ngs-20260331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-31398

NATURAL GAS SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)


Colorado						75-2811855
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

601 State Street, Suite 400

Southlake, Texas 76092

(Address of principal executive offices)

(432) 262-2700

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $0.01	NGS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes x						No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes x						No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes ☐						No x

As of May 8, 2026 there were 12,598,365 shares of the Registrant’s common stock, $0.01 par value, outstanding.

TABLE OF CONTENTS


						Page
Part I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)
Unaudited Condensed Consolidated Balance Sheets						1
Unaudited Condensed Consolidated Statements of Operations						2
Unaudited Condensed Consolidated Statements of Stockholders’ Equity						3
Unaudited Condensed Consolidated Statements of Cash Flows						4
Notes to Unaudited Condensed Consolidated Financial Statements:						5
1.Description of Business						5
2. Summary of Significant Accounting Policies						5
3. Trade Accounts Receivable						6
4. Inventory						6
5. Assets Held for Sale and Restructuring Activities						7
6. Rental Equipment						7
7. Property and Equipment						8
8. Supplemental Balance Sheet Disclosures						8
9. Long-Term Debt						8
10. Income Taxes						10
11. Commitments and Contingencies						10
12. Stockholders’Equity						1 0
13. Revenues from Customers						11
14. Stock-Based and Other Long-Term Incentive Compensation						11
15. Earnings per Share						1 4
16. Subsequent Events						14
Item 2. Management ’s Discussion and Analysis of Financial Condition and Results of Operations						15
Item 3. Quantitative and Qualitative Disclosures about Market Risk						28
Item 4. Controls and Procedures						28

Part II - OTHER INFORMATION

Item 1. Legal Proceedings						29
Item 1A. Risk Factors						29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						29
Item 3. Defaults Upon Senior Securities						29
Item 4. Mine Safety Disclosures						29
Item 5. Other Information						29
Item 6. Exhibits						30

Signatures						31

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited)
	March 31,		December 31,
	2026		2025
ASSETS
Current Assets:
Cash and cash equivalents	$	2,311	$	—
Trade accounts receivable, net of provision for credit losses	22,950		18,497
Inventory, net of allowance for obsolescence	21,780		20,647
Income taxes receivable and prepayments	1,690		14,056
Prepaid expenses and other	3,352		1,696
Assets held for sale	10,986		2,227
Total current assets	63,069		57,123
Long-term inventory, net of allowance for obsolescence	—		—
Rental equipment, net of accumulated depreciation	503,027		498,525
Property and equipment, net of accumulated depreciation	11,994		20,519

Other assets	10,825		10,619
Total assets	$	588,915	$	586,786
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	11,486	$	14,048
Accrued liabilities	11,848		10,462
Total current liabilities	23,334		24,510
Long-term debt	226,000		230,000
Deferred income taxes	54,653		52,530
Other long-term liabilities	4,394		5,030
Total liabilities	308,381		312,070
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Preferred stock, 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock, 30,000 shares authorized, par value $0.01; 13,907 and 13,883 shares issued, respectively	139		138
Additional paid-in capital	121,261		120,811
Retained earnings	174,138		168,771
Treasury shares, at cost, 1,310 shares for each of the dates presented, respectively	(15,004)		(15,004)
Total stockholders’ equity	280,534		274,716
Total liabilities and stockholders’ equity	$	588,915	$	586,786

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share) (unaudited)
	Three months ended
	March 31,
		2026		2025
Revenue:
Rental		$	47,115	$	38,910
Sales		491		1,927
Aftermarket services		861		546
Total revenue		48,467		41,383
Cost of revenue (excluding depreciation and amortization):
Rental		17,090		14,840
Sales		624		2,016
Aftermarket services		505		271
Total cost of revenues (excluding depreciation and amortization)		18,219		17,127
Selling, general and administrative expense		6,508		5,378
Depreciation and amortization		10,325		8,636

Inventory allowance		—		61
Retirement of rental equipment		412		728
Gain on disposition of assets, net		(70)		(54)
Total operating costs and expenses		35,394		31,876
Operating income		13,073		9,507
Other income (expense):
Interest expense		(4,028)		(3,170)

Other income (expense)		(126)		(1)
Total other income (expense), net		(4,154)		(3,171)
Income before income taxes		8,919		6,336
Provision for income taxes		(2,156)		(1,482)
Net income		$	6,763	$	4,854
Earnings per share:
Basic		$	0.54	$	0.39
Diluted		$	0.53	$	0.38
Weighted average shares outstanding:
Basic		12,584		12,462
Diluted		12,746		12,611

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited)
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
January 1, 2025	—	$	—	13,762	$	138	$	118,415	$	151,508	1,310	$	(15,004)	$	255,057
Stock-based compensation	—	—		—	—		359		—		—	—		359
Vesting of restricted stock/units	—	—		22	—		—		—		—	—		—

Taxes paid related to net shares settlement of equity awards	—	—		—	—		(6)		—		—	—		(6)

Net income	—	—		—	—		—		4,854		—	—		4,854
March 31, 2025	—	$	—	13,784	$	138	$	118,768	$	156,362	1,310	$	(15,004)	$	260,264


	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
January 1, 2026	—	$	—	13,883	$	138	$	120,811	$	168,771	1,310	$	(15,004)	$	274,716
Stock-based compensation	—	—		—	—		579		—		—	—		579
Vesting of restricted stock/units	—	—		23	—		—		—		—	—		—
Exercise of common stock options	—	—		2	1		66		—		—	—		67
Taxes paid related to net shares settlement of equity awards	—	—		(1)	—		(195)		—		—	—		(195)

Dividends declared	—	—		—	—		—		(1,396)		—	—		(1,396)
Net income	—	—		—	—		—		6,763		—	—		6,763
March 31, 2026	—	$	—	13,907	$	139	$	121,261	$	174,138	1,310	$	(15,004)	$	280,534

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
	Three months ended
	March 31,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,763	$	4,854
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,325		8,636

Inventory allowance	—		61
Retirement of rental equipment	412		728
Gain on disposition of assets, net	(70)		(54)
Amortization of debt issuance costs	325		212
Deferred income taxes	2,123		1,450
Stock-based compensation	579		359
Provision for credit losses	88		208
Loss on company owned life insurance	125		17
Changes in operating assets and liabilities:
Trade accounts receivables	(4,541)		3
Inventory	(1,133)		647
Prepaid expenses, income taxes receivable and prepayments	10,710		64
Accounts payable and accrued liabilities	(1,380)		4,617
Other	(1,291)		(535)
NET CASH PROVIDED BY OPERATING ACTIVITIES	23,035		21,267
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of rental equipment, property and other equipment	(15,247)		(19,256)


Proceeds from disposition of assets, net	37		—

NET CASH USED IN INVESTING ACTIVITIES	(15,210)		(19,256)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility borrowings	9,000		6,000
Repayments of credit facility borrowings	(13,000)		(8,000)

Payments of debt issuance costs	(1)		—
Proceeds from exercise of stock options	67		—

Payment of dividends	(1,385)		—
Taxes paid related to net share settlement of equity awards	(195)		(6)
NET CASH USED IN FINANCING ACTIVITIES	(5,514)		(2,006)
NET CHANGE IN CASH AND CASH EQUIVALENTS	2,311		5
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	—		2,142
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,311	$	2,147
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized	$	3,653	$	2,936
Income taxes paid, net of refunds received	$	(10,196)	$	16
NON-CASH TRANSACTIONS:


Transfer of property and equipment to assets held for sale	$	8,759	$	—
Accrued purchases of property and equipment	$	228	$	524

See accompanying notes to these unaudited condensed consolidated financial statements.

NATURAL GAS SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts or where otherwise indicated)

(unaudited)

1. Description of Business

Natural Gas Services Group, Inc. (the “Company,” “NGS,” “Natural Gas Services Group,” “we,” “us” or “our”) (a Colorado corporation), is a leading provider of natural gas and electric compression equipment, technology and services to the energy industry. We rent, design, install, service and maintain compressors and related equipment and parts for our customers’ oil and gas production and processing facilities, generally using equipment from OEM suppliers along with limited in-house assembly. We are headquartered in Southlake, Texas, with administrative offices in Midland, Texas, an assembly facility located in Tulsa, Oklahoma and service facilities located in major oil and gas producing basins in the continental United States (“U.S.”).

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) and include the accounts of the Company, its subsidiary, NGSG Properties, LLC and the rabbi trust associated with our deferred compensation plan. All significant intercompany accounts and transactions for the periods presented have been eliminated in consolidation.

These financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for the fair presentation of our financial position as of March 31, 2026, and the results of our operations for the three months ended March 31, 2026, and 2025, respectively. As permitted by the rules and regulations of the SEC, the accompanying Condensed Consolidated Financial Statements do not include all disclosures normally required by GAAP. These financial statements should be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC. In our opinion, the Condensed Consolidated Financial Statements provide a fair representation of our financial position, results of operations, changes in stockholders’ equity and cash flows for the periods presented.

Although we review our service and product offerings (rentals, sales and aftermarket services) to analyze the nature of our revenue, costs and expenses, the net income and non-GAAP financial measures including Adjusted EBITDA and Adjusted gross margin are not captured or analyzed by these categories. Our chief executive officer (“CEO”) serves as the chief operating decision maker and does not make resource allocation decisions or assess the performance of the business based on these service and product offerings, but rather on the entire entity in the aggregate. Accordingly, the measures of profit and loss and total assets are effectively those of the Company as a whole as reflected in these Condensed Consolidated Financial Statements. Based on these facts and circumstances, we have concluded that we operate in one business segment.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2026.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued ASU 2024-03 “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense” (“ASU 2024-03”) which expands annual and interim disclosures for certain types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general & administrative expenses, and research and development). ASU 2024-03 is effective for our annual periods beginning January 1, 2027, and for interim periods beginning January 1, 2028, with early adoption permitted. The adoption of ASU 2024-03 is not expected to have a material impact on our Consolidated Financial Statements or disclosures.

3. Trade Accounts Receivable

The following table summarizes our trade accounts receivable from customers as of the dates presented:


	March 31,		December 31,
	2026		2025
Trade accounts receivable
Rentals	$	20,678	$	16,565
Sales and aftermarket services	2,662		2,249
	23,340		18,814
Less: Provision for credit losses	(390)		(317)
Total trade accounts receivable, net	$	22,950	$	18,497

Our trade accounts receivable consist of customer obligations due under normal trade terms for (i) operating leases for the use of our compressor equipment, (ii) the sale of compressor parts, other equipment and rebuild services and (iii) the performance of aftermarket services.

Major Customers and Concentration of Credit Risk

Rental revenue and sales from Occidental Permian, LTD. (“Oxy”) and Devon Energy Corporation (“Devon”) in the three months ended March 31, 2026 and 2025 amounted to 64 percent and 55 percent of revenue on a combined basis, respectively. No other single customer accounted for more than 10 percent of our revenues during these periods. Likewise, Oxy’s and Devon’s accounts receivable balances amounted to 63 percent and 62 percent of our accounts receivable on a combined basis as of March 31, 2026, and December 31, 2025, respectively. No other customers amounted to more than 10 percent of our accounts receivable as of these dates.

Provision for Credit Losses

The following table summarizes the changes in our provision for credit losses for the periods presented:


	Three months ended		Year ended
	March 31,		December 31,
	2026		2025
Beginning balance	$	317	$	1,249
Provision for credit losses	88		155

Write-offs	(15)		(1,087)
Ending balance	$	390	$	317

Management believes that the provision is adequate; however, actual write-offs may exceed the recorded provision. The substantial write-off of the provision for credit losses during the year ended December 31, 2025 reflects certain aged receivables that were no longer deemed collectible.

4. Inventory

The following table summarizes the components of our inventory, net of allowance for obsolescence, as of the dates presented:


	March 31,		December 31,
	2026		2025
Parts and supplies, net of allowance of $2,552 for each period, respectively	$	21,185	$	20,104
Work-in-process	595		543
Inventory - current	21,780		20,647
Parts and supplies - long term, net of allowance of $1,020 for each period, respectively	—		—
Total inventory	$	21,780	$	20,647

Our long-term inventory, which is fully reserved for obsolescence, consists of excess materials and supplies that remain viable but with limited market opportunities.

The following table summarizes the changes in our allowance for obsolescence for the periods presented:


	March 31,		December 31,
	2026		2025
Beginning balance	$	3,572	$	5,867
Allowance for obsolescence	—		1,114
Write-offs	—		(3,409)
Ending balance	$	3,572	$	3,572

The substantial write-off of the allowance for obsolescence during the year ended December 31, 2025 reflects the disposal of inventory items, including engines, frames and coolers, among other items that were previously held and reserved at our former fabrication, repair and overhaul facility in Midland, Texas (the (“Midland Facility”).

5. Assets Held for Sale and Restructuring Activities

As part of our broader efforts to monetize certain noncash assets, we began a process during 2025 to explore and ultimately pursue transactions to sell certain non-core real estate assets. These properties and the related restructuring actions are described below. The carrying value of these properties are reflected as assets held for sale and are included as a component of current assets on our Condensed Consolidated Balance Sheet.

Former Headquarters Property

In connection with our efforts to plan for an eventual sale of our former corporate headquarters facility including a building and land in Midland, Texas (the “Former Headquarters Property”), we undertook certain actions in the fourth quarter of 2025 to begin building-out a new leased office facility in Midland, Texas. We recorded an impairment during the fourth quarter of 2025 to reduce the carrying value of the Former Headquarters Property to its fair value, less costs to sell, or $8.8 million. In February 2026, we entered into an exclusive listing agreement to sell the Former Headquarters Property.

Midland Facility

During the second quarter of 2025, we completed all activities necessary to terminate operations at the Midland Facility and to begin marketing the facility for sale. The closure of the Midland Facility was part of our strategy to streamline and outsource our assembly operations and monetize company-owned real estate as disclosed previously. We are party to an exclusive listing agreement and are currently marketing the Midland Facility, which has a carrying value of $2.2 million.

In connection with the complete closure of the Midland Facility, we terminated eight employees and incurred $0.1 million of severance and termination benefits all of which were paid and settled during April 2025. In addition, we disposed of all inventory items, including engines, frames and coolers, among other items that were fully reserved (see N

SEC Form 10-Q filed by Natural Gas Services Group Inc.