NATURAL GAS SERVICES GROUP INC

Previous wording

We rent, design, install, service and maintain natural gas and electric compressors and related equipment and parts for our customers’ oil and gas production and processing facilities, generally using equipment from third-party fabricators and OEM suppliers. Substantially all of our compressor assembly is done by third-party contractors while a limited level of assembly work remains in-house at our Tulsa, Oklahoma facility. Our primary focus is on the rental of natural gas engine and electric motor drive compressors. Our rental contracts generally provide for initial terms of 12 to 60 months, with our larger horsepower units having longer initial terms than our small and medium horsepower units. After the initial term of our rental contracts, most of our customers have continued to rent our compressors on a month-to-month basis. Rental amounts are billed monthly in advance and include maintenance of the rented compressor units.

Current wording

We rent, design, install, service, and maintain natural gas and electric compressors and related equipment and parts for our customers’ oil and gas production and processing facilities using equipment from OEM suppliers with fabrication and assembly completed by third-party contractors. Our primary focus is on the rental of natural gas engine and electric motor drive compressors. Our rental contracts generally provide for initial terms of 12 to 60 months, with our larger horsepower units having longer initial terms than our small and medium horsepower units. After the initial term of our rental contracts, most of our customers have continued to rent our compressors on a month-to-month basis. Rental amounts are billed monthly in advance and include maintenance of the rented compressor units.

Previous wording

On June 12, 2026 (the “Acquisition Date”), we acquired Flatrock Compression Holdings LLC (“Flatrock”), including a current rented fleet of 87,233 horsepower (the “Flatrock Acquisition”), in exchange for (i) 241,803 shares of common stock, par value $0.01 per share of the Company (“Common Stock”), (ii) $108.9 million in cash and (iii) the right to receive certain royalty payments pursuant to a royalty agreement resulting in aggregate total consideration of approximately $119 million . The cash portion of the purchase price was sourced from borrowings under our senior secured revolving credit agreement (as amended and restated from time to time, the “Credit Facility”), as amended by the Fifth Amendment to the Amended and Restated Credit Agreement (the “Fifth Amendment”). The results of operations, cash flows and operating statistics attributable to Flatrock from the Acquisition Date through June 30, 2026, are reflected in our condensed consolidated results of operations, cash flows and operating statistics for the periods ended June 30, 2026. Please see Note 3 (“Business Combination”) to our Condensed Consolidated Financial Statements for additional information regarding the Flatrock Acquisition.

Current wording

On June 12, 2026 (the “Acquisition Date”), we acquired Flatrock Compression Holdings LLC (“Flatrock”), including a current rented fleet of 87,233 horsepower (the “Flatrock Acquisition”), in exchange for (i) 241,803 shares of common stock, par value $0.01 per share of the Company (“Common Stock”), (ii) $108.9 million in cash and (iii) the right to receive certain royalty payments pursuant to a royalty agreement resulting in aggregate total consideration of approximately $119 million. On the Acquisition Date, $2.3 million was deposited into escrow pending a post-closing working capital adjustment. We expect the final settlement to occur in November 2026, at which time $1.9 million will be released from escrow to the Sellers with the remaining $0.4 million returned to the Company. The cash portion of the purchase price was sourced from borrowings under our senior secured revolving credit agreement (as amended and restated from time to time, the “Credit Facility”), as amended by the Fifth Amendment to the Amended and Restated Credit Agreement (the “Fifth Amendment”). The results of operations, cash flows and operating statistics attributable to Flatrock from the Acquisition Date through September 30, 2026, are reflected in our condensed consolidated results of operations, cash flows and operating statistics for the periods ended September 30, 2026. Please see Note 3 (“Business Combination”) to our unaudited Condensed Consolidated Financial Statements for additional information regarding the Flatrock Acquisition.

Previous wording

On July 20, 2026, we completed our redomestication from Colorado to Texas (the “Redomestication”). The Redomestication proposal to approve the change in state of incorporation, as described in the Company’s 2026 Proxy Statement, was approved by our shareholders at the 2026 Annual Meeting of Shareholders held on June 10, 2026.

Current wording

On July 20, 2026, we completed our redomestication from Colorado to Texas (the “Redomestication”). The Redomestication proposal, which included a change in our state of incorporation as well as the adoption of new governing documents that contained various shareholder-friendly initiatives, as described in the Company’s 2026 Proxy Statement, was approved by our shareholders at the 2026 Annual Meeting of Shareholders held on June 10, 2026.

Previous wording

Of the total horsepower utilized as of June 30, 2026, 521,931 of horsepower was being rented under contracts expiring between 2026 and 2031 and 147,988 of horsepower was being rented on a month-to-month basis. Of the 1,521 compressors utilized as of June 30, 2026, 921 units were being rented under multi-year contracts and 600 units were being rented on a month-to-month basis.

Current wording

Of the total horsepower utilized as of September 30, 2026, 538,481 of horsepower was being rented under contracts expiring between 2026 and 2031 and 145,471 of horsepower was being rented on a month-to-month basis. Of the 1,529 compressors utilized as of September 30, 2026, 989 units were being rented under multi-year contracts and 540 units were being rented on a month-to-month basis.

Previous wording

Natural Gas. We believe the market outlook for natural gas production in the U.S. remains steady while short-term price volatility remains a factor due to geopolitical influences, weather and shifts in LNG exports. We believe opportunities for increased utilization of our small and medium horsepower units are supported by continued investment in shale gas development, particularly in the Permian Basin and the Utica and Marcellus Shales.

Current wording

Natural Gas. We believe the market outlook for natural gas production in the U.S. remains steady while short-term price volatility remains a factor due to geopolitical influences, weather and shifts in LNG exports. We believe opportunities for increased utilization of our small and medium horsepower units are supported by continued investment in shale gas development, particularly in the Permian Basin and the Utica, Eagle Ford, and Marcellus Shales.

Previous wording

We utilize certain financial and operating metrics to analyze our performance and assess our operating results and overall profitability and liquidity. The most significant of these measures are “Adjusted Gross Margin” and “Adjusted EBITDA” both of which are measurements that are not explicitly defined in accordance with generally accepted accounting principles in the United States of America (“GAAP”), or non-GAAP financial measures, and may vary among different industries and the participants therein.

Current wording

We utilize certain financial and operating metrics to analyze our performance and assess our operating results and overall profitability and liquidity. The most significant of these measures are “Adjusted Gross Margin,” “Adjusted EBITDA,” and “Adjusted Net Income,” all of which are measurements that are not explicitly defined in accordance with generally accepted accounting principles in the United States of America (“GAAP”), or non-GAAP financial measures, and may vary among different industries and the participants therein.

Previous wording

“Adjusted EBITDA” is a non-GAAP financial measure that we define as net income before interest, taxes, depreciation and amortization, as well as an increase in inventory allowance, impairments, retirement of rental equipment, non-recurring restructuring charges including severance, strategic transaction costs including incremental costs directly attributable to business combinations and similar transactions and non-cash equity-classified stock-based compensation expenses. This term, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, management believes Adjusted EBITDA is useful to an investor in evaluating our operating performance because:

Current wording

“Adjusted EBITDA” is a non-GAAP financial measure that we define as net income before interest, taxes, depreciation and amortization, amortization of capitalized technology implementation costs reported in selling, general and administrative expense, as well as an increase in inventory allowance, impairments, retirement of rental equipment, non-recurring restructuring charges including severance, strategic transaction costs and integration expenses including incremental costs directly attributable to business combinations and similar transactions and non-cash, equity-classified, stock-based compensation expenses. This term, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, management believes Adjusted EBITDA is useful to an investor in evaluating our operating performance because:

Previous wording

We generate revenue from renting, maintaining and servicing compressors to our customers under contractual arrangements. The underlying rental service agreements, which all qualify as operating leases under GAAP, generally include a fee for servicing the compressor unit as well as surcharges for fluids during the rental term. Our rental agreement terms typically range from 12 to 60 months. Our revenue is recognized over time, with monthly payments over the term of the agreement. After the terms of the agreement have expired, a customer may renew its agreement or continue renting on a monthly basis thereafter. The primary costs associated with providing our compressor fleet to our customers includes routine maintenance and repairs, fluids, primarily motor oils, and labor and related support costs for our field service facilities and service employees that are geographically dispersed throughout our operating regions.

Current wording

We generate revenue from renting, maintaining, and servicing compressors to our customers under contractual arrangements. The underlying rental service agreements, which all qualify as operating leases under GAAP, generally include a fee for servicing the compressor unit as well as surcharges for fluids during the rental term. Our rental agreement terms typically range from 12 to 60 months. Our revenue is recognized over time, with monthly payments over the term of the agreement. After the terms of the agreement have expired, a customer may renew its agreement or continue renting on a monthly basis thereafter. The primary costs associated with providing our compressor fleet to our customers include routine maintenance and repairs, fluids, primarily motor oils, and labor and related support costs for our field service facilities and service employees that are geographically dispersed throughout our operating regions.

Previous wording

Rental revenue increased for the three and six months ended June 30, 2026, as compared to the corresponding periods in 2025 due primarily to an increase in rented horsepower and units. The increase in revenue reflects a continuing trend of growing demand for our large horsepower units (380 horsepower and greater) which provide for higher rental rates and realized adjusted gross margins. In addition, the Flatrock Acquisition provided rental revenues of $1.9 million during the period from the Acquisition Date through June 30, 2026. Our consolidated utilized horsepower increased during the three and six months ended June 30, 2026, as compared to the prior year periods which reflects the continued addition of large horsepower units to our fleet consistent with our emphasis on larger units over the past several years, as well as the retirement of certain older medium and small horsepower units from the fleet. In addition, we added 87,233 of rented horsepower from 270 rented units in June 2026 attributable to the Flatrock Acquisition. In the six months ended June 30, 2026, we placed into service a total of 180 newly set units, including 137 from our existing fleet and 43 new units. Of those unit sets, a total of 61 were large horsepower units and 43 of those were new units to the fleet.

Current wording

Rental revenue increased for the three and nine months ended September 30, 2026, as compared to the corresponding periods in 2025 due primarily to an increase in rented horsepower and a full quarter impact from the Flatrock Acquisition as well as pricing increases with certain customers. The increase in revenue reflects a continuing trend of growing demand for our large horsepower units (380 horsepower and greater) which provide for higher rental rates and realized adjusted gross margins. In addition, the Flatrock Acquisition provided rental revenues of $9.5 million and $11.4 million, respectively, during the three months ended September 30, 2026, and the period from the Acquisition Date through September 30, 2026. Our consolidated utilized horsepower increased during the three and nine months ended September 30, 2026, as compared to the prior year periods which reflects the continued addition of large horsepower units to our fleet consistent with our emphasis on larger units over the past several years, as well as the retirement of certain older medium and small horsepower units from the fleet. The overall increase in utilized horsepower also includes 90,847 of rented horsepower from 277 rented units attributable to the Flatrock Acquisition. In the nine months ended September 30, 2026, we placed into service a total of 332 units, inclusive of contract renewals, including 280 from our existing fleet and 52 new units. Of those unit sets, a total of 93 were large horsepower units and 52 of those were new units to the fleet.

Previous wording

The cost of rentals increased for the three and six months ended June 30, 2026, consistent with revenues, due to the effects of supporting a larger quantity of utilized horsepower and inflationary pressures primarily in labor and parts costs. Furthermore, we experienced higher unit-redeployment costs consistent with a larger volume of unit sets as compared to the prior year periods. We also experienced higher lubricant costs during the 2026 periods due primarily to the larger quantity of utilized horsepower. An expanding portion of our rented compressor units utilize our proprietary System Management and Recovery Technology (“SMART”) and telemetry software which reduces unplanned shutdowns and increases productivity. Despite inflationary pressure associated with our primary cost components, the SMART and telemetry technology allows us to streamline and manage our maintenance activities more efficiently and thereby mitigate the costs to a manageable extent. As a percentage of revenue, cost of rentals, specifically labor and replacement parts, for the 2026 periods declined compared to the corresponding periods in 2025. As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the three and six months ended June 30, 2026, when compared to the corresponding periods in 2025.

Current wording

The cost of rentals increased for the three and nine months ended September 30, 2026, consistent with revenues, due to the effects of supporting a larger quantity of utilized horsepower and the effect of a full quarter of costs attributable to legacy Flatrock revenues as well as inflationary pressures primarily in labor and lubricant oil costs. Furthermore, we experienced higher unit-redeployment costs consistent with a larger volume of idle unit sets as compared to the prior year periods. An expanding portion of our rented compressor units utilize our proprietary System Management and Recovery Technology (“SMART”) which reduces unplanned shutdowns thereby mitigating related costs and increasing productivity. As a percentage of revenue, cost of rentals, specifically labor, replacement parts, and fixed overhead, for the 2026 periods declined compared to the corresponding periods in 2025, though unit-redeployment costs increased partially offsetting the stated decline. As a result of these factors, our adjusted gross margin increased on both an absolute basis as well as a percentage of revenues for the three and nine months ended September 30, 2026, when compared to the corresponding periods in 2025.

Previous wording

We generate revenue primarily from the sale of compressor and other parts and to a lesser extent repair and overhaul services. Costs of sales primarily include purchases of component materials. In addition, our costs of sales include overhead and related support costs attributable to our storage, assembly facilities including Midland, Texas through its closure at the end of March 2025.

Current wording

We generate revenue primarily from the sale of compressor and other parts and to a lesser extent repair and overhaul services. Costs of sales primarily include purchases of component materials. In addition, our costs of sales include overhead and related support costs attributable to our storage and assembly facilities including the Tulsa Facility, which we expect to be sold in the fourth quarter of 2026, and the Midland, Texas facility currently held for sale through its closure at the end of March 2025.

Previous wording

Sales revenue increased for the three months ended June 30, 2026 due primarily to off-cycle sales of flare parts compared to the quarterly period during 2025 and declined for the six months ended June 30, 2026, compared to the corresponding period in 2025 due primarily to the phasing out of direct sales of compressors and repair/overhaul work which was the primary focus of the former Midland Facility. The costs to support our sales revenues declined on an absolute basis during both periods, primarily reflecting a lower volume of business. While marginally positive for the periods in 2026 due primarily to the off-cycle sale of flare parts, sales represented a negligible contribution to gross margin in the three and six months ended June 30, 2026, and 2025, respectively.

Current wording

Sales revenue increased for the three months ended September 30, 2026, due primarily to Flatrock-related parts sales compared to the quarterly period during 2025 and declined for the nine months ended September 30, 2026, compared to the corresponding period in 2025 due primarily to the phasing out of direct sales of compressors and repair/overhaul work which was the primary focus of the former Midland Facility. The costs to support our sales revenues increased during the three months ended September 30, 2026, due primarily to unabsorbed overhead costs attributable to the Tulsa Facility resulting from winding down operations in advance of the expected sale. The cost of sales declined during the nine-month period in 2026, primarily reflecting a lower volume of business. While marginally positive for the nine-month period in 2026 due primarily to the off-cycle sale of flare parts, sales represented a negligible contribution to our total gross margin in the three and nine months ended September 30, 2026, and 2025, respectively.

Previous wording

Third party aftermarket services revenues, costs and absolute gross margin decreased for three months ended June 30, 2026 compared to the quarterly period during 2025 due primarily to lower activity while revenues and costs increased marginally for the six months ended June 30, 2026, compared to the corresponding period during 2025; however, the gross margin percentage declined over the prior six month period in 2025. The increase in revenue and costs during the six months ended June 30, 2026 is primarily attributable to a marginally higher volume of unit commissioning work performed during the six-month period in 2026 compared to 2025. The margin decline is attributable to higher level of new unit set freight services passed on to customers during the 2025 periods. Aftermarket services represented an insignificant portion of our gross margin in the three and six months ended June 30, 2026, and 2025, respectively.

Current wording

Third party aftermarket services revenues, costs and absolute gross margin increased marginally for the three and nine months ended September 30, 2026, compared to the corresponding periods during 2025; additionally, the adjusted gross margin percentage increased for both periods compared to the corresponding periods in 2025. The increase in revenue and costs during the nine months ended September 30, 2026, is primarily attributable to a marginally higher volume of unit commissioning work performed during the periods in 2026 compared to 2025. The margin percentage increase is attributable to a higher level of lower margin new unit set freight services passed on to customers during the 2025 periods. Aftermarket services represented an insignificant portion of our gross margin in the three and nine months ended September 30, 2026, and 2025, respectively.

Previous wording

SG&A expenses increased during the three andsix months ended June 30, 2026, as compared to thecorresponding periods in 2025. In general, the increase in our total SG&A expenses reflects a higher level of cost to appropriately scale our administrative function commensurate with our overall organizational growth. Excluding non-cash share-based compensation and the strategic transaction costs associated with the Flatrock Acquisition, our primary SG&A expenses have declined as a percentage of our revenues in both of the 2026 periods as compared to the corresponding periods in 2025. The increase in primary SG&A expenses during the three and six months ended June 30, 2026 as compared to the 2025 periodswas impacted by (i) higher professional fees and public company costs of $0.4 million and $0.8 million, respectively, including costs associated with our recent Redomestication, (ii) higher salaries and benefits, including short-term incentive compensation, of $0.1 million and $0.4 million, respectively, reflecting support staff growth and performance, (iii) higher occupancy and office costs of $0.1 million and $0.2 million, respectively, (iv) $0.2 million attributable to Flatrock’s legacy administrative operations from the Acquisition Date through June 30, 2026, and (v) higher IT support costs of $0.1 million and $0.2 million, respectively, in support of our growth initiatives and noncapitalizable costs associated with certain IT system implementation projects.

Current wording

SG&A expenses increased during the three andnine months ended September 30, 2026, as compared to thecorresponding periods in 2025. In general, the increase in our total SG&A expenses reflects a higher level of cost to appropriately scale our administrative function commensurate with our overall organizational growth. Excluding non-cash share-based compensation, the strategic transaction costs and integration expenses associated with the Flatrock Acquisition and the amortization of technology implementation costs of our new cloud-based ERP system, our primary SG&A expenses have declined as a percentage of our revenues in both of the 2026 periods as compared to the corresponding periods in 2025. The net increase in primary SG&A expenses during the three and nine months ended September 30, 2026, as compared to the 2025 periods primarily reflected (i) higher combined salaries, benefits, incentive compensation, and commissions of $2.1 million and $2.6 million, respectively, reflecting performance and support staff growth, including a full quarter with legacy Flatrock personnel, (ii) higher professional fees of $0.1 million and $0.5 million, respectively, including costs associated with our recent Redomestication, (iii) higher occupancy and office costs of $0.1 million and $0.5 million, respectively, including the costs of relocating from our Former Headquarters Property to a new leased facility in Midland, Texas and (iv) lower noncapitalizable IT support costs of $0.2 million during the 2026 quarterly period and higher similar costs of $0.1 million during the nine month period as the new ERP system implementation project concluded during the third quarter of 2026.

Previous wording

Our equity classified stock-based compensation increased during the 2026 periods over 2025 due primarily to a higher mix of performance-based share unit awards, or PSUs, for our executive officers in the 2026 periods. PSUs generally have a higher grant-date fair value than traditional restricted stock and restricted stock units.

Current wording

Our equity classified stock-based compensation increased during the 2026 periods over 2025 due primarily to a higher mix of performance-based share unit awards, or PSUs, for our senior leadership in the 2026 periods. PSUs generally have a higher grant-date fair value than traditional restricted stock and restricted stock units. In addition, we have expanded the number of employees eligible for stock-based compensation consistent with our growth and focus on designing enhanced compensation programs for our highly-skilled technician workforce supporting our customers.

Previous wording

In addition, we incurred $3.3 million of strategic transaction costs in connection with the Flatrock Acquisition comprised primarily of professional fees for certain advisors and consultants to assist us with various activities to develop, execute and report the transaction. We anticipate additional transaction costs to be incurred during the third quarter of 2026, primarily attributable to advisory costs associated with the valuation, purchase price allocation and financial reporting attributable to the Flatrock Acquisition. In addition, we also expect to incur integration costs during the second half of the year to incorporate the legacy Flatrock business into our ERP, human resources and compensation and benefits systems, among others.

Current wording

Through September 30, 2026, we incurred $4.1 million of strategic transaction costs and integration expense in connection with the Flatrock Acquisition comprised primarily of professional fees for certain advisors and consultants who supported us with various activities to develop, execute, and report the transaction. We expect to incur additional integration expenses during the fourth quarter of 2026 including retention bonuses and severance benefits to appropriately align our support staff and incorporate the legacy Flatrock business into our ERP, human resources and compensation and benefits systems, among others.

Previous wording

Depreciation and amortization expense increased for the three andsix months ended June 30, 2026, as compared to thecorresponding periods in 2025, due primarily to depreciation expense associated with the large horsepower units placed in service during 2025 continuing through June 30, 2026. These higher horsepower unit additions are reflective of our strategic plans to concentrate our business development on these higher margin applications. Furthermore, our equipment additions, during the 2026 periods, primarily compressor units and service vehicles, reflect higher overall costs due to broad inflationary pressures as compared to the 2025 periods. Amortization of the intangible assets acquired from Flatrock began on the Acquisition Date and the impact during the periods presented was not material.

Current wording

Depreciation and amortization expense increased for the three andnine months ended September 30, 2026, as compared to thecorresponding periods in 2025, due primarily to depreciation expense associated with the large horsepower units placed in service during 2025 continuing through September 30, 2026 as well as the additions to fixed assets, including finance lease right-of-use assets, attributable to the Flatrock Acquisition. The higher horsepower unit additions are reflective of our strategic plans to concentrate our business development on these higher margin applications. Furthermore, our equipment additions, during the 2026 periods, primarily compressor units and service vehicles, reflect higher overall costs due to broad inflationary pressures as compared to the 2025 periods. Amortization of the intangible assets acquired from Flatrock began on the Acquisition Date and the impact during the periods presented was not material.

Previous wording

During six months ended June 30, 2025, we recorded a nominal increase to the allowance for obsolescence primarily attributable to the transfer of inventory that remained useful from our former Midland, Texas facility, in connection with its closing in March 2025, to our other operating facilities. All of the remaining inventory from the Midland, Texas facility that was subject to the allowance for obsolescence was written off during the three months ended March 31, 2025. There was no impact on our operating income as the Midland allowance was eliminated.

Current wording

During nine months ended September 30, 2025, we recorded a nominal increase to the allowance for obsolescence primarily attributable to the transfer of inventory that remained useful from our former Midland, Texas facility, in connection with its closing in March 2025, to our other operating facilities. All of the remaining inventory from the Midland, Texas facility that was subject to the allowance for obsolescence was written off during the three months ended March 31, 2025. There was no impact on our operating income as the Midland allowance was eliminated.

Previous wording

We retired 134 and 68 units representing 17,700 and 12,073 horsepower, with remaining carrying values of $0.4 million and $0.7 million during thesix months ended June 30, 2026 and 2025, respectively.

Current wording

We retired 134 and 68 units representing 17,700 and 12,073 horsepower, with remaining carrying values of $0.4 million and $0.7 million during thenine months ended September 30, 2026 and 2025, respectively.

Previous wording

Gains recognized during the three and six months ended June 30, 2026 and 2025 are primarily attributable to the sales of trucks after the completion of their useful lives.

Current wording

Gains recognized during the three and nine months ended September 30, 2026 and 2025 are primarily attributable to the sales of trucks after the completion of their useful lives.

Previous wording

Interest expense primarily reflects the costs of borrowing, including commitment fees and the amortization of debt issue costs, under the Credit Facility, net of amounts capitalized attributable to certain capital projects.

Current wording

Interest expense primarily reflects the costs of borrowing, including commitment fees, interest on finance leases and the amortization of debt issue costs, under the Credit Facility, net of amounts capitalized attributable to certain capital projects.

Previous wording

Interest expense increased for the three andsix months ended June 30, 2026, as compared to thecorresponding periods in 2025, due primarily to (i) higher interest costs resulting from higher average outstanding borrowings partially offset by the effect of lower average interest rates and (ii) the effect of lower capitalized interest due primarily to the volume and timing of the completion of certain compressor assembly projects in the 2026 periods as well as lower interest rates. In addition, amortization of debt issue costs increased during the three and six months ended June 30, 2026, as compared to the comparable periods in 2025 due primarily to the amortization of costs associated withthe Fifth Amendment that was completed in June 2026 and a previous amendment that was completed in April 2025. The lower average interest rates are consistent with the Federal Reserve interest rate reductions implemented in the second half of 2025 as well as the lower interest rates attributable to the previous amendment.

Current wording

Interest expense increased for the three andnine months ended September 30, 2026, as compared to thecorresponding periods in 2025, due primarily to (i) higher interest costs resulting from higher average outstanding borrowings partially offset by the effect of lower average interest rates and (ii) the effect of lower capitalized interest due primarily to the volume and timing of the completion of certain compressor assembly projects in the 2026 periods as well as lower interest rates. In addition, amortization of debt issue costs increased during the three and nine months ended September 30, 2026, as compared to the comparable periods in 2025 due primarily to the amortization of costs associated withthe Fifth Amendment that was completed in June 2026 and a previous amendment that was completed in April 2025. The lower average interest rates, despite a recent increase in the Federal Reserve interest rate, are consistent with the Federal Reserve rate reductions implemented in the second half of 2025 as well as the lower interest rate margins attributable to the previous amendment to the Credit Facility.

Previous wording

Interest income for the periods ended June 30, 2026, is entirely attributable to interest earned on the income tax refund for the 2019 tax year. The income tax refund, including interest, was substantially determined and settled in the second quarter of 2026 and the interest was received in July 2026. Please see Note 11 (“Income Taxes”) to our Condensed Consolidated Financial Statements for additional information.

Current wording

Interest income for the nine months ended September 30, 2026, is entirely attributable to interest earned on the income tax refund for the 2019 tax year. The income tax refund, including interest, was substantially determined and settled in the second quarter of 2026 and the interest was received in July 2026. Please see Note 11 (“Income Taxes”) to our unaudited Condensed Consolidated Financial Statements for additional information.

Previous wording

Other income (expense), net declined for the three andsix months ended June 30, 2026 as compared to the corresponding periods in 2025 due primarily to higher unrealized losses attributable to our COLI policies associated with our deferred compensation plan.

Current wording

Other income (expense), net declined for the three andnine months ended September 30, 2026 as compared to the corresponding periods in 2025 due primarily to higher unrealized losses attributable to our COLI policies associated with our deferred compensation plan.

Previous wording

Provision for income taxes represents our income taxes as determined in accordance with GAAP. It considers taxes attributable to our obligations for federal income taxes under the Internal Revenue Code as well as to various states in which we operate, primarily Texas. Please see Note 11 (“Income Taxes”) to our Condensed Consolidated Financial Statements for additional information.

Current wording

Provision for income taxes represents our income taxes as determined in accordance with GAAP. It considers taxes attributable to our obligations for federal income taxes under the Internal Revenue Code as well as to various states in which we operate, primarily Texas. Please see Note 11 (“Income Taxes”) to our unaudited Condensed Consolidated Financial Statements for additional information.

Previous wording

For interim periods, our income tax expense is computed based upon our estimated annual effective tax rate and any discrete items that impact the interim periods. Our estimated annual effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of a higher effective tax rate attributable to state and local income taxes including the impact of projected apportionment of taxable income between states with different tax rates. In addition, the periods in 2026 were adversely impacted by a discrete item attributable to the Texas Comptroller’s amendments to Rule 3.588; a change in law enacted in June 2026 that conformed the Texas cost of goods sold depreciation to current federal law. This discrete item resulted in a 2.6% increase to our annualized effective rate. The Redomestication had no impact on the application of the amendments to Rule 3.588 regarding our income subject to taxation in Texas or any other state in which we operate.

Current wording

For interim periods, our income tax expense is computed based upon our estimated annual effective tax rate and any discrete items that impact the interim periods. Our estimated annual effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of a higher effective tax rate attributable to state and local income taxes including the impact of projected apportionment of taxable income between states with different tax rates. In addition, the nine-month period in 2026 was adversely impacted by a discrete item attributable to the Texas Comptroller’s amendments to Rule 3.588; a change in law enacted in June 2026 that conformed the Texas cost of goods sold depreciation to current federal law, partially offset by discrete items related to stock-based compensation. While the amendments to Rule 3.588 did not increase the Texas franchise tax rate, the corresponding remeasurement of our existing deferred income taxes resulted in an adverse impact to our income tax expense for the 2026 period. These discrete items resulted in a 1.7% increase to our annualized effective rate for 2026. The Redomestication had no impact on the application of the amendments to Rule 3.588 regarding our income subject to taxation in Texas or any other state in which we operate.

Previous wording

Our primary sources of liquidity include cash provided by operating activities and borrowings under our Credit Facility which provides us with up to $500.0 million in borrowing commitments with an additional $100.0 million at our request through an accordion feature. The accordion feature is subject to certain conditions, including the absence of a default, the consent of new or existing lenders willing to provide additional commitments, and our pro forma compliance with the Credit Facility’s financial covenants. As of June 30, 2026, we had $328.0 million of borrowings outstanding under our Credit Facility with a weighted average interest rate of 6.48% as well as $0.2 million for outstanding letters of credit. As of June 30, 2026, we had approximately $134.8 million available for borrowing under the Credit Facility, reflecting the applicable borrowing base calculation.

Current wording

Our primary sources of liquidity include cash provided by operating activities and borrowings under our Credit Facility which provides us with up to $500.0 million in borrowing commitments with an additional $100.0 million at our request through an accordion feature. The accordion feature is subject to certain conditions, including the absence of a default, the consent of new or existing lenders willing to provide additional commitments, and our pro forma compliance with the Credit Facility’s financial covenants. As of September 30, 2026, we had $340.0 million of borrowings outstanding under our Credit Facility with a weighted average interest rate of 6.88%, as well as $0.2 million for outstanding letters of credit. As of September 30, 2026, we had approximately $139.8 million available for borrowing under the Credit Facility, reflecting the applicable borrowing base calculation.

Previous wording

Cash From Operating Activities. Our cash provided by operating activities was $48.5 million for the six months ended June 30, 2026. For additional information and an analysis of our historical cash flows from operating activities, see the “Cash Flows” discussion that follows.

Current wording

Cash From Operating Activities. Our cash provided by operating activities was $65.2 million for the nine months ended September 30, 2026. For additional information and an analysis of our historical cash flows from operating activities, see the “Cash Flows” discussion that follows.

Previous wording

Credit Facility Borrowings. During the six months ended June 30, 2026, we borrowed $98.0 million, net of repayments, under the Credit Facility. The following table summarizes our borrowing activity under the Credit Facility for the periods presented:

Current wording

Credit Facility Borrowings. During the nine months ended September 30, 2026, we borrowed $110.0 million, net of repayments, under the Credit Facility. The following table summarizes our borrowing activity under the Credit Facility for the periods presented:

Previous wording

Cash Flows from Operating Activities. Our cash flows from operating activities increased by $16.2 million during the six months ended June 30, 2026, as compared to the comparable period in 2025. The net increase is primarily attributable to the receipt of $13.8 million in the first half of 2026 related to income tax refunds and associated interest as well as the favorable effects of higher realized margins attributable to growth in our high horsepower unit rentals. These increases were substantially offset by higher working capital uses including (i) increases in our maintenance parts inventory in support of our growing fleet, (ii) implementation costs capitalized and paid for software services and (iii) higher interest payments attributable to higher outstanding borrowings during the 2026 period as compared to the 2025 period.

Current wording

Cash Flows from Operating Activities. Our cash flows from operating activities increased by $16.2 million during the nine months ended September 30, 2026, as compared to the comparable period in 2025. The net increase is primarily attributable to the receipt of $14.1 million during the 2026 period related to income tax refunds and associated interest as well as the favorable effects of higher realized margins attributable to growth in our high horsepower unit rentals. These increases were substantially offset by higher working capital uses including (i) increases in our maintenance parts inventory in support of our growing fleet, (ii) implementation costs capitalized and paid for hosting services, (iii) strategic transaction costs and integration expenses attributable to the Flatrock Acquisition and (iv) higher interest payments attributable to higher outstanding borrowings during the 2026 period as compared to the 2025 period.

Previous wording

Cash Flows from Investing Activities. In June 2026, we completed the Flatrock Acquisition for approximately $119 million of which $108.7 million was paid in cash, net of amounts acquired. For the six months ended June 30, 2026, and 2025, we invested approximately $34.0 million and $45.1 million, respectively, in rental equipment, property and other equipment. Included in these totals for 2026 and 2025 were $27.6 million and $38.8 million for growth capital expenditures to expand our rental fleet and $6.4 million and $6.3 million for capital maintenance projects, respectively. Our investment in rental equipment includes any changes to work-in-progress related to our rental fleet projects at the beginning of the year compared to the end of the period.

Current wording

Cash Flows from Investing Activities. In June 2026, we completed the Flatrock Acquisition for approximately $119 million of which $108.7 million was paid in cash, net of amounts acquired. For the nine months ended September 30, 2026, and 2025, we invested approximately $60.0 million and $86.9 million, respectively, in rental equipment, property and other equipment. Included in these totals for 2026 and 2025 were $48.2 million and $77.9 million for growth capital expenditures to expand our rental fleet and $11.7 million and $9.1 million for capital maintenance projects, respectively. Our investment in rental equipment includes any changes to work-in-progress related to our rental fleet projects at the beginning of the year compared to the end of the period.

Previous wording

Cash Flows from Financing Activities. During the six months ended June 30, 2026, we had net borrowings of $98.0 million and for the six months ended June 30, 2025 we had net borrowings of $12.0 million under the Credit Facility. The net borrowings reflect advances obtained to fully fund the cash portion of the Flatrock Acquisition. The 2026 period includes payments of $3.3 million for common stock dividends while there were no comparable amounts during the 2025 period as our common stock dividend began in the third quarter of 2025. The 2026 period also includes the payments of taxes attributable to the net share settlement of equity awards. These outflows were partially offset by the receipt of over $1.0 million of proceeds from the exercise of stock options.

Current wording

Cash Flows from Financing Activities. During the nine months ended September 30, 2026, we had net borrowings of $110.0 million and for the nine months ended September 30, 2025 we had net borrowings of $38.0 million under the Credit Facility. The net borrowings reflect advances obtained to fully fund the cash portion of the Flatrock Acquisition. The 2026 period includes payments of $5.2 million for common stock dividends while the 2025 period reflected only one quarterly dividend payment as our common stock dividend began in the third quarter of 2025. The 2026 period also includes the payments of taxes attributable to the net share settlement of equity awards. These outflows were partially offset by the receipt of over $1.0 million of proceeds from the exercise of stock options.

Previous wording

Our Credit Facility is subject to: (i) a borrowing base calculation, (ii) variable rates of interest on borrowings that are determined, in part, upon our actual leverage ratio, as defined in the Credit Facility, (iii) commitment fees, (iv) certain financial and other covenants and (v) events of default and acceleration, among other terms and conditions that are customary for such credit instruments. Please see Note 10 (“Long-Term Debt”) to our Condensed Consolidated Financial Statements for a thorough discussion of these matters regarding our Credit Facility.

Current wording

Our Credit Facility is subject to: (i) a borrowing base calculation, (ii) variable rates of interest on borrowings that are determined, in part, upon our actual leverage ratio, as defined in the Credit Facility, (iii) commitment fees, (iv) certain financial and other covenants and (v) events of default and acceleration, among other terms and conditions that are customary for such credit instruments. Please see Note 10 (“Long-Term Debt”) to our unaudited Condensed Consolidated Financial Statements for a thorough discussion of these matters regarding our Credit Facility.

Previous wording

As of June 30, 2026 we had $328.0 million outstanding under our Credit Facility with a weighted average interest rate of 6.48%. As of June 30, 2026, we had approximately $134.8 million available for borrowing under the Credit Facility, subject to a borrowing base determination. As of June 30, 2026, we were in compliance with all financial covenants in our Credit Facility.

Current wording

As of September 30, 2026, we had $340.0 million outstanding under our Credit Facility with a weighted average interest rate of 6.88%. As of September 30, 2026, we had approximately $139.8 million available for borrowing under the Credit Facility, subject to a borrowing base determination. As of September 30, 2026, we were in compliance with all covenants required by our Credit Facility.

Previous wording

The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our Condensed Consolidated Financial Statements. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are generally based on historical experience and various other assumptions that we believe to be reasonable in consideration of our circumstances and expectations for the future based on available information. Our actual results could differ significantly from those estimates under different assumptions and conditions.

Current wording

The preparation of our unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our unaudited Condensed Consolidated Financial Statements. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are generally based on historical experience and various other assumptions that we believe to be reasonable in consideration of our circumstances and expectations for the future based on available information. Our actual results could differ significantly from those estimates under different assumptions and conditions.

Previous wording

Please see Note 2,(“Summary of Significant Accounting Policies”) to our Condensed Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

Current wording

Please see Note 2,(“Summary of Significant Accounting Policies”) to our unaudited Condensed Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.