Natural Gas Services 2025 Q1 Earnings Misses Targets as Net Income Falls 4.8%

Natural Gas Services (NGS) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The total revenue of Natural Gas Services increased by 12.1% to $41.38 million in 2025 Q1, up from $36.91 million in 2024 Q1. In terms of results, NGS reported earnings per share of $0.38, slightly below market expectations of $0.39, and net income fell 4.8% compared to the same period last year. The company adjusted its full-year 2025 EBITDA guidance, raising it to a range of $74 million to $79 million, signaling confidence in business strength and fleet demand.

Revenue

Natural Gas Services reported a 12.1% increase in total revenue, reaching $41.38 million for Q1 2025. Rental segment revenue surged to $38.91 million, showcasing a robust performance, while the sales segment contributed $1.93 million. Additionally, the aftermarket services segment generated $546,000, rounding out the overall revenue growth for the quarter.

Earnings/Net Income

Natural Gas Services's earnings per share declined 4.9% to $0.39 in 2025 Q1 from $0.41 in 2024 Q1. Furthermore, net income decreased to $4.85 million, down 4.8% from $5.10 million reported in the previous year. The decline in EPS reflects challenges in meeting earnings expectations.

Post-Earnings Price Action Review

The post-earnings price action strategy for Natural Gas Services (NGS) involved purchasing shares following a revenue miss and holding them for 30 days. This approach led to a decline in stock value from an initial price of $3.00 to an adjusted price of $2.70, indicating potential downside risk. This strategy underscores the importance of careful analysis, particularly amid economic uncertainties and potential revenue shortfalls. Investors should remain cautious, considering market conditions and company performance before making investment decisions.

CEO Commentary

"We are pleased to report another quarter of strong execution and continued momentum across our business," said Justin Jacobs, Chief Executive Officer. He highlighted the company's market share gains, expansion in key basins, and investments in the fleet, including large-horsepower electric motor units. Jacobs noted that despite increased broader market uncertainty from tariff concerns and commodity price volatility, there has been no meaningful direct impact on operations. He expressed confidence in delivering results consistent with guidance, reflecting optimism about the company's trajectory and disciplined capital allocation for long-term shareholder value creation.

Guidance

The company updated its guidance for the 2025 Fiscal Year, increasing the high-end of its adjusted EBITDA outlook to $79 million, anticipating a range of $74 - $79 million. Growth capital expenditures are expected to be between $95 - $120 million, with maintenance expenditures of $10 - $13 million. The company aims for a target return on invested capital of at least 20%. Once capital expenditures are deployed, the "run rate" Adjusted EBITDA is expected to grow significantly, aligning with an anticipated 18% increase in rented horsepower fleet by early 2026.

Additional News

In recent non-earnings news, Natural Gas Services has been active in strategic initiatives, including discussions surrounding potential mergers and acquisitions to bolster its market position. The company remains focused on optimizing its fleet and enhancing asset utilization, with plans to introduce new rental units featuring both electric motor and natural gas engine technology. Additionally, the company expanded its credit facility, which lowered interest rates and provided more flexible covenants, enhancing its ability to pursue both organic and inorganic growth opportunities. These developments underscore Natural Gas Services' commitment to leveraging its strong balance sheet for future growth and shareholder value creation.