HOUSTON--(BUSINESS WIRE)--Flowco Holdings Inc. (NYSE: FLOC) (“Flowco” or the “Company”), a provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry, today announced financial results for the third quarter ended September 30, 2026.
Key Third Quarter 2026 Highlights
- Revenues of $258.6 million, generating net income of $40.7 million and Adjusted Net Income1 of $48.0 million
- Adjusted EBITDA1 of $103.9 million
- Adjusted EBITDA Margin1 of 40.2%
- Net cash provided by operating activities of $103.1 million and Free Cash Flow1 of $72.4 million
- In October 2026, Flowco’s Board of Directors approved a quarterly cash dividend of $0.09 per share
- In November 2026, Flowco announced the approval by its Board of Directors of a $150 million increase to the Company's existing share repurchase authorization, bringing the total authorization to $200 million
- Robust liquidity with approximately $365 million of availability under our revolving credit facility as of October 30, 2026
Financial Summary
Three Months Ended |
|||||||||||||||
September 30,
|
June 30,
|
September 30,
|
|||||||||||||
(in thousands) |
|||||||||||||||
Revenues |
$ |
258,622 |
$ |
235,859 |
$ |
176,941 |
|||||||||
Net income |
40,713 |
30,944 |
34,273 |
||||||||||||
Adjusted Net Income (1) |
47,973 |
34,267 |
37,301 |
||||||||||||
Adjusted EBITDA (1) |
103,865 |
93,884 |
76,803 |
||||||||||||
Adjusted EBITDA Margin (1) |
40.2 |
% |
39.8 |
% |
43.4 |
% |
|||||||||
(1) |
Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow are non-GAAP financial measures. See definitions of these measures and the reconciliation of GAAP to non-GAAP financial measures outlined in the reconciliation tables accompanying this press release. |
Joe Bob Edwards, President and CEO, commented, “Flowco delivered a strong third quarter, with Adjusted EBITDA exceeding the high end of our guidance range and approximately $72 million of free cash flow, representing roughly 70% free cash flow conversion from Adjusted EBITDA. Our performance reflects the benefits of our production optimization orientation and consistent execution across both of our segments. In addition to the continued performance of our rental revenue base, we benefited from accelerated revenue associated with the release of certain rental systems within Surface Equipment, which we are actively working to redeploy based on identified customer demand.
U.S. operators’ focus on enhancing returns from existing assets is driving demand for our solutions as we advance our strategic priorities, including international growth. Valiant continues to exceed our expectations and recently secured an award for future work from a large independent operator through an existing Flowco relationship, demonstrating the cross-selling opportunities across our platform. Subsequent to quarter-end, we completed our acquisition of Lifting Solutions, a meaningful step in expanding our international presence. We are encouraged by the early international momentum across our business units, including incremental orders for ESPs and gas lift equipment in Venezuela and the Middle East, and we believe Lifting Solutions provides an attractive platform to accelerate these efforts.
Our durable cash flow generation and balance sheet provide the flexibility to pursue strategic growth, both organically and through acquisitions like Valiant and Lifting Solutions, while also returning capital to shareholders through dividends and repurchases under our recently expanded authorization. We remain committed to disciplined capital allocation as we seek to create long-term value for our shareholders.”
Segment Information
We report our results in two segments, Production Solutions and Natural Gas Technologies. Production Solutions includes the rental, sale and service associated with high pressure gas lift, electric submersible pumps (ESP), conventional gas lift and plunger lift, including a range of digital solutions and other production-related technologies. Natural Gas Technologies includes the design, manufacture, rental and sale of vapor recovery and natural gas systems. Corporate costs not directly related to either segment are categorized separately.
Segment Financial Information
Three Months Ended |
||||||||||||
September 30,
|
June 30,
|
September 30,
|
||||||||||
(in thousands) |
||||||||||||
Production Solutions |
||||||||||||
Revenues |
$ |
178,616 |
$ |
170,878 |
$ |
125,596 |
||||||
Adjusted Segment EBITDA (1) |
77,959 |
71,019 |
55,260 |
|||||||||
Adjusted Segment EBITDA Margin (1) |
43.6 |
% |
41.6 |
% |
44.0 |
% |
||||||
Natural Gas Technologies |
||||||||||||
Revenues |
$ |
80,006 |
$ |
64,981 |
$ |
51,345 |
||||||
Adjusted Segment EBITDA (1) |
30,876 |
27,759 |
25,317 |
|||||||||
Adjusted Segment EBITDA Margin (1) |
38.6 |
% |
42.7 |
% |
49.3 |
% |
||||||
Corporate |
||||||||||||
Adjusted Segment EBITDA (1) |
$ |
(4,970 |
) |
$ |
(4,894 |
) |
$ |
(3,774 |
) |
|||
Adjusted Segment EBITDA Margin (1) |
nm |
nm |
nm |
|||||||||
Total |
||||||||||||
Revenues |
$ |
258,622 |
$ |
235,859 |
$ |
176,941 |
||||||
Adjusted EBITDA (1) |
103,865 |
93,884 |
76,803 |
|||||||||
Adjusted EBITDA Margin (1) |
40.2 |
% |
39.8 |
% |
43.4 |
% |
||||||
(1) |
Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin are non-GAAP financial measures. See definitions of these measures and the reconciliation of GAAP to non-GAAP financial measures outlined in the reconciliation tables accompanying this release. |
Production Solutions
Third quarter 2026 revenue and Adjusted Segment EBITDA for the Production Solutions segment increased 4.5% and 9.8%, respectively, from the second quarter of 2026, driven by higher Surface Equipment revenue and Adjusted EBITDA. Adjusted Segment EBITDA Margin increased 209 basis points, primarily reflecting a higher proportion of Surface Equipment revenue within the quarter. Third quarter 2026 revenue included approximately $9 million in accelerated rental revenue associated with the release of certain Surface Equipment systems.
Natural Gas Technologies
Third quarter 2026 revenue and Adjusted Segment EBITDA for the Natural Gas Technologies segment increased 23.1% and 11.2%, respectively, from the second quarter of 2026, primarily due to an increase in Natural Gas Systems sales. Adjusted Segment EBITDA Margin decreased 413 basis points, primarily reflecting a higher proportion of Natural Gas Systems revenue within the quarter.
Corporate
Third quarter 2026 Corporate Adjusted Segment EBITDA was largely unchanged at $(5.0) million, compared to $(4.9) million in the second quarter of 2026.
Balance Sheet & Liquidity
As of October 30, 2026, the Company had outstanding borrowings under its senior secured revolving credit facility (“Credit Agreement”) of $355.7 million and, with a current borrowing base of $721.8 million, had availability under the Credit Agreement of $364.8 million.
Dividend Declaration
On October 30, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.09 per share of Class A common stock payable on November 24, 2026 to Class A common stockholders of record as of the close of business on November 13, 2026. Flowco MergeCo LLC, the Company’s operating subsidiary, will make a corresponding distribution of $0.09 per unit to holders of its common units.
Share Repurchase Program
On November 2, 2026, the Company announced that its Board of Directors approved a $150 million increase to the Company’s existing share repurchase program, bringing the total authorization to $200 million of the Company’s Class A common stock. The expanded program has no expiration date.
Conference Call and Webcast Information
Flowco will host a conference call on Wednesday, November 4, 2026, at 8:00 a.m. Eastern Time to discuss third quarter 2026 results. The conference call can be accessed live over the phone by dialing 1-877-704-4453 (for the U.S.) or 1-201-389-0920 (for International). A telephonic replay of the conference call will be available three hours after the call and can be accessed by dialing 1-844-512-2921 (for the U.S.) or 1-412-317-6671 (for International). The passcode for the call and replay is 13763393. A live webcast of the conference call will also be available under the Investor Relations section of Flowco’s website at ir.flowco-inc.com.
About Flowco
Flowco is a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry. The Company’s products and services include a full range of equipment and technology solutions that enable oil and natural gas producers to efficiently and cost-effectively maximize the profitability and economic lifespan of their assets.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release may be forward-looking statements. These statements generally relate to future events or our future financial or operating performance, and include, but are not limited to: statements regarding guidance or estimates related to the Company’s results of operations or financial condition; industry trends, customer demand and industry outlook, and effects on Flowco’s operations; Flowco’s strategies and plans, including matters relating to the Company’s growth, capital expenditures, dividend policies, and leverage profile. When used in this press release, words such as “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “forecast,” “target,” “predict,” “may,” “should,” “would,” “could,” and “will,” the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Flowco believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. These risks and uncertainties are described further in our annual report on Form 10-K for the year ended December 31, 2025, in our subsequent quarterly reports on Form 10-Q and in our other filings filed with the Securities and Exchange Commission. Flowco undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
Flowco Holdings Inc. Condensed Consolidated Statement of Operations |
|||||||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||||||
September 30,
|
June 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||||||||||
(in thousands except share and per share amounts) |
|||||||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||
Rentals |
$ |
141,756 |
$ |
132,670 |
$ |
106,966 |
$ |
396,299 |
$ |
306,366 |
|||||||||||||||
Sales |
116,866 |
103,189 |
69,975 |
307,712 |
256,140 |
||||||||||||||||||||
Total revenues |
258,622 |
235,859 |
176,941 |
704,011 |
562,506 |
||||||||||||||||||||
Operating expenses: |
|||||||||||||||||||||||||
Cost of rentals (exclusive of depreciation and amortization disclosed separately below) |
36,870 |
35,221 |
29,295 |
104,643 |
83,748 |
||||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization disclosed separately below) |
84,646 |
74,209 |
44,888 |
221,259 |
173,033 |
||||||||||||||||||||
Selling, general and administrative expenses |
39,846 |
35,655 |
28,980 |
111,977 |
92,197 |
||||||||||||||||||||
Depreciation and amortization |
48,907 |
49,372 |
38,953 |
139,774 |
106,237 |
||||||||||||||||||||
Loss on sale of equipment |
422 |
184 |
232 |
916 |
255 |
||||||||||||||||||||
Income from operations |
47,931 |
41,218 |
34,593 |
125,442 |
107,036 |
||||||||||||||||||||
Other expenses: |
|||||||||||||||||||||||||
Interest expense, net |
(4,856 |
) |
(5,597 |
) |
(2,757 |
) |
(14,801 |
) |
(14,567 |
) |
|||||||||||||||
Other income (expense), net |
(233 |
) |
(29 |
) |
229 |
(723 |
) |
521 |
|||||||||||||||||
Total other expenses |
(5,089 |
) |
(5,626 |
) |
(2,528 |
) |
(15,524 |
) |
(14,046 |
) |
|||||||||||||||
Income before provision for income taxes |
42,842 |
35,592 |
32,065 |
109,918 |
92,990 |
||||||||||||||||||||
Income tax benefit (provision) |
(2,129 |
) |
(4,648 |
) |
2,208 |
(10,807 |
) |
(4,320 |
) |
||||||||||||||||
Net income |
40,713 |
30,944 |
34,273 |
99,111 |
88,670 |
||||||||||||||||||||
Net income attributable to redeemable non-controlling interests |
20,588 |
18,429 |
21,756 |
59,029 |
64,510 |
||||||||||||||||||||
Net income attributable to Flowco Holdings Inc. |
$ |
20,125 |
$ |
12,515 |
$ |
12,517 |
$ |
40,082 |
$ |
24,160 |
|||||||||||||||
Earnings per share: |
|||||||||||||||||||||||||
Basic |
$ |
0.45 |
$ |
0.29 |
$ |
0.46 |
$ |
1.01 |
$ |
0.92 |
|||||||||||||||
Diluted |
$ |
0.40 |
$ |
0.28 |
$ |
0.32 |
$ |
0.94 |
$ |
0.82 |
|||||||||||||||
Weighted average shares outstanding: |
|||||||||||||||||||||||||
Basic |
44,363,299 |
42,857,602 |
27,445,906 |
39,678,482 |
26,338,938 |
||||||||||||||||||||
Diluted |
91,410,610 |
43,971,042 |
90,661,805 |
91,348,060 |
90,890,091 |
||||||||||||||||||||
Flowco Holdings Inc. Condensed Consolidated Balance Sheets |
||||||||||
As of |
||||||||||
September 30,
|
December 31,
|
|||||||||
(in thousands except share and per share amounts) |
||||||||||
Assets |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ |
137,815 |
$ |
4,522 |
||||||
Accounts receivable, net of allowances for credit losses |
146,631 |
100,465 |
||||||||
Inventory |
189,608 |
149,590 |
||||||||
Prepaid expenses and other current assets |
30,235 |
5,615 |
||||||||
Total current assets |
504,289 |
260,192 |
||||||||
Property, plant and equipment, net |
855,821 |
797,534 |
||||||||
Operating lease right-of-use assets |
25,713 |
17,556 |
||||||||
Finance lease right-of-use assets |
29,018 |
25,861 |
||||||||
Intangible assets, net |
296,955 |
273,437 |
||||||||
Goodwill |
304,002 |
249,692 |
||||||||
Deferred tax asset |
40,808 |
16,692 |
||||||||
Other assets |
4,414 |
5,387 |
||||||||
Total assets |
$ |
2,061,020 |
$ |
1,646,351 |
||||||
Liabilities, redeemable non-controlling interests and stockholders' equity |
||||||||||
Current liabilities: |
||||||||||
Accounts payable |
$ |
49,527 |
$ |
22,827 |
||||||
Accrued expenses |
66,364 |
26,909 |
||||||||
Current portion of tax receivable agreement liability |
3,500 |
— |
||||||||
Current portion of operating lease obligations |
8,479 |
8,004 |
||||||||
Current portion of finance lease obligations |
14,089 |
12,895 |
||||||||
Deferred revenue |
16,034 |
7,376 |
||||||||
Total current liabilities |
157,993 |
78,011 |
||||||||
Long-term liabilities: |
||||||||||
Long-term debt, net |
363,449 |
167,819 |
||||||||
Tax receivable agreement liability |
131,898 |
21,952 |
||||||||
Operating lease obligations, net of current portion |
17,504 |
9,783 |
||||||||
Finance lease obligations, net of current portion |
11,318 |
10,862 |
||||||||
Total long-term liabilities |
524,169 |
210,416 |
||||||||
Total liabilities |
682,162 |
288,427 |
||||||||
Commitments and contingencies |
||||||||||
Redeemable non-controlling interests |
833,060 |
1,129,298 |
||||||||
Stockholders' equity: |
||||||||||
Class A common stock, $0.0001 par value – 300,000,000 shares authorized; 44,960,812 shares issued and outstanding as of September 30, 2026; 300,000,000 shares authorized; 29,091,960 shares issued and outstanding as of December 31, 2025. |
4 |
3 |
||||||||
Class B common stock, $0.0001 par value – 150,000,000 shares authorized; 45,439,646 shares issued and outstanding as of September 30, 2026; 150,000,000 shares authorized; 60,562,983 shares issued and outstanding as of December 31, 2025. |
5 |
6 |
||||||||
Additional paid-in capital |
344,945 |
40,731 |
||||||||
Retained earnings |
200,844 |
187,886 |
||||||||
Total stockholders' equity to Flowco Holdings Inc. |
545,798 |
228,626 |
||||||||
Total liabilities, redeemable non-controlling interests and stockholders' equity |
$ |
2,061,020 |
$ |
1,646,351 |
||||||
Flowco Holdings Inc. Condensed Consolidated Statements of Cash Flows |
||||||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||
2026 |
2025 |
2026 |
2025 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||
Net income |
$ |
40,713 |
$ |
34,273 |
$ |
99,111 |
$ |
88,670 |
||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization |
48,907 |
38,953 |
139,774 |
106,237 |
||||||||||||||||
Provision for inventory obsolescence |
655 |
362 |
1,807 |
1,636 |
||||||||||||||||
Amortization of operating right-of-use assets |
2,757 |
2,616 |
8,056 |
6,627 |
||||||||||||||||
Amortization of deferred financing costs |
338 |
338 |
1,013 |
1,012 |
||||||||||||||||
Loss on sale of equipment |
422 |
232 |
916 |
255 |
||||||||||||||||
Gain on lease termination |
(24 |
) |
(528 |
) |
(66 |
) |
(791 |
) |
||||||||||||
Stock-based compensation |
4,262 |
1,479 |
10,422 |
9,470 |
||||||||||||||||
Provision for deferred income taxes |
1,769 |
(2,208 |
) |
9,554 |
(780 |
) |
||||||||||||||
Allowance for credit losses |
376 |
610 |
959 |
1,551 |
||||||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||||||
Accounts receivable |
(1,538 |
) |
3,188 |
(16,534 |
) |
(168 |
) |
|||||||||||||
Inventory |
(4,614 |
) |
(8,634 |
) |
(7,026 |
) |
(9,575 |
) |
||||||||||||
Prepaid expenses and other current assets |
(4,791 |
) |
1,700 |
(17,566 |
) |
2,314 |
||||||||||||||
Other assets and liabilities |
5 |
(8 |
) |
(41 |
) |
(74 |
) |
|||||||||||||
Accounts payable - trade |
4,243 |
(1,006 |
) |
20,254 |
1,008 |
|||||||||||||||
Accrued expenses |
16,126 |
7,054 |
30,163 |
359 |
||||||||||||||||
Deferred revenue |
(2,879 |
) |
6,615 |
4,498 |
4,536 |
|||||||||||||||
Operating lease liabilities |
(2,994 |
) |
(2,826 |
) |
(8,552 |
) |
(6,417 |
) |
||||||||||||
Finance lease liabilities |
(632 |
) |
257 |
299 |
1,324 |
|||||||||||||||
Net cash provided by operating activities |
103,101 |
82,467 |
277,041 |
207,194 |
||||||||||||||||
Cash flows from investing activities |
||||||||||||||||||||
Net cash paid in Valiant acquisition |
— |
— |
(161,846 |
) |
— |
|||||||||||||||
Asset acquisition |
— |
(71,813 |
) |
— |
(71,813 |
) |
||||||||||||||
Additions to property, plant and equipment |
(30,710 |
) |
(39,663 |
) |
(102,569 |
) |
(103,283 |
) |
||||||||||||
Payment of contingent consideration related to a business combination |
— |
(548 |
) |
— |
(548 |
) |
||||||||||||||
Proceeds from sale of property, plant and equipment |
227 |
164 |
332 |
434 |
||||||||||||||||
Payment for capitalized patent costs |
(180 |
) |
(339 |
) |
(494 |
) |
(434 |
) |
||||||||||||
Net cash used in investing activities |
(30,663 |
) |
(112,199 |
) |
(264,577 |
) |
(175,644 |
) |
||||||||||||
Cash flows from financing activities |
||||||||||||||||||||
Issuance of Class A common stock in IPO, net of underwriting discount |
— |
— |
— |
461,803 |
||||||||||||||||
Payment of offering costs |
— |
— |
— |
(2,458 |
) |
|||||||||||||||
Repurchase of Class A common stock |
— |
(15,000 |
) |
(16,516 |
) |
(15,000 |
) |
|||||||||||||
Payments on long-term debt |
(244,417 |
) |
(166,788 |
) |
(780,820 |
) |
(906,785 |
) |
||||||||||||
Proceeds from long-term debt |
309,458 |
222,366 |
976,450 |
493,497 |
||||||||||||||||
Payments on finance lease obligations |
(4,668 |
) |
(5,383 |
) |
(12,888 |
) |
(11,046 |
) |
||||||||||||
Proceeds on finance lease terminations |
132 |
36 |
168 |
349 |
||||||||||||||||
Purchase of LLC Interests from Continuing Equity Owners |
— |
— |
— |
(20,876 |
) |
|||||||||||||||
Payment of debt issuance costs |
— |
— |
— |
(13 |
) |
|||||||||||||||
Payment of dividend equivalent units |
(29 |
) |
(10 |
) |
(31 |
) |
(10 |
) |
||||||||||||
Payments of selling commissions and fees |
— |
— |
(69 |
) |
— |
|||||||||||||||
Distributions to members of Flowco LLC |
(4,174 |
) |
(4,911 |
) |
(29,215 |
) |
(23,703 |
) |
||||||||||||
Dividends paid to Flowco Holdings Inc. shareholders |
(10,114 |
) |
(2,334 |
) |
(16,250 |
) |
(4,392 |
) |
||||||||||||
Net cash provided by (used in) financing activities |
46,188 |
27,680 |
120,829 |
(28,930 |
) |
|||||||||||||||
Net increase (decrease) in cash and cash equivalents |
118,626 |
(2,052 |
) |
133,293 |
2,620 |
|||||||||||||||
Cash and cash equivalents |
||||||||||||||||||||
Beginning of period |
19,189 |
9,287 |
4,522 |
4,615 |
||||||||||||||||
End of period |
$ |
137,815 |
$ |
7,235 |
$ |
137,815 |
$ |
7,235 |
||||||||||||
Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company uses non-GAAP financial measures, such as Adjusted Net Income, EBITDA, Adjusted EBITDA and Free Cash Flow, as well as Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin, in this press release to supplement financial information presented in accordance with GAAP. We believe that excluding certain items from our GAAP results provides management additional insight on the consolidated financial performance from period to period to project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our management and investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Similarly, Free Cash Flow does not represent our residual cash flow for discretionary expenditures, since the calculation of this measure does not reflect certain debt service requirements or certain other non-discretionary expenditures. Non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The Company urges investors to review the reconciliation and not to rely on any single financial measure to evaluate our business.
Adjusted Net Income
Adjusted Net Income is a non-GAAP measure that we define as net income (loss) adjusted to eliminate the impact of (i) transaction-related expenses, (ii) share-based compensation, (iii) loss on the sale of equipment, and (iv) non-recurring charges. Adjusted Net Income is a supplemental non-GAAP financial measure used by management, our stockholders and others to provide visibility on the profitability and financial strength of the Company by excluding certain expenses related to non-recurring Company transactions.
Reconciliation from net income to Adjusted Net Income is set forth as follows:
Three Months Ended |
|||||||||||||||
September 30,
|
June 30,
|
September 30,
|
|||||||||||||
(in thousands) |
|||||||||||||||
Net income |
$ |
40,713 |
$ |
30,944 |
$ |
34,273 |
|||||||||
Transaction-related expenses (1) |
1,716 |
66 |
— |
||||||||||||
Share-based compensation expense (2) |
4,262 |
3,073 |
1,479 |
||||||||||||
Non-recurring charges (3) |
860 |
— |
1,317 |
||||||||||||
Loss on sale of equipment |
422 |
184 |
232 |
||||||||||||
Adjusted Net Income |
$ |
47,973 |
$ |
34,267 |
$ |
37,301 |
|||||||||
(1) |
Represents transaction-related and business combination expenses associated with the Lifting Solutions acquisition that began to be incurred in the third quarter 2026. These costs were expensed as incurred and included in the consolidated statements of operations. |
(2) |
Reflects non-cash compensation expense for equity-based awards granted to our employees and non-employee directors, including expense associated with the accelerated vesting of certain employee awards during the third quarter 2026. |
(3) |
Represents one-time charges within the Production Solutions segment, including (i) termination benefits and related expenses associated with the departures of executive officers during the third quarters of 2026 and 2025 and (ii) a litigation settlement expense during the third quarter of 2025. |
Adjusted EBITDA and Adjusted EBITDA margin
We define EBITDA as net income, adjusted to exclude interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude (i) share-based compensation expense, (ii) transaction-related expenses and (iii) other non-cash and non-recurring expenses.
EBITDA and Adjusted EBITDA are key performance indicators we use in evaluating our operating performance and in making financial, operating and planning decisions. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA provides additional visibility on operating performance across reporting periods by removing the effect of non-cash and/or non-recurring expenses. Accordingly, we believe that this measure provides useful information to our stockholders and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Reconciliation from net income to EBITDA and Adjusted EBITDA are set forth as follows:
Three Months Ended |
||||||||||||
September 30,
|
June 30,
|
September 30,
|
||||||||||
(in thousands) |
||||||||||||
Net income |
$ |
40,713 |
$ |
30,944 |
$ |
34,273 |
||||||
Interest expense |
4,856 |
5,597 |
2,757 |
|||||||||
Income tax benefit (provision) |
2,129 |
4,648 |
(2,208 |
) |
||||||||
Depreciation and amortization |
48,907 |
49,372 |
38,953 |
|||||||||
EBITDA |
96,605 |
90,561 |
73,775 |
|||||||||
Transaction-related expenses (1) |
1,716 |
66 |
— |
|||||||||
Share-based compensation expense (2) |
4,262 |
3,073 |
1,479 |
|||||||||
Non-recurring charges (3) |
860 |
— |
1,317 |
|||||||||
Loss on sale of equipment |
422 |
184 |
232 |
|||||||||
Adjusted EBITDA |
$ |
103,865 |
$ |
93,884 |
$ |
76,803 |
||||||
(1) |
Represents transaction-related and business combination expenses associated with the Lifting Solutions acquisition that began to be incurred in the third quarter 2026. These costs were expensed as incurred and included in the consolidated statements of operations. |
(2) |
Reflects non-cash compensation expense for equity-based awards granted to our employees and non-employee directors, including expense associated with the accelerated vesting of certain employee awards during the third quarter 2026. |
(3) |
Represents one-time charges within the Production Solutions segment, including (i) termination benefits and related expenses associated with the departures of executive officers during the third quarters of 2026 and 2025 and (ii) a litigation settlement expense during the third quarter of 2025. |
Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin
In addition to business segment profit or loss, our management also evaluates Adjusted Segment EBITDA, which is presented on a business unit level for purposes of allocating resources and evaluating operating and financial performance. As discussed above, the Company operates and manages its business units in the following two operating and reporting segments:
- Production Solutions: relates to rentals, sales and services related to high pressure gas lift, electric submersible pumps (ESP), conventional gas lift and plunger lift. This segment includes rental, sales and service revenues.
- Natural Gas Technologies: relates to the design, manufacturing, rental, sale and servicing of vapor recovery and natural gas systems. This segment includes rental, sales and service revenues.
We define Adjusted Segment EBITDA as segment net income, as adjusted in the same manner as defined for EBITDA and Adjusted EBITDA above. Reconciliation from segment net income, which includes direct segment costs but excludes corporate costs not directly related to either segment, to Adjusted Segment EBITDA is set forth as follows:
Three Months Ended |
||||||||||||
September 30,
|
June 30,
|
September 30,
|
||||||||||
(in thousands) |
||||||||||||
Production Solutions |
||||||||||||
Net income |
$ |
43,730 |
$ |
38,296 |
$ |
31,734 |
||||||
Interest expense |
10 |
176 |
(1,651 |
) |
||||||||
Income tax benefit (provision) |
— |
89 |
— |
|||||||||
Depreciation and amortization |
32,928 |
32,197 |
23,577 |
|||||||||
EBITDA |
76,668 |
70,758 |
53,660 |
|||||||||
Non-recurring charges (3) |
860 |
— |
1,317 |
|||||||||
(Gain) loss on sale of equipment |
431 |
261 |
283 |
|||||||||
Adjusted Segment EBITDA |
77,959 |
71,019 |
55,260 |
|||||||||
Natural Gas Technologies |
||||||||||||
Net income |
$ |
14,760 |
$ |
10,502 |
$ |
9,774 |
||||||
Interest expense |
165 |
170 |
224 |
|||||||||
Income tax benefit (provision) |
1 |
— |
1 |
|||||||||
Depreciation and amortization |
15,959 |
17,164 |
15,369 |
|||||||||
EBITDA |
30,885 |
27,836 |
25,368 |
|||||||||
(Gain) loss on sale of equipment |
(9 |
) |
(77 |
) |
(51 |
) |
||||||
Adjusted Segment EBITDA |
30,876 |
27,759 |
25,317 |
|||||||||
Corporate |
||||||||||||
Net income |
$ |
(17,777 |
) |
$ |
(17,854 |
) |
$ |
(7,235 |
) |
|||
Interest expense |
4,681 |
5,251 |
4,184 |
|||||||||
Income tax benefit (provision) |
2,128 |
4,559 |
(2,209 |
) |
||||||||
Depreciation and amortization |
20 |
11 |
7 |
|||||||||
EBITDA |
(10,948 |
) |
(8,033 |
) |
(5,253 |
) |
||||||
Transaction-related expenses (1) |
1,716 |
66 |
— |
|||||||||
Share-based compensation expense (2) |
4,262 |
3,073 |
1,479 |
|||||||||
Adjusted Segment EBITDA |
(4,970 |
) |
(4,894 |
) |
(3,774 |
) |
||||||
Total Adjusted EBITDA |
$ |
103,865 |
$ |
93,884 |
$ |
76,803 |
||||||
(1) |
Represents transaction-related and business combination expenses associated with the Lifting Solutions acquisition that began to be incurred in the third quarter 2026. These costs were expensed as incurred and included in the consolidated statements of operations. |
(2) |
Reflects non-cash compensation expense for equity-based awards granted to our employees and non-employee directors, including expense associated with the accelerated vesting of certain employee awards during the third quarter 2026. |
(3) |
Represents one-time charges within the Production Solutions segment, including (i) termination benefits and related expenses associated with the departures of executive officers during the third quarters of 2026 and 2025 and (ii) a litigation settlement expense during the third quarter of 2025. |
Free Cash Flow; Free Cash Flow Conversion
Free Cash Flow is a non-GAAP measure that we define as cash flow provided by operating activities less additions to property, plant and equipment (which includes both maintenance and growth capital expenditures, but excludes asset acquisitions of a business, and excludes other business acquisitions and equity investments). Management believes this information is important to provide because it is used by management to evaluate the Company’s operational performance and trends between periods and to manage our business. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s results of ongoing operations. Free Cash Flow is not intended to replace GAAP financial measures. Free Cash Flow Conversion is a non-GAAP measure that we define as Free Cash Flow divided by Adjusted EBITDA. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s cash flows and results of ongoing operations.
A reconciliation of net cash provided by operating activities to Free Cash Flow, as well as Free Cash Flow (Deficit) after net cash paid in acquisitions, is set forth as follows:
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||
2026 |
2025 |
2026 |
2025 |
|||||||||||||||||
(in thousands) |
||||||||||||||||||||
Net cash provided by operating activities |
$ |
103,101 |
$ |
82,467 |
$ |
277,041 |
$ |
207,194 |
||||||||||||
Additions to property, plant and equipment |
(30,710 |
) |
(39,663 |
) |
(102,569 |
) |
(103,283 |
) |
||||||||||||
Free Cash Flow |
$ |
72,391 |
$ |
42,804 |
$ |
174,472 |
$ |
103,911 |
||||||||||||
Net cash paid in acquisitions |
— |
(71,813 |
) |
(161,846 |
) |
(71,813 |
) |
|||||||||||||
Free Cash Flow (Deficit) after Net Cash Paid in Acquisition |
$ |
72,391 |
$ |
(29,009 |
) |
$ |
12,626 |
$ |
32,098 |
|||||||||||
Adjusted EBITDA |
$ |
103,865 |
$ |
76,803 |
$ |
283,283 |
$ |
228,192 |
||||||||||||
Free Cash Flow Conversion |
69.7 |
% |
55.7 |
% |
61.6 |
% |
45.5 |
% |
||||||||||||