Good morning. Welcome to the ArchRoc fourth quarter and full year 2025 conference call. Your host for today's call is Megan Repine, Vice President of Investor Relations at ArchRoc. I will now turn the call over to Ms. Repine. You may begin.

Thank you, Bella. Hello, everyone, and thanks for joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of ArchRoc, and Doug Aaron, Chief Financial Officer of ArchRoc. Yesterday, ARCHROC released its financial and operating results for the fourth quarter and full year 2025, as well as annual guidance for 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.com. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our current beliefs and expectations as well as assumptions made by and information currently available to our trucks management team. Although management believes that expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS, and cash available for dividends. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8K furnished to the SEC. I will now turn the call over to Brad to discuss our truck's fourth quarter and full year results and to provide an update of our business.

Thank you, Megan, and good morning, everyone. 2025 was an incredible year for our truck, one that leveraged a multi-year transformation of the business and demonstrated the strength, durability, and scalability of our strategy against what continues to be a robust outlook for our business. Before I review our fourth quarter and 2025 performance, I want to thank our employees across the organization for their tireless focus on safety, customer service, and execution. This was another extremely busy year, and our team delivered. The results we're reporting today simply do not happen without the commitment and excellence of ARTROC's amazing team. We achieved much across the business in 2025. Compared to 2024, we increased adjusted EPS by 68% and adjusted EBITDA by 51%. Importantly, with strong Q4 results, we delivered adjusted EBITDA above the midpoint of guidance after raising our outlook twice during the year. Building on the progress we've made in pricing, efficiency, and cost discipline, our contract operations and aftermarket services segments delivered outstanding adjusted gross margins. Contract operations achieved 70% plus adjusted gross margins for the fifth consecutive quarter, underscoring excellent execution in a tight market. We continue to enhance and standardize our fleet through disciplined portfolio actions, completing our second accretive acquisition in 18 months while executing asset sales of 325,000 horsepower for $192 million, which we redeployed into high-return new-build investments. Taken together, these actions drove 8% operating horsepower growth compared to 2024. Our high quality fleet has maintained full utilization of 95% or higher for the last 11 quarters, underscoring the strength of demand for our equipment, our services, and to the reliability of our operations. We translated this performance into meaningful value for shareholders, returning $212 million through dividends and share repurchases during 2025, up over 70% year over year. We also concurrently drove our year-end leverage ratio to 2.7 times, demonstrating our cash-generating capacity. Overall, 2025 was a year of exceptional earnings growth, balance sheet strengthening, and capital returns, providing a strong foundation as we enter 2026. As we look ahead to 2026, our strategy is grounded in the role natural gas continues to play as a critical component of the global energy mix. Our strategic focus for 2026 centers on three priorities. Capturing opportunities to invest in our natural gas lever transformed energy infrastructure and compression platform by helping our customers move more gas to market more efficiently, safely, and with lower environmental impact. We continue to allocate capital toward large horsepower and electric motor drive compression where we see durable demand, strong returns, and clear benefits for both our customers and our shareholders. Second, maximizing the reliability of our service for our customers. Reliability remains our central value proposition. We're continuing to standardize our field operating model and further enhance adoption of the technology we've implemented across the business. We're deploying advanced digital tools, analytics, and machine learning to improve service quality, streamline workflows for our customers, optimize maintenance execution, and expand our remote monitoring capabilities. These initiatives are designed to increase equipment reliability and safety, reduce unplanned downtime, and drive higher fleet utilization and operating efficiency. Third, maintaining disciplined, returns-based capital allocation and prudent financial management. As we reach a higher level of sustained free cash flow generation, our priorities remain balanced and consistent, investing in high-return growth opportunities we see in this durable growth cycle and returning capital to shareholders, while also maintaining a strong balance sheet. This approach has strengthened our portfolio, improved our financial flexibility, and positioned us to continue delivering superior returns on capital while performance over the last few years including 2025 has validated the strength of the strategy i just outlined we believe there is meaningful earnings growth still to be captured as we grow our business and realize the benefits of fleet mix utilization durability a more automated platform and disciplined capital allocation which continued to compound over natural gas production continues to increase steadily and we expect production to reach record levels for the sixth consecutive year in 2026 in the near term US natural gas volumes are expected to increase incrementally in 2026 importantly for our truck our exposure is weighted toward faster growing gas basins particularly the Permian, where gas volumes are expected to grow at mid-single-digit rates. In the Permian, oil production is expected to remain relatively flat while associated gas volumes continue to increase, supporting sustained demand for compression. This growth is being complemented by meaningful additions to takeaway capacity, totaling 4.6 billion cubic feet per day, particularly in the second half of the year, which should improve basin economics and support continued producer activity. At the same time, U.S. LNG exports are expected to continue to grow in 2026 with 2 BCF a day of additional FID project export capacity coming online. LNG remains a key driver of incremental natural gas demand and reinforces the need for investment across natural gas production, transportation, and compression infrastructure. LNG projects that have already reached final investment decision represent 14 BCF a day of additional export capacity expected to come online through 2030, with further projects possible beyond that. These developments support sustained demand and a long runway for natural gas infrastructure investment and growth. In parallel, AI-driven power demand is moving from long-term forecasts into the early stages of infrastructure development. creating another source of incremental demand for natural gas-fired power generation over time. These dynamics support what we believe is a durable, multi-year earnings growth opportunity for our truck. We have a substantial backlog for 2026, which is 85% contracted, and we've already booked units for 2027 delivery. And moving to our segments, contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet. Our fleet remained fully utilized during a quarter, exiting at 95.5%. Maintaining utilization above 95% for 11 consecutive quarters is unprecedented for our business and reflects continued growth in natural gas demand, the high quality of our fleet, and strong operational execution. Stop activity remains at historically low levels, and our equipment is staying on location longer. Based on 2025 data, the average time in our truck compressor remains on location is now 73 months or more than six years. That's up 61 percent since 2021. When isolating large horsepower compression, time on location extends even further relative to the blended fleet average. Average time on location is 97 months or more than eight years for units with 1,500 horsepower or more, reflecting their use in midstream applications. As we continue to invest in this highly profitable and sticky segment of the market, we expect time and location to extend further over time. At quarter end, we have 4.6 million operating horsepower. Sequentially, operating horsepower declined by approximately 80,000 as new build deliveries during the quarter were more than offset by the sale of approximately 123,000 horsepower, including 84,000 active horsepower, which we completed at year end. For the year, compression asset sales totaled 325,000 horsepower, including 175,000 active horsepower, generating $192 million in cash proceeds, and net gains on asset sales of $47 million, while reducing estimated 2026 adjusted EBITDA by about $18 million. Monthly revenue per horsepower moved higher on a sequential and year-over-year basis. In 2026, we expect to benefit from a full year's impact of rate increases from 2025, and we also expect additional price increases in 2026, though at more modest levels. We achieved a quarterly adjusted gross margin percentage of 78%. Strong pricing and solid cost management drove underlying operating profitability to 71.5% in the quarter, up from 70% in the third quarter of 2025, Excluding the impact of prior period cash tax settlements and credits in both periods. Results reflect lower make ready and lube oil costs and efforts to mitigate inflation in labor and parts through ongoing cost management. Fourth quarter 2025 adjusted gross margin further benefited from $23 million in prior period cash tax settlements and credits, which is the driver of the gross margin percentage increase from the 71.5% level to the reported 78% level. Moving to our aftermarket services segment, performance remains solid despite the typical seasonal slowdown in the fourth quarter. Aftermarket services continue to deliver consistent margin performance with adjusted gross margin percentage remaining firmly above 20% and well above historical levels despite normal fluctuations in activity. This reflects our continued focus on higher quality, higher margin work, disciplined cost management, and reliable execution. Turning to capital allocation, our framework remains disciplined and returns focused, with growth investments and shareholder returns as our top priorities, supported by a strong and resilient balance sheet. First, on growth investment. We previously stated that we expected 2026 growth CapEx would be a minimum of $250 million, and last night we refined our guidance to between $250 and $375 million. This level of CapEx reflects continued strong demand, as well as a deliberate and disciplined approach. It also represents a similar level compared to the previous two years, especially when factoring in that 2025 growth capital expenditures included acquired new horsepower investment backlog from both the TOPS and the NGCS transactions. At this level of growth capital, we expect to generate substantial free cash flows, both before and after dividends, supporting our strategy of increasing returns to shareholders over time. Most recently, our confidence in the outlook for the business and our financial position supported an increase in the fourth quarter dividend to 22 cents per share. This was up approximately 5% compared to the prior quarter and up 16% year-over-year as as we focus on maintaining a well-covered dividend that grows along with the profitability increases in our underlying business. This dividend increase still provides flexibility for additional shareholder returns. This includes $117.7 million of remaining authorization under our share repurchase program as of year end, which we expect to continue to use as a tool for value creation for our shareholders. Our strategy has been to buy back shares on a regular basis while being more active during periods of market dislocation from the strong fundamentals we see ahead. We've returned over $92 million to stockholders since program inception at an average price of $22.72, including $70 million during 2025 compared to $13 million in 2024. From a balance sheet perspective, we exit of the year below our long-term leverage target range of 3 to 3.5 times, and we currently expect to operate below three times in the near term. We're comfortable operating at these levels, which reflect the strength and durability of our cash flows and provide significant flexibility to pursue future organic and inorganic growth opportunities while continuing to return capital to shareholders. In summary, our truck is delivering standout performance driven by consistent operational execution and the successful advancement of our strategic initiatives. As we look ahead, we believe we have additional opportunities to continue monetizing our transform platform with earnings growth driven by disciplined execution and capital allocation and further supported by durable market tailwinds across the natural gas infrastructure. With that, I'll turn the call over to Doug to walk through our fourth quarter and full-year financial performance and provide additional detail on our 2026 outlook.

Thank you, Brad, and good morning, everyone. Let's look at a summary of our fourth quarter and full-year results and then cover our financial outlook for 2026. As we review the quarter, it is important to note that results included a few discrete items which I will walk through briefly. We have also provided supplemental slides on our website with additional details which bridge the results we reported last night to both 2025 guidance as well as our 2026 expectations. Net income for the fourth quarter of 2025 was $117 million and adjusted EBITDA was $269 million, bringing net income for the full year 2025 to $322 million and adjusted EBITDA to $901 million. Underlying business performance exceeded expectations in the fourth quarter and fourth quarter results further benefited from a $23 million cash net benefit to contract operations cost of sales related to prior period sales and use tax audit settlements and credits as well as a 32 million dollars of net gains from the sale of compression and other assets which occurred at the end of the year these two items were not included in the 2025 annual guidance we provided on our third quarter call and excluding them we would have delivered full year 2025 adjusted EBITDA of $846 million, above the midpoint of our most recent guidance range of $835 million to $850 million. Turning to our business segments, contract operations revenue came in at $327 million in the fourth quarter of 2025, consistent with the third quarter of 2025. Average operating horsepower was down slightly from the third quarter of 25, primarily due to asset sales, and pricing ticked up incrementally. We expanded our adjusted gross margin percentage to approximately 78%. Underlying operating gross profitability was 71.5% in the quarter, up from 70% in the third quarter of 25, excluding the impact of out-of-period cash tax settlements and credits in both periods. Results further benefited from $23 million in prior-period cash tax settlements and credits, which, as noted earlier, was the driver of the gross margin percentage increase from the 71.5% level to the reported 78% level. In our aftermarket services segment, we reported fourth quarter 2025 revenue of $50 million, down compared to the third quarter, but higher compared to the $40 million a year ago. The sequential decline reflects typical seasonal softness. Fourth quarter AMS adjusted gross margin percentage was 24% compared to the third quarter and prior year period of 23%. We exited the year with total debt of $2.4 billion and strong available liquidity of 579 million dollars. Long-term debt was down 149 million in the quarter compared to the third quarter of 2025, reflecting strong operating cash flow and further support from asset sales. We have taken meaningful steps to extend our maturity profile and further de-risk our sector leading balance sheet. First, we redeemed 300 million dollars of our outstanding 2027 notes at par in November. Second, in January of this year, we closed an upsized $800 million eight-year bond issuance priced at 6%. We believe this represented the lowest rate ever achieved in the compression sector and one of the tightest yields in energy high-yield deal history pro forma for the offering our liquidity was over 1.3 billion dollars with this issuance we have effectively pre-funded the redemption of our 2028 notes which are callable at par in april of 2026. this provides additional flexibility as our nearest bond maturity would move to 2032 following the call of our 2028 notes our leverage ratio at year-end was 2.7 times, calculated as year-end 2025 total debt divided by a trailing 12-month EBITDA. This was down compared to 3.3 times in the fourth quarter of 2024. As Brad mentioned, we currently expect to operate below three times in the near term, which provides significant flexibility to pursue additional growth opportunities while continuing to return capital to shareholders. The strong financial flexibility I just described continued to support increased capital returns to our shareholders. We recently declared an increased fourth-quarter dividend of $0.22 per share, or $0.88 on an annualized basis. This is up 5% from the third-quarter dividend level and 16% versus the year-ago period. Cash available for dividend for the fourth quarter of 2025 totaled $189 million, leading to an impressive quarterly dividend coverage on the increased dividend of 4.9 times. We introduced our full-year 2026 guidance with yesterday's earnings release. As I walk through guidance, I want to again point you to the supplemental slides on our website, which bridge 2025 performance to our 26 adjusted EBITDA outlook outlook, and help isolate items impacting year-over-year comparability. We announced 2026 adjusted EBITDA guidance of $865 million to $915 million, or $890 million at the midpoint. In contract operations, this outlook reflects continued strength with growth in horsepower, revenue, and profitability. In aftermarket services, we expect performance to remain near historical peak levels, second only to 2025, which benefited from a small number of one-time items. This robust level of performance is supported by sustained service activity and the durability of the margin improvements achieved over the past several years. The bridge highlights several items that create noise in our year-over-year comparisons, most Most notably, asset sales and tax-related items, which together have a $98 million impact when comparing 2025 to 2026 adjusted EBITDA. First, tax-related items. 2025 adjusted EBITDA included a $33 million benefit from sales and use tax audit settlements and credits. Second, asset sales. The year-over-year comparison from 25 to 26 is impacted by both the $47 million adjusted EBITDA gains recognized in 2025 and the reduction of associated EBITDA in 26, which we estimate would have totaled approximately $18 million. Of this $18 million, $12 million related to the horsepower sold late in the year and announced alongside our earnings, and thus are not yet factored into analyst forward estimates. Now turning to capital, on a full-year basis, we expect total 2026 capital expenditures to be approximately $400 to $445 million. Of that, we expect growth CapEx to total between $250 and $275 million to support investment in the new-built horsepower and repackage CapEx to meet continued customer demand. Maintenance CapEx is forecasted to be approximately $125 to $135 million, up compared to 2025 due to increased planned overhaul activity. We also anticipate approximately $25 to $35 million in other CapEx primarily for new vehicles. Total capital expenditures are expected to be funded by operations with the potential for more modest additional support from non-strategic asset sale proceeds as we continue to high-grade our fleet. Before we open the line for questions, I'll close by reinforcing that Arch Rock enters 2026 with strong momentum and a very solid financial foundation. The performance we delivered in 2025 reflects the durability of our business model, disciplined capital allocation, and the strength of demand for our compression services. Looking ahead, our outlook is supported by a consistent growth capital profile, expanding free cash flow, and a continued focus on execution. As Brad outlined, our priorities remain clear. investing in high-return growth opportunities and returning capital to shareholders. As we execute on those priorities, leverage will continue to move lower naturally, and we are comfortable operating below the midpoint of our target range as an outcome of strong performance, not as a change in our strategy. We believe this framework positions at Arch Rockwell to support growth, maintain a resilient balance sheet, and continue creating long-term value through cycles. With that, Bella, we are now happy to open the line for questions.

I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We do request for today's session that you please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Doug Irwin with the CD. Your line is now open. Please go ahead.

Okay. Thanks for the question. Just want to start with the growth CapEx guidance here. Just wondering if you could talk about how much organic horsepower you see that translating to being added this year, and then maybe you could just help fine tune just the cadence of food emissions throughout the year.

Yes, Doug, thanks for the question. We – the CapEx should translate into about 170,000 horsepower. Who expects it to take delivery of in 2026? And as far as the impact of the year, while it's generally ratable over the four quarters throughout the year, we are somewhat front-end loaded and expect about 60% of that horsepower to start up in the first half of the year, which is beneficial and just shows the strength of the continuing demand that we see in the market and that we are receiving from our customer base.

Yeah, that's helpful. And as a follow-up, maybe just around lead times, we've heard some peers talk about lead times getting longer here to start the year. Could you maybe just talk about what you're seeing today and then how that maybe impacts the way you're thinking about both build jobs moving forward and kind of the balance of your price and power and where you might see gross margin turned in in a tighter environment over the next few years?

Lead times have definitely extended. Right now, the long lead time item, the gating item for gas drive equipment is Caterpillar. And for the large horsepower equipment that is the bulk of what we are investing in, it's out to 110 to 120 weeks. For larger horsepower, it's out even further. So lead times have definitely extended as the market is in full pressure and demand for natural gas infrastructure, including compression, which we're very happy and excited to be a part of. As far as the impact on us, fortunately, looking at 2026, we are booked to meet our customers' needs for the year. That horsepower is 85% committed to go to work, so we have only a little bit left in the year that would be available for new bookings. And we've already started booking horsepower into 2027. And we expect that we will fully be able to meet our customers' needs for growth through that period of time. So while the supply chain is definitely extended right now, showing the high demand in the market, we will have access to the equipment to meet our customers' needs in 2026, 2027. It's way too early to talk about any years beyond that. As far as the impact on pricing, it's an interesting market right now. There's a slight pause in some oil activity, and that's moderated, I think, some of the immediate pressures for the overall industry and for our segment. And so while we expect to see price increases on our installed base in 2026, at a more modest level, as I think I mentioned in my prepared remarks, we do see price increasing in the On the current market, it's at a more moderate level for sure, just because we've all caught up with inflation and the current demand in the market is basically well-priced. And as you can see, we and we think the industry is operating at a high level of profitability.

Understood. Thanks.

Your next question comes from the line of Jim Rolison with Raymond James. Please go ahead.

Hey, good morning, everyone. Brad, following up on your comments on lead times, one would think as far out as they've stretched to for someone like Caterpillar, that usually more material price increases on their front come down the road. And I'm curious your thoughts there, just because as you talk about more moderate price increases from your end in 26, fixed if they obviously hike prices for future deliveries into 27 and beyond. Presumably that affords you the ability to catch up with that to maintain your return. So I'm just curious your thoughts on that.

First, we have not seen any significant change or received any significant change in Caterpillar's overall pricing strategy impacting us. Second, we have also not really seen a tremendous change in the pricing from our packagers for the total compression package that's been passed on to us. But the good news is that when we do see that, we will have the full flexibility to price that into our forward pricing with our customer base. One of the main impacts, most interesting impacts of this period we've gone through, where over the last five years or so we've had significant inflation impacting our fleet, is it has certainly made the existing equipment we've invested in over the prior period or the prior years a lot more valuable. And a lot of the returns that we can generate in our business are from the value we get from those prior investments, the pricing power we receive in the current market because of the high demand for compression. And so that value creation that we come from the installed base way outweighs what's going to happen from an inflationary perspective coming through the system from Caterpillar or from the packagers in the near term, all of which we can price in and pass on.

That was exactly why I asked the question. Appreciate that answer. And then following up, I can't recall a time when you've been in quite this position from a leverage and free cash flow generation perspective, even after dividends. And as you kind of look forward over the next two, three, four, five years, obviously the gas backdrop is such that you've got a nice runway of annual organic growth there, but your cash flow is going to be far exceeding your ability to spend it, it seems like, in this. So I'm just curious, as you think about this, you run out somewhat of run out of obvious M&A candidates in your main fairway. Do you return more to shareholders? Do you look at – you've had a couple – at least one of your peers enter into another business line as a means to deploy incremental capital. Just how do you think through that because you're in a very enviable position, and I'm just kind of curious how you guys think about that outlook.

I think you could have asked a bigger question, but I'm not sure how. There's a lot to unpack there. I'm going to try to pick a couple of points to make. The first is that we have had worse problems in the past than having to figure out what to do with a lot of free excess cash flow for the benefit of our investors. So we're excited about the position we're in. We think that it demonstrates the strength of this segment. It demonstrates the strength of the natural gas infrastructure sector overall, which is going to continue to grow, and it generates a lot of cash as we're seeing right now. Right now it's generating it on a sustained basis. A lot of this is the benefit of the capital discipline that we've had in the overall energy sector, we've had in the midstream sector, we've had in the compression space particularly. And as long as that holds, that level of discipline is going to continue to be rewarded by generating great cash returns for our investors. So we're excited to maintain that. To the M&A question you posed, look, we've demonstrated both the desire and ability to grow organically as well as inorganically. And we've digested in just 18 months two very nice acquisitions with great equipment and great teams and a great customer base to expand our business. And we were able to do that on an accretive basis and pass that accretion on very promptly to our investors through dividend increases. We will continue to be looking for those opportunities. And to the contrary to maybe what you were thinking, we think that there are more compression companies in the space today that will be available for us to look at and will want to think about changing their platform and or with ownership that will want to monetize in the coming years. So we do see that as a continuing opportunity, and if we can find assets that align with our desire for large equipment, electric motor drive equipment, that are well maintained, you know, we will be in the game and competing hard for those assets. And then I'll close with the last thought, which is that we did note that one of our competitors has entered into the power market, and I'd say a few things about that. First is that there's some synergies when you think about the supply chains, the equipment, the maintenance practices, and the fleet management practices. Clearly there's some overlap and some synergies on how to do this. Second, on how to do that segment. Second, what we've noticed is that we believe the returns are largely comparable to what we can achieve in the compression space. And so that there's a lot of, I think, industrial logic to the expansion there. On the other hand, we haven't seen asset packages that have come to market. They offer the same level of infrastructure, long-term application investment that we're looking for, whether it's in compression, which we're looking for there, or in power. We want to see those longer-term applications and infrastructure position. But when we see those asset packages, we will be working those hard as well. Appreciate all your thoughts, Brad. See you guys next week.

Your next question comes from the line of Nate Peddleton with the Texas Capital. Please go ahead.

Good morning. Congrats on the strong quarter. Can you provide some detail on the units sold and perhaps some insight into how your team decides what assets are non-core to the go-forward business?

Yes. A couple of thoughts. First, having a disciplined program that both invests in our fleet as well as disposes of assets that we no longer want to operate in the fleet is a core competency in our business. And so when you look at the level of asset sales that we've had over the prior five years, we've been averaging something like 270,000 horsepower per year over that five years. So the level of activity that we had in 2025 is not much larger than just the run rate we've had in the kind of nip and tuck of disciplined asset management practices for our fleet. The other thing I'd say is that we did have one cell that was totally non-strategic around high-pressure gas lift units, and there was another business. The buyer was very much in that business, and so that just made great strategic sense for both companies. That made the number – that contributed to the size of the number in 2025. And we had one customer that wanted to purchase some horsepower. They acquired operations in an acquisition, and as part of that acquisition, it came with horsepower from us. And that's a customer that likes to own their horsepower as opposed to outsources much of their horsepower. And so they were aligned with – they wanted to buy that horsepower for that reason. And for us, when we looked at that horsepower, it was an average age of 17 years, the perfect condition to maximize our overall cash generation of that horsepower by selling it. So when we look at the fleet overall, we're always looking to improve the standardization, the quality of our fleet, want to buy horsepower and sell, especially when it's horsepower that has already earned a great return and served us well over time.

Got it. And then as my follow-up, Brad, in your prepared remarks, you mentioned continued opportunities that you see in electric motor drive compression. Can you provide more detail on how you see the adoption of the electric compression trending as you look at your 2026 and early 2027 order book?

We still see demand for electric motor drive. It's definitely competing. Our customers are now facing more competition for power, and that is a gating item for electric motor drive. So in the past, we've had electric motor drive, and I think in 2025 was as much as 30% of the equipment that we had on order. We are seeing that moderate to more in the 20% to 30% range, but it's lumpy and it's inconsistent. It really varies not just with power being a gating item, but also with the prioritization of the customer and how well they can get equipment and how well that fits into their overall long-term strategic focus. But on the good news front, we still see nice demand for electric motor drives. We're very proud to be the leader in the industry in that segment, and we expect to see good growth for electric motor drives ahead still.

Understood. Thanks for taking my questions.

Your next question comes from the line of Ali Josen with J.P. Morgan. Please go ahead.

Hey, good morning. You talked a bit about extended supply chain and lead times and tightness there, But maybe just thinking about the growth CapEx figure, you know, if you guys are able to make opportunistic procurement of horsepower or, you know, you see kind of swelling demand from your customers, could we see upside to the growth CapEx figure? And, you know, what kind of visibility do you have there given, you know, strong customer demand?

In a word, yes. But it's going to be tough because shop space is pretty full for 2026, so getting more through the system is going to be a challenge. That said, there are avenues to do so, and if we see the opportunity and the need with our customer base, we will be ambitious in capturing that.

And then maybe just thinking about base and focus, I know that business has increasingly shifted to be in Liquids Ridge, Permian, Basin, Eagleford. Are you guys kind of still pressing ahead there? Have you looked at, you know, expanding within other basins, or, you know, what's the overall geographic strategy?

Yes, we have looked at – fortunately, we have what is the most diversified footprint in the industry. We operate in every natural gas-producing basin, every producing basin in the U.S., and we have an excellent footprint throughout all of them. but everything compels with the CapEx vacuum cleaner that is the Permian Basin today for the industry. And so, like with others, our focus is on ensuring that we grow where our customers want us to grow, where they're putting their CapEx and their growth, and that the Permian Basin remains in the lead. With that, though, looking back on 2025, we had net horsepower growth in a total of six basins, One of which was the permeate. So we've seen net growth in other plays, including in dry gas plays, which are seeing a little bit more energy and reactivation right now, given the gas tradeoff with the oil price. So it's been a focus of ours to remain prudently diversified as well as we can at the same time, not miss the incredible opportunity for the most efficient oil production in the country which is coming in the Permian thanks your next question comes from the line of Salman Akhil with Stiffel be scared ahead thank you good morning nice quarter nice outlook two quick ones for me so in your opening comments you talked about 11 a quarters of running at higher utilization 95% and then you went

on to talk about how your equipment staying on location longer especially as you skew towards the higher horsepower. So the question directly is this, 26 probably is another lock for the 95%. Sounds like 27 is as well. So how far, how long do you see that extending at that high utilization rate?

Simon, we appreciate that you think we could possibly answer that question. It's nice of you to suggest. Number one, no one knows. and we don't either. But what we see right now with the level of demand for natural gas to feed the LNG beast ahead, which I described in our comments, and we include our best market take in our deck all the time, what we see for power demand in the U.S. for data centers, what we see for pipeline exports to Mexico is that this is a very durable cycle, and it's hard to see what is going to change that within the next five-plus years. So we expect that our business has just a tremendous growth opportunity to expand our infrastructure footprint with our customers for an extended period of time. But we're not smart enough to call when the cycle turns.

Appreciate all that. And then just kind of going back to the consolidation, when you talked about it, You know, you sort of referenced other companies, but is there anything out there from potentially buying packages from your customers?

Reflecting on the acquisitions we've done, we've actually had success doing that. Going back, you know, pretty far back, there was a time when we acquired what was primarily the compression operations of Chesapeake, which we completed in two separate transactions. When we acquired the Elite assets back in 2018, that was primarily the asset packages that were supporting and organized by affiliates of Hillcorp, but it was run in a separate company, and the primary customers in that were both Hillcorp and Marathon, as we discussed at the time. So we've seen success in acquiring packages that were organized for sell in that way. That said, in other instances, we've seen this to be a very hard area to get a lot of traction between the operating teams and the financial teams within our customer base. And so while we've had success in the past and we have those discussions ongoing with our customers, It hasn't fit the mold of a high volume of steady transactions that, you know, would be a purchase-leaseback machine. So, while there are opportunities out there, we think they're going to be, you know, structured more like traditional M&A.

Got it. Thank you for all the color.

Thank you.

Your next question comes from the line of Steve Ferrazani with Zidati.

Please go ahead. good morning everyone appreciate you taking my questions um i was pleasantly surprised by the sgna guide given the given the growth in the fleet given the growth in cash flow you certainly could be looser on spending but it looks like you're even getting tighter and obviously we're seeing that in your margin guidance on the contract operations where it looks like you're you're more than offsetting any kind of inflationary pressures can you talk talk a little bit about your actions there and what you're trying to do in a growth market containing those costs?

On the SG&A front, first and then on OPEX, you know, the nice thing about this business and our platform is our SG&A is very scalable. We can add quite a bit to our operational activities without expanding our SG&A proportionately. So, what you're really seeing is the benefit of the full-year acquisition benefits coming from the NGCS transaction and the expansion of our organic horsepower, and we have a great SG&A platform that can grow our activity without growing our SG&A investments. So, it's just a very scalable position to be in. We expect to benefit from that in the future, and that's why you're seeing when you think about SG&A as a percent of revenue, you're seeing that continue to come down nicely. On the OpEx side, I'm going to point out a few things that are really long-term focused from a strategic perspective, and we're seeing the benefits now, and so are our customers. Over the last several years, we've focused hard on our fleet mix, expanding into large horsepower, expanding into electric motor drive. These are the two most profitable segments of the market, and by shifting that mix, if you look over a long period of time, you're going to see that our OpEx per horsepower Our costs have remained super flat for a long time, notwithstanding inflation, because we've been fighting off inflation and some of these pressures by engaging in these strategies of adopting a different fleet and they're focused on large engines and motor drive. Second, we've been adding technology to our platform. And so we've invested hard into digitization, automation, and just great telemetry into our system, and that's driving a lot of savings in activity, a lot of efficiency and optimization into our activities in the field. So those are the big threads that we're reaping the benefits from. And candidly, so are our customers, because we've been able to actually manage the concurrent improvement of customer service, maximizing uptime for our customers, and at the same time managing our costs, which we get to pass some of that on to them in the form of a very competitive rates. So those are the biggest drivers that I can think of on how we're attacking costs even in this market.

Yeah, I would maybe just make one more point on SG&A, which is that 25 levels were elevated just a little bit, candidly, in recognition of the incredible performance delivered by both the management team and also all of the operating team. And so you saw our short-term incentive and longer-term incentives flow through a bit into that, something that we're glad to share, you know, up and down throughout the entire company. But with stronger performance comes stronger expectations in 26. So that level for guidance was reset to more of a target level. I think, Brad, otherwise, you know, summed that up well.

That's really helpful. I always try to get a question in about aftermarket, Brad. The guidance there, look, I know 25, you benefited from equipment sales, and you've found out how that can affect margins. I'm just curious about the growth opportunities, given that U.S. compression third parties is growing as well. At any point do you become labor-constrained to meet third-party service demand, or can you continue to grow that business?

I actually really appreciate getting a question on AMS because it has been, you know, a standout performer for us for a couple of years now, and that team has just done an excellent job in improving the profitability of the business. But one of the strategies to improve the profitability of the business is to be more selective on the jobs that we take and the customers that we work with. So, I do think that the growth in that business has demonstrated that it's constrained. And I also think that access to labor is going to further be a constraint in that business as it is in contract operations. But what we're really seeking is to have the right business. We're trying to make sure that it's as profitable as it can be, as value-adding to our customers as it can be, and we will grow it prudently. But given the nature of it, I do not expect it to grow in leaps and bounds. I expect we're still going to see sharper levels of growth in the infrastructure side of the business and contract operations.

Great. Thanks, Brad.

Thank you.

Question comes from the line of Elvira Scotto with RBC Capital Markets. Please go ahead.

Hey. Thanks, everyone. So just a couple of follow-up questions for me. The first one, you talked about your investments in technology over the years, telemetry, big data, et cetera. Can you talk about how much more margin improvement or uptime or what you can drive over time? What inning are we in, if you will? And are there other AI initiatives you can undertake to drive incremental margin improvement or uptime for your customers, any additional color there?

Yeah, thank you. The overall strategy around our technology investments really had three goals as our top line priorities. Number one, we've got to continue to drive improvement to the uptime, our customers' experience, to service quality, and that's all of the above from a communication perspective, speed of response perspective, as well as run time. We want those priorities to come through to our customers. Number two, the market has labor challenges, and so ensuring our labor, our mechanics have the access to the best tools, the best information, best communication to make their lives better and to make their work easier to perform is the second priority around that initiative. And third would be that if we succeed in both of those, we knew we would drive improvements to profitability. So with that lens on how we think about technology, we do believe there is still more to come, especially in driving improvement to the service quality that our customers get to experience, just enhancing the customer experience. We are deploying AI in a couple of ways throughout our business, both to make sure our mechanics have the best information at their fingertips and candidly at their laptop and on their iPhone as they can so the speed of how they can ask questions and receive information is something we're working on quite a bit second we can also make our machine smarter and tell us more and so getting great the data machine to have great analytics capability and And using AI to sort through the noise to identify the most actionable items coming from the alarm system within all of the telemetry and all the sensors we have on the equipment is something we're absolutely working on. And last, there's more ahead of that. We believe that there's also additional sensor technologies, vibration technologies, and acoustic technologies that can utilize the AI on the equipment. And we're working hard to figure out how to bring those to market. So that's what we're working on. We're really pleased with the progress we've made to date, the improvement it's had to our operations. But I can't even call the inning in this, in this, because I think technology is a continuous improvement exercise, and we're going to focus on driving continuous improvement in the operations that we have at the company.

Great. Thank you. That's very helpful. And then just my quick follow-up, are you seeing any change in your customer's desire to insource compression more or outsource compression more? Any change to that dynamic?

We have not seen a change or shift in the dynamic of insourcing and outsourcing. We believe that the customer's primary decision-making around what they're going to do with their compression is driven by their own capital availability, capital allocation, and a buy-lease analysis of how long they think they can earn a return on that asset. And all of those factors still favor significant outsourcing, we believe, in the market today. When you think about where we're at, where our large horsepower stays on location on average about eight years, if that is a unit that the customer was considering to purchase and they only had eight years of use for it, But it doesn't make a lot of sense for them to make a 30-year investment for eight years. So we still think that the overall buy-lease analysis is informed by how long the customer expects to be able to utilize that equipment. And what we see in the outsourced industry is that we can amortize our 30-year investment over a broader geography, over a broader customer base. And so that's the driver of our value proposition, and we haven't seen a change in that.

Thank you very much.

Your last question comes from the line of Nick Amicucci, I'm sorry, with Evercore ISI. Please go ahead.

Hey, good morning, guys. Just one quick one from me and actually a follow-up, but just a clarification on another one. But just given kind of the significant kind of sentiment shift that we've seen from, you know, the hyperscalers and just in the AI complex to more of a behind-the-meter solution, just specifically in west texas i mean we had a couple of companies yesterday kind of call out um the permian as as kind of an area of right for opportunity just given the lack of regulatory constraint um just wanted to see like the has that kind of come to fruition have you guys been seeing that um that level of demand on uh on your end have you seen that kind of true inflection of demand um yet or is there kind of inevitably more to more to come on that if i'm if i'm if i'm understanding the question you know fully what we're seeing is that is let me just ask for a clarification is that a question for um the demand for power provision for power or translating into compression could you clarify for us please uh translating into compression just given that the vast majority of all of these all this demand right is going to be powered by through through natural gas so through natural gas um generation so just kind of reading the toes it would kind of imply that we'd have, you know, some significant demand in that area. Yeah, thank you.

That's really helpful. What we are seeing just overall is the demand for in-basin gas supply is something we're seeing an increase in, and I think a lot of it is driven by more in-basin use of natural gas rather than needing to find a long-haul pipeline to get it out to support other markets. So, yeah, we are seeing that translate in demand, but it's translating into more, to be direct, more future demand than it is immediate current demand. Got it. Perfect. Thanks so much.

And then just kind of touching quickly on the aftermarket AMS segment again. So understand that, you know, it's probably you guys are taking more of a prudent approach. But just given that, you know, we are seeing kind of the units, the assets run harder for longer and kind of the constraints within the supply chain, is there a meaningful kind of price opportunity that could be there, especially given that, you know, you guys are taking more of a prudent and deliberate approach, like unit economics, just trying to figure, you know, figure that out from a margin perspective?

We're really happy, actually, with the returns we're achieving right now and, you know, the 24% gross margin for the prior quarter, something that we're pretty excited about. That said, we do see opportunities that we're not going to go into detail on for other reasons, as you can imagine, to continue to improve both the stability, quality, and earnings in that business. But what I'd say is that if you think about a business that has very low barriers to entry and a ton of competition, the aftermarket services might be in the dictionary under that heading. And so finding the right strategy to execute, both with excellence, with the right customer base, and on the right jobs remains a priority for us in operating that business.

There are no more questions, and now I'd like to turn the call back over to Mr. Childers for final remarks.

Thank you all for joining us today and for your continued interest in our truck. by nearly every measure 2025 was a standout year for the company and we're encouraged by how 2026 is shaping up as we benefit from strong u.s gas production trends and the result and the returns from our continued investment in a first class compression platform we appreciate your support and look forward to updating you on our progress next quarter thank you ladies and gentlemen that concludes today's call thank you all for joining you may now disconnect everyone have a great day