8-K
NATURAL GAS SERVICES GROUP INC (NGS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 5, 2025
NATURAL GAS SERVICES GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
| Colorado | 1-31398 | 75-2811855 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
404 Veterans Airpark Lane, Suite 300
Midland, TX 79705
(Address of Principal Executive Offices)
(432) 262-2700
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-14(c)).
| Securities registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common Stock, Par Value $0.01 | NGS | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On August 11, 2025, Natural Gas Services Group, Inc. (the “Company”) issued a press release announcing its results of operations for second quarter ended June 30, 2025. The press release issued August 11, 2025 is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K. Natural Gas Services Group’s annual report on Form 10-K and its reports on Forms 10-Q and 8-K and other publicly available information should be consulted for other important information about Natural Gas Services Group, Inc.
The information in this Current Report on Form 8-K, including Exhibit No. 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers.
On August 5, 2025, Brian L. Tucker, President and Chief Operating Officer of the Company, the Company’s management and its Board of Directors, collectively reached a decision regarding Mr. Tucker’s transition from the Company due solely to the unfortunate and unexpected family loss which changed his personal circumstances. Mr. Tucker’s transition will take place over the next several months with a target end date of October 31, 2025.
In connection with Mr. Tucker’s transition, we entered into a Transition and Mutual Separation Agreement dated August 8, 2025 with Mr. Tucker (the “Agreement”). The following is a summary of the material features of the Agreement:
•The separation date shall be October 31, 2025, or as mutually extended (the “Separation Date”).
•The terms of Mr. Tucker’s employment agreement dated October 10, 2023 (the “Employment Agreement”) shall continue in effect through the Separation Date including the successful transition of all of his duties and responsibilities to other employees as directed by the Chief Executive Officer.
•A cash bonus under the Company’s Annual Incentive Bonus Plan will be paid at the “target” level pro-rated from January 1, 2025 through the Separation Date.
•All outstanding restricted stock units will vest on a pro rata basis through the Separation Date.
•All outstanding performance stock units will vest based on the “target” award amount set forth in each award on a pro rata basis through the Separation Date.
•After the Separation Date, Mr. Tucker will remain subject to the clawback provision of the Employment Agreement, the regulations of the New York Stock Exchange or the Company’s Clawback Policy.
•Mr. Tucker’s Non-Compete Agreement dated October 9, 2023 shall remain in effect pursuant to its terms for 12 months after the Separation Date.
The foregoing description of the Agreement is a summary and does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the full text of the Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The Exhibit listed below is furnished as an Exhibit to this Current Report on Form 8-K.
| Exhibit No. | Description |
|---|---|
| 10.1 | Transition and Mutual Separation Agreement between Natural Gas Services Group, Inc. and Brian L. Tucker dated August 8, 2025. |
| 99.1 | Press release issued August 11, 2025. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NATURAL GAS SERVICES GROUP, INC. | |||
|---|---|---|---|
| Date: | August 11, 2025 | By: | /s/ Justin C. Jacobs |
| Justin C. Jacobs | |||
| Chief Executive Officer | |||
| (Principal Executive Officer) |
Document
Exhibit 10.1
TRANSITION AND MUTUAL SEPARATION AGREEMENT
This TRANSITION AND MUTUAL SEPARATION AGREEMENT (this “Agreement”) is entered into as of August 8, 2025 between Brian L. Tucker (“Executive”) and Natural Gas Services Company, Inc., a Colorado corporation (the “Company”), with respect to the Executive’s employment with the Company and separation from employment. Executive and the Company are hereby referred to as the “Parties.”
A. Executive is employed by the Company as President and Chief Operating Officer, and Executive and the Company are parties to that certain Employment Agreement dated October 9, 2023 (the “Employment Agreement”).
B. Due to a personal family health situation, the Executive will be unable to meet some of the requirements of the Executive’s position with the Company over the long term.
C. The Company recognizes the unexpected nature of Executive’s personal family health situation and also recognizes the significant contribution the Executive has made to the operations of the Company.
D. The Company and Executive desire to amicably provide for an orderly transition.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and other good and valuable consideration, the parties hereto agree as follows:
1.Separation. Except as modified in this Agreement, the Parties agree that from the date of this Agreement until October 31, 2025 or as mutually extended (the “Separation Date”), Executive will continue to be employed by the Company pursuant to the same terms and conditions set forth in the Employment Agreement; provided, however, that the Parties agree that, effective as of the Separation Date, Executive shall be deemed to automatically resign from the position of President and Chief Operating Officer of the Company and any other officer or employee positions held by Executive with the Company, and shall not represent to any individual, entity, or the public that Executive is the President and Chief Operating Officer of the Company or employed by the Company.
2.Separation Pay and Benefits.
2.1 As consideration for Executive’s promises set forth in this Agreement, subject to Executive’s execution and non-revocation of this Agreement and the Supplemental Release (as defined below), and Executive’s continued compliance with this Agreement and any other continuing obligations Executive owes to the Company, the Company agrees to provide Executive with the following: (i) a cash bonus under the Company’s 2025 Bonus Plan at the “target” threshold amount set forth in such plan by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”), regardless of actual Company performance for the year, pro-rated from January 1, 2025 through the Separation Date, payable within thirty (30) days of the Separation Date; (ii) all of Executive’s outstanding restricted stock units (“RSUs”) will vest on a pro rata basis through the Separation Date (to be calculated and approved by the Compensation Committee), with settlement within thirty (30) days of the Separation Date; and (iii) all of Executive’s outstanding performance stock units (“PSUs”) will vest based on the target award amount set forth in each award on a pro rata basis through the
Exhibit 10.1
Separation Date (to be calculated and approved by the Compensation Committee), with settlement within thirty (30) days of the Separation Date (collectively, the “Separation Payment”). Any unvested RSUs and PSUs as of the Separation Date not otherwise accelerated pursuant to the above shall be forfeited and cancelled.
2.1.1 In addition, the Company agrees to (i) pay Executive any earned but unpaid base salary and any accrued but unused vacation through the Separation Date, and (ii) reimbursement for any outstanding, reasonable business expenses incurred by Executive as of the Separation Date.
2.2 Health Benefits. If the Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for the Executive and the Executive’s dependents. Such reimbursement shall be paid to the Executive no later than the 15th day of the month immediately following the month in which the Executive timely remits the premium payment and proof thereof. The Executive shall be eligible to receive such reimbursement for six months post the Separation Date.
2.3 Clawback. Notwithstanding anything to the contrary herein, after the Separation Date Executive will remain subject to the clawback provisions set forth in Section 4.9 of the Employment Agreement if required by law, the regulations of the New York Stock Exchange or the Company’s Clawback Policy.
2.4 Adequacy of Consideration. By signing this Agreement, Executive acknowledges and agrees that absent this Agreement, Executive has no legal entitlement to the Separation Payment provided herein and that such consideration given to Executive represents good and sufficient value for the releases and other agreements by Executive set forth in this Agreement.
2.5 Supplemental Release. Executive understands that Executive will receive the Separation Payment if, and only if, Executive signs and does not revoke this Agreement and complies with its terms, and Executive signs and does not revoke the Supplemental Release in accordance with Section 7. It is expressly understood that, in the event Executive breaches any of the covenants set forth in this Agreement, the Company’s obligations with respect to the Separation Payment shall cease immediately upon such breach, and, upon demand by Company, Executive shall immediately repay to the Company the full amount of any Separation Payment paid by the Company to Executive prior to the date of such breach. Executive understands that the Company will not be required to provide the payment, benefits, and other consideration in this Section 2 (except amounts under Section 2.1.1) until after the date the Supplemental Release becomes irrevocable.
2.6 Taxes. The Separation Payment in Section 2.1 will be subject to usual and customary tax withholdings and deductions (i.e., federal, state, social security, and Medicare taxes). Executive agrees Company has not made any representations to Executive regarding the legal tax consequences of any funds received pursuant to this Agreement. Executive agrees to pay any federal or state taxes remaining due which may be required to be paid with respect to this Agreement and agrees to indemnify and hold Company harmless for any tax liability.
Exhibit 10.1
3. Status of Employment Agreement and Work Requirements.
3.1 Continuation of Duties. From the date of this Agreement through the Separation Date, Executive’s duties will continue as set forth in Section 2.2 of the Employment Agreement and Executive shall continue to devote substantially all of his business time and attention to his duties to the Company as its President and Chief Operating Officer. In addition to existing duties, the Executive agrees that the successful transition of all of his duties and responsibilities to other employees, as directed by the Chief Executive Officer, by the Separation Date is now a critical part of the Executive’s duties.
3.2 Status of Employment Agreement. Except as modified herein, the terms of the Employment Agreement shall remain in full force and effect. To the extent there is any ambiguity between this Agreement and the Employment Agreement, the terms of this Agreement shall apply unless the parties agree otherwise. With respect to Section 5.4 of the Employment Agreement relating the notice of termination, such section shall not apply with respect to the termination of employment on the Separation Date pursuant to this Agreement; provided, however, that such section shall apply in connection with a termination by the Executive prior to the Separation Date.
3.3 Travel. The parties acknowledge that the nature of the Company’s business and Executive’s position and duties require significant travel. Notwithstanding, the Company will endeavor to limit the Executive’s amount of travel to the Company’s Midland office, and will accommodate Executive’s travel schedule so that he will not be required to travel on Sunday. In addition, in order to accommodate Executive, the Chief Executive Officer will endeavor to coordinate with Executive in advance of the Executive’s anticipated travel schedule.
3.4 Non-Compete. The Employee Non-Compete Agreement dated October 9, 2023 and entered into in connection with the Employment Agreement shall remain in effect pursuant to its terms for 12 months after the Separation Date.
3.5 Proprietary Rights. The Employee Proprietary Rights Agreement dated October 9, 2023 and entered into in connection with the Employment Agreement shall remain in effect pursuant to its terms.
3.6 Equity Awards. Executive understands and agrees that Executive has only the equity awards set forth on Exhibit A attached hereto as of the Effective Date as defined in Section 4.7(f) of this Agreement. Executive further understands and agrees that Executive shall not be eligible to receive any additional equity awards under the Employment Agreement or Company’s long-term incentive program or otherwise. Executive’s rights with respect to any equity awards outstanding as of the Separation Date shall be determined in accordance with Section 2.1 above.
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Release of Claims.
4.1 Release by Executive. As further consideration for this Agreement and the payment paid and benefits provided to Executive under this Agreement that Executive is not
Exhibit 10.1
otherwise entitled to (including the Separation Payment), Executive, on his own behalf and on behalf of any of his dependents, heirs, affiliates, successors and assigns, agrees to and hereby does forever, unequivocally and unconditionally waive, abandon, relinquish, release, acquit and forever discharge , the Company, and its affiliated companies, partnerships, and each of their respective present or former affiliates, subsidiaries, directors, officers and partners, employees, agents, attorneys, accountants, and representatives, and their respective successors and assigns (collectively, the “ Company Released Parties”) from any and all rights, claims, liens, contracts, promises, demands, actions, suits, demands, causes of action, charges, obligations, damages, breaches, attorneys’ fees, costs and liabilities of any nature whatsoever, whether or not now known, fixed or contingent, in law or in equity, which Executive has, had, or may claim to have, from the beginning of time through the Effective Date, and without regard to Executive’s present actual knowledge of the act or omission, including but not limited to, any claims, charges, demands, lawsuits, obligations, or causes of action based on, arising from, or relating to Executive’s employment or the conclusion thereof (together, “Released Claims”).
4.2 As used herein, “Released Claims” include any claims, charges, demands, grievances, and/or causes of action under any constitution, local, state, and federal law(s) and including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; 42 U.S.C. § 1981; the Equal Pay Act of 1963; the Family and Medical Leave Act of 1993; the Americans with Disabilities Act of 1990; the National Labor Relations Act; the Age Discrimination in Employment Act of 1967; the Fair Labor Standards Act of 1938; the Pregnant Workers Fairness Act; the Genetic Information Nondiscrimination Act of 2008; the Employee Retirement Income Security Act of 1974; the Health Insurance Portability and Accountability Act; the Occupational and Safety Health Act; all federal and state “whistleblower” statutes; the Uniformed Services Employment and Re-employment Act of 1994; the Sarbanes Oxley Act of 2002; the Fair Credit Reporting Act; the Worker Adjustment and Retraining Notification Act; the Rehabilitation Act of 1973; federal or state securities laws; or arising from any theory under common law including but not limited to breach of contract; express or implied promissory estoppel; wrongful discharge; tortious interference with contract rights; breach of the covenant of good faith and fair dealing; violation of public policy; intentional infliction of emotional distress; fraud or misrepresentation; battery or assault; negligence; negligent hiring or supervision; vicarious liability for the torts of others; invasion of privacy; defamation; or any other employment-related tort.
4.3 Release by the Company. Upon the Separation Date, the Company does hereby release and fully and forever waive and discharge, on its own behalf and on behalf of any of its partners, affiliates, successors and assigns, Executive and each of his present or former affiliates, agents, attorneys, accountants and representatives, and their respective successors and assigns (collectively, the “Executive Released Parties”) from any and all rights, claims, liens, contracts, promises, demands, actions, suits, demands, causes of action, charges, obligations, damages, breaches, attorneys’ fees, costs and liabilities of any nature whatsoever, whether or not now known, fixed or contingent, in law or in equity, which the Company has, had, or may claim to have, from the beginning of time through the Effective Date, and without regard to the Company’s present actual knowledge of the act or omission, including but not limited to, any claims, charges, demands, lawsuits, obligations, or causes of action based on, arising from, or relating to Executive’s employment or the conclusion thereof (together, “Company Released Claims”). Notwithstanding the foregoing, nothing in this Agreement shall be deemed to constitute a release or waiver of any claims that the Company may have against
Exhibit 10.1
any of the Executive Released Parties (i) relating to or arising out of any criminal or fraudulent actions by the Executive Released Parties, (ii) relating to or arising out of any actions or circumstances with respect to which indemnification of Executive would not be permitted under applicable law, (iii) which cannot legally be waived by private agreement; or (iv) which may arise after the date the Company signs this Agreement.
4.4 Other Claims. Executive understands and acknowledges that nothing in this Agreement shall be construed to prohibit Executive from (i) communicating with, filing a charge or complaint with, responding to an inquiry from, participating in an investigation or proceeding conducted by, providing testimony to, or reporting violations of law or regulation to the Securities and Exchange Commission, the Financial Industry Regulation Authority, the National Labor Relations Board, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local governmental authority or agency, including, but not limited to, regarding this Agreement or otherwise, and including providing documents or other information to such agency without notice to Company, (ii) truthfully responding to or complying with a subpoena, court order, or other legal process (a) when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power, or (b) when doing so is necessary to prosecute Executive’s rights against Company or to defend Executive against any allegations, or (iii) exercising any rights Executive may have under applicable labor laws to engage in concerted activity with other employees. For the avoidance of doubt, nothing herein shall limit Executive’s eligibility to receive an award out of monetary sanctions collected by any governmental authority or agency as provided by applicable whistleblower programs. Under the U.S. Defend Trade Secrets Act of 2016, 18 U.S.C. § 1833(b) (the “DTSA”), persons who disclose trade secrets in connection with lawsuits or other proceedings under seal (including lawsuits alleging retaliation), or in confidence to a federal, state or local government official, or attorney, solely for the purpose of reporting or investigating a suspected violation of law, enjoy immunity from civil and criminal liability under state and federal trade secrets laws for such disclosure. Executive acknowledges that Executive has hereby received adequate notice of this immunity and that nothing in this Agreement is intended to conflict with the DTSA or create liability for disclosures of trade secrets that are expressly allowed by the DTSA. “An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal; and does not disclose the trade secret, except pursuant to a court order.”
4.5 Excluded Claims. Excluded from this release are claims which cannot be waived or released as a matter of law, including claims for unemployment and/or workers’ compensation benefits, or any vested benefits earned during the period of Executive’s active employment, if any, under all Company qualified retirement plans, as determined under the official terms of those plans.
Exhibit 10.1
4.6 No Assignment of Claims. Executive and the Company represent and warrant that they have not heretofore assigned or transferred to any person or entity of any kind any matter released herein. To the extent that the release set forth in Sections 4.1 and 4.2 of this Agreement runs in favor of persons or entities not signatory hereto, this Agreement is hereby declared to be made for each of their express benefits and uses.
4.7 Executive’s Release and Waiver of Rights under the Age Discrimination in Employment Act.
(a) Executive expressly certifies and agrees that Executive has read this Agreement and that Executive understands all of its provisions.
(b) Executive recognizes and agrees that under the terms and provisions of this Agreement Executive is releasing and waiving rights Executive may have to pursue, among other potential causes of action, any claims against the Company arising under the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq. (“ADEA”) and that this release and waiver is knowing and voluntary.
(c) Executive agrees and acknowledges that Executive is not waiving or relinquishing any rights or claims Executive may have against the Company that arise under the ADEA after the date this Agreement is executed, and that the consideration given for this release and waiver is in addition to anything of value to which Executive was already entitled.
(d) Executive agrees and acknowledges that, by this Agreement, Executive is advised in writing to consult with an attorney prior to executing the Agreement. Executive certifies that Executive has been given a period of at least twenty-one (21) days to review and consider this Agreement, and to consult with an attorney, accountant, or other advisor before signing the Agreement, and that the actual time Executive has taken for such purposes was adequate for all appropriate consultations. The offers set forth in this Agreement will remain open until 5 p.m. Central Time on [•], 2025, after which the offers made herein are withdrawn if Executive has not signed this Agreement. The Parties agree that Executive may sign this Agreement prior to [•], 2025, if Executive so desires; provided, that if Executive accepts and executes this Agreement, Executive agrees and acknowledges that Executive accepted and executed this Agreement knowingly and voluntarily, without coercion to do so by the Company. The Parties agree that any changes to this Agreement, whether material or immaterial, do not restart the running of the twenty-one (21)-day period.
(e) Executive has seven (7) days following Executive’s execution of this Agreement to revoke the Agreement, and the Agreement will not become effective or enforceable until after this seven (7)-day period has expired. To revoke the Agreement, Executive must advise the Company in writing of Executive’s election to revoke it within the seven (7)-day period by sending a written revocation notice to Justin C. Jacobs, Chief Executive Officer, Natural Gas Services Group, Inc., at 404 Veterans Airpark Lane, Suite 300, Midland, Texas 79705. The effective date of this Agreement shall be the eighth (8th) day after Executive has executed the Agreement (the “Effective Date”), provided that Executive has not revoked the Agreement pursuant to this Section 4.7. This Agreement is intended by the Parties to comply with the terms and provisions of the Older Workers Benefit Protection Act of 1990 (“OWBPA”) and all amendments thereto.
Exhibit 10.1
4.8 No Right to Consideration. Executive agrees and acknowledges that (i) Executive has no right to the consideration specified in this Agreement if Executive revokes this Agreement or the Supplemental Release, and (ii) if any consideration is provided to Executive prior to Executive’s revocation, Executive must promptly return any such consideration to the Company.
5. No Admission. The Company and Executive understand and agree that neither this Agreement nor the consideration referenced herein is to be construed as an admission on the part of the Company Released Parties or the Executive Released Parties, or any of them, of any liability or wrongdoing whatsoever and neither this Agreement nor anything contained herein shall be admissible in any proceeding as evidence of or an admission by the Company Released Parties or the Executive Released Parties, or any of them, of any liability or wrongdoing.
6. Non-Disparagement Covenants. Except for disclosures required under applicable law or in connection with any legal proceedings with respect to which Executive is a party or witness, Executive will not disparage, criticize, or otherwise make any derogatory or damaging remarks or statements regarding the Company. Except for disclosures required under applicable law or in connection with any legal proceedings with respect to which the Company is a party or witness, the Company will not disparage, criticize, or otherwise make any derogatory or damaging remarks or statements regarding Executive. This non-disparagement provision is a material inducement to making this Agreement and if either party breaches this provision, the other party will be entitled to pursue its legal and equitable remedies, including the right to recover damages and to seek injunctive relief. Nothing in this Section 6 will be construed to prevent either party from giving truthful testimony in response to direct questions asked pursuant to a lawful subpoena during any future legal proceedings.
7. Supplemental Release Agreement. As a condition to the Separation Payment, in addition to the other requirements described herein, Executive must execute a supplemental release of claims, in the form attached hereto as Exhibit B, that discharges the Released Parties from any and all claims, liabilities, demands, and causes of action arising on or after the date this Agreement is executed through the date the supplemental release is executed (the “Supplemental Release”). Executive (or, in the case of Executive’s death or disability, Executive’s beneficiaries) shall execute the Supplemental Release no earlier than the Separation Date, but no later than the date that is five (5) business days after the Separation Date. For the avoidance of doubt, Executive (or, in the case of Executive’s death or disability, Executive’s beneficiaries) will not be entitled to the Separation Payment if Executive (or, in the case of Executive’s death or disability, Executive’s beneficiaries) does not execute the Supplemental Release or if Executive revokes the Supplemental Release prior to it becoming irrevocable.
8. Entire Agreement. This Agreement contains the sole and entire agreement and understanding of the Parties with respect to the entire subject matter hereof, and any and all prior discussions, negotiations, commitments or understandings related thereto, if any are hereby merged herein and therein. No representations, oral or otherwise, express or implied, other than those specifically referred to in this Agreement have been made by any party hereto. No other agreements not specifically contained or referenced herein, oral or otherwise, shall be deemed to exist or to bind any of the Parties hereto.
Exhibit 10.1
9. Waiver, Modification and Amendment. No provision hereof may be waived unless in writing signed by all Parties hereto. Waiver of any one provision herein shall not be deemed to be a waiver of any provision herein. This Agreement may be amended or modified only by a written agreement executed by all of the Parties hereto.
10. Binding on Parties. This Agreement, and all the terms and provisions hereof, shall be binding on the Parties and their respective heirs, legal representatives, successors and assigns, and shall inure to the benefit of the Parties and their respective heirs, legal representatives, successors and assigns. The Parties shall defend, indemnify and hold the other Parties harmless from any claim or action brought by any third party related to this Agreement or any claim or matter released herein.
11. No Waiver. Failure to insist on compliance with any term, covenant, or condition contained in this Agreement shall not be deemed a waiver of that term, covenant, or condition, nor shall any waiver or relinquishment of any right or power contained in this Agreement at any one time or more times be deemed a waiver or relinquishment of any right or power at any other time or times.
12. Governing Law, Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of Texas without regard to conflicts of law principles. Any action or proceeding by either of the Parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Texas, county of Midland. The Parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.
13. Severability. Should any portion, word, clause, phrase, sentence or paragraph of this Agreement be declared void or unenforceable, such portion shall be considered independent of and severable from the remainder, the validity of which shall remain unaffected.
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Titles and Captions. Paragraph titles or captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provisions hereof. -
Counterparts. This Agreement may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with the other signed counterparts, shall constitute one agreement, which shall be binding and effective as to the Parties. -
Further Assurances; Cooperation in Litigation. Executive hereby agrees that from time to time at the reasonable request of the Company, and without further consideration, Executive will \(i\) execute and deliver such additional instruments and take such other actions as the Company may reasonably require to carry out the terms of this Agreement, including, without limitation, the execution of a form of intellectual property assignment and inventions agreement confirming and evidencing that Executive has no rights, claim or interest in or to any intellectual property assets used or under development by the Company and that any such rights have been assigned to the Company, \(ii\) cooperate with the Company in connection with preparing for, defending, and testifying in connection with any pending or
Exhibit 10.1
future litigation or other proceeding or dispute between any of the Company and any third party, and (iii) cooperate with the Company in connection with any financial audit of the Company.
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Return of Company Property. Executive agrees to return to the Company all property belonging to it within a reasonable period following the Separation Date. -
Code Section 409A. The intent of the Parties is that payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended \(the “Code”\), and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith to the extent this Agreement is subject to Code Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service, as a short-term deferral, or as a settlement payment pursuant to a bona fide legal dispute shall be excluded from Section 409A to the maximum extent possible. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, all expenses or reimbursements shall be made on or prior to the last day of the taxable year following the taxable year in which they were incurred, and no reimbursement or in-kind benefits provided in any year shall in any way affect those provided in any other year. For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.
EXECUTIVE’S ACKNOWLEDGEMENT OF FULL UNDERSTANDING:
EXECUTIVE ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF EXECUTIVE’S CHOICE BEFORE SIGNING THIS AGREEMENT. EXECUTIVE FURTHER ACKNOWLEDGES THAT EXECUTIVE’S SIGNATURE BELOW IS AN AGREEMENT TO RELEASE THE COMPANY FROM ANY AND ALL CLAIMS.
Exhibit 10.1
IN WITNESS WHEREOF, this Transition and Mutual Separation Agreement has been approved and executed by all Parties and effective as of the latest date below.
NATURAL GAS SERVICES GROUP, INC.
By: /s/Justin C. Jacobs
Name: Justin C. Jacobs
Title: Chief Executive Officer
Date: August 8, 2025
EXECUTIVE
/s/ Brian L. Tucker
Date: August 8, 2025
Exhibit 10.1
EXHIBIT A
Equity Awards Outstanding as of the Effective Date
Restricted Stock Units
| Grant Date | Original Vesting Terms | Total RSUs Granted | Unvested RSUs | Incremental RSUs to Vest |
|---|---|---|---|---|
| 10/09/2023 | 1/3 Increments on each Anniversary Date | 6,361 | 4,241 | 2,249 |
| 3/04/2024 | 1/3 Increments on each Anniversary Date | 11,293 | 7,529 | 2,486 |
| 3/13/2025 | 1/3 Increments on each Anniversary Date | 9,014 | 9,014 | 1,909 |
Performance Stock Units
| Grant Date | Original Vesting Terms | Target PSUs Granted | Unvested PSUs | Incremental PSUs to Vest |
|---|---|---|---|---|
| 3/4/2024 | 3 Years Based on TSR | 11,293 | 11,293 | 6,250 |
| 3/13/2025 | 3 Years Based on TSR | 9,014 | 9,014 | 1,910 |
Notes:
•Incremental RSUs and PSUs to Vest are based on an assumed Separation Date of 10/31/2025. If the Separation Date is extended beyond this date, the numbers will be recalculated based on the new date.
•All figures above as of date of this Agreement.
Exhibit 10.1
Exhibit B
Supplemental Release
[attached hereto]
Document
Exhibit 99.1
| FOR IMMEDIATE RELEASE | NEWS |
|---|---|
| August 11, 2025 | NYSE: NGS |
Natural Gas Services Group, Inc.
Reports Second Quarter 2025 Financial and Operating Results;
Increases 2025 Adjusted EBITDA Guidance
MIDLAND, Texas August 11, 2025 (GLOBE NEWSWIRE) Natural Gas Services Group, Inc. (“NGS” or the “Company”) (NYSE:NGS), a leading provider of natural gas compression equipment, technology, and services to the energy industry, today announced financial results for the three months ended June 30, 2025. The Company also provided updated guidance today, increasing both the low- and high-end of its full-year 2025 Adjusted EBITDA guidance to $76 - $80 million (from $74 - $79 million), citing continued strength in its business and contracted large horsepower unit deployments in the second half of 2025.
Second Quarter 2025 and Recent Highlights
•Rental revenue of $39.6 million for the second quarter of 2025 representing a 13.3% year-over-year increase and a 1.7% sequential increase compared to the period ended March 31, 2025.
•Net income of $5.2 million, or $0.41 per diluted share, for the second quarter of 2025 compared to net income of $4.3 million or $0.34 per diluted share for the comparable period; net income up $0.3 million or 6.9% sequentially.
•Adjusted EBITDA of $19.7 million for the second quarter of 2025, representing a 19.5% year-over-year increase and up 1.9% sequentially. See Non-GAAP Financial Measures – Adjusted EBITDA, below.
•Leverage ratio at June 30, 2025, was 2.31x.
•Initiated first quarterly cash dividend of $0.10 per share and authorized a share repurchase program of up to $6 million, underscoring confidence in cash generation and a disciplined capital allocation strategy.
Management Commentary and Outlook
“We delivered another record-setting quarter, reflecting the strength of our technology, our high level of service to customers, and our operational discipline,” said Justin Jacobs, Chief Executive Officer. “Utilized rental horsepower reached an all-time high of 499,000. Adjusted EBITDA was a record $19.7 million in the second quarter which brings first-half Adjusted EBITDA to $39.0 million. We are deploying large-horsepower gas engine and electric motor units in key basins, and we are increasingly seeing opportunities to displace our competitors. While news around tariffs, commodity volatility, and broader macro uncertainty remain top of mind, we continue to see healthy demand for compression and our services.”
“In light of our first-half performance and the scheduled deployment of large-horsepower units in the second half of the year, we are raising our full-year 2025 Adjusted EBITDA guidance to $76 - $80 million,” said Jacobs. “We expect continued momentum through 2025 and into 2026, driven by new large horsepower unit sets.”
Jacobs added, “Our confidence in the business and its trajectory led to the initiation of a quarterly dividend and the authorization of a share repurchase program. We are starting the dividend at a modest level as we are deploying relatively more capital into new units than our peers in 2025, and we expect that trend to continue in 2026. At the same time, we are maintaining flexibility to pursue both organic growth and accretive M&A opportunities.”
“Our financial position remains a competitive strength. With the lowest leverage among public peers — 2.31x at quarter-end — and a demonstrated ability to monetize non-cash assets, we believe we are well positioned to capitalize on strategic opportunities.”
Exhibit 99.1
Corporate Guidance — 2025 Outlook
Driven by strong first-half results, contractual large horsepower additions, and continued confidence in our ability to execute our strategy, the Company raises its full-year 2025 Adjusted EBITDA guidance to $76 - $80 million.
The Company expects 2025 growth capital expenditures of $95 - $115 million, the vast preponderance of which consists of new units under contract. Furthermore, we invest capital in new units only when we have a multi-year contract. The revision incorporates clearer timing for growth capex in the second half of 2025 and early 2026 tied to the deployment of approximately 90,000 horsepower. Customer deployments remain on schedule and the timing of deployments as previously noted is heavily weighted to the second half of 2025 and early 2026 as reflected by year-to-date capital expenditures. Additionally, the Company anticipates 2025 maintenance expenditures of $11 - $14 million and its target return on invested capital of 20% remains unchanged.
| Outlook | |
|---|---|
| NEW FY 2025 Adjusted EBITDA | $76 million - $80 million |
| FY 2025 Growth Capital Expenditures | $95 million - $115 million |
| FY 2025 Maintenance Capital Expenditures | $11 million - $14 million |
| Target Return on Invested Capital | At least 20% |
Jacobs concluded, “We remain focused on operational excellence, disciplined capital allocation, and creating long-term value for our shareholders. With strong contracted growth, robust rental demand, and a flexible capital framework, we are confident in our ability to drive sustained performance through the remainder of 2025 and beyond.”
Subsequent Events - 2025 Third Quarter
On July 30, 2025, our Board of Directors declared a cash dividend of $0.10 per share to stockholders of record as of August 8, 2025 expected to be paid on August 22, 2025.
On August 5, 2025, Brian Tucker, NGS management, and the Board reached the difficult decision that Mr. Tucker will transition out of his role as President and Chief Operating Officer. This was driven solely by an unfortunate and unexpected family loss which changed Mr. Tucker's personal circumstances. His transition will take place over the next several months with a target end date of October 31, 2025. Mr. Tucker remains fully committed to NGS during this time and beyond, if necessary. The Board and NGS management want to acknowledge not only the many significant contributions Brian has made to the success of the Company, but also the tremendous strength and dedication he has shown while facing an unexpected and profound personal challenge. We are deeply grateful for his leadership, his sacrifice, and the legacy he helped create.
On August 8, 2025, our Board of Directors approved a share repurchase program (the “Repurchase Plan”). The Repurchase Plan provides for the repurchase of shares of our common stock from time to time in the open market as conditions, cash reserves, cash flows and the evaluation of uses of cash for operations, growth and share repurchase may allow. The Repurchase Plan is authorized for up to $6 million and expires on August 6, 2027.
2025 Second Quarter Financial Results
Revenue: Total revenue for the three months ended June 30, 2025, increased 7.5% to $41.4 million from $38.5 million for the three months ended June 30, 2024. This increase was solely attributable to higher rental revenues for the comparable periods. Rental revenue increased 13.3% to $39.6 million from $34.9 million in the second quarter of 2024 due to the addition of higher horsepower packages and pricing improvements. As of June 30, 2025, we had 498,651 rented horsepower (1,198 utilized units) compared to 454,568 horsepower (1,242 utilized units) as of June 30, 2024, reflecting a 9.7% increase in total utilized horsepower.
Gross Margins and Adjusted Gross Margins: Total gross margins, including depreciation expense increased to $15.4 million for the three months ended June 30, 2025, compared to $13.4 million for the same period in 2024 and decreased on a sequential basis from $15.7 million for the three months ended March 31, 2025. Total adjusted gross margin, exclusive of depreciation expense, increased to $24.2 million for the three months ended June 30, 2025, compared to $21.0 million for the same period in 2024. For a reconciliation of Gross Margin, see Non-GAAP Financial Measures – Adjusted Gross Margin, below.
Operating Income: Operating income for the three months ended June 30, 2025, was $9.9 million compared to operating income of $8.5 million for the comparable 2024 period. On a sequential basis, operating income increased $0.4 million compared to $9.5 million for the period ended March 31, 2025.
Exhibit 99.1
Net Income: Net income for the three months ended June 30, 2025, was $5.2 million, or $0.41 per diluted share, compared to net income of $4.3 million, or $0.34 per diluted share, for the comparable 2024 period. On a sequential basis, net income increased $0.3 million when compared to net income of $4.9 million, or $0.38 per diluted share, in the first quarter of 2025. The significant year-over-year increase in net income was driven by the material increase in rental revenue and the associated gross margin impact, partially offset by higher selling, general and administrative expense and rental equipment depreciation. The sequential improvement in net income was primarily driven by the retirement of primarily small horsepower rental equipment in the first quarter, partially offset by higher rental depreciation in the second quarter.
Cash Flows: As of June 30, 2025, cash and cash equivalents were $0.3 million, while working capital was $24.1 million. For the three months ended June 30, 2025, cash flows provided by operating activities were $11.0 million, while cash flows used in investing activities was $25.7 million. This compares to cash flows from operating activities of $25.5 million and cash flows used in investing activities of $16.9 million for the comparable three-month period in 2024. Cash flow used in investing activities during the second quarter of 2025 included $25.8 million in capital expenditures.
Adjusted EBITDA: Adjusted EBITDA increased 19.5% to $19.7 million for the three months ended June 30, 2025, from $16.5 million for the same period in 2024. The increase was primarily attributable to higher rental revenue and rental adjusted gross margin. Sequentially, Adjusted EBITDA increased 1.9% when compared to $19.3 million for the three months ended March 31, 2025.
Debt: Outstanding debt on our revolving credit facility as of June 30, 2025, was $182.0 million. Our leverage ratio as of June 30, 2025, was 2.31x and our fixed charge coverage ratio was 3.04x. The Company is in compliance with all terms, conditions and covenants of the credit agreement.
Selected data: The tables below show revenue by product line, gross margin and adjusted gross margin for the trailing five quarters. Adjusted gross margin is the difference between revenue and cost of sales, exclusive of depreciation.
| Revenues | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | ||||||||||
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||
| (in thousands) | ||||||||||
| Rental | $ | 34,926 | $ | 37,350 | $ | 38,226 | $ | 38,910 | $ | 39,580 |
| Sales | 2,270 | 1,843 | 997 | 1,927 | 750 | |||||
| Aftermarket services | 1,295 | 1,493 | 1,435 | 546 | 1,052 | |||||
| Total | $ | 38,491 | $ | 40,686 | $ | 40,658 | $ | 41,383 | $ | 41,382 |
| Gross Margin | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three months ended | ||||||||||
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||
| (in thousands) | ||||||||||
| Rental | $ | 13,211 | $ | 15,043 | $ | 14,865 | $ | 15,634 | $ | 15,294 |
| Sales | (50) | (258) | (531) | (181) | (254) | |||||
| Aftermarket services | 269 | 151 | 296 | 264 | 310 | |||||
| Total | $ | 13,430 | $ | 14,936 | $ | 14,630 | $ | 15,717 | $ | 15,350 |
Exhibit 99.1
| Adjusted Gross Margin (1) | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended | ||||||||||||||||||||||
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Rental | $ | 20,698 | $ | 22,908 | $ | 23,107 | $ | 24,070 | $ | 24,052 | ||||||||||||
| Sales | 21 | (185) | (449) | (89) | (161) | |||||||||||||||||
| Aftermarket services | 283 | 169 | 321 | 275 | 332 | |||||||||||||||||
| Total | $ | 21,002 | $ | 22,892 | $ | 22,979 | $ | 24,256 | $ | 24,223 | Adjusted Gross Margin % | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Three months ended | ||||||||||||||||||||||
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||||||||||||||
| Rental | 59.3 | % | 61.3 | % | 60.4 | % | 61.9 | % | 60.8 | % | ||||||||||||
| Sales | 0.9 | % | (10.0) | % | (45.0) | % | (4.6) | % | (21.5) | % | ||||||||||||
| Aftermarket services | 21.9 | % | 11.3 | % | 22.4 | % | 50.4 | % | 31.6 | % | ||||||||||||
| Total | 54.6 | % | 56.3 | % | 56.5 | % | 58.6 | % | 58.5 | % | Compression Statistics (at end of period): | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Three months ended | ||||||||||||||||||||||
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||||||||||||||
| Horsepower Utilized | 454,568 | 475,534 | 491,756 | 492,679 | 498,651 | |||||||||||||||||
| Total Horsepower | 552,599 | 579,699 | 598,840 | 603,391 | 596,322 | |||||||||||||||||
| Horsepower Utilization | 82.3 | % | 82.0 | % | 82.1 | % | 81.7 | % | 83.6 | % | ||||||||||||
| Units Utilized | 1,242 | 1,229 | 1,208 | 1,202 | 1,198 | |||||||||||||||||
| Total Units | 1,899 | 1,909 | 1,912 | 1,916 | 1,833 | |||||||||||||||||
| Unit Utilization | 65.4 | % | 64.4 | % | 63.2 | % | 62.7 | % | 65.4 | % |
(1) For a reconciliation of adjusted gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measures - Adjusted Gross Margin” below.
Exhibit 99.1
Non-GAAP Financial Measure - Adjusted Gross Margin: “Adjusted Gross Margin” is defined as total revenue less costs of revenues (excluding depreciation and amortization expense). Adjusted Gross Margin is included as a supplemental disclosure because it is a primary measure used by our management as it represents the results of revenue and costs (excluding depreciation and amortization expense), which are key components of our operations. Adjusted Gross Margin differs from gross margin, in that gross margin includes depreciation and amortization expense. We believe Adjusted Gross Margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations. Depreciation and amortization expense does not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs from current operating activity. Rather, depreciation and amortization expense reflects the systematic allocation of historical property and equipment costs over their estimated useful lives.
Adjusted Gross Margin has certain material limitations associated with its use as compared to gross margin. These limitations are primarily due to the exclusion of depreciation and amortization expense, which is material to our results of operations. Because we use capital assets, depreciation and amortization expense is a necessary element of our costs and our ability to generate revenue. In order to compensate for these limitations, management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of our performance. As an indicator of our operating performance, Adjusted Gross Margin should not be considered an alternative to, or more meaningful than, gross margin as determined in accordance with GAAP. Our Adjusted Gross Margin may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted Gross Margin in the same manner.
The following table shows gross margin, the most directly comparable GAAP financial measure, and reconciles it to Adjusted Gross Margin:
| Three months ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||
| (in thousands) | ||||||||||
| Total revenue | $ | 38,491 | $ | 40,686 | $ | 40,658 | $ | 41,383 | $ | 41,382 |
| Costs of revenue, exclusive of depreciation | (17,489) | (17,794) | (17,679) | (17,127) | (17,159) | |||||
| Depreciation allocable to costs of revenue | (7,572) | (7,956) | (8,349) | (8,539) | (8,873) | |||||
| Gross margin | 13,430 | 14,936 | 14,630 | 15,717 | 15,350 | |||||
| Depreciation allocable to costs of revenue | 7,572 | 7,956 | 8,349 | 8,539 | 8,873 | |||||
| Adjusted Gross Margin | $ | 21,002 | $ | 22,892 | $ | 22,979 | $ | 24,256 | $ | 24,223 |
Non-GAAP Financial Measures - Adjusted EBITDA: “Adjusted EBITDA” is a non-GAAP financial measure that we define as net income (loss) before interest, taxes, depreciation and amortization, as well as an increase in inventory allowance, impairments, retirement of rental equipment, nonrecurring restructuring charges including severance 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 or loss, 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: (i) it is widely used by investors in the energy industry to measure a company’s operating performance without regard to items excluded from the calculation of Adjusted EBITDA, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; (ii) it helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating structure; (iii) it is used by our management for various purposes, including as a measure of operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows: (i) Adjusted EBITDA does not reflect all our cash expenditures, future requirements for capital expenditures, or contractual commitments; (ii) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (iii) Adjusted EBITDA does not reflect the cash requirements necessary to service interest or principal payments on our debt and finance leases; and (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any capital expenditures for such replacements.
Exhibit 99.1
The following table reconciles our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
| Three months ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | ||||||
| (in thousands) | ||||||||||
| Net income | $ | 4,250 | $ | 5,014 | $ | 2,865 | $ | 4,854 | $ | 5,188 |
| Interest expense | 2,932 | 3,045 | 3,015 | 3,170 | 3,243 | |||||
| Income tax expense (benefit) | 1,294 | 1,383 | 283 | 1,482 | 1,597 | |||||
| Depreciation and amortization | 7,705 | 8,086 | 8,469 | 8,636 | 8,969 | |||||
| Impairments | — | 136 | 705 | — | — | |||||
| Inventory allowance | — | — | 1,863 | 61 | — | |||||
| Retirement of rental equipment | — | — | 23 | 728 | — | |||||
| Severance and restructuring charges | 33 | — | — | — | 89 | |||||
| Stock-based compensation | 242 | 522 | 783 | 359 | 579 | |||||
| Adjusted EBITDA | $ | 16,456 | $ | 18,186 | $ | 18,006 | $ | 19,290 | $ | 19,665 |
Conference Call Details: The Company will host a conference call to review its fourth-quarter and year-end financial results on Tuesday, August 12, 2025 at 8:30 a.m. (EST), 7:30 a.m. (CST). To join the conference call, kindly access the Investor Relations section of our website at www.ngsgi.com or dial in at (800) 550-9745 and enter conference ID 167298 at least five minutes prior to the scheduled start time. Please note that using the provided dial-in number is necessary for participation in the Q&A section of the call. A recording of the conference will be made available on our Company's website following its conclusion. Thank you for your interest in our Company's updates.
About Natural Gas Services Group, Inc. (NGS): Natural Gas Services Group is a leading provider of natural gas compression equipment, technology and services to the energy industry. The Company designs, rents, sells and maintains natural gas compressors for oil and natural gas production and plant facilities, primarily using equipment from third-party fabricators and OEM suppliers along with limited in-house assembly. The Company is headquartered in Midland, Texas, with a fabrication facility located in Tulsa, Oklahoma, and service facilities located in major oil and natural gas producing basins in the U.S. Additional information can be found at www.ngsgi.com.
Exhibit 99.1
Forward-Looking Statements
Certain statements herein (and oral statements made regarding the subjects of this release) constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions.
These forward–looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of the Company. Forward–looking information includes, but is not limited to statements regarding: guidance or estimates related to EBITDA growth, projected capital expenditures; returns on invested capital, fundamentals of the compression industry and related oil and gas industry, valuations, compressor demand assumptions and overall industry outlook, and the ability of the Company to capitalize on any potential opportunities.
While the Company believes that the assumptions concerning future events are reasonable, investors are cautioned that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Some of these factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to:
•conditions in the oil and gas industry, including the supply and demand for oil and gas and volatility in the prices of oil and gas;
•changes in general economic and financial conditions, inflationary pressures, the potential for economic recession in the U.S., tariffs and trade restrictions, including the imposition of new and higher tariffs on imported goods and retaliatory tariffs implemented by other countries on U.S. goods, and the potential effects on our financial condition, results of operations and cash flows;
•our reliance on major customers;
•failure of projected organic growth due to adverse changes in the oil and gas industry, including depressed oil and gas prices, oppressive environmental regulations and competition;
•our inability to achieve increased utilization of assets, including rental fleet utilization and monetizing other non-cash balance sheet assets;
•failure of our customers to continue to rent equipment after expiration of the primary rental term;
•our ability to economically develop and deploy new technologies and services, including technology to comply with health and environmental laws and regulations;
•failure to achieve accretive financial results in connection with any acquisitions we may make;
•fluctuations in interest rates;
•changes in regulation or prohibition of new or current well completion techniques;
•competition among the various providers of compression services and products;
•changes in safety, health and environmental regulations;
•changes in economic or political conditions in the markets in which we operate;
•the inherent risks associated with our operations, such as equipment defects, malfunctions, natural disasters and adverse changes in customer, employee and supplier relationships;
•our inability to comply with covenants in our debt agreements and the decreased financial flexibility associated with our debt;
•inability to finance our future capital requirements and availability of financing;
•capacity availability, costs and performance of our outsourced compressor fabrication providers and overall inflationary pressures;
•impacts of world events, such as acts of terrorism and significant economic disruptions and adverse consequences resulting from possible long-term effects of potential pandemics and other public health crises; and
•general economic conditions.
In addition, these forward-looking statements are subject to other various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.
For More Information, Contact:
Anna Delgado, Investor Relations
(432) 262-2700
IR@ngsgi.com
www.ngsgi.com
Exhibit 99.1
| NATURAL GAS SERVICES GROUP, INC.<br><br>CONDENSED CONSOLIDATED BALANCE SHEETS<br><br>(in thousands, except par value)<br><br>(unaudited) | ||||
|---|---|---|---|---|
| June 30, <br>2025 | December 31, 2024 | |||
| ASSETS | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $ | 325 | $ | 2,142 |
| Trade accounts receivable, net of provision for credit losses | 13,742 | 15,626 | ||
| Inventory, net of allowance for obsolescence | 18,334 | 18,051 | ||
| Federal income tax receivable | 11,408 | 11,282 | ||
| Prepaid expenses and other | 2,846 | 1,075 | ||
| Assets held for sale | 2,227 | — | ||
| Total current assets | 48,882 | 48,176 | ||
| Long-term inventory, net of allowance for obsolescence | — | — | ||
| Rental equipment, net of accumulated depreciation | 446,952 | 415,021 | ||
| Property and equipment, net of accumulated depreciation | 22,664 | 22,989 | ||
| Other assets | 7,028 | 6,342 | ||
| Total assets | $ | 525,526 | $ | 492,528 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current Liabilities: | ||||
| Accounts payable | $ | 14,491 | $ | 9,670 |
| Accrued liabilities | 10,297 | 7,688 | ||
| Total current liabilities | 24,788 | 17,358 | ||
| Long-term debt | 182,000 | 170,000 | ||
| Deferred income taxes | 48,884 | 45,873 | ||
| Other long-term liabilities | 3,640 | 4,240 | ||
| Total liabilities | 259,312 | 237,471 | ||
| Commitments and contingencies | ||||
| Stockholders’ Equity: | ||||
| Preferred stock | — | — | ||
| Common stock, 30,000 shares authorized, par value $0.01; 13,811 and 13,762 shares issued, respectively | 138 | 138 | ||
| Additional paid-in capital | 119,530 | 118,415 | ||
| Retained earnings | 161,550 | 151,508 | ||
| Treasury shares, at cost, 1,310 shares for each of the dates presented, respectively | (15,004) | (15,004) | ||
| Total stockholders’ equity | 266,214 | 255,057 | ||
| Total liabilities and stockholders’ equity | $ | 525,526 | $ | 492,528 |
Exhibit 99.1
| NATURAL GAS SERVICES GROUP, INC.<br><br>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS<br><br>(in thousands, except earnings per share)<br><br>(unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three months ended | Six months ended | |||||||
| June 30, | June 30, | |||||||
| 2025 | 2024 | 2025 | 2024 | |||||
| Revenue: | ||||||||
| Rental | $ | 39,580 | $ | 34,926 | $ | 78,490 | $ | 68,660 |
| Sales | 750 | 2,270 | 2,677 | 4,773 | ||||
| Aftermarket services | 1,052 | 1,295 | 1,598 | 1,965 | ||||
| Total revenue | 41,382 | 38,491 | 82,765 | 75,398 | ||||
| Cost of revenue (excluding depreciation and amortization): | ||||||||
| Rental | 15,528 | 14,228 | 30,368 | 27,342 | ||||
| Sales | 911 | 2,249 | 2,927 | 4,429 | ||||
| Aftermarket services | 720 | 1,012 | 991 | 1,512 | ||||
| Total cost of revenues (excluding depreciation and amortization) | 17,159 | 17,489 | 34,286 | 33,283 | ||||
| Selling, general and administrative expense | 5,454 | 5,020 | 10,832 | 9,722 | ||||
| Depreciation and amortization | 8,969 | 7,705 | 17,605 | 14,792 | ||||
| Inventory allowance | — | — | 61 | — | ||||
| Retirement of rental equipment | — | — | 728 | 5 | ||||
| Gain on disposition of assets, net | (124) | (229) | (178) | (229) | ||||
| Total operating costs and expenses | 31,458 | 29,985 | 63,334 | 57,573 | ||||
| Operating income | 9,924 | 8,506 | 19,431 | 17,825 | ||||
| Other income (expense): | ||||||||
| Interest expense | (3,243) | (2,932) | (6,413) | (5,867) | ||||
| Other income (expense) | 104 | (30) | 103 | 163 | ||||
| Total other income (expense), net | (3,139) | (2,962) | (6,310) | (5,704) | ||||
| Income before income taxes | 6,785 | 5,544 | 13,121 | 12,121 | ||||
| Provision for income taxes | (1,597) | (1,294) | (3,079) | (2,773) | ||||
| Net income | $ | 5,188 | $ | 4,250 | $ | 10,042 | $ | 9,348 |
| Earnings per share: | ||||||||
| Basic | $ | 0.42 | $ | 0.34 | $ | 0.81 | $ | 0.75 |
| Diluted | $ | 0.41 | $ | 0.34 | $ | 0.80 | $ | 0.75 |
| Weighted average shares outstanding: | ||||||||
| Basic | 12,483 | 12,384 | 12,473 | 12,392 | ||||
| Diluted | 12,625 | 12,483 | 12,629 | 12,484 |
Exhibit 99.1
| NATURAL GAS SERVICES GROUP, INC.<br><br>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<br><br>(in thousands)<br><br>(unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three months ended | Six months ended | |||||||
| June 30, | June 30, | |||||||
| 2025 | 2024 | 2025 | 2024 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 5,188 | $ | 4,250 | $ | 10,042 | $ | 9,348 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 8,969 | 7,705 | 17,605 | 14,792 | ||||
| Inventory allowance | — | — | 61 | — | ||||
| Retirement of rental equipment | — | — | 728 | 5 | ||||
| Gain on disposition of assets, net | (124) | (229) | (178) | (229) | ||||
| Amortization of debt issuance costs | 294 | 165 | 506 | 315 | ||||
| Deferred income taxes | 1,561 | 1,198 | 3,011 | 2,654 | ||||
| Stock-based compensation | 579 | 242 | 938 | 516 | ||||
| Provision for credit losses | — | 177 | 208 | 287 | ||||
| Gain on company owned life insurance | (34) | 11 | (17) | (173) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivables | 1,673 | 9,163 | 1,676 | 5,898 | ||||
| Inventory | (991) | (1,501) | (344) | 1,149 | ||||
| Prepaid expenses and prepaid income taxes | (1,961) | (1,075) | (1,897) | (825) | ||||
| Accounts payable and accrued liabilities | (4,104) | 5,387 | 513 | (2,993) | ||||
| Other | (54) | 17 | (589) | 375 | ||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 10,996 | 25,510 | 32,263 | 31,119 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of rental equipment, property and other equipment | (25,809) | (17,330) | (45,065) | (28,262) | ||||
| Purchase of company owned life insurance | — | (8) | — | (17) | ||||
| Proceeds received from insurance for damages to equipment | 99 | — | 99 | — | ||||
| Proceeds from disposition of assets, net | 4 | 355 | 4 | 355 | ||||
| Proceeds from surrender of company owned life insurance | — | 43 | — | 43 | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (25,706) | (16,940) | (44,962) | (27,881) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from credit facility borrowings | 17,122 | — | 23,122 | 8,000 | ||||
| Repayments of credit facility borrowings | (3,122) | (9,000) | (11,122) | (9,000) | ||||
| Payments of other long-term liabilities | — | (210) | — | (385) | ||||
| Payments of debt issuance costs | (1,187) | (885) | (1,187) | (885) | ||||
| Proceeds from exercise of stock options | 75 | — | 75 | — | ||||
| Taxes paid related to net share settlement of equity awards | — | (98) | (6) | (98) | ||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 12,888 | (10,193) | 10,882 | (2,368) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,822) | (1,623) | (1,817) | 870 | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,147 | 5,239 | 2,142 | 2,746 | ||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 325 | $ | 3,616 | $ | 325 | $ | 3,616 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | 3,527 | $ | 4,238 | $ | 7,037 | $ | 10,458 |
| Income taxes paid | $ | — | $ | — | $ | 16 | $ | — |
| NON-CASH TRANSACTIONS: | ||||||||
| Accrued purchases of property and equipment | $ | 6,730 | $ | — | $ | 7,254 | $ | — |
| Right of use assets acquired through an finance lease | $ | — | $ | 1,219 | $ | — | $ | 1,751 |
10