Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Form 10-Q and in conjunction with our 2025 Form 10-K.

OVERVIEW

We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way. We are a premier provider of natural gas compression services, in terms of total compression fleet horsepower, to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. Our business supports a must-run service that is essential to the production, processing, transportation and storage of natural gas.

We operate in two business segments: contract operations and aftermarket services. Our contract operations business primarily includes designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers. Our aftermarket services business provides a full range of services to support the compression needs of our customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components.

Significant 2026 Transactions

2028 Notes Redemption

On April 1, 2026, we repurchased our 2028 Notes. The 2028 Notes were redeemed at 100% of their $800.0 million aggregate principal amount plus accrued and unpaid interest of approximately $25.0 million with borrowings under the Credit Facility. We recorded a debt extinguishment gain of $0.7 million during the second quarter of 2026 due to the write-off of unamortized debt premium of $4.0 million, which was partially offset by the write-off of unamortized debt issuance costs of $3.3 million. See Note 10 ("Long-Term Debt") for further details.

2034 Notes

On January 21, 2026, we completed a private offering of $800.0 million aggregate principal amount of 6.0% senior notes due 2034 and received net proceeds of $789.4 million after deducting issuance costs. In January 2026, the approximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statements of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under our Credit Facility. See Note 10 ("Long-Term Debt") for further details.

Operating Highlights

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Non-GAAP Financial Measures

Management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measure of adjusted gross margin.

We define adjusted gross margin as total revenue less cost of sales, exclusive of depreciation and amortization. Adjusted gross margin is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales, exclusive of depreciation and amortization, which are key components of our operations. 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, the indirect costs associated with our SG&A activities, our financing methods and income taxes. In addition, depreciation and amortization may not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs of current operating activity. As an indicator of our operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, net income or any other measure presented in accordance with GAAP. Our adjusted gross margin may not be comparable to a similarly titled measure of other entities because other entities may not calculate adjusted gross margin in the same manner.

Adjusted gross margin has certain material limitations associated with its use as compared to net income. These limitations are primarily due to the exclusion of SG&A, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, interest expense, transaction-related costs, gain on sale of assets, net, other (income) expense, net, provision for income taxes and equity in net loss of unconsolidated affiliate. Because we intend to finance a portion of our operations through borrowings, interest expense is a necessary element of our costs and our ability to generate revenue. Additionally, because we use capital assets, depreciation expense is a necessary element of our costs and our ability to generate revenue, and SG&A is necessary to support our operations and required corporate activities. 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.

The following table reconciles net income to adjusted gross margin:

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The following table reconciles gross margin, the most directly comparable GAAP measure, to adjusted gross margin:

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RESULTS OF OPERATIONS

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Summary of Results

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Revenue was $370.8 million and $382.4 million during the three months ended September 30, 2026 and 2025, respectively. The decrease was primarily driven by decreased revenue from our aftermarket services business, partially offset by increased revenue from our contract operations business. See "Contract Operations" and "Aftermarket Services" below for further details.

Revenue was $1,115.8 million and $1,112.7 million during the nine months ended September 30, 2026 and 2025, respectively. The increase was primarily driven by increased revenue from our contract operations business, partially offset by decreased revenue from our aftermarket services business. See "Contract Operations" and "Aftermarket Services" below for further details.

Net income was $84.5 million and $71.2 million during the three months ended September 30, 2026 and 2025, respectively. The increase was primarily driven by decreases in SG&A and interest expense, as well as a change to other income, net in the three months ended September 30, 2026 from other expense, net in the three months ended September 30, 2025. These decreases were partially offset by an increase in depreciation and amortization, as well as lower adjusted gross margin from our aftermarket services business.

Net income was $225.0 million and $205.5 million during the nine months ended September 30, 2026 and 2025, respectively. The increase was primarily driven by higher adjusted gross margin from our contract operations business and a change to other income, net in the nine months ended September 30, 2026 from other expense, net in the nine months ended September 30, 2025, as well as decreases in transaction-related costs, interest expense and long-lived and other asset impairment. These decreases were partially offset by increases in depreciation and amortization and provision for income taxes, as well as lower adjusted gross margin from our aftermarket services business and a decrease in gain on sale of assts, net.

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Contract Operations

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Revenue in our contract operations business increased approximately $4.9 million primarily due to higher rates, partially offset by sales of active horsepower.

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The increase in cost of sales, exclusive of depreciation and amortization was primarily due to a net increase of $8.2 million in non-income taxes due to a $9.9 million net benefit recorded during the three months ended September 30, 2025 as a result of certain sales and use tax audit settlements, partially offset by a decrease in non-income tax expense for the three months ended September 30, 2026, as well as an increase of $2.3 million in make-ready costs to put idle compression equipment back to work, and an increase of $0.9 million in lube oil expenses due to higher prices, partially offset by a reduction in volumes purchased. These increases were partially offset by a decrease of $3.7 million in parts expense due to lower service activity levels, and a decrease of $3.0 million in employee compensation and benefits expense. We continue to anticipate lube oil cost pressure in the fourth quarter of 2026.

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The decreases in adjusted gross margin and adjusted gross margin percentage were mainly driven by an increase in cost of sales, exclusive of depreciation and amortization that outpaced revenue growth.

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Aftermarket Services

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Revenue in our aftermarket services business decreased primarily due to reduced customer demand for major maintenance service activity, as well as lower parts sales.

The decrease in cost of sales, exclusive of depreciation and amortization, was primarily driven by decreased service activity, including differences in the scope, timing and type of services performed.

The decrease in adjusted gross margin was mainly driven by a decrease in revenue that slightly outpaced the decrease in cost of sales, exclusive of depreciation and amortization.

Costs and Expenses

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Selling, general and administrative. SG&A decreased for the three months ended September 30, 2026 primarily due to lower long-term incentive compensation expense, including a $7.0 million decrease in cash-settled incentive compensation expense as a result of changes in our stock price and a $3.4 million decrease in cash-settled incentive compensation expense pursuant to executive retention and certain other executive agreements, as well as a $2.9 million decrease in employee compensation and benefits expense. These decreases were partially offset by a $1.1 million increase in professional fees.

Depreciation and amortization. Depreciation and amortization increased primarily due to fixed assets additions, including depreciation associated with capital expenditures for compression units and transportation assets. This increase was partially offset by a decrease in depreciation associated with assets reaching the end of their depreciable lives as well as compression and other asset sales.

Long-lived and other asset impairment. The decrease in long-lived and other asset impairment was primarily due to the $0.9 million write-down of assets held for sale to estimated fair value less costs to sell recorded during the three months ended September 30, 2025, as well as a decrease of $0.6 million in compression fleet impairment.

Compression Fleet

We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. We also evaluate for impairment our idle units that have been culled from our compression fleet in prior years and are available for sale. The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment:

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Assets Held For Sale

In connection with the classification of the disposal group as assets held for sale as of June 30, 2025, we adjusted the carrying value of the disposal group to its estimated fair value less costs to sell and recorded a write-down of $0.9 million during the three months ended September 30, 2025, which is included in long-lived and other asset impairment in our condensed consolidated statements of operations. See Note 3 ("Business Transactions") for further details.

Restructuring charges. Restructuring charges of $0.7 million during the three months ended September 30, 2025 consisted of property disposal and closure costs. See Note 15 ("Restructuring Charges") for further details.

Interest expense. Interest expense decreased for the three months ended September 30, 2026, primarily due to a decrease in the average outstanding balance of long-term debt, as well as a decrease in the weighted-average effective interest rate.

Transaction-related costs. We incurred professional fees, compensation and other costs related to the NGCS Acquisition during the three months ended September 30, 2026 and 2025 of $0.1 million and $1.1 million, respectively. We incurred compensation and other costs related to the TOPS Acquisition during the three months ended September 30, 2026 and 2025 of $0.1 million and $0.7 million, respectively. See Note 3 ("Business Transactions") for further details on the NGCS Acquisition.

Gain on sale of assets, net. Gain on sale of assets, net decreased for the three months ended September 30, 2026, primarily due to gains of $1.2 million and $0.9 million on compression and other asset sales, respectively, compared to gains of $3.1 million and $0.7 million on compression and other asset sales, respectively, during the three months ended September 30, 2025.

Other (income) expense, net. The change to other income during the three months ended September 30, 2026 from other expense during the three months ended September 30, 2025 was primarily due to a limited liability agreement amendment fee of $3.6 million paid to FGC Holdco during the three months ended September 30, 2025 (see Note 19 ("Related Party Transactions") for further details), as well as indemnification expense of $0.8 million related to a change in a previously recognized indemnification asset recognized during the three months ended September 30, 2025.

Provision for Income Taxes

Provision for income taxes increased during the three months ended September 30, 2026, primarily due to higher income before income taxes.

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Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Contract Operations

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Revenue in our contract operations business increased approximately $46.3 million primarily due to higher rates and an additional four months of revenue from the compression units acquired in the NGCS Acquisition. These increases were partially offset by sales of active horsepower, including the compression units sold in the Flowco Disposition.

The increase in cost of sales, exclusive of depreciation and amortization, was primarily due to a net increase of $6.6 million in non-income taxes due to a $10.8 million net benefit recorded during the nine months ended September 30, 2025 as a result of certain sales and use tax audit settlements, partially offset by a decrease in non-income tax expense for the nine months ended September 30, 2026, and a net increase of $3.2 million in costs associated with the timing of the NGCS Acquisition in 2025, partially offset by a reduction in costs associated with asset dispositions in 2025, as well as an increase of $3.0 million in make-ready costs to put idle compression equipment back to work. These increases were partially offset by a decrease of $5.7 million in parts expense due to lower service activity levels, as well as a decrease of $4.5 million in lube oil expenses primarily due to lower prices and a decrease in volumes purchased. We continue to anticipate lube oil cost pressure in the fourth quarter of 2026.

The increases in adjusted gross margin and adjusted gross margin percentage were mainly driven by revenue growth that outpaced the increase in cost of sales, exclusive of depreciation and amortization.

Aftermarket Services

Revenue in our aftermarket services business decreased primarily due to reduced customer demand for major maintenance service activity as well as lower parts sales compared to the nine months ended September 30, 2025, which reflected higher parts sales, including the non-recurring sale of overhauled engines.

The decrease in cost of sales, exclusive of depreciation and amortization, was primarily driven by decreased service activity, including differences in the scope, timing and type of services performed.

The decreases in adjusted gross margin and adjusted gross margin percentage were mainly driven by a decrease in revenue that slightly outpaced the decrease in cost of sales, exclusive of depreciation and amortization.

Costs and Expenses

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Selling, general and administrative. SG&A decreased for the nine months ended September 30, 2026 primarily due to a $2.3 million decrease in employee compensation and benefits expense and a $1.7 million decrease in professional fees. These decreases were partially offset by a $1.7 million increase in information technology expense, a $1.6 million acceleration of expense recognition for long-term incentive compensation pursuant to an executive retention agreement, partially offset by a $0.9 million decrease in cash-settled incentive compensation expense as a result of changes in our stock price, a benefit of $0.8 million recognized during the nine months ended September 30, 2025 related to a change in previously recognized tax contingencies, as well as a $0.6 million increase in insurance expense.

Depreciation and amortization. Depreciation and amortization increased primarily due to fixed assets additions, including depreciation and amortization associated with the compression units and intangible assets acquired in the NGCS Acquisition, and depreciation associated with capital expenditures for compression units and transportation assets. This increase was partially offset by a decrease in depreciation associated with assets reaching the end of their depreciable lives as well as compression and other asset sales.

Long-lived and other asset impairment. The decrease in long-lived and other asset impairment was primarily due to the $9.6 million write-down of assets held for sale to estimated fair value less costs to sell as of June 30, 2025. The decrease was partially offset by an increase of $6.5 million in compression fleet impairment.

Compression Fleet

We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. We also evaluate for impairment our idle units that have been culled from our compression fleet in prior years and are available for sale. The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment:

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Assets Held For Sale

In connection with the classification of the disposal group as assets held for sale as of June 30, 2025, we adjusted the carrying value of the disposal group to its estimated fair value less costs to sell and recorded a write-down of $9.6 million during the nine months ended September 30, 2025, which is included in long-lived and other asset impairment in our condensed consolidated statements of operations. See Note 3 ("Business Transactions") for further details.

Restructuring charges. Restructuring charges of $0.3 million during the nine months ended September 30, 2026 consisted of property disposal and closure costs, whereas restructuring charges of $1.5 million during the nine months ended September 30, 2025 consisted of severance as well as property disposal and closure costs. See Note 15 ("Restructuring Charges") for further details.

Debt extinguishment gain. We recorded a debt extinguishment gain of $0.7 million during the nine months ended September 30, 2026 as a result of the 2028 Notes Redemption, due to the write-off of unamortized debt premium of $4.0 million, which was partially offset by the write-off of unamortized debt issuance costs of $3.3 million.

Interest expense. Interest expense decreased for the nine months ended September 30, 2026, primarily due to a decrease in the weighted-average effective interest rate, as well as a decrease in the average outstanding balance of long-term debt.

Transaction-related costs. We incurred professional fees, compensation and other costs related to the NGCS Acquisition during the nine months ended September 30, 2026 and 2025 of $0.6 million and $8.7 million, respectively. We incurred compensation and other costs related to the TOPS Acquisition during the nine months ended September 30, 2026 and 2025 of $0.6 million and $3.1 million, respectively. See Note 3 ("Business Transactions") for further details on the NGCS Acquisition.

Gain on sale of assets, net. Gain on sale of assets, net decreased for the nine months ended September 30, 2026, primarily due to gains of $9.1 million and $3.5 million on compression and other asset sales, respectively, compared to gains of $13.8 million and $1.5 million on compression and other asset sales, respectively, during the nine months ended September 30, 2025.

Other (income) expense, net. The change to other income during the nine months ended September 30, 2026 from other expense during the nine months ended September 30, 2025 was primarily due to a limited liability agreement amendment fee of $3.6 million paid to FGC Holdco during the nine months ended September 30, 2025 (see Note 19 ("Related Party Transactions") for further details), as well as indemnification expense of $0.8 million related to a change in a previously recognized indemnification asset recognized during the nine months ended September 30, 2025, partially offset by a decrease in proceeds from insurance and other settlements.

Provision for Income Taxes

Provision for income taxes increased during the nine months ended September 30, 2026, primarily due to higher income before income taxes.

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LIQUIDITY AND CAPITAL RESOURCES

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Overview

Our ability to fund operations, finance capital expenditures, pay dividends and fund share repurchases depends on the levels of our operating cash flows and access to the capital and credit markets. Our primary sources of liquidity are cash flows generated from our operations and our borrowing availability under our Credit Facility. Our cash flow is affected by numerous factors including prices and demand for our services, oil and natural gas exploration and production spending, conditions in the financial markets and other factors. We have no near-term maturities and believe that our operating cash flows and borrowings under the Credit Facility will be sufficient to meet our liquidity needs in the next twelve months and beyond.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or

exchanges, if any, may be material, will be upon terms and prices as we may determine and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Cash Requirements

Our contract operations business is capital intensive, requiring significant investment to maintain and upgrade existing operations. Our capital spending is primarily dependent on the demand for our contract operations services and the availability of the type of compression equipment required for us to provide those contract operations services to our customers. Our capital requirements have consisted primarily of, and we anticipate will continue to consist of, the following:

Capital Expenditures

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Growth Capital Expenditures. The majority of our growth capital expenditures are related to the acquisition cost of new compressors when our idle equipment cannot be reconfigured to economically fulfill a project's requirements and the new compressor is expected to generate economic returns that exceed our cost of capital over the compressor's expected useful life. In addition to newly-acquired compressors, growth capital expenditures include the upgrading of major components on an existing compression package where the current configuration of the compression package is no longer in demand and the compressor is not likely to return to an operating status without the capital expenditures. These expenditures substantially modify the operating parameters of the compression package such that it can be used in applications for which it previously was not suited.

Growth capital expenditures were $194.3 million and $299.0 million for the nine months ended September 30, 2026 and 2025, respectively.

Maintenance Capital Expenditures. Maintenance capital expenditures are related to major overhauls of significant components of a compression package, such as the engine, electric motor, compressor and cooler, which return the components to a like-new condition, but do not modify the application for which the compression package was designed.

Maintenance capital expenditures were $106.7 million and $84.8 million during the nine months ended September 30, 2026 and 2025, respectively. The increase in maintenance capital expenditures was primarily due to an increase in scheduled and unscheduled maintenance activities due to maintenance cycle requirements and the addition of the compression units acquired in the NGCS Acquisition.

Projected Capital Expenditures. We currently plan to spend approximately $400 million to $445 million on capital expenditures during 2026, primarily consisting of approximately $250 million to $275 million for growth capital expenditures and approximately $125 million to $135 million for maintenance capital expenditures.

Purchase Commitments. As of September 30, 2026, we have purchase commitments for new fleet assets with anticipated deliveries through 2030 in the amount of $958.1 million, of which $278.1 million is due within the next 12 months.

Returning Capital to Stockholders

We continue to return capital to stockholders through quarterly dividends and share repurchases. On October 22, 2026, our Board of Directors declared a quarterly dividend of $0.23 per share of common stock, or approximately $40.5 million, to be paid on November 10, 2026 to stockholders of record at the close of business on November 3, 2026. Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations and credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors. In October 2025, our Board of Directors approved an additional increase to our Share Repurchase Program of $100.0 million through December 31, 2026, and as of September 30, 2026, available capacity under the Share Repurchase Program was $113.2 million. The actual number of shares repurchased will depend on prevailing market conditions, alternative uses of capital and other factors, and will be determined at management's discretion.

2028 Notes Redemption

On April 1, 2026, we repurchased our 2028 Notes. The 2028 Notes were redeemed at 100% of their $800.0 million aggregate principal amount plus accrued and unpaid interest of approximately $25.0 million with borrowings under the Credit Facility. We recorded a debt extinguishment gain of $0.7 million during the second quarter of 2026 due to the write-off of unamortized debt premium of $4.0 million, which was partially offset by the write-off of unamortized debt issuance costs of $3.3 million.

2027 Notes Redemption

In November 2025, we repurchased our 2027 Notes. The 2027 Notes were redeemed at 100% of their $300.0 million aggregate principal amount plus accrued and unpaid interest of approximately $2.6 million with borrowings under the Credit Facility. We recorded a debt extinguishment loss related to unamortized debt issuance costs of $0.9 million during the fourth quarter of 2025.

Sources of Cash

Credit Facility

In December 2025, we amended our Amended and Restated Credit Agreement to, among other things, remove the 0.10% per annum credit spread adjustment that was previously included in the calculation of the interest rate applicable to the loans made under the Credit Facility, decrease the applicable margin for all borrowings by 0.25% per annum such that the applicable margin for borrowings varies and decrease the commitment fee payable on the daily unused amount of the Credit Facility from 0.375% per annum to 0.25% per annum when less than 50% of the Credit Facility is utilized.

In May 2025, we amended our Amended and Restated Credit Agreement to, among other things, increase the borrowing capacity of the Credit Facility from $1.1 billion to $1.5 billion and provide for the ability for the borrowers to request additional increases in the aggregate commitments under the Credit Facility to a total amount not to exceed $2.3 billion (with any increase being at the discretion of the lenders and subject to the satisfaction of certain conditions set forth in the Amended and Restated Credit Agreement).

During the nine months ended September 30, 2026 and 2025, our Credit Facility had an average daily balance of $682.8 million and $653.6 million, respectively. The weighted-average annual interest rate on the outstanding balance under the Credit Facility was 5.5% and 5.8% at September 30, 2026 and December 31, 2025, respectively. As of September 30, 2026, there were $3.2 million letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 1.7%.

As of September 30, 2026, we were in compliance with all covenants under our Amended and Restated Credit Agreement. Additionally, all undrawn capacity on our Credit Facility was available for borrowings as of September 30, 2026.

2034 Notes

On January 21, 2026, we completed a private offering of $800.0 million aggregate principal amount of 6.0% senior notes due 2034 and received net proceeds of $789.4 million after deducting issuance costs. In January 2026, the approximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statements of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under our Credit Facility.

Cash Flows

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Our cash flows, as reflected in our condensed consolidated statements of cash flows, are summarized below:

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Operating Activities

The increase in net cash provided by operating activities was primarily due to tax refund receipts of $41.5 million and higher adjusted gross margin from our contract operations business.

Investing Activities

The decrease in net cash used in investing activities was primarily due to $294.6 million of cash consideration paid, net of cash acquired, in the NGCS Acquisition during the nine months ended September 30, 2025, as well as an $85.3 million decrease in capital expenditures. These decreases were partially offset by a $71.0 million reduction in proceeds from the sale of a business and a $6.0 million reduction in proceeds from the sale of property, equipment and other assets.

Financing Activities

The change to net cash used in financing activities from net cash provided by financing activities was primarily due to net repayments on our Credit Facility of $58.2 million compared to net borrowings on our Credit Facility of $360.4 million in the prior year, a $14.4 million increase in dividends paid to stockholders and an $8.8 million increase in payments for debt issuance costs. These increases were partially offset by a $50.0 million decrease in shares repurchased under the Share Repurchase Program. Additionally, proceeds from the issuance of the 2034 Notes in January 2026 were offset by the 2028 Notes Redemption in April 2026.

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