Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc. Quarter Two 2023 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions]

I would now like to turn the call over to Ms. Delgado. Anna begin. Please

Anna Delgado

and Luke, everyone. Thank good you, morning

of we we Natural Services will I Section expectations of Exchange as team. you beliefs assumptions Group's our the information remind call, this XXE currently Act and Securities by during well that the based make and Gas of on current Before meaning begin, XXXX made forward-looking and as within statements to available leadership

assurance we that reflected expectations call. expectations in forward-looking the can the give be that results reasonable, statements no with the to to believe during we prove and United Although refer in States factors forward-looking made the to cause our such that for filings statements will actual such materially Please differ Securities this those are correct. Commission may Exchange latest from

certain discussion addition, EBITDA, EBITDA and our In others. gross will adjusted today financial including among margin, adjusted measures, non-GAAP reference

measures see XX-Q and GAAP the For our financial to of the to furnished forms please results, our SEC. non-GAAP reconciliations release press X-K, financial yesterday's XX-K,

call turn Steve? Chairman CEO. our Interim I and will Taylor, Steve and over to President now the

Steve Taylor

Thank XXXX you, Thank conference Luke, Anna for everyone. you earnings morning. us joining this call. our second good Welcome morning, to and quarter and

highlight I'll taking your operational business the results for quarter, financial Before questions, discuss and comments our our on of business. and provide second environment current the other aspects

rental and grew continue our consecutive compared a when revenues revenue of revenue revenue pace, at to and rental important quarter, declined, revenues our sales Sequentially, brisk total but year-over-year grow growth. tenth sequential Reflecting quarters. on our quarter the to reflecting rental both strategically

income the net operating by higher comparative income expenses, improved, both margins and margins rental gross over led and overall quarters. increased lower and operating Our

program environment improvement. our we results of further to in anticipate and overall and continues margins, see capital starting bottom industry in to We're positive, lines. The our be XXXX our revenues, the

from or ended from three first increase revenue million revenue Total increased June for by to months months million increase XXXX a months three ended that quarter. our March the the $X.X or was sales in quarter, Total XXXX, in in million X.X% the XX, in XX, increase increase. XX, sequential rental increased The offset $XX million for $XX.X sequential three although and $XX.X year-over-year for ended in drop XXXX, due the June revenues an service was maintenance revenues total XX% in to small business. revenues

referring up revenue aftermarket or is By business now be to our this to the generally make closer refers maintenance we There way, going to it. components but service services. to segment, aftermarket and industry the how in change as forward, and conforms services, will our no AMS,

revenue increased Rental and increased the to three compared comparative rental periods. the revenues second to horsepower revenues Rental in comparative over XX% from ending X% XXXX compose period higher total in overall fleet the revenue June million months increased million XX, XXXX, ending second XXXX. three million from March quarter in XX% $XX.X of gain quarter $XX.X in XXXX in million for months a $XX.X XX, $XX.X throughout rental Rental across utilization of year. XX% were year. horsepower the units, deployment of our now price the Both result of the all past high the to primarily increases the increases approximately of

second XXXX. million same margin margin period to second of of last adjusted XXXX is This $X or revenue our in from QX approximately the in quarter in gross of $XX.X XXXX. of rental the million since gross a XX% quarter. basis, Adjusted increased XX% in increase rental million On compared XX% dollars XX% in the revenue increased to rental sequentially of margin or quarter year-over-year million XXXX when gross $XX.X $XX.X in

while adjusted period, comparative the XX% six-month rental revenues our In by margins XX%. have increased year-to-date grew gross

units, had of units, rented and XX.X% XXXX. utilized fleet on X,XXX per retirement past utilization X,XXX spite ended had basis we net In as XX was basis. The XXXX, idle June units, in a horsepower XXX,XXX units horsepower just which decrease representing a with XX% quarter happened XX, the of horsepower, units rental to sale to XXX,XXX of approximate utilization in that, of compared an rented month. customer over due second a XXXX. XX, over the to both the on horsepower over unit combination a We June increase of of in representing we of and As XX.X% the

of relatively While quarter utilization remained utilization year. in first the this unit flat, horsepower XX.X% increased from

second XX.X% when the price impact X.X% year-ago implement able the periods, last per higher horsepower the demonstrating same the period, to in in of while increases Utilized growth revenue to and the been comparing to have quarter when we horsepower compared the year. increased over increased units horsepower the

and total units X,XXX of Our as XX, horsepower fleet horsepower, consisted per June XXX,XXX of unit. XXX XXXX or

high over our Our of fleet is by grown year. and approximately the average XX% last horsepower Notably, utilized drawn unit rent. unit per XX% equipment horsepower per has

agreements, to Of year, of presently million balance quarter year. this this budget be $XXX committed is our the a anticipated XX% long-term third with it of to capital approximately contracted in

June expense units of we XX% XX, XXXX, the have shipped XXXX As approximately and budget. horsepower set in capital anticipated and the of

five can our and horsepower fleet over horsepower units, horsepower the emanating time, more stream. our current to utilized half horsepower unit Presently, ago, revenue decided larger market revenues half an utilized this from At we market. established and think player enter in large that of our large and we're this I than say with our utilized by current XX% Approximately to years rental NGS approximately count assets comprise segment.

$X.X we sales a balance slightly the the basis, sales. experienced sale quarterly that in $X.X revenues from fluctuation $X.X the occurred increased in of quarter in first to second quarter. quarter first from part the million. the to the million million a quarters decrease second year The this in Sales equipment idle On was Two-thirds $X quarter. for million typical year-over-year revenue quarterly non-recurring from decreased sequential was

XX% of and increased approximately Our SG&A sequential expenses $XXX,XXX revenue. in quarters totaled

obsolescence $XXX,XXX This due margin. primarily operating of second in a to increased first this reported event Negatively compared Without In $XXX,XXX June higher income a impacting took. what quarter rental $XXX,XXX we or would of over was reported. without quarter XX% year, of the ended operating XXXX. year and our the that, improvement with gross the either of revenues in this was to income been quarter charge charge, income the months we Sequentially, income twice operating XXXX, increase. we improved XX, operating have roughly income software this for three software operating

in $X.XX. of per the per second year income was the quarter, compares year-ago the diluted quarter $X.XX share. was or and $XXX,XXX of share. the in our $X.XX net and basic Our diluted first to $XX,XXX This of quarter basic or net income loss or $XXX,XXX XXXX In net a

XX% in $X.X same number first Adjusted and XXXX. to quarter EBITDA $X.X $X.X million the million period of increased XX% from increased for the million from

of our million million Our quarter which we've compared of rental million. quarter $XX.X realized XXXX capital approximately for was the in from last the cash million expenditures, $X.X operations this June as year. of to of fleet. we year, balance quarter, of utilized expended In $XX.X $XX.X this XX, At was end million same $XX.X second cash flow the

ratio X.XX company within is terms, bounds as both and covenants all of agreement. Outstanding leverage coverage revolving June was the compliance the fixed charge The X.XX. conditions, These the our XX, of covenants $XXX and well credit in our facility ratio debt was XXXX credit with million. and was on are of

seeing experiencing I hearing be on to into think thought forecast internally Based activity quarter, the this were XXXX. the positive year continues and we Last likely balance we're what that remarked we from would of we and customers, correct. continue and this

an the for little it components We industry. There's Lead being times market, relief major in are are utilization we long. to and high. undersupplied see is soon. added capacity appreciable no to Industry

we've established increase shareholders we customers activity. there the from inquiries new that prices Customer and pricing, continue get a flow sustain in all present consumption Commodity seem a dynamic been activity environment. help customers return. our positive competitors be in, greater and to data prices future to fair a capital and may to time to of this and support kind since to had from discipline ability production and have It's so and appears this and ensure long

mantra "Please, to screw it to was boom excuse was, through there's and colloquial time." going bust It for promise right. repeated the but this have sink Lord, used industry give this messaging, maybe us a a taken not when We decades the In up one my cycles. past, we It's it boom. more few in,

will equipment. volatile industry pricing, contracts, has commodity-based impact always ours. point, There exceptionally contracts another some long-lived in like think and NGS However, but downturn caution good and with long-term I that somewhat at be mitigated customers a strong there's required

take to over We the are of strong couple advantage the years hope industry environment. our next of bullish and on

look for to Thanks your questions. I your forward time.

Operator

Rob from Capital. Our with comes Instructions] [Operator Brown Lake first Street question

Rob Brown

Just a activity? the what's little the do you sort year? plan, environment and next on rest and And I wanted your see this guess, into to capital impacting get of positive of about into the comments throughout bit sort of demand. your year visibility that that How

Steve Taylor

not and the third much this we impact XX% Well, because to committed, year, of going it's it and during is like too quarter. balance capital contract in anticipate the contracted coming that all I mentioned,

So that's pretty well set.

I XXXX, customer calls like that. As requirements, receiving far as needs, items as on customer we're inbound mentioned,

strong. on at we We anything haven't time formal really pretty that start to that. certainly, announce put But looks together want it to this

things feel be obviously, might end as what much customers, or pretty start little and -- better, that the I meaning of point, signaling publicly I'm might a you budgets budgets we'll it's and say -- year Up towards Now as start people the people to and informal, not required. get conversation announcing pretty to that. like will

that's 'XX But look what's market some lead think of the where we I 'XX 'XX no numbers, the is point will has But caused comments pretty going become a at made be customers see times further will we're population there's 'XX seeing but looking a been to good into just customer strong. the getting the primarily out certainly tightness 'XX on pretty into we're projection. But become already the reality right even flows specific in to baked now. the next bullish year actually And been the as certainly now, because in by required in. pretty we'll how this on and But than to because 'XX, looking 'XX, year. realized to past. And the equipment of is balance are but that mentioned, we're

Rob Brown

weighted then term. at? are of in think your Okay, you high these the terms longer horsepower signed at duration I And where your of guess, of were I incremental at great. what's sort sort point? what's average contract contract contracts duration? this being And of contract many

Steve Taylor

years put We be will includes and that or to five-year that with on of -- that to we've tenor. Overall, without put is that either committed right the five five-year horsepower horsepower, contracts, we're X,XXX in got reason about five contracts, rest three that don't range. out year bigger put new go is need been the year is the Any years three anything out this X,XXX, see exception. ago this to horsepower now average and has to on our some below that being any out

year three or But past ago. so, stuff or five-year put we the that actually in contracts the some the we've we put first of on had out years three out based just some month-to-month over four go or terms

than on actually be less only a And due had, that around of due on to then or X,XXX to immediately to units time, the, lack than horsepower need. put terminations So other equipment typically It on think, some needing but overall this even move it But range we've in terminated, re-rented. those of other respect. handful wasn't are locations I equipment. maybe anything they're say, a month-to-month weren't

these term think I So, the past, mentioned as are in contracts. I've minimum

and that term. two the one expected makes out what that's and first to this commitment come playing five customer beyond that entered we And we're means now, contract they That years. we contractual but a get just to So that's stuff minimum equipment that's equipment for a approaching seeing back example, we're out. years after the right when that's already five-year But now. mean term, into financial putting minimum doesn't

range But question, original across high five-year to fleet. horsepower to we're probably average, answer that, the in on into whole your that three

Rob Brown

medium or this great. horsepower as are phenomenon? Okay, area really then large the all market seeing And in strength well, the is a you horsepower

Steve Taylor

some volatility large primarily the the you of okay. primarily $X is medium in smaller, is whether smaller natural it's volume -- There's horsepower, horsepower It's directed, in Where pressure, type or which there getting so gas hangs that's to is kind gas prices, very of the natural it's because horsepower. equipment. lower start range been lower more which $X, And sensitive running. some

in and more see that market. we out in movement So

and why obviously, of well a those lift. to as medium kind go horsepower from just just up are and a primarily the is et to that's large down the some flat, horsepower the unit pretty climbing in But you is there neither and utilization And -- and horsepower. utilization hang single see But -- of smaller tend The little, the they of large gas medium active aggressively, but robust cetera. as one horsepower. horsepower

Operator

our question & from comes Hoak And next Hoak with Hale Company.

Steve Taylor

Hale?

Operator

your Hale please question. Hello? Hoak, ask I'm ahead sorry. go and

Hale Hoak

Congrats a nice quarter. on

information at helpful growth transition the call, $XX what year sheet. your As for for to talked next excited going I'm there your it's on based you're you math in And The and CapEx and at giving point. be But a to quarterly bit the be of that plans. like to have capital you're think I you guidance more and EBITDA. to thing return on rate maybe if could some I group, your you're plan the peer into maybe spending. of easier and plans? our the seeing $XX you growth give is past, a or compared one this maybe on that and could get growth run little people $XX on the exiting and And be articulate of or close stock XXXX think could maybe though balance guidance the I and the It guidance could work some supportive would of a seems million if your on way business you

Steve Taylor

tightened not lot the We've whole And reliably we can Good so models little of getting a detail more we're and stuff. Yes. that traditionally point. granularity give that of sensitive some we're to et information. and the we we'll people something and be of of given a up, guidance large to need expansive give from context that. cetera, you're the Usually, about. amounts remarks, with capital, debt, the right, enough But the more little a it's

So, that, recognize next quarter. give in we're additional we working towards color that will respect that, and

Hale Hoak

Congratulations great. sounds again. That

Steve Taylor

lot. Okay. Thanks a

Operator

[Operator [Tim Petra Capital Management. Instructions] question next with O'Toole] from (ph) Our comes

Unidentified Analyst

unlike also in solid balance to this of peers terms you I positioning and I these effort this of kind -- I you in you with lot during who like on had actually, to I'd lot a historically like executing And in a this of of And cycle, also to also have think, your very I'd being speak plan. constrained start dial to which your came really things, as kind mean, a congratulate usually sheet don't invest carried on but them able this into of cycle. clearly, debt,

a in fairly we I'd things is like probably labor, color to get but little One the know lot of I that can. A has that a if skilled on that especially labor, couple remained more tight. basins, Permian of oil especially, the

and manageable a bit little getting better. little becoming paid it's a more I you're it think for

the sets run side. to slice been of excess these characterize if in if data But compression could you the the I'm to And could activity expenses to of labor the haven't rate you put of what and able -- maybe I it's of you way. be some have I level for on to the kind you might to the wondering dice got contract probably characterize all However, still and continue wonder tight believe because high fact place? this

Steve Taylor

them et right, from a is been here. it's on, different has tight and -- and little of it's the always here. the but exceptional people In but but got operations be people as looking not areas, you're and as and keep We're in than point it battle the able past with a -- to labor of everywhere, out Yes, bad Permian We've country, it's having in cetera. finding bringing just parts out in more you're up some to turnover of the a it's tight. good for continues it, it

active people active XXX,XXX the of field got most world the of and two and towns each. one here in with You've in the U.S. oil the most

big bit. And there's So a a exhausted not it's for little been labor pool.

I you're about really down X% I coming it's you ones those and last X%. the saw, employed are that I'm official figures because when in. think to number, you're essentially the pulling, want not fully And

look harder in to because the area. having little from to a people hired rotators we're So, we or wider a and have gets too, little of bring what outside now most are commuters, that

to that And technicians running, it higher places. various the are tech. equipment maintain field service keep the and Oklahoma, These Louisiana, that harder are horsepower other primarily So find. are these the the guys

So you job do full-time able it to And that, all is got to but keep a we we're in up, time. do places to approach different look that. in the an just

cost, environment your like course, cost. labor that drives Of

we So, an have that. impact do from

have an essentially impact to whoever having shelter also in. You from and feed you bring

board room a and it's So thing.

XX% appreciable. out The they this, on would it. company target incremental, you little Permian to people, estimate get based them labor want say, market and talking say cost cost the them Permian, much it, manage premium and our -- it you it's people, premium labor -- the it It's the to what to competitive cost attention above and market, And mitigate the pay and payroll. will good try a you very them but It's such we hard of pretty the if cost the I'm demobilization just here. pretty a about pay just talking have to is be that But the in not from I'd dilute I'm bit. a to because and for range on, doing costs standpoint, whole the XX% about would mobilization, on

Unidentified Analyst

you probably logistics of the it's you're at on early I and obviously in it's and be when to your of bit. question, costs personnel the year, activity first 'XX. point, normalize ask of likely put this can equipment question into is managing part fairly but terms this, setting little the better side not should the the of maybe some of extraordinarily don't and to guess. should your high a normalize, but optimize down that half able a strong on of level But and to some color if become easier, necessarily in I'm cheaper, going going to genesis to know Well, new operationally terms little kind manage and

as And sense on million? million line. of run quarter? a getting basis, maybe wondering of again, but if you a And $X Is because bit $X a it look what excess? a few for be year. like kind middle -- go abate a to in sense I'm I more to even got I'm of expense through again, Is wondering for that might quarterly probably bit. things challenge, it terms you little rate these very a would to that if time trying And a start have what get of of you be costs just I'm on operating it than hundred a believe next Or thousand? precise of is excess the obviously feel have that some

Steve Taylor

a really see don't I Cost a labor years. of on really relief that Yes. for couple standpoint, from much

essentially out. whole is We're year know I thinking busy. We As be 'XX the too. going busy mentioned, to sold active 'XX is is already and

here. a people, to but that's the better away. having And supplement getting we labor to start to we'll a people We're way still know finding is, especially, be long to small local labor. in going long as as it's when So on pull force going it there's bring be can

to the over will. couple get probably see pressures we years. the it's And in I to remain. that And anticipate for a then like remain which but Contingent some happen, activity it really in think we time, you ups leads labor So, interim much downturn, unless upon don't can don't going abatement a it. of

availability, of XX So of and labor I to pressure on still got months too. labor think we XX that some

be is labor total XX% finite about the too thinking premium. a number off, not million to far it standpoint, probably from you're probably a would standpoint, From XX% if $X

Unidentified Analyst

question. related And actually, a there's

notes quarter alluded think perhaps before. of around to correctly. sort this correct. to you time remembering I that sure going SG&A I'm out revenues. or the if think I'm this do of I'm if And on I XX%, even last XX%, mentioned some my settle in And the you've something at line And are But running is you have I quarter that by like think, that? should point. numbers not more a recollection

Steve Taylor

-- QX, the Yes. anticipate There's in QX we No, some last that and being of which are QX lower. we gone. those legacy experienced costs

I that here. even get I -- even I have shouldn't So exactly, probably I myself might remember think think -- in don't trouble

even since I'd we'll QX think in maybe take or But no, we're talk but and I'll those I QX. about XX% come XX%. your XX% XX% past, at the see down

Unidentified Analyst

of this quick to is kind numbers or to information question kind are about One the Okay, out been $X.XX related. not I you of Does the work want number called a I'm although great. that tax exactly. $X.XX on affect is impairment, sure There's of something, numbers. through into And then a but might that try of to things that, software how couple back some it earnings sound kind that accounting of without right? like enough around looks have the the

Steve Taylor

-- software Well, impairment $XXX,XXX. the was I think $XXX,XXX

Unidentified Analyst

yes. $XXX,XXX,

Steve Taylor

any it by but -- quick math, being that's take roughly whatever, XX.X divide it and tax representing or pretax XX just $XXX,XXX, million, about yes, I'm just $X.XX. got million or we've not you If that the shares, of

it's an So appreciable charge.

Unidentified Analyst

Yes.

of normalized number. kind Okay. set out All of Yes, kind a right. wasn't a as it

So trying not I and for fairly sense broadly a stock get is covered. was still just the because to that inefficient

numbers getting still research not base of is So challenging. -- off is a

a Another couple things. -- okay, of question

of stuff. trying from look of it of are down your tale been rest medium the benefiting in as maybe this although Another kind small, yourselves high a I right, fleet kind trend but this, to into large. at is, break of fleets two horsepower alluded this have you I really, think and to and industry number look I I've the you and

looked And and utilization fleet You horsepower XX%? fleet the the you XXX horsepower, say below XXX at that demark XXX part around is if rate you above that the the horsepower. did of for above horsepower, fleet that XXX

Steve Taylor

Yes.

Unidentified Analyst

would stuff would the small medium guess, or approximate than better be then part It's probably fleet? and in utilization that that what probably the on So that's XX%, horsepower, of I smaller, the range? your so no

Steve Taylor

No. small horrible. just medium. where and It's in not the It's XX% It's the want not to range we on XX% it.

Unidentified Analyst

And kind kind -- on culling the it you bit, Right. on have taking been recall. of of little taking doing and judiciously writing you're down as but $X.XXX $X, I that not it but not a $X.XX book or something,

Steve Taylor

utilization Yes. calculate misleading standpoints. the to a The seems numbers -- can a from of From number differently. way one, couple little be everybody it

some how same, differently, see calculate, read Ks you differences some Qs there. So, but it people's were just and there's and can some yes, they of

So, smart what fancy enough what's right? running, Nothing and compare to we're just fancy and we We it that's owe it. not the it. take utilization, get with against about

value -- of -- But the equipment, from look this you financial you just impact horsepower XX%, all our that. look the also that's of book a from small is a out. depreciated Yes, at XX%, may financial what's of when at perspective, about

And value book on on of lot generally, books depreciated there's two-thirds probably a horsepower, the So on we're medium that stuff. about little that even the stuff.

book And a much that in we horsepower just And of just most didn't and a than got utilization more impact as horsepower. sense any is too. that to lower time, over that sizes areas value relatively small fleet from small, have, the we units had lot unit had in really the was gotten make some thought we've out So standpoint, called medium prudent. certain we that down or either not

Unidentified Analyst

Okay, great.

back But this if before. are on touched on -- You I'm before. And I in let get queue the touched people queue. the know something there can me in you if

You a put a one big slug years equipment particular customer for ago. specifically in of of handful

I ago. five think years you said three, four,

and long-term And still off I things, as that has of utilized, stuff their they're still heavily of contracts busy, still very Permian weighted. come understand some

this you is is So things those that and I a that stuff XXXX-horsepower you of fill one were of about let's could one take was of in maybe utilized. pieces if But that to wondering being equipment, the unit. still say,

tight, could higher because market that rates basically than the work that went probably You put to certainly begin could with. at you put is to in -- at so to

if And from of and new words, I'm thus, newer with to new the you some would as unit were of one the looked we would into contract be this into look if be annualized what -- other and new equipment? the set cost contracts a is, what In the a equipment of be and down long-term about through place the of putting of something, cost XX% of don't your renewing that five at those that then say, of X,XXX-horsepower your maintenance contract? order in like? wondering location the get then What's number CapEx the XX%. original that do the magnitude dynamic I dynamics customers contract, that? on period And what it new unit, service that you be recurring to revenue know years, would by higher would maybe That is. maintenance number some would let's then it what another line

Steve Taylor

question is easy it move cost the from one location by borne Well, customer. to to another the first, the

from have impact that. we So, financial don't any

impact get that primarily manpower, Our have from it right? reset stuff is that. and them like Help out, it them up

primarily expense. that's customer a So

maybe vary. are those or three go maybe rates if to one, contract been if you don't on typically, or it those the anymore, coming three And From can't you put probably of units. need five four-year-old rates. higher these at point it's But rates XX%, those even they now on and say, got a or off, out a maybe month-to-month let's we have some XX% for unit years higher of

rate. out go would they higher definitely, So at the new

you of and okay, that, that. and then gone set stuff the all operating inflation environment know and chain those all And and like rates up, you we're up. can look of maintenance Now, all you're get -- gone know there. issues you supply capital getting expense other that that's too, got back have But and older those back costs kind And because the you your we some rates fixed but at also up.

customers So, obviously, asking and all on we going contracts successful. those for being going back the and the customers are suppliers what's and the too. on, increases understands Everybody

protect because got on that's hold for and and to the it's preserve expensive So to do to costs to pay. we've these and we've it just that too equipment, customer got more

So rate, going what not are off back proactive there. be waiting and for we to the stuff that and then we're and to getting got come raise from trying we've just we

unit to ready through it a vary the maintenance making some or you tune board. point point minor those sort from over the standpoint, major you from the But overhaul. typically, make for all From go runnable. off, can generally the next costs of And it pull need when the of of you certainly contract them ups need to

want say you rate your if you how I increase, XX%, be. much So say one don't raise But into it it a might XX% contract. goes you're the to rental to next get off,

a on. some from whether or after standpoint after got be is impact location, hours, it's not other maintenance that hours, location on because is at overall if just The you location the moved to many going maintenance to many do stayed or it so different than so

you little to it's off little to And if essentially, have a it's you cost. out might really maintenance scheduled, location do cost quicker comes It's a just before otherwise was might it so it a quicker would. to than get just the money but do it of you XX,XXX a hours not a

Unidentified Analyst

that model of is four in is the a to to which reasons, for if let's little and of that lot there's supporting cash I able a I'm they flow, quarters this a minute, about -- variety discretionary that one -- for talk to trying is cases, of your bit, need compression they're trailing look at a of So things cover. some the are metric one dividends use your peers that be

the So into that way able newer they years, that internal last my this utilize and the earnings, is you're recycled really is but fleet And operations, to your from ton of as as points, six But generated discretionary much in basically, coverage from basis of the one accounting cash haven't recall, that a also. discretionary capital earnings. flow flow that a point. accounting your five reinvested you you've you you've cash over may that, deploy shown at your of or

a look the number, to cash to include on number, machines discretionary to would a I'm trying at bigger but something CapEx of to trucks the invest on maintenance reset of five-year I stuff also kind get and of maintenance have you'd to the into and sort some into the which to flow facilities, try some that back contract. that CapEx But your

some there's a time, ton that will point, part Your enough fleet that model. over but there not in yet, is the become still probably of at new so of

on to can I past I for $X.XX this -- a that been $X.XX to something maybe number that to that had aways like year, at be equates wonder said flow order a don't And metric also little to if suggests -- to that if number that run you model share. and to $X.XX my like may internal something I but you like has next because kind discretionary metric. the numbers you'll $X.XX, that 'XX, a as discretionary verify it kind of peers be also that of cash start your like know if that other or compression suggests verify flow quarters four cash the it do, does able have over able just look the germane a of $XX-ish know this, whether And but off? I And seems also is your year. than don't million. about but higher good you also grow seem

Steve Taylor

the right a to how it. we're on take looking little Yes. hesitate you more number, back discretionary guess I I Tim. get can and on now at you've into got, hazard to a

Unidentified Analyst

Okay.

Steve Taylor

is watch eye it an keep good and yes, valid and a number to on. But

a note, cetera. That's very it As on partners. our you And it of of from important a debt, lot the to competitors do dividends, coverage couple shows et limited on coverage MLPs. are of them point the

you're forward, and CapEx. me little with one becomes gets a offline, we up, activity We one. into discretionary right, the closely, potentially by and that pretty of it's you talk dive going haven't we watch either. like didn't But more it past use activity cash eaten to of times the up discretionary, gets But in just because had in much eaten numbers it certainly less can It right? through let high quick now too flow, course, at in have we

Unidentified Analyst

I whatever up which earlier, that. of But my couple point is weeks. are love at And to the And say. probably may peers appreciate No, $XX.X trading, would on is follow I of the I today came be X-ish Okay. Xx discretionary want or public, numbers, Hale's And you're Xx. to I in flow. next in it that's Archrock sort cash to think I Xx Kodiak, at just number, think the or

So does away. multiple it's points number be on. the It to industry a focuses that number a of seem

to would Steve, and been and the more soon. with want -- the because we'll a much feedback, in for couple ask forward I for to going forward there next again thanks am going people I'm chatting to I some look on bit. weeks. maybe jump of Appreciate feedback to talking very off questions you to I've who and look

Steve Taylor

Very Thanks, good. Tim. Okay.

Unidentified Analyst

Thanks, Steve.

Operator

from comes Apollo question Krueger last Our with Kyle Capital.

Kyle Krueger

putting sheet have to are balance five-year dramatic, that's indicate required inflation the of course. of corporate in return stuff, on that you're return Mr. solve I nothing imputing to utilization your leases period that hurdle are you a one, And out and out the is on that Hoak's looking credit, my five-year fully The the with the has great -- against the short return. question. is follow-up you over horsepower question to And the guys are transformation fact, paid second on what a all protected at high thing horsepower into thing you're is, Number would leases? model. on bogey at first that? is of time? which stuff payout Presumably, What's provide putting the that and been only so for inputs The those full you good

Steve Taylor

take first. your last question I'll

don't. -- but Some inflationary frankly, and most contracts have protection

actually increases. Now price any had the trouble ones don't, getting not have that we

slow, have agree but But you're to doesn't have have you market those something have. you are inflationary for the even increases, with good doing, think activity if example, I there can -- just what is you market like and the in contract, any something, the ask ask probably may this, slow, to don't for ability marketability it. for it accept like not in but point and things the the you that contractual have in and may you go to there customer your from reality have go

but So more not getting they from I think to your gives need you leverage, little contractually be. it you prevent cost does where a

three justify contracts. and that's very satisfying ask can whole. three last for typically, you to one, the five-year us that number increases you seen and But will you price of and in certainly after those not few have keep when contracts, years, in, go contracts expiration we've So the to what go five-year over can

have to So it, are and although more most of our don't more in. starting we contracts put

been not price we able want. haven't by negatively impacted being get We the increase that to in

interest around X% the X%, they're From probably hurdle those, the XX% corporate what It mitigating see. the or currently. to what But on hopefully, -- and want now, at we you X%, do. do, Fed what on about can think We'll may look into somewhat. rates X% depends that's people

to more Hello? we what returns we'll that's things the the mentioned, you a little charging on that we're what go like plus think and quarter detail Hale more call, give on got implied So as the comment. returns, want. color into like that that And on a third price valid we'll certainly, by factor you've just the had I return the And into see that.

Operator

you follow-up? Kruger, have any Mr.

Kyle Krueger

very it. No. Thank Appreciate Steve. much, you

Steve Taylor

Okay. Thanks, Kyle.

Operator

questions. we you further don't Taylor, Thank Mr. very have any much.

Steve Taylor

Okay. next Thanks, look to in for participating updating And thank the call. our you, in progress forward you Luke. I again. on Thanks, everybody, quarter. our

Operator

conference everyone, for Thank you, today's concludes This attending. call.

Natural Gas Services (NGS) 15 Aug 232023 Q2 Earnings call transcript