NGS - Earnings call transcript Q4 2023 | Natural Gas Services Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc. Quarter 4 Earnings Call. [Operator Instructions] I would now like to turn the call over to Ms. Anna Delgado. Please begin.

Anna Delgado

good and Luke, you, morning, everyone. Thank

projected of begin, during developments differ the we will statements making the are those I that of materially are call, those would that you be actual meaning forward-looking within statements. statements performance, remind not to forward-looking securities course forward-looking may the in company laws. Investors cautioned like the Before federal future of and guarantees conference this or results from

with that such disclaims Finally, statements can described statements. These forward-looking obligation place the result no assurance information, and Investors these at XXXX. including XX-K one events of Natural risks the forward-looking risks Group other company year filings to yesterday's and incorrect, ended of on or prove Services should to any future assumptions actual materially. www.ngsgi.com. be materialize press not correct. in prove undue a or annual our can Form may any XX, forward-looking reliance be whether the results website revise underlying release give more located report in are of documents our will or as otherwise. on statements, vary found for new SEC, should December update Should in Accordingly, or Gas or intention our section These the you

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

the most over measures Officer. the release. I financial these directly measures our turn reconciliations For yesterday's non-GAAP Jacobs, Chief to please call and earnings under comparable of will now Justin Executive GAAP, see

Justin?

Justin Jacobs

joining interest Natural start introducing conference XXXX our to We Gas Services Welcome appreciate call. team. your everyone. quarter in morning, good and morning. Anna, the Thank for you this you, earnings Group. I'll by us Thank fourth

the CEO Chief Directors. Steve Officer; the on is Chairman Officer; Tucker, of Chief call was Bittner, of year. I our long-time Chief prepared Steve and interim Officer; year. John President quarter detail, asked guidance Operating on remarks start CEO some Hazlett, to business, our off me the and updated John growth the last our Board and with and Technical this of us that, year-end will strategy our our our After the quarter Steve Financial going Brian state then Jim and finish our I with thoughts Interim Joining will our and current Taylor, morning the review thoughts forward. on and

conclude will question-and-answer We a session. with

an me to taken Steve appreciation to a my approach welcome it turning and second share first-rate transition. for Steve, the Before to during team I has wanted with and in the for all invaluable the resource has been a his take He shareholders office. presence

drive is he our shareholders. the As you, well value aligned as And he continue all to one yours. floor the and Steve, of is goes from is largest walk. Thank the significant to my thing shareholders, for walking perspective,

Stephen Taylor

kind I is appreciate want I assure and Thanks, the everyone mutual. Justin. to listening words. my family

other great in was my for among items. speak place, team take been to long I results won't a have a work with for We management and revenue I pleasure them. the themselves. XXXX year because record think and EBITDA, it's

the us established the were the to has them build future. items on has have realm. with. We market especially X,XXX-horsepower areas are that equipment, operational of into every successful execution horsepower strategy look year, the and funding there our our ability year, technology with happy we the But incorporating obtain in As and continue our performance. or are be X,XXX-horsepower us this that that happy many are of we moved environmental at to talked and bank throughout our increasingly can almost excellent Among we aspect accomplished those this precontracted continued we're successful well into quarter, our duration about particularly to we in a work at proud rates we of high long

among Our we secure resulted initiatives into in blue-chip in I our and workplace will to build our in safety incidents future, contribute can to employees continue future. ability on X the legacy performance these the that that as customers to our additional that growth XXXX. see

a revenue, year have the distill fourth this that a year. I'll If in recent in going you and quarter growth not on adjusted rental them. the total to EBITDA, look or to and road a identify the you exhibits But margin ability the company's rental at exceptional full time XX% those. to I all exhibited company year-over-year execute go and it's will that and John recite will numbers; year, I'm hell XXXX. growth results note through gross to opportunities any XX% of

is We to and Justin ability by well opportunities positioned the the Jacobs, management ahead have CEO, the possess and continue led company's our many growth. team,

song I and Bright, leave I management title confidence Chairman with Shades". significant have as our to As our success. I'll you our in from a Future's "The final continue XXXX. Gotta a and great shareholder, So team comment, which a employees of Wear is one

turn it review John and over John? year-end the I'll Now quarter Bittner to to detail.

John Bittner

comments, Thank very echo everyone. year. we morning, your you, successful and a fourth a Steve, strong quarter had To good to finish

for XX% jump into fourth December XX, review to in to the increased X $XX.X million was up a $XX.X So of get first from QX will which quarter the full or XXXX the million I year then results. Total XXXX, XXXX. months $XX.X me first, let and million, revenue ended

$XX.X revenue for the in increase. $XX.X million QX $XX.X from Our year-over-year, in from up a up was was up or QX September was X $XX.X XXXX XX% -- months up QX XX, increase a XXXX million $X.X million, revenue XX.X% from XXXX. Rental XXXX, million for XX% ended and million

$XXX,XXX in approximately by sequentially, increase. Aftermarket $X.X million revenue QX which was QX $X from million for up XXXX, XXX% and and for the $X.X or up XXX% XXXX, $X.X XXXX was revenue a XXXX, million our or XXX% million quarter million QX $X.X up for QX sales million, from XXXX a for same decrease. AMS XX% $X.X was Our Services, in down

$XX.X a of margin in gross XX% adjusted Our million when million in margin compared quarter. fourth from quarter approximately XX% gross increased $XX.X XXXX. Sequentially, last adjusted to in same the period total dollars of the million XXXX $XX.X increased total as gross by Adjusted XX.X% increase adjusted primarily QX material QX This for XXXX versus XX.X% XXXX was and, XXXX. percent XX.X% for our in in was margins. percent sales driven QX gross and rental margin margin, of

$XX.X Our gross QX XX% rental adjusted QX $XX.X XX% to or adjusted increase. increase. dollars in in gross representing dollars Sequentially, increased increased $XX.X year-over-year million a a million margin XXXX rental from from million margin XXXX,

adjusted XXXX QX in and as Our sales for for margin QX versus percent XXXX. of XX.X% rental XXXX XX.X% gross XX.X% a was QX

we due primarily and parts Our oil lower-than-expected to rental QX, adjusted expected gross expense. margin was labor than in higher

XXX% sales versus million increase an increased was expectation sequentially. is XXXX year-over-year X% what rental of QX third will we Our QX that gross in in in XXXX. be XX.X% by QX $X.X in QX, XXX% we call. Adjusted going gross QX in to expectation QX, Adjusted forward a negative earnings quarter margins indicated, gross and a the revenue negative million XX% adjusted dollars our $X.X somewhere XXXX as revenue experienced margin increased as for QX sales on for between and margin by our of and for percent a

$XXX,XXX of in as QX QX a of gross was XX% in year and AMS QX XXXX. or Our or versus XX.X% of XXXX increase from XXXX, AMS QX X% for percent revenue XX%, $XX,XXX margin margin $XXX,XXX XXXX QX the represented an adjusted gross XXXX. XX% increase and from prior adjusted in

of services AMS on we horsepower due the large increase quarter's our the installing decline prior provide of mentioned primarily gross As historical in volume low in pass-through is seen will QX new when QX that our year carry XXXX. we've significant percentage sets These the XXXX decreased This a in pass-through levels in and to somewhat from QX with level last in set they call, increase of and our of period. revenue beginning each The for equipment hence to margin unit saw revenues margins, fluctuate range the activity highest units. in quarter from volume XXXX. customers QX

and QX from XX% $XX.X QX. million XXX% quarter Our XXXX a adjusted to in increase sequential compared fourth was $X.X or $XX.X EBITDA increase XXXX million year-over-year, million in

adjusted were in margin. Pretax and adjusted contribution Our improved of from QX which XXXX. XXXX, loss our margin QX sales positive XXXX gross earnings for operating QX gross our unexpected $XXX,XXX approximately million benefited adjusted an high operating $X.X from rental EBITDA from

QX Our income XXXX operating was $XXX,XXX sequentially down QX. from approximately

loss a of impact Net XXXX. our fully of the $X.X were for QX net did $X.X note, in a of $X in of the share onetime in QX a in take XX% disclosed these charge in in year $XXX.X to both million basis, million approximately net filed operating million from the million a items approximately $X.X our share for inventory QX company diluted $XXX,XXX earnings and QX XXXX. On idle million operations $X.X a units, retirement sequential total $XXX,XXX charges $X.XX QX from million the XX-K forma would been However, Again, facility, to by of $X.XX $XX.X and which down pro revenue XXXX the approximately basis, million income of of increased onetime a charges, Midland from we increase XXXX, for to a and above. Earnings our as XXXX $X.XX QX income include QX. of million of per it's $X at income yesterday. Without fabrication discussed for our but share to respectively, cessation net per QX compared important of basic $X.XX the results in on for in loss additionally, result QX of per compared reserve XXXX. of the full or have increase was to as and income of XXXX XXXX

XXXX. XX% $XX.X rental revenue was also million in Our in XXXX million $XXX.X from to up

or revenue sales million from million XXXX Our XXXX. approximately up was to in in $XXX,XXX $X.X $X.X X%

was $X.X XXXX. from in revenue to in up AMS $X.X Our million XXXX million XXX%

year-over-year dollars million XX% $XX.X margin increased gross adjusted by in million. from Our XXXX $XX.X to

XX% $XX.X for rental XXXX. from $XX.X was or Our adjusted gross million, up million which was margin

XX.X% Our dollars decline adjusted for XX.X% gross sales associated was billings million gross was for gross XXXX, compared full in XXXX gross a AMS business billings of XXXX. percent of was Adjusted to in Again, XXXX. Adjusted our XX.X% the for XXXX. Adjusted of year positive compared [indiscernible] driven unit percent as was pass-through $XXX,XXX the a revenue in compared a for rental new in in was sales. gross approximately increase XX% AMS margin was margin loan in for in primarily to in percentage to for to sales with low-margin XXXX $X.X revenue XX.X% $XXX,XXX margin which sets XXXX XXXX X margin the by margin compared XXXX. of as pass-through the

as XXXX XXXX. in EBITDA increase was adjusted XX% a or $XX.X compared for XXXX $XX.X million in to Our million

for $XXX,XXX $XX.X for Our operating to was income approximately XXXX as compared XXXX. million

to compared as SG&A million was XXXX Our at in expense $X.X $XX.X $XX.X million million versus XXXX. XXXX in in higher 'XX

operating the half the first second run deducting rate nonrecurring $XXX,XXX some 'XX the for of units in million $X both items second for in the due half in inventory charge a we to above, less of our or reserve, nonrecurring was asset year. Also our quarter have from of were our However, onetime QX. income 'XX than discussed retirement noncash charges first idle the half XXXX, of impairment did taken of $XXX,XXX an in which and experienced the

year Our a net net the approximately for full to million was $XXX,XXX XXXX. XXXX loss compared $X.X income for of

a basic per XXXX share compared to net $X.XX on and $X.XX in was Our a $X.XX basis diluted of XXXX EPS both for loss for measures. fully

just had X,XXX representing over rented XX, we utilized XXX,XXX rental of XX, December XXX,XXX horsepower December representing as horsepower over X,XXX units, compared units XXXX. of just to As

We fleet representing last total year, a horsepower. of over net course XX% approximately in XX,XXX horsepower the fleet our approximately have added the to increase

passed of XXX,XXX year. fleet ended Our total up the just horsepower of end This at XXX,XXX we a year approximately over from size September, XXX,XXX fleet the horsepower. size and total is in horsepower last

our period, horsepower utilization utilization horsepower. fourth a rented XXX,XXX basis. on basis per XX.X% a same on by XX.X% on unit grew We quarter over a ended the During unit horsepower -- and the with per

increases units and horsepower per of growth the past in the revenue demonstrating price high XX% over we've year. year, implement also the over been horsepower the to able the Our increased impact

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

by XX% XX% Our year average currently. is in notably, drawing and fleet our utilized rent horsepower high approximately unit has grown past horsepower the over of per

QX. X.XXx looking cash at balance revolving in Turning the million on X QX with of facility. end financial We amended our $XXX agreement, and And ratio of sheet. in was contained and outstanding from to our the credit million the the ended which restated down end $X.X at our X.XXx, year our credit was at leverage covenants

ratio coverage charge for X.XXx fixed QX. in QX was Our X.XXx, from up

were December XX, our in covenants So both of as XXXX. comfortably we compliance with financial

which million will which as in for of significant balance levels of we credit restated million. We the a that, on our receivable billing million rental over of $XX XXXX. from The current address increase XXXX. With expenditures million accounts and primarily to slower collections for excess during XXXX. The operations is We had accounts delays, of is $XXX it related in generated was And receivable certain to facility XXXX. due discussion the flow of was XXXX, increased in $XXX in decrease during $XX million primarily balance during net operating Justin normal a million, I expected as book our the compared to elevated the amended by process-related environment. from to XX, approximately fleet approximately above. in of and discussed $XX.X December $XXX to at Our our capital paragraph rental expect we value turn back year-end activity cash

Justin?

Justin Jacobs

customers. Approximately growth you, the see solid and for share our we see for continue favorable positioned our where levels Overall, high crude and new oil oil generally is continuing active we Thank potential XX% near environment market over at perform is a activity John. demand expand pricing. while medium-term, basins, prices. both by to rental We in to liquids-oriented well to are attractive equipment and of fleet to believe with driven our services primarily located our for

relatively first steady, continue should prices to oil. drive As to activity. which oil such, appear a turn be level, macro I'll On

currently about LNG have negatively the Pricing and moratorium likely confidence least markets job rigs maintaining the production story. levels shows profitably gas-oriented to for perspective, we presence stable low these growth gas forecast company story, for gas the has and continue current I as rent people at to a gas do the Natural and doing are we generally would see increasing Overall, temporarily. good is medium-term. We in oil near-term. Activity production, future production gas-oriented are basins. equipment market describe markets not gas at the unsteady. From a to level. natural impacted reasonable The production weak, is a a on our but our the sentiment near areas, different in natural relatively facilities in are

remain hurry. awareness the negative While commodity in the overall constant environment state we change of can markets the favorable, be can described will to that a as in

As such, of our quarter consistently third our safety our with plan guidance margin growth to to provided we an update downturn. I'll any appropriate potential earnings XXXX withstand will to turn outlook with call. on an

written our For the also guidance. filed you of yesterday. disclaimer the closed which release after market I would point call, earnings beginning I a of forward-looking of the remind at would our summary outlook, you addresses And this to provided

EBITDA our material is Our $XX XXXX on adjusted current is outlook $XX a provided for This call. guidance to from third million million. the quarter increase

our that annualized amount current or rate fourth the adjusted XXXX low represents EBITDA range quarter As is we the of recurring. of run view of noted believe release, earnings in the end the

to which the draw attention. I fourth are X XXXX, your would to As quarter relates there it of items

fourth in we are first $X.X first quarter. better the We indicator margin First, had we had gross forward year But of year, the for than the fourth the X of quarters the adjusted the a sales of negative quarter. quarters X $X.X believe much million. million

adjusted into gross these Second, everything margin fourth describe right. call, that expectations. as John of rental the note account a leads we run that the believe XXXX. I required of would of is points some as of noted our believe level in are margins rate earlier Taking went XXXX. I quarter quarter investment approximation good the of areas in XXXX further of the of EBITDA to the exceed both at would there fourth the adjusted low end XX% us range

future to these live that quantified yet focused our both they corporate the scalability not I'm efficiency the field have drive on we and announce offices of our improving website and material While lines, yesterday. pleased investments, new operations, to are those in went growth. Along the

of investment, team with Although this in our who our move next happen. I'll are of business to sure we it would expenditures. provide all like thank to unit customers. capital new is made intent relatively to to make aspects I innovative our a small technologically our equipment the line indicative

expenditures expenditures XXXX The in range and/or XXXX approximately planned balance new completed capital our build that, Of the XXXX, million. $XX $XX installed that For XXXX will $XX to are unit is XXXX. expected expected is that capital and plan XXXX. be late to capital to units in from currently installed early and million be is completed million new

least capital, conversions. we would XX%. our growth on any I also would growth This as upgrades This to unit targeting which across growth In are define invested our expenditures, expenditures. I to average capital new and return an strategy. target is at units, discuss terms rate like capital of applies unit forward

While or each and one, are they to accretive improve our long-term fleet; number mergers our parts two, and utilization; also XXXX meet our intention fleet; our flow. There us grow optimize asset reflect number help X growth revenue number utilized of acquisitions. these items cash our hopefully expand four, outlook, and existing three, to will exceed execute number rental the the strategy:

of these Let me points describe a detail. in little each

believe price of improved with optimize modestly along cost utilized to experienced First, to parts that improve profitability higher increases collection existing maintenance. using geographic are there areas through costs fleet. our optimize inflation, efficiencies utilized of the our data the targeted in opportunities analysis particularly rental and operational existing rates and have We in by labor, fleet

as assets. creating we our fleet We overall the investable believe of increasing by of cash flow can well improve business improve utilization. noncash the for cash asset as Second, the utilization

books mostly XXX units was of units. Unutilized currently horsepower small number of as units. We more significant medium unutilized year-end have fleet consisting unutilized and XXXX a on the of than

to review improve cash where will these can We units. the unutilized marketability of potential and the units investment flow determine

tied We include earlier. can examples invested noncash of noncash assets the at these believe invested of back higher a the this return our also We up Notable and income above target capital. capital assets. of levels accounts have the monetized significant in receivable receivable, which and be discussed John amount on fleet or tax in

with strategy We driven believe primarily gas natural rental oil rental identify units expand unconventional existing the medium related We horsepower fleet. Fourth, beyond businesses customers. precontracted production of through of acquisitions. growth increases customer select increase station mainly there for fleet, larger horsepower compressors mergers prudently will meet execute part mergers of of size believe this compression rental companies or our demand intend similar agreements with in with and acquisitions or We the our providing placement fleet. our in to our be future opportunities accretive Third, in be centralized our through may and our to services.

to not evaluate point, and in While no particular will we any acquisitions, certainty other shareholders. At probability there components potential is of breakout could growth opportunities continue of joint a value for nor provide growth enhance the that of we deal, our provide ventures the long-term of contribution. strategy the goals to terms we for overall of will for medium will the this each

delivering drive next I further to we to growth remain to is value for as we'll how look for potential over growth forward However, our future. the our material to against intend years, X provide framework shareholders. This prepared X and concludes it the in our and that to potential remarks. the optimistic detail drive to look

up to the operator question-and-answer of our for the queue portion ask will call. I So

Operator

[Operator ] ahead. Instructions] please Tackle Mr. go [

Unknown Analyst

of the just you end XX? your bit of to the guidance talk what high you little could about takes Maybe a

Justin Jacobs

point, look in plan the which over through -- towards targeted think I those of spilled efficiencies. And growth operational when when into we're 'XX do really third of timing that what fleet, some the of are the the which seeing improvements units, terms items at price the on we and the and strategy, were as of the to look fleet -- then is able the timing it's potential optimization the installed. has expanding of point, those -- as it's XXXX, to going the we first increases, in in really the some

Unknown Analyst

the then of horsepower you sort 'XX? you're guess, about carryover And I terms of and 'XX terms of Understood. CapEx, can into your in adding, new units, between in how much talk planning the on

Justin Jacobs

that the I in would which of ratio the amount was be as that really in give the look aggregate, the those look for added, spent capital if you XXXX at roughly is you XXXX numbers we that at just will and horsepower same.

Unknown Analyst

sort it. reducing you then XQ you're And correct. margin? about and gross between about and higher? understood, which margin in if seeing that to And XQ talk parts you Got of but everything gross QX, specific talked sort right therefore, -- went got guided your can I maybe go And of

Justin Jacobs

in that we which It there's was it particular surpassed expenses the really at look across we really the no expectations, as line It performance we the board really highlighted, stood quarter, the and as line out. are with consumer items oil. fourth major our was said, largely parts, item labor,

so really, at at our and those the across performance that the say And expectation just come would timing, the we we will is of board, down. those machinery of kind looked looked it's as and the

there's -- no item went well. would that really exceptionally we everything a line particular to. was point It So

Unknown Analyst

it. And me I'll last then turn then over. Got X and it for just

being say compression and natural that the in is really growth as don't talked you those You just prices, how Can about basins? located see of story. your you gas much

Justin Jacobs

Sure.

at where rough look natural we roughly as the XX% basins numbers, balance, breakout, in in XX% so So oil the gas.

Operator

again I'll Mr. Hughes. go for and ahead up open

Unknown Shareholder

Frank and former is a Hughes, I'm Hello name there. Yes. My shareholder. Director

First, on the I'd your CEO. phase the appointment And Justin, congratulations congratulations next your to of say, like on as Steve, retirement.

this this handled been transition has -- been has expertly. whole think I

minute to that to Road CEO. my Mill Justin, you. understanding for from is and member for about appreciate at bit you personal Managing it's a of I'd little your level. NGS Director a to question personal going you, Board for a journey a discuss transition more Could at

Justin Jacobs

Sure.

we appreciate I partnership. I'll constructive actually has comments. the for that think, for a is a is, as you been, very it second, the perception thank Steve First, which speak here but shareholder for

I'd positive turnaround really noting that. From So particularly personal Mill situations. perspective, there worked investor, operational of I role and Road, a to in combination the prior and a appreciate comments

back little for so And to me, in career. going this my earlier of bit a is a

I years really the Mill on potential. Certainly, shareholder is that, over some to prior I at believe through grown a for with as business look an Gas year, to looked the Board having years. As the I results past significantly. Road what the think Natural for Services at opportunity been and several you great growth future continue the has in opportunity I there's several And the see

And so that was really on a great very that, with attractive Steve opportunity of gave having step confidence running in to and me my be Board, ground to hit relationship I'd been able a with transition. and the the

speaking and an longtime overall, their just exciting supportive that and was friends really colleagues, it me. former at Mill now one larger with who in my so And they joining were in And opportunity team opportunity investments. for Road our were team, just incredibly of

take. to around, a was excited opportunity And I been able that so great all it

Unknown Shareholder

XX those and I've Well, for much again, initially for comments. private when was an involved with it you Gas companies. still very been thank is Natural years, Services investor

of So managed on work that I'm glad company and this out to very to behalf see yourself. the

you, So again, thank Justin.

Operator

comes Rob Our Mr. next Brown. question from

Robert Brown

all Rob Markets. And Capital congratulations Street the progress. with It's Lake on Brown

Unknown Executive

we Rob, you there. lose

Operator

Let's it Mr. again. try Brown.

Robert Brown

progress. Street. Brown all with Rob Congratulations on the Lake

environment. of question the First kind the is pricing on

guess, to on pricing, increase And with fleet. guess, for opportunities unit alluded pricing placements? think your new is overall still of continue I the your opportunity environment? in some is the But the to how how some Does the -- I market? I prices you

Justin Jacobs

the just by significant Yes. think pricing. years level, I seeing for generally units was, comments attractive I inflation... a that pricing words over units earlier for are would really think at and new hit cost both were our The several existing that I first high driven past and

Robert Brown

Yes.

Justin Jacobs

Depending on look to at. you what want metrics

Permian our the although areas that is of think look we general still the at of attract the labor it I largest there. And very level people we But moderated still where difficult business, look at we're as feel are when that seeing the inflation in particularly we where some, inflation, still that Basin to field. is in has terms

to to fleet look going through and our able time. try maintain pricing new and margin taking so at improve And we we close a as existing certainly at we're are our are units, looking over say and

Robert Brown

on I sort to CapEx what that drives it. of Great. the I the some drive talked customer think. spending upside does interest guess, or Or pretty Or Okay. you Got that, of, the for I upside quotes customer outlook, to of And the about seeing -- could that potential CapEx? 'XX could upside kind that period? Are CapEx? you look stable the guess

Justin Jacobs

Well, we're incremental certainly customer seeing demand.

quite any ability made at in also review near-term the maintaining is some but relative prudent to the near-term haven't attractive at a that or decisions availability of around leverage capitalize us We that, while on looking for units in to making prices. customers the pre-contract levels and looking sure we're with future, great for new

but it capital update looking quarter we're something the on is to extent the at, that and a increases. So we'll certainly plan decision something on yet, made we've our next not that

Operator

Our Mr. O’Toole. next from question comes O’Toole. Tim

Timothy O’Toole

right? me, Can you hear

Justin Jacobs

you, Tim. We can hear

Timothy O’Toole

on coming past, And And books some point, after is quarter. of retiring first quick and the One for you and the Great. I couple as on quarter we'll basically offline at the welcome, balance Justin, at a out million. couple closing now Steve. A all, sheet, to finally I've debt We're trials. questions. of $XXX first of fourth the of with in -- level congratulations catch-up Steve done so the the

to target in terms also of various levels. And So would could I'm kind you ratios. of some if and then about that debt current talk wondering the where go of you

would will out yes, ratio if the coming absent, of -- you out? And like a being. you of Where in where and on go? to relate control matrix then Let's related, let's on you're or also winds what rates, on just terms short-term varying year, spread -- have I of be you spread that the of what M&A, $XX think that can really year, where that leverage say, Fed facility to this to million -- to grid $XX SOFR. SOFR EBITDA But say, a does would depending you debt have your coverage ratio. target million that kind up the coming ratios, that the that We can't

about So talk could bit? and a you little the that leverage

Justin Jacobs

maybe Bittner And to the the I'll second on to pricing just address the John rate. ask Sure. as interest question it first relates

John Bittner

Great.

leverage interest the are when up points increases So by north on the X.XX, we goes currently below. XX our now basis which pricing rate

the of of So the and more Qs we are at QX kind XXXX pricing our of QX grid on for -- mid-tier XXXX.

Justin Jacobs

on current or covenants. And levels, I at availability I to any look cushion modeling future. level Tim, scenarios of the with, the is think at. have mentioned going the both and that QX in I target release, as are we And the feel financial projections looking with through we future, that would I a into there different your market the overall the level. of would at question on go of level terms guess, whether environment, into comfortable potentially address just our I we positive just press a numbers, not look in comfortable a the very say comfortable that as you target very negative in -- And to, that isn't I'm specific

with, larger comfortable levels potentially our existing that leverage some I that a are think, balance shareholders some and like the a unit where of with that for we to to capture the some be opportunities guidance of a for kind and some on to it's of they given attractive debt generally are, sense a reasonably on us through sentiment you where grow going work us balancing we they're could potentially have to we've customers our think be higher could little bit maybe side. And I future. debt of that probably new taking for incremental of customers

Timothy O’Toole

Okay. kind targets? maybe to about accounts other not sure or you And can normalize and that I'm also get I about I here. The dials how obviously high. any you those talked Could assets... what the can takes on AR I'm of monetizing, days it receivable wondering if of quarters if And -- but targets -- guess, kind many are are the then well, you if you said -- turn talk what there towards

Justin Jacobs

Sure.

Timothy O’Toole

guess, Have but is on this fab specifically, pursuing a can Or I maybe been they that that I'm process fact, facilities. broaden the in at discussion you And probably, the about, you're monetized? as wondering well point?

Justin Jacobs

Sure.

take first to I'll accounts me let go receivable. -- So

days much our you mentioned, higher As is historical. than receivable

giving If over the more really to those of years, you it see do levels. are we're back need we I back of don't comfortable look bring where that saying point, will specific we're historical, reason to, a kind at understand course course we to at we number, looking but and levels year, targets, several get our can't without going any do year. over the we down historical to to of quarterly give specific back what the the this

process that And that that's really of On some the facilities, that capabilities great and the the reviewing facilities, be us all side. capabilities rental fabrication will people We've is as capabilities we that to we're we'll terms a drive are we what for a driven ongoing. some business necessary that need by of currently got need. do great in the on

Timothy O’Toole

Great. Okay.

sheet balance any visibility that? in quick And on receivable quick the been time, quite yes, there of any update I long the question has kind on -- mean terms that. for out obviously. a question, of tax moving Another government is

Justin Jacobs

the we at I than would that near terms would other put nothing we into fleet. list certainly view forward-looking. to in current top asset our will So turn of disclosure in what be that say to it of a from cash asset of invest able something I in noncash a or our incremental is back the

the is at capital So it's something one. that right

Timothy O’Toole

Right. area, could resolve EBITDA, actually cash capital your on Basically, just peers can Yes. And it. but everyone all And all metric. And there think you bit you you capital of maybe use do. some think through, little industry actually vis-a-vis final kind is that relates year's about peers many I not also control I to in a as can a flow, this of then capital? of on your that if do point But talk a a of strategy that I at allocation. consideration dividend at discretionary one how I'm actually also cash on modest -- allocation flow, you sure it it people adding based is, back and valuation least allocate a then which will. -- discretionary

Justin Jacobs

Sure.

entirely asked about our question consider -- us think you're the cash how topic I to and thinking understanding previous how about it's quarters an for time, we So flow, around to look back I reasonable you've provide and we're in discretionary over think better I shareholders allocation. capital

For quarter the we've done on for that time first some the given And guidance we've what quarter incremental particular gave past. of course, the call. topic, prior to guidance in this in Steve relative

detail and over And is it timing going general without give the of look a we're do material we I dividend of of at on going our topic overall of of capital good time and would a say there valuation, in of a by to a one the any nothing going how the of mindful -- I'm specific is than consider to part part which So something or we color exactly that what it better clear large is specific to players Board as and investors likely of their to dividend going when to is considering giving on potential and looking time. terms that allocation, a that is more mindful. question capital timing we're to that's or is we're give material that is certainly what that Board other do part it we're do. The -- allocation,

Timothy O’Toole

up and the there. work. Keep both And congratulations good Great. Okay. you whole team the to

Operator

like The Last Sullivan. question comes looks Tate from it

Tate Sullivan

good that, are. Can some website, of Or about how market length you of talking that? look you to years these you the your we X shows website progress context to that Group of -- doors, Maxim can rental large on X,XXX-horsepower go I'm to staying forward you touch. into from new earlier Tate working I and Great. mean, your and I and X,XXX great we've seen moving Steve, Sullivan in to in mentioned continue with heard And to are the units X X units some up contracts how the mean, years? I get out going talk larger the

Stephen Taylor

Sure.

units, For months of listed And in XX in high the at XX-K, [ we're are contracted of public think the the the be terms going we've in horsepower to up range. those ]. large disclosure our end to with I

Tate Sullivan

talk for have far so very Does then to continues looking with customer the to you you just has and a customers what from important little them? you talk your turned And today? demand -- customer. more? Are can with a Oxy diversify you be mean mean, mix can about keep that conversations about -- continue your customers -- I And dialogue just I into Okay. --

Stephen Taylor

Sure.

into We very a specific can is see are get you won't names. -- customer largest customer Obviously, I that -- important a customer. our Oxy and

We new to we continuing business that and we customer even not really are -- in take to to Oxy, diversifying customers. We're base and terms Oxy. increase so customer dollars, with continue our do, see really base with mindful to certainly, it's our -- some our just that's going of demand want of want from time to don't across to

medium opportunities of the And to to decision we making is certainly over to think there, term, we're won't so customers, the the Oxy, capital plan. get they large which that's of we have have part short opportunities of couple the some a around additional size and seeing but

Tate Sullivan

for for a positive have comment your terms margin more last adjusted you the -- positive sales streak, me, backlog? projects? after there forward sales you profit the shifted in new of to be sales gross this does might in going And a growth do Or -- margin liquid? can And trend

Justin Jacobs

remarks. But to quarter. Yes. about with our contribution were rate we what the the our happy in I'd outlook. go XXXX apply as -- of certainly fourth those prepared the is run fourth think quarter our We to back positive

the fourth look as the the more go as margin, X really quarters forward the first the the quarter. adjusted sales, towards On of we'd year opposed to

Operator

in no questions queue. more are There

Justin Jacobs

done. I call. for for all these job you, position. your participation did are employees thanks sometimes opportunity your and and and support, questions for but a who thankless the appreciate our to shareholders. work We of enviable job, in want deliver this on you to numbers our well to of Thank sincerely an real is the thank we I Great. a It thank all is believe

the of forward and markets have who progress Thank them. we value Our We equipment quarter. to are like would next and services updating more you. on strong, and generally you look customers our our in

Operator

conference concludes attending. This so call. much today's Thank you for

Natural Gas Services (NGS) 2 Apr 242023 Q4 Earnings call transcript