Flowco Holding - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 was mixed: revenue declined 8% sequentially to $176.9M while Adjusted EBITDA rose to $76.8M and margin expanded 382 bps QoQ to 43.4% as rental mix increased.
• Versus Wall Street, Flowco beat S&P Global EPS consensus (Primary EPS 0.41 vs 0.30*) but missed revenue (actual $176.9M vs $189.8M*) and was roughly in line on EBITDA (EBITDA $73.8M vs $74.4M*), with Adjusted EBITDA at $76.8M.
• Guidance: Q4 Adjusted EBITDA outlook of $76–$80M; SG&A broadly consistent; Production Solutions revenue to decline seasonally; Natural Gas Technologies revenue to rebound slightly above Q2 levels.
• Capital allocation: declared $0.08 dividend (payable Nov 26), repurchased $15M of shares in Q3; ended Oct 31 with $205.2M borrowings and $518.3M availability on its revolver.
• Potential stock catalysts: EPS beat and margin expansion, resilient rental cash flows, new buyback/dividend, and Q4 guide near the high-70s EBITDA range; offset by softer product sales and sequential revenue decline.

Note: Items marked with an asterisk (*) are Values retrieved from S&P Global.

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EBITDA of $76.8M exceeded internal expectations, with margin up 382 bps QoQ to 43.4% driven by higher-margin rentals.
  • Rental revenue rose to ~$107M vs $102M in Q2; integration of 155 HPGL/VRU assets completed and contributing to enhanced margins and new blue-chip relationships.
  • Strong free cash flow of $42.8M; dividend declared ($0.08) and $15M buybacks underscore cash generation and shareholder returns.

• What Went Wrong

  • Total revenue fell 8% QoQ on weaker product sales in Production Solutions and Natural Gas Technologies (notably Natural Gas Systems).
  • Natural Gas Technologies revenue declined 21% QoQ; segment Adjusted EBITDA down 7.6% despite favorable mix to rentals.
  • Annualized Adjusted ROCE stepped down to ~16% due to lower product sales and capital deployed for the asset acquisition; macro uncertainty and commodity volatility persisted.

Transcript

Operator (participant)

Good morning. Welcome to Flowco Holdings' third quarter 2025 earnings call. Today's call is being recorded and we have allotted a heated one hour for prepared remarks and Q and A. At this time I would like to turn the conference over to Andrew Leonpacher, Vice President of Finance, Corporate Development, and Investor Relations at Flowco. Thank you. You may begin.

Andrew Leonpacher (VP of Investor Relations)

Good morning everyone and thanks for joining us to discuss Flowco's third quarter results. Before we begin, we would like to remind you that this conference call may include forward looking statements. These statements, which are subject to various risks, uncertainties and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties and assumptions are detailed in this morning's press release as well as our filings with the SEC which can be found on our website at ir.flowco-inc.com. We undertake no obligation to revise or update any forward looking statements or information except as required by law. During our call today we will also reference certain non-GAAP financial information. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and in our SEC filings. Joining me on the call today is our President and Chief Executive Officer Joe Bob Edwards and our Chief Financial Officer John Byers. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Joe Bob.

Joe Bob Edwards (President and CEO)

Thank you Andrew, and good morning everybody, and thank you for joining us today. I'll start today by reviewing our third quarter results and operational performance along with an update on the integration of the assets we acquired in August. John will then provide additional detail on our financial and segment results, our balance sheet, and thoughts on capital allocation. I'll wrap up with our perspective on the current market environment and our outlook for the remainder of the year before we open up the line for your questions. In the third quarter, Flowco delivered another period of strong operational and financial execution. We generated Adjusted EBITDA of $76.8 million, exceeding expectations, and we saw a 382 basis point expansion in our Adjusted EBITDA margin quarter-over-quarter.

Excluding the capital associated with our recent asset acquisition, we generated approximately $43 million in free cash flow, underscoring the durability of our cash flow generation and our disciplined execution across the business. Our performance reflects a shift toward our high margin rental portfolio which is growing through targeted investment and incremental customer demand for high pressure gas lift and vapor recovery systems. On HPGL, our solutions are delivering measurable improvements in production efficiency, uptime, and reliability, helping operators enhance recovery and returns. Customers continue to value the consistency and economic uplift these systems provide, particularly in an environment that rewards capital efficiency and sustained performance. On VRU, we are seeing continued momentum as operators recognize the financial and operational benefits of capturing and monetizing natural gas that would otherwise be vented or flared.

Together, our HPGL and VRU fleets provide contracted recurring cash flows that offer visibility and consistency across cycles. These technologies are strengthening Flowco's leadership in production optimization and we believe there remains substantial runway ahead as customers broaden deployment across their assets and recognize the long term value of these solutions. Our high margin rental portfolio was further bolstered by the acquisition of 155 high pressure gas lift and vapor recovery systems which we completed in August and discussed on our second quarter call. The integration of these assets has gone extremely well and is now complete with the units performing in line with expectations and contributing to our enhanced margin profile. The acquired systems, all deployed in the Permian, have also enabled us to establish new relationships with several blue chip customers while strengthening service to existing accounts.

We will continue to evaluate inorganic opportunities within production optimization that complement our portfolio and align with our disciplined capital allocation framework. Spending a moment on sales and consistent with what we discussed in our second quarter call, revenues declined sequentially in both our production solutions and natural gas technology segments. John will expand on this in his remarks, but much of this impact was driven by our natural gas systems business unit which is our lowest margin business but remains a critical part of our internal supply chain and it also provides us operational flexibility within production solutions. Product sales were also impacted but performance remained resilient considering the environment and they exceeded our expectations for gross margin performance. This result underscores the sustained demand for our differentiated, high quality products and highlights the emphasis operators continue to place on reliability and performance in the current environment.

Overall, I am pleased with our operational and financial performance in the third quarter. We continue to execute well across the organization, expanding margins, generating strong free cash flow, and strengthening our high margin rental portfolio through both organic growth and the integration of our acquired assets. These results highlight the resiliency of our business model and consistency of our execution in a dynamic market environment. With that, I'll turn it over to John to provide more detail on the third quarter. John?

John Byers (CFO)

Thanks Joe Bob. Before reviewing some of the key financial metrics and results for the third quarter, I'd like to provide a reminder on our historical financial information given the combination of Flowco, Flogistix and Estis in June of 2024. For clarity, note that any financial information presented prior to the June 20, 2024 business combination such as the third quarter 2024 financials reflects only the historical performance for Estes. Financial information for the second and third quarters of 2025 reflects the financials for the consolidated entities. Turning to our financials, third quarter performance exceeded expectations reflecting continued growth in our rental fleet and stronger than anticipated profitability within our sales business units. We reported adjusted net income of $37.3 million on revenue of $176.9 million. Total revenue declined 8% sequentially driven by lower product sales activity in both our Production Solutions and Natural Gas Technology segment.

Despite lower revenue, Adjusted EBITDA increased sequentially supported by the continued growth of our rental portfolio and its higher margin profile. As a side note, rental revenue, most of which is recurring, increased to $107 million versus $102 million last quarter. Adjusted EBITDA margin expanded by 382 basis points quarter-over-quarter reflecting the benefit of our portfolio mix shift in the operating leverage we continue to capture across the business. In our production solutions segment, third quarter revenue decreased 2.1% to $126 million while adjusted segment EBITDA increased 3.6% from the second quarter to $55 million. Adjusted segment EBITDA margin expanded 240 basis points quarter-over-quarter. The decline in revenue was primarily driven by lower downhole components product sales and partially offset by higher rental revenue from both our existing fleet and the recently acquired assets.

The increase in Adjusted EBITDA and margin was largely attributable to improved operating leverage within our surface equipment rental business and an improvement in gross margin performance in downhole components. In our natural gas technology segment, third quarter revenue decreased 21% to $51 million compared with the second quarter, while Adjusted EBITDA decreased 7.6% to $25 million over the same period, which were attributable to a decrease in natural gas systems and vapor recovery system sales in the quarter. Adjusted segment EBITDA margin increased by 714 basis points due to a favorable revenue mix shift towards vapor recovery from natural gas systems.

Turning briefly to corporate costs, third quarter corporate expenses were $3.8 million, down from $4.3 million in the second quarter, primarily reflecting lower third party professional service costs during the period and a reduction in G&A. Overall, consolidated third quarter Adjusted EBITDA was $76.8 million. Since becoming a public company, we've delivered consistent EBITDA growth while expanding margins and sustaining top quartile profitability even against a more challenging macro backdrop than when we entered the public markets. In the third quarter, we deployed $39.7 million of organic capital, with the majority of capital allocated to expanding our surface equipment and vapor recovery rental fleet to support sustained customer demand at attractive returns. As we look to the remainder of the year, we expect only modest adjustments to organic capital spending and anticipate fourth quarter CapEx to decline relative to the third quarter.

As noted last quarter, we accelerated a portion of our 2026 capital plan into 2025 in connection with the asset transaction and we are assessing market conditions and customer activity levels to determine the appropriate pace of capital deployment for next year. We will continue to prioritize opportunities that enhance growth while meeting our return thresholds in alignment with our broader capital allocation strategy. Our typical investment lead time is approximately six months, which combined with our vertically integrated manufacturing, provides flexibility to adapt spending as we gauge customer demand and market conditions on return on capital employed. Our Annualized Adjusted ROCE for the quarter was approximately 16%. The sequential decrease reflects lower product sales in the period and the incremental capital deployed for the asset acquisition.

As an update on our assessment of the One Big Beautiful Bill act in the third quarter, we benefited from the reinstatement of 100% bonus depreciation for certain fixed assets applicable to both our current year capital expenditures and the acquired assets. As a result, we've had a reversal of income tax expense in the quarter and anticipate minimal federal income tax burden for the remainder of the year. Turning to our balance sheet liquidity and capital allocation, we ended the quarter in a strong financial position. As of October 31, 2025, we had $205.2 million of borrowings outstanding on our credit facility with a borrowing base of $723.5 million. We had $518.3 million of availability under the facility. On October 31st, Flowco declared a quarterly dividend of $0.08 per share payable on November 26.

In addition, during the quarter we returned $15 million of capital to shareholders through share repurchases. Our ability to pursue both organic and inorganic growth while returning capital to shareholders and maintaining low leverage highlights the durability of our business model and the strong cash flow generation across our business units. In summary, we delivered a solid third quarter outperforming our expectations with Adjusted EBITDA above our guidance range. We executed well despite a softer upstream backdrop that weighed on product sales and based on current visibility, we expect sales to improve in the fourth quarter. Joe Bob will speak shortly to the market environment and our outlook as we close out the year. Looking ahead, we expect our rental fleet to continue delivering consistent predictable performance supported by strong demand and contracted cash flows.

We also anticipate continued resilience and strong free cash flow generation across our sales business units. Our disciplined capital deployment and differentiated business model give us confidence in our ability to continue delivering strong results. Back to you, Joe Bob.

Joe Bob Edwards (President and CEO)

Thanks John. Turning now to the market outlook, as we noted last quarter, the North American upstream landscape remains dynamic with operators continuing to balance production growth with capital discipline in a lower commodity price environment. While macro uncertainty and commodity price volatility persist, activity levels have generally stabilized and customers are increasingly focused on maximizing returns from their existing production base.

We continue to see a shift toward prioritizing operating expenditures over capital expenditures to sustain or grow production, an approach that aligns directly with Flowco's core strengths in production optimization. Considering this market backdrop, our growth expectations for the remainder of the year are unchanged and this is reflected in our fourth quarter guidance. In the fourth quarter we expect Adjusted EBITDA of $76 million-$80 million. This outlook reflects continued momentum and growth in our surface equipment and vapor recovery rental fleets, inclusive of a full quarter contribution from the assets acquired in August. Within Production Solutions, we anticipate a small incremental seasonal slowdown in product sales that will lead to an overall decrease in revenue in the Production Solutions segment.

For the natural gas technology segment, based on current visibility, we anticipate a rebound in sales across both natural gas systems and vapor recovery systems resulting in segment revenue slightly above second quarter levels. Finally, we expect SG&A to remain broadly consistent with the third quarter. I am pleased with the solid performance of our business this quarter and I want to thank all of our employees across Flowco for their continued dedication and disciplined execution. While we are encouraged by our positioning, we remain focused on strengthening the business for the long term. We are committed to continuously improving our operations and advancing our strategic priorities within natural gas technologies. We are seeing positive early returns from the use of machine learning to improve efficiency, reduce maintenance expenditures and enhance margins through an internally developed proprietary system.

Across our manufacturing and operational footprint, we are evaluating opportunities to further streamline processes and increase profitability as we strengthen collaboration across the organization. We are identifying ways to more fully service customers through our complete suite of products and solutions and we continue to assess both organic and inorganic opportunities to enhance our technology and service offerings. Positioning Flowco to further support our customers in maximizing their production and profitability in 2025 has reinforced the value of our strategic focus on production optimization where advancing artificial lift technologies within production solutions and improving vapor recovery performance across natural gas technologies is creating meaningful value for our customers and for Flowco. We believe the next phase of value creation will be driven by technology-enabled efficiency, continued innovation across our offerings, and deeper collaboration with our customers to unlock value over the life of the well.

Flowco is well positioned to continue advancing our strategy and to deliver meaningful long term value for our customers and shareholders. With that, I'll turn it back over to the operator for Q and A.

Operator (participant)

Thank you. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question is from Derek Podhaizer with Piper Sandler. Please proceed.

Derek Podhaizer (Senior Equity Research Analyst)

Hey, good morning Joe Bob and John. Just wanted to start with natural gas technologies. More specifically, the progression of optimizing natural gas systems seems like that drove some of the top line decrease, but we've also saw a 700 basis points margin expansion there. I know this was a point of emphasis last quarter, so maybe just update us on your progression optimizing that business unit because it seems like you made a lot of progress in the quarter and how we should think about it moving forward as you continue to optimize NGS.

Joe Bob Edwards (President and CEO)

Yeah, certainly Derek. Hey, thanks for the question.

Good to hear from you.

Remember, the Natural Gas Systems business unit is our supply chain, right?

It is. Its primary function is to build vapor recovery systems as well as the conventional and high pressure gas flow systems for our rental fleets. In addition to that, from time to time we will sell systems to customers that would prefer to own versus rent. Again, we do not sell high pressure gas lift systems, but we will sell conventional gas lift packages as well as vapor recovery systems when the stars align and the price is right.

Okay, with that said we did take in the earlier part of this year the step to optimize that part of our supply chain by consolidating one of our facilities into our center of excellence in El Reno. I think you've been there. It's a world-class manufacturing facility. Very proud of that facility. We took the painful step to close down one of our sister facilities in Pampa, Texas and reallocate the capacity to El Reno, Oklahoma. One particular point that we're particularly proud of is the fact that with all of the redundancy that took place in Pampa through various job placement exercises and career fairs that we hosted, we placed almost 100% of those employees in neighboring facilities in the Pampa region. Even though it was a painful step, it was a necessary step for our shareholders, but we did right by the community that we operate in every day and taking care of those employees.

There might be more to go there.

We have additional capacity elsewhere in the system. We continue to evaluate it as we look at the demand profile going into 2026. Yeah, we're happy to get that behind us this year and move forward in a leaner way.

Derek Podhaizer (Senior Equity Research Analyst)

Got it. Okay, that's helpful. Color and then I guess just on the rentals, right. Like we're up to 60% of revenue now. We were 50% in first quarter.

Is this where you expect the run rate to kind of be going forward as we move into 2026 or are you continuing to target rentals of HPGL and, you know, VRUs that we could see something north of 60% as we move into next year?

Joe Bob Edwards (President and CEO)

It'll largely depend on the capital deployment pace, Derek.

The shift from 50%-60% this year is, is really due to the capital we've deployed as well as the softer product sales. Okay, so it's a mix shift coupled with growth CapEx kind of phenomenon heading into next year. We see and we'll talk on this. I think John will probably address this in a minute. We see capital deployment roughly in line with what we're deploying, what we have deployed in 2025. There will be some mix shift within the capital deployment of course, depending on the demand profile we see. But we fully expect product sales to be largely consistent with where they are in 2025 absent some sort of industry activity boost. Remember, the product sales are a function of both what happens downhole as well as the surface equipment and we've seen particular weakness in the surface equipment sales business in 2025.

Yeah, look, hard to tell if 60% is going to be the new norm or if it's going to go down. My guess is it's probably going to go down a bit as sales recover heading into the end of the year and then, and then going into 2026. Anything to add to that?

John Byers (CFO)

No, I agree. I think, I mean, you know, 60% is almost a flip from a couple of years ago because of all the investment we've made in our rental fleet. But, you know, Q3 was, you know, particularly low in terms of product sales. We expect that to recover a little bit in the next quarter. I think you'll see that kind of bump back down a little bit and, you know, overall that'll have an impact on margins as well as we sell more than we rent.

Derek Podhaizer (Senior Equity Research Analyst)

Got it.

Very helpful.

Great quarter, guys. I'll turn it back.

Joe Bob Edwards (President and CEO)

Thanks, Derek.

John Byers (CFO)

Thanks.

Operator (participant)

Our next question is from Phillip Jungwirth with BMO Capital Markets. Please proceed.

Phillip Jungwirth (Managing Director)

Thanks.

Good morning guys.

You've operated the Archrock assets for the last couple months.

Can you give us a bit more detail on the customer response and feedback to date as they work with the Flowco team? Is there any cross selling potential or increased HPGL penetration that can be done across the new blue chip customers?

Joe Bob Edwards (President and CEO)

Certainly. To answer the second question first, yes, we inherited a couple of accounts that we for a variety of reasons had trouble penetrating specifically with HPGL, Phil. We think that the, and it's early, but we think that those accounts are going to be open to the broader commercial discussions that our teams can have as they progress through the wells progression from HPGL to another form of lift, most likely traditional gas lift. Those conversations are happening. We're starting to see some good early returns there and that's just a daily part of the battle on our commercial efforts.

In terms of the first part of your question having to do with really the integration of the systems into our fleet, it was seamless.

Okay.

The reception that we got from customers of us really the leader in the space and you know, what we do is focus on production at the wellhead. Customers were very pleased that we were the buyer of these assets and are now the custodian of their early production efforts. I'd say all around it was very positive.

I certainly hope all future M&A is as seamless as this.

This is a particularly unique one though, I think. No, it's gone really well.

Phillip Jungwirth (Managing Director)

Great, great to hear.

Can you talk about recent trends in VRU adoption across maybe both upstream and midstream? Just given that captured methane is put back into the sales pipeline, one of the big themes we have seen is just the amount of Permian pipelines and construction FID in the last couple months and what the strips implying for WAHA post 2026. Does this at all make you any more optimistic on increased VRU adoption after you see higher in basin gas prices?

Joe Bob Edwards (President and CEO)

No question. We are as optimistic, if not more, based on the fundamentals of the natural gas build out. You mentioned pipeline capacity. It seems like anytime you have a new pipeline announcement, it just inevitably gets filled with all of the associated gas that's coming out of the Permian. The massive amount of data center power build out that's taking place, a very large portion of that will be fueled by natural gas. I think the demand profile for natural gas, the fundamentals for natural gas coming out of the Permian in particular just continue to strengthen. Vapor recovery is becoming ubiquitous. With pad design and with the undeniable economics that it provides to an operator to deploy our systems, we remain confident in additional system deployment.

We really track a couple of key KPIs on a month by month basis. One of the most critical ones is the number of units that we set every month net of those that come back to us in terms of returns. I'm pleased to say that we just continue to see positive months as we build more systems. As customer demand improves, that net set number continues to trend in the right direction. We see no reason to back away from the capital deployment that we planned for 2026 in VRU and look forward to hopefully providing more positive data points in the quarters to come.

Phillip Jungwirth (Managing Director)

Great.

Thanks guys.

Operator (participant)

Our next question is from Sean Mitchell with Daniel Energy Partners. Please proceed.

Sean Mitchell (Managing Partner)

Good morning guys, and thanks for taking my question, Joe Bob, you kind of mentioned technology in the opening comments, but just are you guys building out kind of proprietary software tools in house?

Are you partnering with kind of digital specialists to accelerate kind of AI and automation capabilities?

Joe Bob Edwards (President and CEO)

Good question, Sean. We actually have built out over the last 10 years, if you can believe it, in-house, proprietary software systems that have helped manage and operate our vapor recovery systems more efficiently, more profitably than our competitors. Okay, so this is a legacy of previous investments we have made as a private entity pre-IPO. We are in the very early stages of leveraging that internal capability of software development, specifically software development to help optimize surface equipment more efficiently.

We're in the early phases of deploying that capability across the rest of our businesses and then obviously from there integrating data that we can collect downhole, either with our own equipment or with third party equipment into more efficient operation of a system that marries downhole lift techniques with surface drive that will enable the lift technique to take place. This is largely an in house effort. We alluded to it in some of our prepared remarks. We are starting to see some very positive early returns from years worth of investment and hopefully more to come there. I think the ultimate end goal is to work with customers who have more data than we do, right. To integrate what they see in their production information with what we can provide with our LIFT and VRU techniques to help optimize their production on a fieldwide basis. Not just well by well but that's the end goal. We're on the journey and look forward to hopefully sharing more good news over time.

Sean Mitchell (Managing Partner)

Thank you for the color.

Appreciate it.

Congrats on the quarter.

Joe Bob Edwards (President and CEO)

Thanks Sean.

Operator (participant)

As a reminder, it is Star one on your telephone keypad if you would like to ask a question. Our next question is from Jeff LeBlanc with TPH & Co. Please proceed.

Jeff LeBlanc (Analyst)

Good morning Joe Bob and team. Thanks for taking my question. I wanted to see if you could help frame, sorry, I wanted to see if you could help frame the tailwind for your HPGL and VRU businesses as operators start to target gassier benches. I know you just talked about the tailwind for natural gas demand, but it actually seems like at least you're starting to see the shift on phase windows in Anadarko and Eagle Ford and then probably over time you could also see it in the Permian. I just appreciate any color there. Thank you.

Joe Bob Edwards (President and CEO)

Look, for HPGL, what you're really, what we're really looking at is oil production, right? As we look at, you know, big picture production data for the country, oil production continues to hang in there and we haven't seen the meaningful decline in production that I think folks feared earlier this year might take place as commodity prices corrected and activity levels started to be curtailed. I think high-pressure gas lift certainly plays a part of that.

And we're going to continue to invest in that effort. We've really seen no change from customers' demand for our systems, in particular in the Permian, which is our largest concentration of units in the U.S. We expect to continue to generate positive growth out of that specific product line over the next few quarters and really have not seen any kind of demand profile shift. Hopefully that answers your question. I know there's not a ton of detail in there, but that's how we see it.

Jeff LeBlanc (Analyst)

Thank you very much. I'll hand the call back to the operator.

Operator (participant)

Our next call is a follow up from Derek Podhaizer with Piper Sandler. Please proceed.

Derek Podhaizer (Senior Equity Research Analyst)

Hey, wanted to ask about the buyback. Nice to see $15 million for this quarter, maybe. Just updated thoughts how you're thinking about that as far as your capital allocation strategy. Obviously we have the dividend for a couple quarters now you have the buyback. I know you have an authorization out there. You're balancing your capital deployment. Will this just be opportunistic? Will this be more formulaic, you know, returning over 50% of free cash, which is really nice to see. Just maybe some more thoughts around the buyback just given that you just kicked it off.

Joe Bob Edwards (President and CEO)

Yeah, certainly, Derek. Listen, we've been very, very careful to not be prescriptive in telegraphing to the market.

You know, how our capital allocation framework will be, you know, period. We've been much more opportunistic in looking at ways to deploy the free cash flow that we generate every day.

As we looked during the quarter at our internal opportunities as well as every day, how we're valued, it just became increasingly more clear that we were undervalued. We leaned into share repurchases during the quarter and we will continue to, as long as we feel like we are not valued where we feel like we should be, certainly that in relative terms against the opportunity set that we have to deploy capital in our existing business and of course in M&A. Look, we will remain opportunistic. We were happy to start the process during the quarter to buy back stock opportunistically and we will just continue to evaluate it as it hits the screen every day.

Derek Podhaizer (Senior Equity Research Analyst)

Got it. No, that makes sense. Maybe just looking out to 2026, you know, appreciate that it's early, but how do you start to think about that, you know, kind of where you're comfortable, where estimates are today for next year and just thinking about the progression of obviously kind of these weaker product sales. You know, we have some seasonal diff in Q4 but we should have some recovery next year. Maybe just some early thoughts as you look out to 2026 and kind of where numbers are shaking out right now.

Joe Bob Edwards (President and CEO)

Listen, we're a brand new public company, right? We've started to be consistent in guiding quarter by quarter. I think we're going to continue that cadence. Derek, we provided you some guidance for Q4. We obviously have a view on 2026, but we're going to see how the planning process goes between now and then.end of the year.

What I can tell you is that the opportunity set that we are investing in today, and remember, we're kind of a six month lead time kind of organic CapEx organization. The opportunity set looks strong, and we are making capital decisions out through June, and I'd say they're largely consistent with the opportunity set that we've seen this year. I don't see any reason why we're going to curtail capital spending certainly through mid year next year. The form of the capital may be different, moving from electric to natural gas drive or conventional from HPGL. You know, it'll move around within the systems that we operate. I'd say as we see it today, it's pretty steady.

The product sales as you point out, are shorter cycle and you tell me what the price deck is for next year and we can pontificate on what the year could be, but we're just not comfortable enough to give you any kind of full year guidance just yet. As we look into Q4, things look good and we're optimistic that we're going to deliver another good quarter with some growth and positive free cash flow and returning capital to shareholders, just as you pointed out.

Derek Podhaizer (Senior Equity Research Analyst)

Got it. All right, all sounds great. Thanks again. I'll turn it back.

Operator (participant)

This will conclude our question and answer session. I would like to turn the conference back over to management for closing remarks.

Joe Bob Edwards (President and CEO)

Thank you everybody. Look forward to talking to you again in 90 days.

Hope everybody has a great Thanksgiving.

Good rest of the year.

Thank you.

Operator (participant)

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.