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 .

Financial Results

Overall P&L and margins

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	189.4	193.2	176.9
Net Income ($M)	20.6	27.4	34.3
Adjusted Net Income ($M)	31.2	33.0	37.3
Adjusted EBITDA ($M)	74.0	76.5	76.8
Adjusted EBITDA Margin (%)	39.1%	39.6%	43.4%
GAAP Diluted EPS ($)	—	0.21	0.32

Revenue mix and cash generation

KPI	Q3 2024	Q2 2025	Q3 2025
Rentals Revenue ($M)	—	102.1	107.0
Sales Revenue ($M)	—	91.1	70.0
Free Cash Flow ($M)	—	—	42.8
Organic Capex ($M)	—	35.8 (Q2 context)	39.7
Dividend per Share ($)	—	0.08 (declared Aug 1)	0.08 (declared Oct 31)
Share Repurchases ($M)	—	—	15.0

Segment performance

Segment	Metric	Q3 2024	Q2 2025	Q3 2025
Production Solutions	Revenue ($M)	111.7	128.2	125.6
	Adjusted Segment EBITDA ($M)	47.4	53.3	55.3
	Adjusted Segment EBITDA Margin (%)	42.5%	41.6%	44.0%
Natural Gas Technologies	Revenue ($M)	77.7	65.0	51.3
	Adjusted Segment EBITDA ($M)	26.6	27.4	25.3
	Adjusted Segment EBITDA Margin (%)	34.2%	42.2%	49.3%
Corporate	Adjusted Segment EBITDA ($M)	—	(4.3)	(3.8)

Balance sheet and liquidity

Metric	Q2 2025 (Aug 1)	Q3 2025 (Oct 31)
Revolver Borrowings ($M)	226.6	205.2
Borrowing Base ($M)	723.1	723.5
Availability ($M)	496.5	518.3

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	Q4 2025	—	76–80	New
Production Solutions Revenue	Q4 2025	—	Decrease QoQ due to seasonal slowdown	New
Natural Gas Technologies Revenue	Q4 2025	—	Rebound; slightly above Q2 levels	New
SG&A	Q4 2025	—	Broadly consistent with Q3	New
Tax	Rest of 2025	—	Minimal federal income tax burden (bonus depreciation)	New
Dividend	Q4 2025 payout	$0.08 (Q2 declaration)	$0.08 (Oct 31 declaration; payable Nov 26)	Maintained

Context: Prior quarter (Q2 call) guided Q3 Adjusted EBITDA to $72–$76M, which Flowco surpassed with $76.8M actual .

Earnings Call Themes & Trends

Topic	Q1 2025 (Previous-2)	Q2 2025 (Previous-1)	Q3 2025 (Current)	Trend
Rental mix and margins	Moving to low/mid-50% rental mix by year-end; margin expansion thesis	Rentals >$100M for first time; mix shift supports margins	Rentals ~$107M; mix drove 382 bps margin expansion QoQ	Positive mix tailwind
Product sales	Muted growth expected in downhole and compression package sales	Softness anticipated into Q3	Sales down; Production Solutions revenue -2% QoQ; NGT -21% QoQ	Headwind
HPGL adoption	Tariffs on ESPs and reliability drive adoption; e‑Grizzly scaling	Archrock HPGL assets acquired; immediate accretion	Demand steady; Permian strongest; growth expected	Structural adoption intact
VRU momentum	Economics/NGL capture; midstream interest forming	Early midstream VRU sales; pipeline of discussions	Adoption becoming ubiquitous; net unit sets trending up	Broadening
AI/ML and software	Innovation focus; productization of solutions	—	Using machine learning to improve efficiency and margins; largely in-house	Emerging tailwind
Supply chain footprint	Domestic manufacturing/tariff insulation	Pampa, TX facility repurposing in NGT	Consolidated NGS to El Reno; Pampa closure executed	Streamlining complete
Capital allocation	Initiated $0.08 dividend	Maintained dividend	$0.08 dividend + $15M buybacks, opportunistic stance	Shareholder returns rising
Tax/regulatory	Became corporate taxpayer; ~22% blended rate Q1	Assessing “One Big Beautiful Bill” bonus depreciation	Bonus depreciation reinstatement lowered taxes; reversal of tax expense	Tax tailwind

Management Commentary

“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.”
“Rental revenue…increased to $107 million versus $102 million last quarter.”
“The integration of [155 HPGL and VRU] assets has gone extremely well and is now complete…contributing to our enhanced margin profile.”
“In the fourth quarter we expect Adjusted EBITDA of $76 million–$80 million…[and] SG&A to remain broadly consistent with the third quarter.”
“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.”

Q&A Highlights

Natural Gas Technologies optimization: Consolidated NGS manufacturing into El Reno; closed Pampa facility; nearly all affected employees placed; margin in NGT rose ~714 bps on mix shift to rentals .
Rental mix: Rentals roughly 60% of revenue in Q3 (implied by rental and total revenue); management expects mix to dip modestly as product sales recover, with some margin impact .
Archrock asset integration and cross-sell: Integration “seamless”; opening doors at blue-chip accounts for HPGL penetration .
VRU adoption: Strengthening given Permian pipeline build-out and data-center driven gas demand; net monthly unit sets trending positively .
Capital returns: $15M buyback initiated; opportunistic approach given perceived undervaluation; dividend continues .
2026 outlook: Capital deployment broadly consistent through mid-2026 with six-month lead times; unwilling to give full-year guidance yet .

Estimates Context

Q3 2025 actual vs S&P Global consensus; Q4 2025 consensus

Metric	Q3 2025 Consensus	Q3 2025 Actual	Surprise	Q4 2025 Consensus
Primary EPS ($)	0.3038*	0.4114*	+0.1076*	0.32184*
Revenue ($M)	189.8*	176.9	(12.9)*	188.8*
EBITDA ($M)	74.4*	73.8*	(0.6)*	78.0*

Notes:

Primary EPS from S&P Global may differ from GAAP diluted EPS due to share structure; GAAP diluted EPS was $0.32 in Q3 .
Values marked with an asterisk (*) are Values retrieved from S&P Global.

Implications: Positive EPS beat and margin outperformance vs an in-line-to-slightly-below EBITDA (GAAP) and a revenue miss suggest mix-driven profitability resilience; Q4 consensus EBITDA (~$78M*) aligns with company’s $76–$80M guide midpoint .

Key Takeaways for Investors

Mix shift to rentals is the key driver: despite an 8% QoQ revenue decline, Adjusted EBITDA rose and margin expanded 382 bps QoQ to 43.4% on higher rental content .
EPS beat vs consensus and robust free cash flow ($42.8M) highlight earnings quality and cash conversion, supporting buybacks and dividend continuity .
Product sales softness (especially NGS and surface equipment) is the primary headwind; watch for Q4’s expected rebound in NGT sales and seasonal dip in Production Solutions .
Q4 guide ($76–$80M Adjusted EBITDA) brackets S&P consensus and implies sustained high-40s segment margins in rentals with SG&A stable .
Archrock HPGL/VRU asset integration expands relationships and accelerates rental growth; cross-sell opportunities at blue-chip customers could support 2026 deployment without outsized Capex .
Tax tailwind from bonus depreciation should keep federal tax burden minimal in 2025, supporting near-term FCF .
Medium-term thesis: technology-enabled optimization (HPGL, VRU) with in-house ML systems and a vertically integrated U.S. supply chain positions Flowco to gain share vs ESPs and expand margins through cycles .

Appendix: Additional Context and Cross-Checks

Q3 2025 financial summary and segment details (company press release) .
Q2 2025 financial summary for trend (company press release) .
GAAP EPS and revenue breakdown (rentals vs sales) for Q3 2025 and Q2 2025 .
Capital allocation and liquidity updates (dividend, buyback, revolver) .
Guidance history: Q2 call guided Q3 Adjusted EBITDA to $72–$76M; Q3 actual was $76.8M .

Flowco Holdings Inc. (FLOC)·Q3 2025 Earnings Summary