Todd Sullivan's ValuePlays

PMI and the Yield Curve Correlation

Davidson — Fri, 22 May 2026 12:28:03 +0000

There are four data sets on these two long-term charts but only one is a measure of economic activity. The odd-data set out is IndPro(Industrial Production). The other three are market sentiment driven. That is, they reflect investor perceptions of future returns. There are correlations between the market sentiment measures themselves that are fairly close. They only agree with economic activity over the broad period of an economic cycle. There is an unmistakable correlation between the mfg PMI and the 10yr minus 3 month Treasury(called the Yield Curve). Both peaked late 2021, then the next 12mos declined into negative territory and stayed there for nearly 3yrs till Dec 2025.

It is no coincidence that both the Yield Curve and the mfg began giving economically positive signals in Dec 2025 and have been positive since. The market has been rising on a select few issues believed to be “inflation and recession proof”. However, I view us as is in a significant transition towards industrial, transport, retail and other issues that perform well under generally positive economic conditions.

Consumer Delinquencies Remain At Comfortable Levels

Davidson — Thu, 21 May 2026 16:22:50 +0000

Consumer Delinquencies remain at comfortable levels. Consumer spending comprises 68%-70% of US GDP. When the consumer is in trouble is when we are likely to enter recession on any given shock. Consumer delinquency rates remain well below the thresholds indicating financial fragility in the past. Both credit card and consumer loan delinquencies have been trending lower. The recent small rise in loan delinquencies is likely due to student loans now requiring payments after a post-COVID period of deferral.

Subs: AI Needs Nat Gas

ToddSullivan — Wed, 20 May 2026 18:53:18 +0000

U.S. natural gas demand will grow more in the next 10 years than it did over the past 15 years, primarily driven by the explosive electricity needs of AI data centers. That is according to Williams Cos. CEO Chad Zamarin, who stated this surge represents the biggest demand spike for natural gas in decades.

Grid Overwhelm: Traditional grid infrastructure is struggling to keep pace with the massive 24/7 power requirements of hyperscale AI data centers.
The “Golden Age” of Energy: Zamarin characterized this as a golden era for domestic energy. With traditional high-voltage grid expansion taking up to a decade, natural gas is increasingly viewed as the most immediate, dispatchable, and reliable backbone for AI infrastructure.
Energy Security: Despite the steep rise in demand, the executive noted that abundant domestic gas will remain resilient against global price disruptions, even if volatile geopolitical choke points like the Strait of Hormuz were closed. [1]

To capitalize on this AI-driven surge, Williams is rapidly expanding infrastructure and storage capacity along major pipeline routes, such as their Transco system, to deliver affordable, dispatchable power directly to areas experiencing localized data center growth.

Higher Retail Money Funds = Higher Market

Davidson — Fri, 15 May 2026 15:56:40 +0000

A useful relationship has been long held between the SP500 and Retail Money Funds. Near-term highs in Retail Money Funds are always associated with the level of market pessimism and closely correlate with significant SP500 cycle lows. That pattern is unmistakable since Jan 1990, the last 36yrs.

Today, both series are at record highs, but the details that underscore the relationship remain. The drivers of the SP500 are the “recession proof” high tech issues believed to be so immune to economic downturn that 10 of these now represent over 40%+ of the total value of the SP500. What is different in this cycle is that the mega-sized Momentum-driven portfolios are chasing these select issues because they are economically pessimistic. The same is true for retail investors which is why Retail Money Funds are also at record levels. That is, pessimism has driven a wild imbalance in markets currently that has been with us pre-COVID. If one examines many individual companies, a pattern emerges in 2015 reflecting this. Well operated companies gradually lost their prior premiums to high tech sector thought to be impervious to economic collapse. The COVID lockdowns confirmed this invulnerability in investor’s minds and remains today now bolstered with a growing chorus for more lockdowns due to Hantavirus.

By now, if you have been listening even a little, you recognize that a power struggle has been ongoing between the old guard and the current approach by the new administration. This struggle is between a top-down globalism vs individual sovereignty of countries. The current administration has demanded reciprocal fair tariffs with trading partners which is forcing a US reindustrialization. A rebuilding of US manufacturing capacity is beginning that was lost since 1970 when we began to ship US intellectual property to cheaper labor production venues. A long held political/economic policy is being reversed by the current administration. A good overview is provided by Barbara Boyd and Susan Kokinda. https://www.youtube.com/@PrometheanAction

Many large financial interests are battling for control that they do not want to lose by these actions. The media is not neutral with the old guard having captured much of the outlet content by way of having influenced our educational, healthcare and other self-governance institutions across past decades. But, nonetheless even though powerful, the influencers of the past are losing to the new trends which favor free speech and individual property rights. We are in the middle of what is a confusing period of transition without a determined outcome. In my opinion, individual freedoms and nation state sovereignty with fair trade is winning out and has the winning hand. Free speech always has the winning hand as does truth.

The current status leaves the largest financial players at risk. They are dependent on Momentum investing long derived from the 1952 mathematical model called Modern Portfolio Theory. This is a top-down model that has infiltrated every piece of investment advice and has trapped many precisely because it ignores the human details of corporate management. It has led to our current situation of high pessimism by large financial interest aggregating capital into a few companies thus driving their valuations to historically nonsense levels while at the same time defining them as “value stocks”. Meanwhile, individual management teams at well operated companies have been busy buying shares for their own portfolios knowing that at some point this nonsense will reverse. That the outcome of this current transition is confusing to retail investors, a reliable indicator, and is demonstrated by record Retail Money Funds.

The net/net is that Retail Money Funds and the 40%+ concentration of capital in high tech “recession proof stocks” indicate a high level of pessimism. As reindustrialization progresses all will have to shift to take advantage of the surging economic growth or miss out.

I remain confident in what I see for US markets.

Subs: Glass

ToddSullivan — Fri, 15 May 2026 15:52:42 +0000

Time to sell the warrants of you have them. The hearing for adult-use rescheduling won’t even start before the expiration. I’m still holding the stock.

From the earnings call:

Key Financial Results (Q1 2026)

Revenue: $40.5 million (vs. $44.8 million in Q1 2025; beat preliminary guidance of ~$39–40 million; up sequentially from $38.9 million in Q4 2025). Decline driven mainly by lower wholesale prices in a challenging California market.
Gross profit: $10.0 million; gross margin 25% (vs. 45% YoY and 34% in Q4 2025; missed preliminary guidance of 29%). Pressured by lower ASP and elevated production costs.
Adjusted EBITDA: Negative $4.2 million (vs. positive $4.4 million in Q1 2025 and negative $3.3 million in Q4 2025).
Net loss: ~$17.0–17.1 million (widened from prior year).
Production: 151,531 equivalent dry biomass pounds (ahead of preliminary guidance; roughly flat YoY). ASP: $171/lb. Cost per pound: $175 (up significantly due to labor inefficiencies and scaling).
Cash position: $27.9 million in cash/restricted cash (up from $23.4 million at end of Q4 2025). Operating cash flow was negative $11.8 million.

Segment notes: Wholesale biomass was the largest piece (~59% of revenue). Retail performed relatively well (stable revenue, improving margins), outperforming broader California trends.

Guidance (Reiterated with Some Downward Adjustments)

Full-year 2026 revenue: $235–245 million (unchanged).
Biomass production: ~1 million pounds (unchanged; record for the company).
ASP: Mid-$180s per pound (unchanged).
Gross margin: Mid-40% range (lowered from prior ~48%).
Cost of production: ~$111/lb average (raised from prior ~$100); long-term target of $95/lb on a quarterly basis in H2 2026 remains intact.
Adjusted EBITDA: High $30 million range (lowered from prior high $40 million).
Ending cash: Low $40 million range (lowered from $50 million).

Guidance excludes potential upside from hemp, interstate commerce, international exports, or the California retail JV.

Strategic Highlights & Outlook

Schedule III rescheduling of cannabis: Major positive catalyst. Company has applied for DEA registration to operate medical business under the new classification (potential 280E relief and new opportunities). Preparing for possible interstate commerce and exports (e.g., Europe).
Completed Greenhouse II build-out → added capacity expected in H2 2026.
Other moves: California retail JV with Vireo Growth (expected close in 2026); warrant redemption; new $50 million ATM equity program for opportunistic capital; new board/product expansion initiatives; partnerships with traditional industries (tobacco, alcohol, cosmetics).
Management emphasized operational fixes for cost/labor issues and confidence in scaling advantages (e.g., greenhouse model vs. indoor peers on energy/water).

Results:

First quarter results include revenue of $40.5 million, average selling price of $171 per pound and biomass production of 152,000 pounds
Company reiterates full year 2026 wholesale cannabis biomass production forecast of approximately 1,000,000 pounds and $95 per pound annual production cost target
Company has submitted applications for DEA registration to fully operate medical business under Schedule III Classification
Conference Call to be held today May 13, 2026, at 5:00 p.m. ET

LONG BEACH, Calif. and TORONTO, May 13, 2026 (GLOBE NEWSWIRE) — Glass House Brands Inc. (“Glass House” or the “Company”) (CBOE CA: GLAS.A.U) (CBOE CA: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest-growing, vertically integrated cannabis companies in the U.S., today reported financial results for the first quarter ended March 31, 2026.

First Quarter 2026 Highlights

(Unaudited results, unless otherwise stated, all results and dollar references are in U.S. dollars)

Revenue was $40.5 million, compared to $44.8 million in Q1 last year and $38.9 million in the fourth quarter 2025.
Gross Profit Margin of 25%, compared to 45% in first quarter 2025 and 34% in fourth quarter 2025.
Adjusted EBITDA¹ was negative $(4.2) million, compared to positive $4.4 million in first quarter 2025 and $(3.3) million in fourth quarter 2025.
Operating Cash Flow of negative $(11.8) million, compared to $2.5 million in first quarter 2025 and negative $(3.7) million in fourth quarter 2025.
Equivalent Dry Pound Production² was 151,531 pounds, compared to 152,568 in first quarter 2025 and 159,131 in fourth quarter 2025.
Cost per Equivalent Dry Pound of Production³ of $175 per pound, compared to $108 per pound in first quarter 2025 and $129 per pound in fourth quarter 2025.
Cash, Restricted Cash and Cash Equivalents balance was $27.9 million at March 31, 2026 compared to $23.4 million at the end of fourth quarter 2025.

Management Commentary

“The recent rescheduling of medical cannabis represents a landmark event within our industry,” said Kyle Kazan, Co-Founder, Chairman and CEO of Glass House. “The implications for Glass House are vast, including potential 280E tax relief and opening up interstate commerce or export to Europe, which would meaningfully increase our addressable market size and unlock greater profit and cash flow generation driven by more favorable pricing dynamics.”

“Preparing for rescheduling has been a top priority for us this year and we have already made significant progress. We accelerated and completed the build-out of Greenhouse 2, and expect that this added capacity will contribute to sales in the second half of 2026. More recently, we registered with the DEA, permitting us to immediately operate medical operations under a Schedule III designation.”

“Our quarterly results were in-line with previously announced preliminary results, reflecting a build-up of cultivation scale and transitory inflated cost of production. We have, and will continue to, make changes to ensure our future performance returns to the standards that we demand of ourselves.”

“Importantly, we remain confident in our outlook for 2026 and have reiterated our guidance to produce approximately one million pounds of cannabis biomass this year, a record number for the Company, and anticipate an average selling price in the mid $180 per pound range. We expect quarterly cost of production to decline as the year progresses and believe our $95 cost of production target remains achievable on a quarterly basis within the second half of this year. We also continue to anticipate strong revenue growth in 2026, with revenue increasing progressively during the course of the year.”

“Longer term, we retain the competitive advantages that have defined us, such as never having to pay the exorbitant energy bills of indoor peers nor having to rely on third-party water supply. It is these and other benefits of our operating model that have sustained us despite challenging California cannabis market conditions. The advantages will further separate the Company from our peers as we enter new markets and expand into new product categories with hemp.”

First Quarter 2026 Operational Highlights and Subsequent Events

Q1 2026 Financial Results Discussion

Revenues for first quarter 2025 were $40.5 million, ahead of guidance of $39 million and compared to $38.9 million in fourth quarter 2025 and $44.8 million in first quarter 2025. The decline is attributed to reduced wholesale prices and lower production volume.

The wholesale biomass segment revenue was $24.0 million, accounting for 59% of total revenue. Biomass production reached 151,531 pounds during Q1 2026, ahead of guidance of 138,000 pounds and compared to 152,568 in the prior year period.

First quarter 2025 retail segment revenue was $11.9 million, compared to $11.8 million the first quarter of last year and $11.9 million in fourth quarter 2025. Retail gross margin was 50% in the first quarter, compared to 47% in the fourth quarter.

Wholesale CPG segment revenues were $4.6 million, representing a 7% sequential increase and (2)% year-over-year decrease.

Consolidated gross profit for the first quarter was $10.0 million, compared to $20.1 million for Q1 last year and $13.2 million in fourth quarter 2025. Gross margin was 25%, compared to guidance of 29%, 45% in the prior year period and 34% in the fourth quarter of 2025. The declines stem from the lower average selling prices and higher production costs in the wholesale business.

Average selling price was $171 per pound, versus guidance of $167 and compared to $193 in the first quarter of 2025 as we are still operating amidst challenged California pricing conditions.

General and administrative expenses were $17.0 million for the first quarter of 2026, compared to $15.1 million last year and down 8% from $18.5 million in the fourth quarter.

Sales and marketing expenses were $0.5 million, compared to $0.7 million during the same period last year and $0.5 million in the prior quarter.

Professional fees were $2.9 million in Q1, compared to $2.9 million in Q4 2025 and $1.7 million in Q1 2025.

Depreciation and amortization in Q1 2026 were $4.0 million, compared to $4.0 million in Q4 2025 and $3.8 million in Q1 2025.

Adjusted EBITDA was negative $(4.2) million in Q1 2026, compared to positive $4.4 million in the first quarter 2025 and negative $(3.3) million in Q4 2025.

Operating cash flow was negative $(11.8) million, compared to positive $2.5 million in the year-ago period and negative $(3.7) million in Q4 2025.

As of March 31, 2026, the Company had $27.9 million of cash and restricted cash, compared to $23.4 million at the start of the first quarter. The Company spent $3.5 million in capex in the first quarter, which was mostly for Phase III expansion at Camarillo. The Company also paid $2.9 million in preferred stock dividend payments.

Warrant Redemption Notice

Subsequent to quarter end, the Company delivered a notice of redemption, dated April 28, 2026, with respect to the warrants (the “Warrants”) outstanding under the warrant agency agreement, dated May 13, 2019, between the Company and Odyssey Trust Company, as amended (the “Warrant Agency Agreement”).

There are currently 30,664,500 Warrants outstanding, each exercisable for one equity share (each, a “Share”) of the Company at an exercise price of US$11.50 per Share. The outstanding Warrants will be redeemed on May 28, 2026 in accordance with Section 3.4 (1) of the Warrant Agency Agreement at a redemption price of .011826 Shares per Warrant (the “Redemption Shares”). If the Company had not taken any action, the outstanding Warrants would have expired on June 29, 2026.

For further information, please refer to the Company’s news release dated April 28, 2026.

At-The-Market Program

The Company has entered into an equity distribution agreement (the “Equity Distribution Agreement”) with ATB Cormark Capital Markets, pursuant to which, the Company may from time to time sell up to US$50 million of its subordinate voting shares, restricted voting shares and limited voting shares (collectively, the “Equity Shares”) in an at-the-market distribution program (the “ATM Program”). The Company currently intends to use net proceeds of the ATM Program, if any, for cultivation expansion and/or general corporate purposes as well as potential acquisitions that may be identified in the future. The Company views its ATM programs as long term sources of potential capital to be accessed on an opportunistic basis, rather than servicing an immediate need.

Launch of the ATM Program is subject to the approval of CBOE Canada, the delivery of customary closing deliverables and the filing of a prospectus supplement to the Company’s base shelf prospectus dated May 16, 2024.

Since the Equity Shares will be distributed at trading prices prevailing at the time of the sale, prices may vary between purchasers and during the period of distribution. The volume and timing of sales, if any, will be determined at the sole discretion of the Company’s management and in accordance with the terms of the Equity Distribution Agreement.

Sales of Equity Shares, if any, under the ATM Program are anticipated to be made in transactions that are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 Shelf Distributions, as sales made directly on CBOE Canada or any other recognized Canadian “marketplace” within the meaning of National Instrument 21-101 Marketplace Operation.

Financial results and analyses will be available on the Company’s website on the ‘Investors’ and ‘News & Events’ drop-down menus (www.glasshousebrands.com) and SEDAR+ (www.sedarplus.ca).

Unaudited results, unless otherwise stated, all results are in U.S. dollars.

Net Income / Loss
(in thousands)	Q1 2025			Q4 2025			Q1 2026
Revenues, Net	$	44,818		$	38,855		$	40,515
Cost of Goods Sold		24,753			25,649			30,499
Gross Profit		20,065			13,206			10,016
% of Net Revenue		45	%		34	%		25	%

Operating Expenses:
General and Administrative		15,083			18,474			16,950
Sales and Marketing		687			476			529
Professional Fees		1,668			2,912			2,865
Depreciation and Amortization		3,837			4,028			4,022
Impairment		1,900			—			—
Total Operating Expenses		23,175			25,890			24,366
Loss from Operations		(3,110	)		(12,684	)		(14,350	)
Interest Expense		2,276			1,044			1,295
(Gain) Loss on Change in Fair Value of Contingent Liabilities and Shares Payable		(95	)		—			—
Other (Income) Expense, Net		1,789			(1,194	)		(1,697	)
Total Other (Income) Expense, Net		3,970			(150	)		(402	)
Income Taxes		2,928			2,966			3,058
Net Loss	$	(10,008	)	$	(15,500	)	$	(17,006	)

Adjusted EBITDA
(in thousands)	Q1 2025			Q4 2025			Q1 2026
Net Loss (GAAP)	$	(10,008	)	$	(15,500	)	$	(17,006	)
Depreciation and Amortization		3,837			4,028			4,022
Interest, Net		1,988			1,044			1,295
Income Tax Expense		2,928			2,966			3,058
EBITDA (Non-GAAP)		(1,255	)		(7,462	)		(8,631	)
Adjustments:
Share-Based Compensation		2,105			4,274			4,523
Stock Appreciation Rights Expense		(37	)		(22	)		(5	)
(Gain) Loss on Equity Method Investments		(40	)		—			—
Change in Fair Value of Derivative Asset and Liability		1,733			(27	)		(409	)
Impairment Expense for Intangible Assets		1,900			—			—
Change in Fair Value of Contingent Liabilities and Shares Payable		(95	)		—			—
Loss on Extinguishment of Debt		292			—			—
Employee Retention Tax Credits		(210	)		(2,365	)		—
Non-Recurring Asset Casualty Loss		—			939			—
Non-Recurring Legal and Professional Fees		—			1,357			349
Adjusted EBITDA (Non-GAAP)	$	4,393		$	(3,306	)	$	(4,173	)

Select Cash Flow Information
(in thousands)	Q1 2025			Q4 2025			Q1 2026
Net Loss	$	(10,008	)	$	(15,500	)	$	(17,006	)
Depreciation and Amortization		3,837			4,028			4,022
Share-Based Compensation		2,105			4,274			4,523
Impairment Expense for Intangibles		1,900			—			—
(Gain) Loss on Change in Fair Value of Contingent Liabilities and Shares Payable		(95	)		—			—
Other		2,573			1,963			(1,911	)
Cash From Net Loss		312			(5,235	)		(10,372	)
Accounts Receivable		(1,424	)		410			(2,096	)
Income Taxes Receivable		—			1,081			25
Prepaid Expenses and Other Current Assets		1,086			(412	)		1,455
Inventory		(1,430	)		(6,851	)		(5,310	)
Other Assets		2,062			134			(14	)
Accounts Payable and Accrued Liabilities		(587	)		7,918			1,855
Income Taxes Payable		27			(2,408	)		—
Other		2,425			1,662			2,702
Working Capital Impact		2,159			1,534			(1,383	)
Operating Activities Cash Flow		2,471			(3,701	)		(11,755	)

Purchases of Property and Equipment		(6,695	)		(2,400	)		(3,546	)
Other		—			222			800
Investing Activities Cash Flow		(6,695	)		(2,178	)		(2,746	)

Proceeds from the Issuance of At-the-Money Shares		—			2,182			22,302
Proceeds from the Issuance of Notes Payable and Preferred Shares, Net of Redemption of Preferred Shares		49,140			—			(250	)
Payments on Notes Payable, Third Parties and Related Parties		(42,068	)		(238	)		(10	)
Distributions to Preferred Shareholders		(1,938	)		(2,493	)		(2,888	)
Other		(218	)		7			(76	)
Financing Activities Cash Flow		4,916			(542	)		19,078

Net Increase (Decrease) in Cash, Restricted Cash and Cash Equivalents		692			(6,421	)		4,577
Cash, Restricted Cash and Cash Equivalents, Beginning of Period		36,923			29,771			23,350
Cash, Restricted Cash and Cash Equivalents, End of Period	$	37,615		$	23,350		$	27,927

Select Balance Sheet Information
(in thousands)	Q1 2025		Q4 2025		Q1 2026
Cash and Restricted Cash	$	34,615	$	19,850	$	24,427
Accounts Receivable, Net		6,712		4,417		6,441
Income Taxes Receivable		1,929		791		766
Prepaid Expenses and Other Current Assets		9,608		15,664		11,181
Inventory		15,682		26,227		31,537
Notes Receivable		—		800		—
Total Current Assets		68,546		67,749		74,352
Operating and Finance Lease Right-of-Use Assets, Net		10,188		5,911		5,961
Long Term Investments		2,381		—		—
Property, Plant and Equipment, Net		212,789		228,760		229,479
Intangible Assets, Net		12,120		11,577		11,626
Restricted Cash, Net of Current Portion		3,000		3,500		3,500
Other Assets		2,566		1,060		435
TOTAL ASSETS	$	311,590	$	318,557	$	325,353

Accounts Payable and Accrued Liabilities	$	30,708	$	35,970	$	38,067
Income Taxes Payable		2,435		—		—
Shares Payable		2,485		—		—
Current Portion of Operating and Finance Lease Liabilities		2,344		1,952		2,102
Current Portion of Notes Payable		—		37		38
Total Current Liabilities		37,972		37,959		40,207
Operating and Finance Lease Liabilities, Net of Current Portion		8,001		3,954		3,842
Other Non-Current Liabilities		25,259		33,413		36,037
Notes Payable, Net of Current Portion		65,797		68,629		67,819
TOTAL LIABILITIES		137,029		143,955		147,905
Preferred Equity Series B, C, D and E		89,002		92,500		92,500
Additional Paid-In Capital, Accumulated Deficit and Non-Controlling Interest		85,559		82,102		84,948
TOTAL MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY		174,561		174,602		177,448
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY	$	311,590	$	318,557	$	325,353

Notes Payable and Preferred Equity
(in thousands)	Q3 2025			Q4 2025			Q1 2026			Comments
Notes Payable
Secured Credit Facility	$	50,000		$	50,000		$	50,000		Maturity is 2/28/30
2025 Lompoc Term Loan		2,997			2,990			2,980		Maturity is 8/4/35
Greenhouse 2 Equipment Supplier Financing		—			—			1,120

Series A		11,895			11,895			10,950		8% semi annual interest, cash or shares, higher of 10 day VWAP 5 trading days prior to pay date or $4.08, Maturity 4/15/27
Series B		4,111			4,111			3,785		8% semi annual interest, cash or shares, lower of 10 day VWAP 5 trading days prior to pay date or $10.00, Maturity 4/15/27
Plus Convertible Debt		16,006			16,006			14,735

Other		(153	)		(330	)		(978	)	Mostly original issue discount
Notes Payable Total	$	68,850		$	68,666		$	67,857

Preferred Equity
Series D		15,000			15,000			15,000		Currently at 15% dividend with 15% cash payment until 8/24/28 when it increases to 20% dividend with 20% cash payment
Series E		77,500			77,500			77,500		12% dividend with 12% cash payment
Preferred Equity Total	$	92,500		$	92,500		$	92,500

Cash Payments
Debt Amortization	$	597		$	239		$	10
Cash Interest		1,222			1,226			(1,314	)	8.58% interest rate on the Senior Secured Credit Facility, entered into on 2/28/25 and 8.5% interest rate on the 2025 Lompoc Term Loan, entered into on 8/4/25
Debt Service		1,819			1,465			(1,304	)

Series D		563			563			563		15% annual rate until 8/24/28 when it increases to 20%
Series E		1,898			2,358			2,325		12% annual rate
Preferred Equity Dividends		2,461			2,921			2,888

Total Debt Service and Dividends	$	4,280		$	4,386		$	1,584

Equity Table
(in thousands, except share price)	Q1 2026		Q4 2025		Change			Comments
Total Equity and Exchangeable Shares		84,663		81,729		2,934		Shares issued in connection with At-the-Market program and exercise of RSUs, ISOs, and warrants
Warrants
Series D		2,770		2,770		—		Exercise price of $6.00 with an expiration date of August 2028
Series C		1,000		1,000		—		Exercise price of $5.00 with an expiration date of August 2027
Series B		8,407		8,787		(380	)	Exercise price of $5.00 with an expiration date of August 2027
SPAC		30,665		30,665		—		Exercise price of $11.50 with an expiration date of June 2026
Total Warrants		42,842		43,222		(380	)

Stock Options		22		179		(157	)	Weighted average exercise price of $3.08 which expire in June 2026
RSUs		4,756		5,327		(571	)	Up to 3-year vesting through 2028
Total		4,778		5,506		(728	)

Share Price at Quarter End	$	8.15	$	8.75	$	(0.60	)

Convertible Debentures
Series A	$	10,950	$	11,895	$	(945	)	8% semi annual interest, cash or shares, higher of 10 day VWAP 5 trading days prior to pay date or $4.08, Maturity 4/15/27
Series B		3,785		4,111		(326	)	8% semi annual interest, cash or shares, lower of 10 day VWAP 5 trading days prior to pay date or $10.00, Maturity 4/15/27
Total Convertible Debentures	$	14,735	$	16,006	$	(1,271	)
Number of Shares if Converted Assuming Share Price at Quarter End		1,981		1,829		152

Revenue
(in thousands)	Q3 2024			Q4 2024			Q1 2025			Q2 2025			Q3 2025			Q4 2025			Q1 2026			FY 2024			FY 2025
Retail (B2C)	$	11,214		$	11,796		$	11,788		$	12,262		$	12,255		$	11,938		$	11,905		$	43,816		$	48,243
Wholesale CPG (B2B)		4,777			4,987			4,747			5,483			4,958			4,320			4,637			17,996			19,508
Wholesale Biomass (B2B)		47,830			36,256			28,283			42,122			21,231			22,597			23,973			139,086			114,233
Total	$	63,821		$	53,039		$	44,818		$	59,867		$	38,444		$	38,855		$	40,515		$	200,898		$	181,984

Sequential % Change
Retail (B2C)		3	%		5	%		—	%		4	%		—	%	(3		)%		—	%
Wholesale CPG (B2B)		20	%		4	%	(5		)%		16	%	(10		)%	(13		)%		7	%
Wholesale Biomass (B2B)		22	%	(24		)%	(22		)%		49	%	(50		)%		6	%		6	%
Total		18	%	(17		)%	(15		)%		34	%	(36		)%		1	%		4	%

% Change to Prior Year
Retail (B2C)		11	%		23	%		19	%		13	%		9	%		1	%		1	%		12	%		10	%
Wholesale CPG (B2B)		11	%		22	%		12	%		38	%		4	%	(13		)%	(2		)%		12	%		8	%
Wholesale Biomass (B2B)		41	%		36	%		78	%		8	%	(56		)%	(38		)%	(15		)%		32	%	(18		)%
Total		32	%		31	%		49	%		11	%	(40		)%	(27		)%	(10		)%		25	%	(9		)%

Gross Profit
(in thousands)	Q3 2024			Q4 2024			Q1 2025			Q2 2025			Q3 2025			Q4 2025			Q1 2026			FY 2024			FY 2025
Retail (B2C)	$	4,952		$	5,396		$	5,653		$	5,861		$	6,166		$	5,621		$	5,965		$	20,763		$	23,301
Wholesale CPG (B2B)		1,398			1,168			1,221			1,949			1,477			818			1,449			4,517			5,465
Wholesale Biomass (B2B)		27,092			16,187			13,191			24,121			4,115			6,767			2,602			72,113			48,194
Total	$	33,442		$	22,751		$	20,065		$	31,931		$	11,758		$	13,206		$	10,016		$	97,393		$	76,960

% of Revenue
Retail (B2C)		44	%		46	%		48	%		48	%		50	%		47	%		50	%		47	%		48	%
Wholesale CPG (B2B)		29	%		23	%		26	%		36	%		30	%		19	%		31	%		25	%		28	%
Wholesale Biomass (B2B)		57	%		45	%		47	%		57	%		19	%		30	%		11	%		52	%		42	%
Total		52	%		43	%		45	%		53	%		31	%		34	%		25	%		48	%		42	%

Wholesale Biomass Production and Cost per Pound
	Q3 2024			Q4 2024			Q1 2025			Q2 2025			Q3 2025			Q4 2025			Q1 2026			FY 2024			FY 2025
Equivalent Dry Pounds of Production	232,295			165,074			152,568			230,748			123,986			159,131			151,531			608,478			666,433
% Change to Prior Year		128	%		60	%		149	%		54	%	(47		)%	(4		)%	(1		)%		71	%		10	%

Cost per Equivalent Dry Pounds of Production	$	103		$	110		$	108		$	91		$	128		$	129		$	175		$	123		$	111
% Change to Prior Year	(13		)%	(9		)%	(41		)%	(39		)%		24	%		17	%		62	%	(10		)%	(10		)%

Ending Operational Canopy Licensed (000 sq. ft)		1,525			1,525			1,525			1,525			1,525			1,708			1,708			1,525			1,708

Wholesale Biomass Sold and Average Selling Price per Pound
	Q3 2024			Q4 2024			Q1 2025			Q2 2025				Q3 2025			Q4 2025			Q1 2026		FY 2024			FY 2025
Equivalent Dry Pounds Sold	209,175			164,660			146,555			204,015			137,026			154,972			140,421			568,133			642,568
% Change to Prior Year		108	%		68	%		160	%		48	%		(34	)%		(6	)%		(4	)%		68	%		13	%
Equivalent Dry Pounds Sold Average Selling Price	$	229		$	220		$	193		$	206		$	155		$	146		$	171		$	245		$	177
% Change to Prior Year	(32		)%	(19		)%	(32		)%	(27		)%		(32	)%		(34	)%		(11	)%	(21		)%	(28		)%

Equivalent Dry Pounds Average Selling Price excludes the impact of cultivation tax.

Conference Call

The Company will host a conference call to discuss the results today, May 13, 2026, at 5:00 p.m. Eastern Time.

Subs: Oil’s Landlord

ToddSullivan — Tue, 12 May 2026 17:01:26 +0000

Solid Q for TPL. As always, it trades down after earnings. Do NOT discount the AI data center potential here. It is huge

YoY Advances (Q1 2026 vs Q1 2025)

Metric	Q1 2026	Q1 2025	YoY Change	Notes
Total Revenue	$236.8M	$196.0M	+$40.8M (+20.8%)	Record quarterly revenue
Net Income	$142.9M	$120.7M	+$22.2M (+18.4%)	Record quarterly net income
EPS (diluted)	$2.07	—	Strong growth	—
Oil & Gas Royalty Revenue	—	—	+$6.9M	Driven by volume surge
Royalty Production	37.1k Boe/d	31.1k Boe/d	+6.0k Boe/d (+19.3%)	Strong operator activity
Water Sales	—	—	+$8.1M	Higher volumes + pricing
Produced Water Royalties	—	—	+$5.8M	Volume-driven
Land Sales	—	—	+$20.9M	One-time data center deal
Adjusted EBITDA	$181.4M	—	Strong	—
Free Cash Flow	$136.4M	—	Robust	—
Operating Expenses	$54.5M	$45.9M	+$8.6M (+18.7%)	Higher G&A + water costs

Key YoY Positives:

Royalty volumes grew nearly 20% — core royalty engine is firing.
Diversified revenue strength: land (data center), water sales, and produced water royalties all contributed meaningfully.
Realized price declined ~11% ($37.06 vs $41.58/Boe), yet higher volumes more than offset it.

Upside Potential

Positive Catalysts:

Data Center / Power Generation Momentum: $42.5M land deal with immediate $20.9M revenue + water supply contract. CEO noted “urgency amongst hyperscalers and AI labs” has increased markedly YoY. More deals possible in West Texas.
Produced Water Desalination: 10k bbl/day R&D facility in Orla, TX nearing completion — first inlet barrels expected in weeks. Could open large new high-margin revenue stream.
Unhedged Commodity Exposure: Fully benefits from any further oil/gas price upside.
Strong Development Inventory: 20.7 net wells in various stages (permits, DUCs, CUPs) + long laterals (avg 10,650 ft) on existing production.
Balance Sheet & Capital Return: Very high free cash flow conversion; $0.60 quarterly dividend maintained.

Valuation / Risk Context:

TPL trades at a premium valuation (typical for high-quality royalty companies) but growth in volumes + new verticals (data centers, desalination) provide tangible re-rating potential.
Risks: Commodity price volatility, slower operator drilling, execution on new water/data center projects.

Bottom Line: TPL delivered excellent ~19–21% YoY top- and bottom-line growth in Q1, driven by core royalty volume strength and a large one-time land win. The emerging data center + desalination narrative adds a secular growth layer on top of the traditional royalty business. Outlook remains constructive for continued upside if oil/gas activity stays healthy and new commercial agreements materialize.

The release:

DALLAS–(BUSINESS WIRE)– Texas Pacific Land Corporation (NYSE: TPL) (the “Company,” “TPL,” “we,” “our,” or “us”), one of the largest landowners in the State of Texas with surface and royalty ownership that provides revenue opportunities through the support of energy production, today announced its financial and operating results for the first quarter of 2026.

First Quarter 2026 Highlights

Entered into an arrangement with a developer of a power generation plant to support data center operations. In conjunction with this arrangement, we sold land for aggregate consideration of $42.5 million pursuant to a financing arrangement with the developer, resulting in immediate recognition of $20.9 million in land sale revenue and the recording of a financing receivable. Additionally, we entered into a separate agreement to supply water to the project.

On May 5, 2026, TPL’s board of directors (the “Board”) appointed Peter Doyle to the Board. Mr. Doyle is a co-founder and the Co-Chief Executive Officer of Horizon Kinetics, which, through various owned subsidiaries, is TPL’s largest shareholder.

Oil and gas royalty production of 37.1 thousand barrels of oil equivalent (“Boe”) per day

As of March 31, 2026, TPL’s royalty acreage had an estimated 5.8 net well permits, 9.6 net drilled but uncompleted wells (“DUCs”), and 5.2 net completed but not producing wells (“CUPs”), totaling 20.7 net wells.⁽¹⁾ TPL had 124.4 net producing wells as of March 31, 2026, and net producing wells added during the quarter had an average lateral length of approximately 10,650 feet.

Land and Resource Management segment revenues of $153.6 million

Water Services and Operations segment revenues of $83.3 million

Consolidated net income of $142.9 million, or $2.07 per share (diluted)

Adjusted EBITDA⁽²⁾ of $181.4 million

Free cash flow⁽²⁾ of $136.4 million

Quarterly cash dividend of $0.60 per share was paid on March 16, 2026

⁽¹⁾ Total may not foot due to rounding.

⁽²⁾ Reconciliations of non-GAAP performance measures are provided in the tables below.

“For the first quarter of 2026, TPL’s core business performance remained strong, and we are closing in on significant milestones in our emerging opportunities in produced water desalination and land opportunities involving data centers and power generation,” said Tyler Glover, Chief Executive Officer of the Company. “TPL generated record quarterly revenue and net income this quarter, supported by robust volumes across oil and gas royalties, water sales, and produced water royalties. With our unhedged commodity position, we will fully capture the upside from elevated commodity prices. During the quarter, we completed a land sale related to a large-scale data center and power generation project. As part of that transaction, TPL secured a water supply agreement for the gas-powered generation and an option to provide additional water to the data center facility. The urgency amongst hyperscalers, AI labs, and developers to advance projects in West Texas has noticeably increased compared to a year ago, and our ongoing commercial conversations in this area are progressing well. In addition, our 10,000 barrel per day produced water desalination R&D test facility in Orla, Texas is nearing completion and is on track to receive its first inlet barrels in the coming weeks.”

Financial Results for the First Quarter of 2026 – Sequential

The Company reported net income of $142.9 million for the first quarter of 2026 compared to net income of $123.3 million for the fourth quarter of 2025.

Total revenues for the first quarter of 2026 were $236.8 million compared to $211.6 million for the fourth quarter of 2025. The increase in total revenues was primarily due to a $21.4 million increase in oil and gas royalty revenue and a $20.9 million increase in land sale revenue, partially offset by a $13.9 million decrease in water sales compared to the fourth quarter of 2025. The Company’s average realized price was $37.06 per Boe in the first quarter of 2026 compared to $29.33 per Boe in the fourth quarter of 2025, and the Company’s share of production was 37.1 thousand Boe per day for the first quarter of 2026 compared to 37.5 thousand Boe per day for the fourth quarter of 2025. Water sales decreased due to a decrease in both water sales volumes and pricing. TPL’s revenue streams are directly impacted by commodity prices and development and operating decisions made by its customers.

Total operating expenses were $54.5 million for the first quarter of 2026 compared to $62.3 million for the fourth quarter of 2025. The decrease in operating expenses was principally related to a $7.9 million decrease in depreciation, depletion and amortization expense and a $3.2 million decrease in water service-related expenses, partially offset by a $2.2 million increase in general and administrative expenses during the first quarter of 2026 compared to the fourth quarter of 2025.

Financial Results for the First Quarter of 2026 – Year Over Year

The Company reported net income of $142.9 million for the first quarter of 2026 compared to net income of $120.7 million for the first quarter of 2025.

Total revenues for the first quarter of 2026 were $236.8 million compared to $196.0 million for the first quarter of 2025. The increase in total revenues was primarily due to a $20.9 million increase in land sales, an $8.1 million increase in water sales, a $6.9 million increase in oil and gas royalty revenue, and a $5.8 million increase in produced water royalties during the first quarter of 2026 compared to the same period of 2025. The Company’s share of production was 37.1 thousand Boe per day for the first quarter of 2026 compared to 31.1 thousand Boe per day for the same period of 2025, and the Company’s average realized price was $37.06 per Boe for the first quarter of 2026 compared to $41.58 per Boe for the same period of 2025. Produced water royalties increased due to increased produced water volumes, and water sales increased due to both increased volumes and pricing. TPL’s revenue streams are directly impacted by commodity prices and development and operating decisions made by its customers.

Total operating expenses were $54.5 million for the first quarter of 2026 compared to $45.9 million for the same period of 2025. The increase in operating expenses was principally related to an increase of $3.2 million in water service-related expenses, an increase of $2.6 million in general and administrative expenses, and a $2.1 million increase in depreciation, depletion and amortization.

Quarterly Dividend Declared

On May 5, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.60 per share, payable on June 15, 2026 to stockholders of record at the close of business on June 1, 2026.

Appointment of Director

On May 5, 2026, TPL’s Board appointed Peter Doyle to the Board. Mr. Doyle will stand for re-election at the 2026 Annual Meeting. Mr. Doyle was also appointed to serve on the strategic acquisitions committee of the Board. Mr. Doyle is a co-founder and the Co-Chief Executive Officer of Horizon Kinetics (OTCQX: HKHC).

2026 and 2027 Annual Meetings of Stockholders

The Company intends to hold its 2026 Annual Meeting of Stockholders on November 5, 2026 in Dallas, Texas. The Company also intends to hold its 2027 Annual Meeting of Stockholders on May 6, 2027. Additional details, including the deadlines for stockholder proposals, will be provided in the applicable proxy statements to be filed by the Company with the Securities and Exchange Commission (“SEC”) and in other filings the Company makes with the SEC.

Conference Call and Webcast Information

The Company will hold a conference call on Thursday, May 7, 2026 at 9:30 a.m. Central Time to discuss first quarter results. A live webcast of the conference call will be available on the Investors section o

Subs: Gas

ToddSullivan — Tue, 12 May 2026 16:32:29 +0000

NGS is up 81% in the past year since our purchase and I do think this small cap has plenty of room to run given it operates in the Permian and producers there are scrambling to pump everything they can.

The release:

Announces Increase in Dividend and Provides Updated 2026 Guidance

SOUTHLAKE, Texas, May 11, 2026 — Natural Gas Services Group, Inc. (“NGS” or the “Company”) (NYSE:NGS), a leading provider of natural gas compression equipment, technology, and services to the energy industry, today announced financial results for the three months ended March 31, 2026.

First Quarter 2026 Highlights

Rental revenue of $47.1 million for the first quarter of 2026 represents a 21.1% year-over-year increase and a 6.3% sequential increase compared to the fourth quarter of 2025.
Net income of $6.8 million, or $0.53 per diluted share, for the first quarter of 2026 compared to $4.9 million or $0.38 per diluted share for the first quarter of 2025 and $4.1 million, or $0.32 per diluted share for the fourth quarter of 2025.
Adjusted EBITDA of $24.3 million for the first quarter of 2026, represents a 25.8% year-over-year increase and a 14.6% increase sequentially.
Commencing with the dividend payable in the second quarter 2026, the Company is increasing its quarterly dividend from $0.11 to $0.15 per share, representing a 36% increase, in the second quarter 2026 reflecting confidence in the Company’s cash generation and long-term outlook.

Management Commentary and Outlook
“NGS delivered an exceptional start to 2026, highlighted by record quarterly rental revenue, adjusted gross margin, adjusted EBITDA, and horsepower utilization,” said Justin Jacobs, Chief Executive Officer. “These results reflect disciplined execution in field service and growing demand for large horsepower compression. The increase in our 2026 Adjusted EBITDA guidance and the material increase in the Company’s quarterly dividend underscore the strong start to the year as well as our favorable outlook for the balance of 2026.

“During the first quarter, we added approximately 17,000 horsepower to the fleet, all of which was large horsepower equipment and a majority of which was electric motor drive. These additions reinforce our continued focus on high-return, longer contract duration large horsepower applications, and we remain committed to deploying at least 50,000 horsepower during 2026.”

“Looking ahead, market fundamentals remain constructive. Recent customer commentary indicating improving oil production sentiment combined with midstream infrastructure build out to support increased natural gas production should drive material incremental demand for compression.”

“NGS remains well positioned to capture a disproportionate share of this growth given our advanced technology, the quality of our fleet, and the strength of our service team. We remain disciplined in our capital allocation framework as we continue to invest in organic fleet expansion, evaluate accretive M&A opportunities, and look to increase return of capital to shareholders. Our leverage at quarter end is the lowest of the public comparable set—we maintain great flexibility to invest in growth and drive value for our shareholders.”

Corporate Guidance — 2026 Outlook

The Company now expects 2026 Adjusted EBITDA of $92.5 million to $97.5 million, compared to prior guidance of $90.5 to $95.5 million. The updated guidance reflects strong first quarter performance, high utilization, and contracted fleet expansion balanced with expectations for inflationary pressures in the remainder of 2026.

	Outlook
FY 2026 Adjusted EBITDA	$92.5 million – $97.5 million
FY 2026 Growth Capital Expenditures	$55.0 million – $70.0 million
FY 2026 Maintenance Capital Expenditures	$15.0 million – $18.0 million

The outlook for capital expenditures remains unchanged from last quarter. Growth capital expenditures for 2026 are expected in the range of $55 million to $70 million, reflecting continued investment in large horsepower compression units supported by multi-year customer contracts. Maintenance capital expenditures for 2026 are expected in the range of $15 million to $18 million consistent with the size, age, and operating profile of the Company’s fleet.

Consistent with prior periods, the Company remains committed to disciplined capital allocation and investing in assets that generate attractive long-term returns for shareholders. The company’s balance sheet and liquidity position provide flexibility to fund organic fleet expansion, evaluate strategic and accretive M&A opportunities, and continue returning capital to shareholders.

2026 First Quarter Financial Results

Revenue: Total revenue for the three months ended March 31, 2026, increased 17.1% to $48.5 million from $41.4 million for the three months ended March 31, 2025. This increase was primarily attributable to higher rental revenues for the comparable periods. Rental revenue increased 6.3% to $47.1 million from $44.3 million in the fourth quarter of 2025 driven by contracted fleet expansion and continued pricing strength across the company’s fleet. As of March 31, 2026, we had 574,969 rented horsepower (1,243 utilized units) compared to 492,679 horsepower (1,202 utilized units) as of March 31, 2025, reflecting a 16.7% increase in total utilized horsepower.

Gross Margins and Adjusted Gross Margins: Total gross margins, including depreciation expense increased to $20.1 million for the three months ended March 31, 2026, compared to $15.7 million for the same period in 2025. Total adjusted gross margin, exclusive of depreciation expense, increased to $30.2 million for the three months ended March 31, 2026, compared to $24.3 million for the same period in 2025. For a reconciliation of Gross Margin, see Non-GAAP Financial Measures – Adjusted Gross Margin, below.

Operating Income: Operating income for the three months ended March 31, 2026, was $13.1 million compared to operating income of $9.5 million for the comparable 2025 period.

Net Income: Net income for the three months ended March 31, 2026, was $6.8 million, or $0.53 per diluted share, compared to net income of $4.9 million, or $0.38 per diluted share, for the comparable 2025 period and $4.1 million, or $0.32 per diluted share for the three months ended December 31, 2025. The year-over-year and sequential increases in net income were driven by the increases in rental revenue and the associated gross margin impact, partially offset by higher selling, general and administrative expenses, rental equipment depreciation and interest expense.

Cash Flows: For the three months ended March 31, 2026, cash flows provided by operating activities were $23.0 million, while cash flows used in investing activities were $15.2 million. This compares to cash flows from operating activities of $21.3 million and cash flows used in investing activities of $19.3 million for the comparable three-month period in 2025.

Adjusted EBITDA: Adjusted EBITDA increased 25.8% to $24.3 million for the three months ended March 31, 2026, from $19.3 million for the same period in 2025. The increase was primarily attributable to higher rental revenue and rental adjusted gross margin. Sequentially, Adjusted EBITDA increased 14.6% when compared to $21.2 million for the three months ended December 31, 2025.

Debt: Outstanding debt on our revolving credit facility as of December 31, 2025, was $226.0 million. Our leverage ratio as of March 31, 2026, was 2.33x and our fixed charge coverage ratio was 3.32x. The Company is in compliance with all terms, conditions and covenants of the credit agreement.