Gross Margin, EBITDA and Rental Revenue Increase for the
Comparative Six Month Periods MIDLAND, Texas, Aug. 6
/PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc.
(NYSE:NGS), a leading provider of equipment and services to the
natural gas industry, announces its financial results for the
second quarter and six months ended June 30, 2009. Natural Gas
Services Group, Inc. Financial Results: Revenue: Our total revenue
decreased from $19.5 million to $16.8 million, or 14.0%, for the
three months ended June 30, 2009, compared to the same period ended
June 30, 2008. This decrease was primarily the result of a 49.8%
decrease in sales revenue, a segment of the business hit
proportionally hard in the current environment. However, rental
revenue increased 18.6%, and service and maintenance revenue
decreased 15.6%. Total revenues for the comparable six months
decreased 4.2%, to $36.8 million from $38.4 million which was
mainly the result of 38.6% decrease in our sales revenue. This was
offset by an increase in rental revenue of 29.6% and service and
maintenance revenue decrease of 4.6%. Operating income: There was a
decrease in operating income to $4.6 million from $5.1 million, or
10.0%, for the three months ended June 30, 2009, compared to the
same period ended June 30, 2008. We posted an increase to $10.7
million from $10.6 million, or 0.9%, for the six months ended June
30, 2009 compared to the same period ended June 30, 2008. Operating
income primarily grew from the increase in rental revenue which
generates higher margins. Additionally, operating income was
positively affected by greater efficiencies in our field service
operations on our rental units resulting in improved margins. Net
income: Our net income for the three months ended June 30, 2009,
decreased 13.8% to $2.9 million, as compared to net income of $3.3
million for the same period in 2008. Net income for the first six
months of 2009 decreased 2.6% to $6.7 million, when compared to net
income of $6.9 million for the same period in 2008. This was mainly
the result of decreased third party unit sales. Earnings per share:
Our earnings per diluted share was $0.24 for the three months
ending June 30, 2009 as compared to $0.27 for the same 2008 period,
a 11.1% decrease. Comparing the six months of 2008 versus 2009, our
earnings per diluted share fell from $0.56 to $0.55, or 1.8%.
EBITDA: Our EBITDA decreased (see discussion of EBITDA at the end
of this release) 1.9% to $7.5 million for the second quarter ended
June 30, 2009, versus $7.7 million for the same period in 2008.
EBITDA increased 6.6% to $16.5 million for the quarter ended June
30, 2009 versus $15.5 million for the same period ended June 30,
2008. Cash flow: At June 30, 2009, we had cash and cash equivalents
of $11.7 million, working capital of $39.1 million, and total debt
of $14.9 million, of which $3.4 million was classified as current.
We had positive net cash flow from operating activities of $16.9
million during first six months of 2009. Selected data: The table
below shows our revenues, gross margin, exclusive of depreciation,
and gross margin for the quarters and six month periods ended June
30, 2009 and 2008. Gross margin is the difference between revenue
and cost of sales, exclusive of depreciation. Three months ended
Six months ended June 30, June 30, -------- -------- 2008 2009 2008
2009 ---- ---- ---- ---- Sales $9,159 $4,599 $18,785 $11,528 Rental
10,095 11,969 19,105 24,757 Service and maintenance 224 189 521 497
--- --- --- --- Total Revenue 19,478 16,757 38,411 36,782 Gross
margin (1) 8,994 9,220 17,922 19,812 Net Income $3,333 $2,872
$6,850 $6,669 Earnings per share (diluted) $0.27 $0.24 $0.56 $0.55
(1) For a reconciliation of gross margin to its most directly
comparable financial measure calculated and presented in accordance
with GAAP, please read "Non-GAAP Financial Measures" in this
report. Rental fleet: As of June 30, 2009, we had 1,771 natural gas
compressors in our rental fleet totaling 223,041 horsepower, as
compared to 1,546 natural gas compressors totaling 188,462
horsepower at June 30, 2008. As of June 30, 2009, we had 1,345
natural gas compressors rented compared to 1,388 at June 30, 2008.
Non GAAP Measures: "EBITDA" reflects net income or loss before
interest, taxes, depreciation and amortization. EBITDA is a measure
used by analysts and investors as an indicator of operating cash
flow since it excludes the impact of movements in working capital
items, non-cash charges and financing costs. Therefore, EBITDA
gives the investor information as to the cash generated from the
operations of a business. However, EBITDA is not a measure of
financial performance under accounting principles generally
accepted in the United States of America ("GAAP"), and should not
be considered a substitute for other financial measures of
performance. EBITDA as calculated by NGS may not be comparable to
EBITDA as calculated and reported by other companies. The most
comparable GAAP measure to EBITDA is net income. The reconciliation
of net income to EBITDA and gross margin is as follows: Three
months ended Six months ended (in thousands of dollars) June 30,
June 30, -------- -------- 2008 2009 2008 2009 ---- ---- ---- ----
Net income $3,333 $2,872 $6,850 $6,669 Interest expense 193 154 434
314 Provision for income taxes 1,760 1,546 3,688 3,599 Depreciation
and amortization 2,364 2,935 4,489 5,893 ----- ----- ----- -----
EBITDA $7,650 $7,507 $15,461 $16,475 Other operating expenses 1,485
1,654 2,835 3,231 Other expense (income) (141) 59 (374) 106 ---- --
---- --- Gross margin $8,994 $9,220 $17,922 $19,812 ====== ======
======= ======= We define gross margin as total revenue less cost
of sales (excluding depreciation and amortization expense). Gross
margin is included as a supplemental disclosure because it is a
primary measure used by our management as it represents the results
of revenue and cost of sales (excluding depreciation and
amortization expense), which are key components of our operations.
Depreciation expense is a necessary element of our costs and our
ability to generate revenue and selling, general and administrative
expense is a necessary cost to support our operations and required
corporate activities. Management uses this non-GAAP measure as a
supplemental measure to other GAAP results to provide a more
complete understanding of our performance. As an indicator of our
operating performance, gross margin should not be considered an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP. Our gross margin may not be comparable to
a similarly titled measure of another company because other
entities may not calculate gross margin in the same manner.
Cautionary Note Regarding Forward-Looking Statements: Except for
historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and
uncertainties, which may cause NGS's actual results in future
periods to differ materially from forecasted results. Those risks
include, among other things, the loss of market share through
competition or otherwise; the introduction of competing
technologies by other companies; a prolonged, substantial reduction
in oil and gas prices which could cause a decline in the demand for
NGS's products and services; and new governmental safety, health
and environmental regulations which could require NGS to make
significant capital expenditures. The forward-looking statements
included in this press release are only made as of the date of this
press release, and NGS undertakes no obligation to publicly update
such forward-looking statements to reflect subsequent events or
circumstances. A discussion of these factors is included in the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Conference Call Details: Teleconference:
Friday, August 7, 2009 at 10:00 a.m. Central (11:00 a.m. Eastern).
Live via phone by dialing 800-624-7038, passcode "Natural Gas
Services". All attendees and participants to the conference call
should arrange to call in at least 5 minutes prior to the start
time. Live Webcast: The webcast will be available in listen only
mode via our website http://www.ngsgi.com/, investor relations
section. Webcast Replay: For those unable to attend the live
teleconference, a Webcast replay of the call will be available
within 2 hours at the NGS website at http://www.ngsgi.com/ under
the Investor Relations section and will remain accessible for 30
days. Stephen Taylor, President and CEO of Natural Gas Services
Group, Inc. will be leading the call and discussing second quarter
and six months ending June 30, 2009 financial results. About
Natural Gas Services Group, Inc. (NGS): NGS is a leading provider
of small to medium horsepower, wellhead compression equipment to
the natural gas industry with a primary focus on the
non-conventional gas industry, i.e., coalbed methane, gas shales
and tight gas. The Company manufactures, fabricates, rents and
maintains natural gas compressors that enhance the production of
natural gas wells. The Company also designs and sells custom
fabricated natural gas compressors to particular customer
specifications and sells flare systems for gas plant and production
facilities. NGS is headquartered in Midland, Texas with
manufacturing facilities located in Tulsa, Oklahoma, Lewiston,
Michigan and Midland, Texas and service facilities located in major
gas producing basins in the U.S. For More Information, Contact:
Kimberly Huckaba, Investor Relations (432) 262-2700
http://www.ngsgi.com/ NATURAL GAS SERVICES GROUP, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands, except per share
amounts) (unaudited) December 31, June 30, ------------ --------
2008 2009 ---- ---- ASSETS Current Assets: Cash and cash
equivalents $1,149 $11,687 Short-term investments 2,300 - Trade
accounts receivable, net of doubtful accounts of $177 and $293,
respectively 11,321 5,799 Inventory, net of allowance for
obsolescence of $500 and $254, respectively 31,931 27,445 Prepaid
income taxes 244 801 Prepaid expenses and other 87 231 -- --- Total
current assets 47,032 45,963 Rental equipment, net of accumulated
depreciation of $24,624 and $29,310, respectively 111,967 113,723
Property and equipment, net of accumulated depreciation of $6,065
and $6,400, respectively 8,973 8,303 Goodwill, net of accumulated
amortization of $325, both periods 10,039 10,039 Intangibles, net
of accumulated amortization of $1,198 and $1,347, respectively
3,020 2,871 Other assets 19 19 -- -- Total assets $181,050 $180,918
======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Current portion of long-term debt $3,378 $3,378
Accounts payable 8,410 1,189 Accrued liabilities 3,987 1,925
Current income tax liability 110 99 Deferred income 38 281 -- ---
Total current liabilities 15,923 6,872 Long term debt, less current
portion 6,194 4,505 Line of credit 7,000 7,000 Deferred income tax
payable 21,042 24,552 Other long term liabilities 441 562 --- ---
Total liabilities 50,600 43,491 Stockholders' equity: Preferred
stock, 5,000 shares authorized, no shares issued or outstanding - -
Common stock, 30,000 shares authorized, par value $0.01;12,094 and
12,097 shares issued and outstanding, respectively 121 121
Additional paid-in capital 83,937 84,245 Retained earnings 46,392
53,061 ------ ------ Total stockholders' equity 130,450 137,427
------- ------- Total liabilities and stockholders' equity $181,050
$180,918 ======== ======== NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS (in thousands, except
earnings per share) (unaudited) Three months ended June 30, Six
months ended June 30, ---------------------------
------------------------- 2008 2009 2008 2009 ---- ---- ---- ----
Revenue: Sales, net $9,159 $4,599 $18,785 $11,528 Rental income
10,095 11,969 19,105 24,757 Service and maintenance income 224 189
521 497 --- --- --- --- Total revenue 19,478 16,757 38,411 36,782
------ ------ ------ ------ Operating costs and expenses: Cost of
sales, exclusive of depreciation stated separately below 6,238
3,253 12,631 7,782 Cost of rentals, exclusive of depreciation
stated separately below 4,094 4,152 7,498 8,841 Cost of service and
maintenance, exclusive of depreciation stated separately below 152
132 360 347 Selling, general, and administrative expense 1,485
1,654 2,835 3,231 Depreciation and amortization 2,364 2,935 4,489
5,893 ----- ----- ----- ----- Total operating costs and expenses
14,333 12,126 27,813 26,094 ------ ------ ------ ------ Operating
income 5,145 4,631 10,598 10,688 Other income (expense): Interest
expense (193) (154) (434) (314) Other income (expense) 141 (59) 374
(106) --- --- --- ---- Total other income (expense) (52) (213) (60)
(420) --- ---- --- ---- Income before provision for income taxes
5,093 4,418 10,538 10,268 Provision for income taxes 1,760 1,546
3,688 3,599 Net income $3,333 $2,872 $6,850 $6,669 ====== ======
====== ====== Earnings per share: Basic $0.28 $0.24 $0.57 $0.55
Diluted $0.27 $0.24 $0.56 $0.55 Weighted average shares
outstanding: Basic 12,088 12,095 12,087 12,094 Diluted 12,152
12,099 12,150 12,102 NATURAL GAS SERVICES GROUP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Six months ended June 30, -------- 2008 2009 ---- ---- CASH FLOWS
FROM OPERATING ACTIVITIES: Net income $6,850 $6,669 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,489 5,893 Deferred taxes 3,688
3,599 Employee stock options expense 181 299 Loss or (Gain) on
disposal of assets (14) (44) Changes in current assets and
liabilities: Trade accounts receivables, net 798 5,522 Inventory,
net (9,332) 4,800 Prepaid income taxes and prepaid expenses 558
(701) Accounts payable and accrued liabilities 4,682 (9,283)
Current income tax liability (220) (100) Deferred income 1,670 243
Other 18 - -- -- NET CASH PROVIDED BY OPERATING ACTIVITIES 13,368
16,897 ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase
of property and equipment (21,897) (7,235) Purchase of short-term
investments (294) - Redemption of short-term investments 12,528
2,300 Proceeds from sale of property and equipment 35 135 -- ---
NET CASH USED IN INVESTING ACTIVITIES (9,628) (4,800) ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit
500 - Proceeds from other long-term liabilities, net 150 121
Repayments of long-term debt (2,689) (1,689) Repayments of line of
credit (1,100) - Proceeds from exercise of stock options 44 9 -- --
NET CASH USED IN FINANCING ACTIVITIES (3,095) (1,559) ------ ------
NET CHANGE IN CASH 645 10,538 CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 245 1,149 --- ----- CASH AND CASH EQUIVALENTS
AT END OF PERIOD $890 $11,687 ==== ======= SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION: Interest paid $477 $322 Income taxes paid
$220 $658 DATASOURCE: Natural Gas Services Group, Inc. CONTACT:
Kimberly Huckaba, Investor Relations, +1-432-262-2700, Web Site:
http://www.ngsgi.com/
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