Natural Gas Services Group Announces a 43% Increase in Diluted Earnings Per Share for the Three Months Ended September 30, 2008
34% Increase In EBITDA For The Three Months Ended September 30, 2008
34% Increase In Total Revenue For The Three Months Ended September 30, 2008
MIDLAND, Texas, Nov. 5 /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 third quarter and nine months ended September 30, 2008.
(in thousands,
except per Three Months Ended Nine Months Ended
share amounts) September 30, Change September 30, Change
2007 2008 2007 2008
(unaudited) (unaudited)
Total revenue $18,651 $24,946 34 % $52,987 $63,357 20 %
Operating income $5,232 $7,448 42 % $13,569 $18,046 33 %
Net income $3,337 $4,811 44 % $8,664 $11,661 35 %
EPS (Basic) $0.28 $0.40 43 % $0.72 $0.96 33 %
EPS (Diluted) $0.28 $0.40 43 % $0.72 $0.96 33 %
EBITDA $7,499 $10,077 34 % $20,079 $25,538 27 %
Weighted avg. shares
outstanding:
Basic 12,072 12,091 12,067 12,088
Diluted 12,091 12,144 12,086 12,153
Revenue: Total revenue increased from $18.7 million to $25.0 million, or 34%, for the three months ended September 30, 2008, compared to the same period ended September 30, 2007. This increase was primarily the result of a 45% growth in rental revenue. Total revenues for the comparable nine month periods increased 20%, or $10.4 million. This increase was the result of 39% higher rental revenue.
Operating income: Operating income increased from $5.2 million to $7.4 million, or 42%, for the three months ended September 30, 2008, compared to the same period ended September 30, 2007 and increased from $13.6 million to $18.0 million, or 33%, for the nine months ended September 30, 2008 compared to the same period ended September 30, 2007. Growth in operating income benefited primarily from the appreciably higher compressor sales and rentalgross margins achieved in the comparable quarterly and year-to-date periods and was positively affected by the product mix where relatively higher rental revenues and margins increased operating income during the period.
Net income: Net income for the three months ended September 30, 2008, increased 44% to $4.8 million, as compared to net income of $3.3 million for the same period in 2007. Net income for the first nine months of 2008 increased 35% to $11.7 million, as compared to net income of $8.7 million for the same period in 2007. The increase for the first nine months of 2008 was mainly the result of increased operating income and lower interest expense on bank debt.
EBITDA: EBITDA (see discussion of EBITDA at the end of this release) increased 34% to $10.1 million for the third quarter ended September 30, 2008, versus $7.5 million for the same period in 2007, and grew 27% for the comparable nine month periods.
Earnings per share: Earnings per diluted share was $0.40 for the three months ending September 30, 2008 as compared to $0.28 for the same 2007 period, a 43% increase. Comparing the first nine months of 2007 versus 2008, our earnings per diluted share grew from $0.72 to $0.96, or 33%.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc., said "We are very pleased with our financial results during this recent third quarter and nine month periods. Sales and rental revenues both grew strongly and, while we maintained our excellent sales margins, we were able to expand our rental margins as well."
The Company has scheduled a conference call Wednesday, November 5, 2008 at 10:00 a.m., Central Standard Time, to discuss 2008 Third Quarter and Nine Months Financial Results.
What: Natural Gas Services Group, Inc. 2008 Third Quarter and Nine Months Financial Results Conference Call
When: Wednesday, November 5, 2008 at 10:00 a.m. CST
How: Live via phone by dialing 800-624-7038. Code: Natural Gas Services. Participants to the Conference call should call in at least 5 minutes prior to the start time.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing third quarter and nine months 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:
Jim Drewitz, Investor Relations
530-669-2466
jim@jdcreativeoptions.com
Or visit the Company's website at
www.ngsgi.com
"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 Nine months ended
(in thousands of dollars) September 30, September 30,
(unaudited) (unaudited)
2007 2008 2007 2008
Net income $3,337 $4,811 $8,664 $11,661
Interest expense 281 84 879 518
Provision for income taxes 1,960 2,574 5,088 6,262
Depreciation and amortization 1,921 2,608 5,448 7,097
EBITDA $7,499 $10,077 $20,079 $25,538
Other operating expenses 1,311 1,539 3,773 4,374
Other expense (income) (346) (21) (1,062) (395)
Gross margin $8,464 $11,595 $22,790 $29,517
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. Because we use capital assets, 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.
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.
NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
December September
31, 30,
2007 2008
ASSETS
Current Assets:
Cash and cash equivalents $245 $6,701
Short-term investments 18,661 -
Trade accounts receivable, net of doubtful
accounts of $110 and $106,
respectively 11,322 11,078
Inventory, net of allowance for obsolescence of
$273 and $380, respectively 20,769 29,270
Prepaid income taxes 3,584 377
Prepaid expenses and other 641 87
Total current assets 55,222 47,513
Rental equipment, net of accumulated depreciation
of $16,810 and $22,374,
respectively 76,025 104,539
Property and equipment, net of accumulated
depreciation of $4,792 and $5,657,
respectively 8,580 9,129
Goodwill, net of accumulated amortization of
$325, both periods 10,039 10,039
Intangibles, net of accumulated amortization of
$1,145 and $1,374, respectively 3,324 3,095
Other assets 43 17
Total assets $153,233 $174,332
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt and
subordinated notes $4,378 $3,378
Current portion of line of credit 600 -
Accounts payable 4,072 5,178
Accrued liabilities 3,990 5,922
Current income tax liability 3,525 109
Deferred income 81 51
Total current liabilities 16,646 14,638
Long term debt, less current portion 9,572 7,039
Line of credit, less current portion - 7,000
Deferred income tax payable 12,635 18,744
Other long term liabilities - 447
Total liabilities 38,853 47,868
Stockholders' equity:
Preferred stock, 5,000 shares authorized, no
shares issued or outstanding - -
Common stock, 30,000 shares authorized, par
value $0.01;12,085 and 12,094
shares issued and outstanding, respectively 121 121
Additional paid-in capital 83,460 83,883
Retained earnings 30,799 42,460
Total stockholders' equity 114,380 126,464
Total liabilities and stockholders' equity $153,233 $174,332
NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except earnings per share)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2007 2008 2007 2008
Revenue:
Sales $10,574 $13,239 $30,239 $32,024
Rentals 7,857 11,414 22,019 30,519
Service and maintenance 220 293 729 814
Total revenue 18,651 24,946 52,987 63,357
Operating costs and expenses:
Cost of sales* 6,894 9,038 20,856 21,669
Cost of rentals* 3,161 4,106 8,885 11,604
Cost of service and maintenance* 132 207 456 567
Selling, general and administrative
expense 1,311 1,539 3,773 4,374
Depreciation and amortization 1,921 2,608 5,448 7,097
Total operating costs
and expenses 13,419 17,498 39,418 45,311
Operating income 5,232 7,448 13,569 18,046
Other income (expense):
Interest expense (281) (84) (879) (518)
Other income 346 21 1,062 395
Total other income (expense) 65 (63) 183 (123)
Income before provision for income
taxes 5,297 7,385 13,752 17,923
Provision for income taxes 1,960 2,574 5,088 6,262
Net income $3,337 $4,811 $8,664 $11,661
*Exclusive of depreciation, stated
separately
Earnings per share:
Basic $0.28 $0.40 $0.72 $0.96
Diluted $0.28 $0.40 $0.72 $0.96
Weighted average shares outstanding:
Basic 12,072 12,091 12,067 12,088
Diluted 12,091 12,144 12,086 12,153
NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
Nine Months Ended
September 30,
2007 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,664 $11,661
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization 5,448 7,097
Deferred taxes 2,259 6,262
Employee stock options expensed 292 294
Gain on sale of property and equipment (1) (14)
Changes in current assets and liabilities:
Trade accounts receivables, net 716 244
Inventory, net (4,179) (8,501)
Prepaid expenses and other (209) 554
Accounts payable and accrued liabilities 2,190 3,038
Current income tax liability (683) (286)
Deferred income 21 (30)
Other 30 17
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,548 20,336
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (15,676) (35,943)
Purchase of short-term investments (2,347) (320)
Redemption of short-term investments 4,500 18,981
Proceeds from sale of property and equipment 44 35
NET CASH USED IN INVESTING ACTIVITIES (13,479) (17,247)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit - 7,500
Proceeds from other long term liabilities - 447
Repayments of long-term debt (3,597) (3,533)
Repayments of line of credit - (1,100)
Proceeds from exercise of stock options and warrants 159 53
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (3,438) 3,367
NET CHANGE IN CASH (2,369) 6,456
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,391 245
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,022 $6,701
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $942 $480
Income taxes paid $3,546 $287
SOURCE Natural Gas Services Group, Inc.
-0- 11/05/2008
/CONTACT: Jim Drewitz, Investor Relations, +1-530-669-2466,
jim@jdcreativeoptions.com, for Natural Gas Services Group, Inc./
/Web site: http://www.ngsgi.com /
(NGS)
CO: Natural Gas Services Group, Inc.
ST: Texas
IN: OIL
SU: ERN CCA
SP-LA
-- CLW017 --
6430 11/05/2008 09:25 EST http://www.prnewswire.com
