Natural Gas Services Group Announces Second Quarter and Six Months Financial Results and Conference Call
17% Increase in Revenue for the Three Months to $3.8 Million;
32% Increase in Revenue for the Six Months to $7.4 Million
MIDLAND, Texas, Aug. 3 /PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc. (Amex: NGS), a leading provider of equipment and services to the natural gas and oil industry, announces its financial results for the second quarter and six months ended June 30, 2004.
Natural Gas Service Group, Inc.
Second Second Six Six
Quarter Quarter Change Months Months Change
2004 2003 2004 2003
Revenues $3,782,065 $3,220,815 17% $7,350,416 $5,564,560 32%
Net Income $365,755 $315,152 16% $2,259,494 $433,035 422%
EPS (Basic) $0.06 $0.06 $0.42 $0.08 425%
EPS (Diluted) $0.06 $0.06 $0.39 $0.07 457%
Net cash
provided by
operations $3,136,599 $536,246 485%
EBITDA $1,375,890 $1,146,193 20% $4,228,620 $1,863,982 127%
Weighted avg.
shares
outstanding:
Basic 5,396,527 4,875,324 5,230,927 4,866,527
Diluted 5,611,115 5,024,774 5,598,747 5,116,332
Revenue for the second quarter ended June 30, 2004, increased 17% to $3,782,065 as compared to $3,220,815 for the same period in 2003. Revenues for the six months ended June 30, 2004, increased 32% to $7,350,416, as compared to $5,564,560 for the same period in 2003. The increase in revenue during the second quarter and six months reflects an increase in revenue primarily as a result of the increase of compressor units in our rental fleet compared to the same period in 2003.
Net income for the three months ended June 30, 2004, increased 16% to $365,755 or $.06 per share (diluted), as compared to net income of $315,152 or $.06 per share (diluted) for the same period in 2003. Net income for the six months ended June 30, 2004, increased 422% to $2,259,494 or $.39 per share (diluted), as compared to net income of $433,035 or $.07 per share (diluted) for same period in 2003. This increase was mainly a result of life insurance proceeds on Mr. Wayne L. Vinson, our former President and C.E.O. who passed away on March 15, 2004. Excluding the life insurance proceeds our net income increased $326,459 or 75% for the six months ended June 30, 2004 compared to the same period in 2003, mainly due to increases in our rental activity.
EBITDA (see discussion of EBITDA at the end of this release) increased 20% to $1,375,890 for the three months ended June 30, 2004, versus $1,146,193 for the same period in 2003. EBITDA increased 127% to $4,228,620 for the six months ended June 30, 2004, versus $1,863,982 for the same period in 2003.
NGS's rental fleet grew by 22% during the six months ended June 30, 2004. The Company ended the period with 488 compressor packages in its rental fleet, up from 399 units at December 31, 2003 and 354 units at June 30, 2003. The Company added 44 gas compressors to its rental fleet in the quarter ended June 30, 2004.
Wallace Sparkman, President and CEO of Natural Gas Services Group, Inc. said, "The second quarter and six months was marked by good execution by our management team, which enables us to achieve our 9th consecutive profitable quarter. With a 17% increase in revenue for the three months and 32% increase in revenue for the six months in our core leasing business, the second quarter and six months were significant accomplishments. As the second quarter financial results show, our core leasing business remains quite profitable. For the three months ended June 30, 2004, leasing revenue increased from $1,764,000 to $2,420,000, or 37% compared to the same period ended June 30, 2003. Leasing revenue increased from $3,166,000 to $4,674,000, or 48% for the six months ended June 30, 2004 compared to the same period ended June 30, 2003. This increase was the result of additional units added to our rental fleet and leased to third parties. Our gross margin percentage increased from 54% for the six months ended June 30, 2003, to 56% for the same period ended June 30, 2004. This improvement resulted mainly from the relative increase in leasing revenue as a percentage of the total revenue. Our rental fleet carries a gross margin averaging 70%, and increases in rental units improves our gross margin."
Mr. Sparkman continued, "We have been able to increase our leasing revenue by delivering a high-value product to the small to mid-sized compressor market that meets their critical needs. Historically, our equipment utilization rate remains in the 88%-92% range."
Mr. Sparkman concluded, "We are moving confidently into the second half of the year and believe we are well positioned for the future as we focus on serving the needs of our customers and enhancing shareholder value."
"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 EBITDA to net income is as follows:
Three months ended June 30, Six months ended June 30,
2004 2003 2004 2003
EBITDA $1,375,890 $1,146,193 $4,228,620 $1,863,982
Adjustments to
reconcile EBITDA
to net income:
Amortization and
depreciation (582,349) (417,589) (1,109,034) (779,555)
Interest expense (193,943) (175,706) (374,551) (329,789)
Provision for
income tax (233,843) (237,747) (485,541) (321,603)
Net income $365,755 $315,151 $2,259,495 $433,035
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-KSB filed with the Securities and Exchange Commission.
Natural Gas Services Group, Inc.
Consolidated Balance Sheet
(unaudited)
June 30, 2004
ASSETS
Current Assets:
Cash and cash equivalents $227,305
Accounts receivable - trade 1,310,624
Inventory 3,503,907
Prepaid expenses 154,908
Total current assets 5,196,744
Lease equipment, net 23,311,862
Other property, plant and equipment, net 3,016,092
Goodwill, net 2,589,655
Patents, net 100,199
Other assets 100,000
Total assets $34,314,552
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt and capital lease $2,742,739
Line of Credit 361,377
Accounts payable and accrued liabilities 2,023,323
Unearned Income 13,104
Total current liabilities 5,140,543
Long term debt and capital lease, less current portion 8,672,736
Subordinated notes, net 1,416,821
Deferred income tax payable 2,323,622
Total liabilities 17,553,722
SHAREHOLDERS' EQUITY
Common stock 54,121
Paid in capital 11,334,452
Retained earnings 5,372,257
Total shareholders' equity 16,760,830
Total liabilities and shareholders' equity $34,314,552
Natural Gas Services Group, Inc.
Consolidated Income Statements
(unaudited)
Three months ended June 30, Six months ended June 30,
2004 2003 2004 2003
Revenue:
Sales $852,255 $939,838 $1,742,220 $1,505,110
Service and
maintenance income 510,120 516,573 933,722 893,883
Leasing income 2,419,690 1,764,404 4,674,474 3,165,567
3,782,065 3,220,815 7,350,416 5,564,560
Cost of revenue:
Cost of sales 601,275 713,624 1,247,669 1,146,797
Cost of service and
maintenance 355,605 335,928 691,855 671,229
Cost of leasing 762,051 406,867 1,330,460 767,784
1,718,931 1,456,419 3,269,984 2,585,810
Gross Margin 2,063,134 1,764,396 4,080,432 2,978,750
Operating Cost:
Selling expense 225,221 185,604 402,610 324,551
General and
administrative
expense 454,966 410,838 943,225 791,004
Depreciation and
amortization 582,349 417,589 1,109,034 779,555
1,262,536 1,014,031 2,454,869 1,895,110
Operating income 800,598 750,365 1,625,563 1,083,640
Interest expense (193,943) (175,706) (374,551) (329,789)
Other income (7,057) (21,760) 1,494,023 787
Income before income
taxes 599,598 552,899 2,745,035 754,638
Provision for
income tax 233,843 237,747 485,541 321,603
Net income 365,755 315,152 2,259,494 433,035
Preferred dividends 25,355 31,010 53,277 62,020
Net income available
to common
shareholders $340,400 $284,142 $2,206,217 $371,015
Earnings per share:
Basic $0.06 $0.06 $0.42 $0.08
Diluted $0.06 $0.06 $0.39 $0.07
Weighted average
Shares:
Basic 5,396,527 4,875,324 5,230,927 4,866,527
Diluted 5,611,115 5,024,774 5,598,747 5,116,332
Natural Gas Services Group, Inc.
Consolidated Statements of Cash Flows
(unaudited)
Six Months Six Months
Ended Ended
June 30, 2004 June 30, 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $2,259,495 $433,035
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,109,034 779,555
Deferred taxes 481,116 321,573
Amortization of debt issuance costs 32,478 32,478
Gain on disposal of assets 8,137 10,547
Changes in operating assets and
liabilities:
Trade and other receivables (494,029) (836,812)
Inventory (949,668) (746,248)
Prepaid expenses and other (47,878) 92,146
Accounts payable and accrued liabilities 951,771 270,867
Deferred income (194,111) 270,446
Other (19,746) (91,341)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 3,136,599 536,246
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (5,651,754) (4,465,223)
Acquisition of remaining interest in
joint venture, net of cash acquired --- 242,753
Proceeds from sale of property and
equipment 28,000 112,500
Decrease in lease receivable --- 210,512
Distribution from equity method investment --- 49,090
NET CASH USED IN INVESTING ACTIVITIES (5,623,754) (3,850,368)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans and
line of credit 3,995,177 2,438,997
Repayments of long term debt and
line of credit (1,533,092) (1,000,489)
Proceeds from exercised warrants
and stock options 129,450 200,000
Dividends paid on preferred stock (53,277) (62,020)
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,538,258 1,576,488
NET CHANGE IN CASH AND CASH EQUIVALENTS 51,103 (1,737,634)
CASH AT BEGINNING OF PERIOD 176,202 2,713,638
CASH AT END OF PERIOD $227,305 $976,004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $374,551 $329,789
As a reminder, the Company has scheduled a conference call Tuesday, August 3 at 10:00 AM Central Daylight Time.
What: Natural Gas Services 2004 Second Quarter & Six Months Financial Results Conference Call
When: Tuesday, August 3, 2004 - 10:00 AM Central Daylight Time
How: Live via phone by dialing 800-936-4602. Code: Natural Gas Services. Participants to the conference call should call in at least 5 minutes prior to the start time.
Wallace Sparkman, President & CEO, Natural Gas Services Group, Inc. will be leading the call and discussing second quarter and six months financial results, the status of existing and new natural gas compressor leases and an outlook on the balance of fiscal 2004.
About Natural Gas Services Group, Inc. (NGS)
NGS manufactures, fabricates, sells, leases and services natural gas compressors that enhance the production of oil and gas wells. The Company also manufactures and sells flare systems and flare ignition systems for plant and production facilities.
For More Information, Contact: Wallace Sparkman, President & CEO
800-580-1828
Jim Drewitz, Investor Relations
972-355-6070
jdrewitz@comcast.net
Or visit the Company's website at http://www.ngsgi.com
SOURCE Natural Gas Services Group, Inc.
-0- 08/03/2004
/CONTACT: Wallace Sparkman, President & CEO of Natural Gas Services
Group, Inc., +1-800-580-1828; or Jim Drewitz, Investor Relations,
+1-972-355-6070, or jdrewitz@comcast.net , for Natural Gas Services Group,
Inc./
/Web site: http://www.ngsgi.com /
(NGS)
CO: Natural Gas Services Group, Inc.
ST: Texas
IN: OIL OTC
SU: ERN CCA MAV
CJ-AW
-- DATU011 --
1551 08/03/2004 08:01 EDT http://www.prnewswire.com
