Natural Gas Services Group Announces Third Quarter and Nine Months Financial Results
MIDLAND, Texas, Nov 1, 2004 /PRNewswire-FirstCall via COMTEX/ -- 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 third quarter and nine months ended September 30, 2004.
Revenue for the third quarter ended September 30, 2004, increased 5% to $3,870,113 as compared to $3,699,556 for the same period in 2003. Revenue for the nine months ended September 30, 2004, increased 21% to $11,220,529 as compared to $9,264,116 for the same period in 2003. The increase in revenue during the third quarter and nine months reflects an increase in revenue from the rental of natural gas compressor units and a slight increase in service and maintenance revenue.
Gross margin percentage increased from 52% for the nine months ended September 30, 2003, to 56% for the same period ended September 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 an increase in rentals improves our total gross margin.
Net income for the three months ended September 30, 2004, increased 17% to $451,074 or $.07 per share (diluted), as compared to net income of $384,407 or $.07 per share (diluted) for the same period in 2003. Net income for the nine months ended September 30, 2004, increased 231% to $2,710,568 or $.43 per share (diluted), as compared to net income of $817,442 or $.14 per share (diluted) for same period in 2003. This increase included life insurance proceeds on Mr. Wayne L. Vinson, our former President and C.E.O. who passed away on March 15, 2004. Excluding these proceeds we had a 60% increase for the nine months.
NGS's rental fleet grew by 34% during the nine months ended September 30, 2004. The Company ended the period with 533 compressor packages in its rental fleet, up from 399 units at December 31, 2003 and 354 units at September 30, 2003.
EBITDA (see discussion of EBITDA at the end of this release) increased 22% to $1,586,814 for the three months ended September 30, 2004, versus $1,300,933 for the same period in 2003. EBITDA increased 84% to $5,815,434 for nine months ended September 30, 2004, versus $3,164,915 for the same period in 2003.
Wallace Sparkman, President and CEO of Natural Gas Services Group, Inc. said, "We are pleased with our quarter-over-quarter growth. Our Year-To-Date financials are strong and getting stronger." Here are some key indicators comparing the quarter ending September 2004 to same period last year:
The Company added 45 new gas compressors in the quarter ended 9-30-04.
Leasing income is up 46% from $1.9 million to $2.7 million.
Gross margin percentage increased 21% to $2.2 million.
Operating income up 12% to $942,692.
Net income up 17% to $451,074.
EBITDA up 22% to $1.6 million.
Diluted Earnings Per Share at $.07.
"As the third quarter and nine months financial results show, we have been able to grow our company through organic growth, as evidenced by the fact our core leasing business remains quite profitable. We have been able to do this by delivering a high-value product to the small to mid-sized compressor market that meets their critical needs. As we continue to focus on the execution of our marketing and sales strategies, we are pleased with the increasing acceptance of our products and the acceleration of new account penetration. We have a strong balance sheet, a healthy backlog and now that NGS has acquired Screw Compression Systems, Inc. we are on track for an even more successful fourth quarter and fiscal year 2004. We remain extremely optimistic about our prospects for continued and long term growth."
Conference Call:
As a reminder, the Company has scheduled a conference call Monday, November 1 at 3:00 PM Central Standard Time.
What: Natural Gas Services 2004 Third Quarter & Nine Months Financial Results Conference Call
When: Monday, November 1, 2004 - 3:00 PM Central Standard 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 third quarter and nine months financial results, the status of existing and new natural gas compressor leases, the acquisition of Screw Compression Systems, Inc. and a look at 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
jdrewitz@comcast.net
972-355-6070
Or
visit the Company's website at http://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 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 Nine months ended
Sept. 30, Sept. 30,
2004 2003 2004 2003
EBITDA $1,586,814 $1,300,933 $5,815,434 $3,164,915
Adjustments to
reconcile EBITDA
to net income:
Amortization and
depreciation (641,817) (455,563) (1,750,851) (1,235,118)
Interest expense (205,532) (170,971) (580,083) (500,760)
Provision for income
tax (288,391) (289,992) (773,932) (611,595)
Net income $451,074 $384,407 $2,710,568 $817,442
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)
September 30, 2004
ASSETS
Current Assets:
Cash and cash equivalents $4,408,170
Accounts receivable - trade 1,187,402
Inventory 3,179,066
Prepaid expenses 178,693
Total current assets 8,953,332
Lease equipment, net 25,818,667
Other property, plant and equipment, net 3,140,203
Goodwill, net 2,589,655
Patents, net 93,328
Other assets 95,500
Total assets $40,690,686
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt and
capital lease $3,145,056
Line of Credit 521,461
Accounts payable and accrued liabilities 1,647,514
Unearned Income 118,283
Total current liabilities 5,432,315
Long term debt and capital lease, less
current portion 9,079,435
Subordinated notes, net 1,433,060
Deferred income tax payable 2,612,013
Total liabilities 18,556,823
SHAREHOLDERS' EQUITY
Common stock 60,683
Paid in capital 16,249,850
Retained earnings 5,823,331
Total shareholders' equity 22,133,864
Total liabilities and shareholders' equity $40,690,686
Natural Gas Services Group, Inc.
Consolidated Income Statements
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
Revenue:
Sales $702,679 $1,372,248 $2,444,899 $2,877,358
Service and
maintenance
income 436,584 452,714 1,370,306 1,346,597
Leasing income 2,730,851 1,874,594 7,405,325 5,040,161
3,870,113 3,699,556 11,220,529 9,264,116
Cost of revenue:
Cost of sales 451,334 1,008,771 1,699,003 2,155,568
Cost of service
and maintenance 338,312 290,008 1,030,167 961,237
Cost of leasing 843,725 545,309 2,174,185 1,313,093
1,633,371 1,844,088 4,903,355 4,429,898
Gross Margin 2,236,742 1,855,468 6,317,174 4,834,218
Operating Cost:
Selling expense 226,935 159,870 629,545 484,421
General and
administrative
expense 425,299 395,918 1,368,524 1,186,922
Depreciation and
amortization 641,817 455,563 1,750,851 1,235,118
1,294,050 1,011,351 3,748,919 2,906,461
Operating income 942,692 844,117 2,568,255 1,927,757
Interest expense (205,532) (170,971) (580,083) (500,760)
Other income 2,306 1,253 1,496,329 2,040
Income before income
taxes 739,466 674,399 3,484,501 1,429,037
Provision for
income tax 288,391 289,992 773,932 611,595
Net income 451,074 384,407 2,710,568 817,442
Preferred dividends 0 30,530 53,277 92,550
Net income available
to common shareholders $451,074 $353,877 $2,657,291 $724,892
Earnings per share:
Basic $0.08 $0.07 $0.49 $0.15
Diluted $0.07 $0.07 $0.43 $0.14
Weighted average
Shares:
Basic 5,626,280 4,995,713 5,428,146 4,910,062
Diluted 6,492,354 5,389,673 6,216,995 5,208,096
Natural Gas Services Group, Inc.
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $2,710,568 $817,442
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,750,851 1,235,120
Deferred taxes 769,507 602,202
Amortization of debt issuance costs 48,717 48,717
Gain on disposal of assets 6,911 10,547
Changes in operating assets and
liabilities:
Trade and other receivables (370,807) (938,817)
Inventory (624,827) (1,000,735)
Prepaid expenses and other (71,663) 42,958
Accounts payable and accrued liabilities 575,362 708,971
Deferred income (88,932) 174,710
Other (16,745) (60,436)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 4,688,942 1,640,679
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (786,941) (713,245)
Purchase of rental equipment (8,150,073) (5,187,208)
Acquisition of remaining interest in joint
venture, net of cash acquired --- 242,753
Proceeds from sale of property and equipment 50,123 112,500
Decrease in lease receivable --- 210,512
Distribution from equity method investment --- 49,090
NET CASH USED IN INVESTING ACTIVITIES (8,886,891) (5,285,598)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans 5,031,435 2,649,811
Net proceeds from line of credit 521,461 ---
Repayments of long term debt (1,821,111) (1,583,951)
Repayments of line of credit (300,000) ---
Proceeds from sale of common stock,
exercised warrants and stock options 5,051,409 216,247
Dividends paid on preferred stock (53,277) (92,550)
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,429,917 1,189,557
NET CHANGE IN CASH AND CASH EQUIVALENTS 4,231,968 (2,455,362)
CASH AT BEGINNING OF PERIOD 176,202 2,713,638
CASH AT END OF PERIOD $4,408,170 $258,276
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $580,083 $500,760
SOURCE Natural Gas Services Group, Inc.
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.
http://www.ngsgi.com
