Natural Gas Services Group Reports First Quarter Financial Results
First Quarter Revenue from Core Leasing Business Advances 40%,
Gross Margin Improves to 52% from 38% in First Quarter Last Year
MIDLAND, Texas — Natural Gas Services Group, Inc. (NGSG) (Amex: NGS, NGS.WS), a provider of equipment and services to the natural gas and oil industry, today announced financial results for the first quarter ended March 31, 2003.
Total first quarter revenue was $2,343,745 versus $2,690,396 in 2002. Revenue from the Company's core leasing business increased to $1,401,163 versus $999,517 in the same quarter of 2002, while equipment sales declined to $565,272 from $1,349,017 a year ago. First quarter service revenue increased to $377,310 from $341,862.
Wayne Vinson, president and CEO, said, “The 40% increase in first quarter leasing revenue is consistent with the growth trends we are seeing in this segment of our business, and also reflects our determined efforts to expand our core leasing programs. As we reported in the fourth quarter, equipment sales, which can fluctuate considerably from quarter to quarter, have been impacted by the slowdown in the economy and by reductions in capital spending. Fortunately, current economic conditions are fueling increased demand for rental equipment, as is evident by the high utilization rate of our lease fleet.”
On the strength of the gross margins generated by NGSG's leasing business, total first quarter gross margins increased to 52% from 38% in the first quarter last year. First quarter EBITDA (see discussion of EBITDA at the end of this release) increased 3% to $717,788 versus $696,503 in the same period a year ago, while net income available to common shareholders increased 67% to $86,873, or .02 cents per diluted share, from $51,991, or .01 cent per diluted share, in 2002.
NGSG's lease fleet grew by 13% during the first quarter. This growth was driven in part by the January 1, 2003, acquisition of 28 compressor packages from Hy-Bon Engineering Company, as well as internal production. The Company ended the quarter with 347 compressor packages in its rental fleet, up from 308 units at end of fiscal 2002.
Cash used in operating activities during the first quarter increased to $133,361 compared with $77,807 used in operating activities during the first quarter of last year.
NGSG 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 on NGSG, please visit the Company's website at www.ngsgi.com.
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 NGSG'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 NGSG's products and services; and new governmental safety, health and environmental regulations which could require NGSG 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 NGSG 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 Income Statement (unaudited) |
||
|
Three months ended March 31,
|
||
|
2003
|
2002
|
|
| Revenue: | ||
|
Sales
|
$565,272
|
$1,349,017
|
|
Service and maintenance income |
377,310
|
341,862
|
| Leasing income |
1,401,163
|
999,517
|
|
2,343,745
|
2,690,396
|
|
| Cost of revenue: |
||
|
Cost of sales |
433,173
|
1,065,152
|
| Cost of service and maintenance |
335,301
|
333,148
|
| Cost of leasing |
360,917
|
282,535
|
1,129,391 |
1,680,835 |
|
| Gross Margin | 1,214,354 |
1,009,561 |
| Operating Costs: | ||
Selling expense |
138,947 |
124,667 |
General and Administrative expense |
380,166 |
273,541 |
Amortization & depreciation |
361,966 |
254,404 |
881,079 |
652,612 |
|
| Operating income | 333,275 |
356,949 |
Interest expense |
(154,083) |
(257,360) |
Equity in earnings of joint venture |
- |
83,452 |
Other income |
22,547 |
1,698 |
| Income before income taxes | 201,739 |
184,739 |
| Provision for income tax | 83,856 |
88,563 |
| Net income | 117,883 |
96,176 |
Preferred dividends |
31,010 |
44,185 |
Net income available to common shareholders |
$ 86,873 |
$51,991 |
Earnings per share: |
||
Basic |
$0.02 |
$0.02 |
Diluted |
$0.02 |
$0.01 |
Weighted average Shares: |
||
Basic |
4,857,632 |
3,357,632 |
| Diluted | 5,059,456
|
3,798,176 |
| March 31, 2003 | ||
ASSETS |
||
Current assets: |
||
Cash and cash equivalents |
$1,611,244 |
|
Accounts receivable- trade |
981,398
|
|
|
Lease
receivable- net
|
100,143
|
|
|
Inventory
|
2,204,467
|
|
|
Prepaid
expenses
|
45,038
|
|
|
Total
current assets
|
4,942,290
|
|
|
Property
plant and equipment, net
|
18,443,470
|
|
|
Goodwill, net
|
2,589,655
|
|
|
Patents,
net
|
134,555
|
|
|
Lease
receivable net
|
87,198
|
|
|
Other assets
|
113,423
|
|
|
Total
assets
|
$
26,310,591
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||
|
Current
liabilities:
|
||
|
Current
portion of long term debt and capital lease
|
$
2,224,133
|
|
|
Accounts
payable
|
848,809
|
|
|
Unearned
income
|
423,946
|
|
|
Total
current liabilities
|
3,496,888
|
|
|
Long term portion, less current portion and capital lease
|
7,110,375
|
|
|
Subordinated
notes, net
|
1,360,626
|
|
|
Deferred
income tax payable
|
1,254,856
|
|
|
Total
liabilities
|
13,222,745
|
|
|
SHAREHOLDERS' EQUITY
|
||
|
Preferred
stock
|
3,817
|
|
|
Common
stock
|
48,576
|
|
|
Paid
in capital
|
10,968,733
|
|
|
Retained
earnings
|
2,066,720
|
|
|
Shareholders'
equity
|
13,087,846
|
|
|
Total
liabilities and shareholders' equity
|
$
26,310,591
|
|
| Natural
Gas Services, Inc. “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 an 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 NGSG 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 March 31,
|
||
|
2003
|
2002
|
|
|
EBITDA
|
$
717,788
|
$
696,503
|
|
Adjustments
to reconcile EBITDA to net income:
|
||
|
Amortization
and depreciation
|
(361,966)
|
(254,404)
|
|
Interest
expense
|
(154,083)
|
(257,360)
|
|
Provision
for income tax
|
(83,856)
|
(88,563)
|
|
Net income |
$
117,883
|
$
96,176
|
CONTACTS:
Wayne Vinson or Wallace Sparkman
915-563-3974
Pfeiffer High Public Relations, Inc.
Geoff High
303-393-7044
