Natural Gas Services Group Announces Fourth Quarter and Year End Financial Results
36% Increase in Revenue for the Three Months to $4.7 Million;
25% Increase in Revenue for the Twelve Months to $15.9 Million
MIDLAND, Texas, Feb. 24 /PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc. (Amex: NGS), a leading provider of gas compression, flare equipment and services to the natural gas and oil industry, announces its financial results for the fourth quarter and twelve months ended December 31, 2004.
Natural Gas Services Group, Inc.
Fourth Fourth Twelve Twelve
Quarter Quarter Change Months Months Change
2004 2003 2004 2003
Revenues $4,737,669 $3,485,406 36% $15,958,199 $12,749,522 25%
Net Income 663,459 489,692 35% 3,374,028 1,307,133 158%
EPS (Basic) $0.11 $0.09 22% $0.59 $0.24 147%
EPS (Diluted) $0.09 $0.09 0% $0.52 $0.23 126%
Gross Profit 2,689,529 1,858,709 45% 9,006,704 6,692,926 36%
EBITDA $1,980,262 $1,231,857 60% $7,795,697 $4,396,771 77%
Weighted avg.
shares
outstanding:
Basic 6,077,368 5,051,851 5,591,313 4,946,922
Diluted 7,049,140 5,386,928 6,382,777 5,252,531
Revenue for the fourth quarter ended December 31, 2004, increased 36% to $4,737,669 as compared to $3,485,406 for the same period in 2003. Revenue for the twelve months ended December 31, 2004 increased 25% to $15,958,199 as compared to $12,749,522 for the same period in 2003. The increase in revenue during the fourth quarter and twelve months reflects a significant increase in revenue from the rental of natural gas compressor units and a slight increase in service and maintenance revenue.
Net income for the fourth quarter ended December 31, 2004 increased 35% to $663,459 ($0.11 per diluted share), as compared to the same period in 2003 of $489,691 ($.09 per diluted share). Net income for the twelve months ended December 31, 2004 increased 158% to $3,374,028 ($0.52 per diluted share), as compared to $1,307,133 ($0.23 per diluted share) for the 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 43% increase in net income for the twelve months.
NGS's rental fleet grew by 46% during the twelve months ended December 31, 2004. We ended the year with 585 compressor packages in our rental fleet, up from 399 units at December 31, 2003. We anticipate adding 250-300 rental units this year at a cost of approximately $16-18 million and expect rental revenue to grow by approximately 30-35%.
"2004 was a year of tremendous significance and change for NGS," said Wallace Sparkman, previous Interim President and current Chairman of the Board of Directors. "We lost a good friend and President of the Company when Wayne Vinson passed away in March. We converted our Series A Preferred Stock into common stock for a savings of approximately $100,000 in dividends. We also completed a private common stock placement for $5 million and entered into an agreement to purchase Screw Compression Systems, a private manufacturer of natural gas compressors. We expect this acquisition to increase NGS's sales and leasing revenue by more than $20 million in 2005. We experienced record revenue, income, earnings per share and hit a new high for the number of compressor packages in our rental fleet. Our success in 2004 is a testament to the hard work, dedication and customer service attitude of our employees."
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said, "During 2004, we continued to grow and create positive momentum. Looking forward, we believe that our revenue and operational profits will continue to grow vigorously driven by a robust natural gas market, continuing strong end- use demand and the acquisition and effective integration of Screw Compression Systems. We are moving confidently into 2005 with a strong balance sheet, a healthy backlog and a platform for growth."
Here are some key indicators comparing year end 2004 to year end 2003:
Leasing revenue up 48% to $10.5 million.
Services and Maintenance revenue up 6% to $1.9 million.
Gross Margin up from 52% to 56% of revenue, or $9 million.
Operating income up 46% to $3.9 million.
EBITDA up 77% to $7.7 million.
The Company has scheduled a conference call Thursday, February 24 at 3:15 PM Central Standard Time to discuss 2004 financial results.
What: Natural Gas Services 2004 Fourth Quarter and Year-End Financial Results Conference Call
When: Thursday, February 24, 2005 - 3:15 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.
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, Chairman or
Stephen Taylor, President/CEO
800-580-1828
Jim Drewitz, Investor Relations
jdrewitz@comcast.net
972-355-6070
"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 Twelve months ended
December 31, December 31,
2004 2003 2004 2003
EBITDA $1,980,262 $1,231,857 $7,795,697 $4,396,771
Adjustments to
reconcile EBITDA
to net income:
Amortization and
depreciation (693,413) (490,599) (2,444,264) (1,725,717)
Interest expense (257,403) (166,362) (837,486) (667,122)
Provision for
income tax (365,987) (85,204) (1,139,919) (696,799)
Net income $663,459 $489,691 $3,374,028 $1,307,133
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.
BALANCE SHEET
DECEMBER 31, 2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $685,187
Trade accounts receivable, net of doubtful
accounts of $25,000 1,998,965
Inventory 4,469,606
Prepaid expenses and other 141,140
Total current assets 7,294,898
LEASE EQUIPMENT, net of accumulated depreciation
of $4,820,774 27,734,030
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $1,446,141 3,134,167
GOODWILL, net of accumulated amortization of $325,192 2,589,655
PATENTS, net of accumulated amortization of $164,907 86,457
RESTRICTED CASH 2,000,000
OTHER ASSETS 416,269
Total assets $43,255,476
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease $3,728,048
Line of credit 549,856
Accounts payable and accrued liabilities 2,354,612
Deferred income 22,128
Total current liabilities 6,654,644
LONG-TERM DEBT AND CAPITAL LEASE, less current
portion 9,290,209
SUBORDINATED NOTES, net of discount of $89,962 1,449,299
DEFERRED TAX LIABILITY 2,958,000
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares authorized,
no shares issued ---
Common stock, 30,000,000 shares authorized,
par value $0.01; 6,104,269 shares issued and
outstanding 61,042
Additional paid-in capital 16,355,492
Retained earnings 6,486,790
Total stockholders' equity 22,903,324
Total liabilities and stockholders' equity $43,255,476
Natural Gas Services Group, Inc.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
DECEMBER 31,
2004 2003
REVENUE:
Sales, net $3,593,376 $3,865,045
Service and maintenance income 1,873,905 1,773,256
Leasing income and interest 10,490,918 7,111,221
Total revenue 15,958,199 12,749,522
COSTS OF REVENUE:
Cost of sales 2,556,573 2,859,572
Cost of service 1,357,016 1,243,499
Cost of leasing 3,037,906 1,953,525
Total costs of revenue 6,951,495 6,056,596
GROSS PROFIT 9,006,704 6,692,926
OPERATING EXPENSES:
Selling expenses 875,289 678,777
General and administrative 1,776,630 1,613,076
Depreciation and amortization 2,444,264 1,725,717
Total operating expenses 5,096,183 4,017,570
INCOME FROM OPERATIONS 3,910,521 2,675,356
OTHER INCOME (EXPENSE):
Interest expense (837,486) (667,122)
Other income (expense) 1,440,912 (4,302)
Total other income (expense) 603,426 (671,424)
INCOME BEFORE PROVISION FOR INCOME TAXES 4,513,947 2,003,932
PROVISION FOR INCOME TAXES:
Current 20,000 25,000
Deferred 1,119,919 671,799
Total income tax expense 1,139,919 696,799
NET INCOME 3,374,028 1,307,133
PREFERRED DIVIDENDS 53,277 120,941
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $3,320,751 $1,186,192
NET INCOME PER COMMON SHARE:
Basic $0.59 $0.24
Diluted $0.52 $0.23
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 5,591,313 4,946,922
Diluted 6,382,777 5,252,531
Natural Gas Services Group, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 31,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,374,028 $1,307,133
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,444,264 1,725,717
Deferred taxes 1,119,919 671,799
Amortization of debt issuance costs 64,956 64,956
Loss on disposal of assets 71,341 18,615
Changes in current assets:
Trade and other receivables (1,182,369) (391,498)
Inventory (1,915,367) (1,078,445)
Prepaid expenses and other (34,110) 66,272
Changes in current liabilities:
Accounts payable and accrued
liabilities 1,283,960 542,790
Deferred income (185,087) 173,678
Other changes (344,341) (76,597)
Net cash provided by operating
activities 4,697,194 3,024,420
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (11,595,811) (7,881,720)
Proceeds from sale of property
and equipment 50,123 119,500
Increase in restricted cash (2,000,000) ---
Distribution from equity method investment --- 107,774
Decrease in lease receivable --- 210,512
Net cash used in investing
activities (13,545,688) (7,443,934)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from lines of credit 549,856 300,000
Proceeds from long-term debt 6,592,012 3,478,568
Repayments of long-term debt (2,588,522) (2,013,546)
Repayment of line of credit (300,000) ---
Dividends on preferred stock (53,277) (120,941)
Proceeds from sale of stock and exercise
of stock options and warrants,
net of transaction costs 5,157,410 237,997
Net cash provided by financing
activities 9,357,479 1,882,078
NET CHANGE IN CASH 508,985 (2,537,436)
CASH, beginning of year 176,202 2,713,638
CASH, end of year $685,187 $176,202
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $775,429 $667,122
Income taxes paid $31,300 $35,292
SOURCE Natural Gas Services Group, Inc.
-0- 02/24/2005
/CONTACT: Wallace Sparkman, Chairman, or Stephen Taylor, President-CEO,
both 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./
(NGS)
CO: Natural Gas Services Group, Inc.
ST: Texas
IN: OIL
SU: ERN CCA MAV
GN-CJ
-- DATH016 --
0556 02/24/2005 09:15 EST http://www.prnewswire.com
