Natural Gas Services Group Announces a 31% Increase in Net Income for the Three Months Ended March 31, 2008
25% Increase in EBITDA for the Three Months ended March 31, 2008 to $7.8
million
32% Increase in EPS (Diluted) for the Three Months ended March 31, 2008 to
$0.29 per share
MIDLAND, Texas, May 6 /PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc. (Amex: NGS), a leading provider of equipment and services to the natural gas industry, announces its financial results for the first quarter ended March 31, 2008.
(in thousands of dollars, except Three Months Ended
per share amounts) March 31,
2007 2008 Change
(unaudited)
Revenue $16,712 $18,933 13 %
Operating income 4,203 5,453 30 %
Net income 2,681 3,517 31 %
EBITDA 6,272 7,811 25 %
EPS (Basic) 0.22 0.29 32 %
EPS (Diluted) 0.22 0.29 32 %
Weighted avg. shares outstanding:
Basic 12,061 12,085
Diluted 12,083 12,144
Revenue: Total revenue increased from $16.7 million to $18.9 million, or 13%, for the three months ended March 31, 2008, compared to the same period ended March 31, 2007. This increase was primarily the result of a 30% growth in rental revenue.
Operating income: Operating income increased from $4.2 million to $5.5 million, or 30%, for the three months ended March 31, 2008, compared to the same period ended March 31, 2007. Higher compressor sales gross margins were the largest factor contributing to the increase of operating income.
Net income: Net income for the three months ended March 31, 2008, increased 31% to $3.5 million, as compared to net income of $2.7 million for the same period in 2007. Increased operating income, a lower income tax rate, and lower interest expense from our reduced debt balances contributed to the increase in net income.
EBITDA: EBITDA (see discussion of EBITDA at the end of this release) increased 25% to $7.8 million for the first quarter ended March 31, 2008, versus $6.3 million for the same period in 2007.
Earnings per Share: Earnings per diluted share were $0.29 during the three months ending March 31, 2008 as compared to $0.22 during the same 2007 period, a 32% increase.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said, "Our results this quarter reflect the growth we are experiencing in our market segment and a continuation of our operational effectiveness. Our rental and sales growth rates remain vigorous and we anticipate an active year."
The Company has scheduled a conference call Tuesday, May 6, 2008 at 10:00 a.m., Central Daylight Time, to discuss 2008 First Quarter Results.
What: Natural Gas Services Group, Inc. 2008 First Quarter Financial Results Conference Call
When: Tuesday, May 6, 2008 at 10:00 a.m., Central Daylight Time
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 first quarter's 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
830-669-2466
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
(in thousands of dollars) March 31,
2007 2008
Net income $2,681 $3,517
Interest expense 300 241
Provision for income taxes 1,574 1,928
Depreciation and amortization 1,717 2,125
EBITDA $6,272 $7,811
Other operating expenses 1,200 1,350
Other expense (income) (352) (233)
Gross margin $7,120 $8,928
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 31, March 31,
2007 2008
ASSETS
Current Assets:
Cash and cash equivalents $245 $2,111
Short-term investments 18,661 14,348
Trade accounts receivable, net of doubtful
accounts of $110, both periods 11,322 10,126
Inventory, net of allowance for obsolescence of
$273 and $288, respectively 20,769 24,490
Prepaid income taxes 3,584 -
Prepaid expenses and other 641 203
Total current assets 55,222 51,278
Rental equipment, net of accumulated depreciation
of $16,810 and $18,454, respectively 76,025 82,175
Property and equipment, net of accumulated
depreciation of $4,792 and $5,175, respectively 8,580 8,442
Goodwill, net of accumulated amortization of $325,
both periods 10,039 10,039
Intangibles, net of accumulated amortization of
$1,145 and $1,224, respectively 3,324 3,245
Other assets 43 32
Total assets $153,233 $155,211
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt and
subordinated notes $4,378 $3,378
Line of credit 600 -
Accounts payable 4,072 6,032
Accrued liabilities 3,990 3,762
Current income tax liability 3,525 57
Deferred income 81 877
Total current liabilities 16,646 14,106
Long term debt, less current portion 9,572 8,727
Deferred income tax payable 12,635 14,359
Total liabilities 38,853 37,192
Stockholders' equity:
Preferred stock, 5,000 shares authorized, no
shares outstanding - -
Common stock, 30,000 shares authorized, par value
$0.01;12,085 and 12,087 shares issued and
outstanding, respectively 121 121
Additional paid-in capital 83,460 83,581
Retained earnings 30,799 34,317
Total stockholders' equity 114,380 118,019
Total liabilities and stockholders' equity $153,233 $155,211
NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except earnings per share)
(unaudited)
Three months ended
March 31,
2007 2008
Revenue:
Sales, net $9,506 $9,626
Rental income 6,940 9,010
Service and maintenance income 266 297
Total revenue 16,712 18,933
Operating costs and expenses:
Cost of sales, exclusive of depreciation stated
separately below 6,670 6,393
Cost of rentals, exclusive of depreciation stated
separately below 2,735 3,404
Cost of service and maintenance, exclusive of
depreciation stated separately below 187 208
Selling, general, and administrative expense 1,200 1,350
Depreciation and amortization 1,717 2,125
Total operating costs and expenses 12,509 13,480
Operating income 4,203 5,453
Other income (expense):
Interest expense (300) (241)
Other income 352 233
Total other income (expense) 52 (8)
Income before provision for income taxes 4,255 5,445
Provision for income taxes 1,574 1,928
Net income $2,681 $3,517
Earnings per share:
Basic $0.22 $0.29
Diluted $0.22 $0.29
Weighted average shares outstanding:
Basic 12,061 12,085
Diluted 12,083 12,144
NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
Three Months Ended
March 31,
2007 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,681 $3,517
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,717 2,125
Deferred taxes (1,479) 5,312
Employee stock options expensed 97 95
Gain on sale of property and equipment (8) -
Changes in current assets and liabilities:
Trade and other receivables 2,413 1,196
Inventory and work in progress (2,333) (3,721)
Prepaid expenses and other (32) 438
Accounts payable and accrued liabilities 2,377 1,732
Current tax liability 2,012 (3,468)
Deferred income 534 796
Other (42) 18
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,937 8,040
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,040) (8,064)
Purchase of short-term investments (274) (187)
Redemption of short-term investments 3,000 4,500
Proceeds from sale of property and equipment 33 -
NET CASH USED IN INVESTING ACTIVITIES (1,281) (3,751)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit - 500
Repayments of long-term debt (1,908) (1,845)
Repayments of line of credit - (1,100)
Proceeds from exercise of stock options and warrants 109 22
NET CASH USED IN FINANCING ACTIVITIES (1,799) (2,423)
NET CHANGE IN CASH 4,857 1,866
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,391 245
CASH AND CASH EQUIVALENTS AT END OF PERIOD $9,248 $2,111
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $305 $290
Income taxes paid $999 $84
SOURCE Natural Gas Services Group, Inc.
-0- 05/06/2008
/CONTACT: Jim Drewitz, Investor Relations of Natural Gas Services Group,
Inc., +1-830-669-2466, jim@jdcreativeoptions.com/
/Web site: http://www.ngsgi.com /
(NGS)
CO: Natural Gas Services Group, Inc.; NGS
ST: Texas
IN: OIL
SU: ERN CCA
CF-JD
-- CLTU030 --
9555 05/06/2008 09:25 EDT http://www.prnewswire.com
