UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 2005
NATURAL GAS SERVICES GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Colorado 1-31398 75-2811855
(State or other jurisdiction (Commission File (IRS Employer
of Incorporation or organization) Number) Identification No.)
2911 South County Road 1260 Midland, Texas 79706
(Address of Principal Executive Offices) (Zip Code)
432-563-3974
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On May 12, 2005, Natural Gas Services Group, Inc. issued a news release
announcing the registrant's results of operations for its first quarter ended
March 31, 2005. The news release issued on May 12, 2005 is furnished as Exhibit
No. 99 to this Current Report on Form 8-K. Natural Gas Services Group's reports
on Forms 10-KSB, 10-QSB and 8-K and other publicly available information should
be consulted for other important information about the registrant.
The information in this Current Report on Form 8-K, including Exhibit
No. 99 hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability
of that section. The information in this Current Report shall not be
incorporated by reference into any filing or other document pursuant to the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such filing or document.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
The Exhibit listed below is furnished as an Exhibit to this Current
Report on Form 8-K.
Exhibit No. Description of Exhibit
----------- ----------------------
99 News release issued May 12, 2005 (furnished
pursuant to Item 2.02)
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATURAL GAS SERVICES GROUP, INC.
By: /s/ Stephen C. Taylor
-----------------------------
Stephen C. Taylor, President
Dated: May 12, 2005
3
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99 News release issued May 12, 2005 (furnished pursuant to Item
2.02)
4
Exhibit 99
NATURAL GAS SERVICES GROUP, INC.
FOR IMMEDIATE RELEASE NEWS
May 12, 2005 Amex - NGS, NGS.WS
NATURAL GAS SERVICES GROUP ANNOUNCES
FIRST QUARTER 2005 FINANCIAL RESULTS
o 209% Increase In Total Revenue To $11 Million For The Three
Months Compared To $3.6 Million For The Same Period In 2004.
o 121% Increase In Income Before Tax For The Three Months To
$1.4 Million Compared To $645,000 For The Same Period In 2004
After Excluding a Non-recurring Item*
MIDLAND, Texas, May 12, 2005 - 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 first quarter
ended March 31, 2005.
Natural Gas Services Group, Inc.
- --------------------------------------------------------------------------------
First Quarter First Quarter Change
2005 2004
- --------------------------------------------------------------------------------
Revenues 11,041,235 3,568,351 209%
Net Income - After Tax 898,360 393,739* 128%
EPS (Basic) $0.13 $.08* 63%
EPS (Diluted) $0.11 $.08* 38%
Gross Profit 3,921,211 2,017,298 94%
EBITDA $2,798,555 $1,352,730* 107%
Weighted avg. shares outstanding:
Basic 6,728,095 5,065,327 33%
Diluted 7,827,206 5,221,441 49%
- --------------------------------------------------------------------------------
*Excludes non-recurring proceeds attributable to life insurance payment in the
amount of $1,500,000 in the first quarter of 2004.
Revenue: Total Revenue for the first quarter ended March 31, 2005, increased
209% to $11,041,235 as compared to $3,568,351 for the same period in 2004. This
reflects an increase in revenue from the rental of natural gas compressor units
and the operations of Screw Compressor Systems, Inc. (SCS) which was acquired on
January 3, 2005. The revenue attributed to SCS during the quarter was
$6,798,267.
Income: Net income for the first quarter ended March 31, 2005 increased 128% to
$898,360 ($0.11 per diluted share) as compared to the same period in 2004 of $
393,739 ($0.08 per diluted share) after excluding non-recurring proceeds from
life insurance policies.
Rental Fleet: NGS's gas compressor rental fleet grew by 12.8% during the first
quarter 2005. At March 31, 2005 we had 661 rental units, an increase of 76 units
from the 585 units at December 31, 2004. We are on plan to add the 250-300 units
projected earlier this year, which will give a rental fleet growth this year of
42% to 50%.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said "NGS
started this year with another record breaking quarter. We closed on our
purchase of Screw Compression Systems in Tulsa, OK on January 3, 2005 which
quadrupled our fabrication space to over 120,000 square feet. We have
consolidated that operation into the company without missing a beat and will add
over 60 units to the rental fleet this year from that location alone, in
addition to serving their existing customer base with build-to-sale units. Our
fabrication backlog in Tulsa is out to October while our rental fleet has grown
from 585 units to 661 units this quarter. With this rate of growth we are
gaining new customers in new markets as the strong demand for our equipment and
services continues. We are well positioned for growth and strong commodity
prices will enable us to continue to expand our presence throughout the year. As
always, I want to relay my congratulations and thanks to our employees for a job
well done. It is truly their hard work that enables the company to deliver
superior results like these."
The Company has scheduled a conference call Thursday, May 12, 2005 at 3:15 PM
Central Standard Time to discuss 2005 First Quarter Financial Results.
What: Natural Gas Services Group, Inc. 2005 First Quarter Financial Results
Conference Call
When: Thursday, May 12, 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.
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:
EBITDA CALCULATION
Three Months Ended March 31, 2005
2005 2004
--------------------------
EBITDA 2,798,555 1,352,730*
Adjustments to reconcile EBITDA to net income:
Amortization and depreciation (950,815) (526,685)
Interest expense (421,773) (180,608)
Provision for income tax (527,607) (251,698)
--------------------------
Net Income $ 898,360 $ 393,739*
==========================
*Excludes non-recurring proceeds attributable to life insurance payment.
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)
March 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents $ 1,370,843
Accounts receivable - trade 3,494,876
Inventory 10,620,317
Prepaid expenses 218,955
-----------
Total current assets 15,704,991
Lease equipment, net of accumulated depreciation 31,150,928
Other property plant and equipment, net of accumulated depreciation 6,421,495
Goodwill, net of accumulated amortization 8,124,216
Intangible, net of accumulated amortization 4,219,767
Restricted cash 2,000,000
Other assets 137,403
-----------
Total Assets $67,758,800
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 5,399,056
Bank line of credit 18,087
Accounts payable and accrued liabilities 5,429,194
Unearned Income 731,673
-----------
Total current liabilities 11,578,010
Long term debt, less current portion 18,998,407
Subordinated notes, net of discount 4,465,538
Deferred income tax payable 3,485,610
-----------
Total liabilities 38,527,565
SHAREHOLDERS' EQUITY
Common Stock 67,825
Paid in Capital 21,778,261
Retained Earnings 7,385,149
-----------
Shareholders' Equity 29,231,235
-----------
Total Liabilities and Shareholders' Equity $67,758,800
===========
Natural Gas Services Group, Inc.
Consolidated Income Statements
(unaudited)
Three months ended March 31,
2005 2004
------------ ------------
Revenue:
Sales $ 7,146,137 65% $ 889,965 25%
Service and maintenance income 463,781 4% 423,602 12%
Leasing income 3,431,317 31% 2,254,784 63%
------------ ------------
11,041,235 100% 3,568,351 100%
------------ ------------
Cost of revenue:
Cost of sales 5,622,167 51% 646,394 18%
Cost of service and maintenance 290,099 3% 336,250 9%
Cost of leasing 1,207,758 11% 568,409 16%
------------ ------------
Total cost of revenue 7,120,024 64% 1,551,053 43%
------------ ------------
Gross Margin 3,921,211 36% 2,017,298 57%
Operating Cost:
Selling expense 229,691 2% 177,389 5%
General and administrative expense 903,800 8% 488,260 14%
Amortization & depreciation 950,815 9% 526,685 15%
------------ ------------
2,084,306 19% 1,192,334 33%
------------ ------------
Operating income 1,836,905 17% 824,964 23%
Interest expense (421,773) -4% (180,608) -5%
Other income 10,835 0% 1,501,081 42%
------------ ------------
Income before income taxes 1,425,967 13% 2,145,437 60%
Income tax expense 527,607 5% 251,698 7%
------------ ------------
Net income 898,360 8% 1,893,739 53%
Preferred dividends -- 0% 27,922 1%
------------ ------------
Net income available to common shareholders $ 898,360 8% $ 1,865,817 52%
============ ============
Earnings per share:
Basic $0.13 $0.37
Diluted $0.11 $0.36
Weighted average Shares:
Basic 6,728,095 5,065,327
Diluted 7,827,206 5,221,441
Natural Gas Services Group, Inc.
Consolidated Statements of Cash Flows
(unaudited)
Three Months Three Months
Ended Ended
March 31, 2005 March 31, 2004
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 898,360 $ 1,893,739
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 950,815 526,686
Deferred taxes 527,610 251,698
Amortization of debt issuance costs 16,239 16,239
Gain on disposal of assets (45,846) --
Changes in current assets and liabilities:
Trade and other receivables 1,342,909 (1,732,493)
Inventory and work in progress (1,596,502) (709,403)
Prepaid expenses and other (30,672) (53,012)
Accounts payable and accrued liabilities 829,651 1,213,472
Deferred income (226,640) (204,104)
Other 297,858 3,273
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,963,782 1,206,095
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,667,716) (2,530,447)
Assets acquired, net of cash received (7,553,965) --
Proceeds from sale of property and equipment 180,166 --
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (12,041,515) (2,530,447)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans 13,469,113 1,952,778
Repayments of long term debt (4,014,839) (604,143)
Dividends paid on preferred stock -- (27,922)
Proceeds from exercised warrants and stock options 309,115 23,575
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,763,389 1,344,288
-------------- --------------
NET INCREASE CHANGE IN CASH 685,656 19,936
CASH AT BEGINNING OF PERIOD 685,187 176,202
-------------- --------------
CASH AT END OF PERIOD $ 1,370,843 $ 196,138
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 378,027 $ 180,608
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired for issuance of subordinated debt $ 3,000,000
Assets acquired for issuance of common stock $ 5,120,438
