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
May 8, 2003
Date of Report (date of earliest event reported)
NATURAL GAS SERVICES GROUP, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Colorado 1-31398 5-2811855
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
2911 SCR 1260, Midland, Texas 79706
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(Address of principal executive offices) (Zip Code)
(915) 563-3974
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(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
None
(b) Pro Forma Financial Information
None
(c) Exhibits
Exhibit 99 News Release issued by Natural Gas Services
Group, Inc. on May 8, 2003
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 8, 2003, Natural Gas Services Group, Inc. issued a news release
announcing its unaudited financial results for the quarter ended March 31, 2003.
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.
Dated: May 8, 2003 NATURAL GAS SERVICES GROUP, INC.
By: /s/ Wayne L. Vinson
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Wayne L. Vinson
President
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
- -------------- -------
99 News Release dated May 8, 2003
EXHIBIT 99
FOR IMMEDIATE RELEASE: NEWS
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May 8, 2003 Amex - NGS, NGS.WS
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.
Continued on Page 2
Page 2 of 4
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
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Revenue:
Sales $ 565,272 $ 1,349,017
Service and maintenance income 377,310 341,862
Leasing income 1,401,163 999,517
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2,343,745 2,690,396
Costs 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
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1,129,391 1,680,835
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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 and depreciation 361,966 254,404
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881,079 652,612
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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
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Income before income taxes 201,739 184,739
Provision for income tax 83,856 88,563
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Net income 117,883 96,176
Preferred dividends 31,010 44,185
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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 share:
Basic 4,857,632 3,357,632
Diluted 5,059,456 3,798,176
Continued on Page 3
Page 3 of 4
Natural Gas Services, Inc.
Consolidated Balance Sheet (unaudited)
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
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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
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Total assets $26,310,591
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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
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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
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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
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Total liabilities and shareholders' equity $26,310,591
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Continued on Page 4
Page 4 of 4
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
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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)
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Net income $ 117,883 $ 96,176
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CONTACTS:
Natural Gas Services Group, Inc. Pfeiffer High Public Relations, Inc.
Wayne Vinson or Wallace Sparkman Geoff High
915-563-3974 303-393-7044