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
November 4, 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 75-2811855
- ---------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
2911 SCR 1260, Midland, Texas 79706
- ----------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(432) 563-3974
----------------------
(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 November 4, 2003
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 4, 2003, Natural Gas Services Group, Inc. issued a news
release announcing its unaudited financial results for the nine months ended
September 30, 2003. The news release is being furnished pursuant to Item 12.
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: November 11, 2003 NATURAL GAS SERVICES GROUP, INC.
By: /s/ Wayne L. Vinson
-----------------------------
Wayne L. Vinson
President
EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT
- -------------- -------
99 News Release dated November 4, 2003
Exhibit 99
NGSE
NATURAL GAS SERVICES GROUP, INC.
FOR IMMEDIATE RELEASE NEWS
November 4, 2003 Amex - NGS, NGS.WS
NATURAL GAS SERVICES GROUP ANNOUNCES THIRD QUARTER AND
NINE MONTHS FINANCIAL RESULTS
20% Increase In Revenue For The Three Months to $3.7 Million
13% Increase In Revenue For The Nine Months to $9.2 Million
MIDLAND, Texas, November 4, 2003 - Natural Gas Services Group, Inc. (AMEX:NGS),
a leading provider of equipment and services to the natural gas and oil
industry, announces its financial results for the third quarter and nine months
ended September 30, 2003.
Revenue for the third quarter ended September 30, 2003, increased 20% to
$3,699,556 as compared to $3,081,384 for the same period in 2002. Revenue for
the nine months ended September 30, 2003, increased 13% to $9,264,116 as
compared to $8,200,940 for the same period in 2002. The increase in revenue
during the third quarter and nine months reflects an increase in revenue from
the rental of natural gas compressor units and a slight increase in service and
maintenance revenue.
Net income for the three months ended September 30, 2003, increased 4% to $
384,407 or $.07 per share (diluted), as compared to net income of $368,932 or
$.08 per share (diluted) for the same period in 2002. Net income for the nine
months ended September 30, 2003, increased 15% to $817,442 or $.14 per share
(diluted), as compared to net income of $708,041 or $.15 per share (diluted) for
same period in 2002. Earnings Per Share were affected by the increase of 1.5
million shares for the initial public offering in the fourth quarter of 2002.
EBITDA (see discussion of EBITDA at the end of this release) increased 13% to
$1,300,933 for the three months ended September 30, 2003, versus $1,150,993 for
the same period in 2002. EBITDA increased 12% to $3,164,915 for nine months
ended September 30, 2003, versus $2,830,105 for the same period in 2002.
NGS's rental fleet grew by 35% during the nine months ended September 30, 2003.
The Company ended the quarter with 371 compressor packages in its rental fleet,
up from 274 units at September 30, 2002.
Wayne Vinson, President and CEO of Natural Gas Services Group, Inc. said, "We
are pleased with our quarter-over-quarter growth. Our Year-To-Date financials
are strong and getting stronger.
Here are some key indicators comparing September 2002 to September 2003:
Services and Maintenance income up 13% to $1.3 million Leasing income
up 55% to $5 million. Operating income up 18% to $1.9 million.
Net income up 15% to $817,442.
EBITDA up 12% at $3.2 million.
Diluted Earnings Per Share at $.14.
As the third quarter and nine months financial results show, our core leasing
business remains quite profitable. We have been able to do this by delivering a
high-value product to the small to mid-sized compressor market that meets their
critical needs. As we continue to focus on the execution of our marketing and
sales strategies, we are pleased with the increasing acceptance of our products
and the acceleration of new account penetration. We have a strong balance sheet,
a healthy backlog and are on track for a successful fourth quarter and fiscal
year 2004. We remain extremely optimistic about our prospects for continued
growth."
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: Wayne Vinson, CEO or Wallace Sparkman
800-580-1828
Jim Drewitz, Investor Relations
972-355-6070
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 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:
Page 2 of 6
Three months ended Sept. 30, Nine months ended Sept. 30,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
EBITDA $ 1,300,933 $ 1,150,993 $ 3,164,915 $ 2,830,105
Adjustments to reconcile
EBITDA to net income:
Amortization and depreciation (455,563) (301,493) (1,235,118) (839,093)
Interest expense (170,971) (273,568) (500,760) (796,408)
Provision for income tax (289,992) (207,000) (611,595) (486,563)
------------ ------------ ------------ ------------
Net income $ 384,407 $ 368,932 $ 817,442 $ 708,041
============ ============ ============ ============
........................................
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.
Page 3 of 6
Natural Gas Services Group, Inc.
Consolidated Balance Sheet
(unaudited)
September 30, 2003
ASSETS
Current Assets:
Cash and cash equivalents $ 258,276
Accounts receivable - trade 1,584,767
Inventory 2,546,683
Prepaid expenses 130,344
-----------
Total current assets 4,520,070
Lease equipment, net 17,537,997
Other property, plant and equipment, net 2,779,335
Goodwill, net of accumulated amortization 2,589,655
Patents, net of accumulated amortization 120,812
Other assets 79,200
-----------
Total assets $27,627,069
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt and capital lease $ 2,342,151
Accounts payable and accrued liabilities 1,411,129
Unearned Income 492,271
-----------
Total current liabilities 4,245,551
Long term debt and capital lease, less current portion 6,273,100
Subordinated notes, net 1,393,104
Deferred income tax payable 1,773,202
-----------
Total liabilities 13,684,957
SHAREHOLDERS' EQUITY
Preferred stock 3,437
Common stock 50,221
Paid in capital 11,183,715
Retained earnings 2,704,739
-----------
Total shareholders' equity 13,942,112
-----------
Total liabilities and shareholders' equity $27,627,069
===========
The accompanying notes are an integral part of the consolidated balance sheet.
Page 4 of 6
Natural Gas Services Group, Inc.
Consolidated Income Statements
(unaudited)
Three months ended Sept 30 Nine months ended Sept 30
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Revenue:
Sales $ 1,372,248 $ 1,438,069 $ 2,877,358 $ 3,749,300
Service and maintenance 452,714 439,522 1,346,597 1,191,580
Leasing income 1,874,594 1,203,793 5,040,161 3,260,060
----------- ----------- ----------- -----------
3,699,556 3,081,384 9,264,116 8,200,940
Cost of revenue:
Cost of sales 1,008,771 963,035 2,155,568 2,543,287
Cost of service and maintenance 290,008 373,594 961,237 1,012,843
Cost of leasing 545,309 329,850 1,313,093 916,149
----------- ----------- ----------- -----------
1,844,088 1,666,479 4,429,898 4,472,279
----------- ----------- ----------- -----------
Gross Margin 1,855,468 1,414,905 4,834,218 3,728,661
Operating Cost:
Selling expense 159,870 134,786 484,421 378,456
General and administrative expense 395,918 276,523 1,186,922 877,010
Amortization and depreciation 455,563 301,493 1,235,118 839,093
----------- ----------- ----------- -----------
1,011,351 712,802 2,906,461 2,094,559
----------- ----------- ----------- -----------
Operating income 844,117 702,103 1,927,757 1,634,102
Interest expense (170,971) (273,568) (500,760) (796,408)
Equity in earnings of joint venture -- 132,081 -- 339,684
Other income 1,253 15,316 2,040 17,226
----------- ----------- ----------- -----------
Income before income taxes 674,399 575,932 1,429,037 1,194,604
Income tax expense 289,992 207,000 611,595 486,563
----------- ----------- ----------- -----------
Net income 384,407 368,932 817,442 708,041
Preferred dividends 30,530 31,009 92,550 106,624
----------- ----------- ----------- -----------
Net income available to common shareholders
$ 353,877 $ 337,923 $ 724,892 $ 601,417
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.07 $ 0.10 $ 0.15 $ 0.18
Diluted $ 0.07 $ 0.08 $ 0.14 $ 0.15
Weighted average shares:
Basic 4,995,713 3,357,632 4,910,062 3,357,632
Diluted 5,389,673 4,091,862 5,208,096 4,136,709
----------- ----------- ----------- -----------
EBITDA $ 1,300,933 $ 1,150,993 $ 3,164,915 $ 2,830,105
----------- ----------- ----------- -----------
The accompanying notes are an integral part of the consolidated income
statements.
Page 5 of 6
Natural Gas Services Group, Inc.
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, 2003 September 30, 2002
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 817,442 $ 708,041
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 1,235,120 839,093
Deferred taxes 602,202 486,563
Amortization of debt issuance costs 48,717 48,717
Warrants Issued for debt guarantee -- 42,025
Equity in earnings of joint venture -- (339,684)
Gain on disposal of assets
10,547 (15,066)
Changes in operating assets:
Trade and other receivables (938,817) 246,047
Inventory and work in progress (1,000,735) (191,713)
Prepaid expenses and other 42,958 (85,097)
Changes in current liabilities:
Accounts payable and accrued liabilities 708,971 157,906
Deferred income 174,710 74,129
Other (60,436) (26,209)
------------------ ------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,640,679 1,944,752
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (5,900,453) (3,025,780)
Acquisition of remaining interest in joint venture, net of cash acquired 242,753 --
Proceeds from sale of property and equipment 112,500
40,000
Decrease in lease receivable 210,512 62,543
Distribution from equity method investee 49,090 260,868
------------------ ------------------
NET CASH USED IN INVESTING ACTIVITIES (5,285,598) (2,662,369)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans and line of credit 2,649,811 1,853,386
Repayments of long term debt (1,583,951) (647,004)
Deferred offering costs -- (250,937)
Proceeds from stock offering, net of offering cost -- 12,724
Dividends paid on preferred stock (92,550) (75,613)
Proceeds from exercise of warrants 216,247
43
------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,189,557 892,599
------------------ ------------------
NET CHANGE IN CASH AND CASH EQUVALENTS (2,455,362) 174,982
CASH AT BEGINNING OF PERIOD 2,713,638 512,669
------------------ ------------------
CASH AT END OF PERIOD $ 258,276 $ 687,651
================== ==================
SUPPLEMENTAL DICLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 500,760 $ 796,408
Income taxes paid $ -- $ --
The accompanying notes are an integral part of the consolidated income
statements.
Page 6 of 6