Earnings Disclosure

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Stock Quote

NGS (common stock)

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$25.70
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Data as of 12/15/17 4:02 p.m. ET

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NGS Reports First Quarter 2016 Earnings of 20 cents per Diluted Share

 

 MIDLAND, Texas May 4, 2016 - Natural Gas Services Group, Inc. (NYSE:NGS), a leading provider of gas compression equipment and services to the natural gas industry, announces its financial results for the three months ended March 31, 2016.

Revenue: Total revenue was $21.6 million, a decrease from $24.7 million, or 13%, for the three months ended March 31, 2016 compared to the same period ended March 31, 2015. This change was attributable to a decrease in rental revenue related to reduced activity in the upstream oil and gas industry due to low commodity prices. Total revenue decreased between consecutive quarters by $4.2 million to $21.6 million from $25.8 million, primarily due to a combination of lower compressor unit sales and decline  in rental revenues.

Gross Margins: Total gross margin for the three months ended March 31, 2016 decreased $2.3 million to $11.8 million from $14.2 million for the same period ended March 31, 2015. Total gross margin percentage dropped slightly to 55% for the three months ended March 31, 2016 compared to 57% for the same period ended March 31, 2015. This decrease was the result of a mix shift from higher margin rentals to lower margin compressor sales and lower compressor sales margins. Sequentially, gross margin was $13.0 million for the three months ending December 31, 2015 compared to $11.8 million in the three months ended in March 31, 2016. Gross margin percentages improved to 55% from 51%, driven primarily by a greater mix and higher gross margin in our rental business.

Operating Income: Operating income for the three months ended March 31, 2016 was $3.8 million, compared to the prior year's first quarter level of $5.8 million. This decrease was due to a reduction in rental revenue and sales gross margins, but partially offset by an increase in rental gross margins. Sequentially, operating income decreased to $3.8 million, for the three months ended March 31, 2016 from $4.6 million in the three month period ended December 31, 2015 primarily due to a decrease in total revenues and lower compressor sales gross margins between the periods.

Net Income:  Net income for the three months ended March 31, 2016 decreased to $2.5 million compared to net income of $3.7 million for the same period in 2015. Sequentially, net income decreased to $2.5 million from $3.3 million.

Earnings Per Share:  Comparing the first quarter of 2016 versus 2015, earnings per diluted share was 20 cents down from 29 cents. Diluted earnings per share decreased to 20 cents from 26 cents between sequential quarters.

EBITDA:  EBITDA decreased $2.3 million to $9.3 million or 43% of revenue for the three months ended March 31, 2016 versus $11.6 million or 47% of revenue for the same three months ended March 31, 2015. EBITDA decreased approximately $937 thousand in the sequential quarters, and relative to revenue, which increased to 43% from 40%. Please see discussion of Non-GAAP Financial Measures - EBITDA, below.

Cash Flow: At March 31, 2016, cash and cash equivalents were $43.1 million with a debt level of $417,000, all of which was classified as long term. Positive net cash flow from operating activities was $10.0 million during the three months ended of 2016.


Commenting on first quarter 2016 results, Stephen C. Taylor, President and CEO, said:

"Activity continued to decline in the first quarter of 2016, but the quarter was good operationally for NGS. Our sales revenues, while down sequentially, still matched the average revenue level we saw in 2015 and we were able to deliver very high gross margins in our rental business. Although revenues continued downward we earned positive net income, continued to generate appreciable levels of free cash flow and strengthened our balance sheet. 2016 has been challenging and it will continue to be throughout the year, but we are confident that our expense control, as well as the pursuit of our sales and product initiatives, will strengthen the immediate and long-term performance of the company."

Selected data: The table below shows revenues, percentage of total revenues, gross margin, exclusive of depreciation, amortization, and gross margin percentage of each of our business lines for the three months ended March 31, 2016 and 2015.  Gross margin is the difference between revenue and cost of sales, exclusive of depreciation and amortization.

  Revenue   Gross Margin, Exclusive of  Depreciation and Amortization(1)
  Three months ended March 31,   Three months ended March 31,
  2016   2015   2016   2015
  (in thousands)
Rental $ 16,408     76 %   $ 20,603     83 %   $ 10,714     65 %   $ 12,876     62 %
Sales 4,910     23 %   3,912     16 %   978     20 %   1,099     28 %
Service & Maintenance 258     1 %   226     1 %   147     57 %   188     83 %
Total $ 21,576         $ 24,741         $ 11,839     55 %   $ 14,163     57 %

(1) For a reconciliation of gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read "Non-GAAP Financial Measures - EBITDA" below.

Non GAAP Financial Measures - EBITDA: "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 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 March 31,
  (in thousands)
  2016   2015
Net income $ 2,541     $ 3,694  
Interest expense 2     3  
Provision for income taxes 1,243     2,132  
Depreciation and amortization 5,503     5,788  
EBITDA 9,289     11,617  
Selling, general and administrative expense 2,569     2,588  
Other income, net (19 )   (42 )
Gross margin $ 11,839     $ 14,163  

"Gross margin" is defined 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 management as it represents the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key operating components.  Depreciation expense is a necessary element of costs and the ability to generate revenue and selling, general and administrative expense is a necessary cost to support 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 the company's performance.  As an indicator of operating performance, gross margin should not be considered an alternative to, or more meaningful than, net income as determined in accordance with GAAP.  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.


Cautionary Note Regarding Forward-Looking Statements:

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 most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Conference Call Details:

Teleconference: Wednesday, May 4, 2016 at 10:00 a.m. Central (11:00 a.m. Eastern).  Live via phone by dialing 877-358-7306, pass code "Natural Gas Services".   All attendees and participants to the conference call should arrange to call in at least 5 minutes prior to the start time.

Live Webcast: The webcast will be available in listen only mode via our website www.ngsgi.com, investor relations section.

Webcast Reply: For those unable to attend or participate, a replay of the conference call will be available within 24 hours on the NGS website at www.ngsgi.com.

Stephen C. Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing the financial results for the three months ended March 31, 2016.

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 and oil industry, i.e., coalbed methane, gas and oil shales and tight gas. The Company manufactures, fabricates, rents, sells and maintains natural gas compressors and flare systems for gas and oil production and plant facilities. NGS is headquartered in Midland, Texas with fabrication facilities located in Tulsa, Oklahoma and Midland, Texas and service facilities located in major gas and oil producing basins in the U.S. Additional information can be found at www.ngsgi.com.

For More Information, Contact: Alicia Dada, Investor Relations
  (432) 262-2700
Alicia.Dada@ngsgi.com
  www.ngsgi.com


 NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
       
  March 31,   December 31,
  2016   2015
ASSETS      
Current Assets:      
Cash and cash equivalents $ 43,055     $ 35,532  
Trade accounts receivable, net of allowance for doubtful accounts of $711 and $833,  respectively 10,847     9,107  
Inventory, net 25,095     27,722  
Prepaid income taxes 396     81  
Prepaid expenses and other 297     762  
Total current assets 79,690     73,204  
Rental equipment, net of accumulated depreciation of $166,359 and $111,293, respectively 188,549     191,933  
Property and equipment, net of accumulated depreciation of $10,972 and $10,825, respectively 8,217     8,527  
Goodwill 10,039     10,039  
Intangibles, net of accumulated amortization of $1,413 and $1,382, respectively 1,746     1,777  
Other assets 124     73  
Total assets $ 288,365     $ 285,553  
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current Liabilities:      
Accounts payable $ 605     $ 1,226  
Accrued liabilities 3,760     3,071  
Deferred income 185     271  
Total current liabilities 4,550     4,568  
Line of credit, non-current portion 417     417  
Deferred income tax liability 56,593     56,458  
Other long-term liabilities 177     129  
Total liabilities 61,737     61,572  
Commitments and contingencies      
Stockholders' Equity:      
Preferred stock, 5,000 shares authorized, no shares issued or outstanding -     -  
Common stock, 30,000 shares authorized, par value $0.01; 12,708 and 12,603 shares issued and outstanding, respectively 127     126  
Additional paid-in capital 98,415     98,310  
Retained earnings 128,086     125,545  
Total stockholders' equity 226,628     223,981  
Total liabilities and stockholders' equity $ 288,365     $ 285,553  


NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except earnings per share)
(unaudited)
   
  Three months ended
  March 31,
  2016   2015
Revenue:      
Rental income $ 16,408     $ 20,603  
Sales, net 4,910     3,912  
Service and maintenance income 258     226  
Total revenue 21,576     24,741  
Operating costs and expenses:      
Cost of rentals, exclusive of depreciation and amortization stated separately below 5,694     7,727  
Cost of sales, exclusive of depreciation and amortization stated separately below 3,932     2,813  
Cost of service and maintenance, exclusive of depreciation and amortization stated separately below 111     38  
Selling, general, and administrative expense 2,569     2,588  
Depreciation and amortization 5,503     5,788  
Total operating costs and expenses 17,809     18,954  
Operating income 3,767     5,787  
Other income (expense):      
Interest expense (2 )   (3 )
Other income 19     42  
Total other income, net 17     39  
Income before provision for income taxes 3,784     5,826  
Provision for income taxes 1,243     2,132  
Net income $ 2,541     $ 3,694  
Earnings per share:      
Basic $ 0.20     $ 0.30  
Diluted $ 0.20     $ 0.29  
Weighted average shares outstanding:      
Basic 12,648     12,504  
Diluted 12,838     12,713  


NATURAL GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
   
  Three months ended
  March 31,
  2016   2015
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 2,541     $ 3,694  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 5,503     5,788  
Deferred income taxes 135     591  
Stock based compensation 648     794  
Bad debt allowance 29     160  
Gain on sale of assets (25 )   (44 )
Gain on company owned life insurance (3 )   -  
Changes in current assets and liabilities:      
Trade accounts receivables, net (1,769 )   619  
Inventory 2,791     5,146  
Prepaid expenses 165     1,491  
Accounts payable and accrued liabilities 68     (6,229 )
Deferred income (86 )   (728 )
Other 51     -  
Tax benefit from equity compensation (15 )   -  
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,033     11,282  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchase of property and equipment (1,942 )   (8,712 )
Purchase of company owned life insurance (48 )   -  
Proceeds from sale of property and equipment 25     44  
NET CASH USED IN INVESTING ACTIVITIES (1,965 )   (8,668 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Repayments from other long-term liabilities, net (3 )   (7 )
Proceeds from exercise of stock options 352     492  
Taxes paid related to net share settlement of equity awards (909 )   (660 )
Tax benefit from equity compensation 15     -  
NET CASH USED IN FINANCING ACTIVITIES (545 )   (175 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,523     2,439  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 35,532     6,181  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 43,055     $ 8,620  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:      
Interest paid $ 2     $ 3  
Income taxes paid $ 1,550     $ -  
NON-CASH TRANSACTIONS      
Transfer of rental equipment components to inventory $ 164     $ -  

HUG#2009673

Natural Gas Services Group Announces its First Quarter 2016 Earnings Call

Midland, Texas, April 21, 2016 - Natural Gas Services Group, Inc. (NYSE:NGS), a leading provider of gas compression equipment and services to the natural gas industry, announces  the following conference call information for their first quarter 2016 earnings release:

Earnings Release: Wednesday, May 4, 2016 before market opens
Public distribution will be through Nasdaq OMX and the Natural Gas Services Group, Inc. website at www.ngsgi.com.

Conference Call: Wednesday, May 4, 2016 at 10:00 a.m. Central, 11:00 a.m. Eastern 
 Live via phone by dialing 877-358-7306, pass code "Natural Gas Services." All attendees and participants to the conference call should arrange to call in at least 5 minutes prior to the start time.

Conference Call Replay
For those unable to attend the live teleconference, a Webcast replay of the call will be available within 2 hours at the NGS website at www.ngsgi.com under the Investor Relations section.

Stephen Taylor, Chairman, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing first quarter 2016 financial results.

About Natural Gas Services Group, Inc.
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 and oil industry, i.e., coalbed methane, gas and oil shales and tight gas. The Company manufactures, fabricates, rents, sells and maintains natural gas compressors and flare systems for gas and oil production and plant facilities. NGS is headquartered in Midland, Texas with fabrication facilities located in Tulsa, Oklahoma and Midland,Texas and service facilities located in major gas and oil producing basins in the U.S. Additional information can be found at www.ngsgi.com.

Natural Gas Services Group, Inc.
Alicia Dada, Investor Relations Coordinator
432-262-2700 or alicia.dada@ngsgi.com


HUG#2005824