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Natural Gas Services Group Announces Diluted Earnings Per Share of $0.25 for the Quarter and $0.80 for the Year Ended December 31, 2011
MIDLAND, Texas March 8, 2012 - 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 and twelve months ended December 31, 2011.
Revenue: Total revenue increased from $53.9 million to $65.2 million, or 20.9%, for the twelve months ended December 31, 2011, compared to the same period ended December 31, 2010. This was the result of a 24.6% increase in sales revenue, an increase of rental revenue of 19.5%, and a 29.0% increase in service and maintenance revenue. Total revenues were up 5.3% between the third and the fourth quarters of 2011.
Gross Margins: The overall gross margin percentage decreased to 53.3% for the twelve months ended December 31, 2011, from 54.1% for the same period ended December 31, 2010. This decrease was the result of a reduction in rental margins from 60.2% to 57.3% primarily as a result of increased lube oil, antifreeze and labor costs.
Operating Income: Operating income for the twelve months ended December 31, 2011 was $14.9 million, up 30.7% from the comparative prior year's level of $11.4 million. Operating income increased 28.1% in the fourth quarter of 2011 when compared to the prior quarter.
Net Income: Net income for the twelve months of 2011 increased 40.0% to $9.8 million, when compared to net income of $7.0 million for the same period in 2010. The increase is largely due to rental fleet growth and increased utilization and improved sales of compressors and flares. Net income grew 35.6% in the fourth quarter when compared to the third quarter of 2011.
Earnings per share: Comparing the twelve months of 2010 versus 2011, earnings per diluted share increased from $0.58 to $0.80 or 37.9%. Earnings per diluted share for the three months ended December 31, 2011 grew 38.8% to $0.25 from $0.18 in the third quarter of the year.
EBITDA: EBITDA increased 26.9% to $29.7 million for the year ended December 31, 2011 versus $23.4 million for the year ended December 31, 2010. EBITDA increased 18.0% to $8.5 million for the three months ended December 31, 2011 when compared to the prior quarter. Please see discussion of Non-GAAP measures in this release.
Cash flow: At December 31, 2011, cash and cash equivalents were approximately $16.4 million; working capital was $37.2 million with a total debt level of $1.0 million, which was classified as long term. Positive net cash flow from operating activities was approximately $33.6 million during 2011.
Commenting on 2011 results, Stephen C. Taylor, President and CEO, said:
Selected data: The table below shows revenues, percentage of total revenues, gross margin, exclusive of depreciation, and gross margin percentage of each business segment for the year ended December 31, 2011 and 2010. Gross margin is the difference between revenue and cost of sales, exclusive of depreciation.
(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" below.
Non GAAP Measures: "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:
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 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: Thursday, March 8 at 10:00 a.m. Central (11:00 a.m. Eastern). Live via phone by dialing 800-624-7038, 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 and twelve months ended December 31, 2011.
About Natural Gas Services Group, Inc. (NGS):
NATURAL GAS SERVICES GROUP, INC.
NATURAL GAS SERVICES GROUP, INC.
NATURAL GAS SERVICES GROUP, INC.