• Natural Gas Services Group, Inc. Reports First Quarter 2023 Financial and Operating Results

    来源: Nasdaq GlobeNewswire / 15 5月 2023 16:01:35   America/Chicago

    Midland, TX, May 15, 2023 (GLOBE NEWSWIRE) --

    First Quarter 2023 Highlights

    • Rental revenue of $22.7 million, an increase of 33% when compared to the first quarter of 2022 and 11% when compared to the fourth quarter of 2022.
    • Net income of $370,000 ($0.03 per basic share), an increase of $33,000 when compared to the first quarter of 2022 and an increase of $1.1 million when compared to the fourth quarter of 2022.
    • Adjusted EBITDA of $7.8 million, an increase of 14% when compared to the first quarter of 2022 and flat when compared to the fourth quarter of 2022. Please see Non-GAAP Financial Measures - Adjusted EBITDA, below.

    MIDLAND, Texas May 15, 2023 (GLOBE NEWSWIRE) Natural Gas Services Group, Inc. (“NGS” or the “Company”) (NYSE:NGS), a leading provider of natural gas compression equipment and services to the energy industry, today announced financial results for the three months ended March 31, 2023.

    Commenting on the quarter, Stephen C. Taylor our Interim President and Chief Executive Officer, added “This quarter marked the ninth quarter in a row of rental revenue growth. For the current sequential quarters, rental revenue alone grew almost 11% while higher rental and sales revenues grew total revenues by 18%. Adjusted rental gross margins slipped 2% due to higher field expenses and a one-time non-cash adjustment, but our total adjusted gross margin increased 4% sequentially. SG&A declined 4% and our bottom-line net income had a positive swing of almost a million dollars from last quarter as we posted positive GAAP earnings”.

    “As mentioned in the last earnings call, NGS closed on a substantial line of credit from our bank at the end of February,” Taylor noted. “This was to fund the additional high horsepower equipment we have already contracted as we continue to execute on our growth plan. NGS had a solid and growing quarter. We have added more committed contracts over the past couple of months, our utilization continues to increase and pre-contracted activity remains at a high level for the rest of the year resulting in an estimated capital expenditure budget of approximately $150 million for the fiscal year 2023 almost of all of which will support project already under contracts with customers.”

    Revenue: Total revenue for the three months ended March 31, 2023 increased to $26.6 million from $20.3 million for the three months ended March 31, 2022. This increase was due primarily to an increase in rental revenues. Rental revenue increased 32.7% to $22.7 million in the first quarter of 2023, from $17.1 million in the first quarter of 2022 due to higher horsepower packages and modest pricing improvements. As of March 31, 2023, we had 1,245 rented units (335,314 horsepower) compared to 1,276 rented units (306,834 horsepower) as of March 31, 2022, reflecting an 9.3% increase in average horsepower deployed. Sequentially, total revenue increased 18.2% to $26.6 million in the first quarter of 2023 compared to $22.5 million in the fourth quarter of 2022 primarily due to increases in both rental revenues and sales revenues during the three months ended March 31, 2023.

    Gross Margins: Total gross margins increased to $5.1 million for the three months ended March 31, 2023, compared to $3.0 million for the same period in 2022. Total adjusted gross margin, exclusive of depreciation, for the three months ended March 31, 2023, increased to $11.1 million from $8.9 million for the same period ended March 31, 2022. This increase was primarily attributable to increased rental revenues and associated gross margins during the current quarter. Sequentially, total gross margin increased to $5.1 million for the three months ended March 31, 2023, compared to $4.9 million for the three months ended December 31, 2022. Excluding depreciation, total adjusted gross margin increased to $11.1 million during the first quarter of 2023 compared to $10.7 million during the fourth quarter of 2022. This sequential increase was primarily due to higher compressor sales.

    Operating Income: Operating income for the three months ended March 31, 2023 was $402,000 compared to an operating income of $382,000 for the three months ended March 31, 2022. Operating income increased in the first quarter of 2023 to $402,000 from an operating loss of $316,000 during the fourth quarter of 2022.

    Net Income: Net income for the three months ended March 31, 2023, was $370,000 ($0.03 per basic share) compared to net income of $337,000 ($0.03 per basic share) for the three months ended March 31, 2022. The increase in net income during the first quarter of 2023 was mainly due to increased rental margins partially offset by an increase in selling, general and administrative expenses. Sequentially, net income during the first quarter of 2023 was $370,000 ($0.03 per basic share) compared to net loss of $756,000 ($0.06 per basic share) during the fourth quarter of 2022. This sequential improvement of $1.1 million was primarily due to higher rental activity and associated gross margin and a non cash charge for fleet retirements in the fourth quarter of 2022.

    Adjusted EBITDA: Adjusted EBITDA increased to $7.8 million for the three months ended March 31, 2023, from $6.8 million for the same period in 2022. This increase was primarily attributable higher adjusted gross margins. Sequentially, adjusted EBITDA was flat at $7.8 million for the three months ended March 31, 2023, and in the previous quarter.

    Cash flows: At March 31, 2023, cash and cash equivalents were approximately $7.4 million, while working capital was $17.6 million with $61.0 million outstanding on our revolving credit facility. For the three months of 2023, cash flows from operating activities were $18.2 million, while cash flows used in investing activities was $47.8 million. Cash flows used in investing activities included $47.8 million in capital expenditures, of which $47.0 million was dedicated to rental capital expenditures.

    Selected data: The tables below show, the three months ended March 31, 2023 and 2022, revenues and percentage of total revenues, along with our gross margin and adjusted gross margin (exclusive of depreciation and amortization), as well as, related percentages of revenue for each of our product lines. Adjusted gross margin is the difference between revenue and cost of sales, exclusive of depreciation.


     Revenue
     Three months ended March 31,
      2023   2022 
     (in thousands)
    Rental$        22,723                 86        % $        17,129                 84        %
    Sales         2,992                 11        %          2,893                 14        %
    Service & Maintenance         905                 3        %          314                 2        %
    Total$        26,620           $        20,336          


     Gross Margin
     Three months ended March 31,  
      2023   2022  
     (in thousands)
    Rental$        5,137                  23        % $        2,063                 12        % 
    Sales         (312)         (10)        %          836                 29        % 
    Service & Maintenance         289                  32        %          134                 43        % 
    Total$        5,114                  19        % $        3,033                 15        % 


     Adjusted Gross Margin (1)
     Three months ended March 31,
      2023   2022 
     (in thousands)
    Rental$        11,078                  49        % $        7,899                 46        %
    Sales         (245)         (8)        %          905                 31        %
    Service & Maintenance         296                  33        %          141                 45        %
    Total$        11,129                  42        % $        8,945                 44        %


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

    Non-GAAP Financial Measure - Adjusted Gross Margin: “Adjusted Gross Margin” is defined as total revenue less cost of sales (excluding depreciation expense). Adjusted 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 expense), which are key operating components. Adjusted gross margin differs from gross margin in that gross margin includes depreciation expense. We believe adjusted gross margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations. Depreciation expense reflects the systematic allocation of historical property and equipment values over the estimated useful lives.

    Adjusted gross margin has certain material limitations associated with its use as compared to gross margin. Depreciation expense is a necessary element of our costs and our ability to generate revenue. 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, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin as determined in accordance with GAAP. Adjusted Gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate adjusted gross margin in the same manner.

    The following table calculates gross margin, the most directly comparable GAAP financial measure, and reconciles it to adjusted gross margin:


     Three months ended March 31,
      2023   2022 
     (in thousands)
    Total revenue$        26,620          $        20,336         
    Costs of revenue, exclusive of depreciation         (15,491)          (11,391)
    Depreciation allocable to costs of revenue         (6,015)          (5,912)
    Gross margin         5,114                   3,033         
    Depreciation allocable to costs of revenue         6,015                   5,912         
    Adjusted Gross Margin$        11,129          $        8,945         


    Non-GAAP Financial Measures - Adjusted EBITDA: “Adjusted EBITDA” reflects net income or loss before interest, taxes, depreciation and amortization, non-cash stock compensation expense, severance expenses, impairment of goodwill, increases in inventory allowance and retirement of rental equipment. Adjusted EBITDA is a measure used by management, 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, Adjusted EBITDA gives the investor information as to the cash generated from the operations of a business. However, Adjusted 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. Adjusted EBITDA as calculated by NGS may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable GAAP measure to Adjusted EBITDA is net income (loss).

    The following table reconciles our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:

     Three months ended March 31,
      2023  2022 
     (in thousands)
    Net income$        370         $        337         
    Interest expense         —                  24         
    Income tax benefit         150                  (11)
    Depreciation and amortization         6,165                  6,061         
    Non-cash stock compensation expense         487                  423         
    Severance expenses         612                  —         
    Adjusted EBITDA$        7,784         $        6,834         


    Conference Call Details: The Company will host its earnings conference call on Tuesday, May 16, 2023, at 11:00AM EDT (10:00am CDT). To participate in the call, participants should access the webcast on www.ngsgi.com under the Investor Relations section. To connect telephonically, call (800) 715-9871 using conference ID 2421165 approximately five minutes prior to the start of the call. Following the conclusion of the conference call, a recording of the call will be available on the Company’s website.

    About Natural Gas Services Group, Inc. (NGS): NGS is a leading provider of gas compression technology and services to the energy industry. The Company manufactures, fabricates, rents, sells, and maintains natural gas compression technology for oil and natural gas upstream providers and midstream facilities. NGS is headquartered in Midland with manufacturing and fabrication facilities located in Tulsa, and Midland. The Company maintains service facilities in major energy producing basins in the U.S. Additional information can be found at www.ngsgi.com.

    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: a prolonged, substantial reduction in oil and natural gas prices which could cause a decline in the demand for NGS's products and services; the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; 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, as well as the Company’s Form 10-Q for the quarterly period ended March 31, 2023, as filed with the Securities and Exchange Commission.


      


     NATURAL GAS SERVICES GROUP, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except par value)
    (unaudited)
        
     March 31,
    2023    		 December 31, 2022
    ASSETS   
    Current Assets:   
    Cash and cash equivalents$        7,412          $        3,372         
    Trade accounts receivable, net         14,971                   14,668         
    Inventory         25,077                   23,414         
    Federal income tax receivable (Note 4)         11,538                   11,538         
    Prepaid income taxes         10                   10         
    Prepaid expenses and other         648                   1,145         
    Total current assets         59,656                   54,147         
    Long-term inventory, net of allowance for obsolescence of $40 and $120, respectively         1,588                   1,557         
    Rental equipment, net of accumulated depreciation of $182,560 and $177,729, respectively         287,181                   246,450         
    Property and equipment, net of accumulated depreciation of $17,554 and $16,981, respectively         22,420                   22,176         
    Right of use assets - operating leases, net of accumulated amortization $760 and $721, respectively         309                   349         
    Intangibles, net of accumulated amortization of $2,290 and $2,259, respectively         869                   900         
    Other assets         4,784                   2,667         
    Total assets$        376,807          $        328,246         
    LIABILITIES AND STOCKHOLDERS' EQUITY   
    Current Liabilities:   
    Accounts payable$        24,835          $        6,481         
    Accrued liabilities         16,946                   23,726         
    Current operating leases         123                   155         
    Deferred income         114                   37         
    Total current liabilities         42,018                   30,399         
    Long-term debt         61,011                   25,000         
    Deferred income tax liability         39,946                   39,798         
    Long-term operating leases         186                   194         
    Other long-term liabilities         2,897                   2,779         
    Total liabilities         146,058                   98,170         
    Commitments and contingencies   
    Stockholders’ Equity:   
    Preferred stock, 5,000 shares authorized, no shares issued or outstanding         —                   —         
    Common stock, 30,000 shares authorized, par value $0.01; 13,548 and 13,519 shares issued, respectively         135                   135         
    Additional paid-in capital         115,714                   115,411         
    Retained earnings         129,904                   129,534         
    Treasury shares, at cost, 1,310 shares, respectively    (15,004)          (15,004)
    Total stockholders' equity         230,749                   230,076         
    Total liabilities and stockholders' equity$        376,807          $        328,246         


    NATURAL GAS SERVICES GROUP, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except earnings per share)
    (unaudited)
      
     Three months ended
     March 31,
      2023   2022 
    Revenue:   
    Rental income$        22,723          $        17,129         
    Sales         2,992                   2,893         
    Service and maintenance income         905                   314         
    Total revenue         26,620                   20,336         
    Operating costs and expenses:   
    Cost of rentals, exclusive of depreciation stated separately below         11,645                   9,230         
    Cost of sales, exclusive of depreciation stated separately below         3,237                   1,988         
    Cost of service and maintenance, exclusive of depreciation stated separately below         609                   173         
    Selling, general and administrative expenses         4,562                   2,502         
    Depreciation and amortization         6,165                   6,061         
    Total operating costs and expenses         26,218                   19,954         
    Operating income         402                   382         
    Other income (expense):   
    Interest expense         —                   (24)
    Other income (expense), net         118                   (32)
    Total other income, net         118                   (56)
    Income before provision for income taxes         520                   326         
    Income tax benefit         (150)          11         
    Net income$        370          $        337         
    Loss per share:   
    Basic$        0.03          $        0.03         
    Diluted$        0.03          $        0.03         
    Weighted average shares outstanding:   
    Basic         12,213                   12,537         
    Diluted         12,354                   12,698         


    NATURAL GAS SERVICES GROUP, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
    (unaudited)
     Three months ended
     March 31,
      2023   2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net income$        370          $        337         
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization         6,165                   6,061         
    Amortization of debt issuance costs         52                   12         
    Deferred income tax (benefit) expense         148                   (11)
    Stock-based compensation         487                   423         
    Bad debt allowance         48                   —         
    Gain on sale of assets         (25)          (36)
    Loss (gain) on company owned life insurance         (18)          130         
    Changes in operating assets and liabilities:   
    Trade accounts receivables         (351)          (2,494)
    Inventory         (986)          2,085         
    Prepaid expenses and prepaid income taxes         497                   238         
    Accounts payable and accrued liabilities         11,574                   (349)
    Deferred income         77                   (1,312)
    Other         184                   (89)
    NET CASH PROVIDED BY OPERATING ACTIVITIES         18,222                   4,995         
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Purchase of rental equipment, property and other equipment         (47,792)          (8,212)
    Purchase of company owned life insurance         (50)          (47)
    Proceeds from sale of property and equipment         —                   37         
    NET CASH USED IN INVESTING ACTIVITIES         (47,842)          (8,222)
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Proceeds from loan         36,011                   —         
    Payments of other long-term liabilities, net         (36)          (2)
    Payments of debt issuance cost         (2,131)          —         
    Purchase of treasury shares         —                   (2,928)
    Taxes paid related to net share settlement of equity awards         (184)          (359)
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES         33,660                   (3,289)
    NET CHANGE IN CASH AND CASH EQUIVALENTS         4,040                   (6,516)
    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         3,372                   22,942         
    CASH AND CASH EQUIVALENTS AT END OF PERIOD$        7,412          $        16,426         
    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:   
    Interest paid$        855          $        12         
    NON-CASH TRANSACTIONS   
    Right of use asset acquired through an operating lease$        —          $        91         
    Transfer of rental equipment to inventory$        708          $        —         



    Investor Relations
(432) 262-2753
Ir@ngsgi.com
www.ngsgi.com

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