EX-99.1 2 d30247exv99w1.htm NEWS RELEASE exv99w1
 

Exhibit 99.1
[LOGO]
FOR IMMEDIATE RELEASE
November 10, 2005
  NEWS
Amex — NGS
NATURAL GAS SERVICES GROUP ANNOUNCES THIRD QUARTER AND NINE
MONTHS FINANCIAL RESULTS; AND CONFERENCE CALL
222% Increase In Revenue For The Three Months to $12.5 Million
217% Increase In Revenue For The Nine Months to $35.5 Million
MIDLAND, Texas, November 10, 2005 — Natural Gas Services Group, Inc. (AMEX:NGS), a leading provider of equipment and services to the natural gas industry, announces its financial results for the third quarter and nine months ended September 30, 2005.
Natural Gas Services Group, Inc.
                                                 
(in thousands of dollars,   Third     Third           Nine     Nine        
except per share amounts)   Quarter     Quarter     Change     Months     Months     Change  
    2005     2004           2005     2004        
 
Revenues
  $ 12,460     $ 3,870       222 %   $ 35,532     $ 11,220       217 %
Net Income
  $ 1,091     $ 451       142 %   $ 3,060     $ 1,210 *     153 %
EPS (Basic)
  $ 0.14     $ 0.08       75 %   $ 0.43     $ 0.21 *     95 %
EPS (Diluted)
  $ 0.12     $ 0.07       71 %   $ 0.37     $ .19 *     95 %
Net cash provided by operations
                          $ 4,134     $ 3,189 *     30 %
EBITDA
  $ 3,316     $ 1,587       109 %   $ 9,322     $ 4,315 *     116 %
Weighted avg. shares outstanding:
                                               
Basic
    7,606       5,626               7,078       5,428          
Diluted
    8,771       6,492               8,213       6,217          
 
*   Excludes non-recurring proceeds attributable to life insurance payment in the amount of $1,500,000 in the first quarter of 2004.
Revenue: Revenue for the third quarter ended September 30, 2005, increased 222% to $12.5 million, as compared to $3.9 million for the same period in 2004. Revenues for the nine months ended September 30, 2005 increased 217% to $35.5 million, as compared to $11.2 million for the same period in 2004. The increase in revenue during the third quarter and first nine months of 2005 reflects an increase in revenue primarily as a result of the acquisition of SCS in January 2005 plus the continued addition of compressor units to our rental fleet.
Income: Net income for the three months ended September 30, 2005 increased 142% to $1.1

 


 

million or $.12 per share (diluted), as compared to net income of $451 thousand or $.07 per share (diluted) for the same period in 2004. Net income for the nine months ended September 30, 2005 increased 153% to $3.1 million or $.37 per share (diluted), as compared to $1.2 million or $.19 per share (diluted) for the same period in 2004. This is mainly due to the increase in our rental activity and compressor unit sales from our SCS subsidiary.
EBITDA (see discussion of EBITDA at the end of this release) increased 109% to approximately $3.3 million for the three months ended September 30, 2005, versus $1.6 million for the same period in 2004. EBITDA increased 116% to approximately $9.3 million for the nine months ended September 30, 2005, versus $4.3 million for the same period in 2004.
Rental Fleet: NGS’s rental fleet grew by 37%, or 220 units, during the nine months ended September 30, 2005. The Company ended the period with 805 compressor units in its rental fleet, up from 585 units at December 31, 2004 and 533 units at September 30, 2004. The Company added 70 natural gas compressors to its rental fleet in the quarter ended September 30, 2005.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said, “Our activity continues in a vigorous manner in all segments of our business, including compressor rentals, compressor sales and flare sales. We have added 220 compressor units to our rental fleet this year through September 30, 2005 which is on track to meet our projected fleet size of 850-900 by year-end. Our utilization and backlogs continue to be strong and our expansion into the Rocky Mountains and Appalachian regions is proceeding at the expected rate.”
The Company has scheduled a conference call Thursday, November 10, 2005 at 3:00 PM Central Standard Time to discuss 2005 Third Quarter and Nine Months Financial Results.
What: Natural Gas Services Group, Inc. 2005 Third Quarter and Nine Months Financial Results Conference Call
When: November 10, 2005 at 3:00 PM Central Standard Time
How: Live via phone by dialing 800-936-4602. Code: Natural Gas Services. Participants to the Conference call should call in at least 5 minutes prior to the start time.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing third quarter and nine months financial results. Mr. Taylor and Wallace Sparkman, Chairman, will discuss the status of the industry and the role of the Company within the industry.
About Natural Gas Services Group, Inc. (NGS)
NGS is a leading provider of small to medium horsepower compression equipment to the natural gas industry. The Company focuses primarily on the non-conventional gas industry (such as coalbed methane, gas shales and tight gas). The Company manufactures, fabricates and rents natural gas compressors that enhance the production of natural gas wells and provide maintenance services for those compressors. In addition, the Company sells custom fabricated natural gas compressors to meet customer specifications dictated by well pressures, production characteristics and particular applications. The Company also manufactures and sells flare systems for gas plant and production facilities.

 


 

     
For More Information, Contact:




  Wallace Sparkman, Investor Relations
800-580-1828
Jim Drewitz, Investor Relations
972-355-6070
jdrewitz@comcast.net
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 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 EBITDA to net income is as follows:
                                 
(in thousands of dollars, exceptper share amounts)   Three months ended     Nine months ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
                                 
EBITDA
  $ 3,316     $ 1,587     $ 9,322     $ 4,315  
 
                               
Adjustments to reconcile EBITDA to net income:
                               
 
                               
Amortization and depreciation
    (1,076 )     (642 )     (3,026 )     (1,751 )
 
                               
Interest expense
    (508 )     (206 )     (1,439 )     (580 )
 
                               
Provision for income tax
    (641 )     (288 )     (1,797 )     (774 )
 
                       
Net income
  $ 1,091     $ 451     $ 3,060     $ 1,210  
 
                       
 
*   Excludes non-recurring proceeds attributable to life insurance payment in the amount of $1,500,000 in the first quarter of 2004.
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.

 


 

Natural Gas Services Group, Inc.
Condensed Consolidated Balance Sheet
(in thousands of dollars)
 
                 
    September 30, 2005     December 31, 2004  
    (unaudited)          
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 5,729     $ 685  
Accounts receivable — trade, net of allowance
    6,894       1,999  
Inventory
    14,369       4,470  
Prepaid expenses
    238       141  
 
           
Total current assets
    27,230       7,295  
 
               
Lease equipment, net of accumulated depreciation
    37,357       27,734  
Other property, plant and equipment, net of depreciation
    6,691       3,134  
Goodwill, net of accumulated amortization
    8,154       2,590  
Intangibles, net of accumulated amortization
    4,059       86  
Restricted cash
    2,000       2,000  
Other assets
    92       416  
 
           
Total Assets
  $ 85,583     $ 43,255  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current Liabilities:
               
Current portion of long term debt
  $ 4,103       3,728  
Bank line of credit
    300       550  
Accounts payable and accrued liabilities
    8,780       2,355  
Unearned Income
    235       22  
 
           
Total current liabilities
    13,418       6,655  
 
               
Long term debt, less current portion
    21,610       9,290  
Subordinated notes, less current portion
    2,000       1,449  
Deferred income tax payable
    4,658       2,958  
 
           
Total liabilities
    41,686       20,352  
 
               
Common stock
    90       61  
Paid in capital
    34,260       16,355  
Retained earnings
    9,547       6,487  
 
           
Shareholders’ Equity
    43,897       22,903  
 
           
Total Liabilities and Shareholders’ Equity
  $ 85,583     $ 43,255  
 
           

 


 

Natural Gas Services Group, Inc.
Condensed Consolidated Income Statements
(unaudited)
(in thousands of dollars, except per share amounts)
                                 
    Three months ended September 30,     Nine months ended September 30,  
    2005     2004     2005     2004  
Revenue:
                               
Sales
  $ 7,479     $ 703     $ 22,066     $ 2,445  
Service and maintenance income
    610       436       1,770       1,370  
Rental income
    4,371       2,731       11,696       7,405  
 
                       
 
    12,460       3,870       35,532       11,220  
Cost of revenue:
                               
Cost of sales
    5,778       451       16,977       1,699  
Cost of service and maintenance
    341       338       1,145       1,030  
Cost of rentals
    1,782       844       4,539       2,174  
 
                       
Total cost of revenue
    7,901       1,633       22,661       4,903  
 
                       
Gross Margin
    4,559       2,237       12,871       6,317  
 
                               
Operating Cost:
                               
Selling expense
    269       227       750       630  
General and administrative expense
    1,007       425       2,850       1,368  
Depreciation and amortization
    1,076       642       3,026       1,751  
 
                       
 
    2,352       1,294       6,626       3,749  
 
                       
Operating income
    2,207       943       6,245       2,568  
 
                               
Interest expense
    (508 )     (206 )     (1,439 )     (580 )
Other income (expense)
    33       2       51       1,496  
 
                       
Income before income taxes
    1,732       739       4,857       3,484  
Provision for income tax
    641       288       1,797       774  
 
                       
Net Income
    1,091       451       3,060       2,710  
Preferred dividends
                      53  
 
                       
Income available to common shareholders
  $ 1,091     $ 451     $ 3,060     $ 2,657  
 
                       
Earnings per share:
                               
Basic
  $ 0.14     $ 0.08     $ 0.43     $ 0.49  
Diluted
  $ 0.12     $ 0.07     $ 0.37     $ 0.43  
Weighted average Shares:
                               
Basic
    7,606       5,626       7,078       5,428  
Diluted
    8,771       6,492       8,213       6,217  

 


 

Natural Gas Services Group, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands of dollars)
                 
    Nine Months     Nine Months  
    Ended     Ended  
             
    September 30, 2005     September 30, 2004  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 3,060     $ 2,710  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    3,026       1,751  
Deferred taxes
    1,700       770  
Amortization of debt issuance costs
    49       49  
Gain on disposal of assets
    (47 )     7  
Changes in current assets and liabilities:
               
Trade and other receivables
    (2,057 )     (371 )
Inventory and work in progress
    (5,345 )     (625 )
Prepaid expenses and other
    (32 )     (72 )
Accounts payable and accrued liabilities
    4,180       575  
Deferred income
    (723 )     (89 )
Other assets
    323       (16 )
 
           
NET CASH PROVIDED BY OPERATING ACTIVITIES
    4,134       4,689  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property and equipment
    (13,107 )     (8,937 )
Assets acquired, net of cash
    (7,584 )      
Proceeds from sale of property and equipment
    239       50  
 
           
NET CASH USED IN INVESTING ACTIVITIES
    (20,452 )     (8,887 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net proceeds from bank loans
    20,517       5,031  
Net proceeds from line of credit
    300       521  
Repayments of long term debt
    (12,268 )     (1,821 )
Repayments of line of credit
          (300 )
Dividends paid on preferred stock
          (53 )
Proceeds from exercise of warrants and stock options
    12,813       5,052  
 
           
NET CASH PROVIDED BY FINANCING ACTIVITIES
    21,362       8,430  
 
           
NET INCREASE IN CASH
    5,044       4,232  
CASH AT BEGINNING OF PERIOD
    685       176  
 
           
CASH AT END OF PERIOD
  $ 5,729     $ 4,408  
 
           
 
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Interest paid
  $ 1,396     $ 580  
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
               
Assets acquired for issuance of subordinated debt
  $ 3,000        
Assets acquired for issuance of common stock
  $ 5,120