FOR IMMEDIATE RELEASE
NATURAL GAS SERVICES GROUP ANNOUNCES DILUTED EARNINGS PER SHARE OF $0.58 FOR THE YEAR ENDED DECEMBER 31, 2010
Revenues, Gross Margins, Operating Income and EBITDA Exhibited Sequential Quarterly Growth through the Year
MIDLAND, Texas March 2, 2011 – 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, 2010.
Revenue: Total revenue decreased from $67.8 million to $53.9 million, or 20.5%, for the twelve months ended December 31, 2010, compared to the same period ended December 31, 2009. This was the result of a 42.9% decrease in sales revenue and a 12.6% decrease in service and maintenance revenue. Rental revenue decreased 9.9%, but rose to 75.4% of our total revenue in the year ended December 31, 2010 as compared to 66.6% in the same period for 2009.
Gross Margins: The overall gross margin percentage increased to 54.1% for the twelve months ended December 31, 2010, from 52.6% for the same period ended December 31, 2009. This increase is the result of (i) an increase in rentals as a percentage of total revenue, of which rentals have a higher margin than our other sources of revenue, (ii) an increase in sales margins from 31.3% to 35.3% for the year ended December 31, 2010 compared to the same period in 2009 and (iii) an increase in our service and maintenance margin from 31.8% for the year ended December 31, 2009 to 38.4% for the same period in 2010. This margin increase is the result of a more favorable pricing regime in those markets.
Operating Income: Operating income for the twelve months ended 2010 was $11.4 million, down 36% from the comparative prior year’s level of $17.8 million. Comparing the three months ended December 31, 2010 to the same period in 2009, operating income rose 17% from $2.9 million to $3.4 million. Operating income is primarily affected by rising or falling revenues and gross margins, but depreciation also plays a significant factor since it is a material fixed cost that is unaffected by market forces. Due to the expansion of our rental fleet our growth capital depreciation expense rose in all comparative quarters.
Income Tax Expense: The effective tax rate for the year ended December 31, 2010 was 38%, up from the full year rate of 36% for 2009. These full year rates were driven higher primarily due to fourth quarter adjustments caused by lower than projected tax deductions from the domestic manufacturing tax allowance. Tax rates were 41% for the three months ending December 31, 2009 and 42% for the same fourth quarter 2010 period. For sequential quarters, taxes rose from 36% in the third quarter of 2010 to 42% for the fourth quarter of 2010.
Net income: Net income for the twelve months of 2010 decreased 36.0% to $7.0 million, when compared to net income of $11.0 million for the same period in 2009. Net income for the three months ended December 31, 2010, increased 17.0% to $2.0 million, as compared to net income of $1.7 million for the same period in 2009. This increase was mainly the result additional rental revenue and flare sales.
Earnings per share: Comparing the twelve months of 2009 versus 2010, earnings per diluted share fell from 91 cents to 58 cents, or 36.0%. Earnings per diluted share was 16 cents for the three months ended December 31, 2010 as compared to 14 cents for the same 2009 period, a 14.0% increase.
EBITDA: EBITDA decreased 20.7% to $23.4 million for the year ended December 31, 2010 versus $29.5 million for the same year ended December 31, 2009. EBITDA increased 10.9% to $6.6 million for the three months ended December 31, 2010, versus $5.9 million for the same period in 2009. Please see discussion of Non-GAAP measures in this release.
Cash flow: At December 31, 2010, cash and cash equivalents were approximately $19.1 million, working capital was $40.4 million with a total debt level of $2.0 million, all of which was classified as current. Positive net cash flow from operating activities was approximately $28.8 million during 2010.
The following information was filed by Natural Gas Services Group Inc (NGS) on Wednesday, March 2, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.