FOR IMMEDIATE RELEASE
NGS Reports Double-Digit Percentage Year-over-Year Increases in Net Income and EBITDA
Rental Revenues Grew by 22% in 2013
MIDLAND, Texas March 13, 2014 - 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 and year ended December 31, 2013.
Revenue: Total revenue was $89.2 million, a decrease from $93.7 million, or 4.8%, for the year ended December 31, 2013, compared to the same period ended December 31, 2012. This decrease is primarily due to lower compressor sales relative to a large one-time sale of rental compression equipment in 2012 of approximately $11 million. Sales fell to $19.5 million for the period ended December 31, 2013 compared to $36.4 million for the same twelve month period in 2012. Rental revenues increased 22.3% in the same year-over-year period and 4.1% over sequential quarters. Total revenues increased 5.8% between the third quarter of 2013 and this current period with nearly 60% of this increase attributable to rental income.
Gross Margins: Total gross margin, exclusive of depreciation and amortization, increased 10% from $43.8 million for the year ended December 31, 2012 to $48.3 million for the same period ended December 31, 2013. Gross margin percentage grew from 46.7% to 54.1% for this same comparative period. This increase was the result of a mix shift from sales to our higher margin rentals. Sequentially, total gross margin remained flat at $11.9 million due to some fourth quarter inventory adjustments during our year end close process which negatively affected our compressor rental and sales gross margins in the fourth quarter. Gross margins grew 4% from $11.4 million to $11.9 million and increased from 49% to 51% as a percentage of revenue in the fourth quarter year-over-year comparative periods. See additional discussion on Gross Margins in the Non-GAAP Financial Measures section in this press release.
Operating Income: Operating income for the year ended December 31, 2013 was $22.0 million, up 8.9% from the comparative prior year's level of $20.2 million. This increase was primarily driven by a growth in our compression rental business . Sequentially, operating income decreased to $5.0 million for the three months ended December 31, 2013 from $5.1 million. This decrease was primarily caused by higher depreciation expense due to rental fleet additions.
Net Income: Net income for the year ended December 31, 2013 increased 13.4% to $14.4 million, when compared to net income of $12.7 million for the same period in 2012. The increase is largely due to rental fleet and corresponding rental revenue growth. Net income fell 7% in the fourth quarter when compared to the third quarter of 2013 and was down 12% when compared against the fourth quarter of 2012. These decreases were mainly driven by higher depreciation as a result of an increase of compressors in our rental pool and a true up of our federal income taxes in the fourth quarter which resulted in a fourth quarter effective rate of 38% compared to an effective rate in the third quarter of 35%.
Earnings per share: Comparing 2013 versus 2012, earnings per diluted share improved to $1.15 from $1.03, or 11.7%. Diluted earnings per share decreased 7.4% per share, to 25 cents from 27 cents, between sequential quarters. As mentioned above, the fourth quarter was negatively affected by year end inventory and tax adjustments which accounted for a decrease in diluted earnings per share of approximately 4 cents.
EBITDA: EBITDA increased 13.3% to $40.7 million or 46% of revenue for the year ended December 31, 2013 versus $35.9 million or 38% of revenue for the year ended December 31, 2012. EBITDA improved to $9.9 million or a 3% increase in the fourth quarter of 2013 when compared to the same period in 2012 and a slight increase of 0.6% in sequential quarters. Please see discussion of Non-GAAP Financial Measures in this press release.
Cash flow: At December 31, 2013, cash and cash equivalents were approximately $24.4 million; working capital was $48.5 million with a total debt level of $577,000, all of which was classified as current. Positive net cash flow from operating activities was approximately $39.2 million during the year ended December 31, 2013 compared to $35.4 million for the same period in 2012. The changes in operating cash flow relate to the cash contribution from net income and normal changes in our working capital accounts.
The following information was filed by Natural Gas Services Group Inc (NGS) on Friday, March 14, 2014 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.