FOR IMMEDIATE RELEASE
NGS Reports 2015 Earnings of $1.03 per Diluted Share, Adjusted for Special Items
Full Year Revenue and Gross Margin Declined 1% from Record Year 2014
MIDLAND, Texas March 10, 2016 - Natural Gas Services Group, Inc. (NYSE:NGS), a leading provider of gas compression equipment and services to the natural gas and oil industry, announces its financial results for the three months and year ended December 31, 2015. Financial results contained herein are preliminary and subject to the audit financial statements included in NGS's Form 10-K to be filed on or about March 11, 2016.
Revenue: Total revenue decreased to $25.8 million from $27.1 million, or 5%, for the three months ended December 31, 2015 compared to the same period ended December 31, 2014. This change was attributable to a decrease in rental revenue related to reduced activity in the upstream oil and natural gas industry due to low commodity prices. Total revenue increased between consecutive quarters by $4.6 million, or 21.5%, to $25.8 million from $21.2 million, primarily due to an increase in compressor unit sales. Total revenue decreased to $95.9 million from $97.0 million, or 1.1%, for the year ended December 31, 2015, compared to the year ended December 31, 2014. This was primarily the result of a 3.2% decrease in rental revenue offset by a 7.7% increase in sales revenue. The rental revenue decrease is due to reduced customer demand, resulting from the drop in oil prices.
Gross Margins: Total gross margin, exclusive of depreciation and amortization, for the three months ended December 31, 2015, decreased $1.9 million to $13.0 million from $14.9 million for the same period ended December 31, 2014. Overall gross margin percentage dropped to 51% from 55% for this same comparative period. This decrease was the result of lower total revenue accompanied by a mix shift from higher margin rentals to lower margin compressor sales. Sequentially, total gross margin increased to $13.0 million from $12.1 million due to substantially higher unit sales in the fourth quarter compared to the third quarter of 2015. For the comparative year ended periods, gross margins decreased slightly from prior year to $53.3 million from $53.8 million and remained steady at 55.5% of revenue. Please see additional discussion on Gross Margins in the Non-GAAP Financial Measures section in this press release.
Operating Income: Operating income for the three months ended December 31, 2015 was $4.6 million, compared to the comparative prior year's level of $6.7 million. This decrease was primarily due to a reduction in rental revenue and the accompanying mix shift. Sequentially, operating income increased to $4.6 million for the three months ended December 31, 2015 from $3.8 million for the three months ended September 30, 2015 primarily due to an increase in total revenues between the periods. Adjusted operating income for the year ended December 31, 2015 was $19.7 million, down 11% compared to last year's comparative period, primarily due to increased depreciation expenses. Please see discussion of Non-GAAP Financial Measures - Special Items, below.
Net Income: Net income for the three months ended December 31, 2015 decreased to $3.3 million compared to net income of $4.0 million for the same period in 2014. Sequentially, net income increased to $3.3 million for the fourth quarter of 2015 from $2.6 million. In the comparative year ended periods, adjusted net income decreased 7% to $13.2 million. Please see discussion of Non-GAAP Financial Measures - Special Items, below.
Earnings per share: Comparing fourth quarter 2015 versus the same quarter 2014, earnings per diluted share was 26 cents down from 32 cents. Sequentially, diluted earnings per share increased to 26 cents in the fourth quarter of 2015, up from 20 cents.
Adjusted EBITDA: Adjusted EBITDA decreased $2.2 million to $10.2 million or 40% of revenue for the three months ended December 31, 2015 compared to $12.4 million or 46% of revenue for the three months ended December 31, 2014. Adjusted EBITDA increased by approximately $800,000 for the three months ended December 31, 2015, as compared to the sequential quarter. As a percentage of revenue for the same comparative period Adjusted EBITDA decreased to 40% from 44%. For the year ended December 31, 2015, Adjusted EBITDA decreased 3% to $42.4 million or 44% of revenue compared to the year ended December 31, 2014. Please see discussion of Non-GAAP Financial Measures - Adjusted EBITDA, below.
The following information was filed by Natural Gas Services Group Inc (NGS) on Friday, March 11, 2016 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.