FOR IMMEDIATE RELEASE
NGS Reports Fourth Quarter 2016 Earnings of 9 cents per diluted share
Full Year 2016 Earnings of 50 cents per diluted share
MIDLAND, Texas March 9, 2017 - 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, 2016. Financial results contained herein are preliminary and subject to the audited consolidated financial statements included in NGS's Form 10-K to be filed on or about March 10, 2017.
Revenue: Total revenue decreased to $16.7 million from $25.8 million, or 35%, for the three months ended December 31, 2016 compared to the same period ended December 31, 2015. 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 approximately $525,000 or 3.2%, to $16.7 million from $16.2 million, primarily due to an increase in compressor unit sales. Total revenue decreased to $71.7 million from $95.9 million, or 25.2%, for the year ended December 31, 2016, compared to the year ended December 31, 2015. This was primarily the result of a 25.8% decrease in rental revenue and a 26.4% decrease in sales revenue. The revenue decrease is due to reduced customer demand, resulting from the drop in oil prices.
Operating Income: Operating income for the three months ended December 31, 2016 was $967,000, compared to the comparative prior year's level of $4.6 million. This decrease was primarily due to a reduction in revenues, a high level of relatively fixed depreciation expense and charges related to the retirement of some rental fleet assets and inventory adjustments. Sequentially, operating income decreased to $967,000 for the three months ended December 31, 2016 from $1.8 million for the three months ended September 30, 2016 primarily due to a decrease in rental gross margins between the periods and our rental equipment retirement and inventory adjustments in the fourth quarter. Operating income for the year ended December 31, 2016 was $8.4 million, down 44% compared to last year's comparative period, primarily due to a decrease in rental revenue.
Adjusted Gross Margins: Total adjusted gross margin, exclusive of depreciation and amortization, for the three months ended December 31, 2016, decreased $3.9 million to $9.1 million from $13.0 million for the same period ended December 31, 2015. Overall adjusted gross margin percentage increased to 55% from 51% for this same comparative period. This increase was the result of higher margins in our total sales. Sequentially, total adjusted gross margin decreased to $9.1 million from $9.4 million due to lower margins on our rentals in the fourth quarter compared to the third quarter of 2016. For the comparative year ended periods, adjusted gross margins decreased from prior year to $39.8 million from $53.3 million and remained steady at 55.5% of revenue. Please see discussions of Non-GAAP Financial Measures - Adjusted Gross Margin, below.
Net Income: Net income for the three months ended December 31, 2016 decreased to $1.2 million compared to net income of $3.3 million for the same period in 2015. Sequentially, net income decreased to $1.2 million for the fourth quarter of 2016 from $1.5 million. In the comparative year ended periods, net income decreased by $3.7 million to $6.5 million. Net income in the fourth quarter was positively impacted by research and development and domestic production tax adjustments.
Earnings per share: Comparing fourth quarter 2016 versus the same quarter 2015, earnings per diluted share was 9 cents down from 26 cents. Sequentially, diluted earnings per share decreased to 9 cents in the fourth quarter of 2016, down from 12 cents.
Adjusted EBITDA: Adjusted EBITDA decreased $3.2 million to $7.0 million or 42% of revenue for the three months ended December 31, 2016 compared to $10.2 million or 40% of revenue for the three months ended December 31, 2015. Adjusted EBITDA decreased by approximately $300,000 for the three months ended December 31, 2016, as compared to the sequential quarter. As a percentage of revenue for the same comparative period Adjusted EBITDA decreased to 42% from 45%. For the year ended December 31, 2016, Adjusted EBITDA decreased 27% to $30.8 million or 43% of revenue compared to the year ended December 31, 2015. 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 10, 2017 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.