FOR IMMEDIATE RELEASE
Natural Gas Services Group, Inc.
Reports Second Quarter 2018 Financial and Operating Results
MIDLAND, Texas August 9, 2018 - Natural Gas Services Group, Inc. (“NGS” or the “Company”) (NYSE:NGS), a leading provider of gas compression equipment and services to the energy industry, today announced financial results for the three and six months ended June 30, 2018.
NGS reported steady rental revenue of $11.4 million for both quarters ended June 30, 2018 and 2017. Sequentially, rental revenue on a quarterly basis stayed relatively flat with a slight decrease of $44,000. For the six months ended June 30, 2018, rental revenues fell to $22.9 million compared to $23.3 million for the same period in 2017.
The Company reported net income of $247,000 for the second quarter compared to $375,000 in the same quarter in 2017 and $225,000 in the first quarter 2018. For the six months ended June 30, 2018, The Company reported net income of $472,000 compared to $627,000 for the same period ended 2017. Earnings per diluted share for the quarter ended June 30, 2018 was 2 cents.
Highlights of the quarter include:
Revenue: Total revenue for the three months ended June 30, 2018 was $18.2 million, an increase compared to $16.2 million for the three months ended June 30, 2017. This increase was due to a $2.0 million rise in sales due to fluctuations in the timing of our compressor sales activity. Total revenue, sequentially, increased between quarters by $3.5 million, to $18.2 million from $14.7 million, due to an increase in sales, particularly due to larger flare and compressor sales. For the six months ended June 30, 2018 and 2017, total revenue dropped to $32.9 million from $35.1 million due to fluctuations in timing of compressor sales activity.
Operating Income: Operating income for the three months ended June 30, 2018, decreased to $226,000 from $414,000 compared to the same period in the prior year. This drop is due to a mix shift in revenues from larger margin rentals to lower margin sales. Sequentially, operating income decreased to $226,000 from $350,000 due to rentals to sales mix shift. Operating income for the six months ended June 30, 2018, decreased to $576,000 from $757,000.
Adjusted Gross Margins: Total adjusted gross margin for the three months ended June 30, 2018 dropped slightly to $8.0 million from $8.1 million for the same period ended June 30, 2017, but as a percentage of revenue decreased to 44% compared to 50% for the same periods, respectively. This decrease is due to the mix in revenues shifting from higher margin rentals to lower margin sales. Sequentially, adjusted gross margin was $8.0 million for the three months ending June 30, 2018 compared to $7.8 million in the three months ended in March 31, 2018. Adjusted gross margin percentages decreased to 44% from 53% the previous quarter, driven by the same shift in revenues from rentals to sales. For the six months 2018 versus 2017, adjusted gross margin fell to $15.7 million from $16.8 million, due to a drop in rental margins but stayed relatively flat as a percentage of revenue at 48%. Please see discussion of Non-GAAP Financial Measures - Adjusted Gross Margin at the conclusion of this release.
Net Income: Net income for the three months ended June 30, 2018 decreased to $247,000 compared to net income of $375,000 for the same period in 2017. Sequentially, net income increased to $247,000 from $225,000. For the six months ended 2018 compared to 2017, net income decreased to $472,000 from $627,000.
Earnings Per Share: Comparing the second quarter of 2018 versus 2017, earnings per diluted share was down to 2 cents compared to 3 cents, respectively. Sequentially, diluted earnings per share was flat at 2 cents. Comparing six months ending 2018 versus 2017, earnings per diluted share was down to 4 cents from 5 cents.
Adjusted EBITDA: Adjusted EBITDA was relatively flat at $5.8 million and $5.7 million, but fell as a percentage of revenue to 32% from 35%, for the three months ended June 30, 2018 and June 30, 2017, respectively. Adjusted EBITDA increased approximately $89,000 in the sequential quarters but decreased relative to revenue to 32% from 38%. For the six month comparison 2018 to 2017, Adjusted EBTIDA remained flat at $11.4 million and rose as a percentage of revenue to 35% from 32%. Please see discussion of Non-GAAP Financial Measures - Adjusted EBITDA at the conclusion of this release.
The following information was filed by Natural Gas Services Group Inc (NGS) on Thursday, August 9, 2018 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.