Natural Gas Services Group, Inc. Announces Upcoming Earnings Call and Full Year and Fourth Quarter 2022 Earnings
Natural Gas Services Group, Inc. (NYSE:NGS) reported its financial results for the year ended December 31, 2022. Total revenue rose 17.1% to $84.8 million, driven by a 17.0% increase in rental revenue, totaling $74.5 million. The company's GAAP net loss improved to $0.6 million, or $(0.05) per share, compared to a net loss of $9.2 million in 2021. Adjusted EBITDA increased significantly to $29.2 million from $18.7 million. Rental fleet utilization also improved, reaching 74.8% for horsepower and 65.3% for units. The Earnings Call is scheduled for April 3, 2023, to discuss these results further.
- Total revenue increased by 17.1% to $84.8 million.
- Rental revenue rose 17.0% to $74.5 million.
- GAAP net loss improved by $8.6 million to $0.6 million.
- Adjusted EBITDA increased to $29.2 million from $18.7 million.
- Rental fleet utilization saw increases in both horsepower and unit basis.
- Net loss reported for the three months ended December 31, 2022, was $0.8 million.
- Operating loss for the year was $0.4 million; flat sequentially in Q4.
Midland, Texas, March 31, 2023 (GLOBE NEWSWIRE) -- Natural Gas Services Group, Inc. (NYSE:NGS) (the "Company" or "NGS"), a leading provider of gas compression equipment and services to the energy industry, announces it's upcoming Earnings Call and its financial results for the three months and full year ended December 31, 2022. The Earnings call will be hosted on Monday, April 3, 2023 at 9:00 a.m. (CST), 10:00 a.m. (EST).
To participate in the call, participants should access the webcast on www.ngsgi.com under the Investor Relations section. To connect telephonically, call (800) 715-9871 using conference ID 5410343 approximately five minutes prior to the start of the call. Following the conclusion of the conference call, a recording of the call will be available on the Company’s website.
Financial results contained herein reflect the consolidated financial statements included in the Company's Form 10-K that was filed on March 31, 2023.
Natural Gas Services Group, Inc. Reports Year End and Fourth Quarter 2022 Earnings
2022 Highlights
- 2022 rental revenue was
$74.5 million , an increase of17.0% when compared to 2021 rental revenue of$63.6 million . - GAAP net loss for the year ended December 31, 2022 was
$0.6 million or$(0.05) per basic and diluted share, an improvement of$8.6 million or$0.65 per basic and diluted share, primarily due to increased revenue and improved rental gross margin. - Adjusted EBITDA for the year ended December 31, 2022 was
$29.2 million compared to 2021 Adjusted EBITDA of$18.7 million . Please see Non-GAAP Financial Measures - Adjusted EBITDA, below. - Rental fleet utilization increased on both a horsepower (
74.8% at year-end 2022 vs.71.2% at year-end 2021) and unit basis (65.3% at year-end 2022 vs.62.0% at year-end 2021).
“In all comparative periods, 2022 was a successful year. Compared to the prior year, we saw appreciable gains in revenue, adjusted gross margin and EBITDA, while we continued to expand our position as a leader in the large horsepower natural gas rental compression market,” said Stephen C. Taylor interim President and Chief Executive Officer. “The entire NGS team has contributed to our recent achievements and the goals in 2023 are to continue our profitable growth, expand our customer base and use our scale to become a more efficient operator, both in the field and at the corporate level. For the first time in several years, we deployed a judicious amount of leverage to further our long-term growth plan, which we are successfully executing.”
Financial and Operating Details for the Three and Twelve Months Ended December 31, 2022
Revenue: Total revenue increased by
Operating Income (Loss): The Company posted operating income for the year ended December 31, 2022 of
Gross Margin: Total gross margin increased to
Net Loss: The Company reported a net loss of
Earnings per share: For the year ended December 31, 2022, the Company reported loss per basic and diluted share of
Adjusted EBITDA: Adjusted EBITDA increased
Cash flow: At December 31, 2022, cash and cash equivalents were approximately
Selected data: The tables below show, for the three months and year ended December 31, 2022 and 2021 revenues and percentage of total revenues, along with our gross margin and adjusted gross margin (exclusive of depreciation and amortization), as well as, related percentages of revenue for each of our product lines. Adjusted gross margin is the difference between revenue and cost of sales, exclusive of depreciation and amortization.
Revenue | |||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Rental | $ | 20,561 | 91 | % | $ | 16,475 | 91 | % | $ | 74,465 | 88 | % | $ | 63,624 | 88 | % | |||||||
Sales | 1,297 | 6 | % | 1,126 | 6 | % | 8,568 | 10 | % | 6,882 | 10 | % | |||||||||||
Service & Maintenance | 662 | 3 | % | 428 | 3 | % | 1,792 | 2 | % | 1,914 | 2 | % | |||||||||||
Total | $ | 22,520 | $ | 18,029 | $ | 84,825 | $ | 72,420 |
Gross Margin | ||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Rental | $ | 5,488 | 27 | % | $ | (1,241 | ) | (8) % | $ | 13,472 | 18 | % | $ | 2,563 | 4 | % | ||||||||||
Sales | (909 | ) | (70) % | (817 | ) | (73) % | 643 | 8 | % | (1,228 | ) | (18) % | ||||||||||||||
Service & Maintenance | 288 | 44 | % | 145 | 34 | % | 802 | 45 | % | 967 | 51 | % | ||||||||||||||
Total | $ | 4,867 | 22 | % | $ | (1,913 | ) | (11) % | $ | 14,917 | 18 | % | $ | 2,302 | 3 | % |
Adjusted Gross Margin (1) | ||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Rental | $ | 11,271 | 55 | % | $ | 4,902 | 30 | % | $ | 36,715 | 49 | % | $ | 26,986 | 42 | % | ||||||||||
Sales | (842 | ) | (65) % | (748 | ) | (66) % | 918 | 11 | % | (947 | ) | (14) % | ||||||||||||||
Service & Maintenance | 298 | 45 | % | 155 | 36 | % | 835 | 47 | % | 1,016 | 53 | % | ||||||||||||||
Total | $ | 10,727 | 48 | % | $ | 4,309 | 24 | % | $ | 38,468 | 45 | % | $ | 27,055 | 37 | % |
(1) For a reconciliation of adjusted gross margin to its most directly comparable financial measure calculated and presented in accordance GAAP, please read "Non-GAAP Financial Measures - Adjusted Gross Margin" below.
Non-GAAP Financial Measure - Adjusted Gross Margin: We define “Adjusted Gross Margin” as total revenue less cost of sales (excluding depreciation and amortization expense). Adjusted gross margin is included as a supplemental disclosure because it is a primary measure used by management as it represents the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key operating components. Adjusted gross margin differs from gross margin in that gross margin includes depreciation expense. We believe adjusted gross margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations. Depreciation expense reflects the systematic allocation of historical property and equipment values over the estimated useful lives.
Adjusted gross margin has certain material limitations associated with its use as compared to gross margin. Depreciation expense is a necessary element of our costs and our ability to generate revenue. Management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of the company's performance. As an indicator of operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP. Adjusted Gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate adjusted gross margin in the same manner.
The following table calculates gross margin, the most directly comparable GAAP financial measure, and reconciles it to adjusted gross margin:
Three months ended December 31, | Year ended December 31, | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Total revenue | $ | 22,520 | $ | 18,029 | $ | 84,825 | $ | 72,420 | |||||||
Costs of revenue, exclusive of depreciation and amortization | (11,793 | ) | (13,720 | ) | (46,357 | ) | (45,365 | ) | |||||||
Depreciation allocable to costs of revenue | (5,860 | ) | (6,222 | ) | (23,551 | ) | (24,753 | ) | |||||||
Gross margin | 4,867 | (1,913 | ) | 14,917 | 2,302 | ||||||||||
Depreciation allocable to costs of revenue | 5,860 | 6,222 | 23,551 | 24,753 | |||||||||||
Adjusted Gross Margin | $ | 10,727 | $ | 4,309 | $ | 38,468 | $ | 27,055 |
Non-GAAP Financial Measures - Adjusted EBITDA: “Adjusted EBITDA” reflects net income or loss before interest, taxes, depreciation and amortization, non-recurring severance expenses, non-cash stock compensation expense, an increase in inventory allowance and write-off and retirement of rental equipment. Adjusted EBITDA is a measure used by management, analysts and investors as an indicator of operating cash flow since it excludes the impact of movements in working capital items, non-cash charges and financing costs. Therefore, Adjusted EBITDA gives the investor information as to the cash generated from the operations of a business. However, Adjusted EBITDA is not a measure of financial performance under accounting principles GAAP, and should not be considered a substitute for other financial measures of performance. Adjusted EBITDA as calculated by NGS may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable GAAP measure to Adjusted EBITDA is net (loss) income.
The following table reconciles our net (loss) income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
Three months ended December 31, | Year ended December 31, | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net loss | $ | (756 | ) | $ | (5,614 | ) | $ | (569 | ) | $ | (9,183 | ) | |||
Interest expense | 291 | 25 | 364 | 65 | |||||||||||
Income tax expense (benefit) | 240 | (2,178 | ) | 528 | (2,603 | ) | |||||||||
Depreciation and amortization | 5,997 | 6,387 | 24,116 | 25,397 | |||||||||||
Inventory allowance | 83 | 208 | 83 | 208 | |||||||||||
Retirement of rental equipment | 196 | 3,096 | 196 | 3,096 | |||||||||||
Severance expenses | 1,130 | — | 2,537 | — | |||||||||||
Stock compensation expense | 573 | 422 | 1,910 | 1,738 | |||||||||||
Adjusted EBITDA | $ | 7,754 | $ | 2,346 | $ | 29,165 | $ | 18,718 |
Conference Call Details:
Teleconference: Monday, April 3, 2023 at 9:00 a.m. Central (10:00 a.m. Eastern). Live via phone by dialing 800-715-9871, conference ID 5410343. All attendees and participants to the conference call should arrange to call in at least 5 minutes prior to the start time.
Live Webcast: The webcast will be available in listen only mode via our website www.ngsgi.com, investor relations section.
Webcast Reply: For those unable to attend or participate, a replay of the conference call will be available within 24 hours on the NGS website at www.ngsgi.com.
Stephen C. Taylor, Interim President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing the financial results for the three months and year ended December 31, 2022.
About Natural Gas Services Group, Inc. (NGS): NGS is a leading provider of gas compression equipment and services to the energy industry. The Company manufactures, fabricates, rents, sells and maintains natural gas compressors and flare systems for oil and natural gas production and plant facilities. NGS is headquartered in Midland, Texas, with fabrication facilities located in Tulsa, Oklahoma and Midland, Texas, and service facilities located in major oil and natural gas producing basins in the U.S. Additional information can be found at www.ngsgi.com.
Cautionary Note Regarding Forward-Looking Statements:
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause NGS's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; a prolonged, substantial reduction in oil and gas prices which could cause a decline in the demand for NGS's products and services; and new governmental safety, health and environmental regulations and social initiatives which could require NGS to make significant capital expenditures or reduce our customers' demand for our products and services. Any forward-looking statements included in this press release are only made as of the date of this press release, and NGS undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. A discussion of these factors is included in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
For More Information, Contact: | Investor Relations |
(432) 262-2700 IR@ngsgi.com | |
www.ngsgi.com |
NATURAL GAS SERVICES GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) | |||||||
December 31, | |||||||
2022 | 2021 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 3,372 | $ | 22,942 | |||
Trade accounts receivable, net of allowance for doubtful accounts of | 14,668 | 10,389 | |||||
Inventory | 23,414 | 19,329 | |||||
Federal income tax receivable | 11,538 | 11,538 | |||||
Prepaid income taxes | 10 | 51 | |||||
Prepaid expenses and other | 1,145 | 854 | |||||
Total current assets | 54,147 | 65,103 | |||||
Long-Term Inventory, net of allowance for obsolescence of | 1,557 | 1,582 | |||||
Rental equipment, net of accumulated depreciation of | 246,450 | 206,985 | |||||
Property and equipment, net of accumulated depreciation of | 22,176 | 20,828 | |||||
Right of use assets - operating leases, net of accumulated amortization | 349 | 285 | |||||
Intangibles, net of accumulated amortization of | 900 | 1,025 | |||||
Other assets | 2,667 | 2,698 | |||||
Total assets | $ | 328,246 | $ | 298,506 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 6,481 | $ | 4,795 | |||
Accrued liabilities | 23,726 | 14,103 | |||||
Current operating leases | 155 | 68 | |||||
Deferred income | 37 | 1,312 | |||||
Total current liabilities | 30,399 | 20,278 | |||||
Credit facility | 25,000 | — | |||||
Deferred income tax liability | 39,798 | 39,288 | |||||
Long-term operating leases | 194 | 217 | |||||
Other long-term liabilities | 2,779 | 2,813 | |||||
Total liabilities | 98,170 | 62,596 | |||||
Commitments and contingencies | |||||||
Stockholders’ Equity: | |||||||
Preferred stock, 5,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, 30,000 shares authorized, par value | 135 | 134 | |||||
Additional paid-in capital | 115,411 | 114,017 | |||||
Retained earnings | 129,534 | 130,103 | |||||
Treasury shares, at cost, 1,310 and 775 shares, respectively | (15,004 | ) | (8,344 | ) | |||
Total stockholders' equity | 230,076 | 235,910 | |||||
Total liabilities and stockholders' equity | $ | 328,246 | $ | 298,506 |
NATURAL GAS SERVICES GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) | |||||||
For the Years Ended December 31, | |||||||
2022 | 2021 | ||||||
Revenue: | |||||||
Rental income | $ | 74,465 | $ | 63,624 | |||
Sales | 8,568 | 6,882 | |||||
Service and maintenance income | 1,792 | 1,914 | |||||
Total revenue | 84,825 | 72,420 | |||||
Operating costs and expenses: | |||||||
Cost of rentals, exclusive of depreciation stated separately below | 37,750 | 36,638 | |||||
Cost of sales, exclusive of depreciation stated separately below | 7,650 | 7,829 | |||||
Cost of service and maintenance, exclusive of depreciation stated separately below | 957 | 898 | |||||
Selling, general and administrative expenses | 13,642 | 10,762 | |||||
Depreciation and amortization | 24,116 | 25,397 | |||||
Inventory allowance | 83 | 208 | |||||
Retirement of rental equipment | 196 | 3,096 | |||||
Total operating costs and expenses | 84,394 | 84,828 | |||||
Operating income (loss) | 431 | (12,408 | ) | ||||
Other income (expense): | |||||||
Interest expense | (364 | ) | (65 | ) | |||
Other income | (108 | ) | 687 | ||||
Total other income, net | (472 | ) | 622 | ||||
Income (loss) before income taxes: | (41 | ) | (11,786 | ) | |||
(Provision for) benefit from income taxes: | |||||||
Current | (17 | ) | 1 | ||||
Deferred | (511 | ) | 2,602 | ||||
Total income tax benefit (expense) | (528 | ) | 2,603 | ||||
Net loss | $ | (569 | ) | $ | (9,183 | ) | |
Loss per share: | |||||||
Basic | $ | (0.05 | ) | $ | (0.70 | ) | |
Diluted | $ | (0.05 | ) | $ | (0.70 | ) | |
Weighted average shares outstanding: | |||||||
Basic | 12,305 | 13,100 | |||||
Diluted | 12,305 | 13,100 |
NATURAL GAS SERVICES GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share amounts) (unaudited) | |||||||
For the Years Ended December 31, | |||||||
2022 | 2021 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (569 | ) | $ | (9,183 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 24,116 | 25,397 | |||||
Amortization of debt issuance costs | 48 | 31 | |||||
Deferred taxes | 510 | (2,602 | ) | ||||
Gain on disposal of assets | (250 | ) | (182 | ) | |||
Retirement of rental equipment | 196 | 3,096 | |||||
Bad debt allowance | — | 65 | |||||
Inventory allowance | 83 | 208 | |||||
Stock-based compensation | 1,910 | 1,738 | |||||
(Gain) loss on company owned life insurance | 389 | (298 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Trade accounts receivables | (4,279 | ) | 1,430 | ||||
Inventory | (4,143 | ) | (1,277 | ) | |||
Prepaid income taxes and prepaid expenses | (250 | ) | (460 | ) | |||
Accounts payable and accrued liabilities | 11,309 | 9,756 | |||||
Deferred income | (1,275 | ) | 208 | ||||
Other | (31 | ) | 600 | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 27,764 | 28,527 | |||||
CASH FLOWS USED IN INVESTING ACTIVITIES: | |||||||
Purchase of rental equipment, property and other equipment | (65,122 | ) | (25,710 | ) | |||
Purchase of company owned life insurance | (329 | ) | (150 | ) | |||
Proceeds from sale of property and equipment | 372 | 195 | |||||
NET CASH USED IN INVESTING ACTIVITIES | (65,079 | ) | (25,665 | ) | |||
CASH FLOWS USED IN FINANCING ACTIVITIES: | |||||||
Proceeds from line of credit | 25,000 | — | |||||
Proceeds of other long-term liabilities | (3 | ) | (1 | ) | |||
Repayments of line of credit, net | — | (417 | ) | ||||
Payments of debt issuance costs | (77 | ) | (237 | ) | |||
Purchase of treasury shares | (6,660 | ) | (7,854 | ) | |||
Taxes paid related to net share settlement of equity awards | (515 | ) | (336 | ) | |||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 17,745 | (8,845 | ) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (19,570 | ) | (5,983 | ) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 22,942 | 28,925 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,372 | $ | 22,942 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Interest paid | $ | 276 | $ | 30 | |||
NON-CASH TRANSACTIONS | |||||||
Right of use asset acquired through an operating lease | $ | 229 | $ | — |
FAQ
What were the total revenues for Natural Gas Services Group in 2022?
What is the net loss reported by NGS for the year ended December 31, 2022?
When will NGS hold its Earnings Call to discuss financial results?
How much did Adjusted EBITDA increase for NGS in 2022?