Natural Gas Services Group Announces a 37% Increase in Total Revenues, a 117% Increase in Net Income and a 67% Increase in Diluted Earnings Per Share for the Three Months Ended September 30, 2006
Wednesday November 8, 1:00 pm ET
30% Increase in Total Revenue for the Nine Months Ended September 30, 2006 to $46.2 Million; 72% Increase in Net Income for the Nine Months Ended September 30, 2006 to $5.3 Million
MIDLAND, Texas, Nov. 8 /PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc. (Amex: NGS - News), a leading provider of gas compression equipment and services to the natural gas industry, announces its record financial results for the third quarter and nine months ended September 30, 2006.
Natural Gas Services Group, Inc.
(in thousands of
dollars, except
per share Third Third Nine Nine
amounts) Quarter Quarter Change Months Months Change
2005 2006 2005 2006
Total Revenues $12,460 $17,130 37 % $35,532 $46,166 30 %
Operating income $2,207 $3,690 67 % $6,245 $8,655 39 %
Net income $1,091 $2,364 117 % $3,060 $5,268 72 %
EPS (Basic) $0.14 $0.20 43 % $0.43 $0.47 9 %
EPS (Diluted) $0.12 $0.20 67 % $0.37 $0.47 27 %
EBITDA $3,316 $5,634 70 % $9,322 $13,805 48 %
Weighted average shares outstanding:
Basic 7,606 11,960 7,078 11,199
Diluted 8,771 12,046 8,213 11,264
Revenue: Total revenue increased from $12.5 million to $17.1 million, or 37%, for the three months ended September 30, 2006, compared to the same period ended September 30, 2005. These gains were the result of a 38% increase in rental revenue and a 46% increase in sales revenue that outweighed the corresponding $401 thousand decline in service and maintenance revenue, coinciding with our strategy to deemphasize this business segment. Total revenue increased from $35.5 million to $46.2 million, or 30% for the nine months ended September 30, 2006 compared to the same period ended September 30, 2005. These results were due to a 45% increase in rental revenue and a 29% increase in sales revenue. Service and maintenance revenue declined by $1.0 million in the comparable nine month period. Total revenues increased approximately 11% from the second quarter of 2006 to the current quarter.
Operating income: Operating income increased from $2.2 million to $3.7 million, or 67%, for the three months ended September 30, 2006, compared to the same period ended September 30, 2005, and increased from $6.2 million to $8.7 million, or 39%, for the nine months ended September 30, 2006 compared to the same period ended September 30, 2005. The higher operating income was driven by strong sales and rental gross margins and higher total revenues for the current quarter. Third quarter gross margins for sales revenues were 23%, while rental revenues experienced a year-to-date high gross margin of 63%. Indirect operating costs, consisting of selling expense, general and administrative expense and depreciation and amortization expense, for the three-month comparable year-over-year periods increased only 14% as compared to a 37% rise in revenue. Sales, general and administrative expenses averaged 8% of revenue for the nine months of 2006 when compared to 10% of revenue in the same nine month period in 2005. Operating income was $3.7 million for the current quarter as compared to $1.9 million in the second quarter of this year, a 93% increase. This increase was due to higher revenues and higher gross margins.
Net Income: Net income for the three months ended September 30, 2006, increased from $1.1 million to $2.4 million, or 117%, compared to the three months ended September 30, 2005. Net income for the nine months ended September 30, 2006, increased from $3.1 million to $5.3 million, or 72%, compared to the same period ended September 30, 2005. These significant gains in both comparative periods were the cumulative result of higher revenues, robust gross margins and positive net interest income. Net income for the three months ended September 2006 grew to a record 14% of total revenue which, at $2.4 million, amounted to more than half of 2005's full-year net income.
EBITDA: EBITDA (see discussion of EBITDA at the end of this release) increased 70% from $3.3 million for the three months ended September 30, 2005 to $5.6 million for the three months ended September 30, 2006. EBITDA increased 48% from $9.3 million for the nine months ended September 30, 2005 to $13.8 million for the nine months ended September 30, 2006. As a percentage of revenue, EBITDA increased from 27% in the third quarter of 2005 to 33% in the current period and is averaging 30% in the nine month period of 2006 as compared to 26% in the same period a year ago.
Earnings per Share: Earnings per diluted share increased 67% to $0.20 during the three months ended September 30, 2006 as compared to $0.12 during the three months ended September 30, 2005. Comparing the first nine months of 2005 versus 2006, earnings per diluted share grew 27% from $0.37 to $0.47. The growth in earnings per diluted share was achieved in spite of a 37% increase in the number of diluted shares for the comparative three and nine month periods.
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said, "Despite uneven industry conditions this year characterized by increasing natural gas storage levels and declining natural gas prices, our business again grew to record levels. Our total revenue for the first nine months of this year is already at 94% of 2005's full-year level, our year-to-date net income easily exceeds all of last years and we have had double digit percentage increases in our major financial indicators. The strength and momentum we continue to demonstrate is a result of our focused strategy, our exceptional execution and our excellent employees."
The Company has scheduled a conference call Thursday, November 9, 2006 at 9:00 a.m., Central Standard Time, to discuss 2006 Third Quarter and Nine Months Financial Results.
What: Natural Gas Services Group, Inc. 2006 Third Quarter and Nine
Months Financial Results Conference Call
When: Thursday, November 9, 2006 at 9:00 a.m. CST
How: Live via phone by dialing 800-624-7038. Code: Natural Gas
Services. Participants to the Conference call should call in at
least 5 minutes prior to the start time.
