UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): May 6, 2008
NATURAL
GAS SERVICES GROUP, INC
(Exact
name of registrant as specified in its charter)
|
Colorado
|
1-31398
|
75-2811855
|
|
(State
or other jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
|
of
incorporation)
|
File
Number)
|
Identification
No.)
|
2911
SCR 1260
Midland,
Texas 79706
(Address
of principal executive offices)
(432)
563-3974
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of
the
registrant under any of the following provisions:
|
□
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
□
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
□
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
□
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
|
|
|
Item
2.02. Results of Operations and Financial
Condition.
|
On May
6, 2008, Natural Gas Services Group, Inc. issued a press release announcing its
results of operations for the first quarter ended March 31, 2008. The press
release issued on May 6, 2008 is furnished as Exhibit No. 99 to this
Current Report on Form 8-K. Natural Gas Services Group's annual report on Form
10-K and its reports on Forms 10-Q and 8-K and other publicly available
information should be consulted for other important information about Natural
Gas Services Group, Inc.
The information in this Current Report
on Form 8-K, including Exhibit No. 99 hereto, shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to liability of that section. The information in this Current
Report shall not be incorporated by reference into any filing or other document
pursuant to the Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in such filing or document.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
The
Exhibit listed below is furnished as an Exhibit to this Current Report on Form
8-K.
|
|
|
Exhibit No.
|
Description of Exhibit
|
|
99
|
Press
release issued May 6, 2008
|
|
(furnished
pursuant to Item 2.02)
|
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
|
NATURAL
GAS SERVICES GROUP, INC.
|
|||
|
Date:
May 6, 2008
|
By:
|
/s/ Stephen C. Taylor | |
| Stephen C. Taylor | |||
| Chairman of the Board, President | |||
| and Chief Executive Officer | |||
EXHIBIT
INDEX
|
Exhibit No.
|
Description of Exhibit
|
|
99
|
Press
release issued May 6, 2008
|
|
(furnished
pursuant to Item 2.02)
|
Exhibit
99
[Missing Graphic Reference]
|
FOR
IMMEDIATE RELEASE
|
NEWS
|
|
May 6,
2008
|
Amex
– NGS
|
NATURAL
GAS SERVICES GROUP ANNOUNCES A 31% INCREASE IN NET INCOME
FOR
THE THREE MONTHS ENDED MARCH 31, 2008
25%
Increase in EBITDA for the Three Months ended March 31, 2008 to $7.8
million
32%
Increase in EPS (Diluted) for the Three Months ended March 31, 2008 to
$0.29 per share
MIDLAND, Texas, May 6, 2008 – Natural Gas Services
Group, Inc. (AMEX:NGS), a leading provider of equipment and services to the
natural gas industry, announces its financial results for the first quarter
ended March 31, 2008.
|
(in
thousands of dollars, except per share amounts)
|
Three
Months Ended March 31,
|
Change
|
||||||||||
|
2007
|
2008
|
|||||||||||
|
(unaudited)
|
||||||||||||
|
Revenue
|
$ | 16,712 | $ | 18,933 | 13 | % | ||||||
|
Operating
income
|
4,203 | 5,453 | 30 | % | ||||||||
|
Net
income
|
2,681 | 3,517 | 31 | % | ||||||||
|
EBITDA
|
6,272 | 7,811 | 25 | % | ||||||||
|
EPS
(Basic)
|
0.22 | 0.29 | 32 | % | ||||||||
|
EPS
(Diluted)
|
0.22 | 0.29 | 32 | % | ||||||||
|
Weighted
avg. shares outstanding:
|
||||||||||||
|
Basic
|
12,061 | 12,085 | ||||||||||
|
Diluted
|
12,083 | 12,144 | ||||||||||
Revenue: Total revenue
increased from $16.7 million to $18.9 million, or 13%, for the three months
ended March 31, 2008, compared to the same period ended March 31, 2007. This
increase was primarily the result of a 30% growth in rental
revenue.
Operating income:
Operating income increased from $4.2 million to $5.5 million, or 30%, for
the three months ended March 31, 2008, compared to the same period ended March
31, 2007. Higher compressor sales gross margins were the largest
factor contributing to the increase of operating income.
Net income: Net
income for the three months ended March 31, 2008, increased 31% to $3.5 million,
as compared to net income of $2.7 million for the same period in
2007. Increased operating income, a lower income tax
rate, and lower interest expense from our reduced debt balances contributed to
the increase in net income.
EBITDA: EBITDA
(see discussion
of EBITDA at the end of this release) increased 25% to $7.8 million for the
first quarter ended March 31, 2008, versus $6.3 million for the same period in
2007.
Earnings per Share:
Earnings per diluted share were $0.29 during the three months ending
March 31, 2008 as compared to $0.22 during the same 2007 period, a 32%
increase.
Steve
Taylor, President and CEO of Natural Gas Services Group, Inc. said, “Our results
this quarter reflect the growth we are experiencing in our market segment and a
continuation of our operational effectiveness. Our rental and sales growth rates
remain vigorous and we anticipate an active year.”
The
Company has scheduled a conference call Tuesday, May 6, 2008 at 10:00
a.m., Central Daylight Time, to discuss 2008 First Quarter
Results.
What: Natural
Gas Services Group, Inc. 2008 First Quarter Financial Results Conference
Call
When: Tuesday, May 6, 2008 at 10:00 a.m.,
Central Daylight Time
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.
Steve
Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading
the call and discussing first quarter’s financial results.
About
Natural Gas Services Group, Inc. (NGS)
NGS is a
leading provider of small to medium horsepower, wellhead compression equipment
to the natural gas industry with a primary focus on the non-conventional gas
industry, i.e., coalbed methane, gas shales and tight gas. The Company
manufactures, fabricates, rents and maintains natural gas compressors that
enhance the production of natural gas wells. The Company also designs and sells
custom fabricated natural gas compressors to particular customer specifications
and sells flare systems for gas plant and production facilities. NGS is
headquartered in Midland, Texas with manufacturing facilities located in Tulsa,
Oklahoma, Lewiston, Michigan and Midland, Texas and service facilities located
in major gas producing basins in the U.S.
|
For
More Information, Contact:
|
|
Jim
Drewitz, Investor Relations
|
|
830-669-2466
|
|
jim@jdcreativeoptions.com
|
|
Or
visit the Company's website at
www.ngsgi.com
|
“EBITDA”
reflects net income or loss before interest, taxes, depreciation and
amortization. EBITDA is a measure used by 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, EBITDA gives the investor information as to the
cash generated from the operations of a business. However, EBITDA is
not a measure of financial performance under accounting principles generally
accepted in the United States of America (“GAAP”), and should not be considered
a substitute for other financial measures of performance. EBITDA as
calculated by NGS may not be comparable to EBITDA as calculated and reported by
other companies. The most comparable GAAP measure to EBITDA is net income. The
reconciliation of net income to EBITDA and gross margin is as
follows:
|
Three
months ended March
31,
|
||||||||
|
2007
|
2008
|
|||||||
|
Net
income
|
$ | 2,681 | $ | 3,517 | ||||
|
Interest
expense
|
300 | 241 | ||||||
|
Provision
for income taxes
|
1,574 | 1,928 | ||||||
|
Depreciation
and amortization
|
1,717 | 2,125 | ||||||
|
EBITDA
|
$ | 6,272 | $ | 7,811 | ||||
|
Other
operating expenses
|
1,200 | 1,350 | ||||||
|
Other
expense (income)
|
(352 | ) | (233 | ) | ||||
|
Gross
margin
|
$ | 7,120 | $ | 8,928 | ||||
We define
gross margin as total revenue less cost of sales (excluding depreciation and
amortization expense). Gross margin is included as a supplemental
disclosure because it is a primary measure used by our management as it
represents the results of revenue and cost of sales (excluding depreciation and
amortization expense), which are key components of our
operations. Because we use capital assets, depreciation expense is a
necessary element of our costs and our ability to generate revenue and selling,
general and administrative expense is a necessary cost to support our operations
and required corporate activities. Management uses this non-GAAP
measure as a supplemental measure to other GAAP results to provide a more
complete understanding of our performance. As an indicator of our
operating performance, gross margin should not be considered an alternative to,
or more meaningful than, net income as determined in accordance with
GAAP. Our gross margin may not be comparable to a similarly titled
measure of another company because other entities may not calculate gross margin
in the same manner.
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
which could require NGS to make significant capital expenditures. The
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 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission.
|
NATURAL
GAS SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in
thousands, except per share amounts)
(unaudited)
|
||||||
|
December
31,
|
March
31,
|
|||||
|
2007
|
2008
|
|||||
|
ASSETS
|
||||||
|
Current
Assets:
|
||||||
|
Cash
and cash equivalents
|
$
|
245
|
$
|
2,111
|
||
|
Short-term
investments
|
18,661
|
14,348
|
||||
|
Trade
accounts receivable, net of doubtful accounts of $110, both
periods
|
11,322
|
10,126
|
||||
|
Inventory,
net of allowance for obsolescence of $273 and $288,
respectively
|
20,769
|
24,490
|
||||
|
Prepaid
income taxes
|
3,584
|
—
|
||||
|
Prepaid
expenses and other
|
641
|
203
|
||||
|
Total
current assets
|
55,222
|
51,278
|
||||
|
Rental
equipment, net of
accumulated depreciation of $16,810 and $18,454,
respectively
|
76,025
|
82,175
|
||||
|
Property
and equipment, net
of accumulated depreciation of $4,792 and $5,175,
respectively
|
8,580
|
8,442
|
||||
|
Goodwill, net of accumulated
amortization of $325, both periods
|
10,039
|
10,039
|
||||
|
Intangibles,
net of accumulated amortization of $1,145 and $1,224,
respectively
|
3,324
|
3,245
|
||||
|
Other
assets
|
43
|
32
|
||||
|
Total
assets
|
$
|
153,233
|
$
|
155,211
|
||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||
|
Current
Liabilities:
|
||||||
|
Current
portion of long-term debt and subordinated notes
|
$
|
4,378
|
$
|
3,378
|
||
|
Line
of credit
|
600
|
—
|
||||
|
Accounts
payable
|
4,072
|
6,032
|
||||
|
Accrued
liabilities
|
3,990
|
3,762
|
||||
|
Current
income tax liability
|
3,525
|
57
|
||||
|
Deferred
income
|
81
|
877
|
||||
|
Total
current liabilities
|
16,646
|
14,106
|
||||
|
Long
term debt, less current portion
|
9,572
|
8,727
|
||||
|
Deferred
income tax payable
|
12,635
|
14,359
|
||||
|
Total
liabilities
|
38,853
|
37,192
|
||||
|
Stockholders’
equity:
|
||||||
|
Preferred
stock, 5,000 shares authorized, no shares outstanding
|
—
|
—
|
||||
|
Common
stock, 30,000 shares authorized, par value $0.01;12,085 and 12,087 shares
issued and outstanding, respectively
|
121
|
121
|
||||
|
Additional
paid-in capital
|
83,460
|
83,581
|
||||
|
Retained
earnings
|
30,799
|
34,317
|
||||
|
Total
stockholders' equity
|
114,380
|
118,019
|
||||
|
Total
liabilities and stockholders' equity
|
$
|
153,233
|
$
|
155,211
|
||
|
NATURAL
GAS SERVICES GROUP, INC.
CONDENSED
CONSOLIDATED INCOME STATEMENTS
(in
thousands, except earnings per share)
(unaudited)
|
||||||||
|
Three
months ended March 31,
|
||||||||
|
2007
|
2008
|
|||||||
|
Revenue:
|
||||||||
|
Sales,
net
|
$
|
9,506
|
$
|
9,626
|
||||
|
Rental
income
|
6,940
|
9,010
|
||||||
|
Service
and maintenance income
|
266
|
297
|
||||||
|
Total
revenue
|
16,712
|
18,933
|
||||||
|
Operating
costs and expenses:
|
||||||||
|
Cost
of sales, exclusive of depreciation stated separately
below
|
6,670
|
6,393
|
||||||
|
Cost
of rentals, exclusive of depreciation stated separately
below
|
2,735
|
3,404
|
||||||
|
Cost
of service and maintenance, exclusive of depreciation stated separately
below
|
187
|
208
|
||||||
|
Selling,
general, and administrative expense
|
1,200
|
1,350
|
||||||
|
Depreciation
and amortization
|
1,717
|
2,125
|
||||||
|
Total operating costs and
expenses
|
12,509
|
13,480
|
||||||
|
Operating
income
|
4,203
|
5,453
|
||||||
|
Other
income (expense):
|
||||||||
|
Interest
expense
|
(300
|
)
|
(241
|
)
|
||||
|
Other
income
|
352
|
233
|
||||||
|
Total
other income (expense)
|
52
|
(8
|
)
|
|||||
|
Income
before provision for income taxes
|
4,255
|
5,445
|
||||||
|
Provision
for income taxes
|
1,574
|
1,928
|
||||||
|
Net
income
|
$
|
2,681
|
$
|
3,517
|
||||
|
Earnings
per share:
|
||||||||
|
Basic
|
$
|
0.22
|
$
|
0.29
|
||||
|
Diluted
|
$
|
0.22
|
$
|
0.29
|
||||
|
Weighted
average shares outstanding:
|
||||||||
|
Basic
|
12,061
|
12,085
|
||||||
|
Diluted
|
12,083
|
12,144
|
||||||
|
NATURAL
GAS SERVICES GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(in
thousands of dollars)
(unaudited)
|
||||||||
|
Three
Months Ended March 31,
|
||||||||
|
2007
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
income
|
$
|
2,681
|
$
|
3,517
|
||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
1,717
|
2,125
|
||||||
|
Deferred
taxes
|
(1,479
|
)
|
5,312
|
|||||
|
Employee
stock options expensed
|
97
|
95
|
||||||
|
Gain
on sale of property and equipment
|
(8
|
)
|
—
|
|||||
|
Changes
in current assets and liabilities:
|
||||||||
|
Trade
and other receivables
|
2,413
|
1,196
|
||||||
|
Inventory
and work in progress
|
(2,333
|
)
|
(3,721
|
)
|
||||
|
Prepaid
expenses and other
|
(32
|
)
|
438
|
|||||
|
Accounts
payable and accrued liabilities
|
2,377
|
1,732
|
||||||
|
Current
tax liability
|
2,012
|
(3,468
|
)
|
|||||
|
Deferred
income
|
534
|
796
|
||||||
|
Other
|
(42
|
)
|
18
|
|||||
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
7,937
|
8,040
|
||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchase
of property and equipment
|
(4,040
|
)
|
(8,064
|
)
|
||||
|
Purchase
of short-term investments
|
(274
|
)
|
(187
|
)
|
||||
|
Redemption
of short-term investments
|
3,000
|
4,500
|
||||||
|
Proceeds
from sale of property and equipment
|
33
|
—
|
||||||
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(1,281
|
)
|
(3,751
|
)
|
||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from line of credit
|
—
|
500
|
||||||
|
Repayments
of long-term debt
|
(1,908
|
)
|
(1,845
|
)
|
||||
|
Repayments
of line of credit
|
—
|
(1,100
|
)
|
|||||
|
Proceeds
from exercise of stock options and warrants
|
109
|
22
|
||||||
|
NET
CASH USED IN FINANCING ACTIVITIES
|
(1,799
|
)
|
(2,423
|
)
|
||||
|
NET
CHANGE IN CASH
|
4,857
|
1,866
|
||||||
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
4,391
|
245
|
||||||
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
9,248
|
$
|
2,111
|
||||
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
|
Interest
paid
|
$
|
305
|
$
|
290
|
||||
|
Income
taxes paid
|
$
|
999
|
$
|
84
|
||||