Exhibit 99
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NGSG
NATURAL GAS SERVICES GROUP, INC.
FOR IMMEDIATE RELEASE NEWS
March 1, 2004 Amex - NGS, NGS.WS
NATURAL GAS SERVICES GROUP ANNOUNCES FOURTH QUARTER AND YEAR
END FINANCIAL RESULTS
66% Increase In Revenue For The Three Months to $3.5 Million
24% Increase In Revenue For The Twelve Months to $12.7 Million
MIDLAND, Texas, March 1, 2004 - Natural Gas Services Group, Inc. (AMEX:NGS), a
leading provider of equipment and services to the natural gas and oil industry,
announces its financial results for the fourth quarter and twelve months ended
December 31, 2003.
Natural Gas Service Group, Inc.
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Fourth Fourth Twelve Twelve
Quarter Quarter Change Months Months Change
2003 2002 2003 2002
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Revenues $ 3,485,406 $ 2,095,601 66.3% $12,749,522 $10,296,541 24%
Net Income $ 489,691 $ 78,044 527% $ 1,307,133 $ 786,085 66%
EPS (Basic) $ 0.09 $ 0.02 428% $ 0.24 $ 0.19 29%
EPS (Diluted) $ 0.09 $ 0.02 411% $ 0.23 $ 0.16 43%
Cash flow from operation $ 3,024,420 $ 2,205,953
EBITDA $ 1,231,856 $ 681,166 80.9% $ 4,396,771 $ 3,511,271 25.2%
Weighted avg. shares outstanding:
Basic 5,051,851 4,515,241 4,946,922 3,649,413
Diluted 5,386,928 4,661,728 5,252,531 4,305,053
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Revenue for the fourth quarter ended December 31, 2003, increased 66% to
$3,485,406 as compared to $2,095,601 for the same period in 2002. Revenue for
the twelve months ended December 31, 2003, increased 24% to $12,749,522 as
compared to $10,296,541 for the same period in 2002. The increase in revenue
during the fourth quarter and twelve months reflects a significant increase in
revenue from the rental of natural gas compressor units and a slight increase in
service and maintenance revenue.
Net income for the fourth quarter ended December 31, 2003, increased 527% to
$489,691 or $.09 per share (diluted), as compared to net income of $78,044 or
$.02 per share (diluted) for the same period in 2002. Net income for the twelve
months ended December 31, 2003, increased 66% to $1,307,133 or $.23 per share
(diluted), as compared to net income of $786,085 or $.16 per share (diluted) for
same period in 2002. Earnings Per Share was affected by the increase of 1.5
million shares for the initial public offering in the fourth quarter of 2002.
NGSG's rental fleet grew by 46% during the twelve months ended December 31,
2003. The Company ended the year with 399 compressor packages in its rental
fleet, up from 274 units at December 31, 2002. The company anticipates adding
rental units this year at a cost of approximately $10 million and expects total
revenue to grow by approximately 28%.
Wayne Vinson, President and CEO of Natural Gas Services Group, Inc. said, "We
delivered consistent sales and earning growth throughout 2003.
Here are some key indicators comparing year end 2003 to year end 2002:
Services and Maintenance income up 13.5% to $1.7 million.
Leasing income up 61.7% to $7 million.
Gross Margin up 42% to $6.7 million.
Operating income up 45% to $2.7 million.
EBITDA up 25% to $4.4 million.
Natural Gas Services 2003 financial performance scored on all major areas:
revenue growth, profitability and positive cash flow, reflecting the strength of
our strategic business model, the dedication of our team and the value of
delivering a high-value product to the small to mid-sized compressor market that
meets their critical needs. Our 2003 profitability reflected two actions which
further demonstrate the Company's performance oriented strategy and tight fiscal
management. We are moving confidently into 2004 with strong balance sheet, a
healthy backlog and a platform for growth."
About Natural Gas Services Group, Inc. (NGS)
NGS manufactures, fabricates, sells, leases and services natural gas compressors
that enhance the production of oil and gas wells. The Company also manufactures
and sells flare systems and flare ignition systems for plant and production
facilities.
For More Information, Contact: Wayne Vinson, CEO or Wallace
Sparkman
800-580-1828
Jim Drewitz, Investor Relations
jdrewitz@comcast.net
972-355-6070
"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 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 EBITDA to net income is as follows:
Three months ended Twelve months ended
December 31, December 31,
-------------------------- --------------------------
2003 2002 2003 2002
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EBITDA $ 1,231,856 $ 681,166 $ 4,396,771 $ 3,511,271
Adjustments to reconcile EBITDA to net income:
Amortization and depreciation (490,599) (326,911) (1,725,717) (1,166,004)
Interest expense (166,362) (179,311) (667,122) (975,719)
Provision for income tax (85,204) (96,900) (696,799) (583,463)
----------- ----------- ----------- -----------
Net income $ 489,691 $ 78,044 $ 1,307,133 $ 786,085
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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-KSB filed with the Securities
and Exchange Commission.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 176,202
Trade accounts receivable, net of doubtful accounts of $5,000 816,596
Inventory 2,554,239
Prepaid expenses and other 107,030
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Total current assets 3,654,067
LEASE EQUIPMENT, net of accumulated depreciation of $2,978,848 18,986,190
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $906,736 2,818,438
GOODWILL, net of accumulated amortization of $325,192 2,589,655
PATENTS, net of accumulated amortization of $137,423 113,941
OTHER ASSETS 107,900
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Total assets $28,270,191
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Current portion of long-term debt and capital lease $ 2,363,927
Line of credit 300,000
Accounts payable and accrued liabilities 1,070,652
Deferred income 207,215
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Total current liabilities 3,941,794
LONG-TERM DEBT AND CAPITAL LEASE, less current portion 6,650,486
SUBORDINATED NOTES, net of discount of $129,918 1,409,343
DEFERRED TAX LIABILITY 1,843,406
COMMITMENT (Note 11)
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares authorized, par value $0.01:
10 % Convertible Series A: 381,654 shares authorized, 343,654 shares
outstanding;10% cumulative, liquidation preference of $1,116,876 3,437
Common stock, 30,000,000 shares authorized, par value $0.01; 5,031,181 shares issued
and outstanding 50,311
Additional paid-in capital 11,205,375
Retained earnings 3,166,039
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Total stockholders' equity 14,425,162
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Total liabilities and stockholders' equity $28,270,191
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See accompanying notes to these consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
DECEMBER 31,
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2003 2002
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REVENUE:
Sales, net $ 3,865,045 $ 4,335,721
Service and maintenance income 1,773,256 1,562,650
Leasing income and interest 7,111,221 4,398,170
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Total revenue 12,749,522 10,296,541
COSTS OF REVENUE:
Cost of sales 2,859,572 3,078,429
Cost of service 1,243,499 1,326,572
Cost of leasing 1,953,525 1,166,530
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Total costs of revenue 6,056,596 5,571,531
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GROSS PROFIT 6,692,926 4,725,010
OPERATING EXPENSES:
Selling expenses 678,777 499,721
General and administrative 1,613,076 1,218,513
Depreciation and amortization 1,725,717 1,166,004
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Total operating expenses 4,017,570 2,884,238
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INCOME FROM OPERATIONS 2,675,356 1,840,772
OTHER INCOME (EXPENSE):
Interest expense (667,122) (975,719)
Equity in earnings of joint venture -- 485,109
Other income (expense) (4,302) 19,386
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Total other income (expense) (671,424) (471,224)
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INCOME BEFORE PROVISION FOR INCOME TAXES 2,003,932 1,369,548
PROVISION FOR INCOME TAXES:
Current 25,000 25,900
Deferred 671,799 557,563
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Total income tax expense 696,799 583,463
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NET INCOME 1,307,133 786,085
PREFERRED DIVIDENDS 120,941 106,624
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 1,186,192 $ 679,461
============ ============
NET INCOME PER COMMON SHARE:
Basic $ 0.24 $ 0.19
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Diluted $ 0.23 $ 0.16
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,946,922 3,649,413
Diluted 5,252,531 4,305,053
See accompanying notes to these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,307,133 $ 786,085
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,725,717 1,166,004
Deferred taxes 671,799 557,563
Amortization of debt issuance costs 64,956 70,369
Gain on disposal of assets 18,615 (15,066)
Warrants issued for debt guarantee -- 42,025
Equity in earnings of joint venture -- (485,109)
Changes in current assets:
Trade and other receivables (391,498) 276,588
Inventory (1,078,445) 139,614
Prepaid expenses and other 66,272 (11,888)
Changes in current liabilities:
Accounts payable and accrued liabilities 542,790 (348,549)
Deferred income 173,678 134,187
Other changes (76,597) (105,870)
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Net cash provided by operating activities 3,024,420 2,205,953
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (7,881,720) (4,414,952)
Proceeds from sale of property and equipment 119,500 40,000
Distribution from equity method investment 107,774 405,466
Decrease in lease receivable 210,512 84,908
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Net cash used in investing activities (7,443,934) (3,884,578)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from lines of credit 300,000 --
Proceeds from long-term debt 3,478,568 1,956,893
Repayments of long-term debt (2,013,546) (4,463,612)
Dividends on preferred stock (120,941) (106,624)
Proceeds from sale of stock and exercise of stock options and
warrants 237,997 6,529,170
Net proceeds from preferred stock sales -- 12,767
Purchase of warrants from underwriter -- (43,000)
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Net cash provided by financing activities 1,882,078 3,885,594
NET CHANGE IN CASH (2,537,436) 2,206,969
CASH, beginning of year 2,713,638 506,669
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CASH, end of year $ 176,202 $ 2,713,638
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 667,122 $ 975,719
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Income taxes paid $ 35,292 $ 4,110
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See accompanying notes to these consolidated financial statements.