EXHIBIT 99
NGSG
NATURAL GAS SERVICES GROUP, INC.
FOR IMMEDIATE RELEASE NEWS
February 24, 2005 Amex - NGS, NGS.WS
NATURAL GAS SERVICES GROUP ANNOUNCES FOURTH QUARTER AND YEAR
END FINANCIAL RESULTS
36% Increase In Revenue For The Three Months to $4.7 Million
25% Increase In Revenue For The Twelve Months to $15.9 Million
MIDLAND, Texas, February 24, 2005 - Natural Gas Services Group, Inc. (AMEX:NGS),
a leading provider of gas compression, flare equipment and services to the
natural gas and oil industry, announces its financial results for the fourth
quarter and twelve months ended December 31, 2004.
Natural Gas Service Group, Inc.
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Fourth Quarter Fourth Quarter Change Twelve Months Twelve Months Change
2004 2003 2004 2003
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Revenues $ 4,737,669 $ 3,485,406 36% $15,958,199 $12,749,522 25%
Net Income 663,459 489,692 35% 3,374,028 1,307,133 158%
EPS (Basic) $ 0.11 $ 0.09 22% $ 0.59 $ 0.24 147%
EPS (Diluted) $ 0.09 $ 0.09 0% $ 0.52 $ 0.23 126%
Gross Profit 2,689,529 1,858,709 45% 9,006,704 6,692,926 36%
EBITDA $ 1,980,262 $ 1,231,857 60% $ 7,795,697 $ 4,396,771 77%
Weighted avg. shares
outstanding:
Basic 6,077,368 5,051,851 5,591,313 4,946,922
Diluted 7,049,140 5,386,928 6,382,777 5,252,531
- ----------------------------------------------------------------------------------------------------------
Revenue for the fourth quarter ended December 31, 2004, increased 36% to
$4,737,669 as compared to $3,485,406 for the same period in 2003. Revenue for
the twelve months ended December 31, 2004 increased 25% to $15,958,199 as
compared to $12,749,522 for the same period in 2003 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, 2004 increased 35% to
$663,459 ($0.11 per diluted share), as compared to the same period in 2003 of
$489,691 ($.09 per diluted share). Net income for the twelve months ended
December 31, 2004 increased 158% to $3,374,028 ($0.52 per diluted share), as
compared to $1,307,133 ($0.23 per diluted share) for same period in 2003. This
increase included life insurance proceeds on Mr. Wayne L. Vinson, our former
President and C.E.O. who passed away on March 15, 2004. Excluding these proceeds
we had a 43% increase in net income for the twelve months.
NGS's rental fleet grew by 46% during the twelve months ended December 31, 2004.
We ended the year with 585 compressor packages in our rental fleet, up from 399
units at December 31, 2003. We anticipate adding 250-300 rental units this year
at a cost of approximately $16-18 million and expects rental revenue to grow by
approximately 30-35%.
"2004 was a year of tremendous significance and change for NGS," said Wallace
Sparkman, previous Interim President and current Chairman of the Board of
Directors. "We lost a good friend and President of the Company when Wayne Vinson
passed away in March. We converted our Series A Preferred Stock into common
stock for a savings of approximately $100,000 in dividends. We also completed a
private common stock placement for $5 million on July 20, 2004 and entered into
an agreement to purchase Screw Compression Systems, a private manufacturer of
natural gas compressors as of January 3, 2005. We expect this acquisition to
increase NGS's sales and leasing revenue by more than $20 million in 2005. We
experienced record revenue, income, earnings per share and hit a new high for
the number of compressor packages in our rental fleet. Our success in 2004 is a
testament to the hard work, dedication and customer service attitude of our
employees."
Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said,
"During 2004, we continued to grow and create positive momentum. Looking
forward, we believe that our revenue and operational profits will continue to
grow vigorously driven by a robust natural gas market, continuing strong end-use
demand and the acquisition and effective integration of Screw Compression
Systems. We are moving confidently into 2005 with a strong balance sheet, a
healthy backlog and a platform for growth."
Here are some key indicators comparing year end 2004 to year end 2003:
Leasing revenue up 48% to $10.5 million.
Services and Maintenance revenue up 6% to $1.9 million.
Gross Margin up from 52% to 56% of revenue , or $9 million.
Operating income up 46% to $3.9 million.
EBITDA up 77% to $7.7 million.
The Company has scheduled a conference call Thursday, February 24 at 3:15 PM
Central Standard Time to discuss 2004 financial results.
What: Natural Gas Services 2004 Fourth Quarter and Year-End Financial Results
Conference Call
When: Thursday, February 24, 2005 - 3:15 PM Central Standard Time
How: Live via phone by dialing 800-936-4602. Code: Natural Gas Services.
Participants to the conference call should call in at least 5 minutes prior to
the start time.
About Natural Gas Services Group, Inc. (NGS)
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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: Wallace Sparkman, Chairman or
Stephen Taylor, President/CEO
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,
2004 2003 2004 2003
----------- ----------- ----------- -----------
EBITDA $ 1,980,262 $ 1,231,857 $ 7,795,697 $ 4,396,771
Adjustments to reconcile
EBITDA to net income:
Amortization and depreciation (693,413) (490,599) (2,444,264) (1,725,717)
Interest expense (257,403) (166,362) (837,486) (667,122)
Provision for income tax (365,987) (85,204) (1,139,919) (696,799)
----------- ----------- ----------- -----------
Net income $ 663,459 $ 489,691 $ 3,374,028 $ 1,307,133
=========== =========== =========== ===========
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
Natural Gas Service Group, Inc.
BALANCE SHEET
DECEMBER 31, 2004
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 685,187
Trade accounts receivable, net of doubtful accounts of $25,000 1,998,965
Inventory 4,469,606
Prepaid expenses and other 141,140
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Total current assets 7,294,898
LEASE EQUIPMENT, net of accumulated depreciation of $4,820,774 27,734,030
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1,446,141 3,134,167
GOODWILL, net of accumulated amortization of $325,192 2,589,655
PATENTS, net of accumulated amortization of $164,907 86,457
RESTRICTED CASH 2,000,000
OTHER ASSETS
416,269
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Total assets $43,255,476
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease $ 3,728,048
Line of credit 549,856
Accounts payable and accrued liabilities 2,354,612
Deferred income 22,128
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Total current liabilities 6,654,644
LONG-TERM DEBT AND CAPITAL LEASE, less current portion 9,290,209
SUBORDINATED NOTES, net of discount of $89,962 1,449,299
DEFERRED TAX LIABILITY 2,958,000
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares authorized, no shares issued - Common
stock, 30,000,000 shares authorized, par value $0.01; 6,104,269 shares issued
and
outstanding 61,042
Additional paid-in capital 16,355,492
Retained earnings 6,486,790
-----------
Total stockholders' equity 22,903,324
-----------
Total liabilities and stockholders' equity $43,255,476
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Natural Gas Service Group, Inc.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------
2004 2003
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REVENUE:
Sales, net $ 3,593,376 $ 3,865,045
Service and maintenance income 1,873,905 1,773,256
Leasing income and interest 10,490,918 7,111,221
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Total revenue 15,958,199 12,749,522
COSTS OF REVENUE:
Cost of sales 2,556,573 2,859,572
Cost of service 1,357,016 1,243,499
Cost of leasing 3,037,906 1,953,525
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Total costs of revenue 6,951,495 6,056,596
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GROSS PROFIT 9,006,704 6,692,926
OPERATING EXPENSES:
Selling expenses 875,289 678,777
General and administrative 1,776,630 1,613,076
Depreciation and amortization 2,444,264 1,725,717
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Total operating expenses 5,096,183 4,017,570
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INCOME FROM OPERATIONS 3,910,521 2,675,356
OTHER INCOME (EXPENSE):
Interest expense (837,486) (667,122)
Other income (expense) 1,440,912 (4,302)
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Total other income (expense) 603,426 (671,424)
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INCOME BEFORE PROVISION FOR INCOME TAXES 4,513,947 2,003,932
PROVISION FOR INCOME TAXES:
Current 20,000 25,000
Deferred 1,119,919 671,799
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Total income tax expense 1,139,919
696,799
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NET INCOME 3,374,028 1,307,133
PREFERRED DIVIDENDS 53,277 120,941
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 3,320,751 $ 1,186,192
============ ============
NET INCOME PER COMMON SHARE:
Basic $ 0.59 $ 0.24
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Diluted $ 0.52 $ 0.23
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 5,591,313 4,946,922
Diluted 6,382,777 5,252,531
Natural Gas Service Group, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,374,028 $ 1,307,133
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,444,264 1,725,717
Deferred taxes 1,119,919 671,799
Amortization of debt issuance costs 64,956 64,956
Loss on disposal of assets 71,341 18,615
Changes in current assets:
Trade and other receivables (1,182,369) (391,498)
Inventory (1,915,367) (1,078,445)
Prepaid expenses and other (34,110) 66,272
Changes in current liabilities:
Accounts payable and accrued liabilities 1,283,960 542,790
Deferred income (185,087) 173,678
Other changes (344,341) (76,597)
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Net cash provided by operating activities 4,697,194 3,024,420
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (11,595,811) (7,881,720)
Proceeds from sale of property and equipment 50,123 119,500
Increase in restricted cash --
(2,000,000)
Distribution from equity method investment -- 107,774
Decrease in lease receivable -- 210,512
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Net cash used in investing activities (13,545,688) (7,443,934)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from lines of credit 549,856 300,000
Proceeds from long-term debt 6,592,012 3,478,568
Repayments of long-term debt (2,588,522) (2,013,546)
Repayment of line of credit (300,000) --
Dividends on preferred stock (53,277) (120,941)
Proceeds from sale of stock and exercise of stock options and
warrants, net of transaction costs 5,157,410 237,997
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Net cash provided by financing activities 9,357,479 1,882,078
NET CHANGE IN CASH 508,985 (2,537,436)
CASH, beginning of year 176,202 2,713,638
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CASH, end of year $ 685,187 $ 176,202
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 775,429 $ 667,122
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Income taxes paid $ 31,300 $ 35,292
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