Midland, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Natural Gas Services Group, Inc. (“NGS” or the “Company”) (NYSE:NGS), a leading provider of gas compression equipment and services to the energy industry, today announced financial results for the three and nine months ended September 30, 2019.
Third Quarter 2019 Highlights
- Total revenue for the third quarter was $20.9 million, an increase of 5% and 27% over the second quarter of 2019 and the third quarter of 2018, respectively.
- Net loss for the third quarter was $12.2 million, which included a full impairment of goodwill, an increase to inventory allowance, and retirement of rental equipment that totaled $14.9 million.
- Diluted loss per share for the third quarter was $0.93. Adjusted diluted earnings per share for the third quarter was $0.10, an increase of $0.06 and $0.08 over the second quarter of 2019 and the third quarter of 2018, respectively. Please see Non-GAAP Financial Measures – Impairment and Other Non-Cash Charges, below.
- Adjusted EBITDA for the third quarter of 2019 was $7.3 million, an increase of 13% and 29% over the second quarter of 2019 and the third quarter of 2018, respectively. Please see Non-GAAP Financial Measures - Adjusted EBITDA, below.
For the quarter ended September 30, 2019, NGS reported rental revenue of $14.4 million, a 20% increase compared to $12.0 million for the quarter ended September 30, 2018. Sequentially, rental revenue increased 6% during the third quarter of 2019 from $13.6 million during the second quarter of 2019. This growth was primarily due to an increase in the rentals of large horsepower units.
In addition, the Company reported a net loss for the third quarter of 2019 of $12.2 million compared to net income of $236,000 in the same quarter in 2018 and net income of $573,000 in the prior quarter. The third quarter of 2019 net loss included a full impairment of goodwill, an increase to inventory allowance, and retirement of rental equipment that totaled $14.9 million (“Impairment and Other Non-Cash Charges”). Excluding Impairment and Other Non-Cash Charges, adjusted net income for the third quarter of 2019 was $1.3 million, an increase of $1.1 million and $0.7 million over the third quarter of 2018 and the second quarter of 2019, respectively. Please see Non-GAAP Financial Measures – Impairment and Other Non-Cash Charges, below.
NGS reported a loss per diluted share for the third quarter of 2019 of $0.93, compared to diluted earnings per share of $0.02 for the third quarter of 2018 and $0.04 for the second quarter of 2019. Excluding Impairment and Other Non-Cash Charges, adjusted diluted earnings per share for the third quarter of 2019 was $0.10, an increase of $0.08 and $0.06 over the third quarter of 2018 and the second quarter of 2019, respectively. Please see Non-GAAP Financial Measures – Impairment and Other Non-Cash Charges, below.
Due to additional customer orders for our large horsepower units and specialized high-pressure compressors, as well as, an acceleration of anticipated 2020 capital expenditures into 2019 due to customer timing demands, NGS increased its 2019 capital expenditures budget for rental fleet additions to $60-$65 million from its previously discussed range of $40-$45 million. As has been the case over the past two years, the vast majority of these orders are committed at premium rental terms with many contracted for rental terms exceeding current market standards. We believe that available cash and anticipated cash flow from operations will be generally sufficient to fund our capital needs. Our cash balance as of September 30, 2019 was $19.5 million.
Additional Discussion of the Quarter
Revenue: Total revenue for the three months ended September 30, 2019 was $20.9 million, an increase of 27% from $16.4 million during the three months ended September 30, 2018. This increase was a result higher rental revenue largely due to an increase in rentals of large horsepower units as well as an increase in compressor sales in the third quarter of 2019 compared to the same period in 2018. Sequentially, total revenue increased by 5% to $20.9 million from $19.9 million in the second quarter of 2019. This increase was the result of higher rental revenue primarily due to an increase in rentals of large horsepower units.
Operating Income (Loss): Reported operating income (loss) for the three months ended September 30, 2019 decreased to a loss of $13.6 million from a loss of $44,000 and income of $593,000 during to the third quarter of 2018 and the second quarter of 2019, respectively. The operating loss during the third quarter of 2019 was due to Impairment and Other Non-Cash Charges totaling $14.9 million. This loss was partially offset by higher rental revenues and compressor sales compared to the third quarter of 2018. In comparison to the second quarter of 2019, this loss was partially offset by higher rental revenue and higher adjusted gross margins as a percentage of revenue. Excluding Impairment and Other Non-Cash Charges, adjusted operating income increased to $1.3 million, driven by higher rental revenues and compressor sales. Sequentially, adjusted operating income increased approximately $747,000 to $1.3 million from $593,000 mainly due to higher rental revenue and higher adjusted gross margins as a percentage of revenue. Please see Non-GAAP Financial Measures – Impairment and Other Non-Cash Charges, below.
Adjusted Gross Margins: Total adjusted gross margin for the three months ended September 30, 2019 increased by 27% to $10.0 million from $7.8 million for the same period in 2018. As a percentage of revenue, total adjusted gross margin remained flat at 48% for the three months ended September 30, 2019 and 2018. Sequentially, adjusted gross margin of $10.0 million for the three months ended September 30, 2019 increased by 12% from $9.0 million for the three months ended in June 30, 2019. Adjusted gross margin as a percentage of revenue increased to 48% during the third quarter of 2019 from 45% during the previous quarter, partially driven by the shift in revenues towards higher margin rentals from lower margin sales. Please see Non-GAAP Financial Measures-Adjusted Gross Margin, below.
Adjusted EBITDA: Adjusted EBITDA increased by 29% to $7.3 million during the third quarter of 2019 compared to $5.7 million during the third quarter of 2018. As a percentage of revenue, adjusted EBITDA remained flat at 35% during the third quarter of 2019 compared to the same period in 2018. In addition, adjusted EBITDA also increased 13% in the third quarter of 2019 from $6.5 million in the second quarter of 2019, while adjusted EBITDA as a percentage of revenue increased to 35% in the third quarter of 2019 compared to 32% in the second quarter of 2019. Please see Non-GAAP Financial Measures - Adjusted EBITDA, below.
Cash Flow: At September 30, 2019, cash and cash equivalents were $19.5 million, while bank debt was $417,000, none of which was classified as current. We had positive net cash flow from operating activities of $20.6 million during the nine months ended September 30, 2019.
Impairment and Other Non-Cash Charges: The Company performed a goodwill impairment analysis as of September 30, 2019. The analysis showed its carrying value of net assets exceeded its fair value, indicating that goodwill was fully impaired. Accordingly, the Company recorded a goodwill impairment charge of $10.0 million during the third quarter of 2019.
During the third quarter of 2019, management performed a review of the Company’s rental compressor units and determined that 327 units should be retired, representing total horsepower of 39,758. Based on this review, at September 30, 2019, NGS recorded a $1.5 million non-cash loss on the retirement of rental equipment to reduce the book value of the units to zero.
Due to the slow moving nature or obsolescence of long-term inventory and inventory related to the retirement of rental equipment, management has started a thorough inventory analysis. Accordingly, management has recorded an increase of $3.4 million in the inventory allowance reserve for costs that may not be recoverable in the future.
Commenting on Third Quarter 2019 results, Stephen C. Taylor, President and CEO, said:
“This morning, we reported our third quarter 2019 results. NGS posted yet another strong operational quarter despite headwinds that have challenged others in the energy industry. We grew revenue in all of our operating segments during the quarter while increasing our sales, rental and overall margins. We are especially encouraged by our rental revenue growth of 20% when compared to the same period last year and 6% compared sequentially, which was fueled by robust performance in our large horsepower segment. Our compressor sales continued to be strong with gross margin as a percentage of revenue this quarter being the highest since Q1 2018. Net income, adjusted for balance sheet items, was 10 cents per diluted share.
"Our focus on maintaining a strong balance sheet and focusing on high return projects has served NGS and its shareholders well in this challenging operating environment. Our approach to self-funding capital expenditures, mostly for large horsepower equipment, has enabled us to increase our market share and take advantage of opportunities not available to competitors with less financial flexibility. Our cash flow from operations for the quarter was $14.2 million, or 68% of revenue, and our balance sheet cash level remained solid at $19.5 million with debt at less than half a million dollars.”
Selected data: The tables below show, for the three and nine months ended September 30, 2019 and 2018, revenues and percentage of total revenues, along with our operating income (loss) 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 September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Rental | $ | 14,434 | 69 | % | $ | 12,039 | 73 | % | $ | 41,393 | 70 | % | $ | 34,937 | 71 | % | |||||||
| Sales | 5,877 | 28 | % | 3,947 | 24 | % | 15,816 | 27 | % | 13,328 | 27 | % | |||||||||||
| Service & Maintenance | 541 | 3 | % | 410 | 3 | % | 1,529 | 3 | % | 1,053 | 2 | % | |||||||||||
| Corporate | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||
| Total | $ | 20,852 | $ | 16,396 | $ | 58,738 | $ | 49,318 | |||||||||||||||
| Operating (loss) Income | |||||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Rental | $ | 5,635 | 39 | % | $ | 6,676 | 55 | % | $ | 20,350 | 361 | % | $ | 19,675 | 56 | % | |||||||||||||
| Sales | (876 | ) | (15 | ) | % | 866 | 22 | % | 945 | (108 | ) | % | 3,132 | 23 | % | ||||||||||||||
| Service & Maintenance | 377 | 70 | % | 303 | 74 | % | 1,059 | 281 | % | 780 | 74 | % | |||||||||||||||||
| Corporate | (18,697 | ) | NA | (7,889 | ) | NA | (35,113 | ) | NA | (23,055 | ) | NA | |||||||||||||||||
| Total | $ | (13,561 | ) | (65 | ) | % | $ | (44 | ) | — | % | $ | (12,759 | ) | (22 | ) | % | $ | 532 | 1 | % | ||||||||
| Adjusted Gross Margin (1) | |||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Rental | $ | 8,134 | 56 | % | $ | 6,676 | 55 | % | $ | 22,849 | 55 | % | $ | 19,675 | 56 | % | |||||||
| Sales | 1,487 | 25 | % | 866 | 22 | % | 3,308 | 21 | % | 3,132 | 23 | % | |||||||||||
| Service & Maintenance | 377 | 70 | % | 303 | 74 | % | 1,059 | 69 | % | 780 | 74 | % | |||||||||||
| Corporate | — | NA | — | NA | — | NA | — | NA | |||||||||||||||
| Total | $ | 9,998 | 48 | % | $ | 7,845 | 48 | % | $ | 27,216 | 46 | % | $ | 23,587 | 48 | % | |||||||
(1) For a reconciliation of adjusted gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Non-GAAP Financial Measures - Adjusted Gross Margin” below.
Non-GAAP Financial Measure - Adjusted Gross Margin: “Adjusted Gross Margin” is defined 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. Depreciation expense is a necessary element of costs and the ability to generate revenue, while selling, general and administrative expense is a necessary cost to support 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 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 reconciliation of operating (loss) income to adjusted gross margin is as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Operating (loss) income | $ | (13,561 | ) | $ | (44 | ) | $ | (12,759 | ) | $ | 532 | |||
| Depreciation and amortization | 5,867 | 5,536 | 17,108 | 16,372 | ||||||||||
| Selling, general, and administration expenses | 2,791 | 2,353 | 7,966 | 6,683 | ||||||||||
| Impairment of goodwill | 10,039 | — | 10,039 | — | ||||||||||
| Inventory allowance and retirement of rental equipment | 4,862 | — | 4,862 | — | ||||||||||
| Adjusted Gross Margin | $ | 9,998 | $ | 7,845 | $ | 27,216 | $ | 23,587 | ||||||
Non GAAP Financial Measures - Adjusted EBITDA: “Adjusted EBITDA” reflects net income or loss before interest, taxes, depreciation and amortization, impairment of goodwill, an increase in inventory allowance and retirement of rental equipment. Adjusted 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, 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 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 income.
The reconciliation of net (loss) income to Adjusted EBITDA is as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Net (loss) income | $ | (12,232 | ) | $ | 236 | $ | (11,302 | ) | $ | 708 | ||||
| Interest expense | 4 | 4 | 12 | 10 | ||||||||||
| Income tax (benefit) expense | (1,240 | ) | (100 | ) | (890 | ) | 3 | |||||||
| Depreciation and amortization | 5,867 | 5,536 | 17,108 | 16,372 | ||||||||||
| Impairment of goodwill | 10,039 | — | 10,039 | — | ||||||||||
| Inventory allowance and retirement of rental equipment | 4,862 | — | 4,862 | — | ||||||||||
| Adjusted EBITDA | $ | 7,300 | $ | 5,676 | $ | 19,829 | $ | 17,093 | ||||||
Non GAAP Financial Measures - Impairment and Other Non-Cash Charges: From time to time, management may publicly disclose certain “non-GAAP financial measures”, such as adjusted operating income below, in our earnings releases, financial presentations or earnings conference calls. These non-GAAP measures are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations that would be reflected in measures determined in accordance with GAAP. Adjusted operating income and adjusted net income exclude goodwill impairment, an increase in inventory allowance, and retirement of rental equipment taken in the third quarter of 2019.
Impairment and Other Non-Cash Charges incurred during the third quarter of 2019 are as follows:
| (in thousands) | ||||||||
| Pre-Tax | Tax | Net | ||||||
| Inventory allowance | $ | 3,350 | $ | 758 | $ | 2,592 | ||
| Retirement of rental equipment | 1,512 | 342 | 1,170 | |||||
| Impairment of goodwill | 10,039 | 255 | 9,784 | |||||
| Total | $ | 14,901 | $ | 1,355 | $ | 13,546 | ||
The reconciliation of operating loss to adjusted operating income is as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||
| Condensed (in thousands) | |||||||
| 2019 | |||||||
| Reported operating loss | $ | (13,561 | ) | $ | (12,759 | ) | |
| Inventory allowance | 3,350 | 3,350 | |||||
| Retirement of rental equipment | 1,512 | 1,512 | |||||
| Impairment of goodwill | 10,039 | 10,039 | |||||
| Adjusted operating income | $ | 1,340 | $ | 2,142 | |||
The reconciliation of net loss to adjusted net income is as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| Condensed (in thousands) | Per diluted share(1) | Condensed (in thousands) | Per diluted share(1) | ||||||||||||
| 2019 | |||||||||||||||
| Reported net loss | $ | (12,232 | ) | $ | (0.93 | ) | $ | (11,302 | ) | $ | (0.86 | ) | |||
| Inventory allowance | 2,592 | 0.19 | 2,592 | 0.19 | |||||||||||
| Retirement of rental equipment | 1,170 | 0.09 | 1,170 | 0.09 | |||||||||||
| Impairment of goodwill | 9,784 | 0.73 | 9,784 | 0.73 | |||||||||||
| Change in diluted shares(1) | — | — | — | — | |||||||||||
| Adjusted net income | $ | 1,314 | $ | 0.10 | $ | 2,244 | $ | 0.17 | |||||||
Notes:
(1) In the three and nine months ended September 30, 2019, restricted stock and stock options were not included in the computation of reported diluted loss per share due to their antidilutive effect ($0.02 per share). Weighted averages of 322,866 shares of restricted stock and 286,435 shares of restricted stock were included in the computation of adjusted diluted earnings per share for the three and nine months ended September 30, 2019, respectively.
Conference Call Details:
Teleconference: Thursday, November 7, 2019 at 10:00 a.m. Central (11:00 a.m. Eastern). Live via phone by dialing 877-358-7306, pass code “Natural Gas Services”. 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, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing the financial results for the three and nine months ended September 30, 2019.
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 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 most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
| For More Information, Contact: | Alicia Dada, Investor Relations |
| (432) 262-2700 Alicia.Dada@ngsgi.com | |
| www.ngsgi.com |
| NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) | ||||||
| September 30, 2019 | December 31, 2018 | |||||
| ASSETS | ||||||
| Current Assets: | ||||||
| Cash and cash equivalents | $ | 19,482 | $ | 52,628 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of $325 and $291, respectively | 11,224 | 7,219 | ||||
| Inventory | 30,289 | 30,974 | ||||
| Prepaid income taxes | 3,102 | 3,148 | ||||
| Prepaid expenses and other | 1,320 | 2,430 | ||||
| Total current assets | 65,417 | 96,399 | ||||
| Long-term inventory, net of allowance of $3,371 and $19, respectively | 540 | 3,980 | ||||
| Rental equipment, net of accumulated depreciation of $156,800 and $165,428, respectively | 205,741 | 175,886 | ||||
| Property and equipment, net of accumulated depreciation of $12,317 and $11,556, respectively | 22,101 | 16,587 | ||||
| Right of use assets - operating leases, net of accumulated amortization $130 | 447 | — | ||||
| Goodwill | — | 10,039 | ||||
| Intangibles, net of accumulated amortization of $1,852 and $1,758, respectively | 1,307 | 1,401 | ||||
| Other assets | 1,443 | 1,109 | ||||
| Total assets | $ | 296,996 | $ | 305,401 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities: | ||||||
| Accounts payable | $ | 4,183 | $ | 2,122 | ||
| Accrued liabilities | 8,358 | 8,743 | ||||
| Current operating leases | 107 | — | ||||
| Deferred income | 81 | 81 | ||||
| Total current liabilities | 12,729 | 10,946 | ||||
| Line of credit | 417 | 417 | ||||
| Deferred income tax liability | 31,229 | 32,158 | ||||
| Long-term operating leases | 340 | — | ||||
| Other long-term liabilities | 1,790 | 1,699 | ||||
| Total liabilities | 46,505 | 45,220 | ||||
| Commitments and contingencies | ||||||
| Stockholders’ Equity: | ||||||
| Preferred stock, 5,000 shares authorized, no shares issued or outstanding | — | — | ||||
| Common stock, 30,000 shares authorized, par value $0.01; 13,142 and 13,005 shares issued, respectively | 131 | 130 | ||||
| Additional paid-in capital | 109,861 | 107,760 | ||||
| Retained earnings | 140,989 | 152,291 | ||||
| Treasury Shares, at cost, 38 shares | (490 | ) | — | |||
| Total stockholders' equity | 250,491 | 260,181 | ||||
| Total liabilities and stockholders' equity | $ | 296,996 | $ | 305,401 | ||
| NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (in thousands, except earnings per share) (unaudited) | |||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenue: | |||||||||||||||
| Rental income | $ | 14,434 | $ | 12,039 | $ | 41,393 | $ | 34,937 | |||||||
| Sales | 5,877 | 3,947 | 15,816 | 13,328 | |||||||||||
| Service and maintenance income | 541 | 410 | 1,529 | 1,053 | |||||||||||
| Total revenue | 20,852 | 16,396 | 58,738 | 49,318 | |||||||||||
| Operating costs and expenses: | |||||||||||||||
| Cost of rentals, exclusive of depreciation and amortization stated separately below | 6,300 | 5,363 | 18,544 | 15,262 | |||||||||||
| Cost of sales, exclusive of depreciation and amortization stated separately below | 4,390 | 3,081 | 12,508 | 10,196 | |||||||||||
| Cost of service and maintenance | 164 | 107 | 470 | 273 | |||||||||||
| Selling, general and administrative expense | 2,791 | 2,353 | 7,966 | 6,683 | |||||||||||
| Depreciation and amortization | 5,867 | 5,536 | 17,108 | 16,372 | |||||||||||
| Impairment of goodwill | 10,039 | — | 10,039 | — | |||||||||||
| Inventory allowance and retirement of rental equipment | 4,862 | — | 4,862 | — | |||||||||||
| Total operating costs and expenses | 34,413 | 16,440 | 71,497 | 48,786 | |||||||||||
| Operating (loss) income | (13,561 | ) | (44 | ) | (12,759 | ) | 532 | ||||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (4 | ) | (4 | ) | (12 | ) | (10 | ) | |||||||
| Other income, net | 93 | 184 | 579 | 189 | |||||||||||
| Total other income, net | 89 | 180 | 567 | 179 | |||||||||||
| (Loss) Income before provision for income taxes | (13,472 | ) | 136 | (12,192 | ) | 711 | |||||||||
| Income tax benefit (expense) | 1,240 | 100 | 890 | (3 | ) | ||||||||||
| Net (loss) income | $ | (12,232 | ) | $ | 236 | $ | (11,302 | ) | $ | 708 | |||||
| (Loss) Earnings per share: | |||||||||||||||
| Basic | $ | (0.93 | ) | $ | 0.02 | $ | (0.86 | ) | $ | 0.05 | |||||
| Diluted | $ | (0.93 | ) | $ | 0.02 | $ | (0.86 | ) | $ | 0.05 | |||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 13,137 | 12,977 | 13,112 | 12,953 | |||||||||||
| Diluted | 13,137 | 13,254 | 13,112 | 13,228 | |||||||||||
| NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
| Nine months ended | |||||||
| September 30, | |||||||
| 2019 | 2018 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net (Loss) income | $ | (11,302 | ) | $ | 708 | ||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 17,108 | 16,372 | |||||
| Deferred income taxes | (929 | ) | 133 | ||||
| Stock-based compensation | 1,780 | 1,729 | |||||
| Bad debt allowance (recovery) | 55 | (137 | ) | ||||
| Inventory allowance | 3,350 | — | |||||
| Impairment of goodwill | 10,039 | — | |||||
| Gain on sale of assets | (37 | ) | (49 | ) | |||
| Retirement of rental equipment | 1,512 | — | |||||
| (Gain) loss on company owned life insurance | (145 | ) | 15 | ||||
| Changes in operating assets and liabilities: | |||||||
| Trade accounts receivables | (4,060 | ) | 555 | ||||
| Inventory | 1,861 | 6,307 | |||||
| Prepaid expenses and prepaid income taxes | 198 | (416 | ) | ||||
| Accounts payable and accrued liabilities | 1,054 | (2,397 | ) | ||||
| Deferred income | — | (51 | ) | ||||
| Other | 125 | 267 | |||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 20,609 | 23,036 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchase of property and equipment | (53,401 | ) | (28,815 | ) | |||
| Purchase of company owned life insurance | (207 | ) | (237 | ) | |||
| Proceeds from sale of property and equipment | 26 | 49 | |||||
| Proceeds from insurance claims of property and equipment | 11 | — | |||||
| NET CASH USED IN INVESTING ACTIVITIES | (53,571 | ) | (29,003 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Payments from other long-term liabilities, net | (16 | ) | (25 | ) | |||
| Proceeds from exercise of stock options | 505 | 680 | |||||
| Purchase of treasury shares | (490 | ) | — | ||||
| Taxes paid related to net share settlement of equity awards | (183 | ) | (629 | ) | |||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (184 | ) | 26 | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (33,146 | ) | (5,941 | ) | |||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 52,628 | 69,208 | |||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 19,482 | $ | 63,267 | |||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
| Interest paid | $ | 42 | $ | 10 | |||
| Income taxes paid | $ | 254 | $ | 66 | |||
| NON-CASH TRANSACTIONS | |||||||
| Transfer of rental equipment components to inventory | $ | 746 | $ | 144 | |||
| Transfer of prepaids to rental equipment and inventory | $ | 958 | $ | — | |||
| Right of use acquired through an operating lease | $ | 126 | $ | — | |||