Mon, May 12, 8:08 PM (42 days ago)
**Natural Gas Services Group, Inc. (NGS) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** NGS reported total revenue of $41,383,000, up from $36,907,000 in Q1 2024, driven by a 15.3% increase in rental revenue to $38,910,000. - **Profit Margins:** Operating income increased to $9,507,000 from $9,319,000, with net income at $4,854,000, slightly down from $5,098,000 due to higher interest expenses. - **Cash Flow:** Operating cash flow surged to $21,267,000 from $5,609,000, reflecting improved collections and higher margins. - **Earnings Changes:** Earnings per share (EPS) were $0.39 basic and $0.38 diluted, down from $0.41 due to increased shares outstanding. **Key Metrics and Trends:** - **Rental Revenue Growth:** Driven by higher horsepower units, rental revenue increased by 15.3%, with a slight decrease in unit utilization. - **Sales Revenue Decline:** Sales revenue dropped by 23.0% to $1,927,000, reflecting a strategic shift towards rentals. - **Aftermarket Services:** Revenue decreased by 18.5% to $546,000, but adjusted gross margin improved significantly. - **SG&A Expenses:** Increased by 14.4% to $5,378,000, primarily due to higher salaries, benefits, and stock-based compensation. - **Depreciation and Amortization:** Rose by 21.9% to $8,636,000, reflecting investments in high horsepower units. **Uncertainties and Future Operations:** - **Market Conditions:** The oil and gas industry's cyclical nature and price volatility pose risks. - **Customer Concentration:** Oxy accounts for nearly half of revenues, posing concentration risk. - **Credit Facility:** Amended to increase commitment to $400,000,000, providing financial flexibility. - **Capital Expenditures:** Forecasted to be dependent on customer demand and market conditions. **Impact on Future Operations:** - **Strategic Focus:** Continued emphasis on high horsepower units and rental services. - **Financial Flexibility:** Enhanced borrowing capacity and improved liquidity position. - **Operational Efficiency:** Ongoing efforts to improve working capital and collections. **Conclusion:** NGS demonstrated strong operational performance in Q1 2025, with significant revenue growth and improved cash flow. However, the company faces market uncertainties and customer concentration risks. The strategic focus on high horsepower units and enhanced financial flexibility position NGS for future growth, provided market conditions remain favorable.