Nov. 5, 2009 (PR Newswire) --

MIDLAND, Texas, Nov. 5 /PRNewswire-FirstCall/ -- Natural Gas Services Group, Inc. (NYSE: NGS), a leading provider of equipment and services to the natural gas industry, announces its financial results for the third quarter and nine months ended September 30, 2009.

Natural Gas Services Group Inc. Financial Results:

Total Revenue: Total revenue decreased from $63.4 million to $53.2 million, or 16.1%, for the nine months ended September 30, 2009, compared to the same period ended September 30, 2008. This was mainly the result of a 47.5% decrease in sales revenue and a 7.6% decrease in service and maintenance revenue offset by a 16.6% increase in rental revenue. For the three months ended September 30, 2009 our total revenue decreased from $24.9 million to $16.4 million for the same period ended September 30, 2008.

For both periods this decrease is the result of lower demand for our products and services due to industry and macroeconomic declines which resulted in fewer compressor units sold and rented.

Operating income: Operating income declined from $18 million in the first nine months of 2008 to $14.9 million in the comparative 2009 period, but the operating margin percentage was flat at 28% of revenue for both periods. For the three months ended September 30, 2009 the overall operating margin percentage decreased to 25.7%, from 29.9% for the same period ended September 30, 2008.

We maintained or improved our product margins but the lower operating margins for both periods was affected by a decline in total sales which caused SG&A and depreciation to become a larger percentage of our total costs.

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Net income: Our net income for the first nine months of 2009 decreased to $9.3 million, when compared to $11.7 million for the same period in 2008. For the three months ended September 30, 2009 our net income was $2.6 million compared to $4.8 million for the same period in 2008.

Earnings per share: For the nine months ending September 30, 2009 our earnings per diluted share declined from $0.96 to $0.77 compared to 2008, for the three months ending September 30, 2009 our earnings per diluted share decreased from $0.40 to $0.22.

EBITDA: Our EBITDA (see discussion of EBITDA at the end of this release) decreased to $23.6 million for the nine months ended September 30, 2009, from $25.5 million for the same period in 2008. For the three months ended September 30, 2009 our EBITDA decreased to $7.1 million, compared to $10.1 million for the same period in 2008.

Cash flow: As of September 30, 2009, we had cash and cash equivalents of $17.7 million, working capital of $38.2 million, and total debt of $14.0 million, of which $10.4 million was classified as current. We had positive net cash flow from operating activities of $24.4 million during first nine months of 2009 as compared to $20.3 million for same period in 2008.

CEO comments: Stephen Taylor, President and CEO of NGS commenting on this quarter's and year-to-date results, said "We are operating in a very difficult and competitive environment in our industry, but are confident in our ability to continue to perform at a high level. We are happy to report increased year-to-date rental revenues while also being able to increase the gross margins in that business. Our compressor sales revenues have, as expected, experienced substantial declines, but we feel we have weathered the storm to a greater degree than the general industry and, again, maintained excellent margins. We continue to increase or maintain our market share, control our costs, generate higher levels of cash and reduce our minimal debt load. My compliments and thanks to our employees for their hard work and dedication during this period."

Selected data: The table below shows our revenues, gross margin, exclusive of depreciation, and gross margin for the quarters and nine month periods ended September 30, 2009 and 2008. Gross margin is the difference between revenue and cost of sales, exclusive of depreciation.

(In thousands of dollars, except earnings per share.)

Three months ended          Nine months ended
September 30,              September 30,
-------------------         -----------------
2008              2009      2008         2009
-------            ------   -------      -------
Sales                   $13,239            $5,285   $32,024      $16,813
Rental                   11,414            10,840    30,519       35,597
Service and maintenance     293               255       814          752
-------            ------   -------      -------
Total Revenue            24,946            16,380    63,357       53,162
Gross margin (1)         11,595             8,695    29,517       28,507
Operating income          7,448             4,211    18,046       14,899
Net Income               $4,811            $2,643   $11,661       $9,312
Earnings per share
(diluted)                $0.40             $0.22     $0.96        $0.77

(1) For a reconciliation of gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read Non-GAAP Financial Measures" below.

Rental fleet: As of September 30, 2009, we had 1,772 natural gas compressors in our rental fleet totaling 223,024 horsepower, as compared to 1,662 natural gas compressors totaling 188,462 horsepower at September 30, 2008. As of September 30, 2009, we had 1,239 natural gas compressors rented compared to 1,418 at September 30, 2008.

Non GAAP Measures: "EBITDA" reflects net income or loss before interest, taxes, depreciation and amortization. EBITDA is a financial 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.