Natural Gas Services Group Inc. (NYSE:NGS) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 11:00 am ET


Natural Gas Services Group Inc. (NYSE:NGS) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Third Quarter Earnings Call. [Operator Instructions] Your call leaders for today are Alicia Dada, IR Coordinator; and Steve Taylor, Chairman, President and CEO. I would now like to turn the call over to Ms. Alicia Dada. You may begin.

Alicia Dada

Thank you, Ross, and good morning, everyone. Please allow me a moment to read the following forward-looking statement prior to commencing our earnings call.

Except for the historical information contained herein, the statements in this morning's conference call are forward looking and are made pursuant to the safe harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements, as you may know, involve known and unknown risks and uncertainties, which may cause Natural Gas Services Group'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; introduction of competing technologies by other companies; and new governmental safety, health or environmental regulations, which could require Natural Gas Services Group to make significant capital expenditures.

The forward-looking statements included in this conference call are made as of the date of this call, and Natural Gas Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, factors described in our recent press release and also under the caption Risk Factors in the company's annual report on Form 10-K filed with the Securities and Exchange Commission.

Having all that stated, I will now turn the call over to Stephen Taylor, who is President, Chairman and CEO of Natural Gas Services Group. Steve?

Stephen C. Taylor

Thank you, Alicia and Ross, and good morning, everyone. And welcome to NGSG's Third Quarter 2019 Earnings Review. This morning, we reported our third quarter 2019 results. If you've had time to review them, you'll see that we had growth in all revenue streams and improvement in all our sales and rental margins.

Rental revenues grew 20% when compared to the same period last year and 6% compared sequentially, both led by robust performance on our large horsepower class. Our compressor sales continued to be strong with the gross margin percentage this quarter being the highest since the first quarter of 2018. Cash flow from operations for the quarter was $14.2 million or 68% of revenue, and our balance sheet cash level remains solid, $19.5 million. As we continue through the call, I will further discuss in detail these financial results as well as include pertinent operating and market comments.

From a non-operating perspective, we do have various non-cash, non-recurring items in the quarter, which we will review shortly. And of special note, we announced the retirement of Larry Lawrence, our Vice President and Chief Financial Officer last night. I will comment on this at the conclusion of these remarks.