ngs-20240930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-31398

NATURAL GAS SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)


Colorado						75-2811855
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

404 Veterans Airpark Ln., Ste 300

Midland, Texas 79705

(Address of principal executive offices)

(432) 262-2700

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $0.01	NGS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes x						No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes x						No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes ☐						No x

As of November 8, 2024 there were 12,474,020 shares of the Registrant’s common stock, $0.01 par value, outstanding.


Part I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Unaudited Condensed Consolidated Balance Sheets	Page	1

Unaudited Condensed Consolidated Statements of Operations	Page	2

Unaudited Condensed Consolidated Statements of Stockholders’ Equity	Page	3

Unaudited Condensed Consolidated Statements of Cash Flows	Page	5

Notes to Unaudited Condensed Consolidated Financial Statements	Page	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	Page	16

Item 3. Quantitative and Qualitative Disclosures about Market Risk	Page	26

Item 4. Controls and Procedures	Page	27

Part II - OTHER INFORMATION

Item 1. Legal Proceedings	Page	29

Item 1A. Risk Factors	Page	29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Page	29

Item 3. Defaults Upon Senior Securities	Page	29

Item 4. Mine Safety Disclosures	Page	29

Item 5. Other Information	Page	29

Item 6. Exhibits	Page	30

Signatures	Page	31

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited)
	September 30,		December 31,
	2024		2023
ASSETS
Current Assets:
Cash and cash equivalents	$	410	$	2,746
Trade accounts receivable, net of allowance for credit losses of $1,248 and $823, respectively	24,809		39,186
Inventory, net of allowance for obsolescence of $2,836 for each of the dates presented, respectively	20,175		21,639
Federal income tax receivable	11,382		11,538

Prepaid expenses and other	2,207		1,162
Total current assets	58,983		76,271
Long-term inventory, net of allowance for obsolescence of $1,168 for each of the dates presented, respectively	1,043		701
Rental equipment, net of accumulated depreciation of $211,841 and $191,745, respectively	407,761		373,649
Property and equipment, net of accumulated depreciation of $18,609 and $17,649, respectively	21,538		20,550


Intangibles, net of accumulated amortization of $2,478 and $2,384, respectively	681		775
Other assets	8,063		6,783
Total assets	$	498,069	$	478,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	26,473	$	17,628
Accrued liabilities	7,041		15,085




Total current liabilities	33,514		32,713
Long-term debt	163,000		164,000
Deferred income tax liability	45,691		41,636


Other long-term liabilities	4,678		4,486
Total liabilities	246,883		242,835
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred stock, 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock, 30,000 shares authorized, par value $0.01; 13,741 and 13,688 shares issued, respectively	137		137
Additional paid-in capital	117,410		116,480
Retained earnings	148,643		134,281


Treasury shares, at cost, 1,310 shares for each of the dates presented, respectively	(15,004)		(15,004)
Total stockholders’ equity	251,186		235,894
Total liabilities and stockholders’ equity	$	498,069	$	478,729

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share) (unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenue:
Rental	$	37,350	$	27,705	$	106,010	$	74,533
Sales	1,843		1,413		6,616		6,000
Aftermarket services	1,493		2,251		3,458		4,413
Total revenue	40,686		31,369		116,084		84,946
Operating costs and expenses:
Cost of rentals, exclusive of depreciation stated separately below	14,442		13,462		41,784		36,450
Cost of sales, exclusive of depreciation stated separately below	2,028		1,505		6,457		6,618
Cost of aftermarket services, exclusive of depreciation stated separately below	1,324		1,846		2,836		3,424
Selling, general and administrative expenses	5,213		2,845		14,706		12,267
Depreciation and amortization	8,086		6,807		22,878		19,390
Impairments	136		—		136		779

Retirement of rental equipment	—		—		5		—
Total operating costs and expenses	31,229		26,465		88,802		78,928
Operating income	9,457		4,904		27,282		6,018
Other income (expense):
Interest expense	(3,045)		(1,600)		(8,912)		(1,785)
Other income (expense), net	(15)		(87)		148		254
Total other expense	(3,060)		(1,687)		(8,764)		(1,531)
Income before provision for income taxes	6,397		3,217		18,518		4,487
Income tax expense	(1,383)		(1,046)		(4,156)		(1,442)
Net income	$	5,014	$	2,171	$	14,362	$	3,045
Earnings per share:
Basic	$	0.40	$	0.18	$	1.16	$	0.25
Diluted	$	0.40	$	0.18	$	1.15	$	0.25
Weighted average shares outstanding:
Basic	12,427		12,378		12,404		12,295
Diluted	12,526		12,403		12,511		12,372

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited)
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
January 1, 2023	—	$	—	13,519	$	135	$	115,411	$	129,534	1,310	$	(15,004)	$	230,076
Compensation expense on common stock options	—	—		—	—		22		—		—	—		22
Issuance of restricted stock	—	—		29	—		—		—		—	—		—
Compensation expense on restricted stock units	—	—		—	—		465		—		—	—		465
Taxes paid related to net shares settlement of equity awards	—	—		—	—		(184)		—		—	—		(184)

Net income	—	—		—	—		—		370		—	—		370
March 31, 2023	—	$	—	13,548	$	135	115,714		$	129,904	1,310	$	(15,004)	$	230,749
Issuance of restricted stock	—	—		140	1		(1)		—		—	—		—
Compensation expense on common stock options	—	—		—	—		30		—		—	—		30
Compensation expense on restricted stock units	—	—		—	—		1,100		—		—	—		1,100
Taxes paid related to net shares settlement of equity awards	—	—		—	—		(798)		—		—	—		(798)

Net income	—	—		—	—		—		504		—	—		504
June 30, 2023	—	$	—	13,688	$	136	116,045		$	130,408	1,310	$	(15,004)	$	231,585
Compensation expense on common stock options	—	—		—	—		22		—		—	—		22
Compensation expense on restricted common stock	—	—		—	—		187		—		—	—		187


Net income	—	—		—	—		—		2,171		—	—		2,171
September 30, 2023	—	$	—	13,688	$	136	$	116,254	$	132,579	1,310	$	(15,004)	$	233,965

See accompanying notes to these unaudited condensed consolidated financial statements.


NATURAL GAS SERVICES GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited)
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
January 1, 2024	—	$	—	13,688	$	137	$	116,480	$	134,281	1,310	$	(15,004)	$	235,894

Compensation expense on common stock options	—	—		—	—		29		—		—	—		29

Compensation expense on restricted stock units	—	—		—	—		245		—		—	—		245
Taxes paid related to net shares settlement of equity awards	—	—		6	—		—		—		—	—		—

Net income	—	—		—	—		—		5,098		—	—		5,098
March 31, 2024	—	—		13,694	137		116,754		139,379		1,310	$	(15,004)	241,266
Compensation expense on common stock options	—	—		—	—		46		—		—	—		46
Issuance of restricted stock	—	—		33			—		—		—	—		—
Compensation expense on restricted stock units	—	—		—	—		196

SEC Form 10-Q filed by Natural Gas Services Group Inc.