In This Article:
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Total Revenue: $40.7 million, up 5.7% sequentially.
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Rental Revenue: $37.4 million, up 7% sequentially.
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Adjusted Rental Gross Margin: 61.3%, compared to 59.3% last quarter and 51.4% in Q3 of last year.
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Adjusted EBITDA: $18.2 million, a 54% increase year-over-year and an 11% increase sequentially.
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Net Income: $5 million or $0.4 per share.
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Rented Horsepower: 475,534 horsepower at the end of Q3 2024, up from 454,568 horsepower at the end of Q2 2024.
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Leverage Ratio: 2.25 times, down from 2.51 times in Q2.
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Accounts Receivable: $24.8 million, a $17.5 million decrease from Q1.
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Cash Flow from Operations: $57 million year-to-date in 2024.
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Growth CapEx Guidance for 2024: $65 million to $75 million.
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Growth CapEx Guidance for 2025: $90 million to $110 million.
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Adjusted EBITDA Guidance for 2024: $67 million to $69 million.
Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Natural Gas Services Group Inc (NYSE:NGS) reported a 35% increase in rental revenue year over year, driven by higher rented horsepower and selected rate increases.
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The company achieved a 54% increase in adjusted EBITDA compared to last year's third quarter, reflecting strong financial performance.
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NGS increased its 2024 adjusted EBITDA outlook from $64 million to $68 million to a range of $67 million to $69 million, indicating confidence in future growth.
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The company is focusing on fleet optimization and expansion, with a 19% increase in rented horsepower year over year, particularly in large horsepower units.
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NGS is leveraging strong customer relationships and innovative compression technology to drive growth, with significant opportunities for expansion in the coming years.
Negative Points
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Natural gas prices remain weak, impacting demand for NGS's small compression fleet.
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The company faces potential incremental costs related to labor and unit set activities during the holiday season, which could affect short-term expenses.
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NGS's accounts receivable balance, although improved, remains higher than desired, indicating room for further improvement in cash conversion.
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The company anticipates increased leverage in 2025 due to higher growth capital expenditures, which may impact financial flexibility.
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NGS's customer count declined slightly from 73 to 69, though the company attributes this to normal fluctuations rather than a strategic decision.
Q & A Highlights
Q: How are you thinking about the margin profile beyond 2024 in the rental business? A: Justin Jacobs, CEO: We are pleased with the third quarter margin of 61.3%. As we continue to integrate more large horsepower units, we expect a modest increase in margins, especially in the latter half of 2025.