Natural Gas Services Group Reports 29.7% Revenue Growth in Q3 2024, 36.7% for Nine-Month Period

Natural Gas Services Group, Inc. (NGS) reported significant financial growth for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Total revenue for Q3 2024 reached $40.7 million, a 29.7% increase from $31.4 million in Q3 2023. For the nine-month period, revenue surged to $116.1 million, reflecting a 36.7% increase from $84.9 million in the prior year. The growth was primarily driven by a substantial rise in rental revenue, which accounted for 91.3% of total revenue, increasing by 42.2% to $106.0 million for the nine months ended September 30, 2024.

Operating income for Q3 2024 was $9.5 million, up from $4.9 million in Q3 2023, while net income for the same period rose to $5.0 million from $2.2 million. For the nine months, net income increased to $14.4 million from $3.0 million in the previous year. Basic earnings per share also improved significantly, reaching $0.40 for Q3 2024 compared to $0.18 in Q3 2023, and $1.16 for the nine months ended September 30, 2024, versus $0.25 in the same period last year.

Despite the revenue growth, total operating costs and expenses increased, with Q3 2024 expenses at $31.2 million compared to $26.5 million in Q3 2023. This rise was attributed to higher salaries, commissions, and consulting expenses, as well as increased depreciation and interest expenses due to higher borrowings under the Amended and Restated Credit Agreement.

As of September 30, 2024, total current assets decreased to $59.0 million from $76.3 million at the end of 2023, while total assets increased to $498.1 million from $478.7 million. Stockholders' equity rose to $251.2 million, up from $235.9 million at the end of 2023, with retained earnings also increasing to $148.6 million.

Strategically, NGS is focusing on expanding its rental fleet, particularly larger horsepower natural gas compressors, and is exploring mergers and acquisitions to enhance shareholder value. The company has also initiated a remediation plan to address a material weakness in internal controls over financial reporting, particularly in inventory processes, and has engaged a third-party consultant for a full assessment of controls and procedures.

Overall, NGS's performance reflects a robust growth trajectory, driven by increased rental activity and strategic investments, despite challenges in managing operational costs and internal controls.