Natural Gas Services Group, Inc., (NGS) has released its second quarter results, highlighting it resilience during the COVID-19 pandemic.
“In spite of continued weakness in energy demand and volatile energy commodity prices – largely a result of the effects of the COVID-19 pandemic - NGS posted solid financial results in the second quarter," NGS President and CEO Stephen Taylor said in a press release. "Our ability to react rapidly to reduce our cost structure and respond to our customers’ needs resulted in less impact than many in our industry on both our income statement and financial condition."
The coronavirus has impacted companies across the U.S. and NGS is one of the many, but it still managed to have a net income of $165,000 in the second quarter, according to the press release. NGS also had an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increase of 13% from the first quarter, totaling $6.5 million.
NGS also had revenue up by 11.5% from 2019 for a total of $15.1 million.
NGS showed "ample liquidity and is maintaining capital spending discipline," the press release saod. The company had low debt at $0.4 million and $15.5 million of cash and $15 million of income tax.
But total revenue did decrease in June to $17.4 million as the company helped to address customers' needs during the COVID-19 pandemic.
"We have been able to address our customers’ requests for pricing and shut-in assistance while maintaining a strong financial position," Taylor said in the press release. "While our revenues declined in the quarter, we were able to post sequential gains in both gross margin and EBITDA."
Gross margins decreased for three months straight, ending in June. It was a 12.6% decreased compared to 2019. But, the gross margins for these same three months increased compared to the previous three months, increasing by 30.6% to $2.7 million when compared to January, February and March.
"As importantly, we continued to strengthen our balance sheet and liquidity position, even in this very challenging market environment," Taylor said. "NGS delivered free cash flow during the quarter and grew our cash balance to $15.5 million, from $13.1 million at the end of the first quarter. Our liquidity position has continued to strengthen into the third quarter as our cash balance at the end of July was approximately $17 million."
The company did experience an operating loss income of $148,000 in the second quarter. This is an increase from the second quarter of 2019, which saw operating growth income. This is due to lower sales, which can be attributed to the coronavirus pandemic.
"While commodity prices have improved from the trough, they remain well below levels that will spur significant oilfield activity," Taylor said in the press release. "While business has improved, the pace has been slow and inconsistent, a trend we expect to gradually improve through the balance of the year. That said, we are seeing new opportunities for which we are uniquely qualified, and believe our fabrication capabilities, superior service and strong financial position will allow us to capitalize on those opportunities.”