Natural Gas Services Group Inc (NGS) filed Quarterly Report for the period ended 2009-09-30.
Natural Gas Services Group Inc. manufactures fabricates sells rents and services natural gas compressors that enhance the production of natural gas wells. The Company also manufactures and sells flare systems and flare ignition systems for plant and production facilities. Natural Gas Services Group Inc has a market cap of $210.8 million; its shares were traded at around $17.42 with a P/E ratio of 13.7 and P/S ratio of 5.1.
Highlight of Business Operations:
At September 30, 2009, we had cash and cash equivalents of $17.7 million compared to $1.1 million at December 31, 2008. This increase in cash was mainly the result of a decrease in capital expenditures for the first nine months of 2009 compared to the same period in 2008. This increase was the result of the conversion of $2.3 million of short-term investments into cash, and the reduction of our accounts receivable by approximately $5.0 million. We had working capital of $37.5 million at September 30, 2009 compared to $31.1 million at December 31, 2008. At September 30, 2009, our total debt was $14.0 million of which $10.4 million was classified as current compared to $16.6 million and $3.4 million, respectively at December 31, 2008. We had positive net cash flow from operating activities of $24.4 million during the first nine months of 2009 compared to $20.3 million for the first nine months of 2008. The cash flow from operations of $24.4 million was primarily the result of the net income of $9.3 million and the non cash items of depreciation and taxes of $13.8 million.
Accounts receivable decreased $5.0 million to $6.3 million September 30, 2009 compared to $11.3 million at December 31, 2008. This decrease largely reflects the timing of collections and a slowdown in compressor unit sales during the first nine months of 2009.
Inventory decreased $5.3 million to $26.6 million at September 30, 2009 compared to $31.9 million at December 31, 2008. This decrease is mainly the result of our decreased manufacturing and purchasing activity as backlogged orders are filled.
Long-term debt decreased $3.0 million to $14.0 million at September 30, 2009, compared to $17.0 million at December 2008. This decrease is mainly the result of the normal debt amortization. The current portion of long-term debt increased by $7 million due to our line of credit becoming due May 2010 and thereby being reclassified as current.
For the remainder of 2009 and into first half of 2010 our plan, during the downturn in the economy, is to reduce our capital expenditures in line with the lower anticipated activity and to fabricate rental fleet equipment only in direct response to market requirements, to emphasize marketing our idle gas compressor units and reduce bank borrowing. Capital expenditures for the remainder of the year are not to exceed our internal cash generating capacity. We continue to operate our rental unit manufacturing facility on a scaled down basis to keep our core group of people employed. We added 110 units to rental during the first nine months of 2009 compared to 385 in the same period in 2008. We believe that cash flows from operations will be sufficient to satisfy our capital and liquidity requirements through 2009 and the first half of 2010. We may require additional capital to fund any unanticipated expenditures, including any acquisitions of other businesses. We currently have a $40 million dollar bank line of credit with an available balance of $33 million which includes the $7 million already drawn.
As of September 30, 2009, we had a long-term liability of $275,000 to Midland Development Corporation. This amount is to be recognized as income contingent upon certain staffing requirements in the future. In addition, we entered into a purchase agreement with a vendor on July 30, 2008 pursuant to which we agreed to purchase up to $4.8 million of our paint and coating requirements exclusively from the vendor. In connection with the execution of the agreement, the vendor paid us a $300,000 fee which is considered to be a discount toward future purchases from the vendor. Based on our historical paint and coating requirements, we estimate meeting the $4.8 million purchase obligation within five years. The $300,000 payment we received is recorded as a long-term liability and will decrease as the purchase commitment is fulfilled. This long-term liability remaining as of September 30, 2009 was $285,000.
NGS is in the portfolios of John Keeley of Keeley Fund Management.
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