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Mar 31
NGS Q1 2025 Earnings Report
Natural Gas Services Group, Inc. reported its financial results for the first quarter ended March 31, 2025, showing an increase in total revenue and net income compared to the same period last year.
Key Takeaways
Natural Gas Services Group, Inc. reported a strong first quarter for 2025, with total revenue increasing to $41.383 million and net income reaching $4.854 million. The company's rental revenue, a primary focus, saw a significant increase, contributing to improved adjusted gross margins. Despite a decrease in sales and aftermarket services revenue, the overall financial performance was positive.
Total revenue increased by 12.1% to $41.383 million in Q1 2025, up from $36.907 million in Q1 2024.
Net income for Q1 2025 was $4.854 million, compared to $5.098 million in Q1 2024.
Rental revenue, the primary revenue driver, grew by 15.3% to $38.910 million, reflecting increased demand for higher horsepower units.
Adjusted gross margin for rentals improved to 61.9% in Q1 2025 from 61.1% in Q1 2024, indicating better profitability from rental operations.
NGS
NGS
NGS Revenue by Segment
Revenue by Segment
Rental Revenue
CapyFin.comSales Revenue
CapyFin.comAftermarket Services Revenue
CapyFin.com Forward Guidance
The company anticipates continued growth in capital expenditures for 2025, driven by customer compression requirements and capital availability, while maintaining prudent debt levels. They expect cash on hand, operating cash flows, and Credit Facility borrowings to be sufficient for capital and liquidity requirements for at least the next twelve months.
Positive Outlook
- Continued demand for higher horsepower units is expected to drive rental revenue growth.
- Improved adjusted gross margins from rental operations are anticipated to continue.
- Sufficient cash on hand, operating cash flows, and Credit Facility borrowings are expected to meet capital and liquidity requirements for the next twelve months.
- Flexibility in financing alternatives allows for adjustments to capital expenditure plans.
- Strategic focus on higher margin applications is expected to continue.
Challenges Ahead
- Sales revenue is subject to fluctuations based on customer capital projects and may continue to decline as the company shifts focus away from new compressor package sales.
- The cost of rentals is expected to increase due to supporting a larger quantity of utilized horsepower and inflationary pressures.
- Potential for unanticipated expenditures or material acquisitions could exceed current resources or not be available on acceptable terms.
- Financing capacity could be negatively impacted by other economic factors.
- The decline in customers due to E&P industry consolidation may continue, though not expected to meaningfully decrease business activity.
Revenue & Expenses
Visualization of income flow from segment revenue to net income