Q1 2024 Natural Gas Services Group Inc Earnings Call Transcript
Key Points
- Natural Gas Services Group Inc reported a strong quarter with sequential growth in rental revenue, rental-adjusted gross margin, and rental-adjusted gross margin percentage.
- First-quarter adjusted EBITDA of $16.9 million exceeded the previous quarter's $16.3 million, with a rental-adjusted gross margin percentage of 61.1%.
- Total revenue for Q1 2024 increased to $36.9 million, up 39% from Q1 2023, driven by a 48% increase in rental revenue year over year.
- The company has maintained a lower level of leverage at only 2.57 times compared to its competitors, enhancing its financial stability.
- Natural Gas Services Group Inc is actively engaged in discussions for new high-horsepower unit contracts extending as far as 2026, indicating strong future demand.
- There is caution about the sustainability of the high rental adjusted gross margins achieved in the past two quarters, with expectations of some downward pressure in the future.
- SG&A expenses increased in Q1 2024 to $4.7 million, or 12.7% of revenue, compared to $4.2 million or 11.6% of revenue in Q4 2023.
- The accounts receivable balance remains elevated, indicating potential issues in timely payment collections despite improvements in process automation.
- Cash flow from operations decreased to $5.6 million in Q1 2024 from $18.2 million in Q1 2023, primarily due to a usage of cash for accounts payable.
- While the company is making progress, there are still challenges in converting non-cash assets into cash, particularly with accounts receivable and inventory management.
Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group, Inc.'s quarter-one earnings call. (Operator Instructions) I would now like to turn the call over to Ms. Anna Delgado. Please begin.
Thank you, Luke, and good morning, everyone.
Before we begin, I would like to remind you that during the course of this conference call, the company will be making forward-looking statements within the meaning of federal security laws. Investors are cautioned that forward-looking statements are not guarantees of future performance, and those actual results or developments may differ materially from those projected in the forward-looking statements. Finally, the company can give no assurance that such forward-looking statements will prove to be correct.
Natural Gas Services Group disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
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