Natural Gas Services Group, Inc (NGS) has reported 69.78 percent jump in profit for the quarter ended Sep. 30, 2016. The company has earned $2.56 million, or $0.20 a share in the quarter, compared with $1.51 million, or $0.12 a share for the same period last year.

Revenue during the quarter surged 30.97 percent to $21.19 million from $16.18 million in the previous year period. Gross margin for the quarter expanded 533 basis points over the previous year period to 91.79 percent. Total expenses were 82.08 percent of quarterly revenues, down from 88.73 percent for the same period last year. This has led to an improvement of 665 basis points in operating margin to 17.92 percent.

Operating income for the quarter was $3.80 million, compared with $1.82 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $7.26 million compared with $9.41 million in the prior year period. At the same time, adjusted EBITDA margin contracted 2387 basis points in the quarter to 34.28 percent from 58.15 percent in the last year period.

Commenting on third quarter 2016 results, Stephen C. Taylor, President and Chief executive officer, said: “Although our markets continue to be very competitive, I think NGS had a notable quarter. The rate of decline in our rental utilization has slowed and, in spite of revenue declines, our gross margin and operating income dollars were essentially flat between quarters. Our rental gross margins were at a ten-year high of 66%, our compressor sales backlog grew, we posted higher earnings per share this quarter than last and we generated positive free cash flow at a rate of 55% of this quarter’s revenue. There are some indications of a tightening market with the higher commodity price, but it has not fully settled into our business yet. If present trends continue we may be in the bottoming of the cycle, but since our production oriented activities tend to lag market upturns, I think we are still looking into 2017 before any definitive recovery will be seen.”

The company has spent $3.45 million cash to meet investing activities during the nine month period as against cash outgo of $11.05 million in the last year period. It has incurred net capital expenditure of $3.45 million on net basis during the nine month period, down 68.76 percent or $7.60 million from year ago period.

The company has spent $0.43 million cash to carry out financing activities during the nine month period as against cash inflow of $0.03 million in the last year period.

Cash and cash equivalents stood at $61.16 million as on Sep. 30, 2016, up 104.01 percent or $31.18 million from $29.98 million on Sep. 30, 2015.

Working capital increases sharply
Natural Gas Services Group, Inc has recorded an increase in the working capital over the last year. It stood at $86.71 million as at Sep. 30, 2016, up 48.92 percent or $28.48 million from $58.22 million on Sep. 30, 2015. Current ratio was at 16.35 as on Sep. 30, 2016, up from 5.97 on Sep. 30, 2015.

Cash conversion cycle (CCC) has decreased to 625 days for the quarter from 1156 days for the last year period. Days sales outstanding went down to 34 days for the quarter compared with 48 days for the same period last year.

Days inventory outstanding has decreased to 644 days for the quarter compared with 1162 days for the previous year period. At the same time, days payable outstanding was almost stable at 53 days for the quarter, when compared with the previous year period.