Natural Gas Services Group, Inc. (NYSE:NGS) Q1 2023 Earnings Conference Call May 16, 2023 11:00 AM ET

Company Participants

Anna Delgado – Production Coordinator

Steve Taylor – Chairman, Interim Chief Executive Officer and President

Conference Call Participants

Rob Brown – Lake Street Capital

Alejandro Nuno – Maxim

Hale Hoak – Hoak & Co.

Kyle Krueger – Apollo Capital

Operator

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Incorporated Quarter One 2023 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions]

And I would now like to turn the call over to Ms. Anna Delgado. Please begin.

Anna Delgado

Thank you, Luke. Hello, everyone, and thank you for joining us to discuss our first quarter 2023 financial results. Today’s call is being webcast on our Investor Relations website ngsgi.com. Also available on the site is our earnings press release, which was issued Monday, May 15.

Before I hand the call over, I’d like to remind everyone that during today’s call, including Q&A, we may make forward-looking statements regarding expectations of the Company. These forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied on this call.

These risks are detailed in our most recent Annual Report on Form 10-K, and as such, may be amended or supplemented by subsequent quarterly reports filed with the Securities and Exchange Commission. The statements made during this call are based upon information known to Natural Gas Services Group as of the date and time of this call and NGS assumes no obligation to update the information presented in today’s call.

With that, I’d like to turn the call over to Steve Taylor, our Chairman of the Board, Interim CEO and President. Steve?

Steve Taylor

Thank you, Anna and Luke, and good morning, everyone. Welcome to our first quarter 2023 earnings conference call. Thank you for joining us this morning. Before taking your questions, I’ll highlight our financial and operational results for the first quarter that were detailed in our earnings press release yesterday, discuss the current business environment and provide comments on other aspects of our business.

The quarter marked the ninth quarter in a row of rental revenue growth for the current sequential quarters, rental revenue alone grew almost 11% while higher rental and sales revenues grew total revenues by 18%.

Adjusted rental gross margins slipped 2% due to higher field expenses and a one-time non-cash adjustment. But our total adjusted gross margin increased 4% sequentially. SG&A declined 4% and our bottom line net income had a positive swing of over $1 million from last quarter as we posted positive GAAP earnings.