Natural Gas Services Group, Inc. (NYSE:NGS) Q3 2023 Earnings Conference Call November 15, 2023 11:00 AM ET

Company Participants

Anna Delgado - IR
Steve Taylor - Chairman and Interim CEO
John Bittner - CFO

Conference Call Participants

Tate Sullivan - Maxim Group
Rob Brown - Lake Street Capital Markets
Tim O'Toole - TETRA Capital

Operator

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Inc. Quarter 3, 2023 Earnings Call. [Operator Instructions]

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

Anna Delgado

Thank you, Luke, and good morning, everyone. Before we begin, I remind you that during this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our current beliefs and expectations as well as assumptions made by the information currently available to Natural Gas Services Group leadership team. Although we believe that the expectations reflected in such forward-looking statements are reachable, we can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the United States Securities and Exchange Commission for the factors that may cause actual results to differ materially from those in the forward-looking statements made during this call.

In addition, our discussion today will reference certain non-GAAP financial measures, including EBITDA, adjusted EBITDA and adjusted gross margin, among others. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K, 10-K and 10-Q furnished to the SEC.

I will now turn the call over to Steve Taylor, our Chairman and Interim CEO.

Steve Taylor

Thanks, Anna, and thank you, Luke, and good morning, everyone.

Welcome to our third quarter 2023 earnings conference call, and thank you for joining us this morning. Before taking your questions, I will highlight our financial and operational results for the third quarter, discuss the current business environment and provide comments on other aspects of our business. We had a very successful third quarter. Sequentially, our total revenue increased over 16% with a year-over-year increase of 42%.

These increases were led by rental revenues that grew by $3.6 million or 15% sequentially and $9.1 million or 49% when compared to last year's third quarter. Sales and AMS revenue combined being about 12% of total revenue, grew by approximately $800,000 or 28%. Sequentially, total gross margins grew by 14%. SG&A declined by over $2 million or 41% and adjusted operating income was up almost 7x to $4.9 million. Sequential net income increased by over 4x, and EBITDA grew 19% to $11.8 million.