Natural Gas Services (US:NGS)2021-08-12 20:06Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $17.7 million, a 2% increase year-over-year but a 4% decrease sequentially [12][13][14] - Adjusted EBITDA for Q2 2021 was $4.5 million, down from $7.1 million year-over-year and $6.3 million sequentially [19][20] - Net loss after tax for Q2 2021 was $1.9 million, compared to a net income of $165,000 in Q2 2020 [18] - Operating loss for Q2 2021 was $2.3 million, compared to a loss of $148,000 in Q2 2020 [17] Business Line Data and Key Metrics Changes - Rental revenues increased by 2% sequentially and 3% year-over-year, reaching $15.6 million [12][25] - Service and maintenance revenues grew over 60% in Q2 2021 [12] - Sales revenue decreased by 22% year-over-year and 41% sequentially, primarily due to the absence of compressor sales [13][21] Market Data and Key Metrics Changes - Over 50 compressor packages were deployed in the Permian Basin, with a significant portion being high horsepower units [8][29] - The company noted a backlog of approximately $2 million, with about $1.5 million related to energy transition projects [24][58] Company Strategy and Development Direction - The company is focusing on evolving towards a higher horsepower fleet, which is expected to drive future revenue and profits [6][7] - Plans to increase rental rates in response to inflationary pressures and rising costs [10][45] - The company aims to maintain balance sheet strength and pursue long-term value creation opportunities [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macro environment for the second half of the year, despite ongoing concerns about COVID-19 variants [8] - The company anticipates a busy Q4, although specific projections remain uncertain [48][49] - Management highlighted the importance of adapting to inflationary pressures and managing operational costs effectively [10][45] Other Important Information - The company has a cash balance of $26.2 million and no outstanding borrowings, providing ample liquidity [36][37] - The fleet size at the end of Q2 2021 totaled 2,257 compressors, with a significant portion classified as large horsepower [34][35] Q&A Session Summary Question: Pricing environment and cost increases - Management indicated plans for rental price increases due to rising costs, particularly in oil and parts [44][45] Question: Demand for new unit placements - Q3 is expected to see lower unit placements compared to Q2, allowing for better cost management [46][47] Question: Energy transition projects - Approximately three-quarters of the backlog is related to energy transition projects, indicating a shift in market focus [58] Question: Parts replacement work and margins - Parts replacement work has been deferred due to COVID-19, leading to increased costs in the current quarter [60][61] Question: Headcount and operational capacity - Overall headcount is above pre-COVID levels, with a shift towards more field employment [63]