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TGC Industries, Inc. (TGE)
Q2 2009 Earnings Call
July27, 2009 8:30 am ET
Jack Lascar – DRG&E
Wayne A. Whitener – President, Chief Executive Officer & Director
James Kevin Brata – Chief Financial Officer, Vice President, Treasurer & Secretary
[Tray Sabian] – Sidoti & Company
[Neal Damon – Wonderless Securities]
[Andrew Halperin – Beaver Capital]
Previous Statements by TGE
» TGC Industries, Inc. Q3 2009 Earnings Call Transcript
» TGC Industries, Inc. Q3 2008 Earnings Call Transcript
» TGC Industries, Inc. Q2 2008 Earnings Call Transcript
Welcome to our second quarter 2009 conference call. We appreciate your joining us today. Your host will be Wayne Whitener, President and Chief Executive Officer along with Chief Financial Officer Jim Brata. Before I turn the call over to management I have a few items to cover. If you would like to be added to the company’s email distribution list, please call our office at 713-529-6600 and relay that information to us. Or, you can send me an email with that information to JLascar@DRG-E.com.
If you would like to listen to a replay of today’s call it is available via webcast by going to the investor relations section of the company’s website at www.TGCSeismic.com or via a recorded instant replay until August 10th. Information on how to access the replay was provided in this morning’s earning release. Information reported on this call speaks only as of today, Monday July 27, 2009 and therefore you are advised that time sensitive information may longer be accurate as of the time of any replay.
Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the company’s future performance are forward-looking statements. These forward-looking statements are based on management’s current expectation and include known and unknown risks, uncertainties and other factors many of which the company is unable to predict or control that may cause the company’s actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.
These risks and uncertainties include the risk factors disclosed by the company from time-to-time in its filings with the SEC including the annual report on Form 10K for the year ended December 31, 2008. Furthermore, as we start this call please also refer to the statement regarding forward-looking statements incorporated in our press release issued this morning and please note that the contents of our conference call are covered by these statements.
Now, I’ll turn the call over to Wayne Whitener.
Wayne A. Whitener
I would like to welcome you to our second quarter 2009 conference call. As far as the agenda is concerned, I will provide you with some highlights and Jim Brata will provide you with the financial details. Then, I will come back with some final comments. Let me begin by making some comments. We had a fairly good second quarter given the continued weak economic environment, low oil and gas prices, a decline for seismic services and a lower domestic rig count. This comes atop of a strong first quarter so overall we had a very good first half of the year.
However, as we mentioned in the first quarter conference call we have been experiencing weaker demand for our services. We are also see continued price pressure and therefore our margins have deteriorated and are off from the normal levels. From my perspective this is the most severe downturn occurring in the shortest period of time in all my years of being in the business. The US land rig count dropped to 932 in the second quarter of 2009, that is down approximately 50% from the second quarter of 2008.
We have responded to this lower level of demand by reducing costs, trying to keep them in line with expected revenues. Regarding our crew count, we began the second quarter with eight crews operating in the field. As a reminder, that was down from the peak of nine crews operating during the first quarter of 2009. In response to the weakening demand we reduced our crew count to five by the end of the second quarter. We further reduced our number of field crews to four at the beginning of the third quarter as we continued to optimize our utilization and keep our crew count aligned with projected demand.
Our backlog is currently $37 million, down from approximately $50 million in the previous quarter. Finally, we continue to stay in close contact with our customers which will enable us to respond quickly when conditions improve. Now, I’ll turn the call over to Jim Brata who will give you a detailed view of our financial results. Then, I will come back with some final remarks.
James Kevin Brata
Revenues for the 2009 second quarter rose 21% to $22.6 million compared to $18.6 million in the second quarter 2008. Cost of services in the second quarter increased 24% to $15.6 million from $12.6 million in the second quarter a year ago. As a percentage of revenues cost of services in the second quarter of ’09 was 68.9% compared to 67.4% in the ’08 second quarter. Gross profit in the ’09 second quarter rose 16% to [$7] million compared to $16.1 million a year ago. Gross profit margin was 31.1% compared to 32.6% in the second quarter of last year.