TGC Industries, Inc. (TGE)
Q3 2009 Earnings Call
November 2, 2009 9:30 am ET
Jack Lascar – DRG&E
Wayne A. Whitener – President, Chief Executive Officer & Director
James Kevin Brata – Chief Financial Officer, Vice President, Treasurer & Secretary
Terese Fabian – Sidoti & Company
[Neal Damon – Wonderless Securities]
[Benny Alexandria] – Pritchard Capital Partners
Previous Statements by TGE
» TGC Industries, Inc. Q2 2009 Earnings Call Transcript
» TGC Industries, Inc. Q3 2008 Earnings Call Transcript
» TGC Industries, Inc. Q2 2008 Earnings Call Transcript
Welcome to the TGC Industries third quarter 2009 conference call. We appreciate your joining us today. Your hosts are Wayne Whitener, President and Chief Executive Officer and Jim Brata, Chief Financial Officer. 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.
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 November 16th. 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 November 2, 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 its 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’d like to welcome you to our third quarter 2009 conference call. As far as the agenda is concerned, I’ll provide you with some highlights and Jim Brata will provide you with some financial details. Then, I will come back with some final comments. Let me begin by making some general comments, first regarding our recent disclosed acquisition. On October 19th we announced that we had acquired Eagle Canada a provider of seismic data acquisition services to the Canadian energy industry based in Calgary.
We are extremely pleased to have Eagle Canada as part of our company and it will play an important role in our strategic operations going forward. Also, while the seismic market continues to be challenging and difficult, we are beginning to see some signs of stability. I will have additional remarks on both of these points following Jim’s discussion of the financials.
After a good first half, we had a disappointing third quarter as the industry wide slowdown in the US had a severe impact on our third quarter results. The continued weak economic environment along with depressed natural gas pricing which remained low during most of the quarter resulted in lower demand for seismic services. We also saw pricing pressures which caused unusually weak margins.
We have responded to this by reducing our cost, reducing our crew count and we expect to keep crew count in line with revenues. We operated four crews for the entire third quarter as we continued to optimize our end utilization keeping our crew count aligned with demand. As a reminder, we have had a fairly significant reduction in our crew count this year down from a peak of nine crews in the first quarter of 2009 to five crews by the end of the second quarter and to four crews at the end of the third quarter. Our backlog is current $35 million, down slightly from $37 million in the previous quarter.
Now, I’ll turn the call over to Jim Brata who will give you some detailed review of financial results. Then, I will come back with some final remarks.
James Kevin Brata
Revenues for the 2009 third quarter declined 25.4% to $16.1 million compared to $21.6 million in the third quarter of 2008. Cost of services in the third quarter increased 5.6% to $14.1 million from $13.4 million in the third quarter a year ago. As a percentage of revenues, cost of services in the third quarter of ’09 was 87.8% compared to 62.0% in the ’08 third quarter resulting primarily from the decline in revenues due to the reduction in our crew count during the second quarter and the beginning of the third as we continued to respond quickly to the industry wide slowdown.