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In a release on November 2, the Company noted that revenues fell to $16.1 million from $21.6 million in the third quarter of 2008. The Company reported a net loss of $1.7 million, or ($0.09) per share, compared to net income of $1.9 million, or $0.10 per diluted share, in the third quarter of 2008. (All per share amounts have been adjusted to reflect the five percent stock dividend paid on May 12, to shareholders of record as of April 28.) Third quarter 2009 EBITDA* (earnings before net interest expense, taxes, depreciation, and amortization) declined to approximately $968,000 from $7.1 million in last year's third quarter.
Wayne Whitener, TGC Industries' President and Chief Executive Officer, said, "As we had anticipated and announced in our second quarter earnings release, we experienced weakening demand for our services during the third quarter, along with a competitive pricing environment. Due to the decreased demand for hydrocarbons and the reduction in capital expenditures from our customers, as well as uncertainty regarding future energy policy, we continue to expect challenging conditions for the balance of the year.
"We have responded to this lower level of demand by reducing our crew count and adjusting our utilization to better match the expected demand from our customers. We operated four crews throughout the third quarter, and our current backlog is approximately $35 million compared to $37 million at the end of the second quarter and $82 million at the end of the third quarter of last year.
"However, we are not merely waiting for the U.S. market to recover, and on October 19, we announced the acquisition of Eagle Canada. This acquisition strengthens our strategic position within the seismic industry bringing us diversification away from natural gas and access to the Canadian seismic market. It provides us with operational exposure to new markets since Eagle Canada has extensive experience in 3-C data acquisition in the Canadian oil sands, and its seismic acquisition services are also used by the potash mining industry in Canada.
"Since the beginning of the fourth quarter, we have seen an increase in inquiries and bidding activity, which should bode well for our 2010 performance. In addition, we have the ability to quickly add crews when business conditions improve.
"We generated cash flow from operations of $5.8 million during the quarter and closed the third quarter with approximately $34.1 million in cash and $7.6 million in long term debt. Subsequent to quarter end, we used $10.3 million of existing cash for the acquisition of Eagle Canada. We remain well capitalized and strong financially and are confident we have the liquidity and financial flexibility to manage through this current period of lower seismic activity."
THIRD QUARTER 2009
Revenues for the third quarter of 2009 declined 25.4 percent year over year, mainly driven by lower overall demand and a competitive pricing environment for domestic seismic services. Cost of services increased 5.6 percent to $14.1 million from $13.4 million a year ago but was down from $15.6 million in the second quarter. Cost of services as a percentage of revenues increased to 87.8 percent in the 2009 third quarter compared to 62.0 percent in the 2008 third quarter primarily as a result of the significant decline in revenues due to the reduction in crew count during the second quarter and the beginning of the third quarter. Selling, general and administrative expenses (SG&A) fell to approximately $995,000 in the third quarter compared to $1.1 million in last year's third quarter but rose to 6.2 percent of revenues compared to 5.2 percent of revenues in the third quarter of 2008. Interest expense for the quarter remained essentially flat with a year ago.
Net loss was $1.7 million compared to net income of $1.9 million in the third quarter of 2008. The effective tax benefit rate for the quarter was 36.4 percent compared to an effective tax expense rate of 44.5 percent in the third quarter of 2008.
YEAR TO DATE 2009
Revenues for the first nine months of 2009 increased 19.2 percent to $74.7 million from $62.6 million in the first nine months of 2008. Cost of services rose 27.3 percent to $51.9 million compared to $40.8 million in last year's period. Cost of services as a percentage of revenues were 69.5 percent compared to 65.1 percent in the same period of last year. Income from operations was essentially flat with the same period last year at $8.7 million. Net income was $4.5 million, or $0.25 per diluted share, compared to $4.7 million, or $0.26 per diluted share, for the first nine months of 2008. Year to date EBITDA rose 4.4 percent to $19.6 million, or 26.3 percent of revenues, compared to $18.8 million, or 30.0 percent of revenues, for the comparable period of 2008.
TGC Industries, Inc., based in Plano, Texas with branch offices in Houston and Oklahoma City, is one of the leading providers of seismic data acquisition services throughout the continental United States.
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