TGC Industries Inc (TGE, Financial) filed Quarterly Report for the period ended 2009-06-30.
TGC Industries Inc. is engaged in the domestic geophysical services business principally through conducting seismic surveys and to a lesser extent through sales of gravity information from the company\'s data bank to companies engaged in the exploration for oil and gas in the UnitedStates. Geophysics is the study of the structure and composition of theearth\'s interior and involves the measuring and interpretation of theearth\'s properties with appropriate instruments. TGC Industries Inc has a market cap of $74.9 million; its shares were traded at around $4.1 with a P/E ratio of 7.1 and P/S ratio of 0.9. TGC Industries Inc had an annual average earning growth of 96.2% over the past 5 years.
Income from operations. Income from operations was $2,424,444 for the three months ended June 30, 2009, compared to $1,678,805 for the same period of 2008, an increase of 44.4%. This increase was primarily attributable to an increase in revenues and a decrease in SG&A expenses, partially offset by an increase in cost of services and depreciation and amortization expense. EBITDA increased $974,028 to $6,057,760 for the three months ended June 30, 2009, from $5,083,732 for the same period of 2008, an increase of 19.2%. This increase was a result of those factors mentioned above. For a definition of EBITDA, a reconciliation of EBITDA to net income, and discussion of EBITDA, please refer to the section entitled EBITDA found below.
Working capital increased $9,865,864 to $26,834,907 as of June 30, 2009, from the December 31, 2008 working capital of $16,969,043. This increase was primarily due to a $6,508,185 increase in cash and cash equivalents, a $3,763,402 increase in cost and estimated earnings in excess of billings on uncompleted contracts, a $1,177,085 increase in prepaid expenses and other, a $1,516,103 decrease in trade accounts payable, and a $5,754,963 decrease in billings in excess of costs and estimated earnings on uncompleted contracts partially offset by a decrease in trade accounts receivable of $1,849,610, a decrease in prepaid federal income taxes of $1,220,154, a $1,077,909 increase in accrued liabilities, an increase in federal and state income taxes payable of $3,511,946, and an increase in the current portion of debt obligations of $1,194,255.
Net cash used in financing activities was $3,700,167 for the six months ended June 30, 2009, and $4,113,739 for the six months ended June 30, 2008. The decrease was due primarily to a decrease in the amount of principal payments on our outstanding notes payable of $270,414 and a decrease in the amount of principal payments on capital lease obligations of $133,116
During the six months ended June 30, 2009, the Company acquired $1,114,678 of additional equipment and vehicles. Cash of $707,080 and capital lease obligations from a vehicle leasing company of $407,598 were used to finance these acquisitions. Although we do not budget for our capital expenditures, we may purchase additional equipment during 2009 should the demand for our services increase.
In April of 2005 we entered into a revolving credit agreement with a commercial bank. Effective September 16, 2006, we renewed our revolving credit agreement and increased the borrowing limit from $3,500,000 to $5,000,000. The borrowing limit under the revolving credit agreement remains at $5,000,000 and was renewed on September 16, 2007, and September 16, 2008, respectively. The revolving line of credit agreement does not expire until September 16, 2009. Our obligations under this agreement are secured by a security interest in our accounts receivable. Interest on the outstanding amount under the revolving credit agreement is payable monthly at the prime rate of interest. The credit loan agreement provides for non-financial and financial covenants including a minimum debt service coverage ratio in excess of 2.0 to 1.0 and a ratio of debt to worth not in excess of 1.25 to 1.0. As of June 30, 2009 we had no borrowings outstanding under the revolving credit agreement.
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TGC Industries Inc. is engaged in the domestic geophysical services business principally through conducting seismic surveys and to a lesser extent through sales of gravity information from the company\'s data bank to companies engaged in the exploration for oil and gas in the UnitedStates. Geophysics is the study of the structure and composition of theearth\'s interior and involves the measuring and interpretation of theearth\'s properties with appropriate instruments. TGC Industries Inc has a market cap of $74.9 million; its shares were traded at around $4.1 with a P/E ratio of 7.1 and P/S ratio of 0.9. TGC Industries Inc had an annual average earning growth of 96.2% over the past 5 years.
Highlight of Business Operations:
Income from operations. Income from operations was $11,217,229 for the six months ended June 30, 2009, compared to $5,063,203 for the same period of 2008, an increase of 121.5%. This increase was primarily attributable to several factors including increased crew productivity, additional shot-hole revenue, favorable weather conditions, and our operation of nine seismic crews during the first three months of 2009 compared to eight crews for the same period of 2008. EBITDA increased $6,905,432 to $18,649,982 for the six months ended June 30, 2009, from $11,744,550 for the same period of 2008, an increase of 58.8%. This increase was a result of those same factors mentioned above. For a definition of EBITDA, a reconciliation of EBITDA to net income, and discussion of EBITDA, please refer to the section entitled EBITDA found below.Income from operations. Income from operations was $2,424,444 for the three months ended June 30, 2009, compared to $1,678,805 for the same period of 2008, an increase of 44.4%. This increase was primarily attributable to an increase in revenues and a decrease in SG&A expenses, partially offset by an increase in cost of services and depreciation and amortization expense. EBITDA increased $974,028 to $6,057,760 for the three months ended June 30, 2009, from $5,083,732 for the same period of 2008, an increase of 19.2%. This increase was a result of those factors mentioned above. For a definition of EBITDA, a reconciliation of EBITDA to net income, and discussion of EBITDA, please refer to the section entitled EBITDA found below.
Working capital increased $9,865,864 to $26,834,907 as of June 30, 2009, from the December 31, 2008 working capital of $16,969,043. This increase was primarily due to a $6,508,185 increase in cash and cash equivalents, a $3,763,402 increase in cost and estimated earnings in excess of billings on uncompleted contracts, a $1,177,085 increase in prepaid expenses and other, a $1,516,103 decrease in trade accounts payable, and a $5,754,963 decrease in billings in excess of costs and estimated earnings on uncompleted contracts partially offset by a decrease in trade accounts receivable of $1,849,610, a decrease in prepaid federal income taxes of $1,220,154, a $1,077,909 increase in accrued liabilities, an increase in federal and state income taxes payable of $3,511,946, and an increase in the current portion of debt obligations of $1,194,255.
Net cash used in financing activities was $3,700,167 for the six months ended June 30, 2009, and $4,113,739 for the six months ended June 30, 2008. The decrease was due primarily to a decrease in the amount of principal payments on our outstanding notes payable of $270,414 and a decrease in the amount of principal payments on capital lease obligations of $133,116
During the six months ended June 30, 2009, the Company acquired $1,114,678 of additional equipment and vehicles. Cash of $707,080 and capital lease obligations from a vehicle leasing company of $407,598 were used to finance these acquisitions. Although we do not budget for our capital expenditures, we may purchase additional equipment during 2009 should the demand for our services increase.
In April of 2005 we entered into a revolving credit agreement with a commercial bank. Effective September 16, 2006, we renewed our revolving credit agreement and increased the borrowing limit from $3,500,000 to $5,000,000. The borrowing limit under the revolving credit agreement remains at $5,000,000 and was renewed on September 16, 2007, and September 16, 2008, respectively. The revolving line of credit agreement does not expire until September 16, 2009. Our obligations under this agreement are secured by a security interest in our accounts receivable. Interest on the outstanding amount under the revolving credit agreement is payable monthly at the prime rate of interest. The credit loan agreement provides for non-financial and financial covenants including a minimum debt service coverage ratio in excess of 2.0 to 1.0 and a ratio of debt to worth not in excess of 1.25 to 1.0. As of June 30, 2009 we had no borrowings outstanding under the revolving credit agreement.
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