MIL-OSI: CGG Announces its Q1 2022 Results  

22

Source: GlobeNewswire (MIL-OSI)

CGG Announces its Q1 2022 Results

Strong Net Cash Flow of $68 million

Seasonally Soft SMO (ex-Equipment) Activity in Q1

2022 Financial Objectives Confirmed

 PARIS, France – May 4, 2022CGG (ISIN: FR0013181864) announced today its first quarter 2022 non-audited results. 

Commenting on these results, Sophie Zurquiyah, CGG CEO, said:

In the continued strengthening market environment, our Geoscience business had a robust quarter and is leading the recovery, driven by our clients’ requirements for better sub-surface imaging technology. Our Earth Data (ex-Multi-client) business is progressively benefiting from our clients’ increasing need to rapidly replace depleting reserves. As anticipated, activity was seasonally low in our Sensing and Monitoring (ex-Equipment) business, which had a slow start to the year. At the end of March, the level of commercial bids significantly increased, and we expect an acceleration of our clients’ decision-making and spending, particularly in the second half of the year. In this context, we confirm our 2022 financial objectives and expect the strengthening business environment to drive CGG growth well into 2023 and beyond.”

Q1 2022: A seasonally soft SMO (ex-Equipment) quarter

  • IFRS figures: revenue at $175m, EBITDAs at $61m, OPINC at $11m 
  • Segment revenue at $153m, down (24)% pro-forma* and down (28)% year-on-year.

Geoscience at $75m, up 36% pro-forma* and up 14% year-on-year. Sustained growing activity worldwide and increased level of commercial bids, up 51% year-on-year.

Earth Data at $44m, up 28% year-on-year. Stable prefunding revenue and Capex with after-sales up 56% year-on-year at $30m. Solid order intake for prefunding of 2022 programs with revenue recognition in Q2/H2 2022.

Sensing and Monitoring at $34m, down 70% year-on-year with large mega-crew deliveries in Q1 2021. Low quarter as anticipated with some equipment sales shifted to H2 2022. Significant commercial opportunities for OBN sales. Higher activity expected in H2 2022. 

  • Segment EBITDAs and adjusted**segment EBITDAs at $39m, up 19% year-on-year, a 25% margin due to favorable revenue mix.
  • Segment Operating income / (loss) at $(5)m and adjusted**segment Operating income / (Loss) at $(4)m.
  • Group Net loss at $(19)m.

*Pro-forma indicators represent supplementary information adjusted for GeoSoftware and Physical Asset Storage and Services businesses sold in 2021.

** Adjusted indicators represent supplementary information adjusted for non-recurring charges.

Strong quarterly Net Cash Flow of $68m

  • Net cash flow at $68m including $90m positive change in working capital & provisions.
  • Cash liquidity of $388m as of March 31, 2022, excluding $100m undrawn RCF.
  • Net debt before IFRS 16 at $807m as of March 31, 2022.

Post closing event

  • Completion of the sale and lease back of the Galileo Headquarter building for a total amount of €59.25m.

Key Figures – First Quarter 2022

Key Figures IFRS – Quarter
In million $
2021
Q1
2022
Q1
Variances %
Operating revenues 209 175 (16%)
Operating income / (loss) (21) 11
Equity from investment
Net cost of financial debt (34) (26) 25%
Other financial income / (loss) (38) 7
Income taxes (4) (9)
Net income / (loss) from continuing operations (97) (16) 83%
Net income / (loss) from discontinued operations 11 (2)
Group net income / (loss) (85) (19) 78%
Operating cash flow 105 130 24%
Net cash flow 28 68
Net debt 987 925 (6%)
Net debt before lease liabilities 845 807 (4%)
Capital employed 2,067 1,917 (7%)

Key Segment Figures – First Quarter 2022

Key Segment Figures – Quarter
In million $
2021
Q1
2022
Q1
Variances %
Segment revenue 213 153 (28%)
Segment EBITDAs 29 39 31%
EBITDAs margin 14% 25% 11 bps
Segment operating income / (loss) (17) (5) 72%
   OPINC margin (8)% (3)% 5 bps
IFRS 15 adjustment (3) 16
IFRS operating income / (loss) (21) 11
Operating cash flow 105 130 24%
Segment net cash flow 28 68
   Supplementary information      
Adjusted**segment EBITDAs 33 39 19%
   Adjusted**EBITDAs margin 15% 25% 10 bps
Adjusted**segment operating income (19) (4) 77%
   Adjusted**OPINC margin (9)% (3)% 6 bps

Key figures bridge: Segment to IFRS – First Quarter 2022 

P&L items
In million $
Segment figures IFRS 15 adjustment IFRS figures
Total revenue 153 23 175
OPINC (5) 16 11
       
Cash Flow Statement items
In million $
Segment figures IFRS 15 adjustment IFRS figures
EBITDAs 39 23 61
Change in working capital & provisions 90 (23) 67
Cash provided by operations 130 130
       
Earth DataEarth Data Data Library NBV
In million $
Segment figures IFRS 15 adjustment IFRS figures
Opening balance sheet , Jan 1st 22 283 109 393
Closing balance sheet , Mar 31th 22 307 100 407

First Quarter 2022 Segment Financial Results

Digital, Data and Energy Transition (DDE, ex-GGR)

Digital, Data & Energy Transition (DDE)
In million $
2021
Q1
2022
Q1
Variances %
Segment revenue 100 119 19%
Geoscience 66 75 14%
Earth Data 34 44 28%
Prefunding 15 14 (8%)
After-Sales 19 30 56%
Proforma revenue from activities (GEO) 55 75 36%
Segment EBITDAs 28 57
EBITDAs Margin 28% 48% 20 bps
Segment operating income / (loss) (8) 22
OPINC Margin (8)% 18% 27 bps
Equity from investments
Capital employed (in billion $) 1.6 1.5 (6%)
Supplementary information      
Adjusted**segment EBITDAs 31 58 86%
Adjusted** EBITDAs Margin 31% 48% 18 bps
Adjusted**segment OPINC (11) 22
Adjusted** OPINC Margin (11)% 19% 30 bps
Other Key Metrics      
Earth Data cash capex ($m) (30) (33) (9%)
Earth Data cash prefunding rate (%) 50% 42% (8) bps

Digital, Data and Energy Transition (DDE) segment revenue was $119 million, up 34% pro-forma* and up 19% year-on-year.

  • Geoscience (GEO) revenue was $75 million, up 36% pro-forma* and up 14% year-on-year.

Geoscience had a very solid activity led by North America and EAME. The level of commercial activity continues to increase and was up 51% year-on-year at the end of March sustained by demand for OBN/OBC imaging and new technologies. Some of our processing centers are running at near full capacity.

We continue to actively develop and promote our high end technology for digitalization, energy transition and monitoring markets with solidifying opportunities in digitalization, CCUS and mining.

To support continued differentiation in our core business and accelerate the development of our Beyond the Core activities, CGG signed a lease to build a new European HPC hub in Southeast England that will become operational in H1 2023 and increase our cloud HPC capacity by up to 100 petaflops.

  • Earth Data (EDA) revenue was $44 million, up 28% year-on-year.

Earth Data cash capex was $(33) million this quarter, stable year-on-year, as we started new Antares marine streamer program offshore Brazil. Prefunding revenue was at $14 million and prefunding rate was at 42%. After-sales were at $30 million this quarter, up 56% year-on-year mainly driven by the North Sea and US Land.

The segment library Net Book Value was $307 million ($407 million after IFRS 15 adjustments) at the end of March 2022.

DDE segment EBITDAs was $57 million and adjusted**segment EBITDAs was $58 million, up 86% year-on-year, a solid 48% margin.

DDE segment operating income and adjusted**segment operating income was $22 million, compared to a negative $(11)m adjusted** segment operating income last year.

DDE capital employed decreased to $1.5 billion at the end of March 2022.

Sensing and Monitoring (SMO)

Sensing and Monitoring (SMO)
In million $
2021
Q1
2022
Q1
Variances %
Segment revenue 113 34 (70%)
Land 100 20 (80%)
Marine 7 6 (8%)
Downhole gauges 4 4 3%
     Non Oil & Gas 3 4 47%
Segment EBITDAs 15 (12)
EBITDAs margin 14% (36)% (49) bps
Segment operating income / (loss) 7 (19)
OPINC Margin 6% (57)% (64) bps
        
   Capital employed (in billion $) 0,6 0,5 (5%)
Supplementary information      
Adjusted segment EBITDAs before NRC 16 (12)
Adjusted** EBITDAs margin 14% (36%) (50) bps
Adjusted segment OPINC before NRC 8 (19)
   Adjusted** OPINC Margin 7% (57%) (64) bps

Sensing and Monitoring (SMO) segment revenue was low this quarter at $34 million, down 70% year-on-year with large mega-crew deliveries in Q1 2021.

  • Low level of seismic equipment sales in Q1:
    • Low level of land equipment sales at $20 million, due to sales shift to Q2/H2. Large tender for land and OBN mega-crews confirmed in Saudi Arabia for deliveries in late 2022 / H1 2023. Sercel also delivered WiNG land node systems to India.
    • Marine equipment represented 18% of total sales in a market limited to equipment repairs. Significant commercial opportunities for OBN equipment deliveries in H2 2022.
  • Downhole sales were $4 million, stable year-on-year.
  • Beyond the Core revenues were $4 million, up 47% year-on-year driven by defence activities.

SMO segment EBITDAs and adjusted**segment EBITDAs was $(12) million. 

SMO segment operating income / (loss) and adjusted**segment operating income / (loss) was $(19) million.

SMO capital employed decreased to $0.5 billion at the end of March 2022.

First Quarter 2022 Financial Results

Consolidated Income Statements
In million $
2021
Q1
2022
Q1
Variances %
Exchange rate euro/dollar 1.22 1.12 (8%)
Segment revenue 213 153 (28%)
DDE 100 119 19%
   SMO 113 34 (70%)
Elim & Other (1)
Segment Gross Margin 10 23
Segment EBITDAs 29 39 31%
DDE 31 58 86%
   SMO 16 (12)
Corporate (6) (5) 9%
Elim & Other (8) (1) 82%
Severance costs (3)
Segment operating income / (loss) (17) (5) 72%
DDE (11) 22
   SMO 8 (19)
Corporate (7) (6) 15%
Elim & Other (9) (2) 82%
   Non recurring charges 2
IFRS 15 adjustment (3) 16
IFRS operating income / (loss) (21) 11
Equity from investments
Net cost of financial debt (34) (26) 25%
Other financial income / (loss) (38) 7
Income taxes (4) (9)
NRC (Tax & OFI)
Net income / (loss) from continuing operations (97) (16) 83%
Net income / (loss) from discontinued operations 11 (2)
IFRS net income / (loss) (85) (19) 78%
Shareholder’s net income / (loss) (87) (18) 80%
Basic Earnings per share in $ (0.12) (0.02) 80%
Basic Earnings per share in € (0.10) (0.02) 78%

Segment revenue was $153 million, down (24)% pro-forma* and down (28)% year-on-year. The respective contributions from the Group’s businesses were 49% from Geoscience, 29% from Earth Data (78% for the DDE segment) and 22% from Sensing and Monitoring (SMO) segment.

Segment EBITDAs and adjusted**segment EBITDAs was $39 million, up 19% year-on-year, a 25% margin.

Segment operating income / (loss) was $(5) million and adjusted**segment operating income / (loss) was $(4) million.

IFRS 15 adjustment at operating income level was $16 million and IFRS operating income, after IFRS 15 adjustment, was $11 million.

Cost of financial debt was $(26) million. Other financial items were at $7 million.

Taxes were at $(9) million.

Group net loss was $(19) million. After minority interests.

Group net loss attributable to CGG shareholders was $(18) million / €(15) million.

First Quarter 2022 Cash Flow

Cash Flow items
In million $
2021
Q1
2022
Q1
Variances %
Segment operating cash flow 105 130 24%
CAPEX (42) (42)
Industrial (4) (4) (16%)
R&D (8) (5) (38)%
Earth Data (cash) (30) (33) 9%
Marine MC (30) (32) 9%
Land MC (1)
Proceeds from disposals of assets (2) (1) 41%
Segment free cash flow 60 86 43%
Lease repayments (15) (13) (11%)
Paid cost of debt (7)
CGG 2021 Plan (11) (7) (39%)
Free cash flow from discontinued operations 1 2
Net cash flow 28 68
Financing cash flow 1
Forex and other (7)
Net increase/(decrease) in cash 22 69
Supplementary information      
Change in working capital and provisions, included in Segment operating cash flow 73 90 24%

Total capex was $(42) million:

  • Industrial capex was $(4) million,
  • Research & Development capex was $(5) million, and
  • Earth Data cash capex was $(33) million.

Segment free cash flow was $86 million, including $90 million positive change in working capital & provisions. 

After $(13) million lease repayments, $(0) million paid cost of debt, $(7) million CGG 2021 Plan cash costs and $2 million free cash flow from discontinued operations, Net cash flow was $68 million.

Balance Sheet 

Group’s liquidity amounted to $388 million at the end of March 31, 2022, excluding $100m undrawn RCF. 

Group gross debt before IFRS 16 was $1,196 million and net debt was $807 million at the end of March 31, 2022.

Group gross debt after IFRS 16 was $1,313 million and net debt was $925 million at the end of March 31, 2022.

Segment leverage ratio of Net debt to Adjusted**Segment EBITDAs was 2.7x at the end of March 2022.

Q1 2022 Conference call 

  • The press release and the slide presentation are available on our website www.cgg.com
  • An English language analysts conference call is scheduled today at 6.30 pm (CET). To follow the conference call, please access the audio webcast from your computer at www.cgg.com.
  • Please dial 5 to 10 minutes prior to the scheduled start time the following numbers:
Confirmation Code: 2885748
Standard International +44 (0) 2071 928338
France (Toll Free) +33 (0) 805101465
France (Local) +33 (0) 170700781
UK (Toll Free) +44 (0) 8002796619
UK (Local)  +44 (0) 8444819752
US (Toll Free) +1 877 8709 135
US (Local) +1 646 7413 167

  
About CGG

CGG (www.cgg.com) is a global technology and HPC leader that provides data, products, services and solutions in Earth science, data science, sensing and monitoring. Our unique portfolio supports our clients in efficiently and responsibly solving complex digital, energy transition, natural resource, environmental, and infrastructure challenges for a more sustainable future. CGG employs around 3,300 people worldwide and is listed on the Euronext Paris SA (ISIN: 0013181864). 

Contacts


CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

 FINANCIAL STATEMENTS

Unaudited Interim Consolidated statements of operations

  Three months ended March 31,
(In millions of US$, except per share data) 2022 2021 Restated    
Operating revenues 175.4 208.6    
Other income from ordinary activities 0.2 0.2    
Total income from ordinary activities 175.6 208.8    
Cost of operations (136.9) (201.9)    
Gross profit 38.7 6.9    
Research and development expenses – net (3.2) (5.3)    
Marketing and selling expenses (7.3) (7.5)    
General and administrative expenses (16.3) (16.7)    
Other revenues (expenses) – net (0.8) 2.0    
Operating income (loss) 11.1 (20.6)    
Expenses related to financial debt (26.0) (34.7)    
Income provided by cash and cash equivalents 0.3 0.3    
Cost of financial debt, net (25.7) (34.4)    
Other financial income (loss) 6.9 (38.4)    
Income (loss) before incomes taxes (7.7) (93.4)    
Income taxes (8.6) (3.6)    
Net income (loss) from consolidated companies before share of income (loss) in companies accounted for under the equity method (16.3) (97.0)    
Share of income (loss) in companies accounted for under the equity method 0.2    
Net income (loss) from continuing operations (16.3) (96.8)    
Net income (loss) from discontinued operations (2.2) 11.5    
Net income (loss) (18.5) (85.3)    
Attributable to :        
Owners of CGG S.A (17.5) (87.2)    
Non-controlling interests (1.0) 1.9    
Net income (loss) per share        
Basic (0.02) (0.12)    
Diluted (0.02) (0.12)    
Net income (loss) from continuing operations per share        
Basic (0.02) (0.14)    
Diluted (0.02) (0.14)    
Net income (loss) from discontinued operations per share        
Basic 0.02    
Diluted 0.02    

Unaudited Consolidated statements of financial position

(In millions of US$) March 31, 2022 December 31, 2021
ASSETS    
Cash and cash equivalents 388.1 319.2
Trade accounts and notes receivable, net 216.9 350.7
Inventories and work-in-progress, net 214.5 197.3
Income tax assets 61.4 68.7
Other current financial assets, net 1.7 1.7
Other current assets, net 117.1 105.1
Assets held for sale, net
Total current assets 999.7 1,042.7
Deferred tax assets 17.1 19.6
Other non-current assets, net 3.4  
Investments and other financial assets, net 17.4 17.8
Investments in companies under the equity method 28.1 28.1
Property, plant and equipment, net 204.2 212.1
Intangible assets, net 532.7 520.7
Goodwill, net 1,082.1 1,083.6
Total non-current assets 1,885.0 1,881.9
TOTAL ASSETS 2,884.7 2,924.6
LIABILITIES AND EQUITY    
Bank overdrafts
Financial debt – current portion 111.6 90.3
Trade accounts and notes payables 73.6 76.4
Accrued payroll costs 86.2 105.4
Income taxes payable 29.0 30.4
Advance billings to customers 28.5 27.1
Provisions — current portion 17.6 18.2
Other current financial liabilities 19.4 19.2
Other current liabilities 212.6 218.2
Liabilities directly associated with the assets classified as held for sale
Total current liabilities 578.5 585.2
Deferred tax liabilities 18.3 14.1
Provisions — non-current portion 31.3 30.6
Financial debt – non-current portion 1,201.6 1,218.1
Other non-current financial liabilities 32.6 37.4
Other non-current liabilities 30.4 32.8
Total non-current liabilities 1,314.2 1,333.0
Common stock: 1,191,396,643 shares authorized and 711,791,271 shares with a €0.01 nominal value outstanding at March 31, 2021 8.7 8.7
Additional paid-in capital 464.6 464.1
Retained earnings 552.8 570.0
Other Reserves 17.0 5.0
Treasury shares (20.1) (20.1)
Cumulative income and expense recognized directly in equity (5.1) (0.8)
Cumulative translation adjustment (68.8) (64.2)
Equity attributable to owners of CGG S.A. 949.1 962.7
Non-controlling interests 42.9 43.7
Total equity 992.0 1,006.4
TOTAL LIABILITIES AND EQUITY 2,884.7 2,924.6

Unaudited Consolidated statements of cash flows

  Three months ended March 31,
(In millions of US$) 2022 2021
OPERATING    
Net income (loss) (18.5) (85.3)
Less: Net income (loss) from discontinued operations 2.2 (11.5)
Net income (loss) from continuing operations (16.3) (96.8)
Depreciation, amortization and impairment 22.2 24.0
Earth Data surveys impairment and amortization 31.0 25.6
Depreciation and amortization capitalized in Earth Data surveys (3.8) (4.5)
Variance on provisions (0.8) (20.3)
Share-based compensation expenses 0.7 0.9
Net (gain) loss on disposal of fixed and financial assets (0.1)
Equity (income) loss of investees (0.2)
Dividends received from investments in companies under the equity method
Other non-cash items (6.9) 38.4
Net cash-flow including net cost of financial debt and income tax 26.0 (32.9)
Less : net cost of financial debt 25.7 34.4
Less : income tax expense (gain) 8.6 3.6
Net cash-flow excluding net cost of financial debt and income tax 60.3 5.1
Income tax paid 1.7 (4.5)
Net cash-flow before changes in working capital 62.0 0.6
Changes in working capital 67.8 104.1
– change in trade accounts and notes receivable 122.5 75.7
– change in inventories and work-in-progress (20.5) 22.5
– change in other current assets (6.7) (6.0)
– change in trade accounts and notes payable (7.8)
– change in other current liabilities (19.7) 11.9
Net cash-flow provided by operating activities 129.8 104.7
INVESTING    
Total capital expenditures (including variation of fixed assets suppliers, excluding Earth Data surveys) (9.6) (12.1)
Investment in Earth Data surveys, net cash (32.7) (30.0)
Proceeds from disposals of tangible and intangible assets 0.1
Total net proceeds from financial assets (2.4)
Acquisition of investments, net of cash and cash equivalents acquired (1.4)
Variation in loans granted
Variation in subsidies for capital expenditures (0.1)
Variation in other non-current financial assets
Net cash-flow used in investing activities (43.8) (44.4)
  Three months ended March 31,
(In millions of US$) 2022 2021  
FINANCING      
Repayment of long-term debt  
Total issuance of long-term debt  
Lease repayments (13.1) (14.7)  
Change in short-term loans (0.1)  
Financial expenses paid (0.2) (6.9)  
Net proceeds from capital increase: 0.4    
— from shareholders 0.4  
— from non-controlling interests of integrated companies  
Dividends paid and share capital reimbursements:      
— to shareholders  
— to non-controlling interests of integrated companies  
Acquisition/disposal from treasury shares  
Net cash-flow provided by (used in) financing activities (12.9) (21.7)  
Effects of exchange rates on cash 0.1 (6.7)  
Impact of changes in consolidation scope  
Net cash flows incurred by discontinued operations (4.3) (10.3)  
Net increase (decrease) in cash and cash equivalents 68.9 21.6  
Cash and cash equivalents at beginning of year 319.2 385.4  
Cash and cash equivalents at end of period 388.1 407.0  

Attachment

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