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CGG: CGG Announces its Q1 2021 Results

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·17 min read
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CGG Announces its Q1 2021 Results

Positive Net Cash Flow and Successful Refinancing

Seasonal Soft Quarter with Solid Equipment Performance

2021 Financial Objectives Confirmed

PARIS, France – May 12, 2021CGG (ISIN: FR0013181864), a world leader in Geoscience, announced today its first quarter 2021 non-audited results.

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

With our successful refinancing we delivered the last milestone in our CGG 2021 strategy while normalizing our capital structure. We are now actively developing our new ambitions, focusing on growing our core highly differentiated businesses as the market gradually strengthens, and accelerating our growth beyond the core into sectors, including digitalization, observation & monitoring, and energy transition.
As anticipated, we continued to execute projects from our Geoscience backlog and delivered land equipment for the Saudi mega crews this quarter. Multi-Client saw a seasonal low first quarter and some shift in timing of sales. Overall, we generated $28m of positive net cash flow this quarter. With oil price firming up above the $60/bbl level, we started to see in March a resumption in commercial activity and contract awards, which gives us confidence in our 2021 financial objectives. “

Q1 2021: A seasonal soft quarter with solid Equipment performance

*Adjusted indicators represent supplementary information adjusted for non-recurring charges triggered by economic downturn.



Positive quarterly Net Cash Flow and Liquidity of $407m

Successful $1.2Bn Senior Secured Notes Debt Refinancing

Key Figures - First Quarter 2021

Key Figures IFRS - Quarter
In million $

2020
Q1

2021
Q1

Variances
%

Operating revenues

253

209

(17)%

Operating Income

(40)

(14)

65%

Equity from Investment

-

-

-

Net cost of financial debt

(33)

(34)

(4)%

Other financial income (loss)

6

(38)

-

Income taxes

(5)

(5)

(12)%

Net Income / Loss from continuing operations

(72)

(92)

(29)%

Net Income / Loss from discontinued operations

(27)

11

143%

Group net income / (loss)

(98)

(81)

18%

Operating Cash Flow

145

105

(28)%

Net Cash Flow

17

28

65%

Net debt

705

987

40%

Net debt before lease liabilities

540

845

56%

Capital employed

2,202

2,072

(6)%


Key Segment Figures - First Quarter 2021

Key Segment Figures - Quarter
In million $

2020
Q1

2021
Q1

Variances
%

Segment revenue

271

213

(21)%

Segment EBITDAs

123

36

(71)%

Group EBITDAs margin

45%

17%

(28) bps

Segment operating income

(31)

(11)

65%

Opinc margin

(11)%

(5)%

6 bps

IFRS 15 adjustment

(9)

(3)

63%

IFRS operating income

(40)

(14)

65%

Operating Cash Flow

145

105

(28)%

Net Segment Cash Flow

17

28

65%

Supplementary information

Adjusted segment EBITDAs before NRC

125

39

(68)%

EBITDAs margin

46%

19%

(27) bps

Adjusted segment operating income before NRC

40

(12)

(130)%

Opinc margin

15%

(6)%

(28) bps

Key figures bridge: Segment to IFRS - First Quarter 2021

P&L items
In million $

Segment figures

IFRS 15 adjustment

IFRS figures

Total Revenue

213

(4)

209

OPINC

(11)

(3)

(14)

Cash Flow Statement items
In million $

Segment figures

IFRS 15 adjustment

IFRS figures

EBITDAs

36

(4)

32

Change in Working Capital & Provisions

73

4

77

Cash Provided by Operations

105

(0)

105

Multi-Client Data Library NBV
In million $

Segment figures

IFRS 15 adjustment

IFRS figures

Opening Balance Sheet , Dec 20

285

207

492

Closing Balance Sheet , Mar 21

291

204

495

First Quarter 2021 Segment Financial Results

Geology, Geophysics & Reservoir (GGR)

Geology, Geophysics & Reservoir (GGR)
In million $

2020
Q1

2021
Q1

Variances
%

Segment revenue

197

100

(49)%

Geoscience (SIR)

93

66

(29)%

Multi-Client

104

34

(67)%

Prefunding

57

15

(74)%

After-Sales

47

19

(59)%

Segment EBITDAs

123

28

(77)%

EBITDAs Margin

62%

28%

(34) bps

Segment operating income

(22)

(8)

63%

OPINC Margin

(11)%

(8)%

3 bps

Equity from investments

-

-

-

Capital employed (in billion $)

1.7

1.6

(6)%

Supplementary information

Adjusted segment EBITDAs before NRC

124

31

(75)%

EBITDAs Margin

63%

31%

(32) bps

Adjusted segment OPINC before NRC

48

(11)

(123)%

OPINC Margin

24%

(11)%

(35) bps

Other Key Metrics

Multi-Client cash capex ($m)

(67)

(30)

(55)%

Multi-Client cash prefunding rate (%)

85%

50%

(35) bps

GGR segment revenue was $100 million, down (49)% year-on-year.

  • Geoscience revenue was $66 million, down (29)% year-on-year.

    Geoscience continued to deliver its backlog and reached an inflection point this quarter. After a year of drastic spending cuts, clients’ priorities this quarter were on development projects. Commercial activity and contract awards resumed in March, especially in North and South America, and the overall level of commercial bids was up 10% during the month of March.

    We continue to actively develop and promote our high end technology for digitalization, energy transition and monitoring markets where we have recently been awarded a few projects.

  • Multi-Client revenue was $34 million, down (67)% year-on-year.

    Multi-client cash capex was $(30) million this quarter, (55)% lower than in Q1 2020, as we had one marine streamer multi-client program offshore Brazil. Prefunding revenue of our multi-client projects was $15 million and prefunding rate was 50%.

    Multi-client after-sales were at $19 million this quarter as we saw a seasonally slow first quarter with some sales shifting into Q2/H2.

    The segment library Net Book Value was $291 million ($495 million after IFRS 15 adjustments) at the end of March 2021, split 85% offshore and 15% onshore.

GGR segment EBITDAs was $28 million and GGR Adjusted* segment EBITDAs was $31 million, a 31% margin.

GGR segment operating income was $(8) million and GGR Adjusted* segment operating income was $(11) million.

GGR capital employed decreased to $1.6 billion at the end of March 2021.

Equipment

Equipment
In million $

2020
Q1

2021
Q1

Variances
%

Segment revenue

75

113

52%

Land

53

100

91%

Marine

13

7

(49)%

Downhole gauges

7

4

(49)%

Non Oil & Gas

2

3

27%

Segment EBITDAs

8

15

98%

EBITDAs margin

10%

14%

3 bps

Segment operating income

0

7

-

OPINC Margin

0%

6%

6 bps

Capital employed (in billion $)

0.5

0.6

11%

Supplementary information

Adjusted segment EBITDAs before NRC

8

16

103%

EBITDAs margin

10%

14%

4 bps

Adjusted segment OPINC before NRC

0

8

-

OPINC Margin

0%

7%

7 bps

Equipment segment revenue was strong this quarter at $113 million, up 52% year-on-year.

  • Land equipment sales represented 89% of total sales, as we delivered in Q1 over 125,000 channels and 50 vibrators worldwide, primarily for large mega-crews in Saudi Arabia. Sercel also delivered WiNG land node systems to new clients.

  • Marine equipment sales represented 6% of total sales.

  • Downhole equipment sales were $4 million and sales from non Oil & Gas equipment were $3 million

Equipment segment EBITDAs was $15 million and Equipment Adjusted* segment EBITDAs was $16 million, a 14% margin.

Equipment segment operating income was $7 million and Equipment Adjusted* segment operating income was $8 million, a 7% margin.

Equipment capital employed increased to $0.6 billion at the end of March 2021.

First Quarter 2021 Financial Results

Consolidated Income Statements
In million $

2020
Q1

2021
Q1

Variances
%

Exchange rate euro/dollar

1.11

1.22

10%

Segment revenue

271

213

(21)%

GGR

197

100

(49)%

Equipment

72

113

57%

Elim & Other

1

(1)

(169)%

Segment Gross Margin

73

17

(77)%

Segment EBITDAs

123

36

(71)%

GGR

124

31

(75)%

Equipment

8

16

103%

Corporate

(6)

(6)

10%

Elim & Other

(1)

(2)

(112)%

Severance costs

(2)

(3)

(75)%

Segment operating income

(31)

(11)

65%

GGR

48

(11)

(123)%

Equipment

0

8

-

Corporate

(7)

(7)

(6)%

Elim & Other

(1)

(2)

(133)%

Non recurring charges

(71)

1

102%

IFRS 15 adjustment

(9)

(3)

63%

IFRS operating income

(40)

(14)

65%

Equity from investments

-

-

-

Net cost of financial debt

(33)

(34)

(4)%

Other financial income (loss)

6

(38)

-

Income taxes

(5)

(5)

(12)%

NRC (Tax & OFI)

-

-

-

Net income / (loss) from continuing operations

(72)

(92)

(29)%

Net income / (loss) from discontinued operations

(27)

11

143%

IFRS net income / (loss)

(98)

(81)

18%

Shareholder's net income / (loss)

(99)

(82)

17%

Basic Earnings per share in $

(0.14)

(0.12)

17%

Basic Earnings per share in €

(0.13)

(0.10)

25%

Segment revenue was $213 million, down (21)% year-on-year. The respective contributions from the Group’s businesses were 31% from Geoscience, 16% from Multi-Client (47% for the GGR segment) and 53% from Equipment.

Segment EBITDAs was $36 million and Adjusted* segment EBITDAs was $39 million, down (68)% year-on-year, a 19% margin due to the unfavorable business mix.

Segment operating income was $(11) million and Adjusted* segment operating income was $(12) million.

IFRS 15 adjustment at operating income level was $(3) million and IFRS operating income, after IFRS 15 adjustment, was $(14) million.

Cost of financial debt was $(34) million. The total amount of interest paid during the quarter was $(7) million. Other Financial Items were at $(38) million, mainly from refinancing costs, including $(14)m call premiums and $(26)m fees.

Taxes were at $(5) million.

Net loss from continuing operations was $(92) million.

Discontinued operations : Correspond to the former Contractual Data Acquisition and Non-Operated Resources segments. Main aggregates are as follows:

- Q1 revenue from discontinued operations was $6 million.

- Net profit from discontinued operations was $11 million this quarter

- Net Cash flow from discontinued operations was $1 million

Group net loss was $(81) million.

After minority interests, Group net loss attributable to CGG shareholders was $(82) million/ €(68) million.

First Quarter 2021 Cash Flow

Cash Flow items
In million $

2020
Q1

2021
Q1

Variances
%

Segment Operating Cash Flow

145

105

(28)%

CAPEX

(87)

(42)

(52)%

Industrial

(8)

(4)

(54)%

R&D

(13)

(8)

(33)%

Multi-Client (Cash)

(67)

(30)

(55)%

Marine MC

(51)

(30)

(43)%

Land MC

(15)

(1)

(97)%

Proceeds from disposals of assets

-

(2)

-

Segment Free Cash Flow

58

60

4%

Lease repayments

(14)

(15)

6%

Paid Cost of debt

(7)

(7)

6%

CGG 2021 Plan

(28)

(11)

(61)%

Free cash flow from discontinued operations

9

1

-

Net Cash flow

17

28

65%

Financing cash flow

-

-

-

Forex and other

(4)

(7)

64%

Net increase/(decrease) in cash

13

22

65%

Supplementary information

Change in working capital and provisions, included in Segment Operating Cash Flow

21

73

-

From severance cash costs

(1)

(6)

-

Segment Free Cash Flow before severance cash costs

59

66

12%

Total capex was $(42) million:

  • Industrial capex was $(4) million,

  • Research & Development capex was $(8) million,

  • Multi-client cash capex was $(30) million

Segment Free Cash Flow was $60 million, including $73 million positive change in working capital.

After $(15) million lease repayments, $(7) million paid cost of debt, $(11) million 2021 Plan cash costs and $1 million free cash flow from discontinued operations, Net Cash Flow was $28 million.

Balance Sheet

Group’s liquidity amounted to $407 million at the end of March 31, 2021.

Group gross debt before IFRS 16 was $1,252 million at the end of March 31, 2021 and net debt was $845 million.

Group gross debt after IFRS 16 was $1,394 million at the end of March 31, 2021 and net debt was $987 million.

Segment leverage ratio of Net debt to Adjusted segment EBITDAs was 3.1x at the end of March 2021.

Q1 2021 Conference call

An English language analysts’ conference call is scheduled today at 8:00 am (Paris time) – 7:00 am (London time)

To follow this conference, please access the live webcast:

From your computer at:

www.cgg.com


A replay of the conference will be available via webcast on the CGG website at: www.cgg.com.

For analysts, please dial the following numbers 5 to 10 minutes prior to the scheduled start time:

France call-in:

+33 (0) 1 70 70 07 81

UK call-in:

+44(0) 844 4819 752

Access Code:

7693239

About CGG

CGG (www.cgg.com) is a global geoscience technology leader. Employing around 3,700 people worldwide, CGG provides a comprehensive range of data, products, services and solutions that support our clients to more efficiently and responsibly solve complex natural resource, environmental and infrastructure challenges. CGG is listed on the Euronext Paris SA (ISIN: 0013181864).

Contacts

Group Communications & Investor Relations
Christophe Barnini
Tel: + 33 1 64 47 38 11
E-Mail: christophe.barnini@cgg.com

CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021

Unaudited Interim Consolidated statements of operations

Three months ended March 31,

(In millions of US$, except per share data)

2021

2020

Operating revenues

208.6

252.7

Other income from ordinary activities

0.2

0.3

Total income from ordinary activities

208.8

253.0

Cost of operations

(195.3)

(188.7)

Gross profit

13.5

64.3

Research and development expenses - net

(5.3)

(4.4)

Marketing and selling expenses

(7.5)

(9.1)

General and administrative expenses

(16.7)

(18.7)

Other revenues (expenses) - net

2.0

(71.9)

Operating income (loss)

(14.0)

(39.8)

Expenses related to financial debt

(34.7)

(33.9)

Income provided by cash and cash equivalents

0.3

1.0

Cost of financial debt, net

(34.4)

(32.9)

Other financial income (loss)

(38.4)

5.7

Income (loss) before incomes taxes

(86.8)

(67.0)

Income taxes

(5.4)

(4.8)

Net income (loss) from consolidated companies before share of income (loss) in companies accounted for under the equity method

(92.2)

(71.8)

Share of income (loss) in companies accounted for under the equity method

0.2

0.3

Net income (loss) from continuing operations

(92.0)

(71.5)

Net income (loss) from discontinued operations

11.5

(26.9)

Net income (loss)

(80.5)

(98.4)

Attributable to :


Owners of CGG S.A

(82.4)

(99.4)

Non-controlling interests

1.9

1.0

Net income (loss) per share

Basic

(0.12)

(0.14)

Diluted

(0.12)

(0.14)

Net income (loss) from continuing operations per share

Basic

(0.13)

(0.10)

Diluted

(0.13)

(0.10)

Net income (loss) from discontinued operations per share

Basic

(0.01)

(0.04)

Diluted

(0.01)

(0.04)

Unaudited Consolidated statements of financial position

(In millions of US$)

March 31,
2021

December 31, 2020

ASSETS

Cash and cash equivalents

407.0

385.4

Trade accounts and notes receivable, net

288.1

325.0

Inventories and work-in-progress, net

207.8

237.8

Income tax assets

83.2

84.6

Other current financial assets, net

-

13.7

Other current assets, net

88.2

92.0

Assets held for sale, net

120.2

117.7

Total current assets

1,194.5

1,256.2

Deferred tax assets

9.7

10.3

Investments and other financial assets, net

13.5

13.6

Investments in companies under the equity method

3.7

3.6

Property, plant and equipment, net

247.6

268.1

Intangible assets, net

638.4

639.2

Goodwill, net

1,186.2

1,186.5

Total non-current assets

2,099.1

2,121.3

TOTAL ASSETS

3,293.6

3,377.5

LIABILITIES AND EQUITY

Bank overdrafts

0.1

0.2

Financial debt – current portion

82.2

58.6

Trade accounts and notes payables

112.5

96.7

Accrued payroll costs

114.5

106.6

Income taxes payable

47.1

56.8

Advance billings to customers

21.6

19.5

Provisions — current portion

32.6

52.7

Other current financial liabilities

18.5

34.4

Other current liabilities

301.8

278.6

Liabilities directly associated with the assets classified as held for sale

15.4

13.0

Total current liabilities

746.3

717.1

Deferred tax liabilities

15.1

16.3

Provisions — non-current portion

44.2

51.8

Financial debt – non-current portion

1,311.6

1,330.3

Other non-current financial liabilities

48.4

53.0

Other non-current liabilities

42.9

44.4

Total non-current liabilities

1,462.2

1,495.8

Common stock: 1,194,005,823 shares authorized and 711,394,241 shares with a €0.01 nominal value outstanding at March 31, 2021

8.7

8.7

Additional paid-in capital

1,687.1

1,687.1

Retained earnings

(559.7)

(480.6)

Other Reserves

(24.1)

(37.3)

Treasury shares

(20.1)

(20.1)

Cumulative income and expense recognized directly in equity

(1.1)

(0.7)

Cumulative translation adjustment

(52.2)

(37.4)

Equity attributable to owners of CGG S.A.

1,038.6

1,119.7

Non-controlling interests

46.5

44.9

Total equity

1,085.1

1,164.6

TOTAL LIABILITIES AND EQUITY

3,293.6

3,377.5

Unaudited Consolidated statements of cash flows

Three months ended March 31,

(In millions of US$)

2021

2020

OPERATING

Net income (loss)

(80.5)

(98.4)

Less: Net income (loss) from discontinued operations

11.5

(26.9)

Net income (loss) from continuing operations

(92.0)

(71.5)

Depreciation, amortization and impairment

24.0

30.5

Multi-client surveys impairment and amortization

25.6

116.8

Depreciation and amortization capitalized in Multi-client surveys

(4.5)

(4.3)

Variance on provisions

(20.3)

(2.2)

Share-based compensation expenses

0.9

1.4

Net (gain) loss on disposal of fixed and financial assets

Equity (income) loss of investees

(0.2)

(0.3)

Dividends received from investments in companies under the equity method

Other non-cash items

38.4

(3.1)

Net cash-flow including net cost of financial debt and income tax

(28.1)

67.3

Less : net cost of financial debt

34.4

32.9

Less : income tax expense (gain)

5.4

4.8

Net cash-flow excluding net cost of financial debt and income tax

11.7

105.0

Income tax paid

(4.5)

(0.8)

Net cash-flow before changes in working capital

7.2

104.2

Changes in working capital

97.5

41.0

- change in trade accounts and notes receivable

69.1

80.8

- change in inventories and work-in-progress

22.5

(16.2)

- change in other current assets

(6.0)

(4.7)

- change in trade accounts and notes payable

16.5

- change in other current liabilities

11.9

(35.4)

Net cash-flow provided by operating activities

104.7

145.2

INVESTING

Total capital expenditures (including variation of fixed assets suppliers, excluding Multi-client surveys)

(12.1)

(20.6)

Investment in Multi-client surveys, net cash

(30.0)

(66.8)

Proceeds from disposals of tangible and intangible assets

0.1

0.1

Total net proceeds from financial assets

(2.4)

Acquisition of investments, net of cash and cash equivalents acquired

Variation in loans granted

Variation in subsidies for capital expenditures

Variation in other non-current financial assets

9.0

Net cash-flow used in investing activities

(44.4)

(78.3)


Three months ended March 31,

(In millions of US$)

2021

2020

FINANCING

Repayment of long-term debt

Total issuance of long-term debt

Lease repayments

(14.7)

(14.0)

Change in short-term loans

(0.1)

Financial expenses paid

(6.9)

(7.4)

Net proceeds from capital increase:


— from shareholders

— 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

(21.7)

(21.4)

Effects of exchange rates on cash

(6.7)

(13.2)

Impact of changes in consolidation scope

Net cash flows incurred by discontinued operations

(10.3)

(19.3)

Net increase (decrease) in cash and cash equivalents

21.6

13.0

Cash and cash equivalents at beginning of year

385.4

610.5

Cash and cash equivalents at end of period

407.0

623.5

Attachment


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