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, 2021 – CGG (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
Positive quarterly Net Cash Flow and Liquidity of $407m
|
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
