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Soft Q3 as clients’ projects shifted to Q4 and 2023
2022 segment revenue expected to be around $900m,
stable pro-forma year-on-year
2022 segment EBITDAs expected to be around $380m, up 10% and up 15% pro-forma year-on-year
Strengthening market confirms favorable upcycle
PARIS, France – November 2, 2022 – CGG (ISIN: FR0013181864), a global technology and high-performance computing (HPC) leader announced today its third quarter 2022 non-audited results.
Commenting on these results, Sophie Zurquiyah, CGG CEO, said:
“Throughout the year we continued to see our market environment strengtheningglobally, mainly driven by increased interest and activity offshore in the Western hemisphere and onshore in the Middle East and North Africa. While stronger market conditions have led to increased commercial activity, confirming the expected multi-year upcycle, near-term macro and geopolitical uncertainties resulted in increased volatility andclients’projectsshift. This particularly affected our Sensing and Monitoring business, which willseesignificantgrowth in 2023.However, ourData, Digital and Energy transition business remains solid with growth in line with increasedE&PCapex.We anticipate astrongQ4 led by Earth Data sales.We remain focused on capturing the upcycle ahead of us and increasing our topline, with the objective of deleveraging our balance sheet.This growth will be supported by our clear technology differentiation, strong focus on our clients’ priorities, and the ongoing development of our Beyond the Corebusinesses.”
Q3 2022: A soft quarter as clients’ projects shifted to Q4 and 2023
9 months 2022: Profitability improvement
Balance Sheet at the end of September
Full Year 2022 financial guidance update:
* 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 triggered by economic downturn.
Key Figures - Third Quarter 2022 Key Figures IFRS
In million $ 2021
Q3 2022
Q3Variances %Operating revenues21025521%Operating Income212835%Equity from Investment(0)0-Net cost of financial debt(27)(24)9%Other financial income (loss)(0)(1)-Income taxes(7)(4)45%Net Income / Loss from continuing operations(13)(1)91%Net Income / Loss from discontinued operations(3)(0)-Group net income / (loss)(16)(2)90%Operating Cash Flow7637(51%)Net Cash Flow(34)(78)-Net debt1,113976(12%)Net debt before lease liabilities987889(10%)Capital employed2,1372,006(6%)
Key Figures – End of September 2022 Key Figures IFRS
In million $ 2021
9 MONTHS 2022
9 MONTHSVariances %Operating revenues59165911%Operating Income(0)97-Equity from Investment0(0)-Net cost of financial debt(94)(75)21%Other financial income (loss)(42)2-Income taxes(17)(27)(54%)Net Income / Loss from continuing operations(154)(2)99%Net Income / Loss from discontinued operations2(2)-Group net income / (loss)(152)(4)97%Operating Cash Flow2352433%Net Cash Flow(61)(65)(6%)Net debt1,113976(12%)Net debt before lease liabilities987889(10%)Capital employed2,1372,006(6%)
Key Segment Figures - Third Quarter 2022 Key Segment Figures
In million $ 2021
Q3 2022
Q3Variances %Segment revenue270217(20%)Segment EBITDAs11877(35%)Group EBITDAs margin44%35%(8) bpsSegment operating income3325(23%) Opincmargin12%12%(1) bpsIFRS 15 adjustment(13)2-IFRS operating income212835%Operating Cash Flow7637(51%)Net Segment Cash Flow(34)(78)-Supplementary information Adjusted segment EBITDAs before NRC11975(37%)EBITDAs margin44%35%(10) bpsAdjusted segment operating income before NRC3524(32%) Opincmargin13%11%(2) bps
Key Segment Figures – End of September 2022Key Segment Figures In million $ 2021
9 MONTHS 2022
9 MONTHSVariances %Segment revenue640610(5%)Segment EBITDAs19024127%Group EBITDAs margin30%40%10 bpsSegment operating income986- Opincmargin1%14%13 bpsIFRS 15 adjustment(9)11-IFRS operating income(0)97-Operating Cash Flow2352433%Net Segment Cash Flow(61)(65)(6%) Supplementary information Adjusted segment EBITDAs before NRC18823626%EBITDAs margin29%39%9 bpsAdjusted segment operating income before NRC082- Opincmargin0%13%13 bps
Key figures bridge: Segment to IFRS - Third Quarter 2022 P&L items
In million $Segment figuresIFRS 15 adjustmentIFRS figuresTotal Revenue21738255 OPINC25228 Cash Flow Statement items
In million $Segment figuresIFRS 15 adjustmentIFRS figuresEBITDAs7738115Change in Working Capital & Provisions(40)(38)(77)Cash Provided by Operations37-37 Earth Data Data Library NBV
In million $Segment figuresIFRS 15 adjustmentIFRS figuresOpening Balance Sheet , Jul 1st 22334109443Closing Balance Sheet , Sep 30th 2237574449
Key figures bridge: Segment to IFRS – End of September 2022 P&L items
In million $Segment figuresIFRS 15 adjustmentIFRS figuresTotal Revenue61049659 OPINC861197 Cash Flow Statement items
In million $Segment figuresIFRS 15 adjustmentIFRS figuresEBITDAs24149290Change in Working Capital & Provisions9(49)(40)Cash Provided by Operations243-243 Earth Data Data Library NBV
In million $Segment figuresIFRS 15 adjustmentIFRS figuresOpening Balance Sheet , Jan 1st 22283109392Closing Balance Sheet , Sep 30th 2237574449
Third Quarter 2022 Segment Financial Results
Data, Digital & Energy Transition (DDE) Data, Digital & Energy Transition (DDE)
In million $ 2021
Q3 2022
Q3Variances %Segment revenue168131(22%)Geoscience7769(10%) Geoscience proforma64698%Earth Data9262(33%)Prefunding5919(68%)After-Sales324332% DDE proforma156131(16%)Segment EBITDAs10664(40%)EBITDAs Margin63%49%(14) bpsSegment operating income3021(31%) OPINCMargin18%16%(2) bpsEquity from investments(0)0-Capital employed (in billion $)1.71.5(12%) Supplementary information Adjusted segment EBITDAs before NRC10866(39%)EBITDAs Margin64%50%(14) bpsAdjusted segment OPINC before NRC3223(29%) OPINCMargin19%17%(2) bps Other Key Metrics Earth Data cash capex ($m)(57)(72)26%Earth Data cash prefunding rate (%)103%26%(77) bps
Digital, Data and Energy Transition (DDE) segment revenue was $131 million, down (22%) and down (16)% pro-forma* year-on-year.
Sequentially, Geoscience revenue was stable this quarter supported by strong activity in the Americas and demand for high-end technology. Geoscience commercial activity is increasing worldwide with high level of bid submissions, up 26% year-on-year, and order intake up 37% year-on-year, during the first 9 months of 2022.
Earth Data cash capex was $(72) million this quarter, up 26% year-on-year. In Q3, we had two vessels acquiring data for our program in the Norwegian North Sea and one vessel offshore Brazil. Prefunding revenue of our Earth Data projects was low at $19 million as some prefunding for North Sea and Brazil multi-client programs shifted to Q4. Prefunding rate was low this quarter at 26%.
Earth Data after-sales were $43 million this quarter, up 32% year-on-year sustained by sales in South America, Gulf of Mexico and the North Sea.
The segment library Net Book Value was $375 million ($449 million after IFRS 15 adjustments) at the end of September 2022, split 94% offshore and 6% onshore.
DDE segment EBITDAs was $64 million, a 49% margin, and DDE adjusted** segment EBITDAs was $66 million.
DDE segment operating income was $21 million, a 16% margin, and DDE adjusted** segment operating income was $23 million.
DDE capital employed decreased to $1.5 billion at the end of September 2022.
Sensing & Monitoring Sensing & Monitoring
In million $ 2021
Q3 2022
Q3Variances %Segment revenue10186(15%)Land405025%Marine5522(60%)Downhole gauges2472% Beyond the Core410-Segment EBITDAs17187%EBITDAs margin17%21%4 bpsSegment operating income91119% OPINCMargin9%13%4 bpsCapital employed (in billion $)0.60.611% Supplementary information Adjusted segment EBITDAs before NRC1715(11%)EBITDAs margin17%17%1 bpsAdjusted segment OPINC before NRC98(16%) OPINCMargin9%9%(0) bps
Sensing & Monitoring (SMO) segment revenue was $86 million, down (15)% year-on-year.
SMO segment EBITDAs was $18 million, a 21% margin and SMO adjusted** segment EBITDAs was $15 million.
SMO segment operating income was $11 million, a 13% margin and SMO adjusted** segment operating income was $8 million.
SMO capital employed increased to $0.6 billion at the end of September 2022.
Third Quarter 2022 Financial Results
2022 Financial Results Consolidated Income Statements
In million $ 2021
Q3 2022
Q3Variances %Exchange rate euro/dollar1.191.02(14%)Segment revenue270217(20%)DDE168131(22%)DDE proforma156131(16%)Sensing & Monitoring10186(15%)Elim & Other(0)0-Proforma revenue for Group257217(16%)Segment Gross Margin6454(15%)Segment EBITDAs11877(35%)DDE Adjusted**10766(38%)Sensing & Monitoring Adjusted**1715(11%)Corporate(5)(5)6%Elim & Other(1)(1)(4%) Non recurring charges02-Segment operating income3325(23%)DDE Adjusted**3023(24%)Sensing & Monitoring Adjusted**98(16%)Corporate(5)(5)(11%)Elim & Other(2)(1)50% Non recurring charges(3)2-IFRS 15 adjustment(13)2-IFRS operating income212835%Equity from investments(0)0-Net cost of financial debt(27)(24)9%Other financial income (loss)(0)(1)-Income taxes(7)(4)45%NRC (Tax & OFI)---Net income / (loss) from continuing operations(13)(1)91%Net income / (loss) from discontinued operations(3)(0)88%IFRS net income / (loss)(16)(2)90%Shareholder's net income / (loss)(17)(1)94%Basic Earnings per share in $(0.02)-94%Basic Earnings per share in €(0.02)-94%
Segment revenue was $217 million, down (20)% and down (16)% pro-forma* year-on-year. The respective contributions from the Group’s businesses were 32% from Geoscience, 28% from Earth Data (60% for the DDE segment) and 40% from Sensing & Monitoring.
Segment EBITDAs was $77 million, down (35)% year-on-year, a 35% margin due to the unfavorable business mix and adjusted** segment EBITDAs was $75 million.
Segment operating income was $25 million, a 12% margin, and adjusted** segment operating income was $24 million.
IFRS 15 adjustment at operating income level was $2 million and IFRS operating income, after IFRS 15 adjustment, was $28 million.
Cost of financial debt was $(24) million. The total amount of interest paid during the quarter was $(1) million.
Taxes were at $(4) million.
Net income from continuing operations was $(1) million.
Group Net Income this quarter was $(2) million.
After minority interests, Group net income attributable to CGG shareholders was $ (2) million/ €(1) million.
Third Quarter 2022 Cash Flow Cash Flow items
In million $ 2021
Q3 2022
Q3Variances %Segment Operating Cash Flow7637(51%)CAPEX(73)(82)13% Industrial(8)(6)(26%)R&D(7)(4)(41%) Earth Data (Cash)(57)(72)26%Marine Offshore(57)(72)27%Land Onshore---Proceeds from disposals of assets(1)(16)-Segment Free Cash Flow2(61)- Lease repayments(14)(11)24% Paid Cost of debt---CGG 2021 Plan(7)(7)(9%)Free cash flow from discontinued operations(15)1-Net Cash flow(34)(78)- Financing cash flow(2)--Forex and other(9)(14)(52%)Net increase/(decrease) in cash(45)(92)- Supplementary information Change in working capital and provisions, included in Segment Operating Cash Flow(49)(40)-
Segment operating cash flow was $37m million, including $(40) million negative change in working capital & provisions mainly related to the SMO business.
Total capex was $(82) million:
Segment free cash flow was $(61) million, including $(19) million for the acquisition of the ION software business.
After $(11) million lease repayments, $(7) million CGG 2021 Plan cash costs and $1 million free cash flow from discontinued operations, the net cash flow was $(78) million.
9 months 2022 Financial Results Consolidated Income Statements
In million $ 2021
9 MONTHS 2022
9 MONTHSVariances %Exchange rate euro/dollar1.201.07(11%)Segment revenue640610(5%)DDE37944417%Proforma revenue for DDE34244430%Sensing & Monitoring262165(37%)Elim & Other(1)0-Proforma revenue for Group6036091%Segment Gross Margin83170-Segment EBITDAs19024127%DDE Adjusted**18826038%Sensing & Monitoring Adjusted**24(4)-Corporate(13)(16)(18%)Elim & Other(11)(3)69% Non recurring charges25-Segment operating income986-DDE Adjusted**28129-Sensing & Monitoring Adjusted**0(26)-Corporate(16)(18)(12%)Elim & Other(12)(4)69% Non recurring charges85(44%)IFRS 15 adjustment(9)11-IFRS operating income(0)97-Equity from investments0(0)-Net cost of financial debt(94)(75)21%Other financial income (loss)(42)2-Income taxes(17)(27)(54%)NRC (Tax & OFI)00-Net income / (loss) from continuing operations(154)(2)99%Net income / (loss) from discontinued operations2(2)-IFRS net income / (loss)(152)(4)97%Shareholder's net income / (loss)(154)(3)98%Basic Earnings per share in $(0.22)-94%Basic Earnings per share in €(0.22)-94%
Segment revenue was $610 million, down (5)% and slightly up pro-forma* compared to the same period last year. The respective contributions from the Group’s businesses were 35% from Geoscience, 38% from Earth Data (73% for the DDE segment) and 27% from SMO.
DDE segment revenue was $444 million, up 17% and up 30% pro-forma* year-on-year.
Geoscience revenue was $214 million, flat and up 19% pro-forma* year-on-year.
Earth Data sales were $230 million, up 41% year-on-year. Prefunding revenue was $69 million, down (25)% year-on-year. Earth Data cash capex was $(180) million, up 37% year-on-year. Cash prefunding rate at the end of September was 38%.
After-sales were $161 million, up 126% year-on-year.
SMO segment revenue was $165 million, down (37)% year-on-year.
Segment EBITDAs was $241 million, up 27% year-on-year, a 40% margin. DDE EBITDAs was $256 million, up 35% year-on-year, a high 58% margin, and Sensing & Monitoring EBITDA was $(1) million. Adjusted** segment EBITDAs was $236 million.
Segment operating income was $86 million, a 15% margin, significantly up from $9m a year ago, and adjusted** segment operating income was $82 million, including net positive impact from EUR/USD exchange rate estimated at $12m compared to last year.
IFRS 15 adjustment at operating income level was $11 million and IFRS operating income, after IFRS 15 adjustment, was $97 million.
Cost of financial debt was $(75) million. The total amount of interest paid during the first nine months 2022 was $(47) million.
Other financial items were $2 million.
Taxes were at $(27) million.
Net income from continuing operations was $(2) million.
Group net loss was $(4) million.
After minority interests, 2022 Group net income attributable to CGG’s shareholders at the end of September 2022 was $(2) million / €(1) million.
Cash Flow Cash Flow items
In million $ 2021
9 MONTHS 2022
9 MONTHSVariances %Segment Operating Cash Flow2352433%CAPEX(172)(210)22% Industrial(17)(15)(15%)R&D(24)(15)(37%) Earth Data (Cash)(131)(180)37%Marine Offshore(130)(179)38%Land Onshore(1)(1)-Proceeds from disposals of assets(4)1-Segment Free Cash Flow5935(42%) Lease repayments(44)(36)18% Paid Cost of debt(37)(47)(28%)CGG 2021 Plan(26)(19)26%Free cash flow from discontinued operations(14)2-Net Cash flow(61)(65)(6%) Financing cash flow(69)2-Forex and other(15)(31)-Net increase/(decrease) in cash(146)(94)35% Supplementary information Change in working capital and provisions, included in Segment Operating Cash Flow399
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Segment operating cash flow was $243 million up 3%, including $9 million positive change in working capital & provisions.
Capex was $(210) million, up 22% year-on-year:
Industrial capex was $(15) million, down (15)% year-on-year,
Research & development capex was $(15) million, down (37)% year-on-year,
Earth Data cash capex was $(180) million, up 37% year-on-year.
Segment free cash flow was $35 million, down (42)% year-on-year.
After lease repayments of $(36) million, $(47) million of interest expenses, $(19) millon of CGG Plan 2021 and $2 million free cash flow from discontinued operations, Group net cash flow was $(65) million, compared to $(61) million for the first 9 months of 2021.
Balance Sheet
Group’s liquidity amounted to $325 million at the end of September 30, 2022, including $225 million of cash liquidity and $100 million undrawn RCF.
Group gross debt before IFRS 16 was $1,114 million and net debt was $889 million at the end of September 30, 2022.
Group gross debt after IFRS 16 was $1,201 million and net debt was $976 million at the end of September 30, 2022.
Segment leverage ratio of Net debt to Adjusted** Segment EBITDAs was 2.5x at the end of September 2022.
* Pro-forma indicators represent supplementary information adjusted for GeoSoftware and Physical Asset Storage and Services businesses sold in 2021.
** Adjusted indicators represent supplementary information adjusted for non-recurring charges triggered by economic downturn.
Q3 2022 Conference call
An English language analysts conference call is scheduled today at 6.30 pm (CET)
Please note that we have switched to a new service provider for conference calls.
Participants should from now on register for the call here to receive a dial-in number and code or participate in the live webcast from here.
A replay of the conference call will be made available the day after for a period of 12 months in audio format on the Company's website www.cgg.com.
About CGG
CGG (www.cgg.com) is a global technology andHPCleader that provides data, products, services and solutions in Earth science, data science, sensing and monitoring. Our unique portfolio supports our clients in efficiently and responsibly solving complex digital, energy transition, natural resource, environmental, and infrastructure challenges for a more sustainable future. CGG employs around 3,300 people worldwide and is listed on the Euronext Paris SA (ISIN: 0013181864).
Contacts Group Communications & Investor Relations
Christophe Barnini
Tel: + 33 1 64 47 38 11
E-Mail: christophe.barnini@cgg.com
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
Unaudited Interim Consolidated statement of operations – Year-To-Date Nine months ended September 30,(In millions of US$, except per share data)20222021 Restated Operating revenues658.5590.6 Other income from ordinary activities0.50.5 Total income from ordinary activities659.0591.1 Cost of operations(477.8)(517.1) Gross profit181.274.0 Research and development expenses - net(12.5)(15.5) Marketing and selling expenses(21.8)(22.3) General and administrative expenses(51.0)(46.2) Other revenues (expenses) - net1.49.6 Operating income (loss)97.3(0.4) Cost of financial debt - gross(75.7)(95.2) Income provided by cash and cash equivalents1.10.9 Cost of financial debt, net(74.6)(94.3) Other financial income (loss)2.4(42.1) Income (loss) before incomes taxes and share of income (loss) from companies accounted for under the equity method25.1(136.8) Income taxes(26.6)(17.4) Net income (loss) before share of income (loss) from companies accounted for under the equity method(1.5)(154.2) Net income (loss) from companies accounted for under the equity method(0.1) Net income (loss) from continuing operations(1.6)(154.2) Net income (loss) from discontinued operations(2.4)2.1 Consolidated net income (loss)(4.0)(152.1) Attributableto : Owners of CGGS.A(2.8)(153.8) Non-controlling interests(1.2)1.7 Net income (loss) per share Basic—(0.22) Diluted—(0.22) Net income (loss) from continuing operations per share Basic—(0.22) Diluted—(0.22) Net income (loss) from discontinued operations per share Basic—0.00 Diluted—0.00
Unaudited Consolidated statement of financial position(In millions of US$)September 30, 2022December 31, 2021ASSETS Cash and cash equivalents225.1319.2Trade accounts and notes receivable, net283.6350.7Inventories and work-in-progress, net (a)242.2197.3Income tax assets61.868.7Other current financial assets, net0.11.7Other current assets, net83.6105.1Assets held for sale, net--Total current assets896.41,042.7Deferred tax assets15.419.6Other non-current assets, net24.017.8Investments and other financial assets, net2.8-Investments in companies under the equity method28.028.1Property, plant and equipment, net148.6212.1Intangible assets, net566.9520.7Goodwill, net1,100.01,083.6Total non-current assets1,885.71,881.9TOTAL ASSETS2,782.12,924.6LIABILITIES AND EQUITY Financial debt – current portion75.190.3Trade accounts and notes payables114.276.4Accrued payroll costs80.4105.4Income taxes payable29.030.4Advance billings to customers24.827.1Provisions — current portion17.918.2Other current financial liabilities19.719.2Other current liabilities174.2218.2Liabilities directly associated with the assets classified as held for sale--Total current liabilities535.3585.2Deferred tax liabilities21.614.1Provisions — non-current portion26.130.6Financial debt – non-current portion1,125.71,218.1Other non-current financial liabilities22.737.4Other non-current liabilities20.732.8Total non-current liabilities1,216.81,333.0Common stock: 1,148,203,130 shares authorized and 712,357,225 shares with a €0.01 nominal value outstanding at September 30, 20228.78.7Additional paid-in capital118.5464.1Retained earnings917.2570.0Other Reserves77.15.0Treasury shares(20.1)(20.1)Cumulative income and expense recognized directly in equity(2.4)(0.8)Cumulative translation adjustment(106.1)(64.2)Equity attributable to owners of CGG S.A.992.9962.7Non-controlling interests37.143.7Total equity1,030.01,006.4TOTAL LIABILITIES AND EQUITY2,782.12,924.6
Unaudited Consolidated statement of cash flows Nine months ended September 30,(In millions of US$)20222021 OPERATING ACTIVITIES Consolidated net income (loss)(4.0)(152.1) Less: Net income (loss) from discontinued operations2.4(2.1) Net income (loss) from continuing operations(1.6)(154.2) Depreciation, amortization and impairment65.276.9 Earth Data surveys impairment and amortization136.977.5 Depreciation and amortization capitalized in Earth Data surveys(11.7)(12.9) Variance on provisions(0.8)(32.3) Share-based compensation expenses2.3(0.7) Net (gain) loss on disposal of fixed and financial assets(3.9)(0.3) Share of (income) loss in companies recognized under equity method0.1— Dividends received from investments in companies under the equity method—— Other non-cash items(2.4)42.2 Net cash-flow including net cost of financial debt and income tax184.1(3.8) Less : Cost of financial debt74.694.3 Less : Income tax expense (gain)26.617.4 Net cash-flow excluding net cost of financial debt and income tax285.3107.9 Income tax paid(3.8)1.2 Net cash-flow before changes in working capital281.5109.1 Changes in working capital(38.8)126.1 - change in trade accounts and notes receivable30.0116.2 - change in inventories and work-in-progress(69.8)12.9 - change in other current assets5.1(12.2) - change in trade accounts and notes payable36.1(6.1) - change in other current liabilities(40.2)15.3 Net cash-flow from operating activities242.7235.2 INVESTING ACTIVITIES Total capital expenditures (tangible and intangible assets) net of variation of fixed assets suppliers, excluding Earth Data surveys)(29.6)(40.9) Investment in Earth Data surveys(179.9)(131.0) Proceeds from disposals of tangible and intangible assets33.10.2 Proceeds from divestment of activities and sale of financial assets4.8(2.4) Acquisition of investments, net of cash and cash equivalents acquired(36.7)(1.9) Variation in loans granted—— Variation in subsidies for capital expenditures(0.1)— Variation in other non-current financial assets(6.7)(2.3) Net cash-flow used in investing activities(215.1)(178.3) Nine months ended September 30,(In millions of US$)20222021 FINANCING ACTIVITIES Repayment of long-term debt—(1,227.5) Total issuance of long-term debt—1,160.0 Lease repayments(36.6)(43.7) Change in short-term loans—(0.2) Financial expenses paid(46.9)(36.7) Loan granted1.7(1.7) Net proceeds from capital increase:0.4 — from Owner of CGG0.4— — from non-controlling interests of integrated companies—— Dividends paid and share capital reimbursements: — to owners of CGG—— — to non-controlling interests of integrated companies(0.9)(3.6) Acquisition/disposal from treasury shares—— Net cash-flow provided by (used in) financing activities(82.2)(153.4) Effects of exchange rates on cash(23.1)(8.0) Impact of changes in consolidation scope—— Net cash flows incurred by discontinued operations(16.4)(41.2) Net increase (decrease) in cash and cash equivalents(94.1)(145.7) Cash and cash equivalents at beginning of year319.2385.4 Cash and cash equivalents at end of period225.1239.7
Attachment