CGG Announces its Q1 2022 Results  

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, 2022 – CGG (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

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

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

• CGG Announces its Q1 2022 Results