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

  • IFRS figures: revenue at $209m, EBITDAs at $32m, OPINC at $(14)m
  • Segment revenue at $213m, down (21)% year-on-year
    Geoscience: Reached a low point as it continued to deliver its backlog
    Multi-client: Soft quarter with timing of some sales moved to Q2/H2
    Equipment: Solid operational & business performance driven by land equipment deliveries
  • Segment EBITDAs at $36m and Adjusted* Segment EBITDAs at $39m, a 19% margin due to revenue mix
  • Segment Operating Income at $(11)m and Adjusted* Segment Operating Income at $(12)m
  • Group Net loss at $(81)m
*Adjusted indicators represent supplementary information adjusted for non-recurring charges triggered by economic downturn.



Positive quarterly Net Cash Flow and Liquidity of $407m

  • Net Cash Flow at $28m
  • Liquidity of $407m and Net debt before IFRS 16 at $845m as of March 31, 2021
Successful $1.2Bn Senior Secured Notes Debt Refinancing
  • Normalization of capital structure through $1.2Bn equivalent refinancing in EUR and USD with a new $100m revolving credit facility (RCF)
  • Reduction of cost of debt with a blended interest rate of 8.17% and elimination of $45m per year in PIK interest
  • Extension of maturities to 2027 (6 years)
  • Non-Call period of 3 years with possibility to repay up to 10% ($120m) per year during this period
  • ESG-linked RCF, aligning capital structure terms with CGG’s sustainability objectives
  • Single maintenance covenant for RCF: leverage below 3.5x (2.7x end of 2020), tested when RCF is drawn by more than 40%

Key Figures - First Quarter 2021

Key Figures IFRS - Quarter
In million $		2020
Q1		2021
Q1		Variances
%
  Operating revenues253209(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)11143%
  Group net income / (loss)(98)(81)18%
  Operating Cash Flow145105(28)%
  Net Cash Flow172865%
  Net debt70598740%
  Net debt before lease liabilities54084556%
  Capital employed2,2022,072(6)%


 Key Segment Figures - First Quarter 2021

Key Segment Figures - Quarter
In million $		2020
Q1		2021
Q1		Variances
%
  Segment revenue271213(21)%
  Segment EBITDAs12336(71)%
  Group EBITDAs margin45%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 Flow145105(28)%
  Net Segment Cash Flow172865%
  Supplementary information   
  Adjusted segment EBITDAs before NRC12539(68)%
  EBITDAs margin46%19%(27) bps
  Adjusted segment operating income before NRC40(12)(130)%
  Opinc margin15%(6)%(28) bps

   

Key figures bridge: Segment to IFRS - First Quarter 2021

P&L items
In million $		Segment figuresIFRS 15 adjustmentIFRS figures
  Total Revenue213(4)209
  OPINC(11)(3)(14)
    
Cash Flow Statement items
In million $		Segment figuresIFRS 15 adjustmentIFRS figures
  EBITDAs36(4)32
  Change in Working Capital & Provisions73477
  Cash Provided by Operations105(0)105
    
Multi-Client Data Library NBV
In million $		Segment figuresIFRS 15 adjustmentIFRS figures
Opening Balance Sheet , Dec 20285207492
Closing Balance Sheet , Mar 21291204495

First Quarter 2021 Segment Financial Results

Geology, Geophysics & Reservoir (GGR)

Geology, Geophysics & Reservoir (GGR)
In million $		2020
Q1		2021
Q1		Variances
%
  Segment revenue197100(49)%
  Geoscience (SIR)9366(29)%
  Multi-Client10434(67)%
      Prefunding5715(74)%
      After-Sales4719(59)%
  Segment EBITDAs12328(77)%
  EBITDAs Margin62%28%(34) bps
  Segment operating income(22)(8)63%
  OPINC Margin(11)%(8)%3 bps
  Equity from investments---
  Capital employed (in billion $)1.71.6(6)%
  Supplementary information   
  Adjusted segment EBITDAs before NRC12431(75)%
  EBITDAs Margin63%31%(32) bps
  Adjusted segment OPINC before NRC48(11)(123)%
  OPINC Margin24%(11)%(35) bps
  Other Key Metrics   
  Multi-Client cash capex ($m)(67)(30)(55)%
  Multi-Client cash prefunding rate (%)85%50%(35) bps

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

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 revenue7511352%
    Land5310091%
    Marine137(49)%
    Downhole gauges74(49)%
    Non Oil & Gas2327%
  Segment EBITDAs81598%
  EBITDAs margin10%14%3 bps
  Segment operating income07-
  OPINC Margin0%6%6 bps
     
  Capital employed (in billion $)0.50.611%
  Supplementary information   
  Adjusted segment EBITDAs before NRC816103%
  EBITDAs margin10%14%4 bps
  Adjusted segment OPINC before NRC08-
  OPINC Margin0%7%7 bps

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

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/dollar1.111.2210%
  Segment revenue271213(21)%
  GGR197100(49)%
  Equipment7211357%
  Elim & Other1(1)(169)%
  Segment Gross Margin7317(77)%
  Segment EBITDAs12336(71)%
  GGR12431(75)%
  Equipment816103%
  Corporate(6)(6)10%
  Elim & Other(1)(2)(112)%
  Severance costs(2)(3)(75)%
  Segment operating income(31)(11)65%
  GGR48(11)(123)%
  Equipment08-
  Corporate(7)(7)(6)%
  Elim & Other(1)(2)(133)%
  Non recurring charges(71)1102%
  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)11143%
  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 Flow145105(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 Flow58604%
  Lease repayments(14)(15)6%
  Paid Cost of debt(7)(7)6%
  CGG 2021 Plan (28)(11)(61)%
  Free cash flow from discontinued operations91-
  Net Cash flow172865%
  Financing cash flow---
  Forex and other(4)(7)64%
  Net increase/(decrease) in cash132265%
  Supplementary information   
Change in working capital and provisions,             included in Segment Operating Cash Flow2173-
From severance cash costs(1)(6)-
Segment Free Cash Flow before severance cash costs596612%

Total capex was $(42) 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:

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)20212020
Operating revenues208.6252.7
Other income from ordinary activities0.20.3
Total income from ordinary activities208.8253.0
Cost of operations(195.3)(188.7)
Gross profit13.564.3
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 equivalents0.31.0
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 0.20.3
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 interests1.91.0
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 equivalents407.0385.4
Trade accounts and notes receivable, net288.1325.0
Inventories and work-in-progress, net207.8237.8
Income tax assets83.284.6
Other current financial assets, net-13.7
Other current assets, net88.292.0
Assets held for sale, net120.2117.7
Total current assets1,194.51,256.2
Deferred tax assets9.710.3
Investments and other financial assets, net 13.513.6
Investments in companies under the equity method 3.73.6
Property, plant and equipment, net247.6268.1
Intangible assets, net638.4639.2
Goodwill, net1,186.21,186.5
Total non-current assets2,099.12,121.3
TOTAL ASSETS3,293.6 3,377.5
LIABILITIES AND EQUITY  
Bank overdrafts0.10.2
Financial debt – current portion82.258.6
Trade accounts and notes payables112.596.7
Accrued payroll costs114.5106.6
Income taxes payable47.156.8
Advance billings to customers21.619.5
Provisions — current portion32.652.7
Other current financial liabilities18.534.4
Other current liabilities301.8278.6
Liabilities directly associated with the assets classified as held for sale 15.413.0
Total current liabilities746.3717.1
Deferred tax liabilities15.116.3
Provisions — non-current portion44.251.8
Financial debt – non-current portion1,311.61,330.3
Other non-current financial liabilities48.453.0
Other non-current liabilities42.944.4
Total non-current liabilities1,462.21,495.8
Common stock: 1,194,005,823 shares authorized and 711,394,241 shares with a €0.01 nominal value outstanding at March 31, 20218.78.7
Additional paid-in capital 1,687.11,687.1
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.1,038.61,119.7
Non-controlling interests46.544.9
Total equity1,085.11,164.6
TOTAL LIABILITIES AND EQUITY3,293.63,377.5

Unaudited Consolidated statements of cash flows

 Three months ended March 31,
(In millions of US$)20212020
OPERATING  
Net income (loss) (80.5)(98.4)
Less: Net income (loss) from discontinued operations11.5(26.9)
Net income (loss) from continuing operations(92.0)(71.5)
Depreciation, amortization and impairment24.030.5
Multi-client surveys impairment and amortization25.6116.8
Depreciation and amortization capitalized in Multi-client surveys(4.5)(4.3)
Variance on provisions(20.3)(2.2)
Share-based compensation expenses0.91.4
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 items38.4(3.1)
Net cash-flow including net cost of financial debt and income tax(28.1)67.3
Less : net cost of financial debt34.432.9
Less : income tax expense (gain)5.44.8
Net cash-flow excluding net cost of financial debt and income tax11.7105.0
Income tax paid(4.5)(0.8)
Net cash-flow before changes in working capital7.2104.2
Changes in working capital97.541.0
- change in trade accounts and notes receivable69.180.8
- change in inventories and work-in-progress22.5(16.2)
- change in other current assets(6.0)(4.7)
- change in trade accounts and notes payable—16.5
- change in other current liabilities11.9(35.4)
Net cash-flow provided by operating activities104.7145.2
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 assets0.10.1
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$)20212020
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 equivalents21.613.0
Cash and cash equivalents at beginning of year385.4610.5
Cash and cash equivalents at end of period407.0623.5

Attachment