CGG Announces its 2020 First Quarter Results

CGG Announces its 2020 First Quarter Results

Solid First Quarter

Adjusting to an Unprecedented Crisis

PARIS, France – May 12, 2020 – CGG CGPVF, a world leader in Geoscience, announced today its 2020 First Quarter unaudited results.

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

"As we are navigating through this unprecedented industry crisis, created by the combined results of oversupply and reduction in demand due to the COVID-19 pandemic, our priority remains on the health and safety of our employees and all our stakeholders, along with the continuity of our business to meet our clients' needs. With our new asset light business profile, and our business segments positioned around reservoir evaluation and production optimization, including our data library, which is focused on proven or mature sedimentary basins, we expect CGG to be much more resilient than in the past. While the duration of this severe crisis is uncertain, we are focusing on what we can control: managing our liquidity, implementing the required capex and cash cost reductions and adjusting the organization as necessary while maintaining our R&D efforts. With $624m of cash on hand after a solid Q1 and no bond debt to reimburse before April 2023, I am confident that our asset light strategy based on high-end technology, services, data and products positions us the best for these challenging market conditions" .

Key Figures - First Quarter 2020

Key Segment Figures - First Quarter 2020

Key figures bridge: Segment to IFRS - First Quarter 2020

First Quarter 2020 Segment Financial Results

Geology, Geophysics & Reservoir (GGR)

GGR segment revenue was $197 million, up 10% year-on-year.

• Geoscience revenue was $93 million, up 2% year-on-year.

Geoscience performance in Q1 was solid driven by 11% increase in imaging business revenue year-on-year. We managed to maintain our business continuity in March with the majority of our people working from home due to the excellent support of our IT organization.

• Multi-Client revenue was $104 million this quarter, up 17% year on year.

Prefunding revenue of our multi-client projects reached $57 million this quarter, up from $42 million in the first quarter of 2019, mainly due to higher multi-client capex this quarter, up to $67 million from $40 million in Q1 2019.

We had four ongoing multi-client projects this quarter, including two Land surveys – Bayou Boeuf and Central Basin Platform – in the US, one Marine streamer survey – Nebula – in Brazil, one Marine streamer survey – Gippsland 2020 – in Australia, and started one Nodes survey in the UK North Sea in the Cornerstone area at the end of March. Prefunding rate in Q1 2020 was solid at 86%.

After-sales were $47 million this quarter, stable year on year and solid across all regions.

In Q1 2020, we performed the impairment test of our multi-client library triggered by current low oil price environment, which resulted in non-cash charges of $(69) million.

The segment library Net Book Value was $318 million ($475 million after IFRS 15 adjustments) at the end of March 2020, split 85% offshore and 15% onshore.

GGR segment EBITDAs was $123 million, up 17% with 62% margin.

GGR segment operating income was $(22) million, including $(69) million impairment of the multi-client library.

GGR capital employed was down to $1.7 billion at the end of March 2020.

Equipment

Equipment segment revenue was $75 million, down 29% year-on-year. External sales were $73 million, down 28% year-on-year.

• Land equipment sales represented 71% of total sales, as we delivered over 80 thousand 508XT channels in Q1, mainly in North Africa, India and Russia
• Sercel was awarded significant orders for heavy duty Nomad90 vibrators for North Africa and for 35 thousand channels for Middle East
• Marine equipment sales represented 17% of total sales. Activity in the streamer market remains low with mostly sales of spares for Sentinel sections
• Downhole equipment sales were $7 million.

Equipment segment EBITDAs was $8 million, a 11% margin.

Equipment segment operating income was $0 million.

Equipment capital employed was stable at $0.5 billion at the end of March 2020.

First Quarter 2020 Financial Results

Segment revenue was $271 million, down 4% year-on-year. The respective contributions from the Group's businesses were 34% from Geoscience, 38% from Multi-Client (73% for the GGR segment) and 27% from Equipment.

Segment EBITDAs was $123 million, up 3% year-on-year with 45% margin.

Segment operating income was $(31) million, impacted by $(69) million impairment of the multi-client library.

IFRS 15 adjustment at operating income level was $(9) million and IFRS operating income, after IFRS 15 adjustment, was $(40) million.

Cost of financial debt was $(33) million. The total amount of interest paid during the quarter was $(7) million. Income taxes were $(5) million.

Net loss from continuing operations was $(72) million.

Discontinued operations

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

- Segment revenues were $14 million this quarter and net loss from discontinued operations was $(27) million.

Group net loss was $(98) million.

After minority interests, Group net loss attributable to CGG shareholders was $(99.4) million/ €(89.7) million.

Cash Flow

Segment Operating Cash Flow was $145 million, down 29% compared to $204 million in Q1 2019.

Total capex was $87 million, up 50% year-on-year:

• Industrial capex was $8 million, down 24%
• Research & Development capex was $13 million, up 56%
• Multi-client cash capex was $67 million, up 68%

Segment Free Cash Flow was at $44 million, compared to $130 million in Q1 2019.

After $(7) million paid cost of debt, $(28) million 2021 plan cash costs and $9 million free cash flow from discontinued operations, Net Cash Flow was $17 million compared to $44 million in Q1 2019.

Balance Sheet

Group gross debt before IFRS 16 was $1,164 million at the end of March 2020 and net debt was $540 million.

Group gross debt after IFRS 16 was $1,329 million at the end of March 2020 and net debt was $705 million.

Group's liquidity amounted to $624 million at the end of March 2020.

Q1 2020 Conference call

An English language analysts' conference call is scheduled today at 8:15 am (Paris time) – 7:15 am (London time)

To follow this conference, please access the live webcast:

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:

About CGG

CGG (www.cgg.com) is a global geoscience technology leader. Employing around 4,600 people worldwide, CGG provides a comprehensive range of data, products, services and equipment that supports the discovery and responsible management of the Earth's natural resources. CGG is listed on the Euronext Paris SA (ISIN: 0013181864).

Contacts

CONSOLIDATED FINANCIAL STATEMENTS

March 31^st, 2020

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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* In accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations", the profit and loss accounts related to the discontinued operations have been presented in the separate line item "Net income (loss) from discontinued operations" at March 31, 2020 and 2019.

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED ANALYSIS BY SEGMENT

1. Sale of equipment to the Contractual Data Acquisition segment which is classified as discontinued operation.
2. "Eliminations and other" corresponded to general corporate expenses.
3. Capital expenditures included capitalized development costs of US$(12.6) million for the three months ended March 31, 2020. "Eliminations and other" corresponded to the variance of suppliers of assets for the three months ended March 31, 2020.
4. Capital employed and identifiable assets related to discontinued operations are included under the column "Eliminations and other".

1. Sale of equipment to the Contractual Data Acquisition segment which is classified as discontinued operation.
2. "Eliminations and other" corresponded to general corporate expenses.
3. Capital expenditures included capitalized development costs of US$(8.1) million for the three months ended March 31, 2019. "Eliminations and other" corresponded to the variance of suppliers of assets for the three months ended March 31, 2019.
4. Capital employed and identifiable assets related to discontinued operations are included under the column "Eliminations and other".

Attachment

• CGG - Press Release pdf version