Third Quarter 2014 Results

Transcription

1 Third Quarter 2014 Results London Analyst Meeting Stephane-Paul Frydman, Executive Vice President, Finance & Strategy and Group CFO November 17 th, 2014

2 Forward-Looking Statements This presentation contains forward-looking statements, including, without limitation, statements about CGG ( the Company ) plans, strategies and prospects. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, the Company s actual results may differ materially from those that were expected. The Company based these forward-looking statements on its current assumptions, expectations and projections about future events. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it is very difficult to predict the impact of known factors and it is impossible for us to anticipate all factors that could affect our proposed results. All forward-looking statements are based upon information available to the Company as of the date of this presentation. Important factors that could cause actual results to differ materially from management's expectations are disclosed in the Company s periodic reports and registration statements filed with the SEC and the AMF. Investors are cautioned not to place undue reliance on such forward-looking statements. 2

3 Managing the Balance Sheet Unsecured HYB Debt Maturity extension Convertible Bond (Debt Component) April refinancing operations with the issuance of two High Yield Bonds Convertible Bond (Equity Component) Nordea Credit Facility & Vendor Loan 69 First major debt installment pushed forward to Covenant Headroom Extended headroom negotiated with Revolving Credit Facility lenders to 3.75x from 3.0x Leverage ratio (Net Debt over EBITDA) at 2.9x as at September-end Coverage ratio (EBITDA over cash 2.25 interest) at 6.0x as at September-end (versus a 4.0x floor) Q Q Q Q Q Financial Covenant after negotiation Financial Covenant before negotiation 3

4 Well balanced Capital Employed $6.0bn Capital Employed financed by Equity ratio at 77% as at September-end Cash at $252m as at September-end GGR Goodwill 82% of the Net Debt to be repaid only after January 1 st, 2019 GGR $3.1bn Other GGR Equity & Minority Interests $3.4bn $2.1bn Data Acquisition Capital Employed 90% Marine related $0.8bn Equipment Capital Employed halfmade by inventories $3.1bn GGR Capital Employed embedding MC Library peaking at $1.1bn Split 88%-12% between Offshore & Onshore Equipment $0.8bn Acquisition $2.1bn MC Library Equip. GW Tangible Equipment Other ACQ. Marine Goodwill Tangible Marine Other Debt net Cash Debt to be repaid after 01/01/ 2019 Net Debt $2.6bn Gulf of Mexico weighting more than 50% within Offshore $6.0bn Assets $6.0bn Liabilities 4

5 GGR Multi-client Q3 Update MCNV: o Best Q3 since 2008 at $133m, but below targets o o o o Horda: Acquisition completed on Quad-35 Gabon: Initiated 35,000km² MC program US Land: Avalon acquisition completed, Big Cat & Bedias Creek ext. progressing well StagSeis: Acquisition completed Over $30M sales in Q3 Client interest gaining momentum 873 blocks acquired (each 23.3km 2 ) over 20,000km 2 1 client committed to all StagSeis acreage 70% pre-funding target for 2014 confirmed CGG Multi-Client coverage 5

6 StagSeis driven by ultra deep water blocks rotation in GOM 6 StagSeis Expiring Blocks

7 CGG View : From WAZ to StagSeis A clear improvement in the resolution and continuity of the sub-salt geology WAZ: Final RTM (2009) Stagseis: Intermediate RTM product (Aug 2014) 7

8 Client View : From Narrow Azimuth to StagSeis 8 Source: COBALT

9 Multi-client accounting: Original Participants and After Sales >2016 IBALT DEUX TROIS Cash Capex Prefunding 70% * 600 = $420 After Sales Starts when data is delivered 600*1, = $330 9 Acquisition time Processing time

10 Multi-client accounting: Basic principles Capex = 125 Cash Capex = 100 Prefunding Revenue = 70 -> 70% Prefunding rate P&L: Revenue: 70 Margin: 20% = 14 Amortization: 80% = (56) Balance Sheet: Gross Book Value = 70 Amortization = 56 Net Book Value = 14 Cash Flow Statement: Revenue = 70 Cash Capex = 100 Net Free Cash Flow = (30) 10

11 Thank you

12 2014 Q3 Operational Review

13 Equipment: Impacted by low volume and unfavorable product mix Total sales were $180m, down 8% q-to-q Land Equipment Marine Equipment Revenue (In million $) Lower sales due to weak market conditions from seismic contractors and lower internal sales CGG fleet reduced % % % % External sales at $167m, up 13% sequentially 51% Large deliveries to our Saudi Arabia high channel count crew Ramp-up of 508 XT delivery and orders 66% 49% 49% 67% 78% Q Q Q Q EBIT margin at 16% Low volume of sales 51 EBIT (In million $) Unfavorable product mix with higher vibrators, and low electronic content Year-to-date EBIT margin at 19% with increased market share 23% 20% 20% 16% 13 Q Q Q Q3 2014

14 Acquisition: Difficult market conditions Acquisition revenue at $418m, down 13% q-to-q Marine revenue at $358m, down 12% q-to-q 44% of the fleet dedicated to multi-client programs Land & Airborne revenue at $60m, down 19% q-to-q Land & Airborne Marine Acquisition Revenue (In million $) Acquisition Operating Income at break-even and EBIT at $(8)m Impacted by reduced fleet perimeter, lower prices in marine and partially offset by lower costs Negative contribution from equity from investees mostly related to the Seabed Geosolutions JV Q Q Q Q Operating Income EBIT 42 Acquisition OPINC and EBIT (In million $) % Q Q % Q % 0% Q (8) (15)

15 GGR: Increased profitability across the board GGR revenue at $305m, up 2% q-to-q MC Revenue SI & Reservoir GGR Revenue (In million $) Multi-Client at $133m, up 4% sequentially Prefunding revenue at $104m, up 13% Amortization rate at 66%, driven by high prefunding Excellent quarter on a historical basis Subsurface Imaging (SI) & Reservoir at $172m, stable sequentially Q Q Q Q Strong demand for Imaging, Geosciences & Reservoir Services and Software activities EBIT margin GGR EBIT (In million $) 73 GGR EBIT at $73m, a 24% margin Subsurface Imaging: strong performance for imaging activity in main centers Good contribution from Multi-Client 18% 22% 21% 24% Q Q Q Q

16 GGR multi-client: StagSeis ready on time for GoM lease rounds 3 year program started in 2012 and finishing end of ,320km 2 data acquired with latest StagSeis technology CGG IBALT / StagSeis footprint Trois TROIS Deux IBALT Western & Central GoM lease rounds cycle (number of blocks) Historically, in Western and Central GoM areas, lease rounds in ultradeep waters peaked every 10 years Number of blocks Expiration by Areas (EB, AC, GB, KC, GC, WR) Blocks Strong match with the location of IBALT, DEUX and TROIS StagSeis surveys