PARIS, France – November 10th 2009
CGGVeritas (ISIN: 0000120164 – NYSE: CGV) announced today its non-audited third quarter 2009 consolidated results. All comparisons are made on a year-on-year basis unless stated otherwise. All results are reported after restructuring charges unless stated otherwise.
CGGVeritas Chairman & CEO, Robert Brunck commented:
“As expected, the positive contribution of higher margin 2008 backlog coming to an end, led to a more difficult quarter. Nevertheless, we delivered solid free cash flow thanks to strong and disciplined actions across the company.
In the current economic environment Sercel, with its leading technology and manufacturing excellence, exhibited a resilient margin. Services reinforced their high-end positioning with increased prefunding of new multi-client projects, continued interest for its advanced depth imaging and through its high-resolution land seismic surveys. In marine, the industry began capacity adjustments but oversupply still prevails, translating into lower pricing and increased vessel transits for some of the new contracts.
Looking forward in the context of relatively high and stable oil prices, we expect oil and gas fundamentals to strengthen and demand for high-end seismic technology, especially around reservoir optimization, to continue to increase. CGGVeritas is well positioned to take full advantage of its technological strength and its well balanced portfolio.”
Group Revenue was down 31% in $ and 26% in € from a record quarter last year, reflecting weak market conditions.
Revenue was down 35% in $ and 30% in € from a record third quarter last year with an increased contribution from marine with sales of two SeaRay OBC systems and one Nautilus for acoustic positioning and streamer control. Internal sales represented 21% of revenue.
Revenue was down 25% in $ and 19% in € with good vessel utilization despite increasing standby between contracts. Revenue was also supported by strong processing performance, while marine multi-client revenue decreased year on year following the reduction of our multi-client investments. Amortization rates of our multi-client library were higher this quarter at 75% mainly due to a different sales mix with lower fully depreciated data and higher onshore contribution. We anticipate the full year 2009 amortization rate to be around 65%.
Marine capacity adjustments: The Fohn and the Orion 3D vessels were decommissioned this quarter. Following contract completion, another 2D vessel will be de-rigged in the fourth quarter 2009. Three additional 2D vessels are scheduled for decommissioning in 2010.
Multi-client marine revenue was down 54% in $ and 51% in € as Capex was reduced 59% year on year in $ to $48 million (€33 million). Prefunding was $54 million (€38 million), up sequentially with a rate of 112%. In Brazil the extension of our Santos cluster survey around the Tupi discovery continued to progress well and we completed our programs offshore Australia and in the North Sea. After-sales worldwide were down 47% in $ and 45% in € at $23 million (€16 million).
Multi-client land revenue was down 16% in $ and 4% in €. Capex was reduced 26% year on year at $20 million (€14 million). Prefunding was high during the quarter, at $25 million (€18 million). Prefunding rate increased year on year and sequentially to 121% reflecting the strong interest for our Haynesville program where we operated two crews this quarter on the 3D multi-client Tri-Parish Line survey in northern Louisiana. After-sales were at $13 million (€9 million).
1 - The vessel availability rate, a metric measuring the structural availability of our vessels to meet demand; this metric is related to the entire fleet, and corresponds to the total vessel time reduced by the sum of the standby time between contracts, of the shipyard time and the steaming time (the “available time”), all divided by total vessel time;
2 - The vessel production rate, a metric measuring the effective utilization of the vessels once available; this metric is related to the entire fleet, and corresponds to the available time reduced by the operational downtime, all then divided by available time.
Group EBITDAs was $231 million (€163 million), a margin of 32%.
Group Operating Income was $58 million, with a margin of 8% based on resilient performance of Sercel while weaker marine prices impacted Services.
Group Net Income was $12 million (€8 million), a 2% margin, compared to $162 million (€105 million) last year, resulting in an EPS of €0.05 per ordinary share and $0.07 per ADS.
The effective tax rate was 42%.
Global Capex was $148 million (€104 million) this quarter, a reduction of 25% year-on-year.
After interest expenses paid during the quarter, free cash flow was strong at $148 million up year on year and sequentially due to strict management of working capital.
Group Revenue was down 16% in $ and 6% in €, with lower Sercel sales in line with weaker market conditions while Services benefited from the addition of Wavefield.
Sercel sales were down 27%, in $ and 18% in €. Land equipment sales were down from record sales in 2009 while marine sales were down as industry future fleet plans were adjusted.
Revenue was down 10% in $ and slightly up in € supported by the addition of Wavefield in marine and strong processing performance. For the first nine months, fleet availability rate was 90% and the production rate was 91%. Multi-client revenue was down 44% in $ and 38% in € as Capex eased as planned and was down 40% in $ to $261 million (€192 million). The amortization rate averaged 65%, a level we expect to continue throughout 2009.
Group EBITDAs before restructuring was $746 million (€548 million), a margin of 32% mainly based on the impact of lower pricing and particularly the lower contribution from multi-client sales.
Group EBITDAs was $689 million (€506 million).
Group Operating Income before restructuring was $256 million (€189 million), an 11% margin driven by the industry leading and resilient performance of Sercel while good vessel operational performance was hampered by a decrease in marine prices and lower multi-client contributions.
Group Operating Income was $170 million (€125 million).
The effective tax rate was 32% and financial charges were $109 million (€80 million).
Group Net Income before restructuring was $106 million (€79 million), down 69% in $ and 64% in €, resulting in an EPS of €0.49 per ordinary share and $0.66 per ADS.
Group Net Income was $50 million (€37 million), resulting in an EPS of €0.22 per ordinary share and $0.29 per ADS.
Cash flow from operations was $643 million (€472 million) a reduction of 20% year-on-year.
Global Capex was $470 million (€345 million) end of September, down 25% in $ year-on-year.
After interest expenses paid during the first 9 months, free cash flow was $130 million stable year on year.
The Group’s gross debt was reduced to $2.190 billion (€1.496 billion) at the end of September 2009.
With $819 million (€560 million) in available cash, Group net debt was $1.371 billion (€936 million) and the net debt to equity ratio was reduced to 32%.
Q3 09 Consolidated Financials - Balance Sheets, Statements of Operations, Statements of Cash Flows, Analysis by Operating Segment (PDF, 522KB)
Detailed financial results (6K) are available on our website: www.cggveritas.com.
A French language conference call is scheduled today November 10th, at 9:30am (Paris), 8:30am (London). To take part in the French language conference, simply dial in five to ten minutes prior to the scheduled start time.
French call-in +33 1 72 00 13 65
International call-in +44 808 238 1769
Replay +33 1 72 00 14 59 & +44 207 107 0686 - code 256924#
An English language conference call is scheduled today November 10th, at 3:00pm (Paris), 2:00pm (London), 8:00am (US CT), 9:00am (US ET). To take part in the English language conference, simply dial in five to ten minutes prior to the scheduled start time.
US call-in 1 (888) 241-0558
International call-in 1 (647) 427-3417
Replay 1 (402) 220-4375 & 1 (888) 567-0351 - code 82646791
You will be asked for the name of the conference: “CGGVeritas Q3 2009 Results”.
A presentation is posted on our website and can be downloaded.
The conference calls will be broadcast live on our website www.cggveritas.com and a replay will be available for two weeks thereafter.
CGGVeritas (www.cggveritas.com) is a leading international pure-play geophysical company delivering a wide range of technologies, services and equipment through Sercel, to its broad base of customers mainly throughout the global oil and gas industry.
CGGVeritas is listed on the Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares, NYSE: CGV).
The information included herein contains certain forward-looking statements within the meaning of Section 27A of the securities act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties as disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. Actual results may vary materially.