CGGVeritas Announces 2012 First Quarter Results: Revenues up 8% and Strong Increase in Backlog

CGGVeritas announced its non-audited first quarter 2012 consolidated results. All comparisons are made on a year-on-year basis unless stated otherwise.

• Revenue at $787 million up 8%
• Operating Income at $54 million
• Strong Increase in Group Backlog
•  Positive Outlook for 2012 confirmed

Effective January 1, 2012, CGGVeritas changed the presentation currency of its consolidated financial statements from the euro to the U.S. dollar to better reflect the profile of an industry with revenues, costs and cash-flows primarily generated in U.S. dollars.

The 2011 first quarter figures shown in this press release were restated as if the change in the Group presentation currency was effective since the January 1, 2004 (IFRS transition). The 4^th quarter 2011 figures are presented for information purposes only. They correspond to the conversion into USD of the 2011 accounts provided in Euros as released last February.  In the context of our new presentation of cash indicators, 2011 first and fourth quarter EBITDAs and multi-client Capex figures were restated.

CGGVeritas CEO, Jean-Georges Malcor commented:

“In the first quarter 2012, Group revenue increased year-on-year as Sercel delivered record sales and Services remained stable. Group results improved despite operating marine contracts this quarter which were awarded during the second half of 2011 at historic low prices. Our performance plan is progressing well and bearing fruit as the marine modernization plan reached completion in early April with the Oceanic Champion returning to operations and our vessel production rate was high at 92% this quarter.

Our backlog is significantly increasing, confirming the recovery in demand for the high end seismic equipment and services market, with marine prices strengthening year on year and good visibility for our land crews across the year.  

With our strengthening operational performance and reinforced technical differentiation, CGGVeritas should continue its journey of growth in 2012 while benefiting from both the excellent financial performance of Sercel and an expected significant improvement of Services, especially in the second half of the year.”

First Quarter 2012 Results

• Group revenue was $787 million, up 8% year-on-year mainly driven by record high Sercel sales.
• Group operating income was $54 million. Group margin was 7%:
  • Sercel margin was high at 33% driven by demand for land and marine high resolution surveys.
  • Services margin was negative at 1% mainly due to the continued very low prices in the marine contracts executed this quarter.
• Net income was a loss of $3 million.
• Operational cash flow was $193 million, stable year-on-year.
• After financial costs paid and capital expenditure, including $65 million for the performance upgrade of the Oceanic Champion, free cash flow was negative at $7 million.
• The acquisition of Global Research Company (GRC) on the 18^th of January strengthened Sercel’s diversification into high resolution downhole gauges and sensors.
• Backlog strengthened to $1.565 billion at the end of March 2012, up 28% year-on-year

Revenue

Group revenue was up 8% year-on-year and down 13% sequentially compared to the fourth quarter which was particularly strong. Services revenue was stable year-on-year, while Sercel reached a quarterly record.

Sercel

First quarter revenue was up 26% year-on-year and up 7% sequentially. This particularly high level of sales was mainly related to the first land equipment deliveries for high channel count surveys in the Middle East and also to sustained marine streamer sales.  Internal sales, which are generally strong in the first quarter, represented 27% of Sercel total revenue as Sentinel and Nautilus were delivered to the Oceanic Champion.

Services

Revenue was stable year-on-year and down 16% sequentially due to the traditional seasonality of multi-client sales in the fourth quarter.

• Marine contract revenue was down 5% year-on-year and sequentially down 23% mainly related to the higher rate of 23% of our fleet dedicated to multi-client programs. The vessel availability rate^[1] grew to 84% and the production rate² to 92% as a result of our strengthening operational performance. The Oceanic Champion, the last of our vessel planned for performance upgrade, left the shipyard on the 31^st of March. She is now operating in the North Sea. Our marine performance plan has reached completion with the Vanquish, Oceanic Endeavour, Oceanic Phoenix and Oceanic Champion vessels all returning to operations over the last 18 months with an enhanced configuration of 12 Sentinel solid streamers and Nautilus navigation systems. The Amadeus vessel was effectively transferred to our Vietnamese Joint-Venture on the 27^th of March.

• Land contract revenue was down 23% compared to an exceptionally strong first quarter 2011. Sequentially, it is up 91%. Our winter campaign in North America, where we operated 12 crews, was successful, our operations in Saudi Arabia were sustained and our crews are beginning to remobilize in North Africa in a still uncertain geopolitical context. Worldwide demand for shallow water and OBC operations continue to be strong.

• Processing, Imaging & Reservoir revenue was up 6% year-on-year and down 15% sequentially compared to the very strong fourth quarter in 2011. Demand for high-end processing remains at high levels especially in our major centers.

• Multi-client revenue was up 52% year-on-year mainly related to strong after-sales in the Gulf of Mexico and the North Sea. Capex was $76 million. The depreciation rate averaged 71%, with 92% in land and 65% in marine, a high rate due to geographical sales mix this quarter. Net Book Value at the end of March 2012 was $536 million compared to $527 million at the end of December 2011.

• Multi-client marine revenue was up 95% year-on-year. Capex was $52 million and was focused on offshore Brazil. Prefunding revenue was low at $22 million, a rate of 42%, as some prefunding was postponed to the second quarter. After-sales were particularly strong for a first quarter and reached $65 million with high levels of client interest for our North Sea and Gulf of Mexico data, ahead of lease sales.

• Multi-client land revenue was down 9% year-on-year. Capex was $24 million dedicated to the pursuit of our Marcellus and Alaska programs. Prefunding revenue was $21 million, a rate of 87%. After-sales were $6 million.

Source