CGG Provides Q4 & Full Year 2023 Financial Update
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Insights
The reported 21% increase in annual segment revenue and a positive net cash-flow of approximately $30 million for CGG in 2023 are indicative of a robust operational year despite the $65 million in penalty fees. This performance is particularly noteworthy given the uneven market recovery post-COVID-19. The emphasis on balance sheet deleveraging and the anticipation of similar cash generation in 2024 suggest a strategic focus on financial stability and gradual debt reduction. The projected acceleration of cash generation in the 2025-2026 period could be a signal for potential future investments or shareholder returns, assuming the company continues to optimize operations and expand its new business initiatives.
The slight decline in Q4 2023 segment revenue year-on-year, coupled with the mixed performance of different segments—such as the 40% increase in the Geoscience segment and a 31% decrease in Earth Data segment sales—reflects the volatility and specific challenges within the industry sectors CGG operates in. Investors may view the varied segment performance as a need for a diversified portfolio to mitigate sector-specific risks.
Regarding the anticipated net debt figures before and after IFRS 16, the distinction is crucial as it reflects the financial obligations related to leases. The expected decrease in net debt after the end of vessel commitments could improve the company's leverage ratios, which is typically a positive indicator for creditworthiness and investment appeal.
The geoscience and sensing & monitoring segments showing year-on-year growth suggests a recovering demand for CGG's services in these areas. The geoscience segment, in particular, is benefiting from a robust global activity, which could be attributed to increased exploration and production as energy markets stabilize and adapt post-pandemic. The decline in the Earth Data segment, particularly due to delayed licensing rounds, highlights the dependency on regulatory and governmental activities in the sector, which can introduce unpredictability in revenue streams.
CGG's focus on operational optimization and the development of new businesses is a strategic move to capture emerging market opportunities, possibly in areas like sustainable energy resources or advanced analytics for resource exploration. The anticipated growth through 2026, albeit uneven, suggests a cautiously optimistic outlook for the industry, recognizing the inherent cyclical nature of the energy and resources sector.
The company's ability to maintain positive cash flow and liquidity, despite market challenges and substantial penalty fees, is a testament to its operational resilience. Stakeholders should note the company's proactive efforts to strengthen its financial position, which may contribute to a more robust performance in the face of future industry headwinds.
The positive revenue generation from new business initiatives, amounting to around $90 million, suggests successful diversification efforts by CGG, which is crucial in an industry often impacted by geopolitical and environmental factors. The energy sector is undergoing significant transformation with the advent of renewable energy sources and the transition towards lower carbon footprints. CGG's ability to adapt and innovate in its service offerings could position it well within this changing landscape.
The mega crew activity and multi-client spending are key drivers for the company's performance. Mega crews are large-scale seismic data acquisition projects that require substantial investment and carry high operational risks but offer significant rewards. Multi-client spending refers to the industry's investment in non-exclusive data acquisition, which can be sold to multiple clients. The uneven quarterly growth anticipated by CGG could be due to the project-based nature of these activities, which can lead to significant fluctuations in revenue.
CGG's anticipation of a moderate market growth through 2026 implies a stable, yet cautious market environment. Investors and stakeholders in the energy sector should monitor the company's ability to navigate the operational challenges associated with large-scale projects and regulatory environments, as these will be pivotal in realizing the forecasted financial objectives.
Q4 2023 segment Revenue at around
2023 segment Revenue at around
2023 positive Net Cash-Flow of around
Cash balance at year-end 2023 at around
PARIS, France – January 10, 2024
Sophie Zurquiyah, CEO of CGG said: “In today’s market, I am pleased to see the positive effects of our strategy on company performance, with GEO and SMO performing at near pre-covid levels, our new business initiatives reaching around
Looking forward, we expect 2024 performance to improve compared to 2023, while we anticipate the market to moderately grow through 2026, yet unevenly over the quarters, based mainly on mega crew activity and multi-client spending.
With these expectations, our priority remains on balance sheet deleveraging, and we anticipate cash generation to be similar in 2024 compared to 2023, and then to significantly accelerate over the period of 2025 – 2026, based on continued operational optimization, including the end of our vessel commitment, positive fall through from the growth of our core activities, and the further development of our new businesses.”
Q4 2023 segment Revenue
CGG anticipates Q4 2023 segment revenue at around
- Geoscience segment revenue is expected to be around
$97 million , up40% year-on-year driven by solid activity worldwide. - Earth Data segment sales are expected to be around
$100 million , down (31)% year-on-year, mainly due in particular to delayed year-end licensing rounds in Brazil and Gulf of Mexico. - Sensing & Monitoring segment sales are expected to be around
$119 million , up14% year-on-year.
Full Year 2023 segment Revenue & segment EBITDAs
CGG anticipates full year 2023 segment revenue at around
Full year 2023 segment EBITDAs is expected to be around
Full Year 2023 Net Cash Flow and Net Debt at the end of 2023
CGG anticipates 2023 net cash-flow to be positive around
Group’s liquidity at the end of December 2023 is expected to be around
CGG anticipates year-end 2023 Net Debt before IFRS 16 to be around
2024 Financial objectives and 2025 - 2026 cash generation
CGG anticipates 2024 financial performance to improve, driven by growth of DDE, offset by reduced mega crews’ activity impacting SMO.
CGG anticipates net cash flow generation to be similar in 2024, compared to 2023 and then to significantly accelerate and represent around
Full Year 2023 Results and conference call
CGG will announce its fourth quarter 2023 and full year 2023 audited results on March 6, 2024, after market close, and after they have been approved by the Board of Directors.
Forward-looking statements/estimated financial information
This press release includes forward-looking statements and estimated financial information. The Company provides this information based on a preliminary review of its financial results as of the date of this press release, and in particular of its revenues. The Company has not completed its financial reporting and related consolidation, review and control procedures, including the review of all sales against the established revenue recognition/cut-off criteria. This financial information constitutes therefore estimates. These estimates have not been reviewed by the Company’s auditors. The information provided in this release is therefore subject to change and the final Q4 2023 and Full Year 2023 financial statements, once they are approved by the Company, reviewed by the auditors and released, may deviate materially from the information herein. Reference is made to the definition of Segment revenues in the Company`s annual and quarterly reports.
About CGG
CGG (www.cgg.com) is a global technology and HPC leader that provides data, products, services and solutions in Earth science, data science, sensing and monitoring. Our unique portfolio supports our clients in efficiently and responsibly solving complex digital, energy transition, natural resource, environmental, and infrastructure challenges for a more sustainable future. CGG employs around 3,300 people worldwide and 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 |
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