Revenue up 12% in $ Year-on-Year
Net Income Margin of 11%
PARIS, May 14 /PRNewswire-FirstCall/ -- CGGVeritas (ISIN: 0000120164 -
NYSE: CGV) today announced its first quarter 2008 unaudited financial
results(1). All comparisons are made on a year-on-year basis with first
quarter 2007 figures unless otherwise stated.
During the first quarter of 2008:
- Group revenue was stable in EUR and up 12% in $ at EUR585
million ($873 million).
- Group operating income was down 14% in EUR but stable in $
at EUR123 million ($184 million). Services and Sercel delivered robust
performance, resulting in a Group operating margin of 21% including a
2% unfavorable currency impact.
- Sercel delivered a revenue of EUR189 million ($282 million),
down 8% in EUR and up 5% in $, with a 32% operating margin.
- Services revenue grew 2% in EUR and 16% in $ to EUR433
million ($647 million) with a 21% operating margin and a stronger
contract vs. multi-client sales mix.
- Net income of EUR64 million ($96 million) represented 11% of
revenue, corresponding to EUR2.28 earnings per share (EPS) and $0.68
per ADS.
- Backlog as of May 1st 2008 stood at $1.7 billion.
CGGVeritas Chairman & CEO, Robert Brunck commented:
"I am pleased to report that CGGVeritas delivered robust results thanks
to our unique and balanced portfolio as well as our leading technology.
These results were achieved despite a less favorable currency environment
as we operate in a dollar denominated market. This quarter particularly
benefited from the strong performance of Sercel and our Services contract
business. I am also pleased to confirm our 2008 objectives with a strong
outlook for the second half of the year, supported by a strengthening
equipment market, increasing interest in our wide-azimuth programs, and the
timing of licensing rounds in the GoM and Brazil. Our longer term outlook
for the seismic market continues to be healthy, driven by strong E&P
fundamentals and the growing requirement for advanced seismic technology."
First Quarter 2008 Overall Performance and Highlights
Group Revenue was EUR585 million ($873 million), compared to EUR592
million ($777 million). This 12% growth in $ was driven by sustained sales
of Sercel equipment and a high level of land and marine contract activity
in Services.
Group Operating Income was EUR123 million ($184 million), down 14% in
EUR and stable in $, with a 21% operating margin, compared to EUR144
million ($188 million) and a 24% margin last year. Group operating income
includes EUR26 million ($39 million) of elimination of margin mainly
related to Sercel internal sales and corporate general administration
expenses. Without the adverse effect of the $/EUR exchange rate during the
quarter, the operating margin would be 23%.
Group EBITDAs(1) was EUR230 million ($343 million) compared to EUR258
million ($339 million), EBITDAs margin was 39%.
Net Income was EUR64 million ($96 million) compared to EUR69 million
($91 million), resulting in an EPS of EUR2.28 per ordinary share and $0.68
per ADS.
The Effective Tax Rate not including deferred tax on currency
translation and before share based compensation was 37%.
The Group Net Debt was stable over the quarter at EUR1,028 million
($1,626 million), representing 45% of total shareholders equity of EUR2,301
million ($3,639 million).
Industrial Capex was EUR51 million ($77 million) while multi-client
Capex reached a peak EUR97 million ($145 million) to develop our offshore
library, particularly our two concurrent leading wide-azimuth programs in
Garden Banks and Walker Ridge in the Gulf of Mexico.
The Net Book Value of the multi-client library closed at EUR447 million
($707 million) distributed respectively with EUR325 million ($514 million)
for our marine library and EUR122 million ($193 million) for our land
library. The multi-client amortization rate was 50%.
Comparison with First Quarter 2007
Consolidated Statement of Income First Quarter First Quarter
(in million euros) (in million dollars)
2008 2007 2008 2007
Exchange rate 1.492 1.313 1.492 1.313
Operating revenue 585.0 592.2 872.8 777.3
Sercel 188.7 204.3 281.6 268.3
Services 433.3 425.7 646.5 558.9
Elimination -37.0 -37.8 -55.3 -49.9
Gross profit 200.4 206.4 299.0 270.9
Operating income 123.4 143.5 184.0 188.3
Sercel 60.1 69.0 89.7 90.6
Services 89.1 101.3 132.9 133.0
Corporate and Elimination -25.8 -26.8 -38.6 -35.3
Income from equity investments 2.9 0.5 4.3 0.6
Net income 64.0 69.0 95.5 90.5
Earnings per share (EUR) 2.28 2.65 n/a n/a
EBITDAs 229.8 257.8 342.9 338.5
Sercel 66.1 73.7 98.6 96.8
Services 190.4 210.2 284.1 276.0
Industrial Capex & development 51.4 73.3 76.7 96.2
costs
Multi-client Capex 97.3 61.8 145.1 81.1
Net Debt / Equity gearing ratio 45% - 45% -
First Quarter 2008 Business Review
Sercel Total revenue for Sercel was EUR189 million ($282 million), down 8% in
EUR and up 5% in $. Internal sales were especially high during the quarter
representing 19% of Sercel total sales.
Operating Income was EUR60 million ($90 million), with a 32% operating
margin, compared to EUR69 million ($91 million) and a 34% margin a year
ago. Without the adverse effect of the $/EUR exchange rate during the
quarter, the operating margin would be 35%.
EBITDAs was EUR66 million ($99 million), with a 35% EBITDAs margin,
compared to EUR74 million ($97 million) and a 36% margin last year.
Services
Revenue for Services was EUR433 million ($646 million), stable in EUR
and up 16% in $ supported by strong contract performance and an 84% fleet
utilization rate partially offset by lower multi-client sales.
Operating Income was EUR89 million ($133 million), with a 21% operating
margin, compared to EUR101 million ($133 million) and a 24% margin a year
ago based on stronger contract sales and lower contributions from the high
margin multi-client business. Without the adverse effect of the $/EUR
exchange rate during the quarter, the operating margin would be 22%.
EBITDAs was EUR190 million ($284 million), with a 44% EBITDAs margin
compared to EUR210 million ($276 million) and a 49% margin last year.
- Marine contract revenue reached EUR159 million ($238 million) up 17%
in EUR and up 33% in $ in an undersupplied market. We operated 66% of our
high-end 3D fleet on contract, mainly in the Eastern Hemisphere. During the
quarter, the Alize was upgraded to a 14 Sercel Sentinel solid streamer
configuration.
- Land contract revenue reached EUR103 million ($154 million) up 23% in
EUR and up 40% in $ with seasonally high activity in North America and
increased demand for high resolution seismic. We operated 25 crews in
select locations with 9 crews in the Eastern Hemisphere and 16 crews in the
Western Hemisphere, including 2 in Alaska.
- Processing & Imaging revenue was EUR65 million ($97 million) down 4%
in EUR and up 9% in $ based on increased data volumes and our strengthening
position in high-end imaging technologies.
- Multi-client revenue was EUR105 million ($157 million) down 32% in
EUR and 23% in $ from a strong first quarter last year. This trend
illustrates the uneven pattern of multi-client revenues which by nature
will be subject to quarterly fluctuations. The amortization rate for
multi-client sales was 50% distributed respectively 48% for marine
multi-client and 56% for land multi-client.
Multi-client marine revenue was EUR79 million ($118 million) down 31%
in EUR and 21% in $. Marine multi-client Capex reached EUR86 million ($129
million) with 61% prefunding as two wide-azimuth projects ran concurrently.
The Vision and the Vanquish pursued work on the Garden Banks multi-vessel
wide-azimuth survey in the GoM while the Viking completed the acquisition
phase of the Walker Ridge survey with promising preliminary results.
Prefunding was EUR53 million ($78 million). After-sales revenue was EUR27
million ($40 million).
Multi-client land revenue was EUR26 million ($39 million) down 36% in
EUR and down 27% in $. Land multi-client Capex was EUR11 million ($16
million) with 86% prefunding and 2 crews operating in the US. Prefunding
was EUR9 million ($14 million). After-sales revenue was EUR17 million ($25
million).
2008 Outlook
In Q2 we plan to demobilize our Arctic crews as every year. We also
expect a lower marine utilization rate based on various factors. These
include planned shipyard maintenance during seasonal transits, a return of
vessels for defective maritime equipment and a loss of propulsion incident
on the Symphony offshore Australia at the end of April that is still under
assessment. At this time, we estimate that the impact of the Symphony
incident on operating income could be above $25 million.
We confirm our 2008 objectives based on strengthening activity in the
second half of the year. Seismic equipment deliveries will continue to
increase throughout 2008, fueled by Sercel's record backlog. In Services,
the marine utilization rate is expected to return to high levels in Q3 and
Q4 and we expect library sales to increase particularly in Q4, driven by
the timing of licensing rounds.
Looking forward we expect the seismic market for equipment and services
to grow along with increasing E&P spending of the oil and gas companies.
Other information
The quarterly financial information including press release, 6K and
presentation are available on our website at http://www.cggveritas.com.
Robert BRUNCK, Chairman and CEO, will comment on the results during a
public presentation today May 14th 2008 at 10:00 am - at Maison du Barreau
- 2 & 4 rue de Harlay - Paris 1st.
An English language conference call is also scheduled today Wednesday
May 14th at 3:00 pm (Paris time) - 2.00 pm (London time) - 8:00 am (US CT)
- 9:00 am (US ET).
- International call-in: +1-647-427-3417
- US call-in: 1-888-241-0558
- Replay: +1-402-220-1756 & +1-800-695-3382 - code 35066969
To take part in the conference call, simply dial five to ten minutes
prior to the scheduled start time to register for the call and to check
your connection is working properly. You will be asked for the name of the
conference: "CGGVeritas 2008 Q1 results".
CGGVeritas will also provide a streaming audio webcast of the
conference call accessible for two weeks following the conference call on
our website.
About CGGVeritas
CGGVeritas (http://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 (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.
Investor Relations Contacts
Paris:
Christophe Barnini
Tel: +33-1-64-47-38-10
E-Mail: invrelparis@cggveritas.com
Houston:
Hovey Cox
Tel: +1-832-351-8821
E-Mail: invrelhouston@cggveritas.com
SOURCE CGGVeritas
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CONTACT:
Investor Relations Contacts: Paris:
Christophe Barnini, Tel: +33-1-64-47-38-10, E-Mail:
invrelparis@cggveritas.com; Houston: Hovey Cox, Tel:
+1-832-351-8821, E-Mail: invrelhouston@cggveritas.com
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