CGGVeritas Cites 'Relatively Stable' Backlog of $1.56B
CGGVeritas' 2009 financial statements have been approved by the Board of Directors on February 24, 2010 and are subject to completion of audit procedures by CGGVeritas independent auditors. All comparisons are made on a year-on-year basis unless stated otherwise. All results are reported after nonrecurring charges unless stated otherwise.
Year 2009 Results: Strong cash generation during the trough of the cycle
- Group revenue was $3.11 billion for the full year, down 19% from a record 2008 with Services down 12% and Sercel down 29%
- Before restructuring costs of $144m and one off depreciation charges of intangible assets of $389m, operating margin was 10%, EBITDAs margin was 32% and net income was $110m
- Sercel delivered a strong and resilient 22% operating margin o Services delivered 7% operating margin in an oversupplied market mainly in marine
- After restructuring costs and one off impairment of intangible assets, net income was a loss of $360m
- 2009 Free cash flow was $168m
- Net Debt to Equity ratio improved to 34.5%
- Backlog as of February 1, 2010 was relatively stable at $1.56 billion
Focus on the high-end market with further strengthening of our marine restructuring plan and one off impairment of intangible assets
In a seismic market that became increasingly challenging in low-end marine, CGGVeritas accelerated its fleet repositioning to the high-end 10+ streamer vessel segment:
- In addition to the previously announced decommissioning of 7 vessels, the Search was decommissioned in Q4 2009 and the Sword will be decommissioned in Q2 2010 leading to additional marine restructuring charges of $31m in Q4, of which $16m is a non-cash charge (depreciation)
- The accounting value of all other low-end vessels was reduced by $28m
The fleet restructuring plan and recent evolution in the seismic market led us to write off the net book value of certain intangible assets by $389m:
- Selected legacy Veritas multi-client surveys, acquired before 2007, were written down by $89m, comparable to the purchase price write up allocated to this data following the merger
- Marine goodwill was impaired by $300m
Fourth Quarter 2009 Results:
- Group revenue was $748m down 28% from a record quarter last year. Continued resilience in Sercel and high multi-client sales partially offset lower vessel utilization and particularly low marine prices this quarter
- Before additional restructuring costs of $59m and one off depreciation charges of intangible assets of $389m, group operating margin was 7%, EBITDAs margin was 33% and net income was $5m
- After restructuring costs and one off depreciation charges, net income was a loss of $411m
- Free cash flow was $38m and $128m of term loan B under US senior facilities was repaid
CGGVeritas Chairman & CEO, Robert Brunck commented, "In 2009, through the market downturn, CGGVeritas achieved a 10% operating margin and generated a strong free cash flow, well above our target while further strengthening our technological leadership position notably in Sercel and Processing & Imaging. Our advanced multi-client library generated strong sales at the end of the year, especially in wide azimuth.
"In the perspective of a marine market that is continuing to rapidly evolve toward high-resolution and reservoir development, we decided in 2009 to reduce the capacity of our low-end fleet while increasing our position in the high-end market.
"We will continue to reinforce this position going forward by upgrading our vessels with the latest and highest performing technologies while taking delivery of the two X-Bow vessels, the Oceanic Vega in 2010 and the Oceanic Sirius in 2011.
"In land, CGGVeritas strengthened its leadership position and unique capability in ultra-high resolution reservoir seismic in the Middle East. In the challenging market of North America we further focused our activities in the Arctic and on unconventional shale gas plays.
"Looking forward, in the context of increasing exploration and production spending and given the fleet rationalization efforts undertaken by the leading seismic companies, we expect the seismic market to progressively recover in 2010.
"We enter the year with a solid balance sheet, restructured activities and assets well positioned in the high-end market.
"Although our backlog is currently impacted by low prices in marine, we expect our financial results to pickup in the second half and further strengthen in 2011, supported by our focus on operational performance and a continued advance of technology across the full breadth of our products and services."