CGGVeritas Announces 2008 Third Quarter Results - Record Quarter with Net Income at $162 M, up 73% year on year 2008 Objectives Confirmed Record Backlog of $1.9 B
<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />PARIS, France – November 7th 2008 – CGGVeritas (ISIN: 0000120164 – NYSE: CGV) today announced its third quarter 2008 unaudited financial results. All comparisons are made on a year-on-year basis with third quarter 2007 figures unless otherwise stated.
During the third quarter of 2008 CGGVeritas delivered its strongest quarter on record:
§ Group revenue was up 28% to $1.062 billion.
§ Group operating income was up 69% to $265 million, a 25% operating margin.
§ Sercel external revenue grew 29% to $300 million as demand for 428 XL land technology continued to strengthen. Operating margin was 33%.
§ Services revenue grew 28% to $762 million driven by high marine availability and production rates and strong multi-client prefunding. Operating margin was 23%.
§ Net income was $162 million representing 15% of revenue. It corresponds to $1.14 per ADS. Net income in Euros was €105 million. It corresponds to €0.74 earnings per share (EPS).
§ Net free cash flow was $65 million and the net debt/equity ratio stood at 42%.
§ Backlog as of October 1, 2008 was a record $1.9 billion.
CGGVeritas Chairman & CEO, Robert Brunck commented:
“I am very pleased to report record operational and financial performance during the quarter confirming our previously communicated strong second half of 2008. Looking forward, based on very high deliveries of land equipment in Sercel and strengthening multi-client sales in the fourth quarter, I confirm our confidence in achieving our 2008 objectives.
Despite the current instability of the global financial markets and uncertainties related to an economic slowdown, oil supply continues to be particularly challenging for our customers as reserve replacement rates remain low and decline rates are increasingly high. For this reason, through lowering the risks associated with finding and producing reserves, high-end differentiated seismic provides enhanced value and productivity to our clients.
With our solid financial position including long term debt maturity, industrial strength and expertise, along with our record backlog of near $2 billion, I am confident in our capacity to deliver robust performance and strength in the market.”
Third Quarter 2008 Performance and Highlights
Group Revenue was $1,062 million (€692 million), compared to $829 million (€607 million). The 28% growth in $ was driven by Sercel sales, marine performance, and multi-client sales.
Group Operating Income was $265 million (€173 million), up 69% in $ and up 51% in €, with a 25% operating margin, compared to $157 million (€115 million) and a 19% margin last year.
Group EBITDAs was $467 million (€304 million) up 27% in $ and up 12% in € compared to $369 million (€271 million) last year. EBITDAs margin was 44% this quarter.
Group Net Income was $162 million (€105 million), up 73% in $ and up 53% in € compared to $94 million (€69 million), resulting in earnings of $1.14 per ADS and €0.74 per ordinary share.
The Effective Tax Rate, not including deferred tax on currency translation, was 30%.
Net Free Cash Flow was $65 million (€42 million) and Group Net Debt decreased over the quarter to $1.57 billion (€1.1 billion), corresponding to a 42% net debt / equity gearing ratio.
Industrial Capex was $52 million (€34 million) while multi-client Capex was $146 million (€95 million) as the acquisition of our Garden Banks wide-azimuth (WAZ) in the Gulf of Mexico (GoM) continued to progress well. Multi-client prefunding was 102%.
The Net Book Value of the multi-client library was stable compared to last quarter and closed at $776 million (€542 million) distributed with $579 million (€405 million) for our marine library and $197million (€138 million) for our land library. The multi-client amortization rate was 54%.
Comparison with Third Quarter 2007
|
Consolidated Statement of Income
|
Third Quarter
(in million euros)
2008 2007 |
Third Quarter
(in million dollars)
2008 2007 | ||
|
Exchange rate |
1.537 |
1.365 |
1.537 |
1.365 |
|
Operating revenue |
691.6 |
607.2 |
1062.2 |
828.6 |
|
Sercel |
204.1 |
213.1 |
313.5 |
290.8 |
|
Services |
496.0 |
436.8 |
761.7 |
595.8 |
|
Elimination |
-8.5 |
-42.7 |
-13.1 |
-57.9 |
|
Gross profit |
246.9 |
175.5 |
379.0 |
240.1 |
|
Operating income |
172.8 |
114.7 |
265.1 |
156.8 |
|
Sercel |
66.7 |
72.4 |
102.5 |
98.8 |
|
Services |
112.7 |
71.8 |
172.9 |
98.1 |
|
Corporate and Elimination |
-6.5 |
-29.5 |
-10.1 |
-40.1 |
|
Cost of financial debt |
-18.7 |
-25.1 |
-28.6 |
-34.4 |
|
Income tax |
-52.1 |
-19.3 |
-80.0 |
-26.8 |
|
Income from equity investments |
-0.6 |
1.3 |
-0.9 |
1.7 |
|
Net income |
105.4 |
68.7 |
161.7 |
93.5 |
|
Earnings per share (€) / per ADS ($) |
0.74 |
0.51 |
1.14 |
0.69 |
|
EBITDAs |
304.3 |
271.2 |
467.2 |
369.4 |
|
Sercel |
72.8 |
77.6 |
111.8 |
105.8 |
|
Services |
239.2 |
220.2 |
367.3 |
299.7 |
|
Industrial Capex |
33.4 |
67.8 |
51.5 |
92.4 |
|
Multi-client Capex |
94.9 |
134.1 |
145.8 |
181.6 |
|
Net debt / Equity gearing ratio |
42% |
46% |
42% |
46% |
Third Quarter 2008 Business Review
Sercel
Total Revenue for Sercel was $314 million (€204 million) and external revenue was $300 million (€196 million), up 29% in $ and 15% in €. Internal sales accounted for 4% of total sales. Growing requirement for high resolution high productivity seismic drove Sercel revenue, particularly in land.
Operating Income was $103 million (€67 million), with a 33% operating margin, compared to $99 million (€72 million) and a 34% margin a year ago.
EBITDAs was $112 million (€73 million), with a 36% EBITDAs margin, compared to $106 million (€78 million) and a 36% margin last year.
Services
Revenue for Services was $762 million (€496 million), up 28% in $ and up 14% in € mainly supported by strong growth in marine contract.
Operating Income was $173 million (€113 million), with a 23% operating margin, compared to $98 million (€72 million) and a 17% margin a year ago. Strengthening multi-client sales, especially our WAZ projects and high vessel utilization rates were the main drivers of third quarter performance.
EBITDAs was $367 million (€239 million), a 48% EBITDAs margin compared to $300 million (€220 million) a 50% margin last year.
- Marine contract revenue reached $320 million (€208 million) up 86% in $ and up 66% in €. We operated 65% of our high-end 3D fleet on contract, mainly in Asia Pacific, the North Sea and the east coast of Canada.
- Land contract revenue was $131 million (€85 million) up 3% in $ and down 8% in €. We operated 19 crews in select locations with 10 in the E. Hemisphere and 9 in the W. Hemisphere. During the quarter, we implemented our first V1 patented technology in Egypt.
- Processing & Imaging revenue was $99 million (€65 million) up 13% in $ and flat in € based on growing interest in our new high-end imaging and depth migration technologies, that led to increased direct awards and the renewal of dedicated centers.
- Multi-client revenue was $212 million (€138 million) up 3% in $ and down 10% in €. The amortization rate for multi-client sales was 54% and split 50% in marine and 69% in land.
Multi-client marine revenue was $169 million (€110 million) up 9% in $ and down 4% in €. Marine multi-client Capex reached $118 million (€77 million) as 4 vessels were shooting in the GoM, Brazil and the
