CGGVeritas: CGGVeritas Announces Q1 2007 Results

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Revenues of US$777 Million, up 22% PARIS, May 10 /PRNewswire-FirstCall/ -- CGGVeritas (ISIN: 0000120164 - NYSE: CGV) today announced its first quarter 2007 unaudited financial results. Preliminary comments: Veritas figures have been incorporated as of January 12th 2007 at the time the merger was effective. The impact of those 12 days is evaluated at US$23 million of Revenues and US$3 million of EBIT. All number for Q1 2007 do not include Jan 1st to Jan 12th Veritas pre-merger figures unless specifically designated as "full quarter". For the purpose of providing the best understanding of our performance, the Q1 2007 results will be compared in US$ to pro-forma 2006 figures. 2006 pro-forma figures are pro-forma as if the merger was effective on January 1st, 2006 and result from the consolidation of former CGG and former Veritas figures. All the figures are provided in euros and dollars. The US$ figures are calculated based on 1st quarter EUR/US$ average exchange rate for the Profit & Loss and Cash Flow Statement and are based on the EUR/US$ closing exchange rate for the Balance Sheet The comparison in EUR between the Q1 2007 results with the Q1 actual 2006 CGG figures is provided on the last page before the balance sheet items. Q1 Financial Highlights and year on year comparison with pro-forma Q1 2006: - Group Revenues of EUR592 million (US$777 million), up 10% in EUR and 22% in US$ - Group EBITDA of EUR258 million (US$339 million), and EBITDA margin of 44% compared to EUR221 million, (US$264 million), and EBITDA margin of 41% - Purchase Price Allocation (PPA) impact of EUR12 million (US$16 million) - Group Operating Profit, including PPA, of EUR144 million (US$188 million), a 24% operating margin compared to EUR114 million (US$136 million), a 21% operating margin - Net Profit of EUR69 million (US$91 million) compared to EUR27 million (US$32 million) - Net Debt to Equity Ratio of 50% - EPS of EUR2.65 (US$3.47) compared to EPS of EUR1.04 (US$1.24) - Services Revenues of EUR426 million (US$559 million), down 5% in EUR and up 5% in US$ - Services EBITDA margin of 49%, compared to a pro-forma EBITDA margin of 44% - Services Operating Profit of EUR101 million (US$133 million), including PPA, a 24% operating margin compared to an operating margin of 21% - Sercel Revenues of EUR205 million, (US$268 million), up 68 % in EUR and 85% in US$ - Sercel Operating Profit of EUR69 million (US$91million), an operating margin of 34% compared to an operating margin of 24% Q1 Operational Highlights: - 32 land seismic crews in operation, including very active winter campaign in North America - Vessels utilization rate at 90% - 3rd Wide Azimuth Acquisition survey initiated in the deep water Gulf of Mexico (GoM) - Multi-Client pre-funding level above 100% - Good level of multi-Client after-sales of EUR76 million, (US$100 million) - Sercel achieved very strong land product deliveries - Backlog as of May 1st 2007 of US$ 1.650 billion Comments and Perspectives: CGGVeritas Chairman & CEO, Robert BRUNCK, commented: "I am very pleased to report robust financial and operational performance for our 1st quarter of operations as the new CGGVeritas. In Services, our employees remained focused on our clients and operations while moving proactively through the integration process and delivered good results. Sercel continued to benefit from clear technology leadership in its sector and achieved superior results with very high level of land product deliveries. Looking forward, we anticipate demand in the seismic market will remain strong into 2009. In this context, we confirm our 2007 financial targets of above 3.0 BUS$ revenues and 40% EBITDA margin. We are also revising our 2008 synergies upward to above US$75 million. Over this period, our targets of strong cash flow generation and debt reduction while building a solid leadership position for CGGVeritas, remain our top priority" Q1 2007 - Year on year comparison with pro-forma 2006 in US$: ------------------------------------------------------------- Q1 Financial Highlights(US$ M) Q1 2007 Q1 2006 ------------------------------------------------------------- Operating revenues 777.3 639.4 Sercel 268.3 144.8 Services 558.7 533.9 Elimination (49.7) (39.4) ------------------------------------------------------------- Gross profit 270.9 199.5 ------------------------------------------------------------- Operating profit (loss) 188.3 135.8 ------------------------------------------------------------- Sercel 90.6 35.0 Services 132.9 109.7 Corporate and Elimination (35.2) (8.9) ------------------------------------------------------------- Income (loss) from equity investments 0.6 3.3 ------------------------------------------------------------- EBITDA 338.5 263.9 ------------------------------------------------------------- Sercel 96.8 40.1 Services 276.0 235.1 ------------------------------------------------------------- Net Income (loss) 90.5 31.6 Earnings per share (US$) 3.47 1.24 ------------------------------------------------------------- Industrial Capex 96.2 122.7 Multi-Client Capex 81.1 29.1 ------------------------------------------------------------- Net Debt / Equity Gearing Ratio 50% N/A ------------------------------------------------------------- Q1 Revenues & year on year comparison with pro-forma Q1 2006: Group Revenues were EUR592 million, (US$777 million) up 10% in EUR and up 22% in US$. Full quarter Group Revenues (including the first 12 Days of January 2007 for Veritas stand alone) were EUR609 million, (US$800 million) up 14% in EUR and up 25% in US$. Revenues for Services were EUR426 million, (US$559 million) down 5% in EUR and up 5% in US$, with less streamer capacity dedicated to contracts. Full quarter Services revenues (including the first 12 days of January 2007 for Veritas stand alone) were EUR443 million, (US$581 million) stable in EUR and up 9% in US$. Revenues for Sercel were EUR205 million (US$268 million), up 68 % in EUR and up 85% in US$ year on year. Sercel external sales were EUR167 million (US$219 million) up 88% in EUR and up 107% in US$, year on year. Full quarter Services revenues breakdown per Segment and year on year comparison with pro-forma Q1 2006: Land Contract Revenues were EUR84 million (US$110 million) stable in EUR and up 7% in US$. Offshore Contract Revenues were EUR136 million (US$178 million) stable in EUR and up 9% in US$. Multi-Client Revenues were EUR155 million (US$203 million) down 4% in EUR and up 6% in US$. Multi-Client land revenues were EUR41 million (US$54 million). Multi-Client offshore revenues were EUR114 million (US$149 million) Processing and Reservoir Revenues were EUR68 million (US$90 million), up 9% in EUR and 20% in US$. Q1 EBITDA & Operating Profit & year on year comparison with pro-forma Q1 2006: Group: The Group EBITDA was EUR258 million (US$339 million), a 43.5% EBITDA margin, compared to EUR221 million (US$264 million), 41.2% EBITDA margin. The Group Operating Profit was EUR144 million (US$ 188 million), a 24.2% operating margin, including PPA EUR12 million (US$16 million) compared to EUR114 million (US$136 million), a 21.3% operating margin, including PPA EUR18 million (US$21 million). Services: Services EBITDA was EUR210 million (US$276 million), a 49% EBITDA margin compared to EUR197 million (US$235 million) and a 44% EBITDA margin. Services Operating Profit including PPA was EUR101 million (US$133 million), a 24% operating margin, compared to EUR92 million (US$110 million), a 21% operating margin. Sercel: Sercel EBITDA was EUR74 million (US$97 million) corresponding to a 36% EBITDA margin, compared to EUR34 million (US$40 million), a 28% EBITDA margin. Sercel Operating Profit was EUR69 million (US$91 million), a 34% operating margin, compared to EUR29 million (US$35 million), a 24% operating margin. Overview of the Q1 Operations and market outlook: Services: Land Contract Acquisition: During the quarter, we operated up to 32 crews, 18 crews in Western Hemisphere and 14 crews in the Eastern Hemisphere. Q1 is typically the strongest quarter for CGGVeritas due to the important contribution of the arctic crews in Alaska and Canada. The first quarter 2007 was no exception and we also saw particularly strong performance in the lower US. Market conditions look to remain strong throughout 2007 and our land backlog is at a high level. The second and third quarter will be active especially in Europe Africa and Middle East (EAME) and Asia Pacific, while the arctic crews will be demobilized in Q2. Land Multi-Client: During the quarter, crews shot highly pre-funded Multi-Client programs in Canada and in the lower US. Starting in June 2007 our 100% pre-funded Multi-Client program in the Caspian Sea will resume. Offshore Contract Acquisition: During the quarter, around 60% of the 3D fleet was dedicated to contracts compared to 90% last year. Five 3D vessels were operating in Asia Pacific, one in EAME and one in multi-azimuth contract in GoM. 100% of our mid capacity 3D and 2D fleets were also shooting contracts works. The 3D vessel utilization rate was 90% and is anticipated to decrease in Q2 as a consequence of scheduled dry docks for performance upgrade and maintenance. It will be up again in Q3 and Q4. We have two new vessels, the Vision and the Poseidon, joining our fleet while we will be decommissioning the Seisquest July 1st. The Vision will start operating early July and the Poseidon early October. Multi-Client Offshore: Demand for recent vintage and well located data particularly in deep and ultra-deep waters remains robust, resulting in a good level of after-sales to be compared to an especially strong Q1 06. During this quarter, six 3D vessels worked on high pre-funded new Multi-Client programs, in GoM, Brazil and North Sea. The wide azimuth Walker Ridge basin program in the Gulf of Mexico commenced and is expected to be completed in Q1 2008. In Processing & Reservoir: During the quarter, processing activity was particularly strong driven by increasing marine volumes and high demand for advanced imaging. Backlog continues to strengthen. Sercel: During the quarter, Sercel delivered a large volume of land equipment into the growing demand for higher resolution seismic and more specifically for increased channel counts. Marine equipment sales continue to be strong driven by demand for leading technology and new builds coming into the market. Q1 Net Income & year on year comparison with pro-forma Q1 2006: The net result was a profit of EUR69 million (US$91 million) compared to a pro-forma profit of EUR27 million (US$32 million). Earning per share was EUR2.65 compared to pro-forma earning per share of EUR1.04. Q1 Capex & year on year comparison with pro-forma Q1 2006: The industrial Capex for the first quarter 2007 were EUR73 million (US$96 million) compared to pro-forma EUR103 million (US$123 million). The Multi-Client Capex for the first quarter 2007 were EUR62 million (US$81 million) compared to pro-forma EUR24 million (US$29 million). The average pre-funding level was above 100 %. Q1 2007 - year on year comparison with actual Q1 2006 CGG figures in Euros: ----------------------------------------------------- Q1 actual results (EURM) Q1 2007 Q1 2006 ----------------------------------------------------- Operating revenues 592.2 322.1 Sercel 204.5 121.5 Services 425.6 229.6 Elimination (37.9) (29.0) ----------------------------------------------------- Operating profit(loss) 143.5 84.5 ----------------------------------------------------- Sercel 69.0 29.3 Services 101.3 62.0 Elimination (26.8) (6.8) ----------------------------------------------------- EBITDA 257.9 127.7 ----------------------------------------------------- Sercel 73.8 32.7 Services 210.3 107.5 ----------------------------------------------------- Net Income (loss) 69.0 46.5 ----------------------------------------------------- Earnings per share (EUR) 2.65 2.7 ----------------------------------------------------- Group Revenues were EUR592 million (US$777 million) up 84% in EUR and up 102% in US$. The Group Operating Profit was EUR144 million (US$ 188 million), up 69% compared to EUR85 million (US$101 million). The net result was a profit of EUR69 million (US$91 million) up 47% compared to a profit of EUR47 million (US$56 million). Earning per share was EUR2.65 compared to earning per share of EUR2.70. Balance Sheet items: At the end of March 2007, Shareholder's equity was EUR2.407 billion and net financial debt was EUR1.213 billion, representing a 50% net debt to equity ratio. 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. - Robert BRUNCK, Chairman and CEO, will comment on the results during the shareholders meeting today at 9:30 am - Maison du Barreau - 2, rue de Harlay - Paris 1st. - Detailed financial figures are available on our website : http://www.cggveritas.com/ - An English language conference call is scheduled at 3:30 PM (Paris time) - 2:30 PM (London) - 8:30 AM (US CT) - 9:30 AM (US ET). To take part in the English language conference, simply dial five to ten minutes prior to the scheduled start time. - International call-in: +1-706-758-9607 - US call-in: 800-374-0113 - Replay: +1-706-645-9291 & 800-642-1687 - code 6497250 - You will be asked for the name of the conference: "CGGVeritas Q1 2007 Results". - Copies of the presentation are posted on the company web site and can be downloaded. - The conference call will be broadcast live on CGGVeritas's website http://www.cggveritas.com/ and replay will be available for two weeks thereafter. 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 Eurolist of Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares, NYSE: CGV). Contacts Investor Relations: Paris: Christophe Barnini, Tel.: +33-1-64-47-38-10, ; Houston: Hovey Cox, Tel.: +1-832-351-8821, ; Press Contact: Brunswick, Tel.: +1-212-333-3810 DATASOURCE: CGGVeritas CONTACT: Contacts Investor Relations: Paris: Christophe Barnini, Tel.: +33-1-64-47-38-10, ; Houston: Hovey Cox, Tel.: +1-832-351-8821, ; Press Contact: Brunswick, Tel.: +1-212-333-3810

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