CGG SA

Thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of CDG's first quarter and full year 2023 results. The call today is hosted from Paris, where Mrs. Sophie Zucchia, Chief Executive Officer, and Mr. Jérôme Servre, Group CFO, will provide an overview of the quarter and the full year results, as well as provide comments on our 2024-2026 environment and market trends, as well on our financial trajectory. Let me remind you first that some of the information contains forward-looking statements subject to risk and uncertainties that may change at any time. And therefore, the actual results may differ materially from those that were expected. Following this presentation, we will be pleased to take your questions. And now, I will turn the call over to Sophie.

Thank you, Christophe. Good morning and good afternoon, ladies and gentlemen. And thank you for participating in this Q4 2023 and for your conference call. On this call today, we will review our Q4 and full year 2023 operational and financial performance. We are also taking this opportunity to provide further insights and share with you our view on the 2024-2026 market environment, the business outlook and perspective of our core and new businesses, and an overview of our expected financial roadmap. Moving on to slide four. Today, CDD is a clear leader in our core businesses of geoscience, earth data, and sensing and monitoring, thanks to our expertise and our advanced technology. We have also successfully expanded the scope of our business to address energy transition, mainly through CCUS and minerals and mining offerings, which are natural step-out extensions of our core products and services. And beyond oil and gas, we are developing two new businesses, high-performance computing and digital solutions, leveraging our geoscience technology and capabilities, and infrastructure monitoring, which leverages our sensing and monitoring equipment and solutions. In 2023, revenue from these new businesses grew to around $90 million, and we anticipate they will continue to develop at a fast pace moving forward. Slide five on ESG performance. I'd like to begin by highlighting the particularly strong ESG ratings of CGG. We set an ESG framework with ambitious targets across social, environmental, and governance areas, all of which are included in the company's and its leadership's objectives. We are well ahead of our carbon emission objectives and expect targets to be achieved much earlier than original commitments. By the end of 2023, we have already reduced our scope 1 and 2 by 58% since 2019, and that is post-investiture of our acquisition services, and have increased our green energy mix to 65%. Our HSE performance remains excellent, and we'll continue to ensure it is maintained at the top percentile level. Our risk profile is low and controlled given the footprint and activities of CDGs. Our key focus on diversity is to set ambitious gender diversity targets and ensure that this targeted percentage is achieved across all levels of the organization. We are already at 25%, which positions us in the best performance of our industry. Our performance is also recognized by rating agencies with an MSCI rating of AA, which we have maintained for the last four years. Moving on to slide 7 now, and looking at our Q4 key figures, our Q4 revenue was $320 million, stable year-on-year. Segment Q4 2023 EBITDA was $122 million, including $13 million penalty fees from vessel commitments and $8 million equipment inventory write-offs. Q4 net cash flow was positive at $48 million and including $18 million contractual fees from Vessel Commence. Looking at 2023 now, our full-year financial performance significantly improved year-on-year. Revenue reached $1.125 billion, up 21%, and we delivered $32 million of organic net cash flow while investing in the development of our new businesses and our HTC capacity, and paying $66 million related to contractual vessel commitments. We finished 2023 with $417 million of liquidity at the end of December, including $327 million of cash and $90 million of undrawn RCF. Going on to slide 8. Macro oil and gas trends over the quarter remained stable, with a long-term range for oil prices around $80. This provides a solid backdrop for a continued increase in client spending in our market. Q4 2023 revenue mix was quite different than last year, with all business lines landing near similar levels. Geoscience was $98 million, up 41% year-on-year, driven by the delivery of large processing projects. Earth data was $103 million, than 29% year-on-year, as our clients remained disciplined on their budgets, prioritizing spend on drilling and other shorter-term-to-market activities. This was further exaggerated by the shift of lease rounds in Brazil and the Gulf of Mexico, delaying seismic spend in those key basins. Sensing and monitoring was $119 million, up 14% year-on-year, sustained by a high level of land and known equipment deliveries in North Africa and China. With Q4 revenue stable year-on-year, we ended up the full year at up 21%, which is a significant achievement. Going on to slide 9. Looking now at each of our segment business indicators. 2023 DDE segment revenue was $672 million, up 2% year-on-year, as double-digit growth in geoscience was offset by lower Earth data sales. When corrected for the $19 million revenue related to our land library footprint in 2022, DDE growth was actually 5%. The profitability of DDE mechanically decreased based on sales mix. Slide 10 with geoscience. In 2023, driven by our leading imaging technologies, geoscience performance was excellent. External revenue grew to $335 million, up 18% year-on-year, with growth coming from all regions. The geoscience business remained strong, supported by demand for new technology to precisely understand the subsurface, both for exploration but also importantly for development and production where technology can bring significant shorter term value to our clients. Our advanced technology is particularly valuable for OBN processing given the high acquisition cost and the step change in quality our unique imaging technology can deliver. We continue to benefit from the success of the elastic TLFWI technology, which is now implemented in all regions and powered by CGG's ever-growing and highly optimized HPC capacity, which has now reached 510 petaflops. The backlog dynamics at the end of the year are not indicative of the trends that we see in the industry, and we expect to recognize multiple significant projects going forward in backlogs. Coverage for 2024 is very similar to last year at the same time and expect our plan for 2024 to be fairly secure.

Going on to EDA, slide 11.