Viridien S/Adr

Thank you, thank you. Good morning, ladies and gentlemen. Welcome to this presentation of CGG's second quarter 2021 results. The call today is hosted from Paris, where Mrs. Sophie Zierkia, Chief Executive Officer, and Yuri Baidukov, Group Chief Financial Officer, will provide an overview of the second quarter and after year 2021. And we will also provide comments on our outlook. Some of the information contains forward-looking statements that are subject to risk and uncertainties and that may change at any time and therefore the actual results may differ materially from those that were expected. Following the overview of the quarter, we will be pleased to take your questions. And now I will turn the call over to Sophie.

Yes, thank you, Christophe, and good morning, ladies and gentlemen, and thank you for participating in this Q2 2021 conference call. So I'll start with general comments on our market environment on the slide five. Overall, during the second quarter, activity of our clients remained similar to the first quarter, with the international oil companies maintaining capital discipline, while national oil companies and large independents remain more active. However, the macro environment has clearly strengthened, with Brent oil price remaining over $70. This is triggering an increase in short cycle investments, mostly targeting development and production. We are not yet seeing in our geoscience space significant changes in behavior, even though there are positive signals. In 2021, the IUCs will generate significantly higher cash flows and deleverage quickly. Even if financial discipline, dividend payouts, and decarbonization remain their priorities, we expect they will start accelerating spending to meet hydrocarbon demand recovery and compensate for the depletion of their existing reservoirs. For all the activity of our clients to optimize production from their current reservoirs and to meet growing hydrocarbon demand, CDG's high-end technology will be a key component of the value chain. Already, we see geoscience progressively recovering thanks to increased demand for our superior technologies and services. Multi-client was particularly slow during the quarter due to delayed pre-funding and the slow decision-making processes from our clients, mainly the IUCs. Since the end of June, we have finalized agreements for more than $35 million of pre-funding for our 2021 streamer vessel programs. Those agreements were expected in Q2 but slipped into July. It was a slow quarter as planned for our equipment business due to the timing of deliveries. CERCEL was recently awarded a major contract for 18,000 DPR 300 shallow water nodes, which are currently in manufacturing and will be delivered in Q3 and Q4. CERCEL is also in advanced discussion for significant land equipment deliveries in Q4. Overall, after a very low first half of the year, we anticipate an acceleration of our top line and profitability in H2 2021 and into 2022. Earlier this year, I highlighted our business initiatives to dispose of a few assets and divest non-core businesses. During Q2, we hit several milestones. First, the Headquartered Building Sale and Leaseback Initiative is progressing well, with closing anticipated in Q4. Second, the sale of the GeoSoftware business is progressing as planned and we're confident to close this sale in Q4. At the end of June, our physical asset storage business has been put for sale. This is a non-core business for CDD for the storage of physical assets in large warehouses. These two divestitures enable CDD to further focus on the continuous strengthening of the differentiation of our core businesses and our growth beyond the core. With the expected solid second half of the year, the monetization of assets and disposal of the businesses held for sale, as well as the full impact of our savings, CDG should deliver a positive net cash flow in 2021. Moving on to slide six now. Our Q2 revenue of $157 million was down 22% year-on-year. Group segment EBITDA was 42 million, with a 26% margin, mainly due to the business mix. Segment free cash flow was negative minus 3 million, and net cash flow this quarter was negative at minus 56 million, before 39 million of core premium and fees related to the refinancing. Our H1 segment revenue of 370 million was down 22% year-on-year, and segment EBITDA was 78 million in H1 with a low 21% margin mainly due to the business mix. Segment free cash flow was 57 million and the net cash flow for the semester was negative at minus 27 million before the 39 million of called premium and refinancing fees. A segment free cash flow in H1 2021 was higher than last year despite the significant drop in EBITDA due to an 87 million positive change in working capital and significantly reduced multi-client capex. Moving on to slide 7 now, with the headcount reduction. I'd like to show you an update on the savings we have achieved from the effort launched in March last year at the beginning of the pandemic. The reductions, which are in line with business and legal requirements, would amount to a reduction of around 900 employees by the end of 2021. And this represents a 21% reduction for the 4,200 employees we had at the end of 2019 in CDG, excluding discontinued operations. Most of the reductions come from our support functions and geoscience. Compared to 2019, the associated savings will represent $90 million of reduced personnel costs by annum by the end of 2021. In parallel, we also hired around 100 new talents, mainly in geoscience, to support our growth beyond the core initiative. The $19 million in savings does not include additional savings associated with cost control and the reduction of our geographical footprint. I'll now cover our Q2 2021 operations by reporting segment, starting with GDR on slide 9. GDR segment revenue was low this quarter at $110 million, down 24% year-on-year, but slightly up sequentially at 10%, thanks to the progressive recovery in June signs. Adjusted EBITDA margin was impacted by the revenue mix, with less multi-client sales than last year. Adjusted opening was positive as a result of improved geoscience revenue and our lower cost base. On slide 10, Q2 geoscience external revenue was $73 million, down 12% year-on-year and up 11% sequentially. Geoscience saw the start of a progressive recovery during the quarter. Backlog at the end of July 1st stands at $222 million. up 4% year-on-year. In H1 2021, order intake more than doubled year-on-year, and we are anticipating further significant awards during H2 in the major active basins. The renewed focus from our clients on field development is driving demand for OBN, especially for our leading processing and imaging technology, which is critical to providing the most detailed understanding of the subsurface to de-risk investment. Our top priority in geoscience is to remain the undisputed technology leader, and this was confirmed by the recent 2021 Kimberlite survey. On slide 11, the Kimberlite survey is a third-party biannual survey of sectors within the E&P industry. Their recent report on subsurface imaging shows that CDD has a clear market leadership position in both technology and the service that we deliver. The chart shows us in the premium offering quadrant where our clients are willing to pay for the better image quality, state-of-the-art technology, and turnaround time that we deliver. Moving on to slide 12. The same Kimberlite survey compares the different subsurface imaging competitors on a number of criteria. CBD consistently performs well above the industry average and better than any other competitor. The largest gaps in this chart are around the technology and quality of the image we deliver. And I want to show you now an example on slide 13. The use of ocean bottom node seismic is on the increase. with increasingly larger-scale surveys designed to provide greater interpretation certainty in areas of complex geology. Around the world, OBN technology is being adopted where business decisions require superior subsurface imaging to reduce risk, as the technical advantages of the ToadStreamer dataset are clear, especially with differentiated processing capabilities. And this is very much the case in the Gulf of Mexico, North Sea, and Brazil, and also in the Middle East as well. The uplift from nodes, combined with our best-in-class imaging technology in this Gulf of Mexico comparison, provides an excellent example of how dramatic the improvements can be. The new insights that we delivered enabled our clients to de-risk their well locations, both from an HSE and project economy standpoint. So moving on to the next slide, multi-client key business indicators. Multi-client revenue was 37 million, down 40% year-on-year. Q2 remains similar to Q1. The IUCs play an essential role in our multi-client business, and they have remained very disciplined in the first half of 2021, given the macro-environment volatility and their focus on the energy transition and restoring financial performance. Sales were also impacted by the lack of bid rounds in the Gulf of Mexico and in Brazil. We have significantly reduced multi-client cash capex from last year. In Q2, we had two vessels working on multi-client programs, as we started to work on a five-month 3D multi-client program in the Norwegian North Sea, in addition to our ongoing Brazil project. Pre-funding revenue on our multi-client project was at 17 million with a pre-funding rate of 39%, as targeted pre-funding slipped into Q3 2021. As I mentioned earlier, since the end of June, we have finalized agreements for more than 35 million of pre-funding for our 2021 Stream of Vessel program. And I'm confident that we will catch up on pre-funding in the second half of the year. Multi-client after-sales were at 20 million this quarter, up 28% year-on-year, but still lower than expected. The segment library net book value was 297 million at the end of June 2021, split 85% offshore and 15% onshore. Looking now at the multi-client footprint, we continue to expand our library in the most resilient basins, And indeed, we have made a conscious effort to increase our participation in development and production successfully and have avoided those frontier areas that we believe would be less robust. Brazil and Norway receive most of our investments, and we also look for those well-prefunded reprocessing projects that leverage our imaging technologies. I'll also point out that we are starting to see new players in the carbon storage space come to us with interest in our data, especially in the North Sea and around the potential development of future major CCUS hubs. I could see where a data library will be very valuable in that new space. Moving on to equipment. Equipment segment revenue was low as planned this quarter at 48 million, down 19% year-on-year. we are anticipated a solid H2 supported by large GPR 300 node deliveries and land equipment deliveries in the last quarter. At this low volume of activity, equipment adjusted EBITDA and operating income were negative at 8 million negative and 16 million negative respectively. Looking at the equipment overview, land equipment sales represented 60% of total sales as we delivered in Q2 to various geographies, mostly spare parts for our install base. Activity for the vibrators was strong with over 25 Nomad vehicles delivered. Marine equipment sales represented 25% of total sales. As an important milestone, equipment was awarded a major contract with BGP for the delivery of 18,000 GPR-300 nodes. It is the first and significant sale of this new, unique technology that features our patented QuietSize sensor. And it will be the first large-scale marine application of our QuietSize sensor that allows broadband recording down to very low frequencies. On the photo on the slide, it features our GPR300 shallow water node, and our manufacturing teams are currently producing it around the clock to meet the challenging delivery schedules. I'm pleased also to report that during the quarter, we made the first sales of our structural health monitoring system, S-LINK. I'll now give the floor to Yuri to promote financial highlights.

Thank you, Sophie. Good morning, ladies and gentlemen. I will comment the Q2 2021 financial results. Looking at the consolidated P&L for 2021 on slide 19, Segment revenue amounted to 157 million, down 22% versus the second quarter of 2020. It is a very low quarter for CEG Group. Geoscience performed better than anticipated. Equipment was low as planned and multi-client sales were disappointing as some pre-funding and after sales slipped to Q3 and the second half of the year. GGR revenue was 110 million, a 24% decrease year-on-year with 70% weight. Geoscience revenue was $73 million, down 10% year-on-year, but up 11% sequentially. And multi-client sales were at $37 million, down 40% year-on-year, on significantly lower capex and delayed pre-funding and after sales, and up 8% sequentially. Equipment revenue was low at $48 million as planned, down 19% year-on-year with 30% weight. Segmented EBITDA was $42 million, and adjusted segmented EBITDA was $35 million with a 22% margin due to unfavorable revenue mix and release of excess provision for severance under the French PEC plan. Segment operating income was negative $7 million, and adjusted segment operating income was negative $15 million. Cost of financial debt was $33 million. Net loss from continuing operations was $44 million, and net loss from discontinued operations was $7 million. Group net loss was $61 million, significantly less than $147 million lost in Q2 of 2020. simplified cash flow on slide 20. Despite significantly lower EBITDA, U2 2021 segment free cash flow improved at negative 3 million versus negative 8 million in the second quarter of 2020 on lower capex and higher positive change in working capital. Total capex was 57 million, 36% down year on year, with industrial capex at 6 million, Research and development capex at $8 million and multi-client cash capex at $43 million, 40% down year on year. Net paid cost of debt was at $30 million and lease repayments were at $15 million. 2021 plan cash costs were at $8 million and continue to reduce. Overall and before the impact of the refinancing, net cash flow was negative at $56 million this quarter. the impact of the refinancing on the cash flow in the second quarter was overall 67 million it included 39 million of refinancing fees and call premiums and 28 million net reduction in gross debt moving on to slide 21 group balance sheet and capital structure at the end of june 2021 Group liquidity amounted to 385 million, including 100 million of ungrown RCF. Group gross debt before IFRS 16 was at 1.22 billion and net debt was at 935 million. Group gross debt after IFRS 16 was at 1.35 billion and net debt was at 1.07 billion with the following breakdown. 1.195 billion of high-yield bonds due in 2027, 24 million of accrued interest and 134 million of lease liabilities. At the end of June 2021, our capital employed was at 2.18 billion versus 2.17 billion at the end of 2020. Net working capital after IFRS 15 was at 161 million, decreasing from 212 million at year end, primarily driven by reduction in net accounts receivable. Goodwill was stable at 1.19 billion, corresponding to 56% of total capital employed. Multi-client library net book value after IFRS 15 was up at 516 million, including $454 million of marine and $62 million of land net book value. Other non-current assets were $385 million, including $228 million of property, plant, and equipment, down $60 million from year-end, including $139 million of IFRS 16 right-of-use assets, of which $64 million related to Galileo financial lease, and $99 million of other intangible assets, down $17 million from year end. Other non-current liabilities were at $129 million, down $20 million from the end of last year. Shareholder's equity was at $1.04 billion, including $44 million of minority interest, mainly related to Yunsang JV. As Sophie already mentioned, our asset monetization and disposal of businesses for sale program is progressing well. The sale and leaseback of our headquarter building in Marcy is progressing as planned, and the closing of this transaction is anticipated in the fourth quarter of this year. In addition to net cash proceeds, it will result in reduction of lease liabilities and operating costs. The sale of GeoSoftware business is also progressing as planned and closing of this transaction is anticipated early Q4 this year. During the second quarter, the physical asset storage business has been put for sale and is now accounted for as an asset held for sale. This is a non-core business for CDG where we store documents, tapes and other physical assets for our clients in various warehouses. We're making good progress in our sales process and will make relevant announcements in due course. Now I hand the floor back to Sophie for an outlook for 2021 market environment and our financial guidance.