Viridien S/Adr

Good day and thank you for standing by. Welcome to the Viridian Q3 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jean-Baptiste Roussy. Please go ahead.

Yes, thank you. I'm Jean-Baptiste Roussy, in charge of corporate finance and investor relations. As has just been said, we are in Paris today with Sophie Durkiga, our CEO, and Jérôme Serre, our CFO. They will provide an overview of the results, as well as a comment on our outlook. Following the overview of the quarter, we will be pleased to take your questions, obviously. And now, I leave you with Sophie.

Thank you, Jean-Baptiste. Welcome, everyone, and thank you for joining the presentation of Buridian's Q3 2024 financial results. The macro environment remains volatile, with oil prices fluctuating due to geopolitical tensions and oversupply. However, our clients have maintained a stable spending pattern within our sector, driven by long-term offshore investments. We're also seeing a gradual pickup in exploration efforts, particularly among European IUCs, which had previously reduced their spending during the COVID-19 pandemic. These clients continue to prioritize efficiency and cost disciplines. Our third quarter has seen another strong growth at Geoscience, which confirmed its strengths and ability to drive the group's performance. Earth data revenue was lower than expected, with some cut-off effects, with continued trends of hyperfunding and flat aftersales. Sensing and monitoring SMO, as anticipated, experienced a low level of activity and a shift in deliveries to Q4. Given our quarterly volatility, we believe that the year-to-date performance is a more accurate indicator of trends and overall performance. Our nine-month revenue was nearly flat at $778 million, with geoscience and Earth data showing strong growth, while sensing and monitoring declines. This is in line with our revenue guidance at the beginning of the year. A nine-month segment adjusted EBITDA increased by 7% year-over-year to $298 million, driven by DDE's growth, partially offset by SMO's decline. Net cash flow improved significantly to $34 million, a major improvement from last year. A focus on cost control and working capital management is starting to yield results. Our performance reflects our focus on high value activities and operational efficiency, despite $37 million penalty fee related to vessel commitments, which impacted our EBITDA. I would like to remind you that this contract will expire in early January, which we expect to have a significant positive impact on both EBITDA and cash flow generation. Now going on to slide six, let's review the performance of our segments and businesses. DDE segment revenue was solid at $187 million, quasi-stable year-on-year, with geoscience growth balancing Earth data decline. Despite the less favorable mix, adjusted EBITDA grew 5% thanks to strong geoscience performance. Going on to slide seven for geoscience. For Geoscience specifically, Q3 segment revenue increased 32% to $103 million in line with Q2 2024, which was the strongest quarter since Q4 2015. A backlog is continuing to strengthen, driven in part by an increase in average project size. This trend is consistent with the growing number of new offshore field developments that we see as the offshore cycle unfolds and demand for high-end imaging solutions increases. Meanwhile, our constant focus on efficiency has yielded further improvements in productivity. By leveraging AI and overall workflow output optimization, that includes the optimization of our highly specialized HPC infrastructure, algorithms, software and workloads, we have continued to strengthen production per head, demonstrating our commitment to delivering the highest quality results while maintaining an efficient operation. Looking now at slide 8, Purdue Science operational highlights. We are pleased to report a significant increase in order intake in Q3. driven in part by strong demand from the Middle East, where our cutting-edge technologies are making a tangible impact. Our land data solutions have reached a new level of sophistication, enabling us to accurately image small features and extract reservoir properties that were previously deemed impossible. These breakthroughs not only save our clients millions of dollars in drilling costs and increase success rates, but also substantially reduce safety risks. We've had more than 30 years of presence in the region with our dedicated HPC on-prem imaging center in Oman and our open HPC cloud imaging center in Abu Dhabi. Recently, we have expanded our footprint into additional countries, further solidifying our position in the market. The Gulf of Mexico is also gaining attention again from a growing number of IOCs and independents. who are drawn to the region's vast opportunities for near-field exploration and new frontier play. We are well positioned to support these efforts with our advanced imaging solutions. In our new businesses, we have secured new contracts in the mining industry and for carbon storage, bringing our total number of ongoing projects to nine. High-quality imaging is essential for carbon storage We've already been able to clearly demonstrate the value of our solutions in this area. In one notable project, our imaging technology helped identify a previously undetected fault, which could have compromised the long-term storage of carbon. This highlights the critical role that our expertise plays in ensuring the viability, safety, and efficacy of carbon storage operations. Turning onto slide nine for Earth data. Earth data segment revenue of $83 million was down 22% compared to last year. However, looking at year-to-date numbers, revenue was up 8%, driven by higher pre-funding revenue. Our after-sales for the quarter came in at $26 million, impacted by a significant deal that was delayed to Q4, and has now been booked. On a year-over-year basis, after-sales trends have been relatively flat, reflected limited bid rounds, and our clients continued cautious and disciplined approach. Meanwhile, multi-client capex increased to $83 million, driven by the ramp-up of our Laconia project in the Gulf of Mexico, where we saw good progress on securing pre-funding during the quarter, ahead of our original plans. Turning to slide 10 for EDA operational highlights. A Laconia project is progressing well, with 40% of the acquisition already complete. In Brazil, our Viridian data covers all 14 blocks that are proposed for 2025 pre-salt speed round. With its improved terms and conditions, including the removal of drilling commitments and our coverage, we are positioned very well to capitalize on this opportunity. In Norway, we successfully completed the acquisition of our latest survey, further expanding our coverage in the region. This marks the 11th consecutive year we acquired data in the North Viking-Rabbon area, resulting in a comprehensive and high-quality dataset that has facilitated dozens of discoveries. Building on the success, we introduced node data to complement our streamer data, which when combined with our high-end imaging could provide greater detail in complex areas. We see strong industry support for these programs. Notably, our data coverage also includes blocks designated for carbon storage, positioning us well to drive new revenue growth in this emerging business area. We're actively pursuing opportunities in carbon storage, with two well-funded re-imaging projects underway in the North Sea, and screening studies completed in the Gulf of Mexico and Asia. Turning now to slide 11 on sensing and monitoring. Our Q3 SMO segment revenue was $59 million, a decline from the unusually strong Q3 2023 that saw high results for large surveys in North Africa and Mekong. As communicated earlier, we expect to see quarter-to-quarter volatility in SMOs, mainly based on large crew activity, and we're confident that Q4 will be strong, driven in part by orders that were delayed from Q3. We would be encouraged to see SMOs adjusted if they remain positive quarter-to-quarter, as this reflects the early benefits of adaptation plans and culture reduction efforts.