Viridien S/Adr

Good day and thank you for standing by. Welcome to the Veridian First Quarter 2026 Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will hear an automatic message advising your hand is raised. To withdraw a question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please use your Q&A box available on the webcast link anytime during the live event. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Alexandre Leroy. Please go ahead.

Good morning and good afternoon, everyone. Thank you for joining us today for the Q1 2016 results presentation. I'm Alexandre Leroy of Investor Relations and Corporate Finance. We are hosting today's call from Paris, and I'm pleased to be joined by Sophie Jochia, our chair and CEO, and Jérôme Therbe, our group CFO, who will walk you through our performance. Before we begin, a few housekeeping items. This call is being recorded and is accessible via both phone and online platforms. An audio replay will be available shortly on our website, www.beurgen.com. The presentation slides are also available for download from the website. Please note that today's presentation includes forward-looking statements. Actual results may differ materially from those expressed or implied today. Relevant risk factors are stated in our 2025 Universal Registration Document, sealed with the French Financial Market Authority . As usual, we conclude with a Q&A session, of course. And finally, a quick reminder that Thierry Dien commented primarily on segment figures, which reflect our internal management reporting. These differ from IFRS numbers, also published today, of course, due to IFRS 15 impacts on our Earth data business account. With that, I now hand over to management, starting with Sophie, who will take you through the key business highlights for the quarter, Sophie, the floor is yours.

Thank you, Alexandre. Good morning. Good afternoon, everyone. Turning on to slide two. As anticipated, the beginning of 2026 presented a softer landscape for Eurasia. This reflects a more cautious spending approach among our clients, a trend that was already visible towards the end of last year, as at the time, lower energy prices were anticipated. The conflict in Iran increased geopolitical uncertainty, driving greater volatility in the energy macro outlook and prompting more cautious client decision-making in Q1. It also reinforced the importance of energy security, exposed supply chain vulnerabilities, and contributed to a structurally tighter oil and gas environment. Potentially higher commodity prices and a greater focus on supply diversification and reserve replacement should drive stronger upstream investments in the medium term, and particularly in large long cycle offshore developments. For Viridian, these conditions favor ongoing demand for subsurface data, such as our multi-client seismic library, as well as our high-end subsurface imaging and advanced geoscience solutions. We see clients increasingly prioritizing disciplined exploration, appraisal and development investment decisions, especially in geologically complex, geopolitically stable, and strategically important perspective base. The overall impact of the Middle East conflict on Viridian's business in the first quarter was contained. Business continued to cross the Middle East was maintained overall. Against this backdrop, Viridian generated segment revenue of $214 million in Q1, 2026, with profitability consistent with activity level. More importantly, the quarter once again showcased the strength and resilience of Region's asset-light differentiated technology business model through strong cash generation. Net cash flow was a positive $26 million compared to negative $20 million in Q1 2025. This improvement was driven by our business model, disciplined approach, strict working capital requirements and management, and the increased operational flexibility we developed in recent years. Veridian also continued its deleveraging efforts, allocating an additional $41 million to bond repayments during the quarter. This brought net debt, excluding IFRS 16, to approximately $700 million at the end of March 2026. Despite ongoing volatility in the macro environment, commercial discussions with clients remain robust. The current slowdown is viewed primarily as a timing shift rather than a change in underlying demand fundamentals. Demand for high-end seismic services continues to be bolstered by long-term energy security needs, supply diversification initiatives, accelerating flood depletion, and several years of industry underinvestment. The region reiterates its 2026 guidance of approximately $100 million in net cash flow generation, with the seasonal profile expected to remain similar to 2025. Turning to slide four, I will move on to quarterly performance by business line, starting with GeoSign. In Q1 2026, we generated $98 million in external revenue. Activity was supported by large projects in Brazil and the US Gulf. while Africa continued to show encouraging momentum, particularly in the West Coast, with increased engagement from international companies. We maintained a high level of productivity and dedicated significant subsurface imaging resources to our internal EDA-modified projects, alongside external client proprietary work. Importantly, all our advanced HPC imaging centers remained fully operational throughout the quarter, including those in Oman and Abu Dhabi, with no disruptions to execution. Year-on-year external revenues were lower, mainly reflecting delays in project approvals rather than any market change. Commercial activity has continued to improve since the beginning of the year. Our backlog is expected to increase materially over the coming months, supported by both confirmed order intake and a significant pipeline of projects already verbally awarded. representing several tens of millions of dollars. Overall, while Q1 reflects a softer start to the year per GEO, we remain confident in the momentum of the business and the trajectory for the remainder of 2026. Moving on to slide five, I would like to briefly address a topic that often comes up in discussions with the financial community, and especially in the context of the current AI boom, namely our relationship with NVIDIA. Before that, let me briefly recall a few key elements. Verigen is a high-end technology company specialized in large volumes of seismic data imaging, combining world-class geoscience expertise, hundreds of proprietary algorithms developed over decades, and a leading position in specialized high-performance computing. With around 700 petaflops of computing power, We rank among the top industrial players globally, supporting more than 20 imaging centers worldwide. Our HPC infrastructure is highly customized, optimized for imaging. We continuously review, test, and select the best hardware components for our requirements and adapt our middleware and algorithms to the optimal hardware. This requires a technology agnostic approach across NVIDIA, AMD, and Intel, using both GPUs and CPUs depending on project requirements. We have been using NVIDIA GPUs for seismic imaging since 2007, making us an early adopter of GPU-based scientific computing, well before the introduction of NVIDIA's XSoftware ecosystem CUDA. This longstanding relationship laid the foundation for a much deeper collaboration. In 2024, we entered into a strategic collaboration with NVIDIA, which goes well beyond a standard supplier relationship. It provides us with early access to next-generation GPU architectures and allows us to co-develop HPC systems and optimize our most advanced imaging algorithms directly with NVIDIA's engineering team. A key focus is adapting our flagship technologies, including four-wave form inversion, to achieve maximum performance from the latest AI-optimized GPU architectures, leveraging features such as increased memory bandwidth and mixed precision. In practical terms, this means we can better anticipate hardware evolution, select the components that are optimal for our high-end throughput scientific computing, and optimize our software ahead of the market. This enables us to deploy more efficient systems as soon as new technologies become available, but also selecting and securing priority access to critical components. Overall, these collaborations are a key driver of our competitive edge, enabling us to design and build an optimal HPC for our requirements and customize and optimize our software early in the cycle. This extreme co-design approach with our suppliers enabled us to deliver superior performance and cost efficiency and to scale increasingly complex subsurface imaging workloads. Now turning to slide six and Earth data. As expected, the start of the year was slow, which is typical for the multi-client business and in line with expectations. We generated $54 million in revenue in Q1, primarily driven by late sales. During the quarter, we spent limited capex on new projects due to their phasing over this year, which resulted in a lower contribution from pre-funding. It is also important to note that Q1 2025 was unusually strong comparison days, as sales shifted from the end of 2024 to early 2025. The level of revenue achieved in Q1 2026 is not unusual for a first quarter. More importantly, the business remained cash positive with 15 million cash EBITDA, fully in line with our disciplined approach that puts a strong focus on returns and cash generation. The cash on cash was above two over the period. Looking ahead, we expect activity to progressively build as we increase investment in new surveys from Q2 onwards, which will support revenue growth over the coming quarters. As of the end of March 2026, the net book value of our data library stood at $498 million, well diversified across mature regions and high potential emerging basins. Turning now onto slide seven, focusing on emerging basins. We constantly strengthen our competitive positioning in high potential areas. leveraging both our technology differentiation and our long-standing relationships with local governments. In Uruguay, we reprocessed around 25,000 square kilometers of legacy data over the past three years using our latest imaging technologies, including TLFWI. This significantly enhanced data quality and enable the identification of new high potential prospects, driving strong interest from international oil companies in the region. Building on this momentum, we launched a new multi-client acquisition campaign covering around 7,000 square kilometers, further expanding our footprint in what the industry sees as a promising exploration area. Guyana is another key emerging basin following the major discoveries in the Starbrook block supported by our legacy data. In this country, we have secured exclusive rights for over 25,000 square kilometers of modified projects in shallow water. The objective is to assess the potential extension of these prolific systems closer to shore, an area that remains largely underexplored. We will reprocess over the coming years thousands of square kilometers of existing shallow water data Once again, leveraging our advanced imaging technologies to unlock additional subsurface insights. Overall, these initiatives position us early in the high potential basins of the attractive Atlantic margin and support future multi-client growth over the coming years. Turning on to slide eight and sensing and monitoring. In Q1 2026, revenues were $61 million. Both the land and marine segments operated in a slow market environment and were further impacted by the current situation in the Middle East. In particular, some new order intake has been delayed as clients in the region focused on other short-term priorities. We expect order intake to progressively recover as visibility improves. Client engagement remains strong, and as conditions normalize for acquisition companies, we anticipate a rebound in activity. Moving on to slide nine. Beyond the temporary headwinds affecting oil and gas business at SMO, our new businesses remained well on track and grew to represent around 20% of SMO revenue in Q1. Our strategy is to leverage our core technologies and know-how in adjacent markets in a capital efficient manner. This example illustrates our infrastructure monitoring capabilities one of the key pillars of this diversification. The project shown here is the Second Avenue subway in New York, a large-scale and complex urban project spanning 10 city blocks with a total value of over $1.9 billion. We provide high-end monitoring services, ensuring safe construction while maintaining uninterrupted operations on one of the city's busiest subway lines. We deploy advanced sensing technology combined with real-time analytics and risk mitigation tools, enabling continuous and precise monitoring of the construction. And more broadly, this type of project demonstrates our ability to extend our core technology in new verticals, addressing critical infrastructure needs and opening up scalable high-value markets beyond oil and gas. With that, I'll now hand over to Jérôme, who will walk you through the financial performance.