Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viridien (CGGYY, Financial) reported a 7% increase in nine-month segment adjusted EBITA, reaching $298 million, driven by strong performance in Geoscience.
- Net cash flow improved significantly to $34 million, marking a major improvement from the previous year.
- The company is seeing strong growth in its Geoscience segment, with Q3 revenue increasing by 32% to $103 million, the strongest quarter since Q4 2015.
- Viridien (CGGYY) has secured new contracts in the mining industry and for carbon storage, expanding its project portfolio to nine ongoing projects.
- The company is well-positioned to capitalize on upcoming opportunities in Brazil's 2025 presalt bid round, with comprehensive data coverage in the region.
Negative Points
- Data revenue was lower than expected due to cutoff effects and a continued trend of hyper funding and flat aftersales.
- Sensing and Monitoring (SMO) segment experienced a decline in activity, with Q3 revenue down from the previous year.
- The company incurred a $37 million penalty fee related to vessel commitments, impacting its EBITDA.
- Earth Data segment revenue decreased by 22% compared to last year, although year-to-date numbers showed an 8% increase.
- The company faces quarterly volatility, particularly in the SMO segment, which is expected to continue based on large crew activity.
Q & A Highlights
Q: Can you provide an update on the prefunding progress for the Laconia project and expectations for late sales in Q4?
A: Prefunding for Laconia is progressing well, with some clients coming in earlier than expected, which will bring cash forward. We are tracking to our cash break-even point by the end of next year. For late sales, we expect Q4 to be strong, with identified deals providing more visibility than in previous years. However, it's always subject to final client decisions at year-end.
Q: With concerns about oil prices and potential investment declines, what are you seeing from clients regarding exploration activities?
A: We are not seeing any inflection in client behavior. Our sector has been slower to pick up, but the long-term view remains positive. Clients need to prepare for future production increases, and exploration is essential for finding new reserves. The current oil price level is comfortable for clients to continue investments.
Q: What is causing the slippage in late sales and SMO deliveries from Q3 to Q4?
A: For late sales, it was a cutoff issue with a significant deal signed just after Q3 ended. For SMO, it was more about the timing of deliveries, which are expected to occur in Q4, leading to a stronger quarter.
Q: Can you elaborate on the potential impact of the upcoming Brazil bid rounds on your data library sales?
A: The Brazil bid rounds in the presalt area, where we have significant data coverage, could drive substantial sales. The blocks are large, and interest from multiple clients could lead to significant data purchases.
Q: With the vessel capacity agreement expiring, how do you plan to source vessel capacity moving forward?
A: We are pleased the agreement is ending and plan to procure vessels on the open market, avoiding onerous contracts. We see a shift towards node-based data acquisition, which offers flexibility and aligns with market trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
