Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viridien (CGGYY, Financial) reported strong performance in its geoscience and Earth data segments, with revenue up 24% year on year.
- The company achieved a credit rating upgrade to B- from Standard & Poor's, reflecting improved financial stability.
- Viridien settled an old litigation with ONGC in India, providing financial support for the Laconia multi-client project.
- The company is leveraging advanced technology and expertise to expand into low carbon markets and high-performance computing.
- Viridien's new businesses, including carbon capture and storage (CCS) and minerals and mining, are showing positive momentum with larger imaging contracts.
Negative Points
- The sensing and monitoring segment experienced a revenue decline due to the absence of significant equipment sales for mega-crews.
- Adjusted EBITDA was down 10% year on year, impacted by decreased performance in the sensing and monitoring segment.
- Net cash flow for Q2 was close to breakeven, indicating financial challenges despite improvements from the previous year.
- The company faces continued volatility in the sensing and monitoring market, affecting revenue stability.
- Viridien anticipates lower EBITDA for the sensing and monitoring segment due to market conditions and delayed environmental permits.
Q & A Highlights
Q: Can you provide insights on the EBITDA margin for the geoscience business unit this quarter and the impact on the group's EBITDA?
A: Sophie Zurquiyah, CEO, explained that while they don't provide direct margin figures, the revenue per head is a proxy that shows continuous improvement. Despite investments in a new data center, efficiency gains and large project wins have driven margin increases.
Q: How does the guidance reconcile with the $50 million increase in CapEx, and what is the pre-funding level for the Laconia project?
A: Jerome Serve, CFO, noted that while more CapEx leads to more pre-funding, the percentage of completion for Laconia by year-end is below 50%. The guidance remains unchanged, with the pre-funding ratio expected to stay at 75% for the group.
Q: What portion of after-sales is contributed by CCS, and how significant is it?
A: Sophie Zurquiyah stated that about 15% of their library is exposed to CCS licenses, contributing approximately 10-15% to after-sales in H1. This figure is a good proxy for future expectations, though sales can be lumpy.
Q: Will the $8 million in penalty fees recur, and are there extra charges expected from the transformation plans?
A: Sophie Zurquiyah mentioned that environmental permit delays could lead to similar penalty fees in the future. Jerome Serve added that restructuring costs, such as downsizing facilities, are part of the transformation plan, with significant impacts expected next year.
Q: How will the end of the Shearwater take-or-pay contract affect earnings, and are there opportunities to renegotiate vessel day rates?
A: Sophie Zurquiyah clarified that costs associated with the contract will disappear in 2025. While vessel day rates are not expected to increase significantly, the market currently has sufficient capacity, and any changes would be commercially adjusted.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
