CGG - model update for Q2 20 results

All,

Please find our updated model here.

Following the Q2 20 results update, we remain long the First Lien and the Second Lien notes. The results confirm our view that CGG’s cash burn will remain contained this year, despite the significant contraction of revenues. The cash outflows from discontinued operations, a key driver of CGG’s FCF generation since 2018, has continued to perform in line with the company’s guidance, which sees it going away in 2021. Even if a small fraction of the additional cost cutting planned materializes as expected by management, the lower overall fixed cost base should enable CGG to break even on a much lower level of revenues than in 2018-2019.

Feel free to reach out if you would like to exchange ideas on the name.

Juliano