Good day and thank you for standing by. Welcome to the CGG Q4 and full year 2022 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to CGG. Please go ahead.
Yes, thank you. Good morning and good afternoon, ladies and gentlemen. Welcome to this presentation of CGG's fourth quarter 2022 results. The call today is hosted from Paris, where Mrs. Sophie Zurquiyah, Chief Executive Officer, and Mr. Yuri Baidoukov, former group CFO, will provide an overview of the quarter results, as well as provide comments on our outlook. Also with us today, Jérôme Serve, our new group CFO, succeeding Yuri, who is leaving CGG for familiar reasons. Let me remind you that some of the information contains forward-looking statements subject to risks and uncertainties that may change at any time, and therefore the actual results may differ materially from those that were expected. Following the overview of the quarter, we will be pleased to take your questions. Now I will turn the call over to Sophie.
Thank you, Christophe. Good morning and good afternoon, ladies and gentlemen, and thank you for participating in this Q4 2022 conference call. Before we start, I would like to thank Yuri for his time at CGG and for all his contributions. He provided outstanding support to CGG and to me through challenging times, and it's been a pleasure to work with him. Let me also welcome Jérôme Serve to the CFO role. Jérôme has a broad and international background in finance and in the energy sector, and most recently was the CFO of one of the large divisions of Faurecia. We look forward to the experience and expertise he will bring to CGG. The overlap will take place during the month of March, and I am confident it will be a smooth transition. Let me move on now to slide 2.
I would like to start with Q4 and full year review today with a few comments on ESG to highlight our strong profile.
Disconnected.
Our company's high-end technology business, along with our low carbon intensity footprint and our continued focus and excellence in ESG, have been consistently recognized by ESG rating agencies. CGG is very well rated both by MSCI and by Sustainalytics due to a broad range of ESG considerations, and in particular, our low carbon footprint. In 2022, we further reduced our Scope 1 and 2 emissions, respectively, to 2 kilotonnes of CO2 and 39 kilotonnes of CO2 for the full year. More importantly, our business brings a significant sustainability contributions to our clients, as our high-end technology and Earth Data in key basins around the world supports the optimization of their drilling and reservoir development plans, which in turn can substantially reduce their CO2 footprint. On slide 3. Looking at our Q4 and full year financial performance.
The macro environment remained favorable with high oil and gas prices, our clients have continued to maintain reduced E&P spending levels, prioritizing return to shareholders. During 2022, IOCs, and especially European IOCs, focused on their energy transition agendas, not growing E&P CapEx in line with the macro trends. Independents and NOCs were the first to increase E&P activity to meet worldwide demand and address the tight market. Energy security has risen as a key consideration, and it is becoming clearer that demand for hydrocarbons will remain high for the foreseeable future. These overall macro trends translated into increased off-field service activity, especially those tied to development and production, such as drilling and completion. Offshore and international activities also picked up significantly.
Products and services that were exposed to longer-term return on hydrocarbon investments, such as frontier explorations, have been lagging, mainly based on the lack of clarity at a 10-year horizon from a climate change and regulatory standpoint. For CGG, this resulted in a volatile yet improving overall market in 2022. Looking now at our Q4 and full-year results. Our solid Q4 financial performance provides a good illustration of the high quarterly volatility that our businesses experienced in 2022. Our Q4 revenue came in stronger than expected at $319 million, due mainly to higher than anticipated EDA and SMO sales. Adjusted EBITDA was $159 million given the mix, and net cash flow was $62 million, including $63 million received from the sale of the U.S. land seismic multi-client library.
Thanks to our high Q4 results, we returned to a positive net income for 2022. Full year revenue of $928 million was stable year-over-year, despite the significant decrease of our SMO business, which also highlights current market volatility. Our adjusted EBITDA of $395 million landed in line with our full year expectations and guidance, representing a 43% margin. Net cash flow for the year of -$3 million was close to breakeven. Overall, our 2022 financial performance was solid as we operated in a complex environment while implementing and investing in our portfolio of beyond the core business initiatives that are focused on developing new profitable revenue streams to CGG as we move forward. Going on to slide 4.
I would qualify 2022 as a year of transition for CGG as we address the volatility of our oil and gas businesses and invested in the future. The quarterly volatility that we experienced this year was probably the highest that we have ever seen, with a significant lumpiness in sales in both EDA and SMO. Variations were greater than 50% between some of the quarters. It was a year of transition, first in our core markets, especially during the second half of the year. We started to see early signs of the projected multi-year oil and gas upcycle. In this environment, we continued to focus on the advance of our technology leadership position in our core businesses. We increased investments in our new beyond the core businesses, which in 2022 now represent more than 8% of our revenue.
As part of our B2C strategy, we acquired Geocomp to establish a stronger infrastructure monitoring market position in North America and acquired the ION Software business to strengthen both the differentiation of our core SMO business by accelerating our value-add cloud-based services and to further advance our B2C initiatives by extending our expertise and giving us a position in the software as a services market, as an example, port management. We also updated our geoscience organization to move our most mature B2C initiatives into the geographies to focus on commercial expansion and created a new HPC and Cloud Solutions organization to strengthen our strategy in a digital area. It was a year of investment looking ahead of the cycle as we are preparing for improving market conditions in oil and gas and accelerating our B2C businesses.
We invested in technology with the construction of a new HPC center in the U.K., which will be operational later this year and significantly increase our compute capacity. We invested in significant multi-client projects in key basins where we are well positioned for the future. We continue to advance our market positions and technology leadership in our geoscience and SMO core businesses while developing a robust portfolio of beyond the core growth opportunities. On slide 5. Our BTC business initiatives are focused around 3 main markets: digital, energy transition, and infrastructure monitoring. We made concrete progress in 2022 in all areas. In digital, the creation of our HPC & Cloud Solutions business line was a major step in strengthening our processes and organization as we invested and prepared for growth in this specialized area.
In our DataHub business, which focuses on data transformation, delivery, and visualization, we successfully completed several pilot projects and secured and are currently delivering a full-scale project for BP. In energy transition, we increased our participation in CCUS and minerals and mining, and generated around $20 million of EDA sales, mainly focused on CCUS in Australia, Norway, and the U.S. We successfully demonstrated our structural health monitoring solutions in various settings within this rapidly growing market, resulting in our first sales in the U.S., where we are leveraging our acquisition of this Geocomp. The new technology profile of DDE is developing in line with our expectation of our B2C businesses, reaching the target of 20% of company revenue by 2025. On slide 6, a year ago, we were anticipating 18% revenue growth in our DDE segment.
We delivered 21% revenue growth in 2022, consistent with offshore E&P spend increases. Our activity particularly strengthened in North America, we also saw improvements in the North Sea, while Asia remained relatively flat. Overall, the profitability of the DDE segment significantly improved in 2022, with adjusted EBITDA increasing by 23% to $406 million, a high 62% margin. Going into each of the business line on slide 7, geoscience. While the market was solid in North America in 2022, it was still slow in the rest of the world, though we see now clear signs of increased activity looking forward.
Geoscience revenue was sequentially stable this quarter due to delayed start of key projects, which in general continued to be driven by strong demand for our high-end technology. The revenue reduction compared to 2021 was in relation to a large one-off software sale that we realized in Q4 of 2021. 2022 ended with a moderate 1% growth pro forma in the geoscience production, which includes external plus internal revenue, and a 6% pro forma growth in external revenue as we utilized less of our services for multi-client. With a 16% backlog increase year-on-year, we ended 2022 in a better position to start the new year. Profitability of the geoscience business continued to improve year-on-year, as we did our production per head ratio. Now for operational highlights on slide 8.
At the end of 2022, geoscience commercial activity was increasing worldwide. We saw a high level of bridge submissions, up 18% year-over-year, driven by a 58% increase in OBN processing bids. This business continues to be driven by strong demand for high-end technology. Geoscience should continue to benefit from the accelerated uses of advanced acquisition technologies such as ocean bottom node or hybrid surveys that require more advanced imaging algorithms. At the end of 2022, order intake in geoscience was up 26% year-over-year. As mentioned earlier, we started 2023 with a backlog of $231 million, up 16% year-over-year. In 2022, our computing power was further extended by more than 20% as we added 61 petaflop.
We continue to make significant upgrades to our data center infrastructure to support our increasingly advanced algorithms and further extend our differentiation and support the development of our new HPC and cloud solutions business. Though modest, we increased our beyond the core revenue in 2022 in geoscience by almost 50%. We expect continued strong growth in general and in digital specifically as industries are looking to gain efficiency and extract more insights from their data. On slide 9. The success of CGG is built on technology differentiation. Our unique elastic full waveform inversion, which was developed by our scientists for complex geology and challenging reservoir development, is the most recent example of this differentiation and the commercial success it drives.
CGG's full waveform inversion technology and expertise provides the most advanced solution in the market today to assist our clients in reducing geologic uncertainty and accelerating interpretation of the subsurface, as we continuously extract more and more information and insights with our unique geoscience and data science technology. In this example, we can see clearly how our FWI technology provides an enhanced understanding of the compact metalization and delineation of the reservoir. Moving on to Earth Data on slide 10. In 2022, EDA revenues were up 36%, sustained by a significant increase of after-sales, which were up 90% year-on-year on the back of strong transfer fees in Q2 and strong sales in Q4. Prefunding caught up in Q4 to land at 66% for the year. 2022 was still driven mainly by demand for new field exploration.
Exploration is active, focused on new oil and gas that is low cost, low risk and low carbon. New field infrastructure-led exploration is a natural choice. Towards the end of the year, we have seen clients gaining interest in more frontier basins. In 2022, aligned with our strategy, CGG multi-client projects were mainly in our core regions and basins, where government policies are stable and petroleum systems are proven. Beyond the core, the CCUS industry is in its early stages, and we have seen growing commercial interest for our EDA data, mainly to support both the finding and assessing of the appropriate subsurface container for storing carbon. We continue to gain experience by participating in various projects and have seen good opportunities to repurpose public and partner data in shallow water and land, together with our geologic data for CCUS use.
With this, our current focus remains on building our expertise, licensing our existing data, packaging new datasets for screening, and getting closer to our clients and potential clients in this rapidly growing business. On slide 11 now. In November of 2022, we completed the Antares acquisition offshore Brazil. Processing of this data is ongoing. In Q4 2022, we also commenced preparation for a new multi-client program in the equatorial margin, including transferring a vessel in mid-December. The acquisition is expected to take around 200 days, and processing should be complete in Q3 2024. In Q4, we divested our non-core US land multi-client data library for a total amount of $63 million. Looking forward, 2 new sales have been confirmed in 2023 in the Gulf of Mexico, one at the end of March and another in September. Both should drive increasing activity. On slide 12.
I mentioned during our Q2 conference call that we continue to expand our data offering to address energy transition, especially for CCUS and mining. This Arizona project is the first multi-client project in the company for the mining industry, and we already have one client commitment. The project has started as we compile information, and airborne acquisition is planned for the March/April timeframe. Acquisition is expected to take approximately 12 months. The purple outline shows the full project area, which will be covered by multidisciplinary data, including multiphysics. Satellite imagery, multispectral, well, and geological data. We do outline highlights where we will acquire airborne multiphysics data. This is a new business model for the minerals and mining industry, and they will allow operators to access larger integrated data sets to better identify and characterize deposits. Now on slide 13 with sensing and monitoring.
In 2022, our sensing and monitoring segment saw a significant reduction in sales, down 24% year-on-year. This was linked to commercial restrictions in Russia and to the lumpiness of its business. Multiple large projects in the Middle East in particular were delayed from 2022 to 2023. At $269 million of sales for the year, the SMO segment generated $16 million EBITDA, a 6% margin. In 2022, the SMO business acquired Geocomp and Concept, the IM software business. The top line contribution of these two businesses was around $18 million. We are very pleased with these acquisitions. They're already accretive to SMO and the level of business synergy is more than we anticipated. On slide 14.
Q4 SMO sales came in at $104 million, up 10% and above expectations, with sales materializing in the last days of December. Land equipment sales represented 60% of total sales. Overall activity has been picking up this quarter, mainly in North Africa and with our WiNG land nodal technology, sales are also gaining momentum. Marine equipment sales represented 22% of total Q4 sales. OBN market for shallow water application remains active, especially in the Middle East. Marine market for streamers is still mostly limited to equipment upgrades and spare stream section deliveries. Sales from beyond the core businesses were $14 million in Q4, significantly up year-on-year, supported mainly by an active defense sector. Our new infrastructure monitoring business is progressing well.
We continue to pilot S-lynks technology and solution on several bridges, including a bridge in the New York area. We secured an order to perform baseline analysis on 2 bridges in Georgia. We won a deck and cables measurement job in Texas as well. We performed several demonstrations of our earthworks monitoring solution, S-Scan, in both Massachusetts and New York. We won a short-term monitoring job in the Paris suburbs. Overall, the B2C areas of focus around SMO benefited in 2022 from increased interest from the defense sector and the addition of Geocomp structural health monitoring business, especially in the second half of the year. I will now give the floor to Yuri for more financial highlights.
Thank you, Sophie. Good afternoon and good evening, ladies and gentlemen. I will comment on the Q4 2022 financial results. Slide 15, Q4 2022 P&L. Let me comment on the overall Q4 activity. Q4 segment revenue was $319 million, up 6% and up 7% pro forma year-on-year. The respective contributions from the group's businesses were 22% from geoscience, 46% from Earth Data, with 67% for the GGR segment and 33% from sensing and monitoring. Segment EBITDA was $193 million, up 25% year-on-year at 60% margin. And adjusted segmented EBITDA, excluding $34 million gain on the sale of the US Land Multi-Client Library, was $159 million, coming with a high 60% margin.
GGR segmented EBITDA was $180 million, an 84% margin, and adjusted segmented EBITDA was $147 million at high 68% margin. SMO segmented EBITDA was $20 million and 19% margin, and adjusted segmented EBITDA was also $20 million and 20% margin. Segment operating income was $94 million at 29% margin, and adjusted segment operating income was $66 million at 21% margin. IFRS 15 adjustment at operating income level was - $10 million and IFRS operating income after IFRS 15 adjustment was $84 million. Cost of financial debt was $24 million. The total amount of interest paid during the quarter was $45 million. Taxes were +$9 million, and net income from continuing operations was $49 million.
Group net income this quarter was $47 million, significantly up from a net loss of $28 million in Q4 2021. After minority interests, Q4 2022 group net income attributable to CGG shareholders was $46 million and EUR 46 million. Overall, in 2022, CGG has significantly improved its financial performance. CGG segment revenue of $928 million was down 1% and up 3% pro forma compared to 2021. Adjusted segmented EBITDA was $395 million, up 17% year-on-year with 43% margin. In 2022, CGG returned to profitability with group net income of $43 million, which was a significant improvement from a net loss of $180 million in 2021.
Moving to slide 16 and looking at the simplified cash flow. Q4 2022 segment operating cash flow was $103 million, including $61 million negative change in working capital and provisions mainly related to the SMO business. Total CapEx was $50 million, including industrial CapEx of $18 million, research and development capitalized costs at $6 million, and Earth Data cash CapEx at $25 million. Segment free cash flow was $115 million, including $63 million proceeds from the sale of the U.S. land seismic library. After $2 million net lease repayments, $45 million cash cost of debt, $3 million of CGG 2021 planned cash costs, and $2 million free cash flow from discontinued operations, Q4 net cash flow was positive $62 million. Overall, in 2022, CGG group net cash flow was - $3 million.
Moving to slide 19 and looking at group balance sheet and capital structure. Group liquidity amounted to $398 million at the end of December 2022, and included cash liquidity of $298 million and $100 million of undrawn RCF. Group gross debt before IFRS 16 was $1.16 billion, and net debt was $859 million. Group net debt after IFRS 16 was $1.25 billion, and net debt was $951 million. Our debt structure included $1.12 billion of high-yield bonds due in 2027, $93 million lease liabilities, $20 million accrued interest, and $12 million bank loans.
Segment leverage ratio of net debt to adjusted segment adjusted debt was 2.4 times at the end of December 2022, down from 2.9 times at the end of 2021. Capital employed was $2 billion, slightly up from the end of December 2021. Net working capital after IFRS 15 was at $225 million, stable year-on-year. Goodwill was also stable at $1.1 billion, corresponding to 54% of total capital employed. Multi-client library net book value after IFRS 15 was up at $419 million. Non-current assets were at $340 million, with $167 million of property, plant and equipment down from year-end 2021, mainly due to the Galileo sale and leaseback transaction, and $84 million of capitalized development costs.
Non-current liabilities were at $31 million, slightly down from year-end 2021. Shareholders' equity was up at $1.06 billion, including $39 million of minority interests mainly related to stamp duty. Before I hand the floor back to Sophie for conclusion, I would like to thank her for the kind assessment of my work at CGG. It was a privilege to contribute to CGG's transformation and work with CGG's team and all of you, our analysts, shareholders, investors, and all the stakeholders over the last 4.5 years. Thank you all for your support.
Thank you, Yuri. Now we're on slide 18. We are entering 2023 with improved visibility, thanks to steadily increasing client activity and our higher backlog. Geoscience will continue to be driven by advanced technology and by large projects in North America, mainly in the Gulf of Mexico, increasing activity in the North Sea, and more generally, the broader utilization of marine nodes for imaging. As pressure on our clients increases to meet global demand for energy, address the high oil price environment, lower their carbon footprint, and effectively transition to renewable energy, all in the shortest timeframe possible, the use of our advanced imaging technologies has become a key enabler and has never been more important to support their decisions. Today's CGG technologies, including our full waveform inversion, are unique to us, and this drives a large portion of the high-end activity to CGG.
In Earth Data, confirmed by a solid Q4, we anticipate an increasing appetite towards exploration and OBN acquisition, which is now being used in a larger number of basins globally, including for exploration purposes. Earth Data is linked to exploration CapEx, ILX, and Frontier, as well as global midstream activity, all of which are expected to increase in 2023. The SMO market is also expected to grow significantly in 2023 from a low in 2022. The key driver will be large land seismic crews in the Middle East and North Africa that require new land and OBN equipment. The development of our B2C businesses will remain a 2023 priority, with digital science, CCUS, defense, and infrastructure monitoring being the most immediate opportunities.
Our beyond the core businesses will benefit from the continued drive towards digitalization, including within the infrastructure monitoring sector, along with an increasing focus on energy transition and security. We expect another year of significant growth in our B2C activities. After years of underinvestment, now on slide 19. After years of underinvestment, exploration focus is expected to increase in 2023, particularly offshore, but also in the Middle East. The macro environment continues to strengthen, but is expected to remain volatile for us as our EDA and SMO businesses rely on large contracts that can move quarter to quarter. Technology pays off for CGG, and we will continue to invest in advancing our leadership. Digital energy transition, infrastructure monitoring and defense BTC markets will continue to mature and should see steady increasing demand moving forward. In this context, CGG has the following outlook and financial objectives for 2023.
2023 segment revenue is expected to increase in the range of 15%-20%, with growth mostly coming from SMO. I want to point out that we expect to see a continued high level of quarterly volatility in revenue, driven mainly by the timing of SMO equipment delivery and the usual EDA seasonality. Q1 should be similar to last year, and we expect to see a much higher revenue in Q2, especially for SMO. 2023 adjusted EBITDA segment EBITDA margin is expected to be in the range of 39%-41%, given the business mix. 2023 EDA cash CapEx is expected to be around $200 million, with pre-funding above 75%. Our backlog coming into 2023 is healthy and stronger compared to the last 2 years.
2023 industrial and R&D CapEx is expected to be up at around $70 million, primarily driven by our planned increase in high-performance computing capacity. Finally, we're anticipating a positive net cash flow before change in working capital in 2023. Going forward, our focus is to build on the growth that this upcycle brings to CGG while further advancing our BTC businesses. We expect to see improvements across our businesses in all of our business in 2023 and beyond, and we'll continue to focus on cash management and cash generation to pursue our path to deleveraging. Thank you for your interest. We are now ready to take your questions.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one if you wish to ask a question. We will now take the first question. It comes from the line of Kévin Roger from Kepler Cheuvreux. Please go ahead. Your line is open.
Yeah, good evening. Thanks for taking my question. I will limit myself to two. The first one is maybe for you, Sophie. Several companies in this sector have already reported, and in the offshore, I think if there is one conclusion, it's that it appears that everyone is accelerating in terms of final investment decision with a commercial pipeline that continue to increase, et cetera. On your side, do you see the same kind of acceleration for appetite for late sales? Because usually you are correlated to CapEx in offshore, but with the things that are accelerating strongly, did you turn a bit more optimistic basically on your late sales expectation over the past few weeks?
The second question is maybe more for Yuri. An important element for investors will be the net cash flow. You guide for positive net cash flow before working cap for 2023. What should we expect in terms of working cap for 2023? 2022 was negative, so should we expect a reversal, so positive net, positive working cap in 2023, or we should assume another deterioration, please?
Well, thank you. Good evening, Kévin. Thanks for your questions. In terms of what's going on in sort of the offshore market, the main what we've seen last year that I was mentioning, it's been more around accelerating the clients have been accelerating basically decisions around getting production. It's been a lot around field development and production, and we've seen it more through our Geocomp business around nodes acquisition, around high-end and understanding the reservoir. A lot of the FITs that have happened have been associated to a pretty high-end seismic acquisition, and we've done a lot of those processing jobs. Now, the link between the increasing activity in offshore and the late sale is not exactly that one.
I think we might see more of that in 2023 because specifically the offshore exploration CapEx is increasing, which I don't think was so much the case. Last year, what had been accelerating is the exploration and production CapEx. The combination of the two mostly targeted at development and production. I think now it's starting to move into exploration, which should then translate in probably more solid after sale. Keep in mind that in 2022, we benefited from a large transfer fee, which was somewhat exceptional. If you correct for that, we should see an increase this year.
Maybe another data point that could be interesting for you is if I look at the mix of buying data in the after sale in 2022 versus 2021, the IEC portion is still low in the mix. It's probably half of what it used to be pre 2019. Meaning that we haven't seen this group of clients come back in a meaningful way in the buying data.
Yeah. So Kévin, good evening. To answer your second question regarding working capital, we actually don't expect any deterioration of or further deterioration of working capital in 2023. Of course, the main reason for that, as you see it in our guidance, that we expect a significant growth of sales in 2023 versus 2022. Which means that the inventories that were increasing throughout last year in manufacturing the equipment for the deliveries of 2023 will be coming down. The element which as you well know, is always kind of variable, right? Or a known unknown, is the level of after sales at the end of the year, right? Again, obviously good after sales, good news about collections in the following Q1.
Also the sequence of deliveries might be impacting kind of receivables as well. Fundamentally, again, we expect release of working capital or slightly positive working capital next year.
Okay. Perfect. Thanks a lot.
Thank you. We will now take the next question. It comes from the line of Haris Papadopoulos from Bank of America. Please go ahead. Your line is open.
Hello. Hi. Thanks for taking my questions. I have three, if I may. The first one is with respect to the delays we saw last year. Could you give us an update of the stage of the tenders for the mega crews in Saudi Arabia? Like, when should we expect an announcement? What about the stage of the multi-client project in Brazil, which was shifted from last year to 2023? I believe that's with Petrobras. That's my first question, please.
Yes. Hi. Thank you for your question. Good evening. In terms of the tenders to the mega crews, they've been out, the service companies have responded, and now they're in the award stage. We're expecting, I would say there are two sets of tenders. There are tenders for land crews, so 2 land crews and 3 OBN crews in Saudi Arabia. The land crews, I think should be awarded fairly soon. At least we know they're in the final stages of negotiation with the service company. The OBN tenders, it's a bit unclear. I think it could be delayed another 1 month or 2. I don't have as much visibility on those. They should be coming after basically the one on the land side.
In terms of the multi-client data, we're planning to see some level of catch up or pre-funding on projects that we did last year. Now I don't wanna name, I can't name clients at this stage, but we have built in our budget some level of catch up on those projects.
Okay. Thank you very much for this. My second question is with respect to M&A. Is it fair to assume that we shouldn't see any major M&A activity this year? What about any potential disposals? I remember the stake in the Saudi Arabia land data acquisition business was mentioned at some point. Is there an intention to seek a buyer for this asset?
In terms of M&A, we're always on the lookout for what I would call the small bolt-on opportunities, which is exactly the kinds that we did last year. That kind of $20 million range, $20 million-$30 million range. Right now, as it is today, there isn't one in the pipe, but it doesn't say that perhaps there would be one that appears during the year. We wanna be ready for that and take that opportunity if it appears, especially if it helps us accelerate our Beyond the Core initiatives. In terms of disposals, it is very clear that we're still looking for divesting our participation in Our Gap.
I think the environment hasn't been conducive to doing that, but we always are looking for opportunities to do so.
Okay. Thank you. My last question is, you know, your liquidity is quite strong now. Especially compared to your minimum cash level of $150 million. I was thinking perhaps like, is there intention perhaps to consider using your 10% special redemption call for the bonds? Given how high the coupon is versus the call premium. I mean, like, it kind of makes sense. Is it something that you're considering right now?
Yeah, good evening. We're always considering those opportunities, as you well know, or as we discussed previously. Again, at this particular point in time, we're still waiting on kind of de-risking of our business plan for SMO. In other words, again, on the Saudi Aramco award of mega crews and things like that. In other words, again, once we get somewhat greater visibility then that option is on the table.
Okay. Thank you very much. That's all on my side.
Thank you, Haris.
Thank you. Once again, as a reminder, if you wish to ask a question, please press star one and one on your telephone. We will now take the next question. It comes from the line of Vikram Lopez from LGIM. Please go ahead. Your line is open.
Hello. Can you all hear me?
Yes.
I just want to clarify. Firstly, thanks for taking the question and congratulations on the results. Just want to clarify something that you'd said earlier. Just on this issue of net cash flow for 2023. You said positive net cash flow before change in working capital, but you expect working capital to not be a drain on cash flow. Have I understood that correctly?
Well, we were guiding that net cash flow will be positive before changing working capital. What I was commenting is that most likely we'll see some of positive change in working capital as well. However, and again, within the working capital components, definitely inventories will be coming down because we're expecting significant growth in SMO sales and therefore deliveries of equipment, which was built in 2022. However, there is an element that is kind of variable and difficult to predict is what will be the level of equipment deliveries, but more so per data after sales at the end of the year. Basically, as you might recall, that is a significant element that can create significant swing.
Again, the more data we sell, the more we collect in Q1. Basically, yeah, it's the usual story.
Okay. I mean, at worst you'd be expecting to be kind of breakeven net cash flow. Would that be right?
Yeah. Breakeven to positive, slightly positive. Yeah.
Okay.
Um.
Okay. I mean, this then feeds into the next question. I mean, you know, if I'm reading the numbers right, you're talking about kind of 15%-20% revenue growth, EBITDA margins range of 4%-10%. That kind of implies a kind of flat EBITDA year-on-year.
No.
No?
No.
It implies flat EBITDA margin year -on -year, but it doesn't mathematically imply flat EBITDA dollars.
If you're going up by 17.5%, then you'd have revenue of $1.091 billion. Multiply that by 40%, then you'd have $437 million, which is pretty much what you did.
No, we were talking about adjusted segment EBITDA. In other words, which doesn't include non-recurring items. The adjusted segment EBITDA in 2022 was $395 million.
Sure. From a cash perspective, you did get that cash. You were paid that amount of money. So you know, you can say that it wasn't a recurring part of the business, but, you know, you got a cash inflow of $430 odd million from businesses plus disposals. Next year you'll have a cash inflow of $430 odd million. You won't have had any disposals. Still kind of $430 million coming in. $270 million going on cash. Okay, working capital. Well, I guess that's it. Then your interest costs. I mean, I guess the wider point is at what point do we start to see, you know, substantial cash flow generation internally?
I guess it all just, you know, flat to slightly positive, but, you know, kind of looking at, just like 3%-4%, cash delivery. Do we need to wait for revenue to be hitting the $1,200, $1,300 mark? How achievable is that?
Well, first of all, we always kind of we're explaining that for us, the net cash flow breakeven point in terms of revenue is roughly $1.1 billion. Right? Now, we were growing next year, sorry, this year, but obviously we expect to continue growth and recovery in 2024 as well. So that, this is one element. Now, the other element is that, Yes, it depends also on the business mix, in other words, on the revenue mix. Because with significant increase in SMO sales, SMO EBITDA margins are lower than the EBITDA margins of geoscience and Earth Data combined.
There is another element to keep in mind is that, the end of our agreement with Shearwater will be at the beginning of January 2025. With that, the scope line, which is about $22 million, will disappear as well. In addition to, of course, us recovering full freedom, when it comes to our EDA business and therefore no longer having capacity utilization agreement and commitment to use Shearwater license.
Okay. I think there's a slight problem with the line. Doesn't quite follow, but maybe we could take this offline...
Yeah.
...to go over those points in a little bit more detail. Thank you very much.
Yeah. Sure.
Sure, Vikram.
Thank you. There are no further questions at this time. I would like to hand back over to CGG for final remarks.
Okay. Well, thank you very much. Thank you for attending. Thank you for the great questions. We'll get certainly follow up offline if you have any other follow-up questions. Thank you very much. Have a great evening and we'll be in touch.
Yeah. Thank you all. Have a good evening. Bye-bye.
That does conclude our conference for today. Thank you for participating. You may all disconnect.