Civeo Corporation (NYSE:CVEO) today reported financial and
operating results for the first quarter ended March 31, 2021.
Highlights include:
- Reported first quarter revenues of $125.4 million, net loss of
$10.0 million and operating cash flow of $12.8 million;
- Delivered first quarter Adjusted EBITDA of $16.2 million and
free cash flow of $16.1 million; and
- Reduced total debt to $238.1 million as of March 31, 2021 from
$251.1 million as of December 31, 2021.
“Despite recent macroeconomic headwinds and winter seasonality,
we continued to generate solid free cash flow and reduced our total
debt. I continue to be encouraged by our team's ability to operate
safely and effectively in this tough environment, while also
progressing our strategic and financial initiatives. For the first
quarter, our Canadian business saw a sequential improvement in
occupancy despite the British Columbia health order impacting our
occupancy at our Sitka location. The Australian business had a
softer quarter than expected due to a slow start to the year in the
Bowen Basin and continued difficulty in sourcing labor in both our
village operations and our integrated services business. The U.S.
business had sequentially improved results as U.S. drilling and
completion activity continued to recover and increased occupancy at
our Louisiana location related to the hurricane recovery efforts in
Lake Charles," stated Bradley J. Dodson, Civeo's President and
Chief Executive Officer.
Mr. Dodson concluded, "Looking forward, we are optimistic that
the turnaround activity in Canada will pick up in the second and
third quarters of 2021 and that our work supporting pipeline
activity will expand as operators look to catch up on lost time due
to COVID-19. In Australia, we are diligently working to resolve the
shortage of full-time labor as we look for occupancy and activity
to improve in our village locations and our integrated services
business. The outlook for the U.S. has improved with modest market
share gains in the well site business, as well as a recent award of
a one-year contract at our Pecos lodge in West Texas to a
third-party operator. Overall, we remain focused on operating
safely in this COVID-19 environment, generating free cash flow and
reducing our leverage.”
First Quarter 2021 Results
In the first quarter of 2021, Civeo generated revenues of $125.4
million and reported net loss of $10.0 million, or $0.70 per
diluted share. During the first quarter of 2021, Civeo produced
operating cash flow of $12.8 million, Adjusted EBITDA of $16.2
million and free cash flow of $16.1 million.
By comparison, in the first quarter of 2020, Civeo generated
revenues of $138.8 million and reported a net loss of $146.5
million, or $(10.43) per diluted share. The loss resulted in part
from $144.1 million in costs associated with goodwill and asset
impairments. During the first quarter of 2020, Civeo produced
operating cash flow of $20.8 million, Adjusted EBITDA of $20.3
million and free cash flow of $18.3 million.
Overall, the decrease in revenues and Adjusted EBITDA in the
first quarter of 2021 compared to 2020 was primarily due to
decreased billed rooms in our Canadian segment and Australian
segment, partially offset by improved Canadian mobile camp
activity, proceeds from the Canadian Emergency Wage Subsidy program
("CEWS") and a favorable foreign currency translation impact.
(EBITDA is a non-GAAP financial measure that is defined as net
income plus interest, taxes, depreciation and amortization, and
Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment
charges. Free cash flow is a non-GAAP financial measure that is
defined as net cash flows provided by operating activities less
capital expenditures plus proceeds from asset sales. Please see the
reconciliations to GAAP measures at the end of this news
release.)
Business Segment Results
(Unless otherwise noted, the following discussion compares the
quarterly results for the first quarter of 2021 to the results for
the first quarter of 2020.)
Canada
During the first quarter of 2021, the Canadian segment generated
revenues of $61.9 million, operating loss of $7.7 million and
Adjusted EBITDA of $10.8 million, compared to revenues of $79.3
million, operating loss of $136.6 million and Adjusted EBITDA of
$11.4 million in the first quarter of 2020. Operating loss and
Adjusted EBITDA from the first quarter of 2021 included $2.8
million of other income related to proceeds from CEWS and a $0.9
million gain on sale of a Canadian manufacturing facility. The
first quarter of 2020 results included a goodwill impairment charge
of $93.6 million and asset impairment charges of $38.1 million.
On a constant currency basis, the Canadian segment experienced a
26% period-over-period decrease in revenues driven by a 32%
year-over-year reduction in billed rooms related to decreased
occupancy due to the decline in oil prices and the COVID-19
pandemic impacting the Alberta locations and the British Columbia
health order limiting occupancy at the Company's Sitka location.
Adjusted EBITDA for the Canadian segment decreased 6%
year-over-year primarily due to lower billed rooms in the lodges,
partially offset by increased EBITDA from mobile camp activity, the
CEWS proceeds and a gain on sale.
Australia
During the first quarter of 2021, the Australian segment
generated revenues of $59.6 million, operating income of $3.3
million and Adjusted EBITDA of $12.8 million, compared to revenues
of $49.1 million, operating income of $6.2 million and Adjusted
EBITDA of $16.2 million in the first quarter of 2020. The first
quarter of 2021 results reflect the impact of a strengthened
Australian dollar relative to the U.S. dollar, which increased
revenues and Adjusted EBITDA by $8.9 million and $1.9 million,
respectively.
On a constant currency basis, the Australian segment experienced
relatively similar year-over-year revenues. Occupancy in our
Australian villages decreased due to a soft start in 2021 in the
Bowen Basin but were largely offset by increases in occupancy in
the Integrated Services business. Adjusted EBITDA from the
Australian segment decreased 21% year-over-year due to lower
village occupancy in the Bowen Basin, as well as higher labor costs
in the Integrated Services business.
U.S.
The U.S. segment generated revenues of $3.9 million, operating
loss of $2.6 million and negative Adjusted EBITDA of $1.2 million
in the first quarter of 2021, compared to revenues of $10.3
million, operating loss of $14.1 million and Adjusted EBITDA of
$0.4 million in the first quarter of 2020. Revenues and Adjusted
EBITDA declined year-over-year primarily due to lower drilling and
completion activity coupled with lower occupancy in the U.S.
lodges.
Financial Condition
As of March 31, 2021, Civeo had total liquidity of approximately
$112.4 million, consisting of $107.0 million available under its
revolving credit facilities and $5.5 million of cash on hand.
Civeo’s total debt outstanding on March 31, 2021 was $238.1
million, a $13.0 million decrease since December 31, 2020. The
decrease consisted of $15.6 million in debt payments from cash flow
generated by the business, partially offset by an unfavorable
foreign currency translation impact of $2.5 million.
Civeo reduced its leverage ratio to 2.10x as of March 31, 2021
from 2.11x as of December 31, 2020.
During the first quarter of 2021, Civeo invested $3.4 million in
capital expenditures, up from $2.7 million during the first quarter
of 2020.
Full Year 2021 Guidance
For the full year of 2021, Civeo is increasing its revenue and
Adjusted EBITDA guidance to a range of $555 million to $580 million
and $90 million to $100 million, respectively. This guidance is
based on our expectations as of the date hereof and assumes no
material changes to the current macro environment, or conditions
related to the COVID-19 pandemic and the responses thereto. The
Company maintains full year 2021 capital expenditure guidance of
$20 million to $25 million.
Conference Call
Civeo will host a conference call to discuss its first quarter
2021 financial results today at 11:00 a.m. Eastern time. This call
is being webcast and can be accessed at Civeo's website at
www.civeo.com. Participants may also join the conference call by
dialing (800) 263-0877 in the United States or (646) 828-8143
internationally and using the conference ID 6711622#. A replay will
be available after the call by dialing (844) 512-2921 in the United
States or (412) 317-6671 internationally and using the conference
ID 6711622#.
About Civeo
Civeo Corporation is a leading provider of hospitality services
with prominent market positions in the Canadian oil sands and the
Australian natural resource regions. Civeo offers comprehensive
solutions for lodging hundreds or thousands of workers with its
long-term and temporary accommodations and provides food services,
housekeeping, facility management, laundry, water and wastewater
treatment, power generation, communications systems, security and
logistics services. Civeo currently operates a total of 28 lodges
and villages in Canada, Australia and the U.S., with an aggregate
of approximately 30,000 rooms. Civeo is publicly traded under the
symbol CVEO on the New York Stock Exchange. For more information,
please visit Civeo's website at www.civeo.com.
Forward Looking Statements
This news release contains forward-looking statements within the
meaning of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are
those that do not state historical facts and are, therefore,
inherently subject to risks and uncertainties. The forward-looking
statements herein include the statements regarding Civeo’s future
plans and outlook, including guidance, current trends and liquidity
needs, are based on then current expectations and entail various
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by these forward-looking
statements. Such risks and uncertainties include, among other
things, risks associated with global health concerns and pandemics,
including the COVID-19 pandemic and the risk that room occupancy
may decline if our customers are limited or restricted in the
availability of personnel who may become ill or be subjected to
quarantine, risks associated with the general nature of the
accommodations industry, risks associated with the level of supply
and demand for oil, coal, iron ore and other minerals, including
the level of activity, spending and developments in the Canadian
oil sands, the level of demand for coal and other natural resources
from, and investments and opportunities in, Australia, and
fluctuations or sharp declines in the current and future prices of
oil, natural gas, coal, iron ore and other minerals, risks
associated with failure by our customers to reach positive final
investment decisions on, or otherwise not complete, projects with
respect to which we have been awarded contracts, which may cause
those customers to terminate or postpone contracts, risks
associated with currency exchange rates, risks associated with the
company’s ability to integrate acquisitions, risks associated with
labor shortages, risks associated with the development of new
projects, including whether such projects will continue in the
future, risks associated with the trading price of the company’s
common shares, availability and cost of capital, risks associated
with general global economic conditions, global weather conditions,
natural disasters and security threats and changes to government
and environmental regulations, including climate change, and other
factors discussed in the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Risk Factors”
sections of Civeo’s annual report on Form 10-K for the year ended
December 31, 2020 and other reports the company may file from time
to time with the U.S. Securities and Exchange Commission. Each
forward-looking statement contained herein speaks only as of the
date of this release. Except as required by law, Civeo expressly
disclaims any intention or obligation to revise or update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
Three Months Ended March
31,
2021
2020
Revenues
$
125,430
$
138,792
Costs and expenses:
Cost of sales and services
99,810
103,313
Selling, general and administrative
expenses
14,181
13,937
Depreciation and amortization expense
21,269
25,502
Impairment expense
—
144,120
Other operating expense
71
989
135,331
287,861
Operating loss
(9,901
)
(149,069
)
Interest expense
(3,362
)
(5,595
)
Interest income
—
16
Other income
4,914
25
Loss before income taxes
(8,349
)
(154,623
)
Income tax (expense) benefit
(1,076
)
8,811
Net loss
(9,425
)
(145,812
)
Less: Net income attributable to
noncontrolling interest
59
258
Net loss attributable to Civeo
Corporation
(9,484
)
(146,070
)
Less: Dividends attributable to Class A
preferred shares
478
468
Net loss attributable to Civeo common
shareholders
$
(9,962
)
$
(146,538
)
Net loss per share attributable to Civeo
Corporation common shareholders:
Basic
$
(0.70
)
$
(10.43
)
Diluted
$
(0.70
)
$
(10.43
)
Weighted average number of common shares
outstanding:
Basic
14,211
14,043
Diluted
14,211
14,043
CIVEO CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
March 31, 2021
December 31, 2020
(UNAUDITED)
Current assets:
Cash and cash equivalents
$
5,455
$
6,155
Accounts receivable, net
87,783
89,782
Inventories
6,677
6,181
Assets held for sale
—
3,910
Prepaid expenses and other current
assets
8,745
13,185
Total current assets
108,660
119,213
Property, plant and equipment, net
468,961
486,930
Goodwill, net
8,601
8,729
Other intangible assets, net
99,269
99,749
Operating lease right-of-use assets
22,338
22,606
Other noncurrent assets
2,349
3,626
Total assets
$
710,178
$
740,853
Current liabilities:
Accounts payable
$
42,336
$
42,056
Accrued liabilities
20,801
27,349
Income taxes
255
203
Current portion of long-term debt
35,047
34,585
Deferred revenue
5,983
6,812
Other current liabilities
6,354
5,760
Total current liabilities
110,776
116,765
Long-term debt
200,756
214,000
Operating lease liabilities
18,941
19,834
Other noncurrent liabilities
15,566
14,897
Total liabilities
346,039
365,496
Shareholders' equity:
Preferred shares
60,494
60,016
Common shares
—
—
Additional paid-in capital
1,579,342
1,578,315
Accumulated deficit
(917,689
)
(907,727
)
Treasury stock
(8,050
)
(6,930
)
Accumulated other comprehensive loss
(350,606
)
(348,989
)
Total Civeo Corporation shareholders'
equity
363,491
374,685
Noncontrolling interest
648
672
Total shareholders' equity
364,139
375,357
Total liabilities and shareholders'
equity
$
710,178
$
740,853
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March
31,
2021
2020
Cash flows from operating activities:
Net loss
$
(9,425
)
$
(145,812
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
21,269
25,502
Impairment charges
—
144,120
Deferred income tax expense (benefit)
1,041
(8,941
)
Non-cash compensation charge
1,027
2,208
Gains on disposals of assets
(1,902
)
(21
)
Provision for credit losses, net of
recoveries
193
54
Other, net
716
693
Changes in operating assets and
liabilities:
Accounts receivable
1,806
(1,496
)
Inventories
(526
)
(740
)
Accounts payable and accrued
liabilities
(5,287
)
6,280
Taxes payable
51
133
Other current assets and liabilities,
net
3,854
(1,143
)
Net cash flows provided by operating
activities
12,817
20,837
Cash flows from investing activities:
Capital expenditures
(3,372
)
(2,651
)
Proceeds from disposition of property,
plant and equipment
6,651
72
Net cash flows provided by (used in)
investing activities
3,279
(2,579
)
Cash flows from financing activities:
Term loan repayments
(8,872
)
(8,109
)
Revolving credit borrowings (repayments),
net
(6,691
)
(6,080
)
Taxes paid on vested shares
(1,120
)
(1,442
)
Net cash flows used in financing
activities
(16,683
)
(15,631
)
Effect of exchange rate changes on
cash
(113
)
(400
)
Net change in cash and cash
equivalents
(700
)
2,227
Cash and cash equivalents, beginning of
period
6,155
3,331
Cash and cash equivalents, end of
period
$
5,455
$
5,558
CIVEO CORPORATION
SEGMENT DATA
(in thousands)
(unaudited)
Three Months Ended March
31,
2021
2020
Revenues
Canada
$
61,885
$
79,348
Australia
59,637
49,113
United States
3,908
10,331
Total revenues
$
125,430
$
138,792
EBITDA (1)
Canada
$
10,796
$
(120,256
)
Australia
12,809
16,161
United States
(1,221
)
(12,053
)
Corporate and eliminations
(6,161
)
(7,652
)
Total EBITDA
$
16,223
$
(123,800
)
Adjusted EBITDA (1)
Canada
$
10,796
$
11,425
Australia
12,809
16,161
United States
(1,221
)
386
Corporate and eliminations
(6,161
)
(7,652
)
Total adjusted EBITDA
$
16,223
$
20,320
Operating income (loss)
Canada
$
(7,659
)
$
(136,631
)
Australia
3,307
6,164
United States
(2,598
)
(14,134
)
Corporate and eliminations
(2,951
)
(4,468
)
Total operating income (loss)
$
(9,901
)
$
(149,069
)
(1) Please see Non-GAAP Reconciliation
Schedule.
CIVEO CORPORATION
NON-GAAP
RECONCILIATIONS
(in thousands)
(unaudited)
Three Months Ended March
31,
2021
2020
EBITDA (1)
$
16,223
$
(123,800
)
Adjusted EBITDA (1)
$
16,223
$
20,320
Free Cash Flow (2)
$
16,096
$
18,258
(1)
The term EBITDA is defined as net income
(loss) attributable to Civeo Corporation plus interest, taxes,
depreciation and amortization. The term Adjusted EBITDA is defined
as EBITDA adjusted to exclude impairment charges. EBITDA and
Adjusted EBITDA are not measures of financial performance under
generally accepted accounting principles and should not be
considered in isolation from or as a substitute for net income or
cash flow measures prepared in accordance with generally accepted
accounting principles or as a measure of profitability or
liquidity. Additionally, EBITDA and Adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
Civeo has included EBITDA and Adjusted EBITDA as supplemental
disclosures because its management believes that EBITDA and
Adjusted EBITDA provide useful information regarding its ability to
service debt and to fund capital expenditures and provide investors
a helpful measure for comparing Civeo's operating performance with
the performance of other companies that have different financing
and capital structures or tax rates. Civeo uses EBITDA and Adjusted
EBITDA to compare and to monitor the performance of its business
segments to other comparable public companies and as a benchmark
for the award of incentive compensation under its annual incentive
compensation plan.
The following table sets forth a
reconciliation of EBITDA and Adjusted EBITDA to net loss
attributable to Civeo Corporation, which is the most directly
comparable measure of financial performance calculated under
generally accepted accounting principles (in thousands)
(unaudited):
Three Months Ended March
31,
2021
2020
Net loss attributable to Civeo
Corporation
$
(9,484
)
$
(146,070
)
Income tax expense (benefit)
1,076
(8,811
)
Depreciation and amortization
21,269
25,502
Interest income
—
(16
)
Interest expense
3,362
5,595
EBITDA
$
16,223
$
(123,800
)
Adjustments to EBITDA
Impairment of long-lived assets (a)
—
50,514
Impairment of goodwill (b)
—
93,606
Adjusted EBITDA
$
16,223
$
20,320
(a)
Relates to asset impairments in the first
quarter of 2020. In the first quarter of 2020, we recorded a
pre-tax loss related to the impairment of long-lived assets in our
Canadian segment of $38.1 million ($38.1 million after-tax, or
$2.71 per diluted share) and a pre-tax loss related to the
impairment of long-lived assets in our U.S. segment of $12.4
million ($12.4 million after-tax, or $0.89 per diluted share),
which is included in Impairment expense on the unaudited statements
of operations.
(b)
Relates to the impairment of goodwill in
the first quarter of 2020. The $93.6 million impairment ($93.6
million after-tax, or $6.67 per diluted share) is related to our
Canada reporting unit and is included in Impairment expense on the
statements of operations.
(2)
The term Free Cash Flow is defined as net
cash flows provided by operating activities less capital
expenditures plus proceeds from asset sales. Free Cash Flow is not
a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation
from or as a substitute for cash flow measures prepared in
accordance with generally accepted accounting principles or as a
measure of profitability or liquidity. Additionally, Free Cash Flow
may not be comparable to other similarly titled measures of other
companies. Civeo has included Free Cash Flow as a supplemental
disclosure because its management believes that Free Cash Flow
provides useful information regarding the cash flow generating
ability of its business relative to its capital expenditure and
debt service obligations. Civeo uses Free Cash Flow to compare and
to understand, manage, make operating decisions and evaluate
Civeo's business. It is also used as a benchmark for the award of
incentive compensation under its annual incentive compensation
plan.
The following table sets forth a
reconciliation of Free Cash Flow to Net Cash Flows Provided by
Operating Activities, which is the most directly comparable measure
of financial performance calculated under generally accepted
accounting principles (in thousands) (unaudited):
Three Months Ended March
31,
2021
2020
Net Cash Flows Provided by Operating
Activities
$
12,817
$
20,837
Capital expenditures
(3,372
)
(2,651
)
Proceeds from disposition of property,
plant and equipment
6,651
72
Free Cash Flow
$
16,096
$
18,258
CIVEO CORPORATION
NON-GAAP RECONCILIATIONS -
GUIDANCE
(in millions)
(unaudited)
Year Ending December 31,
2021
EBITDA Range (1)
$
90.0
$
100.0
Adjusted EBITDA Range (1)
$
90.0
$
100.0
(1)
The following table sets forth a
reconciliation of estimated Adjusted EBITDA to estimated net loss,
which is the most directly comparable measure of financial
performance calculated under generally accepted accounting
principles (in millions) (unaudited):
Year Ending December 31,
2021
(estimated)
Net loss
$
(10.5
)
$
(0.5
)
Income tax expense
0.5
0.5
Depreciation and amortization
85.0
85.0
Interest expense
15.0
15.0
EBITDA
$
90.0
$
100.0
Adjustments to EBITDA
Impairment expense
—
—
Representations and warranties
settlement
—
—
Adjusted EBITDA
$
90.0
$
100.0
CIVEO CORPORATION
SUPPLEMENTAL QUARTERLY SEGMENT
AND OPERATING DATA
(U.S. dollars in thousands,
except for room counts and average daily rates)
(unaudited)
Three Months Ended March
31,
2021
2020
Supplemental Operating Data - Canadian
Segment
Revenues
Accommodation revenue (1)
$
46,530
$
66,066
Mobile facility rental revenue (2)
10,499
2,508
Food and other services revenue (3)
4,856
10,774
Total Canadian revenues
$
61,885
$
79,348
Costs
Accommodation cost
$
38,336
$
48,055
Mobile facility rental cost
6,774
3,257
Food and other services cost
4,121
10,015
Indirect other cost
2,654
2,945
Total Canadian cost of sales and
services
$
51,885
$
64,272
Average daily rates (4)
$
97
$
92
Billed rooms (5)
480,066
708,323
Canadian dollar to U.S. dollar
$
0.790
$
0.745
Supplemental Operating Data -
Australian Segment
Accommodation revenue (1)
$
33,675
$
32,585
Food and other services revenue (3)
25,962
16,528
Total Australian revenues
$
59,637
$
49,113
Costs
Accommodation cost
$
17,105
$
14,995
Food and other services cost
24,297
13,707
Indirect other cost
1,501
851
Total Australian cost of sales and
services
$
42,903
$
29,553
Average daily rates (4)
$
79
$
69
Billed rooms (5)
424,666
471,840
Australian dollar to U.S. dollar
$
0.773
$
0.658
(1)
Includes revenues related to lodge and
village rooms and hospitality services for owned rooms for the
periods presented.
(2)
Includes revenues related to mobile camps
for the periods presented.
(3)
Includes revenues related to food service,
laundry and water and wastewater treatment services, and facilities
management for the periods presented.
(4)
Average daily rate is based on billed
rooms and accommodation revenue.
(5)
Billed rooms represents total billed days
for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210430005146/en/
Carolyn J. Stone Civeo Corporation Senior Vice President &
Chief Financial Officer 713-510-2400
Jeffrey Spittel FTI Consulting 832-667-5140
Civeo (NYSE:CVEO)
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