First Quarter Highlights include:
- Reported first quarter revenues of $167.6 million, net loss of
$6.4 million and operating cash flow of $0.4 million;
- Delivered first quarter Adjusted EBITDA of $20.2 million;
- Continued to return capital to shareholders through the share
repurchase program; and
- Today announced five contract awards to provide accommodations
and hospitality services at various Civeo Australia villages with
expected total revenues of A$175 million spanning 2023-2028.
Civeo Corporation (NYSE:CVEO) today reported financial and
operating results for the first quarter ended March 31, 2023.
“Through continued safe and effective operations, our first
quarter 2023 financial results were in line with our expectations.
We experienced the typical first quarter seasonality which always
results in reduced customer activity and cash flows, but we are
well positioned for a strong second quarter of turnaround
activity,” said Bradley J. Dodson, Civeo's President and Chief
Executive Officer.
“Our recent contract award wins in Australia are supported by
customer activity trending upward and growing customer interest in
securing room supply, resulting in increased revenue visibility for
Civeo. We continue to navigate inflationary pressures through
tailored mitigation efforts leveraging flexibility in our
operations and our contracts. Identifying a long-term solution for
our McClelland Lake assets remains a key focus of our Canadian
team. Finally, we expect to continue to opportunistically buy back
shares, as we did in the first quarter.”
First Quarter 2023 Results
In the first quarter of 2023, Civeo generated revenues of $167.6
million and reported a net loss of $6.4 million, or $0.42 per
diluted share. During the first quarter of 2023, Civeo produced
operating cash flow of $0.4 million, Adjusted EBITDA of $20.2
million and negative free cash flow of $2.1 million. The negative
free cash flow in the first quarter of 2023 was primarily the
result of a seasonal build in working capital of $15.6 million.
By comparison, in the first quarter of 2022, Civeo generated
revenues of $165.7 million and reported net income of $0.9 million,
or $0.06 per diluted share. During the first quarter of 2022, Civeo
produced operating cash flow of $2.0 million, Adjusted EBITDA of
$25.6 million and free cash flow of $0.7 million.
The year-over-year decrease in Adjusted EBITDA in the first
quarter of 2023 was primarily driven by lower contribution from
Canadian mobile camps, continued inflationary pressures and the
negative impact of weakened Australian and Canadian dollars
relative to the U.S. dollar. The decrease was partially offset by a
$1.7 million gain on sale of assets related to the divestiture of
certain U.S. assets.
Business Segment Results
(Unless otherwise noted, the following discussion compares the
quarterly results for the first quarter of 2023 to the results for
the first quarter of 2022.)
Canada
During the first quarter of 2023, the Canadian segment generated
revenues of $89.5 million, operating loss of $4.5 million and
Adjusted EBITDA of $12.0 million, compared to revenues of $96.0
million, operating income of $4.0 million and Adjusted EBITDA of
$17.2 million in the first quarter of 2022. Results from the first
quarter of 2023 reflect the impact of a weakened Canadian dollar
relative to the U.S. dollar, which decreased revenues and Adjusted
EBITDA by $6.0 million and $0.8 million, respectively.
On a constant currency basis, the Canadian segment revenues were
relatively flat period-over-period due to an increase in Canadian
lodge revenue offset by a decline in mobile camp activity. Adjusted
EBITDA for the Canadian segment decreased 30% year-over-year
primarily due to decreased contribution from Canadian mobile camps
resulting from the wind-down in pipeline construction activity as
well as inflationary pressures across the business.
Australia
During the first quarter of 2023, the Australian segment
generated revenues of $77.0 million, operating income of $4.9
million and Adjusted EBITDA of $14.2 million, compared to revenues
of $63.5 million, operating income of $6.1 million and Adjusted
EBITDA of $15.4 million in the first quarter of 2022. Results from
the first quarter of 2023 reflect the impact of a weakened
Australian dollar relative to the U.S. dollar, which decreased
revenues and Adjusted EBITDA by $4.6 million and $0.9 million,
respectively.
As noted above, five additional contracts were awarded for the
Australian villages, including a two-year A$90 million contract
renewal and a five-year A$45 million renewal. Including A$35
million in new contract wins to support short-term turnaround
activity, the additional awards with respect to the Australian
segment total A$175 million over five years.
On a constant currency basis, the Australian segment experienced
a 28% period-over-period increase in revenues primarily driven by
increased integrated services revenue related to new contracts as
well as a 10% year-over-year increase in village billed rooms.
Adjusted EBITDA for the Australian segment decreased 8% due to
inflationary pressures primarily associated with the integrated
services business partially offset by higher occupancy in Civeo's
owned villages.
Financial Condition
As of March 31, 2023, Civeo had total liquidity of approximately
$90.6 million, consisting of $78.2 million available under its
revolving credit facilities and $12.4 million of cash on hand.
Civeo’s total debt outstanding on March 31, 2023 was $142.6
million, a $10.6 million increase since December 31, 2022.
Civeo reported a net leverage ratio of 1.2x as of March 31,
2023.
During the first quarter of 2023, Civeo invested $4.8 million in
capital expenditures compared to $3.6 million invested during the
first quarter of 2022. Capital expenditures in both periods were
predominantly related to maintenance spending on the Company’s
lodges and villages.
Full Year 2023 Guidance
For the full year of 2023, Civeo is maintaining its previously
provided revenue and Adjusted EBITDA guidance ranges of $630
million to $650 million and $85 million to $95 million,
respectively. The Company is increasing full year 2023 capital
expenditure guidance to a range of $45 million to $50 million. The
increase in capital expenditure guidance is entirely driven by our
previously announced contract win in Australia where the customer
has requested specific upgrades to three Australian villages. These
upgrades will be fully funded by the customer upfront; therefore,
the Company is not changing its 2023 free cash flow guidance.
Conference Call
Civeo will host a conference call to discuss its first quarter
2023 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 (877) 423-9813 in the United States or (201) 689-8573
internationally and using the conference ID 13738306#. 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 13738306#.
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 26 lodges
and villages in Canada, Australia and the U.S., with an aggregate
of approximately 28,000 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, including the statements regarding Civeo’s
future plans and outlook, guidance, current trends and liquidity
needs, and expected revenues from new contract awards, and future
share repurchases, 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 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 inflation and volatility in the banking sector,
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, inflation, global weather conditions, natural
disasters, global health concerns, such as the COVID-19 pandemic,
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
most recent annual report on Form 10-K 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.
Non-GAAP Financial Information
EBITDA, Adjusted EBITDA, free cash flow, net debt, bank-adjusted
EBITDA and net leverage ratio are non-GAAP financial measures. See
“Non-GAAP Reconciliation” below for definitions and additional
information concerning non-GAAP financial measures, including a
reconciliation of the non-GAAP financial information presented in
this press release to the most directly comparable financial
information presented in accordance with GAAP. Non-GAAP financial
information supplements and should be read together with, and is
not an alternative or substitute for, the Company’s financial
results reported in accordance with GAAP. Because non-GAAP
financial information is not standardized, it may not be possible
to compare these financial measures with other companies’ non-GAAP
financial measures.
- Financial Schedules Follow -
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
Three Months Ended
March 31,
2023
2022
Revenues
$
167,591
$
165,678
Costs and expenses:
Cost of sales and services
133,514
125,843
Selling, general and administrative
expenses
16,190
15,213
Depreciation and amortization expense
21,662
20,127
Other operating expense
129
258
171,495
161,441
Operating income (loss)
(3,904
)
4,237
Interest expense
(3,656
)
(2,468
)
Interest income
32
—
Other income
2,450
1,696
Income (loss) before income taxes
(5,078
)
3,465
Income tax expense
(1,233
)
(1,557
)
Net income (loss)
(6,311
)
1,908
Less: Net income attributable to
noncontrolling interest
42
498
Net income (loss) attributable to Civeo
Corporation
(6,353
)
1,410
Less: Dividends attributable to Class A
preferred shares
—
487
Net income (loss) attributable to Civeo
common shareholders
$
(6,353
)
$
923
Net income (loss) per share attributable
to Civeo Corporation common shareholders:
Basic
$
(0.42
)
$
0.06
Diluted
$
(0.42
)
$
0.06
Weighted average number of common shares
outstanding:
Basic
15,158
14,096
Diluted
15,158
14,219
CIVEO CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
March 31, 2023
December 31, 2022
(UNAUDITED)
Current assets:
Cash and cash equivalents
$
12,366
$
7,954
Accounts receivable, net
122,962
119,755
Inventories
7,379
6,907
Assets held for sale
8,184
8,653
Prepaid expenses and other current
assets
7,732
10,280
Total current assets
158,623
153,549
Property, plant and equipment, net
284,371
301,890
Goodwill, net
7,565
7,672
Other intangible assets, net
80,369
81,747
Operating lease right-of-use assets
15,059
15,722
Other noncurrent assets
5,176
5,604
Total assets
$
551,163
$
566,184
Current liabilities:
Accounts payable
$
47,819
$
51,087
Accrued liabilities
21,309
39,211
Income taxes
223
178
Current portion of long-term debt
21,485
28,448
Deferred revenue
3,993
991
Other current liabilities
8,387
8,342
Total current liabilities
103,216
128,257
Long-term debt
120,441
102,505
Deferred income taxes
5,874
4,778
Operating lease liabilities
12,005
12,771
Other noncurrent liabilities
17,450
14,172
Total liabilities
258,986
262,483
Shareholders' equity:
Preferred shares
—
—
Common shares
—
—
Additional paid-in capital
1,625,379
1,624,512
Accumulated deficit
(940,247
)
(930,123
)
Treasury stock
(9,063
)
(9,063
)
Accumulated other comprehensive loss
(387,361
)
(385,187
)
Total Civeo Corporation shareholders'
equity
288,708
300,139
Noncontrolling interest
3,469
3,562
Total shareholders' equity
292,177
303,701
Total liabilities and shareholders'
equity
$
551,163
$
566,184
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(6,311
)
$
1,908
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
21,662
20,127
Deferred income tax expense
1,189
1,491
Non-cash compensation charge
867
1,032
Gains on disposals of assets
(2,018
)
(1,489
)
Provision for credit losses, net of
recoveries
(68
)
(20
)
Other, net
589
686
Changes in operating assets and
liabilities:
Accounts receivable
(4,298
)
(7,142
)
Inventories
(535
)
(623
)
Accounts payable and accrued
liabilities
(20,075
)
(13,697
)
Taxes payable
45
59
Other current and noncurrent assets and
liabilities, net
9,311
(379
)
Net cash flows provided by operating
activities
358
1,953
Cash flows from investing activities:
Capital expenditures
(4,772
)
(3,592
)
Proceeds from dispositions of property,
plant and equipment
2,265
2,364
Other, net
—
190
Net cash flows used in investing
activities
(2,507
)
(1,038
)
Cash flows from financing activities:
Term loan repayments
(7,389
)
(8,003
)
Revolving credit borrowings (repayments),
net
17,730
7,680
Repurchases of common shares
(3,771
)
(9
)
Taxes paid on vested shares
—
(1,013
)
Net cash flows provided by (used in)
financing activities
6,570
(1,345
)
Effect of exchange rate changes on
cash
(9
)
571
Net change in cash and cash
equivalents
4,412
141
Cash and cash equivalents, beginning of
period
7,954
6,282
Cash and cash equivalents, end of
period
$
12,366
$
6,423
CIVEO CORPORATION
SEGMENT DATA
(in thousands)
(unaudited)
Three Months Ended March
31,
2023
2022
Revenues
Canada
$
89,453
$
95,952
Australia
76,989
63,529
Other (2)
1,149
6,197
Total revenues
$
167,591
$
165,678
EBITDA (1)
Canada
$
12,011
$
17,219
Australia
14,209
15,437
Corporate, other and eliminations (2)
(6,054
)
(7,094
)
Total EBITDA
$
20,166
$
25,562
Adjusted EBITDA (1)
Canada
$
12,011
$
17,219
Australia
14,209
15,437
Corporate, other and eliminations (2)
(6,054
)
(7,094
)
Total adjusted EBITDA
$
20,166
$
25,562
Operating income (loss)
Canada
$
(4,502
)
$
4,038
Australia
4,897
6,135
Corporate, other and eliminations (2)
(4,299
)
(5,936
)
Total operating income (loss)
$
(3,904
)
$
4,237
(1) Please see Non-GAAP Reconciliation
Schedule.
(2) Prior to the first quarter of 2023, we
presented the U.S. operating segment as a separate reportable
segment. Our operating segment in the U.S. no longer meets the
reportable segment quantitative thresholds, and is included within
the Other and Corporate, other and eliminations categories. Prior
periods have been adjusted.
CIVEO CORPORATION
NON-GAAP
RECONCILIATIONS
(in thousands)
(unaudited)
Three Months Ended
March 31,
Twelve Months Ended March
31,
2023
2022
2023
EBITDA (1)
$
20,166
$
25,562
Adjusted EBITDA (1)
$
20,166
$
25,562
Free Cash Flow (2)
$
(2,149
)
$
725
Net Leverage Ratio (3)
1.2x
(1)
The term EBITDA is a non-GAAP financial
measure that is defined as net income (loss) attributable to Civeo
Corporation plus interest, taxes, depreciation and amortization.
The term Adjusted EBITDA is a non-GAAP financial measure that is
defined as EBITDA adjusted to exclude certain other unusual or
non-operating items. 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 income (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,
Twelve Months Ended March
31,
2023
2022
2023
Net income (loss) attributable to Civeo
Corporation
$
(6,353
)
$
1,410
$
(3,766
)
Income tax expense
1,233
1,557
4,078
Depreciation and amortization
21,662
20,127
88,749
Interest income
(32
)
—
(71
)
Interest expense
3,656
2,468
12,662
EBITDA
$
20,166
$
25,562
$
101,652
Adjustments to EBITDA
Impairment of long-lived assets (a)
—
—
5,721
Adjusted EBITDA
$
20,166
$
25,562
$
107,373
(a)
Relates to asset impairments in the fourth
quarter of 2022. In the fourth quarter of 2022, we recorded a
pre-tax loss related to the impairment of long-lived assets in our
Australian segment of $3.8 million and a pre-tax loss related to
the impairment of long-lived assets in the U.S. of $1.9
million.
(2) The term 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. 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,
2023
2022
Net Cash Flows Provided by Operating
Activities
$
358
$
1,953
Capital expenditures
(4,772
)
(3,592
)
Proceeds from dispositions of property,
plant and equipment
2,265
2,364
Free Cash Flow
$
(2,149
)
$
725
(3)
The term net leverage ratio is a non-GAAP
financial measure that is defined as net debt divided by
bank-adjusted EBITDA. Net debt, bank-adjusted EBITDA and net
leverage ratio are not financial measures under GAAP and should not
be considered in isolation from or as a substitute for total debt,
net income (loss) or cash flow measures prepared in accordance with
GAAP or as a measure of profitability or liquidity. Additionally,
net debt, bank-adjusted EBITDA and net leverage ratio may not be
comparable to other similarly titled measures of other companies.
Civeo has included net debt, bank-adjusted EBITDA and net leverage
ratio as a supplemental disclosure because its management believes
that this data provides useful information regarding the level of
the Company’s indebtedness and its ability to service debt.
Additionally, per Civeo’s credit agreement, the Company is required
to maintain a net leverage ratio below 3.0x every quarter to remain
in compliance with the credit agreement.
The following table sets forth a
reconciliation of net debt, bank-adjusted EBITDA and net leverage
ratio to the most directly comparable measures of financial
performance calculated under GAAP (in thousands) (unaudited):
AS OF MARCH 31,
2023
Total debt
$
142,608
Less: Cash and cash equivalents
12,366
Net debt
$
130,242
Adjusted EBITDA for the twelve months
ended March 31, 2023 (a)
$
107,373
Adjustments to Adjusted EBITDA
Stock-based compensation
3,623
Interest income
71
Bank-adjusted EBITDA
$
111,067
Net leverage ratio (b)
1.2x
(a) See footnote 1 above for
reconciliation of Adjusted EBITDA to net income (loss) attributable
to Civeo Corporation
(b) Calculated as net debt divided by
bank-adjusted EBITDA
CIVEO CORPORATION
NON-GAAP RECONCILIATIONS -
GUIDANCE
(in millions)
(unaudited)
Year Ending December 31,
2023
EBITDA Range (1)
$
85.0
$
95.0
(1)
The following table sets forth a
reconciliation of estimated 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,
2023
(estimated)
Net income
$
(17.0
)
$
(9.0
)
Income tax expense
10.0
12.0
Depreciation and amortization
80.0
80.0
Interest expense
12.0
12.0
EBITDA
$
85.0
$
95.0
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,
2023
2022
Supplemental Operating Data - Canadian
Segment
Revenues
Accommodation revenue (1)
$
64,228
$
67,194
Mobile facility rental revenue (2)
20,031
24,018
Food and other services revenue (3)
5,194
4,740
Total Canadian revenues
$
89,453
$
95,952
Costs
Accommodation cost
$
52,098
$
53,127
Mobile facility rental cost
14,502
14,884
Food and other services cost
4,774
4,359
Indirect other cost
2,531
2,836
Total Canadian cost of sales and
services
$
73,905
$
75,206
Average daily rates (4)
$
96
$
106
Billed rooms (5)
642,796
635,555
Canadian dollar to U.S. dollar
$
0.740
$
0.790
Supplemental Operating Data -
Australian Segment
Revenues
Accommodation revenue (1)
$
40,599
$
37,599
Food and other services revenue (3)
36,390
25,930
Total Australian revenues
$
76,989
$
63,529
Costs
Accommodation cost
$
20,318
$
18,407
Food and other services cost
35,862
24,363
Indirect other cost
2,128
1,744
Total Australian cost of sales and
services
$
58,308
$
44,514
Average daily rates (4)
$
78
$
79
Billed rooms (5)
522,713
474,474
Australian dollar to U.S. dollar
$
0.684
$
0.724
(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 assets
for the periods presented.
(3)
Includes revenues related to food
services, 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 owned assets for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230428005031/en/
Carolyn J. Stone Civeo Corporation Senior Vice President &
Chief Financial Officer 713-510-2400
Civeo (NYSE:CVEO)
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