CVEO - Earnings call transcript Q3 2017

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Operator

Good day and welcome to the Civeo Third Quarter Earnings Call. Today's conference is being recorded. At this time I would like to turn the conference over to Regan Nielsen, Manager, Corporate Development and Investor Relations. Please go ahead, sir.

Regan Nielsen

Thank you and welcome to Civeo's third quarter 2017 earnings conference call. be Officer, Bradley Vice and Chief Officer. will and Civeo's President call Financial Executive Chief Frank our led Dodson, by President and Today Steininger, Senior

forward-looking would today by remarks information federal protections relying other please caution Before on that including information, contain that like historical risks law. read that in in the begin, of affect the extent we Any listeners we our afforded regarding note XX-Q statements. than remarks the factors business, turn To our the XX-K, filings. Harbor should to be Form Bradley. we're call such SEC over I disclosed now the our context other to many and will Safe

Bradley Dodson

provide quarter performance I'll then to of earnings call. by will an review. overview off Thanks regional segment and finish before the Frank move on I'll guidance quarter for with call. us detailed and Regan, to And third of everyone begin the a our welcome XXXX and question-and-answer markets. portion joining we our some fourth quarter commentary level providing our financial and today the on on

environment. business expectations in market with continues line our to difficult very Our a perform in

Canadian with XX.X In lodges guidance Canadian improved free the cash million, million, XX.X paid flow, of flow sequential the to and our of quarter. we million down XX.X cash revenues XX.X We During guidance were and million range third generated segment, company our strengthening third up debt reported EBITDA range. above quarter, of of our within $X dollar. of operating the of our primarily the revenues million at occupancy due XX% during

best approximately in to facility the increasing announce a service commodity that quarter expected catering a were revenues class CADXX with contract the customer business. in This our is our in and testament owned million price and are over is environment of offering totaling contract revenue XXX-room five-year with strategy a the low we catering We operational to profile to consistent operate awarded Canada, during pleased our period. our our customer contract

crude third moving During towards of US above quarter. barrel in the quarter, the mid-to-upper the per prices end oil $XX barrel, XXs per remained

recorded is of year-over-year last above activity which sequentially a in continues X.X million our services oil a plays enjoying barrel segment over to US and and our revenues XXX% higher in year. business US increase due business. resilient, and improvement an wellsite is Bakken, Our Permian to prices $XX With X% Bakken camps currently, in in of conditions completion the light over tight much be improved and Texas the slightly Rockies occupancy oil

discipline pace a capital rig we'll share process. the to began the of is operational than US on the which some we remain market continue considering EBITDA to interim, our services trend third the a quality, need large be to flatten In on our growth, heightened quarter growth wellsite emphasis monitor during independent increasing count production XXXX E&Ps However, and to improvement. and budgeting appear onshore in strictly of rather focused

the Australian coal $XXX our relatively strong remains met continue met price and with stabilize. being coal Australia approximately prices question tonne. Moving met segment will spot prices be coal to per at The constructive, macroeconomic to where

Bowen flow goal conviction Basin XX% potentially coal tonne. projects. price less approximately customers programs [indiscernible] in With those for significant for a assisted is markets, desire discuss as have conducive fairly per respective within to attractive portfolios coal their begun $XXX we perspective, long-term the Canada, the good drilling for approximately to flow calling well per tonne the vibrant. However, macroeconomic in US lead the Australian mines, servicing Greenfield many for capacity meantime, this the the cash completion positive $XXX as shale to significant summarize return per the to to optimistic Met with barrel turning sands above forecasts continue and cash from generates our $XX prices missing activity at oil customer cash increased Australian In prices that producers US are To met the and met from major Generally coal. from rooms of are In met either activity to prices and oil customers retreat plays. met in and to and coal oil $XXX coal are located Australian are levels. flow unlock coal some pursue oil met expansionary publicly of opportunities could met generally is Australian Anecdotally what levels. latent our customers. to both the prospects is on expansionary prices production region and

However from with flow oil cash oil barrel, customers generating our existing above projects. $XX are free positive per sands

recent While price trends utilization modest occupancy in of remain US, end and markets to a succeed we the the environment. and Canada improvements the are committed our core strategy encouraged commodity by any in positioning and we to in macroeconomic business our

unchanged. priorities remain Our

that focus for over Frank the free turn our of while balance delivering the strategic flow, all driving and continue working I'll detailed to cash safely, to sheet, a delevering performance. pursuing strong across operational segments review We on unmatched call generating growth opportunities. financial performance service, With

Frank Steininger

$XX.X good a per $X.XX morning, revenues total with share. diluted and of million million everyone. loss basis Today, GAAP Thank of or we net reported a $XX.X Bradley on you,

walk I the of quarter of the $XX.X segment from flow EBITDA Columbia. of will our $XX.X flow operating contract EBITDA from up adjusted XXXX generated Adjusted segment comparing During of million impact million our as of of the the third our from now The attributable third $XX.X $XX.X despite up negative cash cash turnaround the second sale the of XXXX. of XXXX $X.X million, as of I and quarter million, our free build a through with our $XX.X strengthening overruns related company quarter second will in Canadian and level approximately of associated in Canadian Canadian million performance Revenues beginning was operations increase well to cost from be $XX.X primarily were dollar. from in performance the occupancy million, to and sequential with million. segment $XX.X XXXX. sequentially construction revenues million quarter the higher to was per work Canadian British

Our $X.X the adjusted aforementioned EBITDA of included margin XX% slightly cost second containment benefit which lower by overrun. operations cost quarter offset more was from versus efficient the the million and

and occupancy lodges in During the by related work. was sequentially third which occupancy projects average and continued Canadian was XX%, construction flat our related turnaround to driven quarter,

in from increased short-term $XX quarter segment rate resulting for Our stronger the second average room Canadian dollars the daily $XX rate was and dollar. higher the in demand US versus Canadian

from during $XX.X in Turning recorded EBITDA we to third the were $XX.X $X.X which basis Australia, the of million, from quarter. million $XX.X Adjusted sequential down million. of million quarter, was slightly a revenues second on down

expectations elevated this meet to we levels. to our occupancy segment in yet performance continues experience met Our remain as as growth have prices at coal

EBITDA spending X% to the in Australia for customers therefore was Village daily in cautious The for approach in to occupancy accommodations. demand slightly by to $XX second their was $XX quarter to take Our on quarter. dollars slightly adjusted and continue level to up slightly third rate Australian versus and a average our the XX% down XX%. villages decreased room

driven the quarter $X.X Now for the increased and Rockies second moving completions million markets. to increase in was drilling Revenue the $X.X Texas activity improved million Bakken, third quarter. by to US, versus the revenues in and

increased impact to EBITDA quarter, second negative as areas assets the cost loss in quarter, During million unforeseen recorded due to and the to adjusted million in US continue activity partially associated levels. $X.X an cost reposition with the of higher we of with versus cancellation we $X.X contract our $XXX,XXX

projects basis, On invested in liquidity $X from and the million Now primarily on quarter, for our $X.X consolidated routine service million purposes I levels. capital will we maintenance a improve to on comment customer third expenditures our sequentially, down current position. and CapEx

and our third of made driven increasing the denominated XXXX, $X.X quarter. was dollar, US debt accordingly in dollar quarter the During total versus our strengthening debt third payment. million the This reduction by the in Canadian of dollar X.X Canadian million the Overall, increased debt. we

facility of million. for of $XX September million had XX, revolving capacity $XXX of of we cash liquidity hand million on credit and our As total approximately $XXX.X available on

continuing back about over call of delevering our and free balance generating remainder who year focus turn on Bradley, while our now quarter. sheet the for to provide the the the cash and will to for We some talk flow into comments are fourth will Bradley? XXXX. I closing guidance

Bradley Dodson

earnings quarter XXXX. for startup fourth and the contracts the now you, full-year seasonally and expect of strong with partially dollar. mentioned quarter the work strong on Frank. which projects, demand project in lower Thank from Canada, we continued a Starting offset construction by turnaround fourth we Canadian our second quarter, outline the pipeline guidance I'll call

million exchange we're adjusted assuming fourth of for rentable XX we segment rooms. rate X.X of million of dollar the and For based XX $XX XXXX. quarter million anticipate the EBITDA These to million of to $XX.X quarter, are expectations fourth on and X,XXX Canadian a revenue

primarily performance XX%, a related guidance lodge on year quarter our fourth night. segment, occupancy third rate and CADXXX and between revenue for We're occupancy construction We the quarter. the Canadian approximately XX% expect room for improved a with outlook our an raising for of full in the

per adjusted to range guiding with full-year Canadian XX%, to full-year of and approximately exchange the we're of room CADXXX between For dollar, the Canada, full-year expect $XXX million of to XX full-year rooms assumes the in, million rate rate the in XX% EBITDA of XXXX. rentable from $XXX to lodge be X,XXX, Canada million X.XX and a This occupancy million. we dollar US again assuming in guidance and of of for the XX night revenue to

volatile the and this this to approach prices our to their to take stabilizing. for customers as levels. With macroeconomic accommodations. we've volatility a Met mentioned, coal appears remain cautious be spending but Moving our have environment Australia, year, continue at constructive demand to therefore been

demand be for our outlook fourth and the XXXX. We've remains opaque incorporated incremental As into to contracted demand for for continue expectations quarter rooms a such on basis. these of guidance the shorter-term will for

between quarter rooms occupancy be night. at to quarter, to and between the we're fourth of million $XX $XX village rate million and guiding $XX These with to the AUDXXX room rentable and dollar expectations the of X,XXX million segment based exchange an XX% of to Australian For expected $X with we're XX%, for per rate adjusted on fourth XXXX. and assuming AUDXXX are revenues EBITDA X.XX million

for Australia of X.XX the For $XXX adjusted from to we We of dollar. of revenue Australia expect Australia, we're basis the of assumes AUDXXX rate rate full-year in be million $XX room in fourth for guidance exchange US we to a full-year This our XXXX. million with the quarter XX%, year to On and anticipate $XXX million a lodge assuming X,XXX EBITDA million. full consolidated the year fourth of XX% guidance. rentable rooms night range full an between the with $XX to dollar and approximately occupancy per quarter, raised have of

to in million million revenues $XX expect $XX to adjusted million to $XX EBITDA the range range of of We in be million. the $XX and

XXX For of conclude we we're in raising our remain million opportunistically next to adjusted wait be the year To growth million. of of our million upswing operations as guidance debt principles $XX and guidance raising reducing $XX flow, service, lower with being free range full to industry. end in end customer the to our XXX full while year on generating focused EBITDA pursuing enhancing for cash our we opportunities upper for the revenue the million the an and

positioned dictated into XXXX session. are confident the With the that respond conditions it quarter I'll that and fourth to turn beyond. We question-and-answer well is for into and business the our going over to market

Operator

ahead. first Hancock from take [Operator Blake Please our question go Howard with Instructions] We'll Weil.

Blake Hancock

room little Canada. fit side, how rooms portfolio operated could to a on could maybe bit. contract some little maybe And you especially know, XXX wanted that of catering into your, first the contract you than about then the an approach that in on rooms. on owner-operated but probably different talk can take on Bradley, if working over manage It's lodge, to the touch owner-operated a the bit you the

Bradley Dodson

is This customer rooms, to of owned greater I customer think owned our have of our strategic markets. contract. push in exposure to part both important, we it's highlighted rooms this a

the talking total we're of Canada, accommodation. XX% in workforce both about but Canada Australia Here, and capacity are approximately

us. major So getting contract. to market our out asset Their Creek close were of a piece the is this We push that been revenue to getting pleased for of locations. Wapasu win has strategic access,

portfolio, it standpoint. the the to efficiencies opportunities we reference a But in again business carrying some comment in cost deployed. from across margin, some about So to the largest effectively that and from to lower two and some but your here the both have contract, cost which and lower to have Also, from pleased is win with standpoint the head demonstrates standpoint. head locations, we a capital a food do we're contract can this to caterers managerial compete labor of

best-in-class In are in bring can that from and gain there we service addition, we to location can as our some go we the forward. efficiencies

Blake Hancock

XQ details bump into we're the a bumping of and on helpful. maybe Can all be be walk may that as granular the, on guide of Congrats XQ through that we you maybe much more here how little would seeing bit kind just in the had here. XQ? That sticky

Bradley Dodson

Sure.

they that this going August, was in of demand rooms the towards terms to quarter, that of be of year, was is lot some there to we've but the the the be going as we're we into Fort in through for visibility and last As oil time the we here the end the that what first much work talking the will got late of call construction the at down. particularly the from fourth demand demand going the strong visibility of project to that July, And the was early second quarter. be turnaround, a Canada, had how turnaround And better quarter. in move move about the the wasn't month we fourth be winding benefit Hills at be going to quarter here, in quarter, had October, what of from as much

is visibility - Canada getting again contracts. the under in excess are generally the These short-term speaking, we're better. rooms So are

visibility the better was on looking initially not we the there guidance So when But call. quarter gave it's second now.

Blake Hancock

should on kind items of And that can and last we about XQ. us the help we think and you out how XQ one, Frank, increased in that in maybe saw the here stock one-time comp

Frank Steininger

roof some for a some Yeah. the that The identified go that and in snow contract for we a to associated roof. load the We and British issues with build had, one-time forced we with were increased design the basically, fix or correcting as the matter of it's in construction we Columbia, sale we that identified roof. had reported contract to to noted related that we cost on needed result we

in that So we've is that estimated cost don't work result what get and are that in - third fixed. we from expect in safety the repair come to the accommodations the cost total had the there booked staying the quarter. a basically get any of We quickly to for roof That standpoint, people and this to a was to complete other matter. through as basically

simple as and and quarter driven of is the basically the increase that largely increase up in at we end move Stock as the based really, Phantom price stock the that. stock shares that compensation have down third So with the some price. by

on stock an new, So impact did EBITDA. good but price went have up, it

Bradley Dodson

site we to downstream due they units serve cancel a customer of that the owner facility. was mobilized well project, well. repeat after was in turnaround, had, had disappointing, there but had a operations, shouldn't And with contract our to our a that we one-time downstream one to ultimate dispute where the item That we as had US the location

Operator

And next, hear from Capital. of Stephen we'll Gengaro Loop

Stephen Gengaro

kind stand EBITDA is break hurt getting excess far relative in XQ? on second in the cost areas I And of close moved guess Where on of the assets kind just One, on bit that as you've business to stronger quarter that that does some around US even call things. basis the of and little to US market, like I it a a the two business quarter. you looks to mentioned quickly know demand. may that as

Bradley Dodson

don't don't as mentioned all call, I on think goal. going last the the way the we're breakeven I in get the we was fourth to That think, quarter.

to of and the move this, and the costs, here, northern talking out the the Some MidCon. as Rockies are about we're Permian mentioned you of Bakken the assets markets, into

our in Pecos been have and MidCon. the in Texas well them open which of the our the we're site also is penetrating then Permian at Some and installed West location, camp market

both in some So up that's we've picked markets. rigs

to only assets use markets. those a look customer to to continue We we where We're them. commitment penetrate moving have

giving assets exposure down onshore the up business, that's then move as all the the there so is is you units US have a moving in to, and right business not the we're well spot on us the a from we the do well, site but know, of there. basis, a Now, Permian is largest business market in and customer speculative a MidCon commitment to

So that's that even first I at quarter. get process. break to going in completing budgeting this still know been point, don't the to we're don't our strategy. we're I the think,

I think we year, closer, US the EBITDA be much for the XXXX. full for business expectation the but will in get we'll is positive

Stephen Gengaro

And of another picture question. then a bigger sort then one quick and

the line corporate to you side, of million like to XQ Should XQ, On to that go X.X based the talk negative. closer comp. X stock million Frank, other about corporate numbers back back in

Frank Steininger

right. little mean, than should year. somewhere, and Well, the X for I we're mean, X running between - be we've I a been that, been higher it we've

So should for year. be that's we the where

Stephen Gengaro

so think of 'XX. as we and on half probably kind 'XX, it's that to of back about how the kind goes just relative we maybe thoughts gives even frame I'm down. think [indiscernible] go kind of takes And know how we at like bigger then you just of as finally you I Canada, I positives think mode it and know early, we into of production go kind just and a about Australia look I kind - on, sounds some picture go into look, has to the Any potentially from think 'XX, occupancy, of trying it's but you 'XX.

Bradley Dodson

what highlighted, to the room with end we question. are their process by a room to we're they as to their of be working Hills of what going Sure. Again, going Canada, demand determine moving In needs with just we're and our we'll as be into as by better have in That's project. try conversations In the as working still oil as okay. for conversations It's are towards mentioned, with customers budgeting they're a customer so you I needs XXXX. on the region budget still to 'XX, region. well for very from year in and the the our customers Fort through understanding Canada, budget go and 'XX. We're we're first good going

an personnel projects Second duration. amount the good doing well to third XXXX in people makes they second and a of activity. that turnaround Typically, fairly piece down is activity as of make they Canada XX-day taking it's of the years quarters that incremental headcount this. in We we those two need facility XX amount as our where that of can year This to project bring in a XXX they for customers to do quickly have. maintenance people work meet had as it substantial turnaround the say, row I'd from, is are this execute they they're to and anywhere can, where in as a to normal that

into our usually is activity. the good in turnaround that see contracted year look will another we next that we'll we're be So as booking quarter budget year And our at fourth guidance hopeful we XXXX. or and internal and first for of

pipeline The activity in the work. it's mobile is third Canada for to what camp piece be going

of one of TCPL if projects these lot for call, forward. we some we're press won As there's we're did, around we we projects, and we're pipeline a won those it We more earnings on and have think of in several LNG to lastly of any bidding positioned late is, go others. last major it's That's and the that pleased the some Canada some on pipeline like we quarter Certainly, mentioned to XXXX? or it reach more fourth well 'XX. materially a in And then if becoming and FID like looks very happens, project win of accommodations positive quarter work. going third that does be

it XXXX. to we not as and but XXXX. it certainly no projects. would levels. back then stabilized Australia, In FID, if only like positive would Then reach had into it operations may you the highlighted, year the as personnel. There's half We're question impactful big we of FID if the operating is, positive gone expansionary be for be it as a indication these effectively to feel move the So at earlier, have serving

continue, maintenance, to book have We of really seen some big periods We turnaround we time. for expect of our but seen conviction haven't rooms occupancy. from to blocks do of any that customers extended

XX projects up So we'll price. try Certainly, a that contract launching couple room of the an to years But the highlight, pick here happened as XXX coal or big customers and XXX for are extra rooms hasn't would a XXX here prices to room XX is, rooms we very that met or aren't good is equate yet. there. constructive question

$XXX the We're rig count we US exposure going to met be a completion activity. a dependent US amount making their of and is to moving because are the in positive the price $XXX expansionary range. be level per where range. We Permian as a they'll but and of don't our the stabilize? lastly that going predominantly pickup, customers down which some the flow, completion market And start the on incremental to, rig, and trying third-party customers to to know. costs drilling in modest US but cash then is gain tonne seeing our it's more it Again, $XX would But drilling activity. price to pickup forecasts on lot our cash we're are coal making a a US US, Our have on considerable business, that deck, be in the we does towards to launch to business offshore flow be mentioned, projects? Many are still going of

Operator

we'll with a [Operator Group. Instructions] from Craig-Hallum Mike Malouf Capital question take Next,

Mike Malouf

conviction what's bit any much sort all high, yet, of of When small capacity into in you we your seen - XX think at coal and give months projections XX just give orders. these Australia room little just explore I'm shift that still that? weight sort them start side? insight says, that on come up you some haven't more. there over do and down, wondering how us your if you of after out being market coal the in doing you there the even look Can of why take could the to a one will the you a just a to experience, opinion, of No

Bradley Dodson

Let to and me ability. try answer best the that of the

think I want don't take occupancy that XXX, equate the to to locations. that in XXX at people our I away to lower impression would

coal where from that XXX, for we movement is it and I Why is and a that that the is that today that to level, have think mining if of understanding our price operations. in closer own to terms are you That that at to negative is, appears in the impact projects So constructive a we gets were still for don't operations. on don't to expansionary their go defend be to global constructive would the you down? is occupancy. level going the go down Chinese question cost know. marginal to it The level current do real expect My level

for that's So hasn't a the right last forecast months. forecast. been XX been The

we starting of XXX report just to since went one's there, to to been out been prices the come to right. September coal So in They've last projecting investors no XXX, two but trying the XXXX. years, what see up they down

now, to And Now, XXX. down, first but right went a now back in they've down down Bevy. XXX, they've about to XXX, after up to retreated then to retreated they cycle XXX once

to the close it, to remains outlook unclear. continue our customers, prices to continue stay watch will but on I So the

Mike Malouf

question when And a the then that? revenue do on catering just contract that you to announced, you quick start expect on

Bradley Dodson

November. Xst The of

Operator

back no like appears at Instructions] speakers any further are closing I our turn would to additional the time. conference this for [Operator questions or remarks. there It to

Bradley Dodson

you on you and the us to position we give for be XXXX you. year quarter forward that February appreciate point, the as third complete at we'll Thank speaking joining we Thank in a in guidance. We to stock. interest And everyone your in look XXXX call. to

Operator

for you Thank conference. today's concludes your participation. This

disconnect. now may You

Civeo (CVEO) 26 Oct 172017 Q3 Earnings call transcript