CVEO - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the Civeo Second Quarter Earnings Call. Today's conference is being recorded. At this time, I'd 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 second quarter 2018 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, Executive

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

Bradley Dodson

operating the closed to Noralta accomplishments in the In Operationally, as were we We of results were Australia several acquisition, us I'll second expecting. quarterly made XXXX but in business significant results then the our level conclude move and Thank quarter question-and-answer initially with second good, Canada, detailed our and you, quarter. Regan, XXXX segments. our the and for U.S. we begin quarter and on the financial will the portion the Canadian I'll and thank we an joining on earnings outlook into credit and quarter guidance agreement. today call. We Noralta not you overview and the call. integrated three as today updated Frank for to business with call amended operations the we commentary of review, generated a good on some our second before provide solid segment everyone

ongoing as our for approving operations is activity business. therefore, outlook LNG well activity the Canadian in our core However, as

collectively venture, for million approximately side, LNG to XXXX pipeline Coastal revenues GasLink contracts over to awards XXXX, rooms at and in the four related they expected On long generate Canada to decision this X,XXX potentially CADXXX to activity Civeo Perhaps and pleased activity presents a investment contract peak commercial year. joint is which Canada are positive camp Canada the LNG we Canada, opportunity. announce new are expected these later Western subject importantly, commencement occupy mobile with in final proposed project were LNG conditional sizable way and to the Canada, in development of from the from as

including get we these contracts, initial Lodge existing GasLink contract are are for Sitka our Columbia. conditional we Kitimat, additional to in LNGC, pleased actively additional Coastal While awards related pursuing contracts to British

businesses, impacted quarter they in business sequential while turnaround was revenues included second as increased strong for EBITDA shutdown as consolidated in in activity. at the all Canadian aggregate the increase For our cash well performed mines and quarter and the room improvements in U.S. nights. free and Basin adjusted Bowen our negatively Australian on by well and shorter-than-expected customer three In maintenance flow $X.X segments, million a Australia, a basis. of drove activity sequential XX% Highlights

and contributions and Permian activity works our acquired contributed increased business quarter from positive U.S. to EBITDA continued higher the Our completion offshore that for facility in segment. momentum as recently Louisiana the basin for drilling fabrication achieved

related case Our lower-than- to fluid due of by primarily completion the seasonal Canadian occupancy business is early customers. two in this turnaround second softer-than-expected and experienced the during Occupancy activity turnaround quarter, expected. to work

with of operations conditional second expected integration the with remains Canadian efforts. Oil are those we're pleased and of swift Noralta the Sands awards business into positive very LNG successful as business, quarter, our the the and third complete the evident in overall the However, end and outlook were of recent substantially integration region. quarter the turnaround activity contract as We from for the

$XX.X was was contributed acquisition of segment expectations. revenues increase Adjusted sharp generated to $XX.X as Noralta a EBITDA the below which Canadian million, our our million, Our results.

occupancy locations, our quarter the relative estimates and discussions at the the both in earlier regarding as and as Legacy, initial Noralta Although, expectations year. Civeo improving for activity strong customer to are the expected initially third we wasn't quarter turnaround

segment, Australia mining tonne for that months per larger anticipate met and the appetites. financial our the XX prices the quarter constructive We is coal coal tonne business. have per spending remaining flows our which revenues prices averaged performance, Australian second with stronger for higher healthier increasingly and the Australian supportive is $XXX macroeconomic been Our providing in above Met $XXX customers hopefully, third in with the accordance marginally environment. cash quarter, last level for

business operational occupancy robust our U.S. oil performance as from full shale contribution lodge quarter's the and resilient better a continued Louisiana – Charles, an meaningfully fabrication a in the U.S. of financial and Lake of and offshore completion project. Our to result plays,

As as a achieved the segment. positive EBITDA quarter result in the and anticipated, we for second

in assess half we second and into Mid-Con. activity we strong the As occupancy the drilling and Permian year, of completion expect driven the by the

we we Lodge beds result, our results. Frank grow West strengthen cash of to added a price and The and we the seek to this are to year half in business to about years, free strengthen detailed satisfy XXX meaningful second XXXX. we're of while of recent in acquisitions beginning over Commodity organically to our our the than and heading the I'll two for contributions our performance. Permian turn balance flow Overall, a sheet making financial demand. balance With continue growing fundamentals review remain closed call our into inorganically As our to – considerably that our consistently healthier business. in sheet generate that, excited we

Frank Steininger

Thank I'll with revenues our $XXX.X three us we Today, or quarter $X.XX $XX.X basis diluted results of you, million segments. start this second joining share. in reported on everyone across review per of a and morning. quarter second loss total a our a of for net GAAP with the thanks Bradley, million,

million and the free cash $XX.X adjusted of company million, generated During second million. the $X.X flow of operating flow $XX.X quarter, of EBITDA cash

accretion impact operations. of preferred second includes outstanding conversion The as feature of the net a on the beneficial second a the dividend million, on totaling $XX.X preferred quarter statement net quarter shown loss shares of the

the some $XX.X put the contains when is million Under instrument principles me date. generally the convertible price conversion commitment around quarter. accepted further dividend the into the recorded the a accounting instrument conversion convertible second beneficial than less Let a fair is at during feature or the shares, GAAP, preferred of color value

shares As part paid preferred of to we convertible the the Noralta, sellers. acquire consideration issued to

beneficial feature of shares, shares we GAAP we the as immediately GAAP. date – recognize team common As preferred resulting which the dividend, impact convertible of our second U.S. the the convertible Noralta conversion feature to under Civeo were was impacting at GAAP Since of are conversion in accounting closing the the a value Noralta acquisition, transaction, closed under will greater non-cash under effective fair therefore, a quarter the into, require, therefore the conversion loss shares preferred quarter. the the for beneficial at price than into

review Turning Adjusted by the the EBITDA in to sequentially $XX.X million, the million. pickup as revenue from Noralta Canadian The were activity. mobile prior to performance primarily for the Revenues was second from a rental from the quarter. quarter double facility our by driven Canadian in Noralta almost $XX.X acquisition. well compared with results the increase $X.X million, our segment Revenue for driven of in as quarter. first Canada was our quarter from increasing the the expanded begin $XX.X segments, million segment a I'll were acquisition

operations. driven addition second in quarter, totaled the of sequentially, and Canadian by strong Noralta build rooms up XXX,XXX, work our turnaround the lodges the During the XX% customers by our

primarily for the rate with slightly room first of quarter, US was Canadian $XX Noralta's daily Our to $XX addition dollars segment lower contracts two major by large driven the compared in rates. with the in operations

Turning Australia. to

performance $XX.X our in nights. was The quarter, the first to $XX.X quarter increased million, first the up room to occupancy XXX,XXX levels of $XX million. second in and expectations, increase the above Basin We average in to from sequentially daily were we from in During million sequentially million decreased EBITDA XX% quarter. the build revenues the over rooms quarter $XX to to second pleased $X.X for in Village that $XX.X recorded Adjusted Australian quarter. rate compared our marginally the Bowen villages increased villages. drive

$XX.X quarter acquired E&P and quarter million. Texas in from quarter. new from for a increased markets, driven activity Rockies of Revenue increase the as first well was fourth the second of by to Now sequentially the our moving Bakken, U.S. $XX.X the we to benefit which Revenues improved contribution facility, in million as Louisiana the

efforts positive testament industry's market to adjusted from our loss first a generate we quarter, business and EBITDA the versus downturn. During the this the a quarter our this were year. in $X which pleased EBITDA the health to this had of We segment throughout of U.S. the continued U.S. to manage contribution quarter, a $XXX,XXX million of our is very in adjusted of

comment will expenditures capital on liquidity position. and current Now our I

closing During borrowings repayment about second of debt outstanding from $XX.X quarter. acquisition, Noralta the increased from in to resulting primarily of to In acquisition. $XXX.X routine to during invested $X.X million, the fund made million primarily maintenance. the XXXX, of the first the second Subsequent to by which million quarter, quarter, total both $XXX,XXX $XXX.X our our related debt of quarter were up million, we $X.X million

liquidity XXXX, June million. our cash capacity of of $X.X had and available credit of $XX.X XX, on hand As $XX we total of or revolving facility million on million, approximately

sheet. on cash flow focused Looking ahead, generating balance remain we our and delevering free

will scale acquisitions XXXX. down will the the will of our remains the over strategic recent and pay our I our talk call the priorities. remainder from allow back Bradley, increased about who key one more closing to Our quarter turn of debt and comments quickly guidance Bradley? us third to for and some provide now

Bradley Dodson

provide now and for of for before segments a up open and outlook quarter some closing remarks I’ll answers. line guidance XXXX, the and third questions call and for make the Frank. you, the full-year we business brief our our Thank

related EBITDA we Canadian in full-year guidance. million. the the quarter adjusted rates is to in expectations our Canadian consistent XXXX XXXX. $X the the dollar second by being saw is of Overall, which the our Sands prior largely second in you occupancy Oil Australian down half lower for in As approximately expected We of EBITDA weaker second due This press quarter, the outlook and to exchange full-year adjusted half mix release, was expectations. the second and with our

in facility, work Fort experience the the well quarter. second quarter, activity to shutdown X% provide the into quarter to This again, turnaround due major sequentially the in customers' project quarter to turnaround Lodge the Canada, of Moving our legacy at magnitudes on in work third some temporary room the occupancy from a legacy to Hills to expect the lower primarily the turnaround lower nights should both Civeo seen we not we third activity which X% however, second assets. quarter, continued includes Canada segments, down in McClelland to occupancy Lake assets Ultimately, as as be expect Noralta moves to operations. third the and additional

XXXX. we dollar million quarter, segment on are million to be third of expectations expect a These room Canadian to are of nights $X.XX, of third night and at room for the EBITDA adjusted million quarter we CAD based and the per of rate $XXX,XXX exchange and between XXX our range For quarter. $XXX,XXX approximately $XX million the a in $XX revenues $XX $XX third assuming to with rate

to of are we to the the million EBITDA an revenues adjusted anticipate XXX assuming rate approximately full-year to $XXX rate nights nights full-year Canadian million XXXX. $X.XX, X.XXX and a we CAD based $XX $XX a exchange range per expectations million million and – million million room of Canada, room For of for are dollar on of of night. in X.XXX These $XXX segment room

is in have customers to quarter. expected for activity occupancy to Australia, room their improve. up on XXXX, short-term the strong and should respective been Several third bode continues short-term in basis nights this and to Moving a flexing well be

nights an Australian the XXX rate AUD we're adjusted based of XXXX. and For with expectations for per to segment of dollar XXX,XXX $XX XXX,XXX EBITDA and $X.XX, to room third are million of to $XX million assuming rate XXX million to a the $XX revenues third million exchange on AUD room These quarter, between quarter guiding with we're night. of $XX

consolidated $XX a in nights third a of approximately to For $XXX million the million. room XXXX. nights at $XXX dollar exchange full-year Australia, expectations $XX.X are adjusted $XX X.XXX room an room million $X.XX basis of X.XXX and On be XXX million revenues of EBITDA the based rate and million expect we're segment rate range in adjusted to of for range in million to EBITDA AUD million a to to on night. of quarter, revenue the for These $XXX $XXX the million million per we full-year assuming and to million $XX.X Australian of

and we commodity million. million XXXX, full-year assured markets. stable of remain by fundamentals of $XXX adjusted in $XXX price million summary, to geographic the core the our $XX revenues EBITDA are we $XX projecting In to million For constructive

With integrations complete, related are our global the XXXX. performance. optimistic radar Canadian Noralta of and continues base on customer to the are back screen, about improving opportunities development benefit Louisiana from to and we rest LNG And the our financial

care call shareholder With the the for to head and As safely goal what generate we deliver maximizing the unmatched mandates to that and half, will our our progress over reducing clients continue our prudently organic and returns. and second in with flow, generating strong of we of receive financial returns, and cash I'll to on service that, focus on capital efficiently, opportunities strategic can inorganic make turn free we take control work guests, customers questions. our and allocate debt

Operator

Instructions] you. Group. to Malouf [Operator first Capital Mike Thank go Craig-Hallum We’ll at

Michael Malouf

Great. taking – little Thanks two on focus I we bit had If guys questions could questions. for just on my was I wondering LNG a opportunity, that. the more

guard you work little come could then the able – and more and through that to of can you on regards initial ancillary to additional us give ramp? FID sort about any contracts these you might starting increased get with FIDs into that to bit insight once go a if and the Thanks. some that does First you you of any And all, off, have if that? of been second color

Bradley Dodson

and the for Thank question. you, thanks Mike

four four we In to pleased Sitka any as we're either very to are location, camp location, Sitka their multiple then that year, expecting color have to later quarter. to that, And accommodations to the venture for our in looking the relates personnel the relates were terms pipeline. all we fourth same third Coastal some EPC of or related early don't out it fashion, – joint that to FID, personnel further the sometime that quarter, opportunities, hoping it both contracts of on when color conditional think also GasLink in contractors I really expecting as mobile as pipeline have Sitka. also We're construct was we're to further camps potentially the additional be the as beyond pipeline any put into and this certainly it hope late necessary we well

So we're forward then our that. the with site. the would The LNGC on that be on building X,XXX we And one work lastly, operating facility the had the related a working continue and partner contract, Valley piece to Lodge puzzle joint one last Cedar on Bird is that we asset. of Construction, previously venture to room announced

Cedar contractors is is the focus on the LNGC Sitka securing some to for near-term to Valley Lodge. continue and the So focus work it their Lodge, assist and EPC for the it us, relates as

Michael Malouf

update savings counter that have for of on to reached Noralta, maybe consolidation XXXX an you internally so helpful. much end far, look Great. saving you'll a Okay. how think the up you how you've That’s follow-up regards facilities? then their on you with to question, as And example, just do do expense

Bradley Dodson

Thanks for question. the

I think of difficult a team whole a always two very the that. quickly combined to and a job the It's team has and piece companies. very as whole, as integrate a good work executing done

have and very hope, initially quickly integrated with we only days few to raise we has that think CADXX operations, belt, that come comfortable as million more be XX that the our team given underneath very efficiently. that. and of had a together I the able We months get feel we'll we estimated

another is but let to XX million, update an we'll under and there the days $XX belt say upper I'd investors. the get our bias us So

Michael Malouf

And Look Okay. thanks Great. questions. the for to forward taking that.

Operator

go [Operator next Instructions] Gengaro We'll to Steven at Stifel.

Stephen Gengaro

of the but how go? get year, as over you're maybe the Good us you're And quarters? sense as guidance could a to next that what obviously, what given in several kind customer far you more guys. plays Bradley, give quarter you think interest little morning, on the for Australia increase of and far just next color seeing for as and you've seeing a us out

Bradley Dodson

Sure. quarterly quarters. talk Well number things from look progressed Stephen, if I'll of think, I let and or our rooms for built room which nights, occupied you you at of how the a is have me if kind given

closer [XXX,XXX] the we So think first nights had the quarter, third second quarter, in expect [XXX,XXX] Australia first quarter. to to room in up in gone the grow in the to We we for we XXX,XXX quarter.

are starting expect We're we have quarter. We're trying things year. the a increased now, throughout the fourth up expect to nicely. as that we year, thought we like. and pace to it what So Right strong turnaround of see progressing kind upwards looks throughout firm to work we

As kind in that higher but past, that definitely we've flexibility They're the it. not we've block load knowing committing talked securing and needs, paying of about rooms, than customers not are in they're are their a base to for rates committing that that. of is to what seen more they they're need

to to our it be, So is more to it what we're but there going trying to best because flexible we be do occupancy the that's quarter going is a work. relates every for think maintenance component all the to forecast market of

So fluid trying work, ago quarter larger we market. in were higher of today I a but a we're load highly to market, optimistic fluid to you improving be terms blocks say but if more than will, an secure of it market, would base continues a

Frank Steininger

those with expansion some customers we of there's are but plans, discussions in mines reached nothing been regards the has Yes. and from discussions. there of nor mean, some but haven't – our there's announced some market And – new I any FID there to

see Stephen. could there XXXX, So to hold, we as to later hold if be move prices – too stay into could continue we the I

Stephen Gengaro

– at know the ahead, – would half revenue? you I get was I to guess to on if you about – be was of then Thank see the September a when a it second mean, think mean, thing stream earlier quarter, by or half would and you. to say the I Would any side let's LNG way great. in Canada, the XXXX, go XXXX, I flowing going end And X Okay, get question there when the third that? of this complete first night obviously…? get, in revenue you're through a second

Bradley Dodson

of the conditional on Sitka. expect because Sitka I Well, couple for we the I – use even they've in work would there most to we region. Sure. work that the it's available are we If win past. that for win they would to a are work ASAP, think and used need need in the One, to then at that pieces Kitimat, FID, Lodge it. the our largest asset in asset point, this And if

Sitka If but you they very to had we delaying recall, and in Lodge, perform think I prior to terms meeting expectations, of positioned. project XXXX, Sitka well been obviously, work, staying the the asset and we have them in at have win the to is their the well

Frank Steininger

XXXX in You to in asset. related can that revenues see

Bradley Dodson

FIDs we into revenue. obviously, year, and continue We’re it be XXXX. then have you well, revenue this assuming some XXXX will and – XXXX have XXXX There'll will

is relates of and going but and projects, the We'll As and some is the occupancy some Coastal that pipeline largely have revenues, be it XXXX revenues to mobilization that have We’ll XXXX. XXXX. XXXX XXXX. to in GasLink most

Stephen Gengaro

thinking giving then low relatively think other more combinations us is mean, And about margin if capital which if there's helpful. Canadian the out think lines? Are margin right, but one there? core I I when more, detail, there this, it margins catering could returns your was I'm they're that’s is is you I about intensities, just I business break a are by that in – I think helpful you're the and I the to just overall margins operations, guys sticky, so if about the Okay, impact and but throw good, are impacted

Bradley Dodson

of we in case, we major perspective volumes expected quarter fruition. quite about on to just levels come the quite occupancy out degradation two performing Civeo a missed were slightly second the And there. to we from frankly the late was assets, slightly better, work That as Largely expecting or either in really of from where Haven't margin seen frankly end Noralta Stephen. legacy to higher from came where May. a to operators kind margin either related – the mid perspective, an a that's and turnaround to assets the didn't they're

into at high win rate, will assets, So and to a will that play our are play operate the and where single Canada role Australia, a work owned move any mix – capital-wide as operate customer role try operations, to we digits. we in we both the margins mid- as

Stephen Gengaro

very That’s End Q&A helpful. great. Thank of Okay, you.

Operator

Mr. for the conference And question-and-answer that I'll Dodson time, closing remarks. conclude this over the does session. At any turn back to

Bradley Dodson

you We happening Thank all There things businesses core today. forward. forward second to should the Canadian are joining LNG of we to you. our half in XXXX. things us forward for looking some some look Thank all good obviously and move

So look Thank year. you. later reporting this on to forward that we

Operator

conference. today's conclude thank you does for participation. your that And Again,

Civeo (CVEO) 27 Jul 182018 Q2 Earnings call transcript