CVEO - Earnings call transcript Q1 2019

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Operator

Good day, and welcome to the Civeo First Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Regan Nielsen, Manager of Corporate Development and Investor Relations. Please go ahead.

Regan Nielsen

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

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

Bradley Dodson

all summary provide will of commentary guidance first highlighted outlook in Australian the was activities offering level delivered as well and the from LNG consistent British review. Regan, us earnings our on U.S. business And thank call contributions that joining I'll our quarter our conclude question-and-answer first before Frank, financial you, expectations first and the today performance our related call. in the updated call. then moved our and I'll We with we three portion a Canada. a our with as segment segments, broadly some by quarter before conference robust with and of to detailed you for and the the quarter sequentially performance begin on Thank segments. larger Columbia,

our of Both adjusted generated $XX EBITDA, an of in generated million million of from with increase million adjusted expectations. $XXX in EBITDA $XXX XXXX, last quarter of $XX we million, XXXX, first year. line were and the and During the results revenue first quarter up from revenues

flow the cash our debt in and million during quarter. to operating $X we flow reduction, generate cash Turning

$X negative during impact foreign repaid also a first by offset of $X million. currency We the quarter, translation million in debt

Let Occupancy of we to segments. walk through into our were minute performance market me conditions in heading now experienced Canadian with the our segment of expectations challenging quarter. consistent the each our take a The due McMurray generally holiday demand the provincially major extended McClelland from downtime softening locations continued Fort curtailments. Village Lake our imposed impacted negatively and to impact was and customers production by oil room of at

severe as doubling to Alberta Our occupancy, the related in by which mobile the camps million nights an Southern in related Lodge an lodges claim drilling our offset $XXX sequentially the Columbia. from These highlighted also year-over-year than rig active Sitka insurance legacy in the acceleration Lodge as well were British headwinds of were by assets, proceeds affected and Canada. was more count by LNG almost Noralta of room at decline

other oil and policy continue the curtailment in to elections. recent dynamics following in monitor will Canadian sands the We developments provincial Alberta actively

sands, Although provide these very issues Canadian the short-term, infrastructure across on our oil have services to in competitively hospitality midstream impact segment remain we confident well potential positioned our is LNG the markets. business and that

the outlook and quarter to region. in continues expectations Moving line with to in first Australia, improve were our results the

coal basins. that and Bowen continue met both in the believe to prices activity the to We in conducive improvements Gunnedah current continued are

and drilling the weather, both to quarter. in first winter West challenging financial during generate the Mid-Con continued the quarter activity the moderating segment U.S. improved across Our and performance despite completion U.S., in and Texas

it that, I'll assets strong both our for turn financial contributions by continued highlighted in wellsite and Frank review North occupancy Dakota to and lodges. from were a results performance. our levels With West quarter over detailed Texas First our healthy of

Frank Steininger

million, quarter per on total $XX.X a revenues basis morning. a this the in or appreciate and $XXX.X $X.XX of of GAAP million, Bradley, Today, loss Thanks, us with reported first everyone net joining diluted we share.

EBITDA adjusted of generated million. first cash the and $XX.X of we operating million During $X.X flow quarter,

to to performance declining was were and in million Alberta services Adjusted begin $XX.X fourth prior contract. Revenues I'll Canadian previously fourth by growing quarter downtime from to from with first the EBITDA and of announced review a our adjusted million LNG quarter. $XX.X oil new quarter. $XX.X three in the XXXX. from of quarter modestly segment's $XX.X last year's lower from the sands and the primarily segments, was in our Canadian million, compared million, partially segment Turning Canadian curtailments; in offset production the room related Revenue British for oil occupancy EBITDA Columbia impacted by both results demand down holiday hospitality contributions related from our Canada extended

negatively Additionally, in from by increased compensation proceeds $X.X adjusted an claim. insurance million first by impacted offset of stock-based the expense was EBITDA quarter,

first our was lodges rooms the the which Canadian sequentially, impacted quarter billed totaled During XXX,XXX from rooms which in aforementioned down XXX,XXX, by dynamics. were

changes the segment rate to quarter Our to for $XX in U.S. $XX in Canadian mix. daily occupancy fourth room due dollars in the was compared

down year. recorded quarter, $XX.X Australia, we XXX,XXX from sequentially XXX,XXX slightly compensation relatively room lower demand EBITDA by and from quarter. fourth rate Village to first extended million, impacted last were million Revenue $XX stock-based Australian our EBITDA first the both flat holiday first also quarter room declined adjusted Turning U.S. $X.X downtime. downtime. the the EBITDA at in due to impacted in of for Adjusted daily to the the million. in was revenues quarter in during this million, sequentially aforementioned fourth and $XX.X was negatively The by $XX.X dollars rooms was related year's in down holiday villages to quarter, higher of adjusted from

due LNGC million. revenues U.S., expansion to the partially of operating wellsite $X.X million $XX were the generated the XXXX. being fourth of due of primarily the improved offshore first large divisions, million fabrication $X onto of million, the consolidated million a completed in the in improved large in $XX.X related performance primarily to Lodge EBITDA moving room On in quarter in second going contracts, a million to $XX.X in of Sitka quarter, Australia fabrication for quarter, XXXX support reactivations million sequentially from project in in Canada declined well Adjusted quarter the as into first Capital primarily Now, offshore half by from anticipation the fourth XXXX. during $X.X to our in to basis, U.S. of of our from $X.X up fourth and offset demand the related quarter, reduction million in expenditures selected and increased $X customer the cash flows as we to activity.

impact December partially repayments offset total primarily currency was of million $XXX.X March during XXXX. $X.X by The XXXX million, increase the $X.X as Our from of resulted $X.X outstanding million, of debt million debt negative foreign since translation XX, increase XX, a quarter. a

million March available our liquidity had $X XXXX, XX, of revolving of of consisting total As million million, facilities cash $XX and hand. approximately under we on of credit $XX

executing investments Looking turn opportunistically cash space, - provide the in closing Bradley? contract-backed our full-year. will Bradley, who our ahead, some the over for we about deleveraging and contract-based guidance to talk call comments generating on and quarter investments Canadian balance the continue flow, second on free now back will to focus LNG our I sheet. and

Bradley Dodson

closing our before outlook for outlook guidance in our call. full-year on I'll turnaround for Frank. remains cadence reiterate some largest third remarks earnings for open the for brief XXXX maintenance the quarter we from begin Canada, the and quarter. and through in the our the starting activity and make you, the In increase provide year up guidance our XXXX, quarter, to our section. unchanged previous now we of business Operationally, XXXX, call segments impact second Thank the outline and this largely third turnaround quarter the expect second of to continue steadily question-and-answer with

On build Coastal of be late It from our X,XXX XXXX of by half rooms room Sitka forecasted to second XXXX revenue XXXX. to project GasLink first into complete likely quarter pushed the XXXX. the should the of of of the we is expansion that the Lodge rest LNG continue improve end the the front, from through to with

to again Overall, in encouraging already this to in XXXX in occupancy contemplated the then guidance. Canadian for rooms ore from our second Strong prices In quarter growing for downtime. export expect LNG, and both second are third build the quarter the However, due quarter our iron increased accelerated our related sequentially and and from activity increase to flows driving healthy been the the holiday volumes with we turnaround coal BC first many quarter quarter has full-year fourth XXXX. met but clients. the remains the outlook for of and remainder Australia, moderating of normal cash in

expansion and coal growth, our environment continue demand very balance by similar Basin Bowen ongoing Australian are we India's and to the on of year, demand in second driven China, should quarter During into capital our the initiatives increased steel of for in constructive macroeconomic in a rooms fourth to sector of underpin Accordingly, call, as met reactivate XXXX. we going business. anticipation indicated half XXXX selectively the in the existing allocating of earnings

we with terms budgets. expect the rooms activity results second as second quarter sequentially larger coal quarter abate occupancy, In deploying pleased modestly also activity from improve E&P despite In capital in remains percentage their the to strong. a and of are from and the XXXX customers completion of in constraints the takeaway U.S., we the first as the softer our Australia met and then drilling third first, build related

market expect We improve. conditions to

that a recovery and second recent $XXX $XX $XX.X for pricing, million reasonable have million is we accommodations consolidated remote to the in modestly. already of million revenues of suggesting a quarter XXXX, to hotel $XXX activity the recover is seen of EBITDA On We Texas for basis, West a million. adjusted expect beginning demand to proxy which

upper our Canadian we $XXX of million adjusted Australian For end dollars the the million the $XXX attributed call. of to X% the in $XXX million and EBITDA to reduction currencies million. of of relative guidance XXXX, to be last U.S. can majority full-year The earnings our $XX to and in the both of since expect EBITDA weakening X% to annual revenues

consistent continue provide Although with to contemplate. drivers first broadly in performance commodity us to - our continue with markets our price key was expectations, the our quarter fundamental

committed the of LNG the and international believe on the that policy effects focusing coal met through move in we Alberta philosophy, our strategic we're control priorities, to in and continue the decisions on consistent on in the iron As commodity cycle the and to markets. commodity phase Civeo, that, through we take trade accordance across These markets. XXXX, growth be through navigate oil, the free of questions ripple generating attractive whatever to we managing At specifically to focused key crosscurrents cash most service commodities, way our ore as opportunities which brings. mandates production our impact we sheet, remain we investing judiciously pace what Canadian balance we and this curtailments with on and happy of only remain is end to now. the best the In the the With flow, is Province, best-in-class business the deliver customers, your development. manage sands we'll can our oil disputes

Operator

The Mike Instructions] Capital question Group. [Operator first Malouf at from Craig-Hallum comes

Michael Malouf

Great. Thanks guys for my taking questions.

Bradley Dodson

Mike. morning, Good

Michael Malouf

was incremental switch could stand commentary I'm activity the next LNG give XXXX a on on - wondering give how of of how the us just, and us just we - little into activity And of currently? now, on that at There of see if sense least, XXXX. you how playing year you this out sort as your late a maybe that's thoughts initial some impact bit might from if

Bradley Dodson

be the start related Coastal pipeline. going pipeline LNG Canada financial kind of related about to our talk to with comments at the clear, then on, were this GasLink - Frank, to point, what's I'll Sure, impact. purely related the But and to and can

say, lot expected XXXX there shift activity Some from for I is guidance was this a pipeline in to would XXXX, activity to not of that our but year.

So had Canadian or about $X XXXX. expected million we $X revenues in million initially

XXXX pipeline We to million. the shift XXXX, were $XX the revenues our into then, some in expect Frank, that and of on expectations

Frank Steininger

between That's we - Yes there largely right and it's split exactly. the because, million, $XXX XXXX of XX-XX XXXX.

Bradley Dodson

That's right.

to pipeline do but ship. delays work. So and some have There to of camp relates salvage result as we a been Mike lot weren't some the mobile obviously, a public the and we expect so very - expecting as it

Michael Malouf

All Right.

Okay.

$XX $XX XXXX in million in XXXX a about an So million and then from impact the probably pipeline additional anyway?

Frank Steininger

That's right.

Bradley Dodson

right. incremental, That's aggregate not right. dollars In

Frank Steininger

the million XXXX. about we Of contract million how it's we $X said, going that And split. Bradley Yes. that's announced, as in had $XXX to

a Some of have the that doesn't for material it But shift year on impact will us. XXXX. into

Michael Malouf

prices? back of where a wondering rate when this levels, overall how Okay. And I'm and then, kind could maybe take lower over months four if sort of as impact months, And or or give you that it the obviously, look occupancy you rate than and area, expecting impact your to prices now with at of at sort significantly you a affect us you of room one room think, point wondering you look you in will XX sense that on could overall I'm of were the XX potential look and $XXX they're out we just even ago, impact? just next years you're just see what

Bradley Dodson

Well, speaking Canada room specifically, has price of about there certainly there. contraction. couple been If a night we're things there

a We say line would the in lower have that, with the them. scope lower clients to the in in rates services can costs cost in reduce lower worked as we to environment. things room price XX% of look Canada, trend around the them. We've that our through at of you that do XX% in lot currency. with in to and that rates their There downturn a us to I of worked local are the efforts room decline their can oil And provide the the therefore, we cost

obviously in been there's XX% Now, this in also the dollar. Canadian decline a downturn

which changes their with rate. through reduces downturn, the So but looking it room the client has ultimately, to costs, currency net-net, scope in. yes, depends of we've it majority our some But it reduce lost been the on price vast our costs and you're

think to pencil this do, That for pricing from sharpen place. largely expect that that doesn't largely oil point, get requests we I at we As XXXX the been but continue sands don't consistent that we've stabilized. we we out able pricing customers, I pricing, XXXX, in rooms have mean to our look to on defend from the has

ahead. go - So

Michael Malouf

No. spot. I'll to let you a go finish. I want to different

ahead. Just go

Bradley Dodson

camp include in And nights. work, pricing as it relates we statistics to which the large don't around or mobile the pipeline that's work, room

Michael Malouf

CapEx think shifting time, bit And anticipation I in then, of Okay. a get just Got for I'm of wondering in you, on talked to sort color for into we've little the you if XXXX. about the it. but it that what back first now it's a while, Australia, that increased And starting? been and bit could revenues just prompted some has a like finally expecting little move seems half of

Bradley Dodson

and minimize downturn the and CapEx we've cash maintenance the our think you take be desk on I CapEx need it or globe so, doing of not a In team is largely that's into put and Well, the it you focused it bed used, team would you try an extra out flow. across and the overall. replaced. one things of or furniture, the And one do room if utilized you being to through needs you

So with done say Reactivation years. some hasn't is of means it's by material, it catching the on order just $X the up us. million of over been magnitude in any wouldn't that it's few last CapEx I guidance. of Australia is our that

of Our $XX for total XXXX. is guidance $XX CapEx million to million

magnitude And refresh, villages rooms of a it's a recently of customers Bowen gives to rooms, recently couple years. room in renovated. is, different they them can have us refreshed blocks think, two customers a it where an a if XXX expansionary offer a what three would reactivating their customers see recently be the are are been rooms, we that to that they that's renovated I do when XXX new at XXX with on rooms expect that Basin it we project, inventory project that of attracts available, it So growth are suit that the we does or conversations available to launch we

in fairly I a pick consistent good to continues has that Occupancy been think So commentary spot. we're up. our

but customers, big we're project your our drive by underlying can for up haven't preparing seen question, it. occupancy expansionary think which that incremental we materially, I

Michael Malouf

it. Got

Thanks help. it. Appreciate for the Okay.

Operator

Nielsen, further It to like there are turn conference to the Mr. Instructions] appears [Operator no questions. back I'd you.

Regan Nielsen

like Sandy. one more looks there's question It

Operator

Instructions] [Operator

Bradley Dodson

to second we'll earnings Well, and we and three call. calls of the thank markets operator in tailwinds on see We continue each the are about earnings first We for the there if quarter forward as no look forward then appreciate our call. the some it Thank to talking upcoming you questions, further attending interest. look to everyone quarter you. benefits to

Operator

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

You may disconnect. now

Civeo (CVEO) 26 Apr 192019 Q1 Earnings call transcript