CVEO - Earnings call transcript Q4 2019

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Operator

Good day ladies and gentlemen and welcome to the Civeo fourth quarter 2019 earnings call. Please note today’s conference is being recorded.

At this time I would like to turn the conference over to Regan Nielsen, Director Corporate Development and Investor Relations. Please go ahead sir.

Regan Nielsen

Thank you and welcome to Civeo's Fourth Quarter and Full year 2019 Earnings Conference Call. Treasurer. be Officer; Bradley Senior and Chief Officer will and Civeo's Vice call Financial Executive Chief Carolyn and our led Dodson, by President President Today Stone, Civeo's

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

I will Bradley. to the over now turn call

Bradley Dodson

XXXX earnings fourth by lodges Regan, commentary the the focus summary of on and and coupled debt. you Thank we full quarter from our and a to on were months consolidated We three conclude quarter. Action we million. full call. both and the business fourth today $XX.X cash move delivered segment-level performance. us quarter takeaways segments fourth year exceeding some strong on our all compared free Full year-over-year begin and thank year cash our today villages to expectations operating our I'll up contribution basis acquisition. debt XXXX deliver that and with In with and our XX% generated our to and execution reduce total from occupancy of six the $XX in adjusted portion the Noralta our the respectively will by detailed are key reduced contribution of million flow financial adjusted joining due at call. year offering EBITDA a EBITDA guidance a and acquisition both then fourth call XX% and to from The review before provide our you, for I'll on question-and-answer of Carolyn quarter flow initial on providing our

fourth with XXXX. better Fourth increased to our EBITDA lodges the Basin strong We from to oil in in was quarter our maintenance was Lodge in coupled X.XXx adjusted Sitka strong reduced Australian robust Canada both flow by both and EBITDA expectations sands XX under regions. September our Strong Australia exceeded prior for cash than and and Bowen turnaround at times the and in occupancy year generated the performance from continued stronger quarter note villages significantly business Action occupancy year-over-year. three quarter. year-end expected and leverage as that activity ratio important our It's we driven and of which

XX% year profit than of our activity of sands. stems with oil-related profits oil from the gross coming XXXX from Less majority Canadian the full oil-related that

contracts measured by stable Canadian multiyear is sands backed in Our occupancy relatively customer oil life decades. resource and

Lastly to outlook in provide full free to continue flow reduce XXXX initial we the and our We'll our deliver $X a in and year further. minutes. details expect on cash further quarter few million guidance of first leverage and approximately

million a net flow in net $XXX.X increase XXXX; a in in was $XX.X the XXXX; million quarter XXXX. of fourth During the loss XX% We $XX.X million quarter fourth versus cash of million reported of of $XX of to Civeo of EBITDA generated $XXX.X XXXX quarter million. from of million revenues compared the a $XX operating fourth million adjusted loss $XX

XXXX. of million robust quarter from during reduction in free of in generated balance operating cash X.XXx our leverage X.XXx from $XX facilitated the Turning September our the to sheet. our ratio business quarter debt fourth in The reducing as again a XX flow to

detailed to Carolyn performance. turn call review that the of financial over I'll for With a our

Carolyn Stone

to million a third fourth before with we the review GAAP quarter all income in on and share. million detail with of on the performance compared total share. basis loss per morning. I'll you reported Bradley, with basis the begin revenues prior for us $XXX.X segments. providing quarter our or business to thank three quarter revenues Today this you, of a joining a net more consolidated Thank a $XXX.X net of on $X.XX GAAP of million compares million $X.X or This per $XX.X $X.XX of

adjusted of generated cash cash million. fourth compares of $XX.X free of $XX.X operating cash and million flow the third $XX.X of EBITDA $XX.X flow million million million. $XX quarter During cash of we $XX.X and to adjusted operating flow free EBITDA quarter This of million flow

was million Canada in slight was segment revenues review. third the compared segment $XX.X which million Revenue a quarter to our decrease from to of Moving $XX.X our of XXXX.

in Adjusted a turnaround activity. EBITDA the million and as the were quarter decrease third impacted adjusted as seasonal million holiday fall $XX.X Revenues roll-off XXXX. EBITDA the downtime $XX for by from of well quarter of was

in slowdown quarter holiday the just fourth quarter the sequentially activity the During XXXXXX Canadian totaled to billed XXXXXX our and down due rooms from lodges which mentioned. I third was in turnaround

Our daily quarter. U.S. the the in Canadian run segment was $XX compared $XX for in third to rate dollars

to Turning Australia.

Basin. we revenues from activity quarter the primarily in customer million to During our third quarter $XX.X million fourth due in of recorded improvement maintenance continued $XX.X the up in the which in was Bowen

dollar the for in quarter. drivers. USDXX average from our XXXXXX the Billed quarter the a sale million Calliope down sequentially villages sale Australian to EBITDA aforementioned third of to daily $XX.X during primarily our in Australian Adjusted up due quarter slightly $X.X was million $XX.X million quarter sequentially related was due reflecting The third were USDXX rooms from fourth XXXXXX to quarter weakened village. rate the of the on down gain from in the a

the U.S. which fourth million the were $X.X the in Revenues were the million from $XX up quarter. for to third quarter Moving

$X.X EBITDA million from income was The U.S. due drilling in loss consolidated lower largely customer by business offset to quarter. million third an a the margin of sequentially. and our in the flat This the partially segment offshore adjusted saw fourth completion quarter quarter fourth were revenue. wellsite down impacted fabrication $X.X On in negatively expenditures $X.X activity capital which subdued million of services basis decline

which $XXX.X decrease debt translation by a reduction by flow to on negative foreign million cash September generated offset Our of currency $X.X XX the repayments from total million from The was debt outstanding partially business $XX.X primarily resulted movement million XX. was $XX.X December million. since

liquidity As December million X.XXx million cash Bradley of as XX XX quarter credit and approximately mentioned XXXX. which we to million X.XXx facilities our of ratio And consists had of $X.X for decreased of the XXXX December $XXX.X our available from leverage of as September under revolving total hand. $XXX.X of XX on as

the term toward generating look and continuing are and leverage we rest cash markets reducing flow the into current aggregate to on we monitoring our focus debt. for XXXX year while out to of As opportunities capital free the our

provide will Bradley additional commentary now three Bradley? on performance the of some our segments.

Bradley Dodson

a progress I'd Thank you, to highlight sequential Australian a our Canadian businesses. our take made walked moment Carolyn. both and to the performance. like year-over-year in and Carolyn on basis due we've just through the seasonality

related driven XXXX. finished impressive Sitka year-over-year of and of our for activity Our work on by million and of the to year nights LNG-related occupancy generating The revenue business in million Canada robust was fourth Lodge. room of a million business turnaround in at $XX.X a EBITDA XX% of to and uplift revenues note quarter increase our high adjusted $XX.X from million just compared $XX.X revenues the in EBITDA under $XX

in managing a demand while chain Our profitability. experience commendable team enhance job maintaining has supply customers' done costs our strong to

to Turning Australia.

of versus maintenance activity In EBITDA. and delivered million EBITDA acquisition revenues Basin in the the team customer substantial the in Strong improvements segment fourth adjusted of Our the Australian and XXXX. $XX.X year-over-year outstanding revenues million adjusted quarter. million and Action from revenues drove in the $XX.X quarter contribution adjusted quarter of of the and Bowen generated $XX.X Catering another fourth EBITDA of $XX.X million

revenues and the Our customer business year of continued year-over-year acres in and of in a the quarter the to headwind. of completion an quarter Canadian the generated during adjusted quarter contracted EBITDA spending XXXX U.S. XXXX. fourth earlier fourth and EBITDA with million of of roll-off U.S. of in segment and the $XXXXXX loss of the in as $XX of additional million fourth drilling $X.X compared adjusted revenues $XX.X XXXX million muted

We quarter move our strong into XXXX. are to as look momentum positive this and we continue fourth encouraged by

provide for before to now full quarter year move of first commentary initial we XXXX and the and I'll guidance Q&A.

that the capital in the headwinds will envisioned we steady XXXX XXXX. on in business our impact Canada and strategic Assuming negatively commodities The for top issues economy activity. global stem U.S. materially contributions Canada like oil LNG remain I'll work not that for improvement based primary spending the activity climate also our turnaround coupled priorities therefore from and change do in Australian remains constraints. in continued from and in and reiterate demand mandate overall gas constructive with the growing outlook the coronavirus in the XXXX

focusing We cash will through discipline leverage. service high customer using continue on capital our execute to maximizing to and cost reduce cash free flow that and and control

an our enhance quality. term the best-in-class continue We service markets will monitor to to on look our ways debt to opportunity for capital and for

creating citizens trusted the partners path in We will priorities stakeholders. long-term also and responsive communities be and present operate these to to key value. to continue as clearest believe responsible We our shareholder our

mining year. in In this coal healthy uncertainties Our notable business complex as macroeconomic Met are environment as maintenance above some result Australia will remain our generating And strong a are remain flows our markets. is constructive. XXXX very off per progresses. the core ton activity start despite and a end we metric cash prices metals to and solid to the customers in of expect that remains forecast $XXX in XXXX

customers remain and projects ore in see of met or tracking Although for any a opportunities capital softening mining that space from we any we XXXX in the come to are fruition not coal iron to could indicators we greenlight demand do meaningful will few watchful Asia. any growth

been year. that customers later busy accelerated Canada incurred In the turnaround have some January were as in typically it's very a activity

sands seasonal at LNG-related to progresses. as year. at our As efficiency and EBITDA currently continue oil drop historical of U.S. on XXXX is heightened cadence generation updated steady such should revenue you bidding and keep to pace the industry's levels from the business progress the in Sitka recent initial prices. gas capital be oil and The norms subdued our deviate this crude prognosis might somewhat for occupancy full we'll upstream work Lodge a XXXX from due With relatively but the our

are in our costs on upstream outlook U.S. generate occupancy and that the opportunities than be will budgets. With interesting other to considerably on other less team being regions the our reliant focusing less controlling constructive

from Accordingly our projects low downstream the operating on be end. occupancy-related efficiently and focus capturing will

and expect between of the first million For of consolidated quarter million $XXX.X $XX $XX XXXX revenues to million. and of EBITDA adjusted we $XXX.X million

in million. $XXX we These XXXX When compared the won't dollars dollars of the $XXX revenues insurance adjusted are $XXX increased projecting reoccur occupancy with are weakness as guidance year occupancy gains Canadian to as XXXX along sale another of claim by of million impacts that XXXX village and million full on and consolidated in of in to $X.X year related of related Canada both million associated full the U.S. Australia. Carolyn contemplates relative tempered Australian the to to in and Calliope $X.X our million EBITDA mentioned our to gain earlier well strong of recognized these For income in XXXX results XXXX. of $XXX to with million year and

positive free recent delivered sixth free pleased that our on XXXX consistently shareholders. focus flow I'm the to cash for reiterated consecutive our was generating years. have cash flow that year in report Civeo We

for In minimizes grow on our we our of and commodity our exposure the capital end reliance business. region as speak continue of market enhance view benefits or responsible any diversified ways which and focus one on being stewards look these our results to to our to

cash midpoint you the any market's Starting adjusted pay focus taxes. the free interest flow to of initial range XXXX. to cash and on expect expense we the ahead like million. We anticipate flow see go XXXX our With don't We $XX through what million. EBITDA free guidance for approximately we'd as cash cash walk $XXX of with of

cash of total midpoint We $X we capital are the With meaningfully expect $XX balance ultimately of initial $XX guidance million to then working free a we reduce $XXX million. capex debt use of at full to approximately the free and of year flow million. our of debt million $XX of cash forecasting million using this from starting flow arrive amount

meaningfully go we to XXXX. debt down So expect in

generate the As that deploy we stand and commitments XXXX by cash present on to continued may and capital stakeholder operational cross-currents we macro excellence engagement. focus navigate will debt reduce our prudently

and professionalism. for for Board I'd continue to Civeo dedication service and management customer you is It moment on successful. basis around and to thank has behalf of I'd to our will Finally that the like their that Civeo focus of you team take recognize employees safety the daily a on and all made to Directors make like their continued globe On do. a all

Lastly have been as our thank role Steininger to into for his company the to welcome new I'd last CFO the as like Carolyn CFO. years his her six Frank tremendous service for contributions and

questions. that we're take With happy to

Operator

come [Operator Instructions] Gengaro from Our Stephen first today question will Stifel. with

Stephen Gengaro

to one a of Thanks. cash flow. the Good Frank. I going at consistency just and The clearly Bradley the level We're there good pretty when you the miss business to been aggregate the in everybody. morning, EBITDA things has you free of think look

are based level year-over-year of guidance the strip year and think either and you've obviously do some we look sort beginning at on we could prior pretty XXXX to some that's puts move that or go to positive to and XXXX? Where expectations? have couple when a at where the things as guidance you last of be as you takes of Because through flat full look negative bit you given of a you the onetime XXXX years. confidence out good items provided seem year around As at you the guidance up

Bradley Dodson

Well thanks Stephen.

Canada. with start Let's

that feel we as are but see today we'll turnaround to about we We plays it pretty how the good have out. activity see

We have good relationships. customer

XXX depend that Lodge in that We good magnitude But say the how have next will about both feel CGL forward our relative it's we'll both way year. better those XXXX slightly this the been them We the customers be how pipeline it or than good We've is if fairly depend feel be against to got XX But then lower turnarounds to So It we'll days move compare the forward. they'll it aggregate. back LNG did the we will support likely than length Sitka the felt then. with of feel turnarounds activity capture that. going and year camps constructive on they'll like ago public. we occupancy. more on fairly feels moves and to see at some obviously let's

growth projects if our year-over-year. any whether we greenlighted. get XX up be gets at weak projects quicker continue that January in need facing very of that that's But starting February the movement some feels than in year reflected to In sure bit last but has the will year point in say the or expect we our There've I saw atmosphere delays to good. mining see pipelines. would We're activity than got did the We of in I'm we'll Australia growth greenlighted last and Australia guidance. Aussie of certainly not I been this related much little off the We've over the know we currency has currency those better everyone don't back a headwind watched been But and fairly the days. XXXX. people work strengthen certainly and to dollar to Australia. came activity good occupancy

Now January March to said Australian time weak seasonally dollar then tends April February recover the and read frame. I in in is some May that that thesis have

position that maintaining Australia. in done building going the customer be If happens be a should new of good back to job growth relationships. that will The good U.S. in we has customer then is tough show really a market. team relationships But the

Dakota locations. can the side it's fairly an will Texas lodge U.S. really profitable team there. I on the start EBITDA remain occupancy job good we at It West is So the a our expectation But be and and has of think down year been occupancy North certainly done utilization from our to a maintaining in year-over-year. And good the perspective

that XXXX So I We to strong have you in in that's strip mentioned where things constructive consistent we making very the and kind there. commodities are is comments we we in good cash like free say those Met that stand so tonne than Canada. range in like they're are I of the as the XXXX to as are. are. we we numbers prices had in with performance onetime up. a our that's Australia today $XXX flow items EBITDA got a costs the feel the flat do customer then out And upside of more where range very kind the coal slightly in in kind ending prepared And of would we've $XX XXXX. our

We mindful will that of the through what be have demand coal. because steel to happens happens to met Asian to ultimately what to economies and fall

we've Canada good contracts in place. to relates it As got

sands a oil And while prices let's say more the these days certainly than is in activity. price U.S. so last trend oil much had oil here quite and that environment resilient activity been have in volatile land have few downward

So months very last we've times to executing delivering the on profile a very We in feel has pathway further profitability we credit tried We've XXXX. today clear which were a times that to to it be or under months about in cash strides the overall us with feel using XXXX from even we and made ago. generate pretty four six reduce than to focused about makes over free debt. we're three the six is ratio like what leverage taking good good flow further nine reduce been

Stephen Gengaro

transaction? you that of couple so the when just gone you it of side status Canada. how that you I just gone? on the One that Action kind Action increased I give update has of exposure And your it has I And on of us integration And think what's think think far? of the Great. other control how mid-XXXX took things. a an and other progress can was

Bradley Dodson

Sure.

integrated mining lithium provide and other it Western To They we legacy approximately. we ore So customers do to perspective in and July Australian acquired do beginning there. XXXXXX room companies gold predominantly our iron X.X put room of million the also mining nights in industry services They business at of but XXXX. Action the nights.

in it's there. substantial our So increase volumes a

for We two million. And was six combination existing strong contracts. the to were And million contract first months six and in of very closer AUD expecting dollar expansion to The Action. months wins were did a that those first four AUD we closer and of Australian terms. EBITDA new to do in are to

year back on of to it's to be before far the Integration through largely here transition Civeo on functions first out that kind operational needed predominantly well. of get handle a So going We'll we the this complete basis. finance is administrative integration systems. we played in an office the and quarter them

we've very an overall range. been the four multiple times So five to it. pleased EBITDA were targeting with We times range in four

least expect at on budget than We based trending three be maybe will times toward and Xx. less it

Stephen Gengaro

then mean to XXXX I your Is leverage end And free about your that ratio X.Xx. Great. could we like target right? that sounds it just think I closer finally cash your are thinking

Bradley Dodson

X.Xx to the Yes. know we're with we'll completely I get expecting if cash free certainly under don't but X.XX get flow. levered X.Xx to

Operator

next Instructions] Kurt [Operator Our with from RBC. question Hallead will come

Kurt Hallead

in Hey, a good be to along pleasure retirement morning. Frank with have you. been fun Hey,

How terms markets different now? energy. coming your some been know to getting have very cash banks potentially overall of for Bradley here right leverage free credit longer-term and strong flow it's down. really a debt and I a tell dynamics number to of And are in it tough the ratio refinancing the and So looks the in in terms sheet you of the of on balance like story to

of and that not you others. be more XXXX to prospects your markets than think the your ratio like for of to free some open would But the flow to getting end leverage credit by again I profile could So the that. cash maybe around X.X naive given

that. color So just some on looking for

Bradley Dodson

than Sure. nine much better today ago. We Thanks have do did or we months Kurt. a six story

cash comfortable our felt that generated free always we think business I flow.

won to in of to capture beginning with happens our some support so we last there. contracts Just needed capex we've year market Sitka and Lodge growth invest that order in the

last cash the neutral So year. of free half kind it of was first in flow

demonstrated in in flow free different a cash generated and total performance second half million of the the $XX XXXX. Certainly of

of free we the they So cash to outline of remind what really that flow. everyone And kind like. does looks of tried fact quarters lost the good everybody generate business we've for good sight had XXXX kind two if

all for the it So to advisors be what our to and ready windows is see the in markets refinancing are relates as goal the we market is everything short. of capital can the

got on flow results We've got like actual we we've free that the story right good So cash demonstrate We've feel story well. the got the the a in again. forecast as place.

get results So and it's hit getting matter published a then out they to to the look lot of a the capital open. these when XX-K markets that ready be helps

business that's term and out would mean to idea further get in maturity you little But plan. of got be I as about then the XXXX a a some be So beyond mentioned position the debt again. debt all permanent the the and months then it's next debt we've more to a growing to execution where little six reduction. bit in capital start the

Kurt Hallead

through Okay. out great. you the That's a how term look And think think managing leverage to obtain out beyond that to say context? then look And you in do business as standpoint? and XXXX from or do the ratio feasible you it's what XXXX about cycle you debt

Bradley Dodson

the moving X.Xx responsive investors Well be what X little of we leverage are bit need to said we've we'd that's be. for. target. looking to like where a is Historically to Ultimately a

got bit But pathway think the range may being that. ideally to one need a a a let's plus will that's to down. right is over think spot little get close I us for or that of move next us. moving months we levered that say XX We've times target minus the pretty I that

Kurt Hallead

anything Any oil to that you've dynamics for so projects back to other That's it's going environmental-related going in maybe markets saw the on But thoughts pull minuses. are to dynamics for any positive Obviously some the is they whether heavy by tech shipments now. given incremental rail? that what be was Canadian Canada like the up what color. But pluses could reasons I those? be their look the a catalyst on on they're related look just investment color some good more Okay. good And there. about there dynamics on LNG

Bradley Dodson

Sure. That's question. a good

that that do current would project add guidance subcontractors incremental been work of can we somewhat Sitka that first. occupancy i.e. Let of some of some firms could the me on a going capture the remains say occupancy question major camps where we're putting There tackle that impact our conservatism say they would face to of The would call there. in just half to we've for our the those the unrest of out tertiary Lodge the as guidance CGL Sitka. I some the year. there timing occupancy opportunities But mark secondary of because civil would what That and upside-downside still still at that. projects conservative I are I delays contemplates major in face. back our and there some fairly

it relates occupancy. tech to to be the in to our move contributor it As project plans our to wasn't that frontier forward. was see going disappointing a wasn't near-term It

you the get the have or to from just it lining difficulty greenfield sanctioned moving in infrastructure But if that now that on take greenfield means more value difficult standpoint and forward. existing having existing projects if projects disappointing it's silver Canada. of So projects cannot that

for of that will have customers So we're them I only to rather that source than path projects. growth expand that new that projects greenfield their and will portend opportunity be may cautiously existing the think the optimistic

look to half trying that one glass silver at line more So full. a from or

Kurt Hallead

can. I if more one maybe then And Great. Okay.

more do some is move you opportunities terms Or for speaking. you any stable your see of XXXX? gave improvement? pricing you outlook to of dynamics it pricing seeming throughout generally we as Just kind more in But and

Bradley Dodson

Canada pricing oil I is the in would fairly say in sands stable.

talk Sitka provides We pretty our generally we now. an would conversation pricing of for sure. pricing combination for upward Australia That puts is some that bias and that in basis would I with them. time have I of say to Australia right to every and customers certainly on premiums pay coupled flexibility to responsive But be there actual to consolidated on pressure so kind there's that as constructive opportunities say a of price is a pricing. greater whole. kind to willing both customers a upward modest increases that

On there's Australia. side there costs the food pressure is on going to in be cost upward

related Our team fire year. this supply has disruptions managed chain that the to to relate earlier primarily in

modest has in good far a disruption team with little and P&L. would that I through those managed thus be in through. nothing managing a overall can't Our upward done impact markets January bias but February that probably or costs to say job the labor have

Kurt Hallead

color. great That's you. Thank

Bradley Dodson

you. Thank

Operator

we for no [Operator questions closing time. I'd to queue conference to turn appears additional remarks. Instructions] you have in It further Mr. our over at the or like any this Dodson back

Bradley Dodson

Thank feel the to all contract the to generating uncertainty the is of free In the our And point everyone capital to our we you. after being with I fact Australia. revenues. just despite in stewards our talking to I'd we closing focus that members by on the first and Thank to paying flow stability like down some cash you can continue can you. markets good on earnings control. we'll team forward that and look do us give good in will and That about quarter. and Civeo things global and primarily all focus our positions in Canada debt shareholders'

Operator

conference that for you. for Thank conclude We today. And does our your thank participation. you

Civeo (CVEO) 27 Feb 202019 Q4 Earnings call transcript