CVEO - Earnings call transcript Q4 2020

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Operator

Good day, everyone, and welcome to the Civeo Corporation's Fourth Quarter 2020 Earnings Call. Today's call is being recorded. And 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 2020 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

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

Bradley Dodson

joining earnings loved fourth on Thank you, us and staying Regan, today call. and your hope and quarter that ones you are well. safe for our thank We all you

thinking we're We warm earnings historic recover. to addition, who the and the have our customers by our the and and In surrounding affected Texas last guests and our of as since are all the safe, of emphasizing in I you are at on safety the well-being weather all started stakeholders top winter getting employees, week hope Civeo, is contractors, priority. I'll always and employees, that pandemic begin, by calls states.

open the key world. prepare furthering our as as call And for well is a and reduction summary our provide year a For then full commentary which quarter today's year call, debt assumptions to conclude then regional today I'll and takeaways then cash, Carolyn with key as of underlying to Civeo's call from we efforts. guidance and The our I'll are: XXXX for business generate will our brief fourth initial takeaways start that ongoing give with the segment-level full directional our questions. post performance. and guidance COVID-XX up continues review, and we'll financial some

by million $XXX really year an $XXX point XXXX, year-over-year; from end key this For press and our of Civeo XXX% reduced the of million is generated and million debt. increase XXXX flow, call. the free full earnings release This the year $XXX during to cash total debt of the at total

fourth results In of quarter expecting. is modestly the remains we the Our and quarter, come cash million financial fourth balance reduced EBITDA than delivered quarter, our our better that in December down million straight $XX.X our total $XX.X bringing top adjusted were to by quarter as the leverage XXXX. of of our seventh the were ratio leverage debt flow. Civeo fourth quarter $XX.X We million this and sheet ratio De-levering has X.Xx XX, priority, down. free

contract Australian another had quarter terms and contract extensions. renewals Today, three business. of awards announced successful we in also in our We new

terms. total million revenues expected the year With two over of the AUDXXX

negative impacts Our Australian downtime are good operations on another team's year-over-year adjusted from robust of of holiday the room our quarter, typical a of business showing improvement the operational and normalization lower in EBITDA signs prices. execution. had Despite delivering X% quarter, early $XX.X Canada demand fourth oil our the in million,

fourth XXXX. weaker schedule and our year, from total, unusually constraints on consistent expectations. strong revenues on given despite contractors business I'll to occupancy abating. be solid challenges fourth quarter moment the our team of was a softened In the our and this to and sequentially last prices the strong our update put Canada, provide gradually both performance the a with appear three pandemic pandemic take price are the quarter as in a the oil customers oil the volatile downtime. environment Our -- to a lingering now adjusted worst of employees of turnaround impacts And In and typical EBITDA pandemic year-over-year, mobilizing together segment's holiday segments. the the the in

in slightly occupancy of at our challenging. in in U.S., results Basin our Our as expected, the with LNG-related our occupancy as counting XXXX. customer Carapa Adjusted And on better continue location as half reflect holiday fourth occupancy in Bowen were declined. not for expectations business. are up our we Bowen the our result U.S. In be conditions stronger a line Australian Australian improvement Basin of the but the quarter activity than meaningful EBITDA coupled Services lower typical extraordinarily business was did downtime, in a Integrated in and Western was the business with first some year-over-year to

the Although customers disruptions encouraged overall E&P in and from continue blast, to their and the activity U.S. activity. cash well arctic constraining recent of in completion subdued, drilling improvement we live expect the recent by flows, are we to activity, within independent remains

Keep rely communities, playbook, in and tested as on with possible, enhance obstacles, compromising what unexpected debt similarly dispute, Turning our focus maximize the and contained call series a is often consistent remains free Civeo, atypical we to presented guests without these over North and generation, trade on to costs strategic XXXX recent at safe and continue impacts to X.XXx Southern our end I'll to priority. when vaccine quarter, financial crises from turn the financial And leverage reduce in declined to the quality. X.Xx the rate comfortable Chinese-Australian the reducing the to employees, flexibility vendors of key themselves. control, cash balance weather we our with At proactively the adhere flow to the U.S. of sheet, Carolyn. at arctic continued year-end at our unprecedented and dedicating service cash our that, debt start the responsibly of flow America a and priorities rollout XXXX operate slow battle in present third

Carolyn Stone

diluted joining fourth GAAP total Bradley, per reported million, the of $X.XX share. $X.X this you, in all of million thank or Thank net us $XXX.X Today, with morning. and for revenue you quarter we a loss

lower million, of was $XX.X same our adjusted and the period in in fourth lodges drilling flow XXXX continued as partially cash in U.S. decreased oil lower due adjusted quarter, Canadian completion were by performance The we business. to to proceeds $XX.X largely fourth experienced lower million. as we favorable operating $XX.X the in extent, million These flow EBITDA XXXX, to During and due items CEWS occupancy sands compared the EBITDA as of of free the offset the to of lesser of quarter generated rooms activity and, Australia a our by well build cash

revenue a the completely was full net consistent adjusted with generated which In year million and full the XXXX, or XXXX, per of $XXX.X we year, for $X.XX EBITDA we U.S. $XXX.X For share. of year reported million by in of $XXX.X million Weaker loss our related EBITDA adjusted million. the lower prices Canada well XXXX pandemic in full $XXX.X as Australia activity as was activity of proceeds. almost and oil to CEWS stronger offset the and

in from the was Canadian was EBITDA fourth proceeds revenue decline million of and $XX.X to segments. our meaningful in oil fourth quarter to in quarter turn especially in quarter the sands rooms build Canadian year turnaround from The XXXX. compared negative the EBITDA from our three $X.X I'll quarter million in of million effects XXXX. performance its for Adjusted segment XXXX. performance was in Canadian largely results XXXX. begin a related the the now review the $XX.X the protracted on impact million, fourth segment a as pandemic, in EBITDA to Canada lodges, caused included in million prices, oil adjusted decrease a the $XX.X of of to $XX.X with and Let's of the XXXX activity high our coupled the quarter Related of fourth of fourth by in our unusually Revenue reduction ago segment with compared to XXXX. CEWS. COVID-XX fourth Adjusted quarter revenue in a for

XXX,XXX was fourth the lodges I year-over-year build due in our XX% mentioned. XXX,XXX, which XXXX factors of totaled During the to in the quarter Canadian quarter, down just fourth from rooms

Our with for X% dollars U.S. Canadian year-over-year daily a in run $XX, increase. rate slightly the up was segment

on $XX.X during $XX.X from million, same during fourth revenue quarter XXXX. EBITDA quarter, million our increased driven recorded These results up occupancy top and increased lodges. our a represent currency of XX% and line in Australia, Basin Adjusted $XX.X business, was by period increase to up services were the from Turning fourth constant XXXX. Bowen we a activity of integrated in of million, period-over-period basis the

rate the due the Australian the Basin. of the Bowen results build impact the dollar. quarter strengthened U.S. metallurgical continued quarter daily U.S. average in $XXX,XXX Our our in up further of up $XXX,XXX, The in $XX improvement in the dollars the Australian reflect year-over-year. for from from $XX again was to runs fourth Australian dollar were fourth XXXX, villages activity quarter, coal across in

Australia Western are new As its AUDXX pleased estimated very business, million services Services to hospitality our of our we in Integrated through to with year two contract provide announce term. revenues Bradley over mentioned,

renewal to totaling million contracts of provide these We services in expected also over two contracts announced accommodations villages our currently Basin under a in year Bowen AUDXX revenues with terms. two the hospitality

adjusted a $X.X drilling as million quarter, year consolidated The from of largely as $XX.X in were XXXX. the full primarily of fourth of our environment. during fourth of well primarily to a million for impact of discipline well to XXXX. prices fourth Moving million the to due the XXXX. decrease U.S., This negative quarter were revenue is $X.X the On EBITDA to capital compared the was and in expansion to resulting as adjusted basis, $XX saw lower million capital U.S. as expenditures Lodge million, and reduction period XXXX XXXX to activity, Sitka global the as XXXX the employed million broadly of year-over-year negative completion the pandemic. economic the the These $XX.X due lower during EBITDA same quarter a related pandemic COVID-XX down $X.X declines the in due during from for segment oil completion

payments business by offset December million, on free translation was decrease $XXX.X of outstanding was The consisted during XX debt and XX. partially currency decrease total $XX.X was of since million. in an generated by million quarter from Our $XX.X $XX.X cash September a the unfavorable impact million flow the which foreign

for million, ratio approximately discuss for X.XXx full X.XXx December revolving Our had XXXX. finally, the September And $XX.X December our decreased facilities available outlook XX, we under the on from of will year liquidity XX. which to of cash as Bradley? Bradley as hand. total of XX, now leverage of as XXXX, our $X.X consisted million quarter million of credit $XXX.X and of

Bradley Dodson

provide consolidated with assumptions like the as as a Thank you, well you Carolyn. for outlook to year the underlying with guidance guidance. XXXX full you our of to our basis, each regions provide underlying then on I'd the

million. the in EBITDA Following we economic $XXX of to revenues guidance XXXX to year million of conditions, successful full million XXXX the $XX light million initiating end $XX and of $XXX of are to

forecast expenditures free higher we $XX million. objective we Again, capital XXXX expected investments ore year-over-year capital XXXX are year in expenditures is $XX to LNG Australian financial is full supporting be generation. to levels, more and maintenance million expenditures initial cash to flow Our our primary projects. tied Canadian customer to contracts Capital as make iron normalized and return

EBITDA to the items and capital between the in just year on some full million. need to of interest $XX XXXX, onetime based or XXXX guidance $XX actuals, our material taxes the and to bridge investment, for cash XXXX To no take million flow we our for expected expect $XX out we So XXXX. guidance working range CapEx expected million cash outlined, expense free XXXX of

million the million EBITDA CEWS of non-operating assets. from gains million adjusted on in of XXXX sale included $X Our items, $XX program of and comprised $XX

have in million. Excluding XXXX $XX line our EBITDA results, with guidance those from would adjusted been XXXX $XX.X our EBITDA the of XXXX million,

production improve tied year-over-year development, our improve assumptions in is XXXX. bulk Now our sands accommodated committed year-over-year improvement congratulate LNG underlying perspective, view outlooks we as segment corresponding business of a the should And that the more region. from gas I'll macroeconomic an the global by regional Canada, start prices the pandemic sign Canadian backdrop, oil and provide the although performance for -- commodity a is XXXX. our recent to from price oil In subsiding should shape throughout encouraging and Canadian and constraints our existing

modestly impact occupancy large customers projects We including CGL province, British additional and activity as to order headcount of beginning sequentially with of the at improved COVID-XX is health oil improved and second improve and projects. do to mobilize abate. limiting as quarters as activity negative TMX modestly pipelines. sands all provincial turnaround year-over-year the mobile personnel concerns XXXX across camp the expect the our industrial third to tied in expect Columbian well CGL the This offset gradually We the year-over-year LNGC by

assumptions, four COVID-XX industrial guidance activity the on expected. do not infections one, Canadian primarily and depends following Our than rates impact more hospitalization currently

pipeline seen, is negatively worsen, put Columbia impacting Canada. on our have the the outlook of projects. province pipeline. at CGL that this This impact our could our may our in has are the industrial head a occupancy British of limitations construction the Should Sitka camps you count our As currently and in occupancy supporting pandemic negatively

this next projects season delayed, have in If XXXX XXXX. supporting to clear earnings from We are turnaround could turnarounds by our sands a improved many operators expecting for sands oil push or in turnaround in call. We XXXX. expect picture deferred projects be be activity major activity as time do could This up of oil back XXXX. we but the delayed an year-over-year to the activity are making of busy cut these to expect pipeline the of this region construction are

an the the to our Lastly, levels ability turnaround increase staffing our and negatively limiting and customers' labor issue, become support of occupancy. required plans, impacting ours outlook could to for availability to ultimately construction skilled

highs the industrial new nation supply Australia solid Turning business here steel and and the has to in Iron near prices in markets Australia, to improves. commodity our Metallurgical lower the XXXX. flared. support should of expected our -- Australia multiyear activity weak found outages were remain as continue in ore quarter the price recovered China to coal are for to half and China's its year, be gradually for environment in continue healthy fourth restrictions business. of bulk as exports industrial trade Australian fundamentals demand prices should coal XXXX first underpin prices which XXXX. But the tensions have early continue for

assumes however, Australia does our trade We China expect plans negatively impact maintenance our year-over-year this slightly production dispute be Australian occupancy XXXX. for or to up customers' that not

in not tight current labor some will further. the we in does also move Our in as tightness reinstatement the that Australia, the travel the Australia assumes that supply And help Western of abate particularly worsen guidance labor Australia, recent interstate XXXX. through of

business, the modestly for improved oil cash our For half E&P major months, mandate has meaningful of to in environment and improvement oil forecasting U.S. live within our customers the in price tight a not have light business plays we're clear the flows. in XXXX. recent U.S. a first been gas issued but operating --

strategy by half I U.S. year. in activity, a the elements and modest underscoring our extraordinary expect marketing gradual key as improvement the this we So in the largely we second of will climate. navigate conclude of

and follows: our mandates Our are of well-being as our manage regions. with all we accordance We'll and will prioritize the vendors. structure across the safety employees three in cost outlook guests, occupancy

free continue flow will to and we enhance offerings prudently our while continue allocate to to best-in-class we'll debt. reduce We maximize cash hospitality capital generation

bring dedication, our call, Before I'd they work to the we presented questions of our that proceed day. the the unprecedented team thank around the to to you for to With the every like incredible world for behalf and questions. their proud section with take and employees XXXX team professionalism of to again with Board that, thank Civeo management us at of rose work every we predictably so and Directors, we'll occasion you. On making challenges turn. selflessness

Operator

Instructions] have [Operator Stifel. Stephen from go We question Gengaro ahead. Please a do with

Stephen Gengaro

I is hope the weather. well everybody recovering doing and from

So just off. a to start I on, want hit things to wanted I couple but of

want I XXXX You things to on of couple guidance, gave a lot a detail but of about. ask

time given see seasonal in is And in just first you'll of we about and seasonality. then a a patterns I should normal think How your most think the of XQ guidance? drop-off ramp. 'XX The kind the

Bradley Dodson

Yes.

it's -- it's little been as We mentioned, and negatively things. limitations typically our bit Canada start and impacting In impacting region. well, slow year, the -- negatively Canada, the And of and Columbia, a activity season particularly the both Australia, you and a British industrial a that's Canada on both and in maintenance QX so is the in been headcount slower see will projects, in do, really, sands We Australia. to is start in QX. oil see,

you earnings of $XX the fairly looks slower the the of of to quarter happens if our year, middle about we'll year. of and guidance, about least in at the the to a the then quarter, X/X are fourth normal, fourth in million be have think so, half XX% of middle then $XX the so And point, that year, fairly consistent this start at and with this EBITDA

So, that's seeing we're what thus far, Stephen.

Stephen Gengaro

in I'm it forward? of anything And 'XX. like it adjusted for is and assuming that doesn't going look have with you -- sounds XXXX down rising XQ the CEWS guidance at program. you think year-over-year year-over-year million from does And suggest EBITDA benefit before I also growing $XX your

Bradley Dodson

any is year-over-year EBITDA we have just correct. in and to the CEWS be not gave, That guidance we expect We quarter. first the do proceeds in do down

Stephen Gengaro

Okay. things, Two other you mind. don't if

is... The first

Bradley Dodson

point were So, because months it's Stephen have and additional difficult comp to actually that, a February add good and January to year-over-year impact. a XXXX COVID one of did not pretty

that's so of tough the pandemic a we're out comp, not yet. that given And

Stephen Gengaro

was if actually expectations. relative very XQ I No, Yes. 'XX strong even recall, to

Bradley Dodson

Yes.

Stephen Gengaro

you of divesting The start in would If mentioned a there kind ramp -- business the about think we you see cautious moving that Is a U.S. shorter-term time? higher. a business. over and activity to outlook starts

Bradley Dodson

are costs of more the lot got it consolidated a active activity basins. a out our contribution took basis, we our we We've Last now the that so into positive. each year, district of offices on business. Well,

over get business, has feel worked it. consolidation. where it making at consolidate the it never was activity to be you where So, attractive If offer, I business was money certainly, could like which so worth gotten cycles But a for way pragmatic never if us feasible. we well, position our it's does right-sized we it. long in someone a with shouldn't we've in get will, consolidation portfolio. been last and with a that where making It's a we anything have can were XX it's know a we'd to take would think the point It it never money, see runway, and the accommodations if X year-over-year. an -- been ramp-up it improve certainly you expect in was But the it's -- I really years, look where a U.S. business need to there to to enough

Stephen Gengaro

and the one think, what -- direction? the your I of could it, then the talked about drivers think you as you are one for you about I walked around But out, you the of that When is final just to And be because guidance, the what move of I laid that me Great. think guidance. parameters when about the upside in expectations. needle some and through the think what potential could upside, risks some

Bradley Dodson

there's Well, certainly, one I to labor then I -- get, if upside I'm think we Australian If be number dispute. would that to the Chinese think, Australia. sorry, starts or can trade abate

at and in we're We Australia. can in might can in net start labor some are start of for Australia, -- work and help There is to checks. environments with because if in that and those getting of availability stay but also of to receive primarily feeling well. less situation programs, home the as out, remote in it they want Australia, programs then the we an labor safety both the If Canada Canada phase better people with safety incentive social to net

the we've an our we to for would scope expectations, is up pipeline our the think there, margin opportunity upside section activity. on -- breadth if if those be see hopefully the camps I If that CGL it particularly expand an side. there's be that And it would our anything one higher of And of that -- planning expectation. there one last the Carolyn, our the in section could of we to and -- else? scope I -- for supporting third -- So we for initial we're be then think pipeline, is be accommodations. are to upside. our than be In current opportunity Canada, be but then that would turnaround

Carolyn Stone

list. No. was That a good

Operator

back the queue. or over no All additional questions turn like to Dodson right. I are any And to further Bradley for in would the remarks. closing there call

Bradley Dodson

all doing to you for and Civeo you you're Thank our staying all thank speaking first look stock. to Well, hope Take call quarter listening you on today. well forward We to in care. we earnings your the the safe, for and call. interest

Operator

Thank today's your conclude does That for you participation. presentation.

You disconnect. may now

Civeo (CVEO) 26 Feb 212020 Q4 Earnings call transcript