CVEO - Earnings call transcript Q1 2022

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Operator

Greetings and welcome to the Civeo Corporation’ First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I’ll now turn the conference over to Regan Nielsen, Senior Director of Corporate Development and Investor Relations. you. Thank

begin. may You

Regan Nielsen

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

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

Bradley Dodson

XXXX thank our for call XX%, Canadian Mobil After all revision updated primarily year-over-year an guidance. today The brief increased occupancy activity. improving a increased give start And upward driven our us strong first first drove the in adjusted summary our Australian full our an for camp demand of growth full regional to key I'll will our with Canadian lodges first guidance I’ll call. revenue set year year and then you up coupled EBITDA The are first coupled with overview quarter earnings assumptions provide growth with by first customer and open XXXX quarter joining financial and strong guidance, on our a performance and with performance. we we'll our villages, key takeaways from with questions. today comments and then call today had few a of that and the the quarter takeaways for conclude Thank prepared you, underlying and quarter quarter, which Carolyn Reagan. of XX%

the common to CVEO diluted Torgerson agreement available fully conversing shares the are rights and into spending we're increased CVEO customers forecasts more escrow The and in and XXXX. shares in recent all that Mr. to conversations expected these to be Under customer unrestricted XXX,XXX turnaround for basis refusal related our XXXX. discipline, Due encompassed of of will sold in year. Absent customer to headcount, raising XXXX Capital Canada Torgerson’s not a returning of on as preferred maintenance until detail Mr. be Torgerson capital. the conversations, least the Torgerson’s have June remainder adjusted encouraging have early first Conversant now to month, capital any shares to focused I to strong for shareholders, of of customer the quarter between as and full Lance having updated continue CVEO While year stock Conversant. released sale. market especially and And which open EBITDA agreement into we from conversion Mr. will announced purchase guidance, common, we Mr. common our first common of shares this shareholders Earlier a the are sell call. terms revenue our approximately later transaction at Mr. CVEO on Torgerson, Torgerson’s shares common well results, largest one in on April our of capital

capital our focus capital our be share allocation our to program. continues through top While remains deleveraging priority, returning our sheet balance secondary shareholders repurchase to

shares with purchase our Torgerson of of to by required quarter agreement time and largely This our the first see As the you Q, just to in facilitate was only quarter. the Conversant in due that we Mr. first and stock we the discussed. will repurchased team handful execution focus

and we're signs the our pleased through compared first customer XXXX. program out we encouraging expectations to room seen we of year. total, continue spending shares to balance repurchase expect the as to have In and demand quarter to the some opportunistically of We our the with look under balance related results to

by our moment across three significant in our a a camp take Canada, expectations year revenues central due expectations experience the the occupancy recovery In and and This to also at on segments. In sequentially rate adjusted billed average update to by our our adjusted rates year-over-year, was did mobile above star and me in to related sequentially activity. EBITDA modest business lower and Bowen of demand year-over-year. rooms villages EBITDA and We daily increase expected and were adjusted Australia, sands occupancy revenues a EBITDA area. winter our colder increased a Let in driven in increasing provide daily increased average above driven operational higher rooms. decrease sequential in recovering increased and increase to billed and large than oil to both Canadian were terms primarily Basin costs year-over-year weather our due a

and to drilling activity, increase EBITDA. increased briefly Turning US from the in in adjusted completion benefit which revenues and resulted year-over-year

the were and increase the due that, count Carolyn. contributors to customer With primary rig higher Our over activity. turn I'll it higher offshore wellsite to businesses to and

Carolyn Stone

total GAAP we Thanks $X.X first Bradley. income And revenues morning. net us joining thank you quarter of all million $X.XX or of the reported diluted in $XXX.X this share. per for Today, million, with

and capital that compared the quarter, increase cash $XXX,XXX. as year. The of period we quarter is of Australian payments, of to expected in timing to During our increased EBITDA same in receipts first the Canadian XXXX and the the operating in The a Canadian adjusted in primarily was and EBITDA of build with coupled mobile rooms second decrease in working due first to in activity, cash quarter unwind year-over-year cash operating as result experienced free of XXXX and million, quarters of first camp cash adjusted flow to XXXX billed rooms. increase the generated and due flow increased flow lodges million, increased was largely $XX.X in free third we village an $X flow this of

three was to performance performance year Canada million a of increased revenues $XX.X to I'll of quarter our results increase in and million the of million camp in year. driven first in Adjusted increase increase of revenues from by our XXXX. now EBITDA quarter ago pandemic reduced begin the Revenues $XX.X were of $XX XXXX. first for the compared oil The million with first segment the rooms segment the related of adjusted the $XX.X coupled XX% as in largely was EBITDA mobile recovery and in prices, quarter in review segments. activity. first Let's its the turn compared last both with billed quarter Canadian from a and a in the Canadian COVID-XX year-over-year effects to to

in Canadian lodges XXX,XXX, in XXX,XXX due the which rooms first XXXX billed discussed. quarter, XX% year-over-year was totaled to the up we first our the just During of from quarter factors

Canadian the dollars year-over-year primarily US a Our a segment daily in increase, was result of increased room Lodge. X% Sitka for $XXX, our occupancy rate at

costs, largely from increase billed by first border we of were top same as the currency Adjusted million, during increased villages. million were adjusted at of labor was results our up during EBITDA offset rooms partially driven room the from increased basis, rates well year. million $XX.X restrictions. up $XX.X to related Turning XX% line result COVID quarter revenues the which on by constant daily first a increase travel as The a period which of increased both on of XXXX. last the period $XX.X recorded over These quarter, $XX.X Australia, in EBITDA was million, period represent

of US a in rooms the muted at the daily quarter also dollar due from quarter Our with US from maintenance Australian first XXX,XXX, activity were customer the weakened relative in again dollar. XXXX, negatively the Australian XXXX. the billed dollar rate quarter impact US the The the results in XXX,XXX of was impacted was more consistent first trade by quarter dollars Australian of recovery to villages, our dispute. to XX% in village $XX Australia China a resulting in for first average up

currency constant primarily Australian approximately nights basis, rate. our in which at by However, billed increased driven on a X% village higher room rate day uncontracted increases are a

million and the $X.X first the both EBITDA revenues driven the US million the the wellsite villages. period first in capital adjusted offshore These were expenditures $X.X and was the On for the quarter compared XXXX businesses. quarter consistent consolidated the during on primarily year-over-year million quarter periods relatively maintenance EBITDA of in in adjusted million increases basis, last to quarter year. first a our segment period activity from US, related with first negative of improvement $X.X expenditures was during invested predominantly were for The last breakeven in increased $X.X lodges $X.X Capital by of to as were to and same XXXX. spending Moving million, same the which year. were

result the million of $X.X $XXX.X Our of which December currency outstanding XX, foreign XXXX. March XXXX unfavorable a total increase debt $X.X was The was million, on increase since an million. translation XX, represents

decreased XXXX. from to XX, ratio XX, X.Xx quarter of X.XXx leverage net Our March as for December as the of XXXX,

liquidity XX, updated March will million consisting guidance we Bradley? the approximately hand. of $XX.X discuss $X.X million of cash Bradley available our our for year now million and credit revolving As of facilities, under full total XXXX. had $XX.X on of

Bradley Dodson

I'd each the well our updated full regions Carolyn. consolidated to XXXX you, on of year basis like Thank discuss the to outlook guidance our guidance. as underlying related and $XXX underlying as assumptions XXXX our for the the remainder million year, full including guidance first on $XXX we EBITDA a are results of of revenue $XXX revenues raising the the adjusted of $XX million improving million EBITDA. to year quarter outlook for to our million to and and Based

The and capital just our million. second million we're million. $XX I the expected range $XX across maintaining cash increased XXXX, the unwinds again for quarter EBITDA year. by working to villages. previous is a the flow Based EBITDA expenditure $XX guidance to increase our negotiations taxes guidance Australian And and our assumes of guidance to of the customer on XXXX expected and interest this the million year. range our quarter year $XX million lodges $XX Canadian guidance XXXX cash $XX activity consistent to forecast raising, CapEx driven expense guidance of the increased to million million are of $XX to in capital to that flow contract cash related free this and first minimal We outlined, and third full conversations free free increase primarily recent year flow full cash from revenue raising maintenance of This

and healthy capital increasing also uncertainty return capital camp largest still XXXX Columbia. pipeline levels. British are maintenance due year and of mobile activity customers guidance duration prices discipline the at of The our in our be the sustained their projects commodity they're shareholders, plans in Canadian to to of to our prioritizing related for single timing continues While very

of regional any quarter, camps, of three the as XXXX projects set million demobilization increased into I’ll related demand should XXXX. the could XXXX, recent now not underlying adjusted move quarter matter, In related surrounding, $XX million region. all this we customer early of look by XXXX. three mobile anywhere have maintenance we turnaround, Should by the of we for of for at last Canadian to are corresponding EBITDA $X a the Regarding these outlined assumption encouraged assumptions see remainder conversations fall. rooms outlooks and Canada and to summer our the are provide changed which for the extend we from as improve we XXXX, fourth into and

experiencing an lodge sands from Canadian increase oil XXXX are billed We in rooms levels.

that have to and of customers’ portion third region quarter guidance. into turnarounds. in we our is There labor ability made the risk this a one availability expect execute And our that in risk these the dampen second a year. could We customer

our activity related and demobilization costs earlier, the wind year. mobile end we full still we've down of As in the of a Canadian we're our by year included majority expecting the mentioned for the guidance camp

seeing remainder in the coal signs in Iron prices focused our improvement the same and as at discipline starting continue Western this Australia, to to weather factor labor labor travel XXXX. the We're that we gradual last related in and progress But Australia ore prices, through albeit constructed at activity expect the of year. capital increased and process coming labor Canadian encouraging strong. it we're we border related business. customers see turning issues pertains demand, costs in on for shortages, and remain costs anemia a customer customer to Australia Now remain level is a COVID remain higher restrictions year lingering Australian China remains not But and in dispute. COVID of the result trade it labor more of volatility experienced WA. slow levels into

For price starting significantly and our activity has improved from environment US increased and drilling the gas US. business, recent to over in oil we're and benefit completion the months

will to conclude as climate. extraordinary this market businesses year. improve offshore of and the underscoring wellsite I navigate strategy elements by continue our our throughout expect We to we this key

follows. Our as mandates are

employees communities. safety the of We well-being will prioritize and our and guests,

structure in of the maintain the will outlook occupancy our with three We each cost across accordance regions.

focus our on will to hospitality best-in-class We enhancing continue services.

maximize And through opportunities your lastly, We capital to will generation, debt organic continue cash to we're allocate and capital revenue through the cash to while shareholders repurchase prudently program. happy and to With reduce and we that, we generation our flow further to share opportunities. flow take will diversification seek M&A return questions. free

Operator

[Operator Instructions] Our with question Gengaro is Stephen first Stifel. from

Stephen Gengaro

Thanks. few everybody. Good a things don't morning, mind. I guess you if

some growth. the that The b, it things have been maintenance think heard sound think one the progresses that is just you're business, Australian this first, increased Australia of I the it kind wrong. of you from versus when as struck But and and I seeing, evolves think like about I some to of curious how kind you an did are was what talking and, the seeing I occupancy does some of related me growth. you're the right that perspective? conversations occupancy I'm hear year A, might

Bradley Dodson

we and -- opportunities on Olive construction is was the during Basin Downs certainly we're focused expansionary year-to-date headcount as of their will quarter the projects with during focused the Sure, maintenance some in ramp one and maximization positioned seeing them operating into time, And in which activity announcement into early that is quite primarily say our I are assets macro are customers some terribly increased project. occupancy. of there first would is increasing not cautiously in still there that are Pembroke either the production that seen There serve are spending. say here they spending. the growth we're optimistic seen to in the well that that moving project, increase some Most signs today, activity question, would to will we've or mode. in Bowen forward the we normal your serve as to it signs increase today, I But Australia increased up sit all our on necessarily point go the

is on operations. So most of it focused

where of not kind tailwinds So backdrop, might prices commodity nice it's but are. you a the given that expect,

Stephen Gengaro

that ADRs normalized great. I it regions, Okay, rooms the non-contracted was the Thanks. average and impact that how quarter. you rate in up. the we evolves? the maybe forward? of sort And mentioned on going sort mix Carolyn, should of think the think, How had Is pushed think the that mix about, ADR I both more in

Bradley Dodson

true capture certainly their while of those overwhelming the to Sure. minimums, contracted That's the Australia, the committed above kind question. are the of on haven't been above majority minimums. of are increasing they've customers customers running grades. minimums well, previous backdrop And their the to your lower in they of Most

the block there's are dynamic, night, a issue. rooms on In excess So rooms mix as to contracted can the a same between benefiting not $XX of that Typically, commitment, as $XXX and is those over be a $XXX. Australia high we result of performance. Canada, in quite as a contract it will run more the $XXX from above

you'll recall, year-over-year, if put Specifically, health we're British was as in quarter a late of first in comparing Columbia XXXX XXXX. there that place impacted order

sands and impact guests did So as year, we British quarter compared but were there's XXX, rates year projects the in arranged of more say in there specifically in we running Canada, purely said, typically the limited at I not on this an Australia, you were bias targeting speaking, region. running pricing the nature. generally in at certainly is being to LNGC an project, headcount pricing, first both upward, would And comment, we Sitka than which oil as XXX project. Columbia, XXX last That in is that in overall upward higher get from know, industrial to are inflationary XXX the LNGC not Sitka

Stephen Gengaro

if don't Okay, you great. for me more there's Thanks. And mind. two just

thoughts updates is LNG you're if LNG your and talking LNG golden Canada and about the the in topic, one there. been the, what on big expansions had of on curious a here I any or Western of seeing first or hearing The you age obviously was analysts our

Bradley Dodson

Sure.

would that update timing went three medium term is be cautiously would four, currently biggest trains Canada and given transitioning or when if remain kind real currently backdrop, economics up an positive While that the phase well occur. of cautiously don't positive FID would provide thinks Kitimat, have I the on train update of on LNG from as not impact in be kind There one on economic as that trains serving. It that. the no project and one other two expansion of occur. will -- back our is LNG in of we're terms in three some two out is and customer. of an will would I back of macro occur the everyone one or than phase The not train, to that might and an four. trains us everyone's they optimistic constructing like we to update back that there update optimistic two benefit on think the which There's it that are smoothly And

LNG to getting that it's Now Canada play appear be really a that in projects will to of legs, there couple to are see Western tell too but out. additional how early

Stephen Gengaro

think then could not updates And US the could flow, one land when and something dramatically. you -- about there final balance you as strengthens market that? there? if the Could cash in sure uses the And free just opportunistically any I'm but you this sheet thanks. Great, around of tie do

Bradley Dodson

our of in progress first quarter into we And little a of to as end as as done open up spent ran so we lockout. share much transaction. as year on been, liked window were we -- didn't then really bit Torgerson last we September year, as the announced Conversant of at the September; that. we've has working policies we on repurchase, repurchase get working relates have allocation Most made August, in been of capital would program the the we the we tied Well, share

a forward, accomplish. we what we As want component look it's of key to

at same. be phase into prioritization moving debt, And not may some think we're allocation We the to returning look but So that we're growing I shareholders. a to remains moving where capital certainly company yet we two. capital, require some we will whole. back the to focused in quite although to the there get pay a revenue as the need remain ways and And the on first

So that's we now. stand right where

Operator

And our next Ferezani question is with from Steve Sidoti.

Steve Ferezani

I Good everyone. the follow just wanted on question share last to repurchase. up on morning,

So being with in will that program assumption correctly, renew I'm expires doing if the similar a current the timing right, terms. plan August, the you

Bradley Dodson

mean, prioritization Yes, those have but to I we discuss second would certainly renew and capital would that have program, our occurred, priority, so they assumption of will terms with we and this it our in complete board, we of be if could as the again. remain not conversations safe

Steve Ferezani

good. Okay,

commentary extends around of terms your are getting I about one sense thoughts projects change demobilization. you know at those? upside Are the you into could eventual a ‘XX? that the like What those guidance In today, your around be. now of didn't your the, least what you talked

Bradley Dodson

guidance the that's have that information Yes, don't. to the date. they best assumes And we

the now, to all of shift customers demob or to in as XXXX. if indicate quarter. with so that all, of what one right conversations will change, fourth be would frame as were into we tried that they it And the be But

Steve Ferezani

this would do How you cadence And that? to think there fourth Or through down? that? is expect a about at we quarter? good. Are Okay, you rate running the to wind

Bradley Dodson

the mobile camp basically? of terms activity In

Steve Ferezani

Yes.

Bradley Dodson

quarter of both ramped last should pretty We've out third in that's see then we'll of run third of relatively And quarter contract down the it consistently consistently of running to terms this of that Yes. the fourth out then the quarter year, through guidance. coming revenue the of profit work, camps, start into and gross the since in year. it end been the coming baked

Steve Ferezani

we to cash flow, quarter, saw you to there Okay. you also But levels your and more that carry think terms the back are about in have as flow trying reasonable seeing into watches working the on, and going up? utilization unwinding capital. put you higher And solid to And starts to higher of as to start any think raised cash free as guidance, about of working then capital? they then utilization higher some CapEx revenue is there this of and is these you're it start comment you going picking

Bradley Dodson

question do. The Great it we capital on terms well, final questions. of, -- the in comes working

that is would issue valid, timing we will higher it our quarter. in point in a the first expect higher was middle Your capital, hedged bets We've this revenues, with working unwind the merely it'll should the timing it of year. and unwind the of unwind the we that quarter. part the in second year, could a it part know But QX It again, issue, by be QX. will middle

In would to the built will, we we may we would CapEx those guidance terms to of commitments if certain CapEx the million would There from that We million. customer the solidify are rate, to $XX reactivation, support commitments, But CapEx that. get where of the it. kind only built support you in increase of scenarios our should if customer for the our occupancy longer term now. outlook, commit we guidance require increases $XX and we would into right of that higher to it is what rooms -- in get outlook of CapEx, and the some some we

Operator

conference We’ve would question-and-answer like session. to end Bradley the the back reached closing to of over our I for comments. turn

Bradley Dodson

the on quarter you everyone months. today. the a for it. few for appreciate our concludes call call you. Civeo. second call We Appreciate And that interest in We speaking with your joining forward Thank in look to earnings Thank you today.

Operator

the concludes conference. This you. Thank

this And your at for your thank disconnect may time. participation. you You lines

Civeo (CVEO) 29 Apr 222022 Q1 Earnings call transcript