Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to Civeo Corporation Fourth 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]. is conference this note, being recorded. Please

now Senior Director will you. turn Investor the Nielsen, Regan to over of Thank conference Relations. I Corporate and Development

may You begin.

Regan Nielsen

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

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

I'll now turn the call Bradley. to over

Bradley Dodson

for quarter the call Then financial today open and our and you, us Carolyn full-year consolidated brief summary a conclude and on you fourth with start joining assumptions. then I'll and provide with of quarter level fourth all questions. our for key give XXXX segment full-year call. XXXX a regional and Thank performance. thank then Regan, takeaways our review, the will initial up and guidance earnings I'll we'll

capital debt returning which generate The our key and takeaways from shareholders. ongoing of our that the is supporting cash, reducing allocation call continued to today business are capital priorities to

repayments in $XX cash For million. XXXX, the flow and $XX full-year of made debt generated free Civeo million

conversion of shares at shares year-end are preferred coupled the repurchase XX% common This the which resulting outstanding XX% to shares in of into equivalent just million and the of the X.X common During our of remaining XXXX, then a of only outstanding shares, class common free one repurchase over preferred million. shares. with in we December, for included $XX flow also shares the of used cash

adjusted in existing of relationships our of $XX.X We quarter, a two with of is the and cash flow. This fourth announced delivered EBITDA recently execution. customers free million Australia. and customer operational contracts In million Civeo strong signal $XX.X five-year significant

We to Civeo. contracts room willingness their customers' longer-term by are commit secure to with and supply encouraged our to

In both customer. the a drivers The share component expanded in free generation its market to Civeo cases, with strategy. is diversity Civeo's cash flow key revenue

customer We will geographic footprint our continue our reduce expand cash seek volatility to base to flow generation. to opportunities free in and

natural the to be production Australian capital resources our Despite at ultimately lodges we expense extraction drives at to occupancy capital villages. on continue high spending customers increased their focused shareholders maintenance of for what capital is and Civeo's returning Canadian and commodity prices This and support, that discipline spending.

calls, pressures Canada weather as we've progress utility and throughout in inflationary on the fourth began reverse. As costs mentioned conditions past were to the winter Australian our quarter made in we've on continued earnings issues business increased labor

the in severe inflationary share flow to in the fourth generate with preferred which quarter. free Even quarter, completely repurchase million continued almost the offset $XX made headwinds, Civeo cash

In segments. walk to call. with coupled quarter the of take primarily business inflation EBITDA year-over-year, items our quarter Canada, update revenues Canada. cost the items benefited decreased Carolyn across several three through in me XXXX, to across a moment adjusted a our and that Let later these will fourth provide fourth related you

turnaround sequentially expected, downtime to quarter. in the related typical of a wind at quarter and our end of experienced As rooms the activity the seasonal the lives down holiday fourth third lower build

were expectations in line quarter labor in integrated Our with in despite Australian our higher-than-expected costs services business. the results

downtime expected, sequentially. Our Bowen reflect Basin some occupancy holiday was better did but than typical

Basin. by of modestly in decreased offset increased the increased the our Integrated business, a labor as in the Bowen year-over-year of result Services EBITDA costs and partially Adjusted weakness Australian occupancy quarter fourth in the dollar

business work business while In with the contract previous additional for and one Australia. renewals retained Bowen us the Integrated quarter, customer awarded and Basin these taking room for competitors. villages Civeo's granted and Services additional contract both owned the Western one five-year in share locations our our was our fourth Australian in Civeo renewals, from In two cases, commitments,

offshore to the the sales scale briefly divestiture unable of our U.S. our completed the and Turning We despite quarter. team. unfortunately to of in create the efforts We the fourth service U.S. in business were business

the Acadian business lodge U.S. our in Acres Lake Killdeer Bakken now Our and our near Lodge Charles, North consists Louisiana. of Dakota and

balance our to sheet. Turning

the of but as leverage X.Xx our due XXXX, in quarter share net The ratio down the quarter EBITDA. ratio slightly to net a year-over-year increase adjusted was from third leverage the fourth well quarter year-end, largely preferred sequential Our repurchase increased X.Xx. at the as decrease year-end at in X.Xx from was

With Carolyn. that, turn call I'll over the to

Carolyn Stone

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

fourth buckets. quarter, $XX.X adjusted cash XXXX quarter we free The be fourth $XX.X XXXX compared period as of $XX.X flow EBITDA and the flow of million, in the During can decreased operating same the EBITDA to cash million. in categorized generated adjusted in million of of four we experienced

to as and of relative such fourth in of expense approximately quarter increased 'XX impact First, to dollars, larger on items $X.X of compensation higher million sales fourth price the there well was assets Canadian stronger Australian as of as the the a in gains quarter a XXXX. the due stock-based stock dollar of U.S. non-operating

of impacted the Next, we quarter customer and million have of which $X.X settlements, insurance XXXX. positively fourth

further a well in as fees. professional We related expenses $X.X as technology largely information also to expense, higher SG&A million increase saw approximately

by partially increased Australia inflationary million costs, which were labor, and of pressures increased driven And largely approximately operating occupancy. finally, village by $X.X utilities, for food offset

modest a a increase XXXX, million, XXXX, revenues XXXX per full-year from million we of EBITDA reported our of share. adjusted loss $XXX.X For diluted $XXX.X of of $X.XX and we $X.X adjusted million. or full-year the million net $XXX.X In generated EBITDA

rooms and reflect a a and dollar increased of respectively. full-year $XX.X $X.X adjusted million, to currency which Canada and cost the Canadian basis, share. activities Australian increased constant the Australia, decreased weakened mobile across impact business. compensation and continued U.S. related inflation divestitures to partially and EBITDA from relative camp On U.S. million build the revenues business, expense Canadian the the in increase in our stock-based stronger dollar, by of by offset Results XXXX The and in the were

million of XXXX. Canada in begin fourth to Adjusted to fourth to of quarter revenue our from of fourth with its EBITDA XXXX. quarter turn $XX.X million quarter of our performance was $XX.X segments. quarter Canadian in the Let's $XX.X million review in Canadian a now segment performance in a three compared was the I'll segment fourth ago Revenue for the of $XX year results the million compared as compared EBITDA XXXX. the of adjusted to

the labor fourth dollar customer benefited dollar dollar, of Results from the weakened the as the by in and respectively. certain and food, aforementioned The and adjusted in Canadian quarter reflects of inflation utilities weakened Canadian driven well decreased fourth of relative the million, to $X.X U.S. impact affecting of a the adjusted $X.X insurance EBITDA cost decrease XXXX and XXXX. as fourth revenues was EBITDA quarter by settlements which quarter that XXXX million and

the $XXX,XXX, in our X% billed fourth the of up fourth were XXXX. totaled Canadian $XXX,XXX quarter, quarter year-over-year lodges During rooms in which from

down $XXX dollar in [indiscernible] segment due weakened a to impact rate renewal. the room U.S. from Canadian of which for dollar was contract dollars daily year-over-year $XX, the in to and relative a XX-year lower Our U.S. rate the is Canadian our

to Australia. Turning

and EBITDA of was $XX.X from recorded fourth we revenues to U.S. the the a million from reflects dollar period lower XX, Australian million, and quarter, dollar a and million of in million, million, $X.X adjusted During $XX.X respectively. relative XXXX. which EBITDA Results the decreased quarter fourth the down the rate of the in of of from $X XXXX. $XX.X XXXX of by $XX.X fourth Adjusted revenues during our weakened impact up the same quarter impact million

fourth In was an especially by were partially villages in labor adjusted in EBITDA Australia by rooms in decrease increase rooms to due in build the from increase in offset Western Australian weakened quarter, dollars integrated U.S. driven $XX our the down the fourth dollar, an XXX,XXX compared entirely services Bowen the was quarter the Australian which in average addition weakened $XX was Basin. XXXX. Australian the fourth the The XXX,XXX, U.S. rate This to daily in business. from the in to costs, quarter in billed Australian was of XXXX, quarter for in dollar up of dollar.

contracted maintenance, the fulsome a in increase This XXXX. primarily from for and basis, lend for villages $XX.X due increased lodge our a revenues $XX.X increased program in million expenditures coupled up Australian to certain million, capital preparation in with full-year XXXX On the consolidated during was more villages. refurbishment village were

$X from year-end was XXXX, outstanding XX, decrease a debt December on and XX, total million September increase XXXX, Our million, million a in $XX $XXX XXXX.

leverage ratio the net X.Xx of from of as increased December Our for X.Xx to XX. as September XX quarter

was As to XXXX the preferred incurred fourth EBITDA million the as finance in quarter quarter Bradley of well fourth to XXXX. to combination $XX compared of a increase adjusted lower the mentioned, of quarter fourth share debt due as the repurchase

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

discuss full-year for outlook will now the Bradley our Bradley? XXXX.

Bradley Dodson

basis, discuss now underlying on including Carolyn. consolidated assumptions. our regional I will guidance you, Thank XXXX full-year the a

guidance XXXX revenues between EBITDA million $XXX to of full-year We are $XXX and of million initiating million million. $XX our and $XX

we is prioritizing $XX our million. villages be of relatively several lots cash as XXXX are full-year our spending expected business years expenditure continue across flat capital the million for $XX guidance XXXX maintenance flow. with to normalize capital after to to expenditures Our free Capital and

based we back on process coming the years. an demand refurbishing increased where bring rooms are we online, in rooms have in the occupancy the of current As seen Bowen in example, our contracted outlook to room Basin

interest financial to to cash the working and million cash flow our That just guidance expense flow. Based taxes million expect $XX or free and being range -- expected free me, cash capital primary said, $XX and million. EBITDA between Expected be XXXX $XX and on objective XXXX XXXX minimal CapEx outlined. of maximizing we excuse for investment continues

camp calls, and wind As we Canadian down construction significant previous earnings the year-over-year for on the project from from adjusted GasLink Columbia in activity decline expansion. pipeline our the British resulting Coastal of discussed business, have XXXX the TMX EBITDA mobile pipeline comes in

camps contract $XX contributed Canadian in million approximately XXXX.

expecting mobile on on well pipeline all TMX of project are be the to coastal X are expecting and projects as the add expansion supporting completed camps remaining to as XXXX. gasoline currently in camp We them

includes expenses. guidance $XX CAD million camp and XXXX mobile currently deal Our mobilization

longer-term of we continuing are shareholders to In customers across that provide prioritize prices and assumptions broader look need before now our of to increasing be into and outlooks XXXX, convinced to economy investments Canada, as region. materially underlying corresponding return the in stability their I'll by we know capital commodity the and regional Canada.

pipeline While impacted activity impacted XXXX lounges significantly negatively incurrence will completion the the costs. projects construction the of camp should by demobilization the throughout the year, steady, mobile the some related of of remain of including in activity be --

year-over-year in look We the of activity consistent second Canada XXXX the as customers third are in we turnaround rooms quarter. accurate and have we quarters turnaround in get currently in don't but until expecting to prior-years, secure in relatively second an view discussed

during camps mobile part coastal gasoline wind decline three XXXX. of year will down to mobile middle Canadian currently activity significantly as expected are related to camp throughout pipeline our the the

projects of When I continue with these mobile XXXX. four currently two our quarter demobilization demobilization to as We these will expected pipeline-related XXXX is incur de-mobilizations roll-off also third guidance costs expansion camp associated of the in TMX approximately camps. have our mentioned, through costs. million with, the of Additionally, of camp CADXX supporting mobile the

deferral costs last year, positively are of incremental extent To by saw however, as as the the these projects both extended, around our guidance demobilization timing we impacted, will the well As the that revenue projects. on XXXX remains uncertainty the camps. be of

from in also Our year. further impacted the customer back for a lodges XXXX the guidance half could of demand around by Civeo's be clarity room the

located. this our McClelland to As we have we expiring in lease support Lodge, an which associated mine land customers' is land June order to in Lake XXXX quarter, that lease with not where it currently expires land disclosed the agreed renew to last currently intent

our addition, contract services XXXX. in expires In of June hospitality

would the as customer XXXX room solution. of they customer If Our half our to includes alternate guidance. this new in negatively transitions other find demand an solution guidance to lodges are Civeo XXXX at the impact its for supply, room second

redeployment. for We assets sale new and and these are believe opportunities Canada in on our for or of assets marketing the is U.S. demand for the McLellan Lake there current Based marketplace, Lodge we understanding knowledge

revenues, XXXX McClelland Lake million. of our Lodge the revenues approximately In CADXX generated XXXX

room redeployment on expect in XXXX and We of on to further sales XXXX. assets have potential later customer's these opportunities of demand clarity the

to XXXX activity coal early metallurgical Bowen customer Turning our XXXX gradually and Australia. prices in improved healthy Sustained have in Basin villages.

increase modest in occupancy in a expect village XXXX. We our

on customers hesitant projects. our to to capital to capital continue commit However, discipline focus are expansionary large and

capital reflects continued the current price coal. Our current more discipline it guidance than for met reflects

That said, could activity we XXXX, our upside early this uptick further be if there a versus to being in in and experienced expectations, customer have our into XXXX. noticeable initial trend continues guidance

While iron prices were Australia levels healthy Western remains ore remain XXXX, in strong. in treated customer they modestly activity at and

to labor Services Integrated evidenced as our costs. we business in five-year inflationary award, Australia, burdened pressures, by Although recent contract particularly continue Western our be by

in uplift of year. margin these We our XXXX, slowly labor in throughout Services half back Integrated an in are costs to the expecting the subside resulting

subside do negatively the back results However, if labor the could these impacted. in half issues of be not year

by the underscoring elements our of navigate climate. current the we conclude strategy will market key as I

prioritized as and mandate we the as Our are work follows: of guests, safety employees well-being communities our the we in. and

our and Australia. We accordance will with to cost continue in the across structure outlook occupancy Canada manage

our to best-in-class continue enhance will offerings. We hospitality

capital to our continue And cash free prudently return revenue we organic to maximize allocate will to to seek through prudently generation we will continue diversification flow debt. to opportunities further We opportunities. reduce and while lastly, shareholders -- M&A and capital to

to take happy we're questions. that, With your

Operator

[Operator Stifel. first is you. question from Thank with proceed. Stephen Our Gengaro Please Instructions]

Stephen Gengaro

Thanks and good everybody. morning

with the for a did XXXX. you Bradley, So job thorough guidance

quick question. one Just

to is on sort does the wind together, second think of of down XX% quarter capture of the all full-year that normal expect the pattern should -- current seasonal affect the that third I for put expectation XX% shift EBITDA, Is usually we EBITDA. or and demob based As we cost?

Bradley Dodson

No.

still quarter, it, and EBITDA second same we'll in do of right visibility. that's think softer then kind just in the to due now, guidance as of typically that the third XX% quarters. fourth And I have we and customer guidance, is the

contract So to is we'll out. A the the factor that in back the see the camps that how of plays have of of big half year. demob

Stephen Gengaro

And Thanks. me. for things then Okay. two other

is generation, The buying back about you you've stock. free think been obviously, first the cash when

M&A reacted to would looking well be M&A But do how have people think I evaluate of you you at that. potential what types opportunity? and

Bradley Dodson

as both And we'll to additive at in and that There would on would look building to one-off capital, in to Sure. to would and a upper we on of are other Australia whole. off certain of after-tax see what our as mentioned, hospitality diversify cost returns services be continue properties that that have look Canada be into properties, an basis. unlevered I we teens our geographies the would have other end those strong markets. Based as the portfolio

Stephen Gengaro

to And fair? Great. hard any that likely Okay. as hospitality Is would opposed assets. be it services

Bradley Dodson

Well, be adding M&A companies locations could be hard portfolio fashion. but it in an would assets, also adding service

Stephen Gengaro

just final then And Okay. one one.

to you divested? think The I'm trying second of to close U.S. what the about assets. now? sale zero Is half business U.S. exactly

Bradley Dodson

actively but to We've Acres those. and Acadian we're divest everything chilled and looking beer divested

Stephen Gengaro

one. maybe final then actually And just Thanks. one

Your debt significantly. come have levels down

up I ratio all what tweaked been the think may quarter where stop do leverage return there a the down a -- -- FX. have and is But in bit they at ratio you where you leverage paying debt cash? just little

Bradley Dodson

that in we've in have the what investment. ratio. And I We adverse gives think occur stock won't adverse good and we either -- range. invest made end And an that or Xx macro higher if invest the X.XXx leverage we're in to our own growing business, up a macro in us unforeseen after is we to that I base. a Well, that is think kind that of want does flexibility

we're I like should next the shareholders are there feel to -- standpoint, spot. would decide right opportunity, net it leverage fewer I capital around can slightly dip a for returning be few we years and in lower and higher expect to to the good vary move the both growing may a from It when where investment opportunities which over business. is So potentially it it

Stephen Gengaro

color. it, great. for Got you Thank the

Bradley Dodson

you for Thank the questions.

Operator

Company. is next with proceed. Our Ferazani Instructions] & [Operator Steve Sidoti Please from question

Steve Ferazani

Carolyn. got the because of on them to McClelland of lot a here. appreciate check Bradley, I make I numbers these just some Lake to The parts clear morning, moving Great, the on I do want call. all Good detail shutdown. sure

now that's June. So

that first $XX in right? the after was that So half. million annual I out comes hear that revenue Did

Bradley Dodson

Correct.

Steve Ferazani

Okay. And then you your about... timing thinking now, how are

Bradley Dodson

Civeo offset At XXXX, least it's now, that one on other partially for occupancy right by of into -- hold for second, but as locations. moving

McClelland more the is is much So issue of it issue XXXX. XXXX much a in than

we indications to try have occupancy. people for we half As not back but commitments though caution

Steve Ferazani

Yes.

-- are then both of of camps the right? how And timing current end you this as we going because are that projects consistently completed very how been now currently But Fair. are full-time? some probably the to on guidance, the mobile doesn't based mobile be about know extend What's extended? thoughts camps on clearly timing thinking Okay. your you these 'XX, have your mean this are of know I

Bradley Dodson

between QX So we're camps expecting that QX, QX, potentially the roll-off one. and

the not when costs CADX of million million revenue and XXXX all so demob the will We've with occur will that's the service in XXXX. end, another So in CADXX or costs approximately in demob rent XXXX. got will end

Steve Ferazani

go from right last with year-ago year the on a or estimates your I up over demob inflation, original that? Did costs? that Am

Bradley Dodson

No, they've been consistent in that range. fairly

Steve Ferazani

Okay.

Bradley Dodson

XX about depending million it's on million. [ph] CADXX in total exchange USD XX and rate,

Steve Ferazani

year, of to guessing because just down. a something to but the the like rates wanted on on pretty rooms FX kind couple Then there was I daily was of of for were beyond Canadian booked numbers came mix looked I'm this anything there it Okay. check quarter. the the time ADRs comparably there?

Carolyn Stone

July. release in going into of our offset on cost -- lower have a new [indiscernible] by Lodge. rates as contract that, we forward that's our scope largely We our And adjustments. we noted in and some entered was It that

Steve Ferazani

Okay. about very higher How Perfect. quarter that? food food did is costs. higher costs, service the What's And intention? this slower then but Thanks. a margin labor this, you offset with was anyway. and -- Australia you you know talked low, and on seasonally very, And the do the about talk in your I

Bradley Dodson

cost finding HR the increase. and chain working freight is supply on to trying team is piece food the the the costs team Well, and

we about if how past, lower As labor are we've but a labor in as it employees, using is performance. full-time necessity is temporary to much in a comes principal cost the full-time itself a in manifests issue we can't have opposed and temporary higher employees. talked the The at productivity, which Australia

we're working So scope on new adjustments the the scope clients to with adjust reality. to

supply HR So approach, scope chain, it's adjustments. three-pronged and a

Steve Ferazani

Okay, it. thanks Bradley, Thanks perfect. Carolyn. Appreciate

Bradley Dodson

Appreciate Thank you, Steve. it.

Carolyn Stone

Thank you.

Operator

Our next Partners. proceed. John with Energy Please question Daniel from is

John Daniel

Hi, Bradley. Thanks for taking the call.

Bradley Dodson

John. Hi,

John Daniel

of one on deals When that will -- Can a the to to follow-up of one you cetera. looking et Pico, traditional M&A at, the say, follow-up OFS, they're Just volume stuff. people lot they talk in, speak for doing be valuation on related? any provide color is And are Is helpful. just it how Just deals, opportunities quality color when business? on many M&A you're some property? would of you out not it your there

Bradley Dodson

at that due what diligence. It's -- it's list, say We not an and target find context, would imagine, is that of some valuation. -- can items. it's have your not wish but and list I those, M&A in six And between as had you time. sometimes XX sometimes a time wish it's we've the the a right for them. in the varies To you point, interested

wish while them gone are So sense the down list. right on say I been a focused debt, that another to have been take fortunate been has direction then now, things that on then or -- paying off list in in acquired to would the haven't we've that the we we've

else. been I list internally someplace in would innings the we've there, But certainly while cognizant least decisions. able allocation So hasn't at wish say to we're being pivot capital the of early focused gone of

John Daniel

that a look will, come on versus but side, or majority lack are, of you opportunities -- So just pitching for self-source if at you like how me test, accommodation that the would a say how curious would the the of opportunities to go you knowledge a here all that bankers bunch you? forgive of

Bradley Dodson

these pieces, Generally which interested sourced. -- speaking, in. companies which know we are we're which internally are We service assets,

well. see But properties, business, we'll most pitched that companies idea Of the for that's in course, us. these of part, to occasionally, existing assets, are we fairway an our all the know

John Daniel

Okay, help. education. the tutorial you the for and appreciate I thank

Bradley Dodson

that. for Thanks

Operator

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

Bradley Dodson

and Thank planned the of call thank for look you you all to XXXX at joining with April. first at call on today. end you for your -- quarter the interest forward We our earnings speaking Civeo, for in

So thank you all. Take care.

Operator

Thank conclude does you. This today's conference.

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

Civeo (CVEO) 28 Feb 232022 Q4 Earnings call transcript