Earnings call transcript Q1 2023

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Operator

Greetings and welcome to the Civeo Corporation First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] And as a reminder, this conference is being recorded.

It is now my pleasure to introduce to you, Regan Nielsen, Vice President of Corporate Development and Investor Relations. Regan. you, Thank

begin. You may

Regan Nielsen

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

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

the over turn now Bradley. call to I'll

Bradley Dodson

After and earnings Regan us all which, open guidance give level and first our first XXXX quarter year you for and will and call that will And our of takeaways questions. updated first the a the call. summary full thank start you, then, conclude segment for for a for I'll then today our review. guidance. we Thank joining I'll financial brief with key the quarter assumptions with deployments. underlying reasonable XXXX provide Carolyn quarter

our particularly second the our or main the seasonality in activity, normal of The quarters first in quarter To are, and reflect everyone quarters with Canada. third from today again strongest key XXXX takeaways turnaround line are the our call expectations activity, results were with our in and remind typically business.

million, our own Basin villages awards across revenues revenue contract visibility of in totaling diligence announced business. Bowen expected our five our we additional Today, and Australia with raising AUDXXX several

mobile plan inflationary and XXXX. half improvement increased to expecting our mitigation material in There services share we pressures place wins. the updates addition, the expected counter Canadian To in second for and of Australia in we our no have to demobilizations. integrated integrated a Australian see with in business, are camps outlook recent contract services In in our are have market

our counterparty shaping Encouraged XXXX. our second after by focused well team Canadian is quarters and activity for the or selling is Lake third interest the received on assets expiry turnaround of up to-date, current McClelland contract. redeploying of

execute share We the continue program quarter, back to to the we'll on opportunistically in continue first repurchase shares. and buy

have previous disclosed majority as Lastly, of the calls, the of have point remainder where is over on US segment the the and we our immaterial. reached divested we last XX US the months business

as will the separate we segment business no SEC and filings in report longer a US our Moving materials. forward, investor

take a me and and declined moment two update Let consistent revenues adjusted year-over-year. business a were our segments. with our our EBITDA to In Canada, expectations on provide

quarter-over-quarter. the also Sequentially, pipeline the our mobile and dollar, While the revenue to decrease adjusted flat driven was adjusted of remained Lodge weakened relative be construction due by Canadian as dollar revenue a a well camps to in our activity wind EBITDA decrease US decrease attributed can and down to primarily inflationary as EBITDA pressures. contribution relatively from Sitka

from adjusted Australia, primarily pressures a to and saw with services we the integrated increased build integrated associated increased in by increase the in Due declined inflationary Civeo-owned revenue new For services year-over-year villages. our however. driven year, during business, revenues, rooms contracts EBITDA

call. the we're handling to speak inflationary later how pressure I'll in the

of Australia the dollar to by a weakening were US Australian adversely in the results quarter dollar. relative also First impacted

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

Carolyn Stone

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

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

first continued quarter to and inflationary as the constructive the Canadian the the mentioned, relative pressures. dollar, decline period related XXXX just largely the US same to As and Bradley of wind adjusted pipeline dollars Australian in the due activity Canadian experienced XXXX in weakened of in to we was EBITDA down

These related to assets quarter, was assets. working cash typical million certain primarily seasonality in decreases $X.X cash by on offset by driven in a US million our of a sale in which negative partially the gain flows. of were flow of largely result the the of quarter increase divestiture capital was The free the $XX.X

of segments. quarter quarter in begin segment ago results first Canadian a first with the Let's of compared a now turn for performance to two the year review I'll to XXXX. performance the our its

$XX.X Canadian decrease from the a from was first Adjusted the in revenues in EBITDA quarter of million XXXX. quarter compared million of year. Canada to as million, $XX.X $XX Revenues first segment were last of our $XX million in

Results from the revenues which dollar, decreased of to respectively. $X.X XXXX the quarter EBITDA of dollar impact weakened $X by Canadian reflects and million first US the million, a relative adjusted and

remained due construction with launch revenues basis, to Canadian wind down from decline currency pressures, contributed our in activity, an contributions the Lodge offset a EBITDA to the Canadian constant Lower in increase revenue, activity. by inflationary decrease mobile adjusted of camps to and camp year-over-year. Sitka in flat due a relatively coupled mobile On pipeline

the lodges in the from year. up in was quarter $XXX,XXX, During $XXX,XXX last build which totaled quarter, Canadian first first rents of our modestly

dollars occupancy was run to rate due US in the declined and $XX, dollar segment mix year-over-year which daily the the to relative Our dollar. US weakened for Canadian Canadian

Australia. to Turning

quarter quarter, of from EBITDA $XX.X recorded Adjusted $XX.X year. $XX.X the $XX million million, million first first was up million, the down from in we revenues of XXXX. During last

$X.X impact Australian by of quarter Results and $X.X decreased and EBITDA adjusted weakened million, from a million of the respectively. the which dollar, revenues first reflects XXXX

services was contracts. currency own by in villages Basins, constant and the the integrated and related occupancy a our for higher business our to largely Canada increased basis, driven On new revenue increase in activity Bowen and

integrated However, year-over-year. inflationary to led primarily EBITDA services in with a associated pressures adjusted business decline our

villages recent the contract customer first XXX,XXX of as due quarter Australian build from increased to in owned were as runs at XXX,XXX in XX% and well our wins. the quarter XXXX up demand

The the Australian driven rate The quarter first was daily daily dollars was first by average was average rate $XX year-over-year. dollar a actually up modestly $XX in of the dollar US in Australian as weakened was for entirely decrease in Australian from the quarter, XXXX. which down villages

for both spending first the basis, a this were to in quarter capital of lodges predominantly XXXX. during were On $X.X on period the and expenditures million in same year consolidated to million related Capital compared expenditures $X.X our villages. maintenance periods

quarter XXst, from XXst. times $XXX.X March on as outstanding December of And of slightly to million since debt $XX.X net the times total December as our was million, a for increase XXXX, leverage increased X.X ratio XXst, X.X March XXst. Our

cash hand. for March liquidity consisting our share total approximately And our a cost total revolving the of had repurchase first and XXXX, XXXX, of million. we approximately million $XX.X on under million $X.X XXst, of we available As $XX.X facility shares million, of of of quarter in repurchased program $XX.X approximately through credit XXX,XXX

will discuss updated Bradley guidance for Bradley? now our XXXX. the year full

Bradley Dodson

would that the our Thank related you, full consolidated turn updated two on like I the year each a assumptions at guidance now to to regions Carolyn. guidance. basis, for of XXXX discussion the looking to underlying including

to our previously $XXX EBITDA $XX adjusted adjusted year provided EBITDA. We million ranges are and $XXX million to of guidance maintaining million and XXXX of $XX million revenue of revenues full

by $XX increasing this Australia, customer specific entirely our expenditure important upfront. a $XX Basin three previously increase can fully requested to customer However, villages. has late XXXX upgrades the announced contract of upgrades our million in the is million. to year driven guidance note by guidance range capital we are capital in be of Bowen to full These It's where a funded expenditure to

relative to not flow guidance. To will reiterate, have on guidance, this free our our expenditure XXXX initial capital material increase impact a in guidance, cash

on our guidance full taxes, CapEx interest As year million expense minimal $XX of expected million XXXX result, maintaining million for $XX expecting capital flow guidance, a of inflow this through $XX guidance, $XX and running that guidance to million. free cash the and we cash expected XXXX of are of and working EBITDA based

by are down increasing turnaround as sands year-over-year. remainder at I'll solid sands quarters oil we'll -- in we Canada, rooms to XXXX, of at experience well with region. look now and outlooks regional third activity year second oil provide and expecting we the look In the the billed of the

as by billed as will projects CGL as construction This and partially pipeline, lower TMX Sitka be lower activity the construction well camp rooms mobile Lodge, our in are offset completion. near

be contract no As of Lodge McClelland it customer XXXX. will in needed XXXX relates support guidance, the customer of through lodges from to and in believe demand we change manage Lake is the underlying June XXXX there as the to expiry that Civeo lodge, this our in

and perceived counterparty strategic Lodge current Our McClelland for interest team are the expiry is alternatives we the we assets of beyond on to-date. contract, by the encouraged focused that Lake

as details Lodge of it contribute McClelland to protecting could negotiations, ongoing moving the financially provide interest cannot how we further any forward. the Lake relates In

camps, since mobile changes there Canadian no in assets our earnings our the last to call. are outlook material regards for In these

continue to as We expect completion construction complete. wind to the down during camps activity nears is or pipeline XXXX,

approximately in expense me, demobilization Our expense XXXX, million in of $XX $X excuse in includes XXXX, $XX million demobilization million demobilization -- of sorry, guidance of expense and XXXX.

continue as We update progress shareholders to year. will we the through

villages Bowen in we our we customer Australia, continue owned of to regards of This signs integrated well securing an owned services as to interest forward. continue moving uplift as today's growing to across by see the activity for and Turning the our in In experience Basin. contract encouraging announcement demand customer awards in initial supply business. customer growth room to evidenced villages, our is

comprised these and AUDXX contract million million award outlook contracts our with current all AUDXX Australian short-term the million five-year, which current works renewal; in awards five of XXXX, a in contract and AUDXX guidance. contract Specific of totaling derisked contract three renewal; two-year our to a

numbers dollars. of were Australian All in those

in upgrades, be expected complete funded of the upfront. villages. in previously we XXXX, our customer Australia, fully Australian by to three which the contract above, will As announced conjunction customer in These noted land the specific expect upgrades with to

inflationary Australian increased recent benefiting two last be our to burdened from revenue but Integrated the contract to severe it's over quarters, continue Services from by awards business, pressures. Turning

to it's a a three-pronged have We place plan attack now this, approach. in

a we labor, on in recruitment effort First, have focused HR place.

freight efforts on contractual and food making we're to the flexibility adjustments is chain inflationary supply extreme given the Our And provide work seeking and inflation. cost relief environment. to

our laser-focused strides Integrated our We're of certain XXXX making Australian effort includes on these half team initiatives. all second in the of fronts our is inflationary business. by Services impacts The on guidance three mitigating and

key conclude by XXXX. elements navigate our through as strategy of the will underscoring we I

Australia; well-being employees and maximize debt. with is Canada capital manage free structure to continue cash opportunity on enhancing capital will prioritize in to the mandate to across guests, generation we hospitality manage continue our and while flow allocate our we we offerings; as best-in-class return outlook we our focus prudently our and the we safety Our to follows; accordance and communities; shareholders of cost

diversification. revenue our see further also We opportunities to

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

Operator

Thank you.

conducting We be will now session. a Instructions] [Operator question-and-answer

our & first line comes Steve with question the with of your question. Ferazani from And Sidoti proceed Please Company.

Steve Ferazani

any Brad, sort the Morning think down all on the the do about provide further of everyone. any cadence camp this? Appreciate to have call. can us the or you -- detail information of in detail terms of line help you mobile

Bradley Dodson

we point, four for will and and this for this demobilize at expect year, the other now, GasLink, Right Trans out expansion. we Coastal camps So, the will running, year. the the had that demobilize one next two Mountain two four three of

of or year -- we're of it's again, in earlier, with demobilization demobilization I fourth costs expecting the be of it to portion million the this mispronounced missed and largest of So, quarter $X grid in demobilization $XX the I now. -- XXXX we to assets on guidance. conclude of costs. all activity XXXX But what of as XXXX, And million in the for right know expected the have are we'll

Steve Ferazani

camp Having your Sitka. that's mobile downs at Okay, look build okay, build the up I said affecting Canadian wind rooms in year-over-year. and were When rooms that, fair. sequentially your obviously,

get that still terms cautious in market CapEx could pointing you sense a add a much Sitka. the all of your Mountain to CapEx? of sense why coming. somewhat to argue with with I'm Canada All in moderately get higher better Trans -- -- in if you higher could this signs than year, to in in Moderately decline trying point you sound more signs accommodations things on much how

Bradley Dodson

for conflicting would continue XXXX There's total I X.XX certainly in -- we year Canada. X.XX assumes the point. room Last year, million. be guidance we Fair to optimistic say and did on million nights

modest a So, increase.

treated. because your major turnaround would specifically, in CapEx. Canada, more of say I a -- optimistic would be oil But that players in feed that But on several activity are we're had to sands which sands signs, which conflicting looking -- reduce in oil lot there comment around made headcount comments public would the are we've two

be would because risk. that a Should they not of right that case. the that occupancy out, that that's we're the current occur, assuming indicates, play if that But now, none

would while of, is but is say, would Sitka. your being the now, in guidance, say, down, is say we're XX% getting Sitka let's unfavorable modestly because nights to room I of activity I by right the year-over-year the mix up sands oil So, tune up, offset

we I'd follow -- very the but in say some I'm than out it of what are I obviously optimistic that Right now, signs. the CapEx certainly of conflicting there's data are, announcements So, terms closely some there. points more

Steve Ferazani

Okay, biggest that's larger can that better are know fair. service obviously, to And But and Australia, a generally There's get? how mix the very then to are labor margin. costs up Thanks. lower I revenue of much I speaking, contracts, this, know turning which piece nicely.

And that point, terms quickly you your availability? you this would holding COVID again and have addressed Because it this back how I this would new out. right, restrictions can that? as in the the We thought came mean revenue labor been morning. growth -- What's announced you on there address is of remarks, better at have contracts

Bradley Dodson

Yes.

So, of EBITDA the on key generation focus is on villages. think to -- in the their of vast Australia the own the is majority out I

in renewals pretty And the we running that the quite today short-term we're contracts there, with and occupancy. owned additional frankly, villages, announced strong so the

the almost effectively that of going XX% end locations. second rooms of full the have. of number owned the That's to total so two we is [Indiscernible] Coppabella of our by be quarter, major

[indiscernible] Whitehaven's well. [ph] with pick starting project. basins Dysart And Bakery to up of is doing announcement two the quite the are

We to half, to -- guidance. to second start in up pick that pick which the the grew start the expect to upside up

So, villages. for that's where Australia's key -- that's the owned

years. Integrated the fairly come Services business. in team growth, And Now, services pressures the inflationary Western three business done the a largely, majority that great to where from going last COVID businesses of of the is as are because you our the over building mentioned, likely job Australia integrated Unfortunately, the has of significant.

see now. starting the of two bureaucracy Australia, lot years made influx almost And the for slow, kept to we're a federal to now, part, it So, brokers policies that two into been place, foreign the been -- very it's has very, of years better things facilitate have the -- but help difficult. in of because but

months, point. That cooks that are starting But we're starting last a the to we've sticking coming gotten big got foreign we're in get a number we've -- are in three process. chefs XX in

piece on that other is difficult the full-time the employees hospitality labor the it's very side The hire other side to chefs. on housekeeping and than

progress. making is team the So,

We quarter. improved extra But one expect in second it quarter, to we last improve spoke. the the month time It first we only throughout had the month-to-month.

in see to quarter our our half second So, improvement should of support end that the will and trend material a and continue, guidance balance the guidance. the that second upper -- year. We the year the the of of second meet

Steve Ferazani

Okay. the Thanks Bradley. Appreciate detail.

Bradley Dodson

you. Thank questions. you your and the for interest Thank

Operator

with Stephen Gengaro line from the And with our your of Stifel. question comes question. next Please proceed

Stephen Gengaro

Thanks. everybody. morning Good

about I gas But in a played LNG that know an bit for we've you know historically. this. about in the you're the into? past you a little I Bradley, bit source looking opportunity there there talked Canada can Is First, little haven't -- there talk Canada,

Bradley Dodson

-- right we're we any now locations Yes, in so the plan on Montney. don't

That's assets multi-tier to opportunities the -- to mobile been focus. an It interim camps It really construction looking be really the work. looking could pipeline an major for as have redeploy opportunity We off come win is in to for there. the they for projects.

Stephen Gengaro

on on free thoughts you balance two do things. -- about we when cash there do is get to You allocating as towards reduction? years buybacks de-lever. think continues for lot you a which your debt the Where particularly your more point weigh options, sheet, flow, generated Is you more right? aggressive at I of there? One versus two have How And come capital you ratio stand down? those Thanks. a leverage guess,

Bradley Dodson

I can it wouldn't capital want I to would good keep a ratio, we would Certainly at certain leverage the significantly. ratio increase in spot look we to for to look allocation that opportunities, increase the but in is leverage X.X. range. So, like it --

As very buybacks about certainly were on unfortunately, trended. the The returns we price where attractive, attractive. stock think capital on deployment, -- has the returns

And the we're allocation formal It's that have a with allocation hopefully, -- out year, capital end out. policy policy. of so have we by we'll working And come something not on. the capital formal a

of because To last our a everyone, of difficult for a into is us, as which combination cash out years half of first for impressive the up quarter, That's first coming quarter the just every turnaround little fourth the of ramping strong has activity. year in in for It's to half. quarters into ramping the second third flow. been second and quarter, -- first remind the the half four softer not of seasonality for very the us a the up

receivables an in So, have increase you typically.

also is several insurance And half property in annual the cash premiums. flow -- mainly and taxes first outflows, slated

as see cash half stronger. So, to flows up, we're much And cash our be go the out. tend going then receivables seeing that you flows year,

but So, to back be it exists conservative, going certainly we're stock. roughly there be to buying

Stephen Gengaro

paying the Great. that that ahead statement? mentioned one. The on show of one the increase up CapEx And contract. just that How is a I entire final does believe the customer increase basically income you

Bradley Dodson

to the million payment, the Moranbah. portion They've So, of make the Dysart capital second work, when already should we'll we quarter, in for customer then Coppabella, is us that. prepaid And paying start second amount. three a improvements which make prepaid entire locations: of be $XX approximately at and we a

from will length the the of amortized be revenues over that The contract. five-year

then balance for we'll And in contract. be some the was the the five-year there quarter. of amortizing first So, recognition it

Stephen Gengaro

all That’s you. Great. me. from Thank

Bradley Dodson

Stephen. you, Thank

Operator

proceed with the question Dave Please from next with question. Storms comes your of line Stonegate. the And

Dave Storms

US Or question of the standpoint, had that on give color of A Thank one I Any would some you that from good helpful. Killdeer the there them? million $X.X and increase. Was the acres? be morning. you and saw divestitures is from Canadian could you quick

Bradley Dodson

the we units acres. Sure. have of Killdeer, for both and sale. which sold held Canadian are are the in have still Canadian in acres We that of to the still We housing off land sell planning we

Carolyn Stone

is not. Killdeer

Bradley Dodson

held not Killdeer is sorry. for sale,

Dave Storms

current be wins, then give to this new bidding couple announced Understood. please. information contracts of environment couple you further on would quarter. of And a can also Perfect. well, see you the great a Any helpful as us

Bradley Dodson

you sorry, that? I'm repeat can

Dave Storms

Yes.

Sorry.

on especially after could current announced you Just give in seeing us bidding any environment, color wins the Australia? you new

Bradley Dodson

I we've comments, the as going Well, effectively and to mentioned that's second prepared in be Coppabella. fall year emphasize through are shift. We're of half and two There's clearly a got that this. to Moranbah trying the locations the

moved surety of customers to The concerned being about rooms. of have supply

so announced drive are of that in securing the are activity. that And wins three their really for home, turnaround they supply

of are making total these six, three, in the sure contracts, their are million So, have that AUDXX that's rooms available the that they nine-month for staff. really turnaround

announcement the opportunity of up of That's picking Basin project. of Canada start beyond to half back more XXXX XXXX the Vickery the and and With in build that a also project, expect Whitehaven as we activity. they opportunity

in So, it's upbeat. very I say would that Australia,

that there. actually to year. turnaround but be could it's that mark. It better. Canada, even In I I'm optimistic there's big be a is looks upside like would good question XXXX say a going

Dave Storms

That’s Thank very helpful. you.

Bradley Dodson

you. Thank

Operator

now would the back no to Bradley I questions comments. Dodson And any at over time. floor turn further to this closing for like are There

Bradley Dodson

end call speaking joining appreciate second everyone, call today. earnings We for truly our of July. to you, look at the your forward you you, and on in quarter John. Civeo the to interest Thank Thank

Operator

And today's conference. that concludes

a disconnect Thank have this You your at for lines time. and participation, great you day. may your

Civeo (CVEO) 28 Apr 232023 Q1 Earnings call transcript