Earnings call transcript Q2 2023

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Operator

Greetings. Welcome to the Civeo Corporation Second Quarter 2023 Earnings Call. [Operator Instructions] Please note that this conference is being recorded.

At this time, I'll now turn the conference over to Regan Nielsen, Vice President, Corporate Development and Investor Relations. Regan, you may begin.

Regan Nielsen

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

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

turn over I'll the to call now Bradley.

Bradley Dodson

on earnings Thank you and you, Regan, thank second today call. our all us joining quarter for

the segment takeaways then we'll updated with and quarter that point, XXXX our for open second quarter with the regional that brief of provide start up questions. underlie will level XXXX full and Carolyn assumptions that. year the key a our At and summary call for financial the review, performance. second guidance a with give conclude I'll I'll Then

and our were The our XXXX the results are, our call in revenue of highlighted expectations, line second key financial diversity drivers across with business. quarter today from takeaways the

performed villages as well business segment as we integrated growth own our business. experienced the Australian well Our quarter year-over-year as during both substantial sequential in and services the

the Villages achieved we've Basin during quarterly we integrated XXXX, up that of over are by services benefits owned seen the Basin with highest contributing XX%. that and seeing Bowen were village months. XX past Australian-owned announced we that XX% and as well. have contract both were businesses, important villages It's note year-over-year, awards the activity, Gunnedah increased Village services the guests led the the since revenues In occupancy customer integrated up the quarter, to we

expected, billed versus as to Canadian camp widen resulting of contributing lodge Canada quarter activity mobile quarter second down and LNG for in rooms the British continued the Columbia, Canadian us in activity in XXXX. reduced lower to

on to inflation Australian last benefits our discussed majority to progress underway, Integrated encouraged the date. the and expected As team's conference plan efforts XXXX call, these half and forward. The second seen mitigation going we Services by from be of in are for earnings are is of our the

the are party. assets as was Lake asset, Canada. in priority an We've second third towards Our progress negotiations Lodge for made to regarding in a future the sell that we McClelland attractive commercial to significant active of alternative

encouraged are proposed the time. progress but date, our this discuss to We by cannot details deal the of at

XXXX. In clients. efforts, customer January the due addition, assets room to is our part demobilization through to that under other our reimbursements former similar Lake from a net has minimal, costs is we take-or-pay related be to for The contract process expect our underway. lodge moved from and McClelland in demand lodges team's demobilization the Through for

since The camps changed outlook for our materially last not Canadian our has mobile call.

year. quarter, this in second the last commence discussed to half expect we demobilization the As of

shares share our And buy second points. repurchase on execute program to and the opportunistically will going continue We back in on key quarter lastly, forward.

sharing we as sheet we million that year. later outlook, As forward this flow capital with strong allocation $X the our hopefully cash incorporates of free discussed in previous are in you solid balance we and process calls, framework look our to position

by increase was In dollar. of to due in increased the weakened adjusted the was however, to decline EBITDA well Canadian a a dollar and provide lodge substantially lower revenues the me U.S. moment Canadian the Canadian brief year-over-year mobile our and also the activity EBITDA as declined billed Sequentially, decrease segments. seasonal across driven by year-over-year, relative to business camp down The wind revenue Let the turnaround rooms. as activity. take adjusted exacerbated update Canada,

saw significant adjusted at were our by billed increase driven integrated largely EBITDA, owned contracts. rooms we villages of from increased from a revenues Australia, service new and in which revenue year-over-year both For and increased

noted in in customer increase As are earlier, that which quarterly by encouraged the village reported highest we since the we I substantial resulted XXXX. owned occupancy activity,

milestones We benefits year. also like reached in begin the of this inflation second end towards said, key realize quarter. in mitigation our the the those we'll I half And initiatives of to

in dollar However, uptick adversely across inflationary to Sequentially, the Australian relative EBITDA quarter and as our the in integrated quarter experienced we second the increased as seasonal dollar. business, second business. to our U.S. were by impacted well typical the adjusted the Australian some relief results the weakened revenues dynamics services aforementioned and

we've strides It ours Canadian made inflation both while mitigating future. to our is remain that note in pressures a we inflationary and expect of in for foreseeable Australian that will businesses, the focus important

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

Carolyn Stone

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

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

lodge and was decline just experienced wind EBITDA down compared recent largely Canadian Bowen that increased occupancy. camp by from LNG-related our due we offset the contract pipeline Canadian and Bradley were and in as services activity XXXX, rooms in Villages These integrated in the therefore, period to Basin Australian quarter our of construction billed increased same adjusted in partially our decreases of revenues mobile wins. to As the activity, mentioned, lower second XXXX and EBITDA the Australian

second our to performance our begin as ago performance second the the in second Canadian of XXXX. to Let's of the Revenues million, dollar, XXXX impact which from quarter compared and million and $XX.X Adjusted $X.X weakened relative review its second reflect segment of Canadian I'll XXXX. million quarter of was the respectively. adjusted a Results now segments. quarter in million to $XX.X from two Canada $XX.X $XXX were U.S. from second turn in in year revenues for revenues quarter a million with decrease of decreased the by of to the segment a of million, results quarter the EBITDA EBITDA a Canadian dollar $X.X year. last compared the

a with due down, mobile basis, to year-over-year declined to currency aforementioned decreased billed construction Canadian wind in pipeline the lower coupled primarily a continues EBITDA decline to activity camp On also rooms constant X%, revenues Adjusted as in lodges. our due dynamics.

was $XXX,XXX, quarter the During lodges XXXX. second our billed which rooms the second from in quarter, $XXX,XXX Canadian in of totaled down

due Our daily Canadian run which dollars to was relative declined in the The daily weakened a dollars segment U.S. was U.S. run year-over-year. dollar. rate in up average dollar $XXX, for but that Canadian rate entirely Canadian to was year-over-year, the

Turning to Australia.

$XX.X During second from up XXXX. Results in the of $XX.X revenues second we quarter, the recorded $XX.X million of EBITDA up was quarter Adjusted last year. $XX.X from million, million, million from the relative $X.X the quarter million U.S. EBITDA adjusted the of second XXXX million, which and of to decreased and revenues by weakened Australian respectively. reflect impact dollar, dollar a $X.X

quarter, revenue customer both quarter XX% second average On by own quarter the the contracts. a down constant largely dollars Australian the new U.S. and villages recent higher was $XXX,XXX occupancy basis, was at increased increased villages the EBITDA due related by modestly in in year-over-year. and were in room rate up Australian second from The driven awards. demand second Australian integrated and villages rate owned XXXX, daily $XX at in dollar. average adjusted by currency $XX driven quarter to contract for in the Australian in activity in The entirely from $XXX,XXX, of XXXX, the to increase our our rooms driven up services business, the weakened billed our of our dollars was our for daily

capital a activate predominantly expenditures increased our spending coupled period customer $X.X both in On $X.X XXXX. Capital to million with second Australian mothball demand. in and maintenance rooms related on periods for consolidated during spending to village lodges the villages, million were expenditures the quarter were XXXX to basis, with of same compared

Our total on since XX. debt million, $X.X XX June decrease was March million a $XXX.X outstanding

as remained for Our XXXX. XXXX, the June quarter since March XX, flat ratio at X.Xx of leverage net XX,

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

our repurchased total million. shares a of quarter XXXX, through for program second repurchase the of $X.X In we approximately share cost approximately XXX,XXX

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

Bradley Dodson

you, discussion updated I'll a each our outlook the as including the full basis, turn consolidated to a now well related of Thank for underlying regions, to guidance. on assumptions year Carolyn. the XXXX of guidance as our

resulting We $XXX to our for the lower revenue EBITDA year $XXX tightened million for are range, $XX in million of ranges of guidance million adjusted EBITDA. and $XX XXXX revenues increasing million and full to end

scope The prior changes million decrease in CapEx our We capital guidance Australia. -- entirely XXXX a driven is by full $XX are infrastructure expenditure to customer-funded decreasing our from million. project guidance to by $XX year

portion overall capital into was be of the a spend that expenditure for this XXXX, adjusted The year. requested outlook scope downward will reduce which and will deferred

reminder, fully cash not to guidance in a be XXXX relative will free the will Therefore, flow these guidance To or the XXXX capital As customer expected capital reiterate this upgrades decrease upfront. the previous our project, guidance. by increase related funded flow point, is cash impact any to to will be expenditure expenditures neutral. decrease

to our cash Based are of and expense of range a customer million free $XX to million related $XX expected to inflow XXXX. on cash $XX this of capital expected The interest minimal $XX working expected million. flow guidance, EBITDA that XXXX we and CapEx for adjusting million reimbursement taxes,

in assumptions. lodge we XXXX, quarter sequential expecting I decline the activity will outlooks and now camp corresponding turnaround activity year. Canadian to in remainder Canada, and provide look as we the this In mobile third are at the of regional of experience underlying

are Civeo and relates guidance end for Lake year. lodge, the securing our the As the part the underlying contract for that other lodges we the lower to McClelland remainder in customer a of take-or-pay to the for contract of raising customer's the demand it at of room range, demand expiry Lodge

to the are negotiations call, to I year. the active in mentioned assets earlier we a As on party third later this sell

due client. from minimal We net costs to a expect part to our reimbursements be demobilization in

to and Civeo. In we be ongoing the outcome encouraged protecting negotiations, the interest by are progress positive further We yet this details. to date provide cannot expect for of any a

are Canadian our mobile there camps, no quarter our earnings the assets call. first Regarding since changes in for outlook material these

USD XX camps to of million pipeline We demobilization in wind completed. half next million the expense and of With this is the to approximately down year X of year. USD this demobilization as expenses second year construction expect continue

Australia; second demand in our quarter. and see in our XX% uplift rooms for billed villages in of activity, evidenced we customer signs encouraging growth customer an we as owned increase In Turning in to the year-over-year experienced integrated businesses. villages, services to continue by the owned

recent increased mitigation our on. services plan few awards integrated over the we and revenue Our the inflation contract business benefiting last from are that is from quarters, focused

approach X-pronged and provide supply a HR through pressures and seeking work adjustments environment. inflationary contractual recruitment efforts attacking in scope optimization, this been flexibility of and adjustments, we've reminder, a As chain to relief

realize The and team approach, and we these with mitigation the made the second progress from to substantial year half of benefits this the majority plan of expect in beyond. this

our We and half key is expect end to of XXXX the the progress adjusted our throughout for guidance. Australia, improvement XXXX to in increasing and lower date margin revenue of full second generate year EBITDA factor another

flow you the our for As framework. final with continue and beyond evaluate in allocation discussing cash stages free We're look we look this that forward of this at to [indiscernible], process we -- and our year. as capital XXXX later to outlook

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

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

hospitality best-in-class structure a maintain We while maximize accordance occupancy manage allocate the generation, continue to with capital shareholders our to we and cash enhance prudently our to balance capital flow return strong free to offerings, outlook, in cost sheet. continue

further revenue to We will opportunities our also diversification. seek

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

Operator

Stifel. [Operator And question first from Gengaro line the today Stephen comes with Instructions] our of

Stephen Gengaro

the I when are first the capital if would was you they capital be think, you you mentioned is sold Brad, any allocation, those Lake about made you asset, assets? comments there if same on think when the kind of the maybe one, McClelland allocation, lump-sum,

Bradley Dodson

Yes.

Stephen Gengaro

you little the in a seasonal patterns can of year. and the for business EBITDA and When separately. third we historical maybe generate But general we geographically, bulk the the clearly talk at about look second in quarters bit of your them the Okay.

Is different? XX%. given I -- progressing to the Australian year? XX-ish, pattern year? it comments this think Or the throughout generally, bit made think similar a be margins about Could maybe numbers I it's about the you that

Bradley Dodson

that the bone. that No, expectations that I but We're trouble exactly more some the of the impacted sequentially, and customers to This every XX% the a see everyone's labor our QX There QX appear are but There see think meet an out with slightly are uptick, stay coming activity that Canada. in. some and be wind quarter. the in activities down the same. mobile did was we'll anecdotal but doesn't minuses, year. our see going in not little Australia. up surprise should points put the and you here an mentioned, pluses -- as camps, We it in on did finding having year-over-year, you're of won't margins second comes right, it the and But some to did We'll uptick I'll start you -- as and be of same. will meat an but it We turnaround of turnaround EBITDA the see different. year uptick; of

historical the the So average some will minuses, and same. remain pluses but

Stephen Gengaro

probably year. the the still Just seasonally That's Australian mean from comment the fourth you right? improving quarter adjusted a throughout about comment, is I quickly, down third. margin the made margins

Bradley Dodson

Yes.

Stephen Gengaro

Okay.

was make to wanted Just sure, correct. I

Bradley Dodson

very Canada. starting total The is the in No, our to mean, Bowen in the integrated up, a a larger; number in in we improvement certainly or right. sequentially, occupancy in material seeing Bowen in a to the -- particularly Basin Percentage-wise is That's half owned -- the That's significantly expect at Basin, of although good in point, significant we but some terms seeing see grew Australia. are percentage. market the We'll our villages to strong Stephen. correct. we're And a of services most is volumes. second really that's see so I margin going tighten uplift

Australia but good. is -- looking the So

in markets. we're think I both

you look second it rate, the very the per daily got the we person in If per so much close. paid day -- if pricing Generally, average currency local daily beating average how that quarter, versus at costs. has not,

progress are the I my so going very wanted, at inflation. the been are And just I as away. we that mentioned on think some end the good that. seeing covering teams has introductory And comments I making inflation of of

work still to we're So making there's do progress. but good there,

Stephen Gengaro

Great. just million $X more been And been I'm -- around Gaslink. said clarify, me. at? of there's costs I I demobilization XXXX for the for one just any those missed you've you number. you looking curious then wanted if I assets XXXX opportunities think in Coastal to that

Bradley Dodson

the carry-on construction So the made XXXX say not won't follow-on abundance number of for assets, there's related million, other work opportunities, pursuing are those said I And for and which of we opportunities US$XX there are but is but of to an other maybe some initial opportunities. pipelines, work.

Operator

Steve next Sidoti Our question with & Ferazani is from the line of Company.

Steve Ferazani

Bradley, Carolyn.

margins are question. contract follow-up expected timing be there? some Australian to rollovers? power can margins much starting Just by the how How much you on see pricing of And

Bradley Dodson

somewhat the I've that This say me I've we over mitigate Australia in about that, -- for with to -- beginning specifically it's running Let that rate the which thing, good we're -- some the put seeing that's been is working we'll daily that the part. a AUDXXX first the customers seen. rates what a mean, would I worried maintenance where highest going be higher incremental tend commit address Basin. multiyear toward well, be -- of increments now. customer a customer are casual years will their of blended I rooms We're but business village and average offer XX those to ability a contract, on Where for and is some availability won't and rate. night of than seeing, and And the a we're in AUDXXX on to Australia, we'll basis, rates, or is the pricing. line won't be much take-or-pay the pricing, peaking turnarounds the to multi-month lock good that commit seeing if to of they're typically top Bowen for always rooms take-or-pay typically, casual if needs And a it's they to small but even work. a we're up get

Steve Ferazani

how on and affect then and rollovers And line can contract that top pricing?

Bradley Dodson

last Basin with about in X-year X clients. X I'm We rooms thinking our locked Bowen of specifically chunk a the on a months in -- big basis

but contract And to roll think will specific in midyear the one can Basin number need work that me, we that XXX-room next today chunk and of of front over think, so big that There are about odds are of locked I up only a X,XXX is of I that, of ins are on. there's have the that in magnitude, don't rooms, X years. but certainly I X,XXX in the order between occupied Bowen year for

Steve Ferazani

Great.

quarter progress you has And and getting you the on mentioned you been difficulties that costs about side the it it talk and talked Okay. of can are you more still success? other it wider know there? Or challenging? finding any that, is efforts. last which to recruitment pieces Australia, then I and the And labor

Bradley Dodson

I same I have yet. vacancies. that struggling temporary direction, the would labor. still materially would say We're a we're not trending still moved but it's We amount fair of in say with

As less we having It's up less costs more. pick also pressure on end the because up it mentioned And in to slack. the past, they full-time productive. it staff It's the puts safe.

So the team on it. is acutely focused

putting think that. say manage quarter. -- the much the in in place the we're I'd first pretty I were end the of But to at right we're same spot we're people we

optimistic that to so on get of relief we'll as some to some labor And I'm improve will to it that, mitigate have help that. relates continue contract we'll cautiously it.

Steve Ferazani

versus last high you rooms? kind -- even a is. number, us year your provide includes could a it's actual of Canada. turnaround say a in in Perfect. And year you'd of billed kind Sitka, we playing terms and it of on that so give rooms out this more then what last clearer on versus if sense any little at trend is turnaround if how is bit what color obviously Because Can hard you year activity the look not

Bradley Dodson

up were be had to to in thinking we XX% came in we -- versus 'XX Yes. I 'XX. going turnaround activity, XX% we mean

So what about were the I of more expecting. up, to going so we're believe we but X% range, to in be half X%

Steve Ferazani

think you labor that's costs, And Okay. with no wildfires? issues

Bradley Dodson

Well, on well, at safety -- this XX/X. at team stays been been risk. quarter thus our None have assets our almost far of have

been at risk is and However, has chain what communications. supply

And working we where we and closely. the if make clients help so been to municipalities have that our are evacuates sure local that needed. watching that can with the there We've been

April, were so onward. fires not then, of had not that our we endangering evacuation a since customer that we And in asset anything actual had but But asset -- serious back we since on XX-hour haven't May.

Steve Ferazani

don't affected whether decisions But that further? think on you do customers' to

Bradley Dodson

No, I'm sorry. more It's -- one very don't impacted. I customer that's No, focused right we that think well, cost have now.

So that's impacting spending, it their availability. I believe was major another customer,

Operator

is the Dave [Operator Instructions] question line from The Stonegate. Storms with next of

Dave Storms

want that's demand? and Just the that touch their of that to to with drove Wondering client could that's the reduce indicator specific? customer you scope. that Or adjust an start of their them kind macro more if scope CapEx? is what adjusting something on Is

Bradley Dodson

Australia. enhancements of they and costs be the I the -- village That the done to the run that. line improvements try scope customer done their related own of change in specifically to security came as the at decided that the the to in, rooms And at were Okay. doing they've to we're the security way with own that guess, bring their because we they is These villages. honest. own request down villages that on in

is whole funded by the thing them. but -- So fully

Dave Storms

that I want sure just Got macro it. make -- it. to wasn't Got [ph].

Bradley Dodson

a macro. to it's -- not no, was not -- that read-through not It's

Dave Storms

sequentially Bowen rates both Australia And then about other currency than on and like there just basis. anything already, kind the a could Canada both you little markets and more the we driving if in know but daily I that's of it average constant tightening seasonally, talk Basin? touched just the the up, in a Is coming specific Perfect. rates on

Bradley Dodson

the tightening Basin the most is there for Clearly, the of Bowen significant factor.

Carolyn Stone

adjustments. CPI Also

Bradley Dodson

adjustments part CPI of then related And -- the what's covering it's inflation.

Dave Storms

Perfect.

Bradley Dodson

before The of base CPI rates flat are kind adjustments.

Dave Storms

that. Understood. appreciate just more, I could. if one then And I

front, things I are markets, are of seeing any markets anything you On to the either the movements there? Australian the M&A soften in guess, acquisition starting specifically, more and

Bradley Dodson

given the one-off No. more it not opportunities. in activity We're looking is asset at And levels softening. Australia,

that how So we'll plays have to out. see

Australia. if we reasonable significant near-term say We transaction. available, nothing as some to continue see if asset is We'll potentially that Canada, transactions pursue reach -- but to what's would I we're a as In it. in see can that starting or

Operator

Our the is next question Gengaro with of Stephen from line Stifel.

Stephen Gengaro

to for know early. us I give you looks one like? a XXXX Just me. what stab, Would be it's willing

Bradley Dodson

parts. We've It's a lot too early. yet. pen our moving And not put of teams paper to got have

soon And as as have point. too as so possible, but be I know, clarity it's outlook, at to we soon -- as transparent know it's early as important. some We'll we on as you try this certainly,

Stephen Gengaro

since Yes. here. more I figured queue I try. will in one understand. I I'm I And would ask

the the done point? the normal bid up of you're at Canada you to bid You've alluding of things you've I allocation second that you're one it issuer round. in that through this your capital some for to? midst issuer Is been that something Or last extraordinary guess -- in move is an now could potentially

Bradley Dodson

been At the will allocation. up doing now, years X it and September we this renewal, We've subject important for point, late for September capital in -- Board it's come it's approval. August, -- to it part an think of

so And that say, changes, would renew. we would something there's unless I

Operator

Dodson time, the for At And end session. the closing Bradley the call of over I'll to reached this turn remarks. question-and-answer we

Bradley Dodson

joining speaking you forward interest in the on Civeo. call you, for call third Thank to the in everyone, thank appreciate you. October. And We today. expected quarter your earnings We to look

Operator

This today's conclude will call.

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

Civeo (CVEO) 28 Jul 232023 Q2 Earnings call transcript