CVEO - Earnings call 4 2023 | Civeo Corporation

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Operator

Greetings. Welcome to the Civeo Corporation's Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note this conference is being recorded. At this time, I'll turn the conference over to Regan Nielsen, Vice President, Corporate Development and Investor Relations. Regan, you may now begin.

Regan Nielsen

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

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

Bradley Dodson

and Regan, end you, quarter fourth had full Thank joining for thank the ratio. all to on year, our a and us call. our today reached year exceeded We solid target earnings leverage and you having

We identify are capital looking strength including and allocation growth strategy, into on to financial to execute flexibility execute our on opportunities. XXXX and entering with

our segment-level This and Carolyn will and review performance I'll XXXX and the morning, a XXXX financial conclude assumptions. our I'll provide guidance year fourth quarter initial with and regional full review, underlying

for Lastly, we'll up the questions. open call

with a begin I'll few important highlights.

quarter our record our Our villages build fourth fourth quarter due strength adjusted we quarter where third XXXX Australian expectations. exceeded increased at consecutive of free adjusted EBITDA compared rooms EBITDA flow XXXX owned in the of revenues, to cash our XX% to posted performance. and our particular

our owned mitigation as in recent our improvement services villages efforts. wins. benefited a our And a result saw services also our We business Australian contract integrated from and both margin inflation of integrated

we Moving those services we subsequent of the Lake the of the currently McClelland to quarter, are assets. the transportation contract Lodge, the for and to announced completed previously performing sale end Canada, associated

flow cash our our and returned share XXXX, initiated dividend we opportunistic of to continued recently both shareholders During free XX% through repurchases.

segment business as we the experienced I'll the now comments integrated Australian make exceptionally and a both during our well business in on business. segments. year-over-year services performed sequential growth and owned village our few quarter

in we a setting occupancy experienced third for a consecutive record During village sequential of that our increase the Australian quarterly owned quarter, again business. side

services the Australian In demonstrate started fourth to mitigation significantly margins results. quarter, inflation our as experienced integrated our improved business positive efforts

team's We XXXX. we our continue efforts to into benefit -- continue we see should move this from as

a XXX given execute out by additional Our the services our believe growth with business. opportunities the million for outlook to reach contract is business team we and business top terms particularly plans attractive to AUD line in integrated margins, With improved continues the in in goal on service revenues XXXX. for Australia services our integrated integrated of

decreased adjusted As fourth activity, USD the Canadian expected, in EBITDA the to segment X.X in our down mobile camp and wind year-over-year due mobile including revenues demobilization of costs camp quarter. million LNG-related

The majority Canada, of in proceeds. Lodge XXXX and January in in of the received have the the proceeds sale XXXX. fourth Regarding we net we the of recognized January quarter remainder in completed McClelland were sale our with Lake here all the

included associated of the well calculation. excluded and other reminder, entirety EBITDA sale -- adjusted costs reimbursements related proceeds our as a as As from are the are

adjusted over the other Carol. XXXX that, progressing pursue to call does and we assets of sales I'll the transaction well, result, not business our opportunities. these EBITDA transportation guidance. a is to The turn impact And As full year related with continue

Carolyn Stone

the diluted that thank fourth Total income GAAP Thanks, reported million all per net or of joining revenues this $XXX.X we us for Bradley were results million guidance. $XX exceeded in $X.XX Bradley, morning. quarter and with you as noted, Today, our share. financial

million. $XX exclusive increased and McClelland integrated $XX.X and runs services our During flow this of of due costs. of improved $X.X of of the cash Lodge dismantlement financial build Australian at the quarter camp offset $XX.X lake expected owned mobile fourth Australian LNG-related villages impact the the mobile Fourth Operating in is adjusted Again, camp quarter, million EBITDA the margins business, sale the in assets. year-over-year adjusted by cash Canadian million activity increased of including free to wind-down we partially EBITDA and million. of demobilization generated flow

significant of a $XXX.X million we revenues adjusted For impact year decrease of a XXXX, and activity full Australian million share. reported for improvement million, EBITDA we reflects stronger of XXXX wind-down and of dollars per offset Australian $XXX U.S. the adjusted The adjusted decrease by driven XXXX, adjusted XXXX by $XXX.X both our but weakened and the business. income million, by which largely Results our respectively. from of $XX.X $XX.X $X.X the $X.XX LNG-related the million. EBITDA was or in and partially and year across of million EBITDA decreased dollar, full In Canada of Canadian of generated revenues net diluted EBITDA in the impact

XXXX. demobilization million, quarter mobile decrease respectively, EBITDA Canada XX%, was fourth by adjusted decreased LNG-related XX% the the segment $XX.X and down $XX.X quarter quarter the year. million begin costs. a from of revenues EBITDA last as the ago Canadian of the Adjusted our review a our performance Revenues Let's $X.X performance primarily the compared driven including Revenues were million to of for a turn XXXX. in segment activity, in in million and results fourth to year million compared to with mobile fourth now I'll camp Canadian of wind fourth of of camp quarter from in $XX X its segments. of $X.X

quarter, which of in our was Canadian totaled modestly in from the fourth $XXX,XXX, rents down $XXX,XXX build XXXX. the lodges During quarter fourth

segment the slightly Our increased last in quarter dollars U.S. $XX in daily run Canadian of $XX, year. was rate the from for fourth which

Turning to Australia.

the a of quarter our fourth in up up The This from strength, fourth our the of in U.S. demand XXXX. mitigation EBITDA million daily rooms XXX,XXX fourth at due year. quarter XXXX. million to in XXXX. improved of average EBITDA services XX% million, XX% $XX the adjusted $XX increased to quarter, in integrated source billed During billed contract was the rooms in from in million, increase the modestly increased owned revenues inflation from our $XX.X recorded to as is by due quarter quarter rooms, recent XXX,XXX demonstrated up efforts. and awards. were Australian $XX.X we our significant fourth of villages the our rate Australian Adjusted due was dollars last $XX.X $XX.X villages, fourth at for to quarter, was owned increased The margins activity up villages, of from

expenditures both consolidated expenditures On spending compared periods maintenance million year full related our to million a year and for were in to basis, $XX.X full capital lodges villages. the $XX.X XXXX the on XXXX. Capital during were

customer we expenditures Additionally, the the upgrades million prior $XX Australian discussed also funded full infrastructure that in for quarter year on conference call. have XXXX included

Our quarter XXXX. XXXX. at outstanding debt were end. total of year exceed $XX.X $XX.X And reach We pleased on We as a decrease December X.Xx, from ratio and September was XXXX, XX, million, total ended our $XXX.X September factors to strength in million since in maintaining and target the X.Xx the revolving us down pursue ratios. as while leverage XX, under liquidity had million million XX, cash to and growth and $X.X approximately on prudent hand, facilities our flexibility opportunistically consisting credit the of XXXX available December of XXXX, of $XXX.X beyond we leverage million, of giving net

to turning And allocation. capital

aware, we September. As priorities you allocation are capital updated our in

repurchases existing X.XXx X.Xx strong our flow return operations, cycle. opportunities, while new to capital shareholders of due allow generation use and to to to to to all support consistent opportunistic the our target cash Our leverage in share allocation fund cash maintaining designed through our excess a framework ratio and is capital range growth dividend

However, below leverage ratio pursue we to our growth accretive appropriate, XX also growth as as X.Xx carefully at occasionally have December are we open where X.Xx we to up we drop opportunity. to assess and may opportunities increasing

payment. Directors Shareholders guidance share our XXXX. total Bradley And to program During the dividend that, for for initial XX it declared this Bradley? on the over shares turn quarter XX. a $X.X of quarterly fourth our XXX,XXX cash of Board repurchased announced of has we XXXX, our repurchase I'll we dividend through third a will month, million. per payable that year earlier February of of discuss our receive to share record full as March $X.XX With approximately

Bradley Dodson

Carolyn. you, Thank

to the discussion outlook for turn XXXX guidance consolidated basis regions. initial let's full a on include will our the Now year each an and of

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

of also and of million capital million, initial net expenditure cash adjusted cash $X year guidance, McClelland inflow expected capital dismantlement expected million, million. guidance sale to and $XX proceeds $XX and to taxes related million $XX Based Our XXXX expected $X is expense expected CapEx of this interest full cash approximately on EBITDA $XX Australian working approximately million. of

XXXX be expecting cash to are free our million to of range $XX We million. $XX in flow the

I now provide line on and assumptions. regional corresponding the will our outlooks

and business change adjusted villages performance margins the $XX increases decline in we loss Canadian Australian on year-over-year the year-over-year and XXXX by Australian for improved wind lodges. which These the approximately integrated and EBITDA call, XXXX revenues EBITDA activity million As of EBITDA camp the our in mobile modestly the mentioned partially in earnings, services XXXX year-over-year offset between our of primary guidance. McClelland last the and of in is for are reason down conference account Canadian Lake the and

acutely are business. a for replacing focused We XXXX company, on our will by be transition growing earnings year and the Canadian these

and Mountain the online pipeline improving oil In XXXX, we spending year. Canada, look expansion is capital as sands Trans macroeconomic for the into coming with customer this increased environment

should our loss exception Lake the portfolio. rooms McClelland steady the we the at to across occupancy rest build the modestly experience of With increasing of of lodge Lodge,

mobile our are activity XXXX. rental to in complete, Regarding we continuing continuing camp the the demobilization our of is and mobile process camps, -- majority

this costs first $X demobilization year, approximately in million in full will expect for contemplated our our half business. year XXXX year which Again, this a of of Canadian is We transition guidance. be the

promising to geographies opportunities Moving in brand and scale leverage and markets. to end our expect and forward, we have expand additional Canadian identified

owned Customer our XXXX, into expect in the improved to similar the villages continue year. we Turning levels throughout at activity end that to to XXXX and Australia. of

are at We rest in of the with occupancy our Bowen very at full Australia. owned our villages the in portfolio healthy of currently Basin villages X

was XXXX executed business, we it of our services the story inflation As the to our throughout that plan litigation year. relates integrated

And should quarter Our significantly of increased our EBITDA continue that the improved been the XXXX, in resulting see through products benefit fourth efforts to the has in demonstrate margins achieved. we year-over-year.

We about focus business, integrated winning to we we that Western work potential growth we back the can and mitigation services executed inflation now on have and are now and business. growing our plan, Australia our of excited our -- shift the

million XXX AUD goal team has a Australian integrated to services to revenues set by our of XXXX. Our grow business

by conclude will of key I elements strategy. our underscoring the

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

We will to and offerings. best-in-class improvements enhance invest continue in to innovation operational our hospitality

free allocate we're generation capital and opportunities. return your capital maximize we With while to take flow to will We continue evaluate to cash that, to growth questions. prudently shareholders happy

Operator

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

Stephen Gengaro

right the the with of outlook about mean for sort think very economic think I about we was the Australia concerns the we how suggests that things sort in me hearing what of And quarter of in the conditions you first China. you strong Australia, is potential sort fourth and I I'm strength keep curious takes about think of of the kind about about guidance Australia for your economic and and we one growth the outlook that for should gives when saw just is now? and think in

Bradley Dodson

up the from side growing production, customers Well, certainly, one village owned on majors all new a base our -- the XXXX, seeing are there iron the We're customer at our big uplift from for over related. for is some to 'XX well, million cost is is occupancy owned business, is of 'XX. integrated nicely villages some but top containment, about outlook the of indications and XXXX. that down the big expecting from majority up in vast where about of line, looking year-over-year in the ore the but margin services business $XXX And in our hit integrated there. of $XXX That's services improvement story million we're it's revenues in

So Australian constructive and the always composite we're macroeconomic forces. business certainly on quite of

good As we very feel of right now, about.

Stephen Gengaro

be if of last use types right, you've you be the you current things pursuing? over you capital. should more and we catering geographic sort think obviously acquisitions, a Would when acquisitions, And on in geographies? think likely expansion tremendous it that deleveraging done thinking the it would or like be would side Great. be logistics the returning and about job of would several and What years, about were of cash

Bradley Dodson

the focus a of and be one-off with on which There geographies, would primarily are to properties will be Australia in current Australia. America. North that would start Basin. Bowen nice portfolio we I'll Well, handful additions the

So them. we're pursuing

services, again, in expand through business to integrated opportunities we're be, the that geography. are acquisition, looking The would do so. to that there and And Australian

of value are today think is saga costs been as In one was Canada, has McClelland the the from have big higher I Lake infrastructure significantly historically. that than existing replacement that they the takeaways

So complete newbuild opinion. my America North very in reaching a in is economically lodge difficult,

to in So to expand underutilized McClelland what operations today. specifically into existing Western Montney there. which into fashion ], into But the an mirrors Eastern perhaps other resembles, more Lake we find how Canada, assets Certainly, difficult primarily see [ do geographies, looking moving looking leverage an as in Canada that U.S. that U.S. been expand to the determine opportunity we into a in also Alberta assets, the our to the Canadian long-term intro. more reflects has activity are point entry or has

Operator

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

Steve Ferazani

I a and if of busy seen in inflationary provide margin a how also you've on of color. maybe and very and Australia, When contracts, I'm got think using XXXX improvement pressures. all the are assuming I'm Bradley, finished I the year. into can bit you've more Carolyn, to obviously already XXXX room assuming about you little up a about mix ask it's points? labor much some those new constraints easing wanted

Bradley Dodson

line. on. Some more have it to more in we what quite scale, processes bring part seen That focus although it improve scale on gaining I to think don't of getting the -- yet. be bottom integrated the we've services is is of really business improvement our the will pivoted to of to

gross more of nice efficient fourth Inflation margins work of still to I to think services, a X% in was as going can kind quarter the now you at gross And issue. We XX% services, being look kind is we're the integrated integrated that's solid. pretty that an side. on quarter. really operational maintain on margin

we've it. location mentioned want reliance was reducing by how we in more we has employees. plans, on be improvements efficient don't on I focusing to human inflation team of on, reducing capital I I the seen location What done can work in So discount our and as the at by temporary think and mitigation think there? terms turnover

we're so than that, early the but And been progress has stages good.

Steve Ferazani

Okay. to And market. then U.S. turning the

have You noted translating thinking right too it Mountain to going sense hearing I in customers spring, is get is summer are it you looks are much guess, like the occupancy this another that to spring? you how year turnaround starting about of And rising coming. a -- CapEx, about -- activity? from early and Trans we that now How into

Bradley Dodson

Yes. slightly Canadian assumes Still this for a really QX little period in QX, the year. a early XXXX. Guidance call softer to turnaround activity turnaround

right some little some bit expect on guidance inflation But it we out. margin have of Canada seen locations some plays is now, of we'll see. because activity, improved but softer we'll our turnaround to efforts, XXXX. how that We've mitigation and continue in see so into And in to a

Steve Ferazani

Great.

covered lot call. flow? free provide I hear, did territory of You the guidance a in on didn't you cash

Bradley Dodson

$XX $XX million million. to

Steve Ferazani

changes beyond other leverage? your net capital or uses Any of acquisitions? the On to range target

Bradley Dodson

been our through capital Certainly the be really quarter. blew Right the fourth to of free of we mean flow strong funnel to in growth of probably need in to pipeline than kind past issue. have. cash the allocate now, we just kind opportunities our returning same question. of timing I frankly building the pivot But but it's -- highlighted on that we that able expect we're I target to, growth shareholders or kind now that a with Well, But and XXXX. to do more

optimistic cautiously growth some a fashion where XXXX. capital so work to I'm able to in and show And growth we in putting

Operator

with next Stonegate. Our Dave Storms of from question the line is

David Joseph Storms

kind we might of with could pretty Or to it follow cadence guidance. there patterns? else we the is in anything think hoping seasonal that that? of Just start [indiscernible] typical expect you the Should

Bradley Dodson

XX% fairly of of softer combine the largely activity in that turnaround expect holidays, QX we've by we and where because XXXX, the EBITDA certainly factors in highlighted previously. One, QX QX, be for to the driven now that's right annual ending couple and the year. are typical Canada. the Dave, QX, comes historically, either beginning of or a usually year

So it will I terms think in be typical of cadence. fairly

Carolyn Stone

flow, flow because cadence on buildup same of the year such. cash historical as We our -- to cash the cash timing cash see get lowest on that cadence same of -- cadence we'll kind on and in revenues quarter of And where not the progresses. same then cash expect first various more flow, will is or as

David Joseph Storms

then the long-term $XXX [indiscernible] Understood. logistics What And like? Australia. you up look the short-term like in fairly Concern, do look million goal. for to services And mentioned that? the a it's integrated is what success

Bradley Dodson

to our Well, that X identified the million wins able years should to over tangible be that has $XXX get team us contract next mark.

year, we may revenues Industrial of with XX in many the which Catering acquisition, As about recall, of you AUD [ million Western AUD XXXX into ]. it we million it, was in did bought last Australia XXX integrated it at to and Action the entered services time

not significant to without in very new the see to base proposition value made the get contract to we to a tangible demonstrate lot and continuing progress customer the a work wins. by achieve we've $XXX. So pathway to of It's team

Operator

additional any I'd the no we to like hand for closing At Dodson remarks. this Bradley questions. time, have floor to

Bradley Dodson

earnings you with everyone, and joining call your look April. Civeo, Rob, in quarter appreciate We forward you, interest expected in you, we on thank the the speaking today. call Thank for first to and

Operator

conference. Thank This conclude you. today's will

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

Civeo (CVEO) 29 Feb 242023 Q4 Earnings call transcript