CVEO - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Civeo Corporation Fourth Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Regan Nielsen, Vice President, Corporate Development and Investor Relations. Please go ahead.

Regan Nielsen

Thank you, and welcome to Civeo's Fourth Quarter and Full Year 2024 Earnings Conference Call. be Officer; Bradley Chief and and will and Civeo's Financial call Treasurer. Executive Chief Collin our led Dodson, by President Officer Today, Gerry, Civeo's

statements. to begin, federal contain today law. afforded on than note listeners would the we please other extent like information, we're Before regarding our we anything forward-looking by that To historical remarks safe the that protections caution relying harbor

including that risks read earnings release, in uncertainties provided the of turn affect the schedules. Any our Forms over have asset-intensive with remarks of I'll to factors revenue business, as noted associated call our our other should be Bradley. in in such our and our the SEC asset-light and Also, businesses. This the we be disclosed release context XX-Q data and can those earnings many supplemental XX-K, now business data filings. disclosing in found

Bradley Dodson

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

call the open for questions. we'll Thereafter,

our full growth levels Australia, contract. driven announced quarter XX% year. by I'll start strategy the from our billion was in the occupancy recently experiencing of with This on our that integrated in region. business are segment strong in fourth Starting and for increased key to continue services quarter Revenues and increased to takeaways activity in we the $X.X the XXXX. execute compared our

to area that presence acquisition and villages basin. a X new to immediately acquisition Basin. Bowen This an the of is into recently flow expand also in our Australian be announced expected accretive We of cash

and our contracts as advances new of existing steady and and also X-year take-or-pay to goal secure customers. sources revenues X- with chip earnings It with back it's blue

Canada, well uncertainty, to our as as economic in Moving spending customers' their as and pressure experienced We build result we in a XXXX. increasing of response expect investor to political reduced rooms which to continue capital lower

While Canada some not decline on focus of lodge with cost quarter billed reductions. to LNG-related in did wildfires Canadian the third the expected due was down the the recover correlated the from customer and as activity, of wind expected XXXX impact aforementioned of rooms in the negative in

and In spending lower our to we've reach for response these Canadian activity. dependency rightsizing uncertainty of strategic expand region, sands continued market geographic and to actions to taking and further to challenges end level our expectations this our on a level in address customer oil business new reduce begun of the

expect will headcount We medium close quarter the which first results XX%, of million we XXXX, approximately overhead onetime reduced by our could restructuring incur costs term. we lodges in and of existing to the $X in as strengthen approximately

near-term capture Canadian these remain the in activity be High trough additional shift of oil activity, -- additional end for reality the Canadian LNG-related projects, of and optimistic ramp policy could pathways namely diversified up federal addressing the in government While are a forward. federal an initiatives, -- ramp-up growth positive markets catalysts moving we business. carbon projects, potential in the LNG bidding the and long-term we to acknowledge and the for medium unfavorable outlook for Canadian

share XXXX, So quarterly full year lastly, for the our returned $XX and repurchases. shareholders million approximately we of to through of capital dividends

shares of cash the free common have outstanding. program equivalent of of the repurchased Since XXXX's our flow. repurchase initiation XX% of approximately we our XX% share in approximately represented This XXXX,

spin, our to had Canadian time revenue exists customers' of of $XXX of Civeo context XX% asset-intensive bit of deployment infrastructure Let it provide me focusing most was was internal company, debt, take more sands to tied construction evolution and on approximately Civeo and building XX million was At on on oil a before and and which ago, much I over manufacturing an years hand the of lodges a oil of our the the today. activity new villages. capital Collin. to majority the supporting sands, that moment installation

first growth, line in diversified our catering provides Australia and Since XXXX of services in we that in services the deleveraged business. Industrial owned the at to Catering our successfully the our focused have then, both customer-owned We organic acquisition and entered entered a This on -- revenue CAGR have and assets. X-year market with company sources. integrated clients and facility management business in accommodation XX% delivering top asset-light our Action

our we includes in more both revenue of assets. today have Our the our of customer-owned steel which we mix and Australia our that services owned the is business, to business illustrates current mix, banking our illustrate new at have supplemental and revenues lower weighted asset-light disclosure hospitality debt asset evolution profile. commodities To and better much our provided a assets

mobile asset-intensive includes which that investors perceive village camp to largely Civeo pure-play business. accommodations our business, and the our a assets as business. as accommodations asset-intensive with well And our continue We or associated revenue lodge as Canadian believe

show highlight to and services our business disclosure the asset-light we've integrated the business. supplemental the of key provided part components significant growth the in of or we So achieved

ongoing value years. over positioning creation company XX the are We the next for

the change. to over In diversification redirecting spend revenue our recent that, the conditions With Collin. it our short evidenced to announcement as capital warrant and of we'll continuing means acquisition where by turn run, streams, markets this our Australian

E. Gerry

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

This primarily producers quarter was lower in operating XXXX EBITDA due Canadian as is expected to at During of spending customer reducing continue the focused keenly million. the are the and to million of region fourth quarter, decrease level build in costs. $X.X lodges. to adjusted decrease of rooms flow on the XXXX generated operating we in fourth of $XX.X cash adjusted compared The EBITDA

The relative flow ago sales in related and the the to the collections the fourth to was down net of the Lake by hold decrease in related back wind proceeds year mobile quarter projects to Lodge impacted in Helen quarter XXXX. negatively of camp Canadian cash

by share. year $XX.X adjusted we XXXX, the of revenues a and full EBITDA Lodge in XXXX, sale, per million was EBITDA generated decrease XXXX of XXXX. our $XXX.X which McClelland In a decrease adjusted loss in for $XX.X For compared largely year we or full of the $XXX reported million EBITDA Lake occurred driven adjusted The as diluted million. $X.XX million, the net to of XXXX from

Canada rooms owned activity LNG-related our lodges increased the integrated in some wind as And Australian of offset that Australian own impacted by well as the activity. our increased expected was of which down both villages activity, build mobile in services camp and

I'll million quarter $XX.X a from Australian our quarter Let's performance of now of XX% up turn EBITDA $XX.X XXXX. to its segment compared year. last in the segment a the X performance year to fourth begin $XXX million, quarter the from $XX.X X% fourth revenues was million our from were with Fourth results up million, Australian review Adjusted segments. for ago.

to adjusted the rooms, from build contract quarter quarter rooms activity The revenues our flat due announcement. recent of increase the relatively in to and was increased or XXX,XXX primarily XXXX. in EBITDA Australian related fourth integrated services

contracts. daily recent owned due U.S. increased escalations was which the $XX in CPI in fourth our quarter dollars rate XXXX for Our in room Australian to $XX, villages the from of

XXXX. Canada. to million million in recorded quarter was of We Turning $XX.X negative $XX.X revenues as million, Canada of compared of EBITDA the quarter a $X.X from million, Adjusted to in the fourth decrease fourth in XXXX. $X.X

were, revenue Lake as LNG-related the activity, mobile sale the pipeline wind and adjusted decreases EBITDA Lodge and the customers' headcount cost including activity focus build driven for a again, of by the lower down of recent and on McClelland camps, reductions. The completion result our our of room year-over-year of

totaled in I of quarter, from in the just fourth the which due was quarter to reasons our build Canadian down lodges XXX,XXX mentioned. XXXX the XXX,XXX, fourth During rooms

for mix segment occupancy the dollars from lodges. room $XX, decreased the of fourth daily was quarter in Canadian of Our $XX in among XXXX the to the rate U.S. which due

capital at structure. Looking our

on debt in was September XXXX, XXXX. million, $XX.X million XX, increase $X.X net XX, December Our

for Our the as X.Xx ratio quarter was December net leverage of XX, XXXX.

As million, maintaining our as us total $XXX of strength approximately flexibility and ratios. giving liquidity such while to opportunistically XXXX, of had December Australian XX, we the prudent leverage acquisition, growth opportunities recently pursue announced

consolidated our I'll with periods in from start villages. XXXX. will On full a were and maintenance capital the on capital CapEx. -- spending down Next, year expenditures turn both to Capital expenditures XXXX lodges during $XX.X for basis, million related allocation. predominantly I to

compared Civeo's In fourth same program to customer related were in approximately for approximately our $XX share to XXXX villages, the approximately million a our million. X.X by through the of upgrades included for million repurchased That which XXXX. in total reimbursed repurchase Australian $X we XXX,XXX CapEx shares infrastructure XXXX, at of customer. quarter spend

to XXXX. over million for we in for For repurchased shares year X.X XXXX, shares million $XX.X full million XXX,XXX the approximately compared $XX.X

quarterly As Bradley share $XX mentioned, this flow. XXXX free repurchases capital dividends to million, XX% return to in XXXX, representing cash and shareholders our of of brings including our total

repurchase We will forward. shares opportunistically to moving continue

of XXXX. payable I'll discuss dividend earlier for announced on Board quarterly common XX, that, With of full per Bradley Directors Regarding to our turn guidance to that over the of close XXXX. shareholders declared company year its on business record it as month, of February of cash the dividend the share, a XXXX, March this Bradley? $X.XX XX, to

Bradley Dodson

of turn the regional Thank consolidated guidance on discussion underlying now to you, our I would and Collin. macro to like initial basis, assumptions. a including a XXXX

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

full million guidance initial capital is year million. expenditure $XX to Our XXXX $XX

to Canadian customary the we October for provide approvals changes political This announced would late in On conference comments guidance exchange some regulatory outlook. then, and quarter's impacted excludes which a acquisition, quarter, expect on the in contribution conditions, currency we'll markets in business preliminary completion. second Australian the that have before experienced were and been rates our takes and that XXXX U.S. on updated landscape. those any subject Since conference reduction from XXXX global I recent earnings close XXXX, account shifts during the note XXXX. within and call outlook guidance the there to before have last material call we recently into since election upon provided our

tariffs have U.S. and dollar rates. of dollar exchange those and impact announcement of Canadian potential that dollar The versus Australian all the had on

EBITDA. headwind first, spot today's on this So rate, exchange to an in headwind weakened and of have approximately EBITDA compared for order results. driving the our rates XXXX, magnitude Based the denominated currency $X meaningfully Australian Canadian is U.S. million of

uncertainty customer is in political Canada the driving in Second, changes behavior.

New reduction has lower mobile our driving capital to is the right, quest certainly delayed impacts operating being which oil or in accelerated, deployment a sands costs sustained and pushed spending fleet to our Canadian our occupancy. camp customers

Taken we facilitate team That looking to capital In said, In the quarter. as together, comment what reduced all business. driving aggressively guidance to Canada, can the of our deploying by are factors these rightsize is executing our I Australia, the at announced $XX cost evidenced as million continued control. compared last to acquisition. made structure we growth inward combination recently the we is on are

$XX tax expect that tax When are we $XX approximately XXXX, million year related million, $XX we'll million, we of of to includes tax in approximately than approximately which cash better in XXXX million Australia, $XX Based to we payments we XXXX incorporate million -- payments we expect which million $XX XXXX a tax year. of sorry, free XXXX the investments, I'm position to of million. on confident the -- cash in XXXX cash payments payments flow the $XX cash related anticipate tax we these includes of $XX exit

similar will activity we Australia, I by continue outlooks regional provide forward. incredibly In and the corresponding expect now at moving levels in remains region. underlying to strong, assumptions our customer and villages own

rest the We X villages are at portfolio strong Basin at village our -- our with in own of Australia. full of occupancy

We to XXXX. throughout expect continue that

in integrated to to integrated stated our we XXXX business, relates recent towards contract XXX our services work continuing it revenues XXXX. and services increased by million we this of award expect as AUD our demand As goal of experience on to from are build

mentioned capital the modest room reducing restructuring outlook well expansion focused over CIS also Australia, as spending oil billed operating assumes sands $X uncertainty, I in the declined as In onetime the will XXXX, Canadian in our in a rightsize customers we political to the growth lower and Our are region of help and our and approximately therefore, economic of XX business. Alberta as have million In our as quarter last region affecting costs. Canada, earlier, years Investments incur on leading increased occupancy. our of headcount result costs structure. to first of cost negatively

shutting includes overhead is Canada certain with This in strategy as in cost the reducing XX% terms approximately storm The as lean lodges and a to headcount. of structure weather possible.

to oil activity the by geographically markets We sands reduce expanding in dependency we are and on Canada. looking end the our serve potentially

before, in we and the possibility and LNG stated in our framework. remain next long-term North for we pathways America, Despite allocation of of medium activity As pursue near-term optimistic ramp-up in of headwinds, line opportunities carbon project. capital example, only years these including, opportunities with couple possible about we the capture the

close of business transition. and the Q&A head a by to will we Before XXXX saying year be like the of call, Canadian I'd our into section

near-term While business, on we're we'll long optimistic to in strategic remain and mitigate actions the about we see today. we the work term these improvements headwinds, medium taking to based

will am stated our are that, strategy made region strategy I our services in far. ability in We growth to on and With that adhere confident call integrated I'll continue team's allocation to our with with open questions. progress capital to to execute the business the we've pleased the in grow line thus we as framework. our our Australian

Operator

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

Stephen Gengaro

a I me. couple think for

me was one was asset-intensive about the kind jumped is revenue light that of side that asset-intensive to details impression larger first the base. asset businesses. was you The out a And the versus incremental I disclosed things the the under of

does that that breakout, and assets? in of you're management So include catering owned that sort providing facility at

Bradley Dodson

correct. That's

services the we at locations. we it that the at owned and perform combines services that so includes And customer-owned integrated hospitality provide third-party our with locations

Stephen Gengaro

services is we when of forward, side that sort imagine area then that And I integrated of growth. Okay. the about going think the

Bradley Dodson

right. That's

Stephen Gengaro

I of One a Okay. specific of guidance seasonal Good. thinking from is is The kind sort there perspective, we stage, reason know in perspective? seasonal anything to is X other from still a 'XX? not about should ones that but I early any that had. there expect normal Is be your distribution

Bradley Dodson

you're excluding the of year in the historically, and Stephen, referring, that XX% assume, full the impact to expected generated and the case I XXXX is XX% second as be the EBITDA quarters, third and in well, the is acquisition. of timing to Australian

Stephen Gengaro

And sort And it as word, then more, Canada And when of to of think maybe sort the any Great. for lack benchmark of other is revenue to of Okay. has that. of how with visible Canadian using there this that that what's we highly sort sort Like much of stream, better a about the discretionary? Canada. the visible about question, do spot-oriented kind work. of highly in Is percentage kind more is at and much a of way XXXX point? how think of of is what

Bradley Dodson

about. in guests which this second just -- have is sub-freezing have seasonality the activity, occurs is second the daily of turnaround we when in we operations. increase then productivity and the primary have -- the we component third climate Canadian quarters and not activity it's turnaround driver of in Canada, in of the answer the And the because temperatures. the of way through spoke typically we number is frame the I'll kind that historically,

to our That's number on about a historically, year in activity XX% to total As continue. of of expected nights is in result, total nights. turnaround full terms room basis a Canada XX% room of

Operator

Steve next Ferazani Sidoti. Our from with is question

Steve Ferazani

response seem about now be short-term to might uncertainty. that from feedback be there's to to call. sure Broadly, all term, I'm this customer expect, is wanted right? coming view some this is what to impact, you long a Appreciate to the the Do ask ultimately and longer-term the reaction as I on detail going going

a the -- reduction might the where you is, uncertainty sort is recover workforce from broke pretty short some term. if all You customers with maybe political -- see it as now of XX% the I'm this this, camel's what that dramatic, view back? are The I'm be this seeing didn't wildfires, is curious -- is of we're going fast. this and reaction to right, some Or the cutting right? you given as needle

Bradley Dodson

a and good that's good question. point No, very a

preparing are We will it customer as and it a occupancy in this region. in the viewing behavior shift long-term as sands in behavior Canadian that a oil shift be relates to customer levels

market close and customers, that that. that on headcount continue. was our to started we adjustments of reflect making site level to really reduce to to a close intent year last we're that so to fourth see with -- It in And cost feel we the staying dynamic of quarter structure

accordingly. And adjusting so we're our cost structure

effectively, over change that operations if oil any occupancy would there or Now positive term, can Well, -- serving occupancy. be sort be of the are are rooms would picture? project positive our manage what that work to pathways and Canadian sands to work medium expansionary

with occupancy project Sika. down question of they situation, will kind mark. Minister is the government Canadian XXXX be Prime effectively until LNG positive to the But a Another in shut resolve

don't see aren't coming -- perspective out, the we customers work. putting excited additional think but that capital about day the half-full to reacting So they're is that glass I are really not positive, also to headlines day the

it And expect the be so uncertainty. appropriately will with I -- Canada think painted term I we've

Steve Ferazani

because capacity right? And of right in out could early along I excess in system you've the coming COVID, all -- mean, cuts along, the you have way had made

Bradley Dodson

of say in the our we and a outlook, I was change cost responded always material accordingly. conscious that would we're This structure.

Steve Ferazani

enough. Fair Okay.

which Turning obviously to there. fantastic results has consistently been Australia,

prices customers, market metal and might now, are months certain it's agreements you? from about the CapEx that years X it China your the now? and XX much results how you long-term concerned And from to how on that impact do the are Given protect economic weakness in pressure having important

Bradley Dodson

the Great question. rooms. have seen prices is the softened kind would $XXX a Customers is are that conversations. customer looking met still we've coal say below there of particularly on our for is side, I outlook what current what -- that But ton.

long-term to, in looking our in locations, question, are at a your You referred take-or-pay and we there. backlog contracts have Bowen for Basin still customers strong of terms contracts

changed it more time. the pricing So behavior succinctly, -- this changed hasn't at near-term hasn't customer

talking longer rooms -- are So term, look right their now, we much need tell. additional more projects, are too for as to accordingly. Australia their and we're responding early But in expansionary it's customers about

outlook an at Australia villages the for in So point. owned good looks this

Steve Ferazani

That's great.

modeling including not to a know announced Just you number more it, I think timing an you're question. you including is the did reason for put when And is with number, annualized to X being not still fair? those but not reason it that your unclear? any villages, out do

Bradley Dodson

mean Yes. are -- control. the I conditions we think to entirely our close I the transaction within not

that on the So to than in a line not current say put quarter. second to expectation wanting other is time closes it the

So opinion, But it's year business, the in no generate. the basis, this acquired point, full at to not, acquired guidance closing. we change reason on the my for a on think there's very what us delayed villages could

Steve Ferazani

Okay. to Any closing? risk

Bradley Dodson

No, point. not this at

Operator

Our next Dave Stonegate. with question Storms is from

David Storms

this Basin? specific the this wanted something pretty X.Xx with indicative overall to that the stick should be in there EBITDA that the a market drive Is deal, region price?. especially considering Or feels actually like About EBITDA or that to I that good accretive. seller seeing Bowen is you're immediately much of acquisition. margin that

Bradley Dodson

that highlighted the that say it. I you've impacted things would

fairly to market all think I level? are at it that and assets a think, could the a -- going seller price. were wanted straightforward I all is would I good are No. transaction get execute, in pay priced the The we're a buyer we -- to we that say, easy cash.

David Storms

integrated to with add helpful. And there that property, services opportunity already -- to an there integrated That's on Understood. services? is very are site? Or then further

Bradley Dodson

would in addition This be services. to integrated

and So in-source it. currently, we outsources that, obviously the owner will

David Storms

driving the disclosure added the asset-light the for the occupancy. Is drop great. your the X Canada, up me. in fairly again, asset-light specific that's That's year-over-year report. Great, in noted first resilience well anything there? there on portion assets then you It And like looked held more despite

Bradley Dodson

and in would That in was of camp revenues Year-over-year, by XXXX. would impacted the which the side be activity, Canadian biggest was that delta not driver. mobile the present asset XXXX things be in

Operator

from is question next Daniel Josh Partners. of Energy Jane Our

Unknown Analyst

when frame you last was XX% highlighted year free in just I about think guess, How returned of the term, flow, it thinking the cash you question, this are to you to First acquisition of context and to flow you did going of shareholders. free about free that to percentage flow how ultimately return are just shareholders. about maybe cash medium the thinking forward, your cash could maybe just you over a guys you long

Bradley Dodson

has lever Historically, has to a none free with our of Well, based right with a I fundamental been plus then of target, which the were below cash flow is our is off up Xx minus that opportunistic and ability framework our think Xx changed. or the opportunity, we buybacks dividend levered to for growth and where leverage levered

And approach how it. so continue that's we'll to

a will pro levered on Xx Post be acquisition forma basis. roughly

So to capital framework. still under deploy same the able

Unknown Analyst

maybe just the on follow-up And business. Okay. Canadian X

about of talked that the rightsizing you're talk how but you're long-term don't also about about This just year. doing. medium- you this things optimism. thinking over the managing If Could course that year, You the that costs maybe a there to balance of uncertain taken long-term Or to be in business? be the out what in year business? trying need the further how softer strength are 'XX against progress, you're should just to

Bradley Dodson

see the I for Well, right we our uncertainty the I -- look comments, And market, now. it have think at that we rightsized see how develops. we've the consistently to in reality in We'll our that to structure our outlook. the mentioned we'll match and cost business as

Operator

with Gengaro Stephen Our Stifel.. next question is from

Stephen Gengaro

was at point? would on the talk more this deals cash I flow looking Australia other asked The quick a of just what in be ask side. sort you if than Australia, And can about for? of going one. deals to types the markets of in incremental you're likely you that But was Most Thanks. acquisition think

Bradley Dodson

in we're we've consistent looking I for. what think Well, fairly been

in to that, speaking, we'll additive largely bigger just look buy there if and portfolio and fit in broadly to More the a into are locations our opportunities given again, at there. services that Australia. opportunities So there's opportunity Australia, integrated continue macro in there dynamics, Canada are

market. larger a It's

has our that. to And so pivot been

our be in continue to is activity services asset mining We to only and in that to our In markets just it's services growth diversify Australian that market. east infrastructure we terms our services And integrated by and target. Alberta effort way Canada, and There's ongoing, on related need million asset strong expect of could and that $XXX of legacy Columbia, early could developing that too or but business. sales be both British integrated bidding. is of integrated, well meaning geographically is could be we're the end and tell, considerable and our activity it to

Operator

like no time. over are closing to questions further the remarks. There floor to hand management I'd at back this any for

Bradley Dodson

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

Operator

concludes conference. This today's

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

Civeo (CVEO) 27 Feb 252024 Q4 Earnings call transcript