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Civeo(CVEO) - 2022 Q4 - Earnings Call Transcript
2023-02-28 20:53
Financial Data and Key Metrics Changes - For the full-year 2022, Civeo generated $83 million in free cash flow and made debt repayments of $34 million [4] - Total revenues in the fourth quarter were $162.2 million, with a GAAP net loss of $13 million or $1.31 loss per diluted share [69] - Adjusted EBITDA for the fourth quarter was $15.1 million, a decrease compared to the same period in 2021 [69] - Total debt outstanding as of December 31, 2022, was $132 million, reflecting a $6 million increase from September 30, 2022, but a $43 million decrease from year-end 2021 [13] Business Line Data and Key Metrics Changes - Canadian segment revenue was $88 million in Q4 2022, down from $92.2 million in Q4 2021, with adjusted EBITDA decreasing to $11.8 million from $23.1 million [11] - Australian segment revenue increased to $73.1 million in Q4 2022 from $62.3 million in Q4 2021, but adjusted EBITDA decreased to $13.1 million from $13.6 million [12] Market Data and Key Metrics Changes - Billed rooms in Canadian lodges totaled 622,000, up 6% year-over-year, but the average daily rate decreased to $93 from $106 due to currency fluctuations [71] - In Australia, billed rooms increased to 519,000 from 465,000 year-over-year, with the average daily rate decreasing to $73 from $77 [91] Company Strategy and Development Direction - The company aims to maximize free cash flow while returning capital to shareholders and reducing debt [15] - Civeo is focused on expanding its customer base and geographic footprint to reduce volatility in free cash flow generation [84] - The company is prioritizing safety and well-being, managing costs according to occupancy outlooks, and enhancing hospitality offerings [96] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures and labor costs are expected to impact margins, particularly in the Integrated Services business [17][108] - The company anticipates a decline in mobile camp activity due to the completion of construction projects, which will negatively affect revenues [32][94] - There is uncertainty regarding customer room demand for the second half of 2023, which could impact guidance [95] Other Important Information - Civeo repurchased 1.5 million common shares for $45 million, including 40% of outstanding preferred shares [83] - The company completed the divestiture of its U.S. offshore business, retaining only a few lodges in North Dakota and Louisiana [87] Q&A Session Summary Question: What is the leverage ratio at which the company would stop paying down debt? - Management indicated that a leverage ratio of 1x to 1.25x is a good base, allowing flexibility for investments or returning capital to shareholders [21] Question: How does the company evaluate potential M&A opportunities? - The company primarily sources opportunities internally, focusing on assets and service companies they know well [119] Question: What is the expected impact of the McClelland Lake Lodge shutdown on revenue? - The McClelland Lake Lodge generated approximately CAD60 million in 2022 revenues, and its shutdown will significantly impact future revenues [33][100]
Civeo(CVEO) - 2022 Q4 - Annual Report
2023-02-28 16:00
During the year ended December 31, 2022, revenues from our lodges and villages represented over 62% of our consolidated revenues. Our contract terms generally provide for a rental rate for a reserved room and an occupied room rate that compensates us for hospitality services, including meals, housekeeping, utilities and maintenance for workers staying in the lodges and villages. In most multiyear contracts, our rates typically have annual escalation provisions to cover expected increases in labor and consum ...
Civeo(CVEO) - 2022 Q3 - Earnings Call Transcript
2022-10-28 23:39
Financial Data and Key Metrics Changes - Civeo Corporation reported total revenues of $184.2 million for Q3 2022, with a GAAP net income of $5.2 million, or $0.32 per diluted share, and adjusted EBITDA of $35 million [14][6] - Year-over-year revenues increased by 19%, and adjusted EBITDA rose by 34%, driven by increased activity across all three geographic segments [6][7] - Free cash flow generated in the quarter was $38.6 million, leading to a reduction in net leverage to below 1.0 times [7][8] Business Line Data and Key Metrics Changes - In Canada, revenues increased to $103 million from $84.1 million year-over-year, with adjusted EBITDA rising to $25.6 million from $19.8 million [16] - Australian segment revenues were $73.8 million, up from $65.1 million, with adjusted EBITDA increasing to $16.9 million from $14.8 million [19] - U.S. revenues rose to $7.4 million from $5.9 million, with adjusted EBITDA loss improving to $33,000 from a loss of $544,000 [21] Market Data and Key Metrics Changes - Canadian billed rooms totaled 731,000, up 19% year-over-year, while Australian billed rooms were 525,000, up 7% from the previous year [18][20] - The Canadian dollar's weakness against the U.S. dollar negatively impacted revenues and adjusted EBITDA by $3.7 million and $0.9 million, respectively [17] - The Australian dollar's weakness also affected results, decreasing revenue and adjusted EBITDA by $5.5 million and $1.3 million, respectively [19] Company Strategy and Development Direction - The company is focused on deleveraging and has reduced net leverage to 0.9 times, providing flexibility to weather market volatility and evaluate capital deployment opportunities [8][22] - Civeo plans to prioritize safety, manage costs according to market outlook, enhance hospitality offerings, and seek revenue diversification through organic growth and M&A opportunities [34][33] - The company expects Canadian mobile camp activity to decline as pipeline construction winds down, impacting profitability [26][31] Management's Comments on Operating Environment and Future Outlook - Management noted that customer capital spending drives occupancy, and while commodity prices remain constructive, customers are focused on cash flow generation and capital discipline [30][49] - The outlook for 2023 indicates flat occupancy in Canadian lodges with modest upside, while Australia may see a modest increase in occupancy due to expansionary activities [31][32] - Management expressed cautious optimism regarding the Australian integrated services business, despite expecting margin compression due to labor shortages and inflation [32][30] Other Important Information - The company has renewed its share repurchase authorization to buy back up to 5% of its total common shares outstanding over the next 12 months [9] - Capital expenditures for Q3 2022 were $8.8 million, primarily related to maintenance spending [22] Q&A Session Summary Question: Margin degradation in the fourth quarter - Management indicated that the biggest margin degradation would be in Canada due to significant downturns in occupancy and increased utility costs [37] Question: Timing of demobilization costs - Management stated it is too early to determine when demobilization costs will occur in 2023, but they expect continued activity into the year [38] Question: Managing cost pressures - Management discussed leveraging multiyear contracts with annual inflation adjustments and operational efficiencies to manage cost pressures [39][40] Question: Revenue decline in mobile camps - Management noted that the decline in mobile camp revenue is due to holiday downtime and overall oil sands activity downturn in Q4 [44] Question: Capital allocation and growth opportunities - Management emphasized a balanced approach to capital allocation, focusing on stock buybacks and growth opportunities while maintaining a strong balance sheet [52]
Civeo(CVEO) - 2022 Q3 - Quarterly Report
2022-10-27 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |------------------------------------------------------------------------------|------------------------------------------| | | | | For the transition period from ________ ...
Civeo(CVEO) - 2022 Q2 - Quarterly Report
2022-08-03 16:00
Financial Performance - Civeo Corporation reported revenues of $184,954,000 for the three months ended June 30, 2022, representing a 20% increase from $154,176,000 in the same period of 2021[10]. - The company achieved a net income of $10,230,000 for the three months ended June 30, 2022, compared to a net income of $10,000 in the same period of 2021[13]. - Operating income for the three months ended June 30, 2022, was $14,242,000, significantly up from $2,129,000 in the prior year[10]. - Total revenues for the three months ended June 30, 2022, were $184.954 million, a 20% increase from $154.176 million in the same period of 2021[82]. - For the six months ended June 30, 2022, total revenues reached $350.632 million, up from $279.606 million in the same period of 2021, marking a 25.5% increase[82]. - Net income for the six months ended June 30, 2022, was $12,138 thousand, compared to a loss of $9,415 thousand for the same period in 2021[23]. - Net income attributable to Civeo for the six months ended June 30, 2022, was $10.0 million, or $0.60 per diluted share, compared to a net loss of $10.4 million, or $0.73 per diluted share, in the same period in 2021[142]. Assets and Liabilities - Civeo's total current assets increased to $169,724,000 as of June 30, 2022, compared to $157,193,000 at the end of 2021[15]. - The company reported total liabilities of $273,877,000 as of June 30, 2022, down from $309,623,000 at the end of 2021[15]. - Civeo's total assets decreased to $637,397,000 as of June 30, 2022, from $672,734,000 at the end of 2021[15]. - Total accounts receivable as of June 30, 2022, was $135.165 million, an increase from $115.220 million as of December 31, 2021[42]. - Total accrued liabilities as of June 30, 2022, were $28.289 million, a decrease from $33.564 million as of December 31, 2021[45]. - Outstanding debt as of June 30, 2022, was $154.6 million, down from $175.1 million at the end of 2021[172]. Cash Flow and Capital Expenditures - Net cash flows provided by operating activities for the six months ended June 30, 2022, were $23,631 thousand, down from $29,350 thousand in 2021[23]. - Capital expenditures for the six months ended June 30, 2022, totaled $8,647 thousand, compared to $6,530 thousand in 2021[23]. - Capital expenditures for 2022 are expected to be between $24 million and $29 million, significantly higher than $15.6 million in 2021[113]. - Total cash provided by operations during the six months ended June 30, 2022, was $23.6 million, down from $29.4 million in the same period of 2021[167]. Revenue Segmentation - The company operates in three principal reportable business segments: Canada, Australia, and the U.S., providing hospitality services to the natural resources industry[26]. - Approximately 64% of the company's revenue in Q2 2022 was generated from lodges in Canada and villages in Australia[88]. - Accommodation revenues in Canada for the three months ended June 30, 2022, were $79.431 million, up 13.8% from $69.759 million in the same period of 2021[33]. - The Canadian segment reported a revenue increase of $59.8 million, or 41%, compared to the same period in 2021, despite a $4.5 million decrease due to currency exchange rate fluctuations[154]. - The Australian segment's revenues increased by $7.7 million, or 6%, although a 7% decline in the Australian dollar relative to the U.S. dollar resulted in a $9.5 million decrease in revenues[159]. - The U.S. segment's revenues rose by $3.5 million, or 33%, driven by increased U.S. drilling activity[163]. Expenses and Profitability - Consolidated cost of sales and services rose by $22.1 million, or 20%, in Q2 2022, totaling $130.05 million[117]. - Selling, general and administrative expenses increased by $3.0 million, or 20%, in Q2 2022, reaching $17.68 million[120]. - Gross margin as a percentage of revenues improved from 24.8% in the first half of 2021 to 26.7% in the first half of 2022[156]. - The total cost of sales and services for the six months ended June 30, 2022, increased by $48.1 million, or 23%, compared to the same period in 2021[143]. Market Conditions and Outlook - Global oil prices increased to above $100 per barrel due to improved demand and reduced supply, exacerbated by the Russia-Ukraine conflict[94]. - The company provided an optimistic outlook, projecting a revenue growth of 10-15% for the next quarter, driven by increased demand in the oil and gas industry[201]. - The company is exploring potential acquisitions to enhance its service offerings, with a focus on companies that complement its existing operations[201]. - The company anticipates a stable demand environment, with a forecasted EBITDA margin of 30% for the upcoming fiscal year[201]. Shareholder Returns and Capital Management - During the six months ended June 30, 2022, Civeo repurchased 22,911 common shares at a weighted average price of $23.65 per share, totaling approximately $0.5 million[68]. - The company has authorized a common share repurchase program to repurchase up to 5.0% of its total common shares, approximately 715,000 shares, over a twelve-month period[67]. - Future dividends will depend on various factors, including financial condition and covenants associated with debt obligations[178]. Risk Management - The company is managing inflation risk through negotiated service scope changes and contractual protections due to increasing inflationary pressures impacting labor and food costs[93]. - A hypothetical 10% adverse change in the value of the Canadian dollar and Australian dollar would result in translation adjustments of approximately $24 million and $23 million, respectively[184].
Civeo(CVEO) - 2022 Q1 - Earnings Call Transcript
2022-04-29 19:47
Financial Data and Key Metrics Changes - Civeo Corporation reported a year-over-year revenue growth of 32% and adjusted EBITDA growth of 57% for Q1 2022, driven by increased occupancy in Canadian lodges and Australian villages, along with heightened Canadian mobile camp activity [6][12] - Total revenues for Q1 2022 were $165.7 million, with GAAP net income of $0.9 million or $0.06 per diluted share [12] - Adjusted EBITDA for Q1 2022 was $25.6 million, with operating cash flow of $2 million and free cash flow of $700,000 [12] Business Line Data and Key Metrics Changes - Canadian segment revenues increased to $96 million from $61.9 million year-over-year, with adjusted EBITDA rising to $17.2 million from $10.8 million [13] - Australian segment revenues were $63.5 million, up from $59.6 million, with adjusted EBITDA increasing to $15.4 million from $12.8 million [14] - US segment revenues rose to $6.2 million from $3.9 million, with adjusted EBITDA improving to breakeven from negative $1.2 million [16] Market Data and Key Metrics Changes - Canadian lodges experienced a 32% year-over-year increase in billed rooms, totaling 636,000 [13] - Australian billed rooms increased by 12% year-over-year to 474,000, with average daily rates remaining consistent at $79 [14][15] - The US market benefited from increased drilling and completion activity, contributing to revenue growth [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet while also returning capital to shareholders through a share repurchase program [8] - Civeo aims to enhance its hospitality services, maintain cost structures in line with occupancy outlooks, and seek opportunities for revenue diversification through organic growth and M&A [21] - The company raised its full year 2022 revenue guidance to a range of $660 million to $675 million and adjusted EBITDA guidance to $95 million to $102 million [18] Management's Comments on Operating Environment and Future Outlook - Management noted encouraging customer conversations regarding increased maintenance and turnaround spending, particularly in Canada [6][19] - The company highlighted risks related to labor availability in Canada that could impact turnaround execution [19] - In Australia, management acknowledged ongoing challenges due to COVID-related labor costs and the China-Australia trade dispute, but expressed optimism about gradual improvements [20] Other Important Information - A stock purchase agreement was announced involving one of the largest shareholders, which will limit the availability of common shares for sale until at least April 2023 [7] - The company’s total debt outstanding as of March 31, 2022, was $177.9 million, with a net leverage ratio of 1.4x [16][17] Q&A Session Summary Question: Insights on Australian business occupancy and growth - Management indicated that the increase in occupancy is primarily due to maintenance activities, with some early signs of growth opportunities [24] Question: Average Daily Rate (ADR) evolution - Management confirmed that the mix of non-contracted rooms has influenced ADR, with an upward bias on pricing expected in both Canada and Australia [26] Question: Updates on LNG projects in Western Canada - Management remains cautiously optimistic about potential expansions, particularly the LNG Canada project, but no updates on timing were provided [29] Question: Balance sheet and free cash flow uses - Management reiterated the focus on debt repayment and returning capital to shareholders, with plans to explore growth opportunities as conditions improve [30] Question: Share repurchase program renewal - Management indicated that discussions regarding the renewal of the share repurchase program would occur, with a strong likelihood of continuation [33] Question: Demobilization of Canadian mobile camps - Management confirmed that current guidance assumes demobilization will occur in Q4 2022, based on customer conversations [34] Question: Working capital and capital expenditures - Management acknowledged that higher revenues would likely lead to increased working capital needs, with some capital expenditures already built into guidance [38]
Civeo(CVEO) - 2022 Q1 - Quarterly Report
2022-04-28 16:00
Financial Performance - Civeo Corporation reported revenues of $165,678,000 for the three months ended March 31, 2022, a 32% increase from $125,430,000 in the same period of 2021[9]. - The company achieved a net income of $1,908,000 for Q1 2022, compared to a net loss of $9,425,000 in Q1 2021, marking a significant turnaround[12]. - Operating income for the quarter was $4,237,000, compared to an operating loss of $9,901,000 in the prior year, indicating improved operational efficiency[9]. - Comprehensive income for the quarter was $9,920,000, compared to a comprehensive loss of $11,052,000 in the same quarter of the previous year[12]. - Total revenues for Q1 2022 were $165.7 million, an increase from $125.4 million in Q1 2021, with Canada contributing $95.9 million and Australia $63.5 million[68]. - Net income attributable to Civeo was $0.9 million, or $0.06 per diluted share, compared to a net loss of $10.0 million, or $0.70 per diluted share in Q1 2021[1]. - Operating income increased by $14.1 million, or 143%, in Q1 2022, primarily due to higher activity levels in Canada and Australia[6]. Assets and Liabilities - Civeo's total current assets increased to $161,847,000 as of March 31, 2022, up from $157,193,000 at the end of 2021[15]. - The company reported total assets of $673,094,000 as of March 31, 2022, slightly up from $672,734,000 at the end of 2021[15]. - Civeo's total liabilities decreased to $300,123,000 as of March 31, 2022, down from $309,623,000 at the end of 2021, reflecting improved financial health[15]. - Total debt as of March 31, 2022, was $175,905 thousand, slightly up from $173,178 thousand as of December 31, 2021[48]. - Long-term debt, less current maturities, increased to $145,037 thousand as of March 31, 2022, from $142,602 thousand as of December 31, 2021[48]. - As of March 31, 2022, total available liquidity was $83.1 million, down from $92.8 million as of December 31, 2021[126]. Revenue Breakdown - Accommodation revenues in Canada for the three months ended March 31, 2022, were $67,194,000, up from $46,530,000 in 2021, reflecting a growth of approximately 44%[32]. - Total Australia revenues for the three months ended March 31, 2022, were $63,529,000, an increase from $59,637,000 in the same period of 2021[32]. - The U.S. segment reported revenues of $6.2 million in Q1 2022, compared to $3.9 million in Q1 2021, indicating growth in this market[68]. - Canadian segment revenues increased by $34.1 million, or 55%, driven by higher billed rooms and increased mobile asset activity[13]. - Australian segment revenues increased by $3.9 million, or 7%, despite a $4.2 million decrease due to a weaker Australian dollar[118]. Cash Flow and Expenditures - Total cash flows provided by operating activities for the three months ended March 31, 2022, were $1,953,000, down from $12,817,000 in the same period of 2021[22]. - Capital expenditures for the three months ended March 31, 2022, were $3,592,000, compared to $3,372,000 in the same period of 2021[22]. - The company anticipates capital expenditures in 2022 to be influenced by macroeconomic conditions and commodity price volatility, particularly in the natural resources sector[74]. - Capital expenditures for 2022 are expected to be in the range of $20 million to $25 million, compared to $15.6 million in 2021, indicating a planned increase[98]. Shareholder Information - The company repurchased 500 common shares at a weighted average price of $18.47 per share, totaling approximately $9.2 thousand during Q1 2022[58]. - The company authorized a share repurchase program to buy back up to 5.0% of its total common shares, equating to 715,814 shares, over a twelve-month period[133]. - The company repurchased a total of 46,577 common shares during the three months ended March 31, 2022, at an average price of $21.93 per share[151]. Legal and Compliance - The company is involved in various pending legal claims, but believes that any ultimate liability will not have a material adverse effect on its financial position[148]. - Investors are advised to refer to the "Risk Factors" section in the Annual Report for additional information on potential risks[149]. - The company has filed various agreements as exhibits to its Quarterly Report to provide investors with information regarding their terms[156]. - The certifications of the Chief Executive Officer and Chief Financial Officer were filed in compliance with the Securities Exchange Act of 1934[153][154]. Market Conditions - The ongoing impact of COVID-19 has led to increased staff costs due to labor shortages in Australia, affecting operational efficiency and cost management[78]. - WCS prices in Q1 2022 averaged $82.04 per barrel, up from $46.28 in Q1 2021, indicating a significant year-over-year increase of 77.1%[83]. - The U.S. oil rig count increased from 267 at the end of 2020 to 531 at the end of Q1 2022, showing a recovery in drilling activity[94]. - The average U.S. to Australian dollar exchange rate was $0.724 in Q1 2022, down 6.3% from $0.773 in Q1 2021, impacting financial results[96].
Civeo(CVEO) - 2021 Q4 - Earnings Call Transcript
2022-02-28 18:46
Financial Data and Key Metrics Changes - For the full year 2021, Civeo generated $87 million in free cash flow and reduced total debt by $76 million, ending the year with $175 million in total debt [6] - In Q4 2021, Civeo reported total revenue of $159.8 million, with GAAP net income of $9.8 million or $0.58 per diluted share [15] - Adjusted EBITDA for Q4 2021 was $34.5 million, with free cash flow of $26.1 million [15][6] - The net leverage ratio decreased to 1.49 times at year-end from 1.86 times at the end of Q3 2021 [14] Business Line Data and Key Metrics Changes - Canadian segment revenue increased to $92.2 million in Q4 2021 from $65.5 million in Q4 2020, with adjusted EBITDA rising to $23.1 million from $13.8 million [17][18] - Australian segment revenue decreased to $62.3 million in Q4 2021 from $63.7 million in Q4 2020, with adjusted EBITDA down to $13.6 million from $17.2 million [20] - U.S. segment revenue increased to $5.3 million in Q4 2021 from $4.2 million in Q4 2020, with adjusted EBITDA improving to $3.3 million from a negative $1.4 million [22] Market Data and Key Metrics Changes - Canadian build rooms totaled 588,000 in Q4 2021, up 25% year-over-year from 469,000 [19] - Australian build rooms were 465,000 in Q4 2021, down from 480,000 in Q4 2020 [21] - The average daily rate for Canadian lodges was $106, an 8% year-over-year increase, while the Australian average daily rate remained at $77 [19][21] Company Strategy and Development Direction - Civeo's strategy focuses on diversifying revenue streams to reduce volatility in cash flow generation while prioritizing debt reduction [6][7] - The company aims to return capital to shareholders through a share repurchase program while maintaining a focus on debt paydown [9][38] - Management is optimistic about the potential for increased capital expenditures from customers if commodity prices stabilize [29][32] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are currently focused on capital discipline and returning capital to shareholders, impacting spending on maintenance and production [8] - The outlook for 2022 includes revenue guidance of $600 million to $615 million and EBITDA guidance of $90 million to $95 million [26] - The primary uncertainty in 2022 guidance is the timing and duration of pipeline projects in British Columbia [28] Other Important Information - Total capital expenditures for 2021 were $15.6 million, up from $10.1 million in 2020, with expectations for 2022 to be between $20 million and $25 million [23][26] - The company has total liquidity of approximately $92.8 million as of December 31, 2021 [24] Q&A Session Summary Question: Use of cash and share buyback program - Management indicated that the share buyback program has been progressing well, with about 30% of the authorization completed [39] Question: Canadian mobile camp revenue from pipeline projects - Management confirmed that 95% to 100% of mobile camp revenue is related to the Coastal GasLink and TMX projects [42] Question: Revenue contribution from the West Permian Lodge - The West Permian Lodge generated nearly $2 million in revenue before its sale, and the U.S. business is expected to run at breakeven to a $2 million EBITDA loss in 2022 [44] Question: Capital allocation priorities - Management stated that debt paydown is the top priority, followed by share buybacks, with M&A being the last option [54] Question: Australian labor costs and guidance - Management noted that labor costs are high due to COVID-related restrictions and that improvements are expected to take the full balance of 2022 [50] Question: Canadian turnaround activity expectations - Management expressed a conservative outlook for Canadian occupancy in 2022, dependent on customer capital expenditure alignment [51]
Civeo(CVEO) - 2021 Q4 - Annual Report
2022-02-27 16:00
Financial Performance - Total revenue for the year ended December 31, 2021, was $594.5 million, an increase of 12.3% from $529.7 million in 2020[39] - Accommodation revenue in Canada was $239.5 million in 2021, compared to $202.5 million in 2020, reflecting a growth of 18.3%[40] - Mobile facility rental revenue increased to $77.3 million in 2021 from $50.0 million in 2020, marking a growth of 54.5%[40] - Food service and other services revenue remained stable at $124.8 million in 2021, slightly up from $124.4 million in 2020[40] - Revenues from lodges and villages represented over 65% of consolidated revenues for the year ended December 31, 2021[104] - The Australian operations generated 42% of total revenue, with 9,046 rooms owned across nine villages, maintaining the same number of rooms as in 2020[72][80] - The U.S. business accounted for 4% of total revenue, with 535 rooms across two lodges as of December 31, 2021, down from 925 rooms in 2020[85][92] Operations and Capacity - The company operates 27 lodges and villages with over 28,000 rooms, in addition to approximately 9,500 rooms owned by customers[27] - The company’s Wapasu Creek Lodge has more than 5,000 rooms, comparable in size to the largest hotels in North America[62] - As of December 31, 2021, the total number of rooms in Canadian lodges was 18,947, a decrease from 19,024 in 2020, representing a decline of approximately 0.4%[67] - The company had commitments for 29% of rentable rooms for 2022 and 9% for 2023, excluding exclusivity contracts[104] - As of December 31, 2021, the company had 8,281 rooms under contract, with 4,048 set to expire in 2022 and 3,616 in 2023[107] Market Demand and Influences - Demand for hospitality services is influenced by commodity prices, with a recovery in global oil demand observed throughout 2021 and into 2022[30] - The demand for hospitality services in Canada is largely driven by commodity prices, particularly crude oil prices for oil sands projects[55] - The company’s operations are significantly affected by seasonal weather, impacting service provision during spring thaw and winter months[106] - The company’s customers face unique operating risks that could adversely affect demand for the company’s services, including unexpected problems and higher costs in project development[203] - The current volatile commodity price environment may hinder customers from renewing contracts on favorable terms, impacting the company's revenue stability[209] Customer Base and Partnerships - The largest customers in 2021 included Suncor Energy Inc, Imperial Oil Limited, and Fortescue Metals Group Ltd, each accounting for over 10% of revenues[99] - The company entered into three new Indigenous partnerships in the oil sands region and two in British Columbia in 2018, with a new partnership in British Columbia in 2021[96] - In 2021, the company purchased more than C$56.5 million in goods and services from the Indigenous business community, representing 32% of total Canadian local spending[94] - The company is highly dependent on several significant customers in the natural resources industry, and the loss of any major customer could lead to substantial revenue loss[206] Regulatory and Environmental Factors - The British Columbia Oil and Gas Commission (BCOGC) has implemented new regulations effective January 1, 2020, requiring operators to eliminate or reduce natural gas leaks, which may lead to increased operational costs for customers[123] - Canada aims to reduce methane emissions from the oil and gas sector by 40-45% below 2012 levels by 2025, with regulations taking effect in 2020 and additional requirements in 2023[129] - The Greenhouse Gas Pollution Pricing Act (GGPPA) imposes a carbon price that will escalate to $50 per tonne of CO2e in 2022 and further increase to $170 per tonne by 2030, impacting operational costs for companies[130][132] - The Canadian Net-Zero Emissions Accountability Act mandates the government to achieve net-zero emissions by 2050, establishing five-year emissions-reduction targets[134] - The federal government has committed to reducing emissions by 40-45% below 2005 levels by 2030, which may result in additional costs for companies in the oil and gas sector[135] Challenges and Risks - The company is exposed to various legal and regulatory risks, including extensive environmental laws and potential changes in tax laws that could impact its financial position[190] - Increased operating costs, particularly in food, wages, and utilities, may constrain profitability if not recoverable through pricing adjustments[218] - A shortage of skilled labor has led to increased reliance on expensive temporary labor, negatively affecting profitability[221] - The company faces risks related to contract cancellations and reduced customer utilization, which could materially affect business operations[209] - The company’s profitability may be adversely affected by fluctuations in food prices due to global demand and climate-related supply issues[220] Impact of COVID-19 - The COVID-19 pandemic has materially affected the company’s operations and those of its customers, with ongoing uncertainty regarding future impacts on financial results[200] - The company has implemented measures to comply with COVID-19 regulations, which have resulted in disruptions and increased costs[201] - The company experienced a decrease in customer demand for accommodations in 2020 due to COVID-19, but demand began recovering in 2021, although not to pre-COVID levels[217] Strategic Positioning - The company has exited the Bakken region and reduced its presence in the Rockies due to volatility in oil prices, reallocating assets to the Permian Basin and Mid-Continent[90] - The company’s business model relies on customers outsourcing accommodations, which may be reversed if customers choose to utilize their own facilities[215] - The company operates in a highly competitive industry, facing challenges in maintaining service quality and pricing against larger competitors[216]
Civeo(CVEO) - 2021 Q3 - Earnings Call Transcript
2021-10-28 21:33
Financial Data and Key Metrics Changes - In Q3 2021, Civeo reported total revenues of $155.1 million, with net income of $0.1 million or $0.00 per diluted share [12] - Adjusted EBITDA for the quarter was $26.2 million, operating cash flow was $33.9 million, and free cash flow was $31 million [12] - The net leverage ratio decreased to 1.86 times as of September 30, 2021, down from 1.98 times as of June 30, 2021 [17] Business Segment Data and Key Metrics Changes - Canadian segment revenues increased to $84.1 million from $71.8 million in Q3 2020, with adjusted EBITDA of $19.8 million, down from $21.3 million [13] - Australian segment revenues were $65.1 million, slightly up from $64.7 million in Q3 2020, but adjusted EBITDA decreased to $14.8 million from $21.5 million [14] - U.S. segment revenues were $5.9 million, down from $6.4 million in Q3 2020, with adjusted EBITDA improving to negative $0.5 million from negative $1.5 million [16] Market Data and Key Metrics Changes - The Canadian oil sands region saw a 21% year-over-year increase in billed rooms, totaling 613,000 [13] - In Australia, billed rooms decreased to 491,000 from 514,000 in Q3 2020, influenced by customer hesitancy in capital projects [14] - The U.S. lodge occupancy increased sequentially, although offshore work decreased [11] Company Strategy and Development Direction - The company is focused on free cash flow generation, debt reduction, and maintaining a conservative approach to capital allocation [6][9] - Civeo announced a share repurchase program for up to 5% of total common shares outstanding [6] - The company plans to prioritize safety, manage costs according to market outlooks, enhance hospitality offerings, and allocate capital prudently [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding improvements in commodity prices but noted that customer spending plans remain conservative [9][20] - The outlook for the Canadian segment is steady with expected strong mobile camp activity, while the Australian segment faces subdued customer spending and increased labor costs [19][20] - The U.S. segment is seeing gradual recovery, but rig counts lag behind commodity price movements [21] Other Important Information - Civeo replaced and refinanced its entire debt agreement, extending maturity to September 2025, providing more financial flexibility [17] - Total liquidity as of September 30, 2021, was approximately $78.2 million [17] Q&A Session Summary Question: What should be watched for improvement in the Australian markets next year? - Management indicated that announcements from customers regarding capital spending plans will be crucial for increased occupancy [25] Question: How will the return of capital to shareholders evolve? - Currently, the focus is on the share repurchase program, with no immediate plans to expand it beyond the 5% limit [26][27] Question: What is the opportunity in the global gas markets on the West Coast of Canada? - Management is monitoring the LNG Canada project for potential benefits to their operations [28][29] Question: What factors are driving the higher end of EBITDA guidance? - The increase is largely attributed to the Canadian business, particularly occupancy and pipeline construction camp activity [32] Question: What is needed for greater labor availability in Australia? - Easing of international borders and travel restrictions within Australia is necessary to improve labor supply [37]