Civeo(CVEO) - 2025 Q1 - Quarterly Report

Part I -- FINANCIAL INFORMATION Financial Statements Civeo Corporation reported a net loss of $9.8 million for Q1 2025, a significant increase from the $5.1 million net loss in Q1 2024, driven by a 13% year-over-year revenue decline to $144.0 million - The company provides hospitality services, including catering, lodging, and facility management, to remote workforces in the natural resource sectors of Australia and Canada[19] Consolidated Statements of Operations Highlights (Q1 2025 vs. Q1 2024) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $144.0 million | $166.1 million | | Operating Loss | ($5.5 million) | ($1.8 million) | | Net Loss Attributable to Civeo | ($9.8 million) | ($5.1 million) | | Diluted Net Loss Per Share | ($0.72) | ($0.35) | Consolidated Balance Sheet Highlights (As of March 31, 2025) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $28.4 million | $5.2 million | | Total Assets | $423.8 million | $405.1 million | | Long-term debt | $87.4 million | $43.3 million | | Total Liabilities | $203.0 million | $168.1 million | | Total Shareholders' Equity | $220.7 million | $237.0 million | Consolidated Statements of Cash Flows Highlights (Q1 2025 vs. Q1 2024) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($8.4 million) | $6.0 million | | Net cash provided by (used in) investing activities | ($5.1 million) | $1.2 million | | Net cash provided by financing activities | $36.6 million | $6.6 million | - In Q1 2025, the company repurchased 153,100 shares for $3.3 million and paid a quarterly dividend of $0.25 per share[60][62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the decline in performance primarily to lower activity in its Canadian segment, partially offset by revenue growth in the Australian segment, while navigating a challenging macroeconomic environment and prioritizing share repurchases over dividends Overview and Macroeconomic Environment The company's performance is closely tied to the natural resources sector, with demand sensitive to commodity prices, while managing inflation, labor shortages, and a pending acquisition in Australia - Demand for hospitality services is driven by operations of natural resource projects and is sensitive to commodity price expectations for met coal, oil, iron ore, and LNG[80] - On February 18, 2025, the company entered an agreement to acquire four villages with 1,340 rooms in Australia's Bowen Basin for A$105 million, with the deal expected to close in Q2 2025[93] - The company is managing inflation risk through negotiated service scope changes and contractual protections, but continues to face pressure on labor, food, and fuel costs[94] - Expected capital expenditures for 2025 are projected to be in the range of $20 million to $25 million[100] Results of Operations For Q1 2025, Civeo's consolidated revenues fell 13% to $144.0 million, operating loss widened to $5.5 million, and net loss increased to $9.8 million, primarily due to lower Canadian activity and non-recurring prior-year gains Consolidated Results of Operations (Q1 2025 vs. Q1 2024) | Metric (in millions) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $144.0 | $166.1 | ($22.1) | | Operating Loss | ($5.5) | ($1.8) | ($3.7) | | Net Loss Attributable to Civeo | ($9.8) | ($5.1) | ($4.7) | - The decrease in revenue was primarily driven by lower billed rooms at Canadian oil sands lodges and reduced occupancy at the Sitka Lodge as LNG facility construction nears completion[106] - The Q1 2024 results included a $6.1 million net gain from the sale of the McClelland Lake Lodge and a $7.8 million impairment charge, which impacted year-over-year comparisons[105] Segment Results of Operations The Australian segment's revenue grew 13% to $103.6 million in Q1 2025, while the Canadian segment's revenue plummeted 40% to $40.4 million due to significantly lower occupancy Australian Segment Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $103.6 million | $91.7 million | | Gross Margin % | 26.0% | 27.9% | | Total Billed Rooms | 625,636 | 613,936 | - Australian revenue growth was driven by new business in integrated services villages in Western Australia, despite a 4.5% weakening of the AUD against the USD[117] Canadian Segment Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $40.4 million | $67.2 million | | Gross Margin % | 6.8% | 14.7% | | Total Billed Rooms | 358,697 | 610,032 | - The Canadian revenue decline was caused by lower billed rooms at oil sands lodges and reduced occupancy at Sitka Lodge as the Kitimat LNG facility nears completion[120] Liquidity and Capital Resources As of March 31, 2025, Civeo had total available liquidity of $162.2 million, used $8.4 million in cash from operations, amended its credit agreement, and suspended quarterly dividends to prioritize share repurchases Liquidity Position | Metric (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unused Availability | $133.8 | $197.0 | | Cash and cash equivalents | $28.4 | $5.2 | | Total available liquidity | $162.2 | $202.2 | - In March 2025, the Board increased the common share repurchase program authorization to 10% of outstanding shares, which was further increased to 20% in April 2025[131] - In April 2025, the Board suspended quarterly dividends to prioritize returning capital to shareholders through ongoing share repurchases[136] - The company amended its Syndicated Facility Agreement on March 24, 2025, to increase the Australian revolving commitments by $20.0 million to an aggregate of $55.0 million[132] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are exposure to changes in interest rates on its floating-rate debt and foreign currency exchange rate fluctuations - A 100 basis point increase in floating interest rates would increase annual consolidated interest expense by approximately $0.9 million, based on debt levels at March 31, 2025[139] - A hypothetical 10% adverse change in the value of the Canadian and Australian dollar relative to the U.S. dollar would result in translation adjustments of approximately $11 million and $23 million, respectively, recorded in other comprehensive loss[140] Controls and Procedures The company's management concluded that its disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[141] - There were no changes in internal control over financial reporting during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[142] Part II -- OTHER INFORMATION Legal Proceedings The company is involved in various pending claims and lawsuits, but management believes the ultimate liability will not materially adversely affect its financial position or results - Civeo is a party to various pending or threatened claims and lawsuits concerning its commercial operations, products, and employees[144] - Management believes that any ultimate liability from these proceedings, not covered by indemnity or insurance, will not have a material adverse effect on the company's financial condition[144] Risk Factors Changes in U.S. or foreign trade policies, including tariffs and protectionist measures, could adversely impact the company's future net income, cash flows, and financial condition - Changes in U.S. or foreign trade policies, such as tariffs and other restrictive measures, pose a risk to the company's future net income and cash flows[146] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, Civeo repurchased a total of 177,013 common shares, including 153,092 shares under its publicly announced program at an average price of $21.75 per share Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $ — | — | | Feb 2025 | 23,921 | $26.96 | — | | Mar 2025 | 153,092 | $21.75 | 153,092 | | Total | 177,013 | $21.75 | 153,092 | - The Share Repurchase Program was increased in March and April 2025, authorizing the repurchase of up to 20% of total common shares outstanding (approx. 2,690,000 shares)[150] Other Information There was no information to report under this item for the period - None[149] Exhibits This section lists all exhibits filed with the Form 10-Q, including an Asset Sale and Purchase Agreement, an amendment to the Syndicated Facility Agreement, and required certifications - Filed exhibits include the Asset Sale and Purchase Agreement dated Feb 18, 2025, and the Third Amendment to Syndicated Facility Agreement dated March 24, 2025[151]