Civeo(CVEO) - 2025 Q2 - Quarterly Results

Second Quarter Highlights Civeo's Q2 2025 highlights encompass financial performance, strategic actions, and capital return to shareholders Overall Financial Performance (Q2 2025 vs Q2 2024) Civeo reported a decrease in revenues and a net loss in Q2 2025 compared to Q2 2024, alongside negative operating cash flow, primarily due to reduced customer spending in Canada and specific one-time financial impacts Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (YoY) | | :----------------------- | :--------------------- | :--------------------- | :----------- | | Revenues | $162.7 | $188.7 | -13.7% | | Net Income (Loss) | ($3.3) | $8.2 | -140.2% | | Diluted EPS | ($0.25) | $0.56 | -144.6% | | Operating Cash Flow | ($2.3) | $32.4 | -107.1% | | Adjusted EBITDA | $25.0 | $31.9 | -21.6% | - The year-over-year decrease in Adjusted EBITDA was mainly due to decreased billed rooms at Canadian lodges from ongoing customer spending reductions and lower turnaround activity[5] - Operating cash flow decrease was exacerbated by a $9.4 million one-time collection of holdbacks in Q2 2024 and approximately $15.8 million in Australian cash taxes in Q2 2025 (including a $9.4 million payment for the 2024 tax year) not incurred in Q2 2024[6] CEO Commentary & Strategic Actions The CEO highlighted Q2 2025 revenues and Adjusted EBITDA met expectations, with accelerated capital return to shareholders. Strategic actions included margin expansion in Australian integrated services, key contract awards, and an accretive acquisition in Australia, while continuing to right-size the Canadian business amidst macroeconomic headwinds - Civeo delivered revenues and Adjusted EBITDA consistent with expectations while accelerating capital return to shareholders[3] - The company drove margin expansion in its integrated services business and positioned the Australian segment for success through multiple key contract awards and the acquisition of four new owned-villages in the Bowen Basin[3] - Civeo repurchased 883,000 common shares for $19.1 million (approximately 7% of outstanding shares as of March 31, 2025) and intends to continue opportunistically executing its share repurchase authorization[3] - The Canadian business continues to face macroeconomic headwinds and typical seasonality effects, leading to cash consumption driven by working capital; Civeo is right-sizing the Canadian business and pursuing diversification opportunities[3] Business Segment Results This section details the financial performance of Civeo's Australian and Canadian business segments for Q2 2025 Australia Segment The Australian segment showed strong growth in Q2 2025, with increased revenues and Adjusted EBITDA, primarily driven by the acquisition of four owned-villages and margin improvements in integrated services, despite a negative impact from a weakened Australian dollar Australia Segment Financial Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (YoY) | | :---------------- | :--------------------- | :--------------------- | :----------- | | Revenues | $112.7 | $108.6 | +3.8% | | Operating Income | $14.6 | $13.9 | +5.0% | | Adjusted EBITDA | $23.7 | $21.6 | +9.7% | - The year-over-year increase was primarily driven by the recently completed acquisition of four owned-villages, which contributed $4.9 million in revenues in the last two months of Q2 2025, and margin improvement in the integrated services business[8][9] - A weakened Australian dollar relative to the U.S. dollar negatively impacted revenues by $3.2 million and Adjusted EBITDA by $0.7 million[7] - Key contract awards in the Bowen Basin include a four-year contract with expected revenues of A$250 million and a three-year integrated services contract with expected revenues of A$64 million[8] Canada Segment The Canadian segment experienced a significant decline in Q2 2025 revenues and shifted to an operating loss, primarily due to reduced lodge occupancy and customer spending in the oil sands region, leading the company to pursue cost-saving actions Canada Segment Financial Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (YoY) | | :---------------- | :--------------------- | :--------------------- | :----------- | | Revenues | $50.0 | $79.5 | -37.1% | | Operating Income | ($1.9) | $6.9 | -127.5% | | Adjusted EBITDA | $7.5 | $17.3 | -56.6% | - Lodge occupancy in the Canadian oil sands region remains challenged due to ongoing customer capital and operational spending reductions, including lower turnaround activity[11] - The Canadian segment incurred approximately $0.5 million in implementation costs related to the cold-closure of two lodges, which are excluded from Adjusted EBITDA[12] - Civeo is evaluating additional cost-saving actions to right-size its North American cost structure in light of macroeconomic factors influencing the global oil market[12] Financial Condition & Capital Allocation This section reviews Civeo's liquidity, debt, leverage, share repurchase activities, and capital expenditures Liquidity, Debt & Leverage Civeo's total debt and net debt significantly increased as of June 30, 2025, primarily due to the recent acquisition and share repurchases, resulting in a net leverage ratio of 2.0x Liquidity, Debt, and Leverage Overview | Metric | As of June 30, 2025 (Millions USD) | As of March 31, 2025 (Millions USD) | Change (Millions USD) | | :---------------- | :--------------------------------- | :---------------------------------- | :-------------------- | | Total Liquidity | $72.8 | N/A | N/A | | Total Debt | $168.7 | $87.4 | +$81.3 | | Net Debt | $154.0 | $59.0 | +$95.0 | | Net Leverage Ratio| 2.0x | N/A | N/A | - The increase in net debt is attributable to the recent acquisition and share repurchases[13] Share Repurchase Program Civeo continued its share repurchase program in Q2 2025, buying back 883,000 shares for $19.1 million, and plans to utilize at least 100% of its annual free cash flow to complete the program - In Q2 2025, Civeo repurchased approximately 883,000 shares for $19.1 million at an average price of $21.64 per share[14] - The company intends to use no less than 100% of its annual free cash flow to complete the authorized share repurchase program as market conditions allow[14] Capital Expenditures Capital expenditures in Q2 2025 decreased slightly year-over-year, primarily focused on maintenance spending for the company's lodges and villages Capital Expenditures Overview | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (YoY) | | :------------------ | :--------------------- | :--------------------- | :----------- | | Capital Expenditures| $4.5 | $5.3 | -15.1% | - Capital expenditures in both periods were primarily related to maintenance spending on the Company's lodges and villages[15] Full Year 2025 Guidance Civeo is maintaining its full-year 2025 guidance for revenue, Adjusted EBITDA, and capital expenditures Full Year 2025 Financial Guidance | Metric | Full Year 2025 Guidance Range (Millions USD) | | :---------------- | :------------------------------------------- | | Revenues | $640 - $670 | | Adjusted EBITDA | $86 - $96 | | Capital Expenditures| $20 - $25 | Conference Call Civeo hosted a conference call on July 29, 2025, to discuss its second quarter 2025 financial results, with webcast and dial-in options available - Civeo hosted a conference call on July 29, 2025, at 8:30 a.m. Eastern time to discuss Q2 2025 financial results[17] - The call was webcast on Civeo's website (www.civeo.com) and accessible via dial-in, with a replay available afterward[17] Company Information This section provides an overview of Civeo Corporation, its forward-looking statements, and definitions of non-GAAP financial measures About Civeo Civeo Corporation is a leading provider of hospitality services in Australian natural resource regions and Canadian oil sands, offering comprehensive lodging and support services for workers across 28 owned and 24 customer-owned locations - Civeo Corporation is a leading provider of hospitality services in Australian natural resource regions and the Canadian oil sands[18] - Services include long-term and temporary accommodations, food services, housekeeping, facility management, laundry, water/wastewater treatment, power generation, communications, security, and logistics[18] - Civeo owns and operates 28 lodges/villages with approximately 27,500 rooms and provides services at 24 customer-owned locations with approximately 19,500 rooms[18] Forward-Looking Statements This section contains standard disclosures regarding forward-looking statements, emphasizing that they are subject to various risks and uncertainties that could cause actual results to differ materially from expectations, and Civeo disclaims any obligation to update them - The news release contains forward-looking statements inherently subject to risks and uncertainties, including those related to future plans, outlook, guidance, and strategic priorities[19] - Risks include general industry conditions, supply/demand for natural resources, commodity price fluctuations, contract terminations, currency exchange rates, inflation, acquisitions, labor shortages, and regulatory changes[19] - Civeo expressly disclaims any intention or obligation to revise or update any forward-looking statements, except as required by law[19] Non-GAAP Financial Information This section defines non-GAAP financial measures such as EBITDA, Adjusted EBITDA, free cash flow, net debt, bank-adjusted EBITDA, and net leverage ratio, clarifying that they supplement GAAP results and may not be comparable across companies - EBITDA, Adjusted EBITDA, free cash flow, net debt, bank-adjusted EBITDA, and net leverage ratio are non-GAAP financial measures[20] - These measures supplement and should be read together with GAAP financial results, not as an alternative or substitute[20] - Non-GAAP financial information may not be comparable to similarly titled measures of other companies due to lack of standardization[20] Consolidated Financial Statements This section presents Civeo's unaudited consolidated statements of operations, balance sheets, and cash flows Unaudited Consolidated Statements of Operations Civeo's unaudited consolidated statements of operations show a net loss for both the three and six months ended June 30, 2025, compared to net income in the prior year periods, driven by decreased revenues and increased expenses Unaudited Consolidated Statements of Operations | Metric (in thousands USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $162,694 | $188,713 | $306,738 | $354,833 | | Operating income (loss) | $2,800 | $13,112 | ($2,716) | $11,331 | | Net income (loss) attributable to Civeo Corporation | ($3,314) | $8,227 | ($13,156) | $3,094 | | Diluted EPS | ($0.25) | $0.56 | ($0.98) | $0.21 | Condensed Consolidated Balance Sheets As of June 30, 2025, Civeo's total assets increased significantly, primarily due to an increase in property, plant and equipment, and other intangible assets, while total liabilities also rose substantially, mainly from long-term debt Condensed Consolidated Balance Sheets | Metric (in thousands USD) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total current assets | $139,209 | $110,453 | | Property, plant and equipment, net | $265,138 | $204,897 | | Total assets | $508,839 | $405,072 | | Total current liabilities | $92,238 | $92,646 | | Long-term debt | $168,672 | $43,299 | | Total liabilities | $299,401 | $168,074 | | Total shareholders' equity | $209,438 | $236,998 | - Cash and cash equivalents increased from $5,204 thousand at December 31, 2024, to $14,638 thousand at June 30, 2025[24] Unaudited Consolidated Statements of Cash Flows For the six months ended June 30, 2025, Civeo reported negative cash flow from operating activities, significant cash used in investing activities primarily due to acquisitions, and substantial cash provided by financing activities from revolving credit borrowings Unaudited Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands USD) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows provided by (used in) operating activities | ($10,758) | $38,343 | | Net cash flows used in investing activities | ($74,444) | ($129) | | Net cash flows provided by (used in) financing activities | $92,244 | ($34,112) | | Net change in cash and cash equivalents | $9,434 | $4,112 | | Cash and cash equivalents, end of period | $14,638 | $7,435 | - Acquisitions and related payments accounted for $64,948 thousand in cash used in investing activities for the six months ended June 30, 2025[26] - Revolving credit borrowings (net) provided $119,223 thousand in cash for financing activities during the six months ended June 30, 2025[26] Segment and Operating Data This section provides detailed financial and operational data for Civeo's Australian and Canadian segments, including revenue disaggregation by service type Segment Financial Performance Civeo's segment data for Q2 2025 shows revenue growth and increased Adjusted EBITDA in Australia, while Canada experienced significant declines in both revenues and profitability, shifting to an operating loss Segment Financial Performance by Region | Metric (in thousands USD) | Australia Q2 2025 | Australia Q2 2024 | Canada Q2 2025 | Canada Q2 2024 | | :-------------------- | :---------------- | :---------------- | :------------- | :------------- | | Revenues | $112,672 | $108,608 | $50,022 | $79,527 | | EBITDA | $23,612 | $21,551 | $6,963 | $17,154 | | Adjusted EBITDA | $23,663 | $21,605 | $7,452 | $17,337 | | Operating income (loss)| $14,573 | $13,856 | ($1,915) | $6,854 | - Australia's revenues increased by 3.7% YoY, and Adjusted EBITDA increased by 9.5% YoY in Q2 2025[28] - Canada's revenues decreased by 37.1% YoY, and Adjusted EBITDA decreased by 57.0% YoY in Q2 2025[28] Supplemental Quarterly Operating Data Supplemental operating data highlights increased billed rooms and accommodation revenue in Australia, while Canada saw substantial decreases in billed rooms and accommodation revenue, reflecting ongoing challenges in the Canadian oil sands region Supplemental Quarterly Operating Data by Region | Metric | Australia Q2 2025 | Australia Q2 2024 | Canada Q2 2025 | Canada Q2 2024 | | :-------------------------------------- | :---------------- | :---------------- | :------------- | :------------- | | Accommodation revenue (thousands USD) | $52,682 | $48,914 | $42,590 | $72,259 | | Food and other services revenue (thousands USD) | $59,990 | $59,694 | $6,998 | $6,912 | | Billed rooms | 690,506 | 625,353 | 449,970 | 752,364 | | Average daily rates (USD) | $76 | $78 | $94 | $96 | - Australian billed rooms increased by 10.4% YoY, while Canadian billed rooms decreased by 40.2% YoY in Q2 2025[29] - The Australian dollar weakened against the U.S. dollar (0.641 in Q2 2025 vs 0.659 in Q2 2024), while the Canadian dollar also slightly weakened (0.723 in Q2 2025 vs 0.731 in Q2 2024)[29] Supplemental Operations by Service Type by Region Civeo provides a supplemental view of revenues disaggregated by service type, showing a year-over-year increase in asset-light (Catering and Facility Management) revenues for Australia and a decrease for Canada, while asset-intensive (Accommodations and Infrastructure) revenues increased in Australia and decreased in Canada - The disclosure disaggregates embedded Catering and Facility Management revenues from Accommodation and other services revenues for owned villages and lodges[33] Supplemental Operations by Service Type and Region | Revenue Type (in thousands USD) | Australia Q2 2025 | Australia Q2 2024 | Canada Q2 2025 | Canada Q2 2024 | | :-------------------------- | :---------------- | :---------------- | :------------- | :------------- | | Asset Light: Catering and Facility management | $82,633 | $80,697 | $29,952 | $44,732 | | Asset Intensive: Accommodations and Infrastructure | $30,039 | $27,911 | $20,070 | $34,795 | | Total revenues | $112,672 | $108,608 | $50,022 | $79,527 | Non-GAAP Reconciliations This section provides reconciliations for non-GAAP financial measures including EBITDA, Adjusted EBITDA, net debt, and net leverage ratio, along with guidance reconciliations EBITDA and Adjusted EBITDA Reconciliation This section provides a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) attributable to Civeo Corporation, highlighting adjustments for impairment, asset dispositions, cost-saving initiatives, share-based compensation, and shareholder activist costs - EBITDA is defined as net income (loss) attributable to Civeo Corporation plus interest, taxes, depreciation, and amortization[36] - Adjusted EBITDA further excludes certain unusual or non-operating items such as impairment of long-lived assets, net gain/loss on asset disposition, cost saving initiatives, share-based compensation, and shareholder activist costs[36] EBITDA and Adjusted EBITDA Reconciliation | Metric (in thousands USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Civeo Corporation | ($3,314) | $8,227 | ($13,156) | $3,094 | | EBITDA | $20,743 | $31,221 | $31,835 | $46,726 | | Adjusted EBITDA | $25,008 | $31,917 | $37,663 | $49,719 | Net Debt and Net Leverage Ratio Reconciliation This section reconciles net debt, bank-adjusted EBITDA, and net leverage ratio, providing insight into the company's indebtedness and compliance with credit agreement covenants - Net debt is calculated as total debt less cash and cash equivalents[37] - Bank-adjusted EBITDA includes adjustments to Adjusted EBITDA for acquisition pro-forma EBITDA, interest income, and certain cost-saving and shareholder activist costs not allowed by the credit facility[37] Net Debt and Net Leverage Ratio Reconciliation | Metric | As of June 30, 2025 | | :-------------------------------------------------------- | :------------------ | | Total debt (thousands USD) | $168,672 | | Less: Cash and cash equivalents (thousands USD) | $14,638 | | Net debt (thousands USD) | $154,034 | | Adjusted EBITDA for the twelve months ended June 30, 2025 (thousands USD) | $67,881 | | Bank-adjusted EBITDA (thousands USD) | $75,904 | | Net leverage ratio | 2.0x | - Civeo is required to maintain a net leverage ratio below 3.0x quarterly to remain in compliance with its credit agreement[38] Guidance Reconciliation This section provides a reconciliation of estimated EBITDA and Adjusted EBITDA to estimated net loss for the full year ending December 31, 2025, supporting the company's financial guidance Full Year 2025 Guidance Reconciliation | Metric (in millions USD) | Year Ending December 31, 2025 (estimated) | | :-------------------- | :---------------------------------------- | | Net loss | ($19.2) - ($11.2) | | EBITDA Range | $78.3 - $88.3 | | Adjusted EBITDA Range | $86.0 - $96.0 | - Adjustments to EBITDA for guidance include shareholder activist costs, cost-saving initiatives, and share-based compensation[39] Contact Information This section provides contact details for investor relations inquiries - For investor relations, contact Regan Nielsen, Vice President, Corporate Development & Investor Relations, at 713-510-2400[40]