Civeo(CVEO) - 2025 Q2 - Quarterly Report

PART I -- FINANCIAL INFORMATION ITEM 1. Financial Statements This section presents Civeo Corporation's unaudited consolidated financial statements for Q2 and H1 2025 and 2024, with detailed notes Unaudited Consolidated Statements of Operations Consolidated Statements of Operations (Three Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Revenue | $162,694 | $188,713 | $(26,019) | | Operating income (loss) | $2,800 | $13,112 | $(10,312) | | Net income (loss) attributable to Civeo Corp. | $(3,314) | $8,227 | $(11,541) | | Basic net income (loss) per share | $(0.25) | $0.57 | $(0.82) | | Diluted net income (loss) per share | $(0.25) | $0.56 | $(0.81) | | Dividends per common share | $0.00 | $0.25 | $(0.25) | Consolidated Statements of Operations (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Revenue | $306,738 | $354,833 | $(48,095) | | Operating income (loss) | $(2,716) | $11,331 | $(14,047) | | Net income (loss) attributable to Civeo Corp. | $(13,156) | $3,094 | $(16,250) | | Basic net income (loss) per share | $(0.98) | $0.21 | $(1.19) | | Diluted net income (loss) per share | $(0.98) | $0.21 | $(1.19) | | Dividends per common share | $0.25 | $0.50 | $(0.25) | Unaudited Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :---------------------------------------------------- | :----- | :----- | :----- | | Net income (loss) | $(3,311) | $7,487 | $(10,798) | | Foreign currency translation adjustment | $10,935 | $1,621 | $9,314 | | Comprehensive income (loss) attributable to Civeo Corp. | $7,620 | $9,875 | $(2,255) | Consolidated Statements of Comprehensive Income (Loss) (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :---------------------------------------------------- | :----- | :----- | :----- | | Net income (loss) | $(13,161) | $2,291 | $(15,452) | | Foreign currency translation adjustment | $12,028 | $(8,610) | $20,638 | | Comprehensive income (loss) attributable to Civeo Corp. | $(1,129) | $(5,420) | $4,291 | Consolidated Balance Sheets Consolidated Balance Sheets (As of June 30, 2025 vs December 31, 2024, in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :------------ | :----------- | :------- | | Total current assets | $139,209 | $110,453 | $28,756 | | Property, plant and equipment, net | $265,138 | $204,897 | $60,241 | | Total assets | $508,839 | $405,072 | $103,767 | | Total current liabilities | $92,238 | $92,646 | $(408) | | Long-term debt | $168,672 | $43,299 | $125,373 | | Total liabilities | $299,401 | $168,074 | $131,327 | | Total shareholders' equity | $209,438 | $236,998 | $(27,560) | Unaudited Consolidated Statements of Changes in Shareholders' Equity - Total shareholders' equity decreased from $236,998 thousand at December 31, 2024, to $209,438 thousand at June 30, 2025, primarily due to a net loss of $13,156 thousand, dividends paid of $4,058 thousand, and common shares repurchased of $22,474 thousand, partially offset by a currency translation adjustment of $12,028 thousand[16] Unaudited Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Net cash flows provided by (used in) operating activities | $(10,758) | $38,343 | $(49,101) | | Net cash flows used in investing activities | $(74,444) | $(129) | $(74,315) | | Net cash flows provided by (used in) financing activities | $92,244 | $(34,112) | $126,356 | | Net change in cash and cash equivalents | $9,434 | $4,112 | $5,322 | | Cash and cash equivalents, end of period | $14,638 | $7,435 | $7,203 | Notes to Unaudited Consolidated Financial Statements - Civeo Corporation provides hospitality services to remote workforces in Australia and Canada, including catering, lodging, housekeeping, and facility management, primarily serving the metallurgical coal, oil, liquefied natural gas (LNG), and iron ore producing regions[20] Revenue by Reportable Segment (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Australia | $112,672 | $108,608 | $216,318 | $200,345 | | Canada | $50,022 | $79,527 | $90,420 | $146,687 | | Other | $0 | $578 | $0 | $7,801 | | Total | $162,694 | $188,713 | $306,738 | $354,833 | - No impairment expense was recorded during the first or second quarters of 2025[29] - In the first quarter of 2024, pre-tax impairment charges totaled $7.8 million, including $5.7 million for undeveloped land in Australia and $2.1 million for land in the U.S[31][32] - On May 6, 2025, Civeo acquired Qantac Pty Ltd in Queensland, Australia, for approximately US$68 million in cash[43] - The acquisition included four villages with 1,340 rooms and associated assets, expanding Civeo's accommodations business into the Blackwater region of the Bowen Basin[45] - Total long-term debt increased to $168.7 million at June 30, 2025, from $43.3 million at December 31, 2024[51] - The Syndicated Facility Agreement was amended on March 24, 2025, increasing Australian revolving commitments by $20.0 million to $55.0 million, resulting in a total revolving credit facility of $265.0 million[52][53] - Income tax expense for the three months ended June 30, 2025, was $3.6 million (1222.4% of pretax income) compared to $3.8 million (33.6%) in 2024[61] - For the six months, income tax expense was $6.7 million ((103.5)%) compared to $5.3 million (70.0%) in 2024, significantly impacted by Canada and the U.S. being considered loss jurisdictions[62] - The Board authorized increases to the Share Repurchase Program in March and April 2025, allowing repurchases of up to 20% (approximately 2.7 million) of total common shares outstanding[66] - Quarterly dividends were suspended in April 2025 to prioritize returning capital through ongoing share repurchases[69][163] Common Share Repurchases (in thousands, except per share data) | Period | Dollar-value of shares repurchased | Shares repurchased | Average price paid per share | | :-------------------------- | :------------------------------- | :----------------- | :--------------------------- | | Three Months Ended June 30, 2025 | $19,140 | 883.3 | $21.64 | | Three Months Ended June 30, 2024 | $6,644 | 274.1 | $24.21 | | Six Months Ended June 30, 2025 | $22,474 | 1,036.4 | $21.65 | | Six Months Ended June 30, 2024 | $9,852 | 407.2 | $24.17 | Operating Income (Loss) by Segment (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | | :-------- | :----- | :----- | :----- | | Australia | $14,573 | $13,856 | $717 | | Canada | $(1,915) | $6,854 | $(8,769) | | Corporate, other and eliminations | $(9,858) | $(7,598) | $(2,260) | | Total | $2,800 | $13,112 | $(10,312) | Operating Income (Loss) by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | | :-------- | :------- | :------- | :------- | | Australia | $27,212 | $21,144 | $6,068 | | Canada | $(11,944) | $8,559 | $(20,503) | | Corporate, other and eliminations | $(17,984) | $(18,372) | $388 | | Total | $(2,716) | $11,331 | $(14,047) | Cautionary Statement Regarding Forward-Looking Statements This section advises that forward-looking statements are subject to risks and uncertainties, not guarantees of future performance - Forward-looking statements are identified by terms such as 'may,' 'expect,' 'anticipate,' 'estimate,' 'continue,' 'believe' and are subject to important factors that could cause actual results to differ materially[90] - Readers should refer to 'Risk Factors' in this quarterly report and the Annual Report on Form 10-K for a discussion of known material factors affecting results[90] - The company disclaims responsibility for the accuracy and completeness of third-party reports on natural resources industry trends[91] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Civeo's financial condition and operations, including macroeconomic impacts, segment performance, and liquidity Overview and Macroeconomic Environment - Demand for Civeo's hospitality services is primarily driven by ongoing operations of natural resource projects in Australia and Canada, sensitive to commodity prices (met coal, oil, iron ore, LNG) and global economic factors like inflation, supply chain disruptions, and labor shortages[93] Average Commodity Prices (per Quarter) | Quarter Ended | Hard Coking Coal (per tonne) | Iron Ore (per tonne) | WTI Crude (per bbl) | WCS Crude (per bbl) | | :------------ | :--------------------------- | :------------------- | :------------------ | :------------------ | | 6/30/2025 | $186.10 | $92.70 | $63.81 | $53.15 | | 3/31/2025 | $185.13 | $97.25 | $71.47 | $58.27 | | 12/31/2024 | $203.50 | $96.00 | $70.42 | $57.50 | | 9/30/2024 | $210.74 | $94.54 | $75.29 | $59.97 | | 6/30/2024 | $242.93 | $106.01 | $80.83 | $67.24 | - Met coal prices remained between $168 and $198 per tonne in H1 2025, impacted by subdued global steel production and trader reselling of inventories[97] - Iron ore prices declined to average $92.70 per tonne in Q2 2025, with expectations of continued subdued prices[99] - WTI crude prices are down 9% year-to-date in 2025 due to OPEC+ production increases and flattening global demand[100] - WCS crude prices averaged $53.15 per barrel in Q2 2025, down from $67.24 in Q2 2024, with potential adverse impacts from new U.S. tariffs on Canadian energy resources[103] - The Qantac Acquisition on May 6, 2025, expanded Civeo's Australian accommodations with four villages and 1,340 rooms[104] - Inflationary pressures continue to impact labor and food costs, and labor shortages in Australia lead to increased staff costs[105][106] - Sitka Lodge occupancy is expected to be lower in the near-term following the completion of Phase 1 of the Kitimat LNG facility[107] - Civeo expects 2025 capital expenditures to be in the range of $20 million to $25 million, compared to $26.1 million in 2024[111] Results of Operations – Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 - Consolidated revenues decreased $26.0 million (14%) year-over-year, primarily due to lower billed rooms at Canadian oil sands lodges and reduced occupancy at Sitka Lodge, partially offset by the Qantac Acquisition and new business in Australia[116] - Consolidated cost of sales and services decreased $19.3 million (14%) year-over-year, driven by lower costs at Canadian lodges due to reduced occupancy and mobile asset activity, partially offset by the Qantac Acquisition and new Australian business[117][118] - Selling, general and administrative (SG&A) expenses increased $3.0 million (17%) year-over-year, mainly due to $3.2 million in shareholder activist related costs[119] - Consolidated operating income decreased $10.3 million (79%) year-over-year, primarily due to lower Canadian lodge occupancy and higher SG&A expenses, partially offset by increased activity levels in Australia[121] - Net interest expense increased $0.5 million (22%) year-over-year, related to higher average debt levels[122] - Other comprehensive income increased $9.3 million, primarily due to foreign currency translation adjustments from the Australian and Canadian dollars appreciating against the U.S. dollar[124] Segment Results of Operations – Australian Segment (Three Months) - Australian segment revenues increased $4.1 million (4%) year-over-year, or 6.7% on a constant currency basis, driven by the Qantac Acquisition ($4.9 million in revenues) and new business in integrated services villages in Western Australia[116][126] - Total billed rooms for villages increased by 65,153 (10.4%) to 690,506[126] - Average daily rate for villages decreased by $2 to $76[126] - Gross margin as a percentage of revenues increased to 26.8% from 25.4%, primarily due to increased relative contribution from the higher-margin accommodation business resulting from the Qantac Acquisition[128] Segment Results of Operations – Canadian Segment (Three Months) - Canadian segment revenues decreased $29.5 million (37%) year-over-year, driven by lower billed rooms at oil sands lodges due to producers' focus on cost reduction and reduced occupancy at Sitka Lodge following the completion of the Kitimat LNG facility[129] - Total billed rooms for lodges decreased by 302,394 (40.2%) to 449,970[129] - Average daily rate for lodges decreased by $2 to $94[129] - Cost of sales and services decreased $19.8 million (34%) year-over-year, largely due to lower costs at lodges from reduced occupancy and lower demobilization costs from pipeline projects[130] - Gross margin as a percentage of revenues decreased to 22.0% from 26.0%, primarily due to reduced efficiencies at lodges with lower occupancy levels[131] Results of Operations – Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 - Consolidated revenues decreased $48.1 million (14%) year-over-year, primarily due to lower billed rooms at Canadian oil sands lodges, reduced Sitka Lodge occupancy, decreased mobile asset activity, and weaker Australian and Canadian dollars[134] - Consolidated cost of sales and services decreased $35.1 million (13%) year-over-year, driven by lower costs at Canadian lodges due to reduced occupancy and mobile asset activity, partially offset by the Qantac Acquisition and new Australian business[135][136] - SG&A expenses increased $2.6 million (7%) year-over-year, mainly due to $3.2 million in shareholder activist related costs and higher share-based compensation[137] - Consolidated operating loss increased $14.0 million (124%) year-over-year, primarily due to lower Canadian lodge occupancy, higher SG&A, and the absence of a $6.0 million net gain on asset sale from 2024, partially offset by higher Australian activity and no impairment expenses in 2025[141] - Net interest expense decreased $0.2 million (6%) year-over-year, primarily due to lower interest rates, partially offset by higher average debt levels[142] - Other comprehensive income increased $20.6 million, driven by foreign currency translation adjustments from the Australian and Canadian dollars appreciating against the U.S. dollar[144] Segment Results of Operations – Australian Segment (Six Months) - Australian segment revenues increased $16.0 million (8%) year-over-year, or 12% on a constant currency basis, driven by the Qantac Acquisition ($4.9 million in revenues) and new business in integrated services villages in Western Australia[145] - Total billed rooms for villages increased by 76,853 (6.2%) to 1,316,142[145] - Average daily rate for villages decreased by $1 to $76[145] - Gross margin as a percentage of revenues decreased slightly to 26.4% from 26.6%, primarily due to an increased relative revenue contribution from the lower-margin integrated services business[147] Segment Results of Operations – Canadian Segment (Six Months) - Canadian segment revenues decreased $56.3 million (38%) year-over-year, or 36.2% on a constant currency basis, due to lower billed rooms at oil sands lodges, reduced Sitka Lodge occupancy, and decreased mobile asset activity from completed pipeline projects[149] - Total billed rooms for lodges decreased by 553,729 (40.6%) to 808,667[149] - Average daily rate for lodges decreased by $3 to $94[149] - Cost of sales and services decreased $39.4 million (34%) year-over-year, largely due to lower costs at lodges from reduced occupancy and lower mobile asset activity[150] - Gross margin as a percentage of revenues decreased to 15.2% from 20.8%, primarily due to reduced efficiencies at lodges with lower occupancy levels[151] Liquidity and Capital Resources Consolidated Liquidity Position (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :------------ | :----------- | :------- | | Lender commitments | $265,000 | $245,000 | $20,000 | | Reduction in availability | $(37,291) | $(3,635) | $(33,656) | | Borrowings against revolving credit capacity | $(168,672) | $(43,299) | $(125,373) | | Outstanding letters of credit | $(870) | $(1,100) | $230 | | Unused availability | $58,167 | $196,966 | $(138,799) | | Cash and cash equivalents | $14,638 | $5,204 | $9,434 | | Total available liquidity | $72,805 | $202,170 | $(129,365) | - Net cash used in operating activities was $10.8 million for the six months ended June 30, 2025, compared to $38.3 million provided in 2024, largely due to increased cash taxes paid in Australia and non-repeating holdback collections in Canada[153] - Net cash used in investing activities increased significantly to $74.4 million in 2025 from $0.1 million in 2024, primarily due to the Qantac Acquisition ($64.9 million) and lower proceeds from asset sales[154] - Net cash provided by financing activities was $92.2 million in 2025, mainly from $119.2 million in net revolving credit borrowings used to fund the Qantac Acquisition and share repurchases[156] - Expected capital expenditures for 2025 are in the range of $20 million to $25 million, to be funded by available cash, cash flow from operations, and revolving credit borrowings[155] - The Board suspended quarterly dividends in April 2025 to prioritize share repurchases[163] Critical Accounting Policies - A discussion of critical accounting policies and estimates is provided in the Annual Report on Form 10-K for the year ended December 31, 2024[164] - There have been no material changes to the judgments, assumptions, and estimates underlying these critical accounting policies[164] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines Civeo's exposure to market risks, focusing on interest rate and foreign currency exchange rate impacts - Civeo had $168.7 million in floating-rate debt as of June 30, 2025[166] - A hypothetical 100 basis point increase in floating interest rates would increase consolidated interest expense by approximately $1.7 million annually[166] - A hypothetical 10% adverse change in the value of the Australian dollar and Canadian dollar relative to the U.S. dollar would result in translation adjustments of approximately $23 million and $7 million, respectively, recorded in other comprehensive loss[167] ITEM 4. Controls and Procedures Management confirmed the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that Civeo's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate financial reporting[168] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the three months ended June 30, 2025[169] PART II -- OTHER INFORMATION ITEM 1. Legal Proceedings Civeo is involved in various legal proceedings, but management believes any ultimate liability will not materially affect financial position or operations - Civeo is a party to various pending or threatened claims, lawsuits, and administrative proceedings concerning its commercial operations, products, and employees[171] - Management believes that any ultimate liability from these proceedings will not have a material adverse effect on the company's consolidated financial position, results of operations, or liquidity, to the extent not otherwise provided for or covered by indemnity or insurance[171] ITEM 1A. Risk Factors This section directs readers to review 'Risk Factors' and 'MD&A' in prior reports for factors that could materially affect future operating results - Readers should carefully read and consider 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in the Annual Report on Form 10-K for December 31, 2024, and the Quarterly Report on Form 10-Q for March 31, 2025[172] - These documents contain descriptions of significant factors that may cause future operating results to differ materially from current expectations[172] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details common share repurchases during Q2 2025, where Civeo repurchased 883,333 shares for $19.1 million Common Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may be purchased under the plans or programs | | :----------------------------- | :----------------------------- | :--------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------------------------ | | April 1, 2025 - April 30, 2025 | 88,169 | $22.65 | 88,169 | 2,690,651 | | May 1, 2025 - May 31, 2025 | 409,200 | $20.60 | 409,200 | 2,281,451 | | June 1, 2025 - June 30, 2025 | 385,964 | $22.50 | 385,964 | 1,895,487 | | Total | 883,333 | $21.64 | 883,333 | 1,895,487 | - The 2025 Share Repurchase Program was authorized to repurchase up to 20% (approximately 2.7 million) of total common shares outstanding and does not have an expiration date[174] ITEM 5. Other Information This section indicates no other information is reported for the period - No other information is reported in this section[175] ITEM 6. Exhibits This section provides an index of exhibits filed with the Form 10-Q, including agreements and certifications, with a cautionary note - The index lists various exhibits, including Form of Phantom Unit Agreements, CEO/CFO certifications (Rules 13a-14(a)/15d-14(a) and 13a-14(b)/15d-14(b)), and Inline XBRL documents[176] - Agreements filed as exhibits are intended to provide information regarding their terms and are not necessarily factual representations of Civeo's business or operations, as they may be qualified by confidential disclosure schedules[176] Signature Page This page formally concludes the Form 10-Q filing, signed by E. Collin Gerry, CFO and Treasurer, on July 29, 2025 - The report is signed by E. Collin Gerry, Senior Vice President, Chief Financial Officer and Treasurer, on July 29, 2025[181]