Civeo(US:CVEO)2021-07-30 21:59Financial Data and Key Metrics Changes - Civeo reported total revenues of $154.2 million in Q2 2021, with a net loss of $0.5 million or $0.03 per diluted share [12] - Adjusted EBITDA for the second quarter was $32.2 million, with free cash flow of $13.7 million [6][12] - The leverage ratio decreased to 2.0x as of June 30, 2021, down from 2.1x at the end of Q1 2021 [7][21] Business Line Data and Key Metrics Changes - Canadian segment revenues increased to $83.3 million in Q2 2021 from $53 million in Q2 2020, with adjusted EBITDA rising to $22.6 million from $15.3 million [14][15] - Australian segment revenues were $64 million, up from $57.1 million in the same period last year, but adjusted EBITDA decreased to $15.4 million from $18.8 million [17] - US segment revenues increased to $6.9 million from $4.6 million year-over-year, with adjusted EBITDA improving to $0.3 million from a loss of $1.4 million [19] Market Data and Key Metrics Changes - Billed rooms in Canadian lodges totaled 723,000, up 76% year-over-year from 410,000 [16] - In Australia, billed rooms were 466,000, down from 502,000 in Q2 2020, impacted by lower customer activity [18] - The average daily rate for Australian villages increased to $81 from $70 in 2020, driven by a strengthened Australian dollar [18] Company Strategy and Development Direction - The company aims to prioritize safety and well-being, manage cost structures, enhance hospitality offerings, and allocate capital prudently to maximize free cash flow while focusing on debt reduction [28] - Civeo expects to maintain revenue and adjusted EBITDA guidance for the full year 2021, with revenues projected between $555 million and $850 million and adjusted EBITDA between $90 million and $100 million [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that labor supply issues and subdued customer activity in Australia are expected to be resolved by the end of 2021 [7] - The company anticipates continued pressure on performance in Australia due to prolonged travel restrictions and increased labor costs [25] - In Canada, management is optimistic about the recovery of occupancy levels as COVID-19 cases decline and health orders are lifted [24] Other Important Information - Civeo's total debt outstanding as of June 30, 2021, was $226.8 million, reflecting an $11.2 million decrease since March 31, 2021 [20] - Capital expenditures for Q2 2021 were $3.2 million, up from $1.2 million in the same period last year [20] Q&A Session Summary Question: What will drive activity in the met coal markets? - Management indicated that certainty in the market will drive customer spending, and while modest improvements are expected, they do not anticipate reaching pre-pandemic levels soon [30][31] Question: Is turnaround activity expected to improve in Australia? - Management confirmed that turnaround activity in Canada has improved significantly, with expectations for continued improvement in billed rooms [32][34] Question: What are the plans for capital allocation given the reduced leverage? - Management is considering a share repurchase program as leverage approaches a comfortable level [35] Question: What are the key growth drivers for the business in the next one to two years? - Management highlighted recovery in Canada, potential growth projects in Australia, and expansion of integrated services as key growth drivers [36][37] Question: How is the company managing COVID-related personnel issues and cost inflation? - Management reported no positive COVID-19 cases in their villages and noted that while they are managing labor costs, they expect higher costs to persist due to ongoing restrictions [39][41]