Civeo(US:CVEO)2020-02-28 03:29Financial Data and Key Metrics Changes - In Q4 2019, Civeo generated revenues of $148.7 million, a 30% increase from $114.5 million in Q4 2018; adjusted EBITDA was $29.9 million compared to $19.9 million in 2018; operating cash flow was $41 million [7][8] - Full year adjusted EBITDA and operating cash flow were both up 41% and 37% respectively compared to full year 2018 [5] - The company reported a net loss of $32 million in Q4 2019, compared to a net loss of $14 million in Q4 2018 [8] Business Segment Data and Key Metrics Changes - Canada segment revenues were $89.7 million in Q4 2019, a slight decrease from $91.1 million in Q3 2019; adjusted EBITDA was $20.9 million, down from $25 million in Q3 2019 [10][11] - Australia segment revenues increased to $48.9 million in Q4 2019 from $47.7 million in Q3 2019; adjusted EBITDA was $15.7 million, down from $17.2 million in Q3 2019 [12] - U.S. segment revenues were $10 million in Q4 2019, up from $9.3 million in Q3 2019; adjusted EBITDA loss was $0.2 million, down from income of $0.3 million in Q3 2019 [13] Market Data and Key Metrics Changes - Canadian oil sands occupancy remains stable, supported by multi-year contracts; occupancy in Canadian lodges totaled 837,000 billed rooms in Q4 2019, down from 876,000 in Q3 2019 [11][14] - In Australia, the average daily rate for villages was USD 72 in Q4 2019, down slightly from USD 73 in Q3 2019 due to a weakened Australian dollar [12] - The macroeconomic environment in the metals and mining complex in Australia remains constructive, with met coal prices forecasted to stay above $150 per metric ton [19] Company Strategy and Development Direction - The company aims to focus on generating free cash flow and reducing debt, with a target of approximately $6 million in free cash flow for 2020 [6][18] - Civeo plans to monitor capital markets for opportunities to term out current debt while maintaining operational excellence and stakeholder engagement [19][22] - The strategic mandate includes high customer service, cost control, and capital discipline to maximize free cash flow and reduce leverage [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2020, citing strong LNG activity in Canada and steady turnaround work, despite potential headwinds from U.S. oil and gas capital spending constraints [18][30] - The company anticipates consolidated revenues of $560 million to $576 million and adjusted EBITDA of $100 million to $108 million for the full year 2020 [21] - Management noted that existing infrastructure projects may gain more value as new greenfield projects face difficulties in Canada [40] Other Important Information - Civeo reduced total debt by $34 million in Q4 2019, lowering the leverage ratio to 2.98x from 3.52x as of September 30, 2019 [6][8] - The company had total liquidity of approximately $124.1 million as of December 31, 2019, consisting of $120.8 million available under revolving credit facilities and $3.3 million in cash [13] Q&A Session Summary Question: What are the key factors affecting 2020 expectations? - Management highlighted the importance of turnaround activity in Canada and customer relationships, with a more constructive outlook compared to previous months [26][30] Question: Update on Action acquisition and integration? - The integration of Action is largely complete, with strong performance in the first six months post-acquisition, exceeding initial EBITDA expectations [31][32] Question: What is the outlook for refinancing and credit markets? - Management indicated a better story for refinancing due to improved free cash flow and a lower leverage ratio, with plans to term out some debt [34][37] Question: Any potential catalysts in the Canadian market? - Management noted opportunities for capturing additional occupancy from subcontractors and existing projects, despite some setbacks in new project approvals [40] Question: Pricing dynamics outlook? - Pricing in Canada is stable, while Australia shows upward pressure on pricing due to customer willingness to pay for flexibility, despite some cost pressures [42]