Civeo(US:CVEO)2019-10-25 20:46Financial Data and Key Metrics Changes - In Q3 2019, the company generated revenues of $148.2 million, an increase from $120.5 million year-over-year and up sequentially from $122 million in Q2 2019 [14] - Adjusted EBITDA for the quarter was $36.2 million, up from $22.4 million in Q3 2018 and $26.5 million sequentially [14] - The leverage ratio improved from 4.26 times as of June 30, 2019, to 3.52 times as of September 30, 2019 [8][27] Business Segment Performance Changes - Canadian segment revenues were $91.1 million, up from $78.1 million in Q2 2019, with adjusted EBITDA increasing to $25 million from $16.3 million [19] - Australian segment revenues rose to $47.7 million from $31 million in Q2 2019, with adjusted EBITDA increasing to $17.2 million from $13 million [22] - U.S. segment revenues declined to $9.3 million from $13.1 million in Q2 2019, with adjusted EBITDA dropping to $0.3 million from $2.6 million [25] Market Data and Key Metrics Changes - The Canadian segment saw billed rooms increase by 18% sequentially, driven by maintenance and turnaround activities [15] - In Australia, billed rooms increased from 416,000 in Q2 to 455,000 in Q3, reflecting increased customer activity [24] - The U.S. experienced a 10% sequential decline in rig count, impacting revenues and EBITDA negatively [25] Company Strategy and Industry Competition - The company is focusing on generating free cash flow and reducing leverage while monitoring capital markets for debt refinancing opportunities [31] - Recent contract extensions with major coal producers in Australia indicate strong customer relationships and increased mining activity [12] - The integration of the Action Catering acquisition is progressing well, enhancing the company's presence in the iron ore industry [41][42] Management's Comments on Operating Environment and Future Outlook - Management noted a weakening U.S. market but expressed optimism about continued strong performance in Canada and Australia [9][39] - The company anticipates a decline in billed rooms during the holiday season but expects higher occupancy compared to Q4 2018 due to contributions from the Sitka Lodge [33] - For Q4 2019, the company expects revenues of $128 million to $133 million and adjusted EBITDA of $19.5 million to $23.5 million [37] Other Important Information - Capital expenditures in Q3 were $4.3 million, down from $11.5 million in Q2, as the Sitka Lodge expansion was completed [26] - Total debt outstanding as of September 30 was $393.5 million, a decrease of $11.8 million since June 30 [26] - The company amended and extended its credit agreement, providing financial flexibility and extending maturity dates [28][29] Q&A Session Summary Question: Can you provide more details on the Action deal in Australia? - Management expressed excitement about the Action Catering acquisition, noting it is performing better than expected and integration is progressing well [41][42] Question: What are the expectations for free cash flow in 2020? - Management indicated that with disciplined capital expenditures, free cash flow generation is expected to increase significantly in 2020 [46][49] Question: Can you clarify the amendment to your credit facility? - Management confirmed that the credit facility was amended and extended, with a new lender added, increasing borrowing capacity [51][52]