Civeo(US:CVEO)2023-02-28 20:53Financial Data and Key Metrics Changes - For the full-year 2022, Civeo generated $83 million in free cash flow and made debt repayments of $34 million [4] - Total revenues in the fourth quarter were $162.2 million, with a GAAP net loss of $13 million or $1.31 loss per diluted share [69] - Adjusted EBITDA for the fourth quarter was $15.1 million, a decrease compared to the same period in 2021 [69] - Total debt outstanding as of December 31, 2022, was $132 million, reflecting a $6 million increase from September 30, 2022, but a $43 million decrease from year-end 2021 [13] Business Line Data and Key Metrics Changes - Canadian segment revenue was $88 million in Q4 2022, down from $92.2 million in Q4 2021, with adjusted EBITDA decreasing to $11.8 million from $23.1 million [11] - Australian segment revenue increased to $73.1 million in Q4 2022 from $62.3 million in Q4 2021, but adjusted EBITDA decreased to $13.1 million from $13.6 million [12] Market Data and Key Metrics Changes - Billed rooms in Canadian lodges totaled 622,000, up 6% year-over-year, but the average daily rate decreased to $93 from $106 due to currency fluctuations [71] - In Australia, billed rooms increased to 519,000 from 465,000 year-over-year, with the average daily rate decreasing to $73 from $77 [91] Company Strategy and Development Direction - The company aims to maximize free cash flow while returning capital to shareholders and reducing debt [15] - Civeo is focused on expanding its customer base and geographic footprint to reduce volatility in free cash flow generation [84] - The company is prioritizing safety and well-being, managing costs according to occupancy outlooks, and enhancing hospitality offerings [96] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures and labor costs are expected to impact margins, particularly in the Integrated Services business [17][108] - The company anticipates a decline in mobile camp activity due to the completion of construction projects, which will negatively affect revenues [32][94] - There is uncertainty regarding customer room demand for the second half of 2023, which could impact guidance [95] Other Important Information - Civeo repurchased 1.5 million common shares for $45 million, including 40% of outstanding preferred shares [83] - The company completed the divestiture of its U.S. offshore business, retaining only a few lodges in North Dakota and Louisiana [87] Q&A Session Summary Question: What is the leverage ratio at which the company would stop paying down debt? - Management indicated that a leverage ratio of 1x to 1.25x is a good base, allowing flexibility for investments or returning capital to shareholders [21] Question: How does the company evaluate potential M&A opportunities? - The company primarily sources opportunities internally, focusing on assets and service companies they know well [119] Question: What is the expected impact of the McClelland Lake Lodge shutdown on revenue? - The McClelland Lake Lodge generated approximately CAD60 million in 2022 revenues, and its shutdown will significantly impact future revenues [33][100]