Civeo (CVEO) 27 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to Civeo Corporation Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce Regan Nielsen, Vice President, Corporate Development and Investor Relations. you. Thank

begin. may You

Stone, welcome our Third by call and and Civeo's and Financial President, Conference and Officer Bradley XXXX Call. President Treasurer. Carolyn Officer; Executive Today, will Chief Senior to you, Vice Quarter Chief Civeo's Earnings Dodson, Civeo's Thank be led

by protections such many forward-looking note the in today that risks begin, other contain afforded Any we regarding other than to that extent on the historical the context caution our like affect including SEC read law. should be and we To in federal remarks harbor business, that XX-K, disclosed of factors Please we're and XX-Q anything safe relying fillings. Before forms listeners information. would the uncertainties statements. our remarks our

the turn call Bradley. to over now I'll

Carolyn thank of third and with I'll call. all and quarter up and a updated you I'll quarter us then Then and for outlook third open and for XXXX. also performance. start with third our today for guidance call provide conclude segment-level underlying the our I'll its Regan, give you, for review, will year XXXX quarter our summary Thank XXXX on a full we'll Then with preliminary earnings financial the questions. the takeaways provide a assumptions, key joining brief

year-over-year exceeded strong expectations, operational demonstrating execution strong The X Canada key XXXX Australia. takeaways from our Australia call our quarter financial in today are the results third and both growth.

allocation capital initiating our renewed $X.XX we'll share Lake optimistic outlook for also opportunities. provide will The the key buyback our We additional our and our quarter, an is are XXXX. assessment a shareholders, to framework, we to initial return dividend point a our During assets, lead consistent which qualitative growth. solution last including secured share attractive capital McClelland form a of we provide of quarterly per economically to for announced we

third segments. discuss in take Let quarter to me a moment our the now

third in reflected project base [indiscernible]. from the response oil production, and quarter in and to a iron protection customer Canada coal traditional Our revenue wildfire LNG, gas met and diverse construction ore

Australian integrated Our sequential we our exceptionally in and villages services and during as quarter the both segment business. experienced our business year-over-year performed own growth well

quarter, a village owned the occupancy in increased we rooms. a Bowen basis, record Village build increase Basin Gunnedah consecutive revenues sequential by a quarterly were year-over-year, Australian During XX% experienced constant for Australian up the Basin occupancy second setting On Australian villages. led both in and our currency

recent XX% to revenue our Integrated XX% year-over-year currency as awards constant and both the from contract contribute. Australian began sequentially Assuming business Services grew

also the the During next the fourth saw from our year. inflation the We quarter, we quarter mitigation year tangible benefit should business. services and see more efforts, fully for team's results this our from into in of integrated plan

mitigating that note pressures our important to in made strides However, it in and both Canadian is inflationary we've while Australian businesses.

inflation focus a remain of the ours We for future. expect to foreseeable

wind mobile XXXX. segment in lower in wildfire quarter down quarterly Canada, was for as reduced to as activity construction British Canadian us and third turnaround camp pipeline by Columbia, third from expected. quarter Our the offset in partially strong This the LNG-related activity compared delivered continues is Resulting to of activity. Canadian activity results

third demobilizing the quarter camps our third -- XXXX. this began also mobile We in in of quarter

of have demobilization and Regarding the in secured transportation to assets work McClelland underway. the Lodge transportation Canada, the of our the we contract sale and in for Lake is addition sale the

of quarter the McClelland expense majority the the quarter and of $X.X assets. recognized the fourth XXXX net Lake of be to sale will into from of of The During Lodge million the approximately first proceeds related incurred third the we in XXXX, quarter demobilization XXXX. McClelland

the associated impact our to financial costs excluded income other sales item and EBITDA of line are entirety adjusted And income they for proceeds from sale, in statement. the regard the the calculation. on accounted this of the will In be

full EBITDA impact this result, not XXXX year a adjusted does guidance. transaction As our

per Lastly, dividend quarterly existing This generation a initiation we use policy. strong fund to flexibility provides operations, shareholders. returning announced new to flow our capital opportunities $X.XX of simultaneously cash with framework share capital and or allocation the our growth a

forward. on We shares will repurchase also buy continue third to opportunistically execute plan our in back the share quarter and moving

With Carolyn. that, I'll turn the call over to

for GAAP revenues you reported quarter in and morning. all Bradley, us we with of total of million diluted $XXX.X share. or $X the $X.XX net this thank third Today, income joining per million

of quarter, flow the we and cash $XX.X EBITDA $XX.X third During adjusted free generated flow million. operating of million cash million, $XX.X of

third contract our the Basin decrease largely build we to activity, and period was due and revenues and pipeline mobile increased in EBITDA. adjusted Australian Bowen Villages partially was earlier, mentioned wins. compared therefore, Australian to Canadian as XXXX our Bradley recent by of decline quarter camp EBITDA This rooms integrated to services in down wind due of offset the XXXX our the As of activity same experienced in construction the increased

year. to to quarter a now of segment million in in which from dollar and segment in the $XX.X turn decreased of Canada relative the of and begin third million, $XX.X third third third of quarter $XX our dollar the the performance the million revenues year weakened was Canadian from of reflect a of Canadian a EBITDA Revenues XXXX of at in XXXX. the adjusted last Let's ago $X.X a million respectively. to impact review quarter third EBITDA decrease U.S. were Results Adjusted the million, to quarter with from $X.X for quarter compared XXXX. I'll segments. as our X revenues Canadian the million results its $XXX compared performance

and wind camp also constant in to the activity decreased to a a as to construction EBITDA basis, due primarily currency On pipeline year-over-year continues declined decline aforementioned Adjusted mobile due dynamics. X% revenues down.

third which $XXX,XXX was of lodges in $XXX,XXX, down quarter quarter, in modestly rents our During the third Canadian billed totaled from the XXXX.

Canadian U.S. in entirely Canadian dollar average rate dollars to segment The up the declined Canadian in relative year-over-year. slightly was dollar. for the U.S. weakened rate $XX, to run slightly dollars was year-over-year, the which daily Our due

Australia. to Turning

third quarter from million XX% EBITDA in XXXX. in of $XX.X $XX.X the During million, reflect the decreased year. million, dollar from million dollar, of up the of and to million adjusted the EBITDA respectively. revenues $XX.X we $XX.X third $X.X third Australian of the XXXX was from U.S. $X.X quarter, reported Results and quarter relative impact which last weakened up Adjusted by revenues million

for by $XXX,XXX, quarter XX% third rate the moderated year. up activity new in due villages our runs of was in dollars build in related increase contracts. weakened revenue average constant as adjusted the occupancy dollar. to for EBITDA largely X% The third quarter driven quarter services at owned increased was in On dollars increased $XXX,XXX owned in third awards. was in Australian up up customer modestly year-over-year. quarter villages business our U.S. the driven villages increase demand $XX of our The average as a recent was in contract Australian from the higher well by from currency The integrated Australian basis, our last by were Australian daily XXXX rate in XX the and the to daily

$X.X activate capital this mothball spending increased million year expenditures and with periods On expenditures our lodges of were for to village $X.X quarter related third compared in customer Capital million were maintenance a villages, The period coupled to the Australian spending predominantly both with XXXX. to during rooms basis, the demand. same on consolidated

third that the customer expenditures of $X.X quarter upgrades quarter included Additionally, XXXX Australian in for discussed on funded million prior also the infrastructure calls. we've conference

since June million decrease debt XX $XXX.X million, was outstanding XX. on September $XX.X a total Our

Our of available facilities net leverage ratio of decreased on for also X.Xx cash million, of to credit September XX. as June And as million approximately the $XXX.X of our had XX, revolving liquidity $X.X as we X.Xx hand. under $XXX.X from and of quarter total XX consisting September million of

shares that XXXX, After framework, has morning, to will share like the dividend $X.X approximately allocation dividend. quarterly now September, a payment. of capital XX. our a share declared through our September, allocation. this record our which dividend repurchased payable initiation second we And November quarter Directors of $X.XX December of per $X.XX for our late approximately Board program Shareholders third of cash included in I'd the our of XX, total capital announced of repurchase In turn a we in per new dividend million. share XX,XXX as on quarterly we first announced receive paying to

our excess X.XXx leverage target provide to to and flow Xx to cash allocation it existing to strong opportunities Xx ratio We capital up support believe to ratio generation to our new flexibility growth share do our to consistent Our to return framework pursue where due the increase growth leverage is at accretive however, prudent, maintain appropriate. repurchases. fund through shareholders dividend cycle. and allows a opportunities cash flow operations, our capital our opportunistic Use

I'll XXXX. Bradley our the guidance year Bradley? that, updated discuss for over it With to turn full to

guidance you, we to Carolyn. XXXX the discussion turn our at like consolidated year of Thank I'd basis, for regions. full our each outlook and will the to look updated

for We $XXX -- EBITDA. XXX million and ranges sorry, revenue $XXX $XXX year resulting are to $XX XXXX the increasing and adjusted to guidance XXX adjusted EBITDA full million revenues of our ranges, to million in million for

million. guidance are million We to XXXX of capital full $XX expenditure year $XX our maintaining

related capital Based for million. $XX expected EBITDA reimbursement customer to expense of McClelland with $X sale the of guidance, Expected associated from $XX assets million, interest on demobilization taxes. cash of of cash million inflows Limited proceeds And Village this largely Lake CapEx approximately and cash and working net those capital expected of upgrades. XXXX.

free to $XX the full $XX our million are year. flow cash XXXX expected We for range to adjusting million

the underlying decline sequential and with [ year. pipeline the XXXX, of the quarter expecting the to turnaround mobile to the I'll activity into fourth holiday regional the a in down In to typical fourth end camp build we experience normal outlooks Canadian quarter coupled end with of now Canada, due we of GasLink season in rooms look as wind Coastal large turn continuing downtime the ] and at decline are assumptions. sequential to

no will demobilization and million [indiscernible] material be burdened began in are winding there The the quarter, XX quarter with changes third fourth the Canadian camps in approximately mobile in our down camps, outlook. of expense. USD

X expect USD expenses camps. related million of approximately mobile XXXX demobilization to continue to the in We

be sale, fourth In McClelland estimated quarter XXXX expect Lake lodge the to the regards proceeds in proceeds of the XXXX. in with receive currently we early million of of to $XX the majority remainder the to net net the

associated announce demonization to contract that have these assets the sale secured is underway. transportation and pleased transmission the we of this are with We and

with more. opportunities We know are actively the pursuing update you as we'll sale, associated we and other

Turning to Australia.

integrated continue in for growth our We our both see signs villages and business. services to encouraging owned of customer demand

efforts services wins we've that in plan the see few been revenue XXXX. from contract mitigation our the to business benefits is into to see integrated of in Our and and on. over inflation quarter from the focused recent the quarters, additional began mitigation and expect fourth third the last our efforts our benefiting increased benefits in inflation We quarter

As I'll it to few comments. relates a our outlook, provide XXXX preliminary

transitional the for is business, a in throughout to discussed year-over-year year expected year, we've As be resulting EBITDA. XXXX our in a decline Canadian

Lodge activity, we camp With growing the sale down of are acutely earnings company. replacing the of wind these the mobile Lake and and McClelland on Canadian the focused

continue more provide a XXXX we on market dynamics While we year-end and XXXX through budget as our work will call our to detailed in process, February. outlook conference monitor we

more We a offset of ability are optimism to this material around gaining the decline. portion

few transportation to outcome assets. that those of seeing. could Lake in to opportunities pursuing and that Lodge the additional we transaction with related the trends contract are actively McClelland sale this pleased and like XXXX. the securing positive We're touch contribute we're of a Canada, these for on In I'd opportunities

lose performance we our remainder and of sands should customer, McClelland While Lodge portfolio oil solid, improved build from rooms Lake former our will the our portfolio. launch we the see from remains

encouraged Australia, villages for both by we business. In integrated are the own our outlook service and

villages in own at higher occupancy, are expecting high rooms and build currently we're Our record XXXX.

should services second top year, plan the the to improvement and to mitigation grow in experienced inflation continue from line of margin Our half the we in benefit business it XXXX. this also integrated and expect

XXXX. to activity free consistent significant flow, to we camp currently resulting anticipating a we flow collected XXXX, while due wind in the first in cash in receivables of down be in of the that should the see Regarding decline cash associated relatively we half are expect EBITDA

I elements key our will conclude underscoring of strategy. by the

communities. our hospitality will to safety We continue the and offerings. our well-being prioritize employees guests, enhance of best-in-class and We'll

cash flow accordance will outlook, we capital to we on in structure and to continue shareholders will continue with our manage prudently our growth and We free while focus cost opportunities. capital return allocate occupancy maximize to generation to

With that, we're take happy your to questions.

with Our of comes Instructions] the [Operator question Sidoti. first line Steve from Ferazani

questions of if any I you're sustainable call. the on taking much costs was a Canada. margins on significantly that ask color that's or was to McClelland out just the the better? just around sale all it there's there anything for want in improved The Thanks couple margin improvement significant accommodations because Canadian if or

We we area. call of I very assets, in think in quarter. it's Beaver strong McMurray occupancy a the in activity handful the turnaround had -- of what third things. We Canada our Athabasca is strong which the River region Fort core had Village,

had Athabasca. Beaver move River we occupancy the cloned into addition, the In was that at

that. year. So first really improved place third us And and we're flowed were that. efforts occupancy in been paying have see are labor really earlier put through scale gives time benefits to of They of also leverage able the of was in economies some that in the to There our terms that quarter costs. benefits the

British occupancy quarter. helped. helped some wildfire-related we main Columbia in are addition, In Those that components the ] at that [ the Sika during had response-related

you Okay. taken? the sustainable that you've actions is How much do think of

labor have. certainly, we put place the we -- in Well, that continue efforts will won't

No, it, course, I the know seasonality seasonality of [indiscernible]. to

think I be efforts But in we'll labor has the lasting on the side team Canada. the made,

cadence you it that out help quarter. complete? on you step surprised on didn't the this wind you camps, the downs just when Can of know I us anything the down timing On that with think was line mobile down

quarter. fourth be will It

expecting It Or will not? remaining you but would there? -- some still still you're -- revenue

the contribution, We'll that terms temp of through some, mobile will have with fourth it -- start quarter. costs in the to flow but EBITDA in will demobilization coupled

will step So downward. will -- the revenues

you you -- hasn't highlighted funding of lot Lake, revenue? little mobile can sold the strategies what your use few growth, on there not fact certainly when enough. bit be that's a as particularly efforts to that McClelland a last of camp growth the try and growth On you some you -- Fair that years. replace us Can something Okay. for you've give of you highlights been might

Yes.

going in [indiscernible]. are There properties Lake in the Those to selected McClelland opportunities opportunities looking we're the are main pursuing pick So the looking point into augment some sale. related would Canada, right to also portfolio. that up Canada to at an to addition entry at X be in we're now, things the

for me. one last then And

that know there Is Your for the big from outlook on the your know there's obviously, grow had Australia, what's Do you've some industry seen investment to biggest by significant gains? here? upside think gains. But Australia. here? We occupancies I you've in room mining from contracts. you a

move to we'll XXXX, additional full benefit into rooms a if commitments customer rooms. build they're the opportunities signed those, are have on or will opportunities, or to Australia, rooms only bring of this modest Going on mentioned of year prior the mothballed new calls, rooms mothballed we of some add support contracts going whether year that we be online both forward have that Those bringing them. we in there

had wins grow to integrated we continue -- work on side, see opportunities win that so that a portfolio that of the year contract expect benefit we've the services side of own additional have We to that's year, and this business. village we'll the full the and on

benefit will place. the mitigation of from inflation the also put plan and that benefits year It in we full

on really past from didn't So second sources plan as the the benefit benefit where had them. until got in full margins out -- quarter. were it third the we quarter wanted business of a September. first of not basis the some the the We had we in benefit some mitigation We integrated see clean

we So true fourth efforts out to and how that benefit anticipated them. one be played where expecting quarter will see confirming we're our as the

could just one get last I If Perfect. in. one

with given Lake, bump the the stock, know dividend liquidity could McClelland range be replace Or healthy to the can of buyback? very buybacks some target challenging. low introduced, to the that and your dividend leverage your degree, the with be the aggressive coming is the net you the already. the I you're buyback, -- cash in given you've against still going from probably of Does Given

And of capital fourth XXXX put for to flow expect quarter But cash correct. It bump may fund down leverage. lower some in opportunities. That's in and opportunities reemploying work in of there have we with timing will we'll it that that the as well. growth terms I

line ] with question Our the next of from comes Alec Stifel. Seibelhafer [

you're maybe additional color a understand bit about more XXXX can session kick a you the lot takes last granular. the you and of growth gave hear call. But just could color the off If when me, avenues you some give out, know high any of the us during a just just maybe thinking in I us here. puts a at there's to we're Q&A cost and if pursuing of little just level,

let's we'll have villages, budgets of But see I with -- of the to that year-over-year, still being occupied rafters this frankly, We'll occupied into Coppabella as finalizing will up Australia quite Well, point XXXX. we'll be we at the expect half year-over-year. year that start in in build full and in rooms benefit mentioned, of certainly, the which continue expect full and undiligence the terms at have, fully Moranbah our and second first nicely half XXXX. our were

piece, the to as line with we've margins adjusted major is environment be experienced. services going coupled that piece in just better other The top integrated for inflationary pricing we've growth

economics those own we'll commitments, work. we get certainly to the So we drivers customer villages If the expand can main there. can if make are the

that's So Australia.

of In we've Canada, effectively had a McClelland -- occupancy. we got full year

Napoli The was Athabasca. the first Beaver half at second [ at was half ],

mobile year-over-year. line like. down will So And finalizing looks their down we're we'll EBITDA year-over-year, what then will be Canadian have top camp be and build still that rooms both

So trying looking redeploy what to at assets. is we're

opportunity difficult the Canada have way gave McClelland us months, here and good to XX those leverage and value underutilized things lining down in and in camp of into our But put modular U.S. more see Lake difficult book. into and expect -- underutilized mobile and very new for Lodge over able in to we'll you really assets the broader next across the leverage both into the that a the look in existing to both of that Canada silver it an meat be the assets marketing insight the asset industrial -- complex, U.S. a opportunities, some on was in Canada situations situation. in One assets, the

in mobile could about then lingers question here, if a you little And that 'XX. demobilization just hit -- a into us the or and remind as talk how second just bit much XXXX

said refresh my you be I million, memory if That could $X that. on but just think would great. you

be everyone. So let me clear for

mobile we So expenses on million demobilization will XXXX. camps, run the and will through EBITDA had in $X in through million that $XX of run that EBITDA XXXX

to along it As proceeds McClelland, assets. with item, selling demobilization related relates from other that flow expense and through the those line to costs income will the

So about demo as talk but we'll be cases, little and clear. confusing A both we'll try

Capital Our line Markets. Dave next the question Storms from comes Stonegate with of

morning. Good

one may McClelland aware there be quick any one earnest should money material? Just of, on Are or we that not contingencies may any be Lake. there that

that the in location truck deposits units soon signing in ready upon and put on paid were are some Alberta. agreement, place we're were as the as There

the down it the start As as to will move be in the the quarter relates to recognized to those as the U.S. to we sale Western -- assets Western relates from of fourth U.S. Alberta transportation, to it assets be the

about from that Is a split. been Understood. we you a to a a EBITDA Canada should And diverge think about do X that Australia like quarters, forward? it going Or and Appreciate then contribution for has this the little? looks the it. last think split potential there's XX-XX over trend

and on will Canada, the in And Canada. comments, time. some the will we're the take in because Well, replacement earnings it to McClelland Mobile earnings working loss for -- the highlighted XXXX. of in That shift earnings as Camp of

the on Xx and that Or cycle? just Understood. the your I think this just this ratio a target. gear through and is leverage touched Is one little And this but leverage then ratio something? you normal the bit earlier, for fluctuations more, up of is below

say I would normal it's fluctuations.

first the that continue, Our to free and the The in Australia year. Canada, half up in to year, the the usually this have receivables start ramp are you unwind the in for the go of seasons in historically, half in second predominantly trend expect of of those of the then up, cash half reasons flow the second receivables the we turnaround as start is well year. And strongest second but quarter.

free flow cash the So in we had quarter. strong

flow that, then quarter. We And the of proceeds you've got McClelland the to free cash in on from strong through. coming expect have net fourth top

exacerbated So enhanced or from I would the exacerbated sales. by the enhanced, say it's just on proceeds bond fluctuations not normal

do that XXXX. below and and I deploy to we temporarily then expect range, growth So our it go to efforts expect in

further for no are to the to I'd closing questions call back There in Dodson Bradley like queue. the remarks. hand

joining you do February. call we your to Thank interest which look us thank full and all We forward Civeo, fourth expect for you you, today. earnings in on and year and on speaking the call, to the we in appreciate quarter with

Ladies this for you and gentlemen, does your conclude teleconference. today's participation. Thank

You time, wonderful your have and this day. lines may a disconnect at