Civeo (CVEO) 30 Oct 242024 Q3 Earnings call transcript

Greetings, and welcome to the Civeo Corporation Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Regan Nielsen, Vice President, Corporate Development and Investor Relations. Thank you, sir.

begin. may You

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

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

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

XXXX business Australia customer then villages our integrated continued We to owned are: XX% expand activity call as EBITDA in adjusted takeaways in quarter due we existing today for rooms open call increased of the the from increased will questions. The services strong relationships. our key and our from build third

by activity, expected segment LNG wildfires. our lodge third Canadian due in performance rooms, to negatively and decline was the mobile the segment, anticipated impacted than were in decline which we billed quarter Canadian lower the weaker in the camp While

to is point, through CAD oil a revenues of accommodations XXXX, hospitality which have producer approximately for today, Canadian services and we XX-month XXX June to sands major key continue total announced expected contracted renewal a contract to million. provide Third

to quarter, repurchases. point, shareholders million third and the capital share million to million quarterly XXXX million million. $XXX we and our of full of adjusted $XX our EBITDA key adjusted revenues the through During are EBITDA $XXX tightening to to revenue dividend $XX we and returned for guidance year of $XX.X Last

As execute and the and expectations forward business expected we goal both million are adjusted and our team We growth Australian excess segment on to our stated business. will XXXX. experienced third services to integrated to of provide -- on our our commentary look sequential Australian our $XX to to revenues quarter, previously continues be in owned our in XXX to now the I'll XXXX, grow preliminary services business for year-over-year integrated million. a segments. by well during be AUD moment some performed take EBITDA village

year-over-year, activity, primarily -- roles. and Our year-over-year new quarter expected, but strong wins call particularly recent of customer the of existing and the expansion second McClelland due and With into relationships. as our integrated over services was growth been wildfire-related operational and to Lodge of the Canadian pull This commercial financial, that, has and quarter. by as turnaround delays. of was adjusted our EBITDA discussed Lake our since in Collin. CFO. previously XXXX well I'll revenues activities to associated due in expected, was the operational, with the the Civeo Collin Collin, the of partially the decreased Canada, segment sale forward third Welcome, the strategic, exacerbated spin-off wind-down customer as In competitive LNG-related expected to impact evacuation was turn

$X.X million million you, total we revenues quarter $XXX.X the per loss in share. $X.XX reported with of Today, be here. or third of diluted Bradley. very I'm Thank a happy to net

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

adjusted third-quarter same EBITDA as quarter operating for little provide to call. generation all begin delivered cash reasons relatively flows But ago we in its in Australian down first, year. year a flow X a year-over-year review in performance quite a of that segments. While consistent performance the more the last with I'll later the context was was quarter I'd strong XXXX. the Bradley third discuss our compared the company's cash detail mentioned, of the on to like more I'll segment in

third quarter EBITDA recent was our to of XX% continued the to rooms due $XX.X the revenues segment. Third-quarter integrated of were and The from $XX.X up rooms last quarter to from at up our and Adjusted third our rooms, shows from million up This villages. $XXX.X growth as demand million, and this million the XXXX. XXX,XXX related revenues client EBITDA activity. competitive million, is year. well the billed from Australian villages were increased billed owned increased increase $XX.X was as at wins our customer in XXX,XXX owned adjusted activity services expansion of in quarter XXXX. in segment Australian due This existing X% increased in in steady XX%

quarter dollars was third contracts. Our escalations CPI in increased which XXXX $XX villages room for to the rate our $XX, daily in Australian-owned of due recent from in the U.S.

million. and $XX approximately into well decrease camps, our the pull from as We rooms wind context, the the sale of completion quarter $XX.X $X.X business lower $XX.X was from driven from billed $XX.X result recorded pipeline a the activity The adjusted of Canadian compared a million, including XXXX year-over-year as LNG-related our Adjusted XXXX. of evacuations quarter of the of revenue revenues third in activity, the million of in mobile XXXX. revenues Canada. decrease as McClelland adjusted of Turning our wildfires.  For LNG-related as the of Canada million in expected to for year-over-year down was second Lake the forward turnaround decrease to by activity of EBITDA and Lodge, in EBITDA quarter the million of was EBITDA third

quarter During Canadian XXXX of the totaled lodges in reasons quarter, to just the rooms the down in due which billed was mentioned. third from our $XXX,XXX, I $XXX,XXX

Our rate segment in $XXX, between the room for third of occupancy $XX the due U.S. daily mix Canadian quarter of in which to lodges. dollars from increased XXXX was the

I'll The take reduces capital facility $XXX to at our maturity million to upsizes look million, Next, extension a of revolving XXXX, we $XXX total structure. On extends August XX, our completion credit and capacity agreement. from our costs. the August date the amendment an borrowing the credit and announced to amendment

XX, XX, a Our million, was net XXXX, me, XXXX. decrease, million $XX.X $X.X on excuse September since debt June

X.Xx. for ratio quarter flat at Our remained the leverage net

and September of and capital us $XXX pursue we flexibility liquidity total As prudent XXXX, million, XX, had maintaining opportunistically of giving shareholders. leverage ratios to approximately while to the returning growth strength

year-to-date turn pointing that $XX.X cash flow. a to out. allocation On with is I'll some million adjusted down capital I'll EBITDA cash this start year there's of worth Finally, is flow and as nuance basis, been XX%.

primary million year-over-year. operating are are this flows X XX% up for reasons cash discrepancy. However, $XX There of

of the payments completion of several Once of LNG-related which released, demobilization which cash flows. completed, with those we augmented in projects were upon First, the the these holdbacks received contingent projects camps. mobile were those camp Canada,

work the in stronger flow have cash higher turnaround payment provided this third cash and subsequent of quarter.  Both of quarter quarter year-over-year flows. the second resulted Canada in capital in working into due compression to Secondly, these

$X.X XXXX $X.X the consolidated a compared million $X.X period both CapEx expenditure reimbursed also basis, the which related included the was client. for periods quarter quarter capital expenditures were Capital the third Capital to million related at front, our upgrades million our On in villages, infrastructure by in to lodges expenditures on same were predominantly of third X maintenance on spending XXXX XXXX. and to in customer-funded villages. of during Australian

total In related a and XXXX some projects of lodge optimization XXXX, discretionary mentioned, share we of repurchased CapEx repurchases million.  As the of over to of return to million. rooms CapEx to quarter, third repurchase up the returned dividend of XX, total the approximately year-to-date in million shares XX capital X% program, quarter to refresh our share authorizing capital capital response Looking Australian of fourth for to to share through program a $XX.X $XX.X Canada through project common maintenance forward, the we higher On next outstanding XXX,XXX and of quarter months. the renewal the shareholders announced of bringing repurchase Bradley in shareholders we shares to repurchase our village our some our total September and includes quarterly $XX in demand.

forward. record repurchasing XXXX. Board dividend. We $X.XX that for will payable the to dividend about and to our November per receive our our Shareholders on opportunistic of that, to thoughts announced XX, year quarterly as XXXX full turn With share December moving guidance discuss over cash XX, Bradley it also shares. continue XXXX, This I'll be of has morning, we declared our will

Collin. out to discussion we our see on XXXX million our adjusted revenues million how to playing XXXX EBITDA EBITDA. in are you, revenue earlier, $XXX $XX and $XXX to full-year $XX our we to mentioned million now to would Thank look million and like preliminary I and ranges tightening things guidance at on XXXX. As turn adjusted

our impact guests, to capital Canadian guidance forest XXXX we fires provide million underlying I cash operating like our $XX EBITDA of $XX Based regional I our expect acknowledge our Canada, be guidance, to the and now In and the responders, around safety of $XX the of thank We are our outlooks CapEx expenditure regions. flow and maintaining our $XX to the clock who to first employees the ensure worked full-year I'd to million. free corresponding want on assumptions. first the to million. and on the XXXX adjusted assets. million in range will our

the material While associated renewal expect currently was fourth On the our by quarter. to by negatively and delays. more assets note, from fires a positive with we and for our continue customer were provide financial a Canadian not impacted the impact do not are testament producer strong customer to by We the third-quarter damaged operational execution multiyear our encouraged This performance into fires, evacuations by our more to visibility into our factored a revenue this a major future. the oil XXXX sands relationship. and renewal was solid already Civeo guidance that contract is believe

approximately operations, will As by fourth the million and recovering expect at we at burdened from the mobile billed our occupancy $X wildfire-related quarter rooms of in final due by evacuations camp a customers' XXXX, be lodges be sequential our to mobile camp offset demobilizations, which experience demobilization partially Fourth the we quarter seasonality also delays. look should to of costs. typical decline

to activity Australia. expect strong, incredibly going Customer in levels to villages and our owned remains we continue at similar Turning forward.

occupancy We villages portfolio. are with Australian in the strong of at the of X at rest villages our Bowen currently Basin our full owned

are services relates experience continuing the as well awards contract our recent expansion to it from customer integrated As business, demand to relationships. as existing we increased of

we're and our business, to see growth services about on our continued Western excited in recent preliminary have years the business. Australian We a growth few overall our provide outlook. now XXXX and in the substantial integrated future in comments potential I'll

XXXX, transitional Most the with Canadian been has construction down, coupled Lake continued with the our a growth in throughout of is completed discussed XXXX coupled year period business year, for we As flat experiencing translate in the be transition in growth and The activity experienced sale the should the winding or of McClelland relatively our are a that expectation with that LNG-related in Australia. Canada. for Lodge. completed occupancy will growth year, Australia, we we strong into expecting year-over-year XXXX for this

conference that year-end are conference in not continues regions. for assets activity to XXXX following camp bidding operating observations. XXXX mobile Canada, camp XXXX deploy are and optimistic and also million, demobilizations in $XX able we'll be in be XXXX mentioned the XXXX call more by we'll detailed in outlook strengthen, we earlier, our approximately earnings provide together, expecting preliminarily million. to EBITDA February. outside burdened impacted which we're EBITDA In Underpinning project -- new expectations mobile XXXX by our our $X will exceed call core to Taken I

growth to CapEx oil flat portfolio XXXX expect sands in activity the deploying backed year's modest growth outlook this the both of relatively by back oil next in optimize We commodity our we're by half we're lodge our with lodge limited XXXX services be sands In encouraged to And year, Australia customer for levels. price integrated business. volatility, demand, owned villages XXXX. drive which should despite and our for

our to expect majority to with owned levels near of our occupancy. or occupancy We at villages the -- strong at peak remain villages remain

substantial to anticipate flows. we we're opportunities outperformed capital continue to positioned seeing your relationships business and and we're contract With to questions. returns recent more has we're help in expansion future to long-term ratio, the cash expand services and be economic that to Having leverage driven of should safeguard and XXXX integrated to our XXXX, wins take further benefit and our deploying customer Our happy in target that, opportunistic from drive expansionary grow in that growth XXXX. also

of Stifel. [Operator Instructions] Our line the question Gengaro with first comes Stephen from

I think two for me.

think The how strategy first, cetera? about might of at look you're can and Just you when of which types about just the of an allocation, talk and thinking kind kind kind the we of give you us et that. overview markets, capital things about of M&A

Sure.

are Western core Canada which I grow opportunities Australia, be our areas. certainly to think villages those two there and operations, owned would in

So grow are expand that expanding to also in we'll continue we geographically opportunities We serve. the the there and look end to core and growth think that. markets

business, be will Eastern services to in and integrated in outside So geographically, then look Canada the our predominantly back our North to expand expand services we'll is In both Canada, integrated both Western Western it in into U.S. which America continuing Australia, Australia. of

moved Australia, natural outside inorganically see there have both to would that expand if That expand purely into to of are but and South be opportunities further and resources. We organically. that

That's Okay. Bradley. helpful,

business, The you but but I'll for I of bit? and there that already. seeing mentioned anyway. next but camps quite Maybe other you highly most the is be think your think right? up How Canadian visible? quantify, and highly Canada is to a could visible, to year this When work, much contracted, speak won't I pretty of ask hard question, we what of about Outside mobile the we're turnaround say might visible,

portfolio XX million little is address less part the Canada year we year, first, full X.X rooms we'll in Sure. including guidance at quarter. look year, the for this which second About approximately the I'll for -- end in billed guess that what's XX%, the the with a it I relationships fourth certainly operators have then strong won't of large strong That that we on in in of contracted Canada. But and is is balance the based locations XX% turnaround customer primarily be is activity. largely Canada. contracted. with of It

we not to to February. But you build we be contracted. the percentages done usually, we build prepared as and have rooms in go in exact we'll in, subject XX% of finalizing rooms be as detail and So see into yet. flat with to typically, But XXXX Canada, in we're talk year-over-year, budgets relatively our we as go give more the budgeting

exclusivity some will of be of will be that and Some guaranteed that under contract.

line Sidoti from Company. Our of the next with question comes Steve Ferazani &

ask to the of way on to wildfires any QX impact wanted results? quantify the your I

of in the would say I what in of was rough numbers quarter the XX,XXX third turnaround terms didn't in order flow in room of about on magnitude nights through activity.

And we roughly the impact so saw. that's that

that was we didn't but forward, prior back evacuations occupancy the quite pulled frankly, fires. to that some it was recover of and of Some forest had to where that,

in XXXX XXXX and relatively look at as year-over-year. So look at lodges at start we build again, flat rooms to looking Canadian the

my didn't range to tightened math -- you your that's so doing I'm high-end -- million think went and $X if assuming roughly But the about you right. you of -- only night only I $XXX revenue a you When room, impact, it's EBITDA. it's you

would going stronger pretty big So a something impact quarter? in What offset. indicate else the it to is was

XX-Q, continued of I We of mean I'll the quarterly AUD We if to top mean, QX the into we line. business very QX, were a expanded in has look our Australian let in Yes. and in that in services kind expecting of pickup if the one expect this flowed the and see with integrated had that progression -- strong. and come year of QX I through in at customer that you has Australian business it's you been Australia speak XXX relationship -- to dollars. million particular, forward. We've services you'll continue me, XXXX, going revenues, big has into to

we'll the Australia, this think terms services up last and approximately line exceed XXX revenue that of I top million year. AUD from significantly year in in services integrated that's of

the winning versus activity is that of much How you businesses?

It's had that big work, villages but seen up we majority. is Certainly, occupancy largely already we've a operated, chunk winning it vast the customer of pick at work. winning

more potential full. in Australia on adding the X that update you you with had rooms that? of the were quarter, talked Any villages Previous about

a A to it. never pursue unfortunately. to straight B, Continue It's from point point line

we remind to the the there it's commitments we still So on been satisfy everyone of have optimistic some those shifting to that, Basin. possibility. needs have we and at order about And in, other to been XXX have but that rooms have was that in not magnitude just customers. result, to but expand executed need could able back needed from Bowen of the yet, locations a a and customer as needs we've been And

last The this was going that pushing be any there me, $X this XQ? just million demob costs, were quarter? is one Or the from into to that quarter

in third be had costs. We and in about about with $X the quarter the million e-mail quarter, should only the $XXX,XXX fourth left that final

with question comes David the next Our of from Stonegate. line Storms

I could some circle see customers bringing about. more current think When into of on about the much the how integrated talking do stuff you were you services there? back fold, you runway

Well, And when goal AUD to AUD million half XXX into we about AUD did put To then, for year, have line. kind to hit of year, acquired XX This entered million of Last be we million. XXX together should by that AUD from the we services we really team, grown we remind a top year, it's did Back million. a in a we everyone, we XXXX. close business business. in business the integrated materially XXX XXXX.

to compared any negotiations just the Canada having? look just that and renewal renewal for completed, environment the contract turning new I does what like guess maybe with you're you And then negotiations to contract client

to that I operators costs. cut the well, in all Canada, would are looking say

always So a it's battle.

were a was where it pricing, customer state the able did maintain maintain and team with a exclusivity, good ours. main the think good to I contract outcome we of job

people I It majority on several delivering their oil of service. price think of course, we north operating can the Fort it Canada, sands basin in the safe. service back of McMurray. It to And is of expectation. keeping in their with kind vast players portfolio is of things. our legacy comes locations meeting And region safely, is northern it the

And what wildfires then quantify. hard on that sense of look to an QX similar kind question, just in a the one to maybe little more Is rearview? like the any there in earlier are catch-up now could and

fourth Well, holiday it's mean the I'll difficult, our of honest, have be November surprising downtime. will I it's not little quarter decline because always December. a for that in headcount and starts level to the customers

so, the And by out for as will we it kind look holiday of Canada, at levels downtime. masked be activity

So the really will downtime. of but pickup in a you see it holiday won't occupancy, because be

it will look than a seasonally, normal. just maybe So stronger just little maybe

mean, on year. it will in be will if I of basis. depend what on like-for-like look have we 'XX loss a 'XX is like-for-like, with quarter Yes. line largely fourth like-for-like, on But McClellan to year-over-year seasonally, the we last

[Operator Instructions].

next with Energy from question Daniel Mitchell Our Sean Partners. the of comes line

you internal about organic is Or does in growth? some that Bradley, all million that getting M&A? talk Australia assume $XXX 'XX, when

have there's known right to on now, all Well, we of can't but win. hit won't services to hit bid all bid X let integrated that or set we of next the years them, an have for opportunity be on a business an pathway the on that for we will of obviously, opportunities opportunity and out over them that

And M&A. does it so not include

opportunities might the about little two? opportunities energy of a at you in bit then or U.S. when and/or outside are Canada outside that year next you of looking in second, Australia, kind And over be energy growth the talked of there

continue are still there, right we care I'd take of majority And those. say we we resources related mean do we'll and has off. think of well I we say where people, now. are right term, outside would resources. still pursue that ways outside Sean, of Yes. look energy. what that opposed do is applications I to the as and Longer vast would there opportunities to now,

question Our next Gengaro Stephen a Stifel. is follow-up from with

about When Canadian the we honestly in thinking plus wildfires, margins margin? trouble the margins I'm because been about Canada, demob be kind like going pattern missing triangulating and The actually a million Or normal have around seasonal to something et some should mid-teens 'XX last as I'm there? are having a we plus number. Because $XX cetera. as and is back costs think to the concerned, far of jumping year of there

We budgeting now, I the need bias, to think line, but back may build honest. think top to an be a right I have need but won't have upward upward significant complete we margins yet. they the to process, bias

the back closing I'd to reached question-and-answer have Mr. like end for Dodson over any We the to remarks. turn now of call session. our

speaking you, February expect your quarter for joining we Thank Michelle, your questions. thank We on appreciate be the and which and look forward you to interest of call. fourth all to We XXXX. you earnings the with call, in

This concludes teleconference. Thank you. today's

may wonderful disconnect time. your Thank this for lines at participation, day. a and you your You have