Civeo reports fourth quarter and full year 2022 results
Houston & calgary, alberta--(business wire)--civeo corporation (nyse:cveo) today reported financial and operating results for the fourth quarter and year ended december 31, 2022. “despite inflationary headwinds in 2022, civeo reported strong results. we operated safely while achieving higher revenues and adjusted ebitda compared to 2021. we also generated significant free cash flow and substantially reduced our total debt balance as well as our net leverage ratio,” said bradley j. dodson, civeo's president and chief executive officer. mr. dodson continued, “we continued to prioritize returning capital to shareholders by repurchasing the equivalent of approximately 1.5 million common shares during 2022. we allocated approximately $45 million of capital, or over 50% of the company's 2022 free cash flow, to these repurchases. we will continue to evaluate opportunities to return capital to shareholders in 2023 as well as opportunities to deploy capital for both organic and inorganic growth.” mr. dodson added, “looking forward, we are encouraged by the recent contract awards in australia with their significant terms and expected occupancy. in both cases, these contract renewals retained civeo's previous work with the customer and granted us additional locations or additional room commitments, while taking share from competitors.” fourth quarter 2022 results in the fourth quarter of 2022, civeo generated revenues of $162.2 million and reported a net loss of $13.0 million, or $1.31 per diluted share. the loss results in part from $5.7 million in costs associated with impairments on assets in australia and the u.s. during the fourth quarter of 2022, civeo produced operating cash flow of $29.4 million, adjusted ebitda of $15.1 million and free cash flow of $25.8 million. by comparison, in the fourth quarter of 2021, civeo generated revenues of $159.8 million and reported net income of $9.8 million, or $0.58 per diluted share. during the fourth quarter of 2021, civeo produced operating cash flow of $25.3 million, adjusted ebitda of $34.5 million and free cash flow of $26.1 million. overall, the decrease in adjusted ebitda in the fourth quarter of 2022 compared to 2021 was primarily due to (1) $8.5 million of non-operating items such as the impact of a stronger u.s. dollar relative to the canadian and australian dollars, increased stock-based compensation expense due to a higher stock price and larger gains on sales of assets in the fourth quarter of 2021; (2) $3.3 million of customer and insurance settlements which positively impacted the fourth quarter of 2021; (3) a $2.9 million increase in sg&a largely related to higher information technology expenses and professional fees; and (4) approximately $4.7 million of increased operating costs largely driven by inflationary pressures, partially mitigated by increased australia village occupancy. full year 2022 results for the full year 2022, the company reported revenues of $697.1 million and net income of $2.2 million, or $0.21 loss per share. adjusted ebitda for the full year 2022 was $112.8 million. this compared to revenues of $594.5 million and a net loss of $0.6 million, or $0.04 per share, for the full year 2021. adjusted ebitda was $109.1 million in 2021. results for the full year of 2022 reflect the impact of weakened australian and canadian dollars relative to the u.s. dollar, which decreased revenues and adjusted ebitda by $38.2 million and $8.1 million, respectively. the increase in adjusted ebitda in 2022 as compared to 2021 was largely driven by canadian contract camp activity in the first half of 2022, partially offset by the weakened australian and canadian dollar. business segment results (unless otherwise noted, the following discussion compares the quarterly results for the fourth quarter of 2022 to the results for the fourth quarter of 2021.) canada during the fourth quarter of 2022, the canada segment generated revenues of $88.0 million, operating loss of $6.1 million and adjusted ebitda of $11.8 million, compared to revenues of $92.2 million, operating income of $6.9 million and adjusted ebitda of $23.1 million in the fourth quarter of 2021. results from the fourth quarter of 2022 reflect the impact of a weakened canadian dollar relative to the u.s. dollar, which decreased revenues and adjusted ebitda by $6.9 million and $1.0 million, respectively. on a constant currency basis, the canadian segment experienced a 3% period-over-period increase in revenues driven by a 6% year-over-year increase in billed rooms. despite the increase in billed rooms, adjusted ebitda for the canadian segment decreased year-over-year primarily due to inflationary pressures and certain non-operating items that benefited the fourth quarter of 2021. operating loss for the fourth quarter of 2022 includes asset impairment charges of $3.8 million. australia during the fourth quarter of 2022, the australia segment generated revenues of $73.1 million, operating loss of $2.7 million and adjusted ebitda of $13.1 million, compared to revenues of $62.3 million, operating income of $2.2 million and adjusted ebitda of $13.6 million in the fourth quarter of 2021. results from the fourth quarter of 2022 reflect the impact of a weakened australian dollar relative to the u.s. dollar, which decreased revenues and adjusted ebitda by $8.0 million and $1.5 million, respectively. on a constant currency basis, the australian segment experienced a 30% period-over-period increase in revenues driven by increased integrated services activity and a 12% year-over- year increase in billed rooms. adjusted ebitda from the australian segment increased year-over-year due to increased village occupancy and integrated services activity, partially offset by inflationary pressures throughout the business. u.s. the u.s. segment generated revenues of $1.1 million, operating loss of $3.7 million and negative adjusted ebitda of $0.4 million in the fourth quarter of 2022, compared to revenues of $5.3 million, operating loss of $3.0 million and adjusted ebitda of $3.3 million in the fourth quarter of 2021. the revenue and adjusted ebitda decrease was primarily due to a $3.8 million gain on sale of assets from the fourth quarter 2021 sale of our west permian lodge and the sale of the segment's offshore and wellsite businesses in the second half of 2022. operating loss for the fourth quarter of 2022 includes asset impairment charges of $1.9 million. financial condition as of december 31, 2022, civeo had total liquidity of approximately $104.1 million, consisting of $96.1 million available under its revolving credit facilities and $8.0 million of cash on hand. civeo’s total debt outstanding on december 31, 2022 was $132.0 million, a $5.8 million increase from september 30, 2022 and a $43.1 million decrease from december 31, 2021. civeo reported a net leverage ratio of 1.1x as of december 31, 2022. during 2022, civeo invested $25.4 million in capital expenditures, up from $15.6 million during 2021. this increase is primarily due to increased maintenance spending on the company's lodges and villages. full year 2023 guidance for the full year of 2023, civeo expects revenues of $630.0 million to $650.0 million, ebitda of $85.0 million to $95.0 million and capital expenditures of $25.0 million to $30.0 million. conference call civeo will host a conference call to discuss its fourth quarter 2022 financial results today at 11:00 a.m. eastern time. this call is being webcast and can be accessed at civeo's website at www.civeo.com. participants may also join the conference call by dialing (877) 423-9813 in the united states or (201) 689-8573 internationally and asking for the civeo call or using the conference id 13736531#. a replay will be available after the call by dialing (844) 512-2921 in the united states or (412) 317-6671 internationally and using the conference id 13736531#. about civeo civeo corporation is a leading provider of hospitality services with prominent market positions in the canadian oil sands and the australian natural resource regions. civeo offers comprehensive solutions for lodging hundreds or thousands of workers with its long-term and temporary accommodations and provides food services, housekeeping, facility management, laundry, water and wastewater treatment, power generation, communications systems, security and logistics services. civeo currently operates a total of 26 lodges and villages in canada, australia and the u.s., with an aggregate of approximately 28,000 rooms. civeo is publicly traded under the symbol cveo on the new york stock exchange. for more information, please visit civeo's website at www.civeo.com. forward looking statements this news release contains forward-looking statements within the meaning of the securities act of 1933 and section 21e of the securities exchange act of 1934. forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. the forward-looking statements herein include the statements regarding civeo’s future plans and outlook, including guidance, current trends and liquidity needs, and ability to pay down debt are based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. such risks and uncertainties include, among other things, risks associated with the general nature of the accommodations industry, risks associated with the level of supply and demand for oil, coal, iron ore and other minerals, including the level of activity, spending and developments in the canadian oil sands, the level of demand for coal and other natural resources from, and investments and opportunities in, australia, and fluctuations or sharp declines in the current and future prices of oil, natural gas, coal, iron ore and other minerals, risks associated with failure by our customers to reach positive final investment decisions on, or otherwise not complete, projects with respect to which we have been awarded contracts, which may cause those customers to terminate or postpone contracts, risks associated with currency exchange rates, risks associated with the company’s ability to integrate acquisitions, risks associated with labor shortages, risks associated with the development of new projects, including whether such projects will continue in the future, risks associated with the trading price of the company’s common shares, availability and cost of capital, risks associated with general global economic conditions, inflation, global weather conditions, natural disasters, global health concerns, such as the covid-19 pandemic, and security threats and changes to government and environmental regulations, including climate change, and other factors discussed in the “management’s discussion and analysis of financial condition and results of operations” and “risk factors” sections of civeo’s most recent annual report on form 10-k and other reports the company may file from time to time with the u.s. securities and exchange commission. each forward-looking statement contained herein speaks only as of the date of this release. except as required by law, civeo expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. non-gaap financial information ebitda, adjusted ebitda, free cash flow, net debt, bank-adjusted ebitda and net leverage ratio are non-gaap financial measures. see “non-gaap reconciliation” below for definitions and additional information concerning non-gaap financial measures, including a reconciliation of the non-gaap financial information presented in this press release to the most directly comparable financial information presented in accordance with gaap. non-gaap financial information supplements and should be read together with, and is not an alternative or substitute for, the company’s financial results reported in accordance with gaap. because non-gaap financial information is not standardized, it may not be possible to compare these financial measures with other companies’ non-gaap financial measures. - financial schedules follow - civeo corporation unaudited consolidated statements of operations (in thousands, except per share amounts) three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 revenues $ 162,193 $ 159,794 $ 697,052 $ 594,463 costs and expenses: cost of sales and services 127,671 117,220 517,063 436,462 selling, general and administrative expenses 19,390 14,396 69,962 60,600 depreciation and amortization expense 21,396 20,173 87,214 83,101 impairment expense 5,721 — 5,721 7,935 other operating expense (income) 261 191 74 313 174,439 151,980 680,034 588,411 operating income (loss) (12,246 ) 7,814 17,018 6,052 interest expense (3,397 ) (3,035 ) (11,474 ) (12,964 ) loss on extinguishment of debt — — — (416 ) interest income 24 — 39 2 other income 859 7,133 5,149 13,199 income (loss) before income taxes (14,760 ) 11,912 10,732 5,873 income tax benefit (provision) 2,689 (1,022 ) (4,402 ) (3,376 ) net income (loss) (12,071 ) 10,890 6,330 2,497 less: net income attributable to noncontrolling interest 627 613 2,333 1,147 net income (loss) attributable to civeo corporation (12,698 ) 10,277 3,997 1,350 less: dividends attributable to class a preferred shares 302 485 1,771 1,925 net income (loss) attributable to civeo corporation common shareholders $ (13,000 ) $ 9,792 $ 2,226 $ (575 ) net income (loss) per share attributable to civeo corporation common shareholders: basic $ (1.31 ) $ 0.59 $ (0.21 ) $ (0.04 ) diluted $ (1.31 ) $ 0.58 $ (0.21 ) $ (0.04 ) weighted average number of common shares outstanding: basic 13,835 14,165 14,002 14,232 diluted 13,835 14,289 14,002 14,232 civeo corporation condensed consolidated balance sheets (in thousands) december 31, december 31, 2022 2021 (unaudited) current assets: cash and cash equivalents $ 7,954 $ 6,282 accounts receivable, net 119,755 114,859 inventories 6,907 6,468 assets held for sale 8,653 11,762 prepaid expenses and other current assets 10,280 17,822 total current assets 153,549 157,193 property, plant and equipment, net 301,890 389,996 goodwill, net 7,672 8,204 other intangible assets, net 81,747 93,642 operating lease right-of-use assets 15,722 18,327 other noncurrent assets 5,604 5,372 total assets $ 566,184 $ 672,734 current liabilities: accounts payable $ 51,087 $ 49,321 accrued liabilities 39,211 33,564 income taxes 178 171 current portion of long-term debt 28,448 30,576 deferred revenue 991 18,479 other current liabilities 8,342 4,807 total current liabilities 128,257 136,918 long-term debt 102,505 142,602 deferred income taxes 4,778 896 operating lease liabilities 12,771 15,429 other noncurrent liabilities 14,172 13,778 total liabilities 262,483 309,623 shareholders' equity: preferred shares — 61,941 common shares — — additional paid-in capital 1,624,512 1,582,442 accumulated deficit (930,123 ) (912,951 ) treasury stock (9,063 ) (8,050 ) accumulated other comprehensive loss (385,187 ) (361,883 ) total civeo corporation shareholders' equity 300,139 361,499 noncontrolling interest 3,562 1,612 total shareholders' equity 303,701 363,111 total liabilities and shareholders' equity $ 566,184 $ 672,734 civeo corporation unaudited consolidated statements of cash flows (in thousands) twelve months ended december 31, 2022 2021 cash flows from operating activities: net income $ 6,330 $ 2,497 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 87,214 83,101 impairment charges 5,721 7,935 loss on extinguishment of debt — 416 deferred income tax expense 4,177 3,070 non-cash compensation charge 3,787 4,127 gain on disposals of assets (4,917 ) (6,188 ) provision for loss on receivables, net of recoveries 162 141 other, net 3,223 2,200 changes in operating assets and liabilities: accounts receivable (14,447 ) (28,131 ) inventories (1,845 ) (526 ) accounts payable and accrued liabilities 12,323 15,435 taxes payable 5 (28 ) other current assets and liabilities, net (9,960 ) 4,485 net cash flows provided by operating activities 91,773 88,534 cash flows from investing activities: capital expenditures (25,421 ) (15,571 ) proceeds from disposition of property, plant and equipment 16,286 14,306 other, net 190 559 net cash flows used in investing activities (8,945 ) (706 ) cash flows from financing activities: term loan repayments (30,442 ) (125,483 ) revolving credit borrowings (repayments), net (3,374 ) 49,157 debt issuance costs — (4,412 ) repurchases of common shares (14,209 ) (4,649 ) repurchases of preferred shares (30,553 ) — other, net (1,078 ) (1,120 ) net cash flows used in financing activities (79,656 ) (86,507 ) effect of exchange rate changes on cash (1,500 ) (1,194 ) net change in cash and cash equivalents 1,672 127 cash and cash equivalents, beginning of period 6,282 6,155 cash and cash equivalents, end of period $ 7,954 $ 6,282 civeo corporation segment data (in thousands) (unaudited) three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 revenues canada $ 88,013 $ 92,155 $ 395,997 $ 321,378 australia 73,098 62,300 278,252 251,074 united states 1,082 5,339 22,803 22,011 total revenues $ 162,193 $ 159,794 $ 697,052 $ 594,463 ebitda (1) canada $ 11,803 $ 23,125 $ 83,248 $ 76,326 australia 9,286 13,570 57,118 48,727 united states (2,351 ) 3,283 (1,957 ) 1,815 corporate and eliminations (9,356 ) (5,471 ) (31,361 ) (25,663 ) total ebitda $ 9,382 $ 34,507 $ 107,048 $ 101,205 adjusted ebitda (1) canada $ 11,803 $ 23,125 $ 83,248 $ 76,326 australia 13,094 13,570 60,926 56,662 united states (438 ) 3,283 (44 ) 1,815 corporate and eliminations (9,356 ) (5,471 ) (31,361 ) (25,663 ) total adjusted ebitda $ 15,103 $ 34,507 $ 112,769 $ 109,140 operating income (loss) canada $ (6,058 ) $ 6,892 $ 17,023 $ 12,816 australia (2,715 ) 2,230 14,731 7,303 united states (3,736 ) (3,038 ) (8,330 ) (8,869 ) corporate and eliminations 263 1,730 (6,406 ) (5,198 ) total operating income (loss) $ (12,246 ) $ 7,814 $ 17,018 $ 6,052 (1) please see non-gaap reconciliation schedule. civeo corporation non-gaap reconciliations (in thousands) (unaudited) three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 ebitda (1) $ 9,382 $ 34,507 $ 107,048 $ 101,205 adjusted ebitda (1) $ 15,103 $ 34,507 $ 112,769 $ 109,140 free cash flow (2) $ 25,757 $ 26,128 $ 82,638 $ 87,269 net leverage ratio (3) 1.1x the term ebitda is a non-gaap financial measure that is defined as net income (loss) attributable to civeo corporation plus interest, taxes, depreciation and amortization. the term adjusted ebitda is a non-gaap financial measure that is defined as ebitda adjusted to exclude certain other unusual or non-operating items. ebitda and adjusted ebitda are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. additionally, ebitda and adjusted ebitda may not be comparable to other similarly titled measures of other companies. civeo has included ebitda and adjusted ebitda as supplemental disclosures because its management believes that ebitda and adjusted ebitda provide useful information regarding its ability to service debt and to fund capital expenditures and provide investors a helpful measure for comparing civeo's operating performance with the performance of other companies that have different financing and capital structures or tax rates. civeo uses ebitda and adjusted ebitda to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. the following table sets forth a reconciliation of ebitda and adjusted ebitda to net income (loss) attributable to civeo corporation, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited): three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 net income (loss) attributable to civeo corporation $ (12,698 ) $ 10,277 $ 3,997 $ 1,350 income tax provision (benefit) (2,689 ) 1,022 4,402 3,376 depreciation and amortization 21,396 20,173 87,214 83,101 interest income (24 ) — (39 ) (2 ) loss on extinguishment of debt — — — 416 interest expense 3,397 3,035 11,474 12,964 ebitda $ 9,382 $ 34,507 $ 107,048 $ 101,205 adjustments to ebitda impairment of long-lived assets (a) 5,721 — 5,721 7,935 adjusted ebitda $ 15,103 $ 34,507 $ 112,769 $ 109,140 relates to asset impairments in the fourth quarter of 2022 and the second quarter of 2021. in the fourth quarter of 2022, we recorded a pre-tax loss related to the impairment of long-lived assets in our australian segment of $3.8 million and a pre-tax loss related to the impairment of long-lived assets in our u.s. segment of $1.9 million, which is included in impairment expense on the unaudited statements of operations. in the second quarter of 2021, we recorded a pre-tax loss related to the impairment of long-lived assets in our australian segment of $7.9 million, which is included in impairment expense on the unaudited statements of operations. the term free cash flow is a non-gaap financial measure that is defined as net cash flows provided by operating activities less capital expenditures plus proceeds from asset sales. free cash flow is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. additionally, free cash flow may not be comparable to other similarly titled measures of other companies. civeo has included free cash flow as a supplemental disclosure because its management believes that free cash flow provides useful information regarding the cash flow generating ability of its business relative to its capital expenditure and debt service obligations. civeo uses free cash flow to compare and to understand, manage, make operating decisions and evaluate civeo's business. it is also used as a benchmark for the award of incentive compensation under its annual incentive compensation plan. the following table sets forth a reconciliation of free cash flow to net cash flows provided by operating activities, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited): three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 net cash flows provided by operating activities $ 29,401 $ 25,293 $ 91,773 $ 88,534 capital expenditures (7,955 ) (5,926 ) (25,421 ) (15,571 ) proceeds from disposition of property, plant and equipment 4,311 6,761 16,286 14,306 free cash flow $ 25,757 $ 26,128 $ 82,638 $ 87,269 the term net leverage ratio is a non-gaap financial measure that is defined as net debt divided by bank-adjusted ebitda. net debt, bank-adjusted ebitda and net leverage ratio are not financial measures under gaap and should not be considered in isolation from or as a substitute for total debt, net income (loss) or cash flow measures prepared in accordance with gaap or as a measure of profitability or liquidity. additionally, net debt, bank-adjusted ebitda and net leverage ratio may not be comparable to other similarly titled measures of other companies. civeo has included net debt, bank-adjusted ebitda and net leverage ratio as a supplemental disclosure because its management believes that this data provides useful information regarding the level of the company’s indebtedness and its ability to service debt. additionally, per civeo’s credit agreement, the company is required to maintain a net leverage ratio below 3.0x every quarter to remain in compliance with the credit agreement. the following table sets forth a reconciliation of net debt, bank-adjusted ebitda and net leverage ratio to the most directly comparable measures of financial performance calculated under gaap (in thousands) (unaudited): as of december 31, 2022 total debt $ 132,037 less: cash and cash equivalents 7,954 net debt $ 124,083 adjusted ebitda for the twelve months ended december 31, 2022 (a) $ 112,769 adjustments to adjusted ebitda stock-based compensation 3,787 interest income 39 bank-adjusted ebitda $ 116,595 net leverage ratio (b) 1.1x (a) see footnote 1 above for reconciliation of adjusted ebitda to net income (loss) attributable to civeo corporation (b) calculated as net debt divided by bank-adjusted ebitda civeo corporation non-gaap reconciliations - guidance (in millions) (unaudited) year ending december 31, 2023 ebitda range (1) $ 85.0 $ 95.0 the following table sets forth a reconciliation of estimated ebitda to estimated net loss, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in millions) (unaudited): year ending december 31, 2023 (estimated) net loss $ (19.5 ) $ (9.5 ) income tax provision 12.5 12.5 depreciation and amortization 80.0 80.0 interest expense 12.0 12.0 ebitda $ 85.0 $ 95.0 civeo corporation supplemental quarterly segment and operating data (u.s. dollars in thousands, except for room counts and average daily rates) (unaudited) three months ended twelve months ended december 31, december 31, 2022 2021 2022 2021 supplemental operating data - canadian segment revenues accommodation revenue (1) $ 60,106 $ 62,726 $ 279,455 $ 239,526 mobile facility rental revenue (2) 23,041 24,616 96,400 62,856 food and other services revenue (3) 4,866 4,813 20,142 18,996 total canadian revenues $ 88,013 $ 92,155 $ 395,997 $ 321,378 costs accommodation cost $ 48,049 $ 45,273 $ 204,592 $ 170,071 mobile facility rental cost 15,116 15,009 60,055 38,571 food and other services cost 4,590 4,167 18,372 16,750 indirect other cost 2,728 2,529 10,557 10,027 total canadian cost of sales and services $ 70,483 $ 66,978 $ 293,576 $ 235,419 average daily rates (4) $ 93 $ 106 $ 100 $ 99 billed rooms (5) 621,991 588,473 2,759,521 2,404,880 canadian dollar to u.s. dollar $ 0.736 $ 0.794 $ 0.769 $ 0.798 supplemental operating data - australian segment accommodation revenue (1) $ 37,747 $ 35,776 $ 152,714 $ 145,335 food and other services revenue (3) 35,351 26,524 125,538 105,739 total australian revenues $ 73,098 $ 62,300 $ 278,252 $ 251,074 costs accommodation cost $ 18,260 $ 18,012 $ 73,325 $ 71,550 food and other services cost 35,121 25,011 119,957 100,469 indirect other cost 2,024 1,947 7,662 7,123 total australian cost of sales and services $ 55,405 $ 44,970 $ 200,944 $ 179,142 average daily rates (4) $ 73 $ 77 $ 75 $ 79 billed rooms (5) 518,925 464,700 2,024,068 1,846,882 australian dollar to u.s. dollar $ 0.657 $ 0.729 $ 0.695 $ 0.752 includes revenues related to lodge and village rooms and hospitality services for owned rooms for the periods presented. includes revenues related to mobile camps for the periods presented. includes revenues related to food service, laundry and water and wastewater treatment services, and facilities management for the periods presented. average daily rate is based on billed rooms and accommodation revenue. billed rooms represents total billed days for civeo owned canadian lodges and australian villages for the periods presented.
