Civeo reports first quarter 2023 results
Houston & calgary, alberta--(business wire)--civeo corporation (nyse:cveo) today reported financial and operating results for the first quarter ended march 31, 2023. “through continued safe and effective operations, our first quarter 2023 financial results were in line with our expectations. we experienced the typical first quarter seasonality which always results in reduced customer activity and cash flows, but we are well positioned for a strong second quarter of turnaround activity,” said bradley j. dodson, civeo's president and chief executive officer. “our recent contract award wins in australia are supported by customer activity trending upward and growing customer interest in securing room supply, resulting in increased revenue visibility for civeo. we continue to navigate inflationary pressures through tailored mitigation efforts leveraging flexibility in our operations and our contracts. identifying a long-term solution for our mcclelland lake assets remains a key focus of our canadian team. finally, we expect to continue to opportunistically buy back shares, as we did in the first quarter.” first quarter 2023 results in the first quarter of 2023, civeo generated revenues of $167.6 million and reported a net loss of $6.4 million, or $0.42 per diluted share. during the first quarter of 2023, civeo produced operating cash flow of $0.4 million, adjusted ebitda of $20.2 million and negative free cash flow of $2.1 million. the negative free cash flow in the first quarter of 2023 was primarily the result of a seasonal build in working capital of $15.6 million. by comparison, in the first quarter of 2022, civeo generated revenues of $165.7 million and reported net income of $0.9 million, or $0.06 per diluted share. during the first quarter of 2022, civeo produced operating cash flow of $2.0 million, adjusted ebitda of $25.6 million and free cash flow of $0.7 million. the year-over-year decrease in adjusted ebitda in the first quarter of 2023 was primarily driven by lower contribution from canadian mobile camps, continued inflationary pressures and the negative impact of weakened australian and canadian dollars relative to the u.s. dollar. the decrease was partially offset by a $1.7 million gain on sale of assets related to the divestiture of certain u.s. assets. business segment results (unless otherwise noted, the following discussion compares the quarterly results for the first quarter of 2023 to the results for the first quarter of 2022.) canada during the first quarter of 2023, the canadian segment generated revenues of $89.5 million, operating loss of $4.5 million and adjusted ebitda of $12.0 million, compared to revenues of $96.0 million, operating income of $4.0 million and adjusted ebitda of $17.2 million in the first quarter of 2022. results from the first quarter of 2023 reflect the impact of a weakened canadian dollar relative to the u.s. dollar, which decreased revenues and adjusted ebitda by $6.0 million and $0.8 million, respectively. on a constant currency basis, the canadian segment revenues were relatively flat period-over-period due to an increase in canadian lodge revenue offset by a decline in mobile camp activity. adjusted ebitda for the canadian segment decreased 30% year-over-year primarily due to decreased contribution from canadian mobile camps resulting from the wind-down in pipeline construction activity as well as inflationary pressures across the business. australia during the first quarter of 2023, the australian segment generated revenues of $77.0 million, operating income of $4.9 million and adjusted ebitda of $14.2 million, compared to revenues of $63.5 million, operating income of $6.1 million and adjusted ebitda of $15.4 million in the first quarter of 2022. results from the first quarter of 2023 reflect the impact of a weakened australian dollar relative to the u.s. dollar, which decreased revenues and adjusted ebitda by $4.6 million and $0.9 million, respectively. as noted above, five additional contracts were awarded for the australian villages, including a two-year a$90 million contract renewal and a five-year a$45 million renewal. including a$35 million in new contract wins to support short-term turnaround activity, the additional awards with respect to the australian segment total a$175 million over five years. on a constant currency basis, the australian segment experienced a 28% period-over-period increase in revenues primarily driven by increased integrated services revenue related to new contracts as well as a 10% year-over-year increase in village billed rooms. adjusted ebitda for the australian segment decreased 8% due to inflationary pressures primarily associated with the integrated services business partially offset by higher occupancy in civeo's owned villages. financial condition as of march 31, 2023, civeo had total liquidity of approximately $90.6 million, consisting of $78.2 million available under its revolving credit facilities and $12.4 million of cash on hand. civeo’s total debt outstanding on march 31, 2023 was $142.6 million, a $10.6 million increase since december 31, 2022. civeo reported a net leverage ratio of 1.2x as of march 31, 2023. during the first quarter of 2023, civeo invested $4.8 million in capital expenditures compared to $3.6 million invested during the first quarter of 2022. capital expenditures in both periods were predominantly related to maintenance spending on the company’s lodges and villages. full year 2023 guidance for the full year of 2023, civeo is maintaining its previously provided revenue and adjusted ebitda guidance ranges of $630 million to $650 million and $85 million to $95 million, respectively. the company is increasing full year 2023 capital expenditure guidance to a range of $45 million to $50 million. the increase in capital expenditure guidance is entirely driven by our previously announced contract win in australia where the customer has requested specific upgrades to three australian villages. these upgrades will be fully funded by the customer upfront; therefore, the company is not changing its 2023 free cash flow guidance. conference call civeo will host a conference call to discuss its first quarter 2023 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 using the conference id 13738306#. 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 13738306#. 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, including the statements regarding civeo’s future plans and outlook, guidance, current trends and liquidity needs, and expected revenues from new contract awards, and future share repurchases, 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 inflation and volatility in the banking sector, 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 march 31, 2023 2022 revenues $ 167,591 $ 165,678 costs and expenses: cost of sales and services 133,514 125,843 selling, general and administrative expenses 16,190 15,213 depreciation and amortization expense 21,662 20,127 other operating expense 129 258 171,495 161,441 operating income (loss) (3,904 ) 4,237 interest expense (3,656 ) (2,468 ) interest income 32 — other income 2,450 1,696 income (loss) before income taxes (5,078 ) 3,465 income tax expense (1,233 ) (1,557 ) net income (loss) (6,311 ) 1,908 less: net income attributable to noncontrolling interest 42 498 net income (loss) attributable to civeo corporation (6,353 ) 1,410 less: dividends attributable to class a preferred shares — 487 net income (loss) attributable to civeo common shareholders $ (6,353 ) $ 923 net income (loss) per share attributable to civeo corporation common shareholders: basic $ (0.42 ) $ 0.06 diluted $ (0.42 ) $ 0.06 weighted average number of common shares outstanding: basic 15,158 14,096 diluted 15,158 14,219 civeo corporation condensed consolidated balance sheets (in thousands) march 31, 2023 december 31, 2022 (unaudited) current assets: cash and cash equivalents $ 12,366 $ 7,954 accounts receivable, net 122,962 119,755 inventories 7,379 6,907 assets held for sale 8,184 8,653 prepaid expenses and other current assets 7,732 10,280 total current assets 158,623 153,549 property, plant and equipment, net 284,371 301,890 goodwill, net 7,565 7,672 other intangible assets, net 80,369 81,747 operating lease right-of-use assets 15,059 15,722 other noncurrent assets 5,176 5,604 total assets $ 551,163 $ 566,184 current liabilities: accounts payable $ 47,819 $ 51,087 accrued liabilities 21,309 39,211 income taxes 223 178 current portion of long-term debt 21,485 28,448 deferred revenue 3,993 991 other current liabilities 8,387 8,342 total current liabilities 103,216 128,257 long-term debt 120,441 102,505 deferred income taxes 5,874 4,778 operating lease liabilities 12,005 12,771 other noncurrent liabilities 17,450 14,172 total liabilities 258,986 262,483 shareholders' equity: preferred shares — — common shares — — additional paid-in capital 1,625,379 1,624,512 accumulated deficit (940,247 ) (930,123 ) treasury stock (9,063 ) (9,063 ) accumulated other comprehensive loss (387,361 ) (385,187 ) total civeo corporation shareholders' equity 288,708 300,139 noncontrolling interest 3,469 3,562 total shareholders' equity 292,177 303,701 total liabilities and shareholders' equity $ 551,163 $ 566,184 civeo corporation unaudited consolidated statements of cash flows (in thousands) three months ended march 31, 2023 2022 cash flows from operating activities: net income (loss) $ (6,311 ) $ 1,908 adjustments to reconcile net income (loss) to net cash provided by operating activities: depreciation and amortization 21,662 20,127 deferred income tax expense 1,189 1,491 non-cash compensation charge 867 1,032 gains on disposals of assets (2,018 ) (1,489 ) provision for credit losses, net of recoveries (68 ) (20 ) other, net 589 686 changes in operating assets and liabilities: accounts receivable (4,298 ) (7,142 ) inventories (535 ) (623 ) accounts payable and accrued liabilities (20,075 ) (13,697 ) taxes payable 45 59 other current and noncurrent assets and liabilities, net 9,311 (379 ) net cash flows provided by operating activities 358 1,953 cash flows from investing activities: capital expenditures (4,772 ) (3,592 ) proceeds from dispositions of property, plant and equipment 2,265 2,364 other, net — 190 net cash flows used in investing activities (2,507 ) (1,038 ) cash flows from financing activities: term loan repayments (7,389 ) (8,003 ) revolving credit borrowings (repayments), net 17,730 7,680 repurchases of common shares (3,771 ) (9 ) taxes paid on vested shares — (1,013 ) net cash flows provided by (used in) financing activities 6,570 (1,345 ) effect of exchange rate changes on cash (9 ) 571 net change in cash and cash equivalents 4,412 141 cash and cash equivalents, beginning of period 7,954 6,282 cash and cash equivalents, end of period $ 12,366 $ 6,423 civeo corporation segment data (in thousands) (unaudited) three months ended march 31, 2023 2022 revenues canada $ 89,453 $ 95,952 australia 76,989 63,529 other (2) 1,149 6,197 total revenues $ 167,591 $ 165,678 ebitda (1) canada $ 12,011 $ 17,219 australia 14,209 15,437 corporate, other and eliminations (2) (6,054 ) (7,094 ) total ebitda $ 20,166 $ 25,562 adjusted ebitda (1) canada $ 12,011 $ 17,219 australia 14,209 15,437 corporate, other and eliminations (2) (6,054 ) (7,094 ) total adjusted ebitda $ 20,166 $ 25,562 operating income (loss) canada $ (4,502 ) $ 4,038 australia 4,897 6,135 corporate, other and eliminations (2) (4,299 ) (5,936 ) total operating income (loss) $ (3,904 ) $ 4,237 (1) please see non-gaap reconciliation schedule. (2) prior to the first quarter of 2023, we presented the u.s. operating segment as a separate reportable segment. our operating segment in the u.s. no longer meets the reportable segment quantitative thresholds, and is included within the other and corporate, other and eliminations categories. prior periods have been adjusted. civeo corporation non-gaap reconciliations (in thousands) (unaudited) three months ended march 31, twelve months ended march 31, 2023 2022 2023 ebitda (1) $ 20,166 $ 25,562 adjusted ebitda (1) $ 20,166 $ 25,562 free cash flow (2) $ (2,149 ) $ 725 net leverage ratio (3) 1.2x 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 march 31, twelve months ended march 31, 2023 2022 2023 net income (loss) attributable to civeo corporation $ (6,353 ) $ 1,410 $ (3,766 ) income tax expense 1,233 1,557 4,078 depreciation and amortization 21,662 20,127 88,749 interest income (32 ) — (71 ) interest expense 3,656 2,468 12,662 ebitda $ 20,166 $ 25,562 $ 101,652 adjustments to ebitda impairment of long-lived assets (a) — — 5,721 adjusted ebitda $ 20,166 $ 25,562 $ 107,373 relates to asset impairments in the fourth quarter of 2022. 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 the u.s. of $1.9 million. three months ended march 31, 2023 2022 net cash flows provided by operating activities $ 358 $ 1,953 capital expenditures (4,772 ) (3,592 ) proceeds from dispositions of property, plant and equipment 2,265 2,364 free cash flow $ (2,149 ) $ 725 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 march 31, 2023 total debt $ 142,608 less: cash and cash equivalents 12,366 net debt $ 130,242 adjusted ebitda for the twelve months ended march 31, 2023 (a) $ 107,373 adjustments to adjusted ebitda stock-based compensation 3,623 interest income 71 bank-adjusted ebitda $ 111,067 net leverage ratio (b) 1.2x (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 income $ (17.0 ) $ (9.0 ) income tax expense 10.0 12.0 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 march 31, 2023 2022 supplemental operating data - canadian segment revenues accommodation revenue (1) $ 64,228 $ 67,194 mobile facility rental revenue (2) 20,031 24,018 food and other services revenue (3) 5,194 4,740 total canadian revenues $ 89,453 $ 95,952 costs accommodation cost $ 52,098 $ 53,127 mobile facility rental cost 14,502 14,884 food and other services cost 4,774 4,359 indirect other cost 2,531 2,836 total canadian cost of sales and services $ 73,905 $ 75,206 average daily rates (4) $ 96 $ 106 billed rooms (5) 642,796 635,555 canadian dollar to u.s. dollar $ 0.740 $ 0.790 supplemental operating data - australian segment revenues accommodation revenue (1) $ 40,599 $ 37,599 food and other services revenue (3) 36,390 25,930 total australian revenues $ 76,989 $ 63,529 costs accommodation cost $ 20,318 $ 18,407 food and other services cost 35,862 24,363 indirect other cost 2,128 1,744 total australian cost of sales and services $ 58,308 $ 44,514 average daily rates (4) $ 78 $ 79 billed rooms (5) 522,713 474,474 australian dollar to u.s. dollar $ 0.684 $ 0.724 includes revenues related to lodge and village rooms and hospitality services for owned rooms for the periods presented. includes revenues related to mobile assets for the periods presented. includes revenues related to food services, 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 owned assets for the periods presented.
