Civeo Corporation (NYSE:CVEO) today reported financial and
operating results for the first quarter ended March 31, 2020.
Highlights include:
- Reported first quarter revenues of $138.8 million, net loss of
$146.5 million and operating cash flow of $20.8 million; the net
loss for the first quarter of 2020 included the impact of
approximately $144.1 million in non-cash goodwill and asset
impairments
- Delivered first quarter Adjusted EBITDA of $20.3 million, and
free cash flow of $18.3 million
- Reduced leverage ratio from 2.98x as of December 31, 2019 to
2.54x as of March 31, 2020
- Awarded four contract renewals with three Western Australia
mining customers to provide catering and managed services from the
Company’s Action Catering business with anticipated revenues
totaling A$36 million over the next three years
- Previously announced implementation of cost containment
initiatives related to COVID-19 and lower oil prices, including (1)
salary and total compensation reductions of between 10% to 20% for
the Board, executive leadership team and other senior management,
(2) headcount reduction in North America of 25% in the last month,
and (3) cutting expected 2020 capital spending by approximately
25%
“We are currently operating in a challenging environment, and
are working hard to navigate the COVID-19 pandemic and historic
global oil supply/demand imbalance. Our first and most important
priority in this tumultuous climate is to protect the health and
wellbeing of our employees and guests. We are closely monitoring
the COVID-19 situation and following our stringent safety
protocols. I want to thank our employees for their commitment and
focus during this difficult time," stated Bradley J. Dodson,
Civeo's President and Chief Executive Officer.
Mr. Dodson added, "Civeo made progress on our key strategic
initiatives in 2019, and that momentum carried into January and
February of 2020. Despite the economic disruption and subdued
activity in March in North America, the Company still delivered
improved year-over-year financial and operational results for the
first quarter of 2020, highlighted by the reduction of our leverage
ratio to 2.54x on March 31, 2020, from 2.98x on December 31, 2019.
We expect that the remainder of 2020 will bring reduced EBITDA;
however, we believe the Company’s diversified geographic and
commodity end market footprint, coupled with our relentless focus
on positive free cash flow generation, will help us manage through
this period of uncertainty."
Mr. Dodson concluded, "We are focusing on the factors within our
control as we navigate the challenges ahead, including implementing
cost containment initiatives and reducing capital expenditures. We
will continue to monitor the rapidly evolving market environment
and manage the business accordingly."
First Quarter 2020 Results
In the first quarter of 2020, Civeo generated revenues of $138.8
million and reported a net loss of $146.5 million, or $0.87 per
diluted share. The loss results in part from $144.1 million in
costs associated with goodwill and asset impairments. During the
first quarter of 2020, Civeo produced operating cash flow of $20.8
million, Adjusted EBITDA of $20.3 million and free cash flow of
$18.3 million.
The first quarter of 2020 outperformed the first quarter of 2019
due to higher occupancy in both Canada and Australia coupled with
the contributions from Action Catering, which was acquired in July
2019.
By comparison, in the first quarter of 2019, Civeo generated
revenues of $108.6 million and reported a net loss of $17.5
million, or $0.11 per diluted share. During the first quarter of
2019, Civeo generated operating cash flow of $6.3 million, Adjusted
EBITDA of $15.9 million and free cash flow of $1.1 million.
(EBITDA is a non-GAAP financial measure that is defined as net
income plus interest, taxes, depreciation and amortization, and
Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment
charges. 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. Please see the
reconciliations to GAAP measures at the end of this news
release.)
Business Segment Results
(Unless otherwise noted, the following discussion compares the
quarterly results for the first quarter of 2020 to the results for
the first quarter of 2019.)
Canada
During the first quarter of 2020, the Canadian segment generated
revenues of $79.3 million, operating loss of $136.6 million and
Adjusted EBITDA of $11.4 million, compared to revenues of $66.8
million, operating loss of $11.6 million and Adjusted EBITDA of
$10.2 million in the first quarter of 2019. The first quarter of
2020 results included a goodwill impairment charge of $93.6 million
and asset impairment charges of $38.1 million.
On a constant currency basis, the Canadian segment experienced a
20% period-over-period increase in revenues driven by a 13%
year-over-year increase in billed rooms related to oil sands
activity and the contribution from the newly expanded Sitka Lodge
serving LNG activity. Adjusted EBITDA for the Canadian segment
increased 12% year-over-year with the higher lodge occupancy. These
results were achieved despite a more than 50% drop in occupancy in
our Canadian lodges during March as customers reacted to the
precipitous drop in oil prices and the safety concerns related to
COVID-19.
Australia
During the first quarter of 2020, the Australian segment
generated revenues of $49.1 million, operating income of $6.2
million and Adjusted EBITDA of $16.2 million, compared to revenues
of $28.4 million, operating loss of $0.4 million and Adjusted
EBITDA of $9.9 million in the first quarter of 2019. The first
quarter of 2020 results reflect the impact of a weakened Australian
dollar relative to the U.S. dollar, which decreased revenues and
Adjusted EBITDA by $2.7 million and $1.4 million, respectively.
On a constant currency basis, the Australian segment experienced
an 87% period-over-period increase in revenues primarily driven by
contributions from the acquisition of Action Catering. Australian
village occupancy increased year-over-year with billed rooms up 23%
primarily due to continued improvement in metallurgical coal
activity across the Bowen Basin. Adjusted EBITDA from the
Australian segment increased 64% year-over-year due to higher
village occupancy coupled with contributions from the recent
acquisition of Action Catering. Australian revenues in the first
quarter of 2020 increased more year-over-year than Australian
Adjusted EBITDA due to the inherent lower margins in the
service-only business model of Action Catering.
Since the beginning of 2020, Civeo was awarded four contract
renewals with three Western Australian mining customers from our
Action Catering business. The contract terms vary from one to three
years, with anticipated aggregate revenues totaling A$36 million
through 2023.
U.S.
The U.S. segment generated revenues of $10.3 million, operating
loss of $14.1 million and Adjusted EBITDA of $0.4 million in the
first quarter of 2020, compared to revenues of $13.4 million,
operating loss of $1.0 million and Adjusted EBITDA of $2.8 million
in the first quarter of 2019. The first quarter of 2020 included
asset impairment charges of $12.4 million. Revenues and Adjusted
EBITDA declined year-over-year primarily due to lower drilling and
completion activity coupled with lower occupancy in the U.S.
lodges.
Income Taxes
Civeo recognized an income tax benefit of $8.8 million, which
resulted in an effective tax rate of 5.7%, in the first quarter of
2020. During the first quarter of 2019, Civeo recognized an income
tax benefit of $4.5 million, which resulted in an effective tax
rate of 21%.
Financial Condition
As of March 31, 2020, Civeo had total liquidity of approximately
$149.6 million, consisting of $144.0 million available under its
revolving credit facilities and $5.6 million of cash on hand.
Civeo’s total debt outstanding on March 31, 2020 was $314.9
million, a $44.2 million decrease since December 31, 2019. The
decrease consisted of $14.2 million in debt payments from free cash
flow generated by the business as well as a favorable foreign
currency translation impact of $30 million.
Civeo reduced its leverage ratio from 2.98x as of December 31,
2019 to 2.54x as of March 31, 2020.
During the first quarter of 2020, Civeo invested $2.7 million in
capital expenditures, down from $9.7 million during the first
quarter of 2019 due to the completion of the Sitka lodge expansion
in 2019.
Full Year 2020 Guidance
As previously announced in the April 14th Business Update, Civeo
has withdrawn its 2020 revenue and EBITDA guidance. The Company is
lowering its full year 2020 capital expenditure guidance to
approximately $15 million. The Company is not otherwise providing
guidance at this time.
Conference Call
Civeo will host a conference call to discuss its first quarter
2020 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 (800) 239-9838 in the United States or (323) 794-2551
internationally and using the conference ID 2637764#. 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 2637764#.
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 28 lodges
and villages in Canada, Australia and the U.S., with an aggregate
of approximately 30,000 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, 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 global health
concerns and pandemics, including the COVID-19 pandemic and the
risk that room occupancy may decline if our customers are limited
or restricted in the availability of personnel who may become ill
or be subjected to quarantine, 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 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 our ability to remain in
compliance with our financial covenants in our debt agreements,
risks associated with general global economic conditions, global
weather conditions, natural disasters 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 annual report on
Form 10-K for the year ended December 31, 2019 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.
- Financial Schedules Follow -
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
Three Months Ended March
31,
2020
2019
Revenues
$
138,792
$
108,550
Costs and expenses:
Cost of sales and services
103,313
79,630
Selling, general and administrative
expenses
13,937
16,096
Depreciation and amortization expense
25,502
30,782
Impairment expense
144,120
—
Other operating expense (income)
989
(65
)
287,861
126,443
Operating loss
(149,069
)
(17,893
)
Interest expense
(5,595
)
(6,635
)
Interest income
16
27
Other income
25
2,978
Loss before income taxes
(154,623
)
(21,523
)
Income tax benefit
8,811
4,484
Net loss
(145,812
)
(17,039
)
Less: Net income attributable to
noncontrolling interest
258
—
Net loss attributable to Civeo
Corporation
(146,070
)
(17,039
)
Less: Dividends attributable to Class A
preferred shares
468
459
Net loss attributable to Civeo common
shareholders
$
(146,538
)
$
(17,498
)
Net loss per share attributable to Civeo
Corporation common shareholders:
Basic
$
(0.87
)
$
(0.11
)
Diluted
$
(0.87
)
$
(0.11
)
Weighted average number of common shares
outstanding:
Basic
168,519
165,330
Diluted
168,519
165,330
CIVEO CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
March 31, 2020
December 31, 2019
(UNAUDITED)
Current assets:
Cash and cash equivalents
$
5,558
$
3,331
Accounts receivable, net
91,874
99,493
Inventories
6,050
5,877
Assets held for sale
6,332
7,589
Prepaid expenses and other current
assets
16,374
15,151
Total current assets
126,188
131,441
Property, plant and equipment, net
465,087
590,309
Goodwill, net
6,909
110,173
Other intangible assets, net
98,944
111,837
Operating lease right-of-use assets
21,558
24,876
Other noncurrent assets
837
1,276
Total assets
$
719,523
$
969,912
Current liabilities:
Accounts payable
$
43,258
$
36,971
Accrued liabilities
16,163
21,755
Income taxes
448
328
Current portion of long-term debt
32,142
35,080
Deferred revenue
8,250
7,165
Other current liabilities
5,785
8,741
Total current liabilities
106,046
110,040
Long-term debt
280,939
321,792
Deferred income taxes
—
9,452
Operating lease liabilities
18,527
21,231
Other noncurrent liabilities
17,066
16,592
Total liabilities
422,578
479,107
Shareholders' equity:
Preferred shares
58,597
58,129
Common shares
—
—
Additional paid-in capital
1,574,457
1,572,249
Accumulated deficit
(918,128
)
(771,590
)
Treasury stock
(6,914
)
(5,472
)
Accumulated other comprehensive loss
(411,619
)
(363,173
)
Total Civeo Corporation shareholders'
equity
296,393
490,143
Noncontrolling interest
552
662
Total shareholders' equity
296,945
490,805
Total liabilities and shareholders'
equity
$
719,523
$
969,912
CIVEO CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March
31,
2020
2019
Cash flows from operating activities:
Net loss
$
(145,812
)
$
(17,039
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
25,502
30,782
Impairment charges
144,120
—
Deferred income tax benefit
(8,941
)
(4,745
)
Non-cash compensation charge
2,208
2,534
Gains on disposals of assets
(21
)
(1,452
)
Provision (benefit) for loss on
receivables, net of recoveries
54
(32
)
Other, net
693
(410
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,496
)
(2,377
)
Inventories
(740
)
87
Accounts payable and accrued
liabilities
6,280
(1,417
)
Taxes payable
133
262
Other current and noncurrent assets and
liabilities, net
(1,143
)
148
Net cash flows provided by operating
activities
20,837
6,341
Cash flows from investing activities:
Capital expenditures
(2,651
)
(9,679
)
Proceeds from disposition of property,
plant and equipment
72
4,457
Other, net
—
1,518
Net cash flows used in investing
activities
(2,579
)
(3,704
)
Cash flows from financing activities:
Term loan repayments
(8,109
)
(8,608
)
Revolving credit borrowings (repayments),
net
(6,080
)
5,396
Taxes paid on vested shares
(1,442
)
(4,282
)
Net cash flows used in financing
activities
(15,631
)
(7,494
)
Effect of exchange rate changes on
cash
(400
)
477
Net change in cash and cash
equivalents
2,227
(4,380
)
Cash and cash equivalents, beginning of
period
3,331
12,372
Cash and cash equivalents, end of
period
$
5,558
$
7,992
CIVEO CORPORATION
SEGMENT DATA
(in thousands)
(unaudited)
Three Months Ended March
31,
2020
2019
Revenues
Canada
$
79,348
$
66,770
Australia
49,113
28,421
United States
10,331
13,359
Total revenues
$
138,792
$
108,550
EBITDA (1)
Canada
$
(120,256
)
$
10,173
Australia
16,161
9,853
United States
(12,053
)
2,796
Corporate and eliminations
(7,652
)
(6,955
)
Total EBITDA
$
(123,800
)
$
15,867
Adjusted EBITDA (1)
Canada
$
11,425
$
10,173
Australia
16,161
9,853
United States
386
2,796
Corporate and eliminations
(7,652
)
(6,955
)
Total adjusted EBITDA
$
20,320
$
15,867
Operating income (loss)
Canada
$
(136,631
)
$
(11,595
)
Australia
6,164
(385
)
United States
(14,134
)
(961
)
Corporate and eliminations
(4,468
)
(4,952
)
Total operating income (loss)
$
(149,069
)
$
(17,893
)
(1)
Please see Non-GAAP Reconciliation
Schedule.
CIVEO CORPORATION
NON-GAAP
RECONCILIATIONS
(in thousands)
(unaudited)
Three Months Ended March
31,
2020
2019
EBITDA (1)
$
(123,800
)
$
15,867
Adjusted EBITDA (1)
$
20,320
$
15,867
Free Cash Flow (2)
$
18,258
$
1,119
(1)
The term EBITDA is defined as net income
(loss) attributable to Civeo Corporation plus interest, taxes,
depreciation and amortization. The term Adjusted EBITDA is defined
as EBITDA adjusted to exclude impairment charges. 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 the 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 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,
2020
2019
Net loss attributable to Civeo
Corporation
$
(146,070
)
$
(17,039
)
Income tax benefit
(8,811
)
(4,484
)
Depreciation and amortization
25,502
30,782
Interest income
(16
)
(27
)
Interest expense
5,595
6,635
EBITDA
$
(123,800
)
$
15,867
Adjustments to EBITDA
Impairment of long-lived assets (a)
50,514
—
Impairment of goodwill (b)
93,606
—
Adjusted EBITDA
$
20,320
$
15,867
(a)
Relates to asset impairments recorded in
the first quarter of 2020. We recorded a pre-tax loss related to
the impairment of long-lived assets in our Canadian segment of
$38.1 million ($38.1 million after-tax, or $0.23 per diluted share)
and a pre-tax loss related to the impairment of long-lived assets
in our U.S. segment of $12.4 million ($12.4 million after-tax, or
$0.07 per diluted share), which is included in Impairment expense
on the unaudited statements of operations.
(b)
Relates to the impairment of goodwill. The
$93.6 million impairment ($93.6 million after-tax, or $0.56 per
diluted share) is related to our Canada reporting unit and is
included in Impairment expense on the statements of operations.
(2)
The term Free Cash Flow 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.
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 March
31,
2020
2019
Net Cash Flows Provided by Operating
Activities
$
20,837
$
6,341
Capital expenditures
(2,651
)
(9,679
)
Proceeds from disposition of property,
plant and equipment
72
4,457
Free Cash Flow
$
18,258
$
1,119
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,
2020
2019
Supplemental Operating Data - Canadian
Segment
Revenues
Accommodation revenue (1)
$
66,066
$
57,652
Mobile facility rental revenue (2)
2,508
781
Food and other services revenue (3)
10,774
8,337
Total Canadian revenues
$
79,348
$
66,770
Costs
Accommodation cost
$
48,055
$
42,217
Mobile facility rental cost
3,257
649
Food and other services cost
10,015
8,236
Indirect other cost
2,945
3,545
Total Canadian cost of sales and
services
$
64,272
$
54,647
Average daily rates (4)
$
92
$
92
Billed rooms (5)
708,323
625,992
Canadian dollar to U.S. dollar
$
0.745
$
0.752
Supplemental Operating Data -
Australian Segment
Accommodation revenue (1)
$
32,585
$
28,421
Food and other services revenue (3)
16,528
—
Total Australian revenues
$
49,113
$
28,421
Costs
Accommodation cost
$
14,995
$
14,397
Food and other services cost
13,707
—
Indirect other cost
851
602
Total Australian cost of sales and
services
$
29,553
$
14,999
Average daily rates (4)
$
69
$
74
Billed rooms (5)
471,840
382,581
Australian dollar to U.S. dollar
$
0.658
$
0.712
(1)
Includes revenues related to lodge and
village rooms and hospitality services for owned rooms for the
periods presented.
(2)
Includes revenues related to mobile camps
for the periods presented.
(3)
Includes revenues related to food service,
laundry and water and wastewater treatment services, and facilities
management for the periods presented.
(4)
Average daily rate is based on billed
rooms and accommodation revenue.
(5)
Billed rooms represents total billed days
for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005221/en/
Carolyn J. Stone Civeo Corporation Senior Vice President &
Chief Financial Officer 713-510-2400
Jeffrey Spittel FTI Consulting 832-667-5140
Civeo (NYSE:CVEO)
Historical Stock Chart
From Sep 2024 to Oct 2024
Civeo (NYSE:CVEO)
Historical Stock Chart
From Oct 2023 to Oct 2024