Civeo Reports First Quarter 2023 Results

Press Release

First Quarter Highlights include:

• Reported first quarter revenues of $167.6 million, net loss of $6.4 million and operating cash flow of $0.4 million;
• Delivered first quarter Adjusted EBITDA of $20.2 million;
• Continued to return capital to shareholders through the share repurchase program; and
• Today announced five contract awards to provide accommodations and hospitality services at various Civeo Australia villages with expected total revenues of A$175 million spanning 2023-2028.

HOUSTON & CALGARY, Alberta–Apr. 28, 2023– 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.

Carolyn J. Stone
Civeo Corporation
Senior Vice President & Chief Financial Officer
713-510-2400

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