Civeo Reports Third Quarter 2023 Results

Press Release

10/27/23

Third Quarter Highlights:

• Reported revenues of $183.6 million, net income of $9.0 million and operating cash flow of $36.8 million;
• Delivered Adjusted EBITDA of $32.9 million and free cash flow of $31.7 million;
• Reduced total debt by $32.9 million to $103.2 million as of September 30, 2023;
• Returned capital to shareholders through the previously announced initiation of a quarterly dividend and renewal of its share repurchase program; and
• Announced a definitive agreement to sell McClelland Lake Lodge for approximately C$49 million, or US$36 million.

HOUSTON & CALGARY, Alberta — Civeo Corporation (NYSE:CVEO) today reported financial and operating results for the third quarter ended September 30, 2023.

“On top of solid operating results, we achieved several strategic milestones in the third quarter,” said Bradley J. Dodson, Civeo’s President and Chief Executive Officer.

“Canada exceeded our expectations primarily due to stronger-than-expected billed rooms at Sitka Lodge. In Australia, we experienced a second consecutive quarterly record in terms of billed rooms at our villages,” said Mr. Dodson.

Mr. Dodson concluded, “The agreement to sell McClelland Lake Lodge is a very positive outcome for the Company and we continue to pursue additional business opportunities related to this sale. We were also pleased to announce our new capital allocation framework, which includes the initiation of a regular quarterly dividend of $0.25 per share and the renewal of our share repurchase program. These strategic announcements reflect our commitment to returning capital to shareholders while maintaining the flexibility to deploy capital to fund growth opportunities and support our existing operations.”

Third Quarter 2023 Results

In the third quarter of 2023, Civeo generated revenues of $183.6 million and reported net income of $9.0 million, or $0.61 per diluted share. During the third quarter of 2023, Civeo produced operating cash flow of $36.8 million, Adjusted EBITDA of $32.9 million and free cash flow of $31.7 million.

By comparison, in the third quarter of 2022, Civeo generated revenues of $184.2 million and reported net income of $5.2 million, or $0.32 per diluted share. During the third quarter of 2022, Civeo produced operating cash flow of $38.7 million, Adjusted EBITDA of $35.0 million and free cash flow of $38.6 million.

The year-over-year decrease in Adjusted EBITDA in the third quarter of 2023 was primarily driven by the wind down of LNG-related Canadian mobile camp activity. This decrease was partially offset by increased billed rooms at the Australian Bowen Basin villages and increased Australian integrated services activity.

Business Segment Results

(Unless otherwise noted, the following discussion compares the quarterly results for the third quarter of 2023 to the results for the third quarter of 2022.)

Canada

During the third quarter of 2023, the Canadian segment generated revenues of $95.1 million, operating income of $10.8 million and Adjusted EBITDA of $23.0 million, compared to revenues of $103.0 million, operating income of $7.8 million and Adjusted EBITDA of $25.6 million in the third quarter of 2022. Results for the third quarter of 2023 reflect the impact of a weakened Canadian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $2.6 million and $0.7 million, respectively. The third quarter of 2023 Adjusted EBITDA excluded $4.9 million of other expenses related to the demobilization of McClelland Lake Lodge.

On a constant currency basis, the Canadian segment experienced a 5% period-over-period decrease in revenues primarily related to Canadian mobile camp activity winding down, partially offset by an increased average daily rate on relatively flat billed rooms year-over-year. Adjusted EBITDA for the Canadian segment decreased 10% primarily due to the aforementioned dynamics.

Australia

During the third quarter of 2023, the Australian segment generated revenues of $87.9 million, operating income of $9.1 million and Adjusted EBITDA of $18.8 million, compared to revenues of $73.8 million, operating income of $5.9 million and Adjusted EBITDA of $16.9 million in the third quarter of 2022. Results for the third quarter of 2023 reflect the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $3.8 million and $0.8 million, respectively.

On a constant currency basis, the Australian segment experienced a 24% period-over-period increase in revenues primarily driven by a 19% year-over-year increase in village billed rooms as well as increased integrated services revenue related to new contracts. Adjusted EBITDA for the Australian segment increased 11% due to the aforementioned dynamics.

Financial Condition and Capital Allocation

As of September 30, 2023, Civeo had total liquidity of approximately $110.6 million, consisting of $102.8 million available under its revolving credit facilities and $7.8 million of cash on hand.

Civeo’s total debt outstanding on September 30, 2023 was $103.2 million, a $32.9 million decrease since June 30, 2023.

Civeo reported a net leverage ratio of 0.9x as of September 30, 2023.

During the third quarter of 2023, Civeo invested $9.5 million in capital expenditures compared to $8.8 million invested during the third quarter of 2022. Capital expenditures in both periods were primarily related to maintenance spending on the Company’s lodges and villages. Capital expenditures in the third quarter of 2023 also included $3.6 million related to customer-funded infrastructure upgrades at three Australian villages.

The Company announced today that its board of directors has declared a quarterly cash dividend of $0.25 per common share, payable on December 18, 2023 to shareholders of record as of close of business on November 27, 2023. For purposes of the Income Tax Act (Canada), the Company has designated this dividend to be an “eligible dividend”.

In the third quarter of 2023, Civeo repurchased approximately 62,000 shares through its share repurchase program for approximately $1.3 million.

Full Year 2023 Guidance

For the full year of 2023, Civeo is increasing its previously provided revenue and Adjusted EBITDA guidance ranges. The revised revenue and Adjusted EBITDA guidance ranges are $675 million to $685 million and $95 million to $100 million, respectively. The Company is maintaining its full year 2023 capital expenditure guidance of $35 million to $40 million.

Conference Call

Civeo will host a conference call to discuss its third 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 asking for the Civeo call or using the conference ID 13742013#. 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 13742013#.

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