Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Second Quarter (2Q) Update | Financial Results | Capital Markets | Capex Increase | Capital Expenditure - 2022

Civeo Corp. Second Quarter 2022 Results; Raises Guidances

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Civeo Corp. reported financial and operating results for the second quarter ended June 30, 2022.

Bradley J. Dodson, Civeo's President and Chief Executive Officer, commented: "In the second quarter of 2022, Civeo’s focus remained on operating safely, generating free cash flow and reducing our debt balance. Our Canadian business experienced increasing customer activity in the Canadian oil sands and robust pipeline work. In Australia, metallurgical coal and iron ore prices remained high, which is reflected in improved billed rooms both sequentially and year over year.

Mr. Dodson continued, "We continue to prioritize operational execution with our customers and guests, and we were pleased to announce earlier this month a twelve-year contract renewal at our Wapasu Lodge. This contract is an example of our strategy of collaborating with our long-term partners to maximize value in the current operating environment in a mutually beneficial way."

Mr. Dodson concluded, "We are excited about our recent integrated services contract award from a copper mining company in South Australia. This contract award is a testament to our integrated services growth and diversification potential as it encompasses a new customer, a new state in Australia and a new commodity."

Full Year 2022 Guidance

For the full year of 2022, Civeo is increasing its previously provided revenue and Adjusted EBITDA guidance range to $660 million to $675 million and $95 million to $105 million, respectively. As previously disclosed when the Company announced the contract renewal for its Wapasu Lodge earlier this month, the Company is raising its full year 2022 capital expenditure guidance to $24 million to $29 million.

Second Quarter 2022 Results

In the second quarter of 2022, Civeo generated revenues of $185.0 million and reported net income of $9.1 million, or $0.54 per diluted share. During the second quarter of 2022, Civeo produced operating cash flow of $21.7 million, Adjusted EBITDA of $37.1 million and free cash flow of $17.6 million.

By comparison, in the second quarter of 2021, Civeo generated revenues of $154.2 million and reported a net loss of $0.5 million, or $0.03 per diluted share. The loss resulted in part from $7.9 million in costs associated with asset impairments on properties in Australia. During the second quarter of 2021, Civeo produced operating cash flow of $16.5 million, Adjusted EBITDA of $32.2 million and free cash flow of $13.7 million.

Overall, the increase in revenues and Adjusted EBITDA in the second quarter of 2022 compared to the second quarter of 2021 was primarily driven by improved occupancy in the Canadian lodges and increased Canadian mobile camp activity, as well as an increase in Australian village billed rooms.

Business Segment Results

(Unless otherwise noted, the following discussion compares the quarterly results for the second quarter of 2022 to the results for the second quarter of 2021.)

During the second quarter of 2022, the Canadian segment generated revenues of $109.0 million, operating income of $11.2 million and Adjusted EBITDA of $28.7 million, compared to revenues of $83.3 million, operating income of $7.5 million and Adjusted EBITDA of $22.6 million in the second quarter of 2021. Results from the second quarter of 2022 reflect the impact of a weakened Canadian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $4.4 million and $1.2 million, respectively.

On a constant currency basis, the Canadian segment experienced a 36% period-over-period increase in revenues largely due to increased mobile camp activity, as well as a 7% year-over-year increase in billed rooms, driven by increased customer activity as a result of the recovery of oil prices and a reduced impact from COVID-19. Adjusted EBITDA for the Canadian segment increased 32% year-over-year primarily due to the aforementioned dynamics.

During the second quarter of 2022, the Australian segment generated revenues of $67.8 million, operating income of $5.5 million and Adjusted EBITDA of $15.5 million, compared to revenues of $64.0 million, operating loss of $2.7 million and Adjusted EBITDA of $15.4 million in the second quarter of 2021. Operating loss for the second quarter of 2021 included asset impairment charges of $7.9 million. Results from the second quarter of 2022 reflect the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $5.3 million and $1.2 million, respectively.

On a constant currency basis, the Australian segment experienced a 14% period-over-period increase in revenues, driven by an 8% year-over-year increase in billed rooms due to increased customer maintenance activity in the Bowen Basin. Adjusted EBITDA from the Australian segment increased 8% year-over-year due to higher village occupancy in the Bowen Basin, partially offset by increased costs of temporary labor due to ongoing labor shortages.

The U.S. segment generated revenues of $8.1 million, an operating loss of $1.3 million and Adjusted EBITDA of $0.2 million in the second quarter of 2022, compared to revenues of $6.9 million, an operating loss of $1.1 million and Adjusted EBITDA of $0.3 million in the second quarter of 2021. Revenues increased year-over-year primarily due to the increased drilling activity positively impacting our wellsite services business, partially offset by the sale of the West Permian lodge in the fourth quarter of 2021. Adjusted EBITDA decreased slightly year-over-year primarily due to the sale of the West Permian lodge, largely offset by increased drilling activity positively impacting our wellsite services business.

Financial Condition

As of June 30, 2022, Civeo had total liquidity of approximately $95.3 million, consisting of $90.5 million available under its revolving credit facilities and $4.8 million of cash on hand.

Civeo’s total debt outstanding on June 30, 2022 was $154.6 million, a $23.3 million decrease since March 31, 2022. The decrease consisted of $18.0 million in debt payments from cash flow generated by the business and favorable foreign currency translation of $5.3 million.

Civeo reduced its net leverage ratio to 1.18x as of June 30, 2022 from 1.40x as of March 31, 2022.

During the second quarter of 2022, Civeo invested $5.1 million in capital expenditures compared to $3.2 million invested during the second quarter of 2021. Capital expenditures in both periods were predominantly related to maintenance spending on the Company’s lodges and villages.