8-K
Civeo Corp (CVEO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 28, 2023
____________________
Civeo Corporation
(Exact name of registrant as specified in its charter)
| British Columbia, Canada | 1-36246 | 98-1253716 | ||||
|---|---|---|---|---|---|---|
| (State or other jurisdiction<br><br>of incorporation or organization) | (Commission File<br><br>Number) | (I.R.S. Employer<br><br>Identification No.) | ||||
| Three Allen Center | 333 Clay Street, | Suite 4980 | ||||
| --- | --- | Houston, | Texas | 77002 | ||
| --- | --- | --- | ||||
| (Address and zip code of principal executive offices) |
Registrant’s telephone number, including area code: (713) 510-2400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Shares, no par value | CVEO | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2023, Civeo Corporation (“Civeo”) issued a press release announcing its financial condition and results of operations as of and for the quarter ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K, and is incorporated herein by reference.
The information contained in this report and the exhibit hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filings made by Civeo under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit <br>Number | Description of Document |
|---|---|
| 99.1 | Press Release dated July 28, 2023 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 28, 2023
CIVEO CORPORATION
By: /s/ Carolyn J. Stone ,
Name: Carolyn J. Stone
Title: Senior Vice President, Chief Financial Officer and Treasurer
Document
Civeo Reports Second Quarter 2023 Results
Second Quarter Highlights include:
•Reported second quarter revenues of $178.8 million, net income of $4.5 million and operating cash flow of $19.4 million;
•Delivered second quarter Adjusted EBITDA of $31.6 million and free cash flow of $12.9 million;
•Recorded highest quarterly occupancy in Civeo’s Australian owned-villages since 2014; and
•Reduced debt and continued to return capital to shareholders through the share repurchase program.
HOUSTON and CALGARY, July 28, 2023 (BUSINESS WIRE) -- Civeo Corporation (NYSE:CVEO) today reported financial and operating results for the second quarter ended June 30, 2023.
“In the second quarter of 2023, we delivered financial results in line with our expectations while continuing to operate safely and effectively. We generated solid free cash flow in the quarter which was used to repurchase approximately 212,000 Civeo shares and pay down $6.5 million in debt. The second quarter’s results demonstrate the value of our diversified revenue drivers and were notable for the significant year-over-year growth in our Australian segment, driven by a 33% increase in integrated services revenue related to new contracts as well as a 14% increase in Australian owned-village revenue. This quarter’s Australian village occupancy marks the highest level we’ve experienced since 2014. The improvement in Australia in the quarter was offset by lower LNG-related Canadian lodge occupancy and mobile camp activity,” said Bradley J. Dodson, Civeo's President and Chief Executive Officer.
Mr. Dodson concluded, “As we highlighted on the first quarter earnings conference call, our two strategic priorities for the remainder of 2023 were mitigating inflationary pressures in our Western Australian integrated services business and evaluating commercial alternatives for our Canadian McClelland Lake lodge assets. I'm happy to report that during the second quarter we made progress on both. We will provide additional updates regarding these developments on our earnings conference call later today.”
Second Quarter 2023 Results
In the second quarter of 2023, Civeo generated revenues of $178.8 million and reported net income of $4.5 million, or $0.30 per diluted share. During the second quarter of 2023, Civeo produced operating cash flow of $19.4 million, Adjusted EBITDA of $31.6 million and free cash flow of $12.9 million.
By comparison, 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.
The year-over-year decrease in Adjusted EBITDA in the second quarter of 2023 was primarily driven by lower Canadian LNG-related lodge occupancy and mobile camp activity, partially offset by increased billed rooms at the Australian Bowen Basin villages.
Business Segment Results
(Unless otherwise noted, the following discussion compares the quarterly results for the second quarter of 2023 to the results for the second quarter of 2022.)
Canada
During the second quarter of 2023, the Canadian segment generated revenues of $95.5 million, operating income of $3.2 million and Adjusted EBITDA of $19.8 million, compared to revenues of $109.0 million, operating income of $11.2 million and Adjusted EBITDA of $28.7 million in the second quarter of 2022. Results from the second quarter of 2023 reflect the impact of a weakened Canadian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $5.1 million and $1.1 million, respectively.
On a constant currency basis, the Canadian segment experienced an 8% period-over-period decrease in revenues largely related to Canadian mobile camp activity winding down as well as a 6% year-over-year decrease in Canadian lodge billed rooms. Adjusted EBITDA for the Canadian segment decreased 27% due to the aforementioned dynamics as well as inflationary pressures across the business.
Australia
During the second quarter of 2023, the Australian segment generated revenues of $82.5 million, operating income of $9.2 million and Adjusted EBITDA of $19.6 million, compared to revenues of $67.8 million, operating income of $5.5 million and Adjusted EBITDA of $15.5 million in the second quarter of 2022. Results from the second quarter of 2023 reflect the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $5.7 million and $1.3 million, respectively.
On a constant currency basis, the Australian segment experienced a 30% period-over-period increase in revenues primarily driven by increased integrated services revenue related to new contracts as well as a 16% year-over-year increase in village billed rooms. Adjusted EBITDA for the Australian segment increased 35% due the aforementioned dynamics, partially offset by a weakened Australian dollar relative to the U.S. dollar.
Financial Condition
As of June 30, 2023, Civeo had total liquidity of approximately $89.0 million, consisting of $77.6 million available under its revolving credit facilities and $11.4 million of cash on hand.
Civeo’s total debt outstanding on June 30, 2023 was $136.1 million, a $6.5 million decrease since March 31, 2023.
Civeo reported a net leverage ratio of 1.2x as of June 30, 2023.
During the second quarter of 2023, Civeo invested $6.9 million in capital expenditures compared to $5.1 million invested during the second quarter of 2022. Capital expenditures in both periods were predominantly related to maintenance spending on the Company’s lodges and villages.
In the second quarter of 2023, Civeo repurchased approximately 212,000 shares through its share repurchase program for a total of approximately $4.2 million.
Full Year 2023 Guidance
For the full year of 2023, Civeo is increasing the lower end of its previously provided revenue and Adjusted EBITDA guidance ranges. The revised revenue and Adjusted EBITDA guidance ranges are $640 million to $650 million and $90 million to $95 million, respectively. The Company is decreasing full year 2023 capital expenditure guidance to a range of $35 million to $40 million. The $10 million decrease in capital expenditure guidance is entirely driven by downward revisions to the scope of the customer-funded infrastructure upgrades to three Australian villages announced last quarter. As these upgrades will be fully funded by the customer upfront, this change will not impact our 2023 free cash flow guidance.
Conference Call
Civeo will host a conference call to discuss its second 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 13740254#. 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 13740254#.
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, strategic priorities, guidance, current trends and liquidity needs, 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, 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<br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Revenues | $ | 178,843 | $ | 184,954 | $ | 346,434 | $ | 350,632 |
| Costs and expenses: | ||||||||
| Cost of sales and services | 131,425 | 130,053 | 264,939 | 255,896 | ||||
| Selling, general and administrative expenses | 16,459 | 17,682 | 32,649 | 32,895 | ||||
| Depreciation and amortization expense | 20,701 | 23,083 | 42,363 | 43,210 | ||||
| Other operating expense (income) | 86 | (106) | 215 | 152 | ||||
| 168,671 | 170,712 | 340,166 | 332,153 | |||||
| Operating income | 10,172 | 14,242 | 6,268 | 18,479 | ||||
| Interest expense | (3,604) | (2,608) | (7,260) | (5,076) | ||||
| Interest income | 50 | 2 | 82 | 2 | ||||
| Other income | 427 | 415 | 2,877 | 2,111 | ||||
| Income before income taxes | 7,045 | 12,051 | 1,967 | 15,516 | ||||
| Income tax expense | (2,878) | (1,821) | (4,111) | (3,378) | ||||
| Net income (loss) | 4,167 | 10,230 | (2,144) | 12,138 | ||||
| Less: Net income (loss) attributable to noncontrolling interest | (296) | 662 | (254) | 1,160 | ||||
| Net income (loss) attributable to Civeo Corporation | 4,463 | 9,568 | (1,890) | 10,978 | ||||
| Less: Dividends attributable to Class A preferred shares | — | 490 | — | 977 | ||||
| Net income (loss) attributable to Civeo common shareholders | $ | 4,463 | $ | 9,078 | $ | (1,890) | $ | 10,001 |
| Net income (loss) per share attributable to Civeo Corporation common shareholders: | ||||||||
| Basic | $ | 0.30 | $ | 0.55 | $ | (0.13) | $ | 0.60 |
| Diluted | $ | 0.30 | $ | 0.54 | $ | (0.13) | $ | 0.60 |
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 14,970 | 14,148 | 15,064 | 14,122 | ||||
| Diluted | 15,000 | 14,275 | 15,064 | 14,271 |
CIVEO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| June 30, 2023 | December 31, 2022 | |||
|---|---|---|---|---|
| (UNAUDITED) | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 11,421 | $ | 7,954 |
| Accounts receivable, net | 140,090 | 119,755 | ||
| Inventories | 7,171 | 6,907 | ||
| Assets held for sale | 8,204 | 8,653 | ||
| Prepaid expenses and other current assets | 8,992 | 10,280 | ||
| Total current assets | 175,878 | 153,549 | ||
| Property, plant and equipment, net | 275,561 | 301,890 | ||
| Goodwill, net | 7,522 | 7,672 | ||
| Other intangible assets, net | 80,635 | 81,747 | ||
| Operating lease right-of-use assets | 14,023 | 15,722 | ||
| Other noncurrent assets | 5,343 | 5,604 | ||
| Total assets | $ | 558,962 | $ | 566,184 |
| Current liabilities: | ||||
| Accounts payable | $ | 47,763 | $ | 51,087 |
| Accrued liabilities | 27,524 | 39,211 | ||
| Income taxes | 100 | 178 | ||
| Current portion of long-term debt | 14,664 | 28,448 | ||
| Deferred revenue | 3,097 | 991 | ||
| Other current liabilities | 9,534 | 8,342 | ||
| Total current liabilities | 102,682 | 128,257 | ||
| Long-term debt | 120,999 | 102,505 | ||
| Deferred income taxes | 8,628 | 4,778 | ||
| Operating lease liabilities | 11,446 | 12,771 | ||
| Other noncurrent liabilities | 19,874 | 14,172 | ||
| Total liabilities | 263,629 | 262,483 | ||
| Shareholders' equity: | ||||
| Common shares | — | — | ||
| Additional paid-in capital | 1,626,556 | 1,624,512 | ||
| Accumulated deficit | (939,983) | (930,123) | ||
| Treasury stock | (9,063) | (9,063) | ||
| Accumulated other comprehensive loss | (385,350) | (385,187) | ||
| Total Civeo Corporation shareholders' equity | 292,160 | 300,139 | ||
| Noncontrolling interest | 3,173 | 3,562 | ||
| Total shareholders' equity | 295,333 | 303,701 | ||
| Total liabilities and shareholders' equity | $ | 558,962 | $ | 566,184 |
CIVEO CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended<br>June 30, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Cash flows from operating activities: | ||||
| Net income (loss) | $ | (2,144) | $ | 12,138 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation and amortization | 42,363 | 43,210 | ||
| Deferred income tax expense | 3,985 | 3,256 | ||
| Non-cash compensation charge | 2,044 | 1,974 | ||
| Gains on disposals of assets | (2,445) | (1,895) | ||
| Provision for credit losses, net of recoveries | (65) | (24) | ||
| Other, net | 1,242 | 1,544 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (19,669) | (23,119) | ||
| Inventories | (297) | (1,180) | ||
| Accounts payable and accrued liabilities | (14,713) | (6,713) | ||
| Taxes payable | (78) | (99) | ||
| Other current and noncurrent assets and liabilities, net | 9,538 | (5,461) | ||
| Net cash flows provided by operating activities | 19,761 | 23,631 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (11,717) | (8,647) | ||
| Proceeds from dispositions of property, plant and equipment | 2,719 | 3,302 | ||
| Other, net | — | 190 | ||
| Net cash flows used in investing activities | (8,998) | (5,155) | ||
| Cash flows from financing activities: | ||||
| Term loan repayments | (14,942) | (15,763) | ||
| Revolving credit borrowings (repayments), net | 15,993 | (2,576) | ||
| Repurchases of common shares | (7,970) | (542) | ||
| Taxes paid on vested shares | — | (1,013) | ||
| Net cash flows used in financing activities | (6,919) | (19,894) | ||
| Effect of exchange rate changes on cash | (377) | (82) | ||
| Net change in cash and cash equivalents | 3,467 | (1,500) | ||
| Cash and cash equivalents, beginning of period | 7,954 | 6,282 | ||
| Cash and cash equivalents, end of period | $ | 11,421 | $ | 4,782 |
CIVEO CORPORATION
SEGMENT DATA
(in thousands)
(unaudited)
| Three Months Ended<br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Revenues | ||||||||
| Canada | $ | 95,470 | $ | 109,023 | $ | 184,923 | $ | 204,975 |
| Australia | 82,544 | 67,820 | 159,533 | 131,349 | ||||
| Other (2) | 829 | 8,111 | 1,978 | 14,308 | ||||
| Total revenues | $ | 178,843 | $ | 184,954 | $ | 346,434 | $ | 350,632 |
| EBITDA (1) | ||||||||
| Canada | $ | 19,818 | $ | 28,659 | $ | 31,829 | $ | 45,878 |
| Australia | 19,606 | 15,537 | 33,815 | 30,974 | ||||
| Corporate, other and eliminations (2) | (7,828) | (7,118) | (13,882) | (14,212) | ||||
| Total EBITDA | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 |
| Adjusted EBITDA (1) | ||||||||
| Canada | $ | 19,818 | $ | 28,659 | $ | 31,829 | $ | 45,878 |
| Australia | 19,606 | 15,537 | 33,815 | 30,974 | ||||
| Corporate, other and eliminations (2) | (7,828) | (7,118) | (13,882) | (14,212) | ||||
| Total adjusted EBITDA | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 |
| Operating income (loss) | ||||||||
| Canada | $ | 3,177 | $ | 11,197 | $ | (1,325) | $ | 15,235 |
| Australia | 9,176 | 5,452 | 14,073 | 11,587 | ||||
| Corporate, other and eliminations (2) | (2,181) | (2,407) | (6,480) | (8,343) | ||||
| Total operating income | $ | 10,172 | $ | 14,242 | $ | 6,268 | $ | 18,479 |
| (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<br>June 30, | Six Months Ended<br>June 30, | Twelve Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | |||||
| EBITDA (1) | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 | |
| Adjusted EBITDA (1) | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 | |
| Free Cash Flow (2) | $ | 12,912 | $ | 17,561 | $ | 10,763 | $ | 18,286 | |
| Net Leverage Ratio (3) | 1.2x |
(1)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<br>June 30, | Six Months Ended<br>June 30, | Twelve Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | ||||||
| Net income (loss) attributable to Civeo Corporation | $ | 4,463 | $ | 9,568 | $ | (1,890) | $ | 10,978 | $ | (8,871) |
| Income tax expense | 2,878 | 1,821 | 4,111 | 3,378 | 5,135 | |||||
| Depreciation and amortization | 20,701 | 23,083 | 42,363 | 43,210 | 86,367 | |||||
| Interest income | (50) | (2) | (82) | (2) | (119) | |||||
| Interest expense | 3,604 | 2,608 | 7,260 | 5,076 | 13,658 | |||||
| EBITDA | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 | $ | 96,170 |
| Adjustments to EBITDA | ||||||||||
| Impairment of long-lived assets (a) | — | — | — | — | 5,721 | |||||
| Adjusted EBITDA | $ | 31,596 | $ | 37,078 | $ | 51,762 | $ | 62,640 | $ | 101,891 |
(a)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.
(2)The term 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. 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<br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Net Cash Flows Provided by Operating Activities | $ | 19,403 | $ | 21,678 | $ | 19,761 | $ | 23,631 |
| Capital expenditures | (6,945) | (5,055) | (11,717) | (8,647) | ||||
| Proceeds from dispositions of property, plant and equipment | 454 | 938 | 2,719 | 3,302 | ||||
| Free Cash Flow | $ | 12,912 | $ | 17,561 | $ | 10,763 | $ | 18,286 |
(3)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 June 30, | ||
|---|---|---|
| 2023 | ||
| Total debt | $ | 136,105 |
| Less: Cash and cash equivalents | 11,421 | |
| Net debt | $ | 124,684 |
| Adjusted EBITDA for the twelve months ended June 30, 2023 (a) | $ | 101,891 |
| Adjustments to Adjusted EBITDA | ||
| Stock-based compensation | 3,857 | |
| Interest income | 119 | |
| Bank-adjusted EBITDA | $ | 105,867 |
| 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) | $ | 90.0 | $ | 95.0 |
(1)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 | $ | (13.0) | $ | (10.0) | |
| Income tax expense | 11.0 | 13.0 | |||
| Depreciation and amortization | 79.0 | 79.0 | |||
| Interest expense | 13.0 | 13.0 | |||
| EBITDA | $ | 90.0 | $ | 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<br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||
| Supplemental Operating Data - Canadian Segment | ||||||||
| Revenues | ||||||||
| Accommodation revenue (1) | $ | 72,355 | $ | 79,431 | $ | 136,583 | $ | 146,625 |
| Mobile facility rental revenue (2) | 17,407 | 24,058 | 37,438 | 48,076 | ||||
| Food and other services revenue (3) | 5,708 | 5,534 | 10,902 | 10,274 | ||||
| Total Canadian revenues | $ | 95,470 | $ | 109,023 | $ | 184,923 | $ | 204,975 |
| Costs | ||||||||
| Accommodation cost | $ | 52,431 | $ | 53,108 | $ | 104,529 | $ | 106,235 |
| Mobile facility rental cost | 11,598 | 14,458 | 26,100 | 29,342 | ||||
| Food and other services cost | 5,060 | 4,976 | 9,834 | 9,335 | ||||
| Indirect other cost | 2,756 | 2,467 | 5,287 | 5,303 | ||||
| Total Canadian cost of sales and services | $ | 71,845 | $ | 75,009 | $ | 145,750 | $ | 150,215 |
| Average daily rates (4) | $ | 100 | $ | 103 | $ | 98 | $ | 104 |
| Billed rooms (5) | 724,299 | 771,267 | 1,367,095 | 1,406,822 | ||||
| Canadian dollar to U.S. dollar | $ | 0.745 | $ | 0.784 | $ | 0.742 | $ | 0.787 |
| Supplemental Operating Data - Australian Segment | ||||||||
| Revenues | ||||||||
| Accommodation revenue (1) | $ | 44,342 | $ | 39,052 | $ | 84,941 | $ | 76,651 |
| Food and other services revenue (3) | 38,202 | 28,768 | 74,592 | 54,698 | ||||
| Total Australian revenues | $ | 82,544 | $ | 67,820 | $ | 159,533 | $ | 131,349 |
| Costs | ||||||||
| Accommodation cost | $ | 20,948 | $ | 18,840 | $ | 41,266 | $ | 37,247 |
| Food and other services cost | 35,372 | 27,008 | 71,234 | 51,371 | ||||
| Indirect other cost | 2,225 | 1,844 | 4,353 | 3,588 | ||||
| Total Australian cost of sales and services | $ | 58,545 | $ | 47,692 | $ | 116,853 | $ | 92,206 |
| Average daily rates (4) | $ | 75 | $ | 77 | $ | 76 | $ | 78 |
| Billed rooms (5) | 587,855 | 505,310 | 1,110,568 | 979,784 | ||||
| Australian dollar to U.S. dollar | $ | 0.668 | $ | 0.715 | $ | 0.676 | $ | 0.719 |
(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 assets for the periods presented.
(3)Includes revenues related to food services, 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 owned assets for the periods presented.
CONTACTS:
Carolyn J. Stone
Civeo Corporation
Senior Vice President & Chief Financial Officer
713-510-2400