Press Release
Civeo Announces Third Quarter 2015 Results
11/02/15
- Delivered solid operating cash flows after capital expenditures of
- Reduced total debt outstanding by 46% to
- Completed the Company's migration to
- Remained focused on capturing growth in the British Columbia LNG market by advancing the Sitka lodge, maximizing occupancy and revenues, reducing costs and limiting capital spending.
"Our financial results for the third quarter exceeded the upper end of our expectations, with occupancy in our lodges and villages as expected, and margins and Adjusted EBITDA benefitting from ongoing cost containment initiatives. We are very pleased with the strong free cash flow generated during the quarter, which allowed us to further reduce our debt balance.
"Though market conditions remain challenged, we continue to see pockets of opportunity in our traditional Canadian oil sands market and steady casual occupancy at certain Australian villages.
"Our recently opened
"We remain focused on our three-pronged approach to the current challenging market environment: driving free cash flow, reducing our leverage and capturing organic growth opportunities. We continued to reduce our leverage in the third quarter by using cash flows that we achieved through cost containment and capital discipline, and we have secured new contracts."
THIRD QUARTER 2015 RESULTS
In the third quarter of 2015, the Company generated revenues of
(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 and certain other costs such as those directly associated with the 2014 spin-off from Oil States International and the migration to
By comparison, in the third quarter of 2014, the Company generated revenues of
Revenues and Adjusted EBITDA declined in 2015 as compared to 2014 primarily due to lower occupancy levels. In addition, third quarter 2015 results were reduced by the unfavorable impact of a stronger U.S. dollar compared to the Canadian and Australian dollars, which declined in relative value by 17% and 22%, respectively, on a year-over-year basis.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results for the third quarter of 2015 to the results for the third quarter of 2014. The 2015 results discussed below exclude the goodwill and fixed asset impairment and migration related expenses noted above.)
The Canadian segment generated revenues of
The Australian segment generated revenues of
U.S.
The U.S. segment generated revenues of
INCOME TAXES
The Company recognized an income tax benefit of
FINANCIAL CONDITION
As of
During the third quarter, the Company reduced total debt outstanding by 46% to
The Company invested
GUIDANCE
For the fourth quarter of 2015, the Company expects revenues of
CONFERENCE CALL
ABOUT
FORWARD LOOKING STATEMENTS
The foregoing 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 included herein are based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those 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, natural gas, iron ore and other minerals, including the level of activity and developments in the Canadian oil sands, the level of demand for coal and other natural resources from
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In Thousands, Except Per Share Amounts) | ||||
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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2015 | 2014 | 2015 | 2014 | |
Revenues | $ 106,544 | $ 243,265 | $ 420,678 | $ 723,197 |
Costs and expenses: | ||||
Cost of sales and services | 69,751 | 137,101 | 262,086 | 413,916 |
Selling, general and administrative expenses | 16,691 | 13,216 | 51,796 | 51,069 |
Spin-off and formation costs | -- | 1,028 | -- | 3,497 |
Depreciation and amortization expense | 36,172 | 45,758 | 121,159 | 127,770 |
Impairment expense | 110,715 | -- | 122,926 | 11,610 |
Other operating income (expense) | (3,945) | 165 | (5,188) | 252 |
229,384 | 197,268 | 552,779 | 608,114 | |
Operating income (loss) | (122,840) | 45,997 | (132,101) | 115,083 |
Interest expense to affiliates | -- | -- | -- | (6,980) |
Interest expense to third-parties, net of capitalized interest | (6,022) | (5,335) | (17,879) | (8,445) |
Loss on extinguishment of debt | (1,474) | -- | (1,474) | (3,455) |
Interest income | 160 | 1,048 | 1,969 | 2,841 |
Other income | 261 | 64 | 1,825 | 1,011 |
Income (loss) before income taxes | (129,915) | 41,774 | (147,660) | 100,055 |
Income tax benefit (provision) | 22,745 | (9,011) | 27,451 | (16,411) |
Net income (loss) | (107,170) | 32,763 | (120,209) | 83,644 |
Less: Net income attributable to noncontrolling interest | 515 | 360 | 953 | 1,053 |
Net income (loss) attributable to |
$ (107,685) | $ 32,403 | $ (121,162) | $ 82,591 |
Net income (loss) per share attributable to |
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Basic | $ (1.01) | $ 0.30 | $ (1.14) | $ 0.77 |
Diluted | $ (1.01) | $ 0.30 | $ (1.14) | $ 0.77 |
Weighted average number of common shares outstanding (1): | ||||
Basic | 106,661 | 106,311 | 106,583 | 106,300 |
Diluted | 106,661 | 106,495 | 106,583 | 106,474 |
Dividends per common share | $ -- | $ 0.13 | $ -- | $ 0.13 |
(1) On |
UNAUDITED CIVEO CORPORATION | ||
CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
2015 |
2014 |
|
(UNAUDITED) | ||
Current assets: | ||
Cash and cash equivalents | $ 12,635 | $ 263,314 |
Accounts receivable, net | 63,681 | 160,253 |
Inventories | 5,607 | 13,228 |
Prepaid expenses and other current assets | 27,604 | 27,161 |
Assets held for sale | 8,923 | -- |
Total current assets | 118,450 | 463,956 |
Property, plant and equipment, net | 950,642 | 1,248,430 |
|
-- | 45,260 |
Other intangible assets, net | 35,756 | 50,882 |
Other noncurrent assets | 12,953 | 20,633 |
Total assets | $ 1,117,801 | $ 1,829,161 |
Current liabilities: | ||
Accounts payable | $ 30,553 | $ 36,277 |
Accrued liabilities | 17,042 | 22,512 |
Income taxes | 4 | 61 |
Current portion of long-term debt | 18,205 | 19,375 |
Deferred revenue | 9,872 | 18,539 |
Other current liabilities | 8,243 | 21,677 |
Total current liabilities | 83,919 | 118,441 |
Long-term debt to third-parties | 397,879 | 755,625 |
Deferred income taxes | 32,572 | 55,500 |
Other noncurrent liabilities | 33,830 | 39,486 |
Total liabilities | 548,200 | 969,052 |
Shareholders' equity: | ||
Common stock | -- | 1,067 |
Additional paid-in capital | 1,304,928 | 1,300,042 |
Accumulated deficit | (365,779) | (244,617) |
Accumulated other comprehensive loss | (369,952) | (198,491) |
Total |
569,197 | 858,001 |
Noncontrolling interest | 404 | 2,108 |
Total shareholders' equity | 569,601 | 860,109 |
Total liabilities and shareholders' equity | $ 1,117,801 | $ 1,829,161 |
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in thousands) | ||
NINE MONTHS ENDED |
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2015 | 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (120,209) | $ 83,644 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 121,159 | 127,770 |
Impairment charges | 122,926 | 11,610 |
Inventory write-down | 1,015 | -- |
Loss on extinguishment of debt | 1,474 | 3,455 |
Deferred income tax benefit | (34,200) | (1,989) |
Non-cash compensation charge | 3,467 | 5,892 |
Gains on disposals of assets | (800) | (776) |
Provision for loss on receivables | 1,081 | (1,196) |
Other, net | 1,032 | 2,687 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 79,763 | (32,119) |
Inventories | 5,556 | 13,897 |
Accounts payable and accrued liabilities | (5,094) | 10,957 |
Taxes payable | 1,652 | (17,340) |
Other current assets and liabilities, net | (3,889) | 1,773 |
Net cash flows provided by operating activities | 174,933 | 208,265 |
Cash flows from investing activities: | ||
Capital expenditures, including capitalized interest | (43,701) | (208,297) |
Proceeds from disposition of property, plant and equipment | 2,255 | 1,607 |
Net cash flows used in investing activities | (41,446) | (206,690) |
Cash flows from financing activities: | ||
Proceeds from issuance of common shares | 500 | -- |
Term loan borrowings, net of issuance costs | 325,000 | 775,000 |
Term loan repayments | (725,000) | -- |
Revolver borrowings (repayments), net | 56,708 | -- |
Dividends paid | -- | (13,893) |
Debt issuance costs | (4,555) | (9,460) |
Distributions to Oil States | -- | (750,000) |
Contributions from Oil States | -- | 28,257 |
Net cash flows provided by (used in) financing activities | (347,347) | 29,904 |
Effect of exchange rate changes on cash | (36,819) | (13,793) |
Net change in cash and cash equivalents | (250,679) | 17,686 |
Cash and cash equivalents, beginning of period | 263,314 | 224,128 |
Cash and cash equivalents, end of period | $ 12,635 | $ 241,814 |
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SEGMENT DATA | ||||
(in thousands) | ||||
(unaudited) | ||||
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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2015 | 2014 | 2015 | 2014 | |
Revenues | ||||
|
$ 71,500 | $ 174,111 | $ 278,472 | $ 510,914 |
|
29,177 | 54,000 | 109,304 | 163,847 |
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5,867 | 15,154 | 32,902 | 48,436 |
Total revenues | $ 106,544 | $ 243,265 | $ 420,678 | $ 723,197 |
EBITDA (1) | ||||
|
$ (47,218) | $ 67,100 | $ 14,685 | $ 175,704 |
|
(12,505) | 27,042 | 18,128 | 74,268 |
|
(21,477) | 3,890 | (23,187) | 8,067 |
Corporate and eliminations | (5,722) | (6,573) | (19,696) | (15,228) |
Total EBITDA | $ (86,922) | $ 91,459 | $ (10,070) | $ 242,811 |
Adjusted EBITDA (1) | ||||
|
$ 19,463 | $ 67,104 | $ 81,524 | $ 179,830 |
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11,731 | 27,073 | 51,976 | 83,531 |
|
(977) | 3,959 | 1,066 | 10,850 |
Corporate and eliminations | (4,900) | (5,649) | (15,568) | (12,176) |
Total adjusted EBITDA | $ 25,317 | $ 92,487 | $ 118,998 | $ 262,035 |
Operating income (loss) | ||||
|
$ (70,909) | $ 43,277 | $ (62,609) | $ 110,743 |
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(25,995) | 10,520 | (24,150) | 26,158 |
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(24,916) | (1,236) | (33,611) | (6,664) |
Corporate and eliminations | (1,020) | (6,564) | (11,731) | (15,154) |
Total operating income (loss) | $ (122,840) | $ 45,997 | $ (132,101) | $ 115,083 |
(1) The term EBITDA is defined as net income plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain other costs such as those incurred associated with the Spin-Off and the migration. 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. The Company has included EBITDA and Adjusted EBITDA as supplemental disclosures because its management believes that EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company 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, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited): | ||||
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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2015 | 2014 | 2015 | 2014 | |
Net income (loss) | $ (108,585) | $ 32,403 | $ (122,062) | $ 82,591 |
Income tax (benefit) provision | (21,845) | 9,011 | (26,551) | 16,411 |
Depreciation and amortization | 36,172 | 45,758 | 121,159 | 127,770 |
Interest income | (160) | (1,048) | (1,969) | (2,841) |
Interest expense | 7,496 | 5,335 | 19,353 | 18,880 |
EBITDA | $ (86,922) | $ 91,459 | $ (10,070) | $ 242,811 |
Adjustments to EBITDA | ||||
Impairment of intangible asset (a) | 2,460 | 2,460 | 8,989 | |
Impairment of fixed assets (b) | 65,061 | 74,534 | 2,621 | |
Impairment of goodwill (c) | 43,194 | 43,194 | ||
Severance costs (d) | 4,117 | |||
Transition costs (e) | 1,028 | 3,497 | ||
Migration costs (f) | 1,524 | 5,127 | ||
Loss on assets held for sale (g) | 3,753 | |||
Adjusted EBITDA | $ 25,317 | $ 92,487 | $ 118,998 | $ 262,035 |
(a) 2015 relates to the impairment of an intangible asset in the U.S. The U.S. intangible impairment resulted from an assessment of the carrying value of our long-lived assets, which evaluation included amortizable intangible assets. The |
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(b) 2015 relates to the impairment of certain fixed assets which carrying value we have determined to not to be recoverable. The |
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(c) Relates to the impairment of goodwill. The |
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(d) Relates to severance costs associated with the termination of an executive. The |
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(e) Relates to transition costs incurred associated with becoming a stand-alone company. The |
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(f) Relates to costs incurred associated with the Company's redomiciliation to Canada. The |
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(g) Relates to the first quarter 2015 decision to close a manufacturing facility in the United States. As a result, the related assets were written down to their estimated sales proceeds, less costs to sell. We recorded a pre-tax loss of |
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SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA | ||||
(U.S. dollars in thousands, except for room counts, RevPAR and average daily rate) | ||||
(unaudited) | ||||
THREE MONTHS ENDED |
NINE MONTHS ENDED |
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2015 | 2014 | 2015 | 2014 | |
Supplemental Operating Data - Canadian Segment | ||||
Revenues | ||||
Lodge revenues (1) | $ 55,708 | $ 134,600 | $ 213,896 | $ 379,700 |
Mobile, open camp and product revenues | 15,792 | 39,511 | 64,576 | 131,214 |
Total Canadian revenues | $ 71,500 | $ 174,111 | $ 278,472 | $ 510,914 |
Average available lodge rooms (2) | 13,433 | 13,067 | 13,294 | 12,404 |
Rentable rooms (3) | 9,445 | 11,750 | 10,125 | 11,007 |
Average daily rates (4) | $ 112 | $ 149 | $ 123 | $ 146 |
RevPAR for lodges (5) | $ 45 | $ 112 | $ 59 | $ 112 |
Occupancy in lodges (6) | 57% | 84% | 63% | 86% |
Canadian dollar to U.S. dollar | $ 0.764 | $ 0.918 | $ 0.795 | $ 0.914 |
Supplemental Operating Data - Australian Segment | ||||
Revenues | ||||
Village revenues (1) | $ 29,177 | $ 54,000 | $ 109,304 | $ 163,847 |
Average available village rooms (2) | 9,064 | 9,269 | 9,219 | 9,263 |
Rentable rooms (3) | 8,824 | 9,131 | 8,955 | 9,057 |
Average daily rates (4) | $ 71 | $ 98 | $ 76 | $ 96 |
RevPAR for villages (5) | $ 35 | $ 63 | $ 43 | $ 65 |
Occupancy in villages (6) | 50% | 65% | 58% | 69% |
Australian dollar to U.S. dollar | $ 0.725 | $ 0.924 | $ 0.763 | $ 0.918 |
(1) Includes revenue related to rooms as well as the fees associated with catering, laundry and other services including facilities management. | ||||
(2) Average available rooms relate to Canadian lodges and Australian villages and include rooms that are utilized for our personnel. | ||||
(3) Rentable rooms relate to Canadian lodges and Australian villages and exclude rooms that are utilized for our personnel and out of service rooms. | ||||
(4) Average daily rate is based on rentable rooms and lodge/village revenue in U.S. dollars. | ||||
(5) RevPAR, or revenue per available room, is defined as lodge revenue divided by the product of (a) average available rooms and (b) days in the period. An available room is defined as a calendar day during which the room is available for occupancy. | ||||
(6) Occupancy represents total billed days divided by rentable days. Rentable days excludes staff rooms and out of service rooms. |
CONTACT:Source:Frank C. Steininger Civeo Corporation Senior Vice President and Chief Financial Officer 713-510-2400Anne Pearson /Lisa Elliott Dennard-Lascar Associates 713-529-6600
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