Press Release
Civeo Reports Fourth Quarter 2015 Results
02/24/16
Highlights include:
- Delivered solid operating cash flows after capital expenditures and asset sales in the fourth quarter, driven by cost containment, capital discipline and working capital efficiency;
- Reduced total debt outstanding to
$402 million from$775 million at the end of 2014; and - Amended existing revolving credit facility to modify certain covenants to provide additional financial flexibility.
"Despite the challenging market conditions that persisted throughout 2015, we successfully delivered on our strategic objectives to generate free cash flow, adjust our cost structure to match our market opportunities, significantly reduce our debt, win new business and continue to
deliver best-in-class services," said
"In the fourth quarter, we achieved the results we expected and worked to position the Company to be highly competitive in what is likely to be another challenging year. We expect to generate free cash flow and further reduce debt in 2016. Our confidence is supported by key contracts currently in place, recent contract wins, well-capitalized customers committed to long term projects, and continued pursuit of incremental revenue opportunities and operational efficiencies.
"We enter 2016 with a consistent three-pronged approach to address current market conditions: drive free cash flow, reduce leverage, and capture organic growth opportunities. We amended our credit facility in February to include new leverage covenants that should
give us increased financial flexibility through early 2018. Taken together, our improved financial footing, coupled with our team's demonstrated ability to deliver on our strategy, positions the Company to manage through this cyclical downturn,"
Fourth Quarter 2015 Results
In the fourth 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 fourth quarter of 2014, the Company generated revenues of
Revenues and Adjusted EBITDA declined in 2015 as compared to 2014 due to lower occupancy levels resulting from lower customer activity levels in both the Canadian oil sands and Australian mining industries and the unfavorable impact of a stronger
Full Year 2015 Results
For the full year 2015, the Company reported revenues of
In 2014, the Company reported revenues of
The decline in revenues and Adjusted EBITDA in 2015 as compared to 2014 was largely driven by the weakening of the Canadian and Australian dollars, and lower levels of activity that resulted in decreased occupancy and room rates in both the
Full year 2015 results included the impact of the following items:
- A
$43.2 million pre-tax loss, or a$0.40 per share after-tax loss, from the impairment of goodwill in our Canadian reporting unit; - an
$80.7 million pre-tax loss, or$0.52 per share after-tax loss, from the impairment of fixed assets and intangible assets; - a
$7.0 million pre-tax loss, or a$0.05 per share after-tax loss, from costs incurred in connection with the migration toCanada ; and - a
$1.5 million pre-tax loss, or$0.01 per share after-tax loss, from the write-off of debt issuance costs.
Full year 2014 results included the impact of the following items:
-
a
$290.5 million pre-tax charge, or$2.45 per share after-tax loss, from goodwill, fixed asset and intangible asset impairments; - a
$34.9 million after-tax loss, or$0.33 per share after-tax loss, from the establishment of a deferred tax liability related to a portion of the Company's undistributed foreign earnings, whichCiveo no longer expects to indefinitely reinvest and a valuation allowance against certain deferred tax assets; - a
$7.8 million pre-tax expense, or$0.05 per share after-tax loss, related to transition costs and debt extinguishment costs incurred in connection with the spin-off from Oil States; - a
$4.1 million pre-tax expense, or$0.03 per share after-tax loss, from severance costs associated with the termination of an executive; and - a
$2.6 million pre-tax expense, or$0.02 per share after-tax loss, from costs associated with the proposed migration toCanada .
Business Segment Results
(Unless otherwise noted, the following discussion compares the quarterly results for the fourth quarter of 2015 to the results for the fourth quarter of 2014. The 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
The
Income Taxes
The Company recognized an income tax benefit of
Financial Condition
As of
During 2015, the Company reduced total debt outstanding by 48% to
Subsequent to year end, on
The amendment establishes interest rates for leverage ratios: (1) between 4.75 times and less than 5.0 times and (2) above 5.0 times that are 50 and 100 basis points, respectively, higher than the previously highest rate. In conjunction with this amendment,
The Company invested
First Quarter and Full Year 2016 Guidance
For the first quarter of 2016, the Company expects revenues of
NYSE Listing Requirements
The average closing price of the Company's common shares over a recent period of 30 consecutive trading days has fallen below
Conference Call
About
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 included herein 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, 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
- Financial Schedules Follow -
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(In Thousands, Except Per Share Amounts) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenues | $ | 97,285 | $ | 219,694 | $ | 517,963 | $ | 942,891 | |||||||||
Costs and expenses: | |||||||||||||||||
Cost of sales and services | 65,527 | 131,005 | 327,613 | 544,921 | |||||||||||||
Selling, general and administrative expenses | 16,645 | 19,276 | 68,441 | 70,345 | |||||||||||||
Spin-off and formation costs | - | 853 | - | 4,350 | |||||||||||||
Depreciation and amortization expense | 31,831 | 47,200 | 152,990 | 174,970 | |||||||||||||
Impairment expense | - | 278,898 | 122,926 | 290,508 | |||||||||||||
Other operating income (expense) | (3,816 | ) | 436 | (9,004 | ) | 688 | |||||||||||
110,187 | 477,668 | 662,966 | 1,085,782 | ||||||||||||||
Operating income (loss) | (12,902 | ) | (257,974 | ) | (145,003 | ) | (142,891 | ) | |||||||||
Interest expense to affiliates | - | - | - | (6,980 | ) | ||||||||||||
Interest expense to third-parties, net of capitalized interest | (4,706 | ) | (5,951 | ) | (22,585 | ) | (14,396 | ) | |||||||||
Loss on extinguishment of debt | - | - | (1,474 | ) | (3,455 | ) | |||||||||||
Interest income | 64 | 1,074 | 2,033 | 3,915 | |||||||||||||
Other income | 1,451 | 6,513 | 3,276 | 7,524 | |||||||||||||
Income (loss) before income taxes | (16,093 | ) | (256,338 | ) | (163,753 | ) | (156,283 | ) | |||||||||
Income tax benefit (provision) | 5,638 | (14,968 | ) | 33,089 | (31,379 | ) | |||||||||||
Net income (loss) | (10,455 | ) | (271,306 | ) | (130,664 | ) | (187,662 | ) | |||||||||
Less: Net income attributable to noncontrolling interest | 142 | 328 | 1,095 | 1,381 | |||||||||||||
Net income (loss) attributable to | $ | (10,597 | ) | $ | (271,634 | ) | $ | (131,759 | ) | $ | (189,043 | ) | |||||
Net income (loss) per share attributable to | |||||||||||||||||
Basic | $ | (0.10 | ) | $ | (2.54 | ) | $ | (1.24 | ) | $ | (1.77 | ) | |||||
Diluted | $ | (0.10 | ) | $ | (2.54 | ) | $ | (1.24 | ) | $ | (1.77 | ) | |||||
Weighted average number of common shares outstanding (1): | |||||||||||||||||
Basic | 106,667 | 106,322 | 106,604 | 106,306 | |||||||||||||
Diluted | 106,667 | 106,322 | 106,604 | 106,306 | |||||||||||||
Dividends per common share | $ | - | $ | 0.13 | $ | - | $ | 0.26 | |||||||||
(1) On |
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
2015 | 2014 | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 7,837 | $ | 263,314 | |||||
Accounts receivable, net | 61,467 | 160,253 | |||||||
Inventories | 5,631 | 13,228 | |||||||
Prepaid expenses and other current assets | 16,301 | 27,161 | |||||||
Total current assets | 91,236 | 463,956 | |||||||
Property, plant and equipment, net | 931,914 | 1,248,430 | |||||||
- | 45,260 | ||||||||
Other intangible assets, net | 35,309 | 50,882 | |||||||
Other noncurrent assets | 12,753 | 20,633 | |||||||
Total assets | $ | 1,071,212 | $ | 1,829,161 | |||||
Current liabilities: | |||||||||
Accounts payable | $ | 24,609 | $ | 36,277 | |||||
Accrued liabilities | 14,834 | 22,512 | |||||||
Income taxes | 1,104 | 61 | |||||||
Current portion of long-term debt | 17,698 | 19,375 | |||||||
Deferred revenue | 7,747 | 18,539 | |||||||
Other current liabilities | 493 | 21,677 | |||||||
Total current liabilities | 66,485 | 118,441 | |||||||
Long-term debt to third-parties | 383,862 | 755,625 | |||||||
Deferred income taxes | 25,391 | 55,500 | |||||||
Other noncurrent liabilities | 31,704 | 39,486 | |||||||
Total liabilities | 507,442 | 969,052 | |||||||
Shareholders' equity: | |||||||||
Common stock | - | 1,067 | |||||||
Additional paid-in capital | 1,305,930 | 1,300,042 | |||||||
Accumulated deficit | (376,376 | ) | (244,617 | ) | |||||
Accumulated other comprehensive loss | (366,309 | ) | (198,491 | ) | |||||
Total | 563,245 | 858,001 | |||||||
Noncontrolling interest | 525 | 2,108 | |||||||
Total shareholders' equity | 563,770 | 860,109 | |||||||
Total liabilities and shareholders' equity | $ | 1,071,212 | $ | 1,829,161 | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(in thousands) | |||||||||
TWELVE MONTHS ENDED | |||||||||
2015 | 2014 | ||||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | (130,664 | ) | $ | (187,662 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 152,990 | 174,970 | |||||||
Impairment charges | 122,926 | 290,508 | |||||||
Inventory write-down | 1,015 | - | |||||||
Loss on extinguishment of debt | 1,474 | 3,455 | |||||||
Deferred income tax benefit | (34,175 | ) | 4,333 | ||||||
Non-cash compensation charge | 4,614 | 6,283 | |||||||
Gains on disposals of assets | (1,826 | ) | (5,877 | ) | |||||
Provision (benefit) for loss on receivables | 1,205 | (1,276 | ) | ||||||
Other, net | 1,424 | 1,096 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 80,347 | 4,840 | |||||||
Inventories | 5,406 | 15,174 | |||||||
Accounts payable and accrued liabilities | (12,885 | ) | (167 | ) | |||||
Taxes payable | 6,204 | (16,738 | ) | ||||||
Other current assets and liabilities, net | (11,924 | ) | 2,114 | ||||||
Net cash flows provided by operating activities | 186,131 | 291,053 | |||||||
Cash flows from investing activities: | |||||||||
Capital expenditures, including capitalized interest | (62,451 | ) | (251,158 | ) | |||||
Proceeds from disposition of property, plant and equipment | 12,683 | 12,086 | |||||||
Net cash flows used in investing activities | (49,768 | ) | (239,072 | ) | |||||
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 | (729,425 | ) | - | ||||||
Revolver borrowings (repayments), net | 59,143 | - | |||||||
Dividends paid | - | (27,790 | ) | ||||||
Debt issuance costs | (4,833 | ) | (9,235 | ) | |||||
Distributions to Oil States | - | (750,000 | ) | ||||||
Contributions from Oil States | - | 28,257 | |||||||
Net cash flows provided by (used in) financing activities | (349,615 | ) | 16,232 | ||||||
Effect of exchange rate changes on cash | (42,225 | ) | (29,027 | ) | |||||
Net change in cash and cash equivalents | (255,477 | ) | 39,186 | ||||||
Cash and cash equivalents, beginning of period | 263,314 | 224,128 | |||||||
Cash and cash equivalents, end of period | $ | 7,837 | $ | 263,314 |
SEGMENT DATA | |||||||||||||||||
(in thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenues | |||||||||||||||||
| $ | 65,777 | $ | 150,502 | $ | 344,249 | $ | 661,416 | |||||||||
| 26,660 | 49,432 | 135,964 | 213,279 | |||||||||||||
| 4,848 | 19,760 | 37,750 | 68,196 | |||||||||||||
Total revenues | $ | 97,285 | $ | 219,694 | $ | 517,963 | $ | 942,891 | |||||||||
EBITDA (1) | |||||||||||||||||
| $ | 13,530 | $ | 39,156 | $ | 28,215 | $ | 214,860 | |||||||||
| 13,791 | (161,268 | ) | 31,919 | (87,000 | ) | |||||||||||
| (2,014 | ) | (73,641 | ) | (25,201 | ) | (65,574 | ) | |||||||||
Corporate and eliminations | (5,069 | ) | (8,836 | ) | (24,765 | ) | (24,064 | ) | |||||||||
Total EBITDA | $ | 20,238 | $ | (204,589 | ) | $ | 10,168 | $ | 38,222 | ||||||||
Adjusted EBITDA (1) | |||||||||||||||||
| $ | 13,601 | $ | 56,441 | $ | 95,125 | $ | 236,271 | |||||||||
| 13,710 | 25,019 | 65,686 | 108,550 | |||||||||||||
| (2,014 | ) | 2,050 | (948 | ) | 12,900 | |||||||||||
Corporate and eliminations | (3,175 | ) | (5,768 | ) | (18,743 | ) | (17,944 | ) | |||||||||
Total adjusted EBITDA | $ | 22,122 | $ | 77,742 | $ | 141,120 | $ | 339,777 | |||||||||
Operating income (loss) | |||||||||||||||||
| $ | (10,606 | ) | $ | (4,163 | ) | $ | (73,215 | ) | $ | 106,580 | ||||||
| (667 | ) | (182,009 | ) | (24,817 | ) | (155,851 | ) | |||||||||
| (6,472 | ) | (80,295 | ) | (40,083 | ) | (86,959 | ) | |||||||||
Corporate and eliminations | 4,843 | 8,493 | (6,888 | ) | (6,661 | ) | |||||||||||
Total operating income (loss) | $ | (12,902 | ) | $ | (257,974 | ) | $ | (145,003 | ) | $ | (142,891 | ) |
(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 | TWELVE MONTHS ENDED | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net income (loss) | $ | (10,597 | ) | $ | (271,634 | ) | $ | (131,759 | ) | $ | (189,043 | ) | |||||
Income tax (benefit) provision | (5,638 | ) | 14,968 | (33,089 | ) | 31,379 | |||||||||||
Depreciation and amortization | 31,831 | 47,200 | 152,990 | 174,970 | |||||||||||||
Interest income | (64 | ) | (1,074 | ) | (2,033 | ) | (3,915 | ) | |||||||||
Interest expense | 4,706 | 5,951 | 24,059 | 24,831 | |||||||||||||
EBITDA | $ | 20,238 | $ | (204,589 | ) | $ | 10,168 | $ | 38,222 | ||||||||
Adjustments to EBITDA | |||||||||||||||||
Impairment of intangible assets (a) | 3,196 | 2,460 | 12,185 | ||||||||||||||
Impairment of fixed assets (b) | 72,973 | 74,534 | 75,594 | ||||||||||||||
Impairment of goodwill (c) | 202,729 | 43,194 | 202,729 | ||||||||||||||
Severance costs (d) | 4,117 | ||||||||||||||||
Transition costs (e) | 853 | 4,350 | |||||||||||||||
Migration costs (f) | 1,884 | 2,580 | 7,011 | 2,580 | |||||||||||||
Loss on assets held for sale (g) | 3,753 | ||||||||||||||||
Adjusted EBITDA | $ | 22,122 | $ | 77,742 | $ | 141,120 | $ | 339,777 | |||||||||
(a) 2015 relates to the impairment of an intangible asset in the U.S. The | |||||||||||||||||
(b) 2015 relates to the
impairment of certain fixed assets which carrying value we have determined to not to be recoverable. The | |||||||||||||||||
(c) Relates to the impairment of goodwill. The | |||||||||||||||||
(d) Relates to severance costs associated with the termination of an executive. The | |||||||||||||||||
(e) Relates to transition costs incurred associated with becoming a
stand-alone company. The | |||||||||||||||||
(f) Relates to costs incurred associated with the Company's redomiciliation to Canada. The | |||||||||||||||||
(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 |
SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA | ||||||||||||||||||
( | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Supplemental Operating Data - Canadian Segment | ||||||||||||||||||
Revenues | ||||||||||||||||||
Lodge revenues (1) | $ | 53,590 | $ | 117,516 | $ | 267,486 | $ | 497,216 | ||||||||||
Mobile, open camp and product revenues | 12,187 | 32,986 | 76,763 | 164,200 | ||||||||||||||
Total Canadian revenues | $ | 65,777 | $ | 150,502 | $ | 344,249 | $ | 661,416 | ||||||||||
Average available lodge rooms (2) | 13,972 | 13,365 | 13,435 | 12,557 | ||||||||||||||
Rentable rooms (3) | 9,841 | 11,005 | 10,054 | 11,007 | ||||||||||||||
Average daily rates (4) | $ | 114 | $ | 145 | $ | 121 | $ | 146 | ||||||||||
Occupancy in lodges (5) | 52 | % | 80 | % | 60 | % | 85 | % | ||||||||||
Canadian dollar to | $ | 0.749 | $ | 0.881 | $ | 0.783 | $ | 0.906 | ||||||||||
Supplemental Operating Data - Australian Segment | ||||||||||||||||||
Revenues | ||||||||||||||||||
Village revenues (1) | $ | 26,660 | $ | 49,432 | $ | 135,964 | $ | 213,279 | ||||||||||
Average available village rooms (2) | 9,064 | 9,296 | 9,180 | 9,271 | ||||||||||||||
Rentable rooms (3) | 8,585 | 9,145 | 8,862 | 9,079 | ||||||||||||||
Average daily rates (4) | $ | 69 | $ | 87 | $ | 74 | $ | 94 | ||||||||||
Occupancy in villages (5) | 49 | % | 67 | % | 56 | % | 68 | % | ||||||||||
Australian
dollar to | $ | 0.720 | $ | 0.856 | $ | 0.752 | $ | 0.902 | ||||||||||
(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 includes rooms that are utilized for our personnel. | ||||||||||||||||||
(3) Rentable rooms relate to Canadian lodges and Australian villages and excludes 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. | ||||||||||||||||||
(5) Occupancy represents total billed days divided by rentable days. Rentable days excludes staff rooms and out of service rooms. |
Contacts: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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