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Civeo Reports Fourth Quarter and Full Year 2019 Results

February 27, 2020 at 6:00 AM EST

HOUSTON & CALGARY, Alberta--(BUSINESS WIRE)--Feb. 27, 2020-- Civeo Corporation (NYSE:CVEO) today reported financial and operating results for the fourth quarter and year ended December 31, 2019.

Highlights for the quarter include:

  • Generated $41.0 million in operating cash flow and $37.1 million in free cash flow allowing for the reduction of total debt by $34.5 million during the fourth quarter of 2019
  • Reduced leverage ratio to 2.98x at December 31, 2019 from 3.52x as of September 30, 2019
  • Incurred fourth quarter net loss of $32.1 million and delivered Adjusted EBITDA of $29.9 million
  • Reported fourth quarter revenues of $148.7 million, an increase of 30% year-over-year due to the Action Industrial Catering ("Action") acquisition in Australia and stronger occupancy in both our Canadian lodges and Australian villages

“Civeo made significant progress in 2019 despite some challenges in our key end markets. We achieved year-over-year growth in revenues and EBITDA, generated $74.5 million of operating cash flow and $50.6 million of free cash flow, completed the acquisition and integration of Action and reduced our leverage ratio to 2.98x at year end,” stated Bradley J. Dodson, Civeo's President and Chief Executive Officer.

Mr. Dodson continued, “The fourth quarter results continued to build on our positive momentum experienced earlier in 2019 with strong operational and financial results. We realized a significant amount of free cash flow in the quarter which allowed us to materially reduce our total debt and our leverage ratio. Despite the typical seasonal holiday downtime, our Canadian and Australian segments experienced very strong occupancy compared to the fourth quarter of 2018,”

Mr. Dodson added, “Looking ahead to 2020, we will continue to focus on generating free cash flow to pay down debt, strengthening our balance sheet and creating long-term shareholder value.”

Fourth Quarter 2019 Results

In the fourth quarter of 2019, Civeo generated revenues of $148.7 million and reported a net loss of $32.1 million, or $0.19 per share. The loss results in part from $20.6 million in costs associated with goodwill and asset impairments and $0.2 million in Action transaction costs. During the fourth quarter of 2019, Civeo produced operating cash flow of $41.0 million, Adjusted EBITDA of $29.9 million and free cash flow of $37.1 million.

(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 costs associated with Civeo's acquisitions of Noralta Lodge Ltd. ("Noralta") and Action. 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. Please see the reconciliations to GAAP measures at the end of this news release.)

By comparison, in the fourth quarter of 2018, Civeo generated revenues of $114.5 million and reported a net loss of $13.8 million, or $0.08 per share. The loss represents a $15.2 million pre-tax loss resulting in part from $2.1 million in costs associated with Civeo’s acquisition of Noralta. During the fourth quarter of 2018, Civeo generated operating cash flow of $28.5 million, Adjusted EBITDA of $19.9 million and free cash flow of $21.9 million.

Overall, the increase in revenues and Adjusted EBITDA in the fourth quarter of 2019 compared to 2018 was primarily due to higher billed rooms in our Canadian and Australian segments coupled with the acquisition of Action in July 2019.

Full Year 2019 Results

For the full year 2019, the Company reported revenues of $527.6 million and a net loss of $60.3 million, or $0.36 per share. Adjusted EBITDA for full year 2019 was $108.4 million. This compared to revenues of $466.7 million and a net loss of $131.8 million, or $0.84 per share, for the full year 2018. Adjusted EBITDA was $76.8 million in 2018.

The increase in revenues and Adjusted EBITDA in 2019 as compared to 2018 was primarily due to higher billed rooms across the majority of our Australian segment, solid operational execution in Canada, a shift in the Canadian occupancy mix towards Sitka lodge, and the acquisition of Action in July 2019.

Business Segment Results

(Unless otherwise noted, the following discussion compares the quarterly results for the fourth quarter of 2019 to the results for the fourth quarter of 2018. The Adjusted EBITDA amounts discussed below exclude the goodwill and fixed asset impairments and Action and Noralta-related expenses noted above.)

Canada

During the fourth quarter of 2019, the Canada segment generated revenues of $89.7 million, operating loss of $17.9 million and Adjusted EBITDA of $20.9 million, compared to revenues of $69.4 million, operating loss of $8.2 million and Adjusted EBITDA of $11.3 million in the fourth quarter of 2018. The fourth quarter of 2019 included a goodwill impairment charge of $19.9 million and an asset impairment charge of $0.7 million.

Revenues and Adjusted EBITDA were higher primarily due to a 22% increase in total room nights in the fourth quarter of 2019 compared to the fourth quarter of 2018. The increase in occupied rooms was primarily due to greater turnaround activity in the oil sands region coupled with higher capacity and occupancy at our Sitka Lodge serving the LNG Canada project.

Australia

During the fourth quarter of 2019, the Australia segment generated revenues of $48.9 million, operating income of $1.8 million and Adjusted EBITDA of $15.7 million, compared to revenues of $29.7 million, operating loss of $1.8 million and Adjusted EBITDA of $11.8 million in the fourth quarter of 2018.

Results for the fourth quarter of 2019 reflect the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues by $1.7 million. On a constant currency basis, the Australian segment experienced a 70.5% period-over-period increase in revenues due to the acquisition of Action and 17% higher room nights year-over-year in our villages primarily due to continued improvement in customer maintenance activity in the Bowen Basin. The Adjusted EBITDA increase was also primarily due to higher billed rooms as noted above.

U.S.

The U.S. segment generated revenues of $10.0 million, operating loss of $6.7 million and an Adjusted EBITDA loss of $0.2 million in the fourth quarter of 2019, compared to revenues of $15.5 million, operating loss of $2.2 million and an Adjusted EBITDA loss of $1.9 million in the fourth quarter of 2018. The revenue and Adjusted EBITDA decrease was primarily due to the Acadian Acres contract rolling off in mid-2019 and subdued customer drilling and completion activity.

Income Taxes

Civeo recognized an income tax provision of $3.2 million, which resulted in an effective tax rate of (11%) in the fourth quarter of 2019. During the fourth quarter of 2018, Civeo recognized an income tax benefit of $2.0 million, which resulted in an effective tax rate of 13%.

Financial Condition

As of December 31, 2019, Civeo had total liquidity of approximately $124.1 million, consisting of $120.8 million available under its revolving credit facilities and $3.3 million of cash on hand.

Civeo’s total debt outstanding on December 31, 2019 was $359.1 million, a $34.5 million decrease since September 30, 2019.

During 2019, Civeo invested $29.8 million in capital expenditures, up from $17.1 million during 2018. This increase is primarily related to the completed expansion of our Sitka Lodge in Kitimat, British Columbia by approximately 500 rooms during the first half of 2019.

First Quarter and Full Year 2020 Guidance

For the first quarter of 2020, Civeo expects revenues of $139.5 million to $143.5 million and EBITDA of $20.0 million to $22.0 million. For the full year of 2020, Civeo expects revenues of $560.0 million to $576.0 million, EBITDA of $100.0 million to $108.0 million and capital expenditures of $18.0 million to $22.0 million.

Conference Call

Civeo will host a conference call to discuss its fourth quarter 2019 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 (800)-263-0877 in the United States or (646)-828-8143 internationally and using the conference ID 2683193#. 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 2683193#.

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 28 lodges and villages in Canada, Australia and the U.S., with an aggregate of approximately 30,000 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 in this news release include the statements regarding Civeo’s future plans and guidance, 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 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 the Company's ability to integrate acquisitions, 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, global weather conditions, natural disasters 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 annual report on Form 10-K for the year ended December 31, 2018 and other reports the Company may file from time to time with the U.S. Securities and Exchange Commission. Each forward-looking statement contained in this news release 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.

- Financial Schedules Follow -

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 
 

 

 

THREE MONTHS ENDED
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Revenues

 

$

148,689

 

 

$

114,520

 

 

$

527,555

 

 

$

466,692

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales and services

 

102,464

 

 

83,031

 

 

366,814

 

 

332,414

 

Selling, general and administrative expenses

 

16,626

 

 

11,847

 

 

59,586

 

 

67,036

 

Depreciation and amortization expense

 

30,794

 

 

26,344

 

 

123,768

 

 

125,846

 

Impairment expense

 

20,602

 

 

 

 

26,148

 

 

28,661

 

Other operating expense

 

181

 

 

442

 

 

290

 

 

790

 

 

 

170,667

 

 

121,664

 

 

576,606

 

 

554,747

 

Operating loss

 

(21,978

)

 

(7,144

)

 

(49,051

)

 

(88,055

)

 

 

 

 

 

 

 

 

 

Interest expense

 

(6,713

)

 

(6,929

)

 

(27,383

)

 

(26,258

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

(748

)

Interest income

 

12

 

 

134

 

 

78

 

 

226

 

Other income (expense)

 

399

 

 

(1,300

)

 

7,281

 

 

1,623

 

Loss before income taxes

 

(28,280

)

 

(15,239

)

 

(69,075

)

 

(113,212

)

Income tax benefit (provision)

 

(3,222

)

 

1,979

 

 

10,741

 

 

31,365

 

Net loss

 

(31,502

)

 

(13,260

)

 

(58,334

)

 

(81,847

)

Less: Net income attributable to noncontrolling interest

 

97

 

 

55

 

 

157

 

 

396

 

Net loss attributable to Civeo Corporation

 

(31,599

)

 

(13,315

)

 

(58,491

)

 

(82,243

)

Less: Dividends attributable to Class A preferred shares

 

465

 

 

489

 

 

1,849

 

 

49,589

 

Net loss attributable to Civeo Corporation common shareholders

 

$

(32,064

)

 

$

(13,804

)

 

$

(60,340

)

 

$

(131,832

)

 

 

 

 

 

 

 

 

 

Net loss per share attributable to Civeo Corporation common shareholders:

 

 

 

 

 

 

Basic

 

$

(0.19

)

 

$

(0.08

)

 

$

(0.36

)

 

$

(0.84

)

Diluted

 

$

(0.19

)

 

$

(0.08

)

 

$

(0.36

)

 

$

(0.84

)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

167,653

 

 

165,599

 

 

167,047

 

 

157,231

 

Diluted

 

167,653

 

 

165,599

 

 

167,047

 

 

157,231

 

CIVEO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

December 31,
2019

 

December 31,
2018

 

 

(UNAUDITED)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

3,331

 

 

$

12,372

 

Accounts receivable, net

 

99,493

 

 

70,223

 

Inventories

 

5,877

 

 

4,313

 

Assets held for sale

 

7,589

 

 

10,297

 

Prepaid expenses and other current assets

 

15,151

 

 

10,592

 

Total current assets

 

131,441

 

 

107,797

 

 

 

 

 

 

Property, plant and equipment, net

 

590,309

 

 

658,905

 

Goodwill, net

 

110,173

 

 

114,207

 

Other intangible assets, net

 

111,837

 

 

119,409

 

Operating lease right-of-use assets

 

24,876

 

 

 

Other noncurrent assets

 

1,276

 

 

1,359

 

Total assets

 

$

969,912

 

 

$

1,001,677

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

36,971

 

 

$

28,334

 

Accrued liabilities

 

21,755

 

 

15,956

 

Income taxes

 

328

 

 

310

 

Current portion of long-term debt

 

35,080

 

 

33,329

 

Deferred revenue

 

7,165

 

 

3,035

 

Other current liabilities

 

8,741

 

 

5,719

 

Total current liabilities

 

110,040

 

 

86,683

 

 

 

 

 

 

Long-term debt

 

321,792

 

 

342,908

 

Deferred income taxes

 

9,452

 

 

18,442

 

Operating lease liabilities

 

21,231

 

 

 

Other noncurrent liabilities

 

16,592

 

 

18,220

 

Total liabilities

 

479,107

 

 

466,253

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

Preferred shares

 

58,129

 

 

56,280

 

Common shares

 

 

 

 

Additional paid-in capital

 

1,572,249

 

 

1,562,133

 

Accumulated deficit

 

(771,590

)

 

(710,551

)

Treasury stock

 

(5,472

)

 

(1,189

)

Accumulated other comprehensive loss

 

(363,173

)

 

(371,249

)

Total Civeo Corporation shareholders' equity

 

490,143

 

 

535,424

 

Noncontrolling interest

 

662

 

 

 

Total shareholders' equity

 

490,805

 

 

535,424

 

Total liabilities and shareholders' equity

 

$

969,912

 

 

$

1,001,677

 

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(58,334

)

 

$

(81,847

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

123,768

 

 

125,846

 

Impairment charges

 

26,148

 

 

28,661

 

Loss on extinguishment of debt

 

 

 

748

 

Deferred income tax benefit

 

(11,713

)

 

(31,403

)

Non-cash compensation charge

 

10,116

 

 

11,036

 

Gain on disposals of assets

 

(3,882

)

 

(1,606

)

Provision for loss on receivables, net of recoveries

 

(30

)

 

(276

)

Other, net

 

2,659

 

 

4,879

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(20,547

)

 

13,326

 

Inventories

 

(87

)

 

3,376

 

Accounts payable and accrued liabilities

 

8,473

 

 

(17,716

)

Taxes payable

 

(75

)

 

5,310

 

Other current assets and liabilities, net

 

(2,015

)

 

(5,943

)

Net cash flows provided by operating activities

 

74,481

 

 

54,391

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Payments related to acquisitions, net of cash acquired

 

(16,434

)

 

(171,337

)

Capital expenditures

 

(29,812

)

 

(17,108

)

Proceeds from disposition of property, plant and equipment

 

5,906

 

 

5,844

 

Other, net

 

1,762

 

 

654

 

Net cash flows used in investing activities

 

(38,578

)

 

(181,947

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Term loan repayments

 

(34,942

)

 

(26,609

)

Revolving credit borrowings (repayments), net

 

(3,456

)

 

140,973

 

Debt issuance costs

 

(1,950

)

 

(4,009

)

Other, net

 

(4,283

)

 

(832

)

Net cash flows provided by (used in) financing activities

 

(44,631

)

 

109,523

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(313

)

 

(2,242

)

Net change in cash and cash equivalents

 

(9,041

)

 

(20,275

)

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

12,372

 

 

32,647

 

Cash and cash equivalents, end of period

 

$

3,331

 

 

$

12,372

 

CIVEO CORPORATION

SEGMENT DATA

(in thousands)

(unaudited)

 

 

 

THREE MONTHS ENDED
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

 

Canada

 

$

89,708

 

 

$

69,351

 

 

$

325,651

 

 

$

296,012

 

Australia

 

48,933

 

 

29,696

 

 

156,093

 

 

119,238

 

United States

 

10,048

 

 

15,473

 

 

45,811

 

 

51,442

 

Total revenues

 

$

148,689

 

 

$

114,520

 

 

$

527,555

 

 

$

466,692

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

 

 

 

 

 

 

 

Canada

 

$

311

 

 

$

10,112

 

 

$

51,745

 

 

$

21,639

 

Australia

 

15,563

 

 

11,759

 

 

49,871

 

 

44,821

 

United States

 

(155

)

 

1,908

 

 

5,479

 

 

5,566

 

Corporate and eliminations

 

(6,601

)

 

(5,934

)

 

(25,254

)

 

(33,008

)

Total EBITDA

 

$

9,118

 

 

$

17,845

 

 

$

81,841

 

 

$

39,018

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (1)

 

 

 

 

 

 

 

 

Canada

 

$

20,913

 

 

$

11,313

 

 

$

72,347

 

 

$

53,816

 

Australia

 

15,716

 

 

11,759

 

 

55,786

 

 

44,821

 

United States

 

(155

)

 

1,908

 

 

5,479

 

 

5,566

 

Corporate and eliminations

 

(6,601

)

 

(5,077

)

 

(25,254

)

 

(27,425

)

Total adjusted EBITDA

 

$

29,873

 

 

$

19,903

 

 

$

108,358

 

 

$

76,778

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

Canada

 

$

(17,876

)

 

$

(8,177

)

 

$

(32,313

)

 

$

(63,519

)

Australia

 

1,819

 

 

1,843

 

 

517

 

 

(1,950

)

United States

 

(6,730

)

 

(2,195

)

 

(11,214

)

 

(8,640

)

Corporate and eliminations

 

809

 

 

1,385

 

 

(6,041

)

 

(13,946

)

Total operating loss

 

$

(21,978

)

 

$

(7,144

)

 

$

(49,051

)

 

$

(88,055

)

 

 

 

 

 

 

 

 

 

(1) Please see Non-GAAP Reconciliation Schedule.

 

 

CIVEO CORPORATION

NON-GAAP RECONCILIATIONS

(in thousands)

(unaudited)

 

 

 

THREE MONTHS ENDED
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

$

9,118

 

 

$

17,845

 

 

$

81,841

 

 

$

39,018

 

Adjusted EBITDA (1)

 

$

29,873

 

 

$

19,903

 

 

$

108,358

 

 

$

76,778

 

Free Cash Flow (2)

 

$

37,084

 

 

$

21,893

 

 

$

50,575

 

 

$

43,127

 

(1)

The term EBITDA is defined as net income (loss) attributable to Civeo Corporation plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain costs associated with Civeo's acquisitions of Noralta and Action. 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 the 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 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
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net loss attributable to Civeo Corporation

 

$

(31,599

)

 

$

(13,315

)

 

$

(58,491

)

 

$

(82,243

)

Income tax provision (benefit)

 

3,222

 

 

(1,979

)

 

(10,741

)

 

(31,365

)

Depreciation and amortization

 

30,794

 

 

26,344

 

 

123,768

 

 

125,846

 

Interest income

 

(12

)

 

(134

)

 

(78

)

 

(226

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

748

 

Interest expense

 

6,713

 

 

6,929

 

 

27,383

 

 

26,258

 

EBITDA

 

$

9,118

 

 

$

17,845

 

 

$

81,841

 

 

$

39,018

 

Adjustments to EBITDA

 

 

 

 

 

 

 

 

Impairment of long-lived assets (a)

 

702

 

 

 

 

6,248

 

 

28,661

 

Impairment of goodwill (b)

 

19,900

 

 

 

 

19,900

 

 

 

Noralta transaction costs (c)

 

 

 

2,058

 

 

 

 

9,099

 

Action transaction costs (d)

 

153

 

 

 

 

369

 

 

 

Adjusted EBITDA

 

$

29,873

 

 

$

19,903

 

 

$

108,358

 

 

$

76,778

 

(a)

 

Relates to asset impairments recorded in the fourth and second quarter of 2019 and the first quarter 2018. In the fourth quarter 2019, we recorded a pre-tax loss related to the impairment of assets in Canada of $0.7 million ($0.5 million after-tax, or $0.00 per diluted share), which is included in Impairment expense on the unaudited statements of operations. In the second quarter 2019, we recorded a pre-tax loss related to the impairment of assets in Australia of $5.5 million ($5.5 million after-tax, or $0.03 per diluted share), which is included in Impairment expense on the unaudited statements of operations. This includes $1.0 million of impairment expense related to an error corrected in the second quarter 2019. During the second quarter of 2019, we identified a future liability related to an asset retirement obligation (ARO) at one of our villages in Australia that should have been recorded in 2011. We determined that the error was not material to our previously issued financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, and therefore, corrected the error in the second quarter of 2019.

 

 

 

In the first quarter 2018, we recorded a pre-tax loss related to the impairment of assets in Canada of $28.7 million ($20.9 million after-tax, or $0.14 per diluted share), which is included in Impairment expense on the unaudited statements of operations.

 

 

(b)

Relates to the impairment of goodwill. The $19.9 million impairment ($19.9 million after-tax, or $0.12 per diluted share) is related to our Canada reporting unit and is included in Impairment expense on the statements of operations.

 

 

(c)

Relates to costs incurred associated with Civeo's acquisition of Noralta. For the twelve month period ended December 31, 2018, the $9.1 million of costs in 2018 ($8.0 million after-tax, or $0.05 per diluted share), are reflected in the Canada ($3.5 million) and Corporate and eliminations ($5.6 million) reportable segments and are included in Costs of sales and services ($1.0 million), Selling, general and administrative expenses ($7.2 million) and Other income (expense) ($0.9 million) on the unaudited statements of operations. For the three month period ended December 31, 2018, the $2.1 million of costs in 2018 ($1.7 million after-tax, or $0.01, per diluted share), are reflected in the Canada ($1.2 million) and Corporate and eliminations ($0.9 million) reportable segments and are included in Costs of sales and services ($0.6 million), Selling, general and administrative expenses ($0.6 million) and Other income (expense) ($0.9 million) on the unaudited statements of operations.

 

 

(d)

Relates to costs incurred associated with Civeo's acquisition of Action. For the twelve month period ended December 31, 2019, the $0.4 million of costs ($0.4 million after-tax, or $0.00, per diluted share), are reflected in the Australia reportable segment and are included in Selling, general and administrative expenses on the unaudited statements of operations. For the three month period ended December 31, 2019, the $0.2 million of costs ($0.2 million after-tax, or $0.00, per diluted share), are reflected in the Australia reportable segment and are included in Selling, general and administrative expenses on the unaudited statements of operations.

 

(2)

The term Free Cash Flow 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. It is also used as a benchmark for the award of incentive compensation under its Free Cash Flow plan.

 

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
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net Cash Flows Provided by Operating Activities

 

$

40,955

 

 

$

28,529

 

 

$

74,481

 

 

$

54,391

 

Capital expenditures

 

(4,295

)

 

(8,442

)

 

(29,812

)

 

(17,108

)

Proceeds from disposition of property, plant and equipment

 

424

 

 

1,806

 

 

5,906

 

 

5,844

 

Free Cash Flow

 

$

37,084

 

 

$

21,893

 

 

$

50,575

 

 

$

43,127

 

CIVEO CORPORATION

NON-GAAP RECONCILIATIONS - GUIDANCE

(in millions)

(unaudited)

 

 

 

THREE MONTHS ENDING
MARCH 31, 2020

 

YEAR ENDING
DECEMBER 31, 2020

EBITDA Range (1)

 

$

20.0

 

 

$

22.0

 

 

$

100.0

 

 

$

108.0

 

(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):

 

 

THREE MONTHS ENDING
MARCH 31, 2020

 

YEAR ENDING
DECEMBER 31, 2020

 

 

(estimated)

 

(estimated)

 

 

 

 

 

 

 

 

 

Net loss

 

$

(8.6

)

 

$

(7.0

)

 

$

(12.8

)

 

$

(5.3

)

Income tax provision (benefit)

 

(1.4

)

 

(1.0

)

 

(0.2

)

 

0.3

 

Depreciation and amortization

 

24.0

 

 

24.0

 

 

93.0

 

 

93.0

 

Interest expense

 

6.0

 

 

6.0

 

 

20.0

 

 

20.0

 

EBITDA

 

$

20.0

 

 

$

22.0

 

 

$

100.0

 

 

$

108.0

 

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
DECEMBER 31,

 

TWELVE MONTHS ENDED
DECEMBER 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Supplemental Operating Data - Canadian Segment

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Accommodation revenue (1)

 

$

77,803

 

 

$

62,641

 

 

$

281,577

 

 

$

266,899

 

Mobile facility rental revenue (2)

 

3,927

 

 

33

 

 

9,575

 

 

9,316

 

Food and other services revenue (3)

 

7,978

 

 

4,519

 

 

33,485

 

 

15,601

 

Manufacturing revenue (4)

 

 

 

2,158

 

 

1,014

 

 

4,196

 

Total Canadian revenues

 

$

89,708

 

 

$

69,351

 

 

$

325,651

 

 

$

296,012

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

Accommodation cost

 

$

50,539

 

 

$

43,335

 

 

$

187,679

 

 

$

182,387

 

Mobile facility rental cost

 

2,758

 

 

248

 

 

7,493

 

 

9,985

 

Food and other services cost

 

6,975

 

 

4,435

 

 

30,595

 

 

14,756

 

Manufacturing cost

 

18

 

 

2,622

 

 

1,025

 

 

4,995

 

Indirect other cost

 

3,134

 

 

4,345

 

 

12,832

 

 

15,134

 

Total Canadian cost of sales and services

 

$

63,424

 

 

$

54,985

 

 

$

239,624

 

 

$

227,257

 

 

 

 

 

 

 

 

 

 

Average daily rates (5)

 

$

92

 

 

$

91

 

 

$

91

 

 

$

89

 

 

 

 

 

 

 

 

 

 

Billed rooms (6)

 

837,217

 

 

687,217

 

 

3,078,727

 

 

3,007,229

 

 

 

 

 

 

 

 

 

 

Canadian dollar to U.S. dollar

 

$

0.758

 

 

$

0.757

 

 

$

0.754

 

 

$

0.772

 

 

 

 

 

 

 

 

 

 

Supplemental Operating Data - Australian Segment

 

 

 

 

 

 

 

 

Accommodation revenue (1)

 

$

33,574

 

 

$

29,553

 

 

$

126,047

 

 

$

117,896

 

Food and other services revenue (3)

 

15,359

 

 

143

 

 

30,046

 

 

1,342

 

Total Australian revenues

 

$

48,933

 

 

$

29,696

 

 

$

156,093

 

 

$

119,238

 

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

Accommodation cost

 

$

15,229

 

 

$

14,424

 

 

$

60,045

 

 

$

57,366

 

Food and other services cost

 

13,266

 

 

125

 

 

26,073

 

 

1,150

 

Indirect other cost

 

877

 

 

630

 

 

2,972

 

 

2,552

 

Total Australian cost of sales and services

 

$

29,372

 

 

$

15,179

 

 

$

89,090

 

 

$

61,068

 

 

 

 

 

 

 

 

 

 

Average daily rates (5)

 

$

72

 

 

$

74

 

 

$

73

 

 

$

78

 

 

 

 

 

 

 

 

 

 

Billed rooms (6)

 

463,330

 

 

397,335

 

 

1,717,186

 

 

1,512,030

 

 

 

 

 

 

 

 

 

 

Australian dollar to U.S. dollar

 

$

0.684

 

 

$

0.718

 

 

$

0.695

 

 

$

0.748

 

(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 camps for the periods presented.

(3)

Includes revenues related to food service, laundry and water and wastewater treatment services, and facilities management for the periods presented.

(4)

Includes revenues related to modular construction services for the periods presented.

(5)

Average daily rate is based on billed rooms and accommodation revenue.

(6)

Billed rooms represents total billed days for the periods presented.

 

Carolyn J. Stone
Civeo Corporation
Senior Vice President & Chief Financial Officer
713-510-2400

Jeffrey Spittel
FTI Consulting
713-353-5407

Source: Civeo Corporation

Carolyn J. Stone
Civeo Corporation
Senior Vice President & Chief Financial Officer
713-510-2400

Jeffrey Spittel
FTI Consulting
713-353-5407