Press Release
Civeo Corporation Reports Third Quarter 2016 Results
10/31/16
Highlights include:
- Financial results for each division and on a consolidated basis exceeded guidance due to the Company's continued cost control, higher occupancy in
Canada after the Ft. McMurray forest fires, and slightly higher than anticipated occupancy and average daily rates inAustralia - The Company generated
$13.7 million in operating cash flow and$10.7 million in free cash flow and reduced debt by$15 million
"Our operational execution in the third quarter continued to exceed our expectations despite the persistent macroeconomic headwinds impacting our core end markets. Although the recent stabilization in global crude oil spot prices is
encouraging, we remain committed to vigilant cost control, positive free cash flow generation and debt reduction," said
"Additionally, spot met coal prices in
THIRD QUARTER 2016 RESULTS
In the third quarter of 2016, 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. 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 reconciliation to GAAP measures at the end of this news release.)
By comparison, in the third quarter of 2015, the Company generated revenues of
Revenues decreased
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results for the third quarter of 2016 to the third quarter of 2015. The results discussed below exclude the fixed asset impairment expense and migration charges noted above.)
The Canadian segment generated revenues of
On a constant currency basis, lodge revenues increased nearly 11%
year-on-year due to the expansion of lodging capacity and higher occupancy due primarily to the continued room needs for customers' recovery efforts from the
The Australian segment generated revenues of
The
IMPAIRMENT CHARGES
During the third quarter of 2016, the Company recorded a pre-tax impairment charge of
INCOME TAXES
The Company recognized an income tax benefit of
LIQUIDITY AND CAPITAL RESOURCES
As of
Capital expenditures totaled
FOURTH QUARTER AND FULL YEAR 2016 GUIDANCE
For the fourth quarter of 2016, the Company expects revenues of
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
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) | |||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenues | $ | 104,238 | $ | 106,544 | $ | 306,309 | $ | 420,678 | |||||||||
Costs and expenses: | |||||||||||||||||
Cost of sales and services | 67,964 | 69,751 | 198,493 | 262,086 | |||||||||||||
Selling, general and administrative expenses | 13,644 | 16,691 | 42,056 | 51,796 | |||||||||||||
Depreciation and amortization expense | 33,721 | 36,172 | 100,444 | 121,159 | |||||||||||||
Impairment expense | 37,729 | 110,715 | 46,129 | 122,926 | |||||||||||||
Other operating expense | 138 | (3,945 | ) | 356 | (5,188 | ) | |||||||||||
153,196 | 229,384 | 387,478 | 552,779 | ||||||||||||||
Operating loss | (48,958 | ) | (122,840 | ) | (81,169 | ) | (132,101 | ) | |||||||||
Interest expense to third-parties, net of capitalized interest | (6,072 | ) | (6,022 | ) | (16,941 | ) | (17,879 | ) | |||||||||
Loss on extinguishment of debt | - | (1,474 | ) | (302 | ) | (1,474 | ) | ||||||||||
Interest income | 26 | 160 | 140 | 1,969 | |||||||||||||
Other income | 1,338 | 261 | 1,058 | 1,825 | |||||||||||||
Loss before income taxes | (53,666 | ) | (129,915 | ) | (97,214 | ) | (147,660 | ) | |||||||||
Income tax benefit | 11,697 | 22,745 | 17,217 | 27,451 | |||||||||||||
Net loss | (41,969 | ) | (107,170 | ) | (79,997 | ) | (120,209 | ) | |||||||||
Less: Net income attributable to noncontrolling interest | 162 | 515 | 442 | 953 | |||||||||||||
Net loss attributable to | $ | (42,131 | ) | $ | (107,685 | ) | $ | (80,439 | ) | $ | (121,162 | ) | |||||
Net loss per share attributable to | |||||||||||||||||
Basic | $ | (0.39 | ) | $ | (1.01 | ) | $ | (0.75 | ) | $ | (1.14 | ) | |||||
Diluted | $ | (0.39 | ) | $ | (1.01 | ) | $ | (0.75 | ) | $ | (1.14 | ) | |||||
Weighted average number of common shares outstanding: | |||||||||||||||||
Basic | 107,118 | 106,661 | 106,989 | 106,583 | |||||||||||||
Diluted | 107,118 | 106,661 | 106,989 | 106,583 |
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
2016 | 2015 | ||||||||
(UNAUDITED) | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 2,530 | $ | 7,837 | |||||
Accounts receivable, net | 68,478 | 61,467 | |||||||
Inventories | 3,564 | 5,631 | |||||||
Prepaid expenses and other current assets | 15,821 | 15,024 | |||||||
Total current assets | 90,393 | 89,959 | |||||||
Property, plant and equipment, net | 844,801 | 931,914 | |||||||
Other intangible assets, net | 31,503 | 35,309 | |||||||
Other noncurrent assets | 11,354 | 9,347 | |||||||
Total assets | $ | 978,051 | $ | 1,066,529 | |||||
Current liabilities: | |||||||||
Accounts payable | $ | 27,755 | $ | 24,609 | |||||
Accrued liabilities | 16,161 | 14,834 | |||||||
Income taxes | 56 | 1,104 | |||||||
Current portion of long-term debt | 15,819 | 17,461 | |||||||
Deferred revenue | 10,265 | 7,747 | |||||||
Other current liabilities | 212 | 493 | |||||||
Total current liabilities | 70,268 | 66,248 | |||||||
Long-term debt to third-parties | 358,045 | 379,416 | |||||||
Deferred income taxes | 2,582 | 25,391 | |||||||
Other noncurrent liabilities | 32,402 | 31,704 | |||||||
Total liabilities | 463,297 | 502,759 | |||||||
Shareholders' equity: | |||||||||
Common shares | - | - | |||||||
Additional paid-in capital | 1,310,465 | 1,305,930 | |||||||
Accumulated deficit | (456,815 | ) | (376,376 | ) | |||||
| (65 | ) | - | ||||||
Accumulated other comprehensive loss | (339,799 | ) | (366,309 | ) | |||||
| 513,786 | 563,245 | |||||||
Noncontrolling interest | 968 | 525 | |||||||
Total shareholders' equity | 514,754 | 563,770 | |||||||
Total liabilities and shareholders' equity | $ | 978,051 | $ | 1,066,529 |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(in thousands) | |||||||||
NINE MONTHS ENDED | |||||||||
2016 | 2015 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (79,997 | ) | $ | (120,209 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 100,444 | 121,159 | |||||||
Impairment charges | 46,129 | 122,926 | |||||||
Inventory write-down | 850 | 1,015 | |||||||
Loss on extinguishment of debt | 302 | 1,474 | |||||||
Deferred income tax benefit | (25,239 | ) | (34,200 | ) | |||||
Non-cash compensation charge | 4,535 | 3,467 | |||||||
Losses (gains) on disposals of assets | 259 | (800 | ) | ||||||
Provision (benefit) for loss on receivables, net of recoveries | (74 | ) | 1,081 | ||||||
Other, net | 2,546 | 1,032 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (2,920 | ) | 79,763 | ||||||
Inventories | 1,484 | 5,556 | |||||||
Accounts payable and accrued liabilities | 2,701 | (5,094 | ) | ||||||
Taxes payable | 4,832 | 1,652 | |||||||
Other current assets and liabilities, net | (7,062 | ) | (3,889 | ) | |||||
Net cash flows provided by operating activities | 48,790 | 174,933 | |||||||
Cash flows from investing activities: | |||||||||
Capital expenditures, including capitalized interest | (15,246 | ) | (43,701 | ) | |||||
Proceeds from disposition of property, plant and equipment | 4,465 | 2,255 | |||||||
Other, net | (761 | ) | - | ||||||
Net cash flows used in investing activities | (11,542 | ) | (41,446 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from issuance of common stock | - | 500 | |||||||
Term loan borrowings | - | 325,000 | |||||||
Term loan repayments | (37,107 | ) | (725,000 | ) | |||||
Revolver borrowings (repayments), net | (6,616 | ) | 56,708 | ||||||
Debt issuance costs | (2,037 | ) | (4,555 | ) | |||||
Net cash flows used in financing activities | (45,760 | ) | (347,347 | ) | |||||
Effect of exchange rate changes on cash | 3,205 | (36,819 | ) | ||||||
Net change in cash and cash equivalents | (5,307 | ) | (250,679 | ) | |||||
Cash and cash equivalents, beginning of period | 7,837 | 263,314 | |||||||
Cash and cash equivalents, end of period | $ | 2,530 | $ | 12,635 |
SEGMENT DATA (in thousands) (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenues | |||||||||||||||||
| $ | 73,539 | $ | 71,500 | $ | 216,168 | $ | 278,472 | |||||||||
| 27,679 | 29,177 | 80,694 | 109,304 | |||||||||||||
| 3,020 | 5,867 | 9,447 | 32,902 | |||||||||||||
Total revenues | $ | 104,238 | $ | 106,544 | $ | 306,309 | $ | 420,678 | |||||||||
EBITDA (1) | |||||||||||||||||
| $ | (19,841 | ) | $ | (47,218 | ) | $ | 17,950 | $ | 14,685 | |||||||
| 10,992 | (12,505 | ) | 32,781 | 18,128 | ||||||||||||
| (1,343 | ) | (21,477 | ) | (15,244 | ) | (23,187 | ) | |||||||||
Corporate and eliminations | (3,869 | ) | (5,722 | ) | (15,596 | ) | (19,696 | ) | |||||||||
Total EBITDA | $ | (14,061 | ) | $ | (86,922 | ) | $ | 19,891 | $ | (10,070 | ) | ||||||
Adjusted EBITDA (1) | |||||||||||||||||
| $ | 19,595 | $ | 19,463 | $ | 57,627 | $ | 81,524 | |||||||||
| 10,992 | 11,731 | 32,801 | 51,976 | |||||||||||||
| (1,343 | ) | (977 | ) | (6,844 | ) | 1,066 | ||||||||||
Corporate and eliminations | (3,869 | ) | (4,900 | ) | (14,586 | ) | (15,568 | ) | |||||||||
Total adjusted EBITDA | $ | 25,375 | $ | 25,317 | $ | 68,998 | $ | 118,998 | |||||||||
Operating income (loss) | |||||||||||||||||
| $ | (44,742 | ) | $ | (70,909 | ) | $ | (53,758 | ) | $ | (62,609 | ) | |||||
| (1,918 | ) | (25,995 | ) | (4,454 | ) | (24,150 | ) | |||||||||
| (3,271 | ) | (24,916 | ) | (20,662 | ) | (33,611 | ) | |||||||||
Corporate and eliminations | 973 | (1,020 | ) | (2,295 | ) | (11,731 | ) | ||||||||||
Total operating loss | $ | (48,958 | ) | $ | (122,840 | ) | $ | (81,169 | ) | $ | (132,101 | ) | |||||
(1) Please see Non-GAAP Reconciliation Schedule. |
NON-GAAP RECONCILIATIONS (in thousands) (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
EBITDA (1) | $ | (14,061 | ) | $ | (86,922 | ) | $ | 19,891 | $ | (10,070 | ) | ||||||
Adjusted EBITDA (1) | $ | 25,375 | $ | 25,317 | $ | 68,998 | $ | 118,998 | |||||||||
Free Cash Flow (2) | $ | 10,669 | $ | 61,455 | $ | 38,009 | $ | 133,487 | |||||||||
(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 Company's redomiciliation. 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 | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net loss | $ | (42,131 | ) | $ | (107,685 | ) | $ | (80,439 | ) | $ | (121,162 | ) | |||||
Income tax provision (benefit) | (11,697 | ) | (22,745 | ) | (17,217 | ) | (27,451 | ) | |||||||||
Depreciation and amortization | 33,721 | 36,172 | 100,444 | 121,159 | |||||||||||||
Interest income | (26 | ) | (160 | ) | (140 | ) | (1,969 | ) | |||||||||
Loss on extinguishment of debt | - | 1,474 | 302 | 1,474 | |||||||||||||
Interest expense | 6,072 | 6,022 | 16,941 | 17,879 | |||||||||||||
EBITDA | $ | (14,061 | ) | $ | (86,922 | ) | $ | 19,891 | $ | (10,070 | ) | ||||||
Adjustments to EBITDA | |||||||||||||||||
Impairment of intangible asset (a) | - | 2,460 | - | 2,460 | |||||||||||||
Impairment of assets (b) | 38,579 | 65,061 | 46,979 | 74,534 | |||||||||||||
Impairment of goodwill (c) | - | 43,194 | - | 43,194 | |||||||||||||
Migration costs (d) | - | 1,524 | 1,271 | 5,127 | |||||||||||||
Loss on assets held for sale (e) | - | - | - | 3,753 | |||||||||||||
Severance (f) | 857 | - | 857 | - | |||||||||||||
Adjusted EBITDA | $ | 25,375 | $ | 25,317 | $ | 68,998 | $ | 118,998 | |||||||||
(a) Relates to the 2015 impairment of an intangible asset in the U.S. The | |||||||||||||||||
(b) 2016 relates to the impairment of assets in | |||||||||||||||||
(c) Relates to the impairment of goodwill. The | |||||||||||||||||
(d) Relates to costs incurred associated with the Company's redomiciliation to Canada. For 2016, the | |||||||||||||||||
(e) 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 | |||||||||||||||||
(f) Relates to severance costs associated with the termination of executives. The | |||||||||||||||||
(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. The Company 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. The Company uses Free Cash Flow to compare and to understand, manage, make operating decisions and evaluate its 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 | NINE MONTHS ENDED | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net Cash Flows Provided by Operating Activities | $ | 13,662 | $ | 80,643 | $ | 48,790 | $ | 174,933 | |||||||||
Capital expenditures, including capitalized interest | (5,353 | ) | (19,599 | ) | (15,246 | ) | (43,701 | ) | |||||||||
Proceeds from disposition of property, plant and equipment | 2,360 | 411 | 4,465 | 2,255 | |||||||||||||
Free Cash Flow | $ | 10,669 | $ | 61,455 | $ | 38,009 | $ | 133,487 |
NON-GAAP RECONCILIATIONS - GUIDANCE (in millions) (unaudited) | |||||||||||||||||
THREE MONTHS ENDING | YEAR ENDING | ||||||||||||||||
$ | 15.0 | $ | 18.0 | $ | 34.8 | $ | 37.8 | ||||||||||
$ | 15.0 | $ | 18.0 | $ | 84.0 | $ | 87.0 | ||||||||||
(1) The following table sets forth a reconciliation of estimated EBITDA and Adjusted EBITDA to estimated net income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in millions) (unaudited): | |||||||||||||||||
THREE MONTHS ENDING | YEAR ENDING | ||||||||||||||||
(estimated) | (estimated) | ||||||||||||||||
Net loss | $ | (22.6 | ) | $ | (18.6 | ) | $ | (102.6 | ) | $ | (98.6 | ) | |||||
Income tax benefit | (1.0 | ) | (2.0 | ) | (18.2 | ) | (19.2 | ) | |||||||||
Depreciation and amortization | 33.0 | 33.0 | 133.0 | 133.0 | |||||||||||||
Interest income | - | - | (0.2 | ) | (0.2 | ) | |||||||||||
Loss on extinguishment of debt | - | - | 0.3 | 0.3 | |||||||||||||
Interest expense | 5.6 | 5.6 | 22.5 | 22.5 | |||||||||||||
EBITDA | $ | 15.0 | $ | 18.0 | $ | 34.8 | $ | 37.8 | |||||||||
Adjustments to EBITDA | |||||||||||||||||
Migration costs (a) | 1.3 | 1.3 | |||||||||||||||
Impairment of fixed assets (b) | 47.0 | 47.0 | |||||||||||||||
Severance costs (c) | 0.9 | 0.9 | |||||||||||||||
Adjusted EBITDA | $ | 15.0 | $ | 18.0 | $ | 84.0 | $ | 87.0 | |||||||||
(a) Relates to costs incurred associated with the Company's redomiciliation to Canada. The | |||||||||||||||||
(b) 2016 relates to the impairment of assets in | |||||||||||||||||
(c) Relates to severance costs associated with the termination of executives. The |
SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA ( (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Supplemental Operating Data - Canadian Segment | |||||||||||||||||
Revenues | |||||||||||||||||
Lodge revenues (1) | $ | 61,712 | $ | 55,708 | $ | 182,899 | $ | 213,896 | |||||||||
Mobile, open camp and product revenues | 11,827 | 15,792 | 33,269 | 64,576 | |||||||||||||
Total Canadian revenues | $ | 73,539 | $ | 71,500 | $ | 216,168 | $ | 278,472 | |||||||||
Average available lodge rooms (2) | 14,670 | 13,433 | 14,647 | 13,294 | |||||||||||||
Rentable rooms (3) | 10,588 | 9,445 | 10,199 | 10,125 | |||||||||||||
Average daily rates (4) | $ | 100 | $ | 112 | $ | 106 | $ | 123 | |||||||||
Occupancy in lodges (5) | 64 | % | 57 | % | 62 | % | 63 | % | |||||||||
Canadian dollar to | $ | 0.766 | $ | 0.764 | $ | 0.757 | $ | 0.795 | |||||||||
Supplemental Operating Data - Australian Segment | |||||||||||||||||
Revenues | |||||||||||||||||
Village revenues (1) | $ | 27,679 | $ | 29,177 | $ | 80,694 | $ | 109,304 | |||||||||
Average available village rooms (2) | 9,344 | 9,064 | 9,317 | 9,219 | |||||||||||||
Rentable rooms (3) | 8,675 | 8,824 | 8,700 | 8,955 | |||||||||||||
Average daily rates (4) | $ | 81 | $ | 71 | $ | 75 | $ | 76 | |||||||||
Occupancy in villages (5) | 43 | % | 50 | % | 45 | % | 58 | % | |||||||||
Australian dollar to | $ | 0.758 | $ | 0.725 | $ | 0.742 | $ | 0.763 | |||||||||
(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. |
Source:Frank C. Steininger Civeo Corporation Senior Vice President and Chief Financial Officer 713-510-2400Marc Cunningham orJeffrey Spittel FTI Consulting 713-353-5407
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