UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): October 28, 2022
____________________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address and zip code of principal executive offices) | ||||||||||||||
Registrant’s telephone number, including area code: (713 ) 510-2400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 28, 2022, Civeo Corporation (“Civeo”) issued a press release announcing its financial condition and results of operations as of and for the quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K, and is incorporated herein by reference.
The information contained in this report and the exhibit hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filings made by Civeo under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description of Document | ||||
99.1 | |||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 28, 2022
CIVEO CORPORATION
By: /s/ Carolyn J. Stone ,
Name: Carolyn J. Stone
Title: Senior Vice President, Chief Financial Officer and Treasurer
Civeo Reports Third Quarter 2022 Results
Third Quarter Highlights include:
•Reported third quarter revenues of $184.2 million, net income of $5.2 million and operating cash flow of $38.7 million;
•Reduced net leverage ratio to 0.9x as of September 30, 2022 from 1.2x as of June 30, 2022;
•Delivered third quarter Adjusted EBITDA of $35.0 million and free cash flow of $38.6 million; and
•Announced earlier this quarter that its Board of Directors had renewed its share repurchase authorization for the Company to repurchase up to 5% of its total common shares outstanding over the next twelve months.
HOUSTON and CALGARY, October 28, 2022 (BUSINESS WIRE) -- Civeo Corporation (NYSE:CVEO) today reported financial and operating results for the third quarter ended September 30, 2022.
“In the third quarter of 2022, our focus remained on our strategic objectives of operating safely, generating free cash flow, maintaining our strong balance sheet and returning capital to shareholders through our buyback program. We continued to experience a recovery in Canadian lodge billed rooms as our customers increase activity in the oil sands region. We also experienced strong Canadian mobile camp results supporting pipeline construction activity. We now expect our mobile camps to remain active into 2023, moving their demobilization costs out of 2022 Adjusted EBITDA guidance, " stated Bradley J. Dodson, Civeo's President and Chief Executive Officer.
Mr. Dodson concluded, "We are also proud to report that we achieved the significant milestone of reducing our net leverage ratio below 1.0x. This achievement would not be possible without the efforts of the entire Civeo team over the last few years. Our continued debt reduction provides us the flexibility to both weather the current market volatility and further evaluate other capital allocation opportunities."
Third Quarter 2022 Results
In the third quarter of 2022, Civeo generated revenues of $184.2 million and reported net income of $5.2 million, or $0.32 per diluted share. During the third quarter of 2022, Civeo produced operating cash flow of $38.7 million, Adjusted EBITDA of $35.0 million and free cash flow of $38.6 million.
By comparison, in the third quarter of 2021, Civeo generated revenues of $155.1 million and reported net income of $0.1 million, or $0.00 per diluted share. During the third quarter of 2021, Civeo produced operating cash flow of $33.9 million, Adjusted EBITDA of $26.2 million and free cash flow of $31.0 million.
Overall, the increase in revenues and Adjusted EBITDA in the third quarter of 2022 compared to the third quarter of 2021 was primarily driven by improved occupancy in the Canadian lodges and Australian villages as well as increased Canadian mobile camp activity, partially offset by the weaker Canadian and Australian dollars relative to the U.S. dollar.
Business Segment Results
(Unless otherwise noted, the following discussion compares the quarterly results for the third quarter of 2022 to the results for the third quarter of 2021.)
Canada
During the third quarter of 2022, the Canadian segment generated revenues of $103.0 million, operating income of $7.8 million and Adjusted EBITDA of $25.6 million, compared to revenues of $84.1 million, operating income of $6.1 million and Adjusted EBITDA of $19.8 million in the third quarter of 2021. Results from the third quarter of 2022 reflect the impact of a weakened Canadian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $3.7 million and $0.9 million, respectively.
On a constant currency basis, the Canadian segment experienced a 27% period-over-period increase in revenues largely due to increased mobile camp activity and a 19% year-over-year increase in billed rooms, driven by increased customer activity as a result of the recovery of oil prices. Adjusted EBITDA for the Canadian segment increased 29% year-over-year primarily due to the aforementioned dynamics.
Australia
During the third quarter of 2022, the Australian segment generated revenues of $73.8 million, operating income of $5.9 million and Adjusted EBITDA of $16.9 million, compared to revenues of $65.1 million, operating income of $4.4 million and Adjusted EBITDA of $14.8 million in the third quarter of 2021. Results from the third quarter of 2022 reflect the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and Adjusted EBITDA by $5.5 million and $1.3 million, respectively.
On a constant currency basis, the Australian segment experienced a 22% period-over-period increase in revenues, and a 14% year-over-year increase in Adjusted EBITDA. These improvements were driven by higher integrated services activity in Western Australia as well as a 7% year-over-year growth in billed rooms due to increased customer maintenance activity in the Bowen Basin.
U.S.
The U.S. segment generated revenues of $7.4 million, an operating loss of $1.7 million and negative Adjusted EBITDA of less than $0.0 million in the third quarter of 2022, compared to revenues of $5.9 million, an operating loss of $2.1 million and negative Adjusted EBITDA of $0.5 million in the third quarter of 2021. Revenues and Adjusted EBITDA increased year-over-year primarily due to the increased activity in our wellsite services and offshore businesses, partially offset by the sale of the West Permian lodge in the fourth quarter of 2021.
Financial Condition
As of September 30, 2022, Civeo had total liquidity of approximately $117.3 million, consisting of $108.9 million available under its revolving credit facilities and $8.4 million of cash on hand.
Civeo’s total debt outstanding on September 30, 2022 was $126.2 million, a $28.4 million decrease since June 30, 2022. The decrease consisted of $19.5 million in debt payments from cash flow generated by the business and favorable foreign currency translation of $8.9 million.
Civeo reduced its net leverage ratio to 0.9x as of September 30, 2022 from 1.2x as of June 30, 2022.
During the third quarter of 2022, Civeo invested $8.8 million in capital expenditures compared to $3.4 million invested during the third quarter of 2021. Capital expenditures in both periods were predominantly related to maintenance spending on the Company’s lodges and villages.
Full Year 2022 Guidance
For the full year of 2022, Civeo is increasing its previously provided revenue and Adjusted EBITDA guidance range to $675 million to $685 million and $110 million to $115 million, respectively. The Company is maintaining its full year 2022 capital expenditure guidance of $24 million to $29 million.
Conference Call
Civeo will host a conference call to discuss its third quarter 2022 financial results today at 11:00 a.m. Eastern time. This call is being webcast and can be accessed at Civeo's website at www.civeo.com. Participants may also join the conference call by dialing (877) 423-9813 in the United States or (201) 689-8573 internationally and using the conference ID 13733925#. 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 13733925#.
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 27 lodges and villages in Canada, Australia and the U.S., with an aggregate of over 28,000 rooms. Civeo is publicly traded under the symbol CVEO on the New York Stock Exchange. For more information, please visit Civeo's website at www.civeo.com.
Forward Looking Statements
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements herein include the statements regarding Civeo’s future plans and outlook, including guidance, current trends and liquidity needs, and
ability to pay down debt 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 global health concerns and pandemics, including the COVID-19 pandemic, any increases in or severity of COVID-19 cases (including due to existing or new variants) and the risk that room occupancy may decline if our customers are limited or restricted in the availability of personnel who may become ill or be subjected to quarantine, risks associated with the general nature of the accommodations industry, risks associated with the level of supply and demand for oil, coal, iron ore and other minerals, including the level of activity, spending and developments in the Canadian oil sands, the level of demand for coal and other natural resources from, and investments and opportunities in, Australia, and fluctuations or sharp declines in the current and future prices of oil, natural gas, coal, iron ore and other minerals, risks associated with failure by our customers to reach positive final investment decisions on, or otherwise not complete, projects with respect to which we have been awarded contracts, which may cause those customers to terminate or postpone contracts, risks associated with currency exchange rates, risks associated with the company’s ability to integrate acquisitions, risks associated with labor shortages, risks associated with the development of new projects, including whether such projects will continue in the future, risks associated with the trading price of the company’s common shares, availability and cost of capital, risks associated with general global economic conditions, inflation, global weather conditions, natural disasters and security threats and changes to government and environmental regulations, including climate change, and other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Civeo’s most recent annual report on Form 10-K and other reports the company may file from time to time with the U.S. Securities and Exchange Commission. Each forward-looking statement contained herein speaks only as of the date of this release. Except as required by law, Civeo expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Information
EBITDA is a non-GAAP financial measure that is defined as net income (loss) plus interest, taxes, depreciation and amortization, and Adjusted EBITDA is defined as EBITDA adjusted to exclude certain other unusual or non-operating items. 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.
See “Non-GAAP Reconciliation” below for additional information concerning non-GAAP financial measures, including a reconciliation of the non-GAAP financial information presented in this press release to the most directly comparable financial information presented in accordance with GAAP. Non-GAAP financial information supplements and should be read together with, and is not an alternative or substitute for, the Company’s financial results reported in accordance with GAAP. Because non-GAAP financial information is not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures.
- Financial Schedules Follow -
CIVEO CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues | $ | 184,227 | $ | 155,063 | $ | 534,859 | $ | 434,669 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of sales and services | 133,496 | 111,430 | 389,392 | 319,242 | |||||||||||||||||||
| Selling, general and administrative expenses | 17,677 | 17,320 | 50,572 | 46,204 | |||||||||||||||||||
| Depreciation and amortization expense | 22,608 | 20,282 | 65,818 | 62,928 | |||||||||||||||||||
| Impairment expense | — | — | — | 7,935 | |||||||||||||||||||
| Other operating (income) expense | (339) | 21 | (187) | 122 | |||||||||||||||||||
| 173,442 | 149,053 | 505,595 | 436,431 | ||||||||||||||||||||
| Operating income (loss) | 10,785 | 6,010 | 29,264 | (1,762) | |||||||||||||||||||
| Interest expense | (3,001) | (3,166) | (8,077) | (9,929) | |||||||||||||||||||
| Loss on extinguishment of debt | — | (416) | — | (416) | |||||||||||||||||||
| Interest income | 13 | — | 15 | 2 | |||||||||||||||||||
| Other income | 2,179 | 364 | 4,290 | 6,066 | |||||||||||||||||||
| Income (loss) before income taxes | 9,976 | 2,792 | 25,492 | (6,039) | |||||||||||||||||||
| Income tax expense | (3,713) | (1,770) | (7,091) | (2,354) | |||||||||||||||||||
| Net income (loss) | 6,263 | 1,022 | 18,401 | (8,393) | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interest | 546 | 478 | 1,706 | 534 | |||||||||||||||||||
| Net income (loss) attributable to Civeo Corporation | 5,717 | 544 | 16,695 | (8,927) | |||||||||||||||||||
| Less: Dividends attributable to Class A preferred shares | 492 | 482 | 1,469 | 1,440 | |||||||||||||||||||
| Net income (loss) attributable to Civeo common shareholders | $ | 5,225 | $ | 62 | $ | 15,226 | $ | (10,367) | |||||||||||||||
| Net income (loss) per share attributable to Civeo Corporation common shareholders: | |||||||||||||||||||||||
| Basic | $ | 0.32 | $ | — | $ | 0.92 | $ | (0.73) | |||||||||||||||
| Diluted | $ | 0.32 | $ | — | $ | 0.91 | $ | (0.73) | |||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 13,932 | 14,277 | 14,058 | 14,255 | |||||||||||||||||||
| Diluted | 14,064 | 14,361 | 14,220 | 14,255 | |||||||||||||||||||
CIVEO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| September 30, 2022 | December 31, 2021 | ||||||||||
| (UNAUDITED) | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,361 | $ | 6,282 | |||||||
| Accounts receivable, net | 122,280 | 114,859 | |||||||||
| Inventories | 6,984 | 6,468 | |||||||||
| Assets held for sale | 13,759 | 11,762 | |||||||||
| Prepaid expenses and other current assets | 13,337 | 17,822 | |||||||||
| Total current assets | 164,721 | 157,193 | |||||||||
| Property, plant and equipment, net | 309,752 | 389,996 | |||||||||
| Goodwill, net | 7,322 | 8,204 | |||||||||
| Other intangible assets, net | 81,997 | 93,642 | |||||||||
| Operating lease right-of-use assets | 14,267 | 18,327 | |||||||||
| Other noncurrent assets | 5,270 | 5,372 | |||||||||
| Total assets | $ | 583,329 | $ | 672,734 | |||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 46,225 | $ | 49,321 | |||||||
| Accrued liabilities | 32,432 | 33,564 | |||||||||
| Income taxes | 111 | 171 | |||||||||
| Current portion of long-term debt | 27,964 | 30,576 | |||||||||
| Deferred revenue | 2,092 | 18,479 | |||||||||
| Other current liabilities | 8,900 | 4,807 | |||||||||
| Total current liabilities | 117,724 | 136,918 | |||||||||
| Long-term debt | 96,727 | 142,602 | |||||||||
| Deferred income taxes | 7,344 | 896 | |||||||||
| Operating lease liabilities | 11,669 | 15,429 | |||||||||
| Other noncurrent liabilities | 13,668 | 13,778 | |||||||||
| Total liabilities | 247,132 | 309,623 | |||||||||
| Shareholders' equity: | |||||||||||
| Preferred shares | 63,410 | 61,941 | |||||||||
| Common shares | — | — | |||||||||
| Additional paid-in capital | 1,585,303 | 1,582,442 | |||||||||
| Accumulated deficit | (911,934) | (912,951) | |||||||||
| Treasury stock | (9,063) | (8,050) | |||||||||
| Accumulated other comprehensive loss | (394,408) | (361,883) | |||||||||
| Total Civeo Corporation shareholders' equity | 333,308 | 361,499 | |||||||||
| Noncontrolling interest | 2,889 | 1,612 | |||||||||
| Total shareholders' equity | 336,197 | 363,111 | |||||||||
| Total liabilities and shareholders' equity | $ | 583,329 | $ | 672,734 | |||||||
CIVEO CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | 18,401 | $ | (8,393) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 65,818 | 62,928 | |||||||||
| Impairment charges | — | 7,935 | |||||||||
| Loss on extinguishment of debt | — | 416 | |||||||||
| Deferred income tax expense | 6,930 | 2,105 | |||||||||
| Non-cash compensation charge | 2,861 | 2,933 | |||||||||
| Gains on disposals of assets | (4,069) | (2,305) | |||||||||
| Provision (benefit) for credit losses, net of recoveries | (23) | 155 | |||||||||
| Other, net | 2,397 | 2,436 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (19,138) | (21,516) | |||||||||
| Inventories | (1,557) | (193) | |||||||||
| Accounts payable and accrued liabilities | 3,515 | 9,836 | |||||||||
| Taxes payable | (62) | 61 | |||||||||
| Other current assets and liabilities, net | (12,701) | 6,843 | |||||||||
| Net cash flows provided by operating activities | 62,372 | 63,241 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (17,466) | (9,645) | |||||||||
| Proceeds from dispositions of property, plant and equipment | 11,975 | 7,545 | |||||||||
| Other, net | 190 | — | |||||||||
| Net cash flows used in investing activities | (5,301) | (2,100) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Term loan repayments | (23,059) | (117,595) | |||||||||
| Revolving credit borrowings (repayments), net | (14,824) | 62,474 | |||||||||
| Debt issuance costs | — | (4,407) | |||||||||
| Repurchases of common shares | (14,209) | (445) | |||||||||
| Taxes paid on vested shares | (1,013) | (1,120) | |||||||||
| Net cash flows used in financing activities | (53,105) | (61,093) | |||||||||
| Effect of exchange rate changes on cash | (1,887) | (1,255) | |||||||||
| Net change in cash and cash equivalents | 2,079 | (1,207) | |||||||||
| Cash and cash equivalents, beginning of period | 6,282 | 6,155 | |||||||||
| Cash and cash equivalents, end of period | $ | 8,361 | $ | 4,948 | |||||||
CIVEO CORPORATION
SEGMENT DATA
(in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Canada | $ | 103,009 | $ | 84,057 | $ | 307,984 | $ | 229,223 | |||||||||||||||
| Australia | 73,805 | 65,118 | 205,154 | 188,774 | |||||||||||||||||||
| United States | 7,413 | 5,888 | 21,721 | 16,672 | |||||||||||||||||||
| Total revenues | $ | 184,227 | $ | 155,063 | $ | 534,859 | $ | 434,669 | |||||||||||||||
| EBITDA (1) | |||||||||||||||||||||||
| Canada | $ | 25,567 | $ | 19,801 | $ | 71,445 | $ | 53,201 | |||||||||||||||
| Australia | 16,858 | 14,835 | 47,832 | 35,157 | |||||||||||||||||||
| United States | (33) | (544) | 197 | (1,468) | |||||||||||||||||||
| Corporate and eliminations | (7,366) | (7,914) | (21,808) | (20,192) | |||||||||||||||||||
| Total EBITDA | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 66,698 | |||||||||||||||
| Adjusted EBITDA (1) | |||||||||||||||||||||||
| Canada | $ | 25,567 | $ | 19,801 | $ | 71,445 | $ | 53,201 | |||||||||||||||
| Australia | 16,858 | 14,835 | 47,832 | 43,092 | |||||||||||||||||||
| United States | (33) | (544) | 197 | (1,468) | |||||||||||||||||||
| Corporate and eliminations | (7,366) | (7,914) | (21,808) | (20,192) | |||||||||||||||||||
| Total adjusted EBITDA | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 74,633 | |||||||||||||||
| Operating income (loss) | |||||||||||||||||||||||
| Canada | $ | 7,846 | $ | 6,131 | $ | 23,081 | $ | 5,924 | |||||||||||||||
| Australia | 5,859 | 4,422 | 17,446 | 5,073 | |||||||||||||||||||
| United States | (1,690) | (2,124) | (4,594) | (5,831) | |||||||||||||||||||
| Corporate and eliminations | (1,230) | (2,419) | (6,669) | (6,928) | |||||||||||||||||||
| Total operating income (loss) | $ | 10,785 | $ | 6,010 | $ | 29,264 | $ | (1,762) | |||||||||||||||
| (1) Please see Non-GAAP Reconciliation Schedule. | |||||||||||||||||||||||
CIVEO CORPORATION
NON-GAAP RECONCILIATIONS
(in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| EBITDA (1) | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 66,698 | |||||||||||||||
| Adjusted EBITDA (1) | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 74,633 | |||||||||||||||
| Free Cash Flow (2) | $ | 38,595 | $ | 31,035 | $ | 56,881 | $ | 61,141 | |||||||||||||||
(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 certain other unusual or non-operating items. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Civeo has included EBITDA and Adjusted EBITDA as supplemental disclosures because its management believes that EBITDA and Adjusted EBITDA provide useful information regarding its ability to service debt and to fund capital expenditures and provide investors a helpful measure for comparing Civeo's operating performance with the performance of other companies that have different financing and capital structures or tax rates. Civeo uses EBITDA and Adjusted EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan.
The following table sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) attributable to Civeo Corporation, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) attributable to Civeo Corporation | $ | 5,717 | $ | 544 | $ | 16,695 | $ | (8,927) | |||||||||||||||
| Income tax expense | 3,713 | 1,770 | 7,091 | 2,354 | |||||||||||||||||||
| Depreciation and amortization | 22,608 | 20,282 | 65,818 | 62,928 | |||||||||||||||||||
| Interest income | (13) | — | (15) | (2) | |||||||||||||||||||
| Loss on extinguishment of debt | — | 416 | — | 416 | |||||||||||||||||||
| Interest expense | 3,001 | 3,166 | 8,077 | 9,929 | |||||||||||||||||||
| EBITDA | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 66,698 | |||||||||||||||
| Adjustments to EBITDA | |||||||||||||||||||||||
| Impairment of long-lived assets (a) | — | — | — | 7,935 | |||||||||||||||||||
| EBITDA and Adjusted EBITDA | $ | 35,026 | $ | 26,178 | $ | 97,666 | $ | 74,633 | |||||||||||||||
(a) Relates to asset impairments in the second quarter of 2021.In the second quarter of 2021, we recorded a pre-tax loss related to the impairment of long-lived assets in our Australian segment of $7.9 million, which is included in Impairment expense 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 annual incentive compensation 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net Cash Flows Provided by Operating Activities | $ | 38,741 | $ | 33,891 | $ | 62,372 | $ | 63,241 | |||||||||||||||
| Capital expenditures | (8,819) | (3,389) | (17,466) | (9,645) | |||||||||||||||||||
| Proceeds from dispositions of property, plant and equipment | 8,673 | 533 | 11,975 | 7,545 | |||||||||||||||||||
| Free Cash Flow | $ | 38,595 | $ | 31,035 | $ | 56,881 | $ | 61,141 | |||||||||||||||
CIVEO CORPORATION
NON-GAAP RECONCILIATIONS - GUIDANCE
(in millions)
(unaudited)
| Year Ending December 31, 2022 | |||||||||||
| EBITDA Range (1) | $ | 110.0 | $ | 115.0 | |||||||
(1)The following table sets forth a reconciliation of estimated EBITDA to estimated net loss, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in millions) (unaudited):
| Year Ending December 31, 2022 | |||||||||||
| (estimated) | |||||||||||
| Net income | $ | 3.0 | $ | 8.0 | |||||||
| Income tax expense | 9.0 | 9.0 | |||||||||
| Depreciation and amortization | 88.0 | 88.0 | |||||||||
| Interest expense | 10.0 | 10.0 | |||||||||
| EBITDA | $ | 110.0 | $ | 115.0 | |||||||
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Supplemental Operating Data - Canadian Segment | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Accommodation revenue (1) | $ | 72,724 | $ | 60,511 | $ | 219,349 | $ | 176,800 | |||||||||||||||
| Mobile facility rental revenue (2) | 25,283 | 19,075 | 73,359 | 38,240 | |||||||||||||||||||
| Food and other services revenue (3) | 5,002 | 4,471 | 15,276 | 14,183 | |||||||||||||||||||
| Total Canadian revenues | $ | 103,009 | $ | 84,057 | $ | 307,984 | $ | 229,223 | |||||||||||||||
| Costs | |||||||||||||||||||||||
| Accommodation cost | $ | 50,308 | $ | 41,470 | $ | 156,543 | $ | 124,798 | |||||||||||||||
| Mobile facility rental cost | 15,597 | 11,144 | 44,939 | 23,562 | |||||||||||||||||||
| Food and other services cost | 4,447 | 4,007 | 13,782 | 12,583 | |||||||||||||||||||
| Indirect other cost | 2,526 | 2,593 | 7,829 | 7,498 | |||||||||||||||||||
| Total Canadian cost of sales and services | $ | 72,878 | $ | 59,214 | $ | 223,093 | $ | 168,441 | |||||||||||||||
| Average daily rates (4) | $ | 99 | $ | 98 | $ | 102 | $ | 97 | |||||||||||||||
| Billed rooms (5) | 730,708 | 613,017 | 2,137,530 | 1,816,407 | |||||||||||||||||||
| Canadian dollar to U.S. dollar | $ | 0.766 | $ | 0.794 | $ | 0.779 | $ | 0.799 | |||||||||||||||
| Supplemental Operating Data - Australian Segment | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Accommodation revenue (1) | $ | 38,316 | $ | 38,104 | $ | 114,967 | $ | 109,559 | |||||||||||||||
| Food and other services revenue (3) | 35,489 | 27,014 | 90,187 | 79,215 | |||||||||||||||||||
| Total Australian revenues | $ | 73,805 | $ | 65,118 | $ | 205,154 | $ | 188,774 | |||||||||||||||
| Costs | |||||||||||||||||||||||
| Accommodation cost | $ | 17,818 | $ | 18,351 | $ | 55,065 | $ | 53,538 | |||||||||||||||
| Food and other services cost | 33,465 | 26,007 | 84,836 | 75,458 | |||||||||||||||||||
| Indirect other cost | 2,050 | 2,016 | 5,638 | 5,176 | |||||||||||||||||||
| Total Australian cost of sales and services | $ | 53,333 | $ | 46,374 | $ | 145,539 | $ | 134,172 | |||||||||||||||
| Average daily rates (4) | $ | 73 | $ | 78 | $ | 76 | $ | 79 | |||||||||||||||
| Billed rooms (5) | 525,359 | 491,218 | 1,505,143 | 1,382,182 | |||||||||||||||||||
| Australian dollar to U.S. dollar | $ | 0.683 | $ | 0.735 | $ | 0.707 | $ | 0.759 | |||||||||||||||
(1)Includes revenues related to lodge and village rooms and hospitality services for owned rooms for the periods presented.
(2)Includes revenues related to mobile assets for the periods presented.
(3)Includes revenues related to food service, laundry and water and wastewater treatment services, and facilities management for the periods presented.
(4)Average daily rate is based on billed rooms and accommodation revenue.
(5)Billed rooms represents total billed days for owned assets for the periods presented.
CONTACTS:
Carolyn J. Stone
Civeo Corporation
Senior Vice President & Chief Financial Officer
713-510-2400