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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
 For the transition period from _________________________ to _________________________
Commission file number: 001-36246
Civeo Corporation
(Exact name of registrant as specified in its charter)
British Columbia, Canada98-1253716
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
  
Three Allen Center, 333 Clay Street, Suite 4980,
77002
Houston, Texas
(Zip Code)
(Address of principal executive offices) 
(713) 510-2400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Shares, no par valueCVEONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "accelerated filer," "large accelerated filer," "smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
 
Emerging Growth Company
 
   
Non-Accelerated Filer Smaller Reporting 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).




YesNo

The Registrant had 15,049,360 common shares outstanding as of April 24, 2023.




CIVEO CORPORATION
INDEX
Page No.
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Financial Statements
Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022
Consolidated Balance Sheets – as of March 31, 2023 (unaudited) and December 31, 2022
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2023 and 2022
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022
Notes to Unaudited Consolidated Financial Statements
Cautionary Statement Regarding Forward-Looking Statements
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.   Quantitative and Qualitative Disclosures About Market Risk
Item 4.   Controls and Procedures
Part II -- OTHER INFORMATION
Item 1.     Legal Proceedings
Item 1A.  Risk Factors
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.     Exhibits
(a) Index of Exhibits
Signature Page

3



PART I -- FINANCIAL INFORMATION
ITEM 1. Financial Statements

CIVEO CORPORATION
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
 
Three Months Ended
March 31,
 20232022
Revenues:  
Service and other$167,377 $159,570 
Rental21 5,260 
Product193 848 
 167,591 165,678 
Costs and expenses:
Service and other costs133,392 120,850 
Rental costs35 4,392 
Product costs87 601 
Selling, general and administrative expenses16,190 15,213 
Depreciation and amortization expense21,662 20,127 
Other operating expense 129 258 
171,495 161,441 
Operating income (loss)(3,904)4,237 
Interest expense(3,656)(2,468)
Interest income32  
Other income2,450 1,696 
Income (loss) before income taxes(5,078)3,465 
Income tax expense(1,233)(1,557)
Net income (loss)(6,311)1,908 
Less: Net income attributable to noncontrolling interest42 498 
Net income (loss) attributable to Civeo Corporation(6,353)1,410 
Less: Dividends attributable to Class A preferred shares 487 
Net income (loss) attributable to Civeo common shareholders$(6,353)$923 
Per Share Data (see Note 6)
Basic net income (loss) per share attributable to Civeo Corporation common shareholders$(0.42)$0.06 
Diluted net income (loss) per share attributable to Civeo Corporation common shareholders$(0.42)$0.06 
Weighted average number of common shares outstanding:
Basic15,158 14,096 
Diluted15,158 14,219 

The accompanying notes are an integral part of these financial statements.

4



CIVEO CORPORATION
 
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands)
 
Three Months Ended
March 31,
 20232022
Net income (loss)$(6,311)$1,908 
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment, net of zero taxes
(2,176)8,012 
Total other comprehensive income (loss), net of taxes(2,176)8,012 
Comprehensive income (loss)(8,487)9,920 
Less: Comprehensive income attributable to noncontrolling interest40 538 
Comprehensive income (loss) attributable to Civeo Corporation$(8,527)$9,382 
The accompanying notes are an integral part of these financial statements.

5



CIVEO CORPORATION
 
CONSOLIDATED BALANCE SHEETS
(In Thousands, Excluding Share Amounts)
 March 31, 2023December 31, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$12,366 $7,954 
Accounts receivable, net122,962 119,755 
Inventories7,379 6,907 
Prepaid expenses5,138 7,199 
Other current assets2,594 3,081 
Assets held for sale8,184 8,653 
Total current assets158,623 153,549 
Property, plant and equipment, net284,371 301,890 
Goodwill7,565 7,672 
Other intangible assets, net80,369 81,747 
Operating lease right-of-use assets15,059 15,722 
Other noncurrent assets5,176 5,604 
Total assets$551,163 $566,184 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$47,819 $51,087 
Accrued liabilities21,309 39,211 
Income taxes223 178 
Current portion of long-term debt21,485 28,448 
Deferred revenue3,993 991 
Other current liabilities8,387 8,342 
Total current liabilities103,216 128,257 
Long-term debt, less current maturities120,441 102,505 
Deferred income taxes5,874 4,778 
Operating lease liabilities12,005 12,771 
Other noncurrent liabilities17,450 14,172 
Total liabilities258,986 262,483 
Shareholders’ Equity:
Preferred shares (Class A Series 1) no par value; 50,000,000 shares authorized
  
Common shares (no par value; 46,000,000 shares authorized, 15,416,035 shares and 15,584,176 shares issued, respectively, and 15,049,360 shares and 15,217,501 shares outstanding, respectively)
  
Additional paid-in capital1,625,379 1,624,512 
Accumulated deficit(940,247)(930,123)
Common shares held in treasury at cost, 366,675 and 366,675 shares, respectively
(9,063)(9,063)
Accumulated other comprehensive loss(387,361)(385,187)
Total Civeo Corporation shareholders’ equity288,708 300,139 
Noncontrolling interest3,469 3,562 
Total shareholders’ equity292,177 303,701 
Total liabilities and shareholders’ equity$551,163 $566,184 

The accompanying notes are an integral part of these financial statements.
6



CIVEO CORPORATION
 
UNAUDITED CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY
(In Thousands)
 
Attributable to Civeo
Preferred
Shares
Common
Shares
AmountPar ValueAdditional
Paid-in
Capital
Accumulated
Deficit
Treasury
Shares
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
Shareholders’
Equity
Balance, December 31, 2021$61,941 $ $1,582,442 $(912,951)$(8,050)$(361,883)$1,612 $363,111 
Net income— — — 1,410 — — 498 1,908 
Currency translation adjustment— — — — — 7,972 40 8,012 
Dividends paid— — — — — — (70)(70)
Dividends attributable to Class A preferred shares487 — — (487)— — —  
Common shares repurchased— — — (9)— — — (9)
Share-based compensation— — 1,032 — (1,013)— 19 
Balance, March 31, 2022$62,428 $ $1,583,474 $(912,037)$(9,063)$(353,911)$2,080 $372,971 
Balance, December 31, 2022$ $ $1,624,512 $(930,123)$(9,063)$(385,187)$3,562 $303,701 
Net income (loss)— — — (6,353)— — 42 (6,311)
Currency translation adjustment— — — — — (2,174)(2)(2,176)
Dividends paid— — — — — — (133)(133)
Common shares repurchased— — — (3,771)— — — (3,771)
Share-based compensation— — 867 — — — — 867 
Balance, March 31, 2023$ $ $1,625,379 $(940,247)$(9,063)$(387,361)$3,469 $292,177 
 Preferred
Shares
Common
Shares (in
thousands)
Balance, December 31, 2022 15,218 
Share-based compensation  
Common shares repurchased (169)
Balance, March 31, 2023 15,049 

The accompanying notes are an integral part of these financial statements.
7



CIVEO CORPORATION
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 
Three Months Ended
March 31,
 20232022
Cash flows from operating activities:  
Net income (loss)$(6,311)$1,908 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization21,662 20,127 
Deferred income tax expense1,189 1,491 
Non-cash compensation charge867 1,032 
Gains on disposals of assets(2,018)(1,489)
Provision for credit losses, net of recoveries(68)(20)
Other, net589 686 
Changes in operating assets and liabilities:
Accounts receivable(4,298)(7,142)
Inventories(535)(623)
Accounts payable and accrued liabilities(20,075)(13,697)
Taxes payable45 59 
Other current and noncurrent assets and liabilities, net9,311 (379)
Net cash flows provided by operating activities358 1,953 
Cash flows from investing activities:
Capital expenditures(4,772)(3,592)
Proceeds from dispositions of property, plant and equipment2,265 2,364 
Other, net 190 
Net cash flows used in investing activities(2,507)(1,038)
Cash flows from financing activities:
Revolving credit borrowings48,045 94,266 
Revolving credit repayments(30,315)(86,586)
Term loan repayments(7,389)(8,003)
Repurchases of common shares(3,771)(9)
Taxes paid on vested shares (1,013)
Net cash flows provided by (used in) financing activities6,570 (1,345)
Effect of exchange rate changes on cash(9)571 
Net change in cash and cash equivalents4,412 141 
Cash and cash equivalents, beginning of period7,954 6,282 
Cash and cash equivalents, end of period$12,366 $6,423 
Non-cash financing activities:
Preferred dividends paid-in-kind$ $487 
The accompanying notes are an integral part of these financial statements.

8

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS



1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
 
Description of the Business
 
We provide hospitality services to the natural resources industry in Canada, Australia and the U.S. We provide a suite of services for our guests, including lodging, catering and food service, housekeeping and maintenance at accommodation facilities that we or our customers own. In many cases, we provide services that support the day-to-day operations of these facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics. We also offer development activities for workforce accommodation facilities, including site selection, permitting, engineering and design, manufacturing management and site construction, along with providing hospitality services once the facility is constructed. We primarily operate in some of the world’s most active oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore producing regions, and our customers include major and independent oil companies, mining companies, engineering companies and oilfield and mining service companies. We operate in two principal reportable business segments – Canada and Australia.

Basis of Presentation
 
Unless otherwise stated or the context otherwise indicates: (i) all references in these consolidated financial statements to “Civeo,” “us,” “our” or “we” refer to Civeo Corporation and its consolidated subsidiaries; and (ii) all references in this report to “dollars” or “$” are to U.S. dollars.
 
The accompanying unaudited consolidated financial statements of Civeo have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) has been condensed or omitted pursuant to those rules and regulations. The unaudited consolidated financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which Civeo considers necessary for a fair presentation of the results of operations for the interim periods covered and for the financial condition of Civeo at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. Certain reclassifications have been made to the 2022 financial information to conform to current year presentation.
 
The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements.
 
The unaudited consolidated financial statements included in this report should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022.

9

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
2.REVENUE
 
The following table disaggregates our revenue by our two reportable segments: Canada and Australia and major categories for the periods indicated (in thousands):
Three Months Ended
March 31,
 20232022
Canada  
Accommodation revenues$64,228 $67,194 
Mobile facility rental revenues20,031 24,018 
Food service and other services revenues5,194 4,740 
Total Canada revenues89,453 95,952 
Australia
Accommodation revenues$40,599 $37,599 
Food service and other services revenues36,390 25,930 
Total Australia revenues76,989 63,529 
Other
Other revenues$1,149 $6,197 
Total Other revenues1,149 6,197 
Total revenues$167,591 $165,678 
 
Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when our performance obligations are satisfied is not significant. Payment terms are generally within 30 days and in most cases do not extend beyond 60 days. We do not have significant financing components or significant payment terms.

As of March 31, 2023, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue. The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands):
 For the years ending December 31,
 202320242025ThereafterTotal
Revenue expected to be recognized as of March 31, 2023$130,325 $131,509 $101,967 $357,336 $721,137 

We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less. In addition, we do not estimate revenues expected to be recognized related to unsatisfied performance obligations for contracts without minimum room commitments. The table above represents only a portion of our expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues.

3.FAIR VALUE MEASUREMENTS
 
Our financial instruments consist of cash and cash equivalents, receivables, payables and debt instruments. We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.
 
As of March 31, 2023 and December 31, 2022, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment. In addition, the estimated fair value of our assets held for sale is based upon Level 2 fair value measurements, which include appraisals and previous negotiations with third parties.

4.DETAILS OF SELECTED BALANCE SHEET ACCOUNTS
 
Additional information regarding selected balance sheet accounts at March 31, 2023 and December 31, 2022 is presented below (in thousands):
10

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
 
 March 31, 2023December 31, 2022
Accounts receivable, net:  
Trade$64,593 $65,563 
Unbilled revenue56,915 52,547 
Other1,817 1,944 
Total accounts receivable123,325 120,054 
Allowance for credit losses(363)(299)
Total accounts receivable, net$122,962 $119,755 

 March 31, 2023December 31, 2022
Inventories:  
Finished goods and purchased products$5,994 $5,538 
Work in process  
Raw materials1,385 1,369 
Total inventories$7,379 $6,907 

 Estimated
Useful Life
(in years)
March 31, 2023December 31, 2022
Property, plant and equipment, net:     
Land   $25,301 $25,528 
Accommodations assets3151,458,372 1,464,476 
Buildings and leasehold improvements72015,467 15,516 
Machinery and equipment4712,127 11,775 
Office furniture and equipment3762,954 62,725 
Vehicles358,554 8,411 
Construction in progress   4,346 1,771 
Total property, plant and equipment   1,587,121 1,590,202 
Accumulated depreciation   (1,302,750)(1,288,312)
Total property, plant and equipment, net   $284,371 $301,890 

 March 31, 2023December 31, 2022
Accrued liabilities:  
Accrued compensation$16,797 $34,358 
Accrued taxes, other than income taxes3,296 2,873 
Other1,216 1,980 
Total accrued liabilities$21,309 $39,211 
 

March 31, 2023December 31, 2022
Contract liabilities (Deferred revenue):
Current contract liabilities (1)
$3,993 $991 
Noncurrent contract liabilities (1)
2,972  
Total contract liabilities (Deferred revenue)$6,965 $991 

(1)Current contract liabilities and Noncurrent contract liabilities are included in "Deferred revenue" and "Other noncurrent liabilities," respectively, in our unaudited consolidated balance sheets.

11

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Deferred revenue typically consists of upfront payments received before we satisfy the associated performance obligation. The increase in deferred revenue from December 31, 2022 to March 31, 2023 was primarily due to a payment received from a customer for village enhancements in Australia, which we have the right to control and will recognize over the contracted terms.

5.ASSETS HELD FOR SALE

As of March 31, 2023 and December 31, 2022, assets held for sale included certain assets in our Canadian business segment and the U.S. These assets were recorded at the estimated fair value less costs to sell, which exceeded or equaled their carry values. During the first quarter of 2023, we sold the accommodation assets at our Louisiana location. The land at this location remains in assets held for sale as of March 31, 2023.

The following table summarizes the carrying amount as of March 31, 2023 and December 31, 2022 of the assets classified as held for sale (in thousands):
 
March 31, 2023December 31, 2022
Assets held for sale:
Property, plant and equipment, net$8,184 $8,653 
Total assets held for sale$8,184 $8,653 

6.EARNINGS PER SHARE

For the three months ended March 31, 2023, we calculated our basic earnings per share by dividing net income (loss) attributable to common shareholders, before allocation of earnings to participating earnings by the weighted average number of common shares outstanding. For diluted earnings per share, the basic shares outstanding are adjusted by adding all potentially dilutive securities.

For the three months ended March 31, 2022, a period during which we had participating securities in the form of Class A preferred shares, we used the two-class method to calculate basic and diluted earnings per share. The two-class method requires a proportional share of net income to be allocated between common shares and participating securities. The proportional share to be allocated to participating securities is determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities.

Basic earnings per share is computed under the two-class method by dividing the net income (loss) attributable to common shareholders, after allocation of earnings to participating earnings by the weighted average number of common shares outstanding during the period. Net income attributable to common shareholders, after allocation of earnings to participating earnings represents our net income reduced by an allocation of current period earnings to participating securities as described above. No such adjustment is made during periods with a net loss, as the adjustment would be anti-dilutive.

Diluted earnings per share is computed under the two-class method by dividing diluted net income (loss) attributable to common shareholders, after reallocation adjustment for participating securities by the weighted average number of common shares outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of share-based awards. In addition, we calculate the potential dilutive effect of any outstanding dilutive security under both the two-class method and the “if-converted” method, and we report the more dilutive of the methods as our diluted earnings per share. We also apply the treasury stock method with respect to certain share-based awards in the calculation of diluted earnings per share, if dilutive.
12

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)

The calculation of earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts):
Three Months Ended March 31,
 20232022
Numerator:
Net income (loss) attributable to Civeo common shareholders, before allocation of earnings to participating securities$(6,353)$923 
Less: income allocated to participating securities (138)
Net income (loss) attributable to Civeo Corporation common shareholders, after allocation of earnings to participating securities$(6,353)$785 
Add: undistributed income attributable to participating securities 138 
Less: undistributed income reallocated to participating securities (137)
Diluted net income (loss) attributable to Civeo Corporation common shareholders, after reallocation adjustment for participating securities$(6,353)$786 
Denominator:
Weighted average shares outstanding - basic15,158 14,096 
Dilutive shares - share-based awards 123 
Weighted average shares outstanding - diluted15,158 14,219 
Basic net income (loss) per share attributable to Civeo Corporation common shareholders (1)
$(0.42)$0.06 
Diluted net income (loss) per share attributable to Civeo Corporation common shareholders (1)
$(0.42)$0.06 
 
(1)Computations may reflect rounding adjustments.

The following common share equivalents have been excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented (in millions of shares):

Three Months Ended March 31,
 20232022
Share-based awards0.1 0.1 
Preferred shares 2.5 

13

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
7.DEBT
 
As of March 31, 2023 and December 31, 2022, long-term debt consisted of the following (in thousands):
 
 March 31, 2023December 31, 2022
Canadian term loan; weighted average interest rate of 7.9% for the three month period ended March 31, 2023
$22,167 $29,532 
U.S. revolving credit facility; weighted average interest rate of 9.7% for the three month period ended March 31, 2023
  
Canadian revolving credit facility; weighted average interest rate of 7.9% for the three month period ended March 31, 2023
120,441 101,147 
Australian revolving credit facility; weighted average interest rate of 6.2% for the three month period ended March 31, 2023
 1,358 
 142,608 132,037 
Less: Unamortized debt issuance costs682 1,084 
Total debt141,926 130,953 
Less: Current portion of long-term debt, including unamortized debt issuance costs, net21,485 28,448 
Long-term debt, less current maturities$120,441 $102,505 
 
Credit Agreement

As of March 31, 2023, our Credit Agreement (as then amended to date, the Credit Agreement) provided for: (i) a $200.0 million revolving credit facility scheduled to mature on September 8, 2025, allocated as follows: (A) a $10.0 million senior secured revolving credit facility in favor of one of our U.S. subsidiaries, as borrower; (B) a $155.0 million senior secured revolving credit facility in favor of Civeo, as borrower; and (C) a $35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower; and (ii) a C$100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 in favor of Civeo.
The Credit Agreement was amended effective March 31, 2023 to, among other things, change the benchmark interest rate for certain U.S. dollar-denominated loans in each of the Australian Revolving Facility, Canadian Revolving Facility, and U.S. Revolving Facility from London Inter-Bank Offered Rate to Term Secured Overnight Financing Rate (SOFR).
U.S. dollar amounts outstanding under the facilities provided by the Credit Agreement bear interest at a variable rate equal to the Term SOFR plus a margin of 3.00% to 4.00%, or a base rate plus 2.00% to 3.00%, in each case based on a ratio of our total net debt to Consolidated EBITDA (as defined in the Credit Agreement). Canadian dollar amounts outstanding bear interest at a variable rate equal to a Bankers’ Acceptance Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 3.00% to 4.00%, or a Canadian Prime rate plus a margin of 2.00% to 3.00%, in each case based on a ratio of our total net debt to Consolidated EBITDA. Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 3.00% to 4.00%, based on a ratio of our total net debt to Consolidated EBITDA. The future transition from CDOR as an interest rate benchmark is addressed in the Credit Agreement and at such time the transition from CDOR takes place, an alternate benchmark will be established based on the first alternative of the following, plus a benchmark replacement adjustment, Term Canadian Overnight Repo Rate Average (CORRA) and Compound CORRA.
The Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict: (i) indebtedness, liens and fundamental changes; (ii) asset sales; (iii) specified acquisitions; (iv) certain restrictive agreements; (v) transactions with affiliates; and (vi) investments and other restricted payments, including dividends and other distributions. In addition, we must maintain a minimum interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and our maximum net leverage ratio, defined as the ratio of total net debt to Consolidated EBITDA, of no greater than 3.00 to 1.00. Following a qualified offering of indebtedness, we will be required to maintain a maximum leverage ratio of no greater than 3.50 to 1.00 and a maximum senior secured ratio less than 2.00 to 1.00.
14

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement. EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization, amortization of intangibles and other non-cash charges. We were in compliance with our covenants as of March 31, 2023.
Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries subject to customary exceptions. The obligations under the Credit Agreement are guaranteed by our significant subsidiaries. As of March 31, 2023, we had seven lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $22.5 million to $52.0 million. As of March 31, 2023, we had outstanding letters of credit of $0.3 million under the U.S. facility, zero under the Australian facility and $1.1 million under the Canadian facility. We also had outstanding bank guarantees of A$0.8 million under the Australian facility.
8.INCOME TAXES
Our operations are conducted through various subsidiaries in a number of countries throughout the world. We have provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.
We operate in three jurisdictions, Canada, Australia and the U.S., where statutory tax rates range from 15% to 30%. Our effective tax rate will vary from period to period based on changes in earnings mix between these different jurisdictions. 
We compute our quarterly taxes under the effective tax rate method by applying an anticipated annual effective rate to our year-to-date income, except for significant unusual or extraordinary transactions. Income taxes for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs. As of March 31, 2023 and 2022, Canada and the U.S. were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax expense for the three months ended March 31, 2023 totaled $1.2 million, or (24.3)% of pretax income, compared to income tax expense of $1.6 million, or 44.9% of pretax income, for the three months ended March 31, 2022. Our effective tax rate for each of the three months ended March 31, 2023 and 2022 was impacted by considering Canada and the U.S. loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

9.COMMITMENTS AND CONTINGENCIES
 
We are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims as a result of our products or operations. Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. 

10.ACCUMULATED OTHER COMPREHENSIVE LOSS
 
Our accumulated other comprehensive loss increased $2.2 million from $385.2 million at December 31, 2022 to $387.4 million at March 31, 2023, as a result of foreign currency exchange rate fluctuations. Changes in other comprehensive loss during the first three months of 2022 were primarily driven by the Australian dollar decreasing in value compared to the U.S. dollar. Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$174 million and A$223 million, respectively, at March 31, 2023. 

11.SHARE REPURCHASE PROGRAMS
 
In August 2022 and August 2021, our Board of Directors (Board) authorized common share repurchase programs to repurchase up to 5.0% of our total common shares which were issued and outstanding, or approximately 685,000 common shares and 715,000 common shares, respectively, over a twelve month period.

15

CIVEO CORPORATION
 
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
The repurchase authorization allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. We have funded, and intend to continue to fund, repurchases through cash on hand and cash generated from operations. The common shares repurchased under the share repurchase programs are cancelled in the periods they are acquired and the payment is accounted for as an increase to accumulated deficit in our Unaudited Consolidated Statements of Changes in Shareholders’ Equity in the period the payment is made.

The following table summarizes our common share repurchases pursuant to our share repurchase programs (in thousands, except per share data).
Three Months Ended
March 31,
 20232022
Dollar-value of shares repurchased$3,771 $9 
Shares repurchased168.7 0.5 
Average price paid per share$22.33 $18.47 

12.SHARE-BASED COMPENSATION
 
Certain key employees and non-employee directors participate in the Amended and Restated 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan). The Civeo Plan authorizes our Board and the Compensation Committee of our Board to approve grants of options, awards of restricted shares, performance awards, phantom share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors. No more than 2.4 million Civeo common shares are authorized to be issued under the Civeo Plan.
 
Outstanding Awards
 
Restricted Share Awards / Restricted Share Units / Deferred Share Awards. Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended March 31, 2023 and 2022 totaled $0.3 million and $0.4 million, respectively. The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended March 31, 2023 and 2022 was less than $0.1 million and $0.6 million, respectively.
 
At March 31, 2023, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $0.1 million, which is expected to be recognized over a weighted average period of 0.1 years.
 
Phantom Share Awards. On February 23, 2023, we granted 171,608 phantom share awards under the Civeo Plan, which vest in three equal annual installments beginning on February 23, 2024. We also granted 56,387 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 23, 2024. Phantom share awards are settled in cash upon vesting.

During the three months ended March 31, 2023 and 2022, we recognized compensation expense associated with phantom shares totaling $1.8 million and $2.4 million, respectively. At March 31, 2023, unrecognized compensation cost related to phantom shares was $10.5 million, as remeasured at March 31, 2023, which is expected to be recognized over a weighted average period of 2.1 years.
 
Performance Awards. On February 23, 2023, we granted 85,837 performance awards under the Civeo Plan, which cliff vest in three years on February 23, 2026 subject to attainment of applicable performance criteria. These awards will be earned in amounts between 0% and 200% of the participant’s target performance share award, based equally on (i) the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group that includes 16 other companies and (ii) the payout percentage associated with Civeo's cumulative operating cash flow over the performance period relative to a preset target. The portion of the performance awards tied to cumulative operating cash flow includes a performance-based vesting requirement. We evaluate the probability of achieving the performance criteria throughout the performance period and will adjust share-based compensation expense based on the number of shares expected to vest based on our estimate of the most probable performance outcome.

16

CIVEO CORPORATION
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)

During the three months ended March 31, 2023 and 2022, we recognized compensation expense associated with performance share awards totaling $0.6 million and $0.6 million, respectively. The total fair value of performance share awards that vested during the three months ended March 31, 2023 and 2022 was zero and $2.4 million, respectively. At March 31, 2023, unrecognized compensation cost related to performance share awards was $6.4 million, which is expected to be recognized over a weighted average period of 2.2 years. 

13.SEGMENT AND RELATED INFORMATION
 
In accordance with current accounting standards regarding disclosures about segments of an enterprise and related information, we have identified the following reportable segments: Canada and Australia, which represent our strategic focus on hospitality services and workforce accommodations. Prior to the first quarter of 2023, we presented the U.S. operating segment as a separate reportable segment. Our operating segment in the U.S. no longer meets the reportable segment quantitative thresholds required by GAAP and is included below within the Corporate, other and eliminations category. Prior periods have been updated to be consistent with the presentation for the three months ended March 31, 2023.
 
Financial information by business segment for each of the three months ended March 31, 2023 and 2022 is summarized in the following table (in thousands):
 
 Total
revenues
Depreciation
and
amortization
Operating
income
(loss)
Capital
expenditures
 
Total assets
Three months ended March 31, 2023     
Canada$89,453 $14,139 $(4,502)$1,461 $710,884 
Australia76,989 7,547 4,897 3,025 192,432 
Corporate, other and eliminations1,149 (24)(4,299)286 (352,153)
Total$167,591 $21,662 $(3,904)$4,772 $551,163 
Three months ended March 31, 2022
Canada$95,952 $11,597 $4,038 $2,006 $773,257 
Australia63,529 7,957 6,135 1,216 226,680 
Corporate, other and eliminations6,197 573 (5,936)370 (326,843)
Total$165,678 $20,127 $4,237 $3,592 $673,094 

17


Cautionary Statement Regarding Forward-Looking Statements
 
This quarterly report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. The forward-looking statements can be identified by the use of forward-looking terminology including “may,” “expect,” “anticipate,” “estimate,” “continue,” “believe” or other similar words. The forward-looking statements in this report include, but are not limited to, the statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” relating to our expectations about the macroeconomic environment and industry conditions, including the impact of COVID-19 and the response thereto and the volatility in the price of and demand for commodities, as well as our expectations about capital expenditures in 2023 and beliefs with respect to liquidity needs. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors. For a discussion of known material factors that could affect our results, please refer to “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022 and our subsequent SEC filings. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Our management believes these forward-looking statements are reasonable. However, you should not place undue reliance on these forward-looking statements, which are based only on our current expectations and are not guarantees of future performance. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any of them in light of new information, future events or otherwise, except to the extent required by applicable law.
 
In addition, in certain places in this quarterly report, we may refer to reports published by third parties that purport to describe trends or developments in the energy industry. We do so for the convenience of our shareholders and in an effort to provide information available in the market that will assist our investors in a better understanding of the market environment in which we operate. However, we specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.
 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
You should read the following discussion and analysis together with our consolidated financial statements and the notes to those statements included elsewhere in this quarterly report on Form 10-Q.
Overview and Macroeconomic Environment 
We provide hospitality services to the natural resources industry in Canada, Australia and the U.S. Demand for our services can be attributed to two phases of our customers’ projects: (1) the development or construction phase; and (2) the operations or production phase. Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure, as well as the exploration for oil and natural gas. Long-term demand for our services has been driven by natural resource production, maintenance and operation of those facilities as well as expansion of those sites. In general, industry capital spending programs are based on the outlook for commodity prices, economic growth, global commodity supply/demand, estimates of resource production and the expectations of our customers' shareholders. As a result, demand for our hospitality services is largely sensitive to expected commodity prices, principally related to oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore, and the resultant impact of these commodity price expectations on customers' spending. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, volatility affecting the banking system and financial markets, and regulatory changes in Canada, Australia, the U.S. and other markets, including governmental measures introduced to fight climate change.
Our business is predominantly located in northern Alberta, Canada; British Columbia, Canada; Queensland, Australia; and Western Australia. We derive most of our business from natural resource companies who are developing and producing oil sands, met coal, LNG and iron ore resources and, to a lesser extent, other hydrocarbon and mineral resources. Approximately 63% of our revenue is generated by our lodges in Canada and our villages in Australia. Where traditional accommodations and infrastructure are insufficient, inaccessible or cost ineffective, our lodge and village facilities provide comprehensive hospitality services similar to those found in an urban hotel. We typically contract our facilities to our customers on a fee-per-person-per-
18


day basis that covers lodging and meals and is based on the duration of customer needs, which can range from several weeks to several years. The remainder of our revenue is generated by our hospitality services at customer-owned locations in Canada and Australia, mobile assets in Canada and our lodges in the U.S.
Generally, our core Canadian oil sands and Australian mining customers make significant, upfront capital investments to develop their prospects, which have estimated reserve lives ranging from ten years to in excess of 30 years. Consequently, these investments are primarily dependent on those customers’ long-term views of commodity demand and prices.
During 2022 and into 2023, increasing inflationary pressures and supply chain disruptions have been, and are being, experienced worldwide. Price increases resulting from inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel. We are managing inflation risk with negotiated service scope changes and contractual protections.
In addition to the macro inflationary impacts on labor costs noted above, during the COVID-19 pandemic, we were, and continue to be, impacted by increased staff costs as a result of hospitality labor shortages in Australia as government-imposed and voluntary social distancing and quarantining impacted travel. This labor shortage has been exacerbated by significantly reduced migration in and around Australia affecting labor availability, which has subsequently led to an increased reliance on more expensive temporary labor resources.
Since historic lows in early 2020 during the start of the COVID-19 pandemic, global oil prices increased in late 2020 and throughout 2021 primarily due to improved global oil demand and lagging global oil supply due to oil production discipline from publicly traded oil producers and OPEC+ countries. These supply/demand dynamics continued in 2022 and were exacerbated by the ongoing conflict between Russia/Ukraine and related sanctions on Russia, as well as actions taken by OPEC+ to adjust production levels, which decreased global fossil fuel supply even further. This led to a significant increase in global oil prices to above $100 per barrel in the second quarter of 2022. Severe inflation and rising interest rates in the second half of 2022 led to concerns of an economic recession and lower oil demand which resulted in decreased oil prices through the remainder of 2022 and into early 2023. In an effort to support the price of oil amidst demand concerns, OPEC+ announced additional oil production cuts in April 2023.
Alberta, Canada. In Canada, Western Canadian Select (WCS) crude is the benchmark price for our oil sands customers. Pricing for WCS is driven by several factors, including the underlying price for West Texas Intermediate (WTI) crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar), refinery blending requirements and governmental regulation. Historically, WCS has traded at a discount to WTI, creating a “WCS Differential,” due to transportation costs and capacity restrictions to move Canadian heavy oil production to refineries, primarily along the U.S. Gulf Coast. The WCS Differential has varied depending on the extent of transportation capacity availability.
Certain expansionary oil pipeline projects have the potential to both drive incremental demand for mobile assets and to improve take-away capacity for Canadian oil sands producers over the longer term. The Enbridge Line 3 replacement project was completed at the end of 2021 and the Trans Mountain Pipeline (TMX) is currently under construction and continues to progress towards completion. TMX recently announced that the project is close to 80% complete, with mechanical completion expected to occur at the end of 2023, and the pipeline is expected to be in-service in the first quarter of 2024.
WCS prices in the first quarter of 2023 averaged $56.61 per barrel compared to an average of $82.04 in the first quarter of 2022. The WCS Differential decreased from $27.62 per barrel at the end of the fourth quarter of 2022 to $14.31 at the end of the first quarter of 2023. As of April 24, 2023, the WTI price was $64.11 and the WCS price was $78.76, resulting in a WCS Differential of $14.65.  
Although oil prices reached multi-year highs in the first half of 2022, they fluctuated through the second half of 2022 and into the first quarter of 2023. There is continued uncertainty around commodity price levels, including the impact of inflationary pressures, actions taken by OPEC+ to adjust production levels, geopolitical events such as the ongoing Russia/Ukraine conflict, and regulatory implications on such prices, which could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets.
We have agreed to not renew an expiring land lease associated with our McClelland Lake Lodge in Alberta, Canada, which expires in June 2023, ten years earlier than originally expected, in order to support our customer’s intent to mine the land where the lodge is located. In addition, the accompanying hospitality services contract at McClelland Lake Lodge expires in June 2023. Based on ongoing discussions with customers in the region, our current assessment is there are no commercially viable opportunities that support the reinstallation of these assets in a different location within the Regional Municipality of Wood Buffalo. Accordingly, we intend to market these assets for new opportunities within Canada and the U.S. Based on our
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knowledge and understanding of the marketplace, we believe there is demand for these assets for sale or redeployment. Should our marketing efforts fail to identify an economic alternative, other options will be considered. Revenues for the full year 2022 associated with our McClelland Lake Lodge were approximately C$60 million. We expect to have further clarity on potential sales or redeployment opportunities for these assets as we move through 2023.
British Columbia, Canada. Our Sitka Lodge supports the LNG Canada project and related pipeline projects (see discussion below). From a macroeconomic standpoint, LNG demand has continued to grow, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. The conflict between Russia/Ukraine has further highlighted the need for secure natural gas supply globally, particularly in Europe. Accordingly, additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth.
Currently, Western Canada does not have any operational LNG export facilities. LNG Canada (LNGC), a joint venture among Shell Canada Energy, an affiliate of Shell plc (40 percent), and affiliates of PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea Gas Corporation (5 percent), is currently constructing a liquefaction and export facility in Kitimat, British Columbia (Kitimat LNG Facility). British Columbia LNG activity and related pipeline projects are a material driver of activity for our Sitka Lodge, as well as for our mobile assets, which are contracted to serve designated portions of the related pipeline construction activity. While our current expectation is that our contracted commitments associated with the CGL pipeline project will be completed in the second half of 2023, any new delays in facility or pipeline construction may result in extensions to these dates.
Australia. In Australia, 84% of our rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the level of global steel production, which decreased by 0.1% during the first three months of 2023 compared to the same period in 2022. The decrease was the result of weakness in the Chinese residential sector and slowing global growth due to inflationary pressures. As of April 24, 2023, met coal spot prices were $257.90 per tonne. Steel output is forecast to improve marginally through 2024, with large infrastructure rollouts in a number of major economies including the U.S. and India.

Following historic highs in early 2022, met coal prices have since stabilized and were further supported in early 2023 with seasonal weather-related supply interruptions in Australia. Analysts forecast met coal prices to face downward pressure through the second half of 2023 with supply recovery and weaker demand sentiment impacted by the global financial markets. Downward pressure on prices could accelerate in the short term if demand in China worsens.

Civeo's activity in Western Australia is driven primarily by iron ore production, which is a key steel-making ingredient.  Iron ore prices fluctuated in the second half of 2022 and have since stabilized in early 2023. As of April 21, 2023, iron ore spot prices were $110.82 per tonne. Analysts anticipate that infrastructure-led construction activity in China will gradually improve and continue to support more stable prices. Analysts forecast pricing in 2023 to remain between $100 and $115.

Other. In the first quarter of 2023, we sold our Acadian Acres lodge assets. In addition, in the second half of 2022, we sold both our wellsite services and our offshore businesses. Our remaining U.S. business supports completion activity in the Bakken. U.S. oil completion activity will continue to be impacted by oil prices, pipeline capacity, federal energy policies and availability of capital to support exploration and production completion plans.

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Recent Commodity Prices. Recent WTI crude, WCS crude, met coal and iron ore pricing trends are as follows:
 
 
Average Price (1)
Quarter
ended
WTI
Crude
(per bbl)
WCS
Crude
(per bbl)
Hard
Coking Coal
(Met Coal)
(per tonne)
Iron
Ore
(per tonne)
Second Quarter through April 24, 2023
$80.43 $65.28 $281.04 $116.79 
3/31/202375.96 56.61 341.08 117.08 
12/31/202282.82 54.72 276.19 94.93 
9/30/202291.63 70.70 252.63 99.21 
6/30/2022108.77 92.89 464.61 128.80 
3/31/202295.17 82.04 474.83 129.46 

(1)Source: WTI crude prices are from U.S. Energy Information Administration, WCS crude prices and iron ore prices are from Bloomberg and hard coking coal prices are from IHS Markit.

Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Canada and Australia. These revenues and profits/losses are translated into U.S. dollars for U.S. GAAP financial reporting purposes. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar:
Three Months Ended
March 31,
20232022ChangePercentage
Average Canadian dollar to U.S. dollar$0.740$0.790($0.05)(6.3)%
Average Australian dollar to U.S. dollar$0.684$0.724($0.04)(5.5)%
As of
March 31, 2023December 31, 2022ChangePercentage
Canadian dollar to U.S. dollar$0.739$0.738$0.000.1%
Australian dollar to U.S. dollar$0.670$0.679($0.01)(1.4)%
 
These fluctuations of the Canadian and Australian dollars have had and will continue to have an impact on the translation of earnings generated from our Canadian and Australian subsidiaries and, therefore, our financial results.

Capital Expenditures. We continue to monitor the global economy, commodity prices, demand for crude oil, met coal, LNG and iron ore, inflation and the resultant impact on the capital spending plans of our customers in order to plan our business activities. We currently expect that our 2023 capital expenditures will be in the range of approximately $45 million to $50 million, compared to 2022 capital expenditures of $25.4 million. The $20 million increase relates to village enhancements in Australia, for which our customer will reimburse us, resulting in a net neutral cash flow impact in 2023. We may adjust our capital expenditure plans in the future as we continue to monitor customer activity.

See “Liquidity and Capital Resources below for further discussion of our 2023 capital expenditures.


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Results of Operations 
Unless otherwise indicated, discussion of results for the three months ended March 31, 2023, is based on a comparison to the corresponding period of 2022. 
Results of Operations – Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
 
 Three Months Ended
March 31,
 20232022Change
 ($ in thousands)
Revenues   
Canada$89,453 $95,952 $(6,499)
Australia76,989 63,529 13,460 
Other1,149 6,197 (5,048)
Total revenues167,591 165,678 1,913 
Costs and expenses   
Cost of sales and services   
Canada73,905 75,206 (1,301)
Australia