Press Release
Civeo Announces Second Quarter 2015 Earnings
07/30/15
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Solid operating cash flows of
$45 million in the second quarter and reduced capital expenditures driven by cost containment and capital discipline -
Awarded contract to support development of the
Sitka Lodge inKitimat -
Redomiciled the Company to
Canada and amended the credit facilities with revised financial covenants -
Substantial debt reduction from
$775 million atJune 30, 2015 to$500 million as ofJuly 27, 2015 - Company remains focused on capturing growth in the British Columbia LNG market, maximizing occupancy and revenues, reducing costs and limiting capital spending
SECOND QUARTER 2015 RESULTS
In the second quarter of 2015, the Company generated revenues of
(EBITDA is defined as net income plus interest, taxes, depreciation and amortization and Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain other costs such as those associated with the spin-off and the migration).
In the second quarter of 2014, the Company generated revenues of
Revenues and Adjusted EBITDA declined in 2015 as compared to 2014 primarily due to lower occupancy levels. In addition, second quarter 2015 results were impacted by the unfavorable impact of a stronger U.S. dollar compared to the Canadian dollar and the Australian dollar, which declined in relative value by 11% and 15%, respectively, on a year-over-year basis.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results for the second quarter of 2015 to the results for the second quarter of 2014. The 2015 results discussed below exclude the migration expenses noted above.)
The Canadian segment generated revenues of
The Australian segment generated revenues of
U.S.
The U.S. segment generated revenues of
INCOME TAXES
The Company recognized an income tax benefit of
FINANCIAL CONDITION, MIGRATION AND AMENDMENT TO CREDIT FACILITY
The Company invested
On
As of
MANAGEMENT GUIDANCE
The Company achieved second quarter 2015 revenue that was in line with its previously issued guidance and exceeded its previously issued Adjusted EBITDA guidance. Due to the recent weakness in the Canadian and Australian dollars relative to the U.S. dollar, coupled with continued weakness in oil and metallurgical coal prices, the Company is tightening its range for full year guidance. The Company now expects full year revenues of
INVESTOR CONFERENCE CALL
ABOUT
FORWARD LOOKING STATEMENTS
The foregoing 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 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
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In Thousands, Except Per Share Amounts) | ||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||
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2015 | 2014 | 2015 | 2014 | |
Revenues | $ 143,147 | $ 227,133 | $ 314,134 | $ 479,932 |
Costs and expenses: | ||||
Cost of sales and services | 89,424 | 133,305 | 192,335 | 276,815 |
Selling, general and administrative expenses | 18,419 | 21,708 | 35,105 | 37,853 |
Spin-off and formation costs | -- | 1,896 | -- | 2,469 |
Depreciation and amortization expense | 42,541 | 42,413 | 84,987 | 82,012 |
Impairment expense | 9,473 | 11,610 | 12,211 | 11,610 |
Other operating income (expense) | (2,573) | (25) | (1,243) | 87 |
157,284 | 210,907 | 323,395 | 410,846 | |
Operating income (loss) | (14,137) | 16,226 | (9,261) | 69,086 |
Interest expense to affiliates | -- | (2,828) | -- | (6,980) |
Interest expense to third-parties, net of capitalized interest | (6,248) | (2,269) | (11,857) | (3,110) |
Loss on extinguishment of debt | -- | (3,455) | -- | (3,455) |
Interest income | 687 | 991 | 1,809 | 1,793 |
Other income | 566 | 709 | 1,564 | 947 |
Income (loss) before income taxes | (19,132) | 9,374 | (17,745) | 58,281 |
Income tax benefit (provision) | 5,863 | 4,911 | 4,706 | (7,400) |
Net income (loss) | (13,269) | 14,285 | (13,039) | 50,881 |
Less: Net income attributable to noncontrolling interest | 192 | 336 | 438 | 693 |
Net income (loss) attributable to |
$ (13,461) | $ 13,949 | $ (13,477) | $ 50,188 |
Net income (loss) per share attributable to |
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Basic | $ (0.13) | $ 0.13 | $ (0.13) | $ 0.47 |
Diluted | $ (0.13) | $ 0.13 | $ (0.13) | $ 0.47 |
Weighted average number of common shares outstanding (1): | ||||
Basic | 106,626 | 106,294 | 106,543 | 106,294 |
Diluted | 106,626 | 106,465 | 106,543 | 106,463 |
(1) On |
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UNAUDITED CIVEO CORPORATION | ||
CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
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2015 | 2014 | |
(UNAUDITED) | ||
Current assets: | ||
Cash and cash equivalents | $ 315,169 | $ 263,314 |
Accounts receivable, net | 111,113 | 160,253 |
Inventories | 6,246 | 13,228 |
Prepaid expenses and other current assets | 37,082 | 27,161 |
Assets held for sale | 8,498 | -- |
Total current assets | 478,108 | 463,956 |
Property, plant and equipment, net | 1,105,508 | 1,248,430 |
Goodwill, net | 44,984 | 45,260 |
Other intangible assets, net | 43,540 | 50,882 |
Other noncurrent assets | 24,584 | 20,633 |
Total assets | $ 1,696,724 | $ 1,829,161 |
Current liabilities: | ||
Accounts payable | $ 24,997 | $ 36,277 |
Accrued liabilities | 15,857 | 22,512 |
Income taxes | 16 | 61 |
Current portion of long-term debt | 38,750 | 19,375 |
Deferred revenue | 13,083 | 18,539 |
Other current liabilities | 21,659 | 21,677 |
Total current liabilities | 114,362 | 118,441 |
Long-term debt to third-parties | 736,250 | 755,625 |
Deferred income taxes | 52,993 | 55,500 |
Other noncurrent liabilities | 37,778 | 39,486 |
Total liabilities | 941,383 | 969,052 |
Stockholders' equity: | ||
Common stock | 1,075 | 1,067 |
Additional paid-in capital | 1,302,864 | 1,300,042 |
Accumulated deficit | (258,094) | (244,617) |
Treasury stock | (146) | -- |
Accumulated other comprehensive loss | (291,088) | (198,491) |
Total |
754,611 | 858,001 |
Noncontrolling interest | 730 | 2,108 |
Total stockholders' equity | 755,341 | 860,109 |
Total liabilities and stockholders' equity | $ 1,696,724 | $ 1,829,161 |
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in thousands) | ||
SIX MONTHS ENDED | ||
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2015 | 2014 | |
Cash flows from operating activities: | ||
Net income | $ (13,039) | $ 50,881 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 84,987 | 82,012 |
Impairment charges | 12,211 | 11,610 |
Inventory write-down | 1,015 | -- |
Loss on extinguishment of debt | -- | 3,455 |
Deferred income tax provision (benefit) | (7,469) | (7,151) |
Non-cash compensation charge | 2,331 | 5,419 |
Losses (gains) on disposals of assets | (642) | 574 |
Provision for loss on receivables | 1,055 | 199 |
Other, net | (164) | 851 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 38,761 | (12,622) |
Inventories | 5,352 | 8,841 |
Accounts payable and accrued liabilities | (14,561) | 21,405 |
Taxes payable | (7,324) | (14,376) |
Other current assets and liabilities, net | (8,223) | 3,633 |
Net cash flows provided by operating activities | 94,290 | 154,731 |
Cash flows from investing activities: | ||
Capital expenditures, including capitalized interest | (24,102) | (141,667) |
Proceeds from disposition of property, plant and equipment | 1,844 | 1,350 |
Other, net | -- | (778) |
Net cash flows used in investing activities | (22,258) | (141,095) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 500 | -- |
Term loan borrowings, net of issuance costs | -- | 775,000 |
Debt issuance costs | -- | (9,106) |
Distributions to Oil States | -- | (750,000) |
Contributions from Oil States | -- | 28,170 |
Net cash flows provided by financing activities | 500 | 44,064 |
Effect of exchange rate changes on cash | (20,677) | 3,666 |
Net change in cash and cash equivalents | 51,855 | 61,366 |
Cash and cash equivalents, beginning of period | 263,314 | 224,128 |
Cash and cash equivalents, end of period | $ 315,169 | $ 285,494 |
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SEGMENT DATA | ||||
(in thousands) | ||||
(unaudited) | ||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||
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2015 | 2014 | 2015 | 2014 | |
Revenues | ||||
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$ 90,072 | $ 156,479 | $ 206,972 | $ 336,803 |
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38,268 | 54,383 | 80,127 | 109,847 |
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14,807 | 16,271 | 27,035 | 33,282 |
Total revenues | $ 143,147 | $ 227,133 | $ 314,134 | $ 479,932 |
EBITDA (1) | ||||
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$ 24,391 | $ 46,809 | $ 61,903 | $ 108,604 |
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9,910 | 16,422 | 30,633 | 47,226 |
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1,906 | 1,038 | (1,710) | 4,177 |
Corporate and eliminations | (7,429) | (5,257) | (13,974) | (8,655) |
Total EBITDA | $ 28,778 | $ 59,012 | $ 76,852 | $ 151,352 |
Adjusted EBITDA (1) | ||||
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$ 24,549 | $ 50,926 | $ 62,061 | $ 112,726 |
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19,522 | 25,653 | 40,245 | 56,457 |
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1,906 | 3,726 | 2,043 | 6,892 |
Corporate and eliminations | (5,283) | (3,670) | (10,668) | (6,527) |
Total adjusted EBITDA | $ 40,694 | $ 76,635 | $ 93,681 | $ 169,548 |
Operating income (loss) | ||||
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$ (3,820) | $ 25,424 | $ 8,300 | $ 67,466 |
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(4,882) | (205) | 1,845 | 15,638 |
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(1,801) | (3,767) | (8,695) | (5,428) |
Corporate and eliminations | (3,634) | (5,226) | (10,711) | (8,590) |
Total operating income (loss) | $ (14,137) | $ 16,226 | $ (9,261) | $ 69,086 |
(1) The term EBITDA is defined as net income plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain other costs such as those incurred associated with the Spin-Off and the migration. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA and Adjusted EBITDA as supplemental disclosures because its management believes that EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses EBITDA and Adjusted EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. | ||||
The following table sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited): | ||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||
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2015 | 2014 | 2015 | 2014 | |
Net income (loss) | $ (13,461) | $ 13,949 | $ (13,477) | $ 50,188 |
Income tax (benefit) provision | (5,863) | (4,911) | (4,706) | 7,400 |
Depreciation and amortization | 42,541 | 42,413 | 84,987 | 82,012 |
Interest income | (687) | (991) | (1,809) | (1,793) |
Interest expense | 6,248 | 8,552 | 11,857 | 13,545 |
EBITDA | $ 28,778 | $ 59,012 | $ 76,852 | $ 151,352 |
Adjustments to EBITDA | ||||
Impairment of intangible asset (a) | 8,989 | 8,989 | ||
Impairment of fixed assets (b) | 9,473 | 2,621 | 9,473 | 2,621 |
Severance costs (c) | 4,117 | 4,117 | ||
Transition costs (d) | 1,896 | 2,469 | ||
Migration costs (e) | 2,443 | -- | 3,603 | -- |
Loss on assets held for sale (f) | -- | 3,753 | -- | |
Adjusted EBITDA | $ 40,694 | $ 76,635 | $ 93,681 | $ 169,548 |
(a) Relates to the impairment of an intangible asset in Australia. Due to the Spin-Off, and the resulting rebranding of the Company's Australian operations from The Mac to Civeo Australia, it was determined that the fair value of an intangible asset associated with The Mac brand was zero. The |
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(b) 2015 relates to the impairment of certain fixed assets which carrying value we have determined is not to be recoverable. The |
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(c) Relates to severance costs associated with the termination of an executive. The |
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(d) Relates to transition costs incurred associated with becoming a stand-alone company. The |
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(e) Relates to costs incurred associated with the Company's redomiciliation to Canada. The |
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(f) 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 |
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SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA | ||||
(U.S. dollars in thousands, except for room counts, RevPAR and average daily rate) | ||||
(unaudited) | ||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||
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2015 | 2014 | 2015 | 2014 | |
Supplemental Operating Data - Canadian Segment | ||||
Revenues | ||||
Lodge revenues (1) | $ 70,351 | $ 122,709 | $ 158,188 | $ 245,099 |
Mobile, open camp and product revenues | 19,721 | 33,770 | 48,784 | 91,704 |
Total Canadian revenues | $ 90,072 | $ 156,479 | $ 206,972 | $ 336,803 |
Average available lodge rooms (2) | 13,229 | 12,296 | 13,225 | 12,082 |
Rentable rooms (3) | 10,398 | 10,780 | 10,471 | 10,629 |
Average daily rates (4) | $ 120 | $ 144 | $ 127 | $ 145 |
RevPAR for lodges (5) | $ 59 | $ 110 | $ 66 | $ 112 |
Occupancy in lodges (6) | 63% | 88% | 65% | 89% |
Canadian dollar to U.S. dollar | $ 0.814 | $ 0.917 | $ 0.810 | $ 0.912 |
Supplemental Operating Data - Australian Segment | ||||
Revenues | ||||
Village revenues (1) | $ 38,268 | $ 54,383 | $ 80,127 | $ 109,847 |
Average available village rooms (2) | 9,296 | 9,258 | 9,296 | 9,260 |
Rentable rooms (3) | 8,921 | 9,083 | 9,022 | 9,020 |
Average daily rates (4) | $ 77 | $ 101 | $ 79 | $ 95 |
RevPAR for villages (5) | $ 45 | $ 65 | $ 48 | $ 66 |
Occupancy in villages (6) | 61% | 65% | 62% | 71% |
Australian dollar to U.S. dollar | $ 0.778 | $ 0.933 | $ 0.782 | $ 0.915 |
(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 include rooms that are utilized for our personnel. | ||||
(3) Rentable rooms relate to Canadian lodges and Australian villages and exclude 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 in U.S. dollars. | ||||
(5) RevPAR, or revenue per available room, is defined as lodge revenue divided by the product of (a) average available rooms and (b) days in the period. An available room is defined as a calendar day during which the room is available for occupancy. | ||||
(6) Occupancy represents total billed days divided by rentable days. Rentable days excludes staff rooms and out of service rooms. | ||||
CONTACT: Company Contact:Source:Frank C. Steininger Civeo Corporation Senior Vice President and Chief Financial Officer 713-510-2400
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