Press Release
Civeo Reports Fourth Quarter and Full Year 2017 Results
02/22/18
Highlights include:
- Delivered fourth quarter revenues of
$101.3 million
- Generated
$11.3 million in operating cash flow and$8.4 million in free cash flow
- Announced acquisition of
Noralta Lodge , a premier accommodations provider in the Canadian Oil Sands region, onNovember 27, 2017 , which is expected to close in the second quarter of 2018
- Repaid
$29 million of debt in the fourth quarter, making$81 million of total debt repayments for the full year. Total debt was reduced to$298 million as ofDecember 31, 2017 , including an increase of$21 million in foreign exchange adjustments, down from$357 million at the end of 2016
"Our goal at the start of 2017 was to position the company for success through and beyond the downturn by maximizing free cash flow, deleveraging the balance sheet, and pursuing our strategic direction. Looking back on the year, our accomplishments to further these objectives included a successful public equity offering, an amendment to our revolving credit facility, meaningful debt reduction and the pending Noralta acquisition.
"The improving commodity price environment at the start of 2018 should present
"The fourth quarter of 2017 was consistent with our expectations. We were pleased to announce the Noralta acquisition, enhancing our footprint in the Canadian market and our ability to deliver a complete outsourced accommodations solution. This transaction will help
Fourth Quarter 2017 Results
In the fourth quarter of 2017,
(EBITDA is a non-GAAP financial measure that is defined as net income plus interest, taxes, depreciation and amortization, and Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain other costs. Free cash flow is a non-GAAP financial measure that is defined as net cash flows provided by operating activities less capital expenditures plus proceeds from asset sales. Please see the reconciliations to GAAP measures at the end of this news release.)
By comparison, in the fourth quarter of 2016,
The decline in Adjusted EBITDA and the increase in net loss in the fourth quarter of 2017 compared to 2016 was primarily due to lower average daily rates in
Full Year 2017 Results
For the full year 2017, the Company reported revenues of
In 2016, the Company reported revenues of
The decline in revenues and Adjusted EBITDA and increase in net loss in 2017 as compared to 2016 was primarily due to the Ft. McMurray fire-related revenue in 2016 and lower average daily rates in
Business Segment Results
(Unless otherwise noted, the following discussion compares the quarterly results for the fourth quarter of 2017 to the results for the fourth quarter of 2016. The Adjusted EBITDA amounts discussed below exclude the fixed asset impairment and Noralta-related expenses noted above.)
During the fourth quarter of 2017, the Canadian segment generated revenues of
The financial performance of the Australian segment for the fourth quarter of 2017 was relatively flat compared to the fourth quarter of 2016. Revenue was
The fourth quarter of 2017 results reflect the impact of a strengthened Australian dollar relative to the
The
Income Taxes
Financial Condition
As of
Civeo's total debt outstanding on
During the fourth quarter of 2017,
2018 Guidance
For full year 2018,
Conference Call
About
Forward Looking Statements
This news release contains forward-looking statements within the
meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward looking statements in this news release include the statements regarding Civeo's: views regarding broadening stabilization in its core end markets; growth opportunities; benefits and timing of the Noralta acquisition; optimism about market demand in 2018; and first quarter and full year 2018 guidance. The forward-looking statements included herein are based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of
the accommodations industry, risks associated with the level of supply and demand for oil, coal, iron ore and other minerals, including the level of activity and developments in the Canadian oil sands, the level of demand for coal and other natural resources from
- Financial Schedules Follow -
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenues | $ | 101,348 | $ | 90,921 | $ | 382,276 | $ | 397,230 | |||||||||
Costs and expenses: | |||||||||||||||||
Cost of sales and services | 70,575 | 61,157 | 257,258 | 259,650 | |||||||||||||
Selling, general and administrative expenses | 19,290 | 13,241 | 63,431 | 55,297 | |||||||||||||
Depreciation and amortization expense | 29,360 | 30,858 | 126,443 | 131,302 | |||||||||||||
Impairment expense | 27,244 | - | 31,604 | 46,129 | |||||||||||||
Other operating expense | 407 | 256 | 1,511 | 612 | |||||||||||||
146,876 | 105,512 | 480,247 | 492,990 | ||||||||||||||
Operating loss | (45,528 | ) | (14,591 | ) | (97,971 | ) | (95,760 | ) | |||||||||
Interest expense to third parties, net of capitalized interest | (5,742 | ) | (5,726 | ) | (21,439 | ) | (22,667 | ) | |||||||||
Loss on extinguishment of debt | - | - | (842 | ) | (302 | ) | |||||||||||
Interest income | 131 | 12 | 200 | 152 | |||||||||||||
Other income (expense) | 61 | 1,587 | 1,308 | 2,645 | |||||||||||||
Loss before income taxes | (51,078 | ) | (18,718 | ) | (118,744 | ) | (115,932 | ) | |||||||||
Income tax benefit | 3,615 | 2,888 | 13,490 | 20,105 | |||||||||||||
Net loss | (47,463 | ) | (15,830 | ) | (105,254 | ) | (95,827 | ) | |||||||||
Less: Net income attributable to noncontrolling interest | 116 | 119 | 459 | 561 | |||||||||||||
Net loss attributable to | $ | (47,579 | ) | $ | (15,949 | ) | $ | (105,713 | ) | $ | (96,388 | ) | |||||
Net loss per share attributable to | |||||||||||||||||
Basic | $ | (0.36 | ) | $ | (0.15 | ) | $ | (0.82 | ) | $ | (0.90 | ) | |||||
Diluted | $ | (0.36 | ) | $ | (0.15 | ) | $ | (0.82 | ) | $ | (0.90 | ) | |||||
Weighted average number of common shares outstanding: | |||||||||||||||||
Basic | 130,894 | 107,128 | 128,365 | 107,024 | |||||||||||||
Diluted | 130,894 | 107,128 | 128,365 | 107,024 | |||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
2017 | 2016 | ||||||||
(UNAUDITED) | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 32,647 | $ | 1,785 | |||||
Accounts receivable, net | 66,823 | 56,302 | |||||||
Inventories | 7,246 | 3,112 | |||||||
Assets held for sale | 9,462 | 4,419 | |||||||
Prepaid expenses and other current assets | 16,034 | 16,950 | |||||||
Total current assets | 132,212 | 82,568 | |||||||
Property, plant and equipment, net | 693,833 | 789,710 | |||||||
Other intangible assets, net | 22,753 | 28,039 | |||||||
Other noncurrent assets | 5,114 | 10,129 | |||||||
Total assets | $ | 853,912 | $ | 910,446 | |||||
Current liabilities: | |||||||||
Accounts payable | $ | 27,812 | $ | 20,675 | |||||
Accrued liabilities | 22,208 | 14,822 | |||||||
Income taxes | 1,728 | 111 | |||||||
Current portion of long-term debt | 16,596 | 15,471 | |||||||
Deferred revenue | 5,442 | 6,792 | |||||||
Other current liabilities | 1,843 | 2,572 | |||||||
Total current liabilities | 75,629 | 60,443 | |||||||
Long-term debt to third-parties | 277,990 | 337,800 | |||||||
Deferred income taxes | - | 9,194 | |||||||
Other noncurrent liabilities | 23,926 | 27,019 | |||||||
Total liabilities | 377,545 | 434,456 | |||||||
Shareholders' equity: | |||||||||
Common shares | - | - | |||||||
Additional paid-in capital | 1,383,934 | 1,311,226 | |||||||
Accumulated deficit | (579,113 | ) | (472,764 | ) | |||||
| (358 | ) | (65 | ) | |||||
Accumulated other comprehensive loss | (328,213 | ) | (362,930 | ) | |||||
| 476,250 | 475,467 | |||||||
Noncontrolling interest | 117 | 523 | |||||||
Total shareholders' equity | 476,367 | 475,990 | |||||||
Total liabilities and shareholders' equity | $ | 853,912 | $ | 910,446 | |||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(in thousands) | |||||||||
TWELVE MONTHS ENDED | |||||||||
2017 | 2016 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (105,254 | ) | $ | (95,827 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 126,443 | 131,302 | |||||||
Impairment charges | 31,604 | 46,129 | |||||||
Inventory write-down | 525 | 850 | |||||||
Loss on extinguishment of debt | 842 | 302 | |||||||
Deferred income tax benefit | (8,976 | ) | (13,208 | ) | |||||
Non-cash compensation charge | 7,338 | 5,296 | |||||||
Losses (gains) on disposals of assets | (825 | ) | 29 | ||||||
Provision (benefit) for loss on receivables, net of recoveries | 51 | (54 | ) | ||||||
Other, net | 3,871 | 868 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (6,896 | ) | 6,680 | ||||||
Inventories | (4,463 | ) | 1,773 | ||||||
Accounts payable and accrued liabilities | 12,674 | (4,398 | ) | ||||||
Taxes payable | 3,210 | (10,239 | ) | ||||||
Other current assets and liabilities, net | (3,318 | ) | (7,334 | ) | |||||
Net cash flows provided by operating activities | 56,826 | 62,169 | |||||||
Cash flows from investing activities: | |||||||||
Capital expenditures, including capitalized interest | (11,194 | ) | (19,779 | ) | |||||
Proceeds from disposition of property, plant and equipment | 1,908 | 5,775 | |||||||
Other, net | 548 | 1,315 | |||||||
Net cash flows used in investing activities | (8,738 | ) | (12,689 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from issuance of common stock | 64,734 | - | |||||||
Term loan repayments | (40,781 | ) | (41,023 | ) | |||||
Revolving credit borrowings (repayments), net | (39,937 | ) | (15,199 | ) | |||||
Debt issuance costs | (1,795 | ) | (2,062 | ) | |||||
Other | (293 | ) | (65 | ) | |||||
Net cash flows used in financing activities | (18,072 | ) | (58,349 | ) | |||||
Effect of exchange rate changes on cash | 846 | 2,817 | |||||||
Net change in cash and cash equivalents | 30,862 | (6,052 | ) | ||||||
Cash and cash equivalents, beginning of period | 1,785 | 7,837 | |||||||
Cash and cash equivalents, end of period | $ | 32,647 | $ | 1,785 | |||||
SEGMENT DATA (in thousands) (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenues | |||||||||||||||||
| $ | 63,589 | $ | 62,296 | $ | 245,595 | $ | 278,464 | |||||||||
| 28,057 | 26,121 | 111,221 | 106,815 | |||||||||||||
| 9,702 | 2,504 | 25,460 | 11,951 | |||||||||||||
Total revenues | $ | 101,348 | $ | 90,921 | $ | 382,276 | $ | 397,230 | |||||||||
EBITDA (1) | |||||||||||||||||
| $ | (16,281 | ) | $ | 14,072 | $ | 22,818 | $ | 32,022 | ||||||||
| 10,294 | 10,387 | 41,398 | 43,168 | |||||||||||||
| (1,197 | ) | (1,478 | ) | (5,475 | ) | (16,722 | ) | |||||||||
Corporate and eliminations | (9,039 | ) | (5,246 | ) | (29,420 | ) | (20,842 | ) | |||||||||
Total EBITDA | $ | (16,223 | ) | $ | 17,735 | $ | 29,321 | $ | 37,626 | ||||||||
Adjusted EBITDA (1) | |||||||||||||||||
| $ | 11,356 | $ | 14,072 | $ | 54,815 | $ | 71,699 | |||||||||
| 10,294 | 10,387 | 41,398 | 43,188 | |||||||||||||
| (1,197 | ) | (1,478 | ) | (5,475 | ) | (8,322 | ) | |||||||||
Corporate and eliminations | (7,154 | ) | (5,246 | ) | (27,535 | ) | (19,832 | ) | |||||||||
Total adjusted EBITDA | $ | 13,299 | $ | 17,735 | $ | 63,203 | $ | 86,733 | |||||||||
Operating income (loss) | |||||||||||||||||
| $ | (36,928 | ) | $ | (5,593 | ) | $ | (63,211 | ) | $ | (59,351 | ) | |||||
| (3,244 | ) | (2,399 | ) | (11,528 | ) | (6,853 | ) | |||||||||
| (4,079 | ) | (3,954 | ) | (14,426 | ) | (24,616 | ) | |||||||||
Corporate and eliminations | (1,277 | ) | (2,645 | ) | (8,806 | ) | (4,940 | ) | |||||||||
Total operating loss | $ | (45,528 | ) | $ | (14,591 | ) | $ | (97,971 | ) | $ | (95,760 | ) | |||||
(1) Please see Non-GAAP Reconciliation Schedule. | |||||||||||||||||
NON-GAAP RECONCILIATIONS (in thousands) (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
EBITDA (1) | $ | (16,223 | ) | $ | 17,735 | $ | 29,321 | $ | 37,626 | ||||||||
Adjusted EBITDA (1) | $ | 13,299 | $ | 17,735 | $ | 63,203 | $ | 86,733 | |||||||||
Free Cash Flow (2) | $ | 8,410 | $ | 10,091 | $ | 47,540 | $ | 48,165 | |||||||||
(1) The term EBITDA is defined as net income (loss) plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges, certain costs associated with | |||||||||||||||||
The following table sets forth a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in thousands) (unaudited): | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net loss | $ | (47,579 | ) | $ | (15,949 | ) | $ | (105,713 | ) | $ | (96,388 | ) | |||||
Income tax benefit | (3,615 | ) | (2,888 | ) | (13,490 | ) | (20,105 | ) | |||||||||
Depreciation and amortization | 29,360 | 30,858 | 126,443 | 131,302 | |||||||||||||
Interest income | (131 | ) | (12 | ) | (200 | ) | (152 | ) | |||||||||
Loss on extinguishment of debt | - | - | 842 | 302 | |||||||||||||
Interest expense | 5,742 | 5,726 | 21,439 | 22,667 | |||||||||||||
EBITDA | $ | (16,223 | ) | $ | 17,735 | $ | 29,321 | $ | 37,626 | ||||||||
Adjustments to EBITDA | |||||||||||||||||
Impairment expense (a) | 27,244 | - | 31,604 | 46,979 | |||||||||||||
Noralta transaction costs (b) | 2,278 | - | 2,278 | - | |||||||||||||
Redomiciliation costs (c) | - | - | - | 1,271 | |||||||||||||
Severance (d) | - | - | - | 857 | |||||||||||||
Adjusted EBITDA | $ | 13,299 | $ | 17,735 | $ | 63,203 | $ | 86,733 | |||||||||
(a) Relates to the impairment of assets in | |||||||||||||||||
(b) Relates to costs incurred associated with | |||||||||||||||||
(c) Relates to costs incurred associated with | |||||||||||||||||
(d) Relates to severance costs associated with the termination of executives. The | |||||||||||||||||
(2) The term Free Cash Flow is defined as net cash flows provided by operating activities less capital expenditures plus proceeds from asset sales. Free Cash Flow is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for cash flow measures prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity. Additionally, Free Cash Flow may not be comparable to other similarly titled measures of other companies. | |||||||||||||||||
The 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 | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net Cash Flows Provided by Operating Activities | $ | 11,301 | $ | 13,314 | $ | 56,826 | $ | 62,169 | |||||||||
Capital expenditures, including capitalized interest | (3,174 | ) | (4,533 | ) | (11,194 | ) | (19,779 | ) | |||||||||
Proceeds from disposition of property, plant and equipment | 283 | 1,310 | 1,908 | 5,775 | |||||||||||||
Free Cash Flow | $ | 8,410 | $ | 10,091 | $ | 47,540 | $ | 48,165 | |||||||||
NON-GAAP RECONCILIATIONS - GUIDANCE (in millions) (unaudited) | ||||||||
THREE MONTHS ENDING | ||||||||
$ | 11.0 | $ | 13.0 | |||||
(1) The following table sets forth a reconciliation of estimated EBITDA to estimated net income (loss), which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in millions) (unaudited): | ||||||||
THREE MONTHS ENDING | ||||||||
(estimated) | ||||||||
Net loss | $ | (23.5 | ) | $ | (22.0 | ) | ||
Income tax benefit | (1.0 | ) | (0.5 | ) | ||||
Depreciation and amortization | 30.0 | 30.0 | ||||||
Interest expense | 5.5 | 5.5 | ||||||
EBITDA | $ | 11.0 | $ | 13.0 | ||||
SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA ( (unaudited) | |||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Supplemental Operating Data - Canadian Segment | |||||||||||||||||
Revenues | |||||||||||||||||
Lodge revenues (1) | $ | 58,135 | $ | 55,321 | $ | 226,789 | $ | 238,220 | |||||||||
Mobile, open camp and product revenues | 5,454 | 6,975 | 18,806 | 40,244 | |||||||||||||
Total Canadian revenues | $ | 63,589 | $ | 62,296 | $ | 245,595 | $ | 278,464 | |||||||||
Average available lodge rooms (2) | 14,720 | 14,670 | 14,720 | 14,653 | |||||||||||||
Rentable rooms (3) | 8,872 | 9,324 | 8,642 | 9,979 | |||||||||||||
Average daily rates (4) | $ | 90 | $ | 99 | $ | 92 | $ | 104 | |||||||||
Occupancy in lodges (5) | 79 | % | 65 | % | 78 | % | 63 | % | |||||||||
Canadian dollar to | $ | 0.787 | $ | 0.750 | $ | 0.771 | $ | 0.755 | |||||||||
Supplemental Operating Data - Australian Segment | |||||||||||||||||
Revenues | |||||||||||||||||
Village revenues (1) | $ | 28,057 | $ | 26,121 | $ | 111,221 | $ | 106,815 | |||||||||
Average available village rooms (2) | 9,346 | 9,386 | 9,369 | 9,335 | |||||||||||||
Rentable rooms (3) | 8,697 | 8,616 | 8,739 | 8,679 | |||||||||||||
Average daily rates (4) | $ | 79 | $ | 80 | $ | 80 | $ | 76 | |||||||||
Occupancy in villages (5) | 44 | % | 41 | % | 43 | % | 44 | % | |||||||||
Australian dollar to | $ | 0.768 | $ | 0.750 | $ | 0.767 | $ | 0.752 | |||||||||
(1) Includes revenue related to rooms as well as the fees associated with catering, laundry and other services including facilities management. | |||||||||||||||||
(2) Average available rooms relate to Canadian lodges and Australian villages and includes rooms that are utilized for our personnel. | |||||||||||||||||
(3) Rentable rooms relate to Canadian lodges and Australian villages and excludes rooms that are utilized for our personnel and out-of-service rooms. | |||||||||||||||||
(4) Average daily rate is based on rentable rooms and lodge/village revenue. | |||||||||||||||||
(5) Occupancy represents total billed days divided by rentable days. Rentable days excludes staff rooms and out-of-service rooms. | |||||||||||||||||
Contacts:
Frank C. Steininger
Civeo Corporation
Senior Vice President and Chief Financial Officer
713-510-2400
Marc Cunningham
Jeffrey Spittel
FTI Consulting
713-353-5407
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