Q1 2024 Civeo Corp Earnings Call
Operator: Greetings and welcome to the Civeo Corporation First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Regan Nielsen, Vice President, Corporate Development and Investor Relations. Thank you; you may begin.
Greetings and welcome to the severe corporation first quarter 'twenty 'twenty four earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It's now my pleasure to introduce your host Reagan Nielsen Vice President corporate development and Investor Relations.
Regan Nielsen: Thank you you may begin.
Regan Nielsen: Thank you, and welcome to Civeo's first quarter 2024 earnings conference call. Today our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer, and Barclay Brewer, Civeo's Interim Chief Financial Officer and Treasurer.
Regan Nielsen: Thank you and welcome to <unk> first quarter 2024 earnings conference call.
Regan Nielsen: Today, our call will be led by Bradley Dodson, <unk>, President and Chief Executive Officer, and Barclays have yet.
Regan Nielsen: Jerome Chief Financial Officer and Treasurer.
Regan Nielsen: Before we begin, we would like to caution listeners regarding forward-looking standards. To the extent that our remarks today contain anything other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. Any such remarks should be read in the context of the many factors that affect our business, including risks and uncertainties disclosed in our forms 10-K, 10-Q, and other SEC filings. I'll now turn the call over to Bradley.
Regan Nielsen: Once again, we'd like to caution listeners regarding forward looking statements.
Regan Nielsen: The extent that our remarks today contain anything other than historical information. Please note that we're relying on the safe harbor protections afforded by federal law.
Jerome: Any such remarks should be read in the context of the many factors that affect our business, including risks and uncertainties disclosed in our forms 10-K, 10-Q, and other SEC filings I will now turn the call.
Jerome: Yeah.
Bradley J. Dodson: Thank you, Regan, and thank you all for joining us today on our First Quarter Earnings Call. I'll start with the key takeaways for the first quarter, then provide a brief summary of our first quarter 2024 performance. Then Barclay will go through the financial and segment level review, and I'll conclude with our updated comments on full year 2024 guidance and the underlying regional assumptions. The three key takeaways.
Jerome: Thank you Ryan and thank you all for joining us today on our first quarter earnings call.
Speaker Change: I'll start with the key takeaways for the first quarter and provide a brief summary of our first quarter of 2020 for performance.
Speaker Change: The Barclay will go through.
Barclay: Hello, and segment level review and I'll conclude with our updated comments on full year.
Barclay: For our guidance.
Barclay: And the underlying reasonable assumptions.
Barclay: Well then open the call for questions.
Barclay: The three key takeaways.
Bradley J. Dodson: One, the first quarter and the full year outlook for 2024 were in line with expectations. As a result, there's no change to our full-year guidance. Secondly, Australia's adjusted EBITDA was up 23% compared to the first quarter of 2023 due to particle strength in our buildings and our own villages. We also benefited from recent contract wins and year-over-year improvement in Australia's own villages and integrated services business in terms of margins. Lastly, we continue to return capital to shareholders through our quarterly dividend and opportunistic share recursion.
Barclay: One the first quarter and full year outlook for 2024 were in line with expectations.
Barclay: As a result, there is no change to our full year guidance.
Barclay: Secondly, Australia, adjusted EBITDA was 43% compared to first quarter of 2023.
Barclay: Particular strength in our billed rooms in our own diligence. We also benefited from recent contract wins.
Barclay: And year over year improvement in Australian villages and integrated services business in terms of margin.
Barclay: Lastly, we continued to return capital to shareholders through our quarterly dividend and opportunistic share repurchases.
Bradley J. Dodson: Let me take a moment to provide a business update in the two seconds... Our Australian segment performed exceptionally well during the quarter, and our team continues to execute on our plan to grow our Australian integrated services business to $500 million in top line revenue by 2027. We've since experienced year-over-year growth in both our own diligence business and our integrated services, including the benefit of our recent contract wins that reflect improved customer spending across thanks and diligence and our integrated service.
Speaker Change: Let me take a moment to provide a business update across the two segments.
Speaker Change: Our Australian segment performed exceptionally well during the quarter and our team continues to execute on our plan to grow our Australian and integrated services business to $500 million top line.
Speaker Change: In 2020.
Speaker Change: We.
Experienced year over year grant.
Speaker Change: Our whole indulgence business and our integrated services business.
Including the benefit of our recent contract wins and reflects improved customer spending cros.
Speaker Change: Patient doses and are in the brain.
Speaker Change: Yes.
Bradley J. Dodson: During the quarter, our Australian-owned villages continued to experience significant year-over-year growth, while metallurgical coal prices, which have recently declined, remain at very healthy levels that support these customer activity levels. Additionally, we are seeing the impact of metallurgical coal mines being sold to producers who are more focused on increasing production. These macro factors, coupled with the impact of our recent contract wins in the region, have driven this substantial year-over-year growth. In the first quarter, our Australian Integrated Services business experienced year-over-year margin improvement, as our Inflation Mitigation Plan continued to demonstrate positive results. We expect to continue to see this benefit from our team's efforts throughout 2020. With the improved margins, we believe the integrated service business is particularly attractive given the contract terms and the outlook for additional opportunities in this area.
Speaker Change: During the quarter, Australia villages continued to experience significant year over year growth.
Speaker Change: Well metallurgical coal prices have recently declined.
Speaker Change: It's remained at very healthy levels that support these customer activity levels.
Speaker Change: Additionally, youre seeing the impact.
Speaker Change: Coal mines being salt producers, who are more focused on increasing production levels.
These macro factors coupled with the impact of our recent contract wins in the region and grew in the substantial year over year correct.
Speaker Change: In the first quarter Australian integrated services business experienced year over year margin improvement.
And our inflation mitigation plan continues to demonstrate positive results.
Speaker Change: You should continue to see this benefit from our team's efforts throughout 2024.
Speaker Change: With the improved margins, we lead the integrated service business is particularly attractive given contract terms and the outlook for additional opportunities in this area.
Yeah.
Bradley J. Dodson: As expected, our Canadian segment revenues and adjusted EBITDA decreased year-over-year due to the planned wind-down of LNG-related activity, particularly in our mobile camp businesses, including $1.8 million of Mobile Camp D1 demobilization costs in the first place, as we touched on during our February Earnings Conference call. We completed the sale of our McClellan Lake Lodge in Canada earlier this year and received all proceeds. The majority of the proceeds were recognized in the fourth quarter of 2023, with the remainder recognized this year.
Speaker Change: As expected our Canadian segment revenues and adjusted EBITDA decreased year over year due to the planned wind down of LNG related activity, particularly in our mobile camp business.
Speaker Change: Including $1 $8 million of mobile camp do you want demobilization costs in the first quarter.
Speaker Change: As we touched on it.
Speaker Change: During our February earnings Conference calls, we completed the sale of our Knowhow Lake Lodge in Canada earlier, this year and received all proceeds.
Speaker Change: The majority of the net proceeds were recognized in the fourth quarter of 2023 with the remainder recognized in this quarter.
Bradley J. Dodson: As a reminder, the entirety of the sale proceeds and associated costs, as well as other related reimbursements, are excluded from our adjusted EBITDA calculation. As a result, the sale transaction does not impact our full year 2024 adjusted EBITDA guidance. The transportation of these assets is now complete, and we continue to pursue other business-related opportunities related to the assets. I'll now turn it over to Bartholomew Brewer, our interim CFO.
Speaker Change: As a reminder, the entirety of the sale proceeds and associated costs as well as other related reimbursements are excluded from our adjusted EBITDA calculation.
Speaker Change: As a result, our sales transaction does not impact our full year 2024, adjusted EBITDA guidance.
Speaker Change: The transportation of these assets is now complete and we can do.
Speaker Change: Can you pursue other business related opportunities related to the asset.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I'll now turn it over to Barclays Brewer and anesthesia CFO I'd like to thank him for stepping up against you you know what I'm CHL.
Barclay H. Brewer: Thank you, Bradley, and thank you all for joining us this morning. Today we reported total revenues in the first quarter of $166.1 million with a net loss of $5.1 million, or $0.35 per diluted share, during the first quarter regenerated adjusted EBITDA of $17.3 million. Again, this is exclusive of the financial impact of the dismantlement and sale of the McClellan Lake Lodge asset, operating cash flow of $6 million, and free cash flow of $7.2 million.
Speaker Change: Right.
Barclays Brewer: Thank you Bradley and thank you all for joining us this morning.
Speaker Change: Today, we reported total revenues in the first quarter of $166 1 million.
Barclays Brewer: GAAP net loss of $5 1 million.
Speaker Change: Any thoughts or color you check.
Speaker Change: During the first quarter regenerated adjusted EBITDA $17 3 million again.
Speaker Change: The financial impact just mathematically.
Speaker Change: Likewise.
Speaker Change: Operating cash flow of $6 million and free cash flow of seven <unk>.
Barclay H. Brewer: First quarter adjusted EBITDA increased year over year due to the increased number of filled rooms at our Australian-owned villages and improved margins in the Australian Integrated Services, partially offset by the expected wind-down of LNG-related Canadian mobile camp activity, including $1.8 million in mobilization costs. Let's now turn to the first quarter results for our two segments. I'll begin with a review of the Australian segment's performance compared to its performance a year ago in the first quarter of 2023.
Speaker Change: First quarter adjusted EBITDA increased year over year due to increased telegrams at our Australian villages and price and margin and be Australia and integrated service.
Speaker Change: Partially offset.
Speaker Change: The wind down of LNG related Canadian mobile camp activity.
Speaker Change: And $21 8 million and double cabs.
Speaker Change: Thank you.
Speaker Change: Let's now turn in the first quarter results for our two segments.
Speaker Change: I'll begin with the Australian segment.
Speaker Change: Pardon me congratulate pardon me a year ago in the first quarter of 2023.
Barclay H. Brewer: First quarter revenues from our Australian segment were $91.7 billion, up from $77 billion in the first quarter of 2023, and Justin Ivanov with $20.3 million, up 43% from $14.2 million last year. The significant increase to adjusted EBITDA was due to increased billed rooms at our own villages, increased integrated services activity, and improved margins. Results for the quarter were strong despite the headwind of a weakened Australian dollar relative to the U.S.
Speaker Change: First quarter revenues from our Australian segment.
Speaker Change: Were $91 7 billion up from $77 million in the first quarter of 2023.
Adjusted EBITDA was $20 3 million up 43% from $14 2 million last year.
Speaker Change: The significant increase to adjusted EBITDA.
Speaker Change: Great.
Speaker Change: And pre integrated services activity and improved margins.
Speaker Change: For the quarter were strong despite the headwinds of a weakening Australian dollar relative to the U S dollar.
Barclay H. Brewer: We have increased revenues and adjusted EBITDA by approximately $3.7 million and $800,000, respectively. Australian-billed rooms in the quarter were a source of strength with 614,000 rooms, up 17% from 523,000 in the first quarter of 2023. This is due to increased customer demand at our own villages, as demonstrated by our recent contract award.
Speaker Change: Revenue and adjusted EBITDA by approximately $3 7 million.
800000.
Australia, Belgium, and acquire more of a source of strength.
Speaker Change: 14000 range.
Speaker Change: 17% from $523 in the first quarter about 2023.
Speaker Change: And to increased customer demand and our I think villages and demonstrated by our recent contract awards.
Speaker Change: Average daily rate in Australian dollars by about 3% year over year.
Barclay H. Brewer: The average daily rate in Australian dollars was up 3% year over year. Due to the weakened Australian dollar, the average daily rate for our Australian dollars and U.S. dollars was $77 in the first quarter of 2024, down modestly from $78 in the first quarter of 2023. Turning to Canada, we recorded revenues of $67.2 million as compared to revenues of $89.5 million in the first quarter of 2023. The adjusted EBITDA in Canada was $5.5 million, a decrease from $12 million in the first quarter of 2023.
Speaker Change: You said the weekend Australian dollar the average daily rate.
Australian villages in U S dollars $77 in the first quarter of 2020 or down modestly from $78 in the first quarter.
Speaker Change: 2023.
Speaker Change: Turning to Canada, we recorded revenue of $87 2 million as compared to revenue of $89 5 million in first quarter of 2023.
Speaker Change: Adjusted EBITDA in Canada was bought one 5 million a decrease from $12 million in first quarter of 2023.
Speaker Change: Year over year revenue and adjusted EBITDA decrease was primarily driven by.
Speaker Change: Likewise in the expected wind down of LNG related.
Speaker Change: And only $1 8 million mobile can you guys all at Macy's.
Speaker Change: During the first quarter 11 rooms in our Canadian lodges totaled 610000.
Barclay H. Brewer: The year-over-year revenue and adjusted EBIT decrease was primarily driven by sales of the Colombo Lake Lodge and the expected wind-down of LNG-related mobile camp activity, including $1.8 million of mobile camp demobilization costs. During the first quarter, filled rooms in our Canadian lodges totaled $610,000, which was down from $643,000 in the first quarter of 2023, primarily due to the sale of Cologne playing lots. Our daily room rate for the Canadian segment in US dollars was $98, which increased slightly from $96 in the first quarter of 2023.
Speaker Change: Went down from 643000 in the first quarter 2023, primarily due to the sell out and call them like what.
Speaker Change: Right.
Speaker Change: Room rate for the Canadian segment in U S dollars.
Speaker Change: Which increased slightly from $96 in the first quarter 2023.
Speaker Change: On a consolidated basis capital expenditures for the first quarter of 2024.
Speaker Change: One 6 million compared to $4 8 million during the same period in 2023.
Speaker Change: Capital expenditures in the Bay area.
Speaker Change: We're predominantly related to maintenance spending.
Speaker Change: Hey villages, coupled with spending to activate Mopboard Australian village rain with increased customer demand.
Speaker Change: Additionally, the first quarter of 2024, including $2 4 million in capital expenditures on the Australian customer funding infrastructure upgrades.
Barclay H. Brewer: On a consolidated basis, capital expenditures for the first quarter of 2024 were $5.6 million, compared to $4.8 million during the same period in 2023. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages coupled with spending to activate mopdog Australian village rooms with increased customer demand.
Speaker Change: Scott on prior quarter conference call.
Speaker Change: Our net debt on March 30, <unk> 2024 was $61 8 million, which was down slightly since December 31 2023.
Speaker Change: Our net leverage ratio.
Speaker Change: <unk> maintained remained flat euro six.
Speaker Change: At March 31st 2024.
Speaker Change: At March 31st 2024, we had total liquidity of approximately $136 9 billion.
Barclay H. Brewer: Additionally, the first quarter of 2024 included $2.4 million in capital expenditures for the Australian customer-funded infrastructure upgrade that we discussed on prior quarter conference calls. Our net death toll on March 31st, 2024 was $61.8 million, which was down slightly since December 31st, 2023. Our net leverage ratio for the quarter remains flat at 0.6 times as of March 31st, 2024. As of March 31, 2024, we had total liquidity of approximately $136.9 million, consisting of $120.1 million available under our revolving credit facilities and $16.8 million cash on hand, giving us the strength and flexibility to opportunistically pursue growth vectors in 2024 and beyond while maintaining prudent leverage ratios. Turning to capital allocation,
Speaker Change: $121 million available under our revolving credit facility and $16 8 million.
Speaker Change: And given us the strength and flexibility to opportunistically pursue growth factors in 2024 and beyond while maintaining prudent leverage ratios.
Speaker Change: Turning to capital allocation in the first quarter of 2024, we repurchased approximately 133000 shares throughout share repurchase program for a total of approximately $3 2 million.
Speaker Change: This morning, we announced that our board of directors has declared our fourth quarterly dividend payment.
Speaker Change: Shareholders of record at that.
Speaker Change: May 27, 2024 received a 25 cent per share cash dividend payable on June 17 2024.
Speaker Change: With that I'll turn it over to Brian to discuss our guidance for the full year 2024 right.
Brian: Thank you Barclays.
Brian: Right now I'd like to now turn our discussion to our full year 'twenty 'twenty four guidance on a consolidated basis, including Appalachia, the updated outlook for each of the reasons.
Brian: Despite the weakening Australian dollar versus the beginning of the year, we are maintaining our full year 2020 for revenue and adjusted EBITDA guidance.
Brian: Yeah.
Brian: 625 million 700 million for revenues and 80 to 90 million for adjusted EBITDA.
Barclay H. Brewer: In the first quarter of 2024, we repurchased approximately 133,000 shares through our share repurchase program for a total of approximately $3.2 million. This morning, we announce that our Board of Directors has declared our 4th Quarterly Dividend Payment, shareholders of record, and the Company will receive a $0.25 per share cash dividend payable on June 17, 2024. With that, I'll turn it over to Bradley to discuss.
Brian: We are maintaining our full year 2024, and capital expenditure guidance of 30 to 35 million.
Brian: Based on this adjusted EBITDA and Capex guidance.
Brian: Net cash proceeds related to the Mcclelland Lake Lodge Dismantlement.
Brian: Sale of approximately $6 million adjusted cash interest expense of $6 million.
And then expected working capital inflow of $10 million.
Brian: Unexpected, Australia and cash taxes of $10 million, we are maintaining our 2020 for free cash flow expectation.
Bradley J. Dodson: I'd like to now turn our discussion to our full year 2024 guidance on a consolidated basis, including, after that, the updated outlook for each of the resources. Despite the weakening Australian dollar versus the beginning of the year, we are maintaining our full year 2024 revenue and adjusted EBITDA guidance. $625 million to $700 million for revenues and $80 to $90 million for adjusted EBITDA, we are maintaining our full year 2024 capital expenditure guidance of $30 to $35 million, based on this Adjust-A-Dee-B-Dah and CapEx guide, net cash proceeds related to the McClellan-Lake lot dismantlement.
Brian: $35 million to $60 million.
Speaker Change: I will now provide the regional outlooks in corresponding underlying assumptions by region.
Speaker Change: In Canada, we are in the early stages of the turnaround season for our Canadian oil Sands lodges.
Speaker Change: But early activity is shaping up as expected.
Speaker Change: We will provide further updates on our second quarter call with billed rooms across our portfolio is consistent with our previous 'twenty 'twenty guidance.
Speaker Change: Regarding our mobile camps, the majority of our mobile camp rental activity is complete and.
Speaker Change: And we are continuing the demobilization process, we expect people will Miss D mobilization to be completed in the second quarter.
2024.
Speaker Change: Our second quarter adjusted EBITDA by approximately $4 million of demobilization costs. As a reminder, this is contemplated in our full year 'twenty 'twenty guidance.
Bradley J. Dodson: Sale of approximately $6 million, adjusted cash interest expense of $6 million, and an expected working capital inflow of $10 million, and expected Australian cash taxes of $10 million. We will maintain our 2024 free cash flow expectation of $45 million.
Speaker Change: My Name's, Australia customer activity in our own villages remains incredibly strong and we expect it to continue to see similar levels going forward.
We are currently full at three of our bond.
Speaker Change: Bowen basin villages with very healthy occupancy at the rest of our own village portfolio in Australia.
Bradley J. Dodson: I will now provide the regional outlooks and corresponding underlying assumptions by region. In Canada, we are in the early stages of the turnaround season for our Canadian oil sands lottery, but early activity is shaping up as expected. We'll provide further updates on the second quarter call. The build rate across our portfolio is consistent with our previous 2024 guidance. Regarding our mobile camps, the majority of our mobile camp rental activity is complete, and we are continuing the demobilization process. We expect the demobilizations to be completed in the second quarter. 2024, burdening our second quarter adjusted event by approximately $4 million of demobilization costs.
Speaker Change: As it relates to our integrated services business, our improved margins are expected to continue for the remainder of the year.
We are encouraged by our progress to date and we are continuing to focus on our plan.
Speaker Change: The mitigation plan.
Speaker Change: We're excited about growth potential of our Western Australia, and integrated services business and now we've made strides our inflation mitigation plan, we can shift our focus to where they work and growing the business again, our team has set a goal to grow our integrated services business to 500 million.
Australian topline by 2027.
Speaker Change: Yeah.
Speaker Change: I'll conclude by underscoring the key elements of our strategy.
Speaker Change: We will prioritize as always the safety and wellbeing of our guests employees and communities.
Speaker Change: We will invest in our operational improvements and innovation to continue to enhance to enhance our best in class hospitality offerings.
Speaker Change: And we will allocate capital prudently to maximize free cash flow generation, while we continue to return capital to shareholders and evaluate growth opportunities.
Bradley J. Dodson: As a reminder, this is contemplated in our full year 2024 guidance. Customer activity in our own villages remains incredibly strong, and we expect to continue to see similar levels going forward. We are currently full at three of our Bowen Basin villages, with very healthy occupancy at the rest of our own village portfolio in Australia.
Speaker Change: With that we're happy to take your questions.
Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate that your line is in the question queue and you May Press star two if he would like to remove your question from the queue.
Bradley J. Dodson: As it relates to our integrated services business, our improved margins are expected to continue for the remainder of the year. We are encouraged by our progress to date, and we are continuing to focus on inflation mitigation. We are excited about the growth potential of our integrated Western Australian services, and now we've made strides on our inflation mitigation plan. We can shift our focus to winning work and growing the business. Again, our team has set a goal to grow our integrated services business to $500 million in top line revenue by 2027.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of Alex <unk> with Stifel. Please proceed with your question.
Alex: Alright, Thanks, and good morning, everyone and thanks for taking my questions.
So just to kick us off here a shift for me just so when we were looking at the full year guidance can you just talk about some of the drivers between the low and the high end and also should we choose to be excuse me should we expect to see normal seasonality with a roughly about 65% of full year EBIT in two Q3 Q.
Speaker Change: Thank you.
Speaker Change: The to answer the second part of the question, Yes seasonality should continue in the.
Bradley J. Dodson: I will conclude by underscoring the key elements of our strategy. We will prioritize, as always, the safety and well-being of our guests, employees, and community. We will invest in operational improvements and innovation to continue to enhance our best-in-class hospitality offering. And we will allocate capital prudently to maximize free cash flow generation while we continue to return capital to shareholders and evaluate growth opportunities. With that, I'm happy to take it.
Speaker Change: The amount of EBITDA.
Speaker Change: EBITDA coming in Q2, Q3 is largely driven by.
Speaker Change: The turnaround season in Canada, and we expect that to be the case this year.
Speaker Change: The upper end and lower end.
Speaker Change: It is actually.
Speaker Change: Linked to the same issue, which is what is what does the Canadian turnaround season look like.
Speaker Change: Right now it looks as expected.
Speaker Change: So the only one month into it.
Speaker Change: So we'll.
Speaker Change: We'll see how it plays out, but that's probably the biggest driver for us.
Speaker Change: Inflation continues to be an issue.
Speaker Change: Largely across the globe, most impactful right now in Australia.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue, and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker Change: Food costs and more importantly labor.
Speaker Change: The team has done a great job in terms of trying to.
Speaker Change: <unk> increased our full time labor as opposed to using temporary labor which has.
Speaker Change: A negative impact on costs and productivity.
Speaker Change: So those are primarily the largest drivers of the issue.
Speaker Change: Okay.
Speaker Change: Currency has gone against us, but we've had a few things go for us a year to date.
Operator: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Alex Scheibelhofer with Stiefel. Please proceed with your question.
Speaker Change: Better occupancy and our Kitimat Sitka.
Speaker Change: Sitka Lodge, we've seen better occupancy in the core.
Speaker Change: Canadian area.
Alec John Scheibelhoffer: Hi, thanks, and good morning, everyone, and thanks for taking my questions. So just to kick us off here, if you're familiar, just so when we're looking at the full year guidance, can you just talk about some of the drivers between the low and the high end? And also, should we, should we excuse me? Should we expect to see normal seasonality with roughly about 65% of full year EBITDA and 2Q3Q?
Speaker Change: Coupled with really just really strong occupancy and Australian Bowen basin villages.
Speaker Change: And.
Speaker Change: Clearly very good execution on the integrated services side in Australia.
Speaker Change: Yeah.
Speaker Change: Got it. Thanks I appreciate the color and then just as a second question I was just curious if you flush out just how you're thinking about uses of cash and what are your key criteria when you're looking at potential M&A.
Speaker Change: Well it uses of cash we've got the dividend, which is a 25 cents a share or a dollar for the full year for shareholders that is paramount.
Bradley J. Dodson: Thank you. The answer to the second part of the question: yes, seasonality should continue. The amount of Evodog coming in Q2 and Q3 is largely driven by the coming around season in Canada, and we expect that to be the case this year. The upper end and the lower end are actually linked to the same issue, which is, what does the Canadian turnaround season look like? Right now, it looks as expected. We're obviously only one month into it, so we'll see how it plays out.
Speaker Change: We've been opportunistically buying back shares as well.
We need to get back to growing visits.
Speaker Change: And those returns for growth opportunities happen so.
Speaker Change: I thought it would be better than the opportunity of buying back stock.
Speaker Change: So there are a handful of organic opportunities.
Speaker Change: And then we're looking at M&A the organic opportunities are around.
Speaker Change: Contracted lodge and village rooms.
Either bring them back online or a modest increase in <unk>.
Speaker Change: And rooms.
Speaker Change: And the M&A side is around integrated services and expansion of geographies within Canada and Australia.
Bradley J. Dodson: That's probably the biggest driver for it. Inflation continues to be an issue, largely across the globe, most impactful right now in Australia around food costs and, more importantly, labor. The team has done a great job in terms of trying to improve and increase our full-time labor as opposed to using temporary labor, which has a negative impact on costs and productivity. So, those are primarily the large drivers of the issue. Currency has gone against this, but we've had a few things go for us year to date, including better occupancy in our Kitimat. We've seen better occupancy in the core Canadian area, coupled with really just really strong occupancy in Australian Bowen Basin villages and clearly very good execution on the integrated services side in Australia.
Speaker Change: Got it. Thank you I appreciate the color that's all for me I'll turn it back.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Steve <unk> with Sidoti. Please proceed with your question.
Steve: Thanks, Good morning, Bradley Barkley appreciate all the color on the call. This morning.
Steve: I wanted to ask about Australia, another really impressive quarter.
Steve: Terms of accommodations and food revenue.
Steve: You would have so many new contracts are renewed contracts at better rates have we seen it all now is there more near term growth or is this does this level off near term.
Speaker Change: No we will see further growth, particularly on the integrated services side.
Speaker Change: The team has a lot of lines in the water.
Bradley J. Dodson: Got it, thanks. Appreciate the color. And then, just as a second question, I'm just curious if you could flush out just how you think about uses of cash and what are your key criteria when you're looking at potential M&A?
Speaker Change: And it's really building a good business there I mean, if you recall that business was the $70 million is this five years ago.
Speaker Change: We did choose 30 popping in local currency.
Bradley J. Dodson: Well, in terms of cash, we've got the dividend, which is $0.25 a share or a dollar for the full year for shareholders. That is paramount.
Speaker Change: Last year budgeted for this year was 250 <unk>.
Speaker Change: That resoundingly.
Speaker Change: So and that factored into guidance.
Speaker Change: So we're making good strides there.
Bradley J. Dodson: We've been opportunistically buying back shares as well, but we need to get back to growing the business. And those returns for growth opportunities have to be... sides up, and be better than the opportunity to buy a backstop. So there are a handful of organic opportunities, and then we're looking at M&A. The organic opportunities are around contracted lodge and village rooms, either bringing them back online or modestly. Williams, and the M&A side is around integrated services and expansion of geographies within Canada and Australia.
Speaker Change: It's a differentiated service.
Speaker Change: In terms of the competition that we're winning market share from from others. So.
Speaker Change: Sure.
Speaker Change: More than cautiously optimistic on it.
Speaker Change: Great.
Speaker Change: What are the risks there given the number of contracts you have renewed already anything near term, we should be concerned about or in what kind of terms do you have that.
Just do you risk sort of what's in place right now.
Speaker Change: There are no Ah.
Speaker Change: The question is about Australia, and the integrated services that are no material renewals until 2027.
Alec John Scheibelhoffer: Got it. Thank you. I appreciate the color. That's all for me. I'll turn it back.
Speaker Change: That being said.
Speaker Change: And the integrated services business as you know all the contracts can be cancelled. So every day, we have to show up and deliver service and.
Stephen Michael Ferazani: Our next question comes from the line of Steve Ferazani with Sidoti. Please proceed with your question.
Speaker Change: The team is there.
Stephen Michael Ferazani: Thanks. Good morning, Bradley, and Barclay. Appreciate all the color on the call this morning. Wanted to ask you something about Australia.
Speaker Change: Got a good relationship with the major customers there.
Speaker Change: There's transparency and.
Bradley J. Dodson: Another really impressive quarter in terms of accommodations and food revenue. You announced so many new contracts or renewed contracts at better rates. Have we seen it all now? Is there more near-term growth, or is this level off in the near future?
Speaker Change: Good conversation where.
I believe when you are trying to serve.
Speaker Change: 89000 people a day.
No that'd be safe.
But.
With the transparency the conversation.
Speaker Change: Willingness to and the effort to be deliver excellent service every day.
Bradley J. Dodson: No, we'll see further growth, particularly on the integrated services side. The team has a lot of lines in the water and is really building a good business there. I mean, if you'll recall, that business was a $70 million business back five years ago, and we did $230 million. I'm talking local currency.
That that carries the day.
So.
Speaker Change: Fair enough turning to the other side on food and service in Canada.
Speaker Change: Two two straight quarters of year over year top line was up more than 20% and given that can.
Bradley J. Dodson: Last year's budget for this year was $250 million, and it beat that resoundingly. And that factored into guidance. So we're making good strides there. It's a differentiated service, in terms of the competition that we're winning, and market share from others. So I'm more than cautiously optimistic about it.
Speaker Change: Can you give a little sense of what's what's driving that I know the margins are fairly soon there, but it's pretty significant revenue growth given everything else that's going on in Canada.
Speaker Change: Well the major driver Canada are as discussed I mean, why do we sold the mcclelland asset so year over year or.
Stephen Michael Ferazani: Great. What are the risks there, given the number of contracts you have renewed already? Anything near-term we should be concerned about, or in what kind of term do you have to de-risk sort of what's in place right now? There are no...
Speaker Change: We're losing those bills are items we.
Speaker Change: <unk> got a good value for the assets that we sold in the second is the wind down.
Speaker Change: C.
Speaker Change: LNG, Canada activity Brian.
Speaker Change: Those are the major drivers for Canada.
Speaker Change:
Speaker Change: Both topline and EBITDA now the focus is for for us and for our team is to find additional projects too.
Bradley J. Dodson: There are no, on the questions about Australian integrated services, there are no material renewals until 2027. That being said, in the integrated services business, as you know, all the contracts can be canceled.
Speaker Change: Build back up the profitability of Canada.
Speaker Change: Through the process of selling a call and we recognize that our.
Bradley J. Dodson: So every day we have to show up and deliver service, and the team is there. We've got a good relationship with the major customers there where there's transparency and good conversation where, you know, inevitably when you're trying to serve eight, nine thousand people a day, there are going to be mistakes, but with the transparency, the conversation, the willingness, and the effort to deliver excellent service every day, that carries the day.
Speaker Change: Our modular assets both permanent and.
Speaker Change:
Speaker Change: And mobile.
Speaker Change: There are a lot of industrial and mining projects that need assets that are remote.
Speaker Change: Lot of them are driven by power transmission and.
Speaker Change: Effectively.
Speaker Change: Yeah.
Speaker Change: Resources that are used in EV batteries, so well.
Speaker Change: We're working very diligently to expand that business into.
Speaker Change: Other geographies, specifically east of Alberta, and down into the U S.
And then any update on Mcclelland Lake does that transportation contract completed within Q1, and where are you on any follow up.
Stephen Michael Ferazani: Fair enough. Turning to the other side, on food and service in Canada, two straight quarters where your year-over-year top line was up more than 20 percent. Can you give a little sense of what's driving that? I know the margins are fairly thin there, but it's pretty significant revenue growth given everything else that's going on in Canada.
Speaker Change: Right.
Speaker Change: The transportation contract is complete and it was all recognized in the first quarter.
Speaker Change: And we're continuing to pursue the reinstallation of those assets at the new location in the Western U S.
Bradley J. Dodson: Well, the major drivers for Canada are, as discussed, I mean, one, we sold the McClellan asset. So, year over year, we're losing those build rooms.
Speaker Change: The potential to operate those assets long term for the new clients.
Speaker Change: Okay.
Speaker Change: Thanks, Patrick.
Patrick: Thank you.
Patrick: Okay.
Patrick: Our next question comes from the line of Dave storms with Stonegate. Please proceed with your question.
Bradley J. Dodson: We got good value for the assets that we sold, and the second is the winding down in the LNG Canada activity right now. Those are the major drivers for Canada, both Topline and EBITDA. Now, the focus for us and for our team is to find additional projects to build back up the profitability of Canada. I think through the process of selling McClellan, we recognized that they are modular assets, both permanent and permanent, and mobile.
David Joseph Storms: Good morning.
David Joseph Storms: Just hoping just.
David Joseph Storms: Good morning, just whom we'd kind of start with the dividend I know you've been paying it for a couple of quarters now up your stock has gone up since you started paying it just could you give us a sense of what your processes like how.
David Joseph Storms: How often do you revisit that to make sure it remains competitive.
Anything on that front would be very helpful.
Speaker Change: Sure why don't we we'd like to get a year underneath our belt. This would be the fourth payment. So we'll readdress that in the fall.
Bradley J. Dodson: There are a lot of industrial and mining projects that need assets that are remote. A lot of them are driven by power transmission and, effectively, resources that are used in EV batteries. They are working very diligently to expand the Canadian business into other geographies, specifically east of Alberta and down into the US.
Speaker Change: And again, it's it's a key component to our capital allocation framework.
Speaker Change: And so you know.
Speaker Change: As you know.
Speaker Change: Cash flow for US is it's also seasonal EBITDA seems a little weak covered that in the first question.
Bradley J. Dodson: and any update on McClellan Lake. Was that transportation contract completed within Q1, and where are you on any follow-up?
Speaker Change: Our cash flow is better in the back half of the year, so we'd like to see how things play out.
Speaker Change: Certainly dividend growth as possibility, but one that will address in the back half of this year.
Stephen Michael Ferazani: Right, the transportation contract is complete. It was all recognized in the first quarter, and we're continuing to pursue the reinstallation of those assets at the new location in the western U.S. and the potential to operate those assets long-term for the new client.
Speaker Change: Understood very helpful. Thank you and then just touching back on.
Speaker Change: Kind of some of your levers that you have to kind of recoup some of those mobile camp losses, you mentioned.
Speaker Change: Maybe expanding top arda, maybe into the U S. A little bit what would that look like logistically and what would be some of the hurdles to get over that.
Stephen Michael Ferazani: Thanks, Bradley.
David Joseph Storms: Our next question comes from the line of Dave Storms with Stone Gate. Please proceed with your question. Good morning.
Speaker Change: Well right now the hurdles are are twofold, they're not surprising.
David Joseph Storms: [inaudible] I just hope everyone enjoyed it. Thank you. Bye bye. Good morning.
Speaker Change: One we need the client project to move forward. So we need a green line on projects and then we need to win the work.
David Joseph Storms: Just hoping we can kind of start with the dividend. I know you've been paying it for a couple of quarters now. Your stock has gone up since you started paying it. Could you give us a sense of what your process is like? You know, how often do you revisit that to make sure it remains competitive? Anything on that front would be very helpful.
Speaker Change: We've got a handful of projects we're actively pursuing.
Speaker Change: That's simply what needs to happen.
Speaker Change: We've got a team in eastern Canada.
Speaker Change: On the business development side that are pursuing opportunities and they're largely mining and transmission right.
Bradley J. Dodson: Sure. Well, we'd like to get a year under our belts. This would be the fourth payment, so we'll revisit it in the fall. And again, it's a key component to our capital allocation framework. And so, you know, as you know, cash flow is better in the back half of the year, so we'd like to see how things play out. Certainly, dividend growth is a possibility, but one that we'll address in the back half of the meeting.
Speaker Change: The U S as.
Speaker Change: Initially going to be dependent on can we get more work ultimately related to mcallen assets.
Speaker Change: Understood. Thank you.
Kate: Kate the collar.
Kate: Thank you we have reached the end of our question and answer session and with that I would like to turn the floor back over to Bradley Dodson for any closing comments.
Bradley J. Dodson: Thank you so much and thank you everyone for joining the call today.
David Joseph Storms: I understand. Very helpful. Thank you.
We appreciate your interest in video and we look forward to speaking to you on our second quarter earnings call planned for July.
David Joseph Storms: And then just touching back on kind of some of your levers that you have to kind of recoup some of those mobile camp losses. You mentioned maybe expanding to Alberta, maybe into the U.S. a little bit. What would that look like logistically, and what would be some of the hurdles to get over?
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time.
Speaker Change: You for your participation.
Speaker Change:
Speaker Change: [noise].
Bradley J. Dodson: Well, right now, the hurdles are two-fold. They're not surprising.
Bradley J. Dodson: One, we need the client project to move forward, so we need the green light on projects, and then we need to win the work. We've got a handful of projects we're actively pursuing, but that's simply what needs to happen. We've got a team in Eastern Canada on the business development side that is pursuing opportunities, and they're largely mining and transmission related. The U.S. is initially going to be dependent on whether we can get more work, ultimately related to McClellan S.
Speaker Change: Yeah.
Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change:
Okay.
Speaker Change: Hmm.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Hum.
David Joseph Storms: understood. Thank you.
Speaker Change: Hum.
Operator: Thank you. We have reached the end of our question and answer session. And with that, I would like to turn the floor back over to Bradley Dodson for any closing comments.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: [music].
Bradley J. Dodson: Thank you so much, and thank you everyone for joining the call today. We appreciate your interest in Civeo, and we look forward to speaking to you on our second quarter earnings call, scheduled for July. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Okay.
Speaker Change: [music].
Operator: This concludes today's
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