Q4 2024 Civeo Corp Earnings Call
While the formal presentation.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Regan Nelson: It is now my pleasure to introduce Regan Nelson Vice President corporate development and Investor Relations. Please go ahead.
Regan Nelson: Thank you and welcome to <unk> fourth quarter and full year 2024 earnings conference call.
Bradley Dodson: Today, our call will be led by Bradley Dodson, <unk>, President and Chief Executive Officer, and Colm and Gary <unk>, Chief Financial Officer and Treasurer.
Bradley Dodson: Before we begin we would like to caution listeners regarding forward looking statements.
Bradley Dodson: To 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.
Bradley Dodson: 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.
Bradley Dodson: Also as noted in our earnings release, we have provided supplemental data disclosing revenue associated with our asset light business and those of our asset intensive businesses.
Bradley Dodson: This data can be found in the earnings release schedules.
Brian: I'll now turn the call over to Brian.
Bradley Dodson: Keith.
Speaker Change: Thank you Greg and thank you all for joining us today on our fourth quarter and full year 2024 earnings call.
Speaker Change: I'll start the call today with the key takeaways and then I'll provide a brief summary of our fourth quarter and full year of 2020 for performance and Colin will provide a financial and segment level review.
Yes.
Speaker Change: Greetings and welcome to the City O Corporation fourth quarter 2024 earnings call. At this time, all participants are in a listen only mode.
And I'll conclude our prepared comments with our initial 2025 guidance and the underlying regional assumptions.
Speaker Change: Question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.
Speaker Change: Thereafter, we will open the call for questions.
Speaker Change: Yeah.
Speaker Change: I'll start with our key takeaways for the quarter and the full year.
Speaker Change: Starting in Australia, we continued to execute on our growth strategy and our.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce Regan Nelson Vice President corporate development and Investor Relations. Please go ahead.
Speaker Change: <unk> strong occupancy levels in the region.
Speaker Change: Revenues in that segment increased 23% compared to the fourth quarter of 2023.
Speaker Change: Thank you and welcome to <unk> fourth quarter and full year 2024 earnings conference call.
Speaker Change: This was driven by increased activity.
Bradley Dodson: Today, our call will be led by Bradley Dodson, <unk>, President and Chief Executive Officer, and Colin Gary <unk>, Chief Financial Officer and Treasurer.
Speaker Change: Our integrated services business from our recently announced $1 4 billion dollar contract.
Speaker Change: We also recently announced an acquisition of four villages in the Australian Bowen Basin.
Bradley Dodson: Before we begin we would like to caution listeners regarding forward looking statements.
Speaker Change: This acquisition is expected to be immediately accretive to cash flow and we will expand our presence into a new area of that basin.
Bradley Dodson: To 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.
Speaker Change: It also advances our goal to secure steady sources of revenues and earnings as its backed with two and three year take or pay contracts with new and existing blue chip customers.
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.
Speaker Change: Moving to Canada, we experienced lower billed rooms, as a result of our customers reduce capital spending in response to their investor pressure as well as increasing.
Bradley Dodson: As noted in our earnings release, we have provided supplemental data disclosing revenue associated with our asset light business and those of our asset intensive businesses.
Speaker Change: Economic and political uncertainty.
Speaker Change: Which we expect to continue in 2025.
Bradley Dodson: This data can be found in the earnings release schedules.
Speaker Change: While some of the decline in Canada was expected and correlated with the wind down and LNG related activity Canadian Lodge billed rooms did not recover as expected from the negative impact of the wire wildfires in the third quarter of 2024.
Bradley Dodson: I'll now turn the call over to Bradley.
Bradley Dodson: Yeah.
Bradley Dodson: Thank you Greg and thank you all for joining us today on our fourth quarter and full year 2024 earnings calls.
Bradley Dodson: I'll start the call today with the key takeaways and then I'll provide a brief summary of our fourth quarter and full year 2024 performance didn't Colin will provide financial and segment level review.
Speaker Change: Due to the aforementioned customer focus on cost reductions.
Speaker Change: In response to these challenges and expectations for a continued lower level of customer spending in the region.
Bradley Dodson: And I'll conclude our prepared comments with our initial 2025 guidance and the underlying regional assumptions.
Speaker Change: We've begun right sizing our Canadian business to address this new level of uncertainty and taking further strategic actions to expand our geographic and end market reach to reduce our dependency on oil sands activity.
Thereafter, we will open the call for questions.
Bradley Dodson: I'll start with our key takeaways for the quarter and the full year.
Bradley Dodson: Starting in Australia, we continued to execute on our growth strategy and our extreme.
We will incur one time restructuring costs of approximately $3 million in the first quarter of 2025, as we called close existing lodges and reduce overhead head count by approximately 25%, which we expect to strengthen our results in the medium term.
Bradley Dodson: Variances strong occupancy levels in the region.
Bradley Dodson: Revenues in that segment increased 23% compared to the fourth quarter of 2023.
Bradley Dodson: This was driven by increased activity.
Speaker Change: While we acknowledge and are addressing the near term reality of the unfavorable trough in Canadian oil and LNG related activity, we remain optimistic for the medium to long term outlook for the business.
Bradley Dodson: In our integrated services business from our recently announced one 4 billion dollar contract.
Bradley Dodson: We also recently announced an acquisition of four villages in the Australian Bowen Basin.
Speaker Change: Bidding activity in diversified end markets ramp up of additional ramp up of additional Canadian LNG projects are potential positive shift in the federal Canadian Federal government policy and carbon capture initiatives, namely in pathways projects. These could be catalysts for growth moving forward.
Bradley Dodson: This acquisition is expected to be immediately accretive to cash flow it will expand our presence into a new area of that basically.
Bradley Dodson: It also advances our goal to secure steady sources of revenues and earnings as its back with two and three year take or pay contracts with new and existing blue chip customers.
Bradley Dodson: Yeah.
Speaker Change: So lastly for the full year of 2024, we earned we returned approximately $44 million of capital to shareholders through our quarterly dividends and share repurchases, which represented approximately 65% of 2020 for free cash flow.
Bradley Dodson: Moving to Canada, we experienced lower billed rooms, as a result of our customers reduce capital spending in response to their investor pressure as well as increasing economic.
Bradley Dodson: Economic and political uncertainty.
Bradley Dodson: We expect to continue in 2025.
Speaker Change: Since the initiation of our share repurchase program in 2021, we have repurchased approximately.
Bradley Dodson: While some of the decline in Canada was expected and correlated with the wind down in L. A G related activity Canadian Lodge and village rooms did not recover as expected from the negative impact of the wire wildfires in the third quarter of 'twenty 'twenty four.
Equivalent of 20% of our common shares outstanding.
Speaker Change: Let me take a moment to provide a bit of context on the evolution of where I hand, it over to Colin.
Speaker Change: 10 years ago, <unk> was a much more an asset intensive company focusing on capital deployment.
Bradley Dodson: Due to the aforementioned customer focus on cost reductions.
Bradley Dodson: In response to these challenges and expectations for continued lower level of customer spending in the region.
Speaker Change: On internal manufacturing and installation of new lodges and villages at the time of our spin CBO had $775 million of debt and our revenue was approximately 70% tied to Canadian oil sands, most of which was supporting customers construction activity and building the majority of the oil sands infrastructure that exists today.
Bradley Dodson: We've begun right sizing our Canadian business to address this new level of uncertainty and taking further strategic actions to expand our geographic and end market reach to reduce our dependency on oil sands activity.
Bradley Dodson: We will incur one time restructuring costs of approximately $3 million in the first quarter of 2025, as we called close existing lodges and reduce overhead head count by approximately 25%, which we expect to strengthen our results in the medium term.
Speaker Change: Since then we have successfully deleveraged the company and diversified our revenue sources.
Speaker Change: We first entered in entered the integrated services market in Australia with the action industrial catering acquisition in 2019.
Speaker Change: And have focused on growth delivering a five year topline organic CAGR of 38% in that business.
Bradley Dodson: While we acknowledge and are addressing the near term reality of the unfavorable trough in Canadian oil and LNG related activity, we remain optimistic for the medium to long term outlook for the business.
Speaker Change: This asset life business provides catering and facility management services to our clients at both our owned and our customer owned accommodations assets.
Bradley Dodson: Bidding activity in diversified end markets ramp up of additional ramp up of additional Canadian LNG projects are potential positive shifts in the federal Canadian Federal government policy and carbon capture initiatives, namely the pathways projects. These could be catalysts for growth moving forward.
Speaker Change: Our revenue mix today is more weighted to steelmaking commodities in Australia, and we have a much lower debt profile.
Speaker Change: To better illustrate the evolution of our business and our current asset mix, we have provided new supplemental disclosure that illustrates the revenues of our asset light.
Bradley Dodson: So lastly for the full year of 'twenty 'twenty four we earned we returned approximately $44 million of capital to shareholders through our quarterly dividends and share repurchases, which represented approximately 65% of 'twenty 'twenty four is free cash flow.
Speaker Change: Business, which includes hospitality services at both our owned assets and our customer owned assets.
Speaker Change: And our asset intensive business, which is largely includes the accommodations revenue associated with our lodge and village assets as well as our Canadian mobile camp business.
Bradley Dodson: Since the initiation of our share repurchase program in 2020, one we've repurchased approximately equivalent at 20% of our common shares outstanding.
Speaker Change: We believe that investors continue to perceive CDO as a pure play accommodations, our asset intensive business.
Speaker Change: So we provided supplemental disclosure to highlight the key components of our business and shows the significant growth, we've achieved and integrated services or this asset light part of the business.
Bradley Dodson: Let me take a moment to provide a bit of context on the evolution before I hand, it over to Colin.
Speaker Change: 10 years ago severe was much more asset intensive companies focusing on capital deployment.
Speaker Change: We are positioning the company for ongoing value creation over the next 10 years in the short run this means continuing diversification of our revenue streams as evidenced by our recent Australian acquisition announcement, and redirecting our capital spend to the markets where conditions warrant change.
Our internal manufacturing and installation of new lodges and villages at the time of our spin CBO had $775 million of debt and our revenue was approximately 70% tied to Canadian oil sands, most of which was supporting customers construction activity and building the majority of the oil sands infrastructure that exists today.
Speaker Change: With that I will.
Speaker Change: Turn it over to Colin.
Colin: Thank you Bradley and thank you all for joining us this morning.
Speaker Change: Since then we have successfully deleveraged the company and diversified our revenue sources.
Colin: Today, we reported total revenues in the fourth quarter of $151 million with a net loss of $15 1 million or $1 10 per diluted share during the fourth quarter.
Speaker Change: We first entered in entered the integrated services market in Australia with the action industrial catering acquisition in 2019.
Colin: We generated adjusted EBITDA of $11 4 million in operating cash flow of $9 5 million. The decrease in adjusted EBITDA in the fourth quarter of 2024 compared to 2023 was primarily due to decreased billed rooms at the Canadian lodges this lower level of customer spending.
Speaker Change: And have focused on growth delivering a five year topline organic CAGR of 38% in that business.
Speaker Change: This asset light business provides catering and facility management services to our clients at both our owned and our customer around accommodations assets.
Speaker Change: Our revenue mix today is more weighted to steelmaking commodities in Australia, and we have a much lower debt profile.
Colin: It is expected to continue as producers in the region are keenly focused on reducing operating costs.
Colin: The decrease in cash flow relative to the year ago quarter was negatively impact by net proceeds related to the sales and the pellet Lake Lodge and hold back collections related to the wind down of the Canadian mobile camp projects in the fourth quarter of 2023.
Speaker Change: To better illustrate the evolution of our business and our current asset mix. We have provided a new supplemental disclosure that illustrates the revenues of our asset light.
Speaker Change: Business, which includes hospitality services at both our owned assets and our customer owned assets.
Colin: For the full year 2024, we reported revenues of $682 million and a net loss of $17 1 million or $1 19 per diluted share.
Speaker Change: And our asset intensive business, which is largely includes the accommodations revenue associated with our lodge and village assets as well as our Canadian mobile camp business.
Colin: In 2024, we generated adjusted EBITDA of $79 9 million.
Speaker Change: We believe that investors continue to perceive CDO as a pure play accommodations or asset intensive business.
Colin: A decrease from our 2023 adjusted EBITDA of $106 5 million.
Speaker Change: So we provided supplemental disclosure to highlight the key components of our business and shows the significant growth, we've achieved and integrated services or this asset light part of the business.
Colin: The decrease in adjusted EBITDA for the full year as compared to 2023 was largely driven by.
Colin: The Mcclelland Lake Lodge sale, which occurred in 2023.
Speaker Change: We are positioning the company for ongoing value creation over the next 10 years in the short run this means continuing diversification of our revenue streams as evidenced by our recent Australian acquisition announcement, and redirecting our capital spend to the markets where conditions warrant change.
Colin: And the expected wind down of LNG related activity in Canada.
Colin: That impacted both some of our own largest as well as our mobile camp activity, which was offset by increased billed rooms in the Australian own villages and increased Australian integrated services activity.
Colin: With that I will turn it over to Colin.
Colin: Let's now turn to the fourth quarter results for our two segments I'll begin with a review of the Australian segment performance compared to its performance a year ago.
Colin: Thank you Bradley and thank you all for joining us this morning.
Speaker Change: Today, we reported total revenues in the fourth quarter of $151 million with a net loss of $15 $1 million or $1 10 per diluted share during the fourth quarter.
Colin: Fourth quarter revenues from our Australia segment were $110 million up 20.
Colin: 3% from $89 3 million in the fourth quarter of 2023.
Speaker Change: We generated adjusted EBITDA of $11 4 million in operating cash flow of $9 5 million. The decrease in adjusted EBITDA in the fourth quarter of 2024 compared to 2023 was primarily due to decreased billed rooms at the Canadian lodges. This lower level of customer spending is expected to continuous.
Colin: Adjusted EBITDA was 20 to $22 2 million up 3% from $21 5 million last year.
Colin: The increase in revenues and adjusted EBITDA was primarily primarily due to increased integrated services activity related to our recent contract announcements.
Colin: Australia, Australia and billed rooms in the quarter were 637000 rooms relatively flat from the fourth quarter of 2023, our daily room rate for our for our Australian owned villages in U S dollars was $77.
Producers in the region are keenly focused on reducing operating costs.
Speaker Change: The decrease in cash flow relative to the year ago quarter was negatively impact by net proceeds related to the sales in the southern Lake Lodge and hold back collections related to the wind down of the Canadian mobile camp projects in the fourth quarter of 2023.
Colin: Which increased from $74 in the fourth quarter of 2023 due to CPI escalations on the recent contracts.
Speaker Change: For the full year 2024, we reported revenues of 682 million and a net loss of $17 1 million.
Colin: Yes.
Colin: Turning to Canada, we recorded revenues of $40 7 million.
Colin: As compared to $72 $7 million in the fourth quarter of 2023.
Speaker Change: Or $1 19 per diluted share.
Colin: Adjusted EBITDA in Canada was negative $4 7 million a decrease from $3 5 million.
Speaker Change: In 'twenty 'twenty four we generated adjusted EBITDA of $79 9 million.
Speaker Change: A decrease from our 2023 adjusted EBITDA of $106 5 million.
Colin: In the fourth quarter of 2023, the year over year revenue and adjusted EBITDA decreases were again.
Speaker Change: The decrease in adjusted EBITDA for the full year as compared to 2023 was largely driven by.
Colin: Driven by the wind down of LNG related activity, including the completion of pipeline activity for our mobile camps, a sale of the Mcclelland Lake Lodge and lower billed rooms, as a result of our customers' recent focus on cost and head count reductions.
Speaker Change: The Mcclelland Lake Lodge sale, which occurred in 2023, and the expected wind down of LNG related activity in Canada.
Colin: During the fourth quarter billed rooms in our Canadian lodges totaled 360000, which was down from 617000 in the fourth quarter of 2024 due to the reasons I just mentioned.
Speaker Change: That impacted both some of our own largest as well as our mobile camp activity, which was offset by increased billed rooms in the Australian own villages and increased Australia and integrated services activity.
Colin: Our daily room rate for the Canadian segment in U S dollars was $94, which decreased from $95 in the fourth quarter.
Speaker Change: Let's now turn to the fourth quarter results for our two segments I'll begin with a review of the Australian segment performance compared to its performance a year ago.
Colin: Of 2024 due to the mix of occupancy among the largest.
Speaker Change: Fourth quarter revenues from our Australian segment were $110 million up 23% from $89 3 million in the fourth quarter of 2023.
Colin: Looking at our capital structure, our net debt on December 31, 2024 was $38 1 million or <unk>.
Colin: $5 $9 million increase since September 32024, our net leverage ratio for the quarter was 0.5 times as of December 31 2024.
Speaker Change: Adjusted EBITDA was 20 to $22 2 million up 3% from $21 5 million last year.
Speaker Change: The increase in revenues and adjusted EBITDA was primarily primarily due to increased integrated services activity related to our recent contract announcements, Australia, Australia and billed rooms in the quarter were 637000 rooms relatively flat from the fourth quarter of 2023, our daily room rate for our for our Australian villages in U.
Colin: As of December 31, 2024, we had total liquidity of approximately $202 million, giving us the strength and flexibility to opportunistically pursue growth opportunities such as our recently announced Australian acquisition, while maintaining prudent leverage ratios.
Colin: Next I will turn to.
Colin: Capital allocation.
Speaker Change: <unk> dollars were $77.
Colin: I'll start with Capex on a consolidated basis capital expenditures for the full year 2020 forward.
Speaker Change: Which increased from $74 in the fourth quarter of 2023 due to CPI escalations in the recent contracts.
Colin: Down from $31 6 million during 2023 <unk>.
Speaker Change: Yeah.
Turning to Canada, we recorded revenues of $40 $7 million.
Colin: Capital expenditures in both periods were predominantly related to maintenance spending on are larger than villages.
Speaker Change: As compared to $72 $7 million in the fourth quarter of 2023.
Speaker Change: Adjusted EBITDA in Canada was negative $4 7 million a decrease from $3 5 million.
Colin: Capex in 2024 included approximately $3 million related to customer funded infrastructure upgrades at the bets.
Speaker Change: In the fourth quarter of 2023, a year over year revenue and adjusted EBITDA decreases were again.
Colin: Our Australian villages, which were reimbursed by Cvs customer.
Speaker Change: Driven by the wind down of LNG related activity, including the completion of pipeline activity for our mobile camps, a sale of the Mcclelland Lake Lodge and lower billed rooms, as a result of our customers' recent focus on cost and head count reductions.
Colin: That compared to $10 million for the same spend in 2023.
In the fourth quarter of 2024, we repurchased approximately 208000 shares through our share repurchase program for a total of approximately $5 6 million.
Speaker Change: During the fourth quarter billed rooms in our Canadian lodges totaled 360000, which was down from 617000 in the fourth quarter of 'twenty 'twenty four due to the reasons I just mentioned.
Colin: For the full year 2024, we repurchased over one 1 million shares for approximately $29 6 million compared to 564000 shares for $11 6 million in 2023.
Speaker Change: Really room rate for the Canadian segment in U S dollars was $94, which decreased from $95 in the fourth quarter.
Speaker Change: As Bradley mentioned this brings our total return of capital to shareholders in 2024, including quarterly dividends and share repurchases to $44 million, representing 65% of our 2020 for free cash flow.
Speaker Change: Oh 2024, due to the mix of occupancy I'm on lodges.
Speaker Change: Looking at our capital structure, our net debt on December 31, 2024 was $38 1 million a.
Speaker Change: We will continue to opportunistically repurchase shares moving forward.
Speaker Change: $5 $9 million increase in September 30th 'twenty 'twenty four our net leverage ratio for the quarter was 0.5 times as of December 31 2024.
Speaker Change: Regarding the dividend earlier this month, the company announced that its board of directors declared a quarterly cash dividend of.
Speaker Change: <unk> 25 per common share payable on March 17 to 2025 to shareholders of record as of close of business on February 24 2025.
Speaker Change: As of December 2031, 'twenty 'twenty four we had total liquidity of approximately $202 million, giving us the strength and flexibility to opportunistically pursue growth opportunities such as our recently announced Australian acquisition, while maintaining prudent leverage ratios.
Bradley Dodson: With that I'll turn it over to Bradley to discuss our guidance for the full year 2025.
Bradley Dodson: Thank you Colin.
Bradley Dodson: I would like to now turn to a discussion of our initial 2025 guidance on a consolidated basis, including the underlying macro and regional assumptions.
Speaker Change: Next I will turn to our capital allocation.
Speaker Change: I'll start with Capex on a consolidated basis capital expenditures for the full year 2024, with $26 $1 million down from $31 $6 million during 2023.
Bradley Dodson: We are initially initiating full year 2025 revenue and adjusted EBITDA guidance.
Bradley Dodson: Revenues of $630 million to $660 million and adjusted EBITDA of 80 million to $90 million.
Speaker Change: Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages.
Speaker Change: Capex in 2024 included approximately $3 million related to customer funded infrastructure upgrades.
Bradley Dodson: Our initial full year 2025 capital expenditure guidance is $25 million to $30 million.
Speaker Change: At our Australian villages, which were reimbursed by serious customer.
Bradley Dodson: This guidance takes into account the recent reduction in force.
Speaker Change: That compared to $10 million for the same spend in 2023.
Bradley Dodson: Currency exchange rates experienced since late 2024.
Bradley Dodson: And excludes any contribution from the recently announced Australian acquisition, which we expect to close during the second quarter subject to regulatory approvals and customary conditions.
Speaker Change: And in the fourth quarter of 2024, we repurchased approximately 208000 shares through our share repurchase program for a total of approximately $5 6 million for.
Speaker Change: For the full year 2024, we repurchased over one 1 million shares for approximately $29 $6 million compared to 564000 shares for $11 $6 million in 2023.
Bradley Dodson: And we will provide updated 2020 guidance upon completion.
Bradley Dodson: On last quarter's earnings conference call in October 2024, we provided a preliminary outlook for 2025.
Speaker Change: As Bradley mentioned this brings our total return of capital to shareholders in 2024, including quarterly dividends and share repurchases to $44 million, representing 65% of our 2020 for free cash flow.
Bradley Dodson: Since then there have been some material shifts in global markets and within our business that have impacted our outlook.
Bradley Dodson: I would note that.
Bradley Dodson: Those comments on the conference call, where before the U S election before changes in Canadian political landscape.
Speaker Change: We will continue to offer to opportunistically repurchase shares moving forward.
Bradley Dodson: The announcement of potential tariffs and the impact that the all of those have had on U S dollar versus Canadian dollar and Australian dollar exchange rates.
Speaker Change: Regarding the dividend earlier this month, the company announced that its board of directors declared a quarterly cash dividend.
Speaker Change: A <unk> 25 per common share payable on March 17 to 2025 to shareholders of record as of close of business on February 24025.
Bradley Dodson: So first the Australian and Canadian currency exchange rates have weakened meaningfully compared to 2024.
Speaker Change: With that I'll turn it over to Bradley to discuss our guidance for the full year 2025 Bradley.
Bradley Dodson: Driving an EBITDA headwind for our U S denominated results.
Bradley Dodson: Thank you Colin.
Bradley Dodson: Based on today's spot rate the order magnitude of this headwind is approximately $5 million.
Speaker Change: I would like to now turn to a discussion of our initial 2025 guidance on a consolidated basis, including the underlying macro and regional assumptions.
Bradley Dodson: And EBITDA.
Bradley Dodson: Second the political uncertainty in Canada is driving changes in customer behavior new.
Speaker Change: We are initially initiating full year 2025 revenue and adjusted EBITDA guidance.
New capital spending is certainly being delayed or pushed to the right, which impacts our mobile camp fleet deployment.
Speaker Change: Of revenues of $630 million to $660 million and adjusted EBITDA of 80 million to $90 million.
Bradley Dodson: Our oil sands customers quest to lower operating cost has accelerated.
Bradley Dodson: Tolerated driving a sustained reduction in our Canadian occupancy.
Speaker Change: Our initial full year 2025 capital expenditure guidance is $25 million to $30 million.
Bradley Dodson: Taken together the combination of all of these factors is driving reduced guidance as compared to the $90 million comment I made last quarter.
Speaker Change: This guidance takes into account the recent reduction in currency.
Speaker Change: Currency exchange rates experienced since late 2024.
Bradley Dodson: That said the team is executing on what we can control.
Bradley Dodson: In Canada, we are aggressively looking inward at our cost structure to rightsize the business.
Speaker Change: And excludes any contribution from the recently announced Australia acquisition, which we expect to close during the second quarter subject to regulatory approvals and customary conditions.
Bradley Dodson: In Australia, we are.
Bradley Dodson: Applying capital to facilitate continued growth as evidenced by our recently announced acquisition.
Speaker Change: We will provide updated 2025 guidance upon completion.
Bradley Dodson: Based on these investments we are confident that we will exit 2025 in a better position than when you're starting it.
Speaker Change: On last quarter's earnings conference call in October 2024, we provided a preliminary outlook for 2025.
Bradley Dodson: In 2025, we expect cash tax payments of approximately $90 million in Australia, which includes approximately $10 million of payments related to the 2020 for the tax year.
Speaker Change: Since then there have been some material shifts in global markets and within our business that have impacted our outlook.
Speaker Change: I would note that that that those comments on the conference call, where before the U S election before changes in Canadian political landscape.
Bradley Dodson: I'm, sorry, we expect cash tax payments of approximately $30 million, which includes $10 million related to the 2020 for tax year.
Speaker Change: The announcement of potential tariffs and the impact that the all of those have had on U S dollar versus Canadian dollar and Australian dollar exchange rates.
Bradley Dodson: When we incorporate the 2025.
Cash tax payments of $30 million.
Speaker Change: So first the Australian and Canadian currency exchange rates have weakened meaningfully compared to 2024.
We anticipate 2025 free cash flow of $30 million to $40 million.
Bradley Dodson: I will now provide the regional outlooks in corresponding underlying assumptions by region.
Speaker Change: Driving an EBITDA headwind for our U S denominated results.
Speaker Change: Based on today's spot rate the order magnitude of this headwind is approximately $5 million in EBITDA.
Bradley Dodson: And Australia customer activity and our own villages remains incredibly strong.
Bradley Dodson: And we expect to continue at similar levels moving forward.
Speaker Change: Second the political uncertainty of Canada is driving changes in customer behavior, new capital spending, it's certainly being delayed or pushed to the right, which impacts our mobile camp fleet deployment.
Bradley Dodson: We are full at three of our Bowen basin villages with strong occupancy at the rest of our own village portfolio in Australia, we expect that to continue throughout 2025.
Speaker Change: And our oil sands customers quest to lower operating costs has accelerated drive accelerated driving a sustained reduction in our Canadian occupancy.
Bradley Dodson: As it relates to our integrated services business, we are continuing to experience increased demand from a recent contract award and expect to build on this in 2025 as we work towards our stated goal.
Speaker Change: Taken together the combination of all these factors is driving reduced guidance as compared to the $90 million comment I made last quarter.
Bradley Dodson: <unk> $500 million Australian of integrated services revenues by 2027.
Bradley Dodson: Our outlook also assumes an Australia modest build room growth as well as expansion of our CIS business.
That said the team is executing on what we can control.
Speaker Change: In Canada, we are aggressively looking inward at our cost structure to rightsize the business.
Bradley Dodson: In Canada as I mentioned earlier, our customers are focused on reducing capital spending and operating costs investments in the region have declined over the last 10 years as a result of increased economic and political uncertainty leading to lower head count and the Alberta, Oilsands region, and therefore negatively affecting our occupancy.
Speaker Change: In Australia, we are.
Speaker Change: We're deploying capital to facilitate continued growth as evidenced by our recently announced acquisition.
Speaker Change: Based on these investments we are confident that we will exit 2025 in a better position than when we were starting it.
Speaker Change: In 2025, we expect cash tax payments of approximately $90 million in Australia, which includes approximately $10 million of payments related to the 2020 for the tax year.
Bradley Dodson: In the first quarter of 2025, we will incur one time restructuring costs of approximately $3 million to help rightsize, our Canadian cost structure.
Bradley Dodson: This includes cold shutting certain lodges.
Speaker Change: I'm, sorry, we expect cash tax payments of approximately $30 million, which includes $10 million related to.
Bradley Dodson: And reducing overhead.
Bradley Dodson: Approximately 25% in terms of head count.
Bradley Dodson: The strategy in Canada is to weather the storm.
Speaker Change: 2020 for tax here.
Bradley Dodson: As leaner cost structure as possible.
Speaker Change: When we incorporate the 2025.
Bradley Dodson: We are looking to reduce our dependency on the oil sands activity, but by potentially.
Speaker Change: Cash tax payments of $30 million.
Speaker Change: We anticipate 25 free cash flow of $30 million to $40 million.
Bradley Dodson: Expanding geographically in the end markets, we serve in Canada.
Bradley Dodson: As we stated before we will only pursue opportunities in line with our capital allocation framework.
Speaker Change: I will now provide the regional outlooks in corresponding underlying assumptions by region.
Bradley Dodson: Despite these near term headwinds, we remain optimistic about the medium and long term opportunities in North America, including for example possible ramp up of LNG activity in the next couple of years and the possibility of the pathways carbon capture project.
Speaker Change: And Australia customer activity and our own villages remains incredibly strong and we expect.
Speaker Change: To continue at similar levels moving forward.
Speaker Change: We are full at three of our Bowen basin villages with strong occupancy at the rest of our own village portfolio in Australia, we expect that to continue throughout 2025.
Bradley Dodson: Before we head into the Q&A section of the call I would like to close by saying.
Speaker Change: As it relates to our integrated services business. We have continued to experience increased demand from a recent contract award and expect to build on this in 2025 as we work towards our stated goal of $500 million, Australia in a integrated services revenues by 2027.
And our Canadian business 2025 will be a year of transition while we work to mitigate these near term headwinds we remain opt in opt.
Bradley Dodson: Optimistic about the business and we will see improvements in the medium to long term based on its strategic actions, we're taking today.
Speaker Change: Our outlook also assumes an Australia modest build room growth as well as expansion of our <unk> business.
Bradley Dodson: We will continue to grow our Australia and integrated services business in line with our stated strategy and are pleased with the progress that we've made in the region thus far.
Speaker Change: In Canada as I mentioned earlier, our customers are focused on reducing capital spending and operating costs investments in the region have declined over the last 10 years as a result of increased economic and political uncertainty leading to lower head count and the Alberta, Oilsands region, and therefore negatively affecting our occupancy.
Bradley Dodson: I am confident in our team's ability to execute on our growth strategy as we adhere to our capital allocation framework.
Bradley Dodson: With that I'll open the call to questions.
Bradley Dodson: Okay.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two 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 keys.
Speaker Change: In the first quarter of 2025, we will incur one time restructuring cost of approximately $3 million to help rightsize, our Canadian cost structure.
This includes cold shutting certain lodges.
Speaker Change: And reducing overhead.
Speaker Change: Approximately 25% in terms of head count.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: The strategy in Canada is to weather the storm.
Speaker Change: As leaner cost structure as possible.
Speaker Change: We are looking to reduce our dependency on the oilsands activity by potentially expanding geographically in the end markets we serve in Canada.
Stephen: Thank you. Our first question is from Stephen <unk> with Stifel. Please proceed with your question.
Speaker Change: Hi, Thanks, good morning, everybody.
Speaker Change: As we stated before we will only pursue opportunities in line with our capital allocation framework.
Speaker Change: Good morning.
Speaker Change: I think a couple for me.
Speaker Change: The first is.
Speaker Change: Despite these near term headwinds, we remain optimistic about the medium and long term opportunities in North America, including for example possible ramp up of.
Speaker Change: Q you disclosed incremental details about the asset light versus asset intensive businesses.
Speaker Change: One of the things that jumped out to me was I was kind of under the impression that the.
LNG activity in the next couple of years and the possibility of the pathways carbon capture project.
Speaker Change: Asset intensive side was a larger revenue base. So in that breakout does that include sort of catering and facility management that you are providing at owned assets.
Speaker Change: Before we head into the Q&A section of the call I'd like to close by saying.
Speaker Change: In our Canadian business 2025 will be a year of transition while we work to mitigate these near term headwinds we remain optimistic.
Speaker Change: That's correct and so it includes the third party.
Speaker Change: Optimistic about the business and we will see improvements in the medium to long term based on strategic actions, we're taking today.
Speaker Change: Integrated services that we provide at customer owned locations and combine that with.
Speaker Change: The hospitality services.
Speaker Change: We will continue to grow our Australian integrated services business in line with our stated strategy and are pleased with the progress that we've made in the region thus far.
Speaker Change: Perform at our owned locations.
Speaker Change: Okay.
Speaker Change: And then when we think about that going forward I imagine that the integrated services side sort of the area of growth.
Speaker Change: I am confident in our team's ability to execute on our growth strategy as we adhere to our capital allocation framework.
Speaker Change: That's right.
Okay great.
Speaker Change: With that I'll open the call to questions.
Speaker Change: The two other ones that I had one is.
Speaker Change: From a from a seasonal perspective I know your guidance is still early stage, but is there any reason not to expect kind of a normal seasonal distribution 25 was there anything specific we should be thinking about from that perspective.
Speaker Change: Okay.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two 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 keys.
Speaker Change: I assume youre, referring historically, 60% to 65% of the full year EBITDA is generated in the second and third quarters and that is expected to be the case in 2025 as well.
Speaker Change: One of them in place, while we poll for questions.
Speaker Change: Excluding the impact and the timing of the Australian acquisition.
Speaker Change: Thank you. Our first question is from Stephen <unk> with Stifel. Please proceed with your question.
Speaker Change: Okay great.
Speaker Change: Hi, Thanks, good morning, everybody.
Speaker Change: And then the other question has to do with Canada and.
Speaker Change: Good morning.
Speaker Change: I think a couple for me.
Speaker Change: When we.
Speaker Change: We think about.
Speaker Change: The first is <unk>.
Speaker Change: What sort of highly visible in Canada.
Speaker Change: Q you disclosed incremental details about the asset light versus asset intensive businesses.
Speaker Change: It is more for lack of better word kind of spot oriented work is there any way to think about sort of the percentage of the Canadian revenue stream, even using 'twenty 'twenty four is kind of a benchmark that like how much of that is sort of a highly visible at this point and how much of that is.
Speaker Change: One of the things that jumped out to me was I was kind of under the impression that the asset intensive side was a larger revenue base. So in that breakout does that include sort of a.
Speaker Change: Catering and facility management that you are providing at owned assets.
Speaker Change: Sort of more discretionary.
Speaker Change: I'll frame the answer in this way is that historically we have.
Speaker Change: That's correct and so it includes the third party.
Speaker Change: In Canada, we have the number of guests we have kind of through daily operations and then the second component is turnaround activity, which.
Speaker Change: Our integrated services that we provide at customer owned locations and combine that with the.
Speaker Change: The hospitality services we.
Speaker Change: Which is the primary driver of the seasonality, we just spoke about.
Speaker Change: Perform at our own locations.
Speaker Change: Okay.
Speaker Change: Canadian turnaround activity typically occurs in the second and third quarters because of the climate.
Speaker Change: And then when we think about that going forward I imagine that the integrated services side sort of the area of growth.
Speaker Change: The increase in productivity when it's not sub freezing temperatures.
Speaker Change: That's right.
Speaker Change: As a result his.
Speaker Change: Okay.
Speaker Change: Historically turnaround activity in terms of our total number of room nights in Canada on a full year basis is about 25% to 30% of total room nights.
Speaker Change:
Speaker Change: The two other ones that I had one is.
Speaker Change: From a from a seasonal perspective I know your guidance is still early stage, but is there any reason not to expect kind of a normal seasonal distribution in <unk>.
Speaker Change: That's expected to continue.
Speaker Change: Alright.
Speaker Change: No. That's good color I'll get back in line, but that's very helpful. Thanks.
Speaker Change: <unk> 25 was there anything specific we should be thinking about from that perspective.
Steve: Thank you Steve.
Speaker Change: Okay.
Speaker Change: I assume youre, referring it historically, 60% to 65% of the full year EBITDA is generated in the second and third quarters and that is expected to be the case in 2025 as well.
Speaker Change: Our next question is from Steve, Arizona with Sidoti.
Steve: Good morning, Bradley Colin appreciate all the detail on the call.
Speaker Change: Broadly yes.
Speaker Change: Wanted to ask about the response to what some might view as short term uncertainty do you seem to now expect and I'm sure. This is coming from customer feedback that.
Speaker Change:
Speaker Change: Excluding the impact and the timing of the Australian acquisition.
Speaker Change: Okay great.
Speaker Change: And then the other question has to do with Canada and.
Speaker Change: This reaction is ultimately going to be long term, there's going to be a longer term impact great political uncertainty is what it is the wildfires, maybe you didn't recover as fast.
Speaker Change: When.
Speaker Change: We think about.
Speaker Change: What's the sort of highly visible in Canada, and what is more for lack of better word kind of spot oriented work is there any way to think about sort of the percentage of the Canadian revenue stream, even using 2024 is kind of a benchmark that like how much of that is sort of a highly visible at this point and how much of that is.
Speaker Change: I'm curious if this is sort of.
Speaker Change: The needle that broke the camel's back or.
Speaker Change: Are you seeing the reaction from customers to be alright, we're cutting in that right do you see where I'm going with this a 25% workforce reduction is pretty dramatic given some of this some might view. This is short term.
Speaker Change: Sort of more discretionary.
Speaker Change: I'll frame the answer in this way is that historically we have.
Speaker Change: No that's a good that's a good point.
In Canada, we have the number of guests we have kind of through daily operations and then the second component is turnaround activity, which.
Speaker Change: Very good question.
Speaker Change: We are viewing this as a as a shift in customer behavior and propane that it will be a long term shift in customer behavior as it relates to occupancy levels and the Canadian oil Sands region.
Speaker Change: Which is the primary driver of the seasonality, we just spoke about.
Speaker Change: Canadian turnaround activity typically occurs in second and third quarters because of the climate and the increase in productivity when it's not sub freezing temperatures.
Speaker Change: And so we're making adjustments to cost structure to reflect that.
Speaker Change: It was a a market dynamic that we.
Speaker Change: As a result.
Speaker Change: Historically turnaround activity in terms of our total number of room nights in Canada on a full year basis, it's about 25% to 30% of total room nights.
Speaker Change: Really started to feel in the fourth quarter of last year.
Speaker Change: And close staying close with our customers we see that.
That's expected to continue.
Speaker Change: That level that intent to reduce head count on site to continue.
Speaker Change: Alright.
Speaker Change: Yeah, no that's good I'll get back in line, but that's very helpful. Thanks.
Speaker Change: And so we're adjusting our cost structure accordingly, now what can change that picture.
Steve: Thank you Steve.
Speaker Change: <unk> effectively.
Steve: Yeah.
Steve: Our next question is from Steve, Arizona with Sidoti.
Speaker Change: Our Canadian oil sands rooms are serving operations and maintenance is there any sort of project work or expansionary work.
Steve: Good morning, Bradley Colin appreciate all the detail on the call.
Speaker Change: Over the medium term.
Steve: Yes, I wanted to ask about the response to what.
Speaker Change: That would be positive to occupancy pathways will be positive to occupancy another LNG project will be positive to occupancy and Sitka.
Steve: Some might view as short term uncertainty do you seem to now expect and I'm sure. This is coming from customer feedback that this.
Speaker Change: But.
Speaker Change: With the Canadian government effectively shut down until they resolve the prime minister situation.
Steve: Reaction is ultimately going to be long term.
Steve: Going to be a longer term impact great political uncertainty is what it is the wildfires, maybe you didn't recover as fast.
Speaker Change: 2025 is kind of a question Mark.
Speaker Change: So we don't see that yes, I think the positive the glass half full perspective is customers aren't reacting to the headlines day to day.
Speaker Change: I'm curious if this is sort of.
Steve: The needle that broke the camel's back or.
Speaker Change: They are coming out but there also.
Steve: Are you seeing the reaction from customers to be alright, we're cutting in that right do you see where I'm going with this a 25% workforce reduction is pretty dramatic given some of this.
Speaker Change: Really excited about putting additional capital to work.
Speaker Change: And so I expect Canada will be.
Speaker Change: We've painted appropriately with the term uncertainty.
Steve: Some might view this is short term.
Speaker Change: And then third yes, you could have made cuts earlier right along the way because coming out of Covid I mean, <unk> had excess capacity in the system all along right.
Steve: No that's a good that's a good point.
Steve: Very good question.
Steve: We are viewing this as a as a shift in customer behavior and propane that it will be a long term shift in customer behavior as it relates to occupancy levels and the Canadian oil Sands region.
Speaker Change: I would say that.
Speaker Change: We're always conscious of our cost structure. This was a material change in the outlook we responded accordingly.
Steve: And so we're making adjustments to cost structure to reflect that.
Speaker Change: Okay fair enough.
Steve: It was a market dynamic that we.
Speaker Change: Turning to Australia, which is obviously fantastic results consistently there.
Steve: Really started to feel in the fourth quarter of last year.
Speaker Change: Given the China economic weakness and the pressure, it's having on certain metal prices that are important to your customers.
Steve: And close staying close with our customers we see that.
Steve: That level that intent to reduce head count on site to continue.
Speaker Change: Are you concerned about capex in that market and how it might impact results 18 months from now two years from now and how much to the long term agreements protect you.
And so we're adjusting our cost structure accordingly, now what can change that picture.
Steve: Well.
Steve: Effectively <unk>.
Speaker Change: Great question, I would say that what we've seen there is that.
Steve: And Oilsands rooms are serving operations and maintenance is there any sort of project work or expansionary work over.
Speaker Change: Particularly on the met coal side prices have softened below $200 a ton.
Steve: Over the medium term.
Steve: That would be positive to occupancy pathways will be positive to occupancy another LNG project will be positive to occupancy and sick.
Speaker Change: But what is.
Speaker Change: Kind of Boeing are.
Speaker Change: Our outlook is the current customer conversations customers are still.
Steve: But with the Canadian government effectively shut down until they resolve the prime minister situation.
Speaker Change: Looking for rooms, you referred to in your question, we have a strong backlog.
Steve: 2025 is kind of a question Mark.
Speaker Change: Arms, a take or pay contracts at our Bowen basin locations and customers are still looking for long term contracts there.
Steve: So we don't see that I think the positive the glass half full perspective is customers aren't reacting to the headlines day to day.
Speaker Change: More succinctly it hasnt changed the near term pricing Hasnt change customer behavior at this time so.
Steve: They are coming out but there also.
Steve: Really excited about putting additional capital to work.
Speaker Change: As we look longer term, it's too early to tell.
Steve: And so I expect Canada will be.
Speaker Change: But right now customers are much more in.
Steve: We've painted it appropriately with the term uncertainty.
In Australia are talking about.
Speaker Change: Their expansionary projects there their need for additional rooms, and we're responding accordingly, so the outlook for the owned villages in Australia.
Speaker Change: And then third is you could have made cuts earlier right right along the way because coming out of Covid I mean, you've had excess capacity in the system all along right.
Speaker Change: Looks good at this point.
Speaker Change: That's great.
I would say that.
Speaker Change: Just a modeling question I know you are not including those for bill issues, but when you announced it you did put out an annualized number.
Speaker Change: We're always conscious of our cost structure. This was a material change in the outlook we responded accordingly.
Any reason to think that number's not still fair.
Speaker Change: Okay fair enough.
Speaker Change: Turning to Australia, which is obviously fantastic results consistently there.
Speaker Change: Your reason for not including it more to do with the timing.
Speaker Change: Being unclear.
Speaker Change: Given the China economic weakness and the pressure, it's having on certain metal prices that are important to your customers.
Speaker Change: Yes.
Speaker Change: I think we.
Speaker Change: The conditions to close the transaction are not entirely within our control so not wanting to.
Speaker Change: Are you concerned about capex in that market and how it might impact results 18 months from now two years from now and how much to the long term agreements protect you.
Speaker Change: <unk> put a timeline on that other than to say the current expectation is that closes in the second quarter. So it is not.
Speaker Change: In my opinion, a very delayed closing.
Speaker Change: But there is no reason for us to change.
Speaker Change: Great question, I would say that what we've seen there is that.
Speaker Change: At this point the guidance on that but we think on a full year basis, the acquired business the acquired villages could generate.
Speaker Change: Particularly on the met coal side prices have softened below $200 a ton.
Speaker Change: Okay any risk to closing.
Speaker Change: But what is.
Speaker Change: No not at this point okay. Okay. Thanks, so much.
Speaker Change: Kind of Boeing are.
Speaker Change: Our outlook is the current customer conversations customers are still.
Speaker Change: Yeah.
Speaker Change: Our next question is from Dave storms with Stonegate.
Speaker Change: Looking for rooms, you referred to in New York and your question, we have a strong backlog.
Dave Storms: Morning, I appreciate you taking my questions I actually wanted to stick with that acquisition.
Speaker Change: Arms are take or pay contracts at our Bowen basin locations and customers are still looking for long term contracts there.
Speaker Change: Three nine times EBITDA it feels like a good deal, especially considering the EBIT margin should be pretty.
Speaker Change: Pretty much immediately accretive is this indicative of the overall market that youre seeing in the Bowen basin or is there something specific to that region or that salary that drove this price.
Speaker Change: More succinctly it hasnt changed the near term pricing Hasnt change customer behavior at this time so.
Speaker Change: As we look longer term, it's too early to tell.
Speaker Change: Okay.
Speaker Change: But right now customers are much more in.
Speaker Change: I would say that you've highlighted the things that impacted it.
Speaker Change: In Australia are talking about.
Speaker Change: I think we were we're a buyer that could pay all cash the seller wanted.
Speaker Change: Their expansionary projects there their need for additional rooms, and we're responding accordingly, the outlook for the owned villages in Australia.
Speaker Change: I think a fairly easy straightforward transaction to execute.
And.
Speaker Change: Looks good at this point.
Speaker Change: That's great.
Speaker Change: It is a good price I would say are we going to get.
Speaker Change: Just a modeling question I know, you're not including those four villages, but when you announced it you did put out an annualized number.
Speaker Change: Are all of the assets in the market priced at that level now.
Speaker Change: Any reason to think that number's not still fair.
Speaker Change: Understood. That's very helpful. Thank you and then with that property.
Your reason for not including it more to do with the timing.
Speaker Change: Our integrated services already on site or is there an opportunity to.
Speaker Change: Being unclear.
Speaker Change: Yes, I mean.
Speaker Change: I think we.
Speaker Change: Further add this of your integrated services.
Speaker Change: The conditions to close the transaction are not entirely within our control so not wanting to.
Speaker Change: This would be in addition to the.
Speaker Change: It's an integrated services. So currently the owner outsources that.
Speaker Change: <unk> put a timeline on that other than to say the current expectation is that closes in the second quarter. So it is not.
Speaker Change: We will obviously in sourcing.
Speaker Change: In my opinion, a very delayed closing.
Speaker Change: But theres no reason for us to change.
Speaker Change: That's great. Thank you.
Speaker Change: And then one more for me.
Speaker Change: At this point the guidance on that but we think on a full year basis, the acquired business the acquired villages could generate.
Speaker Change: Great again, they added the asset light one.
Speaker Change: <unk>.
Speaker Change: Disclosure on our report it looked like year over year in Canada, the asset light portion held up fairly well. Despite the noted dropping the occupancy is there anything specific that's driving the resilience there.
Speaker Change: Okay, and any risk to closing.
Speaker Change: No not at this point okay. Okay. Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Our next question is from Dave storms with Stonegate.
Speaker Change: Year over year, the Delta in Canadian revenues was impacted by.
Dave Storms: Morning, I appreciate you taking my questions I actually wanted to stick with that acquisition.
Mobile camp activity, which would be in the asset side of things in 2023 that was not present in 2024 that'd be the biggest driver.
Speaker Change: Three nine times EBITDA it feels like a good deal, especially considering the EBIT margin should be pretty.
Speaker Change: Pretty much immediately accretive is this indicative of the overall market that youre seeing in the Bowen basin or is there something specific to that region or are that salary that drew at this price.
Speaker Change: Understood. Thank you for taking my questions and good luck in 2025.
Speaker Change: Thank you David Thank you.
Speaker Change: Our next question is from Josh Chan with Daniel Energy Partners.
Speaker Change: Okay.
Speaker Change: I would say that you've highlighted that the things that impacted it I think we were we're a buyer they could pay all cash the seller wanted it.
Josh Chan: Thanks. Good morning first question, just when we think about free cash flow.
Josh Chan: You highlighted 65% of your free cash flow last year was returned to shareholders.
Speaker Change: I think a fairly easy straightforward transaction to execute.
Josh Chan: Or are you thinking about this going forward I guess in the context of the acquisition that you just did.
Speaker Change: And.
Speaker Change: It is a good price I would say are we going to get.
Josh Chan: And maybe you could just frame it over the medium to long term. How you guys are thinking about maybe a percentage of free cash flow. It ultimately returns to shareholders.
Speaker Change: Are all of the assets in the market priced at that level now.
Josh Chan: Okay.
Josh Chan: Well I think we are.
Speaker Change: Understood. That's very helpful. Thank you and then with that property by their integrated services already on site or is there an opportunity to.
Josh Chan: Our free cash flow framework.
Josh Chan: It's based off of a fundamental dividend and then opportunistic buybacks.
Josh Chan: With where our leverage has been.
Speaker Change: Further add this of your integrated services.
Josh Chan: Historically, we were below our target, which is a plus or minus one times levered with the ability to lever up to two times levered for the right growth opportunity.
Speaker Change: This would be in addition to the.
Speaker Change: It's an integrated services. So currently the owner outsources that.
Josh Chan: None of that has changed and so thats, how we will continue to approaching.
Speaker Change: And we will obviously in sourcing.
Josh Chan: Post acquisition will be roughly one times levered.
Speaker Change: That's great. Thank you.
Josh Chan: On a pro forma basis, so still able to to deploy capital under the same framework.
Speaker Change: And then one more for me.
Speaker Change: Great again, they added the asset like first.
Speaker Change: Assets disclosure on our report it looked like year over year in Canada. The asset light portion held up fairly well. Despite the noted dropping the occupancy is there anything specific that's driving the resilience there.
Speaker Change: Okay. Thanks, and maybe just one follow up on the Canadian business, you talked about the right sizing that youre doing this year, but also the medium to long term optimism.
Speaker Change: Could you just talk about how you're thinking about managing that over the course of this year.
Speaker Change: Year over year, the Delta in Canadian revenues was impacted by mobile.
If things don't progress or are there other costs that further needs to be taken out of the business or just how youre trying to balance we should maybe be a softer uncertain year in 'twenty five against long term strength in the business.
Speaker Change: Mobile camp activity, which would be in the asset side of things in 2023 that was not present in 2024 that'd be the biggest driver.
Speaker Change: Understood. Thank you for taking my questions and good luck.
Speaker Change: Well I think we've right sized the business for the reality that we see right now.
David: Thank you David Thank you.
Speaker Change: And as I mentioned in our comments the uncertainty in the market, we will have to see how it develops.
Speaker Change: Our next question is from Josh Chan with Daniel Energy Partners.
Speaker Change: We will always we consistently look at our cost structure and match that to our outlook.
Josh Chan: Thanks. Good morning first question, just when we think about free cash flow.
Josh Chan: You highlighted 65% of your free cash flow last year was returned to shareholders.
Speaker Change: Okay. Thanks.
Speaker Change: Okay.
Josh Chan: Are you thinking about this going forward I guess in the context of the acquisition that you just did.
Speaker Change: Our next question is from Stephen <unk> with Stifel.
Josh Chan: And maybe you could just frame it over the medium to long term. How you guys are thinking about maybe a percentage of free cash flow. It ultimately returns to shareholders.
Speaker Change: Thanks.
Speaker Change: Most of what I was going to ask was asked on the cash flow side, but just a quick one.
Speaker Change: The acquisition in Australia.
Josh Chan: Well I think our free cash flow framework.
Speaker Change: Can you talk about sort of the types of deals you're looking for and if you think that incremental deals.
Josh Chan: Based off of a fundamental dividend and then opportunistic buybacks.
Josh Chan: Where our leverage has been a.
Speaker Change: Be more likely in Australia and other markets at this point.
Josh Chan: Historically, we were below our target, which is a plus or minus one times levered with the ability to lever up to two <unk>.
Speaker Change: Well.
Speaker Change: I think we've been fairly consistent in what we're looking for so if there are opportunities to buy.
Josh Chan: <unk> levered for the right growth opportunity and none of that has changed and so that's how we will continue to approach it.
Speaker Change: Additive locations that fit into our portfolio.
Josh Chan: Post acquisition will be roughly one times levered.
Josh Chan: On a pro forma basis, so still able to to deploy capital under the same framework.
Speaker Change: Again, largely in Australia.
Speaker Change: Just given the macro dynamics.
Speaker Change: We'll continue to look at that and there are opportunities there.
Josh Chan: Okay. Thanks, and maybe just one follow up on the Canadian business, you talked about the right sizing that youre doing this year, but also the medium to long term optimism.
Speaker Change: More broadly speaking, there's a bigger opportunity and integrated services in Canada, and Australia, it's a larger market.
Speaker Change: And so our pivot has been to that.
Josh Chan: Could you just talk about how you're thinking about managing that over the course of this year.
Speaker Change: We continue to expect growth in our Australia and integrated services business.
Josh Chan: If things don't progress or are there other costs that further needs to be taken out of the business or just how youre trying to balance how we should maybe be a softer uncertain year and twenty-five against long term strength in the business.
Speaker Change: And we're well on our way to our $500 million target in.
Speaker Change: In Canada, we need to diversify geographically and by end market. There is considerable activity developing east of our legacy markets.
Josh Chan: Well I hope, we've right sized the business for the reality that we see right now.
Speaker Change: Alberta and British Columbia.
Speaker Change: That is mining and infrastructure related that can be asset that could be asset only that could be integrated meaning both asset and services or it could be just integrated services.
Josh Chan: And as I mentioned in our comments.
Josh Chan: And the market will have to see how it develops.
Josh Chan: We will always we consistently look at our cost structure and match that to our outlook.
Speaker Change: That sales effort is ongoing.
Speaker Change: Too early to tell but the activity is strong in terms of bidding.
Speaker Change: Okay. Thanks.
Josh Chan: Okay.
Speaker Change: Okay. That's helpful. I think I'm all set thanks for the color.
Josh Chan: Our next question is from Stephen <unk> with Stifel.
Speaker Change: Thanks, David we appreciate it.
Josh Chan: Thanks.
Speaker Change: Most of what I was going to ask was asked on the cash flow side, but just a quick one.
Speaker Change: Thank you.
Speaker Change: No further questions at this time I'd like to hand, the floor back over to management for any closing remarks.
Speaker Change: The acquisition in Australia.
Speaker Change: Can you talk about sort of the types of deals you're looking for.
Speaker Change: Thank you Paul.
Speaker Change: And thank you everyone for joining the call today. We appreciate your interest in video and we look forward to speaking with you on our first quarter earnings call expected in April.
Speaker Change: Think that.
Speaker Change: Incremental deals would be more likely in Australia and other markets at this point.
Speaker Change: Okay.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Well.
Speaker Change: I think we've been fairly consistent in what we're looking for so if there are opportunities to buy.
Speaker Change: Attitudes locations that fit into our portfolio.
Speaker Change: Again, largely in Australia.
Speaker Change: Just given the macro dynamics.
Speaker Change: We'll continue to look at that and there are opportunities there.
Speaker Change: More broadly speaking, there's a bigger opportunity and integrated services in Canada, and Australia, it's a larger market.
Speaker Change: And so our pivot has been to that we continue to expect growth in our Australia and integrated services business.
Speaker Change: And we're well on our way to our $500 million target in.
Speaker Change: In Canada, we need to diversify geographically and by end market, there's considerable activity developing east of our legacy markets.
Speaker Change: Alberta and British Columbia.
Speaker Change: That is mining and infrastructure related that can be asset one that could be asset only that could be integrated meaning both asset and services or it could be just integrated services and that that sales effort is ongoing and it's.
Speaker Change: Too early to tell but the activity is strong in terms of bidding.
Speaker Change: Okay. That's helpful. I think I'm all set thanks for the color.
David: Thanks, David we appreciate it.
Speaker Change: Thank you there are no further questions at this time I'd like to hand, the floor back over to management for any closing remarks.
Paul: Thank you Paul.
Speaker Change: And thank you everyone for joining the call today. We appreciate your interest in video and we look forward to speaking with you on the first quarter earnings call expected in April.
Paul: Okay.
Paul: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.