Civeo Corporation (CVEO) has demonstrated its ability to navigate through a complex operating environment, delivering a resilient performance in the first quarter of 2024. The company, which provides hospitality services to remote workforces in Canada and Australia, reported quarterly revenues of $166.1 million and a net loss of $5.1 million, or $0.35 per diluted share. Despite the challenges, Civeo's management team has remained focused on executing its strategic priorities, positioning the company for long-term success.
Financials
In the first quarter of 2024, Civeo generated adjusted EBITDA of $17.3 million, excluding the financial impact of the dismantlement and sale of the McClelland Lake lodge assets. This represents a year-over-year increase, driven by the strong performance of the company's Australian segment, which more than offset the expected decline in the Canadian segment.
Australian Segment Performance
The Australian segment was a standout performer, with revenues of $91.7 million and adjusted EBITDA of $20.3 million, up 43% from the first quarter of 2023. This impressive growth was primarily attributable to increased occupancy at Civeo's owned villages in the Bowen Basin region, as well as improved margins in the company's integrated services business. The Australian team's efforts to mitigate the impact of inflation, particularly in labor and food costs, have yielded positive results, and the company expects these benefits to continue throughout 2024.
Canadian Segment Performance
In contrast, the Canadian segment experienced a year-over-year decline in both revenues and adjusted EBITDA, primarily due to the planned wind-down of LNG-related activity, including the sale of the McClelland Lake lodge. The company incurred $1.8 million in mobile camp demobilization costs during the quarter, which weighed on the segment's performance. However, Civeo is actively pursuing new opportunities in Eastern Canada and the United States to offset the decline in LNG-related business, focusing on projects in the mining, power transmission, and electric vehicle battery industries.
Liquidity
Civeo's balance sheet and liquidity position remain strong, with total available liquidity of $136.9 million as of March 31, 2024. The company's net debt position stood at $61.8 million, with a net leverage ratio of 0.6x, providing the flexibility to pursue strategic growth initiatives while maintaining a prudent capital structure.
Capital Allocation
During the first quarter, Civeo returned capital to shareholders through its quarterly dividend of $0.25 per share, as well as opportunistic share repurchases totaling $3.2 million. The company's commitment to shareholder returns underscores its confidence in the long-term prospects of the business.
Outlook
Looking ahead, Civeo has maintained its full-year 2024 guidance, projecting revenues in the range of $625 million to $700 million and adjusted EBITDA between $80 million and $90 million. The company expects to generate free cash flow of $45 million to $60 million, supported by the net cash proceeds from the McClelland Lake lodge sale, lower interest expenses, and an anticipated working capital inflow.
Regional Expectations
In Canada, Civeo anticipates the turnaround season for its oil sands lodges to unfold as expected, while the demobilization of its mobile camps is expected to be completed in the second quarter, resulting in an approximately $4 million burden on adjusted EBITDA. In Australia, the company remains optimistic about the continued strength of customer activity and occupancy at its owned villages, as well as the ongoing improvements in the margins of its integrated services business.
Conclusion
Civeo's diversified geographic footprint, focus on operational excellence, and prudent capital allocation have been instrumental in navigating the challenges faced by the industry. The company's ability to adapt and capitalize on emerging opportunities, such as the growth potential in its Australian integrated services business and the expansion into new markets in Canada and the United States, positions it well for long-term success.
Overall, Civeo's first-quarter performance, coupled with its updated guidance and strategic initiatives, demonstrate the company's resilience and its commitment to delivering value for its shareholders. As the industry landscape continues to evolve, Civeo's management team remains dedicated to leveraging its competitive strengths and pursuing strategic growth opportunities to drive sustainable long-term growth.