Civeo Corp. Q3 FY2024 earnings call

• Australian segment performed well with year-over-year and sequential growth in owned village and integrated services businesses, driven by competitive wins and existing customer expansion, with a goal to grow integrated services revenues to AUD500 million by 2027.
• Canadian segment experienced expected decline due to LNG activity wind-down, McClelland Lake Lodge sale, and wildfire impact, with third quarter results weaker than expected due to lower lodge billed rooms from wildfires.
• Announced a 33-month contract renewal for a major Canadian oil sands producer, with total contracted revenues of approximately CAD150 million.
• Returned $17.8 million of capital to shareholders through quarterly dividend and share repurchases in the third quarter.
• Amended and extended credit agreement, extending maturity to August 2028, upsizing revolving credit facility to $245 million, and reducing borrowing costs.

Australian Segment: In the third quarter, revenues were $116.6 million, up 33% from Q3 2023. Adjusted EBITDA was $22.5 million, up 19% year-over-year. Billed rooms were 647,000, up 4% year-over-year. Daily room rate was $79, an increase from $74 in Q3 2023 due to CPI escalations. Revenue contribution: Approximately 66.1% of total revenues ($116.6 million / $176.3 million total revenues).

Canadian Segment: Revenues were $57.7 million, down from $95.1 million in Q3 2023. Adjusted EBITDA was $3.4 million, down from $23.2 million in Q3 2023. Billed rooms were 484,000, down from 726,000 in Q3 2023. Daily room rate was $100, up from $98 in Q3 2023. Revenue contribution: Approximately 32.7% of total revenues ($57.7 million / $176.3 million total revenues).

• Tightened full year 2024 revenue guidance to $675 million to $700 million and adjusted EBITDA guidance to $83 million to $88 million.
• Maintained full year 2024 capital expenditure guidance of $30 million to $35 million, expecting free cash flow in the range of $50 million to $60 million.
• Preliminary outlook for 2025: Adjusted EBITDA expected to exceed $90 million, with Canada expected flat and Australia expected growth due to strong occupancy and integrated services growth.

• Canadian wildfires negatively impacted third quarter financial performance and billed rooms.
• Seasonality and customer operational typical patterns affecting fourth quarter billed rooms in Canada.
• Mobile camp demobilization costs impacting financials.

Q: Stephen Gengaro with Stifel asked about M&A strategy and types of markets for capital allocation, and about Canadian business visibility for 2025.

A: Bradley Dodson said they look to grow core operations in Western Canada and Australian owned villages, expand geographically and in end markets, and in Canada, about 25% of billed rooms in 2024 is turnaround activity, with balance largely contracted.

Q: Steve Ferazani with Sidoti & Company asked about impact of wildfires on Q3 results, Australian room expansion update, and demob costs.

A: Bradley Dodson said wildfires impacted ~30,000 room nights, Australian room expansion still being pursued, and ~$1 million demob costs left in Q4.

Q: Dave Storms with Stonegate asked about integrated services runway in Australia and catch-up in Q4 Canada.

A: Bradley Dodson said integrated services in Australia has grown from AUD240 million to expected AUD340 million this year, and Q4 Canada activity masked by holiday downtime.

Q: Sean Mitchell with Daniel Energy Partners asked about Australia's $500 million target by 2027 and growth opportunities outside energy.

A: Bradley Dodson said the AUD500 million target is via organic internal growth, and growth opportunities outside energy in Canada and U.S. are still resource-related for now.

Q: Stephen Gengaro with Stifel followed up on Canadian margins and 2025 expectations.

A: Bradley Dodson said need to complete budgeting but margins may have upward bias as they build back top line in Canada.