Civeo Corp. Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Capital Allocation: Board increased share repurchase authorization from 10% to 20% of total shares outstanding and suspended the quarterly dividend. Intend to allocate 100% of annual free cash flow to share repurchases until the expanded authorization is completed. Returned $6.8 million of capital to shareholders in Q1 2025.
• Regional Observations: Australia had strong occupancy with 13% YOY revenue growth, driven by integrated services activity. In Canada, lower billed rooms due to customers reducing capital spending; reduced Canadian employee headcount by ~25% and recorded $1 million restructuring charge. Engaged independent consulting firm to review North American cost structure.
• Supplemental Disclosure: Provided data on asset-light (hospitality services at owned and customer-owned assets) and asset-intensive (accommodations revenue from lodges, villages, and Canadian mobile camp) businesses.

Segment Performance:

• Australia: First quarter revenues were $103.6 million, up 13% year-over-year and 18% on a constant currency basis. Adjusted EBITDA was $20.5 million, relatively flat year-over-year. Billed rooms were 625,000, and the daily room rate in U.S. dollars was $75 (down from $77 in Q1 2024) due to the weakening of the Australian dollar. Revenue contribution from Australia was significant.
• Canada: Revenues were $40.4 million, down from $67.2 million in Q1 2024. Adjusted EBITDA was negative $0.2 million. Billed rooms totaled 359,000, down from 610,000 in Q1 2024. The daily room rate in U.S. dollars was $93 (down from $98 in Q1 2024) due to the weakening of the Canadian dollar.

Guidance:

• Lowered full-year 2025 revenue to $620 million to $650 million, adjusted EBITDA to $75 million to $85 million, CapEx to $20 million to $25 million, and free cash flow to $20 million to $30 million.
• Australia Outlook: Expected strong occupancy to continue, with modest billed room growth and expansion in integrated services business towards AUD 500 million in integrated services revenues by 2027.
• Canada Outlook: Impacted by economic and political uncertainty, expect $1 million in additional restructuring charges in Q2/Q3 2025, with 2025 being a transitional year for the Canadian division.

Risks:

• Macro uncertainties in Canada including economic and political uncertainty, lower oil prices, and export tariffs.
• Trade policy changes and supply chain disruptions affecting business operations.

Question and Answer: Q: Stephen Gengaro asks about capital allocation framework and Canadian partnership.

A: Bradley Dodson discusses shareholder engagement leading to dividend suspension and focus on share repurchase; talks about joint venture with 6 nations in Canada.

Q: Alex asks about Canadian infrastructure projects and cost-cutting consulting.

A: Bradley Dodson mentions pipeline work and carbon sequestration; talks about consulting firm review of cost structure.

Q: Stephen Gengaro asks about guidance cadence and turnaround activity.

A: Bradley Dodson and Collin Gerry discuss seasonality of EBITDA and turnaround activity not strictly tied to commodity prices.

Q: Stephen Gengaro asks about free cash flow guidance.

A: Bradley Dodson and Collin Gerry discuss factors affecting free cash flow, including cash taxes and LNG activity, and optimism for future free cash flow.