British Columbia, Canada (State or other jurisdiction of incorporation or organization) | 1-36246 (Commission File Number) | 98-1253716 (I.R.S. Employer Identification No.) | ||
Three Allen Center 333 Clay Street, Suite 4980 Houston, Texas 77002 (Address and zip code of principal executive offices) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Shares, no par value | CVEO | New York Stock Exchange |
Exhibit Number | Description of Document |
99.1 |
Title: | Executive Vice President, Chief Financial Officer and Treasurer |
• | Delivered second quarter revenues of $122.2 million |
• | Reported second quarter net loss of $15.3 million and Adjusted EBITDA of $26.5 million, with Adjusted EBITDA up 8% year-over-year |
• | Completed the acquisition of Action Industrial Catering Pty Ltd, a provider of catering and managed services to the remote mining industry in Western Australia, on July 1, 2019 |
• | Awarded a four-year contract renewal from BHP Billiton Mitsui Coal Pty Ltd (“BMC”) to provide rooms and hospitality services from the Company's existing Coppabella and Nebo villages in Australia |
• | Awarded a two-year contract renewal to provide rooms and hospitality services to a major oil sands producer at the Company's Fort McMurray Village and Grey Wolf lodges in Canada with take-or-pay revenues totaling approximately C$62 million |
• | Completed the expansion of our Sitka Lodge from 646 rooms to approximately 1,100 rooms to support the LNG Canada project in Kitimat, B.C. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | $ | 122,153 | $ | 130,177 | $ | 230,703 | $ | 231,681 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales and services | 85,240 | 89,455 | 164,870 | 167,156 | |||||||||||
Selling, general and administrative expenses | 12,530 | 21,821 | 28,626 | 38,335 | |||||||||||
Depreciation and amortization expense | 30,996 | 34,270 | 61,778 | 65,034 | |||||||||||
Impairment expense | 5,546 | — | 5,546 | 28,661 | |||||||||||
Other operating expense (income) | (103 | ) | 132 | (168 | ) | 511 | |||||||||
134,209 | 145,678 | 260,652 | 299,697 | ||||||||||||
Operating loss | (12,056 | ) | (15,501 | ) | (29,949 | ) | (68,016 | ) | |||||||
Interest expense | (6,720 | ) | (7,103 | ) | (13,355 | ) | (12,925 | ) | |||||||
Loss on extinguishment of debt | — | (748 | ) | — | (748 | ) | |||||||||
Interest income | 22 | 18 | 49 | 76 | |||||||||||
Other income | 1,055 | 252 | 4,033 | 2,511 | |||||||||||
Loss before income taxes | (17,699 | ) | (23,082 | ) | (39,222 | ) | (79,102 | ) | |||||||
Income tax benefit | 2,850 | 23,371 | 7,334 | 24,056 | |||||||||||
Net income (loss) | (14,849 | ) | 289 | (31,888 | ) | (55,046 | ) | ||||||||
Less: Net income attributable to noncontrolling interest | — | 122 | — | 244 | |||||||||||
Net income (loss) attributable to Civeo Corporation | (14,849 | ) | 167 | (31,888 | ) | (55,290 | ) | ||||||||
Less: Dividends attributable to Class A preferred shares | 461 | 48,488 | 920 | 48,488 | |||||||||||
Net loss attributable to Civeo common shareholders | $ | (15,310 | ) | $ | (48,321 | ) | $ | (32,808 | ) | $ | (103,778 | ) | |||
Net loss per share attributable to Civeo Corporation common shareholders: | |||||||||||||||
Basic | $ | (0.09 | ) | $ | (0.29 | ) | $ | (0.20 | ) | $ | (0.70 | ) | |||
Diluted | $ | (0.09 | ) | $ | (0.29 | ) | $ | (0.20 | ) | $ | (0.70 | ) | |||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 167,532 | 165,373 | 166,437 | 148,595 | |||||||||||
Diluted | 167,532 | 165,373 | 166,437 | 148,595 |
June 30, 2019 | December 31, 2018 | ||||||
(UNAUDITED) | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,459 | $ | 12,372 | |||
Accounts receivable, net | 90,763 | 70,223 | |||||
Inventories | 4,421 | 4,313 | |||||
Assets held for sale | 8,228 | 10,297 | |||||
Prepaid expenses and other current assets | 13,691 | 10,592 | |||||
Total current assets | 130,562 | 107,797 | |||||
Property, plant and equipment, net | 636,038 | 658,905 | |||||
Goodwill, net | 121,674 | 114,207 | |||||
Other intangible assets, net | 108,962 | 119,409 | |||||
Operating lease right-of-use assets | 22,446 | — | |||||
Other noncurrent assets | 723 | 1,359 | |||||
Total assets | $ | 1,020,405 | $ | 1,001,677 | |||
Current liabilities: | |||||||
Accounts payable | $ | 30,796 | $ | 28,334 | |||
Accrued liabilities | 14,691 | 15,956 | |||||
Income taxes | 562 | 310 | |||||
Current portion of long-term debt | 34,833 | 33,329 | |||||
Deferred revenue | 2,621 | 3,035 | |||||
Other current liabilities | 9,003 | 5,719 | |||||
Total current liabilities | 92,506 | 86,683 | |||||
Long-term debt | 368,247 | 342,908 | |||||
Deferred income taxes | 10,941 | 18,442 | |||||
Operating lease liabilities | 17,866 | — | |||||
Other noncurrent liabilities | 20,799 | 18,220 | |||||
Total liabilities | 510,359 | 466,253 | |||||
Shareholders' equity: | |||||||
Preferred shares | 57,200 | 56,280 | |||||
Common shares | — | — | |||||
Additional paid-in capital | 1,567,162 | 1,562,133 | |||||
Accumulated deficit | (744,058 | ) | (710,551 | ) | |||
Treasury stock | (5,472 | ) | (1,189 | ) | |||
Accumulated other comprehensive loss | (364,786 | ) | (371,249 | ) | |||
Total Civeo Corporation shareholders' equity | 510,046 | 535,424 | |||||
Noncontrolling interest | — | — | |||||
Total shareholders' equity | 510,046 | 535,424 | |||||
Total liabilities and shareholders' equity | $ | 1,020,405 | $ | 1,001,677 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (31,888 | ) | $ | (55,046 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 61,778 | 65,034 | |||||
Impairment charges | 5,546 | 28,661 | |||||
Loss on extinguishment of debt | — | 748 | |||||
Deferred income tax benefit | (7,855 | ) | (23,661 | ) | |||
Non-cash compensation charge | 5,029 | 5,013 | |||||
Gains on disposals of assets | (1,371 | ) | (2,332 | ) | |||
Provision for loss on receivables, net of recoveries | (56 | ) | (58 | ) | |||
Other, net | 1,444 | 3,065 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (18,616 | ) | 10,661 | ||||
Inventories | (3 | ) | 3,111 | ||||
Accounts payable and accrued liabilities | 135 | (16,668 | ) | ||||
Taxes payable | 244 | (1,250 | ) | ||||
Other current and noncurrent assets and liabilities, net | (4,427 | ) | (3,301 | ) | |||
Net cash flows provided by operating activities | 9,960 | 13,977 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (21,208 | ) | (5,943 | ) | |||
Payments related to acquisitions, net of cash acquired | — | (185,200 | ) | ||||
Proceeds from disposition of property, plant and equipment | 4,448 | 3,438 | |||||
Other, net | 1,762 | 110 | |||||
Net cash flows used in investing activities | (14,998 | ) | (187,595 | ) | |||
Cash flows from financing activities: | |||||||
Term loan repayments | (17,398 | ) | (11,068 | ) | |||
Revolving credit borrowings (repayments), net | 27,754 | 162,056 | |||||
Debt issuance costs | — | (2,742 | ) | ||||
Taxes paid on vested shares | (4,283 | ) | (632 | ) | |||
Net cash flows provided by financing activities | 6,073 | 147,614 | |||||
Effect of exchange rate changes on cash | 52 | (1,857 | ) | ||||
Net change in cash and cash equivalents | 1,087 | (27,861 | ) | ||||
Cash and cash equivalents, beginning of period | 12,372 | 32,647 | |||||
Cash and cash equivalents, end of period | $ | 13,459 | $ | 4,786 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Canada | $ | 78,102 | $ | 86,518 | $ | 144,872 | $ | 149,908 | |||||||
Australia | 30,996 | 30,577 | 59,417 | 58,452 | |||||||||||
United States | 13,055 | 13,082 | 26,414 | 23,321 | |||||||||||
Total revenues | $ | 122,153 | $ | 130,177 | $ | 230,703 | $ | 231,681 | |||||||
EBITDA (1) | |||||||||||||||
Canada | $ | 16,306 | $ | 15,933 | $ | 26,479 | $ | (4,093 | ) | ||||||
Australia | 6,540 | 11,529 | 16,393 | 20,636 | |||||||||||
United States | 2,586 | 1,982 | 5,382 | 1,244 | |||||||||||
Corporate and eliminations | (5,437 | ) | (10,545 | ) | (12,392 | ) | (18,502 | ) | |||||||
Total EBITDA | $ | 19,995 | $ | 18,899 | $ | 35,862 | $ | (715 | ) | ||||||
Adjusted EBITDA (1) | |||||||||||||||
Canada | $ | 16,306 | $ | 17,580 | $ | 26,479 | $ | 26,483 | |||||||
Australia | 13,010 | 11,529 | 22,863 | 20,636 | |||||||||||
United States | 2,586 | 1,982 | 5,382 | 1,244 | |||||||||||
Corporate and eliminations | (5,437 | ) | (6,581 | ) | (12,392 | ) | (13,840 | ) | |||||||
Total adjusted EBITDA | $ | 26,465 | $ | 24,510 | $ | 42,332 | $ | 34,523 | |||||||
Operating income (loss) | |||||||||||||||
Canada | $ | (5,761 | ) | $ | (7,436 | ) | $ | (17,356 | ) | $ | (47,739 | ) | |||
Australia | (5,579 | ) | (1,099 | ) | (5,964 | ) | (4,265 | ) | |||||||
United States | (1,356 | ) | (1,832 | ) | (2,317 | ) | (5,096 | ) | |||||||
Corporate and eliminations | 640 | (5,134 | ) | (4,312 | ) | (10,916 | ) | ||||||||
Total operating loss | $ | (12,056 | ) | $ | (15,501 | ) | $ | (29,949 | ) | $ | (68,016 | ) | |||
(1) Please see Non-GAAP Reconciliation Schedule. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
EBITDA (1) | $ | 19,995 | $ | 18,899 | $ | 35,862 | $ | (715 | ) | ||||||
Adjusted EBITDA (1) | $ | 26,465 | $ | 24,510 | $ | 42,332 | $ | 34,523 | |||||||
Free Cash Flow (2) | $ | (7,919 | ) | $ | 8,612 | $ | (6,800 | ) | $ | 11,472 |
(1) | The term EBITDA is defined as net income (loss) attributable to Civeo Corporation plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain costs associated with Civeo's acquisition of Noralta. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Civeo has included EBITDA and Adjusted EBITDA as supplemental disclosures because its management believes that EBITDA and Adjusted EBITDA provide useful information regarding its ability to service debt and to fund capital expenditures and provide investors a helpful measure for comparing the Civeo's operating performance with the performance of other companies that have different financing and capital structures or tax rates. Civeo uses EBITDA and Adjusted EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) attributable to Civeo Corporation | $ | (14,849 | ) | $ | 167 | $ | (31,888 | ) | $ | (55,290 | ) | ||||
Income tax benefit | (2,850 | ) | (23,371 | ) | (7,334 | ) | (24,056 | ) | |||||||
Depreciation and amortization | 30,996 | 34,270 | 61,778 | 65,034 | |||||||||||
Interest income | (22 | ) | (18 | ) | (49 | ) | (76 | ) | |||||||
Loss on extinguishment of debt | — | 748 | — | 748 | |||||||||||
Interest expense | 6,720 | 7,103 | 13,355 | 12,925 | |||||||||||
EBITDA | $ | 19,995 | $ | 18,899 | $ | 35,862 | $ | (715 | ) | ||||||
Adjustments to EBITDA | |||||||||||||||
Impairment expense (a) | 5,546 | — | 5,546 | 28,661 | |||||||||||
Noralta transaction costs (b) | — | 5,611 | — | 6,577 | |||||||||||
Australia ARO adjustment (c) | 924 | — | 924 | — | |||||||||||
Adjusted EBITDA | $ | 26,465 | $ | 24,510 | $ | 42,332 | $ | 34,523 |
(a) | Relates to asset impairments recorded in the second quarter 2019 and the first quarter 2018. In the second quarter 2019, we recorded a pre-tax loss related to the impairment of assets in Australia of $5.5 million ($5.5 million after-tax, or $0.03 per diluted share), which is included in Impairment expense on the unaudited statements of operations. This includes $1.0 million of impairment expense related to an error corrected in the second quarter 2019. During the second quarter of 2019, we identified a future liability related to an asset retirement obligation (ARO) at one of our villages in Australia that should have been recorded in 2011. We determined that the error was not material to our previously issued financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, and therefore, corrected the error in the second quarter of 2019. |
(b) | Relates to costs incurred associated with Civeo's acquisition of Noralta. For the six month period ended June 30, 2018, the $6.6 million of costs ($5.9 million after-tax, or $0.04, per diluted shares), are reflected in the Canada ($1.9 million) and Corporate and eliminations ($4.7 million) reportable segments and are included in Costs of sales and services ($0.2 million) and Selling, general and administrative expenses ($6.4 million) on the unaudited statements of operations. During the second quarter 2018, the $5.6 million of costs ($5.0 million after-tax, or $0.03, per diluted share), are reflected in the Canada ($1.6 million) and Corporate and eliminations ($4.0 million) reportable segments and are included in Costs of sales and services ($0.2 million) and Selling, general and administrative expenses ($5.4 million) on the unaudited statements of operations. |
(c) | As noted above, during the second quarter of 2019, we identified a future liability related to an ARO at one of our villages in Australia that should have been recorded in 2011. The correction included a $0.9 million ($0.9 million after-tax, or $0.01 per diluted share) adjustment, which is included in Cost of sales and services on the unaudited statements of operations. This amount represents the prior period impact of this correction. |
(2) | The term Free Cash Flow is defined as net cash flows provided by operating activities less capital expenditures plus proceeds from asset sales. Free Cash Flow is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Free Cash Flow may not be comparable to other similarly titled measures of other companies. Civeo has included Free Cash Flow as a supplemental disclosure because its management believes that Free Cash Flow provides useful information regarding the cash flow generating ability of its business relative to its capital expenditure and debt service obligations. Civeo uses Free Cash Flow to compare and to understand, manage, make operating decisions and evaluate Civeo's business. It is also used as a benchmark for the award of incentive compensation under its Free Cash Flow plan. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Cash Flows Provided by Operating Activities | $ | 3,619 | $ | 11,139 | $ | 9,960 | $ | 13,977 | |||||||
Capital expenditures, including capitalized interest | (11,529 | ) | (3,247 | ) | (21,208 | ) | (5,943 | ) | |||||||
Proceeds from disposition of property, plant and equipment | (9 | ) | 720 | 4,448 | 3,438 | ||||||||||
Free Cash Flow | $ | (7,919 | ) | $ | 8,612 | $ | (6,800 | ) | $ | 11,472 |
Three Months Ending September 30, 2019 | Year Ending December 31, 2019 | |||||||||||||||
EBITDA Range (1) | $ | 30.0 | $ | 33.5 | $ | 88.5 | $ | 94.5 | ||||||||
Adjusted EBITDA Range (1) | $ | 30.0 | $ | 33.5 | $ | 95.0 | $ | 101.0 |
(1) | The following table sets forth a reconciliation of estimated Adjusted EBITDA to estimated net loss, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles (in millions) (unaudited): |
Three Months Ending September 30, 2019 | Year Ending December 31, 2019 | |||||||||||||||
(estimated) | (estimated) | |||||||||||||||
Net loss | $ | (5.5 | ) | $ | (2.5 | ) | $ | (51.2 | ) | $ | (46.7 | ) | ||||
Income tax provision (benefit) | (1.0 | ) | (0.5 | ) | (12.3 | ) | (10.8 | ) | ||||||||
Depreciation and amortization | 30.0 | 30.0 | 125.0 | 125.0 | ||||||||||||
Interest expense | 6.5 | 6.5 | 27.0 | 27.0 | ||||||||||||
EBITDA | $ | 30.0 | $ | 33.5 | $ | 88.5 | $ | 94.5 | ||||||||
Adjustments to EBITDA | ||||||||||||||||
Impairment expense | — | — | 5.5 | 5.5 | ||||||||||||
Australian ARO adjustment | — | — | 0.9 | 0.9 | ||||||||||||
Adjusted EBITDA | $ | 30.0 | $ | 33.5 | $ | 95.0 | $ | 101.0 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Supplemental Operating Data - Canadian Segment | |||||||||||||||
Revenues | |||||||||||||||
Accommodation revenue (1) | $ | 66,183 | $ | 80,620 | $ | 123,835 | $ | 131,267 | |||||||
Mobile facility rental revenue (2) | 1,819 | 2,107 | 2,600 | 9,901 | |||||||||||
Food and other services revenue (3) | 9,086 | 3,716 | 17,423 | 7,455 | |||||||||||
Manufacturing revenue (4) | 1,014 | 75 | 1,014 | 1,285 | |||||||||||
Total Canadian revenues | $ | 78,102 | $ | 86,518 | $ | 144,872 | $ | 149,908 | |||||||
Costs | |||||||||||||||
Accommodation cost | $ | 45,145 | $ | 53,620 | $ | 87,763 | $ | 90,658 | |||||||
Mobile facility rental cost | 2,027 | 2,200 | 2,676 | 9,604 | |||||||||||
Food and other services cost | 8,466 | 3,479 | 16,301 | 6,697 | |||||||||||
Manufacturing cost | 668 | 204 | 857 | 1,443 | |||||||||||
Indirect other cost | 2,970 | 4,054 | 6,326 | 7,051 | |||||||||||
Total Canadian cost of sales and services | $ | 59,276 | $ | 63,557 | $ | 113,923 | $ | 115,453 | |||||||
Average daily rates (5) | $ | 89 | $ | 86 | $ | 91 | $ | 87 | |||||||
Billed rooms (6) | 739,627 | 930,828 | 1,365,619 | 1,503,717 | |||||||||||
Canadian dollar to U.S. dollar | $ | 0.748 | $ | 0.775 | $ | 0.750 | $ | 0.783 | |||||||
Supplemental Operating Data - Australian Segment | |||||||||||||||
Accommodation revenue (1) | $ | 30,996 | $ | 29,966 | $ | 59,417 | $ | 57,664 | |||||||
Food and other services revenue (3) | — | 611 | — | 788 | |||||||||||
Total Australian revenues | $ | 30,996 | $ | 30,577 | $ | 59,417 | $ | 58,452 | |||||||
Costs | |||||||||||||||
Accommodation cost | $ | 15,465 | $ | 14,237 | $ | 29,862 | $ | 28,743 | |||||||
Food and other services cost | — | 497 | — | 660 | |||||||||||
Indirect other cost | 590 | 615 | 1,192 | 1,279 | |||||||||||
Total Australian cost of sales and services | $ | 16,055 | $ | 15,349 | $ | 31,054 | $ | 30,682 | |||||||
Average daily rates (5) | $ | 74 | $ | 80 | $ | 74 | $ | 80 | |||||||
Billed rooms (6) | 416,416 | 376,369 | 798,997 | 717,948 | |||||||||||
Australian dollar to U.S. dollar | $ | 0.700 | $ | 0.757 | $ | 0.706 | $ | 0.771 |
(1) | Includes revenues related to lodge and village rooms and hospitality services for owned rooms for the periods presented. |
(2) | Includes revenues related to mobile camps for the periods presented. |
(3) | Includes revenues related to food service, laundry and water and wastewater treatment services for the periods presented. |
(4) | Includes revenues related to modular construction and offshore manufacturing services for the periods presented. |
(5) | Average daily rate is based on billed rooms and accommodation revenue. |
(6) | Billed rooms represents total billed days for the periods presented. |