Civeo Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Civeo provides lodging, food service and related services to remote workforces, primarily in Canada and Australia. Amounts below are in U.S. dollars.
Financial results
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $166.1 million | $167.6 million |
| Operating loss | $1.8 million | $3.9 million |
| Net loss attributable to Civeo | $5.1 million | $6.4 million |
| Diluted loss per share | $0.35 | $0.42 |
| Cash from operations | $6.0 million | $0.4 million |
| Capital expenditures | $5.6 million | $4.8 million |
Revenue declined 1% year over year. Canada revenue fell $22.3 million, mainly as pipeline-related mobile asset work wound down and lodge room billings declined. Australia revenue rose $14.7 million; management reported 24% growth on a constant-currency basis, reflecting higher activity in the Bowen Basin and Western Australia. The consolidated operating margin, calculated from reported operating loss and revenue, was approximately negative 1.1%, versus negative 2.3% a year earlier.
Operating results included a $7.8 million impairment charge and a $6.1 million net gain related to the McClelland Lake Lodge asset sale. SG&A increased $2.5 million, including $1.1 million in severance costs related to the former CFO’s departure. Net interest expense decreased $1.3 million, primarily due to lower average debt, partly offset by higher borrowing rates. Other income was $0.5 million, down from $2.5 million in Q1 2023.
Balance sheet and liquidity
- At March 31, cash was $16.8 million and long-term debt was $78.6 million, compared with $3.3 million and $65.6 million, respectively, at December 31, 2023.
- Total available liquidity was $136.8 million, including $120.1 million of unused revolving capacity. The $200 million revolving credit agreement matures September 8, 2025.
- Current assets were $168.9 million and current liabilities were $92.9 million. The filing reports covenant compliance at quarter-end; required minimum interest coverage and maximum net leverage ratios are each 3.00 to 1.00.
- Cash from operations improved year over year. Working capital used $6.4 million during Q1 2024, versus $15.6 million in Q1 2023. Investing activities provided $1.2 million, including $6.8 million of property-sale proceeds; cash flow from operations less capital expenditures was approximately $0.4 million.
- Foreign currency translation reduced other comprehensive income by $10.2 million. The company reported total comprehensive loss of $15.4 million.
Changes, outlook and risks
- Canada segment gross margin declined to 14.7% from 17.4%, including approximately $1.8 million of mobile camp demobilization costs. Australia segment gross margin improved to 27.9% from 24.3%, supported by a greater contribution from higher-margin Bowen Basin accommodation.
- Management expects 2024 capital expenditures of approximately $30–$35 million, subject to customer activity, project approvals and timing. It believes cash on hand and operating cash flow will meet anticipated liquidity needs for the next 12 months.
- The company intends to pay regular quarterly dividends, but future payments require Board approval and may be reduced or suspended. It paid a $0.25-per-share dividend in March and repurchased $3.2 million of shares during the quarter.
- Risks cited include commodity-price and customer-spending volatility, inflation and labor shortages, interest-rate exposure, foreign-exchange movements, and geopolitical and regulatory developments. Management estimates a 100-basis-point rise in floating rates would increase annual interest expense by about $0.8 million. A hypothetical 10% adverse move in either the Canadian or Australian dollar would result in an estimated $21 million translation adjustment for each currency in other comprehensive loss.
- Impairments comprised $5.7 million for Australian land and permitting assets after development permits were denied, and $2.1 million for U.S. land written down to estimated fair value less selling costs. Management said pending legal matters are not expected to materially adversely affect financial position, results or liquidity.
- No full-year revenue or earnings guidance is provided in the supplied filing text. Management’s commodity-market discussion describes uncertain conditions and analyst price expectations, not company guidance.
Important facts for investors to verify
- Whether Australian village activity and margins remain strong enough to offset declining Canadian mobile-project and lodge activity.
- Progress against the $30–$35 million 2024 capital expenditure range and the resulting effect on debt and liquidity.
- Compliance with credit covenants and plans to refinance or repay the revolving facility before its September 2025 maturity.
- Whether foreign-exchange, labor-cost and commodity-market changes materially affect reported results and customer commitments.
- The status and financial implications of Australian permitting-related impairments, remaining assets held for sale, and future dividend and share-repurchase decisions.