Civeo Corp (CVEO) Q2 2024 Earnings Call Highlights: Strong Australian Growth Amid Canadian ...
Total Revenue: $188.7 million for Q2 2024.
Net Income: $8.2 million, or $0.56 per diluted share for Q2 2024.
Adjusted EBITDA: $31.3 million for Q2 2024.
Operating Cash Flow: $32.4 million for Q2 2024.
Free Cash Flow: $30.9 million for Q2 2024.
Australian Segment Revenue: $108.6 million, up from $82.5 million in Q2 2023.
Australian Adjusted EBITDA: $21.6 million, up 10% from $19.6 million in Q2 2023.
Canadian Segment Revenue: $79.5 million, down from $95.5 million in Q2 2023.
Canadian Adjusted EBITDA: $17.2 million, down from $19.8 million in Q2 2023.
Capital Expenditures: $5.3 million for Q2 2024.
Net Debt: $40.1 million as of June 30, 2024.
Net Leverage Ratio: 0.3 times as of June 30, 2024.
Total Liquidity: Approximately $159 million as of June 30, 2024.
Share Repurchases: Approximately 274,000 shares for $6.6 million in Q2 2024.
Dividend: $0.25 per share, payable on September 16, 2024.
Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Civeo Corp (NYSE:CVEO) reported an increase in second-quarter 2024 revenues and free cash flow year-over-year.
The Australian segment showed strong performance with a 10% increase in adjusted EBITDA compared to the second quarter of 2023.
Civeo Corp (NYSE:CVEO) returned $10.3 million of capital to shareholders through dividends and share repurchases in the second quarter of 2024.
The company maintained its full-year 2024 revenue and adjusted EBITDA guidance, indicating confidence in its financial outlook.
Civeo Corp (NYSE:CVEO) experienced growth in its Australian Integrated Services business due to recent competitive wins and expansion of existing customer relationships.
Negative Points
The Canadian segment experienced a year-over-year decrease in revenues and adjusted EBITDA due to the wind-down of LNG-related mobile camp activity.
The daily room rate for the Canadian segment decreased from $100 to $96 year-over-year, impacting revenue.
Civeo Corp (NYSE:CVEO) faced a $6.9 million decrease in adjusted EBITDA due to the expected headwind from Canadian LNG mobile camp activity.
The company anticipates more modest results in the latter half of 2024 for Canada due to the shift of customer turnaround activity.
Wildfires in Western Canada posed a potential risk, although no material financial impact was anticipated at the time of the call.
Q & A Highlights
Q: Can you discuss the growth prospects in Australia for the latter half of 2024 and into 2025? A: Bradley Dodson, President and CEO, mentioned that occupancy in Australian villages is expected to remain consistent through the third quarter, with a slight downtick in the fourth quarter due to holidays. Integrated Services is performing well, and the focus is on winning additional work to reach the AUD500 million revenue goal by 2027. There are opportunities to add capacity in the Bowen Basin, contingent on customer commitments and permitting.
Q: With strong cash flow and reduced leverage, what is Civeo's approach to M&A, and are there geographic preferences? A: Bradley Dodson explained that in Australia, they are looking at acquiring additional villages and expanding Integrated Services. In Canada, the focus is on leveraging assets and capabilities across North America to serve a broader range of industrial projects, with an emphasis on modular accommodations.
Q: How does the Canadian turnaround season compare to last year, and what impact does it have on billed rooms? A: Bradley Dodson noted that 2024 turnaround activity is generally in line with expectations, with some timing shifts from Q3 to Q2. Overall, 2024 is expected to see an increase of about 150,000 room nights compared to 2023. The second quarter was stronger than expected due to these shifts, but the back half of the year will be softer.
Q: Given the strong performance in Q2, is Civeo on track to reach the higher end of its guidance range? A: Bradley Dodson indicated that factors such as fire impacts in Alberta, occupancy in Australia, and Integrated Services margins could influence the final results. While they don't anticipate material impacts from fires, these elements could swing results within the guidance range.
Q: What are the prospects for supporting future LNG expansions in Canada, such as Cedar LNG? A: Bradley Dodson highlighted that additional LNG projects could present opportunities for mobile camp deployments and increased occupancy at existing assets like Sitka Lodge. The completion of current projects is winding down, but future expansions could revitalize activity in British Columbia.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.