Civeo Announces First Quarter 2015 Earnings
Source: GlobeNewswire Inc.
Strong operating cash flows after capital expenditures driven by cost containment and capital discipline
Announcing receipt of necessary lender commitments to amend credit facility, expanding leverage covenants and allowing for planned migration to Canada
Civeo's focus remains on maximizing occupancy and revenues, reducing costs and limiting capital spending
Civeo Corporation (NYSE:CVEO) today reported financial results for the first quarter ended March 31, 2015.
Bradley J. Dodson, President and Chief Executive Officer of Civeo, said, "We are pleased with our results for the first quarter 2015, in light of difficult market conditions, as well as our ability to increase operating cash flows after capital expenditures when compared to the first quarter 2014. We remain confident in our team's ability to manage through the headwinds and continue meeting and exceeding the needs of our clients to generate the best possible results for shareholders."
Mr. Dodson continued, "We are starting to see opportunities emerge in our legacy oil sands markets driven by turnaround and maintenance activity. However, our customers remain cautious regarding their commitments to capital spending, making timing difficult to predict. In addition, we remain cautiously optimistic on the prospect of LNG development on the west coast of Canada, an opportunity for which Civeo has land banked several potential lodge locations. In the first quarter, we were awarded multi-year contracts for certain of our lodges and villages in both Canada and Australia, as well as some shorter-term lodge contracts and a build-for-sale contract. In our U.S. operations, we have been negatively impacted by the unprecedented swiftness of the rig count correction, which has resulted in lower operating results."
Mr. Dodson concluded, "We remain focused on completing our previously announced migration to Canada and are making substantial progress. We have received the necessary commitments from our lending group to allow us to navigate through this difficult period. The shareholder vote to approve the migration is scheduled for May 14, 2015. Operationally, we continue to aggressively pursue opportunities for both new and existing assets, while vigilantly managing operating costs and capital spending."
FIRST QUARTER 2015 RESULTS
In the first quarter of 2015, the Company generated revenues of $171.0 million, EBITDA of $48.1 million and Adjusted EBITDA of $53.0 million. Net loss for the quarter was essentially zero, inclusive of a $2.4 million (or $0.02 per diluted share) after-tax loss related to a decision to close Civeo's U.S. manufacturing facility and a $0.8 million (or $0.01 per diluted share) after-tax loss from costs incurred in connection with the proposed migration to Canada.
(EBITDA is defined as net income plus interest, taxes, depreciation and amortization and Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges and certain other costs such as those incurred associated with the spin-off and the migration).
In the first quarter of 2014, the Company generated revenues of $252.8 million. Net income in the year ago period was $36.2 million, or $0.34 per diluted share. EBITDA and Adjusted EBITDA in the first quarter of 2014 was $92.3 million and $92.9 million, respectively.
Revenues and Adjusted EBITDA declined in 2015 as compared to 2014 primarily due to lower occupancy levels in the Company's Australian villages and Canadian lodges. In addition, first quarter 2015 results were impacted by the unfavorable impact of a stronger U.S. dollar compared to the Canadian dollar and the Australian dollar, which declined in relative value by 11% and 12%, respectively, on a year-over-year basis.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following discussion compares the quarterly results for the first quarter of 2015 to the results for the first quarter of 2014. The 2015 results discussed below exclude the migration expenses noted above.)
Canada
The Canadian segment generated revenues of $116.9 million and EBITDA of $37.5 million for the first quarter of 2015 compared to revenues and EBITDA of $180.3 million and $61.8 million, respectively, in the first quarter of 2014. The Company's first quarter 2015 results were negatively impacted by a weaker Canadian dollar relative to the U.S. dollar, which reduced revenues by $14.5 million and EBITDA by $4.6 million. Excluding the year-over-year impact of exchange rates, revenues would have decreased $48.9 million and EBITDA would have decreased by $19.7 million. On a constant currency basis, revenues decreased due to reduced occupancy at lodges, as well as lower contract camp revenue due to large pipeline projects that did not recur in 2015. These items were partially offset by the opening of the Company's McClelland Lake lodge in the second quarter of 2014. Additionally, SG&A expenses were lower year-over-year due to cost containment efforts that resulted in lower compensation expense and overhead costs. RevPAR decreased 36% year-over-year to $74 in the first quarter of 2015, compared to $115 in the first quarter of 2014. The RevPAR decrease was attributable to declining foreign exchange rates and lower occupancy.
