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Civeo Corp (CVEO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 missed vs prior year on revenue and EPS as Canada weakened, partially offset by strong Australia; revenue $151.0M, diluted EPS $(1.10), Adj. EBITDA $11.4M; Australia +23% Y/Y, Canada −44% Y/Y with negative Adj. EBITDA on lower billed rooms and asset sale impact .
  • 2025 guide introduced below preliminary expectations: revenue $630–$660M and Adj. EBITDA $80–$90M (vs prior “> $90M” commentary), reflecting FX headwinds (~$5M EBITDA) and sustained Canada cost discipline/uncertainty; capex $25–$30M, cash taxes ~$30M, FCF $30–$40M .
  • Strategic positives: six‑year A$1.4B integrated services renewal (effective 1/1/25) and announced A$105M acquisition of four Bowen Basin villages (expected A$50M revenue / A$27M EBITDA annualized) to expand Australian footprint; both are positioned to be cash flow accretive .
  • Capital allocation remained shareholder friendly: $44M returned in 2024 (~65% of $68.4M FCF), dividend of $0.25/share declared; net leverage 0.5x with $202M liquidity provides capacity to execute strategy .
  • Near‑term stock reaction catalysts: magnitude/trajectory of Canadian restructuring/occupancy stabilization, progress on Australia acquisition close, FX trends vs AUD/CAD, and any 2025 guidance update post‑acquisition .

What Went Well and What Went Wrong

  • What Went Well

    • Australia delivered 23% Y/Y revenue growth and modest Adj. EBITDA growth on integrated services expansion; ADR increased and owned villages maintained strong occupancy .
    • Major Australian contract renewal: six‑year A$1.4B expansion to operate 11 villages, effective Jan 1, 2025; team had already begun incremental scope under LNTP in mid‑2024 .
    • Disciplined growth: announced acquisition of four villages in Bowen Basin (A$105M purchase; annualized A$50M revenue/A$27M EBITDA) expected to be immediately cash flow accretive on close .
    • Quote: “We are leveraging our core competency of taking care of people into a larger, capital-light market opportunity in Australia… five-year topline organic CAGR of 38%” .

  • What Went Wrong

    • Canada deteriorated meaningfully: revenue −44% Y/Y; billed rooms −42% Y/Y; Adj. EBITDA turned to $(4.7)M on lower oil sands headcount, sale of McClelland Lake Lodge, and softer Sitka occupancy; turnaround activity in Q4’23 exacerbated comps .
    • Consolidated results down Y/Y: revenue $151.0M vs $170.8M; Adj. EBITDA $11.4M vs $18.5M; FCF $2.1M vs $39.2M, with 2023 aided by asset sale proceeds and mobile camp wind‑down collections .
    • 2025 outlook trimmed vs prior commentary due to FX (~$5M EBITDA headwind) and prolonged Canadian customer cost discipline; management initiating ~$3M Q1’25 restructuring (cold‑closing lodges, ~25% overhead reduction) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$170.8 $176.3 $151.0
Diluted EPS ($)$1.55 $(0.36) $(1.10)
Adjusted EBITDA ($M)$18.5 $18.8 $11.4
Operating Income ($M)$22.0 $0.044 $(10.0)

Segment breakdown

SegmentQ4 2023 Revenue ($M)Q3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Adj. EBITDA ($M)Q3 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)
Australia$89.3 $116.6 $110.0 $21.5 $22.5 $22.2
Canada$72.7 $57.7 $40.7 $3.5 $3.4 $(4.7)

KPIs

KPIQ4 2023Q3 2024Q4 2024
Australia ADR ($)$74 $79 $77
Australia Billed Rooms (#)637,759 647,358 637,461
Canada ADR ($)$95 $100 $94
Canada Billed Rooms (#)617,325 483,767 359,537

Drivers vs prior periods

  • Y/Y decline driven by Canada: lower billed rooms from oil sands headcount reductions, McClelland Lake sale, and softer Sitka; Australia offset with integrated services growth and higher ADR .
  • Q/Q decline vs Q3 on seasonality and Canada demobilizations normalization; Australia remained solid .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2025N/A$630–$660 New
Adjusted EBITDA ($M)FY 2025“> $90” (prelim) $80–$90 Lower
Capex ($M)FY 2025N/A$25–$30 New
Cash taxes ($M)FY 2025N/A~ $30 (incl. ~$10 related to 2024 tax) New
Free Cash Flow ($M)FY 2025N/A$30–$40 New
Dividend ($/share)Q1 2025$0.25 (ongoing) $0.25; payable Mar 17, 2025 Maintained
Canada restructuring (one-time)Q1 2025N/A~ $3 New
Adj. EBITDA addbacks in guideFY 2025N/A+$2.9M Canada restructuring; +$2.8M SBC New

Context: Reduction vs prior preliminary EBITDA (> $90M) reflects ~ $5M FX headwind plus more cautious Canada spending/occupancy outlook .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Australia integrated services expansionQ2: growth toward A$500M by 2027; strong LNTP uptick; ADR/occupancy healthy ; Q3: continued wins; AUS revenue +33% Y/Y .Six‑year A$1.4B renewal to 11 villages; sustained strong owned village occupancy .Strengthening
Canada macro/visibilityQ2: LNG mobile camp wind‑down; wildfire disruptions expected to be manageable ; Q3: wildfires and demob costs; mobile activity winding down .Oil sands cost discipline persists; lower occupancy; ~25% overhead reduction; cold‑closing lodges .Worsening
FX and tariffs/macroNot highlighted in Q2/Q3.FX headwind ~ $5M to 2025 EBITDA; cites U.S. election/tariff chatter, Canadian political change .New headwind
Capital returnsQ2: $10.3M returned; dividend $0.25/share ; Q3: $17.8M returned; dividend maintained .2024 total $44M returned; leverage 0.5x .Consistent
M&A / Bowen BasinNo deal announced in Q2/Q3 (considering adds) .A$105M for four villages; ~3.9x EBITDA multiple discussed; expected accretive .Positive optionality
Seasonality cadenceImplied normal seasonality .Expect 60–65% of EBITDA in Q2/Q3 of 2025 .Normal

Management Commentary

  • Strategy shift and mix: “We are a diversified company providing catering and facility management services at both owned and customer‑owned assets… balanced portfolio lets us capitalize on tailwinds and mitigate headwinds” .
  • Australia growth engine: “Leveraging our core competency of taking care of people into a larger, capital‑light market opportunity in Australia… five‑year topline organic CAGR of 38%” .
  • Canada rightsizing: “We are right sizing our Canadian cost structure… expect to incur one‑time restructuring costs of approximately $3 million as we cold‑close existing lodges and reduce overhead headcount by approximately 25%” .
  • 2025 outlook context: FX headwind ~ $5M EBITDA; Canada capex delays from customers; guiding to $80–$90M Adj. EBITDA ex‑acquisition .

Q&A Highlights

  • Asset‑light vs asset‑intensive: Clarified that “asset‑light” includes catering/facility management at owned and customer‑owned assets; integrated services seen as primary growth vector .
  • Seasonality: Management expects typical distribution with 60–65% of full‑year EBITDA in Q2/Q3 2025 (ex acquisition timing) .
  • Canada duration/stance: Management views customer headcount reductions as a longer‑term shift; restructuring aligns cost base; catalysts would be additional LNG projects and the Pathways carbon capture initiative .
  • Australia acquisition economics: ~3.9x EBITDA; expected immediately cash flow accretive; opportunity to in‑source integrated services at acquired sites .
  • Capital returns posture: Maintain dividend and opportunistic buybacks within 1x leverage target; post‑deal leverage ~1x .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 revenue, EBITDA, and EPS, but the S&P Global API was unavailable at the time (daily limit exceeded). As a result, we cannot quantify beat/miss vs Wall Street for this quarter at this time. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

  • Australia continues to outgrow and underpin the model; the A$1.4B renewal and Bowen Basin acquisition should support both revenue visibility and cash flow accretion into 2025+ .
  • Canada’s structural reset appears durable near term (lower occupancy/headcount); management is proactively resizing the cost base; monitoring for LNG/Pathways catalysts is key .
  • 2025 guide reset below preliminary commentary largely on FX and Canada dynamics; watch for an updated guide upon close of the Australia acquisition (expected Q2 2025) .
  • Balance sheet remains a source of strength (0.5x net leverage, $202M liquidity), allowing continued capital returns while funding disciplined growth .
  • KPI focus: Australian ADR and billed rooms remain stable at high levels; Canadian billed rooms have materially reset; mix shift toward asset‑light integrated services supports resilience .
  • Near‑term inflection points: cadence of Canada restructuring benefits, AUD/CAD vs USD impacts on reported EBITDA, and ability to layer additional integrated services wins .
  • Margin/FCF watch: 2025 FCF guide $30–$40M despite FX and Canada headwinds; execution against capex/tax plans and integration of new Australian assets will be pivotal .

Appendix: Additional Relevant Disclosures

  • Liquidity and leverage: Liquidity ~$202.2M; net leverage 0.5x at Dec 31, 2024 .
  • Capital returns: 2024 share repurchases 1.13M shares for ~$29.6M; Q4 repurchases ~208k shares for ~$5.6M .
  • Non‑GAAP definitions and reconciliations are provided in the company’s release (EBITDA, Adj. EBITDA, FCF, net leverage) .