Civeo Corporation (NYSE:CVEO) today reported financial and
operating results for the third quarter ended September 30, 2016.
Highlights
include:
- Financial results for each division and on a consolidated
basis exceeded guidance due to the Company’s continued cost
control, higher occupancy in Canada after the Ft. McMurray forest
fires, and slightly higher than anticipated occupancy and average
daily rates in Australia
- The Company generated $13.7 million in operating cash flow and
$10.7 million in free cash flow and reduced debt by $15
million
"Our operational execution in the third quarter
continued to exceed our expectations despite the persistent
macroeconomic headwinds impacting our core end markets. Although
the recent stabilization in global crude oil spot prices is
encouraging, we remain committed to vigilant cost control, positive
free cash flow generation and debt reduction,” said Bradley J.
Dodson, President and Chief Executive Officer.
“Additionally, spot met coal prices in Australia
have surged in recent weeks in response to domestic coal output
reductions in China leading to an increase in Chinese imports.
Although the higher prices have yet to noticeably impact mining
activity in Australia, improving market fundamentals are an
encouraging sign heading into 2017. We continue to believe that the
Company remains well positioned in the Australian natural resources
market over the long-term.”
THIRD QUARTER 2016 RESULTS
In the third quarter of 2016, the Company
generated revenues of $104.2 million and reported a net loss of
$42.1 million, or $0.39 per share. The loss included a $39.4
million pre-tax loss ($28.8 million after-tax, or $0.27 per diluted
share) resulting from the impairment of fixed assets, a write-down
of inventory and severance costs associated with the termination of
certain executives. Excluding these charges, adjusted net
loss was $13.3 million or $0.12 per diluted share. During the
third quarter of 2016, Adjusted EBITDA was $25.4 million and the
Company generated operating cash flow of $13.7 million and free
cash flow of $10.7 million.
(EBITDA is a non-GAAP financial measure that 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. Free cash flow
is a non-GAAP financial measure that is defined as net cash flows
provided by operating activities less capital expenditures plus
proceeds from asset sales. Please see reconciliation to GAAP
measures at the end of this news release.)
By comparison, in the third quarter of 2015, the
Company generated revenues of $106.5 million and a net loss of
$107.7 million, or $1.01 per share. The loss included $113.7
million in pre-tax charges ($92.6 million after-tax or $0.86 per
diluted share) related to goodwill and fixed asset impairments and
costs incurred in connection with the Company’s migration to
Canada. Excluding these charges, adjusted net loss was $15.1
million, or $0.15 per diluted share. During the third quarter of
2015, Adjusted EBITDA was $25.3 million, operating cash flow was
$80.6 million and free cash flow was $61.5 million.
Revenues decreased $2.3 million, or 2% year over
year, in the third quarter of 2016 compared to the third quarter of
2015. The decline was attributable to decreases in the U.S.
and Australia due to lower occupancy and activity levels. Selling,
general and administrative expense decreased $3.0 million, or 18%,
in the third quarter of 2016 compared to the third quarter of
2015. This decrease was primarily due to reduced compensation
as a result of workforce reductions, the non-recurrence of 2015
transaction costs related to the Canada migration and lower
incentive compensation costs.
BUSINESS SEGMENT RESULTS
(Unless otherwise noted, the following
discussion compares the quarterly results for the third quarter of
2016 to the third quarter of 2015. The results discussed
below exclude the fixed asset impairment expense and migration
charges noted above.)
Canada
The Canadian segment generated revenues of $73.5
million, operating loss of $44.7 million, and Adjusted EBITDA of
$19.6 million in the third quarter of 2016 compared to revenues of
$71.5 million, operating loss of $70.9 million, and Adjusted EBITDA
of $19.5 million in the third quarter of 2015. The average exchange
rates for the Canadian dollar relative to the U.S. dollar had a
negligible impact on the Company’s results in the third quarter of
2016 compared to the third quarter of 2015.
On a constant currency basis, lodge revenues
increased nearly 11% year-on-year due to the expansion of lodging
capacity and higher occupancy due primarily to the continued room
needs for customers’ recovery efforts from the Fort McMurray fires.
However, this was partially offset by a decline in the average
daily lodging rate from $112 to $100. Mobile, open camp and
manufacturing revenues all declined due to overall lower activity
levels.
Australia
The Australian segment generated revenues of
$27.7 million, operating loss of $1.9 million, and Adjusted EBITDA
of $11.0 million in the third quarter of 2016, compared to revenues
of $29.2 million, operating loss of $26.0 million, and Adjusted
EBITDA of $11.7 million in the third quarter of 2015. A stronger
average exchange rate between the Australian dollar relative to the
U.S. dollar in the third quarter of 2016 compared to the third
quarter of 2015 increased revenues by $1.2 million. On a constant
currency basis, Australian segment revenues declined by 9%
year-on-year in the third quarter of 2016 due to lower occupancy
levels associated with the continued downturn in the Australian
mining industry.
United States
The U.S. segment generated revenues of $3.0
million, operating loss of $3.3 million, and negative Adjusted
EBITDA of $1.3 million in the third quarter of 2016, compared to
revenues of $5.9 million, operating loss of $24.9 million, and
negative Adjusted EBITDA of $1.0 million in the third quarter of
2015. Results reflected lower U.S. drilling activity in the
Bakken, Rockies and Texas markets.
IMPAIRMENT CHARGES
During the third quarter of 2016, the Company
recorded a pre-tax impairment charge of $37.7 million ($27.5
million after-tax, or $0.26 per diluted share). The non-cash
impairment charge resulted from a carrying value assessment of
mobile camp assets and certain undeveloped land positions in our
Canadian segment. Additional details will be available in our Form
10-Q filing for the third quarter of 2016.
INCOME TAXES
The Company recognized an income tax benefit of
$11.7 million, which reflected an effective tax rate of 21.8% in
the third quarter of 2016. By comparison, during the third quarter
of 2015, the Company recognized an income tax benefit of $22.7
million, which resulted in an effective tax rate of 17.5%.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2016, the Company had total
available liquidity of approximately $176.6 million, comprising
$174.1 million available under its credit facility and $2.5 million
of cash on hand. The Company made $15.4 million in debt
reduction payments during the third quarter, for a total of $44
million in debt reduction payments during the first nine months of
2016.
Capital expenditures totaled $5.4 million in the
third quarter compared to $19.6 million spent in the same period
last year. Year-to-date, capital expenditures totaled $15.2
million, compared with $43.7 million for the first nine months of
2015. Civeo currently expects capital expenditures of
approximately $20 million to $25 million for the full year
2016.
FOURTH QUARTER AND FULL YEAR 2016 GUIDANCE
For the fourth quarter of 2016, the Company
expects revenues of $88 million to $92 million and Adjusted EBITDA
of $15 million to $18 million. For the full year 2016, the Company
expects revenues of $394 million to $398 million and Adjusted
EBITDA of $84 million to $87 million. (Please see
reconciliation to GAAP measures at the end of this news
release.)
CONFERENCE CALL
Civeo will host a conference call to discuss its
third quarter 2016 financial results today at 11:00 a.m. Eastern
time. This call will be webcast and can be accessed at
Civeo's website at www.civeo.com. Participants may also join the
conference call by dialing (877) 709-8150 in the United States or
(201) 689-8354 internationally and asking for the Civeo call. A
replay will be available after the call by dialing (877) 660-6853
in the United States or (201) 612-7415 internationally and entering
the passcode 13648282#.
ABOUT CIVEO
Civeo Corporation is a leading provider of
workforce accommodations with prominent market positions in the
Canadian oil sands and the Australian natural resource regions.
Civeo offers comprehensive solutions for housing hundreds or
thousands of workers with its long-term and temporary
accommodations solutions and provides catering, facility
management, water systems and logistics services. Civeo currently
owns a total of 19 lodges and villages in operation in Canada and
Australia, with an aggregate of more than 23,000 rooms. Civeo is
publicly traded under the symbol CVEO on the New York Stock
Exchange. For more information, please visit Civeo's website at
www.civeo.com.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking
statements within the meaning of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are those that do not state historical facts and are,
therefore, inherently subject to risks and uncertainties. The
forward-looking statements included herein are based on then
current expectations and entail various risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements. Such
risks and uncertainties include, among other things, risks
associated with the general nature of the accommodations industry,
risks associated with the level of supply and demand for oil, coal,
natural gas, iron ore and other minerals, including the level of
activity and developments in the Canadian oil sands, the level of
demand for coal and other natural resources from Australia, and
fluctuations in the current and future prices of oil, coal, natural
gas, iron ore and other minerals, risks associated with currency
exchange rates, risks associated with the Company’s migration to
Canada, including, among other things, risks associated with
changes in tax laws or their interpretations, risks associated with
the development of new projects, including whether such projects
will continue in the future, and other factors discussed in the
Company’s annual report on Form 10-K for the year ended December
31, 2015, and other reports the Company may file from time to time
with the U.S. Securities and Exchange Commission. Each
forward-looking statement contained in this news release speaks
only as of the date of this release. Except as required by law, the
Company expressly disclaims any intention or obligation to revise
or update any forward-looking statements whether as a result of new
information, future events or otherwise.
Financial Schedules Follow
CIVEO CORPORATION UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
104,238 |
|
|
$ |
106,544 |
|
|
$ |
306,309 |
|
|
$ |
420,678 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales
and services |
|
|
67,964 |
|
|
|
69,751 |
|
|
|
198,493 |
|
|
|
262,086 |
|
|
Selling, general
and administrative expenses |
|
|
13,644 |
|
|
|
16,691 |
|
|
|
42,056 |
|
|
|
51,796 |
|
|
Depreciation and
amortization expense |
|
|
33,721 |
|
|
|
36,172 |
|
|
|
100,444 |
|
|
|
121,159 |
|
|
Impairment
expense |
|
|
37,729 |
|
|
|
110,715 |
|
|
|
46,129 |
|
|
|
122,926 |
|
|
Other operating
expense |
|
|
138 |
|
|
|
(3,945 |
) |
|
|
356 |
|
|
|
(5,188 |
) |
|
|
|
|
153,196 |
|
|
|
229,384 |
|
|
|
387,478 |
|
|
|
552,779 |
|
|
Operating loss |
|
|
(48,958 |
) |
|
|
(122,840 |
) |
|
|
(81,169 |
) |
|
|
(132,101 |
) |
|
|
|
|
|
|
|
|
|
|
|
Interest expense to
third-parties, net of capitalized interest |
|
|
(6,072 |
) |
|
|
(6,022 |
) |
|
|
(16,941 |
) |
|
|
(17,879 |
) |
|
Loss on extinguishment
of debt |
|
|
- |
|
|
|
(1,474 |
) |
|
|
(302 |
) |
|
|
(1,474 |
) |
|
Interest
income |
|
|
26 |
|
|
|
160 |
|
|
|
140 |
|
|
|
1,969 |
|
|
Other income |
|
|
1,338 |
|
|
|
261 |
|
|
|
1,058 |
|
|
|
1,825 |
|
|
Loss before
income taxes |
|
|
(53,666 |
) |
|
|
(129,915 |
) |
|
|
(97,214 |
) |
|
|
(147,660 |
) |
|
Income tax benefit |
|
|
11,697 |
|
|
|
22,745 |
|
|
|
17,217 |
|
|
|
27,451 |
|
|
Net loss |
|
|
(41,969 |
) |
|
|
(107,170 |
) |
|
|
(79,997 |
) |
|
|
(120,209 |
) |
|
Less: Net income
attributable to noncontrolling interest |
|
|
162 |
|
|
|
515 |
|
|
|
442 |
|
|
|
953 |
|
|
Net loss attributable
to Civeo Corporation |
|
$ |
(42,131 |
) |
|
$ |
(107,685 |
) |
|
$ |
(80,439 |
) |
|
$ |
(121,162 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss
per share attributable to Civeo Corporation common
stockholders: |
|
|
|
|
|
|
|
Basic |
|
$ |
(0.39 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.14 |
) |
|
Diluted |
|
$ |
(0.39 |
) |
|
$ |
(1.01 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
107,118 |
|
|
|
106,661 |
|
|
|
106,989 |
|
|
|
106,583 |
|
|
Diluted |
|
|
107,118 |
|
|
|
106,661 |
|
|
|
106,989 |
|
|
|
106,583 |
|
|
CIVEO CORPORATION CONSOLIDATED
BALANCE SHEETS |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
SEPTEMBER 30,
2016 |
|
DECEMBER 31,
2015 |
|
|
|
(UNAUDITED) |
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,530 |
|
|
$ |
7,837 |
|
|
Accounts receivable, net |
|
|
68,478 |
|
|
|
61,467 |
|
|
Inventories |
|
|
3,564 |
|
|
|
5,631 |
|
|
Prepaid expenses and other current assets |
|
|
15,821 |
|
|
|
15,024 |
|
|
Total current assets |
|
|
90,393 |
|
|
|
89,959 |
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
844,801 |
|
|
|
931,914 |
|
|
Other
intangible assets, net |
|
|
31,503 |
|
|
|
35,309 |
|
|
Other
noncurrent assets |
|
|
11,354 |
|
|
|
9,347 |
|
|
Total assets |
|
$ |
978,051 |
|
|
$ |
1,066,529 |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
27,755 |
|
|
$ |
24,609 |
|
|
Accrued liabilities |
|
|
16,161 |
|
|
|
14,834 |
|
|
Income taxes |
|
|
56 |
|
|
|
1,104 |
|
|
Current portion of long-term debt |
|
|
15,819 |
|
|
|
17,461 |
|
|
Deferred revenue |
|
|
10,265 |
|
|
|
7,747 |
|
|
Other current liabilities |
|
|
212 |
|
|
|
493 |
|
|
Total current liabilities |
|
|
70,268 |
|
|
|
66,248 |
|
|
|
|
|
|
|
|
Long-term debt to
third-parties |
|
|
358,045 |
|
|
|
379,416 |
|
|
Deferred income
taxes |
|
|
2,582 |
|
|
|
25,391 |
|
|
Other noncurrent
liabilities |
|
|
32,402 |
|
|
|
31,704 |
|
|
Total liabilities |
|
|
463,297 |
|
|
|
502,759 |
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Common shares |
|
|
- |
|
|
|
- |
|
|
Additional paid-in capital |
|
|
1,310,465 |
|
|
|
1,305,930 |
|
|
Accumulated deficit |
|
|
(456,815 |
) |
|
|
(376,376 |
) |
|
Treasury stock |
|
|
(65 |
) |
|
|
- |
|
|
Accumulated other comprehensive loss |
|
|
(339,799 |
) |
|
|
(366,309 |
) |
|
Total Civeo Corporation shareholders'
equity |
|
|
513,786 |
|
|
|
563,245 |
|
|
Noncontrolling interest |
|
|
968 |
|
|
|
525 |
|
|
Total shareholders' equity |
|
|
514,754 |
|
|
|
563,770 |
|
|
Total liabilities and shareholders' equity |
|
$ |
978,051 |
|
|
$ |
1,066,529 |
|
|
CIVEO CORPORATION UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
Net loss |
|
$ |
(79,997 |
) |
|
$ |
(120,209 |
) |
|
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and
amortization |
|
|
100,444 |
|
|
|
121,159 |
|
|
Impairment
charges |
|
|
46,129 |
|
|
|
122,926 |
|
|
Inventory
write-down |
|
|
850 |
|
|
|
1,015 |
|
|
Loss on
extinguishment of debt |
|
|
302 |
|
|
|
1,474 |
|
|
Deferred income
tax benefit |
|
|
(25,239 |
) |
|
|
(34,200 |
) |
|
Non-cash
compensation charge |
|
|
4,535 |
|
|
|
3,467 |
|
|
Losses (gains)
on disposals of assets |
|
|
259 |
|
|
|
(800 |
) |
|
Provision
(benefit) for loss on receivables, net of recoveries |
|
|
(74 |
) |
|
|
1,081 |
|
|
Other,
net |
|
|
2,546 |
|
|
|
1,032 |
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
Accounts
receivable |
|
|
(2,920 |
) |
|
|
79,763 |
|
|
Inventories |
|
|
1,484 |
|
|
|
5,556 |
|
|
Accounts
payable and accrued liabilities |
|
|
2,701 |
|
|
|
(5,094 |
) |
|
Taxes
payable |
|
|
4,832 |
|
|
|
1,652 |
|
|
Other
current assets and liabilities, net |
|
|
(7,062 |
) |
|
|
(3,889 |
) |
|
Net cash flows provided
by operating activities |
|
|
48,790 |
|
|
|
174,933 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
Capital
expenditures, including capitalized interest |
|
|
(15,246 |
) |
|
|
(43,701 |
) |
|
Proceeds from
disposition of property, plant and equipment |
|
|
4,465 |
|
|
|
2,255 |
|
|
Other,
net |
|
|
(761 |
) |
|
|
- |
|
|
Net cash
flows used in investing activities |
|
|
(11,542 |
) |
|
|
(41,446 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Proceeds from
issuance of common stock |
|
|
- |
|
|
|
500 |
|
|
Term loan
borrowings |
|
|
- |
|
|
|
325,000 |
|
|
Term loan
repayments |
|
|
(37,107 |
) |
|
|
(725,000 |
) |
|
Revolver
borrowings (repayments), net |
|
|
(6,616 |
) |
|
|
56,708 |
|
|
Debt issuance
costs |
|
|
(2,037 |
) |
|
|
(4,555 |
) |
|
Net cash
flows used in financing activities |
|
|
(45,760 |
) |
|
|
(347,347 |
) |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
3,205 |
|
|
|
(36,819 |
) |
|
Net change in cash and
cash equivalents |
|
|
(5,307 |
) |
|
|
(250,679 |
) |
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period |
|
|
7,837 |
|
|
|
263,314 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period |
|
$ |
2,530 |
|
|
$ |
12,635 |
|
|
CIVEO CORPORATION SEGMENT
DATA (in thousands)(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
73,539 |
|
|
$ |
71,500 |
|
|
$ |
216,168 |
|
|
$ |
278,472 |
|
|
Australia |
|
|
27,679 |
|
|
|
29,177 |
|
|
|
80,694 |
|
|
|
109,304 |
|
|
United
States |
|
|
3,020 |
|
|
|
5,867 |
|
|
|
9,447 |
|
|
|
32,902 |
|
|
Total
revenues |
|
$ |
104,238 |
|
|
$ |
106,544 |
|
|
$ |
306,309 |
|
|
$ |
420,678 |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1) |
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
(19,841 |
) |
|
$ |
(47,218 |
) |
|
$ |
17,950 |
|
|
$ |
14,685 |
|
|
Australia |
|
|
10,992 |
|
|
|
(12,505 |
) |
|
|
32,781 |
|
|
|
18,128 |
|
|
United
States |
|
|
(1,343 |
) |
|
|
(21,477 |
) |
|
|
(15,244 |
) |
|
|
(23,187 |
) |
|
Corporate and
eliminations |
|
|
(3,869 |
) |
|
|
(5,722 |
) |
|
|
(15,596 |
) |
|
|
(19,696 |
) |
|
Total
EBITDA |
|
$ |
(14,061 |
) |
|
$ |
(86,922 |
) |
|
$ |
19,891 |
|
|
$ |
(10,070 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1) |
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
19,595 |
|
|
$ |
19,463 |
|
|
$ |
57,627 |
|
|
$ |
81,524 |
|
|
Australia |
|
|
10,992 |
|
|
|
11,731 |
|
|
|
32,801 |
|
|
|
51,976 |
|
|
United
States |
|
|
(1,343 |
) |
|
|
(977 |
) |
|
|
(6,844 |
) |
|
|
1,066 |
|
|
Corporate and
eliminations |
|
|
(3,869 |
) |
|
|
(4,900 |
) |
|
|
(14,586 |
) |
|
|
(15,568 |
) |
|
Total
adjusted EBITDA |
|
$ |
25,375 |
|
|
$ |
25,317 |
|
|
$ |
68,998 |
|
|
$ |
118,998 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
(44,742 |
) |
|
$ |
(70,909 |
) |
|
$ |
(53,758 |
) |
|
$ |
(62,609 |
) |
|
Australia |
|
|
(1,918 |
) |
|
|
(25,995 |
) |
|
|
(4,454 |
) |
|
|
(24,150 |
) |
|
United
States |
|
|
(3,271 |
) |
|
|
(24,916 |
) |
|
|
(20,662 |
) |
|
|
(33,611 |
) |
|
Corporate and
eliminations |
|
|
973 |
|
|
|
(1,020 |
) |
|
|
(2,295 |
) |
|
|
(11,731 |
) |
|
Total
operating loss |
|
$ |
(48,958 |
) |
|
$ |
(122,840 |
) |
|
$ |
(81,169 |
) |
|
$ |
(132,101 |
) |
|
|
|
|
|
|
|
|
|
|
|
(1) Please
see Non-GAAP Reconciliation Schedule. |
|
|
|
|
|
|
|
CIVEO CORPORATION NON-GAAP
RECONCILIATIONS (in
thousands)(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1) |
|
$ |
(14,061 |
) |
|
$ |
(86,922 |
) |
|
$ |
19,891 |
|
|
$ |
(10,070 |
) |
|
Adjusted EBITDA
(1) |
|
$ |
25,375 |
|
|
$ |
25,317 |
|
|
$ |
68,998 |
|
|
$ |
118,998 |
|
|
Free Cash Flow (2) |
|
$ |
10,669 |
|
|
$ |
61,455 |
|
|
$ |
38,009 |
|
|
$ |
133,487 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The term EBITDA is defined as net income plus interest,
taxes, depreciation and amortization. The term Adjusted EBITDA is
defined as EBITDA adjusted to exclude impairment charges and
certain other costs such as those incurred associated with the
Company's redomiciliation. 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. The Company has
included EBITDA and Adjusted EBITDA as supplemental disclosures
because its management believes that EBITDA and Adjusted EBITDA
provides useful information regarding our ability to service debt
and to fund capital expenditures and provides investors a helpful
measure for comparing its operating performance with the
performance of other companies that have different financing and
capital structures or tax rates. The Company 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. |
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth a reconciliation of EBITDA and
Adjusted EBITDA to net income, which is the most directly
comparable measure of financial performance calculated under
generally accepted accounting principles (in thousands)
(unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(42,131 |
) |
|
$ |
(107,685 |
) |
|
$ |
(80,439 |
) |
|
$ |
(121,162 |
) |
|
Income tax provision (benefit) |
|
|
(11,697 |
) |
|
|
(22,745 |
) |
|
|
(17,217 |
) |
|
|
(27,451 |
) |
|
Depreciation and amortization |
|
|
33,721 |
|
|
|
36,172 |
|
|
|
100,444 |
|
|
|
121,159 |
|
|
Interest income |
|
|
(26 |
) |
|
|
(160 |
) |
|
|
(140 |
) |
|
|
(1,969 |
) |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
1,474 |
|
|
|
302 |
|
|
|
1,474 |
|
|
Interest expense |
|
|
6,072 |
|
|
|
6,022 |
|
|
|
16,941 |
|
|
|
17,879 |
|
|
EBITDA |
|
$ |
(14,061 |
) |
|
$ |
(86,922 |
) |
|
$ |
19,891 |
|
|
$ |
(10,070 |
) |
|
Adjustments to EBITDA |
|
|
|
|
|
|
|
|
|
Impairment of intangible asset (a) |
|
|
- |
|
|
|
2,460 |
|
|
|
- |
|
|
|
2,460 |
|
|
Impairment of assets (b) |
|
|
38,579 |
|
|
|
65,061 |
|
|
|
46,979 |
|
|
|
74,534 |
|
|
Impairment of goodwill (c) |
|
|
- |
|
|
|
43,194 |
|
|
|
- |
|
|
|
43,194 |
|
|
Migration costs (d) |
|
|
- |
|
|
|
1,524 |
|
|
|
1,271 |
|
|
|
5,127 |
|
|
Loss on assets held for sale (e) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,753 |
|
|
Severance (f) |
|
|
857 |
|
|
|
- |
|
|
|
857 |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
25,375 |
|
|
$ |
25,317 |
|
|
$ |
68,998 |
|
|
$ |
118,998 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Relates to the 2015 impairment of an intangible asset in
the U.S. The U.S. intangible impairment resulted from an
assessment of the carrying value of our long-lived assets, which
evaluation included amortizable intangible assets. The $2.5
million impairment ($1.6 million after-tax, or $0.01 per diluted
share), which is related to our U.S. segment, is included in
Impairment expense on the unaudited statements of operations. |
|
|
|
|
|
|
|
|
|
|
|
(b) 2016 relates to the impairment of assets in Canada and the
United States. During the third quarter 2016, we recorded a
pre-tax loss of $38.6 million ($28.2 million after-tax, or $0.26
per diluted share), of which $0.9 million is included in Cost of
sales and $37.7 million is included in Impairment expense on the
unaudited statements of operations. During the first quarter
2016, we recorded a pre-tax loss of $8.4 million ($8.4 million
after-tax, or $0.08 per diluted share), which is included in
Impairment expense on the unaudited statements of operations.
2015 relates to the impairment of certain fixed assets which
carrying value we have determined to not to be recoverable.
The $65.1 million impairment ($45.3 million after-tax, or $0.43 per
diluted share) for the quarter ended September 30, 2015 and the
$74.5 million impairment ($54.4 million after-tax, or $0.51 per
diluted share) for the nine months ended September 30, 2015 is
included in Impairment expense on the unaudited statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(c) Relates to the impairment of goodwill. The $43.2
million impairment ($43.2 million after-tax, or $0.40 per diluted
share), which is related to our Canadian segment, is included in
Impairment expense on the unaudited statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(d) Relates to costs incurred associated with the Company's
redomiciliation to Canada. For 2016, the $1.3 million in
costs ($1.2 million after-tax, or $0.01 per diluted share), which
are primarily corporate in nature, are included in Selling, general
and administrative costs on the unaudited statements of
operations. For 2015, the $1.5 million and $5.1 million in
costs ($1.0 million and $3.4 million, respectively, after-tax, or
$0.01 and $0.04, respectively, per diluted share, respectively),
which are primarily corporate in nature, are included in Selling,
general and administrative costs on the unaudited statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(e) Relates to the first quarter 2015 decision to close a
manufacturing facility in the United States. As a result, the
related assets were written down to their estimated sales proceeds,
less costs to sell. We recorded a pre-tax loss of $3.8
million ($2.4 million after-tax, or $0.02 per diluted share), of
which $1.1 million is included in Cost of sales and services and
$2.7 million is included in Impairment expense on the statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(f) Relates to severance costs associated with the termination
of executives. The $0.9 million expense ($0.6 million
after-tax, or $0.01 per diluted share), which is related to our
Canadian segment, is included in Selling, general and
administrative expenses on the unaudited statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(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.
The Company 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. The Company uses Free Cash Flow to
compare and to understand, manage, make operating decisions and
evaluate its business. It is also used as a benchmark for the
award of incentive compensation under its Free Cash Flow
plan. |
|
|
|
The following table sets forth a reconciliation of Free Cash
Flow to Net Cash Flows Provided by Operating Activities, which is
the most directly comparable measure of financial performance
calculated under generally accepted accounting principles (in
thousands) (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash
Flows Provided by Operating Activities |
|
$ |
13,662 |
|
|
$ |
80,643 |
|
|
$ |
48,790 |
|
|
$ |
174,933 |
|
|
Capital expenditures, including capitalized
interest |
|
(5,353 |
) |
|
|
(19,599 |
) |
|
|
(15,246 |
) |
|
|
(43,701 |
) |
|
Proceeds from disposition of property, plant and
equipment |
|
2,360 |
|
|
|
411 |
|
|
|
4,465 |
|
|
|
2,255 |
|
|
Free Cash Flow |
|
$ |
10,669 |
|
|
$ |
61,455 |
|
|
$ |
38,009 |
|
|
$ |
133,487 |
|
|
CIVEO CORPORATION NON-GAAP
RECONCILIATIONS - GUIDANCE (in
millions)(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDING DECEMBER 31,
2016 |
|
YEAR ENDING DECEMBER 31,
2016 |
|
EBITDA Range (1) |
|
$ |
15.0 |
|
|
$ |
18.0 |
|
|
$ |
34.8 |
|
|
$ |
37.8 |
|
|
Adjusted EBITDA Range
(1) |
|
$ |
15.0 |
|
|
$ |
18.0 |
|
|
$ |
84.0 |
|
|
$ |
87.0 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The following table sets forth a reconciliation of
estimated EBITDA and Adjusted EBITDA to estimated net income
(loss), which is the most directly comparable measure of financial
performance calculated under generally accepted accounting
principles (in millions) (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDING DECEMBER 31,
2016 |
|
YEAR ENDING DECEMBER 31,
2016 |
|
|
|
(estimated) |
|
(estimated) |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(22.6 |
) |
|
$ |
(18.6 |
) |
|
$ |
(102.6 |
) |
|
$ |
(98.6 |
) |
|
Income tax benefit |
|
|
(1.0 |
) |
|
|
(2.0 |
) |
|
|
(18.2 |
) |
|
|
(19.2 |
) |
|
Depreciation and amortization |
|
|
33.0 |
|
|
|
33.0 |
|
|
|
133.0 |
|
|
|
133.0 |
|
|
Interest income |
|
|
- |
|
|
|
- |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
Interest expense |
|
|
5.6 |
|
|
|
5.6 |
|
|
|
22.5 |
|
|
|
22.5 |
|
|
EBITDA |
|
$ |
15.0 |
|
|
$ |
18.0 |
|
|
$ |
34.8 |
|
|
$ |
37.8 |
|
|
Adjustments to EBITDA |
|
|
|
|
|
|
|
|
|
Migration costs (a) |
|
|
|
|
|
|
1.3 |
|
|
|
1.3 |
|
|
Impairment of fixed assets (b) |
|
|
|
|
|
|
47.0 |
|
|
|
47.0 |
|
|
Severance costs (c) |
|
|
|
|
|
|
0.9 |
|
|
|
0.9 |
|
|
Adjusted EBITDA |
|
$ |
15.0 |
|
|
$ |
18.0 |
|
|
$ |
84.0 |
|
|
$ |
87.0 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Relates to costs incurred associated with the Company's
redomiciliation to Canada. The $1.3 million in costs ($1.2
million, after-tax), which are primarily corporate in nature, are
included in Selling, general and administrative costs on the
unaudited statements of operations. |
|
|
|
|
|
|
|
|
|
|
|
(b) 2016 relates to the impairment of assets in Canada and the
United States. During the third quarter 2016, we recorded a
pre-tax loss of $38.6 million ($28.2 million after-tax, or $0.26
per diluted share), of which $0.9 million is included in Cost of
sales and $37.7 million is included in Impairment expense on the
unaudited statements of operations. During the first quarter
2016, we recorded a pre-tax loss of $8.4 million ($8.4 million
after-tax, or $0.08 per diluted share), which is included in
Impairment expense on the unaudited statements of
operations. |
|
|
|
|
|
|
|
|
|
|
|
(c) Relates to severance costs associated with the termination
of executives. The $0.9 million expense ($0.6 million
after-tax, or $0.01 per diluted share), which is related to our
Canadian segment, is included in Selling, general and
administrative expenses on the unaudited statements of
operations. |
|
CIVEO CORPORATION
SUPPLEMENTAL QUARTERLY SEGMENT AND OPERATING DATA
(U.S. dollars in thousands, except for room counts and
average daily rates) (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30, |
|
NINE MONTHS ENDED SEPTEMBER
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Operating Data - Canadian Segment |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Lodge
revenues (1) |
|
$ |
61,712 |
|
|
$ |
55,708 |
|
|
$ |
182,899 |
|
|
$ |
213,896 |
|
|
Mobile,
open camp and product revenues |
|
|
11,827 |
|
|
|
15,792 |
|
|
|
33,269 |
|
|
|
64,576 |
|
|
Total Canadian revenues |
|
$ |
73,539 |
|
|
$ |
71,500 |
|
|
$ |
216,168 |
|
|
$ |
278,472 |
|
|
|
|
|
|
|
|
|
|
|
|
Average
available lodge rooms (2) |
|
|
14,670 |
|
|
|
13,433 |
|
|
|
14,647 |
|
|
|
13,294 |
|
|
|
|
|
|
|
|
|
|
|
|
Rentable rooms
(3) |
|
|
10,588 |
|
|
|
9,445 |
|
|
|
10,199 |
|
|
|
10,125 |
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
rates (4) |
|
$ |
100 |
|
|
$ |
112 |
|
|
$ |
106 |
|
|
$ |
123 |
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy in
lodges (5) |
|
|
64 |
% |
|
|
57 |
% |
|
|
62 |
% |
|
|
63 |
% |
|
|
|
|
|
|
|
|
|
|
|
Canadian dollar
to U.S. dollar |
|
$ |
0.766 |
|
|
$ |
0.764 |
|
|
$ |
0.757 |
|
|
$ |
0.795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Operating Data - Australian Segment |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Village
revenues (1) |
|
$ |
27,679 |
|
|
$ |
29,177 |
|
|
$ |
80,694 |
|
|
$ |
109,304 |
|
|
|
|
|
|
|
|
|
|
|
|
Average
available village rooms (2) |
|
|
9,344 |
|
|
|
9,064 |
|
|
|
9,317 |
|
|
|
9,219 |
|
|
|
|
|
|
|
|
|
|
|
|
Rentable rooms
(3) |
|
|
8,675 |
|
|
|
8,824 |
|
|
|
8,700 |
|
|
|
8,955 |
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
rates (4) |
|
$ |
81 |
|
|
$ |
71 |
|
|
$ |
75 |
|
|
$ |
76 |
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy in
villages (5) |
|
|
43 |
% |
|
|
50 |
% |
|
|
45 |
% |
|
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
|
Australian
dollar to U.S. dollar |
|
$ |
0.758 |
|
|
$ |
0.725 |
|
|
$ |
0.742 |
|
|
$ |
0.763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes revenue related to rooms as well as the
fees associated with catering, laundry and other services including
facilities management. |
|
|
|
|
|
|
|
|
|
|
|
(2) Average available rooms relate to Canadian lodges
and Australian villages and includes rooms that are utilized for
our personnel. |
|
|
|
|
|
|
|
|
|
|
|
(3) Rentable rooms relate to Canadian lodges and
Australian villages and excludes rooms that are utilized for our
personnel and out-of-service rooms. |
|
|
|
|
|
|
|
|
|
|
|
(4) Average daily rate is based on rentable rooms and
lodge/village revenue. |
|
|
|
|
|
|
|
|
|
|
|
(5) Occupancy represents total billed days divided by
rentable days. Rentable days excludes staff rooms and
out-of-service rooms. |
|
Frank C. Steininger
Civeo Corporation
Senior Vice President and Chief Financial Officer
713-510-2400
Marc Cunningham or
Jeffrey Spittel
FTI Consulting
713-353-5407
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