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01/11 04:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several negative factors, including lowered revenue and EBITDA guidance, increased net debt due to acquisitions and buybacks, and significant decreases in Canadian segment revenue and EBITDA. The Q&A section reveals concerns about met coal price volatility and uncertainties in customer demand. Despite some positive elements like increased share repurchase authorization and a stable outlook for the second half, the overall sentiment is negative due to financial guidance cuts and operational uncertainties.
Revenue Total revenues in the second quarter of $162.7 million, a decrease compared to the year-ago period. The decrease in adjusted EBITDA in the second quarter of 2025 compared to the year-ago period was primarily due to the decreased build rooms at the Canadian lodges.
Net Loss Net loss of $3.3 million or $0.25 per diluted share in the second quarter of 2025. This was influenced by lower customer spending in Canada and macroeconomic headwinds.
Adjusted EBITDA Adjusted EBITDA of $25 million in the second quarter of 2025, a decrease compared to the year-ago period. The decrease was primarily due to the decreased build rooms at the Canadian lodges.
Operating Cash Flow Negative operating cash flow of $2.3 million in the second quarter of 2025. This was burdened by working capital build and the expected payment of Australian income taxes, including a large payment related to the prior year.
Free Cash Flow Free cash flow was burdened by working capital build and the expected payment of Australian income taxes, including a large payment related to the prior year.
Australian Segment Revenue Second quarter revenues from the Australian segment were $112.7 million, up 4% from $108.6 million in the second quarter of 2024. The increase was primarily driven by the recently completed acquisition of 4 owned villages as well as margin improvement in the integrated services business.
Australian Segment Adjusted EBITDA Adjusted EBITDA was $23.7 million, up 10% from $21.6 million in the second quarter of 2024. The increase was primarily driven by the recently completed acquisition of 4 owned villages as well as margin improvement in the integrated services business.
Canadian Segment Revenue Revenues of $50 million compared to revenues of $79.5 million in the second quarter of 2024. The decrease was driven by lower build rooms as customers focused on cost and headcount reductions as well as the loss of Fort Hills related occupancy from the sale of McClelland Lake lodge.
Canadian Segment Adjusted EBITDA Adjusted EBITDA for the segment was $7.5 million, a decrease from $17.3 million in the second quarter of 2024. The decrease was driven by lower build rooms as customers focused on cost and headcount reductions as well as the loss of Fort Hills related occupancy from the sale of McClelland Lake lodge.
Net Debt Net debt was $154 million as of June 30, 2025, a $95 million increase since March 31, 2025. This was primarily driven by $65 million deployed for the Australian acquisition and $19 million deployed for share buybacks.
Capital Expenditures Capital expenditures for the second quarter of 2025 were $4.5 million, down from $5.3 million during the second quarter of 2024. Capital expenditures in both periods were predominantly related to maintenance spending on lodges and villages.
Australian market expansion: Civeo completed the acquisition of 4 villages in the Bowen Basin in May 2025, which contributed to a 4% year-over-year revenue increase in the region. Additionally, two new contracts were announced: a 4-year take-or-pay agreement worth AUD 250 million and a 3-year integrated services contract worth AUD 64 million.
Share repurchase program: Civeo repurchased 883,000 common shares in Q2 2025, representing 7% of its outstanding shares and 30% of its new buyback authorization. Since August 2021, the company has repurchased 27% of its common shares.
Cost optimization in Canada: Civeo is taking steps to streamline its operations in Canada, including the cold closure of two lodges and working with a consulting partner to identify further cost reduction opportunities.
Focus on Australian integrated services: Civeo aims to achieve AUD 500 million in Australian integrated services revenues by 2027, leveraging recent acquisitions and contract wins.
Canadian Market Challenges: The Canadian segment is facing macroeconomic headwinds, including low oil prices, political uncertainty, and fiscal conservatism among customers. This has led to reduced customer spending, lower demand for temporary turnaround activity, and a focus on cost reductions by customers. Additionally, there is no meaningful near-term rebound in upstream oil sands spending expected.
Operational Adjustments in Canada: Civeo has had to take steps to streamline its operations in Canada, including the cold closure of two lodges and working with third-party consultants to identify further cost reduction opportunities. These actions are necessary to align resources with the current demand realities.
Debt and Leverage: The company’s net debt increased by $95 million in the second quarter of 2025, primarily due to acquisitions and share buybacks. This has resulted in a net leverage ratio of 2x, which is at the upper end of the company’s target range, potentially limiting financial flexibility.
Currency Weakness: The weakening of the Australian and Canadian dollars relative to the U.S. dollar has negatively impacted revenues and EBITDA, reducing financial performance in these regions.
Australian Market Risks: Despite strong occupancy levels and recent acquisitions, the Australian segment faces risks from weakening met coal prices, which could impact future revenue and profitability.
Full Year 2025 Revenue and Adjusted EBITDA Guidance: Civeo is maintaining its full-year 2025 revenue guidance in the range of $640 million to $670 million and adjusted EBITDA guidance in the range of $86 million to $96 million.
Full Year 2025 Capital Expenditure Guidance: Capital expenditures for the full year 2025 are expected to range between $20 million and $25 million.
Australia Regional Outlook: Customer activity in owned villages remains strong, with three Bowen Basin villages operating at full capacity. Despite weakening met coal prices, strong occupancy is expected across the portfolio for the remainder of the year. The company aims to achieve AUD 500 million in Australian integrated services revenues by 2027.
Canada Regional Outlook: The operating environment in the oil sands remains challenging, with no meaningful near-term rebound in upstream oil sands spending expected. Billed rooms in the second half of 2025 are anticipated to align with the second half of 2024. The company is focusing on cost reduction initiatives, operational efficiency, and aligning resources with demand realities.
Share Repurchase Authorization: Civeo Corporation has made significant progress on its expanded share repurchase authorization. During the second quarter of 2025, the company repurchased 883,000 common shares, which represents approximately 7% of Civeo's common shares outstanding. This equates to 30% of the new buyback authorization as of June 30, 2025. Since the inception of the share repurchase program in August 2021, Civeo has repurchased approximately 27% of its common shares outstanding.
Capital Allocation Plan: Civeo is committed to completing the 20% share repurchase authorization as soon as practicable. The company intends to use no less than 100% of its annual free cash flow to achieve this goal. In the first half of 2025, $22.5 million was allocated to share repurchases, and the company plans to remain active in repurchasing shares in the second half of the year.
The earnings call presents mixed signals: strong cost reduction in Canada and potential growth in Australia, but flat Canadian occupancy and a small net loss. Management's optimistic guidance for 2026 and shareholder buyback plan are positives, but uncertainties around mobile camp contributions and vague responses in the Q&A raise concerns. Overall, the sentiment remains neutral, as the positives are balanced by the uncertainties and challenges.
The earnings call highlights several negative factors, including lowered revenue and EBITDA guidance, increased net debt due to acquisitions and buybacks, and significant decreases in Canadian segment revenue and EBITDA. The Q&A section reveals concerns about met coal price volatility and uncertainties in customer demand. Despite some positive elements like increased share repurchase authorization and a stable outlook for the second half, the overall sentiment is negative due to financial guidance cuts and operational uncertainties.
The earnings call summary reveals a decrease in revenue and net income, particularly in Canada, which negatively impacts overall sentiment. Despite positive aspects like increased Australian revenue and share repurchases, the guidance is conservative, hinting at potential downside risks. The Q&A section highlights uncertainties in the Canadian market and unclear management responses, further dampening sentiment. While shareholder returns through buybacks are positive, the overall financial performance and cautious outlook suggest a negative stock price reaction in the short term.
The earnings call presents a mixed picture with strong performance in Australia but significant challenges in Canada, including a net loss and decreased revenues. The Q&A suggests potential long-term shifts in Canadian customer behavior, creating uncertainty. Despite positive shareholder returns, the weak financial results and negative adjusted EBITDA in Canada weigh heavily. The lack of clear guidance on Canadian revenue streams and the overall negative sentiment from analysts further contribute to a negative outlook for the stock price in the short term.
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