Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Civeo Corp (NYSE:CVEO) increased its share repurchase authorization from 10% to 20% of total shares outstanding, demonstrating a commitment to returning capital to shareholders.
• The company has generated free cash flow consistently for the past 10 years, highlighting its strong cash flow generation capabilities.
• Civeo Corp (NYSE:CVEO) reported a 13% year-over-year revenue increase in its Australian segment, driven by strong occupancy levels and a significant contract renewal.
• The company is making progress on its acquisition in the Australian Bowen Basin, expected to be immediately accretive to operating cash flow upon closing.
• Civeo Corp (NYSE:CVEO) maintains a strong liquidity position with approximately $162 million, supporting its capital return strategy and acquisition plans.

Negative Points

• Civeo Corp (NYSE:CVEO) reported a net loss of $9.8 million for the first quarter of 2025, reflecting challenges in its financial performance.
• The Canadian segment experienced a significant decline in revenues, down from $67.2 million in Q1 2024 to $40.4 million in Q1 2025, due to reduced customer spending and economic uncertainty.
• The company recorded a restructuring charge of approximately $1 million in Canada, reflecting ongoing efforts to align costs with the current market environment.
• Civeo Corp (NYSE:CVEO) lowered its full-year 2025 revenue and adjusted EBITDA guidance, indicating a cautious outlook amidst macroeconomic challenges.
• The company suspended its quarterly dividend to prioritize share repurchases, which may not be favorable for income-focused investors.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with CVEO.

Q: How does the macroeconomic uncertainty impact the decision to suspend the dividend, and is this something that might be revisited in the future? A: Bradley Dowson, CEO, explained that the decision to suspend the dividend was influenced more by internal and board views that share repurchases are a better way to create value. The company will continue to evaluate its capital allocation strategy, but for now, buying back stock is seen as more beneficial.

Q: Can you elaborate on the joint venture with the Six Nations and its significance? A: Bradley Dowson, CEO, highlighted the importance of First Nation relationships in Canada, noting that they are crucial for winning work. The joint venture with the Six Nations enhances Civeo's ability to bid on new projects, particularly in eastern Canada, although it is not directly related to source gas for Canadian LNG.

Q: Are there any larger infrastructure projects in Canada that could generate revenue in the coming years? A: Bradley Dowson, CEO, mentioned potential opportunities in pipeline projects and carbon sequestration in Alberta, which could benefit Civeo's mobile camp business.

Q: What is the scope of the cost-cutting measures being implemented with the help of a consulting firm? A: Bradley Dowson, CEO, stated that the focus is primarily on addressing the cost structure in Canada due to a significant shift in the business outlook, but it will also address North American cost structures more broadly.

Q: How should investors interpret the updated guidance, and does it represent a worst-case scenario? A: Bradley Dowson, CEO, described the guidance as reasonably conservative, particularly reflecting conditions in Canada. He noted that the downside case could lower the guidance by $5 million, but this would require significant deterioration in Canada.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.