Civeo Corp. Files Q2 2024 10-Q

TL;DR

Civeo Corp. 10-Q filed. Q2 results out.

AI Summary

Civeo Corp. filed its 10-Q for the period ending June 30, 2024. The company reported financial results for the second quarter and the first half of the year. Specific financial figures and operational details are contained within the filing, which provides an update on the company's performance and financial position.

Why It Matters

This filing provides investors with an updated look at Civeo Corp.'s financial health and operational performance for the second quarter of 2024, crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing financial updates, not indicating immediate or significant new risks.

Key Players & Entities

• Civeo Corp. (company) — Filer of the 10-Q
• 20240630 (date) — End of reporting period
• 20240730 (date) — Filing date
• THREE ALLEN CENTER (location) — Company's business and mailing address

FAQ

Filing Documents

• cveo-20240630.htm (10-Q) — 1255KB
• rbc-civeoxsecondamendmente.htm (EX-10.1) — 1625KB
• a102civeo-formofphantomuni.htm (EX-10.2) — 23KB
• a103bod2023rsagrantletters.htm (EX-10.3) — 24KB
• a104directorsdeferredshare.htm (EX-10.4) — 30KB
• a105directorsdeferredshare.htm (EX-10.5) — 28KB
• cveo06-30x2024exhibit311.htm (EX-31.1) — 13KB
• cveo06-30x2024exhibit312.htm (EX-31.2) — 14KB
• cveo06-30x2024exhibit321.htm (EX-32.1) — 8KB
• cveo06-30x2024exhibit322.htm (EX-32.2) — 8KB
• image_0a.jpg (GRAPHIC) — 2KB
• 0001590584-24-000130.txt ( ) — 7639KB
• cveo-20240630.xsd (EX-101.SCH) — 37KB
• cveo-20240630_cal.xml (EX-101.CAL) — 64KB
• cveo-20240630_def.xml (EX-101.DEF) — 146KB
• cveo-20240630_lab.xml (EX-101.LAB) — 403KB
• cveo-20240630_pre.xml (EX-101.PRE) — 283KB
• cveo-20240630_htm.xml (XML) — 786KB

-- FINANCIAL INFORMATION

Part I -- FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements: Consolidated Financial Statements Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 4 Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 5 Consolidated Balance Sheets – as of June 30, 2024 (unaudited) and December 31, 2023 6 Unaudited Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023 7 Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 8 Notes to Unaudited Consolidated Financial Statements 9 Cautionary Statement Regarding Forward-Looking Statements 19

Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures About Market Risk 34

Item 3. Quantitative and Qualitative Disclosures About Market Risk 34

Controls and Procedures 34

Item 4. Controls and Procedures 34

-- OTHER INFORMATION

Part II -- OTHER INFORMATION

Legal Proceedings 35

Item 1. Legal Proceedings 35

Risk Factors 35

Item 1A. Risk Factors 35

Unregistered Sales of Equity Securities and Use of Proceeds 35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35

Other Information 35

Item 5. Other Information 35

Exhibits 36

Item 6. Exhibits 36 (a) Index of Exhibits 36 Signature Page 38 3

-- FINANCIAL INFORMATION

PART I -- FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements CIVEO CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues: Service and other $ 188,233 $ 178,532 $ 353,763 $ 345,909 Rental 248 13 631 34 Product 232 298 439 491 188,713 178,843 354,833 346,434 Costs and expenses: Service and other costs 140,749 131,333 271,115 264,725 Rental costs — 10 — 45 Product costs 85 82 164 169 Selling, general and administrative expenses 17,433 16,459 36,073 32,649 Depreciation and amortization expense 17,059 20,701 33,829 42,363 Impairment expense — — 7,823 — (Gain) loss on sale of McClelland Lake Lodge assets, net 87 — ( 5,988 ) — Other operating expense 188 86 486 215 175,601 168,671 343,502 340,166 Operating income 13,112 10,172 11,331 6,268 Interest expense ( 2,203 ) ( 3,604 ) ( 4,563 ) ( 7,260 ) Interest income 54 50 97 82 Other income 310 427 763 2,877 Income before income taxes 11,273 7,045 7,628 1,967 Income tax expense ( 3,786 ) ( 2,878 ) ( 5,337 ) ( 4,111 ) Net income (loss) 7,487 4,167 2,291 ( 2,144 ) Less: Net loss attributable to noncontrolling interest ( 740 ) ( 296 ) ( 803 ) ( 254 ) Net income (loss) attributable to Civeo Corporation $ 8,227 $ 4,463 $ 3,094 $ ( 1,890 ) Per Share Data (see Note 7) Basic net income (loss) per share attributable to Civeo Corporation common shareholders $ 0.57 $ 0.30 $ 0.21 $ ( 0.13 ) Diluted net income (loss) per share attributable to Civeo Corporation common shareholders $ 0.56 $ 0.30 $ 0.21 $ ( 0.13 ) Weighted average number of common shares outstanding: Basic 14,518 14,970 14,586 15,064 Diluted 14,600 15,000 14,678 15,064 Dividends per common share $ 0.25 $ — $ 0.50 $ — The accompanying notes are an integral part of these financial statements. 4 CIVEO CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In Thousands) Three Months Ended June 30, Six Month

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of the Business We provide hospitality services to remote workforces in Canada and Australia, including lodging, catering and food service, housekeeping and maintenance at accommodation facilities that we or our customers own. We provide services that support the day-to-day operations of these facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics. We also manage development activities for workforce accommodation facilities, including site selection, permitting, engineering and design, manufacturing management and site construction, along with providing hospitality services once the facility is constructed. We primarily operate in some of the world's most active oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore producing regions, and our customers include major and independent oil companies, mining companies, engineering companies and oilfield and mining service companies. We operate in two principal reportable business segments – Canada and Australia. Basis of Presentation Unless otherwise stated or the context otherwise indicates: (i) all references in these consolidated financial statements to "Civeo," "us," "our" or "we" refer to Civeo Corporation and its consolidated subsidiaries; and (ii) all references in this report to "dollars" or "

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Continued) 2. REVENUE The following table disaggregates our revenue by our two reportable segments (Canada and Australia) into major categories for the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Canada Accommodation revenues $ 72,259 $ 72,355 $ 132,046 $ 136,583 Mobile facility rental revenues 356 17,407 1,350 37,438 Food service and other services revenues 6,912 5,708 13,291 10,902 Total Canada revenues 79,527 95,470 146,687 184,923 Australia Accommodation revenues $ 48,914 $ 44,342 $ 96,021 $ 84,941 Food service and other services revenues 59,694 38,202 104,324 74,592 Total Australia revenues 108,608 82,544 200,345 159,533 Other Other revenues $ 578 $ 829 $ 7,801 $ 1,978 Total other revenues 578 829 7,801 1,978 Total revenues $ 188,713 $ 178,843 $ 354,833 $ 346,434 Our payment terms vary by the type and location of our customer and the services offered. The time between invoicing and when our performance obligations are satisfied is not significant. Payment terms are generally within 30 days and in most cases do not extend beyond 60 days. We do not have significant financing components or significant payment terms. As of June 30, 2024, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue. The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands): For the years ending December 31, 2024 2025 2026 Thereafter Total Revenue expected to be recognized as of June 30, 2024 $ 88,395 $ 135,838 $ 99,944 $ 296,521 $ 620,698 We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less. In addition, we do not estimate reven

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Continued) Quarter ended March 31, 2024 . During the first quarter of 2024, we recorded impairment expense of $ 5.7 million related to various undeveloped land positions and related permitting costs in Australia. At March 31, 2024, we identified an impairment trigger related to certain of these properties due to the denial of development permit applications in Australia. Accordingly, the assets were written down to their estimated fair value of $ 0.6 million. In addition, during the first quarter of 2024, we recorded impairment expense of $ 2.1 million, related to land located in the U.S. The land was written down to its estimated fair value (less costs to sell) of $ 3.8 million. No impairment expense was recorded during the second quarter of 2024. 4. FAIR VALUE MEASUREMENTS Our financial instruments consist of cash and cash equivalents, receivables, payables and debt instruments. We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values. As of June 30, 2024 and December 31, 2023, we believe the carrying value of our floating-rate debt outstanding under our revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment. We estimated the fair value of our floating-rate revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans. In addition, the estimated fair value of our assets held for sale was based upon Level 2 fair value measurements, which included appraisals, broker price opinions and negotiations with third parties. During the first quarter of 2024, we wrote down certain long-lived assets to fair value. Our estimate of the fair value of undeveloped land positions in Australia that were impaired was based on appraisals from third parties. 5. DETAILS OF SELE

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Continued) Estimated Useful Life (in years) June 30, 2024 December 31, 2023 Property, plant and equipment, net: Land $ 25,600 $ 27,988 Accommodations assets 3 — 15 1,341,272 1,378,408 Buildings and leasehold improvements 7 — 20 13,945 14,603 Machinery and equipment 4 — 7 14,026 13,255 Office furniture and equipment 3 — 7 67,830 67,248 Vehicles 3 — 5 8,847 10,025 Construction in progress 6,023 12,087 Total property, plant and equipment 1,477,543 1,523,614 Accumulated depreciation ( 1,240,701 ) ( 1,253,051 ) Total property, plant and equipment, net $ 236,842 $ 270,563 June 30, 2024 December 31, 2023 Accrued liabilities: Accrued compensation $ 26,024 $ 33,854 Accrued taxes, other than income taxes 3,584 3,997 Other 2,599 2,672 Total accrued liabilities $ 32,207 $ 40,523 June 30, 2024 December 31, 2023 Contract liabilities (Deferred revenue): Current contract liabilities (1) $ 4,187 $ 4,849 Noncurrent contract liabilities (1) 6,790 8,068 Total contract liabilities (Deferred revenue) $ 10,977 $ 12,917 (1) Current contract liabilities and Noncurrent contract liabilities are included in "Deferred revenue" and "Other noncurrent liabilities," respectively, in our unaudited consolidated balance sheets. Deferred revenue typically consists of upfront payments received before we satisfy the associated performance obligation. The decrease in deferred revenue from December 31, 2023 to June 30, 2024 was due to revenue recognized over the contracted terms related to advance payments received from a customer for village enhancements in Australia. 6. ASSETS HELD FOR SALE As of December 31, 2023, assets held for sale included certain assets in the United States (U.S.). These assets were recorded at the estimated fair value less costs to sell, which exceeded or equaled their carry values. In the second quarter of 2024, we sold the land at our Louisiana location for no gain. During the third quarter of 2023, we entered into a

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Continued) June 30, 2024 December 31, 2023 Assets held for sale: Property, plant and equipment, net $ — $ 5,873 Total assets held for sale $ — $ 5,873 7. EARNINGS PER SHARE We calculate our basic earnings per share by dividing net income (loss) attributable to Civeo Corporation by the weighted average number of common shares outstanding. For diluted earnings per share, the basic shares outstanding are adjusted by adding all potentially dilutive securities. The calculation of basic and diluted earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Basic net income (loss) attributable to Civeo Corporation $ 8,227 $ 4,463 $ 3,094 $ ( 1,890 ) Diluted net income (loss) attributable to Civeo Corporation $ 8,227 $ 4,463 $ 3,094 $ ( 1,890 ) Denominator: Weighted average shares outstanding - basic 14,518 14,970 14,586 15,064 Dilutive shares - share-based awards 82 30 92 — Weighted average shares outstanding - diluted 14,600 15,000 14,678 15,064 Basic net income (loss) per share attributable to Civeo Corporation common shareholders (1) $ 0.57 $ 0.30 $ 0.21 $ ( 0.13 ) Diluted net income (loss) per share attributable to Civeo Corporation common shareholders (1) $ 0.56 $ 0.30 $ 0.21 $ ( 0.13 ) (1) Computations may reflect rounding adjustments. Share-based awards excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive for the three and six months ended June 30, 2024 and June 30, 2023 totaled fewer than 0.1 million shares. 13 CIVEO CORPORATION NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Continued) 8. DEBT As of June 30, 2024 and December 31, 2023, long-term debt consisted of the following (in thousands): June 30, 2024 December 31, 2023 U.S. revolving credit facility; weighted average interest rate of 10.5 % for the six month period ended June 30, 2024 $ — $ — Canadian revolving credit facility; weighted average interest rate of 8.7 % for the six month period ended June 30, 2024 47,489 65,554 Australian revolving credit facility; weighted average interest rate of 7.3 % for the six month period ended June 30, 2024 — — Total debt $ 47,489 $ 65,554 Credit Agreement As of June 30, 2024, our Credit Agreement (as then amended to date, the Credit Agreement) provided for a $ 200.0 million revolving credit facility scheduled to mature on September 8, 2025, allocated as follows: (A) a $ 10.0 million senior secured revolving credit facility in favor of one of our U.S. subsidiaries, as borrower; (B) a $ 155.0 million senior secured revolving credit facility in favor of Civeo, as borrower; and (C) a $ 35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower. A C$ 100.0 million term loan facility provided under the Credit Agreement was fully repaid on December 31, 2023. The Credit Agreement was amended effective June 28, 2024 to, among other things, change the benchmark interest rate for certain Canadian dollar-denominated loans in the Canadian Revolving Facility from Canadian Dollar Offered Rate to Adjusted Term Canadian Overnight Repo Rate Average (CORRA). U.S. dollar amounts outstanding under the facilities provided by the Credit Agreement bear interest at a variable rate equal to Adjusted Term Secured Overnight Financing Rate (SOFR), which is equal to Term SOFR plus a 10 basis point adjustment, plus a margin of 3.00 % to 4.00 %, or a base rate plus 2.00 % to 3.00 %, in each case based on a ratio of our total net debt to Consolidated EBITDA (as defined in the C

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