Civeo Corp. ((CVEO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Civeo Corp.’s recent earnings call painted a balanced picture of the company’s current standing and future prospects. The call highlighted significant achievements in the company’s share repurchase program and robust performance in Australia, but these were counterbalanced by challenges in the Canadian market, including a revenue decline and a net loss, resulting in a mixed sentiment overall.
Share Repurchase Program Progress
Civeo has made notable strides in its share repurchase program, buying back 883,000 common shares, which accounts for approximately 7% of the shares outstanding. This move capitalizes on market softness and represents 30% of the new buyback authorization set to be completed by June 30, 2025.
Strong Australian Performance
The company reported a 4% increase in revenue from its Australian operations year-over-year, or 7% on a constant currency basis. This growth was bolstered by a 10% rise in adjusted EBITDA, or 12% on a constant currency basis, driven by strategic acquisitions and the expansion of its integrated services business.
New Contracts in Australia
Civeo’s success in Australia is further underscored by securing two substantial contracts: a 4-year AUD 250 million contract and a 3-year AUD 64 million contract. These contracts reflect strong customer trust and validate the company’s business strategy in the region.
Canadian Revenue Decline
In contrast, Civeo’s Canadian operations faced significant hurdles, with revenue dropping to $50 million from $79.5 million in Q2 2024. The adjusted EBITDA also fell to $7.5 million from $17.3 million, attributed to reduced billed rooms and broader macroeconomic challenges.
Net Loss and Cash Flow Concerns
The company reported a net loss of $3.3 million for Q2 2025 and a negative operating cash flow of $2.3 million. These figures were primarily due to a working capital build and substantial Australian tax payments, raising concerns about cash flow management.
Forward-Looking Guidance
Looking ahead, Civeo’s CEO, Bradley Dodson, maintained the full-year 2025 revenue guidance between $640 million and $670 million, with adjusted EBITDA expected to range from $86 million to $96 million. Capital expenditures are projected to remain between $20 million and $25 million. The company plans to utilize 100% of its annual free cash flow to complete the share repurchase authorization, aiming for a year-end leverage ratio of 2x.
In summary, Civeo Corp.’s earnings call revealed a company navigating through mixed conditions. While the Australian segment shows promising growth and strategic contract wins, challenges in Canada and concerns over cash flow and net losses present hurdles. The company’s commitment to its share repurchase program and strategic guidance for 2025 offer a roadmap for potential stabilization and growth.