Civeo Corporation Navigates Challenging Market with Strategic Cost-Cutting and Share Repurchase Plan
TL;DR
Civeo Corporation increased share repurchase authorization to 20% and uses 100% of FCF for buybacks.
Civeo reported negative free cash flow of ($13.5M) due to negative operating cash flow and capital expenditures.
Civeo aims for long-term free cash flow generation and cost-cutting measures to enhance financial flexibility.
Stonegate Capital Partners updates their coverage on Civeo Corporation, highlighting performance in Canadian and Australian segments.
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Civeo Corporation (NYSE: CVEO) reported first-quarter financial results that highlight significant operational challenges, particularly in its Canadian segment, while maintaining resilience in its Australian operations. The company experienced a decline in revenue and free cash flow, prompting strategic adjustments to its financial and operational approach.
The Canadian segment faced substantial headwinds, with revenues dropping 40% year-over-year to $40.4 million. Reduced customer spending in the oil sands region and the loss of Fort Hills-related occupancy contributed to this decline. In response, Civeo implemented aggressive cost-cutting measures, including a 25% reduction in Canadian headcount and the cold-shuttering of two lodges.
Conversely, the Australian segment demonstrated strength, posting a 13% year-over-year revenue growth to $103.6 million. Driven by increased integrated services activity under a six-year contract and high occupancy rates, the Australian operations continue to be a bright spot for the company.
To enhance financial flexibility, Civeo has updated its capital allocation strategy. The company increased its share repurchase authorization from 10% to 20% of shares outstanding and plans to use 100% of free cash flow to complete this program. In the first quarter, Civeo repurchased 153,000 shares for approximately $3.3 million and suspended its quarterly dividend to prioritize buybacks.
The company revised its 2025 guidance, projecting revenue between $620 million and $650 million, with adjusted EBITDA expected to range from $75 million to $85 million. Civeo also lowered its capital expenditure guidance to $20-$25 million, emphasizing a disciplined approach to capital deployment.
These strategic moves underscore Civeo's commitment to navigating current market challenges while positioning itself for potential future growth, particularly with the pending acquisition of four villages in the Bowen Basin expected to close in the second quarter of 2025.
Curated from Reportable
