Civeo Corporation (CVEO) Bundle
Understanding Civeo Corporation (CVEO) Revenue Streams
Understanding Civeo Corporation's Revenue Streams
As of 2024, Civeo Corporation's revenue streams can be categorized into several primary sources, including accommodation services, food services, mobile facility rentals, and other related services. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (in thousands) |
|---|---|---|---|
| Accommodation Revenue | $51,370 | $46,012 | $5,358 |
| Food Service and Other Services Revenue | $65,252 | $41,873 | $23,379 |
| Mobile Facility Rental Revenue | $123 | $17,314 | $(17,191) |
| Total Revenue | $176,338 | $183,572 | $(7,234) |
In the third quarter of 2024, total revenues decreased by 4% compared to the same period in 2023, primarily due to lower occupancy levels and mobile asset activity.
Year-over-Year Revenue Growth Rate
Examining the year-over-year revenue growth rate reveals significant trends:
- Q3 2024 total revenue was $176,338 thousand compared to $183,572 thousand in Q3 2023, reflecting a decrease of 4%.
- For the nine months ended September 30, 2024, total revenue increased slightly by $1,165 thousand, or 0.2%, compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to overall revenue is as follows:
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (in thousands) |
|---|---|---|---|
| Canada | $57,736 | $95,144 | $(37,408) |
| Australia | $116,622 | $87,885 | $28,737 |
The Canadian segment saw a significant revenue decline of 39%, while the Australian segment experienced an increase of 33% year-over-year.
Analysis of Significant Changes in Revenue Streams
Several significant changes were observed in revenue streams:
- The decline in Canadian revenue was largely attributed to reduced mobile asset activity and lower occupancy in oil sands lodges due to maintenance activities.
- In contrast, the Australian segment benefited from increased activity in owned villages and new contracts, contributing to a robust revenue increase.
- Overall, the impact of the strengthening Australian dollar positively influenced revenue by $2.5 million during Q3 2024.
Overall, Civeo Corporation's financial health exhibits a mixed performance across different segments, highlighting the importance of geographical diversification in revenue generation.
A Deep Dive into Civeo Corporation (CVEO) Profitability
Profitability Metrics
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was reported at 25.3%, down from 27.6% in the same quarter of 2023. The decline was primarily attributed to increased costs associated with occupancy and new business activities.
Operating Profit Margin: The operating income for Q3 2024 was $44,000, a drastic decrease of 100% compared to an operating income of $16.0 million in Q3 2023. This significant drop reflects reduced mobile asset activity and lower lodge occupancy.
Net Profit Margin: The net loss attributable to the company for Q3 2024 was $5.1 million, resulting in a net profit margin of (2.9%). In contrast, Q3 2023 showed a net income of $9.0 million, yielding a net profit margin of 4.9%.
Trends in Profitability Over Time
Over the nine months ending September 30, 2024, total revenues reached $531.2 million, a slight increase of 0.2% compared to $530.0 million in the same period of 2023. Notably, net income for the nine months ended September 30, 2024 was a loss of $2.0 million, compared to a net income of $7.1 million for the same period in 2023.
Comparison of Profitability Ratios with Industry Averages
The company's gross margin of 25.3% in Q3 2024 is below the industry average of approximately 30%. The operating margin reflects a significant downturn, with an industry benchmark typically around 10%-15%, indicating the company's struggles in maintaining profitability.
Analysis of Operational Efficiency
Cost management has shown mixed results. For the nine months ended September 30, 2024, total costs and expenses increased to $519.8 million from $507.7 million during the same period in 2023, primarily driven by higher costs in the Australian segment. The following table summarizes key profitability metrics:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 25.3% | 27.6% | (2.3%) |
| Operating Income | $44,000 | $16.0 million | (100%) |
| Net Income | ($5.1 million) | $9.0 million | ($14.1 million) |
| Total Revenues (9 months) | $531.2 million | $530.0 million | $1.2 million |
| Total Costs and Expenses (9 months) | $519.8 million | $507.7 million | $12.1 million |
The analysis of operational efficiency indicates that while revenues have slightly improved, the increase in costs has adversely affected profitability metrics, particularly in the context of rising expenses due to operational activities.
Debt vs. Equity: How Civeo Corporation (CVEO) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, total debt for the company was $50.1 million, a decrease from $65.6 million as of December 31, 2023. The breakdown of long-term debt is as follows:
| Debt Type | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Interest Rate |
|---|---|---|---|
| Canadian Revolving Credit Facility | $50,078 | $65,554 | 8.4% |
| U.S. Revolving Credit Facility | $0 | $0 | N/A |
| Australian Revolving Credit Facility | $0 | $0 | N/A |
| Total Debt | $50,078 | $65,554 |
The company’s debt-to-equity ratio as of September 30, 2024, stood at 0.18, significantly lower than the industry average of approximately 0.50. This indicates a conservative approach to financing and a lower reliance on debt compared to peers.
In the nine months ending September 30, 2024, the company engaged in several debt-related activities:
- Borrowed $233.6 million under revolving credit facilities.
- Made repayments totaling $242.9 million.
- The company recorded net interest expense of $6.1 million for the nine months, down from $10.5 million in the same period of 2023.
The latest credit ratings reflect a stable outlook, although specific ratings were not disclosed. The company has been active in refinancing its debt to optimize interest expenses, with a weighted average interest rate of 10.4% for the U.S. revolving credit facility and 8.4% for the Canadian facility.
The balance between debt and equity funding has been managed prudently. For instance, in 2024, the company repurchased common shares amounting to $24.1 million and paid dividends totaling $11.0 million. This strategy indicates a focus on returning capital to shareholders while maintaining a healthy balance sheet.
The following table summarizes the company’s equity structure:
| Equity Component | Amount (in thousands) |
|---|---|
| Common Shares | $1,630,851 |
| Additional Paid-in Capital | $956,545 |
| Accumulated Deficit | ($10,130) |
| Accumulated Other Comprehensive Income (Loss) | ($382,017) |
| Total Shareholders' Equity | $283,944 |
This financial structuring exemplifies the company's commitment to maintaining a balanced approach in financing growth, navigating through market fluctuations effectively while safeguarding shareholder interests.
Assessing Civeo Corporation (CVEO) Liquidity
Assessing Civeo Corporation's Liquidity
Current and Quick Ratios
The current ratio of Civeo Corporation as of September 30, 2024, stands at 0.99, calculated by dividing current assets of $145.5 million by current liabilities of $146.8 million. The quick ratio, which excludes inventories, is approximately 0.92. This is derived from current assets minus inventories ($136.7 million) divided by current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, Civeo's working capital amounts to -$1.3 million, indicating a slight decline from $28.5 million at the end of 2023. This decline is attributed to increased current liabilities largely due to operational adjustments and financing activities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, Civeo reported cash flows as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $74,014 | $56,593 |
| Investing Activities | -$7,522 | -$14,109 |
| Financing Activities | -$48,300 | -$42,000 |
In 2024, cash flow from operating activities increased by 30.7% compared to 2023, driven by improved collection from accounts receivable.
Potential Liquidity Concerns or Strengths
Civeo's liquidity position reflects strengths in operational cash flow generation, with a notable increase in cash provided by operations. However, the negative working capital and reliance on revolving credit facilities, which stood at $50.1 million as of September 30, 2024, indicate potential liquidity concerns if operational conditions do not improve or if unexpected expenses arise.
Is Civeo Corporation (CVEO) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Civeo Corporation involves several key financial metrics that provide insights into whether the company is overvalued or undervalued. Below are the essential components of this analysis.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated based on the latest earnings report. For the nine months ended September 30, 2024, the net loss attributable to the company was $2.0 million, or $0.14 per diluted share. The corresponding stock price was approximately $6.57, giving a P/E ratio of approximately -46.93 (not applicable due to losses).
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, is calculated from the total equity of $283.9 million and the number of shares outstanding, which is 13.862 million shares. This results in a book value per share of approximately $20.43. The P/B ratio is then calculated as follows:
- Stock Price: $6.57
- Book Value per Share: $20.43
- P/B Ratio: 0.32
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) as of September 30, 2024, is calculated as follows:
- Market Capitalization: $91.1 million (current stock price of $6.57 multiplied by shares outstanding)
- Total Debt: $50.08 million
- Cash and Cash Equivalents: $17.91 million
- EV = Market Cap + Total Debt - Cash = $91.1 million + $50.08 million - $17.91 million = $123.27 million
EBITDA for the nine months ended September 30, 2024, is reported as $11.375 million. Thus, the EV/EBITDA ratio is:
- EV/EBITDA Ratio: 10.84
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
| Date | Stock Price |
|---|---|
| October 2023 | $7.00 |
| July 2024 | $6.00 |
| September 2024 | $6.57 |
Dividend Yield and Payout Ratios
The company declared quarterly dividends of $0.25 per share for the first, second, and third quarters of 2024. The dividend yield based on the current stock price of $6.57 is:
- Dividend Yield: 3.81% (calculated as $0.25 / $6.57)
Analyst Consensus on Stock Valuation
As of the latest analysis, the consensus rating among analysts is as follows:
- Buy: 2
- Hold: 5
- Sell: 1
Overall, the valuation metrics indicate a mixed outlook for investors regarding the company's market position and stock performance.
Key Risks Facing Civeo Corporation (CVEO)
Key Risks Facing Civeo Corporation
Industry Competition: The competitive landscape in the hospitality and workforce accommodation sector poses significant risks. Companies in this industry face pressure to maintain pricing and occupancy rates, particularly in the Canadian and Australian markets. For instance, total revenues for the nine months ended September 30, 2024, were $531.2 million, a marginal increase from $530.0 million in the same period of 2023, indicating competitive pressures impacting growth.
Regulatory Changes: Changes in regulations, especially those related to labor laws and environmental standards, can impact operational costs and compliance requirements. The company must navigate these evolving regulations, which can lead to increased expenses or operational disruptions.
Market Conditions: Fluctuations in commodity prices directly affect demand for accommodation services. A decrease in oil prices can lead to reduced activity in oil sands projects, impacting occupancy rates in lodges. For example, revenues from Canada decreased by $75.6 million year-over-year due to reduced mobile asset activity from pipeline projects.
Operational Risks
Occupancy Rates: Lower occupancy rates in oil sands lodges have been a concern, with occupancy levels affected by maintenance activities from customers. The average daily rate for villages increased to $79 in Q3 2024 from $74 in Q3 2023, but occupancy challenges remain.
Supply Chain Disruptions: The company relies on a stable supply chain for food and accommodation services. Any disruptions can lead to increased costs and impact service delivery. For example, the consolidated cost of sales and services increased by $8.2 million, or 6%, in Q3 2024 compared to Q3 2023.
Financial Risks
Debt Levels: As of September 30, 2024, total debt stood at $50.1 million, reduced from $65.6 million at the end of 2023. However, future borrowings may come at higher interest rates, especially with a weighted average interest rate of 10.4% for U.S. revolving credit facilities.
Liquidity Concerns: The company reported total available liquidity of $211.8 million as of September 30, 2024. However, should market conditions worsen, liquidity could be impacted, affecting the ability to fund operations or growth initiatives.
Strategic Risks
Acquisition Strategies: The company has indicated that acquisitions may be a part of its long-term strategy. However, the timing and success of such acquisitions are unpredictable. The management's ability to raise capital for these acquisitions will depend on future operating performance and market conditions.
Impairment Risks: The company recorded a pre-tax impairment expense of $7.8 million in the nine months ended September 30, 2024, associated with long-lived assets. Such impairments can significantly affect financial results and investor confidence.
Mitigation Strategies
Operational Flexibility: The company is actively working to enhance operational efficiency and flexibility to adapt to changing market conditions. This includes adjusting staffing and resource allocation based on occupancy trends.
Financial Management: To mitigate financial risks, the company is focused on maintaining a healthy balance sheet and managing debt levels. The reduction in net interest expense by 50% in Q3 2024 compared to Q3 2023 demonstrates proactive financial management.
| Risk Type | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Pressure on pricing and occupancy rates | Reduced revenues | Enhance service offerings |
| Regulatory Changes | Changes in labor and environmental regulations | Increased operational costs | Compliance monitoring |
| Market Conditions | Fluctuations in commodity prices | Decreased demand | Diverse service portfolio |
| Occupancy Rates | Lower occupancy in oil sands lodges | Reduced revenues | Contract renewals and extensions |
| Debt Levels | High debt burden | Increased interest expenses | Debt reduction strategies |
| Liquidity Concerns | Potential cash flow issues | Operational disruptions | Maintain liquidity reserves |
Future Growth Prospects for Civeo Corporation (CVEO)
Future Growth Prospects for Civeo Corporation
Analysis of Key Growth Drivers
Key growth drivers for Civeo Corporation include:
- Product Innovations: The company is focusing on enhancing its integrated services offerings, which has shown increased demand.
- Market Expansions: Civeo is expanding its presence in the Australian Bowen Basin and pursuing new business opportunities in Western Australia.
- Acquisitions: Future acquisitions are anticipated as part of the long-term business strategy to enhance service offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, Civeo reported total revenues of $531.2 million, a slight increase of $1.2 million or 0.2% compared to the same period in 2023. The revenues were driven by:
- Australian Segment: Revenues increased by $69.5 million or 28% to $317.0 million.
- Canadian Segment: Revenues decreased by $75.6 million or 27% to $204.4 million.
Earnings estimates indicate a potential recovery in net income, with projections aiming for a return to profitability as operational efficiencies improve.
Strategic Initiatives or Partnerships That May Drive Future Growth
Civeo has initiated several strategic initiatives:
- Share Repurchase Program: The board authorized the repurchase of up to 5% of total common shares, aiming to enhance shareholder value.
- Dividends: Quarterly dividends of $0.25 per share have been declared for the first three quarters of 2024.
Competitive Advantages That Position the Company for Growth
Civeo's competitive advantages include:
- Established Presence: Strong operational footprint in Canada and Australia, particularly in resource-rich regions.
- Diverse Service Offerings: Comprehensive range of services from accommodation to integrated services, catering to various client needs.
- Operational Efficiency: Increased activity levels have led to improved gross margins, with Australian segment gross margin at 26.1% for the nine months ended September 30, 2024.
Financial Overview
The following table summarizes key financial metrics for Civeo Corporation as of September 30, 2024:
| Metric | Value |
|---|---|
| Total Revenues | $531.2 million |
| Net Income (Loss) | $(2.0 million) |
| Average Daily Rate for Villages | $79 |
| Total Billed Rooms | 2,533,010 |
| Gross Margin (%) | 26.1% |
Market Trends
Market trends influencing Civeo's growth include:
- Increased Demand for Accommodation: Heightened activity in the mining and resource sectors is driving demand for workforce accommodations.
- Economic Recovery: As global economies recover, capital spending by customers is expected to rise, enhancing revenue opportunities.
As of September 30, 2024, the company reported total assets of $477.6 million and total liabilities of $193.7 million, resulting in shareholders' equity of $283.9 million.
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Article updated on 8 Nov 2024
Resources:
- Civeo Corporation (CVEO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Civeo Corporation (CVEO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Civeo Corporation (CVEO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.