Civeo Corporation

And welcome to the CVO Corporation First Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Reagan Nielsen, Director, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to CVO's First Quarter 2021 Earnings Conference Call. Today, our call will be led by Bradley Dodson, CVO's President and Chief Executive Officer, and Carolyn Stone, CVO's Senior Vice President, Chief Financial Officer, and Treasurer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we're relying on the safe harbor protections afforded by federal law. Any such remarks should be read in the context of the many factors that affect our business, including risks disclosed in our Form 10-K, 10-Q, and and other SEC filings. I'll now turn the call over to Bradley.

Thank you, Regan, and thank you all for joining us today on our first quarter earnings call. We hope that you and your loved ones are staying safe and well. On today's call, I'll provide a brief summary of our performance for the quarter. Carolyn will provide a financial and segment-level review, and I'll conclude with some directional commentary on our expectations for the second quarter. as well as our updated full year guidance before we move to the question and answer portion of the call. I'll start, as I have on each of our earnings call, emphasizing that at CIVIO, the safety and well-being of our employees, guests, and customers is always our top priority. Our team continues to be vigilant in following our safety protocols, which aim to mitigate the risk of the virus spreading. The key takeaways from our call today are Despite governmental restrictions in Canada and a slow start to the year in Australia's Bowen Basin region, our business continued to generate cash, which we allocated to debt reduction. In the first quarter, Sevier reported $16.2 million of adjusted EBITDA and $16.1 million of free cash flow, and we repaid $15.6 million of debt. Our leverage ratio was sequentially flat at 2.1 times, Delevering our balance sheet remains amongst the most important strategic mandates that we have, and we should see our leverage ratio continue to decrease throughout 2021. Consolidated adjusted EBITDA of $16.2 million was in line with our expectations. As anticipated, EBITDA in both Canada and Australia declined sequentially in the first quarter due to a slow start from year-end holidays, coupled with the impact of headcount and travel restrictions related to COVID-19. The British Columbia COVID-19 public health order, which limits the allowable headcount at industrial projects in the province, continued to negatively impact the occupancy at our sick lodge in Kitimat, British Columbia, as well as the occupancy in our mobile camps supporting the coastal gasoline pipeline project. Our Australian business was negatively impacted in the first quarter by a slow start to the year in the Bowen Basin villages. and continued difficulty in sourcing labor in both our village operations and our integrated services business due to the COVID-19 related interstate travel restrictions. Nevertheless, we're cautiously optimistic that the outlook for the business remains healthy for the remainder of 2021. We're focused on operating safely, generating free cash flow, reducing leverage, and containing our costs. We expect to continue to generate positive free cash flow in the second quarter and for the full year 2021. Let me take a moment to provide a business update across our three segments. In Canada, we saw sequential improvement in occupancy despite the British Columbia Public Health Order, which impacted the SIPCA location. Lodge occupancy in the oil sands started the year off consistent with our expectations as we prepare for turnaround season that's set to start here in the second quarter. The BC health order, however, impacted our occupancy more than we anticipated during the quarter, as we had expected it would be lifted by now. Our Australian business experienced a sequential and year-over-year decline in occupancy and margin due to an especially slow start to customer operations in the Bowen Basin, coupled with labor supply issues due to further COVID-19 travel restrictions, which impacted margins. Turning to the U.S., our team continued to navigate a challenging fundamental environment due to subdued U.S. EMP drilling and pollution activity, which was compounded by temporary disruptions related to the Texas-Oklahoma freeze. Adjusted EBITDA was down from pre-pandemic levels a year ago, but improved modestly on a sequential basis. At CIVIO, our near-term strategy remains consistent to what we've said for the past two years. Our priorities are, one, to keep our employees and guests safe, and then financially, maximize our free cash flow generation, reduce our debt to enhance our financial flexibility, and reduce our costs without compromising service quality. With that, I'll turn it over to Carolyn.