Civeo Corporation

Greetings and welcome to Civio Corporation fourth quarter 2021 earnings call. At this time, all participants are on a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reagan Nielsen, Senior Director, Corporate Development and Investor Relations. Thank you. You may begin.

Thank you, and welcome to CIVIO's fourth quarter 2021 earnings conference call. Today, our call will be led by Bradley Dodson, CIVIO's president and chief executive officer, and Carolyn Stone, CIVIO'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 anything 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 and uncertainties disclosed in our forms 10-K, 10-Q, and other SEC filings.

I'll now turn the call over to Bradley. Thank you, Reagan, and thank you all for joining us today on our fourth quarter variance call. I'll start with the key takeaways and then I'll provide a brief summary of our fourth quarter and full year 2021 performance. Carolyn will then provide a financial and segment level review. And I'll conclude our prepared comments with our initial full year 2022 guidance and the regional assumptions underlying that guidance as well as some directional commentary. And then we'll open up the call for questions. The key takeaways from our call today are the business continues to generate cash while supporting our ongoing debt reduction. For the full year 2021, Civio generated $87 million in free cash flow and reduced total debt by $76 million to end the year at $175 million of total debt. Our fourth quarter results were better than we were expecting. In the fourth quarter, Civio delivered $34.5 million of adjusted EBITDA and $26.1 million of free cash flow. We reduced our total debt by $20 million in the fourth quarter, bringing our net leverage ratio down to 1.49 times as of December 31, 2021. Delevering our balance sheet remains our top financial priority, and this quarter is the 11th straight quarter of leverage ratio reduction. Strategic investment and diversifying our revenue profile has paid dividends again in 2021 like it did in 2020. during the volatility experienced across all three of our segments. While Australia activity declined in 2021 due to the China-Australia trade dispute and the business experienced increased labor costs due to COVID, our Canadian business continued to recover from the trough of 2020 to offset the Australian decline. If you recall, the exact opposite happened in 2020 where Australia had significant growth while Canada struggled and the oil market struggled. This diversity in revenue drivers is a key component of serious free cash flow generation strategies, and we will continue to seek opportunities to expand our customer base and geographic footprint to reduce volatility in our free cash flow generation as we continue to reduce our debt. Despite high prices across the core commodities that we support, our customers continue to be focused on capital discipline, and returning capital to their shareholders at the expense of spending on increased maintenance or increasing production. This capital spending is ultimately what drives occupancy in our Canadian lodges and Australian villages. Cibio announced a share repurchase program in the third quarter of 2021, and we began executing on that program throughout the end of the year. with total 2020 purchases under the program of approximately 217,000 shares repurchased. Return of capital to our shareholders is currently the secondary focus of our capital allocation strategy, alongside our first priority of debt pay down. Our Australian business continues to be burdened with increased labor costs related to COVID travel and border restrictions, coupled with subdued activity from our customers related to the China-Australia trade dispute. which has led to lower build rooms in our villages. In total, our team put together a solid fourth quarter, despite the challenges of the pandemic, trade disputes, and limited capital deployment by our customers. Let me take a moment to provide a business update across our three segments. In Canada, our revenues and adjusted EBITDA increased sequentially and year-over-year, driven by our Canadian mobile camp activity. As expected, our lodges did experience lower billed rooms sequentially related to typical holiday downtime in the fourth quarter. Our Australian results were above expectations. Our Bowen Basin occupancy was better than expected, but did reflect some typical holiday downtime sequentially. Adjusted EBITDA in the fourth quarter was down year over year as a result of weaker customer activity in the Bowen Basin and increased labor costs in our Western Australian integrated services business. Turning briefly to the U.S., conditions for our U.S. business continue to be challenging in the fourth quarter, but increased year-over-year activity in our lodges and offshore business led to higher revenues in adjusted EBITDA versus the fourth quarter of 2020. Adjusted EBITDA was also positively impacted by a $3.8 million gain on sale of assets from the opportunistic fourth quarter 2021 sale of our West Permian Lodge. Turning to our balance sheet, Our net leverage ratio declined to 1.49 times at year end from 1.86 times at the end of the third quarter and 2.06 times at the end of 2020. Proactively dedicating free cash flow to reducing debt remains our primary financial priority. With that, I'll turn the call over to Carolyn.