Civeo Corporation (NYSE: CVEO) unveiled its financial outcomes for the first quarter of 2025, presenting a mixed picture marked by robust performance in Australia contrasted with significant hurdles in Canada. The company's total revenue missed expectations, recording $144.0 million, largely due to underperformance in the Canadian sector where pricing and billed rooms volume saw declines.
The Canadian operations faced a sharp 40.0% year-over-year revenue drop to $40.4 million, attributed to decreased spending in the oil sands region and the loss of occupancy related to Fort Hills. In response, Civeo has taken decisive steps to mitigate these challenges, including reducing its Canadian workforce by 25% and temporarily closing two lodges. These measures underscore the company's commitment to navigating through the current downturn efficiently.
On a brighter note, the Australian segment flourished, with revenue climbing 13% year-over-year to $103.6 million. This growth was fueled by heightened activity under a six-year, A$1.4 billion contract and strategic expansions in the Bowen Basin, highlighting the segment's pivotal role in Civeo's portfolio.
Looking ahead, Civeo has adjusted its 2025 financial guidance, now anticipating revenue between $620 million and $650 million, with adjusted EBITDA projected to be in the range of $75 million to $85 million. The company has also revised its capital expenditure guidance downward to $20-$25 million, reflecting a disciplined approach to capital management.
In a strategic shift, Civeo has enhanced its share repurchase program, increasing the authorization from 10% to 20% of shares outstanding. The company has already repurchased 153,000 shares for about $3.3 million and has decided to suspend its quarterly dividend to focus on share buybacks and bolster financial flexibility.
Despite a $20.9 million quarter-over-quarter increase in net debt to $59.0 million, resulting in a net leverage ratio of 0.8x, Civeo remains optimistic about its long-term free cash flow generation. This confidence is rooted in its capital-light operational model and a significant portion of revenue derived from recurring asset-light services.
