Civeo Corporation Faces Challenges in Canadian Market, Finds Strength in Australian Operations
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 significant financial challenges in the first quarter of 2025, with negative free cash flow of $13.5 million and consolidated revenue falling short of expectations. The company's performance was primarily impacted by weakness in its Canadian segment, which experienced a 40% year-over-year revenue decline.
The Canadian operations suffered from reduced customer spending in the oil sands region and the loss of Fort Hills-related occupancy. In response, Civeo implemented aggressive cost-cutting measures, including a 25% reduction in Canadian headcount and the cold-shuttering of two lodges. The company also engaged a third-party consultant to lead further cost-streamlining initiatives.
Conversely, the Australian segment demonstrated resilience, posting a 13% year-over-year revenue growth to $103.6 million. This growth was driven by increased integrated services activity under a six-year, A$1.4 billion contract and strategic expansion in the Bowen Basin, with plans to acquire four villages in the second quarter of 2025.
To enhance financial flexibility, Civeo increased its share repurchase authorization from 10% to 20% of shares outstanding and suspended its quarterly dividend. The company plans to use 100% of free cash flow to complete the share buyback program and has already repurchased 153,000 shares for approximately $3.3 million.
For the full year 2025, Civeo revised its guidance, projecting revenues between $620 million and $650 million and adjusted EBITDA of $75 million to $85 million. The company also lowered its capital expenditure guidance to $20-$25 million, emphasizing a disciplined approach to capital deployment.
Despite near-term challenges, Civeo remains confident in its long-term free cash flow generation, supported by a capital-light model and a high proportion of recurring asset-light services revenue. The pending Bowen Basin acquisition is expected to be accretive following its closure in the second quarter.
Curated from Reportable
