Civeo Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 30, 2025

Key Takeaways

  • Civeo’s board increased its share repurchase authorization from 10% to 20% of outstanding shares, suspended the quarterly dividend, and plans to allocate 100% of annual free cash flow to buybacks until completion, then 75% thereafter.
  • As of March 31 2025, Civeo reported net debt of $59 million, a leverage ratio of 0.8×, and $162 million in liquidity, providing financial flexibility for shareholder returns and the planned Australian acquisition.
  • The Australian segment saw a 13% revenue increase (18% constant currency) led by higher activity in integrated services, anchored by a A$1.4 billion contract renewal, and expects immediate cash-flow accretion from the pending DeBoer Villages acquisition.
  • Canadian segment revenues fell to $40.4 million in Q1 (from $67.2 million), with a negative adjusted EBITDA and a $1 million restructuring charge after a ~25% headcount reduction amid customer capex cuts and tariff pressures.
  • Civeo lowered 2025 guidance to $620–650 million in revenues, $75–85 million in adjusted EBITDA, and $20–30 million in free cash flow, excluding the Australian acquisition, due to persistent macro uncertainties and weaker Canadian activity.
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Earnings Conference Call
Civeo Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

and welcome to the Silvia Corporation First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Regan Nielsen. Please go ahead.

Regan Nielsen
Regan Nielsen
Senior Director of Corporate Development & Investor Relations at Civeo

Thank you, and welcome to Civeo's first quarter twenty twenty five earnings conference call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer and Colin Geary, Civeo's 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 are 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 ks, 10 Q, and other SEC filings. I'll now turn the call over to Bradley.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Thank you, Reagan, and thank you all for joining us today on our first quarter twenty twenty five earnings call. I'll start by highlighting some of the key takeaways before walking through a brief summary of our first quarter twenty twenty five financial results. Then Colin will provide a financial and segment level review, and I'll conclude with our updated 2025 guidance and underlying regional assumptions. We will then open the call for questions.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

The key takeaways today are, and I'll start with the changes we've made to our capital allocation strategy to accelerate the return of capital to investors and enhance long term shareholder value. Under our updated framework, the Board has increased our share repurchase authorization from the previously announced 10% to 20% of the total shares outstanding and has suspended the quarterly dividend. We intend to allocate 100% of our annual free cash flow to share repurchases until this expanded authorization is completed. We expect to primarily use open market purchases to execute the authorization, while continuing to evaluate more expedited methods of repurchasing shares to augment these open market purchases. In the first quarter of twenty twenty five, we returned $6,800,000 of capital to shareholders through a combination of our quarterly dividend and share repurchases, bringing our total share repurchases since the inception of the program in 2021 to approximately 22% of Syvio's common shares outstanding.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Following the newly increased share repurchase program, we intend to utilize 75% of annual free cash flow to continue funding share repurchases. This is all driven by Astivio's ability to generate free cash flow. It has generated free cash flow and has done so every year for the last ten years. As we've previously noted, Servia's free cash flow is historically weighted to the second half of the year seasonally. I'll now turn to the regional observations.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

In Australia, we continue to experience strong occupancy levels. Revenues in the business increased 13% year over year, and on a constant currency basis 18% compared to the first quarter of twenty twenty four, primarily driven by increased activity in our integrated services business, which was strengthened by the recently announced 1,400,000,000.0 Australian contract renewal and expansion. We are pleased with the progress we are making towards completing our previously announced acquisition of DeBoer Villages in the Australian Bowen Basin, which will expand our presence into a new area of that basin. Upon close, we expect we continue to expect we will we continue to expect that this transaction will close in the second quarter and it will expect we also expect it to be immediately accretive to operating cash flow. Moving to Canada, we experienced lower build rooms as our customers continue to reduce capital spending response to investor pressure to return capital to their shareholders, as well as ongoing economic and political uncertainty.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

During the quarter, we reduced our Canadian employee headcount by approximately 25% and recorded a restructuring charge of approximately $1,000,000 which was excluded from adjusted EBITDA. As our customers continue to navigate macroeconomic challenges, including weaker oil prices, new export tariffs and pressure to return capital and reduce costs, we are focusing on taking additional steps to optimize our cost structure and better align our business with realities of the current environment. We remain focused on controlling what we can control. In the second and third quarters of twenty twenty five, we expect to continue to execute on cost reduction actions, while maintaining a sharp focus on operational execution to improve performance across our lodges in Canada. Given our focus on enhancing operational efficiency, we have engaged an independent, a leading independent consulting firm to review the company's North American cost structure.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

This process is part of our commitment to identifying sustainable opportunities to enhance shareholder value, streamline overhead costs, and align costs with strategic priorities. Before I turn the call on, I'd like to take a moment to remind you of the supplemental disclosure we introduced on last quarter's earnings call and we'll be providing on a quarterly basis moving forward. This disclosure, which is intended to better illustrate the evolution of our business and our current asset mix, shows the revenues from our Asset Light business, which includes hospitality services at both our owned assets as well as assets owned by our customers. And secondly, the asset intensive business, which largely includes the accommodations revenue associated with our lodge and village assets, as well as our Canadian mobile can business. The supplemental data schedule can be found in our earnings press release. With that, I'll turn it over to Colin.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Thank you, Bradley, and thank you all for joining us this morning. Today, we reported total revenues in the first quarter of $144,000,000 with a net loss of $9,800,000 or $0.72 per diluted share. During the first quarter, we generated adjusted EBITDA of $12,700,000 and negative operating cash flow of 8,400,000.0 As a reminder to listeners, seasonally the first quarter tends to see negative working capital negative working capital impact on cash flow. The decrease in adjusted EBITDA in the first quarter of twenty twenty five compared to 2024 was primarily due to decreased build rooms at the Canadian lodges. This lower level of customer spending is expected to continue as producers in the region remain keenly focused on reducing costs in response to uncertainty in current operating environment.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Let's now turn to the first quarter results for our two segments. I'll begin with a review of the Australian segment performance compared to its performance a year ago. First quarter revenues from our Australian segment were $103,600,000 up 13% from $91,700,000 in the first quarter of twenty twenty four. Adjusted EBITDA was $20,500,000 relatively flat year over year. The increase in revenues was primarily driven by increased integrated services activity related to our recent contract announcement.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Adjusted EBITDA did not increase proportionally to revenues year over year, primarily due to increased power and staffing costs in the quarter. Operating cost management will continue to be a focal point throughout 2025. Australian build rooms in the quarter were 625,000 rooms, modestly up from the first quarter of twenty twenty four. Our daily room rate for our Australian owned villages in US dollars was $75 which decreased from $77 in the first quarter of twenty twenty four, primarily due to the weakening of the Australian dollar. Turning to Canada, we recorded revenues of $40,400,000 as compared to $67,200,000 in the first quarter of twenty twenty four.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Adjusted EBITDA for the segment was negative 200,000 The year over year decrease in adjusted EBITDA of $5,900,000 was driven by the wind down of LNG related activity, including the completion of pipeline activity for our mobile camps, and lowered build rooms as a result of our customers' recent focus on cost and headcount reductions, as well as the loss of Fort Hills related occupancy from the sale of our McCullough Lake Lodge. During the first quarter, billed rooms in our Canadian lodges totaled $359,000 which was down from $610,000 in the first quarter of twenty twenty four due to the factors just mentioned. Our daily room rate for the Canadian segment in U. S. Dollars was 93 which decreased from $98 in the first quarter of twenty twenty four, entirely due to the weakening of the Canadian dollar.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Looking at our capital structure, Civeo's net debt as of 03/31/2025 was $59,000,000 a $21,000,000 increase since 12/31/2024. Our net leverage ratio for the quarter was 0.8 times as of 03/31/2025. As of 03/31/2025, Assignia had total liquidity of approximately $162,000,000 Our liquidity position continues to support our ability to return capital to shareholders, close our previously announced Australian acquisition and maintain a prudent leverage ratio. Finally, I'll turn to capital allocation. I'll start with CapEx.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

On a consolidated basis, CapEx for the first quarter of twenty twenty five was $5,300,000 down from $5,600,000 during the first quarter of twenty twenty four. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages. During the first quarter of twenty twenty five, we repurchased approximately 153,000 shares through our share repurchase program for a total cost of 3,300,000.0 As Bradley mentioned, this brings our total return of capital to shareholders in the first quarter of twenty twenty five, including quarterly dividends and share repurchases, to $6,800,000 With our newly increased share repurchase authorization and commitment to accelerating the return of capital to shareholders, We continue to believe that repurchasing shares is a high return, value enhancing opportunity. This new capital return framework reflects that, and we look forward to reporting on our progress repurchasing shares next quarter. With that, I will turn the call back over to Bradley.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Thank you, Colin. I'll provide some additional color on the updated capital allocation framework before I turn to a discussion of our updated guidance expectations for the balance of 2025. In the first quarter, the Board authorized a new share repurchase program for up to 10% of the total common shares outstanding over the next twelve months as part of our commitment to capitalizing on attractive opportunities to enhance shareholder returns. This authorization followed the completion of the prior 5% share repurchase authorization announced in September 2024, which was completed in just six months.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

When we announced the Board's authorization of the share repurchase program last year and reiterated in the first quarter announcement, we also made it clear that our capital allocation strategy remains under continuous review, consistent with our focus on driving long term value creation for shareholders. To that end, we are pleased to announce today a revised capital allocation framework resulting through our thorough review of the framework and our engagement with our shareholder base. Under our refreshed capital allocation strategy, we are rebalancing our capital return mix to prioritize share repurchases as the primary vehicle for returning capital to shareholders and eliminating Sevilla's quarterly dividend to maximize flexibility. Given the macroeconomic headwinds and tariff driven uncertainties, we believe maintaining financial flexibility is essential. As we have seen across industries over the last several weeks, trade policy changes and supply chain disruptions have a significant impact.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

We'll continue to assess more expedited methods for repurchasing shares. Underscoring our commitment to returning capital to shareholders, our Board has approved an increase to the share authorization we announced in March, increasing the amount of shares available for repurchase from 10% to 20% of the total shares outstanding. We intend to allocate 100% of annual free cash flow to executing repurchases in the open market to complete this authorization as soon as practicable. Given the current valuation of Civio shares and our outlook, we believe this approach is prudent, value enhancing, and in the shareholders' best interest. This decision demonstrates our Board and management's confidence in Zevio's future prospects, operational resilience, and ability to deliver long term shareholder value, despite the current market challenges and pressure on our stock price.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Once we have completed this recently expanded share repurchase authorization, our plan is to utilize 75% of free cash flow annually to fund ongoing share repurchases. Our ability to take these important steps to enhance shareholder returns is built on the foundation we have worked foundation of work we have done over the last several years to strengthen our balance sheet, having surpassed our target net leverage ratio of one times through our disciplined focus on debt reduction and given our strong liquidity position and continued solid cash flow generation, we now have ample financial flexibility. We are confident this capital return strategy best supports long term value creation, while reducing risks amidst a more uncertain global backdrop. We will remain agile and responsive to market conditions while advancing our objective of delivering superior returns for Civio shareholders. I would now like to turn our discussion to our full year 2025 guidance on a consolidated basis, including the underlying macro and regional assumptions.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

We are lowering our full year 2025 revenue and adjusted EBITDA guidance to a range of $620,000,000 to $650,000,000 of revenues for 2025 and $75,000,000 to $85,000,000 of adjusted EBITDA for 2025. We are also lowering our full year 2025 capital expenditure guidance to $20,000,000 to $25,000,000 To remind everyone, this guidance continues to exclude the contribution from our recently announced Australian acquisition, which is still expected to close by the end of the second quarter and is subject to regulatory approvals and customary closing conditions. We will provide updated 2025 guidance once the transaction has closed. Taking into account our new adjusted EBITDA and CapEx guidance, we are lowering our free cash flow guidance for 2025 to 20,000,000 to $30,000,000 As a reminder, this 2025 free cash flow guidance is burdened by approximately $10,000,000 of one time deferred tax payments related to fiscal twenty twenty. I will now provide the regional outlooks and corresponding underlying assumptions by region.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

In Australia, customer activity in our own villages remains strong. Three of our Bowen Basin villages are currently operating at full capacity and we are seeing strong occupancy across the remainder of our owned village portfolio. Based on these trends we are seeing in the market, we expect these levels to continue throughout the balance of 2025. As it relates to our integrated services business, we are continuing to experience increased demand from our recent contract award. We expect to build on the strong increasing momentum in 2025 as we work towards our goal achieving A500 million of integrated services revenues by 2027.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Our outlook assumes modest Australian build room growth, as well as expansion in our integrated services business. In Canada, as I mentioned earlier, we expect performance will continue to be impacted by economic and political uncertainty. As we continue executing on the restructuring actions we announced in the fourth quarter, including cold shutting two lodges in the second quarter, we expect to incur another $1,000,000 in restructuring charges. Moving forward, we are focused on remaining agile and responsive, and we will continue to assess potential opportunities to reduce our cash structure as we navigate a challenging and dynamic environment. We continue to believe that 2025 is a transitional year for our Canadian division, as our Canadian division adjusts to lower revenue expectations, driven by customers' response to lower oil prices and investor pressure.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

We expect associated changes to our operations will impact free cash flow performance as a result. However, we believe our consistent free cash flow generation is one of Civio's strongest financial characteristics and we will continue to do so going forward. Before we head into the call, I'd like to close by saying we are confident in our team's ability to execute our updated capital allocation framework and generate value for our long term shareholders. With that, we'll take questions.

Operator

Thank you. We will now be conducting a question and answer session. You. The first question we have is from Stephen Gengaro of Stifel. Please go ahead.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Good morning,

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

So two questions for me and you went over the capital allocation framework pretty well. But what I was curious about is, how much of this is just sort of macro uncertainty on the dividend versus the internal or board views that it's a better way to create value? And is this something that you think you'll revisit when the macro backdrop becomes clearer?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

It's more of the latter, Steven. Thank you for the question. And extensive shareholder engagement over the last few months became apparent that and also just from the trading history that we weren't getting value from the dividend and obviously the whole drive both of the dividend historically and share repurchase, was returning capital to shareholders. And if it wasn't being valued, then it appeared to us and others that shifting that capital to share repurchase made more sense at this time. As we mentioned in the prepared comments, we're constantly looking at our capital allocation, so we'll evaluate in the future, but in the near term and for the foreseeable future, appears that we believe that buying back stock makes more sense.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Thanks. That's sort of in line with the feedback I've gotten too. So I appreciate the comments. And I think the other bigger picture question, and I may ask this incorrectly, but you had press release out, I think a week ago about our extended relationship up in Canada. I think it was with the Six Nations, I forget exactly.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

But I was curious if what's the underlying benefit to that to the business? But also maybe as part of the answer, we've talked about in the past kind of the source gas for Canadian LNG and has there been any change in your ability to sort of maybe penetrate that market?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

So we're very pleased to announce the joint venture with the Six Nations. As you know, and I think our investors know, First Nation relationships are critically important to winning work in Canada. We have an extensive history including being gold certified in terms of our industrial, our indigenous relations efforts. And this is just the extension of that. In many cases, First Nation relationship is necessary to bid on work, and we're excited about the prospects now that we have this relationship in place and on bidding with our partners on new work, particularly in Eastern Canada.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

So there's some of it, second part of your question addressed source gas, this is not related to that.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Okay, okay. And is there anything on the source gas side that has changed? I'm not even sure if you, I don't have a great handle honestly on the on sort of the competitive landscape in that region. Is there any opportunity there or is that something that's too hard to tap into given the established players there?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Our focus on LNG activity in Canada prospectively is really related around three projects. Obviously everyone's watching LNG Canada closely to see if they will move forward with phase two of that project that's currently going into initial production. The second piece we've seen Cedar LNG reach positive FID and that's moving forward. We have a handful of guests from that project staying with us at our Cinco Lodge, but it is not fully ramped up yet. Then the third project that we're watching closely is the Western LNG project or Silysms that would utilize the PRGT pipeline which would need to be built, which would be a great opportunity for our mobile camp business and prospectively potentially additional work on the coast as they build out their clinical faction capabilities.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Okay, great, thank you.

Operator

The next question we have is from Steve Sirozania of Sidoti and Co. Please go ahead.

Alex Hantman
Alex Hantman
Analyst at Sidoti & Company

Good morning. This is Alex on for Steve. Thanks for taking questions. Just to build on that last question, given the completion of the Canadian election, are there any other larger infrastructure projects which you think could generate revenue in the next few years?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Well, I would say things that have been talked about during the campaign were potential additional pipeline work, pipeline projects were to move forward, that's great opportunities for a mobile camp business. The other big project would be pathways and carbon sequestration in Alberta around the oil sands projects.

Alex Hantman
Alex Hantman
Analyst at Sidoti & Company

Okay, thank you. And you also mentioned hiring a consulting firm to help with cost cutting measures. Could you talk a little bit about what's on the table, sort of the types of cost scope and how that might develop across North America?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Well, primarily there's been a significant shift in our Canadian, the outlook for our base Canadian business, so it's primarily helped in addressing that cost structure. But generally speaking, it will address all North American cost structure.

Alex Hantman
Alex Hantman
Analyst at Sidoti & Company

Okay. Thank you. That's all from us.

Operator

The next question we have is from Dave Storms of Stonegate. Please go ahead.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Good morning, Just wanted to start with I know headcount tends to be probably the biggest expense on the foodservice side of your business. But are you seeing any tariff impacts that are specific to the food service that we should keep an eye on?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

We're primarily seeing it on the Canadian side and are working diligently with our supply chain as well as with our customers so that we can, in Canada, source as many operational consumables, food and other items locally in Canada to avoid tariffs and should that be, if we're unable to do that, making sure our customers understand that those costs are being passed through.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Understood. That's very helpful. And then I really appreciate you going through your updated guidance the way that you did. Just still trying to get my head a little bit around, I know the guidance does not include the acquisition that's expected to close later this year. But I'm just trying to get a sense of what macro factors that it does include.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

Would you consider this updated guidance the worst case scenario guidance, optimistic guidance, or maybe somewhere in the middle? How should we think about that?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Great question. I would say that the current guidance, most of the focus and actually implicit in your question is around the conditions in Canada. In Australia, the outlook right now is fairly straightforward, obviously subject to change, but most of the focus at least for us and I think for investors has been around in Canada. And so I would say current guidance reflects I think reasonably conservative outlook for the business as a whole, but also for Canada. If I had to say what's our downside case, we'd probably lower the lower end by $5,000,000 to 70.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

But that would be a further, rather significant deterioration specifically in Canada.

Dave Storms
Director of Equity Research at Stonegate Capital Partners

That's great. Thank you for taking my

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

questions. Thank you.

Operator

We have a follow-up question from Stephen Gengaro of Stifel. Please go ahead.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Thanks. Yes, so one of the things I just wanted to ask quickly, we think about the revised guidance, I actually had two questions. One is, is there any change in sort of how we should think about quarterly cadence of that guide? And then maybe as part of that, in past periods when there's been sort of sloppiness in commodity prices, has that generally led to more or less turnaround activity like the customers sort of take advantage of the to do the work or is it more of a cash flow issue, so they're more reluctant to do more turnaround work?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

So I'll answer the first part and ask Colin to comment on the second part. So on the first part in terms of the seasonality of our EBITDA generation, continue to believe that the second and third quarters will be the strongest. That will be slightly offset by the fact that we'll have the Australian acquisition close. And so it will fully benefit the second half of the year. But generally speaking, we'll continue to see 60% plus or minus of the EBITDA generation in middle half of the year, middle two quarters of the year.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

And then in terms of turnaround activity relative to commodity prices, I'll ask Colin to come.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Yeah, it's a good question, Stephen. You know, our customer base plans turnaround multiple years out in advance, right? So there's certain scopes that have a two to three year cadence and there's certain scopes that are, you know, every year. And then depending on what you're able to get done last year, you're going to have some spillover in terms of what you have to get done this year. So it's really, my sense is that it's historically really driven by the work that needs to be done based on the equipment and less so an opportunistic timing of commodity prices.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

I will supplement that by saying in either commodity price environment, speed is the name of the game because the longer the turnaround lasts, less time they're actually producing barrels. So we've thought about it internally, but we've never actually observed any sort of change in turnaround behavior strictly as it relates to commodity price to try

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

to take advantage of the sloppiness, as you put it. And I would augment that by saying that with the, that most of our customers are actually planning their operations around a much lower oil price than even what we're experiencing now, right? And so certainly the macroeconomic environment, tariffs, etcetera, are impacting their thinking, but way before all this happened they were planning on a much lower commodity, or preparing, operating as if they were a much lower planning price environment.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

I understand that's helpful. And then just one other question, was just looking at our model and I think over the last four years and over the last six years, free cash flow has averaged like about $70,000,000. And recently it's probably been a little bit lower than that. But when the guidance you gave this year for 20 to 30, do you view that as an anomaly because of the market conditions? How would you sort of I know it's early to think about next year, but do you think next year sort of closer to that sort of $110,000,000 range based on what you know now?

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

There are a couple things in there. So let me divide up your question. I'll ask Colin to jump in with color or correct my mistakes. Over that six year time period, the biggest factor, there are two or three big factors. One, we're a cash taxpayer in Australia, which we weren't five years ago, have been 2024 going forward.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

That's a big change. Over that time period, particularly earlier in that time period, had significant benefit from LNG activity in Canada, which right now is coming to completion, they're going to production, that's impacting our Canadian operations. So three, on a go forward basis, we pay cash taxes, as we mentioned in prepared comments, we do have some just timing of cash tax payments in Australia, which are hurting 2025 cash flow. They shouldn't quote unquote normalize on a go forward basis and be more So where do I, where do we think operating cash flow can move? It should improve on a go forward basis.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

Yes. Yeah, Bradley nailed it. I'll just supplement that with, you you kind of have to think about it with or without the acquisition. All of our guidance has been without the acquisition. But we do remain confident that we will close that in Australia.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

So that cash flow could be layered in in the future years. Again, we're not including that in any of our guidance for 2025, but remain confident we'll close that relatively shortly. And then, you know, the third part about it's just going to be focused by the team, right? We always do look at expenses and sharpen our pencils, maybe more so in the future on items like CapEx and maintenance CapEx and discrete things that are flowing through the capital line. So speaking personally, I remain optimistic, yes, that 20 to 30 feels low.

Collin Gerry
Collin Gerry
SVP, CFO & Treasurer at Civeo

And when you normalize for cash taxes and some of those other items that we can start approaching some of the numbers you quoted in the outer years.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Great. Thank you both.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Thanks, Steven.

Operator

At this time, there are no further questions. And I would like to turn the floor back over to Bradley Dodson for any closing remarks.

Bradley Dodson
Bradley Dodson
CEO, President & Director at Civeo

Thank you. And thank you everyone for joining us today on the call. We appreciate your interest in Civio. We look forward to speaking with you on the second quarter earnings call expected in July.

Operator

This concludes today's teleconference. Thank you for joining us. You may now disconnect your line.

Executives
    • Regan Nielsen
      Regan Nielsen
      Senior Director of Corporate Development & Investor Relations
    • Bradley Dodson
      Bradley Dodson
      CEO, President & Director
    • Collin Gerry
      Collin Gerry
      SVP, CFO & Treasurer
Analysts
    • Stephen Gengaro
      Managing Director at Stifel Financial Corp
    • Alex Hantman
      Analyst at Sidoti & Company
    • Dave Storms
      Director of Equity Research at Stonegate Capital Partners
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