Civeo Corp
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
CVEO$34.25+4.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001590584-24-000130
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001590584-24-000160
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 107 current paragraphs.
47 unchanged; 51 reworded; 8 added; 6 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Met coal prices stabilized during the second quarter of 2024 in the range of approximately $220 to $250 per tonne. As steel demand production declined in July and August alongside high met coal inventories, prices for met coal weakened to approximately $190 to $200 per tonne. With supply remaining steady and muted demand, analysts expect prices to remain under pressure through the second half of 2024, with improvement anticipated in early 2025. Improved prices remain contingent on a recovery in demand particularly from China. The decline in Chinese infrastructure spending, along with a weaker Chinese housing market, have impacted prices and are expected to influence near-term outlook. To mitigate this, the Chinese government has put in place a stimulus package to support the domestic real estate market.
Current report
Revenues. Consolidated revenues decreased $7.2 million, or 4%, in the third quarter of 2024 compared to the third quarter of 2023. This decrease was primarily due to (i) reduced mobile asset activity from pipeline projects in Canada which were largely completed in 2023, (ii) lower year-over-year occupancy in our oil sands lodges in Canada due to the timing and extent of maintenance activity by our customers, (iii) lower occupancy associated with the sale of the McClelland Lake Lodge in Canada and (iv) lower occupancy at our Sitka Lodge in Canada. These items were partially offset by increased activity at our Civeo owned villages in the Australian Bowen Basin and new business in our integrated services villages in Western Australia. See the discussion of segment results of operations below for further information.
Current report
Depreciation and Amortization Expense. Depreciation and amortization expense increased $0.5 million, or 3%, in the third quarter of 2024 compared to the third quarter of 2023. The increase was primarily due to additional property, plant and equipment placed in service during 2024.
Current report
Other Income (expense). The third quarter of 2023 included expenses of $4.9 million associated with the demobilization of the McClelland Lake Lodge to prepare the assets for sale.
Current report
Results of Operations – Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
We reported net income attributable to Civeo for the nine months ended September 30, 2023 of $7.1 million, or $0.47 per diluted share. As further discussed below, net income included $4.9 million of expenses associated with the sale of the McClelland Lake Lodge in Canada.
Current report
Our Canadian segment reported revenues in the nine months ended September 30, 2024 that were $75.6 million, or 27%, lower than the nine months ended September 30, 2023. The revenue decrease was driven by (i) reduced mobile asset activity from pipeline projects which were largely completed in 2023, (ii) lower year-over-year occupancy in our oil sands lodges due to the timing and extent of maintenance activity by our customers and (iii) declined occupancy associated with the sale of the McClelland Lake Lodge. In addition, occupancy at our Sitka Lodge has declined as the Kitimat LNG facility nears completion.
Current report
Amended Credit Agreement
Removed paragraphs (6)
Previous report
Met coal prices weakened in March through early April 2024. Prices have since stabilized in the range of approximately $220 to $250 per tonne and continue to support existing production. As supply remains steady and with limited prospects in demand growth, analysts forecast prices to average $235 to $245 over the second-half of 2024.
Previous report
Revenues. Consolidated revenues increased $9.9 million, or 6%, in the second quarter of 2024 compared to the second quarter of 2023. This increase was primarily due to (i) increased activity at our Civeo owned villages in the Australian Bowen Basin, (ii) new business in our integrated services villages in Western Australia and (iii) increased year-over-year occupancy in our Canadian oil sands lodges. These items were partially offset by declined occupancy associated with the sale of the McClelland Lake Lodge and reduced mobile asset activity from pipeline projects in Canada which were largely completed in 2023. See the discussion of segment results of operations below for further information.
Previous report
Results of Operations – Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
We reported net loss attributable to Civeo for the six months ended June 30, 2023 of $1.9 million, or $0.13 per diluted share.
Previous report
Our Canadian segment reported revenues in the six months ended June 30, 2024 that were $38.2 million, or 21%, lower than the six months ended June 30, 2023. The revenue decrease was driven by reduced mobile asset activity from pipeline projects which were largely completed in 2023.
Previous report
Credit Agreement
Reworded paragraphs (51)
Previous wording
Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure, as well as the exploration for oil and natural gas. Long-term demand for our services has been driven by natural resource production, maintenance and operation of those facilities as well as expansion of those sites. In general, industry capital spending programs are based on the outlook for commodity prices, production costs, economic growth, global commodity supply/demand, reserve replacement, estimates of resource production and the expectations of our customers' shareholders. As a result, demand for our hospitality services is largely sensitive to expected commodity prices, principally related to oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore, and the resultant impact of these commodity price expectations on our customers' spending. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, volatility affecting the banking system and financial markets, availability of capital to the natural resource industry and regulatory changes in Canada, Australia and other markets, including governmental measures introduced to fight climate change.
Current wording
Demand for our hospitality services is driven primarily by ongoing operations of existing natural resource projects in Australia and Canada. Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure, as well as the exploration for oil and natural gas. Long-term demand for our services has been driven by natural resource production, maintenance and operation of those facilities as well as expansion of those sites. In general, industry capital spending programs are based on the outlook for commodity prices, production costs, economic growth, global commodity supply/demand, reserve replacement, estimates of resource production, annual maintenance requirements and the expectations of our customers' shareholders. As a result, demand for our hospitality services is sensitive to expected commodity prices, principally related to oil, metallurgical (met) coal, iron ore and liquefied natural gas (LNG), and the resultant impact of these commodity price expectations on our customers' spending. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, volatility affecting the banking system and financial markets, availability of capital to the natural resource industry and regulatory changes in Canada, Australia and other markets, including governmental measures introduced to mitigate climate change.
Previous wording
There is continued uncertainty around commodity price levels, driven by many factors including rising fears of a recession resulting from severe inflation and higher interest rates, the impact of inflationary pressures, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust production levels, geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts and rising geopolitical risks in the Middle East, United States (U.S.) oil production levels and regulatory implications on such prices. In particular, these items could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets.
Current wording
There is continued uncertainty around commodity price levels, driven by many factors including rising fears of a recession resulting from lingering inflation and higher interest rates, an economic slowdown in China and resultant economic stimulus by the Chinese government, the impact of inflationary pressures, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust oil production levels, geopolitical events such as the ongoing Russia/Ukraine conflict and rising conflict and geopolitical risks in the Middle East, United States (U.S.) oil production levels and regulatory implications on such prices. In particular, these items could cause our Canadian oil sands and pipeline customers to delay expansionary and maintenance spending and defer additional investments in their oil sands assets and in extreme cases reduce production.
Previous wording
WTI Crude. After reaching historic lows in early 2020 during the start of the COVID-19 pandemic, global oil prices increased to above $100 per barrel in the second quarter 2022. In the second half of 2022 and throughout 2023, oil prices generally declined due to (i) rising fears of a recession resulting from severe inflation and higher interest rates, (ii) resulting lower demand growth for oil and (iii) increasing U.S. oil production. In an effort to support the price of oil amidst demand concerns, OPEC+ countries have extended their 2023 oil production cuts through the remainder of 2024 and into 2025. These production cuts, coupled with the rising geopolitical risks in the Middle East, resulted in rising oil prices during the first half of 2024 following a decline in prices in the latter part of the fourth quarter of 2023.
Current wording
WTI Crude. After reaching historic lows in early 2020 during the start of the COVID-19 pandemic, global oil prices increased to above $100 per barrel in the second quarter 2022. In the second half of 2022 and throughout 2023, oil prices generally declined due to (i) rising fears of a recession resulting from severe inflation and higher interest rates, (ii) resulting lower demand growth for oil and (iii) increasing U.S. oil production. In an effort to support the price of oil amidst demand concerns, OPEC+ countries have extended their 2023 oil production cuts through the remainder of 2024 and into 2025. These production cuts, coupled with the rising geopolitical risks in the Middle East, resulted in rising oil prices during the first half of 2024. Oil prices decreased during the third quarter of 2024 due to increased market concerns over economic growth and demand.
Previous wording
WCS prices in the second quarter of 2024 averaged $67.24 per barrel compared to an average of $60.25 in the second quarter of 2023. The WCS Differential decreased from $19.35 per barrel at the end of the fourth quarter of 2023 to $15.27 at the end of the second quarter of 2024. As of July 26, 2024, the WTI price was $77.16 and the WCS price was $60.26, resulting in a WCS Differential of $16.90
Current wording
WCS prices in the third quarter of 2024 averaged $59.97 per barrel compared to an average of $66.20 in the third quarter of 2023. The WCS Differential decreased from $19.35 per barrel at the end of the fourth quarter of 2023 to $13.66 at the end of the third quarter of 2024. As of October 25, 2024, the WTI price was $71.99 and the WCS price was $59.33, resulting in a WCS Differential of $12.66.
Previous wording
Met Coal. In Australia, 84% of our rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the level of global steel production, which remained flat through June 2024 compared to the same period of 2023. Production stability was the result of steady production in China and continued growth in India, which offset weaker production in the U.S., Japan and South Korea. As of July 26, 2024, met coal spot prices were $217.00 per tonne. Steel demand is expected to increase marginally in 2024 compared to 2023, with continued improvements in demand from India.
Current wording
Met Coal. In Australia, 84% of our Australian owned rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the level of global steel production. Following negative growth in both July and August 2024, steel production through September 2024 has weakened by 1.9% when compared to the same period of 2023. While there is positive growth in India and Europe, a decline in production during July and August in China more than offset those stronger production results. As of October 25, 2024, met coal spot prices were $200.70 per tonne. Steel demand is expected to increase marginally in 2024 compared to 2023, with continued improvements in demand from India.
Previous wording
Iron Ore. Iron ore prices fluctuated during the first quarter of 2024 and weakened through June 2024, with prices having since stabilized at approximately $105 per tonne. Analysts expect iron ore prices to average $105 to $110 through the second-half of 2024, with stable supply and steady demand.
Current wording
Iron Ore. Iron ore prices fluctuated during the first quarter of 2024 and weakened through September 2024, with prices moving between $90 and $100 per tonne. Analysts expect iron ore prices to average $90 to $100 per tonne through the remainder of 2024 and into 2025, with stable supply and muted demand.
Previous wording
Inflationary Pressures. During 2023 and through the second quarter of 2024, inflationary pressures and supply chain disruptions have been, and are being, experienced worldwide. Price increases resulting from inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel. We are managing inflation risk with negotiated service scope changes and contractual protections.
Current wording
Inflationary Pressures. During 2023 and through the third quarter of 2024, inflationary pressures and supply chain disruptions have been, and are being, experienced worldwide. Price increases resulting from inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel. We are managing inflation risk with negotiated service scope changes and contractual protections.
Previous wording
Currently, Western Canada does not have any operational LNG export facilities. LNG Canada (LNGC), a joint venture among Shell Canada Energy, an affiliate of Shell plc (40 percent), and affiliates of PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea Gas Corporation (5 percent), is currently constructing a liquefaction and export facility in Kitimat, British Columbia (Kitimat LNG Facility). The Kitimat LNG Facility is nearing completion and expected to be operational in 2024, with commercial operations beginning in 2025. British Columbia LNG activity and related pipeline projects are a material driver of activity for our Sitka Lodge, as well as for our mobile assets, which were contracted to serve designated portions of the related pipeline construction activity. The majority of our contracted commitments associated with the Coastal GasLink Pipeline, the pipeline constructed to transport natural gas feedstock to LNGC, were completed in the fourth quarter of 2023.
Current wording
LNG. Our Sitka Lodge supports the LNG Canada (LNGC) project and related pipeline projects, specifically the Coastal GasLink Pipeline, the pipeline constructed to transport natural gas feedstock to LNGC. LNGC, a joint venture among Shell Canada Energy, an affiliate of Shell plc (40 percent), and affiliates of PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea Gas Corporation (5 percent), is currently constructing the initial phase of a liquefaction and export facility in Kitimat, British Columbia (Kitimat LNG Facility). Construction activity of both Phase 1 of the Kitimat LNG Facility and the Coastal GasLink Pipeline are nearing completion in 2024. The majority of our contracted commitments associated with the Coastal GasLink Pipeline were completed in the fourth quarter of 2023. As such, we expect lower occupancy at our Sitka Lodge in the near-term until subsequent phases, or additional construction activity in the region, drive new occupancy demand.
Previous wording
LNG. Our Sitka Lodge supports the LNG Canada project and related pipeline projects. From a macroeconomic standpoint, LNG demand has continued to grow, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. The conflicts between Russia/Ukraine and in the Middle East have further highlighted the need for secure natural gas supply globally, particularly in Europe. Accordingly, additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth.
Current wording
From a macroeconomic standpoint, LNG demand has continued to grow, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. The conflicts between Russia/Ukraine and in the Middle East have further highlighted the need for secure natural gas supply globally, particularly in Europe. Accordingly, experts believe additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth.
Previous wording
Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Canada and Australia. These revenues and profits/losses are translated into U.S. dollars for financial reporting purposes under U.S. Generally Accepted Accounting Principles. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar:
Current wording
Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Canada and Australia. These revenues and profits/losses are translated into U.S.
Previous wording
Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2024, is based on a comparison to the corresponding period of 2023.
Current wording
Unless otherwise indicated, discussion of results for the three and nine months ended September 30, 2024, is based on a comparison to the corresponding period of 2023.
Previous wording
We reported net income attributable to Civeo for the quarter ended June 30, 2024 of $8.2 million, or $0.56 per diluted share compared to net income attributable to Civeo for the quarter ended June 30, 2023 of $4.5 million, or $0.30 per diluted share.
Current wording
We reported net loss attributable to Civeo for the quarter ended September 30, 2024 of $5.1 million, or $0.36 per diluted share, compared to net income attributable to Civeo for the quarter ended September 30, 2023 of $9.0 million, or $0.61 per diluted share. As further discussed below, net income for the quarter ended September 30, 2023 included $4.9 million of expenses associated with the sale of the McClelland Lake Lodge in Canada.
Previous wording
Cost of Sales and Services. Our consolidated cost of sales and services increased $9.4 million, or 7%, in the second quarter of 2024 compared to the second quarter of 2023. This increase was primarily due to increased occupancy at our Civeo owned villages in the Australian Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs. These items were partially offset by decreased mobile asset activity from pipeline projects in Canada which were largely completed in 2023 and lower costs at certain lodges, including the McClelland Lake Lodge, in Canada. See the discussion of segment results of operations below for further information.
Current wording
Cost of Sales and Services. Our consolidated cost of sales and services increased $8.2 million, or 6%, in the third quarter of 2024 compared to the third quarter of 2023. This increase was primarily due to increased occupancy at our Civeo owned villages in the Australian Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs. These items were partially offset by decreased mobile asset activity from pipeline projects in Canada which were largely completed in 2023 and lower costs at various lodges in Canada due to reduced occupancy levels. See the discussion of segment results of operations below for further information.
Previous wording
Selling, General and Administrative Expenses. SG&A expenses increased $1.0 million, or 6%, in the second quarter of 2024 compared to the second quarter of 2023. This increase was primarily due to higher compensation expense of $1.3 million and higher travel and entertainment costs of $0.4 million. The increase in compensation expense was primarily due to severance costs and increased staff and associated recruitment costs. These items were partially offset by lower incentive compensation costs of $0.7 million in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Selling, General and Administrative Expenses. SG&A expenses decreased $0.6 million, or 3%, in the third quarter of 2024 compared to the third quarter of 2023. This decrease was primarily due to lower incentive compensation cost of $3.4 million. This item was partially offset by higher compensation expense of $1.1 million and higher professional fees of $1.1 million. The increase in compensation expense was primarily due to increased staff and associated recruitment costs in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Operating Income. Consolidated operating income increased $2.9 million, or 29%, in the second quarter of 2024 compared to the second quarter of 2023, primarily due to higher activity levels in Australia and lower depreciation and amortization expense in the second quarter of 2024 compared to the second quarter of 2023. These items were partially offset by reduced mobile asset activity in Canada in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Operating Income. Consolidated operating income decreased $16.0 million, or 100%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to reduced mobile asset activity and lower lodge occupancy in Canada in the third quarter of 2024 compared to the third quarter of 2023. These items were partially offset by higher activity levels in Australia in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Interest Expense, net. Net interest expense decreased by $1.4 million, or 40%, in the second quarter of 2024 compared to the second quarter of 2023, primarily related to lower average debt levels during 2024 compared to 2023, partially offset by higher interest rates on credit facility borrowings.
Current wording
Interest Expense, net. Net interest expense decreased by $1.6 million, or 50%, in the third quarter of 2024 compared to the third quarter of 2023, primarily related to lower average debt levels and lower interest rates on credit facility borrowings during 2024 compared to 2023.
Previous wording
Income Tax Expense. Our income tax expense for the six months ended June 30, 2024 totaled $5.3 million, or 70.0% of pretax income, compared to an income tax expense of $4.1 million, or 209.0% of pretax income, for the six months ended June 30, 2023. Our effective tax rate for each of the six months ended June 30, 2024 and 2023 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Current wording
Income Tax (Expense) Benefit. Our income tax expense for the three months ended September 30, 2024 totaled $3.9 million, or (270.6)% of pretax loss, compared to an income tax benefit of $1.2 million, or (15.2)% of pretax income, for the three months ended September 30, 2023. Our effective tax rate for the three months ended September 30, 2024 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision. Our effective tax rate for the three months ended September 30, 2023 was impacted by considering the U.S. a loss jurisdiction that was removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Previous wording
Other Comprehensive Income. Other comprehensive income decreased $0.5 million in the second quarter of 2024 compared to the second quarter of 2023, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar decreased 1% in the second quarter of 2024 compared to a 2% increase in the second quarter of 2023. The Australian dollar exchange rate compared to the U.S. dollar increased 2% in the second quarter of 2024 compared to a 1% decrease in the second quarter of 2023.
Current wording
Other Comprehensive Income. Other comprehensive income increased $14.0 million in the third quarter of 2024 compared to the third quarter of 2023, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar increased 1% in the third quarter of 2024 compared to a 2% decrease in the third quarter of 2023. The Australian dollar exchange rate compared to the U.S. dollar increased 4% in the third quarter of 2024 compared to a 3% decrease in the third quarter of 2023.
Previous wording
Our Canadian segment reported revenues in the second quarter of 2024 that were $15.9 million, or 17%, lower than the second quarter of 2023. The revenue decrease was driven by reduced mobile asset activity from pipeline projects which were largely completed in 2023. Lower mobile asset activity was partially offset by increased year-over-year occupancy in our oil sands lodges with billed rooms up 3.9% due to the timing and extent of maintenance activity by our customers, with some offset from declined occupancy associated with the sale of the McClelland Lake Lodge.
Current wording
Our Canadian segment reported revenues in the third quarter of 2024 that were $37.4 million, or 39%, lower than the third quarter of 2023. The revenue decrease was driven by (i) reduced mobile asset activity from pipeline projects which were largely completed in 2023, (ii) lower occupancy associated with the sale of the McClelland Lake Lodge and (iii) lower year-over-year occupancy in our oil sands lodges due to the timing and extent of maintenance activity by our customers. In addition, our Sitka Lodge had lower occupancy as the Kitimat LNG facility nears completion.
Previous wording
Our Canadian segment cost of sales and services decreased $13.0 million, or 18%, in the second quarter of 2024 compared to the second quarter of 2023. The cost of sales and services decrease was driven by lower costs related to reduced mobile asset activity from pipeline projects which were largely completed in 2023 and lower costs at certain lodges including the McClelland Lake Lodge resulting from the sale.
Current wording
Our Canadian segment cost of sales and services decreased $15.9 million, or 24%, in the third quarter of 2024 compared to the third quarter of 2023. The cost of sales and services decrease was driven by lower costs related to reduced mobile asset activity from pipeline projects which were largely completed in 2023 and lower costs at various lodges due to reduced occupancy levels.
Previous wording
Our Canadian segment gross margin as a percentage of revenues increased from 24.7% in the second quarter of 2023 to 26.0% in the second quarter of 2024. This was primarily driven by improved margins at our lodges due to improved efficiencies at higher occupancy levels and the removal of certain fixed costs with the sale of the McClelland Lake Lodge, partially offset by reduced mobile asset activity from pipeline projects which were largely completed in 2023 and mobile camp demobilization costs of approximately $1.4 million which were incurred in the second quarter of 2024.
Current wording
Our Canadian segment gross margin as a percentage of revenues decreased from 30.7% in the third quarter of 2023 to 13.3% in the third quarter of 2024. This was primarily driven by lower margins at our lodges due to reduced efficiencies at lower occupancy level and reduced mobile asset activity from pipeline projects which were largely completed in 2023.
Previous wording
Our Australian segment reported revenues in the six months ended June 30, 2024 that were $40.8 million, or 26%, higher than the six months ended June 30, 2023. The weakening of the average exchange rate for Australian dollars relative to the U.S. dollar by 2.7% in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 resulted in a $5.1 million period-over-period decrease in revenues. On a constant currency basis, the Australian segment experienced a 29% period-over-period increase in revenues. Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by increased activity at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia. Billed rooms in Civeo owned villages were up 11.6% in the first half of 2024 due to increased activity in both the Bowen Basin and Gunnedah Basin coupled with recent contract renewals and extensions. Excluding the weakening Australian dollar, average daily rates for Civeo owned villages were up 4.4% year-over-year.
Current wording
Our Australian segment reported revenues in the third quarter of 2024 that were $28.7 million, or 33%, higher than the third quarter of 2023. The strengthening of the average exchange rate for Australian dollars relative to the U.S. dollar by 2.3% in the third quarter of 2024 compared to the third quarter of 2023 resulted in a $2.5 million period-over-period increase in revenues. On a constant currency basis, the Australian segment experienced a 30% period-over-period increase in revenues. Excluding the impact of the stronger Australian exchange rate, the increase in the Australian segment was driven by increased activity at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia. Billed rooms in Civeo owned villages were up 3.8% in the third quarter of 2024 due to increased activity in the Bowen Basin coupled with recent contract renewals and extensions.
Previous wording
Our Australian segment cost of sales and services increased $30.3 million, or 26%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The weakening of the average exchange rate for Australian dollars relative to the U.S. dollar by 2.7% in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 resulted in a $3.7 million period-over-period decrease in cost of sales and services. Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was largely driven by increased occupancy at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs.
Current wording
Our Australian segment cost of sales and services increased $23.5 million, or 37%, in the third quarter of 2024 compared to the third quarter of 2023. The strengthening of the average exchange rate for Australian dollars relative to the U.S. dollar by 2.3% in the third quarter of 2024 compared to the third quarter of 2023 resulted in a $1.9 million period-over-period increase in cost of sales and services. Excluding the impact of the stronger Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by increased occupancy at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs.
Previous wording
Our Australian segment gross margin as a percentage of revenues decreased to 25.4% in the second quarter of 2024 from 29.1% in the second quarter of 2023. This was primarily driven by an increased relative revenue contribution from our integrated services business, which has a service-only business model, and generates lower overall gross margins than our accommodation business. The reduced gross margin was partially offset by improved profitability across the integrated services villages in the second quarter of 2024.
Current wording
Our Australian segment gross margin as a percentage of revenues decreased to 25.3% in the third quarter of 2024 from 27.6% in the third quarter of 2023. This was primarily driven by an increased relative revenue contribution from our integrated services business, which has a service-only business model, and generates lower overall gross margins than our accommodation business. The reduced gross margin was partially offset by improved profitability across the integrated services villages in the third quarter of 2024.
Previous wording
We reported net income attributable to Civeo for six months ended June 30, 2024 of $3.1 million, or $0.21 per diluted share. As further discussed below, net income included (i) $6.0 million of net gains associated with the sale of the McClelland Lake Lodge in Canada and (ii) a $7.8 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.
Current wording
We reported net loss attributable to Civeo for nine months ended September 30, 2024 of $2.0 million, or $0.14 per diluted share. As further discussed below, net loss included $5.8 million of net gains associated with the sale of the McClelland Lake Lodge in Canada and a $7.8 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.
Previous wording
Revenues. Consolidated revenues increased $8.4 million, or 2%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to increased activity at our Civeo owned villages in the Australian Bowen Basin and new business in our integrated services villages in Western Australia. These items were partially offset by decreased mobile asset activity from pipeline projects in Canada which were largely completed in 2023 and a weaker Australian dollar relative to the U.S. dollar in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. See the discussion of segment results of operations below for further information.
Current wording
Revenues. Consolidated revenues increased $1.2 million, or 0.2%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to increased activity at our Civeo owned villages in the Australian Bowen Basin and new business in our integrated services villages in Western Australia. These items were partially offset by decreased mobile asset activity from pipeline projects in Canada which were largely completed in 2023 and lower year-over-year occupancy at certain lodges in Canada in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. See the discussion of segment results of operations below for further information.
Previous wording
Cost of Sales and Services. Our consolidated cost of sales and services increased $6.3 million, or 2%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to increased occupancy at our Civeo owned villages in our Australian Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs. These items were partially offset by the decrease in cost of sales and services largely driven by (i) reduced mobile asset activity from pipeline projects in Canada which were largely completed in 2023, (ii) lower costs at certain lodges in Canada and (iii) a weaker Australian dollar relative to the U.S. dollar in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. See the discussion of segment results of operations below for further information.
Current wording
Cost of Sales and Services. Our consolidated cost of sales and services increased $14.6 million, or 4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to increased occupancy at our Civeo owned villages in our Australian Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs. These items were partially offset by the decrease in cost of sales and services largely driven by reduced mobile asset activity from pipeline projects in Canada which were largely completed in 2023 and lower costs at certain lodges in Canada in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. See the discussion of segment results of operations below for further information.
Previous wording
Selling, General and Administrative Expenses. SG&A expenses increased $3.4 million, or 10%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to higher compensation expense of $3.0 million, higher travel and entertainment costs of $0.9 million and higher professional fees of $0.6 million. The increase in compensation expense was primarily due to $1.1 million in severance costs related to the departure of our former Chief Financial Officer, other severance costs and increased staff and associated recruitment costs. These items were partially offset by lower share-based compensation expense of $1.1 million and a weaker Australian dollar relative to the U.S. dollar in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in share-based compensation expense was primarily due to forfeitures during 2024 compared to 2023, partially offset by the changes in our share price during 2024 compared to 2023.
Current wording
Selling, General and Administrative Expenses. SG&A expenses increased $2.8 million, or 5%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to higher compensation expense of $4.1 million, higher travel and entertainment costs of $1.1 million and higher professional fees of $1.8 million. The increase in compensation expense was primarily due to $1.1 million in severance costs related to the departure of our former Chief Financial Officer, other severance costs and increased staff and associated recruitment costs. These items were partially offset by lower incentive compensation costs of $3.5 million, lower share-based compensation expense of $1.2 million and a weaker Australian and Canadian dollar relative to the U.S. dollar in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease in share-based compensation expense was primarily due to forfeitures and reduced performance share expense due to a lower probability of achieving performance criteria during 2024 compared to 2023, partially offset by the changes in our share price during 2024 compared to 2023.
Previous wording
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $8.5 million, or 20%, in six months ended June 30, 2024 compared to the six months ended June 30, 2023 The decrease was primarily due to certain assets becoming fully depreciated in Canada, including the McClelland Lake Lodge, in the six months ended June 30, 2023 and lower depreciation and amortization expense due to a weaker Australian dollar relative to the U.S. dollar in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $8.0 million, or 14%, in nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to certain assets becoming fully depreciated in Canada, including the McClelland Lake Lodge, in the nine months ended September 30, 2023 and lower depreciation and amortization expense due to a weaker Australian and Canadian dollar relative to the U.S. dollar in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. These items were partially offset by higher depreciation and amortization expense due to additional property, plant and equipment placed in service during 2024.
Previous wording
Impairment Expense. We recorded pre-tax impairment expense of $7.8 million in six months ended June 30, 2024 associated with long-lived assets in Australia and the U.S.
Current wording
Impairment Expense. We recorded pre-tax impairment expense of $7.8 million in nine months ended September 30, 2024 associated with long-lived assets in Australia and the U.S.
Previous wording
Gain on Sale of McClelland Lake Lodge Assets, net. We recorded $6.0 million in the six months ended June 30, 2024 related to net gains associated with the sale of the McClelland Lake Lodge.
Current wording
Gain on Sale of McClelland Lake Lodge Assets, net. We recorded $5.8 million in net gains associated with the sale of the McClelland Lake Lodge in the nine months ended September 30, 2024.
Previous wording
Operating Income. Consolidated operating income increased $5.1 million, or 81%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to a net gain on sale of McClelland Lake Lodge assets, higher activity levels in Australia and lower depreciation and amortization expense in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. These items were partially offset by reduced mobile asset activity in Canada and impairment expenses in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
Operating Income. Consolidated operating income decreased $10.9 million, or 49%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to reduced mobile asset activity and lower lodge occupancy in Canada and impairment expenses in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. These items were partially offset by higher activity levels in Australia and lower depreciation and amortization expense in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Interest Expense, net. Net interest expense decreased by $2.7 million, or 38%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily related to lower average debt levels during 2024 compared to 2023, partially offset by higher interest rates on credit facility borrowings.
Current wording
Interest Expense, net. Net interest expense decreased by $4.4 million, or 42%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily related to lower average debt levels during 2024 compared to 2023, which decreased approximately 51%, partially offset by higher interest rates on credit facility borrowings.
Previous wording
Other Income. Consolidated other income decreased $2.1 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to higher gain on the sale of assets related to the sale of our Louisiana accommodation assets in the U.S. in the six months ended June 30, 2023 compared to the six months ended June 30, 2024.
Current wording
Other Income. Consolidated other income increased $2.8 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to expenses of $4.9 million associated with the demobilization of the McClelland Lake Lodge to prepare the assets for sale, partially offset by higher gain on the sale of assets related to the sale of our Louisiana accommodation assets in the U.S. in the nine months ended September 30, 2023.
Previous wording
Income Tax Expense. Our income tax expense for the three months ended June 30, 2024 totaled $3.8 million, or 33.6% of pretax income, compared to an income tax expense of $2.9 million, or 40.9% of pretax income, for the three months ended June 30, 2023. Our effective tax rate for each of the three months ended June 30, 2024 and 2023 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Current wording
Income Tax Expense. Our income tax expense for the nine months ended September 30, 2024 totaled $9.2 million, or 148.3% of pretax income, compared to an income tax expense of $2.9 million, or 29.0% of pretax income, for the nine months ended September 30, 2023. Our effective tax rate for the nine months ended September 30, 2024 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision. Our effective tax rate for the nine months ended September 30, 2023 was impacted by considering the U.S. a loss jurisdiction that was removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Previous wording
Other Comprehensive Loss. Other comprehensive loss increased $8.5 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar decreased 3% in the six months ended June 30, 2024 compared to a 2% increase in the six months ended June 30, 2023. The Australian dollar exchange rate compared to the U.S. dollar decreased 2% in the six months ended June 30, 2024 compared to a 2% decrease in the six months ended June 30, 2023.
Current wording
Other Comprehensive Loss. Other comprehensive loss decreased $5.5 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar decreased 2% in the nine months ended September 30, 2024 compared to a 0.2% increase in the nine months ended September 30, 2023. The Australian dollar exchange rate compared to the U.S. dollar increased 2% in the nine months ended September 30, 2024 compared to a 5% decrease in the nine months ended September 30, 2023.
Previous wording
Our Canadian segment cost of sales and services decreased $29.6 million, or 20%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The cost of sales and services decrease was driven by lower costs related to reduced mobile asset activity from pipeline projects which were largely completed in 2023 and lower costs at certain lodges.
Current wording
Our Canadian segment cost of sales and services decreased $45.6 million, or 22%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The cost of sales and services decrease was driven by lower costs related to reduced mobile asset activity from pipeline projects which were largely completed in 2023 and lower costs at various lodges due to reduced occupancy levels.
Previous wording
Our Canadian segment gross margin as a percentage of revenues decreased from 21.2% in the six months ended June 30, 2023 to 20.8% in the six months ended June 30, 2024. This was primarily driven by reduced mobile asset activity from pipeline projects which were largely completed in 2023 and mobile camp demobilization costs of approximately $3.2 million which were incurred in the first six months of 2024, partially offset by improved margins at our lodges due to improved efficiencies and the removal of certain fixed costs with the sale of the McClelland Lake Lodge.
Current wording
Our Canadian segment gross margin as a percentage of revenues decreased from 24.4% in the nine months ended September 30, 2023 to 18.7% in the nine months ended September 30, 2024. This was primarily driven by reduced mobile asset activity from pipeline projects which were largely completed in 2023 and mobile camp demobilization costs of approximately $3.6 million which were incurred in the first nine months of 2024. In addition, margins at our lodges were lower due to reduced efficiencies at lower occupancy levels.
Previous wording
Our Australian segment reported revenues in the second quarter of 2024 that were $26.1 million, or 32%, higher than the second quarter of 2023. The increase in the Australian segment was driven by increased activity at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia. Billed rooms in Civeo owned villages were up 6.4% in the second quarter of 2024 due to increased activity in both the Bowen Basin and Gunnedah Basin coupled with recent contract renewals and extensions.
Current wording
Our Australian segment reported revenues in the nine months ended September 30, 2024 that were $69.5 million, or 28%, higher than the nine months ended September 30, 2023. The increase in the Australian segment was driven by increased activity at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia. Billed rooms in Civeo owned villages were up 8.8% in the first nine months of 2024 due to increased activity in the Bowen Basin, Western Australia and the Gunnedah Basin coupled with recent contract renewals and extensions.
Previous wording
Our Australian segment cost of sales and services increased $22.5 million, or 38%, in the second quarter of 2024 compared to the second quarter of 2023. The increase in cost of sales and services in the Australian segment was largely driven by increased occupancy at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs.
Current wording
Our Australian segment cost of sales and services increased $53.8 million, or 30%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in the Australian segment was largely driven by increased occupancy at our Civeo owned villages in the Bowen Basin and new business in our integrated services villages in Western Australia and the associated overhead costs.
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Current report — wording carried from elsewhere
dollars for financial reporting purposes under U.S. Generally Accepted Accounting Principles. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar:
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Previous report — wording carried elsewhere
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $3.6 million, or 18%, in the second quarter of 2024 compared to the second quarter of 2023. The decrease was primarily due to certain assets becoming fully depreciated in Canada, including the McClelland Lake Lodge, in the second quarter of 2023.