DALLAS, TX -- March 4th, 2025 -- Civeo Corporation (NYSE: CVEO): Stonegate Capital Partners Updates Coverage on Civeo Corporation (NYSE: CVEO). CVEO reported revenue and adj EBITDA of $161.6M and $21.7M, respectively. This compares to our/consensus estimates of $168.9M/$170.2M and $21.6M/$21.2M, respectively. The year-over-year EBITDA increase reflected continued strength in Australia and the benefit of cost-cutting initiatives in Canada. Operating cash flow in the quarter totaled $19.3M, while capital expenditures were $4.8M, primarily related to maintenance of lodges and villages. The Company ended the quarter with net debt of $168.4M, a net leverage ratio of 1.9x, and liquidity of ~$90.4M.
Canadian Segment: Canada continued to benefit from restructuring actions. 4Q25 revenue rose to $42.1MM (vs. $40.7MM in 4Q24) and Adj. EBITDA improved to $3.4MM from $(5.4)MM, with billed rooms essentially flat at 359.1k (-0.1% y/y). The improvement reflects a lower-cost footprint and better absorption, with gross margin improving to $6.5MM from $(0.3)MM. Management described the oil sands as steady but disciplined, with incremental upside from mobile camps tied to U.S. data centers and Canadian LNG/power project activity as 2026 progresses.
Australian Segment: Australia remained the key contributor in 4Q25, with revenue up 9% y/y to $119.5MM and Adj. EBITDA of $22.4MM (vs. $20.6MM), supported by integrated services growth and the May 2025 Bowen Basin acquisition. Owned-village demand was solid at 704.7k billed rooms (+11% y/y), though management cited some late-year softness tied to 2H25 met coal weakness. For 2026, improving met coal pricing, particularly at values above ~$200/ton through customer budgeting processes, could support stronger 2H26 activity, while the Company reiterated its A$500MM integrated services target by 2027.
Capital Allocation: Civeo continues to prioritize share repurchases. Phase 1 (the 20% authorization) is ~95% complete as of this report. The Company repurchased ~2.3MM shares for ~$53.6MM in FY25, including ~0.2MM shares for ~$4.9MM in 4Q25. It also repurchased an additional ~0.5MM shares post year-end. The Board approved Phase 2, authorizing a further 10% buyback. Management reiterated its framework for capital returns. Phase 1 was executed using more than 100% of annual free cash flow. For 2026, the Company expects to allocate at least 75% of free cash flow to buybacks. Repurchases remain subject to balance sheet guardrails, with net leverage targeted at ~2.0x or below.
Guidance and Outlook: Civeo announced FY2026 guidance to revenue of $650-$700M and adjusted EBITDA of $85-$90M, while maintaining capital expenditures at $25-$30M. Management assumes stable Australia occupancy with the full-year May 2025 acquisition benefit and integrated services growth, with met coal above ~$200/ton as a potential 2H26 catalyst. Canada is expected to remain stable on a leaner cost base, with mobile camp upside not assumed to be material until 2027.
Valuation: We use both a DCF and EV/EBITDA comp analysis to guide our valuation. Our DCF analysis produces a valuation range of $31.28 to $36.52 with a mid-point of $33.70. Our EV/EBITDA valuation results in a range of $30.86 to $38.69 with a mid-point of $34.78.
