CVEO Shareholder/Stockholder Letter Transcript:
Annual
Report
2023
NYSE
CVEO
Stay Well.
Work Well.
Civeo (NYSE: CVEO) is a
workforce accommodations
specialist dedicated to helping
people maintain healthy, productive
and connected lives while living and
working away from home.
Our belief is that a well-rested employee
with a balanced lifestyle will be more
productive at work making Civeo a
key partner in the success of our
clients operations.
8.0M
2023
Hospitality
that draws
attention.
Guest Days Served
25.9M
Meals Served
36.8K
Rooms Operated
Dear Civeo
Shareholders,
2023 was a pivotal year for Civeo and represents the culmination of several years of
work to position the company for its next phase of growth. With our team s continued
focus on delivering value to our guests and clients, we are winning work in our North
American and Australian markets, returning capital to shareholders, and maintaining
the flexibility to enable us to execute on attractive growth opportunities.
Progress in 2023
Civeo s strong reputation and our team s commitment to quality, service, and
continuous improvement have set us apart from competitors and led to exciting
new contract wins. This has enabled us to successfully diversify our revenue streams,
manage macroeconomic headwinds and build greater resiliency into our business.
Bradley J. Dodson
President and CEO
Our Australian operations performed particularly well in 2023 as we were able to
mitigate inflation and achieve material margin improvement in our integrated service
business. High commodity prices are supporting increased customer spending across
our integrated services business and our owned-villages business. We take particular
pride in being the established partner of choice for our customers in this robust
market, as evidenced by the A$738 million of multi-year contracts signed in 2023.
While our Canadian operations entered 2023 with the expectation of a challenging
macroeconomic environment, we continued to identify and execute opportunities to
position the company for growth. We successfully completed multiple mobile camp
contracts for the Coastal GasLink Pipeline Project, which delivered C$266 million in
revenues since 2019. The sale of McClelland Lake Lodge, which we announced in 2023
and finalized in January 2024, demonstrates the growing demand for existing modular
accommodations assets across North America. In addition to the sale proceeds,
we secured revenue associated with the transportation of these assets and look to
capitalize on additional associated revenue opportunities in the future. We are wellpositioned operationally and financially to pursue new end markets in North America
despite the projected headwinds continuing in 2024.
Updated Framework
As we have communicated to our shareholders over the last several years, reducing
leverage has been our top priority. Our differentiated offerings and disciplined
approach, combined with the strength of our free cash flow generation profile, have
enabled us to consistently reduce debt.
By following a disciplined strategy to deliver the highest quality of customer care,
and correctly anticipating shifts in our markets, we surpassed our leverage target
ratio of 1.0 times in 2023. This significant debt reduction allows us to return capital
to shareholders and pursue attractive opportunities to create additional value while
maintaining a strong balance sheet.
Demonstrating resiliency and a commitment to delivering steady shareholder returns,
we have built a strong financial and operational foundation that serves as a platform
for strategic value creation. This allowed us to introduce an updated capital allocation
strategy in September 2023 that reflects the evolution of our business, its capacity for
steady cash flow generation and the health of our balance sheet.
Under our updated framework, we have several near-term objectives. First, we will use our
strong cash flow generation to support our existing operations, prioritizing excellence in
everything we do. Second, subject to the discretion of our board, we plan to return capital to
shareholders through a dividend of $0.25 per quarter which we initiated in September 2023.
When we have cash flow in excess of these priorities and when they present a compelling
expected return, we plan to continue to execute share repurchases opportunistically. In
2023, we repurchased 3.7% of outstanding shares. Finally, we plan to use additional excess
cash flow to accelerate organic growth and pursue inorganic growth opportunities while
maintaining a prudent leverage ratio based on the returns profile of growth initiatives.
Notably, we returned 23% of 2023 free cash flow to shareholders through dividends and
buybacks in 2023. We are well-positioned to execute on our updated framework and
compete effectively in 2024 and beyond.
Advancing our ESG Initiatives
We remain committed to caring for our people, our communities and our environment
through every business decision. Significant progress was made advancing our ESG
initiatives in 2023, and as we enter our next phase of growth, maintaining our track record of
conducting business responsibly will remain a priority.
In 2023, we successfully completed Phase One of our five-year ESG roadmap, which was
developed by a global Steering Committee of the executive team at the direction of the
Board s Environmental, Social, Governance and Nominating Committee. In accordance
with this roadmap, we began efforts to measure greenhouse gas emissions across our
operations with the support of a third-party consultant. We also continued to engage with
our employees to evolve feedback mechanisms based on the results of our recent employee
engagement survey. Safety is always at the heart of what we do, and we continuously assess
ways to enhance safety for our employees and customers, as evidenced by our 2023 Total
Recordable Incident Rate of 0.45.
Looking Ahead to 2024
Despite the expected wind-down of LNG-related activity in Canada, we entered 2024
with the financial strength and flexibility to accelerate momentum across the business. Our
work to date has us well-positioned for excellent shareholder returns as well as organic and
inorganic growth which we will pursue as our cash flow and market conditions allow.
I want to thank our team for their hard work and dedication. I look forward to building upon
our success, strengthening customer relationships, and continuing to provide excellent
service to thousands of people every day.
Sincerely,
Bradley J. Dodson
President & CEO
March 28, 2024
Significant
progress was
made advancing
our ESG initiatives
in 2023, and as
we enter our next
phase of growth,
maintaining our
track record
of conducting
business
responsibly will
remain a priority.
4/12/2024 Letter Continued (Full PDF)