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Greetings, and welcome to the Civeo Corporation First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Regan Nielsen, Vice President, Corporate Development and Investor Relations. Thank you. You may begin.
Thank you, and welcome to Civeo's First Quarter 2024 Earnings Conference Call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer; and Barclay Brewer, Civeo's Interim 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're 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 Form 10-K, 10-Q and other SEC filings.
I'll now turn the call over to Bradley.
Thank you, Regan, and thank you all for joining us today on our first quarter earnings call. I'll start with the key takeaways for the first quarter and provide a brief summary of our first quarter 2020 performance. Then Barclay will go through the financial and segment level review, and I'll conclude with our updated comments on full year 2024 guidance and the underlying regional assumptions. We'll then open the call for questions. The 3 key takeaways. One, the first quarter and the full year outlook for 2024 were in line with expectations. As a result, there's no change to our full year guidance. Secondly, Australia adjusted EBITDA was up 0.3% compared to first quarter of 2023 due to particular strength in our billed rooms in our own villages. We also benefited from recent contract wins and year-over-year improvement in Australian-owned villages and integrated services business in terms of margin. Lastly, we continue to return capital to shareholders through our quarterly dividend and opportunistic share repurchases.
Let me take a moment to provide a business update across the 2 segments. Our Australian segment performed exceptionally well during the quarter, and our team continues to execute on our plan to grow our Australian integrated services business to $500 million of top line by 2027. We experienced year-over-year growth in both our own buildings business and our integrated services business, including the benefit of our recent contract wins that reflect improved customer spending across Bowen Basin diligence and our integrated services business.
During the quarter, our Australian-owned villages continue to experience significant year-over-year growth. While metallurgical coal prices have recently declined, prices remain at very healthy levels that support these customer activity levels. Additionally, we are seeing the impact of metallurgical coal mines being sold to producers who are more focused on increasing production levels. These macro factors, coupled with the impact of our recent contract wins in the region, have driven the substantial year-over-year growth.
In the first quarter, our Australian integrated services business experienced year-over-year margin improvement as our innovation plan continues to demonstrate positive results. We should continue to see this benefit from our team's efforts throughout 2024. With the improved margins, we believe the integrated service business is particularly attractive given contract terms and the outlook for additional opportunities in this area.
As expected, our Canadian segment revenues and adjusted EBITDA decreased year-over-year due to the planned wind-down of LNG-related activity, particularly in our mobile camp business, including $1.8 million of mobile camp demobilization costs in the first quarter. As we touched on our -- during our February earnings conference call, we completed the sale of our McClelland Lake Lodge in Canada earlier this year and received all proceeds. The majority of the net proceeds were recognized in the fourth quarter of 2023, with the remainder recognized in this quarter.
As a reminder, the entirety of the sale proceeds and associated costs as well as other related reimbursements are excluded from our adjusted EBITDA calculation. As a result, the sales transaction does not impact our full year 2024 adjusted EBITDA guidance. The transportation of these assets is now complete, and we continue to pursue other business-related opportunities related to the assets.
I'll now turn it over to Barclay Brewer, our interim CFO. I would like to thank him for stepping up into the interim CFO role. Barclay?
Thank you, Bradley, and thank you all for joining us this morning. Today, we've reported total revenues in the first quarter of $166.1 million with a GAAP net loss of $5.1 million or $0.35 per diluted share. During the first quarter, we generated adjusted EBITDA of $17.3 million. Again, this is exclusive of the financial impact of the dismantlement and sale of the McClelland Lake Lodge assets. Operating cash flow of $6 million and free cash flow of $7.2 million.
First quarter adjusted EBITDA increased year-over-year due to the increased billed rooms at our Australian villages and improved the margin in the Australian integrated services business, partially offset by the expected wind-down of LNG-related Canadian mobile camp activity, including $1.8 million in mobile camp demobilization costs. Let's now turn to the first quarter results for our 2 segments.
I'll begin with a review of the Australian segment performance compared to its performance a year ago in the first quarter of 2023. First quarter revenues from our Australian segment were $91.7 million. up from $77 million in the first quarter of 2023. Adjusted EBITDA was $20.3 million, up 43% from $14.2 million last year. The significant increase to adjusted EBITDA was due to increased billed rooms at our own villages, increased integrated services activity and improved margins. Results for the quarter were strong despite the headwind of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and adjusted EBITDA by approximately $3.7 million and $800,000, respectively.
Australian billed rooms in the quarter were a source of strength, with 614,000 rooms up 17% from $523,000 in the first quarter of 2023. This is due to increased customer demand at our own villages as demonstrated by our recent contract awards. The average daily rate in Australian dollars was up 3% year-over-year. Due to the weakened Australian dollar, the average daily rate for our Australian villages in U.S. dollars was $77 in the first quarter of 2024, down modestly from $78 in the first quarter of 2020.
Turning to Canada. We recorded revenues of $67.2 million as compared to revenue of $89.5 million in the first quarter of 2023. Adjusted EBITDA in Canada was $5.5 million, a decrease from $12 million in the first quarter of 2023. The year-over-year revenue and adjusted EBITDA decrease was primarily driven by the sales of the McClelland Lake Lodge and the expected wind down of LNG-related mobile camp activity, including $1.8 million of mobile can demobilization costs.
During the first quarter, billed rooms in our Canadian lodges totaled $610,000, which was down from $643,000 in the first quarter of 2023, primarily due to the sale of McClelland Lake Lodge, our daily room rate for the Canadian segment in U.S. dollars was $98, which increased slightly from $96 in the first quarter of 2023. On a consolidated basis, capital expenditures for the first quarter of 2024 were $5.6 million compared to $4.8 million during the same period in 2023. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages, coupled with spending to activate a Australian village rooms with increased customer demand.
Additionally, the first quarter of 2024 included $2.4 million in capital expenditures on the Australian customer funding infrastructure upgrades that we have discussed on prior quarter conference call. Our net debt on March 31, 2024, was $61.8 million, which was down slightly since December 31, 2023. Our net leverage ratio for the quarter maintained -- remained flat at 0.6x as of March 31, 2024. As of March 31, 2024, we had total liquidity of approximately $136.9 million consisting of $120.1 million available under our revolving credit facilities and $16.8 million cash on hand, giving us the strength and flexibility to opportunistically pursue growth vectors in 2024 and beyond while maintaining prudent leverage ratios.
Turning to capital allocation. In the first quarter of 2024, we repurchased approximately 133,000 shares through our share repurchase program for a total of approximately $3.2 million. This morning, we announced that our Board of Directors have declared our fourth quarterly dividend payment. Shareholders of record as of May 27, 2024 will receive a $0.25 per share cash dividend payable on June 17, 2024.
With that, I'll turn it over to Bradley to discuss our guidance for the full year 2024. Bradley?
Thank you, Barclay. I'd like to now turn our discussion to our full year 2024 guidance on a consolidated basis, including after which the updated outlook for each of the regions. Despite the weakening Australian dollar versus the beginning of the year, we are maintaining our full year 2024 revenue and adjusted EBITDA guidance of $625 million to $700 million for revenues, and $80 million to $90 million for adjusted EBITDA. We are maintaining our full year 2024 capital expenditure guidance of $30 million to $35 million. Based on this adjusted EBITDA and CapEx guidance, net cash proceeds related to McClelland Lake Lodge dismantlement and sale of approximately $6 million, adjusted cash interest expense of $6 million and an expected working capital inflow of $10 million, and an expected Australian cash taxes of $10 million, we are maintaining our 2024 free cash flow expectation of $45 million to $60 million.
I will now provide the regional outlooks and corresponding underlying assumptions by region. In Canada, we are in the early stages of the turnaround season for our Canadian oil sands lodges, but early activity is shaping up as expected. We will provide further updates on the second quarter call, but billed rooms across our portfolio is consistent with our previous 2024 guidance. Regarding our mobile camps, the majority of our mobile rental activity is complete and we are continuing the demobilization process. We expect demobilizations to be completed in the second quarter 2024, burdening our second quarter adjusted EBITDA by approximately $4 million of demobilization costs. As a reminder, this is contemplated in our full year 2021 guidance.
Turning to Australia, customer activity and our own villages remains incredibly strong, and we expect it to continue to see similar levels going forward. We are currently full at 3 of our Bowen Basin villages, with very healthy occupancy at the rest of our own village portfolio in Australia. As it relates to our integrated services business, our improved margins are expected to continue for the remainder of the year. We are encouraged by our progress to date, and we are continuing to focus on our inflation mitigation plan.
We are excited about growth potential of our Western Australian integrated services business, and now we have made strides on our inflation mitigation plan. We can shift our focus to winning work and growing the business. Again, our team has set a goal to grow our integrated services business to AUD 500 million of top line by 2027.
I will conclude by underscoring the key elements of our strategy. We will prioritize, as always, the safety and well-being of our guests, employees and communities. We'll invest in our operational improvements and innovation to continue to enhance our best-in-class hospitality offerings. And we will allocate capital prudently to maximize free cash flow generation, while we continue to return capital to shareholders and evaluate growth opportunities.
With that, we're happy to take your questions.
[Operator Instructions] Our first question comes from the line of Alec Scheibelhoffer with Stifel.
So just to kick us off here, two from me. Just so when we were looking at the full year guidance, can you just talk about some of the drivers between the low and the high end? And also, should we expect to see normal seasonality with roughly about 65% of full year EBITDA in 2Q, 3Q?
Thank you. The answer to the second part of the question, yes. Seasonality should continue again the amount of EBITDA coming in Q2 and Q3 is largely driven by the turnaround season in Canada, and we expect that to be the case this year. The upper end and the lower end is actually linked to the same issue, which is what does the Canadian turnaround season look like. Right now, it looks as expected. We're obviously only 1 month into it. So we'll see how it plays out. That's probably the biggest driver for us.
Inflation continues to be an issue, largely across the globe. Most impactful right now in Australia around food costs and, more importantly, labor. The team has done a great job in terms of trying to improve, increase our full-time labor as opposed to using temporary labor, which has a negative impact on costs and productivity. So those are primarily the largest drivers of the issue.
Currency has gone against this, but we've had a few things go for us year-to-date. We've had better occupancy in our Killdeer, Sitka Lodge. We've seen better occupancy in the core Canadian area, coupled with really just really strong occupancy in Australian Bowen Basin villages. And clearly, very good execution on the integrated services side in Australia.
Got it. Appreciate the color. And then just as a second question, I was just curious if you could flesh out just how you think about uses of cash. What are your key criteria when you're looking at potential M&A?
Well, uses of cash, we've got the dividend, which is $0.25 a share or $1 for the full year for shareholders. That is paramount. The -- we've been opportunistically buying back shares as well. But we need to get back to growing the business. And those returns for growth opportunities have to size up and be better than the opportunity buying back stock. So there are a handful of organic opportunities. And then we're looking at M&A. The organic opportunities are around contracted lodge and billed rooms, either bringing them back online or modest increase in rooms. And the M&A side is around integrated services and expansion of geographies within Canada and Australia.
Our next question comes from the line of Steve Ferazani with Sidoti.
I wanted to ask about Australia, another really impressive quarter in terms of accommodations and food revenue. You had announced so many new contracts or renewed contracts at better rates. Have we seen it all now? Is there more near-term growth? Or is this -- does this level off near term?
No, we'll see further growth, particularly on the integrated services side. The team has a lot of lines in the water and is really building a good business there. I mean if you recall, that business was a $70 million business back 5 years ago and we did 2 30, I'm talking local currency. Last year, budget for this year was 2 50, going to beat that resoundingly. So -- and that's factored into guidance. And so we're making good strides there. It's a differentiated service in terms of the competition that we're winning market share from others, so we're more than cautiously optimistic on that.
Great. What are the risks there given the number of contracts you have renewed already? Anything near term we should be concerned about? Or in what kind of term do you have that you've derisked sort of what's in place right now?
There are no -- on the -- the questions about Australian integrated services, there are no material renewals until 2027. That being said, in the integrated services business, as you know, all the contracts can be canceled. So we -- every day, we have to show up and deliver reserves. And the team is there. We've got a good relationship with the major customers there where there's transparency and good conversation, where inevitably when you're trying to serve people a day, they're going to be mistakes. But with the transparency of the conversation, the willingness to and the effort to be -- to deliver excellent service every day, that carries the day. So.
Fair enough. Turning to the other side. On food and service in Canada, 2 straight quarters where your year-over-year top line was up more than 20%. And given -- can you give a little sense of what's driving that? I know the margins are fairly thin there, but it's pretty significant revenue growth given everything else that's going on in Canada.
Well, the major driver for Canada are as discussed. I mean, one, we sold the McClelland asset. So year-over-year, we're losing those billed rooms. We've got a good value for the assets that we sold. And the second is wind-down in the LNG Canada activity, right? Those were the major drivers for Canada, both top line and EBITDA. Now the focus is for us and for our team is to find additional projects to build back up the profitability of Canada. I think through the process of selling McClelland, we recognize that our modular assets both permanent and mobile, there are a lot of industrial and mining projects that need assets that are remote. A lot of them are driven by power transmission and, effectively, resources that are used in EV batteries. And so we're working very diligently to expand the Canadian business into other geographies, specifically east of Alberta and down into the U.S.
And any update on McClelland Lake, is that transportation contract completed within Q1? And where are you on any follow-up?
Right. The transportation contract is complete, and it was all recognized in the first quarter. And we are continuing to pursue the reinstallation of those assets at the new location in the Western U.S. and the potential to operate those assets long term for the new client.
Our next question comes from the line of Dave Storms with Stonegate.
Just so we kind of start with the dividend. I know you've been paying it for a couple of quarters now. Your stock has gone up since you started paying it. Just could you give us a sense of what your process is like, how often do you revisit that to make sure it remains competitive. Anything on that front would be very helpful.
Sure. Well, we'd like to get a year underneath our belt. This would be the fourth payment, so we'll readdress it in the fall. And again, it's a key component to our capital allocation framework. And so, as you know, cash flow for us is also seasonal. EBITDA is seasonal, we covered that in the first question. But cash flow is better in the back half of the year. So we'd like to see how things play out. Certainly, dividend growth is a possibility, but one that we'll address in the back half of this year.
Understood. Very helpful. And then just touching back on kind of some of your levers that you have to kind of recoup some of those mobile camp losses. You mentioned maybe expand into Alberta, maybe to the U.S. a little bit. What would that look like logistically? And what would be some of the hurdles to get over that?
Well, right now, the hurdles are twofold. They're not surprising. Which is, one, we need the client project to move forward. So we need green light on projects and then we need to win the work. We've got a handful of projects we're actively pursuing. But that's simply what needs to happen. We've got a team in Eastern Canada on the business development side that are pursuing opportunities, and they're largely mining and transmission related. The U.S. is initially going to be dependent on can we get more work ultimately related to the McClelland assets.
We have reached the end of our question-and-answer session. And with that, I would like to turn the floor back over to Bradley Dodson for any closing comments.
Thank you so much, and thank you, everyone, for joining the call today. We appreciate your interest in Civeo, and we look forward to speaking to you on our second quarter earnings call planned for July.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.