What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-28 compared with 2021-07-30 · 152 added, 107 removed, 451 unchanged (36% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

10 unchanged sentences

Impairment expense — — 7,935 144,120

Other operating expense (income) 30 ( 285 ) 101 704

Other operating expense 21 51 122 755

149,053 135,767 436,431 540,171

1 unchanged sentence

Interest expense ( 3,166 ) ( 3,646 ) ( 9,929 ) ( 13,095 )

Loss on extinguishment of debt ( 416 ) ( 383 ) ( 416 ) ( 383 )

Interest income — — 2 20

Other income 788 12,642 5,702 12,667

(Loss) income before income taxes ( 482 ) 6,951 ( 8,831 ) ( 147,672 )

Income tax benefit (expense) 492 ( 122 ) ( 584 ) 8,689

Other (expense) income 364 4,542 6,066 17,209

Income (loss) before income taxes 2,792 7,603 ( 6,039 ) ( 140,069 )

Income tax (expense) benefit ( 1,770 ) ( 180 ) ( 2,354 ) 8,509

Net income (loss) 1,022 7,423 ( 8,393 ) ( 131,560 )

2 unchanged sentences

Dividends attributable to Class A preferred shares 482 472 1,440 1,411

Net (loss) income attributable to Civeo common shareholders $ ( 467 ) $ 6,136 $ ( 10,429 ) $ ( 140,402 )

Net income (loss) attributable to Civeo common shareholders $ 62 $ 6,517 $ ( 10,367 ) $ ( 133,885 )

Per Share Data (see Note 8) (1)

Basic net (loss) income per share attributable to Civeo Corporation common shareholders $ ( 0.03 ) $ 0.37 $ ( 0.73 ) $ ( 9.96 )

Diluted net (loss) income per share attributable to Civeo Corporation common shareholders $ ( 0.03 ) $ 0.37 $ ( 0.73 ) $ ( 9.96 )

Basic net income (loss) per share attributable to Civeo Corporation common shareholders $ 0.00 $ 0.39 $ ( 0.73 ) $ ( 9.48 )

Diluted net income (loss) per share attributable to Civeo Corporation common shareholders $ 0.00 $ 0.39 $ ( 0.73 ) $ ( 9.48 )

Weighted average number of common shares outstanding:

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

11 unchanged sentences

(In Thousands, Excluding Share Amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

29 unchanged sentences

50,000,000 shares authorized, 9,042 shares issued and outstanding, respectively;

aggregate liquidation preference of $ 96,471,559 and $ 95,514,031 as of June 30, 2021 and December 31, 2020)

aggregate liquidation preference of $ 96,953,917 and $ 95,514,031 as of September 30, 2021 and December 31, 2020)

61,456 60,016

27 unchanged sentences

Shareholders’

Balance, March 31, 2020 $ 58,597 $ — $ 1,574,457 $ ( 918,128 ) $ ( 6,914 ) $ ( 411,619 ) $ 552 $ 296,945

Balance, June 30, 2020 $ 59,068 $ — $ 1,575,788 $ ( 911,992 ) $ ( 6,930 ) $ ( 382,315 ) $ 624 $ 334,243

Net income (loss) — — — 6,989 — — 434 7,423

3 unchanged sentences

Share-based compensation — — 1,265 — — — — 1,265

Balance, September, 30, 2020 $ 59,540 $ — $ 1,577,053 $ ( 905,475 ) $ ( 6,930 ) $ ( 371,212 ) $ 636 $ 353,612

Balance, June 30, 2021 $ 60,974 $ — $ 1,580,213 $ ( 918,156 ) $ ( 8,050 ) $ ( 352,171 ) $ 595 $ 363,405

Balance, March 31, 2021 $ 60,494 $ — $ 1,579,342 $ ( 917,689 ) $ ( 8,050 ) $ ( 350,606 ) $ 648 $ 364,139

Net income (loss) — — — 544 — — 478 1,022

2 unchanged sentences

Dividends attributable to Class A preferred shares 482 — — ( 482 ) — — — —

Common shares repurchased — — — ( 445 ) — — — ( 445 )

Share-based compensation — — 1,035 — — — — 1,035

Balance, June 30, 2021 $ 60,974 $ — $ 1,580,213 $ ( 918,156 ) $ ( 8,050 ) $ ( 352,171 ) $ 595 $ 363,405

Balance, September 30, 2021 $ 61,456 $ — $ 1,581,248 $ ( 918,539 ) $ ( 8,050 ) $ ( 364,360 ) $ 1,030 $ 352,785

Balance, December 31, 2019 $ 58,129 $ — $ 1,572,249 $ ( 771,590 ) $ ( 5,472 ) $ ( 363,173 ) $ 662 $ 490,805

4 unchanged sentences

Share-based compensation — — 4,804 — ( 1,458 ) — — 3,346

Balance, June 30, 2020 $ 59,068 $ — $ 1,575,788 $ ( 911,992 ) $ ( 6,930 ) $ ( 382,315 ) $ 624 $ 334,243

Balance, September 30, 2020 $ 59,540 $ — $ 1,577,053 $ ( 905,475 ) $ ( 6,930 ) $ ( 371,212 ) $ 636 $ 353,612

Balance, December 31, 2020 $ 60,016 $ — $ 1,578,315 $ ( 907,727 ) $ ( 6,930 ) $ ( 348,989 ) $ 672 $ 375,357

3 unchanged sentences

Dividends attributable to Class A preferred shares 1,440 — — ( 1,440 ) — — — —

Common shares repurchased — — — ( 445 ) — — — ( 445 )

Share-based compensation — — 2,933 — ( 1,120 ) — — 1,813

Balance, June 30, 2021 $ 60,974 $ — $ 1,580,213 $ ( 918,156 ) $ ( 8,050 ) $ ( 352,171 ) $ 595 $ 363,405

Balance, September 30, 2021 $ 61,456 $ — $ 1,581,248 $ ( 918,539 ) $ ( 8,050 ) $ ( 364,360 ) $ 1,030 $ 352,785

Shares Common

2 unchanged sentences

Share-based compensation — 113

Balance, June 30, 2021 9,042 14,316

Common shares repurchased — ( 20 )

Balance, September 30, 2021 9,042 14,308

(1) Reflects our 1-for-12 reverse share split that became effective November 19, 2020.

4 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Impairment charges 7,935 144,120

Loss on extinguishment of debt 416 383

Deferred income tax expense (benefit) 2,105 ( 8,941 )

14 unchanged sentences

Other, net — 4,619

Net cash flows provided by investing activities 482 2,669

Net cash flows provided by (used in) investing activities ( 2,100 ) 1,711

Cash flows from financing activities:

2 unchanged sentences

Term loan repayments ( 117,595 ) ( 31,092 )

Debt issuance costs ( 4,407 ) ( 2,583 )

Repurchases of common shares ( 445 ) —

Taxes paid on vested shares ( 1,120 ) ( 1,458 )

47 unchanged sentences

Simplifying the Accounting for Income Taxes.

The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification Topic 740.

The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification (ASC) Topic 740.

The amendments also clarify and amend existing guidance to improve consistent application.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

16 unchanged sentences

We do not have significant financing components or significant payment terms.

As of June 30, 2021, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

As of September 30, 2021, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands):

4 unchanged sentences

2021 2022 2023 Thereafter Total

Revenue expected to be recognized as of June 30, 2021 $ 53,065 $ 81,244 $ 14,253 $ 2,008 $ 150,570

Revenue expected to be recognized as of September 30, 2021 $ 38,929 $ 97,897 $ 25,598 $ 7,188 $ 169,612

We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less.

4 unchanged sentences

We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

As of June 30, 2021 and December 31, 2020, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

As of September 30, 2021 and December 31, 2020, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

We estimated the fair value of our floating-rate term loan and revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans.

12 unchanged sentences

DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at June 30, 2021 and December 31, 2020 is presented below (in thousands):

June 30, 2021 December 31, 2020

Additional information regarding selected balance sheet accounts at September 30, 2021 and December 31, 2020 is presented below (in thousands):

September 30, 2021 December 31, 2020

Accounts receivable, net:

8 unchanged sentences

FINANCIAL STATEMENTS

As of December 31, 2020, Other accounts receivable included $ 1.1 million related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

For the three months ended June 30, 2021 and 2020, Other income related to the CEWS was $ 0.7 million and $ 6.2 million, respectively.

For the six months ended June 30, 2021 and 2020, Other income related to the CEWS was $ 3.5 million and $ 6.2 million, respectively.

June 30, 2021 December 31, 2020

As of September 30, 2021 and December 31, 2020, Other accounts receivable included zero and $ 1.1 million, respectively, related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

For the three months ended September 30, 2021 and 2020, Other income related to the CEWS was zero and $ 3.6 million, respectively.

For the nine months ended September 30, 2021 and 2020, Other income related to the CEWS was $ 3.5 million and $ 9.7 million, respectively.

September 30, 2021 December 31, 2020

Finished goods and purchased products $ 4,882 $ 5,047

2 unchanged sentences

Total inventories $ 6,089 $ 6,181

(in years) June 30, 2021 December 31, 2020

(in years) September 30, 2021 December 31, 2020

Property, plant and equipment, net:

9 unchanged sentences

Total property, plant and equipment, net $ 399,962 $ 486,930

As of December 31, 2020, assets held for sale included $ 3.9 million related to our modular construction and manufacturing plant near Edmonton, Alberta, Canada.

During the first quarter 2021, the manufacturing facility was sold.

As of June 30, 2021, assets held for sale included $ 2.2 million related to various non-operational land holdings in Australia.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Accrued liabilities:

12 unchanged sentences

The spread of the COVID-19 coronavirus (COVID-19) and the response thereto during the first quarter of 2020 negatively impacted the global economy.

The resulting unprecedented decline in oil demand, coupled with disagreements between Saudi Arabia and Russia about production limits, resulted in a collapse of global oil prices in March 2020, thereby creating unprecedented downward pressure on stock prices in the energy industry, particularly small-cap companies with

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

operations in the U.S.

and Canada, such as Civeo.

1 unchanged sentence

Our market capitalization implied an enterprise value which was significantly less than the sum of the estimated fair values of our reporting units, and we determined that an indicator of a goodwill impairment was present as of March 31, 2020.

Accordingly, we performed an interim goodwill impairment test as of March 31, 2020, and the carrying amount of our Canadian reporting unit exceeded the reporting unit's fair value.

Accordingly, we performed an interim goodwill impairment test as of March 31, 2020, and the carrying

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

amount of our Canadian reporting unit exceeded the reporting unit's fair value.

Based on the results of the impairment test, we reduced the value of our goodwill in our Canadian reporting unit to zero and recognized impairment expense in the first quarter of 2020 of $ 93.6 million.

11 unchanged sentences

We recorded impairment expense of $ 12.4 million during the first quarter of 2020 related to our U.S.

ASSETS HELD FOR SALE

During the third quarter of 2021, we committed to a plan to dispose of certain assets in our U.S.

business segment, due to the risks associated with changing geographic and market needs.

Accordingly, the assets met the criteria of held for sale and we have discontinued depreciation of the assets.

Their estimated fair values less the costs to sell exceeded their carrying values as of September 30, 2021.

In addition, as of September 30, 2021, assets held for sale included various non-operational land holdings in Australia.

These assets were recorded at the estimated fair value less costs to sell of approximately $ 2.1 million.

As of December 31, 2020, assets held for sale included $ 3.9 million related to our modular construction and manufacturing plant near Edmonton, Alberta, Canada.

During the first quarter 2021, the manufacturing facility was sold.

The following table summarizes the carrying amount as of September 30, 2021 and December 31, 2020 of the assets classified as held for sale (in thousands):

September 30, 2021 December 31, 2020

Assets held for sale:

Property, plant and equipment, net $ 15,530 $ 3,910

Total assets held for sale $ 15,530 $ 3,910

EARNINGS PER SHARE

8 unchanged sentences

The calculation of earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net (loss) income attributable to Civeo common shareholders $ ( 467 ) $ 6,136 $ ( 10,429 ) $ ( 140,402 )

Net income (loss) attributable to Civeo common shareholders $ 62 $ 6,517 $ ( 10,367 ) $ ( 133,885 )

income allocated to participating securities ( 9 ) ( 944 ) — —

6 unchanged sentences

Weighted average shares outstanding - diluted 14,361 14,212 14,255 14,118

Basic net loss per share attributable to Civeo Corporation common shareholders (1)

Basic net income (loss) per share attributable to Civeo Corporation common shareholders (1)

$ 0.00 $ 0.39 $ ( 0.73 ) $ ( 9.48 )

Diluted net loss per share attributable to Civeo Corporation common shareholders (1)

Diluted net income (loss) per share attributable to Civeo Corporation common shareholders (1)

$ 0.00 $ 0.39 $ ( 0.73 ) $ ( 9.48 )

(1) Computations may reflect rounding adjustments.

For the three months ended June 30, 2020, we excluded 0.3 million share-based awards from the computation of diluted earnings per share because their effect was anti-dilutive.

For the three months ended September 30, 2021 and 2020, we excluded 0.1 million and 0.2 million share-based awards, respectively, from the computation of diluted earnings per share because their effect was anti-dilutive.

When an entity has a net loss from continuing operations, it is prohibited from including potential common shares in the computation of diluted per share amounts.

For the three months ended June 30, 2021 and the six months ended June 30, 2021 and 2020, we excluded from the computation of diluted loss per share 0.1 million, 0.2 million and 0.4 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the three and six months ended June 30, 2021 and 2020, we excluded from the computation the impact of converting the Preferred Shares into 2.4 million and 2.4 million common shares, respectively, since the effect would have been anti-dilutive.

For the nine months ended September 30, 2021 and 2020, we excluded from the computation of diluted loss per share 0.2 million and 0.4 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the three and nine months ended September 30, 2021 and 2020, we excluded from the computation the impact of converting the Preferred Shares into 2.4 million and 2.4 million common shares, respectively, since the effect would have been anti-dilutive.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

As of June 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

June 30, 2021 December 31, 2020

Canadian term loan, which matures on May 30, 2023;

C$ 11.2 million principal repayable per quarter;

weighted average interest rate of 4.0 % for the six month period ended June 30, 2021

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

September 30, 2021 December 31, 2020

Canadian term loan;

weighted average interest rate of 4.2 % for the nine month period ended September 30, 2021

$ 70,642 $ 187,530

revolving credit facility, which matures on May 30, 2023;

weighted average interest rate of 5.8 % for the six month period ended June 30, 2021

Canadian revolving credit facility, which matures on May 30, 2023;

weighted average interest rate of 4.5 % for the six month period ended June 30, 2021

revolving credit facility;

weighted average interest rate of 5.8 % for the nine month period ended September 30, 2021

Canadian revolving credit facility;

weighted average interest rate of 4.5 % for the nine month period ended September 30, 2021

113,809 45,789

Australian revolving credit facility, which matures on May 30, 2023;

weighted average interest rate of 3.6 % for the six month period ended June 30, 2021

Australian revolving credit facility;

weighted average interest rate of 3.6 % for the nine month period ended September 30, 2021

10,786 17,767

195,237 251,086

Unamortized debt issuance costs 2,075 2,501

2 unchanged sentences

Long-term debt, less current maturities $ 162,689 $ 214,000

Credit Agreement

As of June 30, 2021, our Credit Agreement (as then amended to date, the Credit Agreement) provided for:

Amended and Restated Credit Agreement

As of December 31, 2020, our Amended and Restated Credit Agreement provided for:

(i) a $ 167.3 million revolving credit facility scheduled to mature on May 30, 2023, allocated as follows:

2 unchanged sentences

(B) a $ 122.3 million senior secured revolving credit facility in favor of Civeo and certain of our Canadian subsidiaries, as borrowers;

and (C) a $ 35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower;

and (ii) a $ 194.8 million term loan facility scheduled to mature on May 30, 2023 for certain lenders in favor of Civeo.

(C) a $ 35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower;

and (D) a $ 194.8 million term loan facility scheduled to mature on May 30, 2023 for certain lenders in favor of Civeo.

New Syndicated Facility Agreement

On September 8, 2021, we entered into a new Syndicated Facility Agreement (Credit Agreement), which, among other things, as compared to the Amended and Restated Credit Agreement outstanding prior to the effectiveness of the Credit Agreement:

• provided for the increase by $ 32.7 million of the aggregate revolving loan commitments under the Credit Agreement, to a maximum principal amount of $ 200.0 million, allocated as follows:

(A) a $ 10.0 million senior secured revolving credit facility in favor of one of our U.S.

subsidiaries, as borrower;

(B) a $ 155.0 million senior secured revolving credit facility in favor of Civeo, as borrower;

and (C) a $ 35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower, scheduled to mature on September 8, 2025;

• provided for a C$ 100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 in favor of Civeo;

• adjusted the maximum leverage ratio to a maximum total net leverage ratio, and adjusted the level of the ratio to (i) 3.50 to 1.00 for the fiscal quarter ending September 30, 2021, 3.25 to 1.00 for the fiscal quarters ending December 31, 2021 and March 31, 2022 and 3.00 to 1.00 for each fiscal quarter ending thereafter and (ii) following a qualified offering of indebtedness, 3.50 to 1.00 for each fiscal quarter;

• decreased amortization payments on the term loan facility from C$ 11.2 million per quarter to C$ 10.0 million per quarter beginning September 30, 2021;

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

• provided for other technical changes and amendments.

As a result of entering into the Credit Agreement, we recognized a debt extinguishment loss during the third quarter of 2021 of approximately $ 0.4 million related to certain unamortized debt issuance costs from the Amended and Restated Credit Agreement, which is included in Loss on extinguishment of debt on the unaudited consolidated statements of operations.

The remaining $ 3.0 million of unamortized debt issuance costs from the Amended and Restated Credit Agreement was not recognized as a loss as we concluded a significant portion of the Credit Agreement was a modification of the Amended and Restated Credit Agreement under ASC 740, "Debt."

dollar amounts outstanding under the facilities provided by the Credit Agreement bear interest at a variable rate equal to the London Inter-Bank Offered Rate (LIBOR) plus a margin of 3.00 % to 4.00 %, or a base rate plus 2.00 % to 3.00 %, in each case based on a ratio of our total debt to consolidated EBITDA (as defined in the Credit Agreement).

Canadian dollar amounts outstanding bear interest at a variable rate equal to a Bankers’ Acceptance Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 3.00 % to 4.00 %, or a Canadian Prime rate plus a margin of 2.00 % to 3.00 %, in each case based on a ratio of our total debt to consolidated EBITDA.

Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 3.50 % to 4.50 %, based on a ratio of our total debt to consolidated EBITDA.

The future transitions from LIBOR and CDOR as interest rate benchmarks are addressed in the Credit Agreement and at such time the transition from LIBOR or CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to LIBOR or CDOR that gives due consideration to (1) the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time for the replacement of LIBOR and (2) any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 3.00 % to 4.00 %, based on a ratio of our total net debt to consolidated EBITDA.

The future transitions from LIBOR and CDOR as interest rate benchmarks are addressed in the Credit Agreement and at such time the transition from (i) LIBOR takes place, an alternate benchmark will be established based on the first alternative of the following, plus a benchmark replacement adjustment, Term SOFR, Daily Simple SOFR and an alternative benchmark selected by the administrative agent and the applicable borrowers giving due consideration to any selection or recommendation by a government body or any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S.

dollar-denominated syndicated credit facilities at such time or (ii) CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to CDOR that gives due consideration to any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

The Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict:

6 unchanged sentences

and (vii) investments and other restricted payments, including dividends and other distributions.

In addition, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than 3.50 to 1.00.

Following a qualified offering of indebtedness with gross proceeds in excess of $ 150.0 million, we will be required to maintain a maximum leverage ratio of no greater than 4.00 to 1.00 and a maximum senior secured ratio less than 2.50 to 1.00.

In addition, we must maintain a minimum interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and our maximum net leverage ratio, defined as the ratio of total net debt to consolidated EBITDA, of no greater than the levels set forth above.

Following a qualified offering of indebtedness, we will be required to maintain a maximum leverage ratio of no greater than 3.50 to 1.00 and a maximum senior secured ratio less than 2.00 to 1.00.

Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement.

EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

discount amortization, amortization of intangibles and other non-cash charges.

We were in compliance with our covenants as of June 30, 2021.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries subject to customary exceptions.

EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization, amortization of intangibles and other non-cash charges.

We were in compliance with our covenants as of September 30, 2021.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our significant subsidiaries subject to customary exceptions.

The obligations under the Credit Agreement are guaranteed by our significant subsidiaries.

As of June 30, 2021, we had eight lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.4 million to $ 71.1 million.

As of June 30, 2021, we had outstanding letters of credit of $ 0.9 million under the U.S.

As of September 30, 2021, we had seven lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.50 million to $ 52.0 million.

As of September 30, 2021, we had outstanding letters of credit of $ 0.9 million under the U.S.

facility, zero under the Australian facility and $ 1.2 million under the Canadian facility.

As of June 30, 2021, we had one bank guarantee facility totaling A$ 1.0 million.

We had bank guarantees of A$ 0.8 million outstanding under the facility as of June 30, 2021 .

We also had outstanding bank guarantees of A$ 0.8 million under the Australian facility.

Our operations are conducted through various subsidiaries in a number of countries throughout the world.

4 unchanged sentences

Income taxes for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs.

As of June 30, 2021 and 2020, Canada and the U.S.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

September 30, 2021 and 2020, Canada and the U.S.

were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax benefit for the three months ended June 30, 2021 totaled $ 0.5 million, or 102.1 % of pretax loss, compared to tax expense of $ 0.1 million, or 1.8 % of pretax income, for the three months ended June 30, 2020.

Our effective tax rate for both the three months ended June 30, 2021 and June 30, 2020 was impacted by considering Canada and the U.S.

Our income tax expense for the three months ended September 30, 2021 totaled $ 1.8 million, or 63.4 % of pretax income, compared to tax expense of $ 0.2 million, or 2.4 % of pretax income, for the three months ended September 30, 2020.

Our effective tax rate for both the three months ended September 30, 2021 and 2020 was impacted by considering Canada and the U.S.

loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Under ASC 740-270, "Accounting for Income Taxes," the quarterly tax provision is based on our current estimate of the annual effective tax rate less the prior quarter's year-to-date provision.

Our income tax expense for the six months ended June 30, 2021 totaled $ 0.6 million, or ( 6.6 )% of pretax loss, compared to a benefit of $ 8.7 million, or 5.9 % of pretax loss, for the six months ended June 30, 2020.

Our effective tax rate for the six months ended June 30, 2021 and June 30, 2020 was impacted by considering Canada and the U.S.

Our income tax expense for the nine months ended September 30, 2021 totaled $ 2.4 million, or ( 39.0 )% of pretax loss, compared to a benefit of $ 8.5 million, or 6.1 % of pretax loss, for the nine months ended September 30, 2020.

Our effective tax rate for the nine months ended September 30, 2021 and 2020 was impacted by considering Canada and the U.S.

loss jurisdictions.

Although Australia was not considered a loss jurisdiction for the six months ended June 30, 2020, our effective tax rate was impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in Australia, resulting in no income tax expense for that jurisdiction.

Additionally, our effective tax rate for the six months ended June 30, 2020 was impacted by a deferred tax benefit of $ 9.6 million offset by an increase of $ 0.7 million in the valuation allowance in Canada.

Our effective tax rate for the nine months ended September 30, 2021 was impacted by an increase in the valuation allowance related to the impairment of land in Australia.

Although Australia was not considered a loss jurisdiction for the nine months ended September 30, 2020, our effective tax rate was impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in Australia, resulting in no income tax expense for that jurisdiction.

Additionally, our effective tax rate for the nine months ended September 30, 2020 was impacted by a deferred tax benefit of $ 9.0 million, offset by a valuation allowance of $ 0.1 million against the Canadian net deferred tax assets.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss increased $ 3.2 million from $ 349.0 million at December 31, 2020 to $ 352.2 million at June 30, 2021, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the first six months of 2021 were primarily driven by the Australian dollar decreasing in value compared to the U.S.

Our accumulated other comprehensive loss increased $ 15.4 million from $ 349.0 million at December 31, 2020 to $ 364.4 million at September 30, 2021, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the first nine months of 2021 were primarily driven by the Australian dollar decreasing in value compared to the U.S.

dollar, partially offset by the Canadian dollar increasing in value compared to the U.S.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 166 million and A$ 280 million, respectively, at June 30, 2021.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 176 million and A$ 267 million, respectively, at September 30, 2021.

SHARE REPURCHASE PROGRAM

In August 2021, our Board of Directors (Board) authorized a common share repurchase program to repurchase up to 5.0 % of our total common shares which are issued and outstanding, or approximately 715,000 common shares, over a twelve month period.

The common share repurchase program commenced in September 2021 and will terminate no later than twelve months from date of commencement.

The repurchase authorization allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

We intend to fund repurchases through cash on hand and cash generated from operations.

Pursuant to our common share repurchase program, during the three months ended September 30, 2021, we repurchased an aggregate of 20,105 of our common shares outstanding at a weighted average price of $ 22.08 per share, for a total of approximately $ 0.4 million.

The common shares repurchased under the program are cancelled in the periods they are acquired and the payment is accounted for as an increase to accumulated deficit in our Unaudited Consolidated Statements of Changes in Shareholders’ Equity in the period the payment is made.

CIVEO CORPORATION

3 unchanged sentences

Certain key employees and non-employee directors participate in the Amended and Restated 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan).

The Civeo Plan authorizes our Board of Directors and the Compensation Committee of our Board of Directors to approve grants of options, awards of restricted shares, performance awards, phantom share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors.

The Civeo Plan authorizes our Board and the Compensation Committee of our Board to approve grants of options, awards of restricted shares, performance awards, phantom share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors.

No more than 2.4 million Civeo common shares are authorized to be issued under the Civeo Plan.

2 unchanged sentences

On May 19, 2021, we granted 45,762 restricted share awards to our non-employee directors, which vest in their entirety on May 19, 2022.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended June 30, 2021 and 2020 totaled $ 0.3 million and $ 0.8 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the six months ended June 30, 2021 and 2020 totaled $ 0.8 million and $ 2.0 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended June 30, 2021 and 2020 was zero and $ 0.2 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the six months ended June 30, 2021 and 2020 was $ 1.5 million and $ 2.6 million, respectively.

At June 30, 2021, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 1.2 million, which is expected to be recognized over a weighted average period of 0.8 years.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended September 30, 2021 and 2020 totaled $ 0.4 million and $ 0.7 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the nine months ended September 30, 2021 and 2020 totaled $ 1.2 million and $ 2.7 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended September 30, 2021 and 2020 was zero and less than $ 0.1 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the nine months ended September 30, 2021 and 2020 was $ 1.5 million and $ 2.6 million, respectively.

At September 30, 2021, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 1.0 million, which is expected to be recognized over a weighted average period of 0.6 years.

Phantom Share Awards.

1 unchanged sentence

We also granted 81,774 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 22, 2022.

During the three months ended June 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 1.4 million and $ 0.4 million, respectively.

During the six months ended June 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 2.9 million and $ 0.7 million, respectively.

At June 30, 2021, unrecognized compensation cost related to phantom shares was $ 9.6 million, as remeasured at June 30, 2021, which is expected to be recognized over a weighted average period of 2.2 years.

During the three months ended September 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 2.1 million and $ 0.4 million, respectively.

During the nine months ended September 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 5.0 million and $ 1.1 million, respectively.

At September 30, 2021, unrecognized compensation cost related to phantom shares was $ 10.3 million, as remeasured at September 30, 2021, which is expected to be recognized over a weighted average period of 2.0 years.

Performance Awards.

5 unchanged sentences

The ultimate payout of the cumulative free cash flow component of the award can vary from 0 % to 60 % based on actual results.

During the three months ended June 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 0.6 million, respectively.

During the six months ended June 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 1.1 million and $ 1.5 million, respectively.

The total fair value of performance share awards that vested during the three months ended June 30, 2021 and 2020 was zero .

The total fair value of performance share awards that vested during the six months ended June 30, 2021 and 2020 was $ 1.9 million and $ 1.9 million, respectively.

At June 30, 2021, unrecognized compensation cost related to performance shares was $ 3.9 million, which is expected to be recognized over a weighted average period of 2.2 years.

During the three months ended September 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 0.6 million, respectively.

During the nine months ended September 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 1.7 million and $ 2.1 million, respectively.

The total fair value of performance share awards that vested during the three months ended September 30, 2021 and 2020 was zero .

The total fair value of performance share awards that vested during the nine months ended September 30, 2021 and 2020 was $ 1.9 million and $ 1.9 million, respectively.

At September 30, 2021, unrecognized compensation cost related to performance shares was $ 3.3 million, which is expected to be recognized over a weighted average period of 2.1 years.

CIVEO CORPORATION

4 unchanged sentences

Canada, Australia and the U.S., which represent our strategic focus on hospitality services and workforce accommodations.

Financial information by business segment for each of the three and six months ended June 30, 2021 and 2020 is summarized in the following table (in thousands):

Financial information by business segment for each of the three and nine months ended September 30, 2021 and 2020 is summarized in the following table (in thousands):

revenues Depreciation

1 unchanged sentence

(loss) Capital

Three months ended June 30, 2021

Three months ended September 30, 2021

Canada $ 84,057 $ 11,511 $ 6,131 $ 1,344 $ 754,223

3 unchanged sentences

Total $ 155,063 $ 20,282 $ 6,010 $ 3,389 $ 684,042

Three months ended June 30, 2020

Three months ended September 30, 2020

Canada $ 71,785 $ 13,266 $ 1,007 $ 362 $ 691,634

3 unchanged sentences

Total $ 142,857 $ 24,820 $ 7,090 $ 2,397 $ 732,936

Six months ended June 30, 2021

Nine months ended September 30, 2021

Canada $ 229,223 $ 35,750 $ 5,924 $ 3,667 $ 754,223

3 unchanged sentences

Total $ 434,669 $ 62,928 $ ( 1,762 ) $ 9,645 $ 684,042

Six months ended June 30, 2020

Nine months ended September 30, 2020

Canada $ 204,119 $ 39,812 $ ( 142,343 ) $ 1,203 $ 691,634

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements