Civeo (CVEO) risk factors, FY2024 10-K

Other

1. 01Risks in this section are grouped by category. Many risks affect more than one category and the risks are not in order of significance or probability of occurrence because they have been grouped by categories

Risks Related to Our Customers

1. 02Certain of our customers’ spending may be directly, and our business may be indirectly, affected by (i) volatile or low met coal, oil, natural gas or iron ore prices; (ii) elevated or increasing production costs; or (iii) unsuccessful exploration results
2. 03Our customers and their operations are exposed to a number of unique operating risks and challenges which could also adversely affect us
3. 04We depend on several significant customers
4. 05Failure to retain our current customers, renew our existing customer contracts and obtain new customer contracts, or the termination of existing contracts, could adversely affect our business
5. 06Due to the significant geographic concentration of our business, adverse events in areas where we operate could negatively impact our business, and our geographic concentration could limit the number of customers seeking our services
6. 07We may be adversely affected if customers reduce their accommodations outsourcing

Risks Related to Our Operations

1. 08We operate in a highly competitive industry, and if we fail to compete effectively, our business will suffer
2. 09Our operations may suffer due to over-capacity of certain types of accommodations assets in certain regions
3. 10Increased operating costs and limited cost recovery through pricing or contract terms may constrain our ability to make a profit
4. 11While our multi-year contracts often provide for annual escalation in our room rates for food, labor and utility inflation, we may be unable to fully recover costs, or the recovery may be delayed, and such increases would negatively impact our profitability on contracts that do not contain such inflation protections
5. 12Employee and customer labor problems could adversely affect us
6. 13Failure to develop or maintain positive relationships with the Indigenous people in the areas where we operate could adversely affect our business
7. 14Development of permanent infrastructure in the areas where we locate our assets could negatively impact our business
8. 15A failure to maintain food safety or comply with government regulations related to food and beverages or serving alcoholic beverages may subject us to liability
9. 16The majority of our major Canadian lodges are located on land subject to leases. If we are unable to renew a lease or obtain permits necessary to operate on such leased land, we could be materially and adversely affected
10. 17We are susceptible to seasonal earnings volatility due to seasonal weather patterns in our regions of operations
11. 18We may be subject to risks associated with the transportation, installation and demobilization of mobile accommodations
12. 19Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions
13. 20Our business could be disrupted by any failure of our information systems
14. 21Loss of key members of our management could adversely affect our business
15. 22The effects of public health crises, pandemics and epidemics may materially affect how we and our customers are operating our and their businesses

Financial/Accounting Risks

1. 23Currency exchange rate fluctuations could adversely affect our U.S. dollar reported results of operations and financial position
2. 24We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities
3. 25We recorded impairments of our long-lived assets of $11.6 million, $1.4 million and $5.7 million in 2024, 2023 and 2022, respectively. As of December 31, 2024, goodwill at our Australian reporting unit represented 2% of total assets, or $7.0 million
4. 26Our inability to control the inherent risks of identifying, acquiring and integrating businesses that we may acquire, including any related increases in debt or issuances of equity securities, could adversely affect our operations
5. 27Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions

Legal and Regulatory Risks

1. 28We do business in Australia and Canada, whose political and regulatory environments and compliance regimes differ from those in the U.S
2. 29We are subject to extensive and costly environmental laws and regulations that may require us to take actions that will adversely affect our results of operations
3. 30We may be exposed to certain regulatory and financial risks related to climate change and other ESG-related matters

Risks Related to Our Common Shares

1. 31The market price and trading volume of our common shares may be volatile
2. 32These factors may materially reduce the market price of our common shares, regardless of our operating performance. In addition, our average daily trading volume on the New York Stock Exchange has historically been low, which may result in greater price volatility
3. 33The payment of dividends and repurchases of our common shares are each within the discretion of our Board of Directors, and there is no guarantee that we will pay any dividends or repurchase common shares in the future or at levels anticipated by our shareholders
4. 34We are governed by the corporate laws in British Columbia, Canada which in some cases have a different effect on shareholders than the corporate laws in Delaware, U.S
5. 35Provisions contained in our articles and applicable Canadian and British Columbia laws could discourage a take-over attempt, which may reduce or eliminate the likelihood of a change of control transaction and, therefore, the ability of our shareholders to sell their shares for a premium
6. 36The enforcement of civil liabilities against Civeo may be more difficult

Risks Related to Our Structure

1. 37We are subject to various Canadian, Australian and other taxes
2. 38We remain subject to changes in tax law (in various jurisdictions) and other factors that could impact our effective tax rate