Civeo CorpCVEO
Civeo Corp Income Taxes Disclosure
INCOME TAXES
The Company’s operations are conducted through various subsidiaries in a number of countries throughout the world. The Company has provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.
Income tax expense (benefit). Pre-tax income (loss) for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| Canada operations | $ | (39,088) | $ | 5,524 | $ | 3,040 | |||||||||||
| Foreign operations | 33,151 | 34,839 | 7,692 | ||||||||||||||
| Total | $ | (5,937) | $ | 40,363 | $ | 10,732 | |||||||||||
The components of the income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| Current: | |||||||||||||||||
Canada | $ | 41 | $ | 142 | $ | 31 | |||||||||||
| Foreign | 20,110 | 3,685 | 194 | ||||||||||||||
| Total | $ | 20,151 | $ | 3,827 | $ | 225 | |||||||||||
| Deferred: | |||||||||||||||||
Canada | $ | — | $ | — | $ | — | |||||||||||
| Foreign | (7,659) | 6,806 | 4,177 | ||||||||||||||
| Total | $ | (7,659) | $ | 6,806 | $ | 4,177 | |||||||||||
| Net income tax expense (benefit) | $ | 12,492 | $ | 10,633 | $ | 4,402 | |||||||||||
The net income tax expense (benefit) differs from an amount computed at Canadian statutory rates as follows for the years ended December 31, 2024, 2023 and 2022 (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Canadian federal tax benefit at statutory rates | $ | (891) | 15.0 | % | $ | 6,054 | 15.0 | % | $ | 1,610 | 15.0 | % | |||||||||||||||||||||||
| Canadian provincial income tax | (3,186) | 53.6 | % | 497 | 1.2 | % | 282 | 2.6 | % | ||||||||||||||||||||||||||
| Effect of foreign income tax, net | 5,642 | (95.0) | % | 5,481 | 13.6 | % | 1,809 | 16.9 | % | ||||||||||||||||||||||||||
| Valuation allowance | 8,983 | (151.2) | % | (2,556) | (6.3) | % | 153 | 1.4 | % | ||||||||||||||||||||||||||
| Noncontrolling interest | 325 | (5.5) | % | 125 | 0.3 | % | (562) | (5.2) | % | ||||||||||||||||||||||||||
| Non-deductible compensation | 1,213 | (20.4) | % | 1,009 | 2.5 | % | 808 | 7.5 | % | ||||||||||||||||||||||||||
| Unrealized intercompany foreign currency translation gain | (18) | 0.3 | % | (148) | (0.4) | % | (250) | (2.3) | % | ||||||||||||||||||||||||||
| Deemed income from foreign subsidiaries | 243 | (4.1) | % | 322 | 0.8 | % | 331 | 3.1 | % | ||||||||||||||||||||||||||
| Other, net | 181 | (3.1) | % | (151) | (0.4) | % | 221 | 2.0 | % | ||||||||||||||||||||||||||
| Net income tax expense (benefit) | $ | 12,492 | (210.4) | % | $ | 10,633 | 26.3 | % | $ | 4,402 | 41.0 | % | |||||||||||||||||||||||
Deferred Tax Liabilities and Assets. The significant items giving rise to the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):
| 2024 | 2023 | ||||||||||
| Deferred tax assets: | |||||||||||
Net operating loss | $ | 53,756 | $ | 54,274 | |||||||
Employee benefits | 1,767 | 1,796 | |||||||||
Deductible goodwill and other intangibles | 42,713 | 48,201 | |||||||||
| Land | 3,495 | 3,461 | |||||||||
Other reserves | 8,015 | 7,890 | |||||||||
| Deferred revenue | 2,249 | 2,381 | |||||||||
Operating lease liabilities | 3,171 | 3,199 | |||||||||
| Capital losses | 1,869 | 2,036 | |||||||||
Other | 2,255 | 1,770 | |||||||||
| Deferred tax assets | 119,290 | 125,008 | |||||||||
Valuation allowance | (81,998) | (78,769) | |||||||||
Deferred tax assets, net | $ | 37,292 | $ | 46,239 | |||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | $ | (15,135) | $ | (18,949) | |||||||
| Depreciation | (22,641) | (36,048) | |||||||||
Operating lease right-of-use assets | (3,074) | (3,045) | |||||||||
Deferred tax liabilities | (40,850) | (58,042) | |||||||||
| Net deferred tax liabilities, net | $ | (3,558) | $ | (11,803) | |||||||
At December 31, 2024 and 2023, we had no undistributed earnings of foreign subsidiaries that would be subject to income tax upon distribution to Canada from a foreign subsidiary. As such, as of December 31, 2024 and 2023, we did not provide for deferred taxes on any such earnings of our foreign subsidiaries.
NOL Carryforwards. The following summarizes net operating loss (NOL) carryforwards at December 31, 2024 (in thousands):
| Amount | Expiration Period | ||||||||||
| Net operating loss carryforwards: | |||||||||||
| Canada – Federal and provincial | $ | 134,113 | Begins to expire in 2032 | ||||||||
| U.S. – Federal | 34,334 | Begins to expire in 2036 | |||||||||
| U.S. – Federal | 39,624 | Does not expire | |||||||||
| U.S. – State, tax effected | 6,145 | Begins to expire in 2024 | |||||||||
Change in Valuation Allowance. Realization of our deferred tax assets is dependent upon, among other things, our ability to generate taxable income of the appropriate character in the future.
Changes in our valuation allowance for the years ended December 31, 2024 and 2023 are as follows (in thousands):
| Balance as of December 31, 2022 | $ | (82,905) | |||
| Change in income tax provision | 2,556 | ||||
| Other change | 1,767 | ||||
| Foreign currency translation | (187) | ||||
| Balance as of December 31, 2023 | $ | (78,769) | |||
| Change in income tax provision | (8,983) | ||||
| Other change | 910 | ||||
| Foreign currency translation | 4,844 | ||||
| Balance as of December 31, 2024 | $ | (81,998) | |||
As of each reporting date, management considers new evidence, both positive and negative, that could affect our view of the future realization of deferred tax assets. As of December 31, 2024, management determined that there is not sufficient evidence to conclude that it is more likely than not that the Canadian and U.S. net deferred tax assets are realizable, therefore we have maintained the valuation allowance in both of these jurisdictions. As of December 31, 2024, management determined that there is not sufficient evidence to conclude that it is more likely than not that the Australia deferred tax assets related to certain capital assets are realizable, therefore we have maintained a partial valuation allowance in Australia.
Unrecognized Tax Benefits. We file tax returns in the jurisdictions in which they are required. All of these returns are subject to examination or audit and possible adjustment as a result of assessments by taxing authorities. We believe that we have recorded sufficient tax liabilities and do not expect the resolution of any examination or audit of our tax returns to have a material adverse effect on our operating results, financial condition or liquidity.
Our Canadian federal tax returns subsequent to 2019 are subject to audit by the Canada Revenue Agency. Our Australian subsidiary’s federal income tax returns subsequent to 2019 are open for review by the Australian Taxation Office. Our U.S. subsidiary’s federal tax returns subsequent to 2020 are subject to audit by the U.S. Internal Revenue Service.
The total amount of unrecognized tax benefits as of December 31, 2024, 2023 and 2022 was zero. Unrecognized tax benefits, if recognized, would affect the effective tax rate. We accrue interest and penalties, if applicable, related to unrecognized tax benefits as a component of our provision for income taxes. As of December 31, 2024, 2023 and 2022, we had accrued zero of interest expense and penalties.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.