CVEO

Welcome to the Civeo Corporation First Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce Regan Nielsen, Vice President of Corporate Development and Investor Relations. Please go ahead.

Thank you. Welcome to Civeo's First Quarter 2026 Earnings Conference Call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer, and Collin Gerry, Civeo's 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. These forward-looking statements speak only as of the date of our earnings release and this conference call. We undertake no obligation to update or revise these statements except as required by 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 forms 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 2026 earnings call. I'll start with some key takeaways for the quarter, then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment-level detail. I'll conclude our prepared remarks with our outlook for 2026. We will then open the call for questions. There are four key takeaways from the call today. First, we delivered a strong start to 2026, outperforming our expectation. For the quarter, consolidated revenue was up 20% and Adjusted EBITDA was up 78%. Revenue growth was driven by a mixture of improved occupancy across the Canadian assets in both the oil sands and LNG markets, continued growth in our Australian integrated services business, contributions from acquired villages in Australia, improvements in our mobile camp fleet utilization.

We also benefited from foreign currency improvements. This was all complemented by strong incremental margins in Canada as a result of our cost reduction initiatives that we took last year. The second key takeaway is we continue to execute on our disciplined and balanced capital allocation strategy, returning capital to shareholders while enhancing Civeo's financial flexibility. Third, we remain confident in the revenue trajectory of the business as a whole and are raising the lower end of our revenue guidance. The mid-point of the revised guidance implies 8% revenue growth for the year. Our confidence stems from continued momentum in the Australian integrated services platform and an increasingly robust bid pipeline for North America asset and service deployment.

As of today, we are actively bidding on projects with total contract values in excess of $1.5 billion, which is the strongest we've seen to date. While much of this growth is dependent on customers reaching Final Investment Decisions, which is outside of our control, we are excited about the opportunities that these present for later in 2026 and going into 2027. The last key point, the cost impacts of the ongoing conflict in Iran and associated dislocations of the global energy and raw materials trade will likely have an impact on our margins. Australia is highly dependent on normalized global seaborne energy trade for diesel and other fuels. As a result of this and the potential associated impact on inflation, energy prices, and the impacts of those variables on our customers' activity, we are anticipating temporary inflationary impacts to our Adjusted EBITDA.

Thus, we are maintaining our initial guidance of $85 million-$90 million of Adjusted EBITDA for 2026. I'll start with some operational results for the quarter. On a consolidated basis, our first quarter results reflect strong year-over-year growth, with revenues increasing 20% and Adjusted EBITDA increasing 78% compared to the prior year period. In Australia, performance was strong for the first quarter, supported by the full quarter contribution from the villages we acquired in May 2025, as well as continued revenue growth in our integrated services business. In Canada, we delivered strong year-over-year improvement, with higher occupancy across key lodges and meaningful margin expansion. Importantly, this reflects both improved activity levels and the continued benefit of structural cost improvements we implemented last year. From a macro perspective, our operating environment remains dynamic.

Commodity prices, including oil and metallurgical coal, have been volatile and customer spending remains disciplined in both Australia and Canada. We are focused, therefore, on maintaining our flexibility as conditions continue to evolve. In Australia, met coal prices currently in the $230 per ton range, which is up approximately 25% from the second half of last year. Last quarter, we were optimistic that healthy commodity prices would drive higher occupancy in our villages in the back half of 2026. However, the ongoing disruption to global supply chains as a result of the war in the Middle East has likely shift the timing of any such uplift into 2027. On the oil side, prices are undoubtedly higher, but activity levels have not changed as our customers' planning requires much longer-term perspectives in terms of improved oil prices to adjust their activity levels.

Said differently, there's too much uncertainty in the oil market for our customers to change spending plans at this time, and as such, cost discipline remains their priority. From a timing perspective, we will likely see a deferral of turnaround activity in Canada from what normally occurs in the second quarter into later in this year. Turning to capital allocation, during the quarter, we repurchased approximately 500,000 shares, representing approximately 4% of Civeo's shares outstanding at year-end 2025. We have now completed approximately 96% of our current authorization and remain committed to completing it as soon as practicable. As a reminder, upon the completion of this current authorization, we have an additional authorization in place for repurchase up to 10% of the company's outstanding shares.

In April, we amended and extended our credit agreement, increasing the company's total revolving capacity and extending the maturity of our bank agreement to April 2030. This further enhances Civeo's liquidity and provides additional flexibility as we evaluate capital deployment opportunities going forward. Stepping back, before I turn it over to Collin, I want to reiterate my tremendous confidence in Civeo's future. The bid pipeline in North America is robust, with levels of inbound inquiries for beds and services that I haven't seen since oil sands days of the early 2000. Like then, this demand is highly dependent on highly project dependent, meaning dependent on positive final investment decisions. However, unlike the 2015-2020 timeframe, when North America growth was almost exclusively dependent on one major LNG project, this time is especially exciting given the variety and volume of different projects.

While we recognize growth will not be linear, we are confident in our ability to weather the changes as they arise, just as we are navigating today's energy dislocation. I am confident that our values of service, quality, and excellence, coupled with our world-class asset base and asset availability, position Civeo well for the opportunities ahead. What we do best is take care of people. If the industry demand materializes to even a fraction of what's outstanding today, there will be a lot more people for us to take care of. This is an exciting time for Civeo. We are more confident than ever in our actions, positioning, and prospects for growth and value creations. With that, I'll turn it over to Collin.

Thank you, Bradley. Thank you all for joining us this morning. Turning to the income statement. Today, we reported total revenues in the first quarter of $172.7 million, compared to $144 million in the first quarter of 2025, an increase of approximately 20%. Net loss for the quarter was $3.8 million or $0.34 per diluted share, compared to a net loss of $9.8 million or $0.72 per diluted share in the prior year period. During the quarter, we had generated Adjusted EBITDA of $22.5 million, compared to $12.7 million in the first quarter of 2025, an increase of 78%. Operating cash flow in the quarter was -$9.7 million, primarily reflecting expected seasonal working capital outflows in the first quarter.

The year-over-year increase in revenue was primarily driven by higher activity levels in both Australia and Canada, including the contribution from the villages we acquired in May 2025 in Australia and higher occupancy across key lodges in Canada. Year-over-year increase in Adjusted EBITDA was primarily driven by higher occupancy and improved margins in Canada, as well as increased contributions from the Australian villages acquired in May of 2025. Looking at Australia specifically, first quarter revenues were $123 million, up 19% from $103.6 million in the prior year quarter. Adjusted EBITDA was $21.8 million, compared to $19 million in the prior year period. The increase in revenues was primarily driven by the contribution from the villages acquired in May 2025, as well as continued growth in our integrated services business.

These gains were partially offset by modest softness in portions of the legacy-owned village portfolio. The increase in Adjusted EBITDA was primarily driven by the contribution from the acquired villages, partially offset by modest softness in the portions of the legacy-owned village portfolio. Australian billed rooms in the quarter were approximately 676,000, compared to approximately 626,000 in the first quarter of 2025. Our daily room rate for Australian-owned villages was AUD 83 compared to AUD 75 in the prior year period, with the increase primarily reflecting the strengthening of the Australian dollar relative to the U.S. dollar. Turning to Canada, first quarter revenues were $49.6 million, compared to $40.4 million in the first quarter of 2025.

Adjusted EBITDA was $5.2 million, compared to -$0.8 million in the prior year period. The year-over-year improvement was driven by higher occupancy across key lodges, as well as the continued benefits of cost reductions implemented during 2025. Canadian billed rooms totaled approximately 434,000, compared to approximately 359,000 in the prior year quarter. Our daily room rate was $99 compared to $93 in the prior year period. Now, if I turn to our capital structure. As of March 31st, 2026, total liquidity was approximately $68 million. Total debt was $215 million, and net debt was $199 million, resulting in a net leverage ratio of approximately 2.2x.

As Bradley mentioned, during the quarter, we amended and extended our credit agreement, increasing total revolving capacity to $285 million and extending the maturity to April 2030. This enhances our liquidity profile and provides additional flexibility to support both shareholder returns and potential high return growth investments. Turning to capital allocation. Capital expenditures for the quarter were $4.1 million compared to $5.3 million in the prior year period, and were primarily related to maintenance spending. During the quarter we repurchased approximately 500,000 shares at an average price of $28.06, for approximately $14.4 million. We will continue to take a disciplined and opportunistic approach to capital allocation, balancing shareholder returns with maintaining the flexibility to support the business.

As we think about the market in front of us today, we are seeing opportunities to deploy capital at attractive returns, and we'll prioritize preserving dry powder to pursue those while maintaining a strong balance sheet and balanced approach to shareholder returns. With that, I'll turn it back over to Bradley.

Thank you, Collin. I would now like to turn to our outlook for 2026. For the full-year 2026, we are raising the low end of our revenue guidance to $675 million-$700 million from our prior range of $650 million-$700 million. This increase reflects continued momentum in our Australian integrated services platform and continued recovery in our Canadian business. While we are encouraged by the strong start to the year and the underlying revenue trajectory of the business, we are maintaining our Adjusted EBITDA guidance of $85 million-$90 million for 2026. This reflects the impact of higher input costs, particularly diesel, as well as broader inflationary pressures associated with ongoing disruptions in the global energy markets. In addition, customer focus on cost discipline continues to influence activity levels and the timing of certain projects.

Despite improved revenue outlook, we are maintaining our Adjusted EBITDA guidance, and we feel that's appropriate at this time. We also continue to expect capital expenditures for 2026 to be in the range of $25 million-$30 million. I'll now provide additional color on our expectations by region. In Australia, from a macro perspective, metallurgical coal prices remain at healthy economic levels. The recent increase to diesel prices has driven customers to focus more on cost efficiency, which has tempered what we might otherwise have expected in terms of incremental upside to our initial occupancy guidance. Activity levels continue to reflect a more conservative operating posture by our customers, similar to what we would have expected in a sub $200 per ton met coal environment.

Importantly, we have not experienced any material operational impacts from diesel supply dynamics to date. While diesel prices have moderated some, we expect these dynamics to continue to limit near term upside and activity levels relative to what we had initially contemplated when establishing our guidance range for 2026, and may delay any meaningful upside in occupancy. Based on current customer discussions and our contracted room nights, we continue to expect generally stable occupancy across our own village portfolio through the balance of the year. In our Australian integrated services business, we continue to see a solid set of growth opportunities as we advance towards our goal of AUD 500 million in annual services revenues by 2027. In Canada, we're encouraged by the strong start to the year with improved occupancy and continued benefit from the structural cost actions implemented during 2025.

As we look to the remainder of the year, we are continuing to refine our expectations around Canadian turnaround activity. At this point, we're seeing some activity that we had previously expected would occur in the second quarter shift to later in the year. As a result, we expect a more back half-weighted cadence of activity relative to our initial expectations. The overall activity levels remain consistent with our full-year outlook. We also began mobilization under our previously announced contract supporting correctional facilities in Ontario at the beginning of April, and we are pleased with the early execution on that contract. Importantly, this award represents a meaningful milestone for Civeo, marking our first integrated services contract in Eastern Canada and our entry into a new end market.

We believe this is a strong proof of point for the scalability of our integrated services platform in North America. We are actively pursuing additional opportunities to build on this momentum, further expanding and diversifying our revenue base. More broadly, the oil sands activity remains stable, though customer focus on cost discipline continues to influence commercial dynamics across the region. Looking ahead, we remain encouraged by the level of business development activity tied to North American infrastructure projects. Our team continues to see strong engagement across LNG, power, and data center-related projects, and we believe that we are well-positioned to capture these opportunities as they progress. Civeo is well-positioned to capitalize on opportunities of a potential infrastructure construction boom represents.

We have 2,500 mobile camp rooms strategically located in Western Canada, in both Alberta and British Columbia, that are immediately ready to deploy. We also have the ability to redeploy approximately 7,000 of our oil sands lodge rooms for the appropriate infrastructure project. Given their location configuration of these assets, which were purpose-built for colder climates, these are best suited for projects in the Northern U.S., Canada, and Alaska, where transportation from Alberta and BC will be less of a factor. As the U.S. market for workforce accommodations absorbs and fully utilizes existing capacity, our assets will become even more attractive than new build assets. That said, these projects remain dependent on final investment decisions, and we continue to expect that any meaningful financial contribution will occur in 2027 and beyond.

Overall, our outlook reflects a strong start to the year, combined with a continued focus on disciplined execution and maintaining financial flexibility while positioning the business for long-term value creation. We'll now open the call for questions.

Ladies and gentlemen, if you would like to ask a question please press star one on your telephone keypad, and the confirmation tone indicate your line is in the question queue, you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment please while we pull for questions. The first question comes from the line of Stephen Gengaro with Stifel. Please proceed.

Thank you. Good morning, everybody.

Hey, Stephen.

Bradley. Hey, hi. How are you, Bradley? When we think about the U.S. market and the well, and Canada as well, one of your competitors, at least one of the big accommodations players in North America, just lost a bunch of capacity. It seems like the data center demand is extremely strong and the supply is extremely low. I'm curious how you're thinking about that opportunity. Anything you can share on traction of maybe mobilizing assets to the U.S. market and starting to gain traction in that market?

In terms of the U.S. market and both data center opportunities as well as adjacencies to data centers around power, we continue to be extremely active in terms of bidding into those markets. As I made comments in the materials, you know, all of our available assets are in Western Canada. Proximity to where the assets are now helps our bidding posture because transportation costs to move assets into where the customer needs them is a material portion of delivering a room ready for occupancy. Where I was alluding to, we believe we're better positioned in the Northern U.S. and Canada and Alaska for those to redeploy those assets. In terms of overall activity, it's as busy as we've seen it. As I mentioned, we've got 2,500 mobile camp rooms.

We've bid those out a multiple of times. We're seeing increased interest in our multi-story lodge rooms to be redeployed as well.

Thanks. Have you seen from customers yet? I might actually ask you this last quarter, but have you seen from customers any kind of concerns about availability? I mean, we're seeing it clearly on the power side around data centers and pricing becomes less important than access to power, in your case, accommodations. Are you seeing any of that concern from your customers yet? If not, do you think it's close?

I think you summed it up well at the latter part of your question. I think it is an incredibly dynamic market right now. As we've got in our IR deck, we see 35,000 to 50,000 room demand across North America, and that right now there isn't that much capacity. I would say that it hasn't tipped over into that fear of availability broadly. There's certainly with certain customer projects, particularly on the U.S. side of things, expediency, being able to meet timeline, time frames and for first beds is more important than price, although price continues to be a consideration. Having available assets has a lot of value today. To your point, the market is starting to tighten up and concerns about availability are that theme is starting to come out in customer conversations.

Thanks, Bradley. Then maybe just one more, and this might be a little bit harder, but when we go back in time, right, and you built out the oil sands, I forget the exact numbers, but if you needed 1,000 folks to construct the facility and develop the asset, the operating personnel was something less than that. I don't know if it was 50% or 60%, if I don't remember correctly. When your Canada business seems to be pretty base load right now. When you think about these other opportunities, is there any way to think about that dynamic? Like, if you deploy 2,000 rooms, there's, you know, three, four, five years of demand, and then the operating side is X? Is it too early in the process to get that sense?

No. Let me frame it this way. The opportunity set in North America right now is construction-related, and construction work is great, but it does have a finite life, right? I see the next three to five years there. With the current bidding pipeline or opportunity set, it looks like it's going to be strong for three to five years. To your point, whether it's a data center, an LNG facility, an oil sands mine, a pipeline, once construction is complete, there's not a need for accommodations anymore. Construction work is great. It's a great shot in the arm. We have an opportunity set, as we said in our prepared comments, that is as large by a factor of two or three than we've seen since the early 2000s.

It is gonna be construction related, so it's deploy assets and earn a return on those assets. Then, you know, should the construction projects start to space out, then we could see a longer than three to five-year period of demand for accommodations in North America for construction. That would be favorable for a longer-term utilization, particularly the mobile camps.

Great. Thank you. Everything seems to be extending longer than we think, which is a positive. That's great color. Thanks for taking the questions.

Anytime. Good to talk to you, Stephen.

The next question comes from the line of Steve Ferazani with Sidoti & Company. Please proceed.

Hi, good morning. This is Alex on for Steve. Thanks for taking questions.

Hi.

Hey. You alluded to this in the prepared remarks, but maybe I could follow up a little bit, just for clarity on how much of the strong Canadian, you know, one, two performance you would attribute to customer timing, AKA pull forwards.

I would say very little was a pull forward. There was one in the first quarter. A customer had an unexpected situation which added some occupancy during the quarter. You know, April has started off pretty strong. Well, we're done with April, but April was a pretty strong start to the second quarter. What we tried to allude to in the prepared comments was, look, oil's gone from, you know, $60 to $65 to at times close to $100. That's great for our customer base. They're focused on producing as much as they can into that price dynamic. Which has two implications. One, Q2 and Q3 are usually the time period in Canada when the customers do planned annual maintenance.

As we've mentioned in the comments, we see that that's likely pushing out into later in the year, as opposed to being stronger in the second quarter as they focus on production. It also has them continue to be focused on cost containment because other than trying to push production, they're not making changes to spending activity as if it's a $90 a barrel market.

Very helpful context. Then one more from us on Australia. You know, you've continued to report strong and growing Australian services revenue. Could you talk a little bit, you know, about what the labor market is like there now? Any challenges with staffing or any room to expand?

Yeah. Labor availability continues to be a struggle across our Australian business. Which our HR team down there, they're hyper-focused on recruitment and retainment. It's one thing to get people hired, it's another thing to keep them in the business long-term. Labor costs are still. Our labor availability and therefore cost because we have to use temporary labor when we don't have a full complement of full-time employees. Labor costs are something that we're focused on. We're recruiting. You know, one of the tough positions for our business is your head chef at each location. We're recruiting foreign chefs to come in and work rotations for us, and that has helped some, but we're still not to the labor cost that we'd like to have there.

Understood. Thanks for taking ours.

Any time. Thank you.

The next question comes from the line of Dave Storms with Stonegate Capital Partners. Please proceed.

Hi, Dave.

[audio distortion]

Oh, geez. Is that better?

Yes. We can hear you now.

Perfect. Okay. Sorry about that. Wanted to hold on Australia for a second here. We've talked in the past about 200 met coal being an important benchmark. I know you mentioned the challenged cost environment. Can you help us maybe understand a little better about how that push and pull looks now? Is 225 or 250 met coal a better benchmark going forward in the current environment? Maybe just help us understand the push and pull there.

It really depends customer by customer, both their inherent cost structure as it relates to production costs as well as where their balance sheets are. I think where you're headed is generally correct. The old $200 is probably $225 in this market. The other factor that you have to keep in mind from a customer standpoint, it's not a factor for us, and I'll explain why, is that they sell their commodities in US dollars, and they've got largely all Australian dollar costs. Got diesel costs, which are more impactful to our customers' cost structure than it is to ours, coupled with if the Aussie dollar continues to appreciate versus the US dollar, our customers will have effectively a cost structure increase without a revenue increase because it's Aussie dollar costs and US dollar revenues.

For us, we're naturally hedged. We're largely Australian. We're all Australian dollar revenues down there and Australian dollar costs. The concern really is how do fuel prices impact customer activity levels? It's, I would say, early on. We've had effectively two months, and I expect that Australia will continue to see inflationary pressures for the balance of the year.

Understood. That's great color. Thank you. Circling back to the U.S., and I recognize that this is maybe a bit of a crystal ball question, but you mentioned there's a large volume of different types of contracts that could be gained in the U.S. between LNG, power, data centers. When you're looking across that universe, is there maybe a field or a geography or a type of contract that you would expect to drop first, you know, maybe in the earlier 2027? Or are they all just super different and, you know, kind of hard to judge?

We always have to go off what our customers tell us the timeline is. I think embedded in your question is do we think that they're gonna hit the timeline? These are major investment projects which historically have always had a tendency to push to the right. We continue to believe that there's a fair amount of work that will be let in 2026, so that will be announceable in 2026, but may not, as we said in our prepared comments, may not materially hit us financially until going into 2027 and 2028.

The, the FID time period, as we understand it now, the time to mobilize, the time to first meals and first beds, some of it could hit in 2026, but as we sit here on May first, that's gotta hit pretty soon. Mobile camps can typically be deployed within 90 days and start earning money, but if it involves multi-story, that's gonna take longer.

Understood. Appreciate that. Maybe just one more. You mentioned, you know, some of the turnaround activity in Canada being pushed out due to commodity prices. Just looking across your customers, is there a potential for that to be pushed out again further should commodity prices remain elevated? Or is there maybe a hard backstop in the Q3, Q4 that would require customers to bring in that turnaround activity?

It's a tough question to answer. It's always possible for turnaround work to be pushed out. It's always a variability. Even when you don't have the dislocations we're experiencing today, even in a more normalized market, customers can get in and have various idiosyncratic reasons to either accelerate or defer turnaround work. I think we feel good about what's embedded in our guidance. Canada is going to face a smoother year this year in terms of the cadence of occupancy than we would historically have seen. The rule of thumb that we've given the market in the past multiple times was that 60%, 65% of annual EBITDA for us would happen in Q2 and Q3, largely driven by turnaround activity ramping up in Canada.

I would say this year it's gonna look a lot more smooth. Closer to, you know, well, just flatter throughout the year as it relates particularly to Canadian occupancy.

Understood. I think that's a very fair answer. Thank you for taking my questions, and good luck on the next quarter.

Thank you.

Thanks, Dave.

The next question will come again from the line of Stephen Gengaro with Stifel. Please proceed.

Thanks. Two follow-ups. One to the question you just answered. When we think about the difference between the high end and low end of guidance, is that primarily related to the turnaround activity?

It would be turnaround activity. It would be inflationary pressures in Australia more so than Canada. To a prior comment, it would also be if any project work kicks off this year. We've won a little bit of work for our mobile camp business, which we had budgeted for later in the year. That speculative amount of work that we had budgeted, we feel much better about now. That project will kick off here in the next 60 days. That work's in Alberta. I would think it's Canadian turnaround activity, Australian inflation, and when do we get any benefit from infrastructure projects that are won this year, potentially mobilize this year. As I mentioned, set up for a stronger 2027.

Great. Thank you. The second question, I'm not sure if you can answer this directly, but when we think about the types of projects you're bidding on in North America, in aggregate Canada and U.S., are there types of projects that would tend to be longer-term in nature? How do you balance maybe the term of the contract versus maybe something which could be a little more profitable for two or three years versus a longer term relationship and/or contract?

Well, the term of deploying assets for a construction project is, that's a material consideration. Obviously, if we had our druthers, we would win work that has a longer duration. I would say generally what we're seeing today is two to four-year projects. Some are a little bit longer, I haven't seen a lot that are over five years. These are construction projects, and the need for accommodations is typically in that two to four to five-year timeframe.

Great. This is a very helpful call. Thank you, Bradley.

Thanks, Stephen.

Thank you. Ladies and gentlemen, this concludes the Q&A session. I'd like to hand the call back to Bradley Dodson for closing remarks.

Thank you so much. Thank you everyone for joining the call today. We appreciate your interest in Civeo, and we look forward to speaking to you on the second quarter earnings call, which we expect to happen late in July. Have a good day.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.