Civeo Corporation

Greetings, and welcome to the CIVIO third quarter 2021 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 during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Reagan Nielsen, Senior Director, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to CIVIO's third quarter 2021 earnings conference call. Today, our call will be led by Bradley Dodson, CIVIO's President and Chief Executive Officer, and Carolyn Stone, CIVIO's Senior Vice President, 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 information 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 disclosed in our Form 10-K, 10-Q, and other SEC filings. I'll now turn the call over to Bradley.

Thank you, Reagan, and thank you all for joining us today on our third quarter earnings call. For today's call, I'll provide a brief summary of our performance for the quarter. Carolyn Stone, our CFO, will then provide a financial and segment-level review. And I'll conclude with our commentary on our expectations for the balance of the year and moving into next year before we move to the question and answer portion of the call. At a high level, we are seeing encouraging signs related to COVID-19 as the Delta wave has begun to retreat in Canada and the pace of vaccinations in Australia has improved significantly. As always, we are thankful to our operations team who continue to be vigilant in following our safety protocols, which aim to mitigate the risk of the virus spreading. In the third quarter, we made significant progress towards our financial objectives, maintaining our commitment to free cash flow generation and leverage reduction. To this end, during the quarter, we replaced and refinanced all of our debt and extended its maturity out to September 2025. and also announced the board's authorization of a share repurchase program for up to 5% of the total common shares outstanding. Encouraged by these accomplishments, but continued uncertainty related to the pandemic and its after effects, as well as continued geopolitical uncertainties led us to remain conservative in our approach to value creation, cash generation, and debt reduction. The key takeaways from our call today are Our business is reliably generating free cash flow despite the uncertainty and difficult operating environment that we're currently in. In the third quarter, Civio delivered $31 million of free cash flow and made debt repayments of $25 million. As a result, our net leverage ratio was reduced to 1.86 times as of September 30th, 2021, down from 1.98 times as of June 30th, 2021. As I mentioned earlier, we replaced and refinanced our entire credit agreement during the quarter with a four-year tenor providing for more flexibility for our business. To be clear, our primary focus remains to continue to generate free cash flow and reduce debt, but this new agreement has given us additional flexibility and will remain open to other capital allocation priorities as they materialize such as our recently announced share repurchase program. We are encouraged by the improvements in commodity prices recently, namely crude oil and metallurgical coal, but we do not expect to see an outsized impact from these shifts during the near term as our customers remain focused on capital discipline and their capital decisions typically lag fluctuations in commodity prices. Again, our focus is on positive free cash flow generation, leverage reduction, and those remain top of mind. And we expect to deliver on both fronts through the end of the year. Now let me take a moment to provide a business update on our three segments. In Canada, turnaround activity in the oil sands region continued through the majority of the third quarter, albeit, as usual, at lower levels than seen in the second quarter. due to customer project scheduling and their struggle to get labor. However, we did see a sequential increase in mobile camp activity in the quarter as pipeline construction activity picked up. In our Australian business, it continued to face challenges due to continuing impact of the COVID-19 travel restrictions, driving higher labor costs, particularly impacting our Western Australia integrated services business, as well as lingering uncertainty related to the China-Australia trade dispute impacting the Bowen Basin. Sequentially, we saw a modest uptick in billed rooms in the Bowen Basin, but this was offset by an increased cost in our integrated services business. Turning to the U.S., our U.S. lodges continue to perform well in the third quarter with a sequential increase in occupancy. The strength of our lodge business was partially offset by sequentially lower offshore work And in the second quarter of this year, we leased out the entirety of our West Perm Lodge to a third party under the contract. With that brief overview, I'll turn it over to Carolyn for some more detail. Carolyn?