Civeo Corporation

Greetings. Welcome to the Civio Corporation's second quarter 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, we'll now turn the conference over to Reagan Nelson, Vice President, Corporate Development and Investor Relations. Reagan, you may begin.

Thank you, and welcome to Cibio's second quarter 2023 earnings conference call. Today, our call will be led by Bradley Dodson, Cibio's President and Chief Executive Officer, and Carolyn Stone, Cibio'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 anything 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 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, Reagan, and thank you all for joining us today on our second quarter earnings call. I'll start with the key takeaways for the second quarter and then give a brief summary of our second quarter of 2023 performance. Then Carolyn will provide a financial and segment level review. And I'll conclude with our updated full year 2023 guidance with the regional assumptions that underlie that. At that point, we'll open up the call for questions. The key takeaways from our call today are The second quarter of 2023 financial results were in line with our expectations and highlighted the diversity of our revenue drivers across the business. Our Australian segment performed well during the quarter as we experienced substantial, sequential, and year-over-year growth in both our own villages business as well as the integrated services business. Village guests were up 16% year-over-year and integrated services revenues were up 33%. In both the owned villages and integrated services businesses, we are seeing the benefits of the contract awards that we have announced over the past 12 months. It's important to note that during the quarter, we achieved the highest quarterly Australian owned village occupancy that we've seen since 2014, led by increased Bowen Basin customer activity, with the Gunnedah Basin villages contributing as well. LNG activity in British Columbia, Canada continued to widen down in a quarter, as expected, resulting in reduced Canadian mobile camp activity for us and contributing to lower Canadian lodge build rooms versus the second quarter of 2022. As discussed on the last earnings conference call, our inflation mitigation plan for Australian integrated services is underway, and we are encouraged by the progress to date. The majority of these benefits from our team's efforts are expected to be seen in the second half of 2023 and going forward. Our second priority was regarding the McClellan Lake Lodge in Canada. We've made significant progress towards an attractive commercial alternative for the future of that asset as we are in active negotiations to sell the assets to a third party. We are encouraged by the progress to date but cannot discuss the details of the proposed deal at this time. In addition, The demobilization process for McClellan Lake is underway. The related customer room demand from that former lodge has moved to other civil lodges and is under a take-or-pay contract through January 2024. Through our team's efforts, we expect our net demobilization costs for the assets to be minimal, in part due to reimbursements from our clients. The outlook for our Canadian mobile camps has not changed materially since our last call. As discussed last quarter, we expect the demobilizations to commence in the second half of this year. We continue to execute on our share repurchase program in the second quarter and will opportunistically buy back shares going forward. And lastly, on key points, as we discussed in previous calls, We are in the process of formulating a capital allocation framework that incorporates our strong balance sheet position and our solid free cash flow outlook, which we look forward to sharing with you hopefully later this year. Let me take a brief moment to provide a business update across the segments. In Canada, our revenues and adjusted EBITDA declined year over year. The decrease was driven by the wind down of Canadian mobile camp activity, as well as lower year over year Canadian lodge build rooms. The decline was also exacerbated by the weakened Canadian dollar relative to the U.S. dollar. Sequentially, however, revenue in adjusted EBITDA increased substantially due to the seasonal increase in turnaround activity. For Australia, we saw a significant year-over-year increase in revenues in adjusted EBITDA driven by increased billed rooms at our own villages and increased integrated service revenue, both of which were largely from new contracts. As I noted earlier, we are encouraged by the substantial increase in customer activity, which resulted in the highest quarterly owned village occupancy that we've recorded since 2014. We also reached key milestones in our inflation mitigation initiatives towards the end of the quarter, and like I said, we'll begin to realize those benefits in the second half of this year. However, the second quarter results were adversely impacted by the weakened Australian dollar relative to the U.S. dollar. Sequentially, we experienced increased revenues and adjusted EBITDA through the aforementioned dynamics, as well as the typical seasonal uptick in the second quarter across the Australian business and some inflationary relief in our integrated services business. It is important to note that while we've made strides in mitigating inflationary pressures in both our Canadian and Australian businesses, We expect that inflation will remain a focus of ours for the foreseeable future. With that, I'll turn the call over to Carolyn.