Civeo Corporation

Greetings and welcome to the Civio Corporation fourth quarter 2024 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 is now my pleasure to introduce Regan Nelson, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to CBO's fourth quarter and full year 2024 earnings conference call. Today, our call will be led by Bradley Dawson, CBO's President and Chief Executive Officer, and Colin Gary, CBO'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. 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. Also, as noted in our earnings release, we have provided supplemental data disclosing revenue associated with our asset-light business and those of our asset-intensive businesses. This data can be found in the earnings release schedules. I'll now turn the call over to Bradley.

Thank you, Reagan, and thank you all for joining us today on our fourth quarter and full year 2024 earnings call. I'll start the call today with the key takeaways, and then I'll provide a brief summary of our fourth quarter and full year 2024 performance. Then Colin will provide a financial and segment level review. And I'll conclude our prepared comments with our initial 2025 guidance and the underlying regional assumptions. Thereafter, we'll open the call for questions. I'll start with our key takeaways for the quarter and the full year. Starting in Australia, we continue to execute on our growth strategy and are experiencing strong occupancy levels in the region. Revenues in that segment increased 23% compared to the fourth quarter of 2023. This was driven by increased activity in our integrated services business from our recently announced $1.4 billion contract. We also recently announced an acquisition of four villages in the Australian Bowen Basin. This acquisition is expected to be immediately accreted to cash flow and will expand our presence into a new area of that basin. It also advances our goal to secure steady sources of revenues and earnings as it's backed with two and three year take or pay contracts with new and existing glue chip customers. Moving to Canada. We experienced lower billed rooms as a result of our customers' reduced capital spending in response to their investor pressure, as well as increasing economic and political uncertainty, which we expect to continue in 2025. While some of the decline in Canada was expected and correlated with the wind-down and elegy-related activity, Canadian Lodge billed rooms did not recover as expected from the negative impact of the wildfires in the third quarter of 2024 due to the aforementioned customer focus on cost reductions. In response to these challenges and expectations for a continued lower level of customer spending in the region, we've begun right-sizing our Canadian business to address this new level of uncertainty and taking further strategic actions to expand our geographic and in-market reach to reduce our dependency on oil sands activity. We will incur one-time restructuring costs of approximately $3 million in the first quarter of 2025 as we cold-close existing lodges and reduce overhead headcount by approximately 25 percent, which we expect to strengthen our results in the medium term. While we acknowledge and are addressing the near-term reality of the unfavorable trough in Canadian oil and LNG-related activity, we remain optimistic for the medium- to long-term outlook for the business. high bidding activity in diversified end markets, ramp up of additional Canadian LNG projects, a potential positive shift in the Canadian federal government policy and carbon capture initiatives, namely the Pathways projects. These could be catalysts for growth moving forward. So lastly, for the full year of 2024, we returned approximately $44 million of capital to shareholders through our quarterly dividends and share repurchases. This represented approximately 65% of 2024's free cash flow. Since the initiation of our share repurchase program in 2021, we've repurchased approximately the equivalent of 20% of our common shares outstanding. Let me take a moment to provide a bit of context on the evolution before I hand it over to Colin. Ten years ago, Civia was a much more asset-intensive company focusing on capital deployment on internal manufacturing and installation of new lodges and villages. At the time of our spend, CDO had $775 million in debt, and our revenue was approximately 70% tied to Canadian oil sands, most of which was supporting customers' construction activity and building the majority of the oil sands infrastructure that exists today. Since then, we have successfully deleveraged the company and diversified our revenue sources. We first entered in entered the integrated services market in Australia with the Action Industrial Catering acquisition in 2019 and have focused on growth, delivering a five-year top-line organic CAGR of 38% in that business. This asset-light business provides catering and facility management services to our clients at both our owned and our customer-owned accommodations assets. Our revenue mix today is more weighted to steel-making commodities in Australia, and we have a much lower debt profile. To better illustrate the evolution of our business and our current asset mix, we have provided new supplemental disclosure that illustrates the revenues of our asset-light business, which includes hospitality services at both our owned assets and our customer-owned assets. our asset-intensive business, which largely includes the accommodations revenue associated with our lodge and village assets, as well as our Canadian mobile camp business. We believe that investors continue to perceive CBO as a pure-play accommodations or asset-intensive business, so we provided supplemental disclosure to highlight the key components of our business and show the significant growth we've achieved in integrated services or this asset-light part of the business. We are positioning the company for ongoing value creation over the next 10 years. In the short run, this means continuing diversification of our revenue streams as evidenced by our recent Australian acquisition announcement and redirecting our capital spend to the markets where conditions warrant change. With that, we'll turn it over to Colin.