Civeo Corporation

Greetings and welcome to the CVO Corporation's second 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 requires 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, Regan Nielsen, Vice President, Corporate Development. You may begin.

Thank you, and welcome to Cibio's second quarter 2026 earnings conference call. Today, our call will be led by Bradley Dodson, Cibio's President and Chief Executive Officer, and Collin Gerry, Cibio'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 second quarter 2026 earnings call. I'll start with the key takeaways for the quarter, then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment-level details and I'll conclude our prepared remarks with our outlook for 2026. We will then open the call for questions. There are four key takeaways for the call today. First, North American growth represents a tangible opportunity set for CIVIO. Our bid pipeline remains robust with more than $1.5 billion in total contract value in line with what we disclosed last quarter. While the pace and timing of these opportunities are dependent on customer final investment decisions, We remain focused on what we can control, maintaining a sharp business development focus, preparing our assets and operating platform to execute, and preserving the financial flexibility to pursue the right opportunities as they advance. Second, the convertible debt offering we completed after the quarter end provides CBO with the financial firepower to play offense. It gives us the flexibility to pursue the opportunities that I just described. We raised lower-cost, fixed-rate capital and completed the first phase of our shareholder return commitment. Third, Australia remains the strength of our business, although the second quarter results reflected near-term softness from cost inflation and customer caution, tied principally to the fuel costs and availability amid ongoing Middle East seaborne trade dislocation. With metallurgical coal prices in the $220 plus range, the underlying operating environment is healthy and we see upside as this temporary noise dissipates. Lastly, in our base oil sands business, we believe there is more upside than downside from the current activity levels. Our confidence in the long-term outlook for the business is supported by the increasing focus from the federal and Alberta governments and the oil sands producers on advancing pipeline and carbon capture infrastructure projects. I'll now start with our operational results for the quarter. On a consolidated basis, the second quarter results in operating drivers were in line with our expectations. In Australia, we had solid occupancy in our own villages and continued to focus on mitigating inflationary pressures largely brought by the Middle East conflict and labor availability. Australian platform remains well contracted, generates strong cash flow, and is positioned to benefit when fuel market conditions normalize. In Canada, the second quarter results were as expected, and our bidding activity remains robust. We continue to manage the base oil sands business for current demand while preserving the capacity to benefit from future infrastructure activity.

Now turning to capital allocation.

We continue to make progress on our share buyback commitments. We completed the April 2025 commitment to repurchase 20% of the company just after the end of the second quarter. It was done in conjunction with a convertible debt offering in July, 2026, where we bought back 660,000 shares. We continue to believe Civio shares are undervalued and the transaction reinforces this conviction. We did not issue common equity Today's price and retired approximately $22.3 million of stock concurrent with the offering. At the same time, the North American Opportunity Set has become more actionable. We chose to raise capital when the market was open and the terms were attracted. The proceeds from the offering were immediately used to fund the concurrent share repurchase and repay revolver borrowings, restoring capacity under our secured bank facility while lowering the company's near-term cost of capital. However, the strategic intent of the convertible debt offering was to meaningfully enhance our financial flexibility to capitalize on the growth opportunities ahead. Stepping back, while we cannot control when customers make final investment decisions, we are taking steps to ensure Cibio is prepared to respond when they do. We have a growing and diversified opportunity set Available Assets, Proven Operating Capabilities, and a business development team focused on converting that activity into committed work. We believe that combination of operational readiness, capital discipline, and balance sheet flexibility positions Civeo well to create long-term value as these opportunities advance. With that, I'll turn the call over to Collin.

Thank you, Bradley. Thank you all for joining us this morning.

Starting with the income statement, today we reported total revenues in the second quarter of $180 million, compared to $162.7 million in the second quarter of 2025, an increase of approximately 11%. Net loss for the quarter was $2.5 million, or $0.23 per diluted share, compared to a net loss of $3.3 million, or $0.25 per diluted share in the prior year period. During the quarter, Cibio generated a justity bidah of $23.8 million, compared to 25 million in the second quarter of 2025. Operating cash flow was 11.6 million compared to a negative 2.3 million in the prior year period. The 17.3 million year-over-year increase in consolidated revenues was primarily driven by foreign exchange with most of the Australian revenue increases attributed to the stronger Australian dollar. Training growth reflected contributions from acquired villages and increased integrated services activity in Australia as well as higher occupancy in the new integrated services contract in Ontario and Canada. Adjusted EBITDA decreased $1.2 million year-over-year, primarily due to startup costs associated with the new integrated services contract in Ontario and transitory cost inflation in Australia, partially offset by the favorable impact of the stronger Australian dollar. Let's now turn to the second quarter results for our two segments. I'll begin with Australia. Second quarter revenues from our Australian segment were $125.4 million, of 11% from $112.7 million in the second quarter of 2025. The adjusted EBITDA was $22.6 million, compared to $22.3 million in the prior year period. The year-over-year revenue increase was driven almost entirely by the stronger Australian dollar. Increased integrated services activity and contributions from the acquired villages were largely offset by softer owned village occupancy while transitory cost inflation pressured adjusted to the top. Australian-owned village build rooms in the quarter were approximately 675,000 compared to approximately 691,000 in the second quarter of 2025. Our average daily rate for Australian-owned villages was $85 compared to $76 in the prior year period. The increase primarily reflected strengthening of the Australian dollar relative to the US dollar. Turning to Canada, Second quarter revenues were $54.6 million compared to $50 million in the second quarter of 2025. Adjusted EBITDA was $6 billion compared to $6.9 million in the prior year period. The year-over-year increase in revenues was driven by higher occupancy and the new integrated services contract in Ontario. The decrease in adjusted EBITDA was probably driven by startup costs associated with that new contract, which we expect to be temporary. Canadian built rooms totaled approximately $458,000 compared to approximately $450,000 in the prior year quarter. Our average daily rate was $96 compared to $94 in the prior year period. Looking at our capital structure, as of June 30th, 2026, total liquidity was approximately $82 million. Total debt was approximately $209 million and net debt was approximately $191 million. A decrease of approximately $8 million from March 31st, 2026, resulting in a net leverage ratio of approximately 2.1 times. These figures are as of quarter end and therefore precede the convertible notes offer. In July, the company issued $115 million aggregate principal amount of 4.5% convertible senior notes due 2031, including the full exercise of the initial purchasers option. We use the net proceeds to fund the concurrent share repurchase and repay borrowings under the revolving credit facility, restoring undrawn capacity. Turning to capital allocations. Capital expenditures for the second quarter were $3.7 million compared to $4.5 million in the prior year period, and were primarily related to maintenance spending on our lodges and villages. Subsequent to quarter end, and concurrent with the convertible notes offering, we repurchased 660,297 common shares for approximately $22.3 million. Approximately 111,000 shares completed the April 2025 authorization to repurchase 20% of the company. and the remaining approximately 549,000 shares were applied for the subsequent 10% authorization, bringing that authorization to approximately 50% complete. The notes have a 4.5% fixed coupon, mature on August 1st, 2031, and have an initial conversion price of $40.51 per share, representing a 20% premium to the July 1st closing price. Our current intent is to satisfy the principal amount in cash As a result, shares would be issued only for conversion value above the $40.51 margin price, if any, and we retain the flexibility to settle in cash, shares, or combination based on the circumstances at the time. Together with the concurrent share repurchase, the transaction is not expected to result in net share dilution unless the convertible debt settles with a share price of approximately $53 per share or higher. If the North American growth opportunity set takes longer to develop, we will still benefit from five years of lower cost fixed rate capital and no common share issuance below the conversion price. We will continue to take a disciplined and opportunistic approach to capital allocation. Our framework is to return at least 75% of annual free cash flow to shareholders through share repurchases, including the shares repurchased as part of the convertible note offering. We have repurchased roughly $36.7 million worth of shares on a year-to-date basis, which we believe more than satisfies our intentions for 2026. Going forward, our focus remains maintaining the balance sheet flexibility to support the business and pursue high return growth opportunities. As the opportunity set develops, we intend to preserve sufficient capacity to fund the right projects without compromising our strong balance sheet or our commitment to shareholder returns. The Convert improves that flexibility while lowering the fixed rate cost of capital on the refinanced borrowings. With that, I'll turn it back over to Bradley.

Thank you, Collin. Turning now to our outlook for 2026. For the full year 2026, we are maintaining our revenue guidance range of $675 million to $700 million and our adjusted EBITDA guidance range of $85 million to $90 million. We are also maintaining our capital expenditure guidance range of $25 million to $30 million. I'll now provide additional color on our expectations by region. In Australia, metal-electrical coal prices remain in the range of $220 per ton or better, which is supportive of a healthy underlying mine economy. However, elevated fuel costs and concerns around diesel availability have continued to cause customers to operate conservatively, limiting near-term occupancy upside and creating transitory cost pressure for Civian. We expect these temporary macro-driven headwinds to persist through the end of the year, but we remain optimistic about improved conditions in 2027 and beyond. Our owned village portfolio remains well-contracted, and our integrated services business continues to advance towards our goal of reaching a run rate of $500 million Australian in annual services revenue by the year end 2027. In Canada, we expect approximately 20% year-over-year revenue growth in the second half of 2026 compared to the second half of 2025, driven by continued execution in our base business Thank you for joining us today. Canadian Infrastructure, and Power and Data Center related projects. The bid pipeline remains robust at more than $1.5 billion in total contract value. These opportunities remain dependent on customer final investment decisions and the timing of meaningful financial contributions for Cibio remains largely outside of our control. Our recently completed convert gives us Flexibility to move quickly when these opportunities advance without requiring us to compromise operating liquidity or our ongoing commitment to the return of capital to shareholders. What differentiates CIVIO is the combination of our team, our assets, our operating resume, and our financial flexibility. We have demonstrated that we can execute remote lodging and take care of people safely and reliably at scale. including in complex cold weather environments. We have 2,700 mobile camp rooms strategically located in western Canada that are available for deployment along with approximately 7,000 to 8,000 oil sands lodge rooms that could be redeployed for the right project. These are purpose-built assets well suited for projects in the northern United States, Canada, and Alaska. We also have the balance sheet strength and capital flexibility to tailor the right solution to each customer project, whether that requires redeploying existing capacity, investing in incremental capital, or combining accommodations with integrated services. Overall, our outlook reflects a resilient Australian platform, improving diversification in Canada, and a growing North American opportunity set. We remain focused on operating safely and efficiently, managing costs prudently, and allocating capital to the highest return opportunities as we position CIVIO for long-term growth and value creation.

We will now open the call for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 the star keys. Our first question today comes from Steven Gangario of Stifel. Please proceed with your question.

Thanks. Good morning, everybody.

Good morning, Steven.

So I had a few things I wanted to ask, but just because you just talked about the available rooms, maybe I'll start there. The 2,700 mobile rooms and then I think you said 7,000 to 8,000 lodges that are available, are they better? How do we think about the applications that those two buckets of rooms are better suited for? Like are the mobile rooms, do they have a unique application or can they be kind of adapted to you know kind of a more permanent need like the oil sands lodges.

The mobile camp rooms are well suited for quick deployment principally.

They're well suited for camp sizes from 250 to a thousand people. Where you start getting into head counts that are above a thousand, generally the limitation is land availability. becomes a much, much larger footprint where multi-story lodge rooms that are currently installed in Alberta become more attractive, particularly if the project has sufficient term to justify the installation cost of multi-story rooms. All of those assets are largely in Alberta or in British Columbia. From a project standpoint, we're going to be more competitive on a transportation cost basis closer to those areas. So that's why we highlighted in the prepared comments the northern US, Canada, and Alaska. It really depends project by project what the project proponent is looking for. Mobile camp rooms are very well suited for two to four year projects. Below two years, it becomes prohibited the cost of transportation installation and then dismantle and trans out becomes a bigger cost to the total accommodations budget. So I don't know if that answers your question, Stephen, but that's how I know.

No, that's very helpful. The second one was around, I think you had kind of alluded to this, the pipeline of opportunities and North American data centers was kind of part of the part of the equation. Can you tell us what what you're seeing on that front? And, you know, I don't know if you're willing to kind of talk about there's, I don't know, it's almost 10,000 rooms total, or maybe get a little bit more that you have available. Timing on when we may hear about some, some some contracts, whether it be data center or other?

As we highlighted a couple times in the prepared comments, they all depend on customer final investment decision. Those all appear to be progressing in a positive fashion, but ultimately dependent on the customer. That being said, I would expect that based on the current opportunity set, that something meaningful should be REACH FID and we should be in a position to be awarded contracts by year end. The question is, how close is it to now? Bring into the question, is there an opportunity to generate revenues in 2026 and or how much revenue benefit are we gonna get for the full year 2027? But as we look at them, I think what's interesting, we've tried to highlight this in the investor deck The opportunities that just in Canada and Alaska is meaningful between LNG opportunities, high line power, general infrastructure, obviously Alaska LNG, that in and of itself would be an opportunity that is extremely attractive and would rank as some of the best opportunities that we've seen over the last five to ten years. You add in the fact that we have a data center opportunity set that we continue to pursue, that is something that is additive. So we are looking for term on the commitment. Obviously a project that has three to five years of term as opposed to two to three is more attractive, or it can put more rooms to work under a take or pay basis. That is more attractive. I would say overall, the inbounds we were receiving on data center or data center-related projects were feverish at the beginning of this year. It has slowed some. That is not to mean that we are not pursuing those, but I would say the fervor for what we do related to that end market has softened a little bit. That being said, as we said in the comments, the overall opportunity set that we're pursuing is still extremely meaningful.

Right. Okay. Thanks. And here's one final point. The full year guide is unchanged when we think about the variability between the low end and the high end on the EBITDA side. Is that just kind of around some of the uncertainty in Australia that you mentioned because of some of the apprehension of the customers around higher costs and higher diesel costs. Is that the main variable, or how do we think about that?

It would be turnaround work in Canada, which we do have in the third quarter. It to some degree had shifted from Q2 to Q3. partially because of the conflict in the Middle East and our customer base wanting to focus on production given the higher oil prices. Australia is a component of it in terms of what we would call casual occupancy, so customers using rooms above their take-or-pay commitments. And then it is also going to be timing of mobile camp projects. We are expecting that we're going to have some work in the fourth quarter.

Great. Okay. Thank you for all the detail.

The next question is from Steve Ferrazani of Sidoti. Please proceed with your question.

Good morning, everyone. Bradley, just in terms of your outlook for Australia, can you sort of break it down? Because I know your accommodations and your integrated services are really important. in two different areas. Can you talk about the differences from what you're seeing on those two sides? And I know on the integrated services, it's not just been demand growth, but it's been market share growth, your sort of opportunity outlook on that side of the next couple years.

So in terms of the owned villages, which are largely in Queensland, I would say that it's very solid occupants. I think the The piece that has been a little bit of a head scratcher has been that met coal prices are materially better this year than they were last year. Most of last year met coal prices were in $180 a ton plus or minus. And this year they spent most of the year above $220. But I do think the uncertainty around availability and cost of diesel has been The overall unemployment in Australia is low. And so as a result, there are a couple headwinds there. But overall, our city-owned village occupancy is very strong. So I would say that if there is a resolution to the uncertainty surrounding diesel costs, That should set up for, as we said in the comments, for a stronger 2027, really across the village occupancy span. As it relates to the integrated services business, which as you pointed out, is largely in Western Australia, although we have locations that we serve in South Australia and Queensland, the opportunity sets to grow that organically remains strong. We've grown that business pretty successfully over the last seven years. And we're in the crosshairs of the bigger players who are taking notice. So we recognize that it's going to be tougher to win new work, but we are continuing to win new work. And we still, as we've maintained our goal of reaching 500 million Australian revenues out of that business by next year. That goal still seems very achievable, and we have the opportunity set to do it.

Excellent. Got to ask, as we go into 3Q, are we past the worst concerns around wildfires? Do you think you've dodged it this year, or are there still heightened concerns?

I don't want to jinx it, to be quite honest, but there's been a fair amount of rain in Alberta, so Alberta wildfires seem to be less of a concern. Obviously, there's still concerns in BC and Ontario, which have been noted in the press, but I think generally for Alberta, we're going to be okay. It looks like turnaround work in the third quarter is going to progress. but as I noted to Stephen's question, that is kind of part of the variability in the guidance.

Excellent. That's helpful. And then last one, it looks like at least two significant Canadian LNG projects at least appear in the media to be exceptionally close to FID. And again, I'm sure you don't want to jinx it, but how quickly could that move forward if it gets to FID? I mean, how do you typically think about timing from FID to you've got to win the contract? I mean, what are we looking at? If those two went to FID shortly, they would both likely impact 2027 if you won the contracts, correct?

100%. Particularly the way you phrased it. So for the rest of the audience, let me just be very clear in that if those reach positive FID, I would think it would take them 90 days to then kind of get the rest of the steps in order, get their ducks in order. And then, you know, 90 days after that, so you're kind of looking at four to six months between FID and contract award for what we do. Then the third piece is mobilization because they can reach FID. We can then, you know, our portion or a contract But then it depends on whether they want us to mobilize. But given the timelines that are currently provided by those customers, I would say that they will meaningfully add to 2027 if they were to move forward. But as we're sitting here at the end of July, you put all those months together, you're going to miss kind of the first quarter of 2027 somewhat regardless. And so I would say they're going to be meaningful contributors to 2027. We had hoped maybe four months ago that they might be full-year contributors to 2027. I think that window is starting to close if it hasn't already. But as I mentioned to the prior question, we do believe that there will be some mobile camp mobilizations in the fourth quarter, and that is included in guidance.

If I can supplement, there's a third variable that can come along with some of these major pipeline projects, which is the weather window. And so it's It's not impossible, but it is more expensive to mobilize camps in the winter in the BC mountains. And so, depending on where the work, you know, so all these kind of variables have to line up. So you have project timing, FID, contract award, but then there's also the weather window. When do they want to actually mobilize these camps? Summer is usually a little bit better. Winter can be done, but so there's a couple of unknowns, but I would say that all the... The next question is from Dave Storms of StoneGate. Please proceed with your question. Good morning and thank you for taking my questions.

One of the stick in North America, and especially in Canada, you mentioned in your remarks that you're preserving capacity in Alberta due to some of the tailwinds that you've already mentioned. Maybe just what does preserving capacity look like on the ground? I'm assuming you're not mothballing anything, but is that just keeping really up to date on maintenance? And then additionally, is there any additional notable capex or expenses that comes with this that might impact margins while we're waiting for some of those FIDs to be awarded?

So let me address the first part, and I'll have to ask you to repeat the second part. But on the first part, our capacity comment was really more balance sheet related, that we have the financial capacity to then have the mobilization expenses and manage through that piece of it. That being said, in that first part of the question you mentioned, we are doing some work to prepare units for mobilization. Just ongoing R&M to get things ready. Not huge expenditures or speculative spending per se, but trying to be diligent and kind of thread that needle between not overextending and pre-funding things before we've been awarded, but by the same token, trying not to be flat-footed when things do get awarded. And then, Dave, if I could ask you to repeat the second part of the question.

No, I think that covered the second part of the question, that you're not pre-funding or being speculative. So we shouldn't expect a significant impact to margins from this while we're waiting.

Yeah, I mean, I think it is notable that, you know, the vast majority, really, I'll just use vast majority, of the opportunities that is a contract camp contract structure, meaning that these are going to be dedicated camps to a customer, to a project. So the customer is going to pay for transportation installation of the assets, which typically is lower margin work. Then they will rent the assets on a take-or-pay basis for the term that they want the assets there. They'll pay for the hospitality services on a per-person, per-day basis as used. And then at the end, they will pay for the dismantle and trans out of the asset. The startup pieces of these projects are the trans and install. Those are lower margin, 10% margin type work. So that piece will be at the front end. Then once the camps are up and running, then you're kind of into the rent and the services, which does, on a combined basis, have a higher margin.

That's very helpful. Thank you. And then maybe just one more question. in Canada and North America. The Ontario contract, it was mentioned that there's some startup costs associated with that. Maybe just any comments on the overall North American integrated service businesses, if any of your opportunity pipeline could give a boost to the integrated service business, anything there.

Continue to be very active on the integrated service from a This is a development standpoint, particularly in Eastern Canada, trying to build off of some First Nation partnerships that we've put in place there, as well as the Ontario contract. We are looking to also augment our integrated services in North America in a similar fashion that we did it in Australia with the platform acquisition. So we're actively looking for that opportunity, and that could be additive here in the next 12 months.

Understood. Thank you for taking my questions. Thank you.

This concludes our question and answer session. I would like to turn the floor back over to Bradley Dodson for closing comments.

Thank you very much, and thank you, everyone, for joining the call today.

We greatly appreciate your interest in CIVIA, and we look forward to speaking to you on our third quarter earnings call, expected in late October.

Ladies and gentlemen thank you for your participation. This concludes today's event. You may disconnect your lines and have a wonderful day.