Civeo Corp Aktie

Greetings, and welcome to the Civeo Corporation First Quarter 2026 Earnings Call. [Operator Instructions]As a reminder, this conference is being recorded. It is now my pleasure to introduce Regan Nielsen, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, and 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 SE 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 and summarize our consolidated and regional performance, after that, Collin will provide further financial and segment level detail. And I'll conclude our prepared remarks with our outlook for 2026. We will then open the call for questions.

There are 4 key takeaways from call today. First, we delivered a strong start to 2026, outperforming our expectations. 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 midpoint 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.

Well, much of this growth is dependent on customer 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, 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 and thus, we are maintaining our initial guidance of $85 million to $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. Money 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, as the ongoing disruption to global supply chains as a result of the more in the Middle East, has likely to shift the timing of any such uplift into 2027.

On the oil side, prices are undoubtedly higher. 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 is 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 practical. 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. Also during -- in April, we amended and extended our credit agreement, increasing the company's total revolving capacity and extending the maturity of our -- April 2030.

This further enhances Civeo's liquidity and provides additional flexibility as we evaluate capital payment 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 sand stays in 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 to 2020 time frame when North America growth was almost exclusively pended 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 if 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 creation.

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 negative $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. The 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 as legacy village portfolio.

Australian build rooms in the quarter were approximately $676,000 compared to approximately $626,000 in the first quarter 2025. Our daily room rate for Australian owned villages was $83 compared to $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 negative $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 cost reductions implemented during 2025. Canadian build 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 31, 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 group, increasing total revolving capacity to $285 million and extending the maturity to April 2030. This enhances our liquidity profile and provide 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 spend.

During the quarter, we purchased -- 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 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're prior time to conserving 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 to $700 million from our prior range of $650 million to $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 to $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. As a result, despite improved revenue outlook, we are maintaining our adjusted EBITDA guidance and we feel is appropriate at this time. We also continue to expect capital expenditures for 2026 to be in the range of $25 million to $30 million.

I'll now provide additional color on our expectations by range. In Australia from a macro perspective, metallurgical coal prices remain at healthy economic levels. However, the recent increase to diesel prices has driven customers focus more on cost efficiency, which has tempered what we might otherwise have expected in terms of incremental upside to our initial occupancy guidance. As a result, 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 in our contracted room nights, we continue to expect generally stable occupancy across our own billing 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 rent services revenues by 2027. In Canada, we are encouraged by the strong start to the year with improved occupancy and continued benefits 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 have 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, though overall activity levels remain consistent with our full year outlook. We're also -- 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 stability of our integrated services platform in North -- 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 ready base. More broadly, the oil sands activity remains stable to 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 America 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's 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 logos 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 Northern -- in the Northern U.S., Canada and Alaska, where transportation from Alberta and PC 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.

I'll now open the call for questions.

[Operator Instructions] And the first question comes from the line of Stephen Gengaro with Stifel.

So when we think about the U.S. market and the -- well, and as well, one of your competitors at least 1 of the big combinations players in North America just lock a bunch of capacity. And it seems like the data center demand is extremely strong and supply is extremely low. So 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, all of our available assets are in Western Canada. So 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.

So where I was alluding to, we continue to be -- 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 bid those out multiple times. And then we're seeing increased interest in our multistory lodge rooms to be reemployed as well.

And 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. But are you seeing any of that concern from your customers yet? And 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. And as we've gotten 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. So 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, be able to meet time frames and for first beds is more important than price, although price continues to be a consideration.

So having available assets has a lot of value today. And to your point, the market has started to tighten up and concerns about availability are -- that theme is starting to come out in customer conversations.

And then maybe just one more, and this might be a little bit harder. But when we go back in time, right, and you've built out the oil sands. And I forget the exact numbers, but if you needed 1,000 folks to instruct the facility, develop the asset, the operating personnel was something less than that. I don't know if it's 50% or 60%, if I don't remember correctly, but when -- and your Canada business seems to be pretty baseload 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 3 or 4, 5 years of demand? And then the operating side is -- or is it not -- 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? So I see the next 3 to 5 years, there with the current bidding pipeline or opportunity set. It looks like it's going to be strong for 3 to 5 years. But to your point, whether it's a data center, an LNG facility and oil sands, mine, a pipeline, once construction is complete, there's not a need for accommodations anymore. so 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 this large by a factor of 2 or 3, and we've seen since the early 2000s. And it is going to be construction related. So we -- it's deploy assets and earn a return on those assets. And then should the construction projects start to space out, then we could see a longer than 3- to 5-year period of demand for accommodations in North America for construction and that would be favorable for a longer-term utilization, particularly in the mobile camp.

Everything seems to be extending longer than we think, which is a positive, but that's great color.

The next question comes from the line of Stephen Ferazani with Sidoti Company.

This is Alex on for Steve. 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 1Q performance you would attribute to customer timing, AKA pull forward.

I would say very little was a pull forward there was 1 in the first quarter, a customer had an unexpected situation, which added some occupancy during the quarter. April has started off pretty strong. 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 has gone from 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, but that does not -- which has 2 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 until 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 they're not making -- well, 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. And then one more from us on Australia. You've continued to report strong and growing Australian services revenue. Could you talk a little bit about what the labor market is like there now? Any challenges with staffing or any room to expand?

Yes. Labor continues -- availability of labor continues to be a struggle across our Australian business. Our HR team down there, they're hyper focused on recruitment and retainment. It's one thing to get people higher. It's another thing to keep them in the business long term. And so labor costs are still our labor availability and therefore, cost because we have to use temporary labor, what we can't have -- well, we don't have a full complement of full-time employees. Labor costs are something that we're focused on.

So we're recruiting one of the tough positions for our business is your head shaft at each location. We're recruiting foreign shafts to come in and work rotations for us, and that has helped some, but it's still -- we're still not to -- the labor costs that we'd like to have there.

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

Going 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? Or maybe just help us understand the question pool 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 of this market. The other factor that you have to keep in mind from a customer standpoint, it's not a factor for us and all slightly is that they sell their commodities in U.S. dollars and they've got largely all Australian dollar costs.

So 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, for instance, U.S. dollar, they will -- our customers will have effectively a cost structure increase without a revenue increase because -- Aussie dollar cost in U.S. dollar revenues. For us, we're naturally hedged. We're largely Australia. We're all Australian dollar revenues down there and Australia do costs. So the concern really is how do fuel prices impact customer activity levels. And it's, I would say, early on. We've had effectively 2 months and I expect that we'll -- that Australia will continue to see inflationary pressures for the balance of the year.

Understood. That's great color. 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 maybe in earlier 2027? Or are they all just super different and kind of hard to judge.

Well, we always have to go off a lot of our customers tell us the time line is. And I think embedded in your question is, do we think that they're going to hit the time line. It's -- these are major investment projects, which historically have always had a tendency to push to the right. We continue to believe that there is a fair amount of work that will be led in 2026, so that will be announceable in 2026, but may not, as we made it -- I said in our prepared comments, may not materially get us financially until going into 2027 and 2028.

But the FID time period as we understand it now, the time to mobilize the time to first meals, first beds. So it could hit in 2026. But as we sit here on May 1, that's got to hit pretty soon. Oil camps can typically be deployed within 90 days and start earning money. But if it involves multistory, that's going to take longer.

Understood. Appreciate that. And then maybe just one more. You mentioned 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 your 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. It can even -- when you don't have the dislocations we're experiencing today, even in a more -- was a more normalized market. Customers can get in and have various idiosyncratic reasons to either accelerate or defer turnaround work. So I think we feel good about what's embedded in our guidance where Canada is going to face a smoother year this year in terms of the cadence of occupancy than we would historically see.

So the rule of thumb that we have given the market in the past multiple times was that 60%, 65% of annual EBITDA for us what happened in Q2 and Q3, largely driven by turnaround activity ramping up in Canada. I would say this year, it's going to look a lot more smooth. So as to -- well, just flatter throughout the year as it relates, particularly to Canadian occupants.

Next question will come again from the line of Stephen Gengaro with Stifel.

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

It would be turnaround activity. It would be inflationary pressures in Australia, more so in Canada and then 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. So 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, now works in Alberta. So I would think it's Canadian turnaround activity, Australian inflation and when do we get any benefit from infrastructure projects that -- this year, potentially mobilized this year. And then, as I mentioned, set up for a stronger 2027.

Great. And 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? And would that -- how do you balance maybe the term of the contract versus maybe something which could be a little more profitable 2 or 3 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. And so obviously, we would be -- we had our druthers, we would win work that has a longer duration. I would say, generally, what we're seeing today is 2- to 4-year projects. Some are a little bit longer, but I haven't seen a lot that are over 5 years. So these are construction projects and the need for accommodations is typically in that 2- to 4- to 5-year time frame.

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

Thank you so much. And 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 would 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.

Greetings, and welcome to the Civeo Corporation Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Regan Nielsen, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to Civeo's Fourth Quarter and Full Year 2025 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 remarks speak only as of the date of our earnings release and this conference call. We undertake no obligation to update or revise these forward-looking 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 Form 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 fourth quarter for the '25 earnings call. I'll start with a few key takeaways for the quarter and the year and then summarize our consolidated and regional performance that, Colin will provide further financial and segment level detail. And I'll conclude our prepared remarks with our initial guidance for 2026, along with the qualitative outlook by region, then open the call up for questions.

Here are the 4 key takeaways for the call today: one, significant progress on our share repurchase authorization, including we're purchasing 17% of our common stock during 2025 alone. And subsequent to year-end, we have repurchased an incremental approximately 500,000 shares, resulting in in reaching 95% completion of our current buyback authorization. Two, strong performance in Australia, driven by growth in our integrated services business and the contribution from our May 2025 Village acquisition. Third key point meaningful margin recovery in Canada as our cost reduction initiatives continue to bear fruit.

And lastly, the fourth key point, we are entering a 2026 with an improved cost structure and balance sheet strength, positioning Civeo to capitalize on anticipated North American infrastructure development opportunities. Moving on to the content. I'll start with capital allocation. During 2025, we repurchased 2.3 million common shares for approximately $54 million, representing 17% of our common shares outstanding at last year-end and significant progress towards completing our authorization to repurchase 20% of our outstanding shares.

Subsequent to year-end, we repurchased another 500,000 shares, resulting in 95% of completion of our current buyback authorization. As a reminder, our current capital allocation policy announced last April, Phase 1 included a 20% repurchase authorization, which is now substantially complete. Today, we also announced a new authorization to repurchase up to 10% of our outstanding shares which will come effective upon the completion of our existing authorization. As of December 31, 2025, our net leverage ratio was 1.9x, and we're comfortable with that. We remain committed to completing our current buyback authorization as soon as practical.

Turning now to the operational results for the quarter and the full year. Overall, the fourth quarter and full year results reflect disciplined execution in a challenging macroeconomic environment. On a consolidated basis, Civeo's fourth quarter 2025 revenues were up 7% year-over-year with adjusted EBITDA of 90%, a testament to our cost reduction efforts in Canada and the successful integration of our May 2025 Australian acquisition.

Moving to the segments. In Australia, we delivered record annual revenues in 2025, $460 million, reflecting growth in our integrated services business and the contribution from our May 2025 acquisition in the Bowen Basin. Revenue and adjusted EBITDA in Australia for the fourth quarter increased 9% year-over-year, driven primarily by the additional acquired villages and growth in our integrated services. Importantly, our integrated services business in Australia continues to scale and remains on track towards our goal of AUD 500 million in annual revenue by 2027.

In Canada, while overall lodge occupancy remained under pressure from customer spending discipline in the oil sands, our cost reduction initiatives undertaken in late 2024 and early 2025 drove substantial margin improvement. In the fourth quarter, Canadian revenues increased 4% year-over-year, while adjusted EBITDA improved from negative $5.4 million in the fourth quarter of 2024 to positive $3.4 million in the fourth quarter of. This performance reflects the structural cost actions we need last year.

Overall, we believe that we are executing on our strategic priorities in each region. Our Australian business continues to generate strong cash flow, supported by integrated services growth and expanded Village footprint. And our Canadian business is demonstrating improved profitability at current activity levels, while position for anticipated demand from North American infrastructure projects.

With that, I'll turn the call over to Collin.

Thank you, Brad, and thank you all for joining us this morning. Turning to the income statement. We reported total revenues in the fourth quarter of 2025 of $161.6 million, compared to $151 million in the fourth quarter of 2024, an increase of 7%. The year-over-year increase in revenues was primarily driven by higher activity in Australia including contributions from the May 2025 acquisition and growth in our integrated services business.

Net loss for the quarter of 2025 -- for the fourth quarter of 2025 was $6.5 million or $0.56 per diluted share compared to a net loss of $15.1 million or $1.10 per diluted share in the fourth quarter of 2024. During the fourth quarter, Civeo generated adjusted EBITDA of $21.7 million compared to $11.4 million in the fourth quarter of 2020, an increase of 90%. This increase in adjusted EBITDA was primarily driven by significant margin improvement in Canada resulting from the structural cost actions implemented earlier in 2025. The as well as contributions from the Australian acquisition and continued integrated services growth.

Operating cash flow in the fourth quarter of 2020 was $19.3 million compared to $9.5 million in the prior year quarter. For the full year 2025, we generated revenues of $638.8 million and adjusted EBITDA of $88.2 million. compared to revenues of $682.1 million and adjusted EBITDA of $79.9 million in 2024. The year-over-year revenue decline was primarily driven by lower activity levels in Canada, partially offset by Australian growth, including the contribution from the Bowen Basin acquisition, despite the revenue decline -- sorry, despite the revenue decline, the adjusted EBITDA increase of 10% was primarily driven by the cost reduction initiatives in Canada.

Turning to our segments. I want to first point out the change. Prior to the fourth quarter of 2025, corporate SG&A included corporate IT expenses managed on a worldwide basis that were not allocated to individual segments in Australia and Canada. To better align segment results to the profitability measure used by management, these SG&A costs are now allocated into Australia and Canada beginning with the fourth quarter and year ended December 31, 2025. For any for any prior period results discussed on this call, we have adjusted financial figures to conform to the updated 2025 presentation.

In Australia, fourth quarter revenues were $119.5 million, up 9% from $110 million in the fourth quarter of 2024. The -- adjusted EBITDA was $22.4 million, up 9% from $20.6 million in the prior year quarter. The year-over-year increase in revenues was primarily driven by the contribution from the 4 owned diligence acquired in May 2025 and and continued growth in our integrated services business. These gains were partially offset by modest softness in portions of our legacy owned village portfolio. This softness is reflected -- reflective of the sub $200 metal pricing environment that our customers will experience the majority of the back half of 2025.

The increase in adjusted EBITDA reflects the incremental contribution from the acquired villages and continued integrated services growth. Australian build rooms in the fourth quarter totaled approximately $705,000 compared to approximately $637,000 in the fourth quarter of 2024. Average daily rates were $76 compared to 77% in the prior year quarter. For the full year 2025, Australian revenues were $460.3 million compared to $427 million in 2024. Turning to Canada. Fourth quarter revenues were $42.1 million, compared to $40.7 million in the fourth quarter of 2024, an increase of 4%. Adjusted EBITDA was $3.4 million compared to negative $5.4 million in the prior year quarter. The year-over-year increase in revenues was primarily driven by higher average daily rates due to improved occupancy mix as build rooms were essentially flat year-over-year.

The significant improvement in adjusted EBITDA was driven by structural cost reduction initiatives implemented earlier in 2025, including overhead reductions, log rationalization and field-level cost alignment. Canadian build rooms in the fourth quarter totaled approximately $359,000 compared to approximately $360,000 in the fourth quarter of 2024. Average daily rates were $100 compared to $94 in the prior year quarter. For the full year 2025, Canadian revenues were $178.6 million compared to $245.1 million in 2024. Full year Canadian adjusted EBITDA was $17.1 million, compared to $18.2 million in 2024.

The decrease in revenues and adjusted EBITDA were primarily driven by lower oil sands activity with the adjusted EBITDA decline mitigated by the impact of cost reduction initiatives implemented in 2025. Looking at our capital structure. As of December 31, 2025, total liquidity was $90.4 million. Total debt was $182.8 million, and net debt was $168.4 million. Our net leverage ratio was 1.9x at year-end. Finally, capital allocation. Capital expenditures for the full year of 2025 were $20.2 million compared to $26.1 million in 2024. We Capital expenditures in both periods were primarily related to planned maintenance spending on our lodges and villages, Specifically, in 2025, $11.2 million was associated with maintenance CapEx and $9 million was related to growth projects including the reactivation of our Buffalo Lodge in Canada and WiFi infrastructure improvements in Australia. During 2025, we repurchased approximately 2.3 million shares for approximately $54 million, reducing our share count by approximately 17% during the year.

As Bradley mentioned, as of today, we have repurchased approximately 500,000 additional common shares year-to-date in 2026. And resulting in 95% completion of our current authorization. We will look to complete the current authorization as soon as practicable at which time we'll be able to transition into our new share repurchase authorization for up to 10% of our outstanding shares.

With that, I'll turn the call back over to Bradley.

Thank you, Collin. I'd like to now turn to our outlook for 2026. For the full year 2026, we expect revenues of between $650 million to $700 million. adjusted EBITDA of $85 million to $90 million. We are also giving initial CapEx guidance for 2026 of $25 million to $30 million. Looking at the regions. In Australia, metals coal prices weakened in the back half of 2021, contributing to modest activity softness in the fourth quarter of 2025 across our Bowen Basin owned village portfolio. .

Entering 2026, met coal pricing has improved, creating a more constructive economic environment. If prices remain above $200 a ton through the upcoming producer budgeting season, we can see improved activity levels in the back half of the year. base outlook assumes generally stable occupancy in our own villages with the full year impact of our May 2025 acquisition, largely offsetting potential softness in our legacy operations. Our integrated services business, we expect continued revenue growth as we advance towards our $500 million 2027 revenue goal.

In Canada, we expect oil sands activities to remain stable, but at subdued levels by historical standards, consistent with the spending discipline demonstrated by our customers throughout 2025, but importantly, we hit our 2026 with a structurally lower cost base, excuse me. Let me back up and say the key investor themes to watch for Civeo in 2026. One, continued strong results in our Australian business with occupancy upside and our own villages that call sentiment continues to improve in organic growth, and we continue organic growth in our ingrate services business. Two, in Canada, continued stabilization in occupancy in our oil sands lodges with upside from asset deployment for North American infrastructure construction data centers in the U.S. and LNG and power-related infrastructure in Canada. And lastly, continued return of capital to shareholders through the buyback authorization.

We believe 2026 will be a year focused on positioning the company to capitalize on anticipated infrastructure development in Canada and accelerating data center construction activity. While we do not expect these projects to materially impact 2026 results, we believe we are well positioned to support this demand as it develops.

Overall, we expect 2026 to reflect continued solid performance from Australia sale conditions in Canada and meaningful progress positioning the business for potential infrastructure development growth beginning in 2027 and beyond. We will now open the call for questions.

[Operator Instructions] And our first question will come from Stephen Gengaro with Stifel.

A couple of things for me. The first on the Canadian cost-cutting side, did you see the full impact of that in the back half of '25? Or is there -- is there more that will show up in the margins in '26?

We saw most of it. There'll be some continued full year impact in the first half of -- on a comparison basis in the first half of 2026. But the vast majority of it, we had signed by June 30 last year.

And then -- on the asset deployment potential for the assets that are available in Canada and potentially in the U.S. market. Can you talk a little bit about, I guess, 2 parts to the question. One is the types of conversations that are ongoing. And b, like when a decision is made, how long would it take to get assets deployed and start generating revenue and profits?

Once we -- so the status of the conversations are that we're providing detailed bidding proposals, both in Canada and in the U.S. and Canada. They're largely related to pipeline, LNG infrastructure, things like PRT silicas, CGL Phase II, LNGC Phase II and also Alaska LNG, and then in the U.S., it's all about data centers.

Speed to market -- sorry, I was getting to the second part of your question, in terms of speed to market, it depends on the asset deployment. If the asset deployment is from our mobile can fleet, we can begin to have rooms up and running within 3 to 4 months on the first phase and then phase in rooms over time. So we could have first meals within 3 to 4 months. on the -- if we're moving multi story, I would say that's 9 to 12 months, to get fee from getting the authorization to mobilize which includes a signed contract.

Great. No, that's helpful. And just 1 final one, Soe. You gave some of the CapEx levels and the EBITDA guide for 2026. Any big other moving pieces from a working capital perspective, we should be thinking about when we're trying to calibrate free cash flow. I would say, Working capital is a plus or minus. I think the 1 thing in looking at free cash flow, you have to remember is we've got about USD 20 million of cash taxes to assume got about $10 million of interest expense. That should get you there and then working capital should be plus or minus off of that. .

Our next question comes from Steve Ferazani with Sidoti & Company.

I want to follow up the last question, just thinking about how you're looking at capital allocation now that the 20% share repurchase is essentially complete. Your net leverage still under 2x. As we think about cash generation, at least until hopefully, eventual ramp-up on some of the mobile camp deployments. How do you think about cash flow generation? Does that go directly towards your 10% share repurchase authorization do you try to maintain 2x net leverage? How are you going to balance that? And is the #1 focus remaining share repurchases? Or does that change as the initial 20% is complete? .

There has been no change to the capital allocation framework that we laid out last April. We are completing Phase I here shortly with the initial repurchase -- we used more than 100% of free cash flow I might note. Our leverage has been -- has stayed in that 2 times range. And the second phase is to no less than 75% of annual free cash flow to continue to buy back stock. The 1 million share authorization will allow us to do -- that was leverage that would maintain leverage at 2x or less.

Correct. Okay. That's helpful. When we think about the CapEx for guidance for this year, you only spent about $20 million. I think you said $11 million was maintenance CapEx. You're guiding now for $25 million to $30 million. Are there any larger projects that pushed out from last year? Or how should we think about where the spending is going on that 25% to 30% range? .

Yes. Thanks. This is Collin. I'll take that one. The $11 million in maintenance this year is -- I don't want to say a low watermark, but that's a pretty low number for us. Repeatability is aspirational. We'll certainly track for that. But -- and I would also offer that historically, I think we try to -- at this stage of the year, we line out what the capital plan looks like. This have to have, and then there's should does -- and as the year goes on, that list is refined. And I think our track record is that we've done pretty well relative to guidance on the capital side as we really dial in the maintenance requirements throughout the year.

So that's kind of the spirit behind the increase, but I would also say that the $11 million in maintenance that we spent last year was largely driven by some pretty material cuts in Canada, and we may have to kind of get back to a normal run rate this year.

And I will also point out that this time last year, CapEx guidance in the same range.

That's right. Helpful. In terms of mobile camp opportunities versus where you stood 3 months ago, have you seen progress? Are you getting -- are you having more conversations? Are we getting a little bit closer? Can you provide some color?

Conversations continue, say opportunities are increasing. And whether I would say, for the most part, Well, in both markets, quite frankly, you're bidding on work that doesn't have full FID at the customer level yet. And so to a great degree. The wait and see is now clarification to your question. We're completing those with our clients, but moving on to waiting for them to get to that ID.

Does that differ at all in terms of the data center progress where maybe that can happen a lot faster than some of these really large infrastructure projects that require pretty significant funding?

As a general answer, yes, although there is potential that infrastructure projects could move soon around the line.

[Operator Instructions] And we'll go next to Dave Storms with Stonegate. .

Just want to start maybe with the Canadian market. There's been several geopolitical developments since we last spoke that have impacted oil prices. How has this changed in your conversations with customers? I know a lot of this is done after budgeting. Just curious as to anything materially has changed or customers are looking through that. .

I think it's too soon for we're making any material decisions as movement of oil. I don't expect them to do anything. It's certainly Canada as an oil producer certainly interesting in times of geopolitical uncertainty given the security of that resource. So it is maintained over a longer period of time, it could be positive. But in the short term, I don't expect any material changes.

Understood. And sticking with Canada, you signed that contract in Ontario. Is this a playbook for more to come? Or was this an opportunistic onetime contract? How would you characterize that?

Very pleased with the win in Ontario. It's our first work over there. It's on the integrated services side. So adding a new geography, increasing the integrated services contributions in Canada or North America as a whole. And yes, we would like to build off of it. excited by the first land, excited we'll convene with that opportunity and looking forward to expanding further. .

Understood. And then just 1 more for me. It sounds like you could be picking up some momentum through 2026, especially if met coal face above that 200 level, cost cutting continues. Should we expect a similar seasonal trend as usual? Or would you expect to see maybe a little bit more of a quarter-over-quarter and maybe not quarter-over-quarter, but a ramp going into 2027?

But kind of 2 questions there, if I'm hearing you correctly. One thing that we've kind of always been in the past at this time of the year because Canadian turnaround season, in particular, is strongest in the second and third quarters. We typically have 60% to 65% of our annual EBITDA in the middle half, if you will, in the second and third quarters. I think that will be slightly more muted Second and third quarters will still generate the majority of the cash flow as opposed to the first and the fourth, but I don't believe it will be as strong. So a more smooth EBITDA progression throughout the year.

Dave, is there anything further?

Apologies, I was on mute, good luck this quarter.

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

Thanks, Carrie, and thank you, everyone, for joining the call today. We appreciate your interest in Civeo. And we look forward to speaking to you on our first quarter earnings call planned for April. .

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings, and welcome to the Civeo Corporation Third Quarter 2025 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Regan Nielsen, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to Civeo's Third Quarter 2025 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 remarks speak only as of the date of our earnings release and this conference call.

We undertake no obligation to update or revise these forward-looking 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 third quarter 2025 earnings call. I'll start with some key takeaways for the quarter and then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment level details. And I'll conclude with our prepared remarks -- I'll conclude our prepared remarks with our updated 2025 guidance and preliminary outlook -- qualitative outlook for 2026 by region. We'll then open the call up for questions. There are 3 key takeaways from the third quarter results: one, continued significant progress on the current share repurchase authorization.

Two, our Australia business continues to grow both in our owned villages and in our integrated services business; and three, the Canadian cost-cutting measures bear fruit, and our focus now turns to putting our mobile camp assets to work. I'll start with the significant progress we've made toward completing our expanded share repurchase authorization. During the quarter, Civeo repurchased approximately 1 million common shares, bringing our year-to-date return of capital to shareholders to $52 million. With this progress, we've completed 69% of our new buyback authorization as of September 30, 2025.

We remain confident that share repurchases are a compelling use of capital, especially during broad equity market volatility. Given the accelerated buybacks and our recently completed acquisition, our net leverage ratio as of September 30, 2025, was 2.1x, and we're comfortable with that. Our accelerated repurchase activity is consistent with our prior commitment to completing the current authorization as soon as practical. As previously stated, we intend to use no less than 100% of annual free cash flow to achieve this goal.

We've obviously spent more than that, and we'll continue to spend more than that in our 2025 free cash flow buybacks this year. Turning now to the operational results for the quarter. Overall, the third quarter results were consistent with our expectations and reflected our outlook conveyed on our prior earnings call. In Australia, we remain focused on growing our integrated services business and capitalizing on our newly acquired villages in the Bowen Basin. Revenues in the region increased 7% year-over-year and adjusted EBITDA grew 19%. Notably, we completed the integration of our recently acquired villages in the Bowen Basin.

So the third quarter of 2025 was the first full quarter financial impact from these 4 villages. Looking ahead, based on current customer discussions, we expect Australian occupancy in our owned villages to soften modestly in the fourth quarter due to typical fourth quarter seasonality with the holidays and softness in outlook for met coal pricing and demand exhibited by recently announced customer headcount reductions. Despite these near-term headwinds, we are confident in our Australian business. We have a strong contract position in our owned villages that will support good continued cash flow. In our integrated services business, we remain on track to reach our goal of AUD 500 million of revenue by 2027.

And we continue to seek opportunities to expand into non-resource natural resource markets. While conditions -- in Canada, while conditions in the region remain challenged given oil prices and ongoing macroeconomic headwinds, our ability to drive year-over-year gross profit expansion in the face of continued pressures is a testament to the success of our cost reduction strategy implemented to date. We have taken decisive action to position our Canadian business to be more profitable in response to changes in oil sands customer sentiment and operational strategies, and we are pleased with the benefits they are seeing as a result.

Initial actions have included an overall headcount reduction of approximately 25%, [indiscernible] certain underutilized lodges to reduce carrying costs and streamlining field-level operations to align with current demand levels. In the third quarter, this work allowed us to bring direct field level cost in Canada down 29% year-over-year, reduced indirect operating overhead costs by 23% and as a result, increased gross profit by 35%. From here for our Canadian business, our key focus is to capture the potential increase in demand for mobile camp assets in support of various Canadian infrastructure projects.

Overall, we are executing on our strategic priorities in each region. Our Australian business continues to do well with year-over-year growth in both the owned villages and integrated services. And while our Canadian -- while the Canadian headwinds remain, we know this market well, and we're working with our strategic partners to understand how we can continue to support them as they capitalize on evolving opportunities in the country. We are taking decisive action to apply our resources where our customers need them in the region. And as a result, we're positioning Civeo for long-term resilience and cash generation.

With that, I'll turn it over to Collin.

Thank you, Bradley, and thank you all for joining us this morning. Turning to the income statement. Today, we reported total revenues in the third quarter of $170.5 million with a net loss of $0.5 million or $0.04 per diluted share. During the third quarter, Civeo generated adjusted EBITDA of $28.8 million and operating cash flow of $13.8 million.

The year-over-year increase in adjusted EBITDA was primarily driven by the benefits of cost cutting in Canada, contributions from the Australian acquisition completed in May of 2025 and higher occupancy in the legacy Australian-owned vs. Third quarter revenues from our Australian segment were $124.5 million, up 7% from $116.6 million in the third quarter of 2024.

Adjusted EBITDA was $26.7 million, up 19% from the $22.5 million in the third quarter of 2025. The increase in revenues and adjusted EBITDA was primarily driven by the recently completed acquisition of 4 owned villages. The year-over-year increase was offset by the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and adjusted EBITDA by $3 million and $0.6 million, respectively.

Australian-owned village billed rooms in the quarter were 763,000 rooms, up 18% from the third quarter of 2024, primarily due to our recently completed acquisition. Our daily room rate for our Australian owned villages in U.S. dollars was $77 which decreased from $79 in the third quarter of 2024, primarily due to the weakening of the Australian dollar. Turning to Canada. We recorded revenues of $46 million compared to revenues of $57.7 million in the third quarter of 2024.

Adjusted EBITDA for the segment was $8 million, an increase from $3.4 million in the third quarter of 2024. As noted, the year-over-year adjusted EBITDA increase was primarily driven by the implementation of cost reduction measures offsetting lower billed rooms and revenues. During the third quarter, billed rooms in our Canadian lodges totaled 383,000, which was down from 484,000 in the third quarter of 2024. Our daily room rate for the Canadian segment in U.S. dollars was $100, flat with the third quarter of 2024.

Turning to our capital structure. Civeo's net debt as of September 30, 2025, was $176 million, a $22 million increase since the June quarter of 2025, attributable to the significant progress made on our share repurchase authorization in the quarter. Our net leverage ratio for the quarter was 2.1x as of September 30, 2025, with total liquidity of approximately $70 million. We have allocated $48.7 million to share repurchases year-to-date. We remain comfortable maintaining a net leverage ratio in the 2x range on a go-forward basis. As we look at capital allocation, on a consolidated basis, CapEx or capital expenditures for the third quarter of 2025 were $5.6 million, down from $7.5 million during the third quarter of 2024.

Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages. As noted, during the third quarter of 2025, we repurchased approximately 1 million shares through our share repurchase program. We continue to believe that repurchasing Civeo shares presents a value-enhancing opportunity. We've made great progress on our current share repurchase authorization, and we will continue to opportunistically execute on our plan moving forward.

With that, I'll turn it back over to Bradley.

Thank you, Collin. I would now like to turn to a discussion of our full year 2025 guidance on a consolidated basis, including the underlying macro and regional assumption. We are tightening our full year 2025 revenue and adjusted EBITDA guidance. Updated 2025 revenue guidance is $640 million to $655 million of revenues and adjusted EBITDA guidance of $86 million to $91 million. We are maintaining our full year 2025 capital expenditure guidance of $20 million to $25 million. I'll now provide the regional outlooks and corresponding underlying assumptions.

In Australia, occupancy in our owned villages remains strong. 3 of our Bowen Basin villages continue to be effectively operating at full capacity, and we're seeing strong occupancy across the remainder of our owned village portfolio. Even when accounting for the expected impacts of weakening met coal prices and recent customer layoff announcements, we expect healthy, albeit modestly softer occupancy in our owned villages in the fourth quarter.

As it relates to our Integrated Services business, we are encouraged by the strong margin performance we have delivered throughout the year, and we will continue to focus on cost-effective execution. We expect to continue building on our strong momentum for the remainder of 2025 and beyond as we work towards our goal of achieving AUD 500 million of integrated services revenue by 2027. In Canada, we continue to navigate the difficult operating environment in the oil sands region, which is exacerbated by lower oil prices and broader macroeconomic uncertainty.

As a result, expected billed rooms in the fourth quarter of the year is expected to be relatively in line with third quarter. That said, we remain encouraged by the results of our Canadian cost-cutting initiatives to date and expect to continue to benefit from these going forward. I will now provide a preliminary outlook for 2026. In Australia, our outlook for 2026 is relatively similar to what we experienced in 2025 with potential for modest softness in our owned village occupancy due to commodity price volatility and customer layoff announcements.

That said, we expect that any softness in our legacy owned villages will be largely offset by the full year impact of our May 2025 Village acquisition. In our integrated services business, we expect to continue advancing towards our $500 million revenue goal for 2027 through our strong sales pipeline. In Canada, we expect the aforementioned headwinds in the oil sands region to continue to negatively impact lodge occupancy. However, at this point, it feels like occupancy is stabilizing such that we expect next year's lodge occupancy to be flat to slightly up in 2026 when compared to the full year of 2025. In the near term, our focus is on mobile camp deployment.

We are optimistic that we will see increased utilization of our mobile camps in North America towards the end of 2026. Our optimism is underpinned by strong bidding activity tied to continued public support at both the federal and provincial levels for infrastructure projects in Canada and increased demand in the U.S. for a wide range of infrastructure projects. Civeo's attractive asset base, demonstrated capabilities and strong relationships position us well to capture these growth opportunities as final investment decisions are made by our customers.

While several of these projects we are bidding on have estimated project approvals scheduled for 2026, we would not expect to see a material financial impact from these projects until 2027. In the immediate term, our focus remains squarely on managing what we can control, executing on our cost reduction initiatives, enhancing operational efficiencies and aligning our resource base with demand. We are confident that we have the right plan in place to continue mitigating these headwinds while orienting the business to capitalize on growth opportunities to drive increased cash flow from our Canadian operations.

Regarding capital allocation, we will continue to opportunistically repurchase shares and use no less than 100% of our annual free cash flow to complete our current share repurchase authorization. After this authorization is complete, we intend to use no less than 75% of annual free cash flow to buy back shares. We remain comfortable with our net leverage ratio in the 2x range moving forward.

With that, we're happy to take questions.

[Operator Instructions] And our first question will come from Stephen Gengaro with Stifel.

So Bradley, you might get mad at me for asking this. But when you package the guidance you gave for '26 together, it feels like it all sort of equates to something that's kind of flattish year-over-year. I mean, is that in the ballpark of what you're seeing?

No. I think it will be up year-over-year. Still working through the budgeting process. Obviously, it remains dynamic in both markets. In Australia, there have been customer announcements of headcount reductions, and that has impacted our outlook for some of our -- for our occupancy in our owned villages. But we have a very strong contract position. And so while we do see some softness in occupancy in our own villages, as I've said to investors previously, Australian-owned villages occupancy is modestly softer to flat year-over-year with the benefit of the full benefit of the 4 villages we acquired in May. So another 4 months of contribution from that.

We expect that integrated services will show top line growth [ 25 ] to [ 26 ] and continued strong margin performance. In Canada, as I mentioned, we expect lodge occupancy. It feels like it's stabilizing, but it's pretty dynamic right now. And so we'll certainly give an update in February when we do full year results on the fourth quarter call. But right now, as we sit here today on Halloween, I expect Canadian lodge occupancy to be flat to up [ 25 ] to [ 26 ].

And then the key will be if some of these infrastructure projects, and these are pipelines, LNG facilities, highline transmission projects and some infrastructure projects in the U.S. if these get -- if the projects get greenlighted by our customers and then we win the work, there's opportunity to put our mobile camps to work, which right now are really not contributing to the 2025 results. So overall, I expect '26 to be up and still trying to quantify what -- how much it will be up.

Great. The other question I had, you touched on this a little bit. When you talk about the mobile camp assets and the ability to redeploy, are you talking about Canada and the U.S.? And are you looking at things in the U.S. that are connected to some of these newer energy opportunities around lithium mining and maybe data center related. Are any of those things in your opportunity set?

Yes. I would -- you highlighted it, Stephen, and thank you for doing that. I would say that this is the busiest that I can remember in recent history in terms of our bidding activity in North America. We have approximately 2,500 mobile camp rooms that are readily deployable and another roughly 1,000 that are currently attached to our oil sands lodges that we could redeploy anywhere in North America. In Canada, it's mostly LNG related, pipeline related, infrastructure related in Western Canada and looking to also deploy them in Eastern Canada. We can also deploy them into the U.S., and the team is actively pursuing things like you mentioned, like data centers.

Great. And just one final one. When you think about capital allocation longer term, right, and you've done a great job returning a lot of capital. Is there a preference for incremental expansion/acquisitions versus buybacks? Or is it just going to be kind of on a project-by-project basis?

Well, we've committed to completing the current authorization to buy back 20% of the shares, which is about 2.6 million shares as soon as practicable and using no less than 100% of free cash flow -- annual free cash flow to do so. That being said, if there are opportunities that are economic that are supported by customer contracts and if there are attractive bolt-on acquisitions, we'll continue to look at that, obviously, continuing to weigh the fact that we want to stay around 2x levered or no more than that. And so right now, there are opportunities to deploy incremental capital for growth purposes, but nothing that will overextend the balance sheet.

And our next question comes from Steve Ferazani with Sidoti & Company.

Appreciate the detail on I wanted to ask about the growth opportunities in Australia because you noted the softening of met coal prices and some of the -- I think you highlighted chances to build out integrated services beyond the natural resources market. Can you talk a little bit about the opportunities and challenges in that market to hit that $500 million mark? It seems more difficult than it might have seemed a year ago. And does that need to include M&A? Or are there ways to do it outside of your more traditional met coal or iron ore markets?

Well, I didn't mean to leave you with the impression that it was more difficult. I feel as good about our ability to hit the $500 million target by 2027 today. In fact, I feel better about it today than I did a year ago. The team has done an amazing job of capturing new work with customers, capturing market share in some cases, expanding our customer base, expanding our geographic footprint within Australia and integrated services.

Originally, when we bought the Action Catering business, they were in Western Australia. We've now expanded that into South Australia and most recently expanded into Queensland, where our -- the vast majority of our own villages exist. So the ability to leverage that infrastructure is nice and important and to better serve existing Queensland customers. So I believe that we can hit the $500 million target with the kind of funnel of sales opportunities that the team has -- we can hit that hit target by 2027 in the resources market. Right now, I think we can do it organically.

Can could it be enhanced by acquisitions? Possibly. But in terms of -- it is going to get more difficult to win additional resources work because we're on the radar screen of bigger competitors now, plain and simple. So what we're trying to do is take what we believe to be our core competency, which is we think we take care of people well. We make sure that they're safe, that they're well fed and well rested and ready for the workday. So are there other verticals that we can do that in. And we're in the early stages of evaluating that. where we've got the team looking at it and hope that in, I'd say, the next year or 18 months, we'll have some progress there.

Excellent. On the mobile camp side, we can certainly see plenty of opportunities that appear to be out there, particularly in Canada, and I'm sure there's a lot we don't see that you're pursuing. The timing of it is always, I know, really challenging, particularly for the larger projects. Realistically, is this probably more of a 2027, 2028 and beyond story? Or are there real chances in 2026?

It will all depend on our customers getting to final -- positive final investment decisions sooner rather than later. Are some of them still striving to get to a positive FID by year-end 2025? Yes. Do you handicap and say that probably slip into the early '26 or the first half of '26, that's probably pretty reasonable. So it depends on when the projects get approved. Sooner is better, then why I'm confident in our competitive positioning, we still got to win the work then thereafter.

I think that right now, there will be some contribution from increased mobile camp work in 2026. It's likely second half weighted. And even if you handicap some of the expected timing of project approvals, 2027 looks like a good year. And to your point, beyond, these are largely construction projects that are expected to take 2 to 4 years to complete, and that would be a good utilization opportunity for our mobile camps.

Yes. Great. This looks like it will be your second year in a row where CapEx comes down. That being said, now that you've closed some of the Canadian lodges and you've had some larger investments like adding WiFi accessibility. When we think about CapEx moving forward, should -- outside of winning some large project awards, should this be the high level moving forward that you're investing this year?

No. I think it's always reasonable to think that CapEx is around USD 25 million on a consolidated basis. And to your point, because there's always -- we did some WiFi upgrades in Australia this year. There's still some work to be done there in terms of upgrading our WiFi. There's always one-off projects. I think the team globally is very pragmatic about deploying capital and CapEx. We go through a process that's kind of here's what the have to have are, here's what are the good to have and here's the nice-to-have items, and we prioritize those, both looking first and foremost on maintaining safe operating locations and then enhancing guest experience.

So I think [ 25 ] is a safe number to use year in, year out. It would include some discretionary items in that number usually. But from there, higher numbers than that would be dependent on customer commitments and growth projects.

And if I could just supplement on that, what Bradley mentioned the nice to haves. I just want to remind the audience the way that we think about that is today's nice-to-have's are tomorrow's have to have's, and they could be a little bit more expensive if you wait. And so that's the balance.

Great point. Yes. That's a very good point.

When we think about those mobile camp opportunities, particularly if they're 2 to 4 years, does that require significant CapEx?

Great question. To put some numbers around it. We've got, as I mentioned, 2,500 mobile camp rooms readily deployable, another 1,000 that we can pull off that are currently on our oil sands lodges. So of those 3 -- roughly 3,500 rooms, our bidding activity, we bid out those fourfold. Now we don't expect to win all of that work, but we're exceedingly busy.

Now there are probably half a dozen to a dozen infrastructure projects that we're tracking that could kick off in the next 12 to 18 months. It all depends on how those get sequenced. If they all hit at the exact same time, yes, we'll need some more CapEx. Will it be warranted? Absolutely. It will be...

I think I would complain about that.

No, I don't think they will. So to put kind of -- if things are evenly spaced, it's probably let's call it, $5 million to $10 million of incremental CapEx. If everything hits at once, it's probably $25 million to $30 million. But I think I am confident that if everything hit at once, people will be more excited about that than worried about the CapEx.

Yes, Steve, if we win a project, there's going to be a de minimis amount of capital but it's marginal relative to the project. The real capital outlay would be required if we had to start going out and buying new rooms in excess of the 2,500 to 3,500 that Bradley quoted.

Which would be a great problem.

[Operator Instructions]

And we'll go next to Dave Storms with Stonegate.

Just thinking through your goal of [ 500 ] in integrated services in Australia. How do you feel about your current staffing levels there? Just trying to think through what might be the bottlenecks as you march towards that goal.

Good question. I would say that staffing in Australia continues to be a challenge. Is it better than it was a couple of years ago? Absolutely. I think that's a combination of a general recovery in the country from COVID and the efforts of our team, our people and culture team in terms of recruitment. We're the biggest issue in -- for us is around chefs, but it's around labor in general.

And we've had a program for the better part of 5 years to recruit international chefs to come in to Australia. We're making some progress there. So I would say that it is -- continues to be a challenge, but one that is not getting necessarily worse, but it's still not back to pre-COVID levels. So we've made some adjustments to our rosters and our travel allowances that has helped with attracting and retaining people, but it remains a focus for our team. But I don't believe that it would be -- if we win work, we'll find the people.

Understood. That's great color. Thinking about the cost cutting in Canada, specifically the field level streamlining, how much of this could maybe be applicable to Australia? Could we see a similar margin expansion there if some of that was more plug and play? Or is that more specific to Canada, the cost cutting?

It's more specific to Canada. A lot of it is -- we made some big strides with cold closing a couple of locations, which helps the carrying cost there. There has been some streamlining of the operating level headcounts. So this is something, quite frankly, that we started executing on this time last year. As you know us well, Dave, I mean, we started to see occupancy in Canada in the second half of last year just start dropping as customers look to reduce maintenance work, overall cut headcounts and try and localize people as opposed to have them be fly in, fly out.

That's -- as I mentioned in our prepared comments, that feels like it's stabilizing at this point. Again, as we sit here today, we think Canadian lodge occupancy will be flat to up 2025 to 2026. And I think Australia there, it's a different cost structure. Obviously, the climate is very different between Northern Canada and Australia, particularly Queensland, and that presents a different cost structure. So always looking for efficiencies in our operations, and that is just always ongoing. It's not a one-and-done type thing. And -- but I don't think it's analogous between what we've done in Canada and what we could do in Australia.

Understood. That makes perfect sense. And that does kind of just bring me to my last question here. With you mentioning in your prepared remarks that it feels like Canada is stabilizing, how much more cost-cutting initiatives should we expect there? And is there, I guess, a potential for any of that margin to be given back as you maybe start getting a little busier in Canada?

Well, being tied to commodities and having cyclical upturns and downturns, cost cutting is something that our team is very -- it's just part of our DNA. You have to be able to make cost-cutting decisions. I think we moved quickly in the last half of last year and early part of this year. You saw how that bore fruit in the third quarter results. There are -- we will continue to work on our cost structure, but the easier things to get accomplished have been done.

Are there other things that take more work to implement? Yes, and we're working on those. I would hope we get them done by year-end or close to it, but this is an effort that there is a new reality in the Canadian oil sands in terms of activity levels, spending levels, occupancy levels. And we're adjusting to that. We're not expecting that this is going to be a temporary change. Customers are operating in a different fashion. They're getting rewarded by their investors for cutting costs and reducing CapEx. And ultimately, that means fewer people and fewer opportunities for occupancy in our lodges.

And if I could supplement, the focus for the last roughly year, maybe 9 months has absolutely been on the cost-cutting side. And what Bradley said, we're not done, but we are shifting focus. I mean the fundamental -- the best thing we can do for our Canadian business is grow revenue. On a go-forward basis. And so we do see opportunities, and we are pushing the team to focus on that bid pipeline that we have in place with -- while we round out our cost-cutting initiatives.

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

Thank you, and thank you, everyone, for joining the call today. We appreciate your interest in Civeo, and we look forward to speaking with you on our fourth quarter earnings call, which we expect to happen at the end of February.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings, and welcome to the Civeo Corporation Second Quarter 2025 Earnings Call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the conference over to your host, Regan Nielsen. Please go ahead.

Thank you, and welcome to Civeo's Second Quarter 2025 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 remarks speak only as of the date of our earnings release and this conference call. We undertake no obligation to update or revise these forward-looking statements, except as required by law. Any such remarks should be read in 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 2025 earnings call. I'll start by highlighting some of the key takeaways before walking through a brief summary of our second quarter 2025 financial results, then Collin will provide financial and segment level review, I'll conclude with our 2025 guidance and the underlying regional assumptions. And then we'll open the call up for questions.

Turning to our key takeaways. I'll start with significant progress that we've made towards completing our expanded share repurchase authorization. We capitalized on equity market softness earlier in the second quarter to repurchase 883,000 common shares, which is approximately 7% of Civeo's common shares outstanding. These repurchases made since the announcement of our new capital allocation plan equate to 30% of that new buyback authorization as of June 30, 2025.

Civeo has now repurchased approximately 27% of its common shares outstanding since we began our share repurchase program in August of 2021. We believe that share repurchases represent a compelling use of capital, especially during broad market -- equity market volatility.

Given the accelerated buybacks and the recently completed acquisition, we have now reached the upper end of our target net leverage ratio of 2x. We are comfortable with that ratio as we continue to execute under our share repurchase program. We remain committed to completing the 20% share repurchase authorization as soon as practicable and intend to use no less than 100% of the annual free cash flow to achieve that goal.

I'll now move to some comments on the regional results. In Australia, we remain focused on growing our integrated services business and integrating the recent acquisition. Revenue in the region increased 4% year-over-year or 7% on a constant currency basis, and adjusted EBITDA grew by 10% or 12% on a constant currency basis. Contributions from the newly acquired Bowen Basin Villages and growth in our integrated services business are driving the strong margins that we experienced in the second quarter.

Based on current customer discussions and our base of contracted nights, we expect our current Australian occupancy levels to continue through the rest of the year despite weakening in met coal prices experienced recently. We completed the acquisition of 4 villages in May and began integrating them into our operations. Approximately 2 months of those results were included in our second quarter 2025 results. We are pleased with their early contributions, and we look to realize further margin leverage going forward.

Additionally, we recently announced 2 contracts in Australia in the Bowen Basin. Our renewal of a contract with an existing customer, the renewal is a 4-year take-or-pay agreement at our owned villages with expected revenues over the contract term of AUD 250 million. The second contract previously announced as a 3-year integrated services contract worth approximately AUD 64 million in revenue. These awards validate our winning strategy and position us for continued momentum in growth in Australia.

In Canada, the second quarter saw the typical seasonal increase in occupancy relative to the first quarter, driven by turnaround activity in the core region of the core oil sands region. However, on a year-over-year basis, turnaround occupancy remains subdued. Conditions in Canada remain challenging given the macroeconomic headwinds, which include loan on certain oil prices and our customers' fiscal conservatism. Customers remain steadfast in their singular focus on cost reductions in response to oil price and political uncertainty and investor pressure to return capital to shareholders. We remain focused on controlling what we can control. We continue to take steps to optimize our cost structure in Canada and align our business with realities of the current environment without sacrificing our ability to capitalize on opportunities to diversify our business away from the oil sands region.

Overall, we are excluding on our strategic priorities in each region. In Australia, our Australian business is hitting on all cylinders. And while the Canadian headwinds remain, we know this market well and we are working with our strategic partners to understand how we can continue to support them as we capitalize on the volume opportunities in the region. We are taking decisive action to apply our resources to position Civeo for long-term resilience and cash generation.

With that, I'll turn it over to Collin.

Thank you, Bradley. Thank you all for joining us this morning. Typically, I would first focus on expanding more on the underlying drivers of the results in the income statement. However, the real story for this quarter relates to the balance sheet and the impact of our recent capital allocation.

As Bradley mentioned, we made significant progress on our buyback authorization, completing 30% of the program in the second quarter. In addition, we executed on accretive growth through our acquisition in Australia. As a result, our net debt increased by $95 million in the second quarter, primarily driven by $65 million deployed for our recent Australian acquisition and $19 million deployed for share buybacks. Consequently, our net debt was $154 million as of June 30, 2025, resulting in a net leverage ratio of 2x.

Turning to the income statement. Today, we reported total revenues in the second quarter of $162.7 million with a net loss of $3.3 million or $0.25 per diluted share. During the second quarter, we generated adjusted EBITDA of $25 million and negative operating cash flow of $2.3 million. Our free cash flow was burdened by working capital build in the quarter and the expected payment of Australian income taxes, which included a large payment related to the prior year. The decrease in adjusted EBITDA in the second quarter of 2025 compared to the year ago period was primarily due to the decreased build rooms at the Canadian lodges. We expect this lower level of customer spending to continue as producers in the region remain keenly focused on reducing costs.

As we mentioned, we are taking action to cut costs and streamline the business and identifying additional opportunities across the region. Second quarter revenues from our Australian segment were $112.7 million, up 4% from $108.6 million in the second quarter of 2024. Adjusted EBITDA was $23.7 million, up 10% from $21.6 million in the second quarter of 2024. The increase in revenues and adjusted EBITDA was primarily driven by the recently completed acquisition of 4 owned villages as well as margin improvement in the integrated services business. Year-over-year increase was offset by the impact of a weakened Australian dollar relative to the U.S. dollar, which decreased revenues and EBITDA by $3.2 million and $0.7 million, respectively.

Australian-owned village build rooms in the quarter were 690,000 rooms, up 10% from the second quarter of 2024, primarily due to our recently completed acquisition. Our daily room rate for Australian owned villages in U.S. dollars was $76, which decreased from $78 in the second quarter of 2024, primarily due to the weakening of the Australian dollar.

Turning to Canada. We reported revenues of $50 million compared to revenues of $79.5 million in the second quarter of 2024. Adjusted EBITDA for the segment was $7.5 million, a decrease from $17.3 million in the second quarter of 2024. As noted, the year-over-year revenue and adjusted EBITDA decreases were driven by lower build rooms as our customers focused on cost and head count reductions as well as the loss of Fort Hills related occupancy from the sale of our McClelland Lake lodge.

During the second quarter, billed rooms in our Canadian lodges totaled 450,000, which was down from 752,000 in the second quarter of 2024. Our daily room rate for the Canadian segment in U.S. dollars was $94, which decreased from $96 in the second quarter of 2024, primarily due to the weakening of the Canadian dollar.

Looking at our capital structure. As mentioned earlier, Civeo's net debt as of June 30 was $154 million, a $95 million increase since March 31, 2025 attributable to our recent acquisition as well as significant progress made on our share repurchase authorization in the quarter. Our net leverage ratio for the quarter was 2x, with total liquidity of approximately $73 million.

Given the accelerated buybacks and recently completed acquisitions, as mentioned, we have now reached the high end of our targeted leverage ratio at 2x. We have allocated $22.5 million to share repurchases in the first half of 2025 and assuming current valuations, we expect to utilize free cash flow to remain active repurchasing shares in the back half of the year. We will target a year-ending leverage ratio of approximately 2x.

Turning to capital allocation. I'll start with CapEx. On a consolidated basis, Capital expenditures for the second quarter of 2025 were $4.5 million, down from $5.3 million during the second quarter of 2024. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages. As noted during the second quarter of 2025, we repurchased approximately 883,000 shares through our share repurchase program for a total cost of approximately $19.1 million.

With our recently increased share repurchase authorization and commitment to accelerating the return of capital to shareholders, we continue to believe that repurchasing share -- Civeo shares presents a value-enhancing opportunity. Second quarter market softness gave us an excellent buyback opportunity. We've made great progress on our current share repurchase authorization, and we will continue to opportunistically execute on our plan moving forward.

With that, I'll turn it back over to Bradley.

Thank you, Collin. I would now like to turn our discussion over to the full year 2025 guidance on a consolidated basis, including our underlying macroeconomic and regional assumptions. We are maintaining our full year 2025 revenue and adjusted EBITDA guidance. We continue to look for revenue this year to be in a range of $640 million to $670 million and adjusted EBITDA to be in the range of $86 million to $96 million. We're also maintaining our full year capital expenditure guidance, which was a range of $20 million to $25 million.

I'll now provide the regional outlook and corresponding underlying assumptions. In Australia, customer activity in our owned villages remains very strong. Three of our Bowen Basin villages continue to be effectively -- continue to operate effectively at full capacity and we are seeing strong occupancy across the remainder of our owned-village portfolio. Despite weakening met coal prices in the first half of the year, we continue -- we expect continued strength in our owned-villages throughout the balance of the year.

As it relates to our Integrated Services business, we are encouraged by the top line growth as well as the year-over-year margin improvement experienced in the first half of the year and we'll continue to focus on executing on cost -- executing cost effectively as we are on our recent contract awards. We expect to build on this through the remainder of 2025 and beyond as we work towards our goal of achieving AUD 500 million of Australian integrated services revenues by 2027.

In Canada, we continue to navigate the difficult operating environment in the oil sands and lower demand for temporary turnaround activity, which has exacerbated -- has been exacerbated by broader macroeconomic uncertainty. We expect billed rooms in the second half of the year to be more in line with the second half of 2024. There are more balanced between the third and fourth quarters.

Lastly, we do not currently foresee any meaningful near-term rebound in upstream oil sands spending. As a result, our focus remains squarely on managing what we can control, executing on our cost reduction initiatives, enhancing operational efficiency and aligning our resource base with demand realities.

During the second quarter, we took steps to streamline our large footprint, including cold closure of 2 lodges, we are actively working with a third-party consulting partner to identify additional opportunities to lower our cost structure in Canada. While 2025 is clearly a transitional year for our Canadian segment, we believe we are executing the decisive actions that will orient the business to capitalize on growth opportunities and position it for long-term growth and improved cash flow generation.

I want to take a moment to thank the hard working Civeo team for their continued focus on operational excellence. That together with disciplined capital deployment is what's driving long-term shareholder value creation.

With that we're happy to take questions.

[Operator Instructions] And our first question will come from Dave Storms with Stonegate.

Just wanted to start with maybe some of the puts and takes on your guidance at a macro level. We've seen a couple of trade deals get announced in the U.S. over the last couple of weeks. Do any of those deals give you confidence to maybe -- we look at that guidance? Is there a chance that it could be biased towards the upside or the downside? Just curious as to what your thoughts are relative to that.

We have been watching the trade -- the international trade situation very closely. Obviously, the - thus far to date, the impact of the trade uncertainty has not impacted our business either in Canada or Australia significantly although we watch it very closely where the impact primarily to food costs has been felt very -- in a very minor fashion in Canada. We're keeping an eye on it to make sure that doesn't accelerate. Most of our focus has been on whether trade uncertainty or disruption will impact our customers and how that might influence their need for rooms or their spending. But thus far, we've not seen any material impact either previously or with recent announcements.

Understood. That's very helpful. And then just want to turn to the acquisition that you completed in the quarter. I know you mentioned that you're expecting maybe a little bit of additional margin increase as you continue to integrate that. I did want to double check though about the $4.9 million in roughly 2 months. Does the $30 million run rate sound fair for that property on the full year? Or are there other maybe synergies that could be squeezed out of that?

On the run rate -- that's -- I mean originally, we had talked about $11 million of impact in 2025 in terms of EBITDA. We -- that was assuming we were going to close at the beginning of April, we closed at the beginning of May. So -- but the fundamentals of that are intact. Right now, we're not expecting -- so no change to our outlook at this point. Operationally, things are -- the team is doing the job of folding that into our operations with met coal prices being a little shaky here recently. I think it's too early to make a call for improvement.

Our next caller comes -- question comes from Steve Ferazani with Sidoti & Company.

Bradley, your guide would seem to imply even if we add in the full 6 months of the 4 villages that the second half does look from a profit standpoint to be better than the first half. Can you walk through, is that better turnaround activity in 3Q? Is that more impact from the cost cuts? Can you get us to what gets the second half to at least be moderately better than your first half?

Yes, I would say that -- in the second quarter, third quarter looks fairly stable overall, both on the top line and on the adjusted EBITDA line. We'll expect in Canada in the fourth quarter to have normal seasonal downtime for the holiday season.

In Australia, the third quarter will be an improvement over second quarter one because of the full quarter of the 4 acquired villages. Two, because of the integrated services business that we won in the Bowen Basin that we announced and then continued strength in the base business, primarily the owned villages and the base level of integrated services.

Great. That's helpful. Obviously, we're all looking at the met coal prices and thinking that would be a concern but then you announced a very large contract renewal for 4 years. We -- I mean, I don't want to ask you if you were surprised by that. But what's your gauge on your customers in Australia given what we've seen the extreme volatility in prices and recent weakness that you're getting those kind -- those lengthy extensions, particularly with larger customers.

Well, I think it speaks to the service level, which is a combination of the field team doing a good job on food service and housekeeping coupled with an exceedingly strong safety record. That, coupled with a portfolio that can meet the customers' needs across several of their projects across several of our villages. And I think it's being close to the customer. And as they've grown over the last 5 years, we've been able to serve that growth consistently, effectively at an economic price for them.

But I would say that your point is -- or your question implies something that's very valid, which is there is uncertainty in the market. And while that was -- is a great win, I would say that the -- it's relatively shaky. So with our contracted rooms base in Australia, we feel pretty good about the second half of 2025 going into 2026. But as it relates to customers, if they have -- as a hypothetical, they have a contracted minimum of 500 rooms. We have a handful of customers, several customers that are using more than their contracted minimums. What starts to get called into question is how much of that above the contracted minimums are they going to use? Are they going to start deferring maintenance projects that are starting to push things to the right? I think that in the met coal, the current met coal commodity price environment, that becomes a little bit more uncertain. So as we sit here today, we feel good about things, but the met coal price puts our antenna up and we got to pay attention.

Got it. That's fair. If I can get one more in, just about free cash flow. Obviously, the first half, you've seen an outflow. You talked about using 100% or more of free cash flow for the share buyback. But can you talk a little bit about how this trends over the next couple of quarters given the outflows from the first because I didn't hear you update the free cash flow guide?

Yes. So as it relates -- I guess, if the underlying question is related, is it -- is the question related to the repurchase program or just free cash flow in general?

Well, I mean if you don't generate free cash flow, it's going to affect the buyback. So I guess at the core of the question is free cash flow going to be much stronger in the second half? Or how are you thinking about it?

Free cash flow will be stronger in the second half, yes. We had -- as you know having followed us for as long as you have, seasonally or just through history, the first half, free cash flow is always weak. We have a ramp-up in receivables as we come out of the holiday, slow period we have some structural things, including insurance and property taxes would typically hit in the first half of the year. And then you throw on top of that, we're now a cash taxpayer in Australia that's started in earnest with the 2024 fiscal year. Those payments, as Collin noted, there was a big one this quarter that was related to 2024. So free cash flow would be better in the second half. Just to remind everyone, our capital allocation plan is to spend no less than 100% of free cash flow on the buyback until we get our 20% buyback authorization. So we will continue to be active in the second half of the year on the buyback program. And so that's expected to...

[Operator Instructions] And we'll go next to Jawad Bhuiyan with Stifel.

This is Jawad on for Stephen Gengaro. I just had a quick question on the Canadian occupancy. I guess given the continued weakness in billed rooms and then also covered with the turnaround activity that you've seen. I guess could you speak a little bit on what you're seeing so far in 3Q? And then maybe whether there's any signs of stabilization or improvements as we go into the second half of the year?

Sure. As it relates to Canadian occupancy in the second quarter and the third quarter, it always depends on turnaround activity. As we sit here today, third quarter has been a continuation of the second quarter in order to hit what's implied in guidance, we will need to see some turnaround -- expected turnaround activity come to fruition in Canada, particularly in the next couple of months.

And so if that does not come to fruition, we'll miss that part of guidance. But as of right now, it looks like we should see a pickup here July to August and August to September as it relates to Canadian occupancy. As always, turnaround activity is uncertain and could run longer into the fourth quarter. That's not currently contemplated in guidance. But I would say that generally speaking there is some stabilization in the Canadian occupancy.

And moving on to John Daniel with Daniel Energy Partners.

Bradley, I've got perhaps a basic question, so apologies for the ignorance. But as you look at Australia, today, you've got multiple U.S. service companies there, Halliburton, Liberty HP, can you walk me through the -- just the longer-term opportunity set, I'm not looking for specific guidance per se, but just what the opportunity exists with supporting that segment of companies coming over there -- just give me that market update, if you don't mind?

Yes. I mean, today, our Australian operations with the exception today and historically, our oil and gas exposure in Australia has been minimal to de minimis for us. Our exposure has been at our [indiscernible] location, which from time to time has supported onshore and offshore LNG activity.

As it relates to onshore land, oil and gas development, this goes back over 10 years. We did a little bit of work as it related to the Curtis Island LNG work in Queensland, but that's ongoing in terms of the opportunity for accommodations work. So on a go-forward basis, as it relates to oil and gas opportunities in Australia, it would likely be a natural gas drilling project something similar to the Santos project in New South Wales, our Boggabri and Narrabri locations are well suited to support that should that move forward. There seems to be political momentum to support further natural gas drilling and that they're facing higher power, we're facing -- the whole country is facing higher power prices and are starting to get more comfortable with natural gas being an answer to what will be a electricity availability and cost issue.

So nothing now but do you see -- I guess, how -- what do you think these companies are doing for accommodations for their workers because it is remote, isn't it?

It is -- a lot of it is in a space that we don't currently play in, which is we do not have mobile camps in Australia. It's something we've looked at in the past and may -- and we'll continue to look at in the future. I don't see it as being a major driver for us, where I think the Australian business can grow is -- there are specific properties in our core business that would be additive if we were to acquire them. And then organic growth and potentially acquisition growth in the integrated services business. But again, we're very conscious of the fact that any capital project has to stack up against our cost of capital and the anticipated return from the buyback program.

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

Thank you, Gerry, and thank you, everyone, for joining the call today. We appreciate your interest in Civeo. We look forward to speaking with you on the third quarter earnings call, which we anticipate will be at the end of October.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.