Greetings, and welcome to the Civeo Corporation Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. 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 fourth quarter and full year 2024 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. Any such remarks should be read in the context of the many factors that affect our business, including risks and uncertainties disclosed in our Forms 10-K, 10-Q, and other SEC filings. Also, as noted in our earnings release, we have provided supplemental data disclosing revenue associated with our asset-light business and those of our asset-intensive businesses. This data can be found in the earnings release schedules. I'll now turn the call over to Bradley.

Thank you, everyone, for being here today for our fourth quarter and full year 2024 earnings call. I will begin with key takeaways, followed by a brief overview of our fourth quarter and full year performance. Then, Collin will provide a financial and segment-level review, and I will conclude with our initial guidance for 2025 along with the regional assumptions. After that, we will open the floor for questions. Starting with our key takeaways, in Australia, we are continuing to implement our growth strategy and have seen strong occupancy levels in the region. Revenue in this segment increased by 23% compared to the fourth quarter of 2023, driven by heightened activity in our integrated services business stemming from our recently announced $1.4 billion contract. We also announced the acquisition of four villages in the Bowen Basin, which is expected to positively impact cash flow and expand our presence in a new area of that basin. This acquisition reinforces our goal of securing steady revenue and earnings sources, as it is supported by two- and three-year take-or-pay contracts with both new and existing blue-chip customers. In Canada, we faced a decline in billed rooms due to reduced capital spending by our customers under investor pressure, as well as rising economic and political uncertainties that are expected to persist in 2025. While some of this decline was anticipated and linked to reduced LNG-related activity, the recovery of Canadian lodge billed rooms was hampered by the lingering effects of wildfires in the third quarter of 2024, largely because of our customers' focus on cutting costs. In light of these challenges and the expectation of continued lower spending from customers, we are right-sizing our Canadian operations to adapt to this new uncertainty and are taking strategic actions to broaden our geographic and end-market reach, reducing our reliance on oil sands activity. We expect to incur one-time restructuring costs of about $3 million in the first quarter of 2025, as we are closing some existing lodges and reducing headcount by approximately 25%, a move we believe will enhance our medium-term results. While we acknowledge the immediate challenges associated with the downturn in Canadian oil and LNG activities, we are optimistic about the medium- to long-term outlook for our business. Increased bidding activity in diversified markets, the ramp-up of additional Canadian LNG projects, potential positive shifts in Canadian federal policy, and carbon capture initiatives may serve as growth catalysts. For the full year of 2024, we returned around $44 million to shareholders through our quarterly dividends and share repurchases, amounting to about 65% of our free cash flow for the year. Since we began our share repurchase program in 2021, we have repurchased approximately 20% of our outstanding common shares. To provide some context on our evolution, ten years ago, Civeo operated as a more asset-intensive company focused on capital investment in the manufacturing and installation of new lodges and villages. At the time of our spin-off, Civeo had $775 million in debt, and our revenue was about 70% tied to Canadian oil sands, primarily supporting customer construction activities. Since then, we have successfully reduced our debt and diversified our revenue streams. We entered the integrated services market in Australia in 2019 with the acquisition of Action Industrial Catering and have maintained strong growth, achieving a five-year organic CAGR of 38% in that sector. Our revenue mix has shifted to focus more on commodities in Australia, and we now have a significantly lower debt profile. To better showcase our business evolution and current asset mix, we have provided supplemental information that outlines the revenues from our asset-light business, which includes hospitality services at both our owned and customer-owned assets, alongside our asset-intensive business that mainly covers accommodations revenue from our lodges, villages, and the Canadian mobile camp business. We recognize that investors often see Civeo as purely an accommodations or asset-intensive business; hence, we have shared additional disclosure to emphasize the significant growth in our integrated services sector. We are positioning Civeo for long-term value creation over the next decade, which includes further diversifying our revenue streams, as demonstrated by our recent acquisition in Australia, and reallocating our capital towards the markets that require it. Now, I will hand it over to Collin.

Thank you, Bradley, and thank you all for joining us this morning. Today, we reported total revenues in the fourth quarter of $151 million, with a net loss of $15.1 million or $1.10 per diluted share. During the fourth quarter, we generated adjusted EBITDA of $11.4 million and operating cash flow of $9.5 million. The decrease in adjusted EBITDA in the fourth quarter of 2024 compared to 2023 was primarily due to decreased build rooms at the Canadian lodges. This lower level of customer spending is expected to continue as producers in the region are keenly focused on reducing operating costs. The decrease in cash flow relative to the year-ago quarter was negatively impacted by net proceeds related to the sales in the Helen Lake Lodge and hold back collections related to the wind down of Canadian mobile camp projects in the fourth quarter of 2023. For the full year 2024, we reported revenues of $682 million and a net loss of $17.1 million or $1.19 per diluted share. In 2024, we generated adjusted EBITDA of $79.9 million, a decrease from our 2023 adjusted EBITDA of $106.5 million. The decrease in adjusted EBITDA for the full year as compared to 2023 was largely driven by the McClelland Lake Lodge sale, which occurred in 2023, and the expected wind down of LNG-related activity in Canada that impacted both some of our own lodges as well as our mobile camp activity, which was offset by increased build rooms in the Australian owned villages and increased Australian integrated services activity. Let's now turn to the fourth quarter results for our two segments. I'll begin with a review of the Australian segment performance compared to its performance a year ago. Fourth quarter revenues from our Australian segment were $110 million, up 23% from $89.3 million in the fourth quarter of 2023. Adjusted EBITDA was $22.2 million, up 3% from $21.5 million last year. The increase in revenues and adjusted EBITDA was primarily due to increased integrated services activity related to our recent contract announcement. Australian build rooms in the quarter were 637,000 rooms, relatively flat from the fourth quarter of 2023. Our daily room rate for our Australian owned villages in US dollars was $77, which increased from $74 in the fourth quarter of 2023 due to CPI escalations in the recent contracts. Turning to Canada, we recorded revenues of $40.7 million, compared to $72.7 million in the fourth quarter of 2023. Adjusted EBITDA in Canada was negative $4.7 million, a decrease from $3.5 million in the fourth quarter of 2023. The year-over-year revenue and adjusted EBITDA decreases were again driven by the wind down of LNG-related activity, including the completion of pipeline activity for our mobile camps, the sale of the McClelland Lake Lodge and lower build room as a result of our customers' recent focus on cost headcount reductions. During the fourth quarter, build rooms in our Canadian lodges totaled 360,000, which was down from 617,000 in the fourth quarter of 2024 due to the reasons I just mentioned. Our daily room rate for the Canadian segment in US dollars was $94, which decreased from $95 in the fourth quarter of 2024 due to the mix of occupancy among the lodges. Looking at our capital structure, our net debt on December 31, 2024, was $38.1 million, a $5.9 million increase from September 30, 2024. Our net leverage ratio for the quarter was 0.5x as of December 31, 2024. As of December 31, 2024, we had total liquidity of approximately $202 million, giving us the strength and flexibility to opportunistically pursue growth opportunities such as our recently announced Australian acquisition while maintaining prudent leverage ratios. Next, I will turn to capital allocation. I'll start with CapEx. On a consolidated basis, capital expenditures for the full year 2024 were down from $31.6 million during 2023. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages. CapEx in 2024 included approximately $3 million related to customer-funded infrastructure upgrades at our Australian villages, which were reimbursed by Civeo's customer. That compared to $10 million for the same spend in 2023. In the fourth quarter of 2024, we repurchased approximately 208,000 shares through our share repurchase program for a total of approximately $5.6 million. For the full year 2024, we repurchased over 1.1 million shares for approximately $29.6 million compared to 564,000 shares for $11.6 million in 2023. As Bradley mentioned, this brings our total return of capital to shareholders in 2024, including quarterly dividends and share repurchases, to $44 million, representing 65% of our 2024 free cash flow. We will continue to opportunistically repurchase shares moving forward. Regarding the dividend earlier this month, the company announced that its Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on March 17, 2025, to shareholders of record as of close of business on February 24, 2025. With that, I'll turn it over to Bradley to discuss our guidance for the full year 2025.

Thank you, Collin. I would like to now turn to a discussion of our initial 2025 guidance on a consolidated basis, including the underlying macro and regional assumptions. We are initiating full year 2025 revenue and adjusted EBITDA guidance of revenues of $630 million to $660 million and adjusted EBITDA of $80 million to $90 million. Our initial full year 2025 capital expenditure guidance is $25 million to $30 million. This guidance takes into account the recent reduction in currency exchange rates experienced since late 2024 and excludes any contribution from the recently announced Australian acquisition, which we expect to close during the second quarter, subject to regulatory approvals and customary conditions, and we'll provide updated 2025 guidance upon completion. On last quarter's earnings conference call in October 2024, we provided a preliminary outlook for 2025. Since then, there have been some material shifts in global markets and within our business that have impacted our outlook. I would note that those comments on the conference call were before the U.S. election, before changes in the Canadian political landscape, the announcement of potential tariffs and the impact that all of those have had on U.S. dollar versus Canadian dollar and Australian dollar exchange rates. So first, the Australian and Canadian currency exchange rates have weakened meaningfully compared to 2024, driving an EBITDA headwind for our U.S. denominated results. Based on today's spot rate, the order of magnitude of this headwind is approximately $5 million in EBITDA. Second, the political uncertainty in Canada is driving changes in customer behavior. New capital spending is certainly being delayed or pushed to the right, which impacts our mobile camp fleet deployment and our oil sands customers' quest to lower operating costs has accelerated, driving a sustained reduction in our Canadian occupancy. Taken together, the combination of all these factors is driving reduced guidance as compared to the $90 million comment I made last quarter. That said, the team is executing on what we can control. In Canada, we are aggressively looking inward at our cost structure to rightsize the business. In Australia, we are deploying capital to facilitate continued growth as evidenced by our recently announced acquisition. Based on these investments, we are confident that we'll exit 2025 in a better position than we are starting in. In 2025, we expect cash tax payments of approximately $90 million in Australia, which includes approximately $10 million of payments related to the 2024 tax year. When we incorporate the 2025 cash tax payments of $30 million, we anticipate 2025 free cash flow of $30 million to $40 million. I will now provide the regional outlooks and corresponding underlying assumptions by region. In Australia, customer activity in our own villages remains incredibly strong, and we expect to continue at similar levels moving forward. We are full at three of our Bowen Basin villages with strong occupancy at the rest of our owned village portfolio in Australia. We expect that to continue throughout 2025. As it relates to our integrated services business, we are continuing to experience increased demand from our recent contract award and expect to build on this in 2025 as we work towards our stated goal of AUD 500 million of integrated services revenues by 2027. Our outlook also assumes in Australia, modest billed room growth as well as expansion of our CIS business. In Canada, as I mentioned earlier, our customers are focused on reducing capital spending and operating costs. Investments in the region have declined over the last 10 years as a result of increased economic and political uncertainty, leading to lower headcount in the Alberta oil sands region and therefore, negatively affecting our occupancy. In the first quarter of 2025, we will incur one-time restructuring costs of approximately $3 million to help rightsize our Canadian cost structure. This includes shutting certain lodges and reducing overhead approximately 25% in terms of headcount. The strategy in Canada is to weather the storm with as lean a cost structure as possible. We are looking to reduce our dependency on the oil sands activity by potentially expanding geographically and end markets we serve in Canada. As we stated before, we only pursue opportunities in line with our capital allocation framework. Despite these near-term headwinds, we remain optimistic about the medium- and long-term opportunities in North America, including, for example, possible ramp-up of LNG activity in the next couple of years and the possibility of pathways carbon capture project. Before we head into the Q&A section of the call, I would like to close by saying that our Canadian business in 2025 will be a year of transition. While we work to mitigate these near-term headwinds, we remain optimistic about the business, and we'll see improvements in the medium- to long-term based on strategic actions we're taking today. We will continue to grow our Australian integrated services business in line with our stated strategy and are pleased with the progress that we've made in the region thus far. I am confident in our team's ability to execute on our growth strategy as we adhere to our capital allocation framework. With that, I'll open the call to questions.

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question is from Stephen Gengaro with Stifel. Please proceed with your question.

Thanks. Good morning, everybody.

Good morning.

Good morning.

I think a couple for me. The first is you disclosed incremental details about the asset light versus the asset-intensive businesses. And one of the things that jumped out to me was I was kind of under the impression that the asset-intensive side was a larger revenue base. So in that breakout, does that include catering and facility management that you're providing at owned assets?

That's correct. And so it includes the third-party integrated services that we provide at customer-owned locations and combines that with the hospitality services we perform at our owned locations.

Okay. And then when we think about that going forward, I imagine that the integrated services side is sort of the area of growth.

That's right.

Okay. Good. The two other ones that I had. One is from a seasonal perspective, I know your guidance is still at an early stage, but is there any reason not to expect kind of a normal seasonal distribution in 2025? Is there anything sort of specific we should be thinking about from that perspective?

I assume, Stephen, you're referring to historically, 60% to 65% of the full year EBITDA is generated in the second and third quarters, and that is expected to be the case in 2025 as well, excluding the impact and the timing of the Australian acquisition.

Okay. Great. And then the other question, it has to do with Canada. And when we think about what's sort of highly visible in Canada and what is more, for lack of a better word, kind of spot-oriented work. Is there any way to think about sort of the percentage Canadian revenue stream, maybe using 2024 as kind of a benchmark that. Like how much of that is sort of highly visible at this point? And how much of that is sort of more discretionary?

I'll frame the answer in this way, is that historically, in Canada, we have the number of guests we have kind of through daily operations. And then the second component is turnaround activity, which is the primary driver of the seasonality we just spoke about. Canadian turnaround activity typically occurs in the second and third quarters because of the climate and the increase in productivity when it's not sub-freezing temperatures. As a result, historically, turnaround activity in terms of our total number of room nights in Canada on a full year basis is about 25% to 30% of total room nights. That's expected to continue.

Right. Good. No, that’s good. I will get back in line, but that’s very helpful. Thanks.

Thanks, Stephen.

Our next question is from Steve Ferazani with Sidoti.

Good morning, Bradley and Collin. I appreciate all the detail on the call. Bradley, I wanted to ask about the response to what some might see as short-term uncertainty. Do you now expect, based on customer feedback, that this reaction will ultimately have a long-term impact? The political uncertainty is evident, as are the wildfires, and perhaps recovery hasn’t been as swift as anticipated. I'm curious if this is the tipping point or if you are observing that customer reactions are more about trimming down efforts for now. A 25% reduction in the workforce seems quite significant, especially if some perceive this as just short-term.

No, that's a good point and a very good question. We see this as a change in customer behavior and are preparing for it to be a long-term change regarding occupancy levels in the Canadian oil sands region. Consequently, we are adjusting our cost structure to accommodate that. This market dynamic started becoming apparent in the fourth quarter of last year, and in close communication with our customers, we observe that their intent to reduce on-site headcount continues. We are adapting our cost structure accordingly. What could alter this situation? Essentially, our Canadian oil sands operations focus on maintenance. Any project work or expansion efforts in the medium term would be beneficial to occupancy. An additional LNG project would also enhance occupancy in Sika. However, with the Canadian government effectively inactive until they address the Prime Minister situation, 2025 remains uncertain. The positive aspect is that customers are not overly responsive to the daily headlines, although they also aren’t particularly enthusiastic about committing additional capital work. Therefore, I anticipate that Canada will remain characterized by uncertainty.

And third, you could have made cuts early right along the way because coming out of COVID, I mean, you've had excess capacity in the system all along, right?

I would say that we're always conscious of our cost structure. This was a material change in the outlook, and we responded accordingly.

Okay, fair enough. Turning to Australia, which has been obviously fantastic results consistently there. Given the China economic weakness and the pressure it's having on certain metal prices that are important to your customers, are you concerned about CapEx in that market and how it might impact results 18 months from now, two years from now? And how much do the long-term agreements protect you?

Great question. We've noticed that particularly in the met coal sector, prices have dropped below $200 a ton. However, our outlook remains positive based on ongoing conversations with customers. They are still inquiring about long-term contracts, and we have a solid backlog of take-or-pay contracts in our Bowen Basin locations. Therefore, the near-term pricing has not influenced customer behavior at this moment. Looking ahead, it's still too soon to predict changes. Currently, customers in Australia are focused on their expansion projects and expressing a need for additional capacity, and we are addressing that demand.

Okay.

So an outlook for the owned villages in Australia looks good at this point.

That's great. Just a modeling question, I know you're not including those four villages, but when you announced it, you did put out an annualized number, any reason to think that number is not still fair? And is your reason for not including it more to do with the timing being unclear?

The conditions to close the transaction are not entirely within our control. I don't want to specify a timeline, but the current expectation is that it will close in the second quarter. In my opinion, this does not indicate a significant delay in closing, and there is no reason for us to change our position at this point.

Yeah.

The guidance on what we think on a full-year basis, the acquired business, the acquired villages could generate.

Okay. Any risk to closing?

No, not at this point.

Thanks so much, Bradley.

Our next question is from Dave Storms with Stonegate.

Good morning. Appreciate you taking my questions. I actually wanted to stick with that acquisition. About 3.9 times EBITDA feels like a good deal, especially considering the EBITDA margin should be pretty much immediately accretive. Is this indicative of the overall market that you're seeing in the Bowen Basin? Or is there something specific to that region or that seller that drove this price?

You've pointed out several factors that influenced the situation. We are in a position to make a cash offer, and the seller seemed to prefer a straightforward transaction. The price is favorable, but I would note that not all assets in the market are priced similarly.

Understood. That's very helpful. Thank you. And then with that property, are there integrated services already onsite? Or is there an opportunity to further add to Australian integrated services?

This would be in addition to integrated services. So currently, the owner outsources that, and we will obviously insource it.

That's great. Thank you. And then one more for me. Great, again, you added the asset-light first assets disclosure on your report. It looked like year-over-year in Canada, the asset-light portion held up fairly well, despite the noted drop in the occupancy. Is there anything specific that's driving the resilience there?

Year-over-year, the delta in Canadian revenues was impacted by mobile camp activity, which would be in the asset side of things in 2023, that was not present in 2024. That would be the biggest driver.

Thanks for taking the questions.

Our next question is from Josh Jayne with Daniel Energy Partners.

Thanks. Good morning. First question, just when you think about free cash flow, you highlighted 65% of your free cash flow last year was returned to shareholders. How are you thinking about this going forward, I guess, in the context of the acquisition that you just did and maybe you could just frame it over the medium to long term, how you guys are thinking about maybe a percentage of free cash flow to ultimately return to shareholders?

Well, I think our free cash flow framework is based off of a fundamental dividend and then opportunistic buybacks with where our leverage has been. Historically, we were below our target, which is a plus or minus 1 times levered, with the ability to lever up to 2 times levered for the right growth opportunity, and none of that has changed. And so that's how we'll continue to approach it. Post acquisition will be roughly 1 times levered on a pro forma basis, so still able to deploy capital under the same framework.

Okay. Thanks. And maybe just one follow-up on the Canadian business. You talked about the rightsizing that you're doing, but also the medium- to long-term optimism. Could you just talk about how you're thinking about managing that over the course of this year? If things don't progress, are there costs that further need to be taken out of the business? Or just how you're trying to balance what should maybe be a softer uncertain year in '25 against long-term strength in the business?

Well, I think we've rightsized the business for the reality that we see right now. And as I mentioned in our comments, the uncertainty in the market, we'll have to see how it develops. We'll consistently look at our cost structure and match that to our outlook.

Okay. Thanks.

Our next question is from Stephen Gengaro with Stifel.

Thanks. Most of what I was going to ask was asked on the cash flow side. But just a quick one. The acquisition in Australia, can you talk about sort of the types of deals you're looking for? And if you think that incremental deals would be more likely in Australia than other markets at this point?

Well, I think we've been fairly consistent in what we're looking for. So, if there are opportunities to buy additive locations that fit into our portfolio again, largely in Australia, just given the macro dynamics, we'll continue to look at that, and there are opportunities there. More broadly speaking, there's a bigger opportunity in integrated services in Canada and Australia. It's a larger market, and so our pivot has been to that. We continue to expect growth in our Australian integrated services business. And we're well on our way to our $500 million target. In Canada, we need to diversify geographically and by end market. There's considerable activity developing east of our legacy markets of Alberta and British Columbia, that is mining and infrastructure-related that could be asset-only, integrated, meaning both asset and services, or it could be just integrated services, and that sales effort is ongoing, and it's too early to tell, but the activity is strong in terms of bidding.

That's helpful. I think I am all set. Thanks for the color.

Thank you. We appreciate it.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing remarks.

Thank you, Paul, and thank you, everyone, for joining the call today. We appreciate your interest in Civeo, and we look forward to speaking with you on the first quarter earnings call expected in April.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.