Civeo (CVEO) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, March 3, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Bradley J. Dodson
• Senior Vice President & Chief Financial Officer — E. Collin Gerry

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TAKEAWAYS

• Share Repurchase -- Repurchased 2,300,000 shares in 2025 (17% of outstanding shares), with a further 500,000 repurchased subsequent to year-end, resulting in 95% completion of the 20% buyback authorization.
• New Share Buyback Authorization -- Announced fresh authorization to repurchase up to 10% of shares, effective upon completion of the current program.
• Consolidated Revenue -- Revenues increased 7% year over year in the fourth quarter, reaching $161,600,000 for the quarter and $630,800,000 for the full year.
• Adjusted EBITDA -- Fourth quarter adjusted EBITDA rose 90% year over year to $21,700,000; full year adjusted EBITDA increased 10% to $88,200,000 despite lower annual revenue versus 2024.
• Net Loss -- Net loss narrowed to $6,500,000, or $0.56 per diluted share, from $15,100,000, or $1.10 per share, in the prior year.
• Australia Segment Performance -- Delivered record full-year revenue of $460,300,000, with fourth quarter revenue up 9% to $119,500,000 and adjusted EBITDA up 9% to $22,400,000, reflecting growth in integrated services and acquisition-driven gains.
• Billed Rooms Australia -- Fourth quarter billed rooms in Australia totaled approximately 705,000, up from approximately 637,000, while average daily rates slightly declined to $76 from $77.
• Canada Segment Performance -- Fourth quarter revenues increased 4% to $42,100,000, and adjusted EBITDA improved from negative $5,400,000 to positive $3,400,000, mainly from cost-reduction initiatives.
• Billed Rooms Canada -- Canadian fourth quarter billed rooms held flat at approximately 359,000, with average daily rates rising to $100 from $94.
• Liquidity and Net Leverage -- Total liquidity stood at $90,400,000 with net debt of $168,400,000 and a year-end net leverage ratio of 1.9x.
• Capital Expenditures -- CapEx totaled $20,200,000 in 2025, including $11,200,000 for maintenance and $9,000,000 for growth projects; 2026 CapEx guidance is $25,000,000 to $30,000,000.
• 2026 Guidance -- Management projects 2026 revenue of $650,000,000-$700,000,000 and adjusted EBITDA of $85,000,000-$90,000,000.
• Australia Outlook -- Assumes stable village occupancy, with potential upside if metallurgical coal prices remain above $200 per ton through the producer budgeting season.
• Canada Outlook -- Expects stable but subdued oil sands activity, supported by a structurally lower cost base following 2025 reductions.
• Integrated Services Growth Target -- Integrated services in Australia are tracking toward a $500,000,000 annual revenue goal by 2027.

SUMMARY

Management highlighted large-scale share repurchases and the near completion of its 20% repurchase authorization, followed by a new 10% authorization to extend capital returns. Adjusted EBITDA performance outpaced revenue growth, principally due to margin recovery in Canada and continued expansion in Australian integrated services. The Australian operation achieved record revenues, with earnings underpinned by both organic growth and May 2025 acquisition. Capital deployment priorities remain balanced between ongoing buybacks and CapEx, guided by maintenance needs and growth initiatives including geographic and service-line expansion.

• Management stated, "We used more than 100% of free cash flow" on 2025 share repurchases, while maintaining net leverage at or below 2x.
• Chief Financial Officer E. Collin Gerry noted, "we have about $20,000,000 U.S. of cash taxes to assume and about $10,000,000 of interest expense." when assessing free cash flow for 2026.
• Bradley J. Dodson confirmed the primary focus for capital allocation will remain buybacks, using "no less than 75% of annual free cash flow" for share repurchases after the initial phase.
• Discussions for Canadian and U.S. mobile camp asset deployment are advancing, with bidding activity tied to infrastructure and data center projects that could reach revenue-generation in as little as three to four months for mobile fleet deployments after contract signing.
• Management described the recently won Ontario contract as a platform for further integrated services growth in new geographies within North America.
• Operating cash flow in the fourth quarter doubled over the prior year, reaching $19,300,000 from $9,500,000, benefiting from both margin improvement and segment contributions.

INDUSTRY GLOSSARY

• Billed Rooms: Number of room-nights charged to customers during a reporting period, reflecting utilization of lodges or villages.
• Integrated Services: Service offering that combines workforce accommodation with support services such as catering, housekeeping, and facility management, typically on a bundled contract basis.
• Metallurgical Coal: Coal used in steelmaking processes; pricing and demand significantly impact accommodation utilization in Australian mining regions.
• PRGT: Pacific Trail Pipeline project in Canada, a major infrastructure initiative relevant to workforce demand.
• FID: Final Investment Decision; client milestone determining project commencement and associated service contracts.

Full Conference Call Transcript

Bradley J. Dodson: Thank you, Regan. And thank you all for joining us today for our Fourth Quarter 2025 earnings call. I will start with a few key takeaways for the quarter and the year and then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment-level detail. I will 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 four key takeaways for the call today. One, significant progress on our share repurchase authorization, including repurchasing 17% of our common stock during 2025 alone.

Subsequent to year-end, we have repurchased an incremental approximately 500,000 shares, resulting 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. Three, meaningful margin recovery in Canada, as cost-reduction initiatives continue to bear fruit. And four, we are entering 2026 with an improved cost structure and balance sheet strength, positioning Civeo Corporation to capitalize on anticipated North American infrastructure development opportunities.

Moving on to capital allocation, during 2025, we repurchased 2,300,000 common shares for approximately $54,000,000, representing 17% of our common shares outstanding at last year-end and significant progress toward completing our authorization to repurchase 20% of our outstanding shares. Subsequent to year-end, we repurchased another 500,000 shares, resulting in 95% completion of our current buyback authorization. As a reminder, our current capital allocation policy announced last April, Phase One included a 20% repurchase authorization, which is now substantially complete. Today, we also announced a new authorization to purchase up to 10% of our outstanding shares, which will become effective upon the completion of our existing authorization.

As of 12/31/2025, our net leverage ratio is 1.9x, and we are comfortable with that. We remain committed to completing our current buyback authorization as soon as practicable. 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, in Q4 2025, revenues were up 7% year over year with adjusted EBITDA up 90%, a testament to our cost-reduction efforts in Canada and the successful integration of our May 2025 Australian acquisition.

In Australia, we delivered record annual revenues in 2025 of $460,000,000, 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 toward our goal of $500,000,000 in annual revenue by 2027. In Canada, while overall lodge occupancy remained under pressure from customer spending discipline in the oil sands, 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 $5,400,000 in 2024 to positive $3,400,000 in 2025. This performance reflects the structural cost actions we implemented 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 the expanded village footprint, and our Canadian business is demonstrating improved profitability at current activity levels while positioned for anticipated demand from North American infrastructure projects. With that, I will turn the call over to Collin.

E. Collin Gerry: Thank you, Bradley. Thank you all for joining us this morning. Turning to the income statement, we reported total revenues in 2025 of $161,600,000 compared to $151,000,000 in 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 2025 was $6,500,000, or $0.56 per diluted share, compared to a net loss of $15,100,000, or $1.10 per diluted share, in 2024. During the fourth quarter, Civeo Corporation generated adjusted EBITDA of $21,700,000 compared to $11,400,000 in 2024, 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, as well as contributions from the Australian acquisition and continued integrated services growth. Operating cash flow in Q4 2025 was $19,300,000 compared to $9,500,000 in the prior year quarter. For the full year 2025, we generated revenues of $630,800,000 and adjusted EBITDA of $88,200,000 compared to revenues of $682,100,000 and adjusted EBITDA of $79,900,000 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, 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 a change. Prior to 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 to Australia and Canada beginning with the fourth quarter and year ended 12/31/2025. 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 $119,500,000, up 9% from $110,000,000 in 2024. Adjusted EBITDA was $22,400,000, up 9% from $20,600,000 in the prior year quarter. The year-over-year increase in revenues was primarily driven by the contribution from the four owned villages acquired in May 2025 and continued growth in our integrated services business. These gains were partially offset by modest softness in portions of the legacy owned village portfolio, reflective of the sub-$200 per ton metallurgical coal pricing environment that our customers experienced in the majority of 2025. The increase in adjusted EBITDA reflects the incremental contribution from the acquired villages and continued integrated services growth.

Australian billed rooms in the fourth quarter totaled approximately 705,000 compared to approximately 637,000 in 2024. Average daily rates were $76 compared to $77 in the prior year quarter. For the full year 2025, Australian revenues were $460,300,000 compared to $427,000,000 in 2024. Turning to Canada, fourth quarter revenues were $42,100,000 compared to $40,700,000 in 2024, an increase of 4%. Adjusted EBITDA was $3,400,000 compared to negative $5,400,000 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 billed rooms were essentially flat year over year.

Significant improvement in adjusted EBITDA was driven by structural cost-reduction initiatives implemented earlier in 2025, including overhead reductions, lodge rationalization, and field-level cost alignment. Canadian billed rooms in the fourth quarter totaled approximately 359,000 compared to approximately 360,000 in 2024. Average daily rates were $100 compared to $94 in the prior year quarter. For the full year 2025, Canadian revenues were $178,600,000 compared to $245,100,000 in 2024. Full year Canadian adjusted EBITDA was $17,100,000 compared to $18,200,000 in 2024. The decrease in revenues and adjusted EBITDA was 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 12/31/2025, total liquidity was $90,400,000, total debt was $182,800,000, and net debt was $168,400,000. Our net leverage ratio was 1.9x at year-end. Finally, capital allocation. Capital expenditures for the full year 2025 were $20,200,000 compared to $26,100,000 in 2024. Capital expenditures in both periods were primarily related to planned maintenance spending on our lodges and villages. Specifically, in 2025, $11,200,000 was associated with maintenance CapEx and $9,000,000 was related to growth projects, including the reactivation of our Buffalo Lodge in Canada and Wi-Fi infrastructure improvements in Australia. During 2025, we repurchased approximately 2,300,000 shares for approximately $54,000,000, 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, resulting in 95% completion of our current authorization. We will look to complete the current authorization as soon as practicable, at which time we will be able to transition into our new share repurchase authorization for up to 10% of our outstanding shares. With that, I will turn the call back over to Bradley.

Bradley J. Dodson: Thank you, Collin. I like that. Now, I will turn to our outlook for 2026. For the full year 2026, we expect revenues of between $650,000,000 and $700,000,000 and adjusted EBITDA of $85,000,000 to $90,000,000. We are also giving initial CapEx guidance for 2026 of $25,000,000 to $30,000,000. Looking at the regions, in Australia, metallurgical coal prices weakened in the back half of 2025, contributing to modest activity softness across our Bowen Basin owned village portfolio. Entering 2026, metallurgical coal pricing has improved, creating a more constructive economic environment. If prices remain above $200 a ton through the upcoming producer budgeting season, we could see improved activity levels in the back half of the year.

Our base outlook assumes generally stable occupancy in our owned villages, with the full-year impact of our May 2025 acquisition largely offsetting potential softness in our legacy operations. In our integrated services business, we expect continued revenue growth as we advance toward our 2027 revenue goal. In Canada, we expect oil sands activities to remain stable but muted by historical standards, consistent with the spending discipline demonstrated by our customers throughout 2025. But importantly, we enter 2026 with a structurally lower cost base.

Let me back up and say the key investor themes to watch for Civeo Corporation in 2026 are: One, continued strong results in the Australian business with occupancy upside in our owned villages if metallurgical coal sentiment continues to improve, and continued organic growth in our integrated services. Two, in Canada, continued stabilization in occupancy at our oil sands lodges with upside from asset deployment from 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, stable 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. Thank you.

Operator: We will now be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys. Our first question will come from Stephen Gengaro with Stifel.

Bradley J. Dodson: Good morning, Stephen.

Stephen Gengaro: 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 2025, or is there more that will show up in the margins in 2026? 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, two parts to the question? One is the types of conversations that are ongoing, and, when a decision is made, how long would it take to get assets deployed and start generating revenue and profits?

Bradley J. Dodson: We saw most of it. There will be some continued full-year impact on a comparison basis in the first half of 2026. But the vast majority of it, we had done by June 30 last year. So, yes. Thanks. And then on the asset deployment potential for the assets that are available in Canada and potentially in the U.S. market, the status of the conversations is that we are providing detailed bidding proposals both in Canada and in the U.S. In Canada, they are largely related to pipeline, LNG infrastructure, things like PRGT, Coastal GasLink, Cedar LNG phase two, LNG Canada phase two, and also Alaska LNG. And then in the U.S., it is all about data centers.

In terms of speed to market, it depends on the asset deployment. If the asset deployment is from our mobile camp fleet, we can begin to have rooms up and running within three to four months on the first phase, and then phase in rooms over time. So we could have first meals within three to four months. If we are moving multistory, I would say that is nine to twelve months to get the first view, from getting the authorization to mobilize. It includes a signed contract.

Stephen Gengaro: Great. That is helpful. And just one final one to Jeff. 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 are trying to calibrate free cash flow?

E. Collin Gerry: I think I would say working capital is a plus or minus. I think the one thing, in looking at free cash flow, you have to remember is we have about $20,000,000 U.S. of cash taxes to assume and about $10,000,000 of interest expense. So that should get you there, and then working capital should be plus or minus off of that.

Stephen Gengaro: Great. Thank you.

Operator: Our next question comes from Stephen Michael Ferazani with Sidoti & Company.

Stephen Michael Ferazani: Good morning, everyone. Appreciate all the detail on the call. I do want to follow up the last question just thinking about how you are 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, or hopefully, eventual ramp-up on some of the mobile camp deployments, how do you think about cash flow generation? Does that go directly toward your 10% share repurchase authorization? Do you try to maintain 2x net leverage? How are you going to balance that? And is the number one focus remaining share repurchases, or does that change as the initial 20% is complete?

When we think about the CapEx guidance for this year, you only spent about $20,000,000—I think you said $11,000,000 was maintenance CapEx. You are guiding now for $25,000,000 to $30,000,000. Are there any larger projects that pushed out from last year, or how should we think about where the spending is going in that 25 to 30 range? In terms of mobile camp opportunities versus where you stood three months ago, have you seen progress? Are you having more conversations? Are we getting a little bit closer? Can you provide some color?

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?

Bradley J. Dodson: There have been no changes to the capital allocation framework that we laid out last April. We are completing Phase One here shortly with the initial repurchase of 20%. We used more than 100% of free cash flow, I might note. Our leverage has stayed in that 2x range. And the second phase is to use no less than 75% of annual free cash flow to continue to buy back stock. The 10% share authorization will allow us to continue, and that would maintain leverage at 2x or less.

E. Collin Gerry: Yes, thanks. This is Collin. I will take that one on CapEx. $11,000,000 in maintenance this year is—I do not want to say low watermark—but that is a pretty low number for us. Repeatability is aspirational. We will certainly try for that. But I would also offer that, historically, at this stage of the year, we line out what the capital plan looks like. There are have-to-haves, and then there are should-dos. And as the year goes on, that list is refined, and I think our track record is that we have done pretty well relative to guidance on the capital side as we really dial in the main requirements throughout the year.

So that is kind of the spirit behind the increase, but I would also say that the $11,000,000 in maintenance that we spent last year was largely driven by some pretty material cuts in Canada, and we may have to get back to a normal run rate this year. And I will also point out that this time last year, CapEx guidance was the same range.

Bradley J. Dodson: On mobile camp opportunities, conversations continue. I would say opportunities are increasing. For the most part, in both markets, quite frankly, we are bidding on work that does not have full FID at the customer level yet. And so, to a great degree, the wait-and-see is now clarifications to your question, and we are completing those with our clients but moving on to waiting for them to get to FID. As a general answer on data centers, yes, those can move faster, although there is potential that infrastructure projects could move sooner rather than later.

Stephen Michael Ferazani: Okay. Fair enough. Thanks, guys.

E. Collin Gerry: Thank you.

Operator: And we will go next to David Joseph Storms with Stonegate.

David Joseph Storms: Good morning, and thank you for taking my questions. Just want to start maybe with the Canadian market. There have been several geopolitical developments since we last spoke that have impacted oil prices. How is this changing your conversations with customers? I know a lot of this is going after budgeting. Just curious as to whether anything materially has changed or customers are looking through that. Sticking with Canada, you signed that contract in Ontario. Is this a playbook for more to come, or was this an opportunistic one-time contract? How would you characterize that? And then just one more for me.

It sounds like you could be picking up some momentum in 2026, especially if metallurgical coal stays above that $200 level and 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 ramp going into 2027?

Bradley J. Dodson: I think it is too soon for making any material decisions based on moving oil. I do not expect them to do anything. Certainly, Canada as an oil producer is interesting in times of geopolitical uncertainty, given the security of that resource. So if it is maintained over a longer period of time, it would be positive. But in the short term, I do not expect any material changes. Very pleased with the win in Ontario. It is our first work over there. It is on the integrated services side, so adding a new geography and increasing the integrated services contributions in Canada, North America as a whole. And, yes, we would like to build off of it.

Excited by the first win, excited about what we can do with that opportunity, and looking forward to expanding further. On seasonality, one thing that we have kind of always been asked at this time of the year—because Canadian turnaround season in particular is strongest in the second and third quarters—we typically add 60% to 65% of our annual EBITDA in the middle half, if you will, 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 flows as opposed to the first and the fourth, but I do not believe it will be as strong. So a more smooth EBITDA progression throughout the year.

Operator: Dave, is there anything further?

David Joseph Storms: Apologies. I was on mute. No. Thank you for taking my questions, and good luck this quarter.

Bradley J. Dodson: You bet. Appreciate it.

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

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

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines. Have a wonderful day.

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