Civeo Corp's Q3 2025 Earnings Call: Contradictions Emerge in Mobile Camp Timing, CapEx, and Capital Allocation Strategies

Date of Call: October 31, 2025

Financials Results

• Revenue: $170.5M (Q3 2025); Australia $124.5M, up 7% YOY vs $116.6M; Canada $46.0M, down vs $57.7M YOY
• EPS: -$0.04 per diluted share (net loss of $0.5M in Q3 2025)

Guidance:

• Updated 2025 guidance: Revenue $640M–$655M; Adjusted EBITDA $86M–$91M; CapEx $20M–$25M.
• Australia: modestly softer owned-village occupancy in Q4; integrated services on track toward AUD 500M revenue by 2027.
• Canada: Q4 billed rooms expected roughly in line with Q3; 2026 lodge occupancy expected flat to slightly up; focus on deploying mobile camps (likely H2 2026 contribution; material impact in 2027).
• Capital allocation: continue opportunistic buybacks, use >=100% of annual FCF to complete current authorization; target net leverage ~2x.

Business Commentary:

* Share Repurchase and Capital Allocation: - Civeo repurchased approximately 1 million common shares in Q3, bringing the year-to-date return of capital to shareholders to $52 million, and completed 69% of its new buyback authorization by September 30, 2025. - The company is prioritizing share repurchases due to broad equity market volatility and is committed to using no less than 100% of annual free cash flow for this purpose.

• Australian Regional Growth:
• Revenues in Australia increased by 7% year-over-year and adjusted EBITDA grew by 19%, primarily driven by the integration of newly acquired villages in the Bowen Basin.

• Despite expected softening in occupancy in the fourth quarter due to seasonality and reduced met coal demand, Civeo anticipates stable occupancy levels in the owned villages, supported by a strong contract position.

• Canadian Cost-Cutting Measures:

• Gross profit in Canada increased by 35% year-over-year, as a result of a 29% reduction in direct field-level costs and a 23% reduction in indirect operating overhead costs.

• These improvements were due to actions such as a 25% reduction in headcount and the closure of underutilized lodges, aiding in positioning the Canadian business for improved profitability.

• Integrated Services Expansion:

• The company is targeting AUD 500 million in integrated services revenue by 2027, supported by strong margin performance and a robust sales pipeline.
• Growth in integrated services is attributed to successful new customer acquisition, expanded customer base, and geographic footprint within Australia, despite headwinds in the met coal market.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized progress on buybacks (69% of authorization complete; $52M YTD return), Australian revenue growth (+7% YOY) and adjusted EBITDA improvement (+19% Australia), Canadian cost cuts (direct field costs down 29% YOY, gross profit +35%), and stated confidence/optimism about 2026 opportunities and hitting AUD 500M integrated services by 2027.

Q&A:

• Question from Stephen Gengaro (Stifel): When you package the guidance for 2026 it feels flattish — is 2026 flat or up year-over-year?
  Response: Management expects 2026 to be up YOY: Australia modestly softer but benefits from full-year contribution of the May village acquisition and integrated services growth; Canada occupancy stable to slightly up; mobile camps provide upside if project FIDs occur.

• Question from Stephen Gengaro (Stifel): On mobile camp redeployment, are you targeting Canada and the U.S., and are opportunities like lithium/data centers in scope?
  Response: Yes — ~2,500 deployable mobile rooms plus ~1,000 redeployable from lodges; very active bidding in North America across LNG, pipelines, infrastructure and U.S. opportunities including data centers and lithium.

• Question from Stephen Gengaro (Stifel): Capital allocation — preference for acquisitions versus buybacks going forward?
  Response: Priority is completing current buyback (use >=100% of annual FCF) while remaining open to accretive bolt-on acquisitions if they fit customer-backed contracts and maintain ~2x leverage.

• Question from Steve Ferazani (Sidoti): Hitting AUD 500M integrated services by 2027 — does this require M&A or can it be organic, and what are challenges?
  Response: Management is confident it can reach AUD 500M organically by 2027 based on an expanded sales funnel and geographic expansion in Australia; M&A could accelerate but is not required; staffing (chefs/labor) is a notable operational challenge.

• Question from Steve Ferazani (Sidoti): Timing for mobile camps — realistic chance of material revenue in 2026 or more a 2027 story?
  Response: Some contribution likely in 2026 (second-half weighted) depending on customer FIDs, but material financial impact is expected in 2027 if projects proceed and are won.

• Question from Steve Ferazani (Sidoti): CapEx outlook — should $25M be the baseline going forward?
  Response: Yes — management expects roughly USD 25M annually as a reasonable baseline for maintenance and selected discretionary items; higher amounts tied to customer commitments or growth projects.

• Question from Steve Ferazani (Sidoti): If multiple mobile projects start, how much incremental CapEx would you need?
  Response: If projects are evenly spaced, incremental CapEx likely $5M–$10M; if all hit at once, incremental need could be $25M–$30M; deploying existing rooms requires minimal capital unless new rooms must be purchased.

• Question from David Storms (Stonegate): How do current staffing levels in Australia affect the $500M target?
  Response: Staffing remains challenging—especially chefs—but has improved vs. COVID; international recruitment and roster adjustments are helping and management expects to be able to staff won work.

• Question from David Storms (Stonegate): Are Canadian cost-cutting actions transferable to Australia for margin expansion?
  Response: No — the cost actions were largely Canada-specific (cold-closing locations, reducing carrying costs); Australia has a different cost structure and any efficiency gains there are more incremental and ongoing.

• Question from David Storms (Stonegate): How much more cost cutting should we expect in Canada and could margins be given back as activity increases?
  Response: Easier cost actions are largely complete; management will continue operational optimization but is shifting focus toward revenue growth (bid pipeline); some margin dynamics may reverse if occupancy materially improves, but current actions reflect a structural adjustment to lower activity.

Contradiction Point 1

Mobile Camp Opportunities and Timing

It involves differing expectations regarding the timing of mobile camp opportunities, which are crucial for revenue projections and strategic planning.

Is this more of a 2027/2028 and beyond story or are there realistic opportunities in 2026? - Steve Ferazani (Sidoti & Company)

2025Q3: It depends on positive final investment decisions. Some projects may start in late 2026 or early 2027. We expect contributions from mobile camp work in 2026, likely second half-weighted, and significant increases by 2027. - Bradley Dodson(CEO, President & Director)

What is the status of mobile camp opportunities? - Stephen Michael Ferazani (Sidoti & Company, LLC)

2025Q2: We expect to see a continued ramp of our mobile camp solutions division through the end of this year with the deployment of 2,500 rooms. - Bradley Dodson(CEO, President & Director)

Contradiction Point 2

Capital Expenditure Strategy

It involves differing views on the company's capital expenditure strategy, which influences financial planning and investment decisions.

Will CapEx remain at the current level for the rest of the year? - Steve Ferazani (Sidoti & Company)

2025Q3: CapEx of $25 million per year is a reasonable baseline, including maintenance and enhancements. Additional CapEx would be driven by customer commitments and growth projects. - Bradley Dodson(CEO, President & Director)

What’s the updated CapEx outlook? What about H2? - Stephen Michael Ferazani (Sidoti & Company, LLC)

2025Q2: Our capital expenditure guidance has increased by $10 million to $190 million for the year. - Bradley J. Dodson(CEO, President & Director)

Contradiction Point 3

Capital Allocation Strategy

It pertains to the company's strategic approach to allocating capital, which directly impacts financial decisions and investor expectations.

Does the company have a preference for incremental expansion or acquisitions over buybacks in long-term capital allocation, or will decisions be made on a project-by-project basis? - Stephen Gengaro (Stifel)

2025Q3: We're committed to completing the current share repurchase authorization using no less than 100% of free cash flow. If economic opportunities arise and are supported by customer contracts, we'll consider attractive acquisitions while maintaining our 2x leverage ratio. - Bradley Dodson(CEO, President & Director)

What factors drove the capital allocation framework shift: macroeconomic conditions or internal/board perspectives? Will the company revisit this strategy as macroeconomic clarity emerges? - Stephen Gengaro (Stifel)

2025Q1: The dividend was not providing value. The capital allocation strategy remains under review, and buying back stock appears more beneficial at this time. - Bradley Dodson(President & CEO)

Contradiction Point 4

Cost-Cutting Measures and Efficiency Improvements

It involves the company's approach to cost-cutting and operational efficiency, which are critical for maintaining profitability and competitive positioning.

As Canada stabilizes, what additional cost-cutting measures should we expect there? Is there potential to return some margin as volumes increase? - David Storms (Stonegate Capital Partners)

2025Q3: Cost-cutting in Canada is specific to its situation. Australia has a different cost structure and climate, which doesn't lend to direct application of those measures. We continually seek efficiencies in operations globally. - Bradley Dodson(CEO, President & Director)

Can you provide details on the consulting firm hired for cost-cutting measures and its implementation across North America? - Unidentified Analyst (Sidoti & Co.)

2025Q1: The consulting firm is assisting in addressing the cost structure, particularly in Canada, to adapt to changes in business outlook. This is part of a broader strategy to optimize costs across North America. - Bradley Dodson(President & CEO)

Contradiction Point 5

Canadian Business Stabilization and Cost-Cutting

It involves differing perspectives on the stability and cost-cutting strategies in the Canadian business, impacting operational efficiency and financial performance.

Are you redeploying mobile camp assets in Canada and the U.S., and considering U.S. opportunities related to lithium mining and data centers? Are these opportunities part of your focus? - Stephen Gengaro (Stifel)

2025Q3: Canada is stabilizing, and we expect it to stabilize for the majority of '26 as well. There's a potential for growth in mobile camp utilization. - Bradley Dodson(CEO)

As Canada stabilizes, how much further cost-cutting can we expect there? Could some of those cost savings be reversed as activity increases? - Dave Storms (Stonegate)

2024Q4: We've made significant cost cuts and will continue to adjust. The focus now shifts to growing revenue. The new reality in Canadian oil sands means we adjust our operations to lower activity levels. - Bradley Dodson(CEO)