Regan Nielsen: Thank you, and welcome to Civeo's Q3 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 SEC filings. I'll now turn the call over to Bradley.
Bradley Dodson: Thank you, Regan, and thank you all for joining us today on our Q3 2026 Earnings Call. I'll start with the key takeaways for the quarter, then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment-level details, and I'll conclude our prepared remarks with our updated 2026 guidance and a preliminary qualitative look for 2027 by region. We will then open the call for questions. There are four key takeaways for the call today. First, we had a solid Q3, and we are raising our full-year guidance. Revenue grew by 13% year-over-year, Adjusted EBITDA grew by 5%, and operating cash flow nearly doubled to $26.4 million. On the strength of our year-to-date performance, we are raising our 2026 revenue guidance to $710 million to $720 million, and our Adjusted EBITDA guidance to $89 million to $92 million.
Bradley Dodson: The second key takeaway is Canada delivered. Revenue in the region grew 38% year-over-year, driven by stronger-than-expected turnaround activity in the oil sands region and our integrated services contract in Ontario. Some of that turnaround work was originally scheduled for Q4 and was completed in Q3. Adjusted EBITDA grew by 47%, outpacing revenue growth. The third key takeaway is available accommodation capacity in Western Canada is being absorbed. Since the end of Q2, we have secured contracts with a diverse set of customers for the deployment of approximately 700 mobile camp fleet rooms across Canada. These are the first meaningful mobile fleet awards we have had in several years, and they follow a six-year lodge contract renewal we announced in July. For the first time in several years, the conversation with customers in the region is shifting from price concessions to asset availability.
Bradley Dodson: The fourth key takeaway is Australia remains the cash flow foundation of the business and is operating in an unusual environment. Metallurgical coal prices are above $250 a ton, yet our customers are behaving as they would at much lower prices because of elevated diesel costs, broader inflation, and higher royalties at these price levels are compressing margins. Our own village occupancy is solid, just softer than we would have expected at these commodity prices. We expect that to persist through the end of the year and into 2027, and we are managing the business accordingly. I will start with our operational results for the quarter. On a consolidated basis, the Q3 results exceeded our expectations, driven by Canada. Adjusted EBITDA was $30.1 million, up 5% year-over-year, with the Canadian improvement and the stronger Australian dollar more than offsetting softer occupancy at our Australian-owned villages.
Bradley Dodson: Going to the regions, in Australia, revenue increased 4% year-over-year in USD, entirely as a result of stronger Australian dollar. In local currency, the revenue declined approximately 4%, reflecting lower occupancy in our Bowen Basin villages, partially offset by contractual rate increases across our integrated services contracts and increased shutdown activity. Our integrated services business continues to perform well and remains on track toward our goal of a run rate of AUD 500 million in annual services revenues by the year-end 2027. The owned villages business is well contracted and continues to generate strong cash flow, but we are not seeing activity levels that we would expect from customers at these coal prices, and I will come back to why in the outlook section.
Bradley Dodson: Lastly, Civeo was recently recognized by Restaurant & Catering Australia in the industrial catering category, winning the state awards in Western Australia, Queensland, and South Australia, and sweeping the top three places nationally. Taking care of people with a safe environment, welcoming service, and award-winning food sets Civeo apart. Moving to Canada, billed rooms increased 35% year-over-year. Turnaround activity in our oil sands lodges was stronger than anticipated, and our Ontario integrated services contract contributed a full quarter of revenues. The cost structure we reset in 2025 is holding as volume returns. Adjusted EBITDA was up 47% on 38% increase in revenue, even as our revenue mix shifted towards integrated services, which carries inherently lower margins. Now turning to the macro environment. In Australia, the met coal price is supportive, but customer behavior is being driven by costs rather than revenue.
Bradley Dodson: In Canada, oil sands producers remain disciplined, but activity has been steadier than many expected, and infrastructure spending momentum in the country is increasingly tangible. LNG Canada's phase II final investment decision was an important first step for projects of national interest in Canada, and we are optimistic that other infrastructure will similarly move forward in Canada and the United States. That said, we are not in the business of forecasting FID timing. Our job is to put Civeo in the best position to support our customers when they do make those decisions. Turning to capital allocation, we completed the April 2025 authorization to repurchase 20% of the company in July, in conjunction with our convertible notes offering, and we are approximately 50% of the way through the subsequent 10% authorization.
Bradley Dodson: Year-to-date, we have returned $36.7 million to shareholders through repurchases, which more than satisfies our intention for 2026 under our framework of returning at least 75% of annual free cash flow. With shareholder returns on track for the year, our capital allocation emphasis in the near term has shifted towards preparing our Canadian assets for deployment on contracts we have won and opportunities we see in front of us. That is reflected in our increased capital expenditure guidance, which I will discuss in the outlook section. We will remain opportunistic on repurchases, but our priority right now is putting assets to work at attractive returns. As a reminder, we have repurchased approximately 26% of our shares outstanding since the beginning of 2025. Stepping back, the third quarter offers an early look at what this platform can do as demand returns in Canada.
Bradley Dodson: Adjusted EBITDA grew faster than revenue, and operating cash flow followed. We have a well-contracted Australian business, Canadian business with a disciplined cost structure and improving utilization, and a growing opportunity set of North American infrastructure work, and the balance sheet to support all three. We believe that combination of operational readiness, capital discipline, and balance sheet flexibility positions Civeo well to create long-term value as these opportunities advance. With that, I will turn it over to Collin.
Collin Gerry: Thank you, Bradley, and thank you all for joining us this morning. Looking at the income statement, today we reported total revenues in the third quarter of $193.1 million compared to $170.5 million in the third quarter of 2025, an increase of 13%. Net income for the quarter was $5.2 million, or $0.50 per diluted share, compared to a net loss of $0.5 million, or a net loss per share of $0.04 in the prior year period. During the quarter, Civeo generated Adjusted EBITDA of $30.1 million compared to $28.6 million in the third quarter of 2025, an increase of 5%. Operating cash flow was $26.4 million compared to $13.8 million in the prior year period. The $22.6 million year-over-year increase in consolidated revenue was driven primarily by Canada, which contributed $17.6 million of the increase on higher lodge occupancy and the Ontario integrated services contract.
Collin Gerry: The remaining approximately $5 million came from Australia, where the stronger Australian dollar added approximately AUD 9.6 million to reported revenues and more than offset a decline in local currency revenue. Adjusted EBITDA increased $1.4 million year-over-year. Canada contributed $3.5 million to the improvement, and a stronger Australian dollar added approximately $1.7 million. These were partially offset by lower Adjusted EBITDA in Australia on a constant currency basis, reflecting the lower occupancy on our higher-margin owned villages in the Bowen Basin that Bradley discussed. Let's now turn to the Q3 results for our two segments. I'll begin with Australia. Q3 revenues from our Australian segment were AUD 129.5 million, up 4% from AUD 124.5 million in the Q3 of 2025. Adjusted EBITDA was AUD 23.2 million compared to AUD 25 million in the prior year period.
Collin Gerry: The stronger Australian dollar increased revenues and Adjusted EBITDA by AUD 9.6 million and AUD 1.7 million respectively. In local currency, Australia revenue declined approximately 4%. Lower occupancy in our Bowen Basin villages was partially offset by contractual rate increases across our integrated services contracts and increased shutdown activity in that business. Integrated services revenue was AUD 73.1 million, up 11% in US dollars and up approximately 2% in local currency. Australian owned village billed rooms in the quarter were approximately 669,000 compared to approximately 763,000 in the Q3 of 2025. Our average daily rate for Australian owned villages was AUD 84 compared to AUD 77 in the prior year period, with the increase primarily reflecting the stronger Australian dollar, and local currency rate was up approximately 2%. Turning to Canada.
Collin Gerry: Q3 revenues were $63.6 million compared to $46 million in the Q3 of 2025, an increase of 38%, or approximately 40% in local currency. Adjusted EBITDA was $11.1 million compared to $7.6 million in the prior year period, an increase of 47%. The year-over-year increase in revenues was driven by higher occupancy at our oil sands lodges, reflecting stronger-than-expected turnaround activity, and a new integrated services contract in Ontario. Adjusted EBITDA grew faster than revenue, reflecting higher occupancy against the cost base we reset in 2025, partially offset by revenue mix that shifted towards integrated services, which carry lower margins by nature. Canadian billed rooms totaled approximately 516,000 compared to approximately 383,000 in the prior year quarter, an increase of 35%. Our average daily rate was $97 compared to $100 in the prior year period, primarily reflecting the mix of turnaround-related volume at contracted rates.
Collin Gerry: As Bradley noted, utilization in the region is improving, and we have now contracted approximately 700 mobile fleet rooms for deployment. As available capacity tightens, we are approaching contract renewals and new awards with rate in mind, and we expect average daily rate to reflect that over time. Looking at our capital structure, as of 30 September 2026, we had $126.9 million of availability under our revolving credit facility. Total debt was $217.5 million, and net debt was $196 million, an increase of approximately $5 million from 30 June, reflecting the share repurchase completed concurrent with the convertible notes offering, partially offset by cash generated from operations. Our total net leverage ratio was 2.1 times. As a reminder, in July, we issued $115 million of 4.5% convertible senior notes due 2031.
Collin Gerry: The notes replaced higher-cost floating rate revolver borrowings with five-year fixed rate unsecured capital, lowering our near-term cost of capital and giving us the flexibility to pursue the growing global opportunity set. The conversion price is approximately $40.51 per share. Our current intent is to settle the principal in cash, and together with the concurrent repurchase of approximately 660,000 shares, the transaction is not expected to result in net share dilution unless our share price is above approximately $53 at settlement. Turning to capital allocation. Capital expenditures for the Q3 were $5.4 million compared to $5.6 million in the prior year period, and were primarily related to maintenance spending on our lodges and villages. Year-to-date, we have invested $13.2 million in capital expenditures, down 14% from the prior year period.
Collin Gerry: As Bradley will discuss, we expect Q4 capital spending to step up as we prepare Canadian assets for deployment. in July, concurrent with the convertible notes offering, we repurchased approximately 660,000 common shares for approximately $22.3 million, completing the 20% authorization and bringing the subsequent 10% authorization to approximately 50% complete. Year-to-date repurchases total $36.7 million. We will continue to take a disciplined and opportunistic approach to capital allocation. Our framework of returning at least 75% of annual free cash flow to shareholders through repurchases is unchanged, and we have more than satisfied it for 2026. Going forward, our focus is on maintaining the balance sheet flexibility to fund high-return deployments as contracts are awarded without compromising our strong balance sheet or our commitment to shareholder returns. We remain comfortable operating with total net leverage in the 2x range.
Collin Gerry: With that, I'll turn it back over to Bradley.
Bradley Dodson: Thank you, Collin. I would now like to turn to our full year 2026 guidance, our regional assumptions for the Q4, and a preliminary look at 2027. We are raising our full year 2026 revenue and Adjusted EBITDA guidance. Updated 2026 revenue guidance is $710 million to $720 million, up from $675 million to $700 million. Updated Adjusted EBITDA guidance is $89 million to $92 million, up from previous guidance of $85 million to $90 million. We are also increasing our full year 2026 capital expenditure guidance to a range of $30 million to $35 million, which previously was $25 million to $30 million. The increase relates to preparing Canadian assets for deployment on tangible near-term opportunities, including the mobe fleet contracts we have secured since the end of the Q2.
Bradley Dodson: As usual, we expect Q4 to be sequentially lower than Q3, reflecting the end of turnaround season and holiday seasonality in Canada, along with normal December seasonality in Australia. This year, some of the turnaround work we expected in Q4 was completed in Q3, which is reflected in our updated guidance. Our full year guidance also includes approximately $1 million of make-ready and mobilization expenses in Q4 for new customer contracts in Canada. The related revenue will be recognized over the term of those contracts, and largely in 2027. I will now provide the regional outlooks and corresponding underlying assumptions by region. In Australia, metallurgical coal prices are above $250 a ton, which historically would translate into expanding production, more contractor activity, and higher occupancy in our villages. That is not what we are seeing.
Bradley Dodson: Our customers are operating conservatively because their cost structure has moved against them. Diesel remains elevated, labor and other input costs are inflated, and under Queensland progressive royalty regime, a larger share of each dollar at these prices goes to the state. The result is that producers are focused on cost discipline rather than growth, and occupancy in our own villages, while solid, is lower than these prices would normally support. For Q4, we expect owned village occupancy to be modestly softer than Q3, reflecting normal Q4 seasonality. Our own village portfolio remains well contracted, and we continue to focus on mitigating inflationary pressures in our own cost base.
Bradley Dodson: In our integrated services business, we continue to build on contractual rate increases and shutdown activity, and we remain on track toward our goal of a run rate of AUD 500 million in annual services revenue by the year end 2027. In Canada, we expect billed rooms in Q4 to step down from Q3 levels, consistent with the seasonal pattern I described, and we expect revenue growth in H2 2026 to be approximately 30% year over year in local currency, up from the approximately 20% we outlined last quarter. That revenue growth is driven by continued execution in our base business, the Ontario integrated services contract, and stronger than expected turnaround season. On our mobile fleet, the approximately 700 rooms we have contracted are expected to deploy in late 2026 and Q1 2027, with no meaningful contribution to 2026 revenues.
Bradley Dodson: The capital we are expending in Q4 is what gets those rooms ready to go to site. I will now provide a preliminary outlook on 2027. In Australia, our current view is that the dynamics we are seeing today will continue into early 2027. We are not concerned about the health of the business. It is well contracted, generates strong cash flow, and has a growing integrated services platform. But with inflation and royalty pressure at the current met coal prices, we are not seeing the customer activity we would expect, and that situation remains volatile. We may see more of the same, and we will be in a position to better characterize 2027 on our Q4 earnings call. In Canada, we expect 2027 to be better than 2026. Oil sands activity has been steadier than many expected.
Bradley Dodson: Our customers are increasingly focused on securing accommodation capacity, and we expect lodge occupancy in 2027 to be up compared to 2026. We also enter 2027 with contracted mobile fleet revenue for the first time in several years. As available capacity in the region continues to tighten, we expect rates to improve, and we are approaching renewals and new awards accordingly. We are very busy, and the mix of projects continues to shift as some slow down and others accelerate, as is the way with large projects of this kind. Our bidding activity spans LNG, Canadian energy infrastructure, mining, and power and data center-related projects. These opportunities remain dependent on customer final investment decision, and the timing of meaningful financial contribution remains out of our control. What we can control is being ready, and that is where we are spending our time and our capital.
Bradley Dodson: What differentiates Civeo is the combination of our team, our assets, our operating resume, and our financial flexibility. We have demonstrated that we can execute remote lodging and take care of people safely and reliably at scale, including in complex cold weather environments. We have approximately 2,000 mobile camp rooms strategically located in Western Canada that are readily available for deployment, along with approximately 6,000 to 7,000 oil sands lodge rooms that could be redeployed for the right project. These purpose-built assets are well-suited for projects in the northern United States, Canada, and Alaska. We also have the balance sheet strength and financial flexibility to tailor the right solution to each customer project, whether that requires deploying existing capacity, investing in incremental capital, or combining accommodations with integrated services. Regarding capital allocation, our framework is unchanged.
Bradley Dodson: We intend to return at least 75% of annual free cash flow to shareholders through our share repurchases. We have more than satisfied that for 2026. We will remain opportunistic. In the near term, our priority is funding the deployment of our Canadian assets on contracted work and preserving capacity to pursue the right projects as they advance. We remain comfortable with our total leverage ratio of approximately 2x net leverage. Overall, our outlook reflects a resilient Australian platform operating through a cost-driven soft patch, a Canadian business with real momentum and improving utilization, and a North American opportunity set that we are now converting into contracted work. We remain focused on operating safely and efficiently, managing costs prudently, and allocating capital to the highest return opportunities as we position Civeo for long-term growth and value creation. We will now open the call for questions.
Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Stephen Gengaro with Stifel. Please proceed with your question.
Stephen Gengaro: Thanks. Good morning, everybody.
Bradley Dodson: Morning.
Stephen Gengaro: I like the evening release, by the way. It is efficient. I think my first question, it is not surprising, but when you are looking at these incremental opportunities to put rooms to work, and you have kind of laid it out well in your presentations, what type of terms and kind of economic paybacks should we be thinking about? Is there any big difference between the different end markets when it comes to what you are seeing in the bidding process?
Bradley Dodson: Thank you for the question. I will lead off and ask Collin to add some color. In terms of the economic returns, we mentioned that we increased the CapEx guidance. We have some expenses in Q4, getting the mobile camps ready to go on the contracts that we have won. But all that expenditure, whether it be the mobilization costs that go through the P&L or the incremental CapEx to get the assets ready, will all be captured well within the contract, with less than a one-year payback. The revenues typically come through on a pro-rata basis over the term of the contract. As it relates to term on the mobile camps, typically these are being mobilized for 2 to 3 years for most projects, although one of the projects we won is a short-term project.
Bradley Dodson: It is a nice little payback for a winter drilling program, but it has the opportunity that they may keep the assets for another year after that. So, the economics on the initial drilling season project in Canada hold together, and we have got upside if the project gets extended. In terms of rate, I will be quite honest, we are agnostic to the end market. The mobile camps in particular, they are great for construction projects. They are great for remote construction projects, where you need to house 300 to 1,000 people in a location where you do not have the housing infrastructure there. The customer pays for the mobilization of the assets, the installation of the assets. They rent the assets for the term of the contract. They pay for the hospitality services while the people are staying there, and then they pay for the demobilization.
Bradley Dodson: It can be, for shorter-term projects, that can be expensive on a per-person, per-day basis. I would say we are agnostic. As Collin put in his comments, the market is tightening up. We have put 700 rooms, or will be putting 700 rooms to work. We have got another 2,000 mobile camp rooms that we can and are ready to deploy. That first 700, it starts to tighten things up. When you see things like the Coastal GasLink pipeline and its FID and that moving forward, there are other pipeline projects that are in play, whether it be PRGT or Pacific Link, this will tighten up the market. It has to head towards new build pricing. Other players in the market have said that from where we are today to new build pricing, prices need to double. I think they need to at least double.
Bradley Dodson: There is upward bias to pricing on mobile camp rooms. In terms of end market, I will ask Collin to provide some color. I do not see a material difference between pricing, whether it is on a mining project or on a pipeline or on another infrastructure project, because the assets are fungible, so we are going to price them accordingly.
Collin Gerry: Yeah.
Bradley Dodson: I will let Collin comment.
Collin Gerry: Yeah. Thanks, Bradley. I agree wholeheartedly. We love all our customers, and regardless of what the end market is, pricing is the same. I would say, just a little bit of supplement to what you said is, economics and pricing is a function of commitment. Longer term commitments are going to have better pricing and better economics from the customer perspective. Shorter term work tends to carry higher prices. The only other supplement I would add is that, as we mentioned, the first 700 beds have been contracted here. In all transparency, the underlying economics within those contracts are not reflective of where we think the market is going, rather a little bit closer to where the market has been.
Collin Gerry: We are kind of in the middle of transition, and we need demand to continue and utilization to continue to tighten to see that dynamic where you see economics improve, as Bradley mentioned.
Stephen Gengaro: Great. Thanks. I might have missed this, so I apologize, but remind me, there are 2,700 mobile rooms, of which 700 just got contracted, and then what other incremental capacity do you have that is deployable?
Collin Gerry: Bradley, I will take a shot.
Bradley Dodson: Yeah, go ahead.
Collin Gerry: Yeah, go ahead, Bradley.
Bradley Dodson: No, go ahead, Collin.
Collin Gerry: I was going to say, it is 6,000 to 7,000 installed lodge rooms that have a variety of different installation base. Some of those are single story, or a small fraction of those are single story that can be mobilized and kind of taken off the lodges. Others are triple story, which are more advantageous with projects that have footprint constraints. So, that is the additional capacity on top of the 2,700 mobile fleet that is kind of in the yard, so to speak.
Stephen Gengaro: Great. Thanks. I will get back in line here, but thanks for the details.
Operator: Thank you. Our next question comes from the line of Jim Rollyson with Raymond James. Please proceed with your question.
Jim Rollyson: Hey, good morning, everyone. Just following up with Steven's questions. Bradley, so if new builds are double plus in pricing relative to kind of where you have been running, I presume the remaining couple thousand mobile rooms and the 6,000 to 7,000 lodge rooms would go at some price level in between today and double plus. But maybe just kind of help think through how you approach pricing as you scale the existing rooms out first, assuming all the demand actually comes through as we expect.
Bradley Dodson: That is a good question. Collin alluded to it, and made a very good addition, which is term matters. So, if we have got a mobile camp opportunity where it is shorter term, that is going to be pricier. One, the mobe and demobe, on a per person per day basis, is going to be a higher percentage of the total cost to the customer. As we think about pricing, as we have said in the past, look, the sooner the customers commit to rooms, the better pricing they are going to get. As Collin alluded to, these are good pricing. It is in line with what we have talked about before. The mobile camp work, typically in a softer market or kind of a middle market, is about a 20% margin.
Bradley Dodson: If you look back at our historical results, particularly as the assets stay out on rent longer, in other words, the project takes longer to complete or has an extension, those margins can go to 35%. I cannot predict exactly where pricing is going to go. Certainly has an upward bias, and customers that come with term in the longer term opportunities in the interim are going to get better pricing. But look, as we have said in the past, the Coastal GasLink project is probably a 2,000 to 3,000 bed project in totality. That is not to say that we are going to win all that. Obviously, we just said we only have 2,000 beds of mobile camps. We cannot win all of that. I do not expect us to win all of that.
Bradley Dodson: But just as that, not if, as that moves forward, that tightens up the market significantly, both us and our competitors. You look at PRGT, that needs 7,000-plus beds. That, in and of itself, based on what I think is out there publicly, that absorbs all the available, in and of itself, absorbs all the available mobile camp rooms in Western Canada. Those two projects alone, before you even start talking about an additional pipeline or other infrastructure projects, will tighten up the market. First in the door with term is going to get better pricing. Colin, do you have anything you want to add?
Collin Gerry: No, I would just supplement that it has been a long time, and quite frankly, I do not know if I can remember over the past 12 years an environment like this where we are kind of having to think along those strategic lines that we just described, Jim. As this market evolves, I think as Bradley was pointing to, with all these projects, only a proportion of the projects go at the same time. Almost by definition, the industry is into a new build cycle. It will be really interesting to see how that plays out. We talk about it strategically a lot, like what is our strategy for pricing and seeking term, and which projects are we going after, and we will have more color for you on that as 2027 evolves.
Collin Gerry: At the end of the day, I do want to also highlight a lot of this stuff is FID-dependent. The demand does need to materialize in the way that many of us in the industry are seeing right now.
Jim Rollyson: Yes. The big picture trends from the way behavior in Canada has shifted would seem to be lining up for that to happen. Maybe the folks in Alaska need to get their act together, or they are going to be looking at new build pricing. Just switching gears for a minute, data centers in the US have not really been a big part of your business just because you have not been down in the US much, and some of your competitors that have capacity there have been kind of soaking up all that work. As that runs out of capacity, just kind of curious to get an update on what you are seeing on that side, given that it seems like that is also going towards new builds just because of capacity constraints.
Bradley Dodson: Colin, you want to take the lead on this?
Collin Gerry: Yeah, sure. The US market has been exceptionally dynamic over the past, call it 9 months, going from kind of zero to 120 miles an hour, then back to 30 and 90 and in between. Not a week goes by that we do not have some portion of our bidding and pursuits team laser-focused on a new US opportunity of material size. We are in the market. We are talking to people about it. I would characterize the market, though, as very, a little bit chaotic, if I am being totally honest. I think a lot of the existing capacity was absorbed at good prices for the customers. The customers got a good deal, and so did the providers. Now we are into a new build cycle, as you pointed out, Jim, in the US, and I think there is also a lot more competition coming down the woodwork.
Collin Gerry: It is very idiosyncratic to certain projects. We are seeing terms and conditions that might not meet our standards in some cases going around, but then in other projects, they are very attractive. As is very clear, we have not won anything. We are in the market. It would likely require us to build some new build capacity in the US because I think our Canadian fleet is probably better left chasing the work that is in front of it in Canada. Yeah, this has been the proverbial Lucy and the football for us for the better part of the year, but it is still exceptionally vibrant and very active, and we are going to try to win some stuff here, but certainly no promises. I do not know, Bradley, if you have anything to add to that.
Bradley Dodson: No, I think that is right. Look, our competitors that have won work have done a really good job. Many of them had assets that were from a proximity basis, either in the data center market or adjacent to, and mobilization of our assets, while they are modular, putting them on a truck and shipping them thousands of miles is very feasible. It is very doable, but it has a cost.
Bradley Dodson: We have been at a transportation disadvantage. As Collin mentioned, based on what we see, we think most of the available capacity, existing capacity, has been absorbed, and so the data center market is headed towards new build pricing. Our assets, because of location and, quite frankly, the manner in which they are constructed and operated, are much better in colder climates. So, our focus has been mostly on the northern US. We will continue to bid on Texas work.
Bradley Dodson: As Collin mentioned, that may be new build assets for us. We have relationships with the manufacturers to purchase those should we get a contract, but it will be with a contract. We will not be doing it speculatively. We continue to follow it. I think you have seen it in the press, there have been, for every 10 opportunities, probably eight of them have not materialized, as it relates to data centers, for one reason or another, whether it be permits, whether it be water availability, power availability, et cetera. Then, obviously, we have got 3 November right here upon us, and there are a lot of ballot items that are questioning whether the local municipalities want to have these projects. So, we continue to follow it. It is a huge opportunity.
Bradley Dodson: I think from here, it is going to move slower than anticipated, but it is a material opportunity for us, and we are pursuing it.
Jim Rollyson: Appreciate all the color, guys. Thanks.
Operator: Thank you. Our next question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question.
Greg Gibas: Hey, good morning, Bradley, Collin. Thanks for taking the questions. Congrats on the results. Wanted to maybe just follow quickly on the timeline for deployment for those 700 mobile fleet rooms that you secured contracts for, and wondering if you could perhaps discuss the puts and takes of the guidance increase, and then how that accounts for maybe incremental, both that incremental deployment versus maybe continued softness in Australia versus underlying strength with oil sands. Anything you can kind of discuss there would be helpful.
Bradley Dodson: Yeah, I will lead off and then ask Collin to correct and amplify my comments. In terms of Q3 to Q4, as we put in the prepared comments, we did see some Canadian turnaround activity be pulled forward into Q3 from what we had originally expected in Q4. In addition to that, in our prepared comments, we said we have about $1 million of expenses that are related to these mobilizations of the mobile camps. So, Q4 is going to be softer than we thought 90 days ago, but that was really pulled into Q3, and is reason one. Reason two is a good reason, which is we are deploying mobile camp rooms. In terms of the puts and takes in Q4 and going into 2027, I think in Q4, it is fairly locked in.
Bradley Dodson: I think as it relates to mobilization expenses, the team does a great job. I am not terribly worried about there is going to be additional costs we were not anticipating of any material size. Those assets are going to work. I can think of, Greg, one in particular, it is mobilizing as we speak. A second one is mobilizing as we speak. Some of them are starting in November, because that is when, as I mentioned earlier, one of them is a drilling project.
Bradley Dodson: That is going to be one that will take advantage of the winter drilling season in Canada. So, I expect that certainly by mid-Q1, those 700 will be out and working. Puts and takes in Q4, I do not worry about occupancy at the lodge and village level of any material basis. It could be plus or minus 3%, but I think we are pretty locked in on near-term occupancy.
Bradley Dodson: Going into 2027, puts and takes on the base of operations, in Canada, it is always turnaround activity. Also in Canada, we do, as Collin mentioned, we mentioned in our prepared comments, the funnel of opportunities to put mobile camps to work is significant. It will be a matter of when they, as we mentioned, when they reach FID. Once they reach FID, accommodations is usually something that gets contracted fairly shortly thereafter because it then becomes a fairly significant gating item to starting the projects. So, I think that that will be a key to Canada, but I think what it is really doing, particularly as it relates to some of these infrastructure projects, I see more wins in 2027. I think that they will have some revenue in 2027, but what it is really doing is setting up 2028 to be a stronger year.
Bradley Dodson: As it relates to Australia, I think from where we are right here, we are going to see some continued softness relative to what you would expect given that coal prices, and that will likely continue certainly for H1 2027. We will continue to refine our picture as we give formal guidance on the Q4 call in February. In Australia, we have the bidding activity on integrated services is very strong in terms of the opportunity set. We do believe we are going to achieve our 555 plan and reach AUD 500 million of annual run rate revenue in 2027. Then it is going to be controlling costs in Australia. Unemployment is still tight. Inflation is still there. We are a labor-intensive business. Getting people, retaining people is key. That is what I see the puts and takes, and I will let Collin add some color.
Collin Gerry: I will add a little bit of color. In Canada, I agree with everything that Bradley said as it relates to Q4. I will just remind our listeners that December in both regions is a rough month for us. We have, particularly in Canada, where you have higher utility bills with the weather, and occupancy does go quite a bit lower over the holidays. That is an annual issue. As I think about 2027, the only thing I would supplement is that, as Bradley said in his prepared remarks, we are expecting in Canada, the lodges to be up. I would characterize that as more of a baseline level of occupancy. That is not necessarily driven by turnarounds. We had a pretty good, decent turnaround year this year. In fact, the strength in Q3 of this year, as we pointed out, was largely turnaround driven.
Collin Gerry: The lodges will be up, and that is driven by baseline occupancy. What is the variable and the unknown is what do turnarounds look like in Canada versus this year? If they are similar in size and scope that we saw this year, then the lodge occupancy will be nicely up, if not only modestly up. We will refine that, and we are going to work with our customers to understand their plans as we go into 2027. I think in almost all cases, we expect the lodge occupancy to be up, which is certainly a positive trend. In Australia, I agree with everything Bradley just said, particularly on our own villages, that kind of dislocation between met coal prices and our occupancy lingering a little bit longer than we had hoped and expected. I would also point out that we have a great team in Australia.
Collin Gerry: They have been growing the revenue side on the integrated services side so well for the last four to five years, and there is still a very robust market set of opportunity out there. The awards that we just announced today speaks to the customer relationships and the operational kind of integrity in how we attack the market. I think that that is yielding a lot of results, and we are getting a lot of attention from customers. We are really proud of that team, and we are really excited of where we are going to take that over the next two or three years.
Greg Gibas: Okay, that is helpful. Appreciate the detail there. You maybe beat me a little to it, but wanted to ask, just as it relates to the own village occupancy in the Bowen Basin, clearly remaining softer despite what healthy commodity prices would dictate normally. Could you just maybe speak to what you are hearing from the customer base, kind of add some context to their thinking, and perhaps remind us the nuances of timing as it relates to producer budget timeframes in Australia, and perhaps how quickly you would expect these customers to move if there was a demand driver unlock, like diesel prices?
Bradley Dodson: Good question. What we are seeing right now in many cases is we are not losing work. We are not losing market share in Australia. What you have as a hypothetical or an illustrative example, we will have a customer who has got a contract, a multi-year contract for 500 beds, but they have been running at 600, because they have the need for it, and they have been taking the extra 100 beds at casual rates, which are higher.
Bradley Dodson: You are seeing, because of the inflationary pressure, maybe they cut back 20 or 30 or 50 beds out of that incremental 100 above their contracted level. That is what we are seeing. These people are not going to a competitor. The customer is not going to a competitor. They are staying with us. They are contracted, in many cases, on a multi-year basis. They are just trimming on the edges.
Bradley Dodson: But we have got a bunch of great customers, and right now, the mentality is everyone is trimming. As many will know, Australia is on a June to June fiscal year. To your point, we will start seeing what 2027 looks like as we get into March, April of next year, as they finalize their budgets for their fiscal June 2028. So, we will have better color as we go into probably the. Certainly, we might have some color on the Q1 2027 call, certainly have better color on the Q2 call, our Q2 call. So, yeah, there are growth projects with our customers. They are looking. They are not putting pencils down. But right now, I think it makes complete sense. It is not the environment to push the accelerator right now, because met coal prices are good, but that is a printed rate for top-rate quality met coal.
Bradley Dodson: Not all of them have that. Not all of them realize that price. The biggest pieces are really a double whammy between inflation, broadly defined, which is diesel is a huge piece of it, but there is also wage inflation, et cetera, that is impacting them. The second piece is royalties. Royalty regime in Queensland was changed, which is where the Bowen Basin is, was changed back in 2022, if I recall correctly, and it significantly increased the royalty rates. Our customer base has been very vocal about that and how that is impacting them. So, I think this is a soft spot. It will, as you pointed out, likely continues through the H1 of the year, and then we will see if there are other factors that impact things. If inflation starts to come in a little bit, that will be helpful.
Bradley Dodson: If there is some relief on diesel prices, that would be helpful. That would be a big help, if we can see some moderation in diesel prices. I think that would. Really, it is not just, okay, diesel prices have come in. It is the customers believing that they are going to stay there, is the other piece.
Greg Gibas: Yep. Good to hear. Thanks, guys. Appreciate it.
Bradley Dodson: Thank you.
Operator: Thank you. Our next question comes from the line of Steve Ferazani with Sidoti & Company. Please proceed with your question.
Steve Ferazani: Morning, everyone. Bradley, covering you for a while, this is the most optimistic I have heard you on Canada, and that excludes even the mobe camp opportunities. Obviously, the turnarounds were much healthier. I know you do not have a ton of visibility going into the quarter, but certainly much healthier than we were modeling. It sounds like you are optimistic for occupancies next year.
Steve Ferazani: I can speculate on the obvious reasons for this, but I just want to hear from you in terms of how much is that higher oil prices driving greater activity, they have more cash flow, they can go ahead with turnarounds, or larger turnarounds they were pushing off previously. You have the other piece of clearly there is oil sands consolidation going on. Can you talk about those two factors and how that might be influenced, seeing what you are seeing in terms of turnarounds and occupancy?
Bradley Dodson: I think the turnarounds this year, part of it is we had a strong turnaround with one customer in particular. Most of the customers are trying to extend their turnaround times. So, it used to be that everybody would do a turnaround every year of varying degrees. Some customers would alternate between a big turnaround one year and a little bit smaller one the next.
Bradley Dodson: A lot of them are trying to push that out to either an 18-month cadence or a 2-year cadence. That is the piece as we go into 2027, we have got to understand better. I think oil prices are certainly helpful. It is certainly helpful to their P&Ls and their cash flows. But I do not believe that that is something that is truly driving spending right now. I think what is driving spending right now is renewed optimism in the overall industrial complex in Canada.
Steve Ferazani: Yep
Bradley Dodson: reinvesting in Canada. While it is very early days to see if there is more egress capacity that can be constructed and implemented that really give the oil sands customers comfort, belief that they can increase production and then we will be able to get it to market, I think that is the next piece that will really drive things. Near-term oil prices are always helpful, at higher levels, are always helpful.
Bradley Dodson: I do not think that is necessarily what is driving things right now. I think it is, again, trying to get prepared, increased optimism on the long term, and then some customer-specific things as they work to shift their and improve their production. So, I do think Collin really characterized it really well, which is a lot of this is baseline improvement, and then that gives us optimism on occupancy, at least being modestly up from here in Canada next year.
Bradley Dodson: If turnaround activity is equal to stronger next year than this year, then that would be additive.
Steve Ferazani: Got it. That is very helpful. Flipping over to Australia, it sounds like there are two very different markets going on. I know that your integrated services are more tied to Western Australia, different commodities, but same inflationary pressures. Clearly, you are way more optimistic and you are having more success in Western Australia. You mentioned the royalty structure impact. Just why is Western Australia, you are getting the contracted rate increases, you see opportunities to grow that versus what you are seeing in the Bowen Basin?
Bradley Dodson: It is a good question, and we should clarify. We get annual rate increases related to CPI in both the services business and in our owned villages. Our prepared comments were really hitting on that it was fairly notable.
Steve Ferazani: Yeah
Bradley Dodson: In terms of that being part of the pickup in the services revenues. The opportunity set for the services business, you are exactly right. The majority of our services business in Australia does come out of WA, but we are starting to diversify that. We had one previously, and are operating in South Australia. We have won our first contract in the Northern Territory, so we will be entering into that market. We recently won our first services contract in Queensland, which is working for a customer we have worked for for a long time on the owned villages side. The opportunity set is across that. I would actually say that of the near-term opportunity set, most of it is outside of Queensland, in terms of.
Steve Ferazani: Okay
Bradley Dodson: Potential total contracted value. Continue to diversify that business. I think the catering awards are going to help because we beat out the big guys. We beat them head-to-head on culinary capability. There are kind of three or four things that we can do really well to take care of people. You make sure they have got a safe, clean environment, they have got good food, and a service level and a safety level that the customer appreciates. This is a kind of third-party validation of at least one component of that. I think that is going to help us in the marketing going forward.
Steve Ferazani: So, on that side, it is not necessarily that activity has to increase. A lot of it is market share gains and new awards and winning contracts.
Bradley Dodson: That is right. Certainly on the services side.
Steve Ferazani: Yeah. Thanks, Bradley.
Bradley Dodson: Thank you.
Operator: Thank you. Once again, if you would like to ask a question, it is star one on your telephone keypad. Our next question comes from the line of Dave Storms with Stonegate Capital Partners. Please proceed with your question.
Dave Storms: Morning, and thank you for taking my questions. I just wanted to maybe start with the Canada integrated services and the margin profile there. I know it increased quarter-over-quarter, but it is still down compared to historical levels. I am just curious as to how much of this is maybe still Ontario ramping, or if there is anything else in there that we should think about.
Bradley Dodson: It is Ontario ramping. We are working to get our feet underneath us there, and expect that by Q1, we should see certainly improvement in Q1 and better in Q2 as we get our feet underneath us there. But it is specifically Ontario and us not being our best. Some of it is contract-related. Some of it is performance-related.
Dave Storms: Understood. I appreciate that. Then maybe sticking with integrated services, but moving to Australia. Collin, I know you mentioned that you guys have a couple of initiatives that you want to roll out, but when we are just thinking about the mechanics to get to that 555 plan, is the priority there going to be on maybe higher spend per room? Is it going to be more rooms taking advantage of the integrated services? Obviously, with room growth, you will get closer to that goal. I am just trying to think about the logistics that you are hoping to accomplish over the next five quarters to reach that plan.
Collin Gerry: Yeah.
Bradley Dodson: Yeah. Sorry, go ahead, Collin.
Collin Gerry: Oh, I was going to I think we might need one point of clarification. The 555 plan is unique to the integrated services component of Australia and does not include the owned villages. With that, really, it is about winning new work from existing and new customers who are either developing or re-tendering or growing their existing operations in the various parts of Australia. As somebody else pointed out earlier, our kind of bedrock of that business has been in Western Australia. As Bradley Dodson was pointing out, we have been pretty successful here recently in making inroads into other regions of Australia, including for the integrated services side, including our backyard in Eastern Australia, but also the south and north. It is really about new contracts with existing and new customers. The room count conversation is more something that is associated with our owned villages.
Collin Gerry: I think I am playing back your question correctly, but if I misinterpreted, maybe there is some clarification.
Dave Storms: No, that is perfect. Thank you for taking my questions, and good luck in the next quarter.
Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Mr. Dodson for final comments.
Bradley Dodson: Thank you. Thank you all for joining the call today. We really appreciate your interest in Civeo, and we look forward to speaking to you on the Q4 and full year 2026 earnings call in early 2027. Take care.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
