Civeo Corporation

07/30/2026 | Press release | Distributed by Public on 07/30/2026 11:03

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis together with our consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q.
Overview and Macroeconomic Environment
Demand for the majority of our hospitality services is driven primarily by ongoing operations of existing natural resource projects in Australia and Canada. Historically, initial demand for our hospitality services has been driven by our customers' capital spending programs related to the construction and development of natural resource projects and associated infrastructure. Long-term demand for our services has been driven by natural resource production, maintenance, operation and expansion of those facilities. In general, industry capital spending programs are based on the outlook for commodity prices, production costs, economic growth, perceived political risk, global commodity supply/demand, reserve replacement requirements, estimates of resource production, annual maintenance requirements, inclusive of turnaround requirements, and the expectations of our customers' shareholders. As a result, demand for our hospitality services may be sensitive to expected commodity prices, principally related to metallurgical (met) coal, oil, iron ore and liquefied natural gas (LNG), and the resultant impact of these commodity price expectations on our customers' spending. In addition to these historical demand drivers, there is increasing demand for our assets and services tied to data center construction, electrification projects and associated infrastructure. This is principally occurring in the United States (U.S.) but could begin to occur in Australia and Canada as well. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, the impact of global tariff changes and other changes to trade policies, volatility affecting the banking system and financial markets, availability of capital to the natural resource industry and regulatory changes in Australia, Canada and other markets, including governmental measures introduced to mitigate climate change.
Commodity Prices
While prices for the commodities that our customers produce stabilized in late 2025 and remained elevated through the first half of 2026, there remains continued risk of future volatility, particularly in light of ongoing geopolitical tensions in the Middle East and continuing uncertainty surrounding global trade policy. The factors that could drive such volatility and underlying activity include the ongoing conflict involving Iran, expectations for global macroeconomic stability and growth, inflationary pressures, higher interest rates, economic growth (or contraction) in China and resultant economic stimulus by the Chinese government, the impact of changes to global tariff and trade policies, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust oil production levels, other geopolitical events such as the ongoing conflicts in Russia and Ukraine, U.S. oil production levels and regulatory implications on such prices. In Canada, ongoing tensions between the U.S. and Canadian governments regarding trade policy may spur Canadian infrastructure projects, including pipelines for LNG or oil, carbon capture installation for oil producing operations and mining for critical minerals.
Recent Commodity Prices.
Recent met coal, iron ore, West Texas Intermediate (WTI) crude, and Western Canadian Select (WCS) crude pricing trends are as follows:
Average Price (1)
Quarter
ended 		Hard
Coking Coal
(Met Coal)
(per tonne) 		Iron
Ore
(per tonne) 		WTI
Crude
(per bbl) 		WCS
Crude
(per bbl)
Third Quarter through July 27, 2026
$ 231.18 $ 93.14 $ 78.65 $ 62.61
6/30/2026 235.53 100.10 93.11 73.05
3/31/2026 231.01 102.86 72.74 57.16
12/31/2025 198.75 100.23 59.24 46.73
9/30/2025 183.06 96.97 65.06 52.48
6/30/2025 186.10 92.70 63.81 53.15
3/31/2025 185.13 97.25 71.47 58.27
12/31/2024 203.50 96.00 70.42 57.50
9/30/2024 210.74 94.54 75.29 59.97
6/30/2024 242.93 106.01 80.83 67.24
(1)Source: Hard coking coal prices are from IHS Markit, iron ore prices and WCS crude prices are from Bloomberg and WTI crude prices are from U.S. Energy Information Administration.
Met Coal. In Australia, 86% of our Australian owned rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by global steel production, which remained subdued throughout 2025 and into 2026. China, Japan, Brazil and Russia experienced declines in steel production through the first half of 2026, while India and the U.S. continue to see consistent positive growth in 2026. Global tariff developments and recession fears are weighing on current and near-term global steel production, while the ongoing conflict in the Middle East has contributed to further economic and trade uncertainty. While there has been no noticeable impact on met coal prices to date, input costs for producers are expected to increase, particularly due to higher diesel prices.
Global steel production decreased by 0.7% for the six months through June 2026 compared to the same period in 2025. As of July 27, 2026, met coal spot prices were $219.60 per tonne.
Met coal prices in early 2026 fluctuated between $214 and $251 per tonne. In the second quarter of 2026, prices have stabilized and consistently remained above $226 per tonne for extended periods as supply and demand conditions became more balanced, with prices rising in June closer to $245 per tonne.
Although met coal prices remain well supported above $200 per tonne in the first half of 2026, there is still a heightened focus on cost management for producers which has carried over from 2025. The Middle East conflict has resulted in trade disruption, specifically the seaborne transport of oil and LNG through the Strait of Hormuz, increasing the price of oil, gasoline and diesel, putting further pressure on cost containment if fuel costs continue to stay elevated. In late 2025, several large and mid-tier met coal producers in Queensland, Australia announced production cuts and workforce reductions. This activity
continued to slow in the first half of 2026. While met coal prices have settled at a more profitable level in 2026, additional supply is expected to continue entering the market from both Australia and the U.S. during 2026, which could place downward pressure on pricing towards $220 per tonne. These supply and demand dynamics may also be impacted by ongoing geopolitical uncertainties, including the conflict in the Middle East.
Iron Ore. Iron ore prices fluctuated between $92 and $107 through early 2026 before easing below $100 in late June, driven by softer steel demand and continued strong iron ore supply. While demand in China remained subdued amid slower construction activity and ongoing steel industry reforms, production from major exporters, including Australia and Brazil, remained strong throughout the first half of 2026. As a result, market sentiment remained cautious heading into the third quarter of 2026, with iron ore prices continuing to be influenced by the balance between global supply and steel demand.
WTI Crude. WTI crude prices remained elevated during the second quarter of 2026 as oil markets continued to react to geopolitical developments in the Middle East, including concerns regarding the security of global oil supply and shipping routes. In an effort to retain and recapture global market share, OPEC+ began reversing previously implemented production cuts at the beginning of the second quarter of 2025 and continuing throughout 2025, increasing production despite softer global demand for oil. After pausing increases in the first quarter of 2026, OPEC+ resumed unwinding previously implemented production cuts during the second quarter of 2026.
Current geopolitical conditions have increased volatility in the oil markets, making it more difficult to forecast spending and activity for our Canadian oil customers.
WCS Crude. In Canada, WCS crude is the benchmark price for our oil sands customers. Pricing for WCS is driven by several factors, including the underlying price for WTI crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar), refinery blending requirements and governmental regulation. Historically, WCS has traded at a discount to WTI, creating a "WCS Differential," due to transportation costs and export capacity limitations to move Canadian heavy oil production to refineries, primarily along the U.S. Gulf Coast. As a result of the U.S. government's recent takeover of the Venezuelan oil production, there is a new concern that Venezuelan heavy crude may displace refinery demand for Canadian heavy crude on the U.S. Gulf Coast over time.
WCS prices in the second quarter of 2026 averaged $73.05 per barrel compared to an average of $53.15 in the second quarter of 2025. The WCS Differential increased from an average of $12.50 per barrel at the end of the fourth quarter of 2025 to an average of $20.07 at the end of the second quarter of 2026. Changes to global tariff and trade policies affecting oil from Canada could have an adverse impact on our Canadian customers' profit margins, which may in turn reduce their spending on our accommodations and services. With near-term higher prices, Canadian oil sands customers are prioritizing production while focusing on capital discipline and reducing downtime, while continuing to strive for lower operating costs and lower headcount.
Recent Developments and Market Trends
Qantac Acquisition. On May 6, 2025, we completed the Qantac Acquisition, which included four villages with 1,368 rooms in Australia's Bowen Basin and the associated accommodation assets, land and customer contracts. See Note 5 - Asset Acquisition to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.
Inflationary Pressures. Since 2023, price increases resulting from pandemic-related inflation and supply chain disruptions have, and are expected to continue to have, a negative impact on our labor, food and consumable costs, including fuel. Lingering inflation from the pandemic has recently been exacerbated by changes to global tariffs and trade policies. We are managing inflation risk with negotiated service scope changes and contractual protections. Although inflation resulting from global tariffs implemented or threatened by the U.S. administration, and the resulting retaliations by its trading partners, did not materially impact our cost structure in 2025 or the first half of 2026, concerns remain that inflationary pressures could return in the future.
The conflict with Iran and the associated disruptions to shipping through the Strait of Hormuz has adversely affected seaborne trade, specifically the transportation of oil and LNG in the Middle East. Australia imports the majority of its oil and petroleum products, including gasoline and diesel. As a result, continued disruption of trade through the Strait of Hormuz, or a further escalation of the conflict, could materially increase gasoline and diesel prices in Australia, contribute to increased inflation expectations and increase the risk of higher fuel and transportation costs.
Labor Shortages. We continue to experience increased staff costs as a result of hospitality labor shortages in Australia. Australia's labor market remains historically tight, with unemployment holding above 4% and job mobility (movement of workers between different employers or businesses) at its lowest in decades. A persistent overhang of vacancies continues to
constrain recruitment, while government stimulus has disproportionately driven job growth in healthcare, aged care, education and public services. Regulated labor costs also remain high, with the Fair Work Commission decisions pushing wage increases well above Consumer Price Index changes, and statutory increases in superannuation, workers' compensation and payroll tax are further inflating total labor costs. For hospitality, this combination of limited labor supply, competition from government-funded sectors and rising employment costs continues to create pressure on staffing productivity and availability.
LNG. Our Sitka Lodge supports the LNG Canada (LNGC) project and related pipeline projects (specifically, the Coastal GasLink Pipeline, the pipeline constructed to transport natural gas feedstock to LNGC), as well as Cedar LNG. Phase 1 of the LNGC facility commenced commercial operations in June 2025 and the Coastal GasLink Pipeline was completed in 2024. As such, we continue to expect lower occupancy levels at our Sitka Lodge in the near-term until additional phases of the LNGC project are approved and commence, or further regional construction activity increases occupancy demand.
From a macroeconomic standpoint, LNG demand has continued to grow, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. Ongoing geopolitical conflicts have reinforced the importance for secure natural gas supply globally, particularly in Europe. Accordingly, we expect additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth.
Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Australia and Canada. These revenues and profits/losses are translated into U.S. dollars for financial reporting purposes under U.S. generally accepted accounting principles. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 Change Percentage 2026 2025 Change Percentage
Average Australian dollar to U.S. dollar $0.710 $0.641 $0.069 10.8% $0.703 $0.634 $0.069 10.9%
Average Canadian dollar to U.S. dollar $0.723 $0.723 $0.000 -% $0.726 $0.710 $0.016 2.3%
As of
June 30, 2026 December 31, 2025 Change Percentage
Australian dollar to U.S. dollar $0.691 $0.667 $0.024 3.5%
Canadian dollar to U.S. dollar $0.704 $0.730 ($0.026) (3.5)%
These fluctuations of the Australian and Canadian dollars have had and will continue to have an impact on the translation of earnings generated from our Australian and Canadian subsidiaries and, therefore, our financial results.
Capital Expenditures. We continue to monitor the global economy, commodity prices, demand for met coal, oil, iron ore and LNG, inflation, trade policy and the resultant impact on the capital spending plans of our customers in order to plan our business activities. We currently expect that our 2026 capital expenditures will be in the range of approximately $25 million to $30 million, compared to 2025 capital expenditures of $20.2 million. We may adjust our capital expenditure plans in the future as we continue to monitor customer activity.
See "Liquidity and Capital Resources" below for further discussion of our 2026 capital expenditures.
Results of Operations
Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2026, is based on a comparison to the corresponding period of 2025.
Results of Operations - Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Three Months Ended
June 30,
2026 2025 Change
($ in thousands)
Revenues:
Australia $ 125,446 $ 112,672 $ 12,774
Canada 54,571 50,022 4,549
Total revenues 180,017 162,694 17,323
Costs and expenses:
Cost of sales and services
Australia 94,114 82,477 11,637
Canada 44,258 39,037 5,221
Other 239 17 222
Total cost of sales and services 138,611 121,531 17,080
Selling, general and administrative expenses 20,406 20,470 (64)
Depreciation and amortization expense 16,327 17,827 (1,500)
Other operating (income) expense (419) 66 (485)
Total costs and expenses 174,925 159,894 15,031
Operating income 5,092 2,800 2,292
Interest expense, net (4,204) (2,624) (1,580)
Other income 120 119 1
Income before income taxes 1,008 295 713
Income tax expense (3,525) (3,606) 81
Net loss (2,517) (3,311) 794
Less: Net income (loss) attributable to noncontrolling interest 4 3 1
Net loss attributable to Civeo Corporation $ (2,521) $ (3,314) $ 793
We reported net loss attributable to Civeo for the quarter ended June 30, 2026 of $2.5 million or $0.23 per diluted share. Net loss included $1.5 million related to the resolution of a sales and occupancy tax matter, $0.1 million related to real estate rationalization efforts in Canada and $0.1 million of shareholder activist related costs.
We reported net loss attributable to Civeo for the quarter ended June 30, 2025 of $3.3 million, or $0.25 per diluted share. Net loss included $3.2 million of shareholder activist related costs and $0.5 million of cost saving initiatives in Canada related to two lodge closures.
Revenues. Consolidated revenues increased $17.3 million, or 11%, in the second quarter of 2026 compared to the second quarter of 2025. This increase was primarily driven by (i) new integrated services business in Queensland and Canada, (ii) contributions in Australia from the Qantac Acquisition in the second quarter of 2025, (iii) higher billed rooms at our Canadian lodges and (iv) a stronger Australian dollar relative to the U.S. dollar in the second quarter of 2026 compared to the second quarter of 2025. These increases were partially offset by reduced occupancy at our legacy Bowen Basin villages in Queensland. See the discussion of segment results of operations below for further information.
Cost of Sales and Services. Our consolidated cost of sales and services increased $17.1 million, or 14%, in the second quarter of 2026 compared to the second quarter of 2025. This increase was primarily driven by (i) new integrated services business in Queensland and Canada, including the associated overhead costs, (ii) incremental costs in Australia associated with the Qantac Acquisition in the second quarter of 2025, (iii) increased occupancy levels, higher food and service costs resulting from inflation and increased repairs and maintenance expense in Canada and (iv) a stronger Australian dollar relative to the U.S. dollar in the second quarter of 2026 compared to the second quarter of 2025. These increases were partially offset by lower costs and reduced indirect costs at certain Canadian lodges resulting from cost reduction measures implemented in early 2025. See the discussion of segment results of operations below for further information.
Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses decreased $0.1 million in the second quarter of 2026 compared to the second quarter of 2025. This decrease was primarily driven by a $3.7 million reduction in professional fees, including $3.2 million of shareholder activist related costs incurred in the second quarter of 2025. This decrease was partially offset by $1.5 million related to the resolution of a sales and occupancy tax matter, higher share-based compensation expense of $0.7 million, higher compensation expense of $0.5 million and a stronger Australian dollar relative to the U.S. dollar in the second quarter of 2026 compared to the second quarter of 2025.
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $1.5 million, or 8%, in the second quarter of 2026 compared to the second quarter of 2025. The decrease was primarily due to certain assets becoming fully depreciated in Canada and Australia. This decrease was partially offset by additional depreciation on property, plant and equipment acquired in the Qantac Acquisition and a stronger Australian dollar relative to the U.S. dollar in the second quarter of 2026 compared to the second quarter of 2025.
Operating Income (Expense). Consolidated operating income increased $2.3 million, or 82%, in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by the Qantac Acquisition in Australia and lower depreciation and amortization expenses in the second quarter of 2026 compared to the second quarter of 2025.
Interest Expense, net. Net interest expense increased by $1.6 million, or 60%, in the second quarter of 2026 compared to the second quarter of 2025, primarily related to higher average debt levels, as a result of the Qantac Acquisition and increased share repurchases during 2025.
Income Tax Expense. Our income tax expense for the three months ended June 30, 2026 totaled $3.5 million, or 349.7% of pretax income, compared to an income tax expense of $3.6 million, or 1222.4% of pretax income, for the three months ended June 30, 2025. Our effective tax rate for the three months ended June 30, 2026 and 2025 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Other Comprehensive Income (Loss). Other comprehensive income decreased $10.3 million in the second quarter of 2026 compared to the second quarter of 2025, primarily as a result of foreign currency translation adjustments due to changes in the Australian and Canadian dollar exchange rates compared to the U.S. dollar. The Australian dollar exchange rate compared to the U.S. dollar increased 0.4% in the second quarter of 2026 compared to a 5% increase in the second quarter of 2025. The Canadian dollar exchange rate compared to the U.S. dollar decreased 2% in the second quarter of 2026 compared to a 5% increase in the second quarter of 2025.
Segment Results of Operations - Australian Segment
Three Months Ended
June 30,
2026 2025 Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
$ 57,373 $ 52,682 $ 4,691
Integrated services and other services revenue (2)
68,073 59,990 8,083
Total revenues $ 125,446 $ 112,672 $ 12,774
Cost of sales and services ($ in thousands)
Accommodation and associated services cost $ 28,933 $ 25,890 $ 3,043
Integrated services and other services cost 60,996 53,163 7,833
Indirect other cost 4,185 3,424 761
Total cost of sales and services $ 94,114 $ 82,477 $ 11,637
Gross margin as a % of revenues 25.0 % 26.8 % (1.8) %
Average daily rate for owned villages (3)
$ 85 $ 76 $ 9
Total billed rooms for owned villages (4)
674,506 690,506 (16,000)
Average Australian dollar to U.S. dollar $ 0.710 $ 0.641 $ 0.069
(1)Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.
(2)Includes revenues related to food services and other services, including facilities management for the periods presented.
(3)Average daily rate is based on billed rooms and accommodation revenue in our owned villages.
(4)Billed rooms represent total billed days for owned assets for the periods presented.
Our Australian segment reported revenues in the second quarter of 2026 that were $12.8 million, or 11%, higher than the second quarter of 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.8% in the second quarter of 2026 compared to the second quarter of 2025 resulted in a $12.2 million period-over-period increase in revenues. On a constant currency basis, the Australian segment experienced a 0.5% period-over-period increase in revenues. Excluding the impact of the strengthening Australian exchange rate, the increase in the Australian segment was driven by new integrated services business in Queensland and the Qantac Acquisition in the second quarter of 2025, partially offset by reduced occupancy at our legacy Bowen Basin villages in Queensland.
Our Australian segment cost of sales and services increased $11.6 million, or 14%, in the second quarter of 2026 compared to the second quarter of 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.8% in the second quarter of 2026 compared to the second quarter of 2025 resulted in a $9.2 million period-over-period increase in cost of sales and services. Excluding the impact of the strengthening Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by the Qantac Acquisition and new integrated services business in Queensland, including the associated overhead costs.
Our Australian segment gross margin as a percentage of revenues decreased to 25.0% in the second quarter of 2026 from 26.8% in the second quarter of 2025. This was primarily driven by reduced activity at our Bowen Basin villages in Queensland, reduced retail sales across our integrated services business and increased operating costs arising from the ongoing industry-wide shortages of skilled labor. The reduced segment gross margin was also due to higher relative revenue contribution from our integrated services business, which has a service-only business model and generates lower overall gross margins than our accommodation business.
Segment Results of Operations - Canadian Segment
Three Months Ended
June 30,
2026 2025 Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
$ 44,082 $ 42,590 $ 1,492
Mobile facility rental and associated services revenue (2)
367 434 (67)
Integrated services and other services revenue (3)
10,122 6,998 3,124
Total revenues $ 54,571 $ 50,022 $ 4,549
Cost of sales and services ($ in thousands)
Accommodation and associated services cost $ 31,416 $ 30,618 $ 798
Mobile facility rental and associated services cost 348 135 213
Integrated services and other services cost 10,578 6,237 4,341
Indirect other costs 1,916 2,047 (131)
Total cost of sales and services $ 44,258 $ 39,037 $ 5,221
Gross margin as a % of revenues 18.9 % 22.0 % (3.1) %
Average daily rate for owned lodges (4)
$ 96 $ 94 $ 2
Total billed rooms for owned lodges (5)
458,020 449,970 8,050
Average Canadian dollar to U.S. dollar $ 0.723 $ 0.723 $ -
(1)Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.
(2)Includes revenues related to mobile assets for the periods presented.
(3)Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented.
(4)Average daily rate is based on billed rooms and accommodation revenue in our owned lodges.
(5)Billed rooms represents total billed days for owned assets for the periods presented.
Our Canadian segment reported revenues in the second quarter of 2026 that were $4.5 million, or 9%, higher than the second quarter of 2025. The increase in the Canadian segment was driven by higher billed rooms at our lodges, up 2% year-over-year, and a new integrated services contract in Ontario in the second quarter of 2026. Producers in the region remain focused on reducing operating costs while also prioritizing maintaining and increasing oil production, resulting in additional personnel at site.
Our Canadian segment cost of sales and services increased $5.2 million, or 13%, in the second quarter of 2026 compared to the second quarter of 2025. The increase in cost of sales and services in the Canadian segment was largely driven by higher costs at various lodges due to increased occupancy levels, higher food and service costs resulting from inflation, increased repairs and maintenance expense and higher costs associated with a new integrated services contract. These increases were partially offset by lower costs at certain lodges and reduced indirect costs resulting from cost reduction measures implemented in early 2025.
Our Canadian segment gross margin as a percentage of revenues decreased from 22.0% in the second quarter of 2025 to 18.9% in the second quarter of 2026. This was primarily driven by increased startup costs associated with a new integrated services contract, higher inflation and increased repairs and maintenance expense, partially offset by efficiencies while operating with increased occupancy levels.
Results of Operations - Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Six Months Ended
June 30,
2026 2025 Change
($ in thousands)
Revenues:
Australia $ 248,464 $ 216,318 $ 32,146
Canada 104,220 90,420 13,800
Total revenues 352,684 306,738 45,946
Costs and expenses:
Cost of sales and services
Australia 186,582 159,197 27,385
Canada 84,285 76,682 7,603
Other 250 267 (17)
Total cost of sales and services 271,117 236,146 34,971
Selling, general and administrative expenses 40,474 38,655 1,819
Depreciation and amortization expense 33,635 34,080 (445)
Other operating (income) expense (757) 573 (1,330)
Total costs and expenses 344,469 309,454 35,015
Operating income (expense) 8,215 (2,716) 10,931
Interest expense, net (7,928) (4,217) (3,711)
Other income 59 466 (407)
Income (loss) before income taxes 346 (6,467) 6,813
Income tax expense (6,666) (6,694) 28
Net loss (6,320) (13,161) 6,841
Less: Net income (loss) attributable to noncontrolling interest 9 (5) 14
Net loss attributable to Civeo Corporation $ (6,329) $ (13,156) $ 6,827
We reported net loss attributable to Civeo for the six months ended June 30, 2026 of $6.3 million, or $0.57 per diluted share. Net loss included $1.5 million related to the resolution of a sales and occupancy tax matter, $1.0 million in severance, $0.6 million related to real estate rationalization efforts in Canada and $0.5 million of shareholder activist related costs.
We reported net loss attributable to Civeo for the six months ended June 30, 2025 of $13.2 million, or $0.98 per diluted share. Net loss included $3.2 million of shareholder activist related costs and $1.4 million of cost saving initiatives in Canada related to severance and two lodge closures.
Revenues. Consolidated revenues increased $45.9 million, or 15%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by (i) new integrated services business in Queensland and Canada, (ii) contributions in Australia from the Qantac Acquisition in the second quarter of 2025, (iii) higher billed rooms at our owned lodges in Canada and (iv) a stronger Australian and Canadian dollar relative to the U.S. dollar in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. These increases were partially offset by reduced occupancy at our legacy Bowen Basin villages in Queensland. See the discussion of segment results of operations below for further information.
Cost of Sales and Services. Our consolidated cost of sales and services increased $35.0 million, or 15%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by (i) new integrated services business in Queensland and Canada, including the associated overhead costs, (ii) incremental costs in Australia associated with the Qantac Acquisition in the second quarter of 2025, (iii) increased occupancy levels, higher food and service costs resulting from inflation and increased repairs and maintenance expense in Canada and (iv) a stronger Australian and Canadian dollar relative to the U.S. dollar in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. These items were partially offset by lower costs at certain Canadian lodges and reduced indirect costs resulting from cost reduction measures implemented in early 2025. See the discussion of segment results of operations below for further information.
Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses increased $1.8 million, or 5%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This increase was primarily driven by $1.5 million related to the resolution of a sales and occupancy tax matter, higher compensation expense of $1.2 million, largely due to severance costs incurred in Canada, the write-off of accounts receivable in Australia due to customer insolvency of $0.8 million, higher share-based compensation expense of $0.7 million and a stronger Australian and Canadian dollar relative to the U.S. dollar in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. These increases were partially offset by a $3.7 million reduction in professional fees, including $3.2 million of shareholder activist related costs incurred in the six months ended June 30, 2025.
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $0.4 million, or 1%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily due to certain assets becoming fully depreciated in Canada and Australia. This decrease was partially offset by additional depreciation on property, plant and equipment acquired in the Qantac Acquisition and a stronger Australian and Canadian dollar relative to the U.S. dollar in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Operating Income (Expense). Consolidated operating income increased $10.9 million, or 402%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by the Qantac Acquisition in Australia, higher activity levels in Canada and gross margin expansion in Canada resulting from cost cutting measures previously implemented.
Interest Expense, net. Net interest expense increased by $3.7 million, or 88%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily related to higher average debt levels, as a result of the Qantac Acquisition and increased share repurchases during 2025.
Income Tax Expense. Our income tax expense for the six months ended June 30, 2026 totaled $6.7 million, or 1926.6% of pretax income, compared to an income tax expense of $6.7 million or (103.5)% of pretax loss, for the six months ended June 30, 2025. Our effective tax rate for the six months ended June 30, 2026 and 2025 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.
Other Comprehensive Income (Loss). Other comprehensive income decreased $6.5 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily as a result of foreign currency translation adjustments due to changes in the Australian and Canadian dollar exchange rates compared to the U.S. dollar. The Australian dollar exchange rate compared to the U.S. dollar increased 4% in the six months ended June 30, 2026 compared to a 6% increase in the six months ended June 30, 2025. The Canadian dollar exchange rate compared to the U.S. dollar decreased 4% in the six months ended June 30, 2026 compared to a 5% increase in the six months ended June 30, 2025.
Segment Results of Operations - Australian Segment
Six Months Ended
June 30,
2026 2025 Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
$ 113,179 $ 99,505 $ 13,674
Integrated services and other services revenue (2)
135,285 116,813 18,472
Total revenues $ 248,464 $ 216,318 $ 32,146
Cost of sales and services ($ in thousands)
Accommodation and associated services cost $ 56,990 $ 48,961 $ 8,029
Integrated services and other services cost 121,545 103,814 17,731
Indirect other cost 8,047 6,422 1,625
Total cost of sales and services $ 186,582 $ 159,197 $ 27,385
Gross margin as a % of revenues 24.9 % 26.4 % (1.50) %
Average daily rate for owned villages (3)
$ 84 $ 76 $ 8
Total billed rooms for owned villages (4)
1,350,008 1,316,142 33,866
Average Australian dollar to U.S. dollar $ 0.703 $ 0.634 $ 0.069
(1)Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.
(2)Includes revenues related to food services and other services, including facilities management for the periods presented.
(3)Average daily rate is based on billed rooms and accommodation revenue in our owned villages.
(4)Billed rooms represent total billed days for owned assets for the periods presented.
Our Australian segment reported revenues in the six months ended June 30, 2026 that were $32.1 million, or 15%, higher than the six months ended June 30, 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.9% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 resulted in a $24.2 million period-over-period increase in revenues. On a constant currency basis, the Australian segment experienced a 3.7% period-over-period increase in revenues. Excluding the impact of the strengthening Australian exchange rate, the increase in the Australian segment was driven by the new integrated services business in Queensland and the Qantac Acquisition in the second quarter of 2025, partially offset by reduced occupancy at our legacy Bowen Basin villages in Queensland.
Our Australian segment cost of sales and services increased $27.4 million, or 17%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.9% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 resulted in a $18.2 million period-over-period increase in cost of sales and services. Excluding the impact of the strengthening Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by the Qantac Acquisition and new integrated services business in Queensland, including the associated overhead costs.
Our Australian segment gross margin as a percentage of revenues decreased to 24.9% in the six months ended June 30, 2026 from 26.4% in the six months ended June 30, 2025. This was primarily driven by reduced activity at our Bowen Basin villages in Queensland, reduced retail sales across our integrated services business and increased operating costs arising from the ongoing industry-wide shortages of skilled labor. The reduced segment gross margin was also due to higher relative revenue contribution from our integrated services business, which has a service-only business model and generates lower overall gross margins than our accommodation business.
Segment Results of Operations - Canadian Segment
Six Months Ended
June 30,
2026 2025 Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
$ 87,216 $ 76,026 $ 11,190
Mobile facility rental and associated services revenue (2)
1,405 653 752
Integrated services and other services revenue (3)
15,599 13,741 1,858
Total revenues $ 104,220 $ 90,420 $ 13,800
Cost of sales and services ($ in thousands)
Accommodation and associated services cost $ 63,540 $ 59,483 $ 4,057
Mobile facility rental and associated services cost 1,027 135 892
Integrated services and other services cost 15,655 12,710 2,945
Indirect other costs 4,063 4,354 (291)
Total cost of sales and services $ 84,285 $ 76,682 $ 7,603
Gross margin as a % of revenues 19.1 % 15.2 % 3.9 %
Average daily rate for owned lodges (4)
$ 97 $ 94 $ 3
Total billed rooms for owned lodges (5)
891,610 808,667 82,943
Average Canadian dollar to U.S. dollar $ 0.726 $ 0.710 $ 0.016
(1)Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.
(2)Includes revenues related to mobile assets for the periods presented.
(3)Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented.
(4)Average daily rate is based on billed rooms and accommodation revenue in our owned lodges.
(5)Billed rooms represents total billed days for owned assets for the periods presented.
Our Canadian segment reported revenues in the six months ended June 30, 2026 that were $13.8 million, or 15%, higher than the six months ended June 30, 2025. The strengthening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 2.3% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 resulted in a $2.3 million period-over-period increase in revenues. On a constant currency basis, the increase in the Canadian segment was driven by higher billed rooms at our owned lodges, up 10% year-over-year, and a new integrated services contract in Ontario, which began in the second quarter of 2026. Producers in the region remain focused on reducing operating costs while also prioritizing maintaining and increasing oil production, resulting in additional personnel at site.
Our Canadian segment cost of sales and services increased $7.6 million, or 10%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The strengthening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 2.3% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 resulted in a $1.8 million period-over-period increase in cost of sales and services. Excluding the impact of the strengthening Canadian exchange rate, the increase in cost of sales and services was largely driven by higher costs at various lodges due to increased occupancy levels, higher food and service costs resulting from inflation, increased repairs and maintenance expense and higher costs associated with a new integrated services contract. These increases were partially offset by lower costs at certain lodges and reduced indirect costs resulting from cost reduction measures implemented in early 2025.
Our Canadian segment gross margin as a percentage of revenues increased from 15.2% in the six months ended June 30, 2025 to 19.1% in the six months ended June 30, 2026. This was primarily driven by operating efficiencies while operating with increased occupancy levels, as well as higher margins as a result of various cost reduction measures implemented in early 2025, partially offset by startup costs associated with a new integrated services contract.
Liquidity and Capital Resources
Our primary liquidity needs are to fund capital expenditures, which in the past have included expanding and improving our hospitality services, developing new lodges and villages and purchasing or leasing land, to repurchase common shares, to pay dividends and for general working capital needs. In addition, capital has been used to repay debt and fund strategic business acquisitions. Historically, our primary sources of funds have been available cash, cash flow from operations, borrowings under our Amended Credit Agreement and proceeds from debt and equity issuances. In the future, we may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions or refinance debt.
The following table summarizes our consolidated liquidity position as of June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026 December 31, 2025
Lender commitments $ 285,000 $ 265,000
Reduction in availability (1)
(13,952) (5,344)
Borrowings against revolving credit capacity (208,595) (182,842)
Outstanding letters of credit (835) (866)
Unused availability 61,618 75,948
Cash and cash equivalents 20,605 14,439
Total available liquidity $ 82,223 $ 90,387
(1)As of June 30, 2026 and December 31, 2025, $14.0 million and $5.3 million, respectively, of our borrowing capacity under the Amended Credit Agreement could not be utilized in order to maintain compliance with the maximum leverage ratio financial covenant in the Amended Credit Agreement.
Cash totaling $1.9 million was provided by operations during the six months ended June 30, 2026, compared to $10.8 million used in operations during the six months ended June 30, 2025. Net cash used in working capital was $26.4 million during the six months ended June 30, 2026 compared to net cash used in working capital of $31.3 million during the six months ended June 30, 2025. The year-over-year decrease in cash used in working capital in 2026 compared to 2025 is largely due to lower cash taxes paid in Australia, partially offset by increased accounts receivable balances in Australia and Canada.
Cash was used in investing activities during the six months ended June 30, 2026 in the amount of $6.6 million, compared to cash used in investing activities during the six months ended June 30, 2025 in the amount of $74.4 million. The decrease was primarily due to the Qantac acquisition completed during 2025. We received net proceeds from the sale of property, plant and equipment of $1.2 million during the six months ended June 30, 2026 compared to $0.3 million during the six months ended June 30, 2025. Capital expenditures totaled $7.8 million and $9.8 million during the six months ended June 30, 2026 and 2025, respectively. Capital expenditures in both periods were primarily related to maintenance.
We expect our capital expenditures for 2026 to be in the range of $25 million to $30 million, which excludes any unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts or commitments or attractive risk-adjusted economics. Whether planned expenditures will actually be spent in 2026 depends on industry conditions, project approvals and schedules, customer room commitments and project and construction timing. We expect to fund these capital expenditures with available cash, cash flow from operations and revolving credit borrowings under our Amended Credit Agreement. The foregoing capital expenditure forecast does not include any funds for strategic acquisitions, which we could pursue should the transaction economics be attractive enough to us compared to the current capital allocation priorities of returning capital to shareholders. We continue to monitor the global economy, commodity prices, demand for met coal, crude oil, LNG and iron ore, inflation and the resultant impact on the capital spending plans of our customers in order to plan our business activities, and we may adjust our capital expenditure plans in the future.
Net cash of $11.5 million was provided by financing activities during the six months ended June 30, 2026 primarily due to net borrowings under our revolving credit facilities of $29.6 million, partially offset by repurchases of our common shares of $14.4 million, debt issuance costs of $3.4 million and payments to settle tax obligations on vested shares under our share-based compensation plans of $0.3 million. Net cash of $92.2 million was provided by financing activities during the six months ended June 30, 2025 primarily due to net borrowings under our revolving credit facilities of $119.2 million primarily to fund the Qantac Acquisition and share repurchases, partially offset by repurchases of our common shares of $22.5 million, dividend
payments of $3.4 million, payments to settle tax obligations on vested shares under our share-based compensation plans of $0.6 million and debt issuance costs of $0.4 million.
The following table summarizes the changes in debt outstanding during the six months ended June 30, 2026 (in thousands):
Balance at December 31, 2025 $ 182,842
Borrowings under revolving credit facilities 422,901
Repayments of borrowings under revolving credit facilities (393,321)
Translation (3,827)
Balance at June 30, 2026 $ 208,595
We believe that cash on hand and cash flow from operations will be sufficient to meet our anticipated liquidity needs for the next 12 months. If our plans or assumptions change, including as a result of changes in our customers' capital spending or changes in the price of and demand for natural resources, or are inaccurate, or if we make acquisitions, we may need to raise additional capital. Selectively pursuing strategic organic and inorganic growth opportunities that fit with our current capital allocation priorities of returning capital to shareholders has been, and our management believes will continue to be, an element of our long-term business strategy. The timing, size or success of any growth opportunities and the associated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances or may issue equity directly to the sellers. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend on our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control. In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.
In March 2025, our Board authorized a common share repurchase program (the Share Repurchase Program) to repurchase up to 10.0% of our total common shares which were issued and outstanding at that date, or approximately 1.4 million common shares over a twelve-month period. In April 2025, our Board authorized an increase to the Share Repurchase Program to repurchase up to 20.0% of our total common shares which are issued and outstanding at that date, or approximately 2.7 million common shares. In March 2026, our Board authorized an additional repurchase authorization of up to 10.0% of our common shares outstanding upon completion of the April 2025 authorization. The Share Repurchase Program (including the additional authorizations in April 2025 and March 2026) does not expire. See Note 11 - Share Repurchase Programs and Dividends to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.
Amended Credit Agreement
On April 23, 2026, the Credit Agreement was amended and restated (as amended to date, the Amended Credit Agreement) to, among other things:
•provide for an increase by $20.0 million of the aggregate revolving loan commitments under the Amended Credit Agreement, to an aggregate maximum principal amount of $285.0 million, allocated as follows: (A) a $10.0 million senior secured revolving credit facility in favor of certain of our U.S. subsidiaries, as borrowers (the U.S. Facility); (B) a $205.0 million senior secured revolving credit facility in favor of Civeo, as borrower (the Canadian Facility); and (C) a $70.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrowers;
•extend the maturity from August 8, 2028 to April 23, 2030; and
•provide for other technical changes and amendments to the Credit Agreement.
As of June 30, 2026, we had outstanding letters of credit of zero under the U.S. facility, zero under the Australian facility and $0.8 million under the Canadian facility. We also had outstanding bank guarantees of A$1.4 million under the Australian facility.
See Note 7 - Debt to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.
4.50% Convertible Senior Notes
Subsequent to June 30, 2026, we strengthened our liquidity through the issuance of $115.0 million aggregate principal amount of 4.50% Convertible Senior Notes due 2031 (the Convertible Notes) in a private placement, including the full exercise of the initial purchasers' option to purchase an additional $15.0 million aggregate principal amount of Convertible Notes. We received approximately $110.8 million in net proceeds, of which approximately $22.3 million was used to repurchase 660,297 of our common shares. We used the remainder of the net proceeds from the offering to repay outstanding borrowings under our Amended Credit Agreement. The Convertible Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2027. The Convertible Notes will mature on August 1, 2031, unless earlier repurchased or redeemed by us or converted pursuant to their terms. See Note 14 - Subsequent Event to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.
Dividends
In April 2025, our Board suspended quarterly dividends on our common shares to prioritize returning capital to our shareholders through ongoing share repurchases. The declaration and amount of any potential future dividends will be at the discretion of our Board and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board deems relevant. In addition, our ability to pay cash dividends on common shares is limited by covenants in the Amended Credit Agreement. Future agreements may also limit our ability to pay dividends, and we may incur incremental taxes if we are required to repatriate foreign earnings to pay such dividends. If any dividends are declared in the future, the amount per share of our dividend payments may be changed, or dividends may again be suspended, without advance notice. The likelihood that dividends will be reduced or suspended is increased during periods of market weakness. There can be no assurance that we will pay any dividends in the future.
Critical Accounting Policies
For a discussion of the critical accounting policies and estimates that we use in the preparation of our consolidated financial statements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection and disclosure of these critical accounting policies and estimates with the audit committee of our Board. There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based.
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