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Item 1. Financial Statements

2024-04-26 compared with 2023-10-27 · 144 added, 216 removed, 315 unchanged (53% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Service and other $ 165,530 $ 167,377

8 unchanged sentences

Depreciation and amortization expense 16,770 21,662

Other operating expense (income) 87 ( 339 ) 302 ( 187 )

Impairment expense 7,823 —

Gain on sale of McClelland Lake Lodge assets, net ( 6,075 ) —

Other operating expense 298 129

167,901 171,495

Operating income 16,039 10,785 22,307 29,264

Operating loss ( 1,781 ) ( 3,904 )

Interest expense ( 2,360 ) ( 3,656 )

Interest income 43 32

Other income (expense) ( 4,709 ) 2,179 ( 1,832 ) 4,290

Income before income taxes 8,009 9,976 9,976 25,492

Income tax benefit (expense) 1,214 ( 3,713 ) ( 2,897 ) ( 7,091 )

Net income 9,223 6,263 7,079 18,401

Other income 453 2,450

Loss before income taxes ( 3,645 ) ( 5,078 )

Income tax expense ( 1,551 ) ( 1,233 )

Net loss ( 5,196 ) ( 6,311 )

Net income (loss) attributable to noncontrolling interest ( 63 ) 42

Net income attributable to Civeo Corporation 9,022 5,717 7,132 16,695

Dividends attributable to Class A preferred shares — 492 — 1,469

Net income attributable to Civeo common shareholders $ 9,022 $ 5,225 $ 7,132 $ 15,226

Net loss attributable to Civeo Corporation $ ( 5,133 ) $ ( 6,353 )

Per Share Data (see Note 7)

Basic net income per share attributable to Civeo Corporation common shareholders $ 0.61 $ 0.32 $ 0.48 $ 0.92

Diluted net income per share attributable to Civeo Corporation common shareholders $ 0.61 $ 0.32 $ 0.47 $ 0.91

Basic net loss per share attributable to Civeo Corporation common shareholders $ ( 0.35 ) $ ( 0.42 )

Diluted net loss per share attributable to Civeo Corporation common shareholders $ ( 0.35 ) $ ( 0.42 )

Weighted average number of common shares outstanding:

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 9,223 $ 6,263 $ 7,079 $ 18,401

Net loss $ ( 5,196 ) $ ( 6,311 )

Other comprehensive loss, net of taxes:

2 unchanged sentences

Total other comprehensive loss, net of taxes ( 10,231 ) ( 2,176 )

Comprehensive income (loss) 2,428 ( 14,482 ) 189 ( 14,356 )

Comprehensive loss ( 15,427 ) ( 8,487 )

Comprehensive income (loss) attributable to noncontrolling interest ( 132 ) 40

Comprehensive income (loss) attributable to Civeo Corporation $ 2,292 $ ( 14,850 ) $ 239 $ ( 15,830 )

Comprehensive loss attributable to Civeo Corporation $ ( 15,295 ) $ ( 8,527 )

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(In Thousands, Excluding Share Amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

17 unchanged sentences

Income taxes 7,426 3,831

Current portion of long-term debt 7,143 28,448

Deferred revenue 4,492 4,849

1 unchanged sentence

Total current liabilities 92,853 114,236

Long-term debt, less current maturities 95,852 102,505

Long-term debt 78,597 65,554

Deferred income taxes 9,046 11,803

3 unchanged sentences

Shareholders’ Equity:

Preferred shares (Class A Series 1) — —

Common shares ( no par value;

15 unchanged sentences

Attributable to Civeo

Shares Common

Amount Par Value Additional

Par Value Additional

Capital Accumulated

5 unchanged sentences

Shareholders’

Balance, June 30, 2022 $ 62,918 $ — $ 1,584,416 $ ( 903,492 ) $ ( 9,063 ) $ ( 373,841 ) $ 2,582 $ 363,520

Net income — — — 5,717 — — 546 6,263

Currency translation adjustment — — — — — ( 20,567 ) ( 178 ) ( 20,745 )

Dividends paid — — — — — — ( 61 ) ( 61 )

Dividends attributable to Class A preferred shares 492 — — ( 492 ) — — — —

Common shares repurchased — — — ( 13,667 ) — — — ( 13,667 )

Share-based compensation — — 887 — — — — 887

Balance, September 30, 2022 $ 63,410 $ — $ 1,585,303 $ ( 911,934 ) $ ( 9,063 ) $ ( 394,408 ) $ 2,889 $ 336,197

Balance, June 30, 2023 $ — $ — $ 1,626,556 $ ( 939,983 ) $ ( 9,063 ) $ ( 385,350 ) $ 3,173 $ 295,333

Net income — — — 9,022 — — 201 9,223

Currency translation adjustment — — — — — ( 6,730 ) ( 65 ) ( 6,795 )

Dividends paid — — — ( 3,731 ) — — ( 68 ) ( 3,799 )

Common shares repurchased — — — ( 1,252 ) — — — ( 1,252 )

Share-based compensation — — 1,253 — — — — 1,253

Balance, September 30, 2023 $ — $ — $ 1,627,809 $ ( 935,944 ) $ ( 9,063 ) $ ( 392,080 ) $ 3,241 $ 293,963

Balance, December 31, 2022 $ — $ 1,624,512 $ ( 930,123 ) $ ( 9,063 ) $ ( 385,187 ) $ 3,562 $ 303,701

2 unchanged sentences

Dividends paid — — — — — ( 133 ) ( 133 )

Dividends attributable to Class A preferred shares 1,469 — — ( 1,469 ) — — — —

Common shares repurchased — — ( 3,771 ) — — — ( 3,771 )

Share-based compensation — 867 — — — — 867

Balance, September 30, 2022 $ 63,410 $ — $ 1,585,303 $ ( 911,934 ) $ ( 9,063 ) $ ( 394,408 ) $ 2,889 $ 336,197

Balance, March 31, 2023 $ — $ 1,625,379 $ ( 940,247 ) $ ( 9,063 ) $ ( 387,361 ) $ 3,469 $ 292,177

Balance, December 31, 2023 $ — $ 1,628,972 $ ( 919,023 ) $ ( 9,063 ) $ ( 380,715 ) $ 2,867 $ 323,038

Net income (loss) — — — 7,132 — — ( 53 ) 7,079

Net income — — ( 5,133 ) — — ( 63 ) ( 5,196 )

Currency translation adjustment — — — — ( 10,162 ) ( 69 ) ( 10,231 )

1 unchanged sentence

Common shares repurchased — — ( 3,208 ) — — — ( 3,208 )

Excise tax on common shares repurchased — — ( 64 ) — — — ( 64 )

Share-based compensation — 549 — ( 1,067 ) — — ( 518 )

Balance, September 30, 2023 $ — $ — $ 1,627,809 $ ( 935,944 ) $ ( 9,063 ) $ ( 392,080 ) $ 3,241 $ 293,963

Shares Common

Balance, March 31, 2024 $ — $ 1,629,521 $ ( 931,135 ) $ ( 10,130 ) $ ( 390,877 ) $ 2,731 $ 300,110

Balance, December 31, 2023 14,680

1 unchanged sentence

Common shares repurchased ( 133 )

Balance, September 30, 2023 — 14,801

Balance, March 31, 2024 14,624

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income $ 7,079 $ 18,401

Adjustments to reconcile net income to net cash provided by operating activities:

Net loss $ ( 5,196 ) $ ( 6,311 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 16,770 21,662

Deferred income tax expense 2,688 6,930

Impairment charges 7,823 —

Deferred income tax expense (benefit) ( 2,265 ) 1,189

Non-cash compensation charge 549 867

Losses (gains) on disposals of assets 2,264 ( 4,069 )

Gain on disposals of assets ( 6,065 ) ( 2,018 )

Provision (benefit) for credit losses, net of recoveries 4 ( 68 )

10 unchanged sentences

Proceeds from dispositions of property, plant and equipment 6,778 2,265

Other, net — 190

Net cash flows used in investing activities ( 14,109 ) ( 5,301 )

Net cash flows provided by (used in) investing activities 1,165 ( 2,507 )

Cash flows from financing activities:

5 unchanged sentences

Taxes paid on vested shares ( 1,067 ) —

Net cash flows used in financing activities ( 42,023 ) ( 53,105 )

Net cash flows provided by financing activities 6,614 6,570

Effect of exchange rate changes on cash ( 335 ) ( 9 )

2 unchanged sentences

Cash and cash equivalents, end of period $ 16,752 $ 12,366

Non-cash financing activities:

Preferred dividends paid-in-kind $ — $ 1,469

The accompanying notes are an integral part of these financial statements.

4 unchanged sentences

Description of the Business

We provide hospitality services to the natural resources industry in Canada, Australia and the U.S.

We provide a suite of services for our guests, including lodging, catering and food service, housekeeping and maintenance at accommodation facilities that we or our customers own.

In many cases, we provide services that support the day-to-day operations of these facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics.

We also offer development activities for workforce accommodation facilities, including site selection, permitting, engineering and design, manufacturing management and site construction, along with providing hospitality services once the facility is constructed.

We provide hospitality services to remote workforces in Canada and Australia, including lodging, catering and food service, housekeeping and maintenance at accommodation facilities that we or our customers own.

We provide services that support the day-to-day operations of these facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics.

We also manage development activities for workforce accommodation facilities, including site selection, permitting, engineering and design, manufacturing management and site construction, along with providing hospitality services once the facility is constructed.

We primarily operate in some of the world’s most active oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore producing regions, and our customers include major and independent oil companies, mining companies, engineering companies and oilfield and mining service companies.

5 unchanged sentences

The accompanying unaudited consolidated financial statements of Civeo have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) pertaining to interim financial information.

Certain information in footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) has been condensed or omitted pursuant to those rules and regulations.

Certain information in footnote disclosures normally included in financial statements prepared in accordance with U.S.

Generally Accepted Accounting Principles (GAAP) has been condensed or omitted pursuant to those rules and regulations.

The unaudited consolidated financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which Civeo considers necessary for a fair presentation of the results of operations for the interim periods covered and for the financial condition of Civeo at the date of the interim balance sheet.

Results for the interim periods are not necessarily indicative of results for the full year.

Certain reclassifications have been made to the 2022 financial information to conform to current year presentation.

The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

4 unchanged sentences

FINANCIAL STATEMENTS

The following table disaggregates our revenue by our two reportable segments:

Canada and Australia and major categories for the periods indicated (in thousands):

The following table disaggregates our revenue by our two reportable segments (Canada and Australia) into major categories for the periods indicated (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Accommodation revenues $ 59,787 $ 64,228

8 unchanged sentences

Total revenues $ 166,120 $ 167,591

Our payment terms vary by the type and location of our customer and the products or services offered.

Our payment terms vary by the type and location of our customer and the services offered.

The time between invoicing and when our performance obligations are satisfied is not significant.

1 unchanged sentence

We do not have significant financing components or significant payment terms.

As of September 30, 2023, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

As of March 31, 2024, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands):

1 unchanged sentence

2024 2025 2026 Thereafter Total

Revenue expected to be recognized as of September 30, 2023 $ 43,646 $ 151,716 $ 111,329 $ 383,980 $ 690,671

Revenue expected to be recognized as of March 31, 2024 $ 130,870 $ 130,218 $ 96,661 $ 298,110 $ 655,859

We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less.

1 unchanged sentence

The table above represents only a portion of our expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues.

FAIR VALUE MEASUREMENTS

Our financial instruments consist of cash and cash equivalents, receivables, payables and debt instruments.

We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

As of September 30, 2023 and December 31, 2022, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

In addition, the estimated fair value of our assets held for sale is based upon Level 2 fair value measurements, which include appraisals and previous negotiations with third parties.

IMPAIRMENT CHARGES

The following summarizes pre-tax impairment charges recorded during 2024, which are included in Impairment expense in our consolidated statements of operations (in thousands):

Australia U.S.

Quarter ended March 31, 2024

Long-lived assets $ 5,749 $ 2,074 $ 7,823

Total $ 5,749 $ 2,074 $ 7,823

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

Quarter ended March 31, 2024 .

During the first quarter of 2024, we recorded impairment expense of $ 5.7 million related to various undeveloped land positions and related permitting costs in Australia.

At March 31, 2024, we identified an impairment trigger related to certain of these properties due to the denial of development permit applications in Australia.

Accordingly, the assets were written down to their estimated fair value of $ 0.6 million.

In addition, during the first quarter of 2024, we recorded impairment expense of $ 2.1 million, related to land located in the U.S.

The land was written down to its estimated fair value (less costs to sell) of $ 3.8 million.

FAIR VALUE MEASUREMENTS

Our financial instruments consist of cash and cash equivalents, receivables, payables and debt instruments.

We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

As of March 31, 2024 and December 31, 2023, we believe the carrying value of our floating-rate debt outstanding under our revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

We estimated the fair value of our floating-rate revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans.

In addition, the estimated fair value of our assets held for sale is based upon Level 2 fair value measurements, which include appraisals, broker price opinions and negotiations with third parties.

During the first quarter of 2024, we wrote down certain long-lived assets to fair value.

Our estimate of the fair value of undeveloped land positions in Australia that were impaired was based on appraisals from third parties.

DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at September 30, 2023 and December 31, 2022 is presented below (in thousands):

September 30, 2023 December 31, 2022

Additional information regarding selected balance sheet accounts at March 31, 2024 and December 31, 2023 is presented below (in thousands):

March 31, 2024 December 31, 2023

Accounts receivable, net:

5 unchanged sentences

Total accounts receivable, net $ 131,478 $ 143,222

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Finished goods and purchased products $ 5,906 $ 5,648

1 unchanged sentence

Total inventories $ 7,233 $ 6,982

(in years) September 30, 2023 December 31, 2022

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(in years) March 31, 2024 December 31, 2023

Property, plant and equipment, net:

9 unchanged sentences

Total property, plant and equipment, net $ 245,840 $ 270,563

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accrued liabilities:

1 unchanged sentence

Accrued taxes, other than income taxes 3,403 3,997

Other 2,332 2,672

Total accrued liabilities $ 26,127 $ 40,523

(1) The increase in Other accrued liabilities from December 31, 2022 to September 30, 2023 was due to payments received in the third quarter of 2023 from a customer related to an asset sale contract, which are expected to be recognized in the fourth quarter of 2023 and the first quarter of 2024.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Contract liabilities (Deferred revenue):

5 unchanged sentences

Deferred revenue typically consists of upfront payments received before we satisfy the associated performance obligation.

The increase in deferred revenue from December 31, 2022 to September 30, 2023 was due to payments received from a customer for village enhancements in Australia and a payment received from a customer related to an asset transportation contract, which will all be recognized over the contracted terms.

The decrease in deferred revenue from December 31, 2023 to March 31, 2024 was due to revenue recognized over the contracted terms related to advance payments received from a customer for village enhancements in Australia.

ASSETS HELD FOR SALE

As of September 30, 2023 and December 31, 2022, assets held for sale included certain assets in our Canadian business segment and the U.S.

As of March 31, 2024 and December 31, 2023, assets held for sale included certain assets in the United States (U.S.).

These assets were recorded at the estimated fair value less costs to sell, which exceeded or equaled their carry values.

During the first quarter of 2023, we sold the accommodation assets at our Louisiana location.

The land at this location remains in assets held for sale as of September 30, 2023.

During the third quarter of 2023, we entered into a definitive agreement to sell our McClelland Lake Lodge assets for approximately C$ 49 million, or US$ 36 million.

During the third quarter of 2023, we entered into a definitive agreement to sell our McClelland Lake Lodge assets for approximately $ 36 million.

The related assets had no remaining carrying value.

During the third quarter of 2023, we recognized $ 4.9 million in demobilization costs and received $ 9.1 million in cash proceeds associated with the sale.

We expect to recognize the remaining demobilization costs and the proceeds of the sale in the fourth quarter of 2023 and first quarter of 2024.

The following table summarizes the carrying amount as of September 30, 2023 and December 31, 2022 of the assets classified as held for sale (in thousands):

September 30, 2023 December 31, 2022

During the third and fourth quarters of 2023, we recognized $ 14.2 million in dismantle costs and received $ 28.2 million in cash proceeds associated with the sale.

During the first quarter of 2024, we recognized the remaining $ 1.0 million in dismantle costs and received the remaining $ 7.8 million in cash proceeds.

The following table summarizes the carrying amount as of March 31, 2024 and December 31, 2023 of the assets classified as held for sale (in thousands):

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

March 31, 2024 December 31, 2023

Assets held for sale:

2 unchanged sentences

EARNINGS PER SHARE

For the three and nine months ended September 30, 2023, we calculated our basic earnings per share by dividing net income (loss) attributable to common shareholders, before allocation of earnings to participating earnings by the weighted average number of common shares outstanding.

We calculate our basic earnings per share by dividing net loss attributable to Civeo Corporation by the weighted average number of common shares outstanding.

For diluted earnings per share, the basic shares outstanding are adjusted by adding all potentially dilutive securities.

For the three and nine months ended September 30, 2022, a period during which we had participating securities in the form of Class A preferred shares, we used the two-class method to calculate basic and diluted earnings per share.

The two-class method requires a proportional share of net income to be allocated between common shares and participating securities.

The proportional share to be allocated to participating securities is determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities.

Basic earnings per share is computed under the two-class method by dividing the net income (loss) attributable to common shareholders, after allocation of earnings to participating earnings by the weighted average number of common shares outstanding during the period.

Net income attributable to common shareholders, after allocation of earnings to participating

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

earnings represents our net income reduced by an allocation of current period earnings to participating securities as described above.

No such adjustment is made during periods with a net loss, as the adjustment would be anti-dilutive.

Diluted earnings per share is computed under the two-class method by dividing diluted net income (loss) attributable to common shareholders, after reallocation adjustment for participating securities by the weighted average number of common shares outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of share-based awards.

In addition, we calculate the potential dilutive effect of any outstanding dilutive security under both the two-class method and the “if-converted” method, and we report the more dilutive of the methods as our diluted earnings per share.

We also apply the treasury stock method with respect to certain share-based awards in the calculation of diluted earnings per share, if dilutive.

The calculation of earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Net income attributable to Civeo common shareholders, before allocation of earnings to participating securities $ 9,022 $ 5,225 $ 7,132 $ 15,226

income allocated to participating securities — ( 794 ) — ( 2,297 )

Net income attributable to Civeo Corporation common shareholders, after allocation of earnings to participating securities $ 9,022 $ 4,431 $ 7,132 $ 12,929

undistributed income attributable to participating securities — 794 — 2,297

undistributed income reallocated to participating securities — ( 788 ) — ( 2,275 )

Diluted net income attributable to Civeo Corporation common shareholders, after reallocation adjustment for participating securities $ 9,022 $ 4,437 $ 7,132 $ 12,951

The calculation of basic and diluted earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts):

Three Months Ended March 31,

Basic net loss attributable to Civeo Corporation $ ( 5,133 ) $ ( 6,353 )

Diluted net loss attributable to Civeo Corporation $ ( 5,133 ) $ ( 6,353 )

Weighted average shares outstanding - basic 14,655 15,158

1 unchanged sentence

Weighted average shares outstanding - diluted 14,655 15,158

Basic net income per share attributable to Civeo Corporation common shareholders (1)

Basic net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 0.35 ) $ ( 0.42 )

Diluted net income per share attributable to Civeo Corporation common shareholders (1)

Diluted net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 0.35 ) $ ( 0.42 )

1 unchanged sentence

The following common share equivalents have been excluded from the calculation of weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented (in millions of shares):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Share-based awards 0.1 0.1

Preferred shares — 2.5 — 2.5

(1) Share-based awards for the three and nine months ended September 30, 2023 and September 30, 2022 totaled fewer than 0.1 million shares.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

As of September 30, 2023 and December 31, 2022, long-term debt consisted of the following (in thousands):

September 30, 2023 December 31, 2022

Canadian term loan;

weighted average interest rate of 8.1 % for the nine month period ended September 30, 2023

$ 7,396 $ 29,532

As of March 31, 2024 and December 31, 2023, long-term debt consisted of the following (in thousands):

March 31, 2024 December 31, 2023

revolving credit facility;

weighted average interest rate of 10.1 % for the nine month period ended September 30, 2023

weighted average interest rate of 10.5 % for the three month period ended March 31, 2024

Canadian revolving credit facility;

weighted average interest rate of 8.2 % for the nine month period ended September 30, 2023

weighted average interest rate of 8.9 % for the three month period ended March 31, 2024

78,597 65,554

Australian revolving credit facility;

weighted average interest rate of 6.7 % for the nine month period ended September 30, 2023

103,248 132,037

Unamortized debt issuance costs 253 1,084

weighted average interest rate of 7.3 % for the three month period ended March 31, 2024

Total debt $ 78,597 $ 65,554

Current portion of long-term debt, including unamortized debt issuance costs, net 7,143 28,448

Long-term debt, less current maturities $ 95,852 $ 102,505

Credit Agreement

As of September 30, 2023, our Credit Agreement (as then amended to date, the Credit Agreement) provided for:

(i) a $ 200.0 million revolving credit facility scheduled to mature on September 8, 2025, allocated as follows:

As of March 31, 2024, our Credit Agreement (as then amended to date, the Credit Agreement) provided for a $ 200.0 million revolving credit facility scheduled to mature on September 8, 2025, allocated as follows:

(A) a $ 10.0 million senior secured revolving credit facility in favor of one of our U.S.

2 unchanged sentences

and (C) a $ 35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower.

and (ii) a C$ 100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 in favor of Civeo.

A C$ 100.0 million term loan facility provided under the Credit Agreement was fully repaid on December 31, 2023.

The Credit Agreement was amended effective March 31, 2023 to, among other things, change the benchmark interest rate for certain U.S.

12 unchanged sentences

and (vi) investments and other restricted payments, including dividends and other distributions.

In addition, we must maintain a minimum interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and our maximum net leverage ratio, defined as the ratio of total net debt to Consolidated EBITDA, of no greater than 3.00 to 1.00.

In addition, we must maintain a minimum interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and a maximum net leverage ratio, defined as the ratio of total net debt to Consolidated EBITDA, of no greater than 3.00 to 1.00.

Following a qualified offering of indebtedness, we will be required to maintain a maximum leverage ratio of no greater than 3.50 to 1.00 and a maximum senior secured ratio less than 2.00 to 1.00.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement.

EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization, amortization of intangibles and other non-cash charges.

We were in compliance with our covenants as of September 30, 2023.

We were in compliance with our covenants as of March 31, 2024.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries subject to customary exceptions.

The obligations under the Credit Agreement are guaranteed by our significant subsidiaries.

As of September 30, 2023, we had seven lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.5 million to $ 52.0 million.

As of September 30, 2023, we had outstanding letters of credit of $ 0.3 million under the U.S.

As of March 31, 2024, we had seven lenders that were parties to the Credit Agreement, with total revolving commitments ranging from $ 13.0 million to $ 60.6 million.

As of March 31, 2024, we had outstanding letters of credit of $ 0.3

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

million under the U.S.

facility, zero under the Australian facility and $ 1.1 million under the Canadian facility.

4 unchanged sentences

Our effective tax rate will vary from period to period based on changes in earnings mix between these different jurisdictions.

On January 1, 2024, the Organization for Economic Cooperation and Development Pillar Two rules became effective and established a minimum 15% tax rate on certain multinational enterprises.

The Pillar Two rules have been implemented in Canada and Australia, with the U.S.

still uncertain to date.

The applicable tax law changes with respect to Pillar Two have been considered for the jurisdictions in which we operate, and we do not anticipate the Pillar Two rules to have a materially adverse impact on our financial results.

We compute our quarterly taxes under the effective tax rate method by applying an anticipated annual effective rate to our year-to-date income, except for significant unusual or extraordinary transactions.

Income taxes for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs.

As of September 30, 2023 and 2022, the U.S.

was considered a loss jurisdiction for tax accounting purposes and was removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax benefit for the three months ended September 30, 2023 totaled $ 1.2 million, or ( 15.2 )% of pretax income, compared to income tax expense of $ 3.7 million, or 37.2 % of pretax income, for the three months ended September 30, 2022.

Our effective tax rate for the three months ended September 30, 2023 and 2022 was impacted by considering the U.S.

a loss jurisdiction that was removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Additionally, under Accounting Standards Codification 740-270, “Accounting for Income Taxes,” the quarterly tax provision is based on our current estimate of the annual effective tax rate less the prior quarter’s year to date provision.

Our income tax expense for the nine months ended September 30, 2023 totaled $ 2.9 million, or 29.0 % of pretax income, compared to income tax expense of $ 7.1 million, or 27.8 % of pretax income, for the nine months ended September 30, 2022.

Our effective tax rate for the nine months ended September 30, 2023 and 2022 was impacted by considering the U.S.

a loss jurisdiction that was removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

As of March 31, 2024 and 2023, Canada and the U.S.

were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax expense for the three months ended March 31, 2024 totaled $ 1.6 million, or ( 42.6 )% of pretax loss, compared to income tax expense of $ 1.2 million, or ( 24.3 )% of pretax loss, for the three months ended March 31, 2023.

Our effective tax rate for the three months ended March 31, 2024 and 2023 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.

COMMITMENTS AND CONTINGENCIES

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ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss increased $ 6.9 million from $ 385.2 million at December 31, 2022 to $ 392.1 million at September 30, 2023, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the nine months of 2023 were primarily driven by the Australian dollar decreasing in value compared to the U.S.

dollar and the Canadian dollar increasing in value compared to the U.S.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 198 million and A$ 211 million, respectively, at September 30, 2023.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Our accumulated other comprehensive loss increased $ 10.2 million from $ 380.7 million at December 31, 2023 to $ 390.9 million at March 31, 2024, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the three months of 2024 were primarily driven by the Australian dollar and the Canadian dollar decreasing in value compared to the U.S.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 206 million and A$ 207 million, respectively, at March 31, 2024.

SHARE REPURCHASE PROGRAMS AND DIVIDENDS

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In August 2023 and 2022, our Board of Directors (Board) authorized common share repurchase programs to repurchase up to 5.0 % of our total common shares which were issued and outstanding, or approximately 742,000 and 685,000 common shares, respectively, over a twelve month period.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

The repurchase authorization allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

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The following table summarizes our common share repurchases pursuant to our share repurchase programs (in thousands, except per share data).

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Dollar-value of shares repurchased $ 3,208 $ 3,771

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Average price paid per share $ 24.08 $ 22.33

In addition to the share repurchases pursuant to our share repurchase programs, we repurchased 374,753 common shares from a shareholder for approximately $ 10.7 million during the three months ended September 30, 2022.

Our Board declared a quarterly dividend on September 5, 2023 of $ 0.25 per common share to shareholders of record as of close of business on September 15, 2023.

The total cash payment of $ 3.7 million was paid on September 29, 2023.

Our Board declared a quarterly dividend on February 2, 2024 of $ 0.25 per common share to shareholders of record as of close of business on February 26, 2024.

The total cash payment of $ 3.7 million was paid on March 18, 2024.

The dividend is an eligible dividend pursuant to the Income Tax Act (Canada).

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Certain key employees and non-employee directors participate in the Amended and Restated 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan).

The Civeo Plan authorizes our Board and the Compensation Committee of our Board to approve grants of options, awards of restricted shares, performance awards, phantom share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors.

No more than 3,028,667 Civeo common shares are authorized to be issued under the Civeo Plan.

The Civeo Plan authorizes our Board and the Compensation Committee of our Board to approve and grant awards of options, awards of restricted shares, performance awards, phantom share units and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors.

Approximately 3.0 million Civeo common shares are authorized to be issued under the Civeo Plan.

Outstanding Awards

Restricted Share Awards / Restricted Share Units / Deferred Share Awards.

On May 17, 2023, we granted 49,598 restricted share and deferred share awards to our non-employee directors, which vest in their entirety on May 15, 2024.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended September 30, 2023 and 2022 totaled $ 0.3 million and $ 0.3 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the nine months ended September 30, 2023 and 2022 totaled $ 0.8 million and $ 0.9 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended September 30, 2023 and 2022 was zero and less than $ 0.1 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the nine months ended September 30, 2023 and 2022 was $ 0.9 million and $ 2.1 million, respectively.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

At September 30, 2023, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 0.7 million, which is expected to be recognized over a weighted average period of 0.6 years.

Phantom Share Awards.

On February 23, 2023, we granted 171,608 phantom share awards under the Civeo Plan, which vest in three equal annual installments beginning on February 23, 2024.

We also granted 56,387 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 23, 2024.

Phantom share awards are settled in cash upon vesting.

During the three months ended September 30, 2023 and 2022, we recognized compensation expense associated with phantom shares totaling $ 1.7 million and $ 2.3 million, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized compensation expense associated with phantom shares totaling $ 4.8 million and $ 7.2 million, respectively.

At September 30, 2023, unrecognized compensation cost related to phantom shares was $ 7.3 million, as remeasured at September 30, 2023, which is expected to be recognized over a weighted average period of 1.8 years.

Phantom Share Units.

On March 2, 2024, we granted 184,640 phantom share units under the Civeo Plan, which vest in three equal annual installments beginning on March 2, 2025.

We also granted 84,408 phantom share units under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on March 2, 2025.

Phantom share units are settled in cash upon vesting.

During the three months ended March 31, 2024 and 2023, we recognized compensation expense associated with phantom share units totaling $ 1.3 million and $ 1.8 million, respectively.

At March 31, 2024, unrecognized compensation cost related to phantom share units was $ 12.8 million, as remeasured at March 31, 2024, which is expected to be recognized over a weighted average period of 2.2 years.

Performance Awards.

On February 23, 2023, we granted 85,837 performance awards under the Civeo Plan, which cliff vest in three years on February 23, 2026 subject to attainment of applicable performance criteria.

These awards will be earned in amounts between 0 % and 200 % of the participant’s target performance share award, based equally on (i) the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group that includes 16 other companies and (ii) the payout percentage associated with Civeo's cumulative operating cash flow over the performance period relative to a preset target.

The portion of the performance awards tied to cumulative operating cash flow includes a performance-based vesting requirement.

On March 2, 2024, we granted 122,978 performance awards under the Civeo Plan, which cliff vest after three years on March 2, 2027 subject to attainment of applicable performance criteria.

These awards will be earned in amounts between 0 % and 200 % of the participant’s target performance share award, based on (i) the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group of other companies and (ii) the payout percentage associated with Civeo's three year growth in EBITDA over the performance period relative to a preset 2026 EBITDA target.

The portion of the performance awards tied to the 2026 EBITDA target includes a performance-based vesting requirement.

We evaluate the probability of achieving the performance criteria throughout the performance period and will adjust share-based compensation expense based on the number of shares expected to vest based on our estimate of the most probable performance outcome.

During the three months ended September 30, 2023 and 2022, we recognized compensation expense associated with performance share awards totaling $ 1.0 million and $ 0.6 million, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized compensation expense associated with performance share awards totaling $ 2.5 million and $ 1.9 million, respectively.

No performance share awards vested during the three months ended September 30, 2023 and 2022.

The total fair value of performance share awards that vested during the nine months ended September 30, 2023 and 2022 was zero and $ 2.4 million, respectively.

At September 30, 2023, unrecognized compensation cost related to performance share awards was $ 4.6 million, which is expected to be recognized over a weighted average period of 1.8 years.

No share-based compensation expense is recognized if the performance criteria are not probable of being achieved.

During the three months ended March 31, 2024 and 2023, we recognized compensation expense associated with performance share awards totaling $ 0.3 million and $ 0.6 million, respectively.

The total fair value of performance share awards that vested during the three months ended March 31, 2024 and 2023 was $ 2.8 million and zero , respectively.

CIVEO CORPORATION

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FINANCIAL STATEMENTS

2024, unrecognized compensation cost related to performance share awards was $ 3.5 million, which is expected to be recognized over a weighted average period of 1.9 years.

Restricted Share Awards / Restricted Share Units / Deferred Share Awards.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended March 31, 2024 and 2023 totaled $ 0.3 million and $ 0.3 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended March 31, 2024 and 2023 was zero and less than $ 0.1 million, respectively.

At March 31, 2024, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 0.1 million, which is expected to be recognized over a weighted average period of 0.1 years.

SEGMENT AND RELATED INFORMATION

In accordance with current accounting standards regarding disclosures about segments of an enterprise and related information, we have identified the following reportable segments:

Canada and Australia, which represent our strategic focus on hospitality services and workforce accommodations.

Prior to the first quarter of 2023, we presented the U.S.

operating segment as a separate reportable segment.

Our operating segment in the U.S.

no longer meets the reportable segment quantitative thresholds required by GAAP and is included below within the Corporate, other and eliminations category.

Prior periods have been updated to be consistent with the presentation for the three and nine months ended September 30, 2023.

Financial information by business segment for each of the three and nine months ended September 30, 2023 and 2022 is summarized in the following table (in thousands):

In accordance with current accounting standards regarding disclosures about segments of an enterprise and related information, we have identified two reportable segments, Canada and Australia, which represent our strategic focus on hospitality services and workforce accommodations.

Financial information by business segment for each of the three months ended March 31, 2024 and 2023 is summarized in the following table (in thousands):

revenues Depreciation

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(loss) Capital

Three months ended September 30, 2023

Canada $ 95,144 $ 9,565 $ 10,811 $ 3,006 $ 745,377

Australia 87,885 7,181 9,067 6,244 195,315

Corporate, other and eliminations 543 168 ( 3,839 ) 212 ( 384,098 )

Total $ 183,572 $ 16,914 $ 16,039 $ 9,462 $ 556,594

Three months ended September 30, 2022

Canada $ 103,009 $ 14,749 $ 7,846 $ 3,580 $ 718,981

Australia 73,805 7,599 5,859 4,921 191,557

Corporate, other and eliminations 7,413 260 ( 2,920 ) 318 ( 327,209 )

Total $ 184,227 $ 22,608 $ 10,785 $ 8,819 $ 583,329

Nine months ended September 30, 2023

Three months ended March 31, 2024

Canada $ 67,160 $ 9,396 $ 554 $ 1,095 $ 744,639

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Total $ 166,120 $ 16,770 $ ( 1,781 ) $ 5,613 $ 513,070

Nine months ended September 30, 2022

Three months ended March 31, 2023

Canada $ 89,453 $ 14,139 $ ( 4,502 ) $ 1,461 $ 710,884

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Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any of them in light of new information, future events or otherwise, except to the extent required by applicable law.

In addition, in certain places in this quarterly report, we may refer to reports published by third parties that purport to describe trends or developments in the energy industry.

In addition, in certain places in this quarterly report, we may refer to reports published by third parties that purport to describe trends or developments in the natural resources industry.

We do so for the convenience of our shareholders and in an effort to provide information available in the market that will assist our investors in a better understanding of the market environment in which we operate.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements