What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-30 · 246 added, 113 removed, 225 unchanged (61% of the section changed)

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Commodity Prices

There is continued uncertainty around commodity price levels, driven by many factors including rising fears of a recession resulting from lingering inflation and higher interest rates, an economic slowdown in China and resultant economic stimulus by the Chinese government, the impact of inflationary pressures, the impact of global tariff changes and other changes

to trade policies, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust oil production levels, geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts, U.S.

oil production levels and regulatory implications on such prices.

There is continued uncertainty around commodity price levels, driven by many factors including global recession fears that may result from inflationary pressures and higher interest rates, an economic slowdown 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, geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts, United States (U.S.) oil production levels and regulatory implications on such prices.

In particular, these items could cause our Canadian oil sands and pipeline customers to delay expansionary and maintenance spending and defer additional investments in their oil sands assets and in extreme cases reduce production.

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(per bbl) WCS

Second Quarter through April 25, 2025

Third Quarter through July 25, 2025

175.80 94.39 67.08 54.47

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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 the level of global steel production.

Following improvements in global steel production in the last quarter of 2024, production decreased during January and February of 2025 and increased into March 2025.

Europe and the U.S.

experienced decreased steel production during the first quarter of 2025.

However, India and China continued to experience positive growth in steel production into the first quarter of 2025 with strong production in March 2025.

Future steel production remains contingent on global GDP growth rates, Chinese productivity and the impact of global tariff changes and other changes to trade policies.

Global steel production increased by 2.9% during March 2025 compared to March 2024.

As of April 25, 2025, met coal spot prices were $192.20 per tonne.

Met coal prices stagnated around $200 per tonne during the last quarter of 2024.

In early 2025, met coal prices dropped below $200 per tonne, with prices averaging $185 per tonne in the first quarter of 2025.

High met coal inventories from buyers continue to impact demand, which, along with decreased steel production in the first quarter of 2025 resulted in depressed prices.

While larger producers continue to maintain production, managing costs has become a greater focus in a lower-price environment.

While high met coal inventories and lower steel production affected prices in early 2025, analysts are currently forecasting prices to improve gradually in late 2025 to $200.

During 2025, met coal price movements will be driven by changes in underlying met coal production and steel demand, both of which may be impacted by ongoing changes to global tariffs and trade disputes.

Iron ore prices improved to average $97.25 per tonne during the first quarter of 2025 with prices moving between $92 and $103 per tonne.

Analysts expect iron ore prices to average $95-$100 per tonne through the remainder of 2025, with stable supply and subdued steel production.

In an effort to support the price of oil amidst demand concerns, OPEC+ countries extended their 2023 oil production cuts throughout 2024 and into 2025.

These production cuts, coupled with the rising geopolitical risks in the Middle

East, resulted in rising oil prices during the first half of 2024.

Oil prices decreased during the second half of 2024 due to increased market concerns over economic growth and demand.

OPEC+ has announced that it will increase production in 2025, which is likely to put pressure on global oil prices.

Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the level of global steel production, which remained subdued with negative growth in the second quarter of 2025.

China, Europe and Japan all experienced negative growth during January through June 2025, while India continues to see consistent positive growth.

Global tariff changes, recession fears and associated business uncertainty are weighing on current and short-term global steel production.

Global steel production decreased by 2.2% for the six months through June 2025 compared to the same period of 2024.

As of July 25, 2025, met coal spot prices were $174.10 per tonne.

Met coal prices have remained between $168 and $198 per tonne during the first half of 2025, since dropping below $200 per tonne in late 2024.

Low prices are impacted by lower steel production driven by lower demand and trader reselling of met coal inventories.

In a low met coal price environment, producers are under increasing pressure to re-evaluate their production levels due to reduced operating margins.

An improvement in met coal prices is contingent upon increased demand for met coal, which would be driven by improving steel production along with a tightening in supply related to producer maintenance activity and production curtailment from higher cost suppliers.

Such improvements in the supply and demand fundamentals for met coal may be impacted by ongoing geopolitical tensions associated with global tariffs and trade agreements.

Iron ore prices declined to average $92.70 per tonne during the second quarter of 2025.

Analysts expect iron ore prices to continue to be subdued for the remainder of 2025, where strong supply is maintained by the major producers against reduced steel demand and production.

Further new iron ore supply to the market may be delayed and some supply rationalization is possible with continuing lower prices, as suppliers review current production levels in a low iron ore price environment.

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, increasing production despite flattening global demand for oil.

The combined impact of these factors reduced WTI prices, which are down 9% year-to-date in 2025.

OPEC+ has announced further production increases planned for August 2025 which will likely put further downward pressure on oil prices.

currently have oil prices averaging $65.33 per barrel in the second half of 2025.

In light of this macroeconomic backdrop, our Canadian oil sands customers are increasingly looking to reduce costs and headcounts.

In Canada, WCS crude is the benchmark price for our oil sands customers.

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The WCS Differential has varied depending on the extent of transportation capacity availability.

Certain expansionary oil pipeline projects have the potential to both drive incremental demand for mobile assets and to improve take-away capacity for Canadian oil sands producers over the longer term, most notably the Trans Mountain Pipeline expansion, which began operating in the second quarter of 2024.

WCS prices in the first quarter of 2025 averaged $58.27 per barrel compared to an average of $59.48 in the first quarter of 2024 and have continued to fall since the end of the first quarter of 2025.

The WCS Differential decreased from $13.49 per barrel at the end of the fourth quarter of 2024 to $10.89 at the end of the first quarter of 2025.

As of April 25, 2025, the WTI price was $63.95 and the WCS price was $52.50, resulting in a WCS Differential of $11.45.

WCS prices in the second quarter of 2025 averaged $53.15 per barrel compared to an average of $67.24 in the second quarter of 2024.

The WCS Differential decreased from $13.49 per barrel at the end of the fourth quarter of 2024 to $11.67 at the end of the second quarter of 2025.

Further, the U.S.

Administration has announced and is in the process of implementing several new tariffs, including a 10% tariff on energy resources imported to the U.

Administration has implemented and amended several new tariffs over the past several months, including a 10% tariff on energy resources imported to the U.

Implementation of tariffs could have adverse impact on our Canadian customers profit margins, which may in turn reduce their spending on our accommodations and services.

Recent Developments .

On February 18, 2025, we entered into a definitive asset purchase agreement with a private seller to acquire four villages with 1,340 rooms in Australia’s Bowen Basin and the associated assets and long-term customer contracts for total cash consideration of A$105 million, or approximately US$67 million, as may be adjusted for customary purchase price adjustments set forth in the purchase agreement, to be funded with cash on hand and borrowings under the Amended Credit Agreement.

The acquisition is anticipated to close in the second quarter of 2025, subject to certain regulatory approvals and customary closing conditions.

Qantac Acquisition .

On May 6, 2025, we completed the Qantac Acquisition located in Queensland, Australia, which included four villages with 1,340 rooms in Australia’s Bowen Basin and the associated accommodation assets, land and customer contracts.

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 and continuing into 2025, inflationary pressures and supply chain disruptions have been, and continue to be, experienced worldwide.

Price increases resulting from inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel.

Since 2023, price increases resulting from pandemic-related inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as 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 the second quarter of 2025, concerns remain that inflationary pressures could return in the second half of 2025.

Labor Shortages.

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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).

Construction activity of Phase 1 of the Kitimat LNG Facility is nearing completion, with commercial operations expected to begin in mid-2025.

Construction activity of Phase 1 of the Kitimat LNG Facility has been completed and commercial operations commenced at the end of June 2025.

The Coastal GasLink Pipeline was completed in 2024.

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dollar reported financial results.

Our business has historically derived the vast majority of its revenues and operating income (loss) in Canada and Australia.

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.

for financial reporting purposes under 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 Canadian dollar and the Australian dollar:

dollar and each of the Australian dollar and the Canadian dollar:

Three Months Ended

2025 2024 Change Percentage

June 30, Six Months Ended

2025 2024 Change Percentage 2025 2024 Change Percentage

Average Australian dollar to U.S.

2 unchanged sentences

dollar $0.7226 $0.7310 ($0.008) (1.15)% $0.7098 $0.7360 ($0.026) (3.56)%

March 31, 2025 December 31, 2024 Change Percentage

June 30, 2025 December 31, 2024 Change Percentage

Australian dollar to U.S.

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Results of Operations

Unless otherwise indicated, discussion of results for the three months ended March 31, 2025, is based on a comparison to the corresponding period of 2024.

Results of Operations – Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2025, is based on a comparison to the corresponding period of 2024.

Results of Operations – Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Three Months Ended

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Depreciation and amortization expense 17,827 17,059 768

Gain on sale of McClelland Lake Lodge assets, net — 87 (87)

Other operating expense 66 188 (122)

Total costs and expenses 159,894 175,601 (15,707)

Operating income 2,800 13,112 (10,312)

Interest expense, net (2,624) (2,149) (475)

Other income 119 310 (191)

Income before income taxes 295 11,273 (10,978)

Income tax expense (3,606) (3,786) 180

Net income (loss) attributable to noncontrolling interest (3,311) 7,487 (10,798)

Net income (loss) attributable to noncontrolling interest 3 (740) 743

Net income (loss) attributable to Civeo Corporation $ (3,314) $ 8,227 $ (11,541)

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.

We reported net income attributable to Civeo for the quarter ended June 30, 2024 of $8.2 million, or $0.56 per diluted share.

Consolidated revenues decreased $26.0 million, or 14%, in the second quarter of 2025 compared to the second quarter of 2024.

This decrease was primarily driven by (i) lower billed rooms at our oil sands lodges in Canada as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge in Canada as the Kitimat LNG facility was completed and commenced operations in the second quarter of 2025 and (iii) a weaker Australian dollar relative to the U.S.

dollar in the second quarter of 2025 compared to the second quarter of 2024.

These items were partially offset by an increase in Australia related to the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia.

The assets from the Qantac Acquisition generated $4.9 million of revenues in the second quarter of 2025.

See the discussion of segment results of operations below for further information.

Cost of Sales and Services.

Our consolidated cost of sales and services decreased $19.3 million, or 14%, in the second quarter of 2025 compared to the second quarter of 2024.

This decrease was primarily driven by (i) lower costs at various lodges in Canada due to reduced occupancy levels, (ii) lower costs related to the reduced mobile asset activity in Canada from pipeline projects for which final costs were incurred in the second quarter of 2024, (iii) reduced indirect costs in Canada as a result of

various cost reduction measures and (iv) a weaker Australian dollar relative to the U.S.

dollar in the second quarter of 2025 compared to the second quarter of 2024.

See the discussion of segment results of operations below for further information.

Selling, General and Administrative Expenses.

SG&A expenses increased $3.0 million, or 17%, in the second quarter of 2025 compared to the second quarter of 2024.

This increase was primarily due to higher professional fees of $3.6 million primarily due to shareholder activist related costs of $3.2 million, partially offset by lower office expenses of $0.4 million, lower share-based compensation expense of $0.3 million and a weaker Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2025 compared to the second quarter of 2024.

Depreciation and Amortization Expense.

Depreciation and amortization expense increased $0.8 million, or 5%, in the second quarter of 2025 compared to the second quarter of 2024.

The increase was primarily due to additional property, plant and equipment acquired through the Qantac Acquisition, partially offset by reduced depreciation expense resulting from impairments recorded in 2024 and a weaker Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2025 compared to the second quarter of 2024.

Operating Income.

Consolidated operating income decreased $10.3 million, or 79%, in the second quarter of 2025 compared to the second quarter of 2024, primarily due to lower lodge occupancy in Canada in the second quarter of 2025 compared to the second quarter of 2024 and higher SG&A expense, primarily due to shareholder activist related costs, in the second quarter of 2025.

These items were partially offset by higher activity levels in Australia in the second quarter of 2025 compared to the second quarter of 2024.

Interest Expense, net.

Net interest expense increased by $0.5 million, or 22%, in the second quarter of 2025 compared to the second quarter of 2024, primarily related to higher average debt levels, partially offset by lower interest rates on credit facility borrowings during 2025 compared to 2024.

Income Tax Expense.

Our income tax expense for the three months ended June 30, 2025 totaled $3.6 million, or 1222.4% of pretax income, compared to an income tax expense of $3.8 million, or 33.6% of pretax income, for the three months ended June 30, 2024.

Our effective tax rate for the three months ended June 30, 2025 and 2024 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.

Other comprehensive income increased $9.3 million in the second quarter of 2025 compared to the second quarter of 2024, 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.

The Australian dollar exchange rate compared to the U.S.

dollar increased 5% in the second quarter of 2025 compared to a 2% increase in the second quarter of 2024.

The Canadian dollar exchange rate compared to the U.S.

dollar increased 5% in the second quarter of 2025 compared to a 1% decrease in the second quarter of 2024.

Segment Results of Operations – Australian Segment

Three Months Ended

2025 2024 Change

Revenues ($ in thousands)

Accommodation revenue (1)

$ 52,682 $ 48,914 $ 3,768

Food service and other services revenue (2)

59,990 59,694 296

Total revenues $ 112,672 $ 108,608 $ 4,064

Cost of sales and services ($ in thousands)

Accommodation cost $ 25,890 $ 23,613 $ 2,277

Food service and other services cost 53,163 54,527 (1,364)

Indirect other cost 3,424 2,897 527

Total cost of sales and services $ 82,477 $ 81,037 $ 1,440

Gross margin as a % of revenues 26.8 % 25.4 % 1.4 %

Average daily rate for villages (3)

$ 76 $ 78 $ (2)

Total billed rooms for villages (4)

690,506 625,353 65,153

Average Australian dollar to U.S.

dollar $ 0.641 $ 0.659 $ (0.018)

(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.

(4) Billed rooms represent total billed days for owned assets for the periods presented.

Our Australian segment reported revenues in the second quarter of 2025 that were $4.1 million, or 4%, higher than the second quarter of 2024.

The weakening of the average exchange rate for the Australian dollar relative to the U.S.

dollar by 2.7% in the second quarter of 2025 compared to the second quarter of 2024 resulted in a $3.2 million period-over-period decrease in revenues.

On a constant currency basis, the Australian segment experienced a 6.7% period-over-period increase in revenues.

Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia.

Our Australian segment cost of sales and services increased $1.4 million, or 2%, in the second quarter of 2025 compared to the second quarter of 2024.

The weakening of the average exchange rate for the Australian dollar relative to the U.S.

dollar by 2.7% in the second quarter of 2025 compared to the second quarter of 2024 resulted in a $2.3 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by the Qantac Acquisition and new business in our integrated services villages in Western Australia and the associated overhead costs.

Our Australian segment gross margin as a percentage of revenues increased to 26.8% in the second quarter of 2025 from 25.4% in the second quarter of 2024.

This was primarily driven by increased relative contribution from our accommodation business resulting from the Qantac Acquisition.

Our accommodation business generates higher gross margins than our integrated services business, which has a service-only business model.

Segment Results of Operations – Canadian Segment

Three Months Ended

2025 2024 Change

Revenues ($ in thousands)

Accommodation revenue (1)

$ 42,590 $ 72,259 $ (29,669)

Mobile facility rental revenue (2)

Food service and other services revenue (3)

6,998 6,912 86

Total revenues $ 50,022 $ 79,527 $ (29,505)

Cost of sales and services ($ in thousands)

Accommodation cost $ 30,618 $ 48,197 $ (17,579)

Mobile facility rental cost 135 1,401 (1,266)

Food service and other services cost 6,237 6,314 (77)

Indirect other costs 2,047 2,937 (890)

Total cost of sales and services $ 39,037 $ 58,849 $ (19,812)

Gross margin as a % of revenues 22.0 % 26.0 % (4.0) %

Average daily rate for lodges (4)

$ 94 $ 96 $ (2)

Total billed rooms for lodges (5)

449,970 752,364 (302,394)

Average Canadian dollar to U.S.

dollar $ 0.723 $ 0.731 $ (0.008)

(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.

(5) Billed rooms represents total billed days for owned assets for the periods presented.

Our Canadian segment reported revenues in the second quarter of 2025 that were $29.5 million, or 37%, lower than the second quarter of 2024.

The decrease in the Canadian segment was driven by lower billed rooms at our oil sands lodges as producers in the region remain focused on reducing operating costs and reduced occupancy at our Sitka Lodge as the Kitimat LNG facility was completed and commenced operations in the second quarter of 2025.

Our Canadian segment cost of sales and services decreased $19.8 million, or 34%, in the second quarter of 2025 compared to the second quarter of 2024.

The decrease in cost of sales and services in the Canadian segment was largely driven by (i) lower costs at various lodges due to reduced occupancy levels, (ii) lower demobilization costs related to mobile asset activity from pipeline projects, the final costs for which were incurred in the second quarter of 2024 and (iii) reduced indirect costs as a result of various cost reduction measures.

Our Canadian segment gross margin as a percentage of revenues decreased from 26.0% in the second quarter of 2024 to 22.0% in the second quarter of 2025.

This was primarily driven by reduced efficiencies at our lodges with lower occupancy levels.

Results of Operations – Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Six Months Ended June 30,

2025 2024 Change

($ in thousands)

Australia $ 216,318 $ 200,345 $ 15,973

Canada 90,420 146,687 (56,267)

Other — 7,801 (7,801)

Total revenues 306,738 354,833 (48,095)

Costs and expenses:

Cost of sales and services

Australia 159,197 147,150 12,047

Canada 76,682 116,106 (39,424)

Other 267 8,023 (7,756)

Total cost of sales and services 236,146 271,279 (35,133)

Selling, general and administrative expenses 38,655 36,073 2,582

Depreciation and amortization expense 34,080 33,829 251

Impairment expense — 7,823 (7,823)

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Total costs and expenses 309,454 343,502 (34,048)

Operating loss (5,516) (1,781) (3,735)

Operating income (loss) (2,716) 11,331 (14,047)

Interest expense, net (4,217) (4,466) 249

Other income 466 763 (297)

Loss before income taxes (6,762) (3,645) (3,117)

Income (loss) before income taxes (6,467) 7,628 (14,095)

Income tax expense (6,694) (5,337) (1,357)

Net loss attributable to noncontrolling interest (9,850) (5,196) (4,654)

Net income (loss) (13,161) 2,291 (15,452)

Net loss attributable to noncontrolling interest (5) (803) 798

Net loss attributable to Civeo Corporation $ (9,842) $ (5,133) $ (4,709)

We reported net loss attributable to Civeo for the quarter ended March 31, 2025 of $9.8 million, or $0.72 per diluted share.

Net loss included $1.0 million of restructuring costs initiatives in Canada related to severance and two lodge closures.

We reported net loss attributable to Civeo for the quarter ended March 31, 2024 of $5.1 million, or $0.35 per diluted share.

Net loss included (i) $6.1 million of net gains associated with the sale of the McClelland Lake Lodge in Canada and (ii) a $7.8 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

Consolidated revenues decreased $22.1 million, or 13%, in the first quarter of 2025 compared to the first quarter of 2024.

This decrease was primarily driven by (i) lower billed rooms at our Canadian oil sands lodges as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Canadian Sitka Lodge as the construction of the Kitimat LNG facility nears completion and (iii) a weaker Australian and Canadian dollar relative to the U.S.

dollar in the first quarter of 2025 compared to the first quarter of 2024.

These items were partially offset by an increase in our Australian segment driven by new business in our integrated services villages in Western Australia related to a six-year contract with an expected total contract value of A$1.4 billion that the Company previously announced.

Net income (loss) attributable to Civeo Corporation $ (13,156) $ 3,094 $ (16,250)

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.

We reported net income attributable to Civeo for the six months ended June 30, 2024 of $3.1 million, or $0.21 per diluted share.

Net income included (i) $6.0 million of net gains associated with the sale of the McClelland Lake Lodge in Canada and (ii) a $7.8 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

Consolidated revenues decreased $48.1 million, or 14%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This decrease was primarily driven by (i) lower billed rooms at our oil sands lodges in Canada as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge in Canada as the Kitimat LNG facility was completed and commenced operations in the second quarter of 2025, (iii) reduced mobile asset activity in Canada from pipeline projects which were completed in the first six months of 2024 and (iv) a weaker Australia and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

See the discussion of segment results of operations below for further information.

Cost of Sales and Services.

Our consolidated cost of sales and services decreased $15.8 million, or 12%, in the first quarter of 2025 compared to the first quarter of 2024.

This decrease was primarily driven by lower costs at various lodges in our Canadian segment due to reduced occupancy levels and a weaker Australian and Canadian dollar relative to the U.S.

in the first quarter of 2025 compared to the first quarter of 2024.

These items were partially offset by an increase in cost of sales and services in our Australian segment largely driven by new business in our integrated services villages in Western Australia and the associated overhead costs.

Our consolidated cost of sales and services decreased $35.1 million, or 13%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This decrease was primarily driven by (i) lower costs at various lodges in Canada due to reduced occupancy levels, (ii) lower costs related to the reduced mobile asset activity in Canada from pipeline projects for which final costs were incurred in the first six months of 2024, (iii) reduced indirect costs in Canada as a result of various cost reduction measures and (iv) a weaker Australia and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

These items were partially offset

by an increase in Australia related to the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia.

See the discussion of segment results of operations below for further information.

Selling, General and Administrative Expenses.

SG&A expenses decreased $0.5 million, or 2%, in the first quarter of 2025 compared to the first quarter of 2024.

This decrease was primarily due to lower incentive compensation cost of $0.7 million, lower travel and entertainment costs of $0.5 million and a weaker Australian and Canadian dollar relative to the U.S.

dollar in the first quarter of 2025 compared to the first quarter of 2024.

These items were partially offset by higher share-based compensation expense of $0.6 million.

The increase in share-based compensation expense was primarily due to lower forfeitures in the first quarter of 2025 compared to the first quarter of 2024.

SG&A expenses increased $2.6 million, or 7%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This increase was primarily due to higher professional fees of $3.5 million due to shareholder activist related costs of $3.2 million and higher share-based compensation expense of $0.4 million due to lower forfeitures in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

These items were partially offset by lower travel and entertainment costs of $0.7 million, down 43% year-of-year, lower compensation costs of $0.5 million and a weaker Australian and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $0.5 million, or 3%, in the first quarter of 2025 compared to the first quarter of 2024.

The decrease was primarily due to a weaker Australian and Canadian dollar relative to the U.S.

dollar in the first quarter of 2025 compared to the first quarter of 2024, partially offset by additional property, plant and equipment placed in service.

Depreciation and amortization expense increased $0.3 million, or 1%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase was primarily due to additional property, plant and equipment acquired through the Qantac Acquisition, partially offset by a weaker Australian and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 and reduced depreciation expense resulting from impairments recorded in 2024.

Impairment Expense.

We recorded pre-tax impairment expense of $7.8 million in the first quarter of 2024 associated with long-lived assets in Australia and the U.S.

We recorded pre-tax impairment expense of $7.8 million in the six months ended June 30, 2024 associated with long-lived assets in Australia and the U.S.

See Note 3 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Gain on Sale of McClelland Lake Lodge Assets, net.

We recorded $6.1 million in the first quarter of 2024 related to net gains associated with the sale of the McClelland Lake Lodge.

Operating Loss.

Consolidated operating loss increased $3.7 million, or 210%, in the first quarter of 2025 compared to the first quarter of 2024, primarily due to lower lodge occupancy in Canada in the first quarter of 2025 compared to the first quarter of 2024 and a net gain on sale of McClelland Lake Lodge assets in the first quarter of 2024.

These items were partially offset by higher activity levels in Australia in the first quarter of 2025 compared to the first quarter of 2024 and impairment expenses in the first quarter of 2024.

We recorded $6.0 million in the six months ended June 30, 2024 related to net gains associated with the sale of the McClelland Lake Lodge.

Operating Income (Loss).

Consolidated operating loss increased $14.0 million, or 124%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to lower lodge occupancy in Canada in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, higher SG&A expense during the 2025 period compared to the 2024 period and a net gain on sale of McClelland Lake Lodge assets in the six months ended June 30, 2024.

These items were partially offset by higher activity levels in Australia in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 and impairment expenses in the six months ended June 30, 2024.

Interest Expense, net.

Net interest expense decreased by $0.7 million, or 31%, in the first quarter of 2025 compared to the first quarter of 2024, primarily related to lower average debt levels and lower interest rates on credit facility borrowings during 2025 compared to 2024.

Net interest expense decreased by $0.2 million, or 6%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily related to lower interest rates on credit facility borrowings, partially offset by higher average debt levels during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Income Tax Expense.

Our income tax expense for the three months ended March 31, 2025 totaled $3.1 million, or (45.7)% of pretax loss, compared to an income tax expense of $1.6 million, or (42.6)% of pretax loss, for the three months ended March 31, 2024.

Our effective tax rate for the three months ended March 31, 2025 and 2024 was impacted by Canada and the U.S.

Our income tax expense for the six months ended June 30, 2025 totaled $6.7 million, or (103.5)% of pretax loss, compared to an income tax expense of $5.3 million, or 70.0% of pretax income, for the six months ended June 30, 2024.

Our effective tax rate for the six months ended June 30, 2025 and 2024 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.

Other comprehensive income increased $11.3 million in the first quarter of 2025 compared to the first quarter of 2024, 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.

Other comprehensive income increased $20.6 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, 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.

The Australian dollar exchange rate compared to the U.S.

dollar increased 1% in the first quarter of 2025 compared to a 4% decrease in the first quarter of 2024.

dollar increased 6% in the of six months ended June 30, 2025 compared to a 2% decrease in the six months ended June 30, 2024.

The Canadian dollar exchange rate compared to the U.S.

dollar increased 0.1% in the first quarter of 2025 compared to a 2% decrease in the first quarter of 2024.

dollar increased 5% in the six months ended June 30, 2025 compared to a 3% decrease in the six months ended June 30, 2024.

Segment Results of Operations – Australian Segment

Three Months Ended

Six Months Ended June 30,

2025 2024 Change

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(4) Billed rooms represent total billed days for owned assets for the periods presented.

Our Australian segment reported revenues in the first quarter of 2025 that were $11.9 million, or 13%, higher than the first quarter of 2024.

Our Australian segment reported revenues in the six months ended June 30, 2025 that were $16.0 million, or 8%, higher than the six months ended June 30, 2024.

The weakening of the average exchange rate for the Australian dollar relative to the U.S.

dollar by 4.5% in the first quarter of 2025 compared to the first quarter of 2024 resulted in a $4.9 million period-over-period decrease in revenues.

dollar by 3.6% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 resulted in a $8.0 million period-over-period decrease in revenues.

On a constant currency basis, the Australian segment experienced a 12% period-over-period increase in revenues.

Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by new business in our integrated services villages in Western Australia.

Our Australian segment cost of sales and services increased $10.6 million, or 16%, in the first quarter of 2025 compared to the first quarter of 2024.

Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by the Qantac Acquisition in the second quarter of 2025, which generated revenues of $4.9 million in 2025, and new business in our integrated services villages in Western Australia.

Our Australian segment cost of sales and services increased $12.0 million, or 8%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The weakening of the average exchange rate for the Australian dollar relative to the U.S.

dollar by 4.5% in the first quarter of 2025 compared to the first quarter of 2024 resulted in a $3.6 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by new business in our integrated services villages in Western Australia and the associated overhead costs.

Our Australian segment gross margin as a percentage of revenues decreased to 26.0% in the first quarter of 2025 from 27.9% in the first quarter of 2024.

dollar by 3.6% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 resulted in a $5.9 million period-over-period decrease in cost of sales and services.

Our Australian segment gross margin as a percentage of revenues decreased to 26.4% in the six months ended June 30, 2025 from 26.6% in the six months ended June 30, 2024.

This was primarily driven by an increased 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

Six Months Ended June 30,

2025 2024 Change

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(5) Billed rooms represents total billed days for owned assets for the periods presented.

Our Canadian segment reported revenues in the first quarter of 2025 that were $26.8 million, or 40%, lower than the first quarter of 2024.

Our Canadian segment reported revenues in the six months ended June 30, 2025 that were $56.3 million, or 38%, lower than the six months ended June 30, 2024.

The weakening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 6.0% in the first quarter of 2025 compared to the first quarter of 2024 resulted in a $2.6 million period-over-period decrease in revenues.

dollar by 3.6% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 resulted in a $3.1 million period-over-period decrease in revenues.

On a constant currency basis, the Canadian segment experienced a 36.2% period-over-period decrease in revenues.

Excluding the impact of the weaker Canadian exchange rate, the decrease in the Canadian segment was driven by (i) lower billed rooms at our oil sands lodges as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge as the Kitimat LNG facility nears completion and (iii) reduced mobile asset activity from pipeline projects which were completed in early 2024.

Our Canadian segment cost of sales and services decreased $19.6 million, or 34%, in the first quarter of 2025 compared to the first quarter of 2024.

Excluding the impact of the weaker Canadian exchange rate, the decrease in the Canadian segment was driven by (i) lower billed rooms at our oil sands lodges as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge as the Kitimat LNG facility was completed and commenced operations in the second quarter of 2025 and (iii) reduced mobile asset activity from pipeline projects which were completed in the first six months of 2024.

Our Canadian segment cost of sales and services decreased $39.4 million, or 34%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The weakening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 6.0% in the first quarter of 2025 compared to the first quarter of 2024 resulted in a $2.4 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Canadian exchange rate, the decrease in cost of sales and services in the Canadian segment was largely driven by lower costs at various lodges due to reduced occupancy levels and lower costs related to the reduced mobile asset activity from pipeline projects which were completed in early 2024.

Our Canadian segment gross margin as a percentage of revenues decreased from 14.7% in the first quarter of 2024 to 6.8% in the first quarter of 2025.

dollar by 3.6% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 resulted in a $2.9 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Canadian exchange rate, the decrease in cost of sales and services in the Canadian segment was largely driven by (i) lower costs at various lodges due to reduced occupancy levels, (ii) lower costs related to the reduced mobile asset activity from pipeline projects for which final costs were incurred in the first six months of 2024 and (iii) reduced indirect costs as a result of various cost reduction measures.

Our Canadian segment gross margin as a percentage of revenues decreased from 20.8% in the six months ended June 30, 2024 to 15.2% in the six months ended June 30, 2025.

This was primarily driven by reduced efficiencies at our lodges with lower occupancy levels.

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In the future, capital may be required to move lodges from one site to another, and 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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

The following table summarizes our consolidated liquidity position as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025 December 31, 2024

Lender commitments $ 265,000 $ 245,000

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Total available liquidity $ 72,805 $ 202,170

(1) As of March 31, 2025 and December 31, 2024, $43.0 million and $3.6 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 $8.4 million was used in operations during the three months ended March 31, 2025, compared to $6.0 million provided by operations during the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, $14.7 million and $6.4 million was used in working capital, respectively.

The year-over-year increase in cash used in working capital in 2025 compared to 2024 is largely due to an increase in cash taxes paid in Australia in 2025 compared to 2024 and the collection of holdbacks in Canada related to the completion of mobile asset pipeline projects during the three months ended March 31, 2024 that did not repeat in 2025, partially offset by a decrease in cash used by accounts payable and accrued liabilities during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Cash was used in investing activities during the three months ended March 31, 2025 in the amount of $5.1 million, compared to cash provided by investing activities during the three months ended March 31, 2024 in the amount of $1.2 million.

The decrease in cash provided by investing activities was primarily due to lower proceeds from the sale of property, plant and equipment.

We received net proceeds from the sale of property, plant and equipment of $0.2 million during the three months ended March 31, 2025 compared to $6.8 million during the three months ended March 31, 2024 related to the sale of our McClelland Lake Lodge accommodation assets in Canada.

Capital expenditures totaled $5.3 million and $5.6 million during the three months ended March 31, 2025 and 2024, respectively.

(1) As of June 30, 2025 and December 31, 2024, $37.3 million and $3.6 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 $10.8 million was used in operations during the six months ended June 30, 2025, compared to $38.3 million provided by operations during the six months ended June 30, 2024.

Net cash used in working capital was $31.3 million during the six months ended June 30, 2025 compared to net cash provided by working capital of $2.4 million during the six months ended June 30, 2024.

The year-over-year increase in cash used in working capital in 2025 compared to 2024 is largely due to an increase in cash taxes paid in Australia in 2025 compared to 2024 and the collection of holdbacks in Canada related to the completion of mobile asset pipeline projects during the six months ended June 30, 2024 that did not repeat in 2025, partially offset by a decrease in cash used by accounts payable and accrued liabilities during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Cash was used in investing activities during the six months ended June 30, 2025 in the amount of $74.4 million, compared to cash used in investing activities during the six months ended June 30, 2024 in the amount of $0.1 million.

The increase in cash used in investing activities was primarily due to the Qantac Acquisition and lower proceeds from the sale of property, plant and equipment.

We received net proceeds from the sale of property, plant and equipment of $0.3 million during the six months ended June 30, 2025 compared to $10.6 million during the six months ended June 30, 2024 related to the sale of our McClelland Lake Lodge accommodation assets in Canada and the sale of our Louisiana land in the U.S.

Capital expenditures totaled $9.8 million and $10.9 million during the six months ended June 30, 2025 and 2024, respectively.

Capital expenditures in both periods were primarily related to maintenance.

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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 $36.6 million was provided by financing activities during the three months ended March 31, 2025 primarily due to net borrowings under our revolving credit facilities of $44.2 million, partially offset by dividend payments of $3.4 million, repurchases of our common shares of $3.3 million, payments to settle tax obligations on vested shares under our share-based compensation plans of $0.7 million and debt issuance costs of $0.1 million.

Net cash of $6.6 million was provided by financing activities during the three months ended March 31, 2024 primarily due to net borrowings under our revolving credit facilities of $14.6 million, partially offset by dividend payments of $3.7 million, repurchases of our common shares of $3.2 million and payments to settle tax obligations on vested shares under our share-based compensation plans of $1.1 million.

The following table summarizes the changes in debt outstanding during the three months ended March 31, 2025 (in thousands):

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 to primarily 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.

Net cash of $34.1 million was used in financing activities during the six months ended June 30, 2024 primarily due to net repayments under our revolving credit facilities of $15.8 million, repurchases of our common shares of $9.9 million, dividend payments of $7.4 million and payments to settle tax obligations on vested shares under our share-based compensation plans of $1.1 million.

The following table summarizes the changes in debt outstanding during the six months ended June 30, 2025 (in thousands):

Balance at December 31, 2024 $ 43,299

2 unchanged sentences

Translation 6,150

Balance at March 31, 2025 $ 87,367

Balance at June 30, 2025 $ 168,672

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.

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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 September 2024, our Board authorized a common share repurchase program to repurchase up to 5.0% of our total common shares which are issued and outstanding at that date, or 710,556 common shares, over a twelve month period.

In March 2025, our Board authorized an increase to our common share repurchase program to repurchase up to 10.0% of our total common shares which are issued and outstanding at that date, and in April 2025, our Board authorized a further increase to repurchase up to 20% of our total common shares which are issued and outstanding at that date, or approximately 2,690,000 common shares.

Such share repurchase program does not expire.

In September 2024, our Board authorized a common share repurchase program (the Share Repurchase Program) to repurchase up to 5.0% of our total common shares which are issued and outstanding at that date, or 0.7 million common shares, over a twelve month period.

In March 2025, our Board authorized an increase to the Share Repurchase Program to repurchase up to 10.0% of our total common shares which are issued and outstanding at that date, and in April 2025, our Board authorized a further increase to repurchase up to 20% of our total common shares which are issued and outstanding at that date, or approximately 2.7 million common shares (the 2025 Share Repurchase Program).

The 2025 Share Repurchase Program does not expire.

In addition, our Board declared quarterly dividends of $0.25 per common share to shareholders in the first quarter of 2025.

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On March 24, 2025, we amended our Syndicated Facility Agreement (as amended to date, the Amended Credit Agreement) to increase the Australian revolving commitments by $20.0 million to an aggregate amount of $55.0 million.

As of March 31, 2025, the Amended Credit Agreement provided for a $265.0 million revolving credit facility scheduled to mature on August 8, 2028, allocated as follows:

As of June 30, 2025, the Amended Credit Agreement provided for a $265.0 million revolving credit facility scheduled to mature on August 8, 2028, allocated as follows:

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

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and (C) a $55.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower.

As of March 31, 2025, we had outstanding letters of credit of zero under the U.S.

As of June 30, 2025, we had outstanding letters of credit of zero under the U.S.

facility, zero under the Australian facility and $0.9 million under the Canadian facility.

14 unchanged sentences

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 2. Management’s Discussion and Analysis