Civeo Corp 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis together with our consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Overview and Macroeconomic Environment Demand for the majority of our hospitality services is driven primarily by ongoing operations of existing natural resource projects in Australia and Canada. Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure. Long-term demand for our services has been driven by natural resource production, maintenance, operation and expansion of those facilities. In general, industry capital spending programs are based on the outlook for commodity prices, production costs, economic growth, perceived political risk, global commodity supply/demand, reserve replacement requirements, estimates of resource production, annual maintenance requirements, inclusive of turnaround requirements, and the expectations of our customers' shareholders. As a result, demand for our hospitality services is sensitive to expected commodity prices, principally related to met (metallurgical) coal, oil, iron ore and liquefied natural gas (LNG), and the resultant impact of these commodity price expectations on our customers' spending. In addition to these historical demand drivers, there is increasing demand for our assets and services tied to data center construction and associated infrastructure. This is principally occurring in the United States (U.S.) but could begin to occur in Australia and Canada as well. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, the impact of global tariff changes and other changes to trade policies, volatility affecting the banking system and financial markets, availability of capital to the natural resource industry and regulatory changes in Australia, Canada and other markets, including governmental measures introduced to mitigate climate change. 21 Commodity Prices While prices for the commodities that our customers produce stabilized in late 2025 and strengthened in early 2026, there remains continued risk of future volatility, particularly in light of ongoing geopolitical tensions in the Middle East. The factors that could drive such volatility and underlying activity include the U.S. and Israeli conflict with Iran, expectations for global macroeconomic stability and growth, inflationary pressures, higher interest rates, economic growth (or contraction) in China and resultant economic stimulus by the Chinese government, the impact of changes to global tariff and trade policies, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust oil production levels, other geopolitical events such as the ongoing conflicts in Russia and Ukraine, U.S. oil production levels and regulatory implications on such prices. In Canada, ongoing tensions between the U.S and Canadian governments regarding trade policy may spur Canadian infrastructure projects, including pipelines for LNG or oil, carbon capture installation for oil producing operations and mining for critical minerals. Recent Commodity Prices. Recent met coal, iron ore, West Texas Intermediate (WTI) crude, and Western Canadian Select (WCS) crude pricing trends are as follows: Average Price (1) Quarter ended Hard Coking Coal (Met Coal) (per tonne) Iron Ore (per tonne) WTI Crude (per bbl) WCS Crude (per bbl) Second Quarter through April 27, 2026 $ 229.39 $ 101.65 $ 97.74 $ 73.40 3/31/2026 231.01 102.86 72.74 57.16 12/31/2025 198.75 100.23 59.24 46.73 9/30/2025 183.06 96.97 65.06 52.48 6/30/2025 186.10 92.70 63.81 53.15 3/31/2025 185.13 97.25 71.47 58.27 12/31/2024 203.50 96.00 70.42 57.50 9/30/2024 210.74 94.54 75.29 59.97 6/30/2024 242.93 106.01 80.83 67.24 3/31/2024 307.68 118.54 77.01 59.48 (1) Source: Hard coking coal prices are from IHS Markit, iron ore prices and WCS crude prices are from Bloomberg and WTI crude prices are from U.S. Energy Information Administration. Met Coal. In Australia, 86% of our Australian owned rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by global steel production, which remained subdued throughout 2025 and into early 2026. China and Japan experienced declines in steel production through the first three months of 2026, while India and the U.S. continue to see consistent positive growth through 2025 and into early 2026. Global tariff developments and recession fears are weighing on current and near-term global steel production, while the ongoing conflict in the Middle East has contributed to further economic and trade uncertainty. While there has been no noticeable impact on met coal prices to date, input costs for producers are expected to increase, particularly due to higher diesel prices. Global steel production decreased by 2.3% for the three months through March 2026 compared to the same period in 2025. As of April 27, 2026, met coal spot prices were $228.50 per tonne. Met coal prices strengthened in late 2025, rising above $200 per tonne following a 12-month period of depressed prices which fluctuated between $169 and $197 per tonne. In early 2026, prices continued to increase, reaching $250 per tonne before moderating to a more stable level between $215 and $230 per tonne as supply and demand conditions became more balanced. Although met coal prices have risen to over $200 in late 2025, producers continue to re-evaluate production levels with a heightened focus on cost management. The Middle East conflict has resulted in trade disruption, specifically the seaborne transport of oil and LNG through the Strait of Hormuz, increasing the price of oil, gasoline and diesel, putting further pressure on cost containment if fuel costs continue to stay elevated. In late 2025, several large and mid-tier met coal producers in Queensland, Australia reported making production cuts and workforce reductions in response to margin pressures. While met coal prices have settled at a more profitable level in early 2026, additional met coal supply is expected to enter the market from 22 both Australia and the U.S. during 2026, which could place downward pressure on pricing towards $200 per tonne. These supply and demand dynamics may be further impacted by ongoing geopolitical uncertainties, including global tariff developments and the conflict in the Middle East. Iron Ore. Iron ore prices have fluctuated between $97 and $111 through early 2026 and remained buoyant as steel mills replenished their iron ore stocks. Supply has remained strong, with continued production from Australia and Brazil in early 2026, consistent with trends observed in late 2025. Iron ore prices are expected to moderate with continued strong supply entering the market in 2026 and weaker steel demand. WTI Crude. WTI crude prices increased during the first quarter of 2026, primarily driven by the U.S. and Israeli conflict with Iran, including the closure of the Strait of Hormuz, which has disrupted global oil supply. In an effort to retain and recapture global market share, OPEC+ began reversing previously implemented production cuts at the beginning of the second quarter of 2025 and continuing throughout 2025, increasing production despite softer global demand for oil. After pausing increases in the first quarter of 2026, OPEC+ resumed unwinding production cuts beginning in the second quarter of 2026. Current geopolitical conditions have increased volatility in the oil markets, making it more difficult to forecast spending and activity for Canadian oil producers. WCS Crude. In Canada, WCS crude is the benchmark price for our oil sands customers. Pricing for WCS is driven by several factors, including the underlying price for WTI crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar), refinery blending requirements and governmental regulation. Historically, WCS has traded at a discount to WTI, creating a “WCS Differential,” due to transportation costs and export capacity limitations to move Canadian heavy oil production to refineries, primarily along the U.S. Gulf Coast. As a result of the U.S. government’s recent takeover of the Venezuelan oil production, there is a new concern that Venezuelan heavy crude may displace refinery demand for Canadian heavy crude on the U.S. Gulf Coast over time. WCS prices in the first quarter of 2026 averaged $57.16 per barrel compared to an average of $58.27 in the first quarter of 2025. The WCS Differential increased from an average of $12.50 per barrel at the end of the fourth quarter of 2025 to an average of $15.58 at the end of the first quarter of 2026. Further, the U.S. administration implemented and amended several new tariffs during 2025. Continued implementation or expansion of tariffs on oil from Canada could have an adverse impact on our Canadian customers' profit margins, which may in turn reduce their spending on our accommodations and services. With near-term higher prices, Canadian oil sands customers are prioritizing production while focusing on capital discipline and reducing downtime, while continuing to strive for lower operating costs and lower headcount. Other Qantac Acquisition . On May 6, 2025, we completed the Qantac Acquisition, which included four villages with 1,368 rooms in Australia’s Bowen Basin and the associated accommodation assets, land and customer contracts. See Note 5. Asset Acquisition to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion. Inflationary Pressures. Since 2023, price increases resulting from pandemic-related inflation and supply chain disruptions have, and are expected to continue to have, a negative impact on our labor, food and consumable costs, including fuel. Lingering inflation from the pandemic has recently been exacerbated by changes to global tariffs and trade policies. We are managing inflation risk with negotiated service scope changes and contractual protections. Although inflation resulting from global tariffs implemented or threatened by the U.S. administration, and the resulting retaliations by its trading partners, did not materially impact our cost structure in 2025 or into 2026, concerns remain that inflationary pressures could return in the future. The conflict with Iran and the resulting closure of the Strait of Hormuz has disrupted seaborne trade, specifically the transportation of oil and LNG in the Middle East. Australia imports the majority of its oil and petroleum products, specifically gasoline and diesel. The current disruption of trade through the Strait of Hormuz has materially increased gasoline and diesel prices in Australia, resulting in increased inflation expectations and risk of higher fuel and transportation costs. Labor Shortages. We continue to experience increased staff costs as a result of hospitality labor shortages in Australia. Australia’s labor market remains historically tight, with unemployment holding just above 4% and job mobility (movement of workers between different employers or businesses) at its lowest in 30 years. A persistent overhang of vacancies continues to constrain recruitment, while government stimulus has disproportionately driven job growth in healthcare, aged care, education and public services. Regulated labor costs also remain high, with the Fair Work Commission decisions pushing wage increases well above Consumer Price Index changes, and statutory increases in superannuation, workers’ compensation and payroll tax 23 are further inflating total labor costs. For hospitality, this combination of scarce labor supply, competition from government-funded sectors and rising employment costs creates sustained pressure on staffing productivity and availability. LNG. Our Sitka Lodge supports the LNG Canada (LNGC) project and related pipeline projects (specifically, the Coastal GasLink Pipeline, the pipeline constructed to transport natural gas feedstock to LNGC). 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. As such, we continue to expect lower occupancy levels at our Sitka Lodge in the near-term until additional phases of the LNGC project are approved and commence, or further construction activity increases occupancy demand. From a macroeconomic standpoint, LNG demand has continued to grow, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. The conflicts between Russia and Ukraine and in the Middle East have reinforced the importance for secure natural gas supply globally, particularly in Europe. Accordingly, we expect additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth. Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Australia and Canada. These revenues and profits/losses are translated into U.S. dollars for financial reporting purposes under U.S. generally accepted accounting principles. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar: Three Months Ended March 31, 2026 2025 Change Percentage Average Australian dollar to U.S. dollar $0.6954 $0.6276 $0.068 10.80% Average Canadian dollar to U.S. dollar $0.7292 $0.6969 $0.032 4.63% As of March 31, 2026 December 31, 2025 Change Percentage Australian dollar to U.S. dollar $0.6880 $0.6674 $0.021 3.09% Canadian dollar to U.S. dollar $0.7174 $0.7296 ($0.012) (1.67)% These fluctuations of the Australian and Canadian dollars have had and will continue to have an impact on the translation of earnings generated from our Australian and Canadian subsidiaries and, therefore, our financial results. Capital Expenditures. We continue to monitor the global economy, commodity prices, demand for met coal, oil, iron ore and LNG, inflation, trade policy and the resultant impact on the capital spending plans of our customers in order to plan our business activities. We currently expect that our 2026 capital expenditures will be in the range of approximately $25 million to $30 million, compared to 2025 capital expenditures of $20.2 million. We may adjust our capital expenditure plans in the future as we continue to monitor customer activity. See “Liquidity and Capital Resources ” below for further discussion of our 2026 capital expenditures. 24 Results of Operations Unless otherwise indicated, discussion of results for the three months ended March 31, 2026, is based on a comparison to the corresponding period of 2025. Results of Operations – Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 Three Months Ended March 31, 2026 2025 Change ($ in thousands) Revenues: Australia $ 123,018 $ 103,646 $ 19,372 Canada 49,649 40,398 9,251 Total revenues 172,667 144,044 28,623 Costs and expenses: Cost of sales and services Australia 92,468 76,720 15,748 Canada 40,027 37,645 2,382 Other 11 250 (239) Total cost of sales and services 132,506 114,615 17,891 Selling, general and administrative expenses 20,068 18,185 1,883 Depreciation and amortization expense 17,308 16,253 1,055 Other operating (income) expense (338) 507 (845) Total costs and expenses 169,544 149,560 19,984 Operating income (expense) 3,123 (5,516) 8,639 Interest expense, net (3,724) (1,593) (2,131) Other income (expense) (61) 347 (408) Loss before income taxes (662) (6,762) 6,100 Income tax expense (3,141) (3,088) (53) Net loss (3,803) (9,850) 6,047 Less: Net income (loss) attributable to noncontrolling interest 5 (8) 13 Net loss attributable to Civeo Corporation $ (3,808) $ (9,842) $ 6,034 We reported net loss attributable to Civeo for the quarter ended March 31, 2026 of $3.8 million, or $0.34 per diluted share. Net loss included $1.0 million in severance, $0.5 million related to real estate rationalization efforts in Canada and $0.4 million of shareholder activist related costs. 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 cost saving initiatives in Canada related to severance and two lodge closures. Revenues. Consolidated revenues increased $28.6 million, or 20%, in the first quarter of 2026 compared to the first quarter of 2025. This increase was primarily driven by (i) contributions in Australia from the Qantac Acquisition in the second quarter of 2025, (ii) new integrated services business in Queensland, (iii) higher billed rooms at our Canadian oil sands lodges and (iv) a stronger Australian and Canadian dollar relative to the U.S. dollar in the first quarter of 2026 compared to the first quarter of 2025. The Qantac Acquisition generated $7.5 million of revenues in the first quarter of 2026. See the discussion of segment results of operations below for further information. Cost of Sales and Services. Our consolidated cost of sales and services increased $17.9 million, or 16%, in the first quarter of 2026 compared to the first quarter of 2025. This increase was primarily driven by (i) incremental costs in Australia associated with the Qantac Acquisition in the second quarter of 2025, (ii) new integrated services business in Queensland, including the associated overhead costs and (iii) higher costs in Canada due to increased occupancy levels and higher food and service costs. In addition, inflation and higher billed days and a stronger Australian and Canadian dollar relative to the U.S. dollar in the first quarter of 2026 compared to the first quarter of 2025 resulted in an increase in cost of sales and services. These items were partially offset by reduced costs at certain Canadian lodges and lower indirect costs as a result of cost reduction measures implemented in early 2025. See the discussion of segment results of operations below for further information. 25 Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses increased $1.9 million, or 10%, in the first quarter of 2026 compared to the first quarter of 2025. This increase was primarily driven by the write-off of accounts receivable in Australia due to customer insolvency of $0.8 million and higher compensation expense of $0.7 million, largely due to severance costs incurred in Canada. In addition, a stronger Australian and Canadian dollar relative to the U.S. dollar in the first quarter of 2026 compared to the first quarter of 2025. These items were partially offset by lower office expenses of $0.6 million in the first quarter of 2026 compared to the first quarter of 2025. Depreciation and Amortization Expense. Depreciation and amortization expense increased $1.1 million, or 6%, in the first quarter of 2026 compared to the first quarter of 2025. The increase was primarily due to additional property, plant and equipment acquired through the Qantac Acquisition and a stronger Australian and Canadian dollar relative to the U.S. dollar in the first quarter of 2026 compared to the first quarter of 2025. Operating Income (Expense). Consolidated operating income increased $8.6 million, or 157%, in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by the Qantac Acquisition in Australia, higher activity levels in Canada and gross margin expansion in Canada resulting from cost cutting measures previously implemented. These items were partially offset by higher depreciation and amortization expense in the first quarter of 2026 compared to the first quarter of 2025. Interest Expense, net. Net interest expense increased by $2.1 million, or 134%, in the first quarter of 2026 compared to the first quarter of 2025, primarily related to higher average debt levels, as a result of the Qantac Acquisition and increased share repurchases during 2025. Income Tax Expense. Our income tax expense for the three months ended March 31, 2026 totaled $3.1 million, or (474.5)% of pretax loss, compared to an income tax expense of $3.1 million, or (45.7)% of pretax loss, for the three months ended March 31, 2025. Our effective tax rate for the three months ended March 31, 2026 and 2025 was impacted by Canada and the U.S. being considered loss jurisdictions that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision. Other Comprehensive Income (Loss). Other comprehensive income increased $3.8 million in the first quarter of 2026 compared to the first quarter of 2025, primarily as a result of foreign currency translation adjustments due to changes in the Australian and Canadian dollar exchange rates compared to the U.S. dollar. The Australian dollar exchange rate compared to the U.S. dollar increased 3.1% in the first quarter of 2026 compared to a 1% increase in the first quarter of 2025. The Canadian dollar exchange rate compared to the U.S. dollar decreased 2% in the first quarter of 2026 compared to a 0.1% increase in the first quarter of 2025. 26 Segment Results of Operations – Australian Segment Three Months Ended March 31, 2026 2025 Change Revenues ($ in thousands) Accommodation and associated services revenue (1) $ 55,806 $ 46,823 $ 8,983 Integrated services and other services revenue (2) 67,212 56,823 10,389 Total revenues $ 123,018 $ 103,646 $ 19,372 Cost of sales and services ($ in thousands) Accommodation and associated services cost $ 28,057 $ 23,071 $ 4,986 Integrated services and other services cost 60,549 50,651 9,898 Indirect other cost 3,862 2,998 864 Total cost of sales and services $ 92,468 $ 76,720 $ 15,748 Gross margin as a % of revenues 24.8 % 26.0 % (1.1) % Average daily rate for owned villages (3) $ 83 $ 75 $ 8 Total billed rooms for owned villages (4) 675,502 625,636 49,866 Average Australian dollar to U.S. dollar $ 0.695 $ 0.628 $ 0.068 (1) Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented. (2) Includes revenues related to food services and other services, including facilities management for the periods presented. (3) Average daily rate is based on billed rooms and accommodation revenue in our owned villages. (4) Billed rooms represent total billed days for owned assets for the periods presented. Our Australian segment reported revenues in the first quarter of 2026 that were $19.4 million, or 19%, higher than the first quarter of 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.8% in the first quarter of 2026 compared to the first quarter of 2025 resulted in a $12.0 million period-over-period increase in revenues. On a constant currency basis, the Australian segment experienced a 7.1% period-over-period increase in revenues. Excluding the impact of the strengthening Australian exchange rate, the increase in the Australian segment was driven by the Qantac Acquisition in the second quarter of 2025 and new integrated services business in Queensland. Our Australian segment cost of sales and services increased $15.7 million, or 21%, in the first quarter of 2026 compared to the first quarter of 2025. The strengthening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 10.8% in the first quarter of 2026 compared to the first quarter of 2025 resulted in a $9.0 million period-over-period increase in cost of sales and services. Excluding the impact of the strengthening Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by the Qantac Acquisition and new integrated services business in Queensland and the associated overhead costs. Our Australian segment gross margin as a percentage of revenues decreased to 24.8% in the first quarter of 2026 from 26.0% in the first quarter of 2025. This was primarily driven by reduced occupancy at our Bowen Basin villages in Queensland and increased operating costs arising from challenges in industry-wide shortage of skilled labor. 27 Segment Results of Operations – Canadian Segment Three Months Ended March 31, 2026 2025 Change Revenues ($ in thousands) Accommodation and associated services revenue (1) $ 43,134 $ 33,436 $ 9,698 Mobile facility rental and associated services revenue (2) 1,038 219 819 Integrated services and other services revenue (3) 5,477 6,743 (1,266) Total revenues $ 49,649 $ 40,398 $ 9,251 Cost of sales and services ($ in thousands) Accommodation and associated services cost (1) $ 32,124 $ 28,865 $ 3,259 Mobile facility rental and associated services cost 679 — 679 Integrated services and other services cost 5,077 6,473 (1,396) Indirect other costs 2,147 2,307 (160) Total cost of sales and services $ 40,027 $ 37,645 $ 2,382 Gross margin as a % of revenues 19.4 % 6.8 % 12.6 % Average daily rate for owned lodges (4) $ 99 $ 93 $ 6 Total billed rooms for owned lodges (5) 433,590 358,697 74,893 Average Canadian dollar to U.S. dollar $ 0.729 $ 0.697 $ 0.032 (1) Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented. (2) Includes revenues related to mobile assets for the periods presented. (3) Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented. (4) Average daily rate is based on billed rooms and accommodation revenue in our owned lodges. (5) Billed rooms represents total billed days for owned assets for the periods presented. Our Canadian segment reported revenues in the first quarter of 2026 that were $9.3 million, or 23%, higher than the first quarter of 2025. The strengthening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 4.6% in the first quarter of 2026 compared to the first quarter of 2025 resulted in a $2.2 million period-over-period increase in revenues. On a constant currency basis, the increase in the Canadian segment was driven by higher billed rooms at our oil sands lodges, up 17% year-over-year. Producers in the region remain focused on reducing operating costs while also prioritizing maintaining and increasing oil production, resulting in additional personnel at site. Our Canadian segment cost of sales and services increased $2.4 million, or 6%, in the first quarter of 2026 compared to the first quarter of 2025. The strengthening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 4.6% in the first quarter of 2026 compared to the first quarter of 2025 resulted in a $1.8 million period-over-period increase in cost of sales and services. On a constant currency basis, the increase in cost of sales and services in the Canadian segment was largely driven by higher costs at various lodges due to increased occupancy levels and higher food and service costs as a result of inflation and higher billed days, partially offset by reduced costs at certain lodges and reduced indirect costs as a result of various cost reduction measures implemented in early 2025. Our Canadian segment gross margin as a percentage of revenues increased from 6.8% in the first quarter of 2025 to 19.4% in the first quarter of 2026. This was primarily driven by operating efficiencies with higher occupancy as well as higher margins as a result of various cost reduction measures implemented in early 2025. 28 Liquidity and Capital Resources Our primary liquidity needs are to fund capital expenditures, which in the past have included expanding and improving our hospitality services, developing new lodges and villages and purchasing or leasing land, to repurchase common shares, to pay dividends and for general working capital needs. In addition, capital has been used to repay debt and fund strategic business acquisitions. Historically, our primary sources of funds have been available cash, cash flow from operations, borrowings under our Amended Credit Agreement and proceeds from equity issuances. In the future, we may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions or refinance debt. The following table summarizes our consolidated liquidity position as of March 31, 2026 and December 31, 2025 (in thousands): March 31, 2026 December 31, 2025 Lender commitments $ 265,000 $ 265,000 Reduction in availability (1) — (5,344) Borrowings against revolving credit capacity (212,276) (182,842) Outstanding letters of credit (851) (866) Unused availability 51,873 75,948 Cash and cash equivalents 16,549 14,439 Total available liquidity $ 68,422 $ 90,387 (1) As of March 31, 2026 and December 31, 2025, zero and $5.3 million, respectively, of our borrowing capacity under the Amended Credit Agreement could not be utilized in order to maintain compliance with the maximum leverage ratio financial covenant in the Amended Credit Agreement. Cash totaling $9.7 million was used in operations during the three months ended March 31, 2026, compared to $8.4 million used in operations during the three months ended March 31, 2025. Net cash used in working capital was $24.9 million during the three months ended March 31, 2026 compared to net cash used in working capital of $14.7 million during the three months ended March 31, 2025. The year-over-year increase in cash used in working capital in 2026 compared to 2025 is largely due to increased accounts receivable balances in Australia and Canada. Cash was used in investing activities during the three months ended March 31, 2026 in the amount of $3.9 million, compared to cash used in investing activities during the three months ended March 31, 2025 in the amount of $5.1 million. The decrease in cash used in investing activities was primarily due to lower capital expenditures. We received net proceeds from the sale of property, plant and equipment of $0.2 million during the three months ended March 31, 2026 and 2025. Capital expenditures totaled $4.1 million and $5.3 million during the three months ended March 31, 2026 and 2025, respectively. Capital expenditures in both periods were primarily related to maintenance. We expect our capital expenditures for 2026 to be in the range of $25 million to $30 million, which excludes any unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts or commitments or attractive risk-adjusted economics. Whether planned expenditures will actually be spent in 2026 depends on industry conditions, project approvals and schedules, customer room commitments and project and construction timing. We expect to fund these capital expenditures with available cash, cash flow from operations and revolving credit borrowings under our Amended Credit Agreement. The foregoing capital expenditure forecast does not include any funds for strategic acquisitions, which we could pursue should the transaction economics be attractive enough to us compared to the current capital allocation priorities of returning capital to shareholders. We continue to monitor the global economy, commodity prices, demand for met coal, crude oil, LNG and iron ore, inflation and the resultant impact on the capital spending plans of our customers in order to plan our business activities, and we may adjust our capital expenditure plans in the future. Net cash of $15.9 million was provided by financing activities during the three months ended March 31, 2026 primarily due to net borrowings under our revolving credit facilities of $30.6 million, partially offset by repurchases of our common shares of $14.4 million and payments to settle tax obligations on vested shares under our share-based compensation plans of $0.3 million. 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. 29 The following table summarizes the changes in debt outstanding during the three months ended March 31, 2026 (in thousands): Balance at December 31, 2025 $ 182,842 Borrowings under revolving credit facilities 192,837 Repayments of borrowings under revolving credit facilities (162,279) Translation (1,124) Balance at March 31, 2026 $ 212,276 We believe that cash on hand and cash flow from operations will be sufficient to meet our anticipated liquidity needs for the next 12 months. If our plans or assumptions change, including as a result of changes in our customers' capital spending or changes in the price of and demand for natural resources, or are inaccurate, or if we make acquisitions, we may need to raise additional capital. Selectively pursuing strategic organic and inorganic growth opportunities that fit with our current capital allocation priorities of returning capital to shareholders has been, and our management believes will continue to be, an element of our long-term business strategy. The timing, size or success of any growth opportunities and the associated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances or may issue equity directly to the sellers. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend on our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control. In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders. In March 2025, our Board authorized a common share repurchase program (the Share Repurchase Program) to repurchase up to 10.0% of our total common shares which were issued and outstanding at that date, or approximately 1.4 million common shares over a twelve-month period. In April 2025, our Board authorized an increase to the Share Repurchase Program to repurchase up to 20.0% of our total common shares which are issued and outstanding at that date, or approximately 2.7 million common shares. In March 2026, our Board authorized an additional repurchase authorization of up to 10.0% of our common shares outstanding upon completion of the April 2025 authorization. The Share Repurchase Program (including the additional authorizations in April 2025 and March 2026) does not expire. See Note 11 – Share Repurchase Programs and Dividends to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion. Amended Credit Agreement On April 23, 2026, the Credit Agreement was amended and restated (as amended to date, the Amended Credit Agreement) to, among other things: • provide for an increase by $20.0 million of the aggregate revolving loan commitments under the Amended Credit Agreement, to an aggregate maximum principal amount of $285.0 million, allocated as follows: (A) a $10.0 million senior secured revolving credit facility in favor of certain of our U.S. subsidiaries, as borrowers (the U.S. Facility); (B) a $205.0 million senior secured revolving credit facility in favor of Civeo, as borrower (the Canadian Facility); and (C) a $70.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrowers; • extend the maturity from August 8, 2028 to April 23, 2030; and • provide for other technical changes and amendments to the Credit Agreement. As of March 31, 2026, 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. We also had outstanding bank guarantees of A$1.4 million under the Australian facility. See Note 7 – Debt to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion. 30 Dividends In April 2025, our Board suspended quarterly dividends on our common shares to prioritize returning capital to our shareholders through ongoing share repurchases. The declaration and amount of any potential future dividends will be at the discretion of our Board and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board deems relevant. In addition, our ability to pay cash dividends on common shares is limited by covenants in the Amended Credit Agreement. Future agreements may also limit our ability to pay dividends, and we may incur incremental taxes if we are required to repatriate foreign earnings to pay such dividends. If any dividends are declared in the future, the amount per share of our dividend payments may be changed, or dividends may again be suspended, without advance notice. The likelihood that dividends will be reduced or suspended is increased during periods of market weakness. There can be no assurance that we will pay any dividends in the future. Critical Accounting Policies For a discussion of the critical accounting policies and estimates that we use in the preparation of our consolidated financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection and disclosure of these critical accounting policies and estimates with the audit committee of our Board. There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based. 31