Civeo Q3 2024 Earnings Report

Civeo EPS Results

• Actual EPS: -$0.36
• Consensus EPS: $0.03
• Beat/Miss: Missed by -$0.39
• One Year Ago EPS: $0.61

Civeo Revenue Results

• Actual Revenue: $176.34 million
• Expected Revenue: $172.59 million
• Beat/Miss: Beat by +$3.75 million
• YoY Revenue Growth: N/A

Civeo Announcement Details

• Quarter: Q3 2024
• Date: 10/30/2024
• Time: Before Market Opens
• Conference Call Date: Wednesday, October 30, 2024
• Conference Call Time: 11:00AM ET

Civeo (NYSE:CVEO) provides workforce accommodations and related hospitality services for companies operating in remote and challenging environments. Its customers primarily include businesses in the natural resources, mining, energy and infrastructure industries.

The company operates workforce villages, lodges and mobile camps, offering rooms and lodging along with catering, housekeeping, facility management, maintenance, transportation and other support services. These integrated services are designed to support employees working at remote project sites and production locations.

Civeo serves customers primarily in Australia and Canada, where it operates accommodations and provides hospitality services in resource-producing regions. The company was formed through the separation of Oil States International’s accommodations business and became an independent publicly traded company in 2014. Civeo is headquartered in Houston, Texas, and Bradley J. Alexander has served as its president and chief executive officer.

Civeo Q3 2024 Earnings Call Transcript

Key Takeaways

• In the Australia segment, Q3 revenue rose 33% to $116.6 M and adjusted EBITDA increased 19% to $22.5 M, driven by higher build rooms and integrated services wins.
• The Canada segment saw Q3 revenues fall to $57.7 M and adjusted EBITDA to $3.4 M, as LNG activity wound down and wildfires forced lodge evacuations and delays.
• Civeo secured a 33-month contract renewal with a major Canadian oil sands producer through June 2027, representing approximately CAD 150.1 M in contracted revenues.
• During Q3, the company returned CAD 17.8 M to shareholders via dividends and share repurchases and renewed its buyback program to repurchase up to 5% of outstanding shares.
• Full-year 2024 guidance was tightened to $675 M–$700 M in revenues and $83 M–$88 M in adjusted EBITDA, with preliminary 2025 EBITDA expected to exceed $90 M.

Presentation

[Operator]

Greetings and welcome to the Civeo Corporation third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Regan Nielsen, Vice President, Corporate Development and Investor Relations. Thank you, sir. You may begin.

[Regan Nielsen, VP, Corporate Development and Investor Relations at Civeo Corporation]

Thank you and welcome to Civeo's third quarter 2024 earnings conference call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer, and Collin Gerry, Civeo's Chief Financial Officer and Treasurer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain anything other than historical information, please note that we're relying on the safe harbor protections afforded by federal law. Any such remarks should be read in the context of the many factors that affect our business, including risks and uncertainties disclosed in our Forms 10-K, 10-Q, and other SEC filings. I'll now turn the call over to Bradley.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you, Regan, and thank you all for joining us today on our third quarter earnings call. I'll start the call today with a few key takeaways for the third quarter and then give a brief summary of our third quarter 2024 performance. Then Collin will provide a financial and segment-level review, and I will conclude with our prepared comments with updated full-year 2024 guidance with the underlying regional assumptions. I will also provide our preliminary outlook for 2025. We will then open the call for questions. The key takeaways from our call today are: Australia Adjusted EBITDA increased 19% from the third quarter of 2023 due to continued strong billed rooms in our own villages and increased activity in our integrated services business as we expand existing customer relationships.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

While we anticipated the decline in our Canadian segment, the decline in LNG and mobile camp activity, the segment performance was weaker than expected in the third quarter due to lower lodge billed rooms, which were negatively impacted by Canadian wildfires. Third key point: today, we announced a 33-month contract renewal for a major Canadian oil sands producer to continue to provide accommodations and hospitality services through June 2027, which is expected to have total contracted revenues of approximately CAD $150 million. During the third quarter, we returned $17.8 million of capital to shareholders for our quarterly dividend and share repurchases. Last key point: we are tightening our revenue and Adjusted EBITDA guidance for the full year 2024 to $675 million of revenues and Adjusted EBITDA of $83 million to $88 million.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

As we look forward to 2025, our preliminary expectations for Adjusted EBITDA will be expected to be in excess of $90 million. I'll now take a moment to provide some commentary on our business segments. Australian segment performed well during the third quarter, and the team continues to execute on our previously stated goal to grow our Australian integrated services revenues to AUD 500 million by 2027. We experienced year-over-year and sequential growth in both our own village business and our integrated services business. Our year-over-year integrated services growth was particularly strong due to the impact of recent competitive wins as well as the expansion of existing customer relationships.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

In Canada, as expected, our third quarter Canadian segment revenues and adjusted EBITDA decreased year-over-year primarily due to the expected wind down of LNG-related activity, the sale of the McClelland Lake Lodge, and the previously discussed pull forward of customer turnaround and operational activities into the second quarter. This was expected but was exacerbated by the wildfire-related evacuations and associated delays. With that, I'll turn the call over to Collin, our new CFO. Collin has been with Civeo since our spinoff in 2014 in strategic, financial, operational, and commercial roles. Welcome, Collin.

[Collin Gerry, Former CFO at Civeo Corporation]

Thank you, Bradley, and very happy to be here. Today, we reported total revenues in the third quarter of $176.3 million with a net loss of $5.1 million, or $0.36 per diluted share. During the third quarter, we generated adjusted EBITDA of $18.8 million, operating cash flow of $35.7 million, and free cash flow of $28.3 million. While third quarter adjusted EBITDA was down year-over-year for all the reasons Bradley mentioned, the company's cash flow generation was quite strong as we delivered relatively consistent operating cash flow as in the same quarter last year. I'll discuss that in more detail a little later in the call. But first, I'd like to provide more context on our two segments. I'll begin with a review of the Australian segment performance compared to its performance a year ago in the third quarter of 2023.

[Collin Gerry, Former CFO at Civeo Corporation]

Third quarter revenues from our Australian segment were $116.6 million, up 33% from $87.9 million in the third quarter of 2023. Adjusted EBITDA was $22.5 million, up 19% from $18.9 million last year. The increase in revenues and adjusted EBITDA was due to increased billed rooms at our own villages and increased integrated services activity related to recent competitive wins as well as the expansion of existing client activity. This shows our continued and steady growth in this segment. Australian billed rooms in the quarter were 647,000 rooms, up 4% from 623,000 in the third quarter of 2023. This is due to increased customer demand at our own villages. Our daily room rate for our Australian-owned villages in the U.S. in U.S. dollars was $79, which increased from $74 in the third quarter of 2023 due to CPI escalations in recent contracts.

[Collin Gerry, Former CFO at Civeo Corporation]

Turning to Canada, we recorded revenues of $57.7 million as compared to revenues of $95.1 million in the third quarter of 2023. Adjusted EBITDA in Canada was $3.4 million, a decrease from $23.2 million in the third quarter of 2023. The year-over-year revenue and adjusted EBITDA decrease was driven by the expected wind down of LNG-related activity, including the completion of pipeline activity for our mobile camps, the sale of our McClelland Lake Lodge, and lower billed rooms as a result of the pull forward of turnaround activity into the second quarter of 2024, as well as the evacuations from Canadian wildfires. For context, the year-over-year decrease in adjusted EBITDA from our LNG-related business was approximately $12 million. During the quarter, billed rooms in our Canadian lodges totaled $484,000, which was down from $726,000 in the third quarter of 2023 due to the reasons I just mentioned.

[Collin Gerry, Former CFO at Civeo Corporation]

Our daily room rate for the Canadian segment in US dollars was $100, which increased from $98 in the third quarter of 2023 due to the mix of occupancy between lodges. Next, I'll take a look at our capital structure. On August 13th, we announced the completion of an amendment and extension to our credit agreement. The amendment extends the maturity date to August 2028, upsizes the total revolving credit facility capacity to $245 million from $200 million, and reduces our borrowing costs. Our net debt on September 30th, 2024, was $32.2 million, a $7.9 million increase since June 30th, 2024. Our net leverage ratio for the quarter remained flat at 0.3 times. As of September 30th, 2024, we had total liquidity of approximately $212 million, giving us the strength and flexibility to opportunistically pursue growth while maintaining prudent leverage ratios and returning capital to shareholders.

[Collin Gerry, Former CFO at Civeo Corporation]

Finally, I'll turn to capital allocation and cash flow. I'll start with cash flow as there's been some nuance this year that is worth pointing out. On a year-to-date basis, Adjusted EBITDA of $68.5 million is down 22%. However, operating cash flows of $74 million are up 31% year-over-year. There are two primary reasons for this discrepancy. First, with the completion of several of the LNG-related mobile camp projects in Canada, we received payments which were contingent upon the demobilization of those camps. Once those projects completed, these holdbacks were released, which augmented cash flows. Secondly, working capital in Canada provided higher cash flow this quarter due to the compression of turnaround work into the second quarter and subsequent payment in the third quarter. Both of these have resulted in stronger year-over-year cash flows.

[Collin Gerry, Former CFO at Civeo Corporation]

On the capital expenditure front, on a consolidated basis, CapEx for the third quarter of 2024 was $7.5 million compared to $9.5 million during the same period in 2023. Capital expenditures in both periods were predominantly related to maintenance spending on our lodges and villages. Capital expenditures in the third quarter of 2023 also included $3.6 million related to customer-funded infrastructure upgrades at three Australian villages, which were reimbursed by our client. Looking forward, fourth quarter 2024 CapEx includes maintenance CapEx and some discretionary capital related to a lodge optimization project in Canada and projects to refresh some of our Australian village rooms in response to higher demand. In the third quarter of 2024, we repurchased approximately 515,000 shares through our share repurchase program for a total of $14.2 million.

[Collin Gerry, Former CFO at Civeo Corporation]

As Bradley mentioned, we returned $17.8 million of capital to shareholders through the quarterly dividend and share repurchases in the quarter, bringing our total year-to-date return of capital to shareholders to $35 million. On September 11th, we announced the renewal of our share repurchase program, authorizing the repurchase of up to 5% of total common shares outstanding over the next 12 months. We will continue to be opportunistic about repurchasing shares. This morning, we also announced that our board has declared our quarterly dividend payment. Shareholders of record as of November 25th, 2024, will receive $0.25 per share cash dividend payable on December 16th, 2024. With that, I'll turn it over to Bradley to discuss our guidance for the full year 2024 and our thoughts moving forward.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you, Collin. I would now like to turn our discussion to how we see things playing out in 2024 and our preliminary look at 2025. As mentioned earlier, we are tightening our full-year 2024 revenue and Adjusted EBITDA guidance ranges to $675 million-$700 million on revenues and $83 million-$88 million on Adjusted EBITDA. We are maintaining our full-year 2024 capital expenditure guidance of $30 million-$35 million. Based on our Adjusted EBITDA and CapEx guidance, we expect our 2024 free cash flow to be in the range of $50 million-$60 million. I'll now provide the regional outlooks and corresponding underlying assumptions. In Canada, I'd like to first acknowledge the forest fires and the impact on our Canadian operating regions.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

I want to thank our employees who worked around the clock to ensure the safety of our guests, the first responders, and our assets. While our assets were not damaged by the fires, our third quarter financial performance was negatively impacted by customer evacuations and associated delays. We currently do not expect material impact from the fires to continue into the fourth quarter. On a more positive note, we're encouraged by the multi-year contract renewal by a major Canadian oil sands producer and believe that this is a testament to our solid operational execution and our strong customer relationship. This renewal was already factored into our 2024 guidance to provide Civeo with more revenue visibility for the future.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

As we look at the fourth quarter 2024, we expect to experience a sequential decline in billed rooms at our lodges due to the typical seasonality of our customers' operations, partially offset by occupancy recovering from wildfire-related evacuations and delays. The fourth quarter will also be burdened by approximately $1 million of mobile camp demobilizations, which should be the final mobile camp demobilization costs. Turning to Australia, customer activity in our own villages remains incredibly strong, and we expect to continue at similar levels going forward. We are currently full at three of our Bowen Basin villages with strong occupancy at the rest of our own villages in the Australian portfolio. As it relates to our integrated services business, we are continuing to experience increased demand from recent contract awards as well as the expansion of existing customer relationships.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

We have continued to see substantial growth in recent years in the business, and we're excited about the future growth potential in our Western Australia and our overall integrated services business. I'll now provide a few preliminary comments on our 2025 outlook. As we discussed throughout the year, the Canadian business is experiencing a transitional period with the LNG-related construction activity winding down, coupled with the sale of our McClelland Lake Lodge. Most of that transition has been completed or will be completed in 2024, and we are expecting a relatively flat year in 2025 for Canada. The growth in Australia, the growth that we experienced this year, coupled with our expectation for continued strong occupancy, should translate into year-over-year growth in 2025 for Australia.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Taken together, we are preliminarily expecting EBITDA in 2025 to exceed $90 million, and we'll provide more detailed outlook in our 2024 year-end conference call, earnings conference call in February. Underpinning our expectations for 2025 are the following observations. In Canada, new project bidding activity continues to strengthen, and we're optimistic that we'll be able to deploy mobile camp assets in 2025 outside our core operating regions. 2025 will also not be burdened by mobile camp demobilizations I mentioned earlier, which impacted 2024 EBITDA by approximately $4 million. We expect 2025 oil sands lodge activity to be relatively flat with this year's levels, and we're deploying limited growth CapEx in the back half of 2024 to optimize our oil sands lodge portfolio backed by customer demand, which should drive modest growth in 2025.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

In Australia for next year, despite commodity price volatility, we're encouraged by the outlook for both our own villages and our integrated services business. We expect our own villages to remain, if occupancy to remain at strong levels, with the majority of our villages at or near peak occupancy. Our integrated services business should continue to benefit from recent contract wins and the expansion of customer relationships that has driven substantial growth in 2024, and we're also seeing opportunities to further expand in 2025. Having outperformed our target leverage ratio, we're positioned to be more opportunistic in 2025 in deploying expansionary capital that we anticipate to drive long-term economic returns and to help safeguard and grow our future cash flows. With that, we're happy to take your questions.

[Operator]

Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull for your questions. Our first question comes from the line of Stephen Gengaro with Stifel. Please proceed with your question.

[Stephen Gengaro, Managing Director at Stifel]

Thanks, and good morning, everybody. I think two for me. The first, when we think about capital allocation, can you talk about just kind of the M&A strategy and the types of things you might look at and which markets, etc., just to kind of give us kind of an overview of how you're thinking about that?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Sure. I think there are certainly opportunities to grow our core operations, which would be Western Canada and owned villages in Australia, those two areas. So we'll look to grow the core and continue to expand that. We think there are also growth opportunities in expanding geographically and the end markets that we serve. So we'll look to expand in North America outside of Western Canada, both into Eastern Canada and then back into the US. In Australia, it will be continuing to expand our integrated services business, both geographically, which predominantly our integrated services is in Western Australia. We have moved into South Australia, but to expand that further and see if there are opportunities to expand that outside of purely natural resources.

[Stephen Gengaro, Managing Director at Stifel]

Great.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

That would be both inorganically and organically.

[Stephen Gengaro, Managing Director at Stifel]

Okay. Now, that's helpful. Bradley, the other question, and this might be hard to quantify, but I'll ask anyway. When we think about your Canadian business, and you mentioned the mobile camps already, how much of Canada for next year is highly visible? Maybe I won't say quite contracted, but highly visible. Right outside of the turnaround work, I think most of what we're seeing up there is pretty visible, but could you speak to that a bit?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Sure. I guess I'll address the second part first, which is we look at this year, we'll end the year in Canada with approximately 2.2 million billed rooms for the full year, including what's in guidance for the fourth quarter. About 25, a little less, 20%-25% of that is turnaround activity. That won't be contracted. It certainly is based on strong customer relationships and the strong portfolio of locations that we have in Canada. But then the balance of it is largely contracted with primarily large operators in Canada. So we see billed rooms in 2025 to be relatively flat year over year, subject to finalizing our budgets and be prepared to talk in more detail in February. But usually, as we go in, we'll give you the exact percentages as we're not done with budgeting yet.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

But typically, as we go into Canada, we have 60% of the billed rooms contracted. Some of that will be guaranteed, and some of that will be under exclusivity contract.

[Stephen Gengaro, Managing Director at Stifel]

Okay. Good. No, that's helpful color. Thank you.

[Operator]

Thank you. Our next question comes from the line of Steve Ferazani with Sidoti & Company. Please proceed with your question.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

Good morning, Bradley. Collin, thanks for the detail on the call. I wanted to ask, any way to quantify the impact of the wildfires on your Q3 results?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

I would say in rough numbers, in terms of what didn't flow through in the third quarter, it was on the order of magnitude of about 30,000 room nights in turnaround activity, and so that's roughly the impact that we saw. Some of that was pulled forward, but some of that, quite frankly, that we had evacuations and occupancy didn't recover back to where it was prior to the forest fires, so as we look at 2024 and start to look at 2025 again, looking at relatively flat billed rooms in Canadian lodges year over year.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

Okay. When I think about, so that's assuming you're with the $100 night room, it's roughly a $3 million impact if I'm doing my math right. But you didn't, you went to the high end of your revenue range and you only tightened EBITDA. So it would indicate something else is going stronger to offset what was a pretty big impact in the quarter.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Yeah. I mean, the Australian integrated services business has been very strong. We expanded our relationship with one customer in particular, and that has flowed through to, I mean, if you look at the quarterly progression of the services business in Australia and the 10Q Q1 to Q2 of 2024, you'll see a big pickup in revenues, and that has continued into Q3, and we expect that to continue going forward. We had come into this year, if you'll let me, I'll speak in Australian dollars. We were expecting kind of AUD 320 million top line. I think we'll exceed that significantly this year in terms of the integrated services in Australia. And that's up from approximately AUD 240 million top line services revenue last year.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

How much of that is just incoming activity versus you winning the businesses?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

It's largely winning work. Certainly, we've seen occupancy pick up at customer villages that we had already operated, but a big chunk of it is winning work, the vast majority.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

Fantastic. Previous quarter, you talked about the potential of adding more rooms in Australia where you had the three villages that were full. Any update on that?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Continue to pursue it. It's never a straight line from point A to point B, unfortunately. So we've been optimistic that we could have executed on that, but we need the customer commitments to back it. And there have been some shifting needs for the customers, and as a result, we've been able to satisfy those needs at other locations and have not needed to expand yet. But it's still a possibility. And just to remind everyone, that was order of magnitude of about 100 rooms in the Bowen Basin.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

Okay. Last one for me, just the demo costs. Were there any this quarter, or is that $1 million that was going to be this quarter pushing it to 4Q?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

We only had about $400,000 in the third quarter with about $1 million left in the fourth quarter, and that should be the final demo costs.

[Steve Ferazani, Equity Analyst at Sidoti & Company, LLC]

Okay. Thanks, Bradley.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Dave Storms with Stonegate. Please proceed with your question.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Good morning.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Good morning.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Just hoping I could circle back on some of the integrated services stuff you were talking about. When you think about bringing current customers into the fold, how much more runway do you see there?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

The team we have put together a goal to get AUD 500 million by 2027. To remind everyone, we entered into the integrated services business in kind of materially when we acquired a business in 2019. Back then, for a half year, we did about AUD 40 million of top line. Last year, we did 240. This year, we should be close to 340. It's really grown from that business.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. Thank you. And then just turn to Canada with the contract renewal that you just completed. I guess, what does the environment look like for contract renewal negotiations and maybe compared to any new client negotiations you're having?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

I would say that in Canada, pricing is, well, all the operators are looking to cut costs. So it's always a battle. I think the team did a good job where we were able to maintain pricing, maintain exclusivity, and it was a good contract outcome with the mainstay customer of ours. I think it comes back to several things. It is operating safely, keeping their people safe. It is delivering on service. And of course, it is meeting their price expectation. And with our portfolio of locations in Canada, we can service the vast majority of the northern players in the kind of legacy oil sands region north of Fort McMurray.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. Thank you. And then just one more and similar to an earlier question, maybe a little hard to quantify, but is there any sense on what catch-up in Q4 could look like now that the wildfires are kind of in the rearview?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

It's a little difficult, I'll be honest, because the fourth quarter will always have holiday downtime. Right? I mean, it's not surprising that the level of headcount for our customers starts to decline in November and December, so as we look out at kind of activity levels for Canada, it'll be masked by the holiday downtime. You won't really see a pickup in occupancy, but it will be because of the holiday downtime.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. So maybe just seasonally, it'll just maybe look a little stronger than normal.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Yeah. I mean, seasonally, if we look like-for-like, it'll largely depend on what we have like-for-like, is the loss of McClelland 23 and 24 on a year-over-year basis. But on like-for-like, fourth quarter will be in line with last year.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. That's very helpful. Thank you for taking my questions, and good luck in the fourth quarter.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you.

[Operator]

Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Sean Mitchell with Daniel Energy Partners. Please proceed with your question.

[Sean Mitchell, Partner/CEO at Daniel Energy Partners]

Good morning, Bradley and team. Thanks for taking my question. Bradley, when you talk about Australia getting to 500 million in 2027, does that assume some M&A, or is that all organic internal growth?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Right now, we have an opportunity set over the next three years that, obviously, we can't hit on all of them or won't hit on all of them, but there's a pathway of known opportunities for the integrated services business that will be let out for bid that we have an opportunity to bid on and to win, and so it does not include M&A.

[Sean Mitchell, Partner/CEO at Daniel Energy Partners]

Okay. That's helpful. And then second, when you talked a little bit about growth opportunities outside of energy in Australia, are there opportunities outside of energy in Canada and/or the U.S. that you might be looking at over the next kind of year or two?

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Yeah. I mean, I would say right now, the vast majority are still resources related as opposed to purely energy. And there are opportunities there, and we'll continue to pursue those. Longer term, we would look outside of resources. But I'd say that's still a ways off.

[Sean Mitchell, Partner/CEO at Daniel Energy Partners]

Okay. All right, guys.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

At the end of the day, Sean, what we think we do well is take care of people, and that has applications outside of where we do it right now.

[Sean Mitchell, Partner/CEO at Daniel Energy Partners]

Yeah. I agree. Thanks for taking my questions.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you, Sean.

[Operator]

Thank you. Our next question is a follow-up from Stephen Gengaro with Stifel. Please proceed with your question.

[Stephen Gengaro, Managing Director at Stifel]

Thanks. Thanks for taking the follow-up. So the last year plus in Canada, the margins have been jumping around because of some demo costs and the wildfires, etc. When we think about 2025, as far as Canadian margins are concerned, should we be thinking about going back to a normal seasonal pattern and kind of a mid-teens margin, or is there something I'm missing there? Because I'm actually honestly having trouble triangulating to that $90 million-plus number.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

I think right now, we need to complete the budgeting process, but I think margins may have an upward bias, but they won't have a significant upward bias yet. We need to build back the top line, to be honest.

[Stephen Gengaro, Managing Director at Stifel]

Okay. Good. No, that's helpful. I'll turn it back, but thanks for the details.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you.

[Operator]

Thank you. We have reached the end of our question and answer session. I'd now like to turn the call back over to Mr. Dodson for any closing remarks.

[Bradley J. Dodson, President and CEO at Civeo Corporation]

Thank you, Michelle, and thank you all for joining the call. We appreciate your interest and your questions. We look forward to speaking with you on the fourth quarter earnings call, which we expect to be in February of 2025.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Participants

Executives

• Bradley J. Dodson, President and CEO
• Regan Nielsen, VP, Corporate Development and Investor Relations
• Collin Gerry, Former CFO

Analysts

• Dave Storms, Director of Equity Research at Stonegate Capital Partners
• Stephen Gengaro, Managing Director at Stifel
• Steve Ferazani, Equity Analyst at Sidoti & Company, LLC
• Sean Mitchell, Partner/CEO at Daniel Energy Partners