Civeo NYSE: CVEO raised its full-year 2026 revenue and adjusted EBITDA guidance after reporting third-quarter growth driven primarily by stronger Canadian turnaround activity and a full quarter of revenue from an Ontario integrated services contract.
Third-quarter revenue increased 13% year over year to $193.1 million, while adjusted EBITDA rose 5% to $30.1 million. Net income was $5.2 million, or $0.50 per diluted share, compared with a net loss of $0.5 million, or $0.04 per share, a year earlier. Operating cash flow nearly doubled to $26.4 million from $13.8 million.
“On the strength of our year-to-date performance, we are raising our 2026 revenue guidance to $710 million-$720 million, and our adjusted EBITDA guidance to $89 million-$92 million,” President and Chief Executive Officer Bradley Dodson said on the company’s earnings call.
Canada Leads Quarterly Growth
Canada was the principal contributor to Civeo’s year-over-year revenue increase. Canadian revenue rose 38% to $63.6 million, or about 40% in local currency, while adjusted EBITDA climbed 47% to $11.1 million.
The gains reflected stronger-than-expected turnaround activity at oil sands lodges and the Ontario integrated services contract, which contributed a full quarter of revenue. Canadian billed rooms increased 35% to approximately 516,000, although the region’s average daily rate declined to $97 from $100 in the prior-year period, primarily due to the mix of turnaround work at contracted rates.
Dodson said some turnaround work originally expected in the fourth quarter was completed during the third quarter. The company expects Canadian fourth-quarter billed rooms to decline sequentially because of the end of turnaround season and holiday-related seasonality.
Still, management expressed a more favorable outlook for Canadian activity in 2027. Civeo expects oil sands lodge occupancy to be higher than in 2026, supported by what Dodson described as steadier activity and increased customer focus on securing accommodation capacity.
“For the first time in several years, the conversation with customers in the region is shifting from price concessions to asset availability,” Dodson said.
Mobile Camp Contracts Prompt Higher Capital Spending
Since the end of the second quarter, Civeo has secured contracts to deploy about 700 mobile camp rooms across Canada. The contracts mark the company’s first meaningful mobile fleet awards in several years, according to management.
The rooms are expected to begin deployment in late 2026 and the first quarter of 2027, with no meaningful revenue contribution expected this year. Dodson said the company expects the rooms to be in service by the middle of the first quarter of 2027.
Civeo raised its 2026 capital expenditure outlook to $30 million-$35 million from $25 million-$30 million to prepare Canadian assets for deployment. The company said guidance includes about $1 million of fourth-quarter make-ready and mobilization expenses for the new contracts, while related revenue will primarily be recognized during 2027.
During the question-and-answer session, Dodson said the spending associated with secured mobile-camp contracts is expected to be recovered in less than one year. Typical mobile-camp contract terms are two to three years, although one awarded project is tied to a shorter winter drilling program with potential for extension.
Management said Civeo has approximately 2,000 additional mobile camp rooms available in Western Canada, as well as approximately 6,000 to 7,000 oil sands lodge rooms that could potentially be redeployed for suitable projects. The company is pursuing opportunities tied to LNG, energy infrastructure, mining, power and data center-related projects, though management cautioned that many remain dependent on customer final investment decisions.
Australia Faces Cost-Driven Customer Caution
Australia remained Civeo’s cash-flow foundation, but the region’s results reflected softer occupancy at higher-margin owned villages in the Bowen Basin. Australian segment revenue was AUD 129.5 million, up 4% from a year earlier, while adjusted EBITDA declined to AUD 23.2 million from AUD 25 million.
The stronger Australian dollar increased reported revenue and adjusted EBITDA by $9.6 million and $1.7 million, respectively. In local currency, Australian revenue declined about 4% as lower occupancy partially offset contractual rate increases in integrated services and increased shutdown activity.
Australian-owned village billed rooms fell to approximately 669,000 from approximately 763,000 a year earlier. The average daily rate increased to AUD 84 from AUD 77, with local-currency rates up about 2%.
Dodson said metallurgical coal prices above $250 per ton have not produced the level of customer activity Civeo would historically expect. He attributed the cautious customer behavior to elevated diesel, labor and other costs, along with higher royalties under Queensland’s progressive royalty framework.
Management expects owned-village occupancy in Australia to be modestly softer in the fourth quarter than in the third quarter and said the current environment may persist into early 2027. However, Civeo said its owned-village business remains well contracted and continues to generate strong cash flow.
The company’s Australian integrated services operation remains on track toward its target of an annual revenue run rate of AUD 500 million by the end of 2027. Management said growth in that business is expected to come from new and expanded contracts with existing and new customers across multiple Australian regions.
Balance Sheet and Share Repurchases
As of Sept. 30, Civeo had $126.9 million available under its revolving credit facility, total debt of $217.5 million and net debt of $196 million. Its total net leverage ratio was 2.1 times.
In July, the company issued $115 million of 4.5% convertible senior notes due 2031, replacing higher-cost floating-rate revolver borrowings with fixed-rate unsecured capital. Civeo said the notes have a conversion price of approximately $40.51 per share and are not expected to result in net share dilution unless the share price exceeds approximately $53 at settlement, based on the company’s current intent to settle principal in cash.
Civeo repurchased approximately 660,000 shares for about $22.3 million in July, completing its authorization to repurchase 20% of the company and bringing a subsequent 10% authorization to about 50% complete. Year-to-date repurchases totaled $36.7 million, and management said the company has repurchased approximately 26% of its shares outstanding since the start of 2025.
While Civeo reiterated its intention to return at least 75% of annual free cash flow to shareholders through repurchases, management said near-term capital allocation will prioritize preparing Canadian assets for contracted work and potential higher-return deployments.
About Civeo (NYSE:CVEO)
Civeo Corporation is a provider of workforce accommodations and related services for the natural resources and other industries that operate in remote locations. The company develops, owns and operates workforce villages, lodges and other lodging facilities designed to house employees and contractors near work sites.
Civeo's services include room accommodations, food services, housekeeping, facility management, logistics and transportation support. Its facilities are used by customers in sectors such as oil and gas, mining, and infrastructure development, where temporary or long-term workforce housing is needed.
Headquartered in Houston, Texas, Civeo serves customers primarily in Canada, Australia and the United States.
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