Good day, and welcome to the Civeo Second Quarter 2019 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Regan Nielsen, Director of Corporate Development and Investor Relations. Please go ahead, sir.

Thank you, and welcome to Civeo’s second quarter 2019 earnings conference call. Today our call will be led by Mr. Bradley Dodson, Civeo’s President and Chief Executive Officer; and Frank Steininger, Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information 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 disclosed in our Form 10-K, 10-Q and other SEC filings. I will now turn the call over to Bradley.

Thank you, Reagan, and thank you all for joining us today on our second quarter earnings call. I’ll began with a summary of our second quarter performance before offering some commentary on our three business segments; Frank will then provide a detailed discussion of our consolidated and segment quarterly financials and I’ll conclude our prepared remarks with our current outlook and updated financial guidance before we move to question-and-answer portion of the call. Before we begin, I’d like to highlight a few takeaways from our call today. First, second quarter adjusted EBITDA exceeded our expectations in each region and on a consolidated basis. During the second quarter, we completed the expansion of our Sitka Lodge to serve the LNGC project in British Columbia, and the occupancy and earnings from this location will have a meaningful impact on our second half 2019 EBITDA. With the Sitka expansion behind us, we expect to generate significant operating and free cash flow in the second half of 2019, which we will use to reduce debt. We are maintaining our previously disclosed full-year adjusted EBITDA guidance as second quarter performance and the Action acquisition are largely offset by decreasing drilling and completion activity in the U.S. Lastly, we completed a strategic acquisition in Australia, which expands our service offering, commodity exposure and geographic footprint, while opening up future organic growth opportunities. Our second quarter performance was punctuated by strong sequential improvement in Canada and Australia. Both regions benefited from higher occupancy from turnaround activity, and in Canada, we also benefited from increased LNG related occupancy in British Columbia. We were also pleased with our recent progress on the contracting front. During the second quarter, we announced a four-year contract renewal with BHP to provide rooms and hospitality services from the Company’s existing Coppabella and Nebo…

Thank you, Bradley, and thanks everyone for joining us this morning. Today we reported total revenues in the second quarter of $122.2 million, with a net loss on a GAAP basis of $15.3 million or $0.09 per diluted share. During the second quarter, we generated adjusted EBITDA of $26.5 million, and operating cash flow of $3.6 million. Turning to the second quarter results for our three segments. I’ll begin with the review of the Canadian segments performance compared to the prior quarter. Revenue from our Canadian segment was $78.1 million, an increase compared to revenues of $66.8 million in the first quarter of 2019. Adjusted EBITDA in Canada was $16.3 million, an increase from $12.2 million in the first quarter of 2019. Revenue and adjusted EBITDA sequential improvement resulted primarily from the cadence of maintenance and turnaround steadily increasing throughout the second quarter and increased LNG-related occupancy at our Sitka Lodge. During the second quarter, build rooms in our Canadian lodges totaled 740,000, which was up from 626,000 sequentially due to the aforementioned dynamics. Our daily room rate for the Canadian segment in U.S. dollars was $89 compared to $92 in the first quarter of this year. The decrease in daily rate was primarily related to occupancy based rate reductions related to higher build rooms in the oil sands. Turning now to Australia. During the second quarter, we recorded revenues of $31 million, up from $28.4 million in the first quarter, due to increased coal production and maintenance activity across our Bowen Basin villages. Adjusted EBITDA was $13 million, up sequentially from $9.9 million. The average daily rate for our Australian villages was flat sequentially at U.S. dollars $74 in the second quarter, which was negatively impacted by the weakening Australian dollar. Build rooms increased from 383,000 in the first…

Thank you, Frank. I will now outline our guidance for the third quarter and full year of 2019, provide a brief outlook for our business segments, make some closing comments before we open up the call for questions. Our outlook for 2019 is generally consistent with what we articulated on our first quarter earnings call. In Canada, we anticipate sequentially stronger oil sands build rooms in the third quarter as customers turn around and maintenance activity continues to ramp up. Now that our Sitka Lodge expansion is complete, the second half of 2019 will benefit from increased occupancy from roughly 1,100 rooms dedicated to the LNG Canada project. Overall, we expect our Canadian build rooms to improve sequentially in the third quarter before moderating with holiday downtime in the fourth quarter. Moving to Australia, the outlook in the region leads us very comfortable with our committed competitive position and recent investments in refurbished room capacity. Healthy met coal and iron ore prices should support a solid operating environment for our business during the remainder of 2019. And our recently announced four year contract renewal with BMC reaffirms our view that customers are beginning to redeploy capital more opportunistically against the constructive commodity price backdrop. We are also excited to welcome the team from Action Industrial Catering to the Civeo family as we significantly expand our footprint in Western Australia as well as our Australian Service Group to include managing and serving customer on rooms. Action’s managed services business is an excellent fit for our core competencies in hospitality and open significant organic growth opportunities over the next couple of years. In regard to Australian segment’s performance in the second half of 2019, we anticipate build rooms to modestly improve in the third quarter before softening during holiday downtime in the…

Thank you. [Operator Instructions] We’ll take our first question from Stephen Gengaro. Please go ahead sir.

Thank you, gentlemen. Two or three things I wanted to touch on. The first being your – when I look at the balance sheet, the receivables seem to rise a lot in the quarter. So I was curious if you could add some color to that as it pertains to cash generation. I mean, any updates on where you stand as you sort of look at your debt levels in your credit facility going forward?

Yes, the – yes, Steve, this is Frank. The increase in receivables really was a result of Canada. You see the ramp up in revenue in Canada. That was the largest. That’s what really drove that. There was one large receivable that we thought we might collect before the end of the quarter, but we didn’t. Most of that has been collected or a big chunk of that increase has been collected here subsequent to the quarter. So again, it’s just really – really just a timing issue related to revenue increase, nothing unusual there. In regards to the bank situation and the credit facility situation, we are currently in dialogue with the banking group. There’s nine banks in that group as to an extension of the credit agreement. So that process has been kicked off with current discussions happening. Also talking to a couple of other banks, new banks that potentially could come into the credit agreement. We will formally kick off the process to get the [amendment] [ph] and the extension here in the next week or so with the entire banking group, hoping to complete it by the end of August, beginning of September. So hopefully, a month or a month or so, we’ll have a – come back to you guys with the results of that. But the banks have been constructive and the discussions have gone very well to date.

Great, thank you. And then as you look at the extension you announced during the quarter – I think that was the Australian expansion and then the one you announced today in Canada. You disclosed sort of the pricing? Should we think about the margin profile of those extensions being similar to what we’ve seen in those two regions respectively?

Yes. Yes. The pricing is consistent with what were on the prior agreements. Obviously, the margin side should be consistent. Obviously, we’re always trying to work on our cost structure, but nothing in the contrast would indicate lower margins.

Great, thank you. And then just one final one, I know you alluded to this in the call, Brady, but the strong quarter, the raise in the 3Q guidance versus expectations, [indiscernible] prior third quarter guidance, but expectations were surpassed by your guidance. Is it just sort of a softer fourth quarter when you talked about the US outlook. Is that – is that all? Is it – a) is it all U.S. really, then b) is it really just kind of an expectation of what you’re – you’re sort of seeing in the market and what E&Ps are saying, et cetera?

Well, there are a couple pieces to it, Stephen. I would say that the U.S. does look soft in the back half of this year, we factor that in. The sequential movement from second to third and then third to fourth would be primarily driven by Canadian turnaround activity, we’re going to see strong build room improvements second quarter to third quarter, but then see that subside to levels closer to the first quarter level. So in the 600,000 to 650,000 room nights for the fourth quarter in Canada, and then Australia, you’ll see a little bit of softness going into the fourth quarter just on seasonality or holiday downtime. Those are the primary drivers. But the big movement, second quarter, third quarter is turnaround activity, and then seeing that reverse into the fourth quarter in Canada, that’s the biggest driver.

And you said – I missed the number. I’m sorry; did you say about 100,000 rooms – room nights?

Room nights in the fourth quarter, we’re looking about 650,000 room nights.

For Canada.

For Canada.

For Canada?

Yes.

Okay. Very good. Thank you.

Thank you. We’ll take our next question from Mike Malouf from Craig Hallum. Please go ahead sir.

Great. Thanks guys for taking my questions. If we could just start a little bit off on CapEx. Can you kind of update us on your CapEx plans here for the back half of the year and into 2020? It seems like you’ve gotten the bulk of the Sitka site behind you, but just give us some comments on that would be helpful.

Yes, I think – we’re guiding to $40 million to $45 million in CapEx for the entire year. A lot – as I said in my comments we spent about $20 million – almost $22 million for the first six months. Again, the rest – there is a little bit more to be spent at Sitka. We do have some expenditures related to the cost of gasoline, which is the pipeline project associated with the LNG project on the West Coast and then it’s just normal – really normal CapEx, normal maintenance type CapEx for the remaining of the year, nothing unusual there. If you go into 2020, you should see that number fall off by $20 million or so – $20 million or $25 million to get back to the normal levels that we’ve had in CapEx. If you look at – if you go back from 2016, 2017, 2018, you’re anywhere between $16 million to $18 million of CapEx during those periods. So that would be kind of the normal level coming down. We’ll have a little bit more expenditure on the Coastal GasLink project, the LNG – pipeline project, but again it’ll be normal maintenance CapEx.

Okay, great. And then as you look into this extension on the debt, are we going to see any sort of material change you think, I know it’s still early, but on the actual rate?

I’m hoping not, Michael. I don’t have a clear view yet as to what the so called demands will be. I think we’ve gotten comfortable with the aspect of the extension, but I’m not expecting a material increase in the rate based upon the discussions that I’ve had today.

Okay, great. And then just a final question. Could you give us a little bit more color on the impact of Action as you sort of – as we look into 2020. I know that in the third quarter, you’re going to get a little bit of a ramp and then into the fourth, but as you sort of look at the synergies and the opportunity next year, can any sense of both top line and EBITDA impact potential would be helpful?

Well, happy to, I think they’ve done a really good job of, first of all, it’s a great base business, and then they continued to win work there where we’re optimistic that with their team and the combination of our team, our ability to continue to win managed services projects will increase. But just from the base Action business, we’re expecting about $60 million of Australian revenues next year and about $5 million of EBITDA.

Okay. And then as you look into the synergies, there’s obviously upside to that, it’s some of the joint bids you guys have in place or can you talk to us all about the upside there?

We’ll continue to drive the upside. It’s certainly – if you think about it as we’ve noted in the press release for the acquisition about Australian business in rough numbers, we do about 1.6 million room nights a year, that’s what we’ve been running, and that’s a good number for 2019. Action alone adds 900,000 room nights of managed services. We’re taking care of guests in customer owned rooms. So in – to your point, it’s a material amount of buying power for us, particularly in Western Australia. So we will continue to focus on driving those cost synergies and I think there is upside from those numbers.

Yes, and the other side of it, there could be some upside as – we do – we have been doing some bidding on integrated service or catering facility management type of projects on the other side of Australia in the Bowen Basin, with the acquisition of Action that really help strengthen our resume. So we’re hoping that we’ll see some increased activity also from those type of the catering and facility management of contracts on the eastern side of Australia in our core markets, where we have our villages there, we’ve been attacking that – other piece of that market, meaning the catering and facility management piece of it, but this really helps us give us some better resume to win some of that work.

Okay, great. Thanks for the help. Appreciate it.

Thank you.

Thank you. [Operator Instructions]. There are no questions at the moment, Mr. Nielsen.

Well, thank you all for joining us on the call today. We appreciate the interest in stock and look forward to speaking to you on the third quarter earnings call. Have a good day.

This concludes today’s call. Thank you for your participation. You may now disconnect.