Good day everyone and welcome to the Civeo Third 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, Corporate and Development and Investor Relations. Please go ahead.

Thank you and welcome to Civeo's third quarter 2019 earnings conference call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer; Frank Steininger, Executive Vice President and Chief Financial Officer; and Carolyn Stone, Vice President and Chief Accounting 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, Regan, and thank you all for joining us today on our third quarter earnings call. I will begin with the summary of our third quarter performance before offering some commentary on our three business segments. Carolyn will then provide a detailed discussion of our consolidated and segment quarterly financials, and Frank will discuss our current market outlook, our updated financial guidance for 2019 and preliminary views of 2020 before we move on to the question-and-answer portion of the call. Key takeaways today from our third quarter earnings are the third quarter earnings demonstrated that diversity - diverse activity drivers of our business with strong revenues from our Australian Born Basin driven by met coal related occupancy, the benefits of an expanded Sitka Lodge serving Canadian LNG, robust occupancy in our core oil sands lodges and the first quarter of contributions from the Action Catering acquisition in Western Australia, which primarily serves the iron ore industry. In the third quarter, we generated adjusted EBITDA of $36.2 million, which exceeded our expectations on a consolidated basis. We significantly reduced our leverage ratio from 4.26 times as of June 30, 2019 to 3.52 times as of September 30, 2019. We are also raising our previously disclosed full year 2019 adjusted EBITDA guidance on the basis of our strong performance in the third quarter, partially offset by a weakening U.S. market. Lastly, our Sitka Lodge expansionary capital expenditures are complete. We expect to generate increased free cash flow in fourth quarter of 2019 and going into 2020 which we will use to reduce debt. Moving on to the quarter. Our third quarter performance was punctuated by stronger-than-expected billed rooms in Canada, Australia and demonstrates the significant operating leverage of our lodge and village operations as our occupancy increases. This quarter also highlights…

Thank you, Bradley, and thank you all for joining us this morning. Today, we reported total revenues in the third quarter of $148.2 million with net income on a GAAP basis of $4.5 million or $0.02 per diluted share. During the third quarter, we generated adjusted EBITDA of $36.2 million, operating cash flow of $23.6 million, and free cash flow of $20.3 million. Turning to our third quarter segment results, I'll begin with a review of the Canadian segment performance compared to the prior quarter. Revenue from our Canadian segment was $91.1 million this quarter, an increase compared to revenues of $78.1 million in the second quarter of 2019. Adjusted EBITDA in Canada was $25 million, an increase from $16.3 million in the second quarter of 2019. Both the revenue and adjusted EBITDA sequential improvement resulted primarily from increased maintenance and turnaround activity in our oil sands lodges and increased LNG related occupancy at our Sitka Lodge in British Columbia. During the third quarter, billed rooms in our Canadian lodges totaled 876,000, and increased sequentially from 740,000 in the second quarter of 2019 due to the aforementioned dynamics. Our daily run rate for the Canadian segment in U.S. dollars was $91 compared to $89 in the second quarter. This increase in daily rate was primarily related to the increased occupancy at our Sitka Lodge where rates are higher than our oil sands lodges. Turning now to Australia. During the third quarter, we recorded revenues of $47.7 million, up from $31 million in the second quarter due to increased revenues of $14.7 million from the acquired Action Catering business, as well as increased activity in our Bowen Basin villages. Adjusted EBITDA was $17.2 million up sequentially from $13 million. The adjusted EBITDA increase included a gain on sale of $2.4 million…

I will now outline our guidance for the fourth quarter of 2019, provide an outlook for our business segments and make some preliminary comments on 2020 before we open up the call for your questions. Our outlook for the remainder of 2019 is generally consistent with what we articulated on the second quarter call, albeit with some moving parts to consider. In Canada from typical seasonality we expect maintenance and turnaround, activity in the oil sands to subside as the fourth quarter progresses. LNG Canada related occupancy at our Sitka Lodge is anticipated to continue at current levels until early December. When we expect billed rooms to decline for the holidays before we turn it to similar levels in early 2020. The billed rooms should be down sequentially but we expect occupancy will be higher comparison to the fourth quarter 2018 due to the contribution from our Sitka Lodge. Moving now to Australia. The contract extensions referenced earlier are encouraging sign that our customers intend to stay busy over the next several quarters. Like our Canadian segment, we expect seasonality lower billed rooms in the fourth quarter, due to typical holiday downtime but we expect occupancy to be higher in comparison to the fourth quarter of 2018 due to increased customer activity levels in the Bowen Basin. Although met coal prices have declined in the recent months and there is uncertainty regarding Chinese trade policy and temporary import quotas, increased demand remains strong. As such, we do not envision any near-term impact on activity given that our customers are still generating very healthy cash flows. From a margin perspective, a full quarter's contribution from Action Catering coupled with sequentially lower activity, our village - villages should equate to moderately lower EBITDA margins for our Australian segment as a whole. Once…

[Operator Instructions] And we'll take our first question from Stephen Gengaro from Stifel.

Can you - a little more - Hi, Bradley, can you tell me a little more on the Action deal in Australia. It seems to be progressing well based on the numbers that we saw based on some of the commentary kind of give us how that integration is going we should think about that going forward?

I'll be happy to. Yes, we are excited to close the Action Catering transaction acquisition in July of this year. They provide hospitality and managed facility services in Western Australia primarily serving the iron ore industry at the time that we underwrote the transaction with our Board, we were expecting about $4 million of the EBITDA, as you can see from the third quarter results were tracking much better than that already and that's a combination of the team, continuing to serve the existing customer base very well and continue to garner additional work from existing customers. So the integration of the operations is moving along quite well. It's always a challenge to take a privately held company and put it into a public company environment with the safety and HR, and IT requirements that we have and the standards that we have, but we're well on our way to doing that. We're already starting to see the purchasing synergies that we're anticipating as we combined their buying volumes with ours. Again, to put it in perspective our historical Australian village business has about $1.6 million Room nights a year actions running on an equivalent basis of about 900,000. So in terms of adding critical mass in terms of our overall operating business in Australia. It's significant. Not only that it gives us a significant position in Western Australia where we had some presence, but not nearly the presence that we do now with the Action part of the company and it certainly expands our customer base to include much several more iron Ore Company has always serves iron ore industry in the past action adds a lot of volume on that side of things. Anything else Frank, that...

It's a great, it's a great tuck-in acquisition for us, for our Australian business.

And cashless has been good in Australia, we've almost paid off all the...

Yes, that's exactly right. This month, we'll have repaid all the borrowings that we did that we took out for the Action acquisition, so business in Australia is doing really well, generating free cash flow and this acquisition really adds to that.

Speaking of Action I was going to add two other question, one around free cash flow. If I think about 2020, I know you're not giving guidance yet. But if I just look at kind of how we're thinking about EBITDA. I think we've interest costs probably a little on the $30 million. What are your CapEx look like next year because I think, by my numbers, if your CapEx is 2025 million, it looks like you're going to generate $50 to $60 million of free cash next year? I may off on that it seems.

That's all correct.

Yes, we are in the range we - as you can tell from our 2019 CapEx guidance. Obviously, the team continues to be very disciplined and prudent how we manage that process. The spending on Sitka ultimately was lower than we had anticipated in the end and the maintenance spending, we've been able to manage pretty effectively.

And we have some spend related to the Coastal GasLink pipeline work that's we're starting up, but again that's all within kind of the numbers that you're talking about.

So just on that alone, if we're at $20 million of CapEx for next year. It might be a little bit higher; it might be $25 because we'll have some Coastal GasLink CapEx there, but will be $10 to $15 million of additional free cash flow just on lower CapEx spending year-over-year.

Okay. Great. Thank you [indiscernible].

Yes, Stephen, you broke up there. Can you give us the question one more time please?

Oh I'm sorry I forget. You will be amendment to your credit facility. I guess I think there was one or two banks that were not involve the extension. But your total dollar amount remained the same. Is that correct?

Well, yes for this first year. So we were able to I mean - first of all, step back, I mean, we've got three tranches of revolvers in each of the country each of the segment reporting segments. And then we've got the term loan that's all part of one agreement. So that whole agreement was basically extended amended and extended. We were able to bring in one new borrower one new lender at $50 million basically, which was really positive for the most part, most of the banks agreed to the extension to the credit agreement and then as you mentioned, we did have two banks that have decided not to extend, and will stay with us until November of 2020 and [indiscernible] that was a surprise if those two banks were not going to extend and our ability to bring in a new lender was very helpful for that. So if you look at overall, we basically we went up $24 million in as of today in borrowing capacity. Now, when we get to November 2020 when those other two banks leave the credit facility net will go down about $31 million $31, $32 million, which really Stephen is not we're not troubled by because again as we just discussed. As you look at our ability to continue to and we increase our free cash flow, reduce our leverage will be in a position and have the borrowing capacity to basically take those banks out at that point. So, while we didn't proceed to go away, it's not - we're not, we're not concerned about that at all. And we've got one new lender to come in. So, and when you look at it, Stephen, at this point of the cycle, and in some of the pressures on the industry. It's a very good outcome from a stance and we got great support from that we are remaining banker.

And then just, you're clearly your target here, however, with the free cash that you generate this year or next?

You broke up a little bit. I think the question...

I'm sorry. I mean, yes. Free cash flow is going to be used to de-lever is that as we go forward?

Exactly. Yes, no doubt.

Okay.

That's I mean you saw what we did here in the third quarter that will continue in the fourth quarter. And then as we push into 2020.

[Operator Instructions] And it appears we have no further questions in the queue I'd like to turn the conference back over to Bradley Dodson for any closing remarks.

Thank you, and thank you all for joining us today on the third quarter call. We were pleased with the outcome of it. There are a lot of positive things that were accomplished during the third quarter, and we look forward to discussing another good quarter in the fourth quarter with you in sometime in February. Thank you.

And once again, ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may now disconnect.