Posted on November 7, 2022
Houston-headquartered offshore services giant Tidewater Inc. (NYSE:TDW) has released third quarter results that see it report positive net income for the first quarterly period since 2017.
“Our third quarter performance reinforces our previous commentary that the offshore vessel industry had reached an inflection point,” said Tidewater President and CEO Quintin Kneen. “Revenue improved by 17% sequentially, partly driven by a full quarter of the Swire Pacific Offshore (SPO) acquisition. Active utilization increased from 82.5% in the second quarter of 2022 to 83.7% and our average day rate, despite a material strengthening of the U.S. dollar, improved by nearly $1,100 per day sequentially, or approximately 8.5%. The combined improvement in utilization and average day rate provided an approximately 11.5% improvement in revenue per average active vessel. Vessel level cash margin improved to nearly 41%, up 240 basis points. It is also worth mentioning that we generated net income during the third quarter, the first quarterly net income since emergence from bankruptcy in 2017, which represents a satisfying milestone in the continued recovery of our business.”
“I’m pleased to say that as the offshore vessel market continued its momentum during the third quarter, we saw a meaningful improvement in our profitability and free cash flow generation,” said Kneen in a conference call with financial analysts. “The most talked about indicator of the strength in our business, average day rate, increased by nearly $1,100 per day in the quarter on slightly higher active utilization of 83.7%, which is up about 1.2 percentage points.
“You may recall that we have previously discussed that fleet-wide average day rate increase over the entire year during a typical up cycle was about $1,500 per day. We passed that benchmark in the second quarter with average day rate up nearly $1,900. And year-to-date, we are now up $3,000 per day.”
Kneen told the analysts the third quarter step up in average day rate “is emblematic of the tightening of the supply and demand of the offshore vessel market” and was “set up by the significant vessel attrition over the past several years and actuated by the increase over the past year in global offshore activity.”
He said that the increase in global activity began in the third quarter of last year and was based on “steadily increasing oil price as global economic activity increased subsequent to the easing of pandemic restrictions and has further increased over the past 6 months as conflict in Ukraine move the focus of decision-makers to energy security.”
- You can read the Seeking Alpha transcript of the whole conference with analysts HERE
