Posted on May 12, 2022
HOUSTON–(BUSINESS WIRE)– Tidewater Inc. (NYSE:TDW) announced today revenue for the three months ended March 31, 2022 of $105.7 million compared with $83.5 million for the three months ended March 31, 2021. Tidewater’s net losses for the three months ended March 31, 2022, were $12.2 million ($0.29 per common share) compared with $35.3 million ($0.87 per common share) for the three months ended March 31, 2021. Included in the net losses for the three months ended March 31, 2022 were long-lived asset impairment credit, gain on bargain purchase and merger and severance expenses of $0.5 million. Excluding these items, we would have reported a net loss for the three months ended March 31, 2022 of $11.7 million ($0.28 per common share). Included in the net losses for the three months ending March 31, 2021 were severance expenses totaling $0.1 million; excluding these costs, we would have reported a net loss for the three months ending March 31, 2021 of $35.2 million ($0.86 per common share).
Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, “Tidewater is uniquely positioned to capitalize on what is looking to be a truly transformational period for vessel activity and day rate improvements over the next several quarters.
“Over the past several years we have been executing on a multi-faceted strategy to build significant and sustainable value at Tidewater. Recognizing the cyclicality of our highly fragmented, capital intensive industry, there were several priorities we focused on to prepare the company to successfully weather the lean times, while being well-positioned to capitalize on the inevitable upswings in the cycle when they occur. First and foremost, it starts with the people, and we are proud to say that we have built the strongest and most capable leadership and operational team in the industry, and that team will continue to get stronger as we move forward including as we welcome and integrate the talented team from Swire Pacific Offshore (“SPO”) into our organization. Our team’s initial focus was operational execution, including the integration of GulfMark into Tidewater, and driving efficiencies to weather the challenges the industry had experienced for many years while maximizing the operating leverage for the eventual recovery. With a strong team and efficient cost-structure and operations, we were then in a good position to address the company’s balance sheet, and we are proud that Tidewater now has the strongest, most liquid and most flexible capital structure in the industry. Finally, with all of those pieces in place, Tidewater is well-positioned to act strategically, acquire the best assets to complement our global fleet and capitalize on improving industry dynamics and drive sustainable value. The acquisition of SPO that we closed in April is transformational as Tidewater is now the undisputed industry leader at a time when the demand for high quality offshore vessels is poised to significantly exceed the available supply.
“As an illustration of our progress in operational improvements, vessel level gross margins increased from 24.7% in the first quarter of 2021 to 34.0% in the first quarter of 2022. While some of this improvement is due to COVID related costs that impacted 2021, this trend reflects an overall company-wide focus on efficient operational execution. We do expect this positive trend to continue as we realize the full potential benefits of the changes we have put in place. We have also achieved significant savings in G&A expenses as illustrated by the reduction of approximately $80.0 million in G&A since the 2018 merger. To put all of this in perspective, our overall G&A cost structure in the first quarter of 2022 for the combined Tidewater and GulfMark is approximately 30% less than the stand-alone cost structure of Tidewater alone before the merger. We are now applying these techniques and processes to the integration of our latest acquisition of SPO, and we intend to continue the intense focus on efficient operational execution going forward.
“The SPO acquisition includes 50 high quality vessels which augments our already strong position in West Africa, a region that is just beginning to recover from the pandemic and which is likely to be a substantial beneficiary of the world’s search for hydrocarbons outside of Russia. The acquisition also gives us substantial leverage to the Southeast Asia and Australian markets, as well as adding vessels to areas of increasing activity, such as the Middle East. We remain confident that our combination synergies of $45.0 million can be achieved over the next 18 months.
“The OSV industry has historically experienced demand fluctuations that correlate with offshore oil and gas activity, but are impacted by other factors that are unique to our industry, such as shipbuilding and mariner labor cycles. Since the offshore energy downturn began in 2014, there have been very few new vessels enter the market, and existing vessels have aged or been taken out of service. Many operators in the industry have struggled to survive under the burden of high debt levels, low day rates, and inefficient operations. As a result, the available supply of high quality PSVs has declined substantially over the past 8 years such that only approximately 30 remain to be reactivated worldwide.
“The prolonged under-investment in offshore hydrocarbon infrastructure began to result in increased demand for offshore oil and gas activity in the second half of 2021, and that demand has been compounded by recent geopolitical issues. The demand for offshore wind energy infrastructure continues to accelerate as well. As a result, the outlook for OSV demand to support these offshore energy activities has begun to accelerate significantly. We are already seeing this impact in the market, but the most significant improvements will materialize over the next several quarters as this demand swiftly eclipses available supply. As an example, during the first quarter of 2022, we entered into contracts of various durations for 16 vessels with charter dates beginning after the first quarter. The average day rate improvement across these vessels’ contracts compared to their previous contracts is over 20%, with our largest PSVs in this group achieving average day rate improvement of nearly 30%. We believe the improvements in day rates are a clear signal of the fundamental shift in vessel supply and demand, and that as additional tendering continues and existing contracts roll-off, upward acceleration of day rates will continue.
“Everything we have been working on these past several years has positioned us to thrive under any market condition, and now that the market is rapidly improving, we are poised to capitalize. I want to take a moment to thank our employees for driving all the change and improvements that has prepared us for this opportunity. Finally, I want to welcome our 1,300 new employees from SPO to the Tidewater family. I look forward to your contributions and welcome you to the most exciting OSV company in the world.”
Tidewater will hold a conference call to discuss results for the three months ending March 31, 2022 on May 10, 2022, at 8:00 a.m. Central Time. Investors and interested parties may listen to the earnings conference call via telephone by calling +1.888.770.7135 if calling from the U.S. or Canada (+1.929.203.0820 if calling from outside the U.S.) and provide Access Code: 2444624 prior to the scheduled start time. A live webcast of the call will also be available in the Investor Relations section of Tidewater’s website at investor.tdw.com.
A replay of the conference call will be available beginning at 11:00 a.m. Central Time on May 10, 2022 and will continue until 11:59 p.m. Central Time on June 10, 2022. To access the replay, visit the Investor Relations section of Tidewater’s website at investor.tdw.com.
The conference call will contain forward-looking statements in addition to statements of historical fact. The actual achievement of any forecasted results or the unfolding of future economic or business developments in a way anticipated or projected by the company involves numerous risks and uncertainties that may cause the company’s actual performance to be materially different from that stated or implied in the forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed within the “Risk Factors” section of Tidewater’s most recent Forms 10-Q and 10-K.
Tidewater owns and operates the largest fleet of offshore support vessels in the industry, with 65 years of experience supporting offshore energy exploration, production and offshore wind activities worldwide. To learn more, visit www.tdw.com.
