Tidewater Reports Results for the Three and Nine Months Ended September 30, 2022

• Reported positive net income for the first quarterly period since 2017
• Revenue of $191.8 million increased 17% compared to the second quarter of 2022
• Vessel level cash margin of 40.6% compared to 38.2% in the second quarter of 2022
• Adjusted EBITDA of $52.1 million compared to $39.1 million in the second quarter of 2022
• Free cash flow of $21.9 million compared to negative $14.9 million in the second quarter of 2022
• Total fleet utilization of 77.8% compared to 75.5% in the second quarter of 2022
• Active fleet utilization of 83.7% compared to 82.5% in the second quarter of 2022
• Average active vessels of 181 compared to 172 in the second quarter of 2022

HOUSTON–(BUSINESS WIRE)–Tidewater Inc. (NYSE:TDW) announced today revenue for the three and nine months ended September 30, 2022 of $191.8 million and $460.9 million, respectively, compared with $92.4 million and $265.9 million, respectively, for the three and nine months ended September 30, 2021. Tidewater’s net income (losses) for the three and nine months ended September 30, 2022, were $5.4 million ($0.10 per common share) and $(32.4) million ($0.76 per common share), respectively, compared with $(26.3) million ($0.64 per common share) and $(91.0) million ($2.22 per common share), respectively, for the three and nine months ended September 30, 2021. Included in the net income for the three months ended September 30, 2022 were merger and severance expenses of $4.3 million and long-lived asset impairment and other of $1.2 million. Included in the net losses for the nine months ended September 30, 2022 were long-lived asset impairment and other of $0.7 million; gain on bargain purchase of $1.3 million; loss on warrants of $14.2 million and merger and severance expenses of $14.0 million. Excluding these items, we would have reported a net income for the three months ended September 30, 2022 of $10.9 million ($0.21 per common share) and net loss for the nine months ended September 30, 2022 of $4.8 million ($0.11 per common share). Included in the net losses for the three and nine months ended September 30, 2021 were long-lived asset impairments, affiliate credit loss credit, and severance expenses of $2.3 and $2.1 million, respectively. Excluding these items, we would have reported a net loss for the three and nine months ended September 30, 2021 of $24.0 million ($0.58 per common share) and $88.9 million ($2.17 per common share), respectively.

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, “Our third quarter performance reinforces our previous commentary that the offshore vessel industry had reached an inflection point. 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.

“Along with the increase in revenue throughout the first half of this year we also saw an increase in working capital, which is expected during such a period. We are pleased to report that the investment in working capital moderated in the third quarter. In fact, although revenue increased 17% sequentially, our trade accounts receivable balance decreased from the second quarter. The improvement in working capital management combined with our improved profitability provided free cash flow of $21.9 million during the third quarter, representing a sequential improvement in free cash flow of $36.8 million.

“We continue to see day rate momentum across all of our regions, led by Asia Pacific, Europe and Mediterranean and West Africa. Asia Pacific and Europe and Mediterranean regions both benefitted from a strong anchor handling market as favorable conditions and robust drilling activity pushed day rates up to some of the highest levels ever realized in the North Sea. Moving forward, we do expect that the typical industry seasonality will moderate the day rates for the larger anchor handlers over the next two quarters, but the drilling activity driving the demand we saw for these vessels over the past summer will recur in 2023.

“As it pertains to synergies associated with the SPO transaction, we continue to work through our integration plan and have continued to hit internal milestones on our way to realizing our synergy targets. We remain confident that we will realize the $45.0 million of synergies contemplated in the transaction. We expect to realize the full run-rate of general and administrative synergies during the first quarter of 2023 and the full benefit of our operating expense synergy during the latter part of 2023.

“As we look forward to the remainder of 2022 and 2023, we remain confident that the fundamentals for the offshore vessel market will remain robust. The safety of our people and of our operations remains a critical focus for us as this robust activity unfolds, and we remain steadfast in our dedication to being the safest and most reliable offshore support vessel operator in the world.”

In addition to the number of outstanding shares, as of September 30, 2022, the company also has the following in-the-money warrants.

Common shares outstanding			46,494,323
New Creditor Warrants (strike price $0.001 per common share)			119,215
GulfMark Creditor Warrants (strike price $0.01 per common share)			185,126
SPO acquisition warrants (strike price $0.001 per common share)			4,003,299
Total			50,801,963

Tidewater will hold a conference call to discuss results for the three and nine months ending September 30, 2022 on November 4, 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 Conference ID: 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 November 4, 2022 and will continue until 11:59 p.m. Central Time on December 4, 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.

Financial information is displayed beginning on the next page.

The financial statements and supplementary information presented in this press release were not audited. This press release presents extracts from the Consolidated Balance Sheets at September 30, 2022 and December 31, 2021; the Consolidated Statements of Operations and Consolidated Statements of Equity for the three and nine months ended September 30, 2022 and 2021; and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021. Extracts are drawn from the September 30, 2022 unaudited quarterly and year to date financial statements and the December 31, 2021 audited annual financial statements of Tidewater Inc. All per-share amounts are stated on a diluted basis.

In conjunction with the acquisition of Swire Pacific Offshore (SPO), we realigned our reportable segments to better reflect the post-acquisition operating environment. The previous Middle East/Asia Pacific segment has been split into the Middle East segment and the Asia Pacific segment. Our previous operations in Southeast Asia and Australia, along with the legacy SPO operations in the Asia Pacific region, now form the new Asia Pacific segment. Our segment disclosures reflect the current segment alignment for all periods presented.

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share data)
		Three Months Ended								Nine Months Ended
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Revenues:
Vessel revenues		$	190,247			$	91,634			$	456,298			$	261,141
Other operating revenues			1,515				767				4,640				4,717
Total revenues			191,762				92,401				460,938				265,858
Costs and expenses:
Vessel operating costs			113,037				65,344				281,805				190,627
Costs of other operating revenues			592				355				1,436				2,003
General and administrative			27,267				18,045				73,288				50,875
Depreciation and amortization			30,856				27,980				89,279				86,256
Long-lived asset impairment and other			1,214				2,167				714				2,167
Affiliate credit loss impairment credit			—				—				—				(1,000	)
(Gain) loss on asset dispositions, net			(264	)			74				826				2,954
Total costs and expenses			172,702				113,965				447,348				333,882
Operating income (loss)			19,060				(21,564	)			13,590				(68,024	)
Other income (expense):
Foreign exchange loss			(3,997	)			(523	)			(4,932	)			(951	)
Equity in net earnings (losses) of unconsolidated companies			9				100				(235	)			(1,697	)
Interest income and other, net			581				148				4,416				179
Loss on warrants			—				—				(14,175	)			—
Interest and other debt costs, net			(4,391	)			(3,681	)			(12,850	)			(12,166	)
Total other expense			(7,798	)			(3,956	)			(27,776	)			(14,635	)
Income (loss) before income taxes			11,262				(25,520	)			(14,186	)			(82,659	)
Income tax expense			6,352				887				18,189				8,922
Net income (loss)			4,910				(26,407	)			(32,375	)			(91,581	)
Less: Net loss attributable to noncontrolling interests			(470	)			(149	)			(6	)			(546	)
Net income (loss) attributable to Tidewater Inc.		$	5,380			$	(26,258	)		$	(32,369	)		$	(91,035	)
Basic income (loss) per common share		$	0.12			$	(0.64	)		$	(0.76	)		$	(2.22	)
Diluted income (loss) per common share		$	0.10			$	(0.64	)		$	(0.76	)		$	(2.22	)
Weighted average common shares outstanding			44,451				41,132				42,570				40,918
Dilutive effect of warrants, restricted stock units and stock options			7,069				—				—				—
Adjusted weighted average common shares			51,520				41,132				42,570				40,918

TIDEWATER INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, except share and par value data)
		September 30, 2022				December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	115,014			$	149,037
Restricted cash			4,965				1,240
Trade and other receivables, less allowance for credit losses of $2,568 and $1,948 at September 30, 2022 and December 31, 2021, respectively			181,646				86,503
Due from affiliates, less allowance for credit losses of $11,642 and $72,456 at September 30, 2022 and December 31, 2021, respectively			—				70,134
Marine operating supplies			20,764				12,606
Assets held for sale			6,815				14,421
Prepaid expenses and other current assets			17,509				8,731
Total current assets			346,713				342,672
Net properties and equipment			815,990				688,040
Deferred drydocking and survey costs			57,877				40,734
Indemnification assets			30,117				—
Other assets			32,364				24,334
Total assets		$	1,283,061			$	1,095,780
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	31,829			$	20,788
Accrued costs and expenses			105,945				51,734
Due to affiliates			—				61,555
Other current liabilities			46,629				23,865
Total current liabilities			184,403				157,942
Long-term debt			168,649				167,885
Other liabilities and deferred credits			82,910				68,184
Commitments and contingencies
Equity:
Common stock			46				41
Additional paid-in-capital			1,555,388				1,376,494
Accumulated deficit			(710,269	)			(677,900	)
Accumulated other comprehensive loss			1,474				2,668
Total stockholders’ equity			846,639				701,303
Noncontrolling interests			460				466
Total equity			847,099				701,769
Total liabilities and equity		$	1,283,061			$	1,095,780

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In Thousands)
		Three Months Ended								Nine Months Ended
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Net income (loss)		$	4,910			$	(26,407	)		$	(32,375	)		$	(91,581	)
Other comprehensive income (loss):
Unrealized loss on note receivable			(429	)			—				(1,275	)			—
Change in liability of pension plans			140				(207	)			81				(485	)
Total comprehensive income (loss)		$	4,621			$	(26,614	)		$	(33,569	)		$	(92,066	)

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
		Nine Months				Nine Months
		Ended				Ended
		September 30, 2022				September 30, 2021
Operating activities:
Net loss		$	(32,375	)		$	(91,581	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			62,539				54,605
Amortization of deferred drydocking and survey costs			26,740				31,651
Amortization of debt premiums and discounts			1,157				2,662
Provision for deferred income taxes			134				167
Loss on asset dispositions, net			826				2,954
Gain on bargain purchase			(1,300	)			—
Loss on debt extinguishment			—				59
Affiliate credit loss impairment credit			—				(1,000	)
Long-lived asset impairment and other			714				2,167
Loss on warrants			14,175				—
Stock-based compensation expense			5,344				4,199
Changes in assets and liabilities, net of effects of business acquisition:
Trade and other receivables			(30,301	)			26,608
Changes in due to/from affiliate, net			(20	)			1,210
Accounts payable			9,364				1,061
Accrued expenses			(913	)			(473	)
Deferred drydocking and survey costs			(43,883	)			(17,388	)
Other, net			(17,315	)			(8,833	)
Net cash provided by (used in) operating activities			(5,114	)			8,068
Cash flows from investing activities:
Proceeds from sales of assets			8,475				33,956
Acquisitions, net of cash acquired			(20,740	)			—
Additions to properties and equipment			(11,708	)			(2,583	)
Net cash provided by (used in) investing activities			(23,973	)			31,373
Cash flows from financing activities:
Proceeds from stock offering			70,630				—
Repurchase of SPO acquisition warrants			(70,630	)			—
Principal payments on long-term debt			—				(39,259	)
Debt issuance and modification costs			(393	)			(855	)
Debt extinguishment premium			—				(59	)
Tax on share-based awards			(2,276	)			(793	)
Net cash used in financing activities			(2,669	)			(40,966	)
Net change in cash, cash equivalents and restricted cash			(31,756	)			(1,525	)
Cash, cash equivalents and restricted cash at beginning of period			154,276				155,225
Cash, cash equivalents and restricted cash at end of period		$	122,520			$	153,700

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized		$	7,979			$	10,083
Income taxes		$	16,143			$	14,735
Supplemental disclosure of noncash investing activities:
Acquisition of SPO		$	162,648			$	—
Supplemental disclosure of noncash financing activities:
Warrants issued for SPO acquisition		$	162,648			$	—
Repurchase of SPO acquisition warrants		$	992			$	—

Note:  Cash, cash equivalents and restricted cash at September 30, 2022 includes $2.5 million in long-term restricted cash, which is included in other assets in our consolidated balance sheet.

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (In Thousands)
		Three Months Ended
														Accumulated
						Additional								other				Non
		Common				paid-in				Accumulated				comprehensive				controlling
		stock				capital				deficit				income (loss)				interest				Total
Balance at June 30, 2022		$	42			$	1,554,561			$	(715,649	)		$	1,763			$	930			$	841,647
Total comprehensive income (loss)			—				—				5,380				(289	)			(470	)			4,621
Issuance of common stock			4				72,253				—				—				—				72,257
Repurchase of SPO acquisition warrants			—				(73,249	)			—				—				—				(73,249	)
Amortization of share-based awards			—				1,823				—				—				—				1,823
Balance at September 30, 2022		$	46			$	1,555,388			$	(710,269	)		$	1,474			$	460			$	847,099
Balance at June 30, 2021		$	41			$	1,373,727			$	(613,708	)		$	(1,082	)		$	760			$	759,738
Total comprehensive loss			—				—				(26,258	)			(207	)			(149	)			(26,614	)
Amortization of share-based awards			—				1,488				—				—				—				1,488
Balance at September 30, 2021		$	41			$	1,375,215			$	(639,966	)		$	(1,289	)		$	611			$	734,612

		Nine Months Ended
														Accumulated
						Additional								other				Non
		Common				paid-in				Accumulated				comprehensive				controlling
		stock				capital				deficit				income (loss)				interest				Total
Balance at December 31, 2021		$	41			$	1,376,494			$	(677,900	)		$	2,668			$	466			$	701,769
Total comprehensive income (loss)			—				—				(32,369	)			(1,194	)			(6	)			(33,569	)
Issuance of common stock			5				72,252				—				—				—				72,257
SPO acquisition warrants			—				176,823				—				—				—				176,823
Repurchase of SPO acquisition warrants			—				(73,249	)			—				—				—				(73,249	)
Amortization of share-based awards			—				3,068				—				—				—				3,068
Balance at September 30, 2022		$	46			$	1,555,388			$	(710,269	)		$	1,474			$	460			$	847,099
Balance at December 31, 2020		$	41			$	1,371,809			$	(548,931	)		$	(804	)		$	1,157			$	823,272
Total comprehensive loss			—				—				(91,035	)			(485	)			(546	)			(92,066	)
Amortization of share-based awards			—				3,406				—				—				—				3,406
Balance at September 30, 2021		$	41			$	1,375,215			$	(639,966	)		$	(1,289	)		$	611			$	734,612

The company’s vessel revenues and vessel operating costs and the related percentage of total vessel revenues, were as follows:

(In Thousands)		Three Months Ended																Nine Months Ended
		September 30, 2022								September 30, 2021								September 30, 2022								September 30, 2021
Vessel revenues:
Americas		$	39,122				21	%		$	24,564				27	%		$	105,086				23	%		$	74,269				29	%
Asia Pacific			23,902				12	%			4,786				5	%			45,161				10	%			13,228				5	%
Middle East			31,186				16	%			20,847				23	%			79,800				17	%			62,447				24	%
Europe/Mediterranean			39,702				21	%			21,197				23	%			96,096				21	%			58,413				22	%
West Africa			56,335				30	%			20,240				22	%			130,155				29	%			52,784				20	%
Total vessel revenues		$	190,247				100	%		$	91,634				100	%		$	456,298				100	%		$	261,141				100	%
Vessel operating costs:
Crew costs		$	71,189				37	%		$	35,609				39	%		$	172,665				38	%		$	108,456				42	%
Repair and maintenance			13,544				7	%			10,497				11	%			36,482				8	%			29,468				11	%
Insurance			1,988				1	%			812				1	%			4,738				1	%			1,298				1	%
Fuel, lube and supplies			12,291				7	%			6,751				7	%			30,888				7	%			19,152				7	%
Other			14,025				7	%			11,675				13	%			37,032				8	%			32,253				12	%
Total vessel operating costs			113,037				59	%			65,344				71	%			281,805				62	%			190,627				73	%
Vessel operating margin (A)		$	77,210				41	%		$	26,290				29	%		$	174,493				38	%		$	70,514				27	%

Note (A):  Vessel operating margin equals vessel revenues less vessel operating costs.

The company’s operating loss and other components of loss before income taxes and its related percentage of total revenues, were as follows:

(In Thousands)		Three Months Ended																Nine Months Ended
		September 30, 2022								September 30, 2021								September 30, 2022								September 30, 2021
Vessel operating profit (loss):
Americas		$	2,952				2	%		$	(1,770	)			(2	)%		$	8,800				2	%		$	(8,361	)			(3	)%
Asia Pacific			3,260				2	%			1,357				1	%			4,534				1	%			3,023				1	%
Middle East			605				0	%			(2,070	)			(2	)%			(1,585	)			(0	)%			(5,323	)			(2	)%
Europe/Mediterranean			13,137				7	%			(2,866	)			(3	)%			14,970				3	%			(12,873	)			(5	)%
West Africa			12,322				6	%			(3,724	)			(4	)%			24,807				5	%			(15,846	)			(6	)%
Other operating profit			922				0	%			412				0	%			3,204				1	%			2,714				1	%
			33,198				17	%			(8,661	)			(9	)%			54,730				12	%			(36,666	)			(14	)%
Corporate expenses (A)			(13,188	)			(7	)%			(10,662	)			(12	)%			(39,600	)			(9	)%			(27,237	)			(10	)%
Gain (loss) on asset dispositions, net			264				0	%			(74	)			(0	)%			(826	)			(0	)%			(2,954	)			(1	)%
Affiliate credit loss impairment credit			—				0	%			—				0	%			—				0	%			1,000				0	%
Long-lived asset impairments and other			(1,214	)			0	%			(2,167	)			(2	)%			(714	)			(0	)%			(2,167	)			(1	)%
Operating income (loss)		$	19,060				10	%		$	(21,564	)			(23	)%		$	13,590				3	%		$	(68,024	)			(26	)%

Note (A):  General and administrative expenses for the three months and nine months ended September 30, 2022 include stock-based compensation of $1.9 million and $5.3 million, respectively. General and administrative expenses for the three and nine months ended September 30, 2021 include stock-based compensation of $1.5 million and $4.2 million, respectively. In addition, vessel operating and general and administrative costs for the three months and nine months ended September 30, 2022, include $4.3 million and $14.0 million in one-time acquisition, restructuring and integration related costs, respectively. Vessel operating and general and administrative costs for the three and nine months ended September 30, 2021, include $0.1 million and $1.0 million in one-time restructuring and integration related costs, respectively.

TIDEWATER INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – QUARTERLY DATA (In Thousands, except per share data)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
Revenues:
Vessel revenues		$	190,247			$	162,175			$	103,876			$	100,428			$	91,634
Other operating revenues			1,515				1,272				1,853				4,747				767
Total revenues			191,762				163,447				105,729				105,175				92,401
Costs and expenses:
Vessel operating costs (A)			113,037				100,257				68,511				71,187				65,344
Costs of other operating revenue			592				483				361				228				355
General and administrative (A)			27,267				27,804				18,217				17,641				18,045
Depreciation and amortization			30,856				31,766				26,657				28,288				27,980
Long-lived asset impairment (credit)			1,214				—				(500	)			13,476				2,167
Affiliate credit loss impairment expense			—				—				—				1,400				—
(Gain) loss on asset dispositions, net			(264	)			1,297				(207	)			(53	)			74
Total operating costs and expenses			172,702				161,607				113,039				132,167				113,965
Operating income (loss)			19,060				1,840				(7,310	)			(26,992	)			(21,564	)
Other income (expense):
Foreign exchange gain (loss)			(3,997	)			(1,881	)			946				582				(523	)
Equity in net earnings (losses) of unconsolidated companies			9				(244	)			—				(1,625	)			100
Interest income and other, net			581				349				3,486				1,426				148
Loss on early extinguishment of debt			—				—				—				(11,100	)			—
Loss on warrants			—				(14,175	)			—				—				—
Interest and other debt costs, net			(4,391	)			(4,284	)			(4,175	)			(3,417	)			(3,681	)
Total other expense			(7,798	)			(20,235	)			257				(14,134	)			(3,956	)
Income (loss) before income taxes			11,262				(18,395	)			(7,053	)			(41,126	)			(25,520	)
Income tax (benefit) expense			6,352				6,619				5,218				(3,047	)			887
Net income (loss)			4,910				(25,014	)			(12,271	)			(38,079	)			(26,407	)
Net income (loss) attributable to noncontrolling interests			(470	)			567				(103	)			(145	)			(149	)
Net income (loss) attributable to Tidewater Inc.		$	5,380			$	(25,581	)		$	(12,168	)		$	(37,934	)		$	(26,258	)
Basic income (loss) per common share		$	0.12			$	(0.61	)		$	(0.29	)		$	(0.92	)		$	(0.64	)
Diluted income (loss) per common share		$	0.10			$	(0.61	)		$	(0.29	)		$	(0.92	)		$	(0.64	)
Weighted average common shares outstanding			44,451				41,814				41,412				41,280				41,132
Dilutive effect of warrants, restricted stock units and stock options			7,069				—				—				—				—
Adjusted weighted average common shares			51,520				41,814				41,412				41,280				41,132
Vessel operating margin		$	77,210			$	61,918			$	35,365			$	29,241			$	26,290
Note (A) One-time acquisition, restructuring and integration related costs		$	4,332			$	7,314			$	2,305			$	221			$	112

Contacts

Tidewater Inc.

West Gotcher

Vice President,

Finance and Investor Relations

+1.713.470.5285

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