Energy, Automobile, EV, Renewable News | Tidewater Reports Results for the Three Months Ended March 31, 2022

Tidewater Reports Results for the Three Months Ended March 31, 2022

May 10, 2022

Average Active Fleet Increases by 6 Vessels During the Quarter and Active Utilization Remains Strong at 82.5%

Average Day Rate Increases to $10,687; Highest Since Q4 2020

Vessel Level Gross Margin Increased From 24.7% to 34.0% and Global Fleet Utilization Increased From 52.9% to 70.9% Compared to the First Quarter of 2021

Following the Acquisition of Swire Pacific Offshore, Tidewater Now Operates the Premier Global Fleet Poised to Capitalize on the Significant Increase in Demand for High Quality Offshore Vessels

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.”

In addition to the number of outstanding shares, as of March 31, 2022, the company also has the following in-the-money warrants.

Common shares outstanding			41,716,885
New Creditor Warrants (strike price $0.001 per common share)			465,398
GulfMark Creditor Warrants (strike price $0.01 per common share)			429,812
Total			42,612,095

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.

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 March 31, 2022 and December 31, 2021 as well as the Consolidated Statements of Operations, Consolidated Statements of Equity and Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and for the twelve months ended December 31, 2021. Extracts are drawn from the March 31, 2022 unaudited quarterly financial statements and the December 31, 2021 audited annual financial statements of Tidewater, Inc. All per-share amounts are stated on a diluted basis.

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share data)
	Three Months Ended
	March 31, 2022			March 31, 2021
Revenues:
Vessel revenues	$	103,876		$	80,993
Other operating revenues		1,853			2,511
Total revenues		105,729			83,504
Costs and expenses:
Vessel operating costs		68,511			61,020
Costs of other operating revenues		361			1,067
General and administrative		18,217			16,043
Depreciation and amortization		26,657			29,727
Long-lived asset impairment credit		(500	)		—
(Gain) loss on asset dispositions, net		(207	)		1,948
Total costs and expenses		113,039			109,805
Operating loss		(7,310	)		(26,301	)
Other income (expense):
Foreign exchange gain (loss)		946			(850	)
Equity in net losses of unconsolidated companies		—			(1,849	)
Interest income and other, net		3,486			23
Interest and other debt costs, net		(4,175	)		(4,541	)
Total other income (expense)		257			(7,217	)
Loss before income taxes		(7,053	)		(33,518	)
Income tax expense		5,218			2,009
Net loss		(12,271	)		(35,527	)
Less: Net loss attributable to noncontrolling interests		(103	)		(212	)
Net loss attributable to Tidewater Inc.	$	(12,168	)	$	(35,315	)
Basic loss per common share	$	(0.29	)	$	(0.87	)
Diluted loss per common share	$	(0.29	)	$	(0.87	)
Weighted average common shares outstanding		41,412			40,716
Dilutive effect of stock options and restricted stock		—			—
Adjusted weighted average common shares		41,412			40,716

TIDEWATER INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, except share and par value data)
	March 31, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	136,234		$	149,037
Restricted cash		4,958			1,240
Trade and other receivables, less allowance for credit losses of $1,987 and $1,948 as of March 31, 2022 and 2021, respectively		112,953			86,503
Due from affiliates, less allowance for credit losses of $12,812 and $72,456 as of March 31, 2022 and 2021, respectively		21,191			70,134
Marine operating supplies		13,252			12,606
Assets held for sale		8,591			14,421
Prepaid expenses and other current assets		12,012			8,731
Total current assets		309,191			342,672
Net properties and equipment		677,580			688,040
Deferred drydocking and survey costs		44,362			40,734
Other assets		22,997			24,334
Total assets	$	1,054,130		$	1,095,780

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,696		$	20,788
Accrued costs and expenses		55,141			51,734
Due to affiliates		21,191			61,555
Other current liabilities		25,471			23,865
Total current liabilities		125,499			157,942
Long-term debt		167,997			167,885
Other liabilities and deferred credits		70,892			68,184

Commitments and contingencies

Equity:
Common stock		42			41
Additional paid-in-capital		1,376,934			1,376,494
Accumulated deficit		(690,068	)		(677,900	)
Accumulated other comprehensive loss		2,471			2,668
Total stockholders’ equity		689,379			701,303
Noncontrolling interests		363			466
Total equity		689,742			701,769
Total liabilities and equity	$	1,054,130		$	1,095,780

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In Thousands)
	Three Months Ended
	March 31, 2022			March 31, 2021
Net loss	$	(12,271	)	$	(35,527	)
Other comprehensive loss:
Change in liability of pension plans		(197	)		(71	)
Total comprehensive loss	$	(12,468	)	$	(35,598	)

TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
	Three Months			Three Months
	Ended			Ended
	March 31, 2022			March 31, 2021
Operating activities:
Net loss	$	(12,271	)	$	(35,527	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		17,673			18,470
Amortization of deferred drydocking and survey costs		8,984			11,257
Amortization of debt premiums and discounts		375			1,108
Provision for deferred income taxes		177			30
(Gain) loss on asset dispositions, net		(207	)		1,948
Gain on bargain purchase		(1,300	)		—
Loss on debt extinguishment		—			59
Long-lived asset impairment credit		(500	)		—
Stock-based compensation expense		1,458			1,172
Changes in operating assets and liabilities, net of effects of business acquisition:
Trade and other receivables		(15,570	)		12,758
Changes in due to/from affiliate, net		(20	)		2,738
Accounts payable		2,825			(2,359	)
Accrued expenses		3,207			(4,270	)
Deferred drydocking and survey costs		(12,612	)		(2,722	)
Other, net		(3,843	)		1,054
Net cash provided by (used in) operating activities		(11,624	)		5,716
Cash flows from investing activities:
Proceeds from sales of assets		4,628			10,983
Acquisition of joint venture, net of cash acquired		(1,039	)		—
Additions to properties and equipment		(1,229	)		(1,196	)
Net cash provided by investing activities		2,360			9,787
Cash flows from financing activities:
Principal payments on long-term debt		—			(26,414	)
Debt issuance and modification costs		(263	)		(725	)
Debt extinguishment premium		—			(59	)
Tax on share-based award		(1,017	)		(135	)
Net cash used in financing activities		(1,280	)		(27,333	)
Net change in cash, cash equivalents and restricted cash		(10,544	)		(11,830	)
Cash, cash equivalents and restricted cash at beginning of period		154,276			155,225
Cash, cash equivalents and restricted cash at end of period	$	143,732		$	143,395

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized	$	—		$	3,746
Income taxes		3,200			2,535

Note: Cash, cash equivalents and restricted cash at March 31, 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)			loss			interest			Total
Balance at December 31, 2021	$	41	$	1,376,494		$	(677,900	)	$	2,668		$	466		$	701,769
Total comprehensive income (loss)		—		—			(12,168	)		(197	)		(103	)		(12,468	)
Issuance of common stock		1		(1	)		—			—			—			—
Amortization of share-based awards		—		441			—			—			—			441
Balance at March 31, 2022	$	42	$	1,376,934		$	(690,068	)	$	2,471		$	363		$	689,742

Balance at December 31, 2020	$	41	$	1,371,809		$	(548,931	)	$	(804	)	$	1,157		$	823,272
Total comprehensive income (loss)		—		—			(35,315	)		(71	)		(212	)		(35,598	)
Amortization of share-based awards		—		1,037			—			—			—			1,037
Balance at March 31, 2021	$	41	$	1,372,846		$	(584,246	)	$	(875	)	$	945		$	788,711

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
	March 31, 2022				March 31, 2021
Vessel revenues:
Americas	$	28,444	27	%	$	26,224	32	%
Middle East/Asia Pacific		25,115	24	%		24,414	30	%
Europe/Mediterranean		23,919	23	%		14,749	18	%
West Africa		26,398	26	%		15,606	19	%
Total vessel revenues	$	103,876	100	%	$	80,993	100	%
Vessel operating costs:
Crew costs	$	40,837	39	%	$	35,162	43	%
Repair and maintenance		9,461	9	%		9,437	12	%
Insurance		1,384	1	%		623	1	%
Fuel, lube and supplies		7,076	7	%		5,860	7	%
Other		9,753	9	%		9,938	12	%
Total vessel operating costs		68,511	66	%		61,020	75	%
Vessel operating margin (A)	$	35,365	34	%	$	19,973	25	%

Note (A): Vessel operating margin equals revenues less vessel operating costs and excludes general and administrative expenses and depreciation and amortization.

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
	March 31, 2022					March 31, 2021
Vessel operating profit (loss):
Americas	$	(82	)	(0	)%	$	(1,651	)	(2	)%
Middle East/Asia Pacific		290		0	%		(1,853	)	(2	)%
Europe/Mediterranean		(2,429	)	(2	)%		(8,021	)	(10	)%
West Africa		3,215		3	%		(6,767	)	(8	)%
Other operating profit		1,492		1	%		1,444		2	%
		2,486		2	%		(16,848	)	(20	)%

Corporate expenses (A)		(10,503	)	(10	)%		(7,505	)	(9	)%
Gain (loss) on asset dispositions, net		207		0	%		(1,948	)	(2	)%
Long-lived asset impairments and other		500		1	%		—		0	%
Operating loss	$	(7,310	)	(7	)%	$	(26,301	)	(31	)%

Note (A): General and administrative expenses for the three months ended March 31, 2022 and 2021 include stock-based compensation of $1.5 million and $1.2 million, respectively. In addition, vessel operating and general and administrative costs for the three months ended March 31, 2022 and 2021, include $0.1 million and $0.1 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
	March 31,			December 31,			September 30,			June 30,			March 31,
	2022			2021			2021			2021			2021
Revenues:
Vessel revenues	$	103,876		$	100,428		$	91,634		$	88,514		$	80,993
Other operating revenues		1,853			4,747			767			1,439			2,511
Total revenues		105,729			105,175			92,401			89,953			83,504
Costs and expenses:
Vessel operating costs (A)		68,511			71,187			65,344			64,263			61,020
Costs of other operating revenue		361			228			355			581			1,067
General and administrative (A)		18,217			17,641			18,045			16,787			16,043
Depreciation and amortization		26,657			28,288			27,980			28,549			29,727
Long-lived asset impairment (credit) and other		(500	)		13,476			2,167			—			—
Affiliate credit loss impairment expense (credit)		—			1,400			—			(1,000	)		—
(Gain) loss on asset dispositions, net		(207	)		(53	)		74			932			1,948
Total operating costs and expenses		113,039			132,167			113,965			110,112			109,805
Operating loss		(7,310	)		(26,992	)		(21,564	)		(20,159	)		(26,301	)
Other income (expense):
Foreign exchange gain (loss)		946			582			(523	)		422			(850	)
Equity in net earnings (losses) of unconsolidated companies		—			(1,625	)		100			52			(1,849	)
Interest income and other, net		3,486			1,426			148			8			23
Loss on early extinguishment of debt		—			(11,100	)		—			—			—
Interest and other debt costs, net		(4,175	)		(3,417	)		(3,681	)		(3,944	)		(4,541	)
Total other expense		257			(14,134	)		(3,956	)		(3,462	)		(7,217	)
Loss before income taxes		(7,053	)		(41,126	)		(25,520	)		(23,621	)		(33,518	)
Income tax (benefit) expense		5,218			(3,047	)		887			6,026			2,009
Net loss		(12,271	)		(38,079	)		(26,407	)		(29,647	)		(35,527	)
Net loss attributable to noncontrolling interests		(103	)		(145	)		(149	)		(185	)		(212	)
Net loss attributable to Tidewater Inc.	$	(12,168	)	$	(37,934	)	$	(26,258	)	$	(29,462	)	$	(35,315	)
Basic loss per common share	$	(0.29	)	$	(0.92	)	$	(0.64	)	$	(0.72	)	$	(0.87	)
Diluted loss per common share	$	(0.29	)	$	(0.92	)	$	(0.64	)	$	(0.72	)	$	(0.87	)
Weighted average common shares outstanding		41,412			41,280			41,132			40,899			40,716
Dilutive effect of stock options and restricted stock		—			—			—			—			—
Adjusted weighted average common shares		41,412			41,280			41,132			40,899			40,716

Vessel operating margin	$	35,365		$	29,241		$	26,290		$	24,251		$	19,973

Note (A) One-time restructuring and integration related costs	$	2,305		$	221		$	112		$	795		$	103

TIDEWATER INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)
	March 31,			December 31,			September 30,			June 30,			March 31,
	2022			2021			2021			2021			2021
ASSETS
Current assets:
Cash and cash equivalents	$	136,234		$	149,037		$	127,414		$	131,157		$	131,858
Restricted cash		4,958			1,240			24,092			20,284			9,061
Trade and other receivables, net		112,953			86,503			86,015			90,229			99,865
Due from affiliates, less allowances		21,191			70,134			68,217			64,922			62,474
Marine operating supplies		13,252			12,606			13,335			15,404			15,676
Assets held for sale		8,591			14,421			17,891			17,214			31,214
Prepaid expenses and other current assets		12,012			8,731			13,129			15,953			13,594
Total current assets		309,191			342,672			350,093			355,163			363,742
Net properties and equipment		677,580			688,040			709,324			731,659			754,707
Deferred drydocking and survey costs		44,362			40,734			40,510			40,372			46,648
Other assets		22,997			24,334			23,146			24,539			23,833
Total assets	$	1,054,130		$	1,095,780		$	1,123,073		$	1,151,733		$	1,188,930

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	23,696		$	20,788		$	18,042		$	16,189		$	14,622
Accrued costs and expenses		55,141			51,734			52,133			50,532			48,466
Due to affiliates		21,191			61,555			59,571			59,759			56,356
Current portion of long-term debt		—			—			140,995			7,355			18,201
Other current liabilities		25,471			23,865			29,139			28,825			35,003
Total current liabilities		125,499			157,942			299,880			162,660			172,648
Long-term debt		167,997			167,885			14,139			148,612			148,337
Other liabilities and deferred credits		70,892			68,184			74,442			80,723			79,234


Equity:
Common stock		42			41			41			41			41
Additional paid-in-capital		1,376,934			1,376,494			1,375,215			1,373,727			1,372,846
Accumulated deficit		(690,068	)		(677,900	)		(639,966	)		(613,708	)		(584,246	)
Accumulated other comprehensive income (loss)		2,471			2,668			(1,289	)		(1,082	)		(875	)
Total stockholders’ equity		689,379			701,303			734,001			758,978			787,766
Noncontrolling interests		363			466			611			760			945
Total equity		689,742			701,769			734,612			759,738			788,711
Total liabilities and equity	$	1,054,130		$	1,095,780		$	1,123,073		$	1,151,733		$	1,188,930

Supplemental information
Due from related parties, net of due to related parties:
Sonatide (Angola)	$	—		$	8,579		$	8,646		$	5,163		$	6,118