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Tidewater Reports Results for the Three-Months Ended March 31, 2019

HOUSTON--(BUSINESS WIRE)--

Tidewater Inc. (TDW) announced today revenue for the three-months ended March 31, 2019, of $122.1 million and a net loss for the same period of $21.7 million (or $0.58 per common share). Excluding certain costs outlined below, net loss for the three-months ended March 31, 2019 was $18.0 million (or $0.49 per common share).

John T. Rynd, Tidewater’s President and Chief Executive Officer, commented, “March 31 marked the first full quarter with Tidewater and GulfMark operating as a combined company and I’m pleased that the benefits of this merger are immediately evident. With a larger vessel fleet, revenues were up 33% as compared to the same period in 2018 and up 11% from the quarter ended December 31, 2018. Demonstrating the value of leveraging Tidewater’s existing global platform and our team’s progress towards meeting our merger synergy targets, G&A continued its downward trend during the quarter, reaching the same level as the quarter ended March 31, 2018. We continue to make progress in improving our shore base cost structure, and we are now positioning ourselves to exit 2019 with an annual G&A run rate of $87 million.

Capital discipline, both working capital discipline and capital expenditure discipline, is key to exceeding the return on capital objectives we have set for ourselves. The entire team is focused on obtaining these goals and our long-term compensation incentives are driven by return on capital targets. Discipline on the capital tied up in our fleet in lay-up is also part of that focus and considerable progress has been made towards meeting our ambitious goal of selling or recycling 40 additional vessels by the end of the year, with 16 vessel dispositions already completed in the first quarter and more in process.

There are strong indications that E&P spending offshore will increase this year, driving steadily improving drilling activity and the availability of OSVs in several key markets within which we have a large presence, such as the North Sea and West Africa, has shown signs of tightening as we enter the seasonally more active summer season. With strong OSV sector leadership positions in almost every market in the world, Tidewater is best-positioned to benefit from the upside as the market continues improves through 2019.”

Included in the $21.7 million ($0.58 per common share) net loss for the three months ended March 31, 2019 were the following costs were general and administrative expenses for severance and similar expenses related to integrating Tidewater and GulfMark operations of $3.7 million ($0.10 per common share).

Common shares, New Creditor Warrants, GulfMark Creditor Warrants, and the sum of common shares, New Creditor Warrants and GulfMark Creditor Warrants outstanding at March 31, 2019 were 37,381,954, 2,070,463, 2,046,795 and 41,499,212, respectively. New Creditor Warrants and GulfMark Creditor Warrants are each exercisable to acquire one common share at strike prices of $0.001 and $0.01, respectively.

Tidewater will hold a conference call to discuss results for the three months ended March 31, 2019 on Tuesday, May 7, 2019 at 10:00 a.m. Central Time. Investors and interested parties may listen to the teleconference via telephone by calling 1-888-771-4371 if calling from the U.S. or Canada (1-847-585-4405 if calling from outside the U.S.) and ask for the “Tidewater” call just prior to the scheduled start. A replay of the conference call will be available beginning at 12:00 p.m. Central Time on May 7, 2019, and will continue until 11:59 p.m. Central Time on May 9, 2019. To hear the replay, call 1-888-843-7419 (1-630-652-3042 if calling from outside the U.S.). The conference call ID number is 48556943.

A simultaneous webcast of the conference call will be available online at the Tidewater Inc. website, www.tdw.com. The online replay will be available until June 7, 2019.

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 over 60 years of experience supporting offshore energy exploration and production activities worldwide.

Note: all per-share amounts are stated on a diluted basis.

Financial information is displayed on the next page.

 
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

 
  Three Months   Three Months
Ended Ended
    March 31, 2019     March 31, 2018  
Revenues:  
Vessel revenues $ 119,662 87,494
Other operating revenues     2,487       3,999  
Total revenues     122,149       91,493  
Costs and expenses:
Vessel operating costs 82,203 61,364
Costs of other operating revenues 764 2,474
General and administrative (A) 27,140 23,565
Depreciation and amortization 22,932 12,017
Gain on asset dispositions, net (1,270 ) (1,919 )
Long-lived asset impairments           6,186  
Total operating costs and expenses     131,769       103,687  
Operating loss (9,620 ) (12,194 )
Other income (expense):
Foreign exchange loss (508 ) (348 )
Equity in net losses of unconsolidated companies (62 ) (15,439 )
Interest income and other, net 2,470 (128 )
Interest and other debt costs, net     (7,736 )     (7,599 )
Total other income (expense)     (5,836 )     (23,514 )
Loss before income taxes (15,456 ) (35,708 )
Income tax expense     5,830       3,321  
Net loss $ (21,286 ) (39,029 )
Less: Net income attributable to noncontrolling interests     445       143  
Net loss attributable to Tidewater Inc.   $ (21,731 )     (39,172 )
Basic loss per common share     (0.58 )     (1.67 )
Diluted loss per common share     (0.58 )     (1.67 )
Weighted average common shares outstanding 37,179 23,425
Dilutive effect of stock options and restricted stock            
Adjusted weighted average common shares     37,179       23,425  
Total shares outstanding including warrants     March 31, 2019     March 31, 2018
Common shares outstanding     37,382     23,988
New Creditor Warrants (strike price $0.001 per common share) 2,070 6,022
GulfMark Creditor Warrants (strike price $0.01 per common share)     2,047    
Total     41,499     30,010

Note (A):  General and administrative expenses for the three months ended March 31, 2019 and March 31, 2018, included stock-based compensation of $5.6 million and $3.0 million, respectively. In addition, general and administrative costs for the three months ended March 31, 2019 include $3.7 million of severance and similar costs related to integrating Tidewater and GulfMark operations subsequent to the Merger Date.

 
TIDEWATER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value data)

 
  March 31,   December 31,
ASSETS   2019   2018
Current assets:  
Cash and cash equivalents $ 391,060 371,791
Restricted cash 6,975 25,953
Trade and other receivables, net 112,853 111,266
Due from affiliates 119,049 132,951
Marine operating supplies 29,337 29,505
Other current assets     14,844       11,836  
Total current assets     674,118       683,302  
Investments in, at equity, and advances to unconsolidated companies 774 1,039
Properties and equipment, net 1,065,297 1,089,857
Deferred drydocking and survey costs 30,602 22,215
Other assets     38,507       31,326  
Total assets   $ 1,809,298       1,827,739  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 29,739 31,939
Accrued costs and expenses 56,025 61,784
Due to affiliates 40,245 34,972
Current portion of long-term debt 9,957 8,568
Other current liabilities     20,115       21,092  
Total current liabilities     156,081       158,355  
Long-term debt 427,436 430,436
Other liabilities 98,096 94,025
 
Contingencies
 
Equity:
Common stock of $0.001 par value, 125,000,000 shares authorized,

37,381,954 and 36,978,280 shares issued and outstanding

at March 31, 2019 and December 31, 2018, respectively

37 37
Additional paid-in capital 1,356,436 1,352,388
Accumulated deficit (232,514 ) (210,783 )
Accumulated other comprehensive income     2,194       2,194  
Total stockholders’ equity 1,126,153 1,143,836
Noncontrolling interests     1,532       1,087  
Total equity 1,127,685 1,144,923
Total liabilities and equity   $ 1,809,298       1,827,739  
 
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

 
  Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
Net loss $ (21,286 )   (39,029 )
Other comprehensive income:
Unrealized losses on available for sale

securities, net of tax of $61

          (299 )
Total comprehensive loss   $ (21,286 )     (39,328 )
 
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
  Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
Operating activities:  
Net loss $ (21,286 ) (39,029 )
Adjustments to reconcile net loss to net cash provided by (used in) operating

activities:

Depreciation and amortization 19,034 11,380
Amortization of deferred drydocking and survey costs 3,898 638
Amortization of debt premium and discounts (505 ) (443 )
Provision for deferred income taxes 169
Gain on asset dispositions, net (1,270 ) (1,919 )
Long-lived asset impairments 6,186
Changes in investments in, at equity, and advances

to unconsolidated companies

265 15,713
Compensation expense - stock-based 5,627 2,956
Changes in assets and liabilities, net:
Trade and other receivables (2,204 ) (1,662 )
Changes in due to/from affiliates, net 19,175 1,083
Accounts payable (2,200 ) 7,284
Accrued costs and expenses (5,626 ) 845
Cash paid for deferred drydocking and survey costs (12,285 ) (8,860 )
Other, net     (5,949 )     (156 )
Net cash used in operating activities     (3,157 )     (5,984 )
Cash flows from investing activities:
Proceeds from sales of assets 9,651 9,492
Additions to properties and equipment     (3,116 )     (1,677 )
Net cash provided by investing activities     6,535       7,815  
Cash flows from financing activities:
Principal payment on long-term debt (1,509 ) (1,471 )
Payments to General Unsecured Creditors (8,377 )
Taxes on share-based awards (1,578 )
Other           1  
Net cash used in financing activities     (3,087 )     (9,847 )
Net change in cash, cash equivalents and restricted cash 291 (8,016 )
Cash, cash equivalents and restricted cash at beginning of period     397,744       453,335  
Cash, cash equivalents and restricted cash at end of period   $ 398,035       445,319  
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 8,319 8,152
Income taxes   $ 4,415       6,429  
 
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

 
      Accumulated    
Additional other Non
Common paid-in Accumulated comprehensive controlling
(In thousands)   stock   capital   deficit     income (loss)     interest   Total
Balance at December 31, 2018 $ 37   1,352,388   (210,783 ) 2,194 1,087 1,144,923
Total comprehensive loss (21,731 ) 445 (21,286 )
Issuance of common stock from exercise of warrants 1 1
Amortization/cancellation of restricted stock units         4,047               4,047  
Balance at March 31, 2019   $ 37     1,356,436     (232,514 )   2,194     1,532   1,127,685  
                                     
Balance at December 31, 2017 $ 22 1,059,120 (39,266 ) (147 ) 2,215 1,021,944
Total comprehensive loss (39,172 ) (299 ) 143 (39,328 )
Stock option expense (98 ) (98 )
Issuance of common stock 2 2
Amortization of restricted stock units         2,961               2,961  
Balance at March 31, 2018     24     1,061,983     (78,438 )   (446 )   2,358   985,481  

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

  Quarter Ended   Quarter Ended
March 31, 2019     March 31, 2018
(In thousands)         %           %  
Vessel revenues:      
Americas $ 35,279 29 % 26,081 30 %
Middle East/Asia Pacific 20,456 17 % 18,388 21 %
Europe/Mediterranean Sea 28,558 24 % 9,623 11 %
West Africa     35,369   30 %   33,402       38 %
Total vessel revenues   $ 119,662   100 %   87,494       100 %
Vessel operating costs:
Crew costs $ 48,145 40 % 34,224 39 %
Repair and maintenance 9,701 8 % 7,704 9 %
Insurance and loss reserves 2,178 2 % (1,071 ) (1 %)
Fuel, lube and supplies 9,345 8 % 9,012 10 %
Other     12,834   11 %   11,495       13 %
Total vessel operating costs     82,203   69 %   61,364       70 %
Vessel operating margin (B)     37,459   31 %   26,130       30 %

Note (B):  Vessel operating margin can be recalculated by adjusting vessel operating profit (loss) for general and administrative expenses and depreciation and amortization expenses.

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

  Quarter Ended   Quarter Ended
March 31, 2019   March 31, 2018
(In thousands)           %           %  
Vessel operating profit (loss):    
Americas $ (1,030 ) (1 %) 4,911 5 %
Middle East/Asia Pacific (1,162 ) (1 %) (2,253 ) (2 %)
Europe/Mediterranean Sea (3,317 ) (3 %) (3,554 ) (4 %)
West Africa 8,115 7 % (1,753 ) (2 %)
Other operating profit     1,704     1 %   1,506     2 %
4,310 3 % (1,143 ) (1 %)
Corporate expenses (C) (15,200 ) (12 %) (6,784 ) (7 %)
Gain (loss) on asset dispositions, net 1,270 1 % 1,919 2 %
Long-lived asset impairments             (6,186 )   (7 %)
Operating loss     (9,620 )   (8 %)   (12,194 )   (13 %)

Note (C):  The company incurred integration costs related to the combination with GulfMark during the three months ended March 31, 2019 of $3.7 million. General and administrative expenses for the quarter ended March 31, 2019 and March 31, 2018, included stock-based compensation of $5.6 million and $3.0 million, respectively.

...
 
TIDEWATER INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – QUARTERLY DATA

(Unaudited)

(In thousands, except share and per share data)

 
  Three Months Ended
 
March 31,   December 31,   September 30,   June 30,   March 31,
      2019     2018     2018     2018     2018
Revenues:
Vessel revenues $ 119,662 108,527 97,011 104,174 87,494
Other operating revenues     2,487     1,707     2,181     1,427     3,999  
Total revenues     122,149     110,234     99,192     105,601     91,493  
Costs and expenses:
Vessel operating costs 82,203 74,967 65,237 68,012 61,364
Costs of other operating revenues 764 733 1,681 642 2,474
General and administrative (D) 27,140 36,487 25,546 24,425 23,565
Depreciation and amortization 22,932 20,101 13,390 12,785 12,017
Gain on asset dispositions, net (1,270 ) (8,938 ) 1,571 (1,338 ) (1,919 )
Impairment of due from affiliate 20,083
Asset impairments         36,878     16,853     1,215     6,186  
Total operating costs and expenses     131,769     180,311     124,278     105,741     103,687  
Operating loss (9,620 ) (70,077 ) (25,086 ) (140 ) (12,194 )
Other income (expense):
Foreign exchange gain (loss) (508 ) 1,455 1 (1,002 ) (348 )
Equity in net earnings (losses) of unconsolidated companies (62 ) (3,871 ) 56 390 (15,439 )
Interest income and other 2,470 5,799 2,709 2,914 (128 )
Loss on debt extinguishment (8,119 )
Interest and other debt costs     (7,736 )   (7,708 )   (7,585 )   (7,547 )   (7,599 )
Total other income (expense)     (5,836 )   (12,444 )   (4,819 )   (5,245 )   (23,514 )
Loss before income taxes (15,456 ) (82,521 ) (28,905 ) (5,385 ) (35,708 )
Income tax expense     5,830     7,856     1,278     5,797     3,321  
Net loss $ (21,286 ) (90,377 ) (31,183 ) (11,182 ) (39,029 )
Less: Net income (loss) attributable to noncontrolling interests     445     132     (287 )   (242 )   143  
Net loss attributable to Tidewater Inc.   $ (21,731 )   (90,509 )   (30,896 )   (10,940 )   (39,172 )
Basic loss per common share   $ (0.58 )   (2.83 )   (1.16 )   (0.44 )   (1.67 )
Diluted loss per common share   $ (0.58 )   (2.83 )   (1.16 )   (0.44 )   (1.67 )
Weighted average common shares outstanding (E) 37,178,580 31,974,802 26,614,507 24,654,220 23,424,943
Dilutive effect of stock options and restricted stock                      
Adjusted weighted average common shares     37,178,580     31,974,802     26,614,507     24,654,220     23,424,943  
                                 
Vessel operating margin   $ 37,459     33,560     31,774     36,162     26,130  
 

Note (D):  Restructuring and merger-related items:

Professional services costs included in general and administrative expenses related to the business combination with GulfMark $ 88 4,465 3,036 1,547