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Tidewater Reports Results for the Three-Months and Year Ended December 31, 2018

HOUSTON--(BUSINESS WIRE)--

Tidewater Inc. (TDW) announced today revenue for the three-months ended December 31, 2018, of $110.2 million and a net loss for the same period of $90.5 million (or $2.83 per common share), and revenue for the year ended December 31, 2018 of $406.5 million and a corresponding net loss of $171.5 million (or $6.45 per common share). Excluding certain costs outlined below, net loss for the three-months ended December 31, 2018 was $13.2 million (or $0.42 per common share) and net loss for the year ended December 31, 2018 was $65.5 million (or $2.45 per common share).

John T. Rynd, Tidewater’s President and Chief Executive Officer, commented, “Tidewater exhibited in 2018 key attributes that continue to demonstrate its leadership position in the global OSV industry. Our dedicated focus on maximizing revenue, cost control and capital discipline resulted in being both cash flow positive from operating activities and cash flow positive from investing activities for the full year 2018. In addition to these significant operational achievements, we completed the most noteworthy industry merger of the year. Tidewater’s platform enables value creation through its scalability and global position, and we will continue to look for opportunities to enhance these attributes in 2019.

“Our team has made substantial progress implementing our merger integration plan. Our operational shore based footprint has been rapidly reduced, with the closing of five overlapping facilities that included the consolidation of all corporate operations into the existing Tidewater headquarters in Houston. On announcement of the deal we committed to bringing the combined historical G&A run rate of $145 million down to $100 million on an annualized basis by the end of 2019. Based on the integration success we have achieved thus far and additional synergies we believe we can create by taking the best practices of both companies, we are committed to reducing that 2019 annualized exit run rate further, to $90 million, and we are continuing to look for additional savings. I am also very pleased that the optimization of the combined vessel fleet is progressing well, with several active and stacked vessels finding incremental employment at higher margins across the broader geographic footprint serviced by Tidewater – operating margin that could not have been captured by either company on its own.

“Our capital discipline focus, including fleet rationalization, working capital management, and disciplined investments in vessels, contributed significantly to our positive cash flow from operating and investing activities in 2018. We once again led our sector in selling stacked vessels out of the industry or to recycling yards in 2018. We will continue this commitment in 2019 and beyond to foster industry balance.”

Mr. Rynd concluded, “We are proud of our differentiated position as the strongest player in the OSV industry. Our 2019 goals reflect our commitment to value creation by exceeding our targeted merger synergies, growing our cash flow positive operations, maintaining our capital discipline, and continuing to provide our customers around the world with safe and reliable performance.”

As more fully explained in the company’s Form 10-K for the year ended December 31, 2018, on November 15, 2018 (the “Merger Date”), the company completed its merger with GulfMark Offshore, Inc. (“GulfMark”). GulfMark’s results are included in our consolidated results beginning on the Merger Date.

Included in the $90.5 million ($2.83 per common share) net loss for the three months ending December 31, 2018 and the $171.5 million ($6.45 per common share) net loss for the year ending December 31, 2018 were the following costs:

     
Three Months Year
Ended Ended
December 31, December 31,
2018     2018
(In millions, except per share data)           per share             per share

Non-cash long-lived asset impairments that resulted from impairment reviews

$ 36.9       1.15   61.1       2.30
Non-cash impairment to the due from affiliate balance 20.1 0.63 20.1 0.76

Make-whole premium related to the early repayment of the outstanding balance of GulfMark’s Term Loan Facility

8.1 0.25 8.1 0.31

General and administrative expenses related to the exit of leased offices in Houston, Texas; New Orleans and St. Rose, Louisiana; and Aberdeen, Scotland

5.5 0.17 5.5 0.21

General and administrative expenses related to professional services related to the business combination with GulfMark

4.5 0.14 9.0 0.34

General and administrative expenses for severance and similar expenses related to integrating Tidewater and GulfMark operations subsequent to the Merger Date

    2.2       0.07       2.2       0.08

Total

  $ 77.3       2.41       106.0       4.00

Common shares, New Creditor Warrants, GulfMark Creditor Warrants, and the sum of common shares, New Creditor Warrants and GulfMark Creditor Warrants outstanding at December 31, 2018 were 36,978,280, 2,220,857, 2,189,709 and 41,388,846, 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 and year ended December 31, 2018 on Friday, March 1, 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 February 28, 2019, and will continue until 11:59 p.m. Central Time on March 3, 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 48102498.

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 March 28, 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)

 
Successor  
Three Months   Three Months
Ended Ended
    December 31, 2018     December 31, 2017  
Revenues:  
Vessel revenues $ 108,527 101,313
Other operating revenues     1,707       3,140  
      110,234       104,453  
Costs and expenses:
Vessel operating costs 74,967 68,201
Costs of other operating revenues 733 1,519
General and administrative (A) 36,487 30,373
Vessel operating leases 91
Depreciation and amortization 20,101 12,195
Loss (gain) on asset dispositions, net (8,938 ) (6,612 )
Impairment of due from affiliate 20,083
Long-lived asset impairments     36,878       16,777  
      180,311       122,544  
Operating loss (70,077 ) (18,091 )
Other income (expenses):
Foreign exchange gain (loss) 1,455 (349 )
Equity in net earnings (losses) of unconsolidated companies (3,871 ) 825
Interest income and other, net 5,799 1,898
Reorganization items (2,419 )
Loss on early extinguishment of debt (8,119 )
Interest and other debt costs, net     (7,708 )     (7,769 )
      (12,444 )     (7,814 )
Loss before income taxes (82,521 ) (25,905 )
Income tax expense     7,856       (2,706 )
Net loss $ (90,377 ) (23,199 )
Less: Net income (loss) attributable to noncontrolling interests     132       374  
Net loss attributable to Tidewater Inc.   $ (90,509 )     (23,573 )
Basic loss per common share   $ (2.83 )     (1.02 )
Diluted loss per common share   $ (2.83 )     (1.02 )
Weighted average common shares outstanding (B) 31,974,802 23,137,909
Dilutive effect of stock options and restricted stock            
Adjusted weighted average common shares (B)     31,974,802       23,137,909  

Note (A):  The company did not incur any restructuring-related professional services costs during the three months ended December 31, 2018 (Successor), but did incur professional services costs related to the combination with GulfMark during the three months ended December 31, 2018 of $4.5 million. General and administrative expenses for the three months ended December 31, 2018 (Successor) and December 31, 2017 (Successor), included stock-based compensation of $3.4 million and $2.6 million, respectively. In addition, general and administrative costs for the three months ended December 31, 2018 include $5.5 million in lease exit costs and $2.2 million of  severance and similar costs related to integrating Tidewater and GulfMark operations subsequent to the Merger Date.

 

Note (B):  Common shares, New Creditor Warrants, GulfMark Creditor Warrants, and the sum of common shares, New Creditor Warrants and GulfMark Creditor Warrants outstanding at December 31, 2018 were 36,978,280, 2,220,857, 2,189,709 and 41,388,846, 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 INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

Successor   Predecessor  
  Period from Period from
Year August 1, 2017 January 1, 2017
Ended through through
    December 31, 2018     December 31, 2017   July 31, 2017  
Revenues:    
Vessel revenues $ 397,206 171,884 303,501
Other operating revenues     9,314       6,869     8,617  
      406,520       178,753     312,118  
Costs and expenses:
Vessel operating costs 269,580 120,502 197,283
Costs of other operating revenues 5,530 3,792 5,037
General and administrative (C) 110,023 46,619 83,559
Vessel operating leases 1,215 14,607
Depreciation and amortization 58,293 20,337 85,039
Gain on asset dispositions, net (10,624 ) (6,616 ) (9,625 )
Impairment of due from affiliate 20,083
Long-lived asset impairments     61,132       16,777     249,606  
      514,017       202,626     625,506  
Operating loss (107,497 ) (23,873 ) (313,388 )
Other income (expenses):
Foreign exchange loss 106 (407 ) (2,516 )
Equity in net earnings (losses) of unconsolidated companies (18,864 ) 2,130 7,627
Interest income and other, net 11,294 2,771 3,974
Reorganization items (4,299 ) (1,396,905 )
Loss on early extinguishment of debt (8,119 )
Interest and other debt costs, net     (30,439 )     (13,009 )   (32,188 )
      (46,022 )     (12,814 )   (1,420,008 )
Loss before income taxes (153,519 ) (36,687 ) (1,733,396 )
Income tax expense     18,252       2,039     483  
Net loss $ (171,771 ) (38,729 ) (1,733,879 )
Less: Net income (loss) attributable to noncontrolling interests     (254 )     540     7,884  
Net loss attributable to Tidewater Inc.   $ (171,517 )     (39,266 )   (1,741,763 )
Basic loss per common share   $ (6.45 )     (1.82 )   (36.98 )
Diluted loss per common share   $ (6.45 )     (1.82 )   (36.98 )
Weighted average common shares outstanding (D) 26,589,883 21,539,143 47,104,117
Dilutive effect of stock options and restricted stock                
Adjusted weighted average common shares (D)     26,589,883       21,539,143     47,104,117  

Note (C):  The company did not incur any restructuring-related professional services costs during the year ended December 31, 2018 (Successor), but did incur professional services costs related to the combination with GulfMark during the year ended December 31, 2018 of $9.0 million. Restructuring-related professional services costs included in general and administrative expenses for the period from January 1, 2017 through July 31, 2017 (Predecessor), were $23.4 million. General and administrative expenses for the year ended December 31, 2018 (Successor), the period from August 1, 2017 through December 31, 2017 (Successor) and the period from January 1, 2017 through July 31, 2017 (Predecessor), included stock-based compensation of $13.4 million, $1.2 million and $0.8 million, respectively. In addition, general and administrative costs for the year ended December 31, 2018 includes $5.5 million in lease exit costs and $2.2 million of severance and similar costs related to integrating Tidewater and GulfMark operations subsequent to the Merger Date.

 

Note (D):  Common shares, New Creditor Warrants, GulfMark Creditor Warrants, and the sum of common shares, New Creditor Warrants and GulfMark Creditor Warrants outstanding at December 31, 2018 were 36,978,280, 2,220,857, 2,189,709 and 41,388,846, 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 INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value data)

Successor  
December 31,   December 31,
ASSETS   2018     2017  
Current assets:  
Cash and cash equivalents $ 371,791 432,035
Restricted cash 25,953 21,300
Trade and other receivables, net 111,266 114,184
Due from affiliates 132,951 230,315
Marine operating supplies 29,505 28,220
Other current assets     11,836       19,130  
Total current assets     683,302       845,184  
Investments in, at equity, and advances to unconsolidated companies 1,039 29,216
Net properties and equipment 1,089,857 850,935
Deferred drydocking and survey costs 22,215 3,208
Other assets     31,326       31,052  
Total assets   $ 1,827,739       1,759,595  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 31,939 38,497
Accrued expenses 61,784 54,806
Due to affiliates 34,972 99,448
Accrued property and liability losses 2,726 2,585
Current portion of long-term debt 8,568 5,103
Other current liabilities     18,366       19,693  
Total current liabilities     158,355       220,132  
Long-term debt 430,436 443,057
Accrued property and liability losses 4,123 2,471
Other liabilities and deferred credits 89,902 71,991
 

Commitments and contingencies

 
Equity:

Common stock of $0.001 par value, 125,000,000 shares authorized, 36,978,280 and 22,115,916 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively

37 22
Additional paid-in capital 1,352,388 1,059,120

Accumulated deficit

(210,783 ) (39,266 )

Accumulated other comprehensive income (loss)

    2,194       (147 )
Total stockholders’ equity 1,143,836 1,019,729
Noncontrolling interests     1,087       2,215  
Total equity 1,144,923 1,021,944
Total liabilities and equity   $ 1,827,739       1,759,595  
 

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Successor  
Three Months   Three Months
Ended Ended
    December 31, 2018     December 31, 2017  
Net loss $

(90,377

)   (23,199 )
Other comprehensive income:

Unrealized gains (losses) on available for sale securities, net of tax of $0 and $0

 

 

174

Change in supplemental executive retirement plan liability, net of tax of $0 and $0

2,214 (1,582 )

Change in pension plan minimum liability, net of tax of $0 and $0

1,919 (357 )

Change in other benefit plan minimum liability, net of tax of $0 and $0

    (1,536 )     1,536  

Total comprehensive loss

  $

(87,780

)     (23,428 )
     
Successor   Predecessor  
  Period from Period from
Year August 1, 2017 January 1, 2017
Ended through through
    December 31, 2018     December 31, 2017   July 31, 2017  
Net loss $ (171,771 )   (38,726 )   (1,733,879 )
Other comprehensive income:

Unrealized gains (losses) on available for sale securities, net of tax of $0, $0 and $61

(256 ) 256 67

Change in loss on derivative contract, net of tax of $0, $0 and $823

1,317

Change in supplemental executive retirement plan liability, net of tax of $0, $0 and ($927)

2,214 (1,582 ) (2,257 )

Change in pension plan minimum liability, net of tax of $0, $0 and $215

1,919 (357 ) (195 )

Change in other benefit plan minimum liability, net of tax of $0, $0 and ($2,046)

    (1,536 )     1,536     (5,267 )
Total comprehensive loss   $ (169,430 )     (38,873 )   (1,740,214 )
null
     

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Successor   Predecessor  
  Period from Period from
Year

August 1, 2017

January 1, 2017
Ended through through
    December 31, 2018     December 31, 2017   July 31, 2017  
Operating activities:    
Net loss $ (171,771 ) (38,726 ) (1,733,879 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Reorganization items 1,368,882
Depreciation and amortization 51,332 20,131 85,039
Amortization of deferred drydocking and survey costs 6,961 206
Amortization of debt premium and discounts (1,856 ) (715 )
Provision for deferred income taxes 572 (7,743 )
Gain on asset dispositions, net (10,624 ) (6,616 ) (9,625 )
Impairment of due from affiliate 20,083
Long-lived asset impairments 61,132 16,777 249,606
Loss on debt extinguishment 8,119

Changes in investments in, at equity, and advances to unconsolidated companies

28,177 (4,531 ) (9,314 )
Compensation expense - stock-based 13,406 3,731 819
Excess tax liability on stock option activity 4,927
Changes in assets and liabilities, net:
Trade and other receivables 9,088 2,312 57,337
Changes in due to/from related parties, net 28,644 (2,373 ) 26,262
Marine operating supplies (1,955 ) 1,229 (320 )
Other current assets 10,893 10,305 (8,298 )
Accounts payable (15,174 ) (1,259 ) (10,715 )
Accrued expenses (13,489 ) (24,896 ) 24,339
Accrued property and liability losses 141 (176 ) (813 )
Other current liabilities 1,332 (4,026 ) (7,131 )
Other liabilities (2,023 ) (1,089 ) 4,768
Cash paid for deferred drydocking and survey costs (25,968 ) (3,414 )
Other, net     6,921       (2,416 )   14,422  
Net cash provided by (used in) operating activities     3,941       (35,546 )   48,563  
Cash flows from investing activities: