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Tidewater Reports Results for the Three and Six Months Ended June 30, 2022

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·15 min read
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  • Completed Acquisition of Swire Pacific Offshore

  • Adjusted EBITDA Increased From $8.7 million to $39.1 million Compared to the Second Quarter of 2021

  • Average Day Rate Increases to $12,544; Up 17% sequentially; Highest since Q3 2016

  • Vessel Level Cash Margin Increased From 27.4% to 38.2% and Global Fleet Utilization Increased From 57.0% to 75.5% Compared to the Second Quarter of 2021

  • Average Active Vessels Increased From 118 to 172 Compared to the Second Quarter of 2021, Inclusive of the Swire Pacific Offshore Fleet

HOUSTON, August 04, 2022--(BUSINESS WIRE)--Tidewater Inc. (NYSE:TDW) announced today revenue for the three and six months ended June 30, 2022 of $163.4 million and $269.2 million, respectively, compared with $90.0 million and $173.5 million, respectively, for the three and six months ended June 30, 2021. Tidewater's net losses for the three and six months ended June 30, 2022, were $25.6 million ($0.61 per common share) and $37.7 million ($0.91 per common share), respectively, compared with $29.5 million ($0.72 per common share) and $64.8 million ($1.59 per common share), respectively, for the three and six months ended June 30, 2021. Included in the net losses for the three and six months ended June 30, 2022 were merger and severance expenses of $7.3 and $9.6 million, respectively; and loss on warrants of $14.2 million for both periods. Included in the net losses for the six months ended June 30, 2022 were long-lived asset impairment credit and gain on bargain purchase of $1.8 million. Excluding these items, we would have reported a net loss for the three and six months ended June 30, 2022 of $4.1 million ($0.10 per common share) and $15.7 million ($0.38 per common share), respectively. Included in the net losses for the three and six months ended June 30, 2021 were severance expenses of $0.8 and $0.9 million, respectively; and a credit loss impairment credit of $1.0 million for both periods. Excluding these items, we would have reported a net loss for the three and six months ended June 30, 2021 of $29.7 million ($0.73 per common share) and $64.9 million ($1.59 per common share), respectively.

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, "We believe the second quarter of 2022 marks the inflection point in the industry that we have long awaited and is now evident in our financial performance. Revenue, gross margin, average day rate and utilization all improved meaningfully during the second quarter as the building momentum in offshore vessel activity reached critical mass. The second quarter results reflect the impact of the Swire Pacific Offshore (SPO) acquisition, necessarily showing a large jump in revenue and vessels worked, but when viewing the quarter on relative metrics, the improvement is clear. The average day rate improved by nearly $1,900 per day sequentially, which is in excess of the improvement we would typically expect to realize over the course of an entire year in a normal market upcycle. Vessel level cash margin improved to 38%, up approximately four percentage points and continuing to meaningfully outperform the 30% target we have discussed in recent quarters. These improvements during the quarter, particularly the move in day rates, speak to continued demand growth as offshore activity continues to increase and as the vessel supply fundamentals continue to work in our favor given the shortage of available vessels on the market today. We expect activity to continue to improve throughout the remainder of 2022 with another likely step-up in 2023.

"As previously mentioned, we closed on the SPO acquisition on April 22, 2022. Post-closing of the transaction, the legacy SPO fleet contributed approximately $43.2 million of revenue during the second quarter and generated a vessel level cash margin in line with the total fleet vessel level cash margin of 38%. The legacy SPO business incurred approximately $3.9 million of general and administrative expense during the second quarter, down meaningfully from the pre-close run rate as we achieved some early successes in reducing general and administrative expenses as we continue to target $20.0 million in annual general and administrative costs synergies. Overall, we remain confident in our ability to realize total annual cost synergies of $45.0 million, including $25.0 million in annual synergies from operating expenses.

"While there are a variety of macroeconomic factors driving recent market volatility, the current commercial environment for offshore vessel activity remains robust. Commodity prices remain at attractive levels, recent volatility notwithstanding, providing a compelling economic rationale for our customers to continue driving their spending plans and operational goals. The supply of capable and available vessels continues to tighten. As our vessels continue to roll off older contracts, we are taking advantage of the tight supply environment to drive day rates in a strong demand environment. To illustrate this point, during the second quarter, 24 of our vessels entered new contracts of various duration that will ultimately provide a nearly 50% aggregate uplift in day rate as compared to the previous aggregate contracted day rates. Commercial momentum for new contracts is broad-based, evident in all of our operating regions and in all of our vessel classes, with West Africa and our largest PSV class notable drivers of this improvement. We remain mindful of inflation pressures that inevitably impact our business in our commercial strategy and believe that the market tightness will allow for net pricing improvements well in-excess of the impact of any inflation we may incur.

"The various initiatives we have executed over the past several years have prepared us to reap the benefits of the rapidly improving market we are currently experiencing. Building a strong leadership team positioned us to weather market challenges and position the company to take advantage of improved market fundamentals. Optimizing the organizational cost structure positioned us to maximize margins. Streamlining the fleet positioned us to offer the highest quality vessels to the market that can command the best pricing. Addressing the balance sheet positioned us to operate with a high degree of financial flexibility. Acquiring SPO positioned us to transform the company into a global leader in offshore support vessels with additional exposure to the world’s highest growth markets.

"The combination of initiatives we have successfully executed, combined with the market dynamics we are currently experiencing, has set up Tidewater as one of the largest and most efficient OSV operators globally, and has the company poised to create significant value over the coming quarters and years. The combination of high operating leverage and low financial leverage positions Tidewater to generate significant cash returns from its operating activities and the option to further leverage those returns. We remain committed to pursuing executional excellence in all facets of our business. Moving forward, we expect to continue to drive utilization and day rates, execute on realizing continued efficiencies within the business, including our commitment to realizing the synergies associated with SPO, and to opportunistically pursue platform-enhancing, value accretive strategic transactions.

"This is an exciting time for the company, and we expect all of Tidewater’s stakeholders to benefit from the continued improvement in the business. I want to thank all of our employees, including our new employees from SPO, for their continued hard work to position Tidewater to capitalize on what looks to be the best market for offshore vessels in recent memory."

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

Common shares outstanding

42,029,882

New Creditor Warrants (strike price $0.001 per common share)

395,401

GulfMark Creditor Warrants (strike price $0.01 per common share)

309,351

SPO acquisition warrants (strike price $0.001 per common share)

8,100,000

Total

50,834,634

Tidewater will hold a conference call to discuss results for the three and six months ending June 30, 2022 on August 5, 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 August 5, 2022 and will continue until 11:59 p.m. Central Time on September 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 June 30, 2022 and December 31, 2021; the Consolidated Statements of Operations and Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021; and the Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021. Extracts are drawn from the June 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

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Revenues:

Vessel revenues

$

162,175

$

88,514

$

266,051

$

169,507

Other operating revenues

1,272

1,439

3,125

3,950

Total revenues

163,447

89,953

269,176

173,457

Costs and expenses:

Vessel operating costs

100,257

64,263

168,768

125,283

Costs of other operating revenues

483

581

844

1,648

General and administrative

27,804

16,787

46,021

32,830

Depreciation and amortization

31,766

28,549

58,423

58,276

Long-lived asset impairment credit

(500

)

Affiliate credit loss impairment credit

(1,000

)

(1,000

)

Loss on asset dispositions, net

1,297

932

1,090

2,880

Total costs and expenses

161,607

110,112

274,646

219,917

Operating income (loss)

1,840

(20,159

)

(5,470

)

(46,460

)

Other income (expense):

Foreign exchange gain (loss)

(1,881

)

422

(935

)

(428

)

Equity in net earnings (losses) of unconsolidated companies

(244

)

52

(244

)

(1,797

)

Interest income and other, net

349

8

3,835

31

Loss on warrants

(14,175

)

(14,175

)

Interest and other debt costs, net

(4,284

)

(3,944

)

(8,459

)

(8,485

)

Total other expense

(20,235

)

(3,462

)

(19,978

)

(10,679

)

Loss before income taxes

(18,395

)

(23,621

)

(25,448

)

(57,139

)

Income tax expense

6,619

6,026

11,837

8,035

Net loss

(25,014

)

(29,647

)

(37,285

)

(65,174

)

Less: Net income (loss) attributable to noncontrolling interests

567

(185

)

464

(397

)

Net loss attributable to Tidewater Inc.

$

(25,581

)

$

(29,462

)

$

(37,749

)

$

(64,777

)

Basic loss per common share

$

(0.61

)

$

(0.72

)

$

(0.91

)

$

(1.59

)

Diluted loss per common share

$

(0.61

)

$

(0.72

)

$

(0.91

)

$

(1.59

)

Weighted average common shares outstanding

41,814

40,899

41,614

40,808

Adjusted weighted average common shares

41,814

40,899

41,614

40,808

TIDEWATER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, except share and par value data)

June 30, 2022

December 31, 2021

ASSETS

Current assets:

Cash and cash equivalents

$

87,981

$

149,037

Restricted cash

1,240

1,240

Trade and other receivables, less allowance for credit losses of $2,288 and $1,948 as of June 30, 2022 and 2021, respectively

189,259

86,503

Due from affiliates, less allowance for credit losses of $12,215 and $72,456 as of June 30, 2022 and 2021, respectively

70,134

Marine operating supplies

21,182

12,606

Assets held for sale

6,862

14,421

Prepaid expenses and other current assets

23,259

8,731

Total current assets

329,783

342,672

Net properties and equipment

838,612

688,040

Deferred drydocking and survey costs

53,661

40,734

Indemnification assets

30,269

Other assets

30,410

24,334

Total assets

$

1,282,735

$

1,095,780

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

30,537

$

20,788

Accrued costs and expenses

109,212

51,734

Due to affiliates

61,555

Other current liabilities

47,872

23,865

Total current liabilities

187,621

157,942

Long-term debt

168,279

167,885

Other liabilities and deferred credits

85,188

68,184

Commitments and contingencies

Equity:

Common stock

42

41

Additional paid-in-capital

1,554,561

1,376,494

Accumulated deficit

(715,649

)

(677,900

)

Accumulated other comprehensive loss

1,763

2,668

Total stockholders' equity

840,717

701,303

Noncontrolling interests

930

466

Total equity

841,647

701,769

Total liabilities and equity

$

1,282,735

$

1,095,780

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In Thousands)

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Net loss

$

(25,014

)

$

(29,647

)

$

(37,285

)

$

(65,174

)

Other comprehensive loss:

Unrealized loss on note receivable

(846

)

(846

)

Change in liability of pension plans

138

(207

)

(59

)

(278

)

Total comprehensive loss

$

(25,722

)

$

(29,854

)

$

(38,190

)

$

(65,452

)

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Six Months

Six Months

Ended

Ended

June 30, 2022

June 30, 2021

Operating activities:

Net loss

$

(37,285

)

$

(65,174

)

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

Depreciation and amortization

40,287

36,694

Amortization of deferred drydocking and survey costs

18,136

21,582

Amortization of debt premiums and discounts

765

1,986

Provision for deferred income taxes

145

648

Loss on asset dispositions, net

1,090

2,880

Gain on bargain purchase

(1,300

)

Loss on debt extinguishment

59

Affiliate credit loss impairment credit

(1,000

)

Long-lived asset impairment credit

(500

)

Loss on warrants

14,175

Stock-based compensation expense

3,421

2,676

Changes in assets and liabilities, net of effects of business acquisition:

Trade and other receivables

(35,085

)

22,394

Changes in due to/from affiliate, net

(20

)

4,693

Accounts payable

8,072

(792

)

Accrued expenses

2,354

(2,074

)

Deferred drydocking and survey costs

(31,063

)

(6,771

)

Other, net

(16,419

)

(7,234

)

Net cash provided by (used in) operating activities

(33,227

)

10,567

Cash flows from investing activities:

Proceeds from sales of assets

8,163

29,560

Acquisitions, net of cash acquired

(29,525

)

Additions to properties and equipment

(5,380

)

(1,861

)

Net cash provided by (used in) investing activities

(26,742

)

27,699

Cash flows from financing activities:

Principal payments on long-term debt

(37,901

)

Debt issuance and modification costs

(371

)

(855

)

Debt extinguishment premium

(59

)

Tax on share-based award

(2,176

)

(758

)

Net cash used in financing activities

(2,547

)

(39,573

)

Net change in cash, cash equivalents and restricted cash

(62,516

)

(1,307

)

Cash, cash equivalents and restricted cash at beginning of period

154,276

155,225

Cash, cash equivalents and restricted cash at end of period

$

91,760

$

153,918

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest, net of amounts capitalized

$

7,626

$

7,028

Income taxes

$

9,330

$

6,609

Supplemental disclosure of noncash investing activities:

Acquisition of SPO

$

162,648

$

Supplemental disclosure of noncash financing activities:

Warrants issued for SPO acquisition

$

162,648

$

Note: Cash, cash equivalents and restricted cash at June 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)

loss

interest

Total

Balance at March 31, 2022

$

42

$

1,376,934

$

(690,068

)

$

2,471

$

363

$

689,742

Total comprehensive income (loss)

(25,581

)

(708

)

567

(25,722

)

SPO acquisition warrants

176,823

176,823

Amortization of share-based awards

804

804

Balance at June 30, 2022

$

42

$

1,554,561

$

(715,649

)

$

1,763

$

930

$

841,647

Balance at March 31, 2021

$

41

$

1,372,846

$

(584,246

)

$

(875

)

$

945

$

788,711

Total comprehensive loss

(29,462

)

(207

)

(185

)

(29,854

)

Amortization of share-based awards

881

881

Balance at June 30, 2021

$

41

$

1,373,727

$

(613,708

)

$

(1,082

)

$

760

$

759,738

Six Months Ended

Accumulated