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Tidewater Reports Results for the Three and Twelve -Months Ended December 31, 2019

Tidewater Inc. (NYSE:TDW) announced today revenue for the three and twelve months ended December 31, 2019, of $118.8 million and $486.5 million, and net losses for the same periods of $59.9 million (or $1.52 per common share) and $141.7 million (or $3.71 per common share), respectively. Excluding long-lived asset impairments and one time expenses, net losses for the three and twelve months ended December 31, 2019 were $25.2 million (or $0.64 per common share) and $91.4 million (or $2.39) per common share), respectively. Highlights for the three months ended December 31, 2019:

  • Generated revenue of $118.8 million, an 8%, or $8.5 million, increase from the same period in the prior year; driven by a 4% increase in average day rate and a 4% increase in active vessel days.
  • Continued significant streamlining of shore-based operations resulted in a pro forma run rate for general and administrative expense of $81.0 million.
  • Active utilization increased to 81.4% for the fourth quarter, up from 80.4% in the third quarter.
  • Net cash flows provided by operating activities for the quarter was a positive of $5.3 million, and free cash flow for the quarter was a positive $12.5 million.
  • Completed a bond consent and $125 million tender to improve debt covenants, lower overall debt, and reduce pro-forma negative interest carry by $8.0 million.
  • Continued high-grading active fleet by identifying 46 lower specification vessels to be disposed of in 2020.

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, "Over the course of 2019, Tidewater has taken a series of strategic actions to streamline our fleet and increase our efficiency across the entire organization. These actions were part of our continuing efforts to achieve our near-term goal of becoming free cash flow positive and part of our longer-term goal of attaining an acceptable free cash flow return on our assets.

"The team made significant strides in the fourth quarter and we are pleased to report that the business had positive operating cash flow in the fourth quarter, was free cash flow positive in the fourth quarter, and the strong performance in the fourth quarter also resulted in the business being free cash flow positive for the entire year of 2019. Free cash flow for the quarter was $12.5 million and $5.5 million for the year.

"Market conditions around the world continue to improve. Our anticipated revenue for 2020 is similar to our total revenue for 2019, but with fewer ships as we continue to high-grade the active fleet. As of this call, we have $440 million of backlog for 2020, which is over 90% of the revenue we recorded for the prior year. Key operational objectives for 2020 are to continue to improve our active utilization percentage, which results in higher profitability per vessel day, and to lower our annual spend on dry docks and vessel modifications by over $20 million as compared to 2019.

"Through process improvements, headcount reductions and technology implementation, the team successfully achieved merger-related general and administrative cost synergies of $65 million, significantly exceeding the original target of $45 million. We finished 2019 with an annual general and administrative spend run rate of $81 million, which was $19 million lower than our original $100 million target, and substantially lower than Tidewater’s pre-merger general and administrative spend on a stand-alone basis. The improvement in active utilization, reduced spend on drydocks and vessel modifications, and reduced spend on general and administrative costs should result in us nearing our longer-term goal of attaining an acceptable free cash flow return on our assets.

"Part of achieving our return objectives is positioning the Tidewater fleet for the future by obtaining the highest disposal value for our fleet in lay-up. You will notice that we took the step of separating the value of the ongoing fleet from the value of the fleet we intend to sell or scrap, which we are now presenting on the balance sheet as ‘assets held for sale’, which is stated at our expected net realizable value. Marking that portion of the fleet to net realizable value resulted in an impairment in the fourth quarter of $26.7 million, and results in a value of assets to be disposed of totaling $39.3 million. The value that remains on the balance sheet as Net Property and Equipment reflects the book value of the fleet we intend to remain operational."

Kneen concluded, "All of these actions are part of our efforts to achieve our goal of maximizing free cash flow generation while preserving our pristine balance sheet. We believe the result is a nimble, efficient and scalable platform that will enable us to support our growth initiatives and further advance our leadership position in the offshore industry. This accomplishment was the result of our more than 5,000 employees pulling together to create a new culture focused on establishing the safest, most profitable, most investable offshore vessel company in the world."

Included in the net loss for the three months and nine months ended December 31, 2019 were general and administrative expenses of $2.1 million ($0.05 per common share) and $12.6 million ($0.33 per common share), respectively, for severance and similar expenses related to integrating Tidewater and GulfMark operations.

In addition to the number of outstanding shares, as of December 31, 2019, the company also has the following in the money warrants.

Common shares outstanding

 

 

39,941,327

 

 

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

 

 

821,308

 

 

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

 

 

1,165,066

 

 

Total

 

 

41,927,701

 

 

Tidewater will hold a conference call to discuss results for the three and twelve months ended December 31, 2019 on Tuesday, March 3, 2020 at 8:00 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 asking for the "Tidewater" call just prior to the scheduled start time. A replay of the conference call will be available beginning at 10:30 a.m. Central Time on March 3, 2020 and will continue until 11:59 p.m. Central Time on April 3, 2020. To access the replay, call 1-888-843-7419 (1-630-652-3042 if calling from outside the U.S.). The conference call ID number is 49441491.

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 April 3, 2020.

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 beginning on the next page.

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vessel revenues

$

 

116,539

 

 

 

108,527

 

 

 

477,015

 

 

 

397,206

 

Other operating revenues

 

 

2,237

 

 

 

1,707

 

 

 

9,534

 

 

 

9,314

 

Total revenues

 

 

118,776

 

 

 

110,234

 

 

 

486,549

 

 

 

406,520

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vessel operating costs

 

 

85,935

 

 

 

74,967

 

 

 

329,196

 

 

 

269,580

 

Costs of other operating revenues

 

 

916

 

 

 

733

 

 

 

2,800

 

 

 

5,530

 

General and administrative (A)

 

 

22,406

 

 

 

36,487

 

 

 

103,716

 

 

 

110,023

 

Depreciation and amortization

 

 

28,226

 

 

 

20,101

 

 

 

101,931

 

 

 

58,293

 

Gain on asset dispositions, net

 

 

(1,217

)

 

 

(8,938

)

 

 

(2,263

)

 

 

(10,624

)

Impairment of due from affiliate

 

 

 

 

 

20,083

 

 

 

 

 

 

20,083

 

Asset impairments and other

 

 

32,549

 

 

 

36,878

 

 

 

37,773

 

 

 

61,132

 

Total operating costs and expenses

 

 

168,815

 

 

 

180,311

 

 

 

573,153

 

 

 

514,017

 

Operating loss

 

 

(50,039

)

 

 

(70,077

)

 

 

(86,604

)

 

 

(107,497

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

 

(945

)

 

 

1,455

 

 

 

(1,269

)

 

 

106

 

Equity in net earnings (losses) of

unconsolidated companies

 

 

(2,717

)

 

 

(3,871

)

 

 

(3,152

)

 

 

(18,864

)

Interest income and other

 

 

690

 

 

 

5,799

 

 

 

6,598

 

 

 

11,294

 

Loss on debt extinguishment

 

 

 

 

 

(8,119

)

 

 

 

 

 

(8,119

)

Interest and other debt costs

 

 

(6,282

)

 

 

(7,708

)

 

 

(29,068

)

 

 

(30,439

)

Total other expense

 

 

(9,254

)

 

 

(12,444

)

 

 

(26,891

)

 

 

(46,022

)

Loss before income taxes

 

 

(59,293

)

 

 

(82,521

)

 

 

(113,495

)

 

 

(153,519

)

Income tax expense

 

 

1,281

 

 

 

7,856

 

 

 

27,724

 

 

 

18,252

 

Net loss

$

 

(60,574

)

 

 

(90,377

)

 

 

(141,219

)

 

 

(171,771

)

Less: Net income (loss) attributable to

noncontrolling interests

 

 

(721

)

 

 

132

 

 

 

524

 

 

 

(254

)

Net loss attributable to Tidewater Inc.

$

 

(59,853

)

 

 

(90,509

)

 

 

(141,743

)

 

 

(171,517

)

Basic loss per common share

$

 

(1.52

)

 

 

(2.83

)

 

 

(3.71

)

 

 

(6.45

)

Diluted loss per common share

$

 

(1.52

)

 

 

(2.83

)

 

 

(3.71

)

 

 

(6.45

)

Weighted average common shares

outstanding (B)

 

 

39,504,154

 

 

 

31,974,802

 

 

 

38,204,934

 

 

 

26,589,883

 

Dilutive effect of stock options and restricted

stock

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted weighted average common shares

 

 

39,504,154

 

 

 

31,974,802

 

 

 

38,204,934

 

 

 

26,589,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vessel operating margin

$

 

30,604

 

 

 

33,560

 

 

 

147,819

 

 

 

127,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note (A): Restructuring and merger-related

items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional services costs included in

general and administrative expenses

related to the business combination

with GulfMark

$

 

 

 

 

4,465

 

 

 

88

 

 

 

4,553

 

Integration related costs related to the

business combination with GulfMark

 

 

2,123

 

 

 

 

 

 

12,527

 

 

 

10,404

 

Total

$

 

2,123

 

 

 

4,465

 

 

 

12,615

 

 

 

14,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note (B):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issuable upon the exercise of New

Creditor Warrants held by U.S. citizens

included in weighted average shares

outstanding

 

 

 

 

 

2,547

 

 

 

 

 

 

2,547

 

Total shares outstanding including warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

 

 

 

 

 

 

 

 

39,941,327

 

 

 

26,589,883

 

New Creditor Warrants

(strike price $0.001 per common share)

 

 

 

 

 

 

 

 

 

 

821,308

 

 

 

2,220,857

 

GulfMark Creditor Warrants

(strike price $0.01 per common share)

 

 

 

 

 

 

 

 

 

 

1,165,066

 

 

 

2,189,709

 

Total

 

 

 

 

 

 

 

 

 

 

41,927,701

 

 

 

41,388,846

 

TIDEWATER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value data)

 

 

December 31,

 

 

 

December 31,

 

ASSETS

 

2019

 

 

 

2018

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

218,290

 

 

 

 

371,791

 

Restricted cash

 

 

5,755

 

 

 

 

25,953

 

Trade and other receivables, net

 

 

110,180

 

 

 

 

111,266

 

Due from affiliates

 

 

125,972

 

 

 

 

132,951

 

Marine operating supplies

 

 

21,856

 

 

 

 

29,505

 

Assets held for sale

 

 

39,287

 

 

 

 

 

Prepaid expenses and other current assets

 

 

15,956

 

 

 

 

11,836

 

Total current assets

 

 

537,296

 

 

 

 

683,302

 

Investments in, at equity, and advances to

unconsolidated companies

 

 

 

 

 

 

1,039

 

Net properties and equipment

 

 

938,961

 

 

 

 

1,089,857

 

Deferred drydocking and survey costs

 

 

66,936

 

 

 

 

22,215

 

Other assets

 

 

36,335

 

 

 

 

31,326

 

Total assets

$

 

1,579,528

 

 

 

 

1,827,739

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

$

 

27,501

 

 

 

 

31,939

 

Accrued costs and expenses

 

 

74,000

 

 

 

 

61,784

 

Due to affiliates

 

 

50,186

 

 

 

 

34,972

 

Current portion of long-term debt

 

 

9,890

 

 

 

 

8,568

 

Other current liabilities

 

 

24,100

 

 

 

 

21,092

 

Total current liabilities

 

 

185,677

 

 

 

 

158,355

 

Long-term debt

 

 

279,044

 

 

 

 

430,436

 

Other liabilities and deferred credits

 

 

98,397

 

 

 

 

94,025

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

Common stock

 

 

40

 

 

 

 

37

 

Additional paid-in capital

 

 

1,367,521

 

 

 

 

1,352,388

 

Accumulated deficit

 

 

(352,526

)

 

 

 

(210,783

)

Accumulated other comprehensive income (loss)

 

 

(236

)

 

 

 

2,194

 

Total stockholders’ equity

 

 

1,014,799

 

 

 

 

1,143,836

 

Noncontrolling interests

 

 

1,611

 

 

 

 

1,087

 

Total equity

 

 

1,016,410

 

 

 

 

1,144,923

 

Total liabilities and equity

$

 

1,579,528

 

 

 

 

1,827,739

 

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

December 31,
2019

 

 

December 31,
2018

 

 

 

December 31,
2019

 

 

December 31,
2018

 

Net loss

 

$

(60,574

)

 

$

(90,377

)

 

 

$

(141,219

)

 

$

(171,771

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available for sale

securities, net of tax of $0, $0, $0, and $0,

respectively

 

 

 

 

 

 

 

 

 

 

 

 

(256

)

Change in supplemental executive retirement plan

pension liability, net of tax of $0, $0, $0 and

$0, respectively

 

 

(2,121

)

 

 

2,214

 

 

 

 

(2,121

)

 

 

2,214

 

Change in pension plan minimum liability,

net of tax of $0, $0, $0, and $0, respectively

 

 

(309

)

 

 

1,919

 

 

 

 

(309

)

 

 

1,919

 

Change in other benefit plan minimum liability,

net of tax of $0, $0, $0 and $0, respectively

 

 

 

 

 

(1,536

)

 

 

 

 

 

 

(1,536

)

Total comprehensive loss

 

$

(63,004

)

 

$

(87,780

)

 

 

$

(143,649

)

 

$

(169,430

)

...

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Twelve Months
Ended

 

 

Three Months
Ended

 

 

Twelve Months
Ended

 

 

 

December 31,
2019

 

 

December 31,
2019

 

 

December 31,
2018

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(141,219

)

 

 

(60,574

)

 

 

(171,771

)

Adjustments to reconcile net loss to net cash provided by

(used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

77,045

 

 

 

19,416

 

 

 

51,332

 

Amortization of deferred drydocking and survey costs

 

 

24,886

 

 

 

8,810

 

 

 

6,961

 

Amortization of debt premiums and discounts

 

 

(4,877

)

 

 

(3,315

)

 

 

(1,856

)

Provision for deferred income taxes

 

 

672

 

 

 

(87

)

 

 

572

 

Gain on asset dispositions, net

 

 

(2,263

)

 

 

(1,216

)

 

 

(10,624

)

Impairment of due from affiliate

 

 

 

 

 

 

 

 

20,083

 

Long-lived asset impairments and other

 

 

37,773

 

 

 

32,549

 

 

 

61,132

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

8,119

 

Changes in investments in, at equity, and advances to

unconsolidated companies

 

 

1,039

 

 

 

604

 

 

 

28,177

 

Compensation expense – stock based

 

 

19,603

 

 

 

3,004

 

 

 

13,406

 

Changes in operating assets and liabilities, net:

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

1,086

 

 

 

12,882

 

 

 

9,088

 

Changes in due to/from affiliate, net

 

 

22,193

 

 

 

7,295

 

 

 

28,644

 

Accounts payable

 

 

(4,439

)

 

 

3,828

 

 

 

(15,174

)

Accrued expenses

 

 

8,189

 

 

 

18,763

 

 

 

(13,489

)

Deferred drydocking and survey costs

 

 

(70,437

)

 

 

(26,736

)

 

 

(25,968

)

Other, net

 

 

(674

)

 

 

(9,942

)

 

 

7,427

 

Net cash provided by (used in) operating activities

 

 

(31,423

)

 

 

5,281

 

 

 

(3,941

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of assets

 

 

28,847

 

 

 

3,755

 

 

 

46,115

 

Additions to properties and equipment

 

 

(17,998

)

 

 

(4,067

)

 

 

(21,391

)

Cash and cash equivalents from stock based merger

 

 

 

 

 

 

 

 

43,806

 

Net cash provided by (used in) investing activities

 

 

10,849

 

 

 

(312

)

 

 

68,530

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(133,693

)

 

 

(127,235

)

 

 

(105,169

)

Premium paid for redemption of secured notes

 

 

(11,402

)

 

 

(11,402

)

 

 

 

Cash payments to General Unsecured Creditors