Tidewater president and CEO Quintin Kneen says traits level to “as compelling of a long-term market backdrop for our business as we have ever seen.”
The world’s largest operator of offshore service vessels, Houston-headquartered Tidewater Inc.(NYSE:TDW), yesterday reported its outcomes for the three and 6 months ended June 30, 2023. Highlights included:
- Revenue of $215.0 million, an 11.3% improve from the primary quarter of 2023
- Average day fee elevated to $16,042 per day, $1,418 increased than the primary quarter of 2023
- Net revenue of $22.6 million, a rise of practically $12.0 million from the primary quarter of 2023
- Adjusted EBITDA of $72.0 million, a rise of $12.9 million from the primary quarter of 2023
- Composite Q2 2023 modern time period contract day fee up 10.9% to $23,498
What all this can imply for the corporate’s share value stays to be seen. But for individuals who look to Tidewater as a barometer with which to evaluate the general outlook for the worldwide offshores providers business there was loads to unpack in president and CEO Quintin Kneen’s evaluation of the outcomes. Here’s a few of what he mentioned:
“The second quarter continued the trend of new quarterly cyclical revenue and global average day rate high-water marks. Consolidated global average day rates improved approximately $1,400 per day sequentially, approaching a $5,500 per day increase since the end of 2021. The pace of our day rate improvement picked up from the prior quarter as commercial and tendering activity remained robust and an improvement in seasonal factors helped drive shorter term day rate realization. The momentum in day rates is being driven by a global supply shortage of large and small offshore vessels, and as a result each of our five segments realized meaningful day rate expansions during the second quarter. Expected long-term increases in offshore capital spending, the increasingly constructive tone of conversations with our customers in terms of vessel contract duration and future start dates for projects, coupled with the existing and expected future constraints in vessel supply, point to as compelling of a long-term market backdrop for our business as we have ever seen.”
Kneen’s remarks on offshore capital spending and the tone of buyer conversations are according to views simply expressed by Diamond Offshore Drilling president and CEO Bernie Wolford, Jr. (See earlier report).
“We are excited about the addition of the high-quality, high-specification fleet of PSVs we acquired from Solstad Offshore and have already successfully integrated five of these vessels into the Tidewater vessel operational infrastructure,” continued Kneen. “Driven largely by the completion of the Solstad Offshore vessel acquisition, income for the third quarter needs to be up not less than $80.0 million. We up to date our view of the mixed fleets and of the marketplace for the rest of the yr and we reiterate our 2023 annual steerage of roughly $1.03 billion of income and roughly $500.0 million of vessel working margin.
“Revenue for the quarter totaled $215.0 million, a rise of $21.9 million, or 11.3% sequentially. Gross margin improved materially in the course of the quarter, pushed by day fee will increase throughout the fleet. Vessel gross margin expanded over 4 proportion factors to 43.8%, a fee of enchancment we anticipate persevering with for the rest of the yr. Utilization declined modestly to 79.4% from 80.6% within the prior quarter. Utilization was down modestly in the course of the second quarter as we withheld capability and repositioned the fleet to maximise long-term day charges on a worldwide foundation, which resulted in additional days of frictional unemployment as we focused increased margin geographies for our vessels. The alternative value of this technique to maximise day charges was roughly $8.0 million within the second quarter. Drydock days had been up roughly 17.0% sequentially, however drydock expense was down 31.8% to $21.4 million within the second quarter, bringing the whole year-to-date drydock spend to $52.7 million. With the extra 37 PSVs we acquired from Solstad Offshore in early July, we now anticipate to incur roughly $87.0 million in drydock expense for the complete yr of 2023, up from the roughly $77.0 million we beforehand anticipated for the Tidewater fleet.
“Turning to our regional working outcomes, the North Sea skilled a big enchancment in income as seasonal elements abated, with day charges up roughly $3,400, or 23.0%, pushing up vessel money margin by over 9 proportion factors to 45.8%. West Africa continued to see momentum in the course of the quarter with day charges up roughly $1,400 per day, or 11.0%, and vessel money margin increasing by over seven proportion factors to 53.6%. Interestingly, day charges within the Middle East had been up roughly $770 per day, or 8.0%; this motion is especially notable because the Middle East is a market which generally doesn’t see giant day fee actions. Day fee growth within the Americas and Asia Pacific had been up roughly 2.0% and three.0%, respectively, sequentially following a interval of sturdy day fee growth within the first quarter pushed by a significant variety of new contracts. Additionally, within the Americas area in the course of the second quarter we reserved roughly $4.0 million associated to a particular objective buyer receivable stability that we decided to be uncollectible.
“The material improvement in day rates, revenue, and operating margin is possible due to the enormous efforts of our dedicated and high performing employees. We are excited to welcome our new employees from Solstad Offshore and remain committed to providing a safe and rewarding environment for our employees as we move forward together building the safest, most sustainable, most reliable, most profitable, high specification offshore energy support vessel fleet in the world.”
