Tidewater Inc.
Q1 2021 Earnings Call Transcript

Published: 10 May 2021

[Operator:]

Welcome to the Tidewater reports results for the three months ending March 31, 2021. My name is John, and I'll be your operator for today's call. Please note, the conference is being recorded. And I will now turn the call over to Jason Stanley, Vice President of ESG and Investor Relations. Jason, you may begin.

[Jason Stanley:]

Thank you, John. Good morning, everyone, and welcome to Tidewater's earnings conference call for the three months ended March 31, 2021. I'm joined on the call this morning by our President and CEO, Quintin Kneen; our Chief Financial Officer, Sam Rubio; our General Counsel and Corporate Secretary, Daniel Hudson; and our Vice President of Sales and Marketing, Piers Middleton.

[Quintin Kneen:]

Thank you, Jason. Good morning, everyone, and welcome to the First Quarter 2021 Tidewater Earnings Conference Call. Joining me in presenting our prepared remarks, as usual, is Piers Middleton; but also joining me today is Sam Rubio, our newly appointed Chief Financial Officer. I will open the call to some general commentary on the quarter. Piers will cover the markets in the various geographies in which we operate. And then Sam will wrap up the prepared remarks with an overview of income statement, OpEx, G&A, the balance sheet. And then, of course, we'll open it up for questions. The first quarter is often a relatively quiet quarter. This first quarter was relatively quiet. The first quarter is the softest calendar quarter of the year, but I was pleased with the cash generation in the quarter. You may recall from last quarter that the P&L performance was much stronger than we anticipated, but the cash flow generation lagged behind. As often is the case, cash flows caught up to those earnings in the first quarter. Cash flow from operations for the quarter was $5.7 million. Free cash flow was $19.2 million bolstered by working capital inflows and proceeds from vessel sales. We laid out in the press release for you to pick the cash flow measure you like, whether it's cash flow from operations, free cash flow, levered free cash flow, whether or not you want to include asset sales. But whatever measure you pick, it's a positive cash flow measure. Free cash flow for the trailing 12 months was $87.1 million. That includes $39.8 million of asset sales, which we anticipate winding down over the next 12 months. Quarterly revenue was slightly higher than what we expected, but operating costs were also slightly higher.

[Piers Middleton:]

Thank you, Quintin. Good morning, everyone. Before I talk about each of the regions, I just want to make a quick comment around ESG and reiterate Quintin's comments. But at our core, this is something that has always been part of Tidewater's DNA. And it's great that with our recently published sustainability report, we're now able to more clearly showcase our stakeholders our historical as well as our future commitment to ESG. As we look at the first quarter of 2021, we still face strong headwinds in the market going into the year in all regions. As Quintin has just mentioned, Q1 has always tended to be a relatively quiet quarter. But on a global basis, active utilization across the whole fleet was only down 1% at 78% compared to the first quarter of 2020. For the deepwater fleet specifically, we continue to see a rise in active utilization of 6% compared to the first quarter of 2020. Average rates while slightly down from $10,267 per day in Q1 2020 was still a leading industry average of 900 -- $9,993 per day in Q1 2021. Globally, we had 1 more average active vessel working in the first quarter of 2021 than in the fourth quarter of 2020. And the average stacked fleet continued to reduce to 54 vessels in quarter 1 compared to 60 vessels in Q4 2020, a trend that we expect to continue throughout the year. Our Middle East, Asia Pacific region continued to see solid demand relative to the rest of the world with total utilization and average day rates both up from the first quarter 2020. Active utilization for the quarter jumped to 84% compared to 78% in Q1 2020. Our average rates in the region also increased to $8,506 per day compared to $7,863 per day in Q1 2020. Vessel revenue for the quarter was down $400,000 compared to Q1 2020. Going forward, we still expect to see a pickup in demand going into Q2 and Q3 of this year. However, we may see 1 or 2 projects moving slightly to the right due to COVID-related delays in the region. To West Africa where vessel revenues increased by $666,000 during the quarter compared to Q4 2020, average day rates for the region were $8,711 per day, an increase of $200 per day from the previous quarter. As we said throughout last year, West Africa bore the brunt of the downturn in 2020, but we have started to see a small incremental return of demand in Q1, which we expect to grow as we move through the year with the expectation that we will slowly start to reactivate some of our ships in the region to meet the slowly rising demand.

[Sam Rubio:]

Thank you, Piers, and good morning, everyone. I would like to take you through our financial results and also discuss some key components that make up these results and that we believe will be factors in the future. My discussion will focus primarily on quarter-to-quarter results from the fourth quarter of 2020 compared to the first quarter of 2021. As noted on our press earnings release filed yesterday, we reported a net loss for the quarter of $35.3 million or $0.87 per share. Our revenue for the first quarter of 2021 was $83.5 million. This is $8.4 million or 9% less than the fourth quarter of 2020. Active utilization at 78% was slightly higher than the previous quarter but was offset by the decrease in the average day rates mainly in the Americas region. The decrease is a lagging result of higher-value contracts that ended in December and replaced with lower-value, shorter-term contracts. In addition, the fourth and first quarters of any year are subject to mild seasonality as we have less activity in the North Sea.

[Quintin Kneen:]

Thank you, Sam. And on that note, John, we will open it up for any questions.

[Operator:]

[Quintin Kneen:]

Well, John, very good, and thank you, everyone, for listening. We will update you again in August. Goodbye.

[Operator:]

Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. You may now disconnect.