Tidewater Inc 10-Q for FY2023 Q2
Tidewater Inc (TDW)
About this 10-Q
Tidewater Inc filed this 10-Q on August 7, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $214.96M
- up 31.5% from $163.45M a year earlier
- Net income
- $22.58M
- compared with a net loss of $25.58M a year earlier
- Diluted EPS
- $0.43
- compared with -$0.61 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number:
Tidewater Inc.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| |
|
| Accelerated filer ☐ |
| Non-accelerated filer ☐ Emerging Growth Company |
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| Smaller reporting company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, except share and par value data)
| June 30, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | $ | |||||
| Restricted cash | |||||||
| Trade and other receivables, less allowance for credit losses of $ and $ at June 30, 2023 and December 31, 2022, respectively | |||||||
| Marine operating supplies | |||||||
| Assets held for sale | |||||||
| Prepaid expenses and other current assets | |||||||
| Total current assets | |||||||
| Net properties and equipment | |||||||
| Deferred drydocking and survey costs | |||||||
| Indemnification assets | |||||||
| Other assets | |||||||
| Total assets | $ | $ | |||||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | $ | |||||
| Accrued expenses | |||||||
| Current portion of long-term debt | |||||||
| Other current liabilities | |||||||
| Total current liabilities | |||||||
| Long-term debt | |||||||
| Other liabilities | |||||||
| Commitments and contingencies | |||||||
| Equity: | |||||||
| Common stock of $ par value, shares authorized, and shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | |||||||
| Additional paid-in capital | |||||||
| Accumulated deficit | ( | ) | ( | ) | |||
| Accumulated other comprehensive income | |||||||
| Total stockholders’ equity | |||||||
| Noncontrolling interests | ( | ) | |||||
| Total equity | |||||||
| Total liabilities and equity | $ | $ | |||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Vessel revenues | $ | $ | $ | $ | ||||||||||||
| Other operating revenues | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Vessel operating costs | ||||||||||||||||
| Costs of other operating revenues | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Long-lived asset impairment credit | ( | ) | ||||||||||||||
| (Gain) loss on asset dispositions, net | ( | ) | ( | ) | ||||||||||||
| Total costs and expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||
| Foreign exchange loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Equity in net earnings (losses) of unconsolidated companies | ( | ) | ( | ) | ||||||||||||
| Interest income and other, net | ||||||||||||||||
| Loss on warrants | ( | ) | ( | ) | ||||||||||||
| Interest and other debt costs, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | ||||||||||||
| Net income (loss) attributable to Tidewater Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Basic income (loss) per common share | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted income (loss) per common share | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Dilutive effect of warrants, restricted stock units and stock options | ||||||||||||||||
| Adjusted weighted average common shares | ||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In Thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Unrealized loss on note receivable | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in liability of pension plans | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| Six Months |
Six Months |
|||||||
| Ended |
Ended |
|||||||
| June 30, 2023 |
June 30, 2022 |
|||||||
| Operating activities: |
||||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Amortization of deferred drydocking and survey costs |
||||||||
| Amortization of debt premium and discounts |
||||||||
| Provision for deferred income taxes |
||||||||
| (Gain) loss on asset dispositions, net |
( |
) | ||||||
| Gain on pension settlement |
( |
) | ||||||
| Gain on bargain purchase |
( |
) | ||||||
| Long-lived asset impairment credit |
( |
) | ||||||
| Loss on warrants |
||||||||
| Stock-based compensation expense |
||||||||
| Changes in assets and liabilities, net of effects of business acquisition: |
||||||||
| Trade and other receivables |
( |
) | ( |
) | ||||
| Changes in due to/from affiliates, net |
( |
) | ||||||
| Accounts payable |
||||||||
| Accrued expenses |
( |
) | ||||||
| Deferred drydocking and survey costs |
( |
) | ( |
) | ||||
| Other, net |
( |
) | ( |
) | ||||
| Net cash provided by (used in) operating activities |
( |
) | ||||||
| Cash flows from investing activities: |
||||||||
| Proceeds from asset dispositions |
||||||||
| Acquisitions, net of cash acquired |
( |
) | ||||||
| Additions to properties and equipment |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Acquisition of non-controlling interest in a majority owned subsidiary |
( |
) | ||||||
| Debt issuance and modification costs |
( |
) | ||||||
| Tax on share-based awards |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Net change in cash, cash equivalents and restricted cash |
( |
) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period |
||||||||
| Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
(Unaudited)
(In Thousands)
| Six Months |
Six Months |
|||||||
| Ended |
Ended |
|||||||
| June 30, 2023 |
June 30, 2022 |
|||||||
| Supplemental disclosure of cash flow information: |
||||||||
| Cash paid during the period for: |
||||||||
| Interest, net of amounts capitalized |
$ | $ | ||||||
| Income taxes |
$ | $ | ||||||
| Supplemental disclosure of noncash investing activities: |
||||||||
| Acquisition of SPO |
$ | $ | ||||||
| Purchase of three vessels |
$ | $ | ||||||
| Supplemental disclosure of noncash financing activities: |
||||||||
| Warrants issued for SPO acquisition |
$ | $ | ||||||
| Debt incurred for purchase of three vessels |
$ | $ | ||||||
| Cash, cash equivalents and restricted cash at June 30, 2023 includes $2.2 million in long-term restricted cash, which is included in other assets in our condensed consolidated balance sheet. |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In Thousands)
| Three Months Ended |
||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||
| Additional |
other |
Non |
||||||||||||||||||||||
| Common |
paid-in |
Accumulated |
comprehensive |
controlling |
||||||||||||||||||||
| stock |
capital |
deficit |
income (loss) |
interest |
Total |
|||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
| Total comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||||||||||
| Amortization of share-based awards |
||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Balance at March 31, 2022 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
| Total comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| SPO acquisition warrants |
||||||||||||||||||||||||
| Amortization of share-based awards |
||||||||||||||||||||||||
| Balance at June 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
| Six Months Ended |
||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||
| Additional |
other |
Non |
||||||||||||||||||||||
| Common |
paid-in |
Accumulated |
comprehensive |
controlling |
||||||||||||||||||||
| stock |
capital |
deficit |
income (loss) |
interest |
Total |
|||||||||||||||||||
| Balance at December 31, 2022 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
| Total comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||||||||||
| Acquisition of non-controlling interest in a majority owned subsidiary |
— | ( |
) | ( |
) | |||||||||||||||||||
| Amortization of share-based awards |
( |
) | ( |
) | ||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
| Total comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Issuance of common stock |
( |
) | ||||||||||||||||||||||
| SPO acquisition warrants |
||||||||||||||||||||||||
| Amortization of share-based awards |
||||||||||||||||||||||||
| Balance at June 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
| INTERIM FINANCIAL STATEMENTS |
The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive income, cash flows, and changes in stockholders’ equity of Tidewater Inc., a Delaware corporation, and its consolidated subsidiaries, collectively referred to as the “company”, “Tidewater”, “we”, “our”, or “us”.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023 (2022 Annual Report). In the opinion of management, the accompanying financial information reflects all normal recurring adjustments necessary to fairly state our results of operations, financial position and cash flows for the periods presented and are not indicative of the results that may be expected for a full year.
Our financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all subsidiaries (entities in which we have a controlling financial interest), and all intercompany accounts and transactions have been eliminated. We use the equity method to account for equity investments over which we exercise significant influence but do not exercise control and are not the primary beneficiary.
Certain prior year amounts have been reclassified to conform to the current year presentation. Unless otherwise specified, all per share information included in this document is on a diluted basis.
| (2) |
RECENTLY ISSUED OR ADOPTED ACCOUNTING PRONOUNCEMENTS |
In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Disclosures of Supplier Finance Program Obligations, which requires disclosures about supplier finance programs including the nature of the program, activity during the period, changes from period to period and potential magnitude. The guidance is effective for annual periods beginning after December 15, 2022, with early adoption permitted, and most disclosures are applied retrospectively to each period in which a balance sheet is presented. We adopted this standard on January 1, 2023 and it did not have any impact on our consolidated financial statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Topic 805, Business Combinations, to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The guidance is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted. We adopted this standard on January 1, 2023, and it did not have any impact on our consolidated financial statements and related disclosures.
| (3) | ACQUISITION OF SWIRE PACIFIC OFFSHORE HOLDINGS LTD |
On April 22, 2022 (Closing Date), we acquired Swire Pacific Offshore Holdings Ltd., a limited company organized under the laws of Bermuda (SPO), which at closing owned
Assets acquired and liabilities assumed in the business combination were recorded at their estimated fair values as of the Closing Date under the acquisition method of accounting.
As of March 31, 2023, the following recorded fair value amounts for the assets acquired and liabilities assumed were final, with
| (In Thousands) | ||||
| Assets | ||||
| Cash | $ | |||
| Trade and other receivables | ||||
| Marine operating supplies | ||||
| Assets held for sale | ||||
| Prepaid expenses and other current assets | ||||
| Net properties and equipment | ||||
| Indemnification assets (A) | ||||
| Other assets | ||||
| Total assets | ||||
| Liabilities | ||||
| Accounts payable | ||||
| Accrued expenses | ||||
| Other current liabilities | ||||
| Other liabilities | ||||
| Total liabilities | ||||
| Net assets acquired | $ |
| (A) | Consists primarily of tax liabilities existing at the Closing Date that are recorded in other current liabilities and other liabilities. |
Business combination related costs were expensed as incurred in general and administrative expense and consist of various advisory, legal, accounting, travel, training, valuation and other professional fees totaling $
The unaudited supplemental pro forma results present consolidated information as if the business combination were completed on January 1, 2022. The pro forma results include, among others, (i) a reduction in depreciation expense for adjustments to property and equipment and (ii) the reversal of any income or expense related to assets retained by the seller and SPO’s former parent, Banyan Overseas Limited, a limited company organized under the laws of Bermuda (Banyan). The pro forma results do not include any potential synergies or non-recurring charges that may result directly from the business combination.
| (In Thousands) | ||||
| Period from | ||||
| January 1, 2022 | ||||
| to June 30, 2022 | ||||
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
| (4) | ALLOWANCE FOR CREDIT LOSSES |
Expected credit losses are recognized on the initial recognition of our trade accounts receivable and contract assets. In each subsequent reporting period, even if a loss has not yet been incurred, credit losses are recognized based on the history of credit losses and current conditions, as well as reasonable and supportable forecasts affecting collectability. We developed an expected credit loss model applicable to our trade accounts receivable and contract assets that considers our historical performance and the economic environment, as well as the credit risk and its expected development for each segmented group of customers that share similar risk characteristics. It is our practice to write off receivables when all legal options for collection have been exhausted.
Activity in the allowance for credit losses for the six months ended June 30, 2023 is as follows:
| Trade | ||||
| (In Thousands) | and Other | |||
| Receivables | ||||
| Balance at January 1, 2023 | $ | |||
| Current period provision for expected credit losses | ||||
| Write offs | ( | ) | ||
| Other | ( | ) | ||
| Balance at June 30, 2023 | $ | |||
The balance in our allowance for credit losses at June 30, 2023 and December 31, 2022, includes $
| (5) | REVENUE RECOGNITION |
See “Note (13) Segment and Geographic Distribution of Operations” for revenue by segment and in total for the worldwide fleet.
Contract Balances
At June 30, 2023, we had $
At June 30, 2023, we had $
| (6) | STOCKHOLDERS’ EQUITY AND DILUTIVE EQUITY INSTRUMENTS |
Earnings per share
In recent years through the second quarter of 2022, we reported annual and quarterly losses from operations and reported basic and diluted losses per share based on the actual average shares of common stock outstanding during the relevant period. For the three and six months ended June 30, 2023, we reported net income from operations. Our fully diluted earnings per share for the three and six months ended June 30, 2023, is based on our weighted average common shares outstanding plus the common stock equivalent of our outstanding “in-the-money” warrants, restricted stock units and stock options.
Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in accumulated other comprehensive income (loss) (OCI) by component, net of tax:
| (In Thousands) | Three Months Ended | |||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Balance at March 31, 2023 and 2022 | $ | $ | ||||||
| Unrealized loss on note receivable | ( | ) | ( | ) | ||||
| Pension benefits recognized in OCI | ( | ) | ||||||
| Balance at June 30, 2023 and 2022 | $ | $ | ||||||
| (In Thousands) | Six Months Ended | |||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Balance at December 31, 2022 and 2021 | $ | $ | ||||||
| Unrealized loss on note receivable | ( | ) | ( | ) | ||||
| Pension benefits recognized in OCI | ( | ) | ( | ) | ||||
| Balance at June 30, 2023 and 2022 | $ | $ | ||||||
Dilutive Equity Instruments
The following table presents the changes in the number of common shares, incremental “in-the-money” warrants, restricted stock units and stock options outstanding:
| Total shares outstanding including warrants, restricted stock units and stock options | June 30, 2023 | June 30, 2022 | ||||||
| Common shares outstanding | ||||||||
| New creditor warrants (strike price $0.001 per common share) | ||||||||
| GulfMark creditor warrants (strike price $0.01 per common share) | ||||||||
| SPO acquisition warrants (strike price $0.001 per common share) | ||||||||
| Restricted stock units and stock options | ||||||||
| Total | ||||||||
We also had “out-of-the-money” warrants outstanding exercisable for
| (7) | INCOME TAXES |
Income tax rates and taxation systems in the jurisdictions where we and our subsidiaries conduct business vary and our subsidiaries are frequently subjected to minimum taxation regimes. In some jurisdictions, tax liabilities are based on gross revenues, statutory deemed profits or other factors, rather than on net income. We use a discrete effective tax rate method to calculate taxes for interim periods instead of applying the annual effective tax rate to an estimate of the full fiscal year due to the level of volatility and unpredictability of earnings in our industry, both overall and by jurisdiction.
For the six months ended June 30, 2023, income tax expense reflects tax liabilities in various jurisdictions based on either revenue (deemed profit regimes) or pre-tax profits.
The tax liabilities for uncertain tax positions are primarily attributable to permanent establishment issues related to foreign jurisdictions, subpart F income inclusions and withholding taxes on foreign services. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.
As of December 31, 2022, our balance sheet reflected approximately $
Management assesses all available positive and negative evidence to permit use of existing deferred tax assets.
With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to March 2016. We are subject to ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position, results of operations, or cash flows.
| (8) | EMPLOYEE BENEFIT PLANS |
U.S. Defined Benefit Pension Plan
We have a defined benefit pension plan (pension plan) that covers certain U.S. employees. The pension plan was frozen during 2010. We have not made contributions to the pension plan since 2019. Actuarial valuations are performed annually, and an assessment of the future pension obligations and market value of the assets will determine if contributions are made in the future.
During the second quarter of 2023, we, as sponsor of the pension plan entered into an agreement committing the pension plan to use a portion of its assets to purchase an annuity from an insurance company (the “Insurer”) to transfer approximately $
Supplemental Executive Retirement Plan
We support a non-contributory and non-qualified defined benefit supplemental executive retirement plan (supplemental plan) that was closed to new participants during 2010. We contributed $
Net Periodic Benefit Costs
The net periodic benefit cost for our defined benefit pension plans and supplemental plan (referred to collectively as “Pension Benefits”) is comprised of the following components:
| (In Thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Pension Benefits: | ||||||||||||||||
| Interest cost | $ | $ | $ | $ | ||||||||||||
| Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of net actuarial (gains) losses | ( | ) | ( | ) | ||||||||||||
| Net periodic pension (benefit) cost | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
The components of the net periodic pension cost are included in the caption “Interest income and other, net.”
| (9) | DEBT |
The following is a summary of all debt outstanding:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Senior secured bonds: | ||||||||
| % Senior Secured Notes due November 2026 (A) (B) | $ | $ | ||||||
| Supplier Facility Agreements | ||||||||
| Senior Secured Term Loan | ||||||||
| % Senior Unsecured Notes due July 2028 | ||||||||
| $ | $ | |||||||
| Debt discount and issuance costs | ( | ) | ( | ) | ||||
| Less: Current portion of long-term debt | ( | ) | ||||||
| Total long-term debt | $ | $ | ||||||
|
| (A) | As of June 30, 2023 and December 31, 2022, the fair value (Level 2) of the Senior Secured Notes was $ |
|
| (B) | The $ |
Supplier Facility Agreements
We entered into Facility Agreements to finance a portion of the construction and delivery of three new vessels. The vessels were delivered to us in the second quarter of 2023 in exchange for approximately $
Senior Secured Term Loan
On June 30, 2023, Tidewater entered into a Credit Agreement, by and among Tidewater, as parent guarantor, TDW International Vessels Unrestricted, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“TDW International”), as borrower, certain other unrestricted subsidiaries of Tidewater, as other security parties, the lenders party thereto, DNB Bank ASA, New York Branch (“DNB Bank”), as facility agent and DNB Markets, Inc. (“DNB Markets”), as bookrunner and mandated lead arranger (the “Credit Agreement”), pursuant to which the lenders agreed to make available to borrower a senior secured term loan in the aggregate principal amount of $
The Senior Secured Term Loan is composed of a $
The Credit Agreement contains three financial covenants: (i) a minimum free liquidity test (of Guarantor liquidity) equal to the greater of $
Senior Unsecured Notes
On July 3, 2023, Tidewater completed a previously announced offering of $
The Senior Unsecured Notes were issued pursuant to the Bond Terms, dated as of June 30, 2023 (the “Bond Terms”), between the Nordic Trustee AS, as Bond Trustee and us. An application will be made for the Senior Unsecured Notes to be listed on the Nordic ABM. The Senior Unsecured Notes are senior unsecured obligations and are not guaranteed by any of our subsidiaries.
The Senior Unsecured Notes will mature on July 3, 2028. Interest on the Senior Unsecured Notes will accrue at a rate of
The Senior Unsecured Notes contain two financial covenants: (i) a minimum free liquidity test equal to the greater of $
Super Senior Revolver
We also have a Super Senior Revolving Credit Facility Agreement maturing on November 16, 2026 that provides $
| (10) | COMMITMENTS AND CONTINGENCIES |
Currency Devaluation and Fluctuation Risk
Due to our international operations, we are exposed to foreign currency exchange rate fluctuations against the U.S. dollar. For some of our international contracts, a portion of the revenue and local expenses are incurred in local currencies with the result that we are at risk for changes in the exchange rates between the U.S. dollar and foreign currencies. We generally do not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of business, which exposes us to the risk of exchange rate losses. To minimize the financial impact of these items, we attempt to contract a significant majority of our services in U.S. dollars. In addition, we attempt to minimize the financial impact of these risks by matching the currency of our operating costs with the currency of our revenue streams when considered appropriate. We continually monitor the currency exchange risks associated with all contracts not denominated in U.S. dollars.
Legal Proceedings
We are named defendants or parties in certain lawsuits, claims or proceedings incidental to our business and involved from time to time as parties to governmental investigations or proceedings arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results or cash flows.
| (11) | FAIR VALUE MEASUREMENTS |
Other Financial Instruments
Our primary financial instruments consist of cash and cash equivalents, restricted cash, trade receivables and trade payables with book values that are considered to be representative of their respective fair values. The carrying value for cash equivalents is considered to be representative of its fair value due to the short duration and conservative nature of the cash equivalent investment portfolio. In the second quarter of 2022, we agreed to a transaction with PEMEX, the Mexican national oil company, to exchange $
| (12) | PROPERTIES AND EQUIPMENT, ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES |
As of June 30, 2023, our property and equipment consist primarily of
A summary of properties and equipment is as follows:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Properties and equipment: | ||||||||
| Vessels and related equipment | $ | $ | ||||||
| Other properties and equipment | ||||||||
| Less accumulated depreciation and amortization | ||||||||
| Properties and equipment, net | $ | $ | ||||||
A summary of accrued expenses is as follows:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Payroll and related payables | $ | $ | ||||||
| Accrued vessel expenses | ||||||||
| Accrued interest expense | ||||||||
| Other accrued expenses | ||||||||
| $ | $ | |||||||
A summary of other current liabilities is as follows:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Taxes payable | $ | $ | ||||||
| Other | ||||||||
| $ | $ | |||||||
A summary of other liabilities is as follows:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Pension liabilities | $ | $ | ||||||
| Liability for uncertain tax positions | ||||||||
| Other | ||||||||
| $ | $ | |||||||
| (13) | SEGMENT AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS |
Each of our
The following table provides a comparison of segment revenues, vessel operating profit (loss), depreciation and amortization, and additions to properties and equipment for the three and six months ended June 30, 2023 and 2022. Vessel revenues relate to vessels owned and operated by us while other operating revenues relate to other miscellaneous marine-related businesses.
| (In Thousands) | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Vessel revenues: | ||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Asia Pacific | ||||||||||||||||
| Middle East | ||||||||||||||||
| Europe/Mediterranean | ||||||||||||||||
| West Africa | ||||||||||||||||
| Other operating revenues | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Vessel operating profit (loss): | ||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Asia Pacific | ( | ) | ||||||||||||||
| Middle East | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Europe/Mediterranean | ||||||||||||||||
| West Africa | ||||||||||||||||
| Other operating profit | ||||||||||||||||
| Corporate expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Long-lived asset impairment credit | ||||||||||||||||
| Gain on asset dispositions, net | ( | ) | ( | ) | ||||||||||||
| Operating income (loss) | $ | $ | $ | $ | ( | ) | ||||||||||
| Depreciation and amortization: | ||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Asia Pacific | ||||||||||||||||
| Middle East | ||||||||||||||||
| Europe/Mediterranean | ||||||||||||||||
| West Africa | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Additions to properties and equipment: | ||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Asia Pacific | ||||||||||||||||
| Middle East | ||||||||||||||||
| Europe/Mediterranean | ||||||||||||||||
| West Africa | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following table provides a comparison of total assets at June 30, 2023 and December 31, 2022:
| (In Thousands) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Total assets: | ||||||||
| Americas | $ | $ | ||||||
| Asia Pacific | ||||||||
| Middle East | ||||||||
| Europe/Mediterranean | ||||||||
| West Africa | ||||||||
| Corporate | ||||||||
| $ | $ | |||||||
| (14) | ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS |
During the six months ending June 30, 2023, we sold or recycled of our vessels held for sale, leaving vessels valued at $
We consider the valuation approach for our assets held for sale to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be recycled or sold. We estimate the net realizable value of our assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and recycle yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions. Our value ranges depend on our expectation of the ultimate disposition of the vessel. We will in all circumstances attempt to achieve maximum value for our vessels, but also recognize that certain vessels are more likely to be recycled, especially given the time and effort required to achieve a sale and the costs incurred to maintain a vessel while searching for a buyer. We establish ranges that in many cases have recycle value as the low end of the range and an expected open market sale value at the top of the range. When there is no expectation within the range that is considered more likely than any other, we apply equal probability weighting to the low and high ends of the valuation range. In addition, in conjunction with the reactivation of a vessel from assets held for sale to the active fleet in the first quarter of 2022 and the concurrent valuation of such vessel at its fair value, we recaptured $
The following table presents the activity in our asset held for sale account for the periods indicated:
| (In Thousands, except number of vessels) | Three Months Ended | |||||||||||||||
| Number of Vessels | June 30, 2023 | Number of Vessels | June 30, 2022 | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Additions | ||||||||||||||||
| Sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Ending balance | $ | $ | ||||||||||||||
| (In Thousands, except number of vessels) | Six Months Ended | |||||||||||||||
| Number of Vessels | June 30, 2023 | Number of Vessels | June 30, 2022 | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Additions | ||||||||||||||||
| Sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Transfers | ( | ) | ( | ) | ||||||||||||
| Ending balance | $ | $ | ||||||||||||||
| (15) | SOLSTAD VESSEL ACQUISITION |
On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets (the “Original Acquisition Agreement”), with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the “Sellers”), pursuant to which we agreed to acquire from the Sellers (the “Solstad Acquisition”): (i)
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain of the statements included in this Form 10-Q constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which includes any statements that are not historical facts. Such statements often contain words such as “expect,” “believe,” “think,” “anticipate,” “predict,” “plan,” “assume,” “estimate,” “forecast,” “goal,” “target,” “projections,” “intend,” “should,” “will,” “shall” and other similar words. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Tidewater Inc. and its subsidiaries. There can be no assurance that future developments affecting Tidewater Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and natural gas prices; industry overcapacity; limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; the resolution of pending legal proceedings; and other risks and uncertainties detailed in this Form 10-Q and other filings we make with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans, goals or activities are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards still developing, internal controls and processes that we continue to evolve, and assumptions subject to change in the future. Statements in this Form 10-Q are made as of the date of this filing, and Tidewater disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. In addition, see “Risk Factors” included in our Annual Report on Form 10-K and in this Form 10-Q for a discussion of certain risks relating to our business and investment in our securities.
In certain places in this Form 10-Q, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information.
The forward-looking statements should be considered in the context of the risk factors listed above, discussed in this Quarterly Report on Form 10-Q, and discussed in our 2022 Annual Report on Form 10-K (Annual Report) as updated by subsequent filings with the SEC. Investors and prospective investors are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events, or developments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto included in “Item 1. Financial Statements” and with our 2022 Annual Report. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A of our Annual Report and elsewhere in this Quarterly Report.
EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK
Tidewater
We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years. Our vessels and associated vessel services provide support for all phases of offshore oil and natural gas exploration, field development and production as well as windfarm development and maintenance. These services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction and seismic and subsea support; geotechnical survey support for windfarm construction, and a variety of other specialized services such as pipe and cable laying. In addition, we have one of the broadest geographic operating footprints in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have strong relationships.
On April 22, 2022, we completed the acquisition of SPO and its 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. As consideration for the acquisition, we paid $42.0 million in cash and issued 8,100,000 warrants, each of which was exercisable at $0.001 per share for one share of our common stock (SPO acquisition warrants). In addition, we paid $19.6 million at closing and received an $8.8 million post-closing working capital refund related to pre-closing working capital adjustments, for a total consideration of $215.5 million. In 2022, we completed two public offerings of approximately 8.1 million shares combined of our common stock and, coupled with a small redemption of SPO acquisition warrants related to indemnified liabilities, redeemed 100% of the outstanding SPO acquisition warrants. All of the net proceeds from the public equity offerings were used to redeem SPO acquisition warrants.
On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets (the “Original Acquisition Agreement”), with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the “Sellers”), pursuant to which we agreed to acquire from the Sellers (the “Solstad Acquisition”): (i) 37 platform supply vessels owned by the Sellers (the “Solstad Vessels”); (ii) the charter parties governing certain of the Solstad Vessels; and (iii) the Economic Interest (as defined in the Acquisition Agreement) in certain charter parties as specified therein. On June 20, 2023, we and the Sellers executed a First Amendment (the “First Amendment”) to the Original Acquisition Agreement to clarify certain closing matters related to the Solstad Acquisition (the First Amendment, together with the Original Acquisition Agreement, the “Acquisition Agreement”). Subsequent to the end of the second quarter of 2023, on July 5, 2023, we completed the Solstad Acquisition with the Sellers for an aggregate cash purchase price of approximately $580.0 million, consisting of the previously disclosed $577.0 million base purchase price along with an initial $3.0 million purchase price adjustment, which will be further adjusted for bunkers and other consumables within fourteen days after closing. The purchase price was funded through a combination of cash on hand and, net proceeds from the Senior Secured Term Loan and the Senior Unsecured Notes.
At June 30, 2023, we owned 186 vessels with an average age of 11.7 years (including three stacked vessels and two vessels designated as assets held for sale) which are available to serve the global energy industry. At June 30, 2023, the average age of our 184 active vessels was 11.6 years. We took delivery of three vessels in the second quarter of 2023, which are included as part of our vessel count disclosure. In addition, at June 30, 2023, we have five crew boats under construction which will be delivered over the next year. With the addition of the Solstad vessels, our fleet now consists of 221 active vessels with an average age of 11.5 years.
MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity
Our MD&A is designed to provide information about our financial condition and results of operations from management’s perspective.
Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. As is the case with the numerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves. Our objective throughout the MD&A is to discuss how these factors affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.
Our revenues in all segments are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.
Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors impacting overall crew costs in all segments. In addition, our newer, more technologically sophisticated vessels generally require a greater number of specially trained, more highly compensated fleet personnel than our older, smaller and less sophisticated vessels. Crew costs may increase if competition for skilled personnel intensifies.
Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements that either extend the vessel’s useful life or increase the vessel’s functionality are capitalized and depreciated.
Insurance costs are dependent on a variety of factors, including our safety record and pricing in the insurance markets, and can fluctuate over time. Our vessels are generally insured for up to their estimated fair market value in order to cover damage or loss. We also purchase coverage for potential liabilities stemming from third-party losses with limits that we believe are reasonable for our operations, but do not generally purchase business interruption insurance or similar coverage. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.
Fuel and lube costs can fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off charter, drydockings, and changes in fuel prices. We also incur vessel operating costs aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, training costs, satellite communication fees, agent fees, port fees and other miscellaneous costs. Brokers’ commissions are incurred primarily in our non-United States operations where brokers sometimes assist in obtaining work. Brokers generally are paid a percentage of day rates and, accordingly, commissions paid to brokers generally fluctuate in accordance with vessel revenue.
We discuss our liquidity in terms of cash flow that we generate from our operations. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. From time to time, we also issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions.
Industry Conditions and Outlook
As we look forward into the remainder of 2023 and into 2024, we expect the supply-demand balance in the global offshore oil and gas markets to continue to tighten after several years of low commodity prices and underinvestment in offshore activities by the major oil and gas producers. Factors driving this outlook include demand for hydrocarbons continuing to grow internationally, the Organization of the Petroleum Exporting Countries Plus (OPEC+) remaining proactive in maintaining adequate and stable oil prices, combined with a diminishing global supply of vessels to support the offshore energy industry. Energy prices are expected to remain volatile for the remainder of 2023 and into 2024 due to ongoing geopolitical conflicts, global inflationary trends and associated actions from central banks as well as uncertainties surrounding the growth rates expected in key world economies.
Our business is directly impacted by the level of activity in worldwide offshore oil and natural gas exploration, development and production, which in turn is influenced by trends in oil and natural gas prices and the condition of the energy markets and, in particular, the willingness of energy companies to spend on operational activities and capital projects. Crude oil and natural gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand. Offshore oil and gas exploration and development activities generally require higher oil or natural gas prices to justify the much higher expenditure levels of offshore activities compared to onshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile. Over the past several years, oil and natural gas commodity pricing has been affected by a global pandemic which included lock downs by major oil consuming nations, a war in eastern Europe between Russia and Ukraine, OPEC+ production quotas, capital discipline within the major oil and gas companies, inflationary economies of major consuming nations and increased activism related to the perceived oil and gas sector responsibility for climate change. These factors have at various times caused or exacerbated significant swings in oil and gas pricing, which in turn has affected the capital budgets of oil and gas companies.
In addition, pressure on us and our customers continues to rise from certain shareholders and other stakeholders, including governmental entities, on various environmental, social and governance (ESG) factors. Many of our large international customers have (i) indicated changes in future business plans to achieve a lower environmental impact; (ii) responded to pressure to return capital to shareholders and; (iii) increasingly shifted capital allocation from primarily new oil and gas production and reserve additions to a mix of returns to shareholders, new oil and gas project development and renewable energy source development. Even with these pressures to move towards more sustainable fuels for supplying worldwide energy, fossil fuels are expected to be the largest source for supplying worldwide energy needs for years to come.
We are one of the world’s largest operators of offshore support vessels and we have operations in most of the world’s offshore oil and gas basins. We continue to believe that there will be sufficient opportunities for us to operate our vessels in this sector for many years to come. We have also pursued opportunities in the sustainability arena, including the support of offshore wind energy generation and the improvement of our fleet performance regarding emissions and environmental impact. Although our business is impacted by a number of macro factors, including those factors discussed here, which influence our outlook and expectations given the current volatile conditions in our industry, our fleet is currently close to full utilization and our day rates have increased in recent quarters. We are of the opinion that the underlying fundamentals, particularly energy source supply and demand, will support a multi-year increase in offshore upstream development spending. Our outlook expectations are based on the market as we see it today and subject to changing conditions in and impacting our industry.
ESG and Climate Change
Climate change is expected to increase the frequency and intensity of certain adverse weather patterns, which may impact our business. Due to concern over the risk of climate change, several countries have adopted, or are considering the adoption of, regulatory frameworks to reduce the emission of carbon dioxide, methane and other gases (greenhouse gas emissions). In addition, the increased regulation of greenhouse gas emissions is expected to create greater incentives for the use of alternative energy sources. Consideration of climate change-related issues and the responses to those issues through international agreements and national, regional, or state regulatory frameworks are integrated into our strategy, planning, forecasting and risk management processes, where applicable.
Our primary business is to support the fossil fuel industry, which is the primary source of energy in the world. In addition, we burn fossil fuels in operating our vessels. The fossil fuel industry is considered one of the primary contributors to the elements of global climate change. We believe that continued use of fossil fuels will be important as the world transitions to alternative energy sources. We are prepared to participate in the energy transition, including an increased focus on natural gas, and at the same time continue to support the oil industry. We are taking measures to address our impact on climate change, including modifying many of our vessels to reduce our carbon footprint (approximately $19.6 million of emissions focused costs including fuel monitoring systems and batteries for supplemental power are included in our net properties and equipment amount as of June 30, 2023); and providing support to offshore alternative energy providers, such as windfarms. In addition, our Board of Directors has formed a Safety and Sustainability Committee to oversee and support our ESG strategy, initiatives and reporting, and in March 2023, we published our 2022 Sustainability Report. We are committed to continuously consider, develop and implement our ESG strategy as applicable new regulations, business opportunities and sustainable technologies evolve.
In March 2022, the SEC proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks also would include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. We expect final rules to be published during the fourth quarter of 2023.
For detailed discussion of climate change and related governmental regulation, including associated risks and possible impact on our business, financial conditions and results of operations, please see “Risk Factors” in Item 1A of our 2022 Annual Report.
RESULTS OF OPERATIONS
Each of our five operating segments is managed by a senior executive reporting directly to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.
The following table presents our statement of operations for the periods indicated:
| (In Thousands) |
Three Months Ended |
Six Months Ended |
||||||||||||||
| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Vessel revenues |
$ | 210,323 | $ | 191,180 | $ | 401,503 | $ | 266,051 | ||||||||
| Other operating revenues |
4,638 | 1,924 | 6,562 | 3,125 | ||||||||||||
| Total revenue |
214,961 | 193,104 | 408,065 | 269,176 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Vessel operating costs |
118,264 | 115,459 | 233,723 | 168,768 | ||||||||||||
| Costs of other operating revenues |
373 | 1,151 | 1,524 | 844 | ||||||||||||
| General and administrative |
26,013 | 23,545 | 49,558 | 46,021 | ||||||||||||
| Depreciation and amortization |
32,768 | 30,666 | 63,434 | 58,423 | ||||||||||||
| Long-lived asset impairment credit |
— | — | — | (500 | ) | |||||||||||
| (Gain) loss on asset dispositions, net |
(1,404 | ) | (2,216 | ) | (3,620 | ) | 1,090 | |||||||||
| Total costs and expenses |
176,014 | 168,605 | 344,619 | 274,646 | ||||||||||||
| Operating income (loss) |
38,947 | 24,499 | 63,446 | (5,470 | ) | |||||||||||
| Other income (expense): |
||||||||||||||||
| Foreign exchange gain (loss) |
(3,819 | ) | 2,348 | (1,471 | ) | (935 | ) | |||||||||
| Equity in net earnings (losses) of unconsolidated companies |
25 | — | 25 | (244 | ) | |||||||||||
| Interest income and other, net |
2,790 | 130 | 2,920 | 3,835 | ||||||||||||
| Loss on warrants |
— | — | — | (14,175 | ) | |||||||||||
| Interest and other debt costs, net |
(4,731 | ) | (4,190 | ) | (8,921 | ) | (8,459 | ) | ||||||||
| Total other expense |
(5,735 | ) | (1,712 | ) | (7,447 | ) | (19,978 | ) | ||||||||
| Income (loss) before income taxes |
33,212 | 22,787 | 55,999 | (25,448 | ) | |||||||||||
| Income tax expense |
11,284 | 11,971 | 23,255 | 11,837 | ||||||||||||
| Net income (loss) |
21,928 | 10,816 | 32,744 | (37,285 | ) | |||||||||||
| Net income (loss) attributable to noncontrolling interests |
(656 | ) | 78 | (578 | ) | 464 | ||||||||||
| Net income (loss) attributable to Tidewater Inc. |
$ | 22,584 | $ | 10,738 | $ | 33,322 | $ | (37,749 | ) | |||||||
Consolidated Results – Three Months Ended June 30, 2023 compared to March 31, 2023
Revenues for the quarters ended June 30, 2023 and March 31, 2023, were $215.0 million and $193.1 million, respectively. The $21.9 million increase in revenue is primarily due to increases in average day rates across most of our vessel fleet. Average day rates increased by 9.7%, from $14,624 per day in the first quarter to $16,042 in the second quarter. Active utilization decreased slightly from 80.6% in the first quarter of 2023 to 79.4% in the second quarter of 2023, primarily due to elevated drydock activity.
Vessel operating costs for the quarters ended June 30, 2023 and March 31, 2023, were $118.3 million and $115.5 million, respectively. The increase is primarily due to higher personnel costs on the vessels.
Depreciation and amortization expense for the quarters ended June 30, 2023 and March 31, 2023, were $32.8 million and $30.7 million, respectively, largely due to an increase in higher overall amortization due to higher drydock activity in the first two quarters of 2023.
General and administrative expenses for the quarters ended June 30, 2023 and March 31, 2023, were $26.0 million and $23.5 million, respectively. The increase is primarily due to higher bad debt expense and professional fees incurred in connection with pursuing Solstad acquisition financing options that were ultimately not utilized.
We reported gains on asset dispositions, net totaling $1.4 million in the second quarter of 2023, primarily as a result of the sales of three vessels and other assets. We reported gains on asset dispositions, net totaling $2.2 million in the first quarter of 2023, primarily as a result of the sales of five vessels and other assets.
Interest expense for the quarters ended June 30, 2023 and March 31, 2023, was approximately $4.7 million and $4.2 million, respectively, because of a $0.5 million unused capacity fee incurred upon securing the Senior Secured Term Loan to partially fund the Solstad vessels acquisition.
Interest income and other, net for the quarters June 30, 2023 and March 31, 2023, was $2.8 million and $0.1 million, respectively. We recognized a $1.8 million settlement gain in the second quarter in connection with an agreement committing our pension plan to use a portion of its assets to purchase an annuity from an insurance company so as to transfer its liabilities.
During the quarter ended June 30, 2023, we recognized foreign exchange losses of $3.8 million due to the strengthening of the U.S. Dollar against other currencies. During the quarter ended March 31, 2023, we recognized foreign exchange gains of $2.3 million due to the weakening of the U.S. Dollar against other currencies.
The income tax expense for the three months ended June 30, 2023 was $11.3 million compared to an income tax expense of $12.0 million for the three months ending March 31, 2023. The tax expense for the three months ended June 30, 2023 is mainly attributable to taxes on our operations in foreign countries. Tax expense will vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax regimes.
Consolidated Results – Six Months Ended June 30, 2023 compared to June 30, 2022
Revenues for the six months ended June 30, 2023 and 2022 were $408.1 million and $269.2 million, respectively. The $138.9 million increase in revenue is primarily due to the SPO acquisition of 49 vessels in the second quarter of 2022 and increases in average day rates across most of our vessel fleet in 2023. Overall, we had 29 more active vessels in the first six months of 2023 than in the first six months of 2022. Average day rates increased by 30.6%, from $11,738 per day in 2022 to $15,334 in 2023. Active utilization decreased slightly from 82.5% in 2022 to 80.0% in 2023, primarily due to a heavy drydock schedule in the first half of 2023 compared to 2022 and the movement of 22 vessels in 2023 between segments. The vessels acquired in the SPO acquisition accounted for almost all of the increase in active vessels as the vessels were part of our fleet for the entire six months of 2023 and were only in the fleet in 2022 after April 22, 2022. The SPO vessels added $123.2 million to revenue in the six months ended June 30, 2023, compared to $43.2 million in the six months ended June 30, 2022.
Vessel operating costs for the six months ended June 30, 2023 and 2022 were $233.7 million and $168.8 million, respectively. The increase is primarily due to the 29 additional active vessels in our fleet in the first six months of 2023 as compared to the first six months of 2022 and our continued recovery from the low vessel utilization levels caused by the pandemic and increased activity as higher crude oil prices has resulted in more activity from our customers.
Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 were $63.4 million and $58.4 million, respectively, largely due to an increase in depreciation expense because of a higher vessel count and higher overall amortization due to higher drydock activity in 2023.
General and administrative expenses for the six months ended June 30, 2023 and 2022 were $49.6 million and $46.0 million, respectively. The increase is primarily due to increased general and administrative costs associated with the expansion of the Singapore and Dubai offices in connection with the SPO acquisition, bad debt expense and professional fees incurred in connection with pursuing Solstad acquisition financing options that were ultimately not utilized.
We reported gains on asset dispositions, net totaling $3.6 million in the six months ended June 30, 2023, primarily as a result of the sales of eight vessels and other assets. We reported losses on asset dispositions, net totaling $1.1 million in the six months ended June 30, 2022, primarily as a result of the sales of nine vessels and other assets.
Long-lived asset impairment during the six months ended June 30, 2022 was a $0.5 million credit related to recovery of impairment on a vessel reclassified from assets held for sale back to the active fleet. There was no long-lived asset impairment expense in the six months ended June 30, 2023.
Interest expense for the six months ended June 30, 2023 and 2022, was approximately $8.9 million and $8.5 million, because of a $0.5 million unused capacity fee incurred in the second quarter of 2023 upon securing the Senior Secured Term Loan to partially fund the Solstad vessel acquisition.
Interest income and other, net or the six months ended June 30, 2023 and 2022, was $2.9 million and $3.8 million, respectively. We recognized a $1.8 million settlement gain in 2023 in connection with an agreement committing our pension plan to use a portion of its assets to purchase an annuity from an insurance so as to transfer its liabilities. Interest income for 2022 was primarily related to the $1.3 million bargain purchase gain on our acquisition of the remaining 51% of Sonatide, our joint venture in Angola of which we previously owned 49%, and $1.9 million in interest and other income related to a litigation settlement for one of our vessels.
In the six months ended June 30, 2022, we recognized a $14.2 million loss to value the warrant liability at fair value on the date that we amended the SPO share purchase agreement to allow us to reclassify the warrants from liabilities to equity based on the difference in the Tidewater common stock price on amendment date and the acquisition date closing common stock price.
During the six months ended June 30, 2023, we recognized foreign exchange losses of $1.5 million due to the strengthening of the U.S. Dollar against other currencies. During the six months ended June 30, 2022, we recognized foreign exchange losses of $0.9 million.
The income tax expense for the six months ended June 30, 2023 was $23.3 million compared to an income tax expense of $11.8 million for the six months ending June 30, 2022. The tax expense for the six months ended June 30, 2023 is mainly attributable to taxes on our operations in foreign countries. Tax expense will vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax regimes.
The following table compares vessel revenues and vessel operating costs by geographic segment for our owned and operated vessel fleet and the related percentage of vessel revenue for the periods indicated:
| (In Thousands) |
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||||||||||||||||||
| Vessel revenues: |
||||||||||||||||||||||||||||||||
| Americas |
$ | 50,376 | 24 | % | $ | 47,687 | 25 | % | $ | 98,063 | 24 | % | $ | 65,964 | 25 | % | ||||||||||||||||
| Asia Pacific |
22,585 | 11 | % | 22,024 | 12 | % | 44,609 | 11 | % | 21,259 | 8 | % | ||||||||||||||||||||
| Middle East |
31,856 | 15 | % | 30,762 | 16 | % | 62,618 | 16 | % | 48,614 | 18 | % | ||||||||||||||||||||
| Europe/Mediterranean |
39,295 | 19 | % | 31,250 | 16 | % | 70,545 | 18 | % | 56,394 | 21 | % | ||||||||||||||||||||
| West Africa |
66,211 | 31 | % | 59,457 | 31 | % | 125,668 | 31 | % | 73,820 | 28 | % | ||||||||||||||||||||
| Total vessel revenues |
$ | 210,323 | 100 | % | $ | 191,180 | 100 | % | $ | 401,503 | 100 | % | $ | 266,051 | 100 | % | ||||||||||||||||
| Vessel operating costs: |
||||||||||||||||||||||||||||||||
| Americas: |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 18,033 | 36 | % | $ | 17,402 | 36 | % | $ | 35,435 | 36 | % | $ | 24,201 | 37 | % | ||||||||||||||||
| Repair and maintenance |
3,973 | 8 | % | 3,888 | 8 | % | 7,861 | 8 | % | 5,493 | 8 | % | ||||||||||||||||||||
| Insurance |
479 | 1 | % | 410 | 1 | % | 889 | 1 | % | 615 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
2,549 | 5 | % | 2,999 | 6 | % | 5,548 | 6 | % | 4,711 | 7 | % | ||||||||||||||||||||
| Other |
4,564 | 9 | % | 3,572 | 8 | % | 8,136 | 8 | % | 5,250 | 8 | % | ||||||||||||||||||||
| $ | 29,598 | 59 | % | $ | 28,271 | 59 | % | $ | 57,869 | 59 | % | $ | 40,270 | 61 | % | |||||||||||||||||
| Asia Pacific: |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 7,062 | 31 | % | $ | 7,311 | 33 | % | $ | 14,373 | 32 | % | $ | 8,926 | 42 | % | ||||||||||||||||
| Repair and maintenance |
1,517 | 7 | % | 1,749 | 8 | % | 3,266 | 7 | % | 1,229 | 6 | % | ||||||||||||||||||||
| Insurance |
219 | 1 | % | 123 | 1 | % | 342 | 1 | % | 144 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
1,521 | 7 | % | 1,630 | 7 | % | 3,151 | 7 | % | 1,695 | 8 | % | ||||||||||||||||||||
| Other |
1,648 | 7 | % | 1,678 | 8 | % | 3,326 | 8 | % | 1,598 | 7 | % | ||||||||||||||||||||
| $ | 11,967 | 53 | % | $ | 12,491 | 57 | % | $ | 24,458 | 55 | % | $ | 13,592 | 64 | % | |||||||||||||||||
| Middle East |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 13,170 | 41 | % | $ | 12,616 | 41 | % | $ | 25,786 | 41 | % | $ | 19,658 | 40 | % | ||||||||||||||||
| Repair and maintenance |
3,779 | 12 | % | 3,475 | 11 | % | 7,254 | 12 | % | 5,553 | 12 | % | ||||||||||||||||||||
| Insurance |
465 | 1 | % | 433 | 2 | % | 898 | 1 | % | 622 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
3,470 | 11 | % | 2,870 | 9 | % | 6,340 | 10 | % | 4,259 | 9 | % | ||||||||||||||||||||
| Other |
3,756 | 12 | % | 3,669 | 12 | % | 7,425 | 12 | % | 4,706 | 10 | % | ||||||||||||||||||||
| $ | 24,640 | 77 | % | $ | 23,063 | 75 | % | $ | 47,703 | 76 | % | $ | 34,798 | 72 | % | |||||||||||||||||
| Europe/Mediterranean: |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 13,406 | 34 | % | $ | 12,727 | 41 | % | $ | 26,133 | 37 | % | $ | 24,352 | 43 | % | ||||||||||||||||
| Repair and maintenance |
2,900 | 7 | % | 2,706 | 9 | % | 5,606 | 8 | % | 4,520 | 8 | % | ||||||||||||||||||||
| Insurance |
354 | 1 | % | 384 | 1 | % | 738 | 1 | % | 616 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
2,363 | 6 | % | 1,584 | 5 | % | 3,947 | 5 | % | 2,817 | 5 | % | ||||||||||||||||||||
| Other |
2,292 | 6 | % | 2,371 | 7 | % | 4,663 | 7 | % | 4,494 | 8 | % | ||||||||||||||||||||
| $ | 21,315 | 54 | % | $ | 19,772 | 63 | % | $ | 41,087 | 58 | % | $ | 36,799 | 65 | % | |||||||||||||||||
| West Africa: |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 16,336 | 25 | % | $ | 16,587 | 28 | % | $ | 32,923 | 26 | % | $ | 24,339 | 33 | % | ||||||||||||||||
| Repair and maintenance |
4,665 | 7 | % | 4,834 | 8 | % | 9,499 | 8 | % | 6,143 | 8 | % | ||||||||||||||||||||
| Insurance |
651 | 1 | % | 655 | 1 | % | 1,306 | 1 | % | 753 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
4,055 | 6 | % | 4,472 | 7 | % | 8,527 | 7 | % | 5,115 | 7 | % | ||||||||||||||||||||
| Other |
5,037 | 7 | % | 5,314 | 9 | % | 10,351 | 8 | % | 6,959 | 10 | % | ||||||||||||||||||||
| $ | 30,744 | 46 | % | $ | 31,862 | 54 | % | $ | 62,606 | 50 | % | $ | 43,309 | 59 | % | |||||||||||||||||
| Vessel operating costs: |
||||||||||||||||||||||||||||||||
| Crew costs |
$ | 68,007 | 32 | % | $ | 66,643 | 35 | % | $ | 134,650 | 34 | % | $ | 101,476 | 38 | % | ||||||||||||||||
| Repair and maintenance |
16,834 | 8 | % | 16,652 | 9 | % | 33,486 | 8 | % | 22,938 | 8 | % | ||||||||||||||||||||
| Insurance |
2,168 | 1 | % | 2,005 | 1 | % | 4,173 | 1 | % | 2,750 | 1 | % | ||||||||||||||||||||
| Fuel, lube and supplies |
13,958 | 7 | % | 13,555 | 7 | % | 27,513 | 7 | % | 18,597 | 7 | % | ||||||||||||||||||||
| Other |
17,297 | 8 | % | 16,604 | 8 | % | 33,901 | 8 | % | 23,007 | 9 | % | ||||||||||||||||||||
| Total vessel operating costs |
$ | 118,264 | 56 | % | $ | 115,459 | 60 | % | $ | 233,723 | 58 | % | $ | 168,768 | 63 | % | ||||||||||||||||
The following table presents general and administrative expenses in our five geographic segments both individually and in total and the related general and administrative expenses as a percentage of the vessel revenues of each segment and in total for the periods indicated:
| (In Thousands) |
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||||||||||||||||||
| Segment general and administrative expenses: |
||||||||||||||||||||||||||||||||
| Americas |
$ | 5,809 | 12 | % | $ | 3,260 | 7 | % | $ | 9,069 | 9 | % | $ | 5,227 | 8 | % | ||||||||||||||||
| Asia Pacific |
1,768 | 8 | % | 2,500 | 11 | % | 4,268 | 10 | % | 3,464 | 16 | % | ||||||||||||||||||||
| Middle East |
2,508 | 8 | % | 2,308 | 8 | % | 4,816 | 8 | % | 4,179 | 9 | % | ||||||||||||||||||||
| Europe/Mediterranean |
2,228 | 6 | % | 2,092 | 7 | % | 4,320 | 6 | % | 4,042 | 7 | % | ||||||||||||||||||||
| West Africa |
2,180 | 3 | % | 2,853 | 5 | % | 5,033 | 4 | % | 4,283 | 6 | % | ||||||||||||||||||||
| Total segment general and administrative expenses |
$ | 14,493 | 7 | % | $ | 13,013 | 7 | % | $ | 27,506 | 7 | % | $ | 21,195 | 8 | % | ||||||||||||||||
The following table presents segment and total depreciation and amortization expense and the related segment and total vessel depreciation and amortization expense as a percentage of segment and total vessel revenues for the periods indicated:
| (In Thousands) |
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||||||||||||||||||
| Segment depreciation and amortization expense: |
||||||||||||||||||||||||||||||||
| Americas |
$ | 8,724 | 17 | % | $ | 8,194 | 17 | % | $ | 16,918 | 17 | % | $ | 14,619 | 22 | % | ||||||||||||||||
| Asia Pacific |
1,824 | 8 | % | 1,465 | 7 | % | 3,289 | 7 | % | 2,929 | 14 | % | ||||||||||||||||||||
| Middle East |
6,365 | 20 | % | 5,735 | 19 | % | 12,100 | 19 | % | 11,827 | 24 | % | ||||||||||||||||||||
| Europe/Mediterranean |
7,445 | 19 | % | 7,350 | 24 | % | 14,795 | 21 | % | 13,720 | 24 | % | ||||||||||||||||||||
| West Africa |
7,813 | 12 | % | 7,521 | 13 | % | 15,334 | 12 | % | 13,743 | 19 | % | ||||||||||||||||||||
| Total segment depreciation and amortization expense |
$ | 32,171 | 15 | % | $ | 30,265 | 16 | % | $ | 62,436 | 16 | % | $ | 56,838 | 21 | % | ||||||||||||||||
The following table compares operating income (loss) and other components of income (loss) and its related percentage of total revenue for the periods indicated:
| (In Thousands) |
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
|||||||||||||||||||||||||||||
| Vessel operating profit (loss): |
||||||||||||||||||||||||||||||||
| Americas |
$ | 6,245 | 3 | % | $ | 7,962 | 4 | % | $ | 14,207 | 3 | % | $ | 5,848 | 2 | % | ||||||||||||||||
| Asia Pacific |
7,026 | 3 | % | 5,568 | 3 | % | 12,594 | 3 | % | 1,274 | 0 | % | ||||||||||||||||||||
| Middle East |
(1,657 | ) | (1 | )% | (344 | ) | 0 | % | (2,001 | ) | 0 | % | (2,190 | ) | (1 | )% | ||||||||||||||||
| Europe/Mediterranean |
8,307 | 4 | % | 2,036 | 1 | % | 10,343 | 3 | % | 1,833 | 1 | % | ||||||||||||||||||||
| West Africa |
25,474 | 12 | % | 17,221 | 9 | % | 42,695 | 10 | % | 12,485 | 5 | % | ||||||||||||||||||||
| Other operating profit |
4,265 | 2 | % | 773 | 0 | % | 5,038 | 1 | % | 2,282 | 1 | % | ||||||||||||||||||||
| 49,660 | 23 | % | 33,216 | 17 | % | 82,876 | 20 | % | 21,532 | 8 | % | |||||||||||||||||||||
| Corporate expenses |
(12,117 | ) | (6 | )% | (10,933 | ) | (5 | )% | (23,050 | ) | (5 | )% | (26,412 | ) | (10 | )% | ||||||||||||||||
| Gain (loss) on asset dispositions, net |
1,404 | 1 | % | 2,216 | 1 | % | 3,620 | 1 | % | (1,090 | ) | 0 | % | |||||||||||||||||||
| Long-lived asset impairment credit |
— | 0 | % | — | 0 | % | — | 0 | % | 500 | 0 | % | ||||||||||||||||||||
| Operating income (loss) |
$ | 38,947 | 18 | % | $ | 24,499 | 13 | % | $ | 63,446 | 16 | % | $ | (5,470 | ) | (2 | )% | |||||||||||||||
Segment results for three months ended June 30, 2023 compared to March 31, 2023
Americas Segment Operations. Vessel revenues in the Americas segment increased 5.6%, or $2.7 million, during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. This increase is primarily the result of one additional active vessel and a 2.4% increase in average day rates. Average utilization increased from 85.2% to 85.4%.
Vessel operating profit for the Americas segment for the quarter ended June 30, 2023, was $6.2 million, compared to an $8.0 million operating profit for the quarter ended March 31, 2023. The increase in revenue was offset by a $1.3 million increase in operating expenses, a $2.5 million increase in general and administrative costs and a $0.5 million increase in depreciation and amortization. The operating expenses increased due to personnel and repair costs. The increase in general and administrative costs resulted from increased bad debt expense related to a single customer. This customer also contributed to the increase in operating expenses as we incurred costs to bring the related vessel back to its home port.
Asia Pacific Segment Operations. Vessel revenues in the Asia Pacific segment increased 2.5%, or $0.6 million, during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. Average day rates increased 2.8%, rising from $23,582 per day in the first quarter of 2023 to $24,250 in the second quarter of 2023. Average active utilization for the segment decreased from 77.8% to 72.4%. and we operated one more active vessel in the second quarter of 2023.
The Asia Pacific segment reported an operating profit of $7.0 million for the quarter ended June 30, 2023, compared to a $5.6 million operating profit for the quarter ended March 31, 2023. The increase in revenue was supplemented by a $0.5 million decrease in operating expenses and a $0.7 million decrease in general and administrative costs attributable to lower compensation and professional fees. Depreciation and amortization increased by $0.4 million largely due to increased drydock costs in 2023.
Middle East Segment Operations. Vessel revenues in the Middle East segment increased 3.6%, or $1.1 million, during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. Active vessels increased by one and average day rates increased 8.0%, rising from $9,679 per day in the first quarter of 2023 to $10,449 in the second quarter of 2023. Average active utilization for the segment decreased from 82.5% to 76.0%.
The Middle East segment reported an operating loss of $1.7 million for the quarter ended June 30, 2023, compared to an operating loss of $0.3 million for the quarter ended March 31, 2023 as the increase in revenue was more than offset by a $1.6 million increase in operating costs primarily attributable to moving new vessels into the area, a $0.6 million increase in depreciation and amortization attributable to higher drydock activity in 2023, and a $0.2 million increase in general and administrative costs.
Europe/Mediterranean Segment Operations. Vessel revenues in the Europe/Mediterranean segment increased 25.7%, or $8.0 million, during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. This increase was primarily driven by the 21.2% increase in day rates, as rates increased from $15,669 in the first quarter of 2023 to $18,990 in the second quarter of 2023. Active utilization increased from 83.4% to 85.7%. There was one less active vessel in the segment in the second quarter.
The Europe/Mediterranean segment reported an operating profit of $8.3 million for the quarter ended June 30, 2023, compared to an operating profit of $2.0 million for the quarter ended March 31, 2023. The higher operating profit was due to the revenue increase partially offset by $1.5 million in higher operating costs due to higher personnel and fuel costs.
West Africa Segment Operations. Vessel revenues in the West Africa segment increased 11.4%, or $6.8 million, during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. Average day rates increased 10.9% from $13,047 to $14,469, while active utilization increased from 76.6% during the quarter ended March 31, 2023 to 77.8% during the quarter ended June 30, 2023. There was one less vessel in the segment in the second quarter.
West Africa reported an operating profit of $25.5 million for the quarter ended June 30, 2023, compared to an operating profit of $17.2 million for the quarter ended March 31, 2023. The increase in operating profit is largely due to the increase in revenue supplemented by a $1.1 million decrease in operating costs associated with vessels transferred out of the segment and the $0.7 million decrease in general and administrative costs. Depreciation and amortization increased by $0.3 million primarily due to higher drydock activity in 2023.
Segment results for six months ended June 30, 2023 compared to June 30, 2022
Americas Segment Operations. Vessel revenues in the Americas segment increased 48.7%, or $32.1 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022. This increase is primarily the result of four additional active vessels and a 24.5% increase in average day rates largely due to demand recovery in the offshore vessel industry. Average utilization increased from 81.4% to 85.3%. The SPO acquisition added two active vessels in the Americas segment that contributed 100% utilization, $27,995 average day rate and $10.1 million in revenue in the six months ended June 30, 2023. For 2022, the SPO acquisition added less than one average vessel to the Americas fleet that contributed 77.0% utilization and a $15,226 average day rate. The additional vessel added $0.7 million to Americas’ revenue in the six months ended June 30, 2022.
Vessel operating profit for the Americas segment for the six months ended June 30, 2023, was $14.2 million, compared to a $5.8 million operating profit for the six months ended June 30, 2022. The increase in operating profit was largely due to the increase in revenue partially offset by a $17.6 million increase in operating expenses, largely resulting from increased personnel costs associated with additional vessels and vessel reactivations, a $2.3 million increase in depreciation and amortization, resulting mainly from additional vessels and higher drydock activity in 2023, and a $3.8 million increase in general and administrative costs due largely to an increase in bad debt expense in 2023.
Asia Pacific Segment Operations. Vessel revenues in the Asia Pacific segment increased 109.8%, or $23.4 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022. Active vessels increased by two. Average day rates increased 84.1%, rising from $12,992 per day in six months ended June 30, 2022 to $23,916 in the six months ended June 30, 2023. The SPO acquisition added 13 active vessels to the Asia Pacific fleet and contributed 78.2% utilization, a $23,723 average day rate and $43.7 million in revenue for the six months ended June 30, 2023. For 2022, the SPO acquisition added seven vessels to the Asia Pacific fleet. These vessels were 80.4% utilized, had an average day rate of $13,988 and contributed $15.0 million to Asia Pacific’ revenue for the six months ended June 30, 2022.
The Asia Pacific segment reported an operating profit of $12.6 million for the six months ended June 30, 2023, compared to an operating profit of $1.3 million for the six months ended June 30, 2022. The increase in revenue was offset by $10.9 million in additional operating expenses, $0.8 million of additional general and administrative costs, and $0.4 million of additional depreciation and amortization expense, all as a result of the SPO acquisition.
Middle East Segment Operations. Vessel revenues in the Middle East segment increased 28.8%, or $14.0 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022. Active vessels increased by six. Overall, active utilization for the six months ended June 30, 2023 decreased from 82.1% to 79.2% but average day rates increased 13.2%. The SPO acquisition added seven active vessels to the Middle East fleet and contributed $9.3 million in revenue for the six months ended June 30, 2023. For 2022, the SPO acquisition added three active vessels to the Middle East fleet. These vessels were 100.0% utilized, had an average day rate of $13,489 and contributed $6.2 million to the Middle East revenue for the six months ended June 30, 2022.
The Middle East segment reported an operating loss of $2.0 million for the six months ended June 30, 2023, compared to an operating loss of $2.2 million for the six months ended June 30, 2022 as the increase in revenue was largely offset by a $12.9 million increase in operating costs, a $0.3 million increase in depreciation and amortization, and a $0.6 million increase in general and administrative costs. The increase in costs were primarily a result of the seven active vessels acquired in the SPO acquisition.
Europe/Mediterranean Segment Operations. Vessel revenues in the Europe/Mediterranean segment increased 25.1%, or $14.2 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022. The increased revenue was attributable to two more active vessels combined with 24.1% higher average day rates. Active utilization decreased from 89.7% to 84.6%.
The Europe/Mediterranean segment reported an operating profit of $10.3 million for the six months ended June 30, 2023, compared to an operating profit of $1.8 million for the six months ended June 30, 2022. The higher operating profit was due to the revenue increase offset by $4.3 million in higher operating costs, $1.1 million in higher depreciation and amortization associated with the increase in active vessels and a $0.3 million increase in general and administrative expenses.
West Africa Segment Operations. Vessel revenues in the West Africa segment increased 70.2%, or $51.8 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022. The West Africa active vessel fleet increased by 15 vessels from the six months ended June 30, 2022 compared to the six months ended June 30, 2023. Average day rates increased 38.2% from $9,960 to $13,760, and active utilization decreased from 81.3% to 77.2%. The SPO acquisition added 24 active vessels to the West Africa fleet and contributed $55.5 million in revenue in the six months ended June 30, 2023. For 2022, the SPO acquisition added eight active vessels to the West Africa fleet. These vessels were 91.3% utilized, had an average day rate of $14,520 and contributed $19.5 million to Asia Pacific’ revenue in the six months ended June 30, 2022.
West Africa reported an operating profit of $42.7 million for the six months ended June 30, 2023, compared to an operating profit of $12.5 million for the six months ended June 30, 2022. The increase in operating results is largely due to the increase in revenue partially offset by $19.3 million in higher operating costs primarily related to the increase in active vessels. In addition, general and administrative costs increased by $0.8 million due to additional costs associated with the SPO acquisition. Depreciation and amortization increased by $1.6 million due largely to the SPO acquisition and additional drydock activity in 2023.
Vessel Utilization and Average Day Rates by Segment
Vessel utilization is determined primarily by market conditions and to a lesser extent by drydocking requirements. Vessel day rates are determined by the demand created largely through the level of offshore exploration, field development and production spending by energy companies relative to the supply of offshore support vessels. Specifications of available equipment and the scope of service provided may also influence vessel day rates. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. As such, stacked vessels depress utilization rates because stacked vessels are considered available to work and are included in the calculation of utilization rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period.
Total vessel utilization is calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock). Active utilization is calculated on active vessels (which excludes vessels held for sale and stacked vessels). Average day rates are calculated based on total vessel days worked.
The following tables compare day-based utilization percentages, average day rates and average total, active and stacked vessels by segment for the periods indicated:
| Three Months Ended |
Six Months Ended |
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| June 30, 2023 |
March 31, 2023 |
June 30, 2023 |
June 30, 2022 |
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| SEGMENT STATISTICS: |
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| Americas fleet: |
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| Utilization |
82.8 | % | 82.3 | % | 82.5 | % | 66.9 | % | ||||||||
| Active utilization |
85.4 | % | 85.2 | % | 85.3 | % | 81.4 | % | ||||||||
| Average vessel day rates |
$ | 20,269 | $ | 19,794 | $ | 20,035 | $ | 16,091 | ||||||||
| Average total vessels |
33 | 32 | 33 | 34 | ||||||||||||
| Average stacked vessels |
(1 | ) | (1 | ) | (1 | ) | (6 | ) | ||||||||
| Average active vessels |
32 | 31 | 32 | 28 | ||||||||||||
| Asia Pacific fleet: |
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| Utilization |
72.4 | % | 74.8 | % | 73.6 | % | 74.3 | % | ||||||||
| Active utilization |
72.4 | % | 77.8 | % | 75.0 | % | 76.4 | % | ||||||||
| Average vessel day rates |
$ | 24,250 | $ | 23,582 | $ | 23,916 | $ | 12,992 | ||||||||
| Average total vessels |
14 | 14 | 14 | 12 | ||||||||||||
| Average stacked vessels |
— | (1 | ) | — | — | |||||||||||
| Average active vessels |
14 | 13 | 14 | 12 | ||||||||||||
| Middle East fleet: |
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| Utilization |
76.0 | % | 82.5 | % | 79.2 | % | 81.8 | % | ||||||||
| Active utilization |
76.0 | % | 82.5 | % | 79.2 | % | 82.1 | % | ||||||||
| Average vessel day rates |
$ | 10,449 | $ | 9,679 | $ | 10,056 | $ | 8,887 | ||||||||
| Average total vessels |
44 | 43 | 43 | 37 | ||||||||||||
| Average stacked vessels |
— | — | — | — | ||||||||||||
| Average active vessels |
44 | 43 | 43 | 37 | ||||||||||||
| Europe/Mediterranean fleet: |
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| Utilization |
85.7 | % | 83.4 | % | 84.6 | % | 80.3 | % | ||||||||
| Active utilization |
85.7 | % | 83.4 | % | 84.6 | % | 89.7 | % | ||||||||
| Average vessel day rates |
$ | 18,990 | $ | 15,669 | $ | 17,360 | $ | 13,989 | ||||||||
| Average total vessels |
26 | 27 | 27 | 28 | ||||||||||||
| Average stacked vessels |
— | — | — | (3 | ) | |||||||||||
| Average active vessels |
26 | 27 | 27 | 25 | ||||||||||||
| West Africa fleet: |
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| Utilization |
72.3 | % | 68.4 | % | 70.3 | % | 68.7 | % | ||||||||
| Active utilization |
77.8 | % | 76.6 | % | 77.2 | % | 81.3 | % | ||||||||
| Average vessel day rates |
$ | 14,469 | $ | 13,047 | $ | 13,760 | $ | 9,960 | ||||||||
| Average total vessels |
70 | 74 | 72 | 60 | ||||||||||||
| Average stacked vessels |
(5 | ) | (8 | ) | (6 | ) | (9 | ) | ||||||||
| Average active vessels |
65 | 66 | 66 | 51 | ||||||||||||
| Worldwide fleet: |
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| Utilization |
76.9 | % | 76.5 | % | 76.7 | % | 73.5 | % | ||||||||
| Active utilization |
79.4 | % | 80.6 | % | 80.0 | % | 82.5 | % | ||||||||
| Average vessel day rates |
$ | 16,042 | $ | 14,624 | $ | 15,334 | $ | 11,738 | ||||||||
| Average total vessels |
187 | 190 | 189 | 171 | ||||||||||||
| Average stacked vessels |
(6 | ) | (10 | ) | (7 | ) | (18 | ) | ||||||||
| Average active vessels |
181 | 180 | 182 | 153 | ||||||||||||
Average active vessels exclude stacked vessels. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is ongoing. We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and they are no longer considered stacked when they are returned to active service, sold, or otherwise disposed. When economically practical marketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are included in the calculation of utilization statistics. We also include our assets held for sale in stacked vessels as they continue to incur stacking related costs. We had five (two held for sale) and eight (three held for sale) stacked vessels at June 30, 2023 and March 31, 2023, respectively. The decrease in stacked vessels is attributable to vessel sales and reactivation of vessels. Total stacking costs included in vessel operating costs for the three months ended June 30, 2023 and March 31, 2023, were $0.1 million and $0.7 million respectively.
Vessel Dispositions
We seek opportunities to sell and/or responsibly recycle our older vessels when market conditions warrant and opportunities arise. The majority of our vessels are sold to buyers who do not compete with us in the offshore energy industry. Vessel sales during the first six months of 2023 included six vessels that were classified as assets held for sale and two vessels from the active fleet.
Liquidity, Capital Resources and Other Matters
As of June 30, 2023, we had $174.7 million in cash and cash equivalents (including restricted cash), including amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences. Included in foreign subsidiary cash are balances held in U.S. dollars and foreign currencies that await repatriation due to various currency conversion and repatriation constraints and tax related matters, prior to the cash being made available for remittance to our domestic accounts. We currently intend that earnings by foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay third-party and intercompany debt of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the U. S. because cash generated from our domestic businesses and the repayment of intercompany receivables from foreign subsidiaries are currently deemed to be sufficient to fund the cash needs of our U.S. operations.
Our objective in financing our business is to maintain and preserve adequate financial resources and sufficient levels of liquidity. In addition to our cash on hand, we also have a $25.0 million revolving credit facility that matures in 2026. No amounts have been drawn on this facility. Working capital, which includes cash on hand, was $204.0 million at June 30, 2023. We have generated $33.3 million in net income and $22.5 million in cash flow from operating activities, which includes our interest payments and drydock costs, during the first six months of 2023.
As of June 30, 2023, we had $175.0 million of senior secured notes on our consolidated balance sheet, none of which is due until 2026. The 2026 Senior Secured Notes and the revolving credit facility contain two financial covenants: (i) a minimum free liquidity test of the obligors (as defined) equal to the greater of $20.0 million or 10% of net interest-bearing debt and (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries. We are currently in compliance and anticipate being able to maintain ongoing compliance with these two financial covenants.
We entered into Facility Agreements to finance a portion of the construction and delivery of three new vessels. The vessels were delivered to us in the second quarter of 2023 in exchange for approximately $12.2 million in financing. Each of the Facility Agreements bear interest at rates ranging from 2.7% to 6.0% and are payable in ten equal principal semi-annual installments, with the first Facility Agreement installment commencing in the fourth quarter of 2023. The Facility Agreements are secured by the vessels, guaranteed by Tidewater as parent guarantor and contain no financial covenants.
A key component of our growth strategy is expanding our business and fleets through acquisitions, joint ventures and other strategic transactions and we would expect to use the net proceeds from any sale of our securities for general corporate purposes, including capital expenditures, investments, acquisitions, repayment or refinancing of indebtedness, and other business opportunities. In furtherance of this strategy and as discussed above, on July 5, 2023, we closed a Sale and Purchase Agreement with Solstad pursuant to which, among other things, we acquired 37 platform supply vessels for an aggregate adjusted cash purchase price of approximately $580.0 million, plus customary extras, upon the terms and subject to the conditions set forth in the Sale and Purchase Agreement. The purchase price was funded through a combination of cash on hand and net proceeds from the Senior Secured Term Loan and from the Senior Unsecured Notes. We expect that our cash flows from the acquired vessels will be sufficient to service the new debt incurred, including scheduled principal payments, in connection with this transaction.
In addition, some of our Series A and B Warrants were exercised during July 2023 and we collected approximately $111.5 million in cash and issued approximately 1.9 million shares of our common stock in exchange for these warrants.
Cash and cash equivalents, our revolving credit facility and future net cash provided by operating activities provide us, in our opinion, with sufficient liquidity to meet our ongoing operational requirements.
Operating Activities
Net cash provided by (used in) operating activities for the six months ended June 30, 2023 and 2022 was $22.5 million and $(33.2) million, respectively.
Net cash provided by operations for the six months ended June 30, 2023 reflects net income of $32.7 million, which includes non-cash depreciation and amortization of $63.4 million and net gains on asset dispositions of $3.6 million. Combined changes in operating assets and liabilities used $21.2 million in cash, and cash paid for deferred drydock and survey costs was $52.7 million.
Net cash used in operations for the six months ended June 30, 2022 reflects a net loss of $37.3 million, which includes non-cash depreciation and amortization of $58.4 million and net losses on asset dispositions of $1.1 million. Combined changes in operating assets and liabilities used $41.1 million in cash, and cash paid for deferred drydock and survey costs was $31.1 million.
Investing Activities
Net cash outflows in both periods for investing activities for the six months ended June 30, 2023 and 2022, was $(8.8) million and $(26.7) million, respectively.
Net cash used in investing activities for the six months ended June 30, 2023 reflects receipt of $8.7 million primarily related to the sale of eight vessels. Additions to properties and equipment were comprised of approximately $12.7 million in capitalized upgrades to existing vessels and equipment, $2.1 million in down payments made on four new vessels and $2.7 million for other property and information technology equipment purchases and development work.
Net cash used in investing activities for the six months ended June 30, 2022 reflects the cash payments totaling $29.5 million associated with the acquisitions of SPO and a 51% equity interest in Sonatide and the receipt of $8.2 million primarily related to the sale of nine vessels. Additions to properties and equipment were comprised of approximately $3.8 million in capitalized upgrades to existing vessels and equipment and $1.6 million for other property and Information Technology equipment purchases and development work.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2023 and 2022 was $6.9 million and $2.5 million, respectively.
Net cash used in financing activities for the six months ended June 30, 2023 included a $1.4 million payment to acquire the non-controlling interest in a majority owned (now wholly owned) subsidiary and $5.5 million in taxes paid on share-based awards.
Net cash used in financing activities for the six months ended June 30, 2022 included $0.3 million of debt issuance costs and $2.2 million in taxes paid on share-based awards.
Application of Critical Accounting Policies and Estimates
Our 2022 Annual Report filed with the SEC on February 27, 2023, describes the accounting policies that are critical to reporting our financial position and operating results and that require management’s most difficult, subjective or complex judgments. This Quarterly Report on Form 10-Q should be read in conjunction with the discussion contained in our 2022 Annual Report regarding these critical accounting policies.
New Accounting Pronouncements
For information regarding the effect of new accounting pronouncements, see “Note (2) - Recently Issued or Adopted Accounting Pronouncements” of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For quantitative and qualitative disclosures about market risk affecting us, see Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our 2022 Annual Report. Our exposure to market risk has not changed materially since December 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with the objective of ensuring that all information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (Exchange Act), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. However, any control system, no matter how well conceived and followed, can provide only reasonable, and not absolute, assurance that the objectives of the control system are met.
We evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023.
Changes in Internal Controls Over Financial Reporting
On April 22, 2022, we completed the acquisition of SPO. Management has considered this transaction material to the results of operations, cash flows and financial position from the date of acquisition through June 30, 2023 and believes that the internal controls and procedures of the acquisition have a material effect on our internal controls over financial reporting. We are currently in the process of incorporating the internal controls and procedures of SPO into our internal controls over financial reporting for our assessment of and report on internal control over financial reporting as of December 31, 2023.
There has been no change in our internal controls over financial reporting that occurred during the quarter ended June 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
See discussion of legal proceedings in (i) “Note (10) - Commitments and Contingencies” of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report; (ii) Item 3 of Part I of our 2022 Annual Report; and (iii) “Note (12) – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Item 8 of our 2022 Annual Report.
In addition to the following risk factor, as of the date of this filing, the company and its operations continue to be subject to the risk factors previously discussed in the “Risk Factors” section contained in the 2022 Annual Report.
Restrictive covenants in the Senior Secured Notes, Senior Unsecured Notes, Super Senior Revolver and Senior Secured Term Loan may restrict our ability to raise capital and pursue our business strategies, and may have significant consequences for our operations and future prospects.
Our debt instruments, including our (i) 8.50% Senior Secured Notes due in 2026 (the “Senior Secured Notes”), (ii) 10.375% Senior Unsecured Notes due in 2028 (the “Senior Unsecured Notes” and collectively with the Senior Secured Notes, the “Senior Notes”), (iii) Super Senior Revolving Credit Facility Agreement with DNB Bank ASA, New York Branch, as Facility Agent, Nordic Trustee AS, as Security Trustee, and certain other institutions (the “Super Senior Revolver”), and (iv) Senior Secured Term Loan with DNB Bank ASA (the “Senior Secured Term Loan”), contain certain restrictive covenants. These covenants could have important consequences for our strategy and operations, including:
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limiting our ability to incur indebtedness to provide funds for investments or capital expenditures, acquisitions, debt service requirements, general corporate purposes, dividends, and to make other distributions or repurchase or redeem our stock; |
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restricting us from undertaking consolidations, mergers, sales, or other dispositions of all or substantially all our assets; requiring us to dedicate a substantial portion of our cash flow from operations to make required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures, such as investing in new vessels, and other general business activities; |
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requiring that we pledge substantial collateral, including vessels, which may limit flexibility in operating our business and restrict our ability to sell assets; |
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limiting management’s flexibility in operating our business including planning for, or reacting to, changes in our business and the industry in which we operate; |
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diminishing our ability to withstand a downturn in our business or worsening of macroeconomic or industry conditions; and |
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placing us at a competitive disadvantage against less leveraged competitors. |
The Senior Notes, Super Senior Revolver and the Senior Secured Term Loan also require us to comply with certain financial covenants, including maintenance of minimum liquidity and minimum consolidated equity.
We may be unable to meet these financial covenants or comply with these covenants, which could result in a default under the Senior Notes, Super Senior Revolver or Senior Secured Term Loan. If a default occurs and is continuing, the secured parties and the lenders under our debt agreements may elect to declare all borrowings thereunder outstanding, together with accrued interest and other fees, to be immediately due and payable. If we are unable to repay our indebtedness when due or declared due, the secured parties and the lenders under the Senior Notes, Super Senior Revolver and Senior Secured Term Loan will also have the right to foreclose on the collateral pledged to them, including the vessels, to secure the indebtedness. If such indebtedness were to be accelerated, our assets may not be sufficient to repay in full our secured indebtedness. Please refer to Note (9) - “Debt” and Note (14) - “Solstad Vessel Acquisition”) to our accompanying unaudited consolidated financial statements for additional information. As a result of the restrictive covenants under the Senior Notes, Super Senior Revolver and Senior Secured Term Loan, we may be prevented from taking advantage of business opportunities. In addition, the restrictions contained in the Senior Notes, Super Senior Revolver and Senior Secured Term Loan, including a substantial make whole premium applicable to a voluntary prepayment of obligations under the Senior Notes, may also limit our ability to plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans and adversely affect our ability to finance our operations, refinance, enter into acquisitions, execute our business strategy, make capital expenditures, effectively compete with companies that are not similarly restricted or engage in other business activities that would be in our interest.
In the future, we may also incur additional debt obligations that might subject us to additional and different restrictive covenants that could further affect our financial and operational flexibility. We cannot assure you that we will be granted waivers or amendments to these agreements if requested to obtain financial or operational flexibility or if for any reason we are unable to comply with these agreements, or that we will be able to refinance our debt on acceptable terms or at all. We may not be able to obtain debt or equity financing if and when needed with favorable terms, if at all.
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Filed with this quarterly report on Form 10-Q. |
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Furnished with this quarterly report on Form 10-Q. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
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TIDEWATER INC. |
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(Registrant) |
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| Date: August 7, 2023 |
/s/ Samuel R. Rubio |
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Samuel R. Rubio |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer and authorized signatory) |
Exhibit 10.2
RSU Form for Directors Electing Deferral
INCENTIVE AGREEMENT
FOR THE GRANT OF RESTRICTED STOCK UNITS
UNDER THE
TIDEWATER INC. 2021 STOCK INCENTIVE PLAN
THIS AGREEMENT (this “Agreement”) is entered into as of [insert date] (the “Date of Grant”) by and between Tidewater Inc., a Delaware corporation (“Tidewater” and, together with its subsidiaries, the “Company”), and [insert director name], who serves as a non-employee director of the Company (the “Director”). Capitalized terms used, but not defined, in this Agreement have the respective meanings provided in the Tidewater Inc. 2021 Stock Incentive Plan (the “Plan”).
NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, it is agreed by and between the parties as follows:
I. Restricted Stock Units
1.1 Restricted Stock Units. Effective on the Date of Grant, Tidewater hereby grants to the Director under the Plan a total of [insert number of shares] restricted stock units (the “RSUs”), subject to the terms, conditions, and restrictions set forth in the Plan and in this Agreement.
1.2 Award Restrictions. Except as otherwise provided by the Plan, the RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether voluntarily or involuntarily. The Director shall have no rights, including, but not limited to, voting and dividend rights, in the shares of Common Stock underlying the RSUs unless and until such shares are issued to the Director, or as otherwise provided in the Plan or this Agreement.
1.3 Vesting Terms.
(a) Upon vesting under the terms and conditions of the Plan and this Agreement, each RSU represents the right to receive from Tidewater one share of Common Stock, free of any restrictions, and any amounts, securities, and property notionally credited to his or her Account (as defined in Section 2.1) with respect to such RSU.
(b) The RSUs shall vest on July 26, 2024, if, except as provided in Section 1.4, the Director continues to serve on the Board on such date.
1.4 Effect of Termination of Service.
(a) Upon the Director’s death, disability (within the meaning of Section 409A of the Code), or upon the Director’s involuntary termination of service without cause during the 18-month period following a Change of Control (within the meaning of Section 409A of the Code), any unvested RSUs shall immediately vest.
(b) Except as otherwise expressly provided in this Section 1.4, termination of board service shall result in forfeiture of all unvested RSUs.
RSU Form for Directors Electing Deferral
II. Dividend Equivalents and the Issuance of Shares Upon Vesting
2.1 Restricted Stock Unit Account and Dividend Equivalents. Tidewater shall maintain an account (the “Account”) on its books in the name of the Director. Such Account shall reflect the number of RSUs awarded to the Director, as such number may be adjusted under the terms of the Plan and this Agreement, as well as any additional RSUs, cash, or other securities or property credited as a result of dividend equivalents, administered as follows:
(a) The Account shall be for recordkeeping purposes only, and no assets or other amounts shall be set aside from Tidewater’s general assets with respect to such Account.
(b) To the extent permitted by the Plan, in the event that Tidewater declares a cash dividend, or any other securities or other property are distributed to stockholders, between the Date of Grant and the date the RSUs settle under this Agreement, the Director’s Account will be credited with a cash amount equal to the fair market value of such dividend or distribution or, at the Committee’s discretion, the securities or property comprising such dividend or distribution. Any cash amount or securities or other property credited to a Director’s Account pursuant to this Section 2.1(b) shall vest and be paid to the Director, or be forfeited, at the same time and on the same terms as the RSUs to which they relate.
(c) To the extent permitted by the Plan, in the event that dividends are declared and paid in the form of shares of Common Stock rather than cash, then the Director’s Account will be credited with one additional RSU for each share of Common Stock that would have been received as a dividend had the Director’s outstanding RSUs been shares of Common Stock on such date. Such additional RSUs credited shall vest and be paid to the Director, or be forfeited, at the same time and on the same terms as the RSUs to which they relate.
2.2 Issuance of Shares of Common Stock. The number of shares of Common Stock to which the Director is entitled under this Agreement shall be transferred to the Director or his or her nominee via book entry free of restrictions as of the time set forth in the Director’s deferral election form set forth in Appendix A attached hereto. Upon issuance of such shares, the Director is free to hold or dispose of such shares, subject to applicable securities laws and any internal company policy then in effect and applicable to the Director, such as Tidewater’s Policy Statement on Insider Trading and Director Stock Ownership Guidelines.
III. Binding Effect
This Agreement shall inure to the benefit of and be binding upon the parties to this Agreement and their respective heirs, executors, administrators, and successors.
IV. Amendment, Modification or Termination
The Committee may amend, modify, or terminate any RSUs at any time prior to vesting in any manner not inconsistent with the terms of the Plan. Notwithstanding the foregoing, no amendment, modification, or termination may materially impair the rights of the Director under this Agreement without his or her consent.
RSU Form for Directors Electing Deferral
V. Inconsistent Provisions
The RSUs granted hereby are subject to the provisions of the Plan, as in effect on the Date of Grant and as it may be amended. In the event any provision of this Agreement conflicts with such a provision of the Plan, the Plan provision shall control. The Director acknowledges that a copy of the Plan was distributed to the Director and that the Director was advised to review such Plan prior to entering into this Agreement. The Director waives the right to claim that the provisions of the Plan are not binding upon the Director and the Director’s heirs, executors, administrators, legal representatives, and successors.
VI. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
VII. Severability
If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal, or unenforceable in any respect as written, the Director and the Company intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law. Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision of this Agreement, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal, or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.
VIII. Electronic Delivery and Execution of Documents
8.1 Tidewater may, in its sole discretion, deliver any documents related to the Director’s current or future participation in the Plan or any other compensation plan of Tidewater by electronic means or request Director’s consent to the terms of an award by electronic means. Such documents may include the plan, any grant notice, this Agreement, the plan prospectus, and any reports of Tidewater provided generally to Tidewater’s stockholders. In addition, the Director may deliver any grant notice or award agreement to Tidewater or to such third party involved in administering the applicable plan as Tidewater may designate from time to time. By accepting the terms of this Agreement, the Director also hereby consents to participate in such plans and to execute agreements setting the terms of participation through an on-line or electronic system established and maintained by Tidewater or a third party designated by Tidewater.
8.2 The Director acknowledges that the Director has read Section 8.1 of this Agreement and consents to the electronic delivery and electronic execution of plan documents as described in Section 8.1. The Director acknowledges that he or she may receive from Tidewater a paper copy of any documents delivered electronically at no cost to the Director by contacting Tidewater by telephone or in writing.
RSU Form for Directors Electing Deferral
IX. Entire Agreement; Modification
The Plan and this Agreement constitute the entire agreement between the parties with respect to the subject matter contained herein. This Agreement may not be modified without the approval of the Committee and the Director, except as provided in the Plan, as it may be amended from time to time in the manner provided therein, or in this Agreement, as it may be amended from time to time. Any oral or written agreements, representations, warranties, written inducements, or other communications with respect to the subject matter contained herein made prior to the execution of this Agreement shall be void and ineffective for all purposes.
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By clicking the “Accept” button, the Director represents that he or she is familiar with the terms and provisions of the Plan, and hereby accepts this Agreement subject to all of the terms and provisions thereof. The Director has reviewed the Plan, this Agreement, and the prospectus in their entirety and fully understands all provisions of this Agreement. The Director agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.
PLEASE PRINT AND KEEP A COPY FOR YOUR RECORDS
RSU Form for Directors Electing Deferral
TIDEWATER INC.
TIDEWATER INC. 2021 STOCK INCENTIVE PLAN
NON-EMPLOYEE DIRECTOR
RESTRICTED STOCK UNIT AWARD AGREEMENT
TIME OF SETTLEMENT ELECTION FORM
Please complete this Time of Settlement Election Form (the “Election Form”) and return a signed copy to the Office of the General Counsel, attention Daniel Hudson (dhudson@gmail.com), with a copy to Melissa Mong (mmong@tdw.com) of Tidewater Inc. (the “Company”) no later than [insert date] (i.e., on or before 30 days after the Date of Grant) (the “Election Deadline”).
Name: ______________________________________ (“Award Holder”)
NOTE: If you elect to defer all or a portion of your equity retainer, you will be granted restricted stock units (“RSUs”) under the Tidewater Inc. 2021 Stock Incentive Plan (the “Stock Incentive Plan”), which, contingent upon vesting as provided in the Stock Incentive Plan and the Restricted Stock Unit Award Agreement between you and the Company (the “Agreement”), will be deferred according to your election below. This Election Form does not apply to or govern any other equity awards you may receive from the Company. You must make a separate election with respect to subsequent equity awards to the extent permitted and in accordance with any rules established by the Company.
1. Settlement of Restricted Stock Units
In making this election, the following rules apply:
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The RSUs were granted on [insert date] (the “Date of Grant”) pursuant to an Agreement, subject to your continued service with the Company through the Date of Grant and are subject to the terms of this Election Form (to the extent completed and returned by you), the Agreement and the Stock Incentive Plan. |
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Unless otherwise specified, capitalized terms used but not defined in this Election Form shall have the meaning attributed to them in the Agreement or the Stock Incentive Plan, as applicable. |
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If you wish to defer settlement of the RSUs, you must complete this Election Form by the Election Deadline and select a settlement date on which you will receive the shares of Common Stock underlying the RSUs to the extent such RSUs become vested. |
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If you do not wish to defer settlement of your RSU, you do not need to complete this Election Form as the shares of Common Stock underlying your vested award will automatically be paid to you as specified in the Agreement. |
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Notwithstanding the foregoing, if you fail to complete and timely submit this Election Form for any reason, the shares of Common Stock underlying your RSU will be paid to you on the date specified in the Agreement that would have been paid absent a deferral election. |
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Further notwithstanding, if an accelerated vesting event occurs due to your death, disability (within the meaning of section 409A of the Code) or the occurrence of a Change of Control (within the meaning of section 409A of the Code) as provided in the Agreement or the Stock Incentive Plan, and as a result of such event, vesting occurs less than 12 months after the Election Deadline, the shares of Common Stock underlying your RSU will be paid to you on the date specified in the Agreement that the retainer would have been paid absent a deferral election. |
RSU Form for Directors Electing Deferral
2. Deferral Election
I hereby irrevocably elect to defer settlement of _______% (0-100%) of my RSUs upon the earlier to occur of my death, disability (within the meaning of section 409A of the Code), the occurrence of a Change of Control (within the meaning of section 409A of the Code) as provided in the Agreement or the Stock Incentive Plan, or one of the following events that I hereby select to apply to my RSUs:
___ I hereby elect to receive the shares of Common Stock related to the RSUs upon the date of my “separation from service” (within the meaning of section 409A of the Code). Generally under section 409A of the Code, your separation from service will be the date that your Board service ends. Exceptions may apply if you stay in the service of the Company following the termination of your Board service. Please contact the Company if you have questions or need additional information.
___ I hereby elect to receive the shares of Common Stock related to the RSUs on the ___ anniversary of the Date of Grant (insert 2nd-6th).
___ I hereby elect to receive the shares of Common Stock related to the RSUs upon the earlier to occur of (i) the date of my “separation from service” (within the meaning of section 409A of the Code) and (ii) the ___ anniversary of the Date of Grant (insert 2nd-6th).
3. Signature
I understand that my rights to the shares of Common Stock underlying the RSUs are subject to the rights of the creditors of the Company in the event of its insolvency. I further understand that this Election Form will become effective and irrevocable as of the end of the day on [insert date] (i.e., 30 days after the Date of Grant), which is the Election Deadline. Once I have elected the time of settlement of my RSUs by filing this completed Election Form with the Office of the General Counsel of the Company, I understand that (a) the settlement election will be irrevocable as of the Election Deadline, (b) the settlement election will control over any contrary payment time or event specified in the Agreement, and (c) the settlement election may not be changed except in limited circumstances provided under the Code. I acknowledge that, if I do not complete and timely submit this Election Form, the shares of Common Stock underlying my RSU will be paid on the date specified in the Agreement that my retainer would have been paid absent a deferral election.
Remainder of Page Intentionally Left Blank
RSU Form for Directors Electing Deferral
By executing this Election Form, I hereby acknowledge my understanding of, and agreement with, the terms and provisions set forth in this Election Form, the Agreement and the Stock Incentive Plan. Notwithstanding anything contained herein to the contrary, I acknowledge that if I am a “specified employee” (within the meaning of section 409A of the Code) at the time of my separation from service with the Company, the settlement of the RSUs will be delayed until at least six months following the date of the separation from service to the extent necessary to comply with section 409A of the Code. This Election Form is intended to comply with section 409A of the Code and shall be construed and interpreted in accordance with such intent. I acknowledge that I have been advised to consult with my own tax advisor regarding the tax consequences of executing this Election Form.
| AWARD HOLDER | TIDEWATER INC. | ||||
| By: | By: | ||||
| Name: | Name: | Daniel A. Hudson | |||
| Date: | Title: | EVP, General Counsel & Secretary | |||
| Date: | |||||
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Quintin V. Kneen, certify that:
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I have reviewed this quarterly report on Form 10-Q of Tidewater Inc.; |
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: |
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: |
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/s/ Quintin V. Kneen |
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Quintin V. Kneen |
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President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Samuel R. Rubio, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Tidewater Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: |
/s/ Samuel R. Rubio |
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Samuel R. Rubio |
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Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Tidewater Inc. (the “company”) for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Quintin V. Kneen, President and Chief Executive Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company. |
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Date: |
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/s/ Quintin V. Kneen |
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Quintin V. Kneen |
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President and Chief Executive Officer |
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A signed original of this written statement has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
The certification the registrant furnishes in this exhibit is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Tidewater Inc. (the “company”) for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Samuel R. Rubio, Executive Vice President and Chief Financial Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
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1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company. |
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Date: |
/s/ Samuel R. Rubio |
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Samuel R. Rubio |
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Executive Vice President and Chief Financial Officer |
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A signed original of this written statement has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
The certification the registrant furnishes in this exhibit is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated.