Offshore services giant Tidewater Inc. (NYSE: TDW) reported results for the quarter ending March 31, 2021, that still showed a lot of red ink. But, in a sign that it may see better things ahead, it says it is getting near the end of its planned vessel disposals.
First, the numbers. Tidewater reported revenue for the quarter of $83.5 million compared with $116.4 million for the three months ending March 31, 2020. Net losses were $35.3 million ($0.87 per common share) compared with $18.4 million ($0.46 per common share) in the same quarter of 2020.
Included in the net losses for the three months ending March 31, 2021 were severance expenses totaling $0.1 million; excluding these costs, the company would have reported a net loss for quarter of $35.2 million ($0.86 per common share). Included in the net losses for the three months ending March 31, 2020 were $10.3 million in long-lived asset impairments and one-time severance expenses; excluding these costs, net losses for the three months ending March 31, 2020 were $8.1 million (or $0.20 per common share).
President and CEO Quintin Kneen, commented, “I am pleased to report that we once again generated free cash flow for the latest quarter. In the first quarter of 2021, we generated $19.2 million of free cash flow and for the trailing twelve months, which were the most difficult twelve months the company has ever seen, we generated $87.1 million of free cash flow.
“Since late 2018, we have dedicated ourselves to building an offshore vessel company that is able to generate positive free cash flow throughout the business cycle by optimizing the earnings potential of the fleet, being the lowest cost operator and by adroitly managing drydocks and capital investments.
“The shore base infrastructure we have built is highly scalable and the operations have a substantial degree of operating leverage. I look forward to the acceleration in cash generation that will result from combined benefit of higher day rates as we enter a more balanced supply and demand environment and the lower per unit administrative cost of our scalable shore based infrastructure as more vessels are put to work. “
“We’ve designed a sustainable business that will be free cash flow positive in the worst of times and significantly cash flow positive in the best of times,” Kneen told analysts in a conference call.
“We sold six vessels in the quarter for $11 million,” continued Kneen. “We sold two more subsequent to the quarter, and we have 18 vessels left in the assets held for sale category. Based on the recovery in the market that we see beginning to unfold in the second half of 2021, I don’t anticipate reducing the vessel fleet any further than what we currently have in assets held for sale. After this lot is sold, I anticipate everything we own should be working by the end of 2022.
“I am very much looking forward to getting out of the layup vessel business because that certainly has cost us $5.4 million in the first quarter. Annualized, that’s $21.6 million of cost per year that we can add to the bottom line by getting all of these vessels out of layup. And in addition, there will be the operating profit from these currently idle vessels”
So, how many boats has Tidewater shed?
Here’s what CFO Sam Rubio told analysts:
“In Q4 2019, we began reclassifying vessels on our balance sheet from property and equipment to assets held for sale. And at that time, we reclassified 46 vessels. Most of these vessels have been stacked for a considerable time. In 2020, we added another 30 vessels to assets held for sale, and we sold 53, leaving the balance of 23 at year-end.
“During the first quarter, we sold three more vessels plus another three from active — from the active fleet— for $11 million.
“We have since sold two more vessels in April for $3 million, and we currently have 18 vessels left and expect to sell them this year.”