In a call with financial analysts yesterday, Tidewater Inc. (NYSE:TDW) President and CEO Quintin Kneen covered not just the numbers but also gave some interesting insights into the benefits the offshore services giant is already seeing from digitalization and its efforts to cut fuel consumption and emissions.
Kneen was talking to analysts as the company reported its financials for the three and twelve months ending December 31, 2020. You can access those here, but briefly revues for the quarter and year were $91.9 million and $397.0 million, respectively compared with $118.8 million and $486.5 million, respectively, for the equivalent periods last year, while net losses , were $29.2 million ($0.72 per share) and $196.2 million ($4.86 per share), compared with $59.9 million ($1.52 per share) and $141.7 million ($3.71 per share) in 2019.
According to a transcript available through Seekingalpha.com, Kneen told analysts he was “pleased to say that this has been another solid quarter for Tidewater” and that “the worst of the pandemic-driven downturn seems to be behind us.”
A DIGITAL ENTERPRISE IN THE SHIPPING SPACE
Giving analysts what he called “a little more color on what’s been going on here behind the scenes,” Kneen said that the Tidewater team has “created a digital enterprise in the shipping space.”
Referring to Tidewater’s fleetwide roll-out of Inmarsat’s Fleet Xpress mobile broadband solution, Keen said that, “now we have a global shipping enterprise with standardized consistent global practices. And we have an IT backbone connecting all of the vessels. This allows the IoT, the Internet of Things. This is where it really gets exciting. We can begin leveraging the localized technology on the vessels and getting real-time data monitoring. And we learned from canvassing the data of the global fleet, the so-called Big Data benefit. We benefit from global efficiency but our customers benefit as well. Together, we can use the data to better manage carbon emissions, for example, but, moreover, across the board, improvements in operating efficiency. We’re beginning to raise the bar and, by doing so, reducing the commoditization of our service offering.”
“The other transformation we are embracing is working with our customers to lower the carbon emissions from our vessels,” Kneen told the analysts. “Many of you may find it surprising to know that the OSV industry has been working on improving its fuel operating efficiency and, consequently, reducing its carbon impact for our vessels for quite a long time. Quite frankly, for us, it’s been motivated largely by the self-interest of becoming a low-cost provider.
“As you may recall, fuel is provided by our customers. And therefore, fuel efficiency is a key component in their vessel selection process. But it has also been motivated by customers in areas such as Norway, which have been focused on carbon, NOx and noise emissions since the early 2000s.
“Our fleet has been operating on very low or ultra-low sulfur fuel for much of the past decade, well ahead of IMO 2020 regulation making this a requirement. Particularly for Tidewater, during our last newbuild program, our fleet became one of the largest in the world to integrate the Siemens Blue Drive intelligent propulsion management system, resulting in a significant reduction in fuel usage and greenhouse gas emissions while, at the same time, cutting maintenance costs. By investing in this technology, these vessels were also prepared for the future upgrades to utilize alternative energy sources such as battery power.
“To date, several of our vessels have been converted to utilized hybrid propulsion, including the ability to operate on shore power when in port, all paid for by the customer through upfront lump-sum payments or separately negotiated day rate increases. I’m pleased to report that these upgrades completed, in partnership with our customers, have proven quite successful in reducing emissions. Throughout 2020, these technologies achieved emissions reductions of approximately 18% overall and over 60% while in port. We are continuing to adjust our operations to take full advantage of this technology. And we expect that we will see even better results over time.
“We’ve talked about the integration of batteries as a hybrid power source. But I want to be clear that this does not mean that we feel this is the only long-term or perhaps even the best long-term solution available. Our team is constantly evaluating other potential and emerging fuel options and enhancing technologies that can further improve the operational efficiency and the performance of our vessels.
“To achieve these emission reduction goals, these upgrades require material capital investments. And while we are one of the few OSV companies with the financial strength to undertake these investments, we resist doing so without our customers also demonstrating their commitment by paying upfront for these conversions or paying higher day rates for this technology.
“As part of our broader mission of offering high-quality, profitable services to our customers, while at the same time setting ourselves on a lower emissions path, we continue to high-grade our fleet through disposing of vessels that don’t align with these goals and evaluating assets for acquisitions that would further this mission. I’m excited about these two transformations. And I look forward to keeping you updated on our progress.”