Revenue: $333.4 million for Q1 2025. Gross Margin: 50.1% for Q1 2025. Net Income: $42.7 million or $0.83 per share for Q1 2025. Free Cash Flow: $94.7 million for Q1 2025. Average Day Rate: $22,303 per day, setting a new quarterly record. Utilization Rate: Increased to 78.4% in Q1 2025 from 77.7% in Q4 2024. Adjusted EBITDA: $154.2 million for Q1 2025. Share Repurchase: $90 million spent, reducing share count by approximately 2.5 million shares. Capital Expenditures: $10.3 million in Q1 2025. Dry Dock Costs: $43.3 million incurred in Q1 2025.

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Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Tidewater Inc (NYSE:TDW) reported first quarter revenue of $333.4 million, exceeding expectations due to higher average day rates and better utilization. The company achieved a gross margin of over 50% for the second consecutive quarter, indicating strong operational efficiency. Tidewater Inc (NYSE:TDW) generated approximately $95 million of free cash flow in the first quarter, marking the second highest quarterly free cash flow since the offshore recovery began. The company fully utilized its $90 million share repurchase program, reducing the outstanding share count by 2.5 million shares, demonstrating a commitment to returning capital to shareholders. Tidewater Inc (NYSE:TDW) maintains a relatively low leverage profile and a highly scalable global operating footprint, providing flexibility to optimize the business amid macroeconomic uncertainties.

Negative Points

The company anticipates a 5% sequential decline in revenue for the second quarter, with a projected gross margin of 44%, due to lower revenue and higher costs associated with idle days and repair expenses. Tidewater Inc (NYSE:TDW) faces challenges in the North Sea and Mexico markets, which continue to experience demand-side issues. The company has not received payment for several quarters from its primary customer in Mexico, with an outstanding receivable balance of $35.1 million as of March 31. There is uncertainty regarding the impact of recent US-led tariff regimes on global trading patterns and the subsequent effect on the global economy and energy needs. The vessel supply outlook remains unchanged, with newbuild discussions largely ceased, and the modest number of newbuilds on order not expected to deliver until late 2026 or 2027.

Q & A Highlights

Q: Are you seeing any changes in customer plans or activity levels for the back half of 2026 and 2027? A: Piers Middleton, Chief Commercial Officer: We haven't seen any changes from our customers regarding their outlook and plans. Conversations with customers remain positive, and we are seeing pre-tender discussions for 2026 and 2027, indicating continued interest and activity.

Story Continues

Q: Do you expect to participate in the movement of assets out of the North Sea, and how is the Asian market shaping up? A: Piers Middleton, Chief Commercial Officer: We expect to benefit from the tightening market in the North Sea as vessels move to Brazil. In Asia, Malaysia is back online, and we expect the supply-demand balance to improve by Q3 or Q4, which will allow us to continue pushing prices.

Q: What is the impact of stacking vessels in West Africa on margins, and are these core vessels? A: West Gotcher, Senior Vice President of Strategy, Corporate Development & Investor Relations: We have six vessels stacked, primarily small crude transport vessels, which are not core to our main operations. The stacking costs are negligible, and these vessels are not major contributors to our financial profile.

Q: Can you provide more details on the Brazil tender and its impact on the market? A: Piers Middleton, Chief Commercial Officer: The Brazil tender includes some incremental vessels for Petrobras, which will help tighten the supply-demand balance in the North Sea. Rates in Brazil are expected to push towards the high 50s, benefiting the overall market.

Q: How has the guidance for the rest of 2025 changed after the Q1 outperformance? A: West Gotcher, Senior Vice President of Strategy, Corporate Development & Investor Relations: We have 88% of our backlog covered by contracts, giving us confidence in our guidance. However, there are still open revenue days that need to be secured. The Q1 outperformance provides more confidence, but there is still some uncertainty.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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