Tidewater Reports Results For The Three Months Ended June 30, 2018

08/13/2018

HOUSTON, Aug. 13, 2018 /PRNewswire/ -- Tidewater Inc. (NYSE:TDW) announced today a net loss for the three months ended June 30, 2018, of $10.9 million, or $0.44 per common share, on revenues of $105.6 million.

As more fully explained in the company's Form 10-Q for the quarter ended June 30, 2018, upon emergence from Chapter 11 bankruptcy on July 31, 2017, the company adopted fresh start accounting in accordance with applicable accounting and reporting regulations, which resulted in the company becoming a new entity for financial reporting purposes on July 31, 2017. References herein to "Successor" relate to the financial position and results of operations of the reorganized company subsequent to July 31, 2017, while references to "Predecessor" relate to the financial position and results of operations of the company through July 31, 2017.

Included in the $10.9 million ($0.44 per common share) net loss for the three months ending June 30, 2018 were the following:

$6.8 million ($0.27 per common share) of Foreign exchange losses, $5.8 million ($0.23 per common share) of which is included in Equity in net earnings (losses) of unconsolidated companies and related to our Angola joint venture, Sonatide.
$4.9 million ($0.20 per common share) gain included in Equity in net earnings (losses) of unconsolidated companies, representing dividends received from Sonatide ($12.3 million) in excess of the company's investment balance ($7.3 million) at June 30, 2018.
$1.2 million ($0.05 per common share) in non-cash Asset impairments that resulted from impairment reviews undertaken during the three months ended June 30, 2018.

Consolidated earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) for the three months ended June 30, 2018, was $16.2 million, which excludes $1.2 million of Asset impairments, but includes $3.2 million of stock-based compensation expense, $6.8 million of Foreign exchange losses and $4.9 million of Sonatide dividends received in excess of our investment balance. (See disclosures related to Non-GAAP measures in other fleet and financial data beginning on page 10 herein.)

John Rynd, Tidewater President and Chief Executive Officer commented, "Our results for the second quarter reflect strong execution by our team and a modest improvement in the overall market. As expected, utilization, vessel revenues and vessel operating margin recovered relative to reported results in the first quarter, and average day rates were generally stable quarter-to-quarter. Our focus for the remainder of the year will be on maintaining our global commitment to safe operations and high quality, cost efficient customer service. In addition, we are executing our business plan in regards to cash flow and other financial targets. We will also continue to work with the team at GulfMark to develop integration plans that will allow us to quickly and fully realize identified cost and operational synergies and to best position the combined company for future organic and other growth opportunities. As previously disclosed, we expect to close the GulfMark transaction during the fourth quarter. We continue to believe that the combination of Tidewater and GulfMark creates clear and compelling value for stakeholders of both companies. There are no financing contingencies associated with the proposed Tidewater/GulfMark merger and we are committed to completing the transaction."

Common shares and New Creditor Warrants, each of which is exercisable to acquire one common share at a price of $0.001, and the sum of common shares and New Creditor Warrants outstanding at June 30, 2018 were 26,085,274, 3,924,441 and 30,009,715, respectively.

Tidewater will hold a conference call to discuss results for the three months ended June 30, 2018 on Tuesday, August 14, 2018 at 10:00 a.m. Central Time. Investors and interested parties may listen to the teleconference via telephone by calling 1-888-771-4371 if calling from the U.S. or Canada (1-847-585-4405 if calling from outside the U.S.) and ask for the "Tidewater" call just prior to the scheduled start. A replay of the conference call will be available beginning at 12:00 p.m. Central Time on August 14, 2018, and will continue until 11:59 p.m. Central Time on August 16, 2018. To hear the replay, call 1-888-843-7419 (1-630-652-3042 if calling from outside the U.S.). The conference call ID number is 47353238.

A simultaneous webcast of the conference call will be available online at the Tidewater Inc. website, (www.tdw.com). The online replay will be available until September 14, 2018.

The conference call will contain forward-looking statements in addition to statements of historical fact. The actual achievement of any forecasted results or the unfolding of future economic or business developments in a way anticipated or projected by the company involve numerous risks and uncertainties that may cause the company's actual performance to be materially different from that stated or implied in the forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed within the "Risk Factors" section of Tidewater's recent Forms 10-Q and 10-K. For risks related to the proposed transaction with GulfMark Offshore Inc. ("GulfMark"), please see the press release dated July 16, 2018, issued by Tidewater and GulfMark.

Tidewater owns and operates one of the largest fleets of Offshore Support Vessels in the industry, with over 60 years of experience supporting offshore energy exploration and production activities worldwide.

Note: all per-share amounts are stated on a diluted basis.

Financial information is displayed on the next page.

TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)
(In thousands, except share and per share data)
	Successor		Predecessor		Successor		Predecessor
	Quarter Ended		Quarter Ended		Six Months Ended		Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Revenues:
Vessel revenues	$	104,174		112,257		191,668		269,162
Other operating revenues		1,427		2,849		5,426		6,693
		105,601		115,106		197,094		275,855
Costs and expenses:
Vessel operating costs		68,012		83,773		129,376		164,618
Costs of other operating revenues		642		1,585		3,116		4,274
General and administrative		24,425		33,059		47,990		74,786
Vessel operating leases		—		5,542		—		13,985
Depreciation and amortization		12,785		36,287		24,802		73,879
Gain on asset dispositions, net		(1,338)		(3,189)		(3,257)		(9,253)
Asset impairments		1,215		163,423		7,401		228,280
		105,741		320,480		209,428		550,569
Operating loss		(140)		(205,374)		(12,334)		(274,714)
Other income (expenses):
Foreign exchange loss		(1,002)		(1,157)		(1,350)		(493)
Equity in net earnings (losses) of unconsolidated companies		390		4,517		(15,049)		7,358
Interest income and other, net		2,914		1,680		2,786		3,268
Reorganization items		—		(313,176)		—		(313,176)
Interest and other debt costs, net		(7,547)		(10,605)		(15,146)		(31,613)
		(5,245)		(318,741)		(28,759)		(334,656)
Loss before income taxes		(5,385)		(524,115)		(41,093)		(609,370)
Income tax expense		5,797		295		9,118		2,012
Net loss	$	(11,182)		(524,410)		(50,211)		(611,382)
Less: Net income attributable to noncontrolling interests		(242)		24		(99)		7,907
Net loss attributable to Tidewater Inc.	$	(10,940)		(524,434)		(50,112)		(619,289)
Basic loss per common share	$	(0.44)		(11.13)		(2.09)		(13.15)
Diluted loss per common share	$	(0.44)		(11.13)		(2.09)		(13.15)
Weighted average common shares outstanding		24,654,220		47,121,304		23,989,254		47,101,155
Dilutive effect of stock options and restricted stock		—		—		—		—
Adjusted weighted average common shares		24,654,220		47,121,304		23,989,254		47,101,155

Note (A): The company did not incur any restructuring-related professional services costs during the quarter and six months ended June 30, 2018 (Successor), but did incur professional services costs related the proposed combination with GulfMark during the quarter ended June 30, 2018 of $1.5 million. Restructuring-related professional services costs included in general and administrative expenses for the quarter and six months ended June 30, 2017 (Predecessor), were $6.7 million and $23.4 million, respectively. General and administrative expenses for the quarter and six months ended June 30, 2018 (Successor) included stock-based compensation of $3.2 million and $6.1 million, respectively. General and administrative expenses for the quarter and six months ended June 30, 2017 (Predecessor) included stock-based compensation of $0.3 million and ($0.6) million, respectively.

Note (B): Equity in net earnings (losses) of unconsolidated companies for the quarter and six months ended June 30, 2018 (Successor) includes $5.8 million and $20.6 million of foreign exchange losses, respectively, related to our Angola joint venture, Sonatide.

Note (C): Common shares and new creditor warrants and the sum of common shares and New Creditor Warrants outstanding at June 30, 2018 (Successor) were 26,085,274, 3,924,441 and 30,009,715, respectively.

TIDEWATER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and par value data)
	Successor
	June 30,		December 31,
ASSETS	2018		2017
Current assets:
Cash and cash equivalents	$	459,286		432,035
Restricted cash		5,213		21,300
Trade and other receivables, net		96,630		114,184
Due from affiliates		197,059		230,315
Marine operating supplies		28,930		28,220
Other current assets		10,213		19,130
Total current assets		797,331		845,184
Investments in, at equity, and advances to unconsolidated companies		1,335		29,216
Net properties and equipment		803,725		837,520
Deferred drydocking and survey costs		14,372		3,208
Other assets		26,779		31,052
Total assets	$	1,643,542		1,746,180

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	30,561		38,497
Accrued expenses		49,312		54,806
Due to affiliates		62,353		99,448
Accrued property and liability losses		2,790		2,585
Current portion of long-term debt		6,290		5,103
Other current liabilities		17,815		19,693
Total current liabilities		169,121		220,132
Long-term debt		438,559		443,057
Accrued property and liability losses		2,651		2,471
Other liabilities		57,685		58,576

Commitments and Contingencies

Equity:
Successor Common stock of $0.001 par value, 125,000,000 shares authorized, 26,085,274 and 22,115,916 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		26		22
Additional paid-in capital		1,064,039		1,059,120
Retained deficit		(89,378)		(39,266)
Accumulated other comprehensive loss		(403)		(147)
Total stockholders' equity		974,284		1,019,729
Noncontrolling interests		1,242		2,215
Total equity		975,526		1,021,944
Total liabilities and equity	$	1,643,542		1,746,180

TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
	Successor		Predecessor		Successor		Predecessor
	Quarter Ended		Quarter Ended		Six Months Ended		Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Net loss	$	(11,182)		(524,410)		(50,211)		(611,382)
Other comprehensive income:
Unrealized gains (losses) on available for sale securities, net of tax of $0, $0, $0 and $61		43		86		(256)		(8)
Change in loss on derivative contract, net of tax of $0, $0, $0 and $823		—		—		—		1,317
Change in supplemental executive retirement plan liability, net of tax of $0, $0, $0 and ($927)		—		—		—		(1,721)
Change in pension plan minimum liability, net of tax of $0, $0, $0 and $215		—		—		—		399
Change in other benefit plan minimum liability, net of tax of $0, $0, $0 and ($2,046)		—		—		—		(3,799)
Total comprehensive loss	$	(11,139)		(524,324)		(50,467)		(615,194)

TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
	Successor		Predecessor
	Six Months Ended		Six Months Ended
	June 30, 2018		June 30, 2017
Operating activities:
Net loss	$	(50,211)		(611,382)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Reorganization items		—		308,011
Depreciation and amortization		22,572		73,879
Amortization of deferred drydocking and survey costs		2,230		—
Amortization of debt premium and discounts		(900)		—
Provision for deferred income taxes		—		(7,743)
Gain on asset dispositions, net		(3,257)		(9,253)
Asset impairments		7,401		228,280
Changes in investments in, at equity, and advances to unconsolidated companies		27,881		(9,163)
Compensation expense - stock-based		6,139		(562)
Excess tax liability on stock option activity		—		4,927
Changes in assets and liabilities, net:
Trade and other receivables		(15,097)		57,701
Changes in due to/from related parties, net		19,869		22,983
Marine operating supplies		(711)		(922)
Other current assets		8,752		(22,668)
Accounts payable		1,709		(15,384)
Accrued expenses		(6,652)		17,870
Accrued property and liability losses		205		(816)
Other current liabilities		5,590		(1,216)
Other liabilities		11		3,135
Cash paid for deferred drydocking and survey costs		(13,394)		—
Other, net		4,846		9,110
Net cash provided by operating activities		16,983		46,787
Cash flows from investing activities:
Proceeds from sales of assets		12,968		3,072
Additions to properties and equipment		(5,775)		(9,982)
Payments related to novated vessel construction contract		—		5,272
Net cash provided by (used in) investing activities		7,193		(1,638)
Cash flows from financing activities:
Principal payment on long-term debt		(2,637)		(5,048)
Payments to General Unsecured Creditors		(8,377)		—
Other		(1,998)		(6,127)
Net cash used in financing activities		(13,012)		(11,175)
Net change in cash, cash equivalents and restricted cash		11,164		33,974
Cash, cash equivalents and restricted cash at beginning of period		453,335		649,804
Cash, cash equivalents and restricted cash at end of period	$	464,499		683,778
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	16,134		8,651
Income taxes	$	10,083		5,778
Supplemental disclosure of non-cash investing activities:
Additions to properties and equipment	$	—		282

TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
							Accumulated
			Additional		Retained		other		Non
	Common		paid-in		(deficit)		comprehensive		controlling
	stock		capital		earnings		loss		interest		Total
Balance at December 31, 2017 (Successor)	$	22		1,059,120		(39,266)		(147)		2,215		1,021,944
Total comprehensive loss		—		—		(50,112)		(256)		(99)		(50,467)
Issuance of common stock		4		(2)		—		—		—		2
Amortization of restricted stock units		—		6,047		—		—		—		6,047
Acquisition of noncontrolling interest		—		(1,126)		—		—		(874)		(2,000)
Balance at June 30, 2018 (Successor)	$	26		1,064,039		(89,378)		(403)		1,242		975,526

Balance at December 31, 2016 (Predecessor)	$	4,707		171,018		1,570,027		(6,446)		8,258		1,747,564
Total comprehensive loss		—		—		(619,289)		(3,812)		7,907		(615,194)
Stock option activity		—		562		—		—		—		562
Cancellation of restricted stock awards		—		—		157		—		—		157
Amortization/cancellation of restricted stock units		5		(6,064)		—		—		—		(6,059)
Cash paid to noncontrolling interests		—		—		—		—		(1,200)		(1,200)
Balance at June 30, 2017 (Predecessor)	$	4,712		165,516		950,895		(10,258)		14,965		1,125,830

The company's vessel revenues and vessel operating costs and the related percentage of total vessel revenues, were as follows:

	Successor				Predecessor				Successor				Predecessor
	Quarter Ended				Quarter Ended				Six Months Ended				Six Months Ended
	June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
(In thousands)			%				%				%				%
Vessel revenues:
Americas (D)	$	32,601		31%		31,887		28%		58,682		31%		112,420		42%
Middle East/Asia Pacific		22,406		21%		27,766		25%		40,794		21%		54,444		20%
Europe/Mediterranean Sea		13,357		13%		11,031		10%		22,980		12%		21,197		8%
West Africa		35,810		35%		41,573		37%		69,212		36%		81,101		30%
Total vessel revenues	$	104,174		100%		112,257		100%		191,668		100%		269,162		100%
Vessel operating costs:
Crew costs	$	36,368		35%		42,210		38%		70,592		37%		84,039		31%
Repair and maintenance		7,978		8%		13,844		12%		15,682		8%		30,918		11%
Insurance and loss reserves		2,191		2%		3,124		3%		1,120		2%		1,357		1%
Fuel, lube and supplies		8,181		8%		9,428		8%		17,193		9%		18,707		7%
Other		13,294		13%		15,167		14%		24,789		13%		29,597		11%
Total vessel operating costs		68,012		65%		83,773		75%		129,376		69%		164,618		61%
Vessel operating margin (E)	$	36,162		35%		28,484		25%		62,292		31%		104,544		39%

Note (D): Included in Americas vessel revenues for the six months ended June 30, 2017 (Predecessor) is $39.1 million of revenue related to the early cancellation of a long-term vessel charter contract.

Note (E): Vessel operating margin equals vessel revenues less vessel operating costs and excludes general and administrative expenses, vessel operating leases and depreciation and amortization expenses. The following tables reconcile vessel operating margin as presented above to vessel operating profit (loss):

	Successor		Predecessor		Successor		Predecessor
	Quarter Ended		Quarter Ended		Six Months Ended		Six Months Ended
(In thousands)	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Vessel operating margin	$	36,162		28,484	$	62,292		104,544
General and administrative expenses - vessel operations		(16,613)		(18,002)		(33,480)		(37,447)
Vessel operating leases		—		(5,542)		—		(13,985)
Depreciation and amortization - vessel operations		(12,680)		(34,892)		(24,592)		(71,065)
Vessel operating profit (loss)	$	6,869		(29,952)	$	4,220		(17,953)

The company's other operating profit (loss) consists of the following:

	Successor		Predecessor		Successor		Predecessor
	Quarter Ended		Quarter Ended		Six Months Ended		Six Months Ended
(In thousands)	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Other operating revenues	$	1,427		2,849		5,426		6,693
Costs of other marine revenues		(642)		(1,585)		(3,116)		(4,274)
General and administrative expenses - other operating activities		(2)		(355)		(16)		(880)
Depreciation and amortization - other operating activities		(5)		(854)		(10)		(1,709)
Other operating profit (loss)	$	778		55		2,284		(170)

The company's operating loss and other components of loss before income taxes and its related percentage of total revenues, were as follows:

	Successor				Predecessor				Successor				Predecessor
	Quarter Ended				Quarter Ended				Six Months Ended				Six Months Ended
	June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
(In thousands)			%				%				%				%
Vessel operating profit (loss):
Americas (F)	$	5,681		5%		(15,699)		(14%)	$	10,592		5%		14,919		5%
Middle East/Asia Pacific		625		1%		(1,316)		(1%)		(1,628)		(1%)		(7,480)		(3%)
Europe/Mediterranean Sea		(1,142)		(1%)		(10,163)		(9%)		(4,696)		(2%)		(17,265)		(6%)
West Africa		1,705		2%		(2,774)		(2%)		(48)		<1%		(8,127)		(3%)
		6,869		7%		(29,952)		(26%)		4,220		2%		(17,953)		(7%)
Other operating profit (loss)		778		1%		55		<1%		2,284		1%		(170)		(<1%)
		7,647		7%		(29,897)		(26%)		6,504		2%		(18,123)		(7%)

Corporate general and administrative expenses (G)		(7,810)		(7%)		(14,702)		(13%)		(14,494)		(7%)		(36,459)		(13%)
Corporate depreciation		(100)		(<1%)		(541)		(<1%)		(200)		(<1%)		(1,105)		(<1%)
Corporate expenses		(7,910)		(7%)		(15,243)		(13%)		(14,694)		(7%)		(37,564)		(13%)

Gain on asset dispositions, net		1,338		1%		3,189		3%		3,257		2%		9,253		3%
Asset impairments		(1,215)		(1%)		(163,423)		(142%)		(7,401)		(4%)		(228,280)		(83%)
Operating loss	$	(140)		(<1%)		(205,374)		(178%)	$	(12,334)		(6%)		(274,714)		(100%)
Foreign exchange loss		(1,002)		(1%)		(1,157)		(1%)		(1,350)		(1%)		(493)		(<1%)
Equity in net earnings (losses) of unconsolidated companies		390		<1%		4,517		4%		(15,049)		(8%)		7,358		3%
Interest income and other, net		2,914		3%		1,680		1%		2,786		2%		3,268		1%
Reorganization items		—		—		(313,176)		(272%)		—		—		(313,176)		(114%)
Interest and other debt costs		(7,547)		(7%)		(10,605)		(9%)		(15,146)		(8%)		(31,613)		(11%)
Loss before income taxes	$	(5,385)		(5%)		(524,115)		(455%)	$	(41,093)		(21%)		(609,370)		(221%)

Note (F): Americas segment vessel operating profit for the six months ended June 30, 2017 (Predecessor) includes $39.1 million of revenue related to the early cancellation of a long-term vessel charter contract.

Note (G): The company did not incur any restructuring-related professional services costs during the quarter and six months ended June 30, 2018 (Successor), but did incur professional services costs related the proposed combination with GulfMark during the quarter ended June 30, 2018 of $1.5 million. Restructuring-related professional services costs included in general and administrative expenses for the quarter and six months ended June 30, 2017 (Predecessor), were $6.7 million and $23.4 million, respectively. General and administrative expenses for the quarter and six months ended June 30, 2018 (Successor) included stock-based compensation of $3.2 million and $6.1 million, respectively. General and administrative expenses for the quarter and six months ended June 30, 2017 (Predecessor) included stock-based compensation of $0.3 million and ($0.6) million, respectively.

For the following tables for illustrative purposes, the company has combined the Successor and Predecessor results to derive combined results for the three months ended September 30, 2017. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor may not be comparable to those of the Predecessor. The quarter ended June 30, 2017 is a Predecessor period while the quarters ended June 30, 2018, March 31, 2018 and December 31, 2017 are Successor periods.

TIDEWATER INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – QUARTERLY DATA
(Unaudited)
(In thousands, except share and per share data)

		Three Months Ended

		June 30,		March 31,		December 31,		September 30,		June 30,
		2018		2018		2017		2017		2017
Revenues:
Vessel revenues	$		104,174		87,494		101,313		104,911		112,257
Other operating revenues			1,427		3,999		3,140		5,652		2,849
			105,601		91,493		104,453		110,563		115,106
Costs and expenses:
Vessel operating costs			68,012		61,364

News Details

Tidewater Reports Results For The Three Months Ended June 30, 2018