Tidewater Inc.

Thank you for standing by. My name is Mandeep and I'll be your operator today. At this time, I'd like to welcome everyone to the Tidewater Q2 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Wes Goethe, Senior Vice President of Strategy, Corporate Development, and Investor Relations. You may begin.

Thank you, Mandeep. Good morning, everyone, and welcome to Tidewater's second quarter 2024 earnings conference call. I'm joined on the call this morning by our President and CEO, Quentin Nee, our Chief Financial Officer, Sam Rubio, and our Chief Commercial Officer, Piers Middleton. During today's call, we'll make certain statements that are forward-looking, referring to our plans and expectations. There are risks and uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comment that we are making during today's conference call. Please refer to our most recent Form 10-K and Form 10-Q for additional details on these factors. These documents are available on our website at tdw.com. or through the SEC at sec.gov. Information presented on this call speaks only as of today, August 7th, 2024. Therefore, you're advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures can be found in our earnings release located on our website at tdw.com. And now with that, I'll turn the call over to Quentin.

Thank you, Wes. Good morning, everyone, and welcome to the second quarter 2024 Tidewater Earnings Conference Call. Second quarter revenue nicely exceeded our expectations, driven by stronger than anticipated day rates, with printed day rates exceeding our forecast by nearly $800 per day. The second quarter marked the highest ever printed day rate for Tidewater and the highest gross margin percentage in 15 years. This is a notable milestone that highlights our efforts to hydrate the fleet through the disposition of older, smaller vessels and through the acquisition of younger, higher specification vessels over the last few years. We believe the fleet is better positioned to realize the benefits of a healthy, structurally sustainable offshore cycle and to deliver even higher day rates, better margins, and significantly greater cash flow than at any point in the 68-year history of tidewater. The second quarter is typically characterized by favorable weather conditions and is often the quarter during which global activity begins to pick up. And this is exactly what we saw this quarter. Day rate improvements were broad-based with each of our vessel classes and each of our geographic segments posting sequential day rate improvements. The continued day rate strength across each of our vessel classes and geographic segments speaks not only to the robust vessel demand, but to the persistent tightness in vessel supply in each of the regions in which we operate, and when taken together, a global tightness in vessel supply. This global tightness in vessel supply is the primary driver of the day rate performance we continue to realize. New-built vessel activity remains muted, and demand for vessels looks to improve over the coming years, which is indicative of a continued favorable supply-demand fundamentals over the intermediate to long term. We've talked about this in the past, but it seems appropriate to mention again that we re-forecast our business every week. Sam and I have been doing this for over 10 years. We often get ribbed for doing this, but the industry moves quickly, and keeping a weathered eye on the movement in the supply and demand balance by boat class and by geography is important to maximizing the company's return on investment by optimizing the geographic distribution of the fleet. Over the past month, we have seen shifting in the forward outlook. that we want to discuss with you today, because as a result of that shifting, we are bringing our full-year revenue guidance down by $25 million, or just under 2%. We now see the third quarter as slightly improved from the second quarter, and the larger step-up in performance that we were originally anticipated to begin in the third quarter to now begin in the fourth quarter. Wes will walk you through the updated guidance. Pierce will give you insight into what is driving the shift in offshore activity from the third quarter to the fourth. as well as how we execute on our geographic diversification strength when activity in a region suddenly shifts. And Sam will give you insights on how we see our operating costs going down over the next two quarters. In addition to the above, West is going to speak to you about our capital return philosophy and our thoughts on improving our debt capital structure. Pierce is going to speak to you about the overall strength in the market. And lastly, Sam is going to walk you through the consolidated numbers. All of these factors, the improvement in our debt capital structure, the overall strength of the market, combined with the added benefit from geographic diversification and the reduction in both operating and dry dock costs as we move into next year are setting us up for an even stronger year of free cash flow generation in 2025. Subsequent to last quarter's earnings release, we repurchased about 17 million of shares in the open market. That brings our year-to-date share repurchases to about 33 million. And since the inception of the buyback program in the fourth quarter of 2023, we have repurchased nearly 68 million of shares in the open market. In addition to the open market repurchases, we used 28.5 million of cash in the first quarter to buy shares related to the tax obligation on equity compensation from employees in lieu of those employees issuing their shares into the open market. So over the past three quarters, we've used 96 million of cash to reduce the share count by about 1.3 million shares. Wes will provide some more detail on our views on return on capital in his prepared remarks, but we remain committed to using the cash flow generated from the business to pursue capital allocation strategy that maximizes the return to our shareholders. We continue to pursue acquisitions, but thus far deals that are clearly value accretive to our shareholders have not materialized. There are several opportunities to acquire fleets that are strategically relevant to our existing fleet position, but the return on investment is currently higher from the repurchase of our own shares. Our focus for acquisitions remains on fleets located in North and South America, but we remain opportunistic in all geographies. In summary, we are very pleased with the performance of the business during the second quarter. Each of the various elements of demand for our business are poised to continue to build. Drilling, subsidy projects, floating production infrastructure, and support of existing production are all expected to grow materially over the next few years, and each of these activities requires offshore vessel support. We plan to continue to take advantage of a supply-constrained vessel market, in a rising demand environment to continue to push day rates and drive earnings and pre-cash flow growth, and we are well positioned to do so. And with that, let me turn the call over to Wes, Pierce, and Sam for additional commentary and our financial outlook.