Tidewater Inc.

Thank you for standing by. My name is Janice and I will be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Q1 2025 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 would like to ask questions during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Wes Kocher, Senior Vice President of Strategy Corporate Development and Investor Relations. Please go ahead.

Thank you, Janice. Good morning, everyone, and welcome to Tidewater's first quarter 2025 earnings conference call. I'm joined on the call this morning by our President and CEO, Quentin Neen, 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 and referring to our plans and expectations. The 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're 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, May 6, 2025. Therefore, we advise 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 GAAPs and 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 Tidewater's first quarter 2025 earnings conference call. As usual, I'd like to discuss some highlights of the first quarter, provide an update on the execution of our share repurchase program and our views on capital allocation, discuss the state of the offshore vessel market in the midst of the tariff and macroeconomic uncertainty, and lastly, provide an update on the state of vessel supply. Wes will then provide some commentary on our capital structure and financial outlook Piers will give an overview of the global market, and Sam will discuss our consolidated financial results. First quarter revenue and gross margin nicely exceeded our expectations. Revenue came in at $333.4 million due to both a higher average day rate and better utilization. Gross margin came in at over 50% for the second consecutive quarter. Day rates outperformed our expectations by more than $500 per day, setting a new quarterly day rate record at 22,303. We experienced lower than anticipated downfall repair days, which has the benefit of increasing utilization, lowering repair and maintenance expenses, and reducing fuel expenses related to off-hire time. The sequential day rate and utilization improvements in the quarter were an encouraging start to the year. especially given that the quarter was disadvantaged by being our largest TriDoc quarter of the year and the fact that from a calendar year seasonality perspective, the first quarter is typically characterized as the slowest quarter of the year. Additionally, during the first quarter, we generated about $95 million of free cash flow, the second highest quarterly free cash flow figure since the offshore recovery began. down slightly from the fourth quarter, even though during the first quarter we incurred more than $30 million of additional TRIDOC and capital expenditures than we did in the fourth quarter. As we've discussed in prior calls, our view on share repurchase program, as we view our share repurchase program as a nice mechanism to return capital to shareholders, but also as a mechanism to take advantage of inefficiencies we see in the market. particularly to the extent that compelling M&A opportunities are not viable or actionable. During the first quarter and the beginning of the second quarter, amidst broader market volatility, we leaned heavily into the share repurchase program, fully utilizing the $90 million of share repurchase activity available to us under our existing debt agreements, repurchasing 2.3 million shares on the open market at an average price of 39%, 31%. In addition, we further reduced the outstanding share count by 180,000 shares in exchange for paying 7.5 million of employee taxes on the vesting of equity compensation at an average price of $41.55 per share, bringing the total use of cash to reduce the outstanding share count to nearly 100 million for 2.5 million shares. Given our long-term outlook for the offshore activity and our associated view on the intrinsic value of our shares, we view the recent buyback activity as particularly opportunistic. M&A remains a cornerstone of our growth strategy. However, the broader market volatility and shifting sentiment on offshore activity continues to challenge deal dynamics. The strength and durability of any acquired cash flows and the results in consolidated capital structure are important to our view of a transaction, although our focus remains on levered overall returns and near-term pre-cash flow generation. And to the extent that we find targets that satisfy these conditions, we remain interested in aggressively pursuing them. We will evaluate a deal using stock, cash, or a combination of both. Although using shares would need to satisfy our long-term view of our shares' intrinsic value, we will contemplate additional balance sheet leverage for the right acquisition, providing the ability to quickly deliver back to a reasonable level, as we have done in our prior transactions. Shifting gears a bit, I'd like to discuss recent macroeconomic events and how they influence our business on the markets. We are all watching in real time how the recently announced U.S.-led tariff regime will ultimately shape trading patterns globally. its subsequent impact on the global economy, and the resulting impact on global energy needs, which is ultimately what drives our customers' investment plans. It's difficult to say how these factors will play out, but it's easy to say the uncertainty about the magnitude and direction of global growth is relatively high. The good news is that we, along with the broader industry, are familiar with how to navigate situations like this. The benefit of maintaining a relatively low leverage profile and a highly scalable global operating footprint is that it provides the flexibility to react quickly to optimize the business. Reacting quickly requires optimizing the fleet by relocating, withholding, or disposing of vessel capacity. The investments we've made in our scalable shore-based infrastructure ensure that we run the business as efficiently as possible. Our geographic diversification ensures that we are able to redistribute the fleet to focus on those geographic areas that look to be relatively more attractive. I recount these factors not to suggest that these are required today or that activity is structurally declining. In fact, it's quite the opposite. To date, we've learned of no canceled or delayed projects and continue to see signs of strength for the intermediate to long-term plans for our customers, the long-term contracts for offshore drilling units, perhaps the most tangible evidence of continued conviction by our customers. I simply mention it as a reminder that through the cycles of the past decades, we have fundamentally changed how we run the business, focused on efficiency, free cash flow generation, financial and operational flexibility, and geographic diversification. 2025 looks to be in line with our prior expectations, with pockets of driller inactivity offset by increases in subsea construction and production-related activity offering opportunities to deploy our vessels. Recent contract awards for offshore drilling and tendering activity for our vessels provide for cautious optimism that, as we progress into 2026, offshore activity will return to a point that demand will outpace the supply of vessels and provides us the opportunity to resume our aggressive push on day rates. We anticipate that we will continue to see more rig and vessel tenders as we progress through the summer and into the fall, further supporting the intermediate term outlook. Encouragingly, the pipeline of subsea projects and FPSOs deliveries remains robust and provides for an alternative source of demand in addition to the anticipated incremental drilling activity. The vessel supply outlook remains essentially unchanged from the prior quarter, although the general feeling for potential new builds has waned. As a reminder, a shade under 3% of the global supply is on order, most of which were placed back in the latter half of 2024. Our view is that new build discussions have largely ceased. The modest number of new builds on order are now expected to deliver until late 2026 at the earliest, likely into 2027. and likely won't sufficiently replace vessels that are expected to attrition during that same timeframe, resulting in a continued decrease in net vessel supply and supportive of our expectation that demand will outpace supply in the intermediate term. We watch new build activity very closely and will continue to do so, but remain of the view that current shipyard capacity, prevailing global day rates and contract terms, The state of the financing markets and vessel technology considerations make any large-scale new building programs unlikely. In summary, we're pleased with a nice start to the year and expect 2025 to play out largely as anticipated, with optimism on longer-term offshore activity continuing to support the fundamentals for our business. And with that, let me turn the call back over to Wes for additional commentary and our financial outlook.