Tidewater Inc.

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Tidewater Third Quarter 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 a question 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 Goucher, Senior Vice President of Strategy, Corporate Development, and Investor Relations. Please go ahead.

Thank you, Liz. Good morning, everyone, and welcome to Tidewater's third 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 Operating Officer, Piers Middleton. During today's call, we'll make certain statements that are forward-looking and referring to our plans and expectations. There are risks, uncertainties, and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments 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, November 11th, 2025. 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. 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 Tidewater Third Quarter 2025 Earnings Conference Call. I'll start as usual by providing some highlights of the third quarter, updating you on our current view on capital allocation, and then discussing the offshore vessel market and our outlook on vessel supply and demand. Wes will then provide some additional detail on our financial outlook and give you our 2026 guidance. Pierce will give you an overview of the global market and global operations, and then Sam will wrap it up with our consolidated financial results. Third quarter revenue and gross margin nicely exceeded our expectations. Revenue came in at 341.1 million due primarily to a higher than expected average date rate and slightly better than anticipated utilization. Gross margin came in at 48% for the quarter, about 200 basis points better than our guidance. The primary factor driving the increase in average day rate was the benefit of our fleet rolling onto higher day rate contracts. Additionally, fleet utilization continued to benefit from the substantial dry dock and maintenance investment we've made over the past few years, driving meaningful uptime performance compared to our expectations. During the third quarter, we generated $83 million of free cash flow, bringing the first nine months of 2025 total free cash flow to nearly $275 million. cash flow generation we continue to demonstrate alongside balance sheet and liquidity enhancements we completed during the third quarter provides us with a substantial degree of confidence in our ability to deploy a significant amount of capital over time to drive shareholder value based on the estimates for 2026 that west is going to cover shortly absent any cash used in m a or share repurchases we will be ending 2026 with close to 800 million dollars in cash which While we like the pace of cash flow generation, we would find it unacceptable from an allocation of capital perspective. We currently retain our $500 million share repurchase authorization, representing approximately 18% of shares outstanding as of yesterday's close. As discussed on last quarter's earnings call, we see this share repurchase authorization as a long-term program that we will lean into based on competing capital allocation opportunities we have before us. In this regard, we did not repurchase any shares during the past quarter due to these competing priorities. Our current leverage position is such that we feel comfortable in potentially using a substantial amount of cash in an M&A transaction and are comfortable adding leverage to the business, provided that we have confidence that the near-term cash flows provide the ability to quickly deliver back to below one times net debt to EBITDA, very similar and consistent with what we have done in our prior acquisitions. Importantly, given our current balance sheet, future cash flow generation, and liquidity position, M&A and buybacks are not necessarily an either-or proposition. However, how certain M&A discussions progress and whether or not they ultimately come together can shift our cadence and immediate tactics in executing share repurchases. But I don't want to leave you with the impression that we are limited in the long run on our ability to execute on both. Much of the commentary for offshore activity during 2025 has been on the pace and amplitude of the recovery from a relatively muted period of tendering for near-term offshore projects. We believe there are a number of factors that have precipitated this white space dynamic, not the least of which have been macro uncertainties, OPEC production and a relatively tepid commodity price environment, and supply chain bottlenecks for critical offshore infrastructure. By all accounts, including observations by the drilling contractors, recent public commentary, and conversations with our customers, it appears that the next few quarters represents a shoulder period of drilling activity ahead of an uptick towards the end of 2026, with increasing conviction on the state of drilling activity into 2027 and beyond. We believe this to be a reasonable expectation given our conversations, but also more broadly, evaluating expected total global hydrocarbon demand projections and what appears to be a hydrocarbon supply curve that will, in a slight surplus in 2026, move into a meaningful deficit thereafter. This should result in capital expenditures to bring on new production ahead of the shortfall, providing further confidence to the uptick in drilling activity that appears to be developing as evidenced by the recent tendering activity for offshore drilling units. In the intervening period, Tidewater is in the advantageous position compared to many in the offshore sector in that we are the beneficiary of a wide variety of offshore activities, all of which remain robust. Production support is a critical piece of our business, comprising roughly 50% of what we do today. The space level of demand remains steady and is supported by current commodity prices. The continued proliferation and deployment of incremental FPSO units is providing additional vessel demand. FPSO support has always been a component of our business, but the volume of units that are delivering and expected to deliver over the coming years is fairly unique in the history of the offshore industry. In addition, many of these FPSOs are being deployed into frontier areas that have limited shipping infrastructure and are in challenging weather and wave conditions, which should ultimately disproportionately benefit our larger vessel classes. On the EPCI and offshore construction segment of our business, our observation has been that backlog for these projects usually have a few years lead time before converting to vessel demand. We've seen that backlog begin to convert into a meaningful increase in demand, and based on customer conversations, that demand is set to further strengthen in 2026 and in 2027. These demand drivers are important components of our business and help mitigate some of the near-term softness we see in the drilling market. In the longer term, the structural growth in these markets will continue to put added strain on vessel supply. And when drilling activity growth does resume in earnest, vessel supply will be that much more constrained by the growth in these other sectors, providing even more leverage to vessel owners than what we saw in the 2022 to 2024 period. As important as these factors are, particularly in straining vessel supply and the drilling recovery, in the near term, these factors don't adequately offset the absence of additional drilling activity to provide us the ability to aggressively push up day rates. However, we do expect this non-drilling demand to help us retain our utilization in day rates next year. To the extent drilling activity comes in a bit stronger than what we are guiding today, we would expect some additional benefit to our 2026 financial performance. We continue to believe that tight vessel supply will remain a tailwind for the sector and that the structural limitations that impact new-build investment decisions will limit any significant new-build vessel programs for the foreseeable future. In summary, we are pleased with the cash flow that our business is generating. We are optimistic about the long-term outlook for the offshore vessel industry and remain exceptionally well positioned to drive earnings and free cash flow generation over the coming years. Additionally, we are in the fortunate position of having a significant amount of capital to deploy, and we remain committed to deploying this capital to its highest and best use for our shareholders. And with that, let me turn the call back over to Wes for additional commentary and our financial outlook.