Tidewater Inc.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Tidewater Inc. Q4 and full year 2025 earnings conference 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. You are limited to one question and one follow-up question. 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'd 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, Jordan. Good morning, everyone, and welcome to Tidewater's fourth quarter and full year 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 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, March 3rd, 2026. 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 gap to non-gap 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 fourth quarter and full year 2025 earnings conference call. I'll start the call this morning discussing Tidewater's performance during 2025, providing some highlights of the fourth quarter. update you on our current views on capital allocation, and then discuss our outlook for the market and vessel supply and demand, including our initial thoughts on any impact from Operation Epic Puri. 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 markets and global operations, and then Sam will wrap it up with our consolidated financial results. Entering 2025, there was a good deal of uncertainty as to how the market would unfold and what the pace of offshore activity would look like. Our view was not dissimilar, but we did believe that the broader set of demand drivers for our vessels would help deliver a year consistent to 2024, which proved to be the case. In the face of last year's softer offshore drilling demand and general macro uncertainty, I'm pleased to say that Tidewater nonetheless delivered its best year in recent memory by nearly every metric. We generated year-over-year revenue growth, gross margin expansion, and average day rate growth. We generated EBITDA of nearly $600 million and generated nearly $430 million of free cash flow, well outpacing the free cash flow generated in 2024, which itself was the recent high point for the offshore industry activity. This performance against the broader industry backdrop not only speaks to the resiliency of Tidewater's business model, but also to the resiliency of the company we've endeavored to build over the last eight years with a relentless focus on scalable infrastructure and operational excellence. Fourth quarter revenue and gross margin came in ahead of our expectations. Revenue came in at $336.8 million due primarily to higher than anticipated average day rate and slightly better than anticipated utilization. Gross margin came in at nearly 49% for the quarter and an improvement quarter over quarter and about 250 basis points better than we expected. Fleet utilization continued to benefit from better than anticipated uptime and lower than expected down for repair time and dry dock days. Additionally, during the fourth quarter, we completed a strategic internal restructuring of our vessel ownership to consolidate a significant portion of the fleet under a single wholly owned U.S. entity. During the fourth quarter, we generated $151 million of free cash flow, bringing the full year 2025 total free cash flow to nearly $430 million. Fourth quarter free cash flow came in materially higher than the first three quarters of the year, which was the result of a meaningful working capital benefit, which Sam will provide more detail on later, combined with our lowest quarterly dry dock spend of the year. We are very pleased with the pre-cash flow generation of the business, ending the year with nearly $580 million of cash on the balance sheet. I made a comment last quarter that we would find it unacceptable to build this kind of cash on the balance sheet and would look for ways to put the cash to more productive, economically accreted use. Subsequent to the end of the fourth quarter, and as announced last week, we entered into an agreement to acquire Wilson Sons Offshore UltraTug for $500 million. In addition to our expectation of maintaining the existing debt at Wilson's, we plan to fund the remaining purchase price with cash on hand. We are very excited about the addition of Wilson's for a wide variety of strategic and financial reasons, many of which we discussed last week, but this is exactly the type of capital allocation opportunity we target. This acquisition has many merits as it relates to the strategic and operational capabilities it offers, but it also provides a compelling use of capital to realize an economic return well in excess of our cost of capital. Importantly, we're able to maintain a healthy balance sheet pro forma for the transaction given the structure of our unsecured debt, revolving credit facility capacity, and the continued cash flow generation of the business. It's worth noting that during the fourth quarter, we did not repurchase any shares under our repurchase program as we were working on the Wilson's acquisition. We retain our $500 million share repurchase authorization and capacity, which represents 13% of our shares outstanding as of yesterday's close. We've discussed our capital allocation philosophy over the last year or two. We've said consistently that given the strength of our balance sheet, we felt comfortable using a substantial amount of cash for share repurchases and or M&A transactions, as long as the near-term cash flow visibility provides us the ability to quickly deliver back down to below one-times net debt to EBITDA. As discussed last week, we expect to be below one-times net debt to EBITDA pro forma for the acquisition, even as of closing, assuming a June 30 closing date. Although still developing, Operation Epic Fury adds an aspect of uncertainty to our operations in the Middle East, but thus far, no real changes. Our largest geographic area of operation within this segment is Saudi Arabia, which makes up 80% of this segment's revenue for 2025, and everything there is business as usual. Our vessels in the UAE and Qatar are safely in port but remain on hire, and no customers have ordered evacuations. We do expect an increase in insurance costs while hostilities are ongoing, but that incremental cost is immaterial to our business. Diesel costs are also rising, but fuel is a pass-through to our customers. Similar to the increase in insurance costs, the impact is immaterial to our overall business. It's still early in developing, but thus far the developments do not change our outlook for 2026, which remains optimistic, particularly as it relates to the pace of offshore drilling activity. observable offshore drilling leading indicators such as tenders and contracts are materially higher over the past few months compared to earlier in 2025 which suggests that operators are progressing in earnest to commence additional offshore projects in the future in our conversations with our customers the commentary is similar to what we hear publicly offshore international projects are of high interest at pre-tender and tender conversations for our vessels continue One other indicator, which is a bit more structural in nature, is from recent oil and gas industry reports, is that the last decade of underinvestment has led to a declining resource base for many E&P companies. There have been indications that oil companies are acknowledging this challenge beyond looking just to fill the gap through their own M&A, through the rollback of capital return programs to focus on exploring activities and otherwise on activities focused on growing a given company's resource base. Combining this resource need with a longer-term hydrocarbon demand curve that looks materially higher than estimated even a year ago provides a significant incentive for our customers to explore and develop existing assets and take advantage of a healthy long-term hydrocarbon demand environment. We believe that the offshore resource base provides a compelling opportunity for oil companies to find new resource bases, excuse me, and believe that these fundamental factors will support an increase in drilling activity, not only as we progress through the year, but for at least the next few years. I've only spoken about drilling, but the other areas of activity where we benefit, production support, offshore construction, and EPCI work, are all likely to benefit in the scenario outlined. To the extent that drilling activity does increase in a structural way, this will likely occur in frontier regions that require new subsea infrastructure and ultimately FPSO installations to efficiently move product to market. This element of our business continues to serve us well today and would also provide for incremental vessel demand. It's useful to contrast this intermediate demand picture with the current state of vessel supply, which, as we often say, is the most important determinant of the long-term financial health of our business. The demand curve for vessels is highly inelastic. When vessel supply slightly exceeds demand, our pricing power is fairly restrained. However, when demand slightly exceeds vessel supply, pricing leverage accelerates quite quickly. The global fleet of vessels has been essentially unchanged, if not declining slightly over the past few years. In 2024, there was a handful of new-build vessels that were ordered, representing roughly 3% of the global fleet. We've not seen any new builds ordered since then. Given the lead time on new build orders, somewhere between two to three years, and some of the structural reasons that are limiting new build ordering that we've discussed in the past, the vessel supply and demand picture I've illustrated depicts what we believe to be an exciting outlook for the offshore vessel industry. In summary, we are pleased with how the business performed through 2025 with a particularly strong finish to close out the year. We are excited to welcome the Wilson's organization into the Tidewater family and we'll work diligently to close the transaction and to integrate the business. We will look to continue to efficiently allocate capital to the highest returning opportunities we have against a compelling vessel supply and demand environment that we believe is in the early stages of developing. And with that, let me turn the call back over to Wes for additional commentary.