Tidewater Inc.

Hello and thank you for standing by. My name is Mel and I will be your conference operator for today. At this time, I would like to welcome everyone to the Tidewater First Quarter 2026 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. 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 redraw your question, press star one again. Thank you. I would now like to turn the call over to Wes Cutcher. Go ahead.

Thank you, Mel. Good morning, everyone, and welcome to Tidewater's first quarter 2026 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 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, May 5th, 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. Reconciliation of GAAP to non-GAAP financial measures can be found in our earnings release located on our website at tvw.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 2026 earnings conference call. I'll start the call today with the quarter's highlights and then talk about capital allocation and what we're seeing on vessel supply and demand. Wes will walk through our financial outlook and what we're thinking about for 2026 guidance. Pierce will cover the global market and operations, and Sam will close with the consolidated financial results. And each of us will touch on the impact from Operation Epic Fury. Starting with the first quarter, revenue and gross margin were both ahead of what we expected. Revenue was $326.2 million, driven mainly by higher utilization and stronger day rates. Gross margin was just under 49%, up slightly quarter over quarter and over three percentage points above our internal plan. Utilization benefited from strong uptime with less downtime for repairs and fewer dry dock days than we expected. Overall, I'm really pleased with the operational execution and with the returns we're seeing from the fleet investments we've made over the past few years. Before I get into more detail on the financials, I want to touch on Operation Epic Fury, what it meant for the quarter, and what we're watching going forward. As I said on last quarter's call, we hadn't seen any disruption to our business at the outset, and we expected that any cost impact, especially insurance and fuel, to be immaterial. And so far, that's held to be true. Our vessels in the Middle East continue to operate normally. And utilization and revenue in the first quarter, and specifically in March, which was the first full month after the operation began, came in above our forecast. We did see some higher costs, mainly in crew, along with insurance and fuel. The biggest item has been the incremental hazard pay for our crews. Insurance and fuel have been a smaller piece. Sam will share more detail in his remarks. Looking ahead, we're seeing pent-up demand in the region, and we believe activity could rebound above what we expected just a quarter ago once the conflict is resolved. In the first quarter, we generated $34 million of free cash flow. The step down sequentially was relatively less cash flow from working capital and a relatively higher dry dock spend. Just as a reminder, in the fourth quarter, we collected a sizable past due receivable from PEMEX, which drove the working capital change. And Q4 is typically our lightest dry dock quarter, whereas Q1 is usually our heaviest as we get vessels ready for busier working season as the weather improves. And that drove the dry dock change. Importantly, nothing has changed in how we're thinking about free cash flow for the year. And the first quarter is tracking with our expectations for 2026. As we discussed previously, during the first quarter, we announced our agreement to acquire Wilson & Sons UltraTug Offshore, 22 PSVs focused exclusively on the offshore market in Brazil for $500 million. We've already started the pre-integration work using the playbook we built through prior acquisitions. The Wilson's team has been well organized and is highly capable, and we're making good progress getting ready to bring the business onto the Tidewater platform. On approvals, things are moving as expected, and we still anticipate closing by the end of the second quarter. We did not repurchase any shares in the first quarter because we plan to fund the equity portion of the Wilson's transaction with cash on hand, and we're still waiting for consents to transferring the existing Wilson's debt. We still have $500 million authorized under the program, which represents about 12% of the shares outstanding as of yesterday's close. Even as we work towards closing and integrating Wilson's, we're still in a good position to look at additional M&A opportunities. Our balance sheet remains strong, and we continue to expect net leverage to be less than one times at closing. Liquidity is solid, and after issuing our unsecured notes last summer, we have good visibility into the cost of debt capital if we decide to use it for an acquisition. Our preference is still to use cash, but we'll consider using stock if the right fleet is available at the right value. With the Gulf Marks Wire, Solstead, and now Wilson acquisitions, We built a meaningful presence in essentially every major offshore basin. These have largely been newer, higher specification fleets, and they've helped reestablish Tidewater as the leading OSP provider globally. We've also successfully reentered Brazil, which we've talked about as a priority market. From here, we'll stay focused on fleets and geographies where our platform gives us an edge and where bringing additional vessels onboard can create outsized value. and we continue to benefit from our scale and high specification PSVs and anchor handlers, two of the most in-demand vessel classes in the global OSV fleet. When we look out over the next couple of years, we see the market tightening in late 26 and into 27 and 2028. That should set up for meaningful day rate improvements over that time. If day rates move up the way we expect over the coming years, that will flow through to higher earnings and cash flow generation. If we don't see value accretive acquisitions, we'll look for other ways to put that excess cash to work. Our share repurchase philosophy hasn't changed. We'll be optimistic and disciplined. And more broadly, we don't think it makes sense to build and sit on a large cash balance for an extended period. As we move through to the Wilson's closing and into a period of higher free cash flow, we'll stick with the same capital allocation framework that's core to how we run the business. In practice, that means we'll continue to weigh the relative merits of M&A versus share repurchases. We continue to view buybacks as an attractive way to return capital to shareholders. Turning to the outlook, while the Middle East conflict is still ongoing, what we've seen so far could be a net positive for the offshore vessel market over time. Energy security became a key theme since the conflict in Ukraine, and the Middle East conflict has added another layer. an increased focus on sovereign energy independence, particularly in the eastern hemisphere. So far, at least 500 million barrels of oil have been lost, and there's still no clear sign when recent production losses will be reversed. The longer that goes on, the bigger the need becomes to replace those inventories. And historically, crude prices have had a strong relationship with inventory levels, so continued depletion should provide longer-term price support. Put together, The inventory drawdown and the heightened awareness of geopolitical risks suggest oil prices may have a higher floor than before the Middle East conflict began, which supports additional offshore projects. Stepping back, we think the trend towards offshore development supports a structural improvement in demand for offshore activity and for offshore vessels. We see this as a long-term dynamic, and it's additive to the demand we've been seeing already. Recent comments from offshore drillers point to a meaningful increase in fixtures and a high level of drilling unit utilization. We view the expected pickup in offshore drilling as a strong positive for our business. We support a range of offshore applications, but drilling activity typically has been the biggest impact on vessel demand. Offshore vessel activity has been building year to date, and as it continues to pick up, the pressure on available supply creates an opportunity for higher utilization and higher day rates. On the supply side, the global fleet has stayed essentially flat over the past few years. A handful of vessels are expected to deliver late in this year into early 2027, but we view those additions as relatively small in the context of the overall market. As supply tightens further, we can see a path to day rate increases of roughly $3,000 to $4,000 per day per year for the entire fleet, moving the fleet back towards earnings cost of capital. We're excited about the drilling outlook, but we also expect other drivers of vessel demand, especially production and EPCI-related support, to remain strong. Production and EPCI work has stayed robust and helped offset some of the real relative drilling softness early in 2026. Looking ahead, we continue to like the outlook for both, given the strength we're seeing in both subsea and EPCI backlog, as well as continued momentum in FPSO orders. Over the longer term, more drilling and less developed regions should drive additional infrastructure work, which supports sustained demand across these categories. So we're pleased with how the first quarter came together. While we still have some uncertainty in the Middle East until the conflict is resolved, we're increasingly optimistic about the outlook for the business. We'll stay disciplined on capital and continue to look for value-creative ways to deploy it, and we expect the opportunities set and our ability to capitalize on it to improve over the next 18 months. And with that, let me turn it back over to West.