UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022March 31, 2023
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number: 1-6311
Tidewater Inc.
(Exact name of registrant as specified in its charter)
Delaware | 72-0487776 |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
842 West Sam Houston Parkway North, Suite 400
Houston, Texas 77024
(Address of principal executive offices) (Zip code)
(713) 470-5300
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $0.001 par value per share | TDW | New York Stock Exchange |
Series A Warrants to purchase shares of common stock | TDW.WS.A | New York Stock Exchange |
Series B Warrants to purchase shares of common stock | TDW.WS.B | New York Stock Exchange |
Warrants to purchase shares of common stock | TDW.WS | NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
| Accelerated filer |
Non-accelerated filer ☐ Emerging Growth Company ☐ |
|
| Smaller reporting company ☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
42,065,81350,864,557 shares of Tidewater Inc. common stock $0.001 par value per share were outstanding on July 31, 2022.April 30, 2023.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, except share and par value data)
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 87,981 | $ | 149,037 | $ | 165,145 | $ | 164,192 | ||||||
Restricted cash | 1,240 | 1,240 | 4,972 | 1,241 | ||||||||||
Trade and other receivables, less allowance for credit losses of $2,288 and $1,948 at June 30, 2022 and December 31, 2021, respectively | 189,259 | 86,503 | ||||||||||||
Due from affiliates, less allowance for credit losses of $12,215 and $72,456 at June 30, 2022 and December 31, 2021, respectively | 0 | 70,134 | ||||||||||||
Trade and other receivables, less allowance for credit losses of $12,640 and $14,060 at March 31, 2023 and December 31, 2022, respectively | 182,198 | 156,465 | ||||||||||||
Marine operating supplies | 21,182 | 12,606 | 24,448 | 30,830 | ||||||||||
Assets held for sale | 6,862 | 14,421 | 695 | 4,195 | ||||||||||
Prepaid expenses and other current assets | 23,259 | 8,731 | 18,978 | 20,985 | ||||||||||
Total current assets | 329,783 | 342,672 | 396,436 | 377,908 | ||||||||||
Net properties and equipment | 838,612 | 688,040 | 786,168 | 796,655 | ||||||||||
Deferred drydocking and survey costs | 53,661 | 40,734 | 82,787 | 61,080 | ||||||||||
Indemnification assets | 30,269 | 0 | 27,698 | 28,369 | ||||||||||
Other assets | 30,410 | 24,334 | 34,058 | 33,644 | ||||||||||
Total assets | $ | 1,282,735 | $ | 1,095,780 | $ | 1,327,147 | $ | 1,297,656 | ||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 30,537 | $ | 20,788 | $ | 64,775 | $ | 38,946 | ||||||
Accrued expenses | 109,212 | 51,734 | 107,348 | 105,518 | ||||||||||
Due to affiliates | 0 | 61,555 | ||||||||||||
Other current liabilities | 47,872 | 23,865 | 43,220 | 50,323 | ||||||||||
Total current liabilities | 187,621 | 157,942 | 215,343 | 194,787 | ||||||||||
Long-term debt | 168,279 | 167,885 | 169,423 | 169,036 | ||||||||||
Other liabilities | 85,188 | 68,184 | 68,968 | 67,843 | ||||||||||
Commitments and contingencies | ||||||||||||||
Equity: | ||||||||||||||
Common stock of $0.001 par value, 125,000,000 shares authorized, 42,029,882 and 41,307,617 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | 42 | 41 | ||||||||||||
Common stock of $0.001 par value, 125,000,000 shares authorized, 50,780,847 and 50,554,179 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 51 | 51 | ||||||||||||
Additional paid-in capital | 1,554,561 | 1,376,494 | 1,553,919 | 1,556,990 | ||||||||||
Accumulated deficit | (715,649 | ) | (677,900 | ) | (688,911 | ) | (699,649 | ) | ||||||
Accumulated other comprehensive loss | 1,763 | 2,668 | ||||||||||||
Accumulated other comprehensive income | 8,254 | 8,576 | ||||||||||||
Total stockholders’ equity | 840,717 | 701,303 | 873,313 | 865,968 | ||||||||||
Noncontrolling interests | 930 | 466 | 100 | 22 | ||||||||||
Total equity | 841,647 | 701,769 | 873,413 | 865,990 | ||||||||||
Total liabilities and equity | $ | 1,282,735 | $ | 1,095,780 | $ | 1,327,147 | $ | 1,297,656 |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, except per share data)
Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Vessel revenues | $ | 162,175 | $ | 88,514 | $ | 266,051 | $ | 169,507 | $ | 191,180 | $ | 103,876 | ||||||||||||
Other operating revenues | 1,272 | 1,439 | 3,125 | 3,950 | 1,924 | 1,853 | ||||||||||||||||||
Total revenue | 163,447 | 89,953 | 269,176 | 173,457 | 193,104 | 105,729 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Vessel operating costs | 100,257 | 64,263 | 168,768 | 125,283 | 115,459 | 68,511 | ||||||||||||||||||
Costs of other operating revenues | 483 | 581 | 844 | 1,648 | 1,151 | 361 | ||||||||||||||||||
General and administrative | 27,804 | 16,787 | 46,021 | 32,830 | 23,545 | 18,217 | ||||||||||||||||||
Depreciation and amortization | 31,766 | 28,549 | 58,423 | 58,276 | 30,666 | 26,657 | ||||||||||||||||||
Long-lived asset impairment credit | 0 | 0 | (500 | ) | 0 | |||||||||||||||||||
Affiliate credit loss impairment credit | 0 | (1,000 | ) | 0 | (1,000 | ) | ||||||||||||||||||
Loss on asset dispositions, net | 1,297 | 932 | 1,090 | 2,880 | ||||||||||||||||||||
Long-lived asset impairment and other | — | (500 | ) | |||||||||||||||||||||
Gain on asset dispositions, net | (2,216 | ) | (207 | ) | ||||||||||||||||||||
Total costs and expenses | 161,607 | 110,112 | 274,646 | 219,917 | 168,605 | 113,039 | ||||||||||||||||||
Operating income (loss) | 1,840 | (20,159 | ) | (5,470 | ) | (46,460 | ) | 24,499 | (7,310 | ) | ||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Foreign exchange gain (loss) | (1,881 | ) | 422 | (935 | ) | (428 | ) | |||||||||||||||||
Equity in net earnings (losses) of unconsolidated companies | (244 | ) | 52 | (244 | ) | (1,797 | ) | |||||||||||||||||
Foreign exchange gain | 2,348 | 946 | ||||||||||||||||||||||
Interest income and other, net | 349 | 8 | 3,835 | 31 | 130 | 3,486 | ||||||||||||||||||
Loss on warrants | (14,175 | ) | 0 | (14,175 | ) | 0 | ||||||||||||||||||
Interest and other debt costs, net | (4,284 | ) | (3,944 | ) | (8,459 | ) | (8,485 | ) | (4,190 | ) | (4,175 | ) | ||||||||||||
Total other expense | (20,235 | ) | (3,462 | ) | (19,978 | ) | (10,679 | ) | (1,712 | ) | 257 | |||||||||||||
Loss before income taxes | (18,395 | ) | (23,621 | ) | (25,448 | ) | (57,139 | ) | ||||||||||||||||
Income (loss) before income taxes | 22,787 | (7,053 | ) | |||||||||||||||||||||
Income tax expense | 6,619 | 6,026 | 11,837 | 8,035 | 11,971 | 5,218 | ||||||||||||||||||
Net loss | $ | (25,014 | ) | $ | (29,647 | ) | $ | (37,285 | ) | $ | (65,174 | ) | ||||||||||||
Net income (loss) | 10,816 | (12,271 | ) | |||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 567 | (185 | ) | 464 | (397 | ) | 78 | (103 | ) | |||||||||||||||
Net loss attributable to Tidewater Inc. | $ | (25,581 | ) | $ | (29,462 | ) | $ | (37,749 | ) | $ | (64,777 | ) | ||||||||||||
Basic loss per common share | $ | (0.61 | ) | $ | (0.72 | ) | $ | (0.91 | ) | $ | (1.59 | ) | ||||||||||||
Diluted loss per common share | $ | (0.61 | ) | $ | (0.72 | ) | $ | (0.91 | ) | $ | (1.59 | ) | ||||||||||||
Net income (loss) attributable to Tidewater Inc. | $ | 10,738 | $ | (12,168 | ) | |||||||||||||||||||
Basic income (loss) per common share | $ | 0.21 | $ | (0.29 | ) | |||||||||||||||||||
Diluted income (loss) per common share | $ | 0.21 | $ | (0.29 | ) | |||||||||||||||||||
Weighted average common shares outstanding | 41,814 | 40,899 | 41,614 | 40,808 | 50,604 | 41,412 | ||||||||||||||||||
Dilutive effect of warrants, restricted stock units and stock options | 1,368 | — | ||||||||||||||||||||||
Adjusted weighted average common shares | 41,814 | 40,899 | 41,614 | 40,808 | 51,972 | 41,412 |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(Unaudited)
(In Thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
Net loss | $ | (25,014 | ) | $ | (29,647 | ) | $ | (37,285 | ) | $ | (65,174 | ) | ||||
Other comprehensive loss: | ||||||||||||||||
Unrealized loss on note receivable | (846 | ) | 0 | (846 | ) | 0 | ||||||||||
Change in liability of pension plans | 138 | (207 | ) | (59 | ) | (278 | ) | |||||||||
Total comprehensive loss | $ | (25,722 | ) | $ | (29,854 | ) | $ | (38,190 | ) | $ | (65,452 | ) |
Three Months Ended | ||||||||
March 31, 2023 | March 31, 2022 | |||||||
Net income (loss) | $ | 10,816 | $ | (12,271 | ) | |||
Other comprehensive income (loss): | ||||||||
Unrealized loss on note receivable | (132 | ) | — | |||||
Change in liability of pension plans | (190 | ) | (197 | ) | ||||
Total comprehensive income (loss) | $ | 10,494 | $ | (12,468 | ) |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Six Months | Six Months | |||||||
Ended | Ended | |||||||
June 30, 2022 | June 30, 2021 | |||||||
Operating activities: | ||||||||
Net loss | $ | (37,285 | ) | $ | (65,174 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 40,287 | 36,694 | ||||||
Amortization of deferred drydocking and survey costs | 18,136 | 21,582 | ||||||
Amortization of debt premium and discounts | 765 | 1,986 | ||||||
Provision for deferred income taxes | 145 | 648 | ||||||
Loss on asset dispositions, net | 1,090 | 2,880 | ||||||
Gain on bargain purchase | (1,300 | ) | 0 | |||||
Loss on debt extinguishment | 0 | 59 | ||||||
Affiliate credit loss impairment credit | 0 | (1,000 | ) | |||||
Long-lived asset impairment credit | (500 | ) | 0 | |||||
Loss on warrants | 14,175 | 0 | ||||||
Stock-based compensation expense | 3,421 | 2,676 | ||||||
Changes in assets and liabilities, net of effects of business acquisition: | ||||||||
Trade and other receivables | (35,085 | ) | 22,394 | |||||
Changes in due to/from affiliates, net | (20 | ) | 4,693 | |||||
Accounts payable | 8,072 | (792 | ) | |||||
Accrued expenses | 2,354 | (2,074 | ) | |||||
Deferred drydocking and survey costs | (31,063 | ) | (6,771 | ) | ||||
Other, net | (16,419 | ) | (7,234 | ) | ||||
Net cash provided by (used in) operating activities | (33,227 | ) | 10,567 | |||||
Cash flows from investing activities: | ||||||||
Proceeds from asset dispositions | 8,163 | 29,560 | ||||||
Acquisitions, net of cash acquired | (29,525 | ) | 0 | |||||
Additions to properties and equipment | (5,380 | ) | (1,861 | ) | ||||
Net cash provided by (used in) investing activities | (26,742 | ) | 27,699 | |||||
Cash flows from financing activities: | ||||||||
Principal payments on long-term debt | 0 | (37,901 | ) | |||||
Debt issuance and modification costs | (371 | ) | (855 | ) | ||||
Debt extinguishment premium | 0 | (59 | ) | |||||
Tax on share-based awards | (2,176 | ) | (758 | ) | ||||
Net cash used in financing activities | (2,547 | ) | (39,573 | ) | ||||
Net change in cash, cash equivalents and restricted cash | (62,516 | ) | (1,307 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 154,276 | 155,225 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 91,760 | $ | 153,918 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 7,626 | $ | 7,028 | ||||
Income taxes | $ | 9,330 | $ | 6,609 | ||||
Supplemental disclosure of noncash investing activities: | ||||||||
Acquisition of SPO | $ | 162,648 | $ | 0 | ||||
Supplemental disclosure of noncash financing activities: | ||||||||
Warrants issued for SPO acquisition | $ | 162,648 | $ | 0 |
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2023 | March 31, 2022 | |||||||
Operating activities: | ||||||||
Net income (loss) | $ | 10,816 | $ | (12,271 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 21,048 | 17,673 | ||||||
Amortization of deferred drydocking and survey costs | 9,618 | 8,984 | ||||||
Amortization of debt premium and discounts | 420 | 375 | ||||||
Provision for deferred income taxes | 35 | 177 | ||||||
Gain on asset dispositions, net | (2,216 | ) | (207 | ) | ||||
Gain on bargain purchase | — | (1,300 | ) | |||||
Long-lived asset impairment and other | — | (500 | ) | |||||
Stock-based compensation expense | 2,103 | 1,458 | ||||||
Changes in assets and liabilities, net of effects of business acquisition: | ||||||||
Trade and other receivables | (25,733 | ) | (15,570 | ) | ||||
Changes in due to/from affiliates, net | — | (20 | ) | |||||
Accounts payable | 25,829 | 2,825 | ||||||
Accrued expenses | 1,830 | 3,207 | ||||||
Deferred drydocking and survey costs | (31,325 | ) | (12,612 | ) | ||||
Other, net | 369 | (3,843 | ) | |||||
Net cash provided by (used in) operating activities | 12,794 | (11,624 | ) | |||||
Cash flows from investing activities: | ||||||||
Proceeds from asset dispositions | 5,716 | 4,628 | ||||||
Acquisitions, net of cash acquired | — | (1,039 | ) | |||||
Additions to properties and equipment | (8,651 | ) | (1,229 | ) | ||||
Net cash provided by (used in) investing activities | (2,935 | ) | 2,360 | |||||
Cash flows from financing activities: | ||||||||
Acquisition of non-controlling interest in a majority owned subsidiary | (1,427 | ) | — | |||||
Debt issuance and modification costs | — | (263 | ) | |||||
Tax on share-based awards | (3,747 | ) | (1,017 | ) | ||||
Net cash used in financing activities | (5,174 | ) | (1,280 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 4,685 | (10,544 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 167,977 | 154,276 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 172,662 | $ | 143,732 |
TIDEWATER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
(Unaudited)
(In Thousands)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2023 | March 31, 2022 | |||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 98 | $ | — | ||||
Income taxes | $ | 17,057 | $ | 3,200 |
Cash, cash equivalents and restricted cash at |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In Thousands)
Three Months Ended | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | other | Non | ||||||||||||||||||||||
Common | paid-in | Accumulated | comprehensive | controlling | ||||||||||||||||||||
stock | capital | deficit | income (loss) | interest | Total | |||||||||||||||||||
Balance at March 31, 2022 | $ | 42 | $ | 1,376,934 | $ | (690,068 | ) | $ | 2,471 | $ | 363 | $ | 689,742 | |||||||||||
Total comprehensive loss | 0 | 0 | (25,581 | ) | (708 | ) | 567 | (25,722 | ) | |||||||||||||||
SPO acquisition warrants | 0 | 176,823 | 0 | 0 | 0 | 176,823 | ||||||||||||||||||
Amortization of share-based awards | 0 | 804 | 0 | 0 | 0 | 804 | ||||||||||||||||||
Balance at June 30, 2022 | $ | 42 | $ | 1,554,561 | $ | (715,649 | ) | $ | 1,763 | $ | 930 | $ | 841,647 | |||||||||||
Balance at March 31, 2021 | $ | 41 | $ | 1,372,846 | $ | (584,246 | ) | $ | (875 | ) | $ | 945 | $ | 788,711 | ||||||||||
Total comprehensive loss | 0 | 0 | (29,462 | ) | (207 | ) | (185 | ) | (29,854 | ) | ||||||||||||||
Amortization of share-based awards | 0 | 881 | 0 | 0 | 0 | 881 | ||||||||||||||||||
Balance at June 30, 2021 | $ | 41 | $ | 1,373,727 | $ | (613,708 | ) | $ | (1,082 | ) | $ | 760 | $ | 759,738 |
Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||
Additional | other | Non | Additional | other | Non | |||||||||||||||||||||||||||||||||||||||||||
Common | paid-in | Accumulated | comprehensive | controlling | Common | paid-in | Accumulated | comprehensive | controlling | |||||||||||||||||||||||||||||||||||||||
stock | capital | deficit | income (loss) | interest | Total | stock | capital | deficit | income (loss) | interest | Total | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | 51 | $ | 1,556,990 | $ | (699,649 | ) | $ | 8,576 | $ | 22 | $ | 865,990 | |||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | 10,738 | (322 | ) | 78 | 10,494 | |||||||||||||||||||||||||||||||||||||||||
Acquisition of non-controlling interest in a majority owned subsidiary | — | (1,427 | ) | — | — | — | (1,427 | ) | ||||||||||||||||||||||||||||||||||||||||
Amortization of share-based awards | — | (1,644 | ) | — | — | — | (1,644 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | 51 | $ | 1,553,919 | $ | (688,911 | ) | $ | 8,254 | $ | 100 | $ | 873,413 | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | 41 | $ | 1,376,494 | $ | (677,900 | ) | $ | 2,668 | $ | 466 | $ | 701,769 | $ | 41 | $ | 1,376,494 | $ | (677,900 | ) | $ | 2,668 | $ | 466 | $ | 701,769 | ||||||||||||||||||||||
Total comprehensive loss | 0 | 0 | (37,749 | ) | (905 | ) | 464 | (38,190 | ) | — | — | (12,168 | ) | (197 | ) | (103 | ) | (12,468 | ) | |||||||||||||||||||||||||||||
Issuance of common stock | 1 | (1 | ) | 0 | 0 | 0 | 0 | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||
SPO acquisition warrants | 0 | 176,823 | 0 | 0 | 0 | 176,823 | ||||||||||||||||||||||||||||||||||||||||||
Amortization of share-based awards | 0 | 1,245 | 0 | 0 | 0 | 1,245 | — | 441 | — | — | — | 441 | ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | 42 | $ | 1,554,561 | $ | (715,649 | ) | $ | 1,763 | $ | 930 | $ | 841,647 | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | 41 | $ | 1,371,809 | $ | (548,931 | ) | $ | (804 | ) | $ | 1,157 | $ | 823,272 | ||||||||||||||||||||||||||||||||||
Total comprehensive loss | 0 | 0 | (64,777 | ) | (278 | ) | (397 | ) | (65,452 | ) | ||||||||||||||||||||||||||||||||||||||
Amortization of share-based awards | 0 | 1,918 | 0 | 0 | 0 | 1,918 | ||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | 41 | $ | 1,373,727 | $ | (613,708 | ) | $ | (1,082 | ) | $ | 760 | $ | 759,738 | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | 42 | $ | 1,376,934 | $ | (690,068 | ) | $ | 2,471 | $ | 363 | $ | 689,742 |
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
INTERIM FINANCIAL STATEMENTS |
The accompanying unaudited condensed consolidated financial statements forreflect the interim periods presented herein have been preparedfinancial position, results of operations, comprehensive income, cash flows, and changes in conformity with United States generally accepted accounting principlesstockholders’ equity of Tidewater Inc., a Delaware corporation, and inits consolidated subsidiaries, collectively referred to as the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the“company”, “Tidewater”, “we”, “our”, or “us”.
The accompanying unaudited condensed consolidated financial statements athave been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and pursuant to the datesrules and for the periods indicated as required by Rule 10-01 of Regulation S-Xregulations of the Securities and Exchange Commission (SEC). Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years.financial information. Accordingly, certain information and disclosures normally included in our annual financial statements have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 20212022, filed with the SEC on March 9, 2022.February 27, 2023 (2022 Annual Report). In the opinion of management, the accompanying financial information reflects all normal recurring adjustments necessary to fairly state our results of operations, financial position and cash flows for the periods presented and are not indicative of the results that may be expected for a full year.
The unaudited condensed consolidatedOur financial statements include thehave been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all subsidiaries (entities in which we have a controlling financial interest), and all intercompany accounts of Tidewater Inc. and its subsidiaries. Intercompany balances and transactions are eliminated in consolidation.have been eliminated. We use the equity method to account for equity investments over which we exercise significant influence but do not exercise control and are not the primary beneficiary.
Certain prior year amounts have been reclassified to conform to the current year presentation. Unless otherwise specified, all per share information included in this document is on a diluted earnings per share basis.
(2) | RECENTLY ISSUED OR ADOPTED ACCOUNTING PRONOUNCEMENTS |
In November 2021,September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 20212022-10,04, Disclosures by Business Entities about Government Assistance,of Supplier Finance Program Obligations, which requires disclosures about supplier finance programs including the typesnature of government assistance that we received, our accounting for the governmental assistanceprogram, activity during the period, changes from period to period and its effect on our financial statements.potential magnitude. The guidance is effective for annual periods beginning after December 15, 2021,2022, with early adoption permitted, and themost disclosures can beare applied either prospectively at the date of initial application or retrospectively.retrospectively to each period in which a balance sheet is presented. We will adoptadopted this standard in the annual period endingon December 31, 2022,January 1, 2023 and we are currently evaluating the effectsit did not have any impact on our consolidated financial statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Topic 805, Business Combinations, to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The guidance is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the effect of the standard on our consolidated financial statements and related disclosures.
In July 2021, the FASB issued Accounting Standards Update (ASU) 2021-05, Lessors – Certain Leases with Variable Lease Payments, which amends Topic 842, Accounting for Leases, to require a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification (i.e. sales-type or direct financing) would trigger a Day 1 loss. The guidance is effective for annual and interim periods beginning after December 15, 2021, with early adoption permitted. We adopted this standard on January 1, 20222023, and it did not have a materialany impact on our consolidated financial statements and related disclosures.
In May 2021, the FASB issued ASU-2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The guidance is effective for annual and interim periods beginning after December 15, 2021, with early adoption permitted. We adopted this standard on January 1, 2022 and it did not have a material impact on our consolidated financial statements and related disclosures.
(3) | ACQUISITION OF SWIRE PACIFIC OFFSHORE HOLDINGS LTD |
On April 22, 2022 (MergerClosing Date), we acquired Swire Pacific Offshore Holdings Ltd., a limited company organized under the laws of Bermuda (SPO), which ownsat closing owned 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. On the MergerClosing Date, we paid $42.0 million in cash and issued 8,100,000 warrants, each of which is exercisable at $0.001 per share for one share of our common stock.stock (SPO acquisition warrants). In addition, we paid $19.6 million in cashat closing and received an $8.8 million post-closing working capital refund related to pre-closing working capital adjustments, for a total consideration of $223.5$215.5 million. The cash portion of the purchase price is subject to customary post-closing adjustment mechanisms related to SPO’s closing date working capital, cash and indebtedness. Revenues and net earnings of SPO from the Merger Date through June 30, 2022 included in our consolidated statements of operations were $43.2 million and $5.3 million, respectively.
Assets acquired and liabilities assumed in the business combination were recorded at their estimated fair values as of the MergerClosing Date under the acquisition method of accounting. The
As of March 31, 2023, the following recorded fair value estimates below are subject to adjustment during the measurement period subsequent to the Merger Date, primarily consisting of the final valuation for various working capital items, tax and other liabilities existing on the Merger Date. The estimated fair values of certain assets and liabilities including long-lived assets and contingencies require judgments and assumptions. Adjustments might be made to these estimates during the measurement period and those adjustments could be material. The warrants issued in the acquisition were initially classified as liabilities subject to mark to market fair value adjustments but were reclassified to equity on June 24, 2022. See Note 6 for additional details.
The provisional amounts for the assets acquired and liabilities assumed are based on estimates of their fair values as ofwere final, with no material measurement period adjustments made during the Merger Date and were as follows:quarter:
(In Thousands) | ||||||
Assets | ||||||
Cash | $ | 33,152 | $ | 33,152 | ||
Trade and other receivables | 64,621 | 64,621 | ||||
Marine operating supplies | 5,122 | 5,122 | ||||
Assets held for sale | 2,500 | 2,500 | ||||
Prepaid expenses and other current assets | 5,232 | 4,174 | ||||
Net properties and equipment | 179,707 | 174,415 | ||||
Indemnification assets (A) | 32,279 | 32,279 | ||||
Other assets | 1,153 | 1,153 | ||||
Total assets | 323,766 | 317,416 | ||||
Liabilities | ||||||
Accounts payable | 1,594 | 1,594 | ||||
Accrued expenses | 54,924 | 54,924 | ||||
Other current liabilities | 26,856 | 28,511 | ||||
Other liabilities | 16,886 | 16,886 | ||||
Total liabilities | 100,260 | 101,915 | ||||
Net assets acquired | 223,506 | 215,501 |
(A) | Consists primarily of tax liabilities existing at the |
Business combination related costs were expensed as incurred in general and administrative expense and consistedconsist of various advisory, legal, accounting, valuation and other professional fees totaling $7.2$0.7 million and $9.4$2.2 million for the three and sixmonths ended June 30, March 31, 2023 and 2022, respectively.
Property and equipment acquired in the business combination consisted primarily of offshore support vessels. We recorded property and equipment acquired at estimated fair value of approximately $179.7 million. The fair values of the offshore support vessels were estimated by applying both an income approach, using projected discounted cash flows, and a market approach. We estimate that the remaining useful lives for the vessels acquired fall in the range of one to 16 years, based on an original estimated useful life of 20 years. NaN goodwill was recognized in connection with this business combination.
The unaudited supplemental pro forma results present consolidated information as if the business combination were completed on January 1, 2021.2022. The pro forma results include, among others, (i) a reduction in depreciation expense for adjustments to property and equipment and (ii) the reversal of any income or expense related to assets retained by the seller and SPO’s former parent, Banyan Overseas Ltd.,Limited, a limited company organized under the laws of Bermuda.Bermuda (Banyan). The pro forma results do not include any potential synergies or non-recurring charges that may result directly from the business combination.
(In Thousands) | ||||
Period from | ||||
January 1, 2022 | ||||
to March 31, 2022 | ||||
Revenues | $ | 159,677 | ||
Net loss | (12,736 | ) | ||
(In Thousands) | ||||||||
Period from | ||||||||
Year ended | January 1, 2022 | |||||||
December 31, 2021 | to June 30, 2022 | |||||||
Revenues | $ | 578,506 | $ | 336,275 | ||||
Net loss | (143,509 | ) | (38,808 | ) | ||||
(4) | ALLOWANCE FOR CREDIT LOSSES |
Expected credit losses are recognized on the initial recognition of our trade accounts receivable and contract assets. In each subsequent reporting period, even if a loss has not yet been incurred, credit losses are recognized based on the history of credit losses and current conditions, as well as reasonable and supportable forecasts affecting collectability. We developed an expected credit loss model applicable to our trade accounts receivable and contract assets that considers our historical performance and the economic environment, as well as the credit risk and its expected development for each segmented group of customers that share similar risk characteristics. It is our practice to write off receivables when all legal options for collection have been exhausted.
Activity in the allowance for credit losses for the sixthree months ended June 30, 2022March 31, 2023 is as follows:
Trade | Due | Trade | ||||||||||
(In Thousands) | and Other | from | and Other | |||||||||
Receivables | Affiliates | Receivables | ||||||||||
Balance at January 1, 2022 | $ | 1,948 | $ | 72,456 | ||||||||
Balance at January 1, 2023 | $ | 14,060 | ||||||||||
Current period provision for expected credit losses | 340 | 0 | 125 | |||||||||
Acquisition of Sonatide joint venture (see Note 8) | 0 | (59,678 | ) | |||||||||
Write offs | (1,484 | ) | ||||||||||
Other | 0 | (563 | ) | (61 | ) | |||||||
Balance at June 30, 2022 | $ | 2,288 | $ | 12,215 | ||||||||
Balance at March 31, 2023 | $ | 12,640 |
The balance in our allowance for credit losses at March 31, 2023 and December 31, 2022, includes $11.6 million and $11.7 million respectively, previously reported in the allowance for credit losses related to amounts due from affiliates which are now combined with trade and other receivables.
(5) | REVENUE RECOGNITION |
Refer to Note See “Note (1413) Segment and Geographic Distribution of Operations” for the amount of revenue by segment and in total for the worldwide fleet.
Contract Balances
At June 30, 2022March 31, 2023, we had $2.7 million and $3.3$5.3 million of deferred mobilizationmobilizations costs included within prepaid expenses and other current assets and $3.1 million of deferred mobilization costs included in other assets, respectively.assets.
At June 30, 2022March 31, 2023, we have $1.6had $4.5 million of deferred mobilization revenue included within accrued expenses related to unsatisfied performance obligations whichthat will be recognized during the remainder of 20222023 and 20232024.
(6) |
|
Earnings per share
In recent years through the second quarter of 2022, we reported annual and quarterly losses from operations and reported basic and diluted losses per share based on the actual average shares of common stock outstanding during the relevant period. For the quarter ended March 31, 2023, we reported net income from operations. Our fully diluted earnings per share for the three months ended March 31, 2023, is based on our weighted average common shares outstanding plus the common stock equivalent of our outstanding “in-the-money” warrants, restricted stock units and stock options.
Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in accumulated other comprehensive income (loss) (OCI) by component, net of tax, for the three and six months ended June 30, 2022 and 2021 are as follows:tax:
(In Thousands) | Three Months Ended | |||||||
June 30, 2022 | June 30, 2021 | |||||||
Balance at March 31, 2022 and 2021 | $ | 2,471 | $ | (875 | ) | |||
Unrealized loss on note receivable | (846 | ) | 0 | |||||
Pension benefits recognized in OCI | 138 | (207 | ) | |||||
Balance at June 30, 2022 and 2021 | $ | 1,763 | $ | (1,082 | ) |
(In Thousands) | Six Months Ended | Three Months Ended | ||||||||||||||
June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | |||||||||||||
Balance at December 31, 2021 and 2020 | $ | 2,668 | $ | (804 | ) | |||||||||||
Balance at December 31, 2022 and 2021 | $ | 8,576 | $ | 2,668 | ||||||||||||
Unrealized loss on note receivable | (846 | ) | 0 | (132 | ) | — | ||||||||||
Pension benefits recognized in OCI | (59 | ) | (278 | ) | (190 | ) | (197 | ) | ||||||||
Balance at June 30, 2022 and 2021 | $ | 1,763 | $ | (1,082 | ) | |||||||||||
Balance at March 31, 2023 and 2022 | $ | 8,254 | $ | 2,471 |
Dilutive Equity Instruments
We had outstandingThe following table presents the changes in the number of common shares, incremental "in-the-money"“in-the-money” warrants, restricted stock units and stock options at June 30, 2022 and 2021, respectively, as follows:outstanding:
Total shares outstanding including warrants, restricted stock units and stock options | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | ||||||||||||
Common shares outstanding | 42,029,882 | 41,000,575 | 50,780,847 | 41,716,885 | ||||||||||||
New creditor warrants (strike price $0.001 per common share) | 395,401 | 639,354 | 81,244 | 465,398 | ||||||||||||
GulfMark creditor warrants (strike price $0.01 per common share) | 309,351 | 669,601 | 107,877 | 429,812 | ||||||||||||
SPO acquisition warrants (strike price $0.001 per common share) (A) | 8,100,000 | 0 | ||||||||||||||
Restricted stock units and stock options | 1,627,083 | 1,623,635 | 1,637,393 | 1,736,037 | ||||||||||||
Total | 52,461,717 | 43,933,165 | 52,607,361 | 44,348,132 |
We also had “out-of-the-money” warrants outstanding exercisable for 5,923,399 shares of common stock at both June 30, 2022March 31, 2023 and 20212022. Included in these “out-of-the-money” warrants are (i) Series A Warrants, exercise price of $57.06, expiring in July 2023; (ii) Series B Warrants, exercise price of $62.28, expiring in July 2023; and (iii) GLF Equity Warrants, which have exercise pricesprice of $57.06,$62.28, and $100.00, respectively, and expire on various dates$100.00, expiring in 2023November and 2024. No warrants, or restricted stock units or stock options, whether in the money or out of the money, are included in our lossearnings (loss) per share calculations becauseif the effect of such inclusion is antidilutive.
(7) | INCOME TAXES |
Income tax rates and taxation systems in the jurisdictions where we and our subsidiaries conduct business vary and our subsidiaries are frequently subjected to minimum taxation regimes. In some jurisdictions, tax liabilities are based on gross revenues, statutory deemed profits or other factors, rather than on net income. We use a discrete effective tax rate method to calculate taxes for interim periods instead of applying the annual effective tax rate to an estimate of the full fiscal year due to the level of volatility and unpredictability of earnings in our industry, both overall and by jurisdiction.
Income tax expense forFor the three and sixmonths ended June 30, 2022, March 31, 2023, income tax expense reflects tax liabilities in various jurisdictions that are either based on either revenue (deemed profit regimes) or pre-tax profits.
The tax liabilities for uncertain tax positions are primarily attributable to permanent establishment issues related to foreign jurisdictions, subpart F income inclusions and withholding taxes on foreign services. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.
As of December 31, 20212022, our balance sheet reflected approximately $202.8$439.7 million of net deferred tax assets prior to a valuation allowance analysis, with a valuation allowance of $204.9$441.9 million. As of June 30, 2022March 31, 2023, we had net deferred tax assets of approximately $258.6$450.0 million prior to a valuation allowance analysis of $260.9$452.2 million. The net deferred tax assets amounts as of June 30, 2022 March 31, 2023include $55.0$68.8 million of deferred tax assets from the SPO acquisition offset by a $55.0 million valuation allowance.allowance of $68.8 million.
Management assesses all available positive and negative evidence to permit use of existing deferred tax assets.
The Coronavirus Aid, Relief, and Economic SecurityInflation Reduction Act (“CARES Act”)(IRA) was enacted on March 27, 2020 in the United States. U.S. on August 16, 2022. The CARES ActIRA includes several significant businessprovisions imposing a 1% excise tax provisions,on share repurchases that would allow us to carry back net operating losses arisingoccur after 2017December 31, 2022 and introduces a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income for tax years beginning after December 31, 2022. We currently are not expecting the IRA to the five prior tax years. Considering the available carryback, in 2020, we recorded an income tax receivable tax totaling $6.9 million and we collected this receivable in the first quarter of 2021.have a material adverse impact to our financial statements.
With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to March 2015.2016. We are subject to ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position, results of operations, or cash flows.
(8 |
|
Sonatide (Angola)
Prior to 2022, we participated in a joint venture in Angola (Sonatide) where we owned 49% of the joint venture and our partner Sonangol Holdings, LDA (Sonangol) owned 51%. In January 2022, we acquired the 51% equity interest in Sonatide owned by Sonangol, pursuant to a Sale and Purchase Agreement between Sonangol and us for $11.2 million in cash. This acquisition gives us complete control of our operations in Angola.
The acquisition date was January 3, 2022 (Sonatide Merger Date). However, we used a convenience date of January 1, 2022 for the acquisition and have recorded activity from the beginning of the first quarter of 2022. Revenues of Sonatide from the Sonatide Merger Date included in our consolidated statements of operations were $1.0 million and $2.0 million for the three and six months ended June 30, 2022, respectively. The net earnings of Sonatide were $0.2 million and $0.1 million for the three and six months ended June 30, 2022, respectively.
The acquisition date fair value of the 49% equity interest in Sonatide held by us was zero and we did not recognize a significant gain or loss as a result of remeasuring to the fair value of our equity interest.
Assets acquired and liabilities assumed in the business combination have been recorded at their estimated fair values as of the Sonatide Merger Date under the acquisition method of accounting. We have not finalized the fair values of the assets acquired and liabilities assumed. The fair value estimates below are subject to adjustment during the measurement period subsequent to the Sonatide Merger Date. The estimated fair values of certain assets and liabilities including long-lived assets and contingencies require judgments and assumptions. Adjustments might be made to these estimates during the measurement period and those adjustments could be material.
The provisional amounts for assets acquired and liabilities assumed are based on estimates of their fair values as of the Sonatide Merger Date and were as follows:
(In Thousands) | ||||
Assets | ||||
Current assets | $ | 12,894 | ||
Net properties and equipment and other assets | 2,908 | |||
Total assets | 15,802 | |||
Liabilities | ||||
Current liabilities | 283 | |||
Other liabilities | 2,996 | |||
Total liabilities | 3,279 | |||
Net assets acquired | 11,223 | |||
Bargain purchase gain | $ | 1,300 |
The bargain purchase gain of $1.3 million is included in our consolidated statement of operations for the six months ended June 30, 2022 under the caption “Interest income and other, net.” Business combination related costs were expensed as incurred in general and administrative expense and consisted of various advisory, legal, accounting, valuation and other professional fees which were not material to our consolidated results of operations for the year and six months ended December 31, 2021 and June 30, 2022, respectively.
The unaudited supplemental pro forma results present consolidated information as if the business combination were completed on January 1, 2021. The pro forma results include, among others, (i) a reduction in depreciation expense for adjustments to property and equipment and (ii) a reduction in commission expense previously payable to the joint venture which has been eliminated. The pro forma results do not include any potential synergies or non-recurring charges that may result directly from the business combination. The pro forma revenues and net loss, assuming the acquisition had occurred on January 1, 2021, for the twelve months ended December 31, 2021 were $375.4 million and $129.2 million, respectively.
DTDW (Nigeria)
In previous years, we had substantial activity in Nigeria and conducted our business through a joint venture (DTDW). In 2020, we ceased operations in Nigeria, but have continued to maintain and manage residual receivable and payable balances. We own 40% of DTDW which owns 1 offshore service vessel. Our partner, who owns 60%, is a Nigerian national. In the second quarter of 2022, we entered into a netting arrangement with our partner allowing either partner to discharge their obligations by netting these amounts against sums owed by the other partner. In accordance with this agreement, we have the ability to net our due from affiliate balance against the due to affiliate balance on our consolidated balance sheet. The net due from balance equals the net due to balance at June 30, 2022 and, as a result, there is a net zero balance in our net due to due from accounts on our consolidated balance sheet.
| EMPLOYEE BENEFIT PLANS |
U.S. Defined Benefit Pension Plan
We have a defined benefit pension plan (pension plan) that covers certain U.S. employees. The pension plan was frozen during 2010. We have not made contributions to the pension plan since 2019. Actuarial valuations are performed annually, and an assessment of the future pension obligations and market value of the assets will determine if contributions are made in the future.
During the second quarter of 2023, we executed an agreement with a third-party insurance company who agreed to assume all remaining liability under our pension plan for approximately 500 individuals in exchange for a $11.8 million payment made by the pension plan. We expect to recognize a settlement gain in the second quarter of 2023 in connection with this transaction.
Supplemental Executive Retirement Plan
We also support a non-contributory and non-qualified defined benefit supplemental executive retirement plan (supplemental plan) whichthat was closed to new participants during 2010. We contributed $0.8 million during each of the six months ended June 30, 2022 and 2021, respectively. We expect to contribute $0.8$0.4 million to the supplemental plan during each of the three months ended March 31, 2023 and 2022, respectively, and expect to contribute $1.2 million during the remainder of 2022.2023. Our obligations under the supplemental plan were $22.5 million and $22.7$17.3 million at June 30, 2022March 31, 2023 and December 31, 2021, 2022, respectively, and are included in “accrued expenses” and “other liabilities” in the consolidated condensed balance sheet.
Net Periodic Benefit Costs
The net periodic benefit cost for our defined benefit pension plans and supplemental plan (referred to collectively as “Pension Benefits”) is comprised of the following components:
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | |||||||||||||||||||
Pension Benefits: | ||||||||||||||||||||||||
Interest cost | $ | 579 | $ | 543 | $ | 1,157 | $ | 1,086 | $ | 846 | $ | 578 | ||||||||||||
Expected return on plan assets | (751 | ) | (544 | ) | (1,503 | ) | (1,087 | ) | (688 | ) | (752 | ) | ||||||||||||
Amortization of net actuarial losses | 16 | 37 | 32 | 73 | ||||||||||||||||||||
Net periodic pension cost (benefit) | $ | (156 | ) | $ | 36 | $ | (314 | ) | $ | 72 | ||||||||||||||
Amortization of net actuarial (gains) losses | (66 | ) | 16 | |||||||||||||||||||||
Net periodic pension (benefit) cost | $ | 92 | $ | (158 | ) |
The components of the net periodic pension cost are included in the caption “Interest income and other, net.”
( | DEBT |
The following is a summary of all debt outstanding:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Senior secured bonds: | ||||||||||||||||
8.50% Senior Secured Notes due November 2026 (A) (B) | $ | 175,000 | $ | 175,000 | ||||||||||||
8.50% Senior Secured Notes due November 2026 (A) (B) | $ | 175,000 | $ | 175,000 | ||||||||||||
Debt discount and issuance costs | (6,721 | ) | (7,115 | ) | (5,577 | ) | (5,964 | ) | ||||||||
Total long-term debt | $ | 168,279 | $ | 167,885 | $ | 169,423 | $ | 169,036 |
| (A) | As of |
| (B) | The |
We also have a Super Senior Revolving Credit Facility Agreement maturing on November 16, 2026 that provides $25.0 million for general working capital purposes. NaNNo amounts have been drawn on this credit facility.
( | COMMITMENTS AND CONTINGENCIES |
Currency Devaluation and Fluctuation Risk
Due to our international operations, we are exposed to foreign currency exchange rate fluctuations against the U.S. dollar. For some of our international contracts, a portion of the revenue and local expenses are incurred in local currencies with the result that we are at risk for changes in the exchange rates between the U.S. dollar and foreign currencies. We generally do not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of business, which exposes us to the risk of exchange rate losses. To minimize the financial impact of these items, we attempt to contract a significant majority of our services in U.S. dollars. In addition, we attempt to minimize the financial impact of these risks by matching the currency of our operating costs with the currency of our revenue streams when considered appropriate. We continually monitor the currency exchange risks associated with all contracts not denominated in U.S. dollars.
Legal Proceedings
Various legalWe are named defendants or parties in certain lawsuits, claims or proceedings incidental to our business and claims are outstanding which aroseinvolved from time to time as parties to governmental investigations or proceedings arising in the ordinary course of business. InAlthough the opinionoutcome of management,such lawsuits or other proceedings cannot be predicted with certainty and the amount of ultimateany liability if any,that could arise with respect to these actions, willsuch lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results of operations, or cash flows.
( | FAIR VALUE MEASUREMENTS |
Other Financial Instruments
Our primary financial instruments consist of cash and cash equivalents, restricted cash, trade receivables and trade payables with book values that are considered to be representative of their respective fair values. The carrying value for cash equivalents is considered to be representative of its fair value due to the short duration and conservative nature of the cash equivalent investment portfolio. In the second quarter of 2022, we agreed to a transaction with PEMEX, the Mexican national oil company, to exchange $8.6 million in accounts receivable for an equal face amount of seven year-year 8.75% PEMEX corporate bonds (PEMEX Note). As part of this agreement, we are not allowed to sell theThe PEMEX Note for 90 days from issuance and have determined that it should beis classified as “available for sale.” At June 30, 2022March 31, 2023, we recorded a $0.8$0.1 million in mark-to-market loss in other comprehensive income. We discloseincome, valuing the fair value ofPEMEX Note at $8.0 million in our long-term debt inconsolidated balance sheet. The PEMEX Note mark-to-market valuations are considered to be Level 102. and the fair value of our assets held for sale in Note 15.
( | PROPERTIES AND EQUIPMENT, ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES |
As of June 30, 2022March 31, 2023, our property and equipment consist primarily of 187183 active vessels, which excludes the 9three vessels we have classified as held for sale, located around the world. As of December 31, 2021, 2022, our property and equipment consisted primarily of 135183 active vessels, which excluded 18eight vessels classified as held for sale. In April 2023, we took delivery of two new build offshore tugs to be employed in our African market. We made a $2.3 million down payment to the shipyard at inception of construction in December 2021 and incurred approximately $9.2 million of debt with the shipyard upon delivery of the tugs in April 2023. In addition, we have six Alucat crew boats under construction for which we have made down payments totaling approximately $3.6 million in 2022 and 2023 and will incur debt with the shipyard upon deliveries in 2023 and 2024 totaling approximately $14.1 million. These crew boats, upon completion, will be employed in our African market. See Note 15 for disclosure of our announced acquisition of 37 vessels from Solstad Offshore ASA, a Norwegian public limited company, for $577.0 million, estimated to close, subject to financing, in the second quarter of 2023.
A summary of properties and equipment is as follows:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Properties and equipment: | ||||||||||||||||
Vessels and related equipment | $ | 1,078,120 | $ | 898,649 | $ | 1,077,343 | $ | 1,070,821 | ||||||||
Other properties and equipment | 30,239 | 19,625 | 39,600 | 35,819 | ||||||||||||
1,108,359 | 918,274 | 1,116,943 | 1,106,640 | |||||||||||||
Less accumulated depreciation and amortization | 269,747 | 230,234 | 330,775 | 309,985 | ||||||||||||
Properties and equipment, net | $ | 838,612 | $ | 688,040 | $ | 786,168 | $ | 796,655 |
A summary of accrued expenses is as follows:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Payroll and related payables | $ | 34,021 | $ | 18,627 | $ | 36,499 | $ | 35,425 | ||||||||
Accrued vessel expenses | 52,455 | 19,662 | 39,858 | 47,307 | ||||||||||||
Accrued interest expense | 1,859 | 1,859 | 5,790 | 2,037 | ||||||||||||
Other accrued expenses | 20,877 | 11,586 | 25,201 | 20,749 | ||||||||||||
$ | 109,212 | $ | 51,734 | $ | 107,348 | $ | 105,518 |
A summary of other current liabilities is as follows:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Taxes payable | $ | 43,144 | $ | 18,977 | $ | 33,214 | $ | 39,355 | ||||||||
Other | 4,728 | 4,888 | 10,006 | 10,968 | ||||||||||||
$ | 47,872 | $ | 23,865 | $ | 43,220 | $ | 50,323 |
A summary of other liabilities is as follows:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Pension liabilities | $ | 25,192 | $ | 26,872 | $ | 18,368 | $ | 17,383 | ||||||||
Liability for uncertain tax positions | 46,092 | 29,283 | 35,560 | 35,468 | ||||||||||||
Other | 13,904 | 12,029 | 15,040 | 14,992 | ||||||||||||
$ | 85,188 | $ | 68,184 | $ | 68,968 | $ | 67,843 |
( | SEGMENT AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS |
Segment Changes
In conjunction with the acquisition of SPO discussed in(see Note 3 the previous), we split our Middle East/Asia Pacific segment has been split into the Middle East segment and the Asia Pacific segment. Our previous operations in Southeast Asia and Australia, along with the legacy SPO operations in the Asia Pacific region, now form the new Asia Pacific segment. Our segment disclosures reflect the current segment alignment for all periods presented.
Each of our 5five operating segments is managed by a senior executive reporting directly to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.
The following table provides a comparison of segment revenues, vessel operating profit (loss), depreciation and amortization, and additions to properties and equipment for the three and sixmonths ended June 30, 2022March 31, 2023 and 20212022. Vessel revenues relate to vessels owned and operated by us while other operating revenues relate to other miscellaneous marine-related businesses.
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Vessel revenues: | ||||||||||||||||||||||||
Americas | $ | 37,520 | $ | 23,481 | $ | 65,964 | $ | 49,705 | $ | 47,687 | $ | 28,444 | ||||||||||||
Asia Pacific | 16,362 | 4,870 | 21,259 | 8,442 | 22,024 | 4,897 | ||||||||||||||||||
Middle East | 28,396 | 20,758 | 48,614 | 41,600 | 30,762 | 20,218 | ||||||||||||||||||
Europe/Mediterranean | 32,475 | 22,467 | 56,394 | 37,216 | 31,250 | 23,919 | ||||||||||||||||||
West Africa | 47,422 | 16,938 | 73,820 | 32,544 | 59,457 | 26,398 | ||||||||||||||||||
Other operating revenues | 1,272 | 1,439 | 3,125 | 3,950 | 1,924 | 1,853 | ||||||||||||||||||
Total | $ | 163,447 | $ | 89,953 | $ | 269,176 | $ | 173,457 | $ | 193,104 | $ | 105,729 | ||||||||||||
Vessel operating profit (loss): | ||||||||||||||||||||||||
Americas | $ | 5,930 | $ | (4,940 | ) | $ | 5,848 | $ | (6,591 | ) | $ | 7,962 | $ | (82 | ) | |||||||||
Asia Pacific | (899 | ) | 1,722 | 1,274 | 1,667 | 5,568 | 2,173 | |||||||||||||||||
Middle East | (307 | ) | (1,456 | ) | (2,190 | ) | (3,254 | ) | (344 | ) | (1,883 | ) | ||||||||||||
Europe/Mediterranean | 4,262 | (1,986 | ) | 1,833 | (10,007 | ) | 2,036 | (2,429 | ) | |||||||||||||||
West Africa | 9,270 | (5,355 | ) | 12,485 | (12,122 | ) | 17,221 | 3,215 | ||||||||||||||||
Other operating profit | 790 | 858 | 2,282 | 2,302 | 773 | 1,492 | ||||||||||||||||||
19,046 | (11,157 | ) | 21,532 | (28,005 | ) | 33,216 | 2,486 | |||||||||||||||||
Corporate expenses | (15,909 | ) | (9,070 | ) | (26,412 | ) | (16,575 | ) | (10,933 | ) | (10,503 | ) | ||||||||||||
Long-lived asset impairment credit | 0 | 0 | 500 | 0 | ||||||||||||||||||||
Affiliate credit loss impairment credit | 0 | 1,000 | 0 | 1,000 | ||||||||||||||||||||
Loss on asset dispositions, net | (1,297 | ) | (932 | ) | (1,090 | ) | (2,880 | ) | ||||||||||||||||
Long-lived asset impairment and other | — | 500 | ||||||||||||||||||||||
Gain on asset dispositions, net | 2,216 | 207 | ||||||||||||||||||||||
Operating income (loss) | $ | 1,840 | $ | (20,159 | ) | $ | (5,470 | ) | $ | (46,460 | ) | $ | 24,499 | $ | (7,310 | ) | ||||||||
Depreciation and amortization: | ||||||||||||||||||||||||
Americas | $ | 7,503 | $ | 7,382 | $ | 14,619 | $ | 15,389 | $ | 8,194 | $ | 7,116 | ||||||||||||
Asia Pacific | 2,080 | 1,199 | 2,929 | 2,436 | 1,465 | 849 | ||||||||||||||||||
Middle East | 6,421 | 5,322 | 11,827 | 10,965 | 5,735 | 5,406 | ||||||||||||||||||
Europe/Mediterranean | 6,958 | 7,225 | 13,720 | 14,709 | 7,350 | 6,762 | ||||||||||||||||||
West Africa | 8,002 | 6,580 | 13,743 | 13,150 | 7,521 | 5,741 | ||||||||||||||||||
Corporate | 802 | 841 | 1,585 | 1,627 | 401 | 783 | ||||||||||||||||||
Total | $ | 31,766 | $ | 28,549 | $ | 58,423 | $ | 58,276 | $ | 30,666 | $ | 26,657 | ||||||||||||
Additions to properties and equipment: | ||||||||||||||||||||||||
Americas | $ | 538 | $ | 0 | $ | 538 | $ | 0 | $ | 521 | $ | — | ||||||||||||
Asia Pacific | 19 | (50 | ) | 19 | (42 | ) | 4,403 | 24 | ||||||||||||||||
Middle East | 2,048 | 0 | 2,072 | 0 | 1,550 | — | ||||||||||||||||||
Europe/Mediterranean | 169 | 287 | 445 | 593 | 232 | 276 | ||||||||||||||||||
West Africa | 340 | 59 | 690 | 554 | 589 | 350 | ||||||||||||||||||
Corporate | 1,037 | 369 | 1,616 | 756 | 1,356 | 579 | ||||||||||||||||||
Total | $ | 4,151 | $ | 665 | $ | 5,380 | $ | 1,861 | $ | 8,651 | $ | 1,229 |
The following table provides a comparison of total assets at June 30, 2022March 31, 2023 and December 31, 20212022:
(In Thousands) | ||||||||||||||||
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Total assets: | ||||||||||||||||
Americas | $ | 312,606 | $ | 278,394 | $ | 310,096 | $ | 309,985 | ||||||||
Asia Pacific | 141,841 | 28,564 | 127,117 | 148,684 | ||||||||||||
Middle East | 209,336 | 154,723 | 203,625 | 197,054 | ||||||||||||
Europe/Mediterranean | 285,910 | 293,760 | 268,009 | 282,670 | ||||||||||||
West Africa | 293,536 | 223,988 | 311,191 | 285,965 | ||||||||||||
Corporate | 39,506 | 116,351 | 107,109 | 73,298 | ||||||||||||
$ | 1,282,735 | $ | 1,095,780 | $ | 1,327,147 | $ | 1,297,656 |
( | ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS |
During the sixthree months ending June 30,March 31, 2023, we sold or recycled five of our vessels held for sale, leaving three vessels valued at $0.7 million remaining in the held for sale account as of March 31, 2023. The total vessel and other sales for the three-month period ending March 31, 2023 contributed approximately $5.7 million in proceeds and we recognized a net $2.2 million gain on the dispositions. In the three-month period ending March 31, 2022, we added 1 vessel from the SPO fleet to assets held for sale, sold or recycled 9five of our vessels held for sale, and re-activated 1one vessel from assets held for sale back into the active fleet, leaving 9 vessels valued at $6.9 million remaining in the held for sale account as of June 30, 2022. In addition, we sold 0 vessels from our active fleet in the six month period ending June 30, 2022. We sold 8 vessels from assets held for sale and 5 vessels from our active fleet in the six month period ending June 30, 2021. The total vessel and other sales for the six month period ending June 30, 2022 contributed approximately $8.2 million in proceeds and we recognized a net $1.1 million loss on the dispositions. The vessel and other sales for the six month period ending June 30, 2021 contributed $29.4 million in proceeds and we recognized a $2.9 million net loss on the dispositions. One of the vessel sales in the second quarter of 2021, was to a third-party operator, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the chairman of our Board of Directors. This vessel was sold for proceeds of $11.4 million, all of which was collected in the second quarter of 2021, and we recognized a gain of $4.3 million on the sale.fleet.
We consider the valuation approach for our assets held for sale to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be recycled or sold. We estimate the net realizable value of our assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and scraprecycle yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions. Our value ranges depend on our expectation of the ultimate disposition of the vessel. We will in all circumstances attempt to achieve maximum value for our vessels, but also recognize that certain vessels are more likely to be recycled, especially given the time and effort required to achieve a sale and the costs incurred to maintain a vessel while a searching for a buyer. We establish ranges that in many cases have scraprecycle value as the low end of the range and an expected open market sale value at the top of the range. When there is no expectation within the range that is considered more likely than any other, we apply equal probability weighting to the low and high ends of the valuation range. In addition, in conjunction with the reactivation of a vessel from assets held for sale to the active fleet in the first quarter of 2022 and the concurrent valuation of such vessel at its fair value, we recaptured $0.5 million of impairment charged to expense. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments. During the six months ended June 30, 2022 and 2021, we recorded 0 impairment related to assets held for sale.
The following table presents the activity in our asset held for sale account for the periods indicated:
(In Thousands, except number of vessels) | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
Number of Vessels | June 30, 2022 | Number of Vessels | June 30, 2021 | Number of Vessels | March 31, 2023 | Number of Vessels | March 31, 2022 | |||||||||||||||||||||||||
Beginning balance | 12 | $ | 8,591 | 20 | $ | 31,214 | 8 | $ | 4,195 | 18 | $ | 14,421 | ||||||||||||||||||||
Additions | 1 | 2,500 | 0 | 0 | ||||||||||||||||||||||||||||
Sales | (4 | ) | (4,229 | ) | (5 | ) | (11,000 | ) | (5 | ) | (3,500 | ) | (5 | ) | (4,330 | ) | ||||||||||||||||
Transfers | 0 | 0 | (1 | ) | (3,000 | ) | — | — | (1 | ) | (1,500 | ) | ||||||||||||||||||||
Ending balance | 9 | $ | 6,862 | 14 | $ | 17,214 | 3 | $ | 695 | 12 | $ | 8,591 |
(In Thousands, except number of vessels) | Six Months Ended | |||||||||||||||
Number of Vessels | June 30, 2022 | Number of Vessels | June 30, 2021 | |||||||||||||
Beginning balance | 18 | $ | 14,421 | 23 | $ | 34,396 | ||||||||||
Additions | 1 | 2,500 | 0 | 0 | ||||||||||||
Sales | (9 | ) | (8,559 | ) | (8 | ) | (14,182 | ) | ||||||||
Transfers | (1 | ) | (1,500 | ) | (1 | ) | (3,000 | ) | ||||||||
Ending balance | 9 | $ | 6,862 | 14 | $ | 17,214 |
(15) | SOLSTAD VESSEL ACQUISITION |
On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets (the “Sale and Purchase Agreement”) with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the “Sellers”), pursuant to which, among other things, we will acquire from the Sellers 37 platform supply vessels (“Vessels”) currently owned by the Sellers and the charter parties governing certain of such Vessels for an aggregate cash purchase price of $577.0 million (subject to adjustments) plus customary extras, upon the terms and subject to the conditions set forth in the Sale and Purchase Agreement. We expect to close this transaction in the second quarter of 2023 subject to customary closing conditions including, among others, our receipt of proceeds sufficient to pay the purchase price from, in our sole discretion, acceptable financing.
ITEM 2. MANAGEMENT'S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTForward-Looking Statements
In accordance withCertain of the safe harbor provisionsstatements included in this Form 10-Q constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, this Quarterly Report on Form 10-Qwhich includes any statements that are not historical facts. Such statements often contain words such as “expect,” “believe,” “think,” “anticipate,” “predict,” “plan,” “assume,” “estimate,” “forecast,” “goal,” “target,” “projections,” “intend,” “should,” “will,” “shall” and the information incorporated herein by reference contain certain forward-looking statements which reflect our current view with respect to future events and future financial performance.other similar words. Forward-looking statements are allmade based on management’s current expectations and beliefs concerning future developments and their potential effects upon Tidewater Inc. and its subsidiaries. There can be no assurance that future developments affecting Tidewater Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements other than statementsare not a guarantee of historical fact. Allfuture performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, are subject to risks and uncertainties, many of which are beyond our control, and our future results of operations could differ materially from our historical results or current expectations reflected by such forward-looking statements. Some of these risks and uncertainties include, without limitation, the risks related toincluding, among others: fluctuations in worldwide energy demand and oil and natural gas prices, and levels of oil and natural gas prices including the levels to support offshore exploration and development activities; fleet additions by competitors andprices; industry overcapacity; our limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; potential synergies and integration risks related to the SPO acquisition; and the resolution of pending legal proceedings.
Forward-looking statements, which can generally be identified by the use of such terminology as “may,” “can,” “potential,” “expect,” “project,” “target,” “anticipate,” “estimate,” “forecast,” “believe,” “think,” “could,” “continue,” “intend,” “seek,” “plan,”proceedings; and similar expressions containedother risks and uncertainties detailed in this Quarterly ReportForm 10-Q and other filings we make with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans, goals or activities are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards still developing, internal controls and processes that we continue to evolve, and assumptions subject to change in the future. Statements in this Form 10-Q are not guarantees or assurances of future performance or events. Any forward-looking statements are based on our assessment of current industry, financial and economic information, which by its nature is dynamic and subject to rapid and possibly abrupt changes, which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. While management believes that these forward-looking statements are reasonable when made there can be no assurance that future developments that affect us will be those that we anticipate and have identified. The forward-looking statements should be considered in the contextas of the risk factors listed above, discussed indate of this Quarterly Report on Form 10-Q,filing, and discussedTidewater disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. In addition, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 9, 2022, as updated by subsequent filings with the SEC. Investorsa discussion of certain risks relating to our business and prospective investors are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events, or developments.investment in our securities.
In certain places in this Quarterly Report on Form 10-Q, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information.
The following information containedforward-looking statements should be considered in the context of the risk factors listed above, discussed in this Quarterly Report on Form 10-Q, should be readand discussed in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part 1, Item 1 of this Quarterly Report on Form 10-Q and related disclosures and our 2022 Annual Report on Form 10-K for the year ended December 31, 2021, filed(Annual Report) as updated by subsequent filings with the SECSEC. Investors and prospective investors are cautioned not to rely unduly on March 9, 2022.such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events, or developments.
About
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto included in “Item 1. Financial Statements” and with our 2022 Annual Report. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A of our Annual Report and elsewhere in this Quarterly Report.
EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK
Tidewater
We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years. Our vessels and associated vessel services provide support for all phases of offshore oil and natural gas exploration, field development and production as well as windfarm development and maintenance. These services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction and seismic and subsea support; geotechnical survey support for windfarm construction, and a variety of other specialized services such as pipe and cable laying. In addition, we have one of the broadest geographic operating footprints in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have strong relationships. We are also one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years.
At June 30, 2022, we owned 196 vessels with an average age of 11.3 years (excluding one joint venture vessel, but including five stacked vessels and nine vessels designated as assets held for sale) available to serve the global energy industry. We also have two vessels currently under construction. The average age of our 187 active vessels at June 30, 2022 is 11.1 years.
On April 22, 2022, we completed our previously disclosed acquisition of SPO and its 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. As consideration for the acquisition, we paid $42.0 million in cash and issued 8,100,000 warrants, each of which iswas exercisable at $0.001 per share for one share of our common stock.stock (SPO acquisition warrants). In addition, we paid $19.6 million in cashat closing and received an $8.8 million post-closing working capital refund related to pre-closing working capital adjustments. Theadjustments, for a total consideration of $215.5 million. In 2022, we completed two public offerings of approximately 8.1 million shares combined of our common stock and, coupled with a small redemption of SPO acquisition warrants related to indemnified liabilities, redeemed 100% of the outstanding SPO acquisition warrants. All of the net proceeds from the public equity offerings were used to redeem SPO acquisition warrants.
On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets (Solstad Purchase Agreement) with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (Solstad), pursuant to which, among other things, we agreed to acquire 37 platform supply vessels from Solstad for an aggregate cash portionpurchase price of $577.0 million (subject to adjustments) plus customary extras, upon the terms and subject to the conditions set forth in the Sale and Purchase Agreement. We expect to close this transaction in the second quarter of 2023 subject to customary closing conditions including, among others, our receipt of proceeds sufficient to pay the purchase price is subjectfrom, in our sole discretion, acceptable financing.
At March 31, 2023, we owned 186 vessels with an average age of 11.8 years (including five stacked vessels and three vessels designated as assets held for sale) which are available to customary post-closing adjustment mechanisms related to SPO’s closing date working capital, cashserve the global energy industry. At March 31, 2023, the average age of our 183 active vessels at was 11.6 years. In addition, we took delivery of two offshore tugs in April 2023 and indebtedness.have six crew boats currently under construction.
MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity
Our management’s discussion and analysis of financial condition and results of operations (MD&A)MD&A is designed to provide information about our financial condition and results of operations from management’s perspective. It includes relevant components of our financial condition and current and long-term liquidity. Primary revenue drivers include numbers of active vessels, active vessel utilization and average day rates. Our most significant operating cost drivers are generally personnel costs and repairs and maintenance. We discuss our liquidity in terms of cash flow that we generate from our operations. Our primary obligations are vessel operating costs including routine planned maintenance, general and administrative costs and long-term debt service. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. We also can issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions. Our results are affected by the activity of our customers in the offshore oil and gas industry and the supply and demand dynamics associated with our vessels. Our objective is to discuss how all these factors have affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.
Principal Factors That Drive Our Results
Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. As is the case with the numerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves. Our objective throughout the MD&A is to discuss how these factors affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.
Our revenues in all segments are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.
Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors which affectimpacting overall crew costs in all segments. In addition, our newer, more technologically sophisticated vessels generally require a greater number of specially trained, more highly compensated fleet personnel than our older, smaller and less sophisticated vessels. Crew costs may increase if competition for skilled personnel intensifies.
Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking that are not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements that either extend the vessel’s useful life or increase the vessel’s functionality are capitalized and depreciated.
Insurance costs are dependent on a variety of factors, including our safety record and pricing in the insurance markets, and can fluctuate over time. Our vessels are generally insured for up to their estimated fair market value in order to cover damage or loss. We also purchase coverage for potential liabilities stemming from third-party losses with limits that we believe are reasonable for our operations, but do not generally purchase business interruption insurance or similar coverage. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.
Fuel and lube costs can also fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off charter, drydockings, and changes in fuel prices. We also incur vessel operating costs that are aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, training costs, satellite communication fees, agent fees, port fees and other miscellaneous costs. Brokers’ commissions are incurred primarily in our non-United States operations where brokers sometimes assist in obtaining work. Brokers generally are paid a percentage of day rates and, accordingly, commissions paid to brokers generally fluctuate in accordance with vessel revenue.
We discuss our liquidity in terms of cash flow that we generate from our operations. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. From time to time, we also issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions.
Industry Conditions and Outlook
As we look forward into 2023, we believe the macro environment remains volatile with elevated recession risk for major developed economies. Despite these potential challenges, we expect the supply-demand balance in the global offshore oil and gas markets to continue to tighten after several years of low commodity prices and underinvestment in offshore activities by the major oil and gas producers. Factors driving this outlook include demand for hydrocarbons continuing to grow internationally, the Organization of the Petroleum Exporting Countries Plus (OPEC+) remaining proactive in maintaining adequate and stable oil prices, combined with a diminishing global supply of vessels to support the offshore energy industry. In addition, the Russian invasion of Ukraine and the related economic sanctions have highlighted the criticality of energy reliability and security across Europe and the U.S.
Our business is directly impacted by the level of activity in worldwide offshore oil and natural gas exploration, development and production, which in turn is influenced by trends in oil and natural gas prices. In addition,prices and the condition of the energy markets and, in particular, the willingness of energy companies to spend on operational activities and capital projects. Crude oil and natural gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand. In particular, the oil price is significantly influenced by actions of the Organization of Petroleum Exporting Countries, or OPEC, and in recent times, OPEC + which is an expanded version of OPEC. Offshore oil and gas exploration and development activities have traditionally requiredgenerally require higher oil or natural gas prices to justify the much higher expenditure levels and longer lead times from exploration to production associated withof offshore activities compared to onshore activities. Oil and gas pricesPrices are subject to significant uncertainty extreme price cycles and geopolitical risk, and, as a result, can beare extremely volatile. In general,Over the industry considers crudepast several years, oil and natural gas commodity pricing has been affected by a global pandemic which included lock downs by major oil consuming nations, a war in excesseastern Europe between Russia and Ukraine, OPEC production quotas, capital discipline within the major oil and gas companies, inflationary economies of $50.0 per barrelmajor consuming nations and increased activism related to be requiredthe perceived oil and gas sector responsibility for climate change. These factors have at various times caused or exacerbated significant swings in oil and gas pricing, which in turn has affected the capital budgets of oil and gas companies.
Energy prices in 2023 are expected to initiate modest offshore development programs. Prices in excess of $75.0 per barrel are generally consideredcontinue the level needed to support more robust offshore development and exploration programs. In late 2014 and 2015, oil prices declined significantly from levels of over $100.0 per barrel to less than $30.0 per barrel beginning an industry-wide downturn that lasted several years. Prices began to stabilizevolatility experienced in the $50.0last few years due to $60.0 per barrel rangeongoing geopolitical conflicts, the continued relaxation of worldwide restrictions put in 2019place during the pandemic, generalized price level increases and early 2020, suggesting a returnrelated interest rate adjustments from the world's central banks to explorationaddress these increases, and production activities for our customers. However,uncertainties about the rate of growth in key world economies. As an example, in the first quarter of 2020,2023, in response to some weakness in crude oil prices, OPEC unexpectantly lowered its production quotas for the industryremainder of 2023. This action was severely impacted bywidely recognized as a global pandemic (COVID-19) and the resulting loss of demand and decrease insignal that OPEC will attempt to maintain crude oil prices. Oil prices declined severely in the second quarter of 2020, trading at below $20.0above $80.00 per barrel. Oil prices recovered in 2021 to levels greater than experienced since 2018, and in the first half of 2022In addition, periodic economic recession rumors repeatedly have traded in a volatile range between $90.0 and $125.0 per barrel. Natural gas prices are also at historic highs.put downward pressure on oil prices.
In the first quarter of 2022, Russia invaded Ukraine, initiating a military conflict that continues. Russia is the most significant non-OPEC member of OPEC+addition, pressure on us and is one of the largest producers of oil and natural gas in the world. It is also a primary supplier of natural gasour customers continues to the European continent. Many European countries are members of the North Atlantic Treaty Organization (NATO), which also includes the United States. NATO countries have imposed sanctions on Russia in response to the invasion, which has disrupted oil markets and threatened supplies of natural gas to European customers. All of these factors are creating uncertainty in world economies and affecting commodity pricing.
Despite the price recovery, there are lingering effects of the 2014 downturn and the subsequent COVID-19 pandemic downturn in the activity levels of our customers. In addition, there has been recent pressurerise from certain shareholders and other stakeholders, including governmental entities, on our customers related tovarious environmental, social and governance (ESG) factors. A possible impact of this pressure on our business could be a gradual move away from exploration and development of fossil fuels. Many of our large international customers have recently issued statements supporting(i) indicated changes in their future business plans to move towardachieve a lower environmental impact which has, coupled with the lingering COVID-19 impact, effectively delayed the recovery in our business that would be expected with current commodity price levels. Further, as our customers haveimpact; (ii) responded to pressure to return capital to shareholders in the wake of the 2014 downturn and subsequent industry challenges, they haveand; (iii) increasingly shifted their capital allocation strategy from primarily new oil and gas production and reserve additions to a mix of returns to shareholders, along with new oil and gas project development and renewable energy source development. The realistic expectation of a worldwideEven with these pressures to move towards more sustainable fuels for supplying worldwide energy, includes the continued use of fossil fuels are expected to be the largest source for some timesupplying worldwide energy needs for years to come. Despite the pressure to return capital to shareholders and the ongoing social pressure to move away from fossil fuels, our customers have started to expand exploration and development activities.
We are one of the world’s largest operators of offshore support vessels and we have operations in most of the world’s offshore oil and gas basins. We continue to believe that there will be sufficient opportunities for us to operate our vessels in this sector for many years to come. We have however, also begun to seek and developpursued opportunities in the sustainability arena, including the support of offshore wind energy generation and the improvement of our fleet performance regarding emissions and environmental impact. ThereAlthough our business is impacted by a number of macro factors, including those factors discussed here, which influence our outlook and expectations given the current evidence of higher oilvolatile conditions in our industry, our fleet is currently close to full utilization and gas demand which has resultedour day rates have increased in increased commodity pricing and increased customer activity offshore.recent quarters. We are optimisticof the opinion that the underlying fundamentals, particularly energy source supply and demand, will support a multi-year increase in offshore upstream development spending. Our outlook expectations are based on the market as we see it today and subject to changing conditions in and impacting our industry will experience a continued recovery over the coming years.
As COVID-19 spread throughout the world, its impact on many of our locations, including our vessels, has affected our operations. We implemented various protocols for both onshore and offshore personnel in efforts to limit this impact. The effect on our business has included lockdowns of shipyards performing drydocks which delays vessels returning to service and the cancellation and/or temporary delay of certain revenue vessel contracts allowed either under the contract provisions or by mutual agreement with our customers. These cancellations and/or temporary delays reduced our year 2020 revenues by 18% and our year 2021 revenues by less than 3%. Our revenues for the six months ended June 30, 2022 were not significantly impacted. In addition, in the year ended December 31, 2021, and the six months ended June 30, 2022 we incurred approximately $7.0 million and $2.2 million, respectively, in higher operating costs, primarily related to additional crew costs, mobilization and vessel stacking costs as a result of these unplanned contract cancellations or delays. There may be additional cancellations or delays.industry.
ESG and Climate Change
Climate change is expected to increase the frequency and intensity of certain adverse weather patterns, which may impact our business. Due to concern over the risk of climate change, several countries have adopted, or are considering the adoption of, regulatory frameworks to reduce the emission of carbon dioxide, methane and other gases (greenhouse gas emissions). In addition, the increased regulation of environmental emissions is expected to create greater incentives for the use of alternative energy sources. Consideration of climate change-related issues and the responses to those issues through international agreements and national, regional, or state regulatory frameworks are integrated into our strategy, planning, forecasting and risk management processes, where applicable.
Our primary business is to support the fossil fuel industry.industry, which is the primary source of energy in the world. In addition, we burn fossil fuels in operating our vessels. The fossil fuel industry is considered one of the primary contributors to the elements of global climate change. The primary source of energy in the world is fossil fuels. We believe that continued use of fossil fuels will be important as the world transitions to alternative energy sources. We are prepared to participate in the energy transition, but also toincluding an increased focus on natural gas, and at the same time continue to support the fossil fueloil industry. We have begun to takestarted taking measures to address the future of our company and our impact on climate change. Such measures include modifications tochange, including modifying many of our vessels to reduce our carbon footprint (approximately $10.9$18.1 million of emissions focused costs including fuel monitoring systems and batteries for supplemental power are included in our net properties and equipment amount as of June 30, 2022)March 31, 2023); developing associations withand providing support to offshore alternative energy providers, such as windfarms; and publication of a written sustainability report. We have also recently formed an ESG committee withinwindfarms. In addition, in June 2022, our Board of Directors.Directors formed an Environmental, Social and Governance Committee to oversee and support our ESG strategy, initiatives and reporting, and in March 2023, we published our 2022 Sustainability Report. We are in the early stages on most of these measuresour ESG initiatives, and continuewe are committed to continuously consider, develop and implement our strategies and solutions. The measures we undertake will continue to evolve in compliance withESG strategy as applicable new regulations, business opportunities and in recognition of applicable new sustainable technologies.technologies evolve.
TheIn March 2022, the SEC has recently proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks also would include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.
The proposed rule changes would require a registrant We expect final rules to disclose information about (i) the registrant’s governance of climate-related risks and relevant risk management processes; (ii) how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term; (iii) how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; and (iv) the impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions usedbe published in the financial statements.2023.
For a detailed discussion of climate change and related governmental regulation, including associated risks and possible impact on our business, financial conditions and results of operations, please see "Risk Factors"“Risk Factors” in Item 1A of our 2022 Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 9, 2022.
Report.
RESULTS OF OPERATIONS
In November 2020, the SEC issued a final rule to Regulation S-K which permits the option to discuss material changes to results of operations between the current and immediately preceding quarter. We have elected to discuss our results of operations on a sequential-quarter basis starting with this quarterly report. We believe the implementation of this approach will provide more meaningful and useful information to investors to measure performance from the immediately preceding quarter. In addition, to provide year-over-year consistency and in accordance with SEC requirements, the following discussion also includes a comparison of our first quarter 2023 financial results to our first quarter 2022 financial results. In accordance with the final rule, however, we will not include in future filings a comparison of the current quarter and the same prior-year quarter.
Segment Changes
In conjunction with the acquisition of SPO in the previoussecond quarter of 2022, we split our Middle East/Asia Pacific segment has been split into the Middle East segment and the Asia Pacific segment. Our previous operations in Southeast Asia and Australia, along with the legacy SPO operations in the Asia Pacific region, now form the new Asia Pacific segment. Our segment disclosures reflect the current segment alignment for all periods presented.
Each of our five operating segments is managed by a senior executive reporting directly to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.
The following table presents our statement of operations for the periods indicated:
(In Thousands) | Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||
Revenues: | ||||||||||||
Vessel revenues | $ | 191,180 | $ | 103,876 | $ | 185,106 | ||||||
Other operating revenues | 1,924 | 1,853 | 1,640 | |||||||||
Total revenue | 193,104 | 105,729 | 186,746 | |||||||||
Costs and expenses: | ||||||||||||
Vessel operating costs | 115,459 | 68,511 | 115,496 | |||||||||
Costs of other operating revenues | 1,151 | 361 | 694 | |||||||||
General and administrative | 23,545 | 18,217 | 28,633 | |||||||||
Depreciation and amortization | 30,666 | 26,657 | 29,881 | |||||||||
Long-lived asset impairment and other | — | (500 | ) | — | ||||||||
Gain on asset dispositions, net | (2,216 | ) | (207 | ) | (1,076 | ) | ||||||
Total costs and expenses | 168,605 | 113,039 | 173,628 | |||||||||
Operating income (loss) | 24,499 | (7,310 | ) | 13,118 | ||||||||
Other income (expense): | ||||||||||||
Foreign exchange gain | 2,348 | 946 | 2,105 | |||||||||
Equity in net earnings of unconsolidated companies | — | — | 14 | |||||||||
Interest income and other, net | 130 | 3,486 | 981 | |||||||||
Interest and other debt costs, net | (4,190 | ) | (4,175 | ) | (4,339 | ) | ||||||
Total other expense | (1,712 | ) | 257 | (1,239 | ) | |||||||
Income (loss) before income taxes | 22,787 | (7,053 | ) | 11,879 | ||||||||
Income tax expense | 11,971 | 5,218 | 1,697 | |||||||||
Net income (loss) | 10,816 | (12,271 | ) | 10,182 | ||||||||
Net income (loss) attributable to noncontrolling interests | 78 | (103 | ) | (438 | ) | |||||||
Net income (loss) attributable to Tidewater Inc. | $ | 10,738 | $ | (12,168 | ) | $ | 10,620 |
Revenues for the quarters ended June 30,March 31, 2023 and 2022 and 2021 were $163.4$193.1 million and $90.0$105.7 million, respectively. The $73.4$87.4 million increase in revenue is primarily due to the SPO acquisition of 5049 active vessels in the SPO acquisition and to increases in utilization and average day rates and active vessels.across most of our vessel fleet. Overall, we had 5449 more average active vessels in the secondfirst quarter of 20222023 than in the secondfirst quarter of 2021.2022. Average day rates increased by 36.8%, from $10,435$10,687 per day in 20212022 to $12,544$14,624 in 2022.2023. Active utilization increaseddecreased slightly from 78.4%82.5% in 20212022 to 82.5%80.6% in 2023, primarily due to a heavy drydock schedule in the first quarter of 2023 compared to 2022. The vessels acquired in the SPO acquisition accounted for 68%almost all of the increase in average active vessels with an average day rate of $14,553$12,852 per day and average active utilization of 87.3%81.7%. The SPO vessels added $44.5 million to revenue in the three months ended March 31, 2023.
Vessel operating costs for the quarters ended June 30,March 31, 2023 and 2022 and 2021 were $100.3$115.5 million and $64.3$68.5 million, respectively. The increase is primarily due to the increase in vessel activity, as we have 54 more49 additional active vessels in our fleet in the secondfirst quarter of 2022 compared to the second quarter of 2021 primarily due to the additional vessels2023 from the SPO acquisition and also as a resultcompared to the first quarter of 2022 and our continued recovery from the low vessel utilization levels caused by the pandemic and increased activity as higher crude oil prices has resulted in more activity from our customers.
Depreciation and amortization expense for the quarters ended June 30,March 31, 2023 and 2022 and 2021 were $31.8$30.7 million and $28.5$26.7 million, respectively, largely due to an increase in depreciation expense because of a higher vessel count resulting from the SPO acquisition partially offset by lowerand higher overall amortization of deferreddue to higher drydock expenditures.activity as vessels have been reactivated over the past year.
General and administrative expenses for the quarters ended June 30,March 31, 2023 and 2022 and 2021 were $27.8$23.5 million and $16.8$18.2 million, respectively. The increase is primarily due to increased general and administrative costs associated with the Singapore and Dubai offices acquiredadded in the SPO acquisition and professional fees and transaction costs related to the SPO acquisition which totaled $7.2 million for the quarter.acquisition.
Included in lossWe reported gains on asset dispositions, net fortotaling $2.2 million in the first quarter ended June 30, 2022, are $1.3 million of net losses from2023, primarily as a result of the disposalsales of fourfive vessels and other assets. DuringWe reported gains on asset dispositions, net totaling $0.2 million in the first quarter of 2022, primarily as a result of the sales of one vessel and other assets.
Long-lived asset impairment during the quarter ended June 30, 2021, we recognized losses of $0.9March 31, 2022 was a $0.5 million credit related to recovery of impairment on a vessel reclassified from assets held for sale back to the disposal of seven vessels and other assets. One of the vessel sales in 2021active fleet. There was to a third-party operator, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the chairman of our Board of Directors. This vessel was sold for proceeds of $11.4 million, all of which was collectedno long-lived asset impairment expense in the second quarter of 2021, and we recognized a gain of $4.3 million on the sale.ended March 31, 2023.
Interest expense for the quarters ended June 30,March 31, 2023 and 2022, and 2021, was $4.3approximately the same at $4.2 million, and $3.9 million, respectively. The increase reflects higher overallas long-term debt balance and higher coupon rate on the Senior Secured Bonds issued in November 2021 compared to the Senior Secured Notes and Troms debt outstandingremained unchanged in the secondfirst quarter of 2021. The debt outstanding in 2021 was replaced by the Senior Secured Bonds in November 2021.
We recognized a $14.2 million loss to value the warrant liability at fair value on the date that we amended the SPO share purchase agreement to allow us to reclassify the warrants from liabilities to equity based on the difference in the Tidewater common stock price on amendment date2023 and the acquisition date closing common stock price.2022
During the quarter ended June 30, 2022, we recognized foreign exchange losses of $1.9 million and during the quarter ended June 30, 2021March 31, 2023, we recognized foreign exchange gains of $0.4$2.3 million due to the weakening of the U.S. Dollar against other currencies. During the quarter ended March 31, 2022, we recognized foreign exchange gains of $0.9 million.
The income tax expense for the three months ended June 30, 2022March 31, 2023 was $6.6$12.0 million compared to an income tax expense of $6.0$5.2 million for the three months ending June 30, 2021.March 31, 2022. The tax expense for the three months ended June 30, 2022March 31, 2023 is mainly attributable to foreign taxes that are calculated on the basis of deemed profit or minimum tax regimes or withholding tax on revenue instead of taxable income or loss. Additionally, the inability to offset profits in one country with losses in a different country contributes to having a larger than expected tax liability despite large consolidated pre-tax losses.liability.
Consolidated Results of Operations – SixThree Months Ended June 30, 2022March 31, 2023 compared to June 30, 2021December 31, 2022
Revenues for the six monthsquarters ended June 30,March 31, 2023 and December 31, 2022 and 2021 were $269.2$193.1 million and $173.5$186.7 million, respectively. The $95.7$6.4 million increase in revenue is primarily due to the acquisition of 50 vesselsincreases in revenues in the SPO acquisition which closed on April 22, 2022Americas and to increases in utilization, averageAsia Pacific resulting from higher day rates in each segment. These increases were offset by lower revenues due to seasonal declines in Europe/Mediterranean activity and active vessels. Overall, we had 35 more average active vesselstwo less days in the first six months of 2022 than in the first six months of 2021. Average day rates also increased from $10,219 per day in 2021 to $11,738 in 2022. Active utilization increased from 78.0% in 2021 to 82.5% in 2022. The vessels acquired in the SPO acquisition are included in our results from the acquisition date and accounted for 53% of the increase in average active vessels with an average day rate of $14,553 per day and average active utilization of 87.3%.quarter.
Vessel operating costs for the six monthsquarters ended June 30,March 31, 2023 and December 31, 2022 and 2021 were $168.8$115.5 million and $125.3$115.5 million, respectively. The increase is primarily due to the increase in vessel activity, as we have 35 more active vessels in our fleet in the first six months of 2022 compared to the first six months of 2021 primarily due to the additional vessels from the SPO acquisition and also as a result of our continued recovery from the low vessel utilization levels caused by the pandemic and the increased activity as higher crude oil prices has resulted in more activity from our customers.
Depreciation and amortization expense for the six monthsquarters ended June 30,March 31, 2023 and December 31, 2022 and 2021 were $58.4$30.7 million and $58.3$29.9 million, respectively. Depreciation expense only increased slightly because the higher vessel count from the SPO acquisition was largely offset by a decreaserespectively, due to an increase in amortization expense related toof deferred drydock expenditures.costs.
General and administrative expenses for the six monthsquarters ended June 30,March 31, 2023 and December 31, 2022 and 2021 were $46.0$23.5 million and $32.8$28.6 million, respectively. The increase isrespectively, primarily due to generalbecause of a $3.7 million reduction in one-time acquisition, restructuring and administrative costs associated with the Singapore and Dubai offices acquired in the SPO acquisition and professional fees and transaction costsintegration related to the SPO acquisition which totaled $9.4 million for the six months ended June 30, 2022.costs.
Included in lossWe reported gains on asset dispositions, net fortotaling $2.2 million in the six months ended June 30, 2022, are $1.1 millionfirst quarter of net losses from2023 primarily as a result of the disposalsales of ninefive vessels and other assets. DuringWe reported gains on asset dispositions, net totaling $1.1 million in the six months ended June 30, 2021, we recognized lossesfourth quarter of $2.9 million related to2022 primarily as a result of the disposalsales of 13four vessels and other assets. One of the vessel sales in 2021 was to a third-party operator, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the chairman of our Board of Directors. This vessel was sold for proceeds of $11.4 million, all of which was collected in the second quarter of 2021, and we recognized a gain of $4.3 million on the sale.
Long-lived asset impairment during the six months ended June 30, 2022 was $0.5 million credit related to recovery of impairment on a vessel reclassified from assets held for sale back to the active fleet. There was no long-lived asset impairment in the six months ended June 30, 2021.
In the first six months of 2021, we recognized $1.8 million in losses related to our interest in the Sonatide joint venture in Angola. On January 3, 2022, we acquired our partner’s 51% interest in Sonatide and ceased recording equity gains and losses.
Interest incomeexpense for the quarters ended March 31, 2023 and other, netDecember 31, 2022, was $3.8$4.2 million higherand $4.3 million, respectively. Long-term debt remained unchanged in the first six monthsquarter of 2022 compared to the first six months2023 and fourth quarter of 2021. The 2022 income was primarily related to the $1.3 million bargain purchase gain on our acquisition of 51% of Sonatide and $1.9 million in interest and other income related to a litigation settlement for one of our vessels.
We recognized a $14.2 million loss to value the warrant liability at fair value on the date that we amended the SPO share purchase agreement to allow us to reclassify the warrants from liabilities to equity based on the difference in the Tidewater common stock price on amendment date and the acquisition date closing common stock price.2022.
During the six monthsquarter ended June 30, 2022 and 2021,March 31, 2023, we recognized foreign exchange lossesgains of $0.9$2.3 million and $0.4 million, respectively.due to the weakening of the U.S. Dollar against other currencies. During the quarter ended December 31, 2022 we recognized foreign exchange gains of $2.1 million.
The income tax expense for the sixthree months ended June 30, 2022March 31, 2023 was $11.8$12.0 million compared to an income tax expense of $8.0$1.7 million for the sixthree months ending June 30, 2021.December 31, 2022. The increase in tax expense for the sixthree months ended June 30, 2022March 31, 2023 is mainly attributable to foreign taxes that are calculated on the basisaddition of deemed profit or minimuma new uncertain tax regimes or withholdingposition in first quarter of 2023 and an uncertain tax on revenue insteadposition benefit from statute of taxable income or loss.limitations expiration recognized in fourth quarter of 2022. Additionally, the inability to offset profits in one country with losses in a different country contributes to having a larger than expected tax liability despite large consolidated pre-tax losses.liability.
The following table compares vessel revenues and vessel operating costs by geographic segment for our owned and operated vessel fleet and the related percentage of vessel revenue for the periods indicated:
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vessel revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas | $ | 37,520 | 23 | % | $ | 23,481 | 27 | % | $ | 65,964 | 25 | % | $ | 49,705 | 29 | % | $ | 47,687 | 25 | % | $ | 28,444 | 27 | % | $ | 41,785 | 23 | % | ||||||||||||||||||||||||||||
Asia Pacific | 16,362 | 10 | % | 4,870 | 6 | % | 21,259 | 8 | % | 8,442 | 5 | % | 22,024 | 12 | % | 4,897 | 5 | % | 19,070 | 10 | % | |||||||||||||||||||||||||||||||||||
Middle East | 28,396 | 18 | % | 20,758 | 23 | % | 48,614 | 18 | % | 41,600 | 25 | % | 30,762 | 16 | % | 20,218 | 19 | % | 30,575 | 16 | % | |||||||||||||||||||||||||||||||||||
Europe/Mediterranean | 32,475 | 20 | % | 22,467 | 25 | % | 56,394 | 21 | % | 37,216 | 22 | % | 31,250 | 16 | % | 23,919 | 23 | % | 33,482 | 18 | % | |||||||||||||||||||||||||||||||||||
West Africa | 47,422 | 29 | % | 16,938 | 19 | % | 73,820 | 28 | % | 32,544 | 19 | % | 59,457 | 31 | % | 26,398 | 26 | % | 60,194 | 33 | % | |||||||||||||||||||||||||||||||||||
Total vessel revenues | $ | 162,175 | 100 | % | $ | 88,514 | 100 | % | $ | 266,051 | 100 | % | $ | 169,507 | 100 | % | $ | 191,180 | 100 | % | $ | 103,876 | 100 | % | $ | 185,106 | 100 | % | ||||||||||||||||||||||||||||
Vessel operating costs: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 12,949 | 34 | % | $ | 11,132 | 47 | % | $ | 24,201 | 37 | % | $ | 21,726 | 44 | % | $ | 17,402 | 36 | % | $ | 11,252 | 40 | % | $ | 16,486 | 39 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 2,866 | 8 | % | 2,192 | 9 | % | 5,493 | 8 | % | 4,906 | 10 | % | 3,888 | 8 | % | 2,627 | 9 | % | 3,619 | 9 | % | |||||||||||||||||||||||||||||||||||
Insurance | 248 | 1 | % | (30 | ) | (0 | )% | 615 | 1 | % | 170 | 0 | % | 410 | 1 | % | 367 | 1 | % | 410 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 2,326 | 6 | % | 1,952 | 8 | % | 4,711 | 7 | % | 3,726 | 7 | % | 2,999 | 6 | % | 2,385 | 8 | % | 2,387 | 6 | % | |||||||||||||||||||||||||||||||||||
Other | 3,054 | 8 | % | 2,972 | 13 | % | 5,250 | 8 | % | 4,952 | 10 | % | 3,572 | 8 | % | 2,196 | 8 | % | 5,102 | 12 | % | |||||||||||||||||||||||||||||||||||
$ | 21,443 | 57 | % | $ | 18,218 | 78 | % | $ | 40,270 | 61 | % | $ | 35,480 | 71 | % | $ | 28,271 | 59 | % | $ | 18,827 | 66 | % | $ | 28,004 | 67 | % | |||||||||||||||||||||||||||||
Asia Pacific: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 8,138 | 50 | % | $ | 801 | 16 | % | $ | 8,926 | 42 | % | $ | 1,651 | 20 | % | $ | 7,311 | 33 | % | $ | 788 | 16 | % | $ | 9,876 | 52 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 945 | 6 | % | 268 | 6 | % | 1,229 | 6 | % | 818 | 10 | % | 1,749 | 8 | % | 284 | 6 | % | 901 | 5 | % | |||||||||||||||||||||||||||||||||||
Insurance | 90 | 0 | % | (10 | ) | (0 | )% | 144 | 1 | % | 30 | 0 | % | 123 | 1 | % | 54 | 1 | % | 183 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 1,590 | 10 | % | 205 | 4 | % | 1,695 | 8 | % | 615 | 7 | % | 1,630 | 7 | % | 105 | 2 | % | 1,299 | 7 | % | |||||||||||||||||||||||||||||||||||
Other | 1,176 | 7 | % | 459 | 9 | % | 1,598 | 7 | % | 770 | 9 | % | 1,678 | 8 | % | 422 | 9 | % | 1,574 | 8 | % | |||||||||||||||||||||||||||||||||||
$ | 11,939 | 73 | % | $ | 1,723 | 35 | % | $ | 13,592 | 64 | % | $ | 3,884 | 46 | % | $ | 12,491 | 57 | % | $ | 1,653 | 34 | % | $ | 13,833 | 73 | % | |||||||||||||||||||||||||||||
Middle East | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 11,193 | 39 | % | $ | 9,109 | 44 | % | $ | 19,658 | 40 | % | $ | 17,898 | 43 | % | $ | 12,616 | 41 | % | $ | 8,465 | 42 | % | $ | 12,472 | 41 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 3,429 | 12 | % | 2,364 | 11 | % | 5,553 | 12 | % | 4,473 | 11 | % | 3,475 | 11 | % | 2,124 | 11 | % | 3,216 | 11 | % | |||||||||||||||||||||||||||||||||||
Insurance | 325 | 1 | % | 47 | 0 | % | 622 | 1 | % | (217 | ) | (1 | )% | 433 | 2 | % | 297 | 1 | % | 384 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 2,700 | 10 | % | 1,289 | 6 | % | 4,259 | 9 | % | 2,448 | 6 | % | 2,870 | 9 | % | 1,559 | 8 | % | 2,991 | 10 | % | |||||||||||||||||||||||||||||||||||
Other | 2,249 | 8 | % | 2,233 | 11 | % | 4,706 | 10 | % | 4,881 | 12 | % | 3,669 | 12 | % | 2,457 | 12 | % | 2,505 | 8 | % | |||||||||||||||||||||||||||||||||||
$ | 19,896 | 70 | % | $ | 15,042 | 72 | % | $ | 34,798 | 72 | % | $ | 29,483 | 71 | % | $ | 23,063 | 75 | % | $ | 14,902 | 74 | % | $ | 21,568 | 71 | % | |||||||||||||||||||||||||||||
Europe/Mediterranean: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 12,349 | 38 | % | $ | 10,519 | 47 | % | $ | 24,352 | 43 | % | $ | 19,541 | 53 | % | $ | 12,727 | 41 | % | $ | 12,003 | 50 | % | $ | 13,010 | 39 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 2,414 | 7 | % | 2,244 | 10 | % | 4,520 | 8 | % | 3,917 | 11 | % | 2,706 | 9 | % | 2,106 | 9 | % | 3,067 | 9 | % | |||||||||||||||||||||||||||||||||||
Insurance | 307 | 1 | % | (131 | ) | (1 | )% | 616 | 1 | % | 168 | 0 | % | 384 | 1 | % | 309 | 1 | % | 386 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 1,740 | 5 | % | 864 | 4 | % | 2,817 | 5 | % | 1,623 | 4 | % | 1,584 | 5 | % | 1,077 | 5 | % | 2,051 | 6 | % | |||||||||||||||||||||||||||||||||||
Other | 2,468 | 8 | % | 1,803 | 8 | % | 4,494 | 8 | % | 3,510 | 9 | % | 2,371 | 7 | % | 2,026 | 8 | % | 1,762 | 6 | % | |||||||||||||||||||||||||||||||||||
$ | 19,278 | 59 | % | $ | 15,299 | 68 | % | $ | 36,799 | 65 | % | $ | 28,759 | 77 | % | $ | 19,772 | 63 | % | $ | 17,521 | 73 | % | $ | 20,276 | 61 | % | |||||||||||||||||||||||||||||
West Africa: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 16,010 | 34 | % | $ | 6,124 | 36 | % | $ | 24,339 | 33 | % | $ | 12,031 | 37 | % | $ | 16,587 | 28 | % | $ | 8,329 | 32 | % | $ | 17,855 | 30 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 3,823 | 8 | % | 2,466 | 15 | % | 6,143 | 8 | % | 4,857 | 15 | % | 4,834 | 8 | % | 2,320 | 9 | % | 3,971 | 6 | % | |||||||||||||||||||||||||||||||||||
Insurance | 396 | 1 | % | (13 | ) | (0 | )% | 753 | 1 | % | 335 | 1 | % | 655 | 1 | % | 357 | 1 | % | 664 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 3,165 | 6 | % | 2,231 | 13 | % | 5,115 | 7 | % | 3,989 | 12 | % | 4,472 | 7 | % | 1,950 | 7 | % | 4,113 | 7 | % | |||||||||||||||||||||||||||||||||||
Other | 4,307 | 9 | % | 3,173 | 19 | % | 6,959 | 10 | % | 6,465 | 20 | % | 5,314 | 9 | % | 2,652 | 10 | % | 5,212 | 9 | % | |||||||||||||||||||||||||||||||||||
$ | 27,701 | 58 | % | $ | 13,981 | 83 | % | $ | 43,309 | 59 | % | $ | 27,677 | 85 | % | $ | 31,862 | 54 | % | $ | 15,608 | 59 | % | $ | 31,815 | 53 | % | |||||||||||||||||||||||||||||
Vessel operating costs: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crew costs | $ | 60,639 | 38 | % | $ | 37,685 | 43 | % | $ | 101,476 | 38 | % | $ | 72,847 | 43 | % | $ | 66,643 | 35 | % | $ | 40,837 | 39 | % | $ | 69,699 | 37 | % | ||||||||||||||||||||||||||||
Repair and maintenance | 13,477 | 8 | % | 9,534 | 11 | % | 22,938 | 8 | % | 18,971 | 11 | % | 16,652 | 9 | % | 9,461 | 9 | % | 14,774 | 8 | % | |||||||||||||||||||||||||||||||||||
Insurance | 1,366 | 1 | % | (137 | ) | (0 | )% | 2,750 | 1 | % | 486 | 1 | % | 2,005 | 1 | % | 1,384 | 1 | % | 2,027 | 1 | % | ||||||||||||||||||||||||||||||||||
Fuel, lube and supplies | 11,521 | 7 | % | 6,541 | 7 | % | 18,597 | 7 | % | 12,401 | 7 | % | 13,555 | 7 | % | 7,076 | 7 | % | 12,841 | 7 | % | |||||||||||||||||||||||||||||||||||
Other | 13,254 | 8 | % | 10,640 | 12 | % | 23,007 | 9 | % | 20,578 | 12 | % | 16,604 | 8 | % | 9,753 | 9 | % | 16,155 | 9 | % | |||||||||||||||||||||||||||||||||||
Total vessel operating costs | $ | 100,257 | 62 | % | $ | 64,263 | 73 | % | $ | 168,768 | 63 | % | $ | 125,283 | 74 | % | $ | 115,459 | 60 | % | $ | 68,511 | 66 | % | $ | 115,496 | 62 | % |
The following table presents general and administrative expenses in our fourfive geographic segments both individually and in total and the related general and administrative expenses as a percentage of the vessel revenues of each segment and in total for the three and six months ended June 30, 2022 and 2021:periods indicated:
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Segment general and administrative expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas | $ | 2,644 | 7 | % | $ | 2,822 | 12 | % | $ | 5,227 | 8 | % | $ | 5,427 | 11 | % | $ | 3,260 | 7 | % | $ | 2,583 | 9 | % | $ | 2,855 | 7 | % | ||||||||||||||||||||||||||||
Asia Pacific | 3,242 | 20 | % | 226 | 5 | % | 3,464 | 16 | % | 455 | 5 | % | 2,500 | 11 | % | 222 | 5 | % | 4,532 | 24 | % | |||||||||||||||||||||||||||||||||||
Middle East | 2,386 | 8 | % | 1,850 | 9 | % | 4,179 | 9 | % | 4,406 | 11 | % | 2,308 | 8 | % | 1,793 | 9 | % | 2,490 | 8 | % | |||||||||||||||||||||||||||||||||||
Europe/Mediterranean | 1,977 | 6 | % | 1,928 | 9 | % | 4,042 | 7 | % | 3,755 | 10 | % | 2,092 | 7 | % | 2,065 | 9 | % | 2,110 | 6 | % | |||||||||||||||||||||||||||||||||||
West Africa | 2,449 | 5 | % | 1,733 | 10 | % | 4,283 | 6 | % | 3,840 | 12 | % | 2,853 | 5 | % | 1,834 | 7 | % | 3,003 | 5 | % | |||||||||||||||||||||||||||||||||||
Total segment general and administrative expenses | $ | 12,698 | 8 | % | $ | 8,559 | 10 | % | $ | 21,195 | 8 | % | $ | 17,883 | 11 | % | $ | 13,013 | 7 | % | $ | 8,497 | 8 | % | $ | 14,990 | 8 | % |
The following table presents segment and total depreciation and amortization expense and the related segment and total vessel depreciation and amortization expense as a percentage of segment and total vessel revenues for the three and six months ended June 30, 2022 and 2021:periods indicated:
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Segment depreciation and amortization expense: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas | $ | 7,503 | 20 | % | $ | 7,382 | 31 | % | $ | 14,619 | 22 | % | $ | 15,389 | 31 | % | $ | 8,194 | 17 | % | $ | 7,116 | 25 | % | $ | 7,710 | 18 | % | ||||||||||||||||||||||||||||
Asia Pacific | 2,080 | 13 | % | 1,199 | 25 | % | 2,929 | 14 | % | 2,436 | 29 | % | 1,465 | 7 | % | 849 | 17 | % | 1,513 | 8 | % | |||||||||||||||||||||||||||||||||||
Middle East | 6,421 | 23 | % | 5,322 | 26 | % | 11,827 | 24 | % | 10,965 | 26 | % | 5,735 | 19 | % | 5,406 | 27 | % | 6,025 | 20 | % | |||||||||||||||||||||||||||||||||||
Europe/Mediterranean | 6,958 | 21 | % | 7,225 | 32 | % | 13,720 | 24 | % | 14,709 | 40 | % | 7,350 | 24 | % | 6,762 | 28 | % | 7,222 | 22 | % | |||||||||||||||||||||||||||||||||||
West Africa | 8,002 | 17 | % | 6,580 | 39 | % | 13,743 | 19 | % | 13,150 | 40 | % | 7,521 | 13 | % | 5,741 | 22 | % | 7,071 | 12 | % | |||||||||||||||||||||||||||||||||||
Total segment depreciation and amortization expense | $ | 30,964 | 19 | % | $ | 27,708 | 31 | % | $ | 56,838 | 21 | % | $ | 56,649 | 33 | % | $ | 30,265 | 16 | % | $ | 25,874 | 25 | % | $ | 29,541 | 16 | % |
The following table compares operating income (loss) and other components of income (loss) and its related percentage of total revenue for the three and six months ended June 30, 2022 and 2021:periods indicated:
(In Thousands) | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Vessel operating profit (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas | $ | 5,930 | 4 | % | $ | (4,940 | ) | (5 | )% | $ | 5,848 | 2 | % | $ | (6,591 | ) | (4 | )% | $ | 7,962 | 4 | % | $ | (82 | ) | 0 | % | $ | 3,216 | 2 | % | |||||||||||||||||||||||||
Asia Pacific | (899 | ) | (1 | )% | 1,722 | 2 | % | 1,274 | 0 | % | 1,667 | 1 | % | 5,568 | 3 | % | 2,173 | 2 | % | (808 | ) | 0 | % | |||||||||||||||||||||||||||||||||
Middle East | (307 | ) | 0 | % | (1,456 | ) | (2 | )% | (2,190 | ) | (1 | )% | (3,254 | ) | (2 | )% | (344 | ) | 0 | % | (1,883 | ) | (2 | )% | 492 | 0 | % | |||||||||||||||||||||||||||||
Europe/Mediterranean | 4,262 | 3 | % | (1,986 | ) | (2 | )% | 1,833 | 1 | % | (10,007 | ) | (6 | )% | 2,036 | 1 | % | (2,429 | ) | (2 | )% | 3,874 | 2 | % | ||||||||||||||||||||||||||||||||
West Africa | 9,270 | 6 | % | (5,355 | ) | (6 | )% | 12,485 | 5 | % | (12,122 | ) | (7 | )% | 17,221 | 9 | % | 3,215 | 3 | % | 18,305 | 10 | % | |||||||||||||||||||||||||||||||||
Other operating profit | 790 | 0 | % | 858 | 1 | % | 2,282 | 1 | % | 2,302 | 2 | % | 773 | 0 | % | 1,492 | 1 | % | 946 | 0 | % | |||||||||||||||||||||||||||||||||||
19,046 | 12 | % | (11,157 | ) | (12 | )% | 21,532 | 8 | % | (28,005 | ) | (16 | )% | 33,216 | 17 | % | 2,486 | 2 | % | 26,025 | 14 | % | ||||||||||||||||||||||||||||||||||
Corporate expenses | (15,909 | ) | (10 | )% | (9,070 | ) | (10 | )% | (26,412 | ) | (10 | )% | (16,575 | ) | (10 | )% | (10,933 | ) | (5 | )% | (10,503 | ) | (10 | )% | (13,983 | ) | (7 | )% | ||||||||||||||||||||||||||||
Gain (loss) on asset dispositions, net | (1,297 | ) | (1 | )% | (932 | ) | (1 | )% | (1,090 | ) | 0 | % | (2,880 | ) | (2 | )% | ||||||||||||||||||||||||||||||||||||||||
Affiliate credit loss impairment credit | — | 0 | % | 1,000 | 1 | % | — | 0 | % | 1,000 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
Long-lived asset impairment credit | — | 0 | % | — | 0 | % | 500 | 0 | % | — | 0 | % | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | $ | 1,840 | 1 | % | $ | (20,159 | ) | (22 | )% | $ | (5,470 | ) | (2 | )% | $ | (46,460 | ) | (27 | )% | |||||||||||||||||||||||||||||||||||||
Gain on asset dispositions, net | 2,216 | 1 | % | 207 | 0 | % | 1,076 | 0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Long-lived asset impairment and other | — | 0 | % | 500 | 1 | % | — | 0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 24,499 | 13 | % | $ | (7,310 | ) | (7 | )% | $ | 13,118 | 7 | % |
ResultsSegment results for three months ended June 30, 2022March 31, 2023 compared to June 30, 2021March 31, 2022
Americas Segment Operations. Vessel revenues in the Americas segment increased 59.8%67.7%, or $14.0$19.2 million, during the quarter ended June 30, 2022, asMarch 31, 2023, compared to the quarter ended June 30, 2021.March 31, 2022. This increase is primarily the result of four additional active vessels and a 25.9%27.7% increase in average day rates largely due theto demand recovery with higher crude oil prices and the reduction of COVID-19 restrictions and an increase in averageprices. Average utilization increased from 76.4% in the second quarter of 202175.5% to 86.8% in the second quarter of 2022.85.2%. The SPO acquisition added one average vesseltwo active vessels in the Americas segment that contributed 77.0%100% utilization, $15,226$9,334 average day rate and $0.7$1.7 million in revenue.
Vessel operating profit for the Americas segment for the quarter ended June 30, 2022March 31, 2023, was $5.9$8.0 million, compared to a $4.9$0.1 million operating loss for the quarter ended June 30, 2021.March 31, 2022. The increase in operating profit was largely due to the increase in revenue partially offset by a $3.2$9.4 million increase in operating expenses and a $1.1 million increase in depreciation and amortization, resulting mainly from four additional active vessels, reactivation costs, and $0.8a $0.7 million from the additional SPO vessel.increase in general and administrative costs.
Asia Pacific Segment Operations. Vessel revenues in the Asia Pacific segment increased 236.0%349.7%, or $11.5$17.1 million, during the quarter ended June 30, 2022, asMarch 31, 2023, compared to the quarter ended June 30, 2021. Average activeMarch 31, 2022. Active vessels increased by 13,eight, entirely as a result ofdue to the acquisition of SPO. Average day rates increased 28.4%114.9%, rising from $10,975 per day in the first quarter of 2022 to $23,582 in the first quarter of 2023. The SPO acquisition added 13 active vessels to the Asia Pacific segment and contributed 79.8% utilization, $23,583 average day rate and $22.0 million in revenue. The impact of the SPO vessels was slightly offset by a five active vessel decrease in legacy Tidewater vessels due to contract completions. Average active utilization for the segment decreased from 99.2% to 77.8%.
The Asia Pacific segment reported an operating lossprofit of $0.9$5.6 million for the quarter ended June 30, 2022,March 31, 2023, compared to a $1.7$2.2 million loss for the quarter ended June 30, 2021.March 31, 2022. The increase in revenue was offset by additional operating expenses of $10.2$10.8 million, general and administrative costs of $3.1$2.3 million, depreciation and amortization expense of $1.5$0.6 million, all as a result of the SPO acquisition.
Middle East Segment Operations. Vessel revenues in the Middle East segment increased 36.8%52.2%, or $7.6$10.5 million, during the quarter ended June 30, 2022, asMarch 31, 2023, compared to the quarter ended June 30, 2021. Average activeMarch 31, 2022. Active vessels increased by nine,ten, with five averagesix active vessels added from the SPO acquisition that contributed $6.2$5.4 million in revenue. ActiveThe SPO vessels achieved an average day rate of $11,098 and average active utilization of 90.9%. Overall, active utilization for the quarter ended June 30, 2022March 31, 2023 decreased from 83.6% to 80.8% from 86.8%82.5% but average day rates increased 15.5%18.6%.
The Middle East segment reported an operating loss of $0.3 million for the quarter ended June 30, 2022,March 31, 2023, compared to an operating loss of $1.5$1.9 million for the quarter ended June 30, 2021March 31, 2022 as the increase in revenue was largely offset by a $4.9$8.2 million increase in operating costs ($2.7 million(primarily attributable to the acquired SPO vessels), a $1.1$0.3 million increase in depreciation and amortization, and a $0.5 million increase in general and administrative costs. The increase in costs were primarily a result of the five averagesix active vessels acquired in the SPO acquisition and addition of the SPO Dubai office.
Europe/Mediterranean Segment Operations. Vessel revenues in the Europe/Mediterranean segment increased 44.5%30.6%, or $10.0$7.3 million, during the quarter ended June 30, 2022, asMarch 31, 2023, compared to the quarter ended June 30, 2021.March 31, 2022. The increased revenue was attributable to fourthree more average active vessels (one from the SPO acquisition, which had revenue of $1.8$1.1 million) combined with 21.3%29.2% higher average day rates. Active utilization decreased slightly from 90.6%91.3% to 88.1%83.4%. The SPO vessel was 84.1% utilized in the first quarter of 2023 at an average day rate of $13,948. The first quarter in this segment typically experiences lower activity due to weather conditions in the North Sea.
The Europe/Mediterranean segment reported an operating profit of $4.3$2.0 million for the quarter ended June 30, 2022,March 31, 2023, compared to an operating loss of $2.0$2.4 million for the quarter ended June 30, 2021.March 31, 2022. The higher operating profit was due to the revenue increase offset by $4.0$2.3 million in higher operating costs and $0.6 million in higher depreciation and amortization associated with the increase in averageactive vessels. The SPO vessel incurred $1.1 million in operating cost for the period. Depreciation and amortization also decreased by $0.3 million due to lower drydock amortization.
West Africa Segment Operations. Vessel revenues in the West Africa segment increased 180.0%125.2%, or $30.5$33.1 million, during the quarter ended June 30, 2022, asMarch 31, 2023, compared to the quarter ended June 30, 2021.March 31, 2022. The West Africa average active vessel fleet increased by 24 vessels (16(25 from the SPO acquisition) during the comparative periods. West Africa segment active utilization increased as well from 61.8% during the quarter ended June 30, 2021 to 82.9% during the quarter ended June 30, 2022. In addition, average day rates increased 25.8%.47.7% from $8,834 to $13,047, while active utilization decreased from 79.1% during the quarter ended March 31, 2022 to 76.6% during the quarter ended March 31, 2023. The increases in revenue are the result of the additional SPO vessels,acquisition, which added $19.5$14.3 million in revenue and higher demand caused by reduced restrictions from the pandemic and the higher price of crude oil.
West Africa reported an operating profit of $9.3$17.2 million for the quarter ended June 30, 2022,March 31, 2023, compared to an operating lossprofit of $5.4$3.2 million for the quarter ended June 30, 2021.March 31, 2022. The increase in operating results is largely due to the increase in revenue partially offset by $13.7$16.3 million ($11.9 million attributable to the acquired SPO vessels) in higher operating costs primarily related to the increase in average active vessels. In addition, general and administrative costs increased by $0.7$1.0 million due to additional costs associated with the SPO acquisition and our acquisition of the remaining 51% of the Angolan joint venture in January 2022.acquisition. Depreciation and amortization increased by $1.4$1.8 million due largely to the addition of the SPO vessels.acquisition.
ResultsSegment results for sixthree months ended June 30, 2022March 31, 2023 compared to June 30, 2021December 31, 2022
Americas Segment Operations. Vessel revenues in the Americas segment increased 32.7%14.1%, or $16.3$5.9 million, during the six monthsquarter ended June 30, 2022, asMarch 31, 2023, compared to the six monthsquarter ended June 30, 2021.December 31, 2022. This increase is primarily the result of a two average vessel increase and a 29.3%an 8.3% increase in average day rates largely due the demand recovery with higher crude oil prices and the reduction of COVID-19 restrictions. Averagean increase in average utilization decreased slightly from 82.4% in the first six months of 202180.1% to 81.4% in the first six months of 2022. The SPO acquisition added less than one average vessel in the Americas segment that contributed 77.0% utilization and a $15,226 average day rate. The additional vessel added $0.7 million to revenue.85.2%.
Vessel operating profit for the Americas segment for the six monthsquarter ended June 30, 2022March 31, 2023 was $5.8$8.0 million, compared to a $6.6$3.2 million operating lossprofit for the six monthsquarter ended June 30, 2021.December 31, 2022. The increase in operating profit was largely due to the increase in revenue partially offset by a $4.8increases of $0.3 million increase in operating expenses ($0.8expense, $0.4 million from the additional SPO vessel), resulting mainly from reactivation costs. Depreciationin general and amortization decreased slightly due to lower amortization of deferred drydock costs.administrative expense and $0.5 million in depreciation and amortization.
Asia Pacific Segment Operations. Vessel revenues in the Asia Pacific segment increased 151.8%15.4%, or $12.8$3.0 million, during the six monthsquarter ended June 30, 2022,March 31, 2023, as compared to the six monthsquarter ended June 30, 2021. Average activeDecember 31, 2022. Active vessels increaseddecreased by seven, entirely as a result of the acquisition of SPO.one, but this decrease was offset by substantial increases in day rates. Average day rates increased 25.4%. The vessels32.0% rising from $17,868 per day in the SPO acquisition added $15.0 millionfourth quarter of 2022 to revenue.$23,582 in the first quarter of 2023. Average active utilization for the segment decreased slightly from 79.5% to 77.8%.
The Asia Pacific segment reported an operating profit of $1.3$5.6 million for the six monthsquarter ended June 30, 2022,March 31, 2023, compared to $1.7an operating loss of $0.8 million for the six monthsquarter ended June 30, 2021.December 31, 2022. The increase in revenue was offset by a $9.7 millionprofit is primarily due to the increase in revenue plus a $1.3 million decrease in operating costs ($10.2 million increase attributable to SPO vessels), a $0.5 million increase in depreciation and amortization,expenses and a $3.0$2.0 million increasedecrease in general and administrative costs primarily due to the addition of the SPO Singapore office.costs.
Middle East Segment Operations. Vessel revenues in the Middle East segment increased 16.9%, or $7.0slightly by $0.2 million, during the six monthsquarter ended June 30, 2022, asMarch 31, 2023, compared to the six months ended June 30, 2021. Average active vessels increased by four, with three vessels added from the SPO acquisition that added $6.2 million in revenue. Active utilization for the quarter ended June 30, 2022, decreased to 82.1% from 85.6% butDecember 31, 2022. Active vessels, average day rates increased 7.5%.and average active utilization were largely unchanged from quarter to quarter.
The Middle East segment reported an operating loss of $2.2$0.3 million for the six monthsquarter ended June 30, 2022,March 31, 2023, compared to an operating lossprofit of $3.3$0.5 million for the six monthsquarter ended June 30, 2021December 31, 2022 primarily due to the increase in revenue partially offset by a $5.3$1.5 million increase in operating costs ($2.7offset by a $0.3 million attributable to the acquired vessels) and a $0.9 million increasedecrease in depreciation and amortization. amortization and a $0.2 million decrease in general and administrative costs.
Europe/Mediterranean Segment Operations. Vessel revenues in the Europe/Mediterranean segment increased 51.5%,decreased by 6.7% or $19.2$2.2 million, during the six monthsquarter ended June 30, 2022,March 31, 2023, as compared to the six monthsquarter ended June 30, 2021.December 31, 2022. The increaseddecreased revenue was primarily attributable to six more average active vessels (less than one fromlower utilization as the SPO acquisition, which had revenue of $1.8 million) combined with higher average day rates and higherNorth Sea activity level decreased in the first quarter. Average active utilization largely duedecreased from 87.8% in the demand recovery with higher crude oil prices andfourth quarter of 2022 to 83.4% in the reductionfirst quarter of COVID-19 restrictions.2023. Active utilization increased from 86.5% to 89.7%vessels remained unchanged and average daydays rates increased 11.3%.by 2.0% from $15,364 to $15,669.
The Europe/Mediterranean segment reported an operating profit of $1.8$2.0 million for the six monthsquarter ended June 30, 2022,March 31, 2023, compared to an operating lossprofit of $10.0$3.9 million for the six monthsquarter ended June 30, 2021.December 31, 2022. The improved results are fromlower operating profit was due to the increase in revenue partiallydecrease offset by $8.0$0.5 million in higherlower operating costs associated with the increase in average vessels and a $0.3 million increase in general and administrative costs. The SPO vessel incurred $1.1 million in operating costs during the period. Depreciation and amortization decreased by $1.0 million due to lower drydock amortization.
West Africa Segment Operations. Vessel revenues in the West Africa segment increased 126.8%,decreased 1.2% or $41.3$0.7 million, during the six monthsquarter ended June 30, 2022, asMarch 31, 2023, compared to the six monthsquarter ended June 30, 2021. The West Africa averageDecember 31, 2022 primarily due to a 5.1% decrease in utilization. Offsetting the utilization decrease was a one vessel increase in active vessel fleet increased by 16 vessels during the comparative periods. The SPO acquisition added eight vessels to the average vessel count and contributed $19.7 milliona 6.3% increase in revenue. West Africa segment active utilization increased as well from 60.8% during the six months ended June 30, 2021 to 81.3% during the six months ended June 30, 2022. In addition, average day rates increased 15.7%. The increases in revenue are due to the addition of the SPO vessels, the higher demand caused by reduced restrictions from the pandemic and the higher price of crude oil.rates.
West Africa reported an operating profit of $12.5$17.2 million for the six monthsquarter ended June 30, 2022March 31, 2023, compared to an operating lossprofit of $12.1$18.3 million for the six monthsquarter ended June 30, 2021.December 31, 2022. The increasedecrease in operating results is largely due to the decrease in revenue plus a $0.5 million increase in revenuedepreciation and amortization partially offset by $15.6$0.2 million ($11.9 million attributable to the acquired SPO vessels)decrease in higher operating costs primarily related to the increase in average active vessels. In addition, general and administrative costs increased by $0.4 million and depreciation and amortization increased by $0.6 million due largely to the addition of the SPO vessels.costs.
Vessel Utilization and Average Day Rates by Segment
Vessel utilization is determined primarily by market conditions and to a lesser extent by drydocking requirements. Vessel day rates are determined by the demand created largely through the level of offshore exploration, field development and production spending by energy companies relative to the supply of offshore support vessels. Specifications of available equipment and the scope of service provided may also influence vessel day rates. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. As such, stacked vessels depress utilization rates because stacked vessels are considered available to work and are included in the calculation of utilization rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period.
Total vessel utilization is calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock) but does not include vessels owned by joint ventures (one and three vessels at June 30, 2022 and 2021, respectively). Active utilization is calculated on active vessels (which excludes vessels held for sale and stacked vessels). Average day rates are calculated based on total vessel days worked.
The following tables compare day-based utilization percentages, average day rates and average total, active and stacked vessels by segment for the three and six months ended June 30, 2022 and 2021:periods indicated:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
SEGMENT STATISTICS: | ||||||||||||||||
Americas fleet: | ||||||||||||||||
Utilization | 73.0 | % | 51.0 | % | 66.9 | % | 56.1 | % | ||||||||
Active utilization | 86.8 | % | 76.4 | % | 81.4 | % | 82.4 | % | ||||||||
Average vessel day rates | $ | 16,569 | $ | 13,162 | $ | 16,091 | $ | 12,444 | ||||||||
Average total vessels | 34 | 38 | 34 | 39 | ||||||||||||
Average stacked vessels | (5 | ) | (13 | ) | (6 | ) | (13 | ) | ||||||||
Average active vessels | 29 | 25 | 28 | 26 | ||||||||||||
Asia Pacific fleet: | ||||||||||||||||
Utilization | 67.9 | % | 100.0 | % | 74.3 | % | 90.9 | % | ||||||||
Active utilization | 70.4 | % | 100.0 | % | 76.4 | % | 90.9 | % | ||||||||
Average vessel day rates | $ | 13,748 | $ | 10,704 | $ | 12,864 | $ | 10,260 | ||||||||
Average total vessels | 19 | 5 | 12 | 5 | ||||||||||||
Average stacked vessels | (1 | ) | — | — | — | |||||||||||
Average active vessels | 18 | 5 | 12 | 5 | ||||||||||||
Middle East fleet: | ||||||||||||||||
Utilization | 80.8 | % | 83.4 | % | 81.8 | % | 80.3 | % | ||||||||
Active utilization | 80.8 | % | 86.8 | % | 82.1 | % | 85.6 | % | ||||||||
Average vessel day rates | $ | 9,490 | $ | 8,213 | $ | 8,887 | $ | 8,270 | ||||||||
Average total vessels | 41 | 33 | 37 | 35 | ||||||||||||
Average stacked vessels | — | (1 | ) | — | (2 | ) | ||||||||||
Average active vessels | 41 | 32 | 37 | 33 | ||||||||||||
Europe/Mediterranean fleet: | ||||||||||||||||
Utilization | 82.8 | % | 64.7 | % | 80.3 | % | 54.5 | % | ||||||||
Active utilization | 88.1 | % | 90.6 | % | 89.7 | % | 86.5 | % | ||||||||
Average vessel day rates | $ | 15,776 | $ | 13,005 | $ | 13,989 | $ | 12,570 | ||||||||
Average total vessels | 27 | 29 | 28 | 30 | ||||||||||||
Average stacked vessels | (2 | ) | (8 | ) | (3 | ) | (11 | ) | ||||||||
Average active vessels | 25 | 21 | 25 | 19 | ||||||||||||
West Africa fleet: | ||||||||||||||||
Utilization | 72.7 | % | 38.1 | % | 68.7 | % | 36.1 | % | ||||||||
Active utilization | 82.9 | % | 61.8 | % | 81.3 | % | 60.8 | % | ||||||||
Average vessel day rates | $ | 10,721 | $ | 8,521 | $ | 9,960 | $ | 8,611 | ||||||||
Average total vessels | 67 | 57 | 60 | 58 | ||||||||||||
Average stacked vessels | (8 | ) | (22 | ) | (9 | ) | (23 | ) | ||||||||
Average active vessels | 59 | 35 | 51 | 35 | ||||||||||||
Worldwide fleet: | ||||||||||||||||
Utilization | 75.5 | % | 57.0 | % | 73.5 | % | 55.0 | % | ||||||||
Active utilization | 82.5 | % | 78.4 | % | 82.5 | % | 78.0 | % | ||||||||
Average vessel day rates | $ | 12,544 | $ | 10,435 | $ | 11,738 | $ | 10,219 | ||||||||
Average total vessels | 188 | 162 | 171 | 167 | ||||||||||||
Average stacked vessels | (16 | ) | (44 | ) | (18 | ) | (49 | ) | ||||||||
Average active vessels | 172 | 118 | 153 | 118 |
Three Months Ended | ||||||||||||
March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||||||||
SEGMENT STATISTICS: | ||||||||||||
Americas fleet: | ||||||||||||
Utilization | 82.3 | % | 60.7 | % | 74.6 | % | ||||||
Active utilization | 85.2 | % | 75.5 | % | 80.1 | % | ||||||
Average vessel day rates | $ | 19,794 | $ | 15,501 | $ | 18,271 | ||||||
Average total vessels | 32 | 34 | 33 | |||||||||
Average stacked vessels | (1 | ) | (7 | ) | (2 | ) | ||||||
Average active vessels | 31 | 27 | 31 | |||||||||
Asia Pacific fleet: | ||||||||||||
Utilization | 74.8 | % | 99.2 | % | 71.7 | % | ||||||
Active utilization | 77.8 | % | 99.2 | % | 79.5 | % | ||||||
Average vessel day rates | $ | 23,582 | $ | 10,975 | $ | 17,868 | ||||||
Average total vessels | 14 | 5 | 16 | |||||||||
Average stacked vessels | (1 | ) | — | (2 | ) | |||||||
Average active vessels | 13 | 5 | 14 | |||||||||
Middle East fleet: | ||||||||||||
Utilization | 82.5 | % | 82.9 | % | 83.3 | % | ||||||
Active utilization | 82.5 | % | 83.6 | % | 83.3 | % | ||||||
Average vessel day rates | $ | 9,679 | $ | 8,160 | $ | 9,498 | ||||||
Average total vessels | 43 | 33 | 43 | |||||||||
Average stacked vessels | — | — | — | |||||||||
Average active vessels | 43 | 33 | 43 | |||||||||
Europe/Mediterranean fleet: | ||||||||||||
Utilization | 83.4 | % | 77.8 | % | 87.8 | % | ||||||
Active utilization | 83.4 | % | 91.3 | % | 87.8 | % | ||||||
Average vessel day rates | $ | 15,669 | $ | 12,124 | $ | 15,364 | ||||||
Average total vessels | 27 | 28 | 27 | |||||||||
Average stacked vessels | — | (4 | ) | — | ||||||||
Average active vessels | 27 | 24 | 27 | |||||||||
West Africa fleet: | ||||||||||||
Utilization | 68.4 | % | 63.5 | % | 70.5 | % | ||||||
Active utilization | 76.6 | % | 79.1 | % | 81.7 | % | ||||||
Average vessel day rates | $ | 13,047 | $ | 8,834 | $ | 12,272 | ||||||
Average total vessels | 74 | 52 | 75 | |||||||||
Average stacked vessels | (8 | ) | (10 | ) | (10 | ) | ||||||
Average active vessels | 66 | 42 | 65 | |||||||||
Worldwide fleet: | ||||||||||||
Utilization | 76.5 | % | 70.9 | % | 76.5 | % | ||||||
Active utilization | 80.6 | % | 82.5 | % | 82.5 | % | ||||||
Average vessel day rates | $ | 14,624 | $ | 10,687 | $ | 13,554 | ||||||
Average total vessels | 190 | 152 | 194 | |||||||||
Average stacked vessels | (10 | ) | (21 | ) | (14 | ) | ||||||
Average active vessels | 180 | 131 | 180 |
Average active vessels exclude stacked vessels. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is being performed on the vessel.ongoing. We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and they are no longer considered stacked when they are returned to active service, sold, or otherwise disposed. When economically practical marketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are included in the calculation of utilization statistics. We also include our assets held for sale in stacked vessels as they continue to incur stacking related costs. We had 14 (nineeight (three held for sale), 18 (12 held for sale) and 40 (1413 (eight held for sale) stacked vessels at June 30,March 31, 2023, March 31, 2022 and 2021,December 31, 2022, respectively. The decrease in stacked vessels is attributable to vessel sales and reactivation of vessels. We also reclassified three vessels in 2021 and one vessel in 2022 from assets held for sale to the active fleet. Total stacking costs included in vessel operating costs for the three months ended June 30,March 31, 2023, March 31, 2022 and 2021,December 31, 2022, were $0.7 million, $1.4 million, and $3.8$0.7 million respectively. Total stacking costs included in vessel operating costs for the six months ended June 30, 2022 and 2021, were $2.1 million and $9.2 million, respectively.
Vessel Dispositions
We seek opportunities to sell and/or responsibly recycle our older vessels when market conditions warrant and opportunities arise. The majority of our vessels are sold to buyers who do not compete with us in the offshore energy industry. VesselsVessel sales during the first sixthree months of 20222023 included ninefive vessels that were classified as assets held for sale.
Liquidity, Capital Resources and Other Matters
As of June 30, 2022,March 31, 2023, we had $91.8$172.7 million in cash and cash equivalents (including restricted cash), including amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences. Included in foreign subsidiary cash are balances held in U.S. dollars and foreign currencies that await repatriation due to various currency conversion and repatriation constraints partner and tax related matters, prior to the cash being made available for remittance to our domestic accounts. We currently intend that earnings by foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions in order to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay third-party and intercompany debt of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the U. S. because cash generated from our domestic businesses and the repayment of intercompany liabilitiesreceivables from foreign subsidiaries are currently deemed to be sufficient to fund the cash needs of our U.S. operations. The SPO acquisition closed in April 2022 and decreased our net cash position by $28.5 million.
Our objective in financing our business is to maintain and preserve adequate financial resources and sufficient levels of liquidity. In addition to our cash on hand, we also have a $25.0 million revolving credit facility whichthat matures in 2026. No amounts have been drawn on this facility. As of June 30, 2022,March 31, 2023, we had $175.0 million of long-term debt on our consolidated balance sheet, none of which none is due until 2026. The 2026 Senior Secured Notes and the revolving credit facility contain two financial covenants: (i) a minimum free liquidity test of the obligors (as defined) equal to the greater of $20.0 million or 10% of net interest-bearing debt and (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries. We are currently in compliance and anticipate being able to maintain ongoing compliance with these two financial covenants. Cash and cash equivalents, our revolving credit facility and future net cash provided by operating activities provide us, in our opinion, with sufficient liquidity to meet our ongoing operational requirements. In addition, we have available a “shelf” registration under which we may offer and sell up to $300.0 million of any combination of common stock, debt securities, depository shares, preferred stock or warrants from time to time in one or more classes or series or amounts, at prices and on terms that we will determine at the time of the offering. We also have an “at-the-market” offering registered with the SEC under which we may offer and sell shares of our common stock, having an aggregate offering proceeds of up to $30.0 million from time to time through the agents acting as a sales agent or directly to the agents acting as a principals. Weprincipal. A key component of our growth strategy is expanding our business and fleets through acquisitions, joint ventures and other strategic transactions and we would expect to use the net proceeds from theany sale of theour securities covered by these offerings for general corporate purposes, which may includeincluding capital expenditures, investments, acquisitions, repayment or refinancing of indebtedness, working capital, capital expenditures, investments, additional acquisitions and other business opportunities.
In furtherance of this strategy and as discussed above, on March 7, 2023, we entered into a Sale and Purchase Agreement with, Solstad pursuant to which, among other things, we will acquire 37 platform supply vessels for an aggregate cash purchase price of $577.0 million (subject to adjustments), plus customary extras, upon the terms and subject to the conditions set forth in the Sale and Purchase Agreement. We expect to close this transaction in the second quarter of 2023 subject to customary closing conditions including, among others, our receipt of proceeds sufficient to pay the purchase price from, in our sole discretion, acceptable financing. We expect to use a combination of debt and cash on hand to close the transaction, with the expectation that our cash flows from the acquired vessels will be sufficient to service any new debt.
Operating Activities
Net cash provided by (used in) operating activities for the sixthree months ended June 30,March 31, 2023 and 2022 and 2021 was $(33.2)$12.8 million and $10.6$(11.6) million, respectively.
Net cash used inprovided by operations for the sixthree months ended June 30, 2022March 31, 2023 reflects a net lossincome of $37.3$10.8 million, which includes non-cash depreciation and amortization of $58.4$30.7 million and net lossesgains on asset dispositions of $1.1$2.2 million. Combined changes in operating assets and liabilities used $41.1provided $2.3 million in cash, and cash paid for deferred drydock and survey costs was $31.1$31.3 million.
Net cash provided by operations for the sixthree months ended June 30, 2021March 31, 2022 reflects a net loss of $65.2$12.3 million, which includes non-cash depreciation and amortization of $58.3$26.7 million and net lossesgains on asset dispositions of $2.9$0.2 million. Combined changes in operating assets and liabilities and in amounts due to/from affiliate provided $17.0used $13.4 million in cash, and cash paid for deferred drydock and survey costs was $6.8$12.6 million.
Investing Activities
Net cash provided by (used in) investing activities for the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, was $(26.7)$(2.9) million and $27.7$2.4 million, respectively.
Net cash used in investing activities for the sixthree months ended June 30, 2022March 31, 2023 reflects the payments of $29.5 million for the acquisitions of SPO and a 51% equity interest in Sonatide and the receipt of $8.2$5.7 million primarily related to the sale of ninefive vessels. Additions to properties and equipment were comprised of approximately $3.8$6.9 million in capitalized upgrades to existing vessels and equipment and $1.6$1.8 million for other property and Information Technologyinformation technology equipment purchases and development work.
Net cash provided by investing activities for the sixthree months ended June 30, 2021 primarilyMarch 31, 2022 reflects the receipt of $29.6$4.6 million primarily related to the sale of 13five vessels. Additions to properties and equipment were comprised of approximately $1.1$0.6 million in capitalized upgrades to existing vessels and equipment and $0.8$0.6 million for other property and ITinformation technology equipment purchases and development work. We also purchased our joint venture partner's 51% equity interest in Sonatide for $1.0 million, net of cash acquired.
Financing Activities
Net cash used in financing activities for the sixthree months ended June 30,March 31, 2023 and 2022 and 2021 was $2.5$5.2 million and $39.6$1.3 million, respectively.
Net cash used in financing activities for the sixthree months ended June 30, 2022March 31, 2023 included $0.3a $1.4 million of debt issuance costspayment to acquire the non-controlling interest in a majority owned (now wholly owned) subsidiary and $2.2$3.7 million in taxes paid on share-based awards.
Net cash used in financing activities for the sixthree months ended June 30, 2021March 31, 2022 included $11.8 million of repurchases of the Secured Notes in open market transactions, $26.1 million of scheduled semiannual principal payments and prepayments on Troms offshore debt and $0.9$0.3 million of debt modification costs.
Contractual Obligationsissuance costs and Other Contingent Commitments
We did not have any material changes$1.0 in our contractual obligations and commercial commitments since the end of fiscal year 2021. Refer to Part II, Item 7 in our Annual Reporttaxes paid on Form 10-K for the year ended December 31, 2021, for information regarding our contractual obligations and other contingent commitments.share-based awards.
Application of Critical Accounting Policies and Estimates
Our 2022 Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 9, 2022,February 27, 2023, describes the accounting policies that are critical to reporting our financial position and operating results and that require management’s most difficult, subjective or complex judgments. This Quarterly Report on Form 10-Q should be read in conjunction with the discussion contained in our 2022 Annual Report on Form 10-K for the year ended December 31, 2021, regarding these critical accounting policies.
New Accounting Pronouncements
For information regarding the effect of new accounting pronouncements, refer to Note 2see “Note (2) - Recently Issued or Adopted Accounting Pronouncements” of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the quarter ended June 30, 2022 to theFor quantitative and qualitative disclosures about market risk disclosures contained inaffecting us, see Item 7A7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our 2022 Annual Report on Form 10-K for the year endedReport. Our exposure to market risk has not changed materially since December 31, 2021.2022.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with the objective of ensuring that all information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (Exchange Act), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. However, any control system, no matter how well conceived and followed, can provide only reasonable, and not absolute, assurance that the objectives of the control system are met.
We evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2022.
As discussed in Note 3 to our Consolidated Financial Statements herein, we completed the acquisition of SPO on April 22, 2022. We are in the process of assessing the internal controls of SPO as part of the post-close integration process but have excluded SPO from our assessment of internal control over financial reporting as of June 30, 2022. The total assets and revenues excluded from management's assessment represent 25% and 16%, respectively, of the total assets and revenues in the related consolidated financial statements as of June 30, 2022 and for the six months ended June 30, 2022.March 31, 2023.
Changes in Internal ControlControls Over Financial Reporting
On April 22, 2022, we completed the acquisition of SPO. Management has considered this transaction material to the results of operations, cash flows and financial position from the date of acquisition through June 30, 2022March 31, 2023 and believes that the internal controls and procedures of the acquisition have a material effect on our internal controlcontrols over financial reporting. We are currently in the process of incorporating the internal controls and procedures of SPO into theour internal controlcontrols over financial reporting for our assessment of and report on internal control over financial reporting foras of December 31, 2023.
There has been no change in our internal controlcontrols over financial reporting that occurred during the quarter ended June 30, 2022,March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal controlcontrols over financial reporting.
VariousSee discussion of legal proceedings in (i) “Note (10) - Commitments and claims are outstanding which arose inContingencies” of the ordinary course of business. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions, will not have a material adverse effect on our financial position, results of operations, or cash flows. Information related to various commitments and contingencies, including legal proceedings, is disclosed in Note 11 of Notes to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report; (ii) Item 3 of Part I of our 2022 Annual Report; and (iii) “Note (12) – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part I, Item 18 of this Quarterly Report on Form 10-Q.our 2022 Annual Report.
The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in Item 2As of Part Ithe date of this Quarterly Report on Form 10-Q, in Item 1A of Part I of our Annual Report on Form 10-K forfiling, the year ended December 31, 2021, filed withcompany and its operations continue to be subject to the SEC on March 9, 2022, andrisk factors previously discussed in the Current Report on Form 8-K, filed with“Risk Factors” section contained in the SEC on April 26, 2022.2022 Annual Report.
|
|
|
32.1** |
| |
|
|
|
32.2** | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* |
| Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH* |
| Inline XBRL Taxonomy Extension Schema. |
|
|
|
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase. |
|
|
|
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase. |
|
|
|
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase. |
|
|
|
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase. |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed with this quarterly report on Form 10-Q. |
** | Furnished with this quarterly report on Form 10-Q. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
| TIDEWATER INC. |
| (Registrant) |
|
|
Date: | /s/ Samuel R. Rubio |
| Samuel R. Rubio |
| Executive Vice President and Chief Financial Officer |
| (Principal Financial and Accounting Officer and authorized signatory) |