TDW - Earnings call transcript Q3 2020

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Operator

Welcome to our Earnings Conference Call Third Quarter 2020. My name is Sylvia and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the and to ESG. turn President, Stanley, now Relations Investor will call Jason over Vice I Mr. Stanley, may you begin.

Jason Stanley

Marketing, ended of I'm Thank and General you, morning our Conference and quarter Chief Earnings Hudson; welcome by Corporate to XX, Sales Sylvia. Good CEO, Vice Piers Sam our morning Secretary, Call everyone our President Accounting Middleton. for Daniel Quintin call Officer, in Counsel the joined and and and Tidewater's September President this XXXX. Kneen; the our Rubio;

today's During There statements at materially and referring that non-GAAP replay. for as Please recent X, be available actual you're today's time that accurate that over any to GAAP of the the so our call Quintin. XXXX most the details information and call, that conference additional are we'll Information to in I'll the call measures, our release. company's that, on today, advised turn to we'll make through present stated both non-GAAP speaks to call, And a reconciliation press only at presented SEC during certain uncertainties different This time implied of make no longer November sensitive factors call. measures evening's of may be on financial our Also any or GAAP refer document forward any from plans XX-Q this are and last included is now with other by sec.gov. these the comment on factors. performance that looking and and cause or expectations. is website may future risks, during we

Quintin Kneen

against call. Call. execute we the this ongoing welcome challenges quarter Tidewater, the successfully earnings again the everyone quarter outlined we Earnings XXXX Thank a pandemic, on of say that has you, Jason. the to pleased to on Tidewater and of third first solid continue to the I'm quarter been morning Good Conference strategy

the discuss quarterly questions, operating spoke. segments into to open up Tidewater consolidated dive the noteworthy results, since last our some at and Before we like for call developments first review I'd we

we're first the Marketing. up excited Anderson, on of third The President Tidewater the Lois to of Piers position Association; the the our Energy and appointment I'm have International and recently Connecticut is and team and we Commodore and joined two of call energy offshore the them members, Board directors new and diversity Piers Seaways is Services. Maritime to fill Tidewater Zabrocky, and CEO appointed Global governance for to insight of bring on in Darron Sales excited CEO have industry the me new management leading future processes out decision-making President is and Also also Middleton. aboard. as Piers Both joining today broad services. Board's quarter and Ranger and of board of

will addition to XX over in investment assisting and to valuation benefit Tidewater the activities In sales and strategic years. opportunities marketing, the as the be position hydrocarbon Piers energy next from we offshore renewable of

XX crew XX of our expand You Africa from These earlier share the quarter. the acquisition West the in boats a Angola market our of in strengthen total with fourth picked vessels and may will in Offshore the up announcement Hermitage position press, have region. in of and our Services vessels active

active opportunistic will forms an program, they ongoing fleet part Given group average acquisition the our fleet, reduce to condition, M&A. of also our new relatively their the because of age approach of rationalization

right create profitable for the oldest, operations. space vessels, As scale to least efficient, fleet newer and in we our efficient we a to vessels least quality, continue the and higher divest more our of maintain

of accretive shore Africa the to in vessels will to Tidewater a profitability, already manner be these vessels manage of our we easily that contract. six will location believe West are the be Given base, our under able fleet

far flow and XXXX before are focus generated is for be our cash flow Tidewater in flow. be flow full including improving cash for free again, this track peer We leading period proud quarter, positive leverage cash reducing net the continue nine-month ratio, further cash positive even are from asset we free to of our free And the to on we thus once and commitments XXXX. the with to debt on divestments $XX positive cash year million

what to $XX XX I'm the stated offshore core XX% to their be they the the particular In that's costs still which pandemic, those fourth now mature annual XX% to $XXX the revenue cash principally pleased mariners, down of of administrative vessels for We of layup G&A experienced both possible, full remained free we reducing hire $XX in be prices. to XXXX an this the in million excess successful off cash costs cost increased cost flow anticipate revenue million be of year the continuing program call. $XXX our layup anticipate estimated tender the XX%. remaining third a estimated is sum forward been repurchases locations, and to debt launched XXXX cost and $XX modification for reduce be All we million salaries, from tender XXXX. third when We to lump incremental in gets the higher year. with part and the down full-year on costs related having and the improving vessels which quarter $XX of down to quarter, to focus million this we see cash of would of operations can and vessels This in was these $X Tuesday, This debt net what flow is travel for mariner's improvement covenants. operating are their in revenue million the for now associated and quarter $XX transit that $XXX we is and the year in cost Further, through that once in We of company $XX increase layup. of approximately quarter an cash coming wherever call refinance we of to our we earlier last and dedication indenture, current full us that ongoing the estimated the from cash This expenses is position fuel then operating to the XXXX which we with we anticipate bonds notes revised to fuels on million of to within again budgeted repurchased that and quarter, terms us million the The tidewater. our cost certain repay a vessels, third million, value we impact the million, and just million of $X anticipated financial million of and in still for million. is de-crew gets say severance cash the the flow until our of extra last to margin million and position forecasted $XXX quarters year. simultaneously the a general of simply We've frictional see the positive. we for the consent debt as for second million. as par. of During vessels million or as margins $XX look to costs our de-crewed. from another into face we've On result for pandemic to transit and launched onshore the position, the $XX We salaries and have would another costs quarantining

Our rate G&A reductions. quarters to now costs G&A of that's cost come seven continue down consecutive run

post-merger is annualized third G&A Our to stand-alone a for combined data I XXXX integration and mean for was million objective the $XXX a $XXX run G&A post of points as immediate $XX $XXX million. was couple expense with tidewater of quarter million million. GulfMark the under rate annual

We terms seek shore-based the remain and operations. will of to continue cost to in techniques leader low processes

fill support the disposals expenses. million purchased mentioned be another as looking nets million. costs less dry-dock CFO vessels $X role However, for open a now which will Vessel of G&A And that us year we Hermitage noticeable are million. I a $XX $XX expenditures position, XX million and the when we for associated for increase we in see the earlier, revised to $X

So net vessel will million. investments for $X be the year

of capital, of liquidation working other $XX taxes million. net a anticipating of are and costs We

the of the perspective flow achievable of cash So other from net all All working $XX I a is from for told, million we of and timing that year. from of bothered and generation million from cash flow are free million working am area liquidation anticipating $X of vessel capital. one capital but $XX cash very of total receipts cash about continued cash million vessel $XX of a for investments less operations, of

We its vendors, which customer, due. But quarterly disappointing collectability free from to Company I cash as in require about companies on of will of is and idle specification this have results including what the amounts we payments due now, in second dry-dock am we rated is Delivering XXXX, well. National must is this us in worried importantly, timely and vessels, quarter the objective at must the quickly have continue and from expense. the third many of lower the to enterprise. BBB and older achievable that our must a all time, Tidewater, achieved all flow have large and fourth endure oil to and we one We XXXX we well vessels; ultimate quarters for frustrating collect We triple fourth Oil minimize de-crewed the from national the formula Mexico to delaying of executed in the same. quarter layup thus as far we multinationals dispose the similar

to program full vessel year-to-date. Our vessel disposal continues with progress XX

we this makes the and sale tonnage yard highlights dependent increase it this impact stack of to the to in of cost ability that during now stacking of in of of and proceeds to backlog recycling downturn. XXXX all older material mentioned, further over tonnage, previously shipping The return to expect disposal on and the sector. and a of rationalizing $XX fleet is manage from million the continue benefits As service much our unlikely the somewhat of

overview a this, of key And All Piers in pleasure for of recovered generative it's truly optimized to operating market and us over an call our fleet. to a with areas. to markets the the turn cash leaving now ready my enter

Piers Middleton

Thank you, Quintin. Good everyone. morning,

in earnings. and amazing competitors out knocking the to XXXX. working earnings we of teams mentioned months $XXX.X decrease by the and always the is of we $XX.X it fighting quarter keep against Whilst is to same and our period release which majority pandemic X-month caused Again, testament a but is of respectively, generated managed in be not not million million quarter survive. the an it just our revenue our it third every course it's vessel subsequent the to headwinds in demand disappointing have X of ended, believe for park, of aggressive the short-term to of As increasingly the fall around we serious who world and the also fleet off XX%

West to the than third quarter earnings Mediterranean the previous fewer average our decrease quarter activity. active XX brunt had third in the fleets mentioned of call, we XXXX As the of bear our Africa Globally, in XXXX. in continue of and in vessels

we whilst quarter. compared the increase XX% of X% in addition, period to by second utilization in XXXX, from quarter to active the utilization $X.XX in third In to the decreased slightly compared same XXXX, managed

across XX, tailwinds downturn compared is into industry rates X% fleet Looking previous last the before regional teams prices September our XX, the our still pretty compared decreases regional region, discipline the active $X.X our operating day year. commercial by fewer XXXX. quarter increasing careful when XX% revenue cost of ended still began, caused of last during same the by despite bidding at view long-term is Americas result to to we for quarter roughly quarter strategy. entered of of at rates $XX,XXX and This maintain ended not our September contracts work the seven primarily winning per management average the versus the The or the stacked the fleet XXXX compared day million any of the region at but three static decrease quarter against is some from successful day work, in previous results demand. any low approximately also up the active new the by the the helping to saw the in In level, vessels stayed in year-on-year quarter driven a

operating was of However, $X.X year-to-date operating XXXX at faces still the our a careful the XX%. in region of similar quality region profit third maintained control us our but continued going stead region $XXX,XXX the profit good million. vessel discipline believe quarter for forward. small tonnage, the levels in quarter operating Utilization of and stands and vessel challenges in commercial The of still a expenses we flight to

Our average X day continued strong see Middle slightly region, vessels and to rates quarter. an ticking with Asia-Pacific the demand, second utilization fleet up of from from The the the quarter by to XXXX. rest East previous decreased relative world the active both

to the million average forward, region the XXXX. $X,XXX $X,XXX East. day XXXX remain operating of loss was we'll loss of $X.X the the especially per relatively rates were million in vessel in the in in making per QX XXXX, to X.X QX day remain stable compared Vessel QX year-to-date to going demand a the up Middle compared We positive, in region, $X,XXX of XXXX. Our and $XXX,XXX compared QX in revenue

Although in Asia XX% fewer our contract vessel region. to having up as million vessels In active or have revenue year. Mediterranean The had of five $X.X Europe success also recent well. second lower and awards was the some quarter in some by this revenues driven compared Pacific, the we picking region, decreased the

mainly able the by loss quarter rates quarter compared Utilization from campaigns XX% year we looking are However, take reboot the new quarter an is longer-term segment some of either activity XXXX million decreased market, revenue. months X% significantly year, quarter were compared up due operating cover advantage companies roughly for for XXXX. quarter the in XX% to going perceived tenders are vessel cheap compared earlier improved to the winter see $XXX,XXX last regions quarter, of operating increase of Whilst ended for XX, by presumably are to for to oil also hoping the quarter to Mediterranean September year. to European third the the quite we of from some for to XXXX were historically European of starting loss which the in over to of compared the we tonnage an in that prior the average to delayed and the second hoping XX% The idle $X.X oversupply out for coming to and same almost forward. reported pick

for a $X.X in vessel quarter, the to $X,XXX, the been of second $XXX,XXX. compared Vessel previous us loss increase in down operating where we X% decreased year. which West the previous the million mainly Finally, active current with Africa we active period allowed million where continues XX quarter. has operating revenues as were last utilization XX% to vessel due the terms to of the the from West day Africa XXXX an an further to in the with XX% come the to during drop-off region the quarter region for were for XXXX profit to for the time compared rates struggle, coupled was the pandemic. increase at with regions quarter year to was other by a area whole from Average positions. the That's mobilize or same last of this quarter, operate. the vessels vessels cost from XX% struggle $XX.X which decrease for through revenue is we to as the layup everyone count The

shoots Recovery look the start green other early little will are to and some going to starting as we than in region are a open areas, to slower believe committed back forward. We fully but up. see our be clients probably

to with modern during has worked our company you, in has Tidewater Last which no to to XX to in been keep this challenging our to by African so, a thank you. Quintin. or who what the improve been period. difficult and very all like that boats, achieve and a such so modernize from vessels I'd just to managed time. Thank pretty and our be fleet. impressive everyone will It has Back hard a shown approach over join men has company used and longer working and see me month to crew words As the the we women

Quintin Kneen

Piers. have Thank, Great you here. to

The the at up flow for capital vessel cash operating expenditure are and objective Our positive compensation And working capital it free cost vessel. to this We're generate Sylvia, and them company's keeping at operating investments. vessels cost by it open rigs, day and that, per per fewer higher objective lower more we a carefully while lower doing our and cash will operate that geared minding is G&A to way. questions. all with a

Operator

from first Fitzgerald question Patrick Instructions] from Our [Operator Baird. comes

Patrick Fitzgerald

then sale the And Hi agreement. taking what it the is the to credit out? asset tender offshore seems reasoning consent and wondering be to would With just the guys, - seems do - thanks respect with what the solicitation geared something taking for for it the Troms questions. offer, I'm and that

Quintin Kneen

the So right to documents. to but the now, repay those indebtedness. the the the have the in - and use documents their bonds. indebtedness entirety. under $XX in quick you summary; Those now, tender say, covenants and Right Troms Troms what I'll please to mirror allow filing a is I'll defer me we ability have the million in give to But in consent

requirements So otherwise, modifications in or really like go the the we debt go if anything have bonds, we to for that. modifications lower Troms through we also don't the in covenant

individually and compare mirror sets You have to they two be of both each modified. other

flexibility to on what's in repay to modifications, Troms Troms repaid approach being overseas the similar So those and with need some order we of bonds. the

Patrick Fitzgerald

rates and Trans-debt secured the later, notes than lower the But is the then right? do Okay. on

Quintin Kneen

the get to the the same the we're not the what lower lenders objective ability debt that off to coupon objective in pay them to way longer bonds. modification, to modify with modifying is to negotiate our Troms our It's covenants without

Patrick Fitzgerald

just in your the you know going it's I that's ratio then would the guess what coverage enough, is of - And you to up. interest like. look be And if that flexibility concern Okay. want XXXX don't terms bad covenant that is there

Quintin Kneen

right. the a 'XX. world base good load Obviously, us into second is a is, the the That's We've as the of got today. in reality now, look what wave we lot uncertainty feel for there's but hitting is,

bond debt. modifications same but get Troms the thing, to it's the is the important also And the so, to under very with covenant modifications get one

Patrick Fitzgerald

Got you.

Okay, thank you much. very

those expectation of there the on guys horizon In in a is others you M&A, recently, for either - got bigger your good are terms of for either you on obviously, but some deal the vessels, industry. anything in

Quintin Kneen

us, to speak I for is Well, there look not for but to can't sure. enough at balance of sheet and time. consolidation do Tidewater, in opportunities all the others industry we outside the capacity

and We same shore-based and look the overall too region order to what areas at to for better. economies I age can This you average certain to continue seek not industry much not is I do an not existing it's fragmented, quality and tonnage bring in but we in down where established fleet our consolidation globally concentrated so industry you any fragmentation fleet enter that opportunities, I can get the in looking in is scale. into There's prices. up the leveraging dictate footprints. time more can am and am for highly leverage positions newer that of but looking do

really existing to we locations in Hermitage the so and to for a look we about was nice our ways that footprint when And vessels complement talk concentrate existing Angola.

very in any the to we count, We're won't regions point able emphasize we're been have areas. can generally our other pointing Brazil help and generally of in as position trying add the not Asia, at and think be to on focused same Southeast we XX although defensive strengthen is oversupplied, Thailand. still vessels. We out specific some this add head there market we're and So,

Patrick Fitzgerald

look Yes, for what cash going dry-dock know, to sales you, ask terms but cash XXXX. Okay. revenue do you not vessel and 'XX guidance like what margins, for terms about does in of I'm you of, that in and

Quintin Kneen

expect to million the budgeting paper $XX the just living drive on the through enough dry-docks XX we we've uncertainty do of me 'XX. you for XX is otherwise the fleet that that indications. that, $XX I 'XX But of can dry-docks and did lot and 'XX I average off I not for dry-docks give then can vessels and we work got process size. are in so that say just a in to our a were the I than capable the reason I some there's that substitute as as would in and But such let I them those can reason So, have we right, papers, keep we and we would many completely that that's range see be think in can the work rate feel opposed run vessels. enough lower say would we and the legitimacy iron vessels doing boats that to where do of

So dry-dock to to quite bar we minimize to levels us frankly the specification the industry continue and go contracts. lower up showing see those as can 'XX, continues in specification vessels

X months So industry vessels margin, on in as were contracts now the in category. sale say are the ago the that

on saw do into 'XX as in correlate of everything we'll So QX else the go category sale in when part QX into assessment for about probably another do on QX - we that that you call we XXXX early period would on we new the QX. vessels make and some

a So expect 'XX. would sales in level in asset lower I general, of

burning that Just will through expectation range. marginal million $XX because million in be capacity, is it but the we're $XX my to

Patrick Fitzgerald

from Last Okay. me. one

Quintin Kneen

Okay. Yes, ahead. go

Patrick Fitzgerald

Yes.

much of would back it how situation. to to would you a to Mexico, from since get Just normalized - payables, in what's pay have receivable the they kind you are be, a

Quintin Kneen

- they're so million what - behind I million. say $XX is would they're $XX

Patrick Fitzgerald

thanks. Okay,

Operator

no [Operator Instructions] And we questions. have further

Quintin Kneen

again updating to you. thank Goodbye. in we you And forward everyone, February. Sylvia, look

Operator

ladies gentlemen. for you, This participating. today's Thank conference. concludes and you Thank

now disconnect. may You

Tidewater (TDW) 7 Nov 202020 Q3 Earnings call transcript