Tidewater Reports Results for the Three and Nine Months Ended September 30, 2021

November 9, 2021

HOUSTON–(BUSINESS WIRE)–Tidewater Inc. (NYSE:TDW) announced today revenue for the three and nine months ended September 30, 2021 of $92.4 million and $265.9 million, respectively, compared with $86.5 million and $305.2 million, respectively, for the three and nine months ended September 30, 2020. Tidewater’s net losses for the three and nine months ended September 30, 2021, were $26.3 million ($0.64 per common share) and $91.0 million ($2.22 per common share), respectively, compared with $37.9 million ($0.94 per common share) and $167.0 million ($4.15 per common share) for the three and nine months ended September 30, 2020. Included in the net losses for the three and nine months ended September 30, 2021 were long-lived asset impairments, affiliate credit loss credit, and severance expenses of $2.3 and $2.1 million, respectively. Excluding these items, we would have reported a net loss for the three and nine months ended September 30, 2021 of $24.0 million ($0.58 per common share) and $88.9 million ($2.17 per common share), respectively. Included in the net losses for the three and nine months ended September 30, 2020 were $2.6 million and $124.4 million, respectively, in long-lived asset impairments, affiliate credit losses, affiliate guarantee obligations, and severance expenses. Excluding these costs, we would have reported net loss for the three months ended September 30, 2020 of $35.3 million ($0.87 per common share) and a net loss for the nine months ended September 30, 2020 of $42.6 million (or $1.06 per common share).

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, “We recently marked an important achievement with the upcoming refinancing of our senior secured notes that were due in August of 2022 with the new senior secured $175.0 million notes that mature in November of 2026. The refinancing is scheduled to close next week, and we anticipate closing on a new $25.0 million revolving credit facility and the establishment of a $30.0 million “At-the-Market” equity issuance facility shortly thereafter. The 2026 notes provide substantially increased flexibility to grow the business. The refinancing transaction was set up to be cash flow neutral, so upon closing we expect to have approximately $150.0 million of cash on hand. The new revolving credit and ATM facilities will be available to provide additional cash as needed, but we do not foresee the need to utilize these facilities in the near term due to our significant current cash position.

“The successful refinancing of the 2022 senior notes is a sign of the progress Tidewater has made over the past four years to streamline the cost structure, high-grade the fleet, generate meaningful free cash flow, and position the business to prosper as the broader industry recovery unfolds. The 2026 notes and the new revolving credit and ATM facilities will provide us with the liquidity and flexibility to take advantage of opportunities in the legacy hydrocarbon business and position us to participate in the rapidly evolving offshore renewables business.

“From an operational perspective, the business continued to show signs of improvement during the third quarter as we move towards a more robust 2022. Revenue, active vessels and utilization continued to trend up, although day rate did see a modest reduction primarily due to geographic mix. During the third quarter, we generated $4.1 million of free cash flow, even after the reinvestment of $11.1 million in drydock and vessel reactivation costs during the quarter. We remain committed to generating sustainable free cash flow, and over the trailing 12 months we generated $58.3 million in free cash flow. The total number of vessels reactivated in 2021 is now up to 15.

“During the third quarter of 2021, revenue improved 2.7% sequentially, driven primarily by the full effect of vessels being reactivated throughout the year in response to the increase in activity, particularly in the West Africa and Americas regions. We continue to see improving demand fundamentals globally, and during the third quarter we executed a five-year agreement for 17 vessels in West Africa with a major customer.

“Our ongoing fleet development program includes the sale or responsible recycling of vessels that are deemed uneconomic or which otherwise do not meet our future strategic goals, and during the third quarter we disposed of six vessels and other assets for $4.4 million. We expect both the sale and recycling of vessels to taper off in the next 12 months as we work through the 14 vessels remaining in assets held for sale.

“Our confidence in 2022 is growing as certain geographic regions and certain vessel classes have tightened such that we’ve seen material price increases, some in-excess of 50%, as the available supply of easy-to-reactivate vessels has been largely consumed by increased demand. This degree of tightness in supply is not yet pervasive in all regions or vessel classes, but we see it as indicative of improving fundamentals and a reflection of fewer available vessels than readily observable metrics would otherwise suggest. Our growing confidence is further underpinned by increased tendering activity for work that was delayed during the pandemic and by new projects scheduled for 2022, particularly in West Africa, the Middle East, and the Americas regions. We are also encouraged by the pricing discipline our competitors are exhibiting as tendering activity continues to build.”

In addition to the number of outstanding shares, as of September 30, 2021, the company also has the following in-the-money warrants.

Common Shares Outstanding			41,277,377
New Creditor Warrants (strike price $0.001 per common share)			635,663
GulfMark Creditor Warrants (strike price $0.01 per common share)			565,155
Total			42,478,195

Tidewater will hold a conference call to discuss results for the three months ending September 30, 2021 on November 10, 2021, at 8:00 a.m. Central Time. Investors and interested parties may listen to the earnings conference call via telephone by calling +1-888-771-4371 if calling from the U.S. or Canada (+1-847-585-4405 if calling from outside the U.S.) and asking for the “Tidewater” call just prior to the scheduled start time. A live webcast of the call will also be available in the Investor Relations section of Tidewater’s website at investor.tdw.com.

A replay of the conference call will be available beginning at 10:30 a.m. Central Time on November 10, 2021 and will continue until 11:59 p.m. Central Time on December 10, 2021. To access the replay, visit the Investor Relations section of Tidewater’s website at investor.tdw.com.

The conference call will contain forward-looking statements in addition to statements of historical fact. The actual achievement of any forecasted results or the unfolding of future economic or business developments in a way anticipated or projected by the company involves numerous risks and uncertainties that may cause the company’s actual performance to be materially different from that stated or implied in the forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry and other factors discussed within the “Risk Factors” section of Tidewater’s most recent Forms 10-Q and 10-K.

Tidewater owns and operates one of the largest fleets of offshore support vessels in the industry, with more than 65 years of experience supporting offshore energy exploration, production and offshore wind activities worldwide.

Note: All per-share amounts are stated on a diluted basis.

Financial information is displayed beginning on the next page.


TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Revenues:
Vessel revenues	$	91,634		$	85,395		$	261,141		$	298,344
Other operating revenues		767			1,072			4,717			6,835
Total revenues		92,401			86,467			265,858			305,179
Costs and expenses:
Vessel operating costs		65,344			61,784			190,627			205,383
Costs of other operating revenues		355			219			2,003			3,063
General and administrative		18,045			17,438			50,875			56,455
Depreciation and amortization		27,980			30,777			86,256			86,028
Long-lived asset impairments and other		2,167			1,945			2,167			67,634
Affiliate credit loss impairment expense (credit)		—			—			(1,000	)		53,581
Affiliate guarantee obligation		—			—			—			2,000
(Gain) loss on asset dispositions, net		74			(520	)		2,954			(7,511	)
		113,965			111,643			333,882			466,633
Operating loss		(21,564	)		(25,176	)		(68,024	)		(161,454	)
Other income (expense):
Foreign exchange loss		(523	)		(1,153	)		(951	)		(2,365	)
Equity in net earnings (losses) of unconsolidated companies		100			—			(1,697	)		—
Dividend income from unconsolidated company		—			—			—			17,150
Interest income and other, net		148			272			179			1,084
Interest and other debt costs, net		(3,681	)		(6,071	)		(12,166	)		(18,172	)
Total other expense		(3,956	)		(6,952	)		(14,635	)		(2,303	)
Loss before income taxes		(25,520	)		(32,128	)		(82,659	)		(163,757	)
Income tax expense		887			5,953			8,922			3,512
Net loss	$	(26,407	)	$	(38,081	)	$	(91,581	)	$	(167,269	)
Less: Net loss attributable to noncontrolling interests		(149	)		(154	)		(546	)		(274	)
Net loss attributable to Tidewater Inc.	$	(26,258	)	$	(37,927	)	$	(91,035	)	$	(166,995	)
Basic loss per common share	$	(0.64	)	$	(0.94	)	$	(2.22	)	$	(4.15	)
Diluted loss per common share	$	(0.64	)	$	(0.94	)	$	(2.22	)	$	(4.15	)
Weighted average common shares outstanding		41,132			40,405			40,918			40,271
Adjusted weighted average common shares		41,132			40,405			40,918			40,271


TIDEWATER INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and par value data)

	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	127,414		$	149,933
Restricted cash		24,092			2,079
Trade and other receivables, less allowance for credit losses of $2,134 and $1,516 at September 30, 2021 and December 31, 2020, respectively		86,015			112,623
Due from affiliates, less allowance for credit losses of $70,638 and $71,800 at September 30, 2021 and December 31, 2020, respectively		68,217			62,050
Marine operating supplies		13,335			15,876
Assets held for sale		17,891			34,396
Prepaid expenses and other current assets		13,129			11,692
Total current assets		350,093			388,649
Net properties and equipment		709,324			780,318
Deferred drydocking and survey costs		40,510			56,468
Other assets		23,146			25,742
Total assets	$	1,123,073		$	1,251,177

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,042		$	16,981
Accrued expenses		52,133			52,422
Due to affiliates		59,571			53,194
Current portion of long-term debt		140,995			27,797
Other current liabilities		29,139			32,785
Total current liabilities		299,880			183,179
Long-term debt		14,139			164,934
Other liabilities and deferred credits		74,442			79,792

Commitments and contingencies

Equity:
Common stock		41			41
Additional paid-in-capital		1,375,215			1,371,809
Accumulated deficit		(639,966	)		(548,931	)
Accumulated other comprehensive loss		(1,289	)		(804	)
Total stockholder’s equity		734,001			822,115
Noncontrolling interests		611			1,157
Total equity		734,612			823,272
Total liabilities and equity	$	1,123,073		$	1,251,177


TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (In thousands)

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Net loss	$	(26,407	)	$	(38,081	)	$	(91,581	)	$	(167,269	)
Other comprehensive income (loss):
Change in pension plan and supplemental pension plan liability, net of tax of $0, $0.2 million, $0 and $0.4 million, respectively		(207	)		525			(485	)		1,342
Total comprehensive loss	$	(26,614	)	$	(37,556	)	$	(92,066	)	$	(165,927	)


TIDEWATER INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)

	Nine Months			Nine Months
	Ended			Ended
	September 30, 2021			September 30, 2020
Operating activities:
Net loss	$	(91,581	)	$	(167,269	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		54,605			53,614
Amortization of deferred drydocking and survey costs		31,651			32,414
Amortization of debt premiums and discounts		2,662			2,418
Provision for deferred income taxes		167			107
(Gain) loss on asset dispositions, net		2,954			(7,511	)
Loss on debt extinguishment		59			—
Affiliate credit loss impairment expense (credit)		(1,000	)		53,581
Affiliate guarantee obligation		—			2,000
Long-lived asset impairments and other		2,167			67,634
Stock-based compensation expense		4,199			3,959
Changes in operating assets and liabilities, net:
Trade and other receivables		26,608			9,434
Changes in due to/from affiliates, net		1,210			9,852
Accounts payable		1,061			(14,548	)
Accrued expenses		(473	)		(18,189	)
Deferred drydocking and survey costs		(17,388	)		(29,499	)
Other, net		(8,833	)		3,809
Net cash provided by operating activities		8,068			1,806
Cash flows from investing activities:
Proceeds from asset dispositions		33,956			31,498
Additions to properties and equipment		(2,583	)		(4,682	)
Net cash provided by investing activities		31,373			26,816
Cash flows from financing activities:
Principal payments on long-term debt		(39,259	)		(33,520	)
Debt modification costs		(855	)		—
Debt extinguishment premium		(59	)		—
Tax on share-based awards		(793	)		(702	)
Net cash used in financing activities		(40,966	)		(34,222	)
Net change in cash, cash equivalents and restricted cash		(1,525	)		(5,600	)
Cash, cash equivalents and restricted cash at beginning of period		155,225			227,608
Cash, cash equivalents and restricted cash at end of period	$	153,700		$	222,008


Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized	10,083	16,169
Income taxes	14,735	9,940

Note: Cash, cash equivalents and restricted cash at September 30, 2021 includes $2.2 million in long-term restricted cash, which is included in other assets in our consolidated balance sheet.


TIDEWATER INC. 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 June 30, 2021	$	41		1,373,727		(613,708	)		(1,082	)		760			759,738
Total comprehensive loss		—		—		(26,258	)		(207	)		(149	)		(26,614	)
Amortization of share-based awards		—		1,488		—			—			—			1,488
Balance at September 30, 2021	$	41		1,375,215		(639,966	)		(1,289	)		611			734,612

Balance at June 30, 2020	$	40		1,369,645		(481,757	)		581			1,491			890,000
Total comprehensive income (loss)		—		—		(37,927	)		525			(154	)		(37,556	)
Amortization of share-based awards		—		1,133		—			—			—			1,133
Balance at September 30, 2020	$	40		1,370,778		(519,684	)		1,106			1,337			853,577

	Nine Months Ended
								Accumulated
			Additional					other			Non
	Common		paid-in		Accumulated			comprehensive			controlling
	stock		capital		deficit			income (loss)			interest			Total
Balance at December 31, 2020	$	41		1,371,809		(548,931	)		(804	)		1,157			823,272
Total comprehensive loss		—		—		(91,035	)		(485	)		(546	)		(92,066	)
Amortization of share-based awards		—		3,406		—			—			—			3,406
Balance at September 30, 2021	$	41		1,375,215		(639,966	)		(1,289	)		611			734,612

Balance at December 31, 2019	$	40		1,367,521		(352,526	)		(236	)		1,611			1,016,410
Total comprehensive income (loss)		—		—		(166,995	)		1,342			(274	)		(165,927	)
Adoption of credit loss accounting standard		—		—		(163	)		—			—			(163	)
Amortization of share-based awards		—		3,257		—			—			—			3,257
Balance at September 30, 2020	$	40		1,370,778		(519,684	)		1,106			1,337			853,577

The company’s vessel revenues and vessel operating costs and the related percentage of total vessel revenues, were as follows:

	Three Months Ended								Nine Months Ended
(In thousands, except for percentages)	September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
Vessel revenues:
Americas	$	24,564	27	%	$	28,705	34	%	$	74,269	29	%	$	94,608	32	%
Middle East/Asia Pacific		25,633	28	%		23,280	27	%		75,675	29	%		72,091	24	%
Europe/Mediterranean		21,197	23	%		17,716	21	%		58,413	22	%		67,827	23	%
West Africa		20,240	22	%		15,694	18	%		52,784	20	%		63,818	21	%
Total vessel revenues	$	91,634	100	%	$	85,395	100	%	$	261,141	100	%	$	298,344	100	%
Vessel operating costs:
Crew costs	$	35,609	39	%	$	36,686	43	%	$	108,456	42	%	$	119,864	40	%
Repair and maintenance		10,497	11	%		5,932	7	%		29,468	11	%		23,186	8	%
Insurance		812	1	%		1,953	2	%		1,298	1	%		5,748	2	%
Fuel, lube and supplies		6,751	7	%		6,757	8	%		19,152	7	%		22,892	8	%
Other		11,675	13	%		10,456	12	%		32,253	12	%		33,693	11	%
Total vessel operating costs		65,344	71	%		61,784	72	%		190,627	73	%		205,383	69	%
Vessel operating margin (A)	$	26,290	29	%	$	23,611	28	%	$	70,514	27	%	$	92,961	31	%

Note (A): Vessel operating margin equals revenues less vessel operating costs and excludes general and administrative expenses and depreciation and amortization.

The company’s operating loss and other components of loss before income taxes and its related percentage of total revenues, were as follows:

	Three Months Ended										Nine Months Ended
(In thousands, except for percentages)	September 30, 2021					September 30, 2020					September 30, 2021					September 30, 2020
Vessel operating profit (loss):
Americas	$	(1,770	)	(2	)%	$	107		0	%	$	(8,361	)	(3	)%	$	3,448		1	%
Middle East/Asia Pacific		(713	)	(1	)%		(2,222	)	(3	)%		(2,300	)	(1	)%		(2,479	)	(1	)%
Europe/Mediterranean		(2,866	)	(3	)%		(3,883	)	(4	)%		(12,873	)	(5	)%		(4,086	)	(1	)%
West Africa		(3,724	)	(4	)%		(10,168	)	(12	)%		(15,846	)	(6	)%		(19,015	)	(6	)%
Other operating profit		412		0	%		853		1	%		2,714		1	%		3,772		1	%
		(8,661	)	(9	)%		(15,313	)	(18	)%		(36,666	)	(14	)%		(18,360	)	(6	)%

Corporate expenses (A)		(10,662	)	(12	)%		(8,438	)	(10	)%		(27,237	)	(10	)%		(27,390	)	(9	)%
Gain (loss) on asset dispositions, net		(74	)	(0	)%		520		1	%		(2,954	)	(1	)%		7,511		2	%
Affiliate credit loss impairment (expense) credit		—		0	%		—		0	%		1,000		0	%		(53,581	)	(18	)%
Affiliate guarantee obligation		—		0	%		—		0	%		—		0	%		(2,000	)	(1	)%
Long-lived asset impairments and other		(2,167	)	(2	)%		(1,945	)	(2	)%		(2,167	)	(1	)%		(67,634	)	(22	)%
Operating loss	$	(21,564	)	(23	)%	$	(25,176	)	(29	)%	$	(68,024	)	(26	)%	$	(161,454	)	(53	)%

Note (A): General and administrative expenses for the three and nine months ended September 30, 2021 include stock-based compensation of $1.5 million and $4.2 million, respectively. General and administrative expenses for the three and nine months ended September 30, 2020 include stock-based compensation of $1.3 million and $4.0 million, respectively. In addition, vessel operating and general and administrative costs for the three and nine months ended September 30, 2021, include $0.1 million and $1.0 million in one-time restructuring and integration related costs, respectively. Vessel operating and general and administrative costs for the three and nine months ended September 30, 2020, include $0.6 million and $1.2 million in one-time restructuring and integration related costs, respectively.


TIDEWATER INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) – QUARTERLY DATA (Unaudited) (In thousands, except per share data)

	Three Months Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
Revenues:
Vessel revenues	$	91,634			88,514			80,993			87,830			85,395
Other operating revenues		767			1,439			2,511			4,029			1,072
Total revenues		92,401			89,953			83,504			91,859			86,467
Costs and expenses:
Vessel operating costs (A)		65,344			64,263			61,020			63,397			61,784
Costs of other operating revenue		355			581			1,067			342			219
General and administrative (A)		18,045			16,787			16,043			16,992			17,438
Depreciation and amortization		27,980			28,549			29,727			30,681			30,777
Long-lived asset impairments and other		2,167			—			—			6,475			1,945
Affiliate credit loss impairment credit		—			(1,000	)		—			(600	)		—
(Gain) loss on asset dispositions, net		74			932			1,948			(80	)		(520	)
Total operating costs and expenses		113,965			110,112			109,805			117,207			111,643
Operating loss		(21,564	)		(20,159	)		(26,301	)		(25,348	)		(25,176	)
Other income (expense):
Foreign exchange gain (loss)		(523	)		422			(850	)		(2,880	)		(1,153	)
Equity in net earnings (losses) of unconsolidated companies		100			52			(1,849	)		164			—
Interest income and other, net		148			8			23			144			272
Interest and other debt costs, net		(3,681	)		(3,944	)		(4,541	)		(5,984	)		(6,071	)
Total other expense		(3,956	)		(3,462	)		(7,217	)		(8,556	)		(6,952	)
Loss before income taxes		(25,520	)		(23,621	)		(33,518	)		(33,904	)		(32,128	)
Income tax (benefit) expense		887			6,026			2,009			(4,477	)		5,953
Net loss		(26,407	)		(29,647	)		(35,527	)		(29,427	)		(38,081	)
Net loss attributable to noncontrolling interests		(149	)		(185	)		(212	)		(180	)		(154	)
Net loss attributable to Tidewater Inc.	$	(26,258	)		(29,462	)		(35,315	)		(29,247	)		(37,927	)
Basic loss per common share	$	(0.64	)		(0.72	)		(0.87	)		(0.72	)		(0.94	)
Diluted loss per common share	$	(0.64	)		(0.72	)		(0.87	)		(0.72	)		(0.94	)
Weighted average common shares outstanding		41,132			40,899			40,716			40,604			40,405
Dilutive effect of stock options and restricted stock		—			—			—			—			—
Adjusted weighted average common shares		41,132			40,899			40,716			40,604			40,405
Vessel operating margin	$	26,290			24,251			19,973			24,433			23,611


Note (A) One-time restructuring and integration related costs	$	112			795			103			291			641