Tidewater Reports Results for the Three and Six Months Ended June 30, 2023

Second Quarter 2023 Highlights

• Revenue of $215.0 million, an 11.3% increase from the first quarter of 2023
• Average day rate increased to $16,042 per day, $1,418 higher than the first quarter of 2023
• Net income of $22.6 million, an increase of nearly $12.0 million from the first quarter of 2023
• Adjusted EBITDA of $72.0 million, an increase of $12.9 million from the first quarter of 2023
• Composite Q2 2023 leading-edge term contract day rate up 10.9% to $23,498
• Completed Solstad acquisition on July 5, 2023; 5 vessels fully integrated, full-fleet integration by Q4 2023
• Received $111.5 million of cash from the exercise of 1.9 million Series A and Series B warrants in August 2023

Tidewater Inc. (NYSE:TDW) announced today revenue for the three and six months ended June 30, 2023 of $215.0 million and $408.1 million, respectively, compared with $163.4 million and $269.2 million, respectively, for the three and six months ended June 30, 2022. Tidewater's net income for the three and six months ended June 30, 2023, was $22.6 million ($0.43 per common share) and $33.3 million ($0.64 per common share), respectively, compared with net losses of $25.6 million ($0.61 per common share) and $37.7 million ($0.91 per common share), respectively, for the three and six months ended June 30, 2022. Included in the net income for the three and six months ended June 30, 2023 were merger and severance expenses of $1.2 and $2.7 million, respectively. Excluding these items, we would have reported net income for the three and six months ended June 30, 2023 of $23.8 million ($0.46 per common share) and $36.0 million ($0.69 per common share), respectively. Included in the net losses for the three and six months ended June 30, 2022 were merger and severance expenses of $7.3 and $9.6 million, respectively; and loss on warrants of $14.2 million for both periods. Included in the net losses for the six months ended June 30, 2022 were long-lived asset impairment credit and gain on bargain purchase of $1.8 million. Excluding these items, we would have reported net losses for the three and six months ended June 30, 2022 of $4.1 million ($0.10 per common share) and $15.7 million ($0.38 per common share), respectively.

Quintin Kneen, Tidewater’s President and Chief Executive Officer, commented, “The second quarter continued the trend of new quarterly cyclical revenue and global average day rate high-water marks. Consolidated global average day rates improved approximately $1,400 per day sequentially, approaching a $5,500 per day increase since the end of 2021. The pace of our day rate improvement picked up from the prior quarter as commercial and tendering activity remained robust and an improvement in seasonal factors helped drive shorter term day rate realization. The momentum in day rates is being driven by a global supply shortage of large and small offshore vessels, and as a result each of our five segments realized meaningful day rate expansions during the second quarter. Expected long-term increases in offshore capital spending, the increasingly constructive tone of conversations with our customers in terms of vessel contract duration and future start dates for projects, coupled with the existing and expected future constraints in vessel supply, point to as compelling of a long-term market backdrop for our business as we have ever seen.

“We are excited about the addition of the high-quality, high-specification fleet of PSVs we acquired from Solstad Offshore and have already successfully integrated five of these vessels into the Tidewater vessel operational infrastructure. Driven largely by the completion of the Solstad Offshore vessel acquisition, revenue for the third quarter should be up at least $80.0 million. We updated our view of the combined fleets and of the market for the remainder of the year and we reiterate our 2023 annual guidance of approximately $1.03 billion of revenue and approximately $500.0 million of vessel operating margin.

“Revenue for the quarter totaled $215.0 million, an increase of $21.9 million, or 11.3% sequentially. Gross margin improved materially during the quarter, driven by day rate increases across the fleet. Vessel gross margin expanded over four percentage points to 43.8%, a rate of improvement we anticipate continuing for the remainder of the year. Utilization declined modestly to 79.4% from 80.6% in the prior quarter. Utilization was down modestly during the second quarter as we withheld capacity and repositioned the fleet to maximize long-term day rates on a global basis, which resulted in more days of frictional unemployment as we targeted higher margin geographies for our vessels. The opportunity cost of this strategy to maximize day rates was approximately $8.0 million in the second quarter. Drydock days were up approximately 17.0% sequentially, but drydock expense was down 31.8% to $21.4 million in the second quarter, bringing the total year-to-date drydock spend to $52.7 million. With the additional 37 PSVs we acquired from Solstad Offshore in early July, we now expect to incur approximately $87.0 million in drydock expense for the full year of 2023, up from the approximately $77.0 million we previously anticipated for the Tidewater fleet.

“Turning to our regional operating results, the North Sea experienced a significant improvement in revenue as seasonal factors abated, with day rates up approximately $3,400, or 23.0%, pushing up vessel cash margin by over nine percentage points to 45.8%. West Africa continued to see momentum during the quarter with day rates up approximately $1,400 per day, or 11.0%, and vessel cash margin expanding by over seven percentage points to 53.6%. Interestingly, day rates in the Middle East were up approximately $770 per day, or 8.0%; this movement is particularly notable as the Middle East is a market which typically does not see large day rate movements. Day rate expansion in the Americas and Asia Pacific were up approximately 2.0% and 3.0%, respectively, sequentially following a period of robust day rate expansion in the first quarter driven by a meaningful number of new contracts. Additionally, in the Americas region during the second quarter we reserved approximately $4.0 million related to a special purpose customer receivable balance that we determined to be uncollectible.

“The material improvement in day rates, revenue, and operating margin is possible due to the enormous efforts of our dedicated and high performing employees. We are excited to welcome our new employees from Solstad Offshore and remain committed to providing a safe and rewarding environment for our employees as we move forward together building the safest, most sustainable, most reliable, most profitable, high specification offshore energy support vessel fleet in the world.”

In addition to the number of outstanding shares, as of June 30, 2023, the company also has the following in-the-money warrants.

Tidewater will hold a conference call to discuss results for the three months ending June 30, 2023 on August 8, 2023, at 8:00 a.m. Central Time. Investors and interested parties may listen to the earnings conference call via telephone by calling +1.888.770.7135 if calling from the U.S. or Canada (+1.929.203.0820 if calling from outside the U.S.) and provide Conference ID: 2444624 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 11:00 a.m. Central Time on August 8, 2023 and will continue until 11:59 p.m. Central Time on September 8, 2023. To access the replay, visit the Investor Relations section of Tidewater’s website at investor.tdw.com.

About Tidewater

Tidewater owns and operates the largest fleet of offshore support vessels in the industry, with 65 years of experience supporting offshore energy exploration, production and offshore wind activities worldwide. To learn more, visit www.tdw.com.

Cautionary Statement

This news release contains “forward-looking statements” within the meaning of the U.S. federal securities laws – that is, any statements that are not historical facts. Such statements often contain words such as “expect,” “believe,” “think,” “anticipate,” “predict,” “plan,” “assume,” “estimate,” “forecast,” “target,” “projections,” “intend,” “should,” “will,” “shall” and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain and based on our management’s current expectations and beliefs concerning future developments and their potential impact on Tidewater Inc. and its subsidiaries (the “Company”).

These forward-looking statements involve risks and uncertainties that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and gas prices; fleet additions by competitors and industry overcapacity; 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 based on 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; 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; 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; the resolution of pending legal proceedings; and other risks and uncertainties detailed in our most recent Forms 10-K, Form 10-Qs and Form 8-Ks filed with or furnished to 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 presentation 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 release are made as of the date hereof, and the Company disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

Financial information is displayed beginning on the next page.

The financial statements and supplementary information presented in this press release were not audited. This press release presents extracts from the Consolidated Balance Sheets at June 30, 2023 and December 31, 2022; the Consolidated Statements of Operations and Consolidated Statements of Equity for the three and six months ended June 30, 2023 and 2022; and the Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022. Extracts are drawn from the June 30, 2023 unaudited quarterly and year to date financial statements and the December 31, 2022 audited annual financial statements of Tidewater Inc. All per-share amounts are stated on a diluted basis.

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

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