TIDEWATER INC (TDW) Q3 2025 Earnings Summary

Executive Summary

Q3 2025 revenue was $341.1M with gross margin at 48.0%; GAAP diluted EPS was $(0.02) due to a $27.1M loss on early extinguishment of debt, and Adjusted EBITDA was $137.9M .
Results vs Street: revenue beat by ~$11.6M*, EPS beat by ~$0.15*, while EBITDA missed by ~$21.9M*; note company-reported GAAP diluted EPS differs due to the refinancing charge (Street “Primary EPS” reflects normalized EPS) [GetEstimates]* .
2025 guidance narrowed (revenue $1.33–$1.35B; gross margin 49–50%) and 2026 initiated (revenue $1.32–$1.37B; gross margin 48–50%); ~99% of 2025 revenue guidance covered by completed/contracted revenue .
Operational KPIs improved sequentially: active fleet utilization rose to 78.5% and free cash flow was $82.7M, supported by better vessel uptime and lower idle/drydock days; average day rate softened to $22,798 on North Sea/West Africa pressure .
Potential catalysts: capital deployment (M&A and buybacks) under a $500M authorization and low leverage (Net Debt/EBITDA ~0.4x), plus emerging late-2026 drilling recovery narrative that could tighten vessel supply and lift day rates .

What Went Well and What Went Wrong

What Went Well
- Strong uptime and utilization drove revenue above internal expectations; gross margin 48% (~200bps above guidance) and Adjusted EBITDA $137.9M; “best active utilization since Q2 2024” .
- Free cash flow was $82.7M; net cash from operations was $72.1M, with improved operating costs (lower crew, supplies, idle/repair days) .
- CEO on strategic positioning: diverse demand drivers (production support, offshore construction, subsea/EPCI, drilling, renewables) insulate the business amid near‑term drilling uncertainty .
What Went Wrong
- Sequential margin compression: gross margin fell from 50.3% in Q2 to 48.0% in Q3; average day rate declined to $22,798 on North Sea/West Africa softness .
- GAAP net loss of $0.8M (diluted EPS $(0.02)) driven by $27.1M debt extinguishment charge from July refinancing; tax expense also elevated .
- Europe/Mediterranean day rates down ~11% and utilization down ~6ppt; G&A rose ~$4M QoQ on higher professional fees; Americas/West Africa faced lighter activity into year‑end .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($M)	$340.356	$333.444	$341.431	$341.113
GAAP Diluted EPS ($)	$0.87	$0.83	$1.46	$(0.02)
Adjusted EBITDA ($M)	$142.561	$154.179	$162.980	$137.926
Gross Margin % (Vessel Operating Margin %)	47.2%	50.1%	50.3%	48.0%

Segment Vessel Revenues ($M):

Region	Q3 2024	Q2 2025	Q3 2025
Americas	$64.606	$68.758	$76.913
Asia Pacific	$56.283	$45.696	$53.786
Middle East	$36.947	$40.215	$42.035
Europe/Mediterranean	$85.325	$99.280	$83.740
West Africa	$95.324	$82.909	$82.017
Total	$338.485	$336.858	$338.491

Key KPIs:

KPI	Q1 2025	Q2 2025	Q3 2025
Average Day Rate (Worldwide, $)	$22,303	$23,166	$22,798
Utilization – Active Fleet (Worldwide, %)	78.4%	76.4%	78.5%
Active Vessels (Worldwide, units)	216	210	206
Net Cash Provided by Operating Activities ($M)	$100.039	$73.658	$72.079
Free Cash Flow ($M)	$94.664	$97.541	$82.659

Estimates vs Actuals (Q3 2025, S&P Global):

Metric	Consensus	Actual	Surprise
Revenue ($)	$329,505,500*	$341,113,000*	+$11,607,500; +3.5%*
Primary EPS ($)	$0.46*	$0.6109*	+$0.15; +33%*
EBITDA ($)	$120,966,670*	$99,017,000*	−$21,949,670; −18%*

Values retrieved from S&P Global.* Company-reported GAAP diluted EPS was $(0.02), reflecting a $27.1M debt extinguishment charge; S&P’s “Primary EPS” reflects normalized EPS, explaining the divergence .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$1.32–$1.38B	$1.33–$1.35B	Narrowed (raised low end, lowered high end)
Gross Margin %	FY 2025	48–50%	49–50%	Raised low end
Revenue	FY 2026	—	$1.32–$1.37B	Initiated
Gross Margin %	FY 2026	—	48–50%	Initiated
Utilization Assumption	FY 2026	—	~80% (capacity reserve ~11%)	New disclosure
Share Repurchase Authorization	Ongoing	$500M (authorized Q2)	$500M (unchanged)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Offshore drilling cadence	Q1/Q2: macro uncertainty; reiterated 2025 guide; second-half expectations lowered	“Shoulder period” into early 2026, stronger drilling likely late-2026/2027; optimism builds	Improving conviction late-2026
EPCI/subsea & FPSO support	Q1/Q2: diversified demand supports resilience	Backlog converting; FPSO proliferation adds vessel demand, esp. larger classes	Strengthening
Day rates & utilization	Q2: record day rate ($23,166), >50% gross margin	Day rate softened ($22,798); active utilization up to 78.5%	Mixed: rates down, utilization up
Regional dynamics	Q2: Europe strong; West Africa pressured; Americas/ME solid	Europe/Mediterranean day rates/utilization down; Americas/APAC/ME improved; Africa still pressured near term	Europe softer; ME/Americas/APAC stable-to-better
Capital allocation (M&A/buybacks)	Q1: ~$90M buybacks; Q2: new $500M authorization, refi enhances flexibility	Retain $500M authorization; nonpublic info hinted (M&A); leverage guardrails (ND/EBITDA ≤1.25x)	Optionality rising
Supply/newbuilds	Q2: constrained supply supports pricing	Orderbook ~3% of fleet; attrition > newbuilds; decades-long replacement constraints	Tight supply persists
Regulatory/macro	Q2: macro volatility noted	UK energy profits levy uncertainty; OPEC barrels management; customers more confident plans	Macro clarity incrementally better

Management Commentary

CEO: “The third quarter of 2025 came in above our expectations… delivering revenue of $341.1 million and gross margin of 48.0%… yielding our best active utilization since the second quarter of 2024.” .
Strategic positioning: “We benefit from a range of activities… production support, offshore construction… subsea and EPCI… drilling support, along with renewable energy projects… providing insulation from the uncertainty in drilling support activity.” .
Capital deployment: “Absent any cash used in M&A or share repurchases, we will be ending 2026 with close to $800,000,000 in cash… M&A and buybacks are not necessarily an either-or proposition.” .
Leverage framework: “So long as we can return to net debt zero in about six quarters, we are comfortable… we remain opportunistic on share repurchases.” .

Q&A Highlights

Pricing leverage and demand mix: Management expects price leverage to return before rig counts hit 2024 peaks because EPCI/FPSO growth and vessel attrition soak capacity; target day rate uplifts of $3–4K/day per year in robust cycles .
Capital allocation cadence: Retained buyback optionality; hinted at “material nonpublic information” (interpreted by investors as active M&A dialogue) .
2026 coverage & exposure: 2026 firm backlog and options at ~$925M (~69% of midpoint); ~57% of available days covered; more open capacity in Africa and Asia to pursue incremental work .
Contract duration strategy: 34 term contracts signed at ~7 months on average to bridge through expected white space and avoid locking in subscale rates ahead of anticipated strengthening .
Fleet supply and newbuilds: Orderbook ~3% of fleet; attrition likely to outweigh net additions, keeping supply tight; shipyard “muscle memory” and timelines temper delivery pace .

Estimates Context

Revenue beat: Actual $341.113M vs consensus $329.506M (+3.5%)*.
EPS beat: S&P “Primary EPS” actual $0.6109 vs $0.46 (+33%)*; note GAAP diluted EPS was $(0.02) due to the $27.1M extinguishment charge .
EBITDA miss: S&P actual $99.017M vs consensus $120.967M (−18%); company-reported EBITDA was $103.403M and Adjusted EBITDA $137.926M, with FX gain of $1.277M .
Values retrieved from S&P Global.

Implication: Street models will likely raise revenue and normalized EPS, but may trim EBITDA on margin mix and FX normalization; the explicit GAAP loss is nonrecurring from refinancing and should be adjusted out for core run-rate .

Key Takeaways for Investors

Core operations remain resilient: utilization improved to 78.5% with diversified demand (production/EPCI/FPSO), offsetting near‑term drilling softness; sequential rate pressure appears localized (North Sea/West Africa) .
Quality of earnings: GAAP loss stems from a one-time $27.1M refinancing charge; underlying Adjusted EBITDA of $137.9M and strong FCF ($82.7M) support capital returns/M&A .
Guidance credibility: 2025 narrowed with ~99% coverage; 2026 initiated with ~69% coverage and utilization ~80%, leaving upside if drilling accelerates late-year .
Supply/demand asymmetry: OSV orderbook (~3% of fleet) and attrition dynamics favor owners; tightening into late‑2026/2027 should be supportive for day rates and margins .
Capital deployment optionality: $500M buyback authorization intact; leverage constraints allow both buybacks and M&A under disciplined ND/EBITDA thresholds (~0.4x currently) .
Regional watch items: Europe/Mediterranean day rate/utilization softness; Africa exposure heavier near-term; Americas/APAC/ME trending better—portfolio flexibility to reposition vessels mitigates basin swings .
Trading angle: Expect multiple expansion if investors shift focus to normalized EPS/EBITDA and late‑2026 tightening; near-term stock reactions likely driven by capital allocation announcements (deal/buybacks) and any visible firming in North Sea/West Africa day rates .

Note: All company figures cited from Tidewater’s Q3 2025 8‑K/press release and Q&A/transcript. Street estimates marked with * are values retrieved from S&P Global.