Q4 2024 Earnings Summary
- Expected Demand Increase in 2026 and 2027: The company is starting to see discussions with gas companies about 2026 in various regions, indicating a good demand spike in 2026 and 2027. This includes pre-discussions about vessel availability extending into 2026 and 2027, giving confidence about future demand growth.
- Positive Developments in Asia Pacific Region: In Malaysia, PETRONAS has resolved issues with [indiscernible], and tendering activity is expected to start after the holidays. This should bring vessels back to work in Q3 and Q4 of 2025, improving utilization and rates in the region.
- Potential Uplift in Gulf of America in 2026: There are new tenders and expectations of extra rigs coming into the Gulf of America, suggesting an uplift in activity into 2026, which could positively impact the company's operations and financial performance in the region.
- The company anticipates a "sideways movement" in 2025 rather than growth, indicating flat revenue projections and potential stagnation in earnings.
- Tidewater missed its initial 2024 revenue guidance by approximately 6%, with revenue coming in at $1.35 billion compared to the guided $1.4 to $1.45 billion, raising concerns about management's forecasting ability.
- Limited visibility and lack of firm contracts for 2026 and beyond, as there are currently no firm tenders and only preliminary discussions, posing risks to future revenue streams.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +14% (from $302.658M to $345.085M) | Total Revenue increased by 14% YoY due to a stronger overall market mix with higher vessel day rates and improved performance in certain regions such as Asia Pacific and West Africa, which more than offset declines in the Americas. This reflects both operational adjustments and favorable market conditions compared to Q4 2023. |
Operating Income | +29% (from $63.095M to $81.377M) | Operating Income grew by 29% YoY driven by improved revenue composition and higher vessel operating margins. Better cost management and an enhanced revenue mix, particularly from higher-paying regions, contributed to a stronger performance than in the prior year. |
Net Income | -2% (declined from $37.664M to $36.905M) | Net Income fell modestly by about 2% YoY despite higher revenues and operating income, likely due to increased financing costs, interest expense, or other non-operating items that offset the operational gains observed in Q4 2024 compared to Q4 2023. |
Basic EPS | -3% (from $0.72 to $0.70) | Basic EPS declined by roughly 3% YoY in line with the net income pressure. This slight decrease may also reflect potential dilution or timing effects in expense recognition, even though operating performance improved markedly. |
Americas Revenue | -12% (from $68.42M to $60.25M) | Americas segment revenue decreased by 12% YoY as lower utilization and reduced average day rates relative to the previous period weighed down revenue performance in a region that had previously contributed higher results. |
Asia Pacific Revenue | +32% (from $38.59M to $51.03M) | Asia Pacific revenue jumped by 32% YoY due largely to a significant increase in average day rates, partly driven by more vessels operating in Australia where rates are higher. This contrasts with Q4 2023 and underscores the region’s improved contribution to overall revenue. |
West Africa Revenue | +44% (from $74.68M to $107.32M) | West Africa revenue surged by 44% YoY because of an increase in active vessels and substantially improved day rates. This remarkable growth outpaced that of other regions and indicates robust regional demand in contrast with the previous period. |
Middle East Revenue | +7% (from $38.09M to $40.82M) | Middle East revenue saw a modest 7% YoY increase, as slight gains in day rates were partially offset by lower utilization due to more repair and mobilization days relative to Q4 2023, reflecting the region’s challenging market dynamics. |
Net Change in Cash | From -$4,096K to +$38,855K | Net Change in Cash swung to a positive $38.855K in Q4 2024 compared to a negative $4,096K in Q4 2023. This liquidity improvement is driven by stronger operating cash flows and more disciplined financing and investing activities, which contrast with the cash outflows observed in the prior period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | no prior guidance | between $1.32B and $1.38B | no prior guidance |
Gross Margin | FY 2025 | no prior guidance | 48% to 50% | no prior guidance |
Average Day Rates | FY 2025 | no prior guidance | Increase by approximately $850 year-over-year | no prior guidance |
First Quarter Revenue | FY 2025 | no prior guidance | Decline by ~6% vs Q4 2024, with ~46% gross margin | no prior guidance |
Utilization | FY 2025 | no prior guidance | Expected to be lower in Q1 & Q2 then increase in the second half | no prior guidance |
Quarterly Operating Costs | FY 2025 | no prior guidance | Increase slightly in H1 and decrease in H2 | no prior guidance |
Drydock Days | FY 2025 | no prior guidance | Approximately 72% of drydock days in the first half | no prior guidance |
Backlog Coverage | FY 2025 | no prior guidance | Approximately 81% of the revenue guidance’s midpoint is supported by firm backlog and options totaling $973M, with 68% of available days captured | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Future Demand Growth | Q1–Q3 consistently highlighted strong long‑term fundamentals driven by robust subsea activity and growing FPSO/production support work, although Q3 noted that near‑term drilling growth was somewhat subdued. | In Q4 2024, management emphasized muted growth in drilling activity while underlining continued strength in subsea demand and an expected surge in FPSO installations (15 FPSOs in 2025) to fuel future demand. | Mixed sentiment: While near‑term drilling activity appears soft, optimism remains for long‑term demand via subsea and FPSO growth. |
Long‑Term Contract Visibility | Across Q1–Q3, discussions centered on a balance between short‑term and long‑term contracts with consistent visibility—ranging from 6‑ to 12‑month views and significant backlog coverage bolstered by ongoing contract discussions. | Q4 2024 emphasized that approximately 81% of 2025 revenue is covered by firm backlog with most contracting focused in the latter part of the year, reinforcing robust long‑term visibility. | Consistently positive: Contract visibility remains strong, with improvements in backlog coverage reinforcing market confidence. |
Operational Efficiency and Vessel Utilization (including Drydock Management) | Q1 showed stable utilization with strategic drydock scheduling; Q2 experienced heavier drydock impacts and lower utilization; Q3 saw further utilization declines due to increased idle and drydock days impacting operating costs. | In Q4 2024, fewer drydock days in key regions (e.g., Middle East, West Africa) helped boost utilization (improving from 76.2% in Q3 to 77.7%) and led to record-high gross margins—the highest since 2009. | Improving efficiency: Despite recurring drydock challenges, operational performance is recovering with better vessel utilization and enhanced margins in Q4. |
Regional Market Trends and Dynamics | Q1–Q3 analyses revealed mixed regional performance: Europe experienced uncertainty (tax/regulatory issues), Africa generally performed strongly, and the Middle East and Asia Pacific saw variable activity driven by local market conditions and project delays. | Q4 2024 shows clearer regional distinctions, with strong performance in West Africa and improving outlooks in the Middle East and Norway. Positive regional narratives are emerging despite some lingering uncertainties in Europe (e.g., U.K. rate pressures). | Consolidating: Regional variability is being clarified, with certain regions (Africa, Middle East) emerging as clear strength points amid persistent local challenges. |
Day Rates and Margin Performance | Q1 and Q2 saw robust day rate increases across regions fueling revenue growth, while Q3, despite further day rate gains, experienced slight margin compression from higher idle and drydock costs. | Q4 2024 delivered record-high gross margins (50.4%) with stable average day rates; regional performance improved notably in West Africa and the Middle East even as some pressures persisted in the U.K.. | Upward trend strengthened: Day rates and margins rebounded in Q4, overcoming earlier cost pressures and setting a positive tone for future performance. |
Capital Allocation Strategy and Free Cash Flow Utilization | Q1 and Q2 set the framework with disciplined share repurchases and acquisition strategies, while Q3 continued the focus on debt reduction and free cash flow deployment through buybacks and careful capital allocation. | In Q4 2024, Tidewater generated $331 million in free cash flow (a 67% increase year‑over‑year), aggressively executed share repurchases, and reduced net debt significantly, reinforcing a disciplined capital allocation approach. | Strengthening discipline: The capital allocation framework has matured, with enhanced free cash flow generation enabling aggressive share repurchases and debt reduction. |
Forecasting Accuracy and Revenue Guidance | Q1 emphasized robust, bottoms‑up forecasting and solid revenue guidance; Q2 adopted a weekly reforecasting process with minor guidance adjustments; Q3 noted challenges from regional softness leading to cautious revenue projections. | Q4 2024 acknowledged a 6% revenue shortfall relative to initial guidance for 2024 and highlighted refined forecasting efforts, with improved visibility and confidence in the 2025 guidance range thanks to better data accumulation. | Refined over time: Despite early volatility, forecasting accuracy has improved with continuous process adjustments and enhanced guidance for future quarters. |
Project Delays and Operational Disruptions | Q1 mentioned the carryover of delayed projects from 2023; Q2 detailed logistics and supply chain delays (60‑90 day shifts) without cancellations; Q3 saw significant delays in FPSO and subsea constructions affecting vessel utilization and increasing idle days. | Q4 2024 reported residual delays, particularly in drydock schedules and engine overhauls (with some carryovers into 2025), reflecting operational disruptions that continue to impact short‑term utilization. | Recurring yet managed: Project delays and disruptions remain a constant challenge though they are viewed as temporary and are carefully managed across quarters. |
Emerging FPSO Demand | Q1 was optimistic, citing Rystad's projection of 40‑48 FPSOs over the next 5+ years and discussing the mix of production versus drilling work; in Q3, delays in FPSO-related projects were noted as affecting the subsea construction timeline. | Q4 2024 highlighted a robust near‑term pipeline with 15 FPSOs expected to be installed in 2025, positioning FPSO activity as a key growth driver for offshore vessel demand. | Gaining prominence: Initially emerging as a positive signal, FPSO demand is now emphasized with clear execution milestones driving future vessel support growth. |
Drilling Activity Allocation Limits | Q1 discussed a 60/40 production-to‑drilling allocation, indicating that current drilling support was near its upper cap; Q3 noted that exploration drilling comprised about 30% of their activity book, suggesting a controlled approach. | Q4 2024 did not specifically revisit drilling allocation limits, implying that the previous mix is now considered settled as focus shifts to emerging areas like subsea and FPSO demand. | Diminished focus: Earlier emphasis on drilling allocation limits has tapered off as market focus pivots toward subsea and FPSO opportunities. |
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Market Outlook
Q: Has your view of the market changed for the next few years?
A: Quintin Kneen stated that despite an unexpected pullback due to supply chain issues in West Africa and regulatory issues in the U.K., his view of the market hasn't changed. He emphasized that demand for hydrocarbons is very strong as they look out through 2026 and 2027, with vessel supply limited and decreasing due to attrition. He is confident in the business over the next couple of years and sees 2025 as a sideways movement before another leg up. -
2025 Guidance Confidence
Q: How confident are you in the 2025 guidance?
A: Quintin Kneen expressed confidence in the 2025 guidance. He acknowledged that the 2024 revenue came in about 6% below initial guidance, at $1.35 billion versus the $1.4 to $1.45 billion expected. Lessons were learned, and they now have about 81% revenue covered from backlog for 2025, with open contracting mainly in the latter part of the year. Conversations for the remaining contracts have already begun. -
Outlook for 2026-2027 Demand
Q: Can you provide color on demand outlook for 2026 and 2027?
A: Piers Middleton noted they are starting to see discussions with companies about 2026 in various regions, giving them confidence of a good demand spike in 2026 and 2027 across all regions, including the U.K. They have begun pre-discussions with customers about vessel availability, indicating an expected uptick in activity. -
Debt Markets and Newbuild Financing Challenges
Q: What are you seeing in debt markets, especially for new asset financing?
A: West Gotcher explained that while Tidewater is in a favorable position with a strong balance sheet and access to corporate debt, the appetite for newbuild financing in the OSV space remains limited. This is due to banks and financiers having had unfavorable experiences in the last down cycle, leading to caution. Additionally, current day rates and contract terms do not support the economics of new builds, making financing more challenging. -
Fleet Strategy and Vessel Acquisitions
Q: Any comments on fleet size adjustments and acquisition strategy?
A: Quintin Kneen said that buying fleets in bulk is easier and more cost-effective than one-off acquisitions. They prefer fleet acquisitions but are not against individual vessel purchases. With some vessels approaching 25 years old, they may scrap or sell them. Confident in the market for 2027 and 2028, he believes the world has enough vessels and sees opportunities to acquire fleets at a discount, favoring investments in older vessels over new builds at this point. -
Capital Allocation and Shareholder Returns
Q: How will you handle capital allocation and shareholder returns long term?
A: Quintin Kneen stated that in the intermediate term, their priority is to establish a better long-term capital structure and understand what's possible regarding revolver capacities. They aim to determine how low they can bring cash balances without causing financial distress. While no specific percentages were given, actions taken in 2024 serve as a good guide for future capital returns. -
Backlog Coverage and Regional Utilization
Q: Can you elaborate on backlog coverage and regional utilization?
A: James West clarified that about 81% of revenue is covered, with 68% of available days contracted within that backlog, leaving capacity to generate more revenue. Near-term periods have more coverage than Q3 or Q4 of 2025. Regionally, coverage is fairly balanced, but the Americas have lighter coverage, while Africa and Asia are on the higher end. -
Contract Duration and Strategy
Q: What is your current contract duration strategy amid demand growth?
A: West Gotcher mentioned that in Q4, they entered into 31 new term contracts with an average duration of about 12 months. Piers Middleton added that while they took some longer-term contracts through 2025, they continue to focus on shorter-term contracts, believing in market opportunities in 2026 and 2027. They aim not to lock in everything long-term to capitalize on expected future rate improvements. -
Receivables Increase Due to Pemex Delays
Q: What's driving the increase in receivables, and when might it reverse?
A: Samuel Rubio explained that receivables increased in Q4, mainly due to delayed payments from Pemex in Mexico. Days Sales Outstanding (DSO) went up by 2 or 3 days quarter-over-quarter. While other customers in Africa also delayed payments in Q4, they have since caught up over the last couple of months. They hope to receive payments from Pemex soon, which would reduce DSO. -
Drydock Schedule and Impact on Utilization
Q: Are there any factors disproportionately impacting drydock days in 2025?
A: Samuel Rubio noted that while 2023 didn't push many projects into 2024, there are some carryovers from 2024 into 2025. In 2024, drydock days impacted utilization by about 6%, and they're seeing 2025 come down slightly. An increase in engine overhauls in 2025 is also contributing to drydock days, higher than in 2024. -
Malaysia Tax Dispute Resolution and Vessel Re-Activation
Q: What's the status of the tax dispute in Malaysia and vessel reactivation?
A: Piers Middleton reported that PETRONAS has resolved the tax disagreement in Malaysia. They expect vessels to start returning to work after the Eid holidays. By Q3 and Q4, the vessels that have been idle should come back on stream as PETRONAS retenders. Tidewater's larger-sized PSVs in the region are expected to be reactivated in the second half of the year. -
Gulf of America Outlook and Energy Policies
Q: Are you seeing increased demand in the Gulf of America under the new administration?
A: Piers Middleton mentioned they have observed a couple of tenders for additional vessels in the Gulf of America, with expectations of 1 or 2 extra rigs coming in. While it's difficult to determine if this is due to the new administration or existing plans, they expect some uplift in the region into 2026. More time is needed to fully understand the impact on the region.