Tidewater (TDW) Q2 FY26 earnings call: guidance and Q&A

Is the market on track with previous expectations, or is visibility improving, leading to increased bullishness?

Management is more bullish now than in the last 6-9 months due to strong global tendering activity, particularly in Asia, Med, Namibia, Angola, and Nigeria. While some projects might shift right, the overall sentiment is very positive, with Brazil expected to rebound strongly post-election.

“I will tell you that I'm probably more bullish now than I've been in the last 6 to 9 months. The amount of tendering activity and pre-tendering activity is quite strong around the world.”

asked by Jim Rollyson · answered by Quintin Kneen

What is the playbook for recapturing increased costs (conflict, fuel) in rates, and how is the company improving the cost situation in the Middle East?

The company is making game-day decisions to manage costs, including modifying mariner pay premiums, working with insurance agents, and actively rebilling customers for contractually permitted conflict-related costs. Fuel costs are dependent on the environment, but efforts are ongoing to minimize overall impact.

“We're learning as we go through this conflict. And I think that our suppliers and our employees are as well. So we're finding new ways to bring that down. And then, of course, Sam talked to it a little bit, we're going to begin to bill back to our customers.”

asked by Jim Rollyson · answered by Quintin Kneen

Are there more or fewer M&A opportunities now, and does the company foresee more acquisitions in the next 1-2 years, given its focus on strategic rationale and value?

The M&A landscape continues to offer attractive opportunities, with a focus on strategic elements (e.g., Brazil for tonnage, Solstad for larger/hybrid vessels, Swire for Asia). Management expects to pursue value-accretive growth through acquisitions in the next year or so, but will not consolidate the industry alone.

“So it's getting things at the right price, but there's also got to be a good strategic rationale for it as well. Price is, of course, very important to us. But yes, no, I fully expect to see other opportunities develop.”

asked by Fredrik Stene · answered by Quintin Kneen

With the Wilsons' acquisition strengthening the Brazil presence, is the company now particularly focused on the Americas for M&A, or is it open to all regions?

The company is less interested in the U.S. today due to value points but is always open to good opportunities. Opportunities developing in West Africa and Asia are currently more attractive.

“I think the opportunities that are developing throughout West Africa and into Asia are probably more attractive today.”

asked by Fredrik Stene · answered by Quintin Kneen

Given day rate expectations, is the strategy to keep much of the fleet available for repricing in 2027, or how much capacity is desired to be contracted by year-end?

The strategy is to keep a decent amount of availability, especially for larger vessels (PSVs, anchor handlers), to take advantage of anticipated rate uplifts in 2027 and 2028. Some smaller vessels may be contracted for longer terms, but the general philosophy for larger vessels remains short-term to push day rates and contract terms.

“But I think in the short term, we're looking to keep a decent amount of availability in the fleet to take advantage of what we see coming in '27 and '28. So we're not going to change that strategy of going -- looking for the shorter term contracts and turning vessels over because we need to improve contract terms and we still need to obviously push day rate as well on that side.”

asked by Joshua Jayne · answered by Piers Middleton

Will the Middle East market be structurally impaired by the conflict, or will it return to normal, potentially stronger, once resolved?

Management believes the Middle East will show more strength in the future, expecting a bump in activity post-conflict as assets are repositioned and hydrocarbon basins developed. Customers have not shied away from future planning, and sentiment remains strong, with no expected slowdown in investment from major customers.

“So from my perspective, the customers have not shied away from any thinking about what they're going to do in the future, and everybody is just excited to get the conflict resolved so they can get back to work.”

asked by Joshua Jayne · answered by Quintin Kneen

How long can the aged OSV fleet realistically operate, and what day rates would be needed to incentivize newbuilds in the future?

Vessels can routinely operate into their high 20s or early 30s, and there's no current technological transformation necessitating newbuilds. The fleet has 5-6 years of duration left before rebuilding is needed. Day rates in the low $30,000s would justify newbuilds today, which might be achievable in a couple of strong years, potentially by 2029.

“So before the downturn in 2014 and '15, we were routinely operating vessels into the high 20s, early 30-year range. And there's no reason why vessels can't operate that long.”

asked by Keith Beckmann · answered by Quintin Kneen

Are customers requesting vessel upgrades for new offshore work, given technological advances, or can current PSVs handle the work?

There hasn't been a significant technological advance in vessel designs, apart from batteries for hybrid ships. While some customers ask about batteries, the cost of retrofitting needs to be borne by the customer. Discussions around methanol or ammonia have largely ceased due to financial viability concerns. Tidewater is making large investments to push some vessels into more specialized spaces, but generally, conventional PSVs are sufficient.

“I mean there's not been a big technological advance in terms of vessel designs really. I mean the only thing that's come in, I suppose, is putting batteries on the back of the ships, and we've obviously got the largest hybrid fleet. We're seeing a few customers sort of asking about that.”

asked by Gregory Lewis · answered by Piers Middleton