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    TDW
    Earnings call· Jun 2026(Q2 FY26)

    TIDEWATER Q2 FY26 earnings call TDW

    Aug 4, 2026 Source

    Executive summary

    Tidewater Q2 FY26 — Strong Day Rate Momentum and Wilsons' Acquisition Update

    Tidewater delivered strong Q2 FY26 results, exceeding revenue and gross margin expectations, driven by robust day rate momentum and utilization. The company is progressing with the Wilsons' acquisition, expected to close around September 1st, and maintains a disciplined capital allocation strategy balancing M&A with share repurchases. Despite ongoing Middle East conflict costs and dry dock impacts, the long-term offshore activity outlook remains highly optimistic due to increasing tendering and tight vessel supply.

    Highlights

    5

    • Revenue was $342.3 million, exceeding expectations.

    • Gross margin was nearly 47%, almost 3 percentage points above prior expectations.

    • Weighted average leading edge day rate increased approximately 7.5% sequentially.

    • Free cash flow nearly doubled from Q1 to $64 million.

    • Balance sheet remains strong with net debt essentially at $0 and liquidity over $850 million at quarter end.

    Concerns

    4

    • Operation Epic Fury continued to incur costs, totaling approximately $6.8 million in Q2, with $4 million expected in Q3.

    • Wilsons' acquisition closing is now expected around September 1st, approximately 2 months later than previously anticipated.

    • Third-quarter revenue is expected to be up only 3% (inclusive of 1 month Wilsons'), with Legacy Tidewater revenue declining about 2%.

    • Third-quarter gross margin is expected to be about 46% due to conflict-related costs, higher fuel expense, and R&M expense.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 revenue
    $1.42 billion to $1.47 billion
    high materiality
    High
    Full-year 2026 gross margin
    49% to 50%
    high materiality
    High
    Q3 2026 revenue
    up about 3%
    medium materiality
    High
    Q3 2026 Legacy Tidewater revenue
    decline about 2%
    medium materiality
    High
    Q3 2026 gross margin
    about 46%
    medium materiality
    High
    Q3 2026 conflict-related costs
    approximately $4 million
    medium materiality
    High
    Full-year 2026 G&A costs (excluding M&A transaction costs)
    about $126 million
    low materiality
    High
    Full-year 2026 dry dock costs
    approximately $122 million
    medium materiality
    High
    Full-year 2026 capital expenditures
    approximately $52 million
    medium materiality
    High
    Average day rates
    $3,000 to $4,000 per day increase
    high materiality
    High
    Net leverage (pro forma for Wilsons' acquisition)
    approximately 0.8x
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Europe and Mediterranean
    Gross margin increase primarily due to improved utilization and higher day rates. Med region drove overall revenue and margin for Europe. Expect a small lull in activity in early Q3, but Q4 and 2027 expected to be very strong.
    Utilization improvement: 8 percentage pointsDay rates increase: 11%Operating expenses increase: 11% (due to addition of two vessels)
    		———increased by 8 percentage points
    Middle East
    Day rates and utilization both improved, but gains were more than offset by higher costs related to the Iran conflict. No slowdown in demand observed, with some uplift in short-term requirements. Longer-term tenders paused but still expected to be awarded.
    		———decreased about 3 percentage points
    Americas
    Decrease in gross margin primarily due to lower revenue from declining day rates and fewer vessels. Brazil market facing short-term headwinds due to election year, but day rates remain healthy (medium-sized PSVs in excess of $42,000 per day). Demand in Gulf of America flat, offset by Caribbean increase.
    Day rates decline: 2%Total operating costs decline: 4%
    		fell about 8%——decreased
    APAC
    Revenue up due to more vessels operating in the region. Seeing an upturn in pre-tendering and tendering activity, particularly from Malaysia, Indonesia, and Australia. Several larger PSVs commencing work in Q3/early Q4, expecting solid upturn in utilization and improved day rates into 2027.
    Day rates decline: about 1%Utilization down: about 3 percentage pointsOperating costs rose: 12% (due to increase in vessels and mix of vessels in Australia)
    		up 3%——4 percentage points lower than Q1
    Africa
    Utilization affected by higher idle days. Expect pickup in demand in H2 from drilling campaigns in Namibia and production renewal contracts in Angola. Several OSV tenders out in Nigeria expected to create incremental global demand.
    Active utilization decrease: 8 percentage pointsDay rates: flatOperating costs increased: due to higher R&M costs and higher fuel costs
    		$9 million decline——decreased by about 9 percentage points

    Operational metrics

    30
    Net income
    $21.7 million
    Q2 FY26

    Reported net income for the quarter.

    EPS
    $0.43
    Q2 FY26

    Reported EPS for the quarter.

    Revenue
    $342.3 millionvs $326.2 million in Q1 FY26
    Q2 FY26

    Increase driven by 1 additional day, higher average day rates, and improved active utilization.

    Average day rates
    3%higher than Q1 FY26
    Q2 FY26

    Sequential increase in average day rates.

    Active utilization
    81.4%vs 80.6% in Q1 FY26
    Q2 FY26

    Improvement in active utilization.

    Gross margin
    $160.5 millionvs $159.3 million in Q1 FY26
    Q2 FY26

    Gross margin for the quarter.

    Gross margin percentage
    46.9%below Q1 FY26 margin of 48.8%
    Q2 FY26

    Percentage decline primarily due to higher vessel operating costs.

    Operating costs
    $181.8 millionvs $166.9 million in Q1 FY26
    Q2 FY26

    Increase due to higher R&M work pushed from Q1, higher crew wages, and supplies/consumables impacted by Iran conflict.

    Conflict-related costs
    $6.8 million
    Q2 FY26

    Additional costs due to the continuing impact of Operation Epic Fury, primarily insurance and war bonus pay for crew. Rebillable to customers.

    Fuel expense
    over 50%sequential increase
    Q2 FY26

    Heavily impacted since the beginning of the conflict due to increased commodity prices.

    Adjusted EBITDA
    $133.8 millionvs $129.3 million in Q1 FY26
    Q2 FY26

    Adjusted EBITDA for the quarter.

    G&A cost
    $34.8 million
    Q2 FY26

    Total G&A costs, including M&A transaction costs.

    Additional G&A costs (Wilsons' acquisition)
    $7 million
    H2 2026

    Expected additional G&A costs related to the Wilsons' acquisition.

    Dry dock days
    750vs 949 days in Q1 FY26
    Q2 FY26

    Total dry dock days incurred.

    Dry dock costs
    $23.3 millionvs $36.4 million in Q1 FY26
    Q2 FY26

    Total dry dock costs incurred.

    Dry dock impact on utilization
    4 percentage pointsvs 5 percentage points in Q1 FY26
    Q2 FY26

    Impact of dry dock days on utilization.

    Additional dry dock costs (Wilsons' acquisition)
    $7 million
    H2 2026

    Expected additional dry dock costs related to the Wilsons' acquisition.

    Capital expenditures
    $14.9 million
    Q2 FY26

    Mainly vessel modifications and upgrades.

    Debt principal payments
    $6 million
    per year

    Related to the financing of constructed smaller crew transport vessels; no principal payments due until 2030 on new unsecured notes.

    Net debt
    essentially $0
    Q2 FY26 end

    Balance sheet remains very strong.

    Liquidity
    over $850 million
    Q2 FY26 end

    Strong liquidity position.

    Share repurchase authorization
    $500 million
    outstanding

    Remains outstanding; no repurchases made in Q2 ahead of Wilsons' acquisition.

    Cash consideration for Wilsons' equity
    $270 million
    anticipated

    Expected to be funded with cash on hand, not revolving credit facility.

    Contracted capacity
    69%
    remaining available days for 2026

    Inclusive of the Wilsons' fleet, captured in firm backlog and options.

    Full-year utilization assumption
    80%
    FY26

    Inclusive of the Wilsons' fleet, used in full-year revenue guidance.

    Unchartered capacity
    11%
    FY26

    Remaining capacity to be chartered if the market tightens quicker than anticipated.

    Weighted average leading edge day rate increase
    7.5%sequentially
    Q2 FY26

    Clear indication of tight supply and demand balance.

    Term contracts entered
    25
    Q2 FY26

    Contracts entered during the quarter.

    Brazil medium-sized PSV day rates
    in excess of $42,000
    Q2 FY26

    Supported by increased activity from IOCs and EPCI contractors.

    North Sea large AHTS spot rates
    over GBP 160,000
    Q2 FY26

    Highest average levels on record, with some fixtures concluded well above GBP 200,000 per day.

    Industry KPIs

    4
    MetricValueDetails
    Rpo backlog$1.3 billionUSD
    FCF CAPEX leverage$64.4 million FCF; $14.9 million capex; essentially $0 net debt; 0.8x net leverageUSD
    M a integration progressWilsons' acquisition
    Orders bookings by segment25 term contractscontracts

    Deals & partnerships

    1
    Wilsons'Acquisition of Wilsons' fleet and operationsapproximately $270 million

    Tidewater has completed all necessary regulatory steps and obtained change of control waivers related to assuming Wilsons' debt. Working with banks to finalize documentation for debt transfer. Tidewater personnel deployed for pre-closing integration planning.

    Capital programs

    1
    Norwegian vessel major upgradeplanned$15 million

    This amount is included in the full year 2026 capital expenditures.

    Risks & headwinds

    4
    Middle East conflict (Operation Epic Fury)Q2 FY26 and Q3 FY26 (near-term)

    $6.8 million additional costs in Q2 FY26; $4 million expected in Q3 FY26.

    Mitigation: Actively working to reduce costs, identifying alternative management ways, and contractually permitted to invoice customers for reimbursement (invoiced $1 million, collected <$100k to date).

    Dry docks and unplanned maintenanceQ3 FY26

    Legacy Tidewater revenue expected to decline about 2% in Q3 FY26; 1 percentage point utilization consumed by dry docks, another 1 percentage point by higher-than-anticipated down for repair time.

    Mitigation: Timing of some dry dock projects shifted to H2 2026; company aims to minimize unanticipated downtime.

    Brazil election year impact on tenderingQ2 FY26 to Q4 FY26

    Slowing down Petrobras OSV long-term tendering activity.

    Mitigation: Expectation that tendering activity will pick up again at the end of the year once elections are finished in Q4.

    Market volatilityNear-term

    Challenging to navigate.

    Mitigation: Underlying reasons for optimism about offshore activity outlook, driven by long-term energy security considerations and increasing tendering activity.

    What to watch in Q3 FY26

    5

    Wilsons' Acquisition Closing & Integration

    Q3 FY26
    CurrentExpected around September 1st
    TargetClosed and integration progressing

    Why it matters

    Successful integration is key to realizing strategic value and financial synergies from the acquisition.

    On that note, we now expect to close the Wilsons' acquisition around September 1st.

    Q&A highlights

    8

    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

    2 min read5 chapters

    Detailed Narrative

    01

    Operational Resilience Amidst Conflict

    Despite the ongoing Operation Epic Fury, Tidewater reported strong Q2 performance, with Middle East utilization and day rates at their highest in some time. The company incurred $6.8 million in conflict-related costs in Q2 and expects $4 million in Q3, actively working to reduce these expenses and rebill customers. Management noted that activity in the region has been largely unaffected, and the long-term outlook remains robust once the conflict is resolved.

    02

    Wilsons' Acquisition Integration Progress

    The Wilsons' acquisition is now expected to close around September 1st, following the completion of all regulatory steps and change of control waivers. Tidewater has deployed personnel for pre-closing integration planning, aiming for a smooth and swift integration, leveraging its core competency in this area. The company remains confident in its ability to integrate Wilsons' efficiently and is excited about the opportunities in the Brazilian market.

    03

    Disciplined Capital Allocation Strategy

    Tidewater maintains a strong balance sheet with essentially zero net debt and over $850 million in liquidity at quarter-end. The company intends to fund the $270 million equity portion of the Wilsons' acquisition with cash on hand. Its $500 million share repurchase authorization remains outstanding, with a philosophy to opportunistically repurchase shares when M&A opportunities are not immediately actionable, contrasting market value with intrinsic value.

    04

    Optimistic Offshore Market Outlook

    Management expressed increased bullishness on the offshore activity outlook, citing significantly increased tendering and pre-tendering activity across all vessel support services and regions. Strategic energy security considerations are driving long-term investments, accelerating projects. The vessel supply remains tight with negligible newbuild activity and an effectively scrapped-in-place laid-up fleet, supporting expectations for average day rate increases of $3,000 to $4,000 per day in both 2027 and 2028.

    05

    Regional Market Dynamics

    Europe saw strong North Sea AHTS spot rates averaging over GBP 160,000 per day, with the Med region driving overall revenue and margin. Africa anticipates a pickup in demand from drilling campaigns and production renewal contracts in H2. The Middle East experienced a pause in some longer-term tenders due to conflict uncertainty but maintains positive sentiment. Brazil faces short-term headwinds from election-year tendering but expects a strong rebound post-Q4 elections, with medium-sized PSV day rates exceeding $42,000 per day.

    AI-generated summary of the company’s earnings call. Not investment advice.