Tidewater (TDW) Q4 FY25 earnings call: guidance and Q&A

Analyst asks about the trajectory of fleet average day rates given recent leading-edge slips, and how management expects them to move through 2026 and into 2027/2028, and what's embedded in the 2026 guidance.

Management expects a flattish 2026 with market tightening in the second half, potentially leading to $3,000-$4,000/day rate increases in 2027 and 2028. They note increased tender and pre-tender conversations, especially in the Middle East and West Africa, which are showing signs of rate increases.

“So if you go back 2 or 3 years, there was some slackness in the Middle East, but you see that region was one of our best movers in the past quarter. I expect that to continue. I'm getting very excited about what I'm seeing develop in West Africa, and we saw some rate increase there.”

asked by Jim Rollyson · answered by Quintin Kneen

Analyst asks for management's outlook on free cash flow generation for 2026, considering guidance midpoint, higher drydock/capex, and working capital dynamics (PEMEX collections).

Management expects free cash flow to remain strong, averaging around $300 million, noting that the Q4 2025 figure included a disproportionate bump from PEMEX collections which may normalize, potentially impacting 2026 FCF.

“Yes, Jim, thanks. No, I think the free cash should stay fairly strong for '26. We did see $426 million. Obviously, we had a big bump in our cash collections. So if we look back over the last few years, it should average out in the $300 million level somewhere.”

asked by Jim Rollyson · answered by Samuel Rubio

Analyst asks about the maximum vessel life for PSVs and the rough timeline for serious upgrades/renovations or a full newbuild cycle.

Management states vessels can work 30-35 years, despite a 25-year depreciation life, requiring serious upgrades. They expect modest to no newbuilds in the next year, with significant building only occurring when day rates approach $30,000/day, and likely to be replacement-oriented.

“But the fact is these boats can work well into 30, 35 years. But they will need serious upgrades as they go forward, and that needs to be supported by day rates and so forth. So I think that we're going to see real modest to almost no building in the next year.”

asked by Keith Beckmann · answered by Quintin Kneen

Analyst asks if there are other regions for fleet expansion or if fleet rationalization (selling lower spec boats) is being considered.

Management confirms selling boats regularly as they become uneconomical. They are dedicated to current regions and are "tilting towards West Africa" for future expansion, but price is a key factor. They are not looking to enter new regions beyond their current footprint.

“But certainly, the regions that we're in today are regions that we are dedicated to. I'm actually -- I mentioned it in one of the remarks, I think, earlier on the call, I can't remember if it was in the questions or on the call. But I am excited about West Africa.”

asked by Keith Beckmann · answered by Quintin Kneen

Analyst asks about the impact of the Middle East situation on Saudi Aramco contracts, specifically regarding force majeure clauses or contract language allowing pauses/cancellations.

Management states there are no contract clauses allowing Saudi Aramco to unilaterally cancel. While they might request reduced vessel count, production remains critical. They anticipate potential increases in insurance and personnel costs but are not currently concerned, and will provide updates.

“I would tell you that when it comes to Saudi Aramco, they rule the roost. And no, there's nothing in the contract that gives them the privilege to cancel, it will. But they are a strong force, and they will come to us if they feel they need to reduce the vessel count.”

asked by Gregory Lewis · answered by Quintin Kneen

Analyst asks if anything has changed in Brazil to drive the recent flurry of M&A activity, including Tidewater's acquisition and OceanPact acquiring CBO.

Management attributes the M&A to current optimism in Brazil, driven by a focus on long-term contracts with good payers and margins. They view the timing of the two transactions as coincidental, noting that discussions for such deals often take years.

“It's the optimism that's in Brazil today. There was some back and forth in '25 about what Petrobras was going to be doing and what the activity levels were going to be and generally, the strength of the South American market.”

asked by Gregory Lewis · answered by Quintin Kneen