Tidewater's CEO Discusses F1Q13 Results - Earnings Call Transcript

Tidewater Inc. (TDW)

F1Q13 Earnings Call

August 8, 2012 11:00 AM ET

Executives

Joe Bennett – EVP and Chief IR Officer

Jeff Platt – President and CEO

Quinn Fanning – EVP and CFO

Analysts

Gregory Lewis – Credit Suisse

David Smith – Johnson Rice

Todd Scholl – Clarkson Capital Markets

Richard Sanchez – HIS Petrodata

Presentation

Operator

Good morning. My name is Alicia, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Fiscal 2013 First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Joe Bennett, you may begin your conference.

Joe Bennett

Thank you, Alicia. Good morning, everyone, and welcome to Tidewater’s fiscal 2013 first quarter earnings results conference call for the period ended June 30, 2012. I’m Joe Bennett, Tidewater’s Executive Vice President and Chief Investor Relations Officer. With me this morning on the call are our President, and CEO, Jeff Platt; Jeff Gorski, our Executive Vice President and Chief Operating Officer; Quinn Fanning, our Executive Vice President and CFO; and Bruce Lundstrom, our Executive Vice President, General Counsel, and Secretary.

We will follow our usual conference call format. After the formalities, I’ll turn the call over to Jeff for his initial comments, to be followed by Quinn’s review of the financial details for the quarter. Jeff will then provide some wrap-up comments before we open the call for questions.

During today’s conference call, Jeff, Quinn, I, and other Tidewater management may make certain comments that are forward-looking statements and not statements of historical fact. I know that you understand that there are risks, uncertainties, and other factors that may cause the company’s actual future performance to be materially different from that stated or implied by any comment that we may make during today’s conference call.

Additional information concerning the factors that could cause actual results to differ materially from those stated or implied by the forward looking statements, may be found in the risk factors section of Tidewaters’ most recent form 10K. With that I’ll turn the call over to Jeff.

Jeff Platt

Thank you, Joe, and good morning to everyone. Earlier this morning we reported fully diluted earnings per share for our fiscal quarter of $0.65 which compared to $0.48 a year ago. These results were consistent with our expectations and reflect continued progress in the turnaround for the offshore supply vessel business.

In last quarter’s conference call, Dean Taylor, our former CEO and current Chairman pointed out how we could see progress in the industry’s recovery if you looked at our vessel revenues for the full year by its halves. In the first half of fiscal year 2012, our quarterly revenues averaged about $250 million. During the second half of fiscal year 2012, our vessel revenues were averaging about $280 million per quarter.

In the quarter we are reporting today we generated $290 million in vessel revenues, which was once again a step up from the prior two quarters. In this quarter, just as in the March quarter, our financial results reflected revenues coming in at the middle of our guidance on the last conference call while operating expenses were at the low end. Both trends are positive and reflect improving industry fundamentals along with continued diligence in managing our business.

The safety culture at Tidewater that our two previous CEOs Bill O’ Malley and Dean Taylor nurtured during their terms will continue to receive my highest attention, and that of the rest of the Tidewater management team employees. As has been said many times before, safety is important not just because it’s good for our customers and our business, but because we owe it to everyone who comes to work each day to return home safely at night.

Tidewater’s safety record for the first quarter reflected a total recordable incident rate of 0.25 with no lost time accidents incurred. I thank all of our employees worldwide for their continued diligence in operating our fleet safely.

I’m sure most participants in this call remain very interested in an update regarding our situation in Angola. Our ongoing negotiations with Sonangol, our joint venture partner continued. You are probably already aware that our existing Sonatide joint venture agreement with Sonangol has been extended to December 31, 2012, allowing ongoing JV restructuring negotiations to continue.

In regards to recent vessel activity in Angola, during the six months ended June 30, 2012, the company redeployed five Tidewater owned vessels from its Angolan operations to other markets. With each of the vessels redeployed at day rates comparable to or higher than the respective expiring contracts in Angola, reflecting we believe the strength of the markets outside of Angola.

During the quarter ended June 30, 2012, the joint venture entered into seven short-term vessel contracts, four of which have now expired. The remaining three contracts will expire on or before December 31, 2012.

I will also note that Sonangol has recently expressed the willingness to consider additional contracting activity by the Sonatide joint venture. And we look forward to continuing to work with Sonangol in this regard.

The conclusion of the situation is still very much uncertain at this time. So we continue to explore opportunities to move vessels from Angola as need be to other markets. I would like to point out that we move vessels from one market to another in the normal routine of our business, taking full advantage of the global infrastructure, Tidewater has developed over seven decades of existence. To head off questions later, this is the extent of what we are able to tell you about the status for negotiations, other than to say there is much hard work being done by both Sonangol and Tidewater to reach a mutually beneficial outcome. When we have a material change in the Angola situation, we will update our shareholders at that time.

Read the rest of this transcript for free on seekingalpha.com