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Tidewater(TDW) - 2024 Q4 - Earnings Call Transcript
TDWTidewater(TDW)2025-02-28 18:30
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Financial Data and Key Metrics Changes - Revenue for 2024 increased by 33% year-over-year, reaching 1.35billioncomparedto1.35 billion compared to 1 billion in 2023 [52][56] - Average day rates improved by nearly 4,500perday,withgrossmarginrisingto48.24,500 per day, with gross margin rising to 48.2% from 44.2% in 2023 [53][54] - Net income nearly doubled to 180.7 million from 97.2millionin2023,andadjustedEBITDAgrewbynearly5097.2 million in 2023, and adjusted EBITDA grew by nearly 50% to 559.6 million [56][57] - Free cash flow tripled to 331millionin2024,with331 million in 2024, with 131 million generated in Q4 alone [8][66] Business Line Data and Key Metrics Changes - Active utilization decreased by approximately two percentage points to 79.2% due to higher dry dock and idle days [54] - In Q4, average day rates were flat compared to Q3, but active utilization increased from 76.2% to 77.7% [58][69] - Gross margin in Q4 reached 174million,upfrom174 million, up from 160.8 million in Q3, marking the highest gross margin since 2009 [70] Market Data and Key Metrics Changes - Significant improvements were noted in West Africa and the Middle East, with revenues increasing by 13% and 10% respectively, while revenues declined in other regions [69] - The company anticipates fewer offshore rigs working in 2025 compared to 2024, impacting demand for offshore vessels [17][18] - Subsea demand remains strong, with expectations for increased activity in 2026 and 2027, particularly in the subsea sector [20][21] Company Strategy and Development Direction - The company is focused on value-accretive acquisitions and has a disciplined approach to capital allocation, emphasizing free cash flow generation [12][14] - A share repurchase program was initiated, with 91millionspentonrepurchasesin2024,reflectingacommitmenttoreturningcapitaltoshareholders[10][27]−Thecompanyaimstomaintainalong−termunsecureddebtcapitalstructurewhileevaluatingrefinancingopportunitiesasmarketconditionsimprove[29][30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthelong−termfundamentalsofthebusinessdespiteamutedgrowthoutlookforoffshoredrillingactivityin2025[17][18]−Thecompanyremainsoptimisticaboutthedemandforhydrocarbonsandexpectsatighteningvesselmarkettosupportfuturerateincreases[80][81]−Managementhighlightedtheimportanceofexecutingdailyoperationseffectivelytocapitalizeonmarketopportunities[9][10]OtherImportantInformation−Thecompanyplanstoincurapproximately91 million spent on repurchases in 2024, reflecting a commitment to returning capital to shareholders [10][27] - The company aims to maintain a long-term unsecured debt capital structure while evaluating refinancing opportunities as market conditions improve [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the business despite a muted growth outlook for offshore drilling activity in 2025 [17][18] - The company remains optimistic about the demand for hydrocarbons and expects a tightening vessel market to support future rate increases [80][81] - Management highlighted the importance of executing daily operations effectively to capitalize on market opportunities [9][10] Other Important Information - The company plans to incur approximately 37 million in capital expenditures for 2025, focusing on vessel upgrades and IT infrastructure [65] - The firm backlog and options represent $973 million of revenue for the remainder of 2025, with 68% of available days captured in firm backlog [36] Q&A Session Summary Question: Long-term market outlook and rate increases - Management indicated that the long-term demand for hydrocarbons remains strong, and the limited number of vessels will decrease over the next few years, supporting confidence in the business [80][81] Question: Confidence in 2025 guidance - Management expressed confidence in the 2025 guidance, noting that 81% of revenue is covered by backlog, with ongoing discussions for additional contracts [86] Question: Utilization and backlog coverage - Management clarified that 81% of revenue is covered by backlog, with more coverage expected in the near term compared to later in the year, and highlighted regional differences in coverage [95] Question: Increase in receivables - The increase in receivables was primarily driven by delays in payments from PEMEX, with expectations for resolution soon [98] Question: Dry dock schedule and impact on utilization - Management acknowledged some carryovers from 2024 to 2025 in dry dock days, impacting utilization, but noted a decrease in expected dry dock days for 2025 [106] Question: Average duration of new contracts - The average duration of new term contracts in Q4 was about twelve months, with a mix of short and longer-term contracts being pursued [109][111] Question: Confidence in 2026 and 2027 demand - Management is starting to see discussions for contracts extending into 2026 and 2027, indicating confidence in future demand growth [120][121]