# Tidewater Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Tidewater Inc](/companies/tdw.md) (CIK 98222)
- Form: 10-Q
- Filed: 2023-11-06
- Accepted by EDGAR: Nov 6, 2023, 21:39 ET
- Period: 2023-09-30
- Accession: 0001437749-23-030405
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/98222/000143774923030405/tdw20230930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/98222/000143774923030405/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $299.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $707.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $55.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $119.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $9.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $32.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $26.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $59.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.49 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.13 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.50 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.16 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 53,610,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 52,557,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $57.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $23.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $275.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $575.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $2.07bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $332.5m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $641.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $102.4m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $1.03bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 67,614 characters.

### Forward-Looking Statements

Certain of the statements included in this Form 10-Q constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which includes any statements that are not historical facts. Such statements often contain words such as “expect,” “believe,” “think,” “anticipate,” “predict,” “plan,” “assume,” “estimate,” “forecast,” “goal,” “target,” “projections,” “intend,” “should,” “will,” “shall” and other similar words. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Tidewater Inc. and its subsidiaries. There can be no assurance that future developments affecting Tidewater Inc. and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and natural gas prices; industry overcapacity; limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; the resolution of pending legal proceedings; and other risks and uncertainties detailed in this Form 10-Q and other filings we make with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans, goals or activities are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards still developing, internal controls and processes that we continue to evolve, and assumptions subject to change in the future. Statements in this Form 10-Q are made as of the date of this filing, and Tidewater disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. In addition, see “Risk Factors” included in our Annual Report on Form 10-K and in this Form 10-Q for a discussion of certain risks relating to our business and investment in our securities.

In certain places in this Form 10-Q, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information.

The forward-looking statements should be considered in the context of the risk factors listed above, discussed in this Quarterly Report on Form 10-Q, and discussed in our 2022 Annual Report on Form 10-K (Annual Report) as updated by subsequent filings with the SEC. Investors and prospective investors are cautioned not to rely unduly on such forward-looking statements, which speak only as of the date hereof. Management disclaims any obligation to update or revise any forward-looking statements contained herein to reflect new information, future events, or developments.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto included in “Item 1. Financial Statements” and with our 2022 Annual Report. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A of our Annual Report and elsewhere in this Quarterly Report.

### EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK

### Tidewater

We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years. Our vessels and associated vessel services provide support for all phases of offshore oil and natural gas exploration, field development and production as well as windfarm development and maintenance. These services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction and seismic and subsea support; geotechnical survey support for windfarm construction, and a variety of other specialized services such as pipe and cable laying. In addition, we have one of the broadest geographic operating footprints in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have strong relationships.

On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets, which was amended on June 30, 2023 (the “Acquisition Agreement”), with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the “Sellers”), pursuant to which we agreed to acquire from the Sellers (the “Solstad Acquisition”): (i) 37 platform supply vessels owned by the Sellers (the “Solstad Vessels”); and (ii) the charter parties governing certain of the Solstad Vessels. On July 5, 2023, we completed the Solstad Acquisition for an aggregate cash purchase price of approximately $594.2 million, consisting of the $577.0 million base purchase price plus an initial $3.0 million purchase price adjustment; $3.2 million for working capital items comprised of fuel and lubricants; and $11.0 million in estimated transaction costs, consisting primarily of advisory and legal fees. The purchase price was funded through a combination of cash on hand and net proceeds from both the Senior Secured Term Loan and the 10.375% Senior Unsecured Notes due July 2028.

On April 22, 2022, we completed the acquisition of SPO and its 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. As consideration for the acquisition, we paid $42.0 million in cash and issued 8,100,000 warrants, each of which was exercisable at $0.001 per share for one share of our common stock (SPO acquisition warrants). In addition, we paid $19.6 million at closing and received an $8.8 million post-closing working capital refund related to pre-closing working capital adjustments, for a total consideration of $215.5 million. In 2022, we completed two public offerings of approximately 8.1 million shares of our common stock and with the proceeds from these offerings coupled with a small redemption of SPO acquisition warrants related to indemnified liabilities, we redeemed 100% of the outstanding SPO acquisition warrants.

Prior to August 1, 2023, we had outstanding Series A Warrants, exercise price of $57.06 and Series B Warrants, exercise price of $62.28, both with an expiration date of July 31, 2023. During July 2023, an aggregate of 2.0 million Series A Warrants and Series B Warrants were exercised and 1.9 million shares of common stock were issued in exchange for $111.5 million in cash proceeds. The remaining unexercised Series A Warrants and Series B Warrants, 3.1 million in the aggregate, expired according to their terms on July 31, 2023.

At September 30, 2023, we owned 220 vessels with an average age of 11.7 years (including three stacked vessels and one vessel designated as assets held for sale) which are available to serve the global energy industry. At September 30, 2023, the average age of our 219 active vessels was 11.6 years. In addition, at September 30, 2023, we have five crew boats under construction which are scheduled to be delivered in 2023 and 2024.

### MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity

Our MD&A is designed to provide information about our financial condition and results of operations from management’s perspective.

Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. As is the case with the numerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves. Our objective throughout the MD&A is to discuss how these factors affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.

Our revenues in all segments are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.

Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors impacting overall crew costs in all segments. In addition, our newer, more technologically sophisticated vessels generally require a greater number of specially trained, more highly compensated fleet personnel than our older, smaller and less sophisticated vessels. Crew costs may increase if competition for skilled personnel intensifies.

Costs related to the recertification of vessels are deferred and amortized over 30 months on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements that either extend the vessel’s useful life or increase the vessel’s functionality are capitalized and depreciated.

Insurance costs are dependent on a variety of factors, including our safety record and pricing in the insurance markets, and can fluctuate over time. Our vessels are generally insured for up to their estimated fair market value in order to cover damage or loss. We also purchase coverage for potential liabilities stemming from third-party losses with limits that we believe are reasonable for our operations, but do not generally purchase business interruption insurance or similar coverage. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.

Fuel and lube costs can fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off charter, drydockings, and changes in fuel prices. We also incur vessel operating costs aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, training costs, satellite communication fees, agent fees, port fees and other miscellaneous costs. Brokers’ commissions are incurred primarily in our non-United States operations where brokers sometimes assist in obtaining work. Brokers generally are paid a percentage of day rates and, accordingly, commissions paid to brokers generally fluctuate in accordance with vessel revenue.

We discuss our liquidity in terms of cash flow that we generate from our operations. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. From time to time, we also issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions.

### Industry Conditions and Outlook

As we look forward into the remainder of 2023 and into 2024, we expect the supply-demand balance in the global offshore oil and gas markets to continue to be favorable for ongoing offshore activities by the major oil and gas producers. Factors driving this outlook include demand for hydrocarbons continuing to grow internationally, the Organization of the Petroleum Exporting Countries Plus (OPEC+) remaining proactive in maintaining adequate and stable oil prices, combined with a diminishing global supply of vessels to support the offshore energy industry. Energy prices are expected to remain volatile for the remainder of 2023 and into 2024 due to ongoing geopolitical conflicts, global inflationary trends and associated actions from central banks as well as uncertainties surrounding the growth rates expected in key world economies.

Our business is directly impacted by the level of activity in worldwide offshore oil and natural gas exploration, development and production, which in turn is influenced by trends in oil and natural gas prices and the condition of the energy markets and, in particular, the willingness of energy companies to spend on operational activities and capital projects. Crude oil and natural gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand. Offshore oil and gas exploration and development activities generally require higher oil or natural gas prices to justify the much higher expenditure levels of offshore activities compared to onshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile. Over the past several years, oil and natural gas commodity pricing has been affected by a global pandemic, which included lock downs by major oil consuming nations, a war in eastern Europe between Russia and Ukraine, OPEC+ production quotas, capital discipline within the major oil and gas companies, inflationary economies of major consuming nations and increased activism related to the perceived oil and gas sector responsibility for climate change. Recent events include escalation of the Israeli/Palestinian conflict which could affect oil producing nations in the Middle East and disrupt world oil supplies. These factors have at various times caused or exacerbated significant swings in oil and gas pricing, which in turn has affected the capital budgets of oil and gas companies.

Despite the volatility in spot oil prices seen in recent years, our customers tend to consider less volatile medium and long-term prices in making offshore investment decisions. We continue to see positive upstream investment momentum in both the international and domestic markets. We believe these markets are driven by resilient long-cycle offshore developments, production capacity expansions and increased exploration and development activities.

We are one of the world’s largest operators of offshore support vessels and we have operations in most of the world’s offshore oil and gas basins. We continue to believe that there will be sufficient opportunities for us to operate our vessels in this sector for many years to come. We have also pursued opportunities in the sustainability arena, including the support of offshore wind energy generation and the improvement of our fleet performance regarding emissions and environmental impact. Although our business is impacted by a number of macro factors, including those factors discussed here, which influence our outlook and expectations given the current volatile conditions in our industry, our fleet is currently close to full utilization and our day rates have increased in recent quarters. We are of the opinion that the underlying fundamentals, particularly energy source supply and demand, will support a multi-year increase in offshore upstream development spending. Our outlook expectations are based on the market as we see it today and subject to changing conditions in and impacting our industry.

### Climate Change

Climate change is expected to increase the frequency and intensity of certain adverse weather patterns, which may impact our business. Due to concern over the risk of climate change, several countries have adopted, or are considering the adoption of, regulatory frameworks to reduce the emission of carbon dioxide, methane and other gases (greenhouse gas emissions). In addition, the increased regulation of greenhouse gas emissions is expected to create greater incentives for the use of alternative energy sources. Consideration of climate change-related issues and the responses to those issues through international agreements and national, regional, or state regulatory frameworks are integrated into our strategy, planning, forecasting and risk management processes, where applicable.

In March 2022, the SEC proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks also would include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. We expect final rules to be published during the fourth quarter of 2023.

For detailed discussion of climate change and related governmental regulation, including associated risks and possible impact on our business, financial conditions and results of operations, please see “Risk Factors” in Item 1A of our 2022 Annual Report.

### RESULTS OF OPERATIONS

Each of our five operating segments is managed by a senior executive reporting directly to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.

The following table presents our statement of operations for the periods indicated:

*(In Thousands)*

| Revenues: | Three Months Ended September 30, 2023 | June 30, 2023 | Nine Months Ended September 30, 2023 | September 30, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Vessel revenues | $296,975 | $210,323 | $698,478 | $456,298 |
| Other operating revenues | 2,287 | 4,638 | 8,849 | 4,640 |
| Total revenue | 299,262 | 214,961 | 707,327 | 460,938 |
| Costs and expenses: |  |  |  |  |
| Vessel operating costs | 164,239 | 118,264 | 397,962 | 281,805 |
| Costs of other operating revenues | 1,481 | 373 | 3,005 | 1,436 |
| General and administrative | 21,001 | 26,013 | 70,559 | 73,288 |
| Depreciation and amortization | 57,730 | 32,768 | 121,164 | 89,279 |
| Long-lived asset impairment and other | — | — | — | 714 |
| (Gain) loss on asset dispositions, net | (863) | (1,404) | (4,483) | 826 |
| Total costs and expenses | 243,588 | 176,014 | 588,207 | 447,348 |
| Operating income (loss) | 55,674 | 38,947 | 119,120 | 13,590 |
| Other income (expense): |  |  |  |  |
| Foreign exchange loss | (2,149) | (3,819) | (3,620) | (4,932) |
| Equity in net earnings (losses) of unconsolidated companies | 4 | 25 | 29 | (235) |
| Interest income and other, net | 568 | 2,790 | 3,488 | 4,416 |
| Loss on warrants | — | — | — | (14,175) |
| Interest and other debt costs, net | (19,288) | (4,731) | (28,209) | (12,850) |
| Total other expense | (20,865) | (5,735) | (28,312) | (27,776) |
| Income (loss) before income taxes | 34,809 | 33,212 | 90,808 | (14,186) |
| Income tax expense | 9,260 | 11,284 | 32,515 | 18,189 |
| Net income (loss) | 25,549 | 21,928 | 58,293 | (32,375) |
| Net loss attributable to noncontrolling interests | (650) | (656) | (1,228) | (6) |
| Net income (loss) attributable to Tidewater Inc. | $26,199 | $22,584 | $59,521 | $(32,369) |

26

### Consolidated Results – Three Months Ended September 30, 2023 compared to June 30, 2023

Revenues for the quarters ended September 30, 2023 and June 30, 2023, were $299.3 million and $215.0 million, respectively. The $84.3 million increase in revenue is primarily due to the addition to our fleet of 37 vessels acquired from Solstad in July 2023 and increases in average day rates across most of our vessel fleet. Average day rates increased by 11.4%, from $16,042 per day in the second quarter of 2023 to $17,865 in the third quarter of 2023. Active utilization increased from 79.4% in the second quarter of 2023 to 82.1% in the third quarter of 2023. The 37 vessels acquired from Solstad contributed $59.1 million to the increase in revenue. These vessels had utilization of 93.9% and average day rates of $19,377 in the third quarter.

Vessel operating costs for the quarters ended September 30, 2023 and June 30, 2023, were $164.2 million and $118.3 million, respectively. The 37 vessels acquired from Solstad contributed $35.1 million to the increase in vessel operating costs. The remaining increase is primarily due to higher personnel costs and higher repairs and maintenance on our vessels.

Depreciation and amortization expense for the quarters ended September 30, 2023 and June 30, 2023, were $57.7 million and $32.8 million, respectively, primarily due to the depreciation on the 37 vessels from Solstad and amortization of an increased deferred drydock balance.

General and administrative expenses for the quarters ended September 30, 2023 and June 30, 2023, were $21.0 million and $26.0 million, respectively. The decrease was primarily due to lower personnel related costs, despite a $1.0 million increase in one-time acquisition, restructuring and integration related costs.

We reported gains on asset dispositions, net totaling $0.9 million in the third quarter of 2023, primarily as a result of the sales of three vessels and other assets. We reported gains on asset dispositions, net totaling $1.4 million in the second quarter of 2023, primarily as a result of the sales of three vessels and other assets.

Interest expense for the quarters ended September 30, 2023 and June 30, 2023, was approximately $19.3 million and $4.7 million, respectively. The increase in interest expense is primarily due to the July 5, 2023, addition of $575.0 million in long term debt, bearing interest in the aggregate at approximately 10.0%, to fund the Solstad vessel acquisition.

Interest income and other, net for the quarters September 30, 2023 and June 30, 2023, was $0.6 million and $2.8 million, respectively. We had an increase in interest income in the third quarter associated with the investment of the $111.5 million in cash received from the exercise of Series A and B Warrants in July 2023. The higher interest income was partially offset by a $1.2 million charge resulting from a reduction in certain indemnification assets related to assumed tax liabilities acquired from SPO that were adjusted to reflect the expiration of the statute of limitations. This charge and the corresponding decrease in income tax expense resulted in no impact on net income. In addition, second quarter interest income and other, net included a $1.8 million settlement gain in connection with an agreement committing our pension plan to use a portion of its assets to purchase an annuity from an insurance company so as to transfer its liabilities.

During the quarters ended September 30, 2023 and June 30, 2023, we recognized foreign exchange losses of $2.1 million and $3.8 million, respectively, due to the weakening of the U.S. Dollar against other currencies in areas in which we operate.

The income tax expense for the three months ended September 30, 2023 was $9.3 million compared to an income tax expense of $11.3 million for the three months ending June 30, 2023. The tax expense for the three months ended September 30, 2023 is mainly attributable to taxes on our operations in foreign countries. Tax expense will vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax regimes.

### Consolidated Results – Nine Months Ended September 30, 2023 compared to September 30, 2022

Revenues for the nine months ended September 30, 2023 and 2022, were $707.3 million and $460.9 million, respectively. The $246.4 million increase in revenue is primarily due to the full nine month effect of the 49 vessels acquired from SPO in the second quarter of 2022; the third quarter of 2023 effect of the acquisition of 37 vessels from Solstad in July 2023; and increases in average day rates across most of our vessel fleet in 2023. Overall, we had 31 more average active vessels, calculated on a full nine- month basis, in the first nine months of 2023 than in the first nine months of 2022. Average day rates increased by 31.0%, from $12,449 per day in 2022 to $16,313 in 2023. Active utilization decreased from 83.0% in 2022 to 80.8% in 2023, primarily due to a heavy drydock schedule in 2023 and the movement of 22 vessels in 2023 between segments. The SPO vessels added $199.4 million to revenue in the nine months ended September 30, 2023, compared to $101.2 million in the nine months ended September 30, 2022. The vessels acquired from Solstad were part of our fleet for almost all of the third quarter of 2023 but not in our fleet in 2022. The Solstad vessels added $59.1 million to revenue in the nine months ended September 30, 2023.

Vessel operating costs for the nine months ended September 30, 2023 and 2022, were $398.0 million and $281.8 million, respectively. The increase is primarily due to the additional active vessels in our fleet from the SPO and Solstad acquisitions in the first nine months of 2023 as compared to the first nine months of 2022 and our continued recovery from the low vessel utilization levels caused by the pandemic and increased activity as higher crude oil prices and improved long-term industry outlook have resulted in more offshore investments from our customers.

Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022, were $121.2 million and $89.3 million, respectively. The increase is primarily due to higher depreciation expense from the additional vessels acquired and higher overall amortization due to higher drydock activity in 2023.

General and administrative expenses for the nine months ended September 30, 2023 and 2022, were $70.6 million and $73.3 million, respectively, as lower personnel related costs more than offset costs associated with the expansion of the Singapore and Dubai offices in connection with the SPO acquisition, bad debt expense and professional fees incurred in connection with pursuing Solstad acquisition financing options that were ultimately not utilized.

We reported gains on asset dispositions, net totaling $4.5 million in the nine months ended September 30, 2023, primarily as a result of the sales of 11 vessels and other assets. We reported losses on asset dispositions, net totaling $0.8 million in the nine months ended September 30, 2022, primarily as a result of the sales of ten vessels and other assets.

Long-lived asset impairment during the nine months ended September 30, 2022, was $0.7 million consisting of a $1.2 million of impairment expense related to obsolete marine service and vessel supplies and parts inventory partially offset by a $0.5 million credit related to recovery of impairment on a vessel reclassified from assets held for sale back to the active fleet. There was no long-lived asset impairment expense in the nine months ended September 30, 2023.

Interest expense for the nine months ended September 30, 2023 and 2022, was approximately $28.2 million and $12.9 million. The increase in interest expense is primarily due to the July 5, 2023, addition of $575.0 million in long term debt, bearing interest of approximately 10.0%, to fund the Solstad vessel acquisition.

Interest income and other, net for the nine months ended September 30, 2023 and 2022, was $3.5 million and $4.4 million, respectively. During the nine months ended September 30, 2023, we recognized a $1.2 million charge resulting from a reduction in certain indemnification assets related to assumed tax liabilities acquired from SPO that were adjusted to reflect the expiration of the statute of limitations. This charge and the corresponding decrease in income tax expense resulted in no impact on net income. We recognized a $1.8 million settlement gain in 2023 in connection with an agreement committing our pension plan to use a portion of its assets to purchase an annuity from an insurance company so as to transfer its liabilities. We also had an increase in interest income in 2023 associated with the investment of the $111.5 million in cash received from the exercise of Series A and B Warrants in July 2023. Interest income for 2022 was largely attributable to the $1.3 million bargain purchase gain on our acquisition of the remaining 51% of Sonatide, our joint venture in Angola of which we previously owned 49%, and $1.9 million in interest and other income related to a litigation settlement for one of our vessels.

In the nine months ended September 30, 2022, we recognized a $14.2 million loss to value the warrant liability at fair value on the date that we amended the SPO share purchase agreement to allow us to reclassify the warrants from liabilities to equity based on the difference in the Tidewater common stock price on amendment date and the acquisition date closing common stock price.

During the nine months ended September 30, 2023, we recognized foreign exchange losses of $3.6 million due to the strengthening of the U.S. Dollar against other currencies. During the nine months ended September 30, 2022, we recognized foreign exchange losses of $4.9 million.

The income tax expense for the nine months ended September 30, 2023, was $32.5 million compared to an income tax expense of $18.2 million for the nine months ending September 30, 2022. The tax expense for the nine months ended September 30, 2023 is mainly attributable to taxes on our operations in foreign countries. Tax expense will vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax regimes.

The following table compares vessel revenues and vessel operating costs by geographic segment for our owned and operated vessel fleet and the related percentage of vessel revenue for the periods indicated:

*(In Thousands)*

| Vessel revenues: | Three Months Ended September 30, 2023 |  | June 30, 2023 |  | Nine Months Ended September 30, 2023 |  | September 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $70,717 | 24% | $50,376 | 24% | $168,780 | 24% | $105,086 | 23% |
| Asia Pacific | 38,994 | 13% | 22,585 | 11% | 83,603 | 12% | 45,161 | 10% |
| Middle East | 34,685 | 12% | 31,856 | 15% | 97,303 | 14% | 79,800 | 17% |
| Europe/Mediterranean | 78,929 | 26% | 39,295 | 19% | 149,474 | 21% | 96,096 | 21% |
| West Africa | 73,650 | 25% | 66,211 | 31% | 199,318 | 29% | 130,155 | 29% |
| Total vessel revenues | $296,975 | 100% | $210,323 | 100% | $698,478 | 100% | $456,298 | 100% |
| Vessel operating costs: |  |  |  |  |  |  |  |  |
| Americas: |  |  |  |  |  |  |  |  |
| Crew costs | $26,848 | 38% | $18,033 | 36% | $62,283 | 37% | $40,281 | 38% |
| Repair and maintenance | 5,588 | 8% | 3,973 | 8% | 13,449 | 8% | 9,087 | 9% |
| Insurance | 476 | 1% | 479 | 1% | 1,365 | 1% | 1,029 | 1% |
| Fuel, lube and supplies | 4,386 | 6% | 2,549 | 5% | 9,934 | 6% | 7,268 | 7% |
| Other | 5,924 | 8% | 4,564 | 9% | 14,060 | 8% | 8,340 | 8% |
|  | $43,222 | 61% | $29,598 | 59% | $101,091 | 60% | $66,005 | 63% |
| Asia Pacific: |  |  |  |  |  |  |  |  |
| Crew costs | $12,390 | 32% | $7,062 | 31% | $26,763 | 32% | $19,557 | 43% |
| Repair and maintenance | 2,969 | 8% | 1,517 | 7% | 6,235 | 7% | 2,176 | 5% |
| Insurance | 183 | 0% | 219 | 1% | 525 | 1% | 333 | 1% |
| Fuel, lube and supplies | 909 | 2% | 1,521 | 7% | 4,060 | 5% | 2,840 | 6% |
| Other | 2,380 | 6% | 1,648 | 7% | 5,706 | 7% | 3,507 | 8% |
|  | $18,831 | 48% | $11,967 | 53% | $43,289 | 52% | $28,413 | 63% |
| Middle East |  |  |  |  |  |  |  |  |
| Crew costs | $13,914 | 40% | $13,170 | 41% | $39,700 | 41% | $32,472 | 41% |
| Repair and maintenance | 4,828 | 14% | 3,779 | 12% | 12,082 | 12% | 8,994 | 11% |
| Insurance | 385 | 1% | 465 | 1% | 1,283 | 1% | 1,028 | 1% |
| Fuel, lube and supplies | 3,142 | 9% | 3,470 | 11% | 9,482 | 10% | 7,540 | 10% |
| Other | 4,796 | 14% | 3,756 | 12% | 12,221 | 13% | 6,510 | 8% |
|  | $27,065 | 78% | $24,640 | 77% | $74,768 | 77% | $56,544 | 71% |
| Europe/Mediterranean: |  |  |  |  |  |  |  |  |
| Crew costs | $26,632 | 33% | $13,406 | 34% | $52,765 | 35% | $36,699 | 38% |
| Repair and maintenance | 5,342 | 7% | 2,900 | 7% | 10,948 | 7% | 6,172 | 7% |
| Insurance | 689 | 1% | 354 | 1% | 1,427 | 1% | 1,056 | 1% |
| Fuel, lube and supplies | 4,033 | 5% | 2,363 | 6% | 7,980 | 6% | 3,975 | 4% |
| Other | 5,376 | 7% | 2,292 | 6% | 10,039 | 7% | 6,664 | 7% |
|  | $42,072 | 53% | $21,315 | 54% | $83,159 | 56% | $54,566 | 57% |
| West Africa: |  |  |  |  |  |  |  |  |
| Crew costs | $17,502 | 24% | $16,336 | 25% | $50,425 | 25% | $43,656 | 34% |
| Repair and maintenance | 4,868 | 7% | 4,665 | 7% | 14,367 | 7% | 10,053 | 8% |
| Insurance | 626 | 1% | 651 | 1% | 1,932 | 1% | 1,292 | 1% |
| Fuel, lube and supplies | 5,300 | 7% | 4,055 | 6% | 13,827 | 7% | 9,265 | 7% |
| Other | 4,753 | 6% | 5,037 | 7% | 15,104 | 8% | 12,011 | 9% |
|  | $33,049 | 45% | $30,744 | 46% | $95,655 | 48% | $76,277 | 59% |
| Vessel operating costs: |  |  |  |  |  |  |  |  |
| Crew costs | $97,286 | 32% | $68,007 | 32% | $231,936 | 33% | $172,665 | 38% |
| Repair and maintenance | 23,595 | 8% | 16,834 | 8% | 57,081 | 8% | 36,482 | 8% |
| Insurance | 2,359 | 1% | 2,168 | 1% | 6,532 | 1% | 4,738 | 1% |
| Fuel, lube and supplies | 17,770 | 6% | 13,958 | 7% | 45,283 | 7% | 30,888 | 7% |
| Other | 23,229 | 8% | 17,297 | 8% | 57,130 | 8% | 37,032 | 8% |
| Total vessel operating costs | $164,239 | 55% | $118,264 | 56% | $397,962 | 57% | $281,805 | 62% |

30

The following table presents general and administrative expenses in our five geographic segments both individually and in total and the related general and administrative expenses as a percentage of the vessel revenues of each segment and in total for the periods indicated:

*(In Thousands)*

| Segment general and administrative expenses: | Three Months Ended September 30, 2023 |  | June 30, 2023 |  | Nine Months Ended September 30, 2023 |  | September 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $2,964 | 4% | $5,809 | 12% | $12,033 | 7% | $8,071 | 8% |
| Asia Pacific | 2,038 | 5% | 1,768 | 8% | 6,306 | 8% | 7,767 | 17% |
| Middle East | 1,909 | 6% | 2,508 | 8% | 6,725 | 7% | 6,630 | 8% |
| Europe/Mediterranean | 2,621 | 3% | 2,228 | 6% | 6,941 | 5% | 6,048 | 6% |
| West Africa | 2,096 | 3% | 2,180 | 3% | 7,129 | 4% | 7,608 | 6% |
| Total segment general and administrative expenses | $11,628 | 4% | $14,493 | 7% | $39,134 | 6% | $36,124 | 8% |

The following table presents segment and total depreciation and amortization expense and the related segment and total vessel depreciation and amortization expense as a percentage of segment and total vessel revenues for the periods indicated:

*(In Thousands)*

| Segment depreciation and amortization expense: | Three Months Ended September 30, 2023 |  | June 30, 2023 |  | Nine Months Ended September 30, 2023 |  | September 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $11,945 | 17% | $8,724 | 17% | $28,863 | 17% | $22,210 | 21% |
| Asia Pacific | 3,570 | 9% | 1,824 | 8% | 6,859 | 8% | 4,447 | 10% |
| Middle East | 6,854 | 20% | 6,365 | 20% | 18,954 | 19% | 18,211 | 23% |
| Europe/Mediterranean | 24,660 | 31% | 7,445 | 19% | 39,455 | 26% | 20,512 | 21% |
| West Africa | 10,113 | 14% | 7,813 | 12% | 25,447 | 13% | 21,463 | 16% |
| Total segment depreciation and amortization expense | $57,142 | 19% | $32,171 | 15% | $119,578 | 17% | $86,843 | 19% |

The following table compares operating income (loss) and other components of income (loss) and its related percentage of total revenue for the periods indicated:

*(In Thousands)*

| Vessel operating profit (loss): | Three Months Ended September 30, 2023 |  | June 30, 2023 |  | Nine Months Ended September 30, 2023 |  | September 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $12,586 | 4% | $6,245 | 3% | $26,793 | 4% | $8,800 | 2% |
| Asia Pacific | 14,555 | 5% | 7,026 | 3% | 27,149 | 4% | 4,534 | 1% |
| Middle East | (1,143) | 0% | (1,657) | (1)% | (3,144) | (1)% | (1,585) | 0% |
| Europe/Mediterranean | 9,576 | 3% | 8,307 | 4% | 19,919 | 3% | 14,970 | 3% |
| West Africa | 28,392 | 10% | 25,474 | 12% | 71,087 | 10% | 24,807 | 5% |
| Other operating profit | 806 | 0% | 4,265 | 2% | 5,844 | 1% | 3,204 | 1% |
|  | 64,772 | 22% | 49,660 | 23% | 147,648 | 21% | 54,730 | 12% |
| Corporate expenses | (9,961) | (3)% | (12,117) | (6)% | (33,011) | (5)% | (39,600) | (9)% |
| Gain (loss) on asset dispositions, net | 863 | 0% | 1,404 | 1% | 4,483 | 1% | (826) | 0% |
| Long-lived asset impairment and other | — | 0% | — | 0% | — | 0% | (714) | 0% |
| Operating income (loss) | $55,674 | 19% | $38,947 | 18% | $119,120 | 17% | $13,590 | 3% |

31

### Segment results for three months ended September 30, 2023 compared to June 30, 2023

**Americas Segment Operations.** Vessel revenues in the Americas segment increased 40.4%, or $20.3 million, during the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023. This increase is primarily the result of five additional average active vessel from the Solstad acquisition and a 15.9% increase in average day rates, rising from $20,269 in the second quarter to $23,495 in the third quarter. Average utilization increased from 85.4% to 86.3%. The vessels from the Solstad acquisition added $14.3 million in revenue.

Vessel operating profit for the Americas segment for the quarter ended September 30, 2023, was $12.6 million, compared to an $6.2 million operating profit for the quarter ended June 30, 2023. The increase in revenue was accompanied by a $2.8 million decrease in general and administrative expenses which were partially offset by a $13.6 million increase in operating expenses and a $3.2 million increase in depreciation and amortization. The decrease in general and administrative costs resulted from decreased bad debt expense related to a single customer that was recorded in the second quarter. We also incurred higher operating costs bringing this vessel which was chartered to this customer back to its home port. Otherwise, the operating expenses and depreciation and amortization expenses increased primarily due to the increase in active vessels primarily associated with the Solstad vessels.

**Asia Pacific Segment Operations.** Vessel revenues in the Asia Pacific segment increased 72.7%, or $16.4 million, during the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023. Average day rates increased 6.7%, rising from $24,250 per day in the second quarter of 2023 to $25,867 in the third quarter of 2023. Average active utilization for the segment increased from 72.4% to 91.3%. and we operated four more active vessels in the third quarter of 2023. The Solstad acquisition added four vessels and $7.3 million in revenue.

The Asia Pacific segment reported an operating profit of $14.6 million for the quarter ended September 30, 2023, compared to a $7.0 million operating profit for the quarter ended June 30, 2023. The increase in revenue was offset by a $6.9 million increase in operating expenses and a $1.7 million increase in depreciation and amortization expenses. The increase in operating expenses are mainly attributable to the additional vessels.

**Middle East Segment Operations.** Vessel revenues in the Middle East segment increased 8.9%, or $2.8 million, during the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023. Active vessels increased by one and average day rates increased slightly, rising from $10,449 per day in the second quarter of 2023 to $10,544 per day in the third quarter of 2023. Average active utilization for the segment increased from 76.0% to 79.8%. There were no additional Solstad vessels in the Middle East segment.

The Middle East segment reported an operating loss of $1.1 million for the quarter ended September 30, 2023, compared to an operating loss of $1.7 million for the quarter ended June 30, 2023. The increase in revenue was supplemented by a $0.6 million decrease in general and administrative costs and partially offset by a $2.4 million increase in operating costs primarily attributable to repairs and maintenance and a $0.5 million increase in depreciation and amortization attributable to higher drydock activity in 2023.

**Europe/Mediterranean Segment Operations.** Vessel revenues in the Europe/Mediterranean segment increased 100.9%, or $39.6 million, during the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023. This increase was primarily driven by the addition of 24 active vessels from the Solstad acquisition. Day rates increased from $18,990 in the second quarter of 2023 to $19,105 in the third quarter of 2023. Active utilization also increased from 85.7% to 88.8%. Vessels from the Solstad acquisition added $33.5 million in revenue.

The Europe/Mediterranean segment reported an operating profit of $9.6 million for the quarter ended September 30, 2023, compared to an operating profit of $8.3 million for the quarter ended June 30, 2023. The revenue increase was largely offset by $20.8 million in higher operating costs and $17.2 million in higher depreciation and amortization resulting primarily from the additional vessel count. General and administrative costs increased by $0.4 million due primarily to the Solstad acquisition.

**West Africa Segment Operations.** Vessel revenues in the West Africa segment increased 11.2%, or $7.4 million, during the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023. Average day rates increased 9.0% from $14,469 to $15,772, while active utilization decreased from 77.8% during the quarter ended June 30, 2023 to 73.9% during the quarter ended September 30, 2023. There were four more active vessels in the segment in the third quarter. The Solstad acquisition added three vessels and $3.9 million in revenue.

West Africa reported an operating profit of $28.4 million for the quarter ended September 30, 2023, compared to an operating profit of $25.5 million for the quarter ended June 30, 2023. The increase in operating profit is largely due to the increase in revenue offset by a $2.3 million increase in operating costs and $2.3 million in increased depreciation and amortization associated with the additional vessels.

### Segment results for nine months ended September 30, 2023 compared to September 30, 2022

**Americas Segment Operations.** Vessel revenues in the Americas segment increased 60.6%, or $63.7 million, during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. This increase is primarily the result of five additional active vessels and a 30.3% increase in average day rates largely due to demand recovery in the offshore vessel industry. Average utilization increased from 81.0% to 85.7%. The SPO acquisition added two active vessels in the Americas segment with 100.0% utilization and a $27,619 average day rate. The SPO vessels contributed $15.1 million in revenue in the nine months ended September 30, 2023, an increase of $12.0 million over 2022. The Solstad acquisition added six vessels, a $27,527 average day rate and 99.3% utilization beginning on July 5, 2023 which contributed $14.3 million in revenue for the nine months ended September 30, 2023.

Vessel operating profit for the Americas segment for the nine months ended September 30, 2023, was $26.8 million, compared to an $8.8 million operating profit for the nine months ended September 30, 2022. The increase in operating profit was largely due to the increase in revenue partially offset by a $35.1 million increase in operating expenses, largely associated with additional vessels, a $6.7 million increase in depreciation and amortization, resulting mainly from additional vessels and higher drydock activity in 2023, and a $4.0 million increase in general and administrative costs due largely to an increase in bad debt expense in 2023.

**Asia Pacific Segment Operations.** Vessel revenues in the Asia Pacific segment increased 85.1%, or $38.4 million, during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. Active vessels increased by two. Average day rates increased 61.5%, rising from $15,344 per day in the nine months ended September 30, 2022 to $24,783 in the nine months ended September 30, 2023. The SPO acquisition added 13 active vessels to the Asia Pacific fleet with 81.9% utilization and a $25,469 average day rate in 2023. The SPO vessels contributed $74.0 million in revenue for the nine months ended September 30, 2023, an increase of $35.4 million over 2022. The Solstad acquisition added four vessels, a $20,249 average day rate and 100.0% utilization beginning on July 5, 2023 which contributed $7.3 million in revenue for the nine months ended September 30, 2023.

The Asia Pacific segment reported an operating profit of $27.1 million for the nine months ended September 30, 2023, compared to an operating profit of $4.5 million for the nine months ended September 30, 2022. The increase in revenue was offset by $14.9 million in additional operating expenses and $2.4 million of additional depreciation and amortization expense, all resulting from the additional vessels. General and administrative expenses decreased by $1.5 million.

**Middle East Segment Operations.** Vessel revenues in the Middle East segment increased 21.9%, or $17.5 million, during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. Active vessels increased by five. Overall, active utilization for the nine months ended September 30, 2023 decreased from 82.5% to 79.4%, but average day rates increased 10.9%. The SPO acquisition added eight active vessels to the Middle East fleet with 64.2% utilization and an $11,407 average day rate. The SPO vessels contributed $15.2 million in revenue for the nine months ended September 30, 2023, an increase of $1.6 million over 2022. The Solstad acquisition added no vessels in 2023.

The Middle East segment reported an operating loss of $3.1 million for the nine months ended September 30, 2023, compared to an operating loss of $1.6 million for the nine months ended September 30, 2022 as the increase in revenue was offset by a $18.2 million increase in operating costs and a $0.7 million increase in depreciation and amortization. The increase in costs were primarily a result of the increase in active vessels.

**Europe/Mediterranean Segment Operations.** Vessel revenues in the Europe/Mediterranean segment increased 55.5%, or $53.4 million, during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The increased revenue was attributable to nine more active vessels combined with 19.7% higher average day rates. Active utilization decreased from 91.6% to 86.6%. The SPO acquisition added two active vessels to the Europe/Mediterranean fleet with 61.2% utilization and a $33,084 average day rate. The SPO vessels contributed $8.4 million in revenue for the nine months ended September 30, 2023, an increase of $1.3 million over 2022. The Solstad acquisition added 24 vessels, a $17,096 average day rate and 93.3% utilization beginning on July 5, 2023 which contributed $33.5 million in revenue for the nine months ended September 30, 2023.

The Europe/Mediterranean segment reported an operating profit of $19.9 million for the nine months ended September 30, 2023, compared to an operating profit of $15.0 million for the nine months ended September 30, 2022. The higher operating profit was due to the revenue increase offset by $28.6 million in higher operating costs, $18.9 million in higher depreciation and amortization and a $0.9 million increase in general and administrative expenses. The increases in expenses are primarily attributable to the Solstad vessels.

**West Africa Segment Operations.** Vessel revenues in the West Africa segment increased 53.1%, or $69.2 million, during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022. The West Africa active vessel fleet increased by ten vessels in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Average day rates increased 36.7% from $10,561 to $14,441, but active utilization decreased from 80.5% to 76.1%. The SPO acquisition added 23 active vessels to the West Africa fleet with 84.0% utilization and a $16,545 average day rate in 2023. The SPO vessels contributed $86.8 million in revenue for the nine months ended September 30, 2023, an increase of $47.9 million over 2022. The Solstad acquisition added three vessels, an $18,916 average day rate and 78.7% utilization beginning on July 5, 2023 which contributed $3.9 million in revenue for the nine months ended September 30, 2023.

West Africa reported an operating profit of $71.1 million for the nine months ended September 30, 2023, compared to an operating profit of $24.8 million for the nine months ended September 30, 2022. The increase in operating results is largely due to the increase in revenue which was partially offset by $19.4 million in higher operating costs primarily related to the increase in active vessels. In addition, depreciation and amortization increased by $4.0 million due largely to the increase in vessels and additional drydock activity in 2023. General and administrative expenses decreased by $0.5 million.

### Vessel Utilization and Average Day Rates by Segment

Vessel utilization is determined primarily by market conditions and to a lesser extent by drydocking requirements. Vessel day rates are determined by the demand created largely through the level of offshore exploration, field development and production spending by energy companies relative to the supply of offshore support vessels. Specifications of available equipment and the scope of service provided may also influence vessel day rates. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. As such, stacked vessels depress utilization rates because stacked vessels are considered available to work and are included in the calculation of utilization rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period.

Total vessel utilization is calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock). Active utilization is calculated on active vessels (which excludes vessels held for sale and stacked vessels). Average day rates are calculated based on total vessel days worked.

The following tables compare day-based utilization percentages, average day rates and average total, active and stacked vessels by segment for the periods indicated:

| SEGMENT STATISTICS: Americas fleet: | Three Months Ended September 30, 2023 | June 30, 2023 | Nine Months Ended September 30, 2023 | September 30, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Utilization | 84.1% | 82.8% | 83.1% | 69.1% |
| Active utilization | 86.3% | 85.4% | 85.7% | 81.0% |
| Average vessel day rates | $23,495 | $20,269 | $21,348 | $16,383 |
| Average total vessels | 38 | 33 | 35 | 34 |
| Average stacked vessels | (1) | (1) | (1) | (5) |
| Average active vessels | 37 | 32 | 34 | 29 |
| Asia Pacific fleet: |  |  |  |  |
| Utilization | 91.3% | 72.4% | 80.5% | 77.7% |
| Active utilization | 91.3% | 72.4% | 81.4% | 82.4% |
| Average vessel day rates | $25,867 | $24,250 | $24,783 | $15,344 |
| Average total vessels | 18 | 14 | 15 | 14 |
| Average stacked vessels | — | — | — | (1) |
| Average active vessels | 18 | 14 | 15 | 13 |
| Middle East fleet: |  |  |  |  |
| Utilization | 79.8% | 76.0% | 79.4% | 82.3% |
| Active utilization | 79.8% | 76.0% | 79.4% | 82.5% |
| Average vessel day rates | $10,544 | $10,449 | $10,224 | $9,216 |
| Average total vessels | 45 | 44 | 44 | 39 |
| Average stacked vessels | — | — | — | — |
| Average active vessels | 45 | 44 | 44 | 39 |
| Europe/Mediterranean fleet: |  |  |  |  |
| Utilization | 88.8% | 85.7% | 86.6% | 85.1% |
| Active utilization | 88.8% | 85.7% | 86.6% | 91.6% |
| Average vessel day rates | $19,105 | $18,990 | $18,233 | $15,233 |
| Average total vessels | 50 | 26 | 34 | 27 |
| Average stacked vessels | — | — | — | (2) |
| Average active vessels | 50 | 26 | 34 | 25 |
| West Africa fleet: |  |  |  |  |
| Utilization | 70.7% | 72.3% | 70.4% | 69.1% |
| Active utilization | 73.9% | 77.8% | 76.1% | 80.5% |
| Average vessel day rates | $15,772 | $14,469 | $14,441 | $10,561 |
| Average total vessels | 72 | 70 | 72 | 65 |
| Average stacked vessels | (3) | (5) | (6) | (9) |
| Average active vessels | 69 | 65 | 66 | 56 |
| Worldwide fleet: |  |  |  |  |
| Utilization | 80.5% | 76.9% | 78.1% | 75.1% |
| Active utilization | 82.1% | 79.4% | 80.8% | 83.0% |
| Average vessel day rates | $17,865 | $16,042 | $16,313 | $12,449 |
| Average total vessels | 223 | 187 | 200 | 179 |
| Average stacked vessels | (4) | (6) | (7) | (17) |
| Average active vessels | 219 | 181 | 193 | 162 |

36

Average active vessels exclude stacked vessels. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is ongoing. We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and they are no longer considered stacked when they are returned to active service, sold, or otherwise disposed. When economically practical marketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are included in the calculation of utilization statistics. We also include our assets held for sale in stacked vessels as they continue to incur stacking related costs. We had four (one held for sale) and five (two held for sale) stacked vessels at September 30, 2023 and June 30, 2023, respectively. The decrease in stacked vessels is attributable to vessel sales. Total stacking costs included in vessel operating costs for the three months ended September 30, 2023 and June 30, 2023, were $0.2 million and $0.1 million respectively.

### Vessel Dispositions

We seek opportunities to sell and/or responsibly recycle our older vessels when market conditions warrant and opportunities arise. The majority of our vessels are sold to buyers who do not compete with us in the offshore energy industry. Vessel sales during the first nine months of 2023 included seven vessels that were classified as assets held for sale and four vessels from the active fleet.

### Liquidity, Capital Resources and Other Matters

As of September 30, 2023, we had $282.1 million in cash and cash equivalents (including restricted cash), including amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences. Included in foreign subsidiary cash are balances held in U.S. dollars and foreign currencies that await repatriation due to various currency conversion and repatriation constraints and tax related matters, prior to the cash being made available for remittance to our domestic accounts. We currently intend that earnings by foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay third-party and intercompany debt of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the U. S. because cash generated from our domestic businesses and the repayment of intercompany receivables from foreign subsidiaries are currently deemed to be sufficient to fund the cash needs of our U.S. operations.

A key component of our growth strategy is expanding our business and fleets through acquisitions, joint ventures and other strategic transactions. We would expect to use net proceeds from any sale of our securities for general corporate purposes, including capital expenditures, investments, acquisitions, repayment or refinancing of indebtedness, and other business opportunities. In furtherance of this strategy and as discussed elsewhere, on July 5, 2023, we closed the Acquisition Agreement with Solstad pursuant to which we acquired 37 platform supply vessels for an aggregate adjusted cash purchase price of approximately $594.2 million. The purchase price was funded through a combination of cash on hand and net proceeds from both the Senior Secured Term Loan and from the Senior Unsecured Notes.

Our objective in financing our business is to maintain and preserve adequate financial resources and sufficient levels of liquidity. In addition to our cash on hand, we also have a $25.0 million revolving credit facility that matures in 2026. No amounts have been drawn on this facility. Working capital, which includes cash on hand, was $242.9 million at September 30, 2023. We have generated $59.5 million in net income and $57.5 million in cash flow from operating activities, which includes our interest payments and drydock costs, during the first nine months of 2023. With the closing of the Solstad vessel acquisition, we added substantially to our debt, including current maturities, drydock obligations and interest costs. We expect to generate significant operating income from the vessels acquired during the remainder of this year and in 2024. Our expectation is that the cash generated by our operations coupled with our cash on hand will be sufficient to fund all of our obligations.

As of September 30, 2023, we had $761.8 million of debt on our consolidated balance sheet, $102.4 million of which is due in the next twelve months. The Senior Secured Notes, the Senior Secured Term Loan and the revolving credit facility contain a combination of the following three financial covenants: (i) a minimum free liquidity test (as defined) equal to the greater of $20.0 million or 10% of net interest-bearing debt; (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries; and (iii) an interest coverage ratio of not less than 2:1. We are currently in compliance and anticipate being able to maintain ongoing compliance with these financial covenants.

We entered into Facility Agreements to finance a portion of the construction and delivery of three new vessels. The vessels were delivered to us through September 30, 2023, in exchange for approximately EUR11.2 million ($11.8 million) in financing. Each of the Facility Agreements bear interest at rates ranging from 2.7% to 6.0% and are payable in ten equal principal semi-annual installments, with the first Facility Agreement installment commencing in the fourth quarter of 2023. The Facility Agreements are secured by the vessels, guaranteed by Tidewater as parent guarantor and contain no financial covenants.

In addition, some of our Series A and B Warrants were exercised during July 2023 and we received approximately $111.5 million in cash and issued approximately 1.9 million shares of our common stock in exchange for these warrants.

### Operating Activities

Net cash provided by (used in) operating activities for the nine months ended September 30, 2023 and 2022 was $57.5 million and $(5.1) million, respectively.

Net cash provided by operations for the nine months ended September 30, 2023 reflects net income of $58.3 million, which includes non-cash depreciation and amortization of $121.2 million and net gains on asset dispositions of $4.5 million. Combined changes in operating assets and liabilities used $50.4 million in cash, and cash paid for deferred drydock and survey costs was $73.3 million.

Net cash used in operations for the nine months ended September 30, 2022 reflects a net loss of $32.4 million, which includes non-cash depreciation and amortization of $89.3 million and net losses on asset dispositions of $0.8 million. Combined changes in operating assets and liabilities used $39.2 million in cash, and cash paid for deferred drydock and survey costs was $43.9 million.

### Investing Activities

Net cash outflows in both periods for investing activities for the nine months ended September 30, 2023 and 2022, was $(607.8) million and $(24.0) million, respectively.

Net cash used in investing activities for the nine months ended September 30, 2023 reflects the payment of $594.2 million to acquire 37 vessels from Solstad and the receipt of $9.6 million primarily related to the sale of 11 vessels. Additions to properties and equipment were comprised of approximately $17.1 million in capitalized upgrades to existing vessels and equipment, $2.1 million in down payments made on four new vessels and $4.0 million primarily for other property and information technology equipment purchases and development work.

Net cash used in investing activities for the nine months ended September 30, 2022 reflects the payment of an aggregate $20.7 million to acquire SPO and the 51% equity interest in Sonatide (net of cash received) and the receipt of $8.5 million primarily related to the sale of ten vessels. Additions to properties and equipment were comprised of approximately $8.8 million in capitalized upgrades to existing vessels and equipment and $2.9 million for other property and Information Technology equipment purchases and development work.

### Financing Activities

Net cash provided by (used in) financing activities for the nine months ended September 30, 2023 and 2022 was $664.4 million and $(2.7) million, respectively.

Net cash provided by financing activities for the nine months ended September 30, 2023 included proceeds from long-term debt of $575.0 million, $111.5 million in proceeds from the conversion of warrants into common stock, a $1.4 million payment to acquire the non-controlling interest in a majority owned (now wholly owned) subsidiary, $14.8 million of debt issuance costs and $5.9 million in taxes paid on share-based awards.

Net cash used in financing activities for the nine months ended September 30, 2022 included $70.6 million in proceeds from the common stock offering, $70.6 million to redeem 4.1 million SPO acquisition warrants, $0.4 million of debt issuance costs and $2.3 million in taxes paid on share-based awards.

### Application of Critical Accounting Policies and Estimates

Our 2022 Annual Report filed with the SEC on February 27, 2023, describes the accounting policies that are critical to reporting our financial position and operating results and that require management’s most difficult, subjective or complex judgments. This Quarterly Report on Form 10-Q should be read in conjunction with the discussion contained in our 2022 Annual Report regarding these critical accounting policies.

### New Accounting Pronouncements

For information regarding the effect of new accounting pronouncements, see “Note (2) - Recently Issued or Adopted Accounting Pronouncements” of Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

## Market risk

As filed, 258 characters.

For quantitative and qualitative disclosures about market risk affecting us, see Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our 2022 Annual Report. Our exposure to market risk has not changed materially since December 31, 2022.

## Controls and procedures

As filed, 1,950 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed with the objective of ensuring that all information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (Exchange Act), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. However, any control system, no matter how well conceived and followed, can provide only reasonable, and not absolute, assurance that the objectives of the control system are met.

We evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2023.

### Changes in Internal Controls Over Financial Reporting

There has been no change in our internal controls over financial reporting that occurred during the quarter ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

## Risk factors

As filed, 5,103 characters.

In addition to the following risk factor, as of the date of this filing, the company and its operations continue to be subject to the risk factors previously discussed in the “Risk Factors” section contained in the 2022 Annual Report.

**Restrictive covenants in the Senior Secured Notes, Senior Unsecured Notes, Super Senior Revolver and Senior Secured Term Loan may restrict our ability to raise capital and pursue our business strategies, and may have significant consequences for our operations and future prospects.**

Our debt instruments, including our (i) 8.50% Senior Secured Notes due in 2026 (the “Senior Secured Notes”), (ii) 10.375% Senior Unsecured Notes due in 2028 (the “Senior Unsecured Notes” and collectively with the Senior Secured Notes, the “Senior Notes”), (iii) Super Senior Revolving Credit Facility Agreement with DNB Bank ASA, New York Branch, as Facility Agent, Nordic Trustee AS, as Security Trustee, and certain other institutions (the “Super Senior Revolver”), and (iv) Senior Secured Term Loan with DNB Bank ASA (the “Senior Secured Term Loan”), contain certain restrictive covenants. These covenants could have important consequences for our strategy and operations, including:

- limiting our ability to incur indebtedness to provide funds for investments or capital expenditures, acquisitions, debt service requirements, general corporate purposes, dividends, and to make other distributions or repurchase or redeem our stock;
- restricting us from undertaking consolidations, mergers, sales, or other dispositions of all or substantially all our assets; requiring us to dedicate a substantial portion of our cash flow from operations to make required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures, such as investing in new vessels, and other general business activities;
- requiring that we pledge substantial collateral, including vessels, which may limit flexibility in operating our business and restrict our ability to sell assets;
- limiting management’s flexibility in operating our business including planning for, or reacting to, changes in our business and the industry in which we operate;
- diminishing our ability to withstand a downturn in our business or worsening of macroeconomic or industry conditions; and
- placing us at a competitive disadvantage against less leveraged competitors.

The Senior Notes, Super Senior Revolver and the Senior Secured Term Loan also require us to comply with certain financial covenants, including maintenance of minimum liquidity and minimum consolidated equity.

We may be unable to meet these financial covenants or comply with these covenants, which could result in a default under the Senior Notes, Super Senior Revolver or Senior Secured Term Loan. If a default occurs and is continuing, the secured parties and the lenders under our debt agreements may elect to declare all borrowings thereunder outstanding, together with accrued interest and other fees, to be immediately due and payable. If we are unable to repay our indebtedness when due or declared due, the secured parties and the lenders under the Senior Notes, Super Senior Revolver and Senior Secured Term Loan will also have the right to foreclose on the collateral pledged to them, including the vessels, to secure the indebtedness. If such indebtedness were to be accelerated, our assets may not be sufficient to repay in full our secured indebtedness. Please refer to Note (9) - “Debt” and Note (3) - “Solstad Vessel Acquisition”) to our accompanying unaudited consolidated financial statements for additional information. As a result of the restrictive covenants under the Senior Notes, Super Senior Revolver and Senior Secured Term Loan, we may be prevented from taking advantage of business opportunities. In addition, the restrictions contained in the Senior Notes, Super Senior Revolver and Senior Secured Term Loan, including a substantial make whole premium applicable to a voluntary prepayment of obligations under the Senior Notes, may also limit our ability to plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans and adversely affect our ability to finance our operations, refinance, enter into acquisitions, execute our business strategy, make capital expenditures, effectively compete with companies that are not similarly restricted or engage in other business activities that would be in our interest.

In the future, we may also incur additional debt obligations that might subject us to additional and different restrictive covenants that could further affect our financial and operational flexibility. We cannot assure you that we will be granted waivers or amendments to these agreements if requested to obtain financial or operational flexibility or if for any reason we are unable to comply with these agreements, or that we will be able to refinance our debt on acceptable terms or at all. We may not be able to obtain debt or equity financing if and when needed with favorable terms, if at all.

Filed Nov 6, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-030405. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.