Tidewater Earnings Call NUGGETS: PSVs and Other Opportunities, Foreign Exchange Impact

On Wednesday, Tidewater, Inc. (NYSE:TDW) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

PSVs and Other Opportunities

Gregory Lewis – Credit Suisse: My first question is looking at the America’s utilization in the quarter. Could you sort of provide a little bit more colored detail into maybe why that trended down a little bit? Was that specific to any region in the Americas, whether it was the Gulf, Mexico, Brazil, other South America?

Quinn P. Fanning – EVP and CFO: I think I wouldn’t read too much into a trend there, but in the June quarter it primarily reflects contract gaps in the Brazilian market.

Gregory Lewis – Credit Suisse: Then you touched on the two PSVs that you were actually able to acquire from another operator. Could you talk a little bit more about that? What made that possible? Is that other additional opportunities like that may be the Tidewater is going to be able to take advantage of?

Jeffrey M. Platt – President and CEO: Gregory, we’re always looking to add to the fleet and certainly we do that with a mix of new-builds, Tidewater new construction projects. Our bias certainly would be to buy the right new equipment that others have already committed or are already in the marketplace, so we don’t add to the overall supply. But again, you have to have willing seller and a willing buyer. In this particular case, we were able to close the gap and I think make a deal that certainly made sense from Tidewater, that’s why we did it; but again, we’re always looking for that opportunity, but we have to again have the right valuation to make sense from our perspective.

Gregory Lewis – Credit Suisse: Can you provide any color on the seller, was that seller a traditional operator, was it someone that was may be in the market on spec?

Jeffrey M. Platt – President and CEO: No, I think, again, I don’t want to drill too much into, but it was obviously a good deal from their perspective or they wouldn’t have made it. But it was not necessarily a speculative owner. But again, I think it was a deal that made sense from both sides and really – I’ll speak from the Tidewater side, that’s why we did the deal.

Gregory Lewis – Credit Suisse: Then just one follow-up – ne final question on the new-builds that are going to be delivered over the next couple quarters. It looks like the bulk of those, if not all of them, are going to be being built in Asia. Actually, there’s – anyway, we were talking that majority of this that are being built in Asia. Can you sort of give us some guidance and where we expect the majority of those boats to end up, I mean if that – is it going to sort of be what it was last quarter or are the sort of going in the Latin American and West Africa, just sort of if you sort of give some thoughts about maybe where those boats are going to end up?

Jeffrey M. Platt – President and CEO: No, again I think, you know maybe we’re seeing the strength worldwide, okay and certainly the markets you referenced, the Latin American market and the African market both on the East Coast and West Coast are high potential for those vessels, but as is Australia. Australia markets are high as well. So, again, I can tell you that they are all going to sub-Saharan Africa or the African market and Latin America. No, I can’t. Those regions I think certainly will see some of it, but there will be other areas as well.

Quinn P. Fanning – EVP and CFO: The only thing (I will) mention Gregory is that the preponderance of our deliveries recently and in the near term are going to be deepwater PSVs and I would say it’s a general matter. There are multiple contract opportunities for those vessels and we really are just picking the best spots for our company.

Foreign Exchange Impact

David Smith – Johnson Rice: I want to make sure I understood the foreign exchange impact in the quarter correct. Did I hear correctly that the foreign exchange rates, devalued the revenue base by about 3% in the first quarter?

Quinn P. Fanning – EVP and CFO: $3 million.

David Smith – Johnson Rice: And that would be – that was offset on the cost line?

Quinn P. Fanning – EVP and CFO: Offset on both the operating expense line and G&A, but primarily on the operating expense line. If you net the positives and the negatives, it was essentially a push.

Quinn P. Fanning – EVP and CFO: So good natural hedge there. We’ve seen some really good growth in the average backlog per rig – for the global jackup fleet over the last year, year-and-a-half. I want to ask if you’re seeing anything different in the term duration of your new contracts this year relative to last year, particularly in the towing supply and supply fleet.

Jeffrey M. Platt – President and CEO: David, again, we have grown some of our Middle East opportunities and that’s with Saudi Aramco, those are longer-term than some of the shelf operators say, in West Africa. So, to that extent, we have, but again we haven’t seen a whole lot of change other than what you would expect when you have contracts with the state oil companies versus IOCs.

David Smith – Johnson Rice: Could you please remind me what might be a good rule of thumb to estimate the portion of your vessel contracts that roll each quarter?

Quinn P. Fanning – EVP and CFO: 15% to 20%.