Tidewater Inc. — FY2021 Form 10-K
Business context and reporting period. Tidewater provides offshore marine support vessels and services to the global energy industry, including oil and gas operations and offshore wind. This filing covers the fiscal year ended December 31, 2021; it reports annual results, not standalone fourth-quarter results. Operations are reported across the Americas, Middle East/Asia Pacific, Europe/Mediterranean, and West Africa.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $371.0 million | $397.0 million |
| Operating loss | $95.0 million | $186.8 million |
| Net loss | $129.7 million | $196.7 million |
| Net loss attributable to Tidewater | $129.0 million; $3.14 per share | $196.2 million; $4.86 per share |
| Cash from operating activities | $15.0 million | $4.0 million |
| Cash from investing activities | $25.1 million | $23.4 million |
- Vessel revenue was $361.6 million, down 6.4%. Management attributed the decline mainly to 11 fewer average active vessels and day rates 2.2% lower; worldwide active utilization improved from 77.0% to 80.1%.
- Vessel operating costs fell to $261.8 million from $268.8 million, while total general and administrative expense declined to $68.5 million from $73.4 million. Vessel operating loss nevertheless widened to $46.4 million from $37.1 million.
- FY2021 included $15.6 million of long-lived asset impairments, $0.4 million of affiliate credit-loss impairment, and an $11.1 million loss on extinguishment of debt. FY2020 included $74.1 million of asset impairments and $53.0 million of affiliate credit-loss impairment.
- Year-end cash, cash equivalents, and restricted cash totaled $154.3 million. Current assets were $342.7 million and current liabilities $157.9 million. Some foreign cash was subject to conversion, repatriation, partner, or tax constraints.
- Year-end debt was $175.0 million face value, with $167.9 million reported as long-term debt net of discounts and issuance costs. In November 2021, Tidewater issued 8.5% secured notes due November 2026 and repaid its prior senior secured notes and Troms offshore debt. The $25 million revolving facility was undrawn; the company reported compliance with debt covenants.
- Shareholders’ equity was $701.8 million. No shares were repurchased and no dividends were declared in 2021.
Material changes versus the prior year
- Results improved from 2020’s larger net loss, partly reflecting lower impairment and affiliate credit-loss charges, reduced overhead, and lower interest costs. Revenue remained lower as the pandemic’s effects persisted.
- Operating cash flow increased to $15.0 million. Asset-sale proceeds were $34.0 million, against $9.0 million of additions to property and equipment; the company sold 19 vessels.
- Debt refinancing extended the major debt maturity to 2026, but introduced 8.5% fixed-rate notes and related collateral and covenant requirements.
- At year-end, Tidewater had 135 owned vessels excluding 18 classified as held for sale; 9 of the 135 were stacked and 126 were actively employed.
Outlook, commentary, and risks
- Management expected offshore activity to increase in 2022 versus 2021 as customers sought to restore production capacity. It anticipated positive operating cash flow, $5–$10 million of capital improvements, and approximately $14.5 million of proceeds from selling the 18 vessels held for sale. These are expectations, not guarantees.
- Management cited recovering oil and gas demand and prices, but noted that activity remained below pre-pandemic levels and that customer spending was also affected by shareholder-return priorities and ESG pressures. Tidewater is pursuing offshore wind opportunities and vessel emissions improvements.
- COVID-19-related contract cancellations or delays reduced 2021 revenue by less than 3%; associated additional operating costs were approximately $7 million. Continued pandemic, supply-chain, crew-mobility, and customer-spending effects remain risks.
- Key exposures include commodity-price volatility, offshore vessel oversupply and competitive pricing, customer concentration, contract termination or nonrenewal, vessel maintenance and impairment, international political and currency risks, cybersecurity, environmental and climate regulation, and access to capital. Chevron represented 15.7% and Saudi Aramco 11.8% of FY2021 revenue; the five largest customers represented 45.9%.
- In January 2022, Tidewater acquired its partner’s 51% interest in Sonatide for $11.2 million, making the Angolan joint venture wholly owned. In March 2022, it agreed to acquire Swire Pacific Offshore, subject to closing conditions, for $42 million cash and 8.1 million warrants; closing was expected in Q2 2022.
- A vessel was sold for $11.4 million to Jackson Offshore, whose COO is the son of Tidewater’s board chairman; Tidewater recognized a $4.3 million gain. Management said ordinary-course legal proceedings were not expected to have a material adverse effect.
- The financial statements received an unqualified audit opinion, and the auditor reported effective internal control over financial reporting. Uncertain tax positions were identified as a critical audit matter; gross unrecognized tax benefits were approximately $333.7 million, largely offset by tax attributes.
Important facts for investors to verify
- Whether improving commodity prices translate into higher vessel utilization and day rates, particularly in the Americas and West Africa.
- Whether forecast operating cash flow and vessel-sale proceeds materialize, and how much reported cash is readily available to meet domestic obligations.
- Debt covenant headroom, cash interest requirements, and the terms governing secured collateral and the undrawn revolver.
- Collection and impairment risk for affiliate balances, including the $49.0 million due from Sonatide and the outcome of the January 2022 ownership transition.
- Closing terms, financing, dilution, and integration implications of the proposed Swire Pacific Offshore acquisition.
- Potential effects of customer concentration, vessel impairments, environmental requirements, and the substantial valuation allowance and uncertain tax positions.