tdw20200930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 1-6311

Tidewater Inc.

(Exact name of registrant as specified in its charter)

Delaware	72-0487776
(State of incorporation)	(I.R.S. Employer Identification No.)

6002 Rogerdale Road, Suite 600

Houston, Texas 77072

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (713) 470-5300

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	TDW	New York Stock Exchange
Series A Warrants to purchase shares of common stock	TDW.WS.A	New York Stock Exchange
Series B Warrants to purchase shares of common stock	TDW.WS.B	New York Stock Exchange
Warrants to purchase shares of common stock	TDW.WS	NYSE American
Preferred stock purchase rights	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Emerging Growth Company ☐

Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

40,851,226 shares of Tidewater Inc. common stock $0.001 par value per share were outstanding on April 30, 2021.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TIDEWATER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and par value data)

	March 31,			December 31,
ASSETS	2021			2020
Current assets:
Cash and cash equivalents	$	131,858		$	149,933
Restricted cash		9,061			2,079
Trade and other receivables, less allowance for credit losses of $2,136 and $1,516 at March 31, 2021 and December 31, 2020, respectively		99,865			112,623
Due from affiliate less allowance for credit losses of $71,595 and $71,800 at March 31, 2021 and December 31, 2020, respectively		62,474			62,050
Marine operating supplies		15,676			15,876
Assets held for sale		31,214			34,396
Prepaid expenses and other current assets		13,594			11,692
Total current assets		363,742			388,649
Net properties and equipment		754,707			780,318
Deferred drydocking and survey costs		46,648			56,468
Other assets		23,833			25,742
Total assets		1,188,930			1,251,177

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	14,622		$	16,981
Accrued expenses		48,466			52,422
Due to affiliates		56,356			53,194
Current portion of long-term debt		18,201			27,797
Other current liabilities		35,003			32,785
Total current liabilities		172,648			183,179
Long-term debt		148,337			164,934
Other liabilities		79,234			79,792

Commitments and contingencies

Equity:
Common stock of $0.001 par value, 125,000,000 shares authorized, 40,731,777 and 40,704,984 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		41			41
Additional paid-in capital		1,372,846			1,371,809
Accumulated deficit		(584,246	)		(548,931	)
Accumulated other comprehensive loss		(875	)		(804	)
Total stockholders’ equity		787,766			822,115
Noncontrolling interests		945			1,157
Total equity		788,711			823,272
Total liabilities and equity	$	1,188,930		$	1,251,177

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended
	March 31, 2021			March 31, 2020
Revenues:
Vessel revenues	$	80,993		$	111,974
Other operating revenues		2,511			4,394
		83,504			116,368
Costs and expenses:
Vessel operating costs		61,020			78,825
Costs of other operating revenues		1,067			2,673
General and administrative		16,043			21,420
Depreciation and amortization		29,727			27,107
Long-lived asset impairments		—			10,207
(Gain) loss on asset dispositions, net		1,948			(5,331	)
		109,805			134,901
Operating loss		(26,301	)		(18,533	)
Other income (expense):
Foreign exchange gain (loss)		(850	)		864
Equity in net losses of unconsolidated companies		(1,849	)		—
Interest income and other, net		23			116
Interest and other debt costs, net		(4,541	)		(6,142	)
		(7,217	)		(5,162	)
Loss before income taxes		(33,518	)		(23,695	)
Income tax (benefit) expense		2,009			(5,171	)
Net loss	$	(35,527	)	$	(18,524	)
Net loss attributable to noncontrolling interests		(212	)		(79	)
Net loss attributable to Tidewater Inc.	$	(35,315	)	$	(18,445	)
Basic loss per common share	$	(0.87	)	$	(0.46	)
Diluted loss per common share	$	(0.87	)	$	(0.46	)
Weighted average common shares outstanding		40,716			40,101
Adjusted weighted average common shares		40,716			40,101

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

	Three Months Ended
	March 31, 2021			March 31, 2020
Net loss	$	(35,527	)	$	(18,524	)
Other comprehensive income:
Change in pension plan and supplemental pension plan liability, net of tax of $0 and $0, respectively		(71	)		369
Total comprehensive loss	$	(35,598	)	$	(18,155	)

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months			Three Months
	Ended			Ended
	March 31, 2021			March 31, 2020
Operating activities:
Net loss	$	(35,527	)	$	(18,524	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		18,470			17,285
Amortization of deferred drydocking and survey costs		11,257			9,822
Amortization of debt premium and discounts		1,108			675
Provision for deferred income taxes		30			—
(Gain) loss on asset dispositions, net		1,948			(5,331	)
Loss on debt extinguishment		59			—
Long-lived asset impairments		—			10,207
Stock-based compensation expense		1,172			1,335
Changes in assets and liabilities, net:
Trade and other receivables		12,758			(9,438	)
Changes in due to/from affiliate, net		2,738			(2,405	)
Accounts payable		(2,359	)		3,210
Accrued expenses		(4,270	)		(1,146	)
Deferred drydocking and survey costs		(2,722	)		(24,867	)
Other, net		1,054			(8,348	)
Net cash provided by (used in) operating activities		5,716			(27,525	)
Cash flows from investing activities:
Proceeds from sales of assets		10,983			9,452
Additions to properties and equipment		(1,196	)		(2,449	)
Net cash provided by investing activities		9,787			7,003
Cash flows from financing activities:
Principal payments on long-term debt		(26,414	)		(2,600	)
Debt modification costs		(725	)		—
Debt extinguishment premium		(59	)		—
Tax on share-based awards		(135	)		(531	)
Net cash used in financing activities		(27,333	)		(3,131	)
Net change in cash, cash equivalents and restricted cash		(11,830	)		(23,653	)
Cash, cash equivalents and restricted cash at beginning of period		155,225			227,608
Cash, cash equivalents and restricted cash at end of period	$	143,395		$	203,955
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	3,746		$	5,442
Income taxes	$	2,535		$	2,550

Cash, cash equivalents and restricted cash at March 31, 2021 includes $2.5 million in long-term restricted cash, which is included in other assets in our consolidated balance sheet.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

TIDEWATER INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

	Three Months Ended
								Accumulated
			Additional					other			Non
	Common		paid-in		Accumulated			comprehensive			controlling
	stock		capital		deficit			income (loss)			interest			Total
Balance at December 31, 2020	$	41		1,371,809		(548,931	)		(804	)		1,157			823,272
Total comprehensive loss		—		—		(35,315	)		(71	)		(212	)		(35,598	)
Amortization of stock awards		—		1,037		—			—			—			1,037
Balance at March 31, 2021	$	41		1,372,846		(584,246	)		(875	)		945			788,711

Balance at December 31, 2019	$	40		1,367,521		(352,526	)		(236	)		1,611			1,016,410
Total comprehensive loss		—		—		(18,445	)		369			(79	)		(18,155	)
Adoption of credit loss accounting standard		—		—		(163	)		—			—			(163	)
Amortization of stock awards		—		804		—			—			—			804
Balance at March 31, 2020	$	40		1,368,325		(371,134	)		133			1,532			998,896

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

(1)

INTERIM FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements for the interim periods presented herein have been prepared in conformity with United States generally accepted accounting principles and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the unaudited condensed consolidated financial statements at the dates and for the periods indicated as required by Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (SEC). Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021.

The unaudited condensed consolidated financial statements include the accounts of Tidewater Inc. and its subsidiaries. Intercompany balances and transactions are eliminated in consolidation. We use the equity method to account for equity investments over which we exercise significant influence but do not exercise control and are not the primary beneficiary. Unless otherwise specified, all per share information included in this document is on a diluted earnings per share basis.

(2)

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance to simplify the accounting for income taxes. The guidance is effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. We adopted this standard on January 1, 2021 and it did not have a material impact on our consolidated financial statements and related disclosures.

In August 2018 the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General, which modifies the disclosure requirements for employers that sponsor defined benefit plans or other postretirement plans. This ASU removes certain disclosures that are no longer considered cost beneficial, clarifies the specific requirements of certain other disclosures, and adds disclosure requirements identified as relevant. The guidance is effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. We adopted this standard on January 1, 2021 and it did not have a material impact on our related disclosures.

(3)

ALLOWANCE FOR CREDIT LOSSES

Expected credit losses are recognized on the initial recognition of our trade accounts receivable and contract assets. In each subsequent reporting period, even if a loss has not yet been incurred, credit losses are recognized based on the history of credit losses and current conditions, as well as reasonable and supportable forecasts affecting collectability. We developed an expected credit loss model applicable to our trade accounts receivable and contract assets that considers our historical performance and the economic environment, as well as the credit risk and its expected development for each segmented group of customers that share similar risk characteristics. It is our practice to write off receivables when all legal options for collection have been exhausted.

Activity in the allowance for credit losses for the three months ended March 31, 2021 is as follows:

	Trade			Due
	and Other			from
(In thousands)	Receivables			Affiliate
Balance at January 1, 2021	$	1,516		$	71,800
Current period provision for expected credit losses		709			—
Write offs		(89	)		—
Other		—			(205	)
Balance at March 31, 2021	$	2,136		$	71,595

(4)

REVENUE RECOGNITION

Refer to Note (13) for the amount of revenue by segment and in total for the worldwide fleet.

Contract Balances

At March 31, 2021, we had $2.0 million and $4.3 million of deferred mobilization costs included within prepaid expenses and other current assets and other assets, respectively.

At March 31, 2021, we have $1.2 million of deferred mobilization revenue, included within other current liabilities, related to unsatisfied performance obligations which will be recognized during the remainder of 2021 and 2022.

(5)

STOCKHOLDERS' EQUITY AND DILUTIVE EQUITY INSTRUMENTS

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) (OCI) by component, net of tax, for the three months ended March 31, 2021 and 2020 are as follows:

	Three Months Ended
	March 31,			March 31,
(In thousands)	2021			2020
Balance at December 31, 2020 and 2019	$	(804	)	$	(236	)
Pension benefits recognized in OCI		(71	)		369
Balance at March 31, 2021 and 2020	$	(875	)	$	133

Dilutive Equity Instruments

We had 3,171,497 and 2,133,439 incremental "in-the-money" warrants, restricted stock units and stock options at March 31, 2021 and 2020, respectively, which are as follows:

Total shares outstanding including warrants and restricted stock units	March 31, 2021		March 31, 2020
Common shares outstanding		40,731,777		40,259,917
New creditor warrants (strike price $0.001 per common share)		657,203		821,308
GulfMark creditor warrants (strike price $0.01 per common share)		815,575		952,154
Restricted stock units and stock options		1,698,719		359,977
Total		43,903,274		42,393,356

We also had 5,923,399 shares of “out-of-the-money” warrants outstanding at both March 31, 2021 and 2020. Included in these “out-of-the-money” warrants are Series A Warrants, Series B Warrants and GLF Equity Warrants which have exercise prices of $57.06, $62.28, and $100.00, respectively. No warrants or restricted stock units, whether in the money or out of the money, are included in our loss per share calculations because the effect of such inclusion is antidilutive.

(6)

INCOME TAXES

We use a discrete effective tax rate method to calculate taxes for interim periods instead of applying the annual effective tax rate to an estimate of the full fiscal year due to the level of volatility and unpredictability of earnings in our industry, both overall and by jurisdiction.

Income tax expense for the quarter ended March 31, 2021, reflects tax liabilities in various jurisdictions that are either based on revenue (deemed profit regimes) or pre-tax profits.

The tax liabilities for uncertain tax positions are primarily attributable to permanent establishment issues related to a foreign joint venture, subpart F income inclusions and withholding taxes on foreign services. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.

As of December 31, 2020, our balance sheet reflected approximately $137.0 million of net deferred tax assets prior to a valuation allowance analysis, with a valuation allowance of $140.4 million. As of March 31, 2021, we had net deferred tax assets of approximately $142.6 million prior to a valuation allowance analysis of $146.0 million.

Management assesses all available positive and negative evidence to permit use of existing deferred tax assets.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act includes several significant business tax provisions, that are available to the Company, that, among other things, would allow businesses to carry back net operating losses arising after 2017 to the five prior tax years. Considering the available carryback, in the second quarter of 2020, we recorded an account receivable tax benefit totaling $6.9 million related to the realization of net operating loss deferred tax assets on which a valuation allowance was previously recorded. We collected this receivable in the first quarter of 2021.

With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to 2014. We are subject to ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position, results of operations, or cash flows.

(7)

AFFILIATES BALANCES

We maintained the following balances with our unconsolidated affiliates:

(In thousands)	March 31, 2021		December 31, 2020
Due from affiliates:
Angolan joint venture (Sonatide)	$	41,843	$	41,623
Nigeria joint venture (DTDW)		20,631		20,427
		62,474		62,050
Due to affiliates:
Sonatide	$	35,725	$	32,767
DTDW		20,631		20,427
		56,356		53,194
Net due from affiliates	$	6,118	$	8,856

Amounts due from Sonatide

Amounts due from Sonatide represent cash received by Sonatide from customers and due to us, amounts due from customers that are expected to be remitted to us by Sonatide and costs incurred by us on behalf of Sonatide. The following table displays the activity in the due from affiliate account related to Sonatide for the period indicated:

	Three Months
	Ended
(In thousands)	March 31, 2021
Due from Sonatide at December 31, 2020	$	41,623
Revenue earned by the company through Sonatide		8,695
Less amounts received from Sonatide		(8,162	)
Other		(313	)
Total due from Sonatide at March 31, 2021	$	41,843

The amounts due from Sonatide are denominated in U.S. dollars; however, the underlying third-party customer payments to Sonatide were satisfied, in part, in Angolan kwanzas. In late 2019, we were informed that, as part of a broad privatization program, Sonangol, our partner in Sonatide, intends to seek to divest itself from the Sonatide joint venture.

After offsetting the amounts due to Sonatide, the net amount due from Sonatide at March 31, 2021 was approximately $6.1 million. Sonatide had approximately $9.5 million of cash on hand (approximately $1.0 million denominated in Angolan kwanzas) at March 31, 2021 plus approximately $9.2 million of net trade accounts receivable to satisfy the net due from Sonatide. Given prior discussions with our partner regarding how the net losses from the devaluation of certain Angolan kwanza denominated accounts should be shared, we continue to evaluate our net due from Sonatide balance for possible additional impairment in future periods based in part on available liquidity held by Sonatide.

Amounts due to Sonatide

Amounts due to Sonatide represent commissions payable and other costs paid by Sonatide on our behalf. The following table displays the activity in the due to affiliate account related to Sonatide for the period indicated:

	Three Months
	Ended
(In thousands)	March 31, 2021
Due to Sonatide at December 31, 2020	$	32,767
Plus additional commissions payable to Sonatide		814
Plus amounts paid by Sonatide on behalf of the company		2,089
Other		55
Total due to Sonatide at March 31, 2021	$	35,725

Company operations in Angola

Vessel revenues generated by our Angolan operations, percent of consolidated vessel revenues, average number of company owned vessels and average number of stacked company owned vessels of our Angolan operations for the periods indicated were as follows:

	Three Months Ended
	March 31, 2021			March 31, 2020
Revenues of Angolan operations (in thousands)	$	9,292		$	12,137
Percent of consolidated vessel revenues		11	%		11	%
Number of company owned vessels in Angola		22			28
Number of stacked company owned vessels in Angola		6			11

Amounts due from DTDW

We own 40% of DTDW in Nigeria. Our partner, who owns 60%, is a Nigerian national. DTDW owns one offshore service vessel and has long-term debt of $4.7 million which is secured by the vessel and guarantees from the DTDW partners (in proportion to their ownership interests). We also, from time to time, operate company owned vessels in Nigeria for which our partner receives a commission. As of March 31, 2021, we had no company owned vessels operating in Nigeria and the DTDW owned vessel was not employed. As a result, the near-term cash flow projections indicate that DTDW does not have sufficient funds to meet its obligations to us or to the holder of its long-term debt. Based on current situations, operations in Nigeria have been severely impacted and the scope of our activity is winding down. We have created a fully reserved position in our consolidated balance sheet to account for our expected liabilities related to the debt guarantee and certain obligations of the joint venture. On April 22, 2021 we paid approximately $2.0 million which represents our portion of the joint venture debt guarantee.

(8)

EMPLOYEE BENEFIT PLANS

U.S. Defined Benefit Pension Plan

We have a defined benefit pension plan (pension plan) that covers certain U.S. citizen employees and other employees who are permanent residents of the United States. The pension plan was frozen during 2010. We have not made contributions to the pension plan since 2019. Actuarial valuations are performed annually and an assessment of the future pension obligations and market value of the assets will determine if contributions are made in the future.

Supplemental Executive Retirement Plan

We also support a non-contributory and non-qualified defined benefit supplemental executive retirement plan (supplemental plan) which was closed to new participants during 2010, that provided pension benefits to certain employees in excess of those allowed under our tax-qualified pension plan. We contributed $0.4 million during each of the three months ended March 31, 2021 and 2020, respectively. We expect to contribute $1.2 million to the supplemental plan during the remainder of 2021. Our obligations under the supplemental plan were $22.8 million for both March 31, 2021 and December 31, 2020, and are included in “accrued expenses” and “other liabilities” in the consolidated balance sheet.

Net Periodic Benefit Costs

The net periodic benefit cost for our defined benefit pension plans and supplemental plan (referred to collectively as “Pension Benefits”) is comprised of the following components:

	Three Months Ended
(In thousands)	March 31, 2021			March 31, 2020
Pension Benefits:
Service cost	$	—		$	40
Interest cost		543			225
Expected return on plan assets		(543	)		(36	)
Administrative expenses		—			23
Settlement loss		—			508
Amortization of net actuarial losses		36			(44	)
Net periodic pension cost	$	36		$	716

(9)

DEBT

The following is a summary of all debt outstanding:

	March 31,			December 31,
(In thousands)	2021			2020
Secured notes:
8.00% Senior secured notes due August 2022 (A) (B) (C)	$	135,210		$	147,049
Troms Offshore borrowings (D):
NOK denominated notes due May 2024		5,981			5,954
NOK denominated notes due January 2026		7,339			14,559
USD denominated notes due January 2027		7,513			14,744
USD denominated notes due April 2027		15,669			15,669
	$	171,712		$	197,975
Debt premiums and discounts, net		(5,174	)		(5,244	)
Less: Current portion of long-term debt		(18,201	)		(27,797	)
Total long-term debt	$	148,337		$	164,934

	(A)	As of March 31, 2021 and December 31, 2020 the fair value (Level 2) of the Secured Notes was $134.2 million and $141.4 million, respectively.
	(B)	The $9.1 million restricted cash on the balance sheet at March 31, 2021, represents approximately 65% of net proceeds from asset dispositions since the date of the last tender offer and is restricted by the terms of the Indenture.
	(C)	During the three months ended March 31, 2021, we repurchased $11.8 million of the Secured Notes at a premium of $0.1 million in open market transactions.
	(D)	We pay principal and interest on these notes semi-annually. As of March 31, 2021 and December 31, 2020, the aggregate fair value (Level 2) of the Troms Offshore borrowings was $36.3 million and $51.6 million, respectively. The weighted average interest rate of the Troms Offshore borrowings as of March 31, 2021 was 5.0%.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions, one or more additional offers, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our

SEC Form 10-Q filed by Tidewater Inc.