Tidewater Q1 2026 Earnings
A Note on the King of Offshore Support Vessels
(speaking of 2026) “At some point between the middle of the year and the third quarter, it’s going to take off because there is not enough supply and demand is increasing” - Mike Meade CEO/Founder M3 Marine
Tidewater
Tidewater reported strong Q1 2026 earnings and described a constructive market for offshore activity in the coming 1-3 years. In 2025 the business had some one time cash inflows from their delinquent payments from PEMEX in Mexico which they described in Q1 2025 as follows:
“Our primary customer in Mexico has an aggregate outstanding receivable balance of $35.1 million, of which $25.5 million is over 90 days past due, and which represents approximately 11.2% of our total trade and other receivables balance at March 31, 2025. The amounts are not in dispute but we have not had a payment from this customer since May 2024. We have not historically had, and we do not expect to have any material write-offs due to the collectability of these receivables.”.
What is far more interesting to us than the numbers they reported is the momentum toward an inflection in activity in the coming 18-24 months. It is clear looking through the back logs of companies like Technip or Subsea7 that activity is in the pipeline and is simply slow to move as these are multiyear, highly capital-intensive projects.
Rather than bore you with numbers that you can very easily read on your own there are a few notes I would hit on that are value add from my Q/A with the business post the earnings call.
Edge in Continued M&A: On the call Kneen discussed that having established a presence in every major market M&A would be more focused on establishing an edge or leveraging an edge within an existing market that Tidewater serves. We think this is interesting and opens the door for Tidewater to focus on their current markets and do deals based on a valuation first approach. They are in no rush to add vessels and really do think about acquiring vessels like investors with valuation front of mind.
Contract Duration: Tidewater operates in a fundamentally different way than its European/Greek counter parts. Tidewater focuses on maximum earnings power for its vessels and shareholders while many of the European players want long back log to be able to sell the vessel at some point in the future. This is a differentiator for Tidewater and shows up in how they contract vessels. OSV’s benefit from increasing offshore activity but as the market tightens they enjoy a shorter contract duration than their offshore drilling counterparties and can rachet up day rates by rolling off contracts quick and repricing. We think Tidewater is unlikely to tie up vessels on a 3-5 year basis until they have clear visibility on earning their cost of capital which is far from where we are at today.
Driller Activity: There have has been a meaningful uptick in contracting activity for UDWs both in existing extensions and new work. Tidewater is essentially agnostic to what day rate the drillers are getting and for this business what matters is the vessels are contracted and working. Below is a snap shot of the current UDW market out to 2031.
Size of Fleet: At our meeting with the company in Houston last fall we discussed the onshore infrastructure in place and how many vessels Tidewater could reasonably operate. The number thrown out was roughly 300 and anything above that would cause Tidewater to begin competing with its own vessels for contracts, a phenomenon they would prefer to avoid. We still think Harvey Gulf would be an attractive edition to the fleet.
Hornbeck & Helix Merger: We think the Helix acquisition of Hornbeck is a welcome thing that helps Tidewater in its efforts to role the industry up further. It is unclear how this might change Hornbecks competitive position give the difference in regional scale vs world scale that is fundamentally different in Hornbeck vs Helix. We estimate the transaction assumed roughly $28M per vessel for Hornbeck’s fleet which is an indication of the markets slow recognition that these values are worth significantly more their public market prices indicate.
New Build Commentary: Day rates remain meaningfully below new build incentives and as such, under 5% of the global fleet is on order and that is a gross figure, meaning, this does not account for the annual attrition older vessels are experiencing. In 2026 there are an expected 36 PSVs and 32 small ATHS being delivered and shipyard pricing is beginning to grind higher. I was estimated in 2025 that large PSVs and AHTS increased by 21% for new build pricing.
Cashflow/PEMEX Impact: Free cash flow was $34M for the quarter which is a function of the typically seasonality of the firm on top of some working capital releases in 2025 that did not recur this quarter. PEMEM in Mexico began repaying Tidewater in October of 2025 (the first time since summer 2024) in the amount of $7.4M but for the full year the PEMEX balance declined by roughly $40M according to management and substantiated by the “trade and other receivables” line on the cash flow statement.
“cash collections related to our largest customer in Mexico, whose overall receivable balance decreased by more than $40,000,000" - Tidewater CFO Q42025 Commentary
Conclusion: To wrap we are very happy with the way Tidewater is performing and think the next 18-24 months will be very good for all things offshore services. Tightness in supply, renewed balance sheets, and the clear demand for offshore development are massive tailwinds to Tidewater. The other piece worth noting is gas projects are exceptionally economic and for the first time in the offshore cycle are treated as such. In past cycles oil offshore was the only project that got attention or mattered - today, gas projects are economic and massively important to domestic energy security and provides an extra layer of demand that was missing in past cycles.