Tidewater Q2 Earnings
Let the Buyback Begin
Earnings Summary:
Revenue: $341.4M v $333.4M Q1 2025 (2%+)
Net Income: $72.9M v $42.7M Q1 2025 (70%+)
Free Cash Flow: $97.5M v $94.7M in Q1 2025 (3%+)
Average Day Rate: $23,166 v $22,303 in Q1 2025 (4%+) + 10% YoY
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Commentary
Tidewater reported stellar performance in the 2nd quarter of 2025, underpinned by massive earnings per share beat and the announcement of a $500M share repurchase program, representing 20% of the current market capitalization. Post the refinancing of the Nordic bonds, not only do we see buybacks beginning to ramp, but it seems increasingly likely that an acquisition in the America’s will be aggressively pursued over the next 12-24 months.
In the most recent quarter, the business bought back roughly 2% of the effective float for an average price of $36.80 per share. In effect, they are buying back their fleet which has a value of $40M per vessel, at roughly $8M per vessel or, $0.20 on the dollar. In the meantime, the free cash flow generative ability of the underlying fleet continues to increase, allowing for a continued reduction of the float.
The sell off in Tidewater stock is misunderstood by the market for a number of reasons. The first issue was passive capital bidding Tidewater over $100 too quickly as the latent earnings power manifested and it was added to the S&P small cap index. When that happened that index was forced to buy 6M shares of the stock which equaled nearly 12% of the float at the time. As that happened, earnings continued to get better and retail and passive capital bid Tidewater stock further that it ought to have gone at that time. The second development was the temporary lull in offshore project capex as project delays from raw material shortages plagued the industry. Many sold the stock thinking that the cycle for OSVs had ended. Instead, what happened was turbines, compressors, turrets, and flex pipes became harder to come by for the build out of Floating Production Storage & Offloading (FPSO) capacity.