Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Inc. First Quarter 2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn today's call over to Mr. West Gotcher, Vice President of Finance and Investor Relations. Sir, please go ahead.

Thank you, Brent. Good morning, everyone, and welcome to Tidewater's Q1 2023 Earnings Conference Call. I'm joined on the call this morning by our President and CEO, Quintin Kneen; our Chief Financial Officer, Sam Rubio; and our Chief Commercial Officer, Piers Middleton. During today's call, we'll make certain statements that are forward-looking and referring to our plans and expectations. There are risks and uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comment that we are making during today's conference call. Please refer to our most recent Form 10-K and 10-Q for additional details on these factors. These documents are available on our website at tdw.com or through the SEC at sec.gov. Information presented on this call speaks only as of today, May 9, 2023, therefore, you're advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures can be found on our website at tdw.com and is included in yesterday's press release. And now with that, I'll turn the call over to Quintin.

Thank you, West. Good morning, everyone, and welcome to the First Quarter 2023 Tidewater Earnings Conference Call. Before we get into the quarterly results, I want to start out the call by briefly updating you on our recently announced agreement to acquire 37 highest classification PSVs from Solstad Offshore and our assessment of the recent market volatility on the outlook for our industry. As we talked about on the call we hosted to announce the acquisition, we are acquiring the Solstad PSV fleet for $577 million. We mentioned that we plan to finance the purchase of the acquisition through a $325 million bank facility led by DNB, incremental new debt and cash on hand. We continue to monitor the commercial banking and debt capital alternatives to optimize the cost of capital and financial flexibility. We are confident in our ability to finance the acquisition and expect the acquisition to close by the end of the second quarter. The unique aspect of the recent market volatility has been that it hasn't had an impact on chartering activity or price discussions. Since 2024, anytime there has been a pullback in oil price or uncertainty in the global economy, it has been used to delay chartering decisions or, at the very least, to reset price talk. This has not happened this time, and we take it as a good sign that our customers and more importantly, our competitors realize that the world is short of all vessel types in all geographies. The first quarter was another positive period for the rapidly unfolding recovery in the offshore vessel market. The most important indicator of strength in our business, average day rate, continued its upward momentum during the first quarter with average day rates up $1,100 per day sequentially. Average day rates within the business…

Thank you, Quintin, and good morning, everyone. Last quarter, we talked about some of the availability constraints we saw strengthening the global OSV market during 2022 and that we expect those same constraints to follow through into 2023. And why with our modern larger fleet of PSVs and AHTS, we are well placed to take advantage of this continuing upturn in the market. These larger vessel classes of PSV and AHTS in particular, where the supply-demand balance is basically in parity with limited numbers of vessels expected to come back into the marketplace and where the barriers to entry are greater than in the smaller vessel classes. We're also still seeing limited dry docking space globally and significant long lead times for major equipment items which we believe will further exacerbate the already tight supply-demand balance in these larger vessel classes. This quarter, I will focus more on the demand side globally in the context of our regional performance in Q1 and what some of the demand drivers are expected to be going forward. Overall, the outlook for the offshore market remains positive with the sector well set for further improvement in 2023 and beyond. Expectations remain that offshore markets are set to tighten further in the coming months against the backdrop of continued demand side improvement and constraints in vessel supply, driven by rising investment by the offshore E&P operators who according to [indiscernible] are expected to lift CapEx in 2023 by another 14% to $183 billion compared to last year. On the rig side, according to Clarksons Research, jack-up demand is expected to grow by 6% in 2023, underpinned by various contract commencements in the Middle East and with floater demand projected to increase by 16% across 2023 on the back of elevated activity in the Golden Triangle…

Thank you, Piers, and good morning, everyone. At this time, I would like to take you through our financial results. In my discussion, we'll focus primarily on the quarter-to-quarter results of the first quarter of 2023 compared to the fourth quarter of 2022. As noted in our press release filed yesterday, we reported net income of $10.7 million for the quarter or $0.21 per share. In the first quarter of 2023, we generated revenue of $193.1 million, compared to $186.7 million in the fourth quarter of 2022, an increase of 3.4%. Active utilization decreased marginally from 82.5% in Q4 '22 to 80.6% in the current quarter. Average day rates increased significantly from $13,554 per day in the fourth quarter to $14,624 per day in the first quarter, which was the main driver for the increase in revenue, considering the decrease in utilization and 2 less operating days in the quarter. Vessel margin percentage for Q1 increased to 40% from 38% in Q4. Vessel margin in Q1 was $75.7 million, compared to $69.6 million in Q4 '22. Adjusted EBITDA was $59.1 million in Q1 '23 compared to $51.2 million in Q4 '22. This is a positive result as the first quarter is traditionally the weakest quarter in our fiscal year due mainly to the seasonal weakness in the North Sea. Vessel operating costs for the quarter were $115.5 million, which was the same amount in Q4. In the quarter, we saw an increase in R&M costs and fuel costs related to the mobilization of 13 vessels, which resulted in 289 mobilization days. This increase was offset by the decrease in crew salaries and travel costs as we continue to realize synergies as part of the SPO acquisition. Our vessel operating costs per marketing day was $7,078 in the first quarter, compared…

Thank you, Sam. In closing, I want to mention some of what we see for the remainder of 2023. For the full year 2023 for Legacy Tidewater, we reiterate our revenue guidance of $900 million and vessel operating margin of 50%. We are in a unique period where revenue will be accelerating each quarter of the year, outstripping the typical impact of calendar year seasonality. Relative to the first quarter, we anticipate revenue increasing approximately $25 million in the second quarter and $50 million in the third quarter. We have about 95% of the charter hire revenue already booked for the second quarter and about 75% for the third quarter, where we do have vessel availability, it is in the larger PSV and larger anchor handler classes and both classes we anticipate being very strong in the third quarter. Given the current strength of the market, tight vessel supply and our outlook for the business moving forward, we feel quite confident in our outlook for the remainder of 2023 and remain excited about the ability to continue this level of incremental improvement in 2024. And with that, Brent, we will open it up for questions.

[Operator Instructions] Your first question is from the line of Ina Golikja with Fearnley Securities.

Congratulation for very strong quarter, as you mentioned despite seasonality. I had a couple of questions regarding -- well, let's start with the 37 PSVs to be acquired from SOFF. You mentioned that you are looking at different options. And I was just wondering if you could just give a little more color on what you call acceptable financing.

So acceptable, of course, is a judgmental term, but we're looking for the best rates and the best flexibility we can find. We're actively seeking things in the Norwegian debt capital markets as well as in the U.S. debt capital markets, and we'll continue to evaluate those opportunities with the bilateral type of arrangements that are also available there. So compared to a year ago, I would say that the debt capital markets are much wider open than they were even when we did the 2021 refinancing on the Norwegian bond. So the debt capital markets look good. There's certainly been a little chaotic over the last few weeks as we've gone through this banking sector crisis. But I do feel that based on what we see out there today that we will find an acceptable financing solution for this particular transaction.

And I was wondering a little bit on, recently, you gave the guidance, you reiterated the guidance when it comes to the revenues and previously in the previous conference and previous calls, you have mentioned that you expect, say, an uptick in day rates year-on-year of around $3,000 per day. So I was wondering if keeping into account the SOFF PSV fleet to be acquired if you're still looking at that kind of yearly incremental day rates from, say, '23, '24?

Yes. So what we see is that we would acquire with the Solstad transaction is very consistent with what we are anticipating the all-in average day rates for the Tidewater business as we go through the remainder of 2023. So very consistent there. They are certainly locked up into '24 and some units at '25 to '26. And so as a result, I expect that the overall fleet will accelerate faster than those day rates that are already locked up. But by the time we get there, I'm really excited to renegotiate those contracts and roll them over in '24 and '25. So -- but yes, the -- as I look at '23, no change in the guidance. I see what has been locked up for Solstad is very consistent with what we anticipate doing for ourselves at Tidewater stand-alone. As we go into '24 and '25, the fleet that's not locked up will probably accelerate much faster than what's already booked for Solstad.

And as you mentioned, let's say, the strong market for Anchor handlers in North Sea. I was wondering if you could give me some indication of how much do you have available in spot in the North Sea, both Norwegian and U.K. side for the second and third quarter, just roughly.

All right. Well, this one, I'm going to hand over to Piers because he's got a lot more of a handle on that than I do. So let me hand it over to Piers for an update on what's available on North Sea.

Do you -- sorry, is that just related to the anchor handler?

Yes, mostly it is for anchor handler as we are expecting, which is another strong summer.

So the anchor handler we have in the North Sea are all on spot, so nothing is locked up. So they're available for the whole year. They have some work at the moment, but it's all on spot type work at the moment. So yes, hopefully, that answers the question.

Yes. And my last one was that we noticed you had a very big increase in terms of average day rate in Asia Pacific. I was just wondering if you can comment or give a little more color on that specific region.

So I take that again, Quintin?

Yes.

Yes. So primarily, that's driven a lot by vessels which we've had fixed into Australia and Taiwan as well. We have been -- and we saw a number of vessels also rolling off some older contracts. So we were able to reset the rates. It's just a timing piece, it all just came together at the right time. And we've also got much larger PSVs [ and anchors ] in the region. So we're able to start to globalize the rates so that we start seeing the same rates we're charging for vessels in Africa, for instance, we're starting to push those into other regions as well into Asia Pacific as well. So it also came together as we went into Q1.

Great. And the very last one for me is just if I got it correctly, you said that in the quarter, you have entered into 51 new contracts for 44 vessels.

Yes.

At an average rate of $21,000 per day.

Yes.

Right. And the leading edge rates that you're seeing around 28?

So for the composite of the fleet, the 21,000 is a very good round number for what is the leading edge for all 200 vessels. On the larger vessels, we're certainly topping out even over -- even into the high 30s, yes.

There are no further questions at this time. I will now turn today's call back over to Mr. Quintin Kneen.

Well, thank you, everyone, and we look forward to updating you again in August. Goodbye.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.