TDW

Quarter's highlights: Revenue and gross margin ahead of expectations. Revenue driven by higher utilization and stronger day rates. Gross margin up slightly. Operation Epic Fury had no disruption to business initially, with vessels in Middle East operating normally. Utilization and revenue in first quarter above forecast, but saw higher costs like crew hazard pay, insurance, and fuel. Announced acquisition of Wilson & Sons UltraTug Offshore for $500 million, started pre-integration. First quarter generated $34 million of free cash flow. OSV market showed continued improvement, long-term outlook strong. Europe North Sea OSV spot market strengthened, AHST sector supply constraints drive rates higher. Africa had good Q1 with increased utilization, expected slowdown in Q2 but pickup from Q3. Middle East saw little disruption to vessel activity, but low tendering activity near term. Americas看好巴西长期前景, Asia Pacific key drivers of demand in current quarter with contracts for drilling and EPCI activity.

Maintaining full year 2026 revenue guidance of $1.43 to $1.48 billion and gross margin range of 49% to 51%. Guidance assumes closing of Wilson's acquisition at end of second quarter. Second quarter revenue expected to be roughly flat with first quarter, but gross margin to decline by about 5 percentage points due to cost increases from Operation Epic Fury. Forecast assumes normalization of cost frictions from Middle East conflict by third quarter of 2026. Full-year guidance maintained despite Middle East conflict impact, with potential for uplift depending on drilling activity pickup.

In the first quarter, revenue was $326.2 million. Gross margin was just under 49%, up slightly quarter over quarter and over three percentage points above internal plan. Utilization benefited from strong uptime. Regionally, consolidated average day rates were 1% higher versus Q4, led by Europe and Mediterranean day rates improving by 9%, and APAC segment increasing by 7%. Total revenues were 3% lower compared to the fourth quarter, with decreases in the Americas, Africa, and Middle East, partially offset by increases in APEC in Europe and Mediterranean regions. Gross margin increased by 4 percentage points in Africa, 3 percentage points in the APEC region, and 1 percentage point in the Middle East, while Europe and Mediterranean regions saw a decrease of 2 percentage points, and the Americas declined by 4 percentage points.

Ongoing Middle East conflict could continue to impact costs such as crew hazard pay, insurance, and fuel. Unanticipated downtime due to unplanned maintenance and incremental time spent on dry docks could affect backlog revenue. Commodity price increases could lead to higher operating costs. Low tendering activity in the near term in the Middle East due to elevated risk.

Q: Ben Summers of BTIG asked about anchor handler market tightness in North Sea and global impact.

A: Piers said it's a regional development in North Sea with spot market driving noise elsewhere, positive sign for largest classes of anchor handlers.

Q: Josh Jane of Daniel Energy Partners asked about dry dock schedule and Far East markets.

A: Piers said they plan dry docks over five-year period, might move one or two, and Pierce said Far East markets like Indonesia and Malaysia are positive with energy security driving investment.

Q: Jim Rolison of Raymond James asked about customer conversations on day rates and M&A pricing.

A: Quinton said building activity gives confidence in pushing day rates later, and M&A pricing not seeing real movements yet but industry improvement would affect.

Q: Don Christ of Johnson Rice asked about Far East markets and stock buybacks.

A: Pierce said Far East markets are positive with energy security driving investment, and Quentin said M&A opportunities not winding down, but open to share repurchases if right value.