Tidewater Inc Stock

Good morning, and welcome, everyone, to the Tidewater Second Quarter 2026 Conference Call. My name is Dara, and I will be your conference moderator for today. [Operator Instructions]

I will now hand the conference over to West Gotcher, Senior Vice President of Strategy, Corporate Development and Investor Relations. Please go ahead.

Thank you, Dara. Good morning, everyone, and welcome to Tidewater's Second Quarter 2026 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 Operating 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, uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments that we're making during today's conference call. Please refer to our most recent Form 10-K and Form 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, August 4, 2026. 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 in our earnings release located on our website at tdw.com.

And now with that, I'll turn the call over to Quintin.

Thank you, West. Good morning, everyone, and welcome to Tidewater's Second Quarter 2026 Earnings Conference Call. I'll begin today with the quarter's highlights, provide an update on the Wilsons' transaction, discuss our current views on capital allocation and share our outlook for the business. West will then walk through our financial outlook and current guidance considerations. Piers will cover the global market and operations, and Sam will review the consolidated financial results. Collectively, we will also update you on the impacts of Operation Epic Fury.

We are pleased to report that second quarter revenue and gross margin exceeded our expectations. Revenue was $342.3 million, supported by both higher day rates and stronger utilization. Gross margin was just under 47%, nearly 3 percentage points above our prior expectations. Excluding $6.8 million of expenses related to Operation Epic Fury, gross margin would have been approximately 49%. Day rate momentum was particularly strong in the European and Mediterranean segment.

Utilization benefited primarily from the timing of dry docks on seven vessels shifting from the second quarter to later in the year. Operational uptime was also better than expected, which further supported utilization. But most noteworthy, our weighted average leading edge day rate increased approximately 7.5% sequentially, a clear indication of the relatively tight supply and demand balance in the market today.

Turning to Operation Epic Fury. While the intensity of the conflict eased during the quarter, we continued to incur costs above pre-conflict levels, totaling approximately $6.8 million in the second quarter. We did not experience any vessel off-hire associated with the conflict. In fact, our utilization and day rates in the Middle East were the strongest they have been in quite some time. In our guidance, we continue to include only costs for the current quarter, and we are assuming approximately $4 million of costs in the third quarter. We are actively working these costs down as we identify alternative ways to manage through the conflict. We remain encouraged that our activity in the region has been largely unaffected and that the outlook for the region remains robust, particularly once the conflict is resolved.

Free cash flow improved meaningfully in the second quarter, nearly doubling from the first quarter to $64 million. That improvement was driven by stronger operational performance and the movement of dry docks on seven vessels to later in the year. Even taking those deferred dry docks into account, we expect free cash flow for the Legacy Tidewater business to continue to accelerate in the back half of the year. We also expect to generate incremental free cash flow from the Wilsons' vessels once the acquisition closes.

On that note, we now expect to close the Wilsons' acquisition around September 1st. As discussed in our recent disclosures, we have completed all necessary regulatory steps and obtained the change of control waivers related to assume the Wilsons' debt. We are now working with the banks to finalize documentation for the debt transfer.

In parallel, we have continued to deploy Tidewater personnel to work alongside the Wilsons' team on pre-closing integration planning, which should allow us to move quickly once the acquisition closes. We believe the ability to effect a smooth and swift integration is a core competency of our organization, and we see every reason to expect the Wilsons' integration to be as successful as the integrations we have completed in the past.

Our balance sheet remains very strong with net debt essentially at 0 at the end of the second quarter. We expect net leverage to increase to approximately 0.8x by the end of the third quarter as a result of the Wilsons' acquisition. Liquidity was also strong at more than $850 million at quarter end. We intend to fund the equity portion of the acquisition price with cash after assuming the Wilsons' debt, and we remain very comfortable with both the strength of our balance sheet and our liquidity profile.

Our $500 million share repurchase authorization remains outstanding. To date, we have held off on repurchases while we complete the Wilsons' debt transfer. Although we will deploy a substantial amount of cash to fund the Wilsons' acquisition, we still expect to be in a strong cash position after closing and we'll evaluate the most accretive use of the remaining excess cash for shareholders.

Our philosophy on the buyback program has not changed. We remain opportunistic and we'll consider repurchasing shares when M&A opportunities are not immediately actionable. We do not view carrying excess cash on the balance sheet as an optimal long-term capital allocation strategy, particularly given the liquidity position we have with the revolving credit facility added last summer. We expect free cash flow from the business to continue to grow through the remainder of this year and into 2027.

The M&A landscape remains active. A healthy operating environment and an improving outlook are important factors in establishing a productive dialogue with potential targets. We remain interested in acquiring the right vessels at the prices that create immediate value for our shareholders. At the same time, we are not interested in acquiring vessels at a premium to our view of their current value simply for the sake of adding scale. We are in the advantageous position of being the largest global OSV provider, and we continue to believe that in the absence of value-accretive acquisitions, the best way to increase shareholder value is to run the business efficiently, maximize free cash flow and repurchase shares when appropriate.

With the balance sheet, liquidity and expected cash flows all in a healthy position, we will continue to apply the same capital allocation framework we have followed, weighing the relative merits of a given M&A opportunity against the return opportunity from repurchasing our own shares.

Looking ahead, the near-term outcome of the conflict in the Middle East remains uncertain. Market volatility can be challenging to navigate, but we believe there are important underlying reasons to remain optimistic about the offshore activity outlook. For some of our customers, broader strategic considerations, such as proximity to hydrocarbon resources and the ability to provide strategic reserves that can help mitigate future supply disruptions, are more frequently mentioned in planning discussions. These factors are more difficult to quantify, but they can also be more durable because they are driven less by near-term economics and more by long-term energy security considerations.

This backdrop points to a more robust view of the long-term offshore activity environment than we had last year, and we see that momentum continuing to build. Tendering and pre-tendering activity have increased significantly in recent months. Importantly, this increase in activity is evident across all of our vessel support services. Industry commentary around a strong rig tendering cycle supports this level of activity, and we are seeing similar momentum across all of our subsea support and production support offerings.

Our conviction in the next leg up of the cycle is growing, particularly given the strategic resource and energy security elements in the outlook. Most of the activity uplift we have seen to date reflects projects and opportunities that were already taking shape before the conflict in the Middle East began. Discussions regarding future projects in response to the conflict have begun and remain in early stages, but the tone is urgent and serious. Offshore projects are inherently long lead time investments and the desire to accelerate these projects is what gives us increased confidence in the duration of the current cycle.

Turning briefly to vessel supply. There has been little movement over the past quarter and frankly, very little over the past 2 years. To our knowledge, there have been no meaningful newbuild order activity in recent months. A handful of newbuild vessels are expected to deliver towards the end of the year with a few more in early 2027. The laid-up fleet remains essentially unchanged, and we do not anticipate meaningful reactivation given the laid-up fleet's age profile and specification mix. We believe much of the laid-up fleet is effectively scrapped in place as evidenced by the limited number of reactivations we saw from that fleet in 2023 and 2024.

We continue to believe the state of vessel supply will support increasing day rates as demand again begins to approach parity with available tonnage, and we expect day rates to accelerate further from what we saw in the second quarter. We continue to see a realistic path to a year-over-year increase in average day rates of $3,000 to $4,000 per day in both 2027 and 2028.

In summary, we are pleased with our second quarter performance. While we will continue to navigate near-term volatility related to the conflict in the Middle East, we are increasingly encouraged by the activity we see ahead. We look forward to completing the Wilsons' acquisition and to bringing the Wilsons' organization and fleet onto the Tidewater platform. As always, we will remain disciplined in allocating capital to the opportunities that we believe can create the greatest value for our shareholders.

And with that, let me turn the call back over to West.

Thank you, Quint. As Quint mentioned, we did not repurchase any shares during the second quarter ahead of the Wilsons' acquisition closing and funding. We anticipate to fund approximately $270 million of cash consideration for the equity component of the Wilsons' acquisition, assuming a closing date of around September 1, 2026. We plan to use cash on hand and do not anticipate utilizing our revolving credit facility to fund the cash consideration portion of the purchase price.

At the end of the second quarter, we retained our $500 million share repurchase authorization. Our philosophy guiding capital allocation remained consistent such that we will approach share repurchases on an opportunistic rather than a programmatic basis, weighing the market value of our shares with our internal view of the intrinsic value of the business. We will contrast this against the relative return profile and other qualitative considerations that an M&A target may present. We retain the option of evaluating M&A and share repurchases concurrently.

Given that the offshore vessel market has stabilized at a healthy level, along with the constructive outlook for offshore activity broadly, the M&A landscape remains favorable. However, we will remain disciplined on pursuing M&A opportunities that we view as value accretive and consistent with our view of intrinsic value.

As a reminder, under the bonds, we are limited in our ability to return capital to shareholders, provided our net debt-to-EBITDA is less than 1.25x pro forma for any share repurchase. Under our revolving credit facility, we are also limited in our ability to repurchase shares provided that net debt-to-EBITDA does not exceed 1x. However, to the extent that we exceed 1x net leverage, we still retain the flexibility to continue returns to shareholders, provided the free cash flow generation is in excess of cumulative returns to shareholders. We expect to be at 0.8x net leverage pro forma for the Wilsons' acquisition and expect that our cash flow generation should continue to improve throughout the back half of 2026, reducing our net leverage level.

Turning to our leading edge day rates, I will reference the data that was posted in our investor materials yesterday. Across the fleet, our weighted average leading edge day rate accelerated from the inflection we observed in the first quarter, up 7.5% sequentially. During the quarter, we entered into 25 term contracts with an average duration of approximately 12 months.

Turning to our financial outlook. We are modestly revising our full year 2026 revenue guidance to $1.42 billion to $1.47 billion and a full year gross margin range of 49% to 50%. The reduction in our revenue guidance is attributable to the expected closing of the Wilsons'transaction approximately 2 months later than previously anticipated, offset in part by higher-than-anticipated year-to-date Legacy Tidewater revenue. Our guidance now assumes that we close the Wilsons' acquisition around September 1, 2026. The updated gross margin guidance similarly assumes the loss of 2 months of high-margin revenue from Wilsons' due to the timing of the closing of the acquisition.

Additionally, we expect to incur more conflict-related costs in the third quarter than was contemplated in last quarter's guidance, which assumed the conflict concluded by the end of the second quarter. We now expect third quarter revenue to be up about 3%, inclusive of 1 month of revenue from Wilsons'. We expect Legacy Tidewater revenue to decline about 2% due to dry docks moving from the second quarter into the third quarter, consuming about 1 percentage point of utilization, along with higher-than-anticipated down for repair time that will consume another 1 percentage point of utilization.

We expect the third quarter gross margin of about 46% as we now anticipate conflict-related costs of approximately $4 million, along with higher fuel expense due to the dry docks that moved in the third quarter and higher R&M expense than previously anticipated. Our expected conflict-related costs in the third quarter are nearly half of those incurred in the second quarter. We remain in a position to rebill any direct conflict-related costs incurred to date or in the future.

In summary, we are pleased to be able to reiterate a strong full year financial outlook given the continued volatility in the market. Our expectation remains that there is potential for uplift to our full year guidance depending on the strength of the offshore activity picking up towards the end of the year.

Looking to the remainder of 2026, first half 2026 revenue plus firm backlog and options for the Legacy Tidewater fleet, along with the Wilsons' backlog for the September through December 2026 period, represents $1.3 billion of revenue for the full year, representing approximately 91% of the midpoint of our updated 2026 revenue guidance. Approximately 69% of remaining available days for 2026 are captured in firm backlog and options, inclusive of the Wilsons' fleet.

Our full year revenue guidance assumes utilization of approximately 80%, inclusive of the Wilsons' fleet, leaving us with approximately 11% of capacity to be chartered if the market tightens quicker than we are anticipating. Our small and midsized anchor handlers and medium classes of PSVs retain the most opportunity for incremental work, followed by our smaller and largest class of PSVs. Contract cover is higher in the third quarter with more opportunity available in the last quarter of the year. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time spent on dry docks.

With that, I'll turn the call over to Piers for an overview of the commercial landscape.

Thank you, West, and good morning, everyone. First off, our overall long-term outlook for the offshore space remains positive and the continued optimism in the long-term strength of the market has helped our teams be successful at either maintaining or pushing both utilization and day rates in most of the basins and vessel classes in which Tidewater is active in what has been a challenging first half of the year for some of our regions due to Operation Epic Fury. And as Quintin mentioned earlier, we now feel very well placed going into the second half of the year and into 2027 to be able to push rates and utilization significantly higher as we build momentum in the upcoming quarters and years ahead.

The fundamentals for the OSV market remain strong. The sector remains supply side constrained with little prospect of capacity expansion from the stacked fleet or from the negligible order book. And from a demand perspective, we are starting to see a decent uptick in requirements in all the sectors in which we support our customers as well as in the majority of basins in which we currently operate.

Working through our various regions and starting with Europe, the North Sea AHTS spot market continued to strengthen through the quarter with large AHTS spot rates averaging over GBP 160,000 per day, the average levels on -- the highest average levels on record, with some fixtures concluded well above GBP 200,000 per day during the quarter. The PSV market was slightly more subdued during the quarter. However, day rates continue to remain above 2025 levels after the strong start in Q1 with both PSV spot and term activity holding steady throughout the second quarter.

In the Med, we saw strong utilization and day rates in the quarter with the Med region really helping to drive overall revenue and margin for the Europe region as a whole. We do expect a small lull in activity in the Med region at the beginning of Q3 as we wait on a number of drilling and EPCI programs to kick off in September. But once these all begin, we expect Q4 and into 2027 to be very strong for the region.

In Africa, even with the expected drop in utilization in the quarter, the team was still able to maintain healthy day rates across the region and expectation of the pickup in demand that we see coming in the second half of Q3 and into Q4. Increased demand will primarily come from drilling campaigns restarting at the end of Q3 in Namibia as well as a number of production renewal contracts in Angola that are expected to commence in Q4. In addition, there are still several OSV tenders out in Nigeria from all of the IOCs operating in country that we expect will create incremental global demand for the larger PSV classes as well as the medium-sized AHTS classes, with all the tenders expected to commence by end 2026.

Looking further out, strong upstream driving forces appear set to continue to support OSV demand in West Africa. For instance, Azule Energy's $5.1 billion Greater PAJ Project of Angola reached FID in late June and its 95,000 barrel per day FPSO is scheduled to be delivered and installed late 2028. And in Nigeria, Renaissance Africa Energy has recently announced a major offshore oil discovery in OML 74. All in all, we feel very positive for the long-term health of the region.

In the Middle East, even with a very challenging backdrop of Operation Epic Fury affecting the quarter, the team still managed to improve both utilization and day rate across the fleet. And although increased operating costs brought down margins, we have not yet seen any slowdown in demand in the countries in which we operate. We, in fact, saw a little uplift in short-term requirements as our customers have struggled to find OSV supply to fill gaps in their projects.

However, we have seen a pause on some of the longer term tenders that we were expecting awards on in the Q -- quarter, but still expect these longer term charters to still be awarded. However, the NOCs are waiting for a little more clarity before committing on some of those longer term awards. Overall, sentiment is still positive in the region, but we are obviously watching closely what may or may not happen in relation to the Iran conflict in the coming months.

In the Americas, as mentioned on our last call, we remain excited with the long-term outlook in Brazil, although the market is facing some short-term headwinds related to Petrobras OSV long-term tendering activity as Brazil is in an election year, and this is slowing down some decision-making. However, the expectation from the market is that once the elections are finished in Q4, we will start to see a pickup in tenders again at the end of the year. Day rates remain healthy in the country and for our medium-sized class PSVs are still in excess of $42,000 per day levels, supported by increased activity from the IOCs and EPCI contractors operating in the country.

Demand in the Gulf of America has been flat most of the year, and we expect that flatness to continue into 2027, but this has been offset by the increase in demand in the Caribbean. And as such, we'll be moving some of our Jones Act vessels to support customers in Suriname and Guyana at the end of the year. We will still maintain a presence in the Gulf. But until we see a significant pickup in demand again, we will use our global operating platform to look for margin-enhancing work elsewhere in the world.

Lastly, in Asia Pacific, day rates and utilization were modestly down compared to Q1. However, we continue to see an upturn in pre-tendering and tendering activity, driven in part by long-term energy security concerns in Asia Pacific, with particular focus coming from Malaysia, Indonesia and Australia, which all bodes well for the longer term health of the region going beyond 2027.

In the short term, we have several of our larger PSVs commencing work in Q3, early Q4 in the region, which should mean a solid upturn in utilization towards the end of the year and an improvement in day rates as we move into 2027. Overall, we are very pleased with how the market continues to move in the right direction and fully expect that positive momentum to continue into next year and beyond.

And with that, I'll hand over to Sam. Thank you.

Thank you, Piers, and good morning, everyone. I would now like to take you through our Q2 financial results. My discussion will focus on the sequential quarterly comparisons between the second quarter and the first quarter of 2026, including key operational factors that affected our second quarter performance.

Q2 results exceeded our expectation, driven by higher day rates, higher utilization due to stronger demand and timing of dry docks, partially offset by temporary conflict-related operating costs. As noted in our press release filed yesterday, we reported net income of $21.7 million or $0.43 per share. Revenue was $342.3 million compared to $326.2 million in the first quarter. The increase was driven by 1 additional day in the quarter, average day rates that were approximately 3% higher than the first quarter and active utilization improving to 81.4% compared to 80.6%.

Gross margin was $160.5 million in the second quarter compared to $159.3 million in the first quarter. Gross margin percentage was 46.9%, nicely above our Q2 expectation and as expected, below our Q1 margin of 48.8%. The percentage decline was primarily due to the higher vessel operating costs. Operating costs for the second quarter were $181.8 million compared to $166.9 million in Q1. An increase was expected due to higher R&M work that was pushed from Q1 and higher crew wages and supplies and consumables impacted by the Iran conflict. In Q2, we incurred approximately $6.8 million of additional costs due to the continuing impact of Operation Epic Fury. And year-to-date through June 30th, we have incurred approximately $9.2 million. Costs directly impacted were insurance costs and higher crew wages, primarily war bonus pay.

Indirectly, we continued to see elevated fuel and travel cost increases due to increased commodity prices. We will work to minimize these costs. However, we do expect to incur additional costs as the long-term conflict continues.

Fuel expense has been heavily impacted since the beginning of the conflict. In Q2, we saw a sequential increase in fuel expense of over 50%. Importantly, we took steps to contractually limit the amount of war-related pay owed to our mariners working in conflict-affected areas. This effort led to lower-than-expected crew costs beginning in the second half of Q2 and for the remainder of the year.

In total, we are forecasting another $4 million of war-related costs in Q3. We estimate a similar amount of direct costs related to crew wages and insurance costs. In addition, we expect similar increased fuel and travel expenses due to higher global commodity prices. These fuel and travel estimates are based on our forecasted activity and current commodity prices. Elevated costs related to the conflict will likely continue in the near term, though it is uncertain how long this disruption may last.

We are contractually permitted to invoice customers for reimbursement of direct conflict-related cost, which includes war insurance and war-related crew wages, which totaled approximately $5 million through Q2. Currently, we have invoiced close to $1 million and have collected less than $100,000. We have not included any assumed reimbursements in our guidance. However, we will continue submitting invoices for reimbursement for all contractually allowed amounts.

Adjusted EBITDA for Q2 was $133.8 million compared to $129.3 million in the first quarter. Total G&A cost was $34.8 million in the second quarter, which includes $2.7 million of transaction costs related to the Wilsons' acquisition. G&A costs in Q1 was $33.6 million, which included $2 million of transaction costs. Including -- excluding the transaction costs, G&A increased by about $500,000 due primarily to higher personnel costs.

For 2026, excluding M&A transaction costs, we expect Tidewater full year G&A costs to be about $126 million, which includes approximately $14 million of noncash stock compensation. In addition, we expect to incur approximately $7 million in additional G&A costs in the second half of 2026 related to the Wilsons' acquisition.

In the second quarter, we incurred 750 dry dock days and $23.3 million in drydock costs compared to 949 dry dock days and $36.4 million in costs in Q1. Dry dock days in Q2 impacted utilization by about 4 percentage points compared to 5 percentage points in Q1. Our full year 2026 dry dock cost expectation remains at approximately $122 million. Typically, the bulk of our dry dock costs occur in the first half of the year. However, the timing of some projects in 2026 has shifted to the right, resulting in higher cost and days in the second half of the year. Additionally, we expect to incur approximately $7 million of additional dry dock costs in the second half of the year related to the Wilsons' acquisition.

In Q2, we incurred $14.9 million of capital expenditures, mainly vessel modifications and upgrades. For the full year 2026, we expect to incur approximately $52 million in capital expenditures. This amount includes a planned $15 million major upgrade to one of our Norwegian vessels. We also expect to incur about $4 million in additional CapEx spend in the second half of the year related to Wilsons' acquisition. We generated $64.4 million of free cash flow in Q2 compared to $34.4 million in Q1. The sequential increase was mainly attributable to lower dry dock spend, higher proceeds from the sale of two vessels and lower cash consumed by working capital.

As a reminder, the following debt refinancing we completed a year ago, we only have small principal payments each quarter, about $6 million per year that are related to the financing of constructed smaller crew transport vessels. We have no principal payments due until 2030 on our new unsecured notes. Following the anticipated closing of the Wilsons' acquisition, our debt maturity and repayment profile would change to accommodate the newly assumed Wilsons' debt. We conduct our business through five operating segments. Please refer to the press release and the 10-Q for details of our segment results.

In Q2, we saw a decrease in consolidated gross margin of close to 2 percentage points compared with Q1. Regionally, gross margin increased by 8 percentage points in Europe and Mediterranean, offset by 3 percentage point declines in the Middle East and Americas, 4 percentage points in APAC and about 9 percentage points in Africa. While margins were down compared to Q2 -- compared to Q1, they exceeded our expectations, particularly in the Middle East despite challenging circumstances related to the conflict. The gross margin increase in our Europe and Mediterranean region was primarily due to an 8 percentage point improvement in utilization, driven by fewer idle days and dry dock days. The improvement in utilization, together with an 11% increase in day rates, delivered strong results in Q2.

Total operating expenses increased 11%, largely due to the addition of two vessels to the region. Gross margin decreased about 3 percentage points in the Middle East region, while day rates and utilization both improved. Those gains were more than offset by higher costs related to the Iran conflict. Our forecast contemplates war-related costs to continue into Q3.

The decrease in the Americas gross margin was primarily due to a decrease in revenue resulting from a 2% decline in day rates and having fewer vessels in the region, revenue fell about 8% and total operating costs declined about 4%. Gross margin in the APAC region was 4 percentage points lower than Q1. Day rates declined modestly by about 1% and utilization was down about 3 percentage points. However, revenue was up 3% due to more vessels operating in the regions compared to Q1. Operating costs rose 12% versus previous quarter, primarily due to the increase in vessels and the mix of vessels operating in Australia.

Gross margin in our Africa segment decreased by about 9 percentage points due primarily to a $9 million revenue decline caused mainly by an 8 percentage point decrease in active utilization, while day rates remained flat. Utilization was affected by higher idle days. In addition, operating costs increased due to higher R&M costs and higher fuel costs due to the higher idle days. With respect to the Wilsons' acquisition, we now expect the transaction to close around September 1, 2026. We are confident in our ability to integrate Wilsons' in a smooth and efficient manner, consistent with previous acquisitions. We remain strong believers in the importance of the Brazilian market and are excited about the opportunities there.

From a capital allocation perspective, our priorities remain: maintaining balance sheet strength; investing in the fleet; completing and integrating the Wilsons' acquisition; and evaluating opportunities to return capital to shareholders or pursue additional strategic growth. While we have not repurchased shares this year, our $500 million share repurchase authorization remains available. We will continue to evaluate all avenues for capital deployment and execute on the opportunities we believe provide the greatest long-term value for our shareholders.

In summary, we outperformed expectations despite the headwinds from the conflict in the Middle East. Industry fundamentals remain strong. Our balance sheet is in excellent condition, and we remain optimistic about the opportunities that lie ahead for Tidewater.

With that, I'll turn it back over to Quintin.

Thank you, Sam. Dara, we'll go ahead and open it up for questions.

[Operator Instructions] Your first question comes from Jim Rollyson with Raymond James.

Glad to see the great results and hear the commentary. Quintin, I guess I'd like to ask you, for the last couple of quarters, you've been pretty bullish. You kind of reiterated the day rate growth potential, I guess, for the next couple of years. And I'm curious, as you sit here today with your recent travels, project tracking conversations and tendering, are you thinking the market is kind of on track with what you thought before? Or do you -- are things getting better? Do you have more visibility? Just kind of understanding the rate of change just like in the last 90 days or so?

Jim, yes, I will tell you that I'm probably more bullish now than I've been in the last 6 to 9 months. The amount of tendering activity and pre-tendering activity is quite strong around the world. I was in Asia about 5 weeks ago and the talk in Indonesia and Myanmar and Malaysia. It's all much stronger than I've seen in a while. So I'm getting really confident about this next leg up in the cycle.

But let me turn it over to Piers too, because he actually has more contact with the customers than I do. He may have some other color he'd like to add.

Thanks, Quint. Yes, I think Quintin hit the nail on the head. It -- We're seeing a stronger improvement. It's probably slightly -- we were seeing that at the beginning of the year. So there's been a slight improvement. I think, obviously, Asia Pac as Quintin mentioned is very positive. We're also seeing a little bit more work in the Med and also down in Namibia and Angola and a very strong uptick in Nigeria. I mean, like all things, Jim, as you followed us for a long time, things can sometimes move a little bit to the right. So we might see a few projects moving to the right. But no, I mean, there seems to be, I would say, better than we expected from the beginning of the year, but maybe a couple of projects in places like Nigeria, West Africa, things never start on time. So maybe we see a push to -- a little bit to the right.

But no, I think overall, it's very positive. And Brazil, yes, we're expecting Brazil to come back pretty strongly in the beginning of next year once we get through the elections and Petrobras really starts retendering as well probably at the end of this year or beginning of Q1. So overall, we're pretty optimistic.

Appreciate that color from both of you. And for my follow-up, I don't know who best is, but maybe Quintin, just on the cost side of things, with kind of the added cost from the conflict and fuel prices and all that, how do you think that -- like what's the playbook going forward to either recapture that in rates over time? Or -- you mentioned doing some things to try and improve the cost situation in the Middle East. Just kind of what's the playbook on cost as we go through this offsetting day rate growth environment we're talking about?

Yes. Well, there's a lot of game-day decisions just because this is all relatively new and everybody is trying to figure out the best way to do it. Piers and the team have been really good at working with the labor force and the mariners in the area. And in the beginning, we were -- there were significant premiums put into place to attract and maintain the personnel. We've been able to modify that a little bit to bring down those levels. Insurance is something that our team here works on with our insurance agents to try to keep that a little bit more manageable than it otherwise could be. It was very -- everyone was very excited at the beginning of the process. So managing the crew is very important.

The fuel costs themselves are just going to be a product of the environment. My hope is that all settles down. But for us, we're learning as we go through this conflict. And I think that our suppliers and our employees are as well. So we're finding new ways to bring that down. And then, of course, Sam talked to it a little bit, we're going to begin to bill back to our customers. But Saudi Aramco is a strong customer, an important customer and also a difficult customer. So there's a lot of paperwork involved and it takes a long time to get that rebill in place. But my hope is that we'll see all of that come to fruition as we go through the next several months.

Your next question comes from Fredrik Stene from Clarksons Securities.

Congratulations on a strong quarter. I wanted to touch a bit on the M&A side. You have been pretty adamant that from a capital allocation perspective, at least, that's been your preferred path. And the -- I would have to say that your CV of acquisitions is starting to be quite long. Now you're soon closing in on the Wilson acquisition. I know you did comment kind of a bit on this in the prepared remarks, but my questions relate to kind of two things.

One, now on that out of the way, do you see more or less opportunities in the M&A space now compared to, for example, 12 months ago? And maybe a bit more specific, do you think it's fair to see you guys doing anything more over the next 1 to 2 years since you require, I guess, a certain size of your targets? But as you said, you're not chasing scale, just to chase scale.

Fredrik, thank you. So the M&A landscape is evolving and -- but there continues to be some really attractive opportunities out there. I will say that for us, when we think about M&A, we're looking for some strategic element to it. Brazil got us into that market with Brazilian tonnage, and I'm really excited about that. And the Solstad deal that we did really empowered us from the larger vessel standpoint as well as the hybrid vessel standpoint. And of course, we got back into Asia with the Swire acquisition.

So it's getting things at the right price, but there's also got to be a good strategic rationale for it as well. Price is, of course, very important to us. But yes, no, I fully expect to see other opportunities develop. They take time to work out and they take time to close and so forth. But yes, my hope is that we'll be able to continue to demonstrate value-accretive growth through acquisition in the next year or so.

But again, the other thing I'll say, Fredrik, is I'm not going to consolidate this entirely by myself. So I do need other people out there doing something, and there hasn't been too much of that. But everything you hear about, we're not going to be able to participate in or do. But we're certainly looking for those things that, again, have a strategic element and a good demonstrated strong history of cash flow generation.

Right. And as a follow-up to that. I think you previously -- and this was before Wilson, you mentioned the Americas and South America, Brazil, maybe in particular, as areas of interest where you felt like you could become larger. And now with Wilson, you're definitely doing that in Brazil. And from the strategic angle that you're talking about, does this mean that you're now maybe particularly focused on trying to get something done in the Americas? Or are you still open to every region as long as transaction has the right characteristics and benefits for you guys?

Yes. So Fredrik, I think I mentioned on the last call or maybe the call before last, but I was looking in the U.S. for a long while. I just couldn't find anything that I thought it was at the right value point for us. So less interested in the U.S. today, but always interested in a good opportunity. I think the opportunities that are developing throughout West Africa and into Asia are probably more attractive today.

Your next question comes from Joshua Jayne with Daniel Energy Partners.

First, you entered into 25 contracts with a term of 12 months. Just given your day rate expectations, is it fair to say that the mindset is still to largely have a lot of the fleet available to reprice in '27 given this backdrop? Or could you just talk about how you're thinking about as we exit this year, how much of the fleet you'd like to have contracted?

Well, I'll tell you, West and Piers have a well-developed strategy and they follow that real closely. So let me give it over to them and let them speak to it.

Josh, yes, I mean, I think -- I'll let West sort of opine afterwards. But we're still going to -- we believe in this market is probably clear from our comments. So we're going to keep a decent amount of ships, generally, the larger vessels, the larger PSVs, which support drilling and the large anchor handlers, that's always been the big driver for us in terms of being able to drive day rates.

But I think once we start really, as Quintin mentioned, getting to that, really driving that $3,000 to $4,000 a day uplift on the rates as we go through the gears next year, then we may start looking to -- as we get into '28, a little bit longer and things like that. But I think in the short term, we're looking to keep a decent amount of availability in the fleet to take advantage of what we see coming in '27 and '28. So we're not going to change that strategy of going -- looking for the shorter term contracts and turning vessels over because we need to improve contract terms and we still need to obviously push day rate as well on that side. So that's what we're sort of focusing on as we go into '27.

I don't know, West, do you have any other thoughts on top of that?

I'll add one item and it's something we've talked about in the past, which is not all of our vessels are the biggest and best vessels in the world. And so there are a subset of vessels that we are happy to put on longer term contracts. They just won't necessarily exhibit the same type of relative demand and day rate amplitude that some of our other vessels will. And I think there's a component of that in this quarter's average length of contract, is that there are some vessels that we were happy to put away for a little bit longer. And this is often the case from quarter-over-quarter with this measure is, there can be some -- both regional and vessel class, I don't want to use the term noise, but noise in there that can do that.

And so that's what I'd say is that there are some vessels in there that we're happy to tuck away on longer term contracts. I think for the larger vessels, as Piers mentioned, I think our general philosophy is to continue to go relatively short because we do believe in the market and continue to push those day rates and contract terms.

Understood. And then second one for me is on the Middle East. You highlighted some of the short-term cost recoveries you're hoping for. But I just wanted to take a step back and think longer term, so as someone who's been running in that region for quite some time. Could you just give us some more -- a bit more color around conversations with customers, what it is ultimately going to take to get back to sort of a normal operating environment? And if you believe in any way that capital will shift away from that region as a result of the conflict, like is it structurally impaired at all? Or do you just believe that once things settle down, it will just be sort of full steam ahead back to normal and just your expectations over the next couple of years once we have a resolution?

Yes, Josh. So I actually think they'll show more strength in the future than it's shown in the recent past. The conflict certainly has the inherent result of actually improving activity levels as you move jackups in and out and around and relocate things. So post the conflict, I expect to see a bump in activity. But I also expect to see further developments and activities in that region as people reposition assets and redeploy other hydrocarbon basins into -- kind of throughout that region.

So from my perspective, the customers have not shied away from any thinking about what they're going to do in the future, and everybody is just excited to get the conflict resolved so they can get back to work. But Piers, you probably had more recent conversations with them, if there's anything you'd like to add, go ahead.

No, I think -- yes, it's still -- sentiment is still pretty strong. I think this is very much short term. I think there's going to be -- as Quintin mentioned, we come out of this conflict, there's going to be a sort of short-term bump as people sort of get projects back up and running, a little bit like we saw sort of post COVID in some ways where you suddenly saw a big kick of people just catching up with what they've sort of had to pause a little bit.

But no, longer term, we're still seeing tendering activity from all the NOCs we work for in the region. The EPCI guys are -- maybe there's a bit of projects pushing to the right, but there's still FIDs in place. There's no slowdown. And then there's continued talk about putting more dollars into the region as well. The -- Obviously, UAE moving OPEC and things like that, that's going to cause -- for us, we feel a big sort of uptick in terms of future demand as well.

So no, we're not -- we're seeing -- it's going to be positive in the region. I mean it's always -- as I've mentioned on previous calls, it's always a tough region just because it's highly fragmented in terms of competition, et cetera, et cetera. But I think from an investment in the region, we're not seeing any slowdown or any expected slowdown from our big customers that we work with.

Your next question comes from Keith Beckmann with Pickering Energy Partners.

I just wanted to step back and ask a very -- a long, long-term question around the vessel, the OSV fleet is somewhat aged 15-ish years kind of as a whole, I'm thinking about the macro market. How long do you think you can realistically keep -- not have to retire these assets kind of from a macro perspective? And then maybe backing up to what day rates do you -- where do you think day rates would need to go to incentivize new builds, maybe a decade down the road once a lot of these vessels start aging out potentially? Just any thoughts around all that?

Sure. So before the downturn in 2014 and '15, we were routinely operating vessels into the high 20s, early 30-year range. And there's no reason why vessels can't operate that long. There certainly was in that same time frame, kind of '11 to '14, a bit of a transformation in the sense that vessels got larger. They all stepped up to be about 1,000 square meter deck or 300-foot length overall. Everybody went to diesel electric and a lot of them went to DP2 and so forth. But there's no technological transformation that's happening today.

So what we saw during the worst part of the downturn, so '16 to '18 in that time frame, where people putting up age restrictions as a way just to cull the number of vessels that were being tendered in every situation. And so I fully expect all of that to go away. And right now, it's already started. So I expect to see the fleet age still to run for another 5 or 6 years before people need to rebuild. And now what is the price that it takes? Well, in today's market, today's cost structure, it's in the low 30s that would justify building today. And we might get there in a couple of years. I think that takes a couple of strong years to achieve. And maybe by the time we get to '29, that can make some sense. But no, it's -- the fleet has a lot of duration left in it, in our perspective.

Your next question comes from Greg Lewis with BTIG.

Sorry, I might have missed this. But I realize in the Q&A, there was a little bit of talk around term structure in the market. West, are you guys providing any color around what contracted capacity is in either Q3 or the second half of this year?

We did, Greg. We had that in our prepared remarks, and I'll update you, but let me just grab that for you. We have -- about 69% of the remaining available days for 2026 are captured in our backlog and options, which includes the Wilsons' fleet. So you can look at the remainder of that, if you will, as to what capacity we have. And just to be clear, what's contemplated in our financial guidance is 80% utilization. So I think you can use those two data points to determine that answer.

And then just as we think about -- you mentioned the 1-year deals and Piers, you kind of alluded to the fact that there are some term contracts out there that have kind of yet to come to fruition. If we were to kind of think about what '27 already looks like, is it kind of a rough estimate, maybe 20% to 30% of the fleet is already contracted for '27? Yes, probably about right?

A little bit more than that. Yes, we're sort of -- as sort of West alluded to, there's certain -- obviously, some of our smaller vessels last as we've gone a little bit longer term, but we try to keep the bigger ships available so we can really push into 2027, so yes.

Okay. Super helpful. And then there was that transaction, the dock transaction. There's just a few PSVs. I think it's sold in the last couple of weeks. Was that something that the company was looking at? Was there anything interesting about those PSVs that were sold? I believe it was a private deal. Any thoughts around the price of those? Or I mean, I think they were all kind of in that 15-year-old range just simply because there is no real new tonnage. But is that just not -- Quint, I know you always talk about the potential to kind of really establish a position in a new market. Is the read-through there that these kind of smaller one-off acquisitions just really -- don't really get us anywhere?

I think that's right. I mean the amount of work it takes to do a three-vessel transaction is about the same as it takes for 20 transactions. So we've been focused on larger deals. And as I was indicating earlier, if there's a real strategic reason for a particular vessel location or vessel type to be acquired, I'm definitely very interested in those types of opportunities. But I made a joking comment earlier that I just can't consolidate this industry all by myself. So I'm glad for some people to start helping me do it. And so that's great. But no, not bad vessels, it's just work -- more work for us.

And then just really following up on that, just given the fact that there has been some technological advances in the offshore. As we think -- and realizing that the economics for large-scale new builds maybe aren't there, are there starting to come in requests from customers about potentially having to take some vessels into the dry dock for like upgrades to kind of do some of this work that's kind of coming down the pipeline or at this point, just the requirements of that conventional PSV, the work can be done with the fleet that's there?

Well, we are doing some of that. And in fact, we're doing some of it in the North Sea right now. But Piers may have a better perspective on what the customers are asking for. There are certainly a couple of opportunities where we're making large investments in vessels, but we're generally pushing them out of the PSV space into a more specialized space.

Yes. I mean, Greg, I think Quintin touched on the previous comments, I think, to Keith. I mean there's not been a big technological advance in terms of vessel designs really. I mean the only thing that's come in, I suppose, is putting batteries on the back of the ships, and we've obviously got the largest hybrid fleet. We're seeing a few customers sort of asking about that. But to be honest, it really comes down to what they're prepared to pay and it costs money to go and retrofit batteries onto our vessels, and there's a cost to that, and that needs to be borne by the customer.

So yes, some of the tenders, they certainly come out, and we've seen some in Brazil and some in the Middle East are asking about that. And yes, we'll just have to see if that sort of bears out. But there's nothing in terms of the sort of do you want to put methanol or ammonia or these things and that sort of discussion has really gone away in the last couple of years, is just not being financially viable really in terms of how our business is set up today.

There are no further questions at this time. I will now turn the call back to President and CEO, Quintin Kneen, for closing remarks.

Well, thank you, everyone, and we will update you again in November. Goodbye.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and thank you for standing by. My name is Mel, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Tidewater First Quarter 2026 Conference Call. [Operator Instructions] I would now like to turn the call over to Wes Gotcher, [Technical Difficulty] Go ahead.

Thank you, Mel. Good morning, everyone, and welcome to Tidewater's First Quarter 2026 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 Operating 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, uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments that we're making during today's conference call. Please refer to our most recent Form 10-K and Form 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 5, 2026.

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 in our earnings release located on our website at tdw.com.

And now with that, I'll turn the call over to Quintin.

Thank you, Wes. Good morning, everyone, and welcome to Tidewater's First Quarter 2026 Earnings Conference Call. I'll start the call today with the quarter's highlights and then talk about capital allocation and what we're seeing on vessel supply and demand. Wes will walk through our financial outlook and what we're thinking about for 2026 guidance. Piers will cover the global market and operations, and Sam will close with the consolidated financial results. And each of us will touch on the impact from operation Epic Fury.

Starting with the first quarter, revenue and gross margin were both ahead of what we expected. Revenue was $326.2 million, driven mainly by higher utilization and stronger day rates. Gross margin was just under 49%, up slightly quarter-over-quarter and over 3 percentage points above our internal plan. Utilization benefited from strong uptime with less downtime for repairs and fewer drydock days than we expected. Overall, I'm really pleased with the operational execution and with the returns we're seeing from the fleet investments we've made over the past few years. Before I get into more detail on the financials, I want to touch on operation at Epic Fury, what it meant for the quarter and what we're watching going forward. As I said on last quarter's call, we haven't seen any disruption to our business at the outset. And we expected that any cost impact, especially insurance and fuel to be immaterial. And so far, that's held to be true. Our vessels in the Middle East continue to operate normally and utilization and revenue in the first quarter and specifically in March, which was the first full month after the operation began, came in above our forecast.

We did see some higher costs, mainly in crew, along with insurance and fuel. The biggest item has been the incremental hazard pay for our crews. Insurance and fuel have been a smaller piece. Sam will share more detail in his remarks. Looking ahead, we're seeing pent-up demand in the region, and we believe activity could rebound above what we expected just a quarter ago once the conflict is resolved. In the first quarter, we generated $34 million of free cash flow. The step down sequentially was relatively less cash flow from working capital and relatively higher drydock spend. Just as a reminder, in the fourth quarter, we collected a sizable past due receivable for Pemex, which drove the working capital change. And Q4 is typically our lightest drydock quarter, whereas Q1 is usually our heaviest as we get vessels ready for busier working season as the weather improves, and that drove the drydock change.

Importantly, nothing has changed in how we're thinking about free cash flow for the year, and the first quarter is tracking with our expectations for 2026. As we discussed previously, during the first quarter, we announced our agreement to acquire Wilson & Sons UltraTug Offshore 22 PSVs focused exclusively on the offshore market in Brazil for $500 million. We've already started the pre-integration work using the playbook we've built through prior acquisitions.

The Wilsons team has been well organized and is highly capable, and we're making good progress getting ready to bring the business onto the Tidewater platform. On approvals, things are moving as expected, and we still anticipate closing by the end of the second quarter.

We did not repurchase any shares in the first quarter because we plan to fund the equity portion of the Wilsons transaction with cash on hand, and we're still waiting for consents to transferring the existing Wilson's debt. We still have $500 million authorized under the program, which represents about 12% of the shares outstanding as of yesterday's close. Even as we work towards closing and integrating Wilsons, we're still in a good position to look at additional M&A opportunities.

Our balance sheet remains strong, and we continue to expect net leverage to be less than 1x at closing. Liquidity is solid. And after issuing our unsecured notes last summer, we have good visibility into the cost of debt capital if we decide to use it for an acquisition. Our preference is still to use cash, but we'll consider using stock if the right fleet is available at the right value.

With the GulfMark, Swire, Solstad and now Wilson acquisitions, we built a meaningful presence in essentially every major offshore basin. These have largely been newer, higher specification fleets, and they've helped reestablish Tidewater as the leading OSV provider globally. We've also successfully reentered Brazil, which we talked about as a priority market. From here, we'll stay focused on fleets and geographies where our platform gives us an edge and we're bringing additional vessels on board can create outsized value. And we continue to benefit from our scale and high-specification PSVs and anchor handlers, two of the most in-demand vessel classes in the global OSV fleets.

When we look out over the next couple of years, we see the market tightening in late '26 and into '27 and 2028 that should set up for meaningful day rate improvements over that time. If day rates move up the way we expect over the coming years, that will flow through to higher earnings and cash flow generation. If we don't see value-accretive acquisitions, we'll look for other ways to put that excess cash to work. Our share repurchase philosophy hasn't changed. We'll be opportunistic and disciplined. And more broadly, we don't think it makes sense to build and sit on a large cash balance for an extended period.

As we move through to the Wilsons closing and into a period of higher free cash flow, we'll stick with the same capital allocation framework that's core to how we run the business. In practice, that means we'll continue to weigh the relative merits of M&A versus share repurchases. We continue to view buybacks as an attractive way to return capital to shareholders.

Turning to the outlook. While the Middle East conflict is still ongoing, what we've seen so far could be a net positive for the offshore vessel market over time. Energy security became a key theme since the conflict in Ukraine and the Middle East conflict has added another layer, an increased focus on sovereign energy independence, particularly in the Eastern Hemisphere.

So far, at least 500 million barrels of oil have been lost, and there's still no clear sign when recent production losses will be reversed. The longer that goes on, the bigger the need becomes to replace those inventories. And historically, crude prices have had a strong relationship with inventory levels. So continued depletion should provide longer-term price support. Put together, the inventory drawdown and the heightened awareness of geopolitical risk suggests oil prices may have a higher floor than before the Middle East conflict began, which supports additional offshore projects. Stepping back, we think the trend towards offshore development supports a structural improvement in demand for offshore activity and for offshore vessels. We see this as a long-term dynamic, and it's additive to the demand we've been seeing already.

Recent comments from offshore drillers point to a meaningful increase in fixtures and a high level of drilling unit utilization. We view the expected pickup in offshore drilling as a strong positive for our business. We support a range of offshore applications, but drilling activity typically has been the biggest impact on vessel demand. Offshore vessel activity has been building year-to-date. And as it continues to pick up, the pressure on available supply creates an opportunity for higher utilization and higher day rates.

On the supply side, the global fleet has stayed essentially flat over the past few years. A handful of vessels are expected to deliver late in this year and into early 2027, but we view those additions as relatively small in the context of the overall market. As supply tightens further, we can see a path to day rate increases of roughly $3,000 to $4,000 per day per year for the entire fleet, moving the fleet back towards earnings cost of capital.

We're excited about the drilling outlook, but we also expect other drivers of vessel demand, especially production and EPCI-related support to remain strong. Production and EPCI work has stayed robust and helped offset some of the relative drilling softness early in 2026.

Looking ahead, we continue to like the outlook for both, given the strength we're seeing in both Subsea and EPCI backlog as well as continued momentum in FPSO orders. Over the longer term, more drilling in less developed regions should drive additional infrastructure work, which supports sustained demand across these categories.

So we're pleased with how the first quarter came together. While we still have some uncertainty in the Middle East until the conflict is resolved, we're increasingly optimistic about the outlook for the business. We'll stay disciplined on capital and continue to look for value-accretive ways to deploy it, and we expect the opportunity set and our ability to capitalize on it to improve over the next 18 months.

And with that, let me turn it back over to West.

Thank you, Quintin. As Quintin mentioned, we did not repurchase any shares during the first quarter due to the pending Wilson's acquisition. At the end of the first quarter, we retained our $500 million share repurchase authorization. As a reminder, under our outstanding bonds, we are unlimited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than 1.25x pro forma for any share repurchase. Under our revolving credit facility, we are also unlimited in our ability to repurchase shares provided the net debt to EBITDA does not exceed 1x. However, to the extent that we exceed 1x net leverage, we still retain the flexibility to continue returns to shareholders and provide the free cash flow generation is in excess of cumulative returns to shareholders.

We still anticipate to be below 1x net leverage, assuming a June 30 close of the Wilsons acquisition. From a capital allocation perspective, we look to execute share repurchase transactions when suitable M&A targets are not available. We retain the option of evaluating M&A and share repurchases concurrently, but our financial policies and philosophies dictate our relative appetite to pursue both concurrently. Given that the offshore vessel market has stabilized at a healthy level, along with the constructive outlook for offshore vessel activity more broadly, the M&A landscape remains favorable, and we will continue to evaluate additional inorganic opportunities to add to our platform.

Turning to our leading edge day rates. I will reference the data that was posted in our investor materials yesterday. Across the fleet, our weighted average leading-edge day rate for the fleet increased modestly in the first quarter compared to the fourth quarter of 2025. This is the first time since the second quarter of 2025 that our weighted average term contract measure for new contracts has increased.

Our largest class of PSVs saw average day rates increase sequentially, which we find encouraging given the relatively large number of contracts for these vessels and the geographic dispersion of the contracts. During the quarter, we entered into 18 term contracts with an average duration of 13 months with two specific long-term contracts skewing the average. Excluding these contracts, the average duration of our new contracts during the quarter was 7 months.

Turning to our financial outlook. We are maintaining our full year 2026 revenue guidance of $1.43 billion to $1.48 billion and a full year gross margin range of 49% to 51%. Our guidance assumes that we closed the Wilson's acquisition at the end of the second quarter. Our view of the legacy Tidewater annual revenue and gross margin guidance has not changed from our initiation of guidance in November 2025.

The second half expectation for the Wilson's business remains unchanged. We expect our second quarter revenue to be roughly flat with the first quarter, consistent with prior expectations, but expect our gross margin to decline by about 5 percentage points sequentially due to cost increases associated with operation Epic Fury.

However, we are in a position to seek rebuilds for about half of the conflict-related cost increases from our customers related to direct cost increases associated with crew wages, insurance costs and G&A support have not contemplated the recoup of these costs in our guidance. Our forecast assumes a normalization of cost frictions associated with the conflict in the Middle East by the third quarter of 2026.

To the extent the conflict-related cost pressure continues beyond the second quarter, we are similarly privileged to seek rebuilds from our customers on realized direct cost increases. The second quarter guidance does not assume any impact from the Wilson's acquisition. In summary, we are pleased to be able to maintain our full year guidance given the impacts from the conflict in the Middle East with the possibility of recouping a good portion of the cost increase that we are absorbing in our current Q2 guidance.

Our expectation remains that there is a potential for uplift to our full year guidance, depending on the strength of drilling activity picking up towards the end of the year. Looking to the remainder of 2026, first quarter 2026 revenue plus firm backlog and options for the legacy Tidewater fleet represents $1.1 billion of revenue for the full year, representing approximately 84% of the midpoint of our legacy Tidewater 2026 revenue guidance.

Approximately 69% of remaining available days for 2026 are captured in firm backlog and options. Our full year revenue guidance assumes utilization of approximately 80% for the legacy Tidewater fleet, leaving us with 11% of the capacity to be chartered if the market tightens quicker than we are anticipating.

Our midsized anchor handlers and largest class of PSVs retain the most opportunity for incremental work, followed by our smaller and largest class of anchor handlers and midsized PSVs.

Contract cover is higher in the earlier part of the year with more opportunity available later in the year. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time spent on drydocks.

With that, I'll turn the call over to Piers for an overview of the commercial landscape.

Thank you, West, and good morning, everyone. This quarter, I will talk a little about what we are seeing in each of our regions as we look out to the rest of the year and into 2026. Overall, the OSV market showed continued signs of improvement throughout the quarter with sentiment starting to pick up in all regions where we operate, even those which have faced some short-term challenges through 2025. Amid rising rig demand and offshore E&P activity, the long-term outlook for the OSV market remains strong with the ongoing upturn in project investment expected to continue to drive additional incremental demand out to 2030. While the continued limitations in the supply of any significant growth in the global OSV fleet will further exacerbate the expected tightness in our market. Working through our various regions and starting with Europe, the North Sea OSV spot market strengthened throughout the quarter. In the PSV sector, spot rates strengthened significantly as the quarter progressed with fixing activity remaining strong, helped by several PSVs leaving the region for warmer climates, a trend we don't see stopping in the short term.

In the AHST (sic) [ AHTS ] sector, supply constraints continue to drive rates higher with spot rates in the largest classes of AHTS reaching record highs above $350,000 per day in Norway.

In the Med, we continue to see strong activity. And with our global operating platform, we were able to move two further vessels into the region to meet the increased demand that we mentioned on our last earnings call. Overall, we expect the Med region to be a strong market longer term with several drilling campaigns and EPCI projects commencing in the second half of 2026.

In Africa, even with the busiest drydock schedule in the region, we had a good Q1 with a large increase in utilization across our West African and Angolan fleets, predominantly down to some overruns in drilling campaigns in both Namibia and Congo as well as an uptick in EPCI work in Angola and Mozambique.

Looking ahead, we do expect some slowdown in activity across the region in Q2, but are on track for a big pickup in activity from Q3 onwards, led by renewed drilling and EPCI activity in Nigeria, Namibia, Angola, Congo and Mozambique.

In the Middle East, as Quintin mentioned, we saw little disruption to our vessel activity in the region with all our vessels remaining on hire throughout the quarter. However, we have seen a slowdown in new tendering activity as our customers assess the short-term impact of operation to their plans.

Looking ahead, low tendering activity is expected to persist in the near term due to the elevated risk. And while it is probably too early to predict with any accuracy long-term rate movements in the region, we do expect day rates in the shorter term to be impacted positively on the upside by the lack of any new supply being able to enter the region. While the duration and trajectory of the conflict are still unclear, as Quintin mentioned, the ramifications of the conflict, we believe, will likely have longer-term positive benefits to the OSV industry, both in the Middle East and globally.

In the Americas, as mentioned on our last call, we remain excited with the long-term outlook in Brazil with the recent announcement that SBM agreed contracting terms with Petrobras the construction of two more FPSOs to be deployed offshore Brazil with first production targeted for 2030.

And while there's been some short-term slowdown in OSV tendering activity in the first half of 2026, this is expected to pick back up again after elections are completed in Q4 of this year.

In Mexico, Pemex underlying financial pressures continue to weigh down sentiment. However, we are seeing some uptick in the tendering activity from other oil companies in the country, which bodes well for 2027 and 2028.

Lastly, in Asia Pacific, Taiwan, Indonesia and Australia were the key drivers of demand in the region in the current quarter with several new contracts signed up to support both drilling and EPCI activity that will kick off in Q2 and should all go all the way through into 2027.

Looking further out into 2027, we are also starting to see several of the other NOCs and IOCs in the broader region getting organized to increase drilling activity starting end of 2026, all the way out to 2028, which bodes well for the region going forward.

Overall, we are very pleased with how the market has continued to move in the right direction in Q1, and we fully expect that positive momentum to continue into the second half of the year.

With that, I'll hand it over to Sam. Thank you.

Thank you, Piers, and good morning, everyone. I would now like to take you through our financial results where my discussion will focus on the sequential quarterly comparisons of the first quarter of 2026 compared to the fourth quarter of 2025. For the first quarter, we reported net income of $6.1 million or $0.12 per share. We generated $326.2 million in revenue compared to $336.8 million in the fourth quarter.

We saw average day rates increase about 1% versus the fourth quarter, but saw a slight decrease in active utilization to 80.6% from 81.7% in Q4. The revenue decline was primarily due to a decrease in operating days as there were two less days in the quarter, coupled with the lower utilization due to higher drydock days. Gross margin in the first quarter was $159.3 million compared to $164 million in the fourth quarter.

Gross margin percentage in the first quarter was 48.8%, nicely above our Q1 expectation and slightly ahead of our Q4 margin of 48.7%. The increase in margin versus Q4 was primarily due to the decrease in operating costs. Operating costs for the first quarter were $166.9 million compared to $172.7 million in Q4. The decrease in operating costs was due mainly to lower R&M costs and lower other operating expenses in addition to two fewer days in the quarter. While overall cost was lower, we did incur about $2.3 million of costs due to the Iran conflict, the majority of which was incurred in the Middle East.

Costs directly impacted were higher insurance costs and higher crew wages in the form of hazard pay. And directly, we also saw fuel and travel cost increase due to the increase in the commodity price.

Our EBITDA was $129.3 million in the first quarter compared to $143.1 million in the fourth quarter. For the first quarter, total G&A cost was $33.6 million, which is $5.4 million lower than Q4. The decrease was mostly due to lower professional fees due to a decrease in M&A transaction costs as well as costs associated with our Q4 internal vessel realignment.

In addition, we saw a decrease in salaries and benefits due to adjustments made to our compensation expense. For 2026, exclusive of additional M&A costs, we expect Tidewater stand-alone G&A costs to be about $125 million. This includes an estimated $14 million of noncash stock compensation. Moreover, we expect to incur approximately $7 million in additional G&A costs in the second half of this year related to the Wilson's acquisition. In the first quarter, we incurred $36.4 million in deferred drydock costs compared to $13.9 million in the fourth quarter. Q1 is typically a heavy drydock quarter, and this quarter was no exception as we had 949 drydock days that affected utilization by about 5 percentage points.

Drydock costs for 2026 is expected to be approximately $122 million. Additionally, we expect to incur approximately $16 million in drydock costs in the second half of the year related to the Wilson's acquisition.

In Q1, we incurred $14.9 million in capital expenditures related to vessel modifications and upgrades. For the full year 2026, we expect to incur approximately $51 million in capital expenditures. This amount includes a planned major upgrade to one of our Norwegian vessels. After this upgrade, our maintenance CapEx is expected to be approximately $36 million for 2026.

In Q1, we spent $24.4 million related to two purchase options we have exercised for vessels we have been leasing. This amount is not reflected as CapEx spend, but is instead reflected in the financing section of our cash flow statement in Q1 as payments on finance leases.

In addition, we expect to incur about $1 million in CapEx spend in the second half of the year related to the Wilson's acquisition. We generated $34.4 million of free cash flow in Q1 compared to $151.2 million in Q4. The free cash flow decrease quarter-over-quarter was mainly attributable to higher deferred write-off and CapEx spend in Q1 and large working capital benefit achieved in Q4 due to a significant increase in cash collections that did not repeat in Q1.

In Q1, we sold two vessels for proceeds of $3.3 million, which is also lower than the Q4 sale proceeds of $5.3 million. Though the Q1 free cash flow amount was lower than Q4, it was higher than our internal estimate. As a reminder, following our debt refinancing, which was completed in Q3 2025, we only have small debt repayments that are related to the financing of recently constructed smaller crude transport vessels.

We have no payments until 2030 on our new unsecured notes. Following the anticipated close of the Wilson's acquisition, our debt maturity and repayment profile will change to accommodate the newly assumed Wilson's debt. We conduct our business through five operating segments. In the first quarter, consolidated average day rates were 1% higher versus Q4, led by our Europe and Mediterranean day rates improving by 9% and our APAC segment increasing by 7% partially offset by relatively small declines in each of our other regions.

Total revenues were 3% lower compared to the fourth quarter, with decreases in the Americas, Africa and Middle East, partially offset by increases in our APAC and Europe and Mediterranean regions. Regionally, gross margin increased by 4 percentage points in Africa, 3 percentage points in our APAC region and 1 percentage point in the Middle East despite the conflict in Iran.

Our Europe and Mediterranean region saw a decrease of 2 percentage points and the Americas declined by 4 percentage points. The gross margin increase in our African region was primarily due to a 5 percentage point increase in utilization due to fewer idle days, offset by slightly higher repair and drydock days. This is offset somewhat by a decline in average day rates of 4% Operating costs decreased by 15% due mainly to a decrease of 4 vessels operating in the area and two less operating days in the quarter.

The gross margin increase in the APAC region was due to an increase in utilization due to fewer repair days and 7% day rate increase, partially offset by a small increase in operating costs as we had two vessels transferred into the area.

The increase in the Middle East gross margin was primarily due to a 5% decrease in operating costs. The decrease was primarily due to fewer operating days, lower R&M expense due to fewer [ DFR ] days, partially offset by higher costs related to the conflict. In the quarter, we did see a small drop in day rates and utilization. Utilization was down slightly quarter-over-quarter, primarily due to higher idle days, partially offset by fewer drydock and repair days.

Our Europe and Mediterranean region gross margin was 2 percentage points lower versus the prior quarter, but 3 percentage points higher than our expectation. Revenue was up 5.5% due to a 9% increase in day rates, partially offset by a 7 percentage point decrease in utilization. We had a heavy drydock schedule in the quarter, and we mobilized vessels into the region, which contributed to the decrease in utilization.

Drydocks represented a 5 percentage point decrease in utilization in Q1 compared to less than 1 percentage point decrease in Q4. The increased revenue was partially offset by higher operating expenses related to higher salaries and travel and supplies and R&M due primarily to an average of four additional vessels operating in the region.

Gross margin in our Americas segment decreased by 4 percentage points due mainly to a 12% -- $12 million decrease in revenue caused by a 4 percentage point decline in utilization as well as a 3% decrease in average day rates. Utilization was affected by higher drydock and repair days.

The revenue decrease was partially offset by a 10% decrease in operating costs versus Q4. The decrease was primarily due to transferring two vessels out of the region during Q1. As noted in our press release and as Quintin mentioned earlier on the call, we experienced additional operating costs in Q1 related to the impacts from operation Epic Fury.

We estimate ongoing additional crew wages in the form of hazard pay and insurance costs of about $1.6 million per month. In addition, we can expect approximately $1.8 million of additional monthly related costs related to fuel and travel expenses due to the higher global commodity prices. The fuel and travel expenses are estimates based on our forecasted activity and current commodity prices. These elevated costs related to the conflict will likely continue into the near future, though it is uncertain how long this geopolitical disruption may last. It is also widely expected that commodities markets will remain elevated beyond the immediate resolution of the conflict.

In a scenario where the conflict extends and remains similar in nature to its current state, we estimate total operating cost increases of between $10 million and $11 million per quarter.

We are currently working with our customers for reimbursement of wages and insurance costs provided for under our contracts. But as of now, we have not included this in our guidance.

We look at our Q1 revenue when we look at our Q1 revenue, I'm glad to announce that we did not experience any material reduction due to contract cancellations because of this conflict. As it relates to the Wilson's acquisition, integration meetings is progressing as expected, and we will expect the transaction to close by the end of the second quarter.

We strongly believe that our increased presence in the Brazilian market is an important piece to our global strategy and are excited about our growth there.

In summary, Q1 was another strong quarter for operations -- from an operations and execution standpoint. We exceeded internal expectations for free cash flow, day rate and utilization in what is typically a seasonally slow quarter. Industry fundamentals remain strong.

Our balance sheet is in excellent condition, and we continue to be optimistic about the opportunities that lie ahead for Tidewater.

With that, I'll turn it back over to Quintin.

Sam, thank you, Sir. May, we can go ahead and open it up for questions.

[Operator Instructions] Question comes from the line of Ben Summers of BTIG.

So you called out the anchor handler market, anchor handler market being particularly tight in Q1, especially in the North Sea. So I guess I'm kind of curious, is this more of a regional development? Or is this something you're kind of seeing across the global fleet?

Yes. Ben, it's Piers here. It is basically what's happening in the North Sea where there's a bit more of a spot market, but we're certainly seeing on the larger anchor handling sizes, there's been some consolidation in that market, but there's also -- that's driven some of that tightness. So that's allowed some of our competitors to push the day rates, which helps us as well. So as long as we're all moving in the right direction, that's a positive thing.

Generally, what we see is this -- the spot market in the North Sea tends to drive a lot of the sort of noise elsewhere as well. So we expect that to sort of have a trickle-down effect through the rest of the globe over the next few quarters. But no, it's a positive sign on the largest classes of anchor handlers. If you see that in Norway, it tends to sort of push through down to other regions as well. And that's driven by increased towing of rigs, but also on the subsea construction side, the big anchor handlers are needed for sort of trenching and subsea support work as well. So it sort of plays into what we've been saying about the increase in EPCI work and also exploration starting to pick up again.

Awesome. Super helpful. And then kind of on the broader picture, talking about the long-term increased focus on energy security. I guess, are there any specific basins here you'd call out as you think being specifically emphasizing this energy security? I know we called out the Middle East, but just kind of as we think across the global fleet, anything to call out here that you think could be specifically impacted by this longer-term trend?

Principally the smaller markets in Asia, I believe. I think you're going to see a real strength growing over the next few years in Indonesia and Malaysia. Piers, you may have some other anecdotal information as well.

I mean I think it's across the board, but I think Quintin is right, it's primarily going to be in Asia. We see a huge amount of demand coming out of that region in terms of where you're expecting and also from that point of view, we're seeing it already actually a little bit in Indonesia as well. So that's going to have a kick into Africa as well in terms of more drilling and putting more supply.

I wouldn't be surprised if we see it on the East Coast of Africa. And of course, we've already seen some of the Western Mediterranean pickup in Libya and so forth. So you're starting to see players that haven't been in the market over the past 5 years or 6 years, really reaching out and trying to develop their resources.

Your next question comes from the line of Josh Jain of Daniel Energy Partners.

First one, just pretty constructive outlooks have been outlined from the offshore rig companies surrounding activity over the next 12 months. And I know you're not going to guide sort of '27 drydocks. But I'm just curious, is there any thought in bringing forward any of those when you can? Or is it reasonable to think that the drydock schedule is going to be more friendly as we exit this year into '27 with -- and how are you positioning the company given the expected growth in the deepwater side?

To bring any drydocks forward. We tend to try and plan out over a 5-year period, so it would help our supply chain and our procurement piece as well. So we have a pretty well set operations on that side and how we look at things. We might move or two depending how projects pan out. But at the moment, we've got a pretty good sight line in terms of where projects are rolling out over the next few years, both for our own technical team, but also for our commercial team in terms of what projects we're seeing in which areas and we try to line up our vessels and drydocks accordingly to that.

Okay. And then the other one, [Technical Difficulty] space with the Helix-Hornbeck merger. Does this frame at all how you think about growing your business moving forward with respect to different service offerings? Or does additional M&A look more like Wilson and some of the other things that you've done over the last couple of years?

So it doesn't change our view because we always have that expansive view of other service lines. It's certainly a lot easier for us to do things that are in our existing market. To the extent that we do reach out, it would be with a franchise that we feel is already well performing in that particular vertical. But no, it doesn't change anything. Glad to see it. More consolidation is better. I certainly can't consolidate this industry by myself, so more the merrier.

And then sorry, if I could sneak in one more. Just given there are a number of rigs that were given multiyear extensions with Petrobras in the last 90 days, how does that frame your discussion for the Wilson acquisition. And I think at the time of the deal, you talked about there were a number of assets that were in the process of being extended. Maybe you could just update us on those and how much -- maybe how much more confident you are today than you were when you did the deal about that market and your thoughts there?

Yes, still positive. Obviously, Josh, we just said. I think we go into this year has been an election going on with -- in Brazil. So we've seen a couple of tenders that have been pushed to the right. The understanding from the market is that's because Petrobras wants to sort of make some decisions on longer-term commitments. But I think overall positive. Petrobras is positive. There's also the IOCs are coming out as well in that region. So even moving up the margin as well. So I think overall, we don't see any concerns in terms of future tendering. Maybe there's a bit of movement to the right on some of them. But overall, nothing that concerns at the moment. So overall, it's very positive in terms of what we're seeing on the rig side. And then the additional FPSOs, as we mentioned, coming as well. So there's a really good long-term story in Brazil that we think we're really well placed to take advantage of once we get the Wilson's acquisition into the business.

Your next question comes from the line of Jim Rollyson of Raymond James.

Detail this quarter. Quintin, I guess, last quarter, you were pretty optimistic about how things were shaping up as we head into late this year, really into next year and beyond. And obviously, that's only gotten better with the oil macro situation that's kind of come out of this Middle East conflict. And it sounds like you're having some customer conversations maybe that have picked up, but I'd love to just kind of hear what you're hearing from folks? Are they already trying to mobilize incremental activity at this stage? And how do you think that translates into the timing of your ability to start pushing day rates up?

Well, it's always a bit of a guess. But obviously, the building activity that we're seeing coming from the rig companies, EPCI and subsea contractors gives us a lot of confidence in our ability to push day rates up once the market tightens. But we're a little bit later in the chartering process for those customers. So I think we're not going to be able to demonstrate until later into '26 and into '27.

Got it. And then just back to M&A, you obviously got the Wilson deal closed. There's been a couple of other, I guess, chess pieces moved off the board kind of since you announced that deal. And I'm wondering if the shift in the oil macro and just this better environment outlook that we're talking about has changed any of the dynamics of opportunities in terms of customer or target acquisition pricing expectations at this point?

I think people are definitely getting more and more confident in the longer-term view of the industry. And so that's helping. And I think people are also beginning to appreciate the importance of consolidation. They see the benefits from the drillers and other subsectors. So I haven't seen any real price movements at this point, but if the industry continues to improve at a steady rate, we'll certainly see that too.

Your next question comes from the line of Don Crist of Johnson Rice.

Sorry if this has already been addressed. I got on the call a bit late. It's a busy morning. But I just wanted to ask about the Far East. Obviously, we're hearing some news reports of energy shortages and things like that. I know you had a bunch of boats working in Malaysia and Indonesia in the past that cut sidelines for other reasons. But could you just -- what's the state of the Indonesia and Malaysia markets right now and your ability to put those big boats back to work? Is that coming sooner rather than later? Or just any thoughts around that?

Yes. Don, it's Piers here. Yes, the market is pretty close. We don't have a huge -- it's not our biggest market Asia Pacific, but we do have a lot of big boats there, which have all been working in Malaysia, Indonesia and Australia and then up in Taiwan, on that side. So we're very positive as we sort of said earlier, we think with this energy security story, we're only going to continue to see more investment in those countries. I think the governments have been shocked a little bit by what's obviously happened with operation Epic Fury.

So longer term, we're already seeing it, but we expect to see the government really doubling down in terms of pushing their NOCs and also the IOCs that operate in those countries in terms of more investment, looking to do more drilling, exploration and getting production.

So we're busy down there at the moment, and we expect to be -- continue to be busy as well. We've moved one or two ships already into the region this year as well with our operating platform, we're able to do that. So it's a positive story in Asia Pacific for us.

Okay. And M&A has been a big topic in the fourth quarter and the first quarter, so you haven't really done any stock buybacks. But Quintin, are you kind of leaning more towards stock buybacks as the M&A story goes to the background more and you're able to actually buy some stock back here? Or you just going to keep that optionality for the future?

I actually don't believe that the M&A opportunities are winding down. So yes, obviously, we have no issue returning money to the shareholders and share repurchases is our way to do it. But to the extent that we see more value in acquisitions by getting the right boats at the right price, then I would lean towards that.

That concludes our Q&A session. I'll now turn the call back over to Quintin Kneen of President and CEO for closing remarks.

Thank you again for joining us today. We look forward to updating you again in August. Goodbye.

This concludes today's conference call. You may now disconnect.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Tidewater Inc. Q4 and Full Year 2025 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the call over to West Gotcher, Senior Vice President of Strategy, Corporate Development and Investor Relations. Please go ahead.

Thank you, Jordan. Good morning, everyone, and welcome to Tidewater's fourth quarter and full year 2025 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 Operating 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, uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments that we're making during today's conference call. Please refer to our most recent Form 10-K 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, March 3, 2026. 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 in our earnings release located on our website at tdw.com.

And now with that, I'll turn the call over to Quintin.

Thank you, West. Good morning, everyone, and welcome to the Tidewater Fourth Quarter and Full Year 2025 Earnings Conference Call. .

I'll start the call this morning discussing Tidewater's performance during 2025, providing some highlights of the fourth quarter update you on our current views on capital allocation and then discuss our outlook for the market and vessel supply and demand, including our initial thoughts on any impact from operation Epic Fury. West will then provide some additional detail on our financial outlook and give you our 2026 guidance. Piers will give you an overview of the Global Markets and Global Operations, and then Sam will wrap it up with our consolidated financial results.

Entering 2025, there was a good deal of uncertainty as to how the market would unfold and what the pace of offshore activity would look like. Our view was not dissimilar, but we did believe that the broader set of demand drivers for our vessels would help deliver a year consistent to 2024. Which proved to be the case. In the face of last year's softer offshore drilling demand and general macro uncertainty, I'm pleased to say that Tidewater nonetheless delivered its best year in recent memory by nearly every metric.

We generated year-over-year revenue growth, gross margin expansion and average day rate growth. We generated EBITDA of nearly $600 million and generated nearly $430 million of free cash flow, well outpacing the free cash flow generated in 2024, which itself was the recent high point for the offshore industry activity. This performance against the broader industry backdrop not only speaks to the resiliency of Tidewater's business model, but also to the resiliency of the company we've endeavored to build over the last 8 years with a relentless focus on scalable infrastructure and operational excellence.

Fourth quarter revenue and gross margin came in ahead of our expectations. Revenue came in at $336.8 million due primarily to higher-than-anticipated average day rate and slightly better than anticipated utilization. Gross margin came in at nearly 49% for the quarter, an improvement quarter-over-quarter and about 250 basis points better than we expected.

Fleet utilization continued to benefit from better-than-anticipated uptime and lower than expected down for repair time in drydock days. Additionally, during the fourth quarter, we completed a strategic internal restructuring of our vessel ownership consolidate a significant portion of the fleet under a single wholly owned U.S. entity. During the fourth quarter, we generated $151 million of free cash flow, bringing the full year 2025 total free cash flow to nearly $430 million.

Fourth quarter free cash flow came in materially higher than the first 3 quarters of the year, which was the result of a meaningful working capital benefit, which Sam will provide more detail on later, combined with our lowest quarterly drydock spend of the year. We are very pleased with the free cash flow generation of the business, ending the year with nearly $580 million of cash on the balance sheet. I made a comment last quarter that we would find it unacceptable to build this kind of cash on the balance sheet and would look for ways to put the cash to more productive, economically accretive use.

Subsequent to the end of the fourth quarter and as announced last week, we entered into an agreement to acquire Wilson Sons Offshore Ultratug for $500 million. In addition to our expectation of maintaining the existing debt at Wilsons, we plan to fund the remaining purchase price with cash on hand. We are very excited about the addition of Wilson for a wide variety of strategic and financial reasons, many of which we discussed last week, but this is exactly the type of capital allocation opportunity we target. This acquisition has many merits as it relates to the strategic and operational capabilities it offers but it also provides a compelling use of capital to realize an economic return well in excess of our cost of capital.

Importantly, we're able to maintain a healthy balance sheet pro forma for the transaction given the structure of our unsecured debt, revolving credit facility capacity and the continued cash flow generation of the business. It's worth noting that during the fourth quarter, we did not repurchase any shares under our repurchase program as we were working on the Wilson's acquisition. We retain our $500 million share repurchase authorization and capacity, which represents 13% of our shares outstanding as of yesterday's close.

We've discussed our capital allocation philosophy over the last year or 2. We've said consistently that given the strength of our balance sheet, we felt comfortable using a substantial amount of cash for share repurchases and/or M&A transactions. As long as the near-term cash flow visibility provides the ability to quickly delever back down to below 1x net debt to EBITDA. As discussed last week, we expect to be below 1x net debt to EBITDA pro forma for the acquisition, even as of closing, assuming a June 30 closing date.

Although still developing, operation Epic Fury adds an aspect of uncertainty to our operations in the Middle East, but thus far, no real changes. Our largest geographic area of operation within this segment in Saudi Arabia, which makes up 80% of the segment's revenue for 2025. Everything there is business as usual. Our vessels in the UAE and Qatar are safely in port, but remain on [ hire ], and no customers have a word of evacuations. We do expect an increase in insurance costs while hostilities are ongoing, but that incremental cost is immaterial to our business. Diesel costs are also rising, but fuel is a pass-through to our customers. Similar to the increase in insurance cost, the impact is immaterial to our overall business.

It's still early and developing, but thus far, the developments do not change our outlook for 2026, which remains optimistic, particularly as it relates to the pace of offshore drilling activity. observable offshore drilling leading indicators such as tenders and contracts are materially higher over the past few months compared to earlier in 2025. Which suggest that operators are progressing in earnest to commence additional offshore projects in the future.

In our conversations with our customers, the commentary is similar to what we hear publicly. Offshore international projects are of high interest and pre-tender and tender conversations for our vessels continue. One other indicator, which is a bit more structural in nature, is from recent oil and gas industry reports is that, the last decade of underinvestment has led to a declining resource base for many E&P companies. There have been indications that oil companies are acknowledging this challenge beyond looking just to fill the gap through their own M&A through the rollback of capital return programs to focus on exploring activities and otherwise on activities focused on growing a given company's resource base.

Combining this resource need, with a longer-term hydrocarbon demand curve that looks materially higher than estimated even a year ago, provides a significant incentive for our customers to explore and develop existing assets and take advantage of a healthy long-term hydrocarbon demand environment. We believe that the offshore resource base provides a compelling opportunity for oil companies to find new resource bases and believe that these fundamental factors will support an increase in drilling activity, not only as we progress through the year, but for at least the next few years.

I've only spoken about drilling, but the other areas of activity where we benefit production support, offshore construction and [ EPC high ] work are all likely to benefit in the scenario outlined. To the extent that drilling activity does increase in a structural way, this will likely occur in frontier regions that require new subsea infrastructure and ultimately, FPSO installations to efficiently move product to market.

This element of our business continues to serve us well today and would also provide for incremental vessel demand. It's useful to contrast this intermediate demand picture with the current state of vessel supply which, as we often say, is the most important determinant of the long-term financial health of our business. The demand curve for vessels is highly inelastic. Wind vessel supply slightly exceeds demand. Our pricing power is fairly restrained. However, when demand slightly exceeds vessel supply, pricing leverage accelerates quite quickly.

The global fleet of vessels has been essentially unchanged, if not declining slightly over the past few years. In 2024, there was a handful of new build vessels that were ordered, representing roughly 3% of the global fleet. We've not seen any newbuilds ordered since then. Given the lead time on new build orders somewhere between 2 to 3 years and some of the structural reasons we -- that were limiting new build ordering that we've discussed in the past, the vessel supply and demand picture I've illustrated to fix what we believe to be an exciting outlook for the offshore vessel industry.

In summary, we are pleased with how the business performed through 2025 with a particularly strong finish to close out the year. We are excited to welcome the Wilsons organization into the Tidewater family, and we'll work diligently to close the transaction and to integrate the business. We will look to continue to efficiently allocate capital to the highest returning opportunities we have against a compelling vessel supply and demand that we believe is in the early stages of developing.

And with that, let me turn the call back over to West for additional commentary.

Thank you, Quintin. Subsequent to the end of the fourth quarter, we announced the acquisition of Wilson Sons Offshore Ultratug for $500 million in an all-cash transaction. We expect to finance this transaction using cash on hand and the assumption of approximately $261 million of debt provided by BNDES and Banco de Brasil. The assumed debt carries a weighted average cost of 3.6%. The Further, the assumed debt has a long-term amortization profile that stretches out to 2035 with no particular year of amortization adding any significant maturities to our current debt maturity profile. Assuming a June 30, 2026 closing date, we expect to have a net leverage ratio below 1x.

As Quinn mentioned, we did not repurchase any shares during the third quarter due to the Wilsons acquisition, during the fourth quarter due to the Wilsons acquisition. At the end of the fourth quarter, we retained our $500 million share repurchase authorization. As a reminder, under our outstanding unsecured bonds, we are unlimited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than 1.25x pro forma for any share repurchase.

Under our revolving credit facility, we are also unlimited in our ability to repurchase shares, provided that net debt to EBITDA does not exceed 1x. However, to the extent we exceed 1x net leverage, we still retain the flexibility to continue to return to shareholders, provided that free cash flow generation is in excess of cumulative returns to shareholders. From a financial policy perspective, our approach to leverage remains consistent. Our general test is that so long as we can return to net debt 0 in about 6 quarters, we are comfortable to proceed with a given outlay of capital.

Further, our target leverage at any given point in time is 1x, although we will consider exceeding this target for M&A based on the relative merits of the transaction and the visibility and durability of the acquired cash flows, all with an eye to returning to our target leverage level and with an ability to return to net debt 0 in about 6 quarters.

We will maintain a disciplined approach to deploying debt in such a way that we're able to achieve return-enhancing uses of capital while maintaining the strength of our balance sheet. We remain opportunistic on share repurchases, and we will look to execute share repurchase transactions when [ Sebile ] M&A targets are not available. We retain the option of evaluating M&A and share repurchase concurrently, but our financial policies and philosophies outlined dictate our relative appetite to pursue both concurrently.

Turning to our leading-edge day rates. I will reference the data that was posted in our investor materials yesterday. Across the fleet, our weighted average leading-edge day rate was down slightly in the fourth quarter compared to the third quarter. During the quarter, we entered into 21 term contracts with an average duration of 6 months as we are working to ensure that we maintain vessel availability for new contract opportunities as the market is expected to tighten later this year.

Turning to our financial outlook. We are updating our full year 2026 guidance to contemplate the Wilsons acquisition, assuming a June 30, 2026 closing date. We are raising our full year 2026 revenue guidance to $1.43 billion to $1.48 billion and a full year gross margin range of 49% to 51%. The updated guidance is reflective of the addition of the Wilson fleet and does not contemplate any changes to our guidance for the legacy Tidewater business. Our expectation remains that there is a potential for uplift depending on the strength of drilling activity picking up towards the end of the year.

Looking across 2026, firm backlog and options in January revenue for the legacy Tidewater fleet represents approximately $1.1 billion of revenue for the full year representing approximately 80% of the midpoint of our legacy Tidewater 2026 revenue guidance. Approximately 65% of the [ fable ] days for 2026 are captured in firm backlog and options. Our full year revenue guidance assumes utilization of approximately 80%, leaving us with about 11% of capacity to be charted if the market tightens quicker than we are anticipating.

Our largest class of PSVs and anchor handlers retain the most opportunity for incremental work, followed by our midsized anchor handlers in small and midsized PSVs. Contract cover is higher earlier in the part of the year with opportunity available later in the year. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time spent on drydocks.

With that, I'll turn the call over to Piers for an overview of the commercial landscape.

Thank you, West, and good morning, everyone. Before I talk about the market and put some of Quintin and West comments into a wider global context, I wanted to mention that we will be releasing our sixth sustainability report in early April. This report, as always, is a global team effort and I'd like to take this opportunity to thank everyone within the Tidewater team for their hard work and commitment, helping to put this report together as we continue to showcase to all our stakeholders, our historical as well as our future commitment to sustainability. Please look out for the report.

Turning back to the offshore space, as Quintin has already mentioned, 2025 was a very good year for Tidewater, which is testament to the hard work of the whole team not just in maintaining market-leading day rates, but also continuing to improve our vessels uptime with a laser focus on making the right investments in the maintenance and operations of our vessels to be the gold standard in the industry and thereby continuing to decrease our down for repair days year-over-year across the global fleet.

We all came into 2025 with a level of uncertainty as to how the market would turn out. So for our global team to deliver such impressive results in a flattish market, we believe bodes very well for us as we start to see the expected tide of increasing demand turn at the end of 2026. Demand of eased back slightly during 2025. However, long-term fundamentals of the business are still very much in Tidewater's favor. And with the limited supply story, the only truly global footprint and the largest and one of the youngest and best maintained fleets in the industry, we are well placed to springboard on from our 2025 results and make further progress in future years as expected demand growth comes back online in the second half of 2026.

Turning to our regions, starting with Europe and the Med. The medicine set fair to be very active during the year, with several oil majors announcing and tendering for drilling programs in the region for commencement in 2026 as well as several EPCI projects kicking off throughout the year. So we expect a very active 2026 in the Med.

In the North Sea, Norway looks set for a good few years ahead with additional rigs expected in the region and some PSVs expected to leave the LTV space. The supply-demand balance should further tilten our favor over the next few years. Even in the U.K., rumors continue to circulate that the U.K. government is discussing an early end to its windfall tax levy as soon as this year. Although the more likely scenario is that this would not fully come into play until 2027. But as we mentioned on our last call, this will be a significant shot in the arm for the industry in the U.K.

Lastly, in the North Sea, where we operate 2 large AHTS, we've seen some early signs of large AHTS spot rates, both in the U.K. and Norway, cresting over $100,000 per day. And while these are very short-term contracts, it is quite unusual to see dayrates this high so early in the year. But with a couple of large AHTS leaving the region over the winter from warmer climates.

We do expect to continue to see strong rates for large AHTS through the rest of 2026. In Africa, sentiment remained cautiously optimistic for 2026 strengthening drilling activity in West Africa and neighboring regions such as the Med and Mozambique coming back into play are expected to support high utilization and day rate increases across all AHTS and PSC segments throughout the year.

A number of other companies have released tenders for further exploration campaigns in 2026 in Namibia which is a 900 square meter plus perf region and a country where over the last few years, we've been very successful supporting our customers from our in-country base. And the expectation is that in early 2027, we should start to see a number of our customers kicking off field development in analyst in Namibia, which is more vessel intensive, especially in countries like Namibia with limited infrastructure.

Similarly, in Mozambique, we're starting the year supporting Technip 3 to 4 of our large OSVs, with the expectation that we will start to see several other projects kick off in Q3 and Q4 of this year. and go well beyond 2027 as things continue to settle down safety-wise in country.

Lastly, in Angola, we're seeing a lot of increased activity in country as the government continues to pressure the IOCs to increase production and thereby a big focus on both improving existing fields through improved subsea infrastructure, but also through exploration for new fields as Angola sees annual production rates stagnating. Overall, we are positive the outlook for Africa as we get towards the latter part of 2026 and for the next few years beyond.

In the Middle East, the market remains tight with very limited availability of tonnage in the region and expect the region to remain supply constrained to the short to medium term. And the opportunity will be there to continue to push rates throughout 2026.

Of course, as a word of caution, as Quintin just mentioned, we are watching carefully the ongoing situation in the region. And as of today, operations are continuing. However, the safety of our people in Caroma region are of the utmost important and as such, we will constantly be monitoring the situation and work with all of our stakeholders to make sure everyone stays safe. In Asia Pacific, Australia looks to be a flattish year compared to 2025 and with most of our customers focusing on production, so we don't expect any significant incremental demand during 2026.

In Malaysia, in Petrobras specifically, we saw an uptick in activity in the latter half of 2025, which has meant that locally owned OSVs have now gone back to work, meaning there's less supply available to depressed dayrates in the wider region. Which with increased tendering activity in countries like Indonesia, Myanmar and Vietnam should mean that we are able to push rates upwards for a larger class of PSCs as we move into the latter part of 2026.

In the Americas, the Gulf of America market outlook for 2026 looks flat at best, and we expect there to be some pressure through the year as there will be very limited work on the East Coast which over the last few years has soaked up a number of boats in the Gulf during the summer months and kept the supply demand balance and check. We have limited Jones Act exposure with only 4 or 5 of our U.S. boats currently working there. and we believe any softening in the Gulf will be more than offset by the growing demand story we are seeing in the Caribbean.

In Mexico, with Pemex seeming to slowly be writing their listing ship we're cautiously optimistic that by the end of this year, we will really start to see some significant increase in the tendering activity, driven both by Pemex but also by a number of new operators that are touted to be coming into the country to help Mexico focus on increasing its falling production rates.

Lastly, in Brazil, we are very excited about the long-term prospects in the country. as evidenced by our recent announcement to acquire Wilsons Ultratug. And as we talked about last week, we really believe that the combination of our 2 companies will create an even stronger platform in the country to allow us to continue to support and meet the growing demands of our customers in Brazil.

Overall, as Quintin mentioned, we are very pleased with how our global team both on and offshore performed through 2025. And while we saw some softening in the offshore space during 2025, the market still continue to move in the right direction through the year. we remain positive that the platform we have created. We'll continue to be able to reap significant awards for all of our stakeholders for many years to come.

And with that, I'll hand over to Sam. Thank you.

Thank you, Piers, and good morning, everyone. At this time, I would like to take you through our financial results. My discussion will initially focus on the full year 2025 and compared to 2024, followed by a deeper discussion of the sequential quarterly results from the fourth quarter of 2025 compared to the third quarter of '25. As noted in our press release filed yesterday, we generated revenue of $1.35 billion for the year, an increase of approximately $7 million versus our 2024 amount. Gross margin for the year was $665.8 million compared to $649.2 million in 2024.

Our net income was $334.7 million compared to $180.7 million in 2024. Our net income for the quarter and full year 2025 includes the previously mentioned tax benefit related to a strategic realignment of our vessel ownership. Included in that amount is a onetime noncash tax benefit of $201.5 million primarily related to the utilization of foreign tax credits, which were previously subject to valuation allowances. The incremental tax basis is reflected in deferred tax assets for property and equipment.

Average day rates improved by $1,300 per day for the full year to $22.73 while active utilization decreased slightly to 78.7% due to more idle days, partially offset by fewer drydock and repair days. The strength in the day rates, combined with the reduction in operating costs versus 2024, increased our gross margin by about 1 percentage point year-over-year to 49.2%. Adjusted EBITDA was $598.1 million for 2025 compared to $559.6 million in 2024, we also generated $426 million of free cash flow, an increase of $95 million from 2024 due in part to the reduction in dry dock costs of $35 million.

We also sold 12 vessels for total cash proceeds of $17.6 million. Working capital was a source of cash due to the notable success in our cash collections during Q4. Our success in our Q4 cash collections was a large contributor to our free cash flow generation in 2025. Overall, '25 was a good year with strong free cash flow delivery and solid operational execution as well as completing important strategic initiatives including our debt refinance in Q3 and the previously mentioned vessel realignment. Our improved balance sheet and future cash flow generating capability will continue to provide opportunities to deploy capital in M&A as illustrated by the Wilsons announcement last week as well as repurchase our own shares.

As a reminder, although we did not repurchase shares during Q3 or Q4, for the full year, we used $98 million in cash to reduce approximately $2.8 million of our shares in the market year-on-year, including shares which were held back to pay roughly $8 million in taxes related to vesting of employee share-based awards.

I would now like to turn our attention to the fourth quarter where we reported net income of $219.9 million or $4.41 per share, which includes the tax benefit mentioned previously. We generated $336.8 million in revenue compared to $341.1 million in the third quarter. Average day rates were down about 3% versus the third quarter. However, we did see a nice increase in active utilization from 78.5% in the third quarter to 81.7% in the fourth quarter. which was our highest active utilization since Q1 2024. This utilization increase resulted mainly from the decrease in idle and write-off days.

Gross margin in the fourth quarter was $164 million compared to $163.7 million in the third quarter. Gross margin percentage in the fourth quarter was almost 49%, nicely above our Q4 expectation and slightly ahead of our Q3 margin of 48%. The increase in margin versus Q3 was primarily due to a decrease in operating costs. Operating costs for the quarter were $172.7 million compared to $177.4 million in Q3.

In the quarter, there were 3 vessels -- 3 fewer vessels operating in Australia, which is a high operating cost area. Overall, we saw a decrease in salaries and travel and consumable expenses, partially offset by increases in R&M and other vessel expenses. Adjusted EBITDA was $143.1 million in the fourth quarter compared to $137.9 million in the third quarter. For the year, our total G&A cost was $134.5 million, which is $23.7 million higher than 2024, primarily due to an increase in professional fees and personnel costs.

This amount includes approximately $8.3 million in transaction associated costs related to our M&A diligence efforts. G&A cost for the quarter was $39 million, $3.7 million higher than the third quarter due primarily to an increase in professional fees and personnel costs. For 2026, exclusive of additional M&A costs, we expect Tidewater stand-alone G&A costs to be about $123 million. This includes an estimated $15 million of noncash stock compensation.

Moreover, we expect to incur approximately $7 million in additional G&A costs in the second half of this year related to the Wilsons acquisition. Drydock costs for the full year was $98.6 million, which includes approximately $35 million of engine overhauls. Full year 2025 dry dock days affected utilization by about 5 percentage points. In the fourth quarter, we incurred $13.9 million in deferred drydock costs compared to $17.6 million in the third quarter.

We had 672 dry dock days that affected utilization by about 4 percentage points in Q4. Drydock costs for 2026 is expected to be approximately $122 million which includes $46 million of engine overhauls. 2026 drydock days are expected to affect utilization by approximately 5 percentage points. Additionally, we expect to incur about $16 million in drydock costs in the second half of the year related to the Wilsons acquisition. Full year 2025 capital expenditures totaled $25.8 million, in Q4, we incurred $5.1 million in capital expenditures related to vessel modifications and upgrades, ballast water treatment installations, DP system and IT upgrades.

For the full year 2026, we expect to incur approximately $51 million in capital expenditures. The increase year-over-year is primarily due to a planned major upgrade to one of our Norwegian vessel which is supported by customer contract. Option is upgrade or maintenance CapEx is expected to be approximately $36 million during 2026. We will also spend an additional $24.4 million in 2026 related to 2 purchase options we have exercised for vessels that we've been leasing. The purchase auction prices were below market value for these vessels.

Finally, we expect to incur about $1 million in CapEx in the second half of the year related to the Wilsons acquisition. We generated $151.2 million of free cash flow in Q4 compared to $82.7 million in Q3. In the quarter, we sold 2 vessels for proceeds of $5.3 million and incurred $3.8 million less in deferred drydock costs. However, the free cash flow increase quarter-over-quarter was mainly attributable to significant working capital benefit achieved in Q4 due to an increase in cash collections.

This was largely due to our cash collections related to our largest customer in Mexico, whose overall receivable balance decreased by more than $40 million. As a result, our overall DSO decreased by 14 days quarter-over-quarter. As a reminder, following our debt refinancing, which was completed in Q3 2025, we only have small debt repayments that are related to refinancing of recently constructed smaller crew vessels. We have no payments until 2030 on our new unsecured notes. Following the anticipated close of the Wilsons acquisition, our debt maturity and repayment profile will change to accommodate the newly assumed able on debt.

We conduct our business through 5 operating segments. I refer to the tables in the press release and the segment footnote and results of operations in our 10-K for more details of our segment results. In the fourth quarter, consolidated average day rates were down versus the third quarter. However, results varied by segment with our Middle East day rates improving by 9% and which was offset by day rates declining in each of our other regions. Total revenues were slightly lower compared to the third quarter with increases in our Middle East and African regions, offset by decreases in our APAC, Americas, Europe and Mediterranean regions.

Regionally, gross margin increased in Africa by 6 percentage points and we also saw a 3 percentage point increase in our APAC region as well as a 1 percentage point increase in the Middle East. Our Europe and Mediterranean region saw a decrease of one percentage point and Americas declined by 8 percentage points. The gross margin increase in our African region was primarily due to a large increase in utilization of 13 percentage points combined with a slight decrease in operating costs and partially offset by a 2% decline in average day rates.

The increase in utilization was due to fewer idle drydock and repair days, gross margin increase in the APAC region was due to an increase in utilization and a large decline in operating costs, partially offset by a day rate decrease of about 11%. The decline in operating costs and day rates are primarily due to 3 fewer vessels operating in Australia versus Q3. utilization increase is primarily due to a decrease in idle and dry dock base, partially offset by an increase in repair days.

The increase in the Middle East gross margin was primarily due to a 9% increase in average day rates, partially offset by higher operating costs. The cost increase was primarily due to higher R&M to personnel expenses. Utilization was roughly flat quarter-over-quarter. Our Europe and Mediterranean region gross margin was marginally lower versus the previous quarter and the gross margin decrease in our Americas region was driven by 9 percentage points decline in utilization as well as a 6% increase in operating costs.

The cost increase was primarily due to higher R&M, higher fuel expense due to lower utilization compared to Q3. The decrease in utilization was due to higher dry off and idle debts. In summary, Q4 was a strong quarter. We delivered both strong financial results and free cash flow. Our balance sheet is in excellent position. and the industry long-term fundamentals remain very strong. We are especially excited about the Wilson's acquisition in the highly important Brazilian market, and we remain optimistic about the opportunities that lie ahead for Tidewater.

With that, I'll turn it back over to Quintin.

Thank you, Sam. Jordan, I think we can go ahead and open it up for questions. .

[Operator Instructions] Your first question comes from the line of Jim Rollyson from Raymond James.

Yes, you can call me, Jimmy, that's fine. Quintin or Piers, so if you kind of lay out the day rate picture, right, leading edge has slipped the last couple of quarters, which I guess just speaks to the white space timing and seasonality and that kind of stuff.

But with what Piers went through without -- with maybe a couple of exceptions, it sounds like things are shaping up to get materially better as we move through this year and into next. Maybe just some context around the guidance and kind of your thoughts on how your fleet average day rates move throughout the year and heading into next, right? You were going up $4,000 a day for a couple of years that kind of trimmed back to, I think it was 1,300 that Sam mentioned. But how do you think that trajectory looks and kind of what's embedded at the midpoint of guidance for '26?

Well, I'll start. Obviously, we're expecting things to be somewhat flattish for '26, but looking for a tightening in the market in the second half, we're not banking that into the guidance. But if we do see that tightening, my hope is that we're going to see those day rates climb in '27 and '28 at another $3,000 and $4,000 a day.

So it is quite responsive to even small increases in demand for vessel usage. We're starting to see some signs of that. So if you go back 2 or 3 years, there was some slackness in the Middle East, but you see that region was one of our best movers in the past quarter. I expect that to continue. I'm getting very excited about what I'm seeing develop in West Africa, and there's some wage increase there.

So as long as the world can still hold itself together and maybe as pure syndicated, we get some relief from some of the tax authorities in the U.K. we'll see that market tighten up globally. And then you'll see those $3,000 and $4,000 a day movements per year. So I may have cover what Piers was going to say, but he and I are in separate locations.

So let me just ask Piers if he wanted to add anything before we hand it back to you.

No. I mean -- should join the commercial team. That was brilliant. Yes. nothing more to add. I just I think, Jim, we are seeing a lot of -- I think as Quintin opening remarks, a lot of additional tender and pre-tender type of conversations with our customers, which does really bode well for the sort of second half of this year, big projects, both on the EPCI stuff and also on the drilling side as well.

So yes, very optimistic as we get towards the last half of the year. And I think as Quintin said, then we get the chance to really push rates and '27 sort of hopefully what we were the last big time we've got to sort of really push rates.

Yes, that's certainly exciting and nice to actually have visibility beyond just kind of hopes of things going. And my follow-up is probably for Sam.

Sam, if you kind of line up your midpoint of guidance, let's just say, for '26 and the little bit higher dry dock CapEx and a little bit higher overall CapEx? And then however you're thinking about working capital as Pemex is kind of catching up. How are you thinking about free cash flow generation right now for '26?

Yes, Jim, thanks. No, I think the free cash should stay fairly strong for 2026. We did see $426 million. So obviously, we had a big bump in our cash collections. So if we look back over the last few years, it should average out in the $300 million level somewhere.

Yes. I guess the other thing I'd add to that, Jim, is that we did have a disproportionate bump in Q4 from the lump sum collections from Pemex and we're certainly very happy let's see that.

I need to see them continue to pay at that level. But if you look at the DSO for us, it's actually abnormally low for such an internationally and broad company. And that may normalize. So that may eat up some otherwise operational cash flow in '26.

Your next question comes from the line of Keith Beckmann from Pickering Energy Partners.

I always appreciate the slide that you guys kind of put out on newbuild economics. I just kind of wanted to get a sense on maybe where you see the maximum best of life for a lot of -- a majority of the PSCs in the industry? And then when you think a rough time line maybe on when you think we can face either serious upgrades and renovations or a full new build cycle? Obviously, looking much further down the road.

Well, I'll start, and as I indicated, Piers, West and I are in separate locations, I'm here with Sam. So West may want to add something because he maintains those slides. But I will tell you that the industry is a lot more capital discipline than it's ever been in my 2 decades in the industry. I was at an industry conference about a month ago, and this was a big discussion and nobody is interested in building.

If you look at most people's financial statements, they use a 25-year depreciation line. But the fact is these boats can work well into 30, 35 years. But they will need serious upgrades as they go forward. And that needs to be supported by day rates and so forth.

So I think that we're going to see real modest to almost no building in the next year. And then if the industry does pull back, like I was just mentioning to Jim in '26 and '27 and you start to see average day rates closer to $30,000 a day. Think you're definitely going to see some building. But at least from my discussions recently, I believe it's going to be very moderate and be more replacement oriented. So we'll have to see how it plays out. But I still think that we need to see day rates closer to $30,000 a day before you see anybody spending a lot of money and certainly before you see banks supporting it.

Awesome. That's very helpful. And then my second question was just around like right now, obviously, you guys are focused on integrating the Brazil acquisition. I was just wondering if there's any other regions that could make sense to increase your fleet looking forward down the road or on the other end of that, is there any sort of fleet rationalization that could make sense at this point on maybe some lower spec boats? Well, we sell both on a regular basis, and Sam, I think covered some of the boats we sold during the year.

So every year, there's some vessels hit the wall. So economically, they'll we'll sell them off. But certainly, the regions that we're in today are regions that we are dedicated to. I'm actually -- I mentioned it on in one of the remarks, I think, earlier on the call, I can't remember if there's any questions on the call. But I am excited about West Africa. I start to see things really solidify there.

And historically, had been focused on the Americas. And obviously, we got the deal done in Brazil. I guess, now more I'm tilting towards West Africa, but we'll just have to see. A lot of it has to do with price and that's always hard to say.

Your final question comes from the line of Greg Lewis from BTIG. .

I did want to talk a little bit about what's happening in the Middle East. You mentioned things are kind of just business as usual, I guess, in Saudi Arabia and realize it's been years, right, since Saudi evacuated rigs, I think you probably have to go back to what Desert Storm, which I don't doubt.

Quintin, maybe you were in the industry, but I don't know anyone else was. As we think about that, is there any kind of way to think about if we do evacuate rigs, as we think about the contracts with Aramco. Are there like force majeure clauses? Are there -- is there any kind of contract language that allows them to as pause contracting or anything like that? How should we think about realizing it's changing by the hour probably.

Right, so you like to think about the Middle East as the primary impact to the very I would tell you that when it comes to Saudi Aramco, they rule the roost. And no, there's nothing in the contract that gives them the privilege to cancel it will. But they are strong for us, and they will come to us if they feel they need to reduce the vessel count. But the reality is during these times, people need oil and the production becomes very important. .

And so in that particular area where it is very production-focused offshore, I expect that -- we may see things like insurance costs go up. We may see things like personnel costs going up because it's sometimes good target for people to go there during those times, at least that's what we've seen in the past. But I honestly, at this point, not concerned. But obviously, we'll update you in the next 1.5 months in May when we do the first quarter call. But it's -- it's just what we do. So it's probably now it's just not a concern.

Okay. Great. And my other one, appreciating you guys have your ongoing merger with Wilson happening. I guess I'm just kind of curious, it looked like Ocean pack is acquiring CBO in Brazil also. Has anything changed in Brazil that's kind of driving this kind of flurry of M&A activity? I feel like everybody has been waiting for potential consolidation in Brazil for I don't know, a few years now. And it just seems like all at once this is happening, is there anything that's changed that's driving this? Just kind of curious if you have any kind of color you could provide around that.

It's the optimism that's in Brazil today. there was some back and forth in '25 about what was going to be doing and what the activity levels were going to be and generally the strength of the South American market.

And then -- and I would tell you that people are just very focused on finding long-term contracts with good payers at good margins and Brazil fits that bill. I think that it's just coincidental that these 2 transactions have happened real quickly. whisper talk has been that they've been going on for a couple of years. And so as a result, I think it's just more coincidental of the timing, but the general optimism in Brazil is quite nice.

That concludes today's question-and-answer session. I'll now turn the call back over to Quintin Kneen for closing remarks.

Jordan. Thank you, and thank you, everyone. We will update you again in May. Goodbye.

That concludes today's meeting. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wilson Sons UltraTug Offshore acquisition [Operator Instructions] I would now like to turn the call over to West Gotcher, Senior Vice President of Strategy and Corporate Development and Investor Relations. Please go ahead.

Thank you, Kate. Good morning, everyone, and welcome to Tidewater's Wilson Sons Ultratug Offshore Acquisition Announcement Call. I'm joined on the call this morning by our President and CEO, Quintin Kneen; our CFO, Sam Rubio; and our Chief Operating 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, uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments that we're making during today's conference call.

Please refer to our most recent Form 10-K and Form 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, February 23, 2026. 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 in our recent earnings releases located on our website at tdw.com. And now with that, I'll turn the call over to Quintin.

Thank you, West. Hello, everyone, and thank you for your time this morning. We're hosting this call to address any immediate questions that you may have related to the press release we issued last night on our announcement of the acquisition of Wilson Sons Ultratug Offshore. We've publicly disclosed our desire to continue to grow the fleet through M&A and that we've had a particular focus on the Americas in general, but specifically Brazil.

I'm excited to announce that we've entered into a definitive agreement to acquire Wilson Sons Ultratug Offshore for $500 million in an all-cash transaction. Wilson has deep roots as a vessel builder and vessel operator exclusively focused on the Brazilian market. Piers will give you more detail on the fleet, but it consists of 22 PSVs, all but one of which are currently working today. The Wilson's fleet and organization is unmatched in its quality and professionalism, and we believe it will be a great fit with the Tidewater organization.

This transaction is similar to the last few acquisitions we've done as we're focused on acquiring the right vessels at the right price, but different in that these vessels bring with them the regulatory protections that come from being in the right geography. We've maintained a relatively modest shore-based infrastructure in Brazil over the last few years. And in fact, in preparation of expanding in Brazil, we have made preparatory infrastructure investments over the last 2 years to make the infrastructure scalable and efficient to handle these additional vessels. So this integration should be even smoother than the previous 3.

The addition of this fleet will bring the number of vessels we have in Brazil up from 6 currently to 28. We are highly confident in our ability to integrate the Wilsons organization onto the Tidewater platform, and we believe that we've shown this to be a core competency of the Tidewater management team over the last 3 acquisitions we've successfully integrated. Not only are we excited about the fleet that we've acquired, but we're also pleased with some of the optionality the fleet provides.

Under local laws, owners of Brazilian built tonnage are afforded a disproportionate advantage over similar foreign vessels. And furthermore, they also bring the ability to import additional foreign flag vessels and temporarily place a Brazilian flag on those vessels. Brazilian flag vessels receive priority to operate in Brazil and are protected in the commercial tendering process. This REB capacity afforded by the Wilson's fleet allows us to evaluate the future importation of international flag vessels into the Brazilian market as market demand continues to grow over the time for offshore vessels.

As always, we remain committed to building the world's largest, safest, highest specification, most sustainable and most profitable fleet in the world, and we believe the acquisition of Wilsons continues that commitment. With that introduction, let me turn the call over to Piers for more discussion on the fleet and the Brazilian market.

Thank you, Quintin. Good morning, everyone. I'd like to highlight a few more reasons why this is such a great fleet of vessels and a great opportunity to significantly expand our presence in Brazil. Currently, Tidewater operates 6 vessels in Brazil, a relatively small presence for the world's largest OSV operator in the world's largest offshore supply vessel market. With the addition of the Wilson's fleet, as Quintin has said, our fleet will now grow to 28 vessels in country with the ability to expand that fleet further from vessels outside of Brazil with the additional REB capacity.

This additional scale provides the requisite exposure to the world's largest offshore market for a company of our size. One of the primary attributes of the Wilson's fleet that was particularly attractive is the legacy of the Wilsons owners of shipbuilders and ship operators. The vessels are all of a consistent build quality and designs, providing for a great deal of uniformity across the fleet that makes supply chain management and technical planning a streamlined and more efficient process.

This fleet uniformity, combined with what we deem to be a world-class onshore support organization at Wilsons, provides a high degree of confidence in our ability to efficiently utilize these assets over the long term. We've talked at length about our desire to reenter the Brazilian market given the commercial environment today and our expectations of it over the long term. While there's been some noise in the market recently related to the short-term plans of Petrobras, a significant customer of the Wilson's fleet, we remain highly optimistic on the long-term growth opportunities with Petrobras on the back of their recently published 5-year plan.

Further, as we progress through due diligence and remain tuned into ongoing market developments in Brazil, we see incremental vessel requirements from other operators in the region that support the long-term demand profile for the market in addition to just Petrobras. From a vessel supply perspective, expanding on Quintin's discussion on REB capacity and the Brazilian build profile of Wilson's fleet, this dynamic provides additional benefits beyond importing international flag vessels.

Under local laws, Brazilian flag vessels receive priority to operate and are afforded other certain rights during the tendering process. As of today, just over 20% of vessels working in Brazil are international flagged, providing a buffer of vessels that are structurally subordinate to the Wilson's vessels and commercial priority. Broadly, we believe that the Brazilian market is short vessels, and that will persist over time with Brazilian flag vessels, particularly in short supply.

Before I hand it over to West, I want to reiterate how excited we are bringing the Wilson's organization under the Tidewater umbrella and for the opportunity set we see leveraging the Wilson's platform for the long term. With that, I'll hand it over to West to provide some additional color on the transaction.

Thank you, Piers. Under the terms of the transaction, Tidewater will acquire all of the outstanding shares of Wilsons and its affiliates for $500 million on an all-cash basis, consisting of cash on hand and through the assumption of approximately $261 million of debt provided by BNDES and Banco do Brasil. Tidewater intends to novate Wilson's debt as part of the transaction, and we expect to provide a parent company guarantee to support this process. The Wilson's debt is an attractive element of the overall transaction economics.

The weighted average cost of debt is approximately 3.6%. Additionally, the Wilson's debt has a long-term amortization profile stretching out to 2035 with no particular year of amortization adding any significant maturities to our current debt maturity profile. The Wilson's debt provides for a nice element of built-in financing to consummate the transaction and a distinct cost of capital advantage relative to our other available financing avenues, accruing incremental benefit to our equity holders.

Pro forma for the transaction, Tidewater will retain modest net leverage. Assuming an estimated June 30, 2026 closing, we will have a net leverage ratio of below 1.0x. We do not plan to access our revolving credit facility to finance any portion of this transaction, and we use cash on hand. As we look forward, given the relatively low level of pro forma leverage and the substantial cash flow we expect from the legacy Tidewater business and from the acquired cash flows from Wilsons, we retain optionality on incremental capital allocation opportunities as we progress through 2026.

Assuming the transaction closes by the end of the second quarter, we expect the Wilsons business to generate approximately $220 million of revenue and generate a gross margin of approximately 58% over the first 12 months. In addition, we would expect to incur approximately $14 million of annual G&A expense. We expect the Wilsons acquisition to be accretive to 2026 and 2027 earnings and cash flow per share.

Closing the transaction is subject to customary regulatory approvals, including approval from the Brazilian antitrust authority, satisfactory documentation and negotiation and satisfaction of customary conditions precedent. We expect the transaction to close late in the second quarter of 2026. And with that, I'll turn the call back to Quintin.

Thank you, West. Kate, I think we can just go ahead and open it up for questions.

[Operator Instructions] Our first question comes from the line of Jim Rollyson with Raymond James.

Congrats on the announcement of the transaction. My first question, I guess, might be for Piers. Piers, that Slide 8 you have that shows kind of the forecast rig outlook and contracted FPSO outlook. I'm curious, in your math, when you do all this work, what do you think the incremental vessel opportunity is in Brazil over the next few years, given that it's already short, as you mentioned? And how do you see that getting filled? Is it bringing in additional foreign flag vessels or new builds or a combination? Just maybe a little market outlook thoughts.

Jim, thank you. Great question. Yes. I mean, obviously, we're very positive for Brazil. I think there's -- as I mentioned, there's a sort of strong 5-year plan that Petrobras has. But as we mentioned, it's not just Petrobras. We see a lot of incremental demand from the IOCs at the moment coming out and also on the subsea construction piece as well for a number of support vessels as well. So in terms of actual numbers of vessels, it's always difficult to put in on that side.

But we're seeing a lot of additional FPSOs. We're seeing extra rigs coming in as well and then the subsea side as well. So there's no -- when we looked at this, there's -- we definitely saw a complete lack of Brazilian built ships coming out in the market. So we have a very positive sort of 5-year plus outlook for Brazil going forward, which made this very attractive for us to look at.

Understood. And maybe as a follow-up, West, if you take the backlog of $429 million at the time you did the due diligence, and I think you mentioned $220 million kind of runs off over the first 12 months after close. Maybe just a little comment on kind of duration of the remaining backlog and how rates embedded in backlog are comparing to what the current market rates look like?

Thanks, Jim. So you're right, there is a runoff of revenue relative to the $441 million of backlog that we disclosed. But our anticipation is that as vessels roll off contract that they are able to secure new contracts and kind of able to continue that backlog. What I'd tell you as it relates to the day rates is that if you kind of do the implied math on the revenue and the existing backlog that the contracts for this fleet run off over the next couple of years.

Given that historically, the contract lengths of contracts in Brazil, these are usually longer-term contracts. So if you take that back in time a little bit, that would be reflective of a much lower day rate environment. And so our expectation is, particularly with some of the market outlook that Piers provided, is that there will be a nice uplift that we can realize from the rolling of these contracts over the coming years as new contracts move up in line with what we've seen on a kind of a leading-edge basis, if you will.

Your next question comes from the line of Greg Lewis with BTIG.

Quintin, congratulations on this. I feel like you've been talking about trying to buy something in Brazil for, let's just say, at least a little while, right? I did have a question. Obviously, we're just buying the vessels here. I guess that is the right way to think about it. And then just to the previous question, just because Wilson has a shipyard.

Does -- is there any -- post this transaction, will there be any existing kind of preferential treatment if you were to build vessels in Brazil? Or is there any kind of -- I don't know, are there any kind of ongoing relationships that have developed from this acquisition where you're arguably the preferred company with vessels from Wilson at their shipyard?

Well, Greg, just to be perfectly clear, this is a wholly owned subsidiary that has its own infrastructure and G&A team and so forth. And it's separate from the shipyard business that Wilsons has. So we will be taking on an entity with an existing infrastructure, working capital and all that good stuff. But it is siloed into the PSV category of their operations and not any of the other shipping businesses or the shipyard.

Now there's no contractual arrangements that are in place as part of this deal that show that type of preference, but it's very natural for that preference to exist over time. And so I'm not really at a point where I want to do any new builds, but when that point comes, having the same shipyard build the same vessels that you have currently makes a lot of sense, but that's just too far off for me to speculate at this point.

Okay. Okay. I appreciate that. And then I guess West kind of alluded to and maybe both can answer this about -- I mean, hey, we're still kicking off a lot of cash and there's probably ample opportunities to continue to strategically consolidate this market. With Brazil addressed, are there other areas that make kind of long-term strategic sense to kind of scale into just given the fact that the balance sheet is still pretty attractive, and we are going to be generating a lot of cash here over the next 2, 3-plus years.

No, great question. I have also been focused in the U.S. market, but I just can't get anything done in the U.S. market. I mean we laughed about Brazil. I mean it's even more difficult in the U.S. market. I'm actually getting very excited about West Africa again. So that could be the next move for us. But we still reserve the right to repurchase shares. And if I can't get anything done, I'm committed to doing that as well.

Your next question comes from the line of Keith Beckmann with Pickering Energy Partners.

I just wanted to get an idea on if there's any synergies in there. I didn't see it mentioned anywhere, but you haven't had a super scale presence in Brazil historically, but just trying to get an idea on if that was assumed in any of the guidance at all in SG&A for the forward 12 months? Or just are there any further opportunities to cut costs that maybe weren't mentioned?

Well, Brazil is a wonderful place to go for a lot of things, but G&A synergies is not one of them. So I'm not assuming in this transaction that there's going to be any G&A synergies. We'll run with about $14 million of additional G&A, which is in line with our G&A per vessel per day run rate.

Now we -- I do believe over time that we will find synergies and we continue to dedicate ourselves to operating very cost efficiently. But this transaction is not like what we've done in the past where we've had a significant amount of synergies. Now there will be revenue synergies with the REB capacity that we have not included in any of the information that we provided to you, but my hope is that, that will be significant as we move forward.

That's very helpful. And then my second question is just kind of around -- do you guys have any sort of sense on the expected maintenance and dry dock cadence here over the next 24 months on the Wilson's fleet? Is there any sort of significant CapEx that we can know about on catch-ups? Or I mean, 21 of the 22 vessels working, so I'm assuming they're all in pretty good shape. Just any thoughts there?

Keith, it's West. I think that's a reasonable view that you have 21 of them working and Piers talked about the quality of the fleet and kind of the consistent design and the capabilities of the Wilsons organization, which gave us a lot of confidence as we went through diligence and evaluated the fleet for the acquisition.

I would tell you that we didn't disclose anything specifically about this fleet. But as time goes on and that piece of it rolls into the broader Tidewater umbrella, that's something that will be contemplated in future disclosures around CapEx and dry docks and so forth.

Your next question comes from the line of Josh Jayne with Daniel Energy Partners.

My first one is maybe you could just go into a little bit more discussion of the age of the fleet in the specs. I know you highlighted on one of the slides that shows 13 of the larger units have average of 12 years. But just could you speak to why this specific fleet was differentiated from some of the others that you may have looked at in country and then also the age of the fleet in Brazil as it operates today for your competition?

Yes. Josh, it's Piers here. Yes, I mean, obviously, the most -- many interesting reasons for doing this deal, but one of them is the consistency of the fleet. So they're all built under one design by Damen shipyards. They have the same Caterpillar engine sets. They have the same Kongsberg propulsion systems. They're highly respected by Petrobras. Wilsons is a company that is considered to be the #1 supplier to Petrobras. So there's that consistency across the whole fleet. And there's a very strong shoreside team who supports that business, which makes an incredibly efficient and successful fleet in terms of the support of us to Petrobras.

In terms of the age, nothing is getting younger in the global fleet because there's no supply really coming out into the market. We haven't seen -- as long as there's a good maintenance record involved and you've got that consistency across the fleet, Petrobras and the customers in Brazil are very open to considering to support vessels for a long time. So we're still one of the younger fleets there in Brazil, and it's something which we're not worried about at all from going forward and looking forward. There's a long amount of life left in this fleet in our view.

Understood. And then as my follow-up, you highlighted the shortness, I guess, of the availability of vessels in Brazil. Could you just speak to that a little bit more, how you see supply and demand over the next, let's call it, 18 to 24 months, just given the backdrop of Petrobras spending plans?

Yes. I mean I think there's -- there are a lack of building at the moment, and there's a huge amount of REB capacity, which you need to be able to bring in. So there's some vessels which are being built at the moment, specifically against contracts, but that's not something which we're worried about. So there is a -- yes, there's just -- there's only a few shipyards in Brazil. There's huge controls on that side. So we're not worried about any additional supply coming in going forward.

Your next question comes from the line of Don Crist with Johnson Rice.

Congratulations on getting the deal done. Now, I wanted to ask a capital allocation question. When I'm talking to investors, there's a lot of pushback about not being able to put your stock in kind of dividend portfolios. And I know your preference is for M&A and stock buybacks, but any consideration of putting maybe a token $0.01 a quarter or something like that dividend in place to appeal the investors that can't invest in your stock today?

Well, all of those things are considered at the Board level on a routine basis. So yes, they do get addressed. Our general perspective at this point is that with the volatility in this industry and a high degree of operating leverage, the ability to convince the broader shareholder universe that a dividend is permanent is harder. And therefore, as a result, the benefits from that aspect of paying a dividend perhaps not as much. But no, but thank you. I appreciate the fact that people are asking about it, and that will continue to involve our thinking about it as we go forward.

Okay. And I guess just one follow-up. I know you'll talk about this more when you report earnings in a couple of weeks. But any changes broadly around the world? I mean, obviously, the rig calendars are soaking up a lot of the white space that have been there for the last 9 months or so. But any significant changes around the world in activity levels that you all can see that have happened since you last reported earnings?

It's Piers again. No, we're still very positive for the second half of -- or second -- latter half of this year. We're sort of in line with where the rig white space is sort of falling away. So we're seeing some -- our views of the world haven't changed. Quintin talked about Africa in terms of coming back in the second half, but we're seeing a lot of additional work in the Caribbean, Asia Pacific, even the U.K. is looking a little bit more positive at the moment.

So yes, as you say, we'll talk about a little bit more on the earnings call. But no, we're still in a very positive thought process as to how this market is going to develop over the next few years once we sort of get into the second half of this year, which is similar to what we said on the last call.

[Operator Instructions] Your next question comes from the line of Pelle Bibow with Clarksons Securities.

Congrats on the deal. I think everything that we had on our books here apart from one question was answered by the team already. But I was kind of hoping that you could give some details on what's baked into the revenue projections and the backlog. And I think particularly, I'm very interested in knowing if there's anything in the existing tonnage import quota on the REB here that is included. What I mean by that is, has the Wilsons already sold some of the REB capacity? And are you including that type of revenue in that backlog projection?

I'll take that. So as it relates specifically to your question, I believe I heard it correctly. But if not, please correct me. Is there REB revenue or that optionality we spoke to contemplated in our guidance? And the answer is no. Just -- again, correct me if I misheard that. But in terms of what we see for that guidance, 21 of the 22 vessels are working. So we have a good view as to what the contract profile for those vessels look like.

As you might suspect over the course of the year, given some of my earlier commentary on the rolling of those contracts, there are some vessels that will roll off during that 1-year time frame. I can't go into detail as to exactly what we've contemplated in there, but I think it's fair to say it would be in line with what current market rates and expectations are for that fleet.

Yes. Great. Yes. The question, I think I just maybe phrased it a little bit in, I would say, and specifically, what I kind of meant was not that your REB figures would be included in the backlog, but I was just thinking that if there is open capacity for REB tonnage import caught up on the Wilson side already, if they would have sold that capacity for a certain amount of dollars and if that is included in the revenue projection for the next 12 months?

So let me answer it this way. There are 3 vessels in the Wilson's fleet that are formed -- that were non-Brazilian built. And so those do consume some of the REB capacity that Wilsons has. But I think that's all I would consider as it relates to that question.

Yes. And the final question is a little bit about large versus midsized preference in Brazil. On our side here, we kind of see that Petrobras and many other operators as well on deepwater side lean towards a larger vessel preference. Do you see the risk of midsized vessels becoming oversupplied over the next 12 to 24 months?

No. I mean I think that's the very quick answer. There's still a lot of demand for the medium size and large size Wilsons has large vessels as well as the medium size, but we're not seeing any slowdown in that side. So I think the short answer is no, we're not worried about it.

I will now turn the call back over to Quintin Kneen, President and CEO, for closing remarks.

All right. Well, listen, thank you, everyone, for your time today. We look forward to updating you in the next week or so as we release earnings.

Ladies and gentlemen, that concludes today's call. You can now disconnect. Thank you, and have a great day.

Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to West Gotcher, Senior Vice President of Strategy, Corporate Development and Investor Relations. Please go ahead.

Thank you, Liz. Good morning, everyone, and welcome to Tidewater's Third Quarter 2025 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 Operating 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 comments that we're making during today's conference call. Please refer to our most recent Form 10-K and Form 10-Q for additional details on these factors. These documents are available on our website at tdw.com or through the sect at sec.gov.

Information presented on this call speaks only as of today, November 11, 2025. 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 in our earnings release located on our website at tdw.com. And now with that, I'll turn the call over to Quintin.

Thank you, Wes. Good morning, everyone, and welcome to the Tidewater Third Quarter 2025 Earnings Conference Call. I'll start, as usual, by providing some highlights of the third quarter, updating you on our current view on capital allocation and then discussing the offshore vessel market and our outlook on vessel supply and demand. Wes will then provide some additional detail on our financial outlook and give you our 2026 guidance. Piers will give you an overview of the global market and global operations, and then Sam will wrap it up with our consolidated financial results. Third quarter revenue and gross margin nicely exceeded our expectations. Revenue came in at $341.1 million due primarily to a higher-than-expected average day rate and slightly better-than-anticipated utilization.

Gross margin came in at 48% for the quarter, about 200 basis points better than our guidance. The primary factor driving the increase in average day rate was the benefit of our fleet rolling on to higher day rates contracts. Additionally, fleet utilization continued to benefit from the substantial dry dock and maintenance investment we've made over the past few years, driving meaningful uptime performance compared to our expectations.

During the third quarter, we generated $83 million of free cash flow, bringing the first 9 months of 2025 total free cash flow to nearly $275 million. Free cash flow generation, we continue to demonstrate alongside balance sheet and liquidity enhancements we completed during the third quarter provides us with a substantial degree of confidence in our ability to deploy a significant amount of capital over time to drive shareholder value.

Based on the estimates for 2026 that Wes is going to cover shortly, absent any cash used in M&A or share repurchases, we will be ending 2026 with close to $800 million in cash, which, while we like the pace of cash flow generation, we would find unacceptable from an allocation of capital perspective. We currently retain our $500 million share repurchase authorization, representing approximately 18% of shares outstanding as of yesterday's close. As discussed on last quarter's earnings call, we see this share repurchase authorization as a long-term program that we will lean into based on competing capital allocation opportunities we have before us. In this regard, we did not repurchase any shares during the past quarter due to these competing priorities.

Our current leverage position is such that we feel comfortable in potentially using a substantial amount of cash in an M&A transaction and are comfortable adding leverage to the business, provided that we have confidence that the near-term cash flows provide the ability to quickly delever back to below 1x net debt-to-EBITDA, very similar and consistent with what we have done in our prior acquisitions.

Importantly, given our current balance sheet, future cash flow generation and liquidity position, M&A and buybacks are not necessarily and either/or proposition. However, how certain M&A discussions progress and whether or not they ultimately come together, can shift our cadence and immediate tactics in executing share repurchases, but I don't want to leave you with the impression that we are limited in the long run on our ability to execute on both.

Much of the commentary for offshore activity during 2025 has been on the pace and amplitude of the recovery from a relatively muted period of tendering for near-term offshore term projects. We believe there are a number of factors that have precipitated this white space dynamic, not the least of which have been macro uncertainties, OPEC production and a relatively tepid commodity price environment and supply chain bottlenecks for critical offshore infrastructure. By all accounts, including observations by the drilling contractors, recent public commentary and conversations with our customers, it appears that the next few quarters represents a shoulder period of drilling activity ahead of an uptick towards the end of 2026, with increasing conviction on the state of drilling activity into 2027 and beyond.

We believe this to be a reasonable expectation given our conversations, but also more broadly, evaluating expected total global hydrocarbon demand projections in what appears to be a hydrocarbon supply curve that will being a slight surplus in 2026 moving to a meaningful deficit thereafter. This should result in capital expenditures to bring on new production ahead of this shortfall, providing further confidence to the uptick in drilling activity that appears to be developing as evidenced by the recent tendering activity for offshore drilling units.

In the intervening period, Tidewater is in the advantageous position compared to many in the offshore sector in that we are the beneficiary of a wide variety of offshore activities, all of which remain robust. Production support is a critical piece of our business, comprising roughly 50% of what we do today. This base level of demand remains steady and is supported by current commodity prices. The continued proliferation and deployment of incremental FPSO units is providing additional vessel demand. FPSO support has always been a component of our business, but the volume of units that we're delivering and expected to deliver over the coming years is fairly unique in the history of the offshore industry. In addition, many of these FPSOs are being deployed into frontier areas that have limited shipping infrastructure and are in challenging weather and wave conditions, which should ultimately disproportionately benefit our larger vessel classes.

On the EPCI and offshore construction segment of our business, our observation has been that backlog for these projects usually have a few years of lead time before converting into vessel demand. We've seen that backlog begin to convert into a meaningful increase in demand. And based on customer conversations, that demand is set to further strengthen in 2026 and in 2027. These demand drivers are important components of our business and help mitigate some of the near-term softness we see in the drilling market. In the longer term, the structural growth in these markets will continue to put added strain on vessel supply. And when drilling activity growth does resume in earnest, vessel supply will be that much more constrained by the growth in these other sectors, providing even more leverage to vessel-owners than what we saw in the 2022 to 2024 period.

As important as these factors are, particularly in straining vessel supply and a drilling recovery, in the near term, these factors don't adequately offset the absence of additional drilling activity to provide us the ability to aggressively push up day rates. However, we do expect this non-drilling demand to help us retain our utilization in day rates next year. To the extent drilling activity comes in a bit stronger than what we are guiding today, we would expect some additional benefit to our 2026 financial performance. We continue to believe that tight vessel supply will remain a tailwind for the sector and that the structural limitations that impact new build investment decisions will limit any significant new build vessel programs for the foreseeable future.

In summary, we are pleased with the cash flow that our business is generating. We are optimistic about the long-term outlook for the offshore vessel industry and remain exceptionally well positioned to drive earnings and free cash flow generation over the coming years. Additionally, we are in the fortunate position of having a significant amount of capital to deploy, and we remain committed to deploying this capital to its highest and best use for our shareholders.

And with that, let me turn the call back over to Wes for additional commentary and our financial outlook.

Thank you, Quintin. At the end of the third quarter, we had $500 million of share repurchase authorization outstanding. Our share repurchase capacity is a function of the refinancing that we completed during the third quarter of 2025. Under the bonds, we are unlimited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than 1.25x pro forma for any share repurchase. Under the new revolving credit facility, we are also limited in our ability to repurchase shares provided that net debt to EBITDA does not exceed 1x. Under the revolving credit facility metric, to the extent that we exceed 1x net leverage, we still retain the flexibility to continue returns to shareholders, provides a free cash flow generation as in excess of cumulative returns to shareholders. Our net debt-to-EBITDA ratio at the end of the third quarter was 0.4x.

Specific discussions of these limitations can be found in the respective agreements filed with the SEC.

Our philosophical approach to leverage remains consistent. Whether it be for M&A or share repurchases, our litmus test is that so long as we can return to net debt 0 in about 6 quarters, we are comfortable to proceed with a given outlay of capital. From time to time, we may exceed this threshold only for M&A depending on the visibility and durability of the acquired cash flows, but this is our general approach. [indiscernible] is important to keep in mind as we navigate the opportunities before us and also informs how we evaluate a combination of M&A and share repurchase. Our intention is not to use leverage for leverage's sake, but rather to efficiently deploy capital while maintaining the strength of our balance sheet.

We remain opportunistic on share repurchases, and we'll look to execute share repurchase transactions when suitable M&A targets are not available.

Turning to our leading-edge day rates, I will reference the data that was posted in our investor materials yesterday. Probably, our weighted average leading-edge day rate for the fleet was down marginally in the third quarter compared to the second quarter, primarily a function of our midsize PSVs in West Africa and larger PSVs in the North Sea. Rates for these vessels were resilient elsewhere around the world. We did see a nice uplift in our largest class of anchor handlers with contracts in Africa and the Mediterranean and a bit of the movement up in our smallest PSVs.

During the quarter, we entered into the 34 term contracts with an average duration of 7 months as we look to a strengthening market as we progress into the back half of 2026.

Turning to our financial outlook, for the remainder of 2025, we are narrowing our full year revenue guidance to $1.33 billion to $1.35 billion and a full year gross margin range of 49% to 50%. We've narrowed our range for the remainder of the year, with the revenue outperformance in the third quarter bringing up the low end of the range, and we've lowered the high end of the range due to a few projects ending earlier than anticipated in the Americas and as we expect a bit more idle time in West Africa as we close out the year. We now expect utilization to be roughly flat sequentially as the benefit we expected from lower dry docks is now offset by the lighter-than-anticipated activity I just mentioned.

The midpoint of our revenue guidance range is approximately 99% supported by year-to-date revenue plus firm backlog and options for the remainder of the year. Turning to the 2026 outlook. We are initiating a full year 2026 revenue range of $1.32 billion to $1.37 billion and a full year 2026 gross margin range of 48% to 50%. We anticipate a relatively consistent quarterly cadence of revenue generation and margin profile throughout the year. Our expectation is for a relatively even year with the potential for uplift depending on the strength of drilling activity picking up towards the end of the year.

Our firm backlog and options represent $316 million of revenue for the remainder of 2025. Approximately 78% of available days for the remainder of the year captured and firm backlog and options with our larger and midsized classes of vessels retaining slightly more availability to pursue incremental work as compared to our smaller vessel classes.

Looking to 2026, our firm backlog and options represent $925 million of revenue for the full year, representing approximately 69% of the midpoint of our 2026 revenue guidance. Approximately 57% of available days for 2026 are captured in firm backlog and options.

Our full year revenue guidance assumes utilization of approximately 80%, providing us with 11% of capacity to be chartered if the market tightens quicker than we're anticipating. Our largest class of PSVs retain the most opportunity for incremental work followed by our midsized anchor handlers and small and mid-sized PSVs largest anchor handlers. Contract cover is higher in the earlier part of the year with more opportunity available later in the year. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time on on drydocks. With that, I'll turn the call over to Piers for an overview of the commercial landscape.

Thank you, Wes, and good morning, everyone. First off, as both Quintin and Wes have mentioned, our overall long-term outlook for the offshore space remains very positive for the OSV market. And while we have some thought term headwinds to navigate through, our and the industry's expectations are that as we get to this time next year, we will start to see that expected uptick in drilling demand that everyone has been so vocal about, which led on to the record EPCI backlog should bode well for other 3 day rates in the latter half of 2026 and into 2027.

OSV supply growth is expected to remain very moderate, supporting market dynamics overall with the OSV order book of 134 units according to Clarke's research, still representing roughly 3% of the current fleet, reflecting limited capacity for supply growth. New building activity in the OSV space continues to be subdued, and we see no signs of significant new supply entering the market in the foreseeable future.

Turning to our regions and starting with Europe. We saw continued pressure on day rates, mainly in the U.K. However, utilization across the whole region compared favorably to previous quarters as our teams work hard to keep the boats working in the U.K., Med and Norway. Uncertainty over the U.K. energy profits levy remains. However, market chatter suggests that the U.K. government may soften its approach to the next budget on the 26th of November, which, if this happens, will be an unexpected shot in the arm for the region as we go into 2026.

The longer-term outlook for both Norway and the Med remains positive, with our teams now working on several multi tenders all to start during 2026. Any awards, however, are not expected until the early part of next year, with much of the work kicking off in the latter half of Q2 2026.

In Africa, we continue to see pressure on day rates, which as we mentioned last quarter, was in part because of the slowdown in drilling in Namibia, where we've been very active over the last 6 or 7 quarters, supporting operations with our largest 900 square meter class of PSV. We've anticipated a slowdown in drilling. The team has been focused on winning work elsewhere in the world, and we can expect to see a few vessel movements out of [indiscernible] over the next few quarters as we mitigate against some of the expected softness in the first half of 2026.

Longer term, we still remain very bullish for the region with recent announcements of Total lifting force majeure in Mozambique, Shell and Maine returning to Angola after a 20-year absence to restart deepwater exploration with all the Orange Basis to still be developed, we remain very confident that the region will bounce back very quickly once all these pieces fall into place.

In the Middle East, vessel demand and day rates continued to strengthen in the quarter, driven mainly by the EPCI contractors operating in the Kingdom as well as additional incremental demand in Qatar and Abu Dhabi. As we have mentioned previously, this is a very fragmented market to make it much harder to drive rates aggressively. However, we continue to see supply constraints in certain vessel classes. And as demand has been increasing, the team has been doing a great job pushing day rates during 2025. And with no significant slowdown in demand in sight, we expect day rate momentum to continue into 2026 and beyond, especially with the recent news that Saudi Aramco plans to start reactivating some of the rigs that they have suspended last year.

In the Americas, we had a solid quarter with day rate and utilization improvement primarily came from our operations in the Caribbean and Brazil, the Gulf of America and Mexico, both continuing to be flat demand. Brazil or Petrobras specifically, is likely to face some short-term headwinds in 2026 as the NOC is rethinking its offshore logistics model and financial strategy as Brazil enters into an election year in 2026. Longer term, we don't expect any slowdown in drilling or production demand in Brazil. However, we may see some Petrobras specific projects moving to the right as the politics around the election or start times close to the end of 2026 or even the beginning of 2027.

Lastly, in Asia Pacific, Q3 saw a solid jump in both day rate and utilization as projects in both Australia and Asia continue on from Q2. We have seen some pressure unnecessarily in our view in Australia on day rates with competitors. More broadly in the region, day rates for our larger class of vessels have held up well. And looking out into 2026, we see some positive signs of various drilling projects coming back to the region from Q2 onwards after a bit of a hiatus during the majority of 2025 caught by various political machinations in certain areas.

Overall, we're very pleased with how Q3 has turned out and how our teams are focused on delivering strong results even with the short-term whitespace headwinds to content. So even with a short-term headwind, we remain very optimistic on the long-term fundamentals for our business, still being very much in the shipowners favor for some time to come. And with that, I'll hand it over to Sam.

Thank you, Piers, and good morning, everyone. At this time, I would like to take you through our financial results. My discussion will focus primarily on sequential quarterly comparisons of the third quarter of '25 compared to the second quarter of 2025, including operational aspects that affected the third quarter. As noted in our press release filed yesterday, we reported a net loss of $806,000 for the quarter or $0.02 per share. Included in the net loss was a $27.1 million charge related to the early extinguishment of our debt, which will be discussed later.

For the third quarter, we generated revenue of $341.1 million compared to $340.4 million in the second quarter, essentially flat quarter-over-quarter, but about 4% higher than our expectation. Third quarter average day rates of $22,079 were 2% lower versus the second quarter. We saw a nice increase in active utilization from 76.4% in the second quarter to 78.5% in the third quarter, due mainly to the decrease in idle and drydock days as we saw a lighter drydock load in the back half of the year compared to the first half of the year as expected.

Gross margin in the third quarter was $163.7 million compared to $171 million in the second quarter. Gross margin percentage in the third quarter was 48%, nicely above our Q3 expectation, but below our Q2 margin of 50%. The margin outperformance versus our expectation was primarily due to higher-than-expected day rates and utilization, combined with a decrease in operating costs.

Lower operating costs were driven primarily by lower crew salaries and travel costs combined with lower supply to consumables expense due to fewer idle and repair days, offset somewhat by higher R&M expense. The margin decrease versus Q2 was due to an increase in operating costs. Operating costs for the third quarter were $177.4 million compared to $170.5 million in Q2. The increase in costs is due primarily to an increase in salaries and travel, R&M and consumables with continuing FX impacts also contributing.

Adjusted EBITDA was $137.9 million in the third quarter compared to $163 million in the second quarter. The decrease is due to the previously mentioned lower gross margin as well as a sequential lower FX gain.

G&A expense for the third quarter was $35.3 million, $4 million higher than the second quarter due to an increase in professional fees. We are projecting G&A expense to be about $126 million for 2025, which includes about [ $14.4 ] million of noncash stock-based compensation. For 2026, we are projecting our G&A cost to be about $122 million, which includes approximately $13.4 million of noncash stock-based compensation.

We conduct our business through 5 operating segments. I refer to the tables in the press release and segment footnotes and results of operations discussions in the 10-Q for details of our segment results.

In the third quarter, as mentioned, we saw overall revenues decreased slightly sequentially. However, results vary by segment with our APAC, Middle East and Americas revenue increasing. These increases were offset by decreases in Europe, the Mediterranean and African regions. Gross margin versus the previous quarter increased in 4 of our 5 regions, with our Europe and Mediterranean region seeing a decrease of about 12 percentage points. The increase in the Middle East region was due to increases in average day rates and utilization while operating expense was essentially flat versus Q2.

The increase in the Americas region was due to increases in average day rates and utilization, offset by a 2% increase in operating expenses. Improvement in utilization was primarily due to fewer drydock, idle and mobilization days. The increase in the APAC region was primarily due to a 7-point increase in utilization and a 5% increase in average day rates, offset by higher operating costs, primarily driven by higher salaries due to movement of some Southeast Asia vessels into Australia.

The increase in utilization was primarily due to lower idle and repair dates. Africa's gross margin percentage was marginally higher versus the previous quarter, and the decrease in our Europe and Mediterranean region was driven by an 11% decrease in day rates combined with a 6 percentage point decline in utilization as well as an increase in operating costs. The cost increase was primarily due to higher R&M and higher fuel expense due to lower utilization. The decrease in utilization was due to higher drydock and repair days as well as an overall weaker spot market compared to a very strong Q2.

We generated $82.7 million in free cash flow this quarter compared to $97.5 million in Q2. The free cash flow decrease quarter-over-quarter was primarily attributable to lower cash flow from operating activities and lower cash proceeds from asset sales. For a while now, I have mentioned that we had received -- we had not received payment from our primary customer in Mexico. Although we did not receive payment from them prior to the end of the third quarter, subsequent to the quarter end, we did receive a payment of $7.4 million, and we expect to receive additional amounts prior to year-end. Our outstanding AR balance at the end of September before the payment was made, represented approximately 17% of our total AR and other receivables. We will continue to monitor and assess the situation closely.

As we communicated on our previous call, we successfully refinanced our 3 previous secured and unsecured debt instruments to a single longer tenured unsecured structure, and we also entered into a senior secured 5-year credit agreement, which provides for a $250 million revolving credit facility, a $225 million increase over previous revolving credit. As part of the refinancing, we recognized a charge of $27.1 million or about $0.55 per share related to the early extinguishment of previous debt instruments. As a result of our new debt structure, we will only have small debt repayments that are related to the financing of recently constructed smaller accrued transport vessels. We have no payments until 2030 on our new unsecured notes.

We incurred $17.6 million in deferred drydock costs in Q3 compared to $23.7 million in the second quarter. In the quarter, we had 943 drydock days that affected utilization by about 5 percentage points. For the year, we're projecting drydock costs to be about $105 million, which is down about $2 million from a prior call. The decrease is due to the net effect of changes in timing of our various 2025 projects with some pushed to 2026. In addition, we see savings generated from projects completed for the remainder of the year.

For 2026, we are projecting drydock costs to be $124 million. Included in that number is $21 million in engine overhauls and $7 million of carryover projects from 2025. We are expecting drydock days to affect utilization by 6 percentage points. In Q3, we incurred $5.1 million of capital expenditures related to ballast water treatment installations, DP system upgrades and various IT upgrades. In addition, we exercised an option to purchase a vessel that we have been operating in our fleet for the past several years under variable leases. This purchase option was significantly below market value and allows us to keep a high-quality young vessel in our own operated fleet. The purchase option is reflected in the financing section of the cash flow statement.

For the full year, we project capital expenditures of about $30 million, which is down $7 million from our previous forecast. Similar to our drydock projects, the cost savings are due to timing of projects that will be done during drydock deferred to next year. For 2026, we are projecting capital expenditures to be approximately $36 million, which includes the $7 million carryover in 2025. In addition to this year, we have 2 other vessels under leasing arrangement that we intend to purchase in 2026 for approximately $24 million.

In summary, Q3 was another strong quarter from an operations and execution standpoint. We delivered both strong financial results and free cash flow. Our balance sheet is in an excellent position, and we are well positioned to continue to drive earnings and generate meaningful free cash flow in the future. Industry long-term fundamentals remain very strong, and we remain very optimistic about the opportunities that lie ahead for Tidewater.

With that, I will turn the call over to Quintin.

Thank you, Sam. Liz, would you please open it up for questions.

[Operator Instructions] Your first question comes from the line of Tim Lawson with Raymond James.

Quintin, if I kind of take some of your comments around how the market is shaping up at this stage for 26, I'm curious your thoughts on -- it seems like the production support end of the business is steady to growing with your comments about FPSOs kind of over the coming years. The construction market has been steady to strong, and really, it's been the rig market that's kind of been a differentiation between you guys having the pricing leverage you had before and not. And I'm curious, as that starts to return, but you're seeing the production support market continue to grow, do we need to get back to the same rig levels we were at at the peak in '24 to get your pricing back? Or does that actually come a bit sooner because you've soaked up some capacity into the production market since then, do you think?

Jim, thanks for the question. And I think you've summed up really well. No. Because of the increasing activity in both FPSOs and EPCI and subsea broadly, I would expect that we would get there sooner. So -- and there's also been vessel attrition over the intervening 2 years that I think will help us get there sooner regardless. But no, I would love to see the drilling activity get back to where it was in '24 because I think that's going to give us the ability to push day rates again at that $3,000 and $4,000 a day per year level, which is really what we need in this industry to get back to earning our cost of capital. We need a couple of years of that.

Right. Okay. That's helpful. And that's what I figured. And then if I read between the lines and some of your comments, you talked about capital, where capital flows between buybacks, between M&A potential. And obviously, this quarter, you guys built a lot of cash and didn't buy back anything, and you didn't really buy anything, but I'm assuming kind of the way you operate that the lack of share repurchases in this quarter maybe suggest that you're at least looking at some M&A opportunities that you're kind of holding some dry powder for. Not that I expect you to tell me who you're buying, when that's happening or anything like that, but I'm just curious, is that an accurate read that at least you're pursuing some things that could happen, and maybe that's why you didn't do any share repurchases this quarter?

Jim, a very thoughtful and a great question. Allow me to say that we had material nonpublic information during the quarter, but I just have to leave it at that.

Your next question comes from the line of Fredrik Stene at Carson Securities.

I wanted to dive a bit into the guidance for 2026. And I must say that I was a bit surprised that you gave it during the third quarter since you gave it out the fourth quarter for last year, but clearly positive to see that you have confidence enough in next year to guide at this point. With that as the preface, I wanted to ask if you could, call it, help me with a bit of granularity when it comes to which regions would be caused more exposed to open capacity, which regions are well covered, et cetera, when we think about this 69% midpoint revenue number that you gave, Wes, under 57% of available days that were booked. Is there any sort of regional discrepancies going into next year, some regions to watch closer when we try to assess whether or not you'll hit that guidance or even outperform?

Listen, thanks for the question. I'm going to give a quick response, but then I'm going to hand it over to Wes and Piers because I've got more detail on that. But as it relates to the guidance timing, we just think it's appropriate at this point in the year to give people guidance. And if we can give people guidance at this point in the year that is somewhat firm, we're going to do it. This year, we have a little more confidence than we had last year. And I think that we could characterize this year's guidance as kind of a a base case. We're hopeful to see that upside in the latter part of '26. But we are very confident that we could deliver a year in '26 that was at least as good as '25. And so we wanted to get that information out.

But as to the regional breakup, let me pass it over to Piers because he's got more detailed knowledge.

See, Yes. So I think looking at it -- we have -- Africa has a little bit more exposure towards the second half of '26, which is not unusual when we look at into for most years. And then Asia is a little bit more on the nearer term as we go into '26 as well. There's a little bit more exposure there, which again, as I sort of mentioned, we've got a number of things we've got in the -- we're working on at the moment. So maybe that changes as we work through things. But that exposure is primarily Africa and Asia as we look out through the year. Elsewhere, we've got fairly fairly solid coverage, I would say, as we go into 2026.

All right. And just as a follow-up to that one. You're talking about 69% from firm revenues and options. Are you able to give a split there or at least give some color on whether or not it's sensible that most of those options will be exercised given whether price that?

I don't have the split on further options handy at the moment. So -- but I would say we've got options, which we do have at ones, which were done a while ago. So we are very confident we'll get taken when they come.

Just 1 super quick 1 at the end there, which hasn't really related to any market. But in your 10-Q, you're talking about a case -- Venezuela case where you are potentially old around $80 million. And to my understanding, there's potentially a verdict by year-end. How -- is this something to care about? Is there a chance that you will be able to collect that [indiscernible] if it's going in your favor? Any commentary would be super for us, more cash is obviously a positive.

Fredrik, this is Quintin. The timing on these types of cases is so difficult. I mean this has been going on for 12 years now. So yes, we do feel that we're getting really close. But trying to call it whether it's the end of this year or the first half of next year, I would tell you, is really difficult. I would say that most people are thinking it's going to settle [indiscernible].

Your next question comes from the line of Joshua Jayne with Daniel Energy Partners.

Quintin, you alluded to it a little bit in the answer to the last question, but I'm going to go ahead with that anyway about confidence level. So as we sat here a year ago, there's a lot of questions about domestic energy policy in Saudi, and we have just changed President and offshore white space. All of those went on to, I think, impact offshore activity over the course of '25. Do you get a sense that customers have a better sense of the playbook today and are more confident in the next 12 months, maybe more so than you were a year ago? Maybe just elaborate on that a little bit more, it would be great.

I do just because we've had a year of dealing with this volatility and uncertainty, and we're getting a sense for which regions it impacts and what it doesn't. But also, we've gotten a real good view on OPEC and how they're releasing excess barrels into the market. and how they're managing price expectations as they do that. So yes, I think that the operators broadly have a better sense for where they want to go and how deep they want to go in particular regions? So let me look it over to Piers. And Piers, you may have some other commentary like to add?

Yes, Josh. I think I think when we speak to our customers in a moment, they do seem to have a little more of a view as to where they think this is going to go. And you can start seeing that in some of the conversations and what we heard from the drivers in terms of second half of '26. we're seeing a lot more tenders and pre-tenders type of discussions at the moment across all of our regions. So there's definitely good undercurrent of noise coming out in terms of giving us that sort of positive outlook as we go into the second half of '26.

I mean you mentioned Aramco. I mean, they've already come out -- I mentioned briefly about reactivating rigs they had suspended last year. So that's a very positive sign from that side. We're seeing a lot more activity in places like the Med and obviously, Caribbean as well. So it's very positive in all the conversations were happening at the moment. So yes, I mean the customer has seen -- they seem to have plans in place and they're starting to move on those plans, which I think is a positive sign for us.

And then you talked about the 34 contracts that were signed over the course of the quarter for an average term of 7 months. The general consensus view has been, we do see some uptick in rig activity in the second half of 2026. And just when I think about the timing, is that intentional on your part? Or is the duration of those contracts? Or is that just sort of where the market is today, what customers are willing to sign? Maybe just speak to that a little bit more?

It's really sort of where the market is to them. We've-- and I think I mentioned this on the last call, when you when we've had to sort of fix some expected softness of the white space you can talk about, we've obviously been chasing a bit of utilization. So some of those contracts are just to get us through into the second half '26. And I think the thing which we're very conscious of is keeping utilization up, but at the same time, making sure we don't overcommit to longer term because we believe in this uplift in the market in the second half of '26 and and into '27, and we don't want to be locking in something which we think is a little bit of subscale today. So some of the contracts we're signing now about just giving that cover and getting us into the second half of '26 is how we've sort of been focusing in terms of commercial strategy.

And then maybe if I could just squeeze 1 more in. I'd love to get your thoughts on just the newbuild fleet today. You highlighted the number of vessels but then also just the ongoing attrition some has happened over the last 2 years. Could you just frame that against the attrition that you're expecting over the next 12 to 24 months, and your expectation if all if the number of vessels that are on order today all ultimately get built?

Josh, it's West. I'll give a little bit of view and Piers or others want to chime in, that's fine. What we've seen over the past, I guess, a couple of years now is a handful of orders from folks in different parts of the world. For the most part, these are not coming from legacy industrial participants. You; see some orders from, if you will, new entries into the industry. You do have some new builds that are -- that have been ordered down in Brazil against contracts, which we think is -- makes sense, especially given the rates that those reportedly been on at.

But as of today, again, it's roughly 3% of the fleet across both PSVs and anchor handlers that have been ordered. Now what does that mean? That matters as it relates to net new build additions or net incremental supply. And as we look out over time, in an industry where the assets are 20- to 25-year life that would tell you every year, you'd lose roughly 4% to 5% of the fleet. It doesn't always work out as elegantly as that because not all vessels are built kind of pro rata over time. But over the course of a few years, you would expect dozens, if not more, vessels to reach that 20- to 25-year life at which point they should otherwise attrition.

Now if you're in an economic environment such that spending a considerable amount of money to keep a vessel going, that's possible that, that can happen, but there is a finite life for a lot of these vessels. And so what we see is less new build activity or less new build vessels on order than what attrition would tell you would lead to net new supply once these vessels start to deliver.

Now whether they ultimately deliver, I don't think there's any reason to believe they won't. If they're in a shipyard today and they're being built and they have the financing to do that, they -- presumably they should deliver. The question is, on what time frame. A lot of these vessels haven't been built in a long time. And so there's some muscle memory that has to be put back in place at the shipyards. But I think it's fair to assume that they do indeed deliver. But against that attrition dynamic, in our mind, does it create a net new boat. And if it doesn't, then we're still in as good as the places we've been.

Your final question comes from the line of Greg [indiscernible] with BTIG.

Quentin, I realize you mentioned the public information around potential M&A, but beyond that, could you give us any color, like as we think about potential opportunities, clearly, you got the company as a diversified fleet, it's interesting because I think some people like anchor handlers better than PSVs. As you think about the world evolving offshore, which it clearly looks like it's going to, over the next 5 years, do we kind of have a preference for specific asset types or, "Hey, we think asset prices are attractive. And if it's on the water, we want to buy it" view?

Greg, so I will tell you that similar to some commentary I've made in the past, we've been really focused in the Americas. And I will say that South America to us is probably more interesting than North America at this point. But vessel class, I would say, large PSVs, definitely a real preference. Medium and large anchor handlers, not the extra large and handles, but medium to large and for sure, too. Not looking really to stretch too far out of that right now, but we could. I mean I do like the subsea market, but there's a you really need scale to get into that market appropriately. And so we'd have to really think hard about stretching further than the typical PSV [indiscernible], but it's certainly a possibility based on the core competencies of managing vessels, managing crews or using customers like.

Okay. And I appreciate that you have -- in a market like West Africa, which is a key basin, you have -- there's a lot more medium-sized than large vessels in your fleet. But I guess any kind of color on the kind of -- what is keeping the larger vessels pricing stronger relative to the medium/small vessels. Is that mix of work? Is that scarcity of vessels? Any kind of commentary you can have around that?

Greg, it's Piers. It's -- I think just on the larger PSVs, I think it's a combination of all those. I mean they're always go-to vessels that our customers want to get size masses if they can get it. I wouldn't say there's a little bit of a scarcity. We have some -- we have obviously a very large fleet of those vessels around the globe. But I think when you're doing an EPCI contract or you're doing a drilling program in particular, there's definitely a need for a margin PSVs yet to put as much space on. So it definitely works to our advantage to have that fleet.

You mentioned Africa. I mean, you just go through these waves occasionally where there's a little bit of a slowdown in activity. But we've been able to -- we are being able to not work out there where we can reposition some of our larger PSVs in different regions. So it gives us that option people prepared to pay to mobilize vessels to different places to support drilling and construction projects as well. So I think it's a combination of all the things that you mentioned in terms of what's allowing us to keep rates high enough, but could go higher always, of course, and that's where we're hoping to get to as we go into the next half next year, Quintin mentioned.

Okay. And then I guess if I am the last caller, I'll just ask 1 more. Around next year's guidance, I think somebody else mentioned that that was great to say, I think it kind of shows your kind of outlook on the market. But I guess I just had a couple of questions around that. One is, if we kind of think about -- I remember about, I don't know, maybe 1.5 years, you kind of -- we had some hiccups around maintenance and we've kind of been thinking about potential impacts, the utilization. I guess as we think about utilization for next year, are we kind of carrying through some some cushion for those kind of always unexpected unplanned downtimes. And then just one other question, and I apologize, I was late dialing on. It seems like, myself included, everybody expects a stronger half of the back half of next year versus the front half. Any kind of view on how we think maybe the revenue shakes out in second half versus first half?

So I'll start with the first part, Greg. We -- in the prepared remarks, we said the quarterly cadence of revenue next year, we actually see to be fairly even. So it's not necessarily a back half-weighted outlook. We did say, however, to the extent drilling comes back in a little bit stronger than what we currently are able to see and that may influence the back half higher from what we've guided to. But right now, what we indicated was that the quarterly progression will be fairly even.

In terms of the down for repair time, as we've talked about. If you've noticed the past 3 quarters or so, we've continued to have better uptime performance than what we saw about 1.5 years ago, as you mentioned. And so 3 quarters is better than 1 quarter in terms of establishing a trend and seeing the fruits of the investments and all the work that have gone into the the wherewithal of our vessels. And so for next year, we didn't dive into it specifically, but I do think we have a bit more confidence in the operational wherewithal of the vessels at this point in time.

That competes our our Q&A section. I will now turn to President and CEO and Director, for closing remarks.

Liz, thank you. Thank you, everyone, and we look forward to updating you again in February. Goodbye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.