Tidewater Inc. Reports Operating Results (10-Q)
Tidewater Inc. has a market cap of $2.21 billion; its shares were traded at around $42.7 with a P/E ratio of 8.2 and P/S ratio of 1.9. The dividend yield of Tidewater Inc. stocks is 2.4%. Tidewater Inc. had an annual average earning growth of 15% over the past 10 years. GuruFocus rated Tidewater Inc. the business predictability rank of 1-star.TDW is in the portfolios of Arnold Van Den Berg of Century Management, Third Avenue Management, Chuck Royce of Royce& Associates, John Buckingham of Al Frank Asset Management, Inc., David Dreman of Dreman Value Management, Glenn Greenberg of Brave Warrior Capital, Inc., Paul Tudor Jones of The Tudor Group, Kenneth Fisher of Fisher Asset Management, LLC, Jeremy Grantham of GMO LLC, First Pacific Advisors of First Pacific Advisors, LLC.
Highlight of Business Operations: Oil prices gradually recovered and stabilized in the range of $80 to $85 per barrel during the first quarter of calendar year 2010 due to signs of improvement in the global economy and, in part, because OPEC reduced its crude oil production targets by more than 6.0% over the last 18 months in an effort to stabilize crude oil prices. However, renewed uncertainty about the direction of the global economic recovery during the quarter ended June 30, 2010, caused crude oil prices to drop to the $65 to $75 per barrel range. During the most recent OPEC meeting, which was held in March 2010, OPEC officials decided to keep its then existing production targets unchanged because the global economic recovery was uncertain, crude oil market demand fundamentals were still weak and crude oil inventory levels were relatively high. As of mid-July 2010, there has been no further indication that OPEC would adjust its production targets downward in an attempt to buoy crude oil prices. Given the historically strong correlation between commodity prices, drilling and exploration activity and demand for the companys vessels in the various international markets, the company
Natural gas prices, which at mid-July 2010 were trading in the $4.30 - $4.75 Mcf range, trended higher during the first half of calendar year 2010 due to stronger demand for the resource from the industrial sector and higher consumer demand resulting from a colder-than-normal winter in the early part of the year and a hotter-than-normal spring in North America. Although the above positive trend bodes well for activity in the mid and shallow waters depths of the U.S. GOM market in the near-term, the rise in production of unconventional gas resources in North America and the commissioning of a number of new large Liquefied Natural Gas (LNG) exporting facilities around the world are contributing to an over-supplied natural gas market, which exerts downward pricing pressures on the resource. While production of natural gas from unconventional sources is a relatively small portion of the worldwide natural gas production, it is expected to grow in the future. Despite recent increases in demand for natural gas, inventories in the U.S. continue to be significantly oversupplied, which is attributed to the increase of unconventional gas in the market, as well as a reduction in demand for the resource due the global recession. Prolonged increases in the supply of natural gas, whether the supply comes from conventional or unconventional production will exert downward pricing pressures on prices for natural gas. A prolonged downturn in natural gas prices can negatively impact the exploration and development plans of E&P companies, which in turn, would result in a decrease in demand for offshore support vessel services, primarily in the companys U.S. segment.
The companys consolidated net earnings for the first quarter of fiscal 2011 decreased 11%, or $4.7 million, as compared to the same period in fiscal 2010, due to an approximate 20% decrease in total revenues. The company recorded $262.5 million in revenues during the first quarter of fiscal 2011, which is a decrease of approximately $64.1 million over the revenue earned during the same period of fiscal 2010. Also, the first quarter of fiscal 2010 included a $48.6 million provision for its Venezuelan operations as previously disclosed.
Vessel revenues generated by the companys international segment decreased approximately 17%, or $48.8 million, during the first quarter of fiscal 2011 as compared to the same period in fiscal 2010, while the vessel revenues generated by the U.S. segment increased approximately $0.4 million, or 2%, during the same comparative periods. Other marine revenues decreased approximately $15.6 million, or 97%, during the same comparative periods. International segment vessel operating costs increased approximately 3%, or $3.5 million, while the companys U.S. segment vessel operating costs decreased approximately 17%, or $2.5 million, the first quarter of fiscal 2011 as compared to the same period in fiscal 2010. Costs of other marine revenues decreased approximately $14.2 million, or 97%, during the same comparative periods. A
At June 30, 2010, the company had 374 owned or chartered vessels (excluding joint-venture vessels and vessels withdrawn from service) in its fleet with an average age of 17.1 years. The average age of 177 newer vessels that have been acquired or constructed since calendar year 2000 as part of the companys new build and acquisition program is 5.0 years. The remaining 197 vessels have an average age of 28.1 years. During the quarters ended June 30, 2010 and 2009, the companys newer vessels generated $202.9 million and $184.6 million, respectively, of revenue and accounted for 86%, or $91.9 million, and 64%, or $99.5 million, respectively, of total vessel margin (vessel revenues less vessel operating cost). Vessel operating costs exclude depreciation on the companys new vessels of $22.6 million and $17.7 million, respectively, during the same comparative periods.
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