Q4 2019 Earnings Call
The earnings conference call fourth quarter 2019.
My name is John I'll be operator for today's call at this time all participants are in listen only mode. Later, we'll conduct a question and answer session.
During the question answer session or could you ever question. How Star then one on your Touchtone phone. Please note the conference is being recorded.
No one I'll turn the call over to Jason's family, Vice President Investor Relations and marketing, Jason you may begin.
Thank you John Good morning, everyone and welcome to talk what does earnings conference call for the quarter unfold year ended December 31st 29 10.
Jason Stanley Todd was vice President of Investor Relations and I'd like to thank you for your time and interest and Tidewater.
With me this morning on the coal, our president and CEO Quintin Kneen, our Chief Accounting Officer, Sam Rubio.
And our general counsel and corporate Secretary Daniel Hudson.
After a cover a few formalities I'll turn the call over to Quintin for prepared remarks.
Then we'll open up the coal for you to ask questions.
During today's conference call, we may make certain comments that are forward looking at not statements of historical fact, there are risks uncertainties and other factors that might cause the companies.
Actual future performance to be material deep different from that stated or implied by any comment that we might turn todays conference call.
Please refer to our most recent form 10-K for additional details on these factors just.
This document is available on our website go through the FCC or does he see dot Gov.
Information presented on this call speaks only as of today, Boston 29 thing and therefore, you're advised at any time sensitive information I no longer be accurate at the time of day, we play.
Also during the cold will present, both GAAP and non-GAAP financial measures reconciliation of GAAP to non-GAAP measures is included in last evening's press release.
And now with that I'll turn the call over the course huh.
Thank you Jason Good morning, everyone and welcome to the fourth quarter 2019, Tidewater earnings Conference call.
We haven't quite busy over the past fear and especially so over the past six months transforming our business. So that we can prosper even in today's challenging offshore energy market.
We definitely see the offshore vessel market, improving although we're determined to get back to acceptable levels of free cash flow, even without the markets though.
I spoke about on the last call about the transformation, we're going through a tidewater.
We are adjusting or shore based infrastructure and modifying or called <unk> brings to returns based business philosophy.
We have to leading position in the strongest balance sheet and a very challenging industry.
Our employees, though and it makes a difference how customers. So that makes a difference our suppliers to know that and it makes a difference.
Hi, water is committed to making a difference in this industry.
Yep.
Today's call going to talk to thank you mr. needs to go.
<unk> focus on free cash flow because we feel this metric is going to be the keys to managing the business back to acceptable returns and then I'm going to talk about the company's performance by region.
Well then open up the main by all the call todays discussion about the need to transform the industrial which we operate.
Transforming the company is difficult, but at least it's within your control or at least.
That's what I tell myself transforming the industry is order of magnitude mortality has to be done.
Industry is highly fragmented there are nearly 600 participants only four including Tidewater have more than two and a half person in the market.
Industry has legal levels of death is preventing consolidation because many capital holders are looking for par returns.
Our returns are not going to happen probably isn't coming to market is not going to save those capital providers.
The business model of selling vessels at a isn't green in the DNA of the oilfield S is advantageous.
And thereby hence the tail, but model selling pencils by the day results from customers higher girl vessels under you watching that bustle and.
In a recovered market is an efficient for them and it works against the goal of reducing carbon emissions and the shipping community.
Sure vessel free it's the most carbon friendly means of transportation, but everyone higher in their own bustle destroys the accomplishment.
Everyone higher in your own bustle substantially increases the chances of safety or security about.
I believe we will see the industry eventually gravitate to regional Super Consolidators, we'll be able to lever to scalable shore base footprint to operate but most vessels possible at the lowest cost possible in a particular region.
Cheating regional Super consolidation will allow us to promote logistics model consistent with most logistical movement around the world, but it requires enough of a presence in any given geography to influence the change and that can only happen consolidation.
Moving away from the day, replacing model that was ultimately I suppose better for the environment better for our employees and provide more logistical options for our customers.
But it takes fewer vessels globally to execute this business model.
<unk> portable regional Super consolidation that we think is inevitable, you're very likely to be left with a bucket is lost.
So with that let's talk about Tidewater and free cash flow.
The year 2000, my team without regard to nonrecurring or special items. The business had 6 million of free positive free cash flow.
We made significant progress in the fourth quarter and we've worked with negative free cash flow position. We ran at the end of the third quarter by generating 12 million positive free cash flow in the fourth quarter.
Our principal objective of today's calls to walk you through how we see cash flow improvement in Twentytwenty.
Food free cash flows that metric, we are using and twentytwenty for incentive compensation. It's the metric we are using for executives as well as for the managing directors or operating regions.
I'm, a big proponents of pushed Unlevered free cash flow.
Scribe this along with the ideas of cramped a copeland at all.
And by Unvarnished, I mean before special items.
Financial statements. So you will notice that we added a new reconciliation to the press release that huge free cash flow with the subtotal before posting from Buffalo sales I think you will find both amounts valuable and the evaluation of sustainable free cash flow.
I want to swap our pathway through increasing free cash flow from a 6 million in 2019, but divided into four categories increased cash flow from reduced genome and.
Increased cash flow from bustle disposals increased cash flow from reduced investment vessels and increased cash flow from core vessel operations.
Throughout 2019, we have been hard work retooling the shore base operations significant work was done installing the student yard information system, and we're moving to layers of management.
Our objective was to establish the most automated most scalable levels cost effective global platform in the industry, we have achieved that attractive.
We're not making improvements, but I'm pleased with our current shore base. Other when I look forward to testing a skill building through additional consolidation as we proceed through the remainder of the recovery.
Based on our efforts to streamline the organization, we anticipate genie expense to be 83 million for 2020, a cash flow improvement up at least 10 million compared to 2019 Jing expensive to 100 quarterly.
Recall that something as much cash so it's not the absolute difference.
As it relates to this improvement to work is already done Oh.
Our normalized DNA for the fourth quarter was 20.3 million, which is 81.2 million on an annual basis. Our annualized January run rate was 70.6 million, which will allow us to meet our objective even after accounting for adding back the CFO position.
I should note that the recruiting process for Cfos to ongoing I hope to conclude the search by early in the first quarter of Twentytwenty put us looking likely.
We're with future.
In addition to our efforts onshore we have been busy reassessing the offshore fleet.
Notice that we divided the fleet into two categories on the balance sheet. The fleet, we anticipate being a part of the active fleet for the foreseeable future. We kept reclassified as net property and equipment and the portion of the fleet, we intend to dispose of we reclassified as assets held for sale.
That's helpful.
Vessels that we are the process, so scrapping and we have mark the value of these assets to their estimated net realizable value of 39.3 million.
Mark in these assets to their net realizable value result, and.
The fourth quarter of 26.7 billion.
Intention is to liquidate these assets and Twentytwenty, which will result in a cash flow improvement of at least 10 million compared to the proceeds we received 20 my team.
We also wrote off a partially constructed vessel in Brazil battles all the book for 5.8 million because we determined we could not pursue possibilities on that particular investment.
Total results fourth quarter impairment charge of 32.5 million.
Thus far and Twentytwenty, we have sold five vessels were 4 million.
We have an additional nine vessels in the final stages of being sold.
Also recall that included in our operating expense for 2019 is $12 million related to the basic oversight work, which in security of the vessels on later.
As it relates to fleet investments was we have discussed in prior calls.
Through a very heavy drydock period in 2019 total spend for 2019 was $71 million. Our current expectation for dry docking Bessemer 2020 was $53 million, which should result in the cash flow.
Of 18 million in multi quarter.
A few more data points on Drydock expenditures to try and give you a sense for the annual fluctuation demonstrate the unusually high level above.
Vessel investment that we've made in 2019.
Cash spent on dry docks for the full year 2018 was 26 million per fleet of 142.
As I just mentioned at 71 million in 2019, roughly 462 active vessels.
We anticipate will be 53 million Twentytwenty 35 million at 21, both for fleet at 150 active vessels.
As a reminder, we evaluate whether or not to continue see proposal active works reactively vessel out of Leo. We're currently two sides of the same coin we considered correct aspects such as the payback periods overall results on free cash flow generation and the return on invested capital, but ultimately indirect economic impact.
Having more vessels in the market.
Modern vessels, where the market is no longer distress, such as the 5000 square project possible, it's an easy easy.
Computation.
The indirect impact other vessels in the market has a love to do with how many vessels are in the local market. How many vessels you currently have in a given market how your vessel stack up to other vessels in the market.
Geographically, how promote youre from other markets.
Market, it's fair to monetize and although no Marcus perfectly can monetize it certainly feels that are going away sometimes.
But there is a ripple effect on all of the remaining vessels in the global vessel market and there's an impact on the slope of the recovery.
Pack to be miniscule to the extent to keeping both active and a relatively isolated geographic area. It was critical to consider at least the impact on the world supply demand balance.
Our fleet size has been shrinking because we have been with holding capacity on the marginal vessel class, which is to say from where were specification vessels category. That's currently in general the employer.
Our attention is not dispose of these vessels, but to hold them off the market until market conditions improve.
We have 19 vessels and labs.
In this category.
Okay, So, let's get back to pre Tesla improvements year over year.
Well the second part vessel investments, which is capex capex for Twentytwenty.
This page 8 million, which is an improvement in cash flow 10 million for 2019.
And finally, most importantly, we are making improvements to our core business of operating vessels very important but difficult task we have upon the buses approval.
Well thanks.
As a reminder, active utilization was the percent of time, a fully crewed vessel is building a customer.
Reasons that reduce active utilizations are things like being down repair of vessel waiting on pre hire approvals by a customer idle time the market weve per job in similar situations. The fourth quarter should increase in active utilization up to 81.4% from 80.4% in the third quarter or what percentage point increase in active utilization.
Your next 6 million per year increase in pre tax profit.
Imprudent active utilizations, one was challenging aspects of our business because it involves all aspects of our operations improving to maintenance of chartering everything's involve everyone has to work together to better coordinated improve our activities per active utilization to improves.
The one of the reasons, we have been intensely focused on making sure. Our information system provides timely transparent and relative operating information that is easy to use and always up to date.
So to sum up as part of the discussion we were 6 million free cash flow positive in 2000 like team, we anticipate improving that at 20 to 20 by approximately 10 million due to reduced spending on GSK.
We anticipate improving at approximately 18 million due to reduce pendulum drydockings, we anticipate proving a 10 million due to reduced capital expenditures and we anticipate approval by these 10 million for additional proceeds from bustle disposals and then we are anticipating further improvement from.
Approved active utilization.
None of this requires improving market none of its a given it will take additional dedication from employee base and proper alignment of compensation incentive.
Our confident that getting cash flow over 50 below.
In 2020 is very achievable.
As you can tell from the new table on free cash flow, we added to the press release in the fourth quarter, we're positive free cash flow from operations positive free cash flow before vessel disposals positive free cash flow fourth quarter and positive free cash flow for the here and for the fourth quarter. We are free cash flow positive before selling vessels was a horrendously heavy.
Dry dock quarter.
It's important to note the proceeds from disposals as we move away from this period of benefiting from the proceeds for disposal. Some assets the business will benefit from the reduce founder overseas vessels and lab, which I indicated was 12 million in 2019 as it is anticipated to be 13 million twentytwenty.
It's definitely the increase in 2020 is due to complete apostles.
In Brazil.
They account for majority increasing spend the twentytwenty.
On a consolidated basis revenue was down slightly which is better than expected for the fourth quarter active utilization was off which is nice but average day rate was down about $8.
Original story for the fourth quarter was increasing operation, which funds, which bounced up approximately 5 million in the fourth quarter to 86 million due to a legal accrual in Brazil, and an above average vessel repairs and maintenance, which resulted in additional fuel costs as well as I mentioned, including 86 million is approximately 4.4 million or 12 million per year of.
Costs related to managing between the layer.
When we last spoke I anticipate that we would see a similar number of net vessels going into stack in the fourth quarter as which is in the third quarter.
Were down five vessels.
We did better than I anticipated, we were down one vessel for the quarter again, that's all about generating acceptable cash return and certainly not about working vessels practice, both from a margin of generating acceptable cash returns is a bit better than I anticipated, we kept them working through the quarter.
The heavy drydock schedule, we are experiencing settles down this year, but dry docks schedule still disproportionately heavy in the first half of Twentytwenty up to $53 million of dry dock Heska Twentytwenty I anticipate 30 million in the first quarter.
12 million in the second quarter, and 11 million in the second half of Twentytwenty.
A fleet of our current size should experience on average nine in the half million dollars of Drydock expense for quarter $30 million per year as indicated by the second quarter of second half 2020 product guidance, we are getting to the period in the five year Drydock cycle, where we'll be spending less than the average.
As I indicated earlier the expectation for full year 21 is 35 million.
As I mentioned on the last quarter's call Tidewater has been everywhere GR geographically.
But we are skewed.
But we are de emphasizing the geographic areas, where we have low returns on capital purchase Brazil coffee stations. In addition, any work outside of our primary shore based locations must require a commensurate premium being far removed from existing infrastructure.
Exiting areas like Brazil, Southeast Asia is always slower than preferred because we have vessels there were over long term contracts with customers that we work with around the world. So the process of rebalancing the portfolio will take some time.
The fourth quarters, one of the soft for two quarters for the year. The first quarters. Together. This is due to weather and when conditions in the north sea during the winter months in calendar year contracting behavior and other areas of the world.
The fourth quarter. This year was not that bad in the North Sea demand was buoyed by an unusually high level of construction projects principally the Nordstrom project. This kept a spot market strong through most of the fourth quarter average day rates and utilization levels remained flat sequential quarterly basis due to this demand.
West Africa had a tough fourth quarter. The region has had substantial drydocking activity throughout 2019 suffered a few major mechanical failures, which resulted in active utilization numbers decreasing by two percentage points.
The difficulty with mechanical failures in Africa business, not just the loss of revenue as we added costs to the repairs and fuel.
In areas like West Africa to catch a stronger into a dry dock facility you often have to Georgia for several days ticket to repair facility and then getting parts and technicians into the drop off a quick location require significant administrative time.
As a result, West Africa had a difficult on low performing fourth quarter and due to drydocked victories had a difficult to third quarter as well, but I'm optimistic and we will see an improvement in West Africa, as we get the significant driveline activity behind us.
Rick as an important region for Tidewater Angola, Nigeria, we operate through joint ventures, our goal in joint venture partners in the process of divesting non core investments and our joint venture with them as one of them. Many that are partners in the process of divesting.
I have read about this divestiture process in the process and we are of course participated in cooperate in the process.
It Doesnt have an impact on operations and there's nothing to report. This time just wanted to mention the attention of our partner since it will be a public process.
The Middle East Asia Pacific Region had a good quarter. It was a bit of a transition quarter. Three vessels were asked to the active register and even though three vessels entered the region that three vessels form dry dock active utilization was higher than it's been in the past five quarters. The average day rate was up nicely $226.
We lost a bit of ground on the cost side do two vessels and transition in an unusually heavy maintenance quarter and I'm very bullish on the outlook for this region and Twentytwenty.
The Americas region is another region that performed well during the fourth quarter because it had one Iceland special item of note overall revenue was up on a same number of active vessels, which is always nice active utilization utilization was up two percentage points with average day rates were down about $170 per day.
Our operating cost side related accrual for just over $2 million for some old individually insignificant labor and customs planes in Brazil.
Now I believe will result in more exposure after the legal accrual we would.
I have slightly higher vessel operating margins for the quarter.
As I look to the first half of 2020, I still see tightening the west African market as I mentioned on the last quarter by seeing leader in the first half as opposed to what I thought earlier, which was better by the starting the second quarter. We sold the tightening that I was anticipated in the middle East a bit earlier and that's reflected in the fourth quarter numbers.
Anticipated Europe Mediterranean region to be softer in the first quarter stronger in the second quarter and anticipate the Americas region to be consistent throughout the first half of Twentytwenty with what we saw in the fourth quarter.
Time, Warner has the industry's strongest balance sheet.
Accused of keeping it.
During two requires us to develop the businesses free cash flow positive, which we achieved in the fourth quarter and requires that any potential consolidation.
Well stocked for Soc basis.
The stocks are appropriately relatively value.
We completed about consent intention and the fourth quarter related to the 350 million 20 to 22 bonds that resulted in the loosening of certain operational restrictions and and financial covenants as well as a result of the consent. We are extremely comfortable with these financial covenants as we go through to maturity, we tendered and repurchased 125.
Face value of the bonds. So the outstanding phase out today is just under 225 million repurchase improved overall cash flow by eight moves on annual basis as a result, reducing negative interest carry.
As I mentioned previously we have no intention of altering our low net debt position and we'll continue to seek value accretive opportunities to repurchase our debt on the open market. We see no concern funding the debt upon maturity and over the next year, we will develop additional liquidity sources, such as a revolving credit facility to turn the company has backup liquidity to its cash on hand.
We closed the quarter with 224 million of cash we have $289 million into the bulk of which matures during that three years from now on August 24 to two but we are easily able to service the and can readily refinanced is that given our cash on hand also we have no required capex and we have no vessels under construction.
Importantly, our path to improving free cash flow is predicated on a recovering the drilling market referred a recovery in the offshore vessel market. It's based on designing our shore based infrastructure to views addition, and fully scalable space or focusing our vessels in the previous regions possible, while driving the highest margin on those vessels as about tightly managing required for that.
In those vessels, it's about rationalizing the fleet Leah and miles, but certainly not please stop keeping the net debt load keeping working capital both consistent activity levels.
These are the things that will assure tidewater is the highest return on capital global offshore vessel company in the world.
Finally, I want to mentioned the current potential impacts, but the corona virus outbreak.
It's on our business, we havent proactively engage with the international health and travel consultants working outbreak.
We have obtained and related applies so precautions to help our employees of working potential exposure. We continue to monitor the updates on the top rig due to the nature our business safety wellbeing of our employees has always been our highest priority and we have well established protocols on safety communications.
Current concern as having our crews transit through high risk locations. We continue to monitor countries identified as high risk and we restructured our travel companies to avoid when crude movements through these hybris customers.
And with us.
Let's open up the call for questions.
Thank you and I'll begin the question and answer session. If we do have a question press Star then one on your Touchtone phone.
If you wish to be real from the Q. Please press the pound sign or the hash key.
If using a speaker phone you may need to pick up the handset first before pressing the numbers.
Once again, if you have a question press Star then one on your Touchtone phone.
Our first question is from Turner Holm from Clarkson cycle.
Hi, Good morning, gentlemen, thanks for taking my call.
Quinn couldn't you referenced in your prepared remarks that you'd see a pathway to acceptable free cash flow even without.
This get market improvement.
But but on that on the day rate try and I just wanted to ask what you're seeing it, especially for the leading edge or what's being tendered now is there a sense of continued day rate improvement or does it feel like some market is flattening out now.
Good morning, Turner and always while for very long call Dayrates are improving around the world locally.
Especially in the large foot market. So 300 foot class vessel thousand square meter deck vessel IC marked improvement in those vessels throughout 2019 and bidding activities currently as to hire as well so that market as a market with I consider our.
No longer distrust still difficult market, both dayrates improvements are progressing.
Sarcosine now is the next level below that so called up 280 class vessel, maybe 850 square meter deco, starting to improve and day rate so moving up nicely behind those larger class vessels. So then improvements and those two classes of vessels are continuing to improve.
The vessel class, that's 750 meter and below the tech space size.
Still see.
Doesn't seem to give any worse, but it is very challenging and in certain markets. It is getting more reflects healthy sales. So therefore, my prepared remarks on why for deemphasizing some extensions time.
Sure I guess I'm, just trying to reconcile the.
The revenue.
Comments in the press release expectation that 2020 revenue should be similar to levels in 2019 with the sort of underlying market commentary that that you mentioned with with modest improvement day rate.
So.
The back the vessel count will continue to move down so what I see happening and Twentytwenty as us with holding capacity on the marginal vessels, but making up part of revenue on both better vessel more.
Higher in the spot specification vessels, so what I see happening in Twentytwenty is revenue stayed relatively constant, but with fewer vessels and lower operating costs because fewer vessels are offerings.
Or twice.
On that will not to vessel count.
You said you see it moving down in 2020 is that.
It's sort of a conscious decision on your part or is that a function of demand.
I actually see look broader market, improving so I see the broader market improving what I'm doing is shrinking market share of global basis, but I'm shrinking that by reducing our exposure on the low end vessels. So what I'm trying to do is focus our business on the high end vessels on the marginal vessels up with holding capacity.
So I can push the rates up a bit higher and then redeploy them into the market.
I see I see okay and on those marginal assets it looks like Theres.
He was 40 assets that were mentioned in the press release for for scrapping or disposal of some form it what's the main driver that is that.
Is that removing marginal capacity, so that you might get a bump the day rate some of those more marginal assets or or is it more sort of a cost issue with regards to stacking costs and dry docks and that kind of thing.
Okay. So so when I speak up a marginal vessels, what I'm really talking about all those vessels that we intend to key but that the market just isn't right for them to go to reactivate are fair today. The vessels that we have assets held for sale those vessels that were disposing of because I don't believe theres any economic.
Rationale for putting those houses to work yes.
The reason being as the either the dry dock reactivation costs on those vessels significantly high the remaining life on those vessels have significantly well and the current margins on both vessels are breakevens mediocre, so reactivating vessels that class and any perceivable mark in the future doesn't make economic sense.
I understand and one of the things you mentioned in your prepared remarks, well prepared remarks with the.
At some capital providers are wanting par returns and you talked about how challenging that is in the current environment. So I was wondering are you seeing any move men from those capital providers and maybe it's been a few years since some to this process started our I guess, what I'm really trying to do I understand its if there any call it.
A reasonably near term possibilities for for larger scale deals like you did with with Gulf market was very successful lower or are those opportunities still out on the horizon.
Well I cant Mohawk providers are coming around and so theres a lot more dialogue today about cap provider willing to take a discount to there for debt levels in order to get a transaction.
But there's only been a few instances around the world save about half of its at least.
Our banks that are primarily in the shipping space. They are willing to take of losses on the ball.
As it relates to doing another deal or the gulfmark since there's going be some opportunities out there.
There's not that many large companies, but there are some and there but to be the opportunity to do something and twentytwenty, but there's certainly a lot of fleets better our third the size of the Gulfmark fleet like in the 20 range, but to me make can make a lot sense as well so hoping opportunity as people start to come around with a slow.
Lower than I would prefer because of all the facts and circumstances around.
People.
Trying to hold onto their to their assets of over the self preservation by management teams as well, but it seems to be coming to an end.
Yes, Okay. Thanks, and then the last one for me. It's just couldn't you referenced on the business model might evolve in the coming years I'd be interested to hear if theres any examples.
And that sort of happening now, but then also any comments you might have around opportunities to invest and serve operationally similar markets like offshore wind.
That could give some diversification and search it that's on the agenda, we think a timeline could look like.
Sort of yes, yes, the evolution of Tidewater, it's a business.
That motion that they offer vessel industry from logo pricing model perspective, we'll take long time and that has to be post a degree of consolidation the market because of Mark. This will have a fragmented today, it's hard to foster change because can influence enough of particular market.
We're starting to see some aspects.
And what I would say from a tidewater perspective is there's different ways to work around for example, if somebody wants to do something significant to a vessel imaging modification or major Mo mobilization to remote geographic area. The may have to pay a part of that and we've had three incidents throughout the last year half where we've had.
Our customers pay significant amount of pump for modifications of the desire as well as June mobilization fees and starting to get more money upfront as a way of changing the business pricing model.
I hope as of wells continue to see that I see that customers are willing to do that with a company like tidewater because we have the balance sheet. We don't have the existential risks that lot of companies do half. So as a result, theyre willing to spend $2 million to $3 million with Tidewater approach our project because we know that we're conducting here longer term and so the foot.
So that part of the pricing model is beginning to get pushed a bit.
We'll take of higher degree of consolidation of larger focus there are certain areas around the world that are already combining vessel forces and so you'll see this and areas.
We received Denmark, and some other areas, where they are corralling the vessel companies and trying to force more efficient use of vessel traffic and I see that increasing and focus as we go through the next five to 10 years and time my senses of the evolution of the industry will factors.
Sure Okay, well, thank you very much but and I appreciate I'll turn it back.
Thanks.
Our next couple of question is from Patrick Fitzgerald from Baird.
Hi, guys.
Outside of.
Dry docks.
What is what is maintenance capex by 18 million. This year does that kind of good level to use going forward.
Hello, Patrick and.
Outside of dry dock capex as modifying the vessel for a particular factor.
Just finishing up a turnaround was talking about three examples of where we made a significant investment in the vessel because it was up we've got significant upfront payment from the customer those modifications vessels are not drydocked or consider capex. So any modifies the revenue generation capacity of the vessel or expenses useful.
Life, and it's usually performer.
This is kind of Ross's capex.
I have.
I'll take advantage of opportunities with customers are willing to prepay capex, but absent that situation capex few more than about $5 million for.
$8 million for 2014.
Okay. Thank you.
And you said you had on the press release, you had 440 million contract backlog today.
Wherever you out at this point last year.
So our new information systems allows us to gather this information so I don't have a comparable figures last year.
Okay, but you expect Robin will be roughly flat I guess.
So so I guess you don't have.
Information, so to say, one where the other but.
Sets aside it's it's flat with last year.
You would have 440 million contractor roster.
Yes, because we didnt have the same information system placements you I can't tell you how much I had contracted last year at the same time under the same definition.
So.
Give you that comparable figure in the reliable measure.
But.
This growth of contract coverage for the top tier for the upcoming year is unusually hot.
Going into this market my intention is to lock up in the near term, but on the long term because I do see rates, increasing so yes.
A typical to have 60% of your forward your contracted in a normalized market.
We've done throughout 2018, if what things up primarily to the software period and Twentytwenty So call. It the first.
And then.
Some spot exposure.
Fully in summer.
And a little and the fourth.
[music].
About.
It is and what.
Okay.
Markets have spot exposure.
We are bullish farmers, particularly the norcen.
Okay.
Yeah.
Kind of just another question on that consolidation front I mean.
Thanks Your comments were helpful.
So I.
I mean, if you if you see this new world of.
Now companies like Tidewater dominating certain markets and being out of others.
You know how many markets would you expect to be in.
Like North Sea in West Africa or.
Yeah, I was is that kind of how you see it.
Well.
Right now the only thing I would say them deemphasizing, Brazil, and southeast Asian So.
Of the markets around the world the us Gulf of Mexico still decent market.
The market in the southern carefree is a very strong working as a smaller market.
Mexico that decent market, we'll see how involved for next couple of years. So so the Continental Africa and the North sea on more bullish on because I see those markets tightened so the Mediterranean the North Sea and Africa.
Those areas into.
Nope writers and continue to concentrated in the mixture that our businesses is focused on areas like.
So.
We are still very good Marcus I don't see a reason to get out of them at all.
As it relates to Brazil in those lower returns in southeast Asia, That's a market where it used to make a tremendous amount of money in southeast Asia, Thats fair business friendly environment.
Business.
Several oversupply of vessels and it's relatively lower spec tonnage that I don't expect that market to come back, but it's not a market that I wouldn't go back to.
But when we talk about the regional Super Consolidators or people that are in the same position Tidewater has where we can leverage ourself across our global footprint, but it's important to concentrate in some key areas and.
Concentrate in the North Sea in Africa will be great for us, but I wouldnt.
I would put ourselves from cost freight.
In Mexico as well.
Okay.
And then sorry, one more question just on the 39 million assets held for sale.
I don't know if you did you.
Are those going to be mostly from the markets that you are de emphasizing.
Third parties category.
So they're not necessary sub par naturally.
But really it's still older lower effect comment.
Suffocation per continuing to.
Maintain.
And then thats around the world.
Okay. Thanks, a lot.
Our next question is from seeking Medina from South.
All right so far.
Thank you very much can you hear me.
We've got check how are you.
Good thank you very much.
Congratulations on the good results.
A question about Tom good markets that youre tied to undertake space.
Ultra deepwater market is.
Improving much slower compare to Jack ups. So I was wondering if you could give us an idea about which one you're more exposed to these days do you have a sense of what kind of rigs youre vessels are working for in them.
Certainly around the world, but also in different markets roughly.
Okay.
Absolutely checking and so let me start by talking about how I see the demand equation for the offshore vessel industry.
Historically, it's been about 50% of activity that we do is just basic production related not very sophisticated vessel work, but very important vessel work very reliable vessel work.
And with a downtick in drilling that's now 60% to 70% of our business is to basic production activity.
And with those vessels operated in that format throughout the world the remaining 30%.
Drilling and other construction projects as well.
And of course, it for us it's more important for the floater industry to improve from a per vessel basis. So floaters have a.
A more.
A significant improvement in demand.
Impressive in more significantly than the Jackups.
Just because usually they're farther afield they take more supplies, there's more vessels in circuit supporting those types of offshore units as to the Jackups.
Today, though because there hasn't been that much improvement in the floater market, we're still mostly exposed to the jackup market.
So the euro around the world in the areas that we see things improving do see of incremental improvement in the floater market as well, but the substantial improvement in the Jackup market has helped us more.
Okay. Thank you very much.
And we have no further questions at this time ill now turn the call back over to Jason Stanley for closing remarks.
Thanks, John Thank you everybody for your time and your interest in Tidewater as always if you have any follow up questions pill feel free to reach out to me and have a great debt.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
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