Q2 2026 Tidewater Inc Earnings Call

August 4, 2026

Moderator: Good morning and welcome everyone to the Tidewater Q2 2026 conference call. My name is Dara, and I will be your Conference Moderator for today. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Wes Gotcher, Senior Vice President of Strategy, Corporate Development, and Investor Relations. Please go ahead.

Operator: Good morning and welcome everyone to the Tidewater Q2 2026 conference call. My name is Dara, and I will be your Conference Moderator for today. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Wes Gotcher, Senior Vice President of Strategy, Corporate Development, and Investor Relations. Please go ahead.

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand.

Speaker #1: To withdraw your question, press *1 again. I will now hand the conference over to Wes Gotcher, Senior Vice President of Strategy, Corporate Development, and Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Dara. Good morning, everyone, and welcome to Tidewater Second Quarter 2026 Earnings Conference Call. I'm joining on the call this morning by our President and CEO, Quentin Neen.

Wes Gotcher: Thank you, Dara. Good morning, everyone, welcome to Tidewater Q2 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 in 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, 4 August 2026.

Speaker #2: 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 refer to our plans and expectations.

Speaker #2: There are risks, uncertainties, and other factors that may cause the company's actual performance to be materially different from what is stated or implied by any comments we make during today's conference call.

Speaker #2: 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.

Speaker #2: Information presented on this call speaks only as of today, August 4, 2026. Therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay.

Wes Gotcher: 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. Now with that, I'll turn the call over to Quintin.

Speaker #2: 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.

Speaker #2: And now, with that, I'll turn the call over to Quentin.

Speaker #3: Thank you, Wes. Good morning, everyone, and welcome to the Tidewater Second Quarter 2026 Earnings Conference Call. I'll begin today with the quarter's highlights, provide an update on the Wilson's transaction, discuss our current views on capital allocation, and share our outlook for the business.

Quintin Kneen: Thank you, Wes. Good morning, everyone, welcome to Tidewater Q2 2026 Earnings Conference Call. I'll begin today with the quarter's highlights, provide an update on the Wilson Sons transaction, discuss our current views on capital allocation, and share our outlook for the business. Wes will walk through our financial outlook and current guidance considerations. Piers will cover the global market and operations, 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 Q2 revenue and gross margin exceeded our expectations. Revenue was $342.3 million, supported by both higher dayrates and stronger utilization. Gross margin was just under 47%, nearly three percentage points above our prior expectations. Excluding $6.8 million of expenses related to Operation Epic Fury, gross margin would have been approximately 49%.

Speaker #3: Wes 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.

Speaker #3: Collectively, we will also update you on the impacts of operation epic period. We are pleased to report that Second Quarter revenue and gross margin exceeded our expectations.

Speaker #3: 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.

Speaker #3: Excluding $6.8 million of expenses related to the Operation Epic period, gross margin would have been approximately 49%. Day rate momentum was particularly strong in the European and Mediterranean segment.

Quintin Kneen: Dayrate momentum was particularly strong in the European and Mediterranean segment. Utilization benefited primarily from the timing of dry docks on seven vessels shifting from Q2 to later in the year. Operational uptime was also better than expected, which further supported utilization. Most noteworthy, our weighted average leading-edge dayrate 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 Q2. We did not experience any vessel off-hire associated with the conflict. In fact, our utilization and dayrates in the Middle East were the strongest they have been in quite some time.

Speaker #3: 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.

Speaker #3: A clear indication of the relatively tight supply and demand balance in the market today. Turning to operation epic period, while the intensity of the conflict eased during the quarter, we continued to incur costs above pre-conflict levels.

Speaker #3: 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.

Speaker #3: 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.

Quintin Kneen: In our guidance, we continue to include only costs for the current quarter. 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 Q2, nearly doubling from Q1 to $64 million. That improvement was driven by stronger operational performance and the movement of dry docks on 7 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 H2 of the year.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: We also expect to generate incremental free cash flow from the Wilson's vessels once the acquisition closes. On that note, we now expect to close the Wilson's acquisition around September 1.

Quintin Kneen: We also expect to generate incremental free cash flow from the Wilson's vessels once the acquisition closes. On that note, we now expect to close the Wilson's acquisition around 1 September. As discussed in our recent disclosures, we have completed all necessary regulatory steps and obtained the change of control waivers related to assume the Wilson's 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 Wilson's 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. We see every reason to expect the Wilson's integration to be as successful as the integrations we have completed in the past.

Speaker #3: As discussed in our recent disclosures, we have completed all necessary regulatory steps and obtained the change-of-control waivers related to assuming the Wilson's debt. We are now working with the banks to finalize documentation for the debt transfer.

Quintin Kneen: 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 Wilson's 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. We see every reason to expect the Wilson's integration to be as successful as the integrations we have completed in the past.

Speaker #3: In parallel, we have continued to deploy Tidewater personnel to work alongside the Wilson team on pre-closing integration planning, which should allow us to move quickly once the acquisition closes.

Speaker #3: 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 Wilson's integration to be as successful as the integrations we have completed in the past.

Speaker #3: Our balance sheet remains very strong, with net debt essentially at zero at the end of the second quarter. We expect net leverage to increase to approximately 0.8 times by the end of the third quarter as a result of the Wilson's acquisition.

Quintin Kneen: Our balance sheet remains very strong, with net debt essentially at zero at the end of Q2. We expect net leverage to increase to approximately 0.8x by the end of Q3 as a result of the Wilson's 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 Wilson's debt. 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 Wilson's debt transfer.

Speaker #3: 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 Wilson's debt and we remain very comfortable with both the strength of our balance sheet and our liquidity profile.

Speaker #3: Our $500 million share repurchase authorization remains outstanding. To date, we have held off on repurchases while we complete the Wilson's debt transfer. Although we will deploy a substantial amount of cash to fund the Wilson's acquisition, we still expect to be in a strong cash position after closing and will evaluate the most accretive use of the remaining excess cash for shareholders.

Quintin Kneen: Although we will deploy a substantial amount of cash to fund the Wilson's acquisition, we still expect to be in a strong cash position after closing. We will evaluate the most accretive use of the remaining excess cash for shareholders. Our philosophy on the buyback program has not changed. We remain opportunistic. We will 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 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.

Speaker #3: Our philosophy on the buyback program has not changed. We remain opportunistic and will 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.

Quintin Kneen: We will 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 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.

Speaker #3: 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.

Speaker #3: 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 prices that create immediate value for our shareholders.

Quintin Kneen: We remain interested in acquiring the right vessels at the prices that create immediate value for our shareholders. At the same time, we're 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Quintin Kneen: Looking ahead, the near-term outcome of the conflict in the Middle East remains uncertain. 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. 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. We see that momentum continuing to build. Tendering and pre-tendering activity have increased significantly in recent months.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Quintin Kneen: 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. 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 of 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 the early stages. The tone is urgent and serious. Offshore projects are inherently long lead time investments. The desire to accelerate these projects is what gives us increased confidence in the duration of the current cycle.

Speaker #3: Our conviction in the next leg up of the cycle is growing, particularly given the strategic resource and energy security elements of 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.

Quintin Kneen: 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 the early stages. The tone is urgent and serious. Offshore projects are inherently long lead time investments. The desire to accelerate these projects is what gives us increased confidence in the duration of the current cycle.

Speaker #3: Discussions regarding future projects in response to the conflict have begun and remain in the 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.

Speaker #3: Turning briefly to vessel supply, there has been little movement over the past quarter and, frankly, very little over the past two years. To our knowledge, there have been no meaningful new build order activity in recent months.

Quintin Kneen: Turning briefly to vessel supply, there has been little movement over the past quarter. Frankly, very little over the past two years. To our knowledge, there have been no meaningful new build order activity in recent months. A handful of new build 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. 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.

Speaker #3: 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.

Speaker #3: We believe much of the late-up fleet is effectively scrapped in place, as evidenced by the limited number of reactivations we saw from that fleet in 2023 and 2024.

Speaker #3: 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.

Quintin Kneen: 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 Q2. 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 Q2 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 Wilson's acquisition and to bringing the Wilson's 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.

Speaker #3: 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.

Speaker #3: 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.

Quintin Kneen: In summary, we are pleased with our Q2 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 Wilson's acquisition and to bringing the Wilson's 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.

Speaker #3: We look forward to completing the Wilson's acquisition and to bringing the Wilson's 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.

Speaker #3: And with that, let me turn the call back over to West.

Quintin Kneen: With that, let me turn the call back over to Wes.

Speaker #1: Thank you, Quinn. As Quinn mentioned, we did not repurchase any shares during the second quarter ahead of the Wilson's acquisition closing and funding. We anticipate funding approximately $270 million of cash consideration for the equity component of the Wilson's acquisition, assuming a closing date of around September 1, 2026.

Wes Gotcher: Thank you, Quint. As Quint mentioned, we did not repurchase any shares during Q2 ahead of the Wilson's acquisition closing and funding. We anticipate to fund approximately $270 million of cash consideration for the equity component of the Wilson's acquisition, assuming a closing date of around 1 September 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 Q2, 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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 valuing M&A and share repurchases concurrently.

Wes Gotcher: 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 a 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 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.

Speaker #1: 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.

Speaker #1: 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 in limited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than $1.25 times pro forma for any share repurchase.

Speaker #1: Under our revolving credit facility, we are also in limited in our ability to repurchase shares, provided that net debt to EBITDA does not exceed one times.

Speaker #1: However, to the extent that we exceed one times net leverage, we still retain the flexibility to continue returns to shareholders, provided the free cash flow generation is an excess of cumulative returns to shareholders.

Wes Gotcher: However, to the extent that we exceed 1 times 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 0.8 times net leverage pro forma for the Wilson's acquisition and expect that our cash flow generation should continue to improve throughout H2 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 Q1 of 7.5% sequentially. During the quarter, we entered into 25 term contracts with an average duration of approximately 12 months.

Speaker #1: We expect to be at 0.8 times net leverage pro forma for the Wilson's acquisition and expect that our cash flow generation should continue to improve throughout the back half of 2026, reducing our net leverage level.

Speaker #1: 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 inflection we observed in the first quarter was 7.5% sequentially.

Speaker #1: 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 to $1.47 billion, and a full-year gross margin range of 49% to 50%.

Wes Gotcher: Turning to our financial outlook, we are modestly revising our full year 2026 revenue guidance to $1.42 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 Wilson's 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 Wilson's acquisition around 1 September 2026. The updated gross margin guidance similarly assumes the loss of 2 months of high margin revenue from Wilson's due to the timing of the closing of the acquisition. Additionally, we expect to incur more conflict-related costs in Q3 than was contemplated in last quarter's guidance, which assumed the conflict concluded by the end of Q2.

Speaker #1: The reduction in our revenue guidance is attributable to the expected closing of the Wilson's transaction approximately two months later than previously anticipated, offset in part by higher-than-anticipated year-to-date legacy Tidewater revenue.

Speaker #1: Our guidance now assumes that we close the Wilson's acquisition around September 1, 2026. The updated gross margin guidance similarly assumes the loss of two months of high-margin revenue from Wilson's, due to the timing of the closing of the acquisition.

Speaker #1: Additionally, we expect to incur more conflict-related costs in the third quarter, and with contemplated in the last quarter's guidance, which assumed the conflict concluded by the end of the second quarter.

Speaker #1: We now expect third quarter revenue to be up about 3%, inclusive of one month of revenue from Wilson's. 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.

Wes Gotcher: We now expect Q3 revenue to be up about 3% inclusive of 1 month of revenue from Wilson's. We expect legacy Tidewater revenue to decline about 2% due to dry docks moving from Q2 into Q3, 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 a Q3 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 into Q3 and higher R&M expense than previously anticipated. Our expected conflict-related costs in Q3 are nearly half of those incurred in Q2. We remain in a position to rebuild any direct conflict-related cost incurred to date or in the future.

Speaker #1: Along with higher than anticipated down-for-repair time that will consume another 1 percentage point of utilization. We expect a 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 into the third quarter, and higher R&M expense than previously anticipated.

Speaker #1: 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 rebuild any direct conflict-related costs incurred to date or in the future.

Speaker #1: 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 offshore activity picking up towards the end of the year.

Wes Gotcher: In summary, we're 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, H1 2026 revenue, plus firm backlog and options for the legacy Tidewater fleet, along with the Wilson's 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 Wilson's fleet.

Speaker #1: Looking to the remainder of 2026, first-half 2026 revenue, plus firm backlog and options for the legacy Tidewater fleet, along with Wilson's backlog for the September through December 2026 period, represents $1.3 billion of revenue for the full year.

Speaker #1: 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 Wilson's fleet.

Speaker #1: Our full year revenue guidance assumes utilization of approximately 80%, inclusive of the Wilson's fleet, leaving us with approximately 11% of capacity to be chartered if the market tightens quicker than we are anticipating.

Wes Gotcher: Our full-year revenue guidance assumes utilization of approximately 80%, inclusive of the Wilson fleet, leaving us with approximately 11% of capacity to be chartered if the market tightens quicker than we are anticipating. Our small and mid-sized 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 Q3, with more opportunity available in Q4. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time spent on dry docks. With that, I will turn the call over to Piers for an overview of the commercial landscape.

Speaker #1: Our small and midsized anchor handlers, a medium classes of PSVs, retain the most opportunity for incremental work, followed by our smaller and largest class of PSVs.

Speaker #1: 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 an anticipated downtime due to unplanned maintenance and incremental time spent on dry docks.

Speaker #1: With that, I'll turn the call over to Piers for an overview of the commercial landscape.

Speaker #2: Thank you, West, and good morning, everyone. First off, our overall long-term outlook for the offshore space remains positive, and this 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.

Piers Middleton: Thank you, Wes, and good morning, everyone. First off, our overall long-term outlook for the offshore space remains positive. This 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 H1 for some of our regions due to Operation Epic Fury. As Quintin mentioned earlier, we now feel very well-placed going into H2 and into 2027 to be able to push rates and utilizations significantly higher as we build momentum in the upcoming quarters and years ahead. The fundamentals for the OSV market remain strong.

Speaker #2: And as Quinton 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.

Speaker #2: 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're 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.

Piers Middleton: The sector remains supply side constrained with little prospect of capacity expansion from the stacked fleet or from the negligible order book. 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 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 continued to remain above 2025 levels after the strong start in Q1, with both PSV spot and term activity holding steady throughout Q2.

Speaker #2: 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 $160,000 per day.

Piers Middleton: 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 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 continued to remain above 2025 levels after the strong start in Q1, with both PSV spot and term activity holding steady throughout Q2.

Speaker #2: The average levels on the highest average levels on record. With some fixtures concluded well above $200,000 per day during the quarter. The PSV market was slightly more subdued during the quarter.

Speaker #2: However, day rates continued to remain above 2025 levels after the strong start in Q1, with both PSV spot and term activity holding steady throughout the second quarter.

Speaker #2: In the med, we see 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.

Piers Middleton: 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. 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 in expectation of the pickup in demand that we see coming in the second half of Q3 and into Q4.

Speaker #2: 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.

Speaker #2: 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 and demand that we see coming in the second half of Q3 and into Q4.

Speaker #2: 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.

Piers Middleton: 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 of 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 off Angola reached FID in late June, and its 95,000 barrel per day FPSO is scheduled to be delivered and installed late 2028.

Speaker #2: 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 the end of 2026.

Speaker #2: Looking further out, strong upstream driving forces appear set to continue to support OSV demand in West Africa. For instance, Azul Energy's $5.1 billion greater PADGE 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.

Speaker #2: 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.

Piers Middleton: 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 the very challenging backdrop of Operation Epic Fury affecting the quarter, the team still managed to improve both utilization and day rate across the fleet. Although increased operating costs brought down margins, we've 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 quarter, but still expect these longer-term charters to still be awarded.

Speaker #2: In the Middle East, even with the very challenging backdrop of operation Epic Fury affecting the quarter, the team still managed to improve both utilization and day rate across the fleet.

Speaker #2: And although increased operating costs brought down margins, with not yet seeing 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.

Speaker #2: 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.

Piers Middleton: 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're obviously watching closely what may or may not happen in relation to the Iran conflicts 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.

Speaker #2: 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 conflicts in the coming months.

Speaker #2: 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 petroblast OSV long-term tendering activity.

Speaker #2: 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.

Speaker #2: Day rates remain healthy in the country, and for our medium-sized class PSVs are still in excess of $42,000 per day, supported by increased activity from the IOCs and EPCI contractors operating in the country.

Piers Middleton: 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 Mexico has been flat most of the year, and we expect that flatness to continue into 2027. This has been offset by the increase in demand in the Caribbean. 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.

Speaker #2: Demand in the Gulf of America has been flat most of the year, and we expect that flatness to continue into 2027. However, this has been offset by the increase in demand in the Caribbean.

Speaker #2: 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.

Speaker #2: 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.

Piers Middleton: 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 end 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. With that, I will hand over to Sam. Thank you.

Speaker #2: In the short term, we have several of our larger PSVs commencing work end 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.

Speaker #2: Overall, we are very pleased with how the market continues to move in the right direction, and we fully expect that positive momentum to continue into next year and beyond.

Speaker #2: And with that, I'll hand over to Sam. Thank you.

Speaker #1: 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.

Sam Rubio: Thank you, Piers, 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 Q2 and Q1 of 2026, including key operational factors that affected our Q2 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 Q1. The increase was driven by one additional day in the quarter, average day rates that were approximately 3% higher than Q1, and active utilization improving to 81.4% compared to 80.6%.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: The increase was driven by one 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%.

Speaker #1: 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%.

Sam Rubio: Gross margin was $160.5 million in Q2, compared to $159.3 million in Q1. 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 higher vessel operating costs. Operating costs for Q2 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. Year to date, through 30 June, we have incurred approximately $9.2 million. Costs directly impacted were insurance costs and higher crew wages, primarily war bonus pay.

Speaker #1: The percentage decline was primarily due to higher vessel operating costs. Operating costs for the second quarter were $181.8 million compared to $166.9 million in Q1.

Speaker #1: An increase was expected due to higher R&M work that was pushed from Q1, as well as higher crew wages and supplies and consumables impacted by the Iran conflict.

Speaker #1: In Q2, we encouraged 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.

Speaker #1: Costs directly impacted were insurance costs, and higher crew wages primarily wore bonus pay. Indirectly, we continue to see elevated fuel and travel costs increases due to increased commodity price.

Sam Rubio: Indirectly, we continue to see elevated fuel and travel cost increases due to increased commodity price. 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 H2 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.

Speaker #1: 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.

Speaker #1: 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.

Sam Rubio: 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 H2 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.

Speaker #1: 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.

Speaker #1: We estimate a similar amount of direct costs related to crew wages and insurance costs. In addition, we expect similarly increased fuel and travel expenses due to higher global commodity prices.

Speaker #1: 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.

Sam Rubio: 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 at direct conflict-related costs, which includes war insurance and war-related crew wages, which total 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 Q1. Total G&A cost was $34.8 million in Q2, which includes $2.7 million of transaction costs related to the Wilson's acquisition.

Speaker #1: We are contractually permitted to invoice customers for reimbursement of direct conflict-related costs, which includes war insurance and war-related crew wages. Which total approximately $5 million through Q2.

Speaker #1: 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.

Speaker #1: 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 Wilson's acquisition.

Speaker #1: 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.

Sam Rubio: G&A cost in Q1 was $33.6 million, which included $2 million of transaction costs. 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 non-cash stock compensation. In addition, we expect to incur approximately $7 million in additional G&A costs in H2 2026 related to the Wilson's acquisition. In Q2, we incurred 750 dry dock days and $23.3 million in dry dock 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.

Speaker #1: 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 non-cash stock compensation.

Speaker #1: In addition, we expect to incur approximately $7 million in additional G&A costs in the second half of 2026 related to the Wilson's acquisition. In the second quarter, we incurred 750 dry dock days and $23.3 million in dry dock costs, compared to 949 dry dock days and $36.4 million in costs in Q1.

Speaker #1: 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.

Speaker #1: 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 costs and more days in the second half of the year.

Sam Rubio: Typically, the bulk of our dry dock costs occur in H1 of the year. However, the timing of some projects in 2026 has shifted to the right, resulting in higher costs and days in H2 of the year. Additionally, we expect to incur approximately $7 million of additional dry dock costs in H2 of the year related to the Wilson's 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 H2 of the year related to Wilson's acquisition. We generated $64.4 million of free cash flow in Q2 compared to $34.4 million in Q1.

Speaker #1: Additionally, we expect to incur approximately $7 million of additional dry dock costs in the second half of the year related to the Wilson's acquisition.

Speaker #1: 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.

Speaker #1: 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 Wilson's acquisition.

Speaker #1: 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.

Sam Rubio: Sequential increase was mainly attributable to lower dry dock spend, higher proceeds from the sale of 2 vessels, and lower cash consumed by working capital. As a reminder, 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 crude transport vessels. We have no principal payments due until 2030 on our new unsecured notes. Following the anticipated closing 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 5 operating segments. Please refer to the press release and the Form 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 to Q1.

Speaker #1: 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.

Speaker #1: We have no principal payments due until 2030 on our new unsecured notes. Following the anticipated closing of the Wilson's acquisition, our debt maturity and repayment profile would change to accommodate the new debt.

Speaker #1: 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 to Q1.

Speaker #1: Originally, gross margin increased by 8 percentage points in Europe and the 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.

Sam Rubio: 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 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 2 vessels to the region. Gross margin decreased about 3 percentage points in the Middle East region.

Speaker #1: While margins were down compared to Q2, 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.

Speaker #1: 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.

Speaker #1: 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.

Sam Rubio: 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%. The total operating cost 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 the previous quarter, primarily due to the increase in vessels and the mix of vessels operating in Australia.

Speaker #1: Our forecasts contemplate 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.

Speaker #1: Revenue fell about 8%. The 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.

Speaker #1: However, revenue was up 3% due to more vessels operating in the regions compared to Q1. Operating costs rose 12% versus the previous quarter, primarily due to the increase in vessels and the mix of vessels operating in Australia.

Speaker #1: 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.

Sam Rubio: 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 Wilson's acquisitions, we now expect the transaction to close around 1 September 2026. We are confident in our ability to integrate Wilson's 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.

Speaker #1: 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.

Speaker #1: With respect to the Wilson's acquisitions, we now expect the transaction to close around September 1, 2026. We are confident in our ability to integrate Wilson's in a smooth and efficient manner.

Speaker #1: 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 Wilson's acquisition, and evaluating opportunities to return capital to shareholders or pursue additional strategic growth.

Sam Rubio: From a capital allocation perspective, our priorities remain maintaining balancing strength, investing in the fleet, completing and integrating the Wilson's 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.

Speaker #1: 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.

Speaker #1: In summary, we performed as expected, 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.

Speaker #1: With that, I'll turn it back over to Quintin.

Speaker #2: Thank you, Sam. Darla, we'll go ahead and open it up for questions.

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

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one to raise your hand.

Moderator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one to raise your hand, and to withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Jim Rollyson with Raymond James. Your line is open. Please go ahead.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one to raise your hand, and to withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Jim Rollyson with Raymond James. Your line is open. Please go ahead.

Speaker #3: And to withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Jim Rollison with Raymond James.

Speaker #3: Your line is open. Please go ahead.

Speaker #4: Hey, good morning, Quintin, and everyone. Glad to see the great results and hear the commentary. Quintin, I guess I'd like to ask you, over the last couple of quarters, you've been pretty bullish.

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

Speaker #4: 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?

Speaker #4: 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.

Speaker #2: Hey, Jim. Yeah. I will tell you that I'm probably more bullish now than I've been in the last six to nine months. The amount of tendering activity and pre-tendering activity is quite strong around the world.

Quintin Kneen: Hey, Jim. Yeah. I will tell you that I'm probably more bullish now than I've been in the last six to nine months. The amount of tendering activity and pre-tendering activity is quite strong around the world. I was in Asia about five weeks ago, and the talk in Indonesia, Myanmar, and Malaysia, it's all much stronger than I've seen in a while. I'm getting really confident about this next leg up in the cycle. 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.

Speaker #2: I was in Asia about five weeks ago, and the talk in Indonesia, Myanmar, and Malaysia is all much stronger than I've seen in a while.

Speaker #2: 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, and he may have some other color he'd like to add.

Piers Middleton: Thanks, Quintin. Hi, Jim. Morning. Yeah, no, I think Quintin hit the nail on the head. We're seeing a stronger improvement. We were seeing that at the beginning of the year, so there's been a slight improvement. I think obviously Asia Pacific, 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. Like all things, Jim, as you've followed us for a long time, things can sometimes move a little bit to the right. We might see a few projects moving to the right. No, there seems to be, I would say, better than we expected from the beginning of the year. No, maybe a couple of projects in places like Nigeria, West Africa, things never start on time.

Speaker #5: Thanks, Quintin. Hi, Jim. Morning. Yeah, no, I mean, I think Quintin hit the nail on the head. We're seeing a stronger improvement. It's probably slight—we were seeing that at the beginning of the year, so there's been a slight improvement.

Speaker #5: I think, obviously, Asia-Pac has Quentin 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.

Speaker #5: I mean, like all things, Jim, as you've followed this 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.

Speaker #5: But no, I mean, there seems to be—I would say—better results than we expected from the beginning of the year, but maybe a couple of projects, or in places like Nigeria, West Africa, things never start on time.

Speaker #5: So maybe we see a push to a little bit to the right. But no, I think overall it's very positive. And Brazil, yeah, we're expecting Brazil to come back pretty strongly in the beginning of next year once we get through the elections and pledge for us really starts re-tendering as well probably at the end of this year or beginning of Q1.

Piers Middleton: Maybe we see a push a little bit to the right. No, I think overall it's very positive. Brazil, yeah, 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 re-tendering as well, probably at the end of this year or beginning of Q1. No, overall, we're pretty optimistic.

Speaker #5: So no, overall we're pretty optimistic.

Speaker #4: Appreciate that color from both of you. And for a follow-up—I don't know who best to direct this to, but maybe Quintin—just on the cost side of things, with the added costs from the conflict, fuel prices, and all that, how do you think about 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?

Jim Rollyson: Appreciate that color from both of you. For my follow-up, I don't know who the 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. 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 what's the playbook on costs as we go through this offsetting day rate growth environment we're talking about?

Speaker #4: Just kind of what's the playbook on cost as we go through this offsetting day rate growth environment we're talking about?

Speaker #2: Yeah, well, there's a lot of game day decisions, just because this is all relatively new and everybody's trying to figure out the best way to do it.

Quintin Kneen: Yeah. Well, there's a lot of game day decisions. Just because this is all relatively new and everybody's 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. In the beginning, 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. Everyone was very excited at the beginning of the process. 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.

Speaker #2: 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 was significant premiums put into place, to attract and maintain the personnel.

Speaker #2: 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 and tries to keep that a little bit more manageable than it otherwise could be.

Speaker #2: 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.

Speaker #2: 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.

Quintin Kneen: For us, we're learning as we go through this conflict, and I think that our suppliers and our employees are as well. We're finding new ways to bring that down. Of course, Sam talked to a little bit, we're going to begin to bill back to our customers. Saudi Aramco is a strong customer, an important customer, and also a difficult customer. There's a lot of paperwork involved, and it takes a long time to get that bill in place. My hope is that we'll see all of that come to fruition as we go through the next several months.

Speaker #2: So we're finding new ways to bring that down. And then, of course, Sam talked to a little bit we're going to begin to build back to our customers, but Saudi Aramco is a strong customer, an important customer, and also a difficult customer.

Speaker #2: So there's a lot of paperwork involved, and it takes a long time to get that rebuilt in place. But my hope is that we'll see all of that come to fruition as we go through the next several months.

Speaker #4: Appreciate that, guys. I'll turn it back.

Jim Rollyson: Appreciate that, guys. I'll turn it back.

Speaker #2: Thanks, Jim.

Quintin Kneen: Thanks, Jim.

Speaker #3: Your next question comes from Frederick Steen from Clarkson Securities. Your line is open. Please go ahead.

Moderator: Your next question comes from Fredrik Stene from Clarksons Securities. Your line is open. Please go ahead.

Operator: Your next question comes from Fredrik Stene from Clarksons Securities. Your line is open. Please go ahead.

Speaker #6: Hey, Quentin and team. 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.

Fredrik Stene: Hey, Quintin and team. 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 has been your preferred path. I would have to say that your CV of acquisitions is starting to be quite long. Now, you are soon closing in on the Wilson acquisition. You did comment a bit on this in the prepared remarks, but my questions relate to two things. One, now when that is out of the way, do you see more or less opportunities in the M&A space now compared to, for example, 12 months ago? Maybe a bit more specific, do you think it is fair to see you guys doing anything more over the next one to two years?

Speaker #6: And 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.

Speaker #6: And then you did comment a bit on this in the prepared remarks, but my question is related to two things.

Speaker #6: One, now, when that's out of the way, do you see more or fewer opportunities in the M&A space now compared to, for example, 12 months ago?

Speaker #6: And maybe a bit more specifically, do you think it's fair to see you guys doing anything more over the next one to two years?

Speaker #6: Since you require, I guess, a certain size of your targets, but as you said, you're not chasing scale just to chase scale. Thanks.

Fredrik Stene: Since you require, I guess, a certain size of your targets, but as you said, you are not chasing scale just to chase scale. Thanks.

Speaker #2: Hey, Frederick, thank you. So listen, 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.

Quintin Kneen: Hey, Fredrik. Thank you. Listen, the M&A landscape is evolving, but there continues to be some really attractive opportunities out there. I will say that for us, when we think about M&A, we are looking for some strategic element to it. Brazil got us into that market with Brazilian tonnage, and I am really excited about that. The Solstad deal that we did really empowered us from the larger vessel standpoint as well as the hybrid vessel standpoint. Of course, we got back into Asia with the Swire acquisition. It is getting things at the right price, but there is also got to be a good strategic rationale for it as well. Price is, of course, very important to us. Yeah. No, I fully expect to see other opportunities develop. They take time to work out and they take time to close and so forth.

Speaker #2: Brazil got us into that market with Brazilian tonnage and I'm really excited about that. And the Solsted deal that we did really empowered us from the larger vessel standpoint as well as the hybrid vessel standpoint.

Speaker #2: And, of course, we got back into Asia with this wire acquisition. So, it's about getting things at the right price, but there also has to be a good strategic rationale for it as well.

Speaker #2: Price is, of course, very important to us. But yeah, no, I fully expect to see other opportunities develop. They take time to work out, and they take time to close.

Speaker #2: And so forth. But yeah, my hope is that we'll be able to continue to demonstrate value accretive growth through acquisition in the next year or so.

Quintin Kneen: My hope is that we will be able to continue to demonstrate value accretive growth through acquisition in the next year or so. Again, the other thing I will say, Fredrik, is I am not going to consolidate this entry all by myself, so I do need other people out there doing something, and there has not been too much of that. Everything you hear about, we are not going to be able to participate in or do. We are certainly looking for those things that, again, have a strategic element and have a good demonstrated strong history of cash flow generation.

Speaker #2: But again, the other thing I’ll say, Frederick, is I’m not going to consolidate this in Trial by myself. So I do need other people out there doing something, and there hasn’t been too much of that.

Speaker #2: 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.

Speaker #6: All right, thank you. 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.

Fredrik Stene: All right. Thank you. 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. Now with Wilson, you are definitely doing that in Brazil. From the strategic angle that you are talking about, does this mean that you are 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?

Speaker #6: And from this 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 the transaction has the right characteristics and benefits for you guys?

Speaker #2: Yeah, so Frederick, I think I mentioned it on the last call, or maybe the call before last, but yeah, I was looking in the US for a long while.

Quintin Kneen: Yeah. Fredrik, I think I mentioned it on the last call or maybe the call before last, yeah, I was looking in the US for a long while. I just couldn't find anything that I thought was at the right value point for us. I am less interested in the US 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.

Speaker #2: I just couldn't find anything that I thought was at the right value point for us. So less interested in the US today, but always interested in a good opportunity.

Speaker #2: I think the opportunities that are developing throughout West Africa and into Asia are probably more attractive today.

Speaker #6: All right, that's super helpful. I appreciate the color. I'll hand it over. Thank you.

Fredrik Stene: Right. That is super helpful. I appreciate the color. I will hand it over. Thank you.

Speaker #2: Thank you.

Quintin Kneen: Thank you.

Speaker #3: Your next question comes from Josh Jane with Daniel Energy Partners. Your line is open. Please go ahead.

Moderator: Your next question comes from Josh Jayne with Daniel Energy Partners. Your line is open. Please go ahead.

Operator: Your next question comes from Josh Jayne with Daniel Energy Partners. Your line is open. Please go ahead.

Speaker #5: Thanks. Good morning, and thanks for taking my questions. First, you entered the 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?

Josh Jayne: Thanks. Good morning. Thanks for taking my questions. First, you entered into the 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 2027 given this backdrop? 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?

Speaker #5: Or could you just talk about how you're thinking, as we exit this year, about how much of the fleet you'd like to have contracted?

Speaker #2: 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.

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

Speaker #6: Yeah. Hi, Josh. Yeah, I mean, I think I'll let West sort of opine afterwards, but we're still going to—we believe in this market, as is probably clear from our comments.

Piers Middleton: Yeah. Hi, Josh. Yeah, I think I'll let Wes sort of opine afterwards, but we believe in this market, as probably clear from our comments. We're going to keep a decent amount of ships, generally the larger vessels, the larger PSVs, which means 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. 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, we may start looking to, as we get into 2028, go a little bit longer and things like that.

Speaker #6: So we're going to keep a decent amount of ships. Generally, the larger vessels, the larger PSVs, which means support drilling on the large anchor handlers, that's always been the big driver for us.

Speaker #6: And in terms of being able to drive day rates, I think once we start—really, it's good to mention—getting to that, really driving that $3,000 to $4,000 a day uplift on the rates as we go through the gears.

Speaker #6: Next year, then we may start looking to, as we get into '28, go 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.

Piers Middleton: 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 2027 and 2028. We're not going to change that strategy of looking for the short-term contracts and turning vessels over because we need to improve contract terms. We still need to obviously push day rate as well on that side. That's what we're sort of focusing on as we go into 2027. I don't know, Wes, do you have any other thoughts on top of that?

Speaker #6: So we're not going to change that strategy of looking for shorter-term contracts and turning vessels over, because we need to improve contract terms and we still need to, obviously, push day rates as well on that side.

Speaker #6: 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?

Speaker #5: Oh, one item. And it's something we've talked about in the past, which is that not all of our vessels are the biggest and best vessels in the world.

Wes Gotcher: I'll add one item and something we've talked about in the past, which is not all of our vessels are the biggest and best vessels in the world. 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. 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. As 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.

Speaker #5: 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.

Speaker #5: And I think there's a component of that in this quarter's average length of contract, in that there are some vessels that we were happy to put away for a little bit longer.

Speaker #5: And this is often the case from quarter over quarter with this measure, as 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.

Speaker #5: And so that's what I would 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.

Wes Gotcher: That's what I would 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.

Speaker #5: 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.

Speaker #6: Understood. Thanks for that. And then the 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.

Josh Jayne: Understood. Thanks for that. The second one for me is on the Middle East. You highlighted some of the short-term cost recoveries you're hoping for, I just wanted to take a step back and think longer term. As someone who's been running in that region for quite some time, could you just give us 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? If you believe in any way that capital will shift away from that region as a result of a conflict, is it structurally impaired at all? You just believe that once things settle down, it'll 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? Thanks.

Speaker #6: So, as someone who's been running in that region for quite some time, could you just give us a bit more color around conversations with customers?

Speaker #6: What is it ultimately going to take to get back to a normal operating environment, and do you believe in any way that capital will shift away from that region as a result of the conflict?

Speaker #6: Is it structurally impaired at all, or do you just believe that once things settle down, it'll be full steam ahead back to normal? And what are your expectations over the next couple of years once we have a resolution?

Speaker #6: Thanks.

Speaker #2: Yeah, Josh, so I actually think that I'm going to 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.

Quintin Kneen: Yeah. Josh, I actually think that it's going to 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. In post the conflict, I expect to see a bump in activity, but I also expect to see further developments in activities in that region as people reposition assets and redeploy other hydrocarbon basins throughout that region. From my perspective, the customers have not shied away from any thinking about what they're going to do in the future. Everybody is just excited to get the conflict resolved so they can get back to work. Piers, you've probably had more recent conversations with them. If there's anything you'd like to add, go ahead.

Speaker #2: 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.

Speaker #2: So from my perspective, the customers have not shied away from thinking about what they're going to do in the future, and everybody is just excited to get the conflict resolved.

Speaker #2: So they can get back to work. But Piers, you've probably had more recent conversations with them. If there's anything you'd like to add, go ahead.

Speaker #6: No. I think, yeah, it's still sentiment is still pretty strong. I think this is very much short-term. I think there's going to be as Quentin mentioned, when we come out of this conflict, there's going to be a sort of short-term bump as people sort of get products 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're sort of had to pause a little bit.

Piers Middleton: No, I think, yeah, sentiment is still pretty strong. I think this is very much short term. I think there's going to be, as Quintin mentioned, when 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. No, longer term, we're still seeing tendering activities 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. Then there's continued talk about putting more dollars into the region as well.

Speaker #6: 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.

Speaker #6: There's no slowdown. And then there's continued talk about putting more dollars into the region as well. With the, obviously, UAE leaving 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.

Piers Middleton: With the, obviously, UAE leaving OPEC and things like that's going to cause a, for us, we feel a big sort of uptick in terms of future demand as well. No, we're seeing it's going to be positive in the region. I mean, as we've mentioned on previous calls, it's always a tough region just because it's highly fragmented in terms of competition, et cetera. 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.

Speaker #6: So, no, we're not—we're seeing it's going to be positive in the region. I mean, as we've mentioned on previous calls, it's always a tough region, just because it's highly fragmented in terms of competition, etc., etc.

Speaker #6: 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 there.

Speaker #6: Thanks. I'll turn it back.

Josh Jayne: Thanks. I'll turn it back.

Speaker #3: Your next question comes from Keith Beckman with Pickering Energy Partners. Your line is open. Please go ahead.

Moderator: Your next question comes from Keith Beckmann with Pickering Energy Partners. Your line is open. Please go ahead.

Operator: Your next question comes from Keith Beckmann with Pickering Energy Partners. Your line is open. Please go ahead.

Speaker #5: Hey, good morning, and thanks for taking my question. I just wanted to step back and ask a very long-term question around the vessel—the OSV fleet is somewhat aged.

Keith Beckmann: Hey, good morning, and thanks for taking my question. I just wanted to step back and ask a long, long-term question around 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 not have to retire these assets kind of from a macro perspective? Then maybe backing up to 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.

Speaker #5: Fifteen-ish years kind of as a whole. I'm thinking about the macro market. How long do you think you can realistically keep from having to retire these assets, kind of from a macro perspective? And then, maybe backing up to day rates—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?

Speaker #5: Just any thoughts around all that?

Speaker #2: Sure. So before the downturn in 2014–15, we were routinely operating vessels into the high 20s or early 30-year range. And there's no reason why vessels can't operate that long.

Quintin Kneen: Sure. Before the downturn in 2014 and 2015, we were routinely operating vessels into the high 20s, early 30-year range. There's no reason why vessels can't operate that long. There certainly was in that same timeframe, so kind of 2011 to 2014, 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, a lot of them went to DP2, and so forth. There's no technological transformation that's happening today. What we saw during the worst part of the downturn, so 2016 to 2018, in that timeframe, were people putting up age restrictions as a way just to cull the number of vessels that were being tendered in every situation. I fully expect all of that to go away.

Speaker #2: There is certainly was in that same timeframe, so kind of 11 to 14, a bit of a transformation in the sense that vessels got larger.

Speaker #2: They all stepped up to be about a 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.

Quintin Kneen: They all stepped up to be about 1,000 square meter deck or 300 foot length overall. Everybody went to diesel electric, a lot of them went to DP2, and so forth. There's no technological transformation that's happening today. What we saw during the worst part of the downturn, so 2016 to 2018, in that timeframe, were people putting up age restrictions as a way just to cull the number of vessels that were being tendered in every situation. I fully expect all of that to go away.

Speaker #2: 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 timeframe, were people putting up age restrictions as a way just to call the number of vessels that were being tendered in every situation.

Speaker #2: 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 run for another five or six years.

Quintin Kneen: Right now, it's already started. I expect to see the fleet age still to run for another five or six years before people need to rebuild. Now, what is the price that it takes? Well, in today's market, in today's cost structure, it's in the low 30s that would justify building today. We may get there in a couple of years. I think that takes a couple of strong years to achieve. Maybe by the time we get to 2029, that can make some sense. No, the fleet has a lot of duration left in it, in our perspective.

Speaker #2: Before, people needed 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.

Speaker #2: And we may 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.

Speaker #2: But no, it's a fleet that has a lot of duration left in it, in our perspective.

Speaker #5: Awesome. I really appreciate it. I'll turn it back to us.

Keith Beckmann: Awesome. I really appreciate it. I'll turn it back, guys.

Speaker #2: Take care.

Quintin Kneen: Take care.

Speaker #3: Your next question comes from Greg Lewis with BTIG. Your line is open. Please go ahead.

Moderator: Your next question comes from Greg Lewis with BTIG. Your line is open. Please go ahead.

Operator: Your next question comes from Greg Lewis with BTIG. Your line is open. Please go ahead.

Speaker #6: Hey, hey. Thank you, and good morning. Thanks for taking my questions—and 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.

Greg Lewis: Hey. Thank you, and good morning, and thanks for taking my questions. Sorry, I might have missed this, but I realized in the Q&A there was a little bit of talk around term structure in the market. Wes, are you guys providing any color around what contracted capacity is in either Q3 or H2 of this year?

Speaker #6: Wes, do you guys provide any color around what contracted capacity is in either Q3 or the second half of this year?

Wes Gotcher: We did, Greg. We have that.

Speaker #5: We did, Greg. We had that in our compared marks and all updates 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 Wilson's fleet.

Greg Lewis: Okay

Wes Gotcher: Prepared remarks, I'll update you. 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 Wilson fleet.

Speaker #5: So you can look at the remainder of that, if you will, as to what capacity you have. And just to be clear, what's contemplated in our financial guidance is 80% utilization.

Greg Lewis: Great.

Wes Gotcher: You can look at the remainder of that, if you will, as to what capacity we have. Just to be clear, what's contemplated in our financial guidance is 80% utilization. I think you can use those two data points to determine that answer.

Speaker #5: So, I think you can use those two data points to determine that answer.

Speaker #6: And then, just as we think about—you mentioned the one-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.

Greg Lewis: Just as we think about, you mentioned the one-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 think about what 2027 already looks like, is a kind of a rough estimate, maybe 20% to 30% of the fleet is already contracted for 2027? Is that probably about right?

Speaker #6: If we were to kind of think about what '27 already looks like, is it kind of a rough estimate—maybe 20 to 30 percent of the fleet is already contracted for '27?

Speaker #6: That probably about right.

Speaker #5: I think it's a little bit more than that, but it's yeah, we're sort of as sort of Wes alluded to, there's certain obviously some are smaller vessel classes with gone a little bit longer term, but we've tried to keep the bigger ships available so we can really push into 2027.

Piers Middleton: I think it's a little bit more than that. As Wes alluded to, obviously some of our smaller vessel classes, we've gone a little bit longer term, but we've tried to keep the bigger ships available so we can really push into 2027.

Speaker #5: So yeah.

Greg Lewis: Okay. Super helpful. There was that transaction, the DAF transaction. It was just a few PSVs. I think it 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? I think they were all in that 15-year-old range, just simply because there is no real new tonnage. Quintin, 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 get us anywhere?

Speaker #6: Okay, so super helpful. And then there was that transaction—the DOF transaction. It was just a few PSVs, I think, that sold in the last couple of weeks.

Speaker #6: 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.

Speaker #6: Any thoughts around the price of those? 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, Quintin? I know you always talk about the potential to kind of really establish a position in a new market.

Speaker #6: Is the read-through there that these kind of smaller, one-off acquisitions just really don't get us anywhere?

Speaker #2: 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 to do a 20-boat transaction.

Quintin Kneen: I think that's right. I mean, the amount of work it takes to do a 3-vessel transaction is about the same as it takes a 20-boat transaction. We've been focused on larger deals. 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. 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. That's great. No, not that helpful. It just won't work for us.

Speaker #2: 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.

Speaker #2: Earlier, I made a joking comment that I just can't consolidate this industry all by myself, so I'm glad to see some people starting to help me do it.

Speaker #2: And so that's great. But no, not bad vessels. They're just weren't for us, so.

Greg Lewis: Just really following up on that, just given the fact that there has been some technological advances in the offshore. As we think about 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 dry dock for upgrades to kind of do some of this work that's kind of coming down the pipeline? At this point, just the requirements of that conventional PSV, the work can be done with the fleet that's there.

Speaker #6: And then, just really following up on that, given the fact that there have been some technological advances in the offshore sector, as we think about—and realizing that the economics for large-scale new builds maybe aren't there—are you starting to see requests from customers about potentially having to take some vessels into dry dock for upgrades to do some of this work that's coming down the pipeline? Or, at this point, are the requirements such that the conventional PSV fleet can handle the work with the vessels that are currently there?

Speaker #2: 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 whether customers are asking for it.

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

Speaker #2: There were certainly a couple of opportunities where we're making large investments in vessels, but we're generally pushing them out of the PSV space and into a more specialized space.

Piers Middleton: Yeah. I mean, Greg, I think Quintin touched on the previous comments, I think, to Keith. There's not been a big technological advance in terms of vessel designs, really. The only thing that's come in, I suppose, is putting batteries on the back of ships, and we've obviously got the largest hybrid fleet. We're seeing a few customers sort of asking about that. To be honest, it really comes down to what they're prepared to pay. 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. Yeah, 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. Yeah. We'll just have to see if that sort of bears out.

Speaker #5: Yeah. I mean, Greg, I think Quinton touched on it on the previous comments. I think to Keith, I mean, there's not been a big technological advance in terms of vessel designs really.

Speaker #5: 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.

Speaker #5: 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 cost money to go and retrofit batteries onto our vessels.

Speaker #5: And there's a cost to that, and that needs to be borne by the customer. So yeah, some of the tenders, they certainly come out and we've seen some in Brazil and some in the Middle East asking about that.

Speaker #5: And yeah, yeah, 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 in?

Piers Middleton: There's nothing in terms of the sort of, do you want to put methanol or ammonia or these things in? That sort of discussion has really gone away in the last couple of years. It's just not being financially viable, really, in terms of how our business is set up today.

Speaker #5: That sort of discussion has really gone away in the last couple of years. It has just not been financially viable, really, in terms of how our business is set up today.

Speaker #6: All right. Super helpful. Thank you very much.

Greg Lewis: All right. Super helpful. Thank you very much.

Speaker #2: Thanks, Rick.

Quintin Kneen: Thanks, Greg.

Speaker #1: There are no further questions at this time. I will now turn the call back to President and CEO Quintin Kneen for closing remarks.

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

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

Speaker #2: Well, thank you, everyone. We will update you again in November. Goodbye.

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

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

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

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