TDW: Income Statement Analysis for the December 2010 Quarter

Tidewater (NYSE: TDW) earned $0.67 per diluted share on a GAAP basis in the December-ending third quarter of fiscal 2011, down 42 percent from $1.16 in the same three months of the previous year.

This post examines Tidewater's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were $0.04 less than our $0.71 EPS estimate.

The principal sources for this review were the earnings announcement, the conference call, and the formal 10-Q report.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.  It now conducts business on a global scale.

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TDW: Look Ahead to December 2010 Quarterly Results

This post describes our model of Tidewater's (NYSE: TDW) Income Statement for the third quarter of fiscal 2011, which ended on 31 December 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results that the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Tidewater and the business environment in which it is currently operating.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.  It now conducts business on a global scale.

In fiscal 2010, which ended last March, Tidewater earned $259 million ($5.02 per share) on Revenue of $1.2 billion.  These figures were down from earnings of $407 million ($7.89 per share) on Revenue of $1.4 billion in fiscal 2009.

The company's Market Value is currently around $2.7 billion.

For financial reporting purposes, Tidewater's business is divided in U.S. and International segments.  In fiscal 2010, the International segment provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

Profits in the offshore segment of the energy industry have been scarcer the last couple of years.  The industry seems to oscillate between periods of high and low activity.  Energy producers calibrate their exploration and production activities to changing economic and industry conditions.  The Deepwater Horizon disaster in 2010, which led to an offshore drilling moratorium, almost certainly exacerbated the weakness during the current cycle.  (A Tidewater vessel, the Damon B. Bankston, was on the scene when the rig failed with tragic results.)

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TDW: Financial Gauge Analysis for the September 2010 Quarter

Tidewater (NYSE: TDW) earned $0.38 per diluted share on a GAAP basis in the September-ending second quarter of fiscal 2011, down 80 percent from $1.90 in the same three months of last year.

A previous article examined in some detail Tidewater's Income Statement for the September quarter.  Reported earnings, for reasons explained below, were $0.19 less than our $0.57 EPS estimate.

We have now updated the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.  This post reports on the metrics for Tidewater and the associated financial gauge scores.  The metrics were calculated using data from Tidewater's current and historical financial statements, including those in the latest 10-Q report.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico. 

In fiscal 2010, Tidewater's International business provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

The company's Market Value is currently around $2.6 billion.

Tidewater is in the midst of a multi-year effort to expand and modernize its fleet.  On 6 October 2010, Tidewater announced it had contracted with Dubai-based Drydocks World for the construction in Indonesia of four deepwater platform supply vessels at a cost of about $100 million.  On 30 September 2010, Tidewater was committed to acquire 4 vessels and to build 26 other vessels for a total cost of $700 million.

In September, Tidewater announced a plan to sell $425 million of senior unsecured notes to institutional investors.  The notes, which will mature in five to twelve years after issuance, will be used for debt refinancing, capital expenditures including fleet modernization, and general corporate purposes.

Additional background information about Tidewater and the business environment in which it is currently operating can be found in the look-ahead.


In summary, Tidewater's latest quarterly results produced the following changes to the gauge scores:

• Cash Management: 8 of 25 (down from 9 in June)
• Growth: 0 of 25 (unchanged)
• Profitability: 1 of 25 (unchanged)
• Value: 1 of 25 (down from 5)

• Overall: 9 of 100 (up from 15)

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.  Readers are encouraged to verify these figures and calculate others as they see fit using the filings available at the SEC's web site and elsewhere.

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TDW: Income Statement Analysis for the September 2010 Quarter

Tidewater (NYSE: TDW) earned $0.38 per diluted share on a GAAP basis in the September-ending second quarter of fiscal 2011, down 80 percent from $1.90 in the same three months of last year.

The earnings decline was approximately 70 percent if last year's $34.4 million ($0.66 per share) favorable resolution to tax litigation is excluded.

The latest results were consistent with Tidewater's pre-announcement on 25 October 2010 that earnings would be between $0.35 and $0.40 per share, which was well below consensus estimates at the time.

This post examines Tidewater's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings, for reasons explained below, were $0.19 less than our $0.57 EPS estimate.

The principal sources for this review were the earnings announcement, the conference call, and the formal 10-Q report.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico. 

Read the rest of this article

TDW: Preannouncement of September 2010 Quarterly Results

Tidewater (NYSE: TDW) is not scheduled to announce the company's results for fiscal 2011's second quarter, which ended on 30 September 2010, until 3 November.

The company, having already determined that its results would not measure up to the Wall Street consensus, shared this material information with investors by "preannouncing" preliminary results for the September quarter.  Tidewater now estimates its diluted earnings per share in the September quarter were between $0.35 and $0.40 per share.  The company noted that the Thomson First Call consensus estimate was $0.58 per share at the time of the announcement.

This was the second consecutive quarter that Tidewater "preannounced" disappointing earnings.

In our "look-ahead" for Tidewater's September quarter, posted 29 September 2010, we forecast earnings of $0.57 per share. 

Why were earnings roughly $0.20 per share less than expected?

The first reason, which accounts for $0.09 of the shortfall, can be attributed to a $4.35 million charge to resolve an investigation related to the Foreign Corrupt Practices Act.  We had thought, evidently erroneously, that Tidewater concluded this matter in the March 2010 quarter when the company recorded an $11.4 million charge.

The second reason, which explain the rest of the shortfall, or nearly so, was due to Tidewater increasing its estimated income tax rate for the year from 18.5 percent to 22.5 percent.


It may be comforting that Tidewater's revenue and operating costs in the latest quarter were generally consistent with prior targets.  For example, Tidewater now estimates the September quarter had vessel revenue of approximately $267 million.  Since the company's total revenue consists of this vessel revenue plus an additional, but typically modest, amount of "other marine revenues," our $270 million revenue target will probably be close to the actual results.

Tidewater also now expects that Vessel operating costs were approximately $170 million.  This estimate is close to management's prior guidance and cannot be considered a surprise.


We will have to wait until next week to study the detailed results for the quarter.




Full disclosure: Long TDW at time of writing.

TDW: Look Ahead to September 2010 Quarterly Results

This post describes our model of Tidewater's (NYSE: TDW) Income Statement for the second quarter of fiscal 2011, which will end on 30 September 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results that the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Tidewater and the business environment in which it is currently operating.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico. 

A Tidewater vessel, the Damon B. Bankston, was on the scene at the Deepwater Horizon when the rig failed with tragic results.  The offshore drilling moratorium following the disaster will affect Tidewater's business in the Gulf of Mexico; however, this region is a relatively small part of Tidewater's worldwide operations.

In fiscal 2010, Tidewater earned $259 million ($5.02 per share) on Revenue of $1.2 billion.  These figures were down from earnings of $407 million ($7.89 per share) on Revenue of $1.4 billion in fiscal 2009.

The company's Market Value is currently around $2.3 billion.

For financial reporting purposes, Tidewater's business is divided in U.S. and International segments.  In fiscal 2010, the International segment provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

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TDW: Financial Gauge Analysis for the June 2010 Quarter

Tidewater (NYSE: TDW) earned $0.77 per diluted share on a GAAP basis in fiscal 2011's first quarter, which ended on 30 June 2010.  Earnings per share were 10.5 percent less than the $0.86 Tidewater made last year.  The decline would have been steeper, but the earlier period's results were depressed by a $0.93 per share special charge.

A previous article examined Tidewater's Income Statement for the June quarter in some detail.  Reported earnings were $0.07 less than the $0.84 per share we had forecast 

We have now updated the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.  This post reports on the metrics for Tidewater and the associated financial gauge scores.  The metrics were calculated using data from Tidewater's current and historical financial statements, including those in the latest 10-Q report.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.

The Damon B. Bankston, a Tidewater vessel, was on the scene at the Deepwater Horizon when the rig failed with tragic and wide-reaching results.  The offshore drilling moratorium following the disaster could have long-term negative implications for energy-related activities in the Gulf of Mexico; however, this region has become a relatively small part of Tidewater's business.  In fiscal 2010, Tidewater's International operations provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

Additional background information about Tidewater and the business environment in which it is currently operating can be found in the look-ahead.

In summary, Tidewater's latest quarterly results produced the following changes to the gauge scores:

• Cash Management: 9 of 25 (unchanged in March)
• Growth: 0 of 25 (unchanged)
• Profitability: 1 of 25 (down from 4)
• Value: 5 of 25 (up from 2)

• Overall: 16 of 100 (up from 15)

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.  Readers are encouraged to verify these figures and calculate others as they see fit using the filings available at the SEC's web site and elsewhere.

Read the rest of this article

TDW: Income Statement Analysis for the June 2010 Quarter

Tidewater (NYSE: TDW) earned $0.77 per diluted share on a GAAP basis in fiscal 2011's first quarter, which ended on 30 June 2010.  Earnings per share decreased 10.5 percent when compared to the $0.86 Tidewater made in the same quarter of last year.

The latest results were consistent with Tidewater's "preannouncement," made on 21 July 2010, that earnings would be between $0.75 and $0.80 per share.

The company's results in the June 2009 quarter were depressed by a $48.6 million ($0.93 per share) charge related to difficulties in Venezuela.

This post examines Tidewater's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were $0.07 less than the $0.84 per share we had forecast prior to the release of the preannouncement.

The principal sources for this review were the earnings announcement, the conference call, and the formal 10-Q report.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Before getting into the details, we will take a step back to introduce the subject of today's analysis.

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TDW: Earnings Preannouncement

Tidewater (NYSE: TDW) is not scheduled to announce the company's results for fiscal 2011's first quarter, which ended on 30 June 2010, until 5 August.

However, the company today "preannounced" partial and preliminary results for the June quarter.  Tidewater estimates diluted earnings will be between $0.75 and $0.80 per share.  The company noted that the Wall Street consensus estimate was $0.95 per share at the time of the preannouncement.

In our "look-ahead" for Tidewater's June 2010 quarter, posted 20 June 2010, we forecast earnings of $0.84 per share.  This is $0.04 above the high end of the newly announced range.

Tidewater now estimates vessel revenue of approximately $262 million in the June quarter.  Our $266 million target for the company's total revenue shouldn't be too far off because Tidewater typically reports a modest amount of "other marine revenues" in addition to vessel revenue.

The company's estimate for vessel operating costs remains at $155 million.

Since preannounced Revenue and operating cost figures are generally consistent with our earlier targets, it appears general and administrative costs might have exceeded our estimate or that gains on asset dispositions might have been lower.  It's also possible that currency exchange fluctuations had a negative effect on the results.

We will have to wait until 5 August to learn the specifics.




Full disclosure: Long TDW at time of writing.

TDW: Look Ahead to June 2010 Quarterly Results

This post describes our model of Tidewater's (NYSE: TDW) Income Statement for the first quarter of fiscal 2011, which will end on 30 June 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results that the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Tidewater and the business environment in which it is currently operating.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry in exploration, field development, and production.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico. 

A Tidewater vessel, the Damon B. Bankston, was on the scene at the Deepwater Horizon when the rig failed with tragic and wide-reaching results.  The offshore drilling moratorium following the disaster will be a negative for Tidewater's business in the Gulf of Mexico; however, this region is a relatively small part of Tidewater's business.  If cutbacks in deep-water drilling become permanent, rates for using the associated vessels would presumably decline.

In fiscal 2010, Tidewater earned $259 million ($5.02 per share) on Revenue of $1.2 billion.  These figures were down from earnings of $407 million ($7.89 per share) on Revenue of $1.4 billion in fiscal 2009.

For financial reporting purposes, Tidewater's business is divided in U.S. and International segments.  In fiscal 2010, the International segment provided 92 percent of total vessel revenues and 96 percent of vessel operating profit.

Tidewater is in the midst of a multi-year effort to expand and modernize its fleet.  According to the 10-K, the company is presently committed to acquire five vessels and to build 31 other vessels for a total cost of $742 million.  Construction progress payments of $272 million have already been made.

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TDW: Financial Gauge Analysis for the March 2010 Quarter

Tidewater (NYSE: TDW) earned $1.10 per diluted share on a GAAP basis in fiscal 2010's fourth quarter, which ended 31 March.  Earnings per share were 48 percent less than the $2.13 Tidewater made in the same quarter of 2009.

In our earlier review of Tidewater's Income Statement, we compared the actual results to our "look-ahead" estimates.  Reported earnings were $0.02 more than the $1.08 per share we had forecast.

We have now updated the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value for Tidewater.  This post reports on the metrics and the associated financial gauge scores.  The metrics were calculated using data from Tidewater's current and historical financial statements, including the latest formal 10-K report.


Tidewater, Inc., owns the world's largest fleet of vessels serving the global offshore energy industry.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico. 

The company still works in its home region, and a Tidewater vessel was on the scene at the Deepwater Horizon when the rig failed tragically.  However, the lion's share of Tidewater's business has been outside the U.S. for many years.  International operations were responsible for 92 percent of the company's vessel revenue in fiscal 2010.

Additional background information about Tidewater can be found in the look-ahead.

In summary, Tidewater's latest quarterly results produced the following changes to the GCFR gauge scores:

• Cash Management: 9 of 25 (down from 10 in December)
• Growth: 0 of 25 (down from 1)
• Profitability: 4 of 25 (down from 6)
• Value: 2 of 25 (down from 9)

• Overall: 15 of 100 (down from 29)

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.  Readers are encouraged to verify these figures and calculate others as they see fit using the filings available at the SEC's web site and elsewhere.

Read the rest of this article

TDW: Income Statement Analysis for the March 2010 Quarter

Tidewater (NYSE: TDW) earned $1.10 per diluted share on a GAAP basis in fiscal 2010's fourth quarter.  Earnings were 48 percent less than the $2.13 per share Tidewater made in the same quarter of 2009.

Special items added about $0.06 per share to earnings in the quarter, which ended 31 March 2010.

This post examines Tidewater's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Reported earnings were, as luck would have it, only $0.02 more than the $1.08 per share we had forecast.

The principal sources for this income statement analysis were the earnings announcement, the conference call, and the formal 10-K report.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.


Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.  Additional background information about Tidewater and the business environment in which it is currently operating can be found in the look-ahead.

A Tidewater supply vessel, the Damon B. Bankston, was tethered to the Deepwater Horizon oil rig that exploded in April.  A story by Paul Purpura in the Times-Picayune describes the heroic actions of the Bankston's captain and crew in the first moments after the disaster to save the lives of rig workers.

Please click here to see a full-sized, normalized depiction of the actual and projected results for the just-concluded quarter, as well as the quarterly Income Statements for the last couple of years.  Please note that our organization of revenues, expenses, gains, and losses, which we use for all analyses, can and often does differ in material respects from company-used formats.  The standardization facilitates cross-company comparisons.

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TDW: Look Ahead to March 2010 Quarterly Results

This post describes our model of Tidewater's (NYSE: TDW) Income Statement for the fourth quarter of fiscal 2010, which will end on 31 March 2010.

The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results that the company will report.  Estimates for each line of the Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.

We begin by reviewing background information about Tidewater and the business environment in which it is currently operating.

Read the rest of this article

TDW: Financial Gauge Analysis for the December 2009 Quarter

This post provides updated Cash Management, Growth, Profitability and Value metrics and our Financial Gauge scores for Tidewater (NYSE: TDW).  The metrics were calculated using data in Tidewater's financial reports, including the latest earnings announcement and the formal 10-Q report for the December quarter.

We have already examined the Income Statement for the three months that ended on 31 December 2009.  Tidewater earned $1.16 per diluted share in this period, which was the third quarter of Tidewater's fiscal 2010.  This result was 49 percent below the record-high $2.28 earned in the December 2008 quarter.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry.  Headquartered in New Orleans for more than 50 years, Tidewater first serviced drillers in the Gulf of Mexico.  Additional background information about Tidewater and the business environment in which it is currently operating can be found in the look-ahead.

The latest quarterly results produced the following changes to the gauge scores:

• Cash Management: 10 of 25 (unchanged from June)
• Growth: 1 of 25 (down from 4)
• Profitability: 6 of 25 (down from 9)
• Value: 8 of 25 (down from 17)

• Overall: 28 of 100 (down from 47)

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.  Readers are encouraged to verify the figures and calculate any other metrics they find meaningful.  The SEC's web site is great source of data.

Read the rest of this article

TDW: Income Statement Analysis for the December 2009 Quarter

Tidewater (NYSE: TDW) earned $1.16 per diluted share in the quarter that ended 31 December 2009, which was the third quarter of Tidewater's fiscal 2010.  This result was 49 percent less profitable than the record-high $2.28 earned in the December 2008 quarter. 

This post examines Tidewater's Income Statement for the latest quarter and compares the entries on each line to our "look-ahead" estimates.  Our target for Net Income was $1.18 per share, $0.02 more than the reported amount.

The principal sources for the income statement analysis were the earnings announcement, the post-release conference call (transcript available from Seeking Alpha), and the formal 10-Q report.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges.  The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.

Read the rest of this article

TDW: Look Ahead to December 2009 Quarterly Results

Tidewater (NYSE: TDW) earned $1.90 per share in the second quarter of fiscal 2010, which ended 30 September 2009, up from $1.85 in the same quarter of last year.  The recent quarter included a $34.4 million favorable resolution to tax litigation; earnings would have been $0.66 less, or $1.24, without the tax benefit.

In October, we examined Tidewater's Income Statement for the September quarter and compared the entries on each line to our "look-ahead" estimates.  We later performed a financial gauge analysis of Tidewater, which determined that the GCFR Overall gauge fell from 59 to 51 of the 100 possible points.

We have now modeled Tidewater's Income Statement for the quarter that will end on 31 December 2009.  The intent of this exercise was to produce a baseline for identifying deviations, positive or negative, in the actual data the company will announce in late January or early February 2010.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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TDW: Financial Gauge Analysis for the September 2009 Quarter

In a previous article, we examined Tidewater's (NYSE: TDW) Income Statement for the September quarter and compared the figures to our "look-ahead" estimates.  Earnings in this period, the second quarter of fiscal 2010, rose from $1.85 to $1.90 per share.  Earnings would have been $0.66 lower, or a disappointing $1.24, without the benefit of a $34.4 million favorable resolution to tax litigation.

Using the financial statements in the earnings announcement and the more detailed 10-Q, we have now updated a set of Cash Management, Growth, Profitability and Value metrics. This post reports on the metrics and the associated financial gauge scores.

Tidewater owns the world's largest fleet of vessels serving the global offshore energy industry.   Some background information about Tidewater and the business environment in which it is currently operating can be found in the look-ahead.

In summary, Tidewater's latest quarterly results produced the following changes to the gauge scores:

• Cash Management: 14 of 25 (unchanged from June)
• Growth: 4 of 25 (down from 6)
  
• Profitability: 9 of 25 (unchanged)
  
• Value: 17 of 25 (down from 21)
  

• Overall: 51 of 100 (down from 59)
  

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.  Readers are encouraged to verify the figures and calculate any other metrics they find meaningful.  The SEC's web site is great source of data.

Read the rest of this article

TDW: Income Statement Analysis for the September 2009 Quarter

Tidewater (NYSE: TDW) earned $1.90 per share in the second quarter of fiscal 2010, which ended 30 September 2009, up from $1.85 in the same quarter of last year.  The recent quarter included a $34.4 million favorable resolution to tax litigation; earnings would have been $0.66 less, or a disappointing $1.24, without the tax benefit.

This post examines the Income Statement in the earnings announcement and the accompanying 10-Q and compares the entries for the quarter to our "look-ahead" estimates.  Our target for Tidewater's Net Income in the latest quarter was $1.56 per share.

In a second article, we will report Tidewater's scores as measured by the GCFR financial gauges. The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management, Growth, Profitability and Value.

Read the rest of this article

TDW: Look Ahead to September 2009 Quarterly Results

The GCFR Overall Gauge of Tidewater Inc. (NYSE: TDW) slipped from 67 to 59 points of the 100 possible points in the June 2009 quarter, which was the first of fiscal 2010.  Our income statement and financial gauge analyses explained in some detail how the score was attained.

Tidewater earned $0.86 per share in the June quarter, down from $1.64 in the same period of 2008.  Earnings were $1.80 per share if we exclude a $48.6 million charge related to the seizure of Tidewater vessels in Venezuela.

Revenue in the June quarter fell by 4 percent.  The decrease was due, for the most part, to a significant decline in demand for U.S. vessels.


We have now modeled Tidewater's Income Statement for the soon-to-be-concluded September 2009 quarter.  The intent of this exercise was to produce a baseline for identifying any deviations, positive or negative, in the actual data that the company will announce in late July.  GCFR estimates are derived from trends in the historical financial results and guidance provided by company management.

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TDW: Financial Gauge Analysis for the June 2009 Quarter

In an earlier post, we examined Tidewater's (NYSE: TDW) Income Statement for the June quarter and compared the figures to our "look-ahead" estimates.  Earnings in this period, the first quarter of fiscal 2010, fell from $1.64 to $0.86 per share.  Earnings were about $1.80 per share excluding a charge related to the seizure of Tidewater vessels in Venezuela.

We have since mined the financial statements in Tidewater's 10-Q to update the metrics we use to assess Cash Management, Growth, Profitability and Value.  This post reports on these metrics and the Financial Gauge scores.


In summary, Tidewater's latest GCFR gauge scores are as follows:

• Cash Management: 14 of 25 (down from 17 in March)
• Growth: 6 of 25 (down from 11)
  
• Profitability: 9 of 25 (up from 7)
  
• Value: 21 of 25 (down from 25)

• Overall: 59 of 100 (down from 67)
  

The current and historical values for the financial metrics that determine the gauge scores are listed below, with some brief commentary.

Cash Management	Jun 2009	Mar 2009	Jun 2008	5-Yr Avg
Current Ratio	3.1	3.1	2.7	3.5
LTD/Equity	13.2%	13.4%	15.3%	18.1%
Debt/CFO (years)	0.6	0.6	0.7	1.1
Inventory/CGS (days)	N/A	N/A	N/A	N/A
Finished Goods/Inventory	N/A	N/A	N/A	N/A
Days of Sales Outstanding (days)	88.4	83.6	85.6	87.1
Working Capital/Invested Capital	21.3%	18.8%	17.3%	19.3%
Cash Conversion Cycle Time (days)	75.0	56.7	64.1	61.2
Gauge Score (0 to 25)	14	17	12	13

Tidewater's strong Balance Sheet, which is evident from the first few ratios above, should help the company modernize its fleet.  It also provides a cushion to help the company overcome weak periods in the cyclic energy industry and challenges such as those in Venezuela.  Tidewater will need to spend another $572 million to fulfill commitments on 45 new vessels, as part of a $965 million program.  These vessels will be delivered in stages through July 2012.

Growth	Jun 2009	Mar 2009	Jun 2008	5-Yr Avg
Revenue growth	5.6%	9.5%	12.4%	18.0%
Revenue/Assets	46.0%	47.7%	47.4%	42.8%
Operating Profit growth	21.1%	27.9%	69.1%	55.9%
CFO growth	10.1%	7.5%	0.5%	40.3%
Net Income growth	6.0%	16.7%	-7.2%	57.1%
Gauge Score (0 to 25)	6	11	5	15

Revenue, CFO, and Net Income growth rates compare the last four quarters to the four previous quarters.
The Operating Profit rate is the annualized rate of growth in Operating Profit after Taxes over the last 16 quarters.


Reduced offshore activity, especially in the U.S., trimmed Tidewater's Revenue growth.

The earnings and cash flow growth rates after the June 2009 quarter would be more robust (and the Growth score would be 4 points higher) if we ignored the $50 million charge.

Profitability	Jun 2009	Mar 2009	Jun 2008	5-Yr Avg
Operating Expenses/Revenue	67.8%	68.5%	70.7%	71.9%
ROIC	16.6%	17.0%	16.0%	13.6%
Free Cash Flow/Invested Capital	3.2%	2.5%	4.4%	5.2%
Accrual Ratio	5.4%	10.2%	6.7%	3.2%
Gauge Score (0 to 25)	9	7	5	10

It's good to see the decrease in Operating Expenses, and the ROIC has held up well.  However, Free Cash Flow has suffered, in part because of high capital expenditures associated with the fleet expansion and modernization.

Value	Jun 2009	Mar 2009	Jun 2008	5-Yr Avg
P/E	6.0	4.7	9.7	12.7
P/E vs. S&P 500 P/E	0.3	0.3	0.5	0.8
PEG	0.3	0.2	0.1	0.2
Price/Revenue	1.6	1.4	2.6	2.7
Enterprise Value/Cash Flow (EV/CFO)	4.3	3.7	7.6	8.8
Gauge Score (0 to 25)	21	25	10	13

Tidewater's share price increased 15.5 percent during the June quarter, from $37.13 to $42.87.  This rise, combined with the hit to earnings in the latest quarter, put an end to Tidewater's perfect 25-point Value gauge score.

Nevertheless, the valuation ratios above are still very attractive. The valuation ratios can easily be compared with other companies in the Shipping industry.
 

Overall	Jun 2009	Mar 2009	Jun 2008	5-Yr Avg
Gauge Score (0 to 100)	59	67	35	49

Tidewater is coping with the reduced demand for energy services, an industry-wide phenomenon.  Cost cutting has helped, but the asset expropriation that led to an operating charge of almost $50 million was the dominant feature of the June quarter and had the greatest effect on the gauge scores.

Management might face some tough questions about whether to scale back the fleet modernization if demand doesn't quickly resume its earlier upward trajectory.  Continued weakness, as manifested in lower utilization and day rates, will curb the company's cash flows and also reduce the value of older vessels the company might want to sell. 

In July 2009, Tidewater and its lenders amended the company's revolving credit facility, increasing the amount to $450.0 million and extending the maturity date to July 2012.




Full disclosure: Long TDW at time of writing.