A steadily growing giant that doesn't intend to let up
Today, we'll introduce a company that is demonstrating its ability to grow and expand its portfolio in any market environment. The company's strength is underscored by strong growth prospects, and the fact that the company has beaten earnings estimates 3 times out of the last 4 quarters.
In addition, the company announced the acquisition of 37 PSVs (Platform Supply Vessels), which represents a significant milestone in its strategy to strengthen its market position and deliver several key benefits. This category of vessels has the highest utilization across all market cycles. The addition of these 37 new vessels will make it the largest owner and operator of this vessel type in the world.
Company introduction
Tidewater Inc.
TDWTidewater Inc. $TDW+3.0% is a renowned American company that has specialized in providing services to the offshore oil and gas industry for decades. Founded in 1956 in New Orleans, Louisiana, the company has grown over time into one of the world's largest providers of support services for offshore drilling.
Tidewater's core business is operating an extensive fleet of specialized vessels to support oil rigs and other offshore facilities. These vessels perform a variety of critical functions, from supply and personnel transportation to towing and anchor handling. With its diverse fleet, Tidewater is able to meet the wide range of needs of its clients in the oil and gas sector.
Tidewater's footprint is truly global. Its vessels ply the waters of the Gulf of Mexico, the North Sea, the coasts of West Africa and the South East Asian region. This international presence allows the company to serve the world's largest energy companies wherever their offshore projects are located.
What makes Tidewater particularly attractive to investors is its long history and ability to adapt to changing market conditions. The company has undergone several significant mergers and acquisitions over the years that have helped it expand its footprint and solidify its position as an industry leader. This growth strategy, combined with an emphasis on fleet modernization and the adoption of new technologies, allows Tidewater to remain competitive during challenging periods of oil price volatility.
Analysts are confident in the company's growth
Tidewater Inc.
TDWAnalysts predict that Tidewater's earnings per share will nearly triple in fiscal year 2024, which ends in December, growing 183%. Earnings growth is expected to continue with another 60% increase next year. Revenues are expected to increase by 40% and 17% in the periods. Although the pace of growth is slowing, it is still very strong. In 2023, Tidewater's profits will explode by 735% on a 56% increase in revenue. Shares of Tidewater have a Composite Rating of 98 and an RS Rating of 87. They are up 20.98% since the beginning of the year.
How was the last quarter?
Tidewater reported earnings of $0.94 per share for the quarter ended June 2024, well ahead of analysts' expectations, who were predicting $0.72 per share. This represents a 30.56% surprise in earnings. Compared to the same period of the previous year, when earnings were $0.46 per share, this is a significant improvement.
The company's revenue was $339.23 million, again beating analysts' estimates by 2.10%. This is a significant increase compared to sales of $214.96 million in the same quarter of the previous year.
These results confirm the trend of the last four quarters, during which the company has beaten consensus earnings estimates three times.
It's not just growth
Share buybacks: Tidewater announced on Tuesday, Aug. 6, that its board of directors has initiated a stock buyback plan, RTT News reports. The company plans to repurchase $13.90 million worth of outstanding shares. The repurchase authorization allows the oil and gas company to buy up to 0.3% of its shares through open market purchases.
Key Performance Indicators
The company's shares trade at a P/E of 33.71, indicating that investors are paying a relatively high price for every dollar of earnings, while the industry average tends to be lower. The P/B is 4.14, indicating that the stock is trading at more than four times its book value. The P/S is 3.55, indicating that the stock price is approximately three times annual earnings per share.
The company has a D/E ratio of 0.66, indicating that its debts are reasonable relative to its equity. A D/C ratio of 0.40 indicates that the company has a reasonable level of debt relative to available cash.
ROA (return on assets) and ROE (return on equity) are 7.72% and 15.32% respectively, indicating good utilization of assets and capital. ROIC (return on invested capital) is 11.68%, which is a positive signal for the efficiency of investment.
The gross margin is 33.07%, indicating the company's strong ability to generate profit on sales before operating expenses. The operating margin is 20.85%, indicating that even after taking into account operating expenses, a significant portion of revenue remains as profit. The net margin, which is 12.77%, shows how efficiently the company converts revenue into net profit.
Financial results
What will help the company continue to grow?
The company said that its board of directors has approved the design of the barges and it is proceeding to the construction phase. The new barges will replace older, less efficient equipment, which will improve fleet safety, efficiency and environmental responsibility, Tidewater said.
Tidewater's president and CEO, Todd Busch, commented: "Our investment in these new barges reflects Tidewater's unwavering commitment to meet the changing needs of our customers while promoting sustainable practices in the transportation sector."
Jeff Murphy, director of infrastructure investment at Ullico and chairman of Tidewater's board, added: "Our endorsement underlines the confidence we have in Tidewater's management and their vision for the future. We are committed to being a reliable partner for businesses in the Pacific Northwest."
Recent acquisitions
Tidewater announced the acquisition of 37 PSVs (Platform Supply Vessels) from Solstad Offshore. The move represents a significant milestone in its strategy to strengthen its market position and deliver several key benefits.
Reason and benefits:
With this move, Tidewater consolidates its position as a leading operator of high-specification PSVs, the vessel category that has the highest utilization across all market cycles. The addition of these 37 new vessels will make Tidewater the largest owner and operator of this vessel type in the world. The acquisition will also strengthen its global position as a leader in OSVs (Offshore Support Vessels) with a fleet that is among the youngest in the market. In total, Tidewater will have a fleet of 228 vessels, 199 of which are modern PSVs and AHTS (Anchor Handling Tug Supply) with an average age of 11.3 years. Of these, 65% are high-specification vessels.
Another significant advantage of this acquisition is the creation of the largest hybrid fleet in the world. The combined fleet will include 14 vessels with battery hybrid propulsion and 2 LNG capable vessels, allowing the company to leverage its technology to reduce emissions and optimize fuel. The move confirms Tidewater's commitment to sustainability and green practices.
In addition, the new vessels will contribute to generating stable cash flow. They have a total backlog of approximately $620 million, including contract options, and represent significant potential for cash flow enhancement as existing contracts transition to higher market rates.
Analyst expectations
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