Stronger Performance in Q2
Tidewater Inc (NYSE:TDW) saw a significant 7.5% rise in its weighted average leading edge day rate during the second quarter of 2026. CEO Quentin Neane highlighted during the earnings call that tendering and pre-tendering activity is at its strongest in recent years. The company’s free cash flow nearly doubled to $64 million, driven by better operations and deferred maintenance work.
The company’s gross margin for the quarter was just under 47%, a sign of strong financial performance. Neane attributed this to a balanced market situation with tight supply and strong demand. Investors are now closely monitoring if these positive trends hold in the coming months.
Conflict and Costs Weigh on Outlook
Tidewater reported $6.8 million in costs linked to Operation Epoch Fury in the second quarter. Management expects an additional $4 million in the third quarter. These expenses, alongside rising fuel costs and increased maintenance spending, are predicted to bring the third-quarter gross margin down to around 46%.
The acquisition of Wilson's has also pushed back revenue forecasts. The transaction, now expected to close around September 1, 2026, has caused a small adjustment in the company’s full-year revenue guidance. Originally slated for a much earlier completion, this delay is affecting current financial plans.
Despite these third-quarter challenges, the company’s leadership remains optimistic about the long-term. COO Piers Middleton noted improved market sentiment in key regions like Asia-Pacific, the Mediterranean, and parts of Africa. He also mentioned Brazil’s likely rebound after next year’s elections.
Neane confirmed that global project pipelines look better than they did in the first half. Tidewater has over $850 million in liquidity and near-zero net debt, which gives the firm a solid foundation to manage its near-term challenges. However, ongoing uncertainty surrounding the Middle East conflict remains a key concern for the company.
In response to a question about future day rate growth, Neane stated he is more bullish than he has been in over a year. He noted a surge in tendering activity globally and pointed to recent visits to Asia as evidence. Places like Indonesia, Malaysia, and Myanmar are seeing more activity than before, adding to the positive outlook.
Middleton added that the market has improved slightly since the beginning of the year, especially in regions like the Mediterranean, Namibia, Angola, and Nigeria. While some project timelines might shift, overall confidence in the market remains high. Brazil is expected to return to stronger growth after elections settle.
Tidewater has not repurchased any shares this year, a pause it attributes to funding the Wilson's acquisition. With the acquisition now delayed, the company must also monitor how the ongoing conflict in the Middle East affects operations and financial performance.