Tidewater (NYSE:TDW) reported second-quarter 2026 results that exceeded its expectations, as higher day rates, stronger utilization and delayed dry dock activity lifted revenue and margins despite elevated operating costs tied to the Middle East conflict referred to as Operation Epic Fury.
Revenue rose to $342.3 million from $326.2 million in the first quarter, while net income totaled $21.7 million, or $0.43 per share. Gross margin was $160.5 million, representing a 46.9% margin, compared with 48.8% in the prior quarter. Adjusted EBITDA increased to $133.8 million from $129.3 million.
Day Rates and Utilization Improve
Tidewater’s weighted average leading-edge day rate increased approximately 7.5% sequentially during the quarter. The company entered 25 turn contracts with an average duration of about 12 months.
Active utilization improved to 81.4% from 80.6% in the first quarter, while average day rates increased about 3%. Chief Financial Officer Sam Rubio said the company’s operational performance was supported by stronger demand, better-than-expected uptime and the movement of dry dock work into the second half of the year.
Europe and the Mediterranean were particularly strong. Gross margin in that segment increased by 8 percentage points sequentially, aided by an 8 percentage-point improvement in utilization and an 11% rise in day rates. In the North Sea, large anchor-handling tug supply vessel spot rates averaged above GBP 160,000 per day, with some fixtures completed above GBP 200,000 per day, according to Chief Operating Officer Piers Middleton.
Middle East utilization and day rates also improved despite the conflict, though higher costs reduced segment margins. Tidewater did not experience vessel off-hire related to Operation Epic Fury, Kneen said.
Conflict Costs Remain a Near-Term Headwind
Tidewater incurred approximately $6.8 million in additional second-quarter costs related to Operation Epic Fury, bringing year-to-date conflict-related costs to about $9.2 million through June 30. The costs included insurance, higher crew wages, fuel and travel expenses.
Rubio said fuel expense rose more than 50% sequentially in the second quarter. The company has taken steps to limit war-related pay owed to mariners working in affected areas, which resulted in lower-than-expected crew costs during the latter half of the quarter.
The company expects about $4 million of conflict-related costs in the third quarter. It is contractually permitted to seek reimbursement from customers for direct conflict-related costs, including war insurance and crew wages. Tidewater said those direct costs totaled approximately $5 million through the second quarter; it had invoiced nearly $1 million and collected less than $100,000. No reimbursements were included in guidance.
Kneen said Tidewater is working to reduce costs through changes in personnel and insurance arrangements, while continuing to pursue customer reimbursements. He added that activity in the region remains largely unaffected and that management expects a potential increase in work once the conflict is resolved.
Wilsons Closing Expected Around Sept. 1
Tidewater now expects to close its acquisition of Wilson Sons around Sept. 1, following completion of required regulatory steps and change-of-control waivers related to the assumed debt. The company is working with banks to finalize documentation for the debt transfer and has deployed personnel to support pre-closing integration planning.
The later-than-anticipated closing date prompted a revision to full-year guidance because Tidewater will lose roughly two months of Wilson Sons revenue that had previously been expected in 2026. The company expects to pay approximately $270 million in cash for the equity component of the acquisition and plans to use cash on hand rather than its revolving credit facility.
Tidewater ended the second quarter with net debt essentially at zero and liquidity of more than $850 million. It expects net leverage to rise to approximately 0.8 times following the Wilson Sons transaction.
Free cash flow nearly doubled sequentially to $64.4 million in the second quarter from $34.4 million in the first quarter. Rubio attributed the increase primarily to lower dry dock spending, proceeds from the sale of two vessels and lower working-capital use.
Updated 2026 Outlook
Tidewater revised its 2026 revenue guidance to a range of $1.42 billion to $1.47 billion and maintained a full-year gross margin outlook of 49% to 50%. The guidance incorporates the expected September closing of Wilson Sons and additional conflict-related costs during the third quarter.
- Third-quarter revenue is expected to increase about 3%, including one month of Wilson Sons revenue.
- Legacy Tidewater revenue is expected to decline about 2% sequentially, reflecting dry docks and higher-than-anticipated repair downtime.
- Third-quarter gross margin is expected to be about 46%.
- Approximately 69% of remaining available 2026 days are covered by firm backlog and options, including the Wilson Sons fleet.
- Full-year guidance assumes utilization of about 80%, leaving roughly 11% of capacity available for additional charters if markets tighten faster than expected.
Kneen said the company sees a realistic path to average day-rate increases of $3,000 to $4,000 per day in both 2027 and 2028. He cited rising tendering and pre-tendering activity, limited vessel supply and growing energy-security considerations among customers.
While Tidewater has not repurchased shares this year ahead of the Wilson Sons closing, its $500 million repurchase authorization remains available. Management said it will continue to weigh buybacks against acquisitions, focusing on transactions that offer strategic benefits and immediate value rather than pursuing scale alone.
About Tidewater (NYSE:TDW)
Tidewater Inc is a leading global provider of offshore marine support vessels, serving the energy sector with a focus on the oil and gas industry. Headquartered in Houston, Texas, the company operates a diverse fleet of platform supply vessels (PSVs), anchor handling tug supply vessels (AHTSs), crew boats and other specialized vessels designed to support offshore drilling, production and construction activities.
The company’s fleet is equipped to handle a range of maritime services, including the transport of personnel, equipment and bulk materials; anchor handling and mooring operations; and subsea construction support.
