Welcome to the Fiscal Year 2014 First Quarter Earnings Conference Call. My name is Adrienne, and I will be your operator for today's call. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the call over to Joe Bennett. Joe Bennett, you may begin.

Thank you, Adrienne. Good morning, everyone, and welcome to Tidewater's first quarter fiscal 2014 earnings results conference call for the period ended June 30, 2013. I'm Joe Bennett, Tidewater's Executive Vice President and Chief Investor Relations Officer. With me this morning on the call are our President and CEO, Jeff Platt; Jeff Gorski, our Executive Vice President and Chief Operating Officer; Quinn Fanning, our Executive Vice President and CFO; and Bruce Lundstrom, our Executive Vice President, General Counsel and Secretary. We'll follow our usual conference call format. After the formalities, I'll turn the call over to Jeff for his initial comments, to be followed by Quinn's review of the financial details for the quarter. Jeff will then provide some wrap-up comments before we open the call for your questions. During today's conference call, Jeff, Quinn, I and other Tidewater management may make certain comments that are forward-looking statements and not statements of historical fact. I know that you understand that there are risks, uncertainties and other factors that may cause the company's actual future performance to be materially different from that stated or implied by any comment that we may make during today's conference call. Additional information concerning the factors that could cause actual results to differ materially from those stated or implied by the forward-looking statements may be found in the Risk Factors section of Tidewater's most recent Form 10-K. With that, I'll turn the call over to Jeff.

Thank you, Joe, and good morning to everyone. Earlier this morning, we reported fully diluted earnings per share for our first quarter of fiscal 2014 of $0.61, inclusive of several nonrecurring items that were highlighted in our press release, and for which Quinn will provide you with some additional information in a moment. Operationally, we performed in line with the guidance provided on our last earnings call. Vessel revenues, which included about 1 month's contribution from the 5 vessel Troms fleet, were nearly $332 million for the June quarter. Importantly, our revenue performance is consistent with our long-held view that our business is in an upturn that will be manifested in increasingly quarterly revenue gains. Based on our latest assessment of the market, we remain confident in that outlook. Our vessel revenue trend reflects the improving health of the global offshore industry, with recent increases in both sides of the global offshore drilling rig fleet and higher utilization rates. Recent announcements of awards for construction of new offshore drilling rigs, both deepwater floaters and jackups, reinforce our positive outlook for these key drivers of our business. Vessel operating costs were higher in the June quarter than in the March quarter, reflecting fleet growth and a heavy drydock schedule, but were also in line with our prior guidance. I'll remind you that higher R&M costs also penalizes on the revenue line, as vessels do not normally earn revenue as they undergo repairs. Thus, when R&M costs decline in our third and fourth fiscal quarters as we expect, our quarterly revenue performance should be helped. This revenue repair and maintenance seesaw effect will continue to be an operational fact of life for us, especially since we now have only 32 older vessels left in our active fleet and over 230 new, large,…

Thank you, Jeff. Good morning, everyone. First, I'll call your attention to a second earnings press release that we put out this morning in order to correct a typo in one of the tables included in our original press release. We also expect to file our quarterly report on Form 10-Q through the EDGAR filing service sometime before the close of business today. Also note that we included select operating statistics for our newer vessels, including utilization, average day rates and vessel count by asset class in this morning's press release. And at least for the near to an immediate term, we expect to provide this information on our quarterly filings as well. Finally, note that in this quarter, we have stripped vessel operating lease costs, which some associate with financing costs, out of vessel operating costs, and we will instead separately present these costs under the heading vessel operating leases on the face of our income statement on a go-forward basis. This should make our results, including vessel operating costs and vessel operating margins, easier to compare to our peer OSV companies. With those housekeeping items out of the way, as Jeff noted in his introductory remarks, we reported diluted earnings per common share of $0.61 in the June quarter versus diluted earnings per common share of $0.95 for the March quarter. As noted in our press release, net earnings reflect approximately $4.6 million or $0.07 per share after-tax and nonrecurring costs, including transaction expenses associated with the Troms Offshore transaction and our recent settlement of a previously disclosed assessment by the Customs Department of Equatorial Guinea. To help you tie back to my prior guidance, financial results of Troms Offshore are included from the June 4 date of acquisition through June 30. Note that Tidewater's results for the…

Thanks, Quinn. I think it's important to put our recent results at Quinn's near-term guidance in context. We firmly believe the offshore industry cycle is in the early stage of a multiyear growth phase, largely driven by the need for oil and gas companies to find and develop new hydrocarbon reserves and to grow production in order to meet future global energy demand. These efforts are supported by current oil and gas prices that provide our clients with both the necessary cash flow to invest and the incentives to spend on more offshore work. We have seen solid growth in recent years, specifically in international E&P spending, and fully expect that trend to continue. The quest for energy is expanding offshore into more international areas and more challenging areas, which bodes well for our company with our global geographic spread of operations. The offshore industry has a significant order book of newbuilding drilling rigs that currently totals about 215 rigs. We believe it is reasonable to estimate that approximately 170 of these new rigs should be employed by the end of 2015, some 30 months from now. If all of these new rigs are additive to the working fleet, the offshore drilling segment will experience about a 20% expansion from today's record levels. More than likely, not all will be additive due to the retirement of some older rigs mostly attributable to technological obsolescence. At the same time, the demands of our customers for more capable offshore drilling rigs that can work in more challenging operating environments will increase the need for larger, more reliable and technologically sophisticated support vessels such as the ones we have been adding to our fleet during the past few years. Meeting the future needs of our customers is critical as we plan our business.…

[Operator Instructions] And we have Jeff Spittel from Clarkson Capital Markets online with a question.

Maybe if we could start off, Quinn, and I appreciate the commentary about being a heavy drydocking schedule for the second quarter as well. But I think initially, you'd spoken about maybe a 10% to 15% year-over-year uptick in '14 versus '13 for R&M expense. Is that still a pretty reasonable expectation in your opinion?

My sense will be at the high end of that range or even a bit north of that as a result of some unscheduled repairs that we experienced in the current quarter. I'm not sure I could put a fine point in terms of what the year-over-year cost will look like in retrospect, but I think it's plus 15% or better at this point.

Okay, that's just fine. And one of your more Gulf of Mexico-centered competitors had talked a little bit about the newbuild order book for deepwater PSVs in the Gulf of Mexico starting to catch up with the incremental demand drivers. Are you seeing any evidence that things are getting a little frothier in any of international markets and maybe that order book is starting to catch up with the anticipated uptick in demand?

Jeff, we're really not seeing that. Again, with the rigs on order and as they're being delivered, we're still seeing good opportunities really in most, if not all, of the geographic markets we serve.

And we have Todd Scholl from Wunderlich Securities online with a question.

You guys kind of touched on my question at the end of your prepared remarks. Basically, my question is related to the shallow water market, particularly in the towing-supply class. It seems like that's an area where you haven't seen a significant amount of investment in recent years, but yet the demand drivers are there. I think that there's going to be something like 4 jackups delivered each month for like the next 18 months. So is it possible, do you guys think, that you could exit this year at around 90% utilization for that class? And can you maybe give us an idea of how optimistic you are in day rates for that particular class?

Todd, we've had high utilization in that segment for a while, as we have had in deepwater, too. And our largest competitor also reports their segments and they've had high utilization in the jackup support market -- tow-supply and supply. And you're right, when you look at the rig order book, it's very much weighted over the next year, 1.5 years, lots of jackups will be delivered. So when you put that all together, we're optimistic. And I can tell you, we're trying very hard to move the day rates there. When you talk about utilization, as you get into the mid-80s and really try to get up to the 90%, I mean, that gets to be almost full utilization when you look at regulatory drydock as you have to have and you do have some movement of vessels maybe from one market to the next. So getting up to 90%, we could spike up there. But again, you get into the mid-80s to touching on 90%, that's pretty much full utilization in any vessel class when you look at it on an international basis, not just one market.

Picking up on your first point, I'd also note, and I think we agree with your, at least my understanding of your assessment, that the delivery schedule on vessels that would support the new jackups is kind of 1:1 at this point. And then, if you think about some of our investor presentations, a 3.5 or so vessel-to-rig working rig ratio is one where we see reasonable equilibrium in the industry. And so one would think that if only one vessel is delivered for every jackup that's delivered, you would see some firming up of that supply-demand dynamic, assuming that every jackup that gets delivered is merely replacing one that's getting retired.

Okay, great. And then I just had one other question with regard to your acquisition of Troms and really, your thoughts on the North Sea going forward. Is that an area where we could see you make incremental investments in addition to the acquisition? I mean, is the plan to kind of stay in the path there with those vessels right now? Or should we expect, in addition to what you acquired in the Troms order book, should we expect you to add vessels to that region as well?

Well, Todd, just before we did the Troms acquisition, we've made some vessel pickups of equipment that was built for the North Sea built in Europe, so it's very high-end equipment. Again, it's got the ability to work in the cold water environment. So that's a market that, in general, we like. We look at that as a growth area. Our clients are looking at it as a growth area. When you look at the investments being made by some of the very major IOCs, the Arctic region, cold water region is very much a part of where they're investing for the future. So again, maybe not the North Sea just in and of itself, although that is a big market, that whole cold water environment extends well beyond the North Sea and it's one that we certainly intend to have a good market share in.

Fundamental backdrop, in the Norwegian sector in particular, is pretty positive if you look at the recent discoveries on the NCS and development plans have already been announced. I think the large PSV requirements in the Norwegian sector in the mid-70s today and some of the brokers and others that follow that sector, I think generally expect that the, at least PSV requirements, that market would go from the mid-70s up to a size of 100 or 105 over the next couple of years. So the demand is there.

And we have Jeff Tillery from Tudor, Pickering online with a question. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: We're seeing and hearing you talk about the bullish jackup demand dynamics and you guys trying to push rates. To the extent that you're successful, where should we think about seeing the improved -- improvement in the towing-supply rates first within your fleet? And then you talked about not having much improvement in overall towing-supply rates baked into the internal forecast. Just can you tell us what's going on in the leading edge for you guys? Are we seeing a little bit of improvement there or no?

We're seeing a little bit, but again the numbers speak for themselves. Again, we had, I think, a bit of an uptick in the rates earlier in the calendar year. Certainly, this year -- this quarter was pretty much flat to the prior quarters. So -- and I'll tell you we're trying to push it, we do. As far as a location, in general, the contracting length on tow-supply/supply is shorter than the deepwater, but I wouldn't look for any region necessary to be a breakout region. So I can't really point you in that direction. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: That's helpful in and of itself. As you look at that implied tightening in the market just given the kind of newbuild OSV, delivery schedule relative to rigs, and as we think about the rest of the year, do we think about an acceleration in your capital program as you look out in the next year?

We've been pretty aggressive over the last several years reinvesting in the fleet, if that's what you're referring to. And I think we will continue to pursue that as opportunities make themselves available. We certainly have the financial position. When a ship or ships make sense to us, we have the ability to move on it. And other times, we don't. So I don't think you're going to see a shift one way or another. We'll continue to add the assets that we think we need for the market today and into the future. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: And them my last question, just a detail on the guidance. The SG&A guidance that you gave, is that just for the September quarter? Or was that for the rest of the year as well?

That range should work on a quarterly basis for the balance of the fiscal year. And really, the only adjustment from prior G&A guidance is reflecting the incremental shore-based support we picked up at Troms.

And we have Matthias Detjen from Morgan Stanley online with a question.

And pretty much all my questions have been asked, but I have -- just had one question about the Gulf of Mexico. So we've been seeing a lot of tightness there in the market and people have been saying that the deepwater market is improving. I was wondering, going forward, how do you see that market? Do you see that market improving further? Do you expect day rates? Or how do you expect day rates and utilization to develop there?

Again, when you look at the rig deliveries in the deepwater segment, certainly, the Gulf of Mexico has another 15 to 20 deepwater rigs, to the extent that they come in as scheduled. Of course, a lot of those rigs are under construction. And there's also a number of OSVs, I think. Our last look, there's probably in the mid-70s on deepwater PSVs under construction. U.S. flag, they're pretty much targeted for this market. So over the short term, the next year and 1.5 years, I think things are in balance to the extent that those rigs are delivered and come into the market as expected. I think there's a reasonable balance, but there is, again, the order book of U.S. flagged equipment that certainly would be delivered. If there's any delays in the rigs, as you look out another 12 to 18 months, the crystal ball gets a little cloudier, I would say.

And we have Matt Conlan from Wells Fargo online with a question.

I have a couple of unrelated questions. First, just a little housekeeping ahead. Two of the Troms' vessels, I understand, have been operating in Canada. Are they going to be counted in the Americas fleet, being in the Western Hemisphere?

Actually I think it will continue to be reported on our Norwegian segment, reported in the Sub-Saharan Africa/Europe.

Okay, that's helpful. And then I wanted to just get your read on Brazil. Are you -- what are kind of the future demand markers you're seeing there? And would you expect moving vessels in or out of that market on net over the next 12 months?

Well, Matt, we were successful in a large tender that was actually done a year ago, and we're now in the process of delivering those ships. So our actual operating fleet in Brazil is very much on an upswing. But again, that's the delivery onto a contract. The tender was, I think, well over a year ago when the tender went out. So for us, we will -- that market will improve because those ships, with a total of 10, will begin getting on contracts. We've actually, I think, got one on now into the new contract. Over the next couple of weeks, we expect to get on some others. Brazil's deepwater, certainly, they talk about the subsalt, so lots of activity, but it's a tough market. If the rates support it, we would add additional equipment to it. If the rates soften and Petrobras pulls back a little bit, then we won't. But over the next couple of months, our activity level in Brazil will increase fairly significantly because of that tender a year ago.

When do you expect to have all 10 vessels operating there?

I don't know when the final couple are, but we have one on now. We have, I think, a handful that should get on over the next 1.5 months, something like that. And then the last one, Jeff, do you know when it will launch?

Yes, yes, so the one vessel that's on board. We have 6 that are currently going through various inspections and temporary importations. So that's another 6 over the next 3 weeks or so. And then we have another 2 that are delivered, the second one to work with tender, which will be before the end of the calendar year.

Hey, Matt, just revisiting your first question. To the extent that was surprising or odd response. Normally, when we transfer a vessel from one area to another or one region or another, it would shift segments. The 2 vessels that are in Canada are essentially under the management and oversight of the Norway-based management team. So I would say it's -- we'll continually report it, as I indicated, in the Sub-Saharan Africa/Europe segment, but that is an aberration relative to what we normally do.

And we have Mark Brown from Citigroup online with a question.

Just wanted to check on the status of Sonangol negotiations. It sounded to me a little bit more positive, your commentary. I don't want to read into anything, but I don't know if you can talk a little bit about the status of those negotiations. And possibly, just in the Angolan market, has your fleet count remained fairly stable over the past few quarters? And have your day rates and utilization also remained stable during the past few quarters?

To answer your question on the market in Angola, it's been fairly steady at a pretty good activity level. And then looking forward just a little bit, there are some bigger projects, I think, that will be kicking off after the first of the year as Angola gets into their pre-salt activity. So there's some increase in activity levels in Angola that we see starting after the first of the year and ramping up next year from already fairly high levels. I'll let my comments stand on Angola. We don't like to negotiate in public. We have to had some meetings as we have had over the last several years that I think have been positive. And I remain pretty optimistic that we're going to get a longer-term JV agreement put in place. And as soon as we do, we will certainly come to the market and let everybody know.

All right. Had another question, just on Troms Offshore. Just curious what the status is of the vessel under construction. You mentioned 5 vessels you had contributions from in the past quarter. And also, the seventh, potentially, the option, if that's something that you plan to exercise.

The vessel under construction, I believe, is due to be delivered in January or February of 2014. That's a PSV 07 design being delivered out of one of our barge yards. We haven't made a decision with regards to the option vessel at this point.

And we have no further questions at this time.

Great. Adrienne, thank you very much for hosting this, and we appreciate everybody's involvement in our call today. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating, and you may now disconnect.