Tidewater Inc. (TDW) Q3 2016 Earnings Report, Transcript and Summary

Welcome to the Fiscal 2016 Third Quarter Earnings Conference Call. My name is Christine, and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Joe Bennett. You may begin. Joseph M. Bennett - Chief Investor Relations Officer & Executive VP: Thank you, Christine. Good morning, everyone, and welcome to Tidewater's third quarter fiscal 2016 earnings results conference call for the period ended December 31, 2015. I'm Joe Bennett, Tidewater's Executive Vice President and Chief Investor Relations Officer, and I want to thank you for your interest in Tidewater. With me this morning on the call are our President and CEO, Jeff Platt; Jeff Gorski, our Executive Vice President and Chief Operating Officer; and Quinn Fanning, our Executive Vice President and CFO. We'll follow our usual conference call format. Following these formalities, I'll turn the call over to Jeff for his initial comments to be followed by Quinn's financial review. Jeff will then provide some final wrap-up comments, and then we will open the call for your questions. During today's conference call, we may make certain comments that are forward-looking 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 today during the 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. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thank you, Joe, and good morning to everyone. Yesterday, after the markets closed, we reported a net loss for our fiscal 2016 third quarter ended December 31, 2015 of $19.5 million or $0.42 per share, inclusive of two items that are highlighted in our quarterly earnings press release: a $0.26 per share after-tax non-cash asset impairment charge and a $0.09 per share after-tax foreign exchange loss included in our equity pickup line and related to our joint venture company in Angola. If we adjust our results for these after-tax charges, our loss for the quarter would have been $3.1 million or $0.07 per common share. That performance is considerably better than the First Call estimate and reflects the hard work of our employees in dealing with this downturn by controlling those things within our control, specifically our operating and G&A costs. Equally important is that we've achieved these results without compromising any of Tidewater's core disciplines: outstanding safety performance, adhering to a high level standard of regulatory compliance, and delivering high quality service every day to our customers. You are likely aware that our Board of Directors last week approved management's recommendation to suspend our quarterly dividend and common stock repurchase program. The board agreed with management's recommendation that given the challenges currently facing the oil service sector and the continuing uncertainty as to the severity and longevity of this downturn, it was prudent to further preserve our cash. The suspension of our dividend will preserve approximately $47 million in cash annually. So far this fiscal year, we have not purchased any shares under the remaining 100 million authorization which was set to expire on June 30, 2016. Our financial priority remains strengthening our balance sheet and liquidity position as we navigate through this difficult market. Before turning the call over to Quinn who will walk you through our financial results, I'd like to highlight some of our financial results in the quarter. Our roughly $218 million in revenues for the third quarter was down significantly from year ago. It was also down materially from the prior quarter. Importantly, though, we were able to continue to reduce vessel operating cost resulting in an increase to our vessel operating margin to 41.25% in the quarter, up from the average of about 40% in our first and second fiscal quarters. The increase in vessel operating margin percentage, given the decrease in revenues in the quarter, speaks to the success of our continued focus on controlling those things we can control. Another example of controlling those things we can control was the reduced amount of G&A cost we incurred in the quarter. The $35.6 million we recorded was down by about $1.5 million for the prior quarter and over $11 million or 24% from last year's December quarter. Our global employment level since the summer of 2014 is down approximately 22%. The majority of this head count reduction has been related to fleet personnel as we continue to stack additional vessels in the quarter. We have also reduced certain shore-based and corporate head count that is already reflected in our reduced G&A costs and have recently decided to further streamline our organization from an operational management perspective, which will lead to additional cost savings over the next few quarters. In addition to the head count reductions, we have also reduced wages in a number of areas. We will continue to evaluate and take additional steps as required by the reality of today's offshore market and the market we envision we will be operating in for the foreseeable future. The sizing of our organization for the level of business we expect to generate remains a continual process. Despite the challenging offshore market, I am pleased to say that our employees continue our industry-leading safety performance. We have yet to experience any lost time accidents this fiscal year and our Total Recordable Incident Rate, TRIR, thus far for the fiscal year is 0.08 per 200,000 man-hours worked. Maintaining our outstanding safety performance is a tribute to all our employees who operate daily in extremely challenging offshore conditions. This record is important for delivering a high quality service to our customers and we believe a key differentiator in securing work. Once again, I want to thank our employees around the world for their dedication to making Tidewater one of the safest companies operating offshore. Let me now turn the call over to Quinn to walk you through the financial details of our results, expanding on some of my earlier comments. Quinn? Quinn P. Fanning - Chief Financial Officer & Executive Vice President: Thank you, Jeff. Good morning, everyone. As you know, we issued our earnings press release after the market closed yesterday. We plan to file our quarterly report on Form 10-Q through the EDGAR filing service sometime this afternoon. As Jeff noted, we reported a loss per diluted common share of $0.42 for the December quarter. Results for the December quarter included non-cash asset impairment charges totaling $0.26 per share after-tax and foreign exchange losses related to our Angolan joint venture totaling $0.09 per share after-tax. Adjusting for these two items, our after-tax loss per share for the December quarter was $0.07. Looking at the key drivers of operating results, as Jeff noted, vessel revenue for the December quarter at approximately $213 million was down approximately $51 million or 19% quarter-over-quarter. Approximately 60% of the quarter-over-quarter change reflects our stacking of previously active vessels that were expected to be underutilized in the coming quarters. In particular, the average active vessel count at 215 vessels was down 14 vessels quarter-over-quarter. During the just completed quarter, we stacked 23 previously active vessels and we disposed four previously stacked vessels. As a result, the stacked fleet during the December quarter averaged 56 vessels, and was at 70 vessels at December 31 or up 19 vessels quarter-over-quarter. For reference, vessel revenue for the just completed quarter is down approximately 44% relative to the December quarter of fiscal 2015. Active vessel utilization at 74% was down approximately 4 percentage points quarter-over-quarter, and average day rates at approximately $14,600 were up approximately 9% quarter-over-quarter. As discussed on our last earnings conference call, we remain focused on reducing operating costs and G&A, tightly managing our capital expenditures, and preserving franchise value and adequate liquidity. In that context, vessel operating costs in the December quarter at approximately $125 million were down approximately 21% quarter-over-quarter. Essentially all operating cost categories were down significantly quarter-over-quarter. For reference, vessel operating costs were down approximately 41% relative to the December quarter of fiscal 2015. Vessel-level cash operating margin for the December quarter was approximately 41%. As Jeff noted, vessel margins largely reflect cost-cutting efforts, which are mitigating the impact of lower vessel revenue. Total general and administrative expenses in the December quarter at approximately $36 million were down approximately $1.5 million quarter-over-quarter, largely reflecting the combined effects of cost reduction efforts and the downward revaluation of equity-based compensation costs due to Tidewater's lower share price at December 31. G&A for the December quarter is down approximately 24% relative to G&A in the December quarter of fiscal 2015. Combined OpEx and G&A in the December quarter is down approximately $96 million year-over-year or approximately $385 million annualized. CapEx, net of proceeds from asset dispositions, in the December quarter was approximately $11 million. Remaining payments on nine vessels under construction as of December 31 were approximately $107 million or $64 million when netted against approximately $43 million of amounts due from shipyards at December 31, which assumes Tidewater does not exercise options to construct an additional seven vessels. That is not an unreasonable assumption given the current OSV market. Subsequent to the December 31 balance sheet date, we took delivery of three newbuild vessels, including one 7,000 brake horsepower towing supply vessel and two deepwater PSVs. Payments on these three vessels made subsequent to the December 31 balance sheet date totaled approximately $31 million. So remaining payments on the six vessels under construction as of January 31 was approximately $76 million. Also note that we received approximately $12 million in refunds from a shipyard subsequent to December 31 as a result of our decision to not exercise an option on one of the seven option vessels that I just referenced. As of January 31, 2016, remaining payments on construction in process, net of approximately $31 million of refunds still due from shipyard as of January 31 in regards to the six remaining option vessels was approximately $45 million. We expect to expend this amount over the next six quarters or so. As Jeff also noted, we recognized approximately $15 million in asset impairment charges in the December quarter in connection with our ordinary course review of the stacked fleet for possible asset impairments. As color, our sense is that the second-hand vessel market is less active and pricing is softer than it was 12 months or 18 months ago, and this reality informs our valuation of vessels that are not expected to return to service in the near to intermediate term. Not surprisingly, there are fewer potential buyers looking for vessels, given the weaker oil and gas market, and most potential buyers seem to have more limited access to financing than they have historically. Nonetheless, we continue to have dialogue with potential vessel purchasers both within and beyond the broad oil and gas market and, as noted, we have completed a handful of transactions in recent months. In regards to the foreign exchange losses related to our Angolan joint venture, which are included in the equity and net losses of unconsolidated company's line of our income statement, Sonatide's foreign exchange losses in the December quarter were approximately $17 million and Tidewater recognized 49% of that amount in our financial results for the December quarter. The kwanza was further devalued in early January by plus 15%. In regards to fleet profile and performance, as I mentioned earlier, Tidewater's active fleet averaged 215 vessels in the December quarter. Active deepwater vessels averaged 81 vessels in the December quarter and were down eight vessels quarter-over-quarter. Active towing-supply vessels averaged 91 vessels in the December quarter and were down seven vessels quarter-over-quarter. Active other vessels, which include crew boats and offshore tugs, averaged 23 vessels and were down one vessel quarter-over-quarter. As I noted earlier, utilization of the active fleet at approximately 74% was down approximately 4 percentage points quarter-over-quarter. Average day rates at approximately $14,600 were down $1,300 or approximately 9% quarter-over-quarter. Utilization of active deepwater vessels in the December quarter was approximately 67% or down approximately 6 percentage points quarter-over-quarter. Utilization of active towing-supply vessels was approximately 77% or down approximately 5 percentage points quarter-over-quarter. Utilization of other vessels was approximately 82% and was flat quarter-over-quarter. Average day rates for deepwater vessels at approximately $22,500 were down approximately $1,700 or approximately 7% quarter-over-quarter. Average day rates for towing-supply vessels at approximately $13,400 were down approximately $270, or approximately 2% quarter-over-quarter. Average day rates for the other vessels at approximately $5,000 were down about $750 or approximately 12% quarter-over-quarter. Looking at our four geographic reporting segments, for the Sub-Saharan Africa/Europe segment, which accounted for approximately 37% of consolidated third quarter vessel revenue, vessel revenue was off approximately 20% quarter-over-quarter. Average active vessel count in the Sub-Saharan Africa/Europe segment at 94 vessels was off five vessels quarter-over-quarter. The average active Sub-Saharan African fleet at 88 vessels was off five vessels quarter-over-quarter and the average active North Sea fleet at six vessels was flat quarter-over-quarter. Active vessel utilization across the Sub-Saharan Africa/Europe segment at 74% was down approximately 3 percentage points quarter-over-quarter, and average day rates at $13,700 were flat quarter-over-quarter. Within the Sub-Saharan Africa/Europe segment, active utilization of Sub-Saharan Africa was down approximately 2 percentage points quarter-over-quarter to 74%. Active utilization of the North Sea fleet was down approximately 14 percentage points quarter-over-quarter to 79%. Note also that the active utilization statistics that I provided in early November in regards to the African and North Sea fleets for the September quarter were incorrect. The correct active utilization statistics were 76% for Sub-Saharan Africa and 93% for the North Sea. I believe the numbers previously provided were the overall utilization percentages rather than active utilization percentages, so apologies for that. For the Americas segment, which accounted for approximately 36% of consolidated third quarter vessel revenue, vessel revenue was down approximately 15% quarter-over-quarter. The average active fleet in the Americas segment at 61 vessels was down four vessels quarter-over-quarter. Utilization of active vessels in the Americas segment at approximately 68% was down approximately 4 percentage points quarter-over-quarter. Average day rates within the Americas segment at approximately $19,900 for the December quarter were down approximately 3.5% quarter-over-quarter. In the MENA segment, which accounted for approximately 19% of third quarter consolidated vessel revenue, vessel revenue was down approximately 11% quarter-over-quarter. The active fleet in MENA at 42 vessels was down two vessels quarter-over-quarter. Utilization of active vessels in MENA at approximately 77% was down approximately 5 percentage points quarter-over-quarter. Average day rates in MENA at approximately $13,700 in the December quarter were flat quarter-over-quarter. In the Asia-Pac region, which accounted for approximately 9% of third quarter consolidated vessel revenue, vessel revenue was down approximately 40% quarter-over-quarter, largely reflecting a couple of vessels that were earning relatively attractive day rates completing their construction support contracts in Australia. The active vessel count in Asia-Pac at 18 vessels was down three vessels quarter-over-quarter. Utilization of active vessels in Asia-Pac at approximately 83% was down approximately 9 percentage points quarter-over-quarter. And average day rates in Asia-Pac at approximately $13,600 were down $4,400 or approximately 25% quarter-over-quarter. Looking at relative profitability, vessel level cash operating margin in the December quarter was approximately 39% for Sub-Saharan Africa/Europe, approximately 46% for the Americas segment, approximately 43% for MENA, and approximately 26% for the Asia-Pac region. Turning to financing and investment issues, cash flow from operations for the nine months ended December 31 was $191 million as compared to $276 million for the comparable nine-month period of fiscal 2015. At December 31, our net due from affiliate related to our Angolan operations was approximately $166 million or down approximately $68 million since our March 31 fiscal year-end. Tidewater's Angola-related cash collections in the first nine months of the fiscal year were approximately $182 million or approximately $10 million higher than the $172 million of vessel revenue related to our Angolan operations that we have recognized during the same period. As to non-operating uses of cash, CapEx for the nine months ended December 31 was approximately $152 million, $45 million of which was funded by proceeds from asset dispositions and the return by shipyards milestone payments that were previously paid by Tidewater pursuant to vessel construction contracts that were recently canceled by mutual consent of Tidewater and the shipyard. Total debt at December 31 was $1.45 billion, which is down approximately $83 million since March 31, 2015 and is down approximately $47 million since September 30, 2015. Cash at 12/31 was approximately $48 million and net debt-to-net book capital at 12/31 was approximately 37%. Net debt per share and net book value per share at 12/31 was approximately $30 and approximately $51, respectively. Total liquidity at 12/31 was $648 million, including $600 million in availability under our bank credit facility. Jeff mentioned the suspension of the dividend and the buyback authorization, both of which will obviously enhance go-forward liquidity. In closing, I'll note that at December 31, 2015, the company was in compliance with all covenants set forth in its various debt facilities and note indentures. However, given the current weakness and projected trajectory of the offshore energy market, we have initiated a dialogue with the principal lenders and our bank credit facilities and certain noteholders in order to proactively position the company to obtain any needed amendments and/or waivers of interest coverage covenants that are contained in certain debt facilities and senior note indentures. The dialogue has been constructive to-date and we'll update you as circumstances warrant our doing so. And with that, I'll turn the call back over to Jeff. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thanks, Quinn. Let me state the obvious. There was little good news out there in the oil service sector. Nearly every meeting we have with our clients reflects customers retrenching rather than expanding. We understand what is driving their decisions: low oil prices. As a result of the global oil oversupply, our customers are finding their cash flows being squeezed significantly. Without a meaningful decline in oil output and/or a surge in demand, global oil prices will continue to be weak. We know from past experience that when E&P spending for new wells and sustaining existing producing wells is cut, eventually oil and gas output will fall. The problem is the uncertainty in the time it will take for levels of oil production to decline and global oil inventories to begin to shrink. For the past year, everyone's estimate about when oil inventories would stop rising has proven wrong. Until inventories plateau and begin to move in the opposite direction, it is difficult to expect to see any sustainable improvement in oil prices. In response to the ongoing squeeze on cash flows, our clients continue to push for lower costs. Quinn's comments on our press release have highlighted just how much our day rates have fallen in the quarter. Overall, our average fleet day rate fell 9% sequentially and our fleet utilization rate was 7 percentage points below the average utilization rate of the prior quarter. The drop in vessel utilization was dictated by depressed market conditions and is reflective of our stacking of an additional 23 vessels this quarter. Many of our competitors are similarly stacking their excess vessels in an attempt to cut costs and help stabilize vessel supply/demand. Our clients are not the only sector of the oil market feeling the squeeze on cash flows. While our reduced revenue has had a significant negative impact on our cash flow from operations, our cost reduction efforts have worked to soften the blow. In addition to the cost reduction efforts I discussed previously, our disciplined management strategy has also positioned the company with limited cash outflows at this time. I would like to emphasize something Quinn covered. We currently have only six remaining vessels in our construction commitment backlog and an additional six option vessels. The remaining payments for the six committed vessels total about $76 million. If we do not exercise any of the option vessels, we will receive about $31 million of expected refunds, resulting in a net CapEx of approximately $45 million in total. We maintain the largest global footprint in the industry, which does provide us the ability to seek out and respond to market improvements wherever they may appear. That flexibility will become increasingly important as 2016 unfolds. We have the longest institutional history in this industry having managed through 60-plus years of ups and downs. We have a cycle-tested management team, from our vessel captains and shore-based personnel up to the highest levels of our company. We're dedicated to doing everything within our control to protect the Tidewater franchise and preserve shareholder value. Right now, we're delivering that value by operating efficiently. We are working to ensure that we're well-positioned when this cycle turns that we can grow our market share, restore our earnings momentum, and deliver value to our local shareholders. With that, we're now ready for your questions. Christine?

Thank you. Our first question comes from James West from Evercore ISI. Please go ahead.

Hey, good morning, guys. Jeffrey M. Platt - President, Chief Executive Officer & Director: Good morning, James.

Jeff, or maybe Quinn, on a per-vessel basis, how much more can you squeeze out of costs? I mean, I understand stacking vessels, you're going to take most of the costs out, but vessels that are working, how much more can costs come down? Jeffrey M. Platt - President, Chief Executive Officer & Director: Jim, you kind of reach a limiting factor. We've certainly reduced crew wages, we're working with all of our suppliers to reduce it. But unfortunately, the majority of the cost reduction on the active vessels I think it's – the big prizes, so to speak, are in the rearview mirror. So we're getting down to really not a lot left that we can do. That's not to say we're not going to continue to do it, but overall the big cost reductions for us and I think for the industry as a whole are in the rearview mirror.

Okay. Okay, that's helpful. And then... Quinn P. Fanning - Chief Financial Officer & Executive Vice President: Let me just make one thing clear is...

Sure. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: ... we pushed it hard at the fleet level. But as Jeff highlighted, we are now focused on streamlining the area and regional management structures in order to eliminate potentially redundant shore-based staff and reduce costs in that way. We are spending a lot of time in kind of this second phase or third phase, whatever you'd like to think of it as, and trying to pull costs out of our supply chain. And we would like to think that while we may have realized most of the wage reductions or staff reductions, absent additional stackings, there are additional costs we expect to pull out of the system but maybe not just from the rocks that we've turned over thus far.

Okay, got it. Thanks, Quinn. That's very helpful. And then as we think about keeping vessels active, are you having – are any customers out there asking for additional term at this point, or kind of like the offshore drillers who were trading term – or trading day rates for a term, is any of that happening in the vessel market? Jeffrey M. Platt - President, Chief Executive Officer & Director: Yeah. I think we reported that in the past and it still goes on. We have clients that are trying to come back for a second or even a third bite at the apple at times and we try to trade things for things. We've said that from the beginning. So have we been able to increase term in cases? We have. And we try very hard to make sure that we're getting something in return rather than just a reduction in the day rate. So yes, that continues.

It continues. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: And we also, apart from rate renegotiations, have been awarded term contracts in multiple geographies in recent months. So the work continues, just at a lower level than it has historically.

Sure. Sure. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I think the other thing that I'd highlight is, is that we have an objective of trying to maintain an active utilization level in the plus 70% range and that's really reflected a lot of our stacking activities, but there remains work clearly at lower rates than it was 12 months to 18 months ago but we get our fair share of awards and we'd like to think, given the counterparty risks, that customers spend a lot of time thinking about today is we'll get more than our share fair awards.

Right, right. Fair enough. Okay. Thanks, guys. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thanks, James.

Thank you. Our next question comes from Gregory Lewis from Credit Suisse. Please go ahead. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Yes. Thank you. And good morning, gentlemen. Jeffrey M. Platt - President, Chief Executive Officer & Director: Good morning, Gregory. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: Hey, Greg. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Quinn, I have a question. I mean, it looked like, I guess, a couple – a lot of uncertainty in the market. A couple quarters ago you pulled back on some revenue guidance. I guess, last quarter you pulled back on that guidance and were just giving some cost items. I mean, this quarter it seems like – I didn't catch any guidance, correct? Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I think that's relatively consistent with what we're getting from our customers. There's not a lot of finalized budgets that are consistent with current levels of commodity price. So we don't get a lot of transparency in order to provide a forecast around it and, as a result, our ability to provide guidance is more limited. I guess, the guidance I would provide you is, revenue will be what revenue is and we'll continue to – I don't mean to be flip – and we will continue to try to adjust the cost structure to reflect the reality of that lower revenue level. I guess, the last question maybe you had some underlying theme that maybe we didn't address. What we haven't seen is, is something I would suggest customers have achieved a bottom as they see it and therefore they are trying to term up a lot of work for a near-term rebound in the business. So if that's what we were trying to get at before, that's not what we're seeing. We are seeing kind of ordinary course term and spot awards and the like. But again, the lack of guidance is not because we wouldn't love to give you guidance, it's because we have a limited ability provided. But we are busy looking for opportunities to reduce costs, given whatever revenue will come our way and we'd like to think, as I mentioned earlier, that whatever revenue is out there, we will get our share historically and perhaps a bit beyond that, Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Okay, great. And then just – I did notice that you did a great job of bringing down repair and maintenance costs in the quarter. Just as we think about – was there anything specific to that quarter? Is it more just along the lines of, hey, we'll stack a lot of the older boats, this is our better fleet, and this is sort of the activity level? Or was it just something specific about that quarter? Jeffrey M. Platt - President, Chief Executive Officer & Director: Gregory, I think just, again, the drydocking has moved that number. We are looking at the fleet. We're in a fortunate position that the fleet really across the board is of good quality. So we have the ability to kind of move vessels in and out of contracts. But to say there was something that was unique in that quarter, no. It's something that we're squeezing everywhere we can. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Okay. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I guess, the other thing I'd mention is, is that it would be a misperception on your part or anybody's part to assume that we're only drydocking the higher quality vessels. We have taken new delivery of more than a handful of vessels and delivered them into our stacked fleet. So we have, in some cases, brand new equipment, which we believe will over the long-term generate a lot of cash flow for us, which is not working currently. The vessels we are drydocking are the vessels that have contracts or expected to have contracts and we are tending to not drydock everything else. It doesn't mean that there's not an occasional vessel that we'll drydock because we've got a more than even chance of getting an award based on current tendering activity. But more often than not, what we are drydocking is what we have worked for. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Okay, great. And then just one more for me. Clearly, in most markets you guys are in, you're sort of the industry leader in that market. Just given all the uncertainty and sort of issues with, I imagine, a lot of your smaller competitors, has that created any opportunity for you to maybe win away work from a smaller private company that you've been sort of competing head-to-head against over the last couple of years? Jeffrey M. Platt - President, Chief Executive Officer & Director: Gregory, we don't really have insight to that. We know in dialogue with some of our clients around the world is their interest in the financial viability of their suppliers is becoming something that is discussed more and more, okay. So given that and given at least our perception of what a lot of our competition, a lot of our major competition where they sit, I think we're kind of – we welcome that discussion. And other people I think would be a little bit more difficult. I think as time moves on, you are going to see some people kind of fall by the wayside. That's certainly our expectation, as this thing continues to play out as difficult as it is right now. Gregory Lewis - Credit Suisse Securities (USA) LLC (Broker): Okay, guys. Thank you very much for your time. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thanks, Greg.

Thank you. Our next question comes from Turner Holm from Clarksons. Please go ahead.

Yeah. Hi. Good morning, gentlemen. Thanks for taking the call. Jeffrey M. Platt - President, Chief Executive Officer & Director: Hi, Turner.

Hi. So, Quinn, you called out the discussions that you guys have initiated with the lenders. I mean, clearly, we've seen changes in bank terms and even reductions all across the energy complex. You guys are definitely in compliance with all your covenants, but I'm just curious if you could give us any more color on the ongoing dialogues and, just more broadly, on the flexibility of the balance sheet? Quinn P. Fanning - Chief Financial Officer & Executive Vice President: Well, I think we'll leave the comments in regards to the dialog with the banks and noteholders (34:38) what I provided and you'll see similar disclosure in the Q that we file this afternoon. We think that certainly on a relative basis, our financial profile is strong and I emphasize relative basis. If you look at the leverage and whatever metric you want to focus on of our competitors going into the downturn, we were certainly one of the more conservatively capitalized companies, particularly when you factor in new construction commitments relative to existing fleet size. But this has been a downturn that there is no hiding from, and we have been impacted like everybody else. You have emphasized in some of your write ups, there is two primary financial covenants in our bank facility and select indentures with debt-to-total cap covenant of 55% on a book basis, which we are substantially below. And then we've got the interest coverage covenant and select debt arrangements that I was speaking about before. The fact of the matter is, is whether it's your model or anybody else's model, EBITDA is trending in the wrong direction and, as a result, we decided to be proactive with our various constituencies and then in order to position ourselves to get to the other side of this river, whatever its depth and width is. And again, that...

But, Quinn, you don't have any... Quinn P. Fanning - Chief Financial Officer & Executive Vice President: (36:10) and we'll update you as circumstances warrant.

Sure. But just to be clear, you guys don't have any secured debt, right? So it's all unsecured. It's maybe increasing the level of security? Is that the kind of thing maybe that's being discussed? I mean, I understand if you can't give details, but just curious. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: You can look at lots of examples out there in terms of energy and oilfield services companies that renegotiated their structures. And you'll see in our Q, we at least provide a limited menu of some of the adjustments that you could see to our credit facilities or indentures. But again, I wouldn't want to prejudge negotiations that haven't been completed. But there is nothing off the table from our perspective and we've got a longstanding relationship with I think a 14-member bank group and about 20 noteholders, many of which have been in the Tidewater name for well over a decade. Jeffrey M. Platt - President, Chief Executive Officer & Director: So also to answer his question, nothing is secured currently. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I am sorry. We have no material security against any of our credit facilities and that's – we've always financed the business slightly different than most. We've never been big on vessel-level or project-level financing. Most of our capital structure resides at the parent company with the exception of some export finance arrangements. But it's kind of is what – it's you see.

Sure, okay. Yeah. But, I guess, the lack of secured debt gives you a little bit more flexibility. And one more from me, just sort of a housekeeping issue. I think on a previous call, you guys had talked to – given some tax guidance. You talked about, I think, maybe $10 million to $15 million or $5 million to $10 million of taxes per quarter. You guys had a tax benefit, though, this quarter. Is there anything changed on the tax side? Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I think the primary adjustment for the quarterly tax expense just reflects revenue has fallen significantly. And the tax that we do have or that we are recognizing are largely revenue-based taxes in so-called deemed profit regimes. So as revenue has come down, our expected tax expense is falling as well. But what remains true is, is that we're not reporting pre-tax earnings and, as a result, the tax expense we do have is based on revenue-based taxation largely in the African jurisdictions.

All right. Thank you very much, gentlemen. I appreciate it.

Thank you. Our next question comes from Joe Gibney from Capital One. Please go ahead.

Thanks. Good morning. Just one quick one for me. I was just curious if we could get an update on percentage of your fleet on spot versus term. I know historically this is a pretty fluid number, given kind of your fleet scale and geographic distribution; and the rule of thumb used to be kind of 50:50, ballpark. Is there an update on this? It's sort of helpful as we try to think about triangulating a little bit on from mark-to-market perspectives of your fleet from a day rate standpoint. Jeffrey M. Platt - President, Chief Executive Officer & Director: Yeah. Joe, just to comment to – when you say it used to traditionally 50:50 spot and term, I think you're referring more to our contract cover. That was not the percentage of term versus spot. So that is I think more – a much greater percentage that you're attributing to the spot market than has historically.

Right, right. Contract cover... Jeffrey M. Platt - President, Chief Executive Officer & Director: (39:42)

Correct. Jeffrey M. Platt - President, Chief Executive Officer & Director: It's what you're doing to him (39:44). And I think Jeff Gorski may have a comment on the current splits. Jeffrey A. Gorski - Chief Operating Officer & Executive Vice President: Yeah. Joe, this is Jeff Gorski. So, as we've been looking and reporting last couple of quarters of the active fleet, a year out, we're still hitting that 50% in terms of term coverage. So we really haven't seen as we have stacked a few more boats over the last company coverage, our coverage in contracting, however, seems to continue. And so I see that as a positive. But as Jeff mentioned, we are conservatively always looking at spot opportunities as well as term opportunities. But our contract coverage seems to be hanging in there over the last couple of quarters as we've been reporting.

Okay. Thanks, guys. I appreciate it. That was all I had. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: Thanks. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thanks, Joe.

Thank you. Our next question comes from Daniel Burke from Johnson Rice. Please go ahead. Daniel J. Burke - Johnson Rice & Co. LLC: Hey, good morning, guys. Jeffrey M. Platt - President, Chief Executive Officer & Director: Good morning, Daniel. Daniel J. Burke - Johnson Rice & Co. LLC: Can you all say where the stack count was at the end of January? Just trying to discern if there's been any change in the tempo of stacking as you've gotten into the March quarter here? Jeffrey M. Platt - President, Chief Executive Officer & Director: Daniel, I think it's about where we reported at the end of December. I mean, we don't you know... Quinn P. Fanning - Chief Financial Officer & Executive Vice President: And maybe just to distinguish, I think we were at 56 vessels on average during the December quarter, but 70 vessels at quarter-end. Jeffrey M. Platt - President, Chief Executive Officer & Director: Yeah. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: And that's probably not too far from where we are today. Daniel J. Burke - Johnson Rice & Co. LLC: Okay. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I don't have the numbers in front of me, but there has been no wave of stackings in the last two weeks, if that was your question. Daniel J. Burke - Johnson Rice & Co. LLC: Okay. That's helpful, Quinn. And then when we think about your operating costs – and part of that is obviously your stack costs. Do the stack costs load pretty much into the R&M line item, or are they sprinkled amongst your operating cost categories? Just trying to figure out how low that R&M line can get. Quinn P. Fanning - Chief Financial Officer & Executive Vice President: No. Actually most of the stack cost would fall in the crew wages line and in supplies and fuel line. Jeffrey M. Platt - President, Chief Executive Officer & Director: And other... Quinn P. Fanning - Chief Financial Officer & Executive Vice President: And other given berth fees and things like that, but R&M is either routine maintenance, which tends to be on an active vessel more so than a stacked vessel and then major repairs, which would include regulatory drydocking costs, all of which would fall in that R&M line. But I think the R&M expense associated with the stack fleet would be very, very small. Daniel J. Burke - Johnson Rice & Co. LLC: Okay. All right. My misapprehension. And then maybe just the last one for me – on the Americas side, top line held up a little better than we were looking for, as did margin. I guess, we'll see in the Q the R&M apportionment by region. And maybe that would be the driver on the margin side. But just going back to some of the Brazil commentary from last quarter, were you guys successful at re-contracting any of the vessels you were taking out of that market in the Americas region? Quinn P. Fanning - Chief Financial Officer & Executive Vice President: I think most if not all of the vessels have moved into the stacked fleet at this point. Daniel J. Burke - Johnson Rice & Co. LLC: I'm sorry, Quinn. Could you repeat that? I didn't hear you. Jeffrey M. Platt - President, Chief Executive Officer & Director: Daniel, I think we have not re-contracted. Most of those vessels – in fact, all those vessels have moved into the stacked fleet and that's a large percentage of what we stacked in the quarter. Daniel J. Burke - Johnson Rice & Co. LLC: Okay, great. I appreciate the comment, guys. Thanks, Jeff. Jeffrey M. Platt - President, Chief Executive Officer & Director: Yeah.

Thank you. Our next question comes from Mark Brown from Seaport Global. Please go ahead.

Hey, good morning, guys. Jeffrey M. Platt - President, Chief Executive Officer & Director: Hi, Mark.

I wanted to ask about your subsea group. I think you had maybe half a dozen ROVs operating. And what are your thoughts on that business short term, long term, and could that potentially be a business that you consider divesting? Jeffrey M. Platt - President, Chief Executive Officer & Director: Mark, it is a small part of the Tidewater story, so to speak. So when you talk about divesting, you're talking – you're right, a half dozen of ROVs and some personnel. Actually, we continue to look at some projects. Subsea, not just for Tidewater, but subsea in general is having its own challenges in the offshore market. Is it something we potentially could divest? Sure, it could be. I still think strategically, though, that's still an area that we have interest in. And when the market turns around, I think it's going to prove its value to us. So didn't want to sound like a waffle answer, but that's really where we're at with it.

That's helpful. That's helpful. And I was just curious on the dividend decision, if you entertain just cutting the dividend – I know that's been in place since 1993 – rather than eliminating it. I was just curious how you thought through that decision? Jeffrey M. Platt - President, Chief Executive Officer & Director: Mark, we think through that every quarter with our board. We have a recommendation as management. As we said, the board was in agreement with management's recommendation. So we went ahead and did a total suspension of it. It's not something we do lightly, but again, we just think that is absolutely the right decision to make for the company at this time.

All right. And then just one more question. Curious what the average cost of – stacking cost per day for towing-supply or deepwater vessel, and whether you've been able to reduce that over the last few quarters? Jeffrey M. Platt - President, Chief Executive Officer & Director: Mark, I think we've stated previously, but it's in the zip code of about $1,000 a day, and that's on a worldwide basis. The one thing we're doing making sure was when we stack the new fleet we have, with the electronics on board, the equipment, we're not just putting it off alongside in the weeds to go to hell at the end of the day. We're providing we think the right maintenance that will decrease the cost of reactivating that equipment down the road. So it's about $1,000 a day on an average across the fleet.

Thank you. Appreciate it. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thanks, Mark.

Thank you. Our next question comes from Bill Gerding from Citi. Please go ahead.

(45:58) question. I was wondering if you could provide any guidance on day rate trajectories, just a rough ballpark, in the more sheltered markets. The Jones Act (46:10) fleet, for one, kind of stands out to me. If we might be approaching a floor, or there could be a (46:18) supply constraints compared to other markets. Jeffrey M. Platt - President, Chief Executive Officer & Director: Bill, I think that's exactly why we stopped giving sort of guidance going forward. Clients everywhere, inclusive of the Gulf of Mexico and U.S. waters, are again retrenching, their budgets are in flux, and again the pressure continues everywhere. The Gulf of Mexico is not something that's excluded from that. So again, it's pressure remains everywhere. Giving you trajectory ideas I think would be a mistake. We just don't have any clarity or confidence in what our clients are going to be doing to give that to you. Certainly, the spot market reacts much quicker, I mean, because it has the ability to do it. You have term contracts that do roll off, that will affect the average day rates, and clients are renegotiating everything. So when we put there together, it's pretty difficult to give you any guidance that we have any confidence in.

All right. Fair enough. Jeffrey M. Platt - President, Chief Executive Officer & Director: Okay. Thanks, Bill.

Thank you. That is all the questions we have for today. I will now turn the call back over to the Tidewater team. Jeffrey M. Platt - President, Chief Executive Officer & Director: Thank you, Christine, thanks for hosting the call for us today. And, again, thanks for everyone and your interest in Tidewater. Have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.