Welcome to the earnings conference call third quarter 2018. My name is Adrienne, and I will be your operator for today's call. [Operator Instructions] Please note this conference is being recorded. I will now turn the call over to Jason Stanley. Jason Stanley, you may begin.

Thank you, Adrienne. Good morning, everyone, and welcome to Tidewater's Earnings Conference Call for the period ended September 30, 2018. I am Jason Stanley, Tidewater's Director, Investor Relations, and I'd like to thank you for your time and interest in Tidewater. With me this morning on the call are our President and CEO, John Rynd; Quinn Fanning, our Chief Financial Officer; Jeff Gorski, our Chief Operating Officer; and Bruce Lundstrom, our General Counsel. Following a few formalities, I'll turn the call over to John, for his initial comments, to be followed by Quinn's financial review. John will then provide some final wrap-up comments, and we'll then 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. 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 make during today's conference call. Please refer to our most recent Form 10-Q for any additional details on these risk factors. This document is available on our website. Also during the call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in last evening's press release. Finally, with regards to our plan to merger with GulfMark, Tidewater and GulfMark have filed a joint proxy statement with the SEC. Investors are advised to carefully read the proxy statement, because it contains important information about the transaction, the parties and the associated risks. Investors may obtain the copy from the SEC's website and from each company. The stockholders vote is scheduled for November 15, while we're continuing to plan with the integration of GulfMark, pending required approvals, our comments related to the transaction will be limited to our prepared remarks. If there are updates related to the deal, we will announce them broadly. With that, I will turn the call over to John.

Thank you, Jason. Good morning, everyone, and thank you for joining the Tidewater call. For the third quarter of 2018, we reported a net loss of approximately $31 million on revenues of approximately $99 million. Consolidated EBITDA for the quarter-ended September 30 was approximately $8 million, which excludes approximately $17 million in noncash impairments, but includes approximately $4 million of stock-based compensation expense and approximately $3 million in general and administrative expenses related to the proposed combination with GulfMark. Excluding these 2 items, adjusted EBITDA for the September quarter was approximately $15 million. Quinn will discuss our financial results in more detail in a few minutes. Before I get into our operating results for the quarter, I'd like to provide an update on our pending deal with GulfMark. We anticipate favorable outcomes to both companies, stockholder vote is November 15, and we hope to close the transaction on November 15 as well. Post-closing, our combined team looks forward to executing the integration plan that has been refined over the last 4 months. Our intent is to quickly and fully realize cost and other synergies that have been identified and to collectively capitalize upon what we believe to be a recovering offshore market. With a large, young and high-specification OSV fleet and strong positions in key markets such as the North Sea, the U.S., Mexico and Brazil, West Africa, the Mediterranean Sea and the Middle East, the combined company will be a global offshore leader that is well positioned to support our customers in any geo market or in any water depth. Overall, Tidewater's increased scale and scope of operations, strong financial positions and more efficient cost structure should be a competitive advantage for the company. We are confident that the combination at Tidewater will benefit all stakeholders. High-quality, idle assets…

Thank you, John. Good morning, everyone. As was highlighted in our earnings press release and 10-Q, concurrent with the completion of our financial restructuring, the company adopted, "Fresh-start accounting" and will continue to report its financial position and results of operations through July 31, 2017, as predecessor activities. We will report our financial position and results of operations subsequent to July 31, 2017, as successor activities. I'll also call to your attention or call your attention to the financial tables included with last evening's press release. Financial results, balance sheet data and select operating statistics are presented covering 5 quarters or equivalent periods, straddling both predecessor and successor activities. Similarly, operating and financial detail is presented by asset class and based on our 4 geography-based reporting segments. We have also included consolidated EBITDA as a non-GAAP performance and liquidity measure as well as reconciliations to the most directly comparable GAAP financial measures. As John noted, vessel revenue was down approximately 7% quarter-over-quarter. The average active fleet was down 1 vessel sequentially to 140 vessels. Active vessel utilization was off approximately 3 percentage points to approximately 78% and average day rates were down approximately 4% quarter-over-quarter to approximately $9,600. Active utilization in each of the Middle East, Asia-Pac, European/Mediterranean Sea and West Africa segments was off between 2 percentage points and 4 percentage points, but active utilization in each of our 4 reporting segments was no worse than the high-70s in percentage terms. In each of the U.S. Gulf of Mexico, Mediterranean Sea and Arabian Gulf, we had assets mobilizing to known work or in dry-dock in advance of starting or restarting contracts. So the negative quarter-over-quarter trend and active utilization for those markets should be somewhat self-correcting in the December quarter or in early 2019. Less clear in the early…

Thanks, Quinn. Based on our conversations with customers and the volume of requests for tenders and quotes, we think the offshore market is moving in the right direction. However, we expect this to be a gradual improvement. Additional offshore activity will lead to additional vessel demand and higher vessel utilization. But further rationalization of the global OSV fleet is required to support material -- materially higher average day rates. Since emerging from our financial restructuring last year, our team has worked to create a more nimble organization with an intense focus on both cost management and preparation for an offshore recovery, which, again, we expect to get some traction as 2019 unfolds. Our combination with GulfMark furthers this strategy, ensuring we have the right assets, cost structure, financial profile and operating footprint. I look forward to completing the deal with GulfMark and to leading our combined team as we build upon the 2 companies' respective strengths and market positions. We will work together over the coming months to quickly and fully realize identified synergies and to create long-term value for our stockholders. Thank you again for joining us on the call today. Adrienne, we can now open the lines for questions.

[Operator Instructions] And our first question comes from Turner Holm from Clarksons.

Quinn, in your prepared remarks, you talked about some modestly positive trends in vessel day rates. But then in, I guess, the press release, you talked about not expecting any meaningful improvements in day rates until second half of '19 or potentially later. So I just wanted to dig into that -- those 2 statements and maybe you can help me understand how they co-exist?

Sure. We saw your note this morning, we think, you're basically on the trail here in the sense that there is probably a distinction that needs to be made between average day rates and leading-edge day rates. Obviously, every market is a little different. We have the North Sea, obviously, where you've got a lot of experience and exposure [ to, is a unique piece as well ] . We can get to that in a second, and also, there is a contract phasing to use your terms. We have seen relatively significant fleets that have been repriced within the last couple of quarters. We had called these out on our prior earnings call that was in regards to Mexico, where essentially repricing of the fleet lagged the market as a whole, primarily, because of the political season in Mexico. So I would say that we're operate -- essentially above market rates in Mexico for at least a couple of quarters and that's, kind of, worked its way through the wash at this point. Saudi Arabia, where we have another repricing exercise on a relatively large fleet. I would say, primarily, reflects both a customer with high expectations and certainly no shyness in terms of continuing to grind rates down and I would say the influx of Asian competition in the Middle East largely was a cause of -- for rates to move down, because essentially Saudi Aramco was able to press rates given the excess supply there. I think those are 2 interesting markets in the sense that we see an upswing in activity in both markets and ultimately made the decision to preserve market share in anticipation of incremental activity coming on shorter-term contracts, which will allow us to blend rates upwards. If you look at the North…

Yes, I think so. I guess, one more thing to clarify is Mexico and Saudi, that -- the 2 markets that you called out that they, kind of, had an impact here in the third quarter on global day rates. Is that impact fully priced in to the third quarter numbers? Or is there going to be some continuing, kind of, rolling onto lower prices in those markets that might have an impact on the total over the next couple of quarters?

I believe it's worked its way through the numbers at this point. It was partially reflected in the second quarter and then, I think, fully in the third quarter. And as John mentioned, other items of the third quarter impacted those markets i.e. the lower construction activity. But I think the repricing both in Mexico and in Saudi are in the numbers at this point.

[Operator Instructions] And we have no further -- Turner Holm is in the queue. He has a question.

Sure, I guess, I thought I'd use the opportunity just to get 1 or 2 more in. Quinn, you, kind of, called out Africa there in your response and perceived some market tightness there and there has been market talk about some of the suppliers and -- I'm sorry, there were sea operators in that region running short on capacity and that potentially translating into some better day rates. Clearly, an important market for you guys, I guess, close to 40% of revenue. It sounds like you're seeing the same things, but have you actually seen anyone confirm higher pricing in that market? How do you, [ sort of, sense the contours about what's ] happening in Africa right now?

Yes, I would say, leading-edge rates, though, there's not a huge number of data points point higher. Really what we've seen a lot is that there's a 1-well program or the short-term work, so somewhat difficult to extrapolate rate trends. Quite frankly, our biggest challenge in Africa in this, kind of, transition period from the trough to something that's approaching a normal market, is that we're covering a lot of real estate, excluding Nigeria and Angola, trying to play a spot market, where it can be very lucrative to do so, but in the last quarter or so we, kind of, felt the other edge of that blade, which was lower utilization. Hopefully, that corrects itself as you get more consistent work and it's less 1-well or 2-well programs or short production-related work. And so I think most signs point to positive trends in Africa, I think, it's going to be choppy for a couple of quarters, though, and -- which may be good news, maybe bad news, but it's very difficult to predict the non-Nigerian, non-Angolan activity levels. That said, Angola and Nigeria, relatively good stories for us in terms of putting additional capacity work as well.

Sure. And then just one more for me on the Gulf of Mexico, one of your competitors has talked about an upswing in activity in that Gulf of Mexico, Caribbean, Northern and South America and Mexico-type of market. It is -- and talked about actually some improvements on day rates on some of the larger vessels. Is -- are you seeing the same things?

We've had some contracts roll-off recently that were very good rates. We've got a couple of vessels in drydock preparing for additional contracts that I would say are attractive, but I wouldn't -- I wouldn't call or declare victory in terms of market correction in U.S., Gulf of Mexico. But obviously, as you continue to expand to include Mexico, the Caribbean, et cetera, et cetera, you can always expand the definition of the problem in order to find a plausible solution. But I would say, Gulf of Mexico, as a market, that we are comfortable, we'll see additional drilling activity and OSV demand, where we said, it seems to be a market that's still structurally oversupplied, which I assume is why some of these other companies that have had calls or at least public statements are talking about moving the equipment from the Gulf of Mexico to international markets, which we agree, are probably going to lead to recovery. I guess, the good news for Tidewater is we actually have 60 years of experience operating overseas and not all of our competitors can say that.

And we have no further questions in the queue. [Instructions operator] And we have no further questions. I'll turn the call back over to Jason Stanley, for final remarks.

Thank you, Adrienne. Thank you, everybody, for your time and interest in Tidewater today. Have a good rest of the day, and feel free to reach out to myself if you would like to schedule any further Q&A, the light is on.

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