Tidewater's 2027 Guide Puts Vessel Rate Gains at the Center

By Marcus Bennett

Tidewater (NYSE: TDW) set 2027 revenue guidance of $1.70 billion to $1.75 billion and gross margin of 51% to 53%. Revised 2026 guidance is $1.43 billion to $1.44 billion in revenue and 47.5% to 48.5% in gross margin. At its third-quarter earnings call, management said higher vessel rates would drive improvement after a roughly flat opening quarter.

Tidewater assumes active utilization (the share of available fleet capacity in use) of approximately 82% and an average day-rate increase of about $2,700 per day year over year. President and CEO Quintin Kneen said rates should rise sequentially through 2027. Revenue and margin benefits should therefore build through the year.

The weighted average Leading Edge day rate (a measure of rates on new contracts) rose for a third consecutive quarter, Kneen said. It increased 12.5% sequentially to just over $27,000 per day, according to Senior Vice President West Gotcher.

“As vessels across our fleet roll off older contracts and onto current market rates, those higher rates flow into our results,” Kneen said. The average contract duration, including Wilson Sons, is approximately six quarters. That stretches repricing across several reporting periods.

What does the 2027 backlog cover?

Combined fleet backlog represented $1.1 billion of 2027 revenue, approximately 64% of the guidance midpoint, Gotcher said. Even so, execution risk remains. Unplanned maintenance and additional drydock time (time vessels spend in inspection or repair docks) could reduce backlog revenue.

What changed in the 2026 outlook?

Tidewater expects fourth-quarter revenue to rise approximately 11% from the third quarter, primarily because a full quarter of Wilson Sons will replace the one month included in Q3. Higher-than-anticipated repair downtime, reduced capacity and slightly lower-than-anticipated rates on contract extensions in the Americas will affect fourth-quarter revenue by approximately 3%, Gotcher said.

Third-quarter revenue reached $360.4 million, up from $342.3 million in the second quarter, while net income was $17.5 million, or $0.35 per share. Wilson Sons contributed $17.1 million to the sequential revenue increase and added $7.8 million in operating costs.

How did operating performance and cash flow change?

Chief Financial Officer Sam Rubio reported gross margin of 46.8%, unchanged from the second quarter, while average day rates rose 3.6% sequentially. Active utilization fell to 79.2% from 81.4%.

Free cash flow rose to $90.9 million from $64.4 million, helped by higher revenue, a working-capital benefit and lower capital spending. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $140.1 million from $135.5 million, Rubio said.

What does the Wilson Sons integration mean for rates?

Kneen said integration of the acquired fleet is going well and should finish at the beginning of 2027. Wilson Sons' current vessel rates in Brazil sit below market rates, offering potential increases over the next several years. Gotcher said the timing and size remain difficult to quantify, partly because Petrobras tendering has run slower than anticipated.

What is the balance-sheet and capital-return position?

At quarter-end, liquidity was approximately $650 million, including a $250 million revolving credit facility. Net leverage (net debt relative to adjusted EBITDA) was below 0.9 times. Tidewater had assumed $224.5 million of debt related to Wilson Sons as of Sept. 30.

Tidewater repurchased approximately $25 million of shares after closing the acquisition, leaving about $475 million available under its $500 million authorization. Through mid-October, purchases totaled approximately 300,000 shares at an average price of $83.14.

Kneen said value-accretive acquisitions remain the preferred use of capital, while share repurchases will occur opportunistically. He said the company is less focused on the U.S. Gulf than previously and sees opportunities in Africa and Asia, depending on price.

Where does regional demand point next?

Chief Operating Officer Piers Middleton described offshore-vessel demand as firm and supply as tight, despite regional differences. The U.S. Gulf remains soft, Petrobras tendering in Brazil has been delayed around elections, and Asia-Pacific activity is expected to pick up in 2027 as new drilling campaigns begin.

Tidewater plans to maintain a short-term chartering strategy to push rates. “Drilling offers the greatest potential leverage for the business,” Middleton said, referring to its capacity to support higher vessel rates. Subsea construction work also provides opportunities to increase rates.

How large is the conflict-related cost?

Conflict-related costs tied to Operation Epic Fury totaled $5.6 million in the third quarter and should ease to about $5 million in the fourth quarter, Rubio said. Tidewater collected approximately $600,000 in customer reimbursements for eligible direct costs. It excluded assumed reimbursements from its guidance.

Tidewater Inc. provides offshore support vessels and related marine services to the energy industry, moving personnel, equipment and supplies between shore bases and offshore facilities. Its diverse fleet includes platform supply vessels, anchor-handling tug supply vessels, crew boats and other specialized vessels.

These vessels support anchor handling, towing, platform operations and offshore construction. Their work supports offshore exploration, development and production, as well as certain renewable-energy and subsea projects.