Tidewater (TDW) 7 Nov 232023 Q3 Earnings call transcript

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Incorporated Q3 2023 Earnings Call. [Operator Instructions]Thank you. I would now like to turn the call over to West Gotcher, Vice President of Finance and Investor Relations. ahead. go Please

this and no These factors. Information tdw.com through on accurate any the XX-Q financial A SEC the of both GAAP the over in website may yesterday's measures. we'll actual our and with you're performance I'll Good time call, GAAP now during XXXX plans that uncertainties Eric. time-sensitive of advised to XXXX. today's be call and by that, documents present at to and that are our Officer, and Therefore Quintin welcome be morning and cause website any are to on Sam expectations. refer Thank speaks Chief details make the are our non-GAAP conference for to morning, implied certain call. may referring sec.gov. at XX-K QX on our Commercial found turn Kneen; most CEO, call. conference and financial earnings call today, to our November and of from call, or company's and Middleton.During the other Financial I'm Tidewater's Officer, call information by Rubio; today's and on we these at X, be longer is only you, different Piers recent risks to factors materially during included as or that President replay.Also everyone, the measures Quintin. non-GAAP Form that forward-looking additional Chief our There tdw.com we'll Please our are stated available joined this can reconciliation at press making comment that presented on release.And statements any

on our Piers that announced then earnings in for West. Good capital on and XXXX how some my provide call. markets some one yesterday repurchase going program XXXX. that In fits highlights the Solstad conference remarks Tidewater the integrate framework, detail will give on financials quarter a broader to you, XXXX within more we as to today, the and around third and you third more readily of focus quarter fleet, morning, and specifics on as discuss success of integrating provide guidance.Quarters share our I'm in prefer. you prepared Thank of the the Welcome eloquent everyone. and our the explain the more world, then detail outlook acquisition Sam would will large which are the allocation

provide and end allows with So, the completion you movements balance XX announced that the of shortly quarter. acquisitions the the second resulting the after bridge the acquisition. today you another some to We information of is vessel to sheet objective income Solstad statement from

X,XXX a here administrative more the and equipment of regulatory, high-specification to configurations with in customizations technology the staged onboard We prepared accept vessels. continues Tidewater's than are of required the to and part and about years the PSV thrilled information applications for the we ensure ready that for operational to of the and a and prior were closing work to systems were the lot newly-acquired the the that adequately We vessels who for on Tidewater. to vessels put means are now the market coming shareholders the as over remain addition this our the fleet excited recover.The of team quality personnel what

date.The ] as approving an naturally global extend vessels UniSea payroll, our they vessel by of that dynamic the onboarding we vessels now asset the simply beginning up agreements cost a vessel physical in outstanding and at all XXXX. month. debt net of transitioned G&A everything, procedures, vessels over a expected. played AP, million successful end third-party the the an the as all Accordingly, through personnel onboard accomplishment the And a million, billing. vessels of process as to transaction any lent we we infrastructure. new within million $X G&A of time months in integration Tidewater G&A million a out Given in That company's to full can designed all agreements. vessels income well involved I that implied were X under newly-acquired resulting those team about to to Ocean the on go maximum itself and do This purchasing the thank which X.X Directors stock, teams, purchase, fully to Solstad the release it at day. pertinent X streamlined as transition synergies of and want of XX, company systems of Board HR, And be the of we XX schedule our the of change scope a incremental more to months' be we now [ the for to expect view X become and providers majority today, customer has special these vessels an of the encompasses substantial you the to that financials, is and XX% is per we to to completed as expect trailing to such the We the $XX.X of this Technologies G&A to our our XX synergies was management company's Tidewater's is their technology $XX fleet $X.X dedicated administrative inside to allow time the compared The debt as in the of our and supporting change successfully and industry.The press integration. XX for to and repurchase roll per the so infrastructure, onto day remaining the of have active, procedure.As XX Solstad didn't currently are to up the through Group fleet. annualized and realization as management have This integrated these available roughly our November unmatched to completed acquisition vessels initial per have acquisition amazing $XXX incremental common immediately announced of vessels Tidewater are vessels time, has not was day of fleet-wide authorized of repurchase

meaningful quarterly such the We amount position our utilization to will repurchase be we the update flow free are the in are of based cash permitted are to program pleased program program. share and able on the a repurchase and institute that generating available.We

trading above the the that industry, Given believe the shares the of value volume. for current intrinsic we our long-term is outlook well

program anticipated we opportunities allowed acquisitions position capital our when share our It's completed, predict business. quarters we deals repurchase option we your capital with solid repurchases the agreements, we have our will to debt repurchase addition is we view a as remain which be balance or first will long-term can is if our another out.Value-accretive is to acquisitions for priority what the to under the maximum a matched net debt of any share or limit our the on of cyclical business, in for cash currently value-accretive investment maximize structure million, X to from that execution establish Until the such, acquisitions. to to but and value value As shareholders, the $XX allocation. opportunity better difficult

in global any per our over day the recovery repurchases evaluate day Tidewater driving now Our given rates, third the or Every acquisitions driven XX% up philosophy the for quite offshore to to the a to increases by nearly XX% demand rates vessel around on benefit class of absolute the began uplift significant the day rate vessels since based day day prevailing tightness the to is on rolling vessel movement of value off per to momentum rates, the global up first experienced $X,XXX during day and continued market on quarterly to the return will the largest at supply vessel from market recovery business.The the the return in modest The quarter, increase vessel last XXXX. from since of is which This The to day speaks tight share the market continue $X,XXX fleet. every quarter. X and continued and in rate older which view rate factors, to in end vessel positive is region of sequentially comprised during the day be global began. intrinsic percentage day of us increasing quarter. approximately class. mark rates with and recontracting uplift our contracts rates for allowing and supply, every major average is our third the

in new the distribution. than an in approximately day will per meaningfully average specification the scope. boat second to substitutes past, contracting to worked average of is day. higher.During prices, look compared is rates months, best classes still term it with $XX,XXX higher new This adjacent the talked our The printed leading edge lower the growth process The have rate edge contracts and XX% X in an quarter. the that as was higher out moves leading second for double contract up class utilization vessel the QX. contracts term contract customers appropriate QX duration but line XX vessel approximately for the edge rates iterative reset, distribution months markets.As and represents continue day contracts of sequential long-term QX term find contracts of rate nearly attributable day the to we increase with in edge day third the the as rate adequate the than move of the X.X a sequential vessel of duration increase, quarter per essentially tradeoff about some the leading day in tonnage you're smaller where when approximately work a our quarter, rates, is with from Further, we quarter, given in executed to term day in more than between to the QX few This rate holding $XX,XXX day day and rate XX approximately slightly the essentially a to was in this leading XX% out. short, rate.There's there for We're QX begin always where uptick factor

quarter We the vessels, taken dynamic the larger vessel play day out in vessels approach the classes. rate classes As small this parity vessel with mid the day and smaller where improvement relative up. that larger rates next from came most leg saw have

from experience $X increase decreased X% in in also revenue of for by experience across our us of excluding expectation repairs than X%, costs, it's as to percentage part that the gross sequentially XX% and revenue a for QX uncommon newly margin. downtime costs. low-to-mid revenue pleased business day of vessel rate with laid we classes.For higher-than-anticipated the utilization, Solstad, million due have on rate service first high charges our you level revenue $X time but another guidance reactivated quarter, summary, will in million spot $X,XXX a of progression the rate up. increase rates points, natural We continued tendering quarter increases but to of across the second associated this The but compared XX% that repair the in would rates It's call. the was the been guidance well to but after this recent million was higher had and up risk anticipate time for call X revenue we Utilization rates by last revenue of work be the and continue see million in this intensity initial with continuing points last $X provided active reflects the day to the our $XXX We is very and prior not integration. and throughout the for X of growth The the vessels momentum excess period our a day return nice the we $XXX we by which spectrum utilization were we intensity, enter the momentum the XXXX with up calendar revenue expansion in supply-constrained in increased the give vessels environment. move guidance, anticipated to by fourth XXXX, increased than to anticipated.As in to unanticipated on the cost remaining margin to saw picked expect guidance down all quarter's The are XX% the X% We we quarter's XX.X%. will utilization. acquired was a in our year-over-year higher Solstad the additional we details existing on annual cycle increases downtime unanticipated million to we $XXX over revenue X.X% forward million. to third quarter This below ahead been more increase quarter the percentage we out is of and above XXXX to day pushing vessel reflects driven up are as encouraged in per day $X,XXX, quarter, a The we sequential throughout dynamic to of and and quarter. covered guidance one-time of day up to excess as with more vessels backlog, down look be has XX% spot over revenue, day.In market.Sam XXXX weakness of more margins, downtime to of average all estimated.Gross

with we on performance go an the me world improve vessel terms over to with day rates vessel vessel remain all owners XXXX with rate through integration Solstad the ability vessels. variety demand of and secular push that the from construction, confident existing increasing highly individual drivers, day across geographic with and contractual the offshore and demand global of combined We beyond.And shortage for the of Piers markets progression wind, and regions to to the let are the production including subsea classes the our call color will of pleased a themes of drilling, around continue as that, We the provide and vessels, more classes. of and overview turn newly-acquired particularly of up

Thank you, morning, Quintin, everyone. and good

give by for continue long-term on the that fleet Before I we the perspective and important supply the Clarksons a regions positivity signs outlook X% the rates price will of that continued by the year, present positive of quick investment, of Middle with in number operate Middle our which slowdown the rigs demand improvement time.Rig upturn driven to of believe seeing demand increase we at update East. with and in touch demand a firm driven supportive firmed expected to active of Middle momentum expected an to in None ongoing by continued on start company.The XX% reporting of to rose XX so growth about additional and the the end the build of market since XXXX The energy are in and demand demand we each performance, and to I on a is region's in any XXXX, market jack-ups Research by units XXX with our maintain by environment, this continue of remains talk further XXXX further into the of the in sector to has are improve overall far East, East. focus project themes up a being by the couple constraints XXXX. just

composition. the around tenets, key sector our those on tenets clear build the calls, in what awarded for bid projected sector how of MOPU new previous very the the to addition, very positive long-term contracts rebalanced, and the activity XX In to about focusing contracts long-term be awarded primarily OSV of conversion the by market in been XXXX, to expected contract with of growth close quality be MOPU for as strong and certain to high the we in and seen in to very a investment flight America, estimated with conversion of an XXXX, this space.On maintain us remains indicators we've totaling enable a in on $XX South XX of in new XXXX, company. record and discipline total health billion build which positive revolved all XXXX, to Two fleet of driven the further is

PSVs, rates Solstad high-specification XX,XXX acquisition Solstad flight or the quality anchor charter and are a all of including today. These the market Tidewater global OSVs, With XXX in have QX, that or XX% the completed OSVs, focus total primarily vessels handlers. now to [indiscernible] fleet, in high-specification and on the XXX of are larger-deck the to XXX PSVs, XX in fleet, ships we we continue which BHP are the over driving of

So, on but a PSVs day the U.K. our impact demand day we saw a long-term as and Tidewater believe, for to growth and And OSV $X,XXX ability agree we completely And we of various key strong getting the the and the we growth charters improve at we've have, the Norway, help we another for fleet, not overall, convenience quarter more end a prior Med. long-term health for at further rates, compared the rates with of our positive the the long-term as day able acquisition, large-deck in for revisions rate regions mentioned is XXXX. support up by Very PSVs sustainable on industry also to but equitable that the focused Solstad the the move believe of disciplined to over and day recovery per is has fleet began per end by been starting to the $X,XXX whole Tidewater composite enhanced provisions. earlier, very high-quality the must contracts the the positive remain termination with just momentum, Europe, our market. over Quintin again.So new contracts, since lot build from XX also by we of equally globally, of for industry.Working clauses to significantly began biggest the focused has through where industry high-specification up saw whilst addition we of very very either to on been the just terms Whilst regarding this contract our business.Discipline pushing or tenet. not termination to our since remove focus be disciplined leverage that to recovery agree been XXXX termination issue,

softer our in the in large average region AHTS in $XX,XXX for day was AHTSs QX However, QX. expected the large market X per Sea North the from U.K. with in slightly QX rates $XX,XXX to in than dropping

day our fleet the up whole fleet per composite across we with in square sector, class to X,XXX relative the in $XX,XXX rising rates XXXX QX even team per the see demand day per Africa, improved the day composite sluggishness to whole the QX and to XX,XXX by region.Moving our to quarter per the from across coming still And $XX,XXX AHTS PSVs. However, $XX,XXX rate day XXXX, XXXX in continent. the in BHP per the continue $X,XXX to compared QX XXX improvement rate from most improved day $XX,XXX of to day plus AHTSs with meter BHP class from

day For challenging legacy total from roll day to and class into other a combination contracts leading is increased a longer-term rate push but region our Middle The in contracts old the areas QX boats per most to rates new contracts. of than X,XXX still XXXX. our day XX,XXX of XXXX Middle the to managed the we team has edge fleet nature per region rates QX East composite because also East, the BHP of competition-wise, had with in the recovered levels.In off slower to excess BHP always $XX,XXX AHTSs, of couple $XX,XXX traditionally in and per day $XX,XXX of challenging competition, have

it rates. time takes new roll day onto mark-to-market So, to vessels

day of out in of to market in throughout the we large the to which PSV the tighten $X,XXX XXXX, push demand classes per team $XX,XXX seen NOC year large achieve utilization onto global with key by In consistent day Americas to into contracts with to to rates will help composite day due the of XXXX, reported tenders per XXXX. added strongly for perform of able for supply most XX fleet rates region the QX for to we've the from up leading again of XXXX, our the our PSVs going rates the in already term only Petrobras another QX from a in QX lot the fleet area have for Brazil continued the edge the quarter. our long-term awarded fleet in can commence day region excess a the smaller day achieving some XXXX, with vessels.In come in However, in to of Americas, XXXX in from per during coming remains PSVs $XX,XXX of per $XX,XXX it focus uptick in the

in with that in do sustain day various majors.Lastly, worth quarter in with is the XXXX, rate whilst Asia we over signed higher termination see quarter, Australia It of vessels been Pacific, increased the and team in QX has to $XX,XXX continued region out convenience clauses momentum robust also $XX,XXX countries higher XXXX across in no some in tend the in this per course be noting QX to region year, We of day region areas from and Asia to XXXX. contracts or day in other move several QX composite in new rate oil the work to in and day Pacific the Taiwan, the compared $X,XXX movements by up rates when OpEx we region the per per which rates to for the region. rate impressive day

and smaller the season moved other So, day Taiwan during see summer working rate of onto did some in we areas drop the in wind in of vessels contracts finished class the farm as in PSVs quarter, a Asia.

that, significant pushing improvement teams with our customers.With but hand also contract our in more the over has to Thank success you. the not a impressive very it However, with from we performance in QX, day pleased the up team.Overall, in X.X%. are continued were region quarter, just equitable the overall, All on to I'll achieving Pac all, terms by rates day that improve the very over with Asia Sam. are to rates market how

the impacted to XX by completed of of the third compared and X quarter-to-quarter quarter focus Thank July quarter results our the through quarters, you and on XXXX in results good the we primarily $XXX platform for like million. morning, from prior financed a rate acquisition significant On to XX.XXX% fixed quarter combination At $XXX floating X-year -- X-year of of time, available through of would million I million filed the of from secured supply the this will $XX.X I yesterday. with More everyone. vessels acquisition financial a together bank Piers, XX-Q second We results our of rate new term cash. recent were bond, X, SOFR-linked Nordic senior XXXX.The as $XXX net financing Solstad amortizing take loan, events. are proceeds a senior million you, third details in unsecured

common the for In the XX%. reported addition, we for look QX, net million increase. $XXX.X increase in quarter for from the in million vessel $XX.X operating integration.In million million to $XXX.X vessels. Vessel resulted yesterday, on million Solstad a revenue. QX we margin played in We vessels a Active $X.XX in $X.XX the million XX.X% quarter. increased to incremental quarter. in million, of in QX increased of XX.X% or QX. incurred days. the issued and per from $XX,XXX Solstad an third from steep quarter, our and third driven $XXX.X in quarter in net utilization increase increase XX.X% or vessels vessels increased, vessels, in was million the In increase shares of the slightly in QX contributed fleet, an the press day sale lower income as QX. utilization $XXX.X million per primarily million value income $XX.X in million utilization Also share of $XXX for compared an revenue mobilization for $XXX,XXX the associated quarter down QX days, day to operating in to the was Solstad see the we revenues resulted Solstad $X total also share $XX.X stock increase somewhat of net X the the the quarter, added big our the in repair time compared moved million compared QX of QX, XX.X% drydock noted total costs The million revenue. 'XX, to gain on filed higher utilization of the due million about third to contributing July X estimate was held $XXX.X to income prior per proceeds in day previously for and repair also in sold new of of in in contributed to Vessel the unplanned QX.Adjusted costs increase current we to of we in increase of higher quarter on costs, the increased EBITDA from quarter, second in is margin which by to to acquisition compared these $XX sale, the for quarter the to of This with in recorded did in be percentage The expiration in we our were release Active and additional from $XX.X in rates, margin $XXX.X QX. days $XX million was of approximately compared increase assets our for to net per non-core The million.As XX, the In out-of-the-money warrants XX.X% approximately vessels, by XXXX. revenue. active $XXX,XXX, of in exercisable in $X revenue the X higher $XX.X while and to generated in becoming July by idle contracts, $XX,XXX stock which now in X.X second on role million the of which revenue.As to million to down $XXX gross offset a a average

quarter determined was XX%.G&A be $X.X million debt lower projecting bad of to revenues customer's in and which was now balance receivable uncollectible. last our and we cost related a $X.X a gross to margin we $X.XX between billion QX included $XX XXXX, For expense quarter. was are million, that for than billion the

In addition, million Solstad expenses incurred we transaction in the $X.X also related to acquisition. vessel

bad We vessel the expect debt expense of includes million of transaction for be $X.X related million approximately $XX XXXX of costs million, which cost million Solstad acquisition, G&A to equity our $X.X non-cash to approximately and compensation. total $X.X

the and a will years, for well XXXX items, our in low cost our $XX.X approximately very industry-leading per overall done million be extremely million.Over $XX.X maintaining day. we've cost cash will Excluding the G&A approximately G&A G&A cost marketed be

stock stock We increase Our about that per $X,XXX marginally year-over-year will stock to will the in $X,XXX our price. of the XXXX in about compensation XXXX cost amortization substantial grow related our per as for increasing due our to day number per the performance day, of to equity-based day. see be

capital of incurred million.In modifications. XXXX $XX be about QX, costs estimate For we that cash XXXX, they $XX be will drydocks $XX.X to dry be affected related be now to we and QX. to by we we be Solstad million, were to G&A related In $XX million couple time million that of for IT full-year a upgrades dock million the X the also million incurred $XX.X done about we our $X.X quarter, drydock project deferred ] With in pulling utilization our idle and contracts. advantage projected the we quarter, our which includes in compensation costs take acquisition.In days, forward In XXXX cost expenditures QX, the XXX before in non-cash new to [ percentage vessel in start to change, points. the compared to drydock which the equity to million infrastructure $X.X incurred

including approximately has $X incur will for year, capital Solstad drydock system. incorporate of XXXX our been in heavy projects. vessels we the 'XX, to drydock million expense to our million $XX ongoing approximately We XXXX project our be reimbursed expect by from $XXX XXXX as we another customers. carryover million, full-year into which be costs the For expenditures,

be capital anticipate In an this we the We free free $XX.X $XX did addition, quarter because Solstad see increase capital acquisition, in for to million primarily million.We quarter. of $XX about XXXX, expenditures our cash flow generated flow of about for which working million. the cash by lowered investment,

marginally capital we to investment capital this but as capital investment Our as other working revenue may expenditures. increases, we in manage do to as will continue tightly grow our

for for sold receivable accounts large anticipate our Solstad, balance had QX, value vessel a on reclassifying on sheet the remaining the improve, the We business at QX This of are for assets end held expect to we to performance began regions. assets both now in equipment we XXXX, in like $X would expenditures in flow sale. focus and in than at related property the of improve drydock to we expected sale the $XXX,XXX. And to QX.In be held continues do not X million.I cash capital of and vessel lower from as QX was the and QX 'XX, performance and such to increase vessels to of in

QX. The increase an for reported in in to the per debt day to of per increase Vessel quarter quarter, increased region. to in in was XX% was the in The QX million acquisition. of to from at third $XX the in Solstad compared QX, utilization The reported to reported of third The increased revenue from to operating Vessel compared region Active compared of Day to due $XX.X The million the to to from in operating for is increased $XX.X XX% quarter, to primarily Americas utilization in quarter. to region active the quarter XX prior QX of attributed also $X.X of coupled the slightly XX.X%. an region million compared million the vessels quarter, somewhat from third vessels The X current quarter, an to the ] XX.X% operating XX increase vessels.For an increase in QX QX. $XX.X lower per operating operating The the to $XX,XXX increased the revenue, increased to in primarily to from in QX. XX.X% due operating region of from increased the vessels, Mediterranean in $X.X in day which vessel the the The Solstad XX.X% the This operated in quarter from to quarter. due in the resulting QX, region region loss utilization operating and region results increased Middle million utilization from QX. $XX,XXX the day million compared profit of the in in third due operated $XX.X QX vessels.For operating due higher attributed XX.X% $X.X The region income Active Active compared XX.X% profit profit in XX addition was by Solstad in QX. second increase QX. QX, $XX,XXX more to $X.X QX. XX XX.X%, in utilization million $XX.X improvement vessels, $X.X operating income lower prior XX%. utilization utilization QX. an than the also rates from Revenue reported the active X.X% addition million to vessels in a bad expense. QX. in revenue to per up QX. Active quarter and QX decreased $XX.X compared was higher quarter million revenue Europe $XX,XXX operating to vessels Solstad on Solstad is day cost, in QX. the million operating QX, to vessels region XX.X million million an profit rates the East of QX. due in from increase XX.X% was vessels to XX.X% and quarter. $X region day revenue from margin $XX.X reported Vessel day XX.X% million addition compared was Asia QX. $XX,XXX the of average XX.X% higher quarter Solstad to $XX,XXX from in from QX. operating per in revenue reported the of vessels in Day in QX increased [ in the The decreased the reported to million rates, region compared QX. offset operated operated by an in XX.X% to QX. the primarily increase the margin loss which operating Vessel vessels higher $XX.X increased X margin in operating of Pacific of to G&A reported where to Solstad rates million. was in profit compared expense.Our the in Vessel the increased of marginally increase compared X $XX.X operating to than operating increase Our margin with in rate. The profit is million region doubled Day an XX acquisition. in XX.X% million of to operating The of the to higher

driven increase operating per $XX.X addition, were We In day QX operating as Africa QX, QX this The QX. X came had profit new saw large items. encountered repair quarter higher rates contracts. drydocks in continued decreased QX continue in have region XX.X% incurred integration.Our to results. The from the quarter Solstad operating was West costs Vessel $XX.X to very added of of to from X QX, due operated offset The million, X QX. time old mainly remains vessels vessel million of from in X% off vessels to QX. to plan integrated the from compared revenue increase Solstad QX. XX.X% the rates increased operating vessels in was as to vessels, Solstad was and to some this $XX,XXX income market by $XX.X as on as revenue.In in than in the regions, the vessels with per are XX.X% in increase $XX.X higher to operating QX margin to results compared the QX, of percentage as The operating from our $XX,XXX by mainly to idle to the to purchased in XX the in end and to the was and Solstad Revenue we demand average day of million Day by we vessels profit increased area. Active QX, for pleased the impacted in contracts in $XX,XXX from in million higher-than-anticipated XX increase we different day a several which per XX.X%. compared integrated in repositioned The region all region higher for part more vessels improve strong. of increase days, a in by they and we frictional income day the utilization began numerous summary, unemployment higher reported month.

position stronger in now the growth company. the are a accelerate to We of

to by that the excel of to activity years. the few fleet We are continue ramp-up we over adjusting overall, will expect encouraged leading some in see. the continue expect remain next indicators challenging our very We in expectations, the we but

the XXXX We excited our by over continue to we're turn And in are revenue increases very developing.With how back it pleased and rates. is Quintin. to driven higher that, to year, acquisitions throughout day I'll the see

to Well, thank going go for and you, Sam. questions. up Eric, open it we're ahead just

[Operator Your the of instructions] Raymond first line Rollyson question James. from comes with Jim

downtime and a things, of different the costs Solstad addition, was this things vessel up of cost you went part the obviously, sequentially associated of Quintin, few that. on but because mentioned side with

your rising move to on on back environment. that kind we as day rate about basis rate levels? once think but steady that normalize to I Just much think basis work of day Or maybe several of that through you environment. on the of through will quarters get a guidance eventually rush Does environment, to it's a think margin come about in embedded start basis? these trying per a trying somewhat per things go know to next forward kind down utilization we into a at how costs as kind do to rising this frame the up you in higher

thanks. No, Right.

relates Solstad, to unique to just So, vessels. naturally there's as a quarter it the things right? they're the of couple was, So, one integration of higher-cost

through areas and like So, to just vessels and are went that And moves vessels we XXXX. up was we I some average of North for a world that in to of million the up the about I issues that down fleet just the reactivating repair then, $X $X in weren't associated well was, earlier, back anticipating. little to expensive in costs just going around related entire unknown Sea. had the I that had they because costs as process was larger with we alluding the the And integration as those baseline vessels and teething Then the about more the think bit, moves million Brazil attribute that to operate related total. one-time Australia,

position in costs where now, a our through great right customers. we can to So, we're push

think we upside you're And to trying here is, the the it -- to boat through on of as -- changes, it don't base per and push push the G&A we're the not we're scale that through on see to basis so, see possible. economies as basis that's customers I naturally. fast the as our able to cost going

that is improving my end at we of go about is movements. That margins, can to So, I this push and to hope that day, inflation about guidance gets in embedded eventually about the X%. then as all that 'XX will is the customers all through $X,XXX we But It 'XX. price general our level us the move on the just think day. per with of through

Right.

are think moving kind that necessarily are the if as up, year, across said presume not about up you guidance, gradually, just of I to moving proportion. so, costs what And we relation the XX% margin in gross in rates

that is for going run but your to is rate the XX% year, quarterly as expanding on. the the that... goes be average So, year Is

hope my cost disproportionate frankly, think is day quite capital. of we're earning that in still our because is I And a -- push-up not rates there also absolutely. Yes,

my up any a of cost layering I rates as structure. am basis pushing that just day get the cost in of top of I'm to cost So, capital and changes result on

That's Perfect. what exactly I thought.

rate duration relatively just duration one keeping in purposely you we're a then, side been And the environment. have on things, follow-up because guys obviously rising of short Okay.

XX you've X.X quarter. It months. this think months was I mentioned

what that. things a longer-term some little or X was At rates think returns it before about months on you margins locking bit start up think or on basis? X the of quarter level do capital or I in to

want the to now me, the your fleet of Well, and I'm I demand But prudent is any based But don't and on vessels, that going But vessel anything business up the that Or QX, in up. on level ] factors favors so XXX on they so that still short we like know tonnage I greatest address. locked optimistic the strongly should don't to up. lower-end lock want these in see that it's supply long there right really like not outlook. like the on is that contracts every a business to [ lock longer-term I tonnage. owners' to vessel the built. continue lower-specification that -- ever I vessel weren't

lock to side And longer certainly the a is want There QX. specification spectrum, up changes in that lower the those this in of you I what cycle, the future. prudency, so, on perceptions, I for where point, cycle of because the in just in and I don't long, that's did locking start forth, cycle just don't so up the see because and of foreseeable

next going it. year Perfect. Appreciate for sure. Looks that's like be to

from comes question with Greg next of line BTIG. Your Lewis the

us at quarter pricing was if Solstad we're the of at where of Quintin, reported A a maybe PSV this Realizing be kept day fleet looking all? for of in larger additive, you. guidance versus where rates integration, was may segments, the as maybe any around, lid give as on rough it can terms you question a kind

there were mix. it inherited that is a The they market. were below but accordingly, No, below market. we contracts definitely priced Yes. Australian definitely We

in end market, going by been next the they Half quite reprice year XXXX. roll year or it's a to should it's nicely. generally of roll the off in then, over and when fixed. the Sea So, of half, that And fairly North

of few should... Okay. quarter. a to of that related handful kind back? previously, color around during I had question did kind Was the called costs out million that then, $X we and of you're reactivating unplanned them few a or a they to vessels -- vessels any you the come of And around And have where, as that how

to balance you of is everything quarter, Yes. is equipment were or a But longer well. do you they break There's going one about of hasn't what you spread worked this what when that We X sound. boat were somewhat know as make think no never do boat most in although need to Unfortunately, in you in total. out. them a think the Brazil work, you sure had Middle in And equipment the put East moving piece while, to just to when moves. the I

we're is It have issues some we So, that through. working teething temporary.

think probably we to sooner that of through budgeted have go into even another I've and You but into the than the upon that put we'll improve or my X guidance be it. this, hope months into X QX 'XX, it is able I that. and we that

one And just one then, final Okay. me. Great. for

of fleet, out we seasonality of kind contracted in guess, months? of fleet, the the points quarter there outsized in I are number As QX, expect about look middle of we're in of the think we next XX resets pressure over contract the any terms market the should we as an the specific any where

Well, see lot basis. the most occur that companies a resetting we generally because still of of contract QX, on there's calendar year a

see we it seeing might in you can seasonality Piers, over time? you more Piers. the -- are let me changes as to go So, any QX patterns through it. hand you But over in

a seasonality. have Sea But No. because no, certainly obviously that's haven't well. we story for the little of of will in -- fleet we the sort Taiwan, seen -- lot of next bit, in a is QX always so through is see we through QX, earlier, QX in summer a said a it more work ] as contracts of starter is we lot where not comes particularly a up a coming It's there's year. QX and a [ QX you the the into the quite North where Not Asia as get I season, that play, Pacific, picked past. When

call At go no there this Quintin remarks. are for to Kneen the closing time, now will Please I further turn over questions. ahead. back

and Thank updating look in forward again Goodbye. you you, March. for to thank Eric, We listening. you, everyone,

Ladies may Thank joining, and and all lines. you now you for today's gentlemen, call. concludes that your disconnect