Tidewater Inc (TDW) Q2 2019 Earnings Call Transcript

TDW earnings call for the period ending June 30, 2019.

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Tidewater Inc (NYSE:TDW)
Q2 2019 Earnings Call
Aug 13, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Earnings Conference Call Second Quarter 2019. My name is Adriane and I'll be your operator for today's call. [Operator Instructions] Please note this conference call is being recorded.

I'll now turn the call to Matt Mancheski. Matt Mancheski, you may begin.

Matthew A. Mancheski -- Vice President, Investor Relations & Corporate Development

Thank you, Adriane. Good morning, everyone, and welcome to Tidewater's earnings conference call for the period ended June 30th, 2019. I'm Matt Mancheski, Tidewater's Vice President of Investor Relations & Corporate Development. 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; Quintin Kneen, Our Chief Financial Officer; Jeff Gorski, our Chief Operating Officer; and Bruce Lundstrom, our General Counsel.

For today's call agenda, I'll cover a few formalities and then turn the call over to John for his prepared remarks, followed by Quentin's review of our financial results for the period. Following John's closing comments, we will then open up the call for questions.

During today's conference call, we may make certain comments that are forward-looking and not statements of historical fact. These are -- there are risks and 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 additional details on these risk factors. This document is available on our website or through the SEC at sec.gov.

Information presented on this call speaks only as of today, August 13th, 2019, and therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we will present both GAAP and non-GAAP financial measures. The reconciliation of GAAP to non-GAAP measures is included in our last evening's press release.

With that, I'll turn the call over John. John?

John T. Rynd -- President, Chief Executive Officer & Director

Good morning, everyone, and welcome to the Tidewater earnings call. The second quarter was a testament to the strategic rationale of the Gulfmark combination completed toward the end of last year, as demonstrated by the margin growth of the combined company. The North Sea market and deepwater vessels more broadly, both segments that were enhanced through the acquisition, should continue strengthening during the quarter.

In addition, the increased scale allowed for good cost control both on and offshore, resulting in margin expansion relative to both prior quarter and the same time last year. While the seasonal North Sea market strengthened earlier than anticipated, and have since moderated to more normalized levels for this time of the year, we believe the continued trend of activity levels, which impacts rates and utilization, are moving in the right direction, albeit at a pace that is slower than desired.

Revenue was up slightly over the prior quarter due to average debt rate increase of $636 per day, and active utilization falling about 1.3 percentage points. This is the second consecutive quarter where worldwide average day rates have increased after having consistently declined since the onset of the downturn in 2014. The utilization decline is largely attributable to having 784 active days at a service, due to dry docks and reactivations, an increase of 394 days over the first quarter. This difference of 394 days amassed approximately 2.6 percentage points in active utilization drag relative to the first quarter, resulting in active utilization that is otherwise slightly ahead of the first quarter, but for the additional dockings.

We continue to highlight the significant drydock obligations for ourselves and the industry as a whole where we estimate that approximately 450 currently active OSVs have or will come due in 2019 for a special survey, and another approximate 425 will be due in 2020. We are not immune to this impact and we'll continue to experience elevated drydocking cost and downtime as we position our fleet to meet our customers' global demand.

Excluding vessels that are currently stacked and anticipated to be reactivated, we anticipate 1,025 and 300 vessel days out of service due to drydocks in the third and fourth quarters, respectively. These estimates may move between quarters based on our customers needs, but represents our current best estimate. However, in spite of the elevated drydock schedule, we are committed to being disciplined with our capital and we only reactivate or maintain active vessels against contract coverage whose projected margins provide a full payout with a reasonable return on our investment. Overall, this may result in near-term cash outlays as we invest in vessel dockings. However, the overall cash-on-cash returns and long-term strategic positioning of these assets will be meaningful to our shareholders.

As an example, we have recently authorized the reactivation of two deepwater PSVs against multi-year contracts and are currently in discussion with a separate customer to reactivate a third deepwater PSV, whereby they pre-fund a significant portion of the drydock, which will be earned out over the firm term in addition to an above-market average vessel operating margin. These are vessels that were previously projected to be stacked, but the returns warranted the investment.

To further illustrate, as part of our disciplined approach to investing in vessels that will best serve our customers and ultimately our shareholders, in excess of 85% of these vessels that we have projected for drydock this year, have a term contract, and for the remaining 15%, we may elect to have those vessels stacked until adequate visible contract coverage is realized.

Our continued focus on high-grading of fleet and maximized overall cash generation as opposed to operating a large fleet, is a prime objective, will result in us aggressively moving vessels from active service and responsibly disposing of vessels that no longer meet our return objectives. As a result, it is likely that our active vessel camp will continue to trend down throughout the remainder of the year as lower specification vessel contract coverage winds down or as we reposition vessels to more strategically important markets.

Further, it is worth noting that our disciplined fleet management is best evidenced by the fact that we are approaching almost 80 vessels sold since the start of 2018. This disposal of lower specification vessels as we simultaneously acquire high specification vessels, like many of the GulfMark vessels and the two vessels we acquired in fourth quarter of 2018, will continue to yield excellent outcomes for our stakeholders.

We firmly believe that a smaller active fleet with the most commercial options in our primary markets where we can benefit from scale, is more valuable than maybe a larger active vessel count with lower margin or the absolute number of countries in which we operate. To briefly highlight our operating segments, the Americas region had margin expansion in both dollar and percentage terms, resulting from improved day rates offset by active utilization declines that is largely attributed to drydocking and good operating cost control.

Cost reduction possibly resulted from one-time favorable adjustment to insurance reserves and reductions associated with disposal of stack vessels that resulted in lower stack cost.

For the Middle East and Asia-Pac region, revenue was flat with the prior quarter, with operating costs slightly higher though about equivalent with the first quarter when accounting for the extra day available in the quarter. Slightly elevated drydock offer [Phonetic] was offset by small improvements in average day rates, which were more reflective of vessel mix than material change in rate progression. As previously noted, the results for the European Mediterranean Sea region saw significant benefits from the seasonally strong North Sea market. The $6.5 million or 23% increase in revenue from the first quarter, yielded an improvement in vessel operating profit of $6.1 million from the prior quarter. The 95% vessel operating profit conversion rate is a testament to the operating leverage and economies of scale embedded in Tidewater's business.

Lastly, the West Africa region was the weakest relative to the first quarter, with vessel operating margins declining almost 10 percentage points, as revenue decreased and operating cost increased. This is attributable to higher maintenance costs and associated downtime, as we ensure vessels are operationally fit for our customers, as well as stacking of four vessels during the quarter that came off contract or came due for a special survey, without immediately visible opportunities to justify the investment in the special survey.

As we projected second half of 2019, we anticipate the average active vessel count to drop by 11 vessels in the third quarter and another six vessels in the fourth quarter as we seek to improve active utilization, which we anticipate to be up by 2 percentage points in third quarter and another 2 percentage points in the fourth quarter in spite of the high drydock schedule.

Further, we project the average day rates to decline just over 1% in the third quarter as the North Sea seasonally tapers off and we realize the effects of legacy contracts that reprice downwards in Mexico and the North Sea. Overall, we expect vessel level margin to drop to the low 34% range in the third quarter, before rebounding in the fourth quarter to the 37% range. As mentioned in our press release, our objective of being the most cost-efficient operator in industry is clearly in focus. And we remain on track to meet our general and administrative run rate objective. The operational integration is complete and we're in the final stages of the system implementation that will begin to drive additional synergies throughout our shore-based infrastructure.

Our 2019 exit run rate objective for the general and admin expense is $87 million, but rest assured that we did not envision that is the best we can achieve. We will continue to find ways of gaining efficiency and cost savings in our business and we look forward to updating you on our progress.

With that, I'll hand the call over to Quintin. Quintin?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Thank you, John and greetings, everyone. I thought I would open by reinforcing from the financial perspective some of John's comments and reiterating what makes us different. First of all, we have a rock solid balance sheet. We closed the quarter with $383 million of cash. We do have $435 million of debt, the bulk of which matures three years from now on August 2022, but we are easily able to service the debt and can easily refinance the debt connection and function with our cash on hand. We have no plans to alter our loan net debt position until the recovery is much further along. We do have covenants and those covenants get tighter over the next six quarters, but we are performing well above the required levels today, and we are performing today above the tightest those covenants get over the tenor of the debt.

We have no required capex, we have no vessels under construction. Every investment we make is our decision based on today's economics, and we have no concern about shrinking the fleet in order to grow return on capital. We have been free cash flow positive year-to-date and we anticipate being free cash flow positive on an annual basis. In addition to all of that, we are pleased with the continued quarterly improvement of the core business. We're not satisfied, but we're pleased.

Revenue was up again, quarter-over-quarter, and average day rate was up substantially. Operating expenses were down overall, operating expense for active day was down. G&A expenses were down [Technical Issues] below the Tidewater stand-alone pre-merger levels. These metrics are all going in one direction, but we are still not satisfied and we are continuing to work to improve all of these metrics each and every quarter as we go forward.

Working capital investment was up, which is the wrong direction, but we will be addressing that as we go through the remainder of the year. My objective today, as always, is to give you a quick summary of Tidewater's quarterly results and to give you an update on our progress of our G&A target run rate of $87 million per year and an update on the integration of the two company's ERP systems.

Overall, a nice improvement in operations over the first quarter. Revenue was up, operating expenses were down. Overall, incremental operating margins were 144%. A portion of operating expense improvement was the reversal of the insurance approval John mentioned in the Americas of $1.1 million. But even after removing the benefit of that item, consolidated incremental margins were 116%.

Quarter-over-quarter average day rates were up 8% in the Americas, 1% in the Middle East, 19% in Europe, and down 2% in West Africa. Overall, average day rates were up just over 6%, which is a significant overall [Technical Issue] average day rate for one quarter and as John mentioned, is our second quarterly increase in average day rates, the start of what we believe to be a long-term trend as the industry begins to benefit from an improvement in the supply and demand imbalance, principally from the attrition of vessels.

At 100% incremental operating margins, which is our objective, and an active fleet of 162 vessels with 79% active utilization as we experienced in the second quarter, a 6% increase in the average day rate equate to $30 million of additional vessel operating margin on an annual basis.

As we look to the third quarter, we had five significant contract rollovers in the second quarter. These contracts were on pre-downturn rates, as many of them were five-year contracts cut in the summer of 2014. Their roll-off will stall the average day rate progression and as a result, we are expecting the decrease, albeit slight, in the average day rate in the third quarter. These contracts were the last on pre-downturn rates and we do not perceive further downward pricing pressure on existing contracts as we see all current contracts at or about market rates.

I would also add that we see the market getting stronger globally, and we do not see any area getting worse. Active utilization dropped slightly in the second quarter, down 1 percentage point to 79%. The heavy drydock schedule for 2019 is weighing on this metric, and we will continue to look for ways to improve this metric by continuing to optimize drydock performance, as well as over the long term, employing the use of technologies and techniques to reduce downtime due to repairs.

G&A for the quarter had $416,000 of severance-related items, which results in an ongoing quarterly run rate for the second quarter of $23.2 million, which is down slightly from the comparable figure in the first quarter of $23.4 million. Our objective is to get to a quarterly run [Technical Issue] by the end of the fourth quarter, getting to the lower G&A level will result from lowering headcount and professional service fees, and we are actively executing on a plan designed to get us to our run rate objective. But the planned results are weighted toward the end of the fourth quarter. Although not metric we are focused on, it's noteworthy to point out that we are already at a quarterly G&A expense level below what the Company was experiencing prior to the merger.

Consolidated revenue for the quarter was $125.9 million, up approximately $3.7 million from the prior quarter. Driving the increase in revenue was the aforementioned increase in the day rates and the additional day in the calendar quarter, offset by 1% lower active utilization and an average of fewer vessels working in the quarter. Fewer vessels working in the quarter reflects the capital discipline we are enforcing on the business. As vessels in the fleet reach their mandatory drydock investment, a portion of these vessels will not meet our return on investment objective. These are generally the older vessels with lower overall technical specifications. These vessels become candidates for sale outside the industry or recycling. Meanwhile, we do have higher specification vessels in layup and these vessels are being reactivated when economically justified.

Overall, as John indicated, we anticipate the active fleet shrinking further as we go through the remainder of 2019, but increasing slightly as we get into the first half of 2020 when we anticipate economic conditions will be ripe for the reactivation of some of the higher specification vessels we haven't lay out. But overall, we are not averse to shrinking the fleet in order to improving long-term returns on capital.

Active vessel operating costs for the quarter was down $1.1 billion [Phonetic], with $1.1 million of that decrease due to the reversal of insurance approval mentioned previously. And the remainder is the result of having on average five-year vessels active during the quarter. The quarterly active vessel operating costs per day was $5,423, a decrease of $13 per active day from the first quarter and a decrease of $9 per active day from the fourth quarter of 2018. The cost for active day remains in line with our expectations for the fleet and where we anticipate vessel operating costs to be for the remainder of 2019.

We are migrating legacy Tidewater areas on to the SAP platform. The ERP system integration activities have been in process since the day of the merger, but we hit a key milestone in June. The Tidewater Norwegian operations came online in June, which was a test case for the migration of the other regions. The remaining regions will be brought online beginning in October. User acceptance, testing, training and final preparation for the migration are ongoing and we see no impediment to achieving that objective. The ERP system consolidation is the last major piece of the merger integration, but won't be the last improvement in efficiency and scalability. The new system will enable further improvements to shore base efficiency and scalability as we go through 2020 and beyond.

We will have additional merger-related costs throughout the second half of 2019, partially related to severance, but mostly related to professional service costs as we go through the remainder of the year. We will continue to make you aware of these costs as we have in the past three quarters. These amounts will pick up in the third and fourth quarter as professional fees related to the integration increase, as we approach the go-live date.

The cash balance at the end of the year was $383 million, down $15 million from the prior quarter. We mentioned on last quarter's call that we anticipated that the second quarter to be a use of cash due to the timing of drydock payments and other working capital matters. The use was a bit higher than we anticipated and we saw a sharper build in accounts receivable than we were expecting from a few clients. I'm not concerned about the flexibility of any of these amounts, and I anticipate that these will be cleared up in the third and fourth quarters of 2019.

In the first half of 2019, the Company was free cash flow positive in amount of $2 million and we anticipate being in free cash flow positive for the full year. For the second quarter of 2019, the Company was free cash flow negative in the amount of $6.7 million, driven by the build in receivables.

We do include proceeds from vessel disposals in our determined free cash flow. We see these vessels as excess inventory and we are liquidating disposition [Phonetic] over time. For the first half of 2019, we have proceeds of $20.6 million from the disposal of obsolete vessels. The 60 vessels remaining in layup have a combined book value of $126 million, and that amount is included in property and equipment on the balance sheet. Since quarter-end, we have sold three additional vessels for total proceeds of $4.4 million.

And with that, I will turn the call back over to John for his final comments.

John T. Rynd -- President, Chief Executive Officer & Director

Thank you, Quentin. We are optimistic that we are investing in the right people, processes and vessels to thrive through this protracted downturn and beyond. This includes responsibly reducing costs, while ensuring that operational performance remained industry leading. Additionally, we will maintain active supply on the basis of its economic viability and will not chase market share at the expense of profitability. This discipline by us and other market participants, will continue to facilitate the needed recovery in day rates that has begun evidencing itself the past two quarters.

While we cannot predict the pace of the recovery, we see reasons for optimism in each of our markets and believe -- we believe that we are in the best position to capitalize on the fundamental improvements.

Adriane, please open the call up for Q&A.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Turner Holm from Clarksons Platou. Your line is open.

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Hey there, guys. Good morning. This is Turner Holm from Clarksons Platou.

John T. Rynd -- President, Chief Executive Officer & Director

Good morning.

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Hey, John. I just wanted to drill into your last comment of your prepared remarks that you see reason for optimism in some of the older markets that you mentioned. And what we're hearing is maybe some flattening of leading-edge day rates in particular markets perhaps, seasonal in the North Sea. But their guidance is for maybe flat-to-slightly down day rates for the third quarter. Can you kind of just flesh that out a little bit, how you're thinking about that optimism, is it activity related or is it sort of being at day rates that you're seeing?

John T. Rynd -- President, Chief Executive Officer & Director

All right. The combination of things started at a good one. Every market we participate in is on solid footing right now. And really, the driver of our slight reduction in average day rate in the third quarter is more as a result of coming off those legacy term contracts in higher day rates, not reflective of where leading-edge day rates are. And as you know, we guided the fourth quarter day right back up slightly since we see improvement in every major market. Again, some of it's seasonality like you said, the North Sea -- we will watch the North Sea as we progress into the winter months. West Africa appears to be some -- gaining some strength around the world, Brazil is gaining strength, and Mexico is gaining strength, the Med is holding solid. So again, the Gulf of Mexico, really driven by supply migrating outside of the US, Gulf of Mexico has been holding up nicely. So again, as we look around the world, there's reasons for my optimism in all of our key markets.

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Sure. Thanks for that. I understand you all took some contracts down in Guyana recently or have some vessels on the way down there. Relatively encouraging discovery earlier this week by Tullow. I'm wondering if you all see that as being a sort of attractive market and maybe a place to -- just to add some active vessels in the next couple of quarters?

John T. Rynd -- President, Chief Executive Officer & Director

Yeah, I think you have to be paying attention to the Guyana area. Actually, our vessels are moving to Suriname for Apache. And then in October, we have a vessel moving into Exxon Guyana for a five-year contract. So that's a market we're staying very close to. And also, as you mentioned, great news on the Tullow discovery. So I think obvious scenario it's going to get a lot of attention from us and others.

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Thanks, John and Quentin, just one for you. There was some talks earlier in the year about possibly extracting some value from the [Indecipherable] receivable balance. I know it was quite flat this quarter, is there anything to report there with regard to possibly monetizing that balance, and yes or no, is that baked into the free cash flow positive outlook for the year?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Yeah, we're still looking and working with our partner and with the long-term holds with our joint venture. I don't expect that we will be extracting significant amount of value out of that particular receivable as we go through the remainder of 2019. But we are working with them on a systematic collection of that receivable. So -- but I hope that what we're able to do is formalize that receivable in more of a long-term note as we go forward. And have more of a systematic payment and liquidation of that. But it won't be some of the significant gains that we had last year from that particular perceivable balance.

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Okay. Appreciate it guys. I will turn it back.

Operator

[Operator Instructions] Your next question is from Patrick Fitzgerald from Baird. Your line is open.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Hi, guys. What's the -- maybe you said it, but what's the average age of your fleet now after all the divestitures?

John T. Rynd -- President, Chief Executive Officer & Director

The average age of the active fleet is about 9.8 years and the total fleet inclusive of the stack fleet is right at 10 years.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. Is there an average like deadweight tons that you guys could provide?

John T. Rynd -- President, Chief Executive Officer & Director

We'd have to do that all blind. We'll follow up with you when we can. We don't have that at the tip of our fingers.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. So what's deferred drydocking expected? You said it's going to be -- remain elevated for 2019 and '20. What do you expect it to be for the remainder of the year and then what does it look like in '20?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

You know, we expect the total amounts for the year to approximately be $62 million, and we expect the similar number in 2020 as well. Obviously, all of those investments will go through a review before they're made. But based on the age of the fleet and based on the requirements for special service, we've definitely seen a lumpiness in 2019 and 2020. My expectation is as we go into 2021, that will decrease maybe 20% to 30%, but it'll be on the five-year cycle.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Ok. So if there is a way -- I know it's kind of theoretical, but is there a way to think about like maintenance capex For your fleet, what it will be at the end of this year in terms of both vessel drydocking and other maintenance capex kind of on an annualized basis just to kind of put that in a framework?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

So. The way I would encourage you to think about it is right now, the five-year special service are running about an average $1.2 million per vessel. And so it depends on the age of the vessel and when they have done the survey. But overall, we expect 20% of the vessels every year to hit that $1.2 million, then you're going to run into a number that -- it depends on the active fleet, but it's going to be in the $36 million to $40 million range. That's a straight line over every period noting that like, for example, in the current year, we're going to be just about $60 million and maybe the same level in 2020 as well.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. All right. And so given your guys' balance sheet, you obviously are in a much better position to handle that, which is pretty large number per vessel. What -- have you seen that impacting some of your competitors assuming they have kind of the same lumpy schedule, maybe -- which maybe isn't true?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Well, I think it is true and John mentioned it in his prepared remarks. I'm actually surprised that we haven't seen more companies hitting the wall. I'm not sure where they're getting the money for these drydocks. But it is highly fragmented and people will do whatever they can to survive in this market. So obviously, they're leaning on financial institutions and to some extent cash from operations, although a lot of the companies are still operating just above cash flow break even. So, our anticipation as we go through the remainder of 2019 and 2020 is we're going to see acceleration and investable attrition because of the investment required.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay, and are you baking that into your day rate projections, or you're assuming they're going to come up with the money to continue to operate their vessels, so there could be upside to kind of your answers, your day rate expectations?

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Well, in all of our comments we're anticipating a bit of vessel attrition because of that factor. And sometimes it comes in the form of just increased utilization and sometimes it comes in the form of day rate. But overall, it should be positive due to the revenue line on a per boat basis.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. And then I wanted to ask about West Africa. You said you're seeing some bright spots, I guess, in your comments, but that was in terms of floaters. The only revenue decline sequentially in the quarter was, I believe in West African deepwater. So are you seeing kind of more contracts that will be announced on the floater side there or what gives you optimism there?

John T. Rynd -- President, Chief Executive Officer & Director

I think it's two parts, really it's two areas. It's Angola and Nigeria. Angola is looking to -- poised to grow in the back half of this year and through 2020, and that'll be more floater-driven. And then if you go to Nigeria, that'll be more jackup-driven. That's where we see the two strongest areas right now, is Angola and Nigeria, again, Angola being floater-driven, Nigeria more to jackup-driven.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. Thanks. And then just one more question. Covering the industry, on the drilling side, you hear a lot about improvement in the jackup space and kind of slower recovery in the floater space. Yet it seems like your results this quarter, you had more encouraging results on the deepwater side. And I guess, towing supply vessels were down sequentially. Is that just where you've chosen to kind of sell vessels related to the kind of the smaller, older vessels or what's the read through there that we should be taking away from this?

John T. Rynd -- President, Chief Executive Officer & Director

Yeah. I think one thing, when you when you take a look at just -- just pick the deepwater vessels, not all of our deepwater vessels are supporting floaters. If we have an opportunity, we would put it to work with them on a jackup contract or a pipeline contract, your construction contract will do that. That's just an internal nomenclature how we track those vessels. The towing supply was down quarter-over-quarter. Some of that was just in and out of -- in both West Africa and the Middle East. But if you look at the jackup rig count, growth is right now -- it's been in the Middle East and it's coming due -- to West Africa, specifically to Nigeria. And then North Sea, obviously...

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

[Speech Overlap]

John T. Rynd -- President, Chief Executive Officer & Director

And then the North Sea is a deepwater PSV market and that's where we had our strongest market.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Yeah, sorry. So just is there any way to break down like how much revenue you get from floaters versus jackups? Just even a ballpark would be helpful.

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Patrick, we don't track it offhand. You know, it's pretty well diversified in terms of Tidewater's revenue stream between construction activities, production support and then the drilling activity split between jackups and floaters.

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

Okay. All right. Fair enough. Thank you very much.

John T. Rynd -- President, Chief Executive Officer & Director

Thank you, Patrick.

Operator

And this concludes the question-and-answer session. I'll turn the call back over to Matt Mancheski for final remarks.

Matthew A. Mancheski -- Vice President, Investor Relations & Corporate Development

Okay. Thank you, Adriane, and thank you for everyone that participated in the call. We look forward to your continued participation in Tidewater stock and thank you for your interest in the Company.

Operator

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

Duration: 33 minutes

Call participants:

Matthew A. Mancheski -- Vice President, Investor Relations & Corporate Development

John T. Rynd -- President, Chief Executive Officer & Director

Quintin V. Kneen -- Chief Financial Officer & Executive Vice President

Turner Holm -- Clarksons Platou Securities AS -- Analyst

Patrick Fitzgerald -- Robert W. Baird & Co. -- Analyst

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