Marine services company Tidewater (NYSE:TDW) is still boring, and still profitable.
Revenue for the fourth quarter (ended in March) climbed by over 16% as the company saw vessel revenue climb 21% over last year. Revenue was helped by both an improvement in vessel utilization and improved day rates for those vessels.
Net income comparisons are a little messy because of charges and benefits in the respective quarters. Stripping those out, net income doubled over last year, with adjusted EPS of $0.36 vs. $0.18 in the year-ago period.
Operating income is similarly tricky, as I believe asset impairments and gains on asset sales should be excluded. Doing so suggests that adjusted operating income more than tripled and the adjusted operating margin climbed from 5.4% to 15.5%. Somewhat corroborating this calculation, the company reported that vessel operating margin climbed to 40.8% from 33.8% in the year-ago period.
Management also announced that the Securities and Exchange Commission has offered to begin settlement discussions with respect to an inquiry relating to the accounting of vessel impairment charges. That doesn't necessarily mean that a settlement will come soon, though. Management does not believe that its prior accounting methods were inadequate, and that disagreement might hold up the eventual resolution of the matter.
Looking into April, management reports that day rates for its vessels are remaining firm. Work in Nigeria is getting back to normal after some strikes, and demand for vessels continues to look good.
Future prospects also look pretty good. Offshore sites (particularly in deepwater locations) remain among the few areas where energy companies are finding worthwhile new discoveries. Consequently, it's unlikely that there will be any imminent decline in offshore operations.
While ongoing operations are of course tied to current and future energy prices, so long as pumping energy on offshore rigs remains profitable, Tidewater should do fine. Analysts are looking for ongoing earnings growth, and it seems like Tidewater is at least two or more years away from a peak earnings environment. Investors have no doubt already discounted some of this growth into the stock price, but that doesn't mean that patient investors don't still have some opportunity to profit if day rates and utilization trends continue to improve.
For more on energy services, consider these earlier Foolish articles:
- Oil Services Surging
- Take Energy Tech Back From the Day Traders
- Stolt Returns From the Depths
- Tidewater's Rising Tide
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
