TDW

Tidewater ($TDW) Director Bets $4M on 60% Stock Plunge Amid "Structural Supply Shortage"

06/07/2025 13:41

Tidewater Inc. ($TDW) shares have plummeted nearly 60% over the past year, but director Robert Robotti has been steadily accumulating shares, drawing significant market attention. Recent purchases include 15,000 shares on June 4th and 10,000 shares on June 3rd, both around $42 per share, bringing his total purchases to over 100,000 shares this year alone. Headquartered in Houston, Tidewater is a leading provider of offshore support vessels (OSVs) and marine support services to the global offshore energy industry since 1956. The company operates anchor handling towing supply vessels, platform supply vessels, crew boats, utility vessels, and offshore tugs, serving integrated oil and gas exploration companies, offshore drilling contractors, and increasingly, offshore wind development and maintenance services. Robotti's buying spree isn't a one-time investment. His purchases began in December 2024 and continued through March and June 2025, with particularly large acquisitions when shares fell to the mid-$40 range. His December 13th purchase of 41,615 shares ($2 million), March 13th acquisition of 25,000 shares ($1 million), and recent June purchases total over $4 million in aggregate. This suggests company insiders view current price levels as attractive. However, Tidewater's stock decline has clear underlying reasons. Shares have fallen from $96 in June 2024 to current levels around $42, reflecting broader challenges in the offshore energy services sector. The company recently reported Q1 adjusted earnings of $0.83 per share, beating analyst expectations of $0.63 but falling short of the prior year's $0.89. Revenue increased 3.8% year-over-year to $333.4 million, though growth momentum has decelerated. Particularly concerning is the Q2 2025 outlook. Management expects revenue to decline approximately 5% sequentially due to seasonal factors and higher fuel/repair costs. Gross margins are projected to fall to around 44%, down significantly from Q1's 50.1%. Analysts forecast Q2 EPS of $0.51, representing a 47% decline from the prior year's $0.97. Despite these headwinds, Tidewater's fundamentals remain solid. The company generated $377.1 million in levered free cash flow over the trailing twelve months and maintains $341.8 million in cash. The debt-to-equity ratio of 57.28% remains within the industry average range of 50-70%, while the current ratio of 2.07 indicates healthy short-term liquidity. Management demonstrated commitment to shareholder value by repurchasing approximately 2.5 million shares for nearly $100 million in Q1 alone. The offshore energy services industry benefits from structural supply constraints. Less than 3% of the global fleet is on order, creating limited supply that should support day rate improvements over the intermediate term. Tidewater achieved record average day rates of $22,303 in Q1, with potential for further increases driven by Petrobras tenders in Brazil and tight vessel availability in the Middle East and Africa. Regionally, Brazil presents strong opportunities with Petrobras tenders expected to tighten supply further. Middle East and Africa markets show steady improvement with constrained vessel availability. Asia Pacific, particularly Malaysia, anticipates increased subsea construction activity in H2 2025. However, the UK North Sea and Mexico continue facing demand challenges, creating regional disparities. From a valuation perspective, Tidewater appears attractively priced. The EV/EBITDA multiple of 5.26x trades below the industry average of 6-8x, while the P/E ratio of 13x remains below the sector average of 15-18x. This suggests current share prices may overly reflect industry challenges. Robotti, known for his long-term value investing approach and indirect ownership through Robotti Advisors, appears to view current prices as significantly below the company's intrinsic value. His continued accumulation coincides with management's reaffirmation of 2025 revenue guidance at $1.32-1.38 billion and a combined firm backlog plus options totaling approximately $848 million. Key catalysts to watch include Q2 earnings scheduled for August 4-8 and potential Q3 operational improvements. Management expects utilization and margins to improve materially in Q3 as drydock activity declines and operating expenses normalize. Additionally, opportunistic M&A activities and continued share repurchases could provide additional upside catalysts.

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