Why Was Tidewater’s Free Cash Flow Negative?


Nov. 20 2020, Updated 11:04 a.m. ET

Tidewater’s operating cash flows and capex

In this part, we’ll discuss how Tidewater’s (TDW) operating cash flows trended over the past few quarters. We’ll also discuss how its free cash flows were impacted given its capital expenditures (capex).

Tidewater’s CFO (cash from operating activities) depleted to nearly zero in the first six months of fiscal 2017—compared to $164 million a year ago. Tidewater’s CFO mainly fell due to lower revenues in the past year. Also, its marine operating supplies and receivables fell in the first six months of 2017, which also contributed to the lower CFO. Earlier, Tidewater’s CFO fell 29% in fiscal 2016 compared to fiscal 2015.

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Tidewater’s free cash flow

Tidewater’s capex fell significantly in the first six months of fiscal 2017. However, the lower capex couldn’t offset the CFO fall. As a result, the free cash flow turned negative in the first six months of 2017 compared to a year ago. In the first six months of 2017, Tidewater’s free cash flow was -$10 million. Tidewater generated positive free cash flow in fiscal 2016.

National Oilwell Varco (NOV), Tidewater’s larger market cap peer, generated $586 million in free cash flow in the first nine months of 2016. Read Does NOV’s Balance Sheet Support Its Valuation? to learn more about National Oilwell Varco. Tidewater accounts for 0.03% of the iShares S&P Small-Cap 600 Value ETF (IJS). The energy sector makes up 4.1% of IJS.

Did lower free cash flow impact Tidewater’s market performance? We’ll discuss this in the next part.


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