Tidewater (NYSE: TDW) is not scheduled to announce the company's results for fiscal 2011's second quarter, which ended on 30 September 2010, until 3 November.
The company, having already determined that its results would not
measure up to the Wall Street consensus, shared this material
information with investors by "preannouncing"
preliminary results for the September quarter. Tidewater now estimates
its diluted earnings per share in the September quarter were between
$0.35 and $0.40 per share. The company noted that the Thomson First Call consensus estimate was $0.58 per share at the time of the announcement.
This was the second consecutive quarter that Tidewater "preannounced" disappointing earnings.
In our "look-ahead" for Tidewater's September quarter, posted 29 September 2010, we forecast earnings of $0.57 per share.
Why were earnings roughly $0.20 per share less than expected?
first reason, which accounts for $0.09 of the shortfall, can be
attributed to a $4.35 million charge to resolve an investigation related
to the Foreign Corrupt Practices Act.
We had thought, evidently erroneously, that Tidewater concluded this matter in the March 2010 quarter when the company recorded
an $11.4 million charge.
The second reason, which explain the
rest of the shortfall, or nearly so, was due to Tidewater increasing its
estimated income tax rate for the year from 18.5 percent to 22.5
It may be comforting that Tidewater's revenue and
operating costs in the latest quarter were generally consistent with
prior targets. For example, Tidewater now estimates the September
quarter had vessel revenue of approximately $267 million. Since the
company's total revenue consists of this vessel revenue plus an
additional, but typically modest, amount of "other marine revenues," our
$270 million revenue target will probably be close to the actual
Tidewater also now expects that Vessel operating costs
were approximately $170 million. This estimate is close to management's
prior guidance and cannot be considered a surprise.
We will have to wait until next week to study the detailed results for the quarter.
Full disclosure: Long TDW at time of writing.