Gulf Island Fabrication, Inc. ("Gulf Island" or the "Company")
(NASDAQ: GIFI) today reported a net loss of $3.0 million ($0.20 per
share) on revenue of $67.6 million for the first quarter 2019,
compared to a net loss of $5.3 million ($0.35 per share) on revenue
of $57.3 million for the first quarter 2018, and a net loss of $4.7
million ($0.31 per share) on revenue of $60.2 million for the
fourth quarter 2018. At March 31, 2019, the Company's cash
and short-term investments totaled $70.2 million and backlog
totaled $334.7 million.
"Results for the first quarter 2019 reflect
revenue growth on a sequential and year over year basis and solid
project execution across our divisions. However, the
underutilization of our facilities impacted our results for the
quarter. Although we experienced improvement in utilization
within our Fabrication Division, the utilization within our
Shipyard and Services Divisions was impacted by the timing of
construction activities and new awards.” said Kirk Meche, Gulf
Island’s President and Chief Executive Officer. "Our results
show that we are trending in the right direction, and we anticipate
improvement in utilization as construction activities for our
backlog and new awards ramp up. Further, in April, Oregon
State University ("OSU") executed its option for our construction
of a third regional class research vessel and the U.S. Navy
exercised its option for our construction of two additional towing,
salvage and rescue ships, a testament to our strong relationship
with OSU and the U.S. Navy and their confidence in Gulf
Island."
Backlog (1)
The Company’s backlog at March 31, 2019 of
$334.7 million represents a decrease of $21.8 million from December
31, 2018 and an increase of $42.7 million from March 31,
2018. Backlog by operating segment was $248.1 million for
Shipyard, $71.1 million for Fabrication, and $15.4 million for
Services. Backlog for our Shipyard segment excludes
approximately $70.0 million for a regional class research vessel
for OSU, and approximately $129.0 million for two towing, salvage
and rescue ships for the U.S. Navy, all of which were awarded in
April 2019. Backlog for our Shipyard segment also excludes
remaining customer options on contracts of approximately $333.0
million, which include deliveries through 2025 should all options
be exercised._____________
(1) Backlog includes remaining
performance obligations at March 31, 2019 of $312.8 million,
as defined by generally accepted accounting principles in the
United States ("GAAP"), plus $21.9 million of backlog subject to a
contract termination dispute with a customer to build two
multi-purpose service vessels that does not meet the criteria to be
reported as remaining performance obligations under GAAP. Pending
resolution of the dispute, the Company has ceased all work and the
partially completed vessels and associated equipment and materials
remain at its shipyard in Houma, Louisiana.
Cash and Liquidity
The Company's cash and short-term investments at
March 31, 2019 of $70.2 million represents a decrease of $9.0
million from December 31, 2018 and an increase of $63.7 million
from March 31, 2018. The Company ended the quarter with no
debt and total working capital of $102.0 million, which includes
$18.6 million of assets held for sale. On May 1, 2019, the Company
amended its $40.0 million credit facility ("Credit Agreement") to
extend its maturity to June 2021. At March 31, 2019, the
Company's total available liquidity was as follows (in
thousands):
Available Liquidity |
|
Total |
Cash and cash
equivalents |
|
$ |
49,898 |
|
Short-term
investments |
|
20,341 |
|
Total
cash, cash equivalents and short-term investments |
|
70,239 |
|
Credit Agreement total
capacity |
|
40,000 |
|
Outstanding letters of
credit |
|
(2,917 |
) |
Availability under Credit Agreement |
|
37,083 |
|
Total
available liquidity |
|
$ |
107,322 |
|
|
|
|
|
|
Results of Operations(1) (in
thousands, except per share data)
|
Three Months Ended |
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018(2)(3) |
Revenue |
$ |
67,605 |
|
|
$ |
57,290 |
|
|
$ |
60,231 |
|
Cost of revenue |
67,052 |
|
|
56,611 |
|
|
64,195 |
|
Gross profit
(loss) |
553 |
|
|
679 |
|
|
(3,964 |
) |
General and administrative
expense |
3,834 |
|
|
4,709 |
|
|
4,288 |
|
Asset impairments and
(gain) loss on assets held for sale, net |
(70 |
) |
|
750 |
|
|
(1,168 |
) |
Other (income) expense,
net |
71 |
|
|
310 |
|
|
(2,530 |
) |
Operating
loss (4) |
(3,282 |
) |
|
(5,090 |
) |
|
(4,554 |
) |
Interest income (expense),
net |
262 |
|
|
(147 |
) |
|
24 |
|
Net loss
before income taxes |
(3,020 |
) |
|
(5,237 |
) |
|
(4,530 |
) |
Income tax (expense)
benefit |
(22 |
) |
|
(59 |
) |
|
(152 |
) |
Net
loss |
$ |
(3,042 |
) |
|
$ |
(5,296 |
) |
|
$ |
(4,682 |
) |
Per share data: |
|
|
|
|
|
Basic and
diluted loss per share - common shareholders |
$ |
(0.20 |
) |
|
$ |
(0.35 |
) |
|
$ |
(0.31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
________________
(1) See also "Results of Operations by Segment"
below for results by division and discussion of our realigned
segments.
(2) Fourth quarter 2018 includes charges of $5.8
million for our harbor tug projects.
(3) Fourth quarter 2018 reflects a $2.8 million
benefit from the recovery of a bad debt that was reserved in the
third quarter 2018. The recovery during the fourth quarter
2018 has been reclassified from general and administrative expense
to other (income) expense, net to conform to our classification of
bad debt expense (recoveries) for the 2019 period.
(4) Operating loss for the first quarter 2019,
first quarter 2018 and fourth quarter 2018 includes non-cash
depreciation and amortization expense of $2.6 million, $2.7 million
and $2.6 million, respectively.
Condensed Cash Flow Information
(in thousands)
|
|
Three months ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Net cash used in
operating activities |
|
$ |
(8,477 |
) |
|
$ |
(14,096 |
) |
|
$ |
(1,726 |
) |
Net cash provided by
(used in) investing activities |
|
(11,367 |
) |
|
2,403 |
|
|
27,176 |
|
Net cash provided by
(used in) financing activities |
|
(715 |
) |
|
9,202 |
|
|
(13 |
) |
Condensed Balance Sheet
Information (in thousands)
|
|
March 31,2019 |
|
December 31, 2018 |
Cash and cash
equivalents |
|
$ |
49,898 |
|
|
$ |
70,457 |
|
Short-term
investments |
|
20,341 |
|
|
8,720 |
|
Total current
assets |
|
157,366 |
|
|
159,955 |
|
Property, plant and
equipment, net |
|
77,660 |
|
|
79,930 |
|
Total assets |
|
258,715 |
|
|
258,290 |
|
Total current
liabilities |
|
55,350 |
|
|
56,101 |
|
Total shareholders’
equity |
|
197,904 |
|
|
201,100 |
|
Quarterly Conference Call
Gulf Island will hold a conference call on
Tuesday, May 7, 2019 at 9:00 a.m. Central Time (10:00 a.m. Eastern
Time) to discuss the Company’s financial results. The call will be
available by webcast and can be accessed on Gulf Island’s website
at www.gulfisland.com. Participants may also join the conference
call by dialing 1.877.260.1479 and requesting the “Gulf Island”
conference call. A replay of the webcast will be available on
the Company's website for seven days after the call.
About Gulf Island
Gulf Island is a leading fabricator of complex
steel structures, modules and marine vessels used in energy
extraction and production, petrochemical and industrial facilities,
power generation, alternative energy and shipping and marine
transportation operations. The Company also provides project
management, installation, hookup, commissioning, repair,
maintenance and civil construction services. The Company operates
and manages its business through three operating divisions:
Fabrication, Shipyard and Services, with its corporate headquarters
located in Houston, Texas and fabrication facilities located in
Houma, Jennings and Lake Charles, Louisiana.
Company information
Kirk J. MecheChief Executive Officer713.714.6100
Westley S. StocktonChief Financial Officer 713.714.6100
Cautionary Statement
This Release contains forward-looking statements
in which we discuss our potential future performance.
Forward-looking statements, within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995, are all statements other than statements of historical facts,
such as projections or expectations relating to oil and gas prices,
operating cash flows, capital expenditures, liquidity and tax
rates. The words “anticipates,” “may,” “can,” “plans,” “believes,”
“estimates,” “expects,” “projects,” “targets,” “intends,” “likely,”
“will,” “should,” “to be,” “potential” and any similar expressions
are intended to identify those assertions as forward-looking
statements.
We caution readers that forward-looking
statements are not guarantees of future performance and actual
results may differ materially from those anticipated, projected or
assumed in the forward-looking statements. Important factors that
can cause our actual results to differ materially from those
anticipated in the forward-looking statements include the cyclical
nature of the oil and gas industry, competition, consolidation of
our customers, timing and award of new contracts, reliance on
significant customers, financial ability and credit worthiness of
our customers, nature of our contract terms, competitive pricing
and cost overruns on our projects, adjustments to previously
reported profits or losses under the percentage-of-completion
method, weather conditions, changes in backlog estimates,
suspension or termination of projects, ability to raise additional
capital, ability to amend or obtain new debt financing or credit
facilities on favorable terms, ability to remain in compliance with
our covenants contained in our Credit Agreement, ability to
generate sufficient cash flow, ability to sell certain assets,
customer or subcontractor disputes, ability to resolve the dispute
with a customer relating to the purported termination of contracts
to build two MPSVs, operating dangers and limits on insurance
coverage, barriers to entry into new lines of business, ability to
employ skilled workers, loss of key personnel, performance of
subcontractors and dependence on suppliers, changes in trade
policies of the U.S. and other countries, compliance with
regulatory and environmental laws, lack of navigability of canals
and rivers, shutdowns of the U.S. government, systems and
information technology interruption or failure and data security
breaches, performance of partners in our joint ventures and other
strategic alliances, progress of the SeaOne Project, and other
factors described in Item 1A in our Annual Report on Form 10-K
for the Year Ended December 31, 2018, as updated by subsequent
filings with the U.S. Securities and Exchange Commission.
Investors are cautioned that many of the
assumptions upon which our forward-looking statements are based are
likely to change after the forward-looking statements are made,
which we cannot control. Further, we may make changes to our
business plans that could affect our results. We caution investors
that we do not intend to update forward-looking statements more
frequently than quarterly notwithstanding any changes in our
assumptions, changes in business plans, actual experience or other
changes, and we undertake no obligation to update any
forward-looking statements.
Results of Operations by Segment (in thousands,
except for percentages)
Fabrication
Division(1) |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Revenue |
|
$ |
12,631 |
|
|
$ |
17,343 |
|
|
$ |
10,223 |
|
Gross loss |
|
(772 |
) |
|
(527 |
) |
|
(1,952 |
) |
Gross
loss percentage |
|
(6.1 |
)% |
|
(3.0 |
)% |
|
(19.1 |
)% |
General and
administrative expense |
|
767 |
|
|
1,041 |
|
|
1,040 |
|
Asset impairments and
(gain) loss on assets held for sale, net |
|
(70 |
) |
|
750 |
|
|
(2,214 |
) |
Other (income) expense,
net |
|
71 |
|
|
188 |
|
|
(2,538 |
) |
Operating loss |
|
(1,540 |
) |
|
(2,506 |
) |
|
1,760 |
|
Shipyard
Division |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Revenue |
|
$ |
36,587 |
|
|
$ |
18,565 |
|
|
$ |
29,748 |
|
Gross loss |
|
(280 |
) |
|
(1,023 |
) |
|
(4,909 |
) |
Gross
loss percentage |
|
(0.8 |
)% |
|
(5.5 |
)% |
|
(16.5 |
)% |
General and
administrative expense |
|
624 |
|
|
796 |
|
|
712 |
|
Asset impairments and
(gain) loss on assets held for sale, net |
|
— |
|
|
— |
|
|
964 |
|
Other (income) expense,
net |
|
— |
|
|
160 |
|
|
— |
|
Operating loss |
|
(904 |
) |
|
(1,979 |
) |
|
(6,585 |
) |
Services
Division |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Revenue |
|
$ |
19,602 |
|
|
$ |
21,870 |
|
|
$ |
21,538 |
|
Gross profit |
|
1,741 |
|
|
2,614 |
|
|
3,056 |
|
Gross
profit percentage |
|
8.9 |
% |
|
12.0 |
% |
|
14.2 |
% |
General and
administrative expense |
|
452 |
|
|
734 |
|
|
821 |
|
Asset impairments and
(gain) loss on assets held for sale, net |
|
— |
|
|
— |
|
|
82 |
|
Other (income) expense,
net |
|
— |
|
|
(26 |
) |
|
8 |
|
Operating income |
|
1,289 |
|
|
1,906 |
|
|
2,145 |
|
Corporate
Division |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
December 31, 2018 |
Revenue |
|
$ |
(1,215 |
) |
|
$ |
(488 |
) |
|
$ |
(1,278 |
) |
Gross loss |
|
(136 |
) |
|
(385 |
) |
|
(159 |
) |
Gross
loss percentage |
|
n/a |
|
|
n/a |
|
|
n/a |
|
General and
administrative expense |
|
1,991 |
|
|
2,138 |
|
|
1,715 |
|
Other (income) expense,
net |
|
— |
|
|
(12 |
) |
|
— |
|
Operating loss |
|
(2,127 |
) |
|
(2,511 |
) |
|
(1,874 |
) |
___________________
(1) During the first quarter 2019,
our former EPC Division was operationally combined with our
Fabrication Division, and accordingly, our current reportable
segments are "Fabrication", "Shipyard", "Services", and
"Corporate". The segment results for the EPC Division for the three
months ended March 31, 2018 were combined with the Fabrication
Division to conform to the presentation of our reportable segments
for the 2019 period.
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