Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today reported a
net loss of $10.9 million ($0.73 basic and diluted loss per share)
on revenue of $45.9 million for the three months ended
June 30, 2017, compared to net income of $5.5 million ($0.37
basic and diluted earnings per share) on revenue of $81.5 million
for the three months ended June 30, 2016. For the six months
ended June 30, 2017 and 2016, the Company reported a net loss
of $17.4 million ($1.17 basic and diluted loss per share) on
revenue of $83.9 million compared to net income of $6.5 million
($0.44 basic and diluted earnings per share) on revenue of $165.5
million.
Kirk Meche, the Company's CEO and President, commented, "Results
for the second quarter of 2017 are reflective of contract losses of
approximately $10.2 million as a result of rework performed and
revised estimates to complete two vessel construction projects we
assumed as part of our shipyard asset acquisition in 2016.
Additionally, competitive pricing pressures and the continued
weakness in demand from our traditional markets in offshore oil and
gas contributed to our losses. Finally, we incurred holding costs
of $1.2 million during the quarter related to our South Texas
facilities which are for sale. Year-to-date holding costs in South
Texas were $2.5 million plus another $1.9 million in depreciation
which was incurred during the first quarter."
He continued, "As stated in prior earnings calls, we are focused
on managing our balance sheet and rebuilding contract backlog in
new markets and believe we have made progress on both initiatives.
During the quarter, we successfully negotiated a new $40.0 million
credit agreement with Whitney Bank with improved flexibility to
support our business. Additionally, we increased our revenue
backlog to its highest level in over three years to $251.0 million,
up $137.8 million from last quarter's total. Finally, the increase
in backlog included new project awards totaling $167.0 million in
markets primarily outside of oil and gas."
The Company had revenue backlog of $251.0 million and labor
backlog of approximately 1.7 million labor hours at June 30,
2017, compared to revenue backlog of $113.2 million and labor
backlog of 1.1 million labor hours reported as of March 31,
2017.
June 30, 2017 December 31,
2016 (in thousands) Cash and cash equivalents $
22,283 $ 51,167 Total current assets 214,121 113,360
Property, plant and equipment, net 90,698 206,222 Total assets
307,586 322,408 Total current liabilities 46,384 35,348 Total
shareholders’ equity 246,054 263,032
Our balance sheet position at June 30, 2017, includes $22.3
million in cash, no debt, and working capital of $167.7 million
which includes $107.3 million in assets held for sale, primarily
related to our South Texas assets. We continue to monitor and
maintain a conservative capital structure as we navigate through
the current oil and gas industry downturn and further expand our
efforts to secure additional project awards in markets with greater
demand.
On June 9, 2017, we successfully negotiated a new $40.0 million
credit agreement with Whitney Bank that matures on June 9,
2019. Loan amounts may be used for issuing letters of credit and/or
general corporate and working capital purposes providing the
Company with enhanced working capital flexibility to manage our
business and respond to market opportunities.
The management of Gulf Island Fabrication, Inc. will hold a
conference call on Friday, July 28, 2017, at 9:00 a.m. Central Time
(10:00 a.m. Eastern Time) to discuss the Company’s financial
results for the quarter ended June 30, 2017. The call is being
webcast through CCBN and can be accessed at Gulf Island's website
at http://www.gulfisland.com. Participants may also join the
conference call by dialing 1.888.715.1402 and requesting the “Gulf
Island” conference call. A digital replay of the call will be
available from a link on our website two hours after the call and
ending August 4, 2017.
Gulf Island Fabrication, Inc. is a leading fabricator of complex
steel structures and marine vessels used in energy extraction and
production, petrochemical and industrial facilities, power
generation, alternative energy projects and shipping and marine
transportation operations. The Company also provides related
installation, hookup, commissioning, repair and maintenance
services with specialized crews and integrated project management
capabilities. The Company is currently fabricating complex modules
for the construction of a new petrochemical plant, completing
newbuild construction of a technologically advanced offshore
support and two multi-purpose service vessels and recently
fabricated wind turbine pedestals for the first offshore wind power
project in the United States. The Company also constructed one of
the largest lift boats servicing the Gulf of Mexico ("GOM"), one of
the deepest production jackets in the GOM and the first SPAR
fabricated in the United States. The Company’s customers include
U.S. and, to a lesser extent, international energy producers,
petrochemical, industrial, power and marine operators. Our
corporate headquarters is located in Houston, Texas, with
fabrication facilities located in Houma, Jennings and Lake Charles,
Louisiana, and Aransas Pass and Ingleside, Texas.
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended Six Months Ended June
30, June 30, June 30, June
30, 2017 2016 2017 2016 Revenue (1)
$ 45,868 $ 81,502 $ 83,860 $ 165,481 Cost of revenue 57,488
67,436 100,378 145,714 Gross profit (loss)
(11,620 ) 14,066 (16,518 ) 19,767 General and administrative
expenses 4,640 5,062 8,570 9,547 Asset impairment
-
-
389
-
Operating income (loss) (16,260 ) 9,004 (25,477 ) 10,220
Other income (expense): Interest expense (158 ) (88 ) (217 ) (138 )
Interest income 12 2 12 8 Other income, net (266 ) 42 (257 )
440 Total other income (expense) (412 ) (44 ) (462 ) 310
Income (loss) before income taxes (16,672 ) 8,960 (25,939 )
10,530 Income taxes (benefit) (2) (5,749 ) 3,420 (8,561 )
4,001 Net income (loss) $ (10,923 ) $ 5,540 $ (17,378
) $ 6,529 Per share data: Basic and diluted earnings (loss)
per share - common shareholders $ (0.73 ) $ 0.37 $ (1.17 ) $
0.44 Cash dividend declared per common share $ 0.01 $
0.01 $ 0.02 $ 0.02
________________
(1) Revenue includes non-cash amortization of deferred
revenue related to the values assigned to contracts acquired in the
2016 shipyard asset acquisition of $335,000 and $1.5 million for
the three months ended June 30, 2017 and 2016 and $1.9 million and
$2.7 million for the six months ended June 30, 2017 and 2016,
respectively. (2) We adopted Accounting Standards Update
(ASU) No. 2016-09 on January 1, 2017, which requires the
recognition of the excess tax benefit or deficiency related to the
difference between the deduction for tax purposes and the
compensation cost recognized for financial reporting purposes
created when stock grants vest as an income tax benefit or expense
in the Company’s statement of income. Under previous GAAP, this
difference was recognized in additional paid-in capital.
Operating Segments
Backlog (in thousands)
Segments
June 30, 2017 December 31, 2016 $'s (1)
Labor hours $'s Labor hours
Fabrication $ 42,326 426 $ 65,444 707 Shipyards 196,429 1,032
59,771 457 Services 13,318 196 7,757 101 Intersegment eliminations
(1,045 )
-
-
-
Total backlog (1) $ 251,028 1,654 $ 132,972 1,265
________________
(1) We exclude suspended projects from contract backlog when
they are expected to be suspended more than twelve months because
resumption of work and timing of revenue recognition for these
projects are difficult to predict.
Results of Operations (in thousands, except
percentages)
During the three and six months ended June 30, 2017, management
reduced its allocation of corporate administrative costs and
overhead expenses to its operating divisions such that a
significant portion of its corporate expenses are retained in its
non-operating Corporate division. In addition, it has also
allocated certain personnel previously included in the operating
divisions to the Corporate division. In doing so, management
believes that it has created a fourth reportable segment with each
of its three operating divisions and its Corporate division each
meeting the criteria of reportable segments under GAAP. During the
three and six months ended June 30, 2016, we allocated
substantially all of our corporate administrative costs and
overhead expenses to our three operating divisions. We have recast
our 2016 segment data below in order to conform to the current
period presentation. Our results of our operations by segment for
the three and six months ended June 30, 2017, and 2016, are
presented below (in thousands, except for percentages).
Fabrication
Three Months EndedJune
30,
Six Months EndedJune 30,
2017 2016 2017 2016
Revenue $ 13,990 $ 24,296 $ 24,199 $ 48,125 Gross profit (loss)
1,931 3,877 (1,034 ) 3,964 Gross profit (loss) percentage 13.8 %
16.0 % (4.3 )% 8.2 % General and administrative expenses 833 1,130
1,654 1,936 Operating income (loss) 1,098 2,747 (2,688 ) 2,028
Shipyards
Three Months EndedJune
30,
Six Months EndedJune 30,
2017 2016 2017 2016 Revenue (1) $
18,303 $ 29,373 $ 36,724 $ 63,493 Gross profit (loss) (1) (13,851 )
5,423 (15,556 ) 7,797 Gross profit (loss) percentage (75.7 )% 18.5
% (42.4 )% 12.3 % General and administrative expenses 983 1,460
1,947 2,750 Asset impairment
-
-
389
-
Operating income (loss) (1) (14,834 ) 3,963 (17,892 ) 5,047
Services
Three Months EndedJune
30,
Six Months EndedJune 30,
2017 2016 2017 2016 Revenue $ 15,396 $
28,692 $ 26,107 $ 55,251 Gross profit (loss) 390 4,864 423 8,240
Gross profit (loss) percentage 2.5 % 17.0 % 1.6 % 14.9 % General
and administrative expenses 647 800 1,313 1,519 Operating income
(257 ) 4,064 (890 ) 6,721
Corporate
Three Months EndedJune
30,
Six Months EndedJune 30,
2017 2016 2017 2016 Revenue $
-
$
-
$
-
$
-
Gross profit (loss) (90 ) (98 ) (350 ) (234 ) Gross profit (loss)
percentage n/a n/a n/a n/a General and administrative expenses
2,177 1,672 3,656 3,342 Operating income (2,267 ) (1,770 ) (4,006 )
(3,576 )
________________
(1) Revenue includes non-cash amortization of deferred
revenue related to the values assigned to contracts acquired in the
2016 shipyard asset acquisition of $335,000 and $1.5 million for
the three months ended June 30, 2017 and 2016 and $1.9 million and
$2.7 million for the six months ended June 30, 2017 and 2016,
respectively.
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(UNAUDITED)
We adopted Accounting Standards Update
(ASU) No. 2016-09 on January 1, 2017, which clarifies that cash
paid by the Company to taxing authorities on behalf of an employee
from the value of withheld vested shares should be classified as a
financing activity in the Company’s statement of cash flows. We
have reported $0.9 million within financing activities within our
Statement of Cash Flows for the six months ended June 30, 2017, as
a result of adoption of this ASU. We have also recast our Statement
of Cash Flows for the six months ended March 31, 2016, which
resulted in the reclassification of $0.1 million from cash used in
operating activities to cash used in financing activities to
conform with the current period presentation.
Six Months Ended June 30, 2017
2016 (in thousands) Cash flows from operating
activities: Net income (loss) $ (17,378 ) $ 6,529 Adjustments to
reconcile net income (loss) to net cash used in operating
activities: Bad debt expense 17 320 Depreciation and amortization
7,476 12,878 Amortization of deferred revenue (1,887 ) (2,654 )
Asset impairment 389
-
Loss (gain) on sale of assets 259 (369 ) Deferred income taxes
(8,784 ) 3,899 Compensation expense - restricted stock 1,583 1,619
Changes in operating assets and liabilities: Contracts receivable
and retainage (17,927 ) 9,783 Contracts in progress (4,814 ) 1,550
Prepaid expenses and other assets 201 (1,396 ) Inventory 102 (1,234
) Accounts payable 10,308 (7,522 ) Advance billings on contracts
4,665 247 Deferred revenue (5,078 ) (8,718 ) Deferred compensation
393
-
Accrued expenses (795 ) 2,769 Accrued contract losses 3,127 (5,974
) Current income taxes and other 207 105 Net cash
(used in) provided by operating activities (27,936 ) 11,832 Cash
flows from investing activities: Capital expenditures (1,824 )
(3,290 ) Net cash received in acquisition
-
1,588 Proceeds on the sale of equipment 2,120 5,548
Net cash provided by investing activities 296 3,846 Cash flows from
financing activities: Tax payments made on behalf of employees from
withheld, vested shares of common stock (884 ) (146 ) Payment of
financing cost (61 )
-
Payments of dividends on common stock (299 ) (295 ) Net cash used
in financing activities (1,244 ) (441 ) Net change in cash and cash
equivalents (28,884 ) 15,237 Cash and cash equivalents at beginning
of period 51,167 34,828 Cash and cash equivalents at
end of period $ 22,283 $ 50,065
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version on businesswire.com: http://www.businesswire.com/news/home/20170727006553/en/
Gulf Island Fabrication, Inc.Kirk J. Meche, 713.714.6100Chief
Executive OfficerorDavid S. Schorlemer, 713.714.6106Chief Financial
Officer
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