Gulf Island Fabrication, Inc. Reports Third Quarter Earnings
October 26 2017 - 4:11PM
Gulf Island Fabrication, Inc. (NASDAQ:GIFI) today reported a net
loss of $3.1 million ($0.21 basic and diluted loss per share) on
revenue of $49.9 million for the three months ended
September 30, 2017, compared to net income of $0.5 million
($0.04 basic and diluted earnings per share) on revenue of $65.4
million for the three months ended September 30, 2016 and 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. For the nine months ended September 30, 2017, the
Company reported a net loss of $20.5 million ($1.38 basic and
diluted loss per share) on revenue of $133.7 million compared to
net income of $7.1 million ($0.48 basic and diluted earnings per
share) on revenue of $230.9 million during the comparable 2016
period.
Kirk Meche, the Company's CEO and President,
commented, "Results for the third quarter of 2017 are reflective of
continuing suppressed market conditions along with revised
estimates to complete two vessel construction projects within our
Shipyards division. Additionally, we incurred holding costs of $1.1
million during the quarter related to our South Texas facilities
which are for sale. Year-to-date holding costs in South Texas were
$3.6 million plus another $1.9 million in depreciation which was
incurred during the first quarter.
"As stated in prior earnings calls, we are
focused on managing our balance sheet and rebuilding contract
backlog in new markets. Our revenue backlog of $251.7 million has
remained comparable to our last quarter which includes new awards
from our Services and Shipyards divisions and is at its highest
level in over three years. The majority of our backlog remains in
markets primarily outside of oil and gas."
He continued, "On August 25, 2017, our South
Texas facilities were impacted by Hurricane Harvey, which made
landfall as a category 4 hurricane. We are working diligently with
our insurance agents and adjusters to finalize the estimated
damages. Based upon our initial assessment of the damages and
insurance coverage, we believe that there is no basis to record a
net loss at this time."
The Company had revenue backlog of $251.7
million and labor backlog of approximately 1.6 million labor hours
at September 30, 2017, compared to revenue backlog of $251.0
million and labor backlog of 1.7 million labor hours reported as of
June 30, 2017.
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
Cash and cash
equivalents |
|
$ |
17,792 |
|
|
$ |
51,167 |
|
Total current
assets |
|
209,608 |
|
|
113,360 |
|
Property, plant and
equipment, net |
|
90,989 |
|
|
206,222 |
|
Total assets |
|
303,380 |
|
|
322,408 |
|
Total current
liabilities |
|
45,639 |
|
|
35,348 |
|
Total shareholders’
equity |
|
243,847 |
|
|
263,032 |
|
|
|
|
|
|
|
|
Our balance sheet position at September 30,
2017, includes $17.8 million in cash, no debt, and working capital
of $164.0 million which includes $107.0 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.
Declaration of Quarterly
Dividend
The Company's board of directors declared a
dividend of $0.01 per share on Gulf Island Fabrication, Inc.’s
approximately 14.9 million shares of common stock outstanding. The
dividend was declared during a regular meeting of the board held on
October 26, 2017, and is payable November 24, 2017, to
shareholders of record on November 10, 2017.
Quarterly Earnings Conference
Call
The management of Gulf Island Fabrication, Inc.
will hold a conference call on Friday, October 27, 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
September 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 1.866.564.2842 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 November 3, 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 |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue (1) |
$ |
49,884 |
|
|
$ |
45,868 |
|
|
$ |
65,384 |
|
|
$ |
133,745 |
|
|
$ |
230,864 |
|
Cost of revenue |
50,378 |
|
|
57,488 |
|
|
60,125 |
|
|
150,755 |
|
|
205,839 |
|
Gross profit
(loss) |
(494 |
) |
|
(11,620 |
) |
|
5,259 |
|
|
(17,010 |
) |
|
25,025 |
|
General and
administrative expenses |
4,370 |
|
|
4,640 |
|
|
5,086 |
|
|
12,940 |
|
|
14,633 |
|
Asset impairment |
— |
|
|
— |
|
|
— |
|
|
389 |
|
|
— |
|
Operating income
(loss) |
(4,864 |
) |
|
(16,260 |
) |
|
173 |
|
|
(30,339 |
) |
|
10,392 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
Interest
expense |
(45 |
) |
|
(158 |
) |
|
(110 |
) |
|
(262 |
) |
|
(248 |
) |
Interest
income |
— |
|
|
12 |
|
|
12 |
|
|
12 |
|
|
20 |
|
Other
income, net |
38 |
|
|
(266 |
) |
|
599 |
|
|
(221 |
) |
|
1,039 |
|
Total other income
(expense) |
(7 |
) |
|
(412 |
) |
|
501 |
|
|
(471 |
) |
|
811 |
|
Income (loss) before
income taxes |
(4,871 |
) |
|
(16,672 |
) |
|
674 |
|
|
(30,810 |
) |
|
11,203 |
|
Income taxes (benefit)
(2) |
(1,761 |
) |
|
(5,749 |
) |
|
133 |
|
|
(10,322 |
) |
|
4,134 |
|
Net income (loss) |
$ |
(3,110 |
) |
|
$ |
(10,923 |
) |
|
$ |
541 |
|
|
$ |
(20,488 |
) |
|
$ |
7,069 |
|
Per share data: |
|
|
|
|
|
|
|
|
|
Basic and
diluted earnings (loss) per share - common shareholders |
$ |
(0.21 |
) |
|
$ |
(0.73 |
) |
|
$ |
0.04 |
|
|
$ |
(1.38 |
) |
|
$ |
0.48 |
|
Cash dividend declared
per common share |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
0.03 |
|
|
$ |
0.03 |
|
________________ |
(1) |
Revenue includes non-cash amortization of deferred revenue related
to the values assigned to contracts acquired in the 2016
shipyard asset acquisition of $0.5 million, $0.3 million, and
$1.5 million for the three months ended September 30, 2017,
June 30, 2017, and September 30, 2016 and $2.4 million
and $4.1 million for the nine months ended September 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 |
|
September 30, 2017 |
|
December 31, 2016 |
|
|
$'s (1) |
|
Labor hours |
|
$'s |
|
Labor hours |
Fabrication |
|
$ |
29,554 |
|
|
254 |
|
$ |
65,444 |
|
|
707 |
Shipyards |
|
200,909 |
|
|
1,045 |
|
59,771 |
|
|
457 |
Services |
|
21,918 |
|
|
265 |
|
7,757 |
|
|
101 |
Intersegment
eliminations |
|
(649 |
) |
|
— |
|
— |
|
|
— |
Total backlog (1) |
|
$ |
251,732 |
|
|
1,564 |
|
$ |
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 nine months ended September
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 nine months ended September 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 nine months ended September 30, 2017, and
2016, are presented below (in thousands, except for
percentages).
Fabrication |
|
Three Months Ended September
30, |
|
Nine Months EndedSeptember
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue |
|
$ |
18,318 |
|
|
$ |
22,311 |
|
|
$ |
42,517 |
|
|
$ |
70,436 |
|
Gross profit
(loss) |
|
1,250 |
|
|
601 |
|
|
216 |
|
|
4,564 |
|
Gross
profit (loss) percentage |
|
6.8 |
% |
|
2.7 |
% |
|
0.5 |
% |
|
6.5 |
% |
General and
administrative expenses |
|
778 |
|
|
885 |
|
|
2,432 |
|
|
2,821 |
|
Operating income
(loss) |
|
472 |
|
|
(284 |
) |
|
(2,216 |
) |
|
1,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipyards |
|
Three Months Ended September
30, |
|
Nine Months EndedSeptember
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue (1) |
|
$ |
15,074 |
|
|
$ |
23,060 |
|
|
$ |
51,798 |
|
|
$ |
86,553 |
|
Gross profit (loss)
(1) |
|
(3,504 |
) |
|
1,945 |
|
|
(19,061 |
) |
|
9,742 |
|
Gross
profit (loss) percentage |
|
(23.2 |
)% |
|
8.4 |
% |
|
(36.8 |
)% |
|
11.3 |
% |
General and
administrative expenses |
|
888 |
|
|
1,468 |
|
|
2,835 |
|
|
4,218 |
|
Asset impairment |
|
— |
|
|
— |
|
|
389 |
|
|
— |
|
Operating income (loss)
(1) |
|
(4,392 |
) |
|
477 |
|
|
(22,285 |
) |
|
5,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
Three Months Ended September
30, |
|
Nine Months EndedSeptember
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue |
|
$ |
17,651 |
|
|
$ |
20,928 |
|
|
$ |
43,758 |
|
|
$ |
76,179 |
|
Gross profit
(loss) |
|
1,912 |
|
|
2,918 |
|
|
2,335 |
|
|
11,158 |
|
Gross
profit (loss) percentage |
|
10.8 |
% |
|
13.9 |
% |
|
5.3 |
% |
|
14.6 |
% |
General and
administrative expenses |
|
695 |
|
|
943 |
|
|
2,008 |
|
|
2,462 |
|
Operating income |
|
1,217 |
|
|
1,975 |
|
|
327 |
|
|
8,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
Three Months Ended September
30, |
|
Nine Months EndedSeptember
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gross profit
(loss) |
|
(152 |
) |
|
(205 |
) |
|
(500 |
) |
|
(439 |
) |
Gross
profit (loss) percentage |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
General and
administrative expenses |
|
2,009 |
|
|
1,790 |
|
|
5,665 |
|
|
5,132 |
|
Operating income |
|
(2,161 |
) |
|
(1,995 |
) |
|
(6,165 |
) |
|
(5,571 |
) |
________________ |
(1) |
Revenue includes non-cash amortization of deferred revenue related
to the values assigned to contracts acquired in the 2016 shipyard
asset acquisition of $510,000 and $1.5 million for the three months
ended September 30, 2017 and 2016 and $2.4 million and $4.1
million for the nine months ended September 30, 2017 and 2016,
respectively. |
|
|
|
|
GULF ISLAND FABRICATION, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(UNAUDITED, in thousands) |
|
|
|
Nine Months Ended September
30, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
(in thousands) |
Cash flows from
operating activities: |
|
|
|
Net
income (loss) |
$ |
(20,488 |
) |
|
$ |
7,069 |
|
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities: |
|
|
|
Bad debt
expense |
19 |
|
|
422 |
|
Depreciation and amortization |
10,141 |
|
|
19,262 |
|
Amortization of deferred revenue |
(2,397 |
) |
|
(4,114 |
) |
Asset
impairment |
389 |
|
|
— |
|
Loss
(gain) on sale of assets |
224 |
|
|
(924 |
) |
Deferred
income taxes |
(10,235 |
) |
|
3,651 |
|
Compensation expense - restricted stock |
2,636 |
|
|
2,452 |
|
Changes
in operating assets and liabilities: |
|
|
|
Contracts
receivable and retainage |
(5,363 |
) |
|
22,287 |
|
Contracts
in progress |
(15,981 |
) |
|
(5,834 |
) |
Prepaid
expenses, inventory, and other assets |
(26 |
) |
|
1,050 |
|
Accounts
payable |
12,436 |
|
|
(13,654 |
) |
Advance
billings on contracts |
390 |
|
|
(20 |
) |
Deferred
revenue |
(5,825 |
) |
|
(8,928 |
) |
Deferred
Compensation |
590 |
|
|
— |
|
Accrued
expenses and other liabilities |
2,336 |
|
|
4,713 |
|
Accrued
contract losses |
1,595 |
|
|
(8,001 |
) |
Net cash
(used in) provided by operating activities |
(29,559 |
) |
|
19,431 |
|
Cash flows from
investing activities: |
|
|
|
Capital
expenditures |
(4,515 |
) |
|
(5,415 |
) |
Net cash
received in acquisition |
— |
|
|
1,588 |
|
Proceeds
on the sale of equipment |
2,120 |
|
|
5,813 |
|
Net cash
(used in) provided by investing activities |
(2,395 |
) |
|
1,986 |
|
Cash flows from
financing activities: |
|
|
|
Tax
payments made on behalf of employees from withheld, vested shares
of common stock (1) |
(885 |
) |
|
(163 |
) |
Payment
of financing costs |
(88 |
) |
|
— |
|
Payment
of dividends on common stock |
(448 |
) |
|
(440 |
) |
Proceeds
received from borrowings under our line of credit |
2,000 |
|
|
— |
|
Repayments of debt |
(2,000 |
) |
|
— |
|
Net cash
(used in) provided by financing activities |
(1,421 |
) |
|
(603 |
) |
Net change in cash and
cash equivalents |
(33,375 |
) |
|
20,814 |
|
Cash and cash
equivalents at beginning of period |
51,167 |
|
|
34,828 |
|
Cash and cash
equivalents at end of period |
$ |
17,792 |
|
|
$ |
55,642 |
|
________________ |
(1) |
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 nine months ended September 30, 2017, and reclassified $0.2
million from cash used in operating activities to cash used in
financing activities for the nine months ended September 30, 2016,
to conform with the current period presentation. |
|
|
For further information contact:
Kirk J. MecheChief Executive
Officer713.714.6100
David S. SchorlemerChief Financial
Officer713.714.6106
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