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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Gulf Island Fabrication Inc | NASDAQ:GIFI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.12 | -1.69% | 6.98 | 4.94 | 7.49 | 7.35 | 6.88 | 7.12 | 93,503 | 21:30:00 |
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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)
|
LOUISIANA
|
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72-1147390
|
(State or other jurisdiction of
incorporation or organization)
|
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(I.R.S. Employer
Identification No.)
|
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16225 PARK TEN PLACE, SUITE 300
HOUSTON, TEXAS
|
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77084
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(Address of principal executive offices)
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(Zip Code)
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(713) 714-6100
(Registrant’s telephone number, including area code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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GIFI
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NASDAQ
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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Emerging Growth Company
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¨
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Page
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Item 3
.
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Texas North Yard
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Our former fabrication yard, and certain related machinery and equipment, located in Aransas Pass, Texas, which was sold on November 15, 2018.
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Texas South Yard
|
Our former fabrication yard, and certain related machinery and equipment, located in Ingleside, Texas, which was sold on April 20, 2018.
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TLP
|
Tension Leg Platform. A floating hull and deck anchored by vertical tensioned cables or pipes connected to pilings driven into the seabed. A tension leg platform is typically used in water depths exceeding 1,200 feet.
|
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|
Topic 606
|
The revenue recognition criteria prescribed under ASU 2014-09,
Revenue from Contracts with Customers.
|
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U.S.
|
The United States of America.
|
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|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
30,192
|
|
|
$
|
70,457
|
|
Short-term investments
|
45,791
|
|
|
8,720
|
|
||
Contracts receivable and retainage, net
|
23,343
|
|
|
22,505
|
|
||
Contract assets
|
51,334
|
|
|
29,982
|
|
||
Inventory
|
4,543
|
|
|
6,088
|
|
||
Prepaid expenses and other assets
|
3,987
|
|
|
3,268
|
|
||
Assets held for sale
|
18,737
|
|
|
18,935
|
|
||
Total current assets
|
177,927
|
|
|
159,955
|
|
||
Property, plant and equipment, net
|
75,862
|
|
|
79,930
|
|
||
Other noncurrent assets
|
23,802
|
|
|
18,405
|
|
||
Total assets
|
$
|
277,591
|
|
|
$
|
258,290
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
55,238
|
|
|
$
|
28,969
|
|
Contract liabilities
|
13,823
|
|
|
16,845
|
|
||
Accrued expenses and other liabilities
|
9,719
|
|
|
10,287
|
|
||
Total current liabilities
|
78,780
|
|
|
56,101
|
|
||
Other noncurrent liabilities
|
5,369
|
|
|
1,089
|
|
||
Total liabilities
|
84,149
|
|
|
57,190
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, no par value, 20,000 shares authorized, 15,236 shares issued and outstanding at June 30, 2019 and 15,090 at December 31, 2018
|
11,085
|
|
|
11,021
|
|
||
Additional paid-in capital
|
102,811
|
|
|
102,243
|
|
||
Retained earnings
|
79,546
|
|
|
87,836
|
|
||
Total shareholders’ equity
|
193,442
|
|
|
201,100
|
|
||
Total liabilities and shareholders’ equity
|
$
|
277,591
|
|
|
$
|
258,290
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
80,456
|
|
|
$
|
54,014
|
|
|
$
|
148,061
|
|
|
$
|
111,304
|
|
Cost of revenue
|
82,054
|
|
|
54,713
|
|
|
149,106
|
|
|
111,324
|
|
||||
Gross loss
|
(1,598
|
)
|
|
(699
|
)
|
|
(1,045
|
)
|
|
(20
|
)
|
||||
General and administrative expense
|
3,987
|
|
|
5,092
|
|
|
7,821
|
|
|
9,801
|
|
||||
Asset impairment and (gain) loss on assets held for sale, net
|
—
|
|
|
(6,579
|
)
|
|
(70
|
)
|
|
(5,829
|
)
|
||||
Other (income) expense, net
|
(201
|
)
|
|
64
|
|
|
(130
|
)
|
|
375
|
|
||||
Operating income (loss)
|
(5,384
|
)
|
|
724
|
|
|
(8,666
|
)
|
|
(4,367
|
)
|
||||
Interest income (expense), net
|
126
|
|
|
(92
|
)
|
|
388
|
|
|
(238
|
)
|
||||
Net income (loss) before income taxes
|
(5,258
|
)
|
|
632
|
|
|
(8,278
|
)
|
|
(4,605
|
)
|
||||
Income tax (expense) benefit
|
10
|
|
|
(83
|
)
|
|
(12
|
)
|
|
(142
|
)
|
||||
Net income (loss)
|
$
|
(5,248
|
)
|
|
$
|
549
|
|
|
$
|
(8,290
|
)
|
|
$
|
(4,747
|
)
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted income (loss) per common share
|
$
|
(0.34
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.55
|
)
|
|
$
|
(0.32
|
)
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Total
Shareholders’
Equity
|
||||||||||||
|
Shares
|
|
Amount
|
|
|||||||||||||||
Balance at December 31, 2017
|
14,910
|
|
|
$
|
10,823
|
|
|
$
|
100,456
|
|
|
$
|
108,214
|
|
|
$
|
219,493
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,296
|
)
|
|
(5,296
|
)
|
|||||
Vesting of restricted stock
|
133
|
|
|
(79
|
)
|
|
(708
|
)
|
|
—
|
|
|
(787
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
69
|
|
|
607
|
|
|
—
|
|
|
676
|
|
|||||
Balance at March 31, 2018
|
15,043
|
|
|
10,813
|
|
|
100,355
|
|
|
102,918
|
|
|
214,086
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
549
|
|
|
549
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
75
|
|
|
680
|
|
|
—
|
|
|
755
|
|
|||||
Balance at June 30, 2018
|
15,043
|
|
|
$
|
10,888
|
|
|
$
|
101,035
|
|
|
$
|
103,467
|
|
|
$
|
215,390
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Total
Shareholders’
Equity
|
||||||||||||
|
Shares
|
|
Amount
|
|
|||||||||||||||
Balance at December 31, 2018
|
15,090
|
|
|
$
|
11,021
|
|
|
$
|
102,243
|
|
|
$
|
87,836
|
|
|
$
|
201,100
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,042
|
)
|
|
(3,042
|
)
|
|||||
Vesting of restricted stock
|
146
|
|
|
(71
|
)
|
|
(643
|
)
|
|
—
|
|
|
(714
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
56
|
|
|
504
|
|
|
—
|
|
|
560
|
|
|||||
Balance at March 31, 2019
|
15,236
|
|
|
11,006
|
|
|
102,104
|
|
|
84,794
|
|
|
197,904
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,248
|
)
|
|
(5,248
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
79
|
|
|
707
|
|
|
—
|
|
|
786
|
|
|||||
Balance at June 30, 2019
|
15,236
|
|
|
$
|
11,085
|
|
|
$
|
102,811
|
|
|
$
|
79,546
|
|
|
$
|
193,442
|
|
|
Six Months Ended
June 30, |
||||||
|
|||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(8,290
|
)
|
|
$
|
(4,747
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and lease asset amortization
|
4,974
|
|
|
5,308
|
|
||
Other amortization, net
|
26
|
|
|
(436
|
)
|
||
Bad debt expense
|
59
|
|
|
8
|
|
||
Asset impairments
|
299
|
|
|
1,360
|
|
||
(Gain) loss on sale of assets held for sale, net
|
(369
|
)
|
|
(3,853
|
)
|
||
(Gain) loss on sale of fixed assets and other assets, net
|
(565
|
)
|
|
254
|
|
||
(Gain) loss on insurance recoveries, net
|
—
|
|
|
(3,342
|
)
|
||
Stock-based compensation expense
|
1,346
|
|
|
1,431
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Contracts receivable and retainage, net
|
(896
|
)
|
|
(6,438
|
)
|
||
Contract assets
|
(21,352
|
)
|
|
(8,098
|
)
|
||
Prepaid expenses, inventory and other current assets
|
212
|
|
|
(1,665
|
)
|
||
Accounts payable
|
26,269
|
|
|
(2,410
|
)
|
||
Contract liabilities
|
(3,023
|
)
|
|
(4,129
|
)
|
||
Accrued expenses and other liabilities
|
(1,108
|
)
|
|
(437
|
)
|
||
Noncurrent assets and liabilities, net (including long-term retainage)
|
(466
|
)
|
|
767
|
|
||
Net cash used in operating activities
|
(2,884
|
)
|
|
(26,427
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(1,359
|
)
|
|
(891
|
)
|
||
Purchases of short-term investments
|
(45,366
|
)
|
|
(7,474
|
)
|
||
Maturities of short-term investments
|
8,500
|
|
|
—
|
|
||
Proceeds from sale of property, plant and equipment
|
1,598
|
|
|
56,446
|
|
||
Recoveries from insurance claims
|
—
|
|
|
2,165
|
|
||
Net cash provided by (used in) investing activities
|
(36,627
|
)
|
|
50,246
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings under Credit Agreement
|
—
|
|
|
15,000
|
|
||
Repayment of borrowings under Credit Agreement
|
—
|
|
|
(15,000
|
)
|
||
Payment of financing cost
|
(40
|
)
|
|
(11
|
)
|
||
Tax payments for vested stock withholdings
|
(714
|
)
|
|
(787
|
)
|
||
Net cash used in financing activities
|
(754
|
)
|
|
(798
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(40,265
|
)
|
|
23,021
|
|
||
Cash and cash equivalents, beginning of period
|
70,457
|
|
|
8,983
|
|
||
Cash and cash equivalents, end of period
|
$
|
30,192
|
|
|
$
|
32,004
|
|
•
|
Level 1 - inputs are based upon quoted prices for identical instruments traded in active markets.
|
•
|
Level 2 - inputs are based upon quoted prices for similar instruments in active markets and model-based valuation techniques for which all significant assumptions are observable in the market.
|
•
|
Level 3 - inputs are based upon model-based valuation techniques for which significant assumptions are generally not observable in the market and typically reflect estimates and assumptions that we believe market participants would use in pricing the asset or liability. These include discounted cash flow models and similar valuation techniques.
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Eliminations
|
|
Total
|
||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed-price and unit-rate
(1)
|
$
|
22,415
|
|
|
$
|
36,607
|
|
|
$
|
12,668
|
|
|
$
|
(3,232
|
)
|
|
$
|
68,458
|
|
|
T&M
(2)
|
—
|
|
|
960
|
|
|
8,187
|
|
|
—
|
|
|
9,147
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
3,210
|
|
|
(359
|
)
|
|
2,851
|
|
||||||
|
Total
|
$
|
22,415
|
|
|
$
|
37,567
|
|
|
$
|
24,065
|
|
|
$
|
(3,591
|
)
|
|
$
|
80,456
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Eliminations
|
|
Total
|
||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed-price and unit-rate
(1)
|
$
|
9,472
|
|
|
$
|
21,259
|
|
|
$
|
10,576
|
|
|
$
|
(1,042
|
)
|
|
$
|
40,265
|
|
|
T&M
(2)
|
—
|
|
|
2,361
|
|
|
10,486
|
|
|
—
|
|
|
12,847
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
1,143
|
|
|
(241
|
)
|
|
902
|
|
||||||
|
Total
|
$
|
9,472
|
|
|
$
|
23,620
|
|
|
$
|
22,205
|
|
|
$
|
(1,283
|
)
|
|
$
|
54,014
|
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Eliminations
|
|
Total
|
||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed-price and unit-rate
(1)
|
$
|
35,046
|
|
|
$
|
70,233
|
|
|
$
|
18,899
|
|
|
$
|
(3,846
|
)
|
|
$
|
120,332
|
|
|
T&M
(2)
|
—
|
|
|
3,921
|
|
|
18,809
|
|
|
—
|
|
|
22,730
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
5,959
|
|
|
(960
|
)
|
|
4,999
|
|
||||||
|
Total
|
$
|
35,046
|
|
|
$
|
74,154
|
|
|
$
|
43,667
|
|
|
$
|
(4,806
|
)
|
|
$
|
148,061
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Eliminations
|
|
Total
|
||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed-price and unit-rate
(1)
|
$
|
26,815
|
|
|
$
|
38,481
|
|
|
$
|
20,866
|
|
|
$
|
(1,495
|
)
|
|
$
|
84,667
|
|
|
T&M
(2)
|
—
|
|
|
3,704
|
|
|
21,071
|
|
|
—
|
|
|
24,775
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
2,138
|
|
|
(276
|
)
|
|
1,862
|
|
||||||
|
Total
|
$
|
26,815
|
|
|
$
|
42,185
|
|
|
$
|
44,075
|
|
|
$
|
(1,771
|
)
|
|
$
|
111,304
|
|
Segment
|
|
Performance Obligations
|
||
Fabrication
|
|
$
|
53,496
|
|
Shipyard
(1)
|
|
388,239
|
|
|
Services
|
|
12,787
|
|
|
Total
|
|
$
|
454,522
|
|
|
|
|
(1)
|
Amount excludes approximately
$21.9 million
of remaining performance obligations related to contracts for the construction of
two
MPSVs that are subject to dispute pursuant to a termination notice from our customer. See Note 5 for further discussion of these contracts.
|
Year
|
|
Performance Obligations
|
||
Remainder of 2019
|
|
$
|
146,150
|
|
2020
|
|
205,651
|
|
|
2021
|
|
96,481
|
|
|
Thereafter
|
|
6,240
|
|
|
Total
|
|
$
|
454,522
|
|
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Contract assets
|
$
|
51,334
|
|
|
$
|
29,982
|
|
Contract liabilities
(1), (2), (3)
|
(13,823
|
)
|
|
(16,845
|
)
|
||
Contracts in progress, net
|
$
|
37,511
|
|
|
$
|
13,137
|
|
(1)
|
The decrease in contract liabilities compared to December 31, 2018, was primarily due to the unwind of advance payments on a project in our Fabrication Division, offset partially be an increase in advance payments on
two
projects in our Shipyard Division.
|
(2)
|
Revenue recognized during the three months ended June 30, 2019 and 2018 related to amounts included in our contract liabilities balance at March 31, 2019 and 2018, was
$7.6 million
and
$4.1 million
respectively. Revenue recognized during the six months ended June 30, 2019 and 2018 related to amounts included in our contract liabilities balance at December 31, 2018 and 2017, was
$13.9 million
and
$4.9 million
, respectively.
|
(3)
|
Contract liabilities at
June 30, 2019
and
December 31, 2018
, includes accrued contract losses of
$2.0 million
and
$2.4 million
, respectively. See
"Project Changes in Estimates"
below for further discussion of our accrued contract losses.
|
•
|
The changes in estimates for the harbor tug projects resulted in an increase in our operating loss of
$1.4 million
and
$1.2 million
for the three and six months ended June 30, 2019, respectively. The changes in estimates were the result of increased forecast costs, primarily associated with the impact of limitations in craft labor availability and the required use of contract labor in lieu of direct hire labor, resulting in lower than anticipated craft labor productivity and extensions of schedule for the projects. The revised forecasts incorporate actual results obtained from the completion of the third and fourth harbor tugs in the second quarter 2019 and progress achieved on the remaining
six
harbor tugs, which are scheduled to be completed at various dates ranging from the third quarter 2019 through the fourth quarter 2020. Our forecasts anticipate improved craft labor productivity with the completion of each subsequent vessel. The projects were in a loss position at June 30, 2019 and our reserve for estimated losses on the projects was
$1.6 million
. If future craft labor productivity differs from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur schedule liquidated damages, the projects would experience further losses.
|
•
|
The changes in estimates for the ice-breaker tug project resulted in an increase in our operating loss of
$0.9 million
and
$0.8 million
for the three and six months ended June 30, 2019, respectively. The changes in estimates were the result of increased forecast costs, primarily associated with the impact of incomplete and deficient subcontracted production engineering, resulting in construction rework and disruption, lower than anticipated craft labor productivity and an extension of schedule for the project. The project was in a loss position at June 30, 2019 and our reserve for estimated losses on the project was
$0.1 million
. If future craft labor productivity differs from our current estimates, we are unable to achieve our progress estimates, or our schedule is further extended, the project would experience further losses.
|
|
|
|
|
|
|
|
||||||
Assets
|
|
Fabrication Division
|
|
Shipyard Division
|
|
Consolidated
|
||||||
Machinery and equipment
|
|
$
|
25,684
|
|
|
$
|
1,222
|
|
|
$
|
26,906
|
|
Accumulated depreciation
|
|
(7,871
|
)
|
|
(298
|
)
|
|
(8,169
|
)
|
|||
Total
|
|
$
|
17,813
|
|
|
$
|
924
|
|
|
$
|
18,737
|
|
•
|
$9.0 million
, which offset impairments of property and equipment, primarily at our Texas North Yard, resulting in no net gain or loss. Our evaluation considered the Texas North Yard as a single asset group given the sale of our Texas South Yard had been completed. The impairments were based upon our best estimate of the decline in fair value of the asset group as a result of Hurricane Harvey; and
|
•
|
$3.6 million
gain, recorded during the three months ended June 30, 2018, which is included within asset impairments and (gain) loss on assets held for sale, net on our Statement of Operations.
|
•
|
Ratio of current assets to current liabilities of not less than
2.00
:1.00;
|
•
|
Minimum tangible net worth of at least the sum of
$170.0 million
, plus
100%
of the net proceeds from any issuance of stock or other equity after deducting any fees, commissions, expenses and other costs incurred in such offering; and
|
•
|
Ratio of funded debt (which includes outstanding letters of credit) to tangible net worth of not more than
0.50
:1.00.
|
Period
|
|
Payments
|
||
Remainder of 2019
|
|
$
|
326
|
|
2020
|
|
659
|
|
|
2021
|
|
668
|
|
|
2022
|
|
677
|
|
|
2023
|
|
676
|
|
|
Thereafter
|
|
6,173
|
|
|
Total lease payments
|
|
9,179
|
|
|
Less interest
|
|
(4,084
|
)
|
|
Present value of lease liabilities
|
|
$
|
5,095
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss) attributable to common shareholders
|
$
|
(5,248
|
)
|
|
$
|
549
|
|
|
$
|
(8,290
|
)
|
|
$
|
(4,747
|
)
|
Weighted-average shares
(1)
|
15,236
|
|
|
15,043
|
|
|
15,194
|
|
|
15,004
|
|
||||
Basic and diluted income (loss) per common share
|
$
|
(0.34
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.55
|
)
|
|
$
|
(0.32
|
)
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Corporate
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
22,415
|
|
|
$
|
37,567
|
|
|
$
|
24,065
|
|
|
$
|
(3,591
|
)
|
|
$
|
80,456
|
|
Gross profit (loss)
|
(677
|
)
|
|
(2,912
|
)
|
|
2,137
|
|
|
(146
|
)
|
|
(1,598
|
)
|
|||||
Operating income (loss)
|
(1,211
|
)
|
|
(3,564
|
)
|
|
1,728
|
|
|
(2,337
|
)
|
|
(5,384
|
)
|
|||||
Depreciation and amortization expense
|
891
|
|
|
1,047
|
|
|
363
|
|
|
121
|
|
|
2,422
|
|
|||||
Capital expenditures
|
131
|
|
|
712
|
|
|
266
|
|
|
—
|
|
|
1,109
|
|
|||||
Total assets
(1)
|
59,607
|
|
|
106,092
|
|
|
31,163
|
|
|
80,729
|
|
|
277,591
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Corporate
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
9,472
|
|
|
$
|
23,620
|
|
|
$
|
22,205
|
|
|
$
|
(1,283
|
)
|
|
$
|
54,014
|
|
Gross profit (loss)
|
(1,124
|
)
|
|
(2,776
|
)
|
|
3,585
|
|
|
(384
|
)
|
|
(699
|
)
|
|||||
Operating income (loss)
|
4,212
|
|
|
(3,377
|
)
|
|
2,835
|
|
|
(2,946
|
)
|
|
724
|
|
|||||
Depreciation and amortization expense
|
1,047
|
|
|
1,051
|
|
|
383
|
|
|
112
|
|
|
2,593
|
|
|||||
Capital expenditures
|
—
|
|
|
653
|
|
|
98
|
|
|
69
|
|
|
820
|
|
|||||
Total assets
(1)
|
98,526
|
|
|
81,015
|
|
|
33,141
|
|
|
44,007
|
|
|
256,689
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Corporate
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
35,046
|
|
|
$
|
74,154
|
|
|
$
|
43,667
|
|
|
$
|
(4,806
|
)
|
|
$
|
148,061
|
|
Gross profit (loss)
|
(1,449
|
)
|
|
(3,192
|
)
|
|
3,878
|
|
|
(282
|
)
|
|
(1,045
|
)
|
|||||
Operating income (loss)
|
(2,751
|
)
|
|
(4,468
|
)
|
|
3,017
|
|
|
(4,464
|
)
|
|
(8,666
|
)
|
|||||
Depreciation and amortization expense
|
1,858
|
|
|
2,156
|
|
|
737
|
|
|
223
|
|
|
4,974
|
|
|||||
Capital expenditures
|
145
|
|
|
734
|
|
|
480
|
|
|
—
|
|
|
1,359
|
|
|||||
Total assets
(1)
|
59,607
|
|
|
106,092
|
|
|
31,163
|
|
|
80,729
|
|
|
277,591
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Corporate
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
26,815
|
|
|
$
|
42,185
|
|
|
$
|
44,075
|
|
|
$
|
(1,771
|
)
|
|
$
|
111,304
|
|
Gross profit (loss)
|
(1,651
|
)
|
|
(3,799
|
)
|
|
6,199
|
|
|
(769
|
)
|
|
(20
|
)
|
|||||
Operating income (loss)
|
1,705
|
|
|
(5,356
|
)
|
|
4,741
|
|
|
(5,457
|
)
|
|
(4,367
|
)
|
|||||
Depreciation and amortization expense
|
2,196
|
|
|
2,120
|
|
|
776
|
|
|
216
|
|
|
5,308
|
|
|||||
Capital expenditures
|
—
|
|
|
659
|
|
|
163
|
|
|
69
|
|
|
891
|
|
|||||
Total assets
(1)
|
98,526
|
|
|
81,015
|
|
|
33,141
|
|
|
44,007
|
|
|
256,689
|
|
(1)
|
Cash and short-term investments are reported within our Corporate Division. Total assets previously reported for 2018 have been recast to conform to our presentation for 2019.
|
•
|
Shipyard Division
- Within our Shipyard Division we have increased our backlog with customers outside of the oil and gas sector. At
June 30, 2019
, projects in our backlog include:
|
–
|
The construction of three towing, salvage and rescue ships for the U.S. Navy (individual project values of approximately $64.0 million), with customer options for five additional vessels;
|
–
|
The construction of three regional class research vessels (individual project values of approximately $69.0 to $77.0 million); and
|
–
|
The construction of six harbor tug vessels.
|
•
|
Fabrication Division -
Within our Fabrication Division we successfully increased our backlog with traditional and non-traditional fabrication work as we continue to pursue petrochemical and industrial fabrication opportunities for modules and structures. At
June 30, 2019
, projects in our backlog include:
|
–
|
The fabrication of an offshore jacket and deck (destined for Trinidad);
|
–
|
The expansion and delivery of a 245-guest paddle wheel riverboat. The riverboat will be reconfigured using the existing hull of a former gaming vessel; and
|
–
|
The construction of two, forty vehicle ferries.
|
•
|
Services Division
- Within our Services Division demand for services associated with offshore tie-backs, upgrades and maintenance remains strong, and we anticipate it will continue for the remainder of 2019. We will continue to pursue opportunities for offshore and onshore plant expansion and maintenance work and have targeted service opportunities within the shale basins in West Texas.
|
•
|
The level of construction and fabrication projects in the new markets we are pursuing for our Fabrication Division, including petrochemical and industrial facilities and offshore wind developments, and our ability to secure new project awards;
|
•
|
Continued growth within our Shipyard and Services Divisions;
|
•
|
Our ability to secure new project awards through competitive bidding and/or alliance and partnering arrangements;
|
•
|
Our ability to execute projects within our cost estimates and successfully manage them through completion; and
|
•
|
Our ability to resolve our dispute with our customer related to the construction of two MPSVs.
|
|
June 30, 2019
|
||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
Consolidated
|
||||||||
Remaining performance obligations under Topic 606
|
$
|
53,496
|
|
|
$
|
388,239
|
|
|
$
|
12,787
|
|
|
$
|
454,522
|
|
Contracts under purported termination
(1)
|
—
|
|
|
21,888
|
|
|
—
|
|
|
21,888
|
|
||||
Total Backlog
(2)
|
$
|
53,496
|
|
|
$
|
410,127
|
|
|
$
|
12,787
|
|
|
$
|
476,410
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||
Division
|
Amount
|
|
Labor hours
|
|
Amount
|
|
Labor hours
|
||||||
Fabrication
|
$
|
53,496
|
|
|
308
|
|
|
$
|
63,883
|
|
|
369
|
|
Shipyard
|
410,127
|
|
|
2,326
|
|
|
281,531
|
|
|
1,684
|
|
||
Services
|
12,787
|
|
|
205
|
|
|
11,046
|
|
|
171
|
|
||
Total Backlog
(2)
|
$
|
476,410
|
|
|
2,839
|
|
|
$
|
356,460
|
|
|
2,224
|
|
Year
(3)
|
|
Total
|
|
Percentage
|
||
Remainder of 2019
|
|
$
|
146,150
|
|
|
30.7%
|
2020
|
|
205,651
|
|
|
43.2%
|
|
2021
|
|
96,481
|
|
|
20.3%
|
|
Thereafter
|
|
6,240
|
|
|
1.2%
|
|
Future performance obligations under Topic 606
|
|
454,522
|
|
|
95.4%
|
|
Contracts under purported termination
(1)
|
|
21,888
|
|
|
4.6%
|
|
Total Backlog
|
|
$
|
476,410
|
|
|
100.0%
|
(1)
|
Includes backlog within our Shipyard Division related to contracts for the construction of two MPSVs that are subject to a purported notice of termination by our customer. We dispute the purported termination and disagree with the customer’s reasons for the same. We can provide no assurances that we will reach a favorable resolution with the customer for completion of the two MPSVs. See Note 5 of our Financial Statements for further discussion of the dispute.
|
(2)
|
At
June 30, 2019
,
seven
customers represented approximately
92%
of our backlog, and at December 31, 2018, seven customers represented approximately 90% of our backlog. At
June 30, 2019
, backlog from the
seven
customers consisted of:
|
(i)
|
Construction of three harbor tugs within our Shipyard Division. The second of five vessels was completed in the second quarter 2019. We estimate completion of the remaining vessels in 2019 and 2020;
|
(ii)
|
Construction of three harbor tugs within our Shipyard Division (separate from above). The second of five vessels was completed in the second quarter 2019. We estimate completion of the remaining vessels in 2019 and 2020;
|
(iii)
|
Construction of three regional class research vessels within our Shipyard Division. We estimate completion of the vessels in 2021 and 2022;
|
(iv)
|
Construction of three towing, salvage and rescue ships within our Shipyard Division. We estimate completion of the vessels in 2021 and 2022. Our customer has options for the construction of five additional vessels;
|
(v)
|
Expansion of a 245-guest paddle wheel riverboat within our Fabrication Division. We estimate completion of the vessel in 2020;
|
(vi)
|
Construction of two, forty-vehicle ferries within our Fabrication Division. We estimate completion of the vessels in 2020; and
|
(vii)
|
Construction of two MPSV's within our Shipyard Division. See footnote 1 above for further discussion.
|
(3)
|
The timing of recognition of the revenue presented in our backlog is based on our current estimates to complete the projects. Certain factors and circumstances could cause changes in the amounts ultimately recognized and the timing of recognition of revenue from our backlog.
|
|
Three Months Ended
June 30, |
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
80,456
|
|
|
$
|
54,014
|
|
|
$
|
26,442
|
|
|
49.0%
|
Cost of revenue
|
82,054
|
|
|
54,713
|
|
|
(27,341
|
)
|
|
(50.0)%
|
|||
Gross loss
|
(1,598
|
)
|
|
(699
|
)
|
|
(899
|
)
|
|
(128.6)%
|
|||
Gross loss percentage
|
(2.0
|
)%
|
|
(1.3
|
)%
|
|
|
|
|
||||
General and administrative expense
|
3,987
|
|
|
5,092
|
|
|
1,105
|
|
|
21.7%
|
|||
Asset impairments and (gain) loss on assets held for sale, net
|
—
|
|
|
(6,579
|
)
|
|
(6,579
|
)
|
|
(100.0)%
|
|||
Other (income) expense, net
|
(201
|
)
|
|
64
|
|
|
265
|
|
|
nm
|
|||
Operating income (loss)
|
(5,384
|
)
|
|
724
|
|
|
(6,108
|
)
|
|
nm
|
|||
Interest income (expense), net
|
126
|
|
|
(92
|
)
|
|
218
|
|
|
nm
|
|||
Net income (loss) before income taxes
|
(5,258
|
)
|
|
632
|
|
|
(5,890
|
)
|
|
nm
|
|||
Income tax (expense) benefit
|
10
|
|
|
(83
|
)
|
|
93
|
|
|
nm
|
|||
Net income (loss)
|
$
|
(5,248
|
)
|
|
$
|
549
|
|
|
$
|
(5,797
|
)
|
|
nm
|
•
|
Increased revenue for our Shipyard Division of
$13.9 million
, primarily due to progress on our first two regional class research vessel projects and our first towing, salvage and rescue ship project, offset partially by lower revenue for our harbor tug projects and the prior period including revenue on an OSV project that was completed during 2018;
|
•
|
Increased revenue for our Fabrication Division of
$12.9 million
, primarily due to progress on our paddle wheel riverboat project and several smaller fabrication projects, which were not under construction in the prior period, offset partially by the prior period including revenue associated with the fabrication of modules for a petrochemical facility that was completed during the second quarter 2018; and
|
•
|
Increased revenue for our Services Division of
$1.9 million
, primarily due to the timing of new project awards.
|
•
|
Under recovery of overhead costs (primarily associated with the underutilization of our facilities within our Fabrication Division, and to a lesser extent within our Shipyard and Services Divisions);
|
•
|
Holding costs of $0.6 million related to the two MPSV vessels which remain in our possession and are subject to dispute (See Note 5 of our Financial Statements for further discussion of our MPSV dispute);
|
•
|
Charge of $1.4 million related to forecast cost increases on our harbor tug projects (see Note 2 of our Financial Statements for further discussion of the changes in estimates on these projects); and
|
•
|
Charge of $0.9 million related to forecast costs increases on our ice-breaker tug project (see Note 2 of our Financial Statements for further discussion of the changes in estimates on this project).
|
•
|
The aforementioned project charges of $2.3 million for 2019; and
|
•
|
A lower margin project mix for our Fabrication and Services Divisions; offset partially by,
|
•
|
Higher revenue and increased recoveries of overhead costs due to higher activity; and
|
•
|
A higher margin project mix for our Shipyard Division (excluding the aforementioned projects).
|
•
|
Lower incentive plan costs, board of director compensation costs, and legal and advisory fees related to customer disputes; offset partially by,
|
•
|
Higher professional fees and other costs associated with the evaluation of strategic alternatives and initiatives to diversify and enhance our business.
|
•
|
A gain of $3.9 million from the sale of our Texas South Yard; and
|
•
|
A gain of $3.6 million from the settlement of our insurance claim related to Hurricane Harvey damage at our South Texas Properties incurred during 2017; offset partially by,
|
•
|
Impairments of
$0.6 million
related to assets held for sale.
|
|
Three Months Ended
June 30, |
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
22,415
|
|
|
$
|
9,472
|
|
|
$
|
12,943
|
|
|
136.6%
|
Gross loss
|
(677
|
)
|
|
(1,124
|
)
|
|
447
|
|
|
39.8%
|
|||
Gross loss percentage
|
(3.0
|
)%
|
|
(11.9
|
)%
|
|
|
|
|
||||
General and administrative expense
|
742
|
|
|
1,436
|
|
|
694
|
|
|
48.3%
|
|||
Asset impairments and (gain) loss on assets held for sale, net
|
—
|
|
|
(6,579
|
)
|
|
(6,579
|
)
|
|
(100.0)%
|
|||
Other (income) expense, net
|
(208
|
)
|
|
(193
|
)
|
|
15
|
|
|
7.8%
|
|||
Operating income (loss)
|
(1,211
|
)
|
|
4,212
|
|
|
(5,423
|
)
|
|
(128.8)%
|
(1)
|
During the first quarter 2019, our former EPC Division was operationally combined with our Fabrication Division. Accordingly, results for our former EPC Division for the 2018 period have been combined with the Fabrication Division to conform to the presentation of our reportable segments for the 2019 period. See Note 7 of our Financial Statements for further discussion of our realigned operating divisions and related financial information.
|
•
|
Progress on our paddle wheel riverboat project and several smaller fabrication projects, which were not under construction in the prior period; offset partially by,
|
•
|
The prior period including revenue associated with the fabrication of modules for a petrochemical facility that was completed during the second quarter 2018.
|
•
|
A gain of $3.9 million from the sale of our Texas South Yard; and
|
•
|
A gain of $3.6 million from the settlement of our insurance claim related to Hurricane Harvey damage at our South Texas Properties incurred during 2017; offset partially by,
|
•
|
Impairments of
$0.6 million
related to assets held for sale.
|
|
Three Months Ended
June 30, |
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
37,567
|
|
|
$
|
23,620
|
|
|
$
|
13,947
|
|
|
59.0%
|
Gross loss
|
(2,912
|
)
|
|
(2,776
|
)
|
|
(136
|
)
|
|
(4.9)%
|
|||
Gross loss percentage
|
(7.8
|
)%
|
|
(11.8
|
)%
|
|
|
|
|
||||
General and administrative expense
|
590
|
|
|
597
|
|
|
7
|
|
|
1.2%
|
|||
Other (income) expense, net
|
62
|
|
|
4
|
|
|
(58
|
)
|
|
nm
|
|||
Operating loss
|
(3,564
|
)
|
|
(3,377
|
)
|
|
(187
|
)
|
|
(5.5)%
|
•
|
Progress on our first two regional class research vessel projects and our first towing, salvage and rescue ship project; offset partially by,
|
•
|
Lower revenue for our harbor tug projects and the prior period including revenue on an OSV project that was completed during 2018.
|
•
|
Under recovery of overhead costs;
|
•
|
Holding costs of $0.6 million related to the two MPSV vessels which remain in our possession and are subject to dispute (See Note 5 of our Financial Statements for further discussion of our MPSV dispute);
|
•
|
Charge of $1.4 million related to forecast cost increases on our harbor tug projects (see Note 2 of our Financial Statements for further discussion of the changes in estimates on these projects); and
|
•
|
Charge of $0.9 million related to forecast costs increases on our ice-breaker tug project (see Note 2 of our Financial Statements for further discussion of the changes in estimates on this project).
|
•
|
Higher holding costs of $0.2 million for 2019 related to the two MPSV projects; and
|
•
|
The aforementioned project charges of $2.3 million for 2019; offset partially by,
|
•
|
Higher revenue and increased recoveries of overhead costs due to higher activity; and
|
•
|
A higher margin project mix (excluding the aforementioned projects).
|
|
Three Months Ended
June 30, |
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
24,065
|
|
|
$
|
22,205
|
|
|
$
|
1,860
|
|
|
8.4%
|
Gross profit
|
2,137
|
|
|
3,585
|
|
|
(1,448
|
)
|
|
(40.4)%
|
|||
Gross profit percentage
|
8.9
|
%
|
|
16.1
|
%
|
|
|
|
|
||||
General and administrative expense
|
464
|
|
|
762
|
|
|
298
|
|
|
39.1%
|
|||
Other (income) expense, net
|
(55
|
)
|
|
(12
|
)
|
|
43
|
|
|
nm
|
|||
Operating income
|
1,728
|
|
|
2,835
|
|
|
(1,107
|
)
|
|
(39.0)%
|
|
Three Months Ended
June 30, |
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue (eliminations)
|
$
|
(3,591
|
)
|
|
$
|
(1,283
|
)
|
|
$
|
(2,308
|
)
|
|
nm
|
Gross loss
|
(146
|
)
|
|
(384
|
)
|
|
238
|
|
|
62.0%
|
|||
Gross loss percentage
|
n/a
|
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expense
|
2,191
|
|
|
2,297
|
|
|
106
|
|
|
4.6%
|
|||
Other (income) expense, net
|
—
|
|
|
265
|
|
|
265
|
|
|
100.0%
|
|||
Operating loss
|
(2,337
|
)
|
|
(2,946
|
)
|
|
609
|
|
|
20.7%
|
•
|
Lower incentive plan costs and board of director compensation costs; offset partially by,
|
•
|
Increased legal and advisory fees related to customer disputes as the costs were reflected within the operating divisions in 2018; and
|
•
|
Higher professional fees and other costs associated with the evaluation of strategic alternatives and initiatives to diversify and enhance our business.
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
148,061
|
|
|
$
|
111,304
|
|
|
$
|
36,757
|
|
|
33.0%
|
Cost of revenue
|
149,106
|
|
|
111,324
|
|
|
(37,782
|
)
|
|
(33.9)%
|
|||
Gross loss
|
(1,045
|
)
|
|
(20
|
)
|
|
(1,025
|
)
|
|
nm
|
|||
Gross loss percentage
|
(0.7
|
)%
|
|
—
|
%
|
|
|
|
|
||||
General and administrative expense
|
7,821
|
|
|
9,801
|
|
|
1,980
|
|
|
20.2%
|
|||
Asset impairments and (gain) loss on assets held for sale, net
|
(70
|
)
|
|
(5,829
|
)
|
|
(5,759
|
)
|
|
(98.8)%
|
|||
Other (income) expense, net
|
(130
|
)
|
|
375
|
|
|
505
|
|
|
nm
|
|||
Operating loss
|
(8,666
|
)
|
|
(4,367
|
)
|
|
(4,299
|
)
|
|
(98.4)%
|
|||
Interest income (expense), net
|
388
|
|
|
(238
|
)
|
|
626
|
|
|
nm
|
|||
Net loss before income taxes
|
(8,278
|
)
|
|
(4,605
|
)
|
|
(3,673
|
)
|
|
(79.8)%
|
|||
Income tax (expense) benefit
|
(12
|
)
|
|
(142
|
)
|
|
130
|
|
|
91.5%
|
|||
Net loss
|
$
|
(8,290
|
)
|
|
$
|
(4,747
|
)
|
|
$
|
(3,543
|
)
|
|
(74.6)%
|
•
|
Increased revenue for our Shipyard Division of
$32.0 million
, primarily due to progress on our first two regional class research vessel projects and our first towing, salvage and rescue ship project, offset partially by the prior period including revenue on an OSV project that was completed during 2018 and revenue on our two MPSV contracts that were suspended during the first quarter 2018 (See Note 5 of our Financial Statements for further discussion of our MPSV contracts); and
|
•
|
Increased revenue for our Fabrication Division of
$8.2 million
, primarily due to progress on our paddle wheel riverboat project and several smaller fabrication projects, which were not under construction in the prior period, offset partially by the prior period including revenue associated with the fabrication of modules for a petrochemical facility that was completed during the second quarter 2018.
|
•
|
Under recovery of overhead costs (primarily associated with the underutilization of our facilities within our Fabrication Division, and to a lesser extent within our Shipyard and Services Divisions);
|
•
|
Holding costs of $0.8 million related to the two MPSV vessels which remain in our possession and are subject to dispute (See Note 5 of our Financial Statements for further discussion of our MPSV dispute);
|
•
|
Charge of $1.2 million related to forecast cost increases on our harbor tug projects (see Note 2 of our Financial Statements for further discussion of the changes in estimates on these projects); and
|
•
|
Charge of $0.8 million related to forecast costs increases on our ice-breaker tug project (see Note 2 of our Financial Statements for further discussion of the changes in estimates on this project).
|
•
|
The aforementioned project charges of $2.0 million for 2019; and
|
•
|
A lower margin project mix for our Services and Fabrication Divisions; offset partially by,
|
•
|
Higher revenue and increased recoveries of overhead costs due to higher activity; and
|
•
|
A higher margin project mix for our Shipyard Division (excluding the aforementioned projects).
|
•
|
Lower incentive plan costs, board of director compensation costs, and legal and advisory fees related to customer disputes; offset partially by,
|
•
|
Higher professional fees and other costs associated with the evaluation of strategic alternatives and initiatives to diversify and enhance our business.
|
•
|
A gain of $3.9 million from the sale of our Texas South Yard; and
|
•
|
A gain of $3.6 million from the settlement of our insurance claim related to Hurricane Harvey damage at our South Texas Properties incurred during 2017; offset partially by,
|
•
|
Impairments of $1.4 million related to assets held for sale.
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
35,046
|
|
|
$
|
26,815
|
|
|
$
|
8,231
|
|
|
30.7%
|
Gross loss
|
(1,449
|
)
|
|
(1,651
|
)
|
|
202
|
|
|
12.2%
|
|||
Gross loss percentage
|
(4.1
|
)%
|
|
(6.2
|
)%
|
|
|
|
|
||||
General and administrative expense
|
1,509
|
|
|
2,477
|
|
|
968
|
|
|
39.1%
|
|||
Asset impairments and (gain) loss on assets held for sale, net
|
(70
|
)
|
|
(5,829
|
)
|
|
(5,759
|
)
|
|
(98.8)%
|
|||
Other (income) expense, net
|
(137
|
)
|
|
(4
|
)
|
|
133
|
|
|
nm
|
|||
Operating income (loss)
|
(2,751
|
)
|
|
1,705
|
|
|
(4,456
|
)
|
|
nm
|
(1)
|
During the first quarter 2019, our former EPC Division was operationally combined with our Fabrication Division. Accordingly, results for our former EPC Division for the 2018 period have been combined with the Fabrication Division to conform to the presentation of our reportable segments for the 2019 period. See Note 7 of our Financial Statements for further discussion of our realigned operating divisions and related financial information.
|
•
|
Progress on our paddle wheel riverboat project and several smaller fabrication projects, which were not under construction in the prior period; offset partially by,
|
•
|
The prior period including revenue associated with the fabrication of modules for a petrochemical facility that was completed during the second quarter 2018.
|
•
|
A gain of $3.9 million from the sale of our Texas South Yard; and
|
•
|
A gain of $3.6 million from the settlement of our insurance claim related to Hurricane Harvey damage at our South Texas Properties incurred during 2017; offset partially by,
|
•
|
Impairments of $1.4 million related to assets held for sale.
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
74,154
|
|
|
$
|
42,185
|
|
|
$
|
31,969
|
|
|
75.8%
|
Gross loss
|
(3,192
|
)
|
|
(3,799
|
)
|
|
607
|
|
|
16.0%
|
|||
Gross loss percentage
|
(4.3
|
)%
|
|
(9.0
|
)%
|
|
|
|
|
||||
General and administrative expense
|
1,214
|
|
|
1,393
|
|
|
179
|
|
|
12.8%
|
|||
Other (income) expense, net
|
62
|
|
|
164
|
|
|
102
|
|
|
62.2%
|
|||
Operating loss
|
(4,468
|
)
|
|
(5,356
|
)
|
|
888
|
|
|
16.6%
|
•
|
Progress on our first two regional class research vessel projects and our first towing, salvage and rescue ship project; offset partially by,
|
•
|
The prior period including revenue on an OSV project that was completed during 2018 and revenue on our two MPSV contracts that were suspended during the first quarter 2018 (See Note 5 of our Financial Statements for further discussion of our MPSV contracts).
|
•
|
Under recovery of overhead costs;
|
•
|
Holding costs of $0.8 million related to the two MPSV vessels which remain in our possession and are subject to dispute (See Note 5 of our Financial Statements for further discussion of our MPSV dispute);
|
•
|
Charge of $1.2 million related to forecast cost increases on our harbor tug projects (see Note 2 of our Financial Statements for further discussion of the changes in estimates on these projects); and
|
•
|
Charge of $0.8 million related to forecast costs increases on our ice-breaker tug project (see Note 2 of our Financial Statements for further discussion of the changes in estimates on this project).
|
•
|
Higher revenue and increased recoveries of overhead costs due to higher activity; and
|
•
|
A higher margin project mix (excluding the aforementioned projects); offset partially by,
|
•
|
Higher holding costs of $0.4 million for 2019 related to the two MPSV projects; and
|
•
|
The aforementioned project charges of $2.0 million for 2019.
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
$
|
43,667
|
|
|
$
|
44,075
|
|
|
$
|
(408
|
)
|
|
(0.9)%
|
Gross profit
|
3,878
|
|
|
6,199
|
|
|
(2,321
|
)
|
|
(37.4)%
|
|||
Gross profit percentage
|
8.9
|
%
|
|
14.1
|
%
|
|
|
|
|
||||
General and administrative expense
|
916
|
|
|
1,496
|
|
|
580
|
|
|
38.8%
|
|||
Other (income) expense, net
|
(55
|
)
|
|
(38
|
)
|
|
17
|
|
|
44.7%
|
|||
Operating income
|
3,017
|
|
|
4,741
|
|
|
(1,724
|
)
|
|
(36.4)%
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable) Change
|
||||||||||
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
||||||
Revenue (eliminations)
|
$
|
(4,806
|
)
|
|
$
|
(1,771
|
)
|
|
$
|
(3,035
|
)
|
|
nm
|
Gross loss
|
(282
|
)
|
|
(769
|
)
|
|
487
|
|
|
63.3%
|
|||
Gross loss percentage
|
n/a
|
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expense
|
4,182
|
|
|
4,435
|
|
|
253
|
|
|
5.7%
|
|||
Other (income) expense, net
|
—
|
|
|
253
|
|
|
253
|
|
|
100.0%
|
|||
Operating loss
|
(4,464
|
)
|
|
(5,457
|
)
|
|
993
|
|
|
18.2%
|
•
|
Lower incentive plan costs and board of director compensation costs; offset partially by,
|
•
|
Increased legal and advisory fees related to customer disputes as the costs were reflected within the operating divisions in 2018; and
|
•
|
Higher professional fees and other costs associated with the evaluation of strategic alternatives and initiatives to diversify and enhance our business.
|
Available Liquidity
|
|
Total
|
||
Cash and cash equivalents
(1)
|
|
$
|
30,192
|
|
Short-term investments
(2)
|
|
45,791
|
|
|
Total cash, cash equivalents and short-term investments
|
|
75,983
|
|
|
Credit Agreement total capacity
|
|
40,000
|
|
|
Outstanding letters of credit
|
|
(10,737
|
)
|
|
Credit Agreement available capacity
|
|
29,263
|
|
|
Total available liquidity
|
|
$
|
105,246
|
|
|
|
June 30,
|
|
December 31,
|
|
|
||||||
|
|
2019
|
|
2018
|
|
Change
(3)
|
||||||
Contract assets
|
|
$
|
51,334
|
|
|
$
|
29,982
|
|
|
$
|
(21,352
|
)
|
Contract liabilities
(1)
|
|
(13,823
|
)
|
|
(16,845
|
)
|
|
(3,022
|
)
|
|||
Contracts in progress, net
(2)
|
|
37,511
|
|
|
13,137
|
|
|
(24,374
|
)
|
|||
Contracts receivable and retainage, net
|
|
23,343
|
|
|
22,505
|
|
|
(838
|
)
|
|||
Inventory, prepaid expenses and other assets
|
|
8,530
|
|
|
9,356
|
|
|
826
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
|
(64,957
|
)
|
|
(39,256
|
)
|
|
25,701
|
|
|||
Total
|
|
$
|
4,427
|
|
|
$
|
5,742
|
|
|
$
|
1,315
|
|
(1)
|
Contract liabilities at
June 30, 2019
and
December 31, 2018
, include accrued contract losses of $2.0 million and $2.4 million, respectively.
|
(2)
|
Represents our cash position relative to revenue recognized on projects, with contract assets representing unbilled amounts that reflect future cash inflows on projects, and contract liabilities representing (i) advance payments that reflect future cash expenditures and non-cash earnings on projects and (ii) accrued contract losses that represent future cash expenditures on projects.
|
•
|
Net gains from asset sales of
$0.9 million
, bad debt expense of
$59,000
, depreciation and amortization expense of
$5.0 million
, asset impairments of
$0.3 million
, and stock-based compensation expense of
$1.3 million
;
|
•
|
Increase in contract assets of
$21.4 million
, primarily due to an increase in unbilled positions on two projects in our Shipyard Division related to the timing of progress billings (primarily for our first two regional class research vessel projects), and certain projects in our Fabrication Division related to the timing of milestone billings. See below for discussion of increase in related accounts payable;
|
•
|
Decrease in contract liabilities of
$3.0 million
, primarily due to the unwind of advance payments on a project in our Fabrication Division, offset partially by an increase in advance payments on two projects in our Shipyard Division;
|
•
|
Increase in contracts receivable and retainage of
$0.9 million
, primarily due to the timing of billings and collections on our projects;
|
•
|
Decrease in prepaid expenses, inventory and other assets of
$0.2 million
, primarily due to a decrease in inventory, offset partially by an increase in prepaid expenses;
|
•
|
Increase in accounts payable, accrued expenses and other current liabilities of
$25.2 million
, primarily due to increased project activity and the timing of payments for projects in our Shipyard Division (primarily for our first two regional class research vessel projects and our first towing, salvage and rescue ship project); and
|
•
|
Change in noncurrent assets and liabilities, net of
$0.5 million
.
|
•
|
Ratio of current assets to current liabilities of not less than
2.00
:1.00;
|
•
|
Minimum tangible net worth of at least the sum of
$170.0 million
, plus 100% of the net proceeds from any issuance of stock or other equity after deducting any fees, commissions, expenses and other costs incurred in such offering; and
|
•
|
Ratio of funded debt (which includes outstanding letters of credit) to tangible net worth of not more than
0.50
:1.00.
|
•
|
The underutilization of our facilities within our Fabrication Division, and to a lesser extent within our Shipyard Division, until we secure and/or begin to execute sufficient backlog to fully recover our overhead costs;
|
•
|
Capital expenditures (including potential enhancements to our Shipyard Division facilities);
|
•
|
Accrued contract losses recorded at
June 30, 2019
;
|
•
|
Working capital requirements for our projects (including the potential additional projects for the U.S. Navy if the aforementioned options are exercised); and
|
•
|
Corporate administrative expenses and strategic initiatives.
|
GULF ISLAND FABRICATION, INC.
|
|
|
|
BY:
|
/s/ Westley S. Stockton
|
|
Westley S. Stockton
|
|
Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)
|
1 Year Gulf Island Fabrication Chart |
1 Month Gulf Island Fabrication Chart |
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