NEWS RELEASE Exhibit 99.1
For further information contact:
Kerry J. Chauvin Joseph "Duke" Gallagher
Chief Executive Officer Chief Financial Officer
(504) 872-2100 (504) 872-2100
FOR IMMEDIATE RELEASE
THURSDAY, OCTOBER 22, 1998
GULF ISLAND FABRICATION, INC.
REPORTS THIRD QUARTER AND YEAR-TO-DATE 1998 EARNINGS
Houma, LA - Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today reported
pro forma net income of $5.3 million ($.45 diluted EPS) on revenue of $51.9
million for its third quarter ended September 30, 1998, compared to pro forma
net income of $3.7 million ($.32 diluted EPS) on revenue of $36.3 million for
the third quarter of 1997. Pro forma net income for the first nine months of
1998 was $14.7 million ($1.25 diluted EPS) on revenue of $149.4 million,
compared to pro forma net income of $9.2 million ($.89 diluted EPS) on revenue
of $101.6 million for the first nine months of 1997.
Pro forma net income gives effect to federal and state income taxes as if
the company had been a C Corporation for tax purposes during all the periods
presented. Pro forma net income excludes the non-recurring charge of $1.1
million to record the cumulative deferred income tax provision upon the
election on April 4, 1997 to convert from S Corporation status to C Corporation
status. On October 6, 1997 the Company's Board of Directors authorized a two-
for-one stock split effected in the form of a stock dividend that was
distributed on October 28, 1997 to shareholders of record on October 21, 1997.
All share and per share data presented reflects the stock split. At September
30, 1998, the company had a revenue backlog of $53.3 million and a labor
backlog of approximately 1.0 million manhours remaining to work.
"We had a great third quarter and are quite pleased with our results over
the first nine months of the year," said Kerry Chauvin, Gulf Island's Chief
Executive Officer. "Despite our Company's excellent performance, however, the
downturn in our industry brought on by continued low oil prices and a downturn
in natural gas prices as well, will impact our ability to maintain these high
levels of performance beyond year end. The dollar value of projects available
in the market is significantly below last year's levels and our backlog is
being similarly eroded. Competition for available projects has become more
intense and future margins will likely be diminished. Cost reduction measures
will be undertaken as appropriate to meet these conditions. In the longer
term, demand for our services will largely depend upon prices for oil and gas,
which are difficult to predict. At some point however, it is expected that
these should recover as supplies are reduced and our customers are forced to
replace them."
Gulf Island Fabrication, Inc., based in Houma, Louisiana, is a leading
fabricator of offshore drilling and production platforms and other specialized
structures used in the development and production of offshore oil and gas
reserves. The Company also offers offshore interconnect pipe hook-up, inshore
marine construction, and steel warehousing and sales. With the acquisition of
Southport, Inc., effective January 1, 1998, the Company also provides the
fabrication of living quarters for offshore platforms for the oil and gas
industry.
Information in this press release concerning future industry conditions
and future company operations and performance are forward-looking statements
based on current expectations and assumptions. These statements involve risks
and uncertainties that include, among others, the prices of crude oil and
natural gas, the timing of new projects and the Company's ability to obtain
them, and competitive factors in the industry. Changes in these factors could
result in changes in the Company's performance and could cause the actual
results to differ materially from those expressed in the forward-looking
statements.
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenue $51,866 $36,311 $149,421 $101,556
Cost of revenue 42,036 29,325 121,513 83,282
------- ------- -------- --------
Gross profit 9,830 6,986 27,908 18,274
General and administrative expenses 1,458 1,115 4,532 3,262
------- ------- -------- --------
Operating income 8,372 5,871 23,376 15,012
Other expense (income):
Interest expense 19 16 76 324
Interest income (94) (77) (183) (112)
------- ------- -------- --------
(75) (61) (107) 212
------- ------- -------- --------
Income before income taxes 8,447 5,932 23,483 14,800
Income taxes 3,135 2,234 8,787 4,210
Cumulative deferred tax provision(1) 0 0 0 1,144
------- ------- -------- --------
Net income $ 5,312 $ 3,698 $ 14,696 $ 9,446
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Pro forma data: (2)
Income before income taxes $ 8,447 $ 5,932 $ 23,483 $ 14,800
Income taxes 3,135 2,234 8,787 4,210
Pro forma income taxes
related to operations as S Corporation 0 0 0 1,379
------- ------- -------- --------
Pro forma net income $ 5,312 $ 3,698 $ 14,696 $ 9,211
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Pro forma per share data:
Pro forma basic earnings per share (3) $ 0.46 $ 0.32 $ 1.26 $ 0.89
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Pro forma diluted earnings per share (3)(4) $ 0.45 $ 0.32 $ 1.25 $ 0.89
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Weighted-average shares (3) 11,638 11,600 11,627 10,310
======= ======= ======== ========
Adjusted weighted-average shares (3) (4) 11,697 11,689 11,711 10,353
======= ======= ======== ========
Depreciation and amortization
included in expense above $ 1,060 $ 765 $ 3,090 $ 2,104
======= ======= ======== ========
(1) Cumulative deferred tax provision charged upon election on April 4, 1997
to convert from an S Corporation status to a C Corporation Status.
(2) Pro forma information gives effect to federal and state income taxes as
if the Company had been a C Corporation for tax purposes during all
periods presented.
(3) Includes the initial public offering completed on April 9, 1997 and
retroactively restates the two-for-one stock split effective October 28,
1997.
(4) The calculation of diluted earnings per share assumes that all stock
options are exercised and that the assumed proceeds are used to purchase
shares at the average market price for the period.