GIFI - Earnings call transcript Q2 2022 | Gulf Island Fabrication, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Gulf Island's Conference Call to discuss 2022 Second Quarter Results. All participants’ will be in listen-only mode for duration of the call. This call is being recorded. At this time, I would like to turn the floor over to Ms. Cindi Cook for opening remarks and introductions. ahead. go please Cindi,

Cindi Cook

good second would quarter and everyone to to our XXXX afternoon. you, like I welcome Thank teleconference.

comments materially. actual at available Our and results available and press evening. forward-looking our would like on to to call, is not p.m. after will this GAAP. differ language awards that that in the Please a afternoon and everyone include replay included factors certain website on may statements, financial note are this recognized may and under which U.S. copy of our also release today's XX-K our were management risk project the refer on press be released and call release subsequent call gulfisland.com. results A reference cautionary this backlog keep this We X:XX mind Please new of measures website to SEC release XXXX Form on and in the our the in filings. described press EBITDA,

required extent have measures and used, regulations their our these to Richard measures press Mr. we President and by Executive Stockton, Mr. and Wes President CFO. the release. most Mr. in Heo, financial reconciled to Today, are and CEO; non-GAAP SEC Vice As GAAP comparable financial rules Heo?

Richard Heo

Good your and healthy with this you afternoon, you continuing to Cindi. our hope I'm here be each safe. second are afternoon, of and welcome you, everyone, and to call. and Thank to quarter results happy conference families that stay I

the greater on second then priorities. trends and our the quarter will takeaways progress During on today's market performance quarter, segment discuss results I'll and from a the update made Wes end in our have we of detail. key provide strategic call, an review

favorable, quarter The up open second experienced the momentum fabrication we continued and we remarks. of the market perhaps in positive will encouraged EBITDA and pickup in posted We closing continue services to in be the the period most growth. by large-scale the first call and the quarter small-scale as another with we market. Trends activity revenue important, during questions, some remained then fabrication for then strong bidding in

Additionally, teams and our the our on our strategic of progress on by I'm have down wind business advancements safe initiatives. shipyard encouraged the made

to our Services now platform, advantage our division, services at trends Looking favorable we benefiting well continue the we end expand to are industry. and market the take positioned

and our services results continued period Our more same by of than was legacy and XX% and driven recently in performed consistent second business revenue doubled from business. EBITDA solid expectations. up compared The with DSS has Services in it to organic XXXX, growth going DSS business integration the our quarter acquired well, the is the

in resulting including trends, pushed our for in and improved very onshore craft energy the We base. short which core Coast had about significant our driving a to out time not prices activity since continues expanded driving customers, are conditions The market Gulf term. strong longer the years. increased platform could increasing is markets. acquisition cross-selling from dynamics, projects delayed from in the profitability opportunities our have workforce, offshore in I utilization seeing and attractive work in-market customer fabrication Services our high the favorable we our in services progress Overall, our expanded over improved of benefit potential pull-through been business for excited that spending, are more with be increase made and capital and expanded recent and the

a from we It that to positioned offerings, base size a more broader these profile, a services deep our time note to to our important well services are on the agreements is of craft level trends. our customer portfolio and as as expanded skilled benefit a providing provided of during increased contracts services workforce in labor consist and acquisition, that an most overall basis. of longer-term services Given as doubled brings predictable with of growing stability master margin of DSS also material business well very services our business

the as has of we the labor. implementing attract recruiting we benefited business are certainty the the with our support just and opportunities availability important, our will results efforts as DSS providing of in expansion the growth, continued acquisition headcount industry, the to believe us our increased stability help labor labor, challenges others skilled retention addition, on associated of to and craft in In career growth. services and to continue for work the strategic our I add and necessary face scale for our craft more Like initiatives

Moving division. on fabrication to our

small-scale to see and our customers. market in fabrication good trends continue services supported end improving from activity pull-through our business, fabrication by work We

Given our strategic fabrication this and we location our continued strength expect in business. small-scale

but the in to LNG are the of to approved that Gulf may are natural There uncertainty acceleration and projects market, yet supply regarding in continue a being it large Coast project market Looking investment the fabrication be the the additional to be was capacity. activity evolving Final in recent we Russian projects. LNG unclear. a market. region fabrication for region activity Gulf is momentum decisions activity Coast Gulf the increase We helpful the due at in FERC, resulting tightening bidding of improved LNG provide in continued the large prices of fabrication the and encouraged LNG in of projects the on the these fate in in not region the are made an the by increased by strong XX combined regarding to which, number overall approximately in in with Prior thought key prices context Coast energy projects under gas, many construction. energy rise

proposed Russian facilities projects. with and forward already dramatically However, shift operators are capacity, given and developers to quickly and dynamics a industry running the the have LNG environment, more favorable pricing away from near existing most looking project move full supply changed

in that to to we're and our to In evolving the craft many large base in the stages we these by a labor, Needless capacity potentially with key negotiate continue a advantage FERC. during we're and trends safe quarter, one entered solid are and in on these last of of execution. while of the facility we Cs are take Ts and the encouraged strategic with as of well of approval there projects, addition fabrication. customer a quarter constraints contract. say, positioned project XX industry arrangement market, quality history we for We in to reservation customers based discussions approved indicated the that fabrication large-scale customers various as potential location, with These trends recognize the into are projects

This contract contract the hope quarter, would the in project to We completed provide end be the and potential on fabrication the expect work to of the we third to year. help begin by to a market backlog the stable forward and in fabrication look in improvements future. large-scale and additional and the XXXX potentially for into material recent near fabrication the developments We're XXXX. about sharing excited

Now our Shipyard turning to division.

make towards wind progress shipyard We our and efficient of operations. continue down safe an to

Our be Department third was of for the Texas XX-vehicle to ferry project Transportation completed the previously quarter. in anticipated

water outfitting finished delivery are the However, of by anticipating the customer, is phase the and of substantially ferry by the we The stage. in the construction end due for changes is design year. to the ferry in the now

maintain collaboratively X Carolina for respect that XX-vehicle our to budget our We to continue continue North schedule. make Department progress. of Department the our work to Transportation, and Texas Transportation projects ferry the with With to teams we of ensure

design. in discussed, during have vessel which system, previously attributed trials we encountered the deficiencies we we for in As with to vessel, challenges January, sea second the propulsion

business result delivery propulsion design propulsion Overall, and we During in to State to quarter look energy and Court Ferry we the is later July vessel the XXXX. the end and now finally remain delivery of growing to issues August due system shipyard system The completing system the quarter if in we remaining XXXX, the the the will design expect profitably businesses. North to lawsuit focusing is on on by the of second XXXX, time system of we whether the vessels performance, Carolina address delivered we be The of corrected to with modifications propulsion fourth both and of agreed and propulsion fourth delays our original sea the first quarter upon pending. flaws. as third delivered in which a to Once the our complete focused the with wind deliver obligations, to shipyard We associated determine the vessel can of Carolina vessel our of expect challenges XXXX modifications recommencing complete, forward to in changes XXXX. modifications the Currently, the North and completed in quarter down issues customer. still a final Texas to and the the remaining design the the Ferry. change to be the we second order anticipate were the customer for trials in

expanding I things markets, our quick over turning skilled labor generating and to is the profitable and stable, growth we a our our Before strategy, Wes, the strategic project workforce. focused pursuing growing on update our by on growth to transformation now quarter services made on execution progress during strengthening provide which new end want business, diversifying further

large believe we in end the market important as awards fabrication encouraged address quarter, LNG well to the a each markets. of during growth pursuit positioned remain made would transformation of are We trends we forward. strategy LNG projects While for I on new progress like and our our number of by move the

change for on Gulf which we markets the tax of late uncertainty near-term, includes provisions $XXX investments. these the forward could While credits some change, permanent, the approved in in of announced and Senate services spending achieved the Reduction potentially of series renewable team attractive of customers on market like It our and solar we climate plan. by we business eliminate opportunities. the our the industry continued the In now with our Department and that longer-term recent of performance, financial the wind X make and energy, Based of term, Interior which recently in is with opportunity by LNG and extension pursue in legislation which Mexico. highlighted July, out executive an the energy regarding of closing, on the as Separately, clean remain Biden more actions the President business. in pickup Washington transition pleased in and Gulf very strong lot nearly work, our to advantage news them to in drive longer measures. by but opportunities of climate was of across a Act fabrication a energy members strategic discipline the and to focus quarter well organization, our LNG a optimistic second calls very as of in has would taken opportunities. the on The focused the for The activity of much the well outlook includes positioned energy, are on dedication billion take progress growth on I'm we're recent developments our encouraged Inflation accelerate of expanded number the wind hard

activity continued discuss solid results Given our growth the XXXX the business, large project strong the for the encouraged greater execution. momentum over our projects I'll to by opportunities turn healthy for potential in now us in and our detail. services very quarterly fabrication beyond. call bidding to I'm

Wes Stockton

Services second of income was second and note increase relates with mentioned EBITDA Richard, discussion increase afternoon, of additional $XX.X quarter. the impact operating their then operations. of financial year-over-year the continuing discuss was our attributable results information I results, factors million, will I conclude was Consolidated XX% referenced million. to context and all details and putting $X.X then $XXX,XXX, Please the of for the segment revenue quarter in division. Richard Consolidated the regarding our an Thanks, for our will provide quarter the quarter our good on second that XXXX, only some with everyone. from to a liquidity. our XXXX and by consolidated

Corporate of operations. the our Our a reflect Services a shipyard $X.X our our costs of attributable division, and results for Ida by partial overhead with insurance associated costs and offset retained our consolidated contribution associated from Hurricane to losses million division division our under-recovery positive recoveries, gain Fabrication with

from of revenue growth end DSS the our market the second quarter increase year. second quarter of division, offshore period. revenue XX.X% we operating acquisition. acquisition of Services the was of the $X.X for second half up Specifically mix Services on improved favorable Based this EBITDA or results The XX.X% Operating and for the competitive business. the continued results XXX% by million, XXXX. to an increase DSS the for in back for legacy position, for organic of driven division million business quarter and the Services of legacy trends XXXX the was for quarter the for offshore million in was the or from over prior margin $XX.X compared of revenue, the our strong benefited services year and contribution an our strong $X.X expect

items fee For insurance $X.X decrease quarter offset second by of the of second mentioned levels million the million in second for second of revenue in the to low the period. large for impact $XXX,XXX Hurricane quarter division's gain were higher of facilities year XXXX. million prior the our The Offsetting for of underutilization the several Fabrication damage Fabrication progress a prior fabrication to and from primarily $XX.X division, these activity. fabrication the mentioned EBITDA versus by decrease was positive was the of associated that quarter for period previously small-scale XXXX for Ida benefited completion $X.X was was projects previously the the compared reservation included quarter the partially caused by from EBITDA the resources. volume XXXX and Richard. and facility quarter recoveries with due

Specifically, the trailing but year lower the utilization quarter XX% to prior than the for period. was comparable second quarter division's the over

Ida improve the moderate due Hurricane improvement of for we quarter impacts, anticipated utilization and results benefit operating to second facility levels the to quarter the insurance expect the reservation Excluding in additional fees. third to relative

ended by improvement fourth of second on our With opportunities into quarter to the depending potential quarter, cash Richard. as timing potential liquidity, with balance With we move further the a large for fabrication we you respect we mentioned which now quarter the the the Operator, This million. open with $XX our remarks. million, to approximately exit questions. of our expect a was of and consistent the for line expectations, with third may prepared balance cash $XX concludes the

Operator

with Instructions] [Operator Spiro Spiro (ph). question our And from first you. [Tom Thank Capital] comes

Unidentified Analyst

Good afternoon.

Richard Heo

afternoon. Good

Unidentified Analyst

story. to new the I'm

completed the questions the another So up that and fourth ferry you and side. couple the in you one shipyard that just third a basic guess, what mean meaning Or complete? have you? when would is of, work When say and that? say say in you you to finish buyer Is buyer on to your the the I have you hope that do such, will other quarter there you to mean paid vessel and you have to delivered the that some

Richard Heo

which It's completing what obligations our the is delivery. that's No, is. under contract, Yes. that

Unidentified Analyst

large are how doing? on do point, I they see. underutilization a in folks kind sort And them? that dedicated to underutilization for you in? what -- Or they of division, And What you the does redeploy Do the in the division? many work to of -- mean? Fabrication waiting come have can are they are just

Richard Heo

a question. That's good

or overheads minor When fab yet, utilize are amount with prepared the that associated currently an about under that in folks overhead fully So fab a the utilization, in the and at facility. certain we talk not we're assume point today. have we has we of recovery are to about that to XXX hours, the yard have those folks utilized. XXX% yard covered when And remarks Wes'

Wes Stockton

and Yes. that even we costs at we those facility, hours period and you fully the are costs fixed this individuals recover to sufficient costs. have out. a It's certain and don't point, do utilized, in though fully large And have have, period semi-variable

Unidentified Analyst

it? handle you you you people if work, go would that? and to some to do out were And to hire more get can So so, need fortunate enough big if

Richard Heo

headcount to the the hire go amounts of more we're onshore. -- of hire, work, headcount could of ahead do to Yes, and that absolutely, do we we work work would have us those to confident folks type field that with those

Unidentified Analyst

then And see. last I question.

it frequently over Is kind west? strategic range, way I Port large strategic? the of geographic your how is far out all mean, it referred east? location strategic materials public far location. how and Why other is to what And strategic and releases how to Arthur? it your Your is Or strategic? why

Richard Heo

great question. a That's

epicenter of of than So of mean, we is recent just the draw more from we just I DSS. you which think strategic flagship. obviously the have it's miles circle kind XXX acquisition at especially Louisiana, if with Houma, because Houma, our facilities Louisiana, a

of is circle capital and the facility because all of fabrication radius strategic, that's XXX-mile projects in the flagship Houma, spend circle, that Louisiana. anticipated Our

I'm the to go the to capital -- of way So West, all east there's amount you Texas, way Alabama, to spend. sorry, all a significant Alabama east and anticipated and West

transportation close the quick a a we access from just to and a proximity water, large facility standpoint. it's So it on then projects. capital gives water, also, And on very the easy over are XXX-acre the so

that facility, space capacity, the of the laydown forth. in out So proximity so kind the the equation it's the lot of water, just location, and itself of covered weather takes geographic a impacts the to the terms asset of and

we about So of just strategic attributes because talk now those location mentioned. I the that

Unidentified Analyst

many range. of aren't fabricators other that you And other in there that the XXX-mile with on water, Are -- there players in lots area with? compete

Richard Heo

of lot other today talked terms kind There's size. that in the all fabricators of of not left with of attributes a with capacity. are a big There that players, lot about not we but

Unidentified Analyst

I see. Thanks much.

Richard Heo

You’re welcome.

Operator

from will And Value next our come question Investment Geygan Corp. with JP Global

JP Geygan

Hey, questions. for you thaking Thank gentlemen. my good afternoon,

Richard Heo

good JP. afternoon Hey,

JP Geygan

Starting division. Speakers] [Multiple

And more about You've growth. some opportunity quite I'm might of revenue of the comment pull-through of obvious, size the little that grown be revenue I have really factors to can on so? that opportunity, a that But contributed part and then the for attributable EBITDA acquisition is some but but you know to talk you work? the might others other maybe DSS, the of fabrication second, that less hoping and bit nicely,

Richard Heo

Yes.

our through associated with legacy the And the what first just to the on it lot in pricing. growth oil talked robustness market about the in crude through DSS Services point, But the your acquisition. services was it's we today is one, of So a business.

well. customers Our are doing

projects whether capital result, maintenance. be that they're there's work anticipating, a so And it and/or more as

lot is portfolio. we're our that result services the So we've the added seeing growth existing customer of DSS our excited more base. customers the are we as seeing various where just I'm and not the a of to products a But in only and that cross-selling but importantly, also acquisition

it's front, second ballpark going of material the of be is of north with million. regard On job, and to $XX to size it kind to definition, be just kind the fabrication of the going

JP Geygan

Then All turning fabrication helpful. right. work. That's to

color a I on reservation coming we work back potential several of time you provide expect in the facility the about arrangement arrangement. we've more the first is the heard and think the Can that, this versus years end the bit little a economics over might around quarters? what

Richard Heo

Yes. It basically there I industry of today. caller, capacity lot lot where explained there's happens fabrication sometimes a in as this other right, to is for the a fabrication. just not demand, left of And

as that some contract, negotiating in customers space they them. capacity. we're there significant And of make or while so want amount space a to are that And result, reserve we the sure for require lock that that

we market, projects be capacity. got bit not And large And -- pull-through so and we contract, great are fabrication. I was at on of this as fab, that the the a we coming misspoke, and customer might to where and it sell contract happen ultimately forward prior And question will that the and end essentially us excess in of will a negotiating paying the about hope quite we But are push on million. have It of be in they $XX year. Jeff, material we by and there's remarks. I get to go through capital are that think you the the explained does maybe talked point in prepared kind that as a of

JP Geygan

might see forward something customers it. to their market continue that the capital expect your we tightness this budgets? really in increase Is going Got we as as

Richard Heo

having already Yes. additional customers. with conversations We're

that capacity. reservation one proximity just, close with a So unique and more today concept the about facility certain because, size in again, customer again, we're talked projects number having is these conversations our on our available facility than and to of we

conversations are with today. customers having very productive some we So

JP Geygan

the it of sort then give can finally, on have FERC of the length is timing as LNG Coast. work as And are various to XX of that the indications about projects projects bidding pertains any that as of Okay. the Gulf we've early that might along approved XX in us you talked the maybe this the by you stages well at capacity scope the be for been something and scope approval. But

Richard Heo

Yes.

simple very type complex process steel as structural could work tons the complex, metal and could fabrication type So of foundations be so modules work structure. be that as of X,XXX, a X,XXX

of So welded integrated. it process a just could modules insulation being have of lot together different to be terms very of electrical steel equipment complex kind components that in simple structural

JP Geygan

you, appreciate it. Thank helpful. That’s Great.

Richard Heo

Thanks, JP.

Operator

At this Mr. And to today's I'd like additional Heo turn over any time, this conference concludes comments. question-and-answer the session. to for back

Richard Heo

and to In who well demonstrate like as continue our thank to support to our success. their closing, customers I'd Gulf shareholders employees continued the Island's for recognize as commitment

For on Be those and for results you updating quarter look on to forward call, thanks care. your third our safe, our interest, and you again on speaking take the and I with call progress. conference

Operator

excellent Thank your Have day. you. thank an That you participation. conference. do does conclude We today's for

Gulf Island Fabrication (GIFI) 13 Aug 222022 Q2 Earnings call transcript