GIFI - Earnings call 3 2023 | Gulf Island Fabrication, Inc.

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Operator

Good afternoon, ladies and gentlemen and welcome to Gulf Island's conference call to discuss the third quarter of 2023 results. [Operator Instructions]. This call is being recorded.

At this time, I would like to turn the floor over to Cindi Cook for opening remarks and introductions. Cindi, please go ahead.

Cindi Cook

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

were and at Our the this X:XX be released results afternoon website our is of call after on available replay on press this a available our A website evening. gulfisland.com. p.m. today's will release of copy

in statements, and to this may differ results the mind in comments the keep described most actual language and certain in release filings. on recent and refer and everyone our this risk factors Please Form release call to subsequent cautionary included include press forward-looking our materially SEC XX-K

U.S. Please new may project management call, reference revenue, backlog and EBITDA, under on this adjusted measures also GAAP. note awards financial which EBITDA, that are adjusted recognized not

SEC the these to by required GAAP extent reconciled their regulation and financial non-GAAP measures most rules release. financial press to comparable are measures our used, in As

and CFO. Richard we Mr. and President President have Wes Mr. Vice CEO Today, Mr. and Executive Heo, Heo? Stockton,

Richard Heo

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

with Wes strategic a our I'll for initiatives, takeaways call, have up on then including then the update questions then remarks. provide better open market resolution our During will today's detail. closing trends an discuss results on in call segment from the review our the key performance quarter. of and end third we litigation. We'll MPSV and the and made quarter of progress

strategic filing. an at we the believe are inflection our important point of I transformation in

shipyard next of nearly litigation, wind of down obligation we the our be to fully move of and our will phase MPSV the With to the able is journey. resolution on complete, the remaining

growth. closed on we're fabrication and to profitable have is sustainable a business focused that on and a past excited chapter challenged pure-play and We nearly the be services

solid our end quarter profitable of another developed is strong support continuing services by nicely that of strong, fabrication evidenced stable we business markets business solid platform our have both to business. strength services in a small-scale of to up As growth setting results, and fabrication base are and the experience underpinning and through The demand.

and have and litigation company us. reduces removes our to best costly MPSV eliminates a the in thrilled investing was behind the and interest of resolution believe firmly the and as perspective costs legal team. distraction vessel potential significantly settlement significant adverse We're an Island the avoid The ongoing a outcome holding risk potential to operating from Gulf a We lengthy it renews the and risk process. of for appeals the

ability discuss also in the our the The settlement happy say, that ahead removes of lies excited to we're have as fully what detail, more M&As. pursue such some an settlement initiatives has the matter company. strategic Wes and extremely to for we're overhang about will behind suffice us, of specifics but limited somewhat to the it

quarter. Now turning the to

million. our worth of the against made pointing the for divisions for contribution quarter experience out alluded growth strong third the that in our another progress in over EBITDA without stable growth $XX small-scale and of have combined quarter We in It demonstrate quarter operating solid to, services As services I third our and project strategic our $X.X months combined the business. of already during we any our and adjusted XXXX to continue results, initiatives. fabrication we EBITDA large adjusted fabrication to benefit generate division totaled results million X the generated is X our

increase to key for we focus these businesses secure quarters. grow to our is region, growth. our Gulf a contracts the in we encouraged Industry profitable remains capacity coming and business some petrochem activity of fabrication by and see Our continued larger tight, including continue utilization LNG, energy. services and the provide a markets order strong facility team to the be small-scale to form Coast in green longer foundation backlog opportunities Clearly, in and company, drive visibility for in key our end and

of we in to the in past, has stated support direct has modules. our and Gulf large modules of larger the As Mexico CapEx lay the have waterway close to facility the in access to down region, support proximity unique is its projects transport larger large

a support We grow load which in base of to also craft personnel large a solid have of award. on new

our division, base dedicated need believe on employees to of ramp award that continue we to labor While craft the project fungible. craft would up fabrication a we strong are a large in have we

from apart in our attractive the proposition, opportunities of term. which asset in us we near award customers fabrication value a which large is several CapEx competitors Texas. provides sets what projects will and However, some large for especially our We're Louisiana a project result in unique pursuing hope

results. our to turning Now segment

our Services looking at First, division.

quarter primarily third Our by contribution of Safety. X% Spark grew driven the revenue year-over-year,

still reallocate activity, slowed Safety. higher operating revenue from of and benefit opportunities of return able resources the owing the to to growth While results we contribution recent as from grow we're to timing Spark quarters project continue to

develop attractive our craft maintain and able A XXX that fortunate to looking force, talent. opportunities trends continues despite at the favorable focus our to feel be of headcount, for demand currently environment services labor our key key a customers. our and remain oil to services business business employees new spending for We which very labor been competitive roughly for driven our The by gas we've attract services retaining stands market.

product In traction project has fourth new that that addition, Mexico. and a quarter with a continues presence market strong of the awarded customer been offering will in commence we in the have Spark the in a Gulf to gain Safety our

pace EBITDA that $XX and quarter and generate continue growing momentum expect the on we approximately business fourth our to us we third growth continued year strong on the expect into quarter, putting Based services favorable sequentially to Services XXXX. Spark with market million. for the a trends for full Safety, EBITDA over of

are to acquisition support further actively We also momentum. pursuing opportunities this

for steady quarter fabrication Now pleased we fabrication. to another our moving report on generated business. I'm to

adjusted the prior and the year's modestly last the in Our contribution period year EBITDA revenue results project been due to has that large canceled. were compared fabrication of down since to

small-scale over surface, and long positioned our see continue However, below the another we with if business you quarter execution. to to produced steady growth project term. scale look to be business grow will smell volume excited fabrication you of the remain positioning this business and our We new solid award in in continue about our fabrication well strong

fabrication our resources in growth years market back, focused seen have we our business. as example, we few For steady year-over-year A anticipated growth. this we subsea in

a growth are sustainable result interactions, example and As This increase to volumes of recoveries bring the we cut fabrication strong our wealthy how we to of have our one small-scale the more is fabrication in market. our business. baseload overhead grown our high-quality customer of seeing

expect sequential a result, fourth from finish with As growth to the quarter in anticipated year third the on we quarter. to show a results note strong fabrication

our to turning Finally, Shipyard division.

of shipyard to her continue on our successfully We project vessel ferry construction make wind With Texas the safe delivered the a for XX-vehicle down the and customer GI. we Department completed Transportation, operations. progress to the in to respect towards of

agreed the blades will blades, the customer corrosion once we responsibility to the determined of quarter, required. identified propeller and installation last for discussed be and The the we received. blades, propeller directly has propeller new on future the has customer that As procure blades take of replacement

the blades, customer with should However, the the forecast a light price our disagree. bear we believes with final the of customer to the blades. cost We're the responsibility of disagreement propeller who XX, and follow propeller blades, costs. to we recovery should customer attempt necessary the of contract cost September the reduction of propeller claim for responsible estimated new the the is related XXXX, bear regarding ongoing In regarding blades will the for which the at having discussions for process of the the reflect cost cost who of

We customer of final and we're the the to with ferry. trials for working vessel, final have completed receive our acceptance the sea

we of ferry Carolina substantially and our for customer. acceptance to final vessel the in end, the Department X of Further, remaining respect Transportation, the quarter first In for projects was route the the during XX-vehicle complete quarter. delivery second customer is ferry ferry as North the received to of

the the the expect by occur of trials sea final final thereafter week and ferry activities commissioning to acceptance end be to with delivered of and We November. anticipate shortly completion in

which State pursuing the we complete, seeking Our look final North and ongoing, acceptance to damages lawsuit resulting contract for delivery and for vessels the resulting are the laws forward after in last is is obligations delays which the of our vessel. design earnest in Carolina the from

strategic by In the closing, strong lie that and positioning opportunities company. excited our ahead the for we're toward the extremely progress

our and operations shipyard the the of down business. quarter, wind have overhang the anticipated from removed significant will the With in fourth distractions

in execution financial solid our look note, on for operations are Gulf end a position. that strong, year strong are even markets optimistic Island. XXXX finishing We and and will a forward the Our are we're an be stronger to year and favorable we

over in now discuss results will call greater turn the quarterly I to Wes to detail. the

Westley Stockton

in regarding everyone. and segment good including results then and context, I impacts a Richard, the mentioned Thanks, on some and quarter. our their with will discussion additional results, the provide factors will Richard afternoon, our liquidity. by of conclude then details I consolidated discuss our

resulted of in which the division. reflect resolution results charge a as of of for for items, our Shipyard $XX.X to for reduction note which have reflected of revenue the our our that Please been Division, quarter litigation, separate X the consisting a million MPSV the impact third

of contract subject asset litigation. noncash charge write-off the the was first that a $XX.X The noncurrent contracts million with related a to associated the to of were construction

into $XX bonds from was the note, a million the resulting second The contracts. with for charge issued promissory liability recording the of performance with surety we associated a entered a that

promissory contract of long-term at as subsequent will reflected the been and note a be as into reclassified quarter in was the Because XXXX. XX quarter noncurrent fourth liability the September to debt end, has entered liability

which Now to turning the litigation charges resolution the $X revenue for the just the to was quarter. XXXX million, reflects quarter third of discussed. I related Consolidated

Division, and third being down wound year. impacts for all of million, of was Excluding the quarter the is settlement, adjusted to which $XX.X last Shipyard for adjusted quarter revenue revenue includes the revenue for of the our is the comparable which

adjusted the was the division Shipyard loss and EBITDA Consolidated $XX.X quarter Consolidated gains division. million, million while results $X.X reflects EBITDA our removal net for period. our the operating for of the consolidated insurance of fabrication third for adjusted was

by reflect from offset fabrication corporate results services adjusted our and the our Our contributions divisions, costs associated with positive division.

due $XX Specifically Spark compared period for XXXX last revenue business same to an was of million, the the incremental line. for revenue division, year Safety increase of the third associated the quarter to approximately Services X% with

quarter third was of were of revenues million million XX% the project second quarter $X.X sequentially Services the more the prior up business for Spark owing line. down approximately Third $X.X timing to the mix, from including a project the division's for to Safety year activity. favorable the benefit compared period, due to EBITDA margin quarter

Further, EBITDA the from XX.X% the margin up was quarter, XXX year period. basis for points prior

opportunities, strength project Given results quarter and third the of the to we markets our increase of expect anticipated relative the fourth ongoing quarter. timing end to operating

our net the XXXX to for compared $X.X adjusted For period. Ida last fabrication year million, was quarter EBITDA costs for Fabrication to primarily $XXX,XXX fabrication due $XX million of third a partially which quarter, revenue of large was for offset the and the the excludes lower division's small-scale year division, insurance higher same million $X.X Hurricane revenue the canceled recoveries for the period compared activity. with to decrease Fabrication prior third associated project, by of impact

to the and costs under mix. overhead facilities more of resources with increase year the partially lower associated favorable of decrease margin from project by was large to in an prior The project the offset cancellation recovery compared resulting due utilization a

quarter, We quarter momentum small-scale the to continued business. fabrication third relative results increase our to operating in in our expect by the fourth driven

ferry and our For resolution the third due MPSV the project revenue XXXX resulting resulting million the division, contracts. negative of quarter was litigation charges reductions revenue associated reversal remaining revenue Shipyard to our our from for with from of $XX.X of recognized previously

was vessel to to down mentioned our resources our under-recovery holding underutilization advisory litigation, and costs related operations. project loss the legal due related with and of our associated to of the for the projects, charges overhead MPSV wind ferry Our costs partial shipyard and $X.X fees of the as we the revenue and reversal quarter million previously

lease third impairment asset. the associated division, and our partial loss noncash XXXX office EBITDA approximately corporate Corporate For quarter both EBITDA $X.X period. a $XXX,XXX year was the for third of our of adjusted the Adjusted for quarter the XXXX of of with charge million prior of excludes

to million, our from we improvement our to and roughly quarter $X and respect primarily $XX June XX, capital. operating working solid With results investment liquidity, of up ended a with owing million cash balance modest third the in a approximately

the of to end, of have promissory is well December the the be due important $XX quarter face $X.X and to of interest on estimate in fourth MPSV below at discussed, $XX a resolution debt in noncurrent favorable of a less litigation previously repayment rate and which include note that the of terms beginning XX, the It's note, a period, we result our the million X% be amount with associated the annual will to As which obligation than value present payments note. which fixed XX-year of we quarter long-term XXXX. million will of contract the XXXX of liability reclassified approximately million as

quarter strong million. expect XXXX capital, balance of additional exit with cash on our of a expectations the results in improvements $XX approximately for to working Based fourth and operating we

This for you the concludes our may prepared now questions. remarks. open Operator, line

Operator

[Operator Tom Spiro comes question Our Instructions] Capital. first from

Tom Spiro

Tom party last Spiro, was quarter? million million quarterly the large Spiro or from contract. the of this stand? pay call roughly that with Capital. from fabrication Number questions. we a Did A they $XX one, had $XX that our my couple receivable does Where it recollection

Westley Stockton

Yes. the the million And end quarter. $X $X of at this collected We This that of at quarter, around balance the is million. sits Wes.

to and maintain rest that security expect of in We quarter. payment do the continue the to fourth bond. we a collect

Tom Spiro

That's Okay. great.

in the say commentary in you capital. fourth that that improvements Are when you're quarter, additional expecting in your to working you in particular? so referring And

Westley Stockton

an element that's That's it, of correct.

Tom Spiro

was the problem hull. the been issue hull. issue that ferry That's that a recall I shipbuilding the were there on some there the due with I They Overall helpful. see. as side, was North resolved? regarding contending second to Has Carolina,

Richard Heo

design. been there challenges Carolina is from which in of Tom, problem has route, speak the think and the last in has Yes, acknowledging we South it's this That in change that some the Richard. customer is been orders the resolved, hull the today. of some is series vessel, I as

Tom Spiro

for plans, budget what's expenditure Capital CapEx QX? the

Westley Stockton

number we million million. now, expect to be $X $X around Right to that somewhere

Tom Spiro

see. I

mean many but notice struggling mean in offshore for generally lastly, that Not a that newspapers the folks. help is Okay. you And wondered I what can't you business I the particular, these suggesting industry, bit. struggling. quite articles for wind days for may the in I that

Richard Heo

the really doesn't have Well, big Tom, a projects in weren't it actively. for facing the us, short we impact term, because wind a lot of

steel forward. We secondary are structures, kind working are some those which on projects of moving

as believe is I chain the projects ultimately, the continue think just get I we in these firmly see the And delay as delay. will momentum supply -- more wind that just delay. improves, projects and this a just a

Tom Spiro

years? actually great in couple squeeze Weston the won you the LNG, just LNG opportunity is last any me last LNG Let of Have over company. business one one. a mentioned meaningful for

Richard Heo

the project -- was LNG we project. that an Yes. did Well, canceled was

Operator

lines. appears will over It Richard back questions remarks. Heo hand no further the for now Instructions] we from I have closing to [Operator

Richard Heo

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

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

Operator

and Gulf Thank this you. call. Thank concludes Ladies and goodbye. Island you, gentlemen, conference

Gulf Island Fabrication (GIFI) 7 Nov 232023 Q3 Earnings call transcript