GIFI - Earnings call 4 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 fourth quarter and full year 2023 results. [Operator Instructions] 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. Cindi, please go ahead.

Cindi Cook

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

Our results at were the released X:XX be this afternoon, and 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 copy of

and everyone include language We that actual described results management SEC and in mind in recognized under and in would keep are release the our EBITDA, statements, profit, to most recent press EBITDA, backlog GAAP. release reference U.S. awards Please and cautionary certain Form adjusted that risk which differ forward-looking materially. XX-K to comments our press on note project Please factors measures the adjusted call, on gross subsequent included new like financial also refer this the not adjusted revenue, call filings. may and to may this

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

Richard Heo

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

in provide our review an on initiatives. from takeaways strategic have results our quarter, update then on we for key segment progress trends, will and the made XXXX. provide I'll Wes quarter outlook the greater call, some today's discuss on end performance and During market commentary and detail fourth our

open questions with then the closing and will remarks. end for up We some call

settlement projects. for pleased with the made Island. our strategic shipyard We completion and Gulf progress year off results extremely remarkable initiatives, on capped our including the our substantial of MPSV of our important I'm a litigation that quarter fourth

us, strong are to services and behind the company well key we distractions that trends now end focused demand our fabrication With these of positioned is in advantage a take markets.

XX% We giving quarter our Our combined initiatives. flexibility successful increased our the pursue significant we in core Fabrication of both fourth strong strategic balance, region, during and to us cash Services growth reflecting our execution EBITDA revenue and with the grew fourth strength generated last the from Gulf growth in our continued Coast our objectives. segments quarter, year,

strong our through have We stable and fourth As results, million our Services full of we EBITDA a quarter year of should small-scale the established growth Fabrication and be during business $XX.X base profitable evident financial services businesses. by and and generated up strong profitable prior we XXXX, XX% us from is in Fabrication, that expect XXXX. small-scale is Fabrication growth. base foundation further stable and and business year, pursue to provides fiscal In strong a the growth a our gives

canceled. XXXX, underutilization the generated large fabrication division growth fiscal the was gross over facilities execution small-scale margins Fabrication of benefit despite our business solid to fabrication project of During our and our and our owing of that in XX% partial

million strategy. Services the on divisions continued This Fabrication pillars nearly and of EBITDA would our key success generate adjusted to of have the focus possible $XX during Our strategic combined without been segment transformation operating not XXXX.

diversifying new opportunities our and continuing As strengthening execution project in further growing a stable, generating reminder, X growth offshore and focused we're traditional which profitable markets, executing pursue markets. our our skilled on growth strategic is business, to end on Services of pursuing workforce our Phase framework, expanding by while our

in announced we end II the An project. pursuit includes excited markets. gas our of Launcher components markets, pursuing contractor to about important of XXXX, our which XXXX beyond. and the our on I'm of continuing award Mobile part end an new strategy we remain to NASA's execute is and support from progress, focused strategy outside on growth transformation traditional structural fabrication fabrication projects for the the quarter of a oil small-scale In EPC second and

execution have that our has and received value. of schedule on result of focused estimated doubled work we scopes improvement, strong additional quality more initial our a As contract than

fabrication NASA Our a has with the the on quality attended Washington, where program D.C. with and traditional meeting the of the opportunity week in Artemis customer team outside last benefit construction recognized highlights the Island close This where markets, gaps on of historically Launcher. for Gulf we were focusing Mobile other schedule that contractors, helping delivered. schedule values small-scale our the certainty

encouraged be markets by end pet LNG, energy, remains to green tight. and Gulf continue Coast in activity capacity the and in key the We chem region, including industry

these and positioned opportunities. markets, several continue are well we attractive pursue to in We

However, -- continued and see decision have delays projects several with these issues factors to can can be that in cycles extended due that permitting large multibillion-dollar large we projects. project other to impact

not focused our the any and small-scale uncertainty. fab continue services added of contract profitably of LNG will approval layer In The we projects backlog risk the and said, business chase remain Biden and on recent postpone offer. that the does return to or excited they That the meantime, all growing meet another disciplined, by not decision we'll to objectives. enter opportunities are administration our into we by remain

segment our Now turning results. to

at our looking division. First, Services

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

grow example growth to EBITDA as growth translated another yet was opportunities, Safety higher-return of quarter resources XX%. the direct quarter during of benefit our XX% to of Services our This Spark and the revenue strategy to

by revenue XX% In fact, able the to for we X% Services were year, growth. our grow on EBITDA

Safety, labor Spark XXXX. tight expect into conditions continue growth to of this continued trend the we and With the

the business favorable customers our enter gas of and for specifically, the in spending XXXX. oil our for those Gulf and more the into trends environment remain by we demand as Mexico, key Driven encouraging Services

the we business strong in get Based for new In addition, recognize Safety another continue customers market. in our such, add these to advantages safety our Services traction Spark as factors, XXXX. we offering. the who year expect of continue to on And we to expect

nearly quarter fabrication We million, to on We business. moving quarter the once for Now our nature our XX% another period generated business, small-scale steady results Fabrication of of resulting from Fabrication. The and $XX revenue small-scale benefit change approval of in fab again, project driven strong from up the fourth the highlighting orders. year. same improvements customer last growth by stable generated of the were

For our in contribution the was full growth benefited project and business that year, large from the small-scale the we similarly our canceled. of fabrication fabrication

over of in year another expect excited long term. business continue we fabrication our business XXXX, to about growth our small-scale this and steady positioning the in be During

United The was into accepted in remaining ] projects, final we fourth Galveston, ferry Shipyard ferry ferry Finally, be We the customer [ TxDOT she turning quarter, next our was where completed respect occur division, in to projects. christening our final acceptance inspection the received. and With which the I Coast few to delivered the will the will was the put this conditional customer completed service. weeks. acceptance, XX-vehicle X have in in and be awaiting the week, we the in final Guard where tomorrow fourth the quarter States substantially ferry should attending and are

ferry, the shipyard Transportation. pursue final design Department our by for XX-vehicle Upon the periods activities be our wind function Carolina on errors a the of for of the we'll operating be of final Upon projects final warranty North and ferry to will And will immediately of acceptance, final of damages of the operations outcome Carolina. due complete. the down only acceptance customer our lawsuit North expiration lawsuit shipyard

by the flexibility, very XXXX of XXXX that of without not and hard us work fabrication our which In drive Island, business. of Gulf will remain confident accomplishments on have momentum been strong the from during of dedication to services our combined was for an business, reoccurring possible We're across with our our shareholders. one this excited strong closing, and base would exciting financial I'm our in build employees year our all organization. for and positions small-scale revenue foundation proud value that the

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

Westley Stockton

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

impact reminder, please XXXX, a a to As the resolution resulted for million been results the X for our for for the of which consisting have of revenue that full of reduction in MPSV as year note litigation, division. which reflect our division XXXX quarter separate both our of and full year $XX.X reflected the third items, Shipyard charge a

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

The we at a September charge for the a promissory resulting fourth entered Because note liability entered into into the $XX note second debt bonds the liability was performance from associated noncurrent and a year-end. contract as million the reclassified as that liability the was was reflected surety as recording of contracts. XX with a promissory quarter, was during issued the with of

estimate a favorable terms well repayment to we a approximately the the million, to obligation the include is term, below fixed present of interest Due amount of X% rate face be value the debt the the $XX.X of XX-year and note. of note, which which

for resolution the our prior XXXX the results. results and customer XXXX, period. Fabrication quarter both quarter project million EBITDA results prior Shipyard million, Consolidated division. fourth in was project Now of gains of improvements EBITDA our for higher operating our of XX% both insurance and up driven and reflects Consolidated solid change increase million the $X.X The $X.X the our adjusted Services segments. orders the adjusted the reflects the Fabrication for period. year of by The strong benefit turning Consolidated in adjusted improvement and for from growth to Fabrication for Services division from favorable the EBITDA our execution. revenue in removal year up including resulting division, was of was from fourth Fabrication, of $XX.X quarter

in increase Services the business compared The prior compared with our revenue million, year to line. the including to of fourth associated period. strong prior to $X.X Spark XX% the quarter for of Safety revenue mix, the million, for division, margin growth over by Services project Specifically XX% was Safety period, was incremental quarter year increase was driven a favorable higher-margin more $XX.X up business. for fourth Spark XXXX EBITDA XXXX an owing the primarily of our

basis result, XX.X% year period. XXX prior quarter, EBITDA the from the fourth was for a As up margin points

excludes insurance growth an For the customer the for due of our $X was to year with small-scale Hurricane fabrication, XXXX, project impact resolution prior change net period million previously from million million, improvement of EBITDA the $X.X the for was recoveries increase XX% year and and compared and improvements the from our of quarter change Fabrication strong the division, to favorable nearly fourth resolution adjusted $XX.X in by quarter small-scale The costs orders. was revenue gain fabrication driven which of fourth for a execution. strong mentioned in orders of compared XXXX to associated business customer Fabrication Ida, prior the resulting growth project period.

fourth totaled XXXX, Specifically $X.X quarter million. associated for aforementioned of the improvements with the project

these However, of were large recovery utilization contract. from cost under associated cancellation facilities resulting the the partially the benefits of in of offset with lower increase and resources, by overhead division's fabrication an

to EBITDA fourth $X.X impact million fourth consistent respect for to year prior Division, operating XXXX, loss in in of the was the of quarter with $X of For expectations. And the division, XXXX no was a our meaningful period. our which results to our had million a with we Corporate compared Shipyard loss quarter

a million Moving the $X with million, We year the our and due on $XX solid up from cash liquidity. balance to results to for approximately our roughly of September investments operating XX quarter. ended

discussed, year-end, [ the $X.X MPSV resolution obligation annual on approximately of previously XX, our associated was million payments debt litigation ]with our million XXXX. As beginning with of at $XX December

is of sale on award which our with further sale generated long February no net Our operations, the assets. ongoing property our cash including our impact and to of $X.X million. ability cash consistent into Louisiana balance have was underutilized approximately execute Houma, proceeds bolstered in XXXX. the any a at its sale our of liquidity our a strategy The with provide going debt facility, fabrication excess of duration large This strong liquidity to project, will monetize potential property and

the sale, segment full on providing we for results indicative year. we the proceeds $XX for exit XXXX guidance the a first property our cash respect from for of quarter Based balance million. expectation consolidated and our to operating approaching With quarter are with earnings the of and outlook expect to XXXX, first

Our outlook initiatives. is based end continued our our strategic combined markets, execution expectation strength of on the against our with for

driven segment, Safety approximately Services we continued $XX XXXX primarily of ] line. EBITDA For Spark million, by expect growth [ business our in our

expect $X excludes For fabrication the approximately EBITDA year-over-year our small-scale potential of but our includes any XXXX segment, of in award. benefit we Fabrication million, growth large which project

anticipated from resulting of Our gain [ the property sale. previously million roughly mentioned excludes an also forecast ] $X.X

prior of forecasted fabrication experience. our EBITDA than recent approximately large lower we with canceled contribution for year. consistent the was the due from expect XXXX year is to Our of million, XXXX which Fabrication a XXXX is $X project Corporate And for historical our levels EBITDA loss segment, benefiting during the that our

facilities million $X.X $X.X Houma more typical to requirements. capital to advanced the our With we investments $X.X requirements million the technologically more million to respect our to upgrades equipment. maintenance XXXX, And of of CapEx expenditures our and capital remainder approximately approximately for year, in for relates which reflects anticipate

expenditures of January capital by caused damage supplemented insurance million Our to by received XXXX $X previously associated facilities XXXX will be with for Hurricane our Ida. proceeds Houma in

fourth prepared December approximately XX, program. approximately stock line under XXX,XXX quarter, our remarks. approximately share the repurchased had remaining our of mid-December. purchase you the the stock questions at our of may during concludes commenced now Operator, common program we common XX,XXX in authorization we And open under for This for shares repurchase to $X.X million Lastly,

Operator

first Our the Martin of Malloy from question Johnson Instructions] with Rice. is [Operator line

Martin Malloy

progress months. you've over company, de-risking strong quarter. the particularly X Congratulations on last the the the Also, made

that was kind number I first got a the construction on their had work that chemical have under and Gulf projects just baseline small projects. The I LNG do bidding FDA number But LNG. for of or large and to appreciate of fabrication, either a about environment base approval. be still you've the a going And appear of forward load Coast projects there's there's energy for along fabrication of are they outside still question --

that think would about activity the But work I projects maybe and of potential levels? comment there's seeing the projects there. for you're still environment you bidding some So just fabrication could larger type the

Richard Heo

Yes.

LNG observations in still volume of projects are on. both spot and good a are very Your petrochemicals. There

that On have process and the projects LNG projects, obviously, approval gotten the they're FERC construction. of the in

projects, the is of are One of the capital -- very the year, just move projects have in X.X and we are seen challenges we These that lot seeing right. things market. years the are past in large a so they

changes then the around other the And we're challenge because we're that on. there the seeing that of been the contractors, EPC is budgets, the philosophies the some and/or scope has in working customer

build, the example, last And stick chasing large that a that we project a to project, -- of outside project, project lead basically because felt as kind were we're budget. where the very for were module year. a we their actively was a the decided in late contractor, customer So project, we in-house it execute

activity. of project And so a lot there's

large these bidding a go award. to projects know, from take to As you long time

of and things on capital that seeing are there headwinds availability again, some the side. some the with we're LNG However,

Martin Malloy

flow My of Okay. have repurchase expect might question, and sheet follow-up you that talk acquisition potential at you you share XQ, the of be you're could types the opportunities of That's at end cash the have cash kind of seeing? amount that balance the helpful. you maybe the looking of about opportunities to deployment the of . outside with

Richard Heo

Yes.

adding of actively utilize with opportunities that we've to the feel is And with had look [ especially business great have really the and been load like to us X to the for acquisition acquisition Dynamic on . of base actively us, a are years ago. the did now with offense time challenges for shipyard We capital. we and ] looking I our best for our for go us behind some

Westley Stockton

or at point, point, evaluate that Marty, that do mentioned. we invest obviously, if But like other find or at alternatives this is business return sense to doesn't that we shareholders. to what just Richard sense, to to And we'd is Yes. we things return the the come just the that in grow value or makes shareholders conclusion will cash the the to something make can't and attractive pricing

Operator

Our Tom of the Spiro is next Capital. from Spiro question line with

Tom Spiro

your Spiro fab to grow in remarks, division in prepared expect said awards. that's and Spiro, that the Capital. Tom you large Richard, excluding you XXXX, any

be smaller available? driven it's that the to by of -- you would So smaller expect you Why projects. projects What think do to be grow? why going do more these

Richard Heo

Gulf services see in Mexico. for one we the our customers Well, robustness in of

And there's and for a key a the in opportunity seeing fabrication we're with of Gulf we have so construction opportunities lot projected customers pull-through Mexico, where of activities growth. where maintenance

along with we're very that to markets chasing, our about we that, so opportunities the fab small for And regard end other good with of XXXX. some feel guidance

Tom Spiro

from little one in million. you resolution benefit or nice orders, $X fourth particular happened? almost What of of is change order ones? a quite had And quarter, the that lots . that the Was change

Richard Heo

It by change million that expect And than just way. About customer. change improvements. all order volume, was was it's time. orders, of million magnitude, $X.X rest to one you of based revenue those $X our all and on the obviously, the change improvements Yes. wasn't orders, more wouldn't the project that But

opportunities that something that in improvements, where as not the although happen level. realize we every will well. we will same those won't our happen, improvements quarter But will So that's project business, . project but have at like periodic

Tom Spiro

see. I

related of $X ever one, large we a housekeeping couple job. the had collect the we Did Number a to items. Just million receivable small $X fab . million?

Richard Heo

been It of as year-end. collected fully That's did. was collected. We fully

Tom Spiro

for pay it? two, with the $X.X going Was was propeller ferry, that Texas to respect propeller. Number issue great. resolved? to ever That's Who's a million there

Richard Heo

. tom. resolved, been That's

Tom Spiro

us you to tell Would care how?

Richard Heo

in describe way the results. it, Tom, best to is it's the Well,

going been to customer cost any . that to negotiation bear going forward. what, going and is So with quarter. and impacts impact the is to what The of customer extent release resolved. for going already the who in pay that's that results through the blade determination for is the fourth our cost And of we're to of

Tom Spiro

a it And or higher for higher for the happened. CapEx aiming the year on? ended, Anything never a seemed the in seemed . little you're aiming it QX, see. a going throughout just number I were you It number, fiscal year, light.

Richard Heo

well. would No, than that's see -- you a a bit XXXX have normally good as what And CapEx we numbers you really are observation. our higher

progress So expected some remarks didn't of of the in of prepared that facility mentioned equipment. is make in the in just make improvements terms the to some some simply XXXX. we we from And carryover those regarding I and investments

So there's for an causing XXXX. element of the CapEx that, that's lower

Tom Spiro

recently I did about . exactly lastly, see. And for you $X.X property million. sale the What sell?

Richard Heo

was a the That actually time. facility and was acquired is over Yes. facility just large fairly property -- our some of

And benefits, help to able we're productivity further monetize will don't costs. our and efficiency reduce we ago a an think ahead we us we property, just going was it's And we what us was And to both acquired piece it so for And need that One, been which think time company a some from was consolidate for that portion a ongoing operating asset forward. we time. a by as is we our sold some that long it our has something very the perspective property benefits. not a allowed that gave of operations the have footprint, us of underutilized X think other need. look we

Tom Spiro

lean it's the need? I are review there real estate now assets equipment, et significant and Or mean. we whether or that company, the you are see. not assets cetera, of . And may pretty remaining other as you

Richard Heo

at, our where with it's think this need No, and business. is now, to point. latter the think the asset Yes. run what base we happy I we're We're we at

or equipment. wouldn't more selling estate us I major So be to significant any expect real

things having the But with equipment, said normal to we'll sell opportunities for more course. look Now to just cetera. that be that may need that, we et continue not equipment equipment replace older will and or newer

Operator

Heo no would are I . questions, further there Richard? As to for Instructions] conference Richard the closing now [Operator hand comments. his over

Richard Heo

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

the I take For on updating interest, to conference our speaking you call our next those Be your progress. . on safe forward you call, again care. and for you and Thank thank and look you. with on

Operator

Gulf your conference for The has of Island concluded. Thank participation. you now

You may now . disconnect your lines.

Gulf Island Fabrication (GIFI) 7 Mar 242023 Q4 Earnings call transcript