GIFI - Earnings call transcript Q2 2024 | Gulf Island Fabrication, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to Gulf Island's conference call to discuss second quarter 2024 results. [Operation 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

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

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

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

Richard Heo

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

the greater trends second provide then initiatives. on performance of quarter and I'll Wes made our will update from review results on questions strategic results on our our segment on we have operating closing end today's quarter, then objectives. with key of the and in the takeaways for we continue progress strategic call, detail market a discuss important an and delivered and outlook then progress second our commentary make call to stable, and some another for profitable period during quarter, up remarks. We We'll the open XXXX. During provide

segment were our revenue impacted last some X% our results our strong in compared negatively by investments division. our our quarter are of project likely Consolidated quarter pushouts by driven results division. Project delays X-year Services our negatively in in cause fall our short-term incremental the objectives in While and growth growth short initial year, support second fabrication second to Services us still increased target. to EBITDA impacted to of nearly Services and

overall. Services disappointed short remain guidance, Gulf in we Island to by business fall our of we for outlook optimistic While the are the

exciting strong to continue us while at We high level position our tailwinds along objectives. pursue new These are growth our executing in financial as with investing end significant flexibility a give our remain some growth markets businesses strong. to

our Now turning segment to results.

in strong. spending The offshore remains market our environment our services looking overall Services First, division. at key

Our from extremely This operations customers driving Gulf on based capital healthy to commentary is XXXX and expect are in continue profitable. strong their the of spending, into this key Mexico and we and customers. remain maintenance

primarily were were to Services spending. customer-specific lost, delays opportunities. some issues. projects not quarter Safety These impacted results project were and by the delays The to dates related second investment the project project due delayed start Spark were However, project but

it our nature of is While ability the Services these working make headcount. the hard given recover slippage including craft of for from up to to we're impact to ramp up pushouts, project difficult our quickly business,

new investment the services. incremental and also to decision initiatives exciting support make spending We of made in growth

are past that Mexico represents a disclosed the X,XXX Government Island assets dismantling XXX believe CES, business Accountability and offering decommissioning for in our Gulf for our oil which line, During the the coming the of Cleaning and due gas services decommissioning Office activity years. The expands or platforms of the and the to quarter, recently Mexico. Gulf meaningful Services Gulf support of second Gulf opportunity We Environmental wells better we in in launched in decommissioning potential of Mexico. and

In will in addition, must cost future. and the by there need a recent dismantled these estimated study that billion also same $XX a decommission nonproducing Nature oil decommissioned the And and be By to law, XX,XXX decommissioning. Energy roughly gas study the are well estimated roughly companies of wells. total wells for

value made in spending up. activity seeing we we the of And a While order launch CES pick as for will business. CES past are overall have in plans ramp participated services a to decision our inevitably looking decommissioning as strategic Mexico single the our up of accountability. Accordingly, customers Gulf add already we activities, to in our result, are decommissioning point to

in prior half the second already with the have both short activity witnessed and should incremental during our investment project more year which XXXX. The expected spending, the of continue mentioned half combined full the to project see guidance. clients the keen division Services delays of with We interest fall a year previously of into EBITDA significant second our ramp-up of cause are us to will year, from

division $XX businesses. As full-year our a initial Despite $XX invest EBITDA million. a Services lowering our range revising to we as continue to Services in guidance, Services division new of especially for we remain result, $XX guidance optimistic division, million we are growth our million to

Fabrication. moving Now to on

markets from the the XX% demand strong fabrication in small fabrication business. customers. momentum last trends pull-through including year, market active, The our subsea increased fabrication small-scale services the by opportunities and Our in remain revenue from driven our in

focus our markets. structural again the fabrication strong traditional the end our once NASA to contributor of for Our our performance. contract for market and to highlights was key This gas contract outside a components oil opportunity expand

delivering. and Island is certainty, that end quality than more capable a premium markets place areas on are of schedule where seeing these Gulf We

through of a our will of scopes result given additional extend As have XXXX. we performance, contract that been our NASA work

caught of contractors in to opportunities. have markets we the additional and their attractive We end position pursue believe attention realize an are and NASA new and

much and LNG for projects. a been has unfortunately, On change. Earlier not this administration approvals Biden there the of the future large pending year, fabrication paused market,

get gas hold. on this did in recently pause put as earlier federal judge positive Louisiana permits some on we the export a news department's energy month However, natural

also to large continue we projects with actively several large extend we are the associated many conditions are but uneven large and and interest to as decision right lines challenges well. to continue to uncertainty, attractive rate fabrication the of opportunities, inflationary petrochemical with pursuing. We're outlook cycles current continuing the While budgetary for chasing regulatory these they projects are LNG, the and upcoming facing push pursue elections projects time

However, challenging. we on fabrication timing large remains bullish to for predict potential remain the ability but the awards,

dependent market trend in business for are on fabrication small Based in strong in on as our grown have for we remain fab end and positioned right growth opportunities the we awards. while small-scale adjacent We fabrication markets, large the large opportunities. well as our new we small wait well much markets project now less our

division, in warranty vehicle second down In past North plan of one quarter ended operating we closing, quarter our ferry for for period operational relates substantially while the the vessel. In remaining of associated completed the we quarter, for the business, a we the to ends design obligations pursue quarterly in Shipyard remaining stability the final previously customers' ends years first factor our resulting with of mix recent year are and the the will always the business. to our The incurred project the Department and predictability to the project have we and financial warranty avenues on XXXX. of ferry our results it projects of the ferries the ferry deficiency also our the vessels last the XX timing XXXX. In warranty in wind our all our the submitted discussed from fourth to final ferries, will during during XX warranty quarter. shipyard of costs vehicle associated Carolina significantly And other the legal our projects with periods improved recover items quarter regards period the performance. that Transportation XX As in have and be third vehicle of

provides on now long-term outlook, in and growth bidding to our customers our execute with continue for impacted several fabrication financial for confident we're quarter in active, strategic quarterly are and for us strong to our call greater position discuss while detail. opportunities short-term avenues a negatively pursue capital in in spending to position. This Island. The year Gulf will projecting our So Wes value initiatives potential factors over to based plan, projects full deliver confident favorable as results remain coming we Services environment of shareholder on we turn base second in the increased our our years. I we our XXXX, the to And value are in creation. results remains ability the large

Westley Stockton

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

EBITDA for $X.X The division. Consolidated Adjusted to growth $XX.X fabrication our turning quarter the from project million for the period million of year Consolidated the that down in an consolidated prior prior was partially of for EBITDA from our Shipyard $X.X of losses $X.X driven year the business, year XXXX, results. by Now million. was impacted delays quarter was negatively of division. strong period for million for results offset Services increase the X% second small-scale second the revenue excludes by increase of quarter adjusted $XX.X million, prior in XXXX period. our

of The less million division, XX.X% to quarter the Specifically project of due associated by $XX.X second million, from new $X.X of investments start-up project for margin driven timing of quarter lower to awards for CES lower revenue division line. delayed or XXXX revenue, with the was a project XXXX. was The XXXX the million favorable year the for of was Services of opportunities. EBITDA certain decline $X.X a decrease $X.X X% compared decrease XX.X% quarter prior revenue second and period. was mix the down business the second or of or primarily revenue, to of for million due the

our activity. And to by period. With was division, favorable of XXXX higher our to a to $X quarter an XXXX liquidity, fabrication offset Fabrication second $X.X increase for the for EBITDA to compared primarily the with from $X.X second strong small-scale million, investments quarter year increase of increased million and XX% was due the quarter quarter small-scale associated of quarter. due margin $X.X from our fabrication or compared first second over the mix, resources ended from $X our of of improved just EBITDA down prior year million the cash the million, less with was facilities of second a For prior the million revenue cash the Corporate quarter revenue balance XXXX utilization to and respect highlighting million conversion of free and for partially a million, for a the project million $X with activity. the of the XXXX, for division, loss second period, nearly $XX for $XX.X of EBITDA we flow quarter, loss end our on of up higher

cash on going payments obligation expect associated continue of $X.X December Given our of the with lower conversion resolution NOLs, MPSV with cash strong free high XX, to flow balance anticipated forward, a remains we million, XXXX. annual our debt needs rate. At at to XX, $XX June beginning EBITDA million litigation approximately and capital our

objectives. And long duration earnings growth position finally, provides capital for and our in requirements strong XXXX. us puts and debt and ample liquidity balance our a the outlook us to turning flexibility pursue cash to Our our of

primarily As the our for Services The spending incremental prior million Safety our our of balance remains lowering in of initiatives. unchanged. of on to The division for reduction million, business delays our $XX and to line our a $XX timing investment discussed, target to we million. range from growth of due opportunities project down Richard guidance is are guidance $XX Spark

to division, remarks. EBITDA our quarter. our And project Fabrication approximately to expenditures year requirements, XXXX the in approximately million an EBITDA with XXXX for for our capital are and XXXX with anticipated Operator, to previous spending million small-scale to forecasted the adjusted loss fabrication the expectations, continue sale concludes we consistent $X now forecast to million growth award EBITDA for questions. of open remainder our full plans approximately $X.X assumes expect $X approximately $X $X.X potential our in million. With gain division, a continue exclude business. Corporate the to year. This of million continues of any our prepared of which year-over-year $X be may adjusted million, for capital expect to million, For we line for large of is respect first property $X.X of our excludes our capital benefit which you the from The

Operator

with first Johnson is from Instruction] Malloy Martin Rice. question [Operator The

Martin Malloy

I all and abandonment. opportunities have know the maybe any additional with about market, are there with the CES Could that to shop and here. exactly business? how ask And that companies in done abandonment wanted out other about I you about do And and I one-stop doing addressable if solution. work the on increases commercial plug to plug the information past all you downhole guess or what you're a you provide partnering talk diving

Richard Heo

start service of scope a allows to That's gives It's of to What But that and the a as now the past. down. been right of where taking whole our and now that us And penetrating the opportunities are we of decommissioning. has offering, before the the flushed takedown Marty. it simple And where decommissioning good connectivity are takedown slate safe scope the far -- our asset. kind is critical we in with absolutely, with out and and and we decommissioning plug the activity, the do more Environmental pretty we we are as has of look larger sure full abandonment. make Services act in the in value in practices that safe just predominantly portion more been the as our go really working of that key question, on is past conversations dismantling opportunity It's and CES do add or we of clean the the and because in and now Cleaning component the asset -- partners us asset. at predominantly the structure partners, get on lines the

Martin Malloy

pressure in the talk bit I of pace this timing maybe and just the regulatory realize ramp-up with started stuff. of And How progressing? activity you to there's Okay. growing a that of get activity of the see -- about P&A that? Can terms you little the

Richard Heo

seeing we've Yes. X that Marty, -- that and with something been light past activity. some this the years for the seen is about I've hearing

think I really advancement of bankruptcy facilitated activities. the the has recent or more decommissioning Cox resolution speed

in are months. uptick And past few so seeing we an the here

activity we is so XXXX that Island. material belief And should in our that see increase Gulf for in

Martin Malloy

not the completion in in is the Okay. And but one And a is And world. other fabricate give world? a equipment areas to then little fabrication It you picking an for or your remarks, bit for but equipment activity about there the types opportunity prepared fabricating? market. Mexico Gulf could you Gulf the maybe of around just you're me the the just us deepwater question on just Mexico, for little of last more other the this of it that up, detail mentioned about is deepwater appears just of basins that

Richard Heo

Yes.

steel as with customers that. always our fabricated So lot in Services we there's some is that Marty, a construction we've about activities, our talked where do pull-through are past, regular maintenance and fabrication, doing and of associated

our improvement process metal past group production business. But have phase water real injection seeing typically Services the work be an of We're Gulf the steel construction the subsequently. to decent opportunities these being seen engineering translates in fabrication year, amount for and fabrication. They uptick or larger of ultimately we lot of improve skids, skids, opportunities a which those evaluated to engineering be some water treatment that structures lot be there of the of types operators. outside what activity, might and the where Mexico the of a key various our efficiency projects gives are activity where Gulf work capital Fab Mexico a in larger will project essentially of assets, of going is So to

be fabrication onshore about and in But activity that see I well. large LNG. to we're XXXX we on strong on the as we as XXXX. And talked the petrochemical And side the positive and offshore should and to so from reduced anticipate good a it both standpoint relates of key pretty capacity we onshore, like believe chasing business talked that opportunities do the obviously offshore, projects about some fabrication we with

Operator

a Johnson [Operator follow-up We from Malloy Instructions] have the of with Rice. line Martin question

Martin Malloy

want I'm opportunities M&A in of the and trend there, kind back I ask pipeline that to terms opportunities to of about funnel opportunities noteworthy you're seeing. again. the look Anything of of at?

Westley Stockton

and there's activity a disconnect the there sellers Yes, buyers the market point, around and just going out valuation. there's Marty, At on. this challenge between is the the primarily

of we've would like we services the a now. lies multiples because that at, trade a about right business business, interest as call they talked businesses. you forward basis the have sellers side That's looking of where like side people-driven we'd other market the the strong perceive nature mostly what businesses their Our lower command they then multiple what on to for And in that grow. going services right? And what the the the a and of pretty at

And challenging. so sometimes bridging that is

sometimes makes is of get there. So it's to making it deals But done. pipeline out -- a difficult things it there

finish Just now. line things over is challenging right the getting

Richard Heo

Marty. And so to just to add that,

good value food in selective kind to And growing of As our that -- be the things allows that use more doing in that and Services capital one the Environmental of we're a on business terms added is starting it Cleaning of me as offering. result say, are examples good into of where our we a guys the right? really challenging it's are chain, and own, and us you services or moving have Spark this our environment, Safety of up heard

because of pipeline or is are acquisition looking So about. targets opportunities we the talking of homegrown but Wes just also disconnect are we are that -- not we that only at funnel have actively of chasing, a the a some

Operator

gentlemen, for would Richard closing over hand like now concludes I Ladies that comments. to and session. you. Heo our to the question-and-answer conference Thank

Richard Heo

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

For in for updating take we're Gulf thanks forward Island. If you the to connect progress. speaking those on call during safe conference your interest with to our care. able on again and you next on the Be quarter, and I call, not look our

Operator

concludes teleconference. This you. Thank today's

this participation. your for Thank you You disconnect your lines may at time.

Gulf Island Fabrication (GIFI) 6 Aug 242024 Q2 Earnings call transcript