HOUSTON, Oct. 26, 2017 -- Gulf Island Fabrication, Inc. (NASDAQ:GIFI) today reported a net loss of $3.1 million ($0.21 basic and diluted loss per share) on revenue of $49.9 million for the three months ended September 30, 2017, compared to net income of $0.5 million ($0.04 basic and diluted earnings per share) on revenue of $65.4 million for the three months ended September 30, 2016 and a net loss of $10.9 million ($0.73 basic and diluted loss per share) on revenue of $45.9 million for the three months ended June 30, 2017. For the nine months ended September 30, 2017, the Company reported a net loss of $20.5 million ($1.38 basic and diluted loss per share) on revenue of $133.7 million compared to net income of $7.1 million ($0.48 basic and diluted earnings per share) on revenue of $230.9 million during the comparable 2016 period.
Kirk Meche, the Company's CEO and President, commented, "Results for the third quarter of 2017 are reflective of continuing suppressed market conditions along with revised estimates to complete two vessel construction projects within our Shipyards division. Additionally, we incurred holding costs of $1.1 million during the quarter related to our South Texas facilities which are for sale. Year-to-date holding costs in South Texas were $3.6 million plus another $1.9 million in depreciation which was incurred during the first quarter.
"As stated in prior earnings calls, we are focused on managing our balance sheet and rebuilding contract backlog in new markets. Our revenue backlog of $251.7 million has remained comparable to our last quarter which includes new awards from our Services and Shipyards divisions and is at its highest level in over three years. The majority of our backlog remains in markets primarily outside of oil and gas."
He continued, "On August 25, 2017, our South Texas facilities were impacted by Hurricane Harvey, which made landfall as a category 4 hurricane. We are working diligently with our insurance agents and adjusters to finalize the estimated damages. Based upon our initial assessment of the damages and insurance coverage, we believe that there is no basis to record a net loss at this time."
The Company had revenue backlog of $251.7 million and labor backlog of approximately 1.6 million labor hours at September 30, 2017, compared to revenue backlog of $251.0 million and labor backlog of 1.7 million labor hours reported as of June 30, 2017.
| September 30, 2017 | December 31, 2016 | |||||||
| (in thousands) | ||||||||
| Cash and cash equivalents | $ | 17,792 | $ | 51,167 | ||||
| Total current assets | 209,608 | 113,360 | ||||||
| Property, plant and equipment, net | 90,989 | 206,222 | ||||||
| Total assets | 303,380 | 322,408 | ||||||
| Total current liabilities | 45,639 | 35,348 | ||||||
| Total shareholders’ equity | 243,847 | 263,032 | ||||||
Our balance sheet position at September 30, 2017, includes $17.8 million in cash, no debt, and working capital of $164.0 million which includes $107.0 million in assets held for sale, primarily related to our South Texas assets. We continue to monitor and maintain a conservative capital structure as we navigate through the current oil and gas industry downturn and further expand our efforts to secure additional project awards in markets with greater demand.
Declaration of Quarterly Dividend
The Company's board of directors declared a dividend of $0.01 per share on Gulf Island Fabrication, Inc.’s approximately 14.9 million shares of common stock outstanding. The dividend was declared during a regular meeting of the board held on October 26, 2017, and is payable November 24, 2017, to shareholders of record on November 10, 2017.
Quarterly Earnings Conference Call
The management of Gulf Island Fabrication, Inc. will hold a conference call on Friday, October 27, 2017, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss the Company’s financial results for the quarter ended September 30, 2017. The call is being webcast through CCBN and can be accessed at Gulf Island's website at http://www.gulfisland.com. Participants may also join the conference call by dialing 1.866.564.2842 and requesting the “Gulf Island” conference call. A digital replay of the call will be available from a link on our website two hours after the call and ending November 3, 2017.
Gulf Island Fabrication, Inc. is a leading fabricator of complex steel structures and marine vessels used in energy extraction and production, petrochemical and industrial facilities, power generation, alternative energy projects and shipping and marine transportation operations. The Company also provides related installation, hookup, commissioning, repair and maintenance services with specialized crews and integrated project management capabilities. The Company is currently fabricating complex modules for the construction of a new petrochemical plant, completing newbuild construction of a technologically advanced offshore support and two multi-purpose service vessels and recently fabricated wind turbine pedestals for the first offshore wind power project in the United States. The Company also constructed one of the largest lift boats servicing the Gulf of Mexico ("GOM"), one of the deepest production jackets in the GOM and the first SPAR fabricated in the United States. The Company’s customers include U.S. and, to a lesser extent, international energy producers, petrochemical, industrial, power and marine operators. Our corporate headquarters is located in Houston, Texas, with fabrication facilities located in Houma, Jennings and Lake Charles, Louisiana, and Aransas Pass and Ingleside, Texas.
| GULF ISLAND FABRICATION, INC. | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Revenue (1) | $ | 49,884 | $ | 45,868 | $ | 65,384 | $ | 133,745 | $ | 230,864 | |||||||||
| Cost of revenue | 50,378 | 57,488 | 60,125 | 150,755 | 205,839 | ||||||||||||||
| Gross profit (loss) | (494 | ) | (11,620 | ) | 5,259 | (17,010 | ) | 25,025 | |||||||||||
| General and administrative expenses | 4,370 | 4,640 | 5,086 | 12,940 | 14,633 | ||||||||||||||
| Asset impairment | — | — | — | 389 | — | ||||||||||||||
| Operating income (loss) | (4,864 | ) | (16,260 | ) | 173 | (30,339 | ) | 10,392 | |||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense | (45 | ) | (158 | ) | (110 | ) | (262 | ) | (248 | ) | |||||||||
| Interest income | — | 12 | 12 | 12 | 20 | ||||||||||||||
| Other income, net | 38 | (266 | ) | 599 | (221 | ) | 1,039 | ||||||||||||
| Total other income (expense) | (7 | ) | (412 | ) | 501 | (471 | ) | 811 | |||||||||||
| Income (loss) before income taxes | (4,871 | ) | (16,672 | ) | 674 | (30,810 | ) | 11,203 | |||||||||||
| Income taxes (benefit) (2) | (1,761 | ) | (5,749 | ) | 133 | (10,322 | ) | 4,134 | |||||||||||
| Net income (loss) | $ | (3,110 | ) | $ | (10,923 | ) | $ | 541 | $ | (20,488 | ) | $ | 7,069 | ||||||
| Per share data: | |||||||||||||||||||
| Basic and diluted earnings (loss) per share - common shareholders | $ | (0.21 | ) | $ | (0.73 | ) | $ | 0.04 | $ | (1.38 | ) | $ | 0.48 | ||||||
| Cash dividend declared per common share | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.03 | |||||||||
| ________________ | |
| (1) | Revenue includes non-cash amortization of deferred revenue related to the values assigned to contracts acquired in the 2016 shipyard asset acquisition of $0.5 million, $0.3 million, and $1.5 million for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016 and $2.4 million and $4.1 million for the nine months ended September 30, 2017 and 2016, respectively. |
| (2) | We adopted Accounting Standards Update (ASU) No. 2016-09 on January 1, 2017, which requires the recognition of the excess tax benefit or deficiency related to the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes created when stock grants vest as an income tax benefit or expense in the Company’s statement of income. Under previous GAAP, this difference was recognized in additional paid-in capital. |
Operating Segments
Backlog (in thousands)
| Segments | September 30, 2017 | December 31, 2016 | ||||||||||