Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2025 was $37.5 million, down from $41.3 million in Q2 2024, primarily due to lower small scale fabrication revenue and weaker services activity [15] - Adjusted EBITDA for Q2 2025 was $1.9 million, a decrease from $2.5 million in Q2 2024, excluding $1.8 million of transaction costs related to the ENGlobal acquisition [15] - Cash and short-term investments at the end of Q2 2025 totaled approximately $62 million, reflecting the impact of capital expenditures and share repurchases [17] Business Line Data and Key Metrics Changes - Services division revenue for Q2 2025 was $22 million, a decrease of 3.5% compared to the previous year, mainly due to lower offshore maintenance activity [15] - Fabrication division revenue for Q2 2025 was $15.8 million, down approximately 15% year-over-year, attributed to lower small scale fabrication activity and delays in new project awards [16] - Corporate division adjusted EBITDA was a loss of $1.2 million for Q2 2025, an improvement from a loss of $2 million in the prior year [17] Market Data and Key Metrics Changes - The company is seeing extended decision cycles for new project awards in certain end markets due to market uncertainty, particularly in the fabrication business [10] - There is a noted pickup in dialogue with customers regarding large projects, particularly in the LNG and petrochemical markets, driven by stabilizing tariff positions [25][28] Company Strategy and Development Direction - The company has focused on reducing risk, growing services and small scale fabrication businesses, and strengthening project execution, which has led to more stable core business performance [5] - The acquisition of ENGlobal is expected to broaden product and service offerings, expand the customer base, and diversify into new end markets [6][7] - The company remains committed to a balanced capital allocation framework, prioritizing investments in business growth and potential acquisitions [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term competitive positioning despite near-term challenges, including ongoing trade and macroeconomic uncertainty [20] - The company anticipates that consolidated results will improve significantly in Q4 2025 and into 2026, particularly for the fabrication division [19] Other Important Information - The integration of the ENGlobal acquisition is progressing as expected, with initial positive reception from customers and potential strategic partners [8][9] - The company expects operating losses from the ENGlobal business in the second half of the year, estimated between $1.5 million to $2 million [20] Q&A Session Summary Question: Can you describe the industries and end markets where you're seeing a pickup in dialogue on large projects? - Management noted increased discussions in the LNG and petrochemical markets, with improved frequency and quality of conversations due to stabilizing tariff positions [25] Question: Is the large structural steel project a first of its kind for Gulf Island? - Management confirmed that while it is a new end market, Gulf Island is well-equipped for the project, leveraging their capabilities and experience [26] Question: How is the labor situation affecting the company? - Management indicated that there has not been a dramatic impact on labor availability, and they are confident in their ability to hire quality employees for upcoming projects [30][31]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-34279 GULF ISLAND FABRICATION, INC. (Exact name of registrant as specified in its charter) LOUISIANA 72-1147390 (State or other jurisdiction ...

[Q2 2025 Earnings Release Overview](index=1&type=section&id=GULF%20ISLAND%20REPORTS%20SECOND%20QUARTER%202025%20RESULTS) This report details Gulf Island's Q2 2025 financial and operational results, including the Englobal acquisition and key financial statements [Q2 2025 Financial & Operational Highlights](index=1&type=section&id=SECOND%20QUARTER%202025%20SUMMARY) Gulf Island reported Q2 2025 consolidated revenue of $37.5 million, a net loss of $0.6 million, and positive adjusted EBITDA of $1.9 million, alongside the acquisition of ENGlobal Corporation assets Q2 2025 Key Financial Metrics | Metric | Value (USD) | | :--- | :--- | | Consolidated Revenue | $37.5 million | | Consolidated Net Loss | $0.6 million | | Consolidated Adjusted EBITDA | $1.9 million | | Services Division Operating Income | $1.6 million | | Services Division EBITDA | $2.0 million | | Fabrication Division Operating Income | $0.4 million | | Fabrication Division EBITDA | $1.1 million | - The company completed the acquisition of certain assets from ENGlobal Corporation related to its automation, engineering, and government services businesses during the quarter[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=MANAGEMENT%20COMMENTARY) Management emphasized business model durability with $1.9 million adjusted EBITDA, noted improved bidding activity, and expects the Englobal acquisition to be accretive from 2026, supported by a strong $62.2 million cash position - Despite market softness, the company achieved adjusted EBITDA of **$1.9 million** and is seeing improved bidding activity, securing a limited notice to proceed on a contract worth approximately **$20.0 million**[4](index=4&type=chunk) - The acquisition of Englobal is strategically significant, expected to broaden service offerings and diversify end markets. While post-acquisition losses are anticipated for **2025**, the business is projected to contribute to profitability in **2026**[4](index=4&type=chunk) - The company maintains a strong balance sheet with **$62.2 million** in cash and investments. It executed on its capital allocation strategy by repurchasing **437,000 shares** for **$2.8 million** in Q2 2025[4](index=4&type=chunk) [Detailed Financial Performance](index=2&type=section&id=RESULTS%20FOR%20SECOND%20QUARTER%202025) Q2 2025 consolidated revenue declined to $37.5 million, resulting in a $0.6 million net loss, impacted by lower divisional activity and $2.3 million in Englobal acquisition-related costs and losses [Consolidated Results](index=2&type=section&id=Consolidated) Q2 2025 consolidated revenue decreased to $37.5 million, resulting in a $0.6 million net loss and a $1.9 million adjusted EBITDA, impacted by $2.3 million in Englobal acquisition-related costs and losses Consolidated Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $37.5M | $41.3M | -9.2% | | Net Income (Loss) | ($0.6M) | $1.9M | Decline | | Adjusted EBITDA | $1.9M | $2.5M | -24.0% | [Services Division](index=2&type=section&id=Services%20Division) Services Division revenue decreased 3.5% to $22.0 million in Q2 2025, with operating income falling to $1.6 million and EBITDA margin contracting to 9.1%, due to lower activity and Englobal losses Services Division Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $22.0M | $22.8M (approx) | -3.5% | | Operating Income | $1.6M | $2.2M | -27.3% | | EBITDA | $2.0M | $2.7M | -25.9% | | EBITDA Margin | 9.1% | 11.7% | -2.6 p.p. | [Fabrication Division](index=2&type=section&id=Fabrication%20Division) Fabrication Division revenue declined 15.4% to $15.8 million in Q2 2025, with operating income decreasing to $0.4 million due to lower activity, reduced utilization, and Englobal automation business losses Fabrication Division Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $15.8M | $18.7M (approx) | -15.4% | | Operating Income | $0.4M | $1.1M | -63.6% | | EBITDA | $1.1M | $1.8M | -38.9% | [Corporate Division](index=2&type=section&id=Corporate%20Division) Corporate Division's operating loss widened to $3.1 million in Q2 2025, while adjusted EBITDA improved to a loss of $1.2 million, excluding $1.8 million in Englobal acquisition transaction costs Corporate Division Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Loss | ($3.1M) | ($2.0M) | | Adjusted EBITDA | ($1.2M) | ($2.0M) | [Balance Sheet and Liquidity](index=2&type=section&id=BALANCE%20SHEET%20AND%20LIQUIDITY) As of June 30, 2025, Gulf Island maintained strong liquidity with $62.2 million in cash and investments, $19.0 million total debt at 3.0% fixed interest, and repurchased 437,229 shares for $2.8 million - The company's cash and short-term investments balance was **$62.2 million** at the end of Q2 2025[12](index=12&type=chunk) - Total debt was **$19.0 million**, bearing a fixed interest rate of **3.0%** per annum[12](index=12&type=chunk) - The company repurchased **437,229 shares** of its common stock for **$2.8 million**, at an average price of $6.41 per share[13](index=13&type=chunk) [Englobal Acquisition](index=3&type=section&id=ENGLOBAL%20ACQUISITION) In Q2 2025, Gulf Island acquired ENGlobal Corporation's automation, engineering, and government services businesses for a $5.5 million capital commitment, expecting initial operating losses of $0.5 million in Q2 and $1.5-$2.0 million for H2 2025 - The acquisition adds automation, engineering, and government services to Gulf Island's portfolio, aiming to expand offerings and customer base[14](index=14&type=chunk) Englobal Acquisition Financial Summary | Item | Amount (USD) | | :--- | :--- | | Total Capital Commitment | $5.5 million | | Purchase Price (DIP Financing) | $3.5 million | | Loan Assumption Payment | $1.5 million | | Transaction Costs | $0.5 million | | Q2 2025 Operating Loss | $0.5 million | | Expected H2 2025 Operating Loss | $1.5M - $2.0M | [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the unaudited consolidated financial statements for the three and six months ended June 30, 2025, including the Income Statement, Balance Sheets, and Cash Flow Statements, with non-GAAP reconciliations [Consolidated Results of Operations](index=6&type=section&id=Consolidated%20Results%20of%20Operations) Q2 2025 saw a net loss of $574 thousand and diluted loss per share of ($0.04), a decline from Q2 2024's net income of $1,889 thousand and diluted EPS of $0.11, with revenue decreasing to $37.5 million Q2 2025 Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $37,538 | $41,262 | | Gross Profit | $3,561 | $4,158 | | Operating Income (Loss) | $(1,079) | $1,283 | | Net Income (Loss) | $(574) | $1,889 | | Diluted EPS | $(0.04) | $0.11 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $134.3 million, total liabilities $41.6 million, and shareholders' equity $92.8 million, with cash and cash equivalents significantly increasing to $46.8 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $46,825 | $27,284 | | Total Current Assets | $105,398 | $105,409 | | Total Assets | $134,348 | $133,216 | | Total Liabilities | $41,590 | $40,114 | | Total Shareholders' Equity | $92,758 | $93,102 | [Consolidated Cash Flows](index=10&type=section&id=Consolidated%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was $4.8 million, investing activities $19.0 million, and net cash used in financing activities $4.2 million, leading to a $19.5 million net increase in cash Six Months Ended June 30, 2025 Cash Flow (in thousands) | Cash Flow Category | Amount | | :--- | :--- | | Net cash provided by operating activities | $4,758 | | Net cash provided by investing activities | $19,012 | | Net cash used in financing activities | $(4,229) | | **Net increase in cash** | **$19,541** |

Core Insights - Gulf Island Fabrication, Inc. reported a second quarter 2025 revenue of $37.5 million, a decrease from $41.3 million in the same period last year, with a net loss of $0.6 million compared to a net income of $1.9 million in Q2 2024 [5][6][12] - The company achieved an adjusted EBITDA of $1.9 million for Q2 2025, down from $2.5 million in the prior year, reflecting challenges in the offshore services market and lower fabrication activity [5][6][8] - The company completed the Englobal Acquisition, which is expected to enhance its service offerings and profitability in the long term, despite anticipated losses in the short term [4][14][16] Financial Performance - Consolidated revenue for Q2 2025 was $37.5 million, down 9.2% from $41.3 million in Q2 2024 [5][6] - The net loss for Q2 2025 was $0.6 million, compared to a net income of $1.9 million in Q2 2024 [5][6] - Adjusted EBITDA for Q2 2025 was $1.9 million, a decrease of 24% from $2.5 million in the same quarter last year [5][6][31] Division Performance - Services Division revenue was $22.0 million, a decrease of 3.5% from the previous year, primarily due to lower offshore maintenance activity [7][8] - Fabrication Division revenue was $15.8 million, down 15.4% compared to Q2 2024, attributed to reduced small-scale fabrication activity [9][10] - The Corporate Division reported an operating loss of $3.1 million for Q2 2025, compared to a loss of $2.0 million in Q2 2024 [11][12] Acquisition Details - The Englobal Acquisition included assets from ENGlobal Corporation's automation, engineering, and government services businesses, aimed at broadening Gulf Island's service offerings and customer base [14][16] - The total capital commitment related to the acquisition was $5.5 million, with expected post-acquisition losses of $1.5 million to $2.0 million for the remainder of 2025 [16][18] Balance Sheet and Liquidity - As of June 30, 2025, the company had cash and short-term investments totaling $62.2 million, with total debt of $19.0 million at a fixed interest rate of 3.0% [12][35] - The company repurchased approximately 437 thousand shares of common stock for $2.8 million during the quarter, reflecting a commitment to balanced capital allocation [13][12] Market Outlook - Management expressed optimism about improved bidding activity in the fabrication market and the strategic potential of the Englobal Acquisition, anticipating profitability contributions from the acquired business in 2026 and beyond [4][14]

Company Overview - Gulf Island Fabrication, Inc. is a leading steel fabricator and service provider to the industrial and energy sectors [3] - The company specializes in complex steel structures and modules, offering services such as project management, hookup, commissioning, repair, maintenance, scaffolding, coatings, welding enclosures, civil construction, and cleaning and environmental services [3] - Gulf Island's customer base includes U.S. energy producers, refining, petrochemical, LNG, industrial and power operators, and EPC companies [3] Upcoming Events - Gulf Island will participate in the Q2 Investor Summit Virtual Conference on June 11, 2025 [1] - Richard Heo, the Chief Executive Officer, will be available for one-on-one meetings with registered investors during the conference [2] Leadership - Richard W. Heo serves as the Chief Executive Officer of Gulf Island Fabrication, Inc. [4] - Westley S. Stockton is the Chief Financial Officer [4]

Gulf Island Fabrication (GIFI) Q1 2025 Earnings Call May 06, 2025 05:00 PM ET Company Participants Cindi Cook - Executive Assistant to CEORichard Heo - President, CEO & ChairmanWestley Stockton - Executive VP, CFO, Treasurer, Secretary & Principal Accounting OfficerMarty W. Malloy - Director of Research Operator Good afternoon, ladies and gentlemen, and welcome to Gulf Island's Conference Call to discuss First Quarter twenty twenty five Results. All participants will be in a listen only mode for the duratio ...

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2025, including balance sheets, income statements, and cash flows, with detailed notes Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $28,636 | $27,284 | | Total current assets | $111,580 | $105,409 | | **Total assets** | **$138,162** | **$133,216** | | Total current liabilities | $22,789 | $21,376 | | Total long-term debt | $17,886 | $17,888 | | **Total liabilities** | **$41,457** | **$40,114** | | **Total shareholders' equity** | **$96,705** | **$93,102** | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $40,273 | $42,881 | | Gross profit | $6,615 | $6,124 | | Operating income | $3,280 | $5,708 | | **Net income** | **$3,827** | **$6,240** | | Basic income per share | $0.23 | $0.38 | | Diluted income per share | $0.23 | $0.37 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,219 | $7,019 | | Net cash used in investing activities | ($300) | ($12,453) | | Net cash used in financing activities | ($567) | ($273) | | **Net increase (decrease) in cash** | **$1,352** | **($5,707)** | [Note 1: Organization and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company operates through Services, Fabrication, and Corporate segments, completing its Shipyard Division wind-down and applying U.S. GAAP with significant estimates - The company is a leading fabricator of complex steel structures and modules and a provider of specialty services to the industrial and energy sectors, operating through Services, Fabrication, and Corporate divisions[26](index=26&type=chunk) - The wind-down of the Shipyard Division was substantially completed in Q4 2023, with final completion in Q1 2025. Effective January 1, 2025, the Shipyard Division is no longer a reportable segment[27](index=27&type=chunk) - Significant estimates are used in financial reporting, particularly for revenue recognition on long-term contracts, asset recoverability assessments, and tax provisions[31](index=31&type=chunk)[37](index=37&type=chunk) [Note 2: Revenue, Contract Assets and Liabilities](index=18&type=section&id=2.%20REVENUE,%20CONTRACT%20ASSETS%20AND%20LIABILITIES%20AND%20OTHER%20CONTRACT%20MATTERS) This note details Q1 2025 revenue of **$40.3 million** by segment and contract type, with **$9.3 million** in remaining performance obligations and increased net contract assets Revenue by Contract Type - Q1 2025 (in thousands) | Contract Type | Services | Fabrication | Total | | :--- | :--- | :--- | :--- | | Fixed-price and unit-rate | $218 | $11,035 | $11,184 | | T&M and cost-reimbursable | $18,189 | $9,659 | $27,848 | | **Total** | **$19,855** | **$20,694** | **$40,273** | - Remaining performance obligations totaled **$9.3 million** at March 31, 2025, all of which is expected to be recognized as revenue during 2025[66](index=66&type=chunk) - Net contracts in progress (Contract assets less contract liabilities) increased to **$9.1 million** at March 31, 2025, from **$7.3 million** at December 31, 2024, mainly due to higher unbilled positions in the Fabrication Division[67](index=67&type=chunk)[71](index=71&type=chunk) [Note 3: Loan Receivables and ENGlobal Acquisition](index=20&type=section&id=3.%20LOAN%20RECEIVABLES%20AND%20ENGLOBAL%20ACQUISITION) The company is acquiring ENGlobal assets, providing a **$2.5 million** DIP loan and assuming a **$2.4 million** loan, with the acquisition expected to close in Q2 2025 - Provided a senior secured DIP loan to ENGlobal for up to **$2.5 million**, with **$1.2 million** advanced as of March 31, 2025[73](index=73&type=chunk)[74](index=74&type=chunk) - On April 10, 2025, assumed a **$2.4 million** senior secured loan due from ENGlobal in exchange for a **$1.5 million** cash payment[75](index=75&type=chunk) - Named the successful bidder to acquire the ENGlobal Business, with the consideration being a 'credit bid' of the **$2.5 million** DIP loan. The acquisition is expected to close in Q2 2025[76](index=76&type=chunk) [Note 4: Credit Facilities and Debt](index=21&type=section&id=4.%20CREDIT%20FACILITIES%20AND%20DEBT) The company maintains a **$10.0 million** LC facility with **$1.2 million** outstanding, **$15.6 million** in surety bonds, and a **$19.0 million** promissory note with Zurich - At March 31, 2025, the company had **$1.2 million** of outstanding letters of credit under its **$10.0 million** LC Facility and **$15.6 million** of outstanding surety bonds[79](index=79&type=chunk)[80](index=80&type=chunk) - A promissory note with Zurich requires payment of **$20.0 million** plus 3.0% interest, payable in 15 annual installments. The outstanding balance at March 31, 2025 was **$19.0 million**[81](index=81&type=chunk) [Note 5: Commitments and Contingencies](index=21&type=section&id=5.%20COMMITMENTS%20AND%20CONTINGENCIES) The company faces ongoing litigation for ferry projects, is generally uninsured for property damage due to high premiums, and has indemnification obligations for surety bonds - A lawsuit is ongoing against a customer for the forty-vehicle ferry projects to recover costs from design deficiencies; the customer has filed a counterclaim. Trial is set for February 2026[85](index=85&type=chunk) - The company is generally uninsured for exposures resulting from any future damage to its property and equipment after determining the benefits were outweighed by high premiums and deductibles[86](index=86&type=chunk) - The company has indemnification obligations for surety bonds, which could require the use of cash to reimburse the Surety in the event of non-performance on a contract[88](index=88&type=chunk) [Note 6: Income (Loss) Per Share and Shareholders' Equity](index=25&type=section&id=6.%20INCOME%20(LOSS)%20PER%20SHARE%20AND%20SHAREHOLDERS'%20EQUITY) Q1 2025 basic and diluted EPS were **$0.23**, with **86,364 shares** repurchased for **$0.6 million**, leaving **$3.1 million** authorized for future repurchases Earnings Per Share - Q1 2025 vs Q1 2024 | Per Share Data | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Basic income per share | $0.23 | $0.38 | | Diluted income per share | $0.23 | $0.37 | - During Q1 2025, the company repurchased **86,364 shares** of common stock for **$0.6 million**. At March 31, 2025, **$3.1 million** remained available for repurchase under the program[92](index=92&type=chunk) [Note 7: Operating Segments](index=25&type=section&id=7.%20OPERATING%20SEGMENTS) Effective January 1, 2025, the company reports through Services, Fabrication, and Corporate segments, with Fabrication generating the highest Q1 2025 operating income of **$3.8 million** - Effective January 1, 2025, the company's reportable segments are Services, Fabrication, and Corporate, as the Shipyard Division wind-down is complete[93](index=93&type=chunk) Segment Operating Income (Loss) - Q1 2025 (in thousands) | Segment | Revenue | Gross Profit | Operating Income (Loss) | | :--- | :--- | :--- | :--- | | Services | $19,855 | $2,283 | $1,583 | | Fabrication | $20,694 | $4,332 | $3,795 | | Corporate | ($276) | $0 | ($2,098) | | **Consolidated** | **$40,273** | **$6,615** | **$3,280** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, highlighting a revenue decrease to **$40.3 million** but an improved gross profit margin of **16.4%**, with **$66.3 million** in available liquidity [Strategic Transformation](index=28&type=section&id=Strategic%20Transformation) The company is shifting its strategy from risk reduction to profitable growth, focusing on workforce expansion, improved utilization, and diversification into new energy and construction markets - The company has shifted its strategic priorities from risk reduction and liquidity preservation to a focus on generating stable, profitable growth[110](index=110&type=chunk) - Key strategic initiatives include expanding the skilled workforce, improving resource utilization, strengthening project execution, and diversifying into new end markets[116](index=116&type=chunk) - Efforts are underway to reduce reliance on the offshore oil and gas sector by pursuing fabrication for onshore facilities, alternative energy projects, and non-energy construction[117](index=117&type=chunk)[118](index=118&type=chunk) [New Project Awards and Backlog](index=33&type=section&id=New%20Project%20Awards%20and%20Backlog) New project awards in Q1 2025 decreased to **$34.0 million**, leading to a backlog reduction from **$15.6 million** to **$9.3 million**, all expected to be recognized in 2025 New Project Awards by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Services | $19,871 | $25,468 | | Fabrication | $14,385 | $18,272 | | **Total** | **$33,980** | **$43,818** | Backlog by Segment (in thousands) | Segment | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Services | $68 | $52 | | Fabrication | $9,190 | $15,499 | | **Total** | **$9,258** | **$15,551** | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2025 consolidated revenue decreased to **$40.3 million**, but gross profit margin improved to **16.4%**, while net income fell to **$3.8 million** due to a prior-year property sale gain - Consolidated revenue decreased primarily due to a **$5.7 million** decline in the Services Division, partially offset by a **$3.6 million** increase in the Fabrication Division[126](index=126&type=chunk) - Consolidated gross profit margin improved to **16.4%** from **14.3%** YoY, driven by a higher margin project mix and improved utilization in the Fabrication Division[124](index=124&type=chunk)[126](index=126&type=chunk) - Operating income fell to **$3.3 million** from **$5.7 million**, mainly because Q1 2024 results included a **$2.9 million** gain on the sale of real property[124](index=124&type=chunk)[127](index=127&type=chunk)[132](index=132&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company had **$66.3 million** in available liquidity, with **$2.2 million** net cash from operations, and anticipates **$2.0-$2.5 million** in remaining 2025 capital expenditures Available Liquidity at March 31, 2025 (in thousands) | Component | Amount | | :--- | :--- | | Cash and cash equivalents | $28,636 | | Short-term investments | $37,639 | | **Available cash, cash equivalents and short-term investments** | **$66,275** | - Net cash provided by operating activities was **$2.2 million** in Q1 2025, compared to **$7.0 million** in Q1 2024[147](index=147&type=chunk) - Anticipated capital expenditures for the remainder of 2025 are approximately **$2.0 to $2.5 million**[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This item is not applicable for the current reporting period - Not applicable[160](index=160&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[161](index=161&type=chunk) - There were no changes in internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[162](index=162&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no new material legal proceedings for the current period - None[164](index=164&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights uncertainties regarding the successful completion, anticipated benefits, and loan recovery of the pending ENGlobal acquisition - A new risk factor was added concerning the acquisition of the ENGlobal Business[165](index=165&type=chunk)[166](index=166&type=chunk) - The risk states there is no assurance the acquisition will be consummated, that its anticipated benefits will be realized, or that the DIP Loan and Assumed Loan amounts will be recovered[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **86,364 shares** of common stock at an average price of **$6.57** per share under its repurchase program Issuer Purchases of Equity Securities - Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program (end of period) | | :--- | :--- | :--- | :--- | | Jan 1-31, 2025 | 0 | N/A | $3,668,000 | | Feb 1-28, 2025 | 0 | N/A | $3,668,000 | | Mar 1-31, 2025 | 86,364 | $6.57 | $3,101,000 | [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - During the first quarter of 2025, no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[171](index=171&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and required CEO/CFO certifications - The report includes CEO and CFO certifications pursuant to Rule 13a-14/15d-14 and Section 906 of the Sarbanes-Oxley Act[173](index=173&type=chunk)

Financial Data and Key Metrics Changes - The company generated revenue of $40 million for Q1 2025, a decrease from $42.9 million in Q1 2024, primarily due to lower services activity [16] - Adjusted EBITDA for Q1 2025 was $4.5 million, up from $3.7 million in Q1 2024, reflecting improved performance in the fabrication division [16][17] - The cash and short-term investments balance at the end of Q1 2025 was over $67 million, consistent with the previous year-end balance [18] Business Line Data and Key Metrics Changes - Revenue from the Services Division was $19.9 million in Q1 2025, a 22% decrease compared to the same period last year, attributed to lower offshore maintenance activity [17] - The Fabrication Division reported revenue of $20.7 million, a 21% increase year-over-year, driven by higher small-scale fabrication activity [17] - The Corporate Division experienced an EBITDA loss of $2 million, slightly improved from a loss of $2.1 million in the prior year [18] Market Data and Key Metrics Changes - The company noted that macroeconomic uncertainty, including trade policies, has made market outlook difficult to forecast, particularly affecting project award decisions [12][19] - Customers in the Gulf of America are expected to reduce overall capital spending in 2025 due to lower crude demand and margins [13] Company Strategy and Development Direction - The company is focused on pursuing profitable growth, maintaining strong execution, and strategically deploying capital to drive shareholder value [7] - A strategic decision was made to acquire assets from ENGlobal Corporation, which is expected to diversify the business into new end markets and enhance existing offerings [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term market opportunities despite near-term challenges due to macroeconomic headwinds [12][14] - The company anticipates a significant decline in Q2 results compared to Q1, with potential operating losses of $1 million to $2 million during the integration of ENGlobal [19] Other Important Information - The company has maintained a disciplined financial management approach, allowing for continued investment in growth strategies despite economic uncertainties [14] - The acquisition of ENGlobal is expected to provide strategic benefits, including access to new markets and a stronger workforce [11] Q&A Session Summary Question: Can you elaborate on the ENGlobal business unit acquisitions and their customer base? - Management noted that while there is customer overlap, ENGlobal serves onshore projects, providing broader reach with key operators, and opens new markets through government services [24][25] Question: Are customers considering switching to domestic providers due to tariff uncertainties? - Management confirmed that some customers are exploring domestic options for LNG projects due to tariff and supply chain uncertainties, although discussions are currently paused [26][28] Question: What is driving the delays in LNG projects? - Management indicated that the delays are primarily related to minimizing overall costs rather than issues with off-take agreements, as projects are already sanctioned [29][30]

[First Quarter 2025 Performance Overview](index=1&type=section&id=First%20Quarter%202025%20Performance%20Overview) [Q1 2025 Highlights](index=1&type=section&id=Q1%202025%20Highlights) Gulf Island reported consolidated revenue of $40.3 million and a net income of $3.8 million for the first quarter of 2025, with both Services and Fabrication divisions profitable, alongside a strategic agreement to acquire certain ENGlobal Corporation assets Q1 2025 Financial Highlights | Metric | Value | | :--- | :--- | | **Consolidated Revenue** | $40.3 million | | **Consolidated Net Income** | $3.8 million | | **Consolidated EBITDA** | $4.5 million | | **Services Division Operating Income** | $1.6 million | | **Fabrication Division Operating Income** | $3.8 million | - In April, the company entered into an agreement to acquire certain assets of ENGlobal Corporation (ENG) related to its automation, engineering, and government services businesses[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management reported solid Q1 results driven by small-scale fabrication, but anticipates a significant Q2 decline due to macroeconomic uncertainty, while maintaining a strong financial position and proceeding with the strategic ENG acquisition - The market outlook for the remainder of 2025 is challenging due to macroeconomic uncertainty and trade policies, leading to extended decision cycles for fabrication projects and lower capital spending by offshore customers[4](index=4&type=chunk) - A significant decline in second-quarter results compared to the first quarter is anticipated, with profitability expected to be maintained[4](index=4&type=chunk) - The company maintains a strong financial position with over **$67 million in cash and short-term investments** at the end of the quarter[4](index=4&type=chunk) - The acquisition of certain assets from ENGlobal (ENG) is a key strategic initiative aimed at expanding product/service capabilities and diversifying into new end markets, though it is not expected to be accretive to operating results in 2025[4](index=4&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Consolidated Results](index=2&type=section&id=Consolidated%20Results) Q1 2025 consolidated revenue slightly decreased to $40.3 million, net income fell to $3.8 million, but Adjusted EBITDA increased to $4.5 million after excluding a prior-year property sale gain Consolidated Financial Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $40.3M | $42.9M | -6.1% | | **Net Income** | $3.8M | $6.2M | -38.7% | | **Adjusted EBITDA** | $4.5M | $3.7M | +21.6% | [Segment Performance](index=2&type=section&id=Segment%20Performance) In Q1 2025, Fabrication revenue grew 20.7% to $20.7 million, while Services revenue declined 22.2% to $19.9 million, with the Shipyard division's wind-down completed and Corporate reporting a stable operating loss [Services Division](index=2&type=section&id=Services%20Division) The Services Division's Q1 2025 revenue decreased 22.2% to $19.9 million due to reduced offshore maintenance, leading to a fall in operating income to $1.6 million and an EBITDA margin contraction to 10.4% Services Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $19.9M | $25.5M | -22.2% | | **Operating Income** | $1.6M | $2.9M | -44.8% | | **EBITDA** | $2.1M | $3.3M | -36.4% | | **EBITDA Margin** | 10.4% | 13.1% | -2.7 p.p. | [Fabrication Division](index=2&type=section&id=Fabrication%20Division) The Fabrication Division's Q1 2025 revenue increased 20.7% to $20.7 million driven by small-scale activity, with Adjusted EBITDA significantly growing to $4.5 million after excluding a prior-year property sale gain Fabrication Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $20.7M | $17.1M | +20.7% | | **Operating Income** | $3.8M | $4.7M | -19.1% | | **Adjusted EBITDA** | $4.5M | $2.5M | +80.0% | [Former Shipyard Division](index=2&type=section&id=Former%20Shipyard%20Division) The Shipyard division's wind-down was completed in Q1 2025, resulting in no revenue or operating activity compared to the prior year - The wind-down of the Shipyard division was completed in Q1 2025, with the expiration of the final warranty period for its ferry projects[12](index=12&type=chunk) Shipyard Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenue** | $0 | $0.4M | | **Operating Income** | $0 | $0.3M | [Corporate Division](index=2&type=section&id=Corporate%20Division) The Corporate Division reported a slight improvement in operating loss to $2.1 million and EBITDA loss to $2.0 million for Q1 2025 year-over-year Corporate Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Operating Loss** | $(2.1)M | $(2.2)M | | **EBITDA Loss** | $(2.0)M | $(2.1)M | [Strategic Developments](index=3&type=section&id=Strategic%20Developments) [ENGlobal Corporation Acquisition](index=3&type=section&id=ENGlobal%20Corporation%20Acquisition) On April 15, 2025, Gulf Island agreed to acquire ENGlobal Corporation's automation, engineering, and government services businesses, aiming to broaden offerings and diversify markets with a $4.0 million capital commitment - The acquisition includes ENG's automation, engineering, and government services businesses, with the automation segment having generated approximately **$10.0 million in revenue in 2024**[16](index=16&type=chunk) - Strategic benefits include broadening product offerings, strengthening fabrication with engineering capabilities, and diversifying end markets[16](index=16&type=chunk) Acquisition Financial Details | Metric | Value | | :--- | :--- | | **Total Capital Commitment** | $4.0 million | | **Initial DIP Financing** | $2.5 million | | **Payment for Loan Assumption** | $1.5 million | | **Expected Operating Loss (6-12 months)** | $1.0M - $2.0M | [Financial Statements and Reconciliations](index=2&type=section&id=Financial%20Statements%20and%20Reconciliations) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) As of March 31, 2025, the company maintained strong liquidity with **$67.5 million in cash and short-term investments** and $19.0 million in debt, while continuing its share repurchase program Key Balance Sheet & Liquidity Metrics (as of March 31, 2025) | Metric | Value | | :--- | :--- | | **Cash & Short-Term Investments** | $67.5 million | | **Restricted Cash** | $1.2 million | | **Total Debt** | $19.0 million | | **Debt Interest Rate** | 3.0% (fixed) | - In Q1 2025, the company repurchased **86,364 shares** of common stock for **$0.6 million**, at an average price of **$6.57 per share**[15](index=15&type=chunk) [Consolidated Financial Tables](index=5&type=section&id=Consolidated%20Financial%20Tables) This section presents the unaudited consolidated financial statements for Q1 2025, including the Income Statement, Balance Sheets, and Cash Flows, with comparative data [Consolidated Results of Operations](index=5&type=section&id=Consolidated%20Results%20of%20Operations) The consolidated income statement for Q1 2025 reports revenue of $40.3 million, gross profit of $6.6 million, net income of $3.8 million, and a diluted EPS of $0.23 Consolidated Results of Operations (in thousands, except per share data) - Q1 2025 | Line Item | Three Months Ended March 31, 2025 | | :--- | :--- | | **Revenue** | $40,273 | | **Gross profit** | $6,615 | | **Operating income** | $3,280 | | **Net income** | $3,827 | | **Diluted income per share** | $0.23 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $138.2 million, total liabilities $41.5 million, and total shareholders' equity increased to $96.7 million from $93.1 million at year-end 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $111,580 | $105,409 | | **Total assets** | $138,162 | $133,216 | | **Total current liabilities** | $22,789 | $21,376 | | **Total liabilities** | $41,457 | $40,114 | | **Total shareholders' equity** | $96,705 | $93,102 | [Consolidated Cash Flows](index=9&type=section&id=Consolidated%20Cash%20Flows) For Q1 2025, net cash provided by operating activities was $2.2 million, with net cash used in investing and financing activities, resulting in a net cash increase of $1.4 million Consolidated Cash Flows Highlights (in thousands) - Q1 2025 | Cash Flow Activity | Three Months Ended March 31, 2025 | | :--- | :--- | | **Net cash provided by operating activities** | $2,219 | | **Net cash used in investing activities** | $(300) | | **Net cash used in financing activities** | $(567) | | **Net increase in cash** | $1,352 | [Non-GAAP Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Measures%20and%20Reconciliations) The company uses non-GAAP measures like EBITDA and adjusted EBITDA to supplement GAAP figures, providing detailed reconciliations to reflect operating performance excluding non-cash and non-recurring items [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Non-GAAP metrics such as EBITDA and Adjusted EBITDA are used to clarify operating results by excluding non-cash and non-recurring items, with adjusted revenue and gross profit also presented for ongoing operations - The company believes EBITDA is useful as it shows operating results excluding non-cash depreciation and amortization; Adjusted EBITDA further removes non-recurring items (like property sales) and the results of the discontinued Shipyard division[20](index=20&type=chunk) [Non-GAAP Reconciliations](index=5&type=section&id=Non-GAAP%20Reconciliations) For Q1 2025, adjusted revenue and gross profit equaled GAAP figures due to the Shipyard division's completed wind-down, with Consolidated Adjusted EBITDA reconciled from net income to $4.5 million Consolidated Adjusted EBITDA Reconciliation (in thousands) - Q1 2025 | Line Item | Q1 2025 | | :--- | :--- | | **Net income** | $3,827 | | Income tax expense | $2 | | Interest expense (income), net | $(549) | | Depreciation and amortization | $1,256 | | **EBITDA** | **$4,536** | | Gain on property sale | - | | Shipyard operating income | - | | **Adjusted EBITDA** | **$4,536** |

Core Viewpoint - Gulf Island Fabrication, Inc. reported solid first quarter results for 2025 despite macroeconomic uncertainties, with a focus on strategic actions taken in recent years to maintain financial strength and operational flexibility [4][5]. Financial Performance - Consolidated revenue for Q1 2025 was $40.3 million, a decrease from $42.9 million in Q1 2024. Net income was $3.8 million compared to $6.2 million in the prior year [5][29]. - Adjusted EBITDA for Q1 2025 was $4.5 million, up from $3.7 million in Q1 2024, excluding a prior year gain of $2.9 million from the Fabrication division [5][10]. - The Services division reported revenue of $19.9 million, down 22.2% from the previous year, primarily due to reduced offshore maintenance activity [7][8]. - The Fabrication division saw revenue increase by 20.7% to $20.7 million, driven by higher small-scale fabrication activity [9][10]. Strategic Initiatives - The company is pursuing organic growth initiatives, including a new cleaning and environmental services offering, and has entered into an agreement to acquire certain assets of ENGlobal Corporation, which is expected to enhance its product and service capabilities [4][15][17]. - The total capital commitment for the acquisition of ENG is $4.0 million, with expectations of operating losses in the range of $1.0 to $2.0 million during the integration period [17][18]. Balance Sheet and Liquidity - As of March 31, 2025, the company had cash and short-term investments exceeding $67 million, with total debt of $19 million at a fixed interest rate of 3.0% [13][39]. - The company repurchased 86,364 shares for $0.6 million during the first quarter under its share repurchase program [14]. Market Outlook - The company anticipates a challenging market outlook for the remainder of 2025 due to macroeconomic uncertainties and reduced capital spending by customers in the Gulf of America [4][5].