Core Points - Gulf Island Fabrication, Inc. has been awarded a fabrication contract for the reconstruction of the Francis Scott Key Bridge in Baltimore, Maryland, valued at over $35 million [2][3] - The project will involve the fabrication of structural components, with procurement of materials already underway and fabrication activities expected to begin in the fourth quarter of 2025 [2] - This contract reflects the company's strategy to diversify beyond traditional energy markets and leverage its expertise in steel fabrication and project execution [3] Company Overview - Gulf Island is a leading fabricator of complex steel structures and provides various specialty services, including engineering, project management, and maintenance, primarily to the industrial, energy, and government sectors [4] - The company is headquartered in The Woodlands, Texas, with primary operating facilities in Houma, Louisiana, and Houston, Texas [4]

Core Viewpoint - Gulf Island Fabrication, Inc. has been awarded a task order by the U.S. Defense Logistics Agency for an automated fuel handling system upgrade in Yokosuka, Japan, valued at over $7 million, indicating strong growth potential following the acquisition of Englobal [1][2][3] Group 1: Contract Details - The task order is fixed-price with an estimated value exceeding $7 million and will be included in the Company's new awards and backlog for Q3 2025 [2] - Work is scheduled to commence in September 2025, with completion expected in Q1 2028 [2] - This task order is part of a broader indefinite-delivery, indefinite-quantity contract for automated fuel system installations, allowing the DLA to issue similar task orders globally through September 2029 [2] Group 2: Company Insights - Gulf Island is recognized as a leading fabricator of complex steel structures and provides various specialty services to the industrial, energy, and government sectors [4] - The company has a diverse customer base, including U.S. and international energy producers, EPC companies, and government entities [4] - The acquisition of Englobal has led to positive feedback from customers and potential partners, reinforcing the company's confidence in future contract awards [3]

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]

[Glossary of Terms](index=3&type=section&id=Glossary%20of%20Terms) Provides definitions for key terms used throughout the financial report [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) Presents the company's comprehensive financial data, including statements and detailed notes, for the reported periods [Item 1. Financial Statements](index=8&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Gulf Island Fabrication, Inc. for the quarter ended June 30, 2025, including the Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity, and Statements of Cash Flows, along with their accompanying notes. These statements provide a snapshot of the company's financial position, performance, and cash movements - Financial Statements Included: Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows[6](index=6&type=chunk) - Unaudited Nature: The financial statements are unaudited and prepared in accordance with GAAP for interim financial statements[28](index=28&type=chunk) [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, at specific points in time Balance Sheet Summary (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Cash and cash equivalents | $46,825 | $27,284 | +$19,541 | | Short-term investments | $14,167 | $38,784 | -$24,617 | | Total current assets | $105,398 | $105,409 | -$11 | | Total assets | $134,348 | $133,216 | +$1,132 | | Total current liabilities | $22,775 | $21,376 | +$1,399 | | Total liabilities | $41,590 | $40,114 | +$1,476 | | Total shareholders' equity | $92,758 | $93,102 | -$344 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income or loss over specific reporting periods Three Months Ended June 30 (2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Revenue | $37,538 | $41,262 | -$3,724 | | Gross profit | $3,561 | $4,158 | -$597 | | Operating income (loss) | $(1,079) | $1,283 | -$2,362 | | Net income (loss) | $(574) | $1,889 | -$2,463 | | Basic income (loss) per share | $(0.04) | $0.12 | -$0.16 | | Diluted income (loss) per share | $(0.04) | $0.11 | -$0.15 | Six Months Ended June 30 (2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Revenue | $77,811 | $84,143 | -$6,332 | | Gross profit | $10,176 | $10,282 | -$106 | | Operating income (loss) | $2,201 | $6,991 | -$4,790 | | Net income (loss) | $3,253 | $8,129 | -$4,876 | | Basic income (loss) per share | $0.20 | $0.50 | -$0.30 | | Diluted income (loss) per share | $0.20 | $0.48 | -$0.28 | [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Outlines changes in the company's equity components, such as common stock and retained earnings, over time Shareholders' Equity Changes (December 31, 2024 to June 30, 2025) | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Common Stock Amount | $11,669 | $11,309 | -$360 | | Additional Paid-In Capital | $108,065 | $104,828 | -$3,237 | | Accumulated Deficit | $(26,632) | $(23,379) | +$3,253 | | Total Shareholders' Equity | $93,102 | $92,758 | -$344 | - Key Activities Impacting Equity (Six Months Ended June 30, 2025): - Net income: **$3,253 thousand**[20](index=20&type=chunk)[99](index=99&type=chunk) - Stock-based compensation expense: **$343 thousand**[20](index=20&type=chunk)[99](index=99&type=chunk) - Repurchases of common stock: **$(3,369) thousand**[20](index=20&type=chunk)[99](index=99&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Reports cash generated and used by the company across operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by operating activities | $4,758 | $10,297 | -$5,539 | | Net cash provided by (used in) investing activities | $19,012 | $(37,508) | +$56,520 | | Net cash used in financing activities | $(4,229) | $(1,456) | -$2,773 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $19,541 | $(28,667) | +$48,208 | | Cash, cash equivalents and restricted cash, end of period | $48,022 | $10,984 | +$37,038 | - Key Investing Activities (Six Months Ended June 30, 2025): - Maturities of short-term investments: **$48,120 thousand**[23](index=23&type=chunk) - Purchases of short-term investments: **$(23,503) thousand**[23](index=23&type=chunk) - Acquisition of business: **$(3,500) thousand**[23](index=23&type=chunk) - Purchase of loan: **$(1,500) thousand**[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the figures in the primary financial statements [Note 1. Organization and Summary of Significant Accounting Policies](index=12&type=section&id=1%2E%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's nature of operations, its recent acquisition of Englobal's businesses, the basis of financial statement presentation, and key accounting policies including revenue recognition, goodwill impairment, and fair value measurements. It also discusses the impact of oil and gas price volatility and macroeconomic conditions on estimates - Nature of Operations: Gulf Island Fabrication, Inc. is a **leading fabricator of complex steel structures, modules, and automation systems, and a provider of specialty services to industrial, energy, and government sectors**[26](index=26&type=chunk) - Reportable Segments: The company operates through **two operating divisions (Services and Fabrication)** and **one non-operating division (Corporate)**[26](index=26&type=chunk) - Englobal Acquisition: During **Q2 2025**, the company acquired **Englobal's Automation Business** (reflected in Fabrication Division) and **Engineering and Government Businesses** (reflected in Services Division)[27](index=27&type=chunk) - Significant Estimates and Judgments: Key estimates include **revenue recognition for long-term contracts (POC method)**, **fair value determination for acquired assets**, **impairment assessments for long-lived assets and goodwill**, **deferred income taxes**, and **reserves for bad debts**[31](index=31&type=chunk)[37](index=37&type=chunk) - Impact of Oil and Gas Price Volatility and Macroeconomic Conditions: These factors continue to create uncertainty, potentially leading to **reduced bidding, project suspensions, customer financial deterioration, and unanticipated project costs**[32](index=32&type=chunk)[33](index=33&type=chunk) - New Accounting Standards: The company adopted **ASU 2023-07 "Segment Reporting" in Q4 2024** and is evaluating **ASU 2023-09 "Income Taxes" (effective Q4 2025)** and **ASU 2024-03 "Income Statement Reporting" (effective Q4 2027)**[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Note 2. Revenue, Contract Assets and Liabilities and Other Contract Matters](index=19&type=section&id=2%2E%20REVENUE%2C%20CONTRACT%20ASSETS%20AND%20LIABILITIES%20AND%20OTHER%20CONTRACT%20MATTERS) This note details the company's revenue recognition practices under Topic 606, disaggregating revenue by segment, contract type, and duration. It also provides information on future performance obligations, contract assets and liabilities, allowance for doubtful accounts, and changes in project estimates Revenue Disaggregation (Three Months Ended June 30, 2025) | Segment | Fixed-price and unit-rate (in thousands) | T&M and cost-reimbursable (in thousands) | Other (in thousands) | Total (in thousands) | | :-------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :------------------- | | Services | $141 | $20,906 | $931 | $21,978 | | Fabrication | $7,764 | $8,081 | $0 | $15,845 | | Total | $7,896 | $28,987 | $655 | $37,538 | Revenue Disaggregation (Six Months Ended June 30, 2025) | Segment | Fixed-price and unit-rate (in thousands) | T&M and cost-reimbursable (in thousands) | Other (in thousands) | Total (in thousands) | | :-------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :------------------- | | Services | $359 | $39,095 | $2,379 | $41,833 | | Fabrication | $18,799 | $17,740 | $0 | $36,539 | | Total | $19,080 | $56,835 | $1,896 | $77,811 | - Future Performance Obligations (June 30, 2025): - Total remaining performance obligations: **$6.8 million**[66](index=66&type=chunk) - Expected to be recognized as revenue during **2025**[66](index=66&type=chunk) - Includes approximately **$2.1 million** related to the Englobal Business[67](index=67&type=chunk) Contract Assets and Liabilities (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Contract assets | $7,727 | $8,611 | | Contract liabilities | $(2,078) | $(1,278) | | Contracts in progress, net | $5,649 | $7,333 | - Allowance for Doubtful Accounts and Credit Losses: Provision for bad debts and credit losses was **$1.5 million** for Q2 and YTD June 30, 2025, related to a reserve for the Alliance Payment in connection with the Englobal Acquisition[70](index=70&type=chunk) [Note 3. Acquisition](index=23&type=section&id=3%2E%20ACQUISITION) This note details the acquisition of Englobal Business, including the DIP Loan and Alliance Loan, the preliminary purchase price allocation, and supplemental pro forma financial information. The acquisition involved a "credit bid" of the DIP Loan as the purchase price, while the Alliance Loan resulted in a $1.5 million reserve due to unlikelihood of recovery - Englobal Acquisition Details: - Acquired **Automation Business** (effective May 12, 2025) and **Engineering & Government Businesses** (effective June 16, 2025)[77](index=77&type=chunk) - Consideration: Assumption of certain liabilities and a **"credit bid" of the $3.5 million DIP Loan**[77](index=77&type=chunk) - Alliance Loan: Assumed **$2.4 million senior secured loan** from Englobal for a **$1.5 million cash payment (Alliance Payment)**. A **$1.5 million reserve** was recorded as recovery is not probable[78](index=78&type=chunk) - Transaction costs: **$0.3 million (Q2 2025)** and **$0.5 million (YTD June 30, 2025)**[77](index=77&type=chunk)[78](index=78&type=chunk) Preliminary Purchase Price Allocation (in thousands) | Category | Allocation | | :-------------------------------- | :--------- | | Net tangible assets and liabilities | $1,711 | | Intangible assets - trade name | $400 | | Goodwill | $1,389 | | **Purchase Price** | **$3,500** | Pro Forma Revenue (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Pro forma revenue | $83,214 | $93,340 | Pro Forma Net Income (Loss) (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Pro forma net income (loss) | $1,907 | $6,032 | [Note 4. Credit Facilities and Debt](index=25&type=section&id=4%2E%20CREDIT%20FACILITIES%20AND%20DEBT) This note details the company's credit facilities and debt obligations, including the LC Facility, surety bonds, and the Note Agreement with Zurich, which is secured by a Mortgage Agreement on the Houma Facility - LC Facility: **$10.0 million letter of credit facility** with Whitney Bank, maturing **June 30, 2026**. **$1.2 million outstanding** at June 30, 2025, secured by restricted cash[86](index=86&type=chunk) - Surety Bonds: **$15.6 million outstanding** at June 30, 2025, used to support projects and insurance, with indemnification obligations[87](index=87&type=chunk) - Note Agreement: Promissory note with Zurich for **$20.0 million**, bearing **3.0% interest per annum**, payable in **15 equal annual installments**. First payment made December 30, 2024, final payment due December 31, 2038[88](index=88&type=chunk) Note Agreement Principal Maturities (in thousands) | Year | Principal Maturities | | :--- | :------------------- | | 2025 | $1,108 | | 2026 | $1,141 | | 2027 | $1,175 | | 2028 | $1,210 | | 2029 | $1,247 | | Thereafter | $13,044 | | **Total maturities** | **$18,925** | - Mortgage Agreement: Secures the Note Agreement with Zurich, encumbering the Houma Facility real estate[89](index=89&type=chunk) [Note 5. Commitments and Contingencies](index=26&type=section&id=5%2E%20COMMITMENTS%20AND%20CONTINGENCIES) This note discusses various commitments and contingencies, including routine legal proceedings, a lawsuit related to the forty-vehicle ferry projects, insurance coverage limitations, and environmental matters - Routine Legal Proceedings: Subject to various routine legal proceedings, primarily commercial disputes, workers' compensation, and personal injury claims, not expected to have a **material adverse effect**[90](index=90&type=chunk) - Forty-Vehicle Ferry Projects Lawsuit: Lawsuit filed against customer for cost and schedule impacts due to design deficiencies; customer denied claim and asserted counterclaim for defective workmanship. Mediation was unsuccessful, trial set for **February 2, 2026**[91](index=91&type=chunk) - Insurance Coverage: Generally uninsured for future damage to property and equipment due to **coverage limitations and high premiums/deductibles**. Maintains insurance for other aspects but exposed to losses due to deductibles and retentions[93](index=93&type=chunk)[94](index=94&type=chunk) - Letters of Credit and Surety Bonds: Contingent obligations for performance guarantees, with **cash securitization for LCs** and **indemnification for surety bonds**[95](index=95&type=chunk) - Environmental Matters: Believes to be in material compliance with environmental laws and regulations; no **material adverse effect** expected[96](index=96&type=chunk) [Note 6. Income (Loss) Per Share and Shareholders' Equity](index=29&type=section&id=6%2E%20INCOME%20%28LOSS%29%20PER%20SHARE%20AND%20SHAREHOLDERS%27%20EQUITY) This note provides the computation of basic and diluted income (loss) per share and details the company's share repurchase program Basic and Diluted EPS (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Basic income (loss) per share | $(0.04) | $0.12 | | Diluted income (loss) per share | $(0.04) | $0.11 | Basic and Diluted EPS (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Basic income (loss) per share | $0.20 | $0.50 | | Diluted income (loss) per share | $0.20 | $0.48 | - Share Repurchase Program: - Authorized up to **$10.0 million** of common stock repurchases, expiring **December 15, 2026**[99](index=99&type=chunk) - Repurchased **523,593 shares for $3.4 million** during the six months ended June 30, 2025[99](index=99&type=chunk) - Remaining authorization: **$5.3 million** at June 30, 2025[99](index=99&type=chunk)[201](index=201&type=chunk) [Note 7. Reportable Segments](index=30&type=section&id=7%2E%20REPORTABLE%20SEGMENTS) This note details the company's reportable segments: Services, Fabrication, and Corporate. It explains the reclassification of the former Shipyard Division, the integration of the Englobal Acquisition results into the Services and Fabrication divisions, and provides summarized financial information for each segment - Segment Structure: **Two operating divisions (Services, Fabrication)** and **one non-operating division (Corporate)**[101](index=101&type=chunk) - Shipyard Division: No longer a reportable segment effective **January 1, 2025**, following the substantial completion of wind-down operations in **Q4 2023** and expiration of warranty in **Q1 2025**. Remaining results are in Corporate Division's other (income) expense, net[101](index=101&type=chunk) - Englobal Acquisition Integration: - Automation Business results integrated into **Fabrication Division**[102](index=102&type=chunk) - Engineering Business and Government Business results integrated into **Services Division**[102](index=102&type=chunk) - Services Division Activities: Provides **maintenance, repair, construction, scaffolding, coatings, welding enclosures, cleaning, environmental, engineering, design, project management, commissioning, and technical field services**[103](index=103&type=chunk) - Fabrication Division Activities: Fabricates **modules, skids, piping systems, foundations, steel components, support structures, industrial automation systems, and offshore production platforms**[104](index=104&type=chunk) Segment Operating Income (Loss) (Three Months Ended June 30, 2025, in thousands) | Segment | Operating Income (Loss) | | :---------- | :---------------------- | | Services | $1,569 | | Fabrication | $407 | | Corporate | $(3,055) | Segment Operating Income (Loss) (Six Months Ended June 30, 2025, in thousands) | Segment | Operating Income (Loss) | | :---------- | :---------------------- | | Services | $3,152 | | Fabrication | $4,202 | | Corporate | $(5,153) | [Note 8. Subsequent Events](index=32&type=section&id=8%2E%20SUBSEQUENT%20EVENTS) This note discloses the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, and the company's ongoing evaluation of its potential effects on financial statements and disclosures - OBBBA Enactment: The **One Big Beautiful Bill Act** was enacted on **July 4, 2025**, including tax reform provisions[109](index=109&type=chunk) - Evaluation of Impact: The company is evaluating the potential effect of OBBBA on its financial statements and disclosures[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a narrative discussion and analysis of Gulf Island Fabrication, Inc.'s financial condition and results of operations for the periods presented, offering insights into performance drivers, strategic initiatives, and future outlook. It includes forward-looking statements and discusses key factors impacting the business [Cautionary Statement on Forward-Looking Information](index=33&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Information) Highlights inherent uncertainties and risks associated with forward-looking statements in the report - Forward-Looking Statements: Statements about **future performance, operations, projects, diversification, Englobal integration, industry outlook, cash flows, capital expenditures, tax rates, share repurchase program, liquidity, and strategic initiatives**[112](index=112&type=chunk) - Risk Factors: Actual results may differ due to factors like **Englobal integration, oil and gas industry cyclicality, competitive pricing, reliance on major customers, supply chain disruptions, changes in contract estimates, operating dangers, and ability to secure new projects**[113](index=113&type=chunk) - No Obligation to Update: The company undertakes **no obligation to publicly update or revise any forward-looking statements**[114](index=114&type=chunk) [Overview](index=34&type=section&id=Overview) Provides a high-level summary of the company's core business, customer base, and operational structure - Core Business: **Leading fabricator of complex steel structures, modules, and automation systems, and provider of specialty services**[115](index=115&type=chunk) - Customer Base: U.S. and international energy producers, refining, petrochemical, LNG, industrial and power operators, EPC companies, and government entities[115](index=115&type=chunk) - Reportable Segments: **Services, Fabrication, and Corporate divisions**[115](index=115&type=chunk) [Former Shipyard Division](index=34&type=section&id=Former%20Shipyard%20Division) Details the wind-down and reclassification of the former Shipyard Division's operations and financial results - Wind-down Completion: Shipyard Division operations substantially completed in **Q4 2023**, with final completion (warranty expiration) in **Q1 2025**[116](index=116&type=chunk) - Segment Reclassification: No longer a reportable segment effective **January 1, 2025**; remaining results included in Corporate Division[116](index=116&type=chunk) [Acquisition](index=34&type=section&id=Acquisition) Summarizes the recent Englobal acquisition and its integration into the company's operating divisions - Englobal Acquisition: Acquired **Automation Business (May 12, 2025)** and **Engineering & Government Businesses (June 16, 2025)**[117](index=117&type=chunk) - Integration: Automation Business results in **Fabrication Division**; Engineering & Government Business results in **Services Division**[117](index=117&type=chunk) [Impacts of Oil and Gas Price Volatility and Macroeconomic Conditions on Operations](index=34&type=section&id=Impacts%20of%20Oil%20and%20Gas%20Price%20Volatility%20and%20Macroeconomic%20Conditions%20on%20Operations) Discusses how fluctuating oil and gas prices and broader economic factors influence company operations - Ongoing Volatility: Oil and gas prices remain volatile, influenced by **geopolitical turmoil**[118](index=118&type=chunk) - Macroeconomic Factors: Global economic factors like **labor constraints, trade policies, supply chain disruptions, inflation, and economic slowdowns** continue to impact operations[118](index=118&type=chunk) - Potential Impacts: **Reduced bidding activity, project suspensions/terminations, customer financial deterioration, and unanticipated project costs/delays**[119](index=119&type=chunk) [Recent Regulatory Changes](index=34&type=section&id=Recent%20Regulatory%20Changes) Addresses the enactment of new legislation and its potential implications for the company's financial reporting - OBBBA Enactment: The **One Big Beautiful Bill Act** was enacted on **July 4, 2025**, with tax reform provisions[120](index=120&type=chunk) - Evaluation Underway: Company is evaluating the potential effect on financial statements and disclosures[120](index=120&type=chunk) [Strategic Transformation](index=35&type=section&id=Strategic%20Transformation) Outlines the company's ongoing strategic initiatives aimed at achieving stable, profitable growth and diversification - Current Strategic Focus: Generating **stable, profitable growth**[121](index=121&type=chunk) - Key Initiatives: - Expand skilled workforce[121](index=121&type=chunk) - Improve resource utilization[122](index=122&type=chunk) - Strengthen project execution and maintain bidding discipline[123](index=123&type=chunk) - Diversify offshore services customer base and expand services onshore[124](index=124&type=chunk) - Continue pursuing traditional offshore fabrication markets[126](index=126&type=chunk) - Reduce reliance on offshore oil and gas, pursue new growth end markets, and increase T&M vs. fixed price revenue mix[127](index=127&type=chunk)[128](index=128&type=chunk) [Operating Outlook](index=38&type=section&id=Operating%20Outlook) Presents the company's forward-looking perspective on operational priorities, success factors, and potential challenges - Primary Focus: Securing **profitable new project awards and backlog**, generating **operating income and cash flows**, and **workforce safety**[129](index=129&type=chunk) - Success Factors: Ability to **hire/retain skilled labor, oil and gas prices/volatility, fabrication opportunities in traditional and new markets, securing new project awards, facility utilization, project execution, Englobal integration, and strategic growth opportunities**[131](index=131&type=chunk) - Potential Adverse Effects: **Losses from Englobal Business, costs for temporary under-utilized personnel, investments in personnel/process improvements, strategic pursuit costs, and organic growth investment costs**[129](index=129&type=chunk) [Critical Accounting Policies](index=38&type=section&id=Critical%20Accounting%20Policies) Confirms the consistency of critical accounting policies and estimates since the last reporting period - No Changes: **No changes** to critical accounting policies and estimates since December 31, 2024[130](index=130&type=chunk) [New Project Awards and Backlog](index=39&type=section&id=New%20Project%20Awards%20and%20Backlog) Provides an overview of new project awards and the current backlog, indicating future revenue recognition New Project Awards (Three Months Ended June 30, 2025 vs. 2024) | Segment | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :---------- | :----------------------------- | :----------------------------- | :-------------------- | | Services | $21,858 | $22,392 | $(534) | | Fabrication | $10,558 | $17,610 | $(7,052) | | Total | $32,131 | $39,810 | $(7,679) | New Project Awards (Six Months Ended June 30, 2025 vs. 2024) | Segment | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :---------- | :----------------------------- | :----------------------------- | :-------------------- | | Services | $41,729 | $47,860 | $(6,131) | | Fabrication | $24,943 | $35,882 | $(10,939) | | Total | $66,111 | $83,628 | $(17,517) | Backlog (June 30, 2025 vs. December 31, 2024) | Segment | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :---------- | :----------------------------- | :----------------------------- | :-------------------- | | Services | $470 | $52 | +$418 | | Fabrication | $6,330 | $15,499 | -$9,169 | | Total | $6,800 | $15,551 | -$8,751 | - Backlog Recognition: All backlog at June 30, 2025, is expected to be recognized as revenue during **2025**[133](index=133&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, detailing revenue, gross profit, and net income trends across periods [Comparison of the Three Months Ended June 30, 2025 and 2024 (Consolidated)](index=40&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Consolidated%29) For the three months ended June 30, 2025, consolidated revenue decreased by $3.7 million, leading to a decline in gross profit and a shift from operating income to an operating loss, and net income to a net loss, compared to the same period in 2024. This was primarily due to lower revenue in both Services and Fabrication divisions, a lower margin project mix in Services, and significant other expenses related to the Englobal Acquisition Consolidated Financial Performance (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $32,131 | $39,810 | $(7,679) | | Revenue | $37,538 | $41,262 | $(3,724) | | Gross profit | $3,561 | $4,158 | $(597) | | Gross profit percentage | 9.5% | 10.1% | -0.6% | | Operating income (loss) | $(1,079) | $1,283 | $(2,362) | | Net income (loss) | $(574) | $1,889 | $(2,463) | - Key Drivers of Change: - Revenue decrease primarily due to **lower offshore services work** and **small-scale fabrication activity**[136](index=136&type=chunk) - Gross profit decrease due to **lower revenue, lower margin project mix in Services, and lower utilization in Fabrication** (including Automation Business)[138](index=138&type=chunk) - Other (income) expense, net: **$1.4 million expense in 2025** (vs. $0.5 million income in 2024) due to **$1.5 million Alliance Payment reserve** and **$0.3 million Englobal Acquisition transaction costs**[141](index=141&type=chunk) [Segments (Three Months Ended June 30, 2025 and 2024)](index=42&type=section&id=Segments%20%28Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) For the three months ended June 30, 2025, the Services Division saw decreased revenue and gross profit due to lower offshore services work and a lower margin project mix, while the Fabrication Division also experienced lower revenue and gross profit from reduced small-scale fabrication activity and underutilization of resources, despite a higher margin project mix. The Corporate Division's operating loss increased significantly due to acquisition-related charges [Services Division (Three Months Ended June 30, 2025 and 2024)](index=42&type=section&id=Services%20Division%20%28Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Analyzes the Services Division's financial performance, highlighting revenue, gross profit, and operating income trends Financial Performance (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $21,858 | $22,392 | $(534) | | Revenue | $21,978 | $22,767 | $(789) | | Gross profit | $2,398 | $2,888 | $(490) | | Gross profit percentage | 10.9% | 12.7% | -1.8% | | Operating income | $1,569 | $2,189 | $(620) | - Key Drivers: **Lower offshore services work, lower margin project mix**, and **underutilization of resources for acquired Engineering and Government Businesses**[144](index=144&type=chunk) [Fabrication Division (Three Months Ended June 30, 2025 and 2024)](index=43&type=section&id=Fabrication%20Division%20%28Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Examines the Fabrication Division's financial performance, focusing on revenue, gross profit, and operating income changes Financial Performance (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $10,558 | $17,610 | $(7,052) | | Revenue | $15,845 | $18,727 | $(2,882) | | Gross profit | $1,163 | $1,239 | $(76) | | Gross profit percentage | 7.3% | 6.6% | +0.7% | | Operating income | $407 | $1,129 | $(722) | - Key Drivers: **Lower small-scale fabrication activity, lower utilization of facilities and resources** (including Automation Business), offset by a **higher margin project mix**[147](index=147&type=chunk) [Former Shipyard Division (Three Months Ended June 30, 2025 and 2024)](index=44&type=section&id=Former%20Shipyard%20Division%20%28Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Confirms the absence of financial activity for the former Shipyard Division during the reported period - No Activity in 2025: **No new project awards, revenue, or gross profit for Q2 2025**[150](index=150&type=chunk) - Completion: Ferry Projects completed in **2024**, last warranty expired **Q1 2025**[150](index=150&type=chunk) [Corporate Division (Three Months Ended June 30, 2025 and 2024)](index=44&type=section&id=Corporate%20Division%20%28Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Reviews the Corporate Division's operating loss and the key factors influencing its financial results Financial Performance (Three Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Operating loss | $(3,055) | $(2,044) | $(1,011) | - Key Drivers: - Other (income) expense, net: **$1.4 million expense in 2025** (vs. $0.1 million income in 2024) due to **$1.5 million Alliance Payment charge** and **$0.3 million Englobal Acquisition transaction costs**[152](index=152&type=chunk) - General and administrative expense decreased by **23.2%** due to lower incentive plan costs and timing of certain costs[153](index=153&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024 (Consolidated)](index=45&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Consolidated%29) For the six months ended June 30, 2025, consolidated revenue decreased by $6.3 million, and operating income significantly declined by $4.8 million, leading to a substantial decrease in net income compared to the same period in 2024. This was primarily driven by lower revenue in the Services and former Shipyard divisions, and a significant increase in other expenses related to the Englobal Acquisition Consolidated Financial Performance (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $66,111 | $83,628 | $(17,517) | | Revenue | $77,811 | $84,143 | $(6,332) | | Gross profit | $10,176 | $10,282 | $(106) | | Gross profit percentage | 13.1% | 12.2% | +0.9% | | Operating income | $2,201 | $6,991 | $(4,790) | | Net income | $3,253 | $8,129 | $(4,876) | - Key Drivers of Change: - Revenue decrease primarily due to **lower offshore services work** and **no revenue from the Shipyard Division**[155](index=155&type=chunk) - Gross profit slightly decreased due to **lower revenue and lower margin project mix in Services**, offset by **higher margin project mix in Fabrication**[157](index=157&type=chunk) - Other (income) expense, net: **$1.5 million expense in 2025** (vs. $3.5 million income in 2024) due to **$1.5 million Alliance Payment charge** and **$0.5 million Englobal Acquisition transaction costs**, contrasting with significant gains from asset sales in 2024[160](index=160&type=chunk) [Segments (Six Months Ended June 30, 2025 and 2024)](index=47&type=section&id=Segments%20%28Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) For the six months ended June 30, 2025, the Services Division experienced decreased revenue and operating income due to lower offshore services work and a lower margin project mix. The Fabrication Division saw increased revenue and gross profit due to higher small-scale fabrication activity and a higher margin project mix, despite a decline in new project awards. The Corporate Division's operating loss increased significantly due to acquisition-related charges [Services Division (Six Months Ended June 30, 2025 and 2024)](index=47&type=section&id=Services%20Division%20%28Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Analyzes the Services Division's year-to-date financial performance, including revenue and operating income trends Financial Performance (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $41,729 | $47,860 | $(6,131) | | Revenue | $41,833 | $48,301 | $(6,468) | | Gross profit | $4,681 | $6,501 | $(1,820) | | Gross profit percentage | 11.2% | 13.5% | -2.3% | | Operating income | $3,152 | $5,056 | $(1,904) | - Key Drivers: **Lower offshore services work, lower margin project mix, costs for new cleaning and environmental service line**, and **underutilization of acquired Engineering and Government Businesses**[162](index=162&type=chunk)[165](index=165&type=chunk) [Fabrication Division (Six Months Ended June 30, 2025 and 2024)](index=48&type=section&id=Fabrication%20Division%20%28Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Examines the Fabrication Division's year-to-date financial performance, focusing on revenue and gross profit changes Financial Performance (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | New project awards | $24,943 | $35,882 | $(10,939) | | Revenue | $36,539 | $35,865 | $674 | | Gross profit | $5,495 | $3,431 | $2,064 | | Gross profit percentage | 15.0% | 9.6% | +5.4% | | Operating income | $4,202 | $5,850 | $(1,648) | - Key Drivers: **Higher small-scale fabrication activity** and a **higher margin project mix** drove revenue and gross profit increases. Operating income decreased due to **higher G&A (business development, Automation Business acquisition)** and significantly lower other income (2024 included **$2.9M gain from real property sale** and **$1.1M from equipment sales**)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Former Shipyard Division (Six Months Ended June 30, 2025 and 2024)](index=49&type=section&id=Former%20Shipyard%20Division%20%28Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Confirms the absence of financial activity for the former Shipyard Division for the year-to-date period - No Activity in 2025: **No new project awards, revenue, gross profit, or operating income for YTD June 30, 2025**[171](index=171&type=chunk) - Completion: Ferry Projects completed in **2024**, last warranty expired **Q1 2025**[171](index=171&type=chunk) [Corporate Division (Six Months Ended June 30, 2025 and 2024)](index=49&type=section&id=Corporate%20Division%20%28Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%29) Reviews the Corporate Division's year-to-date operating loss and the key factors influencing its financial results Financial Performance (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Operating loss | $(5,153) | $(4,266) | $(887) | - Key Drivers: - Other (income) expense, net: **$1.6 million expense in 2025** (vs. $0.2 million income in 2024) due to **$1.5 million Alliance Payment charge** and **$0.5 million Englobal Acquisition transaction costs**[173](index=173&type=chunk) - General and administrative expense decreased by **18.7%** due to lower incentive plan costs and timing of certain costs[174](index=174&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, working capital, and cash flow activities, along with future liquidity needs Available Liquidity (June 30, 2025, in thousands) | Metric | Amount | | :---------------------------------------------------- | :------- | | Cash and cash equivalents | $46,825 | | Short-term investments | $14,167 | | Restricted cash | $1,197 | | **Total cash, cash equivalents, short-term investments and restricted cash** | **$62,189** | - Working Capital (June 30, 2025, in thousands): **$82.6 million**. Excluding cash, cash equivalents, short-term investments, restricted cash, and current debt, working capital was **$21.6 million**[177](index=177&type=chunk) Cash Flow Activity (Six Months Ended June 30, 2025, in thousands) | Metric | 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) | - Primary Uses of Liquidity (Remainder of 2025 and foreseeable future): - Costs for under-utilization of facilities (including Englobal Business losses)[188](index=188&type=chunk) - Englobal Business integration costs[188](index=188&type=chunk) - Capital expenditures (estimated **$1.5M-$2.0M** for remainder of 2025)[190](index=190&type=chunk) - Working capital requirements[188](index=188&type=chunk) - Interest and principal payments on Note Agreement[188](index=188&type=chunk) - Corporate administrative expenses[188](index=188&type=chunk) - Organic and inorganic growth opportunities[188](index=188&type=chunk) - Share repurchases under Share Repurchase Program[188](index=188&type=chunk) - Liquidity Outlook: Believes current liquidity is sufficient for remainder of 2025 and foreseeable future, but acknowledges uncertainties from **financial forecasts, oil and gas volatility, macroeconomic conditions, and potential future losses**[189](index=189&type=chunk) [Off-Balance Sheet Arrangements](index=54&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of material off-balance sheet arrangements impacting the company's financial condition - No Material Off-Balance Sheet Arrangements: The company has **no off-balance sheet arrangements** with a material current or future effect on financial condition, results of operations, or liquidity[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=54&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not Applicable: **No market risk disclosures are applicable**[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management, with the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective. There were no material changes in internal control over financial reporting during Q2 2025, and the Englobal Business was excluded from the scope of management's review of internal control over financial reporting - Disclosure Controls Effectiveness: Disclosure controls and procedures were **effective as of June 30, 2025**[193](index=193&type=chunk) - No Material Changes in Internal Control: **No material changes** in internal control over financial reporting during Q2 2025[194](index=194&type=chunk) - Englobal Business Exclusion: The Englobal Business was **excluded from the scope of management's review of internal control over financial reporting**[194](index=194&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) Presents additional non-financial information, including legal proceedings, risk factors, and equity security details [Item 1. Legal Proceedings](index=55&type=section&id=Item%201%2E%20Legal%20Proceedings) This section states that there are no legal proceedings to report under this item - None: **No legal proceedings to report**[197](index=197&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A%2E%20Risk%20Factors) This section highlights a new risk factor related to the Englobal Acquisition: the company may not successfully integrate the Englobal Business or realize anticipated benefits, potentially impacting operations and financial condition due to integration expenses, operating losses, and potential litigation - New Risk Factor: **Inability to successfully integrate the Englobal Business or realize anticipated benefits**[199](index=199&type=chunk) - Potential Impacts: Adverse effects on operations and financial condition due to **integration expenses, operating losses, and potential litigation**[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the company's common stock repurchases under its Share Repurchase Program during the three months ended June 30, 2025. The Board increased the authorization to $10.0 million and extended the program to December 15, 2026 Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------ | :----------------------------- | :--------------------------- | | April 1 to 30, 2025 | 167,106 | $6.38 | | May 1 to 31, 2025 | 199,153 | $6.32 | | June 1 to 30, 2025 | 70,970 | $6.72 | | **Total** | **437,229** | **$6.41** | - Share Repurchase Program Update: Authorization increased from **$5.0 million to $10.0 million** and extended to **December 15, 2026**[201](index=201&type=chunk) - Remaining Authorization: **$5.3 million** available at June 30, 2025[99](index=99&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205%2E%20Other%20Information) This section states that no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the second quarter of 2025 - Insider Trading Arrangements: **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** adopted or terminated by directors or officers in Q2 2025[202](index=202&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed or furnished with the Form 10-Q, including organizational documents, restricted stock unit agreements, CEO/CFO certifications, and XBRL documents - Exhibits List: Includes **Amended and Restated Articles of Incorporation, Bylaws, various Restricted Stock Unit Agreements, CEO/CFO Certifications, Section 906 Certification, and Inline XBRL documents**[203](index=203&type=chunk) [Signatures](index=57&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission by an authorized officer of Gulf Island Fabrication, Inc - Authorized Signature: Signed by **Westley S. Stockton, Executive Vice President, Chief Financial Officer, Treasurer and Secretary**[208](index=208&type=chunk) - Date: **August 6, 2025**[209](index=209&type=chunk)

[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, energy, and government sectors [3] - The company specializes in complex steel structures, modules, automation systems, and various specialty services including engineering, project management, and maintenance [3] - Gulf Island's customer base includes U.S. energy producers, refining and petrochemical operators, EPC companies, and government entities [3] Financial Reporting - Gulf Island will report its financial results for the second quarter of 2025 after the market closes on August 6, 2025 [1] - A conference call to discuss the financial results will be held on the same day at 4:00 p.m. Central Time [2] - The call will be accessible via webcast on the company's website and through a dedicated phone line [2]

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]

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 [17] - Adjusted EBITDA for Q1 2025 was $4.5 million, up from $3.7 million in Q1 2024, reflecting improved performance in the fabrication division [17] - The services division revenue decreased by 22% year-over-year to $19.9 million, while the fabrication division revenue increased by 21% to $20.7 million [17][18] Business Line Data and Key Metrics Changes - Services Division: Revenue decreased to $19.9 million, with EBITDA of $2.1 million (10.4% of revenue), down from $3.3 million (13.1% of revenue) in the prior year [18] - Fabrication Division: Revenue increased to $20.7 million, with adjusted EBITDA rising to $4.5 million, compared to $2.5 million in the prior year [18][19] - Corporate Division: EBITDA loss was $2 million, slightly improved from a loss of $2.1 million in the previous year [19] Market Data and Key Metrics Changes - The company is experiencing extended decision cycles for new project awards due to macroeconomic uncertainty, particularly affecting the fabrication business [12] - Customers in the Gulf of America are targeting lower capital spending levels in 2025 due to reduced demand for crude oil [13] Company Strategy and Development Direction - The company remains committed to its strategic framework focused on profitable growth, operational efficiency, and capital deployment to drive shareholder value [7][14] - Recent strategic initiatives include entering a financing arrangement with ENGlobal Corporation and pursuing growth in cleaning and environmental services [9][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term market opportunities despite short-term challenges due to macroeconomic uncertainties and trade policies [12][22] - 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 [20][22] Other Important Information - The company ended Q1 2025 with a cash and short-term investments balance of over $67 million, maintaining a strong liquidity position [19] - The acquisition of ENGlobal is expected to provide strategic benefits, including diversification into new end markets and enhancing existing service offerings [11][22] Q&A Session Summary Question: Can you discuss the customer base of ENGlobal and potential new customers? - Management noted that ENGlobal serves many onshore customers, while the company primarily serves offshore clients, providing broader reach and access to new markets [25][26] Question: Are customers inquiring about domestic fabrication capabilities due to tariff uncertainties? - Management confirmed that some customers are considering domestic options for LNG projects due to uncertainties around tariffs and supply chains [28][29] Question: What are the reasons for delays in LNG projects? - Management indicated that the delays are primarily related to minimizing overall costs rather than issues with off-take agreements [31][32]

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)