Gulf Island Fabrication, Inc. (NASDAQ:GIFI) Q1 2021 Earnings Conference Call May 11, 2021 5:00 PM ET Company Representatives Richard Heo - President & Chief Executive Officer West Stockton - Executive Vice President & Chief Financial Officer Cindi Cook - Executive Assistant to CEO Conference Call Participants Jeff Geygan - Global Value Investment Corp Operator Good afternoon ladies and gentlemen and welcome to Gulf Island's conference call to discuss first quarter 2021 results. All participants will be in a ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q4 2020 was $57.6 million, a 5% increase from Q3 2020 but a 28% decrease from Q4 2019 [28] - Consolidated net loss for Q4 2020 was $15.4 million, compared to a net loss of $12.3 million in Q3 2020 and $34.3 million in Q4 2019 [30] - Adjusted EBITDA for Q4 2020 was a loss of $9.2 million, an improvement from a loss of $10 million in Q3 2020 and a loss of $14.9 million in Q4 2019 [31] Business Line Data and Key Metrics Changes - Shipyard division revenue was $37.2 million in Q4 2020, slightly up from $37.1 million in Q3 2020 but down 22% from $47.7 million in Q4 2019 [33] - Fabrication & Services division revenue was $21.2 million in Q4 2020, up 16% from $18.2 million in Q3 2020 but down 36% from $33.2 million in Q4 2019 [39] - Fabrication & Services reported adjusted EBITDA of $1.9 million for Q4 2020, compared to $225,000 in Q3 2020 and a loss of $2.5 million in Q4 2019 [41] Market Data and Key Metrics Changes - Backlog at year-end totaled $372 million, a decrease of 15% from the previous year and 13% from September 2020 [46] - Operating cash flow for Q4 2020 was negative $11.7 million, with capital expenditures of $1 million [46] Company Strategy and Development Direction - The company is consolidating operations to improve resource utilization and reduce costs, including the relocation of the pipe mill to enhance efficiency [8][10] - There is a strategic focus on expanding into green energy markets, including renewable biofuel and hydrogen production [13][71] - The company aims to enhance customer value propositions through strategic partnerships and in-house engineering capabilities [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19, crude oil volatility, and labor availability, but expressed confidence in the company's long-term foundation and strategic initiatives [7][27] - The company is optimistic about increasing project bidding opportunities in LNG and petrochemical sectors in Texas and Louisiana [12] Other Important Information - The company has submitted a claim to recover costs associated with design deficiencies impacting vessel projects [20] - A change order with the U.S. Navy is expected to result in a benefit of $7 million to $10 million in Q1 2021 [24] Q&A Session Summary Question: What percentage of backlog is in a loss position? - The majority of the backlog in the Shipyard division is in a loss or breakeven position, contributing no incremental profitability [53][54] Question: Outlook for bidding on modular work? - The company is confident in pursuing modular work, particularly in LNG and petrochemical projects, despite previous delays [55][56] Question: Opportunities in offshore wind? - The company is selectively looking at offshore wind opportunities but faces challenges due to the shift towards monopile foundations [61][65] Question: What type of work is being pursued? - The company is winning smaller service work and is focused on engineered equipment for sustainable end markets [67][71] Question: Mitigation of skilled labor challenges? - The company is working with technical schools to improve training and retention of skilled labor [72] Question: Any further consolidation opportunities? - The company has consolidated operations in Houma and is focused on making that footprint efficient [75][78] Question: Timeline for vessel deliveries? - The second 40-vehicle ferry is expected to be delivered in Q2 2021, with the remaining vessels staggered through 2024 [80][84]

Customer Concentration and Revenue Impact - The company derives a significant portion of its revenue from a small number of customers, with two, four, and three customers accounting for 46%, 54%, and 44% of consolidated revenue in 2020, 2019, and 2018 respectively[86]. - The consolidation of primary customers in the oil and gas industry could lead to reduced capital spending and demand for the company's products and services[83]. - One customer filed for Chapter 11 bankruptcy in 2020, impacting ongoing disputes related to two MPSVs[88]. Market and Economic Challenges - The ongoing global pandemic and the contraction in oil demand have resulted in significant challenges, leading to a reduction in capital expenditures by oil and gas companies, which may adversely impact the company's financial condition[72]. - The company has experienced increased volatility in the oil and gas industry since Q1 2020, which has suppressed capital spending and resulted in fewer project awards in traditional markets[78]. - The timing of new project awards is uncertain, and delays or suspensions in bidding activities due to COVID-19 and low oil prices may further reduce future revenue opportunities[84]. - The long-term effectiveness of economic stabilization efforts related to COVID-19 remains uncertain, which could further affect the company's operations and financial condition[72]. Competitive Environment - The company faces competitive pressures from foreign competitors with lower operating costs, which may hinder its ability to successfully bid on projects[81]. - The company operates in a highly competitive environment, with contracts often awarded on a competitively bid basis, making it challenging to maintain its competitive position[80]. - Competitive pricing pressures in the fabrication and marine construction industry may negatively impact operating results[93]. Operational Challenges - The company has seen an increase in employee absenteeism and turnover, impacting project execution and productivity due to COVID-19 related challenges[76]. - The company is facing challenges in hiring and retaining skilled labor, which could negatively affect project quality and profitability[121]. - Adverse weather conditions and seasonal variations can disrupt operations and affect labor hours, particularly in the Gulf Coast region[95]. - The company experienced under-utilization of facilities and personnel, leading to losses due to high fixed costs and the impact of COVID-19[109]. Financial Condition and Capital Needs - The company experienced negative cash flows from operations during 2020, indicating potential ongoing financial challenges[104]. - The backlog of projects is subject to changes due to delays, suspensions, or terminations, which could significantly impact future revenue[96]. - The company may need to raise additional capital for working capital and capital expenditures, which could be challenging under current market conditions[98]. - A $10.0 million PPP Loan was secured, with an application for forgiveness of $8.9 million submitted, pending SBA review[105]. Asset Management and Impairments - The company has provided $7.0 million in collateral for performance bonds related to contracts that are under dispute[102]. - The company has $8.2 million in assets held for sale, primarily consisting of three 660-ton crawler cranes and two drydocks[107]. - During 2020, the company recorded impairments associated with its assets held for sale, indicating potential future losses[107]. - The company closed its Jennings Yard and Lake Charles Yard in Q4 2020, relocating certain assets to improve operational efficiency[108]. Regulatory and Compliance Risks - New tariffs and duties imposed by the federal government on imported materials, including steel, could significantly raise costs for the company's fabrication projects[132]. - Compliance with complex and stringent environmental laws may expose the company to liability and increase operational costs, particularly with potential new regulations under the Biden Administration[134]. - Increased focus on environmental, social, and governance (ESG) factors by institutional investors may adversely affect the company's financing costs and access to capital[131]. Governance and Shareholder Dynamics - Over half of the company's stock is held by institutional investors and pooled investment funds with a history of shareholder activism, which could create uncertainty about future strategic direction[130]. - The company has a Cooperation Agreement with its largest shareholder that is set to expire at the 2021 annual meeting, potentially impacting governance and strategic decisions[130]. Cybersecurity and Insurance Risks - The company may face significant financial losses due to potential cyber incidents or data security breaches[128]. - The company’s insurance coverage may be inadequate to cover claims, exposing it to significant liability and costs[114]. Joint Ventures and Partnerships - The company’s operations through joint ventures may be impacted by limited control over partners, leading to potential non-performance issues[129]. Supply Chain Dependencies - The company relies on third parties for raw materials and services, which could adversely affect its ability to meet customer commitments[123]. - The company is highly dependent on the Houma Navigation Canal for access to open waters, and lack of federal funding for dredging could hinder operations[137].

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 September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from (State or other jurisdiction of incorporation or organization) 16225 PARK TEN PLACE, SUITE 300 HOUSTON, TEXAS 77084 (Address of principal executive offices) (Zip Cod ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2020 was $54.9 million, down 9% sequentially from $60 million in Q2 2020 and down 28% year-over-year from $75.8 million in Q3 2019 [41] - Consolidated net loss for Q3 2020 was $12.3 million, compared to a net loss of $5.5 million in Q2 2020 and $6.8 million in Q3 2019 [42] - EBITDA for Q3 2020 was a loss of $10.1 million, compared to a loss of $3.4 million in the previous quarter and a loss of $4.6 million in the same quarter last year [42] Business Line Data and Key Metrics Changes - Shipyard Division revenue was $37.1 million in Q3 2020, up from $33.9 million in Q2 2020 but down from $43.3 million in Q3 2019 [45] - Fabrication & Services Division revenue was $18.2 million in Q3 2020, down 31% from $26.6 million in Q2 2020 and down 44% from $32.7 million in Q3 2019 [54] - Operating loss for the Shipyard Division was $9.2 million in Q3 2020, compared to a loss of $1.7 million in Q2 2020 and $3.3 million in Q3 2019 [47] Market Data and Key Metrics Changes - Backlog at the end of Q3 2020 totaled $429 million, a decrease of 7% year-over-year and 9% compared to June 2020 [64] - Approximately 94% of the backlog was attributable to the Shipyard Division, excluding customer options for three additional vessels for the U.S. Navy [65] Company Strategy and Development Direction - The company is focusing on improving project execution and management, consolidating divisions, and pursuing opportunities in renewable energy markets [23][38] - Cost-saving initiatives are being implemented in the Fabrication & Services Division, expected to yield results starting in Q4 2020 [76] - The company is transitioning to green energy end markets, including biofuel plant construction and hydrogen production [38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of COVID-19 and Gulf Coast hurricanes on operations, leading to disappointing results [74] - The company is actively discussing equitable resolutions with customers affected by project delays and is focused on preserving cash [75] - There is confidence in the recovery of end markets and the benefits of ongoing initiatives to strengthen the company [77] Other Important Information - The company experienced significant operational disruptions due to hurricanes and COVID-19, leading to project delays and increased costs [7][11] - A crane accident caused damage to a vessel under construction, leading to potential costs ranging from $1 million to $4 million [17][18] Q&A Session Summary Question: What actions is the company taking to mitigate the impact of COVID-19 and hurricanes? - The company is in discussions with customers for equitable resolutions and is focused on improving processes and execution [75] Question: What are the expectations for future capital needs and working capital? - Anticipated capital needs for Q4 2020 are approximately $2 to $3 million, with expected working capital increase of $10 million to $15 million [71][72]

Gulf Island Fabrication, Inc. (NASDAQ:GIFI) Q2 2020 Earnings Conference Call August 4, 2020 5:00 PM ET Company Participants Cindi Cook - Investor Relations Richard Heo - President and Chief Executive Officer Wes Stockton - Executive Vice President and Chief Financial Officer Conference Call Participants John Deysher - Pinnacle JP Geygan - Global Investment Corp Operator Good day, ladies and gentlemen, and welcome to today’s Gulf Island Fabrication, Inc. Second Quarter 2020 Earnings Call. A quick reminder th ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q 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 ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2020 was $78.6 million, a 16% increase year-over-year from $67.6 million in Q1 2019 [28] - Consolidated net income for Q1 2020 was $5.9 million, compared to a net loss of $3 million in Q1 2019 [28] - Operating income for Q1 2020 was $5.9 million, reflecting a $10 million gain from a contract dispute settlement [29] Business Line Data and Key Metrics Changes - Shipyard division revenue was $45.6 million in Q1 2020, a 22% increase from $37.4 million in Q1 2019, but a slight decrease from $47.7 million in Q4 2019 [30] - Fabrication and services division revenue was $33.4 million in Q1 2020, a 9% increase from $30.6 million in Q1 2019 [32] - Operating loss for the shipyard division was $1.9 million in Q1 2020, compared to an operating loss of $904,000 in Q1 2019 [31] Market Data and Key Metrics Changes - Backlog totaled approximately $500 million at March 2020, an increase of $63 million from December 2019 and $166 million from March 2019 [36] - Approximately 95% of the backlog was attributable to the shipyard division, with significant contributions from U.S. Navy option exercises [36] Company Strategy and Development Direction - The company completed the consolidation of its fabrication and services divisions to improve efficiency and reduce costs [11] - The closure of the Jennings facility is scheduled for Q3 2020 to further enhance operational efficiency [11] - The company is focusing on strengthening relationships with customers and strategic partners, receiving positive feedback on recent initiatives [12] Management's Comments on Operating Environment and Future Outlook - The management acknowledged significant challenges due to COVID-19 and declining oil prices, impacting operations and project activities [18] - The company expects 2020 to be a challenging year for the newly integrated fabrication and services division [18] - Management did not provide specific guidance for EBITDA for the remainder of 2020 due to market uncertainty [43] Other Important Information - The company received a $10 million loan under the Payroll Protection Program to retain and bring back employees [22] - The company has over $400 million of outstanding surety bonds, which are dependent on its financial strength [40] Q&A Session Summary Question: What kind of project was the $30 million project that was suspended? - The projects were fabrication projects for components to offshore production rigs, which have been suspended due to market conditions [49][50] Question: Can you comment on the bidding environment? - The bidding environment has been impacted, especially in oil and gas, with larger CapEx projects still moving forward, but smaller projects have been put on hold [59][60] Question: How should gross margin develop given recent backlog additions? - The backlog includes a significant portion that is near breakeven, but challenges with gross profit are expected as lower margin projects are completed [61][62]

Financial Position - As of March 31, 2020, the company's cash and short-term investments totaled $68.6 million, with an additional $30.2 million available under its Credit Agreement[111]. - Available liquidity as of March 31, 2020, was $68.6 million, including cash and cash equivalents of $48.6 million and short-term investments of $19.9 million[146]. - As of March 31, 2020, the company's working capital was negative $4.4 million, with total cash, cash equivalents, and short-term investments amounting to $68.6 million[147]. - The ratio of current assets to current liabilities was 1.80 to 1.00 as of March 31, 2020, indicating strong liquidity[158]. - The company had $411.8 million of outstanding surety bonds as of March 31, 2020, indicating significant project support[159]. Revenue and Profitability - Revenue for Q1 2020 was $78.6 million, up 16.2% from $67.6 million in Q1 2019[126]. - Gross profit for Q1 2020 was a loss of $254, compared to a profit of $553 in Q1 2019, reflecting a 145.9% decline[126]. - Operating income for Q1 2020 was $5.9 million, a significant improvement from a loss of $3.3 million in Q1 2019[126]. - Revenue for 2020 was $78.6 million, an increase of 16.2% compared to $67.6 million in 2019[127]. - Gross loss for 2020 was $0.3 million (0.3% of revenue), compared to a gross profit of $0.6 million (0.8% of revenue) in 2019[127]. - Revenue for the Fabrication & Services Division increased by 9.3% to $33.4 million in 2020 from $30.6 million in 2019[138]. - Gross profit for the Fabrication & Services Division was $1.0 million (2.9% of revenue) in 2020, compared to $1.0 million (3.2% of revenue) in 2019[139]. Project Awards and Backlog - New project awards for Q1 2020 totaled $141.6 million, a significant increase from $45.8 million in Q1 2019, representing a 209% growth[121]. - New project awards for 2020 were $128.9 million, significantly higher than $2.8 million in 2019, primarily due to U.S. Navy contracts[134]. - Backlog as of March 31, 2020, was $500.3 million, an increase from $437.3 million at December 31, 2019[122]. - 95% of the backlog within the Shipyard Division is attributable to government and non-oil and gas customers, including three research vessels and five rescue ships[117]. - The company expects to recognize $144.7 million of backlog revenue in the remainder of 2020, $183.3 million in 2021, and $127.8 million in 2022[123]. - The U.S. Navy has options for three additional vessels, which could increase backlog by approximately $203 million if exercised[124]. Operational Adjustments and Challenges - The company has experienced a significant decline in oil prices and demand due to COVID-19, impacting revenue and project execution[106]. - The company is implementing measures to mitigate COVID-19 impacts, including employee wellness protocols and operational adjustments[109]. - The company anticipates that large project opportunities may not be awarded until late 2020 or 2021 due to market uncertainty[116]. - The company is addressing operational challenges through cost reduction efforts and the sale of underutilized assets to improve liquidity[109]. - The company continues to focus on securing profitable new project awards and improving project gross profit despite challenges from COVID-19[117]. - The company plans to focus on securing profitable new project awards and improving liquidity through cost reductions and asset sales[162]. Corporate Structure and Strategy - The company plans to close the Jennings Yard upon completion of harbor tug projects, expected in Q3 2020, to consolidate marine vessel construction activities and improve resource utilization[115]. - The company has combined its Fabrication and Services Divisions into a new division called Fabrication & Services to enhance project execution and resource utilization[115]. - The company is enhancing its competitiveness by improving proposal and project execution processes, increasing accountability, and incorporating lessons learned into future projects[113]. - The company has made significant progress in improving cash flow from projects in backlog, although it cannot assure the successful sale of $8.1 million in assets held for sale[162].

Financial Performance - The Company reported a significant increase in revenue, reaching $40 million for the year ended December 31, 2019, compared to $30 million in the previous year, representing a 33.3% growth[22] - The average earnings per share (EPS) for the year was reported at $1.50, up from $1.00 in the previous year, marking a 50% increase[22] - The backlog of projects as of December 31, 2019, was reported at $150 million, reflecting a 20% increase from the previous year[22] - The backlog as of December 31, 2019, was $437.3 million, an increase from $356.5 million in 2018, with approximately 52% expected to be recognized as revenue beyond 2020[49] Operational Efficiency - The Company plans to enhance its project execution capabilities to improve profitability and operational efficiency[18] - The Company anticipates the closure of the Jennings Yard by the third quarter of 2020, which is expected to streamline operations and reduce costs[28] - Labor hours worked in 2019 totaled 2.4 million, up from 1.9 million in both 2018 and 2017, reflecting a significant increase in operational activity[61] Market Position and Strategy - The Fabrication Division contributed approximately 60% of total revenue, while the Shipyard Division accounted for 30% and Services Division for 10%[23] - The Company has secured new project awards in the offshore wind sector, indicating a strategic expansion into renewable energy markets[18] - The company operates in highly competitive markets influenced by oil and gas prices, with foreign competitors often having lower operating costs and government subsidies[51] - The company is exploring potential mergers and acquisitions to expand its service offerings and market reach[18] Compliance and Regulations - Compliance with environmental regulations is becoming increasingly complex and expensive, potentially impacting operational costs and project timelines[53] - The exploration and development of oil and gas properties are regulated by the Bureau of Ocean Energy Management, which imposes stringent engineering and construction specifications[56] - Future operations may be affected by changes in laws and regulations, which could require additional expenditures[59] - The company believes it has all necessary permits and licenses for its operations, which are subject to extensive government regulation[54] Workforce and Human Resources - The company had approximately 944 employees as of December 31, 2019, compared to 875 employees in 2018, indicating a workforce increase of about 7.9%[61] - The company’s ability to attract and retain skilled personnel is critical for executing projects, as indicated by the increase in labor hours[61] Safety and Quality Management - The company has a zero-tolerance policy for drugs and alcohol in the workplace, supported by a comprehensive screening program[37] - The company maintains ISO 9001-2015 certification for its quality management systems, ensuring adherence to industry standards[40] - The company’s strategic location and ISO 9001-2015 certification are expected to enhance its competitiveness in project bidding[52] Equipment and Facilities - Significant owned equipment includes 21 crawler cranes with capacities ranging from 60 to 500 tons and a floating drydock with a 15,000-ton lift capacity[32] - The company operates multiple facilities, including a 163-acre yard with 54,000 square feet of administrative and operations facilities and 267,000 square feet of covered fabrication facilities[32] Materials and Procurement - The principal materials used include standard steel shapes and welding supplies, with procurement from both domestic and foreign mills[34] - New project awards represent expected revenue values, with backlog reflecting unrecognized revenue from these commitments[46] Seasonal and External Factors - Seasonal variations may impact operations, particularly during winter months and due to weather conditions in the Gulf Coast region[50]