THE WOODLANDS, Texas, April 30, 2024 (GLOBE NEWSWIRE) -- Gulf Island Fabrication, Inc. ("Gulf Island" or the "Company") (NASDAQ:GIFI), a leading steel fabricator and service provider to the industrial and energy sectors, today announced that it will report financial results for the first quarter 2024 after the market close on Tuesday, May 7, 2024. Gulf Island management will hold a conference call on Tuesday, May 7, 2024, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss the Company's financial ...

Financial Data and Key Metrics Changes - The company reported a consolidated revenue of $44.6 million for Q4 2023, representing a 17% increase from the prior year period [79] - Adjusted EBITDA for Q4 2023 was $6.6 million, up from $2.3 million in the prior year period, reflecting improved performance in both Services and Fabrication segments [79][80] - The cash and investments balance at year-end was approximately $48 million, an increase of roughly $6 million from September 30 [48] Business Line Data and Key Metrics Changes - The Services division generated revenue of $24.5 million in Q4 2023, a 13% increase year-over-year, primarily driven by the Spark Safety business line [81] - The Fabrication division reported revenue of $19.7 million for Q4 2023, nearly a 20% increase compared to the prior year, attributed to strong growth in small-scale fabrication [82] - Services EBITDA for Q4 2023 was $3.2 million, up 25% compared to the prior year, with an EBITDA margin of 13.2%, an increase of 130 basis points [44] Market Data and Key Metrics Changes - The company remains optimistic about activity in key end markets in the Gulf Coast region, including LNG, petrochemicals, and green energy, with tight industry capacity [17] - Demand trends for the Services business are encouraging as the company enters 2024, driven by favorable spending from oil and gas customers, particularly in the Gulf of Mexico [18] Company Strategy and Development Direction - The company is focused on generating stable, profitable growth by pursuing new end markets and diversifying its Services business while strengthening project execution [23] - The strategy includes expanding the skilled workforce and continuing to pursue opportunities in traditional offshore markets [23] - The company aims to leverage its strong financial flexibility to explore acquisition opportunities to enhance its business base [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong foundation and recurring revenue from its base business, anticipating continued growth in 2024 [35] - The company acknowledged challenges in the capital market affecting large projects, with some projects experiencing delays due to permitting issues [30][50] - Management expects another strong year for the Services business in 2024, driven by the growth of the Spark Safety offering [26] Other Important Information - The company completed the sale of excess property at its Houma facility, generating net cash proceeds of approximately $8.5 million, which will bolster liquidity [49][58] - Capital expenditures for 2024 are anticipated to be between $4.5 million and $5.5 million, with a focus on facility upgrades and technologically advanced equipment [62] Q&A Session Summary Question: What is the bidding environment for large fabrication projects? - Management noted that there is still a good volume of projects in LNG and petrochemicals, but challenges in capital markets have caused some projects to be delayed [37][38] Question: Why does the Fabrication division expect growth in 2024? - The company sees robustness in Services customers in the Gulf of Mexico, leading to projected opportunities for Fabrication growth [43] Question: What was the impact of change orders in Q4? - Approximately $2.5 million to $3 million of the nearly $4 million benefit in Q4 was from change orders, with the rest attributed to project improvements [69] Question: What was sold in the recent property sale? - The company sold a piece of underutilized property, which allowed for asset monetization and consolidation of its footprint [73][87] Question: What are the expectations for capital expenditures in 2024? - Capital expenditures are expected to be higher than in 2023, with a focus on facility improvements and equipment upgrades [94]

THE WOODLANDS, Texas, March 07, 2024 (GLOBE NEWSWIRE) -- Gulf Island Fabrication, Inc. (NASDAQ:GIFI) ("Gulf Island" or the "Company"), a leading steel fabricator and service provider to the industrial and energy sectors, today announced results for the fourth quarter and full year 2023. FOURTH QUARTER 2023 SUMMARY Consolidated revenue of $44.6 millionConsolidated net income of $7.1 million; Adjusted EBITDA of $6.6 millionServices Division operating income of $2.7 million; EBITDA of $3.2 millionFabrication ...

Part I [Business and Properties](index=9&type=section&id=Items%201%20and%202.%20Business%20and%20Properties) Gulf Island Fabrication, Inc. is a fabricator of complex steel structures and a provider of specialty services primarily for the industrial and energy sectors [Description of Operations](index=9&type=section&id=Description%20of%20Operations) The company operates through three reportable segments: Services, Fabrication, and Shipyard, with the Shipyard division largely winding down its legacy obligations - The company's business is managed through three operating divisions: Services, Fabrication, and Shipyard, plus a Corporate division[22](index=22&type=chunk) - The Services Division provides a range of specialty services including maintenance, repair, construction, scaffolding, and staffing[23](index=23&type=chunk) - The Fabrication Division fabricates complex steel structures and modules for various sectors including refining, petrochemical, LNG, and alternative energy[24](index=24&type=chunk) - The Shipyard Division has largely ceased new operations after a 2021 asset sale, with remaining activities focused on completing legacy Ferry Projects. The wind-down was substantially complete in Q4 2023, with final warranty periods ending in Q1 2025[25](index=25&type=chunk) [Facilities and Equipment](index=10&type=section&id=Facilities%20and%20Equipment) The company's primary operating facilities are the Houma Facilities in Louisiana, situated on approximately 160 acres with significant water frontage and extensive buildings - The main operating base is the Houma Facilities in Louisiana, covering 160 acres with 3,305 linear feet of water frontage, and includes over 420,000 square feet of covered facilities[27](index=27&type=chunk) - In February 2024, the company sold a portion of its Houma Facilities that had been classified as an asset held for sale at year-end 2023[28](index=28&type=chunk) [Human Capital Management](index=12&type=section&id=Human%20Capital%20Management) As of December 31, 2023, the company had 839 full-time employees, supplemented by 94 independent contractors, and actively promotes diversity and workforce development Employee Statistics (as of Dec 31) | Year | Full-Time Employees | Independent Contractors | | :--- | :--- | :--- | | **2023** | 839 | 94 | | **2022** | 874 | 83 | - The company utilizes Texas and Louisiana state grants for workforce skills development, training 772 employees in 2023 through these programs[36](index=36&type=chunk) - The workforce is diverse, with approximately **54%** being women or minorities at the end of 2023, an increase from **51%** in 2022[39](index=39&type=chunk) [Customers](index=15&type=section&id=Customers) The company's customer base includes U.S. and international energy producers and industrial operators, with revenue concentrated among a few key customers - In 2023, **two customers** accounted for **53%** of consolidated revenue (excluding the negative revenue from the MPSV Litigation resolution)[50](index=50&type=chunk) - In 2022, **two customers** accounted for **48%** of consolidated revenue[50](index=50&type=chunk) [New Project Awards and Backlog](index=16&type=section&id=New%20Project%20Awards%20and%20Backlog) New project awards represent the value of new contract commitments, while backlog is the unrecognized revenue from these awards, both subject to significant variability and potential customer changes - Backlog represents the unrecognized revenue from new project awards and is consistent with the value of remaining performance obligations under Topic 606[54](index=54&type=chunk) - Projects in backlog are subject to potential changes by the customer, including delay, suspension, or termination, which could significantly impact expected revenue[55](index=55&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including its dependence on the cyclical oil and gas industry, intense competition, and reliance on a small number of customers - **Business/Industry Risks:** The company's revenue is highly dependent on the cyclical offshore oil and gas industry, faces intense competition, and derives a significant portion of revenue from a small number of customers[71](index=71&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - **Operational Risks:** A substantial number of projects are fixed-price, exposing the company to cost overruns. The business depends on winning new contracts, and its backlog is subject to cancellation, as exemplified by a **major offshore jackets project cancellation** in July 2023[78](index=78&type=chunk)[80](index=80&type=chunk)[87](index=87&type=chunk) - **Financial Risks:** The company may need additional capital, faces credit risks from its customers, and its insurance coverage has limitations. It is now generally **self-insured** for property and equipment damage[102](index=102&type=chunk)[110](index=110&type=chunk)[86](index=86&type=chunk) - **Workforce Risks:** Profitability depends on attracting and retaining skilled labor, which is challenging in a competitive market. The loss of key personnel could also impact operations[115](index=115&type=chunk)[118](index=118&type=chunk) - **Legal/Regulatory Risks:** The business is subject to complex regulations, potential impacts from climate change policies, and actions of activist shareholders, with **over one-third** of stock held by institutional investors and funds with a history of activism[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) [Unresolved Staff Comments](index=37&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - **None**[136](index=136&type=chunk) [Cybersecurity](index=37&type=section&id=Item%201C.%20Cybersecurity) The company has an integrated cyber risk management program overseen by the Corporate Manager of Information Technology and the Board's Audit Committee - The company's cyber risk management is integrated into its overall risk oversight program, utilizing both internal and external personnel for assessment and response[137](index=137&type=chunk)[138](index=138&type=chunk) - The Board's Audit Committee is responsible for overseeing cyber and IT security risks, receiving annual reports on the company's enterprise risks, including cybersecurity[142](index=142&type=chunk) [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company refers to Note 7 of its Financial Statements for a discussion of its legal proceedings, including details on the resolution of the significant MPSV Litigation - Details regarding legal proceedings, including the resolution of the MPSV Litigation, are incorporated by reference from Note 7 of the Financial Statements[143](index=143&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[144](index=144&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the **Nasdaq Global Select Market** under the symbol "**GIFI**", and the Board authorized a **$5.0 million** share repurchase program in December 2023 - The company's common stock is traded on the **Nasdaq Global Select Market** under the symbol "**GIFI**"[146](index=146&type=chunk) Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Total Purchased as Part of Program | Approx. Dollar Value Remaining ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Oct 2023 | — | $ — | — | — | | Nov 2023 | — | $ — | — | — | | Dec 2023 | **29,578** | $ 4.34 | **29,578** | $ 4,872 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, Gulf Island reported a net loss of **$24.4 million** on revenue of **$151.1 million**, driven by a **$32.5 million** charge from the MPSV Litigation resolution, while maintaining solid liquidity [Results of Operations – Comparison of 2023 and 2022](index=51&type=section&id=Results%20of%20Operations%20%E2%80%93%20Comparison%20of%202023%20and%202022) For 2023, consolidated revenue increased to **$151.1 million** from **$142.3 million** in 2022, but the company posted a gross loss of **$11.9 million** and a net loss of **$24.4 million**, primarily due to a **$32.5 million** charge in the Shipyard division Consolidated Results of Operations (in thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $ 151,067 | $ 142,320 | $ 8,747 | | Gross Profit (Loss) | $ (11,901) | $ 7,895 | $ (19,796) | | Operating Loss | $ (25,883) | $ (3,415) | $ (22,468) | | Net Loss | $ (24,402) | $ (3,352) | $ (21,050) | - The 2023 gross loss was primarily driven by a **$32.5 million** charge from the MPSV Litigation resolution and **$2.7 million** in charges on Ferry Projects in the Shipyard Division[195](index=195&type=chunk)[198](index=198&type=chunk) - General and administrative expenses decreased by **10.6%** to **$16.3 million** in 2023, mainly due to lower legal fees associated with the now-resolved MPSV Litigation[196](index=196&type=chunk) [New Project Awards and Backlog](index=44&type=section&id=New%20Project%20Awards%20and%20Backlog) New project awards decreased to **$157.7 million** in 2023 from **$240.2 million** in 2022, and backlog fell sharply to **$13.0 million** due to a major contract cancellation New Project Awards by Segment (in thousands) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Services | $ 92,728 | $ 85,846 | | Fabrication | $ 66,629 | $ 154,239 | | Shipyard | $ (528) | $ 834 | | **Total** | **$ 157,719** | **$ 240,247** | Backlog by Segment (in thousands) | Segment | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Services | $ 502 | $ 1,322 | | Fabrication | $ 11,739 | $ 110,287 | | Shipyard | $ 709 | $ 3,272 | | **Total** | **$ 12,950** | **$ 114,881** | - A large offshore jackets contract awarded in 2022 was cancelled by the customer in July 2023, reducing performance obligations by **$76.1 million** during 2023[174](index=174&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2023, the company had total cash, cash equivalents, short-term investments, and restricted cash of **$47.9 million**, with positive cash from operations of **$7.2 million** Available Liquidity (in thousands) | Component | Dec 31, 2023 | | :--- | :--- | | Cash and cash equivalents | $ 38,176 | | Short-term investments | $ 8,233 | | **Available cash, cash equivalents and short-term investments** | **$ 46,409** | | Restricted cash | $ 1,475 | | **Total** | **$ 47,884** | Cash Flow Summary (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $ 7,197 | $ (8,923) | | Net cash used in investing activities | $ (503) | $ (8,870) | | Net cash used in financing activities | $ (1,867) | $ (1,972) | - The company anticipates capital expenditures of **$4.5 million** to **$5.5 million** for 2024, primarily for upgrades to its Houma Facilities and new equipment[228](index=228&type=chunk) [Critical Accounting Policies](index=45&type=section&id=Critical%20Accounting%20Policies) The company's most significant accounting policies involve considerable judgment and estimates, particularly revenue recognition for long-term contracts, impairment assessments, and deferred tax assets - Revenue for long-term contracts is recognized over time using the percentage-of-completion (POC) method, based on costs incurred to date versus total estimated costs. This requires significant estimates for costs to complete, which can materially affect results[178](index=178&type=chunk) - Goodwill is tested for impairment annually. The Services Division is the only reporting unit with goodwill, and a qualitative assessment in 2023 indicated **no impairment**[182](index=182&type=chunk) - A **full valuation allowance** is maintained against deferred tax assets (DTAs) because, based on available evidence including cumulative losses, it is more likely than not that the DTAs will not be realized[185](index=185&type=chunk)[360](index=360&type=chunk) - The company is now generally **self-insured** for property and equipment damage due to high premium costs and coverage limitations, exposing it to future losses[188](index=188&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - **Not applicable**[231](index=231&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's Consolidated Financial Statements and accompanying notes are included in the report, starting on page F-1 - The Financial Statements and related notes are incorporated by reference and appear on pages F-1 through F-26[232](index=232&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - **None**[233](index=233&type=chunk) [Controls and Procedures](index=61&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were **effective** as of December 31, 2023 - Management concluded that disclosure controls and procedures were **effective** as of December 31, 2023[234](index=234&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2023[235](index=235&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=62&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required for this item, including details on directors, executive officers, and corporate governance practices, is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the 2024 annual meeting proxy statement[241](index=241&type=chunk) [Executive Compensation](index=62&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the 2024 annual meeting proxy statement[242](index=242&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=62&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information required for this item concerning security ownership is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the 2024 annual meeting proxy statement[243](index=243&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=62&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item regarding related party transactions and director independence is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the 2024 annual meeting proxy statement[244](index=244&type=chunk) [Principal Accounting Fees and Services](index=62&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information required for this item concerning principal accounting fees and services is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the 2024 annual meeting proxy statement[245](index=245&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=63&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section indicates that the required financial statement schedules and exhibits are filed as part of the Form 10-K report, with a detailed list available in the Exhibit Index - Required financial statement schedules and exhibits are filed as part of the report, detailed in the Exhibit Index on page E-1[248](index=248&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=64&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an **unqualified opinion** on the consolidated financial statements, identifying "Revenue recognition for long-term contracts" as a **critical audit matter** due to complex management judgments - The auditor, Ernst & Young LLP, issued an **unqualified opinion** on the consolidated financial statements[254](index=254&type=chunk) - The **critical audit matter** identified was "Revenue recognition for long-term contracts" due to the significant management judgment involved in estimating costs to complete and variable consideration[259](index=259&type=chunk)[260](index=260&type=chunk) [Consolidated Financial Statements](index=67&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a decrease in total assets from **$134.9 million** in 2022 to **$128.4 million** in 2023, an increase in total liabilities to **$49.5 million**, and a net loss of **$24.4 million** for 2023 Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $ 101,627 | $ 87,069 | | Total Assets | $ 128,428 | $ 134,866 | | Total Current Liabilities | $ 29,847 | $ 30,789 | | Total Liabilities | $ 49,457 | $ 32,242 | | Total Shareholders' Equity | $ 78,971 | $ 102,624 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $ 151,067 | $ 142,320 | | Gross Profit (Loss) | $ (11,901) | $ 7,895 | | Operating Loss | $ (25,883) | $ (3,415) | | Net Loss | $ (24,402) | $ (3,352) | | Basic and Diluted Loss Per Share | $ (1.51) | $ (0.21) | [Notes to Consolidated Financial Statements](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's accounting policies, segment performance, and key events, including the **$32.5 million** charge for the MPSV litigation and the new **$20.0 million** promissory note with Zurich - **MPSV Litigation Resolution:** The company resolved its MPSV litigation, resulting in a **$32.5 million** charge (a **$12.5M** non-cash write-off and a **$20.0M** liability). As part of the settlement, the company entered into a **$20.0 million** promissory note with Zurich, payable over **15 years**[374](index=374&type=chunk)[375](index=375&type=chunk)[352](index=352&type=chunk) - **Ferry Project Losses:** The Shipyard division recorded an additional **$2.7 million** in negative margin changes on its legacy Ferry Projects in 2023 due to increased material/subcontractor costs, schedule delays, and warranty costs[329](index=329&type=chunk)[330](index=330&type=chunk) - **Asset Sale:** In February 2024, the company sold a portion of its Houma Facilities (classified as held for sale) for **$8.5 million** net of costs. The carrying value was **$5.6 million**[340](index=340&type=chunk)[393](index=393&type=chunk) - **Share Repurchase Program:** A **$5.0 million** share repurchase program was approved in December 2023. The company repurchased **29,578 shares** for **$0.1 million** before year-end[383](index=383&type=chunk)

[Report Overview](index=1&type=section&id=ReportOverview) Gulf Island reported strong Q4 and full-year 2023 results, driven by services and fabrication, while strategically winding down the Shipyard Division and resolving litigation [Fourth Quarter 2023 Performance Summary](index=1&type=section&id=Q42023Summary) Gulf Island reported strong fourth-quarter 2023 results with significant increases in revenue, net income, and adjusted EBITDA compared to the prior year, driven by momentum in small-scale fabrication and services, including Spark Safety Q4 2023 Consolidated Financial Highlights | Metric | Q4 2023 ($ million) | Q4 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $44.6 | $38.1 | +17.1% | | Consolidated Net Income | $7.1 | $0.5 | +1320% | | Consolidated Adjusted EBITDA | $6.6 | $2.3 | +187% | - Services Division operating income was **$2.7 million**; EBITDA was **$3.2 million**[6](index=6&type=chunk) - Fabrication Division operating income was **$6.1 million**; Adjusted EBITDA was **$5.4 million**[6](index=6&type=chunk) - Cash and short-term investments balance reached **$47.9 million** at December 31, 2023[6](index=6&type=chunk) - Substantially completed remaining ferry projects for the Shipyard Division[6](index=6&type=chunk) [Full Year 2023 Performance Summary](index=1&type=section&id=FY2023Summary) For the full year 2023, Gulf Island saw an increase in consolidated revenue and a significant improvement in adjusted EBITDA, despite reporting a net loss, largely due to the resolution of the MPSV Litigation and the wind-down of the Shipyard Division FY 2023 Consolidated Financial Highlights | Metric | FY 2023 ($ million) | FY 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $151.1 | $142.3 | +6.2% | | Consolidated Adjusted Revenue | $181.5 | $134.6 | +34.8% | | Consolidated Net Loss | ($24.4) | ($3.4) | -617.6% | | Consolidated Adjusted EBITDA | $17.0 | $2.3 | +639.1% | - Services Division operating income was **$10.9 million**; EBITDA was **$12.9 million**[7](index=7&type=chunk) - Fabrication Division operating income was **$10.6 million**; Adjusted EBITDA was **$11.8 million**[7](index=7&type=chunk) - Resolved MPSV Litigation, which included a **$32.5 million** revenue reversal for the Shipyard Division[4](index=4&type=chunk)[7](index=7&type=chunk) [Management Insights & Strategic Direction](index=2&type=section&id=ManagementInsightsStrategicDirection) Management highlighted strong Q4 and full-year 2023 results, attributing success to favorable Gulf Coast market trends and strategic execution, now fully focused on profitable growth in services and fabrication after completing the shipyard wind-down and resolving the MPSV Litigation [Management Commentary](index=2&type=section&id=ManagementCommentary) Management highlighted strong Q4 and full-year 2023 results, attributing success to favorable Gulf Coast market trends and strategic execution, now fully focused on profitable growth in services and fabrication after completing the shipyard wind-down and resolving the MPSV Litigation - Q4 revenue increased **17% YoY**, driven by small-scale fabrication and services, including Spark Safety[8](index=8&type=chunk) - Services operating income increased **35% for FY2023** due to asset deployment to higher-margin opportunities and Spark Safety growth[8](index=8&type=chunk) - Fabrication gross margins exceeded **11% for FY2023**, reflecting strong project execution and bidding discipline[8](index=8&type=chunk) - Key achievements in 2023 include substantial completion of shipyard wind-down and successful resolution of MPSV Litigation[8](index=8&type=chunk) 2024 Segment EBITDA Expectations | Segment | Expected 2024 EBITDA ($ million) | | :--- | :--- | | Services | ~$14.0 | | Fabrication | ~$8.0 (excludes large project awards) | - Year-end cash balance was nearly **$48 million**, with an expected increase to **$60 million** after a February 2024 property sale, providing significant financial flexibility for growth[8](index=8&type=chunk) [Resolution of MPSV Litigation](index=3&type=section&id=ResolutionOfMPSVLitigation) The company's MPSV Litigation was dismissed in Q4 2023, leading to a settlement agreement that released the company from performance bond obligations and resulted in a **$32.5 million** charge in Q3 2023, including a **$20.0 million** promissory note - Lawsuit dismissed in full with prejudice on **October 4, 2023**[10](index=10&type=chunk) - Settlement Agreement on **November 6, 2023**, released the Company from performance bond obligations and transferred MPSVs to the Surety[10](index=10&type=chunk) - Company entered into a promissory note for **$20.0 million**, payable in 15 equal annual installments starting December 31, 2024, at **3.0% interest**[10](index=10&type=chunk) - A **$32.5 million** charge was recorded in Q3 2023 for the Shipyard Division, consisting of a **$12.5 million** non-cash write-off and a **$20.0 million** liability for the settlement[10](index=10&type=chunk) [Strategic Update](index=3&type=section&id=StrategicUpdate) Gulf Island continued its strategic transformation in 2023, focusing on profitable growth by pursuing new end markets, diversifying services, strengthening project execution, and expanding its skilled workforce, while maintaining presence in traditional offshore markets [Pursue Traditional Offshore Markets](index=3&type=section&id=PursueTraditionalOffshoreMarkets) Robust demand in the Gulf of Mexico for traditional offshore activities in 2023 drove growth in services and small-scale fabrication, with momentum expected to continue into 2024 - Robust demand in the Gulf of Mexico for traditional offshore activities in 2023, driving growth in services and small-scale fabrication[11](index=11&type=chunk) - Momentum expected to continue into 2024 due to stable oil prices and healthy customer balance sheets[11](index=11&type=chunk) [Pursue New Growth End Markets](index=3&type=section&id=PursueNewGrowthEndMarkets) The company has a strong foundation to pursue new growth opportunities in LNG, petrochemical, and energy transition markets, while maintaining disciplined bidding practices - Strong foundation to pursue new growth opportunities in LNG, petrochemical, and energy transition markets in the Gulf Coast region[12](index=12&type=chunk) - Bidding activity for large fabrication projects remains active, but decision cycles are extending due to higher interest rates and a challenging permitting environment (e.g., LNG export project pause)[12](index=12&type=chunk) - Company remains disciplined, focusing on profitably growing its services and small-scale fabrication businesses[12](index=12&type=chunk) [Grow and Diversify Services Business](index=3&type=section&id=GrowAndDiversifyServicesBusiness) Services revenue grew by 7.5% in 2023, driven by favorable offshore demand and Spark Safety, with a 2024 focus on strategic opportunities in the Gulf of Mexico market - Services revenue grew by **7.5%** during 2023, driven by favorable offshore demand and contribution from Spark Safety[13](index=13&type=chunk) - Focus for 2024 is on strategic opportunities that capitalize on the Gulf of Mexico market[13](index=13&type=chunk) [Strengthen Project Execution and Bidding Discipline](index=3&type=section&id=StrengthenProjectExecutionAndBiddingDiscipline) The company prioritized strengthening project execution and bidding discipline in 2023, expanding services gross margins and achieving strong fabrication gross margins, a focus to continue in 2024 - Key priority given inflationary pressures and challenges with skilled labor availability[14](index=14&type=chunk) - Services gross margins expanded **180 basis points** year-over-year in 2023[14](index=14&type=chunk) - Fabrication gross margins reached **11.4% for 2023** despite partial under-utilization[14](index=14&type=chunk) - Company will maintain focus on project execution and disciplined bidding for adequate risk-adjusted returns in 2024[14](index=14&type=chunk) [Expand Skilled Workforce](index=4&type=section&id=ExpandSkilledWorkforce) The company maintained its skilled labor headcount in Services during 2023 and is confident in its ability to ramp up Fabrication headcount, evaluating expansion opportunities for 2024 - Maintained skilled labor headcount in Services during 2023 despite the challenging labor environment[15](index=15&type=chunk) - Confident in its proven ability to ramp up headcount in Fabrication to support new project awards[15](index=15&type=chunk) - Evaluating opportunities to expand skilled labor headcount in 2024, including strategic acquisitions[15](index=15&type=chunk) [Segment Performance (Fourth Quarter 2023)](index=4&type=section&id=SegmentPerformanceQ42023) This section details the financial performance of Gulf Island's Services, Fabrication, Shipyard, and Corporate segments for the fourth quarter of 2023 [Services Segment](index=4&type=section&id=ServicesSegment) The Services Segment experienced significant growth in Q4 2023, driven by its Spark Safety business line and a favorable project margin mix, leading to increased revenue, new project awards, and improved operating income and EBITDA Services Segment Q4 2023 Performance | Metric | Q4 2023 ($ million) | Q4 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $24.5 | $21.6 | +13.4% | | New Project Awards | $24.2 | $21.3 | +13.5% | | Operating Income | $2.7 | $2.2 | +22.7% | | EBITDA | $3.2 | $2.6 | +25.1% | - Backlog totaled **$0.5 million** at December 31, 2023[17](index=17&type=chunk) - Improved operating results primarily due to higher revenue and a more favorable project margin mix, including the benefit of the division's Spark Safety business line[18](index=18&type=chunk) [Fabrication Segment](index=4&type=section&id=FabricationSegment) The Fabrication Segment demonstrated strong growth in Q4 2023, with increased revenue and new project awards, and a substantial rise in adjusted EBITDA, primarily due to higher small-scale fabrication activity and favorable resolution of customer change orders Fabrication Segment Q4 2023 Performance | Metric | Q4 2023 ($ million) | Q4 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $19.7 | $16.4 | +19.8% | | New Project Awards | $19.9 | $17.3 | +15.1% | | Operating Income | $6.1 | $4.1 | +48.8% | | Adjusted EBITDA | $5.4 | $2.0 | +171.1% | - Backlog totaled **$11.7 million** at December 31, 2023[20](index=20&type=chunk) - Improved operating results (excluding Hurricane Ida impacts) primarily due to project improvements from the resolution of customer change orders and a more favorable project margin mix[21](index=21&type=chunk) [Shipyard Segment](index=4&type=section&id=ShipyardSegment) The Shipyard Segment's operations were substantially wound down in Q4 2023, with the completion and delivery of the remaining ferry projects, reporting a reduced operating loss compared to the prior year Shipyard Segment Q4 2023 Performance | Metric | Q4 2023 ($ million) | Q4 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $0.6 | $0.4 | +50.0% | | Operating Loss | ($0.1) | ($3.6) | +97.2% | - Seventy-vehicle ferry completed, delivered and accepted by the customer during the fourth quarter 2023[22](index=22&type=chunk) - Final forty-vehicle ferry substantially completed and delivered during the fourth quarter 2023, with final customer acceptance expected in March 2024[22](index=22&type=chunk) [Corporate Segment](index=4&type=section&id=CorporateSegment) The Corporate Segment reported a slightly reduced operating loss and EBITDA loss in Q4 2023 compared to the prior year, reflecting general corporate overheads Corporate Segment Q4 2023 Performance | Metric | Q4 2023 ($ million) | Q4 2022 ($ million) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Loss | ($2.1) | ($2.3) | +8.7% | | EBITDA Loss | ($2.0) | ($2.3) | +13.0% | [Segment Descriptions](index=5&type=section&id=SegmentDescriptions) Gulf Island operates through four reportable segments: Services (offshore/onshore work), Fabrication (on-site fabrication), Shipyard (ferry construction and MPSV litigation costs, now substantially wound down), and Corporate (general overheads) - Services Segment: Includes offshore and onshore services work performed at customer facilities, including offshore platforms[25](index=25&type=chunk) - Fabrication Segment: Includes all fabrication work performed on-site at the Company's facilities, including pull-through fabrication work for the Services Segment[25](index=25&type=chunk) - Shipyard Segment: Includes two ferries under construction (substantially completed in Q4 2023) and vessel holding costs and legal fees associated with the Company's previous MPSV Litigation. The wind down of operations was substantially completed in Q4 2023[25](index=25&type=chunk) - Corporate Segment: Includes costs not directly related to the Company's operating segments, such as costs of being a publicly traded company[25](index=25&type=chunk) [Financial Position & Outlook](index=5&type=section&id=FinancialPositionOutlook) This section provides an overview of Gulf Island's balance sheet, liquidity, and financial outlook for 2024, including segment EBITDA guidance [Balance Sheet and Liquidity](index=5&type=section&id=BalanceSheetAndLiquidity) Gulf Island maintained a strong liquidity position at year-end 2023, with a substantial cash balance, initiated a share repurchase program, and incurred debt related to the MPSV litigation settlement - Cash and short-term investments balance was **$47.9 million** at December 31, 2023, including **$1.5 million** of restricted cash[26](index=26&type=chunk) - Current and long-term debt totaled **$20.0 million** at December 31, 2023, associated with the Note Agreement from the MPSV Litigation[26](index=26&type=chunk) - Repurchased **29,578 shares** of common stock for **$0.1 million** in Q4 2023 under its share repurchase program commenced in December 2023[26](index=26&type=chunk) [2024 Financial Outlook](index=5&type=section&id=2024FinancialOutlook) Gulf Island provided indicative segment and consolidated EBITDA guidance for full year 2024, anticipating continued growth in Services and small-scale Fabrication, while Corporate segment loss is expected to be consistent with historical levels 2024 Segment EBITDA Guidance | Segment | Expected 2024 EBITDA ($ million) | | :--- | :--- | | Services | ~$14.0 (driven by Spark Safety) | | Fabrication | ~$8.0 (includes small-scale growth, excludes large project awards) | | Corporate | ~($8.0) Loss | - Forecast excludes an anticipated gain of approximately **$2.9 million** resulting from the previously disclosed property sale in February 2024[27](index=27&type=chunk) - Forecasted 2024 EBITDA for Fabrication is lower than 2023 levels due to the prior year benefiting from the contribution of a large fabrication project that was cancelled during the year[27](index=27&type=chunk) [Additional Information](index=5&type=section&id=AdditionalInformation) This section provides details on the Q4 2023 conference call, an overview of Gulf Island, definitions of non-GAAP measures, and a cautionary statement regarding forward-looking information [Fourth Quarter 2023 Conference Call](index=5&type=section&id=ConferenceCallDetails) Gulf Island scheduled a conference call for March 7, 2024, to discuss its financial results, accessible via webcast or dial-in, with a replay available online - Conference call held on Thursday, March 7, 2024, at **4:00 p.m. Central Time (5:00 p.m. Eastern Time)**[28](index=28&type=chunk) - Accessible via webcast on Gulf Island's website at www.gulfisland.com or by dialing **1.877.704.4453**[28](index=28&type=chunk) [About Gulf Island](index=5&type=section&id=AboutGulfIsland) Gulf Island Fabrication, Inc. is a leading steel fabricator and service provider to the industrial and energy sectors, offering complex steel structures, modules, and specialty services to a diverse customer base - Leading fabricator of complex steel structures and modules and provider of specialty services[29](index=29&type=chunk) - Specialty services include project management, hookup, commissioning, repair, maintenance, scaffolding, coatings, welding enclosures, civil construction and staffing services[29](index=29&type=chunk) - Customers include U.S. and international energy producers; refining, petrochemical, LNG, industrial and power operators; and EPC companies[29](index=29&type=chunk) - Headquartered in The Woodlands, Texas, with primary operating facilities in Houma, Louisiana[29](index=29&type=chunk) [Non-GAAP Measures](index=6&type=section&id=NonGAAPMeasures) This section defines the non-GAAP financial measures used by Gulf Island, including EBITDA, adjusted EBITDA, adjusted revenue, adjusted gross profit, new project awards, and backlog, explaining their relevance as supplemental indicators of performance - EBITDA: Reflects operating results and expectations of future performance excluding the non-cash impacts of depreciation and amortization[30](index=30&type=chunk) - Adjusted EBITDA: EBITDA adjusted to remove certain nonrecurring items (e.g., Hurricane Ida impacts, impairment charges) and the operating results of the Shipyard Division (including MPSV Litigation impacts)[30](index=30&type=chunk) - Adjusted Revenue and Adjusted Gross Profit: GAAP measures adjusted to remove revenue and gross profit/loss for the Shipyard Division (including MPSV Litigation impacts)[30](index=30&type=chunk) - New Project Awards and Backlog: Represent the expected revenue value of contract commitments received and the unrecognized revenue value of new project awards, respectively[31](index=31&type=chunk) - Non-GAAP measures are supplemental and not replacements or alternatives to GAAP measures[32](index=32&type=chunk) [Cautionary Statement](index=7&type=section&id=CautionaryStatement) The company's forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially, including economic factors, industry cycles, competition, project execution, and regulatory changes - Forward-looking statements discuss potential future performance, operations, and projects, identified by words like 'anticipates,' 'expects,' 'plans,' etc[34](index=34&type=chunk) - Actual results may differ materially due to factors such as supply chain disruptions, inflationary pressures, economic slowdowns, natural disasters, labor costs, geopolitical conflicts, and volatility in oil and gas prices[35](index=35&type=chunk) - Other important factors include competition, reliance on significant customers, competitive pricing and cost overruns on projects, ability to secure new project awards, and compliance with regulatory and environmental laws[35](index=35&type=chunk) - The Company cautions investors that it undertakes no obligation to publicly update or revise any forward-looking statements[36](index=36&type=chunk) [Company Information](index=7&type=section&id=CompanyInformation) Contact information for Gulf Island's Chief Executive Officer and Chief Financial Officer is provided - Richard W. Heo, Chief Executive Officer, contact: **713.714.6100**[37](index=37&type=chunk) - Westley S. Stockton, Chief Financial Officer, contact: **713.714.6100**[37](index=37&type=chunk) [Financial Statements](index=8&type=section&id=FinancialStatements) This section presents Gulf Island's consolidated financial statements, including results of operations, adjusted revenue, adjusted gross profit, EBITDA, and segment-level performance [Consolidated Results of Operations](index=8&type=section&id=ConsolidatedResultsOfOperations) The consolidated results of operations show detailed financial performance for Q4 and full year 2023, highlighting revenue, gross profit/loss, operating income/loss, and net income/loss, along with per share data Consolidated Results of Operations ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | New project awards | $44,400 | $38,417 | $37,945 | $157,719 | $240,247 | | Revenue | $44,550 | $5,023 | $38,139 | $151,067 | $142,320 | | Cost of revenue | $36,087 | $34,902 | $35,716 | $162,968 | $134,425 | | Gross profit (loss) | $8,463 | ($29,879) | $2,423 | ($11,901) | $7,895 | | General and administrative expense | $3,395 | $4,080 | $5,249 | $16,278 | $18,214 | | Other (income) expense, net | ($1,607) | ($324) | ($3,206) | ($2,296) | ($6,904) | | Operating income (loss) | $6,675 | ($33,635) | $380 | ($25,883) | ($3,415) | | Interest (expense) income, net | $383 | $397 | $190 | $1,440 | $86 | | Income (loss) before income taxes | $7,058 | ($33,238) | $570 | ($24,443) | ($3,329) | | Income tax (expense) benefit | $32 | $3 | ($21) | $41 | ($23) | | Net income (loss) | $7,090 | ($33,235) | $549 | ($24,402) | ($3,352) | | Basic income (loss) per share | $0.44 | ($2.04) | $0.04 | ($1.51) | ($0.21) | | Diluted income (loss) per share | $0.43 | ($2.04) | $0.04 | ($1.51) | ($0.21) | [Consolidated Adjusted Revenue](index=8&type=section&id=ConsolidatedAdjustedRevenue) This table provides a reconciliation of consolidated revenue to adjusted revenue, which excludes the Shipyard Division's revenue, particularly the negative revenue impact from the MPSV Litigation resolution Consolidated Adjusted Revenue Reconciliation ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $44,550 | $5,023 | $38,139 | $151,067 | $142,320 | | Add (less): Shipyard revenue | ($556) | $32,702 | ($357) | $30,417 | ($7,671) | | Adjusted revenue | $43,994 | $37,725 | $37,782 | $181,484 | $134,649 | [Consolidated Adjusted Gross Profit](index=8&type=section&id=ConsolidatedAdjustedGrossProfit) This table reconciles consolidated gross profit (loss) to adjusted gross profit, by removing the gross loss (profit) attributable to the Shipyard Division, including the significant charge related to the MPSV Litigation Consolidated Adjusted Gross Profit Reconciliation ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross profit (loss) | $8,463 | ($29,879) | $2,423 | ($11,901) | $7,895 | | Add (less): Shipyard gross loss (profit) | ($93) | $34,356 | $2,299 | $35,862 | $3,058 | | Adjusted gross profit | $8,370 | $4,477 | $4,722 | $23,961 | $10,953 | [Consolidated EBITDA and Adjusted EBITDA](index=9&type=section&id=ConsolidatedEBITDAAndAdjustedEBITDA) This table provides reconciliations of net income (loss) to EBITDA and adjusted EBITDA, with adjustments for depreciation, amortization, hurricane insurance gains, non-cash impairments, and the Shipyard Division's operating loss Consolidated EBITDA and Adjusted EBITDA Reconciliations ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $7,090 | ($33,235) | $549 | ($24,402) | ($3,352) | | Operating income (loss) | $6,675 | ($33,635) | $380 | ($25,883) | ($3,415) | | EBITDA | $8,026 | ($32,245) | $1,714 | ($20,417) | $1,683 | | Adjusted EBITDA | $6,606 | $2,581 | $2,293 | $16,969 | $2,265 | [Results of Operations by Segment](index=10&type=section&id=ResultsOfOperationsBySegment) This section details the financial performance of each operating segment (Services, Fabrication, Shipyard, and Corporate) for the fourth quarter and full year, including revenue, gross profit, operating income/loss, and EBITDA/Adjusted EBITDA Services Division Results ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | New project awards | $24,150 | $22,776 | $21,274 | $92,728 | $85,846 | | Revenue | $24,515 | $22,976 | $21,609 | $93,548 | $87,022 | | Gross profit | $3,435 | $3,260 | $2,932 | $13,783 | $11,227 | | Operating income | $2,742 | $2,577 | $2,212 | $10,929 | $8,124 | | EBITDA | $3,228 | $3,079 | $2,580 | $12,855 | $9,620 | Fabrication Division Results ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | New project awards | $19,896 | $16,589 | $17,291 | $66,629 | $154,239 | | Revenue | $19,664 | $14,979 | $16,414 | $89,046 | $48,299 | | Gross profit (loss) | $4,935 | $1,217 | $1,790 | $10,178 | ($274) | | Operating income | $6,115 | $904 | $4,087 | $10,558 | $4,874 | | Adjusted EBITDA | $5,378 | $1,426 | $1,984 | $11,819 | $761 | Shipyard Division Results ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | New project awards | $539 | ($718) | ($379) | ($528) | $834 | | Revenue | $556 | ($32,702) | $357 | ($30,417) | $7,671 | | Gross profit (loss) | $93 | ($34,356) | ($2,299) | ($35,862) | ($3,058) | | Operating loss | ($106) | ($35,117) | ($3,589) | ($39,374) | ($7,554) | | EBITDA | ($106) | ($35,117) | ($3,589) | ($39,374) | ($7,554) | Corporate Division Results ($ thousand) | Metric | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating loss | ($2,076) | ($1,999) | ($2,330) | ($7,996) | ($8,859) | | EBITDA | ($2,000) | ($1,924) | ($2,271) | ($7,705) | ($8,600) | | Adjusted EBITDA | ($2,000) | ($1,924) | ($2,271) | ($7,705) | ($8,116) | [Consolidated Balance Sheets](index=13&type=section&id=ConsolidatedBalanceSheets) The consolidated balance sheets present the company's financial position at year-end 2023 and 2022, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets ($ thousand) | Asset/Liability/Equity | Dec 31, 2023 ($ thousand) | Dec 31, 2022 ($ thousand) | | :--- | :--- | :--- | | **ASSETS:** | | | | Cash and cash equivalents | $38,176 | $33,221 | | Restricted cash | $1,475 | $1,603 | | Short-term investments | $8,233 | $9,905 | | Total current assets | $101,627 | $87,069 | | Property, plant and equipment, net | $23,145 | $31,154 | | Total assets | $128,428 | $134,866 | | **LIABILITIES AND SHAREHOLDERS' EQUITY:** | | | | Accounts payable | $8,466 | $8,310 | | Total current liabilities | $29,847 | $30,789 | | Long-term debt, noncurrent | $18,925 | - | | Total liabilities | $49,457 | $32,242 | | Total shareholders' equity | $78,971 | $102,624 | | Total liabilities and shareholders' equity | $128,428 | $134,866 | [Consolidated Cash Flows](index=14&type=section&id=ConsolidatedCashFlows) The consolidated cash flow statement outlines the cash generated from or used in operating, investing, and financing activities for Q4 and full year 2023 and 2022 Consolidated Cash Flows ($ thousand) | Activity | Q4 2023 ($ thousand) | Q3 2023 ($ thousand) | Q4 2022 ($ thousand) | FY 2023 ($ thousand) | FY 2022 ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,369 | $2,021 | $9,902 | $7,197 | ($8,923) | | Net cash provided by (used in) investing activities | $6,088 | ($626) | ($2,150) | ($503) | ($8,870) | | Net cash used in financing activities | ($128) | ($128) | ($888) | ($1,867) | ($1,972) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $13,329 | $1,267 | $6,864 | $4,827 | ($19,765) | | Cash, cash equivalents and restricted cash, end of period | $39,651 | $26,322 | $34,824 | $39,651 | $34,824 | [2024 Financial Outlook - Segment and Consolidated EBITDA Reconciliations](index=15&type=section&id=2024FinancialOutlookSegmentConsolidatedEBITDAReconciliations) This table provides a reconciliation of forecasted net income (loss) to EBITDA for each segment and on a consolidated basis for the full year 2024, supporting the financial outlook 2024 Segment and Consolidated EBITDA Reconciliations ($ thousand) | Metric | Services ($ thousand) | Fabrication ($ thousand) | Shipyard ($ thousand) | Corporate ($ thousand) | Consolidated ($ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $12,000 | $5,200 | $0 | ($6,400) | $10,800 | | Operating income (loss) | $12,000 | $5,200 | $0 | ($8,300) | $8,900 | | EBITDA | $14,000 | $8,000 | $0 | ($8,000) | $14,000 | - Forecasted EBITDA excludes a gain of approximately **$2.9 million** for the Fabrication Division resulting from the sale of property in February 2024[55](index=55&type=chunk)

THE WOODLANDS, Texas, Feb. 29, 2024 (GLOBE NEWSWIRE) -- Gulf Island Fabrication, Inc. ("Gulf Island" or the "Company") (NASDAQ:GIFI), a leading steel fabricator and service provider to the industrial and energy sectors, today announced that it will report financial results for the fourth quarter and full year 2023 after the market close on Thursday, March 7, 2024. Gulf Island management will hold a conference call on Thursday, March 7, 2024, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss the ...

THE WOODLANDS, Texas, Feb. 27, 2024 (GLOBE NEWSWIRE) -- Gulf Island Fabrication, Inc. (NASDAQ:GIFI) (the "Company"), a leading steel fabricator and service provider to the industrial and energy sectors, announced today that it has completed the sale of certain excess property that was part of the Company's facilities located in Houma, Louisiana for net cash proceeds of approximately $8.5 million. "A key aspect of our strategic transformation has been to improve our resource and facility utilization and the ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2023 was $5 million, reflecting charges related to the MPSV litigation resolution. Adjusted revenue for the quarter was $37.7 million, comparable to the same period last year [26] - Consolidated net loss for Q3 was $33.2 million, while consolidated adjusted EBITDA was $2.6 million [42] - Services EBITDA for Q3 was $3.1 million, up approximately 11% from $2.8 million in the prior year, with an EBITDA margin of 13.4%, up 110 basis points year-over-year [43] Business Line Data and Key Metrics Changes - Services division revenue for Q3 2023 was $23 million, a 2% increase year-over-year, driven by the Spark Safety business line [27] - Fabrication division revenue for Q3 was $15 million, a decrease of $500,000 compared to the prior year, primarily due to a canceled large fabrication project [28] - The Shipyard division reported negative revenue of $32.7 million due to revenue reversals from the MPSV litigation resolution [29] Market Data and Key Metrics Changes - The company is encouraged by activity in key end markets in the Gulf Coast region, including LNG, petrochemicals, and green energy [9] - The demand trends for the services business remain attractive, driven by favorable spending from key oil and gas customers [15] Company Strategy and Development Direction - The company is focused on securing larger contracts to increase facility utilization and drive profitable growth [9] - The resolution of the MPSV litigation allows the company to fully pursue strategic initiatives, including mergers and acquisitions [8] - The company aims to transition into a pure-play services and fabrication business focused on sustainable and profitable growth [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about finishing the year strongly and anticipates that 2024 will be an even stronger year for the company [39] - The company expects a strong fourth quarter for its services business, with EBITDA projected to grow sequentially over Q3 [16] Other Important Information - The company ended Q3 with a cash and investment balance of approximately $42 million, up roughly $2 million from June 30 [30] - The company has ongoing discussions regarding the responsibility for the cost of propeller blades related to a customer project [24] Q&A Session Summary Question: Status of receivable from the party with the large fabrication contract - The company collected $6 million this quarter, with a remaining balance of around $5 million expected to be collected in Q4 [50] Question: Resolution of hull issue for the second ferry project - The hull issue has been resolved, and change orders have been acknowledged by the customer [51] Question: Capital expenditure plans for Q4 - The company expects capital expenditures to be around $2 million to $3 million [56]

```markdown PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents Gulf Island Fabrication, Inc.'s unaudited consolidated financial statements for Q3 2023, including balance sheets, statements of operations, cash flows, and detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets Summary | ASSETS (in thousands) | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------- | :----------------------- | :----------- | | Cash and cash equivalents | $25,125 | $33,221 | | Restricted cash | $1,197 | $1,603 |\ | Short-term investments | $15,437 | $9,905 |\ | Contract receivables and retainage, net | $35,684 | $29,427 |\ | Contract assets | $4,305 | $4,839 |\ | Prepaid expenses and other assets | $3,438 | $6,475 |\ | Inventory | $2,340 | $1,599 |\ | **Total current assets** | **$87,526** | **$87,069** |\ | Property, plant and equipment, net | $29,285 | $31,154 |\ | Goodwill | $2,217 | $2,217 |\ | Other intangibles, net | $735 | $842 |\ | Other noncurrent assets | $839 | $13,584 |\ | **Total assets** | **$120,602** | **$134,866** |\ | | | |\ | LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands) | Sep 30, 2023 (Unaudited) | Dec 31, 2022 |\ | :-------------------------------- | :----------------------- | :----------- |\ | Accounts payable | $11,515 | $8,310 |\ | Contract liabilities | $3,534 | $8,196 |\ | Accrued expenses and other liabilities | $13,247 | $14,283 |\ | **Total current liabilities** | **$28,296** | **$30,789** |\ | Contract liabilities, non-current | $20,000 | — |\ | Other noncurrent liabilities | $822 | $1,453 |\ | **Total liabilities** | **$49,118** | **$32,242** |\ | Shareholders' equity: | | |\ | Common stock | $11,690 | $11,591 |\ | Additional paid-in capital | $108,257 | $107,372 |\ | Accumulated deficit | $(48,463) | $(16,339) |\ | **Total shareholders' equity** | **$71,484** | **$102,624** |\ | **Total liabilities and shareholders' equity** | **$120,602** | **$134,866** | - Total assets decreased by **$14.26 million** from **$134.87 million** at December 31, 2022, to **$120.60 million** at September 30, 2023[16](index=16&type=chunk) - Total liabilities increased by **$16.88 million**, primarily due to the recognition of a **$20.0 million** non-current contract liability related to the MPSV Litigation resolution[16](index=16&type=chunk)[90](index=90&type=chunk) - Total shareholders' equity decreased significantly by **$31.14 million**, from **$102.62 million** to **$71.48 million**, largely due to the accumulated deficit increasing from **$(16.34) million** to **$(48.46) million**[16](index=16&type=chunk) [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Summary | (in thousands, except per share data) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $5,023 | $39,593 | $106,517 | $104,181 |\ | Cost of revenue | $34,902 | $35,373 | $126,881 | $98,709 |\ | Gross profit (loss) | $(29,879) | $4,220 | $(20,364) | $5,472 |\ | General and administrative expense | $4,080 | $4,510 | $12,883 | $12,965 |\ | Other (income) expense, net | $(324) | $(944) | $(689) | $(3,698) |\ | Operating income (loss) | $(33,635) | $654 | $(32,558) | $(3,795) |\ | Interest (expense) income, net | $397 | $(46) | $1,057 | $(104) |\ | Income (loss) before income taxes | $(33,238) | $608 | $(31,501) | $(3,899) |\ | Income tax (expense) benefit | $3 | $(10) | $9 | $(2) |\ | Net income (loss) | $(33,235) | $598 | $(31,492) | $(3,901) |\ | Basic and diluted income (loss) per share | $(2.04) | $0.04 | $(1.95) | $(0.25) | - Revenue for the three months ended September 30, 2023, decreased by **87.3%** to **$5.0 million** from **$39.6 million** in the prior year, primarily due to a **$32.5 million** reversal of previously recognized revenue from the MPSV Litigation resolution and lower revenue from Shipyard Division projects[19](index=19&type=chunk)[136](index=136&type=chunk) - The company reported a significant net loss of **$33.2 million** for the three months ended September 30, 2023, compared to a net income of **$0.6 million** in the same period last year, largely driven by the **$32.5 million** charge from the MPSV Litigation resolution[19](index=19&type=chunk)[71](index=71&type=chunk)[90](index=90&type=chunk)[138](index=138&type=chunk) - For the nine months ended September 30, 2023, revenue increased by **2.2%** to **$106.5 million**, but the company recorded a net loss of **$31.5 million**, compared to a net loss of **$3.9 million** in the prior year, primarily due to the MPSV Litigation charge[19](index=19&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Consolidated Statements of Changes in Shareholders' Equity Summary | (in thousands) | Common Stock (Shares) | Common Stock (Amount) | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders' Equity | | :------------- | :-------------------- | :-------------------- | :------------------------- | :------------------ | :------------------------- | | Balance at Dec 31, 2022 | 15,973 | $11,591 | $107,372 | $(16,339) | $102,624 |\ | Adoption of ASU 2016-13 | — | — | — | $(632) | $(632) |\ | Balance at Jan 1, 2023 | 15,973 | $11,591 | $107,372 | $(16,971) | $101,992 |\ | Net income (loss) | — | — | — | $(33,235) | $(33,235) |\ | Stock-based compensation expense | — | $52 | $461 | — | $513 |\ | Balance at Sep 30, 2023 | 16,287 | $11,690 | $108,257 | $(48,463) | $71,484 | - The accumulated deficit significantly increased from **$(16.34) million** at December 31, 2022, to **$(48.46) million** at September 30, 2023, primarily due to the net loss of **$33.2 million** for the quarter and the adoption of ASU 2016-13[22](index=22&type=chunk)[60](index=60&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Summary | (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(172) | $(18,825) |\ | Net cash used in investing activities | $(6,591) | $(6,720) |\ | Net cash used in financing activities | $(1,739) | $(1,084) |\ | Net decrease in cash, cash equivalents and restricted cash | $(8,502) | $(26,629) |\ | Cash, cash equivalents and restricted cash, beginning of period | $34,824 | $54,589 |\ | Cash, cash equivalents and restricted cash, end of period | $26,322 | $27,960 | - Net cash used in operating activities significantly improved, decreasing from **$18.8 million** in the nine months ended September 30, 2022, to **$0.2 million** in the same period of 2023, largely due to the **$31.9 million** change in noncurrent assets and liabilities related to the MPSV Litigation resolution[24](index=24&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) - Net cash used in investing activities remained relatively stable at **$6.6 million** in 2023 compared to **$6.7 million** in 2022, with net purchases of short-term investments and capital expenditures being primary uses[24](index=24&type=chunk)[199](index=199&type=chunk) - Net cash used in financing activities increased to **$1.7 million** in 2023 from **$1.1 million** in 2022, mainly due to higher payments on Insurance Finance Arrangements and tax payments for vested stock withholdings[24](index=24&type=chunk)[200](index=200&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Gulf Island Fabrication, Inc. operates through three divisions: Services, Fabrication, and Shipyard, with a corporate headquarters in The Woodlands, Texas, and primary operating facilities in Houma, Louisiana[27](index=27&type=chunk) - The company sold its Shipyard Division operating assets in April 2021 and plans to wind down remaining Shipyard operations by Q4 2023[28](index=28&type=chunk) - The MPSV Litigation was resolved on October 4, 2023, leading to a **$32.5 million** charge in Q3 2023, comprising a **$12.5 million** write-off of a noncurrent net contract asset and a **$20.0 million** liability from a Note Agreement with Zurich[29](index=29&type=chunk)[71](index=71&type=chunk)[90](index=90&type=chunk) - The company adopted ASU 2016-13 (Financial Instruments - Credit Losses) in Q1 2023, resulting in a **$0.6 million** increase to beginning accumulated deficit, but no material effect on results of operations[60](index=60&type=chunk) [2. Revenue, Contract Assets and Liabilities and Other Contract Matters](index=18&type=section&id=2.%20REVENUE,%20CONTRACT%20ASSETS%20AND%20LIABILITIES%20AND%20OTHER%20CONTRACT%20MATTERS) Revenue, Contract Assets and Liabilities and Other Contract Matters Summary | Revenue (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Services | $22,976 | $22,569 | $69,033 | $65,413 |\ | Fabrication | $14,979 | $15,429 | $69,382 | $31,885 |\ | Shipyard | $(32,702) | $1,849 | $(30,973) | $7,314 |\ | Eliminations | $(230) | $(254) | $(925) | $(431) |\ | **Total** | **$5,023** | **$39,593** | **$106,517** | **$104,181** | - Shipyard Division revenue for the three and nine months ended September 30, 2023, was negative **$(32.7) million** and **$(31.0) million**, respectively, primarily due to the **$32.5 million** revenue reversal from the MPSV Litigation resolution[64](index=64&type=chunk)[136](index=136&type=chunk)[163](index=163&type=chunk)[182](index=182&type=chunk) - Fabrication Division's operating results were positively impacted by **$0.7 million** for both the three and nine months ended September 30, 2023, due to favorable resolution of customer change orders[72](index=72&type=chunk)[73](index=73&type=chunk) - Shipyard Division's operating results were negatively impacted by **$1.5 million** and **$2.3 million** for the three and nine months ended September 30, 2023, respectively, due to increased costs and schedule extensions on ferry projects[72](index=72&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - The offshore jackets project for the Fabrication Division was cancelled in July 2023, leading to a **$76.1 million** reduction in performance obligations[67](index=67&type=chunk)[82](index=82&type=chunk) [3. Credit Facilities and Debt](index=22&type=section&id=3.%20CREDIT%20FACILITIES%20AND%20DEBT) - The LC Facility with Whitney Bank was amended in May 2023, reducing capacity from **$20.0 million** to **$10.0 million** and extending maturity to June 30, 2024[83](index=83&type=chunk) - Outstanding surety bonds totaled **$101.6 million** at September 30, 2023, including **$50.0 million** for MPSV projects (subsequently terminated) and **$45.6 million** for Active Retained Shipyard Contracts[84](index=84&type=chunk) - The Restrictive Covenant Agreement with Zurich, which precluded dividends or share repurchases, was terminated on November 6, 2023, following the MPSV Litigation resolution[86](index=86&type=chunk) [4. Commitments and Contingencies](index=23&type=section&id=4.%20COMMITMENTS%20AND%20CONTINGENCIES) - The MPSV Litigation was dismissed on October 4, 2023, with the company entering a Settlement Agreement with Zurich, releasing obligations under Performance Bonds and agreeing to a **$20.0 million** promissory Note Agreement[89](index=89&type=chunk) - A **$32.5 million** charge was recorded in Q3 2023 due to the MPSV Litigation resolution, comprising a **$12.5 million** write-off of a noncurrent net contract asset and a **$20.0 million** noncurrent contract liability for the Note Agreement[90](index=90&type=chunk) - The company is now generally self-insured for property and equipment damage as of Q2 2023 due to high premium costs and increased coverage limitations[91](index=91&type=chunk) [5. Income (Loss) Per Share](index=25&type=section&id=5.%20INCOME%20(LOSS)%20PER%20SHARE) Income (Loss) Per Share Summary | (in thousands, except per share data) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $(33,235) | $598 | $(31,492) | $(3,901) |\ | Weighted average shares | 16,287 | 15,923 | 16,162 | 15,808 |\ | Basic and diluted income (loss) per common share | $(2.04) | $0.04 | $(1.95) | $(0.25) | - Basic and diluted loss per share was **$(2.04)** for the three months ended September 30, 2023, a significant decrease from **$0.04** income per share in the prior year, primarily due to the net loss[96](index=96&type=chunk) [6. Operating Segments](index=25&type=section&id=6.%20OPERATING%20SEGMENTS) - The company operates through Services, Fabrication, and Shipyard divisions, with the Shipyard Division winding down by Q4 2023[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) Operating Segments Summary | Segment Results (in thousands) | Services (3M Sep 2023) | Fabrication (3M Sep 2023) | Shipyard (3M Sep 2023) | Corporate (3M Sep 2023) | Consolidated (3M Sep 2023) | | :----------------------------- | :--------------------- | :------------------------ | :--------------------- | :---------------------- | :------------------------- | | Revenue | $22,976 | $14,979 | $(32,702) | $(230) | $5,023 |\ | Gross profit (loss) | $3,260 | $1,217 | $(34,356) | — | $(29,879) |\ | Operating income (loss) | $2,577 | $904 | $(35,117) | $(1,999) | $(33,635) |\ | | | | | | |\ | Segment Results (in thousands) | Services (9M Sep 2023) | Fabrication (9M Sep 2023) | Shipyard (9M Sep 2023) | Corporate (9M Sep 2023) | Consolidated (9M Sep 2023) | | :----------------------------- | :--------------------- | :------------------------ | :--------------------- | :---------------------- | :------------------------- | | Revenue | $69,033 | $69,382 | $(30,973) | $(925) | $106,517 |\ | Gross profit (loss) | $10,348 | $5,243 | $(35,955) | — | $(20,364) |\ | Operating income (loss) | $8,187 | $4,443 | $(39,268) | $(5,920) | $(32,558) | - The Shipyard Division reported significant negative revenue and gross loss for both the three and nine months ended September 30, 2023, primarily due to the MPSV Litigation resolution charge[101](index=101&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Services Division showed consistent gross profit percentages of **14.2%** (3M) and **15.0%** (9M) in 2023, indicating stable performance[101](index=101&type=chunk)[146](index=146&type=chunk)[174](index=174&type=chunk) [7. Subsequent Events](index=26&type=section&id=7.%20SUBSEQUENT%20EVENTS) - On October 4, 2023, the MPSV Litigation was resolved, leading to a **$32.5 million** charge in Q3 2023. On November 6, 2023, the Settlement Agreement, Note Agreement, and an amendment to the Mortgage Agreement were executed, and the Restrictive Covenant Agreement was terminated[102](index=102&type=chunk) [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 financial condition, operational results, strategic initiatives, and future outlook, including the impact of the MPSV Litigation resolution [Overview](index=28&type=section&id=Overview) - Gulf Island is a fabricator of complex steel structures and modules and a provider of specialty services to industrial and energy sectors, operating through Services, Fabrication, and Shipyard divisions[108](index=108&type=chunk) - The Shipyard Division's operating assets were sold in April 2021, with remaining operations expected to wind down by Q4 2023[109](index=109&type=chunk) - The DSS Acquisition in December 2021 expanded the Services Division's workforce and service offerings[110](index=110&type=chunk) - The MPSV Litigation was resolved on October 4, 2023[110](index=110&type=chunk) [Impacts of Oil and Gas Price Volatility and Macroeconomic Conditions on Operations](index=28&type=section&id=Impacts%20of%20Oil%20and%20Gas%20Price%20Volatility%20and%20Macroeconomic%20Conditions%20on%20Operations) - Oil and gas price volatility and global macroeconomic factors (supply chain disruptions, inflation, geopolitical conflicts) continue to impact operations, leading to reduced bidding, project suspensions, and increased costs[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Other Impacts to Operations](index=28&type=section&id=Other%20Impacts%20to%20Operations) - Hurricane Ida in August 2021 caused damage to Houma Facilities, and the company continues to manage insurance recoveries and repair costs[114](index=114&type=chunk) - Construction challenges and cost increases have been experienced on the seventy-vehicle and forty-vehicle ferry projects[115](index=115&type=chunk) [Initiatives to Improve Operating Results and Generate Stable, Profitable Growth](index=29&type=section&id=Initiatives%20to%20Improve%20Operating%20Results%20and%20Generate%20Stable,%20Profitable%20Growth) - The company's strategic transformation focuses on expanding its skilled workforce, strengthening project execution, diversifying its offshore services customer base, pursuing traditional offshore fabrication markets, and entering new growth markets like green energy and commercial construction[116](index=116&type=chunk)[120](index=120&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Key progress includes mitigating COVID-19 impacts, reducing risk profile through the Shipyard Transaction, improving liquidity via cost reductions and asset monetization, and enhancing competitiveness through management changes and process improvements[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Operating Outlook](index=32&type=section&id=Operating%20Outlook) - Future success depends on hiring and retaining skilled labor, managing oil and gas price volatility, securing new project awards in traditional and new markets, executing projects within cost estimates, and successfully winding down Shipyard Division operations[129](index=129&type=chunk) - Near-term Fabrication Division utilization will be impacted by the timing of new project awards and the cancellation of the offshore jackets project[129](index=129&type=chunk) [New Project Awards and Backlog](index=32&type=section&id=New%20Project%20Awards%20and%20Backlog) New Project Awards and Backlog Summary | New Project Awards (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Services | $22,776 | $22,110 | $68,578 | $64,572 |\ | Fabrication | $16,589 | $116,926 | $46,733 | $136,948 |\ | Shipyard | $(718) | $380 | $(1,067) | $1,213 |\ | Eliminations | $(230) | $(254) | $(925) | $(431) |\ | **Total** | **$38,417** | **$139,162** | **$113,319** | **$202,302** | Backlog Summary | Backlog (in thousands) | Sep 30, 2023 (Amount) | Sep 30, 2023 (Labor Hours) | Dec 31, 2022 (Amount) | Dec 31, 2022 (Labor Hours) | | :--------------------- | :-------------------- | :------------------------- | :-------------------- | :------------------------- | | Services | $867 | 8 | $1,322 | 20 |\ | Fabrication | $11,507 | 119 | $110,287 | 613 |\ | Shipyard | $726 | 2 | $3,272 | 22 |\ | **Total** | **$13,100** | **129** | **$114,881** | **655** | - Total new project awards decreased significantly to **$38.4 million** for the three months ended September 30, 2023, from **$139.2 million** in the prior year, primarily due to the cancellation of a large offshore jackets project in the Fabrication Division[132](index=132&type=chunk)[135](index=135&type=chunk) - Total backlog at September 30, 2023, was **$13.1 million**, a substantial decrease from **$114.9 million** at December 31, 2022, mainly due to the **$76.1 million** reduction from the cancelled offshore jackets project[132](index=132&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended September 30, 2023 and 2022](index=34&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202023%20and%202022) Comparison of the Three Months Ended September 30, 2023 and 2022 Summary | Consolidated (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Revenue | $5,023 | $39,593 | $(34,570) |\ | Gross profit (loss) | $(29,879) | $4,220 | $(34,099) |\ | Operating income (loss) | $(33,635) | $654 | $(34,289) |\ | Net income (loss) | $(33,235) | $598 | $(33,833) | - Consolidated revenue decreased by **87.3%** YoY, primarily due to a **$32.5 million** revenue reversal from the MPSV Litigation resolution in the Shipyard Division[136](index=136&type=chunk) - Gross loss for Q3 2023 was **$29.9 million**, compared to a gross profit of **$4.2 million** in Q3 2022, mainly due to the MPSV Litigation charge and project charges in the Shipyard Division[138](index=138&type=chunk) - Services Division revenue increased by **1.8%** and gross profit increased by **3.1%** due to incremental revenue and a higher margin mix from the welding enclosures business line[146](index=146&type=chunk)[147](index=147&type=chunk) - Fabrication Division revenue decreased by **2.9%** due to the cancelled offshore jackets project, but gross profit was positively impacted by **$0.7 million** from favorable change order resolutions[149](index=149&type=chunk)[150](index=150&type=chunk) - Shipyard Division reported negative revenue of **$32.7 million** and a gross loss of **$34.4 million**, primarily from the **$32.5 million** MPSV Litigation charge and project cost increases on ferry projects[152](index=152&type=chunk)[153](index=153&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 and 2022](index=40&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030,%202023%20and%202022) Comparison of the Nine Months Ended September 30, 2023 and 2022 Summary | Consolidated (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Revenue | $106,517 | $104,181 | $2,336 |\ | Gross profit (loss) | $(20,364) | $5,472 | $(25,836) |\ | Operating loss | $(32,558) | $(3,795) | $(28,763) |\ | Net loss | $(31,492) | $(3,901) | $(27,591) | - Consolidated revenue increased by **2.2%** YoY, driven by higher revenue in Services and Fabrication, offset by a **$38.3 million** decrease in Shipyard revenue due to the MPSV Litigation charge[162](index=162&type=chunk)[163](index=163&type=chunk) - Gross loss for the nine months ended September 30, 2023, was **$20.4 million**, compared to a gross profit of **$5.5 million** in the prior year, primarily due to the **$32.5 million** MPSV Litigation charge[164](index=164&type=chunk) - Services Division revenue increased by **5.5%** and gross profit increased by **24.7%** due to incremental revenue and a higher margin mix from the welding enclosures business line[174](index=174&type=chunk)[176](index=176&type=chunk) - Fabrication Division revenue increased by **117.6%** due to the offshore jackets project (prior to cancellation) and increased small-scale fabrication activity, resulting in a gross profit of **$5.2 million** compared to a gross loss of **$2.1 million** in the prior year[178](index=178&type=chunk) - Shipyard Division reported negative revenue of **$31.0 million** and a gross loss of **$36.0 million**, primarily from the **$32.5 million** MPSV Litigation charge and project cost increases on ferry projects[182](index=182&type=chunk)[183](index=183&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Available Liquidity Summary | Available Liquidity (in thousands) | Sep 30, 2023 | | :--------------------------------- | :----------- | | Cash and cash equivalents | $25,125 |\ | Short-term investments | $15,437 |\ | Restricted cash, current | $1,197 |\ | **Total** | **$41,759** | - Total available liquidity (cash, cash equivalents, short-term investments, and restricted cash) was **$41.8 million** at September 30, 2023[190](index=190&type=chunk) - Working capital was **$59.2 million** at September 30, 2023, including **$41.8 million** in cash and short-term investments[192](index=192&type=chunk) - Net cash used in operating activities significantly improved to **$0.2 million** for the nine months ended September 30, 2023, from **$18.8 million** in the prior year, largely due to the MPSV Litigation resolution[195](index=195&type=chunk) - The company anticipates capital expenditures of approximately **$2.0 million** for the remainder of 2023[203](index=203&type=chunk) - Management believes current cash, cash equivalents, and short-term investments will be sufficient to fund operating expenses, capital expenditures, and debt obligations for at least the next twelve months[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as effective on September 30, 2023, with no material changes to internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed **effective** as of September 30, 2023[206](index=206&type=chunk) - **No material changes** to internal control over financial reporting occurred during Q3 2023[207](index=207&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, including the MPSV Litigation resolution, are discussed in detail within Note 4 of the Financial Statements - Legal proceedings, including the MPSV Litigation resolution, are discussed in Note 4 of the Financial Statements[210](index=210&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2022 Annual Report, except for updates in the Q2 2023 Form 10-Q - No material changes to risk factors since the 2022 Annual Report, except for updates in the Q2 2023 Form 10-Q[211](index=211&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) On November 6, 2023, the company entered a $20.0 million Note Agreement with Zurich, amending the Mortgage Agreement and terminating the Restrictive Covenant Agreement - A **$20.0 million** Secured Promissory Note was entered into with Zurich on November 6, 2023, with **3.0%** interest and 15 equal annual installments starting December 31, 2024[212](index=212&type=chunk) - The Mortgage Agreement was amended, and the Restrictive Covenant Agreement was terminated in connection with the Note Agreement[212](index=212&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, the Secured Promissory Note, and related agreements - Key exhibits include the Secured Promissory Note (10.1), Amendment to Multiple Indebtedness Mortgage (10.2), and Nullification of Restrictive Covenant (10.3), all dated November 6, 2023[214](index=214&type=chunk) [Signatures](index=52&type=section&id=Signatures) The report was signed by Westley S. Stockton, EVP, CFO, Treasurer, and Secretary of Gulf Island Fabrication, Inc. on November 7, 2023 - The report was signed by Westley S. Stockton, EVP, CFO, Treasurer, and Secretary, on November 7, 2023[218](index=218&type=chunk) ```

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-34279 GULF ISLAND FABRICATION, INC. (Exact name of registrant as specified in its charter) LOUISIANA 72-1147390 (State or other jurisdiction ...