Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2020 was $60 million, a decrease of approximately 24% sequentially and 25% year-over-year [17] - Consolidated net loss for Q2 2020 was $5.5 million, compared to net income of $5.9 million in Q1 2020 and a net loss of $5.2 million in Q2 2019 [18] - EBITDA for Q2 2020 was a loss of $3.4 million, compared to a gain of $8.2 million in the previous quarter and a loss of $3 million in the same quarter last year [18] Segment Performance Changes - Shipyard Division revenue was $33.9 million for Q2 2020, down 26% from Q1 2020 and down 15% from Q2 2019 [19] - Fabrication & Services Division revenue was $26.6 million for Q2 2020, a decrease of 20% from Q1 2020 and 35% from Q2 2019 [22] - Operating loss for the Shipyard Division was $1.7 million, while the Fabrication & Services Division reported an operating loss of $1.4 million [20][23] Market Data and Key Metrics Changes - Total backlog was approximately $470 million at the end of June 2020, a decrease of $30 million from March 2020 but an increase of $33 million from June 2019 [27] - Approximately 93% of the backlog was attributable to the Shipyard Division, excluding customer options for three additional vessels valued at approximately $200 million [27] Company Strategy and Industry Competition - The company is focusing on process improvements and enhancing project execution to better navigate the challenges posed by COVID-19 and oil price volatility [7][10] - Management is being selective in bidding for projects, particularly in the Fabrication & Services sector, where the company is targeting opportunities with the best chance of moving forward [10][53] - The company is not significantly diversifying into new markets but is concentrating on onshore petrochemical and LNG projects in Texas and Louisiana [55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the duration and uncertainty of COVID-19 and volatile oil prices will continue to be headwinds [69] - The company is proactively managing variables within its control and is making progress on key initiatives to improve project execution and resource utilization [69] - There is no guidance on EBITDA for the remainder of 2020 due to ongoing market uncertainty [31] Other Important Information - Operating cash flow for the quarter was negative $3.8 million, with capital expenditures of $5.6 million [28] - The company amended its credit facility to extend the maturity date from June 2021 to June 2022 [30] Q&A Session Summary Question: When do you anticipate submitting your PPP loan forgiveness application? - The company will submit as soon as the SBA starts accepting applications, expected in the next several weeks [37][38] Question: What is the status of the $3 million receivable for billables? - The receivable was paid prior to quarter end [40] Question: Were any covenants changed in the debt facility? - No changes to covenants, except for a minimum LIBOR floor of 1% for borrowings [43][44] Question: Any updates on bidding activity and margins? - The company is being selective in bidding, with a focus on smaller projects due to financial challenges in the oil and gas sector [53] Question: Is there any discussion regarding stock buybacks? - The topic is discussed at the Board level, but a strong balance sheet is required to compete for projects, so buybacks are not imminent [62][63]

☒ 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]

Financial Data and Key Metrics Changes - Fourth quarter revenue was $79.4 million, an increase of approximately 5% sequentially and 32% year-over-year [21][23] - Consolidated net loss for the fourth quarter was $34.3 million, compared to a net loss of $6.8 million in the third quarter and $4.7 million in the fourth quarter of 2018 [21][23] - The company ended the year with total cash, investments, and availability under its credit facility of almost $100 million [22][34] Business Line Data and Key Metrics Changes - Fabrication division revenue was $15.5 million for the quarter, down from $19.5 million in the previous quarter but up from $10.2 million in the same period of 2018 [25] - Shipyard division revenue was $45.6 million for the quarter, up from $39.4 million in the previous quarter and $29.7 million in the same period of 2018 [27] - Services division revenue was $20.5 million for the quarter, up from $17.5 million in the previous quarter but down from $21.5 million in the same period of 2018 [30] Market Data and Key Metrics Changes - Backlog at December 2019 totaled approximately $437 million, a decrease of $25 million from September 2019 but an increase of $81 million from year-end 2018 [33] - The backlog by operating segment was $374 million for the shipyard division, $50 million for the fabrication division, and $13 million for the services division [33] Company Strategy and Development Direction - The company plans to be more disciplined in pursuing and evaluating prospects, focusing on profitable opportunities [10][19] - A new integrated segment combining fabrication and services divisions aims to leverage best practices and improve resource utilization [15] - The company is targeting onshore refining, petrochemical, LNG, and industrial facilities for future growth, capitalizing on anticipated capital projects within a 300-mile radius of Houma [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in profitability and emphasized a focus on improving execution capabilities and project management [8][19] - The company is committed to enhancing its bidding process and project execution to return to profitability [19][38] - Management expressed confidence in returning to profitability due to a strong balance sheet and strategic location [78] Other Important Information - The company experienced project charges of $14 million and non-cash asset impairments of $17.3 million during the quarter [21] - The company anticipates capital requirements in 2020 of approximately $10 million to $15 million [37] Q&A Session Summary Question: Outlook on EBITDA - Management noted that about 85% of the current backlog will contribute no future gross profit, emphasizing the need for new project awards to achieve positive EBITDA [56][57] Question: Competitive Advantage in New Opportunities - Management clarified that the company will not compete with international yards but will focus on strategic local projects that leverage its location and capabilities [59][60] Question: Changes in Bidding Process - Management described the implementation of a "go, no go" review process for evaluating project prospects, emphasizing a more rigorous approach to risk assessment [66][67] Question: Legal Disputes and Settlements - Management confirmed that a recent $10 million settlement was related to a change order dispute, while litigation with Hornbeck remains ongoing [74]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2019 was $75.8 million, a decrease from $80.5 million in Q2 2019 and an increase from $49.7 million in Q3 2018 [40][41] - Net loss for Q3 2019 was $6.8 million, compared to a net loss of $5.3 million in Q2 2019 and a net loss of $10.9 million in Q3 2018 [40][41] - Operating loss for Q3 2019 was impacted by project charges of $3.9 million and a $400,000 impact from Hurricane Barry [42][43] Business Line Data and Key Metrics Changes - Fabrication Division revenue was $19.5 million in Q3 2019, down from $22.4 million in Q2 2019 and up from $3.4 million in Q3 2018 [46] - Shipyard Division revenue was $39.4 million in Q3 2019, compared to $37.6 million in Q2 2019 and $24.5 million in Q3 2018 [51] - Services Division revenue was $17.5 million in Q3 2019, down from $24.1 million in Q2 2019 and $22.6 million in Q3 2018 [56] Market Data and Key Metrics Changes - Backlog at the end of September 2019 totaled approximately $462 million, a decrease of $15 million from June 2019 and an increase of $105 million from year-end 2018 [61] - Backlog by segment included $407 million for Shipyard, $40 million for Fabrication, and $15 million for Services [62] Company Strategy and Development Direction - The company aims to enhance resources, processes, and procedures to improve competitiveness and project execution while considering organic and inorganic growth opportunities [69] - The Board has decided that remaining independent is in the best interest of shareholders [69] Management Comments on Operating Environment and Future Outlook - Management expressed disappointment with project impacts during the quarter but does not expect additional charges going forward [68] - The company anticipates ongoing variability in project working capital requirements and potential increases in working capital in Q4 [63] Other Important Information - The company ended Q3 2019 with cash and short-term investments of $71.4 million, a decrease of $4.6 million from June 2019 [63] - The company has $10.4 million of outstanding letters of credit and no borrowings on its credit facility, providing $29.6 million of availability for additional letters of credit or borrowings [64] Q&A Session Summary Question: Expectations for next year's ramp-up on research vessels and Navy vessels - Management expects sequential increases in activity, reaching optimal capacity by Q4 next year [77] Question: Potential inorganic and organic growth opportunities - Management is focused on profitability and execution, with potential growth opportunities likely within the Services business [79] Question: Early delivery incentives on harbor tug projects - The company could be entitled to incentives in the range of $300,000 to $500,000 in aggregate based on current forecasted completion dates [85][86] Question: Strategic review process and cash utilization - The Board is focused on maintaining a strong balance sheet, which is crucial for customer confidence and winning new work [91][120] Question: Subcontractor usage and labor challenges - The company has reduced reliance on subcontractors in Jennings facilities, with contract labor now representing around 40% of the workforce [98][99] Question: Timeline for new CEO appointment - The Board is engaged with a search firm but does not have a specific timeline for the new CEO [113]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 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 jurisdi ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2019 was $80.5 million, a sequential increase from $67.6 million in Q1 2019 and a year-over-year increase from $54 million in Q2 2018 [15][16] - The net loss for Q2 2019 was $5.2 million, compared to a net loss of $3 million in Q1 2019 and a net income of $549,000 in Q2 2018 [15][16] - The operating loss for Q2 2019 was impacted by project charges of $2.3 million and legal costs of approximately $1 million [17][18] Business Line Data and Key Metrics Changes - **Fabrication Division**: Revenue increased to $22.4 million in Q2 2019 from $12.6 million in Q1 2019 and $9.5 million in Q2 2018. Operating loss was $1.2 million, an improvement from $1.5 million in Q1 2019 but a decline from operating income of $4.2 million in Q2 2018 [22][24] - **Shipyard Division**: Revenue was $37.6 million in Q2 2019, slightly up from $36.6 million in Q1 2019 and significantly up from $23.6 million in Q2 2018. Operating loss was $3.6 million, worsening from $904,000 in Q1 2019 but slightly better than $3.4 million in Q2 2018 [26][27] - **Services Division**: Revenue rose to $24.1 million in Q2 2019 from $19.6 million in Q1 2019 and $22.2 million in Q2 2018. Operating income was $1.7 million, representing 7.2% of revenue, compared to $1.3 million (6.6%) in Q1 2019 and $2.8 million (12.8%) in Q2 2018 [29][30] Market Data and Key Metrics Changes - Backlog as of June 30, 2019, totaled approximately $476 million, an increase of $142 million from March 2019 and $120 million from year-end 2018 [36] - The backlog by segment included $410 million for the Shipyard division, $54 million for the Fabrication division, and $13 million for the Services division [37] Company Strategy and Development Direction - The company is optimistic about future revenue growth due to increased backlog and bidding activity, particularly in the Fabrication division [43] - The management is cautious about taking on new work without assessing risks, emphasizing a balanced approach to growth [44] - A special committee is evaluating strategic alternatives to enhance shareholder value, with expectations for conclusions by year-end [45] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in facility utilization and expects further enhancements as new contracts ramp up [5][7] - The company is addressing productivity issues through personnel changes and improved management practices [10][62] - There is confidence in achieving EBITDA-positive results in the latter half of the year, particularly in Q4 [50][61] Other Important Information - The company ended the quarter with cash and short-term investments of $76 million, an increase from March 2019 but a decrease from year-end 2018 [38] - Legal disputes are ongoing, with a trial date set for January 2020 regarding a jacket change order dispute [14][99] Q&A Session Summary Question: When might the company turn EBITDA-positive? - Management expects to be EBITDA-positive in the second half of the year, particularly in Q4 [50] Question: What is the status of engineering for the Oregon State University and U.S. Navy vessels? - Engineering is ahead of production, with construction ramping up in Q3 [51][53] Question: What are the margins in the backlog compared to this quarter? - The backlog has a higher margin mix, and the company is pursuing projects with better margins [60][70] Question: What is the status of the legal disputes? - The company is in discovery for ongoing lawsuits, with mediation scheduled for August 26, 2019 [96][102]

Report Information [Filing Information](index=1&type=section&id=Filing%20Information) This report is GULF ISLAND FABRICATION, INC.'s 10-Q quarterly filing for the period ended June 30, 2019, identifying the company as an accelerated filer and smaller reporting company with 15,237,502 common shares outstanding as of August 6, 2019 - The company is an **Accelerated filer** and a **Smaller reporting company**[4](index=4&type=chunk) Company Basic Information | Metric | Information | | :--- | :--- | | Filing Type | 10-Q Quarterly Report | | Quarter End Date | June 30, 2019 | | Registrant Name | GULF ISLAND FABRICATION, INC. | | State or Jurisdiction | LOUISIANA | | Employer Identification Number | 72-1147390 | | Phone Number | (713) 714-6100 | | Trading Symbol | GIFI | | Registered Exchange | NASDAQ | | Common Stock Outstanding (as of August 6, 2019) | 15,237,502 | | All Required Reports Filed | Yes | | All Interactive Data Files Filed | Yes | [GLOSSARY OF TERMS](index=3&type=section&id=GLOSSARY%20OF%20TERMS) This section defines key abbreviations and terms used in the report, including company names, accounting standards, contract-related terms, financial instruments, asset types, and business operating locations, ensuring readers have a clear understanding of professional terminology - The glossary defines key abbreviations and terms used in the report, such as "Gulf Island", "Company", "we", "us", and "our", all referring to Gulf Island Fabrication, Inc. and its consolidated subsidiaries[9](index=9&type=chunk) - It covers accounting standards (ASU, GAAP, Topic 606), contract-related terms (contract assets, contract liabilities, Performance Obligation, T&M), financial instruments (Credit Agreement, LIBOR, Surety), asset types (deck, jacket, modules, piles, platform, pressure vessel, SPAR, subsea templates, TLP), and business operating locations (GOM, inland/inshore, offshore, onshore)[10](index=10&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements for the period ended June 30, 2019, including balance sheets, statements of operations, statements of changes in shareholders' equity, and cash flow statements, along with related notes, providing detailed information on the company's financial position and operating performance [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2019, the company's total assets were $277.6 million, a 7.5% increase from December 31, 2018, with a significant decrease in cash and cash equivalents offset by substantial increases in short-term investments and contract assets Consolidated Balance Sheet Key Data (in thousands of dollars) | Metric | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $30,192 | $70,457 | | Short-term investments | $45,791 | $8,720 | | Accounts and retainage receivable, net | $23,343 | $22,505 | | Contract assets | $51,334 | $29,982 | | Inventories | $4,543 | $6,088 | | Assets held for sale | $18,737 | $18,935 | | Total current assets | $177,927 | $159,955 | | Property, plant and equipment, net | $75,862 | $79,930 | | Other noncurrent assets | $23,802 | $18,405 | | **Total Assets** | **$277,591** | **$258,290** | | **Liabilities and Shareholders' Equity** | | | | Accounts payable | $55,238 | $28,969 | | Contract liabilities | $13,823 | $16,845 | | Accrued expenses and other liabilities | $9,719 | $10,287 | | Total current liabilities | $78,780 | $56,101 | | Other noncurrent liabilities | $5,369 | $1,089 | | **Total Liabilities** | **$84,149** | **$57,190** | | Total shareholders' equity | $193,442 | $201,100 | | **Total Liabilities and Shareholders' Equity** | **$277,591** | **$258,290** | - As of June 30, 2019, cash and cash equivalents decreased from **$70.5 million** on December 31, 2018, to **$30.2 million**, while short-term investments increased from **$8.7 million** to **$45.8 million**[18](index=18&type=chunk) - Contract assets increased from **$30.0 million** on December 31, 2018, to **$51.3 million** on June 30, 2019, while contract liabilities decreased from **$16.8 million** to **$13.8 million**[18](index=18&type=chunk) [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2019, the company reported net losses in both periods, primarily due to increased gross and operating losses, indicating a decline in profitability despite revenue growth Consolidated Statements of Operations Key Data (in thousands of dollars, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $80,456 | $54,014 | $148,061 | $111,304 | | Cost of sales | $82,054 | $54,713 | $149,106 | $111,324 | | Gross loss | $(1,598) | $(699) | $(1,045) | $(20) | | Selling, general and administrative expenses | $3,987 | $5,092 | $7,821 | $9,801 | | Impairment of assets and (gain) loss on assets held for sale, net | $0 | $(6,579) | $(70) | $(5,829) | | Other (income) expense, net | $(201) | $64 | $(130) | $375 | | Operating (loss) income | $(5,384) | $724 | $(8,666) | $(4,367) | | Interest (expense) income, net | $126 | $(92) | $388 | $(238) | | Net (loss) income before income taxes | $(5,258) | $632 | $(8,278) | $(4,605) | | Income tax (expense) benefit | $10 | $(83) | $(12) | $(142) | | **Net (Loss) Income** | **$(5,248)** | **$549** | **$(8,290)** | **$(4,747)** | | Basic and diluted (loss) income per common share | $(0.34) | $0.04 | $(0.55) | $(0.32) | - For the three months ended June 30, 2019, revenue increased by **49.0%** to **$80.5 million** year-over-year, but gross loss widened from **$0.7 million** to **$1.6 million**, and operating income turned into a **$5.4 million** loss from a **$0.7 million** income[20](index=20&type=chunk) - For the six months ended June 30, 2019, revenue increased by **33.0%** to **$148.1 million** year-over-year, gross loss widened from **$20 thousand** to **$1.0 million**, and operating loss increased from **$4.4 million** to **$8.7 million**[20](index=20&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) As of June 30, 2019, the company's total shareholders' equity decreased to $193.4 million from $201.1 million on December 31, 2018, primarily due to the net loss recorded during the reporting period Consolidated Statements of Changes in Shareholders' Equity Key Data (in thousands of dollars) | Metric | December 31, 2018 | March 31, 2019 | June 30, 2019 | | :--- | :--- | :--- | :--- | | Common stock | $11,021 | $11,006 | $11,085 | | Additional paid-in capital | $102,243 | $102,104 | $102,811 | | Retained earnings | $87,836 | $84,794 | $79,546 | | **Total Shareholders' Equity** | **$201,100** | **$197,904** | **$193,442** | | Net loss (as of March 31) | - | $(3,042) | - | | Net loss (as of June 30) | - | - | $(5,248) | | Restricted stock vesting | - | $(714) | - | | Stock-based compensation expense | - | $560 | $786 | - As of June 30, 2019, retained earnings decreased from **$87.8 million** on December 31, 2018, to **$79.5 million**, reflecting the net loss incurred during the reporting period[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, the company experienced a net cash outflow of $2.9 million from operating activities, $36.6 million from investing activities, and $0.8 million from financing activities, resulting in a net decrease of $40.3 million in cash and cash equivalents Consolidated Statements of Cash Flows Key Data (in thousands of dollars) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash from operating activities | $(2,884) | $(26,427) | | Net cash from investing activities | $(36,627) | $50,246 | | Net cash from financing activities | $(754) | $(798) | | Net increase (decrease) in cash and cash equivalents | $(40,265) | $23,021 | | Cash and cash equivalents at beginning of period | $70,457 | $8,983 | | Cash and cash equivalents at end of period | $30,192 | $32,004 | - In the first half of 2019, net cash outflow from operating activities significantly decreased from **$26.4 million** in the same period of 2018 to **$2.9 million**[26](index=26&type=chunk) - Cash flow from investing activities shifted from a **$50.2 million** inflow in the first half of 2018 to a **$36.6 million** outflow in the same period of 2019, primarily due to the purchase of short-term investments[26](index=26&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering key information such as the company's organizational structure, significant accounting policies, revenue recognition, contract assets and liabilities, assets held for sale, credit arrangements, commitments and contingencies, earnings per share calculation, and segment disclosures [1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=1.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company is a leading fabricator of complex steel structures, modules, and marine vessels, managing its business through three operating divisions: Fabrication, Shipyard, and Services; this note details the company's business nature, basis of accounting, critical accounting estimates, revenue recognition policies, and adoption of new accounting standards - The company primarily engages in the fabrication of complex steel structures, modules, and marine vessels, also providing project management, hook-up, commissioning, repair, maintenance, and civil construction services[28](index=28&type=chunk) - The company manages its business through three operating divisions: Fabrication, Shipyard, and Services, along with a non-operating Corporate division; the former EPC division was merged with the Fabrication division in the first quarter of 2019[28](index=28&type=chunk)[100](index=100&type=chunk) - The company is strategically shifting its focus to petrochemical and industrial facility fabrication, offshore wind opportunities, and diversifying its customer base to address the downturn in the oil and gas industry[32](index=32&type=chunk)[112](index=112&type=chunk) - The company adopted ASU 2016-02 "Leases" in the first quarter of 2019, resulting in the recognition of lease assets of **$6.9 million** and lease liabilities of **$5.1 million** on the balance sheet as of June 30, 2019[61](index=61&type=chunk)[62](index=62&type=chunk) [2. REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS](index=17&type=section&id=2.%20REVENUE,%20CONTRACT%20ASSETS%20AND%20LIABILITIES%20AND%20OTHER%20CONTRACT%20MATTERS) This note details the company's revenue by contract type and operating segment, as well as changes in contract assets and liabilities; as of June 30, 2019, the company's total remaining performance obligations were $454.5 million, expected to be recognized as revenue over the next several years Revenue by Contract Type and Division (in thousands of dollars) | Division/Contract Type | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Fabrication Division** | | | | | | Fixed-price and unit-rate | $22,415 | $9,472 | $35,046 | $26,815 | | T&M | $0 | $0 | $0 | $0 | | Other | $0 | $0 | $0 | $0 | | **Shipyard Division** | | | | | | Fixed-price and unit-rate | $36,607 | $21,259 | $70,233 | $38,481 | | T&M | $960 | $2,361 | $3,921 | $3,704 | | Other | $0 | $0 | $0 | $0 | | **Services Division** | | | | | | Fixed-price and unit-rate | $12,668 | $10,576 | $18,899 | $20,866 | | T&M | $8,187 | $10,486 | $18,809 | $21,071 | | Other | $3,210 | $1,143 | $5,959 | $2,138 | | **Total** | **$80,456** | **$54,014** | **$148,061** | **$111,304** | Remaining Performance Obligations (in thousands of dollars) | Period | Performance Obligations | | :--- | :--- | | Remainder of 2019 | $146,150 | | 2020 | $205,651 | | 2021 | $96,481 | | Thereafter | $6,240 | | **Total** | **$454,522** | Contract Assets and Liabilities (in thousands of dollars) | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Contract assets | $51,334 | $29,982 | | Contract liabilities | $(13,823) | $(16,845) | | **Contracts in progress, net** | **$37,511** | **$13,137** | - As of June 30, 2019, the Shipyard division's remaining performance obligations do not include approximately **$21.9 million** related to two MPSV construction contracts in dispute due to customer termination notices[70](index=70&type=chunk) - In the first half of 2019, the allowance for doubtful accounts was **$0.1 million**, compared to **$8 thousand** in the same period of 2018; as of June 30, 2019, the allowance for doubtful accounts was **$0.1 million**[74](index=74&type=chunk) - In the first half of 2019, operating loss increased by **$2.0 million** due to increased cost estimates for the port tug and ice-class tug projects[76](index=76&type=chunk)[79](index=79&type=chunk) [3. ASSETS HELD FOR SALE](index=19&type=section&id=3.%20ASSETS%20HELD%20FOR%20SALE) As of June 30, 2019, the company held $18.7 million in assets for sale, primarily including machinery and equipment from the Fabrication division and a dry dock from the Shipyard division, with the aim of optimizing asset allocation and improving liquidity Assets Held for Sale Summary (in thousands of dollars) | Asset | Fabrication Division | Shipyard Division | Consolidated Total | | :--- | :--- | :--- | :--- | | Machinery and equipment | $25,684 | $1,222 | $26,906 | | Accumulated depreciation | $(7,871) | $(298) | $(8,169) | | **Total** | **$17,813** | **$924** | **$18,737** | - The Fabrication division's assets held for sale primarily include three **660-ton crawler cranes**, one deck barge, two plate bending rolls, and panel line equipment, which have been relocated to the Houma, Louisiana fabrication facility[81](index=81&type=chunk) - The Shipyard division's assets held for sale include a **2,500-ton dry dock**[85](index=85&type=chunk) - In the first half of 2018, the company recognized a **$3.9 million** gain from the sale of its South Texas facility and a **$3.6 million** gain from the settlement of Hurricane Harvey insurance claims[80](index=80&type=chunk)[86](index=86&type=chunk) [4. CREDIT FACILITIES](index=20&type=section&id=4.%20CREDIT%20FACILITIES) The company has a $40.0 million revolving credit agreement with Hancock Whitney Bank, amended on May 1, 2019, extending the maturity date to June 9, 2021; as of June 30, 2019, the company had no outstanding borrowings and $29.3 million available under the facility - The company has a **$40.0 million** revolving credit agreement available for borrowings or letters of credit[86](index=86&type=chunk) - The credit agreement was amended on May 1, 2019, extending the maturity date to **June 9, 2021**, and revising financial covenants[86](index=86&type=chunk) Credit Agreement Financial Covenants (as of June 30, 2019) | Covenant | Requirement | | :--- | :--- | | Current assets to current liabilities ratio | Not less than 2.00:1.00 | | Minimum tangible net worth | At least $170.0 million, plus 100% of net proceeds from stock issuance or other equity | | Interest-bearing debt to tangible net worth ratio | Not more than 0.50:1.00 | - As of June 30, 2019, the company had no outstanding borrowings, **$10.7 million** in outstanding letters of credit, and **$29.3 million** available under the facility[89](index=89&type=chunk) - As of June 30, 2019, the company was in compliance with all financial covenants, with a tangible net worth of **$191.3 million**, a current assets to current liabilities ratio of **2.26:1.0**, and an interest-bearing debt to tangible net worth ratio of **0.06:1.0**[89](index=89&type=chunk) - As of June 30, 2019, the company had **$375.9 million** in outstanding surety bonds[90](index=90&type=chunk) [5. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=5.%20COMMITMENTS%20AND%20CONTINGENCIES) The company faces various routine legal proceedings, primarily involving commercial disputes, workers' compensation, and personal injury claims; a dispute with a customer regarding the termination of two MPSV construction contracts is ongoing, and the company has filed a lawsuit to protect its rights - The company faces an ongoing customer dispute related to the termination of two MPSV construction contracts, having filed a lawsuit on **October 2, 2018**, with the customer filing counterclaims; the court denied the customer's request for possession of the vessels on **May 28, 2019**[92](index=92&type=chunk)[118](index=118&type=chunk) - As of June 30, 2019, other noncurrent assets on the balance sheet included **$12.5 million** in net contract assets related to the MPSV project[93](index=93&type=chunk)[119](index=119&type=chunk) Future Operating Lease Payments (in thousands of dollars) | Period | Payment Amount | | :--- | :--- | | Remainder of 2019 | $326 | | 2020 | $659 | | 2021 | $668 | | 2022 | $677 | | 2023 | $676 | | Thereafter | $6,173 | | **Total Lease Payments** | **$9,179** | | Less interest | $(4,084) | | **Present Value of Lease Liabilities** | **$5,095** | - As of June 30, 2019, the weighted-average remaining lease term was approximately **16.0 years**, and the weighted-average discount rate used to calculate lease liabilities was **7.5%**[97](index=97&type=chunk) [6. INCOME (LOSS) PER COMMON SHARE](index=23&type=section&id=6.%20INCOME%20(LOSS)%20PER%20COMMON%20SHARE) For the three and six months ended June 30, 2019, the company reported basic and diluted losses per common share of $0.34 and $0.55, respectively, compared to earnings of $0.04 and a loss of $0.32 in the corresponding periods of 2018 Income (Loss) Per Common Share Calculation (in thousands of dollars, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income attributable to common shareholders | $(5,248) | $549 | $(8,290) | $(4,747) | | Weighted-average shares outstanding | 15,236 | 15,043 | 15,194 | 15,004 | | **Basic and Diluted (Loss) Income Per Common Share** | **$(0.34)** | **$0.04** | **$(0.55)** | **$(0.32)** | - The company has no dilutive securities, thus basic and diluted earnings per share are the same[99](index=99&type=chunk) [7. SEGMENT DISCLOSURES](index=23&type=section&id=7.%20SEGMENT%20DISCLOSURES) The company currently manages its business through three operating divisions: Fabrication, Shipyard, and Services, along with a non-operating Corporate division; the former EPC division was merged with the Fabrication division in the first quarter of 2019, and financial information for each segment is evaluated based on revenue, gross profit (loss), and operating profit (loss) - The Fabrication division focuses on fabricating petrochemical and industrial facility modules, alternative energy foundations, and offshore oil and gas structures[100](index=100&type=chunk) - The Shipyard division engages in new vessel construction, including OSVs, MPSVs, research vessels, tugs, and vessel repair activities[101](index=101&type=chunk) - The Services division provides offshore platform and inland structure interconnect piping services, field construction and maintenance activities, as well as skid unit fabrication and municipal projects[102](index=102&type=chunk) Revenue and Operating (Loss) Income by Segment (in thousands of dollars) | Division | Three Months Ended June 30, 2019 Revenue | Three Months Ended June 30, 2019 Operating (Loss) Income | Six Months Ended June 30, 2019 Revenue | Six Months Ended June 30, 2019 Operating (Loss) Income | | :--- | :--- | :--- | :--- | :--- | | Fabrication | $22,415 | $(1,211) | $35,046 | $(2,751) | | Shipyard | $37,567 | $(3,564) | $74,154 | $(4,468) | | Services | $24,065 | $1,728 | $43,667 | $3,017 | | Corporate | $(3,591) | $(2,337) | $(4,806) | $(4,464) | | **Consolidated Total** | **$80,456** | **$(5,384)** | **$148,061** | **$(8,666)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed analysis of the company's financial condition and operating performance, including cautionary statements on forward-looking information, business overview, asset divestitures, backlog growth strategies, review of alternative strategies, operating outlook, safety culture, critical accounting policies, new awards and backlog, segment operating results, and liquidity and capital resources [Cautionary Statement on Forward-Looking Information](index=25&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Information) This report contains forward-looking statements regarding the company's future performance, such as oil and gas prices, operating cash flow, and capital expenditures; these statements are not guarantees of future performance, and actual results may differ materially due to various factors including oil and gas industry cyclicality, competition, contract terms, weather conditions, and project terminations - Forward-looking statements include projections or expectations regarding oil and gas prices, operating cash flow, capital expenditures, liquidity, and tax rates[106](index=106&type=chunk) - Actual results may differ materially due to factors such as oil and gas industry cyclicality, competition, customer consolidation, timing of new contract awards, customer financial capability, contract terms, project cost overruns, weather conditions, changes in backlog estimates, and project suspensions or terminations[107](index=107&type=chunk) - The company does not intend to update forward-looking statements frequently, even if assumptions, business plans, or actual experience change[108](index=108&type=chunk) [Overview](index=26&type=section&id=Overview) The company is a leading fabricator of steel structures, modules, and marine vessels, serving the energy, petrochemical, industrial, power, alternative energy, and marine sectors; in response to the oil and gas industry downturn, the company is actively transforming its business, focusing on petrochemical and industrial facilities, offshore wind projects, and diversifying its customer base, while also improving liquidity through cost reductions and asset sales - The company is a leading fabricator of complex steel structures, modules, and marine vessels, serving the energy, petrochemical, industrial facilities, power, alternative energy, and marine industries[110](index=110&type=chunk) - In the first quarter of 2019, the former EPC division was merged with the Fabrication division, and the company now manages its business through three operating divisions: Fabrication, Shipyard, and Services[111](index=111&type=chunk) - In response to the sustained decline in oil and gas prices since late 2014, the company has implemented cost reduction measures and divested underutilized assets, strategically shifting its focus to petrochemical and industrial facilities, offshore wind opportunities, and diversifying its customer base[112](index=112&type=chunk) [Ongoing Effort to Divest of Underutilized Assets](index=26&type=section&id=Ongoing%20Effort%20to%20Divest%20of%20Underutilized%20Assets) The company continues to divest underutilized assets to improve liquidity, having completed the sale of its South Texas and North Texas facilities in 2018; as of June 30, 2019, the Fabrication division still held $17.8 million in assets for sale, and the Shipyard division had a $0.9 million dry dock for sale - In the second and fourth quarters of 2018, the company completed the sales of its South Texas and North Texas facilities, respectively[113](index=113&type=chunk) - As of June 30, 2019, the Fabrication division still held **$17.8 million** in assets for sale (Fabrication AHFS), primarily including three **660-ton crawler cranes**, one deck barge, two plate bending rolls, and panel line equipment[113](index=113&type=chunk) - As of June 30, 2019, the Shipyard division had **$0.9 million** in assets held for sale (Shipyard AHFS), including a **2,500-ton dry dock**[114](index=114&type=chunk) [Ongoing Efforts to Increase Our Backlog, Diversify Our Customer Base and Resolve Customer Dispute](index=26&type=section&id=Ongoing%20Efforts%20to%20Increase%20Our%20Backlog,%20Diversify%20Our%20Customer%20Base%20and%20Resolve%20Customer%20Dispute) The company is actively pursuing petrochemical and industrial fabrication and offshore wind projects, successfully partnering with Smulders to expand into the offshore wind market; concurrently, the company has increased its non-oil and gas backlog in the Shipyard and Services divisions and continues to address a customer dispute related to the termination of two MPSV construction contracts - The company continues to focus its business development efforts on petrochemical and industrial fabrication opportunities, with increasing bidding activity[115](index=115&type=chunk) - The company signed a cooperation agreement with Smulders, a Belgian company, to jointly pursue US offshore wind opportunities, aiming for a strategic position in this emerging market[116](index=116&type=chunk) - The Shipyard division's backlog increased with non-oil and gas customers, including contracts to build three Towing, Salvage, and Rescue ships for the US Navy, three Regional Class Research Vessels, and six Port Tugboats[119](index=119&type=chunk) - The Fabrication division's backlog increased with traditional and non-traditional fabrication work, including the construction of offshore jackets and decks, the expansion of a paddlewheel riverboat, and the construction of two ferries[119](index=119&type=chunk) - Demand for offshore hook-up, upgrade, and maintenance services remains strong in the Services division, with plans to pursue service opportunities in the West Texas shale basin[118](index=118&type=chunk) - The company is addressing a customer dispute regarding the termination of two MPSV construction contracts, having filed a lawsuit, and the court denied the customer's request for possession of the vessels on **May 28, 2019**[118](index=118&type=chunk) [Review of Alternative Strategies](index=28&type=section&id=Review%20of%20Alternative%20Strategies) On May 6, 2019, the company's Board of Directors formed a special committee to initiate a review of alternative strategies aimed at enhancing shareholder value; there is currently no assurance that this review will result in any transaction or other strategic changes - The company's Board of Directors has formed a special committee to explore alternative strategies aimed at enhancing shareholder value[120](index=120&type=chunk) [Operating Outlook](index=28&type=section&id=Operating%20Outlook) The company is committed to maintaining liquidity, securing new project awards and backlog, and generating operating income and cash flow in the long term; while the Fabrication division may be negatively impacted by underutilized facilities in the short term, and the Shipyard division faces similar challenges, the company expects strong performance from the Services division and an increase in the Shipyard division's backlog - The company will continue to focus on maintaining liquidity, securing meaningful new project awards and backlog in the near term, and generating operating income and cash flow in the long term[121](index=121&type=chunk) - The Fabrication division will be negatively impacted by underutilized facilities in the short term, and the Shipyard division will experience similar impacts until major project construction activities commence[121](index=121&type=chunk) - The Shipyard division's port tug project is operating at a loss and will generate revenue with no gross profit in the future[121](index=121&type=chunk) [Safety](index=28&type=section&id=Safety) The company is committed to the safety and health of its employees and subcontractors, ensuring a safe workplace and compliance with all applicable federal and state safety regulations through rigorous safety assurance programs, continuous safety education and training, and a zero-tolerance drug and alcohol policy - The company is committed to the safety and health of its employees and subcontractors, believing a strong safety culture is critical to success[122](index=122&type=chunk) - The company implements rigorous safety assurance programs, provides continuous safety education and training, and maintains a zero-tolerance policy for drug and alcohol use in the workplace[122](index=122&type=chunk) [Critical Accounting Policies](index=28&type=section&id=Critical%20Accounting%20Policies) The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), requiring management to make estimates and judgments; there have been no changes to the company's critical accounting policies since December 31, 2018 - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), requiring management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures of contingent assets and liabilities[123](index=123&type=chunk) - There have been no changes to the company's critical accounting policies since December 31, 2018[124](index=124&type=chunk) [New Awards and Backlog](index=29&type=section&id=New%20Awards%20and%20Backlog) As of June 30, 2019, the company's total backlog was $476.4 million, a significant increase from December 31, 2018; the Shipyard division contributed the most to this backlog, which also includes customer options for additional vessel construction that could further increase the backlog - Backlog represents the unrecognized value of new project awards and may differ from the value of remaining performance obligations disclosed under Topic 606[125](index=125&type=chunk) Backlog vs. Remaining Performance Obligations (in thousands of dollars) | Metric | Fabrication Division | Shipyard Division | Services Division | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | | Remaining performance obligations under Topic 606 | $53,496 | $388,239 | $12,787 | $454,522 | | Contracts in dispute | $0 | $21,888 | $0 | $21,888 | | **Total Backlog** | **$53,496** | **$410,127** | **$12,787** | **$476,410** | Backlog by Segment (in thousands of dollars) | Division | June 30, 2019 Amount | December 31, 2018 Amount | | :--- | :--- | :--- | | Fabrication | $53,496 | $63,883 | | Shipyard | $410,127 | $281,531 | | Services | $12,787 | $11,046 | | **Total Backlog** | **$476,410** | **$356,460** | - As of June 30, 2019, seven customers accounted for approximately **92%** of the company's backlog[131](index=131&type=chunk) - The company's contract to build three Towing, Salvage, and Rescue ships includes customer options that, if fully exercised, would increase the backlog by approximately **$333.0 million**[129](index=129&type=chunk) [Results of Operations (Consolidated)](index=31&type=section&id=Results%20of%20Operations%20(Consolidated)) This section provides a detailed analysis of the company's consolidated operating results for the three and six months ended June 30, 2019; despite revenue growth, both gross and operating losses expanded, primarily due to increased project costs, underutilized facilities, and specific project expenses [Three Months Ended June 30, 2019 and 2018](index=31&type=section&id=Three%20Months%20Ended%20June%2030,%202019%20and%202018) For the three months ended June 30, 2019, the company's revenue increased by 49.0% to $80.5 million year-over-year, but gross loss widened from $0.7 million to $1.6 million, operating income turned into a $5.4 million loss from a $0.7 million income, and net loss was $5.2 million Consolidated Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $80,456 | $54,014 | $26,442 | 49.0% | | Cost of sales | $82,054 | $54,713 | $(27,341) | (50.0)% | | Gross loss | $(1,598) | $(699) | $(899) | (128.6)% | | Gross loss percentage | (2.0)% | (1.3)% | | | | Selling, general and administrative expenses | $3,987 | $5,092 | $1,105 | 21.7% | | Impairment of assets and (gain) loss on assets held for sale, net | $0 | $(6,579) | $(6,579) | (100.0)% | | Other (income) expense, net | $(201) | $64 | $265 | nm | | Operating (loss) income | $(5,384) | $724 | $(6,108) | nm | | Interest (expense) income, net | $126 | $(92) | $218 | nm | | Net (loss) income before income taxes | $(5,258) | $632 | $(5,890) | nm | | Income tax (expense) benefit | $10 | $(83) | $93 | nm | | **Net (Loss) Income** | **$(5,248)** | **$549** | **$(5,797)** | **nm** | - Revenue growth was primarily driven by increased revenue from the Shipyard division (**$13.9 million**) and Fabrication division (**$12.9 million**), as well as a **$1.9 million** increase in Services division revenue[133](index=133&type=chunk) - The increase in gross loss was mainly due to under-recovery of indirect costs from underutilized facilities in the Fabrication division, holding costs for MPSV vessels (**$0.6 million**), and increased cost estimates for the port tug project (**$1.4 million**) and ice-class tug project (**$0.9 million**)[134](index=134&type=chunk) - Selling, general and administrative expenses decreased by **21.7%** to **$4.0 million**, primarily due to lower incentive plan costs, board compensation, and legal consulting fees related to customer disputes, partially offset by increased professional fees related to strategic review and business diversification[135](index=135&type=chunk) [Six Months Ended June 30, 2019 and 2018](index=36&type=section&id=Six%20Months%20Ended%20June%2030,%202019%20and%202018) For the six months ended June 30, 2019, the company's revenue increased by 33.0% to $148.1 million year-over-year, gross loss widened from $20 thousand to $1.0 million, operating loss increased from $4.4 million to $8.7 million, and net loss was $8.3 million Consolidated Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $148,061 | $111,304 | $36,757 | 33.0% | | Cost of sales | $149,106 | $111,324 | $(37,782) | (33.9)% | | Gross loss | $(1,045) | $(20) | $(1,025) | nm | | Gross loss percentage | (0.7)% | 0.0% | | | | Selling, general and administrative expenses | $7,821 | $9,801 | $1,980 | 20.2% | | Impairment of assets and (gain) loss on assets held for sale, net | $(70) | $(5,829) | $(5,759) | (98.8)% | | Other (income) expense, net | $(130) | $375 | $505 | nm | | Operating loss | $(8,666) | $(4,367) | $(4,299) | (98.4)% | | Interest (expense) income, net | $388 | $(238) | $626 | nm | | Net loss before income taxes | $(8,278) | $(4,605) | $(3,673) | (79.8)% | | Income tax (expense) benefit | $(12) | $(142) | $130 | 91.5% | | **Net Loss** | **$(8,290)** | **$(4,747)** | **$(3,543)** | **(74.6)%** | - Revenue growth was primarily driven by increased revenue from the Shipyard division (**$32.0 million**) and Fabrication division (**$8.2 million**)[157](index=157&type=chunk) - The increase in gross loss was mainly due to under-recovery of indirect costs from underutilized facilities in the Fabrication division, holding costs for MPSV vessels (**$0.8 million**), and increased cost estimates for the port tug project (**$1.2 million**) and ice-class tug project (**$0.8 million**)[158](index=158&type=chunk) - Selling, general and administrative expenses decreased by **20.2%** to **$7.8 million**, primarily due to lower incentive plan costs, board compensation, and legal consulting fees related to customer disputes, partially offset by increased professional fees related to strategic review and business diversification[159](index=159&type=chunk) [Operating Segments](index=33&type=section&id=Operating%20Segments) This section provides a detailed analysis of the operating results for the company's Fabrication, Shipyard, Services, and Corporate divisions for the three and six months ended June 30, 2019; each division's revenue, gross profit (loss), and operating profit (loss) were significantly impacted by project progress, cost control, and market conditions [Fabrication Division (Three Months)](index=33&type=section&id=Fabrication%20Division%20(Three%20Months)) For the three months ended June 30, 2019, the Fabrication division's revenue increased by 136.6% to $22.4 million year-over-year, gross loss decreased from $1.1 million to $0.7 million, and operating loss was $1.2 million Fabrication Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $22,415 | $9,472 | $12,943 | 136.6% | | Gross loss | $(677) | $(1,124) | $447 | 39.8% | | Gross loss percentage | (3.0)% | (11.9)% | | | | Selling, general and administrative expenses | $742 | $1,436 | $694 | 48.3% | | Impairment of assets and (gain) loss on assets held for sale, net | $0 | $(6,579) | $(6,579) | (100.0)% | | Other (income) expense, net | $(208) | $(193) | $15 | 7.8% | | Operating (loss) income | $(1,211) | $4,212 | $(5,423) | (128.8)% | - Revenue growth was primarily driven by progress on the paddlewheel riverboat project and several smaller fabrication projects[142](index=142&type=chunk) - The decrease in gross loss was mainly due to increased revenue and improved indirect cost recovery, partially offset by a decline in project portfolio margins[142](index=142&type=chunk) - Selling, general and administrative expenses decreased by **48.3%**, primarily due to lower costs from the former EPC division and reduced legal consulting fees related to customer disputes[143](index=143&type=chunk) [Shipyard Division (Three Months)](index=34&type=section&id=Shipyard%20Division%20(Three%20Months)) For the three months ended June 30, 2019, the Shipyard division's revenue increased by 59.0% to $37.6 million year-over-year, gross loss widened from $2.8 million to $2.9 million, and operating loss was $3.6 million Shipyard Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $37,567 | $23,620 | $13,947 | 59.0% | | Gross loss | $(2,912) | $(2,776) | $(136) | (4.9)% | | Gross loss percentage | (7.8)% | (11.8)% | | | | Selling, general and administrative expenses | $590 | $597 | $7 | 1.2% | | Other (income) expense, net | $62 | $4 | $(58) | nm | | Operating loss | $(3,564) | $(3,377) | $(187) | (5.5)% | - Revenue growth was primarily driven by progress on the first two Regional Class Research Vessel projects and the first Towing, Salvage, and Rescue ship project[147](index=147&type=chunk) - The increase in gross loss was mainly due to under-recovery of indirect costs, holding costs for MPSV vessels (**$0.6 million**), and increased cost estimates for the port tug project (**$1.4 million**) and ice-class tug project (**$0.9 million**)[147](index=147&type=chunk) [Services Division (Three Months)](index=35&type=section&id=Services%20Division%20(Three%20Months)) For the three months ended June 30, 2019, the Services division's revenue increased by 8.4% to $24.1 million year-over-year, gross profit decreased from $3.6 million to $2.1 million, and operating profit was $1.7 million Services Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $24,065 | $22,205 | $1,860 | 8.4% | | Gross profit | $2,137 | $3,585 | $(1,448) | (40.4)% | | Gross profit percentage | 8.9% | 16.1% | | | | Selling, general and administrative expenses | $464 | $762 | $298 | 39.1% | | Other (income) expense, net | $(55) | $(12) | $43 | nm | | Operating profit | $1,728 | $2,835 | $(1,107) | (39.0)% | - Revenue growth was primarily due to the timing of new project awards and an increased proportion of materials in revenue[151](index=151&type=chunk) - The decrease in gross profit was mainly due to lower project portfolio margins, partly attributable to an increased proportion of materials in revenue, and reduced indirect cost recovery[152](index=152&type=chunk) - Selling, general and administrative expenses decreased by **39.1%**, primarily due to lower incentive plan costs and other cost reductions[153](index=153&type=chunk) [Corporate Division (Three Months)](index=35&type=section&id=Corporate%20Division%20(Three%20Months)) For the three months ended June 30, 2019, the Corporate division's gross loss decreased from $0.4 million to $0.1 million, and operating loss decreased from $2.9 million to $2.3 million Corporate Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue (eliminations) | $(3,591) | $(1,283) | $(2,308) | nm | | Gross loss | $(146) | $(384) | $238 | 62.0% | | Selling, general and administrative expenses | $2,191 | $2,297 | $106 | 4.6% | | Other (income) expense, net | $0 | $265 | $265 | 100.0% | | Operating loss | $(2,337) | $(2,946) | $609 | 20.7% | - The decrease in gross loss was primarily due to lower costs supporting the former EPC division[154](index=154&type=chunk) - Selling, general and administrative expenses decreased by **4.6%**, primarily due to lower incentive plan costs and board compensation, partially offset by increased legal consulting fees related to customer disputes and professional fees related to strategic review and business diversification[155](index=155&type=chunk) [Fabrication Division (Six Months)](index=37&type=section&id=Fabrication%20Division%20(Six%20Months)) For the six months ended June 30, 2019, the Fabrication division's revenue increased by 30.7% to $35.0 million year-over-year, gross loss decreased from $1.7 million to $1.4 million, and operating loss was $2.8 million Fabrication Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $35,046 | $26,815 | $8,231 | 30.7% | | Gross loss | $(1,449) | $(1,651) | $202 | 12.2% | | Gross loss percentage | (4.1)% | (6.2)% | | | | Selling, general and administrative expenses | $1,509 | $2,477 | $968 | 39.1% | | Impairment of assets and (gain) loss on assets held for sale, net | $(70) | $(5,829) | $(5,759) | (98.8)% | | Other (income) expense, net | $(137) | $(4) | $133 | nm | | Operating (loss) income | $(2,751) | $1,705 | $(4,456) | nm | - Revenue growth was primarily driven by progress on the paddlewheel riverboat project and several smaller fabrication projects[165](index=165&type=chunk) - The decrease in gross loss was mainly due to increased revenue and improved indirect cost recovery, partially offset by a decline in project portfolio margins[165](index=165&type=chunk) - Selling, general and administrative expenses decreased by **39.1%**, primarily due to lower costs from the former EPC division and reduced legal consulting fees related to customer disputes[166](index=166&type=chunk) [Shipyard Division (Six Months)](index=38&type=section&id=Shipyard%20Division%20(Six%20Months)) For the six months ended June 30, 2019, the Shipyard division's revenue increased by 75.8% to $74.2 million year-over-year, gross loss decreased from $3.8 million to $3.2 million, and operating loss was $4.5 million Shipyard Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $74,154 | $42,185 | $31,969 | 75.8% | | Gross loss | $(3,192) | $(3,799) | $607 | 16.0% | | Gross loss percentage | (4.3)% | (9.0)% | | | | Selling, general and administrative expenses | $1,214 | $1,393 | $179 | 12.8% | | Other (income) expense, net | $62 | $164 | $102 | 62.2% | | Operating loss | $(4,468) | $(5,356) | $888 | 16.6% | - Revenue growth was primarily driven by progress on the first two Regional Class Research Vessel projects and the first Towing, Salvage, and Rescue ship project[168](index=168&type=chunk) - The decrease in gross loss was mainly due to increased revenue and improved indirect cost recovery, as well as higher project portfolio margins, partially offset by increased MPSV project holding costs (**$0.4 million**) and increased project cost estimates (**$2.0 million**)[170](index=170&type=chunk) - Selling, general and administrative expenses decreased by **12.8%**, primarily due to reduced legal consulting fees related to customer disputes, partially offset by increased incentive plan costs[170](index=170&type=chunk) [Services Division (Six Months)](index=39&type=section&id=Services%20Division%20(Six%20Months)) For the six months ended June 30, 2019, the Services division's revenue slightly decreased by 0.9% to $43.7 million year-over-year, gross profit decreased from $6.2 million to $3.9 million, and operating profit was $3.0 million Services Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $43,667 | $44,075 | $(408) | (0.9)% | | Gross profit | $3,878 | $6,199 | $(2,321) | (37.4)% | | Gross profit percentage | 8.9% | 14.1% | | | | Selling, general and administrative expenses | $916 | $1,496 | $580 | 38.8% | | Other (income) expense, net | $(55) | $(38) | $17 | 44.7% | | Operating profit | $3,017 | $4,741 | $(1,724) | (36.4)% | - The decrease in gross profit was mainly due to lower project portfolio margins and reduced indirect cost recovery[173](index=173&type=chunk) - Selling, general and administrative expenses decreased by **38.8%**, primarily due to lower incentive plan costs and other cost reductions[174](index=174&type=chunk) [Corporate Division (Six Months)](index=40&type=section&id=Corporate%20Division%20(Six%20Months)) For the six months ended June 30, 2019, the Corporate division's gross loss decreased from $0.8 million to $0.3 million, and operating loss decreased from $5.5 million to $4.5 million Corporate Division Operating Results Comparison (in thousands of dollars, percentage) | Metric | June 30, 2019 | June 30, 2018 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue (eliminations) | $(4,806) | $(1,771) | $(3,035) | nm | | Gross loss | $(282) | $(769) | $487 | 63.3% | | Selling, general and administrative expenses | $4,182 | $4,435 | $253 | 5.7% | | Other (income) expense, net | $0 | $253 | $253 | 100.0% | | Operating loss | $(4,464) | $(5,457) | $993 | 18.2% | - The decrease in gross loss was primarily due to lower costs supporting the former EPC division[175](index=175&type=chunk) - Selling, general and administrative expenses decreased by **5.7%**, primarily due to lower incentive plan costs and board compensation, partially offset by increased legal consulting fees related to customer disputes and professional fees related to strategic review and business diversification[176](index=176&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity primarily through cash, short-term investments, and a revolving credit agreement; as of June 30, 2019, the company had $76.0 million in cash and short-term investments and $29.3 million available under its credit facility, and is committed to improving liquidity through cost control, asset sales, and new project acquisition [Available Liquidity](index=40&type=section&id=Available%20Liquidity) As of June 30, 2019, the company had $76.0 million in cash, cash equivalents, and short-term investments, along with $29.3 million available under its revolving credit agreement, totaling $105.2 million in available liquidity Available Liquidity (in thousands of dollars) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $30,192 | | Short-term investments | $45,791 | | **Total Cash, Cash Equivalents, and Short-Term Investments** | **$75,983** | | Total credit agreement facility | $40,000 | | Outstanding letters of credit | $(10,737) | | Available under credit agreement | $29,263 | | **Total Available Liquidity** | **$105,246** | - Cash and cash equivalents include **$13.0 million** in U.S. Treasury bills with original maturities of three months or less[178](index=178&type=chunk) - Short-term investments include U.S. Treasury bills with original maturities greater than three months but less than six months[179](index=179&type=chunk) [Working Capital](index=41&type=section&id=Working%20Capital) As of June 30, 2019, the company's working capital was $99.1 million; excluding cash, short-term investments, and assets held for sale, working capital was $4.4 million, primarily composed of net contract assets, accounts receivable, and inventories, and influenced by project size and backlog mix - As of June 30, 2019, the company's working capital was **$99.1 million**, including **$76.0 million** in cash, cash equivalents, and short-term investments, and **$18.7 million** in assets held for sale[180](index=180&type=chunk) Working Capital Components (excluding cash, short-term investments, and assets held for sale) (in thousands of dollars) | Metric | June 30, 2019 | December 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Contract assets | $51,334 | $29,982 | $(21,352) | | Contract liabilities | $(13,823) | $(16,845) | $(3,022) | | **Contracts in progress, net** | **$37,511** | **$13,137** | **$(24,374)** | | Accounts and retainage receivable, net | $23,343 | $22,505 | $(838) | | Inventories, prepaid expenses and other assets | $8,530 | $9,356 | $826 | | Accounts payable, accrued expenses and other liabilities | $(64,957) | $(39,256) | $25,701 | | **Total** | **$4,427** | **$5,742** | **$1,315** | - Fluctuations in working capital are influenced by factors such as project size, timing of new project awards, and advance and milestone payments[183](index=183&type=chunk) [Cash Flow Activity](index=41&type=section&id=Cash%20Flow%20Activity) For the six months ended June 30, 2019, net cash outflow from operating activities was $2.9 million, net cash outflow from investing activities was $36.6 million, and net cash outflow from financing activities was $0.8 million, resulting in a net decrease of $40.3 million in cash and cash equivalents - In the first half of 2019, net cash outflow from operating activities was **$2.9 million**, a significant improvement compared to the **$26.4 million** outflow in the same period of 2018[184](index=184&type=chunk) - Operating cash outflow was primarily due to operating losses, an increase in contract assets of **$21.4 million**, and an increase in accounts payable, accrued expenses, and other current liabilities of **$25.2 million**[184](index=184&type=chunk)[192](index=192&type=chunk) - In the first half of 2019, net cash outflow from investing activities was **$36.6 million**, primarily due to the purchase of **$45.4 million** in short-term investments and **$1.4 million** in capital expenditures, partially offset by **$8.5 million** in short-term investment maturities and **$1.6 million** in proceeds from equipment sales[186](index=186&type=chunk) - In the first half of 2019, net cash outflow from financing activities was **$0.8 million**, primarily due to tax payments for shares withheld for vested stock[187](index=187&type=chunk) [Credit Facilities](index=42&type=section&id=Credit%20Facilities) The company has a $40.0 million revolving credit agreement; as of June 30, 2019, there were no outstanding borrowings, $10.7 million in outstanding letters of credit, and $29.3 million available under the facility; the company is in compliance with all financial covenants and has $375.9 million in outstanding surety bonds - The company has a **$40.0 million** revolving credit agreement available for borrowings or letters of credit, which was amended on **May 1, 2019**, extending the maturity date to **June 9, 2021**[188](index=188&type=chunk) - As of June 30, 2019, the company had no outstanding borrowings, **$10.7 million** in outstanding letters of credit, and **$29.3 million** available under the facility[190](index=190&type=chunk) - As of June 30, 2019, the company was in compliance with all financial covenants, with a tangible net worth of **$191.3 million**, a current assets to current liabilities ratio of **2.26:1.0**, and an interest-bearing debt to tangible net worth ratio of **0.06:1.0**[190](index=190&type=chunk) - As of June 30, 2019, the company had **$375.9 million** in outstanding surety bonds[191](index=191&type=chunk) [Liquidity Outlook](index=42&type=section&id=Liquidity%20Outlook) The company expects its cash, cash equivalents, short-term investments, and available credit facility as of June 30, 2019, to be sufficient to meet operating expenses, working capital, and capital expenditure needs for at least the next twelve months; the company will continue to maintain and improve liquidity through cost reductions, asset sales, and new project acquisition - The company expects its cash, cash equivalents, short-term investments, and available credit facility as of June 30, 2019, to be sufficient to meet operating expenses, working capital, and capital expenditure needs for at least the next twelve months[196](index=196&type=chunk) - The company will continue to focus on maintaining liquidity, securing meaningful new project awards and backlog in the near term, and generating operating income and cash flow in the long term[192](index=192&type=chunk) - Key uses of future liquidity include costs associated with underutilized facilities in the Fabrication and Shipyard divisions, capital expenditures (including potential improvements to Shipyard facilities), accrued contract losses recorded as of June 30, 2019, project working capital requirements, and corporate administrative expenses and strategic initiatives[194](index=194&type=chunk) - The company anticipates capital expenditures for the remainder of 2019 to be between **$5.0 million** and **$7.0 million**[194](index=194&type=chunk) [Contractual Obligations](index=43&type=section&id=Contractual%20Obligations) There have been no material changes to the company's contractual obligations since the disclosure in its 2018 annual report - There have been no material changes to the company's contractual obligations since the disclosure in its 2018 annual report[197](index=197&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) There have been no material changes to the company's off-balance sheet arrangements since the disclosure in its 2018 annual report - There have been no material changes to the company's off-balance sheet arrangements since the disclosure in its 2018 annual report[198](index=198&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) For the six months ended June 30, 2019, there were no material changes in the company's market risk; for additional information on market risk, please refer to the company's 2018 annual report - For the six months ended June 30, 2019, there were no material changes in the company's market risk[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management assessed the effectiveness of its disclosure controls and procedures as of June 30, 2019, concluding they were effective in design and operation, with no material changes to internal controls during the quarter - The company's management assessed the effectiveness of its disclosure controls and procedures as of June 30, 2019, concluding they were effective in design and operation[200](index=200&type=chunk) - For the three months ended June 30, 2019, there were no material changes to the company's internal control over financial reporting[201](index=201&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company faces various routine legal proceedings, including commercial disputes, workers' compensation, and personal injury claims; a lawsuit with a customer regarding the termination of two MPSV construction contracts is ongoing, and the court has denied the customer's request for possession of the vessels - The company faces various routine legal proceedings, primarily involving commercial disputes and claims, workers' compensation claims, and personal injury claims under general U.S. maritime law and the Jones Act[203](index=203&type=chunk) - The company filed a lawsuit against a customer on **October 2, 2018**, to enforce its rights and remedies under two MPSV construction contracts; the customer filed counterclaims, and the court denied the customer's request for possession of the vessels on **May 28, 2019**[204](index=204&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the disclosure in its 2018 annual report - There have been no material changes to the company's risk factors since the disclosure in its 2018 annual report[205](index=205&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This report includes a series of exhibits, such as the company's articles of incorporation, credit agreement amendments, CEO and CFO certifications, and financial statements in XBRL format - Exhibits include the company's articles of incorporation, the Fourth Amendment to the Credit Agreement, CEO and CFO certifications under Section 13a-14 of the Securities Exchange Act, and Section 906 certifications provided pursuant to 18 U.S.C. Section 1350[206](index=206&type=chunk) - The financial statements (Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements) are filed as Exhibit 101 in XBRL (eXtensible Business Reporting Language) format[206](index=206&type=chunk) [Signatures](index=45&type=section&id=Signatures) This report was signed by Westley S. Stockton, Executive Vice President, Chief Financial Officer, Secretary, and Treasurer of GULF ISLAND FABRICATION, INC., on August 6, 2019 - This report was signed by Westley S. Stockton, Executive Vice President, Chief Financial Officer, Secretary, and Treasurer of GULF ISLAND FABRICATION, INC., on **August 6, 2019**[209](index=209&type=chunk)[210](index=210&type=chunk)