Gulf Island Fabrication(GIFI) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis for the first quarter Item 1. Financial Statements This section presents Gulf Island Fabrication, Inc.'s unaudited consolidated financial statements for Q1 2019 and 2018, covering balance sheets, operations, cash flows, and detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's financial position at March 31, 2019, and December 31, 2018 | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $258,715 | $258,290 | | Total liabilities | $60,811 | $57,190 | | Total shareholders' equity | $197,904 | $201,100 | | Cash and cash equivalents | $49,898 | $70,457 | | Short-term investments | $20,341 | $8,720 | | Contract assets | $38,707 | $29,982 | | Contract liabilities | $9,234 | $16,845 | Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss for the three months ended March 31, 2019 and 2018 | Metric | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | $67,605 | $57,290 | | Cost of revenue | $67,052 | $56,611 | | Gross profit | $553 | $679 | | General and administrative expense | $3,834 | $4,709 | | Operating loss | $(3,282) | $(5,090) | | Net loss | $(3,042) | $(5,296) | | Basic and diluted loss per common share | $(0.20) | $(0.35) | - Revenue increased by 18.0% year-over-year, from $57,290 thousand in Q1 2018 to $67,605 thousand in Q1 2019[21][134] - Net loss improved by 42.6% year-over-year, from $(5,296) thousand in Q1 2018 to $(3,042) thousand in Q1 2019[21][134] Consolidated Statement of Changes in Shareholders' Equity This section outlines changes in the company's shareholders' equity, including net loss and stock-based compensation, for Q1 2019 | Metric | December 31, 2018 (in thousands) | March 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Total Shareholders' Equity | $201,100 | $197,904 | | Net loss | — | $(3,042) | | Vesting of restricted stock | — | $(714) | | Stock-based compensation expense | — | $560 | Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for Q1 2019 and 2018 | Cash Flow Activity | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(8,477) | $(14,096) | | Net cash provided by (used in) investing activities | $(11,367) | $2,403 | | Net cash provided by (used in) financing activities | $(715) | $9,202 | | Net decrease in cash and cash equivalents | $(20,559) | $(2,491) | | Cash and cash equivalents, end of period | $49,898 | $6,492 | - Net cash used in operating activities decreased by 39.9% from $(14,096) thousand in Q1 2018 to $(8,477) thousand in Q1 2019[27] - Investing activities shifted from providing $2,403 thousand in cash in Q1 2018 to using $11,367 thousand in Q1 2019, primarily due to the purchase of short-term investments[27][165] Notes to Consolidated Financial Statements This section provides detailed explanations of the accounting policies, significant transactions, and financial statement line items 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note describes the company's operational structure, business segments, significant projects, and key accounting policies, including the adoption of ASU 2016-02 - The company operates through three reportable segments: Fabrication, Shipyard, and Services, with the former EPC Division combined with Fabrication in Q1 2019 to focus on offshore wind and modular fabrication opportunities[29][101] - Significant projects in backlog include the expansion of a paddle wheel riverboat, construction of a jacket and deck, eight harbor tug vessels, two offshore regional class marine research vessels, two vehicle ferries, two towboats, an ice-breaker tug, and a towing, salvage and rescue ship for the U.S. Navy[30] - Customer options for a third regional class marine research vessel and five additional towing, salvage and rescue ships were exercised in April 2019[31] - Management believes current cash, cash equivalents, short-term investments, and available capacity under the Credit Agreement will be sufficient to fund operations and capital expenditures for at least twelve months[35][36] - The company adopted ASU 2016-02, 'Leases,' in Q1 2019, recording operating lease assets of approximately $7,200 thousand and lease liabilities of $5,300 thousand at January 1, 2019[63] 2. REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS This note details revenue recognition by segment and contract type, remaining performance obligations, and changes in contract assets and liabilities Revenue by Segment and Contract Type (Three Months Ended March 31, 2019) | Contract Type | Fabrication ($k) | Shipyard ($k) | Services ($k) | Eliminations ($k) | Total ($k) | | :------------ | :--------------- | :------------ | :------------ | :---------------- | :--------- | | Fixed-price and unit-rate | 12,631 | 33,626 | 6,231 | (614) | 51,874 | | T&M | — | 2,961 | 10,622 | — | 13,583 | | Other | — | — | 2,749 | (601) | 2,148 | | Total | 12,631 | 36,587 | 19,602 | (1,215) | 67,605 | Revenue by Segment and Contract Type (Three Months Ended March 31, 2018) | Contract Type | Fabrication ($k) | Shipyard ($k) | Services ($k) | Eliminations ($k) | Total ($k) | | :------------ | :--------------- | :------------ | :------------ | :---------------- | :--------- | | Fixed-price and unit-rate | 17,343 | 17,222 | 10,290 | (453) | 44,402 | | T&M | — | 1,343 | 10,585 | — | 11,928 | | Other | — | — | 995 | (35) | 960 | | Total | 17,343 | 18,565 | 21,870 | (488) | 57,290 | - Total remaining performance obligations at March 31, 2019, were $312,800 thousand, with $180,200 thousand expected to be recognized in the remainder of 2019[72][74] - Contract assets increased to $38,700 thousand at March 31, 2019, from $30,000 thousand at December 31, 2018, while contract liabilities decreased to $9,200 thousand from $16,800 thousand, primarily due to the unwind of advance payments[75] - Eight uncompleted harbor tug projects in the Shipyard Division are in a loss position, with a $1,300 thousand reserve for estimated losses due to lower craft labor productivity and schedule extensions[77] 3. ASSETS HELD FOR SALE This note provides a breakdown of assets classified as held for sale within the Fabrication and Shipyard Divisions Assets Held for Sale (March 31, 2019) | Assets | Fabrication Division (in thousands) | Shipyard Division (in thousands) | Consolidated (in thousands) | | :-------------------- | :-------------------------- | :------------------------- | :------------------------ | | Machinery and equipment | $25,583 | $1,222 | $26,805 | | Accumulated depreciation | $(7,871) | $(298) | $(8,169) | | Total | $17,712 | $924 | $18,636 | - Fabrication Division assets held for sale, totaling $17,700 thousand, include three 660-ton crawler cranes, a deck barge, two plate bending roll machines, and panel line equipment[79] - Shipyard Division assets held for sale, totaling $900 thousand, consist of a 2,500-ton drydock[83] - A net gain of $70 thousand was recorded on asset impairments and sales in Q1 2019, compared to an expense of $800 thousand in Q1 2018[81] 4. CREDIT FACILITIES This note outlines the company's revolving credit facility, its terms, available capacity, and compliance with financial covenants - The company has a $40,000 thousand revolving credit facility with Hancock Whitney Bank, which was amended on May 1, 2019, to extend its maturity date to June 9, 2021, and amend certain financial covenants[84] - At March 31, 2019, there were no outstanding borrowings under the Credit Agreement, $2,900 thousand in outstanding letters of credit, and $37,100 thousand of available capacity[88] - The company was in compliance with all financial covenants at March 31, 2019, including a tangible net worth of $196,100 thousand and a current assets to current liabilities ratio of 2.84:1.0[88] - Outstanding surety bonds totaled $334,900 thousand at March 31, 2019[89] 5. COMMITMENTS AND CONTINGENCIES This note discusses ongoing legal proceedings, particularly the MPSV contract dispute, and details future lease payment obligations - The company is involved in a lawsuit against a customer regarding the purported termination of contracts for the construction of two Multi-Purpose Service Vessels (MPSVs), disputing the termination and seeking damages, while the customer has filed a counterclaim[91][187] - A net contract asset of $12,500 thousand related to the MPSV projects is included in other noncurrent assets at March 31, 2019[92] Future Lease Payments (in thousands) | Period | Payments | | :--------------- | :------- | | Remainder of 2019 | $489 | | 2020 | $659 | | 2021 | $668 | | 2022 | $677 | | 2023 | $676 | | Thereafter | $6,173 | | Total lease payments | $9,342 | | Less interest | $(4,181) | | Present value of lease liabilities | $5,161 | - The weighted-average remaining lease term for operating leases was approximately 16.1 years, with a weighted-average discount rate of 7.5% at March 31, 2019[97] 6. LOSS PER COMMON SHARE This note presents the calculation of basic and diluted loss per common share for the periods presented Loss Per Common Share | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common shareholders | $(3,042)k | $(5,296)k | | Weighted-average shares | 15,151k | 14,964k | | Basic and diluted loss per common share | $(0.20) | $(0.35) | 7. SEGMENT DISCLOSURES This note provides financial information by the company's three reportable segments: Fabrication, Shipyard, and Services - The company's EPC Division was operationally combined with the Fabrication Division during the first quarter 2019, resulting in three operating divisions: Fabrication, Shipyard, and Services[101] Segment Financial Information (Three Months Ended March 31, 2019) | Metric | Fabrication ($k) | Shipyard ($k) | Services ($k) | Corporate ($k) | Consolidated ($k) | | :-------------------- | :--------------- | :------------ | :------------ | :------------- | :---------------- | | Revenue | 12,631 | 36,587 | 19,602 | (1,215) | 67,605 | | Gross profit (loss) | (772) | (280) | 1,741 | (136) | 553 | | Operating income (loss) | (1,540) | (904) | 1,289 | (2,127) | (3,282) | | Total assets | 63,761 | 103,703 | 34,306 | 56,945 | 258,715 | Segment Financial Information (Three Months Ended March 31, 2018) | Metric | Fabrication ($k) | Shipyard ($k) | Services ($k) | Corporate ($k) | Consolidated ($k) | | :-------------------- | :--------------- | :------------ | :------------ | :------------- | :---------------- | | Revenue | 17,343 | 18,565 | 21,870 | (488) | 57,290 | | Gross profit (loss) | (527) | (1,023) | 2,614 | (385) | 679 | | Operating income (loss) | (2,506) | (1,979) | 1,906 | (2,511) | (5,090) | | Total assets | 149,116 | 76,150 | 35,529 | 8,327 | 269,122 | 8. SUBSEQUENT EVENTS This note discloses significant events occurring after the balance sheet date, including an amendment to the Credit Agreement - On May 1, 2019, the company amended its Credit Agreement to extend its maturity date and amend certain financial covenants[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, condition, and future outlook, including strategic repositioning, asset divestitures, backlog, and liquidity Cautionary Statement on Forward-Looking Information This section advises readers about the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements regarding future performance, including projections for oil and gas prices, operating cash flows, capital expenditures, liquidity, and tax rates[109] - Readers are cautioned that actual results may differ materially from forward-looking statements due to factors such as the cyclical nature of the oil and gas industry, competition, contract terms, cost overruns, weather, and legal disputes[110] Overview This section provides a general description of the company's business, strategic repositioning efforts, and market focus - The company is a leading fabricator of complex steel structures, modules, and marine vessels, also providing project management and services, with customers in energy, petrochemical, industrial, power, alternative energy, and shipping sectors[113] - Due to a severe decline in oil and gas prices since late 2014, the company has strategically repositioned itself to focus on petrochemical and industrial facilities, offshore wind opportunities, and customer diversification, while implementing cost reductions and asset sales[115] - The EPC Division was operationally combined with the Fabrication Division in Q1 2019 to emphasize offshore wind and modular fabrication over the SeaOne Project[114] Ongoing Effort to Divest of Underutilized Assets This section details the company's initiatives to sell non-core assets within its Fabrication and Shipyard Divisions - At March 31, 2019, the Fabrication Division held $17,700 thousand in assets for sale (Fabrication AHFS), including crawler cranes, a deck barge, plate bending roll machines, and panel line equipment[116] - The Shipyard Division held $900 thousand in assets for sale (Shipyard AHFS), consisting of a 2,500-ton drydock[117] Ongoing Efforts to Increase Our Backlog, Diversify Our Customer Base and Resolve Customer Dispute This section outlines strategies to grow backlog, diversify customers, and address the ongoing MPSV contract dispute - The company is actively pursuing petrochemical and industrial fabrication opportunities, with bidding activity for onshore modules and structures at its highest level[118] - Efforts to pursue offshore wind opportunities include a cooperation agreement with Smulders, a major European fabrication supplier of offshore wind structures[119] - Shipyard Division backlog includes construction of a towing, salvage and rescue ship for the U.S. Navy (with options for additional vessels exercised in April 2019), two regional class research vessels (with an option for a third exercised in April 2019), and eight harbor tug vessels[122] - Fabrication Division backlog includes a jacket and deck, a paddle wheel riverboat expansion, and two vehicle ferries[122] - A lawsuit is ongoing regarding the termination of two MPSV construction contracts, with the company disputing the termination and seeking damages[121] Operating Outlook This section discusses the company's expectations for future operating results, project awards, and divisional performance - Future operating results depend on securing new projects in petrochemical, industrial, and offshore wind markets, continued growth in Shipyard and Services Divisions, successful project execution, and resolution of the MPSV dispute[126] - The Fabrication Division is expected to be negatively impacted in the near-term by facility underutilization due to anticipated delays in new project awards[124] - The Shipyard Division will also be impacted by facility underutilization and lower margin backlog, with harbor tug projects currently in a loss position[124] Safety This section highlights the company's commitment to safety through its stringent assurance program and training initiatives - The company maintains a stringent safety assurance program, providing continuous safety education and training to employees and subcontractors, and enforces a zero-tolerance policy for drugs and alcohol in the workplace[125] Critical Accounting Policies This section confirms no changes to the company's critical accounting policies since the prior fiscal year-end - There have been no changes to the company's critical accounting policies since December 31, 2018[126] New Awards and Backlog This section provides an overview of new project awards and the company's total backlog, including expected revenue recognition Backlog by Division (in thousands) | Division | March 31, 2019 (Amount) | December 31, 2018 (Amount) | | :--------- | :------------------------ | :------------------------- | | Fabrication | $71,144 | $63,883 | | Shipyard | $248,138 | $281,531 | | Services | $15,397 | $11,046 | | Total Backlog | $334,679 | $356,460 | - Backlog at March 31, 2019, includes $21,900 thousand related to MPSV contracts under purported termination[129] Expected Revenue Recognition from Backlog (March 31, 2019) | Year | Total (in thousands) | Percentage | | :------------------------------------ | :------------------- | :--------- | | Remainder of 2019 | $180,172 | 53.8% | | 2020 | $101,924 | 30.5% | | 2021 | $29,825 | 8.9% | | Thereafter | $870 | 0.3% | | Future performance obligations under Topic 606 | $312,791 | 93.5% | | Contracts under purported termination | $21,888 | 6.5% | | Total Backlog | $334,679 | 100.0% | - Customer options exercised in April 2019 for a third regional class marine research vessel ($70,000 thousand) and two additional towing, salvage and rescue ships ($129,000 thousand) are not included in the March 31, 2019 backlog[130] - Remaining options for five additional towing, salvage and rescue ships could add approximately $333,000 thousand to backlog[130] Results of Operations This section analyzes the company's consolidated and segment-specific financial performance for the three months ended March 31 Consolidated This subsection provides a consolidated view of the company's revenue, gross profit, operating loss, and net loss performance Consolidated Financial Performance (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Favorable (Unfavorable) Change (Amount) | Favorable (Unfavorable) Change (Percent) | | :------------------------------------------ | :------------------ | :------------------ | :-------------------------------------- | :--------------------------------------- | | Revenue | $67,605 | $57,290 | $10,315 | 18.0% | | Gross profit | $553 | $679 | $(126) | (18.6)% | | Operating loss | $(3,282) | $(5,090) | $1,808 | 35.5% | | Net loss | $(3,042) | $(5,296) | $2,254 | 42.6% | | General and administrative expense | $3,834 | $4,709 | $875 | 18.6% | | Asset impairments and (gain) loss on assets held for sale, net | $(70) | $750 | $820 | 109.3% | | Interest income (expense), net | $262 | $(147) | $409 | 278.2% | - The 18.0% increase in consolidated revenue was primarily driven by an $18,000 thousand increase in the Shipyard Division, partially offset by decreases in Fabrication and Services Divisions[139] - Gross profit decreased by 18.6% due to the under-recovery of overhead costs across divisions, despite higher revenue[136] Fabrication Division This subsection analyzes the financial performance of the Fabrication Division, including revenue and gross loss trends Fabrication Division Financial Performance (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Favorable (Unfavorable) Change (Amount) | Favorable (Unfavorable) Change (Percent) | | :------------------------------------------ | :------------------ | :------------------ | :-------------------------------------- | :--------------------------------------- | | Revenue | $12,631 | $17,343 | $(4,712) | (27.2)% | | Gross loss | $(772) | $(527) | $(245) | (46.5)% | | Operating loss | $(1,540) | $(2,506) | $966 | 38.5% | | General and administrative expense | $767 | $1,041 | $274 | 26.3% | | Asset impairments and (gain) loss on assets held for sale, net | $(70) | $750 | $820 | 109.3% | - Revenue decreased by 27.2% primarily due to the completion of modules for a petrochemical facility in Q2 2018, partially offset by revenue from the paddle wheel riverboat project[144] - Gross loss increased by 46.5% due to lower revenue and under-recovery of overhead costs[145] Shipyard This subsection examines the financial performance of the Shipyard Division, focusing on revenue growth and gross loss improvement Shipyard Division Financial Performance (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Favorable (Unfavorable) Change (Amount) | Favorable (Unfavorable) Change (Percent) | | :------------------------------------------ | :------------------ | :------------------ | :-------------------------------------- | :--------------------------------------- | | Revenue | $36,587 | $18,565 | $18,022 | 97.1% | | Gross loss | $(280) | $(1,023) | $743 | 72.6% | | Operating loss | $(904) | $(1,979) | $1,075 | 54.3% | | General and administrative expense | $624 | $796 | $172 | 21.6% | - Revenue increased by 97.1% due to progress on regional class research vessels, a towing/salvage ship, an ice-breaker tug, and harbor tug projects[149] - Gross loss decreased by 72.6% due to higher revenue and increased recovery of overhead costs, despite a lower margin project mix from harbor tug projects in a loss position[150] Services This subsection reviews the financial performance of the Services Division, including revenue and gross profit changes Services Division Financial Performance (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Favorable (Unfavorable) Change (Amount) | Favorable (Unfavorable) Change (Percent) | | :------------------------------------------ | :------------------ | :------------------ | :-------------------------------------- | :--------------------------------------- | | Revenue | $19,602 | $21,870 | $(2,268) | (10.4)% | | Gross profit | $1,741 | $2,614 | $(873) | (33.4)% | | Operating income | $1,289 | $1,906 | $(617) | (32.4)% | | General and administrative expense | $452 | $734 | $282 | 38.4% | - Revenue decreased by 10.4% primarily due to the timing of new project awards[153] - Gross profit decreased by 33.4% due to lower revenue and reduced recovery of overhead costs[154] Corporate This subsection details the financial performance of the Corporate segment, including gross loss and administrative expenses Corporate Division Financial Performance (Three Months Ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Favorable (Unfavorable) Change (Amount) | Favorable (Unfavorable) Change (Percent) | | :------------------------------------------ | :------------------ | :------------------ | :-------------------------------------- | :--------------------------------------- | | Revenue (eliminations) | $(1,215) | $(488) | $(727) | nm | | Gross loss | $(136) | $(385) | $249 | 64.7% | | Operating loss | $(2,127) | $(2,511) | $384 | 15.3% | | General and administrative expense | $1,991 | $2,138 | $147 | 6.9% | - Gross loss decreased by 64.7% primarily due to lower costs related to supporting the former EPC Division[156] - General and administrative expense decreased by 6.9% due to lower incentive plan costs, partially offset by increased legal and advisory fees related to customer disputes[157] Liquidity and Capital Resources This section assesses the company's financial resources, including available liquidity, working capital, and cash flow activities Available Liquidity This subsection quantifies the company's total available liquidity, comprising cash, short-term investments, and credit facility capacity Available Liquidity (March 31, 2019) | Available Liquidity | Total (in thousands) | | :-------------------------------------- | :------------------- | | Cash and cash equivalents | $49,898 | | Short-term investments | $20,341 | | Credit Agreement available capacity | $37,083 | | Total available liquidity | $107,322 | Working Capital This subsection analyzes the company's working capital position and its key components, excluding cash and assets held for sale - Working capital was $102,000 thousand at March 31, 2019[160] - Excluding cash, cash equivalents, short-term investments, and assets held for sale, working capital was $13,100 thousand[161] Working Capital Components (excluding cash, investments, and assets held for sale) | Component | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Contract assets | $38,707 | $29,982 | $(8,725) | | Contract liabilities | $(9,234) | $(16,845) | $(7,611) | | Contracts in progress, net | $29,473 | $13,137 | $(16,336) | | Contracts receivable and retainage, net | $21,658 | $22,505 | $847 | | Inventory, prepaid expenses and other assets | $8,126 | $9,356 | $1,230 | | Accounts payable, accrued expenses and other liabilities | $(46,116) | $(39,256) | $6,860 | | Total | $13,141 | $5,742 | $(7,399) | Cash Flow Activity This subsection details the net cash flows from operating, investing, and financing activities for the reporting periods - Net cash used in operating activities was $8,500 thousand in Q1 2019, a decrease from $14,100 thousand in Q1 2018, primarily due to an operating loss and changes in contract assets and liabilities[165][166] - Net cash used in investing activities was $11,400 thousand in Q1 2019, compared to $2,400 thousand provided in Q1 2018, mainly due to $20,000 thousand in short-term investment purchases[165] - Net cash used in financing activities was $700 thousand in Q1 2019, primarily for tax payments on vested stock withholdings, contrasting with $9,200 thousand provided in Q1 2018 from Credit Agreement borrowings[166][167] Credit Facilities This subsection describes the company's revolving credit facility, its recent amendment, and compliance status - The $40,000 thousand revolving credit facility was amended on May 1, 2019, extending its maturity to June 9, 2021, and revising financial covenants[168] - At March 31, 2019, the company had no outstanding borrowings, $2,900 thousand in outstanding letters of credit, and $37,100 thousand in available capacity under the Credit Agreement, remaining in compliance with all covenants[171] - Outstanding surety bonds totaled $334,900 thousand at March 31, 2019[172] Liquidity Outlook This subsection provides management's perspective on future liquidity needs, capital expenditures, and funding sufficiency - Primary uses of liquidity include funding facility underutilization, capital expenditures, accrued contract losses, working capital requirements, and corporate administrative expenses[175] - Anticipated capital expenditures for the remainder of 2019 are $5,000 thousand to $7,000 thousand, excluding potential investments for offshore wind projects[176] - Management believes current cash, cash equivalents, short-term investments, and Credit Agreement availability will be sufficient for at least twelve months, but acknowledges risks if financial forecasts are not met[178] Contractual Obligations This subsection confirms no material changes to the company's contractual obligations since the previous annual report - There have been no material changes to contractual obligations from the 2018 Annual Report[179] Off-Balance Sheet Arrangements This subsection confirms no material changes to the company's off-balance sheet arrangements since the previous annual report - There have been no material changes to off-balance sheet arrangements from the 2018 Annual Report[180] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's market risks during the reporting period - There have been no material changes in the company's market risks during the three months ended March 31, 2019[181] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2019[182] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2019[183] PART II. OTHER INFORMATION This part includes information on legal proceedings, risk factors, and exhibits filed with the Form 10-Q Item 1. Legal Proceedings This section details the company's legal proceedings, including a lawsuit regarding the termination of two MPSV construction contracts and a customer counterclaim - The company is involved in a lawsuit filed on October 2, 2018, against a customer regarding the termination of two MPSV construction contracts, disputing the termination and seeking damages[187] - The customer has filed a counterclaim, and a hearing on their motion to obtain possession of the MPSVs is scheduled for May 28, 2019[187] Item 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in the company's 2018 Annual Report - There have been no material changes from the risk factors included in the company's 2018 Annual Report[188] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the Credit Agreement amendment, CEO/CFO certifications, and XBRL financial statements - Exhibit 10.1 is the Consent and Fourth Amendment to Credit Agreement dated May 1, 2019[189] - Exhibits 31.1, 31.2, and 32 include CEO and CFO Certifications pursuant to Rule 13a-14 and Section 906 Certification[189] - Exhibit 101 provides the Consolidated Balance Sheets, Statements of Operations, Statement of Changes in Shareholders' Equity, Statements of Cash Flows, and Notes to Consolidated Financial Statements in XBRL format[189][190] SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the Form 10-Q filing - The report was signed by Westley S Stockton, Executive Vice President, Chief Financial Officer, Secretary and Treasurer, on May 7, 2019[194]