Gulf Island Fabrication(GIFI) - 2025 Q1 - Quarterly Results

First Quarter 2025 Performance Overview Q1 2025 Highlights Gulf Island reported consolidated revenue of $40.3 million and a net income of $3.8 million for the first quarter of 2025, with both Services and Fabrication divisions profitable, alongside a strategic agreement to acquire certain ENGlobal Corporation assets Q1 2025 Financial Highlights | Metric | Value | | :--- | :--- | | Consolidated Revenue | $40.3 million | | Consolidated Net Income | $3.8 million | | Consolidated EBITDA | $4.5 million | | Services Division Operating Income | $1.6 million | | Fabrication Division Operating Income | $3.8 million | - In April, the company entered into an agreement to acquire certain assets of ENGlobal Corporation (ENG) related to its automation, engineering, and government services businesses[5] Management Commentary Management reported solid Q1 results driven by small-scale fabrication, but anticipates a significant Q2 decline due to macroeconomic uncertainty, while maintaining a strong financial position and proceeding with the strategic ENG acquisition - The market outlook for the remainder of 2025 is challenging due to macroeconomic uncertainty and trade policies, leading to extended decision cycles for fabrication projects and lower capital spending by offshore customers[4] - A significant decline in second-quarter results compared to the first quarter is anticipated, with profitability expected to be maintained[4] - The company maintains a strong financial position with over $67 million in cash and short-term investments at the end of the quarter[4] - The acquisition of certain assets from ENGlobal (ENG) is a key strategic initiative aimed at expanding product/service capabilities and diversifying into new end markets, though it is not expected to be accretive to operating results in 2025[4] Detailed Financial Results Consolidated Results Q1 2025 consolidated revenue slightly decreased to $40.3 million, net income fell to $3.8 million, but Adjusted EBITDA increased to $4.5 million after excluding a prior-year property sale gain Consolidated Financial Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $40.3M | $42.9M | -6.1% | | Net Income | $3.8M | $6.2M | -38.7% | | Adjusted EBITDA | $4.5M | $3.7M | +21.6% | Segment Performance In Q1 2025, Fabrication revenue grew 20.7% to $20.7 million, while Services revenue declined 22.2% to $19.9 million, with the Shipyard division's wind-down completed and Corporate reporting a stable operating loss Services Division The Services Division's Q1 2025 revenue decreased 22.2% to $19.9 million due to reduced offshore maintenance, leading to a fall in operating income to $1.6 million and an EBITDA margin contraction to 10.4% Services Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $19.9M | $25.5M | -22.2% | | Operating Income | $1.6M | $2.9M | -44.8% | | EBITDA | $2.1M | $3.3M | -36.4% | | EBITDA Margin | 10.4% | 13.1% | -2.7 p.p. | Fabrication Division The Fabrication Division's Q1 2025 revenue increased 20.7% to $20.7 million driven by small-scale activity, with Adjusted EBITDA significantly growing to $4.5 million after excluding a prior-year property sale gain Fabrication Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $20.7M | $17.1M | +20.7% | | Operating Income | $3.8M | $4.7M | -19.1% | | Adjusted EBITDA | $4.5M | $2.5M | +80.0% | Former Shipyard Division The Shipyard division's wind-down was completed in Q1 2025, resulting in no revenue or operating activity compared to the prior year - The wind-down of the Shipyard division was completed in Q1 2025, with the expiration of the final warranty period for its ferry projects[12] Shipyard Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $0 | $0.4M | | Operating Income | $0 | $0.3M | Corporate Division The Corporate Division reported a slight improvement in operating loss to $2.1 million and EBITDA loss to $2.0 million for Q1 2025 year-over-year Corporate Division Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Loss | $(2.1)M | $(2.2)M | | EBITDA Loss | $(2.0)M | $(2.1)M | Strategic Developments ENGlobal Corporation Acquisition On April 15, 2025, Gulf Island agreed to acquire ENGlobal Corporation's automation, engineering, and government services businesses, aiming to broaden offerings and diversify markets with a $4.0 million capital commitment - The acquisition includes ENG's automation, engineering, and government services businesses, with the automation segment having generated approximately $10.0 million in revenue in 2024[16] - Strategic benefits include broadening product offerings, strengthening fabrication with engineering capabilities, and diversifying end markets[16] Acquisition Financial Details | Metric | Value | | :--- | :--- | | Total Capital Commitment | $4.0 million | | Initial DIP Financing | $2.5 million | | Payment for Loan Assumption | $1.5 million | | Expected Operating Loss (6-12 months) | $1.0M - $2.0M | Financial Statements and Reconciliations Balance Sheet and Liquidity As of March 31, 2025, the company maintained strong liquidity with $67.5 million in cash and short-term investments and $19.0 million in debt, while continuing its share repurchase program Key Balance Sheet & Liquidity Metrics (as of March 31, 2025) | Metric | Value | | :--- | :--- | | Cash & Short-Term Investments | $67.5 million | | Restricted Cash | $1.2 million | | Total Debt | $19.0 million | | Debt Interest Rate | 3.0% (fixed) | - In Q1 2025, the company repurchased 86,364 shares of common stock for $0.6 million, at an average price of $6.57 per share[15] Consolidated Financial Tables This section presents the unaudited consolidated financial statements for Q1 2025, including the Income Statement, Balance Sheets, and Cash Flows, with comparative data Consolidated Results of Operations The consolidated income statement for Q1 2025 reports revenue of $40.3 million, gross profit of $6.6 million, net income of $3.8 million, and a diluted EPS of $0.23 Consolidated Results of Operations (in thousands, except per share data) - Q1 2025 | Line Item | Three Months Ended March 31, 2025 | | :--- | :--- | | Revenue | $40,273 | | Gross profit | $6,615 | | Operating income | $3,280 | | Net income | $3,827 | | Diluted income per share | $0.23 | Consolidated Balance Sheets As of March 31, 2025, total assets were $138.2 million, total liabilities $41.5 million, and total shareholders' equity increased to $96.7 million from $93.1 million at year-end 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $111,580 | $105,409 | | Total assets | $138,162 | $133,216 | | Total current liabilities | $22,789 | $21,376 | | Total liabilities | $41,457 | $40,114 | | Total shareholders' equity | $96,705 | $93,102 | Consolidated Cash Flows For Q1 2025, net cash provided by operating activities was $2.2 million, with net cash used in investing and financing activities, resulting in a net cash increase of $1.4 million Consolidated Cash Flows Highlights (in thousands) - Q1 2025 | Cash Flow Activity | Three Months Ended March 31, 2025 | | :--- | :--- | | Net cash provided by operating activities | $2,219 | | Net cash used in investing activities | $(300) | | Net cash used in financing activities | $(567) | | Net increase in cash | $1,352 | Non-GAAP Measures and Reconciliations The company uses non-GAAP measures like EBITDA and adjusted EBITDA to supplement GAAP figures, providing detailed reconciliations to reflect operating performance excluding non-cash and non-recurring items Explanation of Non-GAAP Measures Non-GAAP metrics such as EBITDA and Adjusted EBITDA are used to clarify operating results by excluding non-cash and non-recurring items, with adjusted revenue and gross profit also presented for ongoing operations - The company believes EBITDA is useful as it shows operating results excluding non-cash depreciation and amortization; Adjusted EBITDA further removes non-recurring items (like property sales) and the results of the discontinued Shipyard division[20] Non-GAAP Reconciliations For Q1 2025, adjusted revenue and gross profit equaled GAAP figures due to the Shipyard division's completed wind-down, with Consolidated Adjusted EBITDA reconciled from net income to $4.5 million Consolidated Adjusted EBITDA Reconciliation (in thousands) - Q1 2025 | Line Item | Q1 2025 | | :--- | :--- | | Net income | $3,827 | | Income tax expense | $2 | | Interest expense (income), net | $(549) | | Depreciation and amortization | $1,256 | | EBITDA | $4,536 | | Gain on property sale | - | | Shipyard operating income | - | | Adjusted EBITDA | $4,536 |