Gulf Island Fabrication(GIFI) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2021 was $19.6 million, a 19% sequential decrease compared to Q2 2021 and a 23% decline from Q3 2020, primarily due to the Shipyard division [32] - Consolidated operating loss for Q3 was $3.7 million, with an EBITDA loss of $2.6 million, reflecting a positive contribution from the Fabrication & Services division offset by losses from Shipyard operations [32] - Fabrication & Services division revenue for Q3 was $17.3 million, a decrease of $952,000 compared to Q3 2020, attributed to the completion of two large projects and lower revenue from marine docking structures [33] Business Line Data and Key Metrics Changes - Fabrication & Services EBITDA for Q3 was $1.4 million, benefiting from a favorable margin mix and strong project performance despite a year-over-year revenue decline [34] - Shipyard division revenue was $2.3 million for Q3, entirely related to three ferry projects, with an operating loss of $1.9 million [36] - Corporate division operating loss for Q3 was $2.2 million, impacted by costs to diversify and enhance the business [37] Market Data and Key Metrics Changes - The LNG market is identified as the most attractive near-term opportunity, with significant bidding activity expected in Texas and Louisiana [19] - Increased inquiries in hydrogen and renewable fuels are noted, driven by energy transition initiatives [13][20] - The services business is experiencing growth due to increased activity from existing offshore customers and new customer opportunities [22] Company Strategy and Development Direction - The company is shifting focus to generating predictable and profitable growth through initiatives in new growth end markets, diversifying services, and expanding the skilled craft workforce [11][12] - The strategic plan includes improving risk profiles, strengthening liquidity, and reducing reliance on offshore oil and gas [11] - The company aims to maintain discipline in bidding and project execution to ensure adequate returns and manage labor risks effectively [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong position to take advantage of improving market trends and internal initiatives [29] - The company anticipates sequentially lower fourth-quarter revenue due to low backlog and underutilization of resources, but expects to exit the year with a cash balance of $60 million to $65 million [41] - Management is actively working with insurance providers to assess damages from Hurricane Ida and expects cash flow impacts related to deductibles [40] Other Important Information - The company reported receiving forgiveness of $8.9 million of its PPP loan, ending the quarter with a cash balance of almost $74 million and no debt [39] - The company is facing challenges in attracting skilled labor, which is critical for project execution and growth [16][22] Q&A Session Summary Question: What has really moved the needle in business development over the past four to six quarters? - Management emphasized discipline in bidding and execution plans, leading to better-than-expected project performance [45] Question: Can you characterize your bidding activities or early customer engagement by type of end project? - Management indicated that LNG and petrochemical projects will dominate near-term opportunities, while hydrogen and sustainable energy projects are further out [47][49] Question: Can you provide insights on cash balance and capital allocation? - Management stated that cash will be used for deductibles related to Hurricane Ida impacts and to wind down Shipyard operations, with a focus on growth opportunities [51][53] Question: Is all equipment functional post-Hurricane Ida? - Management confirmed that equipment is nearly 100% operational, with minor damages being assessed [61] Question: What is the size and number of contracts currently in the bidding process? - Management noted that large LNG projects could represent contract values between $50 million to $100 million, with significant opportunities expected [75]