Gulf Island Fabrication(GIFI) - 2019 Q2 - Earnings Call Transcript

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]