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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)
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LOUISIANA
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72-1147390
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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16225 PARK TEN PLACE, SUITE 280
HOUSTON, TEXAS
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77084
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(Address of principal executive offices)
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(Zip Code)
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(713) 714-6100
(Registrant’s telephone number, including area code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Page
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Item 3
.
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September 30,
2016 |
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December 31,
2015 |
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(Unaudited)
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(Note 1)
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ASSETS
|
|
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|
||||
Current assets:
|
|
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|
||||
Cash and cash equivalents
|
$
|
55,642
|
|
|
$
|
34,828
|
|
Contracts receivable and retainage, net
|
26,619
|
|
|
47,060
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
18,679
|
|
|
12,822
|
|
||
Prepaid expenses and other assets
|
4,034
|
|
|
3,418
|
|
||
Inventory
|
18,281
|
|
|
12,936
|
|
||
Assets held for sale
|
—
|
|
|
4,805
|
|
||
Total current assets
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123,255
|
|
|
115,869
|
|
||
Property, plant and equipment, net
|
211,215
|
|
|
200,384
|
|
||
Intangible assets, net
|
2,069
|
|
|
—
|
|
||
Other assets
|
673
|
|
|
670
|
|
||
Total assets
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$
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337,212
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$
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316,923
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||
Current liabilities:
|
|
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|
||||
Accounts payable
|
$
|
8,654
|
|
|
$
|
13,604
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
7,154
|
|
|
7,081
|
|
||
Deferred revenue, current
|
14,178
|
|
|
—
|
|
||
Accrued contract losses
|
1,494
|
|
|
9,495
|
|
||
Accrued employee costs
|
8,493
|
|
|
6,831
|
|
||
Accrued expenses and other liabilities
|
3,510
|
|
|
890
|
|
||
Total current liabilities
|
43,483
|
|
|
37,901
|
|
||
Deferred revenue, noncurrent
|
2,029
|
|
|
—
|
|
||
Other long-term liabilities
|
109
|
|
|
—
|
|
||
Net deferred tax liabilities
|
25,476
|
|
|
21,825
|
|
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Total liabilities
|
71,097
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|
|
59,726
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Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 5,000,000 shares authorized, no shares issued and outstanding
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—
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—
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Common stock, no par value, 20,000,000 shares authorized, 14,632,507 issued and outstanding at September 30, 2016 and 14,580,216 at December 31, 2015, respectively
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10,579
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10,352
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Additional paid-in capital
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98,256
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96,194
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Retained earnings
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157,280
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|
150,651
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Total shareholders’ equity
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266,115
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|
257,197
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Total liabilities and shareholders’ equity
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$
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337,212
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$
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316,923
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
|
||||||||||||
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2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||
Revenue
|
$
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65,384
|
|
|
$
|
67,531
|
|
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$
|
230,864
|
|
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$
|
251,102
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|
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Cost of revenue
|
60,125
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75,368
|
|
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205,839
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|
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248,686
|
|
|
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Gross profit (loss)
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5,259
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|
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(7,837
|
)
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25,025
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2,416
|
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|
||||
General and administrative expenses
|
5,086
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3,798
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14,633
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11,817
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Asset impairment
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—
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6,600
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|
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—
|
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6,600
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|
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Operating income (loss)
|
173
|
|
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(18,235
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)
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10,392
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(16,001
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)
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Other income (expense):
|
|
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Interest expense
|
(110
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)
|
|
(39
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)
|
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(248
|
)
|
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(126
|
)
|
|
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Interest income
|
12
|
|
|
8
|
|
|
20
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|
|
21
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|
|
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Other income, net
|
599
|
|
|
—
|
|
|
1,039
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20
|
|
|
||||
|
501
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|
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(31
|
)
|
|
811
|
|
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(85
|
)
|
|
||||
Net income (loss) before income taxes
|
674
|
|
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(18,266
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)
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11,203
|
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(16,086
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)
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|
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Income taxes
|
133
|
|
|
(6,129
|
)
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4,134
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(5,389
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)
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|
||||
Net income (loss)
|
$
|
541
|
|
|
$
|
(12,137
|
)
|
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$
|
7,069
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|
|
$
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(10,697
|
)
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Per share data:
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Basic and diluted earnings (loss) per share - common shareholders
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$
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0.04
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$
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(0.84
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)
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$
|
0.48
|
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|
$
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(0.74
|
)
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Cash dividend declared per common share
|
$
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0.01
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$
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0.10
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$
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0.03
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$
|
0.30
|
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Common Stock
|
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Additional
Paid-In
Capital
|
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Retained
Earnings
|
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Total
Shareholders’
Equity
|
||||||||||||
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Shares
|
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Amount
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|||||||||||||||
Balance at January 1, 2016
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14,580,216
|
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$
|
10,352
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$
|
96,194
|
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$
|
150,651
|
|
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$
|
257,197
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
7,069
|
|
|
7,069
|
|
|||||
Vesting of restricted stock
|
52,291
|
|
|
(16
|
)
|
|
(147
|
)
|
|
—
|
|
|
(163
|
)
|
|||||
Compensation expense - restricted stock
|
—
|
|
|
243
|
|
|
2,209
|
|
|
—
|
|
|
2,452
|
|
|||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(440
|
)
|
|
(440
|
)
|
|||||
Balance at September 30, 2016
|
14,632,507
|
|
|
$
|
10,579
|
|
|
$
|
98,256
|
|
|
$
|
157,280
|
|
|
$
|
266,115
|
|
|
Nine Months Ended
September 30, |
||||||
|
|||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
7,069
|
|
|
$
|
(10,697
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Bad debt expense
|
422
|
|
|
400
|
|
||
Depreciation
|
19,262
|
|
|
19,674
|
|
||
Amortization of deferred revenue
|
(4,114
|
)
|
|
—
|
|
||
Asset impairment
|
—
|
|
|
6,600
|
|
||
Gain on sale of assets
|
(924
|
)
|
|
(10
|
)
|
||
Deferred income taxes
|
3,651
|
|
|
(5,464
|
)
|
||
Compensation expense - restricted stock
|
2,452
|
|
|
1,863
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Contracts receivable and retainage
|
22,287
|
|
|
43,501
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
(5,834
|
)
|
|
(237
|
)
|
||
Prepaid expenses and other assets
|
915
|
|
|
2,072
|
|
||
Inventory
|
135
|
|
|
508
|
|
||
Accounts payable
|
(13,654
|
)
|
|
(25,402
|
)
|
||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(20
|
)
|
|
(13,494
|
)
|
||
Deferred revenue
|
(8,928
|
)
|
|
—
|
|
||
Accrued employee costs
|
1,404
|
|
|
343
|
|
||
Accrued expenses
|
2,733
|
|
|
(2,369
|
)
|
||
Accrued contract losses
|
(8,001
|
)
|
|
1,367
|
|
||
Current income taxes
|
413
|
|
|
—
|
|
||
Net cash provided by operating activities
|
19,268
|
|
|
18,655
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(5,415
|
)
|
|
(5,052
|
)
|
||
Net cash received in acquisition
|
1,588
|
|
|
—
|
|
||
Proceeds from the sale of equipment
|
5,813
|
|
|
10
|
|
||
Net cash provided by (used in) investing activities
|
1,986
|
|
|
(5,042
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of dividends on common stock
|
(440
|
)
|
|
(4,397
|
)
|
||
Net cash used in financing activities
|
(440
|
)
|
|
(4,397
|
)
|
||
Net change in cash and cash equivalents
|
20,814
|
|
|
9,216
|
|
||
Cash and cash equivalents at beginning of period
|
34,828
|
|
|
36,085
|
|
||
Cash and cash equivalents at end of period
|
$
|
55,642
|
|
|
$
|
45,301
|
|
•
|
Jennings
- Leased facilities from a third party for a
180
acre complex five miles east of Jennings, LA on the west bank of the Mermentau River approximately 25 miles north of the Intracoastal waterway. The Jennings complex includes over
100,000
square feet of covered fabrication area and
3,000
feet of water frontage with two launch ways. The lease, including exercisable renewal options, extends through January 2045.
|
•
|
Lake Charles
- Subleased facilities from a third party for a
10
acre complex 17 miles from the Gulf of Mexico on the Calcasieu River near Lake Charles, Louisiana. The Lake Charles complex includes
1,100
feet of bulkhead water frontage with a water depth of 40 feet located one mile from the Gulf Intracoastal Waterway and is located near multiple petrochemical plants. The sublease, including exercisable renewal options (subject to sublessor renewals), extends through July 2038.
|
•
|
Houma
- Leased facilities from the former owner of LEEVAC Shipyards, currently the Senior Vice President of our Shipyards division, for a
35
acre complex 26 miles from the Gulf of Mexico near Houma, Louisiana. Payment terms are approximately
$67,000
per month. The lease expires on the later of December 31, 2016 or
90
days following the completion of the first of
two
vessels currently under construction at the facility, but no later than August 31, 2017. Upon expiration, we have the option to extend the lease at market rates.
|
|
|
|
As of June 30, 2016
|
|
Adjustment from working capital true-up
|
|
Valuation Adjustment
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||||||||
|
Accounts receivable
|
|
$
|
3,544
|
|
|
$
|
(1,882
|
)
|
|
$
|
—
|
|
|
$
|
1,662
|
|
|
Inventory
|
|
4,938
|
|
|
724
|
|
|
—
|
|
|
5,662
|
|
||||
|
Prepaid expenses and other assets
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
|
Machinery and equipment
|
|
23,056
|
|
|
—
|
|
|
2,118
|
|
|
25,174
|
|
||||
|
Intangible assets (leasehold interests)
|
|
2,123
|
|
|
—
|
|
|
—
|
|
|
2,123
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
—
|
|
||||||||
|
Accounts payable and accrued expenses
|
|
6,003
|
|
|
2,514
|
|
|
—
|
|
|
8,517
|
|
||||
|
Deferred revenue and below market contracts
|
|
29,246
|
|
|
—
|
|
|
—
|
|
|
29,246
|
|
||||
Net cash received and due from seller upon the acquisition of LEEVAC
|
|
$
|
1,588
|
|
|
$
|
3,615
|
|
|
$
|
(2,118
|
)
|
|
$
|
3,085
|
|
|
|
|
As of June 30, 2016
|
|
Adjustment from working capital true-up
|
|
Adjusted
|
||||||
Consideration received upon acquisition of LEEVAC:
|
|
|
|
|
|
|
|||||||
|
Seller payment for prepaid contracts
(1)
|
|
$
|
16,942
|
|
|
$
|
(2,118
|
)
|
|
$
|
14,824
|
|
|
Surety payments related to assigned contracts
(2)
|
|
7,125
|
|
|
—
|
|
|
7,125
|
|
|||
|
|
24,067
|
|
|
(2,118
|
)
|
|
21,949
|
|
||||
Less:
|
|
|
|
|
|
|
|||||||
|
Working capital assumed
|
|
2,479
|
|
|
(3,615
|
)
|
|
(1,136
|
)
|
|||
|
Due from seller
|
|
—
|
|
|
1,497
|
|
|
1,497
|
|
|||
|
Net cash due to the Company at closing
|
|
1,588
|
|
|
—
|
|
|
1,588
|
|
|||
|
|
|
4,067
|
|
|
(2,118
|
)
|
|
1,949
|
|
|||
Purchase price
|
|
$
|
20,000
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
(1)
|
Payment from sellers for customer payments received in advance of progress on contracts assigned to us concurrent with the closing of the LEEVAC transaction.
|
(2)
|
Payments from sureties in connection with the release of further obligations related to contracts assigned to us concurrent with the closing of the LEEVAC transaction.
|
Three Months Ended September 30, 2015
|
|
Pro forma adjustments
|
|
|
|
||||||||||||
|
|
Historical results
|
|
LEEVAC
|
|
Adj
|
|
|
Pro forma results
|
||||||||
Revenue
|
|
$
|
67,531
|
|
|
$
|
20,024
|
|
|
$
|
—
|
|
|
|
$
|
87,555
|
|
Net income (loss)
|
|
$
|
(12,137
|
)
|
|
$
|
1,215
|
|
|
$
|
30
|
|
(1)
|
|
$
|
(10,892
|
)
|
Nine Months Ended September 30, 2015
|
|
Pro forma adjustments
|
|
|
|
||||||||||||
|
|
Historical results
|
|
LEEVAC
|
|
Adj
|
|
|
Pro forma results
|
||||||||
Revenue
|
|
$
|
251,102
|
|
|
$
|
69,117
|
|
|
$
|
—
|
|
|
|
$
|
320,219
|
|
Net income (loss)
|
|
$
|
(10,697
|
)
|
|
$
|
(5,359
|
)
|
|
$
|
3,469
|
|
(1)
|
|
$
|
(12,587
|
)
|
|
|
Three Months Ended September 30, 2015
|
|
Nine Months Ended September 30, 2015
|
||||
Effect of purchase price depreciation
|
|
$
|
266
|
|
|
$
|
803
|
|
Elimination of interest expense
|
|
406
|
|
|
1,692
|
|
||
Income taxes
|
|
(642
|
)
|
|
974
|
|
||
|
|
$
|
30
|
|
|
$
|
3,469
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Pass-through costs as a percentage of revenues
|
33.8
|
%
|
|
45.3
|
%
|
|
35.0
|
%
|
|
43.2
|
%
|
|
|
|
|
|
|
|
|
•
|
offshore services projects for
two
oil and gas customers in our Services segment; and
|
•
|
the fabrication and repair to a deepwater structure for
one
of our oil and gas customers in our Fabrication segment.
|
•
|
Level 1-inputs are based upon quoted prices for identical instruments traded in active markets.
|
•
|
Level 2-inputs are based upon quoted prices for similar instruments in active markets and model-based valuation techniques for which all significant assumptions are observable in the market.
|
•
|
Level 3-inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. These include discounted cash flow models and similar valuation techniques.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net Income (loss)
|
$
|
541
|
|
|
$
|
(12,137
|
)
|
|
$
|
7,069
|
|
|
$
|
(10,697
|
)
|
Less: Distributed and undistributed income (unvested restricted stock)
|
2
|
|
|
24
|
|
|
70
|
|
|
71
|
|
||||
Net income attributable to common shareholders
|
$
|
539
|
|
|
$
|
(12,161
|
)
|
|
$
|
6,999
|
|
|
$
|
(10,768
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares
(1)
|
14,633
|
|
|
14,543
|
|
|
14,621
|
|
|
14,541
|
|
||||
Basic and diluted earnings (loss) per share - common shareholders
|
$
|
0.04
|
|
|
$
|
(0.84
|
)
|
|
$
|
0.48
|
|
|
$
|
(0.74
|
)
|
(i)
|
minimum net worth requirement of not less than
$250.0 million
plus:
|
a)
|
50%
of net income earned in each quarter beginning March 31, 2016, and
|
b)
|
100%
of proceeds from any issuance of common stock;
|
(ii)
|
debt to EBITDA ratio not greater than
3.0
to 1.0; and
|
(iii)
|
interest coverage ratio not less than
2.0
to 1.0.
|
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
Fabrication
|
Shipyards
(1), (2)
|
Services
|
Corp. & Eliminations
|
Consolidated
|
||||||||||
Revenue
|
$
|
22,311
|
|
$
|
23,060
|
|
$
|
20,928
|
|
$
|
(915
|
)
|
$
|
65,384
|
|
Gross profit
|
532
|
|
1,877
|
|
2,850
|
|
—
|
|
5,259
|
|
|||||
Operating income (loss)
|
(949
|
)
|
(188
|
)
|
1,310
|
|
—
|
|
173
|
|
|||||
|
|
|
|
|
|
||||||||||
Total assets
|
285,320
|
|
75,779
|
|
100,781
|
|
(124,668
|
)
|
337,212
|
|
|||||
Depreciation expense
|
4,637
|
|
1,183
|
|
443
|
|
123
|
|
6,386
|
|
|||||
CAPEX
|
1,228
|
|
318
|
|
565
|
|
14
|
|
2,125
|
|
|||||
|
|
|
|
|
|
|
Three Months Ended September 30, 2015
|
||||||||||||||
|
Fabrication
|
Shipyards
(1)
|
Services
|
Corp. & Eliminations
|
Consolidated
|
||||||||||
Revenue
|
$
|
32,133
|
|
$
|
12,936
|
|
$
|
23,487
|
|
$
|
(1,025
|
)
|
$
|
67,531
|
|
Gross profit (loss)
|
(14,009
|
)
|
1,937
|
|
4,235
|
|
—
|
|
(7,837
|
)
|
|||||
Operating income (loss)
|
(22,747
|
)
|
1,545
|
|
3,241
|
|
(274
|
)
|
(18,235
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Total assets
|
363,710
|
|
54,726
|
|
90,567
|
|
(171,967
|
)
|
337,036
|
|
|||||
Depreciation expense
|
5,495
|
|
480
|
|
432
|
|
127
|
|
6,534
|
|
|||||
CAPEX
|
1,054
|
|
662
|
|
382
|
|
1
|
|
2,099
|
|
|||||
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
Fabrication
|
Shipyards
(1), (2)
|
Services
|
Corp. & Eliminations
|
Consolidated
|
||||||||||
Revenue
|
$
|
70,436
|
|
$
|
86,553
|
|
$
|
76,179
|
|
$
|
(2,304
|
)
|
$
|
230,864
|
|
Gross profit
|
4,418
|
|
9,595
|
|
11,012
|
|
—
|
|
25,025
|
|
|||||
Operating income (loss)
|
(61
|
)
|
3,720
|
|
6,893
|
|
(160
|
)
|
10,392
|
|
|||||
|
|
|
|
|
|
||||||||||
Total assets
|
285,320
|
|
75,779
|
|
100,781
|
|
(124,668
|
)
|
337,212
|
|
|||||
Depreciation expense
|
14,081
|
|
3,507
|
|
1,342
|
|
332
|
|
19,262
|
|
|||||
CAPEX
|
2,539
|
|
534
|
|
1,612
|
|
730
|
|
5,415
|
|
|||||
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||
|
Fabrication
|
Shipyards
(1)
|
Services
|
Corp. & Eliminations
|
Consolidated
|
||||||||||
Revenue
|
$
|
137,431
|
|
$
|
47,177
|
|
$
|
70,987
|
|
$
|
(4,493
|
)
|
$
|
251,102
|
|
Gross profit (loss)
|
(14,055
|
)
|
6,022
|
|
10,449
|
|
—
|
|
2,416
|
|
|||||
Operating income (loss)
|
(27,681
|
)
|
4,779
|
|
7,441
|
|
(540
|
)
|
(16,001
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Total assets
|
363,710
|
|
54,726
|
|
90,567
|
|
(171,967
|
)
|
337,036
|
|
|||||
Depreciation expense
|
16,554
|
|
1,438
|
|
1,297
|
|
385
|
|
19,674
|
|
|||||
CAPEX
|
2,737
|
|
998
|
|
1,243
|
|
74
|
|
5,052
|
|
|||||
|
|
|
|
|
|
(1)
|
Included in our results of operations for our Shipyards segment were revenue and net income (loss) of
$16.8 million
and
$(471,000)
, for the three months ended
September 30, 2016
, and
$55.9 million
and
$280,000
for the
nine months ended
September 30, 2016
, respectively, attributable to the assets and operations acquired in the LEEVAC transaction. No amounts were included in the comparable 2015 periods as the LEEVAC transaction was effective January 1, 2016. See also Note 2.
|
(2)
|
Revenue for the
three and nine
months ended
September 30, 2016
includes
$1.5 million
and
$4.1 million
of non-cash amortization of deferred revenue, respectively, related to the values assigned to contracts acquired in the LEEVAC transaction.
|
•
|
Jennings
- Leased facilities from a third party for a 180 acre complex five miles east of Jennings, LA on the west bank of the Mermentau River approximately 25 miles north of the Intracoastal waterway. The Jennings complex includes over 100,000 square feet of covered fabrication area and 3,000 feet of water frontage with two launch ways. The lease, including exercisable renewal options, extends through January 2045.
|
•
|
Lake Charles
- Subleased facilities from a third party for a 10 acre complex 17 miles from the Gulf of Mexico on the Calcasieu River near Lake Charles, LA. The Lake Charles complex includes 1,100 feet of bulkhead water frontage with a water depth of 40 feet located one mile from the main ship channel and the Gulf Intracoastal Waterway and is located near multiple petrochemical plants. The sublease, including exercisable renewal options (subject to sublessor renewals), extends through July 2038.
|
•
|
Houma
- Leased facilities from the former owner of LEEVAC Shipyards, currently the Senior Vice President of our Shipyards division, for a 35 acre complex 26 miles from the Gulf of Mexico near Houma, LA. The lease expires on the later of December 31, 2016 or 90 days following the completion of the first of two vessels currently under construction at the facility, but no later than August 31, 2017. Upon expiration, we will have the option to extend the lease at market rates.
|
•
|
Machinery and equipment
- Includes a new plasma cutter installed in 2013, eight crawler cranes ranging from 65-230 tons, 8 track cranes, 10 overhead cranes, six dry docks ranging from 1,500 to 3,500 tons, and a 200 ton module transporter.
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
||||||||||||
Segment
|
$'s
|
Labor hours
|
|
$'s
|
Labor hours
|
|
$'s
|
Labor hours
|
|||||||||
Fabrication
|
84,940
|
|
841
|
|
|
$
|
41,126
|
|
431
|
|
|
$
|
48,828
|
|
524
|
|
|
Shipyards
|
78,886
|
|
582
|
|
|
93,912
|
|
629
|
|
|
119,984
|
|
843
|
|
|||
Services
|
17,386
|
|
163
|
|
|
22,540
|
|
209
|
|
|
28,316
|
|
308
|
|
|||
Intersegment eliminations
|
—
|
|
—
|
|
|
(41
|
)
|
—
|
|
|
(60
|
)
|
—
|
|
|||
Total backlog
(1)
|
$
|
181,212
|
|
1,586
|
|
|
$
|
157,537
|
|
1,269
|
|
|
$
|
197,068
|
|
1,675
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Number
|
Percentage
|
|
Number
|
Percentage
|
|
Number
|
Percentage
|
|||||||||
Major customers
(2)
|
three
|
75.3
|
%
|
|
two
|
57.4%
|
|
three
|
70.0%
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
$'s
|
Percentage
|
|
$'s
|
Percentage
|
|
$'s
|
Percentage
|
|||||||||
Deepwater locations
|
15,775
|
|
8.7
|
%
|
|
$
|
31,272
|
|
19.9%
|
|
$
|
41,269
|
|
20.9%
|
|||
Foreign locations
|
13,519
|
|
7.5
|
%
|
|
$
|
15,917
|
|
10.1%
|
|
$
|
16,984
|
|
8.6%
|
|||
|
|
|
|
|
|
|
|
|
|||||||||
Backlog is expected to be recognized in revenue during:
|
$'s
|
Percentage
|
|
|
|
|
|
|
|||||||||
2016
(3)
|
71,841
|
|
39.6
|
%
|
|
|
|
|
|
|
|||||||
2017
(3)
|
87,255
|
|
48.2
|
%
|
|
|
|
|
|
|
|||||||
2018
(3)
|
22,116
|
|
12.2
|
%
|
|
|
|
|
|
|
|||||||
|
$
|
181,212
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
1.
|
Backlog as of
September 30, 2016
includes commitments received through
October 27, 2016
. We exclude suspended projects from contract backlog that are expected to be suspended more than twelve months because resumption of work and timing of revenue recognition for these projects are difficult to predict. Our backlog also includes the new build construction that was acquired in the LEEVAC transaction on January 1, 2016. Included in our backlog at
September 30, 2016
, is
$5.1 million
of non-cash revenue related to purchase price fair value of contracts acquired in the LEEVAC transaction and included in deferred revenue in our consolidated Balance sheet at
September 30, 2016
.
|
2.
|
At
September 30, 2016
, projects for our
three
largest customers in terms of revenue backlog consisted of:
|
(i)
|
two large petroleum supply vessels for one customer in our Shipyards segment, which commenced in the second quarter of 2013 and will be completed during the first and second quarter of 2017;
|
(ii)
|
two large multi-purpose service vessels for one customer in our Shipyards segment, which commenced in the first quarter of 2014 and will be completed during the first and second quarter of 2018; and
|
3.
|
The timing of recognition of the revenue represented in our backlog is based on management’s current estimates to complete the projects. Certain factors and circumstances could cause changes in the amounts ultimately recognized and the timing of the recognition of revenue from our backlog.
|
|
Three Months Ended September 30,
|
|
Increase or (Decrease)
|
||||||||||
|
2016
|
|
2015
|
|
Amount
|
Percent
|
|||||||
Revenue
|
$
|
65,384
|
|
|
$
|
67,531
|
|
|
$
|
(2,147
|
)
|
(3.2
|
)%
|
Cost of revenue
|
60,125
|
|
|
75,368
|
|
|
(15,243
|
)
|
(20.2
|
)%
|
|||
Gross profit (loss)
|
5,259
|
|
|
(7,837
|
)
|
|
13,096
|
|
167.1
|
%
|
|||
Gross profit percentage
|
8.0%
|
|
(11.6)%
|
|
|
|
|||||||
General and administrative expenses
|
5,086
|
|
|
3,798
|
|
|
1,288
|
|
33.9
|
%
|
|||
Asset impairment
|
—
|
|
|
6,600
|
|
|
(6,600
|
)
|
n/a
|
|
|||
Operating income
|
173
|
|
|
(18,235
|
)
|
|
18,408
|
|
100.9
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|||||||
Interest expense
|
(110
|
)
|
|
(39
|
)
|
|
(71
|
)
|
|
|
|||
Interest income
|
12
|
|
|
8
|
|
|
4
|
|
|
|
|||
Other income, net
|
599
|
|
|
—
|
|
|
599
|
|
|
|
|||
|
501
|
|
|
(31
|
)
|
|
532
|
|
1,716.1
|
%
|
|||
Net income (loss) before income taxes
|
674
|
|
|
(18,266
|
)
|
|
18,940
|
|
103.7
|
%
|
|||
Income taxes
|
133
|
|
|
(6,129
|
)
|
|
6,262
|
|
102.2
|
%
|
|||
Net income (loss)
|
$
|
541
|
|
|
$
|
(12,137
|
)
|
|
$
|
12,678
|
|
104.5
|
%
|
Fabrication
|
|
Three Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
|
|
$
|
22,311
|
|
|
$
|
32,133
|
|
|
$
|
(9,822
|
)
|
|
(30.6
|
)%
|
Gross profit (loss)
|
|
$
|
532
|
|
|
$
|
(14,009
|
)
|
|
$
|
14,541
|
|
|
103.8
|
%
|
Gross profit percentage
|
|
2.4
|
%
|
|
(43.6
|
)%
|
|
|
|
46.0
|
%
|
||||
General and administrative expenses
|
|
$
|
1,481
|
|
|
$
|
2,138
|
|
|
$
|
(657
|
)
|
|
(30.7
|
)%
|
Asset impairment
|
|
$
|
—
|
|
|
$
|
6,600
|
|
|
$
|
(6,600
|
)
|
|
n/a
|
|
Operating income (loss)
|
|
$
|
(949
|
)
|
|
$
|
(22,747
|
)
|
|
|
|
|
Shipyards
|
|
Three Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
(1)
|
|
$
|
23,060
|
|
|
$
|
12,936
|
|
|
$
|
10,124
|
|
|
78.3
|
%
|
Gross profit
(1)
|
|
$
|
1,877
|
|
|
$
|
1,937
|
|
|
$
|
(60
|
)
|
|
(3.1
|
)%
|
Gross profit percentage
|
|
8.1
|
%
|
|
15.0
|
%
|
|
|
|
(6.9
|
)%
|
||||
General and administrative expenses
|
|
$
|
2,065
|
|
|
$
|
392
|
|
|
$
|
1,673
|
|
|
426.8
|
%
|
Operating income (loss)
(1)
|
|
$
|
(188
|
)
|
|
$
|
1,545
|
|
|
|
|
|
(1)
|
Revenue for the three months ended
September 30, 2016
, includes
$1.5 million
of non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction.
|
Services
|
|
Three Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
|
|
$
|
20,928
|
|
|
$
|
23,487
|
|
|
$
|
(2,559
|
)
|
|
(10.9
|
)%
|
Gross profit
|
|
$
|
2,850
|
|
|
$
|
4,235
|
|
|
$
|
(1,385
|
)
|
|
(32.7
|
)%
|
Gross profit percentage
|
|
13.6
|
%
|
|
18.0
|
%
|
|
|
|
(4.4
|
)%
|
||||
General and administrative expenses
|
|
$
|
1,540
|
|
|
$
|
994
|
|
|
$
|
546
|
|
|
54.9
|
%
|
Operating income
|
|
$
|
1,310
|
|
|
$
|
3,241
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
Increase or (Decrease)
|
||||||||||
|
2016
|
|
2015
|
|
Amount
|
Percent
|
|||||||
Revenue
|
$
|
230,864
|
|
|
$
|
251,102
|
|
|
$
|
(20,238
|
)
|
(8.1
|
)%
|
Cost of revenue
|
205,839
|
|
|
248,686
|
|
|
(42,847
|
)
|
(17.2
|
)%
|
|||
Gross profit
|
25,025
|
|
|
2,416
|
|
|
22,609
|
|
935.8
|
%
|
|||
Gross profit percentage
|
10.8%
|
|
1.0%
|
|
|
|
|||||||
General and administrative expenses
|
14,633
|
|
|
11,817
|
|
|
2,816
|
|
23.8
|
%
|
|||
Asset impairment
|
—
|
|
|
6,600
|
|
|
(6,600
|
)
|
n/a
|
|
|||
Operating income (loss)
|
10,392
|
|
|
(16,001
|
)
|
|
26,393
|
|
164.9
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|||||||
Interest expense
|
(248
|
)
|
|
(126
|
)
|
|
(122
|
)
|
|
|
|||
Interest income
|
20
|
|
|
21
|
|
|
(1
|
)
|
|
|
|||
Other income, net
|
1,039
|
|
|
20
|
|
|
1,019
|
|
|
|
|||
|
811
|
|
|
(85
|
)
|
|
896
|
|
1,054.1
|
%
|
|||
Net income (loss) before income taxes
|
11,203
|
|
|
(16,086
|
)
|
|
27,289
|
|
169.6
|
%
|
|||
Income taxes
|
4,134
|
|
|
(5,389
|
)
|
|
9,523
|
|
176.7
|
%
|
|||
Net income (loss)
|
$
|
7,069
|
|
|
$
|
(10,697
|
)
|
|
$
|
17,766
|
|
166.1
|
%
|
•
|
an increase of stock-based compensation expense of $589,000,
|
•
|
bonuses, and
|
•
|
the LEEVAC transaction; partially offset by
|
•
|
cost cutting efforts implemented as a result of the downturn in the oil and gas industry.
|
Fabrication
|
|
Nine Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
|
|
$
|
70,436
|
|
|
$
|
137,431
|
|
|
$
|
(66,995
|
)
|
|
(48.7
|
)%
|
Gross profit (loss)
|
|
$
|
4,418
|
|
|
$
|
(14,055
|
)
|
|
$
|
18,473
|
|
|
131.4
|
%
|
Gross profit (loss) percentage
|
|
6.3
|
%
|
|
(10.2
|
)%
|
|
|
|
16.5
|
%
|
||||
General and administrative expenses
|
|
$
|
4,479
|
|
|
$
|
7,026
|
|
|
$
|
(2,547
|
)
|
|
(36.3
|
)%
|
Asset impairment
|
|
$
|
—
|
|
|
$
|
6,600
|
|
|
$
|
(6,600
|
)
|
|
n/a
|
|
Operating income (loss)
|
|
$
|
(61
|
)
|
|
$
|
(27,681
|
)
|
|
|
|
|
Shipyards
|
|
Nine Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
(1)
|
|
$
|
86,553
|
|
|
$
|
47,177
|
|
|
$
|
39,376
|
|
|
83.5
|
%
|
Gross profit
(1)
|
|
$
|
9,595
|
|
|
$
|
6,022
|
|
|
$
|
3,573
|
|
|
59.3
|
%
|
Gross profit percentage
|
|
11.1
|
%
|
|
12.8
|
%
|
|
|
|
(1.7
|
)%
|
||||
General and administrative expenses
|
|
$
|
5,875
|
|
|
$
|
1,243
|
|
|
$
|
4,632
|
|
|
372.6
|
%
|
Operating income
(1)
|
|
$
|
3,720
|
|
|
$
|
4,779
|
|
|
|
|
|
(1)
|
Revenue for the
nine months ended
September 30, 2016
, includes
$4.1 million
of non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction.
|
Services
|
|
Nine Months Ended September 30,
|
|
Increase or (Decrease)
|
|||||||||||
|
|
2016
|
|
2015
|
|
Amount
|
|
Percent
|
|||||||
Revenue
|
|
$
|
76,179
|
|
|
$
|
70,987
|
|
|
$
|
5,192
|
|
|
7.3
|
%
|
Gross profit
|
|
$
|
11,012
|
|
|
$
|
10,449
|
|
|
$
|
563
|
|
|
5.4
|
%
|
Gross profit percentage
|
|
14.5
|
%
|
|
14.7
|
%
|
|
|
|
(0.2
|
)%
|
||||
General and administrative expenses
|
|
$
|
4,119
|
|
|
$
|
3,008
|
|
|
$
|
1,111
|
|
|
36.9
|
%
|
Operating income
|
|
$
|
6,893
|
|
|
$
|
7,441
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
(i)
|
minimum net worth requirement of not less than
$250.0 million
plus
|
a)
|
50% of net income earned in each quarter beginning March 31, 2016 and
|
b)
|
100% of proceeds from any issuance of common stock;
|
(ii)
|
debt to EBITDA ratio not greater than 3.0 to 1.0; and
|
(iii)
|
interest coverage ratio not less than 2.0 to 1.0.
|
•
|
extension of one of our dry docks, and
|
•
|
improvements to our newly acquired facilities.
|
2.1
|
|
Asset Purchase Agreement, dated December 23, 2015 by and among Gulf Island Shipyards, LLC, LEEVAC Shipyards, LLC and certain related affiliates, incorporated by reference to Exhibit 2.1 of the Company's Form 8-K filed on December 23, 2015.
|
|
3.1
|
|
Composite Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q filed April 23, 2009.
|
|
3.2
|
|
Bylaws of the Company, as amended and restated through April 26, 2012, incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on April 30, 2012.
|
|
4.1
|
|
Specimen Common Stock Certificate, incorporated by reference to the Company’s Form S-1/A filed March 19, 1997 (Registration No. 333-21863).
|
|
10.1
|
|
Form of Long-Term Performance-Based Cash Award Agreement.
|
|
31
|
|
CEO and CFO Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
|
|
32
|
|
Section 906 Certification furnished pursuant to 18 U.S.C. Section 1350.
|
|
99.1
|
|
Press release issued by the Company on October 27, 2016, incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on October 27, 2016.
|
|
101
|
|
Attached as Exhibit 101 to this report are the following items formatted in XBRL (Extensible Business Reporting Language):
|
|
|
|
|
|
|
|
(i)
|
Consolidated Balance Sheets,
|
|
|
(ii)
|
Consolidated Statements of Operations,
|
|
|
(iii)
|
Consolidated Statement of Changes in Shareholders’ Equity,
|
|
|
(iv)
|
Consolidated Statements of Cash Flows and
|
|
|
(v)
|
Notes to Consolidated Financial Statements.
|
GULF ISLAND FABRICATION, INC.
|
|
|
|
BY:
|
/s/ Kirk J. Meche
|
|
Kirk J. Meche
|
|
President, Chief Executive Officer, Director and Interim Chief Financial Officer, Treasurer and Secretary (Principal Executive Officer and Interim Principal Financial and Accounting Officer)
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
||
2.1
|
|
Asset Purchase Agreement, dated December 23, 2015 by and among Gulf Island Shipyards, LLC, LEEVAC Shipyards, LLC and certain related affiliates, incorporated by reference to Exhibit 2.1 of the Company's Form 8-K filed on December 23, 2015.
|
|
3.1
|
|
Composite Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q filed April 23, 2009.
|
|
3.2
|
|
Bylaws of the Company, as amended and restated through April 26, 2012, incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on April 30, 2012.
|
|
4.1
|
|
Specimen Common Stock Certificate, incorporated by reference to the Company’s Form S-1/A filed March 19, 1997 (Registration No. 333-21863).
|
|
10.1
|
|
Form of Long-Term Performance-Based Cash Award Agreement.
|
|
31
|
|
CEO and CFO Certifications pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
|
|
32
|
|
Section 906 Certification furnished pursuant to 18 U.S.C. Section 1350.
|
|
99.1
|
|
Press release issued by the Company on October 27, 2016, incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on October 27, 2016.
|
|
101
|
|
Attached as Exhibit 101 to this report are the following items formatted in XBRL (Extensible Business Reporting Language):
|
|
|
|
|
|
|
|
(i)
|
Consolidated Balance Sheets,
|
|
|
(ii)
|
Consolidated Statements of Operations,
|
|
|
(iii)
|
Consolidated Statement of Changes in Shareholders’ Equity,
|
|
|
(iv)
|
Consolidated Statements of Cash Flows and
|
|
|
(v)
|
Notes to Consolidated Financial Statements.
|
|
|
Relative TSR
|
|
|
|
|
|
|
|
|
|
Performance
|
|||
Performance Level Compared to Peer Group
|
|
Percentage(%)
|
|||||
|
|
||||||
|
|
Below 30
th
Percentile
|
|
|
0
|
%
|
|
Threshold
|
|
30
th
Percentile
|
|
|
50
|
%
|
|
Target
|
|
60
th
Percentile
|
|
|
100
|
%
|
|
Maximum
|
|
90
th
Percentile or above
|
|
|
150
|
%
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
{Insert name}
|
|
|
Award Recipient
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Gulf Island Fabrication, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Kirk J. Meche
|
Kirk J. Meche
|
President, Chief Executive Officer, Director and Interim Chief Financial Officer, Treasurer and Secretary (Principal Executive Officer and Interim Principal Financial and Accounting Officer)
|
1.
|
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.
|
|
|
|
By:
|
|
/s/ Kirk J. Meche
|
|
|
Kirk J. Meche
|
|
|
President, Chief Executive Officer, Director and Interim Chief Financial Officer, Treasurer and Secretary (Principal Executive Officer and Interim Principal Financial and Accounting Officer)
|
|
|
November 2, 2016
|
|
|