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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 300
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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2017 Annual Report:
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Our annual report for the year ended December 31, 2017, on Form 10-K as filed with the SEC on March 9, 2018.
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ASC:
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FASB Accounting Standards Codification.
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ASU:
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Accounting Standards Update.
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Company:
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Gulf Island Fabrication, Inc. and its consolidated subsidiaries.
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Credit Agreement:
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The Company's $40.0 million revolving credit facility with a third party financial institution maturing June 9, 2019, as amended.
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deck:
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The component of a platform on which development drilling, production, separating, gathering, piping, compression, well support, crew quartering and other functions related to offshore oil and gas development are conducted.
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direct labor hours:
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Hours worked by employees directly involved in the production of the Company’s products. These hours do not include support personnel hours such as maintenance, warehousing and drafting.
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EPC:
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Engineering, procurement and construction phases of a complex project; EPC typically refers to a contract that requires the project management and coordination of these significant activities.
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Exchange Act:
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Securities Exchange Act of 1934, as amended.
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FASB:
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Financial Accounting Standards Board.
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FPSO:
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Floating Production Storage and Offloading vessel. A floating vessel used by the offshore oil and gas industry for the production and processing of hydrocarbons and for the storage of oil.
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GAAP:
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Generally accepted accounting principles in the U.S.
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GOM:
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Gulf of Mexico.
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inland or inshore:
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Inside coastlines, typically in bays, lakes and marshy areas.
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jacket:
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A component of a fixed platform consisting of a tubular steel, braced structure extending from the mudline of the seabed to a point above the water surface. The jacket is anchored with tubular steel pilings driven into the seabed. The jacket supports the deck structure located above the water.
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LIBOR:
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London Inter-Bank Offered Rate.
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MinDOC:
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Minimum Deepwater Operating Concept. A floating production platform designed for stability and dynamic positioning response to waves consisting of three vertical columns arranged in a triangular shape connected to upper and lower pontoon sections.
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modules:
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Fabricated structures that include structural steel, piping, valves, fittings, storage vessels and other equipment that are incorporated into a petrochemical or industrial system. These modules are pre-fabricated at our facilities and then transported to the customer's location for final integration.
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MPSV:
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Multi-Purpose Service Vessel.
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NOL(s):
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Net operating loss(es) that are available to offset future taxable income, subject to certain limitations.
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offshore:
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In unprotected waters outside coastlines.
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OSV:
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Offshore Support Vessel.
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piles:
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Rigid tubular pipes that are driven into the seabed to support platforms.
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platform:
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A structure from which offshore oil and gas development drilling and production are conducted.
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pressure vessel:
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A metal container generally cylindrical or spheroid, capable of withstanding various internal pressure loads.
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SeaOne:
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SeaOne Caribbean, LLC.
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SeaOne Project:
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The engineering, procurement, construction, installation, commissioning and start-up work for SeaOne's Compressed Gas Liquids Caribbean Fuels Supply Project. This project will include execution of engineering, construction and installation of modules for an export facility in Gulfport, Mississippi, and import facilities in the Caribbean and South America.
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SEC:
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U.S. Securities and Exchange Commission.
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skid unit:
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Packaged equipment usually consisting of major production, utility or compression equipment with associated piping and control system.
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South Texas Properties:
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Historically, our Texas North Yard and Texas South Yard properties and equipment located in Aransas Pass and Ingleside, Texas, respectively. The Company sold the Texas South Yard, together with improvements and related machinery and equipment on April 20, 2018. The Texas North Yard, together with improvements and related machinery and equipment is held for sale.
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SPAR:
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Single Point Anchor Reservoir. A floating vessel with a circular cross-section that sits vertically in the water and is used for infield flow lines and associated subsea infrastructure. The SPAR connects subsea production and injection wells for oil and gas production in deepwater environments.
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subsea templates:
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Tubular frames which are placed on the seabed and anchored with piles. Usually a series of oil and gas wells are drilled through these underwater structures.
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Surety
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A financial institution that issues bonds to customers on behalf of the Company for the purpose of providing third-party financial assurance related to the Company's performance of construction contracts.
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T&M:
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Work performed and billed to the customer generally at contracted time and materials rates which can include a mark-up.
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Texas North Yard:
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Our Texas North Yard consists of our fabrication yard located in Aransas Pass, Texas, along the U.S. Intracoastal Waterway approximately three miles north of the Corpus Christi Ship Channel. This property is situated on approximately 196 acres. Our Texas North Yard, together with its improvements and related machinery and equipment is held for sale.
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Texas South Yard:
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Historically, our Texas South Yard consisted of our fabrication yard located in Ingleside, Texas on the northwest corner of the Corpus Christi Ship Channel at the intersection of the Corpus Christi Ship Channel and the U.S. Intracoastal Waterway. The Company sold this property on April 20, 2018.
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this Report
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This quarterly report filed on Form 10-Q for the quarterly period ended June 30, 2018.
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TLP:
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Tension Leg Platform. A floating hull and deck anchored by vertical tensioned cables or pipes connected to pilings driven into the seabed. A tension leg platform is typically used in water depths exceeding 1,200 feet.
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June 30,
2018 |
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December 31,
2017 |
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(Unaudited)
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(Audited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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32,004
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$
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8,983
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Held-to-maturity, short-term investments
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7,481
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—
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Contracts receivable and retainage, net
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31,928
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28,466
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Contracts in progress
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36,471
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28,373
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Insurance receivable
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7,197
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—
|
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Prepaid expenses and other assets
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4,357
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3,833
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Inventory
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5,557
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4,933
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Assets held for sale
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43,797
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104,576
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Total current assets
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168,792
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179,164
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Property, plant and equipment, net
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81,819
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88,899
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Other assets
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6,078
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2,777
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Total assets
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$
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256,689
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$
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270,840
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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15,965
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$
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18,375
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Advance billings on contracts
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4,165
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5,136
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|
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Deferred revenue, current
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928
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4,676
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Accrued contract losses
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5,999
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|
|
7,618
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Accrued expenses and other liabilities
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9,062
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|
|
12,741
|
|
||
Income tax payable
|
—
|
|
|
119
|
|
||
Total current liabilities
|
36,119
|
|
|
48,665
|
|
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Deferred revenue, noncurrent
|
2,489
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|
|
769
|
|
||
Other liabilities
|
2,691
|
|
|
1,913
|
|
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Total liabilities
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41,299
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|
|
51,347
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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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Common stock, no par value, 20,000,000 shares authorized, 15,043,068 issued and outstanding at June 30, 2018, and 14,910,498 at December 31, 2017, respectively
|
10,888
|
|
|
10,823
|
|
||
Additional paid-in capital
|
101,035
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|
|
100,456
|
|
||
Retained earnings
|
103,467
|
|
|
108,214
|
|
||
Total shareholders’ equity
|
215,390
|
|
|
219,493
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|
||
Total liabilities and shareholders’ equity
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$
|
256,689
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|
|
$
|
270,840
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
54,014
|
|
|
$
|
45,868
|
|
|
$
|
111,304
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|
|
$
|
83,860
|
|
Cost of revenue
|
54,713
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|
|
57,488
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|
|
111,324
|
|
|
100,378
|
|
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Gross loss
|
(699
|
)
|
|
(11,620
|
)
|
|
(20
|
)
|
|
(16,518
|
)
|
||||
General and administrative expenses
|
5,092
|
|
|
4,640
|
|
|
9,801
|
|
|
8,570
|
|
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Asset impairment
|
610
|
|
|
—
|
|
|
1,360
|
|
|
389
|
|
||||
Operating loss
|
(6,401
|
)
|
|
(16,260
|
)
|
|
(11,181
|
)
|
|
(25,477
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(92
|
)
|
|
(146
|
)
|
|
(238
|
)
|
|
(205
|
)
|
||||
Other income (expense), net
|
7,125
|
|
|
(266
|
)
|
|
6,814
|
|
|
(257
|
)
|
||||
Total other income (expense)
|
7,033
|
|
|
(412
|
)
|
|
6,576
|
|
|
(462
|
)
|
||||
Net income (loss) before income taxes
|
632
|
|
|
(16,672
|
)
|
|
(4,605
|
)
|
|
(25,939
|
)
|
||||
Income tax expense (benefit)
|
83
|
|
|
(5,749
|
)
|
|
142
|
|
|
(8,561
|
)
|
||||
Net income (loss)
|
$
|
549
|
|
|
$
|
(10,923
|
)
|
|
$
|
(4,747
|
)
|
|
$
|
(17,378
|
)
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted income (loss) per share - common shareholders
|
$
|
0.04
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(1.17
|
)
|
Cash dividends declared per common share
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Total
Shareholders’
Equity
|
||||||||||||
|
Shares
|
|
Amount
|
|
|||||||||||||||
Balance at January 1, 2018
|
14,910,498
|
|
|
$
|
10,823
|
|
|
$
|
100,456
|
|
|
$
|
108,214
|
|
|
$
|
219,493
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,747
|
)
|
|
(4,747
|
)
|
|||||
Vesting of restricted stock
|
132,570
|
|
|
(79
|
)
|
|
(708
|
)
|
|
—
|
|
|
(787
|
)
|
|||||
Compensation expense - restricted stock
|
—
|
|
|
144
|
|
|
1,287
|
|
|
—
|
|
|
1,431
|
|
|||||
Balance at June 30, 2018
|
15,043,068
|
|
|
$
|
10,888
|
|
|
$
|
101,035
|
|
|
$
|
103,467
|
|
|
$
|
215,390
|
|
|
Six Months Ended
June 30, |
||||||
|
|||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(4,747
|
)
|
|
$
|
(17,378
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Bad debt expense
|
8
|
|
|
17
|
|
||
Depreciation and amortization
|
5,360
|
|
|
7,476
|
|
||
Amortization of deferred revenue
|
(489
|
)
|
|
(1,887
|
)
|
||
Asset impairment
|
1,360
|
|
|
389
|
|
||
(Gain) loss on sale of assets, net
|
(3,599
|
)
|
|
259
|
|
||
Gain on insurance recoveries, net
|
(3,342
|
)
|
|
—
|
|
||
Deferred income taxes
|
—
|
|
|
(8,784
|
)
|
||
Compensation expense - restricted stock
|
1,431
|
|
|
1,583
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Contracts receivable and retainage, net
|
(6,438
|
)
|
|
(17,927
|
)
|
||
Contracts in progress
|
(8,098
|
)
|
|
(4,814
|
)
|
||
Prepaid expenses, inventory, and other assets
|
(1,693
|
)
|
|
303
|
|
||
Accounts payable
|
(2,410
|
)
|
|
10,308
|
|
||
Advance billings on contracts
|
(971
|
)
|
|
4,665
|
|
||
Deferred revenue
|
(1,538
|
)
|
|
(5,078
|
)
|
||
Deferred compensation
|
726
|
|
|
393
|
|
||
Accrued expenses and other liabilities
|
(436
|
)
|
|
(795
|
)
|
||
Accrued contract losses
|
(1,620
|
)
|
|
3,127
|
|
||
Current income taxes and other
|
69
|
|
|
207
|
|
||
Net cash used in operating activities
|
(26,427
|
)
|
|
(27,936
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(891
|
)
|
|
(1,824
|
)
|
||
Purchase of held to maturity, short-term investments
|
(7,474
|
)
|
|
—
|
|
||
Proceeds from the sale of property, plant and equipment
|
56,446
|
|
|
2,120
|
|
||
Recoveries from insurance claims
|
2,165
|
|
|
—
|
|
||
Net cash provided by investing activities
|
50,246
|
|
|
296
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Tax payments made on behalf of employees from withheld, vested shares of common stock
|
(787
|
)
|
|
(884
|
)
|
||
Payment of financing cost
|
(11
|
)
|
|
(61
|
)
|
||
Payments of dividends on common stock
|
—
|
|
|
(299
|
)
|
||
Proceeds received from borrowings under our Credit Agreement
|
15,000
|
|
|
—
|
|
||
Repayment of borrowings under our Credit Agreement
|
(15,000
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(798
|
)
|
|
(1,244
|
)
|
||
Net change in cash and cash equivalents
|
23,021
|
|
|
(28,884
|
)
|
||
Cash and cash equivalents at beginning of period
|
8,983
|
|
|
51,167
|
|
||
Cash and cash equivalents at end of period
|
$
|
32,004
|
|
|
$
|
22,283
|
|
•
|
Clean-up and repair related costs of
$1.6 million
, less deductibles applied of approximately
$0.3 million
that we have incurred since August 25, 2017, through June 30, 2018.
|
•
|
A gain on insurance recoveries of
$3.6 million
included within other income (expense) on our Consolidated Statement of Operations that was recorded during the second quarter of 2018 primarily related to
two
buildings that were declared a total loss and
five
damaged cranes that were sold during the second quarter of 2018.
|
•
|
Insurance recoveries of
$8.9 million
which offset impairments of damaged assets at our Texas North Yard. Because we do not intend to repair the remaining buildings, improvements and related equipment, we recorded an impairment of
$8.9 million
,
$5.1 million
of which was recorded during the three months ended March 31, 2018. Our impairment was based upon our best estimate of the decline in the fair value of the property and related equipment. The insurance recovery fully offset this amount.
|
|
|
|
|
|
|
|||||||
Assets
|
|
Texas North Yard
|
|
Shipyard Division Assets
|
|
Consolidated
|
||||||
Land
|
|
$
|
2,157
|
|
|
$
|
—
|
|
|
$
|
2,157
|
|
Buildings and improvements
|
|
28,368
|
|
|
—
|
|
|
28,368
|
|
|||
Machinery and equipment
|
|
55,170
|
|
|
2,187
|
|
|
57,357
|
|
|||
Less: accumulated depreciation
|
|
(43,787
|
)
|
|
(298
|
)
|
|
(44,085
|
)
|
|||
Total assets held for sale
|
|
$
|
41,908
|
|
|
$
|
1,889
|
|
|
$
|
43,797
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
EPC
|
|
Eliminations
|
|
Total
|
||||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Lump sum and fixed-price construction
(1)
|
$
|
8,590
|
|
|
$
|
21,260
|
|
|
$
|
11,718
|
|
|
$
|
—
|
|
|
$
|
(1,283
|
)
|
|
$
|
40,285
|
|
|
Service contract revenue
(2)
|
—
|
|
|
2,360
|
|
|
10,487
|
|
|
—
|
|
|
—
|
|
|
12,847
|
|
|||||||
Other
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
882
|
|
|
—
|
|
|
882
|
|
|||||||
Total
|
|
$
|
8,590
|
|
|
$
|
23,620
|
|
|
$
|
22,205
|
|
|
$
|
882
|
|
|
$
|
(1,283
|
)
|
|
$
|
54,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
EPC
|
|
Eliminations
|
|
Total
|
||||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Lump sum and fixed-price construction
(1)
|
$
|
13,990
|
|
|
$
|
17,021
|
|
|
$
|
9,103
|
|
|
$
|
—
|
|
|
$
|
(1,821
|
)
|
|
$
|
38,293
|
|
|
Service contract revenue
(2)
|
—
|
|
|
1,282
|
|
|
6,293
|
|
|
—
|
|
|
—
|
|
|
7,575
|
|
|||||||
Other
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
|
$
|
13,990
|
|
|
$
|
18,303
|
|
|
$
|
15,396
|
|
|
$
|
—
|
|
|
$
|
(1,821
|
)
|
|
$
|
45,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
EPC
|
|
Eliminations
|
|
Total
|
||||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Lump sum and fixed-price construction
(1)
|
$
|
25,860
|
|
|
$
|
38,481
|
|
|
$
|
23,004
|
|
|
$
|
—
|
|
|
$
|
(1,771
|
)
|
|
$
|
85,574
|
|
|
Service contract revenue
(2)
|
—
|
|
|
3,704
|
|
|
21,071
|
|
|
—
|
|
|
—
|
|
|
24,775
|
|
|||||||
Other
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
955
|
|
|
—
|
|
|
955
|
|
|||||||
Total
|
|
$
|
25,860
|
|
|
$
|
42,185
|
|
|
$
|
44,075
|
|
|
$
|
955
|
|
|
$
|
(1,771
|
)
|
|
$
|
111,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||||
|
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
EPC
|
|
Eliminations
|
|
Total
|
||||||||||||
Contract Type
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Lump sum and fixed-price construction
(1)
|
$
|
24,199
|
|
|
$
|
33,727
|
|
|
$
|
14,822
|
|
|
$
|
—
|
|
|
$
|
(3,170
|
)
|
|
$
|
69,578
|
|
|
Service contract revenue
(2)
|
—
|
|
|
2,997
|
|
|
11,285
|
|
|
—
|
|
|
—
|
|
|
14,282
|
|
|||||||
Other
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
|
$
|
24,199
|
|
|
$
|
36,724
|
|
|
$
|
26,107
|
|
|
$
|
—
|
|
|
$
|
(3,170
|
)
|
|
$
|
83,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Segment
|
Performance Obligations as of June 30, 2018
|
||
Fabrication
|
$
|
1,871
|
|
Shipyard
(1)
|
295,506
|
|
|
Services
|
7,607
|
|
|
EPC
|
1,618
|
|
|
Intersegment eliminations
|
(193
|
)
|
|
Total
|
$
|
306,409
|
|
|
|
Year
|
|
$'s
|
||
Remainder of 2018
|
|
$
|
86,378
|
|
2019
|
|
140,831
|
|
|
2020
|
|
69,890
|
|
|
2021
|
|
8,645
|
|
|
2022
|
|
665
|
|
|
Total
|
|
$
|
306,409
|
|
|
|
|
•
|
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; and
|
•
|
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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
549
|
|
|
$
|
(10,923
|
)
|
|
$
|
(4,747
|
)
|
|
$
|
(17,378
|
)
|
Less: Distributed and undistributed loss (unvested restricted stock)
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
(87
|
)
|
||||
Net income (loss) attributable to common shareholders
|
$
|
549
|
|
|
$
|
(10,870
|
)
|
|
$
|
(4,747
|
)
|
|
$
|
(17,291
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares
(1)
|
15,043
|
|
|
14,851
|
|
|
15,004
|
|
|
14,805
|
|
||||
Basic and diluted income (loss per share - common shareholders
|
$
|
0.04
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(1.17
|
)
|
i.
|
Ratio of current assets to current liabilities of not less than
1.25
:1.00;
|
ii.
|
Minimum tangible net worth requirement of at least the sum of:
|
a)
|
$185.0 million
, plus
|
b)
|
An amount equal to
50%
of consolidated net income for each fiscal quarter ending after June 30, 2017, including
50%
of any gain attributable to the sale of all or substantially all of our South Texas Properties (with no deduction for a net loss in any such fiscal quarter), plus
|
c)
|
100%
of the proceeds of any issuance of any stock or other equity after deducting of any fees, commissions, expenses and other costs incurred in such offering; and
|
iii.
|
Ratio of funded debt to tangible net worth of not more than
0.50
:1.00.
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||
|
Fabrication
|
Shipyard
|
Services
|
EPC
|
Corporate
|
Eliminations
|
Consolidated
|
||||||||||||||
Revenue
|
$
|
8,590
|
|
$
|
23,620
|
|
$
|
22,205
|
|
$
|
882
|
|
$
|
—
|
|
$
|
(1,283
|
)
|
$
|
54,014
|
|
Gross profit (loss)
|
(1,667
|
)
|
(2,776
|
)
|
3,585
|
|
543
|
|
(384
|
)
|
—
|
|
(699
|
)
|
|||||||
Operating income (loss)
|
(3,227
|
)
|
(3,374
|
)
|
2,823
|
|
58
|
|
(2,681
|
)
|
—
|
|
(6,401
|
)
|
|||||||
Total assets
(1)
|
101,498
|
|
88,305
|
|
35,197
|
|
888
|
|
30,801
|
|
—
|
|
256,689
|
|
|||||||
Depreciation and amortization expense
|
1,047
|
|
1,051
|
|
383
|
|
—
|
|
130
|
|
—
|
|
2,611
|
|
|||||||
Capital expenditures
|
—
|
|
653
|
|
98
|
|
—
|
|
69
|
|
—
|
|
820
|
|
|||||||
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|||||||||||||||||||
|
Fabrication
|
Shipyard
|
Services
|
EPC
|
Corporate
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenue
|
$
|
13,990
|
|
$
|
18,303
|
|
$
|
15,396
|
|
—
|
|
$
|
—
|
|
$
|
(1,821
|
)
|
$
|
45,868
|
|
Gross profit (loss)
|
1,931
|
|
(13,851
|
)
|
390
|
|
—
|
|
(90
|
)
|
—
|
|
(11,620
|
)
|
||||||
Operating income (loss)
|
1,098
|
|
(14,834
|
)
|
(257
|
)
|
—
|
|
(2,267
|
)
|
—
|
|
(16,260
|
)
|
||||||
Total assets
(1)
|
164,211
|
|
98,393
|
|
30,592
|
|
—
|
|
14,390
|
|
—
|
|
307,586
|
|
||||||
Depreciation and amortization expense
|
1,152
|
|
995
|
|
422
|
|
—
|
|
207
|
|
—
|
|
2,776
|
|
||||||
Capital expenditures
|
746
|
|
546
|
|
106
|
|
—
|
|
35
|
|
—
|
|
1,433
|
|
||||||
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Fabrication
|
Shipyard
|
Services
|
EPC
|
Corporate
|
Eliminations
|
Consolidated
|
||||||||||||||
Revenue
|
$
|
25,860
|
|
$
|
42,185
|
|
$
|
44,075
|
|
$
|
955
|
|
$
|
—
|
|
$
|
(1,771
|
)
|
$
|
111,304
|
|
Gross profit (loss)
|
(1,886
|
)
|
(3,799
|
)
|
6,199
|
|
235
|
|
(769
|
)
|
—
|
|
(20
|
)
|
|||||||
Operating income (loss)
|
(4,821
|
)
|
(5,192
|
)
|
4,703
|
|
(667
|
)
|
(5,204
|
)
|
—
|
|
(11,181
|
)
|
|||||||
Total assets
(1)
|
101,498
|
|
88,305
|
|
35,197
|
|
888
|
|
30,801
|
|
—
|
|
256,689
|
|
|||||||
Depreciation and amortization expense
|
2,196
|
|
2,120
|
|
776
|
|
—
|
|
268
|
|
—
|
|
5,360
|
|
|||||||
Capital expenditures
|
—
|
|
659
|
|
163
|
|
—
|
|
69
|
|
—
|
|
891
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||||
|
Fabrication
|
Shipyard
|
Services
|
EPC
|
Corporate
|
Eliminations
|
Consolidated
|
||||||||||||||
Revenue
|
$
|
24,199
|
|
$
|
36,724
|
|
$
|
26,107
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(3,170
|
)
|
$
|
83,860
|
|
Gross profit (loss)
|
(1,034
|
)
|
(15,556
|
)
|
423
|
|
—
|
|
(351
|
)
|
—
|
|
(16,518
|
)
|
|||||||
Operating loss
|
(2,688
|
)
|
(17,892
|
)
|
(890
|
)
|
—
|
|
(4,007
|
)
|
—
|
|
(25,477
|
)
|
|||||||
Total assets
(1)
|
164,211
|
|
98,393
|
|
30,592
|
|
—
|
|
14,390
|
|
—
|
|
307,586
|
|
|||||||
Depreciation and amortization expense
|
4,287
|
|
2,004
|
|
854
|
|
—
|
|
331
|
|
—
|
|
7,476
|
|
|||||||
Capital expenditures
|
848
|
|
818
|
|
106
|
|
—
|
|
52
|
|
—
|
|
1,824
|
|
•
|
Clean-up and repair related costs of
$1.6 million
, less deductibles applied of approximately
$0.3 million
that we have incurred since August 25, 2017 through June 30, 2018.
|
•
|
A gain on insurance recoveries of
$3.6 million
included within other income (expense) on our Consolidated Statement of Operations that was recorded during the second quarter of 2018 primarily related to
two
buildings that were declared a total loss and
five
damaged cranes that were sold during the second quarter of 2018.
|
•
|
Insurance recoveries of
$8.9 million
which offset impairment of damaged assets at the Texas North Yard. Because we do not intend to repair the remaining buildings, improvements and related equipment, we recorded impairment of
$8.9 million
,
$5.1 million
of which was recorded during the three months ended March 31, 2018. Our impairment was based
|
•
|
During the first quarter of 2018, we executed a contract for the construction and delivery of one towing, salvage and rescue ship ("T-ATS") vessel with the U.S. Navy for
$63.6 million
with an option for seven additional vessels which was subsequently protested by one of the unsuccessful bidders. On July 16, 2018, we were notified that the award was upheld by the U.S. Government Accountability Office and thus given a notification to proceed. We were recently notified that this unsuccessful bidder has filed a subsequent protest with the Department of Justice. We have been granted a partial stay which allows us to proceed with design development, planning, scheduling and material ordering leading up to the start of construction. Actual construction of the vessel cannot begin until a final ruling is issued by the Department of Justice. We are in process of working with the U.S. Navy to re-establish a timeline under this contract.
|
•
|
We signed change orders on May 1, 2018, with two different customers. Each change order was for the construction of one additional harbor tug boat for approximately
$13.0 million
per boat. Each customer has an additional option for one more harbor tug boat. We are now constructing a total of five harbor tug boats for each customer. If the additional options are exercised, we will build a total of 12 harbor tug boats for these two customers.
|
•
|
On June 11, 2018, one of our customers exercised their option for a second, newbuild construction of an additional Regional Class Research Vessel ("RCRV") for $67.6 million. The first vessel was awarded in July of 2017 which included options for two additional vessels.
|
•
|
The level of new construction and fabrication projects in the new markets we are pursuing including petrochemical facilities and offshore wind;
|
•
|
Our successful execution of an agreement with SeaOne and the ability of SeaOne to obtain financing;
|
•
|
Continued growth within our Shipyard and Services divisions;
|
•
|
Our ability to win contracts through competitive bidding or alliance/partnering arrangements;
|
•
|
Our ability to execute projects in accordance with our cost estimates and successfully manage them through completion; and
|
•
|
Our ability to resolve a dispute over purported
with
a Shipyard customer related to the construction of two MPSVs.
|
|
June 30, 2018
|
||||||||||||||||||||||
|
Fabrication
|
|
Shipyard
|
|
Services
|
|
EPC
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
Future performance obligations required under fixed-price contracts under Topic 606 of ASC
|
$
|
1,871
|
|
|
$
|
295,506
|
|
|
$
|
7,607
|
|
|
$
|
1,618
|
|
|
$
|
(193
|
)
|
|
$
|
306,409
|
|
Contracts signed subsequent to June 30, 2018
|
—
|
|
|
—
|
|
|
9,788
|
|
|
1,200
|
|
|
—
|
|
|
10,988
|
|
||||||
Signed contracts under purported termination
(1)
|
—
|
|
|
30,157
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,157
|
|
||||||
Backlog
|
$
|
1,871
|
|
|
$
|
325,663
|
|
|
$
|
17,394
|
|
|
$
|
2,818
|
|
|
$
|
(193
|
)
|
|
$
|
347,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes backlog for a customer for which we have received a notice of purported termination within our Shipyard Division related to the construction of two MPSVs. We dispute the purported termination and disagree with the customer’s reasons for same. We cannot guarantee that we will be able to favorably negotiate completion of the MPSVs with this customer. See Note 9 of the Notes to Consolidated Financial Statements.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||
Division
|
$'s
|
Labor hours
|
|
$'s
|
Labor hours
|
||||||
Fabrication
|
$
|
1,871
|
|
12
|
|
|
$
|
15,771
|
|
150
|
|
Shipyard
|
325,663
|
|
1,784
|
|
|
184,035
|
|
1,104
|
|
||
Services
|
17,394
|
|
83
|
|
|
23,181
|
|
290
|
|
||
EPC
|
2,818
|
|
—
|
|
|
—
|
|
—
|
|
||
Intersegment eliminations
|
(193
|
)
|
—
|
|
|
(370
|
)
|
—
|
|
||
Total backlog
|
$
|
347,553
|
|
1,879
|
|
|
$
|
222,617
|
|
1,544
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
Number
|
Percentage
|
|
Number
|
Percentage
|
||
Major customers
(1)
|
four
|
77.8%
|
|
four
|
73.0%
|
||
|
|
|
|
|
|
||
Backlog is expected to be recognized in revenue during:
(2)
|
$'s
|
Percentage
|
|
|
|
||
2018
|
$
|
97,366
|
|
28.0%
|
|
|
|
2019
|
170,987
|
|
49.2%
|
|
|
|
|
2020
|
69,890
|
|
20.1%
|
|
|
|
|
2021
|
8,645
|
|
2.5%
|
|
|
|
|
2022
|
665
|
|
0.2%
|
|
|
|
|
Total
|
$
|
347,553
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
(1)
|
At
June 30, 2018
, projects for our
four
largest customers in terms of revenue backlog consisted of:
|
(i)
|
newbuild construction of five harbor tugs for one customer (to be completed in 2018 through 2020);
|
(ii)
|
newbuild construction of five harbor tugs for one customer (separate from above) (to be completed in 2018 through 2020);
|
(iii)
|
newbuild construction of two offshore marine research vessels (to be completed in 2020 and 2022); and
|
(iv)
|
newbuild construction of one T-ATS vessel (to be completed in 2021). This contract was protested by one of the unsuccessful bidders. On July 16, 2018, we were notified that the award was upheld by the U.S. Government Accountability Office and thus given a notification to proceed. We were recently notified that this unsuccessful bidder has filed a subsequent protest with the Department of Justice. We have been granted a partial stay which allows us to proceed with design development, planning, scheduling and material ordering leading up to the start of construction.
|
(2)
|
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 June 30,
|
|
Increase or (Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
Amount
|
Percent
|
||||||
Revenue
|
$
|
54,014
|
|
|
$
|
45,868
|
|
|
$
|
8,146
|
|
17.8%
|
Cost of revenue
|
54,713
|
|
|
57,488
|
|
|
(2,775
|
)
|
(4.8)%
|
|||
Gross loss
|
(699
|
)
|
|
(11,620
|
)
|
|
10,921
|
|
94.0%
|
|||
Gross loss percentage
|
(1.3
|
)%
|
|
(25.3
|
)%
|
|
|
|
||||
General and administrative expenses
|
5,092
|
|
|
4,640
|
|
|
452
|
|
9.7%
|
|||
Asset impairment
|
610
|
|
|
—
|
|
|
610
|
|
100.0%
|
|||
Operating loss
|
(6,401
|
)
|
|
(16,260
|
)
|
|
9,859
|
|
60.6%
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(92
|
)
|
|
(146
|
)
|
|
54
|
|
37.0%
|
|||
Other income (expense), net
|
7,125
|
|
|
(266
|
)
|
|
7,391
|
|
2,778.6%
|
|||
Total other income (expense)
|
7,033
|
|
|
(412
|
)
|
|
7,445
|
|
1,807.0%
|
|||
Net income (loss) before income taxes
|
632
|
|
|
(16,672
|
)
|
|
17,304
|
|
103.8%
|
|||
Income tax expense (benefit)
|
83
|
|
|
(5,749
|
)
|
|
5,832
|
|
101.4%
|
|||
Net income (loss)
|
$
|
549
|
|
|
$
|
(10,923
|
)
|
|
$
|
11,472
|
|
105.0%
|
•
|
An increase of
$6.8 million
within our Services Division from additional demand for offshore oil and gas service related projects; and
|
•
|
An increase of
$5.3 million
within our Shipyard Division related to the newbuild construction of ten harbor tug vessels and an offshore marine research vessel which were not under construction during the second quarter of 2017 and $10.2 million in contract losses recorded during the
three months ended June 30, 2017
, which reduced our measurement of revenue progress under percentage of completion accounting for the second quarter of 2017. Additionally, we re-commenced newbuild construction for the second of two OSV's during the fourth quarter of 2017 which was in process in the second quarter of 2018 but was suspended during the second quarter of 2017.
|
•
|
Build-up of additional personnel for our newly created EPC Division in anticipation of the SeaOne Project;
|
•
|
Increased legal and advisory fees related to customer disputes, strategic planning and diversification of our business; and
|
•
|
Increased employee incentives accruals related to our safety incentive program and higher employee profitability incentives within our Services Division.
|
Fabrication
|
|
Three Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
8,590
|
|
|
$
|
13,990
|
|
|
$
|
(5,400
|
)
|
|
(38.6)%
|
Gross profit (loss)
|
|
(1,667
|
)
|
|
1,931
|
|
|
(3,598
|
)
|
|
(186.3)%
|
|||
Gross profit (loss) percentage
|
|
(19.4
|
)%
|
|
13.8
|
%
|
|
|
|
|
||||
General and administrative expenses
|
|
951
|
|
|
833
|
|
|
118
|
|
|
14.2%
|
|||
Asset impairment
|
|
610
|
|
|
—
|
|
|
610
|
|
|
100.0%
|
|||
Operating income (loss)
|
|
(3,227
|
)
|
|
1,098
|
|
|
(4,325
|
)
|
|
|
Shipyard
|
|
Three Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
(1)
|
|
$
|
23,620
|
|
|
$
|
18,303
|
|
|
$
|
5,317
|
|
|
29.0%
|
Gross loss
(1)
|
|
(2,776
|
)
|
|
(13,851
|
)
|
|
11,075
|
|
|
80.0%
|
|||
Gross loss percentage
|
|
(11.8
|
)%
|
|
(75.7
|
)%
|
|
|
|
|
||||
General and administrative expenses
|
|
597
|
|
|
983
|
|
|
(386
|
)
|
|
(39.3)%
|
|||
Operating loss
(1)
|
|
(3,374
|
)
|
|
(14,834
|
)
|
|
11,460
|
|
|
|
(1)
|
Revenue for the
three months ended June 30, 2018
and
2017
, includes
$0.1 million
and
$0.3 million
of non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction, respectively.
|
•
|
$10.2 million in contract losses recorded during the
three months ended June 30, 2017
, related to cost overruns and re-work identified on the two contracts relating to the construction of two MPSVs;
|
•
|
holding and closing costs during the
three months ended June 30, 2017
, related to our former Prospect shipyard. We terminated the lease of this facility effective December 31, 2017; and
|
•
|
holding costs during the
three months ended June 30, 2017
related to a completed OSV that was delivered on February 6, 2017, but refused by our customer as well as the suspension of work on the second OSV vessel. We resolved our disputes with our OSV customer during the fourth quarter of 2017 and construction of the second OSV re-commenced. We subsequently delivered the second OSV on July 31, 2018.
|
Services
|
|
Three Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
22,205
|
|
|
$
|
15,396
|
|
|
$
|
6,809
|
|
|
44.2%
|
Gross profit
|
|
3,585
|
|
|
390
|
|
|
3,195
|
|
|
819.2%
|
|||
Gross profit percentage
|
|
16.1
|
%
|
|
2.5
|
%
|
|
|
|
|
||||
General and administrative expenses
|
|
762
|
|
|
647
|
|
|
115
|
|
|
17.8%
|
|||
Operating income (loss)
|
|
2,823
|
|
|
(257
|
)
|
|
3,080
|
|
|
|
EPC
|
|
Three Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
882
|
|
|
$
|
—
|
|
|
$
|
882
|
|
|
100.0%
|
Gross profit
|
|
543
|
|
|
—
|
|
|
543
|
|
|
100.0%
|
|||
Gross profit percentage
|
|
61.6
|
%
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expenses
|
|
485
|
|
|
—
|
|
|
485
|
|
|
100.0%
|
|||
Operating income
|
|
58
|
|
|
—
|
|
|
58
|
|
|
|
Corporate
|
|
Three Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Gross loss
|
|
(384
|
)
|
|
(90
|
)
|
|
(294
|
)
|
|
(326.7)%
|
|||
Gross loss percentage
|
|
n/a
|
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expenses
|
|
2,297
|
|
|
2,177
|
|
|
120
|
|
|
5.5%
|
|||
Operating loss
|
|
(2,681
|
)
|
|
(2,267
|
)
|
|
(414
|
)
|
|
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
Amount
|
Percent
|
||||||
Revenue
|
$
|
111,304
|
|
|
$
|
83,860
|
|
|
$
|
27,444
|
|
32.7%
|
Cost of revenue
|
111,324
|
|
|
100,378
|
|
|
10,946
|
|
10.9%
|
|||
Gross loss
|
(20
|
)
|
|
(16,518
|
)
|
|
16,498
|
|
99.9%
|
|||
Gross profit percentage
|
—
|
%
|
|
(19.7
|
)%
|
|
|
|
||||
General and administrative expenses
|
9,801
|
|
|
8,570
|
|
|
1,231
|
|
14.4%
|
|||
Asset impairment
|
1,360
|
|
|
389
|
|
|
971
|
|
249.6%
|
|||
Operating loss
|
(11,181
|
)
|
|
(25,477
|
)
|
|
14,296
|
|
56.1%
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(238
|
)
|
|
(205
|
)
|
|
(33
|
)
|
(16.1)%
|
|||
Other income (expense), net
|
6,814
|
|
|
(257
|
)
|
|
7,071
|
|
2,751.4%
|
|||
Total other income (expense)
|
6,576
|
|
|
(462
|
)
|
|
7,038
|
|
1,523.4%
|
|||
Net loss before income taxes
|
(4,605
|
)
|
|
(25,939
|
)
|
|
21,334
|
|
82.2%
|
|||
Income tax expense (benefit)
|
142
|
|
|
(8,561
|
)
|
|
8,703
|
|
101.7%
|
|||
Net loss
|
$
|
(4,747
|
)
|
|
$
|
(17,378
|
)
|
|
$
|
12,631
|
|
72.7%
|
•
|
An increase of
$1.7 million
within our Fabrication Division primarily attributable to the construction and completion of four modules for a petrochemical plant;
|
•
|
An increase of
$5.5 million
within our Shipyard Division primarily related to construction of ten harbor tug vessels and an offshore marine research vessel which were not under construction during the first half of 2017 and $10.6 million in contract losses recorded during the
six months ended June 30, 2017
, which reduced our measure of revenue progress under percentage of completion accounting;
|
•
|
Additionally, we re-commenced newbuild construction for the second of two OSV's during the fourth quarter of 2017, which continued through the first half of 2018 but had been suspended during the second quarter of 2017; and
|
•
|
An increase of
$18.0 million
within our Services Division from additional demand for offshore oil and gas service related projects.
|
•
|
Build-up of additional personnel for our newly created EPC Division;
|
•
|
Increased legal and advisory fees related to customer disputes, strategic planning and diversification of our business; and
|
•
|
Increased employee incentive accruals for all divisions related to our safety incentive program and higher employee profitability incentives within our Services Division.
|
Fabrication
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
25,860
|
|
|
$
|
24,199
|
|
|
$
|
1,661
|
|
|
6.9%
|
Gross loss
|
|
(1,886
|
)
|
|
(1,034
|
)
|
|
(852
|
)
|
|
(82.4)%
|
|||
Gross loss percentage
|
|
(7.3
|
)%
|
|
(4.3
|
)%
|
|
|
|
|
||||
General and administrative expenses
|
|
1,575
|
|
|
1,654
|
|
|
(79
|
)
|
|
(4.8)%
|
|||
Asset impairment
|
|
1,360
|
|
|
—
|
|
|
1,360
|
|
|
100.0%
|
|||
Operating loss
|
|
(4,821
|
)
|
|
(2,688
|
)
|
|
(2,133
|
)
|
|
|
Shipyard
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
(1)
|
|
$
|
42,185
|
|
|
$
|
36,724
|
|
|
$
|
5,461
|
|
|
14.9%
|
Gross loss
(1)
|
|
(3,799
|
)
|
|
(15,556
|
)
|
|
11,757
|
|
|
75.6%
|
|||
Gross loss percentage
|
|
(9.0
|
)%
|
|
(42.4
|
)%
|
|
|
|
|
||||
General and administrative expenses
|
|
1,393
|
|
|
1,947
|
|
|
(554
|
)
|
|
(28.5)%
|
|||
Asset impairment
|
|
—
|
|
|
389
|
|
|
(389
|
)
|
|
(100.0)%
|
|||
Operating loss
(1)
|
|
(5,192
|
)
|
|
(17,892
|
)
|
|
12,700
|
|
|
|
(1)
|
Revenue for the
six months ended June 30, 2018
, and
2017
, includes
$0.5 million
and
$1.9 million
, respectively, of non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction.
|
•
|
$10.6 million in contract losses related to cost overruns and re-work that was identified and recorded during the
six months ended June 30, 2017
relating to the construction of two MPSVs;
|
•
|
Holding and closing costs during the
six months ended June 30, 2017
, related to our Prospect shipyard. We terminated the lease of this facility effective December 31, 2017; and
|
•
|
Holding costs during the
six months ended June 30, 2017
, related to a completed OSV that was delivered on February 6, 2017, but refused by our customer as well as the suspension of work on the second OSV vessel. We resolved our disputes with our OSV customer during the fourth quarter of 2017 and construction of the second OSV re-commenced. We subsequently delivered the second OSV on July 31, 2018.
|
Services
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
44,075
|
|
|
$
|
26,107
|
|
|
$
|
17,968
|
|
|
68.8%
|
Gross profit
|
|
6,199
|
|
|
423
|
|
|
5,776
|
|
|
1,365.5%
|
|||
Gross profit percentage
|
|
14.1
|
%
|
|
1.6
|
%
|
|
|
|
|
||||
General and administrative expenses
|
|
1,496
|
|
|
1,313
|
|
|
183
|
|
|
13.9%
|
|||
Operating income (loss)
|
|
4,703
|
|
|
(890
|
)
|
|
5,593
|
|
|
|
EPC
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
955
|
|
|
$
|
—
|
|
|
$
|
955
|
|
|
100.0%
|
Gross profit
|
|
235
|
|
|
—
|
|
|
235
|
|
|
100.0%
|
|||
Gross profit (loss) percentage
|
|
24.6
|
%
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expenses
|
|
902
|
|
|
—
|
|
|
902
|
|
|
100.0%
|
|||
Operating loss
|
|
(667
|
)
|
|
—
|
|
|
(667
|
)
|
|
|
Corporate
|
|
Six Months Ended June 30,
|
|
Increase or (Decrease)
|
||||||||||
|
|
2018
|
|
2017
|
|
Amount
|
|
Percent
|
||||||
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Gross loss
|
|
(769
|
)
|
|
(351
|
)
|
|
(418
|
)
|
|
(119.1)%
|
|||
Gross loss percentage
|
|
n/a
|
|
|
n/a
|
|
|
|
|
|
||||
General and administrative expenses
|
|
4,435
|
|
|
3,656
|
|
|
779
|
|
|
21.3%
|
|||
Operating loss
|
|
(5,204
|
)
|
|
(4,007
|
)
|
|
(1,197
|
)
|
|
|
Available Liquidity
|
|
$
(in thousands)
|
||
Cash and cash equivalents on hand
|
|
$
|
32,004
|
|
Held-to-maturity, short-term investments
(1)
|
|
7,481
|
|
|
Revolving credit agreement
|
|
40,000
|
|
|
Less:
|
|
|
||
Borrowings under our Credit Agreement
|
|
—
|
|
|
Outstanding letters of credit
|
|
(5,495
|
)
|
|
Total available liquidity
|
|
$
|
73,990
|
|
i.
|
Ratio of current assets to current liabilities of not less than
1.25
:1.00;
|
ii.
|
Minimum tangible net worth requirement of at least the sum of:
|
•
|
$185 million
, plus
|
•
|
An amount equal to
50%
of consolidated net income for each fiscal quarter ending after June 30, 2017, including
50%
of any gain attributable to the sale of all or substantially all our South Texas Properties (with no deduction for a net loss in any such fiscal quarter), plus
|
•
|
100%
of the proceeds of any issuance of any stock or other equity after deducting of any fees, commissions, expenses and other costs incurred in such offering; and
|
iii.
|
Ratio of funded debt to tangible net worth of not more than
0.50
:1.00.
|
•
|
Operating losses for the
six months ended June 30, 2018
, excluding gains on sales of assets and insurance recoveries as well as amounts in excess of non-cash depreciation, amortization, impairment, and stock compensation expense of approximately
$3.5 million
;
|
•
|
Slower collections of receivables of
$6.4 million
|
•
|
Build-up of costs for contracts in progress of $8.1 million;
|
•
|
Increased retainage on projects of $1.5 million;
|
•
|
Increased payments of accounts payable of
$2.4 million
; and
|
•
|
Other general uses of working capital.
|
GULF ISLAND FABRICATION, INC.
|
|
|
|
BY:
|
/s/ David S. Schorlemer
|
|
David S. Schorlemer
|
|
Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)
|
Scheduled Vesting Date
|
Amount of
RSUs To Vest
|
|
||
|
[6 month anniversary]
|
100%
|
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.
|
The registrant's other certifying officer and I are 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 and Director (Principal Executive Officer)
|
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.
|
The registrant's other certifying officer and I are 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/ David S. Schorlemer
|
David S. Schorlemer
Executive Vice President, Chief Financial Officer, Secretary and Treasurer
(Principal Financial 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 and Director
(Principal Executive Officer)
|
|
|
August 9, 2018
|
|
|
|
|
|
By:
|
|
/s/ David S. Schorlemer
|
|
|
David S. Schorlemer
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
|
August 9, 2018
|