Gulf Island Fabrication Inc. (NASDAQ:GIFI) Q3 2018 Earnings Conference Call Transcript

Nov 09, 2018 • 10:00 am ET

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Gulf Island Fabrication Inc. (NASDAQ:GIFI) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome, ladies and gentlemen, to the Q3 2018 Gulf Island Fabrication, Inc. Earnings Conference Call. All participants will be in a listen-only mode for the duration of the presentation. This call is being recorded.

At this time, I'd like to turn the conference over to Ms. Cindi Cook for opening remarks and introduction. Cindi, please go ahead.

Executive
Cindi Cook

Thank you, Jim, and good morning. I would like to welcome everyone to Gulf Island's 2018 third quarter teleconference. Our results were released yesterday afternoon and a copy of the press release is available on our website at gulfisland.com. A replay of today's call will be available on our website later today.

(Forward-Looking Cautionary Statements)

Today, we have Mr. Kirk Meche, President, CEO and Director; Mr. Wes Stockton, our EVP and CFO; and Mr. Todd Ladd, our EVP and COO. Mr. Meche?

Executive
Kirk Meche

Thank you, Cindi, and good morning to all of our listeners. I like to start off by welcoming the newest member of our management team, our new CFO, Mr. Wes Stockton. We're excited to have Wes onboard as he bring significant financial leadership and EPC experience, and his functional and industry experience will serve us well as we execute our operations, evaluate and pursue our strategic alternatives, and position the Company for future growth.

Now, moving on to our results for the quarter; as noted in our press release, the quarter included many positive accomplishments, in spite of headwind as they contributed to an operating loss for the period, which Wes will address in a minute. During the quarter, we increased backlog across our divisions, including a significant award for the expansion and conversion of a paddle-wheel casino vessel into a 245-person river cruise vessel.

This project will be executed by our Fabrication Division and puts needed backlog back into our fabrication yard. We also realized positive operating cash flows of almost $8 million for the quarter and entered into an agreement for the sale of our Texas North Yard and certain associated equipment for $28 million, which we expect will close in the fourth quarter of this year.

In addition, during the quarter, we once again experienced solid performance from our Services Division as demand for its services remain strong. Although, I am pleased with these accomplishments, we continue to be impacted by the underutilization of our facilities within our Fabrication Division and, to a lesser extent, our Shipyard Division.

However, our shipyard backlog is set to ramp up over the next several quarters. This, combined with our newly awarded fabrication backlog will continue to improve utilization of our facilities going forward.

Now, onto the matter of dispute with a customer for the construction and delivery of two MPSVs; as you know, during the quarter, we filed a lawsuit against a customer to enforce our rights under the contract. We have not received a response from the customer and we continue to work closely with the bonding company in an attempt to move this dispute along to achieve