New Awards and Backlog

~~We believe that backlog,~~New project awards represent expected revenue values of commitments received during a ~~non-GAAP financial measure, provides useful information~~given period, including scope growth on existing commitments. A commitment represents authorization from our customer to ~~investors. Backlog differs from the GAAP requirement~~begin work or purchase materials pursuant to disclose future performance obligations required under fixed-price contracts as required under Topic 606 of the ASC. See Note 3 of the Notes to Consolidated Financial Statements for further discussion of Topic 606. Backlog includes future work that has been entered into subsequent to the balance sheet date, from lettersa written agreement, letter of intent or other ~~forms~~form of ~~authorization~~authorization. Backlog represents the unearned value of our new project awards and may differ from the value of remaining performance obligations for our contracts required to be disclosed under Topic 606 and presented in Note 2 of our Financial Statements. In general, a performance obligation is a contractual obligation to construct and/or transfer a distinct good or service to a customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as ~~well~~revenue when, or as, the performance obligation is satisfied. Backlog includes our performance obligations at March 31, 2019, plus signed contracts that are temporarily suspended or under protest that may not meet the criteria to be reported as future performance obligations under Topic 606 ~~(the most comparable GAAP measure); however, represents~~but represent future work that ~~management believes is probable of being~~we believe will be performed.

~~Our~~ We believe that backlog, isa non-GAAP financial measure, provides useful information to investors. New project awards and backlog may vary significantly each reporting period based on ~~management’s estimate~~the timing of the direct labor hours required to complete, and the remaining revenue to be recognized with respect to those projects for which a customer has authorized us to begin work or purchase materials pursuant to written contracts, letters of intent or other forms of authorization. As engineering and design plans are finalized or changes to existing plans are made, management’s estimate of the direct labor hours required to complete a project and the price of a project at completion is likely to change.our major new contract commitments.

~~All projects currently included~~

Projects in our backlog are generally subject to delay, suspension, termination, or aan increase or reduction in scope at the option of the customer, although the customer is required to pay us for work performed and materials purchased through the date of termination, suspension, or reduction in scope. In addition, customers have the ability to delay the execution of projects. We exclude suspended projects from contract backlog when they are expected to be suspended more than 12 months because resumption of work and timing of revenue recognition for these projects are difficult to predict. Depending on the size of the project, the delay, suspension, termination ~~postponement,~~or increase or reduction in scope of any one ~~project~~contract could significantly ~~reduce~~impact our backlog and ~~could have a material adverse effect on future~~change the expected amount and timing of revenue ~~net income (loss) and cash flow.~~recognized. A reconciliation of ~~future revenue~~our remaining performance obligations under Topic 606 ~~of the ASC~~ (the most comparable GAAP measure as ~~included~~presented in Note 32 of ~~the Notes to Consolidated~~our Financial Statements) to our reported backlog is provided below (in thousands).



	March 31, 2019
	Fabrication		Shipyard		Services		Consolidated
Remaining performance obligations under Topic 606	$	71,144	$	226,250	$	15,397	$	312,791
Contracts under purported termination ⁽¹⁾	—		21,888		—		21,888
Total Backlog ⁽²⁾	$	71,144	$	248,137	$	15,397	$	334,679

Backlog at March 31, 2019 and December 31, 2018, is as follows (in thousands):

March 31, 2018
Fabrication Shipyard Services EPC Eliminations Consolidated
Future performance obligations required under fixed-price contracts under Topic 606 of ASC $ 6,706
$ 149,590
$ 11,858
$ —
$ (990 ) $ 167,164
Contracts signed subsequent to March, 31, 2018 —
29,874
—
1,037
—
30,911
Signed contracts under purported termination or third party protest ^{(1), (2)}
—
94,176
—
—
—
94,176
Backlog $ 6,706
$ 273,640
$ 11,858
$ 1,037
$ (990 ) $ 292,251



	March 31, 2019			December 31, 2018
Division	Amount		Labor hours	Amount		Labor hours
Fabrication	$	71,144	402	$	63,883	369
Shipyard	248,138		1,523	281,531		1,684
Services	15,397		194	11,046		171
Total Backlog ⁽²⁾	$	334,679	2,119	$	356,460	2,224

Backlog at March 31, 2019 is expected to be recognized as revenue in the following periods (in thousands, except for percentages):



Year ⁽³⁾	Total		Percentage
Remainder of 2019	$	180,172	53.8%
2020	101,924		30.5%
2021	29,825		8.9%
Thereafter	870		0.3%
Future performance obligations under Topic 606	312,791		93.5%
Contracts under purported termination ⁽¹⁾	21,888		6.5%
Total Backlog	$	334,679	100.0%

___________

(1)

Includes backlog ~~for a customer for which we have received a notice of purported termination~~ within our Shipyard Division related to contracts for the construction of two ~~MPSVs.~~MPSVs that are subject to a purported notice of termination by our customer. We dispute the purported termination and disagree with the customer’s reasons for ~~same.We cannot guarantee~~the same. We can provide no assurances that we ~~be able to favorably negotiate~~will reach a favorable resolution with the customer for completion of the ~~MPSVs with this customer.~~two MPSVs. See Note 95 of our Financial Statements for further discussion of the ~~Notes to Consolidated Financial Statements.~~dispute.

(2)

Includes our signed contract with the U.S. Navy for the construction of the T-ATS Salvage vessel which is under bid protest from a competitor. Bid protests can result in an award decision being overturned, requiring a re-bid of the contract. Even when a bid protest does not result in a re-bid, resolution of the matter typically extends the time until contract performance can begin, which may reduce our earnings in the period in which the contract would otherwise be performed.

~~Our backlog at March 31, 2018, as compared to December 31, 2017, consisted of the following (in thousands, except for percentages):~~

March 31, 2018 December 31, 2017
Division $'s Labor hours $'s Labor hours
Fabrication $ 6,706
54 $ 15,771
150
Shipyard 273,640
1,493 184,035
1,104
Services 11,858
130 23,181
290
EPC 1,037
— —
—
Intersegment eliminations (990 ) — (370 ) —
Total backlog $ 292,251
1,677 $ 222,617
1,544

Number Percentage Number Percentage
Major customers ⁽¹⁾
5 85.4% 4 73.0%

Backlog is expected to be recognized in revenue during:⁽²⁾

$'s Percentage
2018 $ 90,879
31.1%
2019 142,274
48.7%
2020 59,098
20.2%
Total $ 292,251
100.0%


~~(1)~~	At March 31, 2019, seven customers represented approximately 86% of our backlog, and at December 31, 2018, ~~projects for~~seven customers represented approximately 90% of our ~~five largest~~backlog. At March 31, 2019, backlog from the seven customers ~~in terms of revenue backlog~~ consisted of:


(i)	~~Two large MPSVs for one customer for which we have received a purported notice~~Construction of ~~termination as discussed above;~~four harbor tugs within our Shipyard Division. The first of five vessels was completed and delivered in the fourth quarter 2018. We estimate completion of the remaining vessels in 2019 and 2020;


(ii)	~~Newbuild construction~~Construction of four harbor tugs within our Shipyard Division (separate from above). The first of five ~~harbor tugs for one customer (to be~~vessels was completed and delivered in ~~2018 through 2020);~~the first quarter 2019. We estimate completion of the remaining vessels in 2019 and 2020;


(iii)	~~Newbuild~~Construction of two regional class research vessels within our Shipyard Division. We estimate completion of the vessels in 2021. Our customer exercised its option for the construction of ~~five harbor tugs for one customer (separate from above) (to completed~~a third vessel in ~~2018 through 2020);~~April 2019, which is not included in backlog at March 31, 2019;

(iv)

~~Newbuild~~Construction of one towing, salvage and rescue ship within our Shipyard Division. We estimate completion of the vessel in 2021. Our customer exercised its option for the construction of ~~an offshore research vessel (to be completed~~two additional vessels in ~~2020); and~~April 2019, which are not included in backlog at March 31, 2019. Our customer continues to have options for the construction of five additional vessels;


(v)	~~Newbuild construction~~Expansion of ~~one T-ATS vessel (to be completed~~a 245-guest paddle wheel riverboat within our Fabrication Division. We estimate completion of the project in ~~2020). This contract is currently under a bid protest.~~2020;

(vi) Construction of two, forty vehicle ferries within our Fabrication Division. We estimate completion of the projects in 2020;

(vii) Construction of two MPSV's within our Shipyard Division. See footnote 1 above for further discussion.


~~(2)~~(3)	The timing of recognition of the revenue represented in our backlog is based on ~~management’s~~our 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.

Certain of our contracts contain options which grant our customer the right, ~~to our customer,~~ if exercised, for the construction of additional vessels at contracted ~~prices.We~~prices. We do not include options in our backlog. In April 2019, the customer for our two regional class research vessels exercised its option for the construction of a third research vessel (with a project value of approximately $70.0 million), which is not included in backlog ~~above. If all~~at March 31, 2019 and will be reflected as a new project award in the second quarter 2019. In addition, in April 2019, the customer for our towing, salvage and rescue ship exercised its option for the construction of two additional vessels (with a total project value of approximately $129.0 million), which are not included in backlog at March 31, 2019. The customer continues to have options ~~under our current contracts were~~for the construction of five additional vessels, which if exercised, would increase our backlog ~~would increase~~ by ~~$626.2~~approximately $333.0 million. We have not received any additional commitments from our customer related to the exercise of these options, and we can provide no assurances that any further options will be exercised. We believe disclosing these options provides investors with useful information ~~in order~~ to evaluate additional potential work that we would be contractually obligated to perform under our current contracts as well as the potential significance of these options, if exercised. ~~We have not received any commitments related to the exercise of these options from our customers, and we can provide no assurance that any or all of these options will be exercised.~~

As ~~we add~~our backlog increases, we will add personnel with critical project management and fabrication skills to ensure we have the resources necessary to properly execute our projects ~~well~~ and to support our project risk mitigation discipline for all ~~new~~ projects. This may negatively impact near-term results.

As of March 31, 2018, we had 961 employees compared to 977 employees as of December 31, 2017. Labor hours worked were 496,000 during the three months ended March 31, 2018, compared to 479,000 for the three months ended March 31, 2017. The overall increase in labor hours worked for the three months ended March 31, 2018, was due to improved offshore demand within our Services Division. As of April 29, 2018, we had 870 employees. The decrease in our workforce subsequent to March 31, 2018, is primarily within our Fabrication Division due to completion of complex modules for the construction of a new petrochemical plant with no significant future Fabrication backlog forecasted in the near-term as well as the stoppage of construction of the two MPSVs within our Shipyard Division pending resolution of our dispute over termination with our MPSV customer. See Note 9 of the Notes to Consolidated Financial Statements related to our MPSV contract termination dispute.

Results of Operations

~~Three Months Ended March 31,~~Comparison of 2019 and 2018 ~~Compared to Three Months Ended March 31, 2017~~ (in thousands, except for percentages):

In the comparative tables below, percentage changes that are not considered meaningful (generally when the prior period amount is immaterial or when the percentage change is significantly greater than 100%) are shown below as "nm" (not meaningful).

Consolidated

Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue $ 57,290
$ 37,993
$ 19,297
50.8%
Cost of revenue 56,611
42,890
13,721
32.0%
Gross profit (loss) 679
(4,897 ) 5,576
113.9%
Gross profit (loss) percentage 1.2 % (12.9 )%
General and administrative expenses 4,709
3,930
779
19.8%
Asset impairment 750
389
361
92.8%
Operating income (loss) (4,780 ) (9,216 ) (4,436 )
Other income (expense):
Interest expense (469 ) (59 ) (410 ) (694.9)%
Other income (expense), net 12
9
3
33.3%
Total other income (expense) (457 ) (50 ) (407 ) (814.0)%
Net loss before income taxes (5,237 ) (9,266 ) (4,029 ) (43.5)%
Income tax expense (benefit) 59
(2,812 ) 2,871
102.1%
Net loss $ (5,296 ) $ (6,454 ) $ 6,900



	Three Months Ended March 31,						Favorable (Unfavorable) Change
	2019			2018			Amount			Percent
Revenue	$	67,605		$	57,290		$	10,315		18.0%
Cost of revenue	67,052			56,611			(10,441		)	(18.4)%
Gross profit	553			679			(126		)	(18.6)%
Gross profit percentage	0.8		%	1.2		%
General and administrative expense	3,834			4,709			875			18.6%
Asset impairments and (gain) loss on assets held for sale, net	(70		)	750			820			109.3%
Other (income) expense, net	71			310			239			77.1%
Operating loss	(3,282		)	(5,090		)	1,808			35.5%
Interest income (expense), net	262			(147		)	409			278.2%
Net loss before income taxes	(3,020		)	(5,237		)	2,217			42.3%
Income tax (expense) benefit	(22		)	(59		)	37			62.7%
Net loss	$	(3,042	)	$	(5,296	)	$	2,254		42.6%

Revenue - ~~Our~~Revenue for 2019 and 2018 was $67.6 million and $57.3 million, respectively, representing an increase of 18.0%. The increase was primarily due to the net impact of:

Increased revenue of $18.0 million for our Shipyard Division, primarily due to progress on our two regional class research vessels, one towing, salvage and rescue ship, an ice-breaker tug and our harbor tug projects, offset partially by the prior period including revenue on an OSV project that was completed during 2018 and revenue on our two MPSV contracts that were suspended during the first quarter 2018; offset partially by,

Decreased revenue for our Fabrication Division of $4.7 million, primarily due to the completion of modules for a petrochemical facility during the second quarter 2018, offset partially by revenue for our paddle wheel riverboat project which was not under construction in the prior period; and

Decreased revenue for our Services Division of $2.3 million, primarily due to the timing of new project awards.

See Note 5 of our Financial Statements for further discussion of our MPSV contracts.

Gross Profit - Gross profit for 2019 and 2018 was $0.6 million (0.8% of revenue) and $0.7 million (1.2% of revenue), respectively. Gross profit for 2019 was negatively impacted by the under recovery of overhead costs across our divisions. The decrease in gross profit for 2019 relative to the prior period was primarily due to reduced recoveries of overhead costs for our Fabrication and Services Divisions, offset partially by higher revenue and a higher margin project mix.

General and administrative expense - General and administrative expense for 2019 and 2018 was $3.8 million (5.7% of revenue) and $4.7 million (8.2% of revenue), respectively, representing a decrease of 18.6%. The decrease was primarily due to lower incentive plan costs.

Asset impairments and (gain) loss on assets held for sale, net - Asset impairments and (gain) loss on assets held for sale, net for 2019 and 2018 was a gain of $70,000 and expense of $0.8 million, respectively. The net expense for 2018 was primarily due to an impairment of $0.8 million on assets held for sale in our Fabrication Division. See Note 3 of our Financial Statements for further discussion of impairments of our assets held for sale.

Other (income) expense, net - Other (income) expense, net for the 2019 and 2018 was net expense of $71,000 and $0.3 million, respectively. Other (income) expense, net generally represents (recoveries) provisions for bad debts, (gains) losses

associated with the sale or disposition of property and equipment other than assets held for sale, and (income) expense associated with certain nonrecurring items. The net expense for 2018 was primarily due to net losses on the sales of equipment.

Interest income (expense), net - Interest income (expense), net for the 2019 and 2018, was income of $0.3 million and expense of $0.1 million, respectively. The net interest income for 2019 was primarily due to higher interest rates on higher cash equivalents and short-term investment balances during 2019, and reduced interest expense as we had borrowings under our Credit Agreement during 2018 but no borrowing during 2019.

Income tax (expense) benefit - Income tax (expense) benefit for 2019 and 2018 was expense of $22,000 and $59,000, respectively. Income tax expense represents state income taxes. No federal tax benefit was recorded for losses during 2019 or 2018 as a full valuation allowance was recorded against our deferred tax assets generated during the periods.

Operating Segments

Fabrication Division⁽¹⁾



	Three Months Ended March 31,						Favorable (Unfavorable) Change
	2019			2018			Amount			Percent
Revenue	$	12,631		$	17,343		$	(4,712	)	(27.2)%
Gross loss	(772		)	(527		)	(245		)	(46.5)%
Gross loss percentage	(6.1		)%	(3.0		)%
General and administrative expense	767			1,041			274			26.3%
Asset impairments and (gain) loss on assets held for sale, net	(70		)	750			820			109.3%
Other (income) expense, net	71			188			117			62.2%
Operating loss	(1,540		)	(2,506		)	966			38.5%

___________

(1)

During the first quarter 2019, our former EPC Division was operationally combined with our Fabrication Division. Accordingly, results for our former EPC Division for the 2018 period have been combined with the Fabrication Division to conform to the presentation of our reportable segments for the 2019 period. See Note 7 of our Financial Statements for further discussion of our realigned operating divisions and related financial information.

Revenue - Revenue for 2019 and 2018 was $12.6 million and $17.3 million, respectively, representing a decrease of 27.2%. The decrease was primarily due to the completion of modules for a petrochemical facility during the second quarter 2018, offset partially by revenue for our paddle wheel riverboat project which was not under construction in the prior period.

Gross loss - Gross loss for 2019 and 2018 was $0.8 million (6.1% of revenue) and $0.5 million (3.0% of revenue), respectively. The gross loss for 2019 was primarily due to the under recovery of overhead costs. The increase in gross loss for 2019 relative to the prior period was primarily due to reduced recoveries of overhead costs due to lower revenue, offset partially by a higher margin project mix.

General and administrative expense - General and administrative expense for 2019 and 2018 was $0.8 million (6.1% of revenue) and $1.0 million (6.0% of revenue), respectively, representing a decrease of 26.3%. The decrease was primarily due to lower costs associated with our former EPC Division, lower legal and advisory fees related to a customer dispute as the costs are reflected within the Corporate Division in 2019, and other cost reductions.

Other (income) expense, net - Other (income) expense, net for the 2019 and 2018 was expense of $71,000 and $0.2 million, respectively. The net expense for 2018 was primarily due to net losses on the sales of equipment.

Shipyard



	Three Months Ended March 31,						Favorable (Unfavorable) Change
	2019			2018			Amount		Percent
Revenue	$	36,587		$	18,565		$	18,022	97.1%
Gross loss	(280		)	(1,023		)	743		72.6%
Gross loss percentage	(0.8		)%	(5.5		)%
General and administrative expense	624			796			172		21.6%
Other (income) expense, net	—			160			160		100.0%
Operating loss	(904		)	(1,979		)	1,075		54.3%

Revenue - Revenue for 2019 and 2018, was $36.6 million and $18.6 million, respectively, representing an increase of 97.1%. The increase was primarily due to additional progress on our two regional class research vessels, a towing, salvage and rescue ship, an ice-breaker tug and our harbor tug projects, offset partially by the prior period including revenue on an OSV project that was completed during 2018 and revenue on our two MPSV contracts that were suspended during the first quarter 2018.

Gross loss - Gross loss for 2019 and 2018 was $0.3 million (0.8% of revenue) and $1.0 million (5.5% of revenue), respectively. The gross loss for 2019 was primarily due to the under recovery of overhead costs. The decrease in gross loss for 2019 relative to the prior period was primarily due to higher revenue and increased recoveries of overhead costs, offset partially by a lower margin project mix due to revenue at no gross profit for the harbor tug projects which are in a loss position.

General and administrative expense - General and administrative expense for 2019 and 2018 was $0.6 million (1.7% of revenue) and $0.8 million (4.3% of revenue), respectively, representing a decrease of 21.6%. The decrease was primarily due to lower incentive plan costs, lower legal and advisory fees related to a customer dispute as the costs are reflected within the Corporate Division in 2019, and other cost reductions.

Other (income) expense, net - Other (income) expense, net for 2019 and 2018, was expense of $0 and $0.2 million, respectively. The net expense for 2018 was primarily due to net losses on the sales of equipment.

Services



	Three Months Ended March 31,						Favorable (Unfavorable) Change
	2019			2018			Amount			Percent
Revenue	$	19,602		$	21,870		$	(2,268	)	(10.4)%
Gross profit	1,741			2,614			(873		)	(33.4)%
Gross profit percentage	8.9		%	12.0		%
General and administrative expense	452			734			282			38.4%
Other (income) expense, net	—			(26		)	(26		)	(100.0)%
Operating income	1,289			1,906			(617		)	(32.4)%

Revenue - Revenue for 2019 and 2018 was $19.6 million and $21.9 million, respectively, representing a decrease of 10.4%. The decrease was primarily due to the timing of new project awards.

Gross profit - Gross profit for 2019 and 2018 was $1.7 million (8.9% of revenue) and $2.6 million (12.0% of revenue), respectively. Gross profit for 2019 was negatively impacted by the under recovery of overhead costs. The decrease in gross profit for 2019 relative to the prior period was due to lower revenue and reduced recoveries of overhead costs, offset partially by a higher margin project mix.

General and administrative expense - General and administrative expense for 2019 and 2018 was $0.5 million (2.3% of revenue) and $0.7 million (3.4% of revenue), respectively, representing a decrease of 38.4%. The decrease was primarily due to lower incentive plan costs and other cost reductions.

Corporate



	Three Months Ended March 31,						Favorable (Unfavorable) Change
	2019			2018			Amount			Percent
Revenue (eliminations)	$	(1,215	)	$	(488	)	$	(727	)	nm
Gross loss	(136		)	(385		)	249			64.7%
Gross loss percentage	n/a			n/a
General and administrative expense	1,991			2,138			147			6.9%
Other (income) expense, net	—			(12		)	(12		)	(100.0)%
Operating loss	(2,127		)	(2,511		)	384			15.3%

Gross loss - Gross loss for 2019 and 2018 was $0.1 million and $0.4 million, respectively. The decrease was primarily due to lower costs related to supporting our former EPC Division.

General and administrative expense - General and administrative expense for 2019 and 2018 was $2.0 million (2.9% of consolidated revenue) and $2.1 million (3.7% of consolidated revenue), respectively, representing a decrease of 6.9%. The decrease was primarily due to lower incentive plan costs, offset partially by increased legal and advisory fees related to customer disputes as the costs were reflected within the operating divisions in 2018, and increased professional fees and other costs associated with the evaluation of strategic alternatives and initiatives to diversify and enhance our business. The customer disputes relate primarily to the pursuit of claims against a customer for disputed change orders for a completed project, and our MPSV projects which are subject to a purported termination and for which construction has been suspended.

Liquidity and Capital Resources

Available Liquidity

Our primary sources of liquidity are our cash and cash equivalents, scheduled maturities of our short-term investments, and availability under our Credit Agreement (discussed below). At March 31, 2019, our cash, cash equivalents and short-term investments totaled $70.2 million, and our immediately available liquidity was as follows (in thousands):



Available Liquidity	Total
Cash and cash equivalents ⁽¹⁾	$	49,898
Short-term investments ⁽²⁾	20,341
Total cash, cash equivalents and short-term investments	70,239
Credit Agreement total capacity	40,000
Outstanding letters of credit	(2,917		)
Credit Agreement available capacity	37,083
Total available liquidity	$	107,322

___________

(1) Includes U.S. Treasuries of $30.5 million with original maturities of three months or less.

(2) Includes U.S. Treasuries with original maturities of more than three months but less than six months.

Working Capital

Our available liquidity is impacted by changes in our working capital and our capital expenditure requirements. At March 31, 2019, our working capital was $102.0 million and included $70.2 million of cash, cash equivalents and short-term investments and $18.6 million of assets held for sale. Excluding cash, cash equivalents, short-term investments and assets held for sale, our working capital at March 31, 2019 totaled $13.1 million, and consisted of net contracts assets and contract liabilities (collectively, "Contracts in Progress") of $29.5 million; contracts receivable and retainage of $21.7 million; inventory, prepaid expenses and other assets of $8.1 million; and accounts payable, accrued expenses and other liabilities of $46.1 million. The components of our working capital (excluding cash, cash equivalents, short-term investments and assets held for sale) at March 31, 2019 and December 31, 2018, and changes in such amounts during the three months ended March 31, ~~2018 and 2017, was $57.3 million and $38.0 million, respectively, representing an increase of 50.8%. The increase is primarily attributable to:~~2019, were as follows (in thousands):

~~An increase~~



	March 31,			December 31,
	2019			2018			Change⁽³⁾
Contract assets	$	38,707		$	29,982		$	(8,725	)
Contract liabilities⁽¹⁾	(9,234		)	(16,845		)	(7,611		)
Contracts in progress, net⁽²⁾	29,473			13,137			(16,336		)
Contracts receivable and retainage, net	21,658			22,505			847
Inventory, prepaid expenses and other assets	8,126			9,356			1,230
Accounts payable, accrued expenses and other liabilities	(46,116		)	(39,256		)	6,860
Total	$	13,141		$	5,742		$	(7,399	)

___________


(1)	Contract liabilities at March 31, 2019 and December 31, 2018, include accrued contract losses of $1.5 million and $2.4 million, respectively.


(2)	Represents our cash position relative to revenue recognized on projects, with contract assets representing unbilled amounts that reflect future cash inflows on projects, and contract liabilities representing (i) advance payments that reflect future cash expenditures and non-cash earnings on projects and (ii) accrued contract losses that represent future cash expenditures on projects.

(3) Changes referenced in the cash flow activity section below may differ from the changes in this table due to non-cash reclassifications and due to certain changes in balance sheet accounts being reflected within other line items on the Statement of ~~$11.2 million within~~Cash Flows, including bad debt expense and (gain) loss on sale of fixed assets and other assets.

Fluctuations in our ~~Services Division from additional demand for offshore oil~~working capital, and ~~gas service~~its components, are not unusual in our business and are impacted by the size of our projects and the mix of our backlog. Our working capital is particularly impacted by the timing of new project awards and related ~~projects;~~payments in advance of performing work, and the subsequent achievement of billing milestones or project progress on backlog as we complete certain phases of work. Working capital is also impacted at period-end by the timing of contracts receivable collections and accounts payable payments on our projects.

~~An increase of $7.1 million within our Fabrication Division primarily attributable to the construction of four modules for a petrochemical plant.~~

Cash Flow Activity

~~Gross profit (loss) -~~Operating Activities ~~Our gross profit for~~- During the three months ended March 31, ~~2018,~~2019, net cash used in operating activities was ~~$679,000~~$8.5 million, compared to ~~a gross loss~~net cash used in operating activities of ~~$4.9~~$14.1 million for the three months ended March 31, ~~2017. The increase~~2018. Cash used in ~~gross profit~~operating activities during the 2019 period was primarily due to ~~increased revenue within our Services Division as discussed above and decreased expenses within our Fabrication Division which included $1.9 million of depreciation expense~~an operating loss for the ~~three months ended March 31, 2017, related to our South Texas Properties with no depreciation expense during~~period and the ~~three months ended March 31, 2018, for our South Texas Properties as these assets are classified as held for sale.~~following:

~~General~~Net gains from asset sales of $0.3 million, bad debt expense of $53,000, depreciation and ~~administrative expenses~~ ~~- Our general~~amortization of $2.6 million, asset impairments of $0.3 million, and administrative expenses were $4.7 million for the three months ended March 31, 2018, compared to $3.9 million for the three months ended March 31, 2017. The increase in general and administrative expenses for the three months ended March 31, 2018, was primarily attributable to

~~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;~~

Increased employee incentive accruals of approximately $300,000 for all divisions related to our safety incentive program and higher employee profitability incentives within our Services Division as well as the addition of personnel as we build up our EPC Division in anticipation of the SeaOne Project; and

~~Higher~~ stock compensation expense $0.6 million;

Increase in contract assets of ~~approximately $220,000.~~$8.7 million, primarily due to an increase in unbilled positions on two projects in our Shipyard Division;

Decrease in contract liabilities of $7.6 million, primarily due to the partial unwind of advance payments on two separate projects in our Shipyard and Fabrication Divisions;

~~This was partially offset by cost reductions~~Decrease in contracts receivable and ~~continued cost minimization efforts implemented by management~~retainage of $0.8 million, primarily due to the timing of billings and collections on our projects;

Decrease in prepaid expenses, inventory and other assets of $1.1 million, primarily due to inventory and prepaid expenses;

Increase in accounts payable, accrued expenses and other current liabilities of $6.0 million, primarily due to increased project activity and the timing of payments for ~~the period.~~projects in our Shipyard Division; and

Change in noncurrent assets and liabilities, net of $0.2 million.

~~Asset impairment~~Investing Activities - We recorded an impairment of $750,000 during the three months ended March 31, 2018, related to a piece of equipment at our Texas North Yard that we intend to sell at auction. This piece of equipment was not damaged by

Hurricane Harvey. The impairment was calculated as management's estimated net proceeds from the sale less its net book value. See also Note 2 of the Notes to Consolidated Financial Statements for additional information regarding our assets held for sale. During the three months ended March 31, ~~2017, we recorded an impairment of $389,000 related to the Shipyard Division assets held for sale.~~

~~Interest expense~~ - Interest expense increased due to drawings under our Credit Agreement for the three months ended March 31, 2018, with no such drawings under our Credit Agreement for the three months ended March 31, 2017, as well as increased amortization of deferred financing costs during the three months ended March 31, 2018.

~~Income tax expense (benefit) -~~ ~~Our effective income tax rate for the three months ended March 31, 2018,~~2019, net cash used in investing activities was ~~(1.1)%,~~$11.4 million, compared to an effective tax rate benefit of 30.3% for the comparable period during 2017. Current expense represents state taxes within our Services Division. The decrease in the effective tax rate is the result of a valuation allowance against our deferred tax assets. See Note 1 of the Notes to Consolidated Financial Statements regarding our NOLs and deferred tax assets.

~~Operating Segments~~

~~The results of our four operating divisions and Corporate Division for the three months ended March 31, 2018 and 2017, are presented below (in thousands, except for percentages).~~

Fabrication Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue $ 17,270
$ 10,209
$ 7,061
69.2%
Gross profit (loss) (219 ) (2,966 ) (2,747 ) (92.6)%
Gross profit (loss) percentage (1.3 )% (29.1 )%
General and administrative expenses 624
821
(197 ) (24.0)%
Asset impairment 750
—
750
100.0%
Operating income (loss) $ (1,593 ) $ (3,787 ) $ (2,194 )

~~Revenue -~~ Revenue from our Fabrication Division increased $7.1 million for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. The increase is attributable to the construction of four modules for a petrochemical plant during the three months ended March 31, 2018, and lower revenue during the three months ended March 31, 2017, resulting from depressed oil and gas prices and the corresponding reduction in customer demand for offshore fabrication projects during the period. This was partially offset,net cash provided by ~~decreased revenue~~investing activities of $2.4 million for the three months ended March 31, ~~2018, at our South Texas Properties as these were placed for sale~~2018. Cash used in investing activities during the ~~first quarter of 2017 and project work completed or transfered to our Houma Fabrication Yard during 2017.~~

~~Gross profit (loss) -~~ ~~Gross loss from our Fabrication Division for the three months ended March 31, 2018,~~2019 period was $219,000 compared to a gross loss of $3.0 million for the three months ended March 31, 2017. The decrease in gross loss was due to increased revenue as discussed above and a reduction in depreciation expense of $1.9 million in depreciation expense during the three months ended March 31, 2018 for our South Texas Properties as these assets are classified as held for sale.

~~General and administrative expenses~~ ~~- General and administrative expenses for our Fabrication Division decreased $197,000 for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. The decrease is~~ primarily due to ~~decreases in workforce at our South Texas Properties, decreases in corporate allocations as a portion~~the purchase of ~~these are now allocated to our EPC Division~~short-term investments of $20.0 million and ~~continued cost minimization efforts implemented~~capital expenditures of $0.3 million, offset partially by ~~management for the period.~~

~~Asset impairment~~ ~~- We recorded an impairment~~maturities of ~~$750,000 during the three months ended March 31, 2018, related to a piece~~short-term investments of ~~equipment at our Texas North Yard that we intend to sell at auction. This piece of equipment was not damaged by Hurricane Harvey. The impairment was calculated as management's estimated net~~$8.5 million and proceeds from the sale ~~less its net book value. See Note 2~~ of the Notes to Consolidated Financial Statements for additional information regarding our assets held for sale. We did not record any asset impairments during the three months ended March 31, 2017, within our Fabrication Division.

Shipyard Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue ⁽¹⁾
$ 18,565
$ 18,422
$ 143
0.8%
Gross profit (loss) ⁽¹⁾
(1,023 ) (1,704 ) (681 ) (40.0)%
Gross profit (loss) percentage (5.5 )% (9.2 )%
General and administrative expenses 796
964
(168 ) (17.4)%
Asset impairment —
389
(389 ) (100.0)%
Operating income (loss) ⁽¹⁾
$ (1,819 ) $ (3,057 ) $ (1,238 )

~~___________~~


~~(1)~~	Revenue for the three months ended March 31, 2018, and 2017, includes $390,000 and $1.6 million of non-cash amortization of deferred revenue related to the values assigned to the contracts acquired in the LEEVAC transaction, respectively.

~~Revenue -~~ ~~Revenue from our Shipyard Division increased $143,000 for the three months ended March 31, 2018, compared to the three months ended March 31, 2017. During the first quarter~~equipment of 2018, we were able to make progress on the construction of eight harbor tugs and an offshore research vessel which were not under construction during the first quarter of 2017. This was partially offset by lower revenue from construction of our two OSV and two MPSV vessel contracts during the first quarter of 2018.

During the first quarter of 2017, we completed the first of the OSVs and tendered it for delivery on February 6, 2017, and suspended construction of the second OSV due to a customer dispute. We recommenced construction of the second OSV during the fourth quarter of 2017 which is scheduled for completion during the second quarter of 2018. During the first quarter of 2018, we received a notice of purported termination from a customer 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. Pending resolution of the dispute, all work has been stopped and the vessels and associated equipment and material are in our care and custody at our shipyard in Houma, Louisiana. See Note 9 of the Notes to Consolidated Financial Statements for additional information relating to this customer dispute.

~~Gross profit (loss) -~~ Gross loss from our Shipyard Division was $1.0 million for the three months ended March 31, 2018, compared to a gross loss of $1.7 million for the three months ended March 31, 2017. The decrease was due to improved cost management efforts and efficiencies learned from the construction of two OSV and two MPSV vessels during the three months ended March 31, 2017, and applied to the construction of eight harbor tugs during the three months ended March 31, 2018.$0.4 million.

~~General and administrative expenses~~ - General and administrative expenses for our Shipyard Division decreased $168,000 for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, primarily due to reductions in workforce, decreases in corporate allocations as a portion of these are now allocated to our EPC Division and decreased construction activity.

~~Asset impairment~~Financing Activities - During the three months ended March 31, ~~2017, we recorded an impairment~~2019, net cash used in financing activities was $0.7 million, compared to net cash provided by financing activities of $389,000 related to the Shipyard Division assets held for sale. See Note 2 of the Notes to Consolidated Financial Statements for additional information relating to our assets held for sale. We did not record any asset impairment during the three months ended March 31, 2018, in our Shipyard Division.

Services Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue $ 21,870
$ 10,712
$ 11,158
104.2%
Gross profit (loss) 2,614
33
2,581
7,821.2%
Gross profit (loss) percentage 12.0 % 0.3 %
General and administrative expenses 734
666
68
10.2%
Operating income (loss) $ 1,880
$ (633 ) $ 2,513

~~Revenue -~~ ~~Revenue from our Services Division increased $11.2~~$9.2 million for the three months ended March 31, ~~2018, compared to the three months ended March 31, 2017, due to an overall increase~~2018. Cash used in ~~work experienced due to increases in customer demand for offshore oil and gas related service projects.~~

~~Gross profit -~~ ~~Gross profit from our Services Division increased $2.6 million~~financing activities for the ~~three months ended~~2019 period was primarily due to tax payments made on behalf of employees from vested stock withholdings.

Credit Facilities

Credit Agreement - We have a $40.0 million revolving credit facility with Hancock Whitney Bank ("Credit Agreement") that can be used for borrowings or letters of credit. On May 1, 2019, we amended our Credit Agreement to extend its maturity date from June 9, 2020 to June 9, 2021 and amend certain financial covenants. Our quarterly financial covenants at March 31, ~~2018, compared to~~2019, and for the ~~three months ended March 31, 2017, due to increased revenue discussed above.~~remaining term of the Credit Agreement after our amendment, are as follows:

~~General and administrative expenses~~ - General and administrative expenses for our Services Division increased $68,000 for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, due to support of increased work as well as increases in employee incentive compensation of approximately $120,000 resulting from increased operating income. This was partially offset by decreases in corporate allocations as a portion of these are now allocated to our EPC Division and continued cost minimization efforts implemented by management for the period.

EPC Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue 73
$ —
$ 73
100.0%
Gross profit (loss) (308 ) —
(308 ) (100.0)%
Gross profit (loss) percentage n/a
n/a

General and administrative expenses 417
—
417
100.0%
Operating income (loss) $ (725 ) $ —
$ (725 )

~~Revenue -~~ Our EPC Division did not exist at March 31, 2017. Revenue for the three months ended March 31, 2018 consists of early work and engineering studies authorized by SeaOne. See Note 8 of the Notes to Consolidated Financial Statements for further discussion of our EPC Division and the SeaOne Project.

~~Gross profit (loss) -~~ ~~Gross loss from our EPC Division occurred as we added personnel and overhead infrastructure related to the anticipated SeaOne project.~~

~~General and administrative expenses~~ ~~- General and administrative expenses for our EPC Division include the addition of personnel and allocations of corporate expenses as we invest in this new line of business.~~

Corporate Three Months Ended March 31, Increase or (Decrease)
2018 2017 Amount Percent
Revenue $ —
$ —
$ —
—%
Gross profit (loss) $ (385 ) (260 ) 125
48.1%
Gross profit (loss) percentage n/a
n/a

General and administrative expenses 2,138
1,479
659
44.6%
Operating income (loss) $ (2,523 ) $ (1,739 ) $ 784

~~Gross profit (loss) -~~ ~~Gross loss from our Corporate Division increased primarily due to lower allocation of expenses and as well as increased insurance costs.~~

~~General and administrative expenses~~ - General and administrative expenses for our Corporate Division increased primarily due to increased legal and advisory fees related to customer disputes, strategic planning and diversification of our business, increased employee incentive accruals and higher stock compensation expense of approximately $220,000.

~~Liquidity and Capital Resources~~

Our immediate liquidity remains dependent on our cash on hand, anticipated proceeds from the sales of assets, availability of future drawings from our Credit Agreement and collections of accounts receivable. At March 31, 2018, we had $10 million outstanding under our Credit Agreement, $2.5 million in outstanding letters of credit, and cash and cash equivalents totaling $6.5 million compared to $9.0 million at December 31, 2017. As of May 4, 2018, our liquidity has significantly improved due to the sale of our Texas South Yard the net proceeds of which will be used to rebuild our liquidity, to support upcoming projects, continue investing in our newly created EPC Division and for other general corporate purposes. After the sale of our Texas South Yard, our cash balance was $55.0 million, and the amount outstanding under our Credit Agreement was $10 million with remaining availability under our Credit Agreement of approximately $27.5 million for total liquidity of approximately $82.5 million.

~~Working capital was $137.1 million and our ratio~~Ratio of current assets to current liabilities ~~was 4.34 to 1~~ at March 31, ~~2018, compared~~2019 of not less than 1.25:1.00 (2.00:1.00 subsequent to ~~$130.5 million and 3.68 to 1, respectively, at December 31, 2017. Working capital~~the amendment);

Minimum tangible net worth at March 31, ~~2018, includes $98.4~~2019 of at least the sum of $180.0 million related to assets held for sale, primarily related to our South Texas Properties which decreased after the sale of our Texas South Yards to $48.5 million. At March 31, 2018, our contracts receivable balance was $27.4($170.0 million ~~of which we have subsequently collected $14.9 million through May 4, 2018.~~

~~Our primary use of cash during the three months ended March 31, 2018, is referenced in the Cash Flow Activities section below.~~

As discussed in our Executive Summary, we are implementing several strategies to diversify our business, increase backlog, reduce operating expenses and monetize assets. Our South Texas Properties are held for sale. A significant portion of our near-term plan is to generate liquidity from the sale of these assets.

On April 20, 2018, we closed on the sale of our Texas South Yard for a sale price of $55 million, less selling costs of $1.5 million. We received approximately $52.7 million at closing, which was in additionsubsequent to the ~~$750,000~~amendment), plus 100% of ~~earnest money previously received on January 3, 2018, related to the option to purchase the Texas South Yard. We plan to use~~ the net proceeds ~~to rebuild our liquidity, to support upcoming projects, continue investing in our newly created EPC Division and for~~from any issuance of stock or other general corporate purposes. See further discussion of the sale of our Texas South Yard in Note 2 of the Notes to Consolidated Financial Statements. We currently believe that cash on hand coupled with proceeds received from the sale of our Texas South Yard and funds available under our Credit Agreement will enable the Company to meet its working capital needs, capital expenditure requirements,equity after deducting any ~~debt service obligations~~fees, commissions, expenses and other ~~funding requirements for at least the twelve months from the date~~costs incurred in such offering; and

Ratio of ~~this Report.~~

~~As of the date of this Report our Texas North Yard remains held for sale. The book value of the Texas North Yard is $46.6 million~~funded debt to tangible net worth at March 31, ~~2018. We will continue~~2019 of not more than 0.50:1.00 (no change subsequent to ~~incur costs associated with holding and maintaining our Texas North Yard. These costs include insurance, general maintenance of~~ the ~~properties in their current state, property taxes and retained employees which will be expensed as incurred.~~amendment).

~~We have a $40 million~~Our Credit Agreement ~~maturing June 9, 2019. The Credit Agreement allows the Company to use up~~also includes restrictions regarding our ability to: (i) grant liens; (ii) make certain loans or investments; (iii) incur additional indebtedness or guarantee other indebtedness in excess of specified levels; (iv) make any material change to the ~~full amount~~nature of ~~the available borrowing base for letters~~our business or undergo a fundamental change; (v) make any material dispositions; (vi) acquire another company or all or substantially all of ~~credit~~its assets; (vii) enter into a merger, consolidation, or sale leaseback transaction; or (viii) declare and general corporate purposes. We believe that our Credit Agreement will provide us with additional working capital flexibility to expand operations as backlog improves, respond to market opportunities and support our ongoing operations. pay dividends if any potential default or event of default occurs.

Interest on ~~drawings~~borrowings under the Credit Agreement may be designated, at our option, as either ~~Base~~the Wall Street Journal published Prime Rate ~~(as defined in the credit facility) or LIBOR plus 2% per annum. Our outstanding balance of $10 million~~(5.5% at March 31, ~~2018, is designated as a~~2019) or LIBOR ~~rate loan. Unused commitment~~(2.5% at March 31, 2019) plus 2.0% per annum. Commitment fees on the ~~undrawn~~unused portion of the Credit Agreement are 0.4% per annum, and interest on ~~undrawn stated amounts under~~outstanding letters of credit ~~issued by the lender~~ is ~~2% per annum. At March 31, 2018, the interest rate on our outstanding borrowings was 3.75%~~2.0% per annum. The Credit Agreement is secured by substantially all of our assets ~~(other than the South Texas Properties)~~(with a negative pledge on our real property).

At March 31, ~~2018, $10 million was~~2019, we had no outstanding borrowings under ~~the~~our Credit Agreement and ~~we had~~$2.9 million of outstanding letters of credit, providing $37.1 million of ~~$2.5 million outstanding leaving availability of $27.5 million. Subsequent to~~available capacity. At March 31, ~~2018, we re-issued a letter of credit for $3 million related to outstanding contractual obligations which we expect to remain outstanding until July of 2018.~~

~~We must comply with the following financial covenants each quarter during the term of the Credit Agreement:~~


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 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 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.~~

~~As of March 31, 2018,~~2019, we were in compliance with all of our financial ~~covenants.~~covenants, with a tangible net worth of $196.1 million (as defined by the Credit Agreement), a ratio of current assets to current liabilities of 2.84 to 1.0 and a ratio of funded debt to tangible net worth of 0.01:1.0.

Surety Bonds - We issue surety bonds in the ordinary course of business to support our projects. At March 31, 2019, we had $334.9 million of outstanding surety bonds. Although we believe there is sufficient bonding capacity available to us from one or more financial institutions, such capacity is uncommitted, and accordingly, we can provide no assurances that necessary bonding capacity will be available to support our future bonding requirements.

Liquidity Outlook

As discussed in our Overview, we continue to ~~monitor~~focus on maintaining liquidity and ~~preserve~~securing meaningful new project awards and backlog in the near-term, and generating operating income and cash flow from operations in the longer-term. We have made significant progress in our cash. Our primary liquidity requirements for 2018 and beyond are for the costs associated with fabrication and shipyard projects, capital expenditures related to the creation of our EPC Division and enhancements to our shipyards. Future capital expenditures will be highly dependent upon the amount and timing of future projects. Capital expenditures for the quarter ended March 31, 2018, were $71,000. We do not anticipate significant capital expenditures for the remainder of 2018.

~~If industry conditions for offshore oil and gas do not improve, we are unable to sell our Texas North Yard or the sale is delayed, or we are unable~~efforts to increase our backlog ~~we would expect to take additional measures to~~and improve and preserve our ~~cash flows until such time we are able to generate cash flows from operations. Since the beginning of 2016, we have implemented wage adjustments along with employee benefit and overall~~liquidity, including cost reductions ~~within all of our divisions. We have reduced~~(including reducing the ~~level of our workforce in the past and we will continue to do so based on booked work in all of our facilities. We have reduced the~~cash compensation paid to our directors and the salaries of our executive ~~officers,~~officers) and the sale of underutilized assets. In addition, at March 31, 2019, we continue to have ~~reduced~~$18.6 million of assets held for sale; however, we can provide no assurances that we will successfully sell these assets or that we will recover their carrying value. The primary uses of our liquidity for the remainder of 2019 and the foreseeable future are to fund:

The underutilization of our facilities within our Fabrication Division, and to a lesser extent within our Shipyard Division, until we secure and/or begin to execute sufficient backlog to fully recover our overhead costs;

Capital expenditures (including potential enhancements to our Shipyard Division facilities);

Accrued contract losses recorded at March 31, 2019;

Working capital ~~expenditures~~requirements for our projects (including the potential additional projects for the U.S. Navy if the aforementioned options are exercised); and ~~placed assets that are either underutilized, under-performing or not expected to provide sufficient long-term value for sale, which include our South Texas Properties.~~

Corporate administrative expenses and strategic initiatives.

We ~~currently~~anticipate capital expenditures of $5.0 million to $7.0 million for the remainder of 2019. Further investments in facilities may be required to win and execute potential offshore wind projects, which are not included in these estimates.

If conditions for the oil and gas industry do not improve, we are unable to increase our backlog, we are unable to diversify our customer base, or we are unsuccessful in our strategic repositioning of the Company, we would take additional measures to reduce costs and preserve our liquidity until we are able to generate cash flows from operations.

We believe that our cash, ~~on hand~~cash equivalents and ~~funds available~~short-term investments at March 31, 2019, and availability under our Credit Agreement, will be sufficient to enable us to fund our operating expenses, meet our working capital and capital expenditure requirements, and satisfy any ~~future~~ debt service ~~and~~obligations or other funding requirements, for at least twelve months from the date of this Report. Our ~~view regarding~~evaluation of the sufficiency of our cash and liquidity is primarily based on our financial forecast for ~~2018~~2019 and ~~early 2019,~~2020, which is impacted by ~~various assumptions regarding the sale of our Texas North Yard,~~ our existing backlog and ~~a reasonable amount~~estimates of ~~forecast, non-contractual backlog. There is~~future new project awards. We can provide no ~~guarantee~~assurances that our financial forecast will be ~~attainable~~achieved or that we will have sufficient cash ~~including funds available~~or availability under our Credit Agreement to meet planned operating expenses and other unforeseen cash requirements. Accordingly, we may be required to ~~further draw on our Credit Agreement,~~ obtain new or additional ~~bank financing,~~credit facilities, sell additional assets or conduct equity or debt offerings at a time when it is not beneficial to do so.

~~Cash Flow Activities~~

For the three months ended March 31, 2018, net cash used in operating activities was $14.1 million, compared to net cash used in operating activities of $15.1 million for the three months ended March 31, 2017. The use of cash in operations during the period was primarily due to the following:

~~Operating losses for the three months ended March 31, 2018, in excess of non-cash depreciation, amortization, impairment and stock compensation expense of approximately $1.5 million;~~

~~Build-up of costs for contracts in progress of $9.1 million;~~

~~Build-up of retainage on projects of $1.5 million; and~~

~~Payment of property taxes related to our South Texas Properties of $2 million.~~

Net cash provided by investing activities for the three months ended March 31, 2018, was $2.4 million, compared to cash used in investing activities of $391,000 for the three months ended March 31, 2017. The change in cash used in investing activities is primarily due to the insurance proceeds received for hurricane damage to assets at our South Texas Properties.

Net cash provided by financing activities for the three months ended March 31, 2018, and 2017, was $9.2 million compared to $1.0 million in cash used in financing activities, respectively. The increase in cash provided by financing activities is due to $10 million in net borrowings under our Credit Agreement.

Contractual Obligations

There have been no material changes from the information included in our ~~2017~~2018 Annual Report. For more information on our contractual obligations, refer to Part II, Item 7 of our ~~2017~~2018 Annual Report.

Off-Balance Sheet Arrangements

There have been no material changes from the information included in our ~~2017~~2018 Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the Company’s market risks during the ~~quarter~~three months ended March 31, ~~2018.~~2019. For more information on market risk, refer to Part II, Item ~~7A.~~7A of our 2018 Annual ~~Report on Form 10-K for the year ended December 31, 2017.~~Report.

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our disclosure controls and procedures were effective as of the end of the period covered by this Report.

There have been no changes during the ~~fiscal quarter~~three months ended March 31, ~~2018,~~2019, in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

~~The Company is~~We are subject to various routine legal proceedings in the normal conduct of ~~its~~our business primarily involving commercial disputes and claims, workers’ compensation claims, and claims for personal injury under general maritime laws of the ~~United States~~U.S. and the Jones Act. While the outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty, ~~management believes~~we believe that the outcome of any such proceedings, even if determined adversely, would not have a material adverse effect on ~~the~~our financial position, results of operations or cash ~~flows~~flows.

On October 2, 2018, we filed a lawsuit against our customer to enforce our rights and remedies under the applicable construction contracts for two MPSVs. The lawsuit was filed in the Twenty-Second Judicial District Court for the Parish of St. Tammany, State of Louisiana and is styled Gulf Island Shipyards, LLC v. Hornbeck Offshore Services, LLC. The customer responded to our lawsuit by denying many of the ~~Company.~~allegations in the lawsuit and asserting a counterclaim against us. We filed a response to the counterclaim denying all the customer's claims. The customer subsequently filed a motion with the court seeking, among other things, to obtain possession of the two MPSVs. A hearing on that motion is currently scheduled for May 28, 2019. See Note 5 of our Financial Statements for further discussion of this litigation.

Item 1A. Risk Factors.

There have been no material changes from the information included in Item 1A “Risk Factors” ~~included~~ in our 2018 Annual ~~Report on Form 10-K for the year ended December 31, 2017.~~Report.

Item 6. Exhibits.



Exhibit Number	Description of Exhibit

3.1	Composite Articles of Incorporation of the Company incorporated by reference to Exhibit 3.1 of the ~~Company’s~~Company's Form 10-Q filed with the SEC on April 23, ~~2009.~~2009 (SEC File No. 001-34279).
3.2	Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit ~~3.2~~3.1 of the Company’s Form 8-K filed with the SEC on November ~~4, 2016.~~6, 2018 (SEC File no. 001-34279).
10.1	~~Second~~Consent and Fourth Amendment to Credit Agreement dated ~~February 26, 2018, incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K filed March 9, 2018.~~
~~10.2~~	~~Change of Control Agreement, effective March~~May 1, ~~2018, between the Company and Kirk J. Meche, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed February 26, 2018.~~2019. * †
~~10.3~~	~~Change of Control Agreement, effective March 1, 2018, between the Company and David S. Schorlemer, incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed February 26, 2018.~~ †
~~10.4~~	~~Change of Control Agreement, effective March 1, 2018, between the Company and Todd F. Ladd, incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed February 26, 2018.~~ †
31.1	CEO Certifications pursuant to Rule 13a-14 under the Securities Exchange Act of 1934. *
31.2	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.~~1350. *

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.

†*	~~Management Contract or Compensatory Plan.~~Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



GULF ISLAND FABRICATION, INC.

BY:	/s/ ~~David~~Westley S. ~~Schorlemer~~Stockton
	~~David~~Westley S. ~~Schorlemer~~Stockton
	Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)

Date: May ~~4, 2018~~7, 2019

- 3531 -



LOUISIANA		72-1147390
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
		(I.R.S. Employer Identification No.)



16225 PARK TEN PLACE, SUITE ~~280~~300 HOUSTON, TEXAS		77084
16225 PARK TEN PLACE, SUITE ~~280~~300 HOUSTON, TEXAS		77084
(Address of principal executive offices)		(Zip Code)



Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	¨	Smaller reporting company	x

		Emerging Growth Company	¨



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	GIFI	NASDAQ



~~2017~~2018 Annual ~~Report:~~	Report	Our annual report for the year ended December 31, ~~2017, on Form 10-K as~~2018, filed with the SEC on Form 10-K on March ~~9, 2018.~~1, 2019.

~~ASC:~~		~~FASB Accounting Standards Codification.~~

~~ASU:~~	ASU	Accounting Standards Update.

Balance Sheet	Our Consolidated Balance Sheets, as filed in this Report.

~~Company:~~contract assets		~~Gulf Island Fabrication, Inc.~~Costs and ~~its consolidated subsidiaries.~~estimated earnings recognized to date in excess of cumulative billings.

contract liabilities	Cumulative billings in excess of costs and estimated earnings recognized to date and accrued contract losses.

Credit ~~Agreement:~~Agreement		~~The Company's~~Our $40.0 million revolving credit facility with ~~a third party financial institution~~Hancock Whitney Bank maturing June 9, ~~2019,~~2021, as amended.

~~deck:~~	deck	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.

direct labor ~~hours:~~	hours	Hours worked by employees directly involved in the production of ~~the Company’s~~our products. These hours do not include support personnel ~~hours~~ such as maintenance ~~warehousing~~ and ~~drafting.~~warehousing.

DTA(s)	Deferred tax asset(s).

~~EPC:~~	EPC	Engineering, procurement and construction phases of a complex ~~project; EPC typically refers to a contract~~project that requires ~~the~~ project management and coordination of these significant activities.

~~Exchange Act:~~EPS	Earnings per share.

~~U.S.~~ Exchange Act	Securities Exchange Act of 1934, as amended.

~~FASB:~~Fabrication AHFS	The machinery and equipment previously located at our Texas North Yard that was not sold in connection with the sale of the Texas North Yard and continues to be held for sale by our Fabrication Division.

FASB	Financial Accounting Standards Board.

~~FPSO:~~Financial Statements		~~Floating Production Storage~~Our consolidated Financial Statements, including comparative consolidated Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity, and ~~Offloading vessel. A floating vessel used by the offshore oil and gas industry for the production and processing~~Statements of ~~hydrocarbons, and for the storage of oil.~~Cash Flows, as filed in this Report.

~~GAAP:~~	GAAP	Generally accepted accounting principles in the U.S.

~~GOM:~~	GOM	Gulf of Mexico.

~~inshore:~~inland or inshore		~~Inside coastlines, typically~~Typically in bays, lakes and marshy areas.



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets at March 31, ~~2018~~2019 (unaudited) and December 31, ~~2017~~2018	61
	Consolidated Statements of Operations for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018 (unaudited)	72
	Consolidated Statement of Changes in Shareholders' Equity for the Three Months Ended March 31, 2019 and 2018 (unaudited)	83
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018 (unaudited)	94
	Notes to Consolidated Financial Statements (unaudited)	105
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2017
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3329
Item 4.	Controls and Procedures	3329
PART II	Other Information
Item 1.	Legal Proceedings	3430
Item 1A.	Risk Factors	3430
Item 6.	Exhibits	3430
Signatures		3531

~~jacket:~~

jacket	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.

~~LIBOR:~~	LIBOR	London ~~Inter-bank~~Inter-Bank Offered Rate.




~~MinDOC:~~modules		~~Minimum Deepwater Operating Concept. A floating production platform designed~~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 ~~stability and dynamic response to waves consisting of three vertical columns arranged in a triangular shape connected to upper and lower pontoon sections.~~final integration.

~~modules:~~		~~Packaged equipment usually consisting of major production, utility or compression equipment with associated piping and control systems.~~

~~MPSV:~~	MPSV	Multi-Purpose Service Vessel.

~~NOL(s):~~		~~Net operating loss(es).~~

~~offshore:~~	offshore	In unprotected waters outside coastlines.

onshore	Inside the coastline on land.

~~OSV:~~	OSV	Offshore Support Vessel.

Performance Obligation	A contractual obligation to construct and transfer a distinct good or service to a customer. It is the unit of account in Topic 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

~~piles:~~	piles	Rigid tubular pipes that are driven into the seabed to support platforms.

~~platform:~~	platform	A structure from which offshore oil and gas development drilling and production are conducted.

pressure ~~vessel:~~	vessel	A metal container generally cylindrical or spheroid, capable of withstanding various internal pressure loads.

~~SeaOne:~~	SeaOne	SeaOne Caribbean, LLC.

SeaOne ~~Project:~~	Project	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~~is expected to consist of ~~engineering, construction and installation of modules for~~ an export facility in Gulfport, Mississippi, and import facilities in the Caribbean and South America.

~~SEC:~~	SEC	U.S. Securities and Exchange Commission.

Shipyard AHFS	Drydock for our Shipyard Division that is held for sale.

skid ~~unit:~~	unit	Packaged equipment usually consisting of major production, utility or compression equipment with associated piping and control system.

South Texas ~~Properties:~~Properties		~~Collectively, our~~Our former Texas North Yard and Texas South Yard. The Texas South Yard ~~properties~~property was sold on April 20, 2018 and ~~equipment located in Aransas Pass and Ingleside,~~the Texas ~~respectively. These properties, improvements and related machinery and equipment are held for sale.~~North Yard was sold on November 15, 2018.

~~SPAR:~~	SPAR	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.

Statements of Cash Flows	Our Consolidated Statements of Cash Flows, as filed in this Report.

Statements of Operations	Our Consolidated Statements of Operation, as filed in this Report.

subsea ~~templates:~~	templates	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.



Surety		A financial institution that issues bonds to customers on behalf of the Company for the purpose of providing third-party financial ~~support~~assurance related to ~~construction~~the performance of our contracts.



T~~&M:~~	&M	Work performed and billed to the customer generally at contracted time and ~~materials~~material rates, cost plus or other variable fee arrangements which can include a mark-up.

Texas North ~~Yard:~~	Yard	Our ~~Texas North Yard represents our~~former fabrication yard, and certain related machinery and equipment, located in Aransas Pass, Texas, ~~is located along the U.S. Intracoastal Waterway and is approximately three miles north of the Corpus Christi Ship Channel. This facility is situated~~which was sold on ~~approximately 196 acres. This facility, its improvements and its related machinery and equipment are held for sale.~~November 15, 2018.

Texas South ~~Yard:~~	Yard	Our ~~Texas South Yard represents our~~former fabrication yard, and certain related machinery and equipment, located in Ingleside, Texas, and located 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. It consists of approximately 212 acres. This facility, its improvements and its related machinery and equipmentwhich was sold on April 20, 2018.

~~this Report~~		~~This quarterly report filed on Form 10-Q for the quarterly period ended March 31, 2018.~~

~~TLP:~~	TLP	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.

Topic 606	The revenue recognition criteria prescribed under ASU 2014-09, Revenue from Contracts with Customers.

U.S.	The United States of America.


	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
	(Unaudited)		(Audited)		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,492	$	8,983	$	49,898	$	70,457
Short-term investments					20,341		8,720
Contracts receivable and retainage, net	27,359		28,466		21,658		22,505
Contracts in progress	37,509		28,373
Contract assets					38,707		29,982
Prepaid expenses and other assets	3,311		3,833		2,558		3,268
Inventory	5,053		4,933		5,568		6,088
Assets held for sale	98,386		104,576		18,636		18,935
Total current assets	178,110		179,164		157,366		159,955
Property, plant and equipment, net	86,006		88,899		77,660		79,930
Other assets	5,006		2,777
Other noncurrent assets					23,689		18,405
Total assets	$	269,122	$	270,840	$	258,715	$	258,290
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,869	$	18,375	$	36,511	$	28,969
Advance billings on contracts	4,301		5,136
Deferred revenue, current	2,312		4,676
Accrued contract losses	6,320		7,618
Contract liabilities					9,234		16,845
Accrued expenses and other liabilities	9,006		12,741		9,605		10,287
Income tax payable	232		119
Total current liabilities	41,040		48,665		55,350		56,101
Deferred revenue, noncurrent	1,674		769
Outstanding borrowings under our Credit Agreement	10,000		—
Other liabilities	2,322		1,913
Other noncurrent liabilities					5,461		1,089
Total liabilities	55,036		51,347		60,811		57,190
Shareholders’ equity:
Preferred stock, no par value, 5,000,000 shares authorized, no shares issued and outstanding	—		—
Common stock, no par value, 20,000,000 shares authorized, 15,043,068 issued and outstanding at March 31, 2018, and 14,910,498 at December 31, 2017, respectively	10,813		10,823
Preferred stock, no par value, 5,000 shares authorized, no shares issued and outstanding					—		—
Common stock, no par value, 20,000 shares authorized, 15,236 shares issued and outstanding at March 31, 2019 and 15,090 at December 31, 2018					11,006		11,021
Additional paid-in capital	100,355		100,456		102,104		102,243
Retained earnings	102,918		108,214		84,794		87,836
Total shareholders’ equity	214,086		219,493		197,904		201,100
Total liabilities and shareholders’ equity	$	269,122	$	270,840	$	258,715	$	258,290



	Common Stock				Additional Paid-In Capital			Retained Earnings			Total Shareholders’ Equity
	Common Stock
	Shares	Amount
Balance at January 1, 2018	14,910,498	$	10,823		$	100,456		$	108,214		$	219,493
Net loss	—	—			—			(5,296		)	(5,296		)
Vesting of restricted stock	132,570	(79		)	(708		)	—			(787		)
Compensation expense - restricted stock	—	69			607			—			676
Balance at March 31, 2018	15,043,068	$	10,813		$	100,355		$	102,918		$	214,086



		Three Months Ended March 31, 2019
		Fabrication		Shipyard		Services		Eliminations			Total
Contract Type
Fixed-price and unit-rate ⁽¹⁾		$	12,631	$	33,626	$	6,231	$	(614	)	$	51,874
T&M ⁽²⁾		—		2,961		10,622		—			13,583
Other		—		—		2,749		(601		)	2,148
	Total	$	12,631	$	36,587	$	19,602	$	(1,215	)	$	67,605



Period	Payments
Remainder of 2019	$	489
2020	659
2021	668
2022	677
2023	676
Thereafter	6,173
Total lease payments	9,342
Less interest	(4,181		)
Present value of lease liabilities	$	5,161



		Three Months Ended March 31, 2018
		Fabrication		Shipyard		Services		Eliminations			Total
Contract Type
Fixed-price and unit-rate ⁽¹⁾		$	17,343	$	17,222	$	10,290	$	(453	)	$	44,402
T&M ⁽²⁾		—		1,343		10,585		—			11,928
Other		—		—		995		(35		)	960
	Total	$	17,343	$	18,565	$	21,870	$	(488	)	$	57,290



Segment	Performance Obligations at March 31, 2019
Fabrication	$	71,144
Shipyard ^{(1) (2)}	226,250
Services	15,397
Total	$	312,791


(1)	Amount excludes approximately $21.9 million of remaining performance obligations related to contracts for the construction of two MPSVs that are subject to dispute pursuant to a termination notice from our customer. See Note 5 for further discussion of these contracts.


(2)	Amount excludes remaining performance obligations related to contract awards in April 2019 for the construction of a regional class marine research vessel (approximately $70.0 million) and two towing, salvage and rescue ships (approximately $129.0 million).



Year	Total
Remainder of 2019	$	180,172
2020	101,924
2021	29,825
Thereafter	$	870
Total	$	312,791


(1)	The decrease in contract liabilities compared to December 31, 2018, was primarily due to the unwind of advance payments on two separate projects in our Fabrication and Shipyard Divisions.


(2)	Revenue recognized during the three months ended March 31, 2019 and 2018 related to amounts included in our contract liabilities balance at December 31, 2018 and 2017, was $13.5 million and $4.3 million, respectively.




Assets	Fabrication Division			Shipyard Division			Consolidated
Machinery and equipment	$	25,583		$	1,222		$	26,805
Accumulated depreciation	(7,871		)	(298		)	(8,169		)
Total	$	17,712		$	924		$	18,636



	South Texas Properties
Assets	Texas South Yard⁽¹⁾			Texas North Yard			Shipyard Division Assets			Consolidated
Land	$	3,335		$	2,157		$	—		$	5,492
Buildings and improvements	90,370			30,692			—			121,062
Machinery and equipment	—			66,305			2,187			68,492
Less: accumulated depreciation	(43,808		)	(52,554		)	(298		)	(96,660		)
Total assets held for sale	$	49,897		$	46,600		$	1,889		$	98,386



	Three Months Ended March 31, 2017
	Fabrication Division		Shipyard Division		Services Division		EPC Division		Eliminations			Total
Contract Type
Lump sum and fixed-price construction ⁽¹⁾	$	10,209	$	16,707	$	5,721	$	—	$	(1,350	)	$	31,287
Service contract revenue ⁽²⁾	—		1,715		4,991		—		—			6,706
Other ⁽³⁾	—		—		—		—		—			—
Total	$	10,209	$	18,422	$	10,712	$	—	$	(1,350	)	$	37,993



By Segment	Performance Obligations as of March 31, 2018
Fabrication Division	$	6,706
Shipyard Division ⁽¹⁾	149,590
Services Division	11,858
EPC Division	—
Intersegment eliminations	(990		)
Total	$	167,164



Year	$'s
Remainder of 2018	$	88,573
2019	59,231
2020	19,360
Total	$	167,164



	Three Months Ended March 31,
	2018			2017
Basic and diluted:
Numerator:
Net loss	$	(5,296	)	$	(6,454	)
Less: Distributed and undistributed loss (unvested restricted stock)	—			(34		)
Net loss attributable to common shareholders	$	(5,296	)	$	(6,420	)
Denominator:
Weighted-average shares⁽¹⁾	14,964			14,758
Basic and diluted loss per share - common shareholders	$	(0.35	)	$	(0.44	)


–	The construction of two regional class research vessels (individual project values of approximately $77.0 million and $69.0 million). Our customer exercised its option for the construction of a third vessel in April 2019 (project value of approximately $70.0 million), which is not included in backlog at March 31, 2019; and


–	The fabrication of a jacket and deck (destined for Trinidad);


–	The expansion and delivery of a 245-guest paddle wheel riverboat. The riverboat will be reconfigured using the existing hull of a former gaming vessel built in 1995; and



	March 31, 2018
	Fabrication		Shipyard		Services		EPC		Eliminations			Consolidated
Future performance obligations required under fixed-price contracts under Topic 606 of ASC	$	6,706	$	149,590	$	11,858	$	—	$	(990	)	$	167,164
Contracts signed subsequent to March, 31, 2018	—		29,874		—		1,037		—			30,911
Signed contracts under purported termination or third party protest ^{(1), (2)}	—		94,176		—		—		—			94,176
Backlog	$	6,706	$	273,640	$	11,858	$	1,037	$	(990	)	$	292,251



	March 31, 2018				December 31, 2017
Division	$'s			Labor hours	$'s			Labor hours
Fabrication	$	6,706		54	$	15,771		150
Shipyard	273,640			1,493	184,035			1,104
Services	11,858			130	23,181			290
EPC	1,037			—	—			—
Intersegment eliminations	(990		)	—	(370		)	—
Total backlog	$	292,251		1,677	$	222,617		1,544

	Number			Percentage	Number			Percentage
Major customers ⁽¹⁾	5			85.4%	4			73.0%

Backlog is expected to be recognized in revenue during:⁽²⁾	$'s			Percentage
2018	$	90,879		31.1%
2019	142,274			48.7%
2020	59,098			20.2%
Total	$	292,251		100.0%



	Three Months Ended March 31,						Increase or (Decrease)
	2018			2017			Amount			Percent
Revenue	$	57,290		$	37,993		$	19,297		50.8%
Cost of revenue	56,611			42,890			13,721			32.0%
Gross profit (loss)	679			(4,897		)	5,576			113.9%
Gross profit (loss) percentage	1.2		%	(12.9		)%
General and administrative expenses	4,709			3,930			779			19.8%
Asset impairment	750			389			361			92.8%
Operating income (loss)	(4,780		)	(9,216		)	(4,436		)
Other income (expense):
Interest expense	(469		)	(59		)	(410		)	(694.9)%
Other income (expense), net	12			9			3			33.3%
Total other income (expense)	(457		)	(50		)	(407		)	(814.0)%
Net loss before income taxes	(5,237		)	(9,266		)	(4,029		)	(43.5)%
Income tax expense (benefit)	59			(2,812		)	2,871			102.1%
Net loss	$	(5,296	)	$	(6,454	)	$	6,900