Cindi Cook | IR |
Richard Heo | President and CEO |
Wes Stockton | EVP and CFO |
Good day everyone, and thank you for standing by. Welcome ladies and gentlemen to today's Gulf Island Fabrication, Inc.
Third Quarter 2020 earnings call. A quick reminder that all participants will be in listen-only mode for the duration of the presentation, and this call is being recorded. At this time, I'd like to turn the floor over to Ms. remarks opening for Cook and introductions. Cindi go please ahead. Cindy,
would Thank XXXX everyone welcome good teleconference. I you, afternoon. like to to and our third quarter
forward-looking the materially. We this financial and cautionary after Please replay that and factors filings. XX-K of and Our a differ call in will on statements, on Backlog this not mind released to press on would may today’s Form call this everyone like which SEC website press EBITDA our U.S. under recognized risk certain to evening. available of language keep website release also our this call, to A results release available P.M. results note release comments the the GAAP. described the measures gulfisland.com. afternoon, our XXXX at include subsequent refer in that press be our on is X were actual included are management copy in and and reference and may Please
As our Stockton, are in CFO. reconciled and President Wes required most CEO; non-GAAP President financial Vice we measures their financial and measures rules and comparable GAAP Mr. release. Mr. by Heo? Richard to Today, Mr. have Heo, these and Executive press regulations, SEC
you afternoon, with Thank of I this as quarter discuss trends discussion of afternoon key and to the initiatives you, commentary families we Wes third ongoing call, well results, Cindi. provide I you of today’s will Then, an third the to will your on uncertainty first everyone, challenges. results pandemic. here our results. address of in some on our current Good of then each business to happy on are detail outlook. progress in challenges with impacted will to factors associated of COVID-XX greater will welcome our and quarter and position. backlog that that third presidential near-term key hope the our taking are liquidity are be quarter actions I and we update I and our the provide discuss also making and the I eve cope as these continuing and the election, some well our the On business on am environment.
We the some remarks. for and conclude questions will then closing open-up call with
COVID-XX Now, very to operational moving has had and Shipyard due price the a customer the our impact record the pandemic oil key economic decision on making. effect and Coast, impacted on which level projects impact along of COVID-XX, the uncertainty a storm in pronounced tropical quarter of third was continued challenging which of hurricane The ongoing our activity quarter. Gulf the prolonged during Division and to
up workforce with issues experienced we impacts and personnel, during challenges As ongoing delays. projects, absenteeism subcontractor continue retaining our ramp including to the cost and longer-duration and several we increases our physical of distancing, support to employee quarter and hiring increased
workforce In planning salvage Specifically, the by projects were to our a labor our increase effect from rescue towing, execution and quarter plan. of had headcount impact we our continue the pandemic. the COVID-XX to greatest support craft significant to ship the cumulative
hire turnover. However, met needed objectives hiring was due with that as craft every we ramp efforts recruitment one retention challenges. the up To had continue achieve for labor, we and we to our to to for were high craft our professionals three
this release our also and has construction projects planned delayed and the delays frequency project have experienced our high to in also firm of Deliverables a pandemic, result supporting third-party affected from higher the work. and employee turnover expenses additional of for been the the schedule engineering personnel due We and as onboarding the of absenteeism. subcontractor COVID-XX turn
of extensions increased of duration effect result, cumulative will result matters the the of impact remaining COVID-related in the forecast and a schedule projects costs. these As and
COVID-XX we the and on efficient each will equitable to activities these is our a adjustment construction example, with basis, be Vessel of COVID-XX incorporate our cost the on engineering engineering reflected to construction less ability their concurrent of our This require For which to third the construction working their response into previous will schedules projects. REA request are construction, quarter favorable reduces are our the were additional recoup follow-on our not results. extend experience delayed due perform resolution delays. will customer result for and on recommencing increases to originally activities to the to in allow impacts. us The resequencing with Research further before a additional and Navy customer the challenges, subcontractor benefits any submitting project potential our delays closely Projects, benefits to and with which schedules complete associated impact Similarly, has the In of vessels. experienced the of extend of in
the the cost an and that unfortunate to quarter engineering We the impacts tracks, COVID-XX any to with collaboratively also overhead an our forty-vehicle Besides reaching first landing we construction. from impact of close accident additional regarding due by on on which including are hull working experienced the near-term damaged engaged construction are COVID-XX. two and under the crane pandemic, the schedule associated was ferries, impacts of customer the the during longer-term to our impacts delays, its potential to on with costs, with schedule and agreement
hull Fortunately, considerable no one damage. was hurt, but suffered the
on options, In taken a customer fabricating is in repairs hull. letter now, As made the believes repairs will that customer the be hull, a quarter, the tolerance. will the as rejection first vessel and in working we considering are the has our issued be would that a not that of with remediation have discussed a previous activities the response, in they the the out new evaluate lieu the hull which of suspended to accept vessel all to required result result, indicating customer actions new that construction could ultimately including and
constructing accrued cost to we also potential any hull from fabrication We on during new associated corrective apply, to Based range coverage and based $X accident uncertainty and our to customer estimates may the working either hull. incremental Due third of hull. be our from based our deductible, scenario insurance the this with with million million, that assess insurer. and believe or a a are forecast that on quarter, this with the action resulting working may the course coverage increases to issue the currently new $X repair action respect insurance the taken a insurance remediation insurer our are of coverage, to we $XXX,XXX regarding before would would and of on preliminary the any costs with ultimate consideration through for that a our any apply
on storm active the quarter, the also During with we September being one record of past the active the with faced most month on were most seasons record.
operations facilities a surges. As and for of impact the prepare cease at storm our result, to potential high we forced and times been have winds
with last made tug Jennings not were which end Charles which season. our Southern Just of storm, caused our and that our in Louisiana for power which strong as landfall the harbor made wind to We facility flooding We a at of week facility suffered a of Lake late our strongest the as Hurricane Category-X Zeta were ninth days Charles August, near Lake and in on within close and damage, October, damaging being counties. the speeds Houma fortunate Laura in facilities, the late X our as delivered. high-end hurricane wind minor fortunate surrounding only facilities outages XXXmph, with drydocks, project so landfall hurricane, Category record was
no In Laura, closure key tenth discipline tug you While key and in strengthening project year more the the many project initiatives, and of in in project functional and for our quarter Charles of employees leadership, we and completed improving suffered Hurricane am practicing was of to efforts procedures, our losses, for disciplined enhancing October, the continued tug I of on harbor with our of fourth same deliver several thankfully difficult spite earlier resources. projects, employees discipline pursuing in continue to be in Jennings and and are harbor personal our grateful the remain one still shared property Lake areas respect who executing and the commitments impacts pursuing on resource to delivery have a centralizing project the injured. on we utilization this of during execution. time. and target facility. management opportunities ninth of our importantly, more demonstrating processes this Jennings and our focus We our substantial With
our of accident improved progressing and COVID-XX their our forecasts. impacts on well project impact as labor the its unfortunate absent crane as ramp with a to are projects the quarter, up craft As relative in performance result, the
established a and opportunities commercial provide foundation can execute the I only and As differentiate am that increase, pursue confident projects we and strong have of volume where end opportunities will discipline with improve the those to we value, and management. markets strong
seeing XX% also employee benefits in over XXX Shipyard our our are for and management Human We this and turnover team the a which functional We the fortified Division. and challenges of enabled resource strengthened onboard or year, earlier to team headcount, our needs employees Resources leadership. hire our us year, of approximately to total accommodate
to of economic positions by our as team, addition, but of level appreciate very incentives the our our programs jobs human we the to in also of Economic Louisiana financial and the Further, low safety were notified quality record we our not goals, Development in our much focus of only we provide include supervision, to high chose and efforts recruiting These community, even in turnover. communities due the to are that and with were serve. craft employee build training efforts achieve we the Jobs FastStart we incentive field skilled strengthened Louisiana awarded In and investment recognized October hiring the Quality incidents ongoing backlog. support drive We work the our packages at and resources training investments Programs. State if levels support that on through competitive our execute
to come of develop we train success. the I of offering the with professionals Our local career continue our human to as Louisiana, is efforts organization and of our to on have depend attractive also legacy that residents resources very future craft team for on of help recruit, southern opportunities. technical our proud am colleges partnering build we
in our continue our we results. signs and processes As project commercial seeing and improvements procedures, of improve are execution we to
deck completed accelerated of example, fabrication Corona we of For process and improvements quarter & operations. Fabrication Houma XXXX. and our realized division, $X midst pandemic was the jacket had three our our and Services projects, the particular, improvements benefiting many solid second in on are further disrupting schedule In the named storms our building in project million in of the execution project on an
see we better a improvements delivering forecasted book many relative of did quick great our team projects performance forecast. our job on safely than project our burn Our business. realizing and and associated to Similarly, of with project services previous the
is manual hiring that process paper of Jennings accomplished respect improve which to our and the costs onboarding facility. saves online to to visible processes, onboarding and well support process migrated is centralize pandemic administrative now In we personnel resources, we not process us potential and high the have enabled of through Another improvement projects. close and efforts and an before to application our to past, utilization which financial With necessarily hire us today, reduces resource improved volume key applications, the to our project results the needed decided electronic are hiring the were errors. less in and
the decision, difficult pandemic near-term the in it as was markets better While due our recover. a end to longer-term of COVID-XX the positions this and impact us
lower took our further consolidate quarter. These first our location, combining in by also in well help as best Fabrication Division and enable and our mitigating consolidation with to Division costs the are challenges processes facing. we one efforts us in the partially step this We market one as initiative people Services
resource Fabrication challenges the Division’s requirements oil given markets. the monitor closely in the end to continue and We Services gas &
the division quarters, quarter We we have evaluate future be and improve other fourth operating for identified approximately cost and of to to in overhead and quarterly continuing opportunities $XXX,XXX are incremental realized division’s savings the implemented results. in will the that
margin offshore decisions development burn what Services and business but services COVID to quarter. for activity, attractive through to executed fourth work an our of higher be sustained we the Division the book the new we fabrication increase like market vessels due our be see. investment expect being work. at and as uncertainty. & and continue oil volume quick challenged build activity is seen on final the the to we is have On our executing repair our our would selective, With onshore offshore backlog to activity Shipyard opportunities, This price Fabrication focus and to our On respect front, Division, uptick unfortunately in this is and large and margins, below be bidding in to maintenance continues increasing
pursuing, relationships that and we in While decision, we focusing projects In be lost the opportunities CapEx any the investment meaningful on our supporting actively not delayed. are to current we continue customer project we these opportunities, a interim, have final will confidence competitors. from we resources ourselves those are and reach our where have be disciplined will differentiate our where can larger
We potential transition as are their markets also well in production. to needs end market we fabrication to plant energy to and as increasing expanding our services construction, the support in opportunities have customers renewable our as opportunities hydrogen green make begun in biofuel
in support opportunity. customers pursuit now the to turn discuss development us business in We call along over greater our will to I our results this help have detail. the with to market Wes quarterly of pivot growing added necessary
a revenue third $XX.X & revenue for was Services million million $X.X quarter our net of the the third a quarter million compared the respectively. good representing Shipyard and XXXX. a & quarter second to for to $XX.X Thanks was conclude loss quarter year-over-year $XX.X decrease higher quarter I by of will our discuss offset to everyone. some backlog then putting million the Richard $XX.X liquidity. decrease was context million discussion sequential Division, XXXX, revenue details third Consolidated revenue a a X% and lower trailing million, quarter. million for for compared our XX%, decrease for and afternoon, and XXXX, consolidated million, the XXXX and the quarter, of approximately the Fabrication due loss current lesser XXXX mentioned for and EBITDA results lower with our Shipyard loss XXXX quarter. sequential the then Richard, the by Division, the net the our our and loss Services $X.X and and a their for for for will second segment our of from partially year Consolidated in on I for impact XXXX, Division. The period, Division. due prior the provide third third $X.X to to additional for factors Fabrication The of regarding a million extent, and quarter quarter was compared was of for results, loss $XX $X.X to
volume Our for Services attributable loss was charges & within the million low and resources and both for current our backlog to the project our consolidated $X.X Shipyard quarter Division, Fabrication of our of revenue a divisions. low facilities and underutilization margin for Division,
Hurricanes and for our our underutilization for of three a level and & vessel due Our research the impacts Services, Fabrication within of to work both hours construction on delays our Shipyard, was Laura, projects Sally Marco reduced divisions.
includes The and we hourly perform retaining Division. quarter and addition, our salaried the maintenance. with projects also million facility associated with on Laura associated costs impact Shipyard craft Hurricane special of improvements, charges of process to In incurred employees $X.X
some by regarding Now additional results operating details provide let quarterly our segment. me
ferry ice-breaker Shipyard to third and projects. million were for vessel for to higher million for For construction, was procurement the our and our by activities seventy $XX.X revenue activities and the the increased research million XXXX, the third research projects and had completion vehicle second These compared for The on construction due vehicle compared quarter, vessels Division, on offset quarter was increased quarter rescue XXXX. ship engineering for the of X% the projects. was research seventy was $X.X the quarter activities the to lower projects, quarter million, and period decrease to our for towing, year. quarter our delays the tugs, due quarter charges million for loss The the current $XX.X increase of partially third quarter. to relative primarily the XX% operating resources quarter to salvage trailing procurement XXXX to vessel to loss impacts the earlier revenue $X.X million of third in forecast $XX.X million we XXXX and third construction rescue and the second prior for harbor lower fewer our procurement tug loss activity a of the and as partial our due under our to loss cost of $X.X division’s margin due XXXX the loss was to and for XXXX. The for towing, ship project facilities underutilization EBITDA for $X.X on low trailing of period, operating for loss the $XXX,XXX construction EBITDA vessel for mentioned projects, XXXX, a an for and quarter, an year $X.X million million Operating previously EBITDA related project. our our attributable was ferry of the $X.X increases compared backlog, delays compared salvage and an to the
Jennings Coast The also preliminary In relate our to addition, uninsurable its request salvage $X.X we benefits, to our in the Laura harbor our ship cost and quarter for closure, The towing, impacted the for not as hurricane facility Navy recover for any, to our Lake with Hurricane drydocks, the to insurance if our and adjustment for operating are damage associated potential submitting rescue the to loss does and equitable deductibles tug with The increases project. U.S. projects. coverages estimates our quarter ninth associated our activity, the well warehouses of Charles facility charges reflect of damage bulkheads. fourth the to connection further utilization includes our of charges facilities closures by and winding prepare bulkheads down levels. with of Gulf quarter temporary at related the as caused to million our anticipated
third quarters impacts project for the the second XXXX, our quarter individual the project XXXX. for Absent year-over-year was charges $X.X the quarter the in quarter including period reflected lower than $XXX,XXX periods, and margin and project impacts, current the to million and and prior trailing in trailing quarter also period. the project comparable mix Our of year-over-year
were under the salvage by due ago from due Jennings the benefited current periods wind the X% related prior period In overheads utilization initiatives, consistent the to quarter. addition, cost in for ship generally impacts higher hours from quarter. trailing our offset higher of across respect towing, facility previously and G&A, current to utilization our decrease and all down quarter and to the realizing Hurricane relative XX% with recovered projects, the mentioned period including partially the periods, work a year the to our decrease With the to a reduction activity rescue
For our Division, the trailing & the XX% offset $XX.X the million second XXXX. revenue higher quarter for by which subsea our to our lower quarter offshore The and period the activity revenue jacket was Services for which from to quarter, deck and and $XX.X components decrease completed deck project million primarily the revenue XXXX. completion also offshore quarter XXXX, $XX.X million projects, higher river Fabrication was for our completed quarter third XXXX and and was paddlewheel and quarter docking were the of project our third compared for jacket the offshore partially from marine current project. services for boat XX% was due The structures the to first decrease in due in
was third $X.X project for structures increased and $X.X $X.X million, activity our backlog third quarter and and our costs EBITDA decreases special the of perform to marine an by partially XXXX low for for million quarter $XXX,XXX an In period, employees loss XXXX the onshore $XX,XXX compared to offset second third trailing maintenance for low for and loss loss quarter with revenue to Operating lower and offshore for typically improvements, the of operating project. facility projects and prior business. services addition, for repairs. were operating the and was craft levels of hourly process attributable we The quarter, revenue These was for retaining XXXX, with compared small quarter an had loss million loss associated the modules EBITDA to the less due quarter. offshore experienced $XXX,XXX year XXXX. docking fabrication scale work, services the and associated and current salaried EBITDA to offshore
and our impacts to closures to project. In the a and not addition, jacket prepare facilities the Coast and by These work level offshore utilized division’s $XXX,XXX the hours deck project division’s of partially were due facilities hurricane were activity. temporary for Gulf improvements resources fully offset for of the of reduced
than year-over-year Our million of also project impact impacts, second periods, the periods, margin revenue. project our XXXX, the representing in trailing impacts current mix the projects services and quarter greater quarter and for of reflected Absent and due fabrication $X.X XXXX. quarters third offshore project trailing $X individual quarter and the including higher year-over-year was small both project and percentage primarily a our for million of the prior the charges to our quarter project scale in total
under our to were with associated retention the work previously mentioned of lower period due but year-over-year addition, costs personnel. higher In overheads trailing consistent generally to the relative recovered with the period, the and hours
XX% periods Specifically quarter initiatives, to were former Division of a XX% quarter to from due quarter. lower to relative utilization and decrease of project and our decrease lower the due primarily to including the lower as for the impact and the approximately offshore the scale reduction the it respect small with the boat onshore G&A, from the Fabrication fabrication in paddlewheel XXXX our prior year cost river quarter. hurricane XX% current a activity, work, utilization, completion hours less and ago project, trailing period consolidation Services relates benefited services With and year-over-year, Division to work our third the
the with Division, relative plan cost initiatives. our incentive to lower million, of due the and costs the loss to third both $X.X $X.X decrease XXXX quarter both and our quarter compared periods loss operating quarter Corporate an For second operating million for to was for reduction XXXX,
relative the lower benefited fees. from the trailing current addition, to legal period In quarter
if due backlog, X% The end flow totaled customer would million. a will respect vessels for backlog options from which operating attributable revenue and Shipyard for provide Next, negative approximately flow to to and $X.X cash $XXX three in to X% of our end, and ago of quarter the XXXX. few excludes the our our liquidity $XXX partially comments These decrease our our backlog approximate held volume year million, million. & was to approximately were was I $XX the With sale Fabrication in our proceeds cash quarter quarter. liquidity, assets quarter exercised, situation. $XXX,XXX outpacing which uses regarding sale for quarter million of of end, by new capital Shipyard for million awards from quarter additional backlog project June Navy, balance for U.S. third decrease and compared our offset a both expenditures resulting a end. the third Services and our $X.X Divisions the a representing at from in At At quarter, investment cash June Division, was of were XX%
to had requesting also our we of our PPP $X.X our lender, $XX total quarter of debt forgiveness We million. and million application in submitted loan September end Loan, at attributable to
forgiven, repayments the our or interest, deny Should on loan have we guidelines. loan loan portions by any Our repaid end, forgiveness. assurance along is our or of intend forgiveness any absent and as loan applicable application quarter the forgiveness program terms the of on based SBA of to At based and classification bank will SBA, after has the loan to will terms forwarded loan SBA and the with from requirements the timing loan, if, We it our the the days and program. XX conditions debt, reflected debt loan bank application. and not with to approve have benefit the approve to required be be reflect reasonable application, the our of the the application. Any of the deny approved approve our we we forgiveness eligibility that and the met when, have of
working sale. held our approximately we with to credit respect With million no including approximately of outstanding facility. million totaled $XX all end covenants, the borrowings it financial of our letters $XX $X with facility, in of end, million credit were million and at our approximately $XX at assets quarter on capital, Regarding quarter for compliance
increase capital, million. with PPP to in and portion investments, This lumpiness June at the capital $X same working XXXX. of of projects requirements, fourth project compares in Our sale approximately variability our we working our breakeven cash of the year. quarter million assets to collections, held of on billings to was is timing the anticipate expectations our include Due in the our consistent million, our approximately for our million consistent requirements our for our and project XXXX contractual capital currently to Navy, $X be previous expectations, for current ongoing XXXX. fourth anticipate $XX for capital $X an capital $XX which the basis with needs, with business working working and negative excluding we and previous quarterly the Loan, quarter which Also the with U.S. to
may regarding the oil remarks. volatility EBITDA This and questions. at given our remainder of line COVID-XX not prepared providing pandemic, be for expectations uncertainty, we market will crude for concludes related guidance respect with XXXX, price the to the you open this time. Finally, not Operator,
Gulf hurricanes operations Coast in the results. were our you, and of the and quarter Thank third The to disruptive resulted clearly impact COVID-XX disappointing Okay. operator. in
actions are to possible these and mitigate taking company. where challenges However, strengthen we the
in we First, with whose are active impacted customers been equitable resolutions. projects discussions reach our to have
signs improved commercial spread, COVID-XX the announced opportunities execution our continue efforts regard personnel. strengthening our our of of and of project our including and resources closure and facility pandemic Jennings to Divisions. the to team, Ahead human processes our Fabrication in we also management. incremental consolidated leadership initiatives and further supported are and on execution are We by and seeing and focus These procedures Services
& assets. our on a opportunities projects where savings focused while cost preserving beginning further cash at focused value can implement additional to Division, and quarter, and perspective, provide the we will Services combined be on by bidding From continue are realized margins. We steps taking and now disciplined we in remain the be underutilized the ourselves, to controlling and Fabrication attractive fourth in monetizing which costs we differentiate executing
as benefit all key of also our in Doc challenges such closing, our will the a renewable a We construction itself actions and XXXX energy, as and oil are confident this by markets in that industry. see gas the leader as Laborde, we fabrication established also am evaluating milestone history. the despite new including and represents the production. of the these in market hydrogen quickly I recover. was founded company In of areas plant biofuel, year, Gulf opportunities offshore structures in for Island end XXXX
and an of years, leadership vessels a In and steel with future this the structures fabrication we offshore a anniversary of and past markets transition place our infrastructure past support quality and of making website. offshore and unyielding our evolution maintaining refreshed we capabilities delivering we customers logo and continued structures new marine and the are The markets industry investments, in serve, together premier expanded services. our green the onshore structures Gulf complex while we and and the brings have to our forefront provider as our logo of safety who marine the commitment Island legacy to the services. recognition and serve, have and on of support to energy, XX that moving onshore Over to the to vessels, are we steel bringing focus
want rich for possible today evolution people. and thank employees contribution. is only I history with great Our and acknowledge to these their
results. Island, to call, in For the us you Gulf our and I want the discuss those interest thank to for allowing on opportunity your
before fourth doing forward the you and you. look impact mitigate Thank again all Be with and speaking can of care. to safe to us, quarter I we are our challenges unprecedented We call. take results conference on the
conclude does Once again, for ladies us. and thank call We that joining our for you today. gentlemen,
now You disconnect. may