Gulf Island slips into red over weak demand and contract losses
Gulf Island Fabrication, a Houston-based fabricator of specialized offshore structures, has ended up in the red for the 2Q 2017 due to reduced revenue for the quarter.
Gulf Island said in its second quarter financial report that it went from black to red in 2Q with a loss of $10.9 million. In the second quarter of 2016, the company reported a net income of $5.5 million.
The company’s revenue for the second quarter of this year was reported at $45.9 million which is around half the revenue of the same period last year which stood at $81.5 million.
Gulf Island also said that, for the six months ended June 30, 2017, the company reported a net loss of $17.4 million and $83.9 million of revenue. In the same period in 2016, the company saw a net income of $6.5 million and revenue of $165.5 million.
Kirk Meche, the company’s CEO and president, said: “Results for the second quarter of 2017 are reflective of contract losses of approximately $10.2 million as a result of rework performed and revised estimates to complete two vessel construction projects we assumed as part of our shipyard asset acquisition in 2016.
“Additionally, competitive pricing pressures and the continued weakness in demand from our traditional markets in offshore oil and gas contributed to our losses. Finally, we incurred holding costs of $1.2 million during the quarter related to our South Texas facilities which are for sale. Year-to-date holding costs in South Texas were $2.5 million plus another $1.9 million in depreciation which was incurred during the first quarter.”
In its report, the company reported a revenue backlog of $251.0 million and a labor backlog of approximately 1.7 million labor hours in the 2Q 2017. The backlog increased from $113.2 million reported at the end of the first quarter of 2017.
“During the quarter, we successfully negotiated a new $40.0 million credit agreement with Whitney Bank with improved flexibility to support our business. Additionally, we increased our revenue backlog to its highest level in over three years to $251.0 million, up $137.8 million from last quarter’s total. Finally, the increase in backlog included new project awards totaling $167.0 million in markets primarily outside of oil and gas,” continued Meche.
Gulf Island’s balance sheet position at June 30, 2017, includes $22.3 million in cash, no debt, and working capital of $167.7 million which includes $107.3 million in assets held for sale, primarily related to South Texas assets.