Gulf Island Fabrication — Investor Presentation (November 2023)
42 slides from Gulf Island Fabrication's investor presentation, Nov 8, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION November 2023 Exhibit 99.1
Slide 2: Cautionary Statements
Cautionary Statements This presentation contains forward-looking statements in which the Company discusses its potential future performance, operations and projects. Forward-looking statements, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1
Slide 3: Company Overview
rea GULF ISLAND BUILDING ON TRUST COMPANY OVERVIEW
Slide 4: About Us
About Us Fabrication business strategically positioned in attractive end markets Growing Services business provides stable growth platform Significant progress on Strategic Transformation has positioned Gulf Island to pursue Profitable Growth ~$142 million of total revenue for 2022 ~$42 million cash
Slide 5: About Us - Facilities and Labor Force
Houma, LA Broussard, LA & New Iberia, LA Harvey, LA Ingleside, TX About Us Experienced Labor Force Strong team of project professionals with demonstrated experience to support both small-scale and large-scale projects Non-union, skilled labor force capable of fabricating complex steel structures and
Slide 6: Segment Overview
Segment Overview Operates Through Two Operating Segments FABRICATION Revenue Mix Current mix reflects strength of Services business and low volume of large-scale fabrication revenue. Anticipate relative mix to be more evenly split if large-scale fabrication projects are in backlog. SERVICES Fabricat
Slide 7: Services Division
Maintenance & Decommissioning Scaffolding Coatings Specialty Welding Enclosures Municipal & Civil Services Division Welding Fitting Rigging Equipment Operations Firewatch Traditional SafeDeck Blasting/Painting Insulation Fireproofing Ultra High Pressure Torquing/Tensioning Hydrotesting Weld Isolatio
Slide 8: Services Sample Projects
Launcher Skid installation in connection with a subsea tie-back project. Maintenance & Decommissioning Offshore Hookup Coatings Scaffold Hookup of a Tension Leg Platform at an offshore location. Facilities are connected to subsea equipment on the ocean floor to allow for hydrocarbon production. Coat
Slide 9: Fabrication Division
Fabrication Division Offshore O&G Structures Offshore Wind Structures Rolled Goods, Docks & Terminals Subsea Structures Modules, Skids & Piping Systems Equipment Modules / Skids Process Modules / Skids Pipe Racks Pipe Spools Specialty Piping Jacket Foundations Decks Hulls Process Modules / Skids Sub
Slide 10: Fabrication Sample Projects
Fabrication Sample Projects 2,900-ton Secondary Quench Exchanger (SQE) module and three 2,500-ton process modules for Ethane Cracker Facility. Ethane Cracker Modules Offshore Wind Turbine Foundations Mobile Launcher 2 Truss Components Subsea Structures Five 400-ton Jacket Foundations with Piles and
Slide 11: Corporate Sustainability
Corporate Sustainability A strong safety culture is a critical element of Gulf Island’s success, and the Company is committed to the safety and health of its employees and subcontractors. Gulf Island is committed to training the next generation of skilled craft professionals. The Company is also a v
Slide 12: Safety
Safety Average Total Recordable Incident Rate of 0.54 since 2019 One Lost Time Incident since 2019 (7.8 million hours worked)
Slide 13: Supporting the Community
Supporting the Community Training Future Craft Professionals Del Mar College – Funds received from Texas Workforce Commission to upskill and reskill craft employees Louisiana Workforce Commission – Internal training developed to upskill craft employees Philanthropy and Community Involvement Relay fo
Slide 14: Business Transformation
rea GULF ISLAND BUILDING ON TRUST BUSINESS TRANSFORMATION
Slide 15: Business Transformation
Business Transformation Complex shipbuilding and fabrication contracts Reliant on the cyclical marine and offshore O&G end markets Heavily dependent on large, high-risk, fixed-price contracts High customer concentration Multiple facilities with significant under-utilized capacity and siloed organiza
Slide 16: Transformation Phases
Transformation Phases In 2020 Gulf Island outlined a transformational strategy intended to improve the Company’s liquidity and operational performance to position the Company to pursue stable, profitable growth. With the significant progress achieved on the phase one initiatives, Gulf Island has shi
Slide 17: Phase One - Improve Financial Strength and Operational Performance
PHASE ONE – Improve Financial Strength and Operational Performance Combined Fabrication activities within one division Closed certain under-utilized facilities and consolidated operations Made strategic changes to key personnel and added functional expertise Sold Shipyard operating assets and long-t
Slide 18: Phase Two - Pursue Stable, Profitable Growth
PHASE TWO – Pursue Stable, Profitable Growth Near-term focus on higher-growth end markets such as LNG and Petro-Chem Longer-term focus includes sustainable energy end markets, including offshore wind Grow offshore customer base and broaden services offerings Expand services offerings to onshore mark
Slide 19: Shifting End Market and Contract Mix
Previous Mix* Target Mix Shifting End Market and Contract Mix LNG and Petro-Chem expected to provide near-term growth opportunity for Fabrication as transition to target mix Renewable and infrastructure expected to drive longer-term growth opportunity in large-project Fabrication Growth in Services
Slide 20: Shipyard Wind Down and MPSV Litigation
Litigation with Hornbeck Offshore (MPSV Litigation) One 70-vehicle ferry for Texas DOT Two 40-vehicle ferries for North Carolina DOT Shipyard Wind Down In 2Q21, Gulf Island sold its Shipyard Division’s operating assets and long-term construction contracts. Certain contracts were retained, and the fe
Slide 21: Key Investment Highlights
rea GULF ISLAND BUILDING ON TRUST KEY INVESTMENT HIGHLIGHTS
Slide 22: Key Investment Highlights
Key Investment Highlights LNG and Petro-Chem offer strong near-term growth opportunity for Fabrication Renewables and offshore wind provide longer-term growth opportunity for Fabrication High energy prices and labor constraints driving favorable Services trends Baseload of stable craft labor and str
Slide 23: Attractive End Markets - Fabrication
1. Attractive End Markets - Fabrication Offshore Wind Global demand for gas expected to result in increased investment in U.S. LNG U.S. LNG capacity was ~11.4 Bcf/d at the end of 2022, and EIA expects an increase of 25% by the end 2024 8 U.S. LNG export terminals operate today and 15 more are commis
Slide 24: Attractive End Markets - Services
1. Attractive End Markets - Services Onshore Services High energy prices driving robust offshore O&G activity resulting in strong offshore services spending Offshore services demand benefitting from capital spending and maintenance that had been deferred in recent years Labor availability is limited
Slide 25: Positioned For Growth - Strategic Location and Skilled Labor
Strategic Location Skilled Labor Force Experienced and tenured labor force is an important strategic advantage given labor constraints Non-union, skilled labor capable of fabricating complex steel structures Over 600 offsite services professionals provides steady foundation for Services growth Skill
Slide 26: Positioned For Growth - Loyal Customer Base
2. Positioned For Growth Strong execution drives customer loyalty High quality, diversified customer base DSS Acquisition expanded customer base providing cross-sell opportunities Services platform provides opportunity for pull-though fabrication work Many clients embracing sustainability, providing
Slide 27: Improving Margin Profile
3. Improving Margin Profile Reduced cost structure and exit of lower margin backlog Improved operational performance and more disciplined bidding Growing Services platform provides more stable, predictable results Increase in value-added services and products will benefit margins Volume recovery in
Slide 28: Strong Balance Sheet
4. Strong Balance Sheet Surety requirements reduced; debt is long-term with favorable terms Shipyard Transaction improved liquidity and significantly reduced ongoing bonding and letters of credit requirements of the business. The MPSV Litigation settlement resulted in long-term debt of $20.0 million
Slide 29: Experienced Management Team
5. Experienced Management Team Senior leadership has average industry experience of ~26 years. Richard W. Heo PRESIDENT & CEO Joined Gulf Island in 2019 Previous Experience McDermott International, Inc. – Senior Vice President of North, Central and South America business unit Chicago Bridge & Iron N
Slide 30: Financial Overview
rea GULF ISLAND BUILDING ON TRUST FINANCIAL OVERVIEW
Slide 31: Third Quarter Summary
Third Quarter Summary Consolidated adjusted EBITDA* of $2.6 million, up from $2.4 million in the prior year 3Q23 adjusted EBITDA* reflects a positive contribution from Services and Fabrication, offset by costs associated with Corporate. *See slides 37-39 for reconciliations of consolidated net incom
Slide 32: Third Quarter Performance - Services
Third Quarter Performance - Services 3Q23 EBITDA* was $3.1 million (or 13.4% of revenue), versus $2.8 million (or 12.3% of revenue) for the prior year period. The improved operating results were driven by higher revenue and a more favorable project margin mix, including the benefit of the division’s
Slide 33: Third Quarter Performance - Fabrication
Third Quarter Performance - Fabrication 3Q23 adjusted EBITDA* was $1.4 million, versus $1.6 million for the prior year period. The decrease was due to an increase in the under-recovery of overhead costs associated with lower utilization levels resulting from the cancellation of the division’s large
Slide 34: Third Quarter & TTM Performance - Corporate & Consolidated
Third Quarter & TTM Performance - Corporate & Consolidated 3Q23 adjusted EBITDA* (which excludes operating losses for Shipyard) was $2.6 million, versus $2.4 million for the prior year period. The increase was driven by improved results for Services, partially offset by the cancellation of the large
Slide 35: Third Quarter Balance Sheet and Liquidity
Third Quarter Balance Sheet and Liquidity Significant decrease in outstanding surety bonds due to the Shipyard Transaction (2Q21). Remaining surety bonds at Sept. 30, 2023, include $50.0 million for the projects subject to the previous MPSV Litigation (which were terminated subsequent to Sept. 30, 2
Slide 36: Summary
rea GULF ISLAND BUILDING ON TRUST SUMMARY
Slide 37: Summary
Progress on business transformation has created a stronger, more predictable business positioned for profitable growth Shipyard Transaction and MPSV Litigation settlement significantly reduced risk profile and improved liquidity Fabrication segment benefits from people and process improvements and b
Slide 38: Appendix
rea GULF ISLAND BUILDING ON TRUST APPENDIX
Slide 39: Financial Reconciliation
Financial Reconciliation Note: Certain totals may not recalculate due to rounding.
Slide 40: Financial Reconciliation Continued
Financial Reconciliation Continued Note: Certain totals may not recalculate due to rounding.
Slide 41: Contact Information
Contact Information For questions or additional information please contact: Paul Bartolai, CFA 773.489.5692 [email protected]
Slide 42: "es GULF ISLAND
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