Gulf Island Fabrication, Inc. Reports Fourth Quarter Loss

  Gulf Island Fabrication, Inc. Reports Fourth Quarter Loss

Business Wire

HOUMA, La. -- March 11, 2013

Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today reported a net loss of $8.1
million ($.56 diluted loss per share) on revenue of $129.2 million for its
fourth quarter ended December 31, 2012, compared to net income of $1.8 million
($.12 diluted EPS) on revenue of $88.4 million for the fourth quarter ended
December 31, 2011. Net loss for the twelve months ended December 31, 2012 was
$4.1 million ($.29 diluted loss per share) on revenue of $521.3 million,
compared to the net loss of $1.8 million ($.13 diluted loss per share) on
revenue of $307.8 million for the twelve months ended December 31, 2011.

The Company had a revenue backlog of $537.0 million and a labor backlog of
approximately 4.4 million man-hours at December 31, 2012, including
commitments received through March 11, 2013 and excluding backlog of $30.0
million relating to a suspended project, compared to a revenue backlog of
$614.5 million and a labor backlog of 4.6 million man-hours reported as of
December 31, 2011. We exclude suspended projects from contract backlog because
resumption of work and timing of backlog revenues are difficult to predict.


SELECTED BALANCE SHEET INFORMATION
(in thousands)
                                               December 31,   December 31,
                                                 2012             2011
Cash, cash equivalents and short-term            $  24,888        $   55,287
investments
Total current assets                                173,604           177,913
Property, plant and equipment,net                   229,216           216,722
Total assets                                        403,495           395,935
Total current liabilities                           92,274            75,987
Debt                                                0                 0
Shareholders' equity                                273,500           282,799
Total liabilities and shareholders' equity          403,495           395,935
                                                                      

The management of Gulf Island Fabrication, Inc. will hold a conference call on
Tuesday, March 12, 2013 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to
discuss the Company’s financial results for the quarter and fiscal year ended
December 31, 2012. The call is accessible by webcast (www.gulfisland.com)
through CCBN and by dialing 1.888.211.0193. A digital rebroadcast of the call
is available two hours after the call and ending March 19, 2013 by dialing
1.888.203.1112, replay passcode: 2747027.

Gulf Island Fabrication, Inc., based in Houma, Louisiana, is a leading
fabricator of offshore drilling and production platforms, hull and/or deck
sections of floating production platforms and other specialized structures
used in the development and production of offshore oil and gas reserves. These
structures include: jackets and deck sections of fixed production platforms;
hull and/or deck sections of floating production platforms (such as tension
leg platforms (“TLPs”), “SPARs”, “FPSOs” and “MinDOCs”), piles, wellhead
protectors, subsea templates and various production, compressor and utility
modules, offshore living quarters, towboats, offshore supply vessels, dry
docks, liftboats, tanks and barges. The Company also provides offshore
interconnect pipe hook-up, inshore marine construction, manufacture and repair
of pressure vessels, heavy lifts such as ship integration and TLP module
integration, loading and offloading of jack-up drilling rigs, semi-submersible
drilling rigs, TLPs, SPARs, or other similar cargo, onshore and offshore
scaffolding, piping insulation services, and steel warehousing and sales.

Business Update

Customer Requested Slowdown of Work

On July 13, 2012, we received notice from our customer, Bluewater Industries
(“Bluewater”), requesting (i) a slowdown of work on ATP Oil & Gas (UK)
Limited’s (“ATP UK’s”) Cheviot project ordered pursuant to a master service
contract between Bluewater and the Company (the “Contract”), and (ii) an
amendment to the scheduled payment terms under the Contract. On August 16,
2012, we entered into a binding agreement (the “Agreement”) with Bluewater, an
engineering consulting firm engaged by ATP UK to oversee the fabrication of
the Cheviot project, to amend and restate the Contract and suspend the
project. Among other things, the Agreement outlines the revised payment terms
for the contracts receivable balance (the “Balance”) and the limitations on
Bluewater’s ability to request an extended suspension of work. Specifically,
Bluewater must pay $200,000 on or before the last day of each calendar month
through February 28, 2013, with the remaining outstanding Balance due on or
before March 31, 2013. In addition, if Bluewater has fully paid the Balance on
or prior to March 31, 2013, Bluewater has the option to extend the suspension
of work on the Cheviot project to June 30, 2013, after which Bluewater will
have no further rights to request a suspension of work. If Bluewater fails to
make timely payments pursuant to the revised payment plan, we have the right
to terminate the Contract, and we will continue to retain title to any project
deliverables. We also entered into a security agreement with Bluewater
pursuant to which Bluewater granted us a security interest in certain of its
equipment currently located on our facilities. As of March 11, 2013, all
installments under the Agreement had been paid.

On August 17, 2012, ATP Oil & Gas, Inc. (“ATP”), the parent company of ATP UK,
filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code. Although ATP is not our customer and ATP UK is not a party to
the bankruptcy, we believe ATP has historically financed the operations of its
subsidiaries, including ATP UK. On January 22, 2013, ATP filed an emergency
motion to sell all or substantially all of its deepwater assets, including
100% of its equity ownership in ATP UK. The motion has since been approved by
the court and ATP is currently seeking qualified bidders to purchase these
assets. The sale hearing is expected to take place between March 26, 2013 and
April 16, 2013. We do not know whether or not ATP will be successful in its
efforts to sell these assets or whether a purchaser of ATP UK would fund the
Cheviot project. However, in the absence of a sale of ATP UK to a purchaser
desiring to complete the Cheviot project or utilize the structure in another
location, it does not appear that Bluewater will be able to pay the remaining
Balance on March 31, 2013. In the event Bluewater is unable to continue to
meet its obligations under the Agreement, we may attempt to recover or
partially recover the unpaid Balance through the disposition of project
deliverables and the enforcement of our security interest.

As of December 31, 2012, $56.8 million has been billed on the Cheviot project
and the outstanding Balance was approximately $31.3 million. We recorded a
$14.5 million reserve on the Balance as of December 31, 2012 and we believe
the outstanding Balance, less the $14.5 million reserve, is collectible
through the disposition of project deliverables and the enforcement of our
security interest in the event of a default by Bluewater. The Cheviot project
represents revenue backlog of $30.0 million and labor backlog of 308,000
man-hours, both of which are excluded from our backlog at December 31, 2012.

Settlement of contract claim

As previously reported, we recognized estimated contract losses of $21.2
million in the nine-month period ended September 30, 2012 primarily as a
result of an increase in man-hours to complete one of our major deepwater
contracts. On March 7, 2013, we entered into a change order with our customer
to settle our claim on this contract. Revenue for this change order earned by
the Company was recorded in the quarter ended December 31, 2012. The change
order also includes incentives related to key milestone date and performance
metrics which have not been recorded as of December 31, 2012 but will be
recorded as revenue in future periods if and when incentive terms are met.
Estimated contract losses recognized in the year ended December 31, 2012 were
$12.5 million, inclusive of the revenue recorded at December 31, 2012 from
this change order. Our claim was related to increased man-hours driven by
revisions and delivery delays to specifications and designs by our customer
causing out-of-sequence work schedules. The customer also extended delivery of
the first phase of the project multiple times as a result of these revisions
and delays. Any future deliverable delays or project revisions could result in
future revisions to contract estimates.

Cautionary Notice Regarding Forward-Looking Statements

The Company wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made. No
assurances can be given regarding the future performance of the Company. The
Company wishes to advise readers that factors could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ materially from any opinions or statements expressed with
respect to future periods in any current statements. The Company does not
undertake, and specifically declines any obligation, to update any
forward-looking statements to reflect events or circumstances occurring after
the date such statements are made.


GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
                                                           
                                                                    
                     Three Months Ended             Twelve Months Ended
                     December 31,                   December 31,
                     2012            2011           2012            2011
                                                                    
Revenue              $ 129,237       $ 88,406       $ 521,340       $ 307,832
Cost of revenue:
Contract costs         124,090         83,160         502,999         295,614
Provision for
loss on contract       14,501          -              14,501          -
receivable
Asset                 -             -            -             7,690   
impairments
Total cost of         138,591       83,160       517,500       303,304 
revenue
Gross profit           (9,354  )       5,246          3,840           4,528
(loss)
General and
administrative        2,629         2,383        9,806         8,187   
expenses
Operating income       (11,983 )       2,863          (5,966  )       (3,659  )
(loss)
                                                                    
Other income
(expense):
Interest expense       (15     )       (71    )       (153    )       (173    )
Interest income        45              526            586             1,075
Other, net            (11     )      (8     )      128           309     
                      19            447          561           1,211   
                                                                    
Income (loss)
before income          (11,964 )       3,310          (5,405  )       (2,448  )
taxes
                                                                    
Income taxes          (3,874  )      1,544        (1,314  )      (644    )
                                                                    
                                                                    
Net income           $ (8,090  )     $ 1,766       $ (4,091  )     $ (1,804  )
(loss)
                                                                    
                                                                    
                                                                    
Per share data:
                                                                    
Basic earnings
(loss) per share     $ (0.56   )     $ 0.12        $ (0.29   )     $ (0.13   )
- common
shareholders
                                                                    
Diluted earnings
(loss) per share     $ (0.56   )     $ 0.12        $ (0.29   )     $ (0.13   )
- common
shareholders
                                                                    
                                                                    
Weighted-average       14,421          14,360         14,400          14,351
shares
Effect of
dilutive
securities:           -             26           -             -       
employee stock
options
Adjusted
weighted-average      14,421        14,386       14,400        14,351  
shares
                                                                    
Depreciation and
amortization         $ 5,981        $ 5,477       $ 23,396       $ 20,692  
included in
expense above
                                                                    
Cash dividend
declared per         $ 0.10         $ 0.06        $ 0.40         $ 0.24    
common share

Contact:

Gulf Island Fabrication, Inc.
Kirk J. Meche, 985-872-2100
Chief Executive Officer
or
Roy F. Breerwood, III, 985-872-2100
Chief Financial Officer