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spk04: Good afternoon and welcome, ladies and gentlemen, to GOFILAND's conference call to discuss fourth quarter 2020 results. All participants will be in a listen-only mode for the duration of the presentation. This call is being recorded. At this time, I'd like to turn the conference over to Ms. Cindy Cook for opening remarks and introductions. Cindy, please go ahead.
spk01: Thank you, and good afternoon. I would like to welcome everyone to our fourth quarter 2020 teleconference. Our results were released this afternoon, and a copy of the press release is available on our website at gulfisland.com. A replay of today's call will be available on our website after 7 p.m. this evening. Please keep in mind that the press release and certain comments on this call include forward-looking statements, and actual results may differ materially. we would like to refer everyone to the cautionary language included in our press release and to the risk factors described in our 2019 Form 10-K and subsequent SEC filings. Please also note that management may reference EBITDA, adjusted EBITDA, and backlog on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, These non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our press release. Today we have Mr. Richard Huff, President and CEO, and Mr. Wes Stopton, Executive Vice President and CFO. Mr. Huff?
spk03: Thank you, Cindy. Good afternoon, everyone. Welcome to our fourth quarter discussion of the results, business trends, and outlook. I'm happy to be here with you this afternoon. and I hope that each of you and your families are continuing to stay healthy and safe during this difficult time. On today's call, I'll first provide some overall commentary on our fiscal 2020 and fourth quarter results. I will also discuss some of the near-term actions we're taking to address these challenges and provide an update on the progress we're making on some of our key initiatives. I will then discuss the key factors that impacted the results and the current business environment potential new in-market opportunities, and several actions we are taking to enhance our customer value proposition. Wes will then discuss our fourth quarter results in greater detail, as well as our backlog and liquidity position. We will then open up the call for questions and conclude with some closing remarks. This past year brought unprecedented challenges, including the effect of COVID-19 pandemic on labor availability, and productivity negatively impacting our results, as well as crude oil volatility, which reduced the volume of work in our traditional end markets. Adding to these challenges, there were a record level of hurricanes impacting our facilities and employees, disrupting our operations. While our fourth quarter results reflected several of these headwinds, longer term, we believe we have substantially strengthened our foundation over the past year through the consolidation of our resources and process improvements, implementing changes in certain management and functional leadership, and driving initiatives to expand our in-market focus to reduce our reliance on the offshore oil and gas industry. During the quarter, we completed our final two harbor tugs and delivered the last tug in January 2021, which allowed us to successfully close our Jennings and Lake Charles facilities consolidating all of our shipyard division operations into our Houma, Louisiana location, which will further improve our resource utilization, centralize key project resources, and deliver additional cost savings. Our consolidation efforts were not limited to our shipyard division. A year ago, we announced a combination of the fabrication and services business segments, and in the second half of 2020, we took additional actions to consolidate our resources and assets within the division. For example, our pipe mill, a large facility used for fabricating large pipe, primarily supporting our fabrication and supported services division, but was located within our shipyard. This required us to maintain fabrication and services resources in a separate yard and incur costs and inefficiencies associated with significant material handling, including barging pipe across the home and navigation canal between the two yards. During the fourth quarter, we completed the relocation of the pipe mill and other assets from our shipyard to our fabrication and services yard, further driving efficiencies and delivering additional cost savings by reducing material handling. The previous pipe mill facility has been converted to a large warehouse, providing us necessary storage for our shipyard division to support its existing backlog. Our fourth quarter results for the fabrication and services divisions reflect the progress we're seeing on several fronts from the initiatives we are implementing. In the fourth quarter, fabrication and services reported positive adjusted EBITDA for the second quarter in a row with adjusted EBITDA of $1.9 million as we further leveraged cost savings and process improvements, coupled with strong project performance. Our offshore services activity was stable in the fourth quarter and we have seen this trend continue into the first quarter of 2021. We are still seeing lower than traditional volume of quick book and burn type of activity in both offshore services and small fabrication to support our subsea market, but we continue to execute these projects effectively at or better than their as-sold margins, which also benefited the quarter. While current facility utilization and the lack of new projects reflect economic headwinds due to uncertainty caused by COVID-19 and oil price volatility, we continue to closely monitor the Division's resource requirements. As we evaluate our prospect pipeline and timing of awards, we are focused on identifying and implementing incremental overhead cost savings to further improve the Division's operating results. From a business development perspective, we are beginning to see an increase in project bidding opportunities with LNG and petrochemical activity picking up in Texas and Louisiana, with some prospects projected to be awarded in the back half of 2021. We are uniquely positioned for these opportunities due to our strategic location in Houma and our ability to serve multiple customers across the project lifecycle, from scope involving civil construction to proprietary process modules. As these projects reach their final investment decision, I am confident we can capture our share of the market. We are also continuing to review and expand our potential in-market opportunities for the fabrication and services division. We have begun to make the transition to green energy in markets to support our customers and their fabrication and services needs in renewable biofuel plant construction, as well as increasing opportunities in hydrogen production. We have added the necessary business development support to pursue this growing market opportunity, and as market activity picks up, we will be in a better position to benefit from this investment. We are also actively working with owners and engineering companies to identify opportunities where we can provide differentiated offerings. For example, we're evaluating strategic partnerships where the combined service offering will bring additional value to the customer and provide margin expansion for our services. Potential strategic relationships could include engineering companies that need an execution partner, construction companies that need a fabrication partner to reduce field risk, other fabricators that need the strength of our asset to improve their overall delivery. These collaborative partnerships will provide customers with a sole source provider and de-risk their projects, further improving our chances for success. We're also exploring opportunities to move up the value chain. Core to this initiative will be to bring key engineering capabilities in-house, ensuring that we have better control of our destiny and provide a compelling value proposition to our customers. Moving over to the shipyard division, the challenges for the quarter were primarily twofold. Our biggest challenge to project execution in the division continues to be the high level of turnover of craft professionals as we attempt to ramp up our headcount to required levels. This is not a unique problem to Gulf Island, but an industry-wide challenge due to the years of underinvestment in training of craft combined with continued uncertainty in the market. The second challenge is arising from the lack of appreciation of the complexities of build as these projects were bid and one with limited design details. As we progress engineering and get certainty of the remaining work fronts, we're getting more confident of the estimate of hours to complete the remaining backlog. Recruiting and developing our most valuable resource, our people, is one of our key strategic priorities. We are actively addressing this within shipyard division by hiring more frontline supervisors along with working on various programs to improve retention. We are also working closely with technical colleges in Louisiana and Texas to help train and recruit more capable personnel. We are also notified last week that as essential workers, the state of Louisiana will allow our employees to be vaccinated. We expect to see improvement in the stability of our workforce as our initiatives around our people continue to take effect and we reach a steady state headcount in the first half of 2021. Our shipyard division also continued to be impacted during the quarter by a backlog that is largely in a lost position and continues to be challenged as we have previously discussed. Specifically, our 240 vehicle ferry projects continued to experience lower than anticipated craft labor productivity and progress due to the impact of COVID-19 and reworked challenges due to deficiencies in design, which resulted in project charges. Specifically, During the quarter, we experienced additional challenges with the second ferry associated with deflections in the structure as it was nearing completion, which in turn caused us to conduct an evaluation as to the cause. In the course of that evaluation with a third-party engineering firm, we determined that there are inherent engineering deficiencies in the vessel design provided by the client that are creating ongoing structural challenges on the second ferry. As a result of these deficiencies in design, we believe that the first barrier was also impacted, which contributed to the rework and construction challenges discussed in previous quarters. The design impacts on the first vessel, combined with some of our own construction challenges and the overhead crane incident in the third quarter, have led us to the conclusion that construction of a new hull is the most appropriate course of action for the first vessel, resulting in additional forecast costs on the project. We believe the impacts of the design deficiencies, which are causing current quality issues on the vessels, should be the responsibility of the customer. Accordingly, we have submitted a claim to our customer to recover the cost and extension of schedule associated with any design-related impacts. We currently expect the second vessel to be completed in the second quarter, and the construction of the first vessel is currently on hold as we determine a path forward with our customer. Our towing, salvage, and rescue ship projects were also negatively impacted in the quarter by lower than anticipated craft labor productivity and progress due to the impact of COVID-19 and employee turnover, along with higher cost estimates for subcontracted services. Late in the fourth quarter, we submitted a request for equitable adjustment to recover the increased forecast costs associated with the impact of COVID-19 and to extend our project schedules. While we were granted extensions of schedule, we have not yet received any additional commercial consideration associated with our cost increases. We'll continue to collaboratively work with the U.S. Navy to pursue cost recoveries associated with our COVID-19 impact but can provide no assurances that we will be successful in recovering these costs. Earlier this year, we entered into a change order to our contract with the Navy to provide the Navy with data access rights for future towing, salvage, rescue ships. The change order is approximately $13 million and a majority of the amount will be included within the contract price for our existing vessel projects and recognized as revenue on a percentage of completion basis. And the remainder will be recognized as revenue as we facilitate the transfer of the data rights during 2021. This change order is to support the Navy's decision not to exercise their options under our contract for the construction of three additional vessels. Instead, the Navy intends to contract with other shipyards to fabricate these vessels. There are a variety of factors that went into the Navy's decision, including a desire to accelerate the scheduled completion of the remaining vessels, which we could not do given the existing vessels in our backlog. We believe it is in our best interest to support this optionality for the Navy, and particularly given that the options would have largely been in a break-even position. We anticipate that the change order will result in a benefit to our operating results of $7 to $10 million in the first quarter of 2021. Our 70 vehicle ferry project was similarly impacted by increased craft labor and subcontracted service costs and extensions of schedule due to the impact of COVID-19 pandemic and our inability to achieve previously anticipated improvements in productivity. These impacts were compounded by additional complexities of build, especially around piping, that has been identified as we achieve further completion of production engineering. We are continuing to work diligently to deliver the ferry by the end of the year. On our research vessel projects, fabrication and erection are ongoing on a limited basis as we await the completion of production engineering from the customer. We continue to work collaboratively to identify opportunities for construction activities on certain work fronts in advance of full completion of production engineering to minimize the schedule impacts to the project. Earlier this year, we negotiated and executed a change order related to the delay in the customer-provided production engineering caused by COVID-19. The change order provided cost recoveries and extensions of schedules associated with these delays. While our shipyard division experienced operational challenges, we will realize the benefits of this investment we have made, including our enhanced key project management resources which have helped improve our processes and add increased visibility on project performance. We will continue to build on our key initiatives to improve our recruiting and retention for the shipyard division and make further investments in project leadership and frontline supervision to achieve a steady state operation as quickly as possible. Our focus for the shipyard division continues to be on the execution of our backlog maintaining and building strong relationships with our existing customers, and continued and marked emphasis on new-built construction outside of the oil and gas industry, and increased repair and maintenance work. In sum, the economic impact of COVID-19 pandemic and crude oil volatility remain near-term headwinds. However, our strategy and focus are clear. We will continue to focus on the variables that are within our control, including preserving our liquidity maintaining discipline and not only pursuing new projects but executing them rigorously, enhancing our processes and procedures, continuously hiring and developing our employees, and focusing on new market opportunities complemented by strong customer value propositions. We'll also focus on being good stewards of the business and giving back to the communities we serve. I will now turn the call over to Wes to discuss our quarterly results in greater detail.
spk02: Thanks, Richard, and good afternoon, everyone. I will discuss our consolidated results and then provide some additional details regarding our segment results, putting in context the factors mentioned by Richard and their impact on the quarter. I will then conclude with the discussion of our backlog and liquidity. Consolidated revenue for the fourth quarter 2020 was $57.6 million compared to $54.9 million for the third quarter 2020. and $79.4 million for the fourth quarter of 2019, representing a sequential increase of 5% and a year-over-year decrease of 28%. The sequential increase was due to higher revenue for our fabrication and services division, primarily reflecting increased offshore services activity and revenue for our offshore modules projects. The decrease from the fourth quarter of 2019 was due to lower revenue for both our fabrication and services division and shipyard division, as a result of the completion of several projects and a lower level of overall fabrication activity. Consolidated net loss for the fourth quarter 2020 was $15.4 million, compared to a net loss of $12.3 million for the third quarter 2020 and $34.3 million for the fourth quarter 2019. Adjusted EBITDA, which reflects the removal of non-cash impairments, gains and losses from the sales of assets held for sale, and certain non-recurring items, was a loss of $9.2 million for the current quarter compared to an adjusted EBITDA loss of $10 million for the trailing quarter and adjusted EBITDA loss of $14.9 million for the prior year quarter. Our consolidated loss for the current quarter was attributable to project charges of $8.8 million for our Shipyard Division, low volume levels for our Fabrication and Services Division, the overall underutilization of our facilities and resources, and non-cash impairments and non-recurring charges within both divisions. Now let me provide some additional details regarding our quarterly results by operating segment. For our shipyard division, revenue was $37.2 million for the quarter, compared to $37.1 million for the third quarter 2020, and $47.7 million for the fourth quarter 2019. The 22% decrease compared to the fourth quarter 2019 was due to lower revenue for our harbor tugs as we had fewer vessels under construction, lower construction activity on our research vessel projects due to engineering delays, and the completion of our icebreaker tug and towboat projects earlier in the year. These impacts were partially offset by increased construction and procurement activities for our towing, salvage, and rescue ship projects. Operating loss for the fourth quarter 2020 was $11.5 million compared to an operating loss of $9.2 million for the third quarter 2020 and $18.6 million for the fourth quarter of 2019. Adjusted EBITDA was a loss of $9 million for the current quarter compared to an adjusted EBITDA loss of $8.4 million for the trailing quarter and an adjusted EBITDA loss of $10 million for the prior year quarter. The operating loss for the fourth quarter of 2020 primarily reflected project charges of $8.8 million, of which $5.8 million relates to our two 40-vehicle ferry projects, 1.5 million relates to our Texas ferry project. 1.2 million relates to our towing, salvage, and rescue ship projects. And 340,000 relates to our harbor tug projects, which are now complete. The loss was also due to a backlog that is generally in a lost position, the partial underutilization of the division's facilities and resources due to the previously mentioned construction delays for our research vessel projects. and charges of 1.6 million attributable to non-cash impairments of assets held for sale and costs related to the closures of our Jennings and Lake Charles facilities. From a comparison perspective to our trailing quarter and prior year quarter, we incurred project charges of 6.7 million in the third quarter 2020 and 10.2 million in the fourth quarter 2019. Absent the individual project impacts for all periods, Our project mix for the current quarter was comparable, our project margin mix for the current quarter was comparable to the third quarter 2020 and lower than the fourth quarter 2019. In addition, our utilization for the fourth quarter 2020 was improved relative to the trailing period via higher work hours resulting from increased construction activities. And our current quarter utilization was consistent with the prior quarter as work hours were comparable between periods. With respect to general administrative expense, the fourth quarter 2020 reflects a decrease of over 20% from the year-ago quarter, benefiting from our cost reduction initiatives. For our fabrication and service division, revenue was $21.2 million for the quarter, compared to $18.2 million for the third quarter 2020, and $33.2 million for the fourth quarter 2019. The 16% increase from the trailing period was primarily due to higher offshore services activity and revenue for our offshore modules project, offset partially by lower revenue for the Division's jacket and deck project, which was completed prior to the fourth quarter. The 36% decrease from the fourth quarter 2019 was also due to the Division's jacket and deck project and paddlewheel riverboat project, which were both completed prior to the fourth quarter 2020. and a lower level of onshore services activity and small-scale fabrication project work typically associated with our offshore services business. The year-over-year decrease was partially offset by higher revenue for the Division's Marine Docking Structures Project and Offshore Modules Project. Operating loss for the fourth quarter 2020 was $1.8 million, compared to an operating loss of $1.1 million for the third quarter 2020 and $12.7 million for the fourth quarter 2019. Adjusted EBITDA was $1.9 million for the current quarter compared to adjusted EBITDA of $225,000 for the trailing quarter and an adjusted EBITDA loss of $2.5 million for the prior year quarter. The operating loss for the fourth quarter 2020 reflected low revenue and the partial underutilization of the Division's facilities and resources due to low backlog levels. It also reflected charges of $2.4 million attributable to non-cash impairments of assets held for sale and certain other fixed assets associated with the relocation and consolidation of such assets to improve operational efficiency of the Division's facilities and resources. In spite of the utilization challenges for the period, project margins were solid, resulting in a significantly improved adjusted EBITDA for the quarter. From a comparison perspective to our trailing quarter and the prior year quarter, we realized project improvements of $600,000 in the third quarter of 2020 and incurred project charges of 3.8 million in the fourth quarter 2019. Absent the individual project impacts for all periods, our project margin mix for the current quarter was comparable to the third quarter 2020 and higher than the year ago quarter, primarily due to our higher margin offshore services work representing a greater percentage of our total revenue. In addition, our utilization for the fourth quarter 2020 was improved relative to the trailing period due to a 35% increase in work hours associated with higher offshore services activity. However, our current quarter utilization was lower than the prior year quarter due to a 40% decrease in work hours attributable to completion of our paddle-wheel riverboat and offshore jacket and deck projects and less small-scale fabrication project work. With respect to general and administrative expense, The fourth quarter of 2020 reflects a decrease of almost 20% from the year-ago quarter, benefiting from the prior consolidation of our former fabrication division and services division and cost reduction initiatives. For our corporate division, operating loss for the fourth quarter was $2.2 million compared to an operating loss of $1.9 million for the third quarter of 2020 and an operating loss of $3.1 million for the fourth quarter of 2019. with the increase relative to the trailing period due primarily to higher legal fees and the decrease relative to the year-ago quarter due primarily to lower legal fees and the prior year period, including impairments and certain non-recurring costs. Next, I will provide a few comments regarding our quarter-end backlog and liquidity situation. At year-end, our backlog totaled $372 million, with approximately 95% attributable to our shipyard division. This backlog represents a decrease of 15% from a year ago backlog and 13% compared to September 2020, with the decreases due to revenue volume outpacing our new project awards for both our divisions. With respect to our liquidity, operating cash flow for the quarter was negative $11.7 million and our capital expenditures were $1 million. These cash flow uses in the quarter were partially offset by asset sales of approximately $340,000 resulting in a year-end cash and investment balance of approximately $51 million. We also had total debt of $10 million at year-end attributable to our PPP loan. In December, our application requesting loan forgiveness of $8.9 million was approved by our lender and forwarded to the SBA. However, as of today, we have not received an approval or denial of our application from the SBA. Any portions of the loan not forgiven along with interest will be repaid based on the terms of our loan and applicable program guidelines. At year end, we have reflected the loan as debt with the debt classification based on the terms and conditions of our loan and the timing of required repayment absent any loan forgiveness. Regarding our credit facility, in March our facility was amended to right size our capacity to 20 million and it is now only a letter of credit facility with cash securitization required for any outstanding letters of credit. With this amendment, all covenants and other material restrictions to our business were removed, and at year end, we had approximately $10.7 million of outstanding letters of credit. With respect to our working capital, it totaled approximately $49 million at year end, including $8.2 million of assets held for sale, which include three crawler cranes within our fabrication and service division, and two dry docks within our shipyard division that were previously located at our Lake Charles facility and were classified as held for sale in the fourth quarter of 2020. As noted previously, we recorded impairments of these assets during the quarter based on our current estimates of fair value, which have been impacted by COVID-19 and related market conditions. Our working capital, excluding cash and investments, assets held for sale, and the current portion of our PPP loans was negative $4.9 million at year-end. This compares to negative working capital on the same basis at September 2020 of $7 million. We anticipate ongoing quarterly variability in our working capital requirements due to the project-oriented nature of our business and timing of project billings and collections. However, we currently expect our cash balance at the end of the first quarter 2021 to be comparable to our 2020 year-end cash balance. Further, as it relates to our capital needs, we expect our full year capital expenditures to be approximately $3 to $5 million. However, we are focused on trying to limit our expenditures to the low end of this range. Finally, with respect to expectations regarding EBITDA for 2021, given the COVID-19 pandemic, crude oil price volatility, and related market uncertainty, we will not be providing guidance at this time. This concludes our prepared remarks. Operator, you may now open the line for questions.
spk04: Thank you. The question and answer session will be conducted electronically. If you'd like to ask a question, please do so by pressing the star key followed by the digit 1 on your touchtone telephone. If you're using a speakerphone, please make sure your mute function is turned off to allow you to no treat your equipment. We'll proceed in the order that you signal us, and we'll take as many questions as time permits. And we'll take our first question today from Martin Malloy with Johnson Rice.
spk06: Good afternoon.
spk03: Good afternoon, Martin. Good afternoon, Martin.
spk05: That's positive news on the U.S. Navy contract there. If you could provide us with an update, what percent of your backlog is in a lost position at the gross profit level, and how much cash do you expect to continue to go out the door relating to your existing backlog given the charges you've taken?
spk02: Yeah, Marty, the lion's share of that backlog in the shipyard is in a loss or break even. So at this point, it's going to contribute no incremental profitability, of course, if we execute to the current forecast. Those accrued losses and our expectations around losses, those are in our working capital numbers. So If you think about our, I mentioned our working capital and I oftentimes talk about it in terms of excluding cash and some of the other items to focus in on exactly what you're asking. Our negative, our working capital is negative 4.9 million at the end of the year. That includes about eight and a half million dollars of contract losses, accrued contract losses that will be required to fund over the life of these projects.
spk05: Okay. I appreciate that. And then just, you know, you mentioned modular work over the last couple quarters and continuing to pursue that on projects. Could you maybe, you know, given that the fabrication segment backlog is under $20 million, just what your outlook is for being successful on bidding on modular work?
spk03: Well, we're confident, Marty, as we've discussed, though, that activity has been pushed to the right just because of the challenges of COVID and crude oil price. But we are seeing some activity pick up, more specifically on LNG projects and petrochemical projects in Louisiana and Texas. And so as those pick up, one of the things that we talked about in my script was that You know, we have multiple bites of the apple in that project life cycle. So there's one large LNG project that we're currently bidding where it's got pipe associated with some civil work. It's got modules through the prime EPC company. And then it also has specialty high kind of engineered valued process modules for a technology license provider. So, you know, even I would say a third of that, if we won, would put us at capacity in the next 18 to 24 months. So I feel good about the prospects on fabrication and services with regard to those modules that we've discussed.
spk05: Okay. And are you bidding against overseas fabrication yards on these projects?
spk03: On certain parts of the projects or a certain scope, yes, we are. But again, I think the customers see the certainty that we can provide as it relates to our close proximity to the project locations. And so our value proposition is giving the clients certainty on not the entire scope. For example, a prime EPC contractor that's going to look at maximum modularization for these EPC projects, they're going to get the majority of the equipment overseas, but they are bidding time sensitive critical modules to local contractors.
spk05: Okay.
spk03: And then the last topic. talked to you all, I think, offline about this before, but offshore wind in the US and the potential to build towers. I don't know if you saw the Biden administration came out announcing that they're looking for about 30 gigawatts to be built through the end of 2030 and providing financial support and assistance to some of these projects. And I just wanted to get your thoughts. I mean, given that you all did the projects offshore Rhode Island, those six turbines, the support structures for those, and you all have a lot of experience in terms of rolling steel for large offshore projects. Is there an opportunity there for you? Yeah, so there is, Marty, and I saw that report come out this week that you're talking, or actually today that you're talking about from the Biden administration. We are looking at that market selectively. Our first entry into that market was based on a traditional jacket type foundation. The new construction going forward are monopiles that frankly would take us out of that play. As the technologies evolve and change, we're specifically looking at the opportunities where we can provide value to the customers and try to capture some of that growth in the market.
spk05: With the monopiles, what is so different about them? Is it larger diameter?
spk03: I mean, given that you all have done jackets that have gone in water hundreds of feet deep, I'm trying to understand the difference between Yeah, so these monopiles have a technical kind of, they're prefab engineering equipment that requires quite a bit of CapEx investment up front. And so the Europeans have put in significant investment to grow into or support the growth in Europe on these wind farms. And so that's, I think, going to be the disadvantage. As the turbines get larger and heavier, I think it'll limit out some of the monopile type of technologies and hopefully the jackets might get introduced back in. We're actively involved with the technology providers and the operators to see if there's a way that we can participate in that market. I'm sorry to keep talking about this, but it seemed like from that personally is coming out of the Biden administration, there was a real focus in terms of creating jobs domestically. Yeah. And the creating jobs domestically though, unfortunately are in that same report also said in, in, in the Northeast, right. With union labor. And so it does make it challenging for us from that perspective, uh, because we don't, we don't have the close proximity to the ports that were, you know, these projects are going to be based out of.
spk06: Okay. All right. Thank you. Thanks, Marty. Next, we'll hear from J.P. Geigen with Global Value Investment Corp.
spk05: Good afternoon. Thanks for taking my questions. Can you discuss the type of work that you're actively pursuing or winning today in terms of size, industry, scope, time to complete, etc.? ?
spk03: So the work we're winning immediately today, JPR, some of the, obviously the services work, the quick book and burn work that we've been talking about, and some of the smaller fabricated materials, not only to support the subsidy markets and the offshore customers, but also some of the civil contractors like rolled goods, you know, these large pipes that we roll that's typically used to support civil work on these EPC projects. So we're winning our fair share of that book and burn. What we're struggling with the headwinds is these larger modules that obviously have the size in terms of tons and man hours that we're looking for. And that's what I was explaining that we're hoping those are gonna come in the back half of this year.
spk05: Okay. Can you elaborate on your responses to Marty's question about your new markets that might be something other than offshore wind and what the work that you do for those markets would be? What are the characteristics of the projects, specifically the economic characteristics or margins? What does the competitive landscape look like? What is the scope of investment that would be involved, if anything?
spk03: So I can address that. So the type of work we're going after is really engineered equipment, right? And it's fabricated skids and modules that pertain to what we call sustainable markets. And so you're seeing a lot of discussion around biofuels, green energy in terms of, for example, plastic recycling or hydrogen, these all technologies could be built in a modular format. And so we build modules and the modules look the same. They just convert an input to a different product in a different manner. And so the metal and the welding are all the inputs are the same. And so from a capital investment standpoint, it's very low capital investment. And that's where I talk about partnering with the right folks. And if we start partnering with the right people, whether it be engineering companies who don't have the delivery model, or the construction companies that want to modularize more of their construction or the plant because they want to take risk out of the equation from a field labor standpoint, we can capture more market share that way. So ultimately, we're looking to branch into not only onshore petrochemical and LNG, but also capture some of the growth in what I call the sustainable green in markets through our fabrication expertise.
spk05: Okay, that's very helpful. Finally, the issues you've had with skilled labor seem to have been going on for a while. Can you talk about what you're doing to mitigate those challenges? Thank you.
spk03: Yeah, so the skilled labor challenge has been a tough one because especially in 2020 during the COVID, it really, you know, manifested itself or it was exponential i guess because we were ramping up and so we had all this you know need to ramp up uh craft labor which in the shipyard tends to be uh what i call lower trade craft and so they're under five years of experience and and so that compounded with what happened with covid it really just created a perfect storm of high turnover I feel that once we get to steady state through our training and working with some of our technical universities and technical schools, welding schools, that we are developing more capable and better consistent welders. Hopefully, as we stabilize the headcount and get to a steady state position, and then we invest in doing training and working collaboratively with the technical schools, that the employees, those craft employees, will be more predictable in their productivity.
spk06: Great. Thanks for taking my questions. Thanks, JP.
spk04: Our final question will come from John Dacier with Pinnacle.
spk03: Good afternoon, everyone. Good afternoon, John. Hey, I was just curious. You did a nice job of consolidating the operations in Jennings and Lake Charles. Are there any other consolidation opportunities that are out there that you're thinking about? Well, geographically, we're in one location now. We're all in Houma. And we've been trying to consolidate everything that we can into one location, which is the Houma operation. So there really isn't anything other than just looking at our landscape and having this kind of look at our pipeline and backlog, and we're committed to evaluating these prospects. Like I said, I'm committed to, for example, I told you that in the back half of this year, we're looking to get some new awards. that are substantial. If that doesn't happen, we're going to look for more cost cutting. And so we're going to be relentless with that focus of managing our cash.
spk02: We are focused on our, now that we've got our footprint in HOMA, figuring out ways to make that footprint as efficient as possible. And that's what you saw this quarter and the fourth quarter where we did record some impairments associated with admin services. That was a direct function of relocating and consolidating assets within the HOMA footprint to make ourselves as efficient as possible. That's a good point.
spk03: Okay, that's good to hear. I just want to make sure I understand the timeline for the delivery of some of the remaining vessels. The number two ferry, I think the 40 vehicle, did you say that was going to be delivered in the second quarter? That's right, second quarter of this year. Okay. And the 170 vehicle ferry, I think you said by year end, is that fourth quarter then? That's correct, fourth quarter. Okay, fourth quarter. And on the Navy, for the two that you have remaining, when do you anticipate those being delivered? Well, so the Navy's are, we have five vessels with the Navy, right? So when you say two remaining, can you clarify that? Are you talking about the two last ones? Sorry, I thought it was five total, but they're going to manufacture the other three, the back three somewhere else, or did I? No, no, no. Yeah. So, John, we've been awarded five vessels, of which we're building all five. There were three additional options that they had the options. It wasn't an obligation. They had an option to give. which those are the three options that we did not take. And so of the five vessels, the first ones will get delivered in kind of third quarter of 22. And then the last of the fifth vessel will get delivered in the fourth quarter of 24. Okay. Let me make sure I've got that right. So the first four will be delivered in the fourth quarter of 2022? No, no. The first one is the third quarter of 22. And the second one is fourth quarter of 22. They're staggered. And then the last one, I told you, will get delivered in the fourth quarter of 24.
spk06: That's the fifth one?
spk03: That's the fifth one, yes, sir.
spk06: Okay. What about three and four? So we've got second quarter of 23. for number three, and then number four is late second quarter of 24.
spk03: Okay, all right, good, that's helpful. And the proceeds you're getting from the work order, 13 million, I think you said, you're getting seven million in Q1, or anticipate seven million in Q1. When does the remaining six million hit? Well, so we're getting actually majority of the 13 million. So from a revenue standpoint or receivable standpoint, we're getting majority of that 13 million in Q1. And the remaining balance will all come as we make deliverable commitments to the customer in the back half of this year. Oh, so you'll be getting the majority of the 13 million in Q1, not just 7 million. Yeah, so the $7 to $10 million is the income that we anticipate earning from that $13 million and recognizing in the first quarter.
spk02: We'll get about $9 million of that in Q1 in terms of cash receipts. And then you have to separate the revenue recognition from the cash. But the revenue recognition we anticipate will be between $7 and $10 million in the first quarter.
spk03: Okay, that's helpful. And finally, when do you anticipate filing your 10-K?
spk02: We will file it tonight, so hopefully it will be on the wire and be available to you first thing in the morning.
spk03: Okay, good. Thanks. Good luck. Thanks, John.
spk04: This concludes today's question and answer session. At this time, I'd like to turn the conference back over to Mr. Richard Huff for any additional comments.
spk03: Thank you, James. In closing, I want to thank our customers and shareholders for their continued support, as well as recognize our employees who continue to show up every day under difficult conditions to help us deliver our commitments to our customers. While the past year has been difficult, I'm confident that the initiatives are taking effect, and I'm encouraged with the progress we've made. We'll continue to focus on managing those variables within our control with discipline and focus on managing cash, executing rigorously, and bringing in well-vetted new prospects where we add value. For those on the call, thanks again for your interest, and I look forward to speaking with you on our first quarter results conference call and updating you on the progress. Be safe and take care. Thank you.
spk04: That will conclude today's conference call. Thank you for your participation. You may now disconnect.
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