Gulf Island Fabrication, Inc.

Good afternoon, ladies and gentlemen. I welcome to Gulf Islands conference call to discuss first quarter 2025 results. All participants will be in a listen-only mode for the duration of the call. This call is being recorded. At this time, I would like to turn the floor over to Ms. Cindy Cook for opening remarks. Cindy, please go ahead.

Thank you and good afternoon. I would like to welcome everyone to our first quarter 2025 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 most recent Form 10-K and subsequent SEC filings. Please also note that management may reference EBITDA, adjusted EBITDA, adjusted revenue, new project awards, and backlog on this call. which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations to the extent used, 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 Stockton, Executive Vice President and CFO. Mr. Huff?

Thank you, Cindy. Good afternoon, everyone, and welcome to our first quarter results conference call. 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 today's call, I'll provide key takeaways from the quarter, a review of in-market trends, and an update on the progress we have made on our strategic initiatives, including our recent agreement with Englobal Corporation. Wes will then discuss our first quarter results in greater detail. and provide an update on our outlook for 2025. We'll then open up the call for questions and end with closing remarks. Our fiscal 2025 got off to a strong start as the strategic actions we have undertaken in recent years enabled us to deliver solid first quarter results despite the growing macroeconomic uncertainty. We generated revenue of $40 million and adjusted EBITDA of $4.5 million, driven by small-scale fabrication activity. While our small-scale fabrication and services business provide a more stable base of revenue, we're not completely immune to macro headwinds. During the first quarter, reductions in capital spending by our offshore services customers negatively impacted our services business, and we're seeing an impact on the bookings of our short-term, small-scale fabrications. Importantly, we remain committed to our strategic framework and made important progress against these key priorities during the first quarter that will position us for continued success as we move past the near-term macro uncertainty caused by trade headwinds. As a reminder, our strategic priorities are focused on pursuing profitable growth, maintaining strong execution and operating efficiency, and strategically deploying capital and with a focus on driving shareholder value. Some of our accomplishments during the first quarter were as follows. First, we continued in our pursuit to grow and diversify our services business through further investments in our cleaning and environmental services business. We remain optimistic regarding the opportunities in the market and believe we are well positioned to succeed as decommissioning activities in the Gulf pick up. Second, We remained disciplined in our financial management and took the opportunity to return capital through our share repurchase program. And lastly, we made the strategic decision to enter it into a financing arrangement and ultimately enter into an agreement to purchase assets from Englobal Corporation. I'd like to take some time now to provide more detail on our transaction with Englobal and provide an overview of the strategic benefits we expect to realize from the deal. As we have discussed, in early March, we entered into a debtor in possession credit agreement as a lender within Global Corporation. The agreement provided for advances up to $2.5 million to Englobal during their bankruptcy process. Our intent was to use the debt financing as an opportunity to evaluate the potential acquisition of certain assets from Englobal. We have been familiar with InGlobal business for many years and have always felt these assets could be a strategic fit for Gulf Islands. During the first quarter, we made advances of approximately $1.2 million to InGlobal, and in April, we funded the remaining amount of our commitment. In April, we also assumed a loan of $2.4 million from a creditor of InGlobal in exchange for a $1.5 million cash payment. bringing our total capital commitment to $4 million. On April 25th, our stocking horse bid and the amount of our dip financing was announced as the winning bid for certain assets of Englobal, including its automation, engineering, and government businesses, and we expect to close on the acquisition in the second quarter. Englobal's automation business represents the most significant operation of the business's we are acquiring and generated revenues of approximately $10 million for 2024. This business provides engineering, design, fabrication, and integration of industrial automation systems to the oil and gas, renewable energy, and power industries, which coupled with our fabrication business can provide capacity growth opportunities. The engineering business provides various engineering solutions to the oil and gas, and renewable energy industries and helps to complement our fabricating services business by providing additional know-how and expertise. And finally, the government services business provides Inglobal's engineering and automation solutions to federal, state, and local governments and education institutions generally in the form of technical field services and will open up new end markets for Gulf Islands' existing business. We believe the acquisition will provide several strategic benefits, including further diversifying our business into new end markets, increasing the overall value of our existing offerings, and adding a strong bench of both craft and professional workforce to our company. While the transition will take time and the acquisition is not expected to contribute positively to our operating results during 2025, we are excited by the potential overall value creation of the combination of the businesses. Now, turning back to our current business, as we look at the remainder of 2025, the market outlook has become more difficult to forecast due to the macroeconomic uncertainty, including trade policies. As we look at our fabrication business, we remain well positioned strategically and continue to be optimistic regarding the long-term outlook in our markets. However, we're experiencing extended decision cycles for new project awards due to market uncertainty. even for our small-scale fabrication. While we had been encouraged by the pickup and dialogue with customers in the fourth quarter of 2024 and into the early parts of 2025, particularly in the LNG market, the trade-related macro uncertainty is delaying decisions for all types of fabrication projects. That said, longer term, we remain optimistic as the favorable structural drivers for the fabrication market remain in place and we remain well positioned to win as projects eventually move forward, especially in an environment where there is a push for more domestic supply. Looking at our services business, while the project delays impacting our services activity are subsiding, our customers are targeting lower overall capital spending levels in the Gulf of America in 2025 as a result of lower demand for crude and the resulting lower margins for our customers. This coupled with the trade uncertainty has many of our customers holding back spending. While we expect lower activity near term, we'll continue to invest in expanding and diversifying our services offering. Our cleaning and environmental services business is beginning to see increased volume as decommissioning activity gains momentum and Spark Safety has started to pick back up. Despite our solid first quarter results, we expect the remainder of 2025 to be challenging based on the previously mentioned economic headwinds and expected losses from Englobal, as the business transitions out of bankruptcy and is integrated into our existing operations. While we are disappointed by the near-term outlook, our disciplined financial management and emphasis on preserving financial flexibility has enabled us to maintain a strong financial position and puts us in the enviable position of being able to continue investing in our growth strategy and potentially take advantage of market opportunities caused by the uncertainty. Our capital allocation framework will continue to prioritize investing in the business as we have done in the past by adding service lines organically, including hiring key personnel to help us drive growth in our existing services and penetrate UN markets, balanced with the pursuit of acquisition opportunities such as in global and other capital return opportunities. We're fortunate to be operating from a position of strength, heading into a period of economic uncertainty, and remain committed to our strategic framework and driving value for our shareholders. I will now turn the call over to Wes to discuss our quarterly results in greater detail.