Q4 2020 Gulf Island Fabrication Inc Earnings Call
Yes.
[music].
Please standby.
Good afternoon, and welcome ladies and gentlemen to the Gulf Island 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 the it sounds like it turn the conference over to MS. Cindi Cook for opening remarks and introductions Cindy. Please go ahead.
Thank you and good afternoon, I would like to welcome everyone to our fourth quarter 2020 Telecom. However.
Our results were released this afternoon and a copy of the press release is available on our website adult Island dotcom.
A replay of today's call will be available on our website after seven P. M.
Yes.
Please keep in mind that the press release and certain comments on this call include forward looking statements.
And actual results may differ materially.
I would like to be from 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 <unk>, President and CEO and Mr. Wes Stockton Executive Vice President and CFO Mr. Huh.
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 and new end market opportunities. The several actions, we're 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.
Okay.
This past year of 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 and 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 due to the consolidation of our resources and process improvements implementing changes in certain management and functional leadership and driving in the list initiatives to expand our end.
<unk> 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 dog in January of 'twenty, 'twenty, one, which allowed us to successfully close our Jennings and Lake Charles facilities consolidating all of our shipyard division operations into our Hallmark, Louisiana location, which will further improve our resource utilization centric.
The lives key project resources and deliver additional cost savings.
Our consolidation efforts were not limited to our shipyard division of you.
Year ago, we announced the combination of the fabrication and services business segments and then the second half of 'twenty 'twenty, 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 of services resources and a separate yard and incur cost in it.
Inefficiencies associated with significant material handling, including barging pipe across the home of navigation from now between the two yards.
During the fourth quarter, we completed the relocation of the pipe now and the other assets from our shipyard 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 the necessary storage for our shipyard division to support its existing backlog.
Our fourth quarter results for the fabrication and services Division reflect the progress were seeing on several fronts from the initiatives we have.
We are implementing.
In the fourth quarter fabrication services reported positive adjusted EBITDA for the second quarter in a row with adjusted EBITDA of $1 $9 million as we further leverage the cost savings and process improvements coupled with strong project performance.
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 markets, but we continue to execute these projects effectively at or better than their ask the old margins, which also benefited the quarter.
While the current facility utilization and the lack of new projects reflect the 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 division of development perspective, we're 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 the Homer and our ability to serve multiple customers across the project lifecycle from the scope of involving civil construction to proprietary process modules.
As these projects reach their final investment decision I'm confident we can capture our share of the market.
Okay.
We're also continuing to review and expand our potential end market opportunities for the fabrication and services Division we.
We have begun to make the transition of the Green energy end markets to support our customers and their fabrication and services needs and renewable biofuels plant construction as well as increasing opportunities in hydrogen production we.
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 the owners and engineering companies to identify opportunities, where we can provide a differentiated offering.
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 did 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 ship yard division the challenges for the quarter were primarily twofold.
Our biggest challenge the project execution and the division continues to be the high level of turnover of craft professionals as we attempt to ramp up our head count to required levels.
This is not a unique problem the Gulf island, but in the industry wide challenge due to the years of Underinvestment and training of craft combined with continued uncertainty in the market the.
The second challenges arising from the lack of appreciate the 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 the hours to complete the remaining backlog.
Recruiting and developing our most valuable resource our people is one of our key strategic priorities.
Were actively addressing this within the shipyard division by hiring more frontline supervisors, along with working on various programs to improve retention.
We're also working closely with technical colleges in Louisiana, and Texas to help train and recruit more capable personnel.
We are also notified of last week that is essential workers. The state of Louisiana will allow our employees to be vaccinated we.
We expect to see in <unk>.
The improvement in the stability of our workforce as our initiatives around our people continue to take it back and we reach a steady state of head count in the first half of 2021.
Our shipyard Division also continued to be impacted during the quarter by of backlog that is largely in a loss position and continues to be challenged as we have previously discussed.
Specifically, our 240 vehicle ferry projects continued experienced lower than anticipated craft labor productivity and progress due to the impact of COVID-19, and reward challenges due to the deficiencies and design, which resulted in project charges.
Specifically during the quarter, we experienced additional challenges with the second very associated with deflections, and 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 the third party engineering firm, we determined that there are inherent engineering deficiency eastern the vessel design provided by the client that are creating the ongoing structural challenges on the secondary.
As a result of the deficiencies in the design, we believe that the first Barry 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 in the overhead crane incident in the third quarter have led us to the conclusion that the construction of a new hole is the most appropriate of course of action for the first vessel.
<unk> and additional forecast cost 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 the 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 in 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 sub contracted services.
Late in the fourth quarter, we submitted the request for equitable adjustment to recover the increased forecast costs associated with the impacts of the COVID-19 and to extend our project schedules. While we were granted extension of the schedule. We have not yet received any additional commercial consideration associated with our cost increases will continue to.
<unk> worked 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 the costs.
Earlier this year, we entered into a change order to our contract with the Navy to provide the navy the data access rights for future towing established rescue ships.
The change order is approximately $13 million and is in 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 day to Reits during 2021.
This change order is to support the Navy's decision not to exercise their options under our contract for the construction of the of three additional vessels.
Third 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 schedule 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 the support this optionality for the Navy and particularly given that the options would have largely been in a breakeven position.
We anticipate that the change order will be will result in net benefit to our operating results of $7 million to $10 million from the first quarter of 2021.
Our 70 vehicle Ferry project was similarly impacted by increased craft labor subcontracted service costs and extension of the schedule due to the impact of COVID-19, pandemic and our inability to achieve previously anticipated improvements in productivity. These impacts were compounded by the additional complexities of <unk>.
Phil, especially around piping that has been identified as we achieve further completion of production engineering.
We are continuing to work diligently to deliver the very by the end of the year.
On our research vessel.
Projects fabrication and erection are ongoing on a limited basis as the 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 the minimize the schedule impacts of 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.
The change order provided cost recoveries in the extension of the 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 to improve our processes and our 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 operations 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 end market emphasis on newbuild construction outside of the oil and gas industry and increased repair and maintenance work.
And some of the economic impact of COVID-19, pandemic and crude oil volatility remained 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 in 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're also focused on being good stewards of the business and giving back to the communities we serve.
I will now turn the call over to the west to discuss our quarterly results in greater detail.
Thanks, Richard and good afternoon, everyone.
I will discuss our consolidated results and then provide some additional details regarding our segment results.
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 the sequential increase of 5% and of year over year decrease of 28%.
The sequential increase was due to higher revenue per our fabrication and services division.
Primarily reflecting increased offshore services activity and revenue for our offshore module 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 from the third quarter 2020, and $34 3 million for the fourth quarter 2019.
Adjusted EBITDA, which reflects the removal of non cash impairments.
<unk> and losses from the sales of assets held for sale and certain nonrecurring items.
Was the 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 from the prior year quarter.
Our consolidated loss for the current quarter was attributable to project charges of $8 8 million per 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 nonrecurring 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.
$47 7 million for the fourth quarter 2019.
The 22% decrease compared to the fourth quarter 2019 was due to lower revenue per 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 of 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 the 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 from the prior year quarter.
The operating loss for the fourth quarter 2020, primarily reflected project charges of $8 8 million of which $5 8 million relates to our 240 vehicle ferry projects.
$1 5 million relates to our Texas Ferry project.
One 2 million relates to our towing salvage and rescue ship projects and.
And 340000 relates to our harbor tug projects, which are now complete.
The loss was also due to the backlog that is generally in the loss position the partial underutilization of the division's facilities and resources due to the previously mentioned construction delays of our research vessel projects.
And charges of $1 6 million attributable to noncash impairments of assets held for sale and cost related to the closures of our Jennings in 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 quarter 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 peer.
<unk> due to higher work hours, resulting from increased construction activities and.
In our current quarter utilization was consistent with the prior year quarter as work hours were comparable between periods.
With respect the general and administrative expense in the fourth quarter 2020 reflects the decrease of over 20% from the year ago quarter.
The team from a cost reduction initiatives.
For our fabrication and services Division revenue was $21 2 million for the quarter.
Impaired to $18 2 million for the third quarter, 2020, and 30 $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 per our offshore modules project.
Net partially by lower revenue for the divisions jacket and deck project, which was completed prior to the fourth quarter.
The 36% decrease from the fourth quarter 2019 was also need of the division's jacket and deck project and paddle paddle wheel riverboat project, which were both completed prior to the fourth quarter 2020.
And a lower level of onshore services activity in 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 divisions Marine docking structures project in our store 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 of $12 7 million for the fourth quarter 2019.
Adjusted EBITDA was $1 9 million for the current quarter compared to adjusted EBITDA of 225000 for the trailing quarter and in the desk adjusted EBITDA loss of $2 5 million from 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 of noncash impairments of assets held for sale.
And the 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 the significantly improved adjusted EBITDA for the quarter.
From a comparison perspective truck trailing quarter in the prior year quarter, we realized the project improvements of 600003rd quarter 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 How's.
However, our current quarter utilization was lower than the prior year quarter by 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 of fabrication project port.
With respect to general and administrative expense the fourth quarter of 2020 reflects the 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.
From a 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 2020, and an operating loss of $3 1 million for the fourth quarter 2019, with the increase relative to the trailing period due primarily to higher legal fees and the decrease relative to the year ago quarter.
<unk> due primarily to lower legal fees in the prior year period, including impairment and certain nonrecurring costs.
Next I will provide a few comments regarding our quarter end backlog and liquidity situation.
At year end, our backlog totaled $317 million with approximately 95% attributable of Star Shipyard Division. This backlog represents a decrease of 15% from a year ago backlog and 13% compared to September 2020, with the decrease is due to revenue volume outpacing our new project awards from 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 usage in the quarter were partially offset by asset sales of approximately 340000, resulting in the year end cash and investment balance of approximately $51 million.
We also had total debt of $10 million at yearend attributable to our PPP loans in.
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 applicable.
The program guidelines.
At year end, we have reflected the loan as debt, but the debt classification based on the terms and conditions of our loan and the timing of required repayment absent in the 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 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 services Division and two dry dock within our shipyard Division that were previously located at our Lake Charles facility and were classified as held for sell 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 million to $5 million. However, we are focused on trying to limit our expenditures 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.
Thank you.
And the answer session will be conducted electronically if you'd like to ask the question. Please do so by pressing the star key followed by the digit one on your Touchtone telephone if you're using a speaker phone. Please make sure. Your mute function is turned off to Larry smoothed treat dry equipment low preceding the or that you've seen the list and we'll take as many questions as time permits.
And we'll take our first question of day from Martin Malloy with Johnson Rice.
Good afternoon.
That's the name of the aftermarket.
The positive news on the on.
The U S Navy.
Contracts there.
If you could provide us with an update what percentage of your backlog of loss 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 the charges we've taken.
Yes, Marty the the.
The lion's share of that out of that backlog in the shipyard is and the loss of breakeven. So at this point, it's going to contribute no incremental.
The profitability of course, if we execute to the current forecast.
Those of crude losses, and our expectations around losses those are in our working capital numbers. So if you think about our.
I mentioned, our working capital like the oftentimes talk about it in terms of excluding cash in some of the other items the focus in on the exactly what you're asking or negative our working capital was negative $4 9 million at the end of the year that includes about.
$8 $5 million of.
Contract losses of crude contract losses that will be required to fund.
Over the life of these projects.
Okay.
Okay I appreciate that and then.
Just yes.
Yeah.
Mentioned modular world.
Over the last couple of quarters and continuing to pursue that on projects.
Could you maybe given the.
The the fabrication segment backlog is under $20 million just what.
What your outlook is for being successful on the England module work.
We're confident Marty.
We've discussed though the.
That activity has been pushed to the right just because of the challenges of cash.
Covid in crude oil price, but we are seeing some activity pick up more specifically on LNG projects and the.
Petrochemical projects and Louie.
Louisiana and Texas.
And so as those pick up.
One of the things that we talked about in my.
Script was that the.
Net.
We have multiple bites of the Apple and that project lifecycle. So theres one large LNG projects that we're currently bidding where it's Scott.
The pipe associated with some civil work.
Got modules through the prime the EPC company and then it also has the specialty.
Hi, Hi, kind of engineered valued process modules for a technology license provider. So.
Even even I would say a third of that if we won would put us at capacity in the.
In the next 18 to 18 to 24 months. So I feel good about the prospects of on fabrication and services with regard to those modules that we've discussed.
Okay.
Your day against the overseas the fabrication yards.
All of these projects.
On certain parts of the projects are 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 on.
All of our value proposition is giving the clients certainty on not the entire scope. So there's for example.
Prime EPC contract there.
To look at maximum module realization for the EPC projects, they're going to.
The majority of the the.
The equipment.
Overseas, but there are they are bidding time sensitive critical.
The modules to local contractors.
Okay.
And then the <unk>.
Last topic.
Talk to you all I think the offline about this before but.
Offshore wind in the U S and the potential.
To build towers I don't know if you saw the by the 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 of some of these projects and I just wanted to get your thoughts I mean, given that you all did the projects offshore.
Rhode Island of the six.
Those six.
Your bonds the.
The support structures for those in the Hell of a lot of experience in terms of rolling steel.
For large offshore projects.
Is there an opportunity there for you.
Yes. So there is already and I saw that report come out this week that you are talking.
But today that youre talking about from the burden of administration we.
We are looking at debt market selectively so our first entry into that market was based on a traditional.
Jacket platform I'm, sorry jacket, the Thai foundation the.
The new construction going forward of our mono piles of it.
That frankly.
It would take us out of that play and so.
As the technologies evolve and change of what we're specifically looking at the opportunities where we can provide value to the growth.
The customers and try to capture some of the growth in the market.
With the amount of piles of what is so different levels of larger diameter.
Trying to I mean, given that you all of them jackets that are hundreds of they've got a water of hundreds of feet deep I'm from them.
Canada since between.
Yes. So these mono piles have of technical kind of the.
The prefab the engineered equipment at of requires quite a bit of Capex investment upfront and so the the Europeans of put insignificant 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, but as the turbines.
Get larger and heavier I think.
It will limit out some of the model tile type of technologies and hopefully the jackets might get introduced back in and so 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.
And I'm, sorry to keep talking about this but it seemed like from the press release coming out of the Bud administration that was the real focus in terms of creating jobs domestically.
Yes.
The creating jobs domestically, though unfortunately.
And that the same reported also said.
In the northeast right with Union labor, and so and it does make it challenging for us from that perspective, because we don't what we don't have the close proximity to the ports that where these projects are going to be based out of.
Okay.
Alright, thank you.
Okay. Thanks Mark.
Next we'll hear from J P Guy again with global value investment Corp.
Good afternoon, and thanks for taking my questions can you discuss the type of work that you are actively pursuing or winning today in terms of sides industry scope tend to complete et cetera.
Okay.
So the work we're winning immediately today.
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.
The materials not only the support the subsidy.
Markets in the offshore customers, but also some of the civil contractors like rolled goods. These large pipes.
Pipes that we roll that thats typically used to support simple civil work on these EPC projects. So we're winning our fair share of that book and burn work.
<unk> with the headwinds as the larger modules that debt, obviously have the size in terms of tons in man hours that were looking for.
That's what I was explaining that.
We're hoping those.
Are going to come in the back half of this year.
Okay.
<unk>.
Can you elaborate on the responses to Marty's question about your new markets might be other than.
Something other than offshore wind.
And what will work that you do for.
Gross margins would be one of the characteristics of the projects.
Specifically the economic characteristics of the margins will be at the competitive landscape look like.
With each of the scope of investment that would be involved with any.
So I can address that.
So the type of work we're going after.
Is really and.
The engineered equipment, right and its fabricated skids and modules that that pertained to.
What we call sustainable market end markets, and so youre seeing a lot of discussion around <unk>.
The <unk> fuels.
Green energy in terms of for example, plastic recycling or hydrogen. These all technologies can be built in a modular format and so we build modules and the module is look the same day just convert.
And input to a different product and of different manner and so the the metal and the the welding are all the inputs of the same and so from a capital investment standpoint, it's very low capital investment and that's why 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 one of Modularized 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 of 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 of the sustainable Green and markets through our fabrication expertise.
Okay, that's very helpful.
Finally, the issues you've had with skilled labor seem to have been going on for a while.
You talk about what you're doing to mitigate the challenges.
Yes.
The skilled labor challenge has been a tough one because especially in 2020 during the COVID-19 it really.
<unk> itself was exponential I guess, because we were ramping up and so we had all of this.
Okay.
Need to ramp up of craft labor, which in the shipyard tends to be what I call low lower trade crafts and so they are under five years of experience.
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 the steady state through our training and working with.
Some of our technical universities and technical schools welding schools that we are we are developing more capable of.
Better consistent welders, and so hopefully as we stabilize the head count.
And get to a steady state position and then we invest in doing training and working collaboratively with.
The technical schools that the employees of those craft employees, we'll be more productive predictable in there.
Productivity.
Great. Thanks for taking my questions.
Thanks, Ed.
Our final question will come from John day share what's critical.
Good afternoon, everyone.
Hey, good afternoon John.
Hey, I was just curious you did a nice job of consolidating the operations.
<unk> and Jennings in Lake Charles are there any other.
The consolidation opportunities that are out there.
But you are thinking about.
But geographically, Florida in one location now we're all on highway Palma.
And the way.
We've been trying to consolidate everything that we can into one location, which is which of the home of operations.
So there really isn't anything other other than just looking at our landscape.
And having this kind of look at our pipeline and backlog and we are committed to evaluating these prospects like I said I'm committed to.
For example, I told you that debt in the back half of this year.
We're looking to get some new awards that.
Net are substantial if that doesn't happen, we're going to look for more cost cutting and so what we're gonna be relentless with that focus of managing our cash. We are focused on are now that we've got our footprint and Homer.
Figuring out ways to make that footprint as efficient as possible and that's what you saw this quarter in the fourth quarter, where we did record some impairments.
Associated with that and services that was a direct function of relocating and consolidating assets within the home of footprint to make ourselves as efficient as possible.
It's a good point.
Good day here.
I just wanted to make sure I understand the timelines for the delivery of some of the remaining vessels the number two ferry.
I think the 40 vehicle could you say that it 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.
The fourth quarter then.
That's correct fourth quarter fourth.
The fourth quarter.
And on the JV with the two that you have remaining.
When do you anticipate those being delivered.
Well the so the Navy's.
We have five vessels with the Navy right and so when you say two remaining.
Can you clarify that.
I'm talking about the two last one.
Sorry, I thought it was five total of but they are growing too.
Manufacturer.
Other three of the pack three somewhere else or did I don't know no debt yeah, yeah. So the John.
So we have been awarded five vessels of which we're building all five there were three additional options that they had the option it was.
The contract at obligations, they had an option to get which those of the three options that we did not take and so of the.
The five vessels.
The first ones will get delivered.
The.
Third quarter of 'twenty two.
And then the last of the fifth vessel will get delivered in the fourth quarter of 'twenty four.
Okay.
Make sure I've got the alright. So the first four will be delivered in the fourth quarter of 2022 kind of.
The first first one is the third quarter of 2002 and the second one is fourth quarter of 'twenty two.
They are staggered yep.
Yeah.
And then the last one I told you will get delivered and the.
The fourth quarter of 'twenty four.
That's the first loans.
That's the first one yes, sir okay, what about three and four.
So we've got the second quarter of 'twenty three.
For a number three and the number for us.
Late second quarter of 'twenty four.
Okay.
That's helpful.
The proceeds of you're getting from the work order of 13 million I think you said.
You are getting $7 million in Q1, or anticipate 7 million of Q1.
When does the the remaining 6 million hit.
Well, so we're getting actually majority of the 13.
So the.
From a revenue standpoint, our receivable standpoint, we're getting majority of that $13 million.
In Q1, and the the remaining balance will 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 of Q1, not just $7 million.
Yeah.
The $10 million is is the income that we anticipate earning from that $13 million and recognizing in the first quarter. Okay. We'll get we'll get about $9 million of that in Q1 in terms of cash receipts and then the <unk> the revenue recognition from the cash but the.
The revenue recognition, we anticipate will be between seven and $10 million in the first quarter.
Okay. Okay. That's helpful and finally, when do you anticipate filing your 10-K.
We will file it tonight, so hopefully it'll be on the wire and be available to you first thing in the morning.
Okay. Okay.
Thanks, Good luck.
Okay. Thanks, Sean.
This concludes today's question and answer session. At this time like the turn the conference back over to Mr. Richard Hough for any additional comments.
Thank you James in closing I want to thank our customers and shareholders for their continued support as well as the 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 am confident that the initiatives are taking effect I'm encouraged with the progress we've made.
We will 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.
For those on the call. Thanks again for your interest and I look forward to speaking with you on our next on our first quarter results conference call and updating you on the progress be safe and take care. Thank you.
That will conclude today's conference call. Thank you for your participation you may now disconnect.
Okay.
Yes.
Okay.
Okay.
Uh huh.
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Okay.
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Yeah.
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