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| Statement |
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| For our Fabrication division, revenue for the fourth quarter of 2023 was $19.7 million, an increase of nearly 20% compared to the prior year period due to strong growth in our small-scale fabrication business and the favorable resolution of customer change orders |
| For the full year, we similarly benefited from the growth in our small-scale fabrication business and the contribution of our large fabrication project that was canceled |
| During 2024, we expect another year of steady growth in our small-scale fabrication business and continue to be excited about our positioning in this business over the long term |
| We're excited by the momentum in our Services and small-scale fabrication business which, combined with our strong financial flexibility, positions us to drive value for shareholders |
| I'm very proud of all of our accomplishments during 2023 and remain confident that 2024 will build on our strong foundation of reoccurring revenue from our base business |
| Our fourth quarter revenue increased 17% from last year, reflecting the continued strength in our core Gulf Coast region, combined with the successful execution of our strategic initiatives |
| We generated strong EBITDA growth in both our Services and Fabrication segments during the fourth quarter, and we grew our cash balance, giving us significant flexibility to pursue our growth objectives |
| As should be evident by our strong fourth quarter and full year financial results, we have established a stable and profitable base business through the growth of our Services and small-scale fabrication businesses |
| And so that, along with some of the other end markets that we're chasing, we feel very good about our guidance with regard to small fab opportunities for 2024 |
| In Fabrication, our small-scale fabrication business provides a strong base that is stable and nicely profitable and gives us a strong foundation to pursue growth |
| During fiscal 2023, our Fabrication division generated gross margins of over 11%, despite the partial underutilization of our facilities, owing to solid growth and execution in our small-scale fabrication business and the benefit of our large fabrication project that was canceled |
| Our cash balance and the long duration of our debt provide us strong liquidity going into 2024 |
| The improvement was driven by growth in small-scale fabrication, the previously mentioned resolution of customer change orders and project improvements resulting from strong project execution |
| I'm excited about our progress and we remain focused on continuing to execute on our transformation strategy in 2024 and beyond |
| I'm extremely pleased with our fourth quarter results that capped off a remarkable year for Gulf Island |
| And the other was it allowed us to further consolidate our footprint, which we think will have some efficiency benefits, both from a productivity perspective and help us reduce our ongoing operating costs |
| And it gave us two benefits, one, we're able to monetize an asset that we don't think we need |
| Services EBITDA for the fourth quarter of 2023 was $3.2 million, up 25% compared to the prior year period, owing to a more favorable project margin mix, including strong growth in our higher-margin Spark Safety business |
| We are well-positioned in these markets, and we continue to pursue several attractive opportunities |
| In the meantime, we remain focused on profitably growing our Services and small-scale fab business and are excited by the opportunities they offer |
| The improvement in adjusted EBITDA reflects higher results for both Services and Fabrication, including the benefit of project improvements for our Fabrication Division, resulting from the favorable resolution of customer change orders and strong project execution |
| This quarter was yet another example of the benefit of our strategy to grow Spark Safety and direct resources to higher-return opportunities, as our 13% revenue growth during the quarter translated to Services EBITDA growth of 25% |
| In fact, for the year, we were able to grow our Services EBITDA by 34% on 7% revenue growth |
| The increase was driven by solid growth in both our Services and Fabrication segments |
| Driven by the favorable spending environment for our key oil and gas customers and more specifically, those in the Gulf of Mexico, the demand trends for our Services business remain encouraging as we enter into 2024 |
| In addition, we continue to add new customers who recognize the safety advantages of our Spark Safety offering and as such, we expect to continue to gain traction in the market |
| Based on these factors, we expect another strong year for our Services business in 2024 |
| As a result of our strong execution focused on quality and schedule improvement, we have received additional scopes of work that has more than doubled our initial estimated contract value |
| With these distractions behind us, we are now a focused Services and Fabrication company that is well-positioned to take advantage of the strong demand trends in our key end markets |
| The strong results were driven by growth in small-scale fab and the benefit of project improvements, resulting from the approval of customer change orders |
| Statement |
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| One of the things that we have seen in the past year, year and a half is just the challenges in the capital market |
| The recent decision by the Biden administration to postpone the approval of all LNG projects added another layer of uncertainty |
| However, there are some headwinds with, again, capital availability and some of the things that we're seeing on the LNG side |
| Our forecasted 2024 EBITDA for Fabrication is lower than 2023 levels due to the prior year benefiting from the contribution of our large fabrication project that was canceled during the year |
| However, we have continued to see extended project decision cycles with delays in several large projects due to permitting issues and other factors that can be -- that can impact these large multibillion-dollar projects |
| However, these benefits were partially offset by an increase in the under-recovery of overhead cost associated with lower utilization of facilities and resources, resulting from the cancellation of the division's large fabrication contract |
| And then the other challenge we're seeing is that because of the budgets, the customer and/or the EPC contractors, there has been some changes in the philosophies around the scope that we're working on |
| And for our Corporate segment, we expect a 2024 EBITDA loss of approximately $8 million, which is consistent with our recent historical experience |
| For our Corporate division, EBITDA was a loss of $2 million for the fourth quarter of 2023 compared to a loss of $2.3 million in the prior year period |
| And number two, there was a propeller issue with respect to the Texas ferry, a $1.5 million propeller |
| And so what we sold was a piece of property, a portion of property that was acquired by the company some time ago, that has been underutilized for a very long time |
| And the CapEx in the fiscal year just ended, it seemed a little light |
| It never happened |
| And obviously, change order improvements of that magnitude based on our revenue volume, you wouldn't expect to see those all the time |
| As a reminder, please note that our full year results for 2023 reflect the impact of the resolution of our MPSV litigation, which resulted in a charge of $32.5 million for our Shipyard division for both the third quarter and full year 2023, consisting of two separate items, which have been reflected as a reduction to revenue for the division |
| The first was a non-cash charge of $12.5 million associated with the write-off of a non-current contract asset related to the construction contracts that were subject to the litigation |
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