COMPANY UPDATE. October 2017 Houston, Texas

Transcription

1 COMPANY UPDATE October 2017 Houston, Texas

2 Company Overview Since 1985 A leading fabrication, shipbuilding and construction services provider Founded in Louisiana in 1985 with an initial public offering in 1997 (NASDAQ:GIFI) Diversified international customer base delivered some of the largest structures worldwide 2016 Financials: Revenues $286 million / EBITDA $26 million / Net Income $4 million Balance sheet - no debt / Working Capital $164 million Market Capitalization: $180 million (as of 10/24/17) 2

3 2017 A Season of Transition >>> 2016 Harvest Project management discipline Income statement focused Profitability Diminishing upstream oil & gas wave of investment Shipyard acquisition / expansion 2017/8 The Pivot Market diversification Backlog exhaustion / trough Balance sheet management Cash preservation / breakeven EBITDA Divestitures Protect capabilities Price taker Rebuilding backlog 2019 Growth >>>> Return to growth Diversification / new markets Income statement focused Profitability Capacity constraints Pricing leverage / margin expansion Shareholder returns Capital investments 3

4 The Big Market Pivot Our transition into other non-upstream oil & gas markets 2011 Revenues by Market 2016 Revenues by Market Future Revenues by Market Upstream Oil & Gas 8% Upstream Oil & Gas 97% Upstream Oil & Gas 84% Other 16% Other 92% Other 3% 4

5 Our Capabilities Fabrication of complex steel structures for over 30 years 5

6 Diversification - Fab, Services & Ships Three segments with fabrication, installation and project management expertise to oil & gas, government and various other markets. 6

7 A Leader in Offshore Fabrication Many first s in the industry 7

8 From Top (Topsides) to Bottom (Piles) Production platform topsides, jackets and piles Built for Walter Oil & Gas 30,000 ton single-piece jacket 1,250 in length 4,500-ton topsides 8

9 1 st SPAR Built in the U.S.A. Tubular Bells Single-point anchor reservoir 7,400-ton topside 603 and 13,000- ton classic SPAR 50-POB Living quarters Skids and tieback On production in the Mississippi Canyon of the Gulf of Mexico in 4000 water depth $300 million project 9

10 Fabrication & Shipbuilding Facilities Largest offshore fabrication capacity in the U.S.A. Houston, TX Corporate Office 10

11 Business Segment Drivers Fabrication Chemical renaissance Driving new petrochemical plant construction/expansion Modular construction techniques Services Plant-the-Flag Strategy on Fab s coattails of new projects >80% of spending occurs post-construction in petrochemical plants 87% of an asset s lifecycle costs are spent during the operations phase; less than 13% is attributable to project execution costs (and only 8.7% construction) 1 Shipyards U.S. Jones Act enforcement Strong shipping demand Naval reconstruction; military/government Petrochemical marine demand; product carriers Offshore wind power service vessels 1 US Downstream Engineering, Construction & Maintenance Market Outlook 2017, by Martina Asbury, Petrochemical Update, December

12 Shale Oil & Gas Drives Petrochemical Plants The Shale Revolution in the United States is driving a Chemical Renaissance along the Gulf Coast with reliable and plentiful supplies of oil & gas product flowing from nearby basins. It s a tectonic shift in the hemispherical balance of who makes what, said Dow Chief Executive Andrew Liveris the world s appetite for plastics is expected to rise for decades to come. [according to PCI Wood McKenzie] The world consumed more than 147 million metric tons in 2016 of ethylene and will need more than 186 million tons by 2023 to meet global demand - The Wall Street Journal, June 26, 2017 ExxonMobil Corp.: World's largest ethylene cracker plant will be in South Texas; ExxonMobil Picks Corpus Christi for $10 Billion Ethylene Plant Low priced, abundant shale gas supply has created downstream manufacturing renaissance U.S. shale boom fueling chemical plant expansions: Exxon is growing the Gulf; Shell is growing the NE - The Houston Chronicle, April 19, 2017 steady interest in new gas-fired power plants domestically (which typically range in size from $500MM to $700MM) - Johnson Rice & Company, 5/22/

13 The Shift to Modular Plant Construction Modular construction enables efficient utilization of off-site fabrication facilities, enables parallel tasks, reduces on-site risk for the customer and, ultimately, quicker plant startup. PROJECT DURATION: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Serial Task Method = 6-8 Years to Startup Design & Engineering Site Prep Stick-Building Onsite Commissioning NEW Method with Parallel Tasks = 4-5 Years to Startup Design & Engineering Site Prep Module Install Commissioning Time savings to begin facility startup can be substantial. Module Construction Source: management estimates; industry research. 13

14 Petrochem Modules Drive Fabrication Upstream Project Managers now employed in petrochemicals are utilizing offshore engineering, project management techniques and modular construction September 2017 SQE Unit for Lake Charles Ethane Cracker (CB&I/Axial Lotte) 14

15 Offshore Wind Demand Fundamentals Legislation and public policy increasing demand for renewable energy supply with offshore wind providing an alternative to the east coast markets. The U.S. DOE expects offshore wind will produce 86 GW of power by about 7% of America s current electricity demand 23 Projects totaling 16 GW - equivalent to 16 nuclear power plants on the drawing board 15

16 Offshore Wind Demand & Participants European and U.S. equity-backed and U.S. energy generators leading the way. Turbine installations require fixed and/or floating foundations along with an offshore service infrastructure. Offshore USA Wind Turbine Installations and Foundations Required Sources: Statoil Hywind company information, management estimates. 16

17 America s First Offshore Wind Farm Offshore wind power projects are increasing and require similar structures as offshore upstream oil & gas Gulf of Mexico shelf projects and U.S. Jones Act service vessels. D.E. Shaw's Martin (in a blue shirt with raised fist), Jeffrey Grybowski, CEO of Deepwater Wind (center), Rhode Island Gov. Gina Raimondo (with thumb up), and others celebrate an early construction milestone at Deepwater's wind farm in Brian Snyder Reuters Source: Wind Power Takes to the Seas, by Brian Dumaine, Fortune, March 24,

18 Deepwater Wind in Rhode Island Offshore wind power projects are increasing and require similar structures as offshore upstream oil & gas Gulf of Mexico shelf projects and U.S. Jones Act service vessels. 18

19 New Products Flat Plate-30 SPAR FPS A solution for marginal fields ~ supports 30,000 bpd of production Deepwater Solutions Pre-engineered Standardized Singled-sourced Quick-to-market (24 months) U.S.-built (Houma, LA) No overseas transportation $50 oil price Improved NPV & MIRR 19

20 Shipyard Credentials Proprietary design of technologically-advanced offshore supply vessels (completed February 2017) 20

21 Shipyard Credentials Craftsmanship and technical integration below decks (completed February 2017) 21

22 Corporate Objectives in 2017 Balance sheet-focused to prepare for period of sustained growth Capital Discipline: Rationalize Assets - Divest South Texas Facilities Develop Capital Deployment Strategy No debt outstanding Protect Liquidity: New Credit Agreement in June 2017 Conserve cash Disposition of underutilized assets Enhance Organization: Recruiting top talent to enhance team across the organization (corporate and operations) Organizational re-alignment Re-Build Backlog: Q Highest Reported Backlog since April 2014 Awards in New Markets outside of Upstream Oil & Gas (Oregon, New York) Develop new marketing channels (renewables/offshore wind, petrochemical, transportation, government) 22

23 Thank you! 23