Cindi Cook - Accounting Manager Kirk Meche - President and Chief Executive Officer Jeffrey Favret - Chief Financial Officer Todd Ladd - Chief Operating Officer.

Doug Dyer - Heartland Advisors Walter Winnitzki - Buckley Capital Martin Malloy - Johnson Rice.

Good morning and welcome ladies and gentlemen to the Q1 2015 Gulf Island Fabrication Incorporated Earnings Conference Call. All participants will be in a listen-only mode for the duration of the presentation. This call is being recorded. At this time, I would like to turn the conference over to Ms. Cindi Cook for opening remarks and introductions.

Cindi, please go ahead..

Thank you, Noah. I would like to welcome everyone to Gulf Island Fabrication’s 2015 First Quarter Teleconference. Please keep in mind that any statements made in this conference that are not statements of historical fact are considered forward-looking statements.

These statements are subject to factors that could cause actual results to differ materially from the results predicted in the forward-looking statements.

These factors include the timing and extent of changes in the prices of crude oil and natural gas, the timing of new projects and the company’s ability to obtain them and other details that are described under cautionary statements concerning forward-looking information and elsewhere in the company’s 10-K filed March 6, 2015.

The 10-K was included as part of the company’s 2014 Annual Report filed with the Securities and Exchange Commission earlier this year. The company assumes no obligation to update these forward-looking statements. Today, we have Mr. Kirk Meche, President and CEO; and Mr. Jeffrey Favret, our Chief Financial Officer; and Mr.

Todd Ladd, our Chief Operating Officer. Mr.

Meche?.

Thank you, Cindi, and good morning to all of our listeners. I will give a general overview of the marketing opportunities that exist for our company. Mr. Todd Ladd, our Executive Vice President and Chief Operating Officer, who will provide an update on existing projects and Mr.

Jeff Favret, our Executive Vice President of Finance and Chief Financial Officer, will provide a breakdown of the financials for the first quarter 2015. The market continues to be sluggish with oil prices in the 40s and lower 50s for the most part of the first quarter of 2015.

During this first quarter, we had several projects within our facilities put on hold and we were storing these projects until our customers are ready to start up again. We are or will be collecting storage fees for these units in accordance with the contractual terms.

We have also seen future inquiries as it relates to deepwater projects moved further to the right. We have however seen an increase in bidding activity as it relates to marine and offshore win opportunities.

Bidding for our Marine segment includes OSVs, several self-elevating compression barges for an overseas location, a large drydock, a flood control structure and river cruise ships. Bid inquiries for win opportunities for the East Coast, along with petrochemical refineries remain strong.

Our proposal for an overseas multiple jacket index project remains outstanding pending government funding and there is hope that this will be funded in the latter part of the second quarter. Our service side of the business remains steady.

Offshore and onshore cruise remain busy with maintenance and upgrades to existing facilities, but pressure to reduce cost is being put on us by our customers, a plan forward. Our Board has approved the capital spending associated with fabricating the fourth section of our drydock located in Louisiana.

This work will be performed in-house and is scheduled to be completed in the fourth quarter this year.

This fourth section will allow us to drydock larger vessels by giving us a drydock that measures 360 feet in length in lieu of the 280 feet we currently have, along with a lifting capacity of 11,600 short tons versus the existing capacity of 8,500 short tons.

This fourth section will also allow us the flexibility to separate the drydock into two smaller sections to serve the smaller vessels should opportunities present itself. We are continuing our efforts to evaluate all assets. Our cash position remains strong and we have no debt on the books.

This should aid us as we continue to explore opportunities that will enhance our business model, while producing maximum returns for our shareholders. I will now turn the call over to Mr. Todd Ladd, who will discuss our existing projects.

Todd?.

At our Texas facilities, we continue to fabricate a 1,200-foot jacket, the associated piles and topsides for our Gulf of Mexico destination. Deliveries for these units are scheduled for third quarter of 2015.

We are in the rolling process for the piles associated with the project destined for the Gulf of Mexico, delivery of these piles are scheduled for third quarter of 2015.

At our Louisiana facilities, work associated with the fabrication of five shallow water jackets and supporting piles for a wind turbine project located off the East Coast of United States is progressing with deliveries scheduled for the end of the second and third quarters of 2015.

We continue to work on three river towboats scheduled for delivery in the third quarter of 2015, first quarter of 2016 and second quarter of 2016. Our drydock remains active, with opportunities for work going forward. I will now turn the call over to Mr. Jeff Favret, who will discuss the financials for the first quarter of 2015.

Jeff?.

Thank you, Todd and good morning everyone. I will discuss significant trends for the quarter, provide specifics on our financial performance and then we will open the call for your questions.

Net income for the quarter was $83,000 or $0.00 per share compared to net income of $3.5 million or $0.24 per share for the first quarter 2014 and a net loss of $111,000 or $0.01 per share for the previous quarter. Our first quarter results were adversely affected by the following.

Number one, lower overall utilization at our Louisiana and Texas facilities as several projects were completed and delivered early in the quarter and the fact that we experienced one suspended project late in the fourth quarter 2014 and two suspended projects during the first quarter 2015.

Number two, less offshore commissioning and hook-up activity during the quarter as a large offshore campaign finalized early in the first quarter 2015. Number three, progress during the first quarter 2015 on a large deepwater project at our Texas facilities that garnered near breakeven profit margins for the quarter.

And lastly, an additional $400,000 of bad debt expense related to a final settlement of a receivable balance for a spar hull completed in the first quarter 2014. Revenue for the three months ended March 31, 2015 was $99.2 million compared to $134.7 million for the prior year quarter and $124.8 million for the preceding quarter.

The decrease in revenue was 26.3% for the first quarter 2015 compared to the prior year quarter was primarily due to higher revenue realized in the first quarter 2014 related to completion efforts on a spar hull for a large deepwater customer as compared to our mix of backlog for the first quarter 2015 projects.

Gross profit was $4.4 million for the quarter, representing a 4.5% profit margin compared to a gross profit of $8.8 million or 6.5% for the first quarter 2014 and gross profit of $10.8 million or 8.7% for the preceding quarter.

Comparatively lower gross profit for the first quarter 2015 is largely due to reduced utilization in our fabrication yards and near breakeven profit margins on a large deepwater project at our Texas facility as discussed earlier.

Revenue backlog was $135.1 million, with the labor backlog of 1.2 million hours remaining to work at March 31, 2015 compared to a revenue backlog of $184.7 million and labor backlog of 1.7 million hours remaining to work at December 31, 2014.

Revenue backwater – backlog for deepwater projects was $57.8 million or 42.8% compared to $70.1 million or 38% for the preceding quarter.

Of the backlog at March 31, 2015, we expect to recognize revenue of approximately $127.9 million or 94.7% during 2015 and $7.2 million or 5.3% during calendar year 2016, not including change orders, scope growth or new contracts that may be awarded.

We have 1,570 employees and 170 contract employees at March 31, 2015 and 1,700 employees and 247 contract employees at December 31, 2014. Labor hours worked during the first quarter 2015 were 745,000, compared to 818,000 hours for the sequential quarter.

Our balance sheet remains solid, with cash and cash equivalents at $50.1 million at March 31, 2015 compared to $36.1 million at December 31, 2014. Working capital was $101.8 million at March 31, 2015 versus $99.7 million at December 31, 2014. We had no outstanding borrowings at March 31, 2015.

CapEx for the first quarter 2015 was $1 million primarily for yard improvements and maintenance.

Approximately $5.8 million of capital expenditures are planned for the remainder of 2015, including approximately $4 million for the drydock extension that Kirk mentioned earlier and $1.8 million for maintenance capital expenditures at our Texas and Louisiana facilities.

We declared and paid cash dividends of $0.10 per share during each of the quarters ended March 31, 2015 and 2014. Operator, you may now open the call for questions..

Thank you. [Operator Instructions] We will take our first question from Doug Dyer with Heartland Advisors..

Hey, good morning gentlemen..

Hey, Doug. Good morning..

Good morning.

Just a little bit more clarity on the funding at late Q2 for the wind tower jackets, is that funding for additional purchases beyond these first five that are under construction?.

Well, the opportunities that we spoke about in the call, Doug, relate to a different project again that there seems to be quite a few projects that are surfacing now and we are in discussions with some of these owners.

So, again, I haven’t seen much update on the remaining balance for the deepwater wind project, but we are getting inquiries from other wind farms along the East Coast..

But with the funding Doug that you are referring to is for existing projects..

Yes..

These are existing projects that are – how would you describe them in the early stages? They don’t have many of these jackets deployed yet, so there is potential for additional follow-on orders? Is that the right way to look at it?.

Yes, that’s exactly the way we look at it..

Alright. Okay, well thank you very much..

Hey, Doug. Thank you..

[Operator Instructions] We will take a question from Walter Winnitzki with Buckley Capital..

Yes, thank you. Actually two questions.

First, can you provide a little bit more color as to what you are seeing in the marine and shipbuilding segment of the business relative to the current environment, where are the opportunities and the challenges? And then the second question is maybe you can articulate a little bit more relative to the expansion in your drydocks as to what is the goal, what kind of opportunities are there that you are trying to capture? Thank you..

Sure, Walter. This is Kirk. When we talk about opportunities for our marine division, again, we look at OSVs, we look at nontraditional vessels that may not be for the Gulf of Mexico, but for overseas locations, which include liftboats and some sort of jack-up vessels.

We are also looking at some opportunities that exist here in the states or river cruise ships. We have an outstanding bid with that as well. As we talk about the drydock, again, we talk about lengthening the drydock from the current capacity we have to a bigger capacity.

When we look at the vessels that were input into the market as early as just about a year ago up to about three years ago, these guys have to have EBS Coast Guard inspections. And these are typically on a 5-year rotation. Now, these are bigger vessels than we typically have seen in the past.

So, our goal is to try and attract these type of vessels to come in, to look at their 5-year maintenance plans as it goes forward and have the opportunity to service these vessels to go forward..

Maybe as a follow-up, can you also articulate kind of what the demand trends in the barge business and any of these expansion capabilities play into different type of barges, maybe you can build as well?.

Well, certainly, we have built LNG type barges. It looks like new trend has come into market, it’s going to be these integrated tug barge units, it’s called ITBs. These barges are traditionally longer in length than we have seen on our barge as we have fabricated in the past.

And we think our drydock with the extension on, it can handle these larger vessels and larger barges as we go forward. And there is still some inquiries we are getting for LNG tankers and what not, nothing too big in that respect. But there are some inquiries that are starting to come about.

We are looking at our Texas facility with our graving dock to see how we can try and service that market as well..

Thank you..

You’re welcome..

And we will take our next question from Martin Malloy with Johnson Rice..

Good morning..

Hi Marty, good morning..

Could you give us an update on kind of the outlook for the wind market, offshore wind and the bidding opportunities there and how you see them materializing?.

Well, with the deepwater wind project, it appears that there is some renewed interest along the East Coast in terms of looking and trying to push these wind farms forward at least with the preliminary plans that may include 5 to 10 structures sit in offshores, they go through the valuation period.

And again, with our association with deepwater wind and we have been getting several inquiries from two, in particular from the Northeast section of the United States in terms of what’s going to happen with their wind farm projects. We are currently working with an engineering company as well to look at solutions that meet their needs.

So Marty, again it looks like it’s picking up some steam. We thought wind would be here a little quicker than it was, but I think with the deepwater wind project really getting kicked off and getting a lot of visibility, these other programs are now starting to engage us and talk about the future..

Okay.

And then just with your strong balance sheet, how are you thinking about potentially utilizing that cash, are there – your current thoughts in terms of potential areas of interest for acquisition, is share repurchase a possibility?.

Yes. Marty, this is Jeff. We actually introduced the idea of a share purchase plans to our directors in a recent Board meeting. And we are – and we are in the process of finalizing an overall capital allocation strategy that could include M&A activity.

There are a lot of value at the moment in the marketplace, but it would also likely include a stock buyback program. So we are in kind of the last stages of finalizing that program..

Okay, great. Thank you..

Alright, Marty, thank you..

[Operator Instructions] And we have no further questions at this time..

Okay. Again, we would like to thank all of our listeners today. And we look forward to speaking to everyone in the next quarter..

Thank you. The replay for this call will be available starting April 24 at 12:00 PM Central Time through May 1, 12:00 PM Central Time, to access the replay use 719-457-0820 or 1-888-203-1112. Those numbers again are 719-457-0820 or 1-888-203-1112. Thank you. This does conclude today’s call. Thank you for your participation..