Gulf Island revenue down, margins up

Gulf Island Fabrication, the Houma oilrig platform maker and boat builder, had a gross margin of $11.2 million during the third quarter of 2009 ending Sept. 30 compared to last year’s $6.3 million for the same period, said Chief Financial Officer Robin Seibert last week.

Gulf Island reported revenue of $76.6 million for the third quarter this year, he said. The company had revenue of $92.7 million during the same period in 2008.

“We had change order negotiations that were favorable,” CEO Kerry Chauvin said during a conference call on Friday, explaining the higher third quarter gross margin. Chauvin responded to questions from investment firm representatives and media as part of the call. “Also, there were no hurricanes that aided us. Last year we had two hurricanes. Those two events made up most of the increase in margin.”

For the nine months ending Sept. 30 this year, the company had $240.8 million in revenue compared to $334 million last year for the same period. The gross margin for the year is $31.3 million compared to $49.6 million for the first nine months of 2008.

Gulf Island’s first MinDOC (Minimum Deepwater Operating Concept) is floating, the dock is flooded and the gate will be removed, Chauvin said. MinDOC, which allows both drilling and production work to be performed, is scheduled to leave the Gulf Island facility at the end of October.

The company is tracking three deepwater projects in the Gulf of Mexico that could be sanctioned by the end of next year’s first quarter, Chauvin said.

Gulf Island is also tracking two international projects.

The company is bidding on jobs for deepwater vessels and jackets for oilrigs in relatively shallow water in the North Sea, Chauvin said. The work on the boats is primarily topsides but some is for hulls.

“The dollar is weak, that makes it more attractive to build here rather than in Europe,” he said.

The company is looking at several marine projects by the first quarter next year, according to Chauvin.

Seibert said Gulf Island has a $50 million backlog in towboats.

Two towboats have been delivered to clients and another will be delivered by the end of the year, Chauvin said.

“We should deliver towboats every two to three months,” he said.

Five boats are under construction, Seibert said.

Lift boat construction is on hold because a client changed designs, Chauvin said, but the company is hoping to receive several orders for lift boats from other clients.

He said the board authorized spending $4.5 million for a more portable gate on the graving dock that will allow quicker turnaround of vessels.

During the fourth quarter this year, Gulf Island will have to contend with rough weather in January and holiday time for workers. Overhead rates go up, Chauvin said. Colder weather can halt painting and welding work.

According to Seibert, the company has 1,560 employees and 150 contractors. Gulf Island had 1,850 employees and a similar number of contractors in December, he said.

Chauvin said he could not estimate revenue for next year. Gulf Island has received inquiries about shuttle tankers, but that project will not be undertaken until 2012.

“With our graving dock we can pursue that type of activity,” he said.