Should You Worry About The Future Of Gulf Island Fabrication, Inc. (NASDAQ: GIFI)?


Gulf Island Fabrication, Inc. (NASDAQ: GIFI) released 2Q2016 and 1H2016 results that revealed mixed performance in the company in the periods under review. While 2Q EPS of $0.37 improved significantly from $0.09 a year ago, revenue of $81.5 million dipped from the same period last year.

But renewed weakness in oil market has sparked fresh fears of another round of price decay. Does that mean that you should worry about the future of GIFI? If you listen to the management of the company, the impression you get is that there is no cause for alarm regarding the company’s future because the management feels it is in control.

When oil prices are weaker, many energy companies face liquidity challenges that make it difficult for them to operate normally. But Gulf Island Fabrication, Inc. (NASDAQ: GIFI) appears to be saying that sidestep fresh pressures coming to oil market because of weaker prices of the company.

At the release of the 2Q earnings, GIFI said that it has stable balance sheet reflecting $50.1 million and working capital of $75.6 million. The company doesn’t have debt, which makes it more financially flexible.

In addition to the fairly strong cash position, Gulf Island Fabrication, Inc. (NASDAQ: GIFI) has access to nearly $76 million under a credit facility with another $20 million said to be available for what the management described as corporate uses.

On top of what the management wants you to see as balance sheet strength, GIFI says it has a conservative capital structure that should allow it to successfully navigate the downturn in the oil and gas market.

What transpired in 2Q?

Gulf Island Fabrication, Inc. (NASDAQ: GIFI) posted EPS of $0.37 on revenue of $81.5 million. EPS rose from $0.09 a year ago but revenue contracted from $84.3 million in the year-ago period.

What about Gulf Island Fabrication, Inc. (NASDAQ: GIFI)’s 1H?

In the first six months of 2016, Gulf Island Fabrication, Inc. (NASDAQ: GIFI) posted EPS of $0.44 on revenue of $165.5 million. Though EPS improved from $0.10 in the year-ago period, revenue of declined from $183.6 million.


Leave A Reply