10q10k10q10k.net

What changed in GULF ISLAND FABRICATION INC's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of GULF ISLAND FABRICATION INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+253 added−270 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-29)

Top changes in GULF ISLAND FABRICATION INC's 2023 10-K

253 paragraphs added · 270 removed · 195 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

90 edited+27 added−15 removed109 unchanged
Biggest changeAlthough oil and gas prices have recovered from the historic lows seen in 2020, due in part to the conflict in Ukraine and related European energy crisis, there are no assurances that the increase in prices will be sustained or that our business will benefit from such increase in prices. 9 In addition to commodity prices, the levels of our customers’ capital expenditures are influenced by, among other things: • availability and cost of capital; • the cost of exploring for, producing and delivering oil and gas and the sufficiency of any returns on capital investments; • the sale and expiration dates of offshore leases in the U.S. and overseas; • the discovery rate, size and location of new oil and gas reserves; • demand for energy, including hydrocarbon production, which is affected by worldwide economic activity and uncertainty and population growth, as well as the conflict in Ukraine and related European energy crisis; • the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels for oil and the level of production by non-OPEC countries; • political events and conditions, including socio-political unrest, any government shutdown, instability or hostilities, including the conflict in Ukraine, and trade and monetary sanctions in response to such developments; • demand for, availability of and technological viability of, alternative sources of energy; • technological advances affecting energy exploration, production, transportation and consumption; • weather conditions, natural disasters, and global or regional public health crises (such as COVID-19) and other catastrophic events; and • uncertainty regarding the U.S. energy policy, including local, state and federal laws and regulations that would negatively impact or restrict the oil and gas industry.
Biggest changeIn addition to commodity prices, the levels of our customers’ capital expenditures are influenced by, among other things: • availability and cost of capital; • the cost of exploring for, producing and delivering oil and gas and the sufficiency of any returns on capital investments; • the sale and expiration dates of offshore leases in the U.S. and overseas; • the discovery rate, size and location of new oil and gas reserves; • demand for energy, including hydrocarbon production, which is affected by worldwide economic activity and uncertainty and population growth, as well as geopolitical conflicts; • the ability of the Organization of the Petroleum Exporting Countries (“OPEC”) to set and maintain production levels for oil and the level of production by non-OPEC countries; • political events and conditions, including socio-political unrest, any government shutdown, instability or hostilities, and trade and monetary sanctions in response to such developments; • demand for, availability of and technological viability of, alternative sources of energy; • technological advances affecting energy exploration, production, transportation and consumption; • weather conditions, natural disasters, and global or regional public health crises and other catastrophic events; and • uncertainty regarding the U.S. energy policy, including local, state and federal laws and regulations that would negatively impact or restrict the oil and gas industry.
Disruptions and performance problems caused by our suppliers and subcontractors, or a misalignment between our contractual obligations to our customers and our agreements with our subcontractors and suppliers, could have an adverse effect on our ability to meet our commitments to customers. 13 We may be protected from increases in material costs through cost escalation provisions in some of our contracts.
Disruptions and performance problems caused by our suppliers and subcontractors, or a misalignment between our contractual obligations to our customers and our agreements with our subcontractors and suppliers, could have an adverse effect on our ability to meet our commitments to customers. We may be protected from increases in material costs through cost escalation provisions in some of our contracts.
If our safety assurance program fails, our employees, subcontractors and others may become injured, disabled or lose their lives, and our projects may be delayed, causing exposure to litigation or investigations by regulators. 18 Unsafe conditions at project work sites also have the potential to increase employee turnover, increase project costs and increase our operating costs.
If our safety assurance program fails, our employees, subcontractors and others may become injured, disabled or lose their lives, and our projects may be delayed, causing exposure to litigation or investigations by regulators. Unsafe conditions at project work sites also have the potential to increase employee turnover, increase project costs and increase our operating costs.
Our results of operations and cash flows can fluctuate materially from period to period based on our success in securing new project awards Our short-term profitability may be affected from time to time as we balance our current capacity with expectations of future project awards and the timing of execution of new project awards.
Our results of operations and cash flows can fluctuate materially from period to period based on our success in securing new project awards. 11 Our short-term profitability may be affected from time to time as we balance our current capacity with expectations of future project awards and the timing of execution of new project awards.
See “Competition” within Item 1 for further discussion of the competitive nature of our industry. A small number of customers may represent a significant portion of our revenue. We derive a significant amount of our revenue from a small number of customers in any given year.
See “Competition” in Item 1 for further discussion of the competitive nature of our industry. A small number of customers may represent a significant portion of our revenue. We derive a significant amount of our revenue from a small number of customers in any given year.
Additionally, as it relates to our fabrication business, during periods of increased market demand, new fabrication service capacity may enter the market, which could place pressure on the pricing of our fabrication projects.
Additionally, as it relates to our fabrication business, during periods of increased market demand, new fabrication service capacity may enter the market, which could place additional pressure on the pricing of our fabrication projects.
A future sale of assets or facility closure or consolidation could result in further impairments of facility assets and other restructuring or exits costs, including retention, severance or other costs associated with terminated personnel.
A future sale of assets or facility closure or consolidation could result in impairments of facility assets and other restructuring or exits costs, including retention, severance or other costs associated with terminated personnel.
Any trading conflicts and related escalating governmental actions that result in additional tariffs, duties and/or trade restrictions could increase our costs, cause disruptions or shortages in our supply chains and/or negatively impact the U.S., regional or local economies. 19 We are susceptible to adverse weather conditions in our market areas.
Any trading conflicts and related escalating governmental actions that result in additional tariffs, duties and/or trade restrictions could increase our costs, cause disruptions or shortages in our supply chains and/or negatively impact the U.S., regional or local economies. 20 We are susceptible to adverse weather conditions in our market areas.
In addition, as we seek fabrication opportunities related to rapidly growing energy transition initiatives, including in support of our customers who are making energy transitions away from fossil fuels, opportunities related to offshore wind developments and potential future onshore support structures to provide electricity from renewable and green sources, we expect to face increased competition.
In addition, as we seek fabrication opportunities related to energy transition initiatives, including in support of our customers who are making energy transitions away from fossil fuels, opportunities related to offshore wind developments and potential future onshore support structures to provide electricity from renewable and green sources, we expect to face increased competition.
Our ownership and operation of vessels and our fabrication of customer vessels can also give rise to large and varied liability risks, such as risks of collisions with other vessels or structures, sinking, fires and other marine casualties, which can result in significant claims for damages against both us and third parties.
Our ownership and operation of vessels can also give rise to large and varied liability risks, such as risks of collisions with other vessels or structures, sinking, fires and other marine casualties, which can result in significant claims for damages against both us and third parties.
We cannot determine to what extent future operations and results of operations may be affected by new legislation, new regulations or changes in existing regulations. 20 Actions of activist shareholders could create uncertainty about our future strategic direction, be costly and divert the attention of our management and board.
We cannot determine to what extent future operations and results of operations may be affected by new legislation, new regulations or changes in existing regulations. 21 Actions of activist shareholders could create uncertainty about our future strategic direction, be costly and divert the attention of our management and board.
As of December 31, 2022, based on our review of public filings with the SEC, we believe over one-third of our stock is held by a combination of institutional investors, pooled investment funds, and certain other investors with a history of shareholder activism.
As of December 31, 2023, based on our review of public filings with the SEC, we believe over one-third of our stock is held by a combination of institutional investors, pooled investment funds, and certain other investors with a history of shareholder activism.
These developments have caused global economic disruptions, including increases in energy prices and the related European energy crisis.
These developments caused global economic disruptions, including increases in energy prices and the related European energy crisis.
See the risk factors above titled “Our revenue and profitability continues to be dependent on the offshore oil and gas industry, which is a historically cyclical industry” and “We depend on third parties to provide services to perform our contractual obligations and supply raw materials and any increase in the price or constraints on supply of raw materials could negatively affect our profitability” for further discussion of the impacts of major public health crises on our operations.
See the risk factors above titled “Our revenue and profitability continues to be dependent on the offshore oil and gas industry, which is a historically cyclical industry” and “We depend on third parties to provide services and supply raw materials, equipment and components necessary to perform our contractual obligations, and any increase in the price or constraints on the supply of such raw materials, equipment or components could negatively affect our profitability” for further discussion of the impacts of major public health crises on our operations.
If we fail to maintain safe work sites, we can be exposed to significant financial losses and reputational harm. We work on projects with large, mechanized equipment, moving vehicles, and dangerous processes, which can place our employees and subcontractors in challenging environments.
Our employees and subcontractors work on projects that are inherently dangerous. If we fail to maintain safe work sites, we can be exposed to significant financial losses and reputational harm. We work on projects with large, mechanized equipment, moving vehicles, and dangerous processes, which can place our employees and subcontractors in challenging environments.
The price and availability of the raw materials required to execute our projects are subject to volatility and disruptions caused by global economic factors that are beyond our control, including, but not limited to, supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or recession, increases in fuel and energy costs, the impact of natural disasters, public health crises (such as COVID-19), geopolitical conflicts (such as the conflict in Ukraine), foreign currency exchange rate fluctuations, and other matters that have or could impact the global economy.
The price and availability of the raw materials required to execute our projects are subject to volatility and disruptions caused by global economic factors that are beyond our control, including, but not limited to, supply chain disruptions, labor shortages, wage pressures, rising inflation and potential economic slowdown or recession, increases in fuel and energy costs, the impact of natural disasters, public health crises, geopolitical conflicts, foreign currency exchange rate fluctuations, and other matters that have or could impact the global economy.
The revenue, costs and profit realized on a contract will often vary from the estimated amounts on which such contract was originally estimated due to the following: • unanticipated changes in, or failure to properly estimate the costs of, engineering, materials, components, equipment, labor or subcontractors; • failure to properly estimate the impact of engineering delays or errors on the construction of a project, including productivity, schedule and rework; • difficulties in engaging third-party subcontractors, equipment manufacturers or materials suppliers, or failures by such third-parties to perform, resulting in project delays and additional costs; • late delivery of materials by vendors or the inability of subcontractors to deliver contracted services on schedule or at the agreed upon price; • increased costs due to poor project execution or productivity and/or weather conditions; • unanticipated costs or claims, including costs for project modifications, delays, errors or changes in specifications or designs, regulatory changes or contract termination; • unrecoverable costs associated with customer changes in scope and schedule; • payment of liquidated damages due to a failure to meet contractual delivery dates; • changes in labor conditions, including the availability, wage and productivity of labor; • termination, temporary suspension or significant reduction in scope of our projects by our customers; • unanticipated technical problems with the structures, equipment or systems we supply; • unforeseen costs or delays related to equipment that is not operable or does not adequately function; and • under-utilization of our facilities and an idle labor force. 12 These variations and risks are inherent within our industry and may result in revenue and profit that differ from amounts originally estimated or result in losses on projects.
The revenue, costs and profit realized on a contract will often vary from the estimated amounts on which such contract was originally estimated due to the following: • unanticipated changes in, or failure to properly estimate the costs of, engineering, materials, components, equipment, labor or subcontractors; • failure to properly estimate the impact of engineering delays or errors on the construction of a project, including productivity, schedule and rework; • difficulties in engaging third-party subcontractors, equipment manufacturers or materials suppliers, or failures by such third-parties to perform, resulting in project delays and additional costs; • late delivery of materials by vendors or the inability of subcontractors to deliver contracted services on schedule or at the agreed upon price; • increased costs due to poor project execution or productivity and/or weather conditions; • unanticipated costs or claims, including costs for project modifications, delays, errors or changes in specifications or designs, regulatory changes or contract termination; • unrecoverable costs associated with customer changes in scope and schedule; • payment of liquidated damages due to a failure to meet contractual delivery dates; • changes in labor conditions, including the availability, wage and productivity of labor; • termination, temporary suspension or significant reduction in scope of our projects by our customers; • unanticipated technical problems with the structures, equipment or systems we supply; • unforeseen costs or delays related to equipment that is not operable or does not adequately function; and • under-utilization of our facilities and an idle labor force.
We also cannot control the actions of our partners, including any non-performance, default, or bankruptcy of our partners, and we would likely share liability or have joint and/or several liability with our partners for joint venture matters. Major public health crises, including the COVID-19 pandemic, may have a negative impact on our operations.
We also cannot control the actions of our partners, including any non-performance, default, or bankruptcy of our partners, and we would likely share liability or have joint and/or several liability with our partners for joint venture matters. 15 Major public health crises may have a negative impact on our operations.
See “Critical Accounting Policies” in Item 7 and Note 2 for further discussion of our contracting and revenue recognition. 17 Disruptions at the regional bank in which we deposit our funds could have an adverse impact on our business and financial condition.
See Notes 1 and 2 and “Critical Accounting Policies” in Item 7 for further discussion of our contracting and revenue recognition. Disruptions at the regional bank in which we deposit our funds could have an adverse impact on our business and financial condition.
For example, the recently adopted Inflation Reduction Act of 2022 imposes a federal fee on the emission of greenhouse gases.
For example, the Inflation Reduction Act of 2022 imposes a federal fee on the emission of greenhouse gases.
These factors could cause our revenue and margins to remain depressed and limit our future growth opportunities. See “Overview” in Item 7 for further discussion of the impacts of oil and gas price volatility.
These factors could cause our revenue and margins to be depressed and limit our future growth opportunities. See Note 1 and “Overview” in Item 7 for further discussion of the impacts of oil and gas price volatility.
The impact of severe weather conditions or natural disasters has included and may continue to include the disruption of our workforce; curtailment of services; weather-related damage to our facilities and equipment, including impacts from infrastructure challenges in the surrounding areas, resulting in suspension of operations; inability to deliver equipment, personnel and products to project sites in accordance with contract schedules; and loss of productivity.
The impact of severe weather conditions or natural disasters has included and may continue to include the disruption of our workforce; curtailment of services; weather-related damage to our facilities and equipment for which we are generally self-insured, including impacts from infrastructure challenges in the surrounding areas, resulting in suspension of operations; inability to deliver equipment, personnel and products to project sites in accordance with contract schedules; and loss of productivity.
Recently, federal governmental agencies have taken action to protect uninsured deposits at certain U.S. banks; however, if the regional bank in which we hold funds for operations were to fail, we cannot provide any assurances that such governmental agencies will take similar actions.
During 2023, federal governmental agencies took action to protect uninsured deposits at certain U.S. banks; however, if the regional bank in which we hold funds for operations were to fail, we cannot provide any assurances that such governmental agencies will take similar actions.
There are a number of potential negative consequences for the energy sector that may result if oil and gas prices remain volatile (which has been exacerbated by the conflict in Ukraine and related European energy crisis) or decline or if oil and gas companies continue to de-prioritize investments in exploration, development and production, including the continued or worsening of outflow of credit and capital from the energy sector and/or energy focused companies and further efforts by lenders to reduce their exposure to the energy sector, including the imposition of increased lending standards for the energy sector, higher borrowing costs and collateral requirements, or a refusal to extend new credit or amend existing credit facilities in the energy sector.
There are a number of potential negative consequences for the energy sector that may result if oil and gas prices become volatile or decline or if oil and gas companies continue to de-prioritize investments in exploration, development and production, including the continued or worsening of outflow of credit and capital from the energy sector and/or energy focused companies and further efforts by lenders to reduce their exposure to the energy sector, including the imposition of increased lending standards for the energy sector, higher borrowing costs and collateral requirements, or a refusal to extend new credit or amend existing credit facilities in the energy sector.
Advances in onshore exploration and development technologies, particularly with respect to large, onshore shale production areas, or energy transition projects could result in our historical customers allocating a higher percentage of their capital expenditure budgets to such activities and we may not be successful securing new project awards related to these activities.
Advances in onshore exploration and development technologies, or energy transition projects, could result in our historical customers allocating a higher percentage of their capital expenditure budgets to such activities and we may not be successful securing new project awards related to these activities.
We service industries that are highly competitive among service providers. The onshore refining, petrochemical, LNG and industrial fabrication industries and the offshore oil and gas fabrication and services industry are highly competitive and influenced by events largely outside of our control.
The onshore refining, petrochemical, LNG and industrial fabrication industries and the offshore oil and gas fabrication and services industry are highly competitive and influenced by events largely outside of our control.
Regardless of the merit of particular claims, defending against litigation or responding to investigations can be expensive, time-consuming, disruptive to our operations and distracting to management. In recognition of these considerations, we may enter into agreements or other arrangements to settle litigation and resolve such challenges.
See Note 2 for discussion of our ongoing customer disputes. Regardless of the merit of particular claims, defending against litigation or responding to investigations can be expensive, time-consuming, disruptive to our operations and distracting to management. In recognition of these considerations, we may enter into agreements or other arrangements to settle litigation and resolve such challenges.
Further, our employees may engage in certain activities that are covered by the provisions of the Jones Act or USL&H, including services conducted on offshore platforms, services performed on barges owned or chartered by us, and construction activities associated with marine vessels that are performed at our facilities.
Further, our employees may engage in certain activities that are covered by the provisions of the Jones Act or USL&H, including services conducted on offshore platforms, services performed on barges owned or chartered by us, and fabrication activities that are performed at our Houma Facilities.
Pandemics, epidemics, widespread illness or other health crises, such as the COVID-19 pandemic (including any new variants), that interfere with the ability of our employees, suppliers, customers, financing sources or others to conduct business have and could adversely affect the global economy and our operations and business, including our backlog and bidding activities.
Pandemics, epidemics, widespread illness or other health crises, that interfere with the ability of our employees, suppliers, customers, financing sources or others to conduct business have and could adversely affect the global economy and our operations and business, including our backlog and bidding activities.
Accordingly, equipment that is not operable or that does not adequately function could negatively impact our project execution and operations. As our equipment ages, the costs associated with maintaining such equipment typically increases, and in some instances, such equipment may require full replacement.
Our project execution and operations are heavily dependent on the use of owned and leased equipment. Accordingly, equipment that is not operable or that does not adequately function could negatively impact our project execution and operations. As our equipment ages, the costs associated with maintaining such equipment typically increases, and in some instances, such equipment may require full replacement.
The industries we serve are highly competitive, and as a result, we have not always been successful in fully recovering our project and overhead costs or realizing a profit, even when industry conditions are favorable. While we have recently experienced an increase in bidding activity for fabrication projects and demand for our services remains high, this trend may not continue.
We have not always been successful in fully recovering our project and overhead costs or realizing a profit, even when industry conditions are favorable, due in part to the competitive environment for new project awards. While we have recently experienced an increase in bidding activity for fabrication projects and demand for our services remains high, this trend may not continue.
If funding were not appropriated for that purpose, some or all of these waterways could become impassable by barges or other vessels required to transport many of our products. Item 1B. Unresolved Staff Comments None.
If funding were not appropriated for that purpose, some or all of these waterways could become impassable by barges or other vessels required to transport many of our products. 22
During 2022 and 2021, we experienced negative cash flows from operations, and this trend could continue if global macroeconomic conditions continue or worsen or oil and gas prices decline significantly resulting in delayed or suspended capital expenditures by customers, or if we were to experience losses on our projects or in any pending litigation.
During 2022, we experienced negative cash flows from operations, which could occur again if global macroeconomic conditions were to worsen or oil and gas prices decline significantly resulting in delayed or suspended capital expenditures by customers, or if we were to experience losses on our projects.
To the extent one or more of our key customers is in financial distress or commences bankruptcy proceedings, contracts with, or obligations from, these customers may be subject to renegotiation or rejection under applicable provisions of the U.S. Bankruptcy Code and similar international laws. During 2021, Hornbeck emerged from Chapter 11 bankruptcy; however, our MPSV Litigation is ongoing.
To the extent one or more of our key customers is in financial distress or commences bankruptcy proceedings, contracts with, or obligations from, these customers may be subject to renegotiation or rejection under applicable provisions of the U.S. Bankruptcy Code and similar international laws.
These waterways are dredged from time to time to maintain water depth and, while federal funding for dredging has historically been provided, there is no assurance that Congressional appropriations sufficient for adequate dredging and other maintenance of these waterways will be continued.
Federal law also authorizes maintenance of these waterways by the U.S. Army Corps of Engineers. These waterways are dredged from time to time to maintain water depth and, while federal funding for dredging has historically been provided, there is no assurance that Congressional appropriations sufficient for adequate dredging and other maintenance of these waterways will be continued.
See risk factor above titled “ Our revenue and profitability continues to be dependent on the offshore oil and gas industry, which is a historically cyclical industry. ” Many companies, including us, have reduced their skilled workforce in response to decreases in utilization.
See risk factor above titled “ Our revenue and profitability continues to be dependent on the offshore oil and gas industry, which is a historically cyclical industry. ” Many companies, including us, have reduced their skilled workforce in response to decreases in utilization. However, with the current oil and gas prices, we continue to experience an increase in bidding activity.
With respect to surety bonds, including the construction contracts associated with our MPSV Litigation, payments by the Surety pursuant to a bond in the event of non-performance are subject to reimbursement to the Surety by us under a general indemnity agreement.
With respect to surety bonds, payments by the Surety pursuant to a bond in the event of non-performance are subject to reimbursement to the Surety by us under a general indemnity agreement.
In addition, whether a project proceeds as scheduled, is suspended or terminated, it is possible that the customer may default by failing to pay amounts owed to us, including reimbursement to us for third-party costs we have committed or incurred on the customer’s behalf.
In addition, whether a project proceeds as scheduled, is suspended or terminated, it is possible that the customer may default by failing to pay amounts owed to us, including reimbursement to us for third-party costs we have committed or incurred on the customer’s behalf. Accordingly, our backlog as of any date is an uncertain indicator of future results of operations.
While the sale of our Shipyard Division assets and a majority of our long-term construction contracts resulted in a less diversified business portfolio such that we have a greater dependency on the performance of our remaining operations for our financial results, during 2021, we expanded our offshore services offerings and further diversified our offshore customer base through the DSS Acquisition.
While the Shipyard Transaction resulted in a less diversified business portfolio such that we have a greater dependency on the performance of our remaining operations for our financial results, during 2021, we expanded our offshore services offerings and further diversified our offshore customer base through the acquisition of a services and industrial staffing business.
In the case of our Fabrication Division, while we have seen an increase in bidding activities and we secured a large new project award for offshore jacket foundations in 2022, we can provide no assurances that the higher level of bidding activity will continue during 2023 and beyond or that we will be successful in securing any additional large project awards.
In the case of our Fabrication Division, while we have seen an increase in bidding activities, we can provide no assurances that the higher level of bidding activity will continue during 2024 and beyond or that we will be successful in securing any large project awards.
Litigation arising from any such occurrences may result in our being named as a defendant in lawsuits asserting large claims. We may be exposed to future losses through our use of deductibles and self-insured retentions for our exposures related to third-party liability and workers’ compensation. We expect liabilities in excess of any deductible to be covered by insurance.
Litigation arising from any such occurrences may result in our being named as a defendant in lawsuits asserting large claims. We may be exposed to future losses through our use of deductibles and self-insured retentions for our exposures related to property and equipment damage, builder’s risk, third-party liability and workers’ compensation and USL&H claims.
See Note 3 for further discussion of the Shipyard Transaction and Note 4 for further discussion of the sale of the Harvey Option. Legal, Regulatory and Environmental Risks Any changes in U.S. trade policies and retaliatory responses from other countries may significantly increase the costs or limit supplies of materials and products used in our fabrication projects.
See Note 8 and Item 5 for further discussion of our Share Repurchase Program. Legal, Regulatory and Environmental Risks Any changes in U.S. trade policies and retaliatory responses from other countries may significantly increase the costs or limit supplies of materials and products used in our fabrication projects.
In addition, any decisions made regarding our deployment or use of any sales proceeds we receive involves risks and uncertainties. As a result, our decisions with respect to such proceeds may not lead to increased long-term shareholder value.
In addition, any decisions made regarding our deployment or use of any sales proceeds we receive involves risks and uncertainties. As a result, our decisions with respect to such proceeds may not lead to increased long-term shareholder value. See Note 3 for further discussion of our Houma AHFS and the sale of the purchase option.
See “Liquidity and Capital Resources” in Item 7 for further discussion of our business outlook. 16 We may not be able to obtain letters of credit or surety bonds if and when needed on favorable terms, if at all, and we may not have sufficient liquidity to satisfy any indemnification obligations owed to a surety should the surety have to make payments under the performance bonds to the beneficiary thereof.
We may not be able to obtain letters of credit or surety bonds if and when needed on favorable terms, if at all, and we may not have sufficient liquidity to satisfy any indemnification obligations owed to a surety should the surety have to make payments under the performance bonds to the beneficiary thereof.
Projects included in our backlog are generally subject to delay, suspension, termination, or an increase or decrease in scope at the option of the customer. Depending on the size of the project, the delay, suspension, termination, increase or decrease in scope of any project could significantly impact our backlog and change the expected amount and timing of revenue recognized.
Depending on the size of the project, the delay, suspension, termination, increase or decrease in scope of any project could significantly impact our backlog and change the expected amount and timing of revenue recognized.
In addition, as cybersecurity threats continue to evolve, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches.
In addition, as cybersecurity threats continue to evolve, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. See “Cybersecurity” in Item 1C for further discussion of our cybersecurity governance, risk management and strategy.
For example, in February 2023, we received direction from our customer to suspend all activities on our offshore jackets project. No duration of the suspension or timing of potential recommencement of the project was provided. See Note 2 and “New Project Awards and Backlog ” in Item 7 for further discussion of the project suspension.
For example, in February 2023, we received direction from our customer to suspend all activities on our offshore jackets project, and in July 2023, the customer cancelled the contract. See Note 2 and “New Project Awards and Backlog ” in Item 7 for further discussion of the project cancellation.
Revenue and gross profit for contracts accounted for using the percentage-of-completion method can be significantly affected by changes in estimated cost to complete such contracts.
Our method of accounting for revenue using the percentage-of-completion method could have a negative impact on our results of operations. Revenue and gross profit for contracts accounted for using the percentage-of-completion method can be significantly affected by changes in estimated cost to complete such contracts.
Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us.
See Note 2 for further discussion of our reserves for potential credit losses. 17 Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us.
If current or future facility and personnel capacity fails to match current or future customer demands for our services, our facilities would continue to be under-utilized, which could result in less profitable operations or ongoing losses from our operations. Our employees and subcontractors work on projects that are inherently dangerous.
This has resulted in losses from our operations in certain periods. If current or future facility and personnel capacity fails to match current or future customer demands for our services, our facilities would continue to be under-utilized, which could result in less profitable operations or ongoing losses from our operations.
While we maintain reserves for potential credit losses, we can provide no assurances that such reserves will be sufficient to cover uncollectible receivable amounts or that our losses from such receivables will be consistent with our expectations.
We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. While we maintain reserves for potential credit losses, we can provide no assurances that such reserves will be sufficient to cover uncollectible receivable amounts or that our losses from such receivables will be consistent with our expectations.
There can be no assurance such agreements can be obtained on acceptable terms or that litigation will not occur or that we will not incur charges resulting from any such agreements or settlements. The nature of our contracting terms for our contracts could adversely affect our operating results.
There can be no assurance such agreements can be obtained on acceptable terms or that litigation will not occur or that we will not incur charges resulting from any such agreements or settlements.
We can provide no assurances that we will be able to maintain our current competitive position or that we will be able to successfully compete with other companies as the green energy transition progresses.
We can provide no assurances that we will be able to maintain our current competitive position or that we will be able to successfully compete with other companies as the green energy transition progresses. In addition, we often compete with companies that have greater resources, which may make them more competitive for certain projects.
In addition, substantially all of our contracts require us to continue work in accordance with the contractually agreed schedule, and thus, continue to incur expenses for labor and materials, notwithstanding the occurrence of a disagreement with a customer over changes in scope, increased pricing and/or unresolved change orders or claims.
In addition, substantially all of our contracts require us to continue work in accordance with the contractually agreed schedule, and thus, continue to incur expenses for labor and materials, notwithstanding the occurrence of a disagreement with a customer over changes in scope, increased pricing and/or unresolved change orders or claims. 12 We could be exposed to potentially significant liability and costs due to limits on our insurance coverage and losses for which we do not have third-party insurance coverage.
Our backlog is subject to change as a result of delay, suspension, termination or an increase or decrease in scope for projects currently in backlog. The revenue projected in our backlog may not be realized or, if realized, may not be profitable.
The revenue projected in our backlog may not be realized or, if realized, may not be profitable. Projects included in our backlog are generally subject to delay, suspension, termination, or an increase or decrease in scope at the option of the customer.
In addition, we often compete with companies that have greater resources, which may make them more competitive for certain projects. 10 Competition with foreign fabricators can also be challenging as such competitors often have lower operating costs and lower wage rates, and foreign governments often use subsidies and incentives to create local jobs and impose import duties and fees on products.
Competition with foreign fabricators can also be challenging as such competitors often have lower operating costs and lower wage rates, and foreign governments often use subsidies and incentives to create local jobs and impose import duties and fees on products.
The nature of the industries that we serve subjects us to compliance with regulatory and environmental laws. Our operations and properties are subject to a wide variety of existing foreign, federal, state and local laws and other regulations. See “Government and Environmental Regulation” in Item 1 for further discussion.
Our operations and properties are subject to a wide variety of existing foreign, federal, state and local laws and other regulations. See “Government and Environmental Regulation” in Item 1 for further discussion. Compliance with many of these laws is becoming increasingly complex, stringent and expensive.
For example, our operations (as well as the operations of our customers, subcontractors and other counterparties) were negatively impacted by the physical distancing, quarantine and isolation measures recommended by national, state and local authorities on large portions of the population, and mandatory business closures that were enacted in an attempt to control the spread of COVID-19, and which could be reenacted in response to any future major public health crisis (including any new and emerging strains and variants of COVID-19). 15 Financial Risks We may need additional capital in the future for working capital, capital expenditures, contract commitments and/or acquisitions, and we may not be able to obtain or raise such capital (whether debt or equity) or do so on favorable terms, which would impair our ability to operate our business or execute our strategy.
For example, our operations (as well as the operations of our customers, subcontractors and other counterparties) were previously negatively impacted by the physical distancing, quarantine and isolation measures recommended by national, state and local authorities on large portions of the population, and mandatory business closures that were enacted in an attempt to control the spread of COVID-19, and which could be reenacted in response to any future major public health crisis (including any new and emerging strains and variants of COVID-19).
Such actions may include the sale of assets or the closure or consolidation of one or more of our facilities and the termination of facility employees.
We may take actions to relocate assets, consolidate operations and rationalize under-utilized assets and facilities to improve our utilization. Such actions may include the sale of assets or the closure or consolidation of one or more of our facilities and the termination of facility employees.
Further, new risks emerge from time to time. In addition, our business, prospects, financial condition, operating results, cash flows, liquidity and stock price could be affected by additional factors that apply to all companies generally which are not specifically mentioned below.
In addition, our business, prospects, financial condition, operating results, cash flows, liquidity and stock price could be affected by additional factors that apply to all companies generally which are not specifically mentioned below. 9 Business and Industry Risks Our revenue and profitability continues to be dependent on the offshore oil and gas industry, which is a historically cyclical industry.
See the risk factor above titled “ We depend on third parties to provide services to perform our contractual obligations and supply raw materials and components and any increase in the price or constraints on the supply of raw materials or components could negatively affect our profitability ” for discussion of the availability of equipment and component parts. 14 Systems and information technology interruption or failure and data security breaches could adversely impact our ability to operate or expose us to significant financial losses and reputational harm.
See the risk factor below titled “ We depend on third parties to provide services and supply raw materials, equipment and components necessary to perform our contractual obligations, and any increase in the price or constraints on the supply of such raw materials, equipment or components could negatively affect our profitability ” for discussion of the availability of equipment and component parts.
For example, in 2021, we entered into a multiple indebtedness mortgage (“Mortgage Agreement”) and a restrictive covenant arrangement (“Restrictive Covenant Agreement”) with one of our Sureties to secure our obligations and liabilities under our general indemnity agreement with such Surety associated with its outstanding surety bond obligations for our MPSV projects and two forty-vehicle ferry projects.
For example, in connection with the resolution of our MPSV Litigation on October 4, 2023, we entered into a promissory note (“Note Agreement”) and amended the multiple indebtedness mortgage (“Mortgage Agreement”) with one of our Sureties to secure our obligations under the Note Agreement and under our general indemnity agreement with such Surety associated with its outstanding surety bonds for our forty-vehicle ferry projects.
Furthermore, our customers’ operations have been and in the future may be materially and adversely affected by severe weather and seasonal weather conditions, including Hurricane Ida, resulting in reduced demand for our services. See “Overview” in Item 7 and Note 2 for further discussion of the impacts of adverse weather conditions to our operations.
Furthermore, our customers’ operations have been and in the future may be materially and adversely affected by severe weather and seasonal weather conditions, resulting in reduced demand for our services.
We may not be able to generate sufficient cash flow to meet our obligations. Our ability to fund operations depends on our ability to generate future cash flows from operations.
This could limit our ability to bid on new project opportunities, thereby limiting our potential growth and profitability. We may not be able to generate sufficient cash flow to meet our obligations. Our ability to fund operations depends on our ability to generate future cash flows from operations.
Our projects are generally complex, and we may encounter difficulties in design, engineering, schedule changes and other factors, some of which may be beyond our control, that affect our ability to complete projects in accordance with contractual delivery dates or to otherwise meet contractual performance obligations. 11 We may bring claims against customers for additional costs incurred by us resulting from customer-caused delays or changes in project scope initiated by our customers that are not part of the original contract scope.
Our projects are generally complex, and we may encounter difficulties in design, engineering, schedule changes and other factors, some of which may be beyond our control, that affect our ability to complete projects in accordance with contractual delivery dates or to otherwise meet contractual performance obligations.
We can provide no assurances that necessary letters of credit or bonding capacity will be available to support future project requirements or that we will have sufficient liquidity to satisfy any future indemnification obligations.
We can provide no assurances that necessary letters of credit or bonding capacity will be available to support future project requirements or that we will have sufficient liquidity to satisfy any future indemnification obligations. See Note 4 and “Liquidity and Capital Resources” in Item 7 for further discussion of our LC Facility and surety bonds.
Recently, supplier and subcontractor delays negatively affected our completion of certain of our Active Retained Shipyard Contracts, thus prolonging the wind down of our Shipyard Division operations and resulting in losses in excess of our previous estimates for the Active Retained Shipyard Contracts. See Note 2 for further discussion of the impacts of supplier and subcontractor delays on our projects.
During 2023, supplier and subcontractor delays negatively affected our completion of the Ferry Projects, which prolonged the wind down of our Shipyard Division operations and resulted in further losses on the projects. See Note 2 for further discussion of the impacts of supplier and subcontractor delays on our projects.
For example, in February 2023, we received direction from our customer to suspend all activities on our offshore jackets project. No duration of the suspension or timing of potential recommencement of the project was provided. See Note 2 and “New Project Awards and Backlog ” in Item 7 for further discussion of the project suspension.
For example, in February 2023, we received direction from our customer to suspend all activities on our offshore jackets project, and in July 2023, the customer cancelled the contract. See Note 2 and “New Project Awards and Backlog ” in Item 7 for further discussion of the project cancellation. 10 We service industries that are highly competitive among service providers.
We rely heavily on computer information, communications technology and related systems in order to properly operate our business. From time to time, we experience occasional system interruptions and delays.
Systems and information technology interruption or failure and data security breaches could adversely impact our ability to operate or expose us to significant financial losses and reputational harm. We rely heavily on computer information, communications technology and related systems in order to properly operate our business. From time to time, we experience occasional system interruptions and delays.
Although we believe that our insurance coverages are adequate, there can be no assurance that we will be able to maintain adequate insurance at rates we consider reasonable or that our insurance coverages will be adequate to cover claims that may arise.
There can be no assurance that we will be able to maintain adequate insurance at rates we consider reasonable or that our insurance coverages will be adequate to cover claims that may arise. Changes in the insurance industry have generally led to higher insurance costs and decreased availability of coverage.
Compliance with many of these laws is becoming increasingly complex, stringent and expensive. These laws may impose “strict liability” for damages to natural resources or threats to public health and safety, rendering a party liable for the environmental damage without regard to its negligence or fault.
These laws may impose “strict liability” for damages to natural resources or threats to public health and safety, rendering a party liable for the environmental damage without regard to its negligence or fault. Certain environmental laws provide for strict, joint and several liability for remediation of spills and other releases of hazardous substances, as well as damage to natural resources.
See Note 2 for further discussion of the impacts of Hurricane Ida. Our project execution and operations may be negatively affected if our equipment is not operable or does not adequately function. Our project execution and operations are heavily dependent on the use of owned and leased equipment.
See Note 2 and “New Project Awards and Backlog” in Item 7 for further discussion of our new project awards and backlog and the project cancellation. 13 Our project execution and operations may be negatively affected if our equipment is not operable or does not adequately function.
Certain environmental laws provide for strict, joint and several liability for remediation of spills and other releases of hazardous substances, as well as damage to natural resources. In addition, we could be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances.
In addition, we could be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances.
The impact of global macroeconomics on our suppliers and subcontractors has resulted in, and may continue to result in, scheduling delays and higher costs, including as a result of inflation, for subcontracted services and raw materials, equipment and components. For example, certain deliverables from third-party engineering firms supporting our projects have been delayed.
The impact of global macroeconomics on our suppliers and subcontractors has resulted in, and may continue to result in, scheduling delays and higher costs, including as a result of inflation, for subcontracted services and raw materials, equipment and components. Further, there continue to be global shipping and logistics challenges, which began during the COVID-19 pandemic.
Our success is dependent upon the abilities of our executives, management, and other key employees who have significant and relevant industry experience. Our success also depends on our ability to attract, retain and motivate highly-skilled personnel in various areas, including construction supervision, project management, procurement, project controls and finance.
Our success also depends on our ability to attract, retain and motivate highly-skilled personnel in various areas, including construction supervision, project management, procurement, project controls and finance. The loss of one or more key personnel or our inability to attract, retain and motivate necessary personnel could impact our operations.
Additionally, our competitors in these expanded lines of business may possess greater operational knowledge, resources and experience than we do. These diversification initiatives may not increase shareholder value and could result in a reduction in shareholder value depending upon our required capital investment and success.
Additionally, our competitors in these expanded lines of business may possess greater operational knowledge, resources and experience than we do.
The availability of insurance that covers risks we typically insure against may decrease, and the insurance that we are able to obtain may have higher deductibles, higher premiums and more restrictive policy terms. For example, in 2022, our property and equipment insurance premiums increased significantly following Hurricane Ida and could increase further, particularly following any future major storm event.
The availability of insurance that covers risks we typically insure against may decrease, and the insurance that we are able to obtain may have higher deductibles, higher premiums and more restrictive policy terms.
The oil and gas industry continues to face significant challenges due to the prolonged period of depressed and/or volatile oil and gas prices from 2014 to 2018 and subsequent ongoing volatility in oil and gas prices, which have been impacted by the conflict in Ukraine and related European energy crisis.
We are exposed to the credit risks of our customers, including nonpayment and nonperformance by our customers. The oil and gas industry continues to face significant challenges due to the prolonged period of depressed and/or volatile oil and gas prices from 2014 to 2018 and subsequent volatility in oil and gas prices.
Any future rationalization of under-utilized assets or facilities to improve our asset or facility utilization could result in future losses or impairments and may not produce our desired results. We may take actions to relocate assets, consolidate operations and rationalize under-utilized assets and facilities to improve our utilization.
These diversification initiatives may not increase shareholder value and could result in a reduction in shareholder value depending upon our required capital investment and success. 19 Any future rationalization of under-utilized assets or facilities to improve our asset or facility utilization could result in future losses or impairments and may not produce our desired results.
Depending on the size and duration of a project, variations from estimated contract performance can have a significant impact on our operating results.
These variations and risks are inherent within our industry and may result in revenue and profit that differ from amounts originally estimated or result in losses on projects. Depending on the size and duration of a project, variations from estimated contract performance can have a significant impact on our operating results.

… 52 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings See Note 9 of our Financial Statements in Item 8 for discussion of our legal proceedings, including our MPSV Litigation, which is incorporated herein by reference. Item 4. Mine Saf ety Disclosures Not applicable. 21 PART II
Biggest changeItem 3. Legal Proceedings See Note 7 of our Financial Statements in Item 8 for discussion of our legal proceedings, including the resolution of our MPSV Litigation, which is incorporated herein by reference. Item 4. Mine Saf ety Disclosures Not applicable. 23 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+4 added−1 removed0 unchanged
Biggest changeMarket for Registrant’s Common Equity, Related Sha reholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market, under the symbol “GIFI.” At February 21, 2023, there were 52 registered holders of our common stock, which does not include beneficial holders (also known as “street holders”) whose shares are held by banks, brokers, and other financial institutions.
Biggest changeMarket for Registrant’s Common Equity, Related Sha reholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market, under the symbol “GIFI.” At February 23, 2024, there were 52 registered holders of our common stock, which does not include beneficial holders (also known as “street holders”) whose shares are held by banks, brokers, and other financial institutions.
Removed
Issuer Purchases of Equity Securities We had no repurchases of securities during the fourth quarter 2022. Information as to the securities authorized for issuance under our equity compensation plans is incorporated herein by reference to Item 12. Item 6. Selected Fina ncial Data Not applicable. 22
Added
Issuer Purchases of Equity Securities The following table summarizes our purchases of common stock during the three months ended December 31, 2023.
Added
Current Program (1) Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) October 1 to 31, 2023 — $ — — $ — November 1 to 30, 2023 — $ — — $ — December 1 to 31, 2023 29,578 $ 4.34 29,578 $ 4,872 Total 29,578 $ 4.34 29,578 (1) On December 1, 2023, our Board of Directors (“Board”) approved a share repurchase program (“Share Repurchase Program”) authorizing the repurchase of up to $5.0 million of our outstanding common stock, effective from December 15, 2023 through December 15, 2024.
Added
The timing and amount of any share repurchases is at the discretion of management and may be made from time to time through transactions in the open market, in privately negotiated transactions or by other means in accordance with applicable laws.
Added
The Share Repurchase Program does not obligate us to repurchase any shares of common stock and may be modified, increased or suspended or terminated at the discretion of our Board. See Note 8 for further discussion of our Share Repurchase Program. (2) Average price paid per share includes costs associated with the repurchases. Item 6. R eserved 24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+27 added−59 removed50 unchanged
Biggest changeThe change differs from the table above primarily due to the Insurance Finance Arrangement discussed further in Note 6; and • Change in noncurrent assets and liabilities, net of $0.9 million. 2021 Activity • Operating loss adjusted for depreciation and amortization of $5.4 million, non-cash asset impairments of $22.8 million, loss on the Shipyard Transaction of $2.6 million, gain on extinguishment of debt of $9.1 million, and stock-based compensation expense of $1.7 million; • Increase in contract assets of $6.9 million related to the timing of billings on projects, primarily due to increased unbilled positions on our Divested Shipyard Contracts and various projects for our Fabrication Division, offset partially by decreased unbilled positions on our seventy-vehicle ferry project for our Shipyard Division; • Decrease in contract liabilities of $6.9 million, primarily due to the unwind of advance payments on our Divested Shipyard Contracts and two forty-vehicle ferry projects and decrease in accrued contract losses on our seventy-vehicle ferry and two forty-vehicle ferry projects for our Shipyard Division; • Increase in contract receivables and retainage of $0.6 million related to the timing of billings and collections on projects, primarily due to increased receivable positions on various projects for our Fabrication Division and Services Division, including projects associated with our DSS Business, offset partially by collections on our Divested Shipyard Contracts; • Decrease in prepaid expenses, inventory and other assets of $1.9 million, primarily due to prepaid expenses and the associated timing of certain prepayments, insurance receivables related to Hurricane Ida and the unpaid portion of the Transaction Price associated with the Shipyard Transaction; • Decrease in accounts payable, accrued expenses and other current liabilities of $12.7 million, primarily due to the timing of payments and decreased accounts payable positions on our Divested Shipyard Contracts, seventy-vehicle ferry project for our Shipyard Division and various projects for our Fabrication Division; and • Change in noncurrent assets and liabilities, net of $0.8 million. 40 Cash used in operating activities for 2021 included approximately $7.8 million associated with changes in working capital for the Divested Shipyard Contracts from December 31, 2020 through the Transaction Date, which was separately recovered through the Working Capital True-Up in connection with the Shipyard Transaction.
Biggest changeSee Note 4 for further discussion of the Note Agreement and Note 7 for further discussion of the resolution of our MPSV Litigation. 2022 Activity • Net loss adjusted for depreciation and amortization of $5.1 million, non-cash asset impairments of $0.5 million, gain on insurance recoveries of $1.2 million, and stock-based compensation expense of $2.3 million; • Increase in contract assets of $0.1 million related to the timing of billings on projects, primarily due to increased unbilled positions on various projects for our Fabrication Division and our forty-vehicle ferry projects for our Shipyard Division, offset partially by decreased unbilled positions on our seventy-vehicle ferry project; • Increase in contract liabilities of $1.5 million, primarily due to an increase in advance billings on various projects for our Fabrication Division and seventy-vehicle ferry project for our Shipyard Division, offset partially by a decrease in accrued contract losses and the unwind of advance payments on our forty-vehicle ferry projects for our Shipyard Division; • Increase in contract receivables and retainage of $13.4 million related to the timing of billings and collections on projects, primarily due to increased receivable positions on various projects for our Services Division and Fabrication Division; • Decrease in prepaid expenses, inventory and other assets of $2.2 million, primarily due to prepaid expenses and the associated timing of certain prepayments; • Decrease in accounts payable, accrued expenses and other current liabilities of $1.6 million due to the timing of payments, primarily due to decreased accounts payable positions on various projects for our Fabrication Division and our seventy-vehicle ferry project for our Shipyard Division, offset partially by increased accounts payable positions on various projects for our Services Division; and • Change in noncurrent assets and liabilities, net of $0.9 million. 40 Investing Activities – Cash used in investing activities for 2023 and 2022 was $0.5 million and $8.9 million, respectively.
We are also pursuing opportunities to partner with original equipment manufacturers to provide critical services to our customers along the Gulf Coast and strategic partnership opportunities with engineering companies to provide turnkey solutions. Efforts to pursue opportunities in our traditional offshore fabrication markets – We continue to fabricate structures associated with our traditional offshore markets, including subsea and associated structures.
We are also pursuing opportunities to partner with original equipment manufacturers to provide critical services to our customers along the Gulf Coast and strategic partnership opportunities with engineering companies to provide turnkey solutions. 27 Efforts to continue to pursue opportunities in our traditional offshore fabrication markets – We continue to fabricate structures associated with our traditional offshore markets, including subsea and associated structures.
The Shipyard Transaction and wind down of our Shipyard Division operations is expected to reduce overhead costs, improve utilization and enable senior management to focus on existing and new higher-margin markets associated with our other operating divisions.
The wind down of our Shipyard Division operations is expected to reduce overhead costs, improve utilization and enable senior management to focus on existing and new higher-margin markets associated with our other operating divisions.
Backlog represents the unrecognized revenue for our new project awards and at December 31, 2022, was consistent with the value of remaining performance obligations for our contracts required to be disclosed under Topic 606 and presented in Note 2. In general, a performance obligation is a contractual obligation to construct and/or transfer a distinct good or service to a customer.
Backlog represents the unrecognized revenue for our new project awards and at December 31, 2023, was consistent with the value of remaining performance obligations for our contracts required to be disclosed under Topic 606 and presented in Note 2. In general, a performance obligation is a contractual obligation to construct and/or transfer a distinct good or service to a customer.
However, we may be exposed to future losses due to coverage limitations and our use of deductibles and self-insured retentions for our exposures related to property and equipment damage, builders’ risk, third-party liability, and workers’ compensation and USL&H claims.
However, we may be exposed to future losses due to coverage limitations and our use of deductibles and self-insured retentions for our exposures related to property and equipment damage, builder’s risk, third-party liability and workers’ compensation and USL&H claims.
Further, in the third quarter 2022, we made capital and other investments to expand our offshore services offering to include welding enclosures, which provides a safe environment for welding, cutting and burning without the need to shut down operations.
Further, in the third quarter 2022, we made capital and other investments to expand our offshore services offering to include welding enclosures, which provide a safe environment for welding, cutting and burning without the need to shut down operations.
(2) Represents our cash position relative to revenue recognized on projects, with contract assets representing unbilled amounts that reflect future cash inflows on projects, and contract liabilities representing (i) advance payments that reflect future cash expenditures and non-cash earnings on projects and (ii) accrued contract losses that represent future cash expenditures on projects.
(2) Represents our cash position relative to revenue recognized on projects, with contract assets representing unbilled amounts that reflect future cash inflows on projects, and contract liabilities representing (i) advance billings or payments that reflect future cash expenditures and non-cash earnings on projects and (ii) accrued contract losses that represent future cash expenditures on projects.
Treasuries with original maturities of six months. Our available liquidity is impacted by changes in our working capital and our capital expenditure requirements. Fluctuations in our working capital, and its components, are not unusual in our business and are impacted by the size of our projects and the mix of our backlog.
Treasuries with original maturities of four to six months. Our available liquidity is impacted by changes in our working capital and our capital expenditure requirements. Fluctuations in working capital, and its components, are not unusual in our business and are impacted by the size of our projects and the mix of our backlog.
With the significant progress achieved on these objectives, during 2021, we shifted our focus to the next phase of our strategic transformation, which is focused on generating stable, profitable growth.
With the significant progress achieved on these objectives, during 2021, we shifted our focus to the current phase of our strategic transformation, which is focused on generating stable, profitable growth.
Beginning in 2020, the global coronavirus pandemic (“COVID-19”) added another layer of pressure and uncertainty on oil and gas prices (with oil prices reaching a twenty-year low and gas prices reaching a four-year low), which further negatively impacted certain of our end markets during 2021 and the first quarter 2022.
Beginning in 2020, the global coronavirus pandemic (“COVID-19”) added another layer of pressure and uncertainty on oil and gas prices (with oil prices reaching a twenty-year low and gas prices reaching a four-year low in 2020), which further negatively impacted certain of our end markets through the first quarter 2022.
Furthermore, we believe that we possess the expertise to fabricate foundations, secondary steel components and support structures for this emerging market. This is demonstrated by our fabrication of wind turbine foundations for the first offshore wind project in the U.S. and the fabrication of a meteorological tower and platform for an offshore wind project.
We believe that we possess the expertise to fabricate foundations, secondary steel components and support structures for this emerging market. This is demonstrated by our fabrication of wind turbine foundations for the first offshore wind project in the U.S. and the fabrication of a meteorological tower and platform for a separate offshore wind project.
See Note 8 for further discussion of our stock-based and other compensation plans. Insurance We maintain insurance coverage for various aspects of our business and operations.
See Note 6 for further discussion of our stock-based and other compensation plans. Insurance We maintain insurance coverage for various aspects of our business and operations.
In addition, the near-term utilization of our Fabrication Division will be impacted by the timing of new project awards and their execution, and the suspension of our offshore jackets project, and our operations may continue to be impacted by inefficiencies and disruptions associated with employee turnover, craft labor hiring challenges, engineering delays, and supplier and subcontractor disruptions.
In addition, the near-term utilization of our Fabrication Division will be impacted by the timing of new project awards and their execution, including the replacement of our cancelled offshore jackets project, and our operations may continue to be impacted by inefficiencies and disruptions associated with employee turnover, craft labor hiring challenges, engineering delays, and supplier and subcontractor disruptions.
Cash used in investing activities for 2022 was primarily due to purchases of short-term investments of $9.9 million and capital expenditures of $3.1 million, offset partially by proceeds from the Shipyard Transaction of $0.9 million, recoveries from insurance claims of $1.2 million, and the sale of assets of $2.0 million.
Cash used in investing activities for 2022 was primarily due to purchases of short-term investments of $9.9 million and capital expenditures of $3.1 million, offset partially by proceeds from the Shipyard Transaction of $0.9 million, proceeds from asset sales of $2.0 million, and recoveries from insurance claims of $1.2 million.
Other Long-Lived Assets – Our property, plant and equipment, lease assets (included within other noncurrent assets) and finite-lived intangible assets (associated with the DSS Acquisition) are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Other Long-Lived Assets – Our property, plant and equipment, lease assets (included within other noncurrent assets) and finite-lived intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Interest (expense) income, net for both periods included the net impact of interest earned on our cash and short-term investment balances and interest incurred on the unused portion of our LC Facility.
Interest (expense) income, net for both periods included the net impact of interest earned on our cash and short-term investment balances and interest incurred on the unused portion of our LC Facility and on our Insurance Finance Arrangements.
See Note 4 for further discussion of the sale of the Harvey Option. • Sublease of our corporate office – In the third quarter 2022, we entered into a sublease arrangement with a third-party for the remainder of our corporate office, which will partially recover our lease costs for the office for the duration of our lease.
See Note 3 for further discussion of the sale of the purchase option. • Sublease of our corporate office – In the third quarter 2022, we entered into a sublease arrangement with a third-party for the remainder of our corporate office, which will partially recover our lease costs for the office for the duration of our lease.
Examples of these opportunities include refiners who are looking to process biofuels, customers looking to embrace the growing hydrogen economy, and customers using carbon capture technologies to offset their carbon footprint. • Fabricate structures that support commercial construction activities outside of energy end markets – We believe our expertise and capabilities for the fabrication of steel structures will enable us to successfully serve the commercial construction market.
Examples of these opportunities include refiners who are looking to process biofuels, customers looking to embrace the growing hydrogen economy, and customers using carbon capture technologies to offset their carbon footprint. • Fabricate structures that support public and private construction activities outside of energy end markets – We believe our expertise and capabilities for the fabrication of steel structures will enable us to successfully serve a wide range of construction markets.
See Note 7 for further discussion of our income taxes, DTAs, and valuation allowance. 30 Stock-Based Compensation Awards under our stock-based compensation plans are calculated using a fair value-based measurement method. We use the straight-line and graded vesting methods to recognize share-based compensation expense over the requisite service period of the award.
See Note 5 for further discussion of our income taxes, DTAs and valuation allowance. Stock-Based Compensation Awards under our stock-based compensation plans are calculated using a fair value-based measurement method. Depending on the terms of the award, we use the straight-line or graded vesting methods to recognize share-based compensation expense over the requisite service period of the award.
Further, the fabrication activities previously performed at the Harvey Facility were moved to our Houma Facilities to improve utilization and operational efficiency. In October 2022, we entered into a separate lease arrangement for a smaller and more cost-effective office and warehouse facility to accommodate our services activities previously performed at the Harvey Option Facility.
Further, the fabrication activities previously performed at the facility were moved to our Houma Facilities to improve utilization and operational efficiency. In addition, we entered into a separate lease arrangement for a smaller and more cost-effective office and warehouse facility to accommodate our services activities performed at the previous facility.
The Fabrication Division utilization for 2022 and 2021 benefited by $0.7 million and $1.0 million, respectively, from providing resources and facilities to our Shipyard Division for our seventy-vehicle ferry and two forty-vehicle ferry projects. See Note 2 for further discussion of our project impacts.
Our Fabrication Division utilization for 2023 and 2022 benefited by $0.1 million and $0.7 million, respectively, from providing resources and facilities to our Shipyard Division for our Ferry Projects. See Note 2 for further discussion of our project impacts.
If, based on future assessments, our goodwill is deemed to be impaired, the impairment would result in a charge to our operating results in the period of impairment. See Note 4 for further discussion of the DSS Acquisition and related goodwill impairment assessment.
If, based on future assessments, our goodwill is deemed to be impaired, the impairment would result in a charge to our operating results in the period of impairment. See Note 3 for further discussion of our annual goodwill impairment assessment.
Other income for 2022 was primarily due to: • Gains of $7.5 million from insurance recoveries associated with damage previously caused by Hurricane Ida to buildings and equipment at our Houma Facilities for our Fabrication Division, and • Miscellaneous income items for our Shipyard Division, offset partially by, • An impairment charge of $0.5 million associated with the underlying right-of-use asset for our corporate office lease, resulting from a sublease arrangement with a third-party for our Corporate Division, and • Charges of $0.2 million associated with damage previously caused by Hurricane Ida to bulkheads and the MPSVs which are in our possession and subject to our MPSV Litigation for our Shipyard Division.
Other income for 2023 was primarily due to: • Gains of $2.0 million related to the net impact of insurance recoveries and costs associated with damage previously caused by Hurricane Ida to buildings and equipment at our Houma Facilities for our Fabrication Division, • Gains on the sales of equipment and scrap material for our Fabrication Division, and • Miscellaneous income items for our Shipyard Division, offset partially by, • Costs of $0.7 million associated with the consolidation of fabrication activities at our Houma Facilities for our Fabrication Division, and • Charges of $0.5 million associated with damage previously caused by Hurricane Ida to bulkheads and the MPSVs that were previously in our possession and subject to our MPSV Litigation for our Shipyard Division. 34 Other income for 2022 was primarily due to: • Gains of $7.5 million related to the net impact of insurance recoveries and costs associated with damage previously caused by Hurricane Ida to buildings and equipment at our Houma Facilities for our Fabrication Division, and • Miscellaneous income items for our Shipyard Division, offset partially by, • An impairment charge of $0.5 million associated with the underlying right-of-use asset for our corporate office lease, resulting from a sublease arrangement with a third-party for our Corporate Division, and • Charges of $0.2 million associated with damage previously caused by Hurricane Ida to bulkheads and the MPSVs that were previously in our possession and subject to our MPSV Litigation for our Shipyard Division.
(3) Changes referenced in the “Cash Flow Activity” section below may differ from the changes in this table due to non-cash reclassifications and due to certain changes in balance sheet accounts being reflected within other line items on our Statement of Cash Flows, including bad debt expense, gains and losses on sales of fixed assets and other assets, and accruals for capital expenditures. 39 Cash Flow Activity (in thousands) Years Ended December 31, 2022 2021 Net cash used in operating activities $ (8,923 ) $ (24,814 ) Net cash provided by (used in) investing activities $ (8,870 ) $ 37,402 Net cash used in financing activities $ (1,972 ) $ (1,158 ) Operating Activities – Cash used in operating activities for 2022 and 2021 was $8.9 million and $24.8 million, respectively, and was primarily due to the net impacts of the following: 2022 Activity • Net loss adjusted for depreciation and amortization of $5.1 million, non-cash asset impairments of $0.5 million, gain on insurance recoveries of $1.2 million, and stock-based compensation expense of $2.3 million; • Increase in contract assets of $0.1 million related to the timing of billings on projects, primarily due to increased unbilled positions on various projects for our Fabrication Division and our two forty-vehicle ferry projects for our Shipyard Division, offset partially by decreased unbilled positions on our seventy-vehicle ferry project; • Increase in contract liabilities of $1.5 million, primarily due to an increase in advance billings on various projects for our Fabrication Division and seventy-vehicle ferry project for our Shipyard Division, offset partially by a decrease in accrued contract losses and the unwind of advance payments on our two forty-vehicle ferry projects for our Shipyard Division; • Increase in contract receivables and retainage of $13.4 million related to the timing of billings and collections on projects, primarily due to increased receivable positions on various projects for our Services Division (including projects associated with our DSS Business) and Fabrication Division; • Decrease in prepaid expenses, inventory and other assets of $2.2 million, primarily due to prepaid expenses and the associated timing of certain prepayments.
(3) Changes referenced in the “Cash Flow Activity” section below may differ from the changes in this table due to non-cash reclassifications and due to certain changes in balance sheet accounts being reflected within other line items on our Statement of Cash Flows, including allowance for doubtful accounts and credit losses, gains and losses on sales of fixed assets and other assets, and accruals for capital expenditures. 39 Cash Flow Activity (in thousands) Years Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 7,197 $ (8,923 ) Net cash used in investing activities $ (503 ) $ (8,870 ) Net cash used in financing activities $ (1,867 ) $ (1,972 ) Operating Activities – Cash provided by operating activities for 2023 was $7.2 million and cash used in operating activities for 2022 was $8.9 million, and was primarily due to the net impacts of the following: 2023 Activity • Net loss adjusted for depreciation and amortization of $5.5 million, gain from net changes in allowance for doubtful accounts and credit losses of $0.4 million, gain on insurance recoveries of $0.6 million and stock-based compensation expense of $2.0 million; • Decrease in contract assets of $2.1 million related to the timing of billings on projects, primarily due to decreased unbilled positions on our forty-vehicle ferry projects for our Shipyard Division; • Decrease in contract liabilities of $2.7 million, primarily due to a decrease in advance billings on our cancelled offshore jackets project for our Fabrication Division and accrued contract losses on our forty-vehicle ferry projects for our Shipyard Division, offset partially by an increase in advance billings on various other projects for our Fabrication Division; • Increase in contract receivables and retainage of $7.1 million related to the timing of billings and collections on projects, primarily due to increased receivable positions on various projects for our Fabrication Division and Services Division, offset partially by a decreased receivable position on our seventy-vehicle ferry project for our Shipyard Division; • Increase in prepaid expenses, inventory and other assets of $0.1 million, primarily due to prepaid expenses and the associated timing of certain prepayments.
Long-Lived Assets Goodwill – Goodwill (associated with the DSS Acquisition) is not amortized, but instead is reviewed for impairment at least annually at a reporting unit level, absent any indicators of impairment or when other actions require an impairment assessment (such as a change in reporting units).
Long-Lived Assets Goodwill – Goodwill is not amortized, but instead is reviewed for impairment at least annually at a reporting unit level, absent any indicators of impairment or when other actions require an impairment assessment (such as a change in reporting units). Our Services Division represents our only reporting unit with goodwill.
Other expense for 2022 was primarily due to: • Charges of $0.2 million associated with damage previously caused by Hurricane Ida to bulkheads and the MPSVs which are in our possession and subject to our MPSV Litigation, offset partially by, • Miscellaneous income items.
Other expense for 2023 and 2022 was primarily due to: • Charges of $0.5 million and $0.2 million, respectively, associated with damage previously caused by Hurricane Ida to bulkheads and the MPSVs that were previously in our possession and subject to our MPSV Litigation, offset partially by, • Miscellaneous income items for both periods.
See Note 1 and “Risk Factors” in Item 1A for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions and Note 2 for further discussion of the impacts of the aforementioned on our projects. 23 Other Impacts to Operations Hurricane Ida – During 2021, our operations were impacted by Hurricane Ida, which made landfall near Houma, Louisiana as a high-end Category 4 hurricane, with high winds, heavy rains and storm surge causing significant damage and power outages throughout the region, including damage to our buildings and equipment at our Houma Facilities.
See Note 1 and “Risk Factors” in Item 1A for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions and Note 2 for further discussion of the impacts of the aforementioned on our projects. 25 Other Impacts to Operations Hurricane Ida – During 2021, our operations were impacted by Hurricane Ida, which made landfall near Houma, Louisiana as a high-end Category 4 hurricane, causing debris and damage to our buildings and equipment at our Houma Facilities.
Certain terms are defined in the “Glossary of Terms” beginning on page ii. Overview We are a leading fabricator of complex steel structures and modules and provider of specialty services, including project management, hookup, commissioning, repair, maintenance, scaffolding, coatings, welding enclosures, civil construction and staffing services to the industrial and energy sectors.
Overview We are a leading fabricator of complex steel structures and modules and provider of specialty services, including project management, hookup, commissioning, repair, maintenance, scaffolding, coatings, welding enclosures, civil construction and staffing services to the industrial and energy sectors.
The primary uses of our liquidity for 2022 and the foreseeable future are to fund: • Overhead costs associated with the under-utilization of our facilities and resources within our Fabrication Division until we secure and begin to execute sufficient backlog to fully recover our overhead costs; • Capital expenditures, including expenditures to maintain, upgrade and replace aged equipment; • Accrued contract losses for the Active Retained Shipyard Contracts; • Working capital requirements for our projects, including the unwind of advance payments on projects; • Remaining liabilities of the Shipyard Division operations that were excluded from the Shipyard Transaction; • Legal and other costs associated with our MPSV Litigation, including losses, if any, resulting from the ultimate resolution of the litigation.
The primary uses of our liquidity for 2024 and the foreseeable future are to fund: • Overhead costs associated with the under-utilization of our facilities and resources for our Fabrication Division until we secure and begin to execute sufficient backlog to fully recover our overhead costs; • Capital expenditures, including expenditures to maintain, upgrade and replace aged equipment; • Working capital requirements for our projects, including the unwind of advance payments on projects; • Remaining liabilities of the Shipyard Division operations (including accrued contract losses for the Ferry Projects) that were excluded from the Shipyard Transaction; • Interest and principal payments on our Note Agreement entered into in connection with the resolution of our MPSV Litigation and the Settlement Agreement.
Other (income) expense, net generally represents recoveries or provisions for bad debts, gains or losses associated with the sale or disposition of property and equipment, and income or expense associated with certain nonrecurring items.
Other (income) expense, net – Other (income) expense, net for 2023 and 2022 was income of $2.3 million and $6.9 million, respectively. Other (income) expense, net generally represents recoveries or provisions for bad debts and credit losses, gains or losses associated with the sale or disposition of property and equipment, and income or expense associated with certain nonrecurring items.
The change differs from the table above primarily due to the collection of the remainder of the Transaction Price discussed further in Note 3 and the Insurance Finance Arrangement discussed further in Note 6; • Decrease in accounts payable, accrued expenses and other current liabilities of $1.6 million, primarily due to the timing of payments and decreased accounts payable positions on various projects for our Fabrication Division and our seventy-vehicle ferry project for our Shipyard Division, offset partially by increased accounts payable positions on various projects for our Services Division.
The change differs from the table above primarily due to the Insurance Finance Arrangements discussed further in Note 4; • Increase in accounts payable, accrued expenses and other current liabilities of $1.2 million related to the timing of payments, primarily due to decreased accounts payable positions on our forty-vehicle ferry projects for our Shipyard Division, offset partially by increased accounts payable positions on various projects for our Fabrication Division.
In addition, global economic factors that are beyond our control, have and could continue to impact our operations, including, but are not limited to, supply chain disruptions (including global shipping and logistics challenges that began in 2020), inflationary pressures, economic slowdowns and recessions, natural disasters, public health crises (such as COVID-19), and geopolitical conflicts (such as the conflict in Ukraine).
In addition, global economic factors that are beyond our control, have and could continue to impact our operations, including, but are not limited to, labor constraints, supply chain disruptions, inflationary pressures, economic slowdowns and recessions, natural disasters, public health crises, and geopolitical conflicts.
The DSS Acquisition in the fourth quarter 2021 accelerated our progress in this initiative and provides a stronger platform to continue such progress.
Our acquisition of a services and industrial staffing business in the fourth quarter 2021 accelerated our progress in this initiative and provided a stronger platform to continue such progress.
We have successfully maintained our headcount levels and have opportunistically looked to shift our workforce to higher margin opportunities given the industry-wide labor constraints. 25 Efforts to diversify our offshore services customer base, increase our offshore services offerings and expand our services business to include onshore facilities along the Gulf Coast – We believe diversifying and expanding our services business will deliver a more stable revenue stream while providing underpinning work to recruit, develop and retain our craft professionals.
Efforts to diversify our offshore services customer base, increase our offshore services offerings and expand our services business to include onshore facilities along the Gulf Coast – We believe diversifying and expanding our services business will deliver a more stable revenue stream while providing underpinning work to recruit, develop and retain our craft professionals.
We also discuss the development and selection of our critical accounting policies with the Audit Committee of our Board of Directors. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Financial Statements.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Financial Statements.
Projects in our backlog are generally subject to delay, suspension, termination, or an increase or decrease in scope at the option of the customer; however, the customer is required to pay us for work performed and materials purchased through the date of termination, suspension, or decrease in scope.
New project awards and backlog may vary significantly each reporting period based on the timing of our major new contract commitments. 29 Projects in our backlog are generally subject to delay, suspension, termination, or an increase or decrease in scope at the option of the customer; however, the customer is required to pay us for work performed and materials purchased through the date of termination, suspension, or decrease in scope.
General and administrative expense included legal and advisory fees of $4.5 million and $0.9 million for 2022 and 2021, respectively, associated with our MPSV Litigation, which are reflected within our Shipyard Division.
General and administrative expense included legal and advisory fees of $3.2 million and $4.5 million for 2023 and 2022, respectively, associated with our MPSV Litigation, which are reflected within our Shipyard Division. See Note 7 for further discussion of the resolution of our MPSV Litigation.
Other (income) expense, net – Other (income) expense, net for 2022 and 2021 was expense of $0.1 million and $0.8 million, respectively.
Other (income) expense, net – Other (income) expense, net for 2023 and 2022 was income of $0.3 million and expense of $0.4 million, respectively.
Gross profit (loss) – Gross loss for 2022 was $0.3 million (0.6% of revenue) and gross profit for 2021 was $0.5 million (1.2% of revenue).
Gross profit (loss) – Gross profit for 2023 was $10.2 million (11.4% of revenue) and gross loss for 2022 was $0.3 million (0.6% of revenue).
Liquidity Outlook We have made significant progress in our efforts to preserve and improve our liquidity, including cost reductions, the sale of under-utilized assets and facilities (including the sale of our Harvey Option in 2022 and certain assets held for sale in 2021), an improved overall cash flow position on our projects in backlog and the completion of the Shipyard Transaction.
Liquidity Outlook We have made significant progress in our efforts to preserve and improve our liquidity, including cost reductions, the sale of under-utilized assets and facilities, improved project cash flow management and the completion of the Shipyard Transaction.
Fair value is determined based on discounted cash flows, appraised values or third-party indications of value, as appropriate. We had no indicators of impairment during 2022.
Fair value is determined based on discounted cash flows, appraised values or third-party indications of value, as appropriate. We had no indicators of impairment during 2023. 31 Income Taxes Income taxes have been provided for using the liability method.
We estimate variable consideration based on the amount we expect to be entitled and include estimated amounts in transaction price to the extent it is probable that a significant future reversal of cumulative revenue recognized will not occur or when we conclude that any significant uncertainty associated with the variable consideration is resolved. 29 See Note 1 for further discussion of our revenue recognition policy and Note 2 for further discussion of projects with significant changes in estimated margins during 2022 and 2021 and discussion of unapproved change orders, claims, incentives and liquidated damages for our projects.
We estimate variable consideration based on the amount we expect to be entitled and include estimated amounts in transaction price to the extent it is probable that a significant future reversal of cumulative revenue recognized will not occur or when we conclude that any significant uncertainty associated with the variable consideration is resolved.
Excluding cash, cash equivalents, short-term investments and restricted cash, our working capital at December 31, 2022 was $11.6 million, and consisted of net contract assets and contract liabilities of negative $3.4 million; contract receivables and retainage of $29.4 million; inventory, prepaid expenses and other assets of $8.1 million; and accounts payable, accrued expenses and other liabilities of $22.6 million.
Excluding cash, cash equivalents, short-term investments, restricted cash, assets held for sale and current debt, our working capital at December 31, 2023 was $19.3 million, and consisted of net contract assets and contract liabilities of negative $2.7 million; contract receivables and retainage of $36.3 million; inventory, prepaid expenses and other assets of $9.1 million; and accounts payable, accrued expenses and other liabilities of $23.3 million.
Our corporate headquarters is located in The Woodlands, Texas and our primary operating facilities are located in Houma, Louisiana (“Houma Facilities”). See “ Description of Operations” in Item 1 and Note 11 for discussion of our realigned reportable segments.
Our corporate headquarters is located in The Woodlands, Texas and our primary operating facilities are located in Houma, Louisiana (“Houma Facilities”). See Note 9 and “ Description of Operations” in Item 1 for further discussion of our reportable segments. In the second quarter 2021, we sold our Shipyard Division operating assets and certain construction contracts (“Shipyard Transaction”).
This volatility in oil and gas prices has been compounded by Russia’s invasion of Ukraine in February 2022 (and the related European energy crisis), and the U.S. and other countries actions in response (with oil prices reaching an eight-year high and gas prices reaching a fourteen-year high), which has and may continue to positively impact certain of our end markets; however, the duration and broader consequences of this conflict continue to be difficult to predict.
This volatility in oil and gas prices was compounded by Russia’s invasion of Ukraine in February 2022 (and the related European energy crisis), and the U.S. and other countries actions in response, as well as continued inflationary pressures, resulting in elevated energy prices (with oil prices reaching an eight-year high and gas prices reaching a fourteen-year high in 2022), which positively impacted certain of our end markets.
Underpinning the first phase of our strategic transformation was a focus on the following initiatives: • Mitigate the impacts of COVID-19 on our operations and workforce; • Reduce our risk profile; • Preserve and improve our liquidity; • Improve our resource utilization and centralize key project resources; • Improve our competitiveness and project execution; and • Reduce our reliance on the offshore oil and gas construction sector and pursue new growth end markets, including: o Fabricating modules, piping systems and other structures for onshore refining, petrochemical, LNG and industrial facilities in our core Gulf Coast region, and o Fabricating foundations, secondary steel components and support structures for offshore wind developments.
Underpinning the first phase of our strategic transformation was a focus on the following initiatives: • Mitigate the impacts of COVID-19 on our operations and workforce; • Reduce our risk profile; • Preserve and improve our liquidity; • Improve our resource utilization and centralize key project resources; • Improve our competitiveness and project execution; and • Reduce our reliance on the offshore oil and gas construction sector and pursue new growth end markets.
Financing Activities – Cash used in financing activities for 2022 and 2021 was $2.0 million and $1.2 million, respectively. Cash used in financing activities for 2022 was primarily due to payments on our Insurance Finance Arrangement of $1.7 million. Cash used in financing activities for 2021 was primarily due to repayment of $1.1 million of the PPP Loan.
Financing Activities – Cash used in financing activities for 2023 and 2022 was $1.9 million and $2.0 million, respectively. Cash used in financing activities for 2023 and 2022 was primarily due to payments on our Insurance Finance Arrangement of $1.3 million and $1.7 million, respectively, and tax payments made on behalf of employees from vested stock withholdings.
Gross profit – Gross profit for 2022 and 2021 was $11.2 million (12.9% of revenue) and $5.7 million (14.0% of revenue), respectively. The increase in gross profit for 2022 relative to 2021 was primarily due to: • Higher revenue (including incremental revenue associated with the DSS Business), and • A higher margin mix relative to 2021 (excluding the DSS Business).
Gross profit – Gross profit for 2023 and 2022 was $13.8 million (14.7% of revenue) and $11.2 million (12.9% of revenue), respectively. The increase in gross profit for 2023 relative to 2022 was primarily due to: • Higher revenue, and • A higher margin mix resulting from our welding enclosures business line.
To the extent we are self-insured, reserves are recorded based upon our estimates, with input from legal and insurance advisors. Changes in assumptions, as well as changes in actual experience, could cause these estimates to change. See Note 2 for discussion of insurance deductibles incurred during 2022 and 2021 associated with damage caused by Hurricanes Ida.
Changes in assumptions, as well as changes in actual experience, could cause these estimates to change. See Note 2 for discussion of insurance deductibles incurred associated with damage caused by Hurricanes Ida and Note 7 for further discussion of our insurance coverages.
Other (income) expense, net – Other (income) expense, net for 2022 was expense of $0.4 million and was primarily due to an impairment charge of $0.5 million associated with the underlying right-of-use asset for our corporate office lease, resulting from a sublease arrangement with a third-party. See Note 5 for further discussion of our corporate office lease asset impairment.
Other expense for 2022 was primarily due to an impairment charge of $0.5 million associated with the underlying right-of-use asset for our corporate office lease, resulting from a sublease arrangement with a third-party. 38 Liquidity and Capital Resources Available Liquidity Our primary sources of liquidity are our cash, cash equivalents and scheduled maturities of short-term investments.
See Note 2 for further discussion of the impacts of Hurricane Ida. Ferry Projects – During 2022 and 2021, we experienced construction challenges and cost increases on our seventy-vehicle ferry project and our remaining forty-vehicle ferry project. See Note 2 for further discussion of our project impacts.
Ferry Projects – During 2023 and 2022, we experienced construction challenges and cost increases on our Ferry Projects for our Shipyard Division. See Note 2 for further discussion of our Ferry Projects.
The increase in gross profit for 2022 relative to 2021 was primarily due to: • Higher revenue for our Services Division (including incremental revenue associated with the DSS Business) and Fabrication Division, • A higher margin mix relative to 2021 for our Services Division (excluding the DSS Business), • The benefit of the aforementioned facility fees and progress on our offshore jackets project for 2022 for our Fabrication Division, and • Project charges of $3.8 million for 2021 for our Shipyard Division, offset partially by, • An increase in the under-recovery of overhead costs for our Fabrication Division, and • Project improvements of $3.3 million for 2021 for our Fabrication Division.
The gross loss for 2023 relative to gross profit for 2022 was primarily due to: • The aforementioned charges of $32.5 million for 2023 for our Shipyard Division, • The aforementioned project charges of $2.7 million for 2023 for our Shipyard Division, and • An increase in the under-recovery of overhead costs for our Fabrication Division, offset partially by, • Higher revenue for our Fabrication Division and Services Division, and • A higher margin mix for our Fabrication Division and Services Division.
Revenue for performance obligations that do not meet the criteria for over time recognition are recognized at a point-in-time when a performance obligation is complete and a customer has obtained control of a promised asset.
Revenue for performance obligations that do not meet the criteria for over time recognition are recognized at a point-in-time when a performance obligation is complete and a customer has obtained control of a promised asset. 30 Long-term Contracts Satisfied Over Time – Revenue for our long-term contracts is recognized using the POC method based on contract costs incurred to date compared to total estimated contract costs (an input method).
Other expense for 2021 was primarily due to: • Charges of $3.1 million associated with damage caused by Hurricane Ida to buildings and equipment at our Houma Facilities, offset partially by, • Gains on the sales of equipment and scrap materials and other miscellaneous income items.
Other income for 2023 was primarily due to: • Gains of $2.0 million related to the net impact of insurance recoveries and costs associated with damage previously caused by Hurricane Ida to buildings and equipment at our Houma Facilities, and • Gains on the sales of equipment and scrap materials, offset partially by, • Costs of $0.7 million associated with the consolidation of fabrication activities at our Houma Facilities.
See “Operating Segments” below and Note 2 for further discussion of our project impacts. General and administrative expense – General and administrative expense for 2022 and 2021 was $18.2 million and $11.8 million, respectively, representing an increase of 53.7%.
See Note 2 and “Operating Segments” below for further discussion of our project impacts and Note 7 for further discussion of the resolution of our MPSV Litigation. General and administrative expense – General and administrative expense for 2023 and 2022 was $16.3 million and $18.2 million, respectively, representing a decrease of 10.6%.
Efforts to improve our resource utilization and centralize key project resources – We have improved our resource utilization and centralized key project resources through the rationalization and integration of our facilities and operations. • Consolidation of our fabrication activities – In the first quarter 2022, we realigned our operating divisions, which included combining all of our fabrication activities within our Fabrication Division to improve utilization and operational efficiency.
Efforts to further improve our resource utilization – We continue to take actions to improve our resource utilization through the rationalization and integration of our facilities and operations. • Consolidation of our fabrication activities – In the first quarter 2022, we realigned our operating divisions, which included combining all of our fabrication activities within our Fabrication Division to improve utilization and operational efficiency. • Completion of the wind down of our Shipyard Division operations – In the second quarter 2021, we completed the Shipyard Transaction and the wind down of our remaining Shipyard Division operations was substantially completed in the fourth quarter 2023.
New project awards for 2022 were primarily related to: • The fabrication of jacket foundations for an offshore project and small-scale fabrication work for our Fabrication Division, and • Offshore services work for our Services Division. New project awards for 2021 were primarily related to offshore services work for our Services Division and small-scale fabrication work for our Fabrication Division.
Other than noted below, new project awards for both periods were primarily related to: • Small-scale fabrication work for our Fabrication Division, and • Offshore services work for our Services Division.
The components of our working capital (excluding cash, cash equivalents, short-term investments and restricted cash) at December 31, 2022 and 2021, and changes in such amounts during 2022, were as follows (in thousands): December 31, 2022 2021 Change (3) Contract assets $ 4,839 $ 4,759 $ (80 ) Contract liabilities (1) (8,196 ) (6,648 ) 1,548 Contracts in progress, net (2) (3,357 ) (1,889 ) 1,468 Contract receivables and retainage, net 29,427 15,986 (13,441 ) Inventory, prepaid expenses and other assets 8,074 8,750 676 Accounts payable, accrued expenses and other liabilities (22,593 ) (23,306 ) (713 ) Total $ 11,551 $ (459 ) $ (12,010 ) (1) Contract liabilities at December 31, 2022 and 2021, include accrued contract losses of $1.6 million and $3.9 million, respectively.
The components of our working capital (excluding cash, cash equivalents, short-term investments, restricted cash, assets held for sale and current debt) at December 31, 2023 and 2022, and changes in such amounts during 2023, were as follows (in thousands): December 31, 2023 2022 Change (3) Contract assets $ 2,739 $ 4,839 $ 2,100 Contract liabilities (1) (5,470 ) (8,196 ) (2,726 ) Contracts in progress, net (2) (2,731 ) (3,357 ) (626 ) Contract receivables and retainage, net 36,298 29,427 (6,871 ) Prepaid expenses, inventory and other current assets 9,066 8,074 (992 ) Accounts payable, accrued expenses and other liabilities (23,302 ) (22,593 ) 709 Total $ 19,331 $ 11,551 $ (7,780 ) (1) Contract liabilities at December 31, 2023 and 2022, included accrued contract losses of $0.4 million and $1.6 million, respectively, associated primarily with our Ferry Projects.
Gross profit for 2022 was primarily impacted by: • A strong market and demand for the services provided by our Services Division, and • The benefit of the aforementioned facility fees for our Fabrication Division, offset partially by, • Low revenue due to low backlog levels (particularly in the first half of the year) for our Fabrication Division, • The partial under-recovery of overhead costs associated with the under-utilization of our facilities and resources for our Fabrication Division, • Project charges of $2.0 million for our Shipyard Division, and • Holding costs of $0.8 million related to the two MPSVs that remain in our possession and are subject to our MPSV Litigation for our Shipyard Division.
Gross loss for 2023 was primarily impacted by: • Charges of $32.5 million related to the aforementioned reversal of revenue resulting from the resolution of our MPSV Litigation for our Shipyard Division, • Project charges of $2.7 million on our Ferry Projects for our Shipyard Division, • The partial under-recovery of overhead costs due to the under-utilization of our facilities and resources for our Fabrication Division, and to a lesser extent, our resources for our Shipyard Division, and • Holding costs of $0.9 million related to the two MPSVs that were previously in our possession and subject to our MPSV Litigation for our Shipyard Division, offset partially by, • The contribution of our offshore jackets project for our Fabrication Division, and • A strong market and demand for the services provided by our Services Division.
While we believe we have the capability to participate in this emerging market, we do not expect meaningful opportunities in the near term. • Fabricate structures in support of our customers as they transition away from fossil fuels to green energy end markets – We believe that our expertise and capabilities provide us with the necessary foundation to fabricate steel structures in support of our customers as they transition away from fossil fuels to green energy end markets.
We continue to strengthen our relationships with key customers and strategic partners and enhance and rationalize our resources as discussed above. • Fabricate structures in support of our customers as they transition away from fossil fuels to green energy end markets – We believe that our expertise and capabilities provide us with the necessary foundation to fabricate steel structures in support of our customers as they transition away from fossil fuels to green energy end markets.
See Note 1 for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions, “Results of Operations” below and Note 2 for further discussion of our project impacts, and “New Project Awards and Backlog” below and Note 2 for further discussion of the project suspension. 27 New Project Awards and Backlog New project awards represent expected revenue values of commitments received during a given period, including scope growth on existing commitments.
See Note 1 for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions, Note 2 and “Results of Operations” below for further discussion of our project impacts, and Note 2 and “New Project Awards and Backlog” below for further discussion of the project cancellation.
Efforts to improve our competitiveness, project execution and bidding discipline – We have taken, and continue to take, actions to improve our competitiveness and project execution by enhancing our proposal, estimating and operations resources, processes and procedures.
See Note 3 and “ Business and Properties” in Item 1 and 2 for further discussion of our Houma AHFS. Efforts to further strengthen project execution and maintain bidding discipline – We have taken, and continue to take, actions to improve our project execution by enhancing our proposal, estimating and operations resources, processes and procedures.
The gross loss for 2022 relative to gross profit for 2021 was primarily due to: • An increase in the under-recovery of overhead costs due to higher property insurance costs and a decrease in work hours associated with our large fabrication activity, offset partially by an increase in work hours associated with small-scale fabrication activity, and • Project improvements of $3.3 million for 2021 on our offshore modules, material supply and marine docking structures projects, offset partially by, • Higher revenue, and • The benefit of the aforementioned facility fees and progress on our offshore jackets project for 2022.
The gross profit for 2023 relative to gross loss for 2022 was primarily due to: • Higher revenue, and • A higher margin mix associated with our small-scale fabrication work, offset partially by, • An increase in the under-recovery of overhead costs due to lower recoveries associated with our offshore jackets project resulting from its cancellation, offset partially by an increase in work hours associated with our small-scale fabrication work.
Our evaluation of the sufficiency of our cash and liquidity is primarily based on our financial forecast for 2023 and 2024, which is impacted by our existing backlog and estimates of future new project awards and may be further impacted by the ongoing effects of oil and gas price volatility and macroeconomic conditions, as well as the outcome of our MPSV Litigation and any related indemnification obligations to the Surety.
Our evaluation of the sufficiency of our cash and liquidity is primarily based on our financial forecast for 2024 and 2025, which is impacted by our existing backlog and estimates of future new project awards and may be further impacted by the ongoing effects of oil and gas price volatility and macroeconomic conditions, and future losses, if any, due to coverage limitations and our use of deductibles and self-insured retentions for our exposures related to property and equipment damage, builder’s risk, third-party liability and workers’ compensation and USL&H claims.
Cash provided by investing activities for 2021 was primarily due to net proceeds from the Shipyard Transaction of $33.0 million, proceeds from the sale of fixed assets and assets held for sale of $4.5 million, net maturities of short-term investments of $8.0 million and recoveries from insurance claims of $1.0 million, offset partially by the Purchase Price associated with the DSS Acquisition of $7.6 million and capital expenditures of $1.5 million.
Cash used in investing activities for 2023 was primarily due to capital expenditures of $2.9 million, offset partially by proceeds from asset sales of $0.5 million, recoveries from insurance claims of $0.2 million, and net maturities of short-term investments of $1.7 million.
The gross loss for 2022 was primarily due to: • Low revenue due to low backlog levels (particularly in the first half of the year), and • The partial under-recovery of overhead costs due to the under-utilization of our facilities and resources due to low work hours, offset partially by, • The benefit of the aforementioned facility fees.
Gross profit for 2023 was primarily impacted by: • The contribution of our offshore jackets project, offset partially by, • The partial under-recovery of overhead costs due to the under-utilization of our facilities and resources due to low work hours.
Further investments in facilities may be required to win and execute potential new project awards, which are not included in these estimates. 41 We believe that our cash, cash equivalents and short-term investments at December 31, 2022, will be sufficient to enable us to fund our operating expenses, meet our working capital and capital expenditure requirements, and satisfy any debt service obligations or other funding requirements, for at least twelve months from the date of this Report.
See Note 2 for further discussion of the impacts of Hurricane Ida. 41 We believe that our cash, cash equivalents and short-term investments at December 31, 2023, will be sufficient to enable us to fund our operating expenses, meet our working capital and capital expenditure requirements, and satisfy any debt service obligations or other funding requirements, for 2024 and the foreseeable future.
See “Liquidity and Capital Resources” below and Note 6 for further discussion of our PPP Loan forgiveness. Interest (expense) income, net – Interest (expense) income, net for 2022 and 2021 was income of $0.1 million and expense of $0.4 million, respectively.
See Note 2 for further discussion of the impacts of Hurricane Ida. Interest (expense) income, net – Interest (expense) income, net for 2023 and 2022 was income of $1.4 million and $0.1 million, respectively.
Underpinning this strategy is a focus on the following initiatives: • Expand our skilled workforce; • Further strengthen project execution and maintain bidding discipline; • Diversify our offshore services customer base, increase our offshore services offerings and expand our services business to include onshore facilities along the Gulf Coast; • Continue to pursue opportunities in our traditional offshore fabrication markets; and • Pursue additional growth end markets and increase our T&M versus fixed price revenue mix, including: o Fabricating structures in support of our customers as they transition away from fossil fuels to green energy end markets, and o Fabricating structures that support commercial construction activities outside of energy end markets.
Underpinning this strategy is a focus on the following initiatives, which encompass any ongoing initiatives associated with the first phase of our strategic transformation: • Expand our skilled workforce; • Further improve our resource utilization; • Further strengthen project execution and maintain bidding discipline; • Diversify our offshore services customer base, increase our offshore services offerings and expand our services business to include onshore facilities along the Gulf Coast; • Continue to pursue opportunities in our traditional offshore fabrication markets; and • Reduce our reliance on the offshore oil and gas construction sector, pursue additional growth end markets and increase our T&M versus fixed price revenue mix, including: − Fabricating modules, piping systems and other structures for onshore refining, petrochemical, LNG and industrial facilities in our core Gulf Coast region, − Fabricating structures in support of our customers as they transition away from fossil fuels to green energy end markets, − Fabricating structures that support public and private construction activities outside of energy end markets, and − Fabricating foundations, secondary steel components and support structures for offshore wind developments. 26 Progress on the Current Phase of our Strategic Transformation Efforts to expand our skilled workforce – We are focused on ways to improve retention and enhance and add to our skilled, craft personnel, as we believe a strong workforce will be a key differentiator in pursuing new project awards given the scarcity of available skilled labor.
Our success, including achieving the aforementioned initiatives, will be determined by, among other things: • Our ability to hire, develop, motivate and retain key personnel and craft labor to execute our projects in light of industry-wide labor constraints, and maintain our expected project margins if such constraints result in labor cost increases that cannot be recovered from our customers; • Oil and gas prices and the level of volatility in such prices, including the impact of macroeconomic conditions, geopolitical conflicts (such as the conflict in Ukraine and the related European energy crisis) and any current or future public health crises (such as COVID-19); • The level of fabrication opportunities in our traditional offshore markets and the new markets that we are pursuing, including refining, petrochemical, LNG and industrial facilities, green energy and offshore wind developments, and the impact of any climate related regulations; • The outcome of our MPSV Litigation, for which an unfavorable outcome could have a material adverse effect on our financial condition, results of operations and liquidity.
Our success, including achieving the aforementioned initiatives, will be determined by, among other things: • Our ability to hire, develop, motivate and retain key personnel and craft labor to execute our projects in light of industry-wide labor constraints, and maintain our expected project margins if such constraints result in labor cost increases that cannot be recovered from our customers; • Oil and gas prices and the level of volatility in such prices, including the impact of macroeconomic conditions, geopolitical conflicts and any current or future public health crises; • The level of fabrication opportunities in our traditional offshore markets and the new markets that we are pursuing, including refining, petrochemical, LNG and industrial facilities, green energy and offshore wind developments, and the impact of any climate related regulations, such as the Biden administration’s executive order pausing approvals for LNG exports discussed in Item 1; • The timing of recognition of our backlog as revenue; • Our ability to secure new project awards through competitive bidding and/or alliance and partnering arrangements; • Our ability to execute projects within our cost estimates and successfully manage them through completion; • The final completion of the wind down of our Shipyard Division operations, which is subject to the expiration of the warranty periods for our Ferry Projects; • Consideration of organic and inorganic opportunities for growth, including, but not limited to, mergers, acquisitions, joint ventures, partnerships and other strategic arrangements, transactions and capital allocations; and • The operability and adequacy of our major equipment.
General and administrative expense – General and administrative expense for 2022 and 2021 was $2.3 million and $1.8 million, respectively, representing an increase of 25.1%. The increase was primarily due to higher business development and incentive plan costs.
General and administrative expense – General and administrative expense for 2023 and 2022 was $1.9 million and $2.3 million, respectively, representing a decrease of 18.3%. The decrease was primarily due to lower business development costs. Other (income) expense, net – Other (income) expense, net for 2023 and 2022 was income of $2.3 million and $7.5 million, respectively.
New project awards by operating segment for 2022 and 2021, are as follows (in thousands): Years Ended December 31, 2022 2021 Services $ 85,846 $ 38,230 Fabrication 154,239 29,581 Shipyard 834 - Eliminations (672 ) (1,323 ) Total $ 240,247 $ 66,488 Backlog by operating segment at December 31, 2022 and 2021, is as follows (in thousands): December 31, 2022 2021 Amount Labor hours Amount Labor hours Services $ 1,322 20 $ 2,499 32 Fabrication 110,287 613 4,348 41 Shipyard 3,272 22 10,223 106 Total (1), (2) $ 114,881 655 $ 17,070 179 (1) We expect to recognize revenue of $49.1 million during 2023 associated with our backlog at December 31, 2022 based on our current estimates.
New project awards by operating segment for 2023 and 2022, are as follows (in thousands): Years Ended December 31, 2023 2022 Services $ 92,728 $ 85,846 Fabrication (1) 66,629 154,239 Shipyard (528 ) 834 Eliminations (1,110 ) (672 ) Total $ 157,719 $ 240,247 Backlog by operating segment at December 31, 2023 and 2022, is as follows (in thousands): December 31, 2023 2022 Amount Labor hours Amount Labor hours Services $ 502 4 $ 1,322 20 Fabrication (1) 11,739 104 110,287 613 Shipyard 709 1 3,272 22 Total (2) $ 12,950 109 $ 114,881 655 (1) During 2022, our Fabrication Division was awarded a large contract for the fabrication of offshore jackets.
See “Risk Factors” in Item 1A for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions.
See Note 1, “Impacts of Oil and Gas Price Volatility and Macroeconomic Conditions on our Operations” above and “Risk Factors” in Item 1A for further discussion of the impacts of oil and gas price volatility and macroeconomic conditions and see “Government and Environmental Regulation” in Item 1 for further discussion of the recent temporary pause on approvals for applications to export LNG.
A commitment represents authorization from our customer to begin work or purchase materials pursuant to a written agreement, letter of intent or other form of authorization.
New Project Awards and Backlog New project awards represent expected revenue values of new contract commitments received during a given period, including scope growth on existing commitments. A commitment represents authorization from our customer to begin work or purchase materials pursuant to a written agreement, letter of intent or other form of authorization.
See Note 2 for further discussion of our project impacts. General and administrative expense – General and administrative expense for 2022 and 2021 was $4.5 million and $0.9 million, respectively, representing an increase of 378.5%. General and administrative expense relates to legal and advisory fees associated with our MPSV Litigation. See Note 9 for further discussion of our MPSV Litigation.
See Note 2 for further discussion of our project impacts and Note 7 for further discussion of the resolution of our MPSV Litigation. 37 General and administrative expense – General and administrative expense for 2023 and 2022 was $3.2 million and $4.5 million, respectively, representing a decrease of 28.3%.
At December 31, 2022, our cash, cash equivalents, restricted cash and short-term investments totaled $44.7 million as follows (in thousands): December 31, 2022 Cash and cash equivalents $ 33,221 Short-term investments (1) 9,905 Total cash, cash equivalents and short-term investments 43,126 Restricted cash, current 1,603 Total cash, cash equivalents, restricted cash and short-term investments $ 44,729 (1) Includes U.S.
At December 31, 2023, our cash, cash equivalents, short-term investments and restricted cash totaled $47.9 million, as follows (in thousands): December 31, 2023 Cash and cash equivalents $ 38,176 Short-term investments (1) 8,233 Available cash, cash equivalents and short-term investments 46,409 Restricted cash 1,475 Total cash, cash equivalents, short-term investments and restricted cash $ 47,884 (1) Includes U.S.
The gross loss for 2022 was primarily due to: • Holding costs of $0.8 million related to the two MPSVs that remain in our possession and are subject to our MPSV Litigation, • Project charges of $1.1 million related to forecast cost increases and liquidated damages on our remaining forty-vehicle ferry project, and • Project charges of $0.9 million related to forecast cost increases and liquidated damages on our seventy-vehicle ferry project.
The gross loss for 2023 was primarily due to: • Charges of $32.5 million related to the aforementioned reversal of revenue resulting from the resolution of our MPSV Litigation, • Project charges of $2.7 million related to forecast cost increases and liquidated damages on our Ferry Projects, • Holding costs of $0.9 million related to the two MPSVs that were previously in our possession and subject to our MPSV Litigation, and • The partial under-recovery of overhead costs due to the under-utilization of our resources due to low work hours as our remaining projects were nearing completion.
See Note 3 for further discussion of the Shipyard Transaction and our discontinued operations and Note 9 for further discussion of our MPSV Litigation. • Sale of our Harvey Option – In the third quarter 2022, we sold our Harvey Option associated with the Harvey Option Facility to a third-party for $2.1 million ($1.9 million, net of transaction and other costs).
See Note 1 for further discussion of the Shipyard Transaction and Note 9 for further discussion of the status of the wind down of our Shipyard Division operations. • Sale of assets – In the third quarter 2022, we sold a purchase option for $1.9 million (net of transaction and other costs) that was entered into in connection with a previous acquisition that provided us with a right to buy a leased fabrication and operating facility for a nominal amount.
Revenue – Revenue for 2022 and 2021 was $87.0 million and $40.6 million, respectively, representing an increase of 114.6%. The increase was primarily due to: • Incremental revenue associated with the DSS Business, and • Increased offshore services activity.
Revenue – Revenue for 2023 and 2022 was $93.5 million and $87.0 million, respectively, representing an increase of 7.5%. The increase was primarily due to incremental revenue associated with our welding enclosures business line (commenced in the third quarter 2022).
General and administrative expense – General and administrative expense for 2022 and 2021 was $8.4 million and $7.7 million, respectively, representing an increase of 9.8%.
General and administrative expense – General and administrative expense for 2023 and 2022 was $2.9 million and $3.0 million, respectively, representing a decrease of 3.2%.

… 109 more changes not shown on this page.

Other GIFI 10-K year-over-year comparisons