Exhibit 99.1
NEWS RELEASE

For further information contact:
Kirk J. Meche    David S. Schorlemer
Chief Executive Officer     Chief Financial Officer
713.714.6100    713.714.6106

FOR IMMEDIATE RELEASE
Thursday, October 26, 2017

GULF ISLAND FABRICATION, INC.
REPORTS THIRD QUARTER EARNINGS

Houston, TX - Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today reported a net loss of $3.1 million ($0.21 basic and diluted loss per share) on revenue of $49.9 million for the three months ended September 30, 2017, compared to net income of $0.5 million ($0.04 basic and diluted earnings per share) on revenue of $65.4 million for the three months ended September 30, 2016 and a net loss of $10.9 million ($0.73 basic and diluted loss per share) on revenue of $45.9 million for the three months ended June 30, 2017. For the nine months ended September 30, 2017, the Company reported a net loss of $20.5 million ($1.38 basic and diluted loss per share) on revenue of $133.7 million compared to net income of $7.1 million ($0.48 basic and diluted earnings per share) on revenue of $230.9 million during the comparable 2016 period.

Kirk Meche, the Company's CEO and President, commented, "Results for the third quarter of 2017 are reflective of continuing suppressed market conditions along with revised estimates to complete two vessel construction projects within our Shipyards division. Additionally, we incurred holding costs of $1.1 million during the quarter related to our South Texas facilities which are for sale. Year-to-date holding costs in South Texas were $3.6 million plus another $1.9 million in depreciation which was incurred during the first quarter."

"As stated in prior earnings calls, we are focused on managing our balance sheet and rebuilding contract backlog in new markets. Our revenue backlog of $251.7 million has remained comparable to our last quarter which includes new awards from our Services and Shipyards divisions and is at its highest level in over three years. The majority of our backlog remains in markets primarily outside of oil and gas."

He continued, "On August 25, 2017, our South Texas facilities were impacted by Hurricane Harvey, which made landfall as a category 4 hurricane. We are working diligently with our insurance agents and adjusters to finalize the estimated damages. Based upon our initial assessment of the damages and insurance coverage, we believe that there is no basis to record a net loss at this time."

The Company had revenue backlog of $251.7 million and labor backlog of approximately 1.6 million labor hours at September 30, 2017, compared to revenue backlog of $251.0 million and labor backlog of 1.7 million labor hours reported as of June 30, 2017.

 
September 30, 2017
 
December 31, 2016
 
 
(in thousands)
 
 
 
Cash and cash equivalents
 
$
17,792

 
$
51,167

 
Total current assets
 
209,608

 
113,360

 
Property, plant and equipment, net
 
90,989

 
206,222

 
Total assets
 
303,380

 
322,408

 
Total current liabilities
 
45,639

 
35,348

 
Total shareholders’ equity
 
243,847

 
263,032

 

Our balance sheet position at September 30, 2017, includes $17.8 million in cash, no debt, and working capital of $164.0 million which includes $107.0 million in assets held for sale, primarily related to our South Texas assets. We continue to monitor and

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maintain a conservative capital structure as we navigate through the current oil and gas industry downturn and further expand our efforts to secure additional project awards in markets with greater demand.

Declaration of Quarterly Dividend

The Company's board of directors declared a dividend of $0.01 per share on Gulf Island Fabrication, Inc.’s approximately 14.9 million shares of common stock outstanding. The dividend was declared during a regular meeting of the board held on October 26, 2017, and is payable November 24, 2017, to shareholders of record on November 10, 2017.

Quarterly Earnings Conference Call

The management of Gulf Island Fabrication, Inc. will hold a conference call on Friday, October 27, 2017, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss the Company’s financial results for the quarter ended September 30, 2017. The call is being webcast through CCBN and can be accessed at Gulf Island's website at http://www.gulfisland.com. Participants may also join the conference call by dialing 1.866.564.2842 and requesting the “Gulf Island” conference call. A digital replay of the call will be available from a link on our website two hours after the call and ending November 3, 2017.

Gulf Island Fabrication, Inc. is a leading fabricator of complex steel structures and marine vessels used in energy extraction and production, petrochemical and industrial facilities, power generation, alternative energy projects and shipping and marine transportation operations. The Company also provides related installation, hookup, commissioning, repair and maintenance services with specialized crews and integrated project management capabilities. The Company is currently fabricating complex modules for the construction of a new petrochemical plant, completing newbuild construction of a technologically advanced offshore support and two multi-purpose service vessels and recently fabricated wind turbine pedestals for the first offshore wind power project in the United States. The Company also constructed one of the largest lift boats servicing the Gulf of Mexico ("GOM"), one of the deepest production jackets in the GOM and the first SPAR fabricated in the United States. The Company’s customers include U.S. and, to a lesser extent, international energy producers, petrochemical, industrial, power and marine operators. Our corporate headquarters is located in Houston, Texas, with fabrication facilities located in Houma, Jennings and Lake Charles, Louisiana, and Aransas Pass and Ingleside, Texas.

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GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
2017
 
2017
 
2016
 
2017
 
2016
Revenue (1)
$
49,884

 
$
45,868

 
$
65,384

 
$
133,745

 
$
230,864

Cost of revenue
50,378

 
57,488

 
60,125

 
150,755

 
205,839

Gross profit (loss)
(494
)
 
(11,620
)
 
5,259

 
(17,010
)
 
25,025

General and administrative expenses
4,370

 
4,640

 
5,086

 
12,940

 
14,633

Asset impairment
—

 
—

 
—

 
389

 
—

Operating income (loss)
(4,864
)
 
(16,260
)
 
173

 
(30,339
)
 
10,392

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(45
)
 
(158
)
 
(110
)
 
(262
)
 
(248
)
Interest income
—

 
12

 
12

 
12

 
20

Other income, net
38

 
(266
)
 
599

 
(221
)
 
1,039

Total other income (expense)
(7
)
 
(412
)
 
501

 
(471
)
 
811

Income (loss) before income taxes
(4,871
)
 
(16,672
)
 
674

 
(30,810
)
 
11,203

Income taxes (benefit) (2)
(1,761
)
 
(5,749
)
 
133

 
(10,322
)
 
4,134

Net income (loss)
$
(3,110
)
 
$
(10,923
)
 
$
541

 
$
(20,488
)
 
$
7,069

Per share data:
 
 
 
 
 
 
 
 
 
Basic and diluted earnings (loss) per share - common shareholders
$
(0.21
)
 
$
(0.73
)
 
$
0.04

 
$
(1.38
)
 
$
0.48

Cash dividend declared per common share
$
0.01

 
$
0.01

 
$
0.01

 
$
0.03

 
$
0.03

________________
(1)
Revenue includes non-cash amortization of deferred revenue related to the values assigned to contracts acquired in the 2016 shipyard asset acquisition of $0.5 million, $0.3 million, and $1.5 million for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016 and $2.4 million and $4.1 million for the nine months ended September 30, 2017 and 2016, respectively.
(2)
We adopted Accounting Standards Update (ASU) No. 2016-09 on January 1, 2017, which requires the recognition of the excess tax benefit or deficiency related to the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes created when stock grants vest as an income tax benefit or expense in the Company’s statement of income. Under previous GAAP, this difference was recognized in additional paid-in capital.


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Operating Segments
Backlog (in thousands)
Segments
 
September 30, 2017
 
December 31, 2016
 
 
$'s (1)
 
Labor hours
 
$'s
 
Labor hours
Fabrication
 
$
29,554

 
254
 
$
65,444

 
707
Shipyards
 
200,909

 
1,045
 
59,771

 
457
Services
 
21,918

 
265
 
7,757

 
101
Intersegment eliminations
 
(649
)
 
—
 
—

 
—
Total backlog (1)
 
$
251,732

 
1,564
 
$
132,972

 
1,265
 
 
 
 
 
 
 
 
 
__________
(1)
We exclude suspended projects from contract backlog when they are expected to be suspended more than twelve months because resumption of work and timing of revenue recognition for these projects are difficult to predict.
Results of Operations (in thousands, except percentages)

During the three and nine months ended September 30, 2017, management reduced its allocation of corporate administrative costs and overhead expenses to its operating divisions such that a significant portion of its corporate expenses are retained in its non-operating Corporate division. In addition, it has also allocated certain personnel previously included in the operating divisions to the Corporate division. In doing so, management believes that it has created a fourth reportable segment with each of its three operating divisions and its Corporate division each meeting the criteria of reportable segments under GAAP. During the three and nine months ended September 30, 2016, we allocated substantially all of our corporate administrative costs and overhead expenses to our three operating divisions. We have recast our 2016 segment data below in order to conform to the current period presentation. Our results of our operations by segment for the three and nine months ended September 30, 2017, and 2016, are presented below (in thousands, except for percentages).
Fabrication
 
Three Months Ended 
 September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenue
 
$
18,318

 
$
22,311

 
$
42,517

 
$
70,436

Gross profit (loss)
 
1,250

 
601

 
216

 
4,564

Gross profit (loss) percentage
 
6.8
%
 
2.7
%
 
0.5
%
 
6.5
%
General and administrative expenses
 
778

 
885

 
2,432

 
2,821

Operating income (loss)
 
472

 
(284
)
 
(2,216
)
 
1,743

Shipyards
 
Three Months Ended 
 September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenue (1)
 
$
15,074

 
$
23,060

 
$
51,798

 
$
86,553

Gross profit (loss) (1)
 
(3,504
)
 
1,945

 
(19,061
)
 
9,742

Gross profit (loss) percentage
 
(23.2
)%
 
8.4
%
 
(36.8
)%
 
11.3
%
General and administrative expenses
 
888

 
1,468

 
2,835

 
4,218

Asset impairment
 
—

 
—

 
389

 
—

Operating income (loss) (1)
 
(4,392
)
 
477

 
(22,285
)
 
5,524


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Services
 
Three Months Ended 
 September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenue
 
$
17,651

 
$
20,928

 
$
43,758

 
$
76,179

Gross profit (loss)
 
1,912

 
2,918

 
2,335

 
11,158

Gross profit (loss) percentage
 
10.8
%
 
13.9
%
 
5.3
%
 
14.6
%
General and administrative expenses
 
695

 
943

 
2,008

 
2,462

Operating income
 
1,217

 
1,975

 
327

 
8,696

Corporate
 
Three Months Ended 
 September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenue
 
$
—

 
$
—

 
$
—

 
$
—

Gross profit (loss)
 
(152
)
 
(205
)
 
(500
)
 
(439
)
Gross profit (loss) percentage
 
n/a

 
n/a

 
n/a

 
n/a

General and administrative expenses
 
2,009

 
1,790

 
5,665

 
5,132

Operating income
 
(2,161
)
 
(1,995
)
 
(6,165
)
 
(5,571
)
____________
(1)
Revenue includes non-cash amortization of deferred revenue related to the values assigned to contracts acquired in the 2016 shipyard asset acquisition of $510,000 and $1.5 million for the three months ended September 30, 2017 and 2016 and $2.4 million and $4.1 million for the nine months ended September 30, 2017 and 2016, respectively.


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GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, in thousands)
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
(in thousands)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(20,488
)
 
$
7,069

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
 
 
 
Bad debt expense
19

 
422

Depreciation and amortization
10,141

 
19,262

Amortization of deferred revenue
(2,397
)
 
(4,114
)
Asset impairment
389

 
—

Loss (gain) on sale of assets
224

 
(924
)
Deferred income taxes
(10,235
)
 
3,651

Compensation expense - restricted stock
2,636

 
2,452

Changes in operating assets and liabilities:
 
 
 
Contracts receivable and retainage
(5,363
)
 
22,287

Contracts in progress
(15,981
)
 
(5,834
)
Prepaid expenses, inventory, and other assets
(26
)
 
1,050

Accounts payable
12,436

 
(13,654
)
Advance billings on contracts
390

 
(20
)
Deferred revenue
(5,825
)
 
(8,928
)
Deferred Compensation
590

 
—

Accrued expenses and other liabilities
2,336

 
4,713

Accrued contract losses
1,595

 
(8,001
)
Net cash (used in) provided by operating activities
(29,559
)
 
19,431

Cash flows from investing activities:
 
 
 
Capital expenditures
(4,515
)
 
(5,415
)
Net cash received in acquisition
—

 
1,588

Proceeds on the sale of equipment
2,120

 
5,813

Net cash (used in) provided by investing activities
(2,395
)
 
1,986

Cash flows from financing activities:
 
 
 
Tax payments made on behalf of employees from withheld, vested shares of common stock (1)
(885
)
 
(163
)
Payment of financing costs
(88
)
 
—

Payment of dividends on common stock
(448
)
 
(440
)
Proceeds received from borrowings under our line of credit
2,000

 
—

Repayments of debt
(2,000
)
 
—

Net cash (used in) provided by financing activities
(1,421
)
 
(603
)
Net change in cash and cash equivalents
(33,375
)
 
20,814

Cash and cash equivalents at beginning of period
51,167

 
34,828

Cash and cash equivalents at end of period
$
17,792

 
$
55,642

_____________
(1)
We adopted Accounting Standards Update (ASU) No. 2016-09 on January 1, 2017, which clarifies that cash paid by the Company to taxing authorities on behalf of an employee from the value of withheld vested shares should be classified as a financing activity in the Company’s statement of cash flows. We have reported $0.9 million within financing activities within our Statement of Cash Flows for the nine months ended September 30, 2017, and reclassified $0.2 million from cash used in operating activities to cash used in financing activities for the nine months ended September 30, 2016, to conform with the current period presentation.

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