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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number 001-34279

Gulf Island Fabrication, Inc.

(Exact name of registrant as specified in its charter)


Louisiana		72-1147390
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
		(I.R.S. Employer Identification No.)


2170 Buckthorne Place, Suite 420 The woodlands, Texas		77380
2170 Buckthorne Place, Suite 420 The woodlands, Texas		77380
(Address of principal executive offices)		(Zip Code)

(713) 714-6100

(Registrant’s telephone number, including area code)

Securities registered pursuant to 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	Gifi	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, no par value per share, outstanding as of October 31, 2025, was 15,998,611.

GULF ISLAND FABRICATION, INC.

QUARTERLY REPORT ON FORM 10-Q FOR

THE FISCAL QUARTER ENDED SEPTEMBER 30, 2025

TABLE OF CONTENTS


		Page
Glossary of Terms		ii

PART I	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Consolidated Balance Sheets at September 30, 2025 (unaudited) and December 31, 2024	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	2
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)	3
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	42
Item 4.	Controls and Procedures	42

PART II	OTHER INFORMATION	42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47

GLOSSARY OF TERMS

As used in this report filed on Form 10-Q for the quarter ended September 30, 2025 (“this Report”), the following abbreviations and terms have the meanings listed below. In addition, the terms “Gulf Island,” “the Company,” “we,” “us” and “our” refer to Gulf Island Fabrication, Inc. and its consolidated subsidiaries, unless the context clearly indicates otherwise. Certain terms defined below may be redefined separately within this Report when we believe providing a definition in connection with the use of the term will assist users of this Report. Unless and as otherwise stated, any references in this Report to any agreement means such agreement and all schedules, exhibits and attachments in each case as amended, restated, supplemented or otherwise modified to the date of filing this Report.


2024 Annual Report		Our annual report for the year ended December 31, 2024, filed with the SEC on Form 10-K on March 5, 2025.

2024 Financial Statements		Our Financial Statements for the year ended December 31, 2024 and related notes, included in our 2024 Annual Report.

Acquisition Date		Collectively, the effective dates for the acquisition of the Automation Business of May 12, 2025 and the Engineering Business and Government Business of June 16, 2025.

Alliance		Alliance 2000, Ltd., a creditor of Englobal.

Alliance Loan		A $2.4 million senior secured loan of Alliance due from Englobal, which was assumed by us effective April 10, 2025, in connection with the Alliance Payment.

Alliance Payment		A $1.5 million cash payment to Alliance in exchange for the Alliance Loan.

Asset Purchase Agreement		Agreement entered into effective April 15, 2025, as amended May 19, 2025, pursuant to which we acquired the Englobal Business.

ASU		Accounting Standards Update.

Automation Business		Certain assets of Englobal’s automation business, acquired pursuant to the Asset Purchase Agreement.

Balance Sheet		Our Consolidated Balance Sheets, as filed in this Report.

Bankruptcy Court		The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.

Board		Board of Directors of Gulf Island Fabrication, Inc.

contract assets		Costs and estimated earnings recognized to date in excess of cumulative billings.

contract liabilities		Cumulative billings in excess of costs and estimated earnings recognized to date and accrued contract losses.

Corporate Division		Our Corporate reportable segment.

cost-reimbursable		Work is performed and billed to the customer at cost plus a profit margin or other variable fee arrangements which can include a mark-up.

DIP Credit Agreement		A senior secured, super-priority debtors-in-possession credit agreement effective March 5, 2025, as amended May 12, 2025, which provided for loan amounts to Englobal of up to $3.5 million in the aggregate.

DIP Loan		Advances made by us to Englobal under the DIP Credit Agreement, which totaled $3.5 million.

DTA(s)		Deferred Tax Asset(s).

Engineering Business		Certain assets of Englobal’s engineering business, acquired pursuant to the Asset Purchase Agreement.

Englobal		ENGlobal Corporation and certain of its subsidiaries.

Englobal Acquisition		The acquisition of the Englobal Business, pursuant to the Asset Purchase Agreement.

Englobal Business		Collectively, the Automation Business, the Engineering Business and the Government Business, acquired pursuant to the Asset Purchase Agreement.

Englobal Chapter 11		Englobal’s filing for chapter 11 bankruptcy relief pending before the Bankruptcy Court, which commenced on March 5, 2025.

EPC		Engineering, Procurement and Construction.



Exchange Act		Securities Exchange Act of 1934, as amended.

Fabrication Division		Our Fabrication reportable segment.

Facilities		Our Houma Facility, Houston Facility and other facilities that support our operations.

FASB		Financial Accounting Standards Board.

Ferry Projects		Contracts and related obligations for our seventy-vehicle ferry and two forty-vehicle ferry projects for our former Shipyard Division operations, which were substantially completed in the fourth quarter 2023 and for which the last warranty period expired in the first quarter 2025.

Financial Statements		Our Consolidated Financial Statements, including comparative consolidated Balance Sheets, Statements of Operations, Statements of Changes in Shareholders’ Equity and Statements of Cash Flows, as filed in this Report.

GAAP		Generally Accepted Accounting Principles in the U.S.

Government Business		Certain assets of Englobal’s government business, acquired pursuant to the Asset Purchase Agreement.

GOA		Gulf of America (previously referred to as the Gulf of Mexico).

Gulf Coast		Along the coast of the Gulf of America.

Houma Facility		Our owned fabrication and operations facility located in Houma, Louisiana.

Houston Facility		Our leased fabrication and operations facility located in Houston, Texas.

HSR Act		Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

IES		IES Holdings, Inc.

IES Merger Sub		IES Merger Sub, LLC, a Louisiana limited liability company and wholly owned subsidiary of IES, formed for the sole purpose of the Pending Transaction.

jacket		A component of a fixed platform consisting of a tubular steel braced structure extending from the mudline of the seabed to a point above the water surface. The jacket is anchored with tubular steel piles driven into the seabed. The jacket supports the topside structure located above the water.

labor hours		Hours worked by employees directly involved in the fabrication of our products or delivery of our services.

LC Facility		Our $10.0 million letter of credit facility with Whitney Bank maturing on June 30, 2026, as amended.

LNG		Liquefied Natural Gas.

Merger Agreement		Agreement and Plan of Merger dated November 7, 2025, by and among IES, the IES Merger Sub and the Company providing for the Pending Transaction.

Mortgage Agreement		Multiple indebtedness mortgage arrangement with Zurich, to secure our obligations and liabilities under our Note Agreement. The mortgage arrangement encumbers the real estate associated with our Houma Facility and includes certain covenants and events of default.

modules		Fabricated structures that include structural steel, piping, valves, fittings, storage vessels and other equipment that are incorporated into a refining, petrochemical, LNG or industrial system.

Note Agreement		Promissory note entered into with Zurich in the fourth quarter 2023, pursuant to which we will pay Zurich $20.0 million, plus interest at a fixed rate of 3.0% per annum, payable in 15 equal annual installments. The first payment was made on December 30, 2024.

OBBBA		The One Big Beautiful Bill Act enacted on July 4, 2025.

offshore		In unprotected waters outside coastlines.

onshore		Inside the coastline on land.

Pending Transaction		The merger of IES Merger Sub with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of IES, pursuant to the terms and subject to the conditions of the Merger Agreement.

iii


performance obligation		A contractual obligation to construct and transfer a distinct good or service to a customer. It is the unit of account in Topic 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

piles		Rigid tubular pipes that are driven into the seabed to anchor a jacket or to support a structure.

platform		A structure from which offshore oil and gas development drilling and production are conducted.

POC		Percentage-of-completion.

Pro Forma Information		The condensed combined financial information that gives effect to the Englobal Acquisition as if it had occurred on January 1, 2024.

Purchase Price		The DIP Loan amount of $3.5 million “credit bid” in connection with the Englobal Acquisition.

SEC		U.S. Securities and Exchange Commission.

Services Division		Our Services reportable segment.

Share Repurchase Program		Share repurchase program, as amended, authorizing the repurchase of up to $10.0 million of our outstanding common stock expiring December 15, 2026, which has been suspended in accordance with certain restrictive covenants in the Merger Agreement.

Shipyard Division		Our former Shipyard reportable segment.

Statement of Cash Flows		Our Consolidated Statements of Cash Flows, as filed in this Report.

Statement of Operations		Our Consolidated Statements of Operations, as filed in this Report.

Statement of Shareholders’ Equity		Our Consolidated Statements of Changes in Shareholders’ Equity, as filed in this Report.

Surety or Sureties		A financial institution that issues bonds to customers on behalf of the Company for the purpose of providing third-party financial assurance related to the performance of our contracts. 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.

T&M		Time and Materials. Work is performed and billed to the customer at contracted time and material rates.

Topic 606		The revenue recognition criteria prescribed under ASU 2014-09, “Revenue from Contracts with Customers”.

U.S.		The United States of America.

USL&H		United States Longshoreman and Harbor Workers Act.

Whitney Bank		Hancock Whitney Bank.

Zurich		Fidelity & Deposit Company of Maryland and Zurich American Insurance Company.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

GULF ISLAND FABRICATION, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)


	September 30, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,206		$	27,284
Restricted cash		1,197			1,197
Short-term investments		40,156			38,784
Contract receivables and retainage, net		35,686			22,487
Contract assets		11,679			8,611
Prepaid expenses and other assets		3,602			5,139
Inventory		2,716			1,907
Total current assets		118,242			105,409
Property, plant and equipment, net		21,992			24,051
Goodwill		3,606			2,217
Other intangibles, net		821			557
Other noncurrent assets		2,065			982
Total assets	$	146,726		$	133,216
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,067		$	5,801
Contract liabilities		981			1,278
Accrued expenses and other liabilities		13,259			13,180
Long-term debt, current		1,117			1,117
Total current liabilities		33,424			21,376
Long-term debt, noncurrent		17,881			17,888
Other noncurrent liabilities		1,117			850
Total liabilities		52,422			40,114
Shareholders’ equity:
Preferred stock, no par value, 5,000 shares authorized, no shares issued and outstanding		—			—
Common stock, no par value, 30,000 shares authorized, 15,999 shares issued and outstanding at September 30, 2025 and 16,346 at December 31, 2024		11,308			11,669
Additional paid-in capital		104,816			108,065
Accumulated deficit		(21,820	)		(26,632	)
Total shareholders’ equity		94,304			93,102
Total liabilities and shareholders’ equity	$	146,726		$	133,216

The accompanying notes are an integral part of these financial statements.

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GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025		2024			2025			2024
Revenue	$	51,540	$	37,640		$	129,351		$	121,783
Cost of revenue		46,660		32,984			114,295			106,845
Gross profit		4,880		4,656			15,056			14,938
General and administrative expense		3,651		2,985			10,172			9,823
Other (income) expense, net		83		(1	)		1,537			(3,548	)
Operating income		1,146		1,672			3,347			8,663
Interest (expense) income, net		411		647			1,470			1,792
Income before income taxes		1,557		2,319			4,817			10,455
Income tax (expense) benefit		2		(2	)		(5	)		(9	)
Net income	$	1,559	$	2,317		$	4,812		$	10,446

Per share data:
Basic income per share	$	0.10	$	0.14		$	0.30		$	0.64
Diluted income per share	$	0.10	$	0.14		$	0.29		$	0.62

The accompanying notes are an integral part of these financial statements.

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GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)


	Common Stock						Additional Paid-In			Accumulated			Total Shareholders’
	Shares			Amount			Capital			Deficit			Equity
Balance at December 31, 2023		16,258		$	11,729		$	108,615		$	(41,373	)	$	78,971
Net income		—			—			—			6,240			6,240
Stock-based compensation expense		—			50			456			—			506
Repurchases of common stock		(61	)		(27	)		(246	)		—			(273	)
Balance at March 31, 2024		16,197			11,752			108,825			(35,133	)		85,444
Net income		—			—			—			1,889			1,889
Vesting of restricted stock		319			(118	)		(1,065	)		—			(1,183	)
Stock-based compensation expense		—			54			478			—			532
Balance at June 30, 2024		16,516			11,688			108,238			(33,244	)		86,682
Net income		—			—			—			2,317			2,317
Stock-based compensation expense		—			40			366			—			406
Repurchases of common stock		(111	)		(61	)		(545	)		—			(606	)
Balance at September 30, 2024		16,405		$	11,667		$	108,059		$	(30,927	)	$	88,799


	Common Stock						Additional Paid-In			Accumulated			Total Shareholders’
	Shares			Amount			Capital			Deficit			Equity
Balance at December 31, 2024		16,346		$	11,669		$	108,065		$	(26,632	)	$	93,102
Net income		—			—			—			3,827			3,827
Stock-based compensation expense		—			33			310			—			343
Repurchases of common stock		(86	)		(57	)		(510	)		—			(567	)
Balance at March 31, 2025		16,260			11,645			107,865			(22,805	)		96,705
Net loss		—			—			—			(574	)		(574	)
Vesting of restricted stock		218			(86	)		(774	)		—			(860	)
Stock-based compensation expense		—			30			259			—			289
Repurchases of common stock		(437	)		(280	)		(2,522	)		—			(2,802	)
Balance at June 30, 2025		16,041			11,309			104,828			(23,379	)		92,758
Net income		—			—			—			1,559			1,559
Stock-based compensation expense		—			28			248			—			276
Repurchases of common stock		(42	)		(29	)		(260	)		—			(289	)
Balance at September 30, 2025		15,999		$	11,308		$	104,816		$	(21,820	)	$	94,304

The accompanying notes are an integral part of these financial statements.

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GULF ISLAND FABRICATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income	$	4,812		$	10,446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,678			3,641
Change in allowance for doubtful accounts and credit losses		1,500			(28	)
(Gain) loss on sale or disposal of property and equipment, net		8			(3,942	)
Stock-based compensation expense		908			1,444
Changes in operating assets and liabilities:
Contract receivables and retainage, net		(11,037	)		12,822
Contract assets		(2,345	)		(3,076	)
Prepaid expenses, inventory and other current assets		820			2,401
Accounts payable		11,919			(2,843	)
Contract liabilities		(1,735	)		(3,991	)
Accrued expenses and other current liabilities		(548	)		(494	)
Noncurrent assets and liabilities, net and other		(366	)		(437	)
Net cash provided by operating activities		7,614			15,943
Cash flows from investing activities:
Capital expenditures		(813	)		(4,880	)
Acquisition of business		(3,500	)		—
Purchase of loan		(1,500	)		—
Proceeds from sale of property and equipment		11			9,614
Recoveries from insurance claims		—			326
Purchases of short-term investments		(63,792	)		(71,744	)
Maturities of short-term investments		62,420			35,955
Net cash used in investing activities		(7,174	)		(30,729	)
Cash flows from financing activities:
Tax payments for vested stock withholdings		(860	)		(1,183	)
Repurchases of common stock		(3,658	)		(879	)
Net cash used in financing activities		(4,518	)		(2,062	)
Net decrease in cash, cash equivalents and restricted cash		(4,078	)		(16,848	)
Cash, cash equivalents and restricted cash, beginning of period		28,481			39,651
Cash, cash equivalents and restricted cash, end of period	$	24,403		$	22,803

The accompanying notes are an integral part of these financial statements.

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GULF ISLAND FABRICATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2025

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Gulf Island Fabrication, Inc. (together with its subsidiaries, “Gulf Island,” “the Company,” “we,” “us” and “our”) is a leading fabricator of complex steel structures, modules and automation systems, and a provider of specialty services, including engineering, project management, commissioning, repair, maintenance, scaffolding, coatings, welding enclosures, cleaning and environmental, and technical field services to the industrial, energy and government sectors. Our customers include U.S. and, to a lesser extent, international energy producers; refining, petrochemical, LNG, industrial and power operators; EPC companies; and federal, state and local governments. We currently operate and manage our business through two operating divisions (“Services” and “Fabrication”) and one non-operating division (“Corporate”), which represent our reportable segments. Our corporate headquarters is located in The Woodlands, Texas and our primary operating facilities are located in Houma, Louisiana (“Houma Facility”) and Houston, Texas (“Houston Facility”). See Note 7 for further discussion of our reportable segments.

Acquisition

During the second quarter 2025, we acquired certain assets of ENGlobal Corporation’s (“Englobal”) automation business (“Automation Business”) effective May 12, 2025, for which the operating results are reflected within our Fabrication Division from the applicable Acquisition Date, and we acquired certain assets of Englobal’s engineering business (“Engineering Business”) and government business (“Government Business” and together with the Automation Business and Engineering Business, the “Englobal Business”) effective June 16, 2025, for which the operating results are reflected within our Services Division from the applicable Acquisition Date. See Notes 3 and 7 for further discussion of the acquisition of the Englobal Business (“Englobal Acquisition”).

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements (“Financial Statements”) reflect all wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial statements, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, the Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Financial Statements have been included. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. Our Consolidated Balance Sheet (“Balance Sheet”) at December 31, 2024, has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to our 2024 Financial Statements.

Operating Cycle

The duration of our contracts vary, but may extend beyond twelve months from the date of contract award. Consistent with industry practice, assets and liabilities have been classified as current under the operating cycle concept whereby all contract-related items are classified as current regardless of whether cash will be received or paid within a twelve-month period. Assets and liabilities classified as current, which may not be received or paid within the next twelve months, include contract retainage, contract assets and contract liabilities. Variations from normal contract terms may result in the classification of assets and liabilities as long-term.

- 5 -

Use of Estimates

General – The preparation of our Financial Statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We believe our most significant estimates and judgments are associated with:

•

revenue recognition for our long-term contracts, including application of the percentage-of-completion (“POC”) method, estimating costs to complete each contract and the recognition of incentives, unapproved change orders, claims (including amounts arising from disputes with customers) and liquidated damages;

•

determination of fair value with respect to acquired tangible and intangible assets;

•

fair value and recoverability assessments that must be periodically performed with respect to long-lived tangible assets, goodwill and other intangible assets;

•

determination of deferred income tax assets, liabilities and related valuation allowances;

•

reserves for bad debts and credit losses;

•

liabilities related to uninsured losses and deductibles and retentions for insurance coverages; and

•

the impacts of volatile oil and gas prices and macroeconomic conditions on our business, estimates and judgments as discussed further below.

If the underlying estimates and assumptions upon which our Financial Statements are based change in the future, actual amounts may differ materially from those included in the Financial Statements.

Oil and Gas Price Volatility and Macroeconomic Conditions – For over a decade, prices of oil and gas have experienced significant volatility, including depressed prices, which negatively impacted certain of our end markets and operating results, and elevated prices, which positively impacted certain of our end markets and operating results. Such volatility has been compounded by geopolitical turmoil and uncertainty. In addition, global economic factors that are beyond our control, have and could continue to impact our operations, including, but not limited to, labor constraints, trade policies (including tariffs) and related market uncertainty, supply chain disruptions, inflationary pressures, economic slowdowns and recessions, natural disasters, public health crises and geopolitical conflicts.

The ultimate business and financial impacts of oil and gas price volatility and macroeconomic conditions on our business and results of operations continues to be uncertain, but the impacts have included, or may continue to include, among other things, reduced bidding activity; suspension or termination of backlog; deterioration of customer financial condition; and unanticipated project costs and schedule delays due to supply chain disruptions, labor and material price increases, lower labor productivity, increased employee and contractor turnover, craft labor hiring challenges, increased safety incidents, lack of performance by subcontractors and suppliers, and contract disputes. We continue to monitor the impacts of oil and gas price volatility and macroeconomic conditions on our operations, and our estimates in future periods will be revised for any events and changes in circumstances arising after the date of this Report.

Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the assumed conversion of dilutive securities in periods in which income is reported. See Note 6 for calculations of our basic and diluted income (loss) per share.

Cash Equivalents and Short-term Investments

Cash Equivalents – We consider investments with original maturities of three months or less when purchased to be cash equivalents. We hold substantially all of our cash deposits with Hancock Whitney Bank (“Whitney Bank”).

Restricted Cash – At September 30, 2025 and December 31, 2024, we had $1.2 million and $1.2 million, respectively, of restricted cash as security for letters of credit issued under our letter of credit facility (“LC Facility”) with Whitney Bank. Our restricted cash is held in an interest-bearing money market account with Whitney Bank. The classification of the restricted cash as current or noncurrent is determined by the contractual maturity dates of the letters of credit being secured, with letters of credit having maturity dates of twelve months or less from the balance sheet date classified as current, and letters of credit having maturity dates of longer than twelve months from the balance sheet date classified as noncurrent. See Note 4 for further discussion of our letters of credit and associated security requirements.

- 6 -

Short-term Investments – We consider investments with original maturities of more than three months but less than twelve months to be short-term investments. At September 30, 2025 and December 31, 2024, our short-term investments included U.S. Treasuries with original maturities of approximately four to nine months. We intend to hold these investments until maturity and it is not more likely than not that we will be required to sell the investments prior to their maturity. The investments are stated at amortized costs, which approximates fair value due to their near-term maturities. All short-term investments are traded on active markets with quoted prices and represent Level 1 fair value measurements.

Inventory

Inventory is recorded at the lower of cost or net realizable value determined using the first-in-first-out basis. The cost of inventory includes acquisition costs, production or conversion costs, and other costs incurred to bring the inventory to its current location and condition. Net realizable value is our estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal and transportation. An allowance for excess or inactive inventory is recorded based on an analysis that considers current inventory levels, historical usage patterns, estimates of future sales and salvage value.

Allowance for Doubtful Accounts and Credit Losses

In the normal course of business, we extend credit to our customers on a short-term basis and contract receivables are generally not collateralized; however, we typically have the right to place liens on our projects in the event of nonpayment by our customers. We provide an allowance for credit losses and routinely review individual contract receivable balances and other financial assets for collectability and make provisions for probable uncollectible amounts as necessary. Among the factors considered in our review are the financial condition of our customer and its access to financing, underlying disputes with the customer, the age and value of the receivable balance, company-specific credit ratings, historical company-specific uncollectable amounts and economic conditions in general. See Note 2 for further discussion of our allowance for doubtful accounts and credit losses.

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. We recognize the excess tax benefit or tax deficiency resulting from the difference between the deduction we receive for tax purposes and the stock-based compensation expense we recognize for financial reporting purposes created when common stock vests, as an income tax benefit or expense on our Consolidated Statements of Operations (“Statement of Operations”). Tax payments made on behalf of employees to taxing authorities in order to satisfy employee income tax withholding obligations from the vesting of shares under our stock-based compensation plans are classified as a financing activity on our Consolidated Statements of Cash Flows (“Statement of Cash Flows”).

Depreciation and Amortization Expense

Property, plant and equipment are depreciated on a straight-line basis over estimated useful lives ranging from three to 25 years. Ordinary maintenance and repairs, which do not extend the physical or economic lives of the plant or equipment, are charged to expense as incurred. Intangible assets are amortized on a straight-line basis over five to seven years and amortization expense is reflected within general and administrative expense on our Statement of Operations.

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 current reporting units with goodwill consist of our Automation Business within our Fabrication Division (with $1.4 million of goodwill) associated with the Englobal Acquisition and our Services Division as a whole, excluding our Government Business and Engineering Business (with $2.2 million of goodwill). We perform our annual impairment assessment during the fourth quarter of each year based upon balances as of October 1. In evaluating goodwill for impairment, we have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is greater than its carrying value. If we determine that it is more likely than not that the carrying value of the reporting unit is greater than its fair value, we perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing it to the carrying value of the reporting unit, and we recognize an impairment charge to the extent its carrying value exceeds its fair value. To determine the fair value of our reporting unit and test for impairment, we utilize an income approach (discounted cash flow method) as we believe this is the most direct approach to incorporate the specific economic attributes and risk profile of our reporting unit into our valuation model. We had no indicators of impairment during the nine months ended September 30, 2025. 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 the Englobal Acquisition.

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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. If a recoverability assessment is required, we compare the estimated future undiscounted cash flow associated with the asset or asset group to its carrying amount to determine if an impairment exists. An asset group constitutes the minimum level for which identifiable cash flows are principally independent of the cash flows of other assets or asset groups. An impairment loss is measured by comparing the fair value of the asset or asset group to its carrying amount and the excess of the carrying amount of the asset or asset group over its fair value is recorded as an impairment charge. 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 the nine months ended September 30, 2025.

Leases

We record a right-of-use asset and an offsetting lease liability on our Balance Sheet equal to the present value of our lease payments for leases with an original term of longer than twelve months. We do not record an asset or liability for leases with an original term of twelve months or less and we do not separate lease and non-lease components for our leases. Our lease assets are reflected within other noncurrent assets, and the current and noncurrent portions of our lease liabilities are reflected within accrued expenses and other liabilities, and other noncurrent liabilities, respectively, on our Balance Sheet. For leases with escalations over the life of the lease, we recognize expense on a straight-line basis.

Fair Value Measurements

Fair value determinations for financial assets and liabilities are based on the particular facts and circumstances. Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The three levels of the valuation hierarchy are as follows:

•

Level 1 – inputs are based upon quoted prices for identical instruments traded in active markets.

•

Level 2 – inputs are based upon quoted prices for similar instruments in active markets and model-based valuation techniques for which all significant assumptions are observable in the market.

•

Level 3 – inputs are based upon model-based valuation techniques for which significant assumptions are generally not observable in the market and typically reflect estimates and assumptions that we believe market participants would use in pricing the asset or liability. These include discounted cash flow models and similar valuation techniques.

The carrying amounts of our financial instruments, including cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate their fair values. Our fair value assessments for determining the impairments of inventory, goodwill and long-lived assets are non-recurring fair value measurements that fall within Level 3 of the fair value hierarchy. Our fair value assessments for long-term debt are recurring fair value measurements that fall within Level 2 of the fair value hierarchy, and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets. See Note 4 for further discussion of our long-term debt.

Revenue Recognition

General – Our revenue is derived from customer contracts and agreements that are awarded on a competitively bid and negotiated basis using a range of contracting options, including fixed-price, unit-rate, time and materials (“T&M”) and cost-reimbursable, or a combination thereof. Our contracts primarily relate to the fabrication of steel structures, modules and automation systems, and certain service arrangements. We recognize revenue from our contracts in accordance with Accounting Standards Update (“ASU”) 2014-09, Topic 606 “Revenue from Contracts with Customers” (“Topic 606”).

Topic 606 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, provisions of Topic 606 specify which goods and services are distinct and represent separate performance obligations (representing the unit of account in Topic 606) within a contract and which goods and services (which could include multiple contracts or agreements) should be aggregated. In general, a performance obligation is a contractual obligation to construct and/or transfer a distinct good or service to a customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenue for performance obligations satisfied over time is recognized as the work progresses. Revenue for performance obligations that do not meet the criteria for over time recognition is recognized at a point-in-time when a performance obligation is complete and a customer has obtained control of a promised asset.

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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). Fixed-price contracts, or contracts with a more significant fixed-price component, generally provide us with greater control over project schedule and the timing of when work is performed and costs are incurred, and accordingly, when revenue is recognized. Unit-rate, T&M and cost-reimbursable contracts generally have more variability in the scope of work and provide our customers with greater influence over the timing of when we perform our work, and accordingly, such contracts often result in less predictability with respect to the timing of when revenue is recognized. Contract costs include direct costs, such as materials and labor, and indirect costs attributable to contract activity. Material costs that are significant to a contract and do not reflect an accurate measure of project completion are excluded from the determination of our contract progress. Revenue for such materials is only recognized to the extent of costs incurred. Revenue and gross profit or loss for contracts accounted for using the POC method can be significantly affected by changes in estimated cost to complete such contracts. Significant estimates impacting the cost to complete a contract include: forecast costs of engineering, materials, equipment and subcontracts; forecast costs of labor and labor productivity; schedule durations, including subcontractor and supplier progress; contract disputes, including claims; achievement of contractual performance requirements; and contingency, among others. Although our customers retain the right and ability to change, modify or discontinue further work at any stage of a contract, in the event our customers discontinue work, they are required to compensate us for the work performed to date. The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which these changes become known, including, to the extent required, the reversal of revenue recognized in prior periods and the recognition of losses expected to be incurred on contracts. Due to the various estimates inherent in our contract accounting, actual results could differ materially from those estimates, which could result in material changes to our Financial Statements and related disclosures. See Note 2 for further discussion of projects with significant changes in estimated margins during the three and nine months ended September 30, 2025 and 2024.

Short-term Contracts and Contracts Satisfied at a Point In Time – Revenue for our short-term contracts (which includes revenue associated with our master services arrangements) and contracts that do not satisfy the criteria for revenue recognition over time is recognized when the work is performed or when control of the asset is transferred, the related costs are incurred and collection is reasonably assured.

Variable Consideration – Revenue and gross profit or loss for contracts can be significantly affected by variable consideration, which can be in the form of unapproved change orders, claims (including amounts arising from disputes with customers), incentives and liquidated damages that may not be resolved until the later stages of the contract or after the contract has been completed. Variable consideration can also include revenue associated with work performed on a unit-rate, T&M or cost-reimbursable basis that is recognized using the POC method. We estimate variable consideration based on the amount we expect to be entitled and include estimated amounts in the 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. See Note 2 for further discussion of our unapproved change orders, claims, incentives and liquidated damages.

Additional Disclosures – Topic 606 also requires disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. See Note 2 for required disclosures under Topic 606.

Pre-Contract Costs

Pre-contract costs are generally charged to cost of revenue as incurred, but in certain cases their recognition may be deferred if specific probability criteria are met. At September 30, 2025 and December 31, 2024, we had no deferred pre-contract costs.

Other (Income) Expense, Net

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. For the three months ended September 30, 2025, other (income) expense, net for our Corporate Division included integration costs of $0.1 million and for the nine months ended September 30, 2025, included integration and transaction costs $0.6 million, associated with the Englobal Acquisition, and for the nine months ended September 30, 2025, included a charge of $1.5 million related to a reserve for the Alliance Payment made in connection with the Englobal Acquisition. In addition, for the nine months ended September 30, 2024, other (income) expense, net for our Fabrication Division included a gain $1.1 million related to the sales of excess equipment and a gain of $2.9 million related to the sale of certain excess real property (consisting of land and buildings) for net cash proceeds of $8.5 million. See Note 3 for further discussion of the Englobal Acquisition and Notes 2 and 3 for further discussion of the Alliance Payment and related reserve.

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Income Taxes

Income taxes have been provided for using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted rates expected to be in effect during the year in which the differences are expected to reverse. Due to state income tax laws related to the apportionment of revenue for our projects, judgment is required to estimate the effective tax rate expected to apply to tax differences that are anticipated to reverse in the future.

A valuation allowance is provided to reserve for deferred tax assets (“DTA(s)”) if, based upon the available evidence, it is more likely than not that some or all of the DTAs will not be realized. The realization of our DTAs depends on our ability to generate sufficient taxable income of the appropriate character and in the appropriate jurisdictions. Our effective tax rate differs from our statutory rate for the three and nine months ended September 30, 2025 and 2024, as no federal income tax expense was recorded for our income as it was fully offset by the reversal of valuation allowance on our net deferred tax assets. Income taxes recorded for the three and nine months ended September 30, 2025 and 2024, relate to state income taxes.

Reserves for uncertain tax positions are recognized when we consider it more likely than not that additional tax will be due in excess of amounts reflected in our income tax returns, irrespective of whether or not we have received tax assessments. Interest and penalties on uncertain tax positions are recorded within income tax expense.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted and includes tax reform provisions that amend, eliminate and extend tax rules under the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017 and makes other changes to the Internal Revenue Code of 1986, as amended. We currently do not believe the OBBBA will have a material impact on our Financial Statements; however, we will continue to evaluate its impact as further information becomes available.

New Accounting Standards

Segment Reporting – In the fourth quarter 2024, we adopted ASU 2023-07 “Segment Reporting - Improvements to Reportable Segment Disclosures,” which requires us to disclose, on an interim and annual basis, additional information about our significant segment expenses. The new standard did not have an effect on our Financial Statements; however, it did result in changes to our segment disclosures for all periods presented as the standard was applied using the retrospective transition method. See Note 7 for the segment disclosures required by the new standard.

Income Taxes – In the fourth quarter 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “Income Taxes - Improvements to Income Tax Disclosures,” which requires enhanced disclosures related to our rate reconciliation and income taxes paid information. The new standard will be effective for us in the fourth quarter 2025 and may be applied using either the prospective or retrospective transition method. Early adoption of the new standard is permitted; however, we have not elected to early adopt the standard. We are evaluating the potential effect of the new standard on our Financial Statement disclosures; however, adoption will not impact our Financial Statements.

Income Statement Reporting – In the fourth quarter 2024, the FASB issued ASU 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which requires additional disclosure of the nature of expenses included in our Statement of Operations as well as disclosures about specific types of expenses included in the expense captions presented in our Statement of Operations. The new standard will be effective for us in the fourth quarter 2027 and may be applied using either the prospective or retrospective transition method. Early adoption of the new standard is permitted; however, we have not elected to early adopt the standard. We are evaluating the potential effect of the new standard on our Financial Statement disclosures; however, adoption will not impact our Financial Statements.

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2. REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS

As discussed in Note 1, we recognize revenue for our contracts in accordance with Topic 606. Summarized below are required disclosures under Topic 606 and other relevant guidance.

Disaggregation of Revenue

The following tables summarize revenue for each of our reportable segments, disaggregated by contract type and duration, for the three and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30, 2025
	Services(1)		Fabrication(1)		Shipyard(2)		Eliminations			Total
Fixed-price and unit-rate	$	622	$	20,999	$	—	$	(2	)	$	21,619
T&M and cost-reimbursable		19,839		9,552		—		(3	)		29,388
Other		1,033		—		—		(500	)		533
Total	$	21,494	$	30,551	$	—	$	(505	)	$	51,540

Long-term	$	622	$	28,774	$	—	$	(2	)	$	29,394
Short-term		20,872		1,777		—		(503	)		22,146
Total	$	21,494	$	30,551	$	—	$	(505	)	$	51,540


	Three Months Ended September 30, 2024
	Services		Fabrication		Shipyard		Eliminations			Total
Fixed-price and unit-rate	$	74	$	10,235	$	490	$	(3	)	$	10,796
T&M and cost-reimbursable		19,403		6,875		—		—			26,278
Other		768		—		—		(202	)		566
Total	$	20,245	$	17,110	$	490	$	(205	)	$	37,640

Long-term	$	74	$	15,786	$	490	$	(3	)	$	16,347
Short-term		20,171		1,324		—		(202	)		21,293
Total	$	20,245	$	17,110	$	490	$	(205	)	$	37,640


	Nine Months Ended September 30, 2025
	Services(1)		Fabrication(1)		Shipyard(2)		Eliminations			Total
Fixed-price and unit-rate	$	981	$	39,798	$	—	$	(80	)	$	40,699
T&M and cost-reimbursable		58,934		27,292		—		(3	)		86,223
Other		3,412		—		—		(983	)		2,429
Total	$	63,327	$	67,090	$	—	$	(1,066	)	$	129,351

Long-term	$	981	$	61,937	$	—	$	(80	)	$	62,838
Short-term		62,346		5,153		—		(986	)		66,513
Total	$	63,327	$	67,090	$	—	$	(1,066	)	$	129,351


	Nine Months Ended September 30, 2024
	Services		Fabrication		Shipyard		Eliminations			Total
Fixed-price and unit-rate	$	837	$	42,792	$	935	$	(6	)	$	44,558
T&M and cost-reimbursable		65,719		10,183		—		—			75,902
Other		1,990		—		—		(667	)		1,323
Total	$	68,546	$	52,975	$	935	$	(673	)	$	121,783

Long-term	$	837	$	49,400	$	935	$	(6	)	$	51,166
Short-term		67,709		3,575		—		(667	)		70,617
Total	$	68,546	$	52,975	$	935	$	(673	)	$	121,783

(1)

Operating results for the Services Division include the Engineering Business and the Government Business, and operating results for the Fabrication Division include the Automation Business, from the applicable Acquisition Date. See Note 3 for further discussion of the Englobal Acquisition.

(2)

The Shipyard Division is no longer a reportable segment effective January 1, 2025. Remaining operating results for our former Shipyard Division are included in other (income) expense, net on our Statement of Operations and are reflected within our Corporate Division. See Note 7 for further discussion of our former Shipyard Division and change in reportable segments.

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Future Performance Obligations

The following table summarizes our remaining performance obligations for each of our reportable segments, disaggregated by contract type, at September 30, 2025 (in thousands):


	September 30, 2025
	Services		Fabrication		Total
Fixed-price and unit-rate	$	7,771	$	27,319	$	35,090
T&M and cost-reimbursable		—		1,754		1,754
Total(1)	$	7,771	$	29,073	$	36,844

(1)

We expect to recognize revenue of approximately $17.4 million, $16.4 million and $3.0 million for the remainder of 2025, 2026 and thereafter, respectively, associated with our performance obligations at September 30, 2025. Certain factors and circumstances could result in changes in the timing of recognition of our performance obligations as revenue and the amounts ultimately recognized.

Contract Assets and Liabilities

The timing of customer invoicing and recognition of revenue using the POC method may occur at different times. Customer invoicing is generally dependent upon contractual billing terms, which could provide for customer payments in advance of performing the work, milestone billings based on the completion of certain phases of the work, or billings when services are provided. Revenue recognized in excess of amounts billed is reflected as contract assets on our Balance Sheet, or to the extent we have an unconditional right to the consideration, is reflected as contract receivables on our Balance Sheet. Amounts billed in excess of revenue recognized, and accrued contract losses, are reflected as contract liabilities on our Balance Sheet. Information with respect to contracts that were incomplete at September 30, 2025 and December 31, 2024, is as follows (in thousands):


	September 30,			December 31,
	2025			2024
Contract assets(1), (2)	$	11,679		$	8,611
Contract liabilities(3), (4)		(981	)		(1,278	)
Contracts in progress, net	$	10,698		$	7,333

(1)

The increase in contract assets from December 31, 2024 to September 30, 2025, was primarily due to higher net unbilled positions on various projects for our Fabrication Division and contract assets related to the Englobal Business.

(2)

Contract assets at September 30, 2025 and December 31, 2024, excluded $4.3 million and $4.6 million, respectively, associated with revenue recognized in excess of amounts billed for which we have an unconditional right to the consideration. Such amounts are reflected within contract receivables. The decrease from December 31, 2024 to September 30, 2025, was primarily due to lower unbilled positions on various projects for our Services Division, offset partially by amounts related to the Englobal Business.

(3)

The decrease in contract liabilities from December 31, 2024 to September 30, 2025, was primarily due to lower advance billings on various projects for our Fabrication Division, offset partially by contract liabilities related to the Englobal Business.

(4)

Revenue recognized during the three months ended September 30, 2025 and 2024, from amounts included in our contract liabilities balance at June 30, 2025 and 2024, was $1.3 million and $3.0 million, respectively. Revenue recognized during the nine months ended September 30, 2025 and 2024, from amounts included in our contract liabilities balance at December 31, 2024 and 2023, was $0.9 million and $4.8 million, respectively.

Allowance for Doubtful Accounts and Credit Losses

Our provision for bad debts and credit losses is included in other (income) expense, net on our Statement of Operations. For the three months ended September 30, 2025, and each of the three and nine months ended September 30, 2024, our provision for bad debts and credit losses was not significant. For the nine months ended September 30, 2025, our provision for bad debts and credit losses was $1.5 million related to a reserve for the Alliance Payment made in connection with the Englobal Acquisition. Our allowance for doubtful accounts and credit losses at September 30, 2025 and December 31, 2024, was $1.7 million and $0.2 million, respectively. We had no significant write-offs or recoveries of previously recorded bad debts during the three or nine months ended September 30, 2025 or 2024. See Notes 1 and 3 for further discussion of the Englobal Acquisition and Alliance Payment and related reserve.

Variable Consideration

For the three and nine months ended September 30, 2025 and 2024, we had no material amounts in revenue related to unapproved change orders, claims or incentives.

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Changes in Project Estimates

We determine the impact of changes in estimated margins on projects for a given period by calculating the amount of revenue recognized in the period that would have been recognized in a prior period had such estimated margins been forecasted in the prior period. The total impact of changes in estimated margins for a project as disclosed on a quarterly basis may be different from the applicable year-to-date impact due to the application of the POC method and the changing progress of the project at each period end. Such impacts may also be different when a project is commenced and completed within the applicable year-to-date period but spans multiple quarters. For the three and nine months ended September 30, 2025 and 2024, individual projects with significant changes in estimated margins did not have a material net impact on our operating results.

Other Operating and Project Matters

During the nine months ended September 30, 2024, we received insurance payments of $2.0 million from our insurance carriers associated with interruptions to our operations and damage to buildings and equipment resulting from Hurricane Ida during 2021, of which $0.3 million is reflected within investing activities and the remainder is classified within operating activities on our Statement of Cash Flows.

3. ACQUISITION

Acquisition Summary – On March 5, 2025, Englobal filed for chapter 11 bankruptcy relief (the “Englobal Chapter 11”) in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). In connection therewith, we entered into a senior secured, super-priority debtors-in-possession credit agreement effective March 5, 2025, as amended May 12, 2025 (the “DIP Credit Agreement”), as lender, with Englobal, as debtor-in-possession, and certain of its subsidiaries, as guarantors. The DIP Credit Agreement provided for potential loan amounts to Englobal of up to $3.5 million in the aggregate, bearing interest at 12.0% per annum (plus a 4.0% default rate per annum, if applicable) and was secured by all assets of Englobal. Pursuant to the DIP Credit Agreement, during the first quarter 2025, we loaned Englobal $1.2 million (which included the roll-up of a prepetition secured bridge loan), and during the second quarter 2025, we loaned Englobal $2.3 million, for a total loan amount of $3.5 million (the “DIP Loan”).

In addition, we entered into a loan sale and assignment agreement effective April 10, 2025 with Alliance 2000, Ltd. (“Alliance”), a creditor of Englobal, pursuant to which we assumed Alliance’s senior secured loan of $2.4 million (the “Alliance Loan”) due from Englobal in exchange for a cash payment of $1.5 million to Alliance (the “Alliance Payment”) during the second quarter 2025.

We entered into the DIP Loan and Alliance Loan with the right to “credit bid” any amounts then-owed under the agreements in any offer by us to purchase all or a portion of Englobal’s assets. On April 18, 2025, we were named as the successful bidder in the Bankruptcy Court-supervised auction process for certain assets of Englobal, which consisted of certain assets of Englobal’s automation business (“Automation Business”), engineering business (“Engineering Business”) and government business (“Government Business” and together with the Automation Business and Engineering Business, the “Englobal Business”). Accordingly, pursuant to an asset purchase agreement effective April 15, 2025, as amended May 19, 2025 (the “Asset Purchase Agreement”), we acquired the Automation Business effective May 12, 2025, and we acquired the Engineering Business and Government Business effective June 16, 2025 (collectively, the “Acquisition Date”), the consideration for which was the assumption of certain liabilities and a “credit bid” of the full amount of the DIP Loan (collectively, the “Englobal Acquisition”). We did not “credit bid” any portion of the Alliance Loan, and accordingly, it continues to be a senior secured obligation of Englobal owed to us.

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Preliminary Purchase Price Allocation – We considered the DIP Loan amount of $3.5 million to represent the purchase price (“Purchase Price”) of the Englobal Business given such amount was “credit bid” in connection with the Englobal Acquisition. The Purchase Price is reflected within investing activities on our Statement of Cash Flows. However, because the Alliance Loan was not “credit bid” and we currently do not believe that recovery from Englobal of the Alliance Payment is probable, we recorded a reserve against the full amount of the Alliance Payment, resulting in a charge of $1.5 million for the nine months ended September 30, 2025. In addition, for the three months ended September 30, 2025, we incurred integration costs of $0.1 million, and for the nine months ended September 30, 2025, we incurred integration and transaction costs of $0.6 million, associated with the Englobal Acquisition. The aforementioned charge and integration and transaction costs are reflected within other (income) expense, net on our Statement of Operations for our Corporate Division. The Alliance Payment is reflected within investing activities, and the charge is reflected within operating activities, on our Statement of Cash Flows.

The Purchase Price was allocated to the major categories of assets and liabilities acquired based upon estimates of their fair values at the Acquisition Date, which were based, in part, upon outside appraisals for certain assets, including machinery and equipment and specifically-identifiable intangible assets. The excess of the Purchase Price over the estimated fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. The factors contributing to the goodwill (which is all deductible for tax purposes) include the acquired established workforce, estimated future cost savings and potential revenue synergies associated with the Englobal Business. The following table summarizes our preliminary allocation of the Purchase Price as of the Acquisition Date (in thousands):


	Purchase Price Allocation
Tangible assets and liabilities:
Contract receivables and retainage, net	$	2,162
Contract assets	723
Prepaid expenses and other assets		92
Machinery and equipment(1)		708
Accounts payable		(461	)
Contract liabilities		(1,438	)
Accrued expenses and other liabilities		(75	)
Net tangible assets and liabilities		1,711
Intangible assets - trade name(2)		400
Goodwill(3)		1,389
Purchase Price	$	3,500

(1)

Represents acquired machinery, equipment and vehicles. The fair values of the assets were estimated based on third-party appraisals.

(2)

Represents the estimated fair value of the existing Englobal trade name for the Automation Business with an estimated life of five years. The fair value of the trade name was estimated using the relief-from-royalty method, which incorporated Level 3 inputs and calculated the hypothetical royalty fees that would be saved by owning an intangible asset rather than licensing it from another owner. This method forecasts revenue over the estimated useful life of the asset and applies a royalty rate, tax rate and discount rate to such revenue to calculate the discounted cash flows to arrive at the trade name value. Amortization expense for our intangible assets was not material for either the three or nine months ended September 30, 2025, and at September 30, 2025, our intangible asset balance associated with the Englobal Acquisition totaled $0.4 million. Amortization expense is estimated to be approximately $0.1 million for 2025 and for each year thereafter through 2030.

(3)

The portion of the Purchase Price allocated to goodwill resides within our Automation Business, which is included within our Fabrication Division. See Note 1 for further discussion of our goodwill and reporting units.

The allocation of the Purchase Price and related amortization periods are based on preliminary information and are subject to change when additional information concerning final asset and liability valuations is obtained. We have not completed our final assessment of the fair value of the intangible assets and machinery and equipment. Our final purchase price allocation may result in adjustments to certain assets and liabilities, including working capital assets and liabilities associated with variable consideration for certain contracts, and the residual amount allocated to goodwill.

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Supplemental Pro Forma Financial Information – The following unaudited pro forma condensed combined financial information (“Pro Forma Information”) gives effect to the Englobal Acquisition, accounted for as a business combination using the purchase method of accounting. The Pro Forma Information reflects the Englobal Acquisition and related events as if they occurred during the period beginning on January 1, 2024 (the earliest period presented in this Report), and gives effect to pro forma events that are directly attributable to the Englobal Acquisition, factually supportable and expected to have a continuing impact on the combined results of the Company and the Englobal Business following the Englobal Acquisition. The Pro Forma Information includes adjustments to (i) remove transaction costs associated with the Englobal Acquisition of $0.5 million for the nine months ended September 30, 2025, and include such amounts in the nine months ended September 30, 2024, (ii) include incremental intangibles amortization, and reflect an increase or decrease in depreciation expense as applicable, for the three and nine months ended September 30, 2025 and 2024, related to fair value adjustments associated with the Englobal Acquisition, and (iii) include the historical results of the Englobal Business for the three and nine months ended September 30, 2025 and 2024.

The Pro Forma Information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the dates indicated. Further, the Pro Forma Information does not purport to project the future operating results of the combined company following the Englobal Acquisition. The following table presents the Pro Forma Information for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Pro forma revenue(1)	$	51,540	$	42,234	$	134,754	$	135,574
Pro forma net income(2)		1,559		1,762		3,466		7,794

Per share data:
Basic income per share	$	0.10	$	0.11	$	0.21	$	0.48
Diluted income per share	$	0.10	$	0.11	$	0.21	$	0.46

(1)

Revenue attributable to the Englobal Business prior to the Acquisition Date was $4.6 million, $5.4 million and $13.8 million, for the three months ended September 30, 2024, and the nine months ended September 30, 2025 and 2024, respectively. Revenue attributable to the Englobal Business subsequent to the Acquisition Date was $3.2 million and $4.5 million for the three and nine months ended September 30, 2025, respectively.

(2)

Net loss attributable to the Englobal Business prior to the Acquisition Date was $0.6 million, $1.9 million and $2.1 million, for the three months ended September 30, 2024, and nine months ended September 30, 2025 and 2024, respectively. Net loss attributable to the Englobal Business subsequent to the Acquisition Date was $1.0 million and $1.5 million for the three and nine months ended September 30, 2025, respectively.

4. CREDIT FACILITIES AND DEBT

LC Facility

Our LC Facility, as amended, provides for up to $10.0 million of letters of credit, subject to our cash securitization of the letters of credit, and has a maturity date of June 30, 2026. At September 30, 2025, we had $1.2 million of outstanding letters of credit under the LC Facility. Commitment fees on the unused portion of the LC Facility are 0.4% per annum and interest on outstanding letters of credit is 1.5% per annum. See Note 5 for further discussion of our letters of credit and associated security requirements.

Surety Bonds

We issue surety bonds in the ordinary course of business to support our projects and certain of our insurance coverages, and at September 30, 2025, we had $52.7 million of outstanding surety bonds. See Note 5 for further discussion of our surety bonds and related indemnification obligations.

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Note Agreement

In connection with the resolution of litigation for our former Shipyard Division, during 2023, we entered into a promissory note (“Note Agreement”) with certain of our Sureties (Fidelity & Deposit Company of Maryland and Zurich American Insurance Company (collectively, “Zurich”)), pursuant to which we will pay Zurich $20.0 million. The Note Agreement bears interest at a fixed rate of 3.0% per annum, with principal and interest payable in 15 equal annual installments of approximately $1.7 million. The first payment was made on December 30, 2024 and the final payment is due on December 31, 2038. At September 30, 2025, our outstanding balance and future annual principal maturities under the Note Agreement, were as follows (in thousands):


	Principal Maturities
2025	$	1,108
2026		1,141
2027		1,175
2028		1,210
2029		1,247
Thereafter		13,044
Total maturities(1)		18,925
Unamortized interest(2)		73
Total debt	$	18,998

(1)

At September 30, 2025, the estimated present value of the Note Agreement amount was $13.3 million based on an estimated market rate of interest.

(2)

Due to the forbearance of interest from the issuance date of the Note Agreement until January 1, 2024, the effective rate on the Note Agreement is 2.9% per annum. Unamortized interest represents the difference between the effective interest rate and the stated interest rate on the Note Agreement.

Mortgage Agreement

We have a multiple indebtedness mortgage arrangement (“Mortgage Agreement”) with Zurich to secure our obligations and liabilities under the Note Agreement. The Mortgage Agreement, as amended, encumbers all real estate associated with our Houma Facility, includes certain covenants and events of default, and requires that 50 percent of the net proceeds (as defined by the Mortgage Agreement) received by us in excess of $8.0 million from the sale of any real estate of our Houma Facility be used to make early payments on the principal balance under the Note Agreement. The Mortgage Agreement will terminate when the Note Agreement is repaid. See “Note Agreement” above for further discussion of the Note Agreement.

5. COMMITMENTS AND CONTINGENCIES

Routine Legal Proceedings

We are subject to various routine legal proceedings in the normal conduct of our business, primarily involving commercial disputes and claims, workers’ compensation claims, and claims for personal injury under general maritime laws of the U.S. and the Jones Act. While the outcome of these legal proceedings cannot be predicted with certainty, we believe that the outcome of any such proceedings, even if determined adversely, would not have a material adverse effect on our financial position, results of operations or liquidity.

Forty-Vehicle Ferry Projects

As discussed in our 2024 Financial Statements, prior to 2024 we experienced rework, construction and commissioning challenges on our two forty-vehicle ferry projects for our former Shipyard Division as a result of customer design deficiencies, resulting in previous cost increases (including the need to fabricate a new hull for one of the vessels) and liquidated damages. During 2021, we submitted claims to our customer to recover the cost impacts of such design deficiencies. In accordance with contract requirements and North Carolina state law, in July 2024, we submitted our finalized claim to the customer for these cost and schedule impacts. In October 2024, the customer denied our claim, after which we filed a lawsuit in Superior Court for Wake County (docket number 24-CV-035012-910). In December 2024, the customer responded, denying liability and asserted a counterclaim in an unspecified amount, alleging defective workmanship in our construction of the ferries. The warranty claims asserted by the customer during the warranty periods for the vessels were not material and we are not aware of any other material claims regarding alleged defective workmanship for either vessel. In May 2025, a mediation between the parties was held; however, it was not successful. Discovery for the lawsuit is ongoing and trial is currently set for February 2, 2026. At September 30, 2025, no amounts have been included in revenue related to potential recoveries from our claim and we can provide no assurances that we will be successful with our claim or recover any previously incurred costs.

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Insurance

We maintain insurance coverage for various aspects of our business and operations. However, we may be exposed to future losses due to coverage limitations and our use of deductibles and retentions for our exposures related to property and equipment damage, builder’s risk, third-party liability and workers’ compensation and USL&H claims. During the second quarter 2025, we reviewed our insurance coverage options for our property and equipment and determined that the benefits of such coverage continue to be outweighed by coverage limitations and high premiums and deductibles. Accordingly, we continue to be generally uninsured for exposures resulting from any future damage to our property and equipment.

To the extent we have insurance coverage, we do not have an offset right for liabilities in excess of any deductibles and retentions. Accordingly, we have recorded a liability for estimated amounts in excess of our deductibles and retentions, and have recorded a corresponding asset related to estimated insurance recoveries, on our Balance Sheet. Further, to the extent we are uninsured, 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.

Letters of Credit and Surety Bonds

We obtain letters of credit under our LC Facility or surety bonds from financial institutions to provide to our customers in order to secure advance payments or guarantee performance under our contracts, or in lieu of retention being withheld on our contracts. Letters of credit under our LC Facility are subject to cash securitization of the full amount of the outstanding letters of credit. In the event of non-performance under a contract, our cash securitization with respect to the letter of credit supporting such contract would become the property of Whitney Bank. With respect to surety bonds, payments by a Surety pursuant to a bond in the event of non-performance are subject to reimbursement to such Surety by us under a general indemnity agreement relating to such bond. Such indemnification obligations may include the face amount of the surety bond, or portions thereof, as well as other reimbursable items such as interest and certain investigative expenses and legal fees of the Surety. Such indemnification obligations would require us to use our cash, cash equivalents or short-term investments, and we may not have sufficient liquidity to satisfy such indemnification obligations. When a contract is complete, the contingent obligation terminates, and letters of credit or surety bonds are returned. See Note 4 for further discussion of our LC Facility and surety bonds.

Environmental Matters

Our operations are subject to extensive and changing U.S. federal, state and local laws and regulations, as well as the laws of other countries, that establish health and environmental quality standards. These standards relate to air and water pollutants and the management and disposal of hazardous substances and wastes, among others. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or wastes. In connection with the historical operation of our facilities, including those associated with acquired operations, substances which currently are or might be considered hazardous were used or disposed of at some sites that will or may require us to make expenditures for remediation. We believe we are in compliance, in all material respects, with environmental laws and regulations and maintain insurance coverage to mitigate exposure to environmental liabilities. We do not believe any environmental matters will have a material adverse effect on our financial condition, results of operations, cash flows or competitive position.

Leases

We maintain operating leases for our corporate office and certain operating facilities and equipment. See Note 1 for further discussion of our leases.

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6. INCOME (LOSS) PER SHARE AND SHAREHOLDERS’ EQUITY

Income (Loss) Per Share

The following table presents the computation of basic and diluted income per share for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator:
Net income	$	1,559	$	2,317	$	4,812	$	10,446

Denominator:
Weighted average basic shares		16,018		16,489		16,180		16,373
Effect of dilutive share-based awards		130		239		229		409
Weighted average diluted shares		16,148		16,728		16,409		16,782

Basic income per share	$	0.10	$	0.14	$	0.30	$	0.64
Diluted income per share	$	0.10	$	0.14	$	0.29	$	0.62

Shareholders’ Equity

We have a share repurchase program, as amended (“Share Repurchase Program”), authorizing the repurchase of up to $10.0 million of our outstanding common stock expiring December 15, 2026. 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. The Share Repurchase Program does not obligate us to repurchase any shares of our common stock and may be modified, increased, suspended or terminated at the discretion of the Board. During the nine months ended September 30, 2025 and 2024, we repurchased 566,354 and 171,768 shares of our common stock for $3.7 million and $0.9 million, respectively, and at September 30, 2025, we had remaining authorization to purchase $5.0 million under the Share Repurchase Program. In accordance with certain restrictive covenants in the Merger Agreement (as defined in Note 8), we have suspended activity under the Share Repurchase Program and do not intend to make further repurchases during the pendency of the Merger Agreement. See Note 8 for further discussion of the Merger Agreement.

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7. REPORTABLE SEGMENTS

During 2021, we sold our former Shipyard Division operating assets and certain construction contracts and commenced the wind down of our remaining Shipyard Division operations, which consisted of completion of a seventy-vehicle ferry and two forty-vehicle ferry projects (collectively, the “Ferry Projects”). The wind down of our Shipyard Division operations was substantially completed in the fourth quarter 2023 and final completion occurred in the first quarter 2025 with the expiration of the last warranty period for the Ferry Projects. While our Shipyard Division represented a reportable segment for the year ended December 31, 2024, the Shipyard Division is no longer a reportable segment effective January 1, 2025. Accordingly, we currently operate and manage our business through two operating divisions (“Services” and “Fabrication”) and one non-operating division (“Corporate”), which represent our reportable segments. Remaining operating results for our former Shipyard Division for the three and nine months ended September 30, 2025 are included in other (income) expense, net on our Statement of Operations and are reflected within our Corporate Division.

Further, during the second quarter 2025, we acquired the Automation Business, for which the operating results are reflected within our Fabrication Division from the applicable Acquisition Date, and we acquired the Engineering Business and Government Business, for which the operating results are reflected within our Services Division from the applicable Acquisition Date. The Automation Business provides engineering, design, fabrication and integration of industrial automation systems to the oil and gas, renewable energy and traditional power industries. The Engineering Business provides various engineering solutions to the oil and gas and renewable energy industries. The Government Business provides Englobal’s engineering and automation solutions to federal, state and local governments and educational institutions, generally in the form of technical field services. See Note 3 for further discussion of the Englobal Acquisition.

Services Division – Our Services Division provides maintenance, repair, construction, scaffolding, coatings, welding enclosures, cleaning and environmental and other specialty services on offshore platforms and inland structures and at industrial facilities; provides services required to connect production equipment and service modules and equipment on offshore platforms; and provides engineering, design, project management, commissioning and technical field services for the oil and gas and renewable energy industries and federal, state and local governments. Our services activities are managed from our various Facilities.

Fabrication Division – Our Fabrication Division fabricates modules, skids and piping systems for onshore refining, petrochemical, LNG and industrial facilities and offshore facilities; fabricates foundations, secondary steel components and support structures for alternative energy developments and coastal mooring facilities; fabricates, assembles and integrates industrial automation systems for the oil and gas, renewable energy and traditional power industries; fabricates offshore production platforms and associated structures, including jacket foundations, piles and topsides for fixed production and utility platforms, as well as hulls and topsides for floating production and utility platforms for the oil and gas industry; and fabricates other complex steel structures and components for a variety of end markets. Our fabrication activities are performed at our Houma Facility and Houston Facility.

Corporate Division and Allocations – Our Corporate Division includes costs that do not directly relate to our operating divisions. Such costs include, but are not limited to, costs of maintaining our corporate office, executive management salaries and incentives, Board fees, certain insurance costs and costs associated with overall corporate governance and reporting requirements for a publicly traded company. Shared resources and costs that benefit more than one operating division are allocated amongst the operating divisions based on each operating division’s estimated share of the benefit received. Such costs include, but are not limited to, human resources, insurance, information technology, accounting, business development and certain division leadership costs.

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Segment Results – Our chief operating decision maker is our chief executive officer and he generally evaluates the performance of, and allocates resources to, our divisions based upon gross profit or loss and operating income or loss. Segment assets are comprised of all assets attributable to each division. Intersegment revenues are priced at the estimated fair value of work performed. Summarized financial information for our segments as of and for the three and nine months ended September 30, 2025 and 2024, is as follows (in thousands):


	Three Months Ended September 30, 2025
	Services(1)			Fabrication(1)			Shipyard(2)		Corporate			Consolidated
Revenue (eliminations)	$	21,494		$	30,551		$	—	$	(505	)	$	51,540
Cost of revenue		19,668			27,497			—		(505	)		46,660
Gross profit		1,826			3,054			—		—			4,880
General and administrative expense		984			978			—		1,689			3,651
Other (income) expense, net		(1	)		(55	)		—		139			83
Operating income (loss)	$	843		$	2,131		$	—	$	(1,828	)	$	1,146

Other financial information:
Depreciation and amortization expense	$	439		$	765		$	—	$	24		$	1,228
Interest (expense) income, net	$	—		$	—		$	—	$	411		$	411
Capital expenditures	$	10		$	187		$	—	$	—		$	197
Total assets(3)	$	23,398		$	54,705		$	—	$	68,623		$	146,726

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

GULF ISLAND FABRICATION INC 10-Q