Gulf Island Fabrication, Inc, a leading steel fabricator and service provider to the industrial and energy sectors, announces the acquisition of the services and industrial staffing businesses (collectively, “DSS”) of Dynamic Industries, Inc.
Management Commentary
“The acquisition of DSS is another important step in our strategic transformation as it will help us move closer to our goal of generating stable, profitable growth,” said Richard Heo, Gulf Island’s President and Chief Executive Officer. “Two of the key initiatives in the current phase of our strategic plan include growing and diversifying our services business, and expanding our skilled labor force, and this acquisition will help accelerate our progress on these important objectives. The transaction further strengthens our services business by adding long-standing customer relationships to our existing customer base, as well as providing new services offerings and creating attractive revenue synergies.”
“We are excited to welcome the talented and loyal employees of DSS to the Gulf Island team,” continued Heo. “One of the biggest challenges facing our industry is the availability of skilled craft labor, and this acquisition will nearly double the size of our workforce and extend our geographic reach for personnel. Our expanded customer base will provide more consistent opportunities for our employees, which is an important factor in attracting, motivating and retaining skilled labor. The increased scale of resources will also enable us to better serve our customers and more effectively flex our workforce as higher-return opportunities arise. The acquisition will also enhance our craft leadership team and project management capabilities and allow us to adopt the best practices of both organizations.”
“The addition of DSS will add necessary scale and help us further leverage our existing services business, while the complementary services of the two organizations will drive incremental growth over time,” stated Westley Stockton, Gulf Island’s Chief Financial Officer. “An expanded services business also provides a more predictable revenue stream and the reimbursable nature of the services work further improves our overall risk profile.”
“I am excited by the progress we have made on our strategic priorities over the last two years, and this transaction is another important step in our transformation. I continue to be encouraged by the trends in our end markets, and the addition of DSS’s skilled workforce, customer base, expanded offerings and extended geographic reach put us in an even stronger position to take advantage of these improving market trends,” concluded Heo.
Transaction Overview
On December 1, 2021, Gulf Island acquired the business assets and operations of DSS (including offering employment to its employees) from Dynamic Industries, Inc., for a cash purchase price of $8 million, representing a multiple of approximately three (3) times recent operating income of the business. Working capital of the business is excluded from the acquisition, and accordingly, the Company expects to experience an increase in working capital after the acquisition of approximately $5 million to $8 million (depending on revenue volume) over the next three to six months.
