Morgan City, La., headquartered shipbuilder Conrad Industries, Inc. (OTC Pink: CNRD) reported net income of $414,000 for the quarter ended March 31, 2020, compared to a net loss of $307,000 during the first quarter of 2019.
Conrad’s backlog was $36.6 million at March 31, 2020 compared to $79.2 million at December 31, 2019 and $122.7 million at March 31, 2019.
In an OTC Markets filing, Conrad attributes its improved net income compared with the first quarter of 2019 as coming primarily as a result of an increase in hours and jobs in its repair segment and improved performance on jobs in vessel construction in the first quarter of 2020.
“Our results for the first quarter of 2020 and for the year 2019 reflect a continued challenging operating environment, which, later in the first quarter of 2020, was further challenged by the coronavirus (COVID-19) pandemic.” says the filing. “In new construction, we continue to experience a soft market for energy transportation projects and projects related to the offshore oil and gas industry, and low demand for large barge project orders; however, prior to the effects of the COVID-19 pandemic later in the first quarter of 2020, increased demand in the petrochemical, construction, and government markets helped offset the adverse impact. The repair market continues to be adversely effected by low crude oil prices and depressed Gulf of Mexico activity, however, prior to the effects of the COVID-19 pandemic later in the first quarter of 2020, increased demand in the construction and government markets helped offset the adverse impact. We continue to experience pricing pressure in both segments, which has intensified due to the pandemic. Some new construction customers continue to request favorable contract terms with smaller up-front and progress payments during construction. These factors negatively impacted our results for 2019 and the first quarter of 2020, continue to negatively impact our results during the second quarter of 2020, and may continue to negatively impact our financial performance throughout 2020.”
The filing says that after experiencing a peak in steel prices in the third quarter of 2018, steel prices trended downwards throughout 2019. In 2020, prices have trended downwards, but uncertainty exists regarding future steel availability and prices due to the COVID-19 pandemic.
“Uncertainties regarding the pandemic, including its potential length and severity, and the pace of recovery, have caused some customers to delay projects and inquire about modifying or terminating contracts, and have caused us to reduce our workforce hours and consider additional reductions in the workforce hours, personnel and compensation,” says the filing. “Our executive officers and board of directors have agreed to salary and fee reductions.”