WLMS - Earnings call transcript Q3 2021

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Operator

Hello, and welcome to the Williams Industrial Services Group Third Quarter 2021 Financial Results Conference Call and Webcast. [Operator Instructions].

As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Chris Witty, Investor Relations. Please go ahead.

Chris Witty

morning, good and you, everyone. Thank Williams Welcome Conference Quarter to the Call. Third VP are on and President Vassall, the me Tracy COO; CFO. call Damien EVP With Lay, today Pagliara, Randy and and and CEO; call Damien will prepared open After Tracy for provide and questions. remarks, their we'll the

available Our is were slide results website company's quarter yesterday afternoon, the third a at and issued presentation on www.wisgrp.com.

company's Slide to This expectations and I'll or materially may review that statements. cause Harbor All of the statement. call company's such this If events by include risks included from actual statements presentation, indicated represent forward-looking beliefs performance that conference performance you the and facts and our the than are statements now concerning be future historical uncertainties X the of turn statements. statements other different may to forward-looking implied in call involve Safe

expectations company Important expectations results such reasonable, materially no company's are can believes filed give well that the from call this as documents to to disclosed Although SEC. been as in prove with the are our statements with cause conference the such actual it that could will other have that the forward-looking assurance differ reflected in expectations factors correct.

at these on all find can You our www.sec.gov. website documents or

During are measures. also useful today's call, performance. discuss these we financial We in company's believe will some non-GAAP evaluating the

in with ahead, Tracy operations call today Please GAAP. measures unless as our Pagliara. a now results turn or non-GAAP to continuing prepared with GAAP the the additional will about substitute isolation reconciliation accordance we When applicable, release However, in Please information Slide you today's have that I'll this comparable and conversation not slides. should that results go in X. provided accompany noted Tracy. with otherwise. Starting consider over tables of for a be note

Tracy Pagliara

Thanks, good Chris, morning, everyone. and

a for announced the November X, to on management results, our few wanted XXXX. on spend addressing Before we reorganization financial minutes I the rationale

the organization we to as and people we structure Williams American Officer; concluded the the operational review strategic ensure in to Exchange me. earlier Development, we this on we by and President, meet we the Business plan, follows: robust deliver a company President New With for York and overall values leaders. of and operations appointed to Executive new vision and business Based in this first, advance required to execution Vice strategic Vice the a growth goals. review, our Chief new year, our right Operating separate comprehensive have reporting our our a our began Following uplifting and that, Executive to functions development Stock place each mind, and of

to fundamental thus We been forever Second, safety the me our safety of appointed be critical core Safety always improve President reporting has our and to a of our efficacy will program. highest Vice new value priority.

Finally, run organization systems efficiently essential upgraded achievement new a our deployment to most CIO appointed our Therefore, the strategy. successful systems. business to need to will of be our be who for we of us the to our drive

the gets impact accustomed seeing. are to execution, issues vigorously and possible and we were that our with the back produce remainder impacted for below third expectations guidance results, were A causing Regarding their to saying of quarter step disappointed are track which start revise our every positive negatively limit earlier that of operational on to we company's me ensure outcomes let and performance, variety our us we are company pursuing the financial XXXX. by the to overall our

last $X.X overruns to under largely this were expenses, to incentive year. mix, however, While to XXXX. project revenues margins reflects benefit Operating $XX.X gross lower and million, cost versus and of rose quarter, year-over-year came pressure million $X third versus reduced declined X.X% XX.X% the fee quarter XX% down costs. This delayed in compensation due payments. Margins million

our for $XXX.X which Our last level million was from the we by a $X.X in grew potential We There year. EBITDA pipeline. million previously a being is significant $X.X highly this million, down to point. we anticipate characterized a contract, higher it backlog as quarter, at our adjusted record, but probable

our However, a revising still margin this which the our I overall for XXXX, uncertain. for in waiting guidance prepared our outcome delay we Based will made at be end decision detail we are is are the to gross and on of remarks. performance,

X. Slide to performance. QX factors impacted our Several Turning

been quarter contracts, In These our addition incentive by and expected significant $X and we not customer. revenue is fee yet paid being to the disputed reduced profitability. approximately has last an delayed our that disclosed of million delays

Damien experienced detail also mix. cost and less project more items these will favorable contracts in overruns We on momentarily. review fixed-price certain

project more aggressively such are continue The we improve infrastructure. Thus, contracts. customer passed gross markets margin and billion In our place contained by incentives are recent largely should to growth bode robust, challenging, our opportunities be performance. be We limited is and to the forward. $XXX working the have in that financial end results. -- for water beyond. team and line Congress the better, future year top while the material going price taken, the potential our experiencing grid growth from power is bill well to on of calls impact initiatives plus trajectory although infrastructure where early pressure environment our and will for the expenditure This derived approximately company's actions we continues operational and reorganized predictable, warranted, time November, next regarding time, greater upgraded and to chain and on focus of including rigor execution, cost enhanced controls. discipline the leadership XX% supply This delivering accelerate same revenue over At and to

structure. previously mentioned a As announced to management various I moment our ago, we changes

giving in role excellent more of part now is operations. expands Randy responsibilities, him Executive an this, a who President Operating and and right-hand my say been Chief man This Lay, and As Officer. Vice of has CFO, his our

President to lead taken Vice our has with over of has with Damian is our a I'll Damien been prior ability proven a our leader and it role results institute in time to the financial us long to team. financially the Damian? now greater detail. financial Vassall, hand quarterly discuss and CFO. Damien While Controller,

Damien Vassall

you, be looking glad here everyone. today Tracy, I'm to Thank good to to coming our and and the months. getting forward morning, in know investors

quarter, Sales Turning various decommissioning activity We more less the from a $XX.X particularly XX% primarily was in X XXXX. additional nuclear and higher in posted X. year-over-year U.S. Slide combined customers, Revenue X to approximately of to period, and work, revenue the The uptick million work than for with to of increased QX. the our an over Tracy location due increase $X.X new fossil mentioned, rose offsetting than in slightly Vogtle expansion services. reduction services. relates decommissioning million performing million $XX.X during with to as

expect We continue. this trend to

to record forward. of backlog the as negative shows overruns of third less project on revenue and XX.X% the mix, at posted some the price to versus The gross contracts, of of company. million business trends cost margin or and requirements for As Tracy work year. going our continuing just we're X.X% quarter lower Slide $X.X X including Tracy profit revenue We levels, discussed, diversify offset global the remains our impact operating for lower $X.X Vogtle or last fixed reflects mentioned. million

receive multiyear contract. to we incentive addition, to payment an a yet related In have

remain overall margins in thus expect to Going regard. under this guidance pressure forward, and reducing are we

lower quarter using million an $X mitigate pricing including general decrease best to million However, versus for and were issues, anticipate quarter. to these third due we are and our costs cost in the the adjustments efforts bonuses $X.X fourth to controls administrative year, and and the tied other expenses factors. reduce last with improvement Operating primarily

our flat although further remain are overhead. to the we Our versus expected X% Tracy? forward, areas spike was SG&A operating is closing turn going last remarks. I'll margin Tracy call for XXXX guidance year. for his review X% a and the assessing back to of relatively

Tracy Pagliara

Damian. Thanks,

Turning to Slide X.

As earlier, million $XXX the environment. million primarily revenue $XXX are stated our reflect now delayed envision prior guidance of order We current and from I to revising down mentioned. between I our operating guidance to we due

be XX.X% margin is incentive largely and million negatively $XX.X unfavorable to Cost and forecast between impact lower and million. revenue year-end. will reflecting $XX.X us expect decision-making mix, gross to through EBITDA to guidance we project overruns. now our to due overruns addition, cost In SG&A be delayed X% and XX.X%, payments We adjusted anticipate project between and delayed X.X% mix

expect. firm However, in we the foundation the are our The current laying the stand have I while that potential. its days challenges dedicated XXXX stronger team and to Williams set full having belief is work through come returns undertaking for We and shareholders stage ahead. a providing greater the our get will for to reach we're the

even industrial that, and we open more a have management for services reorganized solid more We infrastructure industrial high blue should is energy which operator, who bill our demand line when effective and With the questions. implemented. a team increase the chip have backlog, can for customers

Operator

Our Instructions] O'Neill today is Hills coming question [Operator Research. from Theodore Litchfield from first

now is line live. Your

Theodore O'Neill

Can you quarter. transportation the associated Thanks on you some and in gross one. this it says Florida. water in really if with and of the fixed on that what cost project little very I part you. the costs is more wondering serve more by have uncompleted the us driven you've start-up you And much. talk -- Reading primarily of second expansion give give natural I in questions, decrease a in price that's granularity just profit Thank Q, the markets two the distribution about about? And industrial that's granularity Northeast gas. on was that if was projects could incurred us the overruns

Tracy Pagliara

guys Randy, that. you to or Damien Sure. want take

Randy Lay

at a take me Let this. first crack

issue. issues with Florida of project So the get not terms customer, sharper estimating and and with se. We it's could ground not the the work probably bid believe completed. it, characterize here potentially a have of do The we is per the kind management the customer on have It's it that least. we'll that continuing say some in issue to projects, of project the work the the pencil of a on to the

we're as with work gas to of place infrastructure is repair put this us they terms Northeast in the New primarily a working in are costs. doing modest work. crews start-up natural the that as do to these In customer Eversource area, requires the there gas and distribution, relatively England What

forth, the place but on piece is so So so again, in that a relatively your of and building, expenditure the you and quarter. modest, tooling a need

Theodore O'Neill

Is from, in the they ago? years Eversource couple explosion of Is a residential of that area I guess, fires had work? that

Randy Lay

gas old Yes. infrastructure It's that's Columbia being the upgraded.

Theodore O'Neill

very thanks much. Okay,

Operator

question Julio today Romero next & Sidoti Our Company. is from coming from

now Your is line live.

Julio Romero

now? me hear you Can Yes.

Tracy Pagliara

Yes.

Julio Romero

Hey, questions. Randy. Thanks Damien, Tracy, good taking morning, for the

did And But of conversion the revenue, higher backlog decommissioning hand, start I maybe in you than just Any in to the XX% additional quarter? color given surface. revenue, the there? low expected decommissioning work. see the quarter, the think on the on So did backlog in seems work later start the

Tracy Pagliara

Damien, get you do to want that one?

Damien Vassall

Yes, I'll that. take

continuing providing So did that quarter. sites the work, at have the not it later services. start the to decommissioning perform we We're been in

you to of site, space decommissioning As know, may we've revenue on the the currently quarter. for which doing in Point we're what's work. the driving That's higher part expanded Indian

the going forward. than As the backlog slightly that far expect expected, fully we in as that, in period, we lower it QX will recover but was conversion, our

Julio Romero

I does at your for follow-up, there? look for your flow, Any the looking looks million what like secondly, rise What And Great. a cash just quarter? cash it expectations Okay. flow about guess fourth And had balance in in like are at my receivables. then $X receivables you year-end? the color

Damien Vassall

Yes.

did as receivables. increase collectability were as far it where receivables, the right, those There's as expecting. on as yes, So far from issues you're no we

on you bad we of levels reserves books. the As our by have that debt strong, robust very also customer financially. It's evidenced a maintain low know, we base

related some quarter in receivables on was increase since to end. to primarily the We've collections. So subsequent collected customer delays those

reducing as As levels. to to come we of in our anticipation expect year, far the balances that down debt receivable

Julio Romero

hop I’ll the Thanks much. in back great. very queue. Okay,

Operator

Our is from Dick next Colliers. Instructions] [Operator Ryan question coming from

your Your on live. line perhaps is now mute. Dick, is phone

Dick Ryan

about Can quarter? did overruns of the gross Sorry that. you impact margins that in the talk how much about

Tracy Pagliara

you to take? me do Randy, want

Randy Lay

on quarter Yes, the bottom I'd the about but the that was not on margins, impact. line, a it gross million $X say impact, in

Dick Ryan

the project? do of that what's for that overrun And line mean time into -- stretch QX? does Okay. we some I

Randy Lay

issue. the one there the impact, water concern project -- No. project this that No, we as of is major that's good of we're think, deal you'd expect I some captured Dick, drives that all point. what -- major a -- mean one of at of we've

state other scope they're The smaller completion. and in projects are in of earlier much much

estimate we to So and the obviously, projects captured entire A, of all we've are changes the of on impact; because B, these have where completion. these runway

loss in through at in working this we expect We work But some the mitigation the that reestimate either Nothing mitigate point. we are identify quarter, the quarter. report over customers. to with or projects to working that in -- will as managing the the next this

Dick Ryan

Okay.

that Vogtle the next quarters? X, X the we should how and of couple revenue On look at over

Randy Lay

-- There's of think I looking that. for and guess, expect. anticipated, I we talking there's two ways about fully at some time One that two we've we is would been

forecasting. that levels according into As the reduced. would current near customer that work not we term, that the that as of bit moves had and we've be expect our some little to pick because activity least from we schedule in those to schedule, But which into a at -- published, to we our service, put has still up would or we projects volume historic budgeting that completion is would come previously, we seen expect expect the later than a

sort this two looking at sort we're ways. So of in of different

Dick Ryan

Okay. you your customer that's delayed provide size little detail can that And maybe provide delay detail and the for of Or on order? their more the a end something the reasons can the the opportunity? on you Is end? Tracy, on on

Tracy Pagliara

processes, the more probable millions that through on and $XXX million trying work It order. was a highly their competitively would -- we $XXX bid and they're it's customer said between pipeline. and say I had it's had of we to

would it those I of that So think in terms range. -- of

Dick Ryan

contract to range? So $XXX this million individual $XXX is the this -- in million

Tracy Pagliara

If awarded, yes.

that's it been, As have originally where yes. contemplated, would

Dick Ryan

labor forward last your portion the on you growth issues. that? or Okay. one with getting labor strategy move Thank you. to impact me, need any One for Are

Tracy Pagliara

just although haven't far, as had the we to be smart in look best we as We can need something the business it's certainly going significant impact to we're that grow. so any for. resources and we scale about finding future, we planning out the And

Dick Ryan

you. Thank great. Okay,

Operator

is question Romero from Sidoti & next from Our follow-up Julio a Company.

live. now Your is line

Julio Romero

out to does that from remarks I know your billion prepared Act? of how businesses? business the water $XXX recently you and power will in your you How Can passed energy and infrastructure benefit called speak Jobs and grid. the investment towards funds benefit delivery the wastewater

Tracy Pagliara

or the the it yet. know five Well, don't going should. be to years more. are out over It's appropriations spread specifics We --

we doing that's bill needs now So know a expenditures, and of work the first has the the is expect is right We're step President, relevant the grid, to on energy we'll strengthen would been prepare enacted, grid, report which doing to of Head are have -- planned on when the by the But where. -- after their and on signed now work to we water. power grid. the departments

we we given be to position Florida Jersey those York, Connecticut, So Washington other with or that funds they're expect when in Georgia, would New our Texas, benefit New footprint offices would a certainly and facilities appropriated. from in geographic

Julio Romero

much. very Thanks Understood.

Operator

next Your today question John from is from Pinnacle. coming Deysher

Your line is live. now

John Deysher

for Thanks everyone. morning Good taking questions. my

department that? as did you estimating the ground overrun the of in First are consequence any on a the to situation, cost make on changes who or people all, of

Randy Lay

take me let that. Yes,

the And essentially there reviewing organization we local local folks a the was have aligned are the some we've -- little that project there and estimating accountability the to -- with functions. hybrid -- are There functions control that line the content. we with the are direct is now under way of the was up control some autonomy. bit a model organization we heading circumstances, the and structured We to made

need and for there's of say, the would a other be bids, I that upfront commercial anything of projects. in reason the change. project. the We're well don't that in example, spread a So and that risk make aspects bidding bidding management we've at decided -- of controlled, makes where the to are, to to make as we on would sure Again, want this sense you'd the look competitive from particular the it be that some to we well, in position things standpoint management of to terms the of to win order evaluating on expect. than that go lot a evaluating We're the you

organize So we're to in isolated but in particular is I an are some how appropriate more what will think, this, the we this place area. deal terms we putting likely some issue of with There yes, making changes changes. in be the

John Deysher

customer & And Florida for was Okay. Light contract? that Power

Randy Lay

not Florida. to se, one No. per we're in customer it customers of the disclose going was And down but our

John Deysher

on delayed not $XXX Okay. And cancellation? you the I a assure customer indicated you are order, that so, think possible it's million and or a delay

Tracy Pagliara

We point. not uncertain. is we're the -- at No, this outcome

a just possibility a it's not delay, the -- we're we there's contract. won't So not get

John Deysher

else? or someone I'm get terms I won't a Okay. the what... words, in it trying other perhaps to contract get of it you mean because sense delayed In won't lose might be to you

Tracy Pagliara

would duration someone the the else not -- -- and more or chooses original it's customer that to likely at It length was beginning. it's be magnitude in and contemplated the led awarded not to the

could be it So factors. a combination of

John Deysher

Vogtle And Okay. in X Has of wrapping all? 'XX. in has line up that X, X March finally, Vogtle 'XX changed December my helpful. Vogtle and That's time in X Vogtle at

Tracy Pagliara

Yes.

'XX now have let are me it's Randy, information any different November see 'XX. of Damian think recently. just it if changed I But than you that. and March They

Randy Lay

that's Yes, right, Tracy. I think

Damien Vassall

right. That's

John Deysher

March So for November and 'XX for X. X 'XX

Tracy Pagliara

Right.

John Deysher

a Thanks good. Very Okay. lot.

Operator

of end management to you. or closing the like for back any session. reached turn floor question-and-answer further We’ve Thank comments. over our the to I'd

Tracy Pagliara

time as we future Thank disappointed you that are is positive remain we Again, but to you. you, for recent Thank Williams' and and and again look interest about that, working future, to everybody, participating optimistic in the ensure are we quarter. hard your past. We our next today. by appreciate forward talking Williams to quarter,

Operator

you. today's does conclude That webcast. Thank and teleconference

for have a and wonderful participation line may You your thank time, day. you disconnect today. this your at We

NOS4-1 (WLMSQ) 18 Nov 212021 Q3 Earnings call transcript