WLMS - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to Williams Industrial Services Group First Quarter 2022 Financial Results Conference call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Chris Witty, Investor Relations. ahead. go Please

Chris Witty

Vice good Damien quarter and today Welcome the open CFO. for Lay to Tracy Vassall, call and Thank President the their Vice call. morning, prepared With first and Executive Randy CEO; conference President Tracy call and me Williams’ COO, Pagliara, Damien and you After and everyone. President provide on questions. are we'll the remarks,

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

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

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

As well with filed as with the the SEC. other documents

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

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

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

Tracy Pagliara

while posted $XX.X quarter Thanks, Chris. our revenue call everyone. Williams joining which Thank due up was to from down And for sequentially XX% seasonal today. first QX morning, patterns. good year-over-year of you normal

quarter slower the reduced of first a new challenges our said quarter to to and gross costs in our included speak typically $X.X previously Florida to business levels Damien start serve we water, which with little the for litigation associated about margin our Water minute. related continued end locations bit energy business reflects million reflecting to Operating X.X% As from startup expense. will year. We margin posted delivery further declined expenses a $XXX,XXX a gross of activity market.

of relating million taken costs $XX the was are EBITDA a backlog contract period the As previously former against discussed, these all being employee with includes We quarter. of of for $XXX,XXX action tied business. and wrongful legal fees which loss adjusted and to factors million wins. these Williams’ competitor to Reflecting $XXX finished the new

a discuss expect reiterating I'll addition, reward we our the guidance in come. As activity fiscal in greater in And moment, months XXXX. for to

of turning Now X, outlook. the to and current discuss like slide the state I'd business to

provides of all The funding need landscape market results, reporting billion XXXX. short going with dire critical increasing which supplemental over in many strong enhance to to making We're multiyear backlog resolution, to years $X.X quarters have moving in margin and quarterly new demand Jobs few place, stymied are passed positively of results to investments diversifying operating time, of infrastructure of billion and implementation results to will for add of now, necessary slowed end, the Act that hand under administration into includes Infrastructure ending outlined the more more $XX XXXX facilities finally and Investment Investment impacted have spending and We I forward win funding power and things business financial come. than facility. the been will Damien? to XXXX purgatory and the to business a the the period Thus life but improving in Thus, the designed programs higher trends, existing areas $X extend given of grid Infrastructure discuss upgrade. contracts the of and greater in near focusing our activity. addressing under months bid our it's I to of March, fiscal relatively for the Act. same and having Jobs nuclear changed QX of this water decision infrastructure, potential as supplemental Act alter development continuing omnibus since at While and people to bill the areas in Congress time solid trillion a build the Damien lead now At the comments remainder can serve, it on and our dedicated activities we're we profit view quarter. gross overall sustained, detail. which to

Damien Vassall

everyone. morning, good And Tracy. you, Thank

financials detail. the in review greater Let's

$XX.X water Revenue QX. from business than Vogtle decommissioning than of more we of for Tracy our slide $XX.X and XXXX. and and end mentioned markets, revenue Plant XX% across slightly during increase due year-over-year work million work. As higher X, to X period nuclear to approximately quarter, a levels Turning more rose an in offsetting Canadian the million posted over X lower of the Sales was

or the versus company, Slide our bid $X.X trends $X.X for the X during or with fixed Florida revenue on last costs year. more been the the ongoing XX% distribution projects, revenue posted As and about basis. startup million, costs gross to although markets along gross government into have budget price operating activity expansion optimistic levels. substantially Margins of for demand, previously the grow a for quarter. as were transmission of margins we growth first of not projects we first the due high the X.X% rapid Florida, of are report priorities of for quarter, impact and profit discussed, last due backlog year, excluding margin million, experienced the would reflects Tracy shows pent-up we energy announced also mentioned, margin to the in which with the our startup did remainder quarter lower zero year, lower Tracy the associated several XX.X% and The now overruns and cost

We but pressure, year, remain first million for year including of lower under as Operating $X.X improve cost. reflecting $X.X margins were the the litigation as quarter, to last $XXX,XXX progresses. expenses expect versus million SG&A expense,

our While making bringing down progress expenses.

line the back We guidance I'll and the streamline continue Tracy? going to forward. bottom turn our Tracy overhead further XXXX assess call for to and closing review our ways of his remarks. to improve now results

Tracy Pagliara

forth XXXX Damien. the X that provided we sets guidance first January. Thanks, Slide in

change there of previously revenue discussed. changing this million between X.XX% mix both Without ERP and expected would and margins guidance, SG&A we million We be investments no to the systems, and and to and to HR. of project reflecting between SG&A of gross revenue, and critical earlier, some to XX.X% be As IT XX%, I X.XX% mentioned impact our be envision anticipate including those between $XXX investments between has expected upgrading $XXX been X.XX% in X.XX%. post

forecast legal As the Reflecting mentioned aforementioned earlier, the and $XXX,XXX $XX.X and QX adjusted time million. our included million all items, operating of between $XX remains EBITDA fees expenses cost. related in one

it’s and particularly in to sequential of expected be as our of the to second XXXX. confident in year steadily show are weakest the half report we results, first quarter XXXX ability The typical period this we is improving

decline, impact to some and anticipated are margins previously discussed. problems legacy from both as reflecting improving declining [Indiscernible] Our

today that turn Our The should future environment is business bid benefit also to from key Jobs backlog Infrastructure the from have continue recently an the demand and changed around overall investing guidance rest and in of both by takeaway and revenue the for XXXX. not the Act. the XXXX active strengthened and strong we to QX, Investment in

performance the well company's for as supported remainder of improved setting factors. right and by operating confident the are XXXX for as this the We that following beyond, direction in year

carbon nuclear the element an electricity acceptance First, a of increasing footprint. free essential is of

needs the served energy by Williams states and the in expanding due infrastructure population growth, strengthen the imperative to Second, to grid. key

our billion in clean those anticipated finally, Third, new and Jobs water, budgets address under needs. of applicable than Act. to supplemental investments capital customers and Investment with municipality and energy Infrastructure utility power of $XX And substantial the the more project

support, can passion we As always, that for questions. patience With move forward. shareholder appreciate line Williams our we the operator, long-term we open and as

Operator

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

Theodore O'Neill

much. Thank you very

questions two you. for So

you're the profit. into this entry and there second you're QX the Q, booking profit until the and you what you So And the where revenue is? in a margin? energy to that ‘XX? market impact on see Florida have doing won't what transmission quarter opportunity around about Water you going the fourth gross Is Can distribution project no revolves with talk profit significant market. question say And the

Tracy Pagliara

market part to put Eversource on is new new the which several that, it's in gas quite question. the take I distribution the into transmission the first is the I'll residences, with the question, is substantial, Damien distribution in given comment and in the Eversource in the for we're And asked think to lines amount lines Connecticut opportunity of we probably end capital terms Electric, that power working to we're second TECO, infrastructure, putting the committed billion the part Tampa that natural opportunity areas. is serves spend well. working Tampa, utility next residents of And in to $X and on money for And which lines distribution over as of over has years. we're Tampa surrounding with in of

in let Jobs elaborate me capital the additional losses hangover with the that. Act. of Investment for With situation, So utilities areas on year budgets that's that the let fact last on is based and the opportunities from due But Florida respect to those the to to Florida. money substantial Damien those the a going that reported be further allocated we both are Infrastructure and

Damien Vassall

Yes, Thanks, sure. Tracy.

the fixed water early run projects we these project, year. QX those price Florida to of the through this projects in expect So markets,

measures remain run potential gross taking reflects gains be we're productivity a those as as zero will margin. able well guidance orders. But reverse through profit. at will through QX it gross Our to that projects change at Obviously, year X% this to

Theodore O'Neill

I wasn't going be a I the to profit. way Q, read the there was Okay. clear

profit booking the be fourth revenue in You'll and quarter. no

Operator

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

Julio Romero

more the Hey, on remaining be the revenue of just booked staying how how to for of much quantify that expected the can much topic from you came Florida is project, revenue months the good the quarter? year? nine morning, in And first maybe

Tracy Pagliara

QX, expect approximately out in approximately there Yes, generate revenue to those $X those for forward was In $XX the in year, $X projects there's revenue. going remainder of of coming million projects. $XX the in million million. And to million QX, we

Julio Romero

it, Got that's very helpful.

So maybe about function sequential steady a greater you growth activity how to as Can talk you kind a step the year? in the more kind we progress or coming award expect of the flow Do expect throughout back orders expect you months? you of half? in of

Tracy Pagliara

step of function have a of we've in the more the the monies. of because None We're and Act Investment back Infrastructure they're and coming, We hit books expecting yet. Jobs research. half the those done know really

in So it's think second going to pick up the half. I

Damien Vassall

Okay, I slowest our we add that would first typically also there. uptake historically, quarter per from And quarter. is to typically volume

Julio Romero

any ERP if you updates implementations progress still on the on us timeline understood. Yes, give place? the ERP investments? the HR And same Can and at

Tracy Pagliara

ERP within Yes, so a rollout had We live using went we're we good. very last the system when very the now. good the month and

Damien Vassall

I think HR.

Tracy Pagliara

the first doable. excuse but having ERP based project is I in date the that's with to the on confident we're apologize The And for HR, we're quarter. go still that. me, HR, to live scheduled progress

Julio Romero

Okay, quarter that XXXX. be and would first of

Tracy Pagliara

correct. ’XX,

Julio Romero

question. guess Can to moment? you I if it's at maybe effects current are of any more And working supply broader What inflation, the a perfect. you chain? through Okay, speak

Tracy Pagliara

Damien, to want at? you take shots

Damien Vassall

Sure.

all projects, inflationary those as we ago and projects so on as contracts of Currently, impacted majority to being entered costs. our some impact there, by with a before the of us on we're an pressures the into cost less to look at our the basis, So particularly those customers, price business, see inflation. time our costs managing which because start some fixed clock allows that to on pass are our on we primarily it's are we're we increase plus there inflation

on to and to escalation relates increasing we're remain activities, are this bid it just inflationary environment. the our we in, high in environment ourselves as future based As that we cover contingency

Operator

Next question from [Indiscernible] Capital. is coming

Unidentified Analyst

Based current low margin the margin, normalized Damien. couple and Tracy on I questions, little I your Florida. of a morning, good was of the upgrading because estimate prior of some suppose my gross side gross on is Hi,

the any XX%. is revenue normalized current for Is So assuming Florida or about around that events? XX% is that say the XX.X% say? margin we one any of excluding to off Should sort Florida gross fair business or

Tracy Pagliara

in Florida the normalized the gross costs. excluding while approximately is -- profit quarter and excluded The it's Yes, startup XX.X%.

Unidentified Analyst

sort margin. Oh, Florida XX.X% revenue. not to zero a the gross including so of XX% okay, is normalized It's

Tracy Pagliara

out, carved Correct. If that's yes.

Unidentified Analyst

margins used has if back your going is because would or be some it level, think you to to forward used around gross to the be point? Yes, mostly at and it to mix like number project this it around so But decreased XX%. it of go X%

Tracy Pagliara

so with correct. as we'd XXXX to transmission we've Yes, distribution business, the XX% XX% on business the the seen. you're associated generated the hangover gross Historically, and normal reasons. gross year to as is for that margins go back past has Once Florida projects. our costs abnormal The get into well startup several to entry XXXX, the our we profile expect margins.

Unidentified Analyst

good. that's Okay,

[Indiscernible] off number, assuming think chance you So to these at around one X:XX:XX.X there is a year. it may least next go cost,

Tracy Pagliara

range. XX% to XX% be to it expect would we Yes,

Unidentified Analyst

question you is basis is, earlier again, So let's be? margins, say that's right versus it is about say, next as Great. have the again, X%. settled X.X% X.XX% at will what well, to back X% for or what go say whether and they to levels, lower I'm And But for let's points adjusted you than year side, to margins on which have the same normalize historical XX your higher about now. SG&A, higher these they used it is

like X.X%? Now, year? next Is X.X% stayed you from Let's normalized or now at go it X% say it's to we'll like like area, think do this. it

Damien Vassall

for X.X% yes, No, high is us.

through of increase. As period, we're which that is SG&A some going costs to causing the transition

did expenses. have non-recurring legal $XXX,XXX As in we mentioned we earlier, about

get would to we expect to behind going X% these us, some So forward. below be one-time costs of

Operator

Deysher next John question Pinnacle. from Our coming in from is

John Deysher

in morning, couple planning so And questions. With of you Good to pursuit regards if everyone. quick A new offices that? initiatives. where? opening business of Are the any on

Tracy Pagliara

in Yes, We we're new and the and to at water our energy Coast initiatives. support think and we'll offices of looking Southeast need Northeast. delivery open Gulf

of key upgrade the obviously the we're looking grid. expect in that energy have This, northeast, growth we Georgia, at the Florida population we some to geographies. Tennessee and and is because So areas are imperative one, Texas population delivery, power growth

John Deysher

Do you anticipate end? opening any year offices before

Tracy Pagliara

that but and likely Infrastructure where The about new. monies think a more we're is evaluating Act be initiative, I the that. Jobs information XXXX Investment actively span would relatively

made going is progress are half, money, have follow if will. think we'll that we the second clarity to out where even So trying more in though I the you on But we've to probably money going. some figure that

half. there'll I be more clarity the second think in

would that itself to probably event. XXXX So land

John Deysher

up curious And current Okay, tied from think, that loans, regard rates sensitivity just six analysis should With and makes revolver continue LIBOR And cash sense. to and term interest at any climb? you've each basis three LIBOR. to your I rates, I to LIBOR think the both month month rates looking points, LIBOR a XX what month I'm might done costs to are if ago. roughly do as they're

Damien Vassall

standpoint, an some we're costs more that an something interest that's also from that to have capital Yes, of expense looking business to our mitigate our tightly is it manage And increased way all working the hedge those to will impact evaluating. potential. obviously we're

John Deysher

quite capital more your interest I reduce that you rate the do prepay costs? ability does How follow both of to manage Unless don't those? tightly. working have that

Damien Vassall

No, more I credit facility. referring was our so to revolving

avoid to So in the improve bring rather a to into and business sooner we our ABL. cash using order balance, that, DSOs carrying in to than look using the

John Deysher

term sense. loan that side anything to Can Okay, you on that? makes do a hedge

Damien Vassall

in we the prepayment. associated there that some provisions are with There would, penalties are agreement

John Deysher

you or Okay, would would consider consider you prepayment. prepayment so not

Damien Vassall

prepay. to not ought We

John Deysher

fact, the term up you're pretty goes if so on in LIBOR loan Okay, substantially? exposed

Damien Vassall

correct. that's Yes,

that. evaluating are We

cash year. second which We capital. to working half the help us our of generate allow into will manage will expect us going the the Again, growth in the more business

Operator

there no in At this questions point, be the to further appears queue.

floor the turn I'll to So any back for remarks. closing over Mr. Pagliara

Tracy Pagliara

Have day. and you, for today. care look time to and interest Williams everyone, participating Thank safe again and a quarter. your you well. We talking and good forward in to be next appreciate Take

Operator

and line. have thank your day. Thank you. And participation webcast. That disconnect today’s a you We wonderful you does your for include teleconference And may today.

NOS4-1 (WLMSQ) 13 May 222022 Q1 Earnings call transcript