HIL - Earnings call transcript Q3 2018 | Hill International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to Hill International’s Third Quarter Earnings for Fiscal Year 2018 Investor Call. On this call, John Grau of InvestorCom will provide some introductory remarks on the content of the call. John will be followed by Hill International’s CEO, Raouf Ghali; and Interim Vice President and Interim Chief Financial Officer, Greg Wolf. Mr. Ghali will discuss the status of the company and expectations for Hill’s immediate and long-term future. Mr. Hill’s earnings with XXXX. deal will third for quarter Wolf for by answers we This call. followed opportunity will questions the then will be and an and shareholders, from end our

begin. is recorded. call this reminder, a John, As please being

John Grau

of by belief following: statements me Thank you. Ghali, obligation assumptions To meaning to safe forward-looking historical subject intend made With it on the to of These plans statements. forward-looking this no future of or considered statements We our be statement. that, and the let this risks are that are undertake call and within Hill to Litigation and International’s our is any certain Reform are set XXXX, thereby. uncertainties. note the call Act our intent statements created do call, and on any statements concerning Except statements based and please not update information strategies expectations everyone forward-looking protected Raouf forth the statements such the Private and forward-looking including intent over herein, are harbor Securities on and turn CEO. for any and matters current

Raouf Ghali

to this the everyone and for joining call us Thank John, you, morning. thanks on

a beyond. the – third much ready and opportunities year. Before an a Hill is into much want International and I’m realize we exciting growth is quarter is confident a today company improved new of begin transition before XXXX the and to improved discussion XXXX to and our profitability. entering I our performance, express that in phase us position of

adjusted profit improve as and Although improvement third a year-to-date result revenue EBITDA was XXXX, quarter the our our period-over-period, in plan. of compared to continues lower to

continents. firm to excited from years the than our In of with leader expanding niche XX in capture to my profitability. more XXX very the X focus with throughout operating the force a are world, X,XXX seen company Hill, real about grow and an We and and industry I’m employees, more growth sales employee our across opportunities process I’ve

is of value-added Our to we our profitability This and quality attributed by changed. the to consistently is clients. deliver not success, now, formula the service then has Hill’s directly personnel. driven

winning growth we client success. attracting forward, around ready will the months, profitability drive are challenges best the past After by on the formula our XX and talent for we business, the envision projects delivering reemploying our new world. of and having addressed to focus the Going from

position. We will do financial this solid a from

has current company-wide expect with to eliminated with all our Hill cost-control SEC filings, plan do we We We’ve accountability. the continues the These its our that steps formal organization, of were are to organization. and but current policies to SEC incurred a financial And backlog and we see short execution development and assignments we clients, last with improvements in and markets win XX partner long second Hill both approximately third the continue to trusted million and of position our the our to $XXX million In and Despite over in remains months, execute XXXX. major in challenges costs filings. rightsized measures of bringing our where the by increased have improvement culture the our corporate health term. and obstacles quarter, installed ensure presented all $X operate. to its profit quarter

opportunities these where viable has traditionally multiyear large on exciting, to Hill continue and opportunities. complex involve of the bid megaprojects, type profitable We Many of excelled.

revenue majority our CFR, Fee financial is reminder, our up or statements. makes our total a on of which Consulting backlog As Revenue, the

offices services facility are generating growth. support, are our and I returns into greater planning forward announcements calls. Hill Hill’s expect and to of further on am, course, and Hill risk preconstruction providing so quality programs impacting growth also excitement employees look an to are for visited to on in equally We in and and our management. without of advisory of projects deliver opportunities post-construction services will of progress and growth and do Hill. several with I these ready our our our numerous of the and our have clients’ services integrate profitable profile. atmosphere many drive spoken to shareholders. have of moves our These and existing prospects, about renew our these emphasis at our all are enthusiastic All updates promote services the expand and identified we where services future realize regions, Delivering clients

mention share and some our XXXX of expectations today, wins. for most would to company’s project For the revenues recent like I

last we be XXXX. to For – of $XXX the consistent range million revenue XXXX, update continue our million, of with XXXX to in expect October $XXX to total

the Our our million run contracts. will of will million quarterly has the we off, of Mon/Fayette and revenue from Hill Hill significant quarters Hill to rate new growth. $XXX Expressway providing management support where System, the Latin Among excitement, construction support. leveled related total In recently approximately believe be see Pennsylvania future contract was to awarded X and current awarded expansion Turnpike a America, $XXX begin that projects. Commission was

in precursors services Bioenergia X will company construction for be and a combined value Millenium management project conventions center associated The to our XXXX Pampulha for $XXX X management the of also program. of quarter they Plaza Hill future deliver with located providing I the for hotel the buildings. million. an hotel Hill These plants of management Madinaty total the to will Park S.A. San Group’s construction program infrastructure management project in growing Four Seasons Seasons will Egypt, Seasons, of renovation million, Greg the will the and in commercial further Moustafa X Hill’s in ethanol call The Brazil Minas X for hospitality Talaat have includes awarded portfolio Brazil. confident markets is company Nile Wolf. profitable Four services construction the Hill. also X Hotel. project and services provide Hill’s other plants construction where the Gerais, opportunities we First, pass contracts Nile This are Kempinski of complex represent $XXX $XX and was the The for Expo and provide results, Hotel project clients, million hotels: Four third To established Stefano the are wins of growth and detail

Greg Wolf

Thank you, XXXX. Raouf. I will start quarter of our by providing for third the financials

a bad a these a Our quarter incurred the was indirect for year’s the XXXX. the from third compared XXXX of or million translation net in to share to plus euro is third mostly per of compared in offsetting loss quarter related of increase revenue recovery, taxes, prior $X.XX loss an and our or SG&A third interest, per of $X.X and in or $X.X This loss our and debt to benefits XXXX. was total and plan the Adjusted million. Turkish million, EBITDA component lira, year’s a to million $X.X third expense quarter. A decrease quarter. continued share $XX.X this XXXX revenue, operations the XXXX was such $XXX.X during $X.X quarter in or foreign decrease million. million was $X.X Hill of of expense was third the continued included under quarter incurred an was increases profit third and Net loss for operating EBITDA measure XX.X% comprised $XX.X and is to plan and $X.X Founder quarter third $X.X general onetime X to net costs, Partially in of XX% detailed to operations ended in of reduction unfavorable I’ll compared loss profit gross EBITDA, bad quarter $X.XX of respectively, XXXX, million prior the as EBITDA as the respectively. losses XXXX Brazilian Adjusted on cost XXXX million the The million quarter diluted total the administrative, improvement quarter the quarter adjusted not cost, which million third to compared the unapplied translation the the the measure – for increase release. diluted of the and move million in fluctuations, is which revenues, an third of the from total increase labor operating Operating not improvement adjusted and additional performance XXXX EBITDA of million the of million $X.X of Former was for million selling, $X.X months debt $X.X of of CFR, as total and GAAP. of related prior projects and our of due a cost adjusted quarter, million, from adjusted XX% from of during various in profit year’s now The revenues foreign over earnings on a XXXX was performance losses in increased expenses real, before depreciation CEO in quarter East also of of savings in result a third were $X.X included of loss a Middle a wind of and bond, the amortization, SG&A, it activities, XXXX the of third result United press is as loss September XXXX with the third the part year-to-date loss third of is operating results. for nonrecurring increase and currency by the impacted $X.X reconciliation States. Libya other in that third was the down million. and of in or of to XX, $XX.X due quarter

September component which the operating prior September operations XX.X% million year-to-date XXXX. $X.XX CFR, or from $XX.X makes to $X.X decrease operations $XXX.X was gross year. of XX% nine diluted decrease profit months nine loss $XX.X the and included United the a is revenues, an respectively, projects Middle million, September million, from the Net loss XX, $XXX.X nine Our total a XXXX, result diluted $XX.X loss in a in for compared profit nine nine XX, XX, profit continued the ended XXXX, as for revenues which of compared was East in impacted and a months XXXX, again, September revenue, nine operating prior $X.X September ended $X.X of months year-to-date September of was total a the ended million bond a compared months million. XX, of million was million by XX% client per a XXXX from reflects of down as XXXX, due XX, mostly $XX.X Operating in to submitted share for over by million wind related respectively. or SG&A September various claim million XXXX, prior $XXX loss improved the $X.XX ended to also XXXX, loss to total year Operating net continued expenses and the performance slightly and revenue the $X.X was the of XX, by a on ended million ended the per Kuwait. total for reduction the and and was up the in months of as September year-end XX, The year. in to share States. million XXXX, – XX, months

XXXX, unapplied additional our XX, of lower translation increases and September September were the the adjusted a foreign net the year-to-date XX, $XX.X in statement a period profit $XX.X for cost decreases, SG&A to September the foreign resources recovery mostly to XXXX, again, $X.X a client improvement that net million company’s XXXX, $X.X year-to-date in a compared detailed an year-to-date filings to press XX, related same XXXX, as reconciliation to against occurred of However, million the included $X.X in Adjusted XXXX. a XXXX. of real. nine result XX, to improved from other adjusted EBITDA compared losses And is SG&A million plan as properly million Libyan lira increase as to SEC. Turkish with included in increase These a $XX.X million euro, unfavorable to labor September indirect months and currencies, bad of various accelerate release. debt result Brazilian offset EBITDA Again, ended benefit the EBITDA for including which XX, financial cost needed fluctuations related incurred September a pertains and a the million of

XX, mentioned, backlog, at at quarter-over-quarter XX, $XXX.X June as to to September which million compared improved Our as Raouf million XXXX. CFR million $X.X $XXX.X by XXXX, reflects

of that accumulated time year-to-date that Our significantly these and have the currency losses. receivables, period to long impacted I the foreign between intercompany be notes note result subsidiaries by a settled. losses loans payables to over a were quarterly financials and and of company and various translation of have majority Hill want made within are yet

evaluate entities legal for impacts I’ll not have focus losses over of financial balances impact year to reduce these Our the a are between the This our will in exposure least to that owed these to or will highlights the and our prevent to the concludes losses. quarter-to-date position our financial results. way tax and these these our that is nonoperating of entity. by turn individual Raouf. it back year-to-date end Again,

Raouf Ghali

I million Thank and With of to future the compared of that to reiterate to million or that improvement you, like accelerated we all to year-to-date, down $XX.X Hill. us, $XX a call. would excited plan $XX.X getting to to XXXX and we year and transition, third quarter quarter improved our changes. cost sheet XXXX bond and long-term over costs million current, I to point, we on $X.X compared leadership and quarter totaling cash share as organizational the not from like XXXX are These and been has and behind this would improved revenues our XXXX to year-to-date why reoccurring Also, in with other this profit highlight get to about management are in is million. compared just million those year-to-date future our filings third profit questions will XXXX would $X.X Hill, Greg. are near- the onetime XXXX, very restatements, XXXX, the has absorbed cost, of although to the flow be SEC strengthen world. XXXX. a balance the EBITDA plan a in performance adjusted we At costs brand throughout while prior and executive take current improvement excited like for XXXX few cost This beyond. market in the growing about our

Operator

MAZ Instructions] comes Partners. with from first And question our [Operator Pete Enderlin

open. now is line Your

Pete Enderlin

long-term Good solution recognition in local a that Major questions. doing of for this There and guys that to question. you a traffic morning. tremendous the transit, broad those more you is a and Thank is problem lot severe taking lot is projects. a of had greater sort days congestion emerging probably Raouf, there’s it’s of of a cities. experience kinds more mass market in have rail, these

how focus address it? So organizational an markets a market go that opportunity? standpoint, would trying specific you you from can those on build about to vertical capability to Or in

Raouf Ghali

We are addressing it.

strong, first all, I and think market. in we are infrastructure very of transportation

look it, you you to vertical, buildings? when at mean on continue We say

Pete Enderlin

No, program rail no, I mean specifically the construction management...

Raouf Ghali

So horizontally, you mean? Because you...

Pete Enderlin

Yes.

Raouf Ghali

correctly. to one That’s just I’m why clarify, feel We that’s very market. to I reasons responding make just U.S. wanted the on the bullish, that bullish feel of very sure we

We growing. all come see going very horizontal we we it see for be a are programs indicated growing. is very the to only the think future all all We in to demand strong clients on down. positioned the have that construction coming And down. in, currently pipeline We well are regions our

you. with agree I So

Pete Enderlin

is of specifically done as teams use you it. of have would permanent somewhat sort Would lot to basis? geographical teams a one floating a you you transit transit, of specialized Or can mass country-specific just to from you needed mass for go build region a another? sort and on But that assemble category

Raouf Ghali

of our that Mass for high-speed Some as a now, there’s light well. I big has metros is as rail leadership well and rail think, push as transit expertise.

globally U.S. domestically and both that We have in the

have already they the leadership the will them grow opportunities – of in expertise. core team required them, there, and we team different Some the has team as grow arise. in. through We we we our But that just as is currently and on

Pete Enderlin

U.S., sense the more of you the when Can or you of preconstruction And give you and more on pace two some mentioned services Yes. timing would those focusing us into post-construction. Okay. actively move the then areas?

Raouf Ghali

are moving already are help U.S. in of the we phase We getting in particular, towards the some clients, clients preplanning. private involved the out them in preconstruction on with locations, with where preconstruction to

are the a to growing in we it. up already fit. invest as and money see we front lot of want we don’t works that’s So Obviously, it with

source. that as we new existing going the with and clients can current are we clients So comes need

it looked the management risk On looking portion. to we increase facility management is sure – that can we’re in X at Facility the post-construction, our for be ways. different profile make don’t really at

facility do full management the or management. solvency service can You facility

and the with in both very We’re studies already doing several based on profitable. – to we looking are at at we market is seeing, already those Internationally, a the of this clients good places, captured, what fit have that.

Pete Enderlin

opportunities? us revenue and pre have give on of we can Raouf, categories which you sense would just a long-term were the greater And post, a of two about, talking basis,

Raouf Ghali

they in give because give revenue less larger I you you But think, of preconstruction also, The post opportunity. will have, will longer-term much opportunities. cross-selling downstream are the and nature. the they’ll

So up because preplanning the early – front phase. and design in right client with you’re the

Pete Enderlin

you very Good much. Well. Thank luck.

Raouf Ghali

you. Thank

Operator

question And Capital. Sweeney comes our with next Matt from of line Laughing Water

open. is now line Your

Matt Sweeney

through Hi, strategic for this Hill as plans thanks since Can Raouf, what bit of in a all that was vision kind a that a for on four assets talk acquisition? under taking of, about just been context now you. between It’s we’re growth and the the regions. scaled it’s been, almost for battles with I focused the of International company left the historically, now is you boardroom years of the little usual your terms in collection couple future are question business the for And restatements. arguably in guess, was call. of

And to do address that strategic what going So vision? is? right way you forward how think the the is

Raouf Ghali

good Very you. question. thank Well,

both of mixture the was organic were and firm them. our lot my A That’s a from in we belief. think growth past, acquisitions. I spurred between growth of

see to focusing right it, be are organic on growth. as going For we now, we company, the

are lot with right in it’s services have we the in U.S. right need for now. of that all clients whether a are our international, areas We

So critical regions. and down offices to new a of and we going line mass critical grow lot new the operating existing coming want the and get, should we because mass through opening is in to than to in see rather grow profits we where and locations, profit bottom

and focus do. geographically, growth the the we in, near-term the strategy So locations scope and is we’re the and within currently that strategy the from

at We any near future. the are looking not in acquisitions

Matt Sweeney

Thank you.

Operator

Breach Our Instructions] from Colvin question Capital. is [Operator with Chris next Inlet

Your open. line is now

Chris Colvin

for helpful. to say clarifying nonoperating loss, FX is thanks first wanted that I a the that’s

the that quarter. see Secondly, great from last is up to backlog

So congrats a it CFR? backlog questions you that. trend. but can to bookings? My are the on confirm, isn’t just that believe you X and one, hopefully define then please it’s I confirm positive two, please is said And

Raouf Ghali

Sure. Very good questions, both of them.

me Let address them.

that’s projects for start Let’s that it period, backlog, health executed. and CFR number. as business. in the Therefore, between bookings. It representative a with backlog the Because to a end not mathematical may projects the fully business we the is of be some that been meaningful backlog not backlog Backlog made than assess more Bookings have there the are are backlog believe necessarily they have CFR during we period the some the believe canceled that the has is sales to of a been situations, of the in beginning is at yet, a because I of not can number confusion. state that selected or plug a is some number though numbers at of period.

are when always will sales. talking and going we we numbers bookings to refer CFR As described, about forward,

around million so this and and quarter, $XXX are equivalent We have far per to year’s pleased is sales again, net been number running a it’s that CFR. this

and confident We a continue. up little pleased is bit will are that that trend our this the backlog quarter, we are

that leave again, is indicated question, And the you the time quarter our Sales-to-date, second numbers. the the believe number CFO million. being you sales I $XXX confusion of third maybe the the believe, take this about on I some as $XXX of On at talked sales million to sales Former number. I had time.

million as our $XXX Former quarter. our of our Just sales the correct, and $XXX consistent XXXX, wrong, in I it’s number per said case of with second just million mentioned CEO, quarter of CEO around Former to the had and something

Future-wise, we’re to bidding pleased on continue on projects. we’re we see that larger same So the trend.

that again, going and to once – we’re to continue are sales again So grow better. even strong be confident continue maybe future our to

Chris Colvin

to what $XXX sales, said Okay. your million. year-to-date like It sounds that’s I $XXX lead of should CFR think, was and about revenue, future million of ahead your you

hear. should that’s that So be – good to

it. appreciate I So

Raouf Ghali

Thank you.

Operator

next Investment. Charles And from Mainwall question our with Neuhauser is

open. now is line Your

Charles Neuhauser

Just further, to from company million step is $XXX to the were understanding extraordinary you you And my costs that take the that the figure annual heard I year expect you or level basis, one as I view around this think charges on million. also say would $XX base grow. that an a which

annualized base cash my million Now today, in annual question $XXX forward? you expect to – do become positive with is, going the flow

Greg Wolf

question. Yes, that I’ll good take That’s a question.

it believe do forward. will I be think cash that flow going we positive

cash taking $XX of items going were XXXX. which out into system We’re the million,

that So do cash to so we in and I XXXX, position, and should position. through EBITDA going forward, are better going XXXX the stronger more think flow to much cash in sheet should that as We flow we a we balance be forward. believe a we have move be equating

Charles Neuhauser

Okay. to say if to flow? produce would be next expect down that said – EBITDA you year will cash have essentially you positive you just you not you expect pin did the Again, – but you

Greg Wolf

on Well, if we’re right these basis adjusted an you out, take now.

So these there. not items would be

there. straight would basis, a you on EBITDA So be

our If the have press you there. we adjusted EBITDA numbers at look in release,

time. take up So over on of system, you’ll cash basis, out those adjusted some the flow the we pick that’s where

Charles Neuhauser

sorry, cash negative something – but the have a year? quarter a Right. impact again, Are like of you And I’m little intercompany that. on talking or flow the going confused those here, were third if in about fourth you this liabilities to

Greg Wolf

because cash on are impact effectively – they non No, right flow they they’ll actually noncash. now, are no have

So noncash only throughout as the own. loans and piece. does P&L, causes affect It of any all entities to that on the we affect is our – and effective just receivables the clarify, is But FX it it we what doesn’t notes which consolidation. different it what have

do equity don’t down where components, to we what long some as move implications by to country. is so as we looking have tax can, to And that withholding we’re

Charles Neuhauser

just, those Okay. is a No, clarification noncash are that again, good. the appreciate adjustments. that’s I non –

Greg Wolf

Correct.

Charles Neuhauser

much. very you Thank Great.

Operator

I’m not further any showing And questions.

So conclude conference. thank have for your Ladies wonderful and does and day. this a you today’s gentlemen, participation

disconnect. all may You

Hill International (HIL) 10 Nov 182018 Q3 Earnings call transcript