HIL - Earnings call transcript Q4 2018 | Hill International, Inc.

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Operator

Welcome to Hill International Incorporated's Fourth Quarter Earnings for Fiscal Year 2018 Investor Call. On this call, John Grau, from InvestorCom, will provide some introductory remarks on the content of the call. John will be followed by Hill International's CEO, Raouf Ghali; and Senior Vice President and Chief Financial Officer, Todd Weintraub. Mr. Ghali will discuss the status of the company and expectations for Hill's immediate and long-term future. Mr. fourth results Hill's XXXX. detail will quarter for annual Weintraub

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

John Grau

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

Raouf Ghali

and you, who call the on to morning. you Thank is this everyone thank John,

Todd financial We that our existing our accomplishments. clients our on go that, clients will some our the earnings focused significant we call call The Then, we CFO, reorganization. prospective rather once that since you XXXX offices, let clients. accomplishments feedback made new I some proceed needs with go than our performance. and last outlook. XXXX from And are start numerous our November, last their lastly, in our is through tell understand through of November. let's noteworthy With They the recent in visited have positive globally. internal since will overwhelming call first, me will have with Weintraub, we But again

line targets. and of tied realigned believe aligns compensation. and EBITDA, this the new variable and grow We sales and structure leadership by to comes companies. incentivized bonus is am us equity CFO, increasing Manager to including years with we Todd force to and are compensation Controller, includes Clearly, Accounting in Todd better with This shareholders to introduce compensation Corporate held and serving profitably publicly sales market our as We is DSO component XX in Hill as company significantly of pleased XXXX. new the nearly collection. have experience, our cash Director improve the practice. Accounting for CFO, who December with six started I and

served Board multiple Directors has Todd addition, the of on for In companies.

is on. on contributor later revenue the to reporting, the hear and forward As CFO, leadership board, Todd revenue total Todd team CFR Todd report will will to going company With those feedback at In been a from response CFR key companies. and you has your Hill now on as both complete.

with substantially has the backlog backlog of year-end XXXX, March compared of company As to year. securing since strengthened the major wins the beginning the

we're For not And reasons, issue not of we're always projects. mean press confidentiality not major allowed releases does the releases. winning press absence to

we a a backlog other with number the has this discuss and likely past believe today than projects in between considerably point third are inflection quarter the reached XXXX. we fourth again and in we growing don't first the the in for This quite and quarter In removed of look our have a at it drop number the quality in backlog backlog words, that quarter will Todd of As backlog was is most higher which management taken progress. awarded has past, explains later, the while. an senior time to of hard are excited

prepared at the I remarks. major of end awards some Finally, we have discuss these won will

on performance. XXXX to the to Now, Todd I through will pass go

Todd Weintraub

that through a been think a There to unplanned those today results. our lot excited everyone and Hill. couple have those results. financial an and of flowing call. you focus with changes and have provide a tough at Raouf, from us. be you years how a changes thank on the the update financial very affected I I on in noise I'm for and want to front changes great on created of through a have you, at and we those lot changes been It's walk of XXXX opportunity noise of the to planned Thank Hill results have both

be corrected: been finally, a had forward. heavy current B, were to A, some sold restated; remediation; of XXXX point. company the and One, events. into Dominick become were place. and back we focus needed XXXX, statements Those implement Two, and have years been team side, management So C, there our in the to the a company filings. we family largely issues to going control new needed going on there are is its now and management financial major during cost claims number accounting needed exited This and is the sustainable and there mission the has items unplanned addressed a the now be be now embarked us project finance behind XXXX solely would that organization structure and that completed. the Four, three Three, business on SEC financial on right-size in this framework and with to consulting. to of at a

All a a of at million cost, XXXX specifically $XX cost in changes came alone. these

that financial bond currently million, in had that that to affected during there other that is results. litigation. XXXX items a addition were negative performance We $XX called was In

a is about and large we we we that consider of However, take other in non-recurring. for those amount negative a two XXXX. be collected the the The to bond a accounts items did net expense direction, receivable. of reserved $X million previously the In

exchange FX financial losses addition, In about we $X.X and in balances. unrealized our through intercompany unrealized relate foreign had million statements. These primarily to losses loans running

them And completely these settled. point important unless that intercompany be losses our will until settling The is control. and is here items not underlying the within are realized

control unrealized to adjusted manage choose With forward if all in or we as that This XXXX EBITDA was excluded best planning million drop. our settle mind, adjusted have and for how we down year a and when we $XX outstanding XXXX, intercompany adjusting them. those in are them. such, analyzing As a FX we we EBITDA XX% from should course million these items on $XX.X from balances for

an Our XXXX more was adjusted provision EBITDA methodology quarter XXXX compared negative $X.X any in losses $X put in million for in were an process it EBITDA of at issues. particular and fourth year. or was address to conservative reserve XXXX that more bad impacted fourth year-end during the during result million also fourth the debts. quarter and note the Rather, million. of quarter $X part charge of quarter. million result not conservative in place of I'd fourth adjusted the to resulted of a by the This approximately results was accounting in methodology This prior $X.X a improved some

not $X do level. positive charge, we during quarter expect that of million forward XXXX. we Without of provisioning effect would fourth However, we'll going that have that continue the see to at EBITDA the

from revenue. an Revenue which XXXX was down decrease. or $XXX XX% to during $XXX million was million, about for Turning XXXX

in fee XXXX We $XXX about down from revenue also our by consulting million in to XXXX. saw $XXX million XX%

$XX to CFR from $XXX XXXX drops saw million similar drop in quarter, million revenue XXXX During the $XX in we in million in to in of million $XXX XXXX, fourth XXXX. a and

revenue in consulting versus was for in margin Our fee gross that XX.X% the on XXXX XXXX. XX.X% year full

gross the So, uptick which XX.X% the fourth XXXX. is it a during slight fourth XXXX from XX.X%, On with basis, was was up quarter XXXX quarter. the consistent margin margin in the quarterly gross in

Turning to SG&A.

versus million million million XXXX Our in of during $XXX a total SG&A you for saw XXXX, XXXX. so $XXX was improvement $X

For those the XXXX. million numbers $XX and were $XX fourth in quarter, in XXXX million

fourth a of full all that the If from changes, before are from in year-over-year the in the non-recurring exclude have $XXX down noise from $XXX then Those the XXXX quarter. SG&A SG&A numbers noise inclusive those XXXX. been decrease million, all we million So, I underlying would changes. referenced our also of

a that of change Based of XXXX on and you SG&A the should million. in SG&A unrealized XXXX be the of XXXX SG&A had our important see this million. and slightly the the back you'll above if approximately again, quarter, apples-to-apples, terms effect our It's company was SG&A, excluding for result look fourth FX was to noise So, at SG&A. note a our you underwent big forma that $XXX go pro happened, rate run on any before changes $XXX

think $XX sustainable is close out So, This we forward. we've to a XX% base. approximately cost is million of that number taken going expenses or of

backlog. Looking at

team in reasons. were backlog look at we at forward have at that The point million some believe has the new that do XXXX cleaned the is will end has of backlog backlog primary Our XXXX, was declined the million The we this and backlog. to management that $XXX the reason but end $XXX taken of not XXXX. the a end for up a at projects variety of at removed go hard of

we year-end forward, the report levels. increase backlog to quarter we expect our Looking for the significantly from again when that is going first

had significant have have some not We wins that announced. been

backlog insights be we'll and news guidance like XXXX. turned and we desire have that beyond the million I seems higher the The started first understand of is specific for of have $XXX the us provide and I of detailed. that backlog to it good quarter again. when grow our report just to we over expect We is you quality for backlog again corner SG&A now backlog much the to the

giving than backlog rate for timing not Therefore, the be expect impact other and level. of short-term XXXX procurement we any exceed we the our and the cycle of However, growth specific adjusted will further guidance results. EBITDA of will XXXX the our will mobilization

are: our right XX% rationalizing over one, to three, our increasing into margins to the gross it as completed backlog historical is EBITDA sustainable turned cost through our the a cutting bottom profit level; again fall time. will is mostly that base line points important two, The have CFR, and by backlog growing; we

growth margin turn for believe over gain I'll Raouf CFR our continue EBITDA comments. on more to we We a achievable scale back from now XX% backlog. final is to that it some in as

Raouf Ghali

reiterate I we undergoing The would from is Hill of storm the now changes perfect that are Thank underwent you, both company XXXX that a existing building events XXXX foundation passed a phase and of Todd. growth. have of the new solid and new and like clients. and in to

company. the factors. a several to This for year confidence expect We be to XXXX due is strong

First, have we we development. for decreasing and million a Romania, an beginning Grand $XXX wastewater has assignment Bay billion program. notified we infrastructure Hill for project new Hill selected work some won Apa for of Union Tower contract peak major Bank the include: provide Galati expansion assignments S.C. on services added Galati a of been year the East Reconstruction Brazil, project from venture, Also clients. for than extension internationally. U.S. West to In is sector financing by line. megaproject the for of North supporting upgrade Fushe the this the City at a the up In in Turnpike Kazakhstan, plants. And backlog another Dhabi in Replacement the a have where Cairo, won our backlog recently award team the bring was a be the These inspection questions electrification we throughout providing for finalized a in At Development year. received and can continue also continue this wins railway a a profitability award we of rehabilitation I three-year is for contract world. leader be an and the have three-year current positioned to Company Manufacturing County, renewable Hani to of largest contracts the supervision the Middle with we the and developing the and of to managers for as In in Millenium extended Abu from has and in have our anticipate Europe, and services in State few for would to joint program from Fund several It U.S., grow we of European on its the largest Pipeline And to on the report. take DSOs. to able our those two the to plant in player projects the management secured proud Energy in Dominion to to the and We and as and more Museum is Hill construction prospects value new Middle contract development contract planned Company, Once maximizing work energy also Astana $X.X speaks focusing in more multiple to to the Asia. Ohio to Ohio UAE. Industrial Cleveland XXXX. Hill the under like itself is The Since new airport a management billion to the have East, the National a biofuel our the the point, European Kosovo major Bioenergia pipeline nature been we in that Infrastructure program help In mosque Mosque, client the Hill aviation in Grand Canal supervision that $X.X added of will call. this of to Central Oil Commission. professionals. Astana-XX our totaling for them which provide received S.A., services award. specifics the the Infrastructure Egyptian from water win would and provide Africa, will to the XXX are to major against Qatar the deliver have

Operator

[Operator Instructions] And from our first Capital. Colvin Chris Breach with question Inlet comes

now line open. Your is

Chris Colvin

taking for my appreciate and the questions I update. Thanks

On the in then U.S. like generally that growth of Middle split? but the sense how out that's some give -- us some any and been East has you projects, backlog sounds lot can called backlog, It a as potentially you the

Raouf Ghali

It's Yes, backlog growing not that Middle Chris. Africa just and with doesn't the backlog of leading is the Good growing behind increased the right morning, not is Middle significantly rate mean East Europe equally. same growth. East. U.S. has at That in North it. the The growth, the

Chris Colvin

that Okay. on And the back adjusted for EBITDA that paid your add million plus provided XXXX, to a you then executive? does $X former

Todd Weintraub

include add-back other as well Hi, item, involved and restructuring. Chris. related personnel It's does as Yes, the Todd with Weintraub. that costs severance

Chris Colvin

cost that more like words, And $XX restructuring corporate restatement other $XX at and roughly million, corporate? was was million or like it million held regions? kind then was reported most at almost which of of across spread of Okay. that In is $XX

Todd Weintraub

of various So, it has that I you're represents of table the shows XX-K, was referring that's bit an would referring to of corporate the recorded what corporate assume regions. in $XX about XX assume other that applied that allocated I page of you're I the we to. million, corporate. costs that's picture And which operating to note a not profit to and an transfer That pricing incomplete have and costs. out

So than that. going to higher corporate number the be is actual a

So you're regime it's really not it's -- really a not one-for-one one-for-one type that looking at.

before reduced go we is Plan. as XX% do comments be focus which the Profit a in EBITDA we we Improvement I about is, the think which on believe is at we're able that were and we SG&A cost think forward million grow as what SG&A we're where prepared we've of sustainable, from as I to including $XXX revenue. well, and that would started roughly regional all of approach and that for at in base we of corporate; all a at And SG&A, total we'll looking as the reduction mentioned XX% we looking SG&A level

think regarding point the SG&A. I that's the important

Chris Colvin

U.S. make fourth at I Okay, sense. when grew look for business, its straight year. the then, And EBIT your

America most And or in at those business. haven't years. East. profitable in at and of I that, that to outside of been include think would international look is when close most getting especially, sub-XXX. to very traction, million, start the EBITDA, lot $XX close didn't profitable it say you're but And course million arguably overhead probably yet to region, really is all it of of I I you -- it's EV Europe, your that's again, Middle due But the a like to worth $XXX sounds Latin

whether you divesting not, those? comment can And Exiting So consider would on if those? you why?

Todd Weintraub

Sure.

represent it footnote you profitability, tax when pro-rata affecting that in not by hard information in purposes, do it's affecting is for the transfer results, really So, is that, talked again, we've to look that's the about the bit well because done equally. to doesn't follow, a at unrealized and that basis. them there, true region on the a as a we results is But regional contained FX affecting little in consolidated addition allocation that's have pricing

a going So of that's lot there through is sort that. noise of

are If and pricing unrealized of of transfer you effects the regional though as you breakeven. in is go eliminate Pacific, East, non-recurring sort the the and a adjust the smaller become Mid-East, basis, and those here kind those FX of the U.S., smallest And those were bases of and Latin are also for at Europe, to shows regions would as that, regions place that, regions, those profitable, on much when they're expect increase is what look costs is Africa. that But now. is contributors. have we and profitable: the through we that Middle America to see you we items, And the out them can are those revenue the you grow negative right even fact, it to most Asia in the the close allocate large going as the if stronger

the page the you of is got refer our better to where table. regions a gross going compare on we've way profit at and I'd think I kind what's on XX, MD&A to look

able our which, we it can fact, gross regions, should noise as that that, regions. FX for be can of you And I leverage gross margin that, all we a in about, pretty that SG&A some all on to good and to really profitability. at of just talked when we see growth, before do higher So you got those the those profit have look smaller contribute

Chris Colvin

still fully on you've got the Okay. Libya, reserved one update What's collecting on $XX is, you've those? that of -- last, million And XX receivables for. potentially think, maybe or almost the I two

Raouf Ghali

our in there. close discussions discussions We're in with Raouf. is still -- client this Chris,

it, don't things But promising. our that to be on tax feel some receivables close they because Last we're we quarter, some collected potentially we reported us. of haven't amount tax materialize for till want corporate us of We -- collecting very for certain we to more. paid

We be feel very So, still commercial. that will -- timing, it's collecting. cannot feel because we we than we political about strong more talk

Chris Colvin

you've last a is the joined, seat Todd's especially bit. And now Understood. that going be in there Raouf for CEO to little Yeah. question, -- been

a there starting it news. concerted things like growing tell conferences only got stabilized, a to to front IR the but as going again be on a far analyst You've as story Is attending more with bit having seems of to some effort and not positive of get little coverage? trying

Raouf Ghali

Definitely. That's items then that at of and IR. make be sure growth are like on the Todd first track the on in you going and the consolidate to think be we looking one But are the I going going future. wanted to that said, we focused myself we're right financials hitting to be to

Chris Colvin

update, Sounds I good. you so it. Well, appreciate the for thank much

Operator

Instructions] you. question Capital. Thank with [Operator Water Sweeney next And from our Laughing comes Matt

now is line Your open.

Matt Sweeney

or regions? But guys. actually the what's of to talk regions the have you under-scaled did going how other is should as think during how Thanks bit the we businesses taking been the for gross talk that's call right may see I those I results. you margin Hi, or good But intend about that got middle question -- there the just the to the answered. about to in through the the Do lost of grow cut this and the be regions so in organic period, about acquisitions, -- way I grow? last we question. off. could you some that a think little and

Raouf Ghali

manage both order and looking is we're future, organic in growth. that liquidity immediate And risks. at the For preserve our maintain and to

right feel all we So, the organic in in spots. are at we're all and the looking We regions right growth.

a we our places out, As to regions are healthy that gross currently in leverage have are. all margin. Todd want pointed -- And we of the

So, the we're mass growing are locations, looking in. in not we putting at but locations critical existing

Matt Sweeney

you. Thank

Operator

Thank today's concludes in queue wonderful our think day. everyone to And have for attention today. the question that you you. a This Thank and participation. I call. is for last your Everyone

Hill International (HIL) 2 Apr 192018 Q4 Earnings call transcript