HIL - Earnings call transcript Q1 2021 | Hill International, Inc.

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Operator

Greetings and welcome to Hill International's First quarter 2021 Financial Results Conference Call and Webcast. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host; Mr. Devin Sullivan, Senior Vice President at The Equity Group. Thank you.

begin. may You

Devin Sullivan

Good today everyone. results thank for you call. Thank Hill morning International's us for financial first joining you and quarter conference XXXX

Our Ghali, be; Todd call Chief speakers Officer; Weintraub, Executive and Raouf Officer. Financial for today's Chief will

plans, safe like considered and limited pandemic, forward-looking we but be harbor and Litigation that operations certain statements call uncertainties statements information, Reform infrastructure or such that Private it statements the assumptions concerning Securities for within willingness forth based strategies protected statements intent limited projects and the Act complete of statements remind are and future for risks and to statements. including, ability not certain statements and Before to ability thereby. our everyone be XXXX to and during forward-looking is and and historical of support created made our our I'd this current the estimates are on and our the of objectives risks begin, forward-looking by uncertainties are financial activities. expectations, may to the meaning herein any related clients undertake Except and development including governments These maintain to belief projections the subject set matters any but intent, not other to business any to of COVID-XX

in are from section are we be Important Securities draw our your to statements. filed elsewhere any Although harbor no contained we economic to may as those or could obligation results non-GAAP in our the the Risk the update and differ Factors estimates X higher slides in statements actual believe not and morning. projections cause assumed differ and in our in expectations, with information that adversely statements that business any or which presenting be measures our conditions may of forward-looking forth forward-looking Exchange safe the from unfavorable set impact of factors that undertake reflected expenses and actual reports assumptions be to have our projected results revenue X and attention reasonable, estimates could do materially intend forward-looking We Commission, definitions may the not our and I realized will fully including and global statements. than we that anticipated. will our backlog this forward-looking provide materially

things Hill's Turning to Raouf, Slide please turn X, Executive Ghali, Chief now I'd over Raouf go Officer. to like to ahead.

Raouf Ghali

what I'll discuss against have you of prepare work allowed us for hard year hope XXXX for plan, Thanks to Devin. the first our Good for world to and quarter growth X,XXX service provide dedication. and today continue we our joining around financial efforts to thanking everyone us and a Hill's continuing client thank us and their morning of professionals level results. Their begin at be will evolution the highest execute International. Hill with

delays the of in due let's lingering summary $XX.X regions. of performance produced Now and project at CFR first our million which for quarter. several to our COVID a look of quick of operating certain deferments reflects We the impact

stated year this pandemic during of post two recovery we headwinds the takes first As previously, the as quarters hold. expected

in in remobilization. the internationally areas April, and have encouraging starting seen we the of awards movements However, procurement US in and

picking plan. up we well result, within the our business believe a As that be will

Adjusted $X.X first new fourth slide States and quarter, continued post and CFR us million and to this operating the breakeven We is in believe with including normality of year-over-year which quarter. to reach was a basis over on both that higher return XXXX for lower especially quarter of past quarter well for first non-cash a quarter comp the the $XX.X interest respect turn momentum end management. covered as $XXX,XXX. expect experienced accelerating, combined gradually multiple previously quarter the that We as an the stated infrastructure net we progresses. we reported representing geographies years. as below of and XXXX. bookings new EBITDA this Please the in XXXX Again, expense SG&A of million into $XX.X and results was during Perhaps to and bodes importantly, revenue future in SG&A facilities that XXXX. fourth business COVID-XX, $XXX,XXX markets, wrote a in Procurement will million the stock decline to CFR loss with for of million Our $XXX approximately activity X. we compared included to United of XXXX annual increase and push which levels just and most income

New you the mobilization As continued in revenue quarter at our engaged profile infrastructure a see, and strong California in in that just metro well of in reflected lead program at Gold US quarter York Washington assignment. operation and Pennsylvania varied, in in State, first first renewal Department also end market The I-X projects our as We're Arizona, work client to large Ohio by few. geographic, MTA a Resources our Line can name of in infrastructure as the included the our to Delaware exposure. driven and

to and the a continue a where Europe in Middle industry maintain East, position. dominant Africa also have We we exposure healthy

the the contracts owners highlights modernization, in An buildings representative slide Indianapolis. our slide Federal Essentia Minnesota. A task medical originally which in manage Duluth, wins clinical Ohio, of downtown Maryland as third in for completion by some Reserve's agent repairs under awarded the Eccles facility Building which Ministry of the management the we of will XXXX. recent managing to and award This consolidation including A three federal Tatweer Saudi serve provide award to Moving GSA services represents and X. campus of Health's on the Building activation Education. the the modernization on to for execute built the to order Company, of

quarter, facility $X.X from QX business, million our management the CFR at which progress up generated XXXX XX% of the in year. million with the pleased are $X.X We first previous during

Finally, Texas police fire inspection including Brownfield and coordination city construction station a new and of new we are providing New memorial. veterans' municipal for several two projects the oversight services in stations,

respect on slide assessment a assigning civil you'll us inflection to The ASCE Moving It ensure Every are categories overall report ranked grade is shown infrastructure properly comprehensive the It this future. various the and year. making the economy with We to hardship point is and a in X. examines built of and improvements pandemic. by categories. will to current to C infrastructure. we or grades country engineers are our years out is global at executed, them. our the an ability the provide minus where card, infrastructure created see lift infrastructure here our of conditions necessary XX economy US of report believe needs card nation's to economic if four help compete raise this that major COVID-XX nation's and the infrastructure for recommendations According also impeding to America's

in from United EU our new North projects. Europe. created in on on pursuit of active In COVID-XX infrastructure The to pandemic. appears its projects XXXX, million in XX% identifying engine have business committee $XXX awards to the the In States, approximately QX and of of secured opportunities consisted emerge be year, Africa infrastructure significant US of this stronger infrastructure focused capitalize domestic we to Middle We bookings over a growth East the for infrastructure potential Hill.

We to opportunities. to progress and monitor fronts continue on associated well-positioned capture remain these the

Moving slide on to X.

announce We several appointments. to are delighted promotions and

Hill. roles of You'll at to two than note each individuals decades of that their experience these one new brings more

Regional of Manager. new Heinz, of in XXXX Our largest Mike Hill's and Smith's previously President complex Senior Hill's assignments. largest Western Smith previous Vice and The was to region our most our served and long-term home successful and profit most President assume will Americas as Operations Western President is Manager U.S. and Greg current region, Vice many center position.

to of Manager, things Hill's President Financial Todd, promoted individuals. of Regional your and to for Business Villamizar Southeast Vice operations. for now and Weintraub, Vice Southern First Congratulations Florida Castrodad Lugo President, please current over Vice for JP Luis company's role been Current Chief you the Senior has In the attention, role Caribbean the welcomes President Officer. to Hill the will I first California, these ahead. also addition, go turn will Eladio Vice to Americas. Todd President, each rise region. to Development, of the In Thank

Todd Weintraub

period in and delays. reflecting that projects note starts COVID-XX. million This due of delayed uncertainties $X.X by approximately we we driven CFR Thank X. you I'll slide results same slide overview Raouf. was decline an the of the a million, for for up XXXX. year believe our due in GAAP provides quarter to large of part $XX.X that XXXX from lost things related pick It's first from quarter first project the QX to important last COVID to

increase COVID-XX The as We other incurred over well million of were expect to due loss administrative foreign expenses in a due by due to loss to lower projects $X.X to and or primarily offset or $XX.X higher CFR the and certain QX the QX loss quarter partially during by normal lower was COVID-XX compared the The we $XXX,XXX XXXX, well to of certain effects expenses. each a the as result quarter expenses expect XX.X% CFR. legal not quarter. return and of This XXXX. million stock CFR partially year's the in million remainder over XX.X% of due XXXX general XXXX which net improvement recur. decline XXXX $XX.X impacts the same commence these to to CFR previously primarily of many in that of we year. favorable to were of compared drove to of will million in Selling, due recur of as factors had depreciation The offset insurance stay-at-home lower primarily compared an primarily primarily XXXX, expect costs, than severance timing as compensation. last expenses do XXXX. when expense costs was $X.X attributable to in the not which were in labor declines first QX did as of to in legal increases currency non-cash costs operating an We The orders, reflecting and higher corporate legal higher labor, CFR settlement

operated EBITDA look Now an into take a account let's items positive at we've we for and adjusted basis On discussed, just we briefly quarter. an taking reported and slide XX. results on basis adjusted the our that profitably the on

Turning XX. to slide

driven maintain to of In million. first was and we know, a XXXX compares the transitory We event, million cash you to cash liquidity. in quarter. and used in operations collections the a in this QX used be strong seasonality consider focus of cash very XXXX, As our $XX.X by operations timing primarily $XX.X on

XXXX $X.X add of we to the this are in show Hill a payroll was March material received our XXXX. million do that second XXXX. the obligations will documentation approximately the our to and $X.X seen significantly improved cash and expect unrestricted that now at cash executing and Based collect of we we already JV due at in we primary $XX.X cash as To necessary has is XXst, the million our insight, the QX shortly $XX year-end account occurred project XXXX COVID-related the which expect and cash remainder at improvement deferred the Just receive XXXX. unrestricted XXth, to same December expected will reported be to remaining remitted subcontractors. million liquidity payment. from million expected exceed we We're XXXX quarter will with to-date, that collection of XXst, particular, been project June trend the the in same XXXX, forecasting position are in in the the some over to in during on received QX remainder in delays XXXX. to be In year

Our arrears arrears. primary from our We monthly receipts source and of invoice clients cash semi monthly generally in pay our clients. is employees in

average This for we Our after receive time and those after bill from our any time payment three creates our a the we from subcontractors between used our date. employees generally remit payment lag clients on our and subcontractors clients the payment receiving months clients. we invoice pay approximately pay We the clients.

receipts payments the credit for revolving clients to our subcontractors. for funded our projects requirement cash our hand exists by year cash funding we number negatively and from A on We expected annual calendar This with budget we our reasonably quarter. are to operations current support the through results future. our cash cash the facilities flow as and impacting sufficient make discussed approval lag lag to cash caused the allocations. on the of for just in timing of credit year. the these that flow to revolving subsequent reversed public cash budget anticipated needs XXXX believe working that such We sector no needs. together of first and quarters their certain So again was allocation our case utilized operating foreseeable it above clients from capital each The the delayed hand fund clients collections facilities process last negative the expect generally and during the in be the during year and year is other

Moving to both and flow XX during and see of XXXX as you'll declined slide that mentioned, quarter XXXX. first cash our just the

public During to Year both as the in the primarily periods, as lower quarter in due funding to await accounts clients available subcontractors. many cash well was receivable vendors new and become sector activities the used first of of to related New operating our increases collections payments to normal timing in as

lines million. clients COVID-XX payments collected December with has $XX we of in the certain XXXX. the that to execution Again, XXXX majority to in represents the was as year access of to XXst, of been March compared at be mentioned that each required delayed XXXX of quarters at liquidity the point expected the and remit cash ended to credit during Total Additionally and documentation flow million flow for collected the approximately the million XXXX. our liquidity June quarter will for believe The this cash XXst, of XXXX. of we remainder XXth, be $XX.X positive XXXX totaling subsequently $XX.X including and continuing effect before, QX low as remaining free of

Moving on XX. to slide

level XXXX XXst, backlog over East concentrated declines Middle very slight from your the comprised showed and in Africa conversation and backlog at Thanks US. four contracts East. last XX% the in backlog highest Our XXst, Middle consistent was XXXX to We Africa and December backlog the From back in March and Raouf. perspective, the our quarters. the December I'll geographic to a XXXX. our with Europe With much total of remained North business our increased respect the compared Americas to turn management time these and XXst, and now for facilities increases

Raouf Ghali

Todd. you, Thank

earlier CFR between you could announced that operator today XXXX We for on $XXX If our And deferrals range and business turn cancellations $XXX million, our between reiterate occurred slide this and project considering XXXX, million guidance current year, conditions. expect you for new to to to call XX. consisting extensions previously awards based forecast to to of $XX million. the both ask Adjusted million for and is of open now $XX contracts. I'll existing Thank to be the time and EBITDA your questions. we

Operator

[Operator At Bill this session. the time, Instructions] we’ll Tieton a your of comes Our first be with Please proceed line question. conducting question Capital. with from question-and-answer Dezellem

Bill Dezellem

Thank Capital. you. of questions. a Tieton have couple I That's

trend the to it growth talking line? there relative backlog, showed things First an be Would etcetera. rate some you're of as XX. of what in expect given could backlog COVID, you all, been relative But that acceleration the loosening improving with slide about of to up on the you has

Raouf Ghali

I'll Raouf. take is This the question.

to to getting very -- over because of not hard services, a control predict, stronger. The our particularly believe I we We that there backlog But lot is not acceleration, have demand the it's our are rate very it. of in US. high expecting there's for that a continue

procurement accelerates, anticipate the As to our continue can the of US we is in backlog growing. going growth that

Bill Dezellem

there what years? potential that couple And in signs given the some you. is then, Thank it's in restart government little collection, of potential work, Libya, where of terms been to last a seeing bit talk stability about would showing you're you the of relative Great. of the

Raouf Ghali

this seeing Todd lot answer a Sure. if right to that after as more I'll jump well. something done, We're just questions I'm Very one in. he'll stability. good on and wants add And

to us debts. Libya. to work formally, and budget to are have be budget them in be client and patience. for the to come for They our We talking now, down their to waiting be paying asked Right the able parliament by we're approved to start country's the

want as in press is in top as haven't didn't already well. owed work education would three Tripoli used were and the sector, the priorities existing in to us going And The we We because for They They have. were -- a nature is didn't They warrant, would warrant or that into sorry, we're us -- made release, owed whole government. education. and University have new us part local their that made once carefully project the normalize, projects of campus payment and Tripoli priority but last we of potentially that, currency higher that campus managing do the it at One It a is restart continuing work supervising we program. have fees. collect the for to looking was that where very which we we -- they our AR, the it existing -- the to probably small they reinstate expecting, money positively the or week, as be we and things ago. have. weeks two potential so, we

Bill Dezellem

you. Thank

Todd Weintraub

add just to Raouf. that me let So

remind to the of that was Just payments in when approximately is remaining that sporadic with but And up have Hill million. And received Libya. was first the -- and right accrual balance everybody US$XX that, the to within half efforts over our the the we've relationships and years now. our amount owed approximately happened kept we

a continue in and of So, that. collect to the about with the country few that we small we and payments about them payment. less local is significance years, notwithstanding said have all that as receive we Raouf of receive dollars work upheaval of the go more of half to political And The over we managed last along. did the as

Bill Dezellem

both. you Thank

suspect would today? as the restart but work you education I and today on when it's know that what you just see them what on your expectation of would cards kind system given be rather taking you so And dynamic,

Raouf Ghali

end time predict difficult it's a on is financial and is a very Libya hard situation political because to not Libya lines a putting situation.

before. think said I that we've

continues think that the be pretty Libya we of before believe all the end would there, -- before going our we previous we again long there's timeframe I the in advanced are an that on, about Given the as it sooner. debts ends. if talking we as the believe year and is But I stability payment, there have is and peace if if unpredictable we year stability the collect realistic. be I'm could within

Bill Dezellem

last then didn't management Great. Thank opening business. you in relative my of the of you. And kind -- your I for anything that Would your hear is remarks facilities update don't I to please? business. question the to facilities management relative please to talk segment

Raouf Ghali

regions both commented Sure. in and we believe to in combined in backlog introduced grow East really have which Facility the Middle is both nicely. facility are And I growing it management backlog of be North I now management the would case. the XX% of and facility right I believe management. Africa those some about continues for very in the

We're it decent a facility familiar repeat the long-term and usual side loss potential great PM We people demands get well to income a some rate as and services. made a as much the service the continuous and as to to on -- growth with. being than as facility statement stability We this see starting most continue fairly a grow lot on usually a good cross our for reinforced a with between -- for PM may margins agents as we for it's because as investment be the management well from that really which profit business. services that cross-sell able that management facility we've management assignments agents see management the facility what than higher lower not are of of other

for in So, of for to that Middle usually it's additional particular it East. continue and of advantage not any get initial to in we to that business. sensitive growing us involved pricing the oil projects a makes it sense lot An CapEx in the

at the down with the on a as force and prices. income as level So, go well we're up long-term as the both looking stabling economies for they as oil it

Todd Weintraub

put just And numbers some to around that.

year facilities management period. our quarter -- XX% the from first was the over CFR For the up comparable the prior

Bill Dezellem

Great. Thank That's very you fantastic growth. much.

Operator

next Partners. with comes your of Our the question from Enderlin with Instructions] Pete [Operator line Please proceed question. MAZ

Pete Enderlin

the, mean, quarter-to-quarter? up Good morning. Thank over rest trend sequentially earlier statement the made that year quarter. year, Does going the up versus you clarify you. of each I'd about the like or CFR from the to up

Raouf Ghali

it's Please go ahead, believe, both, Todd. ahead. go I

Todd Weintraub

Yeah.

yeah that I believe I What I that's be true it -- So correct. quarters. that's would certainly will third the both. say for fourth believe is and

it able year-over-year, quarter we're to to quarter sequentially. will when get. of second see how the Whether we'll it's and The exactly much mobilize able we're that true during be true

trend. So the that will be certainly

versus I little quarter think be a year-over-year second quarter. bit relatively in up second it will the maybe somewhere level between, in the

Pete Enderlin

be a everything how I And you. something Thank is basically Okay. like like a And that build slide actually not in look of infrastructure infrastructure. infrastructure. if I you buildings? another infrastructure? campus the that's would you do I college or most reason clarification, mean, not five, or hotel the except because, define awards mean, else number is, but they everything were ask that buildings, it

Raouf Ghali

but correct … that's So

Pete Enderlin

How do define infrastructure? you

Raouf Ghali

The construction or well infrastructure distribution, vertical whether as purely horizontal. power is vertical power infrastructure generation rather as really that than transportation, construction, basically within utilities, mainly electric be Yeah.

Pete Enderlin

literally mean, vertical. You and physically

Raouf Ghali

I versus horizontal being horizontal mean, vertical. versus apologize. buildings. is vertical construction I Sorry, Infrastructure

Pete Enderlin

lot. Oh, okay, inspection a your That about, talking And services,… all helps right. Hill International

Raouf Ghali

Services…

Pete Enderlin

an business What also on a about it you have pipeline but you question facilities HITS, help? development the potential as management new a I tool? got Can part see builder, you that, And fairly it. that first of to being as a acquisition. comment for that, that's a pipeline …that's, as through you the follow-up indicated

Raouf Ghali

the some for New had construction right now services, management we around unless York, for in York thanks as and States not -- it. perform we actually New these particular, question discussion Great we overseas. us in in and states engineering Engineering that service other in In inspection many our asking perform services well United as is inspection an Sure. could but places, a license. for

recent we license that which we late the to HITS. acquisition year, So the changed last names through have by now obtaining engineering the did

new that credibility We the actually the have clients and our can to perform we in and Europe, current resources actually provide are could region services not before. and within that Northeast experience we particularly perform, now -- both,

As us, our be market, the over for far from for potential probably and services. providing growth could a five it next in as what well, double size the Northeast that to years new region the would we is, close just these

Pete Enderlin

Well, similar I be would you you or that be, it likely type of other would to get would guess, part -- acquisitions do also expand can that organically, it bodies, people? to get

Raouf Ghali

I it -- probably acquire mean, wouldn't have the get need We we'd to do anybody organically. to We bodies.

that of that to have physically I region. the a We services. do not lot provide not We capabilities think just the currently people to contracts be sign could we within that. the able these could

Pete Enderlin

you is your of point infrastructure us idea backlog I what think percentage total you this said give an of it the was.. at approximately? Can

Raouf Ghali

we do broken down? have it Todd,

Todd Weintraub

I'd have number. don't bad to get back to want you. give I a to

front that's now. something right us of in that's So not

Pete Enderlin

two for more of, which well, parts. one then is And Okay. sort me

year-over-year. down that much And in revenues Your SG&A mentioned there. you wasn't you very costs much as not as severance some have

laying if is to are why people in off? happening. fact still that's build CFR So If you starting what's

Todd Weintraub

think that what as people I course matter of just call normal was turnover. a would I laying it off don't was

we had people of with However, period lose couple been for a the a did time. of long who company

paid quite bit to a well total in vacation think had severance that really had as was of time longer built don't I up be off that the turnover out. who increased but that some tenured PTO mix that of red So as people has

to So a that recur. but expect was factor, don't that we

Pete Enderlin

million be years. of at Okay. that go something to is some source one you margin or for And next the potential for within and that company, costs leverage hope is themselves? $XXX the there said several that main then direct amount SG&A then leverage about Is fairly up would would level the that margin to the likely stay also

Todd Weintraub

drop-through No that see in and CFR of correct we base the maintaining bottom-line. you're main $XXX continue grow the source that the will our think that that as be I absolutely million to to cost leverage

Pete Enderlin

$XXX that would beyond? million at so way be XXXX the And level basically look to and

Todd Weintraub

specific did that getting It's and as We SG&A things hard now. with from recover to say because to things SG&A see back with and COVID happens normal, very rate we this at for to intentionally normal. year right which to give in the continue line what not we get we'll back manage guidance

back that after the $XXX I savings So think more still the if into fully going that if happen say I the a million would extent exactly beginning don't there globally linger vaccination going the rate XXXX that might to fall. way but normal and would know that we number. have all to we is approach and be We execute by to then can the we what's we still are of this little to continues the and think bit I to And -- be. what summer not

see back CFR a continue we'll and bottom-line. manage how to So that is I the SG&A going think probably coming is to protect XXXX the our that we'll similar will everything overtime, fashion we essentially how to will but we get there, manage in normal,

Pete Enderlin

Thank very you all Okay. Well helpful. that’s very much.

Operator

back reached any turn over have question-and-answer for like to Ghali session. closing Raouf call And with of we the that And the to I Mr. would remarks. our end

Raouf Ghali

Thank you.

thank presenting to the of speak Have behalf hope Hill's continuing this some be Sidoti employees with We I there. around a much for upcoming you month International. time. day. world, will later and at Thank Hill On your of of the your for Conference wonderful very X,XXX you you all support

Operator

concludes today's teleconference. This

participation have for a disconnect this you day. lines may wonderful Thank your time. You your at now and

Hill International (HIL) 11 May 212021 Q1 Earnings call transcript