Hill International, Inc. (NYSE:HIL) ("Hill" or the "Company"),
the global leader in managing construction risk, announced today
its results for the quarter and fiscal year ended December 31,
2019. This release will be followed by a conference call on March
17, 2020 at 9:00 am EDT with Hill Chief Executive Officer Raouf
Ghali and Senior Vice President and Chief Financial Officer Todd
Weintraub.
Mr. Ghali commented, “The Company successfully
returned to profitability, reduced its cost base and significantly
increased its backlog during 2019. I expect continued positive
results in 2020 as we convert the increased backlog into revenue
and continue to manage our costs. I look forward to providing
further details of our performance during our call."
Fourth Quarter Financial
Results
Hill's consulting fee revenue ("CFR") was $76.8 million for the
quarter ended December 31, 2019, compared to $75.5 million for
the quarter ended December 31, 2018. Total revenue for
the quarter ended December 31, 2019 was $83.8 million,
compared to $100.7 million for the quarter ended December 31,
2018.
Net income attributable to Hill was $12.1
million, resulting in a margin of 15.8% as a percentage of CFR, for
the quarter ended December 31, 2019, compared to a net loss
from continuing operations attributable to Hill of $7.3 million,
resulting in a margin of (9.7)% as a percentage of CFR, for the
quarter ended December 31, 2018. The Company’s operating
income for the quarter ended December 31, 2019 was $10.1
million, compared to an operating loss of $4.5 million during the
same period in the prior year.
Mr. Weintraub added, “The Company continued its improved 2019
performance with a strong fourth quarter, supported by solid
underlying results of operations bolstered by collection of a
significant aged receivable from a Libya contract.”
Selling, general, and administrative
("SG&A") expenses were $23.1 million and $37.3 million in the
quarters ended December 31, 2019 and 2018, respectively.
SG&A was favorably impacted in 2019 by a net credit of $7.1
million related to collection of a fully reserved receivable from a
Libya project. The fourth quarter of 2018 was negatively impacted
by a bad debt provision of $3.1 million and costs related to the
Company's Profit Improvement Plan ("PIP") of $2.8 million.
Adjusted EBITDA (as defined below), which
excludes certain effects of the SG&A items specified above,
improved to $4.0 million for the fourth quarter of 2019, compared
to $(0.5) million for the fourth quarter of 2018 (see EBITDA and
adjusted EBITDA table below). Hill's adjusted EBITDA margin, as a
percentage of CFR, was 5.2% and (0.6)% for the quarters ended
December 31, 2019 and 2018, respectively.
Year End Financial Results
CFR was $308.6 million for the year ended
December 31, 2019, compared to $337.2 million for the year
ended December 31, 2018. Total revenue for the year ended
December 31, 2019 was $376.4 million, compared to $428.7
million for the year ended December 31, 2018.
Net income attributable to Hill for the year
ended December 31, 2019 was $14.1 million, or $0.25 per
diluted share, resulting in a margin of 4.6% of CFR, compared to a
net loss from continuing operations attributable to Hill of $30.6
million, or $0.56 per diluted share, resulting in a margin of
(9.1)% of CFR for the year ended December 31, 2018. Hill’s
operating profit for the year ended December 31, 2019 was
$18.3 million, compared to an operating loss of $21.0 million
during the same period in the prior year.
SG&A expenses were $111.1 million and $154.2
million in the years ended December 31, 2019 and 2018,
respectively. SG&A was favorably impacted in 2019 by a net
credit of $7.1 million related to collection of a fully reserved
receivable from a project in Libya. The year ended
December 31, 2018 was negatively impacted by costs related to
the Company's PIP of $19.8 million.
Adjusted EBITDA, which excludes the effects of
the SG&A items specified above and other one-time costs, was
$16.9 million for both years ended December 31, 2019 and 2018
(see EBITDA and adjusted EBITDA table below). The Company's
adjusted EBITDA margin was 5.5% and 5.0% over CFR for the years
ended December 31, 2019 and 2018, respectively.
Net cash provided by (used in) continuing
operations was $10.0 million and $(25.0) million for the years
ended December 31, 2019 and 2018, respectively. Free cash flow
(as defined below) for the year ended December 31, 2019 was
$6.1 million, which represents net cash provided by continuing
operations, less $3.9 million in purchases of property and
equipment during the year. Free cash flow for the year ended
December 31, 2018 was $(27.4) million, which represents net
cash used in continuing operations, less $2.3 million in purchases
of property and equipment during the year.
Backlog
Backlog represents the Company's estimate of the
amount of uncompleted projects under contract and awards in-hand
that are expected to be recognized as CFR in future periods as a
component of total revenue. Hill's backlog is based upon the
binding nature of the underlying contract, commitment or letter of
intent, and other factors, including the economic, financial and
regulatory viability of the project and the likelihood of the
contract being extended, renewed or canceled. Although backlog
reflects business that the Company considers to be firm,
cancellations or scope adjustments may occur. It is an important
indicator of future performance and is used by the Company in
planning Hill's operational needs. Backlog is not a measure defined
in GAAP and the Company's methodology for determining backlog may
not be comparable to the methodology used by other companies in
determining their backlog.
Non-GAAP Measures
EBITDA
Earnings before interest, taxes, depreciation
and amortization ("EBITDA") and adjusted EBITDA from continuing
operations are not measures of financial performance under U.S.
generally accepted accounting principles ("GAAP"). EBITDA, in
addition to operating profit, net income, and other GAAP measures,
is a useful indicator of Hill's financial and operating performance
and its ability to generate cash flow from operations that are
available for taxes and capital expenditures. The Company believes
that EBITDA is useful to investors and other external users of
Hill's financial statements in evaluating its operating performance
because EBITDA is widely used by investors to measure a company’s
operating performance without regard to items such as interest
expense, taxes, and depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which assets were acquired.
Adjusted EBITDA is EBITDA, adjusted to exclude
the impact of certain items, including non-recurring, one-time
costs (as presented in the table below), unrealized foreign
currency translation losses (benefit) and non-cash share-based
compensation expense. Adjusted EBITDA margin is adjusted EBITDA as
a percentage of the Company's CFR. The Company believes that the
adjusted EBITDA margin is useful to investors and other external
users of Hill's financial statements and that it is an indicator of
the Company's efficiency and ability to convert CFR into cash flows
from operations.
These non-GAAP measures should be considered in
addition to, and not as a substitute for or superior to, any
measure of performance prepared in accordance with GAAP. Investors
should recognize that EBITDA, adjusted EBITDA and adjusted EBITDA
margin may not be comparable to similarly titled measures of other
companies.
The following table includes a reconciliation of
EBITDA and adjusted EBITDA to the most directly comparable GAAP
measure, in addition to adjusted EBITDA margin:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
(in thousands) |
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations |
|
12,115 |
|
|
(7,295 |
) |
|
14,254 |
|
|
(30,512 |
) |
Net (loss) income -
noncontrolling interests |
|
(6 |
) |
|
(10 |
) |
|
170 |
|
|
86 |
|
Net income (loss) attributable to Hill International,
Inc. |
|
$ |
12,121 |
|
|
$ |
(7,285 |
) |
|
$ |
14,084 |
|
|
$ |
(30,598 |
) |
|
|
|
|
|
|
|
|
|
Interest and related financing
fees, net |
|
1,387 |
|
|
1,455 |
|
|
5,795 |
|
|
5,310 |
|
Income tax (benefit) expense |
|
(3,357 |
) |
|
1,311 |
|
|
(1,109 |
) |
|
4,239 |
|
Depreciation and amortization
expense |
|
1,389 |
|
|
1,997 |
|
|
3,824 |
|
|
5,430 |
|
EBITDA |
|
$ |
11,540 |
|
|
$ |
(2,522 |
) |
|
$ |
22,594 |
|
|
$ |
(15,619 |
) |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Profit Improvement Plan and other
one-time costs |
|
500 |
|
|
2,752 |
|
|
646 |
|
|
19,768 |
|
Loss on performance bond |
|
— |
|
|
— |
|
|
— |
|
|
7,938 |
|
Collection of Libya receivable,
net (1) |
|
(7,124 |
) |
|
— |
|
|
(7,124 |
) |
|
(3,248 |
) |
Share-based compensation (2) |
|
260 |
|
|
881 |
|
|
1,598 |
|
|
1,622 |
|
Unrealized foreign currency
translation benefit |
|
(1,172 |
) |
|
(1,581 |
) |
|
(814 |
) |
|
6,450 |
|
Adjusted
EBITDA |
|
$ |
4,004 |
|
|
$ |
(470 |
) |
|
$ |
16,900 |
|
|
$ |
16,911 |
|
|
|
|
|
|
|
|
|
|
Consulting fee
revenue |
|
$ |
76,838 |
|
|
$ |
75,450 |
|
|
$ |
308,620 |
|
|
$ |
337,244 |
|
Net income (loss)
margin |
|
15.8 |
% |
|
(9.7 |
)% |
|
4.6 |
% |
|
(9.1 |
)% |
Adjusted EBITDA
margin |
|
5.2 |
% |
|
(0.6 |
)% |
|
5.5 |
% |
|
5.0 |
% |
(1) The three and twelve months ended
December 31, 2019 and 2018 includes amount collected, net of
amounts paid to subcontractors and other fees.(2) Share-based
compensation excludes expense related to shares issued as part of
the PIP during the year ended December 31, 2019 and were
accrued by the Company in prior years.
Free Cash Flow
Free cash flow, a non-GAAP measure, includes net
cash provided by (used in) continuing operations, less purchases of
property and equipment. Free cash flow is a useful indicator that
provides additional perspective on Hill's ability to generate cash
that is available to the Company for taxes and other corporate
purposes. Investors should recognize that free cash flow might not
be comparable to similarly-titled measures of other companies. This
measure should be considered in addition to, and not as a
substitute for or superior to, any measure of performance prepared
in accordance with GAAP.
Conference Call
Mr. Ghali, and Mr. Weintraub will host a
conference call on Tuesday, March 17, 2020, at 9:00 am Eastern
Daylight Time to discuss the results.
Interested parties may participate in the call
by dialing (877) 511-3236 (Domestic) or (786) 815-8670
(International) approximately 10 minutes before the call is
scheduled to begin and asking to be connected to the Hill
International Conference Call. To listen to the live call online,
please go to the “Investor Relations” section of Hill’s website at
www.hillintl.com and click on “Financial Information,” and
then “Conferences and Calls.” Please go to the website at least 15
minutes early to register, download, and install any necessary
audio software. If you are unable to participate in the live call,
the conference call will be archived on Hill’s website and
accessible for approximately 90 days.
Filing of Form 10-K
The Company will file Hill's Annual Report on
Form 10-K for the fiscal year ended December 31, 2019 once the
Company completes certain administrative and other procedures
relating to the ongoing review of information for the Company's
annual audit. The additional time needed arises from previously
disclosed material weaknesses in internal controls over financial
reporting. The Company intends to file Form 10-K as soon as
practicable, but in any event, within the extended deadline
(fifteen calendar days following March 16, the regular filing due
date of the Form 10-K) provided under Rule 12b-25).
About Hill International
Hill International, with approximately 2,700
professionals in more than 60 offices worldwide, provides program
management, project management, construction management, and other
consulting services to clients in a variety of market sectors.
Engineering News-Record magazine recently ranked Hill as the
eighth-largest construction management firm in the United States.
For more information on Hill, please visit our website at
www.hillintl.com.
Forward Looking Statements
Certain statements contained herein may be
considered "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, and it is our
intent that any such statements be protected by the safe harbor
created thereby. Except for historical information, the matters set
forth herein including, but not limited to, any statements of
belief or intent, any statements concerning our plans, strategies,
and objectives for future operations are forward-looking
statements. These forward-looking statements are based on our
current expectations, estimates and assumptions and are subject to
certain risks and uncertainties, including but not limited to the
effects of any continued spread of the COVID-19 virus or effects of
decreased oil and gas prices. Although we believe that the
expectations, estimates, and assumptions reflected in our
forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our
forward-looking statements. Important factors that could cause our
actual results to differ materially from estimates or projections
contained in our forward-looking statements are set forth in the
Risk Factors section and elsewhere in the reports we have filed
with the Securities and Exchange Commission, including that
unfavorable global economic conditions may adversely impact our
business, our backlog may not be fully realized as revenue, and our
expenses may be higher than anticipated. We do not intend, and
undertake no obligation, to update any forward-looking
statement.
Hill International, Inc. Elizabeth J. Zipf,
LEED AP BD+CSenior Vice PresidentHill International,
Inc.One Commerce Square2005 Market Street, 17th
FloorPhiladelphia, PA 19103Tel:
215-309-7707elizabethzipf@hillintl.com
Hill International, Inc. Todd WeintraubSenior
Vice President and Chief Financial Officer (215)
309-7951toddweintraub@hillintl.com
(HIL-G)
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