Hill International, Inc. (NYSE:HIL) ("Hill" or the "Company"),
the global leader in managing construction risk, announced today
that it has filed its Quarterly Report on Form 10-Q for the first
quarter ended March 31, 2020. This release will be followed by
a conference call on May 8, 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, "Our first priority is the
health and safety of all our stakeholders. To this end, we took a
number of actions in response to the COVID-19 global pandemic,
including work from home directives and cost saving initiatives. To
date, the pandemic has not had a significant impact on our results.
While we incurred a net loss of $6.6 million due in large part to
unrealized FX losses and accelerated amortization of a leasehold
improvement, our adjusted EBITDA for the quarter was $3.2 million,
a 36.9% increase compared to last year’s number. At present,
approximately 95% of our billable employees continue to service
ongoing projects, for which their services have been deemed
essential. New bookings were impacted during the quarter as
customers focused on their existing operations and, as a
consequence, we are withdrawing our CFR guidance provided last
quarter. We took a number of actions to reduce our SG&A for
2020, including more than $10.0 million of cost reduction compared
to our original plan. I look forward to providing further details
of our actions taken, our first quarter performance and our current
outlook during our call."
First Quarter Financial Results
Hill's consulting fee revenue ("CFR") was $77.2
million for the quarter ended March 31, 2020, compared to
$79.0 million for the quarter ended March 31, 2019. Although
the pandemic has not had a significant impact on its business to
date, the Company is rescinding its previous guidance of $330.0
million through $350.0 million of CFR for 2020 due to the related
uncertainty.
Net loss attributable to Hill was $6.6 million
for the quarter ended March 31, 2020, compared to a net loss
attributable to Hill of $2.1 million for the quarter ended
March 31, 2019. Unrealized foreign currency exchange losses of
$4.1 million, a $1.6 million write off of leasehold improvements
related to the sublease of a portion of the Company's corporate
headquarters as part of its cost reduction initiatives and
share-based compensation of $0.4 million, all non-cash items, were
the primary reasons for the net loss in 2020. Adjusted net loss,
which is defined below and is not a measure under U.S. generally
accepted accounting principles ("GAAP"), was $0.5 million and $2.2
million for the quarters ended March 31, 2020 and 2019,
respectively (see reconciliation of adjusted net loss in the table
below).
The Company’s operating loss for the quarter
ended March 31, 2020 was $3.9 million, compared to operating
profit of $0.5 million during the same period in the prior year.
The operating loss in 2020 was primarily due to the same items
impacting net loss, as discussed above. Adjusted operating profit
(which is a non-GAAP measure; see definition below) was $2.2
million and $0.4 million for the quarters ended March 31, 2020
and 2019, respectively (see reconciliation of adjusted operating
profit in the table below).
Mr. Weintraub added, “The Company continued its
recovery with its fifth consecutive quarter of positive adjusted
EBITDA and further reduced operating costs in response to the
uncertainty caused by the global pandemic. Our liquidity is
sufficient with approximately $23 million of cash and undrawn
credit available at April 30. We are also looking at funding from
the Main Street Lending Program to further increase our
flexibility.”
Selling, general, and administrative
("SG&A") expenses were $32.1 million and $31.3 million in the
quarters ended March 31, 2020 and March 31, 2019,
respectively. SG&A was negatively impacted during the quarter
ended March 31, 2020 by the same items impacting net and
operating losses, as discussed above, totaling $6.1 million.
Adjusted EBITDA (which is a non-GAAP measure;
see definition below), which excludes certain effects of the
SG&A items specified above, improved 36.9% to $3.2 million for
the quarter ended March 31, 2020, compared to $2.4 million for
the quarter ended March 31, 2019 (see reconciliation of EBITDA
and adjusted EBITDA in the table below).
Net cash used in operating activities for the
quarter ended March 31, 2020 was $10.9 million, compared to
net cash provided by operating activities of $8.5 million in the
quarter ended March 31, 2019. The Company believes a number of
clients' payments to them that would have normally been received in
March were delayed due to the pandemic. Collections to-date during
the second quarter have returned to normal levels. The Company's
unrestricted cash increased to approximately $19.0 million at
April 30, 2020 from $16.1 million at March 31, 2020. The
Company also had approximately $3.8 million in available and
undrawn credit facilities at April 30, 2020, an increase from
$2.8 million at March 31, 2020.
Backlog (which is a non-GAAP measure; see
definition below) decreased to $753.1 million at March 31,
2020, or 7.2%, from December 31, 2019, due primarily to lower
than expected bookings and higher than normal reductions during the
quarter ended March 31, 2020, as the awarding on many projects
was deferred and certain projects scheduled for 2020 were canceled
because of the impact of COVID-19.
Non-GAAP Measures
The following measures below are not measures of
financial performance under U.S. generally accepted accounting
principles ("GAAP") and should be considered in addition to and not
as a substitute for, or superior to, the related measure of
performance prepared in accordance with GAAP.
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.
Adjusted Operating Profit
(Loss)
Adjusted operating profit (loss) is operating
profit (loss), adjusted to exclude non-cash items including
unrealized foreign currency exchange losses (gains), share-based
compensation and the write-off of leasehold improvements previously
included in property and equipment on the Company's consolidated
balance sheets. The Company believes that adjusted operating profit
(loss) is useful to investors and other external users of Hill's
financial statements as a measure of a company's core ongoing
operations, without regard to non-cash activity.
EBITDA
Earnings before interest, taxes, depreciation
and amortization ("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. Investors should recognize that EBITDA might not
be comparable to similarly titled measures of other
companies. 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) and non-cash items such as
unrealized foreign currency exchange losses (benefit) and
share-based compensation expense.
Adjusted Net Income (Loss) Attributable
to Hill
Adjusted net income (loss) attributable to Hill
is net income (loss) attributable to Hill, adjusted to exclude
non-cash items including unrealized foreign currency exchange
losses (gains), share-based compensation and the write-off of
leasehold improvements previously included in property and
equipment on the Company's consolidated balance sheets. The Company
believes that adjusted net income (loss) attributable to Hill is
useful to investors and other external users of Hill's financial
statements as a measure of a company's operating performance,
without regard to non-cash activity.The following table includes a
reconciliation of these non-GAAP measures to its most directly
comparable GAAP measure:
|
|
|
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
(in thousands) |
|
|
|
|
Operating (loss)
profit |
|
(3,865 |
) |
|
539 |
|
Adjustments to operating (loss)
profit |
|
|
|
|
Share-based compensation |
|
399 |
|
|
241 |
|
Unrealized foreign currency exchange loss (benefit) |
|
4,103 |
|
|
(352 |
) |
Write-off of leasehold improvements (1) |
|
1,582 |
|
|
— |
|
Adjusted operating
profit |
|
$ |
2,219 |
|
|
$ |
428 |
|
|
|
|
|
|
Net loss |
|
(6,422 |
) |
|
(2,068 |
) |
Less: net earnings -
non-controlling interests |
|
159 |
|
|
67 |
|
Net loss attributable to
Hill International, Inc. |
|
$ |
(6,581 |
) |
|
$ |
(2,135 |
) |
Adjustments to net loss
attributable to Hill International, Inc. |
|
|
|
|
Interest and related financing fees, net |
|
1,299 |
|
|
1,512 |
|
Income tax expense |
|
1,603 |
|
|
1,095 |
|
Depreciation and amortization expense (1) |
|
2,424 |
|
|
791 |
|
EBITDA |
|
$ |
(1,255 |
) |
|
$ |
1,263 |
|
Adjustments to EBITDA: |
|
|
|
|
PIP and other one-time costs |
|
— |
|
|
1,218 |
|
Share-based compensation |
|
399 |
|
|
241 |
|
Unrealized foreign currency exchange loss (benefit) |
|
4,103 |
|
|
(352 |
) |
Adjusted
EBITDA |
|
$ |
3,247 |
|
|
$ |
2,370 |
|
|
|
|
|
|
Adjustments to net loss
attributable to Hill International, Inc. |
|
|
|
|
Share-based compensation |
|
399 |
|
|
241 |
|
Unrealized foreign currency exchange loss (benefit) |
|
4,103 |
|
|
(352 |
) |
Write-off of leasehold improvements (1) |
|
1,582 |
|
|
— |
|
Adjusted net
loss |
|
$ |
(497 |
) |
|
$ |
(2,246 |
) |
(1) The write-off of leasehold improvements that was incurred as
a result of the sublease of the Company's corporate headquarters as
part of its cost reduction initiatives was included in depreciation
and amortization expense and is reflected in SG&A in the
Company's consolidated statements of operations.
Conference Call
Mr. Ghali, and Mr. Weintraub will host a
conference call on May 8, 2020 at 9:00 am EDT 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.
About Hill International
Hill International, with approximately 2,700
professionals in more than 55 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 President, Global Marketing and
CommunicationsHill 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
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