Outlook Improving as Company Moves Forward;
Guidance Unchanged
Williams Industrial Services Group Inc. (NYSE American: WLMS)
(“Williams” or the “Company”), an energy and industrial
infrastructure services company, today reported its financial
results for the fiscal fourth quarter ended December 31, 2021.
Recent Highlights
- Williams posted revenue of $79.2 million in the fourth quarter
of 2021 compared with $64.1 million in the prior-year period
- The Company reported net income from continuing operations of
$0.8 million, or $0.03 per diluted share, in the fourth quarter of
2021 compared with a net loss from continuing operations of $0.7
million, or $(0.03) per diluted share, in the prior-year period;
the 2020 fourth quarter included a $1.5 million pre-tax charge for
extinguishment of debt related to the Company’s refinancing
- Adjusted EBITDA1 was $3.6 million for the fourth quarter of
2021 compared with $4.0 million in the prior-year period
- For the full year, the Company reported net income from
continuing operations of $2.7 million, or $0.10 per diluted share,
and Adjusted EBITDA1 of $12.7 million compared with net income from
continuing operations of $2.0 million, or $0.08 per share, and
Adjusted EBITDA1 of $14.7 million in 2020
- As of December 31, 2021, the Company’s backlog was $631.7
million, compared to $672.5 million as of September 30, 2021, with
approximately $188.7 million expected to be converted to revenue
over the following twelve months; subsequent to year end, the
Company announced that a multi-year contract for nuclear
decommissioning at three sites – worth approximately $361 million
of backlog through 2029 – had been transferred to a competitor,
such that the Company now expects approximately $157.2 million of
the backlog to be converted to revenue this year
- The Company announced its financial guidance for fiscal 2022 on
January 28, which remains unchanged
“The Company previously announced certain contract and operating
losses that adversely impacted last year’s results and our guidance
for 2022,” said Tracy Pagliara, President and CEO of Williams.
“With these challenges now behind us, we anticipate improving
performance and positive developments for the quarters to come. We
continue to have a solid, diverse backlog that underscores our
confidence in the Company’s future and are bidding on numerous
high-growth opportunities within our end markets.
“We finished the year with revenue of $305 million and are
encouraged by the expanding, enduring demand for the services
Williams provides. Our commitment to customer satisfaction remains
paramount. At the same time, we are also aggressively driving new
business development and enhanced operational execution as the
means to deliver increased margins, higher cash flow and a more
effective organization. We believe the Company is well positioned
for a return to stable, attractive results, which our investors
have come to expect.”
Fourth Quarter 2021 Financial Results Compared to Fourth
Quarter 2020
Revenue in the fourth quarter of 2021 was $79.2 million compared
with $64.1 million in the fourth quarter of 2020, largely
reflecting higher nuclear maintenance and decommissioning work.
Gross profit was $9.2 million, or 11.6% of revenue, compared with
$9.1 million, or 14.2% of revenue, in the prior-year period, with
the lower margin primarily due to changes in project mix.
Operating expenses were $6.8 million compared with $6.5 million
in the fourth quarter of 2020, primarily reflecting slightly higher
selling, general, and administrative (SG&A) expense. The
Company reported operating income of $2.4 million versus $2.6
million in the prior-year period. Interest expense was $1.3 million
in the fourth quarter of 2021 versus $1.4 million in 2020, as a
result of the Company’s refinancing completed in the fourth quarter
of 2020.
The Company reported net income from continuing operations of
$0.8 million, or $0.03 per diluted share, in the fourth quarter of
2021 compared with a net loss from continuing operations of $0.7
million, or $(0.03) per diluted share, in the prior-year period.
The 2020 fourth quarter included a $1.5 million pre-tax charge for
extinguishment of debt related to the aforementioned refinancing
completed during the period.
Balance Sheet
The Company’s total liquidity (the sum of unrestricted cash and
availability under the Company’s revolving credit facility) was
$27.7 million as of December 31, 2021, versus $21.7 million at the
end of the third quarter of 2021. As of December 31, 2021, the
Company had $2.5 million of unrestricted cash and cash equivalents,
$0.5 million of restricted cash, and $32.1 million of bank debt
compared with $8.7 million of unrestricted cash and cash
equivalents, $0.5 million of restricted cash, and $32.1 million of
bank debt as of December 31, 2020.
Backlog
Total backlog as of December 31, 2021 was $631.7 million
compared with $672.5 million on September 30, 2021. During the
fourth quarter of 2021, the Company recognized revenue of $79.2
million, booked new awards of $36.8 million, and saw net
adjustments and cancellations of $1.7 million, reflecting work
scope expansion.
Three Months Ended December
31, 2021
Year Ended December 31,
2021
Backlog - beginning of period
$
672,506
$
443,850
New awards
36,776
413,004
Adjustments and cancellations, net
1,584
79,785
Revenue recognized
(79,173
)
(304,946
)
Backlog - end of period
$
631,693
$
631,693
In January, the Company announced that it failed to renew a key
Canada nuclear contract and that several projects for nuclear
decommissioning – worth approximately $361 million of backlog
through 2029 – had been transferred to a competitor. With the loss
of such business, Williams now estimates that approximately $157.2
million of its adjusted year-end backlog will be converted to
revenue within 2022. This compares with $207.4 million of backlog
($157.8 million excluding the aforementioned contracts) as of
September 30, 2021 that the Company anticipated would be converted
to revenue over the succeeding twelve-month period.
Three Months Ended December
31, 2021
Year Ended December 31,
2021
Backlog - beginning of period
$
672,506
$
443,850
New awards
36,776
413,004
Adjustments and cancellations, net
(359,385
)
(281,184
)
Revenue recognized
(79,173
)
(304,946
)
Backlog - end of period
$
270,724
$
270,724
Outlook
The Company provided guidance on January 28, 2022 for the
current fiscal year, which remains unchanged.
2022 Guidance
Revenue:
$305 million to $325 million
Gross margin:
10.5% to 11.0%
SG&A:
8.75% to 9.25% of revenue (8.25% to 8.75%
excluding investments in upgrading systems)
Adjusted EBITDA*
$10.0 million to $12.5 million
*See Note 1 — Non-GAAP Financial Measures for information
regarding the use of Adjusted EBITDA and forward-looking non-GAAP
financial measures.
Webcast and Teleconference
The Company will host a conference call tomorrow, March 17,
2022, at 10:00 a.m. Eastern time. A webcast of the call and an
accompanying slide presentation will be available at
www.wisgrp.com. To access the conference call by telephone,
listeners should dial 201-493-6780.
An audio replay of the call will be available later that day by
dialing 412-317-6671 and entering conference ID number 13727028;
alternatively, a webcast replay can be found at
http://ir.wisgrp.com/, where a transcript will be posted once
available.
About Williams
Williams Industrial Services Group has been safely helping plant
owners and operators enhance asset value for more than 50 years.
The Company is a leading provider of infrastructure related
services to blue-chip customers in energy and industrial end
markets, including a broad range of construction maintenance,
modification, and support services. Williams’ mission is to be the
preferred provider of construction, maintenance, and specialty
services through commitment to superior safety performance, focus
on innovation, and dedication to delivering unsurpassed value to
its customers.
Additional information about Williams can be found on its
website: www.wisgrp.com.
Forward-looking Statement Disclaimer
This press release contains “forward-looking statements” within
the meaning of the term set forth in the Private Securities
Litigation Reform Act of 1995. The forward-looking statements
include statements or expectations regarding the Company’s ability
to perform in accordance with guidance, build and diversify its
backlog and convert backlog to revenue, realize opportunities,
including receiving contract awards on outstanding bids and
successfully pursuing future opportunities, benefit from potential
growth in the Company’s end markets, including from increased
infrastructure spending by the U.S. federal government, and
successfully achieve its growth, strategic and business development
initiatives, including decreasing the Company’s outstanding
indebtedness, future demand for the Company’s services, and
expectations regarding future revenues, cash flow, and other
related matters. These statements reflect the Company’s current
views of future events and financial performance and are subject to
a number of risks and uncertainties, including the Company’s level
of indebtedness and ability to make payments on, and satisfy the
financial and other covenants contained in, its debt facilities, as
well as its ability to engage in certain transactions and
activities due to limitations and covenants contained in such
facilities; its ability to generate sufficient cash resources to
continue funding operations, including investments in working
capital required to support growth-related commitments that it
makes to customers, and the possibility that it may be unable to
obtain any additional funding as needed or incur losses from
operations in the future; exposure to market risks from changes in
interest rates; the Company’s ability to obtain adequate surety
bonding and letters of credit; the Company’s ability to attract and
retain qualified personnel, skilled workers, and key officers,
including the potential impact of any applicable COVID-19
vaccination mandate on the Company’s ability to recruit and retain
employees; failure to successfully implement or realize its
business strategies, plans and objectives of management, and
liquidity, operating and growth initiatives and opportunities,
including any expansion into international markets and its ability
to identify potential candidates for, and consummate, acquisition,
disposition, or investment transactions; the loss of one or more of
its significant customers; its competitive position; market outlook
and trends in the Company’s industry, including the possibility of
reduced investment in, or increased regulation of, nuclear power
plants, declines in public infrastructure construction, and
reductions in government funding; costs exceeding estimates the
Company uses to set fixed-price contracts; harm to the Company’s
reputation or profitability due to, among other things, internal
operational issues, poor subcontractor performances or
subcontractor insolvency; potential insolvency or financial
distress of third parties, including customers and suppliers; the
Company’s contract backlog and related amounts to be recognized as
revenue; its ability to maintain its safety record, the risks of
potential liability and adequacy of insurance; adverse changes in
the Company’s relationships with suppliers, vendors, and
subcontractors, including increases in cost, disruption of supply
or shortage of labor, freight, equipment or supplies, including as
a result of the COVID-19 pandemic; compliance with environmental,
health, safety and other related laws and regulations, including
those related to climate change; limitations or modifications to
indemnification regulations of the U.S.; the Company’s expected
financial condition, future cash flows, results of operations and
future capital and other expenditures; the impact of general
economic conditions including the ongoing economic disruption and
any recession resulting from the COVID-19 pandemic; the impact of
the COVID-19 pandemic on the Company’s business, results of
operations, financial condition, and cash flows, including global
supply chain disruptions and the potential for additional COVID-19
cases to occur at the Company’s active or future job sites, which
potentially could impact cost and labor availability; information
technology vulnerabilities and cyberattacks on the Company’s
networks; the Company’s failure to comply with applicable laws and
regulations, including, but not limited to, those relating to
privacy and anti-bribery; the Company’s ability to successfully
implement its new enterprise resource planning (ERP) system; the
Company’s participation in multiemployer pension plans; the impact
of any disruptions resulting from the expiration of collective
bargaining agreements; the impact of natural disasters, which may
worsen or increase due to the effects of climate change, and other
severe catastrophic events (such as the ongoing COVID-19 pandemic);
the impact of corporate citizenship and environmental, social and
governance matters; the impact of changes in tax regulations and
laws, including future income tax payments and utilization of net
operating loss and foreign tax credit carryforwards; volatility of
the market price for the Company’s common stock; the Company’s
ability to maintain its stock exchange listing; the effects of
anti-takeover provisions in the Company’s organizational documents
and Delaware law; the impact of future offerings or sales of the
Company’s common stock on the market price of such stock; expected
outcomes of legal or regulatory proceedings and their anticipated
effects on the Company’s results of operations; and any other
statements regarding future growth, future cash needs, future
operations, business plans and future financial results.
Other important factors that may cause actual results to differ
materially from those expressed in the forward-looking statements
are discussed in the Company’s filings with the U.S. Securities and
Exchange Commission, including the section of the Annual Report on
Form 10-K for its 2021 fiscal year titled “Risk Factors.” Any
forward-looking statement speaks only as of the date of this press
release. Except as may be required by applicable law, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, and you are cautioned not to rely upon
them unduly.
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
Three Months Ended December
31,
Year Ended December
31,
($ in thousands, except share and per
share amounts)
2021
2020
2021
2020
Revenue
$
79,173
$
64,115
$
304,946
$
269,051
Cost of revenue
69,959
55,021
273,520
235,035
Gross profit
9,214
9,094
31,426
34,016
Gross margin
11.6
%
14.2
%
10.3
%
12.6
%
Selling and marketing expenses
241
168
950
569
General and administrative expenses
6,478
6,308
23,409
23,721
Depreciation and amortization expense
53
43
190
187
Total operating expenses
6,772
6,519
24,549
24,477
Operating income
2,442
2,575
6,877
9,539
Operating margin
3.1
%
4.0
%
2.3
%
3.5
%
Interest expense, net
1,268
1,443
5,001
6,083
Loss on extinguishment of debt
—
1,455
—
1,455
Other income, net
(208
)
(430
)
(1,619
)
(1,367
)
Total other expenses, net
1,060
2,468
3,382
6,171
Income (loss) from continuing operations
before income tax expense
1,382
107
3,495
3,368
Income tax expense
537
820
793
1,385
Income (loss) from continuing
operations
845
(713
)
2,702
1,983
Loss from discontinued operations before
income tax expense (benefit)
42
(183
)
172
(405
)
Income tax expense
72
96
131
40
Income (loss) from discontinued
operations
(30
)
(279
)
41
(445
)
Net income (loss)
$
815
$
(992
)
$
2,743
$
1,538
Basic earnings (loss) per common share
Income (loss) from continuing
operations
$
0.03
$
(0.03
)
$
0.11
$
0.08
Income (loss) from discontinued
operations
—
(0.01
)
—
(0.02
)
Basic earnings (loss) per common share
$
0.03
$
(0.04
)
$
0.11
$
0.06
Diluted earnings (loss) per common
share
Income (loss) from continuing
operations
$
0.03
$
(0.03
)
$
0.10
$
0.08
Income (loss) from discontinued
operations
—
(0.01
)
—
(0.02
)
Diluted earnings (loss) per common
share
$
0.03
$
(0.04
)
$
0.10
$
0.06
Weighted average common shares outstanding
(basic)
25,699,545
24,689,337
25,506,748
23,676,458
Weighted average common shares outstanding
(diluted)
26,404,060
24,689,337
26,137,644
24,217,997
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
REVENUE BRIDGE
ANALYSIS*
Fourth Quarter 2021 Revenue
Bridge
(in millions)
$ Change
Fourth quarter 2020 revenue
$
64.1
Plant Vogtle Units 3 and 4
(3.8
)
Canada
(1.5
)
Decommissioning
6.8
Nuclear Maintenance
7.0
Water/Wastewater
3.7
Project mix
2.9
Total change
15.1
Fourth quarter 2021 revenue
$
79.2
*Numbers may not sum due to rounding
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31,
($ in thousands, except share and per
share amounts)
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
2,482
$
8,716
Restricted cash
468
468
Accounts receivable, net of allowance of
$427 and $351, respectively
35,204
27,549
Contract assets
12,683
7,969
Other current assets
11,049
6,457
Total current assets
61,886
51,159
Property, plant and equipment, net
653
309
Goodwill
35,400
35,400
Intangible assets, net
12,500
12,500
Other long-term assets
5,712
5,712
Total assets
$
116,151
$
105,080
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
12,168
$
6,210
Accrued compensation and benefits
12,388
15,800
Contract liabilities
3,412
2,529
Short-term borrowings
676
352
Current portion of long-term debt
1,050
1,050
Other current liabilities
11,017
7,170
Current liabilities of discontinued
operations
316
342
Total current liabilities
41,027
33,453
Long-term debt, net
30,328
30,728
Deferred tax liabilities
2,442
2,440
Other long-term liabilities
1,647
2,098
Long-term liabilities of discontinued
operations
4,250
4,466
Total liabilities
$
79,694
$
73,185
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000
shares authorized and 26,408,789 and 25,926,333 shares issued,
respectively, and 25,939,621 and 25,336,442 shares outstanding,
respectively
$
261
$
256
Paid-in capital
92,227
90,292
Accumulated other comprehensive income
(loss)
(95
)
28
Accumulated deficit
(55,930
)
(58,673
)
Treasury stock, at par (469,168 and
589,891 common shares, respectively)
(6
)
(8
)
Total stockholders’ equity
36,457
31,895
Total liabilities and stockholders’
equity
$
116,151
$
105,080
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
Year Ended December
31,
(in thousands)
2021
2020
Operating activities:
Net income
$
2,743
$
1,538
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Net (income) loss from discontinued
operations
(41
)
445
Deferred income tax provision
2
242
Depreciation and amortization on property,
plant and equipment
190
187
Amortization of deferred financing
costs
831
1,536
Amortization of debt discount
200
—
Gain on disposals of property, plant and
equipment
—
(104
)
Debt extinguishment expenses
—
1,211
Bad debt expense
77
(351
)
Stock-based compensation
3,045
2,546
Changes in operating assets and
liabilities, net of businesses acquired and sold:
Accounts receivable
(7,826
)
11,107
Contract assets
(4,700
)
(699
)
Other current assets
(4,682
)
(3,903
)
Other assets
(337
)
3,972
Accounts payable
5,860
(10,438
)
Accrued and other liabilities
(538
)
4,532
Contract liabilities
879
(176
)
Net cash provided by (used in) operating
activities, continuing operations
(4,297
)
11,645
Net cash used in operating activities,
discontinued operations
(200
)
(464
)
Net cash provided by (used in) operating
activities
$
(4,497
)
$
11,181
Investing activities:
Purchase of property, plant and
equipment
(538
)
(117
)
Net cash used in investing activities
$
(538
)
$
(117
)
Financing activities:
Repurchase of stock-based awards for
payment of statutory taxes due on stock-based compensation
$
(554
)
$
(227
)
Proceeds from issuance of common stock
—
6,489
Debt issuance costs
—
(4,200
)
Debt refinancing costs and original issue
discount
—
(2,003
)
Proceeds from short-term borrowings
289,379
262,695
Repayments of short-term borrowings
(289,055
)
(273,192
)
Proceeds from long-term debt
—
35,000
Repayments of long-term debt
(1,050
)
(34,388
)
Net cash used in financing activities
(1,280
)
(9,826
)
Effect of exchange rate change on cash
81
128
Net change in cash, cash equivalents and
restricted cash
(6,234
)
1,366
Cash, cash equivalents and restricted
cash, beginning of period
9,184
7,818
Cash, cash equivalents and restricted
cash, end of period
$
2,950
$
9,184
Supplemental Disclosures:
Cash paid for interest
$
3,674
$
4,316
Noncash fee related to revolving debt
facility
$
—
$
150
Cash paid for income taxes, net of
refunds
$
2,128
$
—
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURE
(UNAUDITED)
This press release contains financial
measures not derived in accordance with accounting principles
generally accepted in the United States (“GAAP”). A reconciliation
to the most comparable GAAP measure is provided below.
ADJUSTED EBITDA - CONTINUING
OPERATIONS
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2021
2020
2021
2020
Income from continuing operations
$
845
$
(713
)
$
2,702
$
1,983
Add back:
Interest expense, net
1,268
1,443
5,001
6,083
Income tax expense
537
820
793
1,385
Depreciation and amortization expense
53
43
190
187
Stock-based compensation
466
801
3,045
2,503
Severance costs
358
—
523
421
Franchise taxes
80
64
264
267
Consulting expenses-remediation
—
(69
)
—
194
Settlement expenses
—
314
—
443
Loss on extinguishment of debt
—
1,455
—
1,455
Foreign currency gain
(56
)
(162
)
(206
)
(186
)
ROU Asset Impairment
—
—
423
—
Adjusted EBITDA - continuing
operations
$
3,551
$
3,996
$
12,735
$
14,734
NOTE 1 — Non-GAAP Financial Measures
Adjusted EBITDA-Continuing
Operations
Adjusted EBITDA is not calculated through the application of
GAAP and is not the required form of disclosure by the U.S.
Securities and Exchange Commission. Adjusted EBITDA is the sum of
the Company’s income (loss) from continuing operations before
interest expense, net, and income tax (benefit) expense and unusual
gains or charges. It also excludes non-cash charges such as
depreciation and amortization. The Company’s management believes
adjusted EBITDA is an important measure of operating performance
because it allows management, investors and others to evaluate and
compare the performance of its core operations from period to
period by removing the impact of the capital structure (interest),
tangible and intangible asset base (depreciation and amortization),
taxes and unusual gains or charges (stock-based compensation,
severance costs, other professional fees, franchise taxes, foreign
currency (gain) loss, settlement expenses and ROU asset impairment)
which are not always commensurate with the reporting period in
which such items are included. Williams’ credit facilities also
contain ratios based on EBITDA. Adjusted EBITDA should not be
considered an alternative to net income or income from continuing
operations or as a better measure of liquidity than net cash flows
from operating activities, as determined by GAAP, and, therefore,
should not be used in isolation from, but in conjunction with, the
GAAP measures. The use of any non-GAAP measure may produce results
that vary from the GAAP measure and may not be comparable to a
similarly defined non-GAAP measure used by other companies.
Note Regarding Forward-Looking Non-GAAP
Financial Measures
The Company does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting and analyzing future periods, the Company
does so primarily on a non-GAAP basis without preparing a GAAP
analysis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220316005752/en/
Chris Witty Darrow Associates 646-345-0998
cwitty@darrowir.com
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