Hill International, Inc.
Q4 2020 Earnings Call Transcript

Published: 17 Mar 2021

[Operator:]

Greetings, and welcome to the Hill International Fourth Quarter and Year End 2020 Financial Results Conference Call. A question-and-answer session will follow the formal presentation. As a reminder this conference is being recorded. It is now my pleasure to turn the call over to Devin Sullivan, with The Equity Group. Please go ahead, Sir.

[Devin Sullivan:]

Thank you, Kevin. Good morning everyone, and thank you for joining us today for Hill International's fourth quarter and full year 2020 financial results conference call. Our speakers for today's call will be Raouf Ghali, Chief Executive Officer; and Todd Weintraub, Hill's Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made during this call 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 financial projections, our plans, strategies and objectives for future operations are forward-looking statements.

[Raouf Ghali:]

Thank you, Devin. Good morning everyone and thank you for joining us today to discuss our 2020 fourth quarter and full year results. I want to begin by thanking all of Hill's staff around the world. Their hard work, dedication, and commitment to client services during the pandemic helped us navigate the most challenging time in our history. The pandemic profoundly impacted our personal and business lives and Hill's professionals quickly rose to the challenge to provide seamless support to our clients around the world. This helped us create the road to recovery beginning in the second quarter of 2020 and positions us for continuing growth in 2021. We take great pride what we have accomplished and I remain grateful for the privilege of leading this extraordinary organization. Let's begin with an overview of our annual performance on Slide 4. We produced $296.6 million in CFR, which came in just below the end of our range due to several project deferments in the fourth quarter of 2020. I want to note that we estimate these COVID-19 related temporary suspensions have a negative impact of $25 million in CFR in 2020.

[Todd Weintraub:]

Thank you, Raouf. I'll pick things up from Slide 11. This slide provides an overview of our GAAP results for the fourth quarter and full year of 2020. CFR for the fourth quarter of 2020 was $72.2 million, a slight increase from Q3 2020, but a decline from $76.8 million in last year's fourth quarter. As Raouf noted, this decline reflected the late project starts due to large part to uncertainties driven by COVID-19. Selling, general and administrative expenses were $28.7 million or 37.9% of CFR compared to $23.6 million or 30.2% of CFR in Q4 2019. As mentioned, last year's fourth quarter SG&A was reduced by $7.1 million reflecting the net credit associated with the Libya receivable. Excluding that transaction, SG&A in last year's fourth quarter was $30.7 million or 40% of CFR. SG&A in the 2020 fourth quarter, reflected higher than normal professional fees related to remediation of control activities and higher than normal unapplied and indirect labor due to PTO taken in December as the company had previously instituted a user or loser policy. Operating profit for Q4 was $6.3 million compared to $10.3 million in last year's fourth quarter, reflecting both slightly lower CFR due to the effects of COVID-19 and the positive impact of the Libya receivable, in last year's fourth quarter. We incurred a net loss of $1.8 million in the quarter compared to income of $12.1 million in last year's Q4. In addition to the lower CFR, net income in the 2019 fourth quarter included the $7.1 million for the receivable we spoke about, and the $3.6 million income tax benefit, as opposed to a $4.4 million income expense that we incurred in Q4 2020. The variance in income tax was related to the reversal of an accrual relating to the former claims business in 2019, and additional accruals for uncertain tax positions in 2020. Q4 2020 also included a non-cash write-off of $1.4 million related to our exit from the Brazil market. Now let's take a look at our results on an adjusted basis on Slide 12. Adjusting for non-cash share based compensation, unrealized FX losses and the Libya collection and Brazil write-off just mentioned, operating profit rose to $5.9 million in the 2020 fourth quarter from $2.8 million in 2019 fourth quarter, due primarily to lower SG&A costs overall from COVID related cost savings initiatives. Adjusting for these same items, net loss was $700,000 compared to net income of $4.6 million in last year's Q4, due mainly to the variance in income taxes mentioned before. We reported adjusted EBITDA of $5.7 million in the 2020 fourth quarter, up from $4 million in last year's Q4.

[Raouf Ghali:]

Thank you, Todd. Let's go to Slide 15. We finished 2020 strong and remain cautiously optimistic for 2021. With respect to guidance, based on current business conditions and considering certain previously announced project deferrals and cancellations that occurred earlier this year, we expect CFR to range between $320 million to $330 million, consisting of both new awards and extensions of existing contracts.

[Operator:]

Thank you.

[Operator:]

If there are no questions at this time, I'll turn the floor back over for any further or closing comments.

[Raouf Ghali:]

Thank you. As we announced on Monday, we will be hosting a one-on-one meeting at the Roth Conference today. Thank you all very much for your time. On behalf of Hill's 2700 employees around the world, I thank you for your continued support of Hill International. Have a wonderful day.

[Operator:]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

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