Begins 2021 Positioned for Growth, Strong
Operating Results, and Further Debt Reduction
Williams Industrial Services Group Inc. (NYSE American: WLMS)
(“Williams” or the “Company”), a construction and maintenance
services company, today reported its financial results for the
fiscal fourth quarter ended December 31, 2020.
Recent Highlights
- Williams posted revenue of $64.1 million in the fourth quarter
of 2020 compared with $66.8 million in the prior-year period; for
the full year, revenue rose to $269.1 million from $245.8 million
in 2019
- The Company reported a net loss of $1.0 million, or $(0.04) per
share, in the fourth quarter versus net income of $0.2 million, or
$0.01 per share, in the fourth quarter of 2019
- The 2020 fourth quarter included $1.8 million in charges
related to the Company’s debt, $0.3 million of which were fees
associated with the repayment of the Company’s prior credit
facilities, without which earnings per share was $0.03
- The Company reported net income from continuing operations of
$2.0 million, or $0.08 per share, for the full year 2020 compared
to $1.0 million, or $0.05 per share, for 2019; excluding the
aforementioned $1.8 million charge relating to the repayment of the
Company’s prior credit facilities, earnings per share from
continuing operations was $0.15 in 2020
- Adjusted EBITDA1 was $4.0 million for the fourth quarter of
2020 compared with $4.2 million in the prior-year period and, for
fiscal 2020, Adjusted EBITDA was $14.7 million compared with $12.6
million in 2019. Prior to adding back severance, professional, and
other non-recurring operational expenses, EBITDA1 was $14.3 million
in 2020 compared with $9.7 million in 2019, an increase of 47%
- As of December 31, 2020, the Company’s backlog was $443.9
million compared to $494.9 million as of December 31, 2019 and
$457.9 million as of September 30, 2020, with approximately $165.3
million expected to be converted to revenue over the following
twelve months; Williams is currently pursuing over $500 million of
high-probability potential orders in its pipeline and anticipates
booking at least $300 million in additional backlog by year
end
- The Company generated $17.4 million of operating cash in the
fourth quarter of 2020 and reduced debt by $9.3 million
“The fourth quarter, while challenging from a revenue
perspective, had several significant achievements that we believe
positioned us well for 2021 and beyond,” said Tracy Pagliara,
President and CEO of Williams. “Gross margins rose to 14.2%, we
generated $17.4 million of cash from operations, refinanced our
credit facilities, and reduced debt by $9.3 million. Adjusted for
our refinancing costs, net income rose year-over-year, and we
reported Adjusted EBITDA of $4.0 million for the quarter and $14.7
million for 2020 as a whole – at the high end of our guidance.
Overall, I was pleased with our performance given a tough economic
environment, and we began 2021 with a stronger balance sheet and
increased financial flexibility.
“Since the start of the new year, we’ve uplisted to the NYSE
American Stock Exchange – substantially expanding our prospective
investor base – and issued guidance that builds upon our many
successes in 2020. We anticipate that our continuing efforts to
diversify the Company, combined with an unwavering commitment to
margin expansion and cost discipline, will bolster top line growth
and drive higher EBITDA going forward. With the easing of COVID-19
travel restrictions and more favorable economic conditions, our
business development activities are robust, and we are optimistic
about building our backlog throughout the remainder of 2021. I am
also confident that, just as we persevered through many storms in
2020, we will further execute on our strategic plan and
consistently improve financial results in the quarters and years to
come.”
Fourth Quarter 2020 Financial Results Compared to Fourth
Quarter 2019
Revenue in the fourth quarter of 2020 was $64.1 million compared
with $66.8 million in the fourth quarter of fiscal 2019, primarily
reflecting $3.3 million of higher revenue from Canadian nuclear
contracts and a $1.7 million increase related to decommissioning
work, offset by a $9.7 million reduction in revenue tied to the
Vogtle 3 & 4 nuclear construction project.
Gross profit was $9.1 million, or 14.2% of revenue, compared
with $9.1 million, or 13.6% of revenue, in the prior-year period,
with the higher margin reflecting improved business mix. Operating
expenses were $6.5 million compared with $8.5 million in the fourth
quarter of 2019, reflecting significantly lower general and
administrative (G&A) expenses due to the Company’s streamlining
initiatives. The fourth quarter of 2019 also included approximately
$1.6 million of non-recurring severance, professional, and legal
fees. The Company’s operating margin rose to 4.0% from 0.9% in the
prior-year fourth quarter, reflecting the improvement in gross
margin year-over-year and lower G&A. Interest expense was $1.4
million in the fourth quarter of fiscal 2020 versus $1.5 million in
2019.
On December 17, 2020, the Company announced that it had entered
into new credit agreements as follows: (a) a $50.0 million term
loan facility with Energy Impact Credit Fund (an affiliate of
Energy Impact Partners), CION Investment Corporation, and CrowdOut
Capital, which consists of a $35.0 million initial term loan and a
$15.0 million delayed draw facility; and (b) a $30.0 million
revolving credit facility with PNC Bank. As part of this
refinancing, Williams booked a $1.5 million loss on the repayment
of its prior credit agreements. Interest expense in fiscal 2021 is
expected to be approximately $1.5 million lower than in 2020.
The Company reported a net loss of $1.0 million, or $(0.04) per
share, in the fourth quarter of 2020 compared with net income of
$0.2 million, or $0.01 per share, in the prior-year period.
Excluding the aforementioned refinancing costs, the Company’s
earnings per share was $0.03 in the fourth quarter of 2020.
Balance Sheet
As of December 31, 2020, the Company had $9.2 million of cash
(including restricted cash) and $32.1 million of bank debt compared
with $7.8 million of cash and $44.2 million of bank debt as of
December 31, 2019. Debt was reduced by $9.3 million in the fourth
quarter of 2020 – and by $12.1 million for fiscal 2020 as a whole –
and the Company anticipates using its cash generation, supported by
its significant net operating losses (NOLs), to further lower
indebtedness in 2021.
Backlog
Total backlog as of December 31, 2020 was $443.9 million
compared with $494.9 million at December 31, 2019 and $457.9
million as of September 30, 2020. The Company recognized revenue of
$64.1 million in the fourth quarter, booked new awards of $37.4
million, and saw net adjustments and cancellations of $12.6
million, primarily reflecting work scope expansion.
Three Months Ended December
31, 2020
Year Ended December 31,
2020
Backlog - beginning of period
$
457,932
$
494,904
New awards
37,436
184,087
Adjustments and cancellations, net
12,597
33,910
Revenue recognized
(64,115
)
(269,051
)
Backlog - end of period
$
443,850
$
443,850
Williams estimates that approximately $165.3 million, or 37.2%,
of total backlog will be converted to revenue in the following
twelve months. This compares with $191.3 million of backlog at
December 31, 2019 and $166.7 million of backlog at September 30,
2020 that the Company anticipated would be converted to revenue
over the succeeding twelve-month period.
Outlook
The Company reaffirmed previous guidance (issued February 8,
2021) for the current fiscal year.
2021 Guidance
Revenue:
$310 million to $320 million
Gross margin:
11% to 13%
SG&A:
7.75% to 8.25% of revenue
Adjusted EBITDA (from continuing
operations)*:
$16 million to $18 million
*See Note 1 — Non-GAAP Financial Measures for information
regarding the use of Adjusted EBITDA and forward-looking non-GAAP
financial measures.
The Company expects that, as has been historically the case,
that its first quarter will represent the lightest quarter in its
2021 results.
Webcast and Teleconference
The Company will host a conference call today, March 31, 2021,
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 13715809;
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 provides a broad range of construction, maintenance and
modification, and support services to customers in energy and
industrial end markets. 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, realize opportunities and successfully
achieve its growth and strategic initiatives, including
diversifying the Company, increasing its margins and managing
costs, future demand for the Company’s services, expectations
regarding future contract awards, revenues, Adjusted EBITDA and
positive 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,
some of which have been, and may further be, exacerbated by the
COVID-19 pandemic, 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; 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 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; failure to maintain
effective internal control over financial reporting and disclosure
controls and procedures; the Company’s ability to attract and
retain qualified personnel, skilled workers, and key officers;
failure to successfully implement or realize its business
strategies, plans and objectives of management, and liquidity,
operating and growth initiatives and opportunities, including its
expansion into international markets; 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; compliance with environmental, health, safety and
other related laws and regulations; limitations or modifications to
indemnification regulations of the U.S. or Canada; 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 current 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; 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 participation in multiemployer pension plans; the impact
of any disruptions resulting from the expiration of collective
bargaining agreements; the impact of natural disasters and other
severe catastrophic events (such as the ongoing COVID-19 pandemic);
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 2020 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.
Financial Tables Follow
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)
2020
2019
2020
2019
Revenue
$
64,115
$
66,807
$
269,051
$
245,787
Cost of revenue
55,021
57,737
235,035
214,887
Gross profit
9,094
9,070
34,016
30,900
Gross margin
14.2
%
13.6
%
12.6
%
12.6
%
Selling and marketing expenses
168
119
569
587
General and administrative expenses
6,308
8,256
23,721
24,583
Depreciation and amortization expense
43
76
187
301
Total operating expenses
6,519
8,451
24,477
25,471
Operating income
2,575
619
9,539
5,429
Operating margin
4.0
%
0.9
%
3.5
%
2.2
%
Interest expense, net
1,443
1,528
6,083
6,032
Loss on extinguishment of debt
1,455
—
1,455
—
Other income, net
(430
)
(805
)
(1,367
)
(1,958
)
Total other expenses, net
2,468
723
6,171
4,074
Income (loss) from continuing operations
before income tax expense
107
(104
)
3,368
1,355
Income tax expense
820
192
1,385
333
Income (loss) from continuing
operations
(713
)
(296
)
1,983
1,022
Loss from discontinued operations before
income tax expense (benefit)
(183
)
(59
)
(405
)
(234
)
Income tax expense (benefit)
96
(553
)
40
(1,398
)
Income (loss) from discontinued
operations
(279
)
494
(445
)
1,164
Net income (loss)
$
(992
)
$
198
$
1,538
$
2,186
Basic earnings (loss) per common share
Income (loss) from continuing
operations
$
(0.03
)
$
(0.02
)
$
0.08
$
0.05
Income (loss) from discontinued
operations
(0.01
)
0.03
(0.02
)
0.07
Basic earnings (loss) per common share
$
(0.04
)
$
0.01
$
0.06
$
0.12
Diluted earnings (loss) per common
share
Income (loss) from continuing
operations
$
(0.03
)
$
(0.02
)
$
0.08
$
0.05
Income (loss) from discontinued
operations
(0.01
)
0.03
(0.02
)
0.07
Diluted earnings (loss) per common
share
$
(0.04
)
$
0.01
$
0.06
$
0.12
Weighted average common shares outstanding
(basic)
24,689,337
18,775,136
23,676,458
18,700,107
Weighted average common shares outstanding
(diluted)
24,689,337
18,831,450
24,217,997
18,922,012
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
REVENUE BRIDGE
ANALYSIS*
Fourth Quarter 2020 Revenue Bridge
(in millions)
$ Change
Fourth quarter 2019 revenue
$
66.8
Plant Vogtle Units 3 and 4
(9.7
)
Canada
3.3
Decommissioning
1.7
Project mix
2.0
Total change
(2.7
)
Fourth quarter 2020 revenue*
$
64.1
2020 Full Year Revenue Bridge
(in millions)
$ Change
2019 revenue
$
245.8
Plant Vogtle Units 3 and 4
14.6
Canada
18.8
Decommissioning
18.8
Nuclear Maintenance
(19.1
)
Oil & Gas
(8.1
)
Project mix
(1.7
)
Total change
23.3
2020 revenue*
$
269.1
*Numbers may not sum due to rounding
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ in thousands, except share and per
share amounts)
Dec. 31, 2020
Dec. 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
8,716
$
7,350
Restricted cash
468
468
Accounts receivable, net of allowance of
$351 and $377, respectively
27,549
38,218
Contract assets
7,969
7,225
Other current assets
6,457
2,483
Total current assets
51,159
55,744
Property, plant and equipment, net
309
273
Goodwill
35,400
35,400
Intangible assets, net
12,500
12,500
Other long-term assets
5,712
8,549
Total assets
$
105,080
$
112,466
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
6,210
$
16,618
Accrued compensation and benefits
15,800
9,318
Contract liabilities
2,529
2,699
Short-term borrowings
352
10,849
Current portion of long-term debt
1,050
700
Other current liabilities
7,170
6,408
Current liabilities of discontinued
operations
342
340
Total current liabilities
33,453
46,932
Long-term debt, net
30,728
32,658
Deferred tax liabilities
2,440
2,198
Other long-term liabilities
2,098
4,028
Long-term liabilities of discontinued
operations
4,466
4,486
Total liabilities
73,185
90,302
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000
shares authorized and 25,926,333 and 19,794,270 shares issued,
respectively, and 25,336,442 and 19,057,195 shares outstanding,
respectively
256
198
Paid-in capital
90,292
81,964
Accumulated other comprehensive income
(loss)
28
222
Accumulated deficit
(58,673
)
(60,211
)
Treasury stock, at par (589,891 and
737,075 common shares, respectively)
(8
)
(9
)
Total stockholders’ equity
31,895
22,164
Total liabilities and stockholders’
equity
$
105,080
$
112,466
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
Year Ended December
31,
(in thousands)
2020
2019
Operating activities:
Net income
$
1,538
$
2,186
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Net (income) loss from discontinued
operations
445
(1,164
)
Deferred income tax provision
(benefit)
242
(484
)
Depreciation and amortization on property,
plant and equipment
187
301
Amortization of deferred financing
costs
1,536
615
Gain on disposals of property, plant and
equipment
(104
)
—
Debt extinguishment expenses
1,211
—
Bad debt expense
(351
)
237
Stock-based compensation
2,546
1,698
Changes in operating assets and
liabilities, net of businesses acquired and sold:
Accounts receivable
11,107
(15,675
)
Contract assets
(699
)
1,001
Other current assets
(3,903
)
(743
)
Other assets
3,972
1,613
Accounts payable
(10,438
)
13,697
Accrued and other liabilities
4,532
(6,704
)
Contract liabilities
(176
)
(579
)
Net cash provided by (used in) operating
activities, continuing operations
11,645
(4,001
)
Net cash provided by (used in) operating
activities, discontinued operations
(464
)
162
Net cash provided by (used in) operating
activities
11,181
(3,839
)
Investing activities:
Purchase of property, plant and
equipment
(117
)
(242
)
Net cash used in investing activities
(117
)
(242
)
Financing activities:
Repurchase of stock-based awards for
payment of statutory taxes due on stock-based compensation
(227
)
(154
)
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
262,695
223,958
Repayments of short-term borrowings
(273,192
)
(216,383
)
Proceeds from long-term debt
35,000
—
Repayments of long-term debt
(34,388
)
(525
)
Net cash provided by (used in) financing
activities
(9,826
)
6,896
Effect of exchange rate change on cash
128
61
Net change in cash, cash equivalents and
restricted cash
1,366
2,876
Cash, cash equivalents and restricted
cash, beginning of period
7,818
4,942
Cash, cash equivalents and restricted
cash, end of period
$
9,184
$
7,818
Supplemental Disclosures:
Cash paid for interest
$
4,316
$
4,697
Noncash fee related to revolving debt
facility
$
150
$
100
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)
2020
2019
2020
2019
Income (loss) from continuing
operations
$
(713
)
$
(296
)
$
1,983
$
1,022
Add back:
Interest expense, net
1,443
1,528
6,083
6,032
Income tax expense
820
192
1,385
333
Depreciation and amortization expense
43
76
187
301
Stock-based compensation
801
584
2,503
1,595
Severance costs
—
865
421
1,314
Other non-recurring expenses
—
—
—
241
Franchise taxes
64
63
267
255
Loss on other receivables
—
—
—
189
Consulting expenses
(69
)
433
194
585
Bank fees
314
548
314
685
Loss on extinguishment of debt
1,455
—
1,455
—
Foreign currency (gain) loss
(162
)
206
(186
)
20
Settlement expenses
—
—
129
—
Adjusted EBITDA - continuing
operations
$
3,996
$
4,199
$
14,734
$
12,572
ADJUSTED EBITDA-CONTINUING OPERATIONS – RECONCILIATION OF ANNUAL
AMOUNTS
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2020
2019
2020
2019
Income (loss) from continuing
operations
$
(713
)
$
(296
)
$
1,983
$
1,022
Add back:
Interest expense, net
1,443
1,528
6,083
6,032
Income tax expense
820
192
1,385
333
Depreciation and amortization expense
43
76
187
301
Stock-based compensation
801
584
2,503
1,595
Severance costs
—
865
—
—
Other non-recurring expenses
—
—
—
—
Franchise taxes
64
63
267
255
Loss on other receivables
—
—
—
189
Consulting expenses
(69
)
433
194
Bank fees
314
548
314
—
Loss on extinguishment of debt
1,455
—
1,455
—
Foreign currency (gain) loss
(162
)
206
(186
)
20
Settlement expenses
—
—
129
—
Adjusted EBITDA - continuing
operations
$
3,996
$
4,199
$
14,314
$
9,747
NOTE 1 — Non-GAAP Financial Measures
Adjusted EBITDA 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 net income
(loss) 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 non-recurring
expenses, franchise taxes, loss on other receivables, consulting
expenses, bank fees, foreign currency (gain) loss, loss on
extinguishment of debt and settlement expenses), which are not
always commensurate with the reporting period in which such items
are included. Williams’ credit facility also contains ratios based
on EBITDA. Adjusted EBITDA should not be considered an alternative
to net income 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/20210331005296/en/
Investor Contact: Chris Witty Darrow Associates
646-345-0998 cwitty@darrowir.com
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