Growing Backlog & New Opportunities Point
to Improving Fundamentals; Guidance Unchanged
Williams Industrial Services Group Inc. (NYSE American: WLMS)
(“Williams” or the “Company”), an infrastructure, construction and
maintenance services company, today reported its financial results
for the fiscal first quarter ended March 31, 2021.
Recent Highlights
- Williams posted revenue of $60.9 million in the first quarter
of 2021 compared with $66.1 million in the prior-year period,
reflecting project timing, including reduced nuclear work at
Vogtle
- The Company reported a net loss of $1.7 million, or $(0.07) per
share, in the first quarter versus a net loss of $1.0 million, or
$(0.05) per share, in the first quarter of 2020
- Adjusted EBITDA1 was $0.6 million for the first quarter of 2021
compared with $1.6 million in the prior-year period
- As of March 31, 2021, the Company’s backlog was $460.6 million
compared to $443.9 million as of December 31, 2020, with
approximately $182.4 million expected to be converted to revenue
over the following twelve months
- The Company has reaffirmed its previous financial guidance for
2021
- On May 17, 2021, the Company hired Ray Hruby as Senior Vice
President of Key Accounts, to support strategy and business
development in pursuit of nuclear long-term agreements
“First quarter results were consistent with our sales and
profitability expectations, and we reaffirm our previously-issued
guidance for the remainder of the year,” said Tracy Pagliara,
President and CEO of Williams. “The lower revenue, and less
favorable project mix, impacted bottom line results, but we
continued to build and diversify our backlog – and expect to hear
soon on a major expansion of work related to the upcoming Indian
Point nuclear decommissioning project in New York. We’re also
confident in our ability to win our fair share of other contracts
still out for bid as well as new opportunities on the horizon. We
believe the Company is well positioned to capitalize on future
growth potential across its myriad end markets, including energy
delivery and water/wastewater, where investment upgrades are now
under review in Congress.”
First Quarter 2021 Financial Results Compared to First
Quarter 2020
Revenue in the first quarter of 2021 was $60.9 million compared
with $66.1 million in the first quarter of fiscal 2020, reflecting
$15.4 million of lower revenue tied to the Vogtle 3 & 4 nuclear
construction project, partially offset by a $3.8 million increase
related to decommissioning work and higher sales across other areas
of the business.
Gross profit was $6.1 million, or 10.0% of revenue, compared
with $6.9 million, or 10.4% of revenue, in the prior-year period,
with the lower margin reflecting changes in program mix and lower
Vogtle-related work. Operating expenses were $6.6 million compared
with $6.4 million in the first quarter of 2020, reflecting
investment in new business development, and the Company reported an
operating loss of $0.5 million versus operating income of $0.5
million in the prior-year period. Interest expense was $1.3 million
in the first quarter of fiscal 2021 versus $1.5 million in
2020.
The Company reported a net loss of $1.7 million, or $(0.07) per
share, in the first quarter of 2021 compared with a net loss of
$1.0 million, or $(0.05) per share, in the prior-year period.
1See NOTE 1 — Non-GAAP Financial Measures in the attached tables
for important disclosures regarding Williams’ use of Adjusted
EBITDA, as well as a reconciliation of income (loss) from
continuing operations to Adjusted EBITDA.
Balance Sheet
Total liquidity (the sum of unrestricted cash and availability
under the Revolving Credit Facility) was $16.9 million at the end
of the first quarter. The Company anticipates using its cash
generation, supported by significant net operating losses (NOLs),
to lower indebtedness during the remainder of fiscal 2021. As of
March 31, 2021, the Company had $5.4 million of unrestricted cash
and cash equivalents, $0.5 million of restricted cash, and $32.8
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 March 31, 2021 was $460.6 million compared
with $443.9 million at December 31, 2020. The Company recognized
revenue of $60.9 million in the first quarter, booked new awards of
$37.2 million, and saw net adjustments and cancellations of $40.3
million, primarily reflecting work scope expansion.
Three Months Ended March 31,
2021
Backlog - beginning of period
$
443,850
New awards
37,241
Adjustments and cancellations, net
40,310
Revenue recognized
(60,851
)
Backlog - end of period
$
460,550
Williams estimates that approximately $182.4 million, or 39.6%,
of total backlog will be converted to revenue in the following
twelve months. This compares with $165.3 million of backlog at
December 31, 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.
New Hire
On May 17, 2021, the Company hired Ray Hruby as Senior Vice
President of Key Accounts, responsible for business development and
project management of certain large accounts and nuclear long-term
agreements. He most recently worked at Bruce Power as Vice
President of Project Management and has experience at both Southern
Nuclear and the Tennessee Valley Authority. As part of his
employment agreement, the Company granted Mr. Hruby restricted
share units (“RSUs”), consisting of time-based RSUs covering 37,500
shares that vest on the first anniversary of Mr. Hruby’s start
date, subject to continued employment, and performance-based RSUs
covering 37,500 shares at “target” performance and 75,000 shares at
“maximum” performance that vest on March 31, 2024, based on the
extent to which the Company achieves the performance criteria under
the 2021 long-term incentive plan and subject to continued
employment. The grant was approved by the Company’s independent
directors and made as an inducement material to Mr. Hruby’s
commencement of employment as Senior Vice President of Key
Accounts. The grant was made in reliance on the employment
inducement exception to shareholder approval provided under Section
711 of the NYSE American Company Guide.
Webcast and Teleconference
The Company will host a conference call today, May 19, 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 13719207;
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 infrastructure 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, 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 the possibility of
increased infrastructure spending by the U.S. federal government,
and successfully achieve its growth and strategic initiatives,
including decreasing the Company’s outstanding indebtedness, future
demand for the Company’s services, and expectations regarding
future revenues, cash flow, and the Company’s Indian Point project
opportunity, 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, 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 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 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; the failure of the U.S. Congress
to pass infrastructure-related legislation benefiting the Company’s
end markets; 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,
including 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
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March
31,
($ in thousands, except share and per
share amounts)
2021
2020
Revenue
$
60,851
$
66,147
Cost of revenue
54,753
59,238
Gross profit
6,098
6,909
Gross margin
10.0
%
10.4
%
Selling and marketing expenses
211
138
General and administrative expenses
6,311
6,200
Depreciation and amortization expense
41
41
Total operating expenses
6,563
6,379
Operating income (loss)
(465
)
530
Operating margin
(0.8
)%
0.8
%
Interest expense, net
1,293
1,533
Other income, net
(360
)
(122
)
Total other expense, net
933
1,411
Loss from continuing operations before
income tax
(1,398
)
(881
)
Income tax expense
185
48
Loss from continuing operations
(1,583
)
(929
)
Loss from discontinued operations before
income tax
(79
)
(54
)
Income tax expense
19
18
Loss from discontinued operations
(98
)
(72
)
Net loss
$
(1,681
)
$
(1,001
)
Basic loss per common share
Loss from continuing operations
$
(0.06
)
$
(0.05
)
Loss from discontinued operations
(0.01
)
—
Basic loss per common share
$
(0.07
)
$
(0.05
)
Diluted loss per common share
Loss from continuing operations
$
(0.06
)
$
(0.05
)
Loss from discontinued operations
(0.01
)
—
Diluted loss per common share
$
(0.07
)
$
(0.05
)
Weighted average common shares outstanding
(basic)
24,933,894
20,347,661
Weighted average common shares outstanding
(diluted)
24,933,894
20,347,661
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
REVENUE BRIDGE
ANALYSIS*
First Quarter 2021 Revenue
Bridge
(in millions)
$ Change
First quarter 2020 revenue
$
66.1
Plant Vogtle Units 3 and 4
(15.4
)
Canada
1.2
Decommissioning
3.8
Project mix
5.2
Total change
(5.2
)
First quarter 2021 revenue*
$
60.9
*Numbers may not sum due to rounding
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
March 31,
December 31,
($ in thousands, except share and per
share amounts)
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
5,444
$
8,716
Restricted cash
468
468
Accounts receivable, net of allowance of
$333 and $351, respectively
29,258
27,549
Contract assets
12,528
7,969
Other current assets
6,461
6,457
Total current assets
54,159
51,159
Property, plant and equipment, net
325
309
Goodwill
35,400
35,400
Intangible assets, net
12,500
12,500
Other long-term assets
5,833
5,712
Total assets
$
108,217
$
105,080
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
5,373
$
6,210
Accrued compensation and benefits
21,760
15,800
Contract liabilities
1,978
2,529
Short-term borrowings
1,151
352
Current portion of long-term debt
1,050
1,050
Other current liabilities
6,837
7,170
Current liabilities of discontinued
operations
339
342
Total current liabilities
38,488
33,453
Long-term debt, net
30,628
30,728
Deferred tax liabilities
2,427
2,440
Other long-term liabilities
1,871
2,098
Long-term liabilities of discontinued
operations
4,499
4,466
Total liabilities
77,913
73,185
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000
shares authorized, and 26,365,169 and 25,926,333 shares issued,
respectively, and 25,896,001 and 25,336,442 shares outstanding,
respectively
260
256
Paid-in capital
90,372
90,292
Accumulated other comprehensive income
32
28
Accumulated deficit
(60,354
)
(58,673
)
Treasury stock, at par (469,168 and
589,891 common shares, respectively)
(6
)
(8
)
Total stockholders’ equity
30,304
31,895
Total liabilities and stockholders’
equity
$
108,217
$
105,080
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March
31,
(in thousands)
2021
2020
Operating activities:
Net loss
$
(1,681
)
$
(1,001
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Net loss from discontinued operations
98
72
Deferred income tax provision
(benefit)
(13
)
33
Depreciation and amortization on plant,
property and equipment
41
41
Amortization of deferred financing
costs
208
182
Amortization of debt discount
50
—
Bad debt expense
(18
)
3
Stock-based compensation
715
472
Changes in operating assets and
liabilities, net of businesses sold:
Accounts receivable
(1,634
)
5,444
Contract assets
(4,410
)
(9,413
)
Other current assets
59
(2
)
Other assets
(172
)
(596
)
Accounts payable
(859
)
(3,122
)
Accrued and other liabilities
5,112
4,230
Contract liabilities
(548
)
701
Net cash used in operating activities,
continuing operations
(3,052
)
(2,956
)
Net cash used in operating activities,
discontinued operations
(69
)
(83
)
Net cash used in operating activities
(3,121
)
(3,039
)
Investing activities:
Purchase of property, plant and
equipment
(56
)
(42
)
Net cash used in investing activities
(56
)
(42
)
Financing activities:
Repurchase of stock-based awards for
payment of statutory taxes due on stock-based compensation
(541
)
(65
)
Proceeds from issuance of common stock
—
6,532
Debt issuance costs
—
(442
)
Proceeds from short-term borrowings
57,971
53,460
Repayments of short-term borrowings
(57,435
)
(57,913
)
Net cash provided by (used in) financing
activities
(5
)
1,572
Effect of exchange rate change on cash
(90
)
(136
)
Net change in cash, cash equivalents and
restricted cash
(3,272
)
(1,645
)
Cash, cash equivalents and restricted
cash, beginning of period
9,184
7,818
Cash, cash equivalents and restricted
cash, end of period
$
5,912
$
6,173
Supplemental Disclosures:
Cash paid for interest
$
875
$
716
Noncash amendment fee related to revolving
credit facility
$
—
$
150
Cash paid for income taxes, net of
refunds
$
1,066
$
—
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 March
31,
(in thousands)
2021
2020
Loss from continuing operations
$
(1,583
)
$
(929
)
Add back:
Interest expense, net
1,293
1,533
Income tax expense
185
48
Depreciation and amortization expense
41
41
Stock-based compensation
715
471
Other professional fees
—
156
Franchise taxes
60
76
Settlement expenses
—
69
Foreign currency (gain) loss
(90
)
95
Adjusted EBITDA - continuing
operations
$
621
$
1,560
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, other
professional fees, franchise taxes, foreign currency (gain) loss,
and settlement expenses), 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 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/20210519005112/en/
Investor Contact: Chris Witty Darrow Associates
646-345-0998 cwitty@darrowir.com
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