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8-K - 8-K - Hill International, Inc.a16-16095_18k.htm

 

Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

Hill International Reports Second Quarter and First Half 2016 Financial Results

 

PHILADELPHIA — August 3, 2016 — Hill International (NYSE:HIL), the global leader in managing construction risk, announced today its financial results for the second quarter and first half ended June 30, 2016 (see attached tables).

 

Total revenue for the second quarter of 2016 was $175.6 million, a decrease of 3.3% from the second quarter of 2015.  Consulting fee revenue for the second quarter was $152.6 million, a decrease of 4.5% from last year’s second quarter.  The lower revenue was driven principally by Hill’s Middle East project management operation, where consulting fee revenue declined by $8.6 million, or 14.1%, during the second quarter from the same period last year.  This was partially offset by increases in consulting fee revenue of $2.2 million, or 6.8%, in the U.S. project management operation and $1.6 million, or 13.9%, in the European construction claims operation.

 

EBITDA (as defined below) for the second quarter was $10.8 million, a 20.3% decrease from the second quarter of 2015.  Operating profit for the second quarter was $8.2 million, a decrease of 23.1% from the second quarter of last year.  Net earnings attributable to Hill for the second quarter were down 66.1% to $1.5 million, or $0.03 per diluted share, from net earnings of $4.4 million, or $0.09 per diluted share, in the second quarter of 2015.

 

Hill’s total backlog at June 30, 2016 was $949 million, up 9.6% from $866 million at March 31, 2016. Twelve-month backlog at June 30, 2016 was $414 million, up 3.8% from $399 million at March 31, 2016.

 

“Our performance in the second quarter lagged behind last year’s primarily because of the impact that the collapse in oil prices had on new work in our Middle East project management operation last year and earlier this year,” said David L. Richter, Hill’s President and Chief Executive Officer.  “However, we expect this dip in revenue and its impact on our profitability to be temporary as we benefit from the nearly $90 million in new backlog we have added thus far in 2016, including significant new work in U.S. and the Middle East,” added Richter.

 

First Half 2016 Results

 

Total revenue for the first half of 2016 was $351.8 million, essentially unchanged from the first half of 2015. Consulting fee revenue for the first half was $309.9 million, a decrease of 0.3% from the first half of last year.

 

EBITDA for the first half was $18.9 million, a decrease of 11.5% from the first half of 2015.  Operating profit for the first half was $13.7 million, a decrease of 15.6% from the first half of last year.  Net earnings attributable to Hill for the first half were down 42.3% to $2.9 million, or $0.06 per diluted share, from net earnings of $5.1 million, or $0.10 per diluted share, in the first half of 2015.

 

2016 Guidance

 

Based on Hill’s financial performance during the first half, current market conditions and the backlog amounts described above, the company reiterates its prior guidance that consulting fee revenue in 2016 is expected to be between $630 million and $660 million.  This guidance reflects approximately 0% to 5% growth in consulting

 



 

fee revenue for the year.  The company also maintains that EBITDA margin as a percentage of consulting fees in 2016 will be in the range of 8% to 10%, up from 6.5% during 2015.

 

Project Management Group

 

Hill’s Project Management Group provides program management, project management, construction management, project management oversight, troubled project turnaround, staff augmentation, project labor agreement consulting, commissioning, estimating and cost management, labor compliance and facilities management services.

 

Total revenue at Hill’s Project Management Group during the second quarter of 2016 was $131.8 million, a decrease of 3.8% from the second quarter of 2015.  Consulting fee revenue for the second quarter at the Projects Group was $110.1 million, a decrease of 5.4% from the second quarter of last year.  Operating profit for the Projects Group for the second quarter was $11.6 million, a decrease of 22.8% from last year’s second quarter.

 

Total revenue at the Projects Group during the first half of 2016 was $266.2 million, a decrease of 0.3% from the first half of 2015.  Consulting fee revenue for the Projects Group during the first half was a $226.7 million, a decrease of 0.8% from the first half of last year.  Operating profit for the Projects Group for the first half was $23.6 million, a decrease of 14.5% from last year’s first half.

 

Construction Claims Group

 

Hill’s Construction Claims Group provides claims consulting, management consulting, litigation support, expert witness testimony, cost/damages assessment, delay/disruption analysis, adjudication, lender advisory, risk management, forensic accounting, fraud investigation, Project Neutral and international arbitration services.

 

Total revenue at Hill’s Construction Claims Group during the second quarter of 2016 was $43.7 million, a decrease of 1.9% from the second quarter of 2015.  Consulting fee revenue for the second quarter at the Claims Group was $42.5 million, a decrease of 1.8% from the second quarter of last year.  Operating profit for the Claims Groups for the second quarter was $4.6 million, a decrease of 4.5% from last year’s second quarter.

 

Total revenue at the Claims Group during the first half of 2016 was a record $85.6 million, an increase of 0.9% from the first half of 2015.  Consulting fee revenue for the Claims Group during the first half was a record $83.2 million, an increase of 1.1% from the first half of last year. Operating profit for the Claims Group for the first half was a record $7.4 million, an increase of 4.6% from last year’s first half.

 

Conference Call

 

David L. Richter, Hill’s President and Chief Executive Officer, and John Fanelli III, Hill’s Senior Vice President and Chief Financial Officer, will host a conference call on August 4, 2016, at 11:00 am Eastern Time to discuss the financial results for the second quarter and first half ended June 30, 2016.  Interested parties may participate in the call by dialing (877) 423-9820 (Domestic) or (201) 493-6749 (International) approximately 10 minutes before the call is scheduled to begin and asking to be connected to the Hill International conference call.  The conference call will also be broadcast live over the Internet.  To listen to the live call, 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 and can be accessed for approximately 90 days.

 



 

About Hill International

 

Hill International, with 4,600 professionals in 100 offices worldwide, provides program management, project management, construction management, construction claims and other consulting services primarily to the buildings, transportation, energy environmental and industrial markets.  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.

 

The Hill International logo is available at: http://www.globenewswire.com/newsroom/prs/?pkgid=5733.

 

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 projections of revenues, earnings or other financial items; any statements concerning our plans, strategies and objectives for future operations; and any statements regarding future economic conditions or performance, 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.  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.

John P. Paolin

Senior Vice President of Marketing and

Corporate Communications

(215) 309-7710

johnpaolin@hillintl.com

 

The Equity Group Inc.

Devin Sullivan

Senior Vice President

(212) 836-9608

dsullivan@equityny.com

 

(HIL-F)

 



 

HILL INTERNATIONAL, INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

(In 000’s, Except Per Share Data)

(Unaudited)

 

Consolidated Statement of Operations

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2016 

 

2015 

 

2016 

 

2015 

 

 

 

 

 

 

 

 

 

 

 

Consulting fee revenue

 

$

152,614 

 

$

159,738 

 

$

309,919 

 

$

310,879 

 

Reimbursable expenses

 

22,975 

 

21,910

 

41,891

 

41,037

 

Total revenue

 

175,589 

 

181,648 

 

351,810 

 

351,916 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

89,748 

 

92,400

 

183,811

 

178,829

 

Reimbursable expenses

 

22,975 

 

21,910

 

41,891

 

41,037

 

Total direct expenses

 

112,723 

 

114,310 

 

225,702 

 

219,866 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

62,866 

 

67,338 

 

126,108 

 

132,050 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

54,642 

 

56,652

 

112,367

 

115,575

 

Share of loss of equity method affiliates

 

31 

 

34

 

16

 

217

 

Operating profit

 

8,193 

 

10,652 

 

13,725 

 

16,258 

 

 

 

 

 

 

 

 

 

 

 

Interest expense and related financing fees, net

 

3,338 

 

3,531

 

6,735

 

7,105

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

4,855 

 

7,121 

 

6,990 

 

9,153 

 

Income tax expense

 

3,378 

 

2,586

 

4,059

 

3,770

 

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations

 

1,477 

 

4,535 

 

2,931 

 

5,383 

 

 

 

 

 

 

 

 

 

 

 

Less: (net earnings) loss - noncontrolling interests

 

(13

)

140

 

(9

)

286

 

 

 

 

 

 

 

 

 

 

 

Net Earnings attributable to Hill International, Inc.

 

$

1,490 

 

$

4,395 

 

$

2,940 

 

$

5,097 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share - Hill International, Inc.

 

$

0.03 

 

$

0.09 

 

$

0.06 

 

$

0.10 

 

Basic weighted average common shares outstanding

 

51,727

 

50,483

 

51,679

 

50,429

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share - Hill International, Inc.

 

$

0.03 

 

$

0.09 

 

$

0.06 

 

$

0.10 

 

Diluted weighted average common shares outstanding

 

51,948

 

51,495

 

51,777

 

51,010

 

 



 

Selected Segment Data

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2016 

 

2015 

 

2016 

 

2015 

 

 

 

 

 

 

 

 

 

 

 

Project Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting fee revenue

 

$

110,126 

 

$

116,464 

 

$

226,705 

 

$

228,581 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

131,845 

 

$

137,052 

 

$

266,215 

 

$

267,047 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

39,491 

 

$

43,089 

 

$

80,560 

 

$

86,475 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a percent of consulting fee revenue

 

35.9 

%

37.0 

%

35.5 

%

37.8 

%

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

27,873 

 

$

28,048 

 

$

56,937 

 

$

58,646 

 

 

 

 

 

 

 

 

 

 

 

SG&A expenses as a percentage of consulting fee revenue

 

25.3 

%

24.1 

%

25.1 

%

25.7 

%

 

 

 

 

 

 

 

 

 

 

Operating profit before equity in losses of affiliates

 

$

11,618 

 

$

15,041 

 

$

23,623 

 

$

27,829 

 

 

 

 

 

 

 

 

 

 

 

Share of loss of equity method affiliate

 

(31

)

(34

)

(16

)

(217

)

 

 

 

 

 

 

 

 

 

 

Operating profit

 

11,587 

 

15,007 

 

23,607 

 

27,612 

 

 

 

 

 

 

 

 

 

 

 

Operating profit as a percent of consulting fee revenue

 

10.5 

%

12.9 

%

10.4 

%

12.1 

%

 

 

 

 

 

 

 

 

 

 

Construction Claims

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting fee revenue

 

$

42,488 

 

$

43,274 

 

$

83,214 

 

$

82,298 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

43,744 

 

$

44,596 

 

$

85,595 

 

$

84,869 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

23,375 

 

$

24,249 

 

$

45,548 

 

$

45,575 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a percent of consulting fee revenue

 

55.0 

%

56.0 

%

54.7 

%

55.4 

%

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

18,819 

 

$

19,477 

 

$

38,119 

 

$

38,470 

 

 

 

 

 

 

 

 

 

 

 

SG&A expenses as a percentage of consulting fee revenue

 

44.3 

%

45.0 

%

45.8 

%

46.7 

%

 

 

 

 

 

 

 

 

 

 

Operating profit

 

$

4,556 

 

$

4,772 

 

$

7,429 

 

$

7,105 

 

 

 

 

 

 

 

 

 

 

 

Operating profit as a percent of consulting fee revenue

 

10.7 

%

11.0 

%

8.9 

%

8.6 

%

 



 

Selected Other Financial Data

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

Consulting fee revenue

 

$

152,614 

 

$

159,738 

 

$

309,919 

 

$

310,879 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

175,589 

 

$

181,648 

 

$

351,810 

 

$

351,916 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

62,866 

 

$

67,338 

 

$

126,108 

 

$

132,050 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a percentage of consulting fee revenue

 

41.2 

%

42.2 

%

40.7 

%

42.5 

%

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (excluding corporate expenses)

 

$

46,692 

 

$

47,525 

 

$

95,056 

 

$

97,116 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses (excluding corporate expenses) as a percentage of consulting fee revenue

 

30.6 

%

29.8 

%

30.7 

%

31.2 

%

 

 

 

 

 

 

 

 

 

 

Corporate expenses

 

$

7,950 

 

$

9,127 

 

$

17,311 

 

$

18,459 

 

 

 

 

 

 

 

 

 

 

 

Corporate expenses as a percentage of consulting fee revenue

 

5.2 

%

5.7 

%

5.6 

%

5.9 

%

 

 

 

 

 

 

 

 

 

 

Operating profit before equity in losses of affiliates

 

$

8,224 

 

$

10,686 

 

$

13,741 

 

$

16,475 

 

 

 

 

 

 

 

 

 

 

 

Share of loss of equity method affiliate

 

(31

)

(34

)

(16

)

(217

)

 

 

 

 

 

 

 

 

 

 

Operating profit

 

8,193 

 

10,652 

 

13,725 

 

16,258 

 

 

 

 

 

 

 

 

 

 

 

Operating profit as a percent of consulting fee revenue

 

5.4 

%

6.7 

%

4.4 

%

5.2 

%

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

69.6 

%

36.3 

%

58.1 

%

41.2 

%

 



 

Selected Balance Sheet Data

 

 

 

June 30, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,922 

 

$

24,089 

 

Accounts receivable, net

 

$

233,860 

 

$

243,417 

 

Current assets

 

$

283,691 

 

$

291,591 

 

Total assets

 

$

441,151 

 

$

442,563 

 

Current liabilities

 

$

130,891 

 

$

143,048 

 

Total debt

 

$

145,346 

 

$

144,983 

 

Stockholders’ equity:

 

 

 

 

 

Hill International, Inc. share of equity

 

$

117,495 

 

113,969 

 

Noncontrolling interest

 

$

2,604 

 

$

4,070 

 

Total equity

 

$

120,099 

 

$

118,039 

 

 

EBITDA Reconciliation

(Unaudited)

 

Management believes earnings before interest, taxes, depreciation and amortization, or EBITDA, in addition to operating profit, net earnings and other measures under United States generally accepted accounting principles, or GAAP, is a useful indicator of Hill’s financial and operating performance and its ability to generate cash flows from operations that are available for taxes and capital expenditures.  EBITDA is not a measure of financial performance under GAAP.  Investors should recognize that EBITDA might not be comparable to similarly-titled measures of other companies.  This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP.  A reconciliation of EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation S-K follows:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2016 

 

2015 

 

2016 

 

2015 

 

Net earnings

 

$

1,490 

 

$

4,395 

 

$

2,940 

 

$

5,097 

 

Interest expense, net

 

3,338 

 

3,531 

 

6,735 

 

7,105 

 

Income tax expense

 

3,378 

 

2,586 

 

4,059 

 

3,770 

 

Depreciation and amortization

 

2,544 

 

2,983 

 

5,200 

 

5,423 

 

EBITDA

 

$

10,750 

 

$

13,495 

 

$

18,934 

 

$

21,395