Backlog Continues to Expand; Revising Guidance
to Reflect Margin Pressure and Order Timing
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 third quarter ended September 30, 2021.
Recent Highlights
- Williams posted revenue of $73.4 million in the third quarter
of 2021 compared with $66.2 million in the prior-year period
- The Company reported net income of $0.7 million, or $0.03 per
diluted share, in the third quarter versus net income of $1.0
million, or $0.04 per diluted share, in the third quarter of
2020
- Adjusted EBITDA1 was $3.8 million for the third quarter of 2021
compared with $4.1 million in the prior-year period
- As of September 30, 2021, the Company’s backlog was $672.5
million compared to $664.4 million as of June 30, 2021, with
approximately $207.4 million expected to be converted to revenue
over the following twelve months and $73.4 million expected to be
converted by the end of the fiscal year
- The Company announced November 8, 2021 that it restructured the
organization and made substantial changes to management to improve
business development initiatives, strengthen operational execution,
and drive long-term growth
“Although revenue rose 11% year-over-year and our backlog
climbed to $672.5 million, gross margins fell, as did adjusted
EBITDA, primarily due to cost overruns on certain fixed price
contracts,” said Tracy Pagliara, President and CEO of Williams. “In
addition, due to the delay – and uncertainty – associated with an
anticipated, significant customer order, our backlog has not grown
at the pace previously envisioned, such that fourth quarter results
will also be adversely impacted. Accordingly, we have revised our
guidance for 2021.
“It goes without saying that we are working aggressively to
address these issues. First and foremost, as recently announced, we
have upgraded and reorganized our leadership team, which we believe
will improve Williams’ business development and overall performance
going forward. Our new structure necessitates greater focus on
customer initiatives and operational execution, which should
accelerate the Company’s growth trajectory while delivering better,
more predictable, financial results. With this in mind, along with
strong prospects in our end markets – now supplemented by the
infrastructure bill approved by Congress – I remain positive about
the future heading into 2022.”
Third Quarter 2021 Financial Results Compared to Third
Quarter 2020
Revenue in the third quarter of 2021 was $73.4 million compared
with $66.2 million in the third quarter of 2020, largely reflecting
$8.6 million of higher decommissioning work.
Gross profit was $6.8 million, or 9.2% of revenue, compared with
$8.7 million, or 13.1% of revenue, in the prior-year period, with
the lower margin reflecting cost overruns and changes in project
mix. Gross margin in the third quarter of 2021 did not benefit from
a previously-announced incentive related to a multi-year customer
contract, the receipt of which is now uncertain.
Operating expenses were $4.6 million compared with $6.0 million
in the third quarter of 2020, reflecting reduced compensation and
benefit costs. The Company reported operating income of $2.2
million versus $2.7 million in the prior-year period. Interest
expense was $1.2 million in the third quarter of 2021 versus $1.5
million in 2020, as a result of the Company’s refinancing which was
completed in the fourth quarter of 2020.
The Company reported net income of $0.7 million, or $0.03 per
share, in the third quarter of 2021 compared with net income of
$1.0 million, or $0.04 per share, in the prior-year period.
Balance Sheet
Total liquidity (the sum of unrestricted cash and availability
under the Revolving Credit Facility) was $21.7 million at the end
of the third 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
September 30, 2021, the Company had $2.6 million of unrestricted
cash and cash equivalents, $0.5 million of restricted cash, and
$36.2 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 September 30, 2021 was $672.5 million
compared with $664.4 million on June 30, 2021. The Company
recognized revenue of $73.4 million in the third quarter, booked
new awards of $76.8 million, and saw net adjustments and
cancellations of $4.7 million, primarily reflecting work scope
expansion.
Three Months Ended
September 30, 2021
Nine Months Ended
September 30, 2021
Backlog - beginning of period
$
664,357
$
443,850
New awards
76,774
376,228
Adjustments and cancellations, net
4,726
78,201
Revenue recognized
(73,351
)
(225,773
)
Backlog - end of period
$
672,506
$
672,506
Williams estimates that approximately $207.4 million, or 30.8%
of total backlog on September 30, 2021, will be converted to
revenue within the next twelve months and $73.4 million, or 10.9%
of total backlog, will be converted to revenue within the remainder
of the fiscal year. This compares with $199.5 million of backlog on
June 30, 2021 that the Company anticipated would be converted to
revenue over the succeeding twelve-month period.
Outlook
The Company has adjusted its previous guidance (issued February
8, 2021) for the current fiscal year to reflect recent project cost
overruns, delays in contract decision-making, and investment in
business development, among other factors.
2021 Guidance
Revised
Previous
Revenue:
$300 million to $310 million
$310 million to $320 million
Gross margin:
10.2% to 10.6%
11.0% to 13.0%
SG&A:
8.00% to 8.50% of revenue
7.75% to 8.25% of revenue
Adjusted EBITDA (from continuing
operations)*:
$12.5 million to $13.5 million
$16.0 million to $18.0 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, November 18,
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 afterwards by
dialing 412-317-6671 and entering conference ID number 13724845;
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, 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 Company and its end markets
to benefit from the infrastructure bill recently passed by the U.S.
Congress; 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; the impact of supply chain
constraints and labor shortages related to the COVID-19 pandemic;
the potential impact of the federal vaccination mandate on the
Company’s labor supply and future results of operations, as well as
any impact of such mandate on the Company’s customers; 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.
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands, except share and
per share amounts)
2021
2020
2021
2020
Revenue
$
73,351
$
66,240
$
225,773
204,936
Cost of revenue
66,590
57,582
203,561
180,014
Gross profit
6,761
8,658
22,212
24,922
Gross margin
9.2
%
13.1
%
9.8
%
12.2
%
Selling and marketing expenses
267
123
709
401
General and administrative expenses
4,248
5,827
16,931
17,413
Depreciation and amortization expense
50
46
137
144
Total operating expenses
4,565
5,996
17,777
17,958
Operating income
2,196
2,662
4,435
6,964
Operating margin
3.0
%
4.0
%
2.0
%
3.4
%
Interest expense, net
1,227
1,541
3,733
4,640
Other (income) expense, net
181
(316
)
(1,411
)
(937
)
Total other expense, net
1,408
1,225
2,322
3,703
Income from continuing operations before
income tax
788
1,437
2,113
3,261
Income tax (benefit) expense
(6
)
321
256
565
Income from continuing operations
794
1,116
1,857
2,696
Income (loss) from discontinued operations
before income tax
(34
)
(66
)
130
(222
)
Income tax (benefit) expense
22
24
59
(56
)
Income (loss) from discontinued
operations
(56
)
(90
)
71
(166
)
Net income
$
738
$
1,026
$
1,928
2,530
Basic earnings per common share
Income from continuing operations
$
0.03
$
0.04
$
0.07
$
0.12
Income (loss) from discontinued
operations
0.00
0.00
0.00
(0.01
)
Basic earnings per common share
$
0.03
$
0.04
$
0.07
0.11
Diluted earnings per common share
Income from continuing operations
$
0.03
$
0.04
$
0.07
$
0.11
Income from discontinued operations
0.00
0.00
0.00
0.00
Diluted earnings per common share
$
0.03
$
0.04
$
0.07
0.11
Weighted average common shares outstanding
(basic)
25,699,545
24,689,337
25,306,130
23,304,059
Weighted average common shares outstanding
(diluted)
26,506,575
25,184,306
26,097,700
23,836,798
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
REVENUE BRIDGE
ANALYSIS*
Third Quarter 2021 Revenue
Bridge
(in millions)
$ Change
Third quarter 2020 revenue
$
66.2
Decommissioning
8.6
Fossil
3.7
Canada Nuclear
0.7
U.S. Nuclear
(3.2
)
Wastewater
(1.1
)
Other
(1.5
)
Total change
7.2
Third quarter 2021 revenue*
$
73.4
*Numbers may not sum due to rounding
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
September 30,
December 31,
($ in thousands, except share and per
share amounts)
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
2,556
$
8,716
Restricted cash
468
468
Accounts receivable, net of allowance of
$228 and $351, respectively
39,489
27,549
Contract assets
12,811
7,969
Other current assets
11,526
6,457
Total current assets
66,850
51,159
Property, plant and equipment, net
709
309
Goodwill
35,400
35,400
Intangible assets, net
12,500
12,500
Other long-term assets
5,687
5,712
Total assets
$
121,146
$
105,080
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
8,439
$
6,210
Accrued compensation and benefits
19,856
15,800
Contract liabilities
2,494
2,529
Short-term borrowings
4,672
352
Current portion of long-term debt
1,050
1,050
Other current liabilities
10,711
7,170
Current liabilities of discontinued
operations
188
342
Total current liabilities
47,410
33,453
Long-term debt, net
30,428
30,728
Deferred tax liabilities
2,136
2,440
Other long-term liabilities
1,828
2,098
Long-term liabilities of discontinued
operations
4,201
4,466
Total liabilities
86,003
73,185
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000
shares authorized and 26,384,670 and 25,926,333 shares issued,
respectively, and 25,915,502 and
25,336,442 shares outstanding, respectively
260
256
Paid-in capital
91,670
90,292
Accumulated other comprehensive income
(loss)
(36
)
28
Accumulated deficit
(56,745
)
(58,673
)
Treasury stock, at par (469,168 and
589,891 common shares, respectively)
(6
)
(8
)
Total stockholders’ equity
35,143
31,895
Total liabilities and stockholders’
equity
$
121,146
$
105,080
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September
30,
(in thousands)
2021
2020
Operating activities:
Net income
$
1,928
$
2,530
Adjustments to reconcile net income to net
cash used in operating activities:
Net (income) loss from discontinued
operations
(71
)
166
Deferred income tax provision
(benefit)
(304
)
55
Depreciation and amortization on plant,
property and equipment
137
144
Amortization of deferred financing
costs
623
546
Amortization of debt discount
150
—
Gain on disposals of property, plant and
equipment
—
(136
)
Bad debt expense
(123
)
19
Stock-based compensation
2,579
1,703
Changes in operating assets and
liabilities, net of businesses sold:
Accounts receivable
(11,896
)
(6,530
)
Contract assets
(4,824
)
(1,553
)
Other current assets
(5,113
)
(3,684
)
Other assets
(214
)
1,619
Accounts payable
2,121
(8,914
)
Accrued and other liabilities
6,628
7,290
Contract liabilities
(39
)
706
Net cash used in operating activities,
continuing operations
(8,418
)
(6,039
)
Net cash used in operating activities,
discontinued operations
(348
)
(189
)
Net cash used in operating activities
(8,766
)
(6,228
)
Investing activities:
Purchase of property, plant and
equipment
(537
)
(88
)
Net cash used in investing activities
(537
)
(88
)
Financing activities:
Repurchase of stock-based awards for
payment of statutory taxes due on stock-based compensation
(501
)
(227
)
Proceeds from issuance of common stock
—
6,488
Debt issuance costs
—
(325
)
Proceeds from short-term borrowings
208,421
172,616
Repayments of short-term borrowings
(204,101
)
(175,158
)
Repayments of long-term debt
(788
)
(350
)
Net cash provided by financing
activities
3,031
3,044
Effect of exchange rate change on cash
112
(80
)
Net change in cash, cash equivalents and
restricted cash
(6,160
)
(3,352
)
Cash, cash equivalents and restricted
cash, beginning of period
9,184
7,818
Cash, cash equivalents and restricted
cash, end of period
$
3,024
$
4,466
Supplemental Disclosures:
Cash paid for interest
$
2,781
$
2,900
Noncash amendment fee related to revolving
credit facility
$
—
$
150
Cash paid for income taxes, net of
refunds
$
1,841
$
—
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
September 30,
Nine Months Ended
September 30,
(in thousands)
2021
2020
2021
2020
Income from continuing operations
$
794
$
1,116
$
1,857
$
2,696
Add back:
Interest expense, net
1,227
1,541
3,733
4,640
Income tax (benefit) expense
(6
)
321
256
565
Depreciation and amortization expense
50
46
137
144
Stock-based compensation
1,119
614
2,579
1,702
Severance costs
165
421
165
421
Other professional fees
—
38
—
155
Franchise taxes
62
64
184
203
Settlement expenses
—
—
—
129
Foreign currency gain
(46
)
(83
)
(150
)
(24
)
ROU Asset Impairment
423
—
423
—
Adjusted EBITDA - continuing
operations
$
3,788
$
4,078
$
9,184
$
10,631
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 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/20211117006325/en/
Investor Contact: Chris Witty Darrow Associates
646-345-0998 cwitty@darrowir.com
Williams Industrial Serv... (AMEX:WLMS)
Historical Stock Chart
From Apr 2024 to May 2024
Williams Industrial Serv... (AMEX:WLMS)
Historical Stock Chart
From May 2023 to May 2024