Performance Reflects Delayed Awards,
Non-recurring Margin Pressure
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 second quarter ended June 30, 2022.
Recent Highlights
- Williams posted revenue of $56.1 million in the second quarter
of 2022 compared with $91.6 million in the prior-year period
- The Company reported a net loss from continuing operations of
$5.3 million, or $(0.20) per diluted share, in the second quarter
of 2022 compared with net income from continuing operations of $2.6
million, or $0.10 per diluted share, in the second quarter of
2021
- Adjusted EBITDA1 was negative $3.2 million for the second
quarter of 2022 compared with $4.9 million in the prior-year
period
- As of June 30, 2022 the Company’s backlog was $234.3 million
compared to $257.0 million as of March 31, 2022; approximately
$144.6 million of the June 30, 2022 backlog is expected to be
converted to revenue over the following twelve months
- As previously announced, the Company has updated its guidance
to reflect delayed awards and certain non-recurring costs
“Although Williams’ future remains promising, we were
disappointed in how the second quarter played out, causing us to
reduce guidance on August 4, 2022,” said Tracy Pagliara, President
and CEO of Williams. “Our second quarter revenues were lower than
expected as nuclear work was pushed out to the second half of 2022.
In addition, several non-recurring items, including start-up costs
in our transmission and distribution business, margin pressure from
certain Florida water projects, and litigation expenses relating to
a competitor and former employee, also negatively impacted bottom
line results.
“Looking ahead, with bid activity accelerating, we’re optimistic
about revenue and backlog growth and better operating performance
in the quarters to come. We remain focused on new business
development, expense controls and working capital management. We’re
confident in our ability to position Williams for expansion and
increased shareholder returns going forward.”
1 See 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.
Second Quarter 2022 Financial Results Compared to Second
Quarter 2021
Revenue in the second quarter was $56.1 million compared with
$91.6 million in the second quarter of 2021, largely reflecting
reduced nuclear business – due to the timing of a nuclear outage
which occurs every other year accounting for $17.6 million of the
decline – fewer decommissioning contracts accounting for $11.5
million of decline, and the exit of the Canadian nuclear market
accounting for a $9.9 million reduction in revenue. Gross profit
was $2.3 million, or 4.1% of revenue, compared with $9.4 million,
or 10.2% of revenue, in the prior-year period, with the lower
margin primarily due to changes in project mix, including the
ongoing impact of certain contracts in Florida, as previously
announced, and start-up costs tied to the Company’s further
expansion into the energy delivery market. Excluding the
aforementioned gross margin compression associated with Williams’
entry into the transmission and distribution business of $1.6
million and the negative gross margin impact of $1.2 million from
the Company’s Florida water projects, adjusted gross margin would
have been 10.0% of revenue.
Operating expenses were $6.7 million in the 2022 second quarter,
inclusive of $0.3 million in professional fees relating to an
ongoing legal matter, compared with $6.6 million in the prior-year
period. The Company reported an operating loss of $4.5 million for
the second quarter of 2022 versus operating profit of $2.7 million
in the same period of 2021. Interest expense was $1.3 million in
the second quarter of 2022 versus $1.2 million in 2021.
The Company reported a net loss from continuing operations of
$5.3 million, or $(0.20) per diluted share, in the second quarter
of 2022 compared with net income from continuing operations of $2.6
million, or $0.10 per diluted share, in the second quarter of
2021.
Balance Sheet
The Company’s total liquidity (the sum of unrestricted cash and
availability under the Company’s revolving credit facility) was
$6.5 million as of June 30, 2022 versus $27.7 million at the
beginning of 2022. As of June 30, 2022, the Company had $0.7
million of unrestricted cash and cash equivalents, $0.5 million of
restricted cash, and $41.4 million of bank debt compared with $2.5
million of unrestricted cash and cash equivalents, $0.5 million of
restricted cash, and $32.1 million of bank debt as of December 31,
2021.
Backlog
Total backlog as of June 30, 2022 was $234.3 million compared
with $257.0 million on March 31, 2022. During the second quarter of
2022 the Company recognized revenue of $56.1 million, booked new
awards of $17.2 million, and saw net adjustments and cancellations
of $16.2 million.
Three Months Ended June 30,
2022
Six Months Ended June 30,
2022
Backlog - beginning of period
$
256,956
$
631,693
New awards
17,227
55,520
Adjustments and cancellations, net
16,179
(327,292
)
Revenue recognized
(56,059
)
(125,618
)
Backlog - end of period
$
234,303
$
234,303
Williams estimates that approximately $144.6 million of its
current backlog will be converted to revenue within the next twelve
months compared with $139.0 million of backlog as of March 31, 2022
that the Company anticipated would be converted to revenue over the
succeeding twelve-month period. Additionally, the Company saw an
increase in its pipeline to approximately $400 million as of June
30, 2022 compared with approximately $360 million as of March 31,
2022.
Outlook
The Company adjusted guidance on August 4, 2022 from that
previously provided January 28, 2022 for the current fiscal year,
as follows:
2022 Guidance
Revenue:
$275 to $295 million (previously, $305 -
$325 million)
Gross margin:
9.0% to 9.5% (previously, 10.5% to
11.0%)
SG&A:
8.25% to 8.75% of revenue; 8.00% to 8.50%
excluding investments in upgrading systems (previously, 8.75% to
9.25%; 8.25% to 8.75% excluding investments)
Adjusted EBITDA*:
$5.0 to $7.5 million (previously, $10.0 to
$12.5 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, August 12,
2022, 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 13731982;
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, increasing shareholder returns, and managing working
capital, 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, including the Company’s level of
indebtedness and ability to make payments on, and satisfy the
financial and other covenants contained in, its amended 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, including
investments in working capital required to support growth-related
commitments that it makes to customers, 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; the Company’s ability to obtain adequate
surety bonding and letters of credit; the Company’s ability 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 any
expansion into new 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; 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, including increases in cost, disruption of supply
or shortage of labor, freight, equipment or supplies, including as
a result of the COVID-19 pandemic; compliance with environmental,
health, safety and other related laws and regulations, including
those related to climate change; limitations or modifications to
indemnification regulations of the U.S.; the Company’s expected
financial condition, future cash flows, results of operations and
future capital and other expenditures; the impact of unstable
market and economic conditions on our business, financial condition
and stock price, including inflationary cost pressures, supply
chain disruptions and constraints, labor shortages, the effects of
the Ukraine-Russia conflict and ongoing impact of COVID-19, and a
possible recession; our ability to meet publicly announced guidance
or other expectations about our business, key metrics and future
operating results; the impact of the COVID-19 pandemic on the
Company’s business, results of operations, financial condition, and
cash flows, including global supply chain disruptions and 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 ability to successfully implement its new enterprise
resource planning (ERP) system; 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, which may worsen or increase due
to the effects of climate change, and other severe catastrophic
events (such as the ongoing COVID-19 pandemic); the impact of
corporate citizenship and environmental, social and governance
matters; 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 (whether claims made by
or against the Company) 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 2021 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 June
30,
Six Months Ended June
30,
($ in thousands, except share and per
share amounts)
2022
2021
2022
2021
Revenue
$
56,059
$
91,571
$
125,618
$
152,422
Cost of revenue
53,778
82,218
117,628
136,971
Gross profit
2,281
9,353
7,990
15,451
Gross margin
4.1
%
10.2
%
6.4
%
10.1
%
Selling and marketing expenses
402
231
732
442
General and administrative expenses
6,294
6,372
12,365
12,683
Depreciation and amortization expense
46
46
112
87
Total operating expenses
6,742
6,649
13,209
13,212
Operating income (loss)
(4,461
)
2,704
(5,219
)
2,239
Operating margin
(8.0
)%
3.0
%
(4.2
)%
1.5
%
Interest expense, net
1,261
1,213
2,480
2,506
Other income, net
(240
)
(1,232
)
(419
)
(1,592
)
Total other (income) expense, net
1,021
(19
)
2,061
914
Income (loss) from continuing operations
before income tax
(5,482
)
2,723
(7,280
)
1,325
Income tax expense (benefit)
(171
)
77
58
262
Income (loss) from continuing
operations
(5,311
)
2,646
(7,338
)
1,063
Income (loss) from discontinued operations
before income tax
(47
)
243
(47
)
164
Income tax expense (benefit)
(640
)
18
(623
)
37
Income from discontinued operations
593
225
576
127
Net income (loss)
$
(4,718
)
$
2,871
$
(6,762
)
$
1,190
Basic income (loss) per common share
Income (loss) from continuing
operations
$
(0.20
)
$
0.10
$
(0.28
)
$
0.04
Income from discontinued operations
0.02
0.01
0.02
0.01
Basic income (loss) per common share
$
(0.18
)
$
0.11
$
(0.26
)
$
0.05
Diluted income (loss) per common share
Income (loss) from continuing
operations
$
(0.20
)
$
0.10
$
(0.28
)
$
0.04
Income from discontinued operations
0.02
0.01
0.02
0.01
Diluted income (loss) per common share
$
(0.18
)
$
0.11
$
(0.26
)
$
0.05
Weighted average common shares outstanding
(basic)
26,106,493
25,683,258
26,034,907
25,306,130
Weighted average common shares outstanding
(diluted)
26,106,493
26,436,505
26,034,907
26,069,091
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
REVENUE BRIDGE
ANALYSIS*
Second Quarter 2022 Revenue
Bridge
(in millions)
$ Change
Second quarter 2021 revenue
$
91.6
U.S. Nuclear
(20.2
)
Decommissioning
(11.5
)
Canada Nuclear
(9.9
)
Water
4.0
Transmission and Distribution
1.6
Other
0.5
Total change
(35.5
)
Second quarter 2022 revenue*
$
56.1
*Numbers may not sum due to rounding
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
GROSS MARGIN
RECONCILIATION
NON-GAAP FINANCIAL MEASURE
(UNAUDITED)
The following table reconciles our
adjusted gross margin to our actual gross margin by deducting the
energy transmission and distribution projects that are incurring
start-up costs and lump sum projects in the water markets that are
generating a loss. We believe this information is meaningful as it
isolates the impact that our start-up costs and the non-profitable
lump sum projects have on our gross margin. Because adjusted gross
margin is not calculated in accordance with GAAP, it may not be
comparable to other similarly titled measures of other companies
and should not be considered in isolation or as substitute for, or
superior to, financial measures prepared in accordance with
GAAP.
(in thousands)
Three Months Ended June 30,
2022
Six Months Ended June 30,
2022
Revenue
$
56,059
$
125,618
Cost of revenue
53,778
117,628
Gross profit
2,281
7,990
Gross margin
4.1
%
6.4
%
Minus: revenue from transmission and
distribution start-up business
(1,597
)
(2,540
)
Minus: revenue from Florida lump sum water
projects
(3,687
)
(9,928
)
Minus: total revenue deducted
(5,284
)
(12,468
)
Minus: cost of revenue from transmission
and distribution start-up business
(3,228
)
(5,325
)
Minus: cost of revenue from the Florida
lump sum water projects
(4,861
)
(11,868
)
Minus: total cost of revenue deducted
(8,089
)
(17,193
)
Adjusted revenue
50,775
113,150
Adjusted cost of revenue
45,689
100,435
Adjusted gross profit
$
5,086
$
12,715
Adjusted gross profit margin
10.0
%
11.2
%
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
June 30,
December 31,
($ in thousands, except per share
amounts)
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
656
$
2,482
Restricted cash
468
468
Accounts receivable, net of allowance of
$327 and $427, respectively
33,267
35,204
Contract assets
13,483
12,683
Other current assets
10,812
11,049
Total current assets
58,686
61,886
Property, plant and equipment, net
977
653
Goodwill
35,400
35,400
Intangible assets, net
12,500
12,500
Other long-term assets
7,640
5,712
Total assets
$
115,203
$
116,151
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
10,939
$
12,168
Accrued compensation and benefits
9,182
12,388
Contract liabilities
2,289
3,412
Short-term borrowings
10,223
676
Current portion of long-term debt
1,050
1,050
Other current liabilities
10,226
11,017
Current liabilities of discontinued
operations
104
316
Total current liabilities
44,013
41,027
Long-term debt, net
30,128
30,328
Deferred tax liabilities
2,445
2,442
Other long-term liabilities
4,443
1,647
Long-term liabilities of discontinued
operations
3,523
4,250
Total liabilities
84,552
79,694
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000
shares authorized and 26,869,938 and 26,408,789 shares issued,
respectively, and 26,427,635 and 25,939,621 shares outstanding,
respectively
263
261
Paid-in capital
93,208
92,227
Accumulated other comprehensive loss
(122
)
(95
)
Accumulated deficit
(62,692
)
(55,930
)
Treasury stock, at par (442,303 and
469,168 common shares, respectively)
(6
)
(6
)
Total stockholders’ equity
30,651
36,457
Total liabilities and stockholders’
equity
$
115,203
$
116,151
WILLIAMS INDUSTRIAL SERVICES
GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June
30,
(in thousands)
2022
2021
Operating activities:
Net income (loss)
$
(6,762
)
$
1,190
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Net income from discontinued
operations
(576
)
(127
)
Deferred income tax provision
(benefit)
3
(25
)
Depreciation and amortization on plant,
property, and equipment
112
87
Amortization of deferred financing
costs
415
415
Amortization of debt discount
100
100
Bad debt expense
(101
)
(51
)
Stock-based compensation
577
1,460
Changes in operating assets and
liabilities:
Accounts receivable
2,137
(3,040
)
Contract assets
(787
)
(4,268
)
Other current assets
177
(1,561
)
Other assets
(2,219
)
(175
)
Accounts payable
(1,251
)
1,546
Accrued and other liabilities
(601
)
4,432
Contract liabilities
(1,122
)
(1,246
)
Net cash used in operating activities,
continuing operations
(9,898
)
(1,263
)
Net cash used in operating activities,
discontinued operations
(365
)
(139
)
Net cash used in operating activities
(10,263
)
(1,402
)
Investing activities:
Purchase of property, plant and
equipment
(438
)
(418
)
Net cash used in investing activities
(438
)
(418
)
Financing activities:
Repurchase of stock-based awards for
payment of statutory taxes due on stock-based compensation
(163
)
(501
)
Proceeds from short-term borrowings
144,220
140,194
Repayments of short-term borrowings
(134,673
)
(138,482
)
Repayments of long-term debt
(525
)
(525
)
Net cash provided by financing
activities
8,859
686
Effect of exchange rate change on cash,
continuing operations
16
128
Net change in cash, cash equivalents and
restricted cash
(1,826
)
(1,006
)
Cash, cash equivalents and restricted
cash, beginning of period
2,950
9,184
Cash, cash equivalents and restricted
cash, end of period
$
1,124
$
8,178
Supplemental Disclosures:
Cash paid for interest
$
2,292
$
1,887
Cash paid for income taxes, net of
refunds
$
—
$
1,553
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 June
30,
Six Months Ended June
30,
(in thousands)
2022
2021
2022
2021
Income (loss) from continuing
operations
$
(5,311
)
$
2,646
$
(7,338
)
$
1,063
Add back:
Interest expense, net
1,261
1,213
2,480
2,506
Income tax expense (benefit)
(171
)
77
58
262
Depreciation and amortization expense
46
46
112
87
Stock-based compensation
608
745
577
1,460
Severance costs
—
—
43
—
Other professional fees
260
—
974
—
Franchise taxes
65
62
129
122
Foreign currency (gain) loss
12
86
(123
)
(4
)
Adjusted EBITDA - continuing
operations
$
(3,230
)
$
4,875
$
(3,088
)
$
5,496
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 and stock-based compensation. 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 certain non-cash
expenses and unusual gains or charges (such as stock-based
compensation, severance costs, other professional fees, and foreign
currency (gain) loss) 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 income
from continuing operations 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/20220811005726/en/
Chris Witty Darrow Associates 646-345-0998
cwitty@darrowir.com
Williams Industrial Serv... (AMEX:WLMS)
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De May 2024 a Jun 2024
Williams Industrial Serv... (AMEX:WLMS)
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De Jun 2023 a Jun 2024