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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from                                          to 
Commission File Number: 001-33961
HILL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
20-0953973
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
One Commerce Square
 
 
2005 Market Street, 17th Floor
 
 
Philadelphia
PA
19103
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:  (215) 309-7700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
 
Common Stock, par value $0.0001
HIL
New York Stock Exchange
(NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý     No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
Yes  ý     No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act
Large Accelerated Filer
 
Accelerated Filer
Non-Accelerated Filer
 
Smaller Reporting Company
 
 
 
Emerging Growth Company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes   No  ý

There were 55,984,012 shares of the Registrant’s Common Stock outstanding at April 24, 2020.
 



HILL INTERNATIONAL, INC. AND SUBSIDIARIES
 
Index to Form 10-Q
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


3


PART I
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and it is Hill International, Inc.'s (the "Company") 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, margin, profit improvement, cost savings or other financial items; any statements of belief, any statements concerning the Company's 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 the Company's current expectations, estimates and assumptions and are subject to certain risks and uncertainties. Although the Company believes 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.
 
Those forward-looking statements may concern, among other things:
 
The markets for the Company's services;
Projections of revenues and earnings, anticipated contractual obligations, funding requirements or other financial items;
Statements regarding the impact and effect of the COVID-19 pandemic;
Statements regarding the Company's eligibility to participate in the Main Street Lending Program;
Statements concerning the Company's plans, strategies and objectives for future operations; and
Statements regarding future economic conditions or the Company's performance.
 
Important factors that could cause the Company's actual results to differ materially from estimates or projections contained in our forward-looking statements include:
 
The risks set forth in Item 1A, “Risk Factors,” in the Company's most recent Annual Report on Form 10-K;
Unfavorable global economic conditions may adversely impact its business;
Our backlog, which is subject to unexpected adjustments and cancellations, may not be fully realized as revenue;
Our expenses may be higher than anticipated;
Modifications and termination of client contracts;
Control and operational issues pertaining to business activities that the Company conducts pursuant to joint ventures with other parties; and
The ability to retain and recruit key technical and management personnel.
 
Other factors that may affect the Company's business, financial position or results of operations include:
 
Unexpected delays in collections from clients;
Risks related to the effect of the COVID-19 pandemic on the Company, including its employees and related costs;
Risks of the Company's ability to obtain debt financing or otherwise raise capital to meet required working capital needs and to support potential future acquisition activities;
Risks of international operations, including uncertain political and economic environments, acts of terrorism or war, potential incompatibilities with foreign joint venture partners, foreign currency fluctuations, civil disturbances and labor issues; and
Risks related to contracts with governmental entities, including the failure of applicable governing authorities to take necessary actions to secure or maintain funding for particular projects with us, the unilateral termination of contracts by the governments and reimbursement obligations to the government for funds previously received.
 
The Company does not intend, and undertakes no obligation to, update any forward-looking statement. In accordance with the Reform Act, Part II, Item 1A of this Report entitled “Risk Factors” contains cautionary statements that accompany those forward-looking statements. You should carefully review such cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. Those cautionary statements are not exclusive and are in addition to other factors discussed elsewhere in this Form 10-Q, in our other filings with the Securities and Exchange Commission ("SEC") or in materials incorporated therein by reference.



4


PART I — FINANCIAL INFORMATION
Item 1.   Financial Statements.
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
March 31, 2020
 
December 31, 2019
Assets
 
(Unaudited)
 
 
Cash and cash equivalents
 
$
16,083

 
$
15,915

Cash - restricted
 
3,489

 
4,666

Accounts receivable, net
 
108,109

 
103,892

Current portion of retainage receivable
 
16,040

 
16,459

Accounts receivable - affiliates
 
24,919

 
18,776

Prepaid expenses and other current assets
 
11,879

 
9,340

Income tax receivable
 
2,176

 
2,256

Total current assets
 
182,695

 
171,304

Property and equipment, net
 
10,167

 
11,895

Cash - restricted, net of current portion
 
3,921

 
4,401

Operating lease right-of-use assets
 
15,781

 
17,451

Retainage receivable
 
6,433

 
5,695

Acquired intangibles, net
 
205

 
232

Goodwill
 
44,591

 
48,024

Investments
 
1,628

 
1,711

Deferred income tax assets
 
3,074

 
3,800

Other assets
 
3,060

 
5,038

Total assets
 
$
271,555

 
$
269,551

Liabilities and Stockholders’ Equity
 
 
 
 
Current maturities of notes payable and long-term debt
 
$
3,071

 
$
1,792

Accounts payable and accrued expenses
 
66,394

 
65,172

Income taxes payable
 
3,586

 
3,152

Current portion of deferred revenue
 
9,090

 
10,773

Current portion of operating lease liabilities
 
5,481

 
5,736

Other current liabilities
 
6,065

 
4,876

Total current liabilities
 
93,687

 
91,501

Notes payable and long-term debt, net of current maturities
 
50,470

 
41,150

Retainage payable
 
1,581

 
1,551

Deferred income taxes
 
418

 
419

Deferred revenue
 
1,437

 
3,041

Non-current operating lease liabilities
 
15,850

 
17,030

Other liabilities
 
4,882

 
4,631

Total liabilities
 
168,325

 
159,323

Commitments and contingencies
 


 


Stockholders’ equity:
 
 
 
 
Preferred stock, $0.0001 par value; 1,000 shares authorized, none issued
 

 

Common stock, $0.0001 par value; 100,000 shares authorized, 62,530 shares and 62,708 shares issued at March 31, 2020 and December 31, 2019, respectively
 
6

 
6

Additional paid-in capital
 
213,263

 
212,759

Accumulated deficit
 
(77,941
)
 
(71,360
)
Accumulated other comprehensive loss
 
(3,913
)
 
(3,817
)
Less treasury stock of 6,807 and 6,546 at March 31, 2020 and December 31, 2019, respectively
 
(29,056
)
 
(28,231
)
Hill International, Inc. share of equity
 
102,359

 
109,357

Noncontrolling interests
 
871

 
871

Total equity
 
103,230

 
110,228

Total liabilities and stockholders’ equity
 
$
271,555

 
$
269,551


See accompanying notes to consolidated financial statements.

5


HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
 
Three Months Ended
March 31,
 
 
2020
 
2019
Consulting fee revenue
 
$
77,150

 
$
79,000

Reimbursable expenses
 
16,158

 
19,683

Total revenue
 
$
93,308

 
$
98,683

Direct expenses
 
65,048

 
67,247

Gross profit
 
$
28,260

 
$
31,436

Selling, general and administrative expenses
 
32,149

 
31,311

 Plus: Share of profit of equity method affiliates
 
24

 
414

Operating (loss) profit
 
$
(3,865
)
 
$
539

Interest and related financing fees, net
 
1,299

 
1,512

Other income, net
 
345

 

Loss before income taxes
 
$
(4,819
)
 
$
(973
)
Income tax expense
 
1,603

 
1,095

Net loss
 
$
(6,422
)
 
$
(2,068
)
Less: net earnings - non-controlling interests
 
159

 
67

Net loss attributable to Hill International, Inc.
 
$
(6,581
)
 
$
(2,135
)
 
 
 
 
 
Basic loss per common share - Hill International, Inc.
 
$
(0.12
)
 
$
(0.04
)
Basic weighted average common shares outstanding
 
56,543

 
55,946

 
 
 
 
 
Diluted loss per common share - Hill International, Inc.
 
$
(0.12
)
 
$
(0.04
)
Diluted weighted average common shares outstanding
 
56,543

 
55,946

 
See accompanying notes to consolidated financial statements.

6


HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net loss
 
$
(6,422
)
 
$
(2,068
)
Foreign currency translation adjustment, net of tax
 
(255
)
 
(1,854
)
Comprehensive loss
 
(6,677
)
 
(3,922
)
Less: Comprehensive (loss) income attributable to non-controlling interests
 

 
19

Comprehensive loss attributable to Hill International, Inc.
 
$
(6,677
)
 
$
(3,941
)
 
See accompanying notes to consolidated financial statements.

7


HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands) 
 
 
Common Stock
 
Additional
Paid-in
 
Retained
Earnings
 
Accumulated Other
Comprehensive
 
Treasury Stock
 
Hill Share of Stockholders’
 
Non-controlling
 
Total
Stockholders’
 
 
Shares
 
Amount
 
Capital
 
(Deficit)
 
(Loss)
 
Shares
 
Amount
 
Equity
 
Interests
 
Equity
Balance - December 31, 2019
 
62,708

 
$
6

 
$
212,759

 
$
(71,360
)
 
$
(3,817
)
 
6,546

 
$
(28,231
)
 
$
109,357

 
$
871

 
$
110,228

Net income (loss)
 

 

 

 
(6,581
)
 

 

 

 
(6,581
)
 
159

 
(6,422
)
Other comprehensive loss
 

 

 

 

 
(96
)
 

 

 
(96
)
 
(159
)
 
(255
)
Share-based compensation expense
 

 

 
399

 

 

 

 

 
399

 

 
399

Shares issued under employee stock purchase plan (1)
 
83

 

 
105

 

 

 

 

 
105

 

 
105

Transfer of shares pledged as collateral (2)
 
(261
)
 

 

 

 

 
261

 
(825
)
 
(825
)
 

 
(825
)
Balance - March 31, 2020
 
62,530

 
$
6

 
$
213,263

 
$
(77,941
)
 
$
(3,913
)
 
6,807

 
$
(29,056
)
 
$
102,359

 
$
871

 
$
103,230

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance - December 31, 2018
 
62,181

 
$
6

 
$
210,084

 
$
(85,444
)
 
$
(2,575
)
 
6,546

 
$
(28,231
)
 
$
93,840

 
$
605

 
$
94,445

Net income (loss)
 

 

 

 
(2,135
)
 

 

 

 
(2,135
)
 
67

 
(2,068
)
Other comprehensive loss
 

 

 

 

 
(1,806
)
 

 

 
(1,806
)
 
(48
)
 
(1,854
)
Shares issued to Board of Directors
 
24

 

 

 

 

 

 

 

 

 

Share-based compensation expense
 

 

 
241

 

 

 

 

 
241

 

 
241

Balance - March 31, 2019
 
62,205

 
$
6

 
$
210,325

 
$
(87,579
)
 
$
(4,381
)
 
6,546

 
$
(28,231
)
 
$
90,140

 
$
624

 
$
90,764



(1) Includes $55 of proceeds related to shares issued under the Employee Stock Purchase Plan ("ESPP") during the three months ended March 31, 2020 and were received in the subsequent period. The three months ended March 31, 2019 excluded $34 of proceeds received during the period that are included in Hill International, Inc.'s (the "Company") consolidated statements of cash flow, but related to ESPP shares issued and recognized at December 31, 2018.
(2) Reflects 261 of the Company's common stock pledged as collateral under the terms of a secured promissory note payable to the Company. During the three months ended March 31, 2020, the Company exercised its right to retain the shares upon the note holder's agreement to relinquish the shares upon the promissory note maturity date.

See accompanying notes to consolidated financial statements.

8


HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(6,422
)
 
$
(2,068
)
Adjustments to reconcile net loss to net cash provided by (used in):
 
 
 
 
Depreciation and amortization
 
2,424

 
791

(Recovery) provision for bad debts
 
(479
)
 
934

Amortization of deferred loan fees
 
175

 
179

Deferred tax expense (benefit)
 
490

 
(349
)
Share-based compensation
 
399

 
241

Operating lease right-of-use assets
 
1,575

 
1,408

Foreign currency remeasurement losses (gains)
 
4,376

 
(511
)
Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(4,203
)
 
5,390

Accounts receivable - affiliate
 
(6,143
)
 
(218
)
Prepaid expenses and other current assets
 
(2,608
)
 
551

Income taxes receivable
 
(45
)
 
(199
)
Retainage receivable
 
(755
)
 
(1,247
)
Other assets
 
1,231

 
690

Accounts payable and accrued expenses
 
1,964

 
6,851

Income taxes payable
 
431

 
1,020

Deferred revenue
 
(2,994
)
 
(3,423
)
Operating lease liabilities
 
(1,323
)
 
(1,442
)
Other current liabilities
 
696

 
31

Retainage payable
 
29

 
51

Other liabilities
 
250

 
(222
)
Net cash (used in) provided by operating activities
 
(10,932
)
 
8,458

Cash flows from investing activities:
 
 
 
 
Purchase of property and equipment
 
(833
)
 
(873
)
Net cash used in investing activities
 
(833
)
 
(873
)
Cash flows from financing activities:
 
 
 
 
Repayment of term loans
 
(217
)
 
(266
)
Proceeds from revolving loans
 
18,792

 
9,854

Repayment of revolving loans
 
(7,836
)
 
(8,662
)
Proceeds from stock issued under employee stock purchase plan
 
50

 
34

Net cash provided by financing activities
 
10,789

 
960

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(513
)
 
(1,033
)
Net (decrease) increase in cash, cash equivalents and restricted cash
 
(1,489
)
 
7,512

Cash, cash equivalents and restricted cash — beginning of period
 
24,982

 
23,107

Cash, cash equivalents and restricted cash — end of period
 
$
23,493

 
$
30,619

 
 
Three Months Ended March 31,
Supplemental disclosures of cash flow information:
 
2020
 
2019
Interest and related financing fees paid
 
$
1,150

 
$
1,414

Income taxes paid
 
87

 
601

Cash paid for amounts included in the measurement of lease liabilities
 
1,910

 
1,814

Right-of-use assets obtained in exchange for operating lease liabilities (1)
 

 
18,178

(1) Amount for the three months ended March 31, 2019 relates to the Company's January 1, 2019 adoption of Accounting Standards Update 2016-2, Leases (Topic 842).


 See accompanying notes to consolidated financial statements.

9


HILL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 

Note 1 — The Company
 
Hill International, Inc. (“Hill” or the “Company”) is a professional services firm that provides program management, project management, construction management and other consulting services primarily to the buildings, transportation, environmental, energy and industrial markets worldwide. Hill’s clients include the U.S. federal government, U.S. state and local governments, foreign governments and the private sector.

All amounts included in the following Notes to the Consolidated Financial Statements are in thousands, except per share data.

Note 2 — Liquidity
 
At March 31, 2020 and December 31, 2019, our principal sources of liquidity consisted of $16,083 and $15,915 of cash and cash equivalents, respectively, $1,500 and $9,052 of available borrowing capacity under the Domestic Revolving Credit Facility, respectively, $165 and $3,145 of available borrowing capacity under the International Revolving Credit Facility, respectively, and $1,134 and $2,538 under other foreign credit agreements, respectively. Additional information regarding the Company's credit facilities is set forth in Note 9 - Notes Payable and Long-Term Debt.

In December 2019, COVID-19 was identified in Wuhan, China. In March 2020, the World Health Organization declared COVID-19 a global pandemic as a result of the further spread of the virus into all regions of the world, including those regions where the Company's primary operations occur. The effects of this global pandemic on the Company includes anticipated lower gross and operating margins, as well as temporary delays in accounts receivable collections. The Company is focused on preserving its principal sources of liquidity and managing its cash flow and will continue to evaluate the potential short-term and long-term implications of COVID-19 on its consolidated statements of operations. The Company has also implemented various actions and policies that is expected to result in approximately $10,000 in cost reductions. The Company believes that it has adequate liquidity and business plans to continue to operate the business and mitigate the risks associated with COVID-19 for the next 12 months from May 7, 2020, the date of this filing. Additional disclosure on the impact of COVID-19 on the Company's is included in Item 2 Management's Discussion and Analysis within the Overview section of this Form 10-Q.

Note 3 — Basis of Presentation
 
Summary
 
The accompanying unaudited interim consolidated financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") pertaining to reports on Form 10-Q and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. In the opinion of management, these statements include all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of the consolidated financial statements. The consolidated financial statements include the accounts of Hill and its wholly and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The interim operating results are not necessarily indicative of the results for a full year.

Reclassification

A reclassification was made in the presentation of the consolidated statements of cash flow for the three months ended March 31, 2019. Net borrowings on revolving loans previously reported as $1,192 was broken out between repayments of revolving loans and proceeds from revolving loans of $(8,662) and $9,854, respectively, to conform to current year presentation.


10


Certain back-office expenses and foreign currency translation gains and losses that had previously been included in the individual regions in the operating profit/(loss) table presentation are currently being included within the corporate costs line item on the operating profit/(loss) tables herein. The related 2019 prior period operating profit (loss) by geographic region and corporate costs have been recast to reflect this change. This change only affects the presentation in the operating profit/(loss) tables and has no impact on total operating profit/(loss) reported.

The Company's Consolidated Statements of Operations for the three months ended March 31, 2019 reflects a change in the presentation of revenue. Total Revenue of $98,683 for the three months ended March 31, 2019 was broken out between consulting fee revenue ("CFR") and reimbursable expenses to conform to current year presentation. CFR is the revenue, excluding reimbursable costs. The Company believes that CFR is an important measure because it represents the revenue on which gross profit is earned.

Other Income, net

During the three months ended March 31, 2020, the Company recognized $345 of income in Other Income, net. The other income represents the cancellation of a PIDC Economic Stimulus Program Loan Agreement that the Company made on October 24, 2014 as a result of the Company satisfying all obligations in regard to the Loan Agreement.

Summary of Significant Accounting Policies

(a)                                 Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at period-end rates of exchange while revenues and expenses are translated at the average monthly exchange rates. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity titled accumulated other comprehensive loss until the entity is sold or substantially liquidated. Gains or losses arising from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency), including those resulting from intercompany transactions, are reflected in selling, general and administrative expenses in the consolidated statements of operations. The impact of foreign exchange on long-term intercompany loans, for which repayment has not been scheduled or planned and permanent equity has been elected, are recorded in accumulated other comprehensive loss on the consolidated balance sheet.

(b)                                 Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and accounts receivable.

The Company maintains its cash accounts with high quality financial institutions. Although the Company believes that the financial institutions with which it does business will be able to fulfill their commitments, there is no assurance that those institutions will be able to continue to do so.

No single client accounted for 10% or more of total revenue for the three months ended March 31, 2020 or 2019.

There was one client in Africa who contributed 10% or more to gross accounts receivable at March 31, 2020 and December 31, 2019, respectively, which represents 15% and 17% of the gross accounts receivable balance at March 31, 2020 and December 31, 2019, respectively.

(c)                                 Allowance for Doubtful Accounts

The allowance for doubtful accounts is an estimate prepared by management based on identification of the collectability of specific accounts and the overall condition of the receivable portfolios. When evaluating the adequacy of the allowance for doubtful accounts, the Company specifically analyzes trade receivables, including retainage receivable, historical bad debts, client credits, client concentrations, current economic trends and changes in client payment terms. If the financial condition of clients were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Likewise, should the Company determine that it would be able to realize more of its receivables in the future than previously estimated, an adjustment to the allowance would increase earnings in the period such determination was made. The allowance for doubtful accounts is reviewed on a quarterly basis and adjustments are recorded as deemed necessary.


11


(d)                                    Retainage Receivable

Retainage receivable represents balances billed but not paid by clients pursuant to retainage provisions in certain contracts and will be due upon completion of specific tasks or the completion of the contract.

(e)                                 Income Taxes

The Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating its actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Company’s consolidated balance sheets. The Company assesses the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent it believes recovery is not likely, the Company establishes a valuation allowance. To the extent the Company establishes a valuation allowance in a period, it must include an expense within the tax provision in the consolidated statements of operations. The Company has recorded a valuation allowance to reduce the deferred tax asset to an amount that is more likely than not to be realized in future years. If the Company determines in the future that it is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position, that the deferred tax assets subject to the valuation allowance will be realized, then the previously provided valuation allowance will be adjusted.

The Company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is more likely than not that the benefit will be ultimately realized. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.

(f)                                 Revenue Recognition

The Company generates revenue primarily from providing professional services to its clients under various types of contracts. In providing these services, the Company may incur reimbursable expenses, which consist principally of amounts paid to subcontractors and other third parties and travel and other job related expenses that are contractually reimbursable from clients. The Company includes reimbursable expenses in computing and reporting its total revenue as long as the Company remains responsible to the client for the fulfillment of the contract and for the overall acceptability of all services provided.

If estimated total costs on any contract project a loss, the Company charges the entire estimated loss to operations in the period the loss becomes known. The cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, incentive awards, change orders, claims, anticipated losses, and others are recorded in the accounting period in which the events indicating a loss are known and the loss can be reasonably estimated. These loss projects are re-assessed for each subsequent reporting period until the project is complete. Such revisions could occur at any time and the effects may be material.

See Note 4 - Revenue from Contracts with Clients for more detail, regarding how the Company recognizes revenue under each type of its contractual arrangements.

(g)                                    Restricted Cash

Restricted cash primarily represents cash collateral required to be maintained in foreign bank accounts to serve as collateral for letters of credit, bonds or guarantees on certain projects. The cash will remain restricted until the respective project has been completed, which typically is greater than one year.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:
 
 
March 31, 2020
 
December 31, 2019
Cash and cash equivalents
 
$
16,083

 
$
15,915

Cash - restricted
 
3,489

 
4,666

Cash - restricted, net of current portion
 
3,921

 
4,401

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows
 
$
23,493

 
$
24,982




12


(h)                                    Earnings (loss) per Share

Basic earnings (loss) per common share have been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share incorporates the incremental shares issuable upon the assumed exercise of stock options, the assumed vesting of stock and deferred and restricted stock unit awards using the treasury stock method, if dilutive.

The Company has outstanding options to purchase approximately 1,616 shares and 1,417 shares at March 31, 2020 and 2019, respectively. In addition, the Company had 789 and 471 restricted and deferred stock units outstanding at March 31, 2020 and 2019, respectively. These awards were excluded from the calculation of diluted loss per share for the three months ended March 31, 2020 and 2019 because they were anti-dilutive.

The following table provides a reconciliation to net loss used in the numerator for loss per share attributable to Hill:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net loss
 
$
(6,422
)
 
$
(2,068
)
Less: net earnings - non-controlling interests
 
159

 
67

Net loss attributable to Hill International, Inc.
 
$
(6,581
)
 
$
(2,135
)
 
 
 
 
 
Basic weighted average common shares outstanding
 
56,543

 
55,946

Effect of dilutive securities:
 
 
 
 
Stock options
 

 

Unvested share-based compensation units
 
$

 
$

Diluted weighted average common shares outstanding
 
56,543

 
55,946

 
 
 
 
 
Basic and diluted net loss per share attributable to Hill
 
$
(0.12
)
 
$
(0.04
)


(i)                                    New Accounting Pronouncements

Changes to U.S. GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs and, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Company or adoption will have minimal impact on its consolidated financial statements.

For additional information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 3 to the consolidated financial statements in Item 8 of Form 10-K for the year ended December 31, 2019 filed with the SEC on March 26, 2020. See update below.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-4, Intangibles - Goodwill and Other (Topic 350), which removes step 2 from the goodwill impairment test. As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units’ fair value. The guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017, and the prospective transition method should be applied. The Company adopted this guidance on January 1, 2020 and it did not materially impact its consolidated financial statements.

13



In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, for all entities. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance on January 1, 2020 on a prospective basis and will begin to capitalize certain implementation costs that may have been previously expensed as incurred. There was no impact on the Company's consolidated financial statements on the date of implementation.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities ("VIE"). The amendments in this ASU for determining whether a decision-making fee is a variable interest require reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required by GAAP). These amendments will create alignment between determining whether a decision-making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019 for public companies. Early adoption is permitted. The Company adopted this guidance in January 1, 2020. There was no impact on the Company's consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This ASU provides guidance on whether certain transactions between collaborative arrangement participants should be accounted for with revenue under Topic 606, specifically when the collaborative arrangement participant is a customer in the context of a unit-of-account. It provides more comparability in the presentation of revenues for certain transactions between collaborative arrangement participants, including adding unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019 for public companies. Early adoption is permitted. The Company adopted this guidance in January 1, 2020. There was no impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments (Topic 326) - Credit Losses: Measurement of Credit Losses on Financial Instruments, which provides guidance regarding the measurement of credit losses on financial instruments.  The new guidance replaces the incurred loss impairment methodology in the current guidance with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.  This ASU will be effective for the Company commencing January 1, 2022.  The Company is in the process of assessing the impact of this ASU on our consolidated financial statements and disclosures.

Note 4 — Revenue from Contracts with Clients

The Company recognizes revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the Company expects to be entitled in exchange for such goods or services.


14


Below is a description of the basic types of contracts from which the Company may earn revenue:

Time and Materials Contracts

Under the time and materials (“T&M”) arrangements, contract fees are based upon time and materials incurred. The contracts may be structured as basic time and materials, cost plus a margin or time and materials subject to a maximum contract value (the "cap value"). Due to the potential limitation of the cap value, the economic factors of the contracts subject to a cap value differ from the economic factors of basic T&M and cost plus contracts. The majority of the Company’s contracts are for consulting projects where it bills the client monthly at hourly billing rates. The hourly billing rates are determined by contract terms. Under cost plus a margin contracts, the Company charges its clients for its costs, plus a fixed fee or rate. Under time and materials contracts with a cap value, the Company charges the clients for time and materials based upon the work performed however there is a cap or a not to exceed value. There are often instances that a contract is modified to extend the contract value past the cap. As the consideration is variable depending on the outcome of the contract renegotiation, the Company will estimate the total contract price in accordance with the variable consideration guidelines and will only include consideration that it expects to receive from the client. When the Company is reaching the cap value, the contract will be renegotiated, or Hill ceases work when the maximum contract value is reached. The Company will continue to work if it is probable that the contract will be extended. The Company will only include consideration or contract renegotiations to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. If the Company continues to work and is uncertain that a contract change order will be processed, the variable consideration will be constrained to the cap until it is probable that the contract will be renegotiated. The Company is only entitled to consideration for the work it has performed, and the cap value is not a guaranteed contract value.

Fixed Price Contracts

Under fixed price contracts, the Company’s clients pay an agreed amount negotiated in advance for a specified scope of work. The Company is guaranteed to receive the consideration to the extent that the Company delivers under the contract. The Company recognizes revenue over a period of time on fixed price contracts using the input method based upon direct costs incurred to date, which are compared to total projected direct costs. Costs are the most relevant measure to determine the transfer of the service to the client. The Company assesses contracts quarterly and will recognize any expected future loss before actually incurring the loss. When the Company is expecting to reach the total value of the contract, the Company will begin to negotiate a change order.

Change Orders and Claims

Change orders are modifications of an original contract. Either the Company or its client may initiate change orders. They may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Management evaluates when a change order is probable based upon its experience in negotiating change orders, the client’s written approval of such changes or separate documentation of change order costs that are identifiable. Change orders may take time to be formally documented and terms of such change orders are agreed with the client before the work is performed. Sometimes circumstances require that work progresses before an agreement is reached with the client. If the Company is having difficulties in renegotiating the change order, the Company will stop work, record all costs incurred to date, and determine, on a project by project basis, the appropriate final revenue recognition.

Claims are amounts in excess of the agreed contract price that the Company seeks to collect from its clients or others for client-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. Costs related to change orders and claims are recognized when they are incurred. The Company evaluates claims on an individual basis and recognizes revenue it believes is probable to collect.

U.S. Federal Acquisition Regulations

The Company has contracts with the U.S. government that contain provisions requiring compliance with the U.S. Federal Acquisition Regulations (“FAR”). These regulations are generally applicable to all of its federal government contracts and are partially or fully incorporated in many local and state agency contracts. They limit the recovery of certain specified indirect costs on contracts subject to the FAR. Cost-plus contracts covered by the FAR provide for upward or downward adjustments if actual recoverable costs differ from the estimate billed under forward pricing arrangements. Most of the Company's federal government contracts are subject to termination at the convenience of the federal government. Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such termination.


15


Federal government contracts that are subject to the FAR and that are required by state and local governmental agencies to be audited are performed, for the most part, by the Defense Contract Audit Agency (“DCAA”). The DCAA audits the Company’s overhead rates, cost proposals, incurred government contract costs and internal control systems. During the course of its audits, the DCAA may question incurred costs if it believes the Company has accounted for such costs in a manner inconsistent with the requirements of the FAR or Cost Accounting Standards and recommend that its U.S. government corporate administrative contracting officer disallow such costs. Historically, the Company has not incurred significant disallowed costs because of such audits. However, the Company can provide no assurance that the DCAA audits will not result in material disallowances of incurred costs in the future. The Company provides for a refund liability to the extent that it expects to refund some of the consideration received from a client.

Disaggregation of Revenues
 
The Company has one operating segment, the Project Management Group, which reflects how the Company is being managed. Additional information related to the Company’s operating segment is provided in Note 12 - Segment and Related Information. The Project Management Group provides extensive construction and project management services to construction owners worldwide. The Company considered the type of client, type of contract and geography for disaggregation of revenue. The Company determined that disaggregating by (1) contract type; and (2) geography would provide the most meaningful information to understand the nature, amount, timing, and uncertainty of its revenues. The type of client does not influence the Company’s revenue generation. Ultimately, the Company is supplying the same services of 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 services and facilities management services. The Company’s contracts are generally long term contracts that are either based upon time and materials incurred or provide for a fixed price. The contract type will determine the level of risk in the contract related to revenue recognition. For purposes of disaggregation of revenue, the contract types have been grouped into: (1) Fixed Price - which include fixed price projects; and, (2) T&M - which include T&M contracts, T&M with a cap and cost plus contracts. The geography of the contracts will depict the level of global economic factors in relation to revenue recognition.

The components of the Company’s revenue by contract type and geographic region for the three months ended March 31, 2020 and 2019 are as follows:

 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Fixed Price
 
T&M
 
Total
 
Percent of Total Revenue
 
Fixed Price
 
T&M
 
Total
 
Percent of Total Revenue
United States
 
$
5,023

 
$
40,997

 
$
46,020

 
49.3
%
 
$
3,433

 
$
44,669

 
$
48,102

 
48.7
%
Latin America
 
1,171

 

 
1,171

 
1.3
%
 
2,016

 
418

 
2,434

 
2.5
%
Europe
 
6,429

 
5,108

 
11,537

 
12.4
%
 
6,051

 
5,283

 
11,334

 
11.5
%
Middle East
 
4,883

 
19,689

 
24,572

 
26.3
%
 
11,365

 
16,946

 
28,311

 
28.7
%
Africa
 
206

 
7,091

 
7,297

 
7.8
%
 
571

 
6,378

 
6,949

 
7.0
%
Asia/Pacific
 

 
2,711

 
2,711

 
2.9
%
 
300

 
1,253

 
1,553

 
1.6
%
   Total
 
$
17,712

 
$
75,596

 
$
93,308

 
100.0
%
 
$
23,736

 
$
74,947

 
$
98,683

 
100.0
%

 
 
 
 
 
 
 
 
 

The Company recognizes revenue when it transfers promised goods or services to clients in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company exercises judgment in determining if the contractual criteria are met to determine if a contract with a client exists, specifically in the earlier stages of a project when a formally executed contract may not yet exist. The Company typically has one performance obligation under a contract to provide fully-integrated project management services, and, occasionally, a separate performance obligation to provide facilities management services. Performance obligations are delivered over time as the client receives the service.
 

16


The consideration promised within a contract may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur. In estimating the transaction price for pending change orders, the Company considers all relevant facts, including documented correspondence with the client regarding acknowledgment and/or agreement with the modification, as well as historical experience with the client or similar contractual circumstances. The Company transfers control of its service over time and, therefore, satisfies a performance obligation and recognizes revenue over time by measuring the progress toward complete satisfaction of that performance obligation. The Company’s fixed price projects and T&M contracts subject to a cap value generally use a cost-based input method to measure its progress towards complete satisfaction of the performance obligation as the Company believes this best depicts the transfer of control to the client. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Due to the nature of the work required to be performed under the Company’s performance obligations, estimating total revenue and cost at completion on its long term contracts is complex, subject to many variables and requires significant judgment.

For basic and cost plus T&M contracts, the Company recognizes revenue over time using the output method which measures progress toward complete satisfaction of the performance obligation based upon actual costs incurred, using the right to invoice practical expedient.

Accounts Receivable

Accounts receivable includes amounts billed and currently due from clients and amounts for work performed which have not been billed to date. The billed and unbilled amounts are stated at the net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of client creditworthiness, historical payment experience and the age of outstanding receivables.

Contract Assets and Liabilities

Contract assets include unbilled amounts typically resulting from performance under long-term contracts where the revenue recognized exceeds the amount billed to the client. Retainage receivable is included in contract assets. The current portion of retainage receivable is a contract asset, which prior to the adoption of ASC 606, had been classified within accounts receivable.
The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized and are reported as deferred revenue in the consolidated balance sheets. The Company classifies billings in excess of revenue recognized as deferred revenue as current or non-current based on the timing of when revenue is expected to be recognized.

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s performance and client payments. The amount of revenue recognized during the three months ended March 31, 2020 and 2019 that was included in the deferred revenue balance at the beginning of the periods was $7,861 and $9,241, respectively.

Remaining Performance Obligations

The remaining performance obligations represent the aggregate transaction price of executed contracts with clients for which work has partially been performed or not started as of the end of the reporting period. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. T&M contracts are excluded from the remaining performance obligation as these contracts are not fixed price contracts and the consideration expected under these contracts is variable as it is based upon hours and costs incurred in accordance with the variable consideration optional exemption. As of March 31, 2020 and December 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $105,370 and $113,592, respectively. During the following 12 months, approximately 50.0% of the remaining performance obligations are expected to be recognized as revenue with the remaining balance recognized over 1 to 5 years.

17



Note 5 — Accounts Receivable 

The components of accounts receivable and accounts receivable - affiliates reflected in the Company's consolidated balance sheets are as follows:
Accounts Receivable
 
March 31, 2020
 
December 31, 2019
Billed (1)
 
$
128,320

 
$
132,339

Unbilled (2)
 
35,122

 
30,026

 
 
163,442

 
162,365

Allowance for doubtful accounts (1)
 
(55,333
)
 
(58,473
)
Accounts receivable, net
 
$
108,109

 
$
103,892

 
 
 
 
 
Accounts Receivable - Affiliates
 
 
 
 
Billed (3)
 
$
13,895

 
$
12,546

Unbilled (2)
 
11,658

 
6,888

 
 
$
25,553

 
$
19,434

Allowance for doubtful accounts
 
(634
)
 
(658
)
Accounts receivable - affiliates, net
 
$
24,919

 
$
18,776

 
(1) Includes $32,162 and $32,864 related to amounts due from a client in Africa as of March 31, 2020 and December 31, 2019, respectively.
(2) Amount is net of unbilled reserves.
(3) Includes $401 and $397 of retainage receivables due from affiliates as of March 31, 2020 and December 31, 2019, respectively.

Note 6 — Intangible Assets
 
The following table summarizes the Company’s acquired intangible assets:
 
 
 
March 31, 2020
 
December 31, 2019
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
 
 
 
 
 
 
 
 
Client relationships
 
$
1,080

 
$
875

 
$
1,080

 
$
848

Total
 
$
1,080

 
$
875

 
$
1,080

 
$
848

 
 
 
 
 
 
 
 
 
Intangible assets, net
 
$
205

 
 
 
$
232

 
 


The Company amortizes client relationship intangible assets over the estimated useful life of ten years. For the three months ended March 31, 2020 and 2019, such amortization expense was $27 and $114, respectively.
 
The following table presents the estimated amortization expense for the next five years: 
 
 
Estimated
Amortization
Expense
 
 
Year ending December 31,
 
2020 (remaining 9 months)
 
$
52

2021
 
51

2022
 
51

2023
 
51

2024
 

 


18


Note 7 — Goodwill
 
The following table summarizes the changes in the Company’s carrying value of goodwill during the three months ended March 31, 2020:
 
 
Balance, December 31, 2019
$
48,024

Translation adjustments (1)
(3,433
)
Balance, March 31, 2020
$
44,591


(1) The translation adjustment was calculated based on the foreign currency exchange rates as of March 31, 2020.

The Company performed its 2019 annual impairment test effective July 1, 2019, and noted no impairment. Based on the valuation as of July 1, 2019, the fair value of the Company exceeded its carrying value. The Company performs its annual impairment test during the second half of each year unless events or circumstances indicate an impairment may have occurred before that time.

Despite the excess fair value identified in our 2019 impairment assessment, the Company determined that the significant decline in its market capitalization as a result of the COVID-19 pandemic indicated that an impairment loss may have been incurred. The Company bypassed the qualitative assessment and proceeded directly to performing the quantitative goodwill impairment test. The quantitative goodwill impairment test concluded that the fair value of the Company (reporting unit) exceeded its carrying amount at March 31, 2020, and therefore, goodwill is not considered impaired.

The Company’s changes in estimates and assumptions, including decreases in stock price and market capitalization, could materially affect the determination of fair value and/or conclusions on goodwill impairment. As a result of recent events, including market volatility and the impact on the global economy, it is at least reasonably possible that changes in one or more of those assumptions could result in impairment of our goodwill in future periods.

Note 8 — Accounts Payable and Accrued Expenses
 
Below are the components of accounts payable and accrued expenses:
 
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
Accounts payable
 
$
25,659

 
$
22,102

Accrued payroll and related expenses
 
27,546

 
28,874

Accrued subcontractor fees
 
8,966

 
9,405

Accrued agency fees
 
193

 
239

Accrued legal and professional fees
 
1,787

 
2,169

Other accrued expenses
 
2,243

 
2,383

 
 
$
66,394

 
$
65,172

 


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Note 9 — Notes Payable and Long-Term Debt
 
The table below reflects the Company's notes payable and long-term debt, which includes credit facilities:
 
 
 
 
 
 
Interest Rate (1)
 
Balance Outstanding as of
Loan
 
Maturity
 
Interest Rate Type
 
March 31,
2020
December 31,
2019
 
March 31,
2020
December 31,
2019
Secured Credit Facilities
 
 
 
 
 
 
 
 
 
 
Hill International, Inc. - Société Générale 2017 Term Loan Facility
 
06/20/2023
 
Variable
 
7.86%
7.92%
 
$
29,175

$
29,250

Hill International, Inc. - Société Générale Domestic Revolving Credit Facility (2)
 
05/04/2022
 
Variable
 
6.18%
6.27%
 
18,400

9,400

Hill International N.V.. - Société Générale International Revolving Credit Facility (3)
 
05/04/2022
 
Variable
 
4.14%
4.16%
 
2,811

2,302

Unsecured Credit Facilities
 
 
 
 
 
 
 
 
 
 
Hill International, Inc. - First Abu Dhabi Bank ("FAB") PJSC Overdraft Credit Facility (4)
 
04/18/2021
 
Variable
 
5.79%
5.81%
 
1,997

593

Hill International Brasil S.A. - Revolving Credit Facility (5)
 
06/12/2020
 
Fixed
 
2.80%
3.24%
 
386

498

Unsecured Notes Payable and Long-Term Debt
 
 
 
 
 
 
 
 
 
 
Hill International Spain SA-Bankia S.A. & Bankinter S.A.(6)
 
12/31/2021
 
Fixed
 
2.21%
2.21%
 
907

1,054

Philadelphia Industrial Development Corporation Loan
 
03/31/2027
 
Fixed
 
2.79%
2.79%
 
466

486

Total notes payable and long-term debt, gross
 
 
 
 
 
 
 
 
$
54,142

$
43,583

Less: unamortized discount and deferred financing costs related to Société Générale 2017 Term Loan Facility
 
 
 
 
 
 
 
 
(601
)
(641
)
Notes payable and long-term debt
 
 
 
 
 
 
 
 
$
53,541

$
42,942

Current portion of notes payable
 
 
 
 
 
 
 
 
$
3,258

$
1,972

Current portion of unamortized debt discount and deferred financing costs
 
 
 
 
 
 
 
 
$
(187
)
$
(180
)
Current maturities of notes payable and long-term debt
 
 
 
 
 
 
 
 
$
3,071

$
1,792

Notes payable and long-term debt, net of current maturities
 
 
 
 
 
 
 
 
$
50,470

$
41,150


(1) Interest rates for variable interest rate debt are reflected on a weighted average basis through March 31, 2020 since the loan origination or modification date.
(2) As of March 31, 2020 and December 31, 2019, the Company had $5,100 and $6,548 of outstanding letters of credit, respectively, in addition to the balances outstanding above, which resulted in $1,500 and $9,052 of available borrowing capacity under the Domestic Revolving Credit Facility, respectively. The amounts available were based on the maximum borrowing capacity of $25,000 as of March 31, 2020 and December 31, 2019. See additional information below related to this secured revolving credit facility.
(3) As of March 31, 2020 and December 31, 2019, the Company had $2,162 and $3,145 of outstanding letters of credit, respectively, in addition to the balances outstanding above, which resulted in $165 and $2,232 of available borrowing capacity under the International Revolving Credit Facility, respectively. The amounts available were based on the Company's borrowing capacity of $5,138 and $7,679 as of March 31, 2020 and December 31, 2019, respectively. See additional information below related to this secured revolving credit facility.
(4) FAB credit facility lender was formerly known as National Bank of Abu Dhabi. There is no stated maturity date, however, the loan is subject to annual review in April of each year, or at any other time as determined by FAB. Therefore, the amount outstanding is reflected within the current maturities of notes payable and long-term debt. Balances outstanding are reflected in U.S. dollars based on the conversion rates from AED as of March 31, 2020 and December 31, 2019. The Company had $1,134 and $2,538 of availability under the credit facility as of March 31, 2020 and