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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 June 30, 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
PhiladelphiaPA19103
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001HILNew 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 56,062,669 shares of the Registrant’s Common Stock outstanding at July 27, 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 and including any project cancellations, delays and modifications;
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

Table of Contents
PART I — FINANCIAL INFORMATION
Item 1.   Financial Statements.
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
 June 30, 2020December 31, 2019
Assets(Unaudited)
Cash and cash equivalents$23,198  $15,915  
Cash - restricted4,423  4,666  
Accounts receivable, net105,435  103,892  
Current portion of retainage receivable17,075  16,459  
Accounts receivable - affiliates23,237  18,776  
Prepaid expenses and other current assets12,658  9,340  
Income tax receivable1,542  2,256  
Total current assets187,568  171,304  
Property and equipment, net9,771  11,895  
Cash - restricted, net of current portion4,040  4,401  
Operating lease right-of-use assets15,279  17,451  
Financing lease right-of-use assets96    
Retainage receivable5,430  5,695  
Acquired intangibles, net178  232  
Goodwill44,431  48,024  
Investments2,667  1,711  
Deferred income tax assets2,929  3,800  
Other assets2,493  5,038  
Total assets$274,882  $269,551  
Liabilities and Stockholders’ Equity
Current maturities of notes payable and long-term debt$1,828  $1,792  
Accounts payable and accrued expenses66,914  65,172  
Income taxes payable1,888  3,152  
Current portion of deferred revenue7,628  10,773  
Current portion of operating lease liabilities5,465  5,736  
Current portion of financing lease liabilities27    
Other current liabilities8,357  4,876  
Total current liabilities92,107  91,501  
Notes payable and long-term debt, net of current maturities53,570  41,150  
Retainage payable2,017  1,551  
Deferred income taxes418  419  
Deferred revenue1,321  3,041  
Non-current operating lease liabilities14,910  17,030  
Non-current financing lease liabilities69    
Other liabilities3,277  4,631  
Total liabilities167,689  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, 62,609 shares and 62,708 shares issued at June 30, 2020 and December 31, 2019, respectively6  6  
Additional paid-in capital214,161  212,759  
Accumulated deficit(79,895) (71,360) 
Accumulated other comprehensive income (loss)1,279  (3,817) 
Less treasury stock of 6,807 and 6,546 at June 30, 2020 and December 31, 2019, respectively(29,056) (28,231) 
Hill International, Inc. share of equity106,495  109,357  
Noncontrolling interests698  871  
Total equity107,193  110,228  
Total liabilities and stockholders’ equity$274,882  $269,551  
See accompanying notes to consolidated financial statements.
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Table of Contents
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Consulting fee revenue$75,760  $77,035  $152,910  $156,035  
Reimbursable expenses18,689  21,222  34,847  40,905  
Total revenue$94,449  $98,257  $187,757  $196,940  
Direct expenses65,032  66,955  130,080  134,202  
Gross profit$29,417  $31,302  $57,677  $62,738  
Selling, general and administrative expenses26,857  27,407  54,955  58,744  
Foreign currency exchange loss (benefit)265  8  4,316  (18) 
 Plus: Share of profit of equity method affiliates1,014  717  1,038  1,131  
Operating profit (loss)$3,309  $4,604  $(556) $5,143  
Interest and related financing fees, net1,296  1,411  2,595  2,923  
Other loss, net (3,847)   (3,502)   
(Loss) earnings before income taxes$(1,834) $3,193  $(6,653) $2,220  
Income tax expense102  1,493  1,705  2,588  
Net (loss) earnings$(1,936) $1,700  $(8,358) $(368) 
Less: net earnings - noncontrolling interests18  83  177  150  
Net (loss) earnings attributable to Hill International, Inc.$(1,954) $1,617  $(8,535) $(518) 
Basic (loss) earnings per common share - Hill International, Inc.$(0.03) $0.03  $(0.15) $(0.01) 
Basic weighted average common shares outstanding56,409  56,032  56,476  55,989  
Diluted (loss) earnings per common share - Hill International,Inc.$(0.03) $0.03  $(0.15) $(0.01) 
Diluted weighted average common shares outstanding56,409  56,032  56,476  55,989  
 
See accompanying notes to consolidated financial statements.
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Table of Contents
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(In thousands)
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net (loss) earnings$(1,936) $1,700  $(8,358) $(368) 
Foreign currency translation adjustment, net of tax5,001  980  4,746  (874) 
Comprehensive earnings (loss)3,065  2,680  (3,612) (1,242) 
Less: Comprehensive (loss) earnings attributable to noncontrolling interests(173) 195  (173) 214  
Comprehensive earnings (loss) attributable to Hill International, Inc.$3,238  $2,485  $(3,439) $(1,456) 
 
See accompanying notes to consolidated financial statements.
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Table of Contents
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands) 
 Common StockAdditional
Paid-in
Retained
Earnings
Accumulated Other
Comprehensive
Treasury StockHill Share of Stockholders’Non-controllingTotal
Stockholders’
 SharesAmountCapital(Deficit)Income (Loss)SharesAmountEquityInterestsEquity
Balance - December 31, 201962,708  $6  $212,759  $(71,360) $(3,817) 6,546  $(28,231) $109,357  $871  $110,228  
Net earnings (loss)—  —  —  (6,581) —  —  —  (6,581) 159  (6,422) 
Other comprehensive income (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, 202062,530  $6  $213,263  $(77,941) $(3,913) 6,807  $(29,056) $102,359  $871  $103,230  
Net income (loss)—  —  —  (1,954) —  —  —  (1,954) 18  (1,936) 
Other comprehensive income (loss)—  —  —  —  5,192  —  —  5,192  (191) 5,001  
Share-based compensation expense—  —  802  —  —  —  —  802  —  802  
Shares issued under employee stock purchase plan79  —  96  —  —  —  —  96  —  96  
Balance - June 30, 202062,609  $6  $214,161  $(79,895) $1,279  6,807  $(29,056) $106,495  $698  $107,193  
Balance - December 31, 201862,181  $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 income (loss)—  —  —  —  (1,806) —  —  (1,806) (48) (1,854) 
Shares issued to Board of Directors24  —  —  —  —  —  —  —  —    
Share-based compensation expense (2)
—  —  241  —  —  —  —  241  —  241  
Balance - March 31, 201962,205  $6  $210,325  $(87,579) $(4,381) 6,546  $(28,231) $90,140  $624  $90,764  
Net income (loss)—  —  —  1,617  —  —  —  1,617  83  1,700  
Other comprehensive income (loss)—  —  —  —  868  —  —  868  112  980  
Share-based compensation expense—  —  801  —  —  —  —  801  —  801  
Shares issued under employee stock purchase plan57  —  113  —  —  —  —  113  —  113  
Balance - June 30, 201962,262  $6  $211,239  $(85,962) $(3,513) 6,546  $(28,231) $93,539  $819  $94,358  

(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 received during the three months ended June 30, 2020. The six months ended June 30, 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 shares 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

Table of Contents
HILL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended June 30,
 20202019
Cash flows from operating activities:
Net loss$(8,358) $(368) 
Adjustments to reconcile net loss to net cash provided by (used in):
Depreciation and amortization2,675  1,585  
(Recovery) provision for bad debts(1,010) (557) 
Amortization of deferred loan fees348  361  
Deferred tax expense (benefit)