Hill International, Inc.
Aug 4, 2010
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Hill International Reports Second Quarter and First Half 2010 Financial Results

MARLTON, N.J., Aug 4, 2010 (GlobeNewswire via COMTEX News Network) -- Hill International (NYSE:HIL), the global leader in managing construction risk, announced today financial results for the second quarter ended June 30, 2010 and the first six months of 2010 (see attached tables). Total revenue for the second quarter of 2010 was $108.2 million, an increase of 3.7% from the second quarter of 2009. Consulting fee revenue for the second quarter of 2010 was $91.6 million, unchanged from the second quarter of 2009. In the second quarter of 2010, Hill's consulting fee revenue was composed of a 3.4% organic decline offset by 3.4% growth from acquisitions.

Operating profit for the second quarter of 2010 was $4.3 million, a decrease of 34.5% from the prior year's quarter. Net earnings in the second quarter declined 38.3% to $2.9 million (or $0.07 per diluted share based on 40.4 million diluted shares outstanding) from $4.7 million (or $0.12 per diluted share based on 40.3 million diluted shares outstanding) in the second quarter of 2009.

The company's total backlog at June 30, 2010 increased to $569 million from $550 million at March 31, 2010. Twelve-month backlog at June 30, 2010 was $241 million, up slightly from $240 million at March 31, 2010.

"Although the wind-down of our assignment in Iraq affected year-over-year quarterly comparisons, we saw sequential improvements in our business in the second quarter from the first quarter, especially in new business development," said Irvin E. Richter, Hill's Chairman and Chief Executive Officer. "We are optimistic that will continue into the second half of 2010," Richter added.

First Half 2010 Results

Total revenue for the first half of 2010 rose to $212.7 million, an increase of 2.1% from the first half of 2009. Consulting fee revenue for the first half of 2010 was $183.5, down 0.1% from the first half of 2009. The decrease in Hill's consulting fee revenue was composed of a 3.5% organic decline offset by 3.4% growth from acquisitions.

Operating profit for the first half of 2010 was $7.0 million, a decrease of 35.9% from the first half of 2009. Net earnings in the first half of 2010 declined 41.2% to $5.3 million (or $0.13 per diluted share based on 40.7 million diluted shares outstanding) from $9.1 million (or $0.22 per diluted share based on 40.7 million diluted shares outstanding) in the first half of 2009.

Business Segment Results

In addition to providing consolidated financial results, Hill also reports separate financial results for its two operating segments: the Project Management Group and the Construction Claims Group. Hill's Project Management Group provides program management, project management, construction management, project management oversight, troubled project turnaround, staff augmentation, estimating and cost management, project labor agreement consulting and management consulting services. Hill's Construction Claims Group provides claims preparation, analysis and review, litigation support, lender advisory, cost/damages assessment, delay/disruption analysis, contract review and assessment, risk assessment, adjudication and expert witness testimony services.

Project Management Group. Total revenue at Hill's Project Management Group during the second quarter of 2010 was $86.2 million, an increase of 3.0% from the second quarter of 2009. Consulting fee revenue for the second quarter of 2010 at the Projects Group was $70.2 million, a decrease of 2.0% from the second quarter of 2009. That percentage change was comprised of an organic decrease of 5.5%, primarily from less work in the Middle East and Europe, offset by a 3.5% increase due to the December 2009 acquisitions of Boyken International and TRS Consultants. Operating profit for the Projects Group for the second quarter of 2010 was $9.0 million, a decrease of 25.3% from the prior year's quarter.

Total revenue at the Projects Group during the first half of 2010 grew to $165.3 million, up 0.5% from the first half of 2009. Consulting fee revenue for the first half of 2010 was $137.6 million, a decrease of 2.7% from the first half of 2009. That percentage change was the result of a 6.6% decline in organic work, primarily from less work in the Middle East and Europe, offset by 3.9% growth from acquisitions. Operating profit for the Projects Group for the first half of 2010 was $14.1 million, a decrease of 33.5% from the first half of 2009.

Construction Claims Group. Total revenue at Hill's Construction Claims Group during the second quarter of 2010 was $22.0 million, an increase of 6.7% over the second quarter of 2009. Consulting fee revenue for the second quarter of 2010 at the Claims Group rose to $21.3 million, an increase of 7.1% from the year earlier quarter. That percentage change was comprised of 4.0% organic growth plus an increase of 3.1% due to the acquisition of McLachlan Lister in June 2010. The organic increase in construction claims work primarily took place in the Middle East and the Americas, partially offset by a decrease in work in Europe. Operating profit for the Claims Group for the second quarter of 2010 was $1.5 million, an increase of 72.1% from the prior year's quarter.

Total revenue at the Claims Group during the first half of 2010 rose to $47.4 million, an increase of 8.2% over the first half of 2009. Consulting fee revenue for the first half of 2010 rose to $45.9 million, an increase of 8.5% over the first half of 2009. That percentage change was comprised of 7.0% organic growth, primarily from the Middle East and the Americas, plus 1.5% growth from the McLachlan Lister acquisition. Operating profit for the Claims Group for the first half of 2010 was $5.7 million, an increase of 79.1% from the first half of 2009.

Stock Repurchase Program

During the second quarter of 2010, Hill purchased approximately 1,550,000 shares of its common stock pursuant to its previously authorized $40 million Stock Repurchase Program at a cost of approximately $6.7 million, or an average price of $4.33 per share. Since the inception of the program in November 2008, the company has purchased approximately 5,203,000 shares of its common stock for an aggregate purchase price of approximately $21.8 million, or an average price of $4.19 per share.

Conference Call

David L. Richter, Hill's President and Chief Operating Officer, and John Fanelli III, Hill's Senior Vice President and Chief Financial Officer, will host a conference call on Thursday, August 5, 2010, at 11:00 am Eastern Time to discuss the financial results for the period ended June 30, 2010. Interested parties may participate in the call by dialing (888) 787-0460 (Domestic) or (706) 679-3200 (International) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Hill International conference call. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to the "Investor Relations" section of Hill's website at www.hillintl.com, and click on "Financial Information," and then "Conferences and Calls". Please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 90 days.

About Hill International

Hill International, with 2,600 employees in 90 offices worldwide, provides program management, project management, construction management, and construction claims and consulting services. Engineering News-Record magazine recently ranked Hill as the 8th largest construction management firm in the United States. For more information on Hill, please visit our website at www.hillintl.com.

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

Forward-Looking Statements

Certain statements contained in this press release may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and it is our intent that any such statements be protected by the safe harbor created thereby. Except for historical information contained in this press release, the matters set forth herein including, but not limited to, any projections of earnings or other financial items; any statements concerning our plans, strategies and objectives for future operations; and any statements regarding future economic conditions or performance, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties. Although we believe that the expectations, estimates and assumptions reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include: modifications and termination of client contracts; control and operational issues pertaining to business activities that we conduct on our own behalf or pursuant to joint ventures with other parties; difficulties we may incur in implementing our acquisition strategy; the need to retain and recruit key technical and management personnel; and unexpected adjustments and cancellations related to our backlog. Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in the reports we have filed with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statement.

(HIL-G)

                          HILL INTERNATIONAL, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF EARNINGS
                              (In 000's, Except Per Share Data)
                                         (Unaudited)


                                             Three Months Ended        Six Months Ended
                                                 June 30,                  June 30,
                                          -----------------------  ------------------------

                                             2010        2009         2010         2009
                                          ---------  ------------  ----------  ------------
                                                     (Revised)(1)              (Revised)(1)
  Consulting fee revenue                   $ 91,559      $ 91,542   $ 183,495     $ 183,690

  Reimbursable expenses                      16,633        12,801      29,169        24,587
                                          ---------  ------------  ----------  ------------

   Total revenue                            108,192       104,343     212,664       208,277
                                          ---------  ------------  ----------  ------------
  Cost of services(1)                        52,728        52,472     105,841       105,361

  Reimbursable expenses                      16,633        12,801      29,169        24,587
                                          ---------  ------------  ----------  ------------

  Total direct expenses(1)                   69,361        65,273     135,010       129,948
                                          ---------  ------------  ----------  ------------
   Gross profit(1)                           38,831        39,070      77,654        78,329
  Selling, general and administrative
   expenses(1)                               34,820        34,852      71,765        70,952

  Equity in earnings of affiliates            (243)       (2,278)     (1,064)       (3,459)
                                          ---------  ------------  ----------  ------------
   Operating profit                           4,254         6,496       6,953        10,836

  Interest expense, net                         654           320       1,199           533
                                          ---------  ------------  ----------  ------------
  Earnings before provision for (benefit
   from) income taxes                         3,600         6,176       5,754        10,303
  Provision for (benefit from) income
   taxes                                        429         1,161        (40)           734
                                          ---------  ------------  ----------  ------------
  Consolidated net earnings                   3,171         5,015       5,794         9,569
  Less: net earnings -- noncontrolling
   interests                                    287           340         453           491
                                          ---------  ------------  ----------  ------------
  Net earnings attributable to Hill
   International, Inc.                      $ 2,884       $ 4,675     $ 5,341       $ 9,078
                                          =========  ============  ==========  ============

  Basic earnings per common share
   attributable to Hill International,
   Inc.                                      $ 0.07        $ 0.12      $ 0.13        $ 0.22
                                          =========  ============  ==========  ============
  Basic weighted average common shares
   outstanding                               39,837        39,920      40,074        40,455
                                          =========  ============  ==========  ============

  Diluted earnings per common share
   attributable to Hill International,
   Inc.                                      $ 0.07        $ 0.12      $ 0.13        $ 0.22
                                          =========  ============  ==========  ============
  Diluted weighted average common shares
   outstanding                               40,380        40,297      40,656        40,726
                                          =========  ============  ==========  ============

(1) In the fourth quarter of 2009, the Company began charging a portion of depreciation and amortization expense, which had previously been reflected in selling, general and administrative expenses, to cost of services. As a result, the consolidated statements of earnings for the second quarter and first half ended June 30, 2009 have been revised to reflect the new accounting procedure. The result of this change increased direct expenses, decreased gross profit and decreased selling, general and administrative expenses by $214,000 and $417,000 for the second quarter and first half ended June 30, 2009, respectively. There was no effect on operating profit or net earnings.

                     HILL INTERNATIONAL, INC. AND SUBSIDIARIES
                               Selected Segment Data
                                   (Unaudited)


                               Three Months Ended June   Six Months Ended June
                                         30,                       30,
                               -----------------------  ------------------------

                                  2010        2009         2010         2009
                               ---------  ------------  ----------  ------------
  (in thousands)                          (Revised)(1)              (Revised)(1)


  Project Management
  ---------------------------
  Consulting fee revenue        $ 70,236      $ 71,640   $ 137,564     $ 141,339
  Total revenue                 $ 86,221      $ 83,750   $ 165,312     $ 164,519
  Gross profit(1)               $ 27,322      $ 28,627    $ 51,668      $ 55,897
  Gross profit as a percent
   of consulting fee revenue       38.9%         40.0%       37.6%         39.5%
  Selling, general and
   administrative expenses(1)   $ 18,531      $ 18,817    $ 38,625      $ 38,134
  SG&A expenses as a percent
   of consulting fee revenue       26.4%         26.3%       28.1%         27.0%
  Operating profit before
   equity in earnings of
   affiliates                    $ 8,791       $ 9,810    $ 13,043      $ 17,763
  Equity in earnings of
   affiliates                        243         2,278       1,064         3,459
                               ---------  ------------  ----------  ------------
  Operating profit               $ 9,034      $ 12,088    $ 14,107      $ 21,222
  Operating profit as a
   percent of consulting fee
   revenue                         12.9%         16.9%       10.3%         15.0%


  Construction Claims
  ---------------------------
  Consulting fee revenue        $ 21,323      $ 19,902    $ 45,931      $ 42,351
  Total revenue                 $ 21,972      $ 20,593    $ 47,353      $ 43,758
  Gross profit(1)               $ 11,509      $ 10,445    $ 25,987      $ 22,432
  Gross profit as a percent
   of consulting fee revenue       54.0%         52.5%       56.6%         53.0%
  Selling, general and
   administrative expenses(1)    $ 9,986       $ 9,560    $ 20,243      $ 19,224
  SG&A expenses as a percent
   of consulting fee revenue       46.8%         48.0%       44.1%         45.4%
  Operating profit               $ 1,523         $ 885     $ 5,744       $ 3,208
  Operating profit as a
   percent of consulting fee
   revenue                          7.1%          4.4%       12.5%          7.6%

(1) In the fourth quarter of 2009, the Company began charging a portion of depreciation and amortization expense, which had previously been reflected in selling, general and administrative expenses, to cost of services. As a result, the consolidated statements of earnings for the second quarter and first half ended June 30, 2009 have been revised to reflect the new accounting procedure. The result of this change increased direct expenses, decreased gross profit and decreased selling, general and administrative expenses for Project Management by $130,000 and for Construction Claims by $84,000 for the second quarter ended June 30, 2009 and by $256,000 and $161,000 for the first half ended June 30, 2009.

                           HILL INTERNATIONAL, INC. AND SUBSIDIARIES
                                 Selected Other Financial Data
                                           (Unaudited)


                                               Three Months Ended         Six Months Ended
                                                    June 30,                  June 30,
                                            ------------------------  ------------------------

                                               2010         2009         2010         2009
                                            ----------  ------------  ----------  ------------
  (in thousands)                                        (Revised)(1)              (Revised)(1)

  Consulting fee revenue                      $ 91,559      $ 91,542   $ 183,495     $ 183,690
  Total revenue                              $ 108,192     $ 104,343   $ 212,664     $ 208,277
  Gross profit(1)                             $ 38,831      $ 39,070    $ 77,654      $ 78,329
  Gross profit as a percent of consulting
   fee revenue                                   42.4%         42.7%       42.3%         42.6%
  Selling, general and administrative
   expenses (excluding corporate
   expenses)(1)                               $ 28,516      $ 28,375    $ 58,868      $ 57,355
  Selling, general and administrative
   expenses (excluding                           31.1%         31.0%       32.1%         31.2%
  Corporate expenses                           $ 6,304       $ 6,477    $ 12,897      $ 13,594
  Corporate expenses as a percent of
   consulting fee revenue                         6.9%          7.1%        7.0%          7.4%
  Operating profit                             $ 4,254       $ 6,496     $ 6,953      $ 10,839
  Operating profit as a percent of
   consulting fee revenue                         4.6%          7.1%        3.8%          5.9%
  Effective income tax (benefit) rate            11.9%         18.8%      (0.7)%          7.1%

(1) In the fourth quarter of 2009, the Company began charging a portion of depreciation and amortization expense, which had previously been reflected in selling, general and administrative expenses, to cost of services. As a result, the consolidated statements of earnings for the second quarter and first half ended June 30, 2009 have been revised to reflect the new accounting procedure. The result of this change increased direct expenses, decreased gross profit and decreased selling, general and administrative expenses (excluding corporate expenses) by $214,000 and $417,000 for the second quarter and first half ended June 30, 2009, respectively. There was no effect on operating profit or net earnings.

     HILL INTERNATIONAL, INC. AND SUBSIDIARIES
             Selected Balance Sheet Data
                     (Unaudited)

                                         December
                             June 30,      31,

                               2010        2009
                            ----------  ----------
  (in thousands)

  Cash and cash
   equivalents                $ 36,747    $ 30,923
  Accounts receivable, net   $ 147,153   $ 130,900
  Current assets             $ 201,389   $ 183,602
  Total assets               $ 313,702   $ 291,539
  Current liabilities         $ 90,231    $ 82,657
  Total debt                  $ 54,999    $ 28,244
  Total equity               $ 152,622   $ 159,640

                          EBITDA Reconciliation
                              (Unaudited)


EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2010 declined to $6.3 million, a decrease of 20.5% from the second quarter of 2009. EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Management believes EBITDA, in addition to operating profit, net income and other GAAP measures, is a useful indicator of Hill's financial and operating performance and its ability to generate cash flows from operations that are available for taxes and capital expenditures. Investors should recognize that EBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation S-K follows:


                              Three Months Ended    Six Months Ended
                                   June 30,             June 30,
                              ------------------  --------------------

                                2010      2009       2010       2009
                              --------  --------  ---------  ---------
  (in thousands)

  Net earnings                 $ 2,884   $ 4,675    $ 5,341    $ 9,078
  Interest expense, net            654       320      1,199        533
  Income tax expense
   (benefit)                       429     1,161       (40)        734
  Depreciation and
   amortization                  2,348     1,789      4,542      3,516
                              --------  --------  ---------  ---------

  EBITDA                       $ 6,315   $ 7,945   $ 11,042   $ 13,861
                              ========  ========  =========  =========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Hill International, Inc.

CONTACT:  Hill International, Inc.
John P. Paolin, Vice President of Marketing and Corporate
Communications
(856) 810-6210
johnpaolin@hillintl.com
The Equity Group Inc.
Devin Sullivan, Senior Vice President
(212)836-9608
dsullivan@equityny.com

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