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Hill International Inc. Q2 2010 Earnings Call Transcript

Hill International Inc. Q2 2010 Earnings Call Transcript

Hill International Inc., (HIL)

Q2 2010 Earnings Call

August 5, 2010 11:00 am ET


David Richter - President and Chief Operating Officer

John Fanelli - Vice President and Chief Financial Officer

Devin Sullivan - Investor Relations


Richard Paget - Morgan Joseph

Arnold Ursaner - CJS Securities

Chase Jacobson- Sterne Agee

Timothy McHugh - William Blair & Co.

Bill Sutherland - Boenning & Scattergood


Rossetti – Janny Montgomery Scott

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Bob Sullivan - Satuit Capital Management

Kevin Liu - B. Riley & Company



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Good day everyone and welcome to the Hill International 2010 Second Quarter Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode. I will now turn the conference over to Mr. Devin Sullivan.

Devin Sullivan

Thank you Christie and good morning everyone. Thank you for joining us today. Our speakers on today’s call will be David Richter, President and Chief Operating Officer of Hill International and John Fanelli, Senior Vice President and Chief Financial Officer. Before we get started, I would like to remind everyone that certain statements contained in today’s call maybe considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Hill intends that any such statements be protected by the safe harbor created thereby except for historical information contained in this call, the matter set forth hear in including but not limited to any projections of earnings or other financial items, any statements concerning plans, strategies and objectives for future operations and any statements regarding economic conditions or performance of forward-looking statements.

These forward-looking statements are based on current expectations, estimates and assumptions and are subject to certain risks and uncertainties. Although Hill believes that the expectations, estimates and assumptions reflected in forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. Important factors that could cause actual results performance and achievements or industry results to differ materially from estimates or projections contained in forward-looking statements include modification and termination of client contract, control and operational issues pertaining to business activities conducted on Hill’s own behalf or pursuant to joint ventures with the parties, difficulties incurred in implementing company’s acquisition strategy, the need to retain and recruit key technical and management personnel and unexpected adjustments and cancellations related to backlog.

Additional factors that could cause actual results to differ materially from forward-looking statements are set forth in the reports filed with Securities and Exchange Commission. Hill does not intend and undertakes no obligation to update any forward-looking statements.

I’d now like to turn the call over to David Richter, President and Chief Operating Officer of Hill International; go ahead David.

David Richter

Thank you very much Devin, and good morning to everyone joining us for our quarterly earnings conference call. Yesterday we announced our financial results for the second quarter of 2010, first let me review the numbers in detail relative to our year-over-year performance meaning second quarter of 2010 versus second quarter of 2009. Still we’ll look more closely on our sequential performance 2010 second quarter versus the first quarter of 2010. Our management team is reviewing Hill’s performance entirely. This is what we focus on more closely, see how our business has changed over the past 90 days and how we can approve our performance over the next 90 days.

Towards the end, I will also discuss our two recent acquisitions; McLachlan Lister and the CM Division of DCK Worldwide. For the second quarter of 2010, Hill’s total revenue grew to $108.2 million, a 3.7% increase in the second quarter of last year.

Consultancy revenue for the second quarter was 91.6 million, unchanged from the prior year’s quarter. This was due to a 3.4% organic decline offset equally by 3.4% growth from acquisition. Major positive changes for the second quarter in our consultancy revenue year-over-year included increases of $3.3 million in North Africa Project, $2.5 million from our acquisitions of Boyken and TRS late last year, $1.9 million in Middle East claims and $1.6 million in New York projects, offset by declines of $5.8 million in Iraq, $2.8 million in the U.K claims, $2.1 million in Europe projects and $1.9 million in Middle East projects.

We continue to see our biggest upsize in the short term, being our project management operations in North Africa and the United States, our work in Iraq continues to wind down as mentioned above and we are expecting that work in Iraq, to end completely by the end of the current quarter.

Operating profits for the second quarter of 2010 was $4.3 million, a 34.5% decrease from the second quarter of 2009. Our operating margin as a percentage of CFR consultancy revenue was 4.6%, down from 7.1% in the year earlier quarter.

Our overall SG&A as a percentage of CFR, dropped slightly from 38.1% to 38%. Our corporate overhead, which is a component of SG&A dropped even more from 7.1% to 6.9% of consultancy.

Our net earnings for the second quarter were $2.9 million or $0.07 per diluted share based on 40.4 million diluted shares outstanding, down to 38.3% from $4.7 million or $0.12 per diluted share based 40.3 million shares for the second quarter of last year.

Looking at our financial performance sequentially, May versus the first quarter and to much more I could picture where our business is heading on the numbers I gave earlier for year-over year performance. From the first quarter to the second quarter, Hill’s total revenues were up 3.6% and our consulting fees were just slightly down, a 0.4% drop. Our gross profit was unchanged but our SG&A expense was down 5.8%.

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