Hill International, Inc.

Greetings and welcome to Hill's International Second Quarter 2021 Financial Results Conference Call and Webcast. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Devin Sullivan, Senior Vice President at the Equity Group. Thank you. You may begin.

Thanks, Rob. Good morning, everyone, and thank you for joining us today for Hill International's second quarter 2021 Financial Results Conference call. Our speakers for today's call will be Rawuf Ghali, Chief Executive Officer, and Todd Weintraub, Company's Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made during this call may be considered forward-looking statements within the meaning of the Private Securities and 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, the matter set forth herein including but not limited to any statements of belief or intent, any statements concerning financial projections, our plans, strategies, and objectives for future operations 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 including but not limited to risks and uncertainties related to the COVID-19 pandemic, the willingness and ability of governments and other clients to undertake and complete infrastructure projects, and our ability to maintain and support business development activities. 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 to differ materially from estimates or projections contained in our forward-looking statements are set forth in the risk factors section and elsewhere in the reports we have filed with the Securities and Exchange Commission, including that unfavorable global economic conditions may adversely impact our business, our backlog may not be fully realized as revenue, and our expenses may be higher than anticipated. We do not intend and undertake no obligation to update any forward-looking statements. I will draw your attention to slides two and three, which provide safe harbor information and definitions of the non-GAAP measures we will be presenting this morning. Turning to slide four, I'll now turn things over to Rauf Ghali, Hill's Chief Executive Officer. Rauf, please go ahead.

Thank you, Devin. Good morning, everyone, and thank you for joining us today to discuss our 2021 second quarter financial results. I'll begin as always by thanking Hill's 2,900 professionals in 36 countries around the world for their continued hard work and dedication. This year, Hill is celebrating 45 years of helping clients deliver the infrastructure of change. Our internationally recognized teams of experts have delivered thousands of successful projects across the world with an aggregate construction value of more than $600 billion. Over these past five decades, our colleagues have created Hill's legacy. More importantly, they will alter our future as we pursue multiple growth opportunities this year and beyond. Slide five, please. Now let's look at a summary of our performance for the second quarter. We produced 77.7 million of CFR up from last year's second quarter and first quarter 2021. The headwinds we experienced in the first quarter of this year have abated and the global recovery from COVID-19 is picking up speed. We continue to expect that business will accelerate in the second half of the year, particularly in the U.S. we have remobilized our staff and reached pre-COVID staffing levels by quarter end. Our SG&A for the quarter was $27.1 million, up marginally from last year's second quarter, but declining slightly from quarter one of this year. As revenue and normality return post-COVID-19, we expect that SG&A will gradually increase during 2021 and reach annual levels of approximately $120 million in future years. We reported an income of $2.9 million in the quarter. On a net basis, we reported a modest loss. Adjusted EBITDA was $3.8 million. I'm also very pleased with the pace of new bookings, which came in at $90.4 million in the second quarter, resulting in a book-to-burn ratio of 116.4%. These new awards covered multiple geographies and markets, including aviation, rail and transit, roadways, water, and public facilities. For the first half of 2021, new awards totaled $182 million, resulting in a year-to-date book-to-burn ratio of 121%. We remain optimistic about new awards activity for the balance of this year. Moving on to slide six. This slide highlights some of our recent wins, including an award from Los Angeles World Airport, or LAWA, to manage airport concessions development, tenant projects, and airport commercial analysis and development at lower properties, including Los Angeles International Airport, Van Nuys Airport, and Palm Dane Land Holdings. A contract to continue our program management services for the Metro Gold Line Foothill Extension Construction Authority for Phase 2B of the award-winning Foothill Gold Line Light Rail Project. A contract to provide Technical Assistance for Phase II Bucharest, Romania's Glina Wastewater Treatment Facility, one of the largest environmental projects in the country. An Award to Manage for Loudoun County's 65 Million Recreation and Community Center project in Ashburn, Virginia. A Project Management Award to support the Advanced Roadway Package of the Medina Central Area MCA development. This is a 1.4 square kilometer project in the municipality of Medina and a key part of the Kingdom of Saudi Arabia's ambitious Vision 2030 program. I am also pleased to announce two additional project wins, an award from the City of Philadelphia to continue providing capital program administration support services for the ongoing multi-billion dollar capital program at Philadelphia International Airport. This award represents our ninth consecutive contract at the airport. And a major award with an important new client in our southeastern U.S. region, a contract to provide program management services for the Miami-Dade County Aviation Department's $5 billion capital program improvement. This program encompasses work at Miami International Airport and other properties and will support modernization projects over the next 15 years. Please turn to slide seven. At the end of the second quarter, we acquired the Neo Company, a pan-India cost consultancy firm with 120 professionals. This was not a material investment for Hill. but it was strategic. NEO reinforces Hill's program, project, and construction management resources across the country with expertise spanning multiple market sectors, including commercial, residential, industrial, hospital, healthcare, and retail clients, areas where Hill also brings expertise. The acquisition specifically provides us with estimating capabilities which we did not possess in India. We now have the ability to involve NIO in a larger project opportunities and leverage the fine reputation the company has built throughout India. I want to welcome NIO's management and thank our country leader and Vice President Said Manimini for completing the transaction in a swift manner. We look forward to doing great things with our new colleagues. Moving on to slide eight, the U.S. is focused on the pending infrastructure package currently working its way through Congress. At this point, it's impossible for us to know what the final legislation will look like. However, all indications suggest that it will focus almost entirely on physical infrastructure projects. This includes, amongst other things, roads Bridges and tunnels, the largest federal investment in public transit in history, according to the president. Rail projects and ports and airports. Our national infrastructure is in dire need of repair and any support from the federal government to invest in those long-term vital hard assets is welcome news. As noted on last call, we have created a committee focused on identifying U.S. domestic infrastructure opportunities to capitalize on the significant potential growth engine for HIL. Outside the U.S., the European Union remains active in its support of infrastructure projects, and this offers HIL added opportunities under the Next Generation EU initiative, the largest stimulus package ever financed in Europe, The EU has agreed to invest 750 billion euros to undertake infrastructure projects including railways, airports, highways, smart infrastructure, green energy transition, and upgrades for airports, water efficiency, buildings, and hospitals, and tourism. We believe that HIL is well positioned to capitalize on these global opportunities and we are optimistic about the long-term positive impact these initiatives can have on our growth. Thank you for your attention, and I will now turn things over to Todd Weintraub, Hale's Chief Financial Officer. Todd, please go ahead. Thank you, Raoul.