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Hill International, Inc. (HIL)
Q4 2018 Earnings Conference Call
April 02, 2019 8:30 AM ET
John Grau - IR, InvestorCom
Raouf Ghali - Chief Executive Officer
Todd Weintraub - Senior Vice President & Chief Financial Officer
Conference Call Participants
Chris Colvin - Breach Inlet Capital
Matt Sweeney - Laughing Water Capital
Previous Statements by HIL
» Hill International's (HIL) CEO Raouf Ghali on Q3 2018 Results - Earnings Call Transcript
» Hill International's (HIL) Interim CEO Paul Evans on Q1 2017 Results - Earnings Call Transcript
» Hill International's (HIL) CEO David Richter on Q4 2016 Results - Earnings Call Transcript
On this call, please note the following. Certain statements made on this call are 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, the matters set forth herein, including any statements of belief or intent and any statements concerning our future plans and strategies are forward-looking statements. These forward-looking statements are based on our current expectations and assumptions that are subject to risks and uncertainties. We do not intend and undertake no obligation to update any forward-looking statement.
With that, let me turn the call over to Raouf Ghali, Hill International's CEO.
Thank you, John, and thank you to everyone who is on the call this morning. We will start the call with some noteworthy accomplishments we have made since our last call in November. Then, Todd Weintraub, our new CFO, will go through the 2018 financial performance. And lastly, we will go through our 2019 outlook.
But first, let me tell you that since our last earnings call in November, I have visited numerous offices, existing clients and prospective clients globally. The positive feedback is overwhelming from our clients. They understand that we are once again focused on their needs rather than our internal reorganization.
With that, let's proceed with some of our recent significant accomplishments. We have realigned our leadership and sales force compensation by significantly increasing the variable component of the compensation.
This bonus includes cash and equity and is tied to EBITDA, sales and DSO targets. Clearly, we are incentivized to profitably grow the company and improve collection. We believe this new compensation structure aligns us with shareholders and is better in line with market practice.
I am pleased to introduce Todd as our new CFO, who started in December 2018. Todd comes to Hill with nearly 30 years experience, including serving as CFO, Corporate Controller, Director of Accounting and Accounting Manager for six publicly held companies.
In addition, Todd has served on the Board of Directors for multiple companies. As CFO, Todd has been a key contributor to those companies. With Todd on board, the leadership team at Hill is now complete. In response to your feedback on total revenue and CFR reporting, the company going forward will report both revenue and CFR as you will hear from Todd later on.
As of March 2019, backlog has substantially strengthened compared to the year-end backlog with the company securing major wins since the beginning of the year. For confidentiality reasons, we're not always allowed to issue press releases. And the absence of press releases does not mean we're not winning major projects.
As Todd will discuss later, the senior management has taken a hard look at the backlog number and has removed a number of projects awarded in the past, which we don't believe are likely to progress. This explains most of the drop in backlog between third quarter and fourth quarter 2018.
In other words, our backlog today is of considerably higher quality than it was in the past and we are excited that we have reached an inflection point this quarter with backlog growing again for the first time in quite a while. Finally, we have won some major awards I will discuss at the end of these prepared remarks.
Now, I will pass on to Todd to go through the 2018 performance.
Thank you, Raouf, and thank you to everyone on the call. I'm very excited to be at Hill and I think that we have a great opportunity in front of us. It's been a tough couple of years at Hill. There have been a lot of changes both planned and unplanned and those changes have created a lot of noise flowing through our financial results.
I want to provide an update today on those changes and walk you through financial results for 2018 with a focus on how the noise from those changes have affected the results. So going back into 2017 and 2018, there were some major events. One, the Dominick family exited the company and there is now a new management team in place. Two, the company sold its claims business and the focus is now solely on project management and consulting. Three, we embarked on a mission during 2017 to right-size the organization and to implement a cost structure that would be sustainable going forward. This has now been completed.
Four, finally, on the unplanned side, there were a number of issues in accounting and finance that had to be corrected: A, three years of financial statements needed to be restated; B, the financial control framework needed heavy remediation; and C, we needed to become current with our SEC filings.