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Edited Transcript of WLMS earnings conference call or presentation 26-Mar-20 12:00pm GMT

Q4 2019 Williams Industrial Services Group Inc Earnings Call

Tulsa Mar 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Williams Industrial Services Group Inc earnings conference call or presentation Thursday, March 26, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Matthew J. Petrizzo

Williams Industrial Services Group Inc. - President of Energy & Industrial

* Michael Kelly Powers

Williams Industrial Services Group Inc. - President of Power Division

* Randall R. Lay

Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer

* Tracy D. Pagliara

Williams Industrial Services Group Inc. - President, CEO & Director

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Conference Call Participants

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* Charles W. Neuhauser

Mainwall Investment Management, LLC - Chief Compliance Officer

* John Butler Walthausen

Walthausen & Co., LLC - CIO & Portfolio Manager

* John Eric Deysher

Bertolet Capital Trust - Pinnacle Value Fund - Portfolio Manager

* Matthew Pilkington

* Richard Allen Ryan

Dougherty & Company LLC, Research Division - VP & Senior Research Analyst of Industrials

* Chris Witty

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Presentation

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Operator [1]

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Greetings, and welcome to the Williams Industrial Services Group Inc. Fourth Quarter and Full Year 2019 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Witty. Please go ahead.

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Chris Witty, [2]

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Thank you, and good morning, everyone. Welcome to the Williams Fourth Quarter Conference Call. With me on the call today are Tracy Pagliara, President and CEO; and Randy Lay, Senior VP and CFO.

We are holding this call earlier than we normally would due to our planned participation at the Sidoti Conference, which has since been canceled. After Tracy and Randy provide their prepared remarks, we'll open the call for questions. Our fourth quarter results were issued yesterday evening and a slide presentation is available on the company's website at www.wisgrp.com.

If you turn to Slide 2 on the deck, I will review the safe harbor statement. During this call, we may make some forward-looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events, which are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release and slides as well as with other documents filed with the SEC. You can find all these documents on our website or at sec.gov, and we plan to file our 10-K on Friday, March 27, tomorrow.

During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. When applicable, we have provided a reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and the slides for your information.

Please note as well that our conversation today will be about continuing operations unless we note otherwise.

Starting with Slide 3. I'll now turn the call over to Tracy Pagliara. Please go ahead, Tracy.

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [3]

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Thanks, Chris, and good morning, everyone. While the world around us has changed quite drastically over the past few months, Williams ended 2019 on a strong note. It's been a volatile time in the market due to no small part to the COVID-19 pandemic, but the company has continued to take actions to improve its outlook and lay the foundation for solid long-term growth and improved profitability. We posted positive financial results for 2019 with annual revenue and adjusted EBITDA both exceeding our guidance for the year. In addition, our gross margins were at the high end of our range. We also made further meaningful strides in reducing SG&A expenses, consistent with the strategy we began in 2018. Excluding nonrecurring items, our 2019 SG&A was generally in line with expectations. We also experienced significant backlog growth in the fourth quarter, including important successes in our newer end markets. This validates that our strategic plan is working to build Williams into a more diverse, larger and more profitable company. To that end, as I will review later in the call, we are expecting even better financial results in 2020.

We reported net revenues of $66.6 million (sic) [$66.8 million] for the fourth quarter compared with $44.4 million last year, and finished the year with 12 months revenue of $245.8 million, up 30% over 2018 and above the high end of our guided range of $230 million to $240 million for 2019. This strong top line achievement reflects higher revenues from the Vogtle 3 and 4 construction projects, along with growth across many of our foreign markets, such as Canada, which grew sequentially by $900,000 or 19% in the fourth quarter and also -- and rose to $17 million for the year. We also reported gross margins of $13.6 million for the quarter and $12.6 million for 2019 in total.

The fourth quarter included $1.7 million related to an early contract termination, but even excluding this, the gross margin was over 11%. As noted earlier, the company met its overall gross margin target of 11% to 13% for 2019. Operating expenses for the quarter were $8.5 million, down $3 million year-over-year. While costs rose sequentially from the third quarter, this was primarily due to approximately $1.6 million in nonrecurring expenses tied to severance, legal and professional fees. For the year, excluding nonrecurring items, SG&A was approximately 9.2% of revenues, slightly above 9% at the high end of our range, and we expect it to be around 8% to 8.5% of revenue for 2020.

Adjusted EBITDA was $4.2 million and $12.5 million for the fourth quarter and full year 2019, respectively, and our backlog grew by over $100 million during the last 3 months of the year. The $12.5 million of adjusted EBITDA exceeded the high end of our guidance, which was $10 million to $12 million. This clearly demonstrates the strength of our business development efforts and ongoing vitality of our end markets. Of particular note, we experienced approximately $30 million of wins in Canada and $112 million of new backlog for decommissioning in 2019. We anticipate that approximately $191 million of our total backlog of $495 million will be converted to revenue this year.

After the end of the quarter, we also took 2 steps to strengthen our balance sheet and provide increased financial flexibility going forward. As Randy will review in a moment, we amended our credit facilities in January 2020, and in February, we completed a rights offering, initially backed by Wynnefield, that was oversubscribed and brought in net proceeds of $6.6 million. We're very pleased by the support and interest in our success that was shown by our investors and lenders alike.

Now let me add some details to our business performance, starting with our backlog on Slide 4. As I noted a moment ago, the company's backlog grew over $100 million sequentially from the third quarter of 2019 and is now much more diverse. While Vogtle 3 and 4 construction project still accounts for roughly $155 million of the total, we've seen nice growth in our Canadian decommissioning and energy, industrial end markets. As discussed in the past, we're dedicated to expanding our penetration in these and other areas to offset Vogtle 3 and 4 revenue as it declines in future years.

As a side note, let me add -- just to add that, for the time being, our Vogtle work continues unabated with Southern Nuclear still planning to the 2 new nuclear reactors on that site to be up and running in November 2021 and '22, respectively. If timing changes due to the COVID-19 pandemic or other factors, we will adapt our operations accordingly inform -- and inform investors properly.

As we are now near the end of the first quarter, our business development efforts largely remain on track, but certain project bid activities have been delayed due to the COVID-19 pandemic. Nonetheless, we remain focused on those areas with the most growth potential and have not experienced any disruption to our business plans for 2020 thus far.

We have pending orders and other opportunities in our pipeline which support our current outlook. We are pursuing further expansion into Canada nuclear and Florida Water, decommissioning and downstream oil and gas. There are also plenty of other prospects for growth within the energy delivery, power generation, industrial end markets. So we remain confident regarding the outlook for the year, particularly in the back half. However, the situation remains very fluid, and we will continue to monitor conditions closely.

Slide 5 is the snapshot of 2019 revenue by market and contract type. During the year, 86% of our revenues were derived from cost plus contracts, which, as we've said in the past, are lower risk and more predictable in terms of margins and returns. Generally speaking, only certain projects within the power generation, midstream oil and gas and industrial markets tend to be fixed price in nature. U.S. nuclear work accounted for about 60% of total revenue last year. And of that, roughly $100 million was related to Vogtle 3 and 4. Energy and Industrial was our next largest end market with approximately 15% of total revenue, followed by fossil of 13%; Canada nuclear at 7% and decommissioning at 4%. Most of these areas will grow as a percent of total revenue over time, as indicated by the backlog numbers I just reviewed.

Turning to Slide 6, I wanted to make a few comments about overall market conditions before handing the call over to Randy. The world is now going through a very tumultuous time due to the ongoing challenges created by the COVID-19 pandemic. The most important of these is obviously the threat to human life, and we clearly hope that the actions now being taken by governments, drug companies and scientists, alike, bring the situation under control as quickly as possible. We are continually tracking developments with our customers in the markets we serve.

In our -- in the meantime, our view is that Williams is in a better spot than most companies to handle the short-term issues being faced from an economic standpoint. Our end markets are generally recession-proof, given the essential and critical nature of the services we provide to the energy, power and industrial sectors. Our utility and municipality customers require continuing infrastructure maintenance and improvements during recessionary cycles and their capital projects move forward during economic downturns.

Transmission grids, power and water infrastructure and related sites require regular maintenance and upgrades, no matter what is happening in the outside world. Williams has a solid diversified backlog with blue chip customers, minimal CapEx requirements and de minis warranty and receivables collection exposure. We also have the ability to move rapidly as additional changes occur in our demand environment and are, as always, keeping a lid on costs. We can flex our workforce quickly and have already taken a significant amount of SG&A out of the business during the last 2 years.

We are always looking at ways to further streamline the company's operations and increase returns for shareholders. This mindset is important in the current environment, which remains uncertain and dynamic. While bid activity has slowed in some end markets, it has remained resilient in others. But if things slow down even further or projects take a pause, we will obviously reassess the outlook for 2020.

I remain bullish about the long-term potential for Williams, which has emerged from a period of restructuring and rebirth to be a leaner, focused, more profitable company. We have a backlog of approximately $500 million and just recently completed both the refinancing of our credit facilities and an oversubscribed rights offering. So we are better prepared at this point than at any time in recent memory, and we intend to uplist through a broader exchange as soon as possible, subject to market conditions.

I never thought that many months ago, we'd be sitting in the middle of a pandemic and economic distress the world over. But even with this very negative turn of events, Williams is a strong, balanced business with solid end markets, unmatched management talent and a very bright future. I'll make a few more comments at the end of the call, and we will review overall guidance for 2020, but will now hand it over to Randy to discuss our financial results in greater detail.

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [4]

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Thank you, Tracy, and good morning, everyone. Turning to Slide 7, we posted revenue of $66.8 million for the quarter and $245.8 million for the year, as Tracy mentioned. Sales in Q4 rose 50% year-over-year, primarily reflecting continued work on the Vogtle sites as well as nearly $6 million of higher revenue from Canada. These results are in keeping with the positive momentum we saw in 2019, diversifying our business and penetrating new markets. As a reminder, the Vogtle business was roughly $90 million in total for the year and barring any unforeseen slowdowns, including those that could be caused by the coronavirus, will be in that same vicinity for 2020.

We remain upbeat about the outlook for the current year, given numerous opportunities across our end markets, as Tracy discussed, and we currently project revenue of $280 million to $300 million.

Slide 8 shows our gross margin trends. We posted gross profit of $9.1 million or 13.6% of revenue for the fourth quarter versus $5.3 million or 12% of revenue last year. The 2019 quarter included approximately $1.7 million of revenue related to the early termination of a customer contract, and our margin also benefited from higher volumes and customer mix. The increased volume, which contributed to gross profit included our entry into Canada as well as our expansion into the oil and gas markets.

For 2019, as a whole, we posted gross profit of $30.9 million or 12.6% of sales. Excluding onetime or nonrecurring credits and losses on certain projects, our gross profit last year was $30.3 million or 12.5% of sales, within our target range of 11% to 13%. Going forward, we again expect 2020 margins to fall within this range due to current backlog mix and previously taken restructuring measures to expand and strengthen the company's long-term profitability.

Slide 9 shows an overview of EBITDA trend. Adjusted EBITDA for 2019 reached $12.5 million in line with our strategic plans. Going forward, we expect adjusted EBITDA between $13 million and $15 million in 2020, as Tracy will review in a moment.

Turning now to Slide 10. I wanted to take a moment to review our balance sheet and recent achievements, which have provided the company with increased financial flexibility. At the end of the year, we had $7.8 million of cash and $44.2 million of bank debt compared with $4.9 million of cash and $36.8 million of bank debt at the beginning of 2019.

After the end of the fourth quarter in January 2020, the company refinanced its debt facilities bolstering our ability to fund growth initiatives by expanding our revolver by $10 million. At the same time, we amended our $35 million term loan, which now matures in September of 2022. This refinancing not only strengthened our ability to grow but also underscore the commitment by our banks to the company's success.

Then in March 2020, we completed a rights offering that raised net proceeds of $6.6 million. As Tracy indicated earlier, the offering, which was backstopped by our largest shareholder, Wynnefield, was oversubscribed. We are very pleased with our investors' confidence in our actions taken to date and our outlook for the future.

With a major restructuring of the company's operating cost behind us, we'll use the cash freed up to delever the company and fuel our business development initiatives. Due to our significant loss carryforwards of approximately $219 million, we have minimal cash tax requirements and our business model is one with a meaningful capital expenditures. We have a strategy in place to maximize cash generation going forward, manage our working capital effectively and strengthen our balance sheet in the quarters to come.

I'll now turn the call back to Tracy for a review of our 2020 guidance and his closing remarks. Tracy?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [5]

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Thanks, Randy. Turning to Slide 11. I wanted to recap our 2020 guidance before taking questions from our call participants. Going forward, we anticipate revenue of between $280 million and $300 million this year, which would represent growth of 14% to 22% over 2019. We also expect gross margins between 11% and 13%, with SG&A under 8.5% of sales. Under this scenario, we anticipate EBITDA between $13 million and $15 million, with an underlying goal of increased financial performance through improved operating leverage and a lower cost of capital. We'll focus on cash generation driven by solid working capital management and delever the balance sheet in tandem.

As has been mentioned during the call, the COVID-19 pandemic and other worldwide issues are creating tremendous uncertainty in our economy and financial markets at this moment. We are very mindful that these are unprecedented times and are ready to pivot as circumstances dictate. Notwithstanding that, we feel very positive about the company's current position, given our customer and end market profile, sizable backlog, strengthened balance sheet and streamlined operating structure.

During 2019, we were a more disciplined, opportunistic enterprise and successfully grew and diversified our business. We began 2020 with our restructuring process behind us, and as a transformed organization, poised to continue gain market share across a broad array of end markets.

With that, we'll open the line up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Matthew Pilkington with Strategic Credit Concepts.

Matthew, your line is live. Please proceed with your question.

(Operator Instructions) Next question is from Matthew Pilkington with Strategic Credit Concepts. Matthew, are you online?

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Matthew Pilkington, [2]

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Yes, yes. Sorry, I had you on mute. Congratulations on the rights offering. I just got -- it's Pilkington, there's a K in there. I've got a quick question about the BDC Midcap. They have your revolver. Can you just comment on their stability during this time?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [3]

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Randy, you want to take that?

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [4]

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Sure, sure. Yes, we have a very good relationship with Midcap. And we have no reason to believe other than they are coping with the same environment that we're coping with, that there are any issues there. It's business as usual with our lenders, fortunately. And yes, so again, markets being what they are and everybody is a little bit busier today than they probably were 3 or 4 weeks ago, but yes, we have no concerns in that area.

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Operator [5]

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(Operator Instructions) Your next question comes from the line of John Deysher with Pinnacle.

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John Eric Deysher, Bertolet Capital Trust - Pinnacle Value Fund - Portfolio Manager [6]

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Looks like another solid quarter. I was just curious about 2 things. One, what are you seeing on the ground right now in terms of work being done, people showing up? What percentage of your normal utilization are you at right now? What does it look like on the ground?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [7]

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Sure. Really, John, we haven't seen any meaningful or significant impacts. Really, very little impact, I would say, the work on the ground. Luckily for us, we're considered essential work. And therefore, our workers have continued to work on all of our existing projects, which are going forward at this point.

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John Eric Deysher, Bertolet Capital Trust - Pinnacle Value Fund - Portfolio Manager [8]

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Okay. So people are not calling in sick, that kind of thing?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [9]

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No, not -- it's not disproportionate to what we see in the normal course. So it's -- we're not seeing higher sicknesses. Now we've taken some actions in our offices to what people work remotely. I think that's helped mitigate some of the issues associated with kids being at home. But in terms of our craft labor, they're showing up for work as usual. And we've got very minimal disruption to any of the projects we're working on.

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John Eric Deysher, Bertolet Capital Trust - Pinnacle Value Fund - Portfolio Manager [10]

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Okay. Good. That's comforting. On the guidance for 2020, how should we think about the interest expense line? You've expanded your debt capacity, I think the rates moved a little, but what should we think about budgeting for interest expense for 2020?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [11]

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Randy, you want to say something?

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [12]

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Sure. Sure, John. I think what we're anticipating -- 2 things are happening, right: one is the rates on our term loan haven't changed the -- and we don't expect them to; and on our ABL, because it is now going to be a higher proportion of our borrowing because we've raised the limit as we grow the company plus the additional liquidity that we'll bring in from operations as well as from the rights offering. I think the -- I would anticipate something below what we saw this year. Book interest was about $6 million as reported. So I would expect that we'd probably see something around -- I would model something around that number, at this point, given the growth in the company.

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John Eric Deysher, Bertolet Capital Trust - Pinnacle Value Fund - Portfolio Manager [13]

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Around $6 million?

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [14]

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Yes, yes, that's what I'd model.

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Operator [15]

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Your next question comes from the line of Charles Neuhauser with Mainwall Investment Management.

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Charles W. Neuhauser, Mainwall Investment Management, LLC - Chief Compliance Officer [16]

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Sort of, on the same subject, in the slide presentation, you say you expect significant cash generation, you anticipate $3 million in cash, restructuring cost blow a lot. Do you expect to end this -- I mean, assuming your projections are realized, would you expect to end this year with less debt than you started with, forgetting them? Yes, let's leave it at that.

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [17]

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Sure, sure. And thanks for the question. What we're balancing here is growth in the business, which is -- which we're anticipating. You've seen the guidance. So we're anticipating the business will continue growing. I mean, net-net, we would expect that we would -- for those -- 2 things are going on here, we're managing working capital, I would say, effectively. So -- but we are growing the business significantly. So I think the answer to that question is, if we get the growth that we're anticipating, I would expect some reduction in leverage via the growth, but I wouldn't expect it to be significantly lower at the end of this year if we see the growth that we're anticipating at this point. We could -- on the margin, I would say that we would expect it would not be unreasonable to expect some reduction in debt, but we also have pretty aggressive growth plans.

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Charles W. Neuhauser, Mainwall Investment Management, LLC - Chief Compliance Officer [18]

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Fair enough. As far as the margin, EBITDA margin goes, if I look at the midpoint of the guidance versus what you achieved last year, the margin is -- the implied margin is actually a little less than what you produced in 2019. And I guess my real question is, how do you feel about that? What's a respectable level of EBITDA margin that you think your business should be able to generate once you continue to get things rolling.

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [19]

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Yes, I think the answer to that question is that we would expect -- the guidance is, by its nature, I think, particularly in the environment that we're operating in, is, I would say, that I would view our guidance as not unreasonable but probably little conservative. I mean, we did perform well this year against it. I think all things -- and Tracy has talked about the issues that are going on that we're all aware of. So I'm hesitant to do anything other than be a little bit conservative and maybe that's just natural in this environment. But I think the EBITDA margin in the 5% to 6% range is probably something that's not unreasonable.

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Operator [20]

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Your next question comes from the line of Dick Ryan with Dougherty.

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Richard Allen Ryan, Dougherty & Company LLC, Research Division - VP & Senior Research Analyst of Industrials [21]

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Congratulations, guys, on very strong execution. With the oil price collapsing, can you talk a little bit about what you're seeing or could see in either backlog related to such projects? Or is that the area that you're seeing some bids being delayed. Can you address the fossil and energy outlook at this point what you're seeing?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [22]

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Yes. So we have on the line with us, Matt Petrizzo, who's the President of our Energy and Industrial business, and I'll let him elaborate. But luckily for us, we're really not tied to upstream oil and gas and our midstream exposure is relatively limited at this point. But Matt, why don't you elaborate a little further on that?

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Matthew J. Petrizzo, Williams Industrial Services Group Inc. - President of Energy & Industrial [23]

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Yes, sure. Ryan -- thank you for the question, Dick. Our focus has been, over the last 6 months, we've been looking mostly in the Houston Ship Channel, where a combination of the low natural gas cost and the low feedstock cost is actually a benefit towards the products. And so a lot of our focus has been in and around plastics, coatings, catalysts and end products where the investment in the facilities has been planned to be quite significant. We've actually become an embedded contractor inside some of those facilities, which gives us a core run rate of work and then we select our capital projects. So we have a pretty good understanding of the market, and we have a very measured component of that in our plan. Back to you, Tracy.

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [24]

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Yes. So I mean, the good news is, we're focused on downstream oil and gas, as Matt has indicated. So we -- luckily, we are not in a position where we're seeing any impact to our business relating to the dramatic drop in the price of oil?

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Richard Allen Ryan, Dougherty & Company LLC, Research Division - VP & Senior Research Analyst of Industrials [25]

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Sure. Where are you seeing bid activity being slowed down?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [26]

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It's been a little bit spotty. We had a little bit with one of our municipalities, but then that -- it picked up again earlier in the week. So there hasn't really been anything linear about it. So it's just been sort of -- for the most part, it hasn't been widespread. We've just had a few customers that have had some things slow down. But I would say, in general, although our current projects, our business is usual, we're doing what we'd normally do. Suffice to say, with people not working together in offices and -- that has impacted the bid process, in general. I mean, it's just a little bit slower across the board than it would have otherwise been. But we still are putting bids and we're still chasing opportunity. So I don't want to say it's shut down. It's just -- it's been a little bit in some customers more than others, but generally speaking, we think this is -- the bid activity will pick back, right back up, when people can go back to work. So we're not overly concerned about that at this point.

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Richard Allen Ryan, Dougherty & Company LLC, Research Division - VP & Senior Research Analyst of Industrials [27]

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Okay. Okay. And Tracy, can you talk a little bit about the dynamics of the kind of the refueling outages that kind of work. I think there's 32 or something over 32 new projects that are going to go through outages this year. Did you lose some of that business during the restructuring? How do you get back into that flow? If possible, can you just talk about how your level, how that outlook (technical difficulty) the outage opportunity looks?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [28]

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Sure. We also have on the phone Kelly Powers, who's the president of our Power group and is a nuclear engineer among other things, so he understands that space very well. So I'll let him give you some insights on that.

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Michael Kelly Powers, Williams Industrial Services Group Inc. - President of Power Division [29]

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Thank you, Tracy. Very good question. So part of the restructuring, we did not lose any work in that arena. However, in that area, we've not been able to go -- regain much market share through the restatement and through the restructuring. So a focus going forward is for us to go regain market share in the nuclear industry. We're currently working at all the TVA sites, and the TVA sites have ongoing refueling outages this spring as well as more in the fall. The only impact there is a 2-week delay in the schedule of the outages. And they're continuing to monitor the situation with the ongoing COVID-19 situation. But at this point, that's the only impact. We have further outage work next spring with Entergy doing a major project with Energy Northwest's Columbia Generating Station. I will tell you one area right now where we are being impacted is our ability, as you discussed, to go regain market share. To do that, you have to meet with new customers, go to sites, find areas that they have needs and we have capabilities, and that activity is not occurring at this time due to the ongoing COVID-19 situation. So that is one area of impact for us. Outside of new customers, we don't really anticipate much of an impact with refueling outage work at this point. Back to you, Tracy.

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Operator [30]

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(Operator Instructions) Your next question comes from the line of John Walthausen with Walthausen & Company.

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John Butler Walthausen, Walthausen & Co., LLC - CIO & Portfolio Manager [31]

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Congratulations. Good job. That was a great year, great to get the refinancing done and the rights offering completed. Okay. One complaint then is, it's frustrating to have such late reports. With the restructuring done, is it reasonable to expect that this year we'll start to see quarterly reports coming in, in a more timely basis?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [32]

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John, I'm not sure I understand the reference point. We're filing all of our...

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John Butler Walthausen, Walthausen & Co., LLC - CIO & Portfolio Manager [33]

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No, no. It is correct in that, but there isn't any company that I own that hasn't reported their year -- their calendar year a company that hasn't reported weeks ago. So it's frustrating to be -- we're talking about ancient history when we talk about the fourth quarter in the environment we are in now. The first quarter is virtually complete. I mean, we'd like to see that quarterly reports come out, basically, 30 days after the quarter is over rather it's in the -- they taking it to the 45 days.

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [34]

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Well, I will tell you, we're a small filer at this point. So our deadlines are a little bit later. So we're meeting those deadlines, but I understand your point. And I think with Randy now the CFO, he's been on the ground about 6 months, our accounting, finance team has strengthened quite a bit. So we will certainly take your guidance request and look at that and see what we can do to get more -- get things out earlier. We're actually doing a lot good, and we've reported a little bit early because we thought we were going to go to Sidoti, and unfortunately, Sidoti got canceled. So -- but we'll see what we'll -- we'll definitely see what we can do.

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John Butler Walthausen, Walthausen & Co., LLC - CIO & Portfolio Manager [35]

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Okay. The other thing is, last year, you were very helpful in kind of outlining the way the quarters were likely to roll out. But is there anything that we should understand either about the anomalies that might be in the first quarter or the likely pattern of the quarters for the balance of the year?

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [36]

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Yes. I'll let Randy elaborate. But our first quarter is going to be, I think, one of our lightest quarters. But, Randy, maybe you can add a little bit more perspective on that?

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [37]

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I think -- thanks, Tracy. I think that's right. I think that the -- because the business is so backlogged-driven, I think although that is changing as we expand in some of the upper markets, we would expect the first and, to some extent, the second quarter to be lighter. And then given the growth trajectory of the company probably the third quarter probably being most significant and then towards the end of the fourth quarter, as you know, you sort of see a seasonal slowdown as the winter approaches and projects go into lower gear. So I'd say, I don't think it's going to -- if you look at the numbers and just do it on the numbers, it's not going to be terrifically different from the pattern that you saw in 2019, I think it will probably track about the same way.

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John Butler Walthausen, Walthausen & Co., LLC - CIO & Portfolio Manager [38]

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Okay. That's helpful. And I assume that in the first quarter, okay, it's going to be a little bit light. The rate offering, it sounds like the cost of that gets absorbed and not going through the income statement just absorbed this and the net number...

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [39]

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That's correct. Yes, it goes directly. That's correct.

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John Butler Walthausen, Walthausen & Co., LLC - CIO & Portfolio Manager [40]

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And the refinancing cost of that? That, I guess, will be broken out as a separate item?

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Randall R. Lay, Williams Industrial Services Group Inc. - Senior VP, CFO and Principal Financial & Accounting Officer [41]

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Yes.

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Operator [42]

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At this time, there appears to be no further questions in the queue. So I'll turn it back to Mr. Pagliara for any closing remarks.

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Tracy D. Pagliara, Williams Industrial Services Group Inc. - President, CEO & Director [43]

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Thanks, everyone, for your interest today and participation in the call. We appreciate the continuing support and confidence and patience of all of our shareholders, and we wish everyone the best. Please stay safe and take good care of yourselves. We look forward to speaking with you in the near future after our first quarter is completed. Thank you.

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Operator [44]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.