Greetings, and welcome to the Hill International Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan, Senior Vice President of the Equity Group. Thank you. You may begin.

Thank you Jessie. Good morning everyone, and thank you for joining us today for Hill International's third quarter 2020 financial results conference call and webcast. Our speakers today will be Raouf Ghali, Chief Executive Officer; and Todd Weintraub, Hill'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 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, 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 business development activities. Although, we believe 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 of our forward-looking statements. Important factors that could cause our 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. Before I turn the call over to Raouf, I'd like to make you aware of the Safe Harbor statements regarding forward-looking statements, as well as the slide regarding our GAAP financial measures, which will apply not only to the presentation, but to the remarks made today. With that said, I'd now like to turn the call over to Raouf Ghali, Hill's Chief Executive Officer. Raouf, please go ahead.

Thank you Devin. Good morning everyone and thank you for joining us today to discuss our third quarter financial results. Results for this quarter reflected the ongoing improvements to our business following the significant impact COVID-19 produced on our results to start the year. While challenges with respect to the buyers are still lingering most notably with respect to CFR, our third quarter performance was among the best in recent memory. We produced $71.5 million in CFR, continued to reduce SG&A, improved operating income by 53% from last year's third quarter, returned to net profitability, generated positive free cash flow for the second consecutive quarter, and improved our liquidity profile. We also generated $154 million in new contract awards during this quarter, representing the best new booking this year. I will provide greater detail on these projects shortly, however, I'm pleased to note that they cover multiple geographies and end markets, including infrastructure. As we stated on our second quarter call, we expected that new awards would accelerate in the second half of the year. Based on current business conditions and activity, we remain confident in our earlier projections that new awards will continue throughout the fourth quarter. This is based on our third quarter results and the plentiful opportunities we are currently pursuing. Todd will discuss our results in greater detail shortly. If we can move on to slide 5. As you can seem our revenue profile continues to reflect very geographic end market and client exposure, which allows us to quickly adapt to changing market environments. The bulk of project were continuous to be in the U.S. followed by the Middle East. Our Middle East exposure while still very important part of our business has declined by design as we focus our efforts more and more on the U.S. infrastructure market. Our fee-based model mitigates threats typically associated with at-risk construction services. It provides us with the flexibility to pursue complex dynamic long-term projects along with the added benefit of providing us with repeat business. Historically, approximately 70% of our CFR is from repeat clients both U.S. and international. If we could turn to slide six please. Earlier this month, we acquired a licensed New York State Engineering corporation. This acquisition expands our service portfolio by allowing Hill to offer our New York and state clients resident engineering and inspection services. The acquisition of this license was made for cash generated by our operations and consisted of a New York entity with a grandfathered engineering license to allow us to provide these services to existing and new clients. Hill currently provides resident engineering and inspection services for infrastructure clients across the U.S. including work on major aviation, highway and bridge, and rail and transit programs and projects. However, we have been restricted from offering these services to many New York and state clients due to our lack of New York state engineering license. With this license, we now have a significant opportunity to expand our presence in one of our largest U.S. operating regions. And with the leadership of Gill Mosseri, we will leverage the best practices and lessons learned from our U.S. infrastructure projects to better serve our New York metro area clients. I want to formally welcome Gill to Hill. He will serve as Vice President and New York Metro Infrastructure and Operations Manager. Gill has more than 20 years of experience and we are very excited to work with him to roll out these expanded service offerings. Moving on to slide seven, I am very proud of our team and their continued pursuit of new business in particular in these challenging times. We have recently announced several high-profile wins in the U.S. Middle East and Europe that cover rail, bridge, and highway power and public buildings. These wins reflect our deliberate pivot to global infrastructure projects which we believe are resilient, sustainable, and a potential catalyst for domestic and international economic growth. These new projects include the U.S. Interstate 5 Improvement in Los Angeles California; a Major Transmission Line Investment Program for Southern California -- in Southern California -- sorry investment program for Southern California Edison in Southern California; the New Administrative Capital Study and 6th of October City Monorail Lines which incidentally is the longest land monorail in the world; the Bosnia and Herzegovina Principal Motor Highway in the bottom; and the Kasr Al-Ainy Hospital Development Program in Cairo University in Egypt. These projects have an aggregate construction value of more than $6 billion. Over our history, Hill has participated in over 10,000 project assignments with a total construction value of more than $600 billion. We believe we are very well-positioned to continue to capture global infrastructure project opportunities, stimulus-related, and otherwise. We are closely monitoring activity in Washington regarding infrastructure spending proposals. We will also pursue projects in the EU which will be funded under the COVID-19-related stimulus programs that have an aggregate value and access of €200 billion for 2021 alone. These projects would be in addition to those that have already been approved by the European Union for Infrastructure. Moving on to slide 8. The next two slides show, recent awards received by Hill for our projects, many of which were in the category of Best Projects or Project of the Year. These include the ISEC, Pedestrian Bridge Crossing at Northeastern University, and the Spokane River Park U.S. Pavilion project. Notably Hill projects won 20 major awards this year, the most in our 45-year history. Going on to slide 9. We show the award of the Astir Palace Hotel in Greece, which is built as the crown jewel resort of the Athenian Riviera; the Boeing V-22 Osprey Factory in Pennsylvania; the Metrolink Parking Structure in Orange County; and the SR-237 Phase two Express Lane project, which provided an innovative transportation solution for commuters in the Silicon Valley. These awards recognize the inherent talent of our teams from our clients and designer and contractor partners through our own very project managers, inspectors, schedulers, estimators and engineers. I could not be prouder of these professionals and applaud their achievements. Thank you for your attention. And now, I will turn things over to Todd Weintraub, Hill's Chief Financial Officer. Todd, please go ahead.

Thank you, Raouf. I'll pick things up from slide 10. This slide provides an overview of our GAAP results for the second quarter of 2020 – excuse me, third quarter of 2020. CFR for the third quarter of 2020 was $71.5 million compared to $75.7 million in the third quarter of 2019, reflecting delayed project starts from earlier 2020 to later this year and into 2021. These delays were due in large part to uncertainties driven by COVID-19. SG&A expenses were $25.6 million or 35.8% of CFR compared to $27.4 million or 36.2% of CFR in Q3 2019. The decline in SG&A was primarily attributable to lower labor corporate and business development expenses, due to COVID-19 stay-at-home orders it was partially offset by a decline in bad debt recoveries. As we previously announced, we've undertaken several initiatives designed to reduce corporate costs by $11 million to $13 million in 2020, which is up a little bit from the $10 million that we had previously announced in savings. Our operating profit for Q3 2020 was $4.7 million, a nearly 53% increase from operating profit of $3.1 million in Q3 2019. Net income attributable to Hill in Q3 2020 was $2.1 million, or $0.04 per diluted share compared to net income attributable to Hill of $2.5 million, also $0.04 per diluted share in quarter three of 2019. Now let's take a look at our results on an adjusted basis on slide 11. On an adjusted basis, operating profit rose to $4.4 million in the 2020 third quarter from $4.3 million for the comparable 2019 quarter, which adds back $415,000 this quarter of share-based compensation and deducts an FX loss of $700 million and – excuse me, an FX gain of $760,000. Last year's comparable number added back $296,000 of share-based compensation and an FX loss of $858,000. Adjusted net income was $1.8 million in the 2020 third quarter compared to $3.7 million in last year's third quarter. The same variables that impacted adjusted operating net profit were also reflected in the adjusted net income. We also reported adjusted EBITDA of $4.8 million in the 2020 third quarter and that compared to $5.6 million last year's third quarter. You'll note that, our adjusted metrics this quarter are not all that different from our GAAP metrics. We think that's a good sign that we've cleaned up the past noise in our results and we do expect going forward that we'll continue to have only minor adjustments for non-cash stock comp and unrealized FX. Likewise, the more favorable comparables on a year-to-date basis reflect the quarter variability of FX and share-based compensation. Turning to slide 12. We'll take a look at our liquidity management and our cash flow. We continue to maintain a strong focus on liquidity management. Our cash collections were strong during Q3 2020, producing a $10.1 million increase in unrestricted cash at September 30, 2020 from June 30th. Our total liquidity at September 30, 2020, which includes our unrestricted cash as well as access to our lines of credit was $36.6 million, a $10.2 million increase from June 30. Free cash flow in the quarter was $7.7 million, a nearly $19.5 million improvement from the first quarter of 2020 and $1.5 million increase from the immediately preceding second quarter. This improvement was due in large part to the receipt of pine payments in the second and third quarter of 2020 that had been delayed earlier in the year due to the impact of COVID-19. So although we expect that we'll remain cash flow positive in the fourth quarter of 2020, it's not likely that it's going to remain at the same levels we experienced in the second and third quarters of this year. It is worth noting that cash flow generation and the increases in cash and liquidity during the quarter were achieved primarily from organic growth. And now if we could turn to slide 13. Our Q3 bookings helped to drive an improvement in our backlog at September 30th from the second quarter ended June 30, 2020. As you review the progression of our backlog quarter-to-quarter, I want to make you aware of a recent joint venture agreement that we entered associated with our Hamad International Airport Project in Doha, Qatar. The agreement will elevate our ability to serve this client and it positions us to work collaboratively with our new JV partner not only on the current project but to secure additional project work, some of which could be significant. The agreement did have the effect of decreasing our current backlog associated with this project by approximately $45 million. However, we believe that the impact of this reduction will be more than offset by new projects that we expect to secure and book in the future via this JV relationship. From a geographic perspective, our backlog is concentrated in the U.S. with the Middle East comprising the next largest area. I'd also like to mention the increasing role of our facilities management business is taking. Facilities management contracts now comprise just under 6% of our backlog compared to just over 4% of our year-to-date CFR through September. Thanks very much for your time and I'll now turn the conversation back to Raouf.

Thank you, Todd. In summarizing if we can move on to slide 14. We are cautiously optimistic for the balance of 2020 and continue to improve our financial and competitive position. With respect to guidance based on our current business conditions and considering certain previously announced project deferrals and cancellations that occurred earlier this year, we continue to expect CFR to range between $300 million and $310 million, consisting of both new awards and extensions of existing contracts. However, the impact of the pandemic on project start dates and mobilization will likely skew CFR to the lower end of the range. As background, we estimate that approximately $18 million of CFR has been delayed due to COVID-19 from existing contracts since the beginning of the year. This figure does not include COVID-19's impact on expected awards that were postponed and/or canceled. We are targeting an annual gross margin of 38% to 39% for 2020 consistent with our previous guidance. SG&A for 2020 is expected to be approximately $107 million to $109 million, down from our prior estimate of $110 million. This revised outlook reflects continuing cost cutting measures due to the lingering impact of COVID-19 on certain aspects of our business. We will continue to manage SG&A and its association with CFR relative to the evolving effects of COVID-19. Adjusted EBITDA for 2020 has been expected to range between $16 million and $20 million. However, based on our year-to-date performance, we are increasing, the lower end of this range. And now expect 2020, adjusted EBITDA will range between $18 million and $20 million. Thank you for your time today. And I will ask the operator, to open the call for questions.

Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Pete Enderlin with MAZ Partners. Please proceed with your question.

Thank you. Good morning. Thanks for taking the questions. It seems you're doing a good job of coping with a vast array of difficult situations. I just had a few specific questions. Were there any major cancellations or cuts that stand out to you in the quarter, as a result of COVID or other impacts on the economy? And what would be the approximate total of all those cuts and reductions?

This is Raouf. I'll take this one. We had -- we did not have any major cancellations. We had some minor ones, probably in the neighborhood of -- an aggregate number would be $15 million to $20 million. But that didn't only affect the 2020 revenue, that's also going rolling forward.

Okay.

But we had postponements of -- and delays of actual projects, that really impacted 2020 revenue generation.

Okay. And with the establishment of that joint venture in Qatar, what's the percentage breakdown of the joint venture itself? And did that change the accounting treatment for, how you report the backlog?

So it doesn't -- I don't -- in terms of the joint venture, I don't think we've disclosed kind of the percentages of that. And what it looks like. From an accounting standpoint, it doesn't change our accounting at all. We'll continue to consolidate the results of the project into our financial statements. And in terms of the backlog, it had exactly the impact that we discussed which it reduces our current backlog, by the $45-or-so million that we discussed before immediately. And the important point I think is that, we expect that this is -- and Raouf can talk a little bit more in detail about this but the project that we are awarded is the first couple of phases of a very, very major project. There will be other phases to it to be awarded in the future. And we believe that this really positions us well, along with our partner, to be able to be successful in securing the future contracts as well which again, will we think will be a net positive for us, in terms of the eventual work and our own Hill CFR, that we'll be able to book on this.

Okay. So the $45 million specifically is just because you previously accounted for all of that, or whatever the projects are that were in there? And now it's a proportion of that? Is that the way the reduction came about?

Yes, that's correct.

Okay. On the resident engineering and inspection services, do you offer those services in a lot of parts of the country? And New York was just kind of a missing piece, or is this sort of a new area of activity for you?

No. The answer is the first part which is we offer these services, in other parts of the U.S. however in New York in order to offer these services, we needed to have an engineering license, which we were missing.

And is it generally true in these other areas that you have to have those kinds of licenses as well?

Yes. But they are not -- in some space, we have to have a license, and it's much easier to obtain. In other states you don't have to have a license an engineering license.

Okay. Thank you. And is Brazil completely gone at this point in terms of cleaning it up and disposing of assets or whatever?

That is correct.

And is there any potential long-term or strategically to get back into that market at some point?

I think the future will tell. For right now, we don't believe for our organization, our business model it is the right market for us. So we're not looking at it right now.

Okay.

Our main focus is really to maximize critical mass within the locations we currently are by offering different types of services within the markets that we are.

All right. Thank you very much.

Thank you. Thank you for the questions.

Thank you. Our next question comes from the line of Bill Dezellem with Tieton Capital. Please proceed with your question.

Thank you. Would you talk about the wins in the quarter and how they break out amongst either categories or industries please?

For the most part, I don't have the exact breakdown on them, but most of them are within the infrastructure, within the transportation and infrastructure sector, and it's pretty much an even split between domestic and international.

And this...

Todd, do you have any more details on -- sorry, maybe Todd has more details on the exact split on it. I don't have them.

No, I don't have the exact split, but I agree what Raouf says. Just off the top of our heads, I think we know that some of the projects that Raouf referenced specifically in his remarks, they were pretty bulky projects for us. I don't think we've disclosed the exact amount and we won't, but the I-5 Highway Project in California is -- that's a nice bulky project for us the monorail in Cairo that he mentioned is -- that's also a very -- that's a big bulky project. Those are the ones that kind of come top to mind in terms of some of the major ones. And as Raouf also mentioned that there's kind of diversity there, I mean it's all infrastructure, but you've got rail, you've got roads, you've got domestic, you've got international and those are a couple of major ones. But I think downstream too it follows although the dollars aren't as big in the other ones, I think it follows the same general pattern.

Great, thank you. And as you look out over the next cycle of wins, do you see the ratio generally similar to what you had this quarter, or is there any sort of interesting change in the potential makeup that you see coming?

I think the ratio will continue to be the same. I think -- one of our focus is obviously the U.S. so, we're hoping as -- with the elections now over, but it's not going to be this quarter. But in the future quarters, we will be looking at the U.S. on the ratio of new works being hired. But our focus is two-focused. One is infrastructure sector, that includes all the infrastructure including aviation as aviation rebounds; and the next focus, we are focused is growing the U.S.

I'll also add to that another kind of sector which kind of spans that we are actively trying to expand and we've made some progress in just the facilities management business. And as we said before, we like that business because of the recurring fee nature of it. I mentioned in my remarks that we -- it's still not a big part of the business, but it's growing. It's about 6% of our backlog right now, although it's 4% of our CFR for the year-to-date. I think that -- what that indicates the CFR is more history and the backlog obviously is future. So you can see the direction that we're trending, and we'd like to continue to expand that part of the business as well.

Great, thank you. You just preempted questions, so I will then jump to a different one, which is relative to the New York engineering license. What's the time frame that you would anticipate that you would start booking business from that new capability?

Well, we're planning to have hopefully revenue, so far being generated by the third or fourth quarter of 2021. It's going to be small based on the plant, but I think, it's going to start growing very fast thereon after. There's a lot of potential opportunities out there. It just takes time for us to get in the procurement cycle and start moving. So, I think, it's going to take us six to nine months for the first one, and then, things will start developing from there.

Great. Thank you, both for the time.

Thank you. Great questions.

Thank you. Our next question comes from the line of Tim Chatard with Meros Investments. Please proceed with your question.

Good morning. You mentioned airport-related work a little bit, but can you give some feedback on how that's -- how that looks as a part of your work today, either via new bidding activity or work you have in the backlog?

Sure. Aviation, we have been involved in many aviation projects, both domestically and international. Most of our aviation projects that we're on, have kept on going. There has been some slowdown obviously, because of low traffic and the impacts of COVID. We -- some of the new procurement and new tenders that are out there in the U.S. have been delayed although now, we're starting to see one or two really coming to live and potentially, hopefully, closing even before this year-end, which are some of the expansion programs in the country. Long term and short term, we believe the aviation industry based on all the statistics and everything that we see is by end of 2021 capacity and traffic capacity is expected to be 70% of where it was before COVID and probably mid-'22 is where we're going to reach the same level that, we were before going COVID-19 hit. And basically, at that point of time, there was a lot of demand for expansions for the aviation industry, so we feel it's still going to be a very good market for us. We've invested in human resources and bringing in the right caliber of people for us to be able to secure future aviation projects and we feel still confident that we're on the right track on it.

Just one last thing here, just based on your guidance for the year on CFR and operating expenses, just doing the quick arithmetic, it seems like your CFR sequentially would be higher than it was in the current quarter and that your G&A would sequentially be lower in order to kind of fit into the guidance numbers you've given. Are those both directionally correct?

Yes, they are.

That’s it from me. Thank you.

Thank you.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session, so I'd like to pass the floor back to management for closing comments.

Thank you, very much, and thank you all for your time. We will be participating in two investor events this month. The details of which will be announced shortly and hope to be able to speak with some of you. On behalf of the Hill's 2,700 employees around the world, I thank you for your continued support of Hill International. Have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference and webcast. We thank you for your participation and you may disconnect your lines at this time.