Company Quick10K Filing
Williams Industrial Services Group
Price2.00 EPS0
Shares19 P/E19
MCap38 P/FCF-17
Net Debt35 EBIT2
TEV73 TEV/EBIT34
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-13
10-K 2019-12-31 Filed 2020-03-27
S-1 2019-11-14 Public Filing
10-Q 2019-09-30 Filed 2019-11-14
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-15
10-K 2018-12-31 Filed 2019-04-01
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-14
10-Q 2018-03-31 Filed 2018-05-21
10-K 2017-12-31 Filed 2018-04-16
10-Q 2017-09-30 Filed 2018-01-31
10-Q 2017-06-30 Filed 2017-12-19
10-Q 2017-03-31 Filed 2017-12-19
10-K 2016-12-31 Filed 2017-09-12
10-K 2015-12-31 Filed 2017-03-15
10-K 2014-12-31 Filed 2015-03-09
10-Q 2014-09-28 Filed 2014-10-30
10-Q 2014-06-29 Filed 2014-07-31
10-Q 2014-03-30 Filed 2014-05-02
10-K 2013-12-31 Filed 2014-03-17
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-07
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-03-22
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-09-13
8-K 2020-06-09
8-K 2020-05-13
8-K 2020-03-25
8-K 2020-03-25
8-K 2020-03-06
8-K 2020-02-07
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8-K 2019-11-14
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8-K 2019-06-21
8-K 2019-06-10
8-K 2019-05-15
8-K 2019-04-01
8-K 2019-03-28
8-K 2019-03-19
8-K 2019-01-14
8-K 2018-11-09
8-K 2018-11-09
8-K 2018-11-06
8-K 2018-10-11
8-K 2018-09-18
8-K 2018-08-28
8-K 2018-08-14
8-K 2018-07-31
8-K 2018-07-11
8-K 2018-06-29
8-K 2018-06-20
8-K 2018-05-29
8-K 2018-05-21
8-K 2018-04-16
8-K 2018-01-31
8-K 2017-12-27

WLMS 10Q Quarterly Report

Part I—Financial Information
Item 1. Financial Statements.
Note 1—Business and Basis of Presentation
Note 2—Liquidity
Note 3—Recent Accounting Pronouncements
Note 4—Leases
Note 5—Changes in Business
Note 6—Revenue
Note 7—Earnings (Loss) per Share
Note 8—Income Taxes
Note 9—Debt
Note 10—Financial Instruments
Note 11—Commitments and Contingencies
Note 12—Stock - Based Compensation Plans
Note 13—Subsequent Events
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Ii—Other Information
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 5. Other Information
Item 6.Exhibits.
EX-10.4 wlms-20200331ex104a3188b.htm
EX-10.5 wlms-20200331ex105bcf14e.htm
EX-10.6 wlms-20200331ex106cd7047.htm
EX-31.1 wlms-20200331ex31118861c.htm
EX-31.2 wlms-20200331ex3129fbf6e.htm
EX-32.1 wlms-20200331ex321c76275.htm
EX-32.2 wlms-20200331ex322bedbd7.htm

Williams Industrial Services Group Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
4003202401608002012201420172020
Assets, Equity
175135955515-252012201420172020
Rev, G Profit, Net Income
503214-4-22-402012201420172020
Ops, Inv, Fin

10-Q 1 wlms-20200331x10q.htm 10-Q wlms-current folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                 to                

 

Commission File No. 001-16501

Picture 1

Williams Industrial Services Group Inc.

(Exact name of registrant as specified in its charter)

 


 

 

 

 

Delaware

 

73-1541378

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

100 Crescent Centre Parkway, Suite 1240

Tucker, GA 30084

(Address of principal executive offices) (Zip code)

 

(770) 879-4400

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

N/A

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒  No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

 

 

 

As of May 6, 2020, there were 25,324,645 shares of common stock of Williams Industrial Services Group Inc. outstanding.

 

 

 

 

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

Table of Contents

 

 

Part I—FINANCIAL INFORMATION 

3

 

 

Item 1. Financial Statements 

3

 

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (unaudited) 

3

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited) 

4

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2020 and 2019 (unaudited) 

5

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited) 

6

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited) 

7

 

 

Notes to Condensed Consolidated Financial Statements (unaudited) 

8

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

21

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk 

27

 

 

Item 4. Controls and Procedures 

27

 

 

Part II—OTHER INFORMATION 

 

 

 

Item 1. Legal Proceedings 

28

 

 

Item 1A. Risk Factors 

28

 

 

Item 5. Other Items 

30

 

 

Item 6. Exhibits 

30

 

 

SIGNATURES 

32

 

 

 

 

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements.

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

March 31, 2020

  

December 31, 2019

ASSETS

  

 

 

  

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,705

 

$

7,350

Restricted cash

 

 

468

 

 

468

Accounts receivable, net of allowance of $374 and $377, respectively

 

 

32,662

 

 

38,218

Contract assets

 

 

16,401

 

 

7,225

Other current assets

 

 

2,570

 

 

2,483

Total current assets

 

 

57,806

 

 

55,744

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

274

 

 

273

Goodwill

 

 

35,400

 

 

35,400

Intangible assets

 

 

12,500

 

 

12,500

Other long-term assets

 

 

8,611

 

 

8,549

Total assets

 

$

114,591

 

$

112,466

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,941

 

$

16,618

Accrued compensation and benefits

 

 

12,487

 

 

9,318

Contract liabilities

 

 

3,400

 

 

2,699

Short-term borrowings

 

 

6,397

 

 

10,849

Current portion of long-term debt

 

 

875

 

 

700

Other current liabilities

 

 

7,941

 

 

6,408

Current liabilities of discontinued operations

 

 

339

 

 

340

Total current liabilities

 

 

44,380

 

 

46,932

Long-term debt, net

 

 

32,418

 

 

32,658

Deferred tax liabilities

 

 

2,231

 

 

2,198

Other long-term liabilities

 

 

3,337

 

 

4,028

Long-term liabilities of discontinued operations

 

 

4,476

 

 

4,486

Total liabilities

 

 

86,842

 

 

90,302

Commitments and contingencies (Note 9 and 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value, 170,000,000 shares authorized and 25,602,226 and 19,794,270 shares issued, respectively, and 24,903,913 and 19,057,195 shares outstanding, respectively

 

 

252

 

 

198

Paid-in capital

 

 

88,753

 

 

81,964

Accumulated other comprehensive income (loss)

 

 

(36)

 

 

222

Accumulated deficit

 

 

(61,212)

 

 

(60,211)

Treasury stock, at par (698,313 and 737,075 common shares, respectively)

 

 

(8)

 

 

(9)

Total stockholders’ equity

 

 

27,749

 

 

22,164

Total liabilities and stockholders’ equity

 

$

114,591

 

$

112,466

 

See accompanying notes to condensed consolidated financial statements.

3

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands, except share and per share data)

  

2020

  

2019

Revenue

 

$

66,147

 

$

50,652

Cost of revenue

 

 

59,238

 

 

43,970

 

 

 

 

 

 

 

 Gross profit

 

 

6,909

 

 

6,682

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

138

 

 

240

General and administrative expenses

 

 

6,200

 

 

4,762

Depreciation and amortization expense

 

 

41

 

 

72

Total operating expenses

 

 

6,379

 

 

5,074

 

 

 

 

 

 

 

Operating income

 

 

530

 

 

1,608

 

 

 

 

 

 

 

Interest expense, net

 

 

1,533

 

 

1,474

Other (income) expense, net

 

 

(122)

 

 

(325)

Total other (income) expense, net

 

 

1,411

 

 

1,149

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax

 

 

(881)

 

 

459

Income tax expense

 

 

48

 

 

64

Income (loss) from continuing operations

 

 

(929)

 

 

395

 

 

 

 

 

 

 

Loss from discontinued operations before income tax

 

 

(54)

 

 

(64)

Income tax expense

 

 

18

 

 

28

Loss from discontinued operations

 

 

(72)

 

 

(92)

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,001)

 

$

303

 

 

 

 

 

 

 

Basic earnings (loss) per common share  

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

(0.05)

 

$

0.02

Income (loss) from discontinued operations

 

 

 —

 

 

 —

Basic earnings (loss) per common share  

 

$

(0.05)

 

$

0.02

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

(0.05)

 

$

0.02

Income (loss) from discontinued operations

 

 

 —

 

 

 —

Diluted earnings (loss) per common share

 

$

(0.05)

 

$

0.02

 

 

See accompanying notes to condensed consolidated financial statements.

4

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

(in thousands)

 

2020

  

2019

 

Net income (loss)

 

$

(1,001)

 

$

303

 

Foreign currency translation adjustment

 

 

(258)

 

 

18

 

Comprehensive income (loss)

 

$

(1,259)

 

$

321

 

 

See accompanying notes to condensed consolidated financial statements.

5

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.01 Per Share

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

Treasury Shares

 

 

 

(in thousands, except share data)

  

Shares

  

 

Amount

  

 

Capital

  

 

Income (Loss)

 

 

Deficit

 

Shares

 

 

Amount

  

 

Total

Balance, December 31, 2018

 

19,767,605

 

$

197

 

$

80,424

 

$

 —

 

$

(62,397)

 

(1,107,387)

 

$

(11)

 

$

18,213

Issuance of restricted stock units

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

390,901

 

 

 4

 

 

 4

Tax withholding on restricted stock units

 

 —

 

 

 —

 

 

(123)

 

 

 —

 

 

 —

 

(50,738)

 

 

(2)

 

 

(125)

Stock-based compensation

 

 —

 

 

 —

 

 

408

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

408

Foreign currency translation

 

 —

 

 

 —

 

 

 —

 

 

18

 

 

 —

 

 —

 

 

 —

 

 

18

Net income (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

303

 

 —

 

 

 —

 

 

303

Balance, March 31, 2019

 

19,767,605

 

$

197

 

$

80,709

 

$

18

 

$

(62,094)

 

(767,224)

 

$

(9)

 

$

18,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.01 Per Share

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

Treasury Shares

 

 

 

(in thousands, except share data)

  

Shares

  

 

Amount

  

 

Capital

  

 

Income (Loss)

  

 

Deficit

  

Shares

  

 

Amount

  

 

Total

Balance, December 31, 2019

 

19,794,270

 

$

198

 

$

81,964

 

$

222

 

$

(60,211)

 

(737,075)

 

$

(9)

 

$

22,164

Issuance of common stock

 

5,384,615

 

 

54

 

 

6,478

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

6,532

Issuance of restricted stock units

 

423,341

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

80,207

 

 

 1

 

 

 1

Tax withholding on restricted stock units

 

 —

 

 

 —

 

 

(65)

 

 

 —

 

 

 —

 

(41,445)

 

 

 —

 

 

(65)

Stock-based compensation

 

 —

 

 

 —

 

 

376

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

376

Foreign currency translation

 

 —

 

 

 —

 

 

 —

 

 

(258)

 

 

 —

 

 —

 

 

 —

 

 

(258)

Net income (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,001)

 

 —

 

 

 —

 

 

(1,001)

Balance, March 31, 2020

 

25,602,226

 

$

252

 

$

88,753

 

$

(36)

 

$

(61,212)

 

(698,313)

 

$

(8)

 

$

27,749

 

See accompanying notes to condensed consolidated financial statements.

6

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands)

 

2020

  

2019

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(1,001)

 

$

303

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Net loss from discontinued operations

 

 

72

 

 

92

Deferred income tax provision (benefit)

 

 

33

 

 

45

Depreciation and amortization on plant, property and equipment

 

 

41

 

 

72

Amortization of deferred financing costs

 

 

182

 

 

154

Bad debt expense

 

 

 3

 

 

189

Stock-based compensation

 

 

472

 

 

305

Changes in operating assets and liabilities, net of businesses sold:

 

 

 

 

 

 

Accounts receivable

 

 

5,444

 

 

(2,421)

Contract assets

 

 

(9,413)

 

 

(2,923)

Other current assets

 

 

(2)

 

 

(54)

Other assets

 

 

(596)

 

 

403

Accounts payable

 

 

(3,122)

 

 

5,964

Accrued and other liabilities

 

 

4,230

 

 

517

Contract liabilities

 

 

701

 

 

(76)

Net cash provided by (used in) operating activities, continuing operations

 

 

(2,956)

 

 

2,570

Net cash provided by (used in) operating activities, discontinued operations

 

 

(83)

 

 

(212)

Net cash provided by (used in) operating activities

 

 

(3,039)

 

 

2,358

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(42)

 

 

(68)

Net cash provided by (used in) investing activities, continuing operations

 

 

(42)

 

 

(68)

Financing activities:

 

 

 

 

 

 

Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation

 

 

(65)

 

 

(121)

Proceeds from issuance of common stock

 

 

6,532

 

 

 —

Debt issuance costs

 

 

(442)

 

 

 —

Proceeds from short-term borrowings

 

 

53,460

 

 

42,266

Repayments of short-term borrowings

 

 

(57,913)

 

 

(45,497)

Repayments of long-term debt

 

 

 —

 

 

(88)

Net cash provided by (used in) financing activities, continuing operations

 

 

1,572

 

 

(3,440)

Effect of exchange rate change on cash, continuing operations

 

 

(136)

 

 

 —

Net change in cash, cash equivalents and restricted cash

 

 

(1,645)

 

 

(1,150)

Cash, cash equivalents and restricted cash, beginning of period

 

 

7,818

 

 

4,942

Cash, cash equivalents and restricted cash, end of period

 

$

6,173

 

$

3,792

 

 

 

 

 

 

 

Supplemental Disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

716

 

$

1,092

Noncash amendment fee related to MidCap facility

 

$

150

 

$

 —

 

See accompanying notes to condensed consolidated financial statements.

7

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—BUSINESS AND BASIS OF PRESENTATION

Business

Williams Industrial Services Group Inc. was incorporated in 2001 under the name “Global Power Equipment Group Inc.” under the laws of the State of Delaware and became the successor to GEEG Holdings, LLC, which was formed as a Delaware limited liability company in 1998. Effective June 29, 2018, Global Power Equipment Group Inc. changed its name to Williams Industrial Services Group Inc. (together with its wholly owned subsidiaries, “Williams,” the “Company,” “we,” “us” or “our,” unless the context indicates otherwise) to better align its name with the Williams business, and our stock now trades on the OTCQX® Best Market under the ticker symbol “WLMS.” Williams has been safely helping plant owners and operators enhance asset value for more than 50 years. We provide a broad range of construction, maintenance and support services to customers in energy, power and industrial end markets. Our mission is to be the preferred provider of construction, maintenance, and specialty services through commitment to superior safety performance, focus on innovation, and dedication to delivering unsurpassed value to our customers.

Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended December 31, 2019, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 27, 2020 (the “2019 Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, including all normal recurring adjustments, necessary to present fairly the unaudited condensed consolidated balance sheets and statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the periods indicated. All significant intercompany transactions have been eliminated. The December 31, 2019 unaudited condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. These unaudited condensed consolidated interim financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the 2019 Report. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for any interim period are not necessarily indicative of operations to be expected for the full year.

The Company reports on a fiscal quarter basis utilizing a “modified” 4-4-5 calendar (modified in that the fiscal year always begins on January 1 and ends on December 31). However, the Company has continued to label its quarterly information using a calendar convention. The effects of this practice are modest and only exist when comparing interim period results. The reporting periods and corresponding fiscal interim periods are as follows:

 

 

 

 

 

 

 

 

 

 

Reporting Interim Period

 

Fiscal Interim Period

 

  

2020

  

2019

Three Months Ended March 31

 

January 1, 2020 to March 29, 2020

 

January 1, 2019 to March 31, 2019

Three Months Ended June 30

 

March 30, 2020 to June 28, 2020

 

April 1, 2019 to June 30, 2019

Three Months Ended September 30

 

June 29, 2020 to September 27, 2020

 

July 1, 2019 to September 29, 2019

 

 

NOTE 2—LIQUIDITY

The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that it will be able to meet its obligations and continue its operations during the twelve-month period following the issuance of this Quarterly Report on Form 10-Q for the three months ended March 31, 2020 (this “Form 10-Q”). These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

The Company had negative cash flows from operations during the three months ended March 31, 2020 and has historically raised capital to fund its working capital and growth. On January 13, 2020, the Company amended its existing credit facilities with Centre Lane (as defined below) and MidCap (as defined below). As of March 31, 2020, the Company had $5.5 million in available borrowing capacity (see Note 9). In addition, the Company successfully completed its fully backstopped $7.0 million

8

registered offering of subscription rights to purchase shares of the Company’s common stock to existing holders of the Company’s common stock (the “Rights Offering”), which expired March 2, 2020, pursuant to which the Company issued 5,384,615 shares of its common stock and received net proceeds of $6.6 million. The Company is using the net proceeds from the Rights Offering, combined with the additional borrowing capacity provided by the amended MidCap Facility (as defined below), for working capital and general corporate purposes to fund certain of the Company’s strategic growth initiatives. As a result, management believes that the Company has sufficient resources to satisfy its working capital requirements for at least 12 months following the issuance of these unaudited condensed consolidated financial statements. However, the Company’s liquidity could be periodically, and for certain intervals, constrained due to the working capital requirements that will be needed as it continues to execute its plans to grow the business.

The Company continues to monitor its liquidity and capital resources. If market conditions were to change, and revenue was reduced or operating costs increased, cash flows and liquidity could be significantly reduced.

In December 2019, a novel strain of the coronavirus (“COVID-19”) surfaced in Wuhan, China, which spread globally and was declared a pandemic by the World Health Organization in March 2020. The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the first quarter of 2020 progressed. In response to COVID-19, federal, provincial, state, county and local governments and public health organizations and authorities around the world have implemented a variety of measures intended to control the spread of the virus, including quarantines, “shelter-in-place,” “stay-at-home” and similar orders, travel restrictions, school closures, business curtailments and closures, social distancing and hygiene requirements. The effects of COVID-19 have impacted some of the Company’s projects; for instance, in April 2020, the Company experienced a temporary suspension in projects in New York and a labor reduction for projects in Georgia (see Note 13). Although to date the Company has not experienced materially negative impacts from COVID-19, such as widespread project stoppage or cancellations or a slowdown or cessation of accounts receivables collections, the timing of future contract awards could create gaps in the Company’s project delivery schedule across quarterly periods, and the uncertainty and economic impacts created by the pandemic could cause a temporary decline in demand for the Company’s services. The Company anticipates that its future results of operations, including the results for 2020, will be impacted by the COVID-19 outbreak, but at this time does not expect that the impact from the COVID-19 outbreak will have a material effect on the Company’s liquidity or financial position. However, given the speed and frequency of continuously evolving developments and inherent uncertainty with respect to this pandemic, the Company cannot provide any assurance that such impacts will not grow and become material to its liquidity or financial position.

The Company currently cannot predict the ultimate impact of the COVID-19 pandemic on its business, results of operations, financial condition and cash flows, as such impact is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. The Company and its liquidity, as well as its ability to satisfy its working capital requirements, may be adversely affected to some degree by the COVID-19 pandemic. The Company currently believes that the impact of COVID-19 on the Company will not negatively impact its ability to comply with the covenants under its existing credit facilities. However, the Company cannot provide any assurance that the assumptions used to estimate its liquidity requirements will remain accurate due to the unprecedented nature and the unpredictability of the COVID-19 global pandemic and its potential impact on the Company and its customer base. As a consequence, the Company’s estimates of the duration of the pandemic and its impact on the Company’s future earnings and cash flows could change and have a material impact on its results of operations and financial condition.

NOTE 3—RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40).” This update aligns the requirements for capitalizing costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software, including hosting arrangements that are service contracts, over the term of the hosting arrangement. Further, this update requires the presentation of the expense in the statement of income, the presentation of the costs on the statement of financial position and the classification of payments in the statement of cash flows related to capitalized implementation costs to be treated the same as the fees of the associated hosting arrangement. In the first quarter of 2020, the Company adopted ASU 2018-15, which did not have a material impact on its financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820).” This amendment update modifies disclosure requirements related to fair value measurement. In the first quarter of 2020, the Company adopted ASU 2018-13,

9

which did not have a material impact on its financial statement disclosures.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848).” This guidance is to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). The guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. The Company is currently evaluating the impact this ASU will have on its results of operations, financial position and cash flows.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes”, which simplifies the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in accounting for income taxes. The update is effective for annual periods beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its results of operations, financial position and cash flows.

 

NOTE 4—LEASES

On January 1, 2019, the Company adopted ASU 2016-02 using the modified retrospective method, and accordingly, the new guidance was applied to leases that existed as of January 1, 2019.

The Company primarily leases office space and related equipment, as well as equipment, modular units and vehicles directly used in providing services to its customers. The Company’s leases have remaining lease terms of one to ten years. Most leases contain renewal options for varying periods, which are at the Company’s sole discretion and included in the expected lease term if they are reasonably certain of being exercised. For leases beginning in 2019 and thereafter, the Company accounts for lease components, such as fixed payments including rent, real estate taxes, and insurance costs, separately from the non-lease components, such as common area maintenance costs.

For leases with terms greater than twelve months, the Company records the related right-of-use assets and lease liabilities at the present value of the fixed lease payments over the lease term at the lease commencement date. The Company uses its incremental borrowing rate to determine the present value of the lease as the rate implicit in the lease is typically not readily determinable.

Short-term leases (leases with an initial term of twelve months or less or leases that are cancelable by the lessee and lessor without significant penalties) are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used in delivering services to its customers. These leases are entered into at agreed upon hourly, daily, weekly or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

The components of lease expense were as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

Lease Cost/(Sublease Income) (in thousands)

 

2020

 

2019

Operating lease cost

 

$

1,219

 

$

1,227

Short-term lease cost

 

 

835

 

 

306

Sublease income

 

 

 —

 

 

(9)

Total lease cost

 

$

2,054

 

$

1,524

Lease cost related to finance leases was not significant for the three months ended March 31, 2020 and 2019.

10

Information related to the Company’s right-of-use assets and lease liabilities was as follows:

 

 

 

 

 

 

 

 

 

Lease Assets/Liabilities (in thousands)

 

Balance Sheet Classification

 

March 31, 2020

 

December 31, 2019

Lease Assets 

 

 

 

 

 

 

 

 

Right-of-use assets

 

Other long-term assets

 

$

5,449

 

$

5,743

 

 

 

 

 

 

 

 

 

Lease Liabilities

 

 

 

 

 

 

 

 

Short-term lease liabilities

 

Other current liabilities

 

$

3,389

 

$

2,985

Long-term lease liabilities

 

Other long-term liabilities

 

 

2,253

 

 

2,939

Total lease liabilities

 

 

 

$

5,642

 

$

5,924

 

Supplemental information related to the Company’s leases was as follows:

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(dollars in thousands)

 

2020

 

2019

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash used by operating leases

 

$

1,231

 

 

1,238

Right-of-use assets obtained in exchange for new operating lease liabilities

 

 

1,001

 

 

578

Right-of-use assets obtained in exchange for new finance lease liabilities

 

 

 —

 

 

27

Weighted-average remaining lease term - operating leases

 

 

1.83 years

 

 

2.56 years

Weighted-average remaining lease term - finance leases

 

 

3.98 years

 

 

5 years

Weighted-average discount rate - operating leases

 

 

9%

 

 

9%

Weighted-average discount rate - finance leases

 

 

9%

 

 

9%

 

Total remaining lease payments under the Company’s operating and finance leases are as follows:

 

 

 

 

 

 

 

 

 

Operating Leases

 

Finance Leases

Three Months Ended March 31, 2020

 

(in thousands)

Remainder of 2020

 

$

2,988

 

$

 4

2021

 

 

2,256

 

 

 6

2022

 

 

696

 

 

 6

2023

 

 

145

 

 

 5

2024

 

 

 2

 

 

 1

Thereafter

 

 

 —

 

 

 —

Total lease payments

 

$

6,087

 

$

22

Less: interest

 

 

(467)

 

 

 —

Present value of lease liabilities

 

$

5,620

 

$

22

 

 

NOTE 5—CHANGES IN BUSINESS

Discontinued Operations

Electrical Solutions

During the fourth quarter of 2017, the Company made the decision to exit and sell its Electrical Solutions segment (which was comprised solely of Koontz-Wagner Custom Controls Holdings LLC (“Koontz-Wagner”), a wholly owned subsidiary of the Company) in an effort to reduce the Company’s outstanding term debt. The Company determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment has been presented as a discontinued operation for all periods presented.

On July 11, 2018, Koontz-Wagner filed a voluntary petition for relief under Chapter 7 of Title 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of Texas. The filing was for Koontz-Wagner only, not for the Company as a whole, and was completely separate and distinct from the Williams business and operations. As a result of the July 11, 2018 bankruptcy of Koontz-Wagner, the Company recorded $11.4 million of exit costs, consisting of a lease guarantee, liability for salary and benefit continuation and a pension withdrawal liability, which were included in loss from discontinued operations in the Company’s consolidated statements of operations for the year ended December 31, 2018. The Company satisfied the liability related to the lease guarantee settlement and substantially all of the salary and benefit continuation liability through cash payments by the end of 2018. The pension liability is expected to be satisfied by annual cash payments of $0.3

11

million each, paid in quarterly installments, which began in 2018 and will continue to be paid over the next twenty years.

Mechanical Solutions

During the third quarter of 2017, the Company made the decision to exit and sell substantially all of the operating assets and liabilities of its Mechanical Solutions and determined that the decision to exit this segment met the definition of  a discontinued operation. As a result, this segment, including TOG Manufacturing Company, Inc., has been presented as a discontinued operation for all periods presented.

In connection with the sale of its Mechanical Solutions segment during 2017, the Company entered into a transition services agreement with the purchaser to provide certain accounting and administrative services for an initial period of nine months. In April 2019, the purchaser of the Company’s former Mechanical Solutions segment went into receivership and in connection with this event, the Company recognized a write down to the estimated fair value of its amounts due under the transition services agreement of $0.2 million in the three months ended March 31, 2019. At the time the purchaser went into receivership, the Company also had remaining balances of $0.2 million and $0.8 million included in other current assets and other current liabilities, respectively, on its condensed consolidated balance sheet. In November 2019, the Company executed, and the U.S. Bankruptcy Court for the Northern District of Oklahoma approved, an agreement with the purchaser to settle the disputes related to the remaining asset and liability. As a result, the Company recorded a net gain of $0.4 million, which was included in other (income) expense, net on its consolidated statement of operations for the year ended December 31, 2019.

As of March 31, 2020 and December 31, 2019, the Company did not have any assets related to its Electrical and Mechanical Solutions’ discontinued operations. The following table presents a reconciliation of the carrying amounts of major classes of liabilities of Electrical and Mechanical Solutions’ discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

  

March 31, 2020

 

December 31, 2019

Liabilities:

 

 

 

 

 

 

Other current liabilities

 

$

339

 

$

340

Current liabilities of discontinued operations

 

 

339

 

 

340

Liability for pension obligation

 

 

2,688

 

 

2,708

Liability for uncertain tax positions

 

 

1,788

 

 

1,778

Long-term liabilities of discontinued operations

 

 

4,476

 

 

4,486

Total liabilities of discontinued operations

 

$

4,815

 

$

4,826

 

The following table presents a reconciliation of the major classes of line items constituting the net loss from discontinued operations. In accordance with GAAP, the amounts in the table below do not include an allocation of corporate overhead.

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands)

  

2020

  

2019

General and administrative expenses

 

$

 1

 

$

10

Interest expense

 

 

53

 

 

54

Loss from discontinued operations before income tax

 

 

(54)

 

 

(64)

Income tax expense

 

 

18

 

 

28

Loss from discontinued operations 

 

$

(72)

 

$

(92)

 

 

NOTE 6—REVENUE

Disaggregation of Revenue

Disaggregated revenue by type of contract was as follows:  

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands)

 

2020

 

2019

Cost-plus reimbursement contracts

 

$

60,296

 

$

43,503

Fixed-price contracts

 

 

5,851

 

 

7,149

Total

 

$

66,147

 

$

50,652

 

12

Disaggregated revenue by the geographic area where the work was performed was as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands)

 

2020

 

2019

United States

 

$

57,647

 

$

49,204

Canada

 

 

8,500

 

 

1,449

Total

 

$

66,147

 

$

50,652

 

Contract Balances

The Company enters into contracts that allow for periodic billings over the contract term that are dependent upon specific advance billing terms, as services are provided, or as milestone billings based on completion of certain phases of work. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported in the Company’s unaudited condensed consolidated balance sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported in the Company’s unaudited condensed consolidated balance sheets as contract liabilities. At any point in time, each project in process could have either contract assets or contract liabilities.

The following table provides information about contract assets and contract liabilities from contracts with customers:

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands)

 

2020

  

2019

Costs incurred on uncompleted contracts

 

$

59,238

 

$

43,403

Earnings recognized on uncompleted contracts

 

 

6,909

 

 

7,265

Total

 

 

66,147

 

 

50,668

Less—billings to date

 

 

(53,146)

 

 

(42,729)

Net

 

$

13,001

 

$

7,939

Contract assets

 

$

16,401

 

$

11,141

Contract liabilities

 

 

(3,400)

 

 

(3,202)

Net

 

$

13,001

 

$

7,939

 

For the three months ended March 31, 2020, the Company recognized revenue approximately $2.8 million that was included in the corresponding contract liability balance at December 31, 2019.

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Remainder of 2020

 

2021

 

2022

 

Thereafter

 

Total

Remaining performance obligations

 

$

154,903

 

$

122,427

 

$

73,991

 

$

117,083

 

$

468,404

 

 

 

NOTE 7—EARNINGS (LOSS) PER SHARE

In March 2020, the Company successfully completed its fully backstopped $7.0 million Rights Offering, which expired March 2, 2020, pursuant to which the Company issued 5,384,615 shares of its common stock and received net proceeds of $6.6 million.

As of March 31, 2020, the Company’s 24,903,913 shares outstanding included 550,857 shares of contingently issued but unvested restricted stock. As of March 31, 2019, the Company’s 19,000,381 shares outstanding included 288,137 shares of contingently issued but unvested restricted stock. Restricted stock is excluded from the calculation of basic weighted average shares outstanding, but its impact, if dilutive, is included in the calculation of diluted weighted average shares outstanding.

Basic earnings (loss) per common share are calculated by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted earnings (loss) per common share are based on the weighted average common shares outstanding during the period, adjusted for the potential dilutive effect of common shares that would be issued upon the vesting and release of restricted stock awards and units and stock options, if any.

13

Basic and diluted earnings (loss) per common share from continuing operations were calculated as follows:

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(in thousands, except share data)

  

2020

 

2019

Income (loss) from continuing operations

 

$

(929)

 

$

395

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

Weighted average common shares outstanding