Devin Sullivan - Senior Vice President, Equity Group David Richter - President and Chief Executive Officer John Fanelli - Senior Vice President and Chief Financial Officer

Mike Shlisky - Global Hunter Securities Chase Jacobson - William Blair Tahira Afzal - KeyBanc Capital Markets Pete Enderlin - MAZ Partners Walter Schenker - MAZ Capital Advisors Stewart Pond - Medley Capital Michael Conti - Sidoti & Company Mark Braha - Private Investor

Thank you, Latonia. Good morning, everyone.

Thank you for joining us today. Our speakers for today will be David Richter, President and Chief Executive Officer of Hill International and John Fanelli, the company’s Senior Vice President and Chief Financial Officer.

Before we begin, I would like to remind everyone that certain statements made during the course of this call maybe 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 projections of earnings or other financial items; any statements concerning plans, strategies and objectives for future operations; and any statements regarding future economic conditions or performance 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. 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 actual results, performance and achievements or industry results to differ materially from estimates or projections contained in our forward-looking statements include modifications and termination of client contracts, control in operational issues pertaining to business activities that we conduct in our own behalf or pursuant to joint ventures with other parties, difficulties we may incur in implementing our acquisition strategy, the need to retain and recruit key technical and management personnel and unexpected adjustments and cancellations related to our backlog. Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in the reports we have filed with the Securities and Exchange Commission.

We do not intend and undertake no obligation to update any forward-looking statement. So, with that said, I’d now like to turn the call over to David Richter, President and CEO of Hill International.

David, please go ahead.

Thank you, Devin and good morning to everyone joining us for today’s earnings conference call. Yesterday, we announced our financial results for the fourth quarter of 2014.

The total revenue for the fourth quarter for our company was a record $169.1 million, a 17% increase from the fourth quarter of 2013. Consulting fee revenue, or CFR, for the fourth quarter was also a record at $148.7 million, a 14% increase from the prior year’s fourth quarter.

This growth in consulting fees consists of 12% organic growth, plus 2% growth as a result of our acquisitions of Scottish consultancy, Cadogans and New England project management firm, Collaborative Partners over the past year. Our gross profit in the fourth quarter rose to a record $64.4 million, up 10% from the fourth quarter of 2013.

Our gross margin as a percentage of consulting fees was down by 150 basis points to 43.3% in the fourth quarter versus the prior year. Our SG&A expenses in the fourth quarter were $61.1 million, up 18% from the year earlier quarter.

Our SG&A margin was up 160 basis points year-over-year to 41.1% for the quarter. The largest increases in SG&A expense for the fourth quarter were the following: an increase in unemployed labor of $2.8 million year-over-year, an increase in bad debt expense of $2.7 million, an increase in indirect labor of $1.6 million, an increase in administrative travel expenses of $400,000 and professional fees incurred in connection with the Cadogans acquisition of $200,000 during the fourth quarter.

Hill’s EBITDA for the fourth quarter was $5.7 million, down 38% from the fourth quarter of 2013. EBITDA margin as a percentage of consulting fees was only 3.8% in the fourth quarter, down 330 basis points from a year earlier.

Operating profit for the quarter was $3.3 million, down 52% year-over-year. Our operating margin in the fourth quarter was just 2.2%, a decrease of 310 basis points from the fourth quarter of 2013.

With operating profit down so much in the fourth quarter, we saw a net loss during the quarter of $3.5 million or a loss of $0.07 per diluted share compared to a net loss during the prior year’s fourth quarter of $1.3 million or a loss of $0.03 per diluted share. Our net loss was also negatively impacted by an increase in income tax expense of $900,000 between 2014 and 2013.

One area where we saw significant improvement in the fourth quarter, however, was interest expense. As a result of the debt refinancing we closed at the end of the third quarter last year, our interest expense during the fourth quarter was $3.7 million, down 35% from $5.6 million during the fourth quarter of 2013.

Despite the net loss, the fourth quarter was a very strong quarter for cash flow with Hill having positive operating cash flow of $12.7 million for the quarter. Now, looking at the fourth quarter performance of our two operating segments separately, total revenue at Hill’s Project Management Group during the fourth quarter was a record $129.5 million, a 16% increase from the fourth quarter of 2013.

Consulting fee revenue for the quarter of the Projects Group was also a record at $110.2 million, an 11% increase from the year earlier quarter. This growth was comprised of 10% organic growth and 1% growth from the acquisition of Collaborative Partners at the end of 2013.

The Projects Group saw a 7% increase in gross profit to $43.1 million for the quarter with gross margin on a percentage basis at 39.1%, down 140 basis points from last year’s fourth quarter. SG&A expenses of the Projects Group were up 12% to $31.7 million in the fourth quarter.

As a percentage of consulting fees, SG&A margin was 28.8%, up just 10 basis points year-over-year, but that included an increase in bad debt expense of $1 million year-over-year, $1.5 million last year versus $500,000 the year before. Absent that, the Projects Group’s SG&A margin would have been down year-over-year.

Operating profit for the Projects Group was $11.4 million during the quarter, a 3% decline from the prior year’s fourth quarter. Operating margin as a percentage of consulting fees was 10.3%, a 150 basi points drop versus the year earlier quarter, all-in-all, a very solid quarter for our Project Management Group.

It was a very different quarter however for our Construction Claims Group. Total revenue during the fourth quarter at the Claims Group was $39.7 million, a 20% increase from the fourth quarter of 2013.

Consulting fee revenue for the Claims Group was a record $38.5 million, a 21% increase. The Claims Group’s growth in consulting fees was comprised of 19% organic growth and 2% growth from the acquisition of Cadogans.

The Claims Group saw its gross profit rise by 15% to $21.3 million, but saw a drop in its gross margin as a percentage of consulting fees to 55.3%, down 280 basis points from the prior year’s fourth quarter. SG&A expenses for the Claims Group were up 33% to $21.2 million during the quarter and as a percentage of consulting fees they were up by 490 basis points to 55.2%.

This increase in overhead expense was primarily result of an increase in unemployed labor of $2.2 million, an increase in bad debt expense of $1.7 million, an increase in administrative travel expenses of $400,000, and the professional fees incurred in connection with Cadogans of $200,000. As a result, fourth quarter operating profit for the Claims Group was just better than breakeven at $55,000, unfortunately a 98% drop from the fourth quarter of 2013.

As a percent of consulting fees, this was a 790 basis point decline from the year earlier with operating margin dropping to 0.1% in the fourth quarter, obviously, a disappointing quarter for the group and one that adversely impacted the entire company’s performance in the fourth quarter. But having started 2014 with three outstanding quarters, the Claims Group still had a great year overall.

The group delivered 24% growth in consulting fees and $11 million in operating profit. It’s second most profitable year ever after 2013 where the group delivered $12.2 million in operating profit.

For the comparable fourth quarter or even an ordinary fourth quarter, operating profit would have been a record as well. Claims Group and our entire senior management team are working hard to ensure that the fourth quarter isn’t repeated in 2015 and the group gets back on track to delivering a record performance this year.

In addition to the SG&A incurred by our two operating segments, we also incurred SG&A in our corporate group. For the fourth quarter, our corporate SG&A expenses were $8.1 million, up 12% from the year earlier quarter.

As a percentage of consulting fees, it was 5.5%, down 10 basis points from the prior year’s fourth quarter. Regarding backlog, we ended 2014 with a record total backlog of $1.08 billion, up almost 1% during the fourth quarter.

This backlog consisted of $1.034 billion from our Project Management Group and $46 million from our Construction Claims Group. 12-month backlog at the end of the year was also a record at $470 million, up 3% during the quarter.

This was broken down into $424 million from our Project Management Group and $46 million from our Claims Group. Hill had net bookings during the fourth quarter of $156 million.

Absent a major project interactive was canceled and which was previously included in our backlog for $47 million, we would have had net bookings of $203 million during the quarter, which equates to a book-to-bill ratio of 137%. Some of the major new contracts that we announced over the past four months since our last earnings call include a $56 million contract to manage super storm Sandy recovery efforts for New York City Transit, a $34 million contract to provide construction management services to the New Jersey Turnpike Authority, a $30 million construction management contract for GSA’s Mid-Atlantic region, three contracts totaling $25 million to manage nearly $1 billion of residential projects to the Abu Dhabi National Oil Company, a $22 million contract to manage the extension of the East Link Light Rail project in Seattle, a $7 million contract to act as project manager for a new headquarters building for the European Investment Bank in Luxembourg, a $4 million contract to manage the $0.5 billion renovation and expansion of the Miami Beach Convention Center, a $4 million contract to provide PM services in connection with a Bahrain affordable housing project, and a $3 million contract extension for our work managing the construction of BBVA Bancomer Operating Center in Mexico City.

Based on those major contract wins and others yet to be announced, we are once again anticipating double-digit growth in consulting fees for this upcoming year. We currently expect to achieve between $650 million and $675 million in consulting fees during 2015, which equates to approximately 13% to 17% growth for the year.

With that, John Fanelli, our CFO and I are happy to take any of your questions.

Good morning.

Good morning.

Good morning, Mike.

I want to just start off with just asking about the effect of foreign exchange rates on your backlog at the end of the year. Was there anything major there?

Wouldn’t they have been the lot higher having us seeing the major change at some of the global exchange rates versus the dollar?

Yes, it’s something we have been at least a little bit higher. The dollar has been very strong.

80% of our business is international. Certainly, the euro has been weak relative to the dollar and a lot of other currencies as well.

So, it’s had an impact on us. It’s been a negative for that’s far back as I can remember now.

We don’t do any hedging. We don’t plan to.

So, we just have to suffer the consequences of the strengthening dollar.

Okay. And perhaps, I mean, they had no – given such a strong dollar, are you seeing anymore appetite for international acquisitions from here, if you can get a good deal on them?

Thanks to the good rate.

Yes, that’s certainly a factor. In some areas, it does help as acquisitions is one of those areas.

We are looking at a handful of acquisitions right now. In fact, we expect to have one closed before the end of this quarter.

And I think our primary focus going forward is on acquisitions domestically.

Okay, okay. Can you also maybe give us an update on what’s going on over maybe has there been any change or any kind of news we can talk about as far as the AR issue out there?

We don’t have any direct news. Obviously, there has been a lot of change going on in Libya in last, let’s say, 6 months.

There was a Court decision that sort of mediated the dispute between the two contesting governments. One government was named the legitimate government of Libya the one most of the international community is now dealing with.

They are working with the other government to sort of settle things down, normalize the situation in Libya, and hopefully get the country moving forward. We have maintained a very good and positive dialogue with ODAC, our clients.

They have not been authorized to pay any outstanding debts that haven’t been authorized to make any payments other than payroll in the ordinary course. Once that changes and the country gets back to normal, we expect to be in a position to collect our remaining funds.

Mike, this is John Fanelli.

Yes, yes.

I just wanted to add to what David said from our financial report, the only change we made is that we have re-classed this receivable from a current asset to a non-current asset, but they have positioned that we know we are going to get paid, we just don’t know when.

Okay, it makes sense. And I just squeeze in one more here about your interest costs, interest was down 35%, certainly a good drop, but I don’t know why I probably feel a bit more maybe like 50% down, was there anything in the quarter we should be aware of that might have been one-time in nature and to use any kind of what your thoughts are as far as the quarterly run-rate of interest in 2015?

Yes. We originally projected and disclosed that we expected the drop to be about half.

We had some letters of credit that we sort of had to pay twice for. They were still in the Bank of America accounts.

They were backed by Société Générale LCs. So, we are basically paying twice the same letters of credit for quite a few months.

We are also in the process of working with those LCs out of our senior revolver and into local banks, primarily in the Middle East, where the – where we have a need for them. We also have a significant amount of cash collateral with certain banks that was put in place over the last several years that we now expect with a normalized banking relationship with Soc Gén to be able to free up.

So, hopefully a significant amount of cash we will be able to get out of restricted accounts in the Middle East. We have been actively doing that taking a little longer than expected like most things do, but over the next couple of months, we expect to free up that cash which will have a big impact on our interest expense as well.

Okay, thanks so much guys.

Thank you.

Thanks Mike.

Hi, good morning.

Good morning.

Good morning, Chase.

Can you give us some more color on the increase in the bad debt expense maybe something as to what it was related to I guess I was surprised to see how much of it was in the construction claims business given that the contracts there tend to be smaller and shorter cycle?

Yes, which actually tends to create more cash collection problems when you are doing short-term work than the Project Management Group and historically we have seen most of our collection issues, Libya notwithstanding on the claims side of our business not project management. They were two things.

One is they were across the board geographically, but primarily Asia, the Middle East and the U.S. And secondly just with my dad retiring and me coming in, I wanted to take as good a scrub on the balance sheet as I possibly could to make sure we get any outstanding receivable issues behind us.

So we can start 2015 with as cleaner slate as possible.

Okay, that’s helpful. And then I appreciate the color that you gave us on breaking out the increase in the G&A, but again the construction claims, the unemployed labor you mentioned a $2.2 million headwind there, but you still had pretty good revenue growth.

So, is that to support growth next year or is that something that you need to cut going forward and are you still looking at getting to 35% to 37% for SG&A as a percent of CFR in 2015?

Yes, to answer the last part first, yes we are, that is still our target. It seems strange to complain about the record revenues in the Claims Group, but we actually expected them to be much higher in the fourth quarter.

They were down from what we expected that the group grew 24% for the year. So, they obviously added a lot of staff over the course of the year and in the fourth quarter with less work than anticipated, they saw a big increase in unemployed labor.

It was $2.8 million for the whole company, so $2.2 million was in claims and $600,000 was in project management. So, claims, was most of it and claims was also about two-thirds of the bad debt expense.

Okay. And then last question is we hear and read a lot about what’s going on in the Middle East as it relates to their budgets and what the impact of lower oil is having can you maybe give us an update just some market color on what you are seeing in the Middle East, it seems like it’s still pretty good year given your backlog results, but I would just love to get any color?

Thanks.

Yes, I would be happy to. The countries that we predominantly do business in the Middle East are the ones that are the most stable.

The vast majority of our revenues come from essentially four countries, which is Saudi Arabia, the UAE, Qatar and Oman. And they are the four most stable countries.

So, not to worry about political instability and it hasn’t impacted our business much at all other than obviously for Libya. We have seen work slowdown significantly in Iraq, including that one project I talked about that was about $47 million that we have removed from our backlog because of funding issues with our client.

Other than that, the bulk of the operations in the Middle East were strong. We saw I think it was about 22% growth in consulting fees during the fourth quarter in the Middle East, which was to us very strong.

We have heard rumors of and then read in publications about the same kind of questions that we get asked which is, is the price of oil going to impact future spending? The answer is we don’t know.

It hasn’t impacted our operations to-date. We don’t see it impacting the current projects that we are on.

What happens in the future as far as budgets for construction development infrastructure, we just don’t know. We also don’t know where the price of oil is going to go.

It seems to have been heading up a little bit back up lately, but the reality is that the plans that are made over there are long-term in nature and aren’t really dependent upon the last week’s price of oil.

Okay, that’s helpful. Thank you.

Hi, David and John.

Good morning, Tahira.

Good morning.

So, folks if you look at your revenue target for the year, it came in a slightly below your expectations for 2014 at the end of the year, how should we be thinking about, how should we get comfortable around 2015, the revenue target you are setting, it’s up roughly at least 13% year-on-year, while your backlog is up 5%. So, anything you can provide us that can provide some comfort around that would be helpful?

Sure. We did miss slightly from the target we gave 4 months ago.

For our year end consulting fees, it was 5.80 to 5.90, I think we did 5.76. As I said, the fourth quarter despite record revenue in both PM and claims, it was less than we expected.

We had some major wins in the second half of last year that we expected to ramp up on in project management and those have been ramping up slower than expected or hoped for. And the fourth quarter was a little slower in claims than we expected.

So, we thought we are going to be right in the middle of that range and we were just a hair below it. We still need to factor that in.

We have now given annual consulting fee guidance. This is our third year in a row.

I think we have been fairly on target with those estimates. We do revise them over the course of the year as we deliver quarterly results, but we are obviously confident enough with this projection for 2015 that we put it out there in the market.

So, it’s a significant growth mid-teens. And we are as I said confident that we can achieve that.

Got it, okay. David and then in regards to the cost tightening that you talked about in the press release in today so far, how fast should we expect that, what milestones should we be looking for and how rapidly should we see that being visible in your earnings or at least in your operating margins so that we can see the visible improvements coming through?

Sure. Earlier this year before the fourth quarter numbers came out, we put together a plan to do a global review of our overhead structure and our costs and that process we expect will be done by the end of the second quarter.

And we are going to make sure that we get our overhead as low as we possibly can, so that we absolutely maximize our profitability for this year. We are expecting significant amount of growth between $75 million and $100 million of additional consulting fees.

We want to make sure we bring every last dollar of profit we possibly can out of that. I don’t want to be bringing a business that’s losing money.

We lost money last year. I think it was third out of four years than we have been not able to deliver net profit to our shareholders.

And I am certain that this year we will.

Great, thanks. And just one last question David along those lines, could you or John provide any guidance around free cash flow expectation for this year?

No.

That’s going to be the same way look I am. We typically don’t give that kind of projection out in the market.

We have some internal projections, but they also can be wildly inaccurate in either direction. Collections can be even just offset by a couple of weeks can have a big impact on what we get in a quarter.

But certainly we expect significant positive cash flow this year as we start to ramp up our EBITDA.

Got it. Thank you very much, David.

Thank you. Good morning, David and John.

Good morning.

Good morning, Pete.

When was the $47 million contract with Iraq actually canceled?

I am not sure it was officially canceled, but we removed it from our backlog because we weren’t getting additional task orders. We understand that there has been funding issues with our client, but essentially we removed it from backlog in January for the end of the year.

Okay. And given that it’s such a significant contract, it was a significant contract in a highly visible area did you give some thought to putting out a press release about that?

No, we don’t put out press releases related to our backlog adjustments positive or negative.

Okay.

All these get canceled from time to time and we include that in our ongoing backlog calculations, it was significant enough that I mentioned that related to our net sales during the quarter. Absent that, we had about $203 million or $204 million of net bookings that brought it down to about $155 million or so.

Right.

So that’s my discussion.

And talking about the revenues in the fourth quarter with a month gone in the fourth quarter, you had indicated consulting fee revenues that were about $10 million more than where you ended up, so what was the timing and the source of the slowdown that occurred in the fourth quarter?

I can break it down for you by month. We had a very strong October overall, a very weak November.

October was a month and this impacts us much more so in the U.S. than overseas, but October was the month with 23 billable days and November was the month with 18 billable days.

So, in November, we had 5 fewer billable days with exactly the same cost structure. So, we lost 5 days of revenue that came out of the bottom line.

So, we thought we would be ramping up in November to offset some of that. But November was a bad month and December is always a bad month, just because of holidays, vacations and other things.

Right. Did you actually collect a little money from Libya, because I think that the stated amount went down about $400,000?

That might have just been a rounding error or a foreign currency translation adjustment. We did – we have not collected any money in about 13 months since February of 2014.

Okay. And then David, can you give us the status of your headquarters move and what that might mean in terms of costs and savings?

Sure. We are about a month away from relocating our headquarters from Southern New Jersey into Philadelphia, consolidating our headquarters office with our local Philadelphia office and the costs will be slightly higher.

We are paying about $26 a square foot for space here and Philadelphia. Our effective rent in Philadelphia when you factor in 2 years of free rent, there is going to be effectively $29 a square foot, so not much more about 10% higher, although we are taking about 20% more [indiscernible].

Over what period of time, if you have 2 years free rent?

It’s a 12-year lease.

Okay.

So this maybe more detail than you wanted, but so it’s effectively $29 a square foot. We are taking about 20% more space there than we have combined in Philly and Marlton for anticipated growth.

And anybody that’s sitting right now in New York knows that $29 a square foot is not expensive office space. So, we are looking forward to being in there.

We are going to have some cost expansion to move. Most if not all of the costs are being paid by our landlord in the City of Philadelphia and the State of Pennsylvania.

Okay, great. Thanks a lot guys.

Thank you.

Thank you, Pete.

Hi. Two questions.

First, on the currency, you largely bill in local currency or in U.S. dollars since most of it’s in the Middle East?

We almost always bill in local currency.

And therefore there is the strength of the dollar and you pay local people I assume unless they are U.S. based in local currency as well?

Yes, we do.

So, the strength of the dollar isn’t that significant or shouldn’t be that significant, if most of the businesses is not done either on a cost of revenue basis in dollars obviously in the U.S. it is, but….

It has a lot of color, Walter than if we were a manufacturer of building in the U.S. and selling in the Middle East and our costs are in dollars and our revenues are in foreign currency.

So, you are talking about basically the profit differential. You have got some translation adjustments on our balance sheet, because our receivables, our cash held gets converted on a quarterly basis.

And so we have some impact from that. It’s typically several hundred thousand dollars a quarter recently.

John, you note the number was in the fourth quarter.

It was around some $400,000.

So that $400,000 negative impact from the strength of the dollar.

Okay, thank you. And secondly, you are now running the company David clearly the last – as you pointed out 3 or the last 4 years the company has not made money.

This past year, you only were profitable one quarter, although you did make some achievements in revenues and cleaning up the balance sheet since it’s now your company, I realize your father is still at the Board. Could you just give me an overview of your view toward management broadly not just you compensation and how or to what extent bonuses should be tied to what type of performance?

Yes, Walter, I am happy to do that. We had a couple negative years.

2012 was the loss was principally driven by a write-off of our deferred tax asset. We basically had booked our NOLs in the U.S.

and we had enough losses in a row that our auditors required us to write that off. Our loss in 2014 was primarily driven by the debt refinancing we did and $11 million charge that we took to pay off our second lien lender 2 years early.

The – I am sorry Walter that’s the second part of your question again.

I mean sort of a general view on compensation in periods in which you thought the stock is down and the company – and I realized there were extenuating factors, but there has been a series of them, the company doesn’t make any money – just should….

Yes. Let me – so I add just like on the bonus plans.

We have basically three or even four types of bonus plans here. The claims group – their bonuses are tied to individual and office performance as a motivator and getting them to achieve as much revenue as they possibly can.

It’s not tied to company performance The Project Management Group typically gets bonuses tied to their operating profit and in most cases it’s a relatively small percentage, 2%. Typically although in some situations, it’s higher.

The corporate staff has discretionary bonuses and that very much is tied to the overall corporate performance and how much is available to be paid on a discretionary basis and the exception is myself as CEO and Raouf Ghali as COO we have a bonus that’s tied to both EBITDA and EPS of the entire company.

Okay, I appreciate that explanation. Thank you, David.

Yes. We also, Walter, have in many cases at the very highest levels the company’s stock options, but obviously only valuable if the stock moves forward and that’s a significant part of my compensation certainly going forward.

Hi. I just had another follow-up question on the construction claims business.

I know that you had mentioned earlier that large part of the margin compression came from unemployed labor. And I was just curious if you could dive a little bit deeper into that and just maybe help me better understand why that part of the business struggled so much in the fourth quarter in terms of bringing costs back in kind of what your expectation is for kind of how quickly you can ratchet that end?

Yes. The Claims Group through three quarters was having a terrific year, 24% growth eventually for the year with record revenues, record operating profit.

In the fourth quarter, they expected that to continue. They have added staff over the course of the year anticipating not just continued growth in 2014, but more growth in 2015.

And as can happen to a consulting practice that has relatively short-term assignments that can stop and start with very little predictability or visibility, they had a slower quarter than they expected, even though it was still a record quarter in consulting fees and had higher billable staff than they needed for the work. And as a result, unemployed labor was up in the Claims Group by $2.2 million.

The overhead review that we are going through in the first half of this year is obviously across the entire company, corporate project management and claims and there will be a part of the review to see whether or not they have overstaffed a little too much and whether we can get our costs back in line with what our revenue is expected to be going forward.

Okay. And what is the term of these contracts that you are generally standing up this extra labor for, I mean is it – can it be kind of ratcheted in fairly quickly or I know that you had mentioned that you are putting on extra overhead expecting more work and I understand there is less predictability or consistency in the work you receive.

I am just trying to understand how quickly you can kind of rein in labor cost as needed if work is not there?

Yes, a couple of things. One is there is almost never a term to our assignments in construction claims.

We are told to start work, do something and we continue working until the client tells us to stop. So, we may not know on day 1 that this is a 6-month or a 12-month assignment.

We may not know if the claim settles in the middle of our work and then we have got people that with nothing to do for a while until we can get them re-billable, but these are people we added to the overhead. These are billable professionals that we added to the operations.

The way we keep score is that unemployed labor, which is that cost for billable people when they are not billable and that’s to be distinguished from indirect labor, which is the cost of overhead people. So, we really not expect it to ever be billable.

Unemployed labor moves into SG&A when people aren’t busy. They are direct costs, which is the cost of them when they are billable is direct cost and comes between consulting fees and gross margin.

So, we have faced this before where we have a slow, let’s say, claims has a slow quarter and it looks like SG&A took a big pop up and people are asking the question, that’s a reasonable question to ask if you don’t know how we calculate these numbers, that you had a slow quarter, why did you increase your overhead? Well, we didn’t do it automatic – we didn’t do it by hiring indirect staff.

It happened automatically because as people aren’t billable, their costs become part of SG&A and that’s what happened to us in the fourth quarter.

Thank you.

Thank you, Stewart.

I just wanted to touch on the overhead question and on your guidance. I mean again in the year, it sounds like you actually had – you still have people that were you didn’t kind of lose any headcount, but given that you have got 15% growth approximately in your guidance for ‘15, do you expect to grow into that overhead throughout the year?

I guess that’s part one of the question. And then part two is do you think you have to actually staff up further to meet what you think is going to be 10% to 15% – I am sorry be 13% to 17% revenue guidance growth?

Yes. We will certainly need to add staff to achieve that and I think that we will add staff and we will achieve those revenue targets.

The trick is to add the staff more slowly and to get the people you already have more billable. So, you can get revenue for their time and you can take their unemployed labor out of our overhead cost and get that number as low as we possibly can, but we certainly can’t grow 13% to 17% with our current staff.

But the folks who you have hired today who are sort of idle a little bit in the fourth quarter, you had AR payable to do some of the work that you have got in your backlog for the first part of ‘15 to have those kind of skills and knowledge, is that something….

Yes, it is fair to say and if you look at our press releases over the last let’s say two quarters, because we always announce what our total staff is, we are at 4,600 we have been that for about 6 months now. You can see we are not ramping up drastically, we are trying to get the people we have more billable and absorb that unemployed labor first and then grow from that.

And then as you are trying to get through some of the overhead here, do you have any plans to of course I guess to size Philadelphia consolidate any of your other offices throughout the world to kind of saving overhead, is that part of the plan or are there other way you can kind of get some of those fixed costs down?

We could consolidate LA and San Francisco, but I think that would require a major earthquake to move those two cities close together. This was an obvious relocation just because I think being downtown at Philadelphia makes more sense for our headquarters.

That gave us the chance to consolidate two of our biggest offices, which are only about 20 to 30 minutes apart. Elsewhere I don’t really see that happening anywhere.

We have been very cautious in the last couple of years about adding new offices. We have opened a few here and there, where we have seen strong demand locally.

Certainly in project management, you have to physically be where the projects are. In claims, you can have more sort of regionalized offices that can serve an entire region just from one office.

But we have also been at about 100 offices for several years now other than picking up a new office here and there from acquisitions. We very infrequently will open a new office.

And our goal for a long time has been gaining critical mass include doubling the size of the business by not by doubling the offices from 100 to 200, but by doubling the size of each office we can bring a lot more profitability out of doing that. And I think we are certainly growing into our overhead and at the same time we are trying to trim it around the edges and get it down this year.

So, we can be profitable in 2015 and even more profitable going forward.

Okay, fair enough. Thanks very much.

Hey, guys. Good morning.

Good morning.

Good morning, Mike.

Yes. So, most of my questions were answered, but Dave I was wondering maybe you can just give us an update on the competitive landscape just given the inflationary period of commodities, stronger dollar what have you.

Has bidding behavior changed from any of your customers or maybe some of your clients on in terms of pricing pressure or any of that sort?

No, we haven’t seen any change in pricing pressure or anything else. Our clients really aren’t hiring us based on price.

They are hiring us on a number of factors, all of which tie to our technical capabilities to help them on their project or on their claim. This is not an industry where the low bidder gets the work the vast majority of the time.

So, the pricing hasn’t impacted our business, hasn’t impacted our gross margins, nor do we expect it to.

Okay, fair enough. And John, how should we think about the effective tax rate in 2015?

For 2015, you know that our income taxes can vary quarter-to-quarter depending on where the profit is located and what jurisdiction, but we are projecting that will be mid to high 40s overall, but there maybe some ups and downs, but overall we think it’s going to be in the mid to high 40s.

Perfect. That’s all I have.

Thanks guys.

Thanks.

Thank you, Mike.

Thanks. So, David as so much hinges in terms of your margin expansion story on your delivering the revenue side of the equation, could you talk a bit more on when you said that $650 million to $675 million and given that you have seen some lumpiness and progressively saw some of the projects ramping up little more slowly, what kind of incremental caution potentially you have taken or cushion you have taken when you look at the revenue projections for this year?

Certainly, there is some cushion built into that number. It’s conservative enough that we expect and as I said before we are confident that we can reach it.

We will refine the number over the course of the year. The variability typically would be up on the claims side just because it’s we have a lot less visibility and how they are going to perform going forward.

We have a lot of confidence on the project management side, which is 75% of our business and 75% of our revenues that, that number for them is achievable. Given the long-term nature of those contracts and are at the phase [ph] we want to put it out there if we weren’t confident, we are going to hit it.

Got it, okay. And then as we look at opportunities for this year, clearly the U.S.

seems to be the bright spot globally this year, so can you talk a bit about backlog growth whether you do see that being achievable on an organic level and I assume more of that is going to be coming from domestic sources?

Yes. And I think that’s true and I think it will.

If you look at 2014 historically the biggest contracts we are winning in the world were in the Middle East, just because of the size of the projects and the level of our involvement in them. If you look at last year, I think our biggest contracts and the most – number of them came from the United States.

And I think that’s a very good sign for growth not just in 2015, but going forward in this market. We are expecting growth in most regions of the world.

We are expecting the Middle East to continue to grow, but certainly still not to the level it has been over the last couple of years. I think 2 years ago, we saw 80% growth in the Middle East, which was a result of I think 4 or 5 very large contracts that ramped up very quickly.

I don’t think on the bigger base now that we are going to see 80% growth in that business anytime soon. But certainly we are projecting strong growth in that market.

We are expecting strong growth in the U.S. We are very pleased to see last year that our European business grew after about 5 years of shrinking and we are expecting strong growth in Europe this year and elsewhere.

We had a great quarter. I think our fastest growing region in the fourth quarter was Asia-Pacific, which was a very good time.

And I think our entire management team, are very confident that this is going to be a very strong year on the top line.

Got it, okay. And I guess last question for me, David, if you look few years out, where do you see your revenue mix settling down as the U.S.

grows organically potentially faster and given that’s where you are making your inorganic investments? And also in regards to that, what you do at least directionally expect your DSOs to do as a consequence?

Our DSOs are naturally high just because of the nature of this industry, but ours are unusually high because of the heavy concentration of the Middle East business, which is the – for us the slowest player of any of our geographies. I don’t see the Middle East becoming more than half our business, that’s where it is now.

I expect that number to come down over time. I think the U.S.

will pick up. I think Asia will pick up.

I think Europe will have a very strong year. We are pushing into some new markets like South Africa in the Claims Group.

We have been in Australia now for about 4 years. That market looks like it’s going to be a strong one for us long-term.

Latin America has been disappointing, but we are hoping that, that market will do better long-term, the longer we have been there and the more relationships that we have built. It’s been a very strong market for the Claims Group.

They pushed into that market just a couple of years ago. So, I expect that the U.S.

will be a much bigger component of our business going forward than 20%. And as you said and as I said before, our acquisitions are more focused on the U.S.

market than anywhere else and hopefully that will drive growth here as well.

Thanks a lot.

Thank you. Yes, I don’t want to beat this too much, but you do expressed a lot of confidence, David, in the revenue guidance for this year, if we look at the orders that came in for 2014 and just for Iraq they were up about 10%.

We are facing a strong dollar very weak oil prices, generally sluggish economies around the world. And so I guess the question that comes up is as you look out and your crystal ball is fairly short-term, is your confidence based more on the overall pipeline or is it a lot on unannounced deals that you already haven’t had?

It’s based on everything that we know as of right now that includes the backlog that we have disclosed, the work that we have won so far this year that hasn’t been announced, but hopefully will be soon. The backlog change in the Claims Group was the almost de minimis, but we are expecting growth out of that operation as well that wouldn’t be reflected in the backlog.

And I really can’t say anything more than over the course of this year when we announce first quarter numbers in early May which will be on May 4, we have a – we will have a review of that number and how closely we are to target. And then we think we need to make an adjustment up or down we will do that.

Can you give us any sense of the magnitude of unannounced contracts at this point, I mean in the tens of millions of dollars or anything you can help us to get a handle on that?

Not really.

Okay, fair enough.

But not off the top of my head right now, but there is always a lag in between winning work in the press releases, there are lot of clients and I said it before surprising number of clients today don’t want us announcing anything, no press release or make us wait a quarter or two either because they just don’t want press coverage or they want to be the first one to announce their project. So, we have more projects than we have announced.

And since we are going to announce any specific project we won’t.

Okay, great. Thank you.

Thanks Pete.

Good morning, Dave. Good morning John.

Good morning.

Good morning, Mark.

As you know I have been on these conference calls over the years, I have been a loyal shareholder for quite a number of years been through the lean times and the remark that seems to be popping up is that the expenses are higher than we have expected and from time to time we are hitting record revenues. And it just seems to be the déjà vu all over again.

Why can’t we get the expenses to a point where we are making profit dollars as opposed to just generating salaries and generating revenues? That’s the first part of my question.

Second part of my question, if we factor out the one-time charges on the closing of the new financing, all things being equal this year to next year, this past year to 2015 with the anticipated revenues where do you see the profitability going forward?

Let me answer that one first. We have given now consulting fee guidance for three years.

We have not given any kind of either EBITDA or EPS guidance. You can see the variability of our performance that numbers can swing wildly, even when the revenues are exactly where we expect them to be.

So, we haven’t wanted to give any kind of earnings guidance at all, I am not going to do on this call. Your first question is a fair one which is we keep delivering record consulting fees and 3 of the last 4 years we have lost money and I can tell you I started telling why before.

Typically, there is one large item that drives us from a profit to a loss. Last year, we had $11 million charge on refinancing.

It was a very positive event for the company. We also had three quarters of higher interest than we are going to have going forward and that savings is going to drop right to the bottom line, because not to be tax effected, because we don’t pay to U.S.

taxes. So, the interest line will be a lot improved this year.

The EBITDA line I can tell you will be a lot improved from last year. I am going to make sure that that happens.

And the overhead is high because we are a business providing professional services to our clients. We have a lot of competition.

Most of our competitors – many of our competitors are 10 or 20 times our size with more resources and a lot of our other competitors are a lot smaller firms with a lot less cost than we have. And we have to make sure that we do everything we can to win work and perform the work at an exceptional level.

And I think we have done that and have done that though some of the 20 years I have been here, I think my dad would say for 40 years now. That’s an expensive process.

It requires having very high level people and those people are expensive and we get rated by our competitors and we do the same to them. And it drives labor cost up, but I think we have a team here at Hill that’s for what we do the best in the world.

And I wish I could just go through and have everybody take a big pick up, but that’s not going to help us keep those people and they are the reason we are successful. We are going to take the really strong look over the next couple of months that where we can cut our expenses.

I foresee 75% of our expenses are people. So, my guess is 75% of any cuts we make are going to be people, but we are going to do that in a way that doesn’t impact our revenue growth this year and doesn’t impact the quality of the services we deliver to our clients.

It seems to me that and as you mentioned earlier that in every one of your press releases you indicate the number of employees that are in the company. And I might be wrong with the numbers, but it seems to me a year or 2 years down – 2 years ago that number was in the low 3,000s and now all of a sudden we are back up in the mid 4,000s and maybe you might want to look at is the increased revenue at the expense of the increase personnel worth it, are you better off doing less business with less overhead creating more profitability, if you say 75% of your expenses as people, maybe that’s where we need to look?

Yes, most of the growth – the vast majority of the growth in people that you have seen over the last couple of years are billable people. Our corporate group has not found much at all, but certainly the two operating groups have their own overhead.

We think the opposite. We think that we can get better profitability by growing the business, not by shrinking it and that’s why we are so focused on top line revenue growth.

We had a five very difficult challenging years during the recession, but we average 6% growth. We have now two years of double-digit growth.

We are expecting a third year this year. And we think as we get bigger we can leverage that growth and bring more profitability out of this business.

So, we don’t think retrenchment is the right way to go, we think for the growth is.

Well, I would think that you would be looking to grow into not looking to over anticipate personnel looking for the job as opposed to outgrowing the personnel and then adding which everything becomes incremental profit dollars?

Yes, I think that’s true. That’s certainly a lot easier to do on the project management side of our business, where we have a lot more visibility in the one the work starts and when it ends.

It’s much more difficult in the claims side and that’s the challenge that they had in the fourth quarter was they all will have themselves regarding staffing relative to their workload, but that can change quarter-to-quarter. And we have got to make sure that right now that they have not extended or they are not hiring until their existing people in billable.

And I think you will see the results of that this year, no question.

Well, we certainly hope so.

Thank you, Mark.

Thank you very much. We had a lot of accomplishments in 2014, but unfortunately, we were not able to deliver net profit to our stockholders last year.

We are working hard to make sure that our company not only continues its strong growth in backlog and revenues, but also significantly improves on our profitability. We were able to lower our interest expense in a major way last year.

Our focus this year is through the same to our overhead expense. We are certain that we can continue to improve our businesses fundamentals and deliver positive profitability in 2015.

Thank you all for your interest in our company and for participating in our call this morning. We are looking forward to our next earnings call which will be on May 5.

Thank you.