Williams Industrial Services Group Inc.

Thank you, Christine, and good morning, everyone. We certainly appreciate your time today and your interest in Global Power.

On the call with me are our President and CEO, Tracy Pagliara; and Chief Financial Officer, Erin Gonzalez. We will begin with our prepared comments, and then open the call for questions.

After the close of market yesterday, we released our first quarter 2018 financial results and filed with The Securities and Exchange Commission our first quarter 2018 Form 10-Q. You can find these documents and the slides that will accompany today's conversation on our website at www.globalpower.com.

If you open the slide deck, I will review the safe harbor regarding forward-looking statements.

As you are aware, we may make some forward-looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events, which are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today.

These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with the Securities and Exchange Commission. You can find those documents on our website or at sec.gov.

During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance.

You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. When applicable, we have provided a reconciliation of the non-GAAP measures to comparable GAAP measures in the tables that accompany today's release and slides for your information.

So if you would turn to Slide #2, I will turn the call over to Tracy to begin. Tracy?

Thanks, Deb, and good morning, everyone. While it's only been about 5 weeks since we last talked, we are happy to report that we had a solid first quarter that underscores the potential of our business.

We are headed in the right direction to become a leader in specialty construction, maintenance and modification and plant support services for the energy and industrial end markets we serve, including nuclear, hydro and fossil power generation, as well as pulp and paper, refining, petrochemical and other industries.

Excluding Hetsco's revenue and a reserve reversal for last year's first quarter, revenue was up 8% for the first quarter of 2018 to $43.1 million. Importantly, we achieved a gross margin of 15%, validating our earnings potential.

Backlog was $151 million -- $150.1 million at the end of the first quarter, as we had previously reported. This provides a solid base for delivering a successful 2018.

In fact, our operating activities generated $7.1 million in cash from continuing operations during the first quarter, which is a significant step forward. We have a business that can generate positive cash flow and a significant upside potential due to the strength of its service offerings and end markets.

We have multiple bidders for our Koontz-Wagner business and have stabilized our Houston facility. We continue to work towards our goal of having Koontz-Wagner sold by the end of June.

Please turn to Slide #3. Based on the growing momentum in our business, the board has eliminated from consideration the potential sale of Global Power and/or our Williams subsidiaries at this time.

We are now focused on growing the top line revenue and bottom line operating income of our business. In order to increase our revenue, we are building out our physical presence in new markets.

We recently opened new offices in Houston to support the oil and gas industry, and in Ontario, Canada to expand our Nuclear Services geographically. We are on the approved bid list for prospects in both regions and have a great degree of confidence in our potential to grow revenue in these markets.

We have been gaining significant additional scope at Vogtle 3 and 4 directly with the owner. We also have been gaining more scope with our long-time customer TBA both directly and indirectly.

In fact, we have been building upon our relationships with larger engineering and procurement contractors. Again, our unique capabilities and strong reputation to deliver on time and safely helped to augment opportunities with larger EPC contractors.

We are encouraged by Energy Northwest management's recommendation to renew our maintenance and modification contract, subject to final approval of the Energy Northwest Board of Directors.

We are expanding geographically with the drive fuel storage project for a nuclear facility in the Midwest. In the first quarter, we also won a wastewater project in the Southeast.

To further grow operating income, we also plan to reduce our general and administrative expenses to a $14 million to $18 million annualized run rate by the end of 2018. We expect to incur $8 million to $12 million in restructuring cost to implement this plan.

In addition to these other initiatives, we are also planning to recapitalize our balance sheet. Erin will cover these plans in greater detail.

With that, let me turn the call over to Erin.

Thank you, Tracy, and good morning, everyone. During today's conference call, we will cover our first quarter 2018 financial results in detail and will generally follow the presentation slides provided.

Towards the end of the call, I will provide an update on our progress with our financing. As previously reported, the Mechanical Solutions and Electrical Solutions segments have been classified as discontinued operations, and accordingly, the results for those segments are presented as such.

Results are presented as a single segment comprised of a former Services segment or Williams, and corporate operation unless otherwise noted.

Now I will review our operational results for the first quarter of 2018. Please turn to Slide #4.

First quarter revenue was $43.1 million. As illustrated in the revenue bridge, the first quarter of 2017 was favorably impacted by $1.2 million of revenue from our divested business, Hetsco, and a $4.4 million reserve release for liquidated damages.

After excluding those impacts, revenue increased 8% over the first quarter of 2017.

We had an $8.4 million increase in revenue from the construction activities at Plant Vogtle Units 3 and 4 in the 2018 first quarter, more than offsetting lower revenue of $3.3 million related to nonrecurring nuclear, fossil fuel and other industrial projects, and a $2 million decline due to the timing of a nuclear outage in the 2017 first quarter.

Please turn to Slide #5. In the first quarter of 2018, our gross profit increased $8 million to $6.5 million, and margin improved to 15%, which is back to historical performance levels.

As highlighted in the gross margin bridge on this slide, the improvement over the prior period came from nonrecurring loss contracts in the first quarter of 2017.

Please turn to Slide #6. Our operating loss decreased $11.2 million to a loss of $800,000 in the first quarter of 2018, primarily as a result of the improvement in gross margins.

Restatement expenses decreased $1.6 million compared with the prior year period, due to the wind down of the restatement process. Also important to note, general and administrative expenses decreased $1.4 million, due primarily to a $700,000 decrease in labor-related expenses and a $500,000 decrease in stock-based compensation.

Please turn to Slide #7. Our adjusted EBITDA for the first quarter of 2018 improved significantly due to the $9.4 million decrease in net loss from continuing operations.

Please turn to Slide #8. In the first quarter of 2018, we generated positive cash from operations, including discontinued operations of $2.2 million.

At the end of the first quarter of 2018, cash and cash equivalents were $8 million, which is an improvement on cash and cash equivalents as of 2017 year-end of $4.6 million. Our outstanding term loans debt at the end of the quarter was $25 million.

We are currently in active discussions with various potential lenders and our efforts to secure an asset-based revolver, which will secure our letters of credit and provide incremental borrowing capacity. When this new revolver is in place, the restricted cash currently securing letters of credit can be released and will be used to pay down our term debt.

Following the sale of Koontz-Wagner, we plan to refinance our existing term debt under more favorable terms.

With that, operator, we can open the call for questions.

Looks like you're making solid progress. I just have a quick question on the reduction of SG&A.

That's a pretty big number that you've targeted. And I'm just wondering, exactly, how you get there?

What specific actions you're going to be taking? And what will drive the restructuring costs?

Absolutely. So what we're planning on doing is we're going to consolidate our corporate office into our Tucker, Georgia office.

So that -- under the One Company concept. And so what that will mean is that there's going to be significant headcount reduction in our corporate office here in Dallas.

And also we will have a lot of savings related to IT cost. So that plan's already been in motion, and it will continue throughout this year.

Okay. So how much will the headcount come down, relative to year-end?

So the headcount will come down, in our corporate office, significantly -- probably, about -- it will be 25% of what it was to start the year. And again, we'll have all reporting functions in -- going up to our Tucker, Georgia office.

So where do you expect the headcount to be at the end of this year?

In our corporate office?

No. Total.

Total headcount, probably, about 500 people. But again -- and that would be full-time equivalents, but that, again, over our business not just -- that's not our corporate function.

Okay. Let me rephrase it.

How many do you expect to reduce the corporate headcount by?

About 20 to 25 people.

Okay. And most of the restructuring cost is related to the reduction of 20 to 25 people?

Yes. That's correct.

This is Tracy Pagliara. Thank you, everyone, for participating in our earnings conference call.

We appreciate your time and interest in Global Power. We are excited to see encouraging progress in the business after working through what has been a difficult period.

There is still much to do, but we are very confident there will be positive outcomes ahead for all of our stakeholders.

We look forward to talking with you all again after our second quarter results. Thank you, and have a great day.