Hill International: Thar's gold in this hill
Hill International Inc. (Nasdaq: HINT)
Marlton, N.J.
http://www.hillintl.com/
52-week low / high: $8.07 / $13.10
Shares Outstanding: 36.13 million
Market Capitalization: $384.39 million
If you spend time surfing the Web, you may have seen the incredible pictures of recent Dubai construction projects. One of the most striking is a series of artificial islands that, when viewed through satellite pictures, form the shape of a palm tree. When completed, the Palm Jumeirah will be home to 32 five-star hotels, a monorail, four marinas, 60,000 residents and ample entertainment and retail offerings. As an investor, you might be thinking, “Who is making money off this amazing project?”
Hill International Inc. (Nasdaq: HINT), a small-cap based in New Jersey, is among the many companies profiting from Dubai’s explosive growth. The international construction manager is currently managing the construction of 1,300 villas on the Palm Jumeirah, among several other Dubai-based projects.
A wide geographic and client-type mix keeps Hill’s revenue diversified. About 20% of revenue comes from the U.S. government, 14% from foreign governments and the rest from private-sector companies. In terms of geography, about 18% of the firm’s sales come from Europe, 38% from the Middle East and 43% from the Americas.
Much of Hill’s income comes from contracts that have terms of three to five years. On Jan. 9, the company said at a CJS Securities conference that the “predictable nature of these contracts provides a stable base of recurring revenue and provides increased visibility of future performance.” At the end of fourth quarter of 2007, Hill’s 12-month order backlog had increased to $179 million, from $95 million a year earlier.
Over the last 52 weeks, Hill’s stock price has ranged from $6.60 to $14.35. The recent momentum has been positive, in spite of the overall market turmoil. The 52-week low was set a year ago on Jan. 24 while the year-high was established on Dec. 31, after Hill announced it received a four-year, $9.8 million contract to provide project management services for a tower construction project in Abu Dhabi.
The 32-year-old company is moderately owned by insiders. Fifty-two percent of Hill’s shares are held by insiders and 20% of 28.59 million outstanding shares are held by institutional owners.
In the most recent quarter, Hill posted net income of $3.8 million, or $0.13 per share, up from $2.9 million, or $0.12 per share, a year earlier. Revenue for the three months ended Sept. 30 rose to $72.2 million, from $49.9 million during the same period of 2006.
“We are extremely pleased with our excellent financial performance in the third quarter, having achieved record revenue, profits and backlog,” CEO Irvin E. Richter said in a statement. “We expect continued strong performance during the remainder of 2007 and beyond.”
The company’s fourth quarter ends in December. Last year, Hill reported its fourth quarter results in March.
At the Jan. 9 investors conference, Hill made a pitch to investors. Executives said the firm has high margins, low risk, a proven management team and is the only pure-play project management company. Additionally, Hill management mentioned that the company has an attractive valuation below its peer group.
Although this company’s stock price had a significant run-up in the fall, Hill International has kept announcing new, and lucrative, contracts and considerable upside may still exist.
Note: Hill International (Nasdaq: HINT) is on the “Watch List” of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Hill displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.
