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MIAMI, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Montana Advisors Ltd and its affiliates (collectively“Montana”) issue open letter to The Board of Directors of Williams Industrial Services Group Inc (NYSE:WLMS)
Dear Members of the Board of Directors:
Montana Advisors is a significant stockholder of Williams Industrial Services Group Inc., owning roughly 323,000 shares of the Company's outstanding common stock. We trust that the Board shares our common goal of maximizing value for all WLMS stockholders, while also creating a culture of accountability. However, as a large stockholder, I am compelled to publicly express in writing my severe disappointment with the Company's complete lack of progress and missteps.
WLMS is a structurally sound business serving important industrial end markets in North America, therefore it disappoints us that the Company has completely failed to deliver on key financial metrics, including revenue growth, margins, and EBITDA. While we understand many of the current issues are“one time” events, we beg to ask the question, how much longer can the Board preside over millions of dollars of destroyed value. Furthermore, and even more alarming to me than the Board's oversight of stockholder value is its oversight of the loss of a large Canadian contract, continued losses on fixed price contracts and former employee litigation, events that continue to drag on the business. We believe the value destruction at WLMS must end, and therefore we are proposing the following actions to maximize and protect stockholder value.
Actions To Maximize and Protect Stockholder Value
The Board must release a detailed three-year plan outlining the issuers value creation plan for stockholders by year-end, 2022. We believe WLMS has the opportunity to achieve $15 million of EBITDA in 2023 and greater than that in 2024. With limited cash tax expenses we believe this would result in at least an annualized run rate of $.50 cents/share in free cash flow by year-end 2023. At a 10x free cash flow multiple WLMS would be worth $5 by year-end 2023. Management must implement a roadmap that includes a continued assessment of corporate culture and people, sales growth opportunities, sourcing and bidding processes, and margin expansion opportunities. In order to avoid future cost overruns and legal issues the Board should also create a risk committee to oversee fixed-price contracts and corporate culture risks. The Company should also accelerate the process to reduce all unnecessary and unusual corporate expenses in order to ensure an EBITDA margin of 5% or greater starting in 2023.
The Company's investor relations program should undergo a complete overhaul to foster investor confidence in management. We strongly urge the Company to avoid wasting time attending public conferences and shift valuable time, energy and resources to Company related issues including cost overruns, employee morale and project bidding.
By the end of 2023 the Company should establish a strategic alternatives committee led by Chairman Robert Mills. We believe there are many interested buyers for WLMS. After a few quarters of successfully executing against its three-year plan we believe buyers would be willing to pay at least a market multiple for the company's 2023 earnings run rate. In the meantime the Board has a fiduciary duty to consider any strategic alternative that will generate the highest return for stockholders and properly compensate shareholders for the expected increased demand in Williams end markets over the next five years.
I would like to reiterate that we are committed, long-term shareholders whose priority is to work with the Board. We think Williams has a unique opportunity to create significant value for all of its stockholders, however we demand the Board immediately set specific, measurable targets and finally hold management accountable. We look forward to a quick and favorable response.
Respectfully,
Kunal Mehta
Contacts:
Kunal Mehta
Co-Founder & President, Montana Advisors
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