WILLIAMS INDUSTRIAL SERVICES GROUP INC. Management’s analysis of the financial position and operating results. (form 10-Q)

Caution Regarding Forward-Looking Statements

This Form 10-Q and its exhibits contain or incorporate by reference various
forward-looking statements that express a belief, expectation or intention or
are otherwise not statements of historical fact. Forward-looking statements
generally use forward-looking words, such as "may," "will," "could," "should,"
"would," "project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan," "forecast" and other words that convey the uncertainty of
future events or outcomes. These forward-looking statements are not guarantees
of our future performance and involve risks, uncertainties, estimates and
assumptions that are difficult to predict. Therefore, our actual outcomes and
results may differ materially from those expressed in these forward-looking
statements. Investors should not place undue reliance on any of these
forward-looking statements. Except as required by law, we undertake no
obligation to further update any such statements, or the risk factors described
in our 2020 Report under the heading "Part I-Item 1A. Risk Factors," to reflect
new information, the occurrence of future events or circumstances or otherwise.
The forward-looking statements in this Form 10-Q do not constitute guarantees or
promises of future performance. Forward-looking statements may include
information concerning the following, among other items:

? our level of debt;

our ability to make interest and principal payments on our debt and to meet

? financial and other commitments contained in our credit facilities, as well as our

ability to engage in certain transactions and activities due to limitations and

the commitments contained in these facilities;

our ability to generate sufficient liquidity to continue financing

operations, including working capital investments needed to support

? growth commitments we make to our customers and the potential

that we may not be able to secure additional financing as needed or to commit

operating losses in the future;

? exposure to market risks associated with changes in interest rates, including

or replacement of LIBOR;

? failure to maintain effective internal control over financial reporting and

future disclosure controls and procedures;

our ability to attract and retain qualified personnel, skilled workers and

? agents, including the potential impact of the federal COVID-19 vaccination

mandate, or any mandate imposed by our clients, on our ability to recruit

and retain employees;

failure to successfully implement or achieve our strategies, plans and

management objectives and liquidity, operating and growth initiatives and

? opportunities, including our expansion into international markets and our

ability to identify potential candidates for the acquisition and to carry it out,

disposal or investment transactions;

? the loss of one or more of our important customers;

? our competitive position;

market outlook and trends in our industry, including the possibility of

? investments in or increased regulation of nuclear power plants and the reduction of

building public infrastructure and reducing public funding,

including funding from state and local agencies;

? the failure of the American congress adopt infrastructure legislation

benefit our end markets;

? costs in excess of the estimates we use to establish fixed price contracts;

damage to our reputation or profitability due, among other things, to

? operational problems, poor performance of the subcontractor or subcontractor

insolvency;

? the potential insolvency or financial hardship of third parties, including our

customers and suppliers;

? our backlog and related amounts to be recognized as revenue;

? our ability to maintain our safety record, potential liability risks and

adequacy of insurance;

adverse changes in our relationships with suppliers, vendors and

? subcontractors, including cost increases, supply disruptions or shortages

labor, freight, equipment or supplies, including due to COVID-19

pandemic;

? compliance with laws relating to the environment, health, safety and other laws and

regulations, including those related to climate change;

? limitations or modifications to the compensation regulations of the we Where

Canada;

? our expected financial condition, future cash flows, results of operations and

future capital and other expenditures;

? the impact of general economic conditions, including inflation,

economic disruption and any recession resulting from the COVID-19 pandemic;

the impact of the COVID-19 pandemic on our activities, our operating results,

financial condition and cash flow, including global supply chain disruptions

? and the possibility of other cases of COVID-19 occurring at our active premises or

future projects, as happened before in our Vegetal site in Georgia,

which could have an impact on the costs and availability of labor;

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? information technology vulnerabilities and cyber attacks on our networks;

? our failure to comply with applicable laws and regulations, including, but not

limited to those relating to privacy and the fight against corruption;

? our participation in multi-employer pension plans;

? the impact of any disruption resulting from the expiration of the collective agreement

negotiation agreements;

? the impact of natural disasters and other serious catastrophic events (such as

the ongoing COVID-19 pandemic);

the impact of changes in tax laws and regulations, including future taxes

? payments and use of net operating loss and foreign tax credit

postponements;

? market price volatility for our common shares;

? our ability to maintain our stock market listing;

? the effects of anti-takeover provisions in our organizational documents and

Delaware law;

? the impact of future offers or sales of our common shares on the market price

of this stock;

? the expected results of legal or regulatory proceedings and their

the effects on our operating results; and

? any other statement regarding future growth, future cash flow requirements,

future operations, business plans and financial results.

These forward-looking statements represent our intentions, plans, expectations,
assumptions, and beliefs about future events and are subject to risks,
uncertainties, and other factors, including unpredictable or unanticipated
factors that we have not discussed in this Form 10-Q. In addition, some of these
risks, uncertainties and other factors have been, and may further be,
exacerbated by the COVID-19 pandemic. Many of those factors are outside of our
control and could cause actual results to differ materially from the results
expressed or implied by the forward-looking statements.

In light of these risks, uncertainties and assumptions, the events described in
the forward-looking statements might not occur or might occur to a different
extent or at a different time than we have described. Investors should consider
the areas of risk and uncertainty described above, as well as those discussed in
the 2020 Report under the heading "Part I-Item 1A. Risk Factors" and in this
Form 10-Q under the heading "Part II-Item 1A. Risk Factors." Except as may be
required by applicable law, we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, and we caution investors not to rely upon them unduly.

The following discussion provides an analysis of the results of continuing
operations, an overview of our liquidity and capital resources and other items
related to our business. Unless otherwise specified, the financial information
and discussion in this Form 10-Q are as of and for the three and nine months
ended September 30, 2021 and are based on our continuing operations; they
exclude any results of our discontinued operations. Please refer to "Note
4-Changes in Business" to the unaudited condensed consolidated financial
statements included in this Form 10-Q for additional information on our
discontinued operations.

This discussion and analysis should be read in conjunction with our unaudited
condensed consolidated financial statements and notes thereto included in this
Form 10-Q and our audited consolidated financial statements and notes thereto
included in the 2020 Report.

Backlog

The services we provide are typically carried out under construction contracts,
long-term maintenance contracts and master service agreements. Total backlog
represents the dollar amount of revenue expected to be recorded in the future
for work performed under awarded contracts.

Revenue estimates included in our backlog can be subject to change as a result
of project accelerations, cancellations or delays due to various factors,
including, but not limited to, the customer's budgetary constraints and adverse
weather. These factors can also cause revenue amounts to be recognized in
different periods and at levels other than those originally projected.
Additional work that is not identified under the original contract is added to
our estimated backlog when we reach an agreement with the customer as to the
scope and pricing of that additional work. Backlog is reduced as work is
performed and revenue is recognized, or upon cancellation.

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Backlog is not a measure defined by GAAP, and our methodology for determining
backlog may vary from the methodology used by other companies in determining
their backlog amounts. Backlog may not be indicative of future operating results
and projects in our backlog may be cancelled, modified, or otherwise altered by
our customers. We utilize our calculation of backlog to assist in measuring
aggregate awards under existing contractual relationships with our customers. We
believe our backlog disclosures will assist investors in better understanding
this estimate of the services to be performed pursuant to awards by our
customers under existing contractual relationships.

The following tables summarize our order book:

(in thousands)    September 30, 2021     December 31, 2020
Cost plus        $            604,323   $           430,694
Lump sum                       68,183                13,156
Total            $            672,506   $           443,850





(in thousands)                        Three Months Ended September 30, 2021     Nine Months Ended September 30, 2021
Backlog - beginning of period        $                               664,357   $                              443,850
New awards                                                            76,774                                  376,228
Adjustments and cancellations, net                                     4,726                                   78,201
Revenue recognized                                                  (73,351)                                (225,773)
Backlog - end of period              $                               672,506   $                              672,506




Total backlog as of September 30, 2021 was $672.5 million, compared with $443.9
million on December 31, 2020, an increase of $228.7 million, which was primarily
driven by our decommissioning work, which accounted for $224.6 million of the
increase. Our fossil and wastewater markets also contributed to a $28.3 million
increase in backlog. These increases were partially offset by a reduction in our
nuclear market backlog of $29.4 million. We estimate that approximately $207.4
million, or 30.8% of total backlog on September 30, 2021, will be converted to
revenue within the next twelve months and $73.4 million, or 10.9% of total
backlog, will be converted to revenue within the remainder of the fiscal year.
As of December 31, 2020, we estimated that approximately $165.3 million, or
37.2% of total backlog, would convert to revenue in 2021.

Results of operations

The Company continues to monitor several factors that may cause actual results
of operations and financial results to differ from our historical results or
current expectations. These factors include: inflationary pressures, the
political environment, work delays on projects and supplies, labor shortages and
rising labor costs, new laws, regulations and guidelines, new project
requirements, and the impact of the COVID-19 pandemic, including the
consequences of governmental and other measures designed to prevent the spread
of the virus, including the potential impact of applicable vaccine mandates on
our labor supply and future results of operations, as well as any impact of such
mandates on our customers, the continued sporadic outbreaks of COVID-19 cases
and the ongoing spread of the new COVID-19 variants, the impact of COVID-19
vaccines, including the speed at which they, or related "boosters," are
approved, disseminated and widely adopted, and their effectiveness against
COVID-19 and its evolving strains, and the ultimate duration and scope of the
pandemic. These and other factors could affect the Company's operational results
and cause them to not be comparable to those of the same period in previous
years. For instance, the effects of the COVID-19 pandemic led the Company to
implement enhanced safety standards and processes on a project in Georgia that
experienced COVID-19 cases on site and caused work delays on projects in New
York due to specific state, local, municipal and customer mandated stay-at-home
orders and new project requirements that were established to protect workers and
the general public. Additionally, during the third quarter of 2020, we
experienced a delay in a nuclear project and an outage cycle in Louisiana and
have experienced a slow-down in business development activities and bid
opportunities, particularly on the eastern shore of the Lake Huron area in
Ontario, Canada due to COVID-19. Although the majority of stay-at-home orders
were phased-out by the end of the second quarter of 2020, we are still
experiencing impacts associated with the COVID-19 project specific protocols.
While the Company has not yet experienced a material negative impact on its
operational results, these project specific requirements are expected to remain
in place for the foreseeable future, which will continue to impact project
schedules and workflow going forward.

In addition, federal and state governments have increased spending as part of
efforts to mitigate the impact of COVID-19 on the economy. The amount and timing
of such spending will be directly impacted by the duration of required efforts
to contain COVID-19 and the severity of the negative impacts created by the
virus and its effect on the economy. Any recovery from the COVID-19 pandemic and
related economic impact may also be slowed or reversed by a number of factors,
including any widespread resurgence in COVID-19 infections. The results
presented in this Form 10-Q are not necessarily indicative of future operating
results.

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The following summary and analysis of our results of operations is based on our continuing operations and excludes the results of our discontinued operations:

                                       Three Months Ended September 30,         Nine Months Ended September 30,
(in thousands)                            2021                  2020                2021                2020
Revenue                             $          73,351     $          66,240   $        225,773    $        204,936
Cost of revenue                                66,590                57,582            203,561             180,014
 Gross profit                                   6,761                 8,658             22,212              24,922

Selling and marketing expenses                    267                   123                709                 401
General and administrative
expenses                                        4,248                 5,827             16,931              17,413
Depreciation and amortization
expense                                            50                    46                137                 144
Total operating expenses                        4,565                 5,996             17,777              17,958

Operating income                                2,196                 2,662              4,435               6,964

Interest expense, net                           1,227                 1,541              3,733               4,640
Other expense (income), net                       181                 (316)            (1,411)               (937)
Income from continuing operations
before income tax                                 788                 1,437              2,113               3,261
Income tax expense                                (6)                   321                256                 565
Income from continuing operations   $             794     $           1,116

  $          1,857    $          2,696




Revenue for the three months ended September 30, 2021 increased $7.1 million, or
10.7%, compared with the corresponding period in 2020. The increase was driven
primarily by our growth in the decommissioning market of $8.6 million. In
addition, our volume increased in the fossil fuel markets by $3.7 million. These
increases were partially offset by reduced volume in the nuclear and industrial
markets of $2.5 million and $2.6 million, respectively.

Revenue for the nine months ended September 30, 2021 increased $20.8 million, or
10.2%, compared with the corresponding period in 2020. The increase was
primarily driven by our growth in the decommissioning market of $19.1 million,
and the timing of a planned utility outage related to our long-term maintenance
and modification contract of $18.3 million. In addition, our volume increased in
the fossil fuel market by $10.8 million. These increases were partially offset
by reduced volume in the nuclear market of $27.4 million.

Gross profit for the three months ended September 30, 2021 decreased $1.9
million, or 21.9%, compared with the corresponding period in 2020. The decrease
was primarily driven by cost overruns on uncompleted fixed price projects in the
industrial markets we serve in Florida. We also incurred start-up costs
associated with our expansion in the northeast transportation and distribution
of natural gas during the three months ended September 31, 2021. The decrease
was partially offset by growth in the decommissioning market accounting for a
greater portion of revenue compared to the corresponding period in 2020. Our
decommissioning projects have a lower gross margin profile compared to other
services we provide.

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Gross profit for the nine months ended September 30, 2021 decreased $2.7
million, or 10.9%, compared with the corresponding period in 2020. The decrease
was primarily driven by cost overruns on uncompleted fixed price projects in the
industrial markets we serve in Florida. The decrease was partially offset by
growth in the decommissioning market and the timing of a planned utility outage
related to our long-term maintenance and modification contract, each of which
has a lower gross margin profile compared to other services we perform and
accounted for a greater portion of revenue compared to the corresponding period
in 2020.

Operating income for the three months ended September 30, 2021 decreased $0.5
million compared with the corresponding period in 2020, due primarily to the
decrease in gross profit of $1.9 million. This was partially offset by a
decrease of $1.4 million in operating expenses, driven by lower general and
administrative costs.

Operating income for the nine months ended September 30, 2021 decreased $2.5
million compared with the corresponding period in 2020, due primarily to the
decrease in gross profit of $2.7 million. This was partially offset by a
decrease of $0.2 million in operating expenses, driven by lower general and
administrative costs.

General and administrative expenses

                                      Three Months Ended September 30,           Nine Months Ended September 30,
($ in thousands)                         2021                  2020                2021                  2020
Employee-related expenses          $           1,946     $           3,111   $           8,916     $           8,835
Stock-based compensation expense               1,119                   614 

             2,579                 1,702
Professional fees                               (10)                   843               1,876                 3,088
Other expenses                                 1,193                 1,259               3,560                 3,788
Total                              $           4,248     $           5,827   $          16,931     $          17,413




Total general and administrative expenses for the three months ended September
30, 2021 decreased by $1.6 million, or 27.1%, compared with the corresponding
period in 2020.  Employee related costs decreased by $1.2 million due to cost
reductions in a short term incentive program, which was partially offset by
growth in headcount. Professional fees decreased by $0.9 million resulting from
a claim recovery on previously incurred expenses. These decreases were partially
offset by an increase in stock-based compensation expense of $0.5 million,
driven by additional restricted stock units granted in 2021.

Total general and administrative expenses for the nine months ended September
30, 2021 decreased by $0.5 million, or 2.8%, compared with the corresponding
period in 2020.  The decrease was primarily driven by decreases of $1.2 million
and $0.2 million, respectively, in professional fees and other expenses
resulting from a claim recovery on previously incurred expenses and cost
reduction initiatives. These decreases were partially offset by increases of
$0.1 million in employee related costs and $0.9 million in stock-based
compensation expenses due to accelerated vesting of a restricted stock award and
a new grant of restricted stock units.

Total other (income) expense, net

                                 Three Months Ended September 30,           Nine Months Ended September 30,
($ in thousands)                    2021                  2020                 2021                  2020
Interest expense, net         $           1,227     $           1,541   $             3,733     $         4,640
Other (income) expense, net                 181                 (316)               (1,411)               (937)
Total                         $           1,408     $           1,225   $             2,322     $         3,703

Total other charges, net, for the three months ended September 30, 2021
increase $ 0.2 million, or 14.9%, compared to the corresponding period of 2020. The increase is mainly explained by the recognition of a $ 0.4 million
depreciation linked to a sublet, partially offset by $ 0.2 million
reduction in interest expense thanks to the refinancing of our debt in december 2020, compared to the corresponding period in 2020.

Total other expense, net, for the nine months ended September 30, 2021 decreased
$1.4 million, or 37.3%, compared with the corresponding period in 2020. The
decrease was primarily due to receipt of a $1.0 million distribution from the
assets of a former subsidiary related to a previous intercompany receivable that
we recognized as a loss in 2018, coupled with a $1.0 million decrease in
interest expense and fees related to the refinancing of our debt in 2020. These
decreases were partially offset by a $0.3 million reduction in joint venture
earnings due to lower volume as construction activities for Plant Vogtle Units 3
and 4 move closer to completion, and a $0.4 million impairment charge related to
a sublease, compared with the corresponding period in 2020.

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Income Tax Expense


                                  Three Months Ended September 30,         Nine Months Ended September 30,
($ in thousands)                     2021                  2020               2021                  2020
Income tax (benefit) expense   $            (6)      $            321   $            256      $            565


Income tax expense for the interim periods is based on estimates of the
effective tax rate for the entire fiscal year. The effective income tax rate is
based upon the estimated income during the calendar year, the estimated
composition of the income in different jurisdictions and discrete adjustments,
if any, in the applicable quarterly periods for settlements of tax audits or
assessments and the resolution or identification of tax position uncertainties.

For the three months ended September 30, 2021, we recorded income tax benefit
from continuing operations of $0.01 million, or (0.8)% of pretax income from
continuing operations, compared with income tax expense from continuing
operations of $0.3 million, or 22.3% of pretax income from continuing
operations, in the corresponding period of 2020. For the nine months ended
September 30, 2021, we recorded income tax expense from continuing operations of
$0.3 million, or 12.1% of pretax income from continuing operations, compared
with income tax expense from continuing operations of $0.6 million, or 17.3% of
pretax income from continuing operations, in the corresponding period of 2020.

The difference between our effective tax rate and the federal statutory tax rate
for the three and nine months ended September 30, 2021 and 2020 is primarily
related to the Canadian income tax provision and the partial valuation allowance
recorded on our U.S. deferred tax assets.

The decrease in income tax provision from continuing operations for the three
months ended September 30, 2021 compared with the corresponding period in 2020,
was primarily the result of the $0.3 million increase in the U.S. deferred tax
assets net of a partial valuation allowance, and the $0.05 million decrease in
the income tax provision due to the year-over-year fluctuation in the pre-tax
Canadian book income.

The decrease in income tax provision from continuing operations for the nine
months ended September 30, 2021 compared with the corresponding period in 2020
was primarily the result of the $0.4 million increase in the U.S. deferred tax
assets net of the partial valuation allowance as the Company's indefinite lived
intangible assets have been fully amortized for tax purposes as of year-end
2020, partially offset by the $0.1 million increase in the Canadian income tax
provision.

2017 Tax Cut and Employment Laws

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law, making
significant changes to the Internal Revenue Code. Such changes include, but are
not limited to, a U.S. federal corporate tax rate decrease from 35% to 21%
effective for tax years beginning after December 31, 2017, the transition of
U.S. international taxation from a worldwide tax system to a territorial system,
and a one-time transition tax on the mandatory deemed repatriation of cumulative
foreign earnings as of December 31, 2017.

Due to changes in interpretations and assumptions, and future guidance that may
be issued and actions we may take in response to the Tax Cuts and Jobs Act, the
ultimate impact of the Tax Cuts and Jobs Act may change in future periods. The
Tax Cuts and Jobs Act is highly complex, and we will continue to assess the
impact of certain aspects of the Tax Cuts and Jobs Act. For additional
information, please refer to "Note 7-Income Taxes" to the consolidated financial
statements included in this Form 10-Q.

Interrupted operations

See “Note 4-Changes in operations” to the unaudited condensed consolidated financial statements included in this Form 10-Q for information on discontinued operations.

Liquidity and capital resources

During the nine months ended September 30, 2021, our primary sources of liquidity were borrowings under the revolving credit facility and efficient management of our working capital. Our primary uses of cash were to pay for equipment related to customer contracts, labor and contract labor, operating expenses, and interest expense on the term loan and revolving credit facility. See the discussion in “Note 8-Debt” to the unaudited condensed consolidated financial statements included in this Form 10-Q for additional information on the term loan and the revolving credit facility.

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