Executive Summary

Revenue declined to $56.1M, down 38.7% year over year and 19% sequentially, with gross margin compressing to 4.1% and operating margin to -8.0% due to nuclear outage timing, decommissioning losses and start-up costs in energy delivery; diluted EPS from continuing operations was $(0.20) versus $0.10 in Q2 2021 and $(0.08) in Q1 2022 .
Guidance was cut on August 4: revenue lowered to $275–$295M (from $305–$325M), gross margin to 9.0%–9.5% (from 10.5%–11.0%), SG&A to 8.25%–8.75% of revenue, and adjusted EBITDA to $5.0–$7.5M (from $10.0–$12.5M), citing start-up costs, litigation expenses, and Florida project margin pressure; management expects these issues to subside later in 2022 .
Liquidity compressed to $6.5M at quarter-end (from $26.1M in Q1) amid higher bank debt ($41.4M) and lower cash; backlog fell to $234.3M (from $257.0M), with ~$144.6M expected to convert within 12 months; pipeline strengthened to ~$400M (from ~$360M) .
Catalysts for stock reaction: the guidance cut and weak Q2 profitability, offset by a growing pipeline and expected second-half revenue/backlog improvement as one-time costs abate and Florida projects wind down .

What Went Well and What Went Wrong

What Went Well

Pipeline expanded to approximately $400M vs ~$360M in Q1, with management optimistic about backlog growth and improved operating performance in the second half of 2022 .
Management reaffirmed strategic positioning in nuclear, energy delivery and water end markets and expects demand tailwinds from the Infrastructure Investment & Jobs Act and Inflation Reduction Act (including nuclear support) to bolster awards and growth into 2023: “we are excited by the prospect for meaningful new orders…as one-time costs subside and demand rises” .
Adjusted gross margin excluding start-up and Florida losses would have been 10.0% in Q2, highlighting potential margin normalization once transitional items subside .

What Went Wrong

Q2 revenue fell to $56.1M (vs $91.6M YoY) driven by a non-outage period for nuclear (-$17.6M), fewer decommissioning contracts (-$11.5M), and Canada nuclear exit (-$9.9M); adjusted EBITDA turned negative at $(3.2)M .
Ongoing margin pressure from Florida water projects and transmission & distribution start-up costs reduced gross margin to 4.1%; management noted litigation expenses and contract delays further weighed on results .
Liquidity dropped to $6.5M with bank debt increasing to $41.4M and unrestricted cash at $0.7M, highlighting a tighter near-term financial posture .

Financial Results

Metric	Q2 2021	Q4 2021	Q1 2022	Q2 2022
Revenue ($USD Millions)	$91.6	$79.2	$69.6	$56.1
Diluted EPS - Continuing Operations ($USD)	$0.10	$0.03	$(0.08)	$(0.20)
Gross Margin (%)	10.2%	11.6%	8.2%	4.1%
Operating Margin (%)	3.0%	3.1%	(1.1)%	(8.0)%
Adjusted EBITDA ($USD Millions)	$4.88	$3.55	$0.14	$(3.23)

Segment/End-Market mix and project specifics (current quarter):

End Market (Q2 2022)	Share (%)
US Nuclear	48%
Fuel Storage / Decommissioning	5%
Energy Delivery	11%
Fossil	14%
Industrial / Water / Other	22%

Key Project	Q2 2022 Revenue ($USD Millions)
Vogtle Units 3 & 4	$15.4

KPIs and balance sheet:

KPI	Q4 2021	Q1 2022	Q2 2022
Backlog ($USD Millions)	$631.7	$257.0	$234.3
Backlog expected to convert in next 12 months ($USD Millions)	$157.2 (adjusted post-loss)	$139.0	$144.6
Pipeline ($USD Millions)	N/A	~$360	~$400
Total Liquidity ($USD Millions)	$27.7	$26.1	$6.5
Bank Debt ($USD Millions)	$32.1	$31.3	$41.4
Unrestricted Cash ($USD Millions)	$2.5	$4.3	$0.7

Non-GAAP adjustment context:

Metric	Q2 2022 Actual	Q2 2022 Adjusted (ex T&D start-up and FL losses)
Gross Margin (%)	4.1%	10.0%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2022	$305–$325M	$275–$295M	Lowered
Gross Margin	FY 2022	10.5%–11.0%	9.0%–9.5%	Lowered
SG&A (% of revenue)	FY 2022	8.75%–9.25%; 8.25%–8.75% excl. investments	8.25%–8.75%; 8.00%–8.50% excl. investments	Lowered (ex-investments band)
Adjusted EBITDA	FY 2022	$10.0–$12.5M	$5.0–$7.5M	Lowered

Drivers: start-up costs in transmission & distribution, litigation expenses, and margin pressure on Florida projects; project award delays pushed work into H2 .

Earnings Call Themes & Trends

Topic	Q4 2021 (Previous Mentions)	Q1 2022 (Previous Mentions)	Q2 2022 (Current Period)	Trend
Margin pressure (Florida projects)	Ongoing impact expected near term	Florida margin pressure to subside in H2	Continued pressure; adjusted gross margin would be 10.0% absent FL/T&D impacts	Improving into H2 as projects complete
Energy delivery (T&D) start-up costs	Strategic focus areas identified	Start-up costs impacting margins	Start-up costs cited in guidance cut	Transitional; expected to abate
Nuclear outage timing	Mix shift; reduced higher-margin Vogtle sequentially	Seasonal factors; nuclear and water drove growth	Non-outage period reduced revenue vs YoY	Normalizes with cycle
Backlog/pipeline	Adjusted backlog post contract losses; still solid	Backlog $257M; expecting greater award activity	Backlog $234M; pipeline ~$400M	Pipeline strengthening
Litigation/competitor issues	Contract losses disclosed; remediation underway	$0.7M legal expenses	Litigation expense continues; cited in guidance revision
Macro/supply chain/inflation	Noted pressures and risks	Inflation and Ukraine-Russia effects noted	Inflationary cost pressures and recession risk highlighted	Persistent headwind

Note: The Q2 2022 earnings call was scheduled for Aug 12, 2022; no transcript was available in our document set .

Management Commentary

“Although Williams’ future remains promising, we were disappointed in how the second quarter played out, causing us to reduce guidance on August 4, 2022… non-recurring items… negatively impacted bottom line results.” — Tracy Pagliara, President & CEO .
“We are excited by the prospect for meaningful new orders and better operating performance over the rest of 2022 as one-time costs subside and demand rises heading into next year... our pipeline is robust – approximately $400 million…” .
“We remain focused on new business development, expense controls and working capital management. We’re confident in our ability to position Williams for expansion and increased shareholder returns going forward.” .

Q&A Highlights

No Q2 2022 earnings call transcript was found in the available documents; the company hosted the call on Aug 12 and posted slides, but a transcript was not accessible via our tools .
Guidance clarifications were provided in the press releases and slides: revised FY 2022 ranges and key drivers (start-up costs, litigation, Florida projects) .

Estimates Context

Wall Street consensus (S&P Global) for Q2 2022 (EPS/Revenue/EBITDA) was unavailable for WLMSQ via our S&P Global data connection; therefore, estimate comparisons are not provided here.

Key Takeaways for Investors

Q2 print was a clear miss vs internal expectations, with revenue down 38.7% YoY and margins compressed by transitional costs and project mix; EPS swung to a $(0.20) loss from $0.10 a year ago .
Guidance reset reflects near-term headwinds; watch for H2 inflection as Florida projects substantially complete and T&D start-up costs fade; management expects better operating performance in the back half .
Liquidity fell markedly to $6.5M and bank debt increased to $41.4M; monitor working capital and revolver availability closely in coming quarters .
Backlog and pipeline trends are constructive (backlog $234.3M; pipeline ~$400M), with ~$144.6M of backlog slated to convert in the next 12 months, supporting revenue visibility despite recent contract delays .
Adjusted gross margin indicates underlying margin potential (10.0% ex FL/T&D impacts); achieving mix shift and completing problematic projects are critical to margin recovery .
Nuclear cycle/outage timing remains a swing factor; non-outage periods can dent revenue/margins, while major projects (e.g., Vogtle) still contribute meaningfully ($15.4M in Q2) .
Legal/litigation expenses tied to competitor/former employee remain a cost headwind; resolution could reduce SG&A and remove a non-operational drag on EBITDA .

NOS4-1, Inc. (WLMSQ)·Q2 2022 Earnings Summary