Willbros Reports First Quarter 2014 Results from Continuing Operations

HOUSTON, May 5, 2014 /PRNewswire/ -- Willbros Group, Inc. (NYSE: WG) announced today results from continuing operations for the first quarter of 2014. The Company reported net income from continuing operations of $10 thousand, or $0.00 per diluted share, on revenue of $517.7 million, compared to a net loss from continuing operations in the first quarter of 2013 of $11.6 million, or $0.24 per share, on revenue of $487.4 million. The Company reported operating income from continuing operations of $11.0 million, a $12.6 million improvement in operating income, compared to an operating loss of $1.6 million in the first quarter of 2013.  

Randy Harl, President and Chief Executive Officer, commented, "We continue to benefit from our diversified business model as we delivered another quarter of year-over-year improvement led by strong performance in Canada. Operating margins in the Professional Services segment also improved in an historically weak quarter due to growing demand for our engineering and integrity related field services. Even though our first quarter results for the Oil & Gas and Utility T&D segments were impacted by adverse weather, the diversification in our model is working and delivering improved results.

"The $11.0 million improvement in the Oil & Gas segment's operating results was due to solid execution in cross-country pipeline construction as well as a $12.5 million improvement in our regional delivery service line. In our regional delivery services, positive operating performance in the Northeast was offset by weather related costs incurred in the Northern Plains and Southern regions and under-absorption of indirect costs associated with lower than planned revenue levels. We continue to implement our new strategy to align our resources with our customers' needs as well as focus on projects where we have a competitive advantage. We have streamlined our offering in the downstream sector with the sale of the union refinery maintenance turnaround service line and related fabrication facility. Going forward, we will focus our remaining downstream resources on tank, terminal, heater, fabrication and related field services where the market and our capabilities provide us with significantly better growth opportunities."

Segment Operating Results

Oil & Gas

For the first quarter of 2014, the Oil & Gas segment reported contract revenue of $218.4 million, an increase of $33.4 million compared to the first quarter of 2013. The operating loss of $3.6 million was an improvement of $11.0 million from the first quarter of 2013. Positive performance in cross-country pipeline construction, which benefited from higher utilization of resources, was more than offset by losses associated with regional delivery and downstream services. Additionally, timing on the resolution of change orders in the Company's facilities service line also negatively impacted operating income. The Company continues to expect strong performance going forward from its cross-country pipeline construction services and for the regional service lines to be breakeven or better for the full year 2014. Additionally, the Company anticipates stronger performance from its remaining downstream services which have significant growth opportunities.

Utility T&D

For the first quarter of 2014, the Utility T&D segment reported an operating loss of $231 thousand on revenue of $96.3 million compared to operating income of $1.9 million on revenue of $113.2 million in the first quarter of 2013. Results for the first quarter of 2014 reflect the impact of unusually harsh weather conditions which caused delays and lower productivity in both transmission and distribution services. This segment is successfully transitioning to broader market opportunities in the geographic areas adjacent to Texas and extending across the South to operations on the Atlantic seaboard.  

Canada

The Canada segment delivered another strong quarter of operating results following a very solid performance in 2013. Canada reported operating income of $12.6 million, with operating margins of 10.7 percent, on revenue of $117.1 million compared to operating income of $10.5 million with operating margins of 9.4 percent on revenue of $112.0 million in the first quarter of 2013. The moderate contract revenue increase was accompanied by an additional improvement in operating margin. Canada continues to benefit from its presence in the oil sands, providing maintenance, capital projects, fabrication, specialty pipe and electrical and instrumentation services.

Professional Services

Revenue generated by the Professional Services segment increased 11.4 percent to $87.4 million compared to $78.5 million in the first quarter of 2013. The segment also reported operating income of $2.2 million which was an increase of $1.6 million compared to the first quarter of 2013. The improvement in revenue and operating income was due to strong performance in engineering and increased demand for integrity related field services in a traditionally weak quarter. The Company expects improved performance relative to last year in this segment throughout 2014 as a result of the investments made in new offices and technology in 2013.

Backlog(2)

At March 31, 2014, Willbros backlog from continuing operations was slightly down at $1.9 billion compared to $2.0 billion at December 31, 2013, primarily due to the continued work-off of long-term master service agreements, which are subject to renewal options in future years. At March 31, 2014, twelve month backlog was at $1.1 billion, essentially the same as at December 31, 2013.

Liquidity

At March 31, 2014, the Company had $53.9 million of cash and cash equivalents, up from $42.6 million at December 31, 2013. During the first quarter, the Company paid off the $19 million cash draw on its revolver, and as a consequence, borrowing availability at March 31, 2014, under the revolver, was $70.8 million on a borrowing base of $143.7 million and letters of credit of $72.9 million.

Subsequent to March 31, 2014, the Company sold its union refinery maintenance turnaround service line, a related fabrication facility and associated tools and equipment and utilized $25.0 million in proceeds to pay down the Company's term loan to a balance of approximately $221.5 million.  There was no premium associated with the payment.

As the construction season ramps up, the Company expects to utilize its revolver during the second and third quarters to finance working capital increases due to seasonal work levels, major projects and growth in revenue.  Accordingly, subsequent to March 31, 2014, the Company borrowed $30.0 million against its revolver.  As of April 28, 2014, the Company had $66.8 million of cash in the bank and letters of credit had reduced to $65.9 million.

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Tuesday, May 6, 2014 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

What:

Willbros First Quarter Earnings Conference Call

When:

Tuesday, May 6, 2014 - 9:00 a.m. Eastern Time

How:

Live via phone - By dialing 480-629-9723 or 877-941-2332 a few minutes prior to the start time and asking for the Willbros' call.  Or live over the Internet by logging on to the web address below.

Where:

http://www.willbros.com. The webcast can be accessed from the investor relations home page.

For those who cannot listen to the live call, a replay will be available through May 13, 2014, and may be accessed by calling 303-590-3030 or 800-406-7325 using pass code 4681771#.  Also, an archive of the webcast will be available shortly after the call on www.willbros.com.

Willbros is a specialty energy infrastructure contractor serving the oil, gas, refining, petrochemical and power industries. Our offerings include engineering, procurement and construction (either individually or as an integrated EPC service offering), turnarounds, maintenance, facilities development and operations services. For more information on Willbros, please visit our web site at www.willbros.com.

This announcement contains forward-looking statements.  All statements, other than statements of historical facts, which address activities, events or developments the Company expects or anticipates will or may occur in the future, are forward-looking statements.  A number of risks and uncertainties could cause actual results to differ materially from these statements, including  new legislation or regulations detrimental to the economic operation of refining capacity in the United States; the identification of one or more other issues that require restatement of one or more prior period financial statements; contract and billing disputes; the consequences the Company may encounter if it is unable to make payments required of it pursuant to its settlement agreement of the West African Gas Pipeline Company Limited lawsuit; the existence of material weaknesses in internal control over financial reporting; availability of quality management; availability and terms of capital; changes in, or the failure to comply with, government regulations; ability to remain in compliance with, or obtain waivers under, the Company's existing loan agreements; the promulgation, application, and interpretation of environmental laws and regulations; future E&P capital expenditures; oil, gas, gas liquids, and power prices and demand; the amount and location of planned pipelines; poor refinery crack spreads; delay of planned refinery outages and upgrades and development trends of the oil, gas, power, refining and petrochemical industries; as well as other risk factors described from time to time in the Company's documents and reports filed with the SEC.  The Company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.


CONTACT

Michael W. Collier

Connie Dever

Vice President Investor Relations

Director Investor Relations

Willbros

Willbros

713-403-8038

713-403-8035

 

TABLE TO FOLLOW

 

 

WILLBROS GROUP, INC.

(In thousands, except per share amounts)




 Three Months Ended 



 March 31, 



2014


2013

Income Statement 






Contract revenue







Oil & Gas


$   218,415


$   184,984



Utility T&D


96,333


113,204



Canada


117,079


111,995



Professional Services


87,425


78,465



Eliminations


(1,507)


(1,289)




517,745


487,359








Operating expenses







Oil & Gas


221,971


199,555



Utility T&D


96,564


111,311



Canada


104,506


101,488



Professional Services


85,187


77,852



Eliminations


(1,507)


(1,289)




506,721


488,917








Operating income (loss)







Oil & Gas


(3,556)


(14,571)



Utility T&D


(231)


1,893



Canada


12,573


10,507



Professional Services


2,238


613


Operating income (loss)


11,024


(1,558)








Other expense







Interest expense, net


(7,718)


(7,690)



Other, net


39


231




(7,679)


(7,459)


Income (loss) from continuing operations before income taxes


3,345


(9,017)


Provision for income taxes


3,335


2,612


Income (loss) from continuing operations


10


(11,629)


Income (loss) from discontinued operations net of provision for income taxes


(6,617)


15,821


Net income (loss)


$ (6,607)


$ 4,192








Basic income (loss) per share attributable to Company shareholders:







Continuing operations


$         0.00


$       (0.24)



Discontinued operations


$       (0.14)


$         0.33




$       (0.14)


$         0.09








Diluted income (loss) per share attributable to Company shareholders:







Continuing operations


$         0.00


$        (0.24)



Discontinued operations


$       (0.13)


$          0.33




$       (0.13)


$          0.09







Cash Flow Data





Continuing operations






Cash provided by (used in)







Operating activities


$     (2,204)


$    (14,594)



Investing activities


19,259


37,052



Financing activities


(23,160)


(58,898)



Foreign exchange effects


(823)


(228)

Discontinued operations


17,195


(8,014)







Other Data (Continuing Operations)






Weighted average shares outstanding







Basic


48,847


48,307



Diluted


49,744


48,307


Adjusted EBITDA from continuing operations(1)


$     22,476


$      9,560


Purchases of property, plant and equipment


3,635


2,646







Reconciliation of Non-GAAP Financial Measure












Adjusted EBITDA from continuing operations (1)







Income (loss) from continuing operations


$           10


$    (11,629)



Interest expense, net


7,718


7,690



Provision for income taxes


3,335


2,612



Depreciation and amortization


9,941


11,070



Stock based compensation


2,494


821



Restructuring and reorganization costs


220


96



Gain on disposal of property and equipment


(1,242)


(1,100)



Adjusted EBITDA from continuing operations


$     22,476


$      9,560



















Balance Sheet Data


3/31/2014


12/31/2013


Cash and cash equivalents


$     53,877


$     42,569


Working capital


213,191


226,984


Total assets


865,588


870,668


Total debt


254,094


277,208


Stockholders' equity


180,328


188,774







Backlog Data (2)






Total By Reporting Segment







Oil & Gas


$   390,828


$   414,749



Utility T&D


990,004


978,535



Canada


285,364


365,946



Professional Services


256,594


256,981


Total Backlog


$1,922,790


$2,016,211








Total Backlog By Geographic Area







United States


$1,633,427


$1,645,769



Canada


285,364


365,946



Other International


3,999


4,496


Total Backlog


$1,922,790


$2,016,211








12 Month Backlog


$1,091,372


$1,085,359



(1)

Adjusted EBITDA from continuing operations is defined as income (loss) from continuing operations before interest expense, income tax expense (benefit) and depreciation and amortization, adjusted for items broadly consisting of selected items which management does not consider representative of our ongoing operations and certain non-cash items of the Company.  Management uses Adjusted EBITDA from continuing operations as a supplemental performance measure for comparing normalized operating results with corresponding historical periods and with the operational performance of other companies in our industry and for presentations made to analysts, investment banks and other members of the financial community who use this information in order to make investment decisions about us.

Adjusted EBITDA from continuing operations is not a financial measurement recognized under U.S. generally accepted accounting principles, or U.S. GAAP.  When analyzing our operating performance, investors should use Adjusted EBITDA from continuing operations in addition to, and not as an alternative for, net income, operating income, or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity.  Because all companies do not use identical calculations, our presentation of Adjusted EBITDA from continuing operations may be different from similarly titled measures of other companies.



(2)

Backlog is anticipated contract revenue from uncompleted portions of existing contracts and contracts whose award is reasonably assured.  Master Service Agreement ("MSA") backlog is estimated for the remaining term of the contract.  MSA backlog is determined based on historical trends inherent in the MSAs, factoring in seasonal demand and projecting customer needs based on ongoing communications.

 

SOURCE Willbros Group, Inc.



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