Willbros Reports Fourth Quarter and Full Year 2013 Results from Continuing Operations

Feb 27, 2014, 17:01 ET from Willbros Group, Inc.

HOUSTON, Feb. 27, 2014 /PRNewswire/ -- Willbros Group, Inc. (NYSE: WG) announced today results from continuing operations for the fourth quarter and full year 2013. The Company reported a net loss from continuing operations in the fourth quarter of $348 thousand, or $0.00 per share, on revenue of $540.5 million. In the fourth quarter of 2013, operating income increased to $15.5 million compared to operating income of $5.7 million in the fourth quarter of 2012 on revenue of $556.7 million. The results for 2012 included a non-cash, pre-tax goodwill impairment charge of $8.1 million related to the Utility T&D segment.

2013 Accomplishments:

  • Improved safety Total Recordable Incident Rate (TRIR) performance by 16%
  • Improved operating results led by a $35 million increase in operating income in Canada
  • Completed sale of Oman and Hawkeye assets
  • Closed on new $400 million credit facility

"We continue to make meaningful progress toward accomplishing the strategic objectives we established at the beginning of 2013," commented Randy Harl, President and Chief Executive Officer. "When we last reported, we stated that we expected that all four segments would be profitable at the operating level in the fourth quarter of 2013. I am pleased to report we met that expectation. We delivered another sequential improvement with operating income of $15.5 million. Canada delivered strong performance in 2013 and produced operating margins of 7.9 percent for the year.

"In the Oil & Gas segment, operations improved and we have addressed the issues that led to the losses generated by our regional delivery services. Our actions are proving successful, with three consecutive quarter-on-quarter improvements. We have also established clear performance standards and an assurance process to verify that these standards are being met."

For the full year 2013, the Company reported a net loss from continuing operations attributable to Willbros Group, Inc. of $23.4 million, or $0.48 per share, on revenue of $2.0 billion compared to a net loss of $23.3 million, or $0.49 per share, on revenue of $1.9 billion in 2012. Fiscal 2013 results included a debt extinguishment charge of $11.6 million, or $0.24 per share, associated with the refinancing of its previous credit facility. Operating income for the full year 2013 was $34.1 million compared to operating income of $14.8 million in 2012, which included a non-cash, pre-tax goodwill impairment charge of $8.1 million.

Backlog(2) At December 31, 2013, Willbros reported total backlog from continuing operations of $2.0 billion compared to $2.1 billion at December 31, 2012. Twelve month backlog of $1.1 billion at the end of 2013 increased $129 million from September 30, 2013 and $75 million over the fourth quarter of 2012; largely driven by two significant cross-country pipeline project awards. Subsequent to December 31, 2013, the Company was awarded three mid-sized pipeline projects in the Oil & Gas segment.

Segment Operating Results

Oil & Gas For the fourth quarter of 2013, the Oil & Gas segment generated revenue of $235.5 million and operating income of $1.9 million, a $10.7 million sequential improvement and a $1.6 million improvement in operating income from the fourth quarter of 2012. The fourth quarter results were driven by the contribution of a major pipeline project that was 66 percent complete at December 31 and by improved performance in its regional services. The segment reported an operating loss of $40.2 million for the full year on revenue of $791.1 million, primarily a result of losses in the regional service lines in the first half of the year.

Utility T&D For the fourth quarter of 2013, the Utility T&D segment reported operating income of $2.8 million on revenue of $96.6 million compared to operating income of $2.9 million on revenue of $108.1 million in the third quarter and an operating loss of $2.9 million on revenue of $121.7 million in the fourth quarter of 2012 which included a non-cash, after-tax goodwill impairment charge of $8.1 million. Results for the fourth quarter of 2013 reflect the impact of adverse weather which caused delays and lower productivity in both our transmission and distribution services. For the full year, operating income increased $18.3 million while revenue decreased $37.4 million over 2012.  The reduction in revenue was related to the adverse weather in November and December and completion of the Oncor Texas CREZ projects. 

Canada For the fourth quarter of 2013, Canada's operating income increased $3.6 million, or 61 percent, to $9.5 million as a result of increased margins on higher revenue compared to the fourth quarter of 2012. For the full year, the segment generated operating income of $35.4 million on revenue of $445.2 million compared to a small operating loss in 2012. The improvement in operating income compared to last year was attributable to revenue gains from increased market penetration, quality backlog and safe, reliable execution of core construction and maintenance services performed for key customers. Contract revenue increased $228.4 million over 2012 firmly demonstrating that the segment is ahead of schedule to achieve its previously established growth target.

Professional Services The Professional Services segment reported operating income of $1.3 million on revenue of $89.8 million in the fourth quarter compared to operating income of $2.3 million on revenue of $82.3 million in the fourth quarter of 2012. The decrease in the fourth quarter operating income reflects reduced storm restoration work compared to 2012. For the full year, operating income increased 38 percent over 2012 to $15.7 million and revenue increased 4 percent to $342.7 million.

Outlook Willbros believes that the markets it serves remain strong. With the recent backlog additions in the Oil & Gas segment, the Company has good visibility with regard to its large-diameter pipeline spread capacity that is largely booked into early fall of this year.  The Company's focus on growing midstream pipeline and facilities and pipeline integrity opportunities is expected to result in significantly improved performance in its regional delivery services this year. The Utility T&D segment is transitioning in 2014 to address the opportunity to perform electric transmission and distribution work for new customers, particularly in the markets contiguous to our strong presence in Texas. The Canada segment is very well positioned to continue its strong performance and the Company will continue to expand its service offerings in Northern Alberta. The Professional Services segment has upside potential for operating margin improvement as the Company benefits from the investments it made to expand its geographic presence and services in 2013.

Liquidity At December 31, 2013, the Company had $42.6 million of cash and cash equivalents. Outstanding revolver borrowings were $19.0 million, with $60.1 million in letters of credit outstanding, resulting in $70.9 million remaining against the approximately $150.0 million of borrowing base availability. Subsequent to December 31, 2013, the Company paid the outstanding revolver borrowings in full through proceeds received in connection with the sale of Hawkeye and through cash flow from operations.  The Company expects to continue strengthening its balance sheet through improved cash flow from operations and potential sales of non-strategic and under-performing assets (including equipment, real property and businesses).

Guidance Van Welch, Willbros Chief Financial Officer, commented, "We expect annual revenue to range from $2.1 to $2.3 billion in 2014. We expect our operating results to improve significantly in 2014 with an increase every quarter in 2014 as compared to the corresponding quarter in 2013. We expect first quarter operating results to be down from the fourth quarter of 2013 due to inclement weather and the transition underway of our Utility T&D segment. 

"We expect to reduce our Term Loan debt by approximately $30 to $50 million and fund the final payments due under the WAPCo settlement by the end of the year through cash flow from operations and proceeds from potential asset sales."

Conference Call In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Friday, February 28, 2014 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

What:      

Willbros Fourth Quarter and 2013 Earnings Conference Call

When:      

Friday, February 28, 2014 - 9:00 a.m. Eastern Time

How:        

Live via phone - By dialing 480-629-9722 or 888-549-7750 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 March 7, 2014 and may be accessed by calling 303-590-3030 or 800-406-7325 using pass code 4669451 #.  Also, an archive of the webcast will be available shortly after the call on www.willbros.com.

Willbros Group, Inc. is an independent contractor serving the oil, gas, power, refining and petrochemical industries, providing engineering, construction, turnaround, maintenance, life-cycle extension services and facilities development and operations services to industry and government entities worldwide.  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:

Connie Dever                 

Michael W. Collier    

Director Investor Relations  

Vice President Investor Relations     

Willbros                             

Sales & Marketing

713-403-8035                      

Willbros

713-403-8038

TABLE TO FOLLOW

 

 

 

WILLBROS GROUP, INC.

(In thousands, except per share amounts)

 Three Months Ended 

 Year Ended 

 December 31, 

 December 31, 

2013

2012

2013

2012

Income Statement 

Contract revenue

Oil & Gas

$   235,538

$   267,035

$   791,076

$   902,688

Utility T&D

96,556

121,675

446,216

483,603

Canada

120,879

87,913

445,213

216,793

Professional Services

89,754

82,335

342,746

330,594

Eliminations

(2,205)

(2,279)

(6,468)

(4,878)

540,522

556,679

2,018,783

1,928,800

Operating expenses

Oil & Gas

233,601

266,669

831,269

904,167

Utility T&D

93,791

124,544

422,983

478,706

Canada

111,393

82,035

409,837

216,833

Professional Services

88,484

79,998

327,031

319,168

Eliminations

(2,205)

(2,279)

(6,468)

(4,878)

525,064

550,967

1,984,652

1,913,996

Operating income (loss)

Oil & Gas

1,937

366

(40,193)

(1,479)

Utility T&D

2,765

(2,869)

23,233

4,897

Canada

9,486

5,878

35,376

(40)

Professional Services

1,270

2,337

15,715

11,426

Operating income

15,458

5,712

34,131

14,804

Other expense

Interest expense, net

(7,897)

(7,939)

(30,729)

(29,393)

Loss on early extinguishment of debt

-

-

(11,573)

(3,405)

Other, net

(318)

(121)

(731)

(570)

(8,215)

(8,060)

(43,033)

(33,368)

Income (loss) from continuing operations before income taxes

7,243

(2,348)

(8,902)

(18,564)

Provision for income taxes

7,591

1,649

14,534

4,727

Income (loss) from continuing operations

(348)

(3,997)

(23,436)

(23,291)

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

13,123

(9,301)

7,569

(5,944)

Net income (loss)

12,775

(13,298)

(15,867)

(29,235)

Less: Income attributable to noncontrolling interest

-

(31)

-

(976)

Net income (loss) attributable to Willbros Group, Inc.

$     12,775

$    (13,329)

$    (15,867)

$    (30,211)

Reconciliation of net income (loss) attributable to Willbros Group, Inc.

Income (loss) from continuing operations

$        (348)

$     (3,997)

$    (23,436)

$    (23,291)

Income (loss) from discontinued operations

13,123

(9,332)

7,569

(6,920)

Net income (loss) attributable to Willbros Group, Inc.

$     12,775

$    (13,329)

$    (15,867)

$    (30,211)

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

Continuing operations

$        0.00

$       (0.09)

$       (0.48)

$       (0.49)

Discontinued operations

0.27

(0.19)

0.16

(0.14)

$        0.27

$       (0.28)

$       (0.32)

$       (0.63)

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

Continuing operations

$        0.00

$       (0.09)

$       (0.48)

$       (0.49)

Discontinued operations

0.27

(0.19)

0.16

(0.14)

$        0.27

$       (0.28)

$       (0.32)

$       (0.63)

Cash Flow Data

Continuing operations

Cash provided by (used in)

Operating activities

$     70,111

$       5,329

$     26,863

$     (7,201)

Investing activities

(3,878)

7,219

26,156

6,842

Financing activities

(31,858)

39,075

(37,450)

7,335

Foreign exchange effects

(1,254)

(27)

(1,564)

(2,137)

Discontinued operations

(9,586)

(13,124)

(24,775)

(13,904)

Other Data (Continuing Operations)

Weighted average shares outstanding

Basic

48,704

48,176

48,560

48,019

Diluted

48,704

48,176

48,560

48,019

Adjusted EBITDA from continuing operations (2)

$     26,014

$     26,443

$     79,825

$     74,769

Purchases of property, plant and equipment

6,071

2,813

15,744

12,486

Reconciliation of Non-GAAP Financial Measure

Operating income from continuing operations before special items (1)

Operating income, as reported

$     15,458

$      5,712

$     34,131

$     14,804

Goodwill impairment

-

8,067

-

8,067

Operating income before special items

$     15,458

$     13,779

$     34,131

$     22,871

Adjusted EBITDA from continuing operations (2)

Loss from continuing operations attributable to Willbros Group, Inc.

$        (348)

$     (3,997)

$    (23,436)

$    (23,291)

Interest expense, net

7,897

7,939

30,729

29,393

Provision for income taxes

7,591

1,649

14,534

4,727

Loss on early extinguishment of debt

-

-

11,573

3,405

Depreciation and amortization

9,948

11,557

42,194

46,345

Goodwill impairment

-

8,067

-

8,067

DOJ monitor cost

-

-

-

1,588

Stock based compensation

2,358

1,846

7,142

7,607

Restructuring and reorganization costs

43

(18)

241

151

Gain on disposal of property and equipment

(1,475)

(600)

(3,152)

(3,223)

Adjusted EBITDA from continuing operations(1)

$     26,014

$     26,443

$     79,825

$     74,769

Balance Sheet Data

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Cash and cash equivalents

$     42,569

$     20,075

$     53,610

$      9,698

Working capital

226,984

265,636

236,812

217,406

Total assets

870,668

864,046

863,054

888,168

Total debt  

277,208

309,294

264,386

249,493

Stockholders' equity

188,774

175,547

200,961

207,443

Backlog Data (3)

Total By Reporting Segment

Oil & Gas

$   414,749

$   315,159

$   241,347

$   212,358

Utility T&D

978,535

999,293

1,079,261

1,169,806

Canada

365,946

386,830

415,804

395,804

Professional Services

256,981

246,829

220,707

228,134

Total Backlog

$2,016,211

$1,948,111

$1,957,119

$2,006,102

Total Backlog By Geographic Area

United States

$1,645,769

$1,556,010

$1,537,313

$1,606,046

Canada

365,946

386,830

415,804

395,804

Other International

4,496

5,271

4,002

4,252

Total Backlog

$2,016,211

$1,948,111

$1,957,119

$2,006,102

12 Month Backlog

$1,085,359

$   956,810

$   918,974

$   880,021

(1)

Operating income from continuing operations before special items is a non-GAAP financial measure that excludes special items that management believes affect the comparison of results for the periods presented.  Management also believes results excluding these items are more comparable to estimates provided by securities analysts and therefore are useful in evaluating operational trends of the Company and its performance relative to other engineering and construction companies.

(2)

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.

(3)

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 terms 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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