Willbros Reports Third Quarter 2013 Results from Continuing Operations

06 Nov, 2013, 17:00 ET from Willbros Group, Inc.

HOUSTON, Nov. 6, 2013 /PRNewswire/ -- Willbros Group, Inc. (NYSE: WG) announced today results from continuing operations for the third quarter of 2013. The Company reported a net loss from continuing operations of $12.5 million, or ($0.26) per share, on revenue of $503.0 million, compared to net income from continuing operations in the third quarter of 2012 of $3.8 million, or $0.08 per diluted share, on revenue of $548.0 million. Third quarter results included a debt extinguishment charge of $11.6 million, or ($0.24) per share associated with the refinancing of its previous credit facility. The Company reported operating income of $10.9 million for the third quarter of 2013 compared to operating income of $11.3 million in the third quarter of 2012. 

Randy Harl, President and Chief Executive Officer, commented, "Three of our four segments continue to generate positive operating results. Our Canada segment delivered another quarter of strong operating margins and our Utility T&D and Professional Services segments also contributed positive results. In our Oil & Gas segment, the regional service lines generated a $4.8 million operating improvement from the second quarter of 2013 driven by higher quality backlog and better execution. The losses incurred in the regions during the third quarter were a function of underutilization of resources in some offices and margin erosion on certain projects which still produced an acceptable profit. The improvement we have seen in the regions is expected to continue in the fourth quarter as we focus our regional services on midstream opportunities, much as we focused the Canada model on oil sands in 2011, and align our resources and our cost structure to address this growing midstream market."

Segment Operating Results

Oil & Gas

For the third quarter of 2013, the Oil & Gas segment reported an operating loss of $8.8 million on revenue of $184.2 million, compared to operating income of $4.4 million in the third quarter of 2012 on revenue of $282.8 million. Underutilization of resources for cross-country pipeline, regional and downstream services negatively impacted the segment's operating results. The segment benefited from the start of construction work on a major cross-country pipeline project, which began late in the third quarter and was 18 percent complete at September 30. Sequentially, the Oil & Gas segment delivered a $10.0 million improvement in operating income.

Utility T&D

The Utility T&D segment generated revenue of $108.1 million and $2.9 million of operating income, an improvement of approximately $1.0 million of operating income over the third quarter of 2012. The increase in operating income was primarily related to increased productivity in its matting and installation services in the Northeast. Contract revenue decreased $15.6 million compared to the third quarter of 2012 primarily related to the completion of two CREZ program projects during the second quarter of 2013.

Canada

The Canada segment reported operating income of $11.1 million on revenue of $124.9 million, a substantial improvement compared to breakeven in the third quarter of 2012. Contract revenue increased $67.4 million from the third quarter of 2012 and nearly $200.0 million year-to-date compared to the same period last year. Canada continues to benefit from its focus on the oil sands mine sites and in situ extraction developments. The improvement in operating income compared to last year was attributable to quality backlog and safe, reliable execution of core construction and maintenance services performed for key customers. 

Professional Services

The Professional Services segment reported operating income of $5.6 million, an improvement of $0.7 million relative to the third quarter of 2012, on revenue of $87.1 million. Operating margins were slightly lower compared to the second quarter of 2013 due to a higher component of procurement revenue associated with engineering, procurement and construction (EPC) projects which began in the third quarter of 2013. The segment's line locating and integrity services continued to deliver solid results during the third quarter.

Backlog(2)

At September 30, 2013, total backlog from continuing operations was flat at $1.95 billion compared to total backlog from continuing operations at June 30, 2013. Twelve month backlog increased to $956.8 million at September 30, 2013 compared to $919.0 million at June 30, 2013. After the close of the third quarter, the Oil & Gas segment was awarded nearly $100 million of significant cross-country pipeline work in the Northeast.

Credit Facility and Liquidity

At September 30, 2013, the Company had $20.1 million of cash and cash equivalents. Outstanding revolver borrowings were $50.0 million, with $54.6 million in letters of credit outstanding, resulting in $40.4 million remaining against the approximately $145.0 million of borrowing base availability. The Company believes that improved cash flow from operations and proposed sales of non-strategic assets will allow it to maintain adequate liquidity. The sale of the assets of the discontinued Hawkeye operations is expected to close in 2013, and the Company continues to consider additional sales of non-strategic and under-performing assets (including equipment, real property and businesses) to strengthen the balance sheet.

Outlook

For the fourth quarter of 2013, Willbros expects positive operating results in the Oil & Gas segment supported by continued improvement in its regional service lines. Willbros' pipeline and facilities service lines in the Oil & Gas segment are fully booked for the fourth quarter and are expected to continue generating positive operating results. Willbros also expects further improvement in its regional service lines as a result of higher quality backlog, improved execution and lower cost structure. The Company experienced decreased demand for its downstream services during the third quarter and expects improvement in the fourth quarter due to increased activity from backlog associated with the fall turnaround season.

Willbros expects its other three segments to continue to contribute positive results in the fourth quarter of 2013. The Company continues to expect that it can achieve increased margins in its Utility T&D segment as it captures additional transmission construction work beyond its alliance agreement in Texas. Canada is on track to meet or exceed the growth and performance objectives of $500 million in quality revenue by 2016. Operating margins in the Professional Services segment are anticipated to remain positive, with improvement opportunities, as the Company realizes the benefit from its geographic and service line expansion in 2013.

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Thursday, November 7, 2013 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

What:

Willbros Third Quarter Earnings Conference Call

When:

Thursday, November 7, 2013 - 9:00 a.m. Eastern Time

How:  

Live via phone - By dialing 480-629-9869 or 888-561-1799 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 November 14, 2013 and may be accessed by calling 303-590-3030 or 800-406-7325 using pass code 4648246 #. 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 Vice President Investor Relations Willbros 713-403-8038

Connie Dever Director Investor Relations Willbros 713-403-8035

TABLE TO FOLLOW

 

WILLBROS GROUP, INC.

(In thousands, except per share amounts)

 Three Months Ended 

 Nine Months Ended 

 September 30, 

 September 30, 

2013

2012

2013

2012

Income Statement 

Contract revenue

Oil & Gas

$   184,167

$   282,790

$   555,538

$   635,653

Utility T&D

108,135

123,782

349,660

361,928

Canada

124,914

57,555

324,334

128,880

Professional Services

87,104

84,612

252,992

248,259

Eliminations

(1,282)

(746)

(4,263)

(2,599)

503,038

547,993

1,478,261

1,372,121

Operating expenses

Oil & Gas

192,968

278,410

597,668

637,498

Utility T&D

105,188

121,800

329,192

354,162

Canada

113,839

57,512

298,444

134,798

Professional Services

81,457

79,699

238,547

239,170

Eliminations

(1,282)

(746)

(4,263)

(2,599)

492,170

536,675

1,459,588

1,363,029

Operating income (loss)

Oil & Gas

(8,801)

4,380

(42,130)

(1,845)

Utility T&D

2,947

1,982

20,468

7,766

Canada

11,075

43

25,890

(5,918)

Professional Services

5,647

4,913

14,445

9,089

Operating income

10,868

11,318

18,673

9,092

Other expense

Interest expense, net

(8,220)

(6,464)

(22,832)

(21,454)

Loss on early extinguishment of debt

(11,573)

-

(11,573)

(3,405)

Other, net

(336)

(110)

(413)

(449)

(20,129)

(6,574)

(34,818)

(25,308)

Income (loss) from continuing operations before income taxes

(9,261)

4,744

(16,145)

(16,216)

Provision for income taxes

3,205

897

6,943

3,078

Income (loss) from continuing operations

(12,466)

3,847

(23,088)

(19,294)

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

(13,467)

(3,112)

(5,554)

3,357

Net income (loss)

(25,933)

735

(28,642)

(15,937)

Less: Income attributable to noncontrolling interest

-

(273)

-

(945)

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

$    (25,933)

$         462

$    (28,642)

$    (16,882)

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

Income (loss) from continuing operations

$    (12,466)

$      3,847

$    (23,088)

$    (19,294)

Income (loss) from discontinued operations

(13,467)

(3,385)

(5,554)

2,412

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

$    (25,933)

$         462

$    (28,642)

$    (16,882)

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

Continuing operations

$       (0.26)

$        0.08

$       (0.48)

$       (0.40)

Discontinued operations

(0.28)

(0.07)

(0.11)

0.05

$       (0.54)

$        0.01

$       (0.59)

$       (0.35)

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

Continuing operations

$       (0.26)

$        0.08

$       (0.48)

$       (0.40)

Discontinued operations

(0.28)

(0.07)

(0.11)

0.05

$       (0.54)

$        0.01

$       (0.59)

$       (0.35)

Cash Flow Data

Continuing operations

Cash provided by (used in)

Operating activities

$    (60,721)

$    (22,708)

$    (43,248)

$    (12,530)

Investing activities

$     (4,600)

$     (2,349)

30,034

(377)

Financing activities

$     38,417

$     28,612

(5,592)

(31,740)

Foreign exchange effects

$         209

$        (404)

(310)

(2,110)

Discontinued operations

$     (6,840)

$    (25,724)

(15,189)

(780)

Other Data (Continuing Operations)

Weighted average shares outstanding

Basic

48,642

48,120

48,512

47,965

Diluted

48,642

48,509

48,512

47,965

Adjusted EBITDA from continuing operations(1)

$     21,866

$     23,403

$     53,811

$     48,326

Purchases of property, plant and equipment

4,966

3,240

9,673

10,506

Reconciliation of Non-GAAP Financial Measure

Adjusted EBITDA from continuing operations (1)

Income (loss) from continuing operations attributable to Willbros Group, Inc.

$    (12,466)

$      3,847

$    (23,088)

$    (19,294)

Interest expense, net

8,220

6,464

22,832

21,454

Provision for income taxes

3,205

897

6,943

3,078

Loss on early extinguishment of debt

11,573

-

11,573

3,405

Depreciation and amortization

9,939

10,934

32,246

34,788

DOJ monitor cost

-

2

-

1,588

Stock based compensation

1,986

1,844

4,784

5,761

Restructuring and reorganization costs

44

33

198

169

Gain on disposal of property and equipment

(635)

(618)

(1,677)

(2,623)

Adjusted EBITDA from continuing operations(1)

$     21,866

$     23,403

$     53,811

$     48,326

Balance Sheet Data

9/30/2013

6/30/2013

3/31/2013

12/31/2012

Cash and cash equivalents

$     20,075

$     53,610

$      9,698

$     48,778

Working capital

265,636

236,812

217,406

270,512

Total assets

864,046

863,054

888,168

978,246

Total debt  

309,294

264,386

249,493

303,359

Stockholders' equity

175,547

200,961

207,443

206,333

Backlog Data (2)

Total By Reporting Segment

Oil & Gas

$   315,159

$   241,347

$   212,358

$   293,495

Utility T&D

999,293

1,079,261

1,169,806

1,257,403

Canada

386,830

415,804

395,804

349,520

Professional Services

246,829

220,707

228,134

197,752

Total Backlog

$1,948,111

$1,957,119

$2,006,102

$2,098,170

Total Backlog By Geographic Area

United States

$1,556,010

$1,537,313

$1,606,046

$1,743,906

Canada

386,830

415,804

395,804

349,520

Other International

5,271

4,002

4,252

4,744

Total Backlog

$1,948,111

$1,957,119

$2,006,102

$2,098,170

12 Month Backlog

$   956,810

$   918,974

$   880,021

$1,010,365

(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.  These adjustments are included in various performance metrics under our credit facilities and other financing arrangements.  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.



RELATED LINKS

http://www.willbros.com