SOURCE: Willbros Group, Inc.

Willbros Group, Inc.

March 14, 2011 20:34 ET

Willbros Reports Fourth Quarter and 2010 Results

Twelve Month Backlog at December 31, 2010 of $946 Million; Total Backlog at December 31, 2010 of $2.2 Billion; Company to Host a Conference Call on Tuesday, March 15, 2011 at 9:00 a.m. Eastern Time

HOUSTON, TX--(Marketwire - March 14, 2011) - Willbros Group, Inc. (NYSE: WG) announced today results for the fourth quarter and full year 2010. The Company recorded a net loss from continuing operations in the fourth quarter of $66.3 million, or $1.41 per share, on revenue of $398.5 million. Contributing to the loss were after-tax charges of $14.0 million related to cost overruns due to extreme weather and schedule slippage on several projects in Canada, and an after-tax impairment charge of $28.8 million related to the 2007 acquisition of the Downstream Oil & Gas ("Downstream") segment. Absent the non-cash impairment charge, fourth quarter results would have been a net loss from continuing operations of approximately $37.5 million, or $0.80 per share.

For the full year 2010, Willbros reported a net loss from continuing operations of $31.8 million, or $0.74 per share, on revenue of $1.2 billion. Full year results were negatively impacted by $57.3 million from the following after-tax charges: $14.0 million of Canada fourth quarter project losses, $7.3 million of deal costs associated with the acquisition of the InfrastruX Group, now the Company's Utility Transmission & Distribution ("Utility T&D") segment, and a non-cash $36.0 million goodwill impairment charge in the Downstream segment. These charges were partially offset by an after-tax and non-cash $45.3 million reduction in the fair value of the earnout liability associated with the acquisition of InfrastruX. Absent the impairment charge and reduction in earnout, full year 2010 results would have been a net loss from continuing operations of approximately $41.1 million, or $0.96 per share.

Randy Harl, President and Chief Executive Officer, commented, "Although market conditions started to improve late in the year, we continued to be challenged by weaker demand for our services which was compounded by poor visibility for the timing of both committed projects as well as anticipated projects. In our Downstream and Utility T&D segments, we found ourselves maintaining our operations at resource levels sufficient to initiate and complete certain projects that were delayed or cancelled on short notice. The combination of these circumstances resulted in misalignment of our costs with the uncertain timing of revenues. We also made significant investments in the future of the Company to diversify our end market exposure with the acquisition of InfrastruX and to align our service offerings with our customers' needs. We have made several management changes and added a key position to the management team since the second half of 2010. We have high expectations from the newly configured management team.

"Our foremost priority in 2011 is strengthening the Company's financial position. We are advancing the integration of InfrastruX; and, across all our segments, we continue to monitor overhead costs and identify additional cost savings while also reviewing and adapting our strategies to align them with our markets, which should translate into increased margin. In order to deliver these results, I have directed our management team to focus on four primary objectives:

1. Reduce debt by approximately $50 - $100 million, to significantly
   reduce interest expense and provide better financial flexibility.
   This should help translate more of our EBITDA into earnings;

2. Continue to emphasize and improve our project management tools and
   capabilities. Across the Company, we can achieve results like those
   we accomplished on the Fayetteville Express Pipeline ("FEP") project
   which we completed under budget and on schedule;

3. Maintain our focus on North America. Our presence in the U.S.
   unconventional shale play developments, the Canadian oil sands and the
   U.S. electric transmission markets presents the best growth
   opportunities for Willbros. This is where our key markets and resources
   come together to offer the best risk adjusted returns; and

4. Remain focused on Safety. Our objective for the year is to reduce
   injuries by 50%. We differentiate Willbros on this value both as an
   employer and as a provider of services."

Backlog(4)

At December 31, 2010, Willbros reported backlog from continuing operations of $2.2 billion compared to $2.3 billion at September 30, 2010 and $429 million at December 31, 2009. The $1.8 billion year-over-year increase is primarily related to the $1.4 billion of backlog associated with the InfrastruX acquisition. Backlog in the Upstream segment also increased by $370 million year-over-year.

Historically, the Company has only recognized Master Service Agreement ("MSA") backlog for the next twelve months from the reporting date. In conjunction with the InfrastruX acquisition and the resulting material increase in future MSA work, the Company is now reporting all expected MSA backlog until the conclusion of the contract. At December 31, 2010, $1.2 billion of the $2.2 billion backlog represents MSA backlog expected to be worked off in periods beyond twelve months from the reporting date and is comprised of $854 million and $324 million for the Utility T&D and Upstream segments, respectively.

Mr. Harl continued, "We are encouraged by the improving outlook in all of our segments, growing backlog and increasing visibility for future projects in North America. We are upgrading our sales and marketing efforts, which we anticipate will result in increased backlog and higher operating margins through 2011 and into 2012. We see greater opportunities in North America and we are keenly focused on successfully executing the projects we have in backlog. While the current market for small capital projects in the Downstream segment remains challenging, we do believe it is improving. Our visibility in the U.S. pipeline and related facility infrastructure and electric transmission construction markets has improved. We also see greater opportunities in Canada in the oil sands and development opportunities for the shale plays in North America. With our diversified services platform, broad geographic reach and strong reputation for quality, we believe we are well-positioned to compete for new energy infrastructure projects in the foreseeable future."

Segment Operating Results

Upstream

For the fourth quarter of 2010, the Upstream segment reported an operating loss of $28.7 million on revenue of $140.9 million. For the full year, Upstream reported operating income of $11.7 million on revenue of $573.8 million. Fourth quarter and full year operating results were reduced by $19.2 million as a result of delays and cost overruns on several Canada projects. Also, the fourth quarter operating loss was increased by normal seasonal patterns in the U.S. pipeline construction market.

Downstream

For the fourth quarter of 2010, the Downstream segment reported an operating loss of $48.3 million on revenue of $98.2 million. For the full year, Downstream reported an operating loss of $75.2 million on revenue of $301.1 million. Downstream results were impacted by impairment charges of $12.0 million and $48.0 million in the third and fourth quarters, respectively. The Downstream segment in 2010 continued to be impacted by curtailment of customer spending for small capital projects and maintenance in the refining sector.

Utility T&D

For the fourth quarter of 2010, the Utility T&D segment reported an operating loss of $10.4 million on revenue of $159.3 million. Full year results only include the six month period following the close of the InfrastruX acquisition on July 1, 2010 and reflect an operating loss of $26.5 million on revenue of $317.5 million. In the fourth quarter, the segment incurred charges of $2.6 million comprised of severance costs and accelerated stock vesting charges primarily associated with the integration of the new Utility T&D segment. These charges included a reduction in the management structure of the new Utility T&D segment and the closing of the Seattle administrative office. This creates a more streamlined reporting structure with lower costs and is expected to generate annualized savings of $2.5 million going forward.

Liquidity

At December 31, 2010, the Company had $141.1 million of cash and equivalents. On March 4, 2011, the Company negotiated an amendment to its 2010 Credit Facility. As part of the amendment, the Company agreed to limit its cash borrowings to $25 million plus $59.4 million to satisfy the note holders who have exercised their put options under the 2.75% Senior Notes Indenture. Additionally, the amended credit facility now permits the Company to divest of certain non-core and non-strategic assets to reduce its leverage position. The $25 million borrowing restriction would be lifted when the Company's total leverage ratio reaches 3.0 to 1.0, or less. The credit facility has the capacity to provide up to $175.0 million of letters of credit less the $25.7 million of currently issued letters of credit. Any use of the revolver capacity would reduce, by a like amount, the available letters of credit capacity.

Guidance

Van Welch, Willbros Chief Financial Officer, provided expectations for 2011, "The seasonality of the fourth and first quarters of our business model, and the extreme weather conditions across North America early this year are expected to impact the first quarter. We do not expect additional losses on the Canadian projects or additional impairment charges, but otherwise we expect the first quarter results will be comparable to the fourth quarter. We expect annual revenue to range from $1.6 to $1.8 billion; debt reduction of approximately $50-100 million by the end of the year; and, SG&A reduced to 6-8% of revenue.

"Our approved capital expenditure budget for 2011 is $29.7 million, but capital spending is expected to be a function of future work commitments and the terms and conditions offered in the equipment rental market."

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Tuesday, March 15, 2011 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

What:  Willbros Fourth Quarter Earnings Conference Call

When:  Tuesday, March 15, 2011 - 9:00 a.m. Eastern Time

How:   Live via phone - By dialing 416-340-8530 or 877-240-9772
       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 home page.

For those who cannot listen to the live call, a replay will be available through March 29, 2011, and may be accessed by calling 905-694-9451 or 800-408-3053 using pass code 7036711#. Also, an archive of the webcast will be available shortly after the call on www.willbros.com for a period of 12 months.

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 the potential for additional investigations; disruptions to the global credit markets; the global economic downturn; fines and penalties by government agencies; 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 integration and operation of InfrastruX; the possible losses arising from the discontinuation of operations and the sale of the Nigeria assets; the existence of material weaknesses in internal controls 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 loan agreements and indentures; 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; the effective tax rate of the different countries where the Company performs work; development trends of the oil, gas, power, refining and petrochemical industries and changes in the political and economic environment of the countries in which the Company has operations; 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.

TABLE TO FOLLOW

                           WILLBROS GROUP, INC.
                 (In thousands, except per share amounts)


                           Three Months Ended            Year Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------
Income Statement
 Contract revenue
   Upstream O&G         $   140,946  $   128,457  $   573,796  $   982,523
   Downstream O&G            98,210       65,374      301,104      277,250
   Utility T&D              159,340            -      317,512            -
                        -----------  -----------  -----------  -----------
                            398,496      193,831    1,192,412    1,259,773


 Operating expenses
   Upstream O&G             169,662      137,332      562,082      942,526
   Downstream O&G           146,461       66,583      376,319      276,751
   Utility T&D              169,780            -      343,967            -
                        -----------  -----------  -----------  -----------
                            485,903      203,915    1,282,368    1,219,277


 Operating income
  (loss)
   Upstream O&G             (28,716)      (8,875)      11,714       39,997
   Downstream O&G           (48,251)      (1,209)     (75,215)         499
   Utility T&D              (10,440)           -      (26,455)           -
   Changes in fair value
    of earn out
    liability                     -            -       45,340            -
                        -----------  -----------  -----------  -----------
 Operating income
  (loss)                    (87,407)     (10,084)     (44,616)      40,496


 Other expense
   Interest - net           (11,549)      (2,236)     (27,565)      (8,328)
   Other - net                1,881          838        5,474          819
                        -----------  -----------  -----------  -----------
                             (9,668)      (1,398)     (22,091)      (7,509)
                        -----------  -----------  -----------  -----------
 Income (loss) from
  continuing operations
  before income taxes       (97,073)     (11,482)     (66,707)      32,987
 Provision (benefit)
  for income taxes          (31,076)      (4,520)     (36,150)       8,734
                        -----------  -----------  -----------  -----------
 Income (loss) from
  continuing operations     (65,997)      (6,962)     (30,557)      24,253
 Income (loss) from
  discontinued
  operations net of
  provision for income
  taxes                      (1,465)        (993)      (5,272)      (4,613)
                        -----------  -----------  -----------  -----------
 Net income (loss)          (67,462)      (7,955)     (35,829)      19,640
 Less: Income
  attributable to
  noncontrolling
  interest                     (305)        (275)      (1,207)      (1,817)
                        -----------  -----------  -----------  -----------
 Net income (loss)
  attributable to
  Willbros Group, Inc.  $   (67,767) $    (8,230) $   (37,036) $    17,823
                        ===========  ===========  ===========  ===========
 Reconciliation of net
  income (loss)
  attributable to
  Willbros Group, Inc.
 Income (loss) from
  continuing operations $   (66,302) $    (7,237) $   (31,764) $    22,436
 Income (loss) from
  discontinued
  operations                 (1,465)        (993)      (5,272)      (4,613)
                        -----------  -----------  -----------  -----------
 Net income (loss)
  attributable to
  Willbros Group, Inc.  $   (67,767) $    (8,230) $   (37,036) $    17,823
                        ===========  ===========  ===========  ===========

 Basic income (loss)
  per share
  attributable to
  Company shareholders:
   Continuing
    operations          $     (1.41) $     (0.19) $     (0.74) $      0.58
   Discontinued
    operations          $     (0.03)       (0.03)       (0.12)       (0.12)
                        -----------  -----------  -----------  -----------
                        $     (1.44) $     (0.22) $     (0.86) $      0.46
                        ===========  ===========  ===========  ===========

 Diluted income (loss)
  per share
  attributable to
  Company shareholders:
   Continuing
    operations          $     (1.41) $     (0.19) $     (0.74) $      0.58
   Discontinued
    operations          $     (0.03)       (0.03)       (0.12)       (0.12)
                        -----------  -----------  -----------  -----------
                        $     (1.44) $     (0.22) $     (0.86) $      0.46
                        ===========  ===========  ===========  ===========

Cash Flow Data
Continuing operations
 Cash provided by (used
  in)
   Operating activities $    38,184  $   (26,363) $    58,293  $    57,425
   Investing activities      11,434      (17,945)    (404,651)     (34,036)
   Financing activities      (9,090)      (2,853)     291,220      (35,056)
   Foreign exchange
    effects                   1,622        2,990        2,402        6,135
Discontinued operations     (1,501)        (669)      (4,847)      (3,546)

Other Data (Continuing
 Operations)
 Weighted average
  shares outstanding
   Basic                     47,100       38,778       43,014       38,688
   Diluted                   47,100       38,778       43,014       38,883
 EBITDA(1)              $   (18,038) $       257  $    75,816  $    80,358
 Capital expenditures         4,577        2,738       18,300       13,107

Reconciliation of
 Non-GAAP Financial
 Measures

 EBITDA (1), (2)
  Net income (loss)
   from continuing
   operations
   attributable to
   Willbros Group, Inc. $   (66,302) $    (7,237) $   (31,764) $    22,436
  Interest - net             11,549        2,236       27,565        8,328
  Provision (benefit)
   for income taxes         (31,076)      (4,520)     (36,150)       8,734
  Depreciation and
   amortization              19,791        9,778       56,165       40,860
  Goodwill impairment        48,000            -       60,000            -
                        -----------  -----------  -----------  -----------
  EBITDA                    (18,038)         257       75,816       80,358
                        ===========  ===========  ===========  ===========
  Changes in fair value
   of contingent
   earnout liability              -            -      (45,340)           -
  DOJ monitor cost              414        2,479        4,002        2,582
  Stock based
   compensation               1,749        2,300        7,957        9,549
  Restructuring and
   reorganization costs       3,073        4,487        3,771       12,694
  Acquisition related
   costs                        143        1,557       10,055        2,499
  (Gains) losses on
   sales of equipment        (1,745)        (619)      (3,538)      (1,082)
  Noncontrolling
   interest                     305          275        1,207        1,817
                        -----------  -----------  -----------  -----------
  Adjusted EBITDA (2)   $   (14,099) $    10,736  $    53,930  $   108,417
                        ===========  ===========  ===========  ===========

 Net income (loss)
  before special items
  (3)
   Net income (loss),
    continuing
    operations          $   (66,302) $    (7,237) $   (31,764) $    22,436
   Changes in fair value
    of contingent
    earnout liability             -            -      (45,340)           -
   Goodwill impairment,
    net of tax               28,800            -       36,000            -
                        -----------  -----------  -----------  -----------
   Net income (loss),
    continuing
    operations before
    special items       $   (37,502) $    (7,237) $   (41,104) $    22,436
                        ===========  ===========  ===========  ===========

 Net income from
  continuing operations
  applicable to common
  shares (numerator for
  diluted calculation)
  before special items
   Net income (loss),
    continuing
    operations          $   (66,302) $    (7,237) $   (31,764) $    22,436
   Net income (loss),
    continuing
    operations before
    special items       $   (37,502) $    (7,237) $   (41,104) $    22,436

 Diluted income (loss)
  before special items
  (3)
   Continuing
    operations          $     (1.41) $     (0.19) $     (0.74) $      0.58
   Income (loss) per
    share before special
    items               $     (0.80) $     (0.19) $     (0.96) $      0.58

 Fully Diluted Shares
  Diluted shares as
   reported                  47,100       38,778       43,014       38,688
  Diluted shares before
   special items             47,100       38,778       43,014       38,688


                        -----------  -----------  -----------  -----------

Balance Sheet Data       12/31/2010    9/30/2010    6/30/2010    3/31/2010
  Cash and cash
   equivalents          $   141,101  $   100,452  $   226,727  $   190,392
  Working capital           269,500      218,401      239,215      232,037
  Total assets            1,285,802    1,342,153      767,828      720,317
  Total debt                387,933      394,995      109,010      112,769
  Stockholders' equity      523,540      582,342      484,269      477,808

Backlog Data (4)
  Total By Reporting
   Segment
    Upstream O&G        $   653,671  $   685,076  $   324,396  $   347,700
    Downstream O&G          107,077      138,443      104,842      132,483
    Utility T&D           1,415,279    1,489,880            -            -
                        -----------  -----------  -----------  -----------
  Total Backlog         $ 2,176,027  $ 2,313,399  $   429,238  $   480,183
                        ===========  ===========  ===========  ===========

  Total Backlog By
   Geographic Area
   North America        $ 2,125,830  $ 2,267,745  $   383,054  $   436,058
   Middle East & North
    Africa                   45,728       40,674       46,184       44,125
   Other International        4,469        4,980            -            -
                        -----------  -----------  -----------  -----------
  Total Backlog         $ 2,176,027  $ 2,313,399  $   429,238  $   480,183
                        ===========  ===========  ===========  ===========

                        -----------  -----------  -----------  -----------
  12 Month Backlog      $   946,315  $ 1,037,368  $   429,238  $   480,183
                        ===========  ===========  ===========  ===========


(1)  EBITDA is earnings before net interest, income taxes and depreciation
     and amortization and intangible asset impairments. EBITDA as presented
     may not be comparable to other similarly titled measures reported by
     other companies. The Company believes EBITDA is a useful measure of
     evaluating its financial performance because of its focus on the
     Company's results from operations before net interest, income taxes,
     depreciation and amortization. EBITDA is not a measure of financial
     performance under U.S. generally accepted accounting principles.
     However, EBITDA is a common alternative measure of operating
     performance used by investors, financial analysts and rating
     agencies. A reconciliation of EBITDA to net income is included
     in the exhibit to this release.

(2)  Adjusted EBITDA is defined as earnings before net interest, income
     taxes and depreciation and amortization and intangible asset
     impairments, as adjusted for other items that management considers
     to be non-recurring, unusual or not indicative of our core operating
     performance. Management uses Adjusted EBITDA for comparing normalized
     operating results with corresponding historical periods and with the
     operational performance of other companies in our industry and
     presentations made to our analysts, investment banks and other
     members of the financing community who use this information in order
     to make investing decisions about us.  Most of the adjustments
     reflected in Adjusted EBITDA are also included in performance
     metrics under our credit facilities and other financing arrangements.
     However, Adjusted EBITDA is not a financial measurement recognized
     under U.S. generally accepted accounting principles. Because not all
     companies use identical calculations, our presentation of
     Adjusted EBITDA may not be comparable to similarly titled measures
     of other companies.

(3)  Net income (loss), continuing operations before special items, a
     non-GAAP financial measure, 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.

(4)  Backlog is anticipated contract revenue from projects for which award
     is either in hand or reasonably assured.

Contact Information

  • CONTACT:

    Michael W. Collier
    Vice President Investor Relations
    Sales & Marketing
    Willbros
    713-403-8038

    Connie Dever
    Director Strategic Planning
    Willbros
    713-403-8035