SOURCE: Willbros Group, Inc.

March 07, 2007 20:40 ET

Willbros Reports Results for Fourth Quarter and the Full Year 2006

Continuing Operations Results Improve Year Over Year and Quarter Over Quarter; Severance Charges Impact Earnings From Continuing Operations in Fourth Quarter; Backlog at Year End From Continuing Operations of $602 Million, Primarily in North America; Full Year Loss of $83.4 Million From Discontinued Operations; Nigerian Operations Sold in February 2007

HOUSTON, TX -- (MARKET WIRE) -- March 7, 2007 -- Willbros Group, Inc. (NYSE: WG) today reported its results for the fourth quarter and the full year 2006. On revenue of $543.3 million, from continuing operations, the net loss for the full year 2006 was $22.0 million, or $0.98 per share, an improvement over the loss of $30.5 million, or $1.43 per share, in 2005. Net loss from discontinued operations for the full year 2006 was $83.4 million, or $3.72 per share, compared to $8.3 million, or $0.39 per share, in 2005. Total net loss for the full year 2006 was $105.4 million, or $4.70 per share, compared to a net loss of $38.8 million, or $1.82 per share, in 2005.

Randy Harl, President and Chief Executive Officer, commented, "While our annual results were disappointing, 2006 was a year of change and transition for Willbros. We spent much of our time, effort and resources reducing the risks in our portfolio and positioning the Company to take advantage of one of the most robust markets we have seen in years. As a result, in the fourth quarter of 2006, the revenue from North America and Oman operations increased 52 percent compared to the third quarter of 2006 with improved contract margins. An important milestone in 2006 included deciding to sell the Nigerian operations. The Nigerian sale and recent awards in North America, which exhibit better terms and conditions and contract margins, resulted in significantly improving the risk profile of our backlog. Equally important was implementing more sophisticated business processes and controls and obtaining the capital and financial resources necessary to win projects that fit our risk profile. Our markets in North America, where we are well positioned, continue to exhibit strength. We are achieving our objective to reduce general and administrative costs and are continuing to refine our business processes and controls.

"In summary, we accomplished the goals we established in the fourth quarter 2006 which are as follows:

--  We sold Nigerian operations in February 2007.
--  We reduced our G&A to a run rate to 6-8% of revenue going forward.
--  We delivered the revenue and contract margins per our previous
    guidance."
    

Fourth Quarter 2006 Continuing Operations

The Company reported revenue from continuing operations of $191.1 million in the fourth quarter of 2006 compared to $125.5 million in the third quarter of 2006 which represented a 52 percent increase quarter over quarter. The increase in revenue was due primarily to the startup of new projects in the fourth quarter of 2006, which were delayed from starting in the third quarter of 2006. Despite heavy rains and flooding at multiple job sites, contract margin in the fourth quarter 2006 increased to 11.6 percent from 9.6 percent in the third quarter of 2006.

General and Administrative ("G&A") expenses were $20.2 million, 10.6 percent of revenue, for the fourth quarter of 2006. G&A expenses included severance charges of $5.0 million related to executive management changes. With the reductions made during the fourth quarter of 2006, the Company expects its G&A expense as a percentage of revenue to be in line with guidance of 6-8 percent beginning in 2007.

The net loss from continuing operations from the fourth quarter of 2006 was $3.4 million, or $0.14 per share, compared to a net loss of $5.0 million, or $0.23 per share, in the third quarter of 2006.

2006 Full Year Continuing Operations

The Company reported revenue from continuing operations of $543.3 million for the full year 2006 compared to $294.5 million in 2005, an 84 percent increase year over year. The increase in revenue was due to higher levels of activity in engineering, construction and engineering, procurement and construction (EPC) projects primarily in North America. Contract margin for 2006 increased to 9.9 percent which was an improvement over 2005 contract margin of 9.6 percent. G&A expenses were $53.4 million, 9.8 percent of revenue, in 2006 compared to $42.4 million, 14.4 percent of revenue, in 2005.

2006 Discontinued Operations

Discontinued operations reported an $83.4 million loss, or $3.72 per share, for the full year of 2006 and $37.2 million loss, or $1.47 per share, for the fourth quarter of 2006. Losses from discontinued operations are almost entirely attributable to our Nigeria operations. The operating results in Nigeria for 2006 were negatively impacted by schedule delays; increasing costs related to labor, equipment, materials, and security; disputes with clients related to change orders; and the lack of revenues on certain projects due to force majeure. While in the process of selling our Nigerian operations, we incurred costs to protect the value of our franchise in Nigeria by continuing to qualify for future projects and by maintaining a certain level of workforce.

Additional explanation of the results for the reported periods and factors which impacted them will be provided in the Company's conference call and in Note 2 of the Notes to Consolidated Financial Statements included in the annual report on Form 10-K, which will be filed in the next several days.

Backlog(1)

At December 31, 2006, Willbros reported backlog(1) from continuing operations of approximately $602 million compared to $240 million at December 31, 2005. Backlog from continuing operations has increased by more than 150 percent since the end of 2005 and represents projects primarily in North America. This year-end backlog does not include $210 million in new project awards, which will be reflected in backlog at the end of the first quarter 2007. These new awards are all in the United States.

CONFERENCE CALL

In conjunction with the release, Willbros has scheduled a conference call, which will be broadcast live over the Internet on Thursday, March 8, 2007 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

     What:   Willbros Group, Inc. Fourth Quarter and Full Year Earnings
             Conference Call

     When:   Thursday, March 8, 2007 - 9:00 a.m. Eastern Time

     Where:  Live via phone by dialing 888-868-9080 and asking for the
             Willbros call at least 10 minutes prior to the start time.
             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.
A telephonic replay of the conference call will be available through March 22, 2007 and may be accessed by calling 877-519-4471 and using the passcode 8487408. 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 and power industries, providing engineering and construction 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 those discussed above and such things as the potential for additional investigations; the possible losses arising from the discontinuation of operations and the sale of the Nigeria assets; fines and penalties by government agencies; the outcome of the current Securities and Exchange Commission, Office of Foreign Assets Control and Department of Justice investigations; the identification of one or more other issues that require restatement of one or more prior period financial statements; 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, the effective tax rate of the different countries where the work is being conducted, development trends of the oil, gas and power industries, 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.


                            WILLBROS GROUP INC.
                  (In Thousands, Except Per Share Amounts)



                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2006        2005        2006        2005
                            ----------  ----------  ----------  ----------
Statement of Income Data
 Contract revenue
  United States & Canada    $  167,941  $  111,179  $  474,045  $  269,006
  International                 23,138       6,773      69,214      25,473
                            ----------  ----------  ----------  ----------
                               191,079     117,952     543,259     294,479
 Contract cost
  United States & Canada       150,219      98,358     429,451     242,471
  International                 18,650       6,341      60,043      23,601
                            ----------  ----------  ----------  ----------
                               168,869     104,699     489,494     266,072
 Contract income
  United States & Canada        17,722      12,821      44,594      26,535
  International                  4,488         432       9,171       1,872
                            ----------  ----------  ----------  ----------
                                22,210      13,253      53,765      28,407
  Depreciation and
   amortization                  3,236       3,143      12,430      11,688
  General and
   administrative               20,233      12,093      53,366      42,350
                            ----------  ----------  ----------  ----------
 Operating loss                 (1,259)     (1,983)    (12,031)    (25,631)
 Other income (expense):
  Interest - net                (2,133)     (1,267)     (8,265)     (3,904)
  Other - net                      465         260         569         742
                            ----------  ----------  ----------  ----------
                                (1,668)     (1,007)     (7,696)     (3,162)
                            ----------  ----------  ----------  ----------
 Loss before income taxes       (2,927)     (2,990)    (19,727)    (28,793)
 Provision for income taxes        498       3,636       2,308       1,668
                            ----------  ----------  ----------  ----------
 Loss from continuing
  operations                    (3,425)     (6,626)    (22,035)    (30,461)
 Loss from discontinued
  operations                   (37,166)      5,216     (83,402)     (8,319)
                            ----------  ----------  ----------  ----------
 Net income (loss)          $  (40,591) $   (1,410) $ (105,437) $  (38,780)
                            ==========  ==========  ==========  ==========
 Basic loss per share:
  Continuing operations     $    (0.14) $    (0.32) $    (0.98) $    (1.43)
  Discontinued operations        (1.47)       0.25       (3.72)      (0.39)
                            ----------  ----------  ----------  ----------
                            $    (1.61) $    (0.07) $    (4.70) $    (1.82)
                            ==========  ==========  ==========  ==========
 Diluted loss per share:
  Continuing operations     $    (0.14) $    (0.32) $    (0.98) $    (1.43)
  Discontinued operations        (1.47)       0.25       (3.72)      (0.39)
                            ----------  ----------  ----------  ----------
                            $    (1.61) $    (0.07) $    (4.70) $    (1.82)
                            ==========  ==========  ==========  ==========

Cash Flow Data
Continuing operations:
 Cash provided by (used in):
  Operating activities      $   23,820  $  (15,711) $   11,103  $  (34,631)
  Investing activities           4,836      (4,171)       (810)    (16,966)
  Financing activities          43,709      59,966      51,550      56,830
  Foreign exchange effects         380        (458)        139          17
Discontinued operations        (50,578)    (14,581)    (80,272)    (22,484)

Other Data (Continuing
 Operations)
  Weighted average shares
   outstanding:
    Basic                       25,321      21,274      22,441      21,258
    Diluted                     25,321      21,274      22,441      21,258
  EBITDA(2)                 $    2,442  $    1,420  $      968  $  (13,201)
  Capital expenditures          (1,016)      4,043      11,373      18,706

Reconciliation of Non-GAAP
 Financial Measure
  Net loss, continuing
   operations               $   (3,425) $   (6,626) $  (22,035) $  (30,461)
  Interest - net                 2,133       1,267       8,265       3,904
  Income taxes                     498       3,636       2,308       1,668
  Depreciation and
   amortization                  3,236       3,143      12,430      11,688
                            ----------  ----------  ----------  ----------
  EBITDA(2)                 $    2,442  $    1,420  $      968  $  (13,201)
                            ==========  ==========  ==========  ==========

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

Balance Sheet Data          12/31/2006   9/30/2006  12/31/2005
                            ----------  ----------  ----------
 Cash and cash equivalents  $   37,643  $   15,476  $   55,933
 Working capital               170,825     165,743     204,960
 Total assets                  588,254     524,596     498,885
 Total debt                    167,139     167,540     138,020
 Stockholders' equity           97,931      86,614     145,234

Backlog(1) Data

 Continuing Operations By
  Geographic Area
   Middle East              $   36,864  $   58,583  $   47,196
   North America               565,408     704,439     193,177
                            ----------  ----------  ----------
                            $  602,272  $  763,022  $  240,373
                            ==========  ==========  ==========

 Continuing Operations By
  Reporting Segment
   International            $   36,864  $   58,583  $   47,196
   United States & Canada      565,408     704,439     193,177
                            ----------  ----------  ----------
                            $  602,272  $  763,022  $  240,373
                            ==========  ==========  ==========

 Discontinued Operations
   West Africa              $  406,780  $  449,280  $  564,343
   Latin America                     -           -      11,639
                            ----------  ----------  ----------
                            $  406,780  $  449,280  $  575,982
                            ==========  ==========  ==========


(1)  Backlog is anticipated contract revenue from projects for which award
     is either in hand or assured.
(2)  EBITDA is earnings before net interest, income taxes and depreciation
     and amortization. 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
     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.

Contact Information

  • CONTACT:

    Michael W. Collier
    Vice President, Investor Relations
    Willbros USA, Inc.
    (713) 403-8016

    Connie Dever
    Director, Strategic Planning
    Willbros USA, Inc.
    (713) 403-8035