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8-K - FORM 8-K - Willbros Group, Inc.\NEW\d397021d8k.htm
EX-99.2 - TRANSCRIPT OF THE REGISTRANT'S AUGUST 8, 2012 CONFERENCE CALL - Willbros Group, Inc.\NEW\d397021dex992.htm

Exhibit 99.1

 

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FOR IMMEDIATE RELEASE

Willbros Reports Second Quarter 2012 Results from Continuing Operations

HOUSTON, TX, AUGUST 7, 2012 — Willbros Group, Inc. (NYSE: WG) announced today results from continuing operations for the second quarter of 2012. The Company recorded a net loss of $4.0 million, or ($0.08) per share, on revenue of $499.2 million, compared to a net loss from continuing operations in the first quarter of 2012 of $23.0 million, or ($0.48) per share, on revenue of $419.1 million, and net income from continuing operations of $7.2 million, or $0.15 per share, on revenue of $442.7 million in the second quarter of 2011.

For the second quarter of 2012, the Company generated operating income of $5.9 million compared to an operating loss of $10.6 million in the first quarter of 2012 and an operating income of $8.2 million in the second quarter of 2011.

Randy Harl, President and Chief Executive Officer, commented, “Our second quarter results were negatively impacted by delays on two projects and execution problems on two others. One project encountered dense rock formations, which led to underperformance by a sub-contractor and impacted productivity on the entire project. A lump-sum capital project in Canada also encountered poor soil conditions which reduced productivity and increased costs. In the aggregate, these four projects reduced our operating income by approximately $14.4 million in the second quarter of 2012, and were the primary reason we did not meet the operating income guidance of $14.0 to $16.0 million we provided with our first quarter results. Excluding the impact of these four projects, we would have exceeded the high end of this guidance.

“Despite the operating income shortfall relative to the guidance, we had several business units that performed as planned, or better than expected. I am very pleased with the progress we achieved in the Utility T&D segment which was driven by better performance in our transmission and distribution businesses in Texas. Our Texas distribution business, where we have been focused on making operating improvements, generated positive operating income for the first time since the acquisition of InfrastruX. Additionally, our Downstream Engineering business unit made a positive contribution for the second consecutive quarter and our Upstream Engineering unit continues to deliver strong operating performance on both engineering and EPC projects.

“We booked over $550 million of new work during the second quarter, maintaining a positive book-to-bill ratio. We continue to experience higher levels of bid activity consistent with our exposure to the Canadian oil sands, where we added $110 million in new work, primarily on sites where we have a long and successful work history. For the balance of 2012, we will emphasize improving our execution of the work we have in backlog.”

 

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Backlog(2)

At June 30, 2012, Willbros reported backlog from continuing operations of $2.4 billion compared to $2.3 billion at March 31, 2012. Twelve month backlog increased 36 percent to $1.2 billion at June 30, 2012 compared to $865.1 million at December 31, 2011. The major increases in backlog were in the Oil & Gas and Canada segments which increased over 47 and 62 percent, respectively, from the end of last year.

Segment Operating Results

Oil & Gas

For the second quarter of 2012, the Oil & Gas segment reported operating income of $388 thousand on revenue of $291.4 million. Revenue increased $40.5 million as compared to $250.9 million in the same period last year and the increase was primarily driven by the rapid growth of our regional offices, which now generate approximately 21 percent of segment revenue. The segment’s performance was negatively impacted by a project delay associated with our customer obtaining necessary permits, which have now been received. The majority of revenue anticipated from this south Louisiana project is now expected to be generated in the third and fourth quarters. Additionally, our progress on the Red River Pipeline project was impeded by low productivity due to greater than anticipated rock excavation, which put the project in a loss position.

Utility T&D

For the second quarter of 2012, the Utility T&D segment reported operating income of $8.4 million on revenue of $170.5 million. This represents the best quarterly financial results since this segment was created after the InfrastruX acquisition. This improvement was mainly driven by higher utilization of resources in our transmission and distribution businesses and secondly by positive operating income generated in the Texas distribution business.

Canada

For the second quarter of 2012, the Canada segment reported an operating loss of $2.9 million on revenue of $37.4 million. The loss was attributable to a lump-sum capital project which encountered increased costs related to piling installation, which put the project in a loss position, as well as the delayed start-up on another project due to delays by the customer.

Liquidity

At June 30, 2012, the Company had $38.5 million of cash and cash equivalents and access to $25.0 million in cash under the revolver included in its Credit Facility. As part of the March 4, 2011 amendment to its Credit Facility, the Company agreed to limit its cash borrowings to $25.0 million plus amounts to pay the 6.5% Senior Notes that mature in December 2012 and $59.4 million paid to the 2.75% Senior Notes holders when they exercised their put rights in the first quarter of 2011. The $25.0 million borrowing restriction is lifted when the Company’s total leverage ratio, as defined, reaches 3.00 to 1.00, or less. In the second quarter of 2012, the Company paid an additional $16.7 million against its term loan and the total leverage ratio for the period ending June 30, 2012 was 3.14.

 

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Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Wednesday, August 8, 2012 at 9:00 a.m. Eastern Time (8:00 a.m. Central).

 

What:    Willbros Second Quarter Earnings Conference Call
When:    Wednesday, August 8, 2012 - 9:00 a.m. Eastern Time
How:    Live via phone - By dialing 480-629-9772 or 888-549-7880 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 August 15, 2012, and may be accessed by calling 303-590-3030 or 800-406-7325 using pass code 4558374#. 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 and lawsuits; disruptions to the global credit markets; the untimely filing of financial statements; 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 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 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, except as may be required by law.

TABLE TO FOLLOW

 

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WILLBROS GROUP, INC.

(In thousands, except per share amounts)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2012     2011     2012     2011  

Income Statement

        

Contract revenue

        

Oil & Gas

   $ 291,406      $ 250,947      $ 537,310      $ 417,019   

Utility T&D

     170,521        159,112        309,834        279,656   

Canada

     37,356        32,701        71,325        69,957   

Eliminations

     (89     (86     (185     (169
  

 

 

   

 

 

   

 

 

   

 

 

 
     499,194        442,674        918,284        766,463   

Operating expenses

        

Oil & Gas

     291,018        252,571        536,076        427,878   

Utility T&D

     162,145        152,556        309,865        285,339   

Canada

     40,266        29,396        77,286        71,786   

Changes in fair value of earn out liability

     —          —          —          (6,000

Eliminations

     (89     (86     (185     (169
  

 

 

   

 

 

   

 

 

   

 

 

 
     493,340        434,437        923,042        778,834   

Operating income (loss)

        

Oil & Gas

     388        (1,624     1,234        (10,859

Utility T&D

     8,376        6,556        (31     (5,683

Canada

     (2,910     3,305        (5,961     (1,829

Changes in fair value of earn out liability

     —          —          —          6,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     5,854        8,237        (4,758     (12,371

Other expense

        

Interest expense, net

     (7,124     (10,446     (15,018     (25,246

Loss on early extinguishment of debt

     (1,149     (4,124     (3,405     (4,124

Other, net

     24        201        (241     (20
  

 

 

   

 

 

   

 

 

   

 

 

 
     (8,249     (14,369     (18,664     (29,390
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (2,395     (6,132     (23,422     (41,761

Provision (benefit) for income taxes

     1,273        (13,690     2,925        (12,158
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (3,668     7,558        (26,347     (29,603

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

     7,376        (9,708     9,675        (17,166
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     3,708        (2,150     (16,672     (46,769

Less: Income attributable to noncontrolling interest

     (328     (311     (672     (582
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 3,380      $ (2,461   $ (17,344   $ (47,351
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Income (loss) from continuing operations

   $ (3,996   $ 7,247      $ (27,019   $ (30,185

Income (loss) from discontinued operations

     7,376        (9,708     9,675        (17,166
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 3,380      $ (2,461   $ (17,344   $ (47,351
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Continuing operations

   $ (0.08   $ 0.15      $ (0.56   $ (0.64

Discontinued operations

     0.15        (0.20     0.20        (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.07      $ (0.05   $ (0.36   $ (1.00
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Continuing operations

   $ (0.08   $ 0.15      $ (0.56   $ (0.64

Discontinued operations

     0.15        (0.20   $ 0.20        (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.07      $ (0.05   $ (0.36   $ (1.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash Flow Data

        

Continuing operations

        

Cash provided by (used in)

        

Operating activities

   $ 9,334      $ 73,394      $ 29,897      $ 42,917   

Investing activities

     (1,847   $ 2,840        2,346        18,380   

Financing activities

     (27,748   $ (48,438     (60,751     (90,302

Foreign exchange effects

     (236   $ 665        (1,706     1,691   

Discontinued operations

     10,016      $ (4,747     5,250        (10,784

Other Data (Continuing Operations)

        

Weighted average shares outstanding

        

Basic

     47,995        47,437        47,888        47,377   

Diluted

     47,995        47,776        47,888        47,377   

Adjusted EBITDA from continuing operations(1)

   $ 18,159      $ 23,242      $ 24,368      $ 16,641   

Capital expenditures

     4,082        4,463        7,516        6,343   

 

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Reconciliation of Non-GAAP Financial Measure

        

Adjusted EBITDA from continuing operations (1)

        

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

   $ (3,996   $ 7,247      $ (27,019   $ (30,185

Interest expense, net

     7,124        10,446        15,018        25,246   

` Provision (benefit) for income taxes

     1,273        (13,690     2,925        (12,158

Loss on early extinguishment of debt

     1,149        4,124        3,405        4,124   

Changes in fair value of earn out liability

     —          —          —          (6,000

Depreciation and amortization

     12,995        16,184        26,100        32,664   

DOJ monitor cost

     —          122        1,586        2,603   

Stock based compensation

     1,837        2,067        3,925        3,468   

Restructuring and reorganization costs

     34        28        136        173   

Acquisition related costs

     —          136        —          179   

(Gains) losses on sales of assets

     (2,585     (3,733     (2,380     (4,055

Noncontrolling interest

     328        311        672        582   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations (1)

   $ 18,159      $ 23,242      $ 24,368      $ 16,641   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     6/30/2012      3/31/2012      12/31/2011  

Balance Sheet Data

        

Cash and cash equivalents

   $ 38,481       $ 48,939       $ 58,686   

Working capital

     61,344         133,626         172,470   

Total assets

     868,801         857,644         861,771   

Total debt

     227,947         238,124         268,794   

Stockholders’ equity

     216,404         211,804         231,578   

Backlog Data (2)

        

Total By Reporting Segment

        

Oil & Gas

   $ 716,756       $ 678,946       $ 517,597   

Utility T&D

     1,336,397         1,375,119         1,345,204   

Canada

     362,933         293,061         309,416   
  

 

 

    

 

 

    

 

 

 

Total Backlog

   $ 2,416,086       $ 2,347,126       $ 2,172,217   
  

 

 

    

 

 

    

 

 

 

Total Backlog By Geographic Area

        

United States

   $ 1,886,855       $ 1,872,478       $ 1,718,920   

Canada

     362,933         293,061         309,416   

Middle East/North Africa

     160,060         174,747         135,698   

Other International

     6,238         6,840         8,183   
  

 

 

    

 

 

    

 

 

 

Total Backlog

   $ 2,416,086       $ 2,347,126       $ 2,172,217   
  

 

 

    

 

 

    

 

 

 

12 Month Backlog

   $ 1,177,607       $ 980,792       $ 865,124   
  

 

 

    

 

 

    

 

 

 

 

(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.

###

 

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