HOUSTON, TX, Oct 31, 2007 (MARKET WIRE via COMTEX News Network) -- Willbros Group, Inc. ("WGI") (NYSE: WG)
- Net income for continuing operations of $10.3 million, or $0.32 per
fully diluted share
- Revenue increased 57 percent compared to second quarter 2007 and 97
percent compared to third quarter 2006
- Contract margins improved to 16.1 percent
- 75 percent of $1.1 billion backlog is cost reimbursable
- Entered into a definitive agreement to acquire Integrated Service
Company LLC (InServ)
- $150 million commitments from bank group to replace existing credit
facility
- Reached agreements in principle to resolve the DOJ/SEC investigations
relating to former operations
- Updates 2007 and provides 2008 guidance
Willbros Group, Inc. ("WGI") (NYSE: WG) today reported its results
for the third quarter 2007. Revenue from continuing operations for
the third quarter 2007 was $246.7 million. Net income from continuing
operations for the third quarter was $10.3 million or $0.32 per fully
diluted share compared to a net loss from continuing operations of
$40.4 million, or $1.47 per share, in the second quarter 2007 and a
net loss of $5.0 million, or $0.23 per share, in the third quarter
2006. Willbros also announced that it had executed a definitive
agreement to acquire Tulsa-based InServ, a leading specialty
contractor serving downstream markets, specifically, the refinery and
petrochemical markets. Willbros also reported it has received
commitments from a bank group, led by Calyon, for a new three year
revolving credit facility to replace its existing synthetic credit
facility.
THIRD QUARTER RESULTS FROM CONTINUING OPERATIONS
The Company reported revenue from continuing operations of $246.7
million, up 57 percent from the second quarter 2007 and up 97 percent
from the third quarter 2006. The increase in revenue resulted from
higher utilization of personnel and equipment in the U.S. pipeline
construction market and increased revenue from multiple station
construction projects in North America compared to both second
quarter 2007 and third quarter 2006. Contract income for the third
quarter 2007 was $39.6 million, resulting in a contract margin of
16.1 percent compared to contract income of $18.9 million and
contract margin of 12.0 percent in the second quarter 2007. Contract
income and contract margin for third quarter 2006 were $12.0 million
and 9.6 percent, respectively.
General and Administrative ("G&A") costs from continuing operations
were $17.4 million, or 7.1 percent of revenue, in the third quarter
2007. For the first nine months of 2007, G&A expense was $42.3
million, or 6.9 percent of revenue. The Company maintains its annual
guidance that G&A is expected to be in the range of 6 to 8 percent of
revenue.
Randy Harl, President and Chief Executive Officer, commented, "The
third quarter results are evidence that our strategic initiatives are
gaining traction. Our business is now operating at levels which will
sustain the growth platform we have sought, and we are able to act on
strategic transactions which will transform the business model. Key
take-aways from the third quarter results are:
- Achieved contract margins of 16.1 percent which is a significant
improvement from 8.7 percent during the first six months of 2007
- Approached the billion dollar annual revenue run rate and maintained a
backlog of over $1 billion
- Received $150 million of commitments for a new revolving credit
facility to replace our existing facility and to support additional growth
- Reached agreements in principle to settle the DOJ and SEC
investigations, which included an additional disgorgement charge."
Mr. Harl further commented, "We believe we are in the early innings
of a strong energy infrastructure build-out and continue to
anticipate improving performance which will open additional new
opportunities for us."
BACKLOG(1)
Backlog from continuing operations at September 30, 2007 was $1.09
billion, an 83 percent increase from the $602.3 million backlog at
December 31, 2006. Willbros now has 94 percent of its backlog in
North America. The Company's backlog at September 30, 2007 was 75
percent cost reimbursable compared to 45 percent at the end of 2006.
INSERV ACQUISITION
On October 31, 2007, Willbros entered into a definitive agreement to
acquire Integrated Service Company LLC for $225 million, including
$202.5 million in cash and the balance in Willbros stock issued to
existing InServ shareholders. The transaction is expected to close in
mid-November 2007, and is subject to certain closing conditions and
necessary regulatory approvals.
InServ is an integrated, full-service industrial specialty contractor
providing construction, turnaround, repair and maintenance services
to the downstream energy infrastructure market. The acquisition of
InServ will further extend Willbros fully integrated service
offerings to the downstream hydrocarbon value chain, and expand
Willbros ability to market operations, maintenance and capital
projects to new and existing clients.
"The addition of InServ is very complementary to our existing strong
position in the midstream energy infrastructure market. InServ's
strong management team averages over thirty years of industry
experience and has developed an equally strong position in its core
market. We are pleased to have this caliber of management join our
team," said Randy Harl, President and Chief Executive Officer of
Willbros. "InServ allows us to offer new service lines to our
existing customers, brings us new customer contacts through existing
InServ relationships, and also delivers a new facet, gaining end
market exposure to refineries and other downstream facilities."
Arlo DeKraai, President and Chief Executive Officer of InServ,
commented, "We are excited to join the Willbros organization, which
has a great history and reputation for exceptional service and
customer satisfaction. I believe there is a strong cultural fit and
similarity of operating philosophy between InServ and Willbros, which
will greatly assist the integration process. InServ will benefit
from operating on the larger Willbros platform and the combined
company will be well positioned to capture an increasing share of the
growing energy infrastructure market."
Willbros believes that the acquisition of InServ has compelling long
term strategic and financial rationale, including:
- The integration of complementary service offerings
- Expansion of InServ's service offerings in geographic regions where
Willbros has significant presence
- Enhancement of relationships with existing Willbros customers, many of
whom are also current InServ customers
- Similar cost reimbursable and fixed price contract mix --
approximately 75% cost reimbursable
The transaction is expected to be accretive to Willbros earnings in
2008.
NEW CREDIT FACILITY
Willbros has received commitments from a group of lenders, led by
Calyon, to replace its existing synthetic credit facility with a $150
million revolving credit facility with improved terms and conditions.
The credit facility can be increased to $200 million with lender
approval. The entire facility will be available for performance
letters of credit and 33 percent of the facility will be available
for cash borrowings and financial letters of credit. Willbros expects
to close the facility in mid-November 2007.
Commenting on the transactions, Van Welch, Chief Financial Officer,
said, "With our successes in recent project awards and operational
performance demonstrated by third quarter results, and the ability to
execute on the series of transactions we are announcing today, we are
positioning Willbros to be able, both financially and strategically,
to capture more of the energy infrastructure market."
AGREEMENTS IN PRINCIPLE TO SETTLE DOJ/SEC MATTERS
Willbros and its subsidiary, Willbros International, Inc. ("WII"),
have reached an agreement in principle with representatives of the
United States Department of Justice (the "DOJ"), subject to approval
by the DOJ, to settle its previously disclosed investigation into
possible violations of the Foreign Corrupt Practices Act (the
"FCPA"). In addition, the Company has reached an agreement in
principle with the staff of the United States Securities and Exchange
Commission (the "SEC") to resolve its previously disclosed
investigation of possible violations of the FCPA and possible
violations of the Securities Act of 1933 and the Securities Exchange
Act of 1934. These investigations stem primarily from its former
operations in Bolivia, Ecuador and Nigeria. As described more fully
in the Company's third quarter 2007 10-Q filed with the SEC, if
accepted by the DOJ and the SEC and approved by the court, the
settlements together will require Willbros to pay over approximately
three years, a total of $32.3 million in penalties and disgorgement.
In addition, WGI and WII will, for a period of approximately three
years, each be subject to Deferred Prosecution Agreements ("DPAs")
with the DOJ. Finally, the Company will be subject to a permanent
injunction barring future violations of certain provisions of the
federal securities laws.
As a result of the settlements in principle, Willbros has increased
its reserves related to these investigations by $8.3 million, bringing
the aggregate reserves for these matters to $32.3 million. The
increase to the reserve is comprised of: (i) a $2 million reduction
in the Company's 2007 second quarter estimate of $24 million in fines
resulting from the DOJ actions that was recorded as a charge to
continuing operations, and (ii) an additional charge to discontinued
operations of $10.3 million of profit
disgorgement, inclusive of accrued interest on the disgorgement
profit, resulting for the SEC actions. The aggregate reserves reflect
the Company's estimate of the expected probable loss with respect to
these matters, assuming the settlements are finalized. If the
settlements are not finalized, the amount reserved may not reflect
eventual losses.
2007 UPDATE AND 2008 FINANCIAL GUIDANCE
Due to the positive results in the third quarter, Willbros raised its
revenue guidance for 2007 to the $800 - $900 million range. The
Company maintains its annual guidance for contract margins to be in
the range of 11 to 13 percent and expects G&A to be in the range of 6
to 8 percent of revenue.
The Company's base plan for 2008 projected earnings per share to
range from $1.40 to $1.50. As a result of the transactions announced
today, including the acquisition, earnings per share in 2008 should
increase 10 to 15 percent relative to the Company's base plan.
Supported by strong backlog announced in the third quarter, and
including the InServ acquisition, Willbros expects to generate
revenue in 2008 in the range of $1.4 to $1.6 billion.
CONFERENCE CALL
Willbros has scheduled a conference call, which will be broadcast
live over the Internet on Thursday, November 1, 2007 at 9:00 a.m.
Eastern Time (8:00 a.m. Central).
What: Willbros Group, Inc. Third Quarter 2007 Conference Call
When: Thursday, November 1, 2007 - 9:00 a.m. Eastern Time
Where: Live via phone by dialing 888-575-8232 and using the passcode
3240754 or asking for the Willbros call at least 10
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
November 14, 2007 and may be accessed by calling 800-408-3053 and
using the passcode 3240754. 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 international contractor serving the
energy industries, providing engineering, construction, engineering,
procurement and construction ("EPC"), and operations and maintenance
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 possible losses arising from the
discontinuation of operations and the sale of the Nigeria assets;
failure to finalize the agreements in principle with the Securities
and Exchange Commission and the Department of Justice; the potential
for additional investigations; the identification of one or more
other issues that require restatement of one or more prior period
financial statements; 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; future
refining and petrochemical capital and maintenance expenditures;
oil, gas, gas liquids, motor fuel and power prices and demand; the
amount and location of planned pipelines; the effective tax rates 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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Statement of Operations Data
Contract revenue
Construction $ 193,984 $ 91,204 $ 476,638 $ 257,587
Engineering 25,584 20,216 66,040 55,621
EPC 27,148 14,046 67,490 38,973
---------- ---------- ---------- ----------
246,716 125,466 610,168 352,181
Contract cost
Construction 163,404 82,912 427,966 238,172
Engineering 19,034 17,292 49,166 46,598
EPC 24,651 13,214 61,658 35,858
---------- ---------- ---------- ----------
207,089 113,418 538,790 320,628
Contract income
Construction 30,580 8,292 48,672 19,415
Engineering 6,550 2,924 16,874 9,023
EPC 2,497 832 5,832 3,115
---------- ---------- ---------- ----------
39,627 12,048 71,378 31,553
Depreciation and
amortization 5,457 3,265 13,223 9,180
General and administrative 17,448 11,092 42,295 33,133
Government fines (2,000) - 22,000 -
---------- ---------- ---------- ----------
Operating income (loss) 18,722 (2,309) (6,140) (10,760)
Other income (expense):
Interest - net (1,042) (2,709) (2,119) (6,132)
Other - net (1,327) 432 (2,019) 105
Loss on early
extinguishment of debt - - (15,375) -
---------- ---------- ---------- ----------
(2,369) (2,277) (19,513) (6,027)
---------- ---------- ---------- ----------
Income (loss) before income
taxes 16,353 (4,586) (25,653) (16,787)
Provision for income taxes 6,081 379 7,793 1,811
---------- ---------- ---------- ----------
Income (loss) from
continuing operations 10,272 (4,965) (33,446) (18,598)
Loss from discontinued
operations (9,126) (17,136) (21,494) (46,249)
---------- ---------- ---------- ----------
Net income (loss) $ 1,146 $ (22,101) $ (54,940)$ (64,847)
========== ========== ========== ==========
Basic income (loss) per share
Continuing operations $ 0.36 $ (0.23) $ (1.22)$ (0.87)
Discontinued operations (0.32) (0.80) (0.78) (2.15)
---------- ---------- ---------- ----------
$ 0.04 $ (1.03) $ (2.00)$ (3.02)
========== ========== ========== ==========
Diluted income (loss) per share
Continuing operations $ 0.32 $ (0.23) $ (1.22)$ (0.87)
Discontinued operations (0.26) (0.80) (0.78) (2.15)
---------- ---------- ---------- ----------
$ 0.06 $ (1.03) $ (2.00)$ (3.02)
========== ========== ========== ==========
Cash Flow Data
Continuing operations:
Cash provided by (used in):
Operating activities $ (28,635)$ (2,291) $ (22,629)$ (12,717)
Investing activities (35,925) 5,124 66,952 26,436
Financing activities (6,353) (3,340) (28,445) 7,841
Foreign exchange effects 2,661 (123) 2,208 (241)
Discontinued operations 19,199 (15,910) 2,980 (61,776)
Other Data (continuing operations)
Weighted average shares
outstanding:
Basic 28,805 21,558 27,422 21,481
Diluted 34,844 21,558 27,422 21,481
EBITDA $ 22,852 $ 1,388 $ (10,311)$ (1,475)
Capital expenditures (12,561) (7,268) (23,397) (12,425)
Reconciliation of Non-GAAP
Financial Measure
EBITDA (2)
Net income (loss),
continuing operations $ 10,272 $ (4,965) $ (33,446)$ (18,598)
Interest - net 1,042 2,709 2,119 6,132
Income taxes 6,081 379 7,793 1,811
Depreciation and
amortization 5,457 3,265 13,223 9,180
---------- ---------- ---------- ----------
EBITDA $ 22,852 $ 1,388 $ (10,311)$ (1,475)
========== ========== ========== ==========
Net income (loss) before
special items (3)
Net income (loss),
continuing operations $ 10,272 $ (4,965) $ (33,446)$ (18,598)
Government fines (2,000) - 22,000 -
Loss on early
extinguishment of debt - - 15,375 -
---------- ---------- ---------- ----------
Income (loss) before
special items $ 8,272 $ (4,965) $ 3,929 $ (18,598)
========== ========== ========== ==========
Basic income (loss) per
share before special items
Continuing operations $ 0.36 $ (0.23) $ (1.22)$ (0.87)
Government fines (0.07) - 0.80 -
Loss on early extinguishment
of debt - - 0.56 -
---------- ---------- ---------- ----------
Income (loss) per share
before special items $ 0.29 $ (0.23) $ 0.14 $ (0.87)
========== ========== ========== ==========
Balance Sheet Data 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------- ---------- ---------- ----------
Cash and cash equivalents $ 58,709 $ 107,762 $ 145,439 $ 37,643
Working capital 122,286 112,823 161,046 170,825
Total assets 443,854 406,568 410,714 589,982
Total debt 136,960 136,420 167,789 166,152
Stockholders' equity 106,458 98,552 84,569 97,931
Backlog Data (1)
By Reporting Segment:
Construction $ 883,365 $ 808,617 $ 397,080 $ 320,461
Engineering 89,527 90,943 92,615 92,956
EPC 125,992 144,686 158,594 188,855
---------- ---------- ---------- ----------
$1,098,884 $1,044,246 $ 648,289 $ 602,272
========== ========== ========== ==========
By Geographic Area:
North America $1,032,400 $1,009,524 $ 611,630 $ 565,408
Middle East 66,484 34,722 36,659 36,864
---------- ---------- ---------- ----------
$1,098,884 $1,044,246 $ 648,289 $ 602,272
========== ========== ========== ==========
(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.
(3) Loss before special items (and the related amounts per share), 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.
CONTACTS:
Michael W. Collier
Vice President
Investor Relations
Willbros USA, Inc.
(713) 403-8016
Connie Dever
Director
Strategic Planning
Willbros USA, Inc.
(713) 403-8035
SOURCE: Willbros Group, Inc.
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