HOUSTON, April 2, 2012 /PRNewswire/ -- Willbros Group,
Inc. (NYSE: WG) announced today certain preliminary estimated
unaudited operating results from continuing operations for the
fourth quarter and full year 2011 that the Company expects to
report for these periods. Our actual results may differ materially
from these estimates due to the completion of our financial closing
procedures, final adjustments, including those as a result of the
material weakness in our internal controls discussed below, and
other developments that may arise between now and the time the
financial results for fiscal 2011 are finalized.
Willbros estimates an operating loss in the fourth quarter of
$46.0 million, on revenue of
$404.9 million. Contributing to the
fourth quarter loss was an estimated combined goodwill impairment
charge of $36.0 million related to
goodwill carried in the Upstream Oil and Gas and Downstream Oil and
Gas operating segments in addition to the normal seasonality of the
business model.
The Company added that it has been unable to timely file its
2011 Form 10-K, having determined that a material weakness existed
in its controls over the completeness, accuracy and presentation of
its accounting for income taxes, including the tax provision and
related tax assets and liabilities. The Company is working
diligently and expects to file its 2011 Form 10-K by April 9, 2012. The Company noted that the delayed
filing does not currently put it in default of its multiple credit,
surety and lease agreements. Van
Welch, Chief Financial Officer, commented, "We have reviewed
our significant agreements and believe we can complete the filing
within the time periods allotted. The generally non-cash nature of
the items which require adjustment, primarily goodwill and tax
reserves, does not impact our debt covenants or our liquidity."
For the fourth quarter of 2011, the estimated operating loss was
$11.0 million compared to
$21.1 million in the fourth quarter
of 2010, excluding the impact of non-cash goodwill impairment
charges in both years(1) (these are non-GAAP financial measures,
and schedules for the GAAP to non-GAAP adjustment reconciliations
in this press release are provided in the accompanying schedules).
The operating improvement in the fourth quarter was attributed to
better performance in the Upstream Oil & Gas segment in
the United States and Canada and increased resource utilization in
the Utility T&D segment. This improvement was partially offset
by lower revenue and income in the Downstream Oil & Gas
segment.
Randy Harl, President and Chief
Executive Officer, commented, "We delivered improved fourth quarter
results relative to last year, largely as a result of the expansion
of our Upstream presence and service offerings to help mitigate the
seasonality of large diameter pipeline construction and the
improvement in our Utility T&D segment, which posted much
better results, especially in the Texas market, where we continue to benefit
from the CREZ build-out.
"At the beginning of 2011, we established several objectives to
move Willbros towards profitability. Those objectives included:
debt reduction, focus on North
America and project management improvements. We exceeded our
debt reduction goal and in the North American markets, we expanded
our presence in the growing liquids resource plays, improved the
risk profile of the Canada model
by focusing on base-load multi-year contracts and increased our
resource utilization for electric utility infrastructure
construction. As a result, year over year operating results
improved; however, I am not pleased with our overall performance in
2011 and am committed to taking aggressive steps to generate better
results in 2012.
"During the fourth quarter, we launched a thorough review of all
of our business units and their relative performance. We have
identified the business units that are operating at a level
comparable to our peers and we are taking actions to improve the
results of the non-performing units. To improve the Company's
performance, we are focusing our management capacity on the
business units with strategic value and high potential but which
have underperformed relative to our expectations. We are
implementing action plans to address the challenges we face in
order to improve the performance of the units that are negatively
impacting our results. We are prepared to make exit decisions when
our strategic or operating analysis dictates that is the correct
business decision.
"Looking ahead, we have good visibility with $2.2 billion of work in backlog and we are
experiencing higher levels of bid activity consistent with our
exposure to the North American markets including the Canadian oil
sands, the liquids-rich development plays in the United States and the robust expansion of
the electric transmission grid. We are replacing work at an
acceptable rate and expect to see moderate growth in revenue, with
emphasis on improving our execution of the work we have in
backlog."
Recent Developments
West Africa Gas Pipeline Company (WAPCO) Willbros
announced that its subsidiary, Willbros Global Holdings, Inc.
("WGHI"), has settled the $274
million WAPCO lawsuit for a total of $55.5 million to be paid in installments.
The settlement defers $41.5
million (75 percent) of the payments into future years with
the last payment scheduled for December 31,
2017. The payments due in years 2015, 2016, and 2017
(totaling $29.0 million) may be
accelerated and become due as early as the fourth quarter of 2014
if Willbros achieves certain financial metrics. The settlement
stops the significant legal spend on the litigation, including an
additional anticipated expense of $15.0
million for trial and likely appeal. This settlement creates
certainty of the outcome and eliminates trial risk. The Company
believes it is a fair settlement and is pleased to remove the
overhang of this litigation.
U. S. Department of Justice ("DOJ") Monitorship and Deferred
Prosecution Agreement ("DPA") Willbros announced that the DOJ
has filed a motion to dismiss the FCPA-related criminal charges
filed previously against the Company stemming from legacy issues in
Nigeria and South America in 2005, which led to the DPA.
Randy Harl commented, "We are pleased to have successfully
completed the requirements of the DPA, including the monitorship
which is now ended. We have instituted values and processes
that we believe will prevent any future FCPA-related incidents."
Outlook
Willbros expects continued expansion of its operations in the
Canadian oil sands and expressed confidence that it could fully
replace the revenue opportunities discontinued with the exit from
its cross-country pipeline construction in Canada. In the
United States, the Company is seeing increased inquiries for
fabrication and manufacturing services, and manpower levels in both
its upstream and downstream engineering units have grown in the
past 12 months, a leading indicator for increased future
construction activity. The Company also expects continued growth in
the mid-stream markets for field gathering, processing, terminal
and small diameter pipeline projects. During the first quarter, the
Company recognized higher than anticipated demand for its regional
service offerings, and it believes this level of activity will
continue throughout the year. In the Utility T&D segment, the
Company expects to continue the present level of activity in
transmission construction and believes the distribution,
maintenance and construction markets have begun to rebound, related
to an improvement in housing starts.
Backlog(2)
At December 31, 2011, Willbros
estimates backlog from continuing operations of $2.2 billion compared to $2.2 billion at September
30, 2011 and $1.9 billion at
December 31, 2010. Estimated twelve
month backlog was $865.1 million at
December 31, 2011 compared to
$869.8 at September 30, 2011.
Segment Operating Results
Upstream
For the fourth quarter of 2011, the Upstream segment expects to
report an estimated operating loss (exclusive of goodwill
impairment) of $1.1 million(1) on
revenue of $183.7 million. Fourth
quarter results were impacted by normal seasonal patterns in the
U.S. large diameter pipeline construction market. The results are
an improvement over the $11.3 million
loss on revenue of $133.2 million in
the comparable period in 2010 due to improved performance in the
oil sands in Canada and the
success of our regional expansion in the
United States. For the full year, Upstream expects to report
estimated operating income (exclusive of goodwill impairment) of
$7.0 million(1) on revenue of
$763.1 million. Operating income for
2011 was negatively impacted by an $8.2
million non-cash charge related to the settlement of a
project dispute incurred during the second quarter of 2011.
Downstream
For the fourth quarter of 2011, the Downstream segment expects
to report an estimated operating loss (exclusive of goodwill
impairment) of $3.8 million(1) on
revenue of $62.8 million. For the
full year, Downstream expects to report an estimated operating loss
(exclusive of goodwill impairment) of $16.4
million(1) on estimated revenue of $228.2 million. The Downstream segment in 2011
was primarily impacted by curtailment of customer spending for
small capital and maintenance projects in the refining sector,
resulting in a revenue decline of $72.9
million or 24.2 percent.
Utility T&D
For the fourth quarter of 2011, the Utility T&D segment
expects to report an estimated operating loss of $6.0 million on revenue of $158.4 million. Fourth quarter results improved
relative to the same period in 2010 due to higher utilization of
resources on transmission construction projects in Texas. For the full year, Utility T&D
expects to report an estimated operating loss (exclusive of
goodwill impairment) of $6.7
million(1) on revenue of $624.1
million, which is a substantial improvement from the results
experienced in 2010.
Liquidity
At December 31, 2011, the Company
had $58.7 million of cash and cash
equivalents and access to $25.0
million in cash under the revolver on 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
will be lifted when the Company's total leverage ratio, as defined,
reaches 3.0 to 1.0, or less.
In the fourth quarter of 2011, the Company utilized the proceeds
from the sale of its InterCon subsidiary and $10 million in cash to further reduce its term
loan by $28.7 million. For the year,
the Company made payments of $123.4
million against its term loan, exceeding its 2011 objective
of $50 to $100 million. In the
first quarter of 2012, the Company has paid an additional
$30 million against its term loan.
The Company's estimated bank balance at March 30, 2012 was approximately $60.0 million.
Guidance
Van Welch, Willbros Chief
Financial Officer, provided expectations for 2012, "We have seen a
meaningful improvement in our results in the fourth quarter as we
have diminished the impact of seasonality on our business model. We
anticipate our first quarter results to also register a significant
operating improvement versus the first quarter of 2011. In 2012, we
expect annual revenue to range from $1.7 to
$1.9 billion, positive operating income in all three
segments and additional debt reduction of approximately
$50.0 to $100.0 million by the end of
the year. Our approved capital expenditure budget for 2012 is
$28.3 million, but capital spending
is expected to be a function of future work commitments."
Conference Call
In conjunction with this release, Willbros has scheduled a
conference call, which will be broadcast live over the Internet, on
Monday, April 2, 2012 at 12:00 p.m. Eastern Time (11:00 a.m. Central).
What:
|
Willbros Fourth Quarter Update
Conference Call
|
|
When:
|
Monday, April 2, 2012 - 12:00
p.m. Eastern Time
|
|
How:
|
Live via phone - By dialing
719-325-4767 or 877-718-5104 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 April 16, 2012, and
may be accessed by calling 719-457-0820 or 888-203-1112 using pass
code 4164451#. 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, including such things as expected
fourth quarter and full year 2011 operating results, anticipated
date of filing of the Company's 2011 Form 10-K, and the Company's
outlook and guidance, including future capital expenditures.
A number of risks and uncertainties could cause actual
results to differ materially from these statements, including
unanticipated accounting issues or audit issues regarding the
material weakness in internal controls over accounting for income
taxes; inability of the Company or its independent auditor to
confirm relevant information or data; unanticipated issues that
prevent or delay the Company's independent auditor from completing
the audit or that require additional efforts, procedures or review;
the potential for 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 issues, including those relating to the material weakness
discussed above, 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 Africa 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.
Connie Dever
Director Investor Relations
Willbros
713-403-8035
Michael W. Collier
Vice President Investor Relations
Sales & Marketing
Willbros
713-403-8038
TABLE TO
FOLLOW
|
|
WILLBROS
GROUP, INC.
|
|
(In
thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
|
|
Operating loss from continuing
operations before special items (1)
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
(45,988)
|
|
$
(69,107)
|
|
$
(184,722)
|
|
$
(20,841)
|
|
|
|
Goodwill impairment
|
35,032
|
|
48,000
|
|
178,575
|
|
60,000
|
|
|
|
Changes in fair value of
contingent earnout liability
|
-
|
|
-
|
|
(10,000)
|
|
(45,340)
|
|
|
|
Operating loss from continuing
operations before special items
|
$
(10,956)
|
|
$
(21,107)
|
|
$
(16,147)
|
|
$
(6,181)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream O&G operating
income (loss) from continuing operations before special items
(1)
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
(22,423)
|
|
$
(11,255)
|
|
$
(14,241)
|
|
$
35,867
|
|
|
|
Goodwill impairment
|
21,278
|
|
-
|
|
21,278
|
|
-
|
|
|
|
Operating income (loss) from
continuing operations before special items
|
$
(1,145)
|
|
$
(11,255)
|
|
$
7,037
|
|
$
35,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Downstream O&G operating
loss from continuing operations before special items (1)
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
(17,551)
|
|
$
(48,251)
|
|
$
(30,195)
|
|
$
(75,320)
|
|
|
|
Goodwill impairment
|
13,754
|
|
48,000
|
|
13,754
|
|
60,000
|
|
|
|
Operating loss from continuing
operations before special items
|
$
(3,797)
|
|
$
(251)
|
|
$
(16,441)
|
|
$
(15,320)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility T&D operating loss
from continuing operations before special items (1)
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
$
(6,014)
|
|
$
(9,601)
|
|
$
(150,286)
|
|
$
(26,728)
|
|
|
|
Goodwill impairment
|
-
|
|
-
|
|
143,543
|
|
-
|
|
|
|
Operating loss from continuing
operations before special items
|
$
(6,014)
|
|
$
(9,601)
|
|
$
(6,743)
|
|
$
(26,728)
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations
Data
|
|
|
|
|
|
|
|
|
|
Contract revenue
|
|
|
|
|
|
|
|
|
|
|
Upstream O&G
|
$
183,713
|
|
$
133,166
|
|
$
763,088
|
|
$
585,797
|
|
|
|
Downstream O&G
|
62,826
|
|
98,210
|
|
228,203
|
|
301,104
|
|
|
|
Utility T&D
|
158,353
|
|
121,251
|
|
624,100
|
|
238,171
|
|
|
|
|
$
404,892
|
|
$
352,627
|
|
$
1,615,391
|
|
$
1,125,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
Upstream O&G
|
$
206,136
|
|
$
144,421
|
|
$
777,329
|
|
$
549,930
|
|
|
|
Downstream O&G
|
80,377
|
|
146,461
|
|
258,398
|
|
376,424
|
|
|
|
Utility T&D
|
164,367
|
|
130,852
|
|
774,386
|
|
264,899
|
|
|
|
|
$
450,880
|
|
$
421,734
|
|
$
1,810,113
|
|
$
1,191,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
Upstream O&G
|
$
(22,423)
|
|
$
(11,255)
|
|
$
(14,241)
|
|
$
35,867
|
|
|
|
Downstream O&G
|
(17,551)
|
|
(48,251)
|
|
(30,195)
|
|
(75,320)
|
|
|
|
Utility T&D
|
(6,014)
|
|
(9,601)
|
|
(150,286)
|
|
(26,728)
|
|
|
|
Changes in fair value of
contingent earnout liability
|
-
|
|
-
|
|
10,000
|
|
45,340
|
|
|
Operating loss
|
$
(45,988)
|
|
$
(69,107)
|
|
$
(184,722)
|
|
$
(20,841)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
$
(8,842)
|
|
$
(11,593)
|
|
$
(45,117)
|
|
$
(27,677)
|
|
|
|
Loss on early extinguishment of
debt
|
(2,180)
|
|
-
|
|
(6,304)
|
|
-
|
|
|
|
Other, net
|
(146)
|
|
184
|
|
(430)
|
|
1,649
|
|
|
|
|
$
(11,168)
|
|
$
(11,409)
|
|
$
(51,851)
|
|
$
(26,028)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
before income taxes
|
$
(57,156)
|
|
$
(80,516)
|
|
$
(236,573)
|
|
$
(46,869)
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog Data (2)
|
12/31/2011
|
|
9/30/2011
|
|
6/30/2011
|
|
3/31/2011
|
|
|
Total By Reporting
Segment
|
|
|
|
|
|
|
|
|
|
|
Upstream O&G
|
$
622,396
|
|
$
545,518
|
|
$
627,075
|
|
$
645,263
|
|
|
|
Downstream O&G
|
151,069
|
|
159,919
|
|
105,466
|
|
116,561
|
|
|
|
Utility T&D
|
1,398,752
|
|
1,477,599
|
|
1,530,773
|
|
1,349,849
|
|
|
Total Backlog
|
$
2,172,217
|
|
$
2,183,036
|
|
$
2,263,314
|
|
$
2,111,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Backlog By Geographic
Area
|
|
|
|
|
|
|
|
|
|
|
North America
|
$
2,028,336
|
|
$
2,129,932
|
|
$
2,230,503
|
|
$
2,073,055
|
|
|
|
Middle East & North
Africa
|
135,698
|
|
44,243
|
|
28,462
|
|
37,796
|
|
|
|
Other International
|
8,183
|
|
8,862
|
|
4,349
|
|
822
|
|
|
Total Backlog
|
$
2,172,217
|
|
$
2,183,037
|
|
$
2,263,314
|
|
$
2,111,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Month Backlog
|
$
865,124
|
|
$
869,759
|
|
$
904,392
|
|
$
946,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating income
(loss) from 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.
|
|
(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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SOURCE Willbros Group, Inc.