Willbros Reports Second Quarter 2016 Results

What:

Willbros Second Quarter 2016 Earnings Conference Call

When: 

Monday, August 1, 2016 - 10:00 a.m. Eastern Time (9:00 a.m. Central Time)

How: 

Live via phone - By dialing 877-404-9648 or 412-902-0030 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.

WILLBROS GROUP, INC.

(In thousands, except per share amounts)

 Three Months Ended 

 Six Months Ended 

 June 30, 

 June 30, 

2016

2015

2016

2015

Income Statement 

Contract revenue

Oil & Gas

$      54,739

$    61,778

$       114,074

$    138,218

Utility T&D

109,355

106,439

206,644

193,425

Canada

29,496

50,645

71,988

137,654

Eliminations

(148)

(73)

(234)

(154)

193,442

218,789

392,472

469,143

Operating expenses

Oil & Gas

57,065

77,529

125,477

164,944

Utility T&D

109,860

101,773

205,945

193,619

Canada

29,406

50,264

73,486

138,788

Unallocated Corporate Costs

-

2,334

-

6,269

Eliminations

(148)

(73)

(234)

(154)

196,183

231,827

404,674

503,466

Operating income (loss)

Oil & Gas

(2,326)

(15,751)

(11,403)

(26,726)

Utility T&D

(505)

4,666

699

(194)

Canada

90

381

(1,498)

(1,134)

Unallocated Corporate Costs

-

(2,334)

-

(6,269)

Operating loss

(2,741)

(13,038)

(12,202)

(34,323)

Non-operating income (expense)

Interest expense

(3,302)

(6,543)

(6,869)

(14,851)

Interest income

411

11

431

22

Debt covenant suspension and extinguishment charges

-

(312)

(63)

(36,181)

Other, net

58

(38)

(2)

(135)

(2,833)

(6,882)

(6,503)

(51,145)

Loss from continuing operations before income taxes

(5,574)

(19,920)

(18,705)

(85,468)

Provision (benefit) for income taxes

187

(517)

354

(21,121)

Loss from continuing operations

(5,761)

(19,403)

(19,059)

(64,347)

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

(658)

517

(2,511)

35,637

Net loss

$      (6,419)

$   (18,886)

$       (21,570)

$    (28,710)

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

Continuing operations

$        (0.09)

$       (0.33)

$           (0.31)

$        (1.17)

Discontinued operations

(0.01)

0.01

(0.04)

0.65

$        (0.10)

$       (0.32)

$           (0.35)

$        (0.52)

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

Continuing operations

$        (0.09)

$       (0.33)

$           (0.31)

$        (1.17)

Discontinued operations

(0.01)

0.01

(0.04)

0.65

$        (0.10)

$       (0.32)

$           (0.35)

$        (0.52)

Cash Flow Data

Continuing operations

Cash provided by (used in)

Operating activities

$       (5,407)

$       7,273

$         (3,043)

$     41,945

Investing activities

5,633

17,432

4,751

102,307

Financing activities

(687)

(14,773)

(6,120)

(80,778)

Foreign exchange effects

341

423

928

(411)

Discontinued operations

(2,840)

18,890

(6,622)

(18,103)

Other Data (Continuing Operations)

Weighted average shares outstanding

Basic

61,299

60,227

61,065

55,052

Diluted

61,299

60,227

61,065

55,052

Adjusted EBITDA from continuing operations⁽¹⁾

$        3,232

$     (4,032)

$           3,328

$    (14,012)

Purchases of property, plant and equipment

1,408

128

1,900

1,424

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA from continuing operations ⁽¹⁾

Loss from continuing operations

$      (5,761)

$   (19,403)

$       (19,059)

$    (64,347)

Interest expense

3,302

6,543

6,869

14,851

Interest income

(411)

(11)

(431)

(22)

Provision (benefit) for income taxes

187

(517)

354

(21,121)

Depreciation and amortization

5,621

7,149

11,309

14,594

Debt covenant suspension and extinguishment charges

-

312

63

36,181

Stock based compensation

1,108

1,441

2,401

3,053

Restructuring and reorganization costs

927

2,908

4,279

3,191

Accounting and legal fees associated with the restatements

(81)

(30)

(46)

446

Loss on sale of subsidiary

-

-

123

-

Fort McMurray wildfire related costs

523

-

523

-

Gain on disposal of property and equipment

(2,183)

(2,424)

(3,057)

(838)

Adjusted EBITDA from continuing operations⁽¹⁾

$       3,232

$    (4,032)

$           3,328

$    (14,012)

Balance Sheet Data

June 30,
2016

March 31,
2016

December 31,
2015

Cash and cash equivalents

$     48,726

$    51,686

$         58,832

Working capital

105,443

106,304

120,430

Total assets

416,464

431,372

441,577

Total debt  

90,589

90,617

95,623

Stockholders' equity

160,324

165,682

177,400

Backlog Data ⁽²⁾

Total By Reporting Segment

Oil & Gas

$     34,479

$    71,314

$         48,810

Utility T&D

535,218

595,620

622,629

Canada

102,302

116,352

155,379

Total Backlog

$671,999

$783,286

$       826,818

Total Backlog By Geographic Area

United States

$   569,697

$  666,934

$       671,439

Canada

102,302

116,352

155,379

Total Backlog

$671,999

$783,286

$       826,818

12 Month Backlog by Reporting Segment

Oil & Gas

$     34,479

$    69,514

$         46,810

Utility T&D

269,758

296,278

274,610

Canada

68,995

91,503

110,797

12 Month Backlog

$   373,232

$  457,295

$       432,217

12 Month Backlog By Geographic Area

United States

$   304,237

$  365,792

$       321,420

Canada

68,995

91,503

110,797

12 Month Backlog

$   373,232

$  457,295

$       432,217

(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.  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.  Backlog is not a term recognized under U.S. GAAP; however, it is a common measurement used in our industry.

Supplemental Schedule of Special Items

Three Months Ended June 30, 2016 

(In thousands)

Oil & Gas

Utility T&D

Canada

Unallocated
Corporate
Costs

Eliminations

Consolidated

Contract revenue before special items ⁽¹⁾

Contract revenue, as reported

$   54,739

$   109,355

$ 29,496

$            -

$       (148)

$      193,442

Contract revenue, exited subsidiaries ⁽²⁾

(385)

-

-

-

-

(385)

Contract revenue before special items

$   54,354

$   109,355

$ 29,496

$            -

$       (148)

$      193,057

Operating income (loss) before special items ⁽¹⁾

Operating income (loss), as reported

$   (2,326)

$        (505)

$       90

$            -

$             -

$        (2,741)

Operating income, exited subsidiaries ⁽²⁾

(179)

-

-

-

-

(179)

Other charges

265

99

575

-

-

939

Fort McMurray wildfire related costs

-

-

523

-

-

523

Operating income (loss) before special items

$   (2,240)

$        (406)

$   1,188

$            -

$             -

$        (1,458)

Three Months Ended March 31, 2016 

(In thousands)

Oil & Gas

Utility T&D

Canada

Unallocated
Corporate
Costs

Eliminations

Consolidated

Contract revenue before special items ⁽¹⁾

Contract revenue, as reported

$    59,335

$     97,289

$       42,492

$            -

$         (86)

$      199,030

Contract revenue, exited subsidiaries ⁽²⁾

(645)

-

-

-

-

(645)

Contract revenue before special items

$    58,690

$     97,289

$       42,492

$            -

$          86)

$      198,385

Operating income (loss) before special items ⁽¹⁾

Operating income (loss), as reported

$    (9,077)

$       1,204

$       (1,588)

$            -

$             -

$        (9,461)

Operating loss, exited subsidiaries ⁽²⁾

702

-

-

-

-

702

Other charges

1,828

1,294

566

-

-

3,688

Operating income (loss) before special items

$    (6,547)

$       2,498

$       (1,022)

$            -

$             -

$        (5,071)

Three Months Ended June 30, 2015 

(In thousands)

Oil & Gas

Utility T&D

Canada

Unallocated
Corporate
Costs

Eliminations

Consolidated

Contract revenue before special items ⁽¹⁾

Contract revenue, as reported

$    61,778

$    106,439

$       50,645

$            -

$        (73)

$      218,789

Contract revenue, exited subsidiaries ⁽²⁾

(14,217)

(3,821)

-

-

-

(18,038)

Contract revenue before special items

$    47,561

$    102,618

$       50,645

$            -

$        (73)

$      200,751

Operating income (loss) before special items ⁽¹⁾

Operating income (loss), as reported

$  (15,751)

$        4,666

$            381

$   (2,334)

$            -

$      (13,038)

Operating (income) loss, exited subsidiaries ⁽²⁾

4,843

(962)

-

-

-

3,881

Other charges

2,749

290

208

71

-

3,318

Operating income (loss) before special items

$    (8,159)

$        3,994

$            589

$   (2,263)

$            -

$        (5,839)

Adjusted EBITDA from continuing operations before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Adjusted EBITDA from continuing operations, as reported

$      3,232

$             96

$       (4,032)

Adjusted EBITDA from continuing operations, exited subsidiaries ⁽²⁾

(298)

684

2,707

Adjusted EBITDA from continuing operations before special items

$      2,934

$           780

$       (1,325)

Covenant EBITDA from continuing operations ⁽⁴⁾

Q2 2016

Q1 2016

Q2 2015

Loss from continuing operations

$    (5,761)

$    (13,298)

$    (19,403)

Interest expense

3,302

3,567

6,543

Interest income

(411)

(20)

(11)

Provision (benefit) for income taxes

187

167

(517)

Depreciation and amortization

5,621

5,688

7,149

Debt covenant suspension and extinguishment charges

-

63

312

Stock-based compensation

1,108

1,293

1,441

Restructuring and reorganization costs

927

3,352

2,908

Accounting and legal fees associated with the restatements

(81)

35

(30)

Loss on sale of subsidiary

-

123

-

Fort McMurray wildfire related costs

523

-

-

Loss on disposal of property and equipment outside of normal course of business

-

-

247

Changes in project loss provision

(186)

(456)

707

Adjustments to self-insurance liabilities

-

-

211

Letter of credit fees

342

356

392

Provision for (recovery of) bad debt

62

(22)

(8)

Covenant EBITDA from continuing operations

$      5,633

$          848

$           (59)

Covenant EBITDA from continuing operations before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Covenant EBITDA from continuing operations, as reported

$      5,633

$          848

$           (59)

Covenant EBITDA from continuing operations, exited subsidiaries ⁽²⁾

(298)

684

2,707

Covenant EBITDA from continuing operations before special items

$      5,335

$       1,532

$       2,648

Loss from continuing operations before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Loss from continuing operations, as reported

$    (5,761)

$   (13,298)

$   (19,403)

(Income) loss from continuing operations, exited subsidiaries ⁽²⁾

(179)

702

3,881

Other charges

939

3,688

3,318

Fort McMurray wildfire related costs

523

-

-

Debt covenant suspension and extinguishment charges

-

63

312

Benefit for income taxes ⁽³⁾

-

-

(308)

Loss from continuing operations before special items

$    (4,478)

$     (8,845)

$   (12,200)

Income (loss) from discontinued operations before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Income (loss) from discontinued operations, as reported

$       (658)

$     (1,853)

$         517

Other charges

(1,162)

-

1,417

Loss on sale of subsidiaries

911

1,545

2,177

Provision for income taxes ⁽³⁾

-

-

308

Income (loss) from discontinued operations before special items

$       (909)

$        (308)

$      4,419

Net loss before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Net loss, as reported

$    (6,419)

$   (15,151)

$  (18,886)

(Income) loss from continuing operations, exited subsidiaries ⁽²⁾

(179)

702

3,881

Other charges

(223)

3,688

4,735

Fort McMurray wildfire related costs

523

-

-

Loss on sale of subsidiaries

911

1,545

2,177

Debt covenant suspension and extinguishment charges

-

63

312

Provision (benefit) for income taxes

-

-

-

Net loss, before special items

$    (5,387)

$    (9,153)

$   (7,781)

Diluted loss per share attributable to Company shareholders before special items ⁽¹⁾

Q2 2016

Q1 2016

Q2 2015

Diluted loss per share attributable to Company shareholders, as reported

$      (0.10)

$      (0.25)

$     (0.32)

(Income) loss from continuing operations, exited subsidiaries ⁽²⁾

-

-

0.06

Other charges

-

0.06

0.08

Fort McMurray wildfire related costs

-

-

-

Loss on sale of subsidiaries

0.01

0.03

0.04

Debt covenant suspension and extinguishment charges

-

-

0.01

Provision (benefit) for income taxes

-

-

-

Diluted loss per share attributable to Company shareholders before special items

$      (0.09)

$      (0.16)

$     (0.13)

(1) Contract revenue before special items, operating income (loss) before special items, Adjusted EBITDA from continuing operations before special items, Covenant EBITDA from continuing operations before special items, loss from continuing operations before special items, income (loss) from discontinued operations before special items, net loss before special items and diluted loss per share attributable to Company shareholders before special items are non-GAAP financial measures that exclude 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 construction companies.  In addition, management believes results excluding these items are more indicative of the future operating prospects for Willbros as a consolidated company in 2016.

(2) Contract revenue, exited subsidiaries, operating income (loss), exited subsidiaries, Adjusted EBITDA from continuing operations, exited subsidiaries, Covenant EBITDA from continuing operations, exited subsidiaries and (income) loss from continuing operations, exited subsidiaries relate to the Company's historical Downstream Oil & Gas (including Fabrication services sold in the first quarter of 2016), Regional Delivery and Bemis subsidiaries.  They are non-GAAP financial measures that exclude 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 construction companies.  In addition, management believes results excluding these items are more indicative of the future operating prospects for Willbros as a consolidated company in 2016.

(3) The Company recorded a provision for income taxes on discontinued operations in connection with the 2015 gains on sale of the Professional Services segment and its historical subsidiaries.  The provision for income taxes in discontinued operations was fully offset with a benefit for income taxes in continuing operations through the utilization of prior year net operating losses.  The net effect on the Company's consolidated financial results was $-0-.

(4) Covenant EBITDA from continuing operations is a non-GAAP financial measure that conforms to the definition of Consolidated EBITDA in the Company's 2014 Term Credit Agreement which includes certain special items.  Management uses Covenant EBITDA from continuing operations to determine the Company's compliance with certain financial covenants under the 2014 Term Credit Agreement.