Willbros Reports Third Quarter of 2015 Results

HOUSTON, Nov. 5, 2015 /PRNewswire/ -- Willbros Group, Inc. (NYSE: WG) today announced results for the third quarter and the nine months ended September 30, 2015. The Company reported a net loss in the third quarter of 2015 of $17.2 million, or $0.29 per share, on revenue of $266.8 million, compared to a net loss of $3.4 million, or $0.07 per share, on revenue of $559.7 million in the third quarter of 2014. Operating loss in the third quarter of 2015 was $10.1 million compared to operating income of $11.4 million in the third quarter of 2014.  The Company's third quarter of 2015 operating results include a $0.6 million loss on the sale of a subsidiary and $5.9 million in other charges primarily related to equipment and lease abandonments. Operating loss before these special items⁽³⁾ was $3.5 million in the third quarter of 2015, which was a $1.9 million improvement from the Company's operating loss, before special items, of $5.4 million in the second quarter of 2015.  (Operating loss before special items is a non-GAAP measure.  A related reconciliation of this non-GAAP measure is included in the accompanying schedule.)

Shortly after the close of the third quarter, on October 2, 2015, Willbros announced significant developments intended to improve its balance sheet and help restore customer confidence and position the Company to rebuild its backlog. Willbros completed amendments to its Term Loan and ABL Credit Facilities. The amendments established less stringent term loan financial covenants beyond the end of the first quarter 2016 and are designed to address the impact of current market conditions. Consistent with the Company's expected revenue levels for 2016, the ABL commitment has been reduced from $150 million to $100 million, with an accordion feature to expand up to $175 million to accommodate future revenue growth. These amendments also enable the Company to proceed with previously announced asset sale initiatives, including the sale of its Professional Services segment, on which the Company has reached agreement and expects to close by the end of November 2015. 

John T. McNabb, II, Chairman and Chief Executive Officer, commented, "Our third quarter operating results improved from our second quarter, as we continued to reduce our losses and de-lever the Company. The anticipated close of the sale of Professional Services, in conjunction with other asset sales we have completed this year, will provide $43 million in funds for working capital and other purposes, enable us to reduce our term-loan debt to under $100 million and further strengthen our capital structure. We believe we are now in a better position to meet the challenges and opportunities of our end markets and deliver results."

Michael J. Fournier, President and Chief Operating Officer, added, "Parallel to the activities initiated to strengthen our balance sheet, we have put a great deal of effort into reshaping our remaining segments to balance operational risk with opportunity and to align our capabilities and competencies with our markets and customer needs. This translates into ensuring that processes and controls are appropriately embedded in each of our segments and the teams charged with executing work have the experience and training to perform the projects we undertake. We also expect our backlog, which is now growing in our Oil & Gas segment, to improve over the next 12 months. With the anticipated improvement in backlog and associated revenue, we are confident that we can execute and are now ready to take on the types of projects we have a reputation for completing in a safe and timely manner."

Backlog ⁽⁴⁾

At September 30, 2015, Willbros reported total backlog of approximately $1.0 billion and 12 month backlog of $548.5 million, compared to total backlog of approximately $1.4 billion and 12 month backlog of approximately $739.7 million at December 31, 2014.  Revisions to backlog from the sale of assets in earlier periods of 2015 reduced 12 month backlog by $110.8 million and total backlog by $161.1 million.

Segment Operating Results

Oil & Gas

For the third quarter of 2015, the Oil & Gas segment reported an operating loss of $8.3 million on revenue of $81.0 million compared to operating income of $1.1 million on revenue of $253.7 million in the third quarter of 2014.  The operating loss was related to excess equipment charges, lower volumes of work in mainline pipeline construction and losses in the Downstream business.  Third quarter operating results were improved from the second quarter of 2015 operating loss of $15.8 million due to revenue growth of $19.3 million, improved operating performance and the shut-down of the regional services model. Oil & Gas operating results included $3.8 million of other charges, including lease abandonment and equipment fleet rationalization, as compared to $2.7 million in the second quarter of 2015.

Utility T&D

For the third quarter of 2015, the Utility T&D segment reported an operating loss of $5.3 million on revenue of $88.9 million compared to breakeven operating income on revenue of $93.6 million in the third quarter of 2014. The operating loss of $5.3 million is attributed to lower volumes of work in transmission construction. Both East and West distribution units generated positive operating results at the business unit level. The Bemis subsidiary results are included in the third quarter. In the fourth quarter, Bemis was sold for $19.2 million.

Canada

For the third quarter of 2015, the Canada segment reported operating income of $2.8 million on revenue of $52.3 million, compared to operating income of $5.5 million on revenue of $100.8 million in 2014. The decrease in revenue from 2014 is attributed to fewer capital projects and a contraction in the level of construction and maintenance activities by customers in response to low oil prices. Operating income decreased as a result of the lower volume of work and cost abatement actions by customers.  Compared to the second quarter of 2015, Canada revenue was up slightly and operating income grew by $2.4 million as a result of cost management and increased productivity.

Professional Services

The Professional Services segment reported operating income of $1.3 million on revenue of $51.0 million in the third quarter of 2015 compared to operating income of $4.8 million on revenue of $113.2 million in the third quarter of 2014. The revenue decline was due to the sale of three business units in earlier periods in 2015. Operating results were impacted by $2.0 million of other charges, primarily related to lease abandonment.

Outlook

Going forward, with the anticipated completion of the planned sale of the Professional Services segment, Willbros expects to be a smaller and more responsive infrastructure construction provider with revenue from continuing operations for 2015 expected to be approximately $900 million, after giving effect to the anticipated close of the sale of Professional Services. The anticipated close of the sale of the Professional Services segment will enable the Company to reduce its term-loan debt to under $100 million. The Company expects its Canada segment to remain under pressure from low oil prices, but believes Canada can defend its position and expects it to remain above break-even for 2015. The Utility T&D segment is expected to improve its operating performance as it continues to build its presence in new geographic areas of operation and grows revenue. The Oil & Gas segment should benefit from the stronger balance sheet and participation in the relatively strong markets for tanks, terminals and pipeline construction. Backlog levels in this segment are anticipated to show growth through the end of the second quarter of 2016. The Company must build backlog and increase revenue levels for these expectations to be realized.

Liquidity

Total liquidity (defined as cash and cash equivalents plus revolver availability) was $68.3 million at September 30, 2015. The Company had $48.1 million of cash and cash equivalents. There were no revolver borrowings. The Company's primary sources of capital are its cash on hand, proceeds from asset sales and borrowings under its revolver. 

Guidance

Van A. Welch, Willbros Chief Financial Officer, discussed guidance, "For 2015, we now expect annual revenue to range from $1.1 billion to $1.2 billion.  On a pro-forma basis, by including the results of the Professional Services segment in discontinued operations, we expect annual revenue from continuing operations to approximate $900.0 million with expected continuing operating results for the fourth quarter of 2015, excluding other charges and any gain on the sale of subsidiaries, to be similar to the third quarter of 2015."

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Friday, November 6, 2015 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

For those who cannot listen to the live call, a replay will be available through November 13, 2015 and may be accessed by calling 877-660-6853 or 201-612-7415 using pass code 13624042#.  Also, an archive of the webcast will be available shortly after the call on www.willbros.com.

Willbros is a specialty energy infrastructure contractor serving the oil, gas, refining, petrochemical and power industries. Our offerings include engineering, procurement and construction (either individually or as an integrated EPC service offering), maintenance, facilities development and operations services. 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 unanticipated accounting or other issues regarding any material weaknesses in internal control over financial reporting; inability of the Company or its independent auditor to confirm relevant information or data; inability to complete the planned sale of the Professional Services segment; inability to maintain compliance with the New York Stock Exchange continued listing standards; inability to timely collect contractually due receivables; unanticipated issues that prevent or delay the Company's independent auditor from completing its review of financial statements or that require additional efforts, procedures or review; the untimely filing of financial statements; pending and potential investigations and lawsuits; the identification of one or more issues that require restatement of one or more other prior period financial statements; ability to remain in compliance with, or obtain waivers under, the Company's existing loan agreements; ability to dispose of businesses and assets in a timely manner at reasonable valuations; the existence of other material weaknesses in internal control over financial reporting; contract and billing disputes; new legislation or regulations detrimental to the economic operation of refining capacity in the United States; availability of quality management; availability and terms of capital; changes in, or the failure to comply with, government regulations; 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 and development trends of the oil, gas, power, refining and petrochemical industries; 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.

CONTACT:
Michael W. Collier
SVP Investor Relations
Marketing & Communications
Willbros
713-403-8038

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SOURCE Willbros Group, Inc.

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