Willbros Reports Second Quarter of 2015 Results

HOUSTON, Aug. 6, 2015 /PRNewswire/ -- Willbros Group, Inc. (NYSE: WG) today announced results for the second quarter of 2015. The Company reported a net loss in the second quarter of 2015 of $18.9 million, or $0.32 per share, on revenue of $286.9 million, compared to a net loss of $15.5 million, or $0.32 per share, on revenue of $539.8 million in the second quarter of 2014. Operating loss in the second quarter of 2015 was $12.3 million compared to operating income of $6.6 million in the second quarter of 2014.  The Company's second quarter of 2015 operating results include a $2.2 million loss on the sale of its Downstream Professional Services subsidiary and $4.7 million in other charges primarily related to equipment and facility lease abandonment charges and employee severance expenses.  Operating loss before these special items(3) was $5.4 million in the second quarter of 2015, which was a $14.0 million improvement from the Company's operating loss, before special items, of $19.4 million in the first 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.)

John T. McNabb, II, Chairman and Chief Executive Officer, commented, "Our second quarter operating results, adjusted for special items, improved substantially from our first quarter operating results, adjusted for special items, as we expected. These improvements are driven by G&A cost reductions and positive operating results in our Canada, Professional Services and Utility T&D segments.

"Our Utility T&D segment benefited from better construction weather in the South, and, paradoxically, from storm restoration services in certain markets. Canada experienced the usual reduced activity level during Spring break-up, but operated profitably and positioned itself for higher activity by securing approximately $120.0 million of new contract awards during the quarter. Professional Services improved its performance and continues to see new project opportunities in natural gas transmission and mid-stream projects. Our Oil & Gas segment is continuing to reduce its cost structure to address the revenue anticipated for the third and fourth quarters and is building new backlog.

"Willbros revenue is down significantly year over year as we have shed low margin backlog associated with the regional delivery services and downsized the Company to better align with current market opportunities. Our challenge in the Oil & Gas segment is to rebuild the backlog in that unit, which operated at low revenue levels in the first half of 2015, in order to return the segment to profitability.

"We have been working to generate positive operating income throughout all segments and continue to focus on strengthening our balance sheet. We have closed another transaction in the planned sale of our Professional Services segment. We have multiple indications of interest in this segment and believe we are on track to have a signed sales agreement by the end of September.  We anticipate closing on that sale in the fourth quarter of 2015. We also expect to close in the third quarter on the sale of a discrete asset.  After these sales are completed, we expect to use the proceeds to make additional payments against our Term Loan and for working capital purposes.  In addition, we are currently working with our lenders to achieve formal approval of these sales, an amendment to our Term Loan allowing the use of a portion of the sales proceeds for working capital, and reduced covenant compliance requirements. Upon completion of these items we expect to have sufficient liquidity and capital resources to meet our obligations for at least the next twelve months.

"We are focusing on building quality backlog, and we are confident that the new backlog we have booked will make positive contributions to our overall results going forward. When I became Executive Chairman eleven months ago, we developed an encompassing list of actions needed to return Willbros to stability, predictability and profitability. Our team has responded to the challenge and made measurable progress to date. Operationally, we have accomplished much of what we set out to do: streamlining our operations, improving project management and controls, making meaningful cost reductions, and now are rebuilding our Oil & Gas segment and improving our balance sheet."

Backlog (2)

At June 30, 2015, Willbros reported total backlog of approximately $1.1 billion and 12 month backlog of $586.3 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 reduced 12 month backlog by $110.8 million and total backlog by $161.1 million from December 31, 2014. Twelve month backlog was up from $577.2 million, adjusted for subsidiary sales, at March 31, 2015.

Segment Operating Results

Oil & Gas

For the second quarter of 2015, the Oil & Gas segment reported an operating loss of $15.8 million on revenue of $61.8 million compared to an operating loss of $22.6 million on revenue of $234.0 million in the second quarter of 2014.  The reduction in operating loss was primarily related to the fact that the losses from a significant pipeline construction project in the second quarter of 2014 did not reoccur in the second quarter of 2015 and was partially offset by lower volumes of work and adverse weather, as well as trailing costs associated with the exit from the regional delivery services and losses on certain projects. Oil & Gas operating results included $2.7 million of other charges discussed above.

Utility T&D

For the second quarter of 2015, the Utility T&D segment reported operating income of $4.7 million on revenue of $106.4 million compared to operating income of $7.4 million on revenue of $93.9 million in the second quarter of 2014. The segment performed comparably to 2014 at the business unit level. The operating income of $4.7 million is attributed to stronger performance in the distribution units, both East and West, and the segment also benefited from storm restoration services which slightly offset the impacts of regional storms. The decrease in operating income from the comparable quarter in 2014 is attributable to a worker's compensation refund in 2014 and higher G&A cost allocated to the segment as a result of the restructuring that the Company has realized in 2015. Adverse weather also moved certain revenue opportunities into the second half of 2015.

Canada

For the second quarter of 2015, the Canada segment reported operating income of $0.4 million on revenue of $50.6 million, compared to operating income of $11.5 million on revenue of $95.3 million in 2014. The decrease in revenue from 2014 is attributed to the completion of a significant capital project in 2014, 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. The segment increased total backlog by $44.7 million from year-end as contracts for funded development projects continue to be awarded.

Professional Services

The Professional Services segment reported operating income of $0.6 million on revenue of $70.7 million in the second quarter of 2015 compared to operating income of $10.3 million on revenue of $118.7 million in the second quarter of 2014. This decrease was primarily due to the first quarter of 2015 sale of the UtilX and Premier subsidiaries in this segment which generated $42.7 million in  revenue and $6.3 million in operating income, exclusive of allocated segment and corporate G&A costs in the second quarter of 2014, as well as the second quarter of 2015 sale of the Downstream Professional Services subsidiary, whose revenue and operating income decreased $9.5 million and $1.1 million, respectively. Operating results in the Professional Services segment included other charges of $1.5 million.

Outlook

Going forward, with the completion of the planned sale of the Professional Services segment, Willbros expects to be a smaller and more responsive infrastructure construction provider with presence in the North American markets for oil sands, pipelines and facilities, and electric utility construction and maintenance. Willbros believes the planned sale of the Professional Services segment will result in reduced debt, stronger alignment of its earnings power with its desired debt to EBITDA ratio, more financial flexibility and increased customer confidence.

Liquidity

Total liquidity (defined as cash and cash equivalents plus revolver availability) was $94.0 million at June 30, 2015. The Company had $68.2 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, operating cash flows and borrowings under its revolver.  Since the beginning of the year, we have paid down $78.3 million of Term Loan debt with proceeds from asset sales.

Guidance

Van Welch, Willbros Chief Financial Officer, discussed guidance, "For 2015 we now expect annual revenue to range from $1.2 billion to $1.3 billion.  On a pro forma basis, after we have completed the anticipated asset sales and the entire Professional Services segment is reported in discontinued operations, we would expect to report 2015 revenue of approximately $1.0 billion from continuing operations. The revenue decline from 2014 is due to asset sales and the smaller footprint of our Oil & Gas segment as we reshape its service offering and rebuild backlog. We will continue to focus on improving our balance sheet and strengthening operating results across all of Willbros. We expect to enter 2016 with a business model which can operate profitably in the attractive infrastructure markets we see ahead."

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Friday, August 7, 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 August 14, 2015 and may be accessed by calling 877-660-6853 or 201-612-7415 using pass code 13608887#.  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 or other discrete assets; 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. CollierSVP Investor RelationsMarketing & CommunicationsWillbros713-403-8038

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SOURCE Willbros Group, Inc.