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Willbros Reports Third Quarter 2016 Results

HOUSTON, Oct. 28, 2016 (GLOBE NEWSWIRE) -- Willbros Group, Inc. (NYSE:WG) today reported a $29.7 million loss from continuing operations, or $(0.49) per share, for the nine months ended September 30, 2016, compared to an $83.8 million loss from continuing operations, or $($1.47) per share, for the nine months ended September 30, 2015. Adjusted EBITDA from continuing operations was $3.7 million for the nine months ended September 30, 2016 compared to $(15.8) million for the nine months ended September 30, 2015.

For the third quarter of 2016, we reported a loss from continuing operations of $10.7 million, or $(0.17) per share, on revenue of $174.8 million, compared to a loss from continuing operations of $19.4 million, or $(0.32) per share, in the third quarter of 2015 on revenue of $222.2 million. Adjusted EBITDA from continuing operations was approximately $0.3 million for the third quarter of 2016 compared to $(1.8) million for the third quarter of 2015. Loss from continuing operations before special items was $10.1 million for the third quarter of 2016 compared to $13.8 million for the third quarter of 2015.

An operating loss of $6.3 million in the third quarter of 2016 compares to an operating loss of $12.4 million in the third quarter of 2015, a $6.1 million improvement. Operating results for the third quarter of 2016 include project losses on two jobs totaling approximately $4.7 million. Other charges incurred during the third quarter of 2016 totaled $0.5 million related to equipment impairment and employee severance costs. Excluding these other charges, the operating loss before special items was $5.8 million in the third quarter of 2016.

Michael J. Fournier, President and CEO, commented, “Year-to-date results represent a significant improvement over the prior year as a result of our continuing efforts to align our indirect and overhead costs to market conditions. Our third quarter results were impacted by adverse weather conditions and cost overruns on two projects. We may recover some of these costs through future change orders.

“Our 12-month backlog remained relatively flat compared to June 30, 2016 primarily due to additions to our MSA contracts in the UTD segment. We are seeing an increase in our bidding activity in our Oil and Gas segment and remain optimistic in winning a major MSA renewal in our Canadian segment. Building backlog remains our top priority throughout the organization.”

Included in this press release are certain non-GAAP financial measures, including operating income (loss), income (loss) from continuing operations, and Adjusted EBITDA from continuing operations. A related reconciliation of each of these non-GAAP measures is included in the accompanying schedules.

Backlog

At September 30, 2016, Willbros reported total backlog of $646.6 million, a decrease of $25.4 million from the June 30, 2016 balance. Twelve month backlog of $375.7 million at September 30, 2016 reflects a small increase from the $373.2 million reported at June 30, 2016. A substantial portion of the total backlog decline is attributable to the expiration of existing multi-year MSA contracts. We will rebid these MSA’s as they come up for renewal but we do not include these new contracts in backlog until they are signed. The twelve month backlog is being impacted by Canadian MSA contracts that expire at the end of 2016 and early 2017.

Segment Operating Results

Utility T&D
Utility T&D generated revenue of approximately $106.4 million in the third quarter of 2016, a slight decrease from the second quarter of 2016. Despite recording a large share of corporate costs, the segment generated operating income of $0.6 million, a $1.1 million improvement over the second quarter of 2016. Operating income before special items of $0.7 million reflected a similar $1.1 million improvement over the second quarter of 2016.

Oil & Gas
In the third quarter of 2016, the Oil & Gas segment generated revenue of $33.1 million, a $21.6 million decrease when compared to the second quarter of 2016. The segment reported an operating loss of $5.4 million in the third quarter of 2016, representing a $3.1 million increase over the second quarter of 2016 operating loss. The third quarter of 2016 operating loss was inclusive of one project loss of $3.4 million. The segment reported an operating loss before special items of $5.2 million, or a $3.0 million increase from the second quarter of 2016 operating loss before special items.

Canada
The Canada segment generated revenue of $35.4 million for the third quarter of 2016, a $5.9 million increase over the second quarter of 2016. The segment reported an operating loss of $1.5 million in the third quarter of 2016, representing a $1.6 million reduction over the second quarter of 2016 operating income. The third quarter of 2016 operating loss was inclusive of one project loss of $1.3 million. The segment reported operating loss before special items of $1.2 million, or a $2.4 million reduction from the second quarter of 2016 operating income before special items.

Liquidity and Debt

Total liquidity (defined as cash and cash equivalents plus revolver availability) at September 30, 2016 was $71.2 million, a decrease of $13.3 million from the end of the second quarter of 2016. Cash and cash equivalents totaled $42.3 million at September 30, 2016 and there were no revolver borrowings at September 30, 2016.

At September 30, 2016, the principal amount due on the term loan remained unchanged from the prior quarter at $92.2 million.

Guidance

Van Welch, Willbros Chief Financial Officer, commented, “We now expect revenue for 2016 to range between $725 million to $750 million.”

Conference Call

In conjunction with this release, Willbros has scheduled a conference call, which will be broadcast live over the Internet, on Monday, October 31, 2016 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

What: Willbros Third Quarter 2016 Earnings Conference Call
When: Monday, October 31, 2016 - 10 a.m. Eastern Time
How: Live via phone - By dialing 1-888-317-6016 (U.S. Toll Free), 1-855-669-9657 (Canada Toll Free) or 1-412-317-6016 (International) a few minutes prior to the start time and asking for the Willbros Group, Inc. call.
Live over the internet - By logging on to the website at the following address: http://www.willbros.com. The webcast can be accessed from the investor relations home page.

A replay will be available through November 8, 2016 and may be accessed by calling 1-877-344-7529 (U.S. Toll Free), 1-855-669-9658 (Canada Toll Free) or 1-412-317-0088 (International) using Replay Access Code 10095345. 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 and gas and power industries with offerings that primarily include construction, maintenance and facilities development 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; 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 additional waivers or amendments under, the Company's existing loan agreements; the existence of other material weaknesses in internal control over financial reporting; contract and billing disputes; 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; development trends of the oil and gas, and power 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.

SCHEDULES TO FOLLOW

WILLBROS GROUP, INC.
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Income Statement
Contract revenue
Oil & Gas $ 33,100 $ 81,029 $ 147,174 $ 219,247
Utility T&D 106,422 88,922 313,066 282,347
Canada 35,355 52,294 107,343 189,948
Eliminations (56) (54) (290) (208)
174,821 222,191 567,293 691,334
Operating expenses
Oil & Gas 38,501 89,358 163,978 254,302
Utility T&D 105,793 94,201 311,738 287,820
Canada 36,902 49,472 110,388 188,260
Unallocated Corporate Costs - 1,581 - 7,850
Eliminations (56) (54) (290) (208)
181,140 234,558 585,814 738,024
Operating income (loss)
Oil & Gas (5,401) (8,329) (16,804) (35,055)
Utility T&D 629 (5,279) 1,328 (5,473)
Canada (1,547) 2,822 (3,045) 1,688
Unallocated Corporate Costs - (1,581) - (7,850)
Operating loss (6,319) (12,367) (18,521) (46,690)
Non-operating expenses
Interest expense (3,564) (6,125) (10,433) (20,976)
Interest income 12 15 443 37
Debt covenant suspension and extinguishment charges - (931) (63) (37,112)
Other, net 2 (46) - (181)
(3,550) (7,087) (10,053) (58,232)
Loss from continuing operations before income taxes (9,869) (19,454) (28,574) (104,922)
Provision (benefit) for income taxes 792 (43) 1,146 (21,164)
Loss from continuing operations (10,661) (19,411) (29,720) (83,758)
Income (loss) from discontinued operations net of provision for income taxes (1,325) 2,212 (3,836) 37,849
Net loss $ (11,986) $ (17,199) $ (33,556) $ (45,909)
Basic loss per share attributable to Company shareholders:
Continuing operations $ (0.17) $ (0.32) $ (0.49) $ (1.47)
Discontinued operations (0.02) 0.03 (0.06) 0.67
$ (0.19) $ (0.29) $ (0.55) $ (0.80)
Diluted loss per share attributable to Company shareholders:
Continuing operations $ (0.17) $ (0.32) $ (0.49) $ (1.47)
Discontinued operations (0.02) 0.03 (0.06) 0.67
$ (0.19) $ (0.29) $ (0.55) $ (0.80)
Cash Flow Data
Continuing operations
Cash provided by (used in)
Operating activities $ (5,189) $ (27,489) $ (8,232) $ 14,456
Investing activities 1,888 1,287 6,639 103,594
Financing activities (2,450) (1,309) (8,570) (82,087)
Foreign exchange effects (308) (341) 620 (752)
Discontinued operations (408) 7,724 (7,030) (10,379)
Other Data (Continuing Operations)
Weighted average shares outstanding
Basic 61,640 60,336 61,258 56,833
Diluted 61,640 60,336 61,258 56,833
Adjusted EBITDA from continuing operations(1) $ 331 $ (1,815) $ 3,659 $ (15,827)
Purchases of property, plant and equipment 628 631 2,528 2,055
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA from continuing operations (1)
Loss from continuing operations $ (10,661) $ (19,411) $ (29,720) $ (83,758)
Interest expense 3,564 6,125 10,433 20,976
Interest income (12) (15) (443) (37)
Provision (benefit) for income taxes 792 (43) 1,146 (21,164)
Depreciation and amortization 5,385 6,452 16,694 21,046
Debt covenant suspension and extinguishment charges - 931 63 37,112
Stock based compensation 868 1,500 3,269 4,553
Restructuring and reorganization costs 308 3,318 4,587 6,509
Accounting and legal fees associated with the restatements 4 205 (42) 651
Loss on sale of subsidiary 207 - 330 -
Fort McMurray wildfire related costs - - 523 -
Gain on disposal of property and equipment (124) (877) (3,181) (1,715)
Adjusted EBITDA from continuing operations(1) $ 331 $ (1,815) $ 3,659 $ (15,827)
Balance Sheet Data September 30,
2016
June 30,
2016
March 31,
2016
December 31,
2015
Cash and cash equivalents $ 42,259 $ 48,726 $ 51,686 $ 58,832
Working capital 96,709 105,443 106,304 120,430
Total assets 382,828 416,464 431,372 441,577
Total debt 88,672 90,589 90,617 95,623
Stockholders' equity 148,974 160,324 165,682 177,400
Backlog Data (2)
Total By Reporting Segment
Oil & Gas $ 23,590 $ 34,479 $ 71,314 $ 48,810
Utility T&D 535,014 535,218 595,620 622,629
Canada 88,025 102,302 116,352 155,379
Total Backlog $ 646,629 $ 671,999 $ 783,286 $ 826,818
Total Backlog By Geographic Area
United States $ 558,604 $ 569,697 $ 666,934 $ 671,439
Canada 88,025 102,302 116,352 155,379
Total Backlog $ 646,629 $ 671,999 $ 783,286 $ 826,818
12 Month Backlog by Reporting Segment
Oil & Gas $ 23,590 $ 34,479 $ 69,514 $ 46,810
Utility T&D 289,758 269,758 296,278 274,610
Canada 62,400 68,995 91,503 110,797
12 Month Backlog $ 375,748 $ 373,232 $ 457,295 $ 432,217
12 Month Backlog By Geographic Area
United States $ 313,348 $ 304,237 $ 365,792 $ 321,420
Canada 62,400 68,995 91,503 110,797
12 Month Backlog $ 375,748 $ 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 September 30, 2016
(In thousands)
Oil & GasUtility T&DCanadaUnallocated
Corporate
Costs
EliminationsConsolidated
Contract revenue before special items (1)
Contract revenue, as reported $ 33,100 $ 106,422 $ 35,355 $ - $ (56)$ 174,821
Contract revenue, exited subsidiaries (2) (13) - - - - (13)
Contract revenue before special items $ 33,087 $ 106,422 $ 35,355 $ - $ (56)$ 174,808
Operating income (loss) before special items (1)
Operating income (loss), as reported $ (5,401)$ 629 $ (1,547)$ - $ - $ (6,319)
Operating loss, exited subsidiaries (2) 29 - - - - 29
Other charges 158 36 325 - - 519
Operating income (loss) before special items $ (5,214)$ 665 $ (1,222)$ - $ - $ (5,771)
Three Months Ended June 30, 2016
(In thousands)
Oil & GasUtility T&DCanadaUnallocated
Corporate
Costs
EliminationsConsolidated
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 September 30, 2015
(In thousands)
Oil & GasUtility T&DCanadaUnallocated
Corporate
Costs
EliminationsConsolidated
Contract revenue before special items (1)
Contract revenue, as reported $ 81,029 $ 88,922 $ 52,294 $ - $ (54)$ 222,191
Contract revenue, exited subsidiaries (2) (7,783) (2,943) - - - (10,726)
Contract revenue before special items $ 73,246 $ 85,979 $ 52,294 $ - $ (54)$ 211,465
Operating income (loss) before special items (1)
Operating income (loss), as reported $ (8,329)$ (5,279)$ 2,822 $ (1,581)$ - $ (12,367)
Operating loss, exited subsidiaries (2) 2,092 7 - - - 2,099
Other charges 3,787 81 11 (7) - 3,872
Operating income (loss) before special items $ (2,450)$ (5,191)$ 2,833 $ (1,588)$ - $ (6,396)
Covenant EBITDA from continuing operations (3) Q3 2016Q2 2016Q3 2015
Loss from continuing operations $ (10,661)$ (5,761)$ (19,411)
Interest expense 3,564 3,302 6,125
Interest income (12) (411) (15)
Provision (benefit) for income taxes 792 187 (43)
Depreciation and amortization 5,385 5,621 6,452
Debt covenant suspension and extinguishment charges - - 931
Stock-based compensation 868 1,108 1,500
Restructuring and reorganization costs 308 927 3,318
Accounting and legal fees associated with the restatements 4 (81) 205
Loss on sale of subsidiary 207 - -
Fort McMurray wildfire related costs - 523 -
Loss on disposal of property and equipment outside of normal course of business - - 286
Changes in project loss provision 1,470 (186) (525)
Adjustments to self-insurance liabilities - - (2,732)
Letter of credit fees 349 342 409
Provision for (recovery of) bad debt 66 62 1,906
Covenant EBITDA from continuing operations $ 2,340 $ 5,633 $ (1,594)
Loss from continuing operations before special items (1) Q3 2016Q2 2016Q3 2015
Loss from continuing operations, as reported $ (10,661)$ (5,761)$ (19,411)
(Income) loss from continuing operations, exited subsidiaries (2) 29 (179) 2,099
Other charges 519 939 3,872
Fort McMurray wildfire related costs - 523 -
Debt covenant suspension and extinguishment charges - - 931
Benefit for income taxes (4) - - (1,317)
Loss from continuing operations before special items $ (10,113)$ (4,478)$ (13,826)
Income (loss) from discontinued operations before special items (1) Q3 2016Q2 2016Q3 2015
Income (loss) from discontinued operations, as reported $ (1,325)$ (658)$ 2,212
Other charges 102 (1,162) 2,048
Loss on sale of subsidiaries - 911 591
Provision for income taxes (4) - - 1,317
Income (loss) from discontinued operations before special items $ (1,223)$ (909)$ 6,168
Net loss before special items (1) Q3 2016Q2 2016Q3 2015
Net loss, as reported $ (11,986)$ (6,419)$ (17,199)
(Income) loss from continuing operations, exited subsidiaries (2) 29 (179) 2,099
Other charges 621 (223) 5,920
Fort McMurray wildfire related costs - 523 -
Loss on sale of subsidiaries - 911 591
Debt covenant suspension and extinguishment charges - - 931
Provision (benefit) for income taxes - - -
Net loss, before special items $ (11,336)$ (5,387)$ (7,658)
Diluted loss per share attributable to Company shareholders before special items (1) Q3 2016Q2 2016Q3 2015
Diluted loss per share attributable to Company shareholders, as reported $ (0.19)$ (0.10)$ (0.29)
(Income) loss from continuing operations, exited subsidiaries (2) - - 0.03
Other charges 0.01 - 0.10
Fort McMurray wildfire related costs - 0.01 -
Loss on sale of subsidiaries - 0.01 0.01
Debt covenant suspension and extinguishment charges - - 0.02
Provision (benefit) for income taxes - - -
Diluted loss per share attributable to Company shareholders before special items $ (0.18)$ (0.08)$ (0.13)
(1) Contract revenue before special items, operating income (loss) 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.
(2) Contract revenue, exited subsidiaries, operating income (loss), 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.
(3) 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.
(4) 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-.

CONTACT: Stephen W. Breitigam VP Investor Relations Willbros 713-403-8172

Source:Willbros United States Holdings, Inc.