Willbros Reports Fourth Quarter and Full Year 2017 Results

March 29, 2018 | Source: Willbros United States Holdings, Inc

Q1 2018 Backlog Additions of $212 Million for the Utility T&D Segment
Willbros shares are now traded on the OTC under the symbol WGRP
Due to the Recent Transaction Announcement with Primoris Services Corporation,
No Conference Call will be Held

HOUSTON, March 29, 2018 (GLOBE NEWSWIRE) — Willbros Group, Inc. (OTC:WGRP) today announced financial results for the fourth quarter and full year of 2017. The company reported a net loss in the fourth quarter of 2017 of $55.0 million, or $(0.89) per diluted share, on revenue of $217.9 million, compared to a net loss of $14.2 million, or $(0.23) per diluted share, on revenue of $164.4 million in the fourth quarter of 2016. For the full year 2017, the company reported a net loss of $108.1 million, or $(1.74) per diluted share, on revenue of $850.0 million, compared to a net loss of $47.8 million, or $(0.77) per diluted share, on revenue of $731.7 million for the full year of 2016.

Operating loss for the fourth quarter of 2017 was $49.1 million, compared to an operating loss of $27.8 million in the third quarter of 2017 and $12.1 million in the fourth quarter of 2016. The increase in the operating loss of $21.3 million compared to the third quarter of 2017 was primarily driven by a significant increase in losses associated with three mainline pipeline construction projects in the Oil & Gas segment. For the full year 2017, the company reported an operating loss of $91.3 million compared to a full year 2016 operating loss of $30.7 million. In January 2018, the company completed the sale of its tank services business and also reached agreement to sell assets comprising its mainline pipeline construction business.

On March 28, 2018, the company announced that it entered into a definitive agreement to be acquired by Primoris Services Corporation (NASDAQ:PRIM) (“Primoris”). The transaction has been unanimously approved by the Boards of Directors of both companies, is not subject to a financing condition, and is anticipated to close during the second quarter of 2018, subject to approval by the requisite vote of the Company’s stockholders and certain other closing conditions.

Michael J. Fournier, President and CEO, commented, “We look forward to working with Primoris to complete the transaction. The announced sale and additional liquidity of up to $20 million adds stability to the company as we move towards closing of this transaction.”

Segment Operating Results

Utility T&D
For the fourth quarter of 2017, the Utility T&D segment reported an operating loss of $9.6 million on revenue of $109.9 million compared to an operating loss of $7.5 million on revenue of $129.9 million in the third quarter of 2017. The fourth quarter 2017 operating results were impacted by losses on two large discrete projects. These discrete projects were completed in the first quarter of 2018. For the full year 2017, the segment reported an operating loss of $5.3 million on revenue of $507.0 million. For the full year 2016, the segment reported operating income of $15.6 million on revenue of $418.4 million.

Oil & Gas
For the fourth quarter of 2017, the Oil & Gas segment reported an operating loss of $35.0 million on revenue of $75.2 million compared to an operating loss of $14.8 million on revenue of $75.3 million in the third quarter of 2017. The fourth quarter 2017 operating results were impacted by a significant increase in losses associated with three mainline pipeline construction projects. Two of these projects have reached mechanical completion and the company reached a settlement to conclude the work on the third project in the first quarter of 2018. For the full year 2017, the segment reported an operating loss of $60.5 million on revenue of $221.9 million. For the full year 2016, the segment reported an operating loss of $16.8 million on revenue of $170.4 million.

Canada
For the fourth quarter of 2017, the Canada segment reported operating income of $1.3 million on revenue of $32.9 million, compared to an operating loss of $0.3 million on revenue of $35.6 million in the third quarter of 2017. The $1.6 million increase was primarily driven by high productivity on an integrity dig project and gross margin increases on the close-out of other discrete projects. For the full year 2017, the segment reported an operating loss of $4.0 million on revenue of $121.2 million. For the full year 2016, the segment reported an operating loss of $0.7 million on revenue of $143.1 million.

Corporate

For the full year 2017, the company recorded $21.5 million of corporate overhead costs compared to $28.8 million of corporate overhead costs for the full year 2016.

Backlog

At December 31, 2017, the company reported total backlog of $616.3 million compared to $741.3 million at September 30, 2017. Twelve-month backlog of $477.1 million at December 31, 2017 decreased $66.8 million from September 30, 2017. The decrease in total and twelve-month backlog is primarily related to a reduction in discrete projects in the Oil & Gas segment, as well as a reduction in MSA backlog in the Utility T&D segment due to the overall timing of renewal.

During the first quarter of 2018, the Utility T&D segment received $212 million in contract extensions or new awards, including a one-year contract extension with one of our key clients amounting to approximately $180 million. The remaining $32 million in awards consists of multiple MSA contract extensions and small discrete projects.

Liquidity

Total liquidity (defined as cash and cash equivalents plus revolver availability) was $48.8 million at December 31, 2017. Cash and cash equivalents totaled $33.5 million at December 31, 2017. As a result of the operating loss we incurred in the fourth quarter 2017, we have had a significant reduction in our liquidity during the first quarter of 2018. In order to address this decrease in liquidity, in March 2018 we obtained additional liquidity up to $20.0 million through an amendment to our Term Credit Agreement. This additional liquidity was provided by Primoris and is repayable if the transaction does not close.

In addition, in March 2018, we entered into forbearance agreements with our lenders as a result of noncompliance with certain default provisions, including the inability to deliver audited financial statements without a going concern explanation and the inability to meet certain future financial covenants. The forbearance agreements provide that our lenders will refrain from pursuing any remedies with respect to certain events of default under our credit agreements for a limited period as we work to complete the merger transaction and provided we comply with the provisions of the agreements.

Conference Call

As a result of Willbros’ pending transaction with Primoris, the company will not hold a conference call to discuss quarterly and full year results.

About Willbros

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 the company’s stockholders may not approve the transaction; the conditions to the completion of the transaction may not be satisfied, or any regulatory approvals required for the transaction may not be obtained on the terms expected, on the anticipated schedule, or at all; closing of the transaction may not occur or may be delayed, either as a result of litigation related to the transaction or otherwise; the parties may be unable to achieve the anticipated benefits of the transaction; completing the merger may distract the company’s management from other important matters; inability to obtain additional waivers, amendments or other forbearance under the company’s existing loan agreements; inability to achieve anticipated margins on fixed price contracts; unanticipated accounting or other issues regarding any material weaknesses in internal control over financial reporting; 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; 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						Year Ended
			December 31,						December 31,
				2017			2016			2017			2016
Income Statement
	Contract revenue
		Utility T&D	$	109,881		$	105,321		$	506,978		$	418,387
		Canada		32,876			35,797			121,151			143,140
		Oil & Gas		75,191			23,274			221,939			170,448
		Eliminations		(85	)		–			(85	)		(290	)
				217,863			164,392			849,983			731,685
	Operating expenses
		Utility T&D		119,455			103,236			512,259			402,820
		Canada		31,571			37,561			125,196			143,790
		Oil & Gas		110,160			29,038			282,444			187,231
		Corporate		5,819			6,697			21,510			28,795
		Eliminations		(85	)		–			(85	)		(290	)
				266,920			176,532			941,324			762,346
	Operating income (loss)
		Utility T&D		(9,574	)		2,085			(5,281	)		15,567
		Canada		1,305			(1,764	)		(4,045	)		(650	)
		Oil & Gas		(34,969	)		(5,764	)		(60,505	)		(16,783	)
		Corporate		(5,819	)		(6,697	)		(21,510	)		(28,795	)
	Operating loss			(49,057	)		(12,140	)		(91,341	)		(30,661	)

	Non-operating expenses
		Interest expense		(5,045	)		(3,543	)		(16,017	)		(13,976	)
		Interest income		8			8			31			451
		Debt covenant suspension and extinguishment charges		–			–			–			(63	)
		Other, net		(298	)		(63	)		(296	)		(63	)
				(5,335	)		(3,598	)		(16,282	)		(13,651	)
	Loss from continuing operations before income taxes			(54,392	)		(15,738	)		(107,623	)		(44,312	)
	Benefit (provision) for income taxes			701			(1,676	)		(964	)		(530	)
	Loss from continuing operations			(55,093	)		(14,062	)		(106,659	)		(43,782	)
	Income (loss) from discontinued operations net of provision for income taxes			72			(141	)		(1,436	)		(3,977	)
	Net loss		$	(55,021	)	$	(14,203	)	$	(108,095	)	$	(47,759	)

	Basic loss per share attributable to Company shareholders:
		Continuing operations	$	(0.89	)	$	(0.23	)	$	(1.72	)	$	(0.71	)
		Discontinued operations		–			–			(0.02	)		(0.06	)
			$	(0.89	)	$	(0.23	)	$	(1.74	)	$	(0.77	)

	Diluted loss per share attributable to Company shareholders:
		Continuing operations	$	(0.89	)	$	(0.23	)	$	(1.72	)	$	(0.71	)
		Discontinued operations		–			–			(0.02	)		(0.06	)
			$	(0.89	)	$	(0.23	)	$	(1.74	)	$	(0.77	)

Cash Flow Data
Continuing operations
	Cash provided by (used in)
		Operating activities	$	(28,066	)	$	(3,760	)	$	(49,623	)	$	(11,992	)
		Investing activities		301			4,204			2,581			10,843
		Financing activities		30,963			(45	)		40,115			(8,615	)
		Foreign exchange effects		(232	)		(649	)		823			(29	)
Discontinued operations				(788	)		(589	)		(1,844	)		(7,619	)

Other Data
	Weighted average shares outstanding
		Basic		62,330			61,683			62,161			61,365
		Diluted		62,330			61,683			62,161			61,365
	Adjusted EBITDA from continuing operations⁽¹⁾		$	(43,928	)	$	(6,414	)	$	(70,882	)	$	(2,755	)
	Purchases of property, plant and equipment			318			1,266			2,450			3,794

Reconciliation of Non-GAAP Financial Measures

	Adjusted EBITDA from continuing operations ⁽¹⁾
		Loss from continuing operations	$	(55,093	)	$	(14,062	)	$	(106,659	)	$	(43,782	)
		Interest expense		5,045			3,543			16,017			13,976
		Interest income		(8	)		(8	)		(31	)		(451	)
		Benefit (provision) for income taxes		701			(1,676	)		(964	)		(530	)
		Depreciation and amortization		4,562			5,225			19,162			21,919
		Debt covenant suspension and extinguishment charges		–			–			–			63
		Stock based compensation		738			858			2,859			4,127
		Restructuring and reorganization costs		804			346			1,339			4,933
		Accounting and legal fees associated with the restatements		19			18			636			(24	)
		Gain on disposal of equipment		(696	)		(585	)		(3,241	)		(3,436	)
		Fort McMurray wildfire related costs (income)		–			(73	)		–			450
		Adjusted EBITDA from continuing operations⁽¹⁾	$	(43,928	)	$	(6,414	)	$	(70,882	)	$	(2,755	)


Balance Sheet Data			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
	Cash and cash equivalents		$	33,472		$	31,294		$	41,249		$	36,693
	Working capital			(83,884	)		56,620			84,033			75,756
	Total assets			363,877			400,553			382,108			366,285
	Total debt			133,283			100,927			88,179			87,466
	Stockholders’ equity			31,708			86,295			118,624			118,614

Backlog Data ⁽²⁾
	12 Month Backlog by Reporting Segment
		Utility T&D	$	307,122		$	329,531		$	355,480		$	362,749
		Canada		51,714			55,127			75,051			77,918
		Oil & Gas		118,278			159,213			116,366			87,750
	12 Month Backlog		$	477,114		$	543,871		$	546,897		$	528,417

	12 Month Backlog exclusive of Tank Services & Mainline Pipeline Construction Services
	12 Month Backlog, as reported		$	477,114		$	543,871		$	546,897		$	528,417
	Mainline Pipeline Construction Services 12 Month Backlog			20,734			47,123			58,097			45,084
	Tank Services 12 Month Backlog			18,258			21,099			26,351			28,813
	12 Month Backlog, exclusive of Tank Services and Mainline Pipeline Construction Services		$	438,122		$	475,649		$	462,449		$	454,520

	Total By Reporting Segment
		Utility T&D	$	387,284		$	459,417		$	540,876		$	605,706
		Canada		110,770			122,644			151,336			158,999
		Oil & Gas		118,278			159,213			116,366			87,750
	Total Backlog		$	616,332		$	741,274		$	808,578		$	852,455

	Total Backlog exclusive of Tank Services & Mainline Pipeline Construction Services
	Total Backlog, as reported		$	616,332		$	741,274		$	808,578		$	852,455
	Mainline Pipeline Construction Services Total Backlog			20,734			47,123			58,097			45,084
	Tank Services Total Backlog			18,258			21,099			26,351			28,813
	Total Month Backlog, exclusive of Tank Services and Mainline Pipeline Construction Services		$	577,340		$	673,052		$	724,130		$	778,558

(1)		Adjusted EBITDA from continuing operations is defined as income (loss) from continuing operations before interest expense (income), 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.

		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.

(2)		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