FIRST QUARTER 2004
Revenue for the first quarter of 2004 was $102.3 million compared to $98.9 million during the first quarter of 2003. The three percent increase in revenue was driven by an increase in construction partially offset by decreases in specialty services and engineering work. Construction revenue for the first quarter increased to $76.9 million compared to $64.2 million for the same period last year. Specialty services revenue in the first quarter decreased to $16.9 million from $19.5 million for the same period last year. Engineering revenue for the quarter decreased to $8.5 million from $15.2 million in the first quarter of last year.
Net loss for the first quarter of 2004 was $0.2 million or $(0.01) per share on 20.7 million shares, compared to a net loss for the first quarter of 2003 of $4.6 million or $(0.22) per share on 20.6 million shares. The improvement in financial results in the first quarter of this year resulted from increased construction activity in North America and the Middle East. These improvements were partially offset by increased costs associated with bidding, initial staffing and contract negotiations on anticipated projects. Legal expenses related to contract negotiations and claims, and costs to comply with Sarbanes-Oxley requirements also contributed to increased administrative costs. Results in the first quarter of 2003 were negatively affected by a series of unforeseen costs related to contract variations. EBITDA (1) for the first quarter of 2004 increased to $5.6 million compared to $0.5 million in the same period last year.
Backlog (2) as of March 31, 2004 was $204.5 million, with an estimated imbedded margin of 30.9 percent, compared to $224.7 million at the end of 2003, with an estimated imbedded margin of 29.6 percent.
Michael F. Curran, President and Chief Executive Officer, commented, "The first quarter unfolded as we had anticipated. We continue to see increased demand for construction services both in international and North American markets. In addition, in the last 30 days we have begun to see renewed interest in engineering work in North America. Furthermore, because we are actively negotiating contracts with a number of clients, we remain confident that Willbros will be awarded approximately $400 million in new contracts before the end of the summer."
In late March, our Opal gas processing plant in southwestern Wyoming began full commercial operations.
Mr. Curran stated, "Our long-term relationship with Williams allowed us to create a unique structure for the expansion of the gas processing capacity at the Opal facility. From our perspective, this facility adds a new source of long-term revenue to complement our revenue stream from projects."
On March 15, 2004, the Company announced that it had entered into an expanded credit agreement with Credit Lyonnais, for a new $150 million three- year senior secured credit facility. This facility replaces the Company's existing three-year $125 million bank facility, which was scheduled to expire in June 2005. Also, between early March and mid-April, Willbros issued $70 million of convertible senior notes, with an interest rate of 2.75 percent, due in 2024. The notes are convertible into shares of Willbros' common stock at an initial equivalent conversion price of $19.47 per share of common stock, subject to adjustment in certain circumstances. The notes will be convertible only upon the occurrence of certain specified events including, but not limited to, if, at certain times, the closing sale price of the Company's Common Stock exceeds 120% of the then current conversion price, or $23.36 per share based on the initial conversion price.
The following outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein are set forth below and in Willbros' filings with the Securities and Exchange Commission.
Warren L. Williams, Senior Vice President and Chief Financial Officer, commented, "Based on current information, we are reconfirming our revenue expectations in the range of $525 to $575 million and our earnings for the year in the range of $0.65 to $0.90 per diluted share. Depending upon the timeframe of project awards, we now expect earnings per diluted share in the second quarter of 2004 to range between $0.01 and $0.05."
Mr. Curran added, "Willbros is in very strong financial condition and we continue to be a contractor of choice with many of our customers. We are confident that the Company is positioned to perform well in this improving business cycle despite the continued uncertainty related to the timing of awards. With respect to our outstanding contract variations, we continue to meet and negotiate with our customers. Our timetable for the resolution of these matters has not changed and we believe we will finalize negotiations on these issues before the end of this year."
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