Willbros Reports $22M Loss for 2006
Willbros Group, Inc. late Wednesday reported its results for the fourth quarter and the full year 2006.
On revenue of $543.3 million, from continuing operations, the net loss for the full year 2006 was $22.0 million, or $0.98 per share, an improvement over the loss of $30.5 million, or $1.43 per share, in 2005. Net loss from discontinued operations for the full year 2006 was $83.4 million, or $3.72 per share, compared to $8.3 million, or $0.39 per share, in 2005. Total net loss for the full year 2006 was $105.4 million, or $4.70 per share, compared to a net loss of $38.8 million, or $1.82 per share, in 2005.
Randy Harl, President and Chief Executive Officer, commented, "While our annual results were disappointing, 2006 was a year of change and transition for Willbros. We spent much of our time, effort and resources reducing the risks in our portfolio and positioning the Company to take advantage of one of the most robust markets we have seen in years. As a result, in the fourth quarter of 2006, the revenue from North America and Oman operations increased 52 percent compared to the third quarter of 2006 with improved contract margins. An important milestone in 2006 included deciding to sell the Nigerian operations. The Nigerian sale and recent awards in North America, which exhibit better terms and conditions and contract margins, resulted in significantly improving the risk profile of our backlog. Equally important was implementing more sophisticated business processes and controls and obtaining the capital and financial resources necessary to win projects that fit our risk profile. Our markets in North America, where we are well positioned, continue to exhibit strength. We are achieving our objective to reduce general and administrative costs and are continuing to refine our business processes and controls.
"In summary, we accomplished the goals we established in the fourth quarter 2006 which are as follows:
-- We sold Nigerian operations in February 2007. -- We reduced our G&A to a run rate to 6-8% of revenue going forward. -- We delivered the revenue and contract margins per our previous guidance."
Fourth Quarter 2006 Continuing Operations
The Company reported revenue from continuing operations of $191.1 million in the fourth quarter of 2006 compared to $125.5 million in the third quarter of 2006, which represented a 52 percent increase quarter over quarter. The increase in revenue was due primarily to the startup of new projects in the fourth quarter of 2006, which were delayed from starting in the third quarter of 2006. Despite heavy rains and flooding at multiple job sites, contract margin in the fourth quarter 2006 increased to 11.6 percent from 9.6 percent in the third quarter of 2006.
General and Administrative ("G&A") expenses were $20.2 million, 10.6 percent of revenue, for the fourth quarter of 2006. G&A expenses included severance charges of $5.0 million related to executive management changes. With the reductions made during the fourth quarter of 2006, the Company expects its G&A expense as a percentage of revenue to be in line with guidance of 6-8 percent beginning in 2007.
The net loss from continuing operations from the fourth quarter of 2006 was $3.4 million, or $0.14 per share, compared to a net loss of $5.0 million, or $0.23 per share, in the third quarter of 2006.
2006 Full Year Continuing Operations
The Company reported revenue from continuing operations of $543.3 million for the full year 2006 compared to $294.5 million in 2005, an 84 percent increase year over year. The increase in revenue was due to higher levels of activity in engineering, construction and engineering, procurement and construction (EPC) projects primarily in North America. Contract margin for 2006 increased to 9.9 percent, which was an improvement over a 2005 contract margin of 9.6 percent. G&A expenses were $53.4 million, 9.8 percent of revenue, in 2006 compared to $42.4 million, 14.4 percent of revenue, in 2005.
2006 Discontinued Operations
Discontinued operations reported an $83.4 million loss, or $3.72 per share, for the full year of 2006 and $37.2 million loss, or $1.47 per share, for the fourth quarter of 2006. Losses from discontinued operations are almost entirely attributable to our Nigeria operations. The operating results in Nigeria for 2006 were negatively impacted by schedule delays; increasing costs related to labor, equipment, materials, and security; disputes with clients related to change orders; and the lack of revenues on certain projects due to force majeure. While in the process of selling our Nigerian operations, we incurred costs to protect the value of our franchise in Nigeria by continuing to qualify for future projects and by maintaining a certain level of workforce.
Additional explanation of the results for the reported periods and factors which impacted them will be provided in the Company's conference call and in Note 2 of the Notes to Consolidated Financial Statements included in the annual report on Form 10-K, which will be filed in the next several days.
At December 31, 2006, Willbros reported backlog from continuing operations of approximately $602 million compared to $240 million at December 31, 2005. Backlog from continuing operations has increased by more than 150 percent since the end of 2005 and represents projects primarily in North America. This year-end backlog does not include $210 million in new project awards, which will be reflected in backlog at the end of the first quarter 2007. These new awards are all in the United States.
Willbros Group, Inc. is an independent contractor serving the oil, gas and power industries, providing engineering and construction services to industry and government entities worldwide.
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