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Jefferies 2011 Global Energy Conference
November 30, 2011
Willbros Group(NYSE : WG)
November 2011
2
Forward Looking Statements
This presentation 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. These
risk factors are described 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. This
presentation contains non-GAAP numbers and a reconciliation is
provided in the Appendix.
November 2011
Willbros: Over 100 years of
3
Founded in 1908: IPO in 1996
Exchange / Ticker: NYSE : WG
Share Price(1): $4.62/share
Market Capitalization: $231 million
Avg. Trading Volume(2): 433,006 shs/d
Inside Ownership(3): ~9 million shares
Notes:(1) Share price as of 11/14/11
(2) Based on 3 month average
(3) Inside Ownership 8/31/11
Current work regions
Past work regions
Willbros of f ices
November 2011
• Global contractor specializing in energy infrastructure serving the
oil, gas and power industries.
• Offerings include engineering, procurement and construction
(individually or as an integrated “EPC” service offering), ongoing
maintenance and other specialty services.
Utility T&D
Willbros Overview
Services Span Energy Infrastructure Sector
Onshore
Production
Gathering &
ProcessingRefining, Processing,
& Terminals
Long Haul
Transportation
Who We Are
4
Utilities &
Power
Upstream / Midstream Downstream
November 2011
5
Willbros Vision and Values
Our mission is to be a multi-billion dollar engineering and construction company with a diversified revenue stream,
exposure to high growth opportunities and ability to achieve more stable and predictable results
November 2011
MSAs95%
Discrete Services
5%
Upstream7%
Downstream6%
Utility T&D87%
• Master service agreements (MSAs) are
typically multi-year agreements (1-3 yrs)
• Contracts are based on established rates
for time and materials
• Acquisition of InfrastruX increased MSA
related backlog
• Current significant MSA agreements /
alliances include:
– NiSource
– Oncor
– Syncrude
• Enhances visibility
Utility T&D Backlog by Type(1)
6
Recurring Revenue from MSAs
(1)September 30, 2011$1.6 billion
MSA Backlog by Segment(1)
$1.7 billion
November 2011
2011 Objectives on Track
7
Returning Willbros to profitability and strengthening the balance sheet
Objective
Reduce debt by
approximately $50 - $100
million
Improve project management
tools and capabilities
Maintain focus on North
America
Remain focused on Safety
Status
• Third quarter debt reduction of $94.7 million
• Applied certain proceeds from disposition of non-strategic business
unit for total debt reduction of $113.4 million as of October 31, 2011
• Remaining principal balance of $185.9 million on the outstanding
Term Loan
• Increased executive level project management oversight
• Engaged in enterprise-wide improvements and implementation
• Utility Transmission & Distribution build out
• Regional U.S. Upstream offices in the Permian Basin and Eagle
Ford, Barnett, Marcellus, Haynesville, Bakken and Niobrara Shale
plays
• Pipeline Integrity Management Services
• In Canada, focusing on oil sands-centric markets while
discontinuing operations in cross-country pipeline construction
• Made improvements over last year's performance and our HSE
management system implementation and safety culture
enhancement programs are continuing on target
November 2011
8
Key Investment Considerations
• Worldwide brand recognition and reputation for quality, safety and schedule /
price certainty
• Exposure to burgeoning markets in electric transmission, hydrocarbon
infrastructure and the Canadian oil sands driven by:
– Renewable energy – Shale development
– Pipeline integrity – Aging infrastructure
– Ongoing maintenance – Government regulation
• Transmission infrastructure market outlook implies earnings break-out as pricing
power shifts to contractors in a tightening market
• Broad range of services enhanced by in-house engineering
• Critical scale, extensive geographic presence and strong customer base reduces
cyclicality and risk
• Balanced revenue base from recurring services and EPC / discrete projects
• Trading at a discount to peer group based on most valuation metrics
November 2011
Focusing on North America
9
• Utility Transmission & Distribution Build-Out
• U.S. Oil and Gas Infrastructure:
– Large Diameter Pipelines
– Shale Play Development
– Pipeline Integrity Services
• Canadian Oil Sands Production
Willbros has the backlog, resources and
expertise to drive profitability from:
November 2011
$6.0
$7.1
$7.8$8.0
$8.6
$9.3$9.7
$11.2
$11.9$12.3
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Track Record for Recognizing Growth Markets
10
Electricity Transmission Infrastructure
Market(2) (billions)
(1) Oil & Gas Journal
(2) Edison Electric Institute
We see similar opportunities for electric utility transmission infrastructure
construction like we saw for U.S. pipeline construction in 2006
Actual Planned
7,105
11,991 12,115
14,238
10,323
4,309
$0.3
$0.6
$1.1$0.7
$0.3
$0.0
$0.3
$0.6
$0.9
$1.2
0
4,000
8,000
12,000
16,000
2006 2007 2008 2009 2010 2011
U.S. Pipeline Construction Miles of 30+" Underway or Anticipated
Willbros U.S. Upstream Revenue
U.S. Large Diameter Pipeline Construction
Forecast(1) vs. Upstream Revenue (billions)
November 2011
Utility T&D Positioned for Growing Market
• Near-term investment in the utility T&D industry is growing
– Over $54 billion in planned U.S. transmission investment from 2009 - 2013
• Build-out investment continues to grow
– Over $880 billion in new T&D infrastructure expected from 2010 – 2030(1)
– $298 billion for transmission infrastructure
– $582 billion to be spent on distribution
• Willbros now has service offering to participate in the utility T&D market
– Broad spectrum of overhead and underground energy transportation services
– Provide recurring services through Master Service Agreements (MSAs)
• Strong Utility T&D backlog
11
Transmission infrastructure market outlook
implies pricing power shifts to contractors in a
capacity tightening environment
(1)Transforming America's Power Industry: The Investment Challenge 2010-2030, Edison Electric Institute
November 2011
Large Diameter Pipeline Construction Remains a Core Upstream Capability
• Willbros has the resources and in-depth expertise to perform
pipeline assessment, engineering, construction and ongoing pipeline
integrity management and maintenance >> the full pipeline lifecycle
• Maintaining capacity to execute 1 to 2 large diameter pipeline
construction projects per year in the United States
• Continuous process improvement to ensure we offer competitive
value propositions to our customers
• Opportunistic view of international markets
12
November 2011
U.S. Production Growth Concentrated in Shale Plays is Changing Pipeline Landscape
13
2221
+29485/+13
9/-2
198/+50
240/+34
461
+117
59/+11
178/+39
17/-4
8/-1
91/-35
30/+3
43/+6
25/+1
78/+8
38/-3
24/-4102/-11
85/-12
5/+4
29/-6
226
+81
21/-6
74/+1
12/+2
46/+7
29/+11
8/-9
Active rig count: October 2011 / Change in rig count from October 2010
Dry Gas Focused Areas
Liquids Rich/Oil Focused Areas
Rig Declines Source: Bentek, October 2011
November 2011
Operating & Expanding in the U.S. Shale Plays
14
• Increasing unconventional
production is driving demand for
smaller & shorter distance
pipelines and gathering systems
• New supply areas lack sufficient
infrastructure
• The natural gas, NGL and oil
midstream sectors are projected
to require capital expenditures of
$10 billion per year(1)
• Willbros is strategically
positioning offices in the shale
plays (focus on liquids-rich areas)
Broaden our offerings to provide strategic customers the
services they want in the places they want them
(1) INGAA, North American Midstream Natural Gas Infrastructure Through 2035: A Secure Energy Future, June 28, 2011
Ponder, TXEunice, NM
Houston, TXGeismer, LAForth Worth, TX
George West, TX
Pittsburgh, PA
Denver, CO
Watford City, ND
Gillette, WY
Carlsbad, NMOdessa, TX
Tulsa, OK
Kansas City, MO
Shreveport, LA
Existing office / presence
New office, 2011
Greeley, CO
November 2011
Compelling Opportunities for Pipeline Integrity Management Services
15
Market Drivers Willbros Offerings
Ability to offer discrete and integrated EPC services
• Aging pipeline infrastructure with
significant exposure in densely populated
areas
• Fatal pipeline incidents across the U.S.
– San Bruno, CA and Allentown, PA
• New regulations by DOT/PHMSA are
expected to be imposed in 2012
• There are ~3,000 companies with over
2.5 million miles of high pressure
pipelines
– Pipeline integrity services market is
expected to double to ~$12 bn/year
starting in 2012(1)
– Upgrade initiatives will be offset by
increased rate bases
• Data mining
• MAOP validation
• Class location
analysis
• As-built services
• Corrosion services
• Risk & threat
assessment
(1) Willbros estimate based on data from American Gas Association and operator projections(2) September 30, 2011
• Maintenance
• Construction
• Engineering
• Survey services
• EPC
• Operations
Willbros Upstream Engineering Backlog(2)
Other Upstream
Engineering96% Integrity
Services4%
November 2011
Canadian Opportunities Improving in Oil Sands
• Production from the oil sands set to increase significantly over the next decade
– Production expected to increase from ~1.5 MMBD in 2010 to ~2.2 MMBD by 2015
• Capital spending is forecast to peak at $22 billion in 2014
– 20% higher than previous peak of 07/08 and close to double from 2009
• Labor shortage will be a factor
16
(1)CAPP Canadian Crude Oil Production Forecast 2011 – 2025, June 2011(2)Peters & Co. Limited
(2)
(1)
Financial Overview
November 2011
Upstream49%
Downstream11%
Utility T&D40%
Willbros Financial Snapshot
18
Historical Revenue Revenue Q3 2011
(1) InfrastruX revenue Jan – Jun 2010
Total: $466 million
(1)
($ in millions)
$948
$1,913
$1,260 $1,192
$1,600
$657
$827
$599
$309
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2007 2008 2009 2010 2011 Guidance
Willbros InfrastruX
November 2011
Total Backlog
Oncor
MPRP
ECHO Eagle Ford
NiSource
Syncrude Maintenance
Oman LNG Maintenance
Husky Sunrise Tanks
Camp Pendleton
12 Month Backlog by Segment (1)
19
Backlog
(1)September 30, 2011$0.9 billion
Total Backlog by Segment (1)
$2.3 billion
1Q 3Q 4Q2Q
2011 2012
Major Projects
Upstream24%
Downstream7%
Utility T&D69%
Upstream36%
Downstream13%
Utility T&D51%
1Q 3Q 4Q2Q
November 2011
Improving Adjusted EBITDA While Reducing Debt
Q2 2011 Q3 2011
Contract revenue $458.3 $466.1
Adjusted EBITDA(1) $21.0 $31.6
Adjusted operating income $13.1(1) $17.8(2)
Backlog (12 month) 948.3 910.8
Cash 93.6 68.3
Total debt 317.9 297.1
($ in millions)
20
• Q3 revenue growth driven primarily by strong project execution in the
Upstream (Acadian Pipeline) and UT&D segments (BP Solar, Bangor Hydro
and MPRP)
• Downstream continues to experience a slow market recovery, especially in
small capital projects
• Cash build and debt paydown aided by receipt of $61 million related to the
TransCanada settlement
(1)Adjusted operating income excludes the $8.2M charge related to TransCanada settlement(2)Adjusted operating income excludes the $134.3 million charge related to the Goodwill Impairment
November 2011
Liquidity and Free Cash Flow(1)
21
• Cash and cash equivalents of approximately $68.3 million
• $175 million credit facility
‒ $25 million cash revolver available
‒ $21 million letters of credit drawn
‒ $59 million cash revolver borrowings
• Maturity profile
‒ $32 million of convertible notes due in December 2012
‒ Senior credit facility due in June 2013
‒ Term loan due in June 2014
• Flexible maintenance and capital expenditure requirements
(1)September 30, 2011
November 2011
WG is Undervalued Relative to Peers
22
Source: Thomson One
Pricing as of November14, 2011
0x
2x
4x
6x
8x
10x
WG FWLTMTRX PIKE EXH DY TTEK MTZ MYRG PWR TISI CBI GLBL
2012 EV/EBITDA Valuation
0.0x
0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
WG EXH PIKE MTRX MTZ MYRG CBI FWLT DY TTEK PWR TISI GLBL
2012 Price/Sales Valuation
0x
2x
4x
6x
8x
10x
12x
14x
EXH WG DY TISI MTZ TTEK MTRX MYRG GLBL FWLT CBI PWR
2012 Price/Cash Flow Valuation
November 2011
23
Key Investment Considerations
• Worldwide brand recognition and reputation for quality, safety and schedule /
price certainty
• Exposure to burgeoning markets in electric transmission, hydrocarbon
infrastructure and the Canadian oil sands driven by:
– Renewable energy – Shale development
– Pipeline integrity – Aging infrastructure
– Ongoing maintenance – Government regulation
• Transmission infrastructure market outlook implies earnings break-out as pricing
power shifts to contractors in a tightening market
• Broad range of services enhanced by in-house engineering
• Critical scale, extensive geographic presence and strong customer base reduces
cyclicality and risk
• Balanced revenue base from recurring services and EPC / discrete projects
• Trading at a discount to peer group based on most valuation metrics
www.willbros.com