Willbros - 2011 Credit Suisse Presentation
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Willbros - 2011 Credit Suisse Presentation





Presentation for Credit Suisse Group Engineering & Construction Conference



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Willbros - 2011 Credit Suisse Presentation Presentation Transcript

  • 1. Willbros Group (NYSE : WG) 2011 Credit SuisseEngineering & Construction Conference June 2, 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. 2 Credit Suisse June 2011
  • 3. Willbros: Over 100 years of Current work regions Past work regions Willbros offices Founded in 1908: IPO in 1996 Exchange / Ticker: NYSE : WG Share Price(1): $8.82/share Market Capitalization: $444 millionNotes:(1)  Share price as of 05/24/11 Avg. Trading Volume(2): 426,817 shs/d(2)  Based on 3 month average(3)  Inside Ownership 8/31/10 Inside Ownership(3): ~9 million shares 3 Credit Suisse June 2011
  • 4. Willbros Values: Guiding our Business Practices 4 Credit Suisse June 2011
  • 5. Willbros Overview Who We Are• 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), refinery turnarounds, ongoing maintenance and other specialty services. Services Span Energy Infrastructure Sector Upstream / Midstream Downstream Utility T&D Onshore Gathering & Long Haul Refining & Utilities & Production Processing Transportation Processing Power 5 Credit Suisse June 2011
  • 6. Willbros VisionTo be a multi-billion dollar engineering and constructioncompany with a diversified revenue stream, exposure to high growth opportunities and ability to achieve more stable and predictable results 6 Credit Suisse June 2011
  • 7. 2011 Objectives Returning Willbros to profitability and strengthening the balance sheet Objective StatusReduce debt by approximately •  Paid down $28.75 million in debt$50 - $100 million •  Sold ~$8.1 million in under-utilized equipment –  Identified ~$12.1 million of additional non-strategic / under-utilized assets •  Signed LOI for non-strategic business unitImprove project management •  Increased executive level project management oversighttools and capabilities •  Engaged in enterprise-wide improvements and implementationMaintain focus on North •  Regional U.S. Upstream offices in the Barnett, Marcellus,America Haynesville, Eagle Ford and Bakken Shale plays •  Discontinued operations in Canada cross-country pipeline construction and focusing on oil sands-centric marketsRemain focused on Safety •  Made improvements over last years performance and our HSE management system implementation and safety culture enhancement programs are continuing on target 7 Credit Suisse June 2011
  • 8. Focus on North America Willbros has the resources and expertise to grow revenue from: •  Utility Transmission & Distribution Build-Out •  Oil and Gas Shale Play Development •  Canadian Oil Sands Production 8 Credit Suisse June 2011
  • 9. Recognizing Growth Markets U.S. Pipeline Construction Forecast(1) vs. Transmission Infrastructure Market(2) Willbros Revenue ($ in millions) ($ in millions) Actual Planned We see similar opportunities for electric utility transmission infrastructure construction like we saw for U.S. pipeline construction in 2006(1)  Oil & Gas Journal(2)  Edison Electric Institute 9 Credit Suisse June 2011
  • 10. Utility T&D Positioned for Growing Market•  Near-term investment in Utility T&D is growing –  Over $54 billion in planned U.S. transmission investment from 2009 - 2013•  Build-out investment to continue growing –  Over $880 billion in new T&D infrastructure expected from 2010 – 2030 –  $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 MSAs•  Strong Utility T&D backlog of $854 million Transmission infrastructure build-out expected to be challenged by construction capacity 10 Credit Suisse June 2011
  • 11. New Technologies = Domestic Production Growth Active Rig Additions Since Low – May 2009 +137 +1 Williston +3 +4 +16 +2 +4 -7 +78 +29 +15 +33 +2 Marcellus +7 -1 +145 +28 +14 +19 Anadarko -3 -6 -2 +40 +4 +322 +19 +7 Permian +7 +10 +140 Eagle Dry Gas Focused Areas Ford +3 +134 Liquids Rich/Oil Focused Areas Rig Declines Source: Bentek, April 2011 11 Credit Suisse June 2011
  • 12. Operating & Expanding in the U.S. Shale Plays Broaden our offerings to provide strategic customers the services they want in the places they want them•  Increasing unconventional production is driving demand for Bakken Shale smaller & shorter distance pipelines and gathering systems•  New supply areas lack sufficient infrastructure Pittsburgh, PA Denver, CO•  Annual midstream pipeline Tulsa, OK Kansas City, MO expenditures are projected to be between $4 and $14 billion / year Eunice, NM Ponder, TX (1) Haynesville Shale•  Willbros is strategically Forth Worth, TX Houston, TX positioning offices in the shale plays (focus on liquids-rich areas) George West, TX(1)  INGAA, North American Midstream Natural Gas Infrastructure Through 2035 (Preliminary Results), April 2011 12 Credit Suisse June 2011
  • 13. Canadian Opportunities Improving•  Production from the oil sands set to increase significantly over the next decade –  Production expected to increase from ~1.5 MMBD to ~2.0 MMBD by 2015•  Capital spending is forecast to peak at $22 billion in 2014 –  20% higher than previous peak of 07/08 and close to double from 2009•  Labor shortage will be a factor(1) Peters & Co. Limited 13 Credit Suisse June 2011
  • 14. Financial Overview
  • 15. Willbros Financial Snapshot Revenue Guidance ($million) Revenue Q1 2011 (1) $412 million(1) InfrastruX revenue Jan – Jun 2010 15 Credit Suisse June 2011
  • 16. Backlog Total Backlog by Segment (1) Major Projects $2.3 billion 12 Month Backlog by Segment (1) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011 2012 $1.1 billion(1)March 31, 2011 16 Credit Suisse June 2011
  • 17. Liquidity and Free Cash Flow(1)•  Cash and cash equivalents of approximately $79 million•  $175 million credit facility ‒  $25 million cash revolver limited until leverage ratio reaches 3.0 to 1.0 or less ‒  $25 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)March 31, 2011 17 Credit Suisse June 2011
  • 18. Key Investment Highlights
  • 19. WG is Undervalued Relative to Peers * *Source: Thomson OnePricing as of May 18, 2011*Data not available 19 Credit Suisse June 2011
  • 20. Key Investment Considerations•  Worldwide brand recognition and reputation for quality, safety and schedule / price certainty•  Exposure to burgeoning markets in electric transmission infrastructure, unconventional shale production and the Canadian oil sands driven by: – Shale development – Renewable energy – Increasing safety concerns – Aging infrastructure – Ongoing maintenance – Government spending•  Market outlook implies earnings break-out as pricing power shifts to contractors in a tightening market•  Broad service offering, critical scale, extensive geographic presence and strong customer base•  Balanced revenue base from recurring services coupled with EPC and discrete projects•  Trading at a discount to peer group based on most valuation metrics 20 Credit Suisse June 2011
  • 21. Appendix and Exhibits
  • 22. Utility Transmission & Distribution Segment Overview Utility T&D •  Expanded into Utility T&D in mid-2010 via InfrastruX acquisition •  Service offerings include: –  Construction of overhead and underground transmission and distribution lines, substations and tower structures –  Other services include electric substation service, cable reliability (CableCURE®) and specialty services •  National network of experienced utility construction and maintenance service providers: –  Chapman Construction (Texas CREZ project) –  Hawkeye (East Coast) –  Willbros T&D –  Trafford –  Skibeck –  InterCon –  Premier –  Gill –  Bemis –  Lineal 22 Credit Suisse June 2011
  • 23. Upstream Overview•  Engineering, construction and EPC Upstream services provided from the wellhead to the burner tip –  Large diameter transmission pipelines –  Lateral and distribution pipelines –  Gas / oilfield gathering & well-tie systems –  Compression stations and other facilities•  Maintenance and integrity services –  Recurring revenue from maintenance and master service agreements –  Significant NiSource alliance –  Management, maintenance & expansion services of pipeline & storage system•  National network of experienced engineering, construction and maintenance service providers: –  U.S. Construction –  Specialty Services –  Upstream Engineering –  B&H 23 Credit Suisse June 2011
  • 24. Downstream Segment Overview Downstream •  Specialty service provider to refiners and petrochemical customers: ‒  Engineering ‒  Construction ‒  Turnarounds ‒  Maintenance ‒  Field Services ‒  Safety Services •  Integrated EPC offering targets small to mid-sized capital projects •  Flexible model to scale business geographically on a project basis •  Enhancing lowest cost offering •  Expanding Government services capabilities 24 Credit Suisse June 2011
  • 25. Effective and Comprehensive Risk ManagementProcesses and ProceduresWillbros utilizes a rigorous risk management process in assessing potential opportunities •  Standing bi-weekly review Corporate Review Comprehensive Bid Review Review “Triggers” Committee Review Process Dollar Threshold CEO Contract Terms Pursue / No Pursue New Customers CFO Pricing / Margins Bid / No Bid Segment Leadership New Countries Contingency Final Bid ReviewNew Service / Unique Sales and Marketing Bid Strategy Follow-up, as needed Project Project Team Execution Strategy Project Controls Legal Compliance Tax Treasury Insurance Procurement 25 Credit Suisse June 2011
  • 26. Experienced Management and Operations Teamwith Proven Track Record•  Senior executive team averages over 20 years of relevant industry experience ‒  Many have led projects both domestically and overseas•  Field leadership team brings significant and diverse global energy infrastructure project management construction experience•  Current management team has grown revenues from continuing operations from $295 million in fiscal 2005 to $1,859 million for pro forma 2009, representing a 58.5% CAGR•  Combined management team, along with a skilled workforce, position Willbros well to further expand into new geographic regions and capitalize on substantial growth opportunities Key Management Years of Relevant Name Age Position Experience Robert R. Harl 60 35 President and Chief Executive Officer James L. Gibson 60 37 Chief Operating Officer Van A. Welch 55 33 Senior Vice President and Chief Financial Officer Peter W. Arbour 62 36 Senior Vice President and General Counsel J. Robert Berra 43 21 Executive Vice President, Sales & Marketing Jerrit M. Coward 42 18 Senior Vice President and President Upstream Oil & Gas Richard E. Cellon 54 27 Senior Vice President and President Downstream Oil & Gas Michael J. Giarratano 58 36 Senior Vice President and COO Utility T&D 26 Credit Suisse June 2011
  • 27. Worldwide Brand RecognitionReputation for Successful Project ExecutionWillbros has developed an international brand and reputation as a preferredcontractor in meeting customer expectations for quality and schedule, even underdemanding conditions•  Over its 100-year history, Willbros has developed a strong global presence ‒  Performed work in more than 60 countries ‒  Completed approximately 124,000 miles of pipelines•  Willbros differentiated full engineering and construction capabilities and superior project management provide customers a single, integrated solution ‒  Engineering, procurement and construction (“EPC”) capabilities are offered either selectively or as a combined offering ‒  EPC allows Willbros to capture significant incremental revenue with minimal additional resources, while maintaining greater control of the overall project execution ‒  Employees: 9,000+ ‒ Diverse technical work provides significant operational flexibility 27 Credit Suisse June 2011
  • 28. Strong Long-Term Customer BaseWillbros has long-standing customer relationships with leading companiesincluding integrated majors, large independents, utilities and energy companies,natural gas transportation companies and Canadian oil sands operators•  Several relationships span more than 50 years•  The basis for the Company’s long-term customer relationships continues to be the comprehensive, cost-efficient and timely services provided•  Relationships enable participation in the planning stages of larger projects, improving project control and enhancing future bid work opportunities•  Often able to procure work on a negotiated rather than a competitive bid basis•  Able to leverage long-term relationships for cross-selling opportunities•  Three years into a 10-year alliance agreement with Oncor, making Willbros the de facto provider for most of Oncor’s transmission and distribution maintenance and construction servicesSelected Client Base Upstream Downstream Utility T&D 28 Credit Suisse June 2011
  • 29. www.willbros.com