Willbros Group, Inc. KeyBanc Capital Markets EC&U Conference. November 2010

Transcription

1 Willbros Group, Inc. KeyBanc Capital Markets EC&U Conference

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

3 Willbros: Over 100 years of Notes: Information as of 11/09/10 (1) Shares Outstanding as of 11/5/10 (2) Shares Issued as part of InfrastruX acquisition 7/01/10 (3) Based on 3 month average (4) Inside Ownership 8/31/10 Founded in 1908: IPO in 1996 Exchange / Ticker: NYSE : WG Share Price: $8.66/share Shares Outstanding (1) : 47.9 million Shares Issued (2) : 7.9 million Market Capitalization: $415 million Avg. Trading Volume (3) : 418,840 shs/d Inside Ownership (4) : ~9 million shares 3

4 Willbros Overview Who We Are Provider of E&C services globally to the oil, gas refinery, petrochemical and power industries with focus on infrastructure such as oil & gas pipeline systems, electric transmission and distribution (T&D) services and refinery downstream markets Offerings include engineering, procurement and construction (either individually or as an integrated EPC service offering), turnarounds, maintenance and other specialty services World leader in pipeline engineering and construction We Provide Services To Onshore Production Gathering & Processing Long Haul Transportation Oil Refining & Petrochemical Processing Utilities & Power Providers Defense & Infrastructure Upstream Mid-Stream Downstream Utilities Government 4

5 Strategic Objectives Expand Services, Broaden Customer Base, Balance Revenues Focusing on: Diversification Geographies Services Markets Customers Revenue Expansion Recurring Services Capital Projects Government Projects Risk Reduction Steadier Revenue Improved Visibility Balanced Market Cycles Evaluating non-strategic and underutilized assets 5

6 Transformation to Broadly Diversified E&C YTD 2010 Reduced Exposure to Unstable Markets Focused on North American Infrastructure and Expand Capabilities Positioned Company for Growth Delivering Strategic Objectives Sold Nigerian operations and closed South American offices in February 2007 Key acquisitions InServ Midwest in Canada Redeployed cash from Nigeria sale Increased U.S. large- diameter capacity from 1.5 to 3 spreads Supplemented Canadian capacity to replace / retrofit equipment Re-domiciled from Panama to Delaware Improved ability to win U.S. government contract awards Acquired Wink Engineering Full EPC offering to downstream market Improved project management systems and controls Completed acquisition of InfrastruX Positioned for growth opportunities in Utility T&D market Enhanced midstream offerings Increased regional exposure and crossselling opportunities 6

7 Willbros Values: Guiding our Business Practices 7

8 Willbros Business Segments Pipeline Construction Engineering Pipeline M&M T&D Emergency Restoration Slurry Line Maintenance Upstream Downstream Utility T&D Spool Fabrication Field Maintenance Mod Fab / Assembly Rig Moving Heavy Hauling Turnarounds Manufacturing Turnkey Projects Engineering Field Services Tank Services / Construction Construction Heater Services Safety Services Gov t Services Transmission (OH & UG) Substation Distribution Cable Restoration Smart Grids Emergency Restoration Utility Line Locating Large-bore Horizontal Directional Drilling Telecom Civil Leak Detection 8

9 Market Leader with Diversified Revenues & Backlog Proforma Revenue by Segment (1) Upstream 38% Backlog by Segment (2) Upstream 37% Utility T&D 41% Utility T&D 50% Downstream 21% Downstream 13% $1.4 - $1.5 billion $1.0 billion (1) Proforma 2010 (Jan Dec) (2) September 30,

10 Operating Segment Overview

11 Upstream Segment Overview Pipeline Construction Slurry Line Maintenance Mod Fab / Assembly Upstream Engineering Spool Fabrication Rig Moving Pipeline M&M Field Maintenance Heavy Hauling Services provided from the wellhead to the plant gate Large diameter transmission pipelines Small diameter lateral and distribution pipelines Gas and oilfield gathering and well-tie systems Compression stations and other facilities Full portfolio of services EPC capabilities through integrated engineering Team with customers to extend services beyond construction Recurring revenue stream opportunities increasing NiSource Alliance agreement notable in the industry 11

12 Upstream Outlook Improving Significant rebound expected in new U.S. pipeline construction driven by: Unconventional oil and gas production Development of oil and gas fields in remote areas Supply / demand imbalances Aging pipeline infrastructure requires significant maintenance and replacement investment Recent oil and natural gas pipeline accidents have significantly increased national safety awareness Renewed Canadian oil sands investment (Kearl / Firebag / Jackfish) Re-emerging oil field development in the Middle East 12

13 Upstream Segment Outlook Backlog of $386.3 million as of 9/30/10 Upstream highlights: Increased competition in large diameter U.S. pipeline construction Growing opportunities in gathering and other early stage work to support shale development: More demand for smaller diameter systems and for shorter length, large diameter pipelines Complementing centralized model by adding regional based service offerings utilizing our engineering and construction capabilities Adding engineering staff (leading indicator for construction) Growth opportunities in our pipeline maintenance and integrity offerings Canadian pipeline construction, fabrication and field services demand are improving as oil sands investment recovers: Two significant pipeline construction projects in backlog extending visibility through first quarter

14 Downstream Segment Overview Turnarounds Field Services Downstream Manufacturing Tank Services / Construction Turnkey Projects / Engineering Construction Heater Services Safety Services Gov t Services Specialty service provider to refiners and petrochemical customers Targets higher value-added technical services Focus on maintenance and small capital projects for life extension Frame agreements drive recurring revenue Integrated EPC offering targets small to mid-sized capital projects Offers vertically integrated or any combination of discreet services Flexible model allows business to scale geographically on a project specific basis Moving to the lowest cost offering Continue to pursue Government services contracts 14

15 Downstream Outlook Implies Future Improvement Deferred downstream maintenance and turnaround activities and recent project delays have shifted spending into 2011 Safety more paramount in the hydrocarbon industry following recent onshore and offshore accidents Industry trending towards small capital projects related to: Efficiency improvements EPA regulations mandating benzene and sulphur content reductions 95% U.S. Historical Refinery Utilization Source: Industrial Information Resources 85% 75% 65% Recent decline in U.S. refinery utilization indicates continued uncertainty Recent small addition of chargeable personnel in Downstream Engineering Trend to smaller / EPC projects favorable for Willbros EPC inquiries and opportunities increasing Source: Energy Information Agency 15

16 Downstream Segment Outlook Backlog of $138.4 million as of 9/30/10 Reorganized Downstream segment in 2Q with new management Downstream remains challenged due to customer caution around potential regulatory change, margins and uncertainty of future utilization rates Refinery maintenance and turnarounds improving due to 2009 deferrals New management team focused on: Realigning our strategy and business model to be a low cost provider Reducing costs to increase competitiveness and profitability Maintaining safety, quality, schedule and performance Wink Engineering leads integrated EPC service offering Recently booked $14 million EPC project for Valero McKee Refinery in Sunray, Texas 16

17 Utility Transmission & Distribution Segment Overview Electric Transmission & Substation Natural Gas Pipeline Utility T&D Electric Distribution Gas & Oilfield Services Emergency Storm Response Pipeline Integrity Broad spectrum of overhead and underground electric power and natural gas T&D services Construction of overhead and underground transmission lines and substations up to 500kV and all types of tower structures Construction of overhead and underground distribution lines from household voltage levels to 69kV Smart grid component installation and other specialty services 24x7 response to transmission and distribution emergencies throughout the United States CableCURE Proprietary process for the restoration and life extension of underground electric cables worldwide 17

18 Utility T&D Segment Integration Natural Gas Operations Downstream Upstream Utility T&D Implement Marcellus midstream strategy combining Upstream engineering and project management with Utility T&D local construction and maintenance Build on alliances to grow opportunities for combined service offerings Increase presence in shale plays, e.g. Eagle Ford, Marcellus Local / regional offices providing array of services including engineering, project management, construction and EPC Broaden engineering and project management capabilities into transmission and substation construction to pursue complex, larger projects including EPC Expand program management, engineering and EPC capabilities to pursue future transmission mega projects 18

19 Compelling Electric T&D Market Outlook Significant new transmission infrastructure is needed for new generation including renewable and alternative energy sources Aging electric grid system and existing infrastructure Congested and regionalized infrastructure is inefficient to meet growing power demands, prompting construction of new infrastructure Regulatory environment supports and promotes electric infrastructure investment Transmission Line Additions > 100kV (1) Total Transmission Spending (2) $ 18,000 $ 16,000 $ 14,000 $ 12,000 $ 10,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ Total Transmission Spending (1) Stifel Nicolaus Electric Transmission: Forecast Acceleration of Large Project Spending Ahead (March 10, 2010). North American Electric Reliability Corporation 2009 Long-Term Reliability Assessment (October 29, 2009). (2) Edison Electric Institute. 19

20 Willbros Utility T&D Segment Outlook Backlog of $516.8 million as of 9/30/10 Utility T&D segment trends Texas CREZ driving electric transmission improvements Increasing bid activity for transmission projects in the $20-50mm range each Distribution remains challenged by soft housing market Utility maintenance delayed during 2009 is slowly returning to the market Willbros is three years into a 10 year alliance agreement with Oncor Oncor is the largest utility in Texas with ~3 million customers and over 117,000 miles of T&D lines Agreement favorably positions us as Oncor s preferred T&D contractor De facto provider for most T&D maintenance and construction services Anticipated annual volumes expected to be greater than $150MM for

21 Financial Overview

22 Willbros Financial Snapshot (000) $3,000 Revenue Guidance $MM Proforma Revenue 2010 (1) $2,500 $2,000 $1,500 $827 $599 $1,500 Utility T&D 41% Upstream 38% $657 $1,200 $1,000 $1,913 $500 $0 $948 $1,260 $1,100 $1, Guidance Willbros InfrastruX 2010 PF Guidance (1) Downstream 21% $1.4 - $1.5 billion (1) Proforma 2010 (Jan Dec) 22

23 Liquidity and Free Cash Flow Cash, cash equivalents and short-term investments of approximately $101 million $175 million undrawn revolving credit facility Favorable maturity profile $30 million of putable convertible bonds in late 2010 and $60 million early 2011, with no other maturities until the credit facilities in 2013 Revolver available to fund potential put Flexible maintenance and capital expenditure requirements 23

24 Undervalued Relative to Peers 2011 EV/EBITDA Valuation 2011 Price/Cash Flow Valuation 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 2011 Market Cap/Sales Valuation Source: Thomson One Pricing as of November 9, x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x 24

25 Key Investment Highlights

26 Key Investment Considerations Worldwide brand recognition and outstanding reputation for successful project execution Critical scale, extensive geographic presence, strong equipment and customer base Opportunity for growth from broad service offering Improving market outlook driven by: Shale play development Renewable energy Increasing safety concerns Aging infrastructure Delayed maintenance Government spending Balanced revenue base from recurring services coupled with discrete projects Trading at a discount to peer group based on most valuation metrics 26

27 Appendix and Exhibits

28 Effective and Comprehensive Risk Management Processes and Procedures Willbros utilizes a rigorous risk management process in assessing potential opportunities Standing bi-weekly review Review Triggers Corporate Review Committee Comprehensive Review Bid Review Process Dollar Threshold CEO Contract Terms Pursue / No Pursue New Customers CFO Pricing / Margins Bid / No Bid New Countries Segment Leadership Contingency Final Bid Review New Service / Unique Project Sales and Marketing Project Team Project Controls Bid Strategy Execution Strategy Follow-up, as needed Legal Compliance Tax Treasury Insurance Procurement 28

29 Experienced Management and Operations Team with 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 Name Age Years of Relevant Experience Position Robert R. Harl President and Chief Executive Officer James L. Gibson Senior Vice President and Chief Operating Officer Van A. Welch Senior Vice President and Chief Financial Officer Peter W. Arbour Senior Vice President and General Counsel Jerrit M. Coward Senior Vice President and President Upstream Oil & Gas Richard E. Cellon Senior Vice President and President Downstream Oil & Gas Michael T. Lennon 47 8 Senior Vice President and President Utility T&D 29

30 Worldwide Brand Recognition Reputation for Successful Project Execution Willbros has developed an international brand and reputation as a preferred contractor in meeting customer expectations for quality and schedule, even under demanding 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: 8,400+ Diverse technical work provides significant operational flexibility 30

31 Strong Long-Term Customer Base Willbros has long-standing customer relationships with leading companies including 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 services Selected Client Base Upstream Downstream Utility T&D 31

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