IFS Intercorp Financial Services Inc

Revenues of $217 million increased 20% over prior year period MEDIA, Pa., May 3 /PRNewswire-FirstCall/ -- InfraSource Services, Inc. (NYSE:IFS), one of the largest specialty contractors servicing electric, natural gas and telecommunications infrastructure in the United States, today announced its financial results for the first quarter ended March 31, 2006. First Quarter Results Revenues for the first quarter 2006 increased $36.6 million, or 20%, to $217.2 million, compared to $180.6 million for the same quarter in 2005. This increase was due primarily to mild weather during the quarter coupled with growth in each of our electric, natural gas and telecommunications end markets. Net income for the first quarter 2006 was $2.5 million, or $0.06 per diluted share, versus net income of $2.7 million, or $0.07 per diluted share, for the first quarter last year, a decrease of 7%. Approximately $0.9 million of pre-tax expense was included in net income for the first quarter 2006 in connection with our adoption of SFAS 123R on January 1, 2006. Excluding the items in the attached table, income as adjusted (non-GAAP) was $3.6 million for the first quarter 2006 versus income as adjusted of $1.8 million for the same quarter in 2005, an increase of 100%. EBITDA from continuing operations (non-GAAP) for the first quarter 2006 was $13.2 million compared to $14.8 million for the first quarter 2005, a decrease of 11%. Excluding the items in the attached table, EBITDA as adjusted (non-GAAP) increased $3.8 million, or 35%, to $14.8 million for the first quarter 2006 versus $11.0 million for the first quarter a year ago. Income as adjusted, EBITA from continuing operations, EBITA from continuing operations as adjusted, EBITDA from continuing operations and EBITDA from continuing operations as adjusted are provided to enhance understanding of our operating performance. Reconciliations of net income to these non-GAAP financial measures are included in the attached tables. Backlog & New Awards At the end of the first quarter 2006, total backlog was $932 million, a 4% increase compared to the end of the fourth quarter 2005 and 1% higher compared to the end of the first quarter 2005. The increase in our backlog from the fourth quarter 2005 to the first quarter 2006 is primarily related to increases in our electric, natural gas and telecommunications backlogs of 9%, 3% and 1%, respectively. The increase in our backlog from the first quarter 2005 to the first quarter 2006 is primarily related to increases in our electric and telecommunications backlogs of 19% and 26%, respectively offset by a 24% decrease in natural gas backlog due to the exit of several low margin contracts and shorter than typical durations on the renewals of several of our natural gas master services agreement contracts. Among our awards during the first quarter 2006 were 9 scopes of electric work totaling $27 million, 6 scopes of underground natural gas work of approximately $65 million and 3 scopes of telecommunications work of approximately $10 million. Subsequent to the end of the first quarter 2006, we received verbal awards for two major scopes of electrical work for an emissions control project of a large coal-fired generation plant and the construction of an 85-mile 345kv electric transmission line with total aggregate contract value expected to exceed $80 million. David Helwig, Chief Executive Officer, said, "We are very pleased with our results for the quarter, the increase in our backlog and the recent verbal awards. We continue to see strength in our electric and telecommunications end markets and improved performance in our natural gas unit. Our higher than expected revenue and earnings for the first quarter are a result of favorable weather in the Midwest and Northeast regions of the United States, increased customer demand for greater volumes of work, and operational improvements. We believe that we are well positioned to benefit from growth opportunities in our end markets. Our continued efforts to capitalize on the breadth and strength of our complementary services and the level of activity in our end markets are encouraging. However, as we have said previously, our quarterly revenue and earnings will continue to depend on the timing and scope of contract awards, especially those for large electric projects." Conference Call InfraSource has scheduled a conference call for May 3, 2006 at 9:00AM EDT to discuss the results for the quarter. This conference call will be webcast live on the InfraSource website at http://www.infrasourceinc.com/ by clicking on the investors, webcasts & presentations links. A webcast replay will be available immediately following the call at the same location on the website through May 2, 2007. For those investors who prefer to participate in the conference call by phone, please dial (913) 981-5510. An audio replay of the conference call will be available shortly after the call through May 10, 2006 by calling (719) 457-0820 and using passcode 1246549. For more information, please contact Mahmoud Siddig at Taylor Rafferty at (212) 889-4350. About InfraSource InfraSource Services, Inc. (NYSE:IFS) is one of the largest specialty contractors servicing electric, natural gas and telecommunications infrastructure in the United States. InfraSource designs, builds, and maintains transmission and distribution networks for utilities, power producers, and industrial customers. Further information can be found at http://www.infrasourceinc.com/. Safe Harbor Statement Certain statements contained in this press release are forward-looking statements. These forward-looking statements are based upon our current expectations about future events. When used in this press release, the words "believe," "anticipate," "intend," "estimate," "expect," "will," "should," "may," and similar expressions, or the negative of such words and expressions, are intended to identify forward-looking statements, although not all forward- looking statements contain such words or expressions. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. However, these statements are subject to a number of known and unknown risks, uncertainties and other factors affecting our business that could cause our actual results to differ materially from those contemplated by the statements. You should read this press release completely and with the understanding that actual future results may be materially different from what we expect as a result of these risks and uncertainties and other factors, which include, but are not limited to: (1) technological, structural and cyclical changes that could reduce the demand for the services we provide; (2) loss of key customers; (3) the impact of variations between actual and estimated costs under our contracts, particularly our fixed-price contracts; (4) our ability to attract and retain qualified personnel; (5) our ability to successfully bid for and perform large-scale project work; (6) work hindrance due to inclement weather events; (7) the definitive award of new contracts and the timing of the performance of those contracts; (8) project delays or cancellations; (9) the failure to meet schedule or performance requirements of our contracts; (10) the uncertainty of implementation of the recently enacted federal energy legislation; (11) the presence of competitors with greater financial resources and the impact of competitive products, services and pricing; (12) successful integration of acquisitions into our business; (13) close out of certain of our projects may or may not occur as anticipated or may be unfavorable to us; and (14) other factors detailed from time to time in our reports and filings with the Securities and Exchange Commission. Except as required by law, we do not intend to update forward-looking statements even though our situation may change in the future. INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income Three Months Ended Three Months Ended March 31, 2005 March 31, 2006 (Unaudited) (In thousands, except per share data) Contract revenues $180,630 $217,240 Cost of revenues 160,366 188,044 Gross Profit 20,264 29,196 Selling, general and administrative expenses 16,508 23,071 Merger related costs 76 - Provision (recoveries) of uncollectible accounts 80 (10) Amortization of intangible assets 1,612 257 Income from operations 1,988 5,878 Interest income 194 236 Interest expense and amortization of debt discount (1,456) (2,111) Other income, net 4,380 128 Income from continuing operations before income taxes 5,106 4,131 Income tax expense 2,042 1,665 Income from continuing operations 3,064 2,466 Discontinued operations: Loss from discontinued operations (net of income tax benefit of $215 and $0, respectively) (322) - Net income $2,742 $ 2,466 Basic income per share: Income from continuing operations $0.08 $0.06 Loss from discontinued operations (0.01) - Net income $0.07 $0.06 Weighted average basic common shares outstanding 38,981 39,515 Diluted income per share: Income from continuing operations $0.08 $0.06 Loss from discontinued operations (0.01) - Net income $0.07 $0.06 Weighted average diluted common shares outstanding 39,794 40,116 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets December 31, March 31, 2005 2006 (Unaudited) (In thousands, except share data) ASSETS Cash and cash equivalents $ 24,287 $11,891 Contract receivables (less allowances for doubtful accounts of $3,184 and $2,561, respectively) 137,762 141,864 Costs and estimated earnings in excess of billings 84,360 86,175 Inventories 9,183 12,322 Deferred income taxes 4,732 5,193 Other current assets 7,074 6,121 Receivables due from related party - 268 Total current assets 267,398 263,834 Property and equipment (less accumulated depreciation of $55,919 and $62,741, respectively) 144,200 146,290 Goodwill 138,054 138,610 Intangible assets (less accumulated amortization of $19,861 and $20,118, respectively) 1,884 1,627 Deferred charges and other assets, net 10,501 9,667 Total assets $562,037 $ 560,028 Current liabilities: Current portion of long-term debt $889 $ 888 Other liabilities - related parties 11,299 7,880 Accounts payable 44,939 40,057 Accrued compensation and benefits 20,454 19,049 Other current and accrued liabilities 20,515 19,068 Accrued insurance reserves 30,550 33,766 Billings in excess of costs and estimated earnings 15,012 16,143 Deferred revenues 6,590 6,573 Total current liabilities 150,248 143,424 Long-term debt, net of current portion 83,019 82,797 Deferred revenues 17,826 17,815 Other long-term liabilities - related party 420 420 Deferred income taxes 3,370 3,805 Other long-term liabilities 5,298 4,837 Total liabilities 260,181 253,098 Commitments and contingencies Shareholders' equity: Preferred stock, $.001 par value (authorized - 12,000,000 shares; 0 shares issued and outstanding) - - Common stock $.001 par value (authorized - 120,000,000 shares; issued and outstanding - 39,396,694 and 39,673,004, respectively) 39 40 Treasury stock at cost (29,870 and 29,870, respectively) (137) (137) Additional paid-in capital 276,746 279,368 Retained earnings 24,640 27,106 Accumulated other comprehensive income 568 553 Total shareholders' equity 301,856 306,930 Total liabilities and shareholders' equity $562,037 $ 560,028 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands) We believe investors' understanding of our operating performance is enhanced by disclosing the following non-GAAP financial measures: -- Net income, as adjusted ("Income as adjusted"), which we define as GAAP net income, adjusted for certain significant items that, in management's opinion, are not indicative of our core operating performance; -- EBITA from continuing operations before extraordinary items, net ("EBITA from continuing operations"), which we define as net income before discontinued operations, income tax expense, interest expense, interest income and amortization; -- EBITA from continuing operations, as adjusted ("EBITA as adjusted"), which we define as EBITA from continuing operations, adjusted for certain significant items that, in management's opinion, are not indicative of our core operating performance; -- EBITDA from continuing operations before extraordinary items, net ("EBITDA from continuing operations"), which we define as EBITA from continuing operations before depreciation; and -- EBITDA from continuing operations, as adjusted ("EBITDA as adjusted"), which we define as EBITA as adjusted before depreciation. The significant non-core items for the periods shown are set forth in the tables below. We believe it is helpful to an understanding of our business to assess the effects of these items on our results of operations in order to evaluate our performance from period to period on a more consistent basis. This presentation should not be construed as an indication that similar charges will not recur or that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business. We present these non-GAAP financial measures primarily as supplemental performance measures because we believe they facilitate operating performance comparisons from period to period and company to company as they exclude certain items that we believe are not representative of our core operations. In addition, we believe that these measures are used by financial analysts as measures of our financial performance and that of other companies in our industry. Because Income as adjusted, EBITA from continuing operations, EBITDA from continuing operations, EBITA as adjusted and EBITDA as adjusted facilitate internal comparisons of our historical financial position and operating performance on a more consistent basis, we also use these measures for business planning and analysis purposes, in measuring our performance relative to that of our competitors and/or in evaluating acquisition opportunities. In addition, we use certain of these measures in establishing incentive compensation goals and/or determining compliance with covenants in our senior credit facility. We use EBITA from continuing operations and EBITA as adjusted in addition to our other non-GAAP measures because they include all aspects of our equipment charges, including both operating leases and depreciation from owned equipment. We believe these are important measures for analyzing our performance because they eliminate the variation related to lease versus purchase decisions on capital equipment. Because Income as adjusted, EBITA from continuing operations, EBITDA from continuing operations, EBITA as adjusted and EBITDA as adjusted have limitations as analytical tools, you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: -- These measures do not include cash expenditures for capital purchases or contractual commitments; -- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these measures do not reflect cash requirements for such replacements; -- These measures do not include cash requirements necessary to service interest or principal payments on our indebtedness; -- Income as adjusted, EBITA as adjusted and EBITDA as adjusted do not necessarily reflect adjustments for all earnings or charges resulting from matters that we may consider not to be indicative of our core operations; and -- Other companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as a comparative measure. INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands) Three Months Ended Three Months Ended March 31, 2005 March 31, 2006 Net income (GAAP) $2,742 $2,466 Loss from discontinued operations (net of tax) 322 - Amortization of intangible assets relating to purchase accounting 967 153 Litigation judgment reversal (2,271) - Stock compensation expenses - 519 Secondary offering costs - 440 Income as adjusted (a non-GAAP financial measure) $1,760 $3,578 Three Months Ended Three Months Ended March 31, 2005 March 31, 2006 Net income (GAAP) $2,742 $2,466 Loss from discontinued operations (net of tax) 322 - Income tax expense 2,042 1,665 Interest expense 1,456 2,111 Interest income (194) (236) Amortization of intangible assets relating to purchase accounting 1,612 257 EBITA from continuing operations (a non-GAAP financial measure) 7,980 6,263 Litigation judgment reversal (3,785) - Stock compensation expenses - 870 Secondary offering costs - 737 EBITA as adjusted (a non-GAAP financial measure) $4,195 $7,870 Depreciation 6,793 6,911 EBITDA from continuing operations (a non-GAAP financial measure) $14,773 $ 13,174 EBITDA as adjusted (a non-GAAP financial measure) $10,988 $ 14,781 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Supplemental Financial Data (Unaudited) (In millions) Revenues by End Market Three Months Three Months Increase/(decrease) Ended Ended $ % March 31, March 31, 2005 2006 Electric Power - Transmission $ 39.5 21.9% $ 57.8 26.6% $ 18.3 46.3% - Substation* 32.6 18.1% 38.7 17.8% 6.1 18.7% - Other Electric 41.8 23.1% 37.4 17.2% (4.4) (10.6%) Subtotal 113.9 63.1% 133.9 61.6% 20.0 17.5% Natural Gas 43.1 23.9% 53.9 24.8% 10.8 25.1% Telecommunications 19.4 10.7% 24.3 11.2% 4.9 25.3% Other 4.2 2.3% 5.1 2.3% 0.9 21.4% Total $180.6 100.0% $217.2 100.0% $ 36.6 20.3% Backlog by End Market March 31, March 31, Increase/(decrease) 2005 2006 $ % Electric Power - Transmission $152.4 16.5% $176.1 18.9% $ 23.7 15.6% - Substation* 102.0 11.1% 136.4 14.6% 34.4 33.7% - Other Electric 68.7 7.4% 72.7 7.8% 4.0 5.8% Subtotal 323.1 35.0% 385.2 41.3% 62.1 19.2% Natural Gas 388.1 42.1% 293.7 31.5% (94.4) (24.3%) Telecommunications 185.9 20.2% 233.7 25.1% 47.8 25.7% Other 25.1 2.7% 19.3 2.1% (5.8) (23.1%) Total $922.2 100.0% $931.9 100.0% $9.7 1.1% December 31, March 31, Increase/(decrease) 2005 2006 $ % Electric Power - Transmission $184.3 20.6% $176.1 18.9% $(8.2) (4.5%) - Substation* 123.9 13.9% 136.4 14.6% 12.5 10.1% - Other Electric 45.5 5.1% 72.7 7.8% 27.2 59.7% Subtotal 353.7 39.6% 385.2 41.3% 31.5 8.9% Natural Gas 284.4 31.8% 293.7 31.5% 9.3 3.3% Telecommunications 232.4 26.0% 233.7 25.1% 1.3 0.6% Other 23.8 2.7% 19.3 2.1% (4.5) (19.0%) Total $894.3 100.0% $931.9 100.0% $ 37.6 4.2% * - Previously classified in "Other Electric". Note: Percentages may not add due to rounding. CONTACT: Terence R. Montgomery 610-480-8000 Mahmoud Siddig 212-889-4350 DATASOURCE: InfraSource Services, Inc. CONTACT: Terence R. Montgomery of InfraSource Services, Inc., +1-610-480-8000, ; or Mahmoud Siddig of Taylor Rafferty, +1-212-889-4350, Web site: http://www.infrasourceinc.com/

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