MEDIA, Pa., Nov. 1 /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 earnings of $0.27 per diluted share
for the third quarter ended September 30, 2006, above the upper end
of previously announced net income guidance of $0.22 to $0.25 per
diluted share. Third Quarter Results Revenues for the third quarter
2006 increased $49.3 million, or 22%, to $275.9 million, compared
to $226.6 million for the same quarter in 2005 due primarily to
growth in electric end market revenues. Net income for the third
quarter 2006 was $10.8 million, or $0.27 per diluted share, versus
$6.6 million, or $0.16 per diluted share, for the third quarter
last year. EBITDA from continuing operations (non-GAAP) for the
third quarter 2006 was $27.0 million compared to $19.4 million for
the third quarter 2005, an increase of 39%. Reconciliations of net
income to our non-GAAP financial measures are included in the
attached tables. Excluding the items in the attached table, income
as adjusted (non-GAAP) was $11.7 million for the third quarter 2006
versus $6.0 million for the same quarter in 2005 and EBITDA as
adjusted (non- GAAP) increased $8.2 million, or 42%, to $27.9
million for the third quarter 2006 versus $19.7 million for the
third quarter a year ago. Backlog & New Awards At the end of
the third quarter 2006, total backlog was $802 million, which was
comparable to the end of the third quarter 2005. Our electric and
telecommunications backlogs increased 10% and 34%, respectively,
from the third quarter 2005 to the third quarter 2006, offset by a
41% decrease in natural gas backlog due to the planned exit of
certain low margin contracts and shorter than typical durations on
the renewals of several of our natural gas master services
agreement contracts. Our total backlog was 13% less than at the end
of the second quarter 2006. The decrease in our backlog from the
second quarter 2006 to the third quarter 2006 is primarily related
to seasonal work-off of natural gas backlog (27% decline) and a 20%
decline in electric backlog due to the timing of electric project
work completions and awards, offset in part by an 11% increase in
telecommunications backlog. Among our awards during the third
quarter 2006 were 17 scopes of electrical work totaling $72
million, 6 scopes of natural gas work totaling $11 million and 6
scopes of telecommunications work totaling $47 million. David
Helwig, Chairman, President and Chief Executive Officer, said, "We
are very pleased with our results for the quarter as earnings
exceeded the upper end of our expectations due primarily to
profitable execution of high voltage electric work, as well as
reductions in insurance expense due to favorable claims experience.
Although our volume of backlog is down pending seasonal master
service agreement renewals and new project awards, our backlog mix
is strong with a higher proportion of electric and
telecommunications work where we continue to target growth. We
believe that we are well positioned to benefit from growth
opportunities in our end markets; 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, and our performance on those
contracts." Nine Months Financial Review Revenues for the nine
months ended September 30, 2006 increased $111.8 million, or 18%,
to $744.4 million, compared to $632.6 million for the same period
in 2005 due primarily to growth in revenues from our electric and
telecommunications end markets and comparable natural gas end
market revenues. Net income for the nine months ended September 30,
2006 was $18.6 million, or $0.46 per diluted share, versus net
income of $7.9 million, or $0.20 per diluted share, for the same
period last year. Net income for the nine months ended September
30, 2006 included the non-cash charge associated with the
refinancing of our bank debt of $0.06 per diluted share,
stock-based compensation expenses of $0.04 per diluted share
pursuant to SFAS 123R and $0.01 per diluted share of amortization
of intangible assets. EBITDA from continuing operations for the
nine months ended September 30, 2006 was $57.2 million compared to
$42.6 million for the nine months ended September 30, 2005, an
increase of 34%. Excluding the items in the attached table, income
as adjusted (non-GAAP) was $23.7 million for the nine months ended
September 30, 2006 versus $7.4 million for the same period in 2005
and EBITDA as adjusted (non-GAAP) increased $25.9 million, or 66%,
to $65.0 million for the nine months ended September 30, 2006
versus $39.1 million for the same period a year ago. Conference
Call InfraSource has scheduled a conference call for November 1,
2006 at 9:00AM EST to discuss the results for the quarter and its
updated guidance. 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 October 31, 2007. For those
investors who prefer to participate in the conference call by
phone, please dial (480) 629-9562. An audio replay of the
conference call will be available shortly after the call through
November 8, 2006 by calling (303) 590-3030 and using passcode
3623429. 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 in accordance with our estimated costs;
(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 Three Months Nine
Months Nine Months Ended Ended Ended Ended September 30, September
30, September 30, September 30, 2005 2006 2005 2006 (Unaudited) (In
thousands, except per share data) Contract revenues $ 226,575
$275,880 $632,645 $744,416 Cost of revenues 194,857 230,832 562,230
634,642 Gross profit 31,718 45,048 70,415 109,774 Selling, general
and administrative expenses 20,017 25,910 53,851 71,214 Merger
related costs 66 - 218 - Provision for uncollectible accounts 61 5
145 36 Amortization of intangible assets 1,001 254 4,311 748 Income
from operations 10,573 18,879 11,890 37,776 Interest income 122 229
328 638 Interest expense (2,170) (1,404) (5,872) (5,197) Write-off
of deferred financing costs - - - (4,296) Other income, net 735 882
5,749 2,445 Income from continuing operations before income taxes
9,260 18,586 12,095 31,366 Income tax expense 3,994 7,604 5,188
12,770 Income from continuing operations 5,266 10,982 6,907 18,596
Discontinued operations: Income (loss) from discontinued operations
(net of income tax expense (benefit) of $(330), $(110), $(557) and
$9, respectively) (490) (151) (799) 28 Gain (loss) on disposition
of discontinued operation (net of income tax provision (benefit) of
$1,432, $(22), $1,432 and $(22), respectively) 1,790 (33) 1,790
(33) Net income $6,566 $10,798 $7,898 $18,591 Basic income (loss)
per share: Income from continuing operations $0.14 $0.28 $0.18
$0.47 Income (loss) from discontinued operations (0.01) (0.01)
(0.02) - Gain on disposition of discontinued operation 0.04 - 0.04
- Net income $0.17 $0.27 $0.20 $0.47 Weighted average basic common
shares outstanding 39,139 39,778 39,059 39,657 Diluted income
(loss) per share: Income from continuing operations $0.13 $0.27
$0.17 $0.46 Income (loss) from discontinued operations (0.01) -
(0.01) - Gain on disposition of discontinued operation 0.04 - 0.04
- Net income $0.16 $0.27 $0.20 $0.46 Weighted average diluted
common shares outstanding 40,090 40,308 40,008 40,249 INFRASOURCE
SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets December 31, September 30, 2005 2006 (Unaudited) (In
thousands, except share data) Current assets: Cash and cash
equivalents $ 24,287 $15,834 Contract receivables (less allowances
for doubtful accounts of $3,184 and $2,369, respectively) 136,610
164,988 Costs and estimated earnings in excess of billings 84,360
89,970 Inventories 6,747 6,769 Deferred income taxes 4,683 6,152
Other current assets 7,678 5,338 Current assets - discontinued
operations 3,033 2,033 Total current assets 267,398 291,084
Property and equipment (less accumulated depreciation of $55,701
and $73,822, respectively) 143,881 147,323 Goodwill 138,054 138,857
Intangible assets (less accumulated amortization of $19,861 and
$20,609, respectively) 1,884 1,136 Deferred charges and other
assets, net 10,501 6,619 Assets held for sale - 1,245 Non-current
assets - discontinued operations 319 1,749 Total assets $562,037
$588,013 Current liabilities: Current portion of long-term debt
$889 $46 Other liabilities - related parties 11,299 1,227 Accounts
payable 43,570 47,980 Accrued compensation and benefits 20,402
32,830 Other current and accrued liabilities 20,435 26,106 Accrued
insurance reserves 30,550 34,907 Billings in excess of costs and
estimated earnings 15,012 15,683 Deferred revenues 6,590 6,300
Current liabilities - discontinued operations 1,501 - Total current
liabilities 150,248 165,079 Long-term debt, net of current portion
83,019 70,019 Deferred revenues 17,826 17,116 Other long-term
liabilities - related party 420 - Deferred income taxes 3,320 3,683
Other long-term liabilities 5,298 5,055 Non-current liabilities -
discontinued operations 50 - Total liabilities 260,181 260,952
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 39,396,694 and 39,911,185
shares, respectively, and outstanding - 39,366,824 and 39,881,315,
respectively) 39 40 Treasury stock at cost (29,870 shares) (137)
(137) Additional paid-in capital 278,387 283,459 Deferred
compensation (1,641) - Retained earnings 24,640 43,231 Accumulated
other comprehensive income 568 468 Total shareholders' equity
301,856 327,061 Total liabilities and shareholders' equity $562,037
$588,013 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 non-core 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 reflect the non-cash
costs of our stock-based compensation plans, which are an on-going
component of our executive compensation program. -- These measures
do not reflect changes in, or 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 September 30, 2005 September 30, 2006 Net income
(GAAP) $6,566 $10,798 Loss from discontinued operations (net of
tax) 490 151 (Gain) loss on disposition of discontinued operation
(net of tax) (1,790) 33 Amortization of intangible assets relating
to purchase accounting 569 150 Stock compensation expenses 155 561
Income as adjusted (a non-GAAP financial measure) $5,990 $11,693
Three Months Ended Three Months Ended September 30, 2005 September
30, 2006 Net income (GAAP) $6,566 $10,798 Loss from discontinued
operations (net of tax) 490 151 (Gain) loss on disposition of
discontinued operation (net of tax) (1,790) 33 Income tax expense
3,994 7,604 Interest expense 2,170 1,404 Interest income (122)
(229) Amortization of intangible assets relating to purchase
accounting 1,001 254 EBITA from continuing operations (a non-GAAP
financial measure) 12,309 20,015 Stock compensation expenses 272
949 EBITA as adjusted (a non-GAAP financial measure) $12,581
$20,964 Depreciation 7,086 6,934 EBITDA from continuing operations
(a non-GAAP financial measure) $19,395 $26,949 EBITDA as adjusted
(a non-GAAP financial measure) $19,667 $ 27,898 INFRASOURCE
SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP
Financial Measures (Unaudited) (In thousands) Nine Months Ended
Nine Months Ended September 30, 2005 September 30, 2006 Net income
(GAAP) $7,898 $ 18,591 Loss (income) from discontinued operations
(net of tax) 799 (28) (Gain) loss on disposition of discontinued
operation (net of tax) (1,790) 33 Amortization of intangible assets
relating to purchase accounting 2,462 443 Litigation judgment
reversal (2,161) - Stock compensation expenses 175 1,645 Secondary
offering expenses - 437 Write-off of deferred financing costs -
2,547 Income as adjusted (a non-GAAP financial measure) $7,383
$23,668 Nine Months Ended Nine Months Ended September 30, 2005
September 30, 2006 Net income (GAAP) $7,898 $ 18,591 Loss (income)
from discontinued operations (net of tax) 799 (28) (Gain) loss on
disposition of discontinued operation (net of tax) (1,790) 33
Income tax expense 5,188 12,770 Interest expense 5,872 5,197
Interest income (328) (638) Amortization of intangible assets
relating to purchase accounting 4,311 748 EBITA from continuing
operations (a non-GAAP financial measure) 21,950 36,673 Litigation
judgment reversal (3,785) - Stock compensation expenses 306 2,774
Secondary offering expenses - 737 Write-off of deferred financing
costs - 4,296 EBITA as adjusted (a non-GAAP financial measure)
$18,471 $44,480 Depreciation 20,624 20,538 EBITDA from continuing
operations (a non-GAAP financial measure) $42,574 $57,211 EBITDA as
adjusted (a non-GAAP financial measure) $39,095 $65,018 INFRASOURCE
SERVICES, INC. AND SUBSIDIARIES Supplemental Financial Data
(Unaudited) (In millions) Revenues by End Market Three Months Ended
Three Months Ended Increase/ September 30, 2005 September 30, 2006
(decrease) $ % Electric - Transmission $ 35.0 15.4% $ 75.9 27.5% $
40.9 116.9% - Substation 33.3 14.7% 60.2 21.8% 26.9 80.8% - Other
Electric 42.3 18.7% 35.3 12.8% (7.0) -16.5% Subtotal 110.6 48.8%
171.4 62.1% 60.8 55.0% Natural Gas 83.3 36.8% 76.3 27.7% (7.0)
-8.4% Telecommunications 27.5 12.1% 26.3 9.5% (1.2) -4.4% Other 5.2
2.3% 1.9 0.7% (3.3) -63.5% Total $226.6 100.0% $275.9 100.0% $ 49.3
21.8% Nine Months Ended Nine Months Ended Increase/ September 30,
2005 September 30, 2006 (decrease) $ % Electric - Transmission
$112.6 17.8% $193.1 25.9% $80.5 71.5% - Substation 106.3 16.8%
157.1 21.1% 50.8 47.8% - Other Electric 127.2 20.1% 104.9 14.1%
(22.3) -17.5% Subtotal 346.1 54.7% 455.1 61.1% 109.0 31.5% Natural
Gas 202.3 32.0% 202.5 27.2% 0.2 0.1% Telecommunications 72.3 11.4%
80.3 10.8% 8.0 11.1% Other 11.9 1.9% 6.5 0.9% (5.4) -45.4% Total
$632.6 100.0% $744.4 100.0% $111.8 17.7% Backlog by End Market
Increase/ September 30, 2005 September 30, 2006 (decrease) $ %
Electric - Transmission $156.8 19.4% $152.4 19.0% $(4.4) -2.8% -
Substation 120.7 14.9% 132.2 16.5% 11.5 9.5% - Other Electric 41.5
5.1% 67.2 8.4% 25.7 61.9% Subtotal 319.0 39.4% 351.8 43.9% 32.8
10.3% Natural Gas 304.4 37.6% 180.4 22.5% (124.0) -40.7%
Telecommunications 183.7 22.7% 245.5 30.6% 61.8 33.6% Other 3.1
0.4% 24.0 3.0% 20.9 674.2% Total $810.2 100.0% $801.7 100.0% $(8.5)
-1.0% Increase/ June 30, 2006 September 30, 2006 (decrease) $ %
Electric - Transmission $214.7 23.4% $152.4 19.0% $(62.3) -29.0% -
Substation 136.5 14.9% 132.2 16.5% (4.3) -3.2% - Other Electric
88.1 9.6% 67.2 8.4% (20.9) -23.7% Subtotal 439.3 48.0% 351.8 43.9%
(87.5) -19.9% Natural Gas 247.4 27.0% 180.4 22.5% (67.0) -27.1%
Telecommunications 221.4 24.2% 245.5 30.6% 24.1 10.9% Other 7.7
0.8% 24.0 3.0% 16.3 211.7% Total $915.8 100.0% $801.7 100.0%
$(114.1) -12.5% 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 for
InfraSource Services, +1-212-889-4350, Web site:
http://www.infrasourceinc.com/
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