IFS Intercorp Financial Services Inc

Fourth quarter revenues increased 12% and net income increased 30% over prior year period MEDIA, Pa., March 5 /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 $0.19 per diluted share for the fourth quarter ended December 31, 2006, above the upper end of previously announced net income guidance of $0.15 to $0.17 per diluted share. For the twelve months ended December 31, 2006, the Company's earnings were $0.65 per diluted share compared to $0.34 in 2005. Fourth Quarter Results Revenues for the fourth quarter 2006 increased $27.5 million, or 12%, to $247.9 million, compared to $220.4 million for the same quarter in 2005 due primarily to growth in our electric end market revenues. Net income for the fourth quarter 2006 was $7.6 million, or $0.19 per diluted share, versus $5.8 million, or $0.15 per diluted share, for the fourth quarter last year. Excluding the items in the attached table, income as adjusted (non-GAAP) was $7.9 million for the fourth quarter 2006 versus $6.7 million for the same quarter in 2005, an increase of 19%. Reconciliations of net income to our non- GAAP financial measures are included in the attached tables. Backlog & New Awards At the end of the fourth quarter 2006, total backlog was $902 million which was 13% higher than at the end of the third quarter 2006. This increase was primarily related to additional natural gas backlog (36% increase), a 6% increase in electric backlog due to industrial project awards and a 4% increase in telecommunications backlog. Total backlog was 2% higher than at the end of the fourth quarter 2005. Electric and telecommunications backlogs increased 6% and 9%, respectively, offset by a 14% 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. Among our awards adding to backlog during the fourth quarter 2006 were 12 scopes of electrical work totaling $72 million, 7 scopes of natural gas work totaling $112 million and 7 scopes of telecommunications work totaling $67 million. Subsequent to the end of the fourth quarter, bidding and award activity for the Company's services continues to be strong including the previously announced award of a multi-year construction and project management contract with American Transmission Company which will add approximately $100 million to our backlog. Twelve Months Financial Review Revenues for the twelve months ended December 31, 2006 increased $139.2 million, or 16%, to $992.3 million, compared to $853.1 million for 2005 due primarily to growth in revenues from our electric and telecommunications end markets with natural gas end market revenues comparable to 2005. Net income for 2006 was $26.1 million, or $0.65 per diluted share, versus $13.7 million, or $0.34 per diluted share, for the prior year. Net income for 2006 included a non-cash charge associated with the refinancing of our bank debt of $0.06 per diluted share, stock-based compensation expenses of $0.05 per diluted share pursuant to SFAS 123R and $0.02 per diluted share of amortization of intangible assets. Excluding the items in the attached table, income as adjusted (non-GAAP) was $31.7 million for 2006 versus $14.0 million for 2005. David Helwig, Chairman, President and Chief Executive Officer, said, "We are very pleased with the strength of our earnings for the quarter, the sequential increase in our backlog and the growth in our earnings for the year. We continue to believe that we are well positioned to benefit from growth opportunities in our end markets including opportunities in electric transmission and telecommunications high-bandwidth infrastructures. 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, and our performance on those contracts." Conference Call InfraSource has scheduled a conference call for March 5, 2007 at 9:00AM EDT 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 March 4, 2008. 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 March 12, 2007 by calling (303) 590-3030 and using passcode 3705229. 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 Consolidated Statements of Income (Unaudited) (In thousands, except per share data) Three Months Three Months Ended Ended December 31, December 31, 2005 2006 Revenues $220,431 $247,889 Cost of revenues 188,018 212,004 Gross profit 32,413 35,885 Selling, general and administrative expenses 19,886 23,573 Provision for uncollectible accounts 11 1,464 Amortization of intangible assets 600 256 Income from operations 11,916 10,592 Interest income 60 315 Interest expense (2,285) (1,711) Other income, net 914 1,699 Income from continuing operations before income taxes 10,605 10,895 Income tax expense 4,546 3,621 Income from continuing operations 6,059 7,274 Discontinued operations: Loss from discontinued operations (net of income tax benefit of $(142) and $(8), respectively) (270) (28) Gain on disposition of discontinued operation (net of income tax (benefit) provision of $(60) and $187, respectively) 42 308 Net income $5,831 $7,554 Basic income (loss) per share: Income from continuing operations $0.16 $0.18 Loss from discontinued operations (0.01) (0.00) Gain on disposition of discontinued operation - 0.01 Net income $0.15 $0.19 Weighted average basic common shares outstanding 39,337 40,052 Diluted income (loss) per share: Income from continuing operations $0.16 $0.18 Loss from discontinued operations (0.01) (0.00) Gain on disposition of discontinued operation - (0.01) Net income $0.15 $0.19 Weighted average diluted common shares outstanding 40,141 40,621 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) (In thousands, except per share data) Year Ended Year Ended December 31, December 31, 2005 2006 Revenues $853,076 $992,305 Cost of revenues 750,248 846,646 Gross profit 102,828 145,659 Selling, general and administrative expenses 73,737 94,787 Merger related costs 218 - Provision for uncollectible accounts 156 1,500 Amortization of intangible assets 4,911 1,004 Income from operations 23,806 48,368 Interest income 388 953 Interest expense (8,157) (6,908) Write-off of deferred financing costs - (4,296) Other income, net 6,663 4,144 Income from continuing operations before income taxes 22,700 42,261 Income tax expense 9,734 16,391 Income from continuing operations 12,966 25,870 Discontinued operations: (Loss) income from discontinued operations (net of income tax (benefit) provision of $(699) and $1, respectively) (1,069) 2 Gain on disposition of discontinued operation (net of income tax provision of $1,372 and $165, respectively) 1,832 273 Net income $13,729 $26,145 Basic income (loss) per share: Income from continuing operations $0.33 $0.65 (Loss) income from discontinued operations (0.03) 0.00 Gain on disposition of discontinued operation 0.05 0.01 Net income $0.35 $0.66 Weighted average basic common shares outstanding 39,129 39,757 Diluted income (loss) per share: Income from continuing operations $0.32 $0.64 (Loss) income from discontinued operations (0.03) 0.00 Gain on disposition of discontinued operation 0.05 0.01 Net income $0.34 $0.65 Weighted average diluted common shares outstanding 39,943 40,364 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In thousands, except share data) December 31, December 31, 2005 2006 Current assets: Cash and cash equivalents $ 31,639 $26,209 Contract receivables (less allowances for doubtful accounts of $3,184 and $3,770, respectively) 136,610 166,780 Costs and estimated earnings in excess of billings 84,360 59,012 Inventories 5,131 5,443 Deferred income taxes 4,683 8,201 Other current assets 7,678 6,384 Current assets - discontinued operations 3,033 746 Total current assets 273,134 272,775 Property and equipment (less accumulated depreciation of $55,701 and $73,302, respectively) 143,881 154,578 Goodwill 138,054 146,933 Intangible assets (less accumulated amortization of $19,861 and $20,865, respectively) 1,884 900 Deferred charges and other assets, net 12,117 5,529 Assets held for sale - 517 Non-current assets - discontinued operations 319 - Total assets $569,389 $581,232 Current liabilities: Current portion of long-term debt $889 $ 42 Current portion of capital lease obligations - 35 Short-term credit facility borrowings - 1,077 Other liabilities - related parties 11,299 766 Accounts payable 50,923 47,846 Accrued compensation and benefits 20,402 27,951 Other current and accrued liabilities 20,434 22,096 Accrued insurance reserves 30,550 36,166 Billings in excess of costs and estimated earnings 15,012 23,245 Deferred revenues 6,590 6,188 Current liabilities - discontinued operations 1,501 - Total current liabilities 157,600 165,412 Long-term debt, net of current portion 83,019 50,014 Capital lease obligations, net of current portion - 56 Deferred revenues 17,826 16,347 Other long-term liabilities - related party 420 900 Deferred income taxes 3,320 3,750 Other long-term liabilities 5,298 5,568 Non-current liabilities - discontinued operations 50 - Total liabilities 267,533 242,047 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 40,263,739 shares, respectively, and outstanding - 39,366,824 and 40,233,869, respectively) 39 40 Treasury stock at cost (29,870 shares) (137) (137) Additional paid-in capital 278,387 288,517 Deferred compensation (1,641) - Retained earnings 24,640 50,785 Accumulated other comprehensive income (loss) 568 (20) Total shareholders' equity 301,856 339,185 Total liabilities and shareholders' equity $569,389 $581,232 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 Three Months Ended Ended December 31, December 31, 2005 2006 Net income (GAAP) $5,831 $7,554 Loss from discontinued operations (net of tax) 270 28 Gain on disposition of discontinued operation (net of tax) (42) (308) Amortization of intangible assets relating to purchase accounting 343 171 Stock compensation expenses 261 458 Income as adjusted (a non-GAAP financial measure) $6,663 $7,903 Three Months Three Months Ended Ended December 31, December 31, 2005 2006 Net income (GAAP) $5,831 $7,554 Loss from discontinued operations (net of tax) 270 28 Gain on disposition of discontinued operation (net of tax) (42) (308) Income tax expense 4,546 3,621 Interest expense 2,285 1,711 Interest income (60) (315) Amortization of intangible assets relating to purchase accounting 600 256 EBITA from continuing operations (a non-GAAP financial measure) 13,430 12,547 Stock compensation expenses 457 686 EBITA as adjusted (a non-GAAP financial measure) $13,887 $13,233 Depreciation 6,916 5,063 EBITDA from continuing operations (a non-GAAP financial measure) $20,346 $17,610 EBITDA as adjusted (a non-GAAP financial measure) $20,803 $18,296 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands) Year Ended Year Ended December 31, December 31, 2005 2006 Net income (GAAP) $13,729 $26,145 Loss (income) from discontinued operations (net of tax) 1,069 (2) Gain on disposition of discontinued operation (net of tax) (1,832) (273) Amortization of intangible assets relating to purchase accounting 2,805 615 Litigation judgment reversal (2,162) - Stock compensation expenses 406 2,118 Secondary offering expenses - 451 Write-off of deferred financing costs - 2,630 Income as adjusted (a non-GAAP financial measure) $14,015 $31,684 Year Ended Year Ended December 31, December 31, 2005 2006 Net income (GAAP) $13,729 $26,145 Loss (income) from discontinued operations (net of tax) 1,069 (2) Gain on disposition of discontinued operation (net of tax) (1,832) (273) Income tax expense 9.734 16,391 Interest expense 8,157 6,908 Interest income (388) (953) Amortization of intangible assets relating to purchase accounting 4,911 1,004 EBITA from continuing operations (a non-GAAP financial measure) 35,380 49,220 Litigation judgment reversal (3,785) - Stock compensation expenses 711 3,460 Secondary offering expenses - 737 Write-off of deferred financing costs - 4,296 EBITA as adjusted (a non-GAAP financial measure) $32,306 $57,713 Depreciation 27,540 25,601 EBITDA from continuing operations (a non-GAAP financial measure) $62,920 $74,821 EBITDA as adjusted (a non-GAAP financial measure) $59,846 $83,314 INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Supplemental Financial Data (Unaudited) (In millions) Revenues by End Market Three Months Ended Three Months Ended December 31, December 31, 2005 2006 Increase/(decrease) $ % Electric - Transmission $ 48.0 21.8% $ 66.4 26.8% $ 18.4 38.3% - Substation 32.4 14.7% 47.0 19.0% 14.6 45.1% - Other Electric 43.8 19.9% 39.9 16.1% (3.9) -8.9% Subtotal 124.2 56.4% 153.3 61.8% 29.1 23.4% Natural Gas 63.2 28.7% 66.1 26.7% 2.9 4.6% Telecommunications 28.9 13.1% 25.2 10.2% (3.7) -12.8% Other 4.1 1.9% 3.3 1.3% (0.8) -19.5% Total $220.4 100.0% $247.9 100.0% $ 27.5 12.5% Year Ended Year Ended December 31, December 31, 2005 2006 Increase/(decrease) $ % Electric - Transmission $160.7 18.8% $259.6 26.2% $98.9 61.5% - Substation 138.6 16.2% 204.1 20.6% 65.5 47.3% - Other Electric 171.1 20.1% 144.7 14.6% (26.4) -15.4% Subtotal 470.4 55.1% 608.4 61.3% 138.0 29.3% Natural Gas 265.5 31.1% 268.6 27.1% 3.1 1.2% Telecommunications 101.2 11.9% 105.5 10.6% 4.3 4.2% Other 16.0 1.9% 9.8 1.0% (6.2) -38.8% Total $853.1 100.0% $992.3 100.0% $139.2 16.3% Backlog by End Market December 31, December 31, 2005 2006 Increase/(decrease) $ % Electric - Transmission $184.3 20.9% $138.8 15.4% $(45.5) -24.7% - Substation 123.9 14.1% 132.0 14.6% 8.1 6.5% - Other Electric 45.5 5.2% 102.4 11.4% 56.9 125.1% Subtotal 353.7 40.1% 373.2 41.4% 19.5 5.5% Natural Gas 284.4 32.3% 245.6 27.2% (38.8) -13.6% Telecommunications 232.4 26.4% 254.0 28.2% 21.6 9.3% Other 10.5 1.2% 29.3 3.2% 18.8 179.0% Total $881.0 100.0% $902.1 100.0% $21.1 2.4% September 30, December 31, 2006 2006 Increase/(decrease) $ % Electric - Transmission $152.4 19.0% $138.8 15.4% $(13.6) -8.9% - Substation 132.2 16.5% 132.0 14.6% (0.2) -0.2% - Other Electric 67.2 8.4% 102.4 11.4% 35.2 52.4% Subtotal 351.8 43.9% 373.2 41.4% 21.4 6.1% Natural Gas 180.4 22.5% 245.6 27.2% 65.2 36.1% Telecommunications 245.5 30.6% 254.0 28.2% 8.5 3.5% Other 24.0 3.0% 29.3 3.2% 5.3 22.1% Total $801.7 100.0% $902.1 100.0% $100.4 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, +1-610-480-8000, , Mahmoud Siddig, +1-212-889-4350, Web site: http://www.infrasourceinc.com/

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