The Daily Kill Sheet Picking Off Profits One Stock At A Time!

March 6, 2013

Daily Kill Sheet For March 6, 2013

Filed under: Industrial,Long,Sure Shot Update!,Uncategorized — Administrator @ 1:29 pm

Just a quick update on our Deep Value position in Willbros Group (WG, $7.10). Willbros announced fourth-quarter earnings of $0.11 a share, $0.05 better than the consensus estimate. Revenues jumped 54% year over year. 

Management noted that their strategy to reduce the impact of seasonality in the businesses during the first and fourth quarters is proving successful as evidenced by improving top line and operating results. 
 
Backlog:
 
Willbros reported total backlog from continuing operations of $2.2 billion up approximately 7% from last year.  Twelve month backlog at the end of 2012 was $1.1 billion up over $240 million from December 31, 2011. 
 
Strategy: 
 
Key objectives in 2013 are to improve operating results and financial flexibility. They intend to improve performance through strengthening project management capabilities, bolstering training programs and adding work with more favorable terms and conditions to backlog. In addition, they expect to further reduce debt to strengthen the balance sheet.
 
Guidance:
 
Management now expects annual revenue to range from $1.9 to $2.1 billion, excluding the Hawkeye and Oman businesses, and debt reduction of $50-$100 million by the end of the year. The business model has experienced improved results in the first and fourth quarters year over year and they expect that trend to continue, with the strongest operating results in the second and third quarters.
At this juncture, we are up nearly 30% in the shares since our January recommendation. I recommend to continue to hold the shares here. The company remains well positioned to help build out the infrastructure necessary for the U.S. to continue to increase its oil and natural gas output. Energy security is a focus of this administration and it’s likely that oil and gas production will continue to increase regardless of the U.S. economic environment. With that said, the stock is volatile and with patience you should be able to increase your positions at prices below $6.50.

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