InfraSource Services, Inc. Reports Third Quarter 2005 Results; Revenues Increased 42% to $229.9 million; Net Income Increased 29% to $6.6 million; Recent Transmission and Substation Contract Awards of $76 million

Business Wire, Nov 2, 2005

MEDIA, Pa. -- InfraSource Services, Inc. (NYSE:IFS), one of the largest specialty contractors servicing utility transmission and distribution infrastructure in the United States, today announced its financial results for the third quarter ended September 30, 2005.

Third Quarter Results

Revenues for the third quarter 2005 increased $68.0 million, or 42%, to $229.9 million, compared to $161.9 million for the same quarter in 2004. This increase was due to growth in revenues from each of our electric, natural gas, and telecommunication end markets.

Net income for the third quarter 2005 was $6.6 million, or $0.16 per diluted share, including a gain on disposition of discontinued operations, a reduction to insurance reserves, and the write-off of due diligence costs associated with an abandoned acquisition, versus net income of $5.1 million, or $0.13 per diluted share, for the third quarter last year. Excluding the items in the attached table, income as adjusted (non-GAAP) was $6.0 million for the third quarter 2005 versus income as adjusted of $5.6 million for the same quarter in 2004.

Reconciliations of net income to the non-GAAP financial measures income as adjusted, EBITDA from continuing operations and EBITDA from continuing operations as adjusted are included in the attached tables.

EBITDA from continuing operations for the third quarter 2005 was $19.5 million, including the insurance reserve adjustment and the write-off of due diligence costs mentioned above, compared to $17.2 million for the third quarter 2004. Excluding the items in the attached table, EBITDA from continuing operations as adjusted increased $2.2 million, or 13%, to $19.6 million for the third quarter 2005 versus $17.4 million for the third quarter a year ago.

The aforementioned gain on disposition of discontinued operations relates to the previously announced dispositions of Electric Services, Inc. and Utility Locate and Mapping Services, Inc. The insurance reserve adjustment mentioned above is a result of updated actuarial estimates reflecting favorable loss development in our self insured retentions. The aforementioned write-off of due diligence costs relates to an acquisition opportunity that the Company pursued over the past year. In the third quarter, the Company decided to not pursue this opportunity. These items will be discussed in the Company's quarterly filing with the Securities and Exchange Commission.

Backlog & New Awards

At the end of the third quarter 2005, total backlog was $819 million, a 3% decrease compared to the end of the second quarter 2005 and 17% less than at the end of the third quarter 2004. This decline was anticipated due to the backlog burn associated with multi-year natural gas master service agreements that renew on a cycle of 2-3 years. Approximately $150 to $170 million of this backlog is expected to be performed during the balance of 2005, and approximately $400 to $420 million is expected to be performed during the next calendar year.

Among the contracts awarded to us during the third quarter 2005 were 6 transmission line projects totaling $57 million and a substation project of $19 million. We also performed approximately $9 million of storm work related to power restoration efforts in the Gulf region following Hurricanes Katrina and Rita.

"We are pleased with our results for the quarter, including our contributions to the restoration efforts following Hurricanes Katrina and Rita. We continue to believe that we are well positioned to benefit from increased utility spending on electric transmission infrastructure. The level of activity in our end markets, as evidenced by the strength of our bidding activity, particularly for electric transmission lines, remains high. Our quarterly revenue and earnings will continue to depend on the timing and scope of contract awards, especially those for large transmission lines. Our backlog will depend on our contract awards and the cycle of our natural gas master service agreement renewals" said David Helwig, Chief Executive Officer.

Nine Months Financial Review

Revenues for the nine months ended September 30, 2005 increased $192.0 million, or 43%, to $642.2 million, compared to $450.2 million for the same period in 2004. This increase was due to growth in revenues from each of our electric, natural gas, and telecommunication end markets, including organic growth and the 2004 acquisitions of EnStructure and Utili-Trax. This growth was achieved despite the completion of the Path 15 project last year, a substantial portion of which was recognized in the nine months ended September 30, 2004.

Net income for the nine months ended September 30, 2005 was $7.9 million, or $0.20 per diluted share, including an after-tax loss of $5.1 million related to the previously announced underground construction project, versus net income of $4.1 million, or $0.12 per diluted share, for the same period last year. Excluding the items in the attached table, income as adjusted was $7.8 million for the nine months ended September 30, 2005, including the underground project loss, versus income as adjusted of $14.7 million for the same period in 2004.