InfraSource Services, Inc. Reports 2004 Results; Fourth Quarter Revenu

    Business Editors

    MEDIA, Pa.--(BUSINESS WIRE)--March 11, 2005--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 fourth quarter and twelve months ended December 31, 2004.

    Fourth Quarter Results

    Revenues for the fourth quarter 2004 increased $56.8 million, or 41% to $194.4 million, compared to $137.6 million for the same quarter in 2003. This increase was primarily due to growth in our underground natural gas work, including the acquisitions of EnStructure and Utili-Trax, additional aerial electric transmission work from the acquisition of Maslonka & Associates, Inc., and an increase in telecommunications work.
    Net income for the fourth quarter 2004 was $5.5 million, or $0.14 per diluted share, versus $1.3 million, or $0.12 per diluted share, for the fourth quarter last year. Net income for the fourth quarter 2004 included, on an after-tax basis, $0.8 million of amortization of intangible assets arising from acquisitions, $0.7 million of interest forgiveness relating to the early extinguishment of a subordinated note and other lesser items. Net income for the fourth quarter 2003 included, on an after-tax basis, a $2.2 million charge relating to a litigation judgment entered against the Company in connection with a proposed 1999 acquisition and other lesser items. Excluding the aforementioned items, income as adjusted (non-GAAP) was $5.7 million for the fourth quarter 2004 versus $3.5 million for the combined period a year ago. A reconciliation of net income to income as adjusted is included in the attached table, including all reconciling items.
    EBITDA from continuing operations for the fourth quarter 2004 increased $5.5 million to $19.6 million, compared to $14.1 million for the fourth quarter 2003. EBITDA from continuing operations for the fourth quarter 2004 included $1.1 million of interest forgiveness relating to the early extinguishment of a subordinated note and other lesser items. EBITDA from continuing operations for the fourth quarter 2003 included a $3.8 million charge relating to a litigation judgment entered against the Company in connection with a proposed 1999 acquisition. Excluding the aforementioned items, EBITDA from continuing operations as adjusted was $18.7 million for the fourth quarter 2004 versus $17.9 million for the fourth quarter a year ago. A reconciliation of GAAP net income to EBITDA from continuing operations, as well as to EBITDA from continuing operations as adjusted, is included in the attached table, including all reconciling items.
    In connection with our initial public offering, we changed our quarter end to the last calendar day of each quarter, while our fourth quarter 2003 included the period September 24 to September 30, 2003. The Company does not believe the impact of this change would have had a material effect on net income for the quarter ended December 31, 2003.

    Backlog

    At the end of the fourth quarter 2004, total backlog was $935 million, an 18% increase compared to the end of the fourth quarter 2003 and 6% less than at the end of the third quarter 2004 despite the normal seasonal downturn at this time of year. Approximately $500 to $520 million of this backlog is expected to be performed during 2005.
    "We are pleased with our fourth quarter results, and our substantial backlog at year-end gives us support for future performance. The level of activity of our end markets indicates favorable prospects for continued long-term growth. In the near-term, however, the level and quarterly profile of our earnings will continue to be dependant on the timing and scope of large electric transmission projects and the overall mix of electric transmission versus distribution-related service work. We are currently tracking the development of a number of large electric transmission project opportunities, but none of them has yet reached the stage for award." said David Helwig, Chief Executive Officer.

    Twelve Month Results

    As previously reported, the Company acquired InfraSource Incorporated (Predecessor) on September 24, 2003. For comparative purposes, the results of operations for the twelve months ended December 31, 2003 are presented on a combined basis and include the Predecessor's results for the period January 1 to September 23, 2003 and the Company's results for the period May 30 to December 31, 2003. The Company had no operating activity prior to the acquisition of InfraSource Incorporated.
    Revenues for the twelve months ended December 31, 2004 increased $130.7 million, or 25%, to $651.0 million, compared to $520.3 million for the combined period in 2003. This increase was primarily due to additional aerial electric transmission work including the acquisition of Maslonka & Associates, Inc. and additional underground natural gas work, including the acquisitions of EnStructure and Utili-Trax, offset by declines in other electric and telecommunications work.
    Net income for the twelve months ended December 31, 2004 was $9.6 million, or $0.26 per diluted share, versus a net loss of $22.2 million for the combined period in 2003. Net income for the twelve months ended December 31, 2004 included, on an after-tax basis, $7.3 million of amortization of intangible assets arising from acquisitions, $1.4 million (after-tax) of expenses related to our initial public offering, $2.6 million of loss on early extinguishment of debt and other lesser items. Net income for the combined period in 2003 included, on an after-tax basis, $12.4 million of loss from discontinued operations, $11.3 million of merger-related expenses associated with the acquisition of InfraSource Incorporated, a $6.0 million adjustment to insurance reserves for periods prior to 2003, a $2.6 million charge relating to a litigation judgment entered against the Company in connection with a proposed 1999 acquisition and other lesser items. Excluding the aforementioned items, income as adjusted (non-GAAP) was $20.1 million for the twelve months ended December 31, 2004 versus $10.1 million for the combined period a year ago. A reconciliation of net income (loss) to income as adjusted is included in the attached table, including all reconciling items.
    EBITDA from continuing operations for the twelve months ended December 31, 2004 increased $44.0 million to $61.2 million, compared to $17.2 million for the combined period in 2003. EBITDA from continuing operations for the twelve months ended December 31, 2004 included $2.4 million of expenses relating to our initial public offering and a loss of $4.4 million due to the early extinguishment of a $30 million note also related to the initial public offering. EBITDA from continuing operations for the combined period in 2003 included $16.2 million of merger-related expenses associated with the acquisition of InfraSource Incorporated in September 2003, an $8.7 million adjustment to insurance reserves for periods prior to 2003, and a $3.8 million charge relating to a litigation judgment entered against the Company in connection with a proposed 1999 acquisition. Excluding the aforementioned items, EBITDA from continuing operations as adjusted was $68.4 million for the twelve months ended December 31, 2004 versus $45.9 million for the combined period a year ago. A reconciliation of GAAP net income (loss) to EBITDA from continuing operations, as well as to EBITDA from continuing operations as adjusted, is included in the attached table, including all reconciling items.

    Conference Call

    InfraSource has scheduled a conference call for March 11, 2005 at 9:00AM EDT to discuss the results for the quarter. This conference call will be webcast live on the InfraSource website at 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 April 30, 2005. For those investors who prefer to participate in the conference call by phone, please dial (718) 354-1172. An audio replay of the conference call will be available shortly after the call through March 16, 2005 by calling (718) 354-1112 and using passcode 8421011. For more information, please contact Laura Martin at Taylor Rafferty at (212) 889-4350.

    About InfraSource

    InfraSource Services, Inc. (NYSE: IFS) is one of the largest specialty contractors servicing utility transmission and distribution 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 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 risks and uncertainties affecting our business. 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 uncertainty of the outcome of federal energy legislation; (4) the nature of our contracts, particularly our fixed-price contracts; (5) work hindrance due to inclement weather events; (6) the award of new contracts and the timing of the performance of those contracts; (7) project delays or cancellations; (8) the failure to meet schedule or performance requirements of our contracts; (9) the presence of competitors with greater financial resources and the impact of competitive products, services and pricing; (10) successful integration of the acquisitions into our business; (11) close out of certain of our projects may or may not occur as anticipated or may be unfavorable to us; and (12) 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.

    - Tables to Follow -

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts)

For the Period September 24 to Three Months Ended December 31, 2003 December 31, 2004 ------------------ ------------------ (Audited) (Unaudited)

Contract revenues $108,741 $194,401 Contract revenues - related parties 28,902 - ------------------ ------------------ Total contract revenues 137,643 194,401 Cost of revenues 113,819 165,574 ------------------ ------------------ Gross profit 23,824 28,827 ------------------ ------------------ Selling, general and administrative expenses 14,771 17,499 Merger related costs - 106 Provision for uncollectible accounts 178 93 Amortization of intangible assets 2,600 1,361 ------------------ ------------------ Income from operations 6,275 9,768 Interest income 60 222 Interest expense and amortization of debt discount (3,966) (2,017) Gain on early extinguishment of debt - 1,105 Other income (expense) (130) 40 ------------------ ------------------ Income before income taxes 2,239 9,118 Income tax expense 923 3,752 ------------------ ------------------ Income from continuing Operations 1,316 5,366 Discontinued operations: Income (loss) from discontinued operations (net of income tax provision (benefit) of $(13) and $73, respectively) (57) 109 Gain on disposition of discontinued operation (net of income tax benefit of $0 and $3, respectively) - 3 ------------------ ------------------ Income before extraordinary item 1,259 5,478 Extraordinary item, net of tax of $51 76 - ------------------ ------------------ Net income $1,335 $5,478 ================== ==================

Basic income (loss) per share: Income from continuing operations $0.12 $0.14 Loss from discontinued operations (0.01) - Extraordinary item 0.01 - ------------------ ------------------ Net income $0.12 $0.14 ================== ==================

Weighted average basic common shares outstanding 10,782 38,868 ================== ==================

Diluted income (loss) per share: Income from continuing operations $0.12 $0.14 Loss from discontinued operations (0.01) - Extraordinary item 0.01 - ------------------ ------------------ Net income $0.12 $0.14 ------------------ ------------------

Weighted average diluted common shares outstanding 11,031 39,757 ================== ==================

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts)

For the Period January 1 to September For the 23, 2003 Period (Predecessor For the January 1 entity - Period to InfraSource May 30 to December Incorporated December 31, 2003 Year Ended and 31, (Combined December 31, Subsidiaries) 2003 Basis) (1) 2004 ------------- --------- ----------- ------------ (Audited) (Audited) (Unaudited) (Unaudited)

Contract revenues $329,150 $108,741 $437,891 $651,023 Contract revenues - related parties 53,477 28,902 82,379 - ------------- --------- ----------- ------------ Total contract revenues 382,627 137,643 520,270 651,023 Cost of revenues 330,322 113,819 444,141 546,746 ------------- --------- ----------- ------------ Gross profit 52,305 23,824 76,129 104,277 ------------- --------- ----------- ------------

Selling, general and administrative expenses 50,062 14,771 64,833 65,246 Merger related costs 16,242 - 16,242 (228) Provision (recoveries) of uncollectible accounts 236 178 414 (274) Amortization of intangible assets - 2,600 2,600 12,350 ------------- --------- ----------- ------------ Income (loss) from operations (14,235) 6,275 (7,960) 27,183 Interest income 1,376 60 1,436 572 Interest expense and amortization of debt discount (27) (3,966) (3,993) (10,178) Loss on early extinguishment of debt - - - (4,444) Other income (expense) (3,556) (130) (3,686) 1,166 ------------- --------- ----------- ------------ Income (loss) before income taxes (16,442) 2,239 (14,203) 14,299 Income tax expense (benefit) (5,240) 923 (4,317) 5,824 ------------- --------- ----------- ------------ Income (loss) from continuing operations (11,202) 1,316 (9,886) 8,475 Discontinued operations: Income (loss) from discontinued operations (net of income tax provision (benefit) of $(6,503), $(13), $(6,516), and $338, respectively) (12,316) (57) (12,373) 505 Gain on disposition of discontinued operation (net of income tax provision of $0, $0, $0 and $410, respectively) - - - 596 ------------- --------- ----------- ------------ Income (loss) before extraordinary item (23,518) 1,259 (22,259) 9,576 Extraordinary item, net of tax of $51 - 76 76 - ------------- --------- ----------- ------------ Net income (loss) $(23,518) $1,335 $(22,183) $9,576 ============= ========= =========== ============

Basic income (loss) per share: Income (loss) from continuing operations $(0.24) $0.12 n/a $0.24 Income (loss) from discontinued operations (0.26) (0.01) n/a 0.01 Gain on disposition of discontinued operation - - n/a 0.02 Extraordinary item - 0.01 n/a - ------------- --------- ----------- ------------ Net income (loss) $(0.50) $0.12 n/a $0.27 ============= ========= =========== ============

Weighted average basic common shares outstanding 47,585 10,782 n/a 35,172 ============= ========= =========== ============

Diluted income (loss) per share: Income (loss) from continuing operations $(0.24) $0.12 n/a $0.23 Income (loss) from discontinued operations (0.26) (0.01) n/a 0.01 Gain on disposition of discontinued operation - - n/a 0.02 Extraordinary item - 0.01 n/a - ------------- --------- ----------- ------------ Net income (loss) $(0.50) $0.12 n/a $0.26 ------------- --------- ----------- ------------

Weighted average diluted common shares outstanding 47,585 11,031 n/a 36,139 ============= ========= =========== ============

(1) - The combined statement of operations for the period January 1 to December 31, 2003 is presented for comparative purposes and has been derived from the audited consolidated statements of operations for the period January 1 to September 23, 2003 (Predecessor) and for the period May 30 to December 31, 2003 (Successor)

n/a - Per share information for the combined period is not presented because Predecessor and Successor shares outstanding are not comparable.

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share amounts)

December 31, December 31, 2003 2004 ------------ ------------ ASSETS (Audited) (Unaudited) Current assets: Cash and cash equivalents $12,176 $21,781 Restricted Cash - 5,000 Contract receivables (less allowances for doubtful accounts of $4,917 and $3,305, respectively) 69,328 109,099 Contract receivables due from related parties 14,617 - Costs and estimated earnings in excess of billings 33,919 59,517 Inventories 8,473 13,567 Deferred income taxes 685 2,970 Other current assets 4,310 9,037 Due from related parties, net 10,907 - Current assets - discontinued operations 6,339 2,019 ------------ ------------ Total current assets 160,754 222,990 ------------ ------------ Property and equipment (less accumulated depreciation of $5,292 and $30,754, respectively) 116,513 144,670 Property and equipment - related parties 7,218 - Goodwill 68,877 134,478 Intangible assets (less accumulated amortization of $2,600 and $14,950, respectively) 5,400 6,795 Deferred charges and other assets, net 7,309 11,766 Deferred income taxes 1,058 1,265 Noncurrent assets - discontinued operations 448 516 ------------ ------------ Total assets $367,577 $522,480 ============ ============

Current liabilities: Current portion of long-term debt $1,433 $886 Current portion of capital lease obligation 67 14 Accounts payable 12,970 35,292 Accrued compensation and benefits 12,328 17,537 Other current and accrued liabilities 27,150 23,441 Accrued income taxes 2,454 - Accrued insurance reserves 19,773 26,042 Billings in excess of costs and estimated earnings 8,019 10,728 Deferred revenues 3,393 8,710 Other liabilities - related parties 7,218 - Current liabilities - discontinued operations 1,043 1,304 ------------ ------------ Total current liabilities 95,848 123,954 ------------ ------------ Long-term debt, net of current portion 162,057 83,878 Capital lease obligations, net of current portion 29 - Long-term debt - related party - 1,000 Deferred revenues 12,750 16,935 Other long-term liabilities 3,167 12,719 Non-current liabilities - discontinued operations 877 11 ------------ ------------ Total liabilities 274,728 238,497 ------------ ------------ 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 - 19,914,840 and 38,942,728, respectively) 20 39 Additional paid-in capital 91,695 272,954 Deferred compensation (215) (329) Retained earnings 1,335 10,911 Accumulated other comprehensive income 14 408 ------------ ------------ Total shareholders' equity 92,849 283,983 ------------ ------------ Total liabilities and shareholders' equity $367,577 $522,480 ============ ============

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 income as adjusted, EBITDA from continuing operations, and EBITDA from continuing operations as adjusted. 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 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 financial performance of us and other companies in our industry. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.

We define income as adjusted as GAAP net income (loss), adjusted to exclude certain significant items. For the periods shown in this press release, the significant items include an extraordinary item, discontinued operations, an insurance reserve adjustment relating to periods prior to 2003, expenses associated with the September 2003 acquisition of InfraSource Incorporated, a litigation judgment against the Company in connection with a proposed 1999 acquisition, amortization of intangibles arising from acquisitions, expenses relating to our initial public offering, a loss on the early extinguishment of debt in connection with our initial public offering and expenses related to the EnStructure and Utili-Trax acquisitions. We define EBITDA from continuing operations as net income (loss) before extraordinary item, discontinued operations, interest expense, interest income, income tax expense, depreciation and amortization for the periods shown. We define EBITDA from continuing operations as adjusted as EBITDA from continuing operations, adjusted for certain significant items. For the periods shown in this press release, the significant items include expenses associated with the acquisition of InfraSource Incorporated, a litigation judgment against the Company in connection with a proposed 1999 acquisition, an insurance reserve adjustment relating to periods prior to 2003, expenses relating to our initial public offering, a loss on the early extinguishment of debt in connection with our public offering and expenses related to the EnStructure and Utili-Trax acquisitions.

Because these measures facilitate internal comparison 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.

Three Months For the Period Ended September 24 to December 31, December 31, 2003 2004 ------------------ ------------

Net income (GAAP) $1,335 $5,478

Extraordinary item, net of tax (76) -

Loss (income) on discontinued operations 57 (109)

Gain on disposition of discontinued operation - (3)

Merger related expenses - 62

Litigation judgment 2,224 -

Amortization of intangible assets relating to purchase accounting - 801

Loss on early extinguishment of debt - (650)

EnStructure / Utili-Trax severance and personnel expenses - 82

------------------ ------------ Income as adjusted (a non-GAAP financial measure) $3,540 $5,661 ================== ============

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands)

For the Period September 24 to Three Months December 31, Ended December 2003 31, 2004 ---------------- ---------------

Net income (GAAP) $1,335 $5,478

Extraordinary item, net of tax (76) -

Loss (income) on discontinued operations (net of tax) 57 (109)

Gain on disposition of discontinued operation (net of tax) - (3)

Income tax expense (benefit) 923 3,752

Interest expense 3,966 2,017

Interest income (60) (222)

Depreciation 5,323 7,285

Amortization of intangible assets 2,600 1,361 ---------------- ---------------

EBITDA from continuing operations, before extraordinary item , net of tax (a non-GAAP financial measure) 14,068 19,559 ---------------- ---------------

Merger related expenses $- $106

Litigation judgment 3,785 -

Loss on early extinguishment of debt - (1,105)

EnStructure / Utili-Trax severance and personnel expenses - 140

---------------- --------------- EBITDA from continuing operations as adjusted (a non-GAAP) financial measure) $17,853 $18,700 ================ ===============

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands)

For the Period January 1 to September 23, 2003 For the (Predecessor Period entity - For the January 1 InfraSource Period to December Incorporated May 30 to 31, 2003 Year Ended and December (Combined December 31, Subsidiaries) 31, 2003 Basis) (1) 2004 --------------- ---------- ------------ ------------

Net income (loss) (GAAP) $(23,518) $1,335 $(22,183) $9,576

Extraordinary item, net of tax - (76) (76) -

Loss (income) on discontinued operations 12,316 57 12,373 (505)

Gain on disposition of discontinued operations - - - (596)

Insurance reserve adjustment 5,897 - 6,025 -

Merger related expenses 11,067 - 11,307 (135)

Litigation judgment - 2,224 2,635 -

Amortization of intangible assets relating to purchase accounting - - - 7,320

IPO related expenses - - - 1,440

Loss on early extinguishment of debt - - - 2,634

EnStructure/Utili- Trax severance and personnel expenses - - - 362

--------------- ---------- ------------ ------------ Income as adjusted (a non-GAAP financial measure) $5,762 $3,540 $10,081 $20,096 =============== ========== ============ ============

(1) - Columns for Predecessor and Successor results may not add due to differential in tax rates.

INFRASOURCE SERVICES, INC. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) (In thousands)

For the Period January 1 to September 23, 2003 For the (Predecessor Period entity - For the January 1 InfraSource Period to December Twelve Months Incorporated May 30 to 31, 2003 Ended and December 31, (Combined December 31, Subsidiaries) 2003 Basis) 2004 -------------- ------------ ------------ -------------

Net income (loss) (GAAP) $(23,518) $1,335 $(22,183) $9,576

Extraordinary item, net of tax - (76) (76) -

Loss (income) on discontinued operations (net of tax) 12,316 57 12,373 (505)

Gain on disposition of discontinued operations (net of tax) - - - (596)

Income tax expense (benefit) (5,238) 923 (4,315) 5,824

Interest expense 27 3,966 3,993 10,178

Interest income (1,377) (60) (1,437) (572)

Depreciation 20,917 5,323 26,240 24,931

Amortization of intangible assets - 2,600 2,600 12,350 -------------- ------------ ------------ -------------

EBITDA from continuing operations, before extraordinary item, net of tax (a non-GAAP financial measure) 3,127 14,068 17,195 61,186 -------------- ------------ ------------ -------------

Insurance reserve adjustment $8,655 $- $8,655 $-

Merger related expenses 16,242 - 16,242 (228)

Litigation judgment - 3,785 3,785 -

IPO related expenses - - - 2,429

Loss of early extinguishment of debt - - - 4,444

EnStructure / Utili-Trax severance and personnel expenses - - - 610

-------------- ------------ ------------ ------------- EBITDA from continuing operations as adjusted (a non-GAAP) financial measure) $28,024 $17,853 $45,877 $68,441 ============== ============ ============ =============

--30--CD/ny*

CONTACT: InfraSource Services, Inc. Terence R. Montgomery, 610-480-8000 terry.montgomery@infrasourceinc.com or Laura Martin, 212-889-4350 laura.martin@taylor-rafferty.com

KEYWORD: PENNSYLVANIA INDUSTRY KEYWORD: TELECOMMUNICATIONS ENERGY UTILITIES EARNINGS CONFERENCE CALLS SOURCE: InfraSource Services, Inc.

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