Willdan Reports Fourth Quarter 2012 and Fiscal Year 2012 Financial Results Business Wire ANAHEIM, Calif. -- March 26, 2013 Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), today announced financial results for its fourth quarter and fiscal year 2012 ended December 28, 2012. For the fourth quarter of 2012, Willdan reported total contract revenue of $22.9 million and net income of $0.3 million, or $0.04 per basic and diluted share. For the fiscal year ended December 28, 2012, Willdan reported total contract revenue of $93.4 million and a net loss of $17.3 million, or $2.37 per basic and diluted share. Tom Brisbin, Willdan’s Chief Executive Officer, stated: “Our fourth quarter revenue and earnings were in line with our expectations. We continued to carefully manage expenses during the quarter and we generated positive cash flow from operations.” Fourth Quarter 2012 Results For the fourth quarter of fiscal 2012, revenue was $22.9 million, down $7.1 million, or 23.5%, from revenue of $30.0 million for the comparable period last year. On a sequential basis, revenue was up $1.4 million, or 6.5%, from the third quarter of 2012. Income from operations was $1.2 million for the fourth quarter of fiscal 2012, as compared to income from operations of $0.3 million for the comparable period last year. On a sequential basis, income from operations decreased $0.2 million from $1.4 million in the third quarter of 2012. Net income was $0.3 million for the fourth quarter of fiscal 2012, as compared to a net loss of $0.8 million in the comparable period last year and net income of $0.8 million in the third quarter of 2012. Basic and diluted earnings per share for the fourth quarter of fiscal 2012 were $0.04 as compared to basic and diluted loss per share of $0.11 for the comparable period last year. Willdan generated $0.7 million in cash flow from operations in the fourth quarter of fiscal 2012. Fiscal Year 2012 Results Revenue for fiscal year 2012 was $93.4 million, a decrease of $13.7 million, or 12.8%, from revenue of $107.2 million for fiscal year 2011. Loss from operations was $19.3 million for fiscal year 2012 as compared to income from operations of $3.4 million for fiscal year 2011. Net loss was $17.3 million for fiscal year 2012, including a$15.2 milliongoodwill impairment charge, as compared to net income of $1.8 million for fiscal year 2011. Basic and diluted loss per share for fiscal year 2012 was $2.37, as compared to basic and diluted earnings per share of $0.25 and $0.24, respectively, for fiscal year 2011. Willdan generated $5.3 million in cash flow from operations in the year ended December 28, 2012. Three Months Ended Twelve Months Ended In thousands December December December December (except EPS 28, 30, 28, 30, data) 2012 2011 2012 2011 Revenue $ 22,947 $ 30,006 $ 93,443 $ 107,165 Income from 1,225 347 (19,255 ) 3,401 operations Interest income 2 — 6 5 Interest expense (26 ) (24 ) (106 ) (77 ) Other, net 7 (4 ) (28 ) 1 Income tax expense 908 1,098 (2,083 ) 1,500 (benefit) Net income $ 300 $ (779 ) $ (17,300 ) $ 1,830 (loss) Earnings (loss) per share Basic $ 0.04 $ (0.11 ) $ (2.37 ) $ 0.25 Diluted $ 0.04 $ (0.11 ) $ (2.37 ) $ 0.24 Weighted average shares outstanding: Basic 7,335 7,273 7,310 7,262 Diluted 7,343 7,273 7,310 7,485 Use of Non-GAAP Financial Measures Adjusted EBITDA is a supplemental measure used by Willdan’s management to measure its operating performance. Willdan defines Adjusted EBITDA as net (loss) income plus net interest expense, income tax (benefit) expense, depreciation and amortization, goodwill impairment and other non-recurring income and expense items occurring in such period. Willdan’s definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures. This measure should be considered in addition to, and not as a substitute for or superior to, other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles, or GAAP, such as operating income and net income. Willdan believes Adjusted EBITDA enables management to separate non-recurring income and expense items from its results of operations to provide a more normalized and consistent view of operating performance on a period-to-period basis. Willdan uses Adjusted EBITDA to evaluate its performance for, among other things, budgeting, forecasting and incentive compensation purposes. Willdan also believes Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes the impact of certain non-recurring income and expense items from its operational results, which may facilitate comparison of its results from period to period. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to operating income or net income as an indicator of operating performance or any other GAAP measure. Adjusted EBITDA decreased to $(3.3) million for fiscal year 2012 from $4.3 million for fiscal year 2011. The following is a reconciliation of net (loss) income to Adjusted EBITDA: In thousands Twelve Months Ended December 28, December 30, 2012 2011 Net (loss) income $ (17,300 ) $ 1,830 Interest income (6 ) (5 ) Interest expense 106 77 Income tax (benefit) expense (2,083 ) 1,500 Lease abandonment expense 26 2 Depreciation and amortization 737 944 Impairment of goodwill 15,208 — Loss on sale of assets 18 2 Adjusted EBITDA $ (3,294 ) $ 4,350 Liquidity and Capital Resources Willdan had $10.0 million in cash and cash equivalents at December 28, 2012, compared with $3.0 million at December 30, 2011. Willdanhas a $5.0 millionrevolving line of credit withWells Fargo Bank, National Association("Wells Fargo"), with$3.0 millionin outstanding borrowings at December 28, 2012. In addition, the revolving line of credit is scheduled to expire on April 1, 2013. Wells Fargo may also refuse to renew the facility when it expires on April 1, 2013 and if they do so, Willdan will have to repay the outstanding balance of $3.0 million. Willdanis currently in breach of the net income covenant in its revolving line of credit because it did not have net income of at least$250,000 measured on a rolling four quarter basis and it sustained net losses for two consecutive quarters in the past year. Additionally, Willdan’s ratio of funded debt to EBITDA exceeds the limits permitted under the line of credit. Because of these covenant breaches, Willdan’s ability to borrow additional funds under the line of credit is currently subject to Wells Fargo’s discretion. AlthoughWilldanis seeking a waiver from Wells Fargo for the current breach of the covenants and to extend the maturity of the line of credit, Wells Fargo is not obligated to provide any waiver or modify the terms of the agreement and could choose to increase the interest rate of the outstanding indebtedness, accelerate the loans outstanding under the line of credit and/or terminate its commitments under the line of credit. Conference Call and Webcast Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call today, March 26, 2013, at 5:00 p.m. Eastern/2:00 p.m. Pacific, to discuss Willdan’s financial results. Interested parties may participate in the conference call by dialing 877-941-0844 (480-629-9835 for international callers). When prompted, ask for the “Willdan Group, Inc., Fourth Quarter 2012 Conference Call.” The conference call will be webcast simultaneously on Willdan’s website at www.willdan.com under Investors: Events. The telephonic replay of the conference call may be accessed approximately two hours after the call through April 9, 2013, by dialing 800-358-3474 (303-590-3030 for international callers). The replay access code is 4599738. The webcast replay will be archived for 12 months. About Willdan Group, Inc. Founded in 1964,Willdanis a provider of professional technical and consulting services to public agencies at all levels of government, public and private utilities and commercial and industrial firms.Willdanprovides a broad range of services to clients throughout the United States, including engineering and planning, energy efficiency and sustainability, economic and financial consulting, and national preparedness and interoperability. For additional information, visitWilldan’swebsite atwww.willdan.com. Forward-Looking Statements Safe Harbor Statement: Statements in this press release which are not purely historical, including statements regarding Willdan’s intentions, hopes, beliefs, expectations, representations, projections, estimates, plans or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties including, but not limited to, the risk that Willdan will not be able to expand its services or meet the needs of customers in markets in which it operates. It is important to note that Willdan’s actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, a slowdown in the local and regional economies of the states where Willdan conducts business and the loss of or inability to hire additional qualified professionals. Willdan’s business could be affected by a number of other factors, including the risk factors listed from time to time in Willdan’s SEC reports including, but not limited to, the Annual Report on Form 10-K to be filed for the year ended December 28, 2012. Willdan cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Willdan disclaims any obligation to, and does not undertake to, update or revise any forward-looking statements in this press release. WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 28, December 30, 2012 2011 Assets Current assets: Cash and cash equivalents $ 10,006,000 $ 3,001,000 Accounts receivable, net of allowance for doubtful accounts of $303,000 and $421,000 15,484,000 16,782,000 at December 28, 2012 and December 30, 2011, respectively Costs and estimated earnings in excess of 9,860,000 20,672,000 billings on uncompleted contracts Other receivables 95,000 175,000 Prepaid expenses and other current assets 1,782,000 1,724,000 Total current assets 37,227,000 42,354,000 Equipment and leasehold improvements, net 979,000 1,217,000 Goodwill — 15,208,000 Other intangible assets, net 12,000 49,000 Other assets 307,000 383,000 Deferred income taxes 3,452,000 5,100,000 Total assets $ 41,977,000 $ 64,311,000 Liabilities and Stockholders’ Equity Current liabilities: Excess of outstanding checks over bank $ 1,188,000 $ 1,777,000 balance Borrowings under line of credit 3,000,000 256,000 Accounts payable 6,983,000 8,182,000 Accrued liabilities 5,306,000 10,192,000 Billings in excess of costs and estimated 3,419,000 752,000 earnings on uncompleted contracts Current portion of notes payable 628,000 600,000 Current portion of capital lease 152,000 163,000 obligations Current portion of deferred income taxes 3,452,000 7,349,000 Total current liabilities 24,128,000 29,271,000 Notes payable, less current portion — 77,000 Capital lease obligations, less current 124,000 136,000 portion Deferred lease obligations 374,000 534,000 Total liabilities 24,626,000 30,018,000 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and — — outstanding Common stock, $0.01 par value, 40,000,000 shares authorized; 7,335,000 and 7,274,000 73,000 73,000 shares issued and outstanding at December 28, 2012 and December 30, 2011, respectively Additional paid-in capital 34,423,000 34,065,000 Accumulated (deficit) earnings (17,145,000 ) 155,000 Total stockholders’ equity 17,351,000 34,293,000 Total liabilities and stockholders’ equity $ 41,977,000 $ 64,311,000 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Year 2012 2011 2010 Contract revenue $ 93,443,000 $ 107,165,000 $ 77,896,000 Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below): Salaries and wages 23,218,000 25,714,000 21,607,000 Subconsultant services 35,741,000 39,013,000 20,415,000 and other direct costs Total direct costs of 58,959,000 64,727,000 42,022,000 contract revenue General and administrative expenses: Salaries and wages, payroll taxes and 22,421,000 22,594,000 17,582,000 employee benefits Facilities and facility 4,871,000 4,875,000 4,290,000 related Stock-based compensation 227,000 201,000 235,000 Depreciation and 671,000 877,000 1,042,000 amortization Lease abandonment 26,000 2,000 (68,000 ) (recovery), net Impairment of goodwill 15,208,000 — — Other 10,315,000 10,488,000 9,719,000 Total general and 53,739,000 39,037,000 32,800,000 administrative expenses (Loss) income from (19,255,000 ) 3,401,000 3,074,000 operations Other (expense) income: Interest income 6,000 5,000 12,000 Interest expense (106,000 ) (77,000 ) (54,000 ) Other, net (28,000 ) 1,000 32,000 Total other (expense) (128,000 ) (71,000 ) (10,000 ) income, net (Loss) income before (19,383,000 ) 3,330,000 3,064,000 income taxes Income tax (benefit) (2,083,000 ) 1,500,000 344,000 expense Net (loss) income $ (17,300,000 ) $ 1,830,000 $ 2,720,000 (Loss) earnings per share: Basic $ (2.37 ) $ 0.25 $ 0.38 Diluted $ (2.37 ) $ 0.24 $ 0.37 Weighted-average shares outstanding: Basic 7,310,000 7,262,000 7,233,000 Diluted 7,310,000 7,485,000 7,311,000 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Year 2012 2011 2010 Cash flows from operating activities: Net (loss) income $ (17,300,000 ) $ 1,830,000 $ 2,720,000 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Non-cash revenue from — (902,000 ) — subcontractor settlement Depreciation and 737,000 944,000 1,053,000 amortization Deferred income taxes (2,249,000 ) 1,465,000 389,000 Goodwill impairment 15,208,000 — — Lease abandonment expense 26,000 2,000 (68,000 ) (recovery), net Loss (gain) on sale of 18,000 2,000 (17,000 ) equipment Provision for doubtful 673,000 209,000 20,000 accounts Stock-based compensation 227,000 201,000 235,000 Changes in operating assets and liabilities: Accounts receivable 625,000 (2,507,000 ) (4,407,000 ) Costs and estimated earnings in excess of billings on 10,812,000 (8,427,000 ) (4,694,000 ) uncompleted contracts Income tax receivable — — 51,000 Other receivables 80,000 1,000 (103,000 ) Prepaid expenses and other (58,000 ) (10,000 ) (214,000 ) current assets Other assets 76,000 24,000 (89,000 ) Accounts payable (1,199,000 ) 2,802,000 3,923,000 Accrued liabilities (4,886,000 ) 4,206,000 1,476,000 Billings in excess of costs and estimated earnings on 2,667,000 (289,000 ) 11,000 uncompleted contracts Deferred lease obligations (186,000 ) (234,000 ) (189,000 ) Net cash provided by (used 5,271,000 (683,000 ) 97,000 in) operating activities Cash flows from investing activities: Purchase of equipment and (359,000 ) (395,000 ) (685,000 ) leasehold improvements Proceeds from sale of 20,000 6,000 40,000 equipment Payments related to business — (2,733,000 ) (2,104,000 ) acquisitions Net cash used in investing (339,000 ) (3,122,000 ) (2,749,000 ) activities Cash flows from financing activities: Changes in excess of outstanding checks over bank (589,000 ) 554,000 735,000 balance Payments on notes payable (663,000 ) (211,000 ) (17,000 ) Proceeds from notes payable 614,000 667,000 214,000 Borrowings under line of 11,663,000 33,965,000 14,123,000 credit Repayments of line of credit (8,919,000 ) (34,709,000 ) (14,123,000 ) Principal payments on (164,000 ) (202,000 ) (173,000 ) capital leases Proceeds from stock option 11,000 7,000 3,000 exercise Proceeds from sales of common stock under employee 120,000 93,000 87,000 stock purchase plan Net cash provided by 2,073,000 164,000 849,000 financing activities Net increase (decrease) in 7,005,000 (3,641,000 ) (1,803,000 ) cash and cash equivalents Cash and cash equivalents at 3,001,000 6,642,000 8,445,000 beginning of the year Cash and cash equivalents at $ 10,006,000 $ 3,001,000 $ 6,642,000 end of the year Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 106,000 $ 77,000 $ 52,000 Income taxes 139,000 70,000 48,000 Supplemental disclosures of noncash investing and financing activities: Equipment acquired under $ 151,000 $ 247,000 $ 240,000 capital leases Contact: Willdan Group, Inc. Kimberly Gant Chief Financial Officer Tel: 714-940-6300 firstname.lastname@example.org or Financial Profiles, Inc. Moira Conlon Tel: 310-478-2700 x11 email@example.com
Willdan Reports Fourth Quarter 2012 and Fiscal Year 2012 Financial Results
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