Willdan Reports Fourth Quarter 2012 and Fiscal Year 2012 Financial Results

  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
kgant@willdan.com
or
Financial Profiles, Inc.
Moira Conlon
Tel: 310-478-2700 x11
mconlon@finprofiles.com
 
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