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Willdan Reports Second Quarter 2013 Financial Results



  Willdan Reports Second Quarter 2013 Financial Results

Business Wire

ANAHEIM, Calif. -- August 8, 2013

Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), today announced financial
results for its second quarter ended June 28, 2013.

For the second quarter of 2013, Willdan reported total contract revenue of
$20.5 million and net income of $0.7 million, or $0.09 per share.

Tom Brisbin, Willdan’s Chief Executive Officer, stated: “While our second
quarter revenue was lower than last year, I’m pleased to report that we
generated positive cash flow and earnings for the quarter. Lower revenue was
due to continued declines in our energy segment, offset by gains in all of our
other business lines. Our energy projects began to ramp up during the second
quarter as planned and we expect revenue growth and higher levels of
profitability in the second half of 2013.”

Second Quarter 2013 Results

For the second quarter of fiscal 2013, revenue was $20.5 million, down $3.0
million, or 12.7%, from revenue of $23.5 million for the comparable period
last year. On a sequential basis, revenue was down $0.9 million, or 4.2%, from
the first quarter of 2013. Income from operations was $0.7 million for the
second quarter of fiscal 2013, as compared to a loss from operations of $19.6
million for the comparable period last year. On a sequential basis, income
from operations was $0.7 million as compared to $0.5 million for the first
quarter of 2013.

Net income was $0.7 million for the second quarter of fiscal 2013, as compared
to a net loss of $17.0 million for the comparable period last year and net
income of $0.4 million for the first quarter of 2013.

Basic and diluted earnings per share for the second quarter of fiscal 2013
were $0.09 as compared to a basic and diluted loss per share of $2.33 for the
comparable period last year.

Willdan generated $1.4 million in cash flow from operations in the second
quarter of fiscal 2013.

Six Months 2013 Results

For the six months ended June 28, 2013, revenue was $41.9 million, as compared
to $48.9 million in the comparable period last year. Income from operations
was $1.2 million for the six months ended June 28, 2013 as compared to a loss
from operations of $21.9 million for the comparable period last year. Net
income was $1.1 million for the six months ended June 28, 2013 as compared to
a net loss of $18.4 million for the comparable period last year.

Basic and diluted earnings per share for the six months ended June 28, 2013
were $0.15 as compared to a basic and diluted loss per share of $2.52 for the
comparable period last year.

Willdan generated $2.4 million in cash flow from operations in the six months
ended June 28, 2013.

                               Three Months Ended       Six Months Ended
In thousands (except per       June 28,   June 29,      June 28,   June 29,
share data)
                               2013       2012          2013       2012
Revenue                        $ 20,496   $ 23,481      $ 41,881   $ 48,949
                                                                              
Income (loss) from             718        (19,583   )   1,175      (21,900   )
operations
Interest income                2          1             5          2
Interest expense               (50      ) (30       )   (77      ) (52       )
Other, net                     10         (21       )   25         (21       )
Income tax (benefit) expense   (8       ) (2,657    )   41         (3,584    )
Net income (loss)              $ 688      $ (16,976 )   $ 1,087    $ (18,387 )
                                                                              
Basic and diluted earnings     $ 0.09     $ (2.33   )   $ 0.15     $ (2.52   )
(loss) per share
                                                                              
Weighted average shares
outstanding:
                                                                              
Basic                          7,353      7,297         7,336      7,294
Diluted                        7,401      7,297         7,383      7,294
                                                                              

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
income (loss) plus net interest expense, income tax expense (benefit),
depreciation and amortization, goodwill impairment, lease abandonment expense,
net 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 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 income from operations or net income as an indicator of
operating performance or any other GAAP measure.

Adjusted EBITDA increased $7.8 million to $1.5 million for the six months
ended June 28, 2013 from $(6.3) million for the comparable period last year.

The following is a reconciliation of net income (loss) to Adjusted EBITDA:

                                 Six Months Ended
                                 June 28,   June 29,
In thousands
                                 2013       2012
Net income (loss)                $  1,087   $ (18,387 )
Interest income                  (5       ) (2        )
Interest expense                 77         52
Income tax expense (benefit)     41         (3,584    )
Loss on sale of assets           —          22
Depreciation and amortization    310        387
Impairment of goodwill           —          15,208
Lease abandonment expense, net   13         30
Adjusted EBITDA                  $  1,523   $ (6,274  )
                                                       

Liquidity and Capital Resources

Willdan had $8.5 million in cash and cash equivalents at June 28, 2013,
compared with $10.0 million at December 28, 2012. Willdan has a $5.0
million revolving line of credit with Wells Fargo Bank, National Association,
with no outstanding borrowings at June 28, 2013.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly
Gant plan to host a conference call on August 8, 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
877-941-2332 (480-629-9867 for international callers). When prompted, ask for
the “Willdan Group, Inc., Second Quarter 2013 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 August 22, 2013, by dialing 800-406-7325
(303-590-3030 for international callers). The replay access code is 4633799.
The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Founded in 1964, Willdan is 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. Willdan provides 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, visit Willdan’s website at www.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 for the year ended December 28, 2012 filed
on March 26, 2013 and the Quarterly Report on Form 10-Q for the quarter ended
March 29, 2013 filed on May 9, 2013. 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

CONDENSED CONSOLIDATED BALANCE SHEETS
                                                
                                                 June 28,       December 28,
                                                 2013           2012
                                                 (unaudited)
Assets
Current assets:
Cash and cash equivalents                        $ 8,475,000    $ 10,006,000
Accounts receivable, net of allowance for
doubtful accounts of $512,000 and $303,000 at    11,040,000     15,484,000
June 28, 2013 and December 28, 2012,
respectively
Costs and estimated earnings in excess of        10,241,000     9,860,000
billings on uncompleted contracts
Other receivables                                68,000         95,000
Prepaid expenses and other current assets        1,222,000      1,782,000
Total current assets                             31,046,000     37,227,000
                                                                              
Equipment and leasehold improvements, net        762,000        979,000
Other intangible assets, net                     —              12,000
Other assets                                     298,000        307,000
Deferred income taxes, net of current portion    3,452,000      3,452,000
Total assets                                     $ 35,558,000   $ 41,977,000
                                                                              
Liabilities and Stockholders’ Equity
Current liabilities:
Excess of outstanding checks over bank balance   $ 818,000      $ 1,188,000
Borrowings under line of credit                  —              3,000,000
Accounts payable                                 3,440,000      6,983,000
Accrued liabilities                              5,110,000      5,306,000
Billings in excess of costs and estimated        3,559,000      3,419,000
earnings on uncompleted contracts
Current portion of notes payable                 169,000        628,000
Current portion of capital lease obligations     136,000        152,000
Current portion of deferred income taxes         3,452,000      3,452,000
Total current liabilities                        16,684,000     24,128,000
                                                                              
Capital lease obligations, less current          74,000         124,000
portion
Deferred lease obligations                       237,000        374,000
Total liabilities                                16,995,000     24,626,000
                                                                              
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: 7,353,000 and 7,335,000
                                                 74,000         73,000
shares issued and outstanding at June 28, 2013
and December 28, 2012, respectively
Additional paid-in capital                       34,547,000     34,423,000
Accumulated (deficit) earnings                   (16,058,000  ) (17,145,000  )
Total stockholders’ equity                       18,563,000     17,351,000
Total liabilities and stockholders’ equity       $ 35,558,000   $ 41,977,000
                                                                              

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
                                                   
                   Three Months Ended               Six Months Ended
                   June 28,       June 29,          June 28,       June 29,
                   2013           2012              2013           2012
                                                                                  
Contract revenue   $ 20,496,000   $ 23,481,000      $ 41,881,000   $ 48,949,000
                                                                                  
Direct costs of
contract revenue
(exclusive of
depreciation and
amortization
shown separately
below):
Salaries and       6,129,000      5,976,000         11,972,000     11,933,000
wages
Subconsultant
services and       5,309,000      11,140,000        11,500,000     22,377,000
other direct
costs
Total direct
costs of           11,438,000     17,116,000        23,472,000     34,310,000
contract revenue
                                                                                  
General and
administrative
expenses:
Salaries and
wages, payroll
taxes and          4,948,000      5,839,000         10,486,000     12,267,000
employee
benefits
Facilities and
facilities         1,149,000      1,240,000         2,337,000      2,435,000
related
Stock-based        38,000         77,000            88,000         131,000
compensation
Depreciation and   127,000        181,000           276,000        355,000
amortization
Lease              —              26,000            13,000         30,000
abandonment, net
Impairment of      —              15,208,000        —              15,208,000
goodwill
Other              2,078,000      3,377,000         4,034,000      6,113,000
Total general
and                8,340,000      25,948,000        17,234,000     36,539,000
administrative
expenses
Income (loss)      718,000        (19,583,000   )   1,175,000      (21,900,000   )
from operations
                                                                                  
Other income
(expense), net:
Interest income    2,000          1,000             5,000          2,000
Interest expense   (50,000      ) (30,000       )   (77,000      ) (52,000       )
Other, net         10,000         (21,000       )   25,000         (21,000       )
Total other        (38,000      ) (50,000       )   (47,000      ) (71,000       )
expense, net
Income (loss)
before income      680,000        (19,633,000   )   1,128,000      (21,971,000   )
taxes
                                                                                  
Income tax
(benefit)          (8,000       ) (2,657,000    )   41,000         (3,584,000    )
expense
Net income         $ 688,000      $ (16,976,000 )   $ 1,087,000    $ (18,387,000 )
(loss)
                                                                                  
Earnings per
share:
Basic and          $ 0.09         $ (2.33       )   $ 0.15         $ (2.52       )
diluted
                                                                                  
Weighted-average
shares
outstanding:
Basic              7,353,000      7,297,000         7,336,000      7,294,000
Diluted            7,401,000      7,297,000         7,383,000      7,294,000
                                                                                  

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
                                              
                                               Six Months Ended
                                               June 28,        June 29,
                                               2013            2012
Cash flows from operating activities:
Net income (loss)                              $ 1,087,000     $ (18,387,000 )
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization                  310,000         387,000
Deferred income taxes                          —               (3,584,000    )
Impairment of goodwill                         —               15,208,000
Lease abandonment expense, net                 13,000          30,000
Loss on sale of equipment                      (6,000      )   22,000
Provision for doubtful accounts                162,000         432,000
Stock-based compensation                       88,000          131,000
Changes in operating assets and liabilities:
Accounts receivable                            4,282,000       (5,498,000    )
Costs and estimated earnings in excess of      (381,000    )   10,066,000
billings on uncompleted contracts
Other receivables                              27,000          89,000
Prepaid expenses and other current assets      560,000         231,000
Other assets                                   9,000           34,000
Accounts payable                               (3,543,000  )   2,826,000
Accrued liabilities                            (196,000    )   (2,045,000    )
Billings in excess of costs and estimated      140,000         1,063,000
earnings on uncompleted contracts
Deferred lease obligations                     (150,000    )   (86,000       )
Net cash provided by operating activities      2,402,000       919,000
                                                                              
Cash flows from investing activities:
Purchase of equipment and leasehold            (86,000     )   (220,000      )
improvements
Proceeds from sale of equipment                11,000          8,000
Net cash used in investing activities          (75,000     )   (212,000      )
                                                                              
Cash flows from financing activities:
Changes in excess of outstanding checks over   (370,000    )   (448,000      )
bank balance
Payments on notes payable                      (459,000    )   (489,000      )
Borrowings under line of credit                266,000         11,663,000
Repayments on line of credit                   (3,266,000  )   (8,919,000    )
Principal payments on capital lease            (66,000     )   (88,000       )
obligations
Proceeds from sales of common stock under      37,000          75,000
employee stock purchase plan
Net cash (used in) provided by financing       (3,858,000  )   1,794,000
activities
Net increase in cash and cash equivalents      (1,531,000  )   2,501,000
Cash and cash equivalents at beginning of      10,006,000      3,001,000
the period
Cash and cash equivalents at end of the        $ 8,475,000     $ 5,502,000
period
                                                                              
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest                                       $ 81,000        $ 51,000
Income taxes                                   155,000         45,000
                                                                              
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under capital lease         $ 7,000         $ 10,000
obligations

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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