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Willdan Reports Third Quarter 2013 Financial Results

  Willdan Reports Third Quarter 2013 Financial Results

Business Wire

ANAHEIM, Calif. -- November 7, 2013

Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN) today announced financial
results for its third quarter ended September 27, 2013.

For the third quarter of 2013, Willdan reported total contract revenue of
$21.2 million and net income of $0.8 million, or $0.11 per share.

Tom Brisbin, Willdan’s Chief Executive Officer, stated: “While third quarter
revenue declined slightly from the year-ago period, we reported positive
earnings and cash flow for the quarter. Our energy projects have continued to
ramp up as planned and we continue to expect a profitable year.”

Third Quarter 2013 Results

For the third quarter of fiscal 2013, revenue was $21.2 million, down $0.4
million, or 1.8%, from the comparable period last year. On a sequential basis,
revenue was up $0.7 million, or 3.3%, from the second quarter of 2013. Income
from operations was $0.9 million for the third quarter of fiscal 2013, as
compared to income from operations of $1.4 million for the comparable period
last year and $0.7 million for the second quarter of 2013.

Net income was $0.8 million for the third quarter of 2013, the same as for the
comparable period last year. Net income was $0.7 million for the second
quarter of 2013.

Basic and diluted earnings per share for the third quarter of fiscal 2013 and
the comparable period last year were $0.11.

Willdan generated $1.8 million in cash flow from operations in the third
quarter of fiscal 2013.

Nine Months 2013 Results

For the nine months ended September 27, 2013, revenue was $63.0 million, as
compared to $70.5 million for the comparable period last year. Income from
operations was $2.1 million for the nine months ended September 27, 2013 as
compared to a loss from operations of $20.5 million for the comparable period
last year. Net income was $1.9 million for the nine months ended September 27,
2013 as compared to a net loss of $17.6 million for the comparable period last
year.

Basic and diluted earnings per share for the nine months ended September 27,
2013 were $0.26, as compared to a basic and diluted loss per share of $2.41
for the comparable period last year.

Willdan generated $4.2 million in cash flow from operations in the nine months
ended September 27, 2013.

                                             
                   Three Months Ended              Nine Months Ended
                   September     September       September     September
                   27,             28,             27,             28,
In thousands
(except per        2013            2012            2013            2012
share data)
Revenue            $  21,167       $  21,547       $  63,048       $ 70,496
                                                                             
Income
(loss) from        882             1,420           2,057           (20,480   )
operations
Interest           3               2               8               4
income
Interest           (9        )     (28       )     (86       )     (80       )
expense
Other, net         10              (14       )     35              (35       )
Income tax
expense            44              593             85              (2,991    )
(benefit)
Net income         $  842          $  787          $  1,929        $ (17,600 )
(loss)
                                                                             
Earnings
(loss) per
share
Basic              $  0.11         $  0.11         $  0.26         $ (2.41   )
Diluted            $  0.11         $  0.11         $  0.26         $ (2.41   )
                                                                             
Weighted
average
shares
outstanding:
Basic              7,359           7,315           7,349           7,303
Diluted            7,526           7,315           7,443           7,303
                                                                             

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 $7.3 million to $2.6 million for the nine months
ended September 27, 2013 from $(4.7) million for the comparable period last
year.

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

                                  Nine Months Ended
                                     September 27,    September 28,
In thousands                         2013              2012
Net income (loss)                    $    1,929        $   (17,600   )
Interest income                      (8            )   (4            )
Interest expense                     86                80
Income tax expense (benefit)         85                (2,991        )
(Gain) loss on sale of assets        (3            )   17
Depreciation and amortization        452               569
Impairment of goodwill               —                 15,208
Lease abandonment expense, net       13                27
Adjusted EBITDA                      $    2,554        $   (4,694    )
                                                                     

Liquidity and Capital Resources

Willdan had $10.4 million in cash and cash equivalents, including restricted
cash, at September 27, 2013. Willdanhas available a $5.0 millionrevolving
line of credit withWells Fargo Bank, National Association, withno
outstanding borrowings at September 27, 2013.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly
Gant plan to host a conference call on November 7, 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
877-941-6010 (480-629-9772 for international callers). When prompted, ask for
the “Willdan Group, Inc., Third 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 November 22, 2013, by dialing 800-406-7325
(303-590-3030 for international callers). The replay access code is 4645884.
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 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
                                                                             
                                                                             
                                            September 27,       December 28,
                                            2013                2012
                                            (unaudited)
Assets
Current assets:
Cash and cash equivalents, including        $  10,354,000       $ 10,006,000
restricted cash
Accounts receivable, net of allowance
for doubtful accounts of $589,000 and       10,393,000          15,484,000
$303,000 at September 27, 2013 and
December 28, 2012, respectively
Costs and estimated earnings in excess      9,565,000           9,860,000
of billings on uncompleted contracts
Other receivables                           62,000              95,000
Prepaid expenses and other current          1,570,000           1,782,000
assets
Total current assets                        31,944,000          37,227,000
                                                                             
Equipment and leasehold improvements,       774,000             979,000
net
Other intangible assets, net                —                   12,000
Other assets                                314,000             307,000
Deferred income taxes, net of current       3,452,000           3,452,000
portion
Total assets                                $  36,484,000       $ 41,977,000
                                                                             
Liabilities and Stockholders’ Equity
Current liabilities:
Excess of outstanding checks over bank      $  1,169,000        $ 1,188,000
balance
Borrowings under line of credit             —                   3,000,000
Accounts payable                            3,432,000           6,983,000
Accrued liabilities                         5,926,000           5,306,000
Billings in excess of costs and
estimated earnings on uncompleted           2,614,000           3,419,000
contracts
Current portion of notes payable            24,000              628,000
Current portion of capital lease            140,000             152,000
obligations
Current portion of deferred income          3,452,000           3,452,000
taxes
Total current liabilities                   16,757,000          24,128,000
                                                                             
Capital lease obligations, less current     86,000              124,000
portion
Deferred lease obligations                  155,000             374,000
Total liabilities                           16,998,000          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: 7,375,000
and 7,335,000
                                            74,000              73,000
shares issued and outstanding at
September 27, 2013 and December 28,
2012, respectively
Additional paid-in capital                  34,628,000          34,423,000
Accumulated (deficit) earnings              (15,216,000   )     (17,145,000  )
Total stockholders’ equity                  19,486,000          17,351,000
Total liabilities and stockholders’         $  36,484,000       $ 41,977,000
equity
                                                                             
                                                                             

                                                   
                                                                                      
WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
                                                                                      
                                                                                      
                     Three Months Ended                Nine Months Ended
                     September       September        September       September 28,
                     27,              28,              27,
                     2013             2012             2013             2012
                                                                                      
Contract revenue     $ 21,167,000     $ 21,547,000     $ 63,048,000     $ 70,496,000
                                                                                      
Direct costs of
contract revenue
(exclusive of
depreciation and
amortization
shown separately
below):
Salaries and         6,136,000        5,680,000        18,108,000       17,613,000
wages
Subconsultant
services and         5,836,000        5,610,000        17,336,000       27,987,000
other direct
costs
Total direct
costs of             11,972,000       11,290,000       35,444,000       45,600,000
contract revenue
                                                                                      
General and
administrative
expenses:
Salaries and
wages, payroll
taxes and            4,947,000        5,075,000        15,433,000       17,342,000
employee
benefits
Facilities and
facilities           1,167,000        1,224,000        3,504,000        3,659,000
related
Stock-based          36,000           50,000           124,000          181,000
compensation
Depreciation and     125,000          163,000          401,000          518,000
amortization
Lease
abandonment          —                (3,000       )   13,000           27,000
(recovery), net
Impairment of        —                —                —                15,208,000
goodwill
Other                2,038,000        2,328,000        6,072,000        8,441,000
Total general
and                  8,313,000        8,837,000        25,547,000       45,376,000
administrative
expenses
Income (loss)        882,000          1,420,000        2,057,000        (20,480,000   )
from operations
                                                                                      
Other income
(expense), net:
Interest income      3,000            2,000            8,000            4,000
Interest expense     (9,000       )   (28,000      )   (86,000      )   (80,000       )
Other, net           10,000           (14,000      )   35,000           (35,000       )
Total other
expense              4,000            (40,000      )   (43,000      )   (111,000      )
(income), net
Income (loss)
before income        886,000          1,380,000        2,014,000        (20,591,000   )
tax expense
(benefit)
                                                                                      
Income tax
expense              44,000           593,000          85,000           (2,991,000    )
(benefit)
Net income           $ 842,000        $ 787,000        $ 1,929,000      $ (17,600,000 )
(loss)
                                                                                      
Earnings (loss)
per share:
Basic                $ 0.11           $ 0.11           $ 0.26           $ (2.41       )
Diluted              $ 0.11           $ 0.11           $ 0.26           $ (2.41       )
                                                                                      
Weighted-average
shares
outstanding:
Basic                7,359,000        7,315,000        7,349,000        7,303,000
Diluted              7,526,000        7,315,000        7,443,000        7,303,000
                                                                                      
                                                                                      

                                       
                                                                             
WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
                                                                             
                                                                             
                                           Nine Months Ended
                                           September 27,     September 28,
                                           2013                2012
Cash flows from operating
activities:
Net income (loss)                          $  1,929,000        $ (17,600,000 )
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization              452,000             569,000
Deferred income taxes                      —                   (3,584,000    )
Impairment of goodwill                     —                   15,208,000
Lease abandonment expense, net             13,000              27,000
(Gain) loss on sale of equipment           (3,000        )     17,000
Provision for doubtful accounts            219,000             793,000
Stock-based compensation                   118,000             181,000
Changes in operating assets and
liabilities:
Accounts receivable                        4,872,000           1,910,000
Costs and estimated earnings in
excess of billings on uncompleted          295,000             9,518,000
contracts
Other receivables                          33,000              47,000
Prepaid expenses and other current         212,000             652,000
assets
Other assets                               (7,000        )     30,000
Accounts payable                           (3,551,000    )     (3,236,000    )
Accrued liabilities                        620,000             (2,656,000    )
Billings in excess of costs and
estimated earnings on uncompleted          (805,000      )     2,855,000
contracts
Deferred lease obligations                 (232,000      )     (126,000      )
Net cash provided by operating             4,165,000           4,605,000
activities
                                                                             
Cash flows from investing
activities:
Purchase of equipment and leasehold        (248,000      )     (275,000      )
improvements
Proceeds from sale of equipment            16,000              14,000
Net cash used in investing                 (232,000      )     (261,000      )
activities
                                                                             
Cash flows from financing
activities:
Changes in excess of outstanding           (19,000       )     (281,000      )
checks over bank balance
Payments on notes payable                  (604,000      )     (582,000      )
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        (50,000       )     (126,000      )
obligations
Proceeds from stock option exercise        15,000              10,000
Proceeds from sales of common stock        73,000              120,000
under employee stock purchase plan
Net cash (used in) provided by             (3,585,000    )     1,885,000
financing activities
Net increase in cash and cash              348,000             6,229,000
equivalents
Cash and cash equivalents, including
restricted cash, at beginning of the       10,006,000          3,001,000
period
Cash and cash equivalents, including
restricted cash, at end of the             $  10,354,000       $ 9,230,000
period
                                                                             
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest                                   $  86,000           $ 79,000
Income taxes                               164,000             59,000
                                                                             
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under capital           $  60,000           $ 93,000
lease 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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