Investment Community Conference Call Today at 5:00 p.m. Eastern Time

ANAHEIM, Calif.--(BUSINESS WIRE)-- Willdan Group (NASDAQ: WLDN), a provider of professional technical and consulting services, today reported financial results for the fourth quarter and fiscal year ended December 27, 2013, and provided a business update.

For the fourth quarter of 2013, Willdan reported total contract revenue of $22.5 million and net income of $0.7 million, or $0.10 and $0.09 per basic and diluted share, respectively.

For the fiscal year ended December 27, 2013, Willdan reported total contract revenue of $85.5 million and a net income of $2.6 million, or $0.36 and $0.35 per basic and diluted share, respectively.

"We are pleased with our results for the year," said Tom Brisbin, Willdan's Chief Executive Officer. "Our Engineering Services segment benefited from recovery in the residential housing market and additional opportunities to outsource staffing for cities facing financial challenges. We reported lower year-over-year revenues from our Energy Efficiency Services segment in 2013. This was due mainly to changes in our project with Consolidated Edison of New York, including our transition to self-performing most of our energy subcontract work, which decreased pass-through revenue and costs.

"We are excited about the California High Speed Rail project. We performed our initial contract services in December on this project under a limited notice to proceed and will be bidding with our joint venture partners on the next two segments that we expect will be awarded in the second half of 2014.

"We believe our prospects for 2014 are bright. In the latter part of last year, we created a new group in our Engineering Services segment that is dedicated to large-scale, high-value infrastructure products and we expect this group and our full Engineering Services segment to be growing contributors to revenues in 2014. We will continue to manage expenses carefully and expect another profitable year in 2014."

Fourth Quarter Financial Highlights

Total contract revenue for the fourth quarter of 2013 was $22.5 million compared with $22.9 million for the fourth quarter of 2012. The decrease was due primarily to lower energy efficiency services in the State of New York. Engineering Services contract revenue for the fourth quarter 2013 of $9.2 million increased by 7.8% from the prior year, due mainly to greater demand for our city engineering, building and safety, construction management and geotechnical services in California. For the fourth quarter of 2013, revenues from Public Finance Services were $2.4 million and Homeland Security Services were $1.3 million.

Net income for quarter ended December 27, 2013 was $0.7 million, or $0.10 per diluted share, as compared to net income of $0.3 million, or $0.04 per share, for the comparable quarter ended December 28, 2012.

Revenue, net of subcontractor costs, for the fourth quarter of 2013 was $17.7 million, compared to revenue, net of subcontractor costs for the fourth quarter of 2012 of $15.8 million.

Direct costs of $13.5 million for the fourth quarter of 2013 decreased 17.0% compared with the prior period, primarily as a result of a decrease in direct costs within our Energy Efficiency Services segment of $11.5 million. Adjusted EBITDA (as defined below) was $0.9 million compared with $1.4 million for the fourth quarter of 2012.

Full Year 2013 Financial Highlights

Total contract revenue for 2013 was $85.5 million compared with $93.4 million for 2012, primarily due to a 20.9% decline in revenue from our Energy Efficiency Service segment to $36.0 million, as a result of a decrease in services provided in the state of New York. Engineering Services contract revenue for 2013 of $35.2 million increased by 3.5% from the prior year, due mainly to demand for city engineering services, building and safety, construction management and geotechnical services in California. For 2013, revenues from Public Finance Services were $9.8 million and Homeland Security Services were $4.4 million.

Net income for 2013 was $2.6 million, or $0.35 per diluted share, compared with a net loss of $17.3 million, or $2.37 per share.

Revenue, net of subcontractor costs, for 2013 was $68.7 million, compared to revenue, net of subcontract costs for 2012 of $57.3 million.

Direct costs of $48.9 million for 2013 decreased 17.0% compared with 2012, primarily as a result of a decrease in subcontractor services and other direct costs used primarily by the Energy Efficiency Services segment. Operating income of $2.6 million for the fiscal year ended December 27, 2013 improved substantially from an operating loss of $19.3 million for the fiscal year ended December 28, 2012, which included a $15.2 million impairment of goodwill charge. Adjusted EBITDA was $3.4 million compared with a loss of $3.3 million for 2012. Income tax expense for 2013 was $0.1 million compared with a benefit of $2.1 million for 2012.

Willdan reported $8.1 million in cash and cash equivalents at December 27, 2013, compared with $10.0 million at December 28, 2012. Willdan's primary sources of liquidity are cash generated from operations and a revolving line of credit with BMO Harris Bank, N.A., which matures on March 24, 2016.

At December 27, 2013, Willdan had federal and state operating loss carryovers of $6.8 million and $9.8 million, respectively.

Use of Non-GAAP Financial Measures

"Revenues, net of subcontractor costs," a non-GAAP financial measure, is a supplemental measure that Willdan believes enhances investors' ability to analyze our business trend and performance because it substantially measures the work performed by our employees. In the course of providing services, we routinely subcontract various services. Generally, these subcontractor costs are passed through to our clients and, in accordance with GAAP and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities. Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends. Accordingly, we segregate costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers. A reconciliation of contract revenue as reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to revenues, net of subcontractor costs is provided at the end of this news release.

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 and other non-recurring income and expense items occurring in such period. Willdan 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. A reconciliation of net income (loss) as reported in accordance with U.S. GAAP to Adjusted EBITDA is provided at the end of this news release.

Willdan's definition of Revenues, net of subcontractor costs and Adjusted EBITDA may differ from other companies reporting similarly names measures. These measures 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. GAAP, such as contract revenues and net income.

Conference Call Details

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Stacy McLaughlin will host a conference call today, March 25, 2014, at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, to discuss Willdan's financial results and provide a business update.

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 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 April 8, 2013, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4662028. The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Celebrating its 50th year of business, Willdan provides outsourced professional technical and consulting services to public agencies, public and private utilities, and commercial and industrial firms throughout the United States. Willdan benefits from well-established relationships, industry-leading expertise and a solid reputation for delivering projects on time and on budget. The company's service offerings span a broad set of complementary disciplines that include engineering and planning, energy efficiency and sustainability, financial and economic consulting, and national preparedness. Willdan has crafted this set of integrated services so that, in the face of an evolving environment—whether economic, natural, or built—Willdan can continue to extend the reach and resources of its clients. For additional information, visit Willdan's website at www.willdan.com.

Forward Looking Statements

Statements in this press release that 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 27, 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
CONSOLIDATED BALANCE SHEETS
		December 27, 2013					December 28, 2012
Assets
Current assets:
Cash and cash equivalents, including restricted cash of $5,000,000 at December 27,2013			$	8,134,000				$	10,006,000
Accounts receivable, net of allowance for doubtful accounts of $385,000 and $303,000 at December 27, 2013 and December 28, 2012, respectively			13,167,000					15,484,000
Costs and estimated earnings in excess of billings on uncompleted contracts			9,635,000					9,860,000
Other receivables			212,000					95,000
Prepaid expenses and other current assets			2,377,000					1,782,000
Total current assets			33,525,000					37,227,000
Equipment and leasehold improvements, net			691,000					979,000
Other intangible assets, net			—					12,000
Other assets			333,000					307,000
Deferred income taxes, net of current portion			3,688,000					3,452,000
Total assets			$	38,237,000				$	41,977,000
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over bank balance			$	1,473,000				$	1,188,000
Borrowings under line of credit			—					3,000,000
Accounts payable			3,957,000					6,983,000
Accrued liabilities			5,808,000					5,306,000
Billings in excess of costs and estimated earnings on uncompleted contracts			2,247,000					3,419,000
Current portion of notes payable			517,000					628,000
Current portion of capital lease obligations			129,000					152,000
Current portion of deferred income taxes			3,688,000					3,452,000
Total current liabilities			17,819,000					24,128,000
Capital lease obligations, less current portion			85,000					124,000
Deferred lease obligations			120,000					374,000
Total liabilities			18,024,000					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 shares issued and outstanding at December 27, 2013 and December 28, 2012, respectively			74,000					73,000
Additional paid-in capital			34,654,000					34,423,000
Accumulated deficit			(14,515,000		)			(17,145,000		)
Total stockholders' equity			20,213,000					17,351,000
Total liabilities and stockholders' equity			$	38,237,000				$	41,977,000

Willdan Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
		Fiscal Year								Three Months Ended
		2013				2012				December 27, 2013				December 28, 2012
Contract revenue		$	85,510,000			$	93,443,000			$	22,462,000			$	22,947,000
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below):
Salaries and wages		24,098,000				23,218,000				5,990,000				5,605,000
Subcontractor services and other direct costs		24,831,000				35,741,000				7,495,000				7,754,000
Total direct costs of contract revenue		48,929,000				58,959,000				13,485,000				13,359,000
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits		20,555,000				22,421,000				5,122,000				5,079,000
Facilities and facility related		4,654,000				4,871,000				1,150,000				1,212,000
Stock-based compensation		150,000				227,000				26,000				46,000
Depreciation and amortization		517,000				671,000				116,000				153,000
Lease abandonment (recovery), net		30,000				26,000				17,000				(1,000			)
Impairment of goodwill		—				15,208,000				—				—
Other		8,067,000				10,315,000				1,995,000				1,874,000
Total general and administrative expenses		33,973,000				53,739,000				8,426,000				8,363,000
Income (loss) from operations		2,608,000				(19,255,000		)		551,000				1,225,000
Other income (expense):
Interest income		10,000				6,000				2,000				2,000
Interest expense		(94,000		)		(106,000		)		(8,000		)		(26,000			)
Other, net		238,000				(28,000		)		203,000				7,000
Total other income (expense), net		154,000				(128,000		)		197,000				(17,000			)
Income (loss) before income taxes		2,762,000				(19,383,000		)		748,000				1,208,000
Income tax expense (benefit)		132,000				(2,083,000		)		47,000				908,000
Net income (loss)		$	2,630,000			$	(17,300,000	)		$	701,000			$	300,000
Earnings (loss) per share:
Basic		$	0.36			$	(2.37	)		$	0.10			$		0.04
Diluted		$	0.35			$	(2.37	)		$	0.09			$		0.04
Weighted-average shares outstanding:
Basic		7,355,000				7,310,000				7,375,000				7,335,000
Diluted		7,495,000				7,310,000				7,520,000				7,343,000

WILLDAN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
		Fiscal Year
		2013				2012
Cash flows from operating activities:
Net income (loss)		$	2,630,000			$	(17,300,000	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Non-cash revenue from subcontractor settlement		—				—
Depreciation and amortization		585,000				737,000
Deferred income taxes		—				(2,249,000		)
Goodwill impairment		—				15,208,000
Lease abandonment expense, net		30,000				26,000
(Gain) loss on sale of equipment		(6,000		)		18,000
Provision for doubtful accounts		101,000				673,000
Stock-based compensation		150,000				227,000
Changes in operating assets and liabilities:
Accounts receivable		2,216,000				625,000
Costs and estimated earnings in excess of billings on uncompleted contracts		225,000				10,812,000
Income tax receivable		—				—
Other receivables		(117,000		)		80,000
Prepaid expenses and other current assets		(595,000		)		(58,000		)
Other assets		(26,000		)		76,000
Accounts payable		(3,026,000		)		(1,199,000		)
Accrued liabilities		502,000				(4,886,000		)
Billings in excess of costs and estimated earnings on uncompleted contracts		(1,172,000		)		2,667,000
Deferred lease obligations		(284,000		)		(186,000		)
Net cash provided by operating activities		1,213,000				5,271,000
Cash flows from investing activities:
Purchase of equipment and leasehold improvements		(306,000		)		(359,000		)
Proceeds from sale of equipment		27,000				20,000
Payments related to business acquisitions		—				—
Net cash used in investing activities		(279,000		)		(339,000		)
Cash flows from financing activities:
Changes in excess of outstanding checks over bank balance		285,000				(589,000		)
Payments on notes payable		(621,000		)		(663,000		)
Proceeds from notes payable		510,000				614,000
Borrowings under line of credit		—				11,663,000
Repayments of line of credit		(3,000,000		)		(8,919,000		)
Principal payments on capital leases		(62,000		)		(164,000		)
Proceeds from stock option exercise		9,000				11,000
Proceeds from sales of common stock under employee stock purchase plan		73,000				120,000
Net cash (used in) provided by financing activities		(2,806,000		)		2,073,000
Net (decrease) increase in cash and cash equivalents		(1,872,000		)		7,005,000
Cash and cash equivalents, including restricted cash, at beginning of the year		10,006,000				3,001,000
Cash and cash equivalents, including restricted cash, at end of the year		$	8,134,000			$	10,006,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest		$	100,000			$	106,000
Income taxes		324,000				139,000
Supplemental disclosures of noncash investing and financing activities:
Equipment acquired under capital leases		$	87,000			$	151,000

Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Revenue and "Revenue, Net of Subcontractor Costs"
		Fiscal Year Ended
								Change
		December 27, 2013			December 28, 2012			$				%
Contract revenue		$	85,510,000		$	93,443,000		$	(7,933,000	)			(8	%	)
Subcontractor costs		16,840,000			36,184,000			(19,344,000		)		(53		%	)
Revenue, net of subcontractor costs		68,670,000			57,259,000			11,411,000				20		%

Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
The following is a reconciliation of net income (loss) to Adjusted EBITDA:
		Fiscal Year
		2013				2012				2011				2010				2009
Net income (loss)		$	2,630			$	(17,300	)		$	1,830			$	2,720			$	(5,575	)
Interest income		(10		)		(6		)		(5		)		(12		)		(30		)
Interest expense		94				106				77				54				38
Income tax expense (benefit)		132				(2,083		)		1,500				344				(1,931		)
Lease abandonment expense (recovery)		30				26				2				(68		)		707
Impairment of goodwill		—				15,208				—				—				2,763
Depreciation and amortization		585				737				944				1,053				1,814
(Gain) loss on sale of assets		(6		)		18				2				(17		)		6
Litigation reversal		—				—				—				—				(1,125		)
Adjusted EBITDA		$	3,455			$	(3,294	)		$	4,350			$	4,074			$	(3,333	)

Willdan Group, Inc.
Stacy McLaughlin
Chief Financial Officer
Tel: 714-940-6300
smclaughlin@willdan.com
or
Investor/Media Contact
Financial Profiles, Inc.
Tel: 310-478-2700
Moira Conlon: mconlon@finprofiles.com
Jody Cain: jcain@finprofiles.com

Source: Willdan Group

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