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Willdan Reports Fourth Quarter 2007 and Fiscal Year 2007 Financial Results
ANAHEIM, Calif., Mar 27, 2008 (BUSINESS WIRE) -- Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN), announces financial results for its fourth quarter and fiscal year ended December 28, 2007.
For the fourth quarter of 2007, Willdan reported total contract revenue of $18.7 million and net income of $0.3 million, or $0.04 per basic and diluted share.
The fourth quarter reflected a one-time, non-cash charge of $1.0 million related to the reversal of a litigation-related receivable that was originally recorded in the third quarter of fiscal year 2006.
Tom Brisbin, Willdan's Chief Executive Officer, stated: "Coming out of our fourth quarter, I was pleased with our operating results, given the amount of change that took place during 2007. It was unfortunate that we received word that this litigation receivable, which related to a claim back in 2002, was no longer collectible. While revenue in Q4 was down slightly, we posted operating margins of 7% and generated cash flow from operations. I see positive trends happening and I look forward to future growth at Willdan."
For the fiscal year ended December 28, 2007, Willdan reported total contract revenue of $78.8 million and net income of $2.1 million, or $0.30 per basic and diluted share.
Fourth Quarter 2007 Results
For the fourth quarter of fiscal 2007, revenue was $18.7 million, down $0.6 million, or 3.3%, from revenue of $19.3 million for the comparable period last year. On a sequential basis, revenue was down $1.0 million, or 5.2% from the third quarter of 2007. Income from operations was $0.3 million for the fourth quarter of fiscal 2007, down $1.0 million, or 77.7% from income from operations of $1.3 million for the comparable period last year. On a sequential basis, income from operations was down $1.4 million, or 82.9% over the third quarter of 2007.
In the third quarter of fiscal 2006, Willdan received a favorable litigation judgment. The plaintiff subsequently appealed the judgment and in February 2008, the judgment was overturned. Accordingly, Willdan reversed the $1.0 million receivable in its fourth quarter of fiscal 2007. Excluding this reversal, income from operations for the fourth quarter of fiscal 2007 would have been $1.3 million, up 4.1% from the comparable period last year and down 19.6% on a sequential basis.
Net income was $0.3 million for the fourth quarter of fiscal 2007, up $1.0 million from the comparable period last year and down $0.8 million, or 73.1%, on a sequential basis. Net income in fiscal year 2006 was impacted by the Company's change in tax status from an S Corporation status to a C Corporation upon the completion of the initial public offering in November 2007. Pro forma net income for the fourth quarter of fiscal 2006 would have been $0.7 million assuming taxation as a C Corporation during the entire year 2006. Excluding the aforementioned litigation receivable reversal, net income for the fourth quarter of fiscal 2007 would have been $0.9 million, up 21.1% over pro forma net income of $0.7 million in the fourth quarter of fiscal 2006.
Basic and diluted earnings (loss) per share for the fourth quarter of fiscal 2007 was $0.04 as compared to $(0.14) for the comparable period last year, or $0.13 on a pro forma basis giving effect to additional income tax expense. Excluding the litigation receivable reversal, basic and diluted earnings per share for the fourth quarter of fiscal 2007 would have been $0.12.
Willdan generated cash flow from operations of $1.1 million in the fourth quarter of fiscal year 2007.
Fiscal Year 2007 Results
For the twelve months ended December 28, 2007, revenue was $78.8 million, up $0.5 million, or 0.6% from revenue of $78.3 million for the comparable period last year. Income from operations was $2.5 million for the twelve months ended December 28, 2007, down $4.5 million, or 64.3%, from the comparable period last year. Net income was $2.1 million for the twelve months ended December 28, 2007, down $4.6 million, or 68.7% from the comparable period last year.
Basic and diluted earnings per share for fiscal year 2007 were $0.30 as compared to $1.37 for the comparable period last year or $1.25 on a pro forma basis. Excluding the litigation receivable reversal, basic and diluted earnings per share for fiscal 2007 would have been $0.38.
Three Months Twelve Months
Ended Ended
--------------- ---------------
Dec. Dec. Dec. Dec.
28, 29, 28, 29,
In thousands (except EPS data) 2007 2006 2007 2006
------- ------- ------- -------
Revenue $18,663 $19,292 $78,798 $78,339
--------------- ---------------
Income from operations 284 1,273 2,522 7,044
Interest income (expense) 28 177 499 (773)
Other, net 141 102 666 2,470
Income tax expense 114 1,942 1,543 2,021
------- ------- ------- -------
Net income (loss) $ 283 $ (744)$ 2,144 $ 6,720
======= ======= ======= =======
Basic and Diluted EPS:
Net income (loss) $ 0.04 $ (0.14)$ 0.30 $ 1.37
Weighted average shares outstanding:
Basic 7,150 5,464 7,149 4,900
Diluted 7,151 5,464 7,150 4,900
Pro Forma Data (unaudited)(1):
Pro forma income tax expense $ 478 $ 2,596
Pro forma net income $ 720 $ 6,145
Pro forma EPS, basic and diluted $ 0.13 $ 1.25
(1) Assumes the Company was taxed as a C corporation during the three
and twelve months ended December 29, 2006.
Outlook
The following statement is based on current expectations. This statement is forward-looking and actual results could differ materially from current expectations. This outlook should be read in conjunction with the information on forward-looking statements at the end of this press release.
Willdan expects to report revenue between $80 and $83 million for fiscal year 2008.
Conference Call and Webcast
Chief Executive Officer Thomas Brisbin, Chief Operations Officer Mallory McCamant and Chief Financial Officer Kimberly Gant plan to host a conference call on March 27, 2008 at 5:00 p.m. Eastern/2:00 p.m. Pacific to further discuss the Company's financial results and business developments.
Interested parties may access the conference call by dialing 800-257-1836 (303-275-2170 for international callers). When prompted, ask for the "Willdan Group Investor Conference Call." The conference call will be webcast simultaneously on Willdan's website at www.willdangroup.com under Investor Relations: Events.
The telephonic replay of the conference call may be accessed approximately two hours after the call through April 10, 2008, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11111158#. The webcast replay will be archived for 12 months.
About Willdan Group, Inc.
Founded over 40 years ago, Willdan Group, Inc. is a leading provider of outsourced services to public agencies located primarily in California and other western states. Willdan Group, Inc. assists cities and other government agencies with a broad range of services, including civil engineering, building and safety services, geotechnical engineering, financial and economic consulting, and disaster preparedness and homeland security. www.willdangroup.com
Forward-Looking Statements
Safe Harbor Statement: Statements in this press release which are not purely historical, including statements regarding Willdan Group'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 the Company 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 the Company'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. The Company's business could be affected by a number of other factors, including the risk factors listed from time to time in the Company's SEC reports including, but not limited to, the Form 10-K annual report for the year ended December 28, 2007 filed on March 27, 2008. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Willdan Group, Inc. disclaims any obligation, 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
December 28, December 29,
2007 2006
------------------------------------------ ------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 15,511,000 $ 20,633,000
Liquid investments 1,300,000 --
------------ ------------
Cash, cash equivalents and liquid
investments 16,811,000 20,633,000
------------ ------------
Accounts receivable, net of allowance
for doubtful accounts of $372,000 and
$492,000 at December 28, 2007 and
December 29, 2006, respectively 15,090,000 14,270,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 7,336,000 7,960,000
Other receivables 157,000 4,505,000
Prepaid expenses and other current
assets 2,067,000 1,858,000
------------ ------------
Total current assets 41,461,000 49,226,000
Equipment and leasehold improvements, net 3,354,000 4,372,000
Goodwill 2,911,000 2,911,000
Other assets 500,000 599,000
------------ ------------
Total assets $ 48,226,000 $ 57,108,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over bank
balance $ 633,000 $ 257,000
Accounts payable 1,136,000 1,270,000
Accrued liabilities 5,314,000 14,106,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts 941,000 1,222,000
Accrued final distribution payable to
holders of redeemable common stock -- 3,150,000
Current portion of notes payable 1,088,000 993,000
Current portion of notes payable to
related parties -- 75,000
Current portion of capital lease
obligations 176,000 170,000
Current portion of deferred income
taxes 2,002,000 1,262,000
------------ ------------
Total current liabilities 11,290,000 22,505,000
Notes payable to related parties, less
current portion -- 46,000
Capital lease obligations, less current
portion 283,000 348,000
Deferred lease obligations 606,000 547,000
Deferred income taxes, net of current
portion 395,000 398,000
------------ ------------
Total liabilities 12,574,000 23,844,000
------------ ------------
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:
7,150,000 and 7,148,000 shares issued and
outstanding at December 28, 2007 and
December 29, 2006, respectively 71,000 71,000
Additional paid-in capital 32,796,000 32,552,000
Retained earnings 2,785,000 641,000
------------ ------------
Total stockholders' equity 35,652,000 33,264,000
------------ ------------
Total liabilities and
stockholders' equity $ 48,226,000 $ 57,108,000
============ ============
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
------------------------ -----------------------
(Unaudited)
December December December December
28, 2007 29, 2006 28, 2007 29, 2006
----------- ----------- ---------- -----------
Contract revenue $18,663,000 $19,292,000 $78,798,000 $78,339,000
----------- ----------- ---------- -----------
Direct costs of
contract revenue:
Salaries and
wages 5,954,000 6,032,000 25,769,000 24,602,000
Production
expenses 339,000 347,000 1,568,000 1,496,000
Subconsultant
services 1,162,000 1,002,000 4,600,000 4,168,000
----------- ----------- ---------- -----------
Total direct
costs of
contract
revenue 7,455,000 7,381,000 31,937,000 30,266,000
----------- ----------- ---------- -----------
General and
administrative
expenses:
Salaries and
wages, payroll
taxes and
employee
benefits 5,801,000 6,390,000 25,061,000 26,051,000
Facilities 1,141,000 1,067,000 4,546,000 4,046,000
Stock-based
compensation 209,000 38,000 209,000 38,000
Depreciation and
amortization 412,000 447,000 1,747,000 1,584,000
Litigation
accrual
(reversal) 1,049,000 -- 1,049,000 (1,049,000)
Other 2,521,000 2,734,000 11,727,000 10,359,000
----------- ----------- ---------- -----------
Total general
and
administrative
expenses 10,924,000 10,638,000 44,339,000 41,029,000
----------- ----------- ---------- -----------
Income from
operations 284,000 1,273,000 2,522,000 7,044,000
----------- ----------- ---------- -----------
Other income
(expense):
Interest (28,000) (177,000) 499,000 (773,000)
Other, net 141,000 102,000 666,000 2,470,000
----------- ----------- ---------- -----------
Total other
income
(expenses) 113,000 (75,000) 1,165,000 1,697,000
----------- ----------- ---------- -----------
Income before
income tax
expense 397,000 1,198,000 3,687,000 8,741,000
Income tax expense 114,000 1,942,000 1,543,000 2,021,000
----------- ----------- ---------- -----------
Net income
(loss) $ 283,000 $ (774,000) $ 2,144,000 $ 6,720,000
=========== =========== ========== ===========
Earnings (loss) per
share:
Basic and
diluted $ 0.04 $ (0.14) $ 0.30 $ 1.37
Weighted-average
shares
outstanding:
Basic 7,150,000 5,464,000 7,149,000 4,900,000
Diluted 7,151,000 5,464,000 7,150,000 4,900,000
Pro Forma Data:
Pro forma provision
for income taxes $ 478,000 $ 2,596,000
Pro forma net
income $ 720,000 $ 6,145,000
Pro forma income
per common share,
basic and diluted $ 0.13 $ 1.25
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
---------------------------
December 28, December 29,
2007 2006
------------- ------------
Cash flows from operating activities:
Net income $ 2,144,000 $ 6,720,000
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,755,000 1,584,000
Loss (gain) on sale of equipment 28,000 (13,000)
Allowance for doubtful accounts 212,000 481,000
Stock-based compensation 209,000 38,000
Changes in operating assets and
liabilities:
Accounts receivable (1,032,000) (3,071,000)
Costs and estimated earnings in
excess of billing on
uncompleted contracts 624,000 (731,000)
Other receivables 4,348,000 (1,090,000)
Prepaid expenses and other
current assets (209,000) (535,000)
Other assets 69,000 (8,000)
Accounts payable (134,000) 226,000
Accrued liabilities (8,792,000) 1,026,000
Billings in excess of costs and
estimated earnings on
uncompleted contracts (281,000) (134,000)
Deferred income taxes 737,000 1,602,000
Deferred lease obligations 59,000 178,000
------------ ------------
Net cash provided by (used
in) operating activities (263,000) 6,273,000
------------ ------------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (654,000) (2,822,000)
Proceeds from sale of equipment 35,000 5,000
Purchase of other assets -- (100,000)
Purchase of liquid investments (22,800,000) --
Proceeds from sale of liquid
investments 21,500,000 --
------------ ------------
Net cash used in investing
activities (1,919,000) (2,917,000)
------------ ------------
Cash flows from financing activities:
Changes in excess of outstanding checks
over bank balance 376,000 (115,000)
Payments on notes payable (1,210,000) (1,482,000)
Proceeds from notes payable 1,184,000 973,000
Proceeds from borrowings under line of
credit 418,000 11,700,000
Repayments of line of credit (418,000) (11,700,000)
Principal payments on capital leases (175,000) (158,000)
Payments on liabilities to stockholders -- (3,000)
Proceeds from stockholders receivables -- 38,000
Proceeds from issuance of redeemable
common stock -- 18,000
Proceeds from issuance of common stock
in the initial public offering -- 22,646,000
Proceeds from employee stock purchase
plan 25,000 --
Distributions to holders of redeemable
common stock (3,150,000) (5,484,000)
Refund (payment) of offering costs 10,000 (2,222,000)
------------ ------------
Net cash provided by (used
in) financing activities (2,940,000) 14,211,000
------------ ------------
Net increase (decrease) in cash and cash
equivalents (5,122,000) 17,567,000
Cash and cash equivalents at beginning of
the year 20,633,000 3,066,000
------------ ------------
Cash and cash equivalents at end of the
year $ 15,511,000 $ 20,633,000
============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 84,000 $ 143,000
Income taxes 902,000 72,000
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under capital leases $ 147,000 $ 386,000
Note payable issued in connection with
acquisition of assets -- 150,000
Accrued final distributions to holders
of redeemable common stock -- 3,150,000
Use of Non-GAAP Financial Measures
Our fourth quarter of fiscal 2007 reflected a one-time, non-cash charge of $1.0 million related to the reversal of a litigation-related receivable that was originally recorded in the third quarter of fiscal year 2006. By excluding this one-time, non-cash charge, we believe our results of operations for the fourth quarter of 2007 are more comparable to our fourth quarter results of 2006 because it removes the non-recurring charge. Therefore, along with the GAAP measures of income from operations, net income and basic and diluted earnings per share, we have presented these measures excluding the impact of this expense, which are non-GAAP measures.
The following is a reconciliation of income from operations to income from operations excluding the one-time reversal of litigation receivable (in thousands):
Fourth Quarter
----------------
2007 2006
------- -------
Income from operations $ 284 $1,273
Litigation receivable reversal 1,049 --
------- -------
Income from operations excluding the one-time
reversal of litigation $1,333 $1,273
======= =======
The following is a reconciliation of net income to net income excluding the one-time reversal of litigation receivable (in thousands):
Fourth Quarter
--------------
2007 2006
------ -------
Net income (loss) $ 283 $ (744)
Litigation receivable reversal, net of income tax
effect 589 --
------ -------
Net income (loss) excluding the one-time reversal of
litigation $ 872 $ (744)
====== =======
The following is a reconciliation of basic and diluted earnings per share to basic and diluted earnings per share excluding the one-time reversal of litigation receivable:
Fourth Quarter
---------------
2007 2006
------ --------
Basic and diluted earnings (loss) per share $0.04 $(0.14)
Litigation receivable reversal per basic and diluted
earnings per
share $0.08 --
------ --------
Basic and diluted earnings (loss) per share excluding
the one-time reversal of litigation $0.12 $(0.14)
====== ========
Adjusted EBITDA is a supplemental measure used by our management to measure our operating performance. We define Adjusted EBITDA as net income plus net interest expense, income tax expense (benefit), depreciation and amortization, loss (gain) on sales of assets, accrued expenses related to a litigation matter and a one-time stock-based compensation expense recorded in anticipation of the initial public offering, less proceeds from life insurance policies carried on our former chief executive officer. Our 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. We believe Adjusted EBITDA enables management to separate non-recurring income and expense items from our results of operations to provide a more normalized and consistent view of operating performance on a period-to-period basis. We use Adjusted EBITDA to evaluate our performance for, among other things, budgeting, forecasting and incentive compensation purposes. We also believe Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes from our operational results the impact of certain non-recurring income and expense items, which may facilitate comparison of our 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 29.9% to $5.4 million for fiscal year 2007 from $7.7 million for fiscal 2006. Adjusted EBITDA, as a percentage of revenue, decreased to 6.9% for fiscal 2007 from 9.8% for fiscal 2006.
The following is a reconciliation of net income to Adjusted EBITDA (in thousands):
Fiscal Year
----------------
2007 2006
------- --------
Net income (loss) $2,144 $ 6,720
Interest income (649) (135)
Interest expense (499) 773
Income tax provision 1,543 2,021
Depreciation and amortization 1,747 1,584
Loss (gain) on sale of assets 28 (13)
Life insurance proceeds -- (2,250)
Litigation accrual (reversal) 1,049 (1,049)
------- --------
Adjusted EBITDA $5,363 $ 7,651
======= ========
SOURCE: Willdan Group, Inc.
Willdan Group, Inc. Mallory McCamant, Chief Operations Officer, 714-940-6327 mallory@willdangroup.com or Kimberly Gant, Chief Financial Officer, 714-940-6329 kgant@willdangroup.com or Financial Profiles, Inc. Moira Conlon, 310-277-4907 mconlon@finprofiles.com
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