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Willdan Reports Fourth Quarter 2008 and Fiscal Year 2008 Financial Results
ANAHEIM, Calif., Mar 31, 2009 (BUSINESS WIRE) -- Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN), a provider of outsourced engineering, public finance and homeland security services to public agencies primarily in California and other western states, today announced financial results for its fourth quarter and fiscal year 2008 ended January 2, 2009.
For the fourth quarter of 2008, Willdan reported total contract revenue of $19.0 million and a net loss of $1.2 million, or $0.17 per basic and diluted share. The fourth quarter results reflect lease abandonment expenses of $742,000 related to office closures and space reductions and a goodwill impairment charge of $148,000 related to Willdan's Homeland Security Services reporting unit.
For the fiscal year ended January 2, 2009, Willdan reported total contract revenue of $73.2 million and a net loss of $1.6 million, or $0.22 per basic and diluted share.
Tom Brisbin, Willdan's Chief Executive Officer, stated: "In our fourth quarter, we took sharp measures to reduce our indirect cost structure to be in line with our anticipated revenue for 2009.These measures included terminating certain staff and exiting geographies that were not generating sufficient backlog to support continued operations.2008 was a challenging year for Willdan, however, from a liquidity standpoint, we continued to generate positive cash flow from operations and ended the quarter with $8.1 million in cash and cash equivalents.In December 2008 and March 2009, we amended our credit agreement to relax or eliminate certain financial covenants while reducing the revolving loan commitment from $10 million to $5 million and increasing the underlying collateral. In 2009, we will continue to execute on our business development strategies and will make mid-course changes to improve internal operations as needed."
Fourth Quarter 2008 Results
For the fourth quarter of fiscal 2008, revenue was $19.0 million, up $0.3 million, or 1.6%, from revenue of $18.7 million for the comparable period last year. On a sequential basis, revenue was up $0.3 million, or 1.6%, from the third quarter of 2008. Loss from operations was $2.0 million for the fourth quarter of fiscal 2008, as compared to income from operations of $0.3 million for the comparable period last year. On a sequential basis, loss from operations increased by $1.3 million from $0.7 million in the third quarter of 2008.
Net loss was $1.2 million for the fourth quarter of fiscal 2008, as compared to net income of $0.3 million in the comparable period last year and a net loss of $0.4 million in the third quarter of 2008.
Basic and diluted loss per share for the fourth quarter of fiscal 2008 was $0.17 as compared to basic and diluted earnings per share of $0.04 for the comparable period last year.
Willdan generated cash flow from operations of $0.4 million in the fourth quarter of fiscal year 2008.
Fiscal Year 2008 Results
Revenue for fiscal year 2008 was $73.2 million, down $5.6 million, or 7.1%, from revenue of $78.8 million for fiscal year 2007. Loss from operations was $2.8 million for fiscal year 2008 as compared to income from operations of $2.5 million for fiscal year 2007. Net loss was $1.6 million for fiscal year 2008 as compared to net income of $2.1 million for fiscal year 2007.
Basic and diluted loss per share for fiscal year 2008 was $0.22 as compared to basic and diluted earnings per share of $0.30 for fiscal year 2007.
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| In thousands (except EPS data) | Jan. 2, 2009 | Dec. 28, 2007 | Jan. 2, 2009 | Dec. 28, 2007 | ||||||||||||
| Revenue | $ | 18,956 | $ | 18,663 | $ | 73,190 | $ | 78,798 | ||||||||
| (Loss) income from operations | (2,009 | ) | 284 | (2,800 | ) | 2,522 | ||||||||||
| Interest income, net | 21 | 136 | 280 | 1,192 | ||||||||||||
| Other, net | (32 | ) | (23 | ) | (15 | ) | (27 | ) | ||||||||
| Income tax benefit (expense) | 791 | (114 | ) | 930 | (1,543 | ) | ||||||||||
| Net (loss) income | $ | (1,229 | ) | $ | 283 | $ | (1,605 | ) | $ | 2,144 | ||||||
| Basic and diluted (loss) earnings per share | $ | (0.17 | ) | $ | 0.04 | $ | (0.22 | ) | $ | 0.30 | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 7,164 | 7,150 | 7,159 | 7,149 | ||||||||||||
| Diluted | 7,164 | 7,151 | 7,160 | 7,150 | ||||||||||||
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 plus net interest expense, income tax expense (benefit), depreciation and amortization, goodwill impairment expense, lease abandonment expense, loss (gain) on sales of assets and accrued expenses related to a litigation matter. 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 from its operational results the impact of certain non-recurring income and expense items, 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 98.7% to $68,000 for fiscal year 2008 from $5.3 million for fiscal year 2007. Adjusted EBITDA, as a percentage of revenue, decreased to less than 0.1% for fiscal year 2008 from 6.7% for fiscal year 2007.
The following is a reconciliation of net (loss) income to Adjusted EBITDA:
| Fiscal Year | ||||||||
| 2008 | 2007 | |||||||
| Net (loss) income | $ | (1,605,000 | ) | $ | 2,144,000 | |||
| Interest income | (313,000 | ) | (693,000 | ) | ||||
| Interest expense, net of reversal | 33,000 | (499,000 | ) | |||||
| Loss on the sale of assets | 15,000 | 27,000 | ||||||
| Income tax (benefit) expense | (930,000 | ) | 1,543,000 | |||||
| Depreciation and amortization | 1,978,000 | 1,755,000 | ||||||
| Lease abandonment expense | 742,000 | -- | ||||||
| Impairment of goodwill | 148,000 | -- | ||||||
| Litigation accrual | -- | 1,049,000 | ||||||
| Adjusted EBITDA | $ | 68,000 | $ | 5,326,000 | ||||
Conference Call and Webcast
Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on March 31, 2009 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 877-835-3301 (303-262-2140 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.willdan.com under Investors: Events.
The telephonic replay of the conference call may be accessed approximately two hours after the call through April 14, 2009, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11128779#. 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, management and economic consulting, energy efficiency, water conservation, renewable energy, disaster preparedness and homeland security. www.willdan.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 January 2, 2009 to be filed on April 2, 2009. 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 CONSOLIDATED BALANCE SHEETS | ||||||
| January 2, 2009 | December 28, 2007 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 8,144,000 | $ | 15,511,000 | ||
| Liquid investments | -- | 1,300,000 | ||||
| Cash, cash equivalents and liquid investments | 8,144,000 | 16,811,000 | ||||
Accounts receivable, net of allowance for doubtful accounts of $662,000 and $372,000 at January 2, 2009 and December 28, 2007, respectively | 12,862,000 | 15,090,000 | ||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 8,281,000 | 7,336,000 | ||||
| Income tax receivable | 956,000 | -- | ||||
| Other receivables | 48,000 | 157,000 | ||||
| Prepaid expenses and other current assets | 1,784,000 | 2,067,000 | ||||
| Total current assets | 32,075,000 | 41,461,000 | ||||
| Equipment and leasehold improvements, net | 2,377,000 | 3,354,000 | ||||
| Goodwill | 11,145,000 | 2,911,000 | ||||
| Other intangible assets, net | 1,367,000 | 85,000 | ||||
| Other assets | 373,000 | 415,000 | ||||
| Deferred income taxes, net of current portion | 233,000 | -- | ||||
| Total assets | $ | 47,570,000 | $ | 48,226,000 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Excess of outstanding checks over bank balance | $ | 448,000 | $ | 633,000 | ||
| Accounts payable | 2,111,000 | 1,136,000 | ||||
| Purchase price payable | 1,000,000 | -- | ||||
| Accrued liabilities | 5,253,000 | 5,314,000 | ||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 704,000 | 941,000 | ||||
| Current portion of notes payable | 52,000 | 1,088,000 | ||||
| Current portion of capital lease obligations | 168,000 | 176,000 | ||||
| Current portion of deferred income taxes | 2,519,000 | 2,002,000 | ||||
| Total current liabilities | 12,255,000 | 11,290,000 | ||||
| Notes payable, less current portion | 17,000 | -- | ||||
| Capital lease obligations, less current portion | 157,000 | 283,000 | ||||
| Deferred lease obligations | 805,000 | 606,000 | ||||
| Deferred income taxes, less current portion | -- | 395,000 | ||||
| Total liabilities | 13,234,000 | 12,574,000 | ||||
| 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; 7,164,000 and 7,150,000 shares issued and outstanding at January 2, 2009 and December 28, 2007, respectively | 72,000 | 71,000 | ||||
| Additional paid-in capital | 33,084,000 | 32,796,000 | ||||
| Retained earnings | 1,180,000 | 2,785,000 | ||||
| Total stockholders' equity | 34,336,000 | 35,652,000 | ||||
| Total liabilities and stockholders' equity | $ | 47,570,000 | $ | 48,226,000 | ||
WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| Fiscal Year | ||||||||||||
| 2008 | 2007 | 2006 | ||||||||||
| Contract revenue | $ | 73,190,000 | $ | 78,798,000 | $ | 78,339,000 | ||||||
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below): | ||||||||||||
| Salaries and wages | 21,991,000 | 25,769,000 | 24,602,000 | |||||||||
| Subconsultant services | 7,750,000 | 4,600,000 | 4,168,000 | |||||||||
| Other direct costs | 2,973,000 | 1,568,000 | 1,496,000 | |||||||||
| Total direct costs of contract revenue | 32,714,000 | 31,937,000 | 30,266,000 | |||||||||
| Gross profit | 40,476,000 | 46,861,000 | 48,073,000 | |||||||||
| General and administrative expenses: | ||||||||||||
| Salaries and wages, payroll taxes and employee benefits | 24,439,000 | 25,061,000 | 26,051,000 | |||||||||
| Facilities and facility related | 4,803,000 | 4,546,000 | 4,046,000 | |||||||||
| Stock-based compensation | 214,000 | 209,000 | 38,000 | |||||||||
| Depreciation and amortization | 1,978,000 | 1,747,000 | 1,584,000 | |||||||||
| Lease abandonment | 742,000 | -- | -- | |||||||||
| Impairment of goodwill | 148,000 | -- | -- | |||||||||
| Litigation accrual (reversal) | -- | 1,049,000 | (1,049,000 | ) | ||||||||
| Other | 10,952,000 | 11,727,000 | 10,359,000 | |||||||||
| Total general and administrative expenses | 43,276,000 | 44,339,000 | 41,029,000 | |||||||||
| (Loss) income from operations | (2,800,000 | ) | 2,522,000 | 7,044,000 | ||||||||
| Other (expense) income: | ||||||||||||
| Interest income | 313,000 | 693,000 | 135,000 | |||||||||
| Interest expense | (33,000 | ) | 499,000 | (773,000 | ) | |||||||
| Other, net | (15,000 | ) | (27,000 | ) | 2,335,000 | |||||||
| Total other income | 265,000 | 1,165,000 | 1,697,000 | |||||||||
| (Loss) income before income tax expense | (2,535,000 | ) | 3,687,000 | 8,741,000 | ||||||||
| Income tax (benefit) expense | (930,000 | ) | 1,543,000 | 2,021,000 | ||||||||
| Net (loss) income | $ | (1,605,000 | ) | $ | 2,144,000 | $ | 6,720,000 | |||||
| (Loss) earnings per share: | ||||||||||||
| Basic and diluted | $ | (0.22 | ) | $ | 0.30 | $ | 1.37 | |||||
| Weighted-average shares outstanding: | ||||||||||||
| Basic | 7,159,000 | 7,149,000 | 4,900,000 | |||||||||
| Diluted | 7,160,000 | 7,150,000 | 4,900,000 | |||||||||
| Pro Forma Data (unaudited): | ||||||||||||
| Pro forma provision for income taxes | $ | 2,596,000 | ||||||||||
| Pro forma net income (loss) | $ | 6,145,000 | ||||||||||
| Pro forma earnings per common share, basic and diluted | $ | 1.25 | ||||||||||
WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| Fiscal Year | ||||||||||||
| 2008 | 2007 | 2006 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net (loss) income | $ | (1,605,000 | ) | $ | 2,144,000 | $ | 6,720,000 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||
| Depreciation and amortization | 1,978,000 | 1,755,000 | 1,584,000 | |||||||||
| Impairment of goodwill | 148,000 | -- | -- | |||||||||
| Lease abandonment expense | 742,000 | -- | -- | |||||||||
| Loss (gain) on sale of equipment | 17,000 | 28,000 | (13,000 | ) | ||||||||
| Allowance for doubtful accounts | 585,000 | 212,000 | 481,000 | |||||||||
| Stock-based compensation | 214,000 | 209,000 | 38,000 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 3,266,000 | (1,032,000 | ) | (3,071,000 | ) | |||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 187,000 | 624,000 | (731,000 | ) | ||||||||
| Income tax receivable | (956,000 | ) | -- | -- | ||||||||
| Other receivables | 53,000 | 4,348,000 | (1,090,000 | ) | ||||||||
| Prepaid expenses and other current assets | 292,000 | (209,000 | ) | (535,000 | ) | |||||||
| Other assets | 50,000 | 69,000 | (8,000 | ) | ||||||||
| Accounts payable | (186,000 | ) | (134,000 | ) | 226,000 | |||||||
| Accrued liabilities | (831,000 | ) | (8,792,000 | ) | 1,026,000 | |||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | (236,000 | ) | (281,000 | ) | (134,000 | ) | ||||||
| Deferred income taxes | (112,000 | ) | 737,000 | 1,602,000 | ||||||||
| Deferred lease obligations | (60,000 | ) | 59,000 | 178,000 | ||||||||
| Net cash provided by (used in) operating activities | 3,546,000 | (263,000 | ) | 6,273,000 | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of equipment and leasehold improvements | (552,000 | ) | (654,000 | ) | (2,822,000 | ) | ||||||
| Proceeds from sale of equipment | 49,000 | 35,000 | 5,000 | |||||||||
| Purchase of other assets | (75,000 | ) | -- | (100,000 | ) | |||||||
| Payments for business acquisitions, net of cash acquired | (10,236,000 | ) | -- | -- | ||||||||
| Purchase of liquid investments | (7,100,000 | ) | (22,800,000 | ) | -- | |||||||
| Proceeds from sale of liquid investments | 8,400,000 | 21,500,000 | -- | |||||||||
| Net cash used in investing activities | (9,514,000 | ) | (1,919,000 | ) | (2,917,000 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Changes in excess of outstanding checks over bank balance | (185,000 | ) | 376,000 | (115,000 | ) | |||||||
| Payments on notes payable | (1,119,000 | ) | (1,210,000 | ) | (1,482,000 | ) | ||||||
| Proceeds from notes payable | -- | 1,184,000 | 973,000 | |||||||||
| 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 | (170,000 | ) | (175,000 | ) | (158,000 | ) | ||||||
| Payments on liabilities to stockholders | -- | -- | (3,000 | ) | ||||||||
| Proceeds from stockholder 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 sales of common stock under employee stock purchase plan | 75,000 | 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 (used in) provided by financing activities | (1,399,000 | ) | (2,940,000 | ) | 14,211,000 | |||||||
| Net (decrease) increase in cash and cash equivalents | (7,367,000 | ) | (5,122,000 | ) | 17,567,000 | |||||||
| Cash and cash equivalents at beginning of the year | 15,511,000 | 20,633,000 | 3,066,000 | |||||||||
| Cash and cash equivalents at end of the year | $ | 8,144,000 | $ | 15,511,000 | $ | 20,633,000 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | 34,000 | $ | 84,000 | $ | 143,000 | ||||||
| Income taxes | 853,000 | 902,000 | 72,000 | |||||||||
| Supplemental disclosures of noncash investing and financing activities: | ||||||||||||
| Equipment acquired under capital leases | $ | 42,000 | $ | 147,000 | $ | 386,000 | ||||||
| Note payable issued in connection with acquisition of assets | 100,000 | -- | 150,000 | |||||||||
| Purchase price payable | 1,000,000 | -- | -- | |||||||||
| Accrued final distributions to holders of redeemable common stock | -- | -- | 3,150,000 | |||||||||
SOURCE: Willdan Group, Inc.
Willdan Group, Inc.
Kimberly Gant
Chief Financial Officer
714-940-6329
kgant@willdan.com
or
Financial Profiles, Inc.
Moira Conlon, 310-277-4907
mconlon@finprofiles.com
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