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Willdan Reports Third Quarter 2007 Financial Results
ANAHEIM, Calif., Nov 08, 2007 (BUSINESS WIRE) -- Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN), announces financial results for its third quarter ended September 28, 2007.
For the third quarter of 2007, Willdan reported total contract revenue of $19.7 million and net income of $1.1 million, or $0.15 per basic and diluted share.
Key Operational Highlights for the Third Quarter 2007
-- Increased profitability and positive cash flow from operations; and
-- Strengthened our business development team through the appointments of Crescent Wells as Director of Marketing Support.
Third Quarter Results
For the third quarter of fiscal 2007, revenue was $19.7 million, down $1.3 million, or 6.0%, from revenue of $21.0 million for the comparable period last year. On a sequential basis, revenue was down $1.5 million, or 7.0% from the second quarter of 2007. Income from operations was $1.7 million for the third quarter of fiscal 2007, down $1.3 million, or 43.1% from the comparable period last year. On a sequential basis, income from operations was flat over the second quarter of 2007 at $1.7 million. Net income was $1.1 million for the third quarter of fiscal 2007, down $1.6 million, or 61.0% from the comparable period last year and was flat on a sequential basis. Our net income decreased in the third quarter of fiscal 2007 compared to the third quarter of fiscal 2006 in part because of a one-time $1.0 million reduction of a litigation accrual the Company recognized in the third quarter of fiscal 2006 related to a favorable litigation judgment. Further, prior to the Company's initial public offering, or IPO, of its common stock in November 2006, the Company was considered a qualified S Corporation for federal and state income tax purposes. Upon the completion of the IPO, the Company's S Corporation status terminated and the Company became subject to federal and state income taxes as a C Corporation. Pro forma net income for the third quarter of fiscal 2006 would have been $1.6 million assuming the Company had been taxed during that period as a C Corporation. Basic and diluted earnings per share for the third quarter of fiscal 2007 was $0.15 as compared to $0.57 for the comparable period last year or $0.35 on a pro forma basis giving effect to additional income tax expense.
Willdan generated cash flow from operations of $2.5 million in the third fiscal quarter of 2007.
Nine Months Results
For the nine months ended September 28, 2007, revenue was $60.1 million, up $1.1 million, or 1.8% from revenue of $59.0 million for the comparable period last year. Income from operations was $2.2 million for the first nine months of fiscal 2007, down $3.5 million, or 61.2%, from the comparable period last year. Net income was $1.9 million for the first nine months of fiscal 2007, down $5.6 million, or 75.1% from the comparable period last year. Our net income decreased in the third quarter of fiscal 2007 compared to the third quarter of fiscal 2006 in part because the Company recognized one-time income of $2.3 million for life insurance proceeds received as a result of the death of its former Chief Executive Officer during the nine months ended September 29, 2006 and a one-time $1.0 million reduction of a litigation accrual during the nine months ended September 29, 2006, as previously mentioned. Further, giving effect to additional income tax expense, pro forma net income for the nine months ended September 29, 2006 would have been $5.4 million. Basic and diluted earnings per share for the first nine months of fiscal 2007 was $0.26 as compared to $1.58 for the comparable period last year or $1.15 on a pro forma basis.
Three Months
Ended Nine Months Ended
----------------- -----------------
Sept 28, Sept 29, Sept 28, Sept 29,
In thousands (except EPS data) 2007 2006 2007 2006
-------- -------- -------- --------
Revenue $19,687 $20,954 $60,135 $59,047
----------------- -----------------
Income from operations 1,657 2,912 2,238 5,771
Interest expense (23) (185) 527 (596)
Interest income and other, net 197 13 525 2,368
Income tax expense 778 41 1,429 79
-------- -------- -------- --------
Net income $ 1,053 $ 2,699 $ 1,861 $ 7,464
======== ======== ======== ========
Basic and Diluted EPS:
Net income $ 0.15 $ 0.57 $ 0.26 $ 1.58
Weighted average shares
outstanding:
Basic 7,150 4,713 7,148 4,712
Diluted 7,161 4,713 7,154 4,712
Pro Forma Data (unaudited)(1):
Pro forma income tax expense $ 1,096 $ 2,117
Pro forma net income $ 1,644 $ 5,426
Pro forma EPS, basic and diluted $ 0.35 $ 1.15
(1) Assumes the Company was taxed as a C corporation during the three
and nine months ended September 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 revises its previously disclosed outlook of $86 million to $90 million in revenue for its fiscal year 2007 and now expects to report revenue between $78 and $80 million for fiscal year 2007.
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 November 8, 2007 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 800-218-0204 (303-262-2191 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 November 22, 2007, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11101325#. 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 29, 2006 filed on March 27, 2007. 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 29, September 28,
2006 2007
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 20,633,000 $ 6,207,000
Liquid investments -- 9,000,000
------------ -------------
Cash, cash equivalents and liquid
investments 20,633,000 15,207,000
------------ -------------
Accounts receivable, net of allowance
for doubtful accounts of $492,000 and
$650,000 at December 29, 2006 and
September 28, 2007, respectively 14,270,000 14,364,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 7,960,000 7,738,000
Other receivables 4,505,000 1,376,000
Prepaid expenses and other current
assets 1,858,000 1,025,000
------------ -------------
Total current assets 49,226,000 39,710,000
Equipment and leasehold improvements, net 4,372,000 3,690,000
Goodwill 2,911,000 2,911,000
Other assets 599,000 525,000
------------ -------------
Total assets $ 57,108,000 $ 46,836,000
============ =============
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over
bank balance $ 257,000 $ 1,089,000
Borrowings under line of credit -- 31,000
Accounts payable 1,270,000 1,003,000
Accrued liabilities 14,106,000 5,477,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,222,000 1,112,000
Accrued final distribution payable to
holders of redeemable common stock 3,150,000 --
Current portion of notes payable 993,000 23,000
Current portion of notes payable to
related parties 75,000 --
Current portion of capital lease
obligations 170,000 178,000
Current portion of deferred income
taxes 1,693,000 1,693,000
------------ -------------
Total current liabilities 22,936,000 10,606,000
------------ -------------
Notes payable to related parties, less
current portion 46,000 --
Capital lease obligations, less current
portion 348,000 300,000
Deferred lease obligations 547,000 658,000
Deferred income taxes, net of current
portion 398,000 398,000
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:
7,148,000 and 7,150,000 shares
issued and outstanding at December
29, 2006 and September 28, 2007
respectively 71,000 71,000
Additional paid-in capital 32,552,000 32,732,000
Retained earnings 210,000 2,071,000
------------ -------------
Total stockholders' equity 32,833,000 34,874,000
------------ -------------
Total liabilities and
stockholders' equity $ 57,108,000 $ 46,836,000
============ =============
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September September September September
29, 2006 28, 2007 29, 2006 28, 2007
Contract revenues $20,954,000 $19,687,000 $59,047,000 $60,135,000
----------- ----------- ----------- ----------
Direct costs of
contract revenues:
Salaries and
wages 6,412,000 6,414,000 18,570,000 19,815,000
Production
expenses 381,000 432,000 1,149,000 1,229,000
Subconsultant
services 1,206,000 1,187,000 3,166,000 3,438,000
----------- ----------- ----------- ----------
Total direct
costs of
contract
revenues 7,999,000 8,033,000 22,885,000 24,482,000
----------- ----------- ----------- ----------
General and
administrative
expenses:
Salaries and
wages, payroll
taxes and
employee
benefits 6,616,000 5,916,000 19,661,000 19,260,000
Facilities 1,116,000 1,145,000 2,979,000 3,405,000
Depreciation and
amortization 414,000 439,000 1,137,000 1,335,000
Litigation
accrual
reversal (1,049,000) -- (1,049,000) --
Other 2,946,000 2,497,000 7,663,000 9,415,000
----------- ----------- ----------- ----------
Total general
and
administrative
expenses 10,043,000 9,997,000 30,391,000 33,415,000
----------- ----------- ----------- ----------
Income from
operations 2,912,000 1,657,000 5,771,000 2,238,000
----------- ----------- ----------- ----------
Other income
(expense):
Interest expense (185,000) (23,000) (596,000) 527,000
Interest income
and other, net 13,000 197,000 2,368,000 525,000
----------- ----------- ----------- ----------
Total other
income
(expense) (172,000) 174,000 1,772,000 1,052,000
----------- ----------- ----------- ----------
Income before
income tax
expense 2,740,000 1,831,000 7,543,000 3,290,000
Income tax expense 41,000 778,000 79,000 1,429,000
----------- ----------- ----------- ----------
Net income $ 2,699,000 $ 1,053,000 $ 7,464,000 $ 1,861,000
=========== =========== =========== ==========
Net income per
share:
Basic and
diluted $ 0.57 $ 0.15 $ 1.58 $ 0.26
=========== =========== =========== ==========
Weighted-average
shares
outstanding:
Basic 4,713,000 7,150,000 4,712,000 7,148,000
=========== =========== =========== ==========
Diluted 4,713,000 7,161,000 4,712,000 7,154,000
=========== =========== =========== ==========
Pro Forma Data:
Pro forma provision
for income taxes $ 1,096,000 $ 2,117,000
Pro forma net
income $ 1,644,000 $ 5,426,000
Pro forma income
per common
share, basic
and diluted $ 0.35 $ 1.15
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September September
29, 28,
2006 2007
Cash flows from operating activities:
Net income $ 7,464,000 $ 1,861,000
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,138,000 1,342,000
Loss (gain) on sale of equipment (13,000) 4,000
Allowance for doubtful accounts 406,000 194,000
Stock-based compensation -- 145,000
Changes in operating assets and
liabilities:
Accounts receivable (2,301,000) (288,000)
Costs and estimated earnings in
excess of billing on
uncompleted contracts (800,000) 222,000
Other receivables (1,030,000) 3,129,000
Prepaid expenses and other
current assets 424,000 833,000
Other assets (60,000) 52,000
Accounts payable 906,000 (267,000)
Accrued liabilities (517,000) (8,629,000)
Billings in excess of costs and
estimated earnings on
uncompleted contracts 144,000 (110,000)
Deferred income taxes 48,000 --
Deferred lease obligations 141,000 111,000
------------ ------------
Net cash provided by (used
in) operating activities 5,950,000 (1,401,000)
------------ ------------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (2,418,000) (582,000)
Proceeds from sale of equipment 4,000 28,000
Purchase of other assets (100,000) --
Purchase of liquid investments -- (16,100,000)
Proceeds from sale of liquid
investments -- 7,100,000
------------ ------------
Net cash used in investing
activities (2,514,000) (9,554,000)
------------ ------------
Cash flows from financing activities:
Changes in excess of outstanding checks
over bank balance (78,000) 832,000
Payments on notes payable (1,128,000) (1,091,000)
Proceeds from borrowings under line of
credit 11,655,000 378,000
Repayments of line of credit (11,655,000) (347,000)
Principal payments on capital leases (117,000) (127,000)
Payments on liabilities to stockholders (3,000) --
Proceeds from stockholders receivables 34,000 --
Proceeds from issuance of redeemable
common stock 18,000 --
Proceeds from employee stock purchase
plan -- 24,000
Distributions to holders of redeemable
common stock (2,334,000) (3,150,000)
(Payment) refund of offering costs (1,051,000) 10,000
------------ ------------
Net cash used in financing
activities (4,659,000) (3,471,000)
------------ ------------
Net decrease in cash and
cash equivalents (1,223,000) (14,426,000)
Cash and cash equivalents at beginning of
the period 3,066,000 20,633,000
------------ ------------
Cash and cash equivalents at end of the
period $ 1,843,000 $ 6,207,000
============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 126,000 $ 63,000
Income taxes 55,000 875,000
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under capital leases $ 349,000 $ 120,000
Note payable issued in connection with
acquisition of assets 150,000 --
SOURCE: Willdan Group, Inc.
Willdan Group, Inc. Mallory McCamant, Chief Operations Officer, 714-940-6327 mallory@willdangroup.com Kimberly Gant, Chief Financial Officer, 714-940-6329 kgant@willdangroup.com
Copyright Business Wire 2007
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