Willdan Reports Third Quarter 2011 Financial Results

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Nov 10, 2011

Willdan Reports Third Quarter 2011 Financial Results

 

ANAHEIM, Calif. --(BUSINESS WIRE)-- Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN), today announced financial results for its third quarter ended September 30, 2011.

For the third quarter of 2011, Willdan reported total contract revenue of $28.6 million and net income of $2.2 million, or $0.29 per share.

Tom Brisbin, Willdan's Chief Executive Officer, stated: "Our third quarter improvements in revenue and profits demonstrate that the investments we made in key people and technology earlier in the year are paying off. While the California economy remains challenged, we are seeing strength in other markets where we are leveraging our expertise to win new business. We are pleased with our continued progress and on track for a profitable year in 2011."

Third Quarter 2011 Results

For the third quarter of fiscal 2011, revenue was $28.6 million, up $7.9 million, or 38.1%, from revenue of $20.7 million for the comparable period last year. On a sequential basis, revenue was up $2.8 million, or 10.8%, from the second quarter of fiscal 2011. Income from operations was $2.4 million for the third quarter of fiscal 2011, as compared to income from operations of $1.4 million for the comparable period last year. On a sequential basis, income from operations was up $1.4 million from income from operations of $1.0 million for the second quarter of fiscal 2011.

Net income was $2.2 million for the third quarter of fiscal 2011, as compared to net income of $0.8 million for the comparable period last year and net income of $0.7 million for the second quarter of 2011.

Basic and diluted earnings per share for the third quarter of fiscal 2011 were $0.30 and $0.29, respectively, as compared to basic and diluted earnings per share of $0.11 for the comparable period last year.

Willdan generated $1.5 million in cash flows from operations in the third quarter of fiscal 2011.

Nine Months 2011 Results

For the nine months ended September 30, 2011, revenue was $77.2 million, up $19.1 million, or 33.0%, from revenue of $58.0 million in the comparable period last year. Income from operations was $3.1 million for the nine months ended September 30, 2011 as compared to income from operations of $3.0 million for the comparable period last year. Net income was $2.6 million for the nine months ended September 30, 2011 as compared to net income of $2.4 million for the comparable period last year.

Basic and diluted earnings per share for the nine months ended September 30, 2011 were $0.36 and $0.35, respectively, as compared to basic and diluted earnings per share of $0.34 for the comparable period last year.

Willdan generated $3.1 million in cash flow from operations in the nine months ended September 30, 2011.

            Three Months Ended           Nine Months Ended  
In thousands (except per share data)          

September 30,
2011

          

October 1,
2010

          

September 30,
2011

          

October 1,
2010

  
Revenue           $ 28,605           $ 20,706           $ 77,159           $ 58,024  
                                                   
Income from operations           2,380           1,394           3,054           3,044  
Interest income           1           3           5           9  
Interest expense           (21 )         (11 )         (53 )         (37 )
Other, net           8           (3 )         5           17  
Income tax expense           203           595           402           595  
Net income           $ 2,165           $ 788           $ 2,609           $ 2,438  
                                                   
Earnings per share:                                                  
Basic           $ 0.30           $ 0.11           $ 0.36           $ 0.34  
Diluted           $ 0.29           $ 0.11           $ 0.35           $ 0.34  
                                                   
Weighted average shares outstanding:                                                  
                                                   
Basic           7,267           7,236           7,258           7,229  
Diluted           7,468           7,318           7,478           7,274  
                                                   

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 pre-tax net income plus (minus) net interest expense (income), depreciation and amortization, lease abandonment expense (recovery) and loss (gain) on sale of assets. 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 unusual or infrequent 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 unusual or infrequent 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 income from operations or net income as an indicator of operating performance or any other GAAP measure.

Adjusted EBITDA increased $0.1 million to $3.8 million for the nine months ended September 30, 2011 from $3.7 million for the comparable period last year.

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

In thousands             Nine Months Ended  
             

September 30,
2011

            

October 1,
2010

  
                               
Net income             $ 2,609             $ 2,438  
Interest income             (5 )           (9 )
Interest expense             53             37  
Loss (gain) on sale of equipment             1             (17 )
Income tax expense             402             595  
Depreciation and amortization             733             752  
Lease abandonment expense (recovery), net             9             (62 )
Adjusted EBITDA             $ 3,802             $ 3,734  
                                   

Liquidity and Capital Resources

Willdan had $8.3 million in cash and cash equivalents at September 30, 2011, compared with $6.6 million at December 31, 2010. Willdan has a $5.0 million bank revolving line of credit, with $2.9 million in outstanding borrowings at the quarter's end.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on November 10, 2011 at 5:00 p.m. Eastern/2:00 p.m. Pacific, to further discuss the Company's financial results.

Interested parties may participate in the conference call by dialing 877-941-0843 (480-629-9819 for international callers). When prompted, ask for the "Willdan Group, Inc., Third Quarter 2011 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 24, 2011, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4483424. The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Founded over 45 years ago, Willdan is a provider of professional technical and consulting services to small and mid-sized public agencies, large public utilities and, to a lesser extent, private industry primarily located in California, New York and Arizona. Willdan provides a broad range of services to clients, including civil engineering and planning, energy efficiency and sustainability, economic and financial consulting, and homeland security and communications and technology. For additional information, visit Willdan's website 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'sSEC reports including, but not limited to, the Form 10-K annual report for the year ended December 31, 2010 filed on March 29, 2011. 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 30,
2011

            

December 31,
2010

  
              (unaudited)                
Assets                              
Current assets:                              
Cash and cash equivalents             $ 8,275,000             $ 6,642,000  

Accounts receivable, net of allowance for doubtful accounts of $810,000 and $959,000
at September 30, 2011 and December 31, 2010, respectively

             14,755,000             14,484,000  
Costs and estimated earnings in excess of billings on uncompleted contracts             16,418,000             11,343,000  
Other receivables             242,000             176,000  
Prepaid expenses and other current assets             1,005,000             1,714,000  
Total current assets             40,695,000             34,359,000  
                               
Equipment and leasehold improvements, net             1,245,000             1,496,000  
Goodwill             15,208,000             12,475,000  
Other intangible assets, net             59,000             95,000  
Other assets             395,000             407,000  
Deferred income taxes, net of current portion             622,000             622,000  
Total assets             $ 58,224,000             $ 49,454,000  
                               
Liabilities and Stockholders' Equity                              
Current liabilities:                              
Excess of outstanding checks over bank balance             $ 989,000             $ 1,223,000  
Borrowings under line of credit             2,920,000             1,000,000  
Accounts payable             6,024,000             5,380,000  
Accrued liabilities             9,638,000             5,985,000  
Billings in excess of costs and estimated earnings on uncompleted contracts             1,156,000             1,041,000  
Current portion of notes payable             101,000             90,000  
Current portion of capital lease obligations             155,000             173,000  
Current portion of deferred income taxes             1,407,000             1,407,000  
Total current liabilities             22,390,000             16,299,000  
                               
Notes payable, less current portion             95,000             131,000  
Capital lease obligations, less current portion             106,000             96,000  
Deferred lease obligations             617,000             766,000  
Total liabilities             23,208,000             17,292,000  
                               
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: 7,272,000 and 7,246,000
shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively

             73,000             72,000  
Additional paid-in capital             34,009,000             33,765,000  
Accumulated earnings (deficit)             934,000             (1,675,000 )
Total stockholders' equity             35,016,000             32,162,000  
Total liabilities and stockholders' equity             $ 58,224,000             $ 49,454,000  
                                   

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
                         
            Three Months Ended         Nine Months Ended  
            September 30,         October 1,         September 30,         October 1,  
            2011         2010         2011         2010  
                                             
Contract revenue           $ 28,605,000         $ 20,706,000         $ 77,159,000         $ 58,024,000  
                                             
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below):                                            
Salaries and wages           6,568,000         5,570,000         19,567,000         16,196,000  
Subconsultant services           8,825,000         5,433,000         22,618,000         10,912,000  
Other direct costs           1,462,000         448,000         3,749,000         3,434,000  
Total direct costs of contract revenue           16,855,000         11,451,000         45,934,000         30,542,000  
                                             
General and administrative expenses:                                            
Salaries and wages, payroll taxes and employee benefits           5,381,000         4,093,000         16,245,000         13,019,000  
Facilities and facilities related           1,266,000         1,117,000         3,663,000         3,246,000  
Stock-based compensation           40,000         52,000         148,000         180,000  
Depreciation and amortization           197,000         231,000         683,000         741,000  
Lease abandonment (recovery) expense, net           —         (75,000 )       9,000         (62,000 )
Other           2,486,000         2,443,000         7,423,000         7,314,000  
Total general and administrative expenses           9,370,000         7,861,000         28,171,000         24,438,000  
Income from operations           2,380,000         1,394,000         3,054,000         3,044,000  
                                             
Other income (expense), net:                                            
Interest income           1,000         3,000         5,000         9,000  
Interest expense           (21,000 )       (11,000 )       (53,000 )       (37,000 )
Other, net           8,000         (3,000 )       5,000         17,000  
Total other expense, net           (12,000 )       (11,000 )       (43,000 )       (11,000 )
Income before income taxes           2,368,000         1,383,000         3,011,000         3,033,000  
                                             
Income tax expense           203,000         595,000         402,000         595,000  
Net income           $ 2,165,000         $ 788,000         $ 2,609,000         $ 2,438,000  
                                             
Earnings per share:                                            
Basic           $ 0.30         $ 0.11         $ 0.36         $ 0.34  
Diluted           $ 0.29         $ 0.11         $ 0.35         $ 0.34  
                                             
Weighted-average shares outstanding:                                            
Basic           7,267,000         7,236,000         7,258,000         7,229,000  
Diluted           7,468,000         7,318,000         7,478,000         7,274,000  
                                             

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
               
            Nine Months Ended  
           

September 30,
2011

            

October 1,
2010

  
Cash flows from operating activities:                            
Net income           $ 2,609,000             $ 2,438,000  
Adjustments to reconcile net income to net cash provided by operating activities:                            
Non-cash revenue from subcontractor settlement           (902,000 )           —  
Depreciation and amortization           733,000             752,000  
Lease abandonment expense (recovery), net           9,000             (62,000 )
Loss (gain) on sale of equipment           1,000             (17,000 )
Provision for doubtful accounts           131,000             259,000  
Stock-based compensation           148,000             180,000  
Changes in operating assets and liabilities:                            
Accounts receivable           (402,000 )           (1,578,000 )
Costs and estimated earnings in excess of billings on uncompleted contracts           (5,075,000 )           (5,259,000 )
Income tax receivable           —             (4,000 )
Other receivables           (66,000 )           (165,000 )
Prepaid expenses and other current assets           709,000             391,000  
Other assets           12,000             (92,000 )
Accounts payable           1,546,000             1,487,000  
Accrued liabilities           3,653,000             2,817,000  
Billings in excess of costs and estimated earnings on uncompleted contracts           115,000             245,000  
Deferred lease obligations           (158,000 )           (97,000 )
Net cash provided by operating activities           3,063,000             1,295,000  
                             
Cash flows from investing activities:                            
Purchase of equipment and leasehold improvements           (309,000 )           (363,000 )
Proceeds from sale of equipment           6,000             31,000  
Payments for business acquisition           (2,733,000 )           (2,103,000 )
Net cash used in investing activities           (3,036,000 )           (2,435,000 )
                             
Cash flows from financing activities:                            
Changes in excess of outstanding checks over bank balance           (234,000 )           335,000  
Payments on notes payable           (48,000 )           (20,000 )
Proceeds from notes payable           23,000             —  
Borrowings under line of credit           22,682,000             8,970,000  
Repayments on line of credit           (20,762,000 )           (8,970,000 )
Principal payments on capital lease obligations           (152,000 )           (102,000 )
Proceeds from stock option exercise           4,000             —  
Proceeds from sales of common stock under employee stock purchase plan           93,000             87,000  
Net cash provided by financing activities           1,606,000             300,000  
Net increase (decrease) in cash and cash equivalents           1,633,000             (840,000 )
Cash and cash equivalents at beginning of the period           6,642,000             8,445,000  
Cash and cash equivalents at end of the period           $ 8,275,000             $ 7,605,000  
                             
Supplemental disclosures of cash flow information:                            
Cash paid during the period for:                            
Interest           $ 51,000             $ 35,000  
Income taxes           51,000             5,000  
                             
Supplemental disclosures of noncash investing and financing activities:                            
Equipment acquired under capital lease obligations           $ 159,000             $ 88,000  

 

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

 

Source: Willdan Group, Inc.

 

 

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