UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 25, 2014

 


 

WILLDAN GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-33076

 

14-1951112

(State of other jurisdiction
of incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

2401 East Katella Avenue, Suite 300, Anaheim, California 92806

(Address of Principal Executive Offices)

 

Registrant’s telephone number, including area code: (800) 424-9144

 

Not Applicable

(Former name or former address, if changed since last report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o              Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

 

o              Soliciting material pursuant to Rule 14A-12 under the Exchange Act (17 CFR 240.14a-12)

 

o              Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR.14d-2(b))

 

o              Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.                                        Results of Operation and Financial Condition

 

Willdan Group, Inc. (“Willdan”) issued a press release on March 25, 2014. The press release announced Willdan’s financial results for the fourth quarter and fiscal year ended December 27, 2013. The press release is filed as Exhibit 99.1 and is hereby incorporated by reference in its entirety. The information in this Form 8-K and the exhibit attached hereto is being furnished (not filed) under Item 2.02 of Form 8-K.

 

Item 9.01                                           Financial Statements and Exhibits

 

(d)                                 Exhibits.

 

99.1                        Press Release of Willdan Group, Inc. dated March 25, 2014 (financial results for the fourth quarter and fiscal year ended December 27, 2013).

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

WILLDAN GROUP, INC.

 

 

 

 

Date: March 25, 2014

By:

/s/ Stacy B. McLaughlin

 

 

Stacy B. McLaughlin

 

 

Chief Financial Officer

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Document

 

 

 

 

99.1

 

Press Release of Willdan Group, Inc. dated March 25, 2014 (Financial results for the fourth quarter and fiscal year ended December 27, 2013)

 

4


Exhibit 99.1

 

 

WILLDAN GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS

 

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

 

ANAHEIM, Calif. — March 25, 2014 — 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 projects 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 more 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 of 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 the 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, as compared to revenue, net of subcontractor costs for the fourth quarter of 2012 of $15.8 million.

 

1



 

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.

 

2



 

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.

 

3



 

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

 

 

4



 

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

 

 

5



 

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:

 

 

 

 

 

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

 

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

 

 

6



 

Willdan Group, Inc. and Subsidiaries

Reconciliation of GAAP Revenue and “Revenue, Net of Subcontractor Costs”

 

 

 

Fiscal Year Ended

 

 

 

December 27,

 

December 28,

 

Change

 

 

 

2013

 

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

%

 

7



 

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

)

 

8



 

Contact:

 

 

 

Willdan Group, Inc.

Investor/Media Contact

Stacy McLaughlin

Financial Profiles, Inc.

Chief Financial Officer

Tel: 310-478-2700

Tel: 714-940-6300

Moira Conlon: mconlon@finprofiles.com

smclaughlin@willdan.com

Jody Cain: jcain@finprofiles.com

 

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