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Willdan Group Reports First Quarter 2018 Results
Investment Community Conference Call Today at
First Quarter 2018 Highlights
-
Total contract revenue of
$54.6 million -
Net Revenue of
$30.5 million -
Net income of
$2.2 million -
Diluted earnings per share of
$0.24
For the first quarter of 2018,
“Our first quarter results were in line with our expectations and
reflect the change we have made to reduce the amount of pass-through
revenue we recognize with little to no margin,” said
First Quarter 2018 Financial Highlights
Total contract revenue for the first quarter of 2018 was
Net Revenue for the first quarter of 2018 was
Direct costs of contract revenue were
Total general and administrative expenses for the first quarter of 2018
was
The Company recorded an income tax benefit of approximately
Net income for the first quarter of 2018 was
Adjusted EBITDA (see “Use of Non-GAAP Financial Measures” below) was
Adjusted Net Income (see “Use of Non-GAAP Financial Measures” below) was
Balance Sheet
Outlook
-
Total Net Revenue of
$130 - $140 million -
Adjusted Diluted EPS of
$1.95 - $2.05 - Effective tax rate of approximately 23%
- Diluted share count of 9.3 million shares
-
Depreciation of approximately
$2.0 million -
Amortization of approximately
$3.0 million
Over the long-term,
Conference Call Details and Investor Report
Chief Executive Officer
Interested parties may participate in the conference call by dialing 877-260-1479 and providing conference ID 9171688. The conference call will be webcast simultaneously on Willdan’s website at www.willdan.com under Investors: Events and the replay will be archived for at least 12 months.
The telephonic replay of the conference call may be accessed following
the call by dialing 888-203-1112 and entering the passcode 9171688. The
replay will be available through
An Investor Report containing supplemental financial information can also be accessed on the home page of Willdan’s investor relations website.
About Willdan Group, Inc.
Willdan provides professional technical and consulting services,
including comprehensive energy efficiency services, for utilities,
private industry and public agencies throughout the
Use of Non-GAAP Financial Measures
“Net Revenue,” 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,
Adjusted EBITDA is a supplemental measure used by Willdan’s management
to measure its operating performance.
Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s costs of capital, stock-based compensation, as well as the historical costs of depreciable assets. Willdan’s definition of Adjusted EBITDA may also differ from those of many companies reporting similarly named measures. Willdan believes Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes the impact of certain non-operational items from its operational results, which may facilitate comparison of its results from period to period. A reconciliation of net income as reported in accordance with GAAP to Adjusted EBITDA is provided at the end of this news release.
“Adjusted Net Income” is a supplemental measure used by Willdan’s
management to measure its operating performance.
“Adjusted Diluted EPS” is a supplemental measure used by Willdan’s
management to measure its operating performance.
Willdan’s definition of revenue, net of subcontractor services and other direct costs (Net Revenue), Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS may differ from other companies reporting similarly named 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 GAAP, such as contract revenue and net income.
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,
including statements regarding Willdan’s targets for fiscal year 2018
and the expected benefits of Willdan’s acquisitions of
| WILLDAN GROUP, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Unaudited) | ||||||
| March 30, | December 29, | |||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 5,353,000 | $ | 14,424,000 | ||
| Accounts receivable, net of allowance for doubtful accounts of $466,000 and $369,000 at March 30, 2018 and December 29, 2017, respectively | 20,597,000 | 38,441,000 | ||||
| Contract assets | 42,297,000 | 24,732,000 | ||||
| Other receivables | 1,985,000 | 1,833,000 | ||||
| Prepaid expenses and other current assets | 3,265,000 | 3,760,000 | ||||
| Total current assets | 73,497,000 | 83,190,000 | ||||
| Equipment and leasehold improvements, net | 5,189,000 | 5,306,000 | ||||
| Goodwill | 37,714,000 | 38,184,000 | ||||
| Other intangible assets, net | 10,658,000 | 10,666,000 | ||||
| Other assets | 924,000 | 826,000 | ||||
| Total assets | $ | 127,982,000 | $ | 138,172,000 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 15,620,000 | $ | 20,826,000 | ||
| Accrued liabilities | 16,596,000 | 23,293,000 | ||||
| Contingent consideration payable | 2,757,000 | 4,246,000 | ||||
| Contract liabilities | 6,458,000 | 7,321,000 | ||||
| Notes payable | — | 383,000 | ||||
| Capital lease obligations | 298,000 | 289,000 | ||||
| Total current liabilities | 41,729,000 | 56,358,000 | ||||
| Contingent consideration payable | 4,467,000 | 5,062,000 | ||||
| Notes payable | 2,500,000 | 2,500,000 | ||||
| Capital lease obligations, less current portion | 223,000 | 160,000 | ||||
| Deferred lease obligations | 676,000 | 614,000 | ||||
| Deferred income taxes, net | 2,552,000 | 2,463,000 | ||||
| Other noncurrent liabilities | 468,000 | 363,000 | ||||
| Total liabilities | 52,615,000 | 67,520,000 | ||||
| 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;
8,861,000 and 8,799,000 shares issued and outstanding at March 30, 2018 and December 29, 2017, respectively |
89,000 | 88,000 | ||||
| Additional paid-in capital | 52,934,000 | 50,976,000 | ||||
| Retained earnings | 22,344,000 | 19,588,000 | ||||
| Total stockholders’ equity | 75,367,000 | 70,652,000 | ||||
| Total liabilities and stockholders’ equity | $ | 127,982,000 | $ | 138,172,000 | ||
| WILLDAN GROUP, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| 2018 | 2017 | |||||
| Contract revenue | $ | 54,595,000 | $ | 68,351,000 | ||
| Direct costs of contract revenue (inclusive of directly related depreciation and amortization): | ||||||
| Salaries and wages | 10,998,000 | 10,801,000 | ||||
| Subcontractor services and other direct costs | 24,069,000 | 39,895,000 | ||||
| Total direct costs of contract revenue | 35,067,000 | 50,696,000 | ||||
| General and administrative expenses: | ||||||
| Salaries and wages, payroll taxes and employee benefits | 10,025,000 | 9,315,000 | ||||
| Facilities and facility related | 1,209,000 | 1,124,000 | ||||
| Stock-based compensation | 1,064,000 | 476,000 | ||||
| Depreciation and amortization | 1,064,000 | 909,000 | ||||
| Other | 4,192,000 | 3,867,000 | ||||
| Total general and administrative expenses | 17,554,000 | 15,691,000 | ||||
| Income from operations | 1,974,000 | 1,964,000 | ||||
| Other income (expense): | ||||||
| Interest expense, net | (23,000) | (33,000) | ||||
| Other, net | 10,000 | 37,000 | ||||
| Total other expense, net | (13,000) | 4,000 | ||||
| Income before income taxes | 1,961,000 | 1,968,000 | ||||
| Income tax benefit | (242,000) | (673,000) | ||||
| Net income | $ | 2,203,000 | $ | 2,641,000 | ||
| Earnings per share: | ||||||
| Basic | $ | 0.25 | $ | 0.32 | ||
| Diluted | $ | 0.24 | $ | 0.30 | ||
| Weighted-average shares outstanding: | ||||||
| Basic | 8,753,000 | 8,281,000 | ||||
| Diluted | 9,185,000 | 8,854,000 | ||||
| WILLDAN GROUP, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| 2018 | 2017 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 2,203,000 | $ | 2,641,000 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 1,101,000 | 919,000 | ||||
| Deferred income taxes, net | (126,000) | 28,000 | ||||
| Provision for doubtful accounts | 96,000 | 8,000 | ||||
| Stock-based compensation | 1,064,000 | 476,000 | ||||
| Accretion and fair value adjustments of contingent consideration | 338,000 | 167,000 | ||||
| Changes in operating assets and liabilities, net of effects from business acquisitions: | ||||||
| Accounts receivable | 9,628,000 | (963,000) | ||||
| Contract assets | (8,677,000) | (10,191,000) | ||||
| Other receivables | (152,000) | 471,000 | ||||
| Prepaid expenses and other current assets | 495,000 | (559,000) | ||||
| Other assets | (98,000) | 25,000 | ||||
| Accounts payable | (5,206,000) | 2,475,000 | ||||
| Accrued liabilities | (6,592,000) | 3,377,000 | ||||
| Contract liabilities | (863,000) | (256,000) | ||||
| Deferred lease obligations | 62,000 | (6,000) | ||||
| Net cash used in operating activities | (6,727,000) | (1,388,000) | ||||
| Cash flows from investing activities: | ||||||
| Purchase of equipment and leasehold improvements | (144,000) | (583,000) | ||||
| Net cash used in investing activities | (144,000) | (583,000) | ||||
| Cash flows from financing activities: | ||||||
| Payments on contingent consideration | (2,622,000) | (1,508,000) | ||||
| Payments on notes payable | (383,000) | (1,272,000) | ||||
| Principal payments on capital leases | (90,000) | (121,000) | ||||
| Proceeds from stock option exercise | 279,000 | 1,300,000 | ||||
| Proceeds from sales of common stock under employee stock purchase plan | 616,000 | 344,000 | ||||
| Net cash used in financing activities | (2,200,000) | (1,257,000) | ||||
| Net decrease in cash and cash equivalents | (9,071,000) | (3,228,000) | ||||
| Cash and cash equivalents at beginning of period | 14,424,000 | 22,668,000 | ||||
| Cash and cash equivalents at end of period | $ | 5,353,000 | $ | 19,440,000 | ||
| Supplemental disclosures of cash flow information: | ||||||
| Cash paid during the period for: | ||||||
| Interest | $ | 23,000 | $ | 33,000 | ||
| Income taxes | 36,000 | 249,000 | ||||
| Supplemental disclosures of noncash investing and financing activities: | ||||||
| Equipment acquired under capital leases | 162,000 | 32,000 | ||||
| Willdan Group, Inc. and Subsidiaries | ||||||
| Reconciliation of GAAP Revenue to Net Revenue | ||||||
| (Non-GAAP Measure) | ||||||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| Consolidated | 2018 | 2017 | ||||
| Contract revenue | $ | 54,595,000 | $ | 68,351,000 | ||
| Subcontractor services and other direct costs | 24,069,000 | 39,895,000 | ||||
| Net Revenue | $ | 30,526,000 | $ | 28,456,000 | ||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| Energy segment | 2018 | 2017 | ||||
| Contract revenue | $ | 37,332,000 | $ | 50,114,000 | ||
| Subcontractor services and other direct costs | 20,999,000 | 35,440,000 | ||||
| Net Revenue | $ | 16,333,000 | $ | 14,674,000 | ||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| Engineering and Consulting segment | 2018 | 2017 | ||||
| Contract revenue | $ | 17,263,000 | $ | 18,237,000 | ||
| Subcontractor services and other direct costs | 3,070,000 | 4,455,000 | ||||
| Net Revenue | $ | 14,193,000 | $ | 13,782,000 | ||
| Willdan Group, Inc. and Subsidiaries | ||||||
| Reconciliation of GAAP Net Income to Adjusted EBITDA | ||||||
| (Non-GAAP Measure) | ||||||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| 2018 | 2017 | |||||
| Net income | $ | 2,203,000 | $ | 2,641,000 | ||
| Interest expense | 23,000 | 33,000 | ||||
| Income tax benefit | (242,000) | (673,000) | ||||
| Stock-based compensation | 1,064,000 | 476,000 | ||||
| Interest accretion(1) | 338,000 | 167,000 | ||||
| Depreciation and amortization | 1,101,000 | 919,000 | ||||
| Adjusted EBITDA | $ | 4,487,000 | $ | 3,563,000 | ||
| (1) | Interest accretion represents the imputed interest on the earn-out payments to be paid by us in connection with the acquisitions of Abacus Resource Management Company and substantially all of the assets of 360 Energy Engineers, LLC in January 2015 and the acquisition of Integral Analytics, Inc. in July 2017. |
| Willdan Group, Inc. and Subsidiaries | ||||||
| Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS | ||||||
| (Non-GAAP Measure) | ||||||
| Three Months Ended | ||||||
| March 30, | March 31, | |||||
| 2018 | 2017 | |||||
| Net income | $ | 2,203,000 | $ | 2,641,000 | ||
| Adjustment for stock-based compensation | 1,064,000 | 476,000 | ||||
| Adjusted Net Income | 3,267,000 | 3,117,000 | ||||
| Diluted weighted-average shares outstanding | 9,185,000 | 8,854,000 | ||||
| Diluted earnings per share | $ | 0.24 | $ | 0.30 | ||
| Impact of adjustment: | ||||||
| Stock-based compensation, net of tax | 0.13 | 0.07 | ||||
| Adjusted Diluted EPS | $ | 0.37 | $ | 0.37 | ||
| Willdan Group, Inc. and Subsidiaries | ||||||
| Reconciliation of Diluted EPS to Adjusted Diluted EPS Guidance | ||||||
| (Non-GAAP Measure) | ||||||
| 2018 Guidance | ||||||
| High | Low | |||||
| Diluted earnings per share | $ | 1.60 | $ | 1.70 | ||
| Stock-based compensation | 0.35 | 0.35 | ||||
| Adjusted Diluted EPS | $ | 1.95 | $ | 2.05 | ||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180503006674/en/
Source:
Willdan Group, Inc.
Stacy McLaughlin
Chief Financial
Officer
Tel: 714-940-6300
smclaughlin@willdan.com
Or
Investor/Media
Contact
Financial Profiles, Inc.
Tony Rossi
Tel:
310-622-8221
trossi@finprofiles.com
