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Willdan Group Reports Third Quarter 2018 Results
WILLDAN GROUP REPORTS THIRD QUARTER 2018 RESULTS
Investment Community Conference Call Today at
Third Quarter 2018 Highlights
- Consolidated Contract Revenue of
$71.4 million - Net Revenue of
$34.5 million - Net Income of
$3.3 million - Diluted earnings per share of
$0.35 , including Lime transaction costs - Adjusted diluted earnings per share of
$0.56 - Cash flow from operations of
$7.5 million
For the third quarter of 2018,
“We delivered another solid quarter, while generating strong cash flow from operations,” said
“We anticipate completing our acquisition of
Third Quarter 2018 Financial Highlights
Consolidated contract revenue for the third quarter of 2018 was
Net Revenue for the third quarter of 2018 was
Direct costs of contract revenue were
Total general and administrative expenses for the third quarter of 2018 was
Income tax expense was
Net income for the third 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
Nine Months 2018 Financial Highlights
Consolidated contract revenue for the nine months ended
Net Revenue for the nine months ended
Direct costs of contract revenue were
Total general and administrative expenses for the nine months ended
Income tax expense was
Net income for the nine months ended
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
- Net Revenue of
$130 - $140 million - Adjusted Diluted EPS of
$1.98 - $2.03 - Effective tax rate of approximately 24%
- Diluted share count of 10.1 million shares
- Depreciation of approximately
$2.2 million - Amortization of approximately
$3.5 million
Over the long-term,
Conference Call Details and Investor Report
Chief Executive Officer
Interested parties may participate in the conference call by dialing 866-548-4713 and providing conference ID 7722489. 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 7722489. 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.
Use of Non-GAAP Financial Measures
“Net Revenue,” defined as contract revenue as reported in accordance with GAAP minus subcontractor services and other direct costs, is a non-GAAP financial measure, Net Revenue 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,” defined as net income plus interest expense, income tax expense, stock-based compensation, interest accretion, depreciation and amortization, transaction costs and gain on sale of equipment is a non-GAAP financial measure. 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 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 press release.
“Adjusted Net Income,” defined as net income plus stock-based compensation, intangible amortization and transaction costs is a non-GAAP financial measure. Adjusted Net Income is a supplemental measure used by Willdan’s management to measure its operating performance. Adjusted Net Income has limitations as an analytical tool and should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP. A reconciliation of net income as reported in accordance with GAAP to Adjusted Net Income is provided at the end of this press release.
“Adjusted Diluted EPS,” defined as net income plus stock-based compensation, intangible amortization and transaction costs, net of tax, all divided by the diluted weighted-average shares outstanding, is a non-GAAP financial measure. Adjusted Diluted EPS is a supplemental measure used by Willdan’s management to measure its operating performance. Adjusted Diluted EPS differs in this press release from the similarly named non-GAAP financial measure
Willdan’s definition of Net Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS may differ from other companies reporting similarly named measures or from similarly named measures
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, as amended, including statements regarding Willdan’s targets for fiscal year 2018 and the expected benefits of Willdan’s pending acquisition of
The above is not a complete list of factors or events that could cause actual results to differ from Willdan’s expectations, and
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WILLDAN GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||||
| September 28, | December 29, | |||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 16,681,000 | $ | 14,424,000 | ||
| Accounts receivable, net of allowance for doubtful accounts of $296,000 and $369,000 at September 28, 2018 and December 29, 2017, respectively | 19,725,000 | 38,441,000 | ||||
| Contract assets | 43,752,000 | 24,732,000 | ||||
| Other receivables | 315,000 | 1,833,000 | ||||
| Prepaid expenses and other current assets | 3,549,000 | 3,760,000 | ||||
| Total current assets | 84,022,000 | 83,190,000 | ||||
| Equipment and leasehold improvements, net | 5,042,000 | 5,306,000 | ||||
| Goodwill | 40,187,000 | 38,184,000 | ||||
| Other intangible assets, net | 10,454,000 | 10,666,000 | ||||
| Other assets | 904,000 | 826,000 | ||||
| Total assets | $ | 140,609,000 | $ | 138,172,000 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 18,979,000 | $ | 20,826,000 | ||
| Accrued liabilities | 21,804,000 | 23,293,000 | ||||
| Contingent consideration payable | 4,020,000 | 4,246,000 | ||||
| Contract liabilities | 5,001,000 | 7,321,000 | ||||
| Notes payable | — | 383,000 | ||||
| Capital lease obligations | 216,000 | 289,000 | ||||
| Total current liabilities | 50,020,000 | 56,358,000 | ||||
| Contingent consideration payable | 1,949,000 | 5,062,000 | ||||
| Notes payable | — | 2,500,000 | ||||
| Capital lease obligations, less current portion | 193,000 | 160,000 | ||||
| Deferred lease obligations | 599,000 | 614,000 | ||||
| Deferred income taxes, net | 1,582,000 | 2,463,000 | ||||
| Other noncurrent liabilities | 468,000 | 363,000 | ||||
| Total liabilities | 54,811,000 | 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;
8,921,000 and 8,799,000 shares issued and outstanding at September 28, 2018 and December 29, 2017, respectively |
89,000 | 88,000 | ||||
| Additional paid-in capital | 56,739,000 | 50,976,000 | ||||
| Retained earnings | 28,970,000 | 19,588,000 | ||||
| Total stockholders’ equity | 85,798,000 | 70,652,000 | ||||
| Total liabilities and stockholders’ equity | $ | 140,609,000 | $ | 138,172,000 | ||
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WILLDAN GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Contract revenue | $ | 71,386,000 | $ | 69,007,000 | $ | 185,814,000 | $ | 209,191,000 | ||||||||
| Direct costs of contract revenue (inclusive of directly related depreciation and amortization): | ||||||||||||||||
| Salaries and wages | 11,233,000 | 11,425,000 | 33,358,000 | 33,594,000 | ||||||||||||
| Subcontractor services and other direct costs | 36,840,000 | 37,310,000 | 86,453,000 | 118,881,000 | ||||||||||||
| Total direct costs of contract revenue | 48,073,000 | 48,735,000 | 119,811,000 | 152,475,000 | ||||||||||||
| General and administrative expenses: | ||||||||||||||||
| Salaries and wages, payroll taxes and employee benefits | 11,125,000 | 8,691,000 | 31,875,000 | 26,092,000 | ||||||||||||
| Facilities and facility related | 1,492,000 | 1,235,000 | 4,087,000 | 3,478,000 | ||||||||||||
| Stock-based compensation | 1,705,000 | 896,000 | 4,431,000 | 1,992,000 | ||||||||||||
| Depreciation and amortization | 1,117,000 | 1,053,000 | 3,292,000 | 2,896,000 | ||||||||||||
| Other | 2,961,000 | 4,214,000 | 11,226,000 | 11,548,000 | ||||||||||||
| Total general and administrative expenses | 18,400,000 | 16,089,000 | 54,911,000 | 46,006,000 | ||||||||||||
| Income from operations | 4,913,000 | 4,183,000 | 11,092,000 | 10,710,000 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (22,000 | ) | (23,000 | ) | (75,000 | ) | (88,000 | ) | ||||||||
| Other, net | 17,000 | 18,000 | 36,000 | 56,000 | ||||||||||||
| Total other expense, net | (5,000 | ) | (5,000 | ) | (39,000 | ) | (32,000 | ) | ||||||||
| Income before income taxes | 4,908,000 | 4,178,000 | 11,053,000 | 10,678,000 | ||||||||||||
| Income tax expense | 1,597,000 | 1,292,000 | 2,224,000 | 1,839,000 | ||||||||||||
| Net income | $ | 3,311,000 | $ | 2,886,000 | $ | 8,829,000 | $ | 8,839,000 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.37 | $ | 0.33 | $ | 1.00 | $ | 1.03 | ||||||||
| Diluted | $ | 0.35 | $ | 0.31 | $ | 0.95 | $ | 0.97 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 8,844,000 | 8,730,000 | 8,798,000 | 8,580,000 | ||||||||||||
| Diluted | 9,343,000 | 9,248,000 | 9,283,000 | 9,138,000 | ||||||||||||
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WILLDAN GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||
| Nine Months Ended | ||||||||
| September 28, | September 29, | |||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 8,829,000 | $ | 8,839,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 3,391,000 | 2,976,000 | ||||||
| Deferred income taxes, net | (1,460,000 | ) | 1,784,000 | |||||
| (Gain) loss on sale/disposal of equipment | (17,000 | ) | 26,000 | |||||
| Provision for (recovery of) doubtful accounts | 317,000 | (98,000 | ) | |||||
| Stock-based compensation | 4,431,000 | 1,992,000 | ||||||
| Accretion and fair value adjustments of contingent consideration | (713,000 | ) | 779,000 | |||||
| Changes in operating assets and liabilities, net of effects from business acquisitions: | ||||||||
| Accounts receivable | 19,492,000 | (5,061,000 | ) | |||||
| Contract assets | (18,252,000 | ) | (8,200,000 | ) | ||||
| Other receivables | 1,518,000 | (1,071,000 | ) | |||||
| Prepaid expenses and other current assets | 78,000 | (167,000 | ) | |||||
| Other assets | (78,000 | ) | 44,000 | |||||
| Accounts payable | (1,960,000 | ) | 5,408,000 | |||||
| Accrued liabilities | (1,672,000 | ) | (3,340,000 | ) | ||||
| Contract liabilities | (2,320,000 | ) | (1,812,000 | ) | ||||
| Deferred lease obligations | (15,000 | ) | (64,000 | ) | ||||
| Net cash provided by operating activities | 11,569,000 | 2,035,000 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment and leasehold improvements | (720,000 | ) | (1,826,000 | ) | ||||
| Proceeds from sale of equipment | 41,000 | — | ||||||
| Cash paid for acquisitions, net of cash acquired | (2,994,000 | ) | (14,603,000 | ) | ||||
| Net cash used in investing activities | (3,673,000 | ) | (16,429,000 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments on contingent consideration | (3,768,000 | ) | (1,659,000 | ) | ||||
| Payments on notes payable | (383,000 | ) | (3,270,000 | ) | ||||
| Repayments under line of credit | (2,500,000 | ) | — | |||||
| Principal payments on capital lease obligations | (321,000 | ) | (323,000 | ) | ||||
| Proceeds from stock option exercise | 476,000 | 1,751,000 | ||||||
| Proceeds from sales of common stock under employee stock purchase plan | 1,299,000 | 830,000 | ||||||
| Unregistered sales of equity securities and use of proceeds | (442,000 | ) | — | |||||
| Net cash used in financing activities | (5,639,000 | ) | (2,671,000 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 2,257,000 | (17,065,000 | ) | |||||
| Cash and cash equivalents at beginning of period | 14,424,000 | 22,668,000 | ||||||
| Cash and cash equivalents at end of period | $ | 16,681,000 | $ | 5,603,000 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 75,000 | $ | 88,000 | ||||
| Income taxes | 2,061,000 | 2,142,000 | ||||||
| Supplemental disclosures of noncash investing and financing activities: | ||||||||
| Issuance of common stock related to business acquisitions | — | 3,099,000 | ||||||
| Contingent consideration related to business acquisitions | 943,000 | 5,400,000 | ||||||
| Other payable for working capital adjustment | 698,000 | 1,881,000 | ||||||
| Equipment acquired under capital leases | 281,000 | 263,000 | ||||||
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Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Revenue to Net Revenue (Non-GAAP Measure) |
||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||
| Consolidated | 2018 | 2017 | 2018 | 2017 | ||||||||
| Contract revenue | $ | 71,386,000 | $ | 69,007,000 | $ | 185,814,000 | $ | 209,191,000 | ||||
| Subcontractor services and other direct costs | 36,840,000 | 37,310,000 | 86,453,000 | 118,881,000 | ||||||||
| Net Revenue | $ | 34,546,000 | $ | 31,697,000 | $ | 99,361,000 | $ | 90,310,000 | ||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||
| Energy segment | 2018 | 2017 | 2018 | 2017 | ||||||||
| Contract revenue | $ | 50,085,000 | $ | 50,031,000 | $ | 129,143,000 | $ | 153,878,000 | ||||
| Subcontractor services and other direct costs | 29,919,000 | 32,883,000 | 72,413,000 | 105,432,000 | ||||||||
| Net Revenue | $ | 20,166,000 | $ | 17,148,000 | $ | 56,730,000 | $ | 48,446,000 | ||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||
| Engineering and Consulting segment | 2018 | 2017 | 2018 | 2017 | ||||||||
| Contract revenue | $ | 21,301,000 | $ | 18,976,000 | $ | 56,671,000 | $ | 55,313,000 | ||||
| Subcontractor services and other direct costs | 6,921,000 | 4,427,000 | 14,040,000 | 13,449,000 | ||||||||
| Net Revenue | $ | 14,380,000 | $ | 14,549,000 | $ | 42,631,000 | $ | 41,864,000 | ||||
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Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (Non-GAAP Measure) |
||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income | $ | 3,311,000 | $ | 2,886,000 | $ | 8,829,000 | $ | 8,839,000 | ||||||
| Interest expense | 22,000 | 23,000 | 75,000 | 88,000 | ||||||||||
| Income tax expense | 1,597,000 | 1,292,000 | 2,224,000 | 1,839,000 | ||||||||||
| Stock-based compensation | 1,705,000 | 896,000 | 4,431,000 | 1,992,000 | ||||||||||
| Interest accretion(1) | (1,335,000 | ) | 498,000 | (713,000 | ) | 779,000 | ||||||||
| Depreciation and amortization | 1,148,000 | 1,106,000 | 3,391,000 | 2,976,000 | ||||||||||
| Transaction costs(2) | 621,000 | 120,000 | 621,000 | 140,000 | ||||||||||
| Gain on sale of equipment | — | — | (14,000 | ) | — | |||||||||
| Adjusted EBITDA | $ | 7,069,000 | $ | 6,821,000 | $ | 18,844,000 | $ | 16,653,000 | ||||||
(1) Interest accretion represents the imputed interest and fair value adjustments to estimated contigent consideration.
(2) Transaction costs represents acquisition and acquisition related costs.
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Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS (Non-GAAP Measure) |
||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Net income | $ | 3,311,000 | $ | 2,886,000 | $ | 8,829,000 | $ | 8,839,000 | ||||
| Adjustment for stock-based compensation | 1,705,000 | 896,000 | 4,431,000 | 1,992,000 | ||||||||
| Adjustment for intangible amortization | 748,000 | 661,000 | 2,148,000 | 1,757,000 | ||||||||
| Adjustment for transaction costs | 621,000 | 120,000 | 621,000 | 140,000 | ||||||||
| Adjusted Net Income | 6,385,000 | 4,563,000 | 16,029,000 | 12,728,000 | ||||||||
| Diluted weighted-average shares outstanding | 9,343,000 | 9,248,000 | 9,283,000 | 9,138,000 | ||||||||
| Diluted earnings per share | $ | 0.35 | $ | 0.31 | $ | 0.95 | $ | 0.97 | ||||
| Impact of adjustment: | ||||||||||||
| Stock-based compensation, net of tax | 0.12 | 0.07 | 0.38 | 0.18 | ||||||||
| Intangible amortization, net of tax | 0.05 | 0.05 | 0.18 | 0.16 | ||||||||
| Transaction costs, net of tax | 0.04 | 0.01 | 0.05 | 0.01 | ||||||||
| Adjusted Diluted EPS | $ | 0.56 | $ | 0.44 | $ | 1.56 | $ | 1.32 | ||||
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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 | $ | 1.26 | $ | 1.21 | ||
| Stock-based compensation, net of tax | 0.45 | 0.45 | ||||
| Intangible amortization, net of tax | 0.27 | 0.27 | ||||
| Transaction costs, net of tax | 0.05 | 0.05 | ||||
| Adjusted Diluted EPS | $ | 2.03 | $ | 1.98 | ||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181101006129/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
