wldn_Current Folio_8K

 

 

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 7, 2019

 


 

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:

 

 

 

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

 

 

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

 

 

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

 

 

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

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 


 

Item 2.02             Results of Operations and Financial Condition

 

Willdan Group, Inc. (“Willdan”) issued a press release on March 7, 2019.  The press release announced Willdan’s financial results for the fourth quarter and fiscal year ended December 28, 2018.  A copy of the press release is attached as Exhibit 99.1 hereto and is hereby incorporated herein by reference in its entirety.  The information in this Item 2.02 and the attached Exhibit 99.1 to this Current Report on Form 8-K is being furnished (not filed) pursuant to Item 2.02 of Form 8-K.

 

Item 9.01             Financial Statements and Exhibits

 

(d)          Exhibits.

 

 

 

 

 

 

Exhibit No.

 

Document

 

 

 

 

99.1

 

 

Press Release of Willdan Group, Inc. dated March 7, 2019.

 

 

 

 

 

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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 7, 2019

By:

/s/ Stacy B. McLaughlin

 

 

Stacy B. McLaughlin

 

 

Chief Financial Officer

 

 

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wldn_Ex99_1

Exhibit 99.1

 

WD_tagend_300rgb

 

Willdan Group Reports

Fourth Quarter and Fiscal Year 2018 Results

 

Investment Community Conference Call Today at 5:30 p.m. Eastern Time

 

 

ANAHEIM, Calif. – March 7, 2019 – Willdan Group, Inc. (“Willdan”) (NASDAQ: WLDN), a provider of professional technical and consulting services, today reported financial results for its fourth quarter and fiscal year ended December 28, 2018 and provided its financial targets for fiscal 2019.

 

Fiscal Year 2018 Highlights

 

·

Consolidated Contract Revenue of $272.3 million

·

Net Revenue of $139.6 million, an increase of 14.9% over prior year

·

Net Income of $10.0 million

·

Diluted earnings per share of $1.03, including Lime transaction costs and new shares issued 

·

Adjusted diluted earnings per share of $2.07,  above 2018 guidance of $1.98 to $2.03

 

Fourth Quarter 2018 Highlights

 

·

Consolidated Contract Revenue of $86.4 million

·

Net Revenue of $40.2 million

·

Net Income of $1.2 million

·

Diluted earnings per share of $0.11, including Lime transaction costs and new shares issued

·

Adjusted diluted earnings per share of $0.61

·

Adjusted EBITDA of $6.6 million, an increase of 23.2%

 

For the fourth quarter of 2018, Willdan reported consolidated contract revenue of $86.4 million and net income of $1.2 million, or $0.11 per diluted share.  This compares with consolidated contract revenue of $64.2 million and net income of $3.3 million, or $0.36 per diluted share, for the fourth quarter of 2017.  Fourth quarter 2018 results include $0.9 million of transaction costs associated with the acquisition of Lime Energy, Inc. (“Lime Energy”) and approximately 2 million new shares issued to help fund the transaction. For the fourth quarter of 2018, Net Revenue, defined as revenue, net of subcontractor services and other direct costs (see “Use of Non-GAAP Financial Measures” below), was $40.2 million, up 29.2% compared to the same period in fiscal year 2017.

 

“We completed fiscal 2018 with a strong quarter that included the completion of our acquisition of Lime Energy,” said Tom Brisbin, Willdan’s Chairman and Chief Executive Officer.  “With our expanded scale, geographic presence and client base, we enter 2019 well positioned to capitalize on large markets such as California, New York and New Jersey. Lime Energy has performed well, is collaborating effectively, and we expect continued growth from them in 2019. Our pending acquisition of The Weidt Group also positions us to grow our presence in key Midwestern states. The Weidt Group is looking forward to cross selling their new construction energy efficiency and software to Willdan’s existing 70 plus Investor Owned Utility (“IOU”) client base. As the transportation fleet electrifies and green house gas becomes more important, all users of energy will be seeking smarter solutions. Willdan is building a company to provide these solutions.”

 

Fourth Quarter 2018 Financial Highlights

 

Consolidated contract revenue for the fourth quarter of 2018 was $86.4 million, an increase of 34.7% from $64.2 million for the fourth quarter of 2017.  Contract revenue for the Energy segment was $67.7 million for the fourth quarter of 2018, an increase of 48.0%, which was primarily due to the contributions from Lime Energy (acquired on November 9, 2018) 


 

 

 

and an increase in data analytics revenue, partially offset by a reduction in subcontracted pass-through revenue.  Contract revenue for the Engineering and Consulting segment was $18.7 million, an increase of 1.7% from the fourth quarter of 2017.

 

Net Revenue for the fourth quarter of 2018 was $40.2 million, an increase of 29.2% from $31.1 million for the fourth quarter of 2017.  The increase was primarily due to the contributions from Lime Energy, a ramp up in new programs within the Energy segment replacing high revenue and high pass-through costs projects with lower revenue and lower pass-through costs projects, and an increase in data analytics revenue.  Net Revenue in the Energy segment was $25.6 million for the fourth quarter of 2018, an increase of 43.3% over the same period last year.  Net Revenue in the Engineering and Consulting segment was $14.6 million for the fourth quarter of 2018, an increase of 10.2% over the same period last year.

 

Direct costs of contract revenue were $59.5 million for the fourth quarter of 2018, an increase of 34.6%, from $44.2 million for the fourth quarter of 2017.  The increase was primarily related to the growth in contract revenue resulting from the acquisitons of Lime Energy, partially offset by reduced pass-through subcontractor expenses related to certain Energy segment projects.

 

Total general and administrative expenses for the fourth quarter of 2018 was $25.3 million, an increase of 48.9% from $17.0 million for the fourth quarter of 2017, driven primarily by increased costs largely related to personnel added through the acquisitions of Lime Energy, and transaction costs associated with the acquisition of Lime Energy. 

 

Interest expense was $0.6 million for the fourth quarter of 2018, compared with $23,000 for the fourth quarter of 2017. The increase in interest expense was attributable to debt utilized to finance the acquisition of Lime Energy.

 

The Company recorded an income tax benefit of $0.1 million in the fourth quarter of 2018, compared to a benefit of $0.3 million for the prior year period. The income tax benefit was primarily attributable to deductions for stock options and disqualifying dispositions and an additional energy efficient commercial building deduction recognized in the fourth quarter of 2018.

 

Net income for the fourth quarter of 2018 was $1.2 million, or $0.11 per diluted share, as compared to net income of $3.3 million, or $0.36 per diluted share, for the fourth quarter of 2017.  Adjusted Net Income (see “Use of Non-GAAP Financial Measures” below) for the fourth quarter of 2018 was $6.3 million, or $0.61 per diluted share, as compared to Adjusted Net Income of $4.8 million, or $0.53 per diluted share, for the fourth quarter of 2017. 

 

Adjusted EBITDA (see “Use of Non-GAAP Financial Measures” below) was $6.6 million for the fourth quarter of 2018, an increase of 23.2% from $5.3 million for the fourth quarter of 2017.

 

Fiscal Year 2018 Financial Highlights

 

Consolidated contract revenue for fiscal 2018 was $272.3 million, a decrease of 0.4% from $273.4 million for fiscal 2017.  Consolidated contract revenue for the Energy segment was $196.8 million for fiscal 2018, a decline of 1.4% from $199.6 million for fiscal 2017, which was primarily attributable to the substantial completion of certain large construction management projects with high pass-through subcontractor costs, partially offset by the contribution of Lime Energy.  Consolidated contract revenue for the Engineering and Consulting segment was $75.4 million for fiscal 2018, an increase of 2.3% from $73.7 million for fiscal 2017.

 

Net Revenue for fiscal 2018 was $139.6 million, an increase of 14.9% from $121.4 million for fiscal 2017.  The increase was primarily due to a ramp up in new programs within the Energy segment with lower pass-through costs replacing projects with higher pass-through costs, the contribution of Lime Energy, and an increase in revenue from data analytics. Net Revenue in the Energy segment was $82.3 million for fiscal 2018, an increase of 24.1% from $66.3 million for fiscal 2017.  Net Revenue in the Engineering and Consulting segment was $57.3 million for fiscal 2018, an increase of 3.8% from $55.2 million for fiscal 2017.

 

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Direct costs of contract revenue were $179.3 million for fiscal 2018, a decrease of 8.8%, from $196.7 million for fiscal 2017.  The decrease was primarily due to the substantial completion of certain large construction management projects with high pass-through subcontractor costs, partially offset by direct costs associated with revenue from Lime Energy.

 

Total general and administrative expenses for fiscal 2018 was $80.2 million, an increase of 27.3% from $63.0 million for fiscal 2017, driven primarily by an increase in salaries and wages and employee benefits resulting from the personnel added in the Lime Energy acquisition, as well as an increase in stock-based compensation.

 

Interest expense was $0.7 million for fiscal 2018, compared with $0.1 million for fiscal 2017. The increase in interest expense was attributable to debt utilized to finance the acquisition of Lime Energy.

 

Income tax expense was $2.1 million for fiscal 2018, compared to $1.6 million for fiscal 2017.  The effective tax rate for fiscal year 2018 was 17.5%, as compared to 11.4% for fiscal year 2017.  The increase in the year-over-year effective tax rate for fiscal 2018 and the difference between the tax expense recorded and the expense that would be recorded by applying the federal statutory rate was primarily attributable to increased state taxes, decreased deductions for stock options and disqualifying dispositions and the impact of the Tax Act recognized in 2017, partially offset by energy efficient commercial building deductions recognized in 2018 and increased research and development credits. 

 

Net income for fiscal 2018 was $10.0 million, or $1.03 per diluted share, as compared to net income of $12.1 million, or $1.32 per diluted share, for fiscal 2017.  Adjusted Net Income (see “Use of Non-GAAP Financial Measures” below) was $22.3 million, or $2.07 per diluted share, for fiscal 2018, compared with $17.5 million, or $1.84 per diluted share, for fiscal 2017. 

 

Adjusted EBITDA (see “Use of Non-GAAP Financial Measures” below) was $25.4 million for fiscal 2018, an increase of 15.6% from $22.0 million for fiscal 2017.  Adjusted EBITDA as a percentage of Net Revenue, was 18.2% for fiscal 2018, as compared with 18.1% for fiscal 2017.

 

Balance Sheet

 

Willdan reported $15.3 million in cash and cash equivalents at December 28, 2018, as compared to $14.4 million at December 29, 2017.  The increase in cash and cash equivalents was primarily due to cash proceeds from an equity offering of $56.4 million and borrowings under Willdan’s new credit facilities of $70.0 million related to the acquisition of Lime Energy, which was offset by cash paid for the acquisition of Lime Energy. 

 

Outlook

 

Willdan has provided the following financial targets for fiscal 2019:

 

·

Net Revenue* of $180 to $200 million

·

Adjusted Diluted EPS* of $2.35 - $2.45

·

Effective tax rate of approximately 24%  

·

Diluted share count of 11.7 million shares

·

Depreciation of approximately $4.5 million

·

Amortization of approximately $7.6 million

·

Stock-based compensation of approximately $11.9 million

 

*See “Use of Non-GAAP Financial Measures” below.

 

The financial targets do not include the effect of any transaction that has not been completed as of this date. Over the long-term, Willdan continues to target both organic and acquisitive Net Revenue growth of greater than 10%, resulting in total Net Revenue growth of greater than 20% per year.

 

3

 


 

 

 

Conference Call Details and Investor Report

 

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Stacy McLaughlin will host a conference call today, March 7, 2019, at 5:30 p.m. Eastern/2:30 p.m. Pacific to discuss Willdan’s financial results and provide a business update.

 

Interested parties may participate in the conference call by dialing 888-254-3590 and providing conference ID 7731627.  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 7731627.  The replay will be available through March 21, 2019.

 

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 is a nationwide provider of professional technical and consulting services to utilities, government agencies, and private industry. Willdan’s service offerings span a broad set of complementary disciplines that include electric grid solutions, energy efficiency and sustainability, engineering and planning, and municipal financial consulting. For additional information, visit Willdan's website at www.willdan.com.

 

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 Willdan’s business trends and performance because it substantially measures the work performed by Willdan’s employees. In the course of providing services, Willdan routinely subcontracts various services. Generally, these subcontractor services and other direct costs are passed through to Willdan’s clients and, in accordance with U.S. generally accepted accounting principles (“GAAP”) and industry practice, are included in Willdan’s revenue when it is Willdan’s contractual responsibility to procure or manage such subcontracted activities. Because subcontractor services and other direct costs can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of Willdan’s business trends. Accordingly, Willdan segregates subcontractor services and other direct costs from revenue to promote a better understanding of Willdan’s business by evaluating revenue exclusive of subcontract services and other direct costs associated with external service providers. A reconciliation of Willdan’s contract revenue as reported in accordance with GAAP to Net Revenue is provided at the end of this press release. A reconciliation of targeted contract revenue for 2019 as reported in accordance with GAAP to targeted Net Revenues for 2019, which is a forward-looking non-GAAP financial measure, is not provided because Willdan is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the subcontractor services and other director costs that are subtracted from contract revenues in order to derive Net Revenues. Subcontractor services and direct costs typically range between 55% and 58% of Willdan’s contract revenues.

 

“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 Willdan’s operating performance. Willdan believes Adjusted EBITDA is useful because it allows Willdan’s management to evaluate its operating performance and compare the results of its operations from period to period and against its peers without regard to its financing methods, capital structure and non-operating expenses. Willdan uses Adjusted EBITDA to evaluate its performance for, among other things, budgeting, forecasting and incentive compensation purposes. 

 

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

4

 


 

 

 

depreciable assets. 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 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 Net Income and Adjusted Diluted EPS are supplemental measures used by Willdan’s management to measure its operating performance. Willdan believes Adjusted Net Income and Adjusted Diluted EPS are useful because they allow Willdan’s management to more closely evaluate and explain the operating results of Willdan’s business by removing certain non-operating expenses. Reconciliations of net income as reported in accordance with GAAP to Adjusted Net Income and diluted EPS as reported in accordance with GAAP to Adjusted Diluted EPS are provided at the end of this press release.

 

Willdan’s definitions of Net Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS have limitations as analytical tools and may differ from other companies reporting similarly named measures or from similarly named measures Willdan has reported in prior periods. 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, as amended, including statements regarding Willdan’s targets for fiscal 2019, Willdan’s ability to capitalize on increased energy efficiency spending in large markets and expected benefits from Willdan’s pending acquisition of The Weidt Group.  All statements other than statements of historical fact included in this press release are forward-looking statements. These 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. Important factors that could cause actual results to differ materially from its expectations include, but are not limited to,  Willdan’s ability to compete successfully in the highly competitive energy efficiency services market, changes in state, local and regional economies and government budgets, Willdan’s ability to win new contracts, to renew existing contracts (including with our three primary customers and the two primary customers of recently acquired Lime Energy) and to compete effectively for contracts awarded through bidding processes, Willdan’s ability to successfully integrate its acquisitions, including its recent acquisition of Lime Energy, and execute on its growth strategy,  Willdan’s ability to make principal and interest payments as they come due and comply with applicable financial maintenance covenants, and Willdan’s ability to obtain financing and to refinance its outstanding debt as it matures. 

 

The above is not a complete list of factors or events that could cause actual results to differ from Willdan’s

expectations, and Willdan cannot predict all of them. All written and oral forward-looking statements attributable to Willdan, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements and risk factors disclosed from time to time in Willdan’s reports filed with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K filed for the year ended December 28, 2018, as such disclosures may be amended, supplemented or superseded from time to time by other reports Willdan files with the Securities and Exchange Commission, including subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.  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.

 

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WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

December 28,

 

December 29,

 

 

    

2018

    

2017

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,259,000

 

$

14,424,000

 

Accounts receivable, net of allowance for doubtful accounts of $442,000 and $369,000 at December 28, 2018 and December 29, 2017, respectively

 

 

61,346,000

 

 

38,441,000

 

Contract assets

 

 

51,851,000

 

 

24,732,000

 

Other receivables

 

 

1,893,000

 

 

1,833,000

 

Prepaid expenses and other current assets

 

 

5,745,000

 

 

3,760,000

 

Total current assets

 

 

136,094,000

 

 

83,190,000

 

Equipment and leasehold improvements, net

 

 

7,998,000

 

 

5,306,000

 

Goodwill

 

 

97,748,000

 

 

38,184,000

 

Other intangible assets, net

 

 

44,364,000

 

 

10,666,000

 

Other assets

 

 

3,311,000

 

 

826,000

 

Deferred income taxes, net

 

 

12,321,000

 

 

 —

 

Total assets

 

$

301,836,000

 

$

138,172,000

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

36,829,000

 

$

20,826,000

 

Accrued liabilities

 

 

37,401,000

 

 

23,293,000

 

Contingent consideration payable

 

 

3,113,000

 

 

4,246,000

 

Contract liabilities

 

 

5,075,000

 

 

7,321,000

 

Current portion of notes payable

 

 

8,572,000

 

 

383,000

 

Current portion of capital lease obligations

 

 

320,000

 

 

289,000

 

Total current liabilities

 

 

91,310,000

 

 

56,358,000

 

Contingent consideration payable

 

 

1,616,000

 

 

5,062,000

 

Notes payable

 

 

63,139,000

 

 

2,500,000

 

Capital lease obligations, less current portion

 

 

224,000

 

 

160,000

 

Deferred lease obligations

 

 

724,000

 

 

614,000

 

Deferred income taxes, net

 

 

 —

 

 

2,463,000

 

Other noncurrent liabilities

 

 

534,000

 

 

363,000

 

Total liabilities

 

 

157,547,000

 

 

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; 10,968,000

and 8,799,000 shares issued and outstanding at December 28, 2018 and December 29, 2017, respectively

 

 

110,000

 

 

88,000

 

Additional paid-in capital

 

 

114,008,000

 

 

50,976,000

 

Retained earnings

 

 

30,171,000

 

 

19,588,000

 

Total stockholders’ equity

 

 

144,289,000

 

 

70,652,000

 

Total liabilities and stockholders’ equity

 

$

301,836,000

 

$

138,172,000

 

6

 


 

 

 

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 28,

    

December 29,

 

December 28,

    

December 29,

 

    

2018

 

2017

    

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract revenue

 

$

86,438,000

 

$

64,161,000

    

$

272,252,000

 

$

273,352,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of contract revenue (inclusive of directly related depreciation and amortization):

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

 

13,230,000

 

 

11,149,000

 

 

46,588,000

 

 

44,743,000

Subcontractor services and other direct costs

 

 

46,240,000

 

 

33,038,000

 

 

132,693,000

 

 

151,919,000

Total direct costs of contract revenue

 

 

59,470,000

 

 

44,187,000

 

 

179,281,000

 

 

196,662,000

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages, payroll taxes and employee benefits

 

 

13,373,000

 

 

10,442,000

 

 

45,248,000

 

 

36,534,000

Facilities and facility related

 

 

1,513,000

 

 

1,146,000

 

 

5,600,000

 

 

4,624,000

Stock-based compensation

 

 

1,831,000

 

 

782,000

 

 

6,262,000

 

 

2,774,000

Depreciation and amortization

 

 

2,768,000

 

 

1,053,000

 

 

6,060,000

 

 

3,949,000

Other

 

 

5,804,000

 

 

3,557,000

 

 

17,030,000

 

 

15,105,000

Total general and administrative expenses

 

 

25,289,000

 

 

16,980,000

 

 

80,200,000

 

 

62,986,000

Income from operations

 

 

1,679,000

 

 

2,994,000

 

 

12,771,000

 

 

13,704,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(625,000)

 

 

(23,000)

 

 

(700,000)

 

 

(111,000)

Other, net

 

 

54,000

 

 

42,000

 

 

90,000

 

 

98,000

            

 

 

(571,000)

 

 

19,000

 

 

(610,000)

 

 

(13,000)

Income before income taxes

 

 

1,108,000

 

 

3,013,000

 

 

12,161,000

 

 

13,691,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(93,000)

 

 

(277,000)

 

 

2,131,000

 

 

1,562,000

Net income

 

$

1,201,000

 

$

3,290,000

 

$

10,030,000

 

$

12,129,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

$

0.38

 

$

1.08

 

$

1.42

Diluted

 

$

0.11

 

$

0.36

 

$

1.03

 

$

1.32

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

10,662,000

 

 

8,689,000

 

 

9,264,000

 

 

8,541,000

Diluted

 

 

11,217,000

 

 

9,231,000

 

 

9,763,000

 

 

9,155,000

 

7

 


 

 

 

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year

 

 

    

2018

    

2017

    

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,030,000

 

$

12,129,000

 

$

8,299,000

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,211,000

 

 

4,082,000

 

 

3,220,000

 

Deferred income taxes, net

 

 

(2,890,000)

 

 

621,000

 

 

1,225,000

 

(Gain) loss on sale/disposal of equipment

 

 

(12,000)

 

 

27,000

 

 

4,000

 

Provision for (recovery of) doubtful accounts

 

 

470,000

 

 

(189,000)

 

 

216,000

 

Stock-based compensation

 

 

6,262,000

 

 

2,774,000

 

 

1,239,000

 

Accretion and fair value adjustments of contingent consideration

 

 

(1,426,000)

 

 

1,156,000

 

 

21,000

 

Changes in operating assets and liabilities, net of effects from business acquisitions:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

3,177,000

 

 

(7,412,000)

 

 

1,288,000

 

Contract assets

 

 

(11,539,000)

 

 

(5,744,000)

 

 

(4,057,000)

 

Other receivables

 

 

4,081,000

 

 

(1,126,000)

 

 

82,000

 

Prepaid expenses and other current assets

 

 

(154,000)

 

 

(1,096,000)

 

 

(519,000)

 

Other assets

 

 

(778,000)

 

 

25,000

 

 

(169,000)

 

Accounts payable

 

 

(1,583,000)

 

 

3,186,000

 

 

206,000

 

Accrued liabilities

 

 

(1,945,000)

 

 

4,329,000

 

 

8,409,000

 

Contract liabilities

 

 

(2,272,000)

 

 

(1,593,000)

 

 

2,159,000

 

Deferred lease obligations

 

 

(64,000)

 

 

(100,000)

 

 

(23,000)

 

Net cash provided by operating activities

 

 

7,568,000

 

 

11,069,000

 

 

21,600,000

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Purchase of equipment and leasehold improvements

 

 

(2,105,000)

 

 

(2,178,000)

 

 

(1,662,000)

 

Proceeds from sale of equipment

 

 

59,000

 

 

0

 

 

15,000

 

Cash paid for acquisitions, net of cash acquired

 

 

(124,344,000)

 

 

(14,603,000)

 

 

(8,857,000)

 

Net cash used in investing activities

 

 

(126,390,000)

 

 

(16,781,000)

 

 

(10,504,000)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Payments on contingent consideration

 

 

(4,296,000)

 

 

(1,709,000)

 

 

(1,284,000)

 

Payments on notes payable

 

 

(477,000)

 

 

(4,164,000)

 

 

(4,378,000)

 

Payments on debt issuance costs

 

 

(1,300,000)

 

 

 —

 

 

 —

 

Proceeds from notes payable

 

 

1,805,000

 

 

 —

 

 

733,000

 

Borrowings under delayed draw term loan facility

 

 

70,000,000

 

 

1,000,000

 

 

 —

 

Repayments under line of credit

 

 

(2,500,000)

 

 

 —

 

 

 —

 

Principal payments on capital lease obligations

 

 

(367,000)

 

 

(390,000)

 

 

(522,000)

 

Proceeds from stock option exercise

 

 

668,000

 

 

1,901,000

 

 

327,000

 

Proceeds from sales of common stock under employee stock purchase plan

 

 

1,300,000

 

 

830,000

 

 

209,000

 

Proceeds from equity raise

 

 

55,266,000

 

 

 —

 

 

 —

 

Unregistered sales of equity securities and use of proceeds

 

 

(442,000)

 

 

 —

 

 

 —

 

Net cash provided by (used in) financing activities

 

 

119,657,000

 

 

(2,532,000)

 

 

(4,915,000)

 

Net increase (decrease) in cash and cash equivalents

 

 

835,000

 

 

(8,244,000)

 

 

6,181,000

 

Cash and cash equivalents at beginning of period

 

 

14,424,000

 

 

22,668,000

 

 

16,487,000

 

Cash and cash equivalents at end of period

 

$

15,259,000

 

$

14,424,000

 

$

22,668,000

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

Interest

 

$

494,000

 

$

111,000

 

$

179,000

 

Income taxes

 

 

3,163,000

 

 

2,750,000

 

 

1,875,000

 

Supplemental disclosures of noncash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

Issuance of notes payable related to business acquisitions

 

$

 —

 

$

 —

 

$

4,569,000

 

Issuance of common stock related to business acquisitions

 

 

 —

 

 

3,100,000

 

 

2,228,000

 

Contingent consideration related to business acquisitions

 

 

943,000

 

 

5,400,000

 

 

 —

 

Other working capital adjustment

 

 

63,000

 

 

113,000

 

 

 —

 

Equipment acquired under capital leases

 

 

462,000

 

 

294,000

 

 

373,000

 

8

 


 

 

 

Willdan Group, Inc. and Subsidiaries

Reconciliation of GAAP Revenue to Net Revenue

(Non-GAAP Measure)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 28,

 

December 29,

 

December 28,

 

December 29,

Consolidated

    

2018

    

2017

    

2018

    

2017

Contract revenue

 

$

86,438,000

 

$

64,161,000

 

$

272,252,000

 

$

273,352,000

Subcontractor services and other direct costs

 

 

46,240,000

 

 

33,038,000

 

 

132,693,000

 

 

151,919,000

Net Revenue

 

$

40,198,000

 

$

31,123,000

 

$

139,559,000

 

$

121,433,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 28,

 

December 29,

 

December 28,

 

December 29,

Energy segment

    

2018

    

2017

    

2018

    

2017

Contract revenue

 

$

67,689,000

 

$

45,731,000

 

$

196,832,000

 

$

199,609,000

Subcontractor services and other direct costs

 

 

42,132,000

 

 

27,895,000

 

 

114,545,000

 

 

133,328,000

Net Revenue

 

$

25,557,000

 

$

17,836,000

 

$

82,287,000

 

$

66,281,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 28,

 

December 29,

 

December 28,

 

December 29,

Engineering and Consulting segment

    

2018

    

2017

    

2018

    

2017

Contract revenue

 

$

18,749,000

 

$

18,430,000

 

$

75,420,000

 

$

73,743,000

Subcontractor services and other direct costs

 

 

4,108,000

 

 

5,143,000

 

 

18,148,000

 

 

18,591,000

Net Revenue

 

$

14,641,000

 

$

13,287,000

 

$

57,272,000

 

$

55,152,000

 

9

 


 

 

 

Willdan Group, Inc. and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Non-GAAP Measure)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 28,

   

December 29,

 

December 28,

    

December 29,

 

 

    

2018

 

2017

    

2018

 

2017

 

Net income

    

$

1,201,000

 

$

3,290,000

 

$

10,030,000

 

$

12,129,000

 

Interest expense

 

 

625,000

 

 

23,000

 

 

700,000

 

 

111,000

 

Income tax expense

 

 

(93,000)

 

 

(277,000)

 

 

2,131,000

 

 

1,562,000

 

Stock-based compensation

 

 

1,831,000

 

 

782,000

 

 

6,262,000

 

 

2,774,000

 

Interest accretion(1)

 

 

(712,000)

 

 

377,000

 

 

(1,425,000)

 

 

1,156,000

 

Depreciation and amortization

 

 

2,820,000

 

 

1,106,000

 

 

6,211,000

 

 

4,082,000

 

Transaction costs(2)

 

 

906,000

 

 

38,000

 

 

1,527,000

 

 

178,000

 

Gain on sale of equipment

 

 

 —

 

 

 —

 

 

(14,000)

 

 

 —

 

Adjusted EBITDA

 

$

6,578,000

 

$

5,339,000

 

$

25,422,000

 

$

21,992,000

 


(1)

Interest accretion represents the imputed interest and fair value adjustments to estimated contigent consideration. 

(2)

Transaction costs represents acquisition and acquisition related costs.

10

 


 

 

 

 

Willdan Group, Inc. and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS

(Non-GAAP Measure)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 28,

    

December 29,

 

December 28,

    

December 29,

 

    

2018

 

2017

    

2018

 

2017

Net income

    

$

1,201,000

 

$

3,290,000

 

$

10,030,000

 

$

12,129,000

Adjustment for stock-based compensation

 

 

1,831,000

 

 

782,000

 

 

6,262,000

 

 

2,774,000

Tax effect on stock-based compensation

 

 

154,000

 

 

72,000

 

 

(1,097,000)

 

 

(316,000)

Adjustment for intangible amortization

 

 

2,340,000

 

 

669,000

 

 

4,488,000

 

 

2,426,000

Tax effect on intangible amortization

 

 

196,000

 

 

62,000

 

 

(786,000)

 

 

(277,000)

Adjustment for transaction costs

 

 

906,000

 

 

38,000

 

 

1,527,000

 

 

178,000

Tax effect on transaction costs

 

 

76,000

 

 

3,000

 

 

(268,000)

 

 

(20,000)

Adjusted Net Income

 

 

6,704,000

 

 

4,916,000

 

 

20,156,000

 

 

16,894,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

 

11,217,000

 

 

9,231,000

 

 

9,763,000

 

 

9,155,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.11

 

$

0.36

 

$

1.03

 

$

1.32

Impact of adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation per share

 

 

0.16

 

 

0.08

 

 

0.64

 

 

0.30

Tax effect on stock-based compensation per share

 

 

0.02

 

 

0.01

 

 

(0.11)

 

 

(0.03)

Intangible amortization per share

 

 

0.21

 

 

0.07

 

 

0.46

 

 

0.26

Tax effect on intangible amortization per share

 

 

0.02

 

 

0.01

 

 

(0.08)

 

 

(0.03)

Transaction costs per share

 

 

0.08

 

 

0.00

 

 

0.16

 

 

0.02

Tax effect on transaction costs per share

 

 

0.01

 

 

0.00

 

 

(0.03)

 

 

(0.00)

Adjusted Diluted EPS

 

$

0.61

 

$

0.53

 

$

2.07

 

$

1.84

 

 

 

 

11

 


 

 

 

 

Willdan Group, Inc. and Subsidiaries

Reconciliation of Diluted EPS to Adjusted Diluted EPS Target

(Non-GAAP Measure)

 

 

 

 

 

 

 

 

 

    

2019 Target

 

    

High

    

Low

Net income

 

$

13,923,000

 

$

12,753,000

Adjustment for stock-based compensation

 

 

11,900,000

 

 

11,900,000

Tax effect on stock-based compensation

 

 

(2,856,000)

 

 

(2,856,000)

Adjustment for intangible amortization

 

 

7,600,000

 

 

7,600,000

Tax effect on intangible amortization

 

 

(1,824,000)

 

 

(1,824,000)

Adjustment for transaction costs

 

 

 —

 

 

 —

Tax effect on transaction costs

 

 

 —

 

 

 —

Adjusted Net Income

 

 

28,743,000

 

 

27,573,000

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

 

11,700,000

 

 

11,700,000

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.19

 

$

1.09

Impact of adjustment:

 

 

 

 

 

 

Stock-based compensation per share

 

 

1.01

 

 

1.01

Tax effect on stock-based compensation per share

 

 

(0.24)

 

 

(0.24)

Intangible amortization per share

 

 

0.65

 

 

0.65

Tax effect on intangible amortization per share

 

 

(0.16)

 

 

(0.16)

Transaction costs per share

 

 

 —

 

 

 —

Tax effect on transaction costs per share

 

 

 —

 

 

 —

Adjusted Diluted EPS

 

$

2.45

 

$

2.35

 

 

12

 


 

 

 

Contact:

 

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 

13