Willdan Reports Fourth Quarter 2009 and Fiscal Year 2009 Financial Results

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Mar 30, 2010

Willdan Reports Fourth Quarter 2009 and Fiscal Year 2009 Financial Results

ANAHEIM, Calif., Mar 30, 2010 (BUSINESS WIRE) -- Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN) today announced financial results for its fourth quarter and fiscal year 2009 ended January 1, 2010.

For the fourth quarter of 2009, Willdan reported total contract revenue of $14.4 million and a net loss of $3.3 million, or $0.46 per basic and diluted share. The fourth quarter results reflect a goodwill impairment charge of $2.8 million related to Willdan's public finance services reporting unit, a lease abandonment charge of $0.5 million, and an income tax valuation allowance of $0.9 million, partially offset by a litigation reversal of $1.1 million.

For the fiscal year ended January 1, 2010, Willdan reported total contract revenue of $61.6 million and a net loss of $5.6 million, or $0.78 per basic and diluted share.

Tom Brisbin, Willdan's Chief Executive Officer, stated: "During the fourth quarter of 2009, we took a number of decisive actions to address the impact of continued economic weakness on our business. These changes were not easy to make, however, we believe they were necessary to position Willdan for the road ahead. While our traditional engineering business has continued to decline, we are encouraged by the growth in our energy business. Looking ahead, we will continue to counter weakness in our traditional engineering business with growth in our energy and homeland solutions businesses. With the changes we recently made, we believe we have closely aligned our resources with the demand for our services going forward. Assuming some degree of economic stabilization in 2010, we believe Willdan is poised for improved financial performance."

Fourth Quarter 2009 Results

For the fourth quarter of fiscal 2009, revenue was $14.4 million, down $4.6 million, or 24.2%, from revenue of $19.0 million for the comparable period last year. On a sequential basis, revenue was down $0.2 million, or 1.3%, from the third quarter of 2009. Loss from operations was $4.0 million for the fourth quarter of fiscal 2009, as compared to $2.0 million for the comparable period last year. On a sequential basis, loss from operations increased $2.6 million from $1.4 million in the third quarter of 2009.

Net loss was $3.3 million for the fourth quarter of fiscal 2009, as compared to $1.2 million in the comparable period last year and a net loss of $0.9 million in the third quarter of 2009. Included in the net loss for the fourth quarter of fiscal 2009 was an income tax valuation allowance of $0.9 million related to a portion of the deferred tax assets.

Basic and diluted loss per share for the fourth quarter of fiscal 2009 was $0.46 as compared to $0.17 for the comparable period last year.

Willdan generated $0.4 million in cash flow from operations in the fourth quarter of fiscal year 2009.

Fiscal Year 2009 Results

For fiscal year 2009, revenue was $61.6 million, down $11.6 million, or 15.8%, from revenue of $73.2 million for fiscal year 2008. Loss from operations was $7.5 million for fiscal year 2009 as compared to $2.8 million for fiscal year 2008. Net loss was $5.6 million for fiscal year 2009 as compared to a net loss of $1.6 million for fiscal year 2008.

Basic and diluted loss per share for fiscal year 2009 was $0.78 as compared to basic and diluted loss per share of $0.22 for fiscal year 2008.

Willdan generated $2.2 million in cash flow from operations in the twelve months ended January 1, 2010.

Three Months Ended Twelve Months Ended
In thousands (except per share data) January 1,

2010

January 2,

2009

January 1,

2010

January 2,

2009

Revenue $ 14,375 $ 18,956 $ 61,605 $ 73,190
Loss from operations (3,970 ) (2,009

)

(7,493 ) (2,800 )
Interest income 3 34 30 313
Interest expense (9 ) (13

)

(38 ) (33 )
Other, net (4 ) (32

)

(5 ) (15 )
Income tax benefit (635 ) (791

)

(1,931 ) (930 )
Net loss $ (3,345 ) $ (1,229

)

$ (5,575 ) $ (1,605 )
Basic and diluted loss per share $ (0.46 ) $ (0.17

)

$ (0.78 ) $ (0.22 )
Weighted average shares outstanding:

Basic

7,208 7,164 7,192 7,159
Diluted 7,208 7,164 7,192 7,159

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a supplemental measure used by Willdan's management to measure its operating performance. Willdan defines Adjusted EBITDA as net (loss) income plus net interest expense, income tax (benefit) expense, depreciation and amortization, goodwill impairment expense, lease abandonment expense, loss (gain) on sales of assets and litigation (reversals) accruals. Willdan's definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures. This measure should be considered in addition to, and not as a substitute for or superior to, other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles, or GAAP, such as net income. Willdan believes Adjusted EBITDA enables management to separate unusual or infrequent income and expense items from its results of operations to provide a more normalized and consistent view of operating performance on a period-to-period basis. Willdan uses Adjusted EBITDA to evaluate its performance for, among other things, budgeting, forecasting and incentive compensation purposes. Willdan also believes Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes from its operational results the impact of certain unusual or infrequent income and expense items, which may facilitate comparison of its results from period-to-period.

Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to income or net income as an indicator of operating performance or any other GAAP measure.

Adjusted EBITDA decreased $3.4 million to $(3.3) million for fiscal year 2009 from $0.1 million for fiscal year 2008.

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

In thousands Twelve Months Ended
January 1,

2010

January 2,

2009

Net loss $ (5,575 ) $ (1,605 )
Interest income (30 ) (313 )
Interest expense 38 33
Loss on the sale of assets 6 15
Income tax benefit (1,931 ) (930 )
Depreciation and amortization 1,814 1,978
Impairment of goodwill 2,763 148
Lease abandonment expense 707 742
Litigation reversal (1,125 )

--

Adjusted EBITDA $ (3,333 ) $ 68

Liquidity and Capital Resources

Willdan had $8.4 million in cash and cash equivalents at January 1, 2010, compared with $8.1 million at January 2, 2009. Willdan has a $5.0 million bank revolving line of credit, with $1.0 million in outstanding borrowings at the end of fiscal year 2009.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on March 30, 2010 at 5:00 p.m. Eastern/2:00 p.m. Pacific to further discuss Willdan's financial results and business developments.

Interested parties may access the conference call by dialing 877-941-8631 (480-629-9820 for international callers). When prompted, ask for the "Willdan Group Fourth Quarter 2009 Investor 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 13, 2010, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4272630#. The webcast replay will be available on Willdan's website for 12 months.

About Willdan Group, Inc.

Founded over 40 years ago, Willdan is a provider of outsourced services to public and private agencies and utilities located primarily in California and New York. Willdan assists cities, public utilities and other government agencies and, to a lesser extent, private industry with a broad range of services, including civil engineering, building and safety services, geotechnical engineering, energy efficiency, water conservation, renewable resource strategy, financial and economic consulting, and disaster preparedness and homeland security. For additional information, visit Willdan's website at www.willdan.com.

Forward-Looking Statements

Safe Harbor Statement: Statements in this press release which are not purely historical, including statements regarding Willdan's intentions, hopes, beliefs, expectations, representations, projections, estimates, plans or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties including, but not limited to, the risk that Willdan will not be able to expand its services or meet the needs of customers in markets in which it operates. It is important to note that Willdan's actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, a slowdown in the local and regional economies of the states where Willdan conducts business and the loss of or inability to hire additional qualified professionals. Willdan's business could be affected by a number of other factors, including the risk factors listed from time to time in Willdan's SEC reports including, but not limited to, the Form 10-K annual report for the year ended January 1, 2010 filed on March 30, 2010. Willdan cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Willdan disclaims any obligation to, and does not undertake to, update or revise any forward-looking statements in this press release.

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

January 1,
2010 		January 2,
2009
Assets
Current assets:
Cash and cash equivalents $ 8,445,000 $ 8,144,000
Accounts receivable, net of allowance for doubtful accounts of $1,862,000 and $662,000

at January 1, 2010 and January 2, 2009, respectively

10,097,000 12,862,000
Costs and estimated earnings in excess of billings on uncompleted contracts 6,649,000 8,281,000
Income tax receivable 51,000 956,000
Other receivables 73,000 48,000
Prepaid expenses and other current assets 1,500,000 1,784,000
Total current assets 26,815,000 32,075,000
Equipment and leasehold improvements, net 1,596,000 2,377,000
Goodwill 10,371,000 11,145,000
Other intangible assets, net 149,000 1,367,000
Other assets 318,000 373,000
Deferred income taxes, net of current portion 1,083,000 233,000
Total assets $ 40,332,000 $ 47,570,000
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over bank balance $ 488,000 $ 448,000
Accounts payable 1,457,000 2,111,000
Purchase price payable -- 1,000,000
Accrued liabilities 4,509,000 5,253,000
Billings in excess of costs and estimated earnings on uncompleted contracts 1,030,000 704,000
Borrowings under line of credit 1,000,000 --
Current portion of notes payable 23,000 52,000
Current portion of capital lease obligations 125,000 168,000
Current portion of deferred income taxes 1,479,000 2,519,000
Total current liabilities 10,111,000 12,255,000
Notes payable, less current portion -- 17,000
Capital lease obligations, less current portion 82,000 157,000
Lease obligations 1,022,000 805,000
Total liabilities 11,215,000 13,234,000
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; 7,208,000 and 7,164,000 shares issued and outstanding at January 1, 2010 and January 2, 2009, respectively 72,000 72,000
Additional paid-in capital 33,440,000 33,084,000
(Accumulated deficit) retained earnings (4,395,000 ) 1,180,000
Total stockholders' equity 29,117,000 34,336,000
Total liabilities and stockholders' equity $ 40,332,000 $ 47,570,000

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Year
2009 2008 2007
Contract revenue $ 61,605,000 $ 73,190,000 $ 78,798,000
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below):
Salaries and wages 18,130,000 21,991,000 25,769,000
Sub-consultant services 7,997,000 7,750,000 4,600,000
Other direct costs 2,715,000 2,973,000 1,568,000
Total direct costs of contract revenue 28,842,000 32,714,000 31,937,000
Gross profit 32,763,000 40,476,000 46,861,000
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits 20,325,000 24,439,000 25,061,000
Facilities and facility related 4,430,000 4,803,000 4,546,000
Stock-based compensation 272,000 214,000 209,000
Depreciation and amortization 1,814,000 1,978,000 1,755,000
Lease abandonment, net 707,000 742,000 --
Impairment of goodwill 2,763,000 148,000 --
Litigation (reversal) accrual (1,125,000 ) -- 1,049,000
Other 11,070,000 10,952,000 11,719,000
Total general and administrative expenses 40,256,000 43,276,000 44,339,000
(Loss) income from operations (7,493,000 ) (2,800,000 ) 2,522,000
Other (expense) income:
Interest income 30,000 313,000 693,000
Interest expense (38,000 ) (33,000 ) 499,000
Other, net (5,000 ) (15,000 ) (27,000 )
Total other (expense) income (13,000 ) 265,000 1,165,000
(Loss) income before income tax expense (7,506,000 ) (2,535,000 ) 3,687,000
Income tax (benefit) expense (1,931,000 ) (930,000 ) 1,543,000
Net (loss) income $ (5,575,000 ) $ (1,605,000 ) $ 2,144,000
(Loss) earnings per share:
Basic and diluted $ (0.78 ) $ (0.22 ) $ 0.30
Weighted-average shares outstanding:
Basic 7,192,000 7,159,000 7,149,000
Diluted 7,192,000 7,159,000 7,150,000

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Year
2009 2008 2007
Cash flows from operating activities:
Net (loss) income $ (5,575,000 ) $ (1,605,000 ) $ 2,144,000
Adjustments to reconcile net (loss) income to net cash provided by (used in)

operating activities:

Depreciation and amortization 1,814,000 1,978,000 1,755,000
Impairment of goodwill 2,763,000 148,000 --
Lease abandonment expense, net 707,000 742,000 --
Loss on sale of equipment, net 6,000 17,000 28,000
Provision for doubtful accounts 1,829,000 585,000 212,000
Stock-based compensation 272,000 214,000 209,000
Changes in operating assets and liabilities:
Accounts receivable 936,000 3,266,000 (1,032,000 )
Costs and estimated earnings in excess of billings on uncompleted contracts 1,632,000 187,000 624,000
Income tax receivable 905,000 (956,000 ) --
Other receivables (25,000 ) 53,000 4,348,000
Prepaid expenses and other current assets 284,000 292,000 (209,000 )
Other assets 55,000 50,000 69,000
Accounts payable (654,000 ) (186,000 ) (134,000 )
Accrued liabilities (959,000 ) (831,000 ) (8,792,000 )
Billings in excess of costs and estimated earnings on uncompleted contracts 326,000 (236,000 ) (281,000 )
Deferred income taxes (1,890,000 ) (112,000 ) 737,000
Lease obligations (272,000 ) (60,000 ) 59,000
Net cash provided by (used in) operating activities 2,154,000 3,546,000 (263,000 )
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (386,000 ) (552,000 ) (654,000 )
Proceeds from sale of equipment -- 49,000 35,000
Purchase of other assets -- (75,000 )

--

Payments for business acquisitions, net of cash acquired (2,373,000 ) (10,236,000 )

--

Purchase of liquid investments -- (7,100,000 ) (22,800,000

)

Proceeds from sale of liquid investments -- 8,400,000 21,500,000
Net cash used in investing activities (2,759,000 ) (9,514,000 ) (1,919,000

)

Cash flows from financing activities:
Changes in excess of outstanding checks over bank balance 40,000 (185,000 ) 376,000
Payments on notes payable (46,000 ) (1,119,000 ) (1,210,000

)

Proceeds from notes payable -- -- 1,184,000
Borrowings under line of credit 3,553,000 -- 418,000
Repayments of line of credit (2,553,000 ) -- (418,000

)

Principal payments on capital leases (172,000 ) (170,000 ) (175,000

)

Proceeds from sales of common stock under employee stock purchase plan 84,000 75,000 25,000
Final distributions to former holders of redeemable common stock -- -- (3,150,000

)

Refund of offering costs -- -- 10,000
Net cash provided by (used in) financing activities 906,000 (1,399,000 ) (2,940,000 )
Net increase (decrease) in cash and cash equivalents 301,000 (7,367,000 ) (5,122,000

)

Cash and cash equivalents at beginning of the year 8,144,000 15,511,000 20,633,000
Cash and cash equivalents at end of the year $ 8,445,000 $ 8,144,000 $ 15,511,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 40,000 $ 34,000 $ 84,000
Income taxes 3,000 853,000 902,000
Supplemental disclosures of noncash investing and financing activities:
Equipment acquired under capital leases $ 60,000 $ 42,000 $ 147,000
Note payable issued in connection with acquisition of assets -- 100,000 --
Purchase price payable -- 1,000,000 --

SOURCE: Willdan Group, Inc. 

Willdan Group, Inc.
Kimberly Gant
Chief Financial Officer
714-940-6329
kgant@willdan.com
or
Financial Profiles, Inc.
Moira Conlon
310-478-2700 x11
mconlon@finprofiles.com

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