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Willdan Group Reports First Quarter 2014 Financial Results
Reports 6% Revenue Increase and 7th Consecutive Quarter of Profitability
Investment Community Conference Call Today at 5:00 p.m. Eastern Time
For the first quarter of 2014, Willdan reported total contract revenue of $22.7 million and net income of $1.3 million, or $0.18 and $0.17 per basic and diluted share, respectively.
"We are reporting strong earnings on higher year-over-year revenue and our seventh consecutive quarter of profitability," said Tom Brisbin, Willdan's Chief Executive Officer. "Our Engineering Services segment continues to benefit from recovery in the residential housing market and more outsourced staffing for cities. We have hired more than 30 new employees for this segment since the beginning of 2014.
"Revenue from our Energy Efficiency Services segment increased from the first quarter of 2013. This is notable given the change last year in our project with Consolidated Edison of New York that included our transition to self-performing most of our energy subcontract work, which decreased pass-through revenue and costs.
"We've had a good start to 2014 and we are on track to deliver on our outlook for improved profitability in 2014," Brisbin added. "We ended the first quarter with a strong balance sheet and will continue to manage expenses carefully throughout the current year."
First Quarter 2014 Financial Highlights
Total contract revenue for the first quarter of 2014 increased 6% to
Net income for the quarter ended March 28, 2014 increased by
Revenue, net of subcontractor costs, for the first quarter of 2014
increased 12% to
Direct costs of contract revenue were
Adjusted EBITDA (as defined below) was
Total general and administrative expenses for the first quarter of 2014
decreased by 8% to
Willdan reported $12.7 million in cash and cash equivalents at March 28,
2014, an increase of
Use of Non-GAAP Financial Measures
"Revenues, net of subcontractor costs," a non-GAAP financial measure, is a supplemental measure that Willdan believes enhances investors' ability to analyze our business trend and performance because it substantially measures the work performed by our employees. In the course of providing services, we routinely subcontract various services. Generally, these subcontractor costs are passed through to our clients and, in accordance with GAAP and industry practice, are included in our revenue when it is our contractual responsibility to procure or manage these activities. Because subcontractor services can vary significantly from project to project and period to period, changes in revenue may not necessarily be indicative of our business trends. Accordingly, we segregate costs from revenue to promote a better understanding of our business by evaluating revenue exclusive of costs associated with external service providers. A reconciliation of contract revenue as reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to revenues, net of subcontractor costs is provided at the end of this news release.
Adjusted EBITDA is a supplemental measure used by Willdan's management to measure its operating performance. Willdan defines Adjusted EBITDA as net income (loss) plus net interest expense, income tax expense (benefit), depreciation and amortization, goodwill impairment and other non-recurring income and expense items occurring in such period. Willdan believes Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes the impact of certain non-recurring income and expense items from its operational results, which may facilitate comparison of its results from period to period. A reconciliation of net income (loss) as reported in accordance with U.S. GAAP to Adjusted EBITDA is provided at the end of this news release.
Willdan's definition of Revenues, net of subcontractor costs and Adjusted EBITDA 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 U.S. GAAP, such as contract revenues and net income.
Conference Call Details
Chief Executive Officer Thomas Brisbin and Chief Financial Officer Stacy
McLaughlin will host a conference call today, May 8, 2014, at 5:00 p.m.
Eastern Time/
Interested parties may participate in the conference call by dialing
888-561-1721 (480-629-9821 for international callers). When prompted,
ask for the "Willdan Group, Inc. First Quarter 2014 Conference Call."
The conference call will be webcast simultaneously on
The telephonic replay of the conference call may be accessed approximately two hours after the call through May 22, 2013, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4681757. The webcast replay will be archived for 12 months.
About Willdan Group, Inc.
Celebrating its 50th year of business, Willdan provides outsourced professional technical and consulting services to public agencies, public and private utilities, and commercial and industrial firms throughout the United States. Willdan benefits from well-established relationships, industry-leading expertise and a solid reputation for delivering projects on time and on budget. The company's service offerings span a broad set of complementary disciplines that include engineering and planning, energy efficiency and sustainability, financial and economic consulting, and national preparedness. Willdan has crafted this set of integrated services so that, in the face of an evolving environment—whether economic, natural, or built—Willdan can continue to extend the reach and resources of its clients. For additional information, visit Willdan's website at www.willdan.com.
Forward Looking Statements
Statements in this press release that are not purely historical, including statements regarding Willdan's intentions, hopes, beliefs, expectations, representations, projections, estimates, plans or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties including, but not limited to, the risk that Willdan will not be able to improve its profitability in 2014. It is important to note that Willdan's actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, a slowdown in the local and regional economies of the states where Willdan conducts business and the loss of or inability to hire additional qualified professionals. Willdan's business could be affected by a number of other factors, including the risk factors listed from time to time in Willdan's SEC reports including, but not limited to, the Annual Report on Form 10-K filed for the year ended December 27, 2013. Willdan cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Willdan disclaims any obligation to, and does not undertake to, update or revise any forward-looking statements in this press release.
CONDENSED CONSOLIDATED BALANCE SHEETS |
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(unaudited) | ||||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents, including restricted cash of |
$ | 12,656,000 | $ | 8,134,000 | ||||||||||
Accounts receivable, net of allowance for doubtful accounts of
|
10,791,000 | 13,167,000 | ||||||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
10,728,000 | 9,635,000 | ||||||||||||
Other receivables | 350,000 | 212,000 | ||||||||||||
Prepaid expenses and other current assets |
1,900,000 | 2,377,000 | ||||||||||||
Total current assets | 36,425,000 | 33,525,000 | ||||||||||||
Equipment and leasehold improvements, net | 666,000 | 691,000 | ||||||||||||
Other assets | 648,000 | 333,000 | ||||||||||||
Deferred income taxes, net of current portion | 3,688,000 | 3,688,000 | ||||||||||||
Total assets | $ | 41,427,000 | $ | 38,237,000 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Excess of outstanding checks over bank balance | $ | 2,106,000 | $ | 1,473,000 | ||||||||||
Accounts payable | 3,576,000 | 3,957,000 | ||||||||||||
Accrued liabilities | 7,324,000 | 5,808,000 | ||||||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 2,479,000 | 2,247,000 | ||||||||||||
Current portion of notes payable | 319,000 | 517,000 | ||||||||||||
Current portion of capital lease obligations | 124,000 | 129,000 | ||||||||||||
Current portion of deferred income taxes | 3,688,000 | 3,688,000 | ||||||||||||
Total current liabilities | 19,616,000 | 17,819,000 | ||||||||||||
Capital lease obligations, less current portion | 96,000 | 85,000 | ||||||||||||
Deferred lease obligations | 73,000 | 120,000 | ||||||||||||
Total liabilities | 19,785,000 | 18,024,000 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, |
— | — | ||||||||||||
Common stock, |
74,000 | 74,000 | ||||||||||||
Additional paid-in capital | 34,768,000 | 34,654,000 | ||||||||||||
Accumulated deficit | (13,200,000 | ) | (14,515,000 | ) | ||||||||||
Total stockholders' equity | 21,642,000 | 20,213,000 | ||||||||||||
Total liabilities and stockholders' equity | $ | 41,427,000 | $ | 38,237,000 | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
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Three Months Ended | ||||||||||||||||
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2014 | 2013 | |||||||||||||||
Contract revenue | $ | 22,686,000 | $ | 21,385,000 | ||||||||||||
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||
Salaries and wages | 6,202,000 | 5,843,000 | ||||||||||||||
Subconsultant services and other direct costs | 6,996,000 | 6,191,000 | ||||||||||||||
Total direct costs of contract revenue | 13,198,000 | 12,034,000 | ||||||||||||||
General and administrative expenses: | ||||||||||||||||
Salaries and wages, payroll taxes and employee benefits | 4,918,000 | 5,538,000 | ||||||||||||||
Facilities and facilities related | 1,062,000 | 1,188,000 | ||||||||||||||
Stock-based compensation | 41,000 | 50,000 | ||||||||||||||
Lease abandonment, net | — | 13,000 | ||||||||||||||
Depreciation and amortization | 103,000 | 149,000 | ||||||||||||||
Other | 2,052,000 | 1,956,000 | ||||||||||||||
Total general and administrative expenses | 8,176,000 | 8,894,000 | ||||||||||||||
Income from operations | 1,312,000 | 457,000 | ||||||||||||||
Other income (expense), net: | ||||||||||||||||
Interest income | 2,000 | 3,000 | ||||||||||||||
Interest expense | (4,000 | ) | (27,000 | ) | ||||||||||||
Other, net | 49,000 | 15,000 | ||||||||||||||
Total other income (expense), net | 47,000 | (9,000 | ) | |||||||||||||
Income before income taxes | 1,359,000 | 448,000 | ||||||||||||||
Income tax expense | 44,000 | 49,000 | ||||||||||||||
Net income | $ | 1,315,000 | $ | 399,000 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.18 | $ | 0.05 | ||||||||||||
Diluted | 0.17 | 0.05 | ||||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 7,397,000 | 7,335,000 | ||||||||||||||
Diluted | 7,609,000 | 7,382,000 | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Three Months Ended | ||||||||||||||||
2014 |
2013 |
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Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 1,315,000 | $ | 399,000 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 103,000 | 166,000 | ||||||||||||||
Lease abandonment expense, net | — | 13,000 | ||||||||||||||
Loss (gain) on sale of equipment | 2,000 | (5,000 | ) | |||||||||||||
Provision for doubtful accounts | 78,000 | 65,000 | ||||||||||||||
Stock-based compensation | 41,000 | 50,000 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 2,298,000 | 3,345,000 | ||||||||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | (1,093,000 | ) | (1,279,000 | ) | ||||||||||||
Other receivables | (138,000 | ) | (6,000 | ) | ||||||||||||
Prepaid expenses and other current assets | 477,000 | 526,000 | ||||||||||||||
Other assets | (315,000 | ) | 7,000 | |||||||||||||
Accounts payable | (381,000 | ) | (2,552,000 | ) | ||||||||||||
Changes in excess of outstanding checks over bank balance | 633,000 | (300,000 | ) | |||||||||||||
Accrued liabilities | 1,516,000 | 454,000 | ||||||||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 232,000 | (107,000 | ) | |||||||||||||
Deferred lease obligations | (47,000 | ) | (71,000 | ) | ||||||||||||
Net cash provided by operating activities | 4,721,000 | 705,000 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchase of equipment and leasehold improvements | (33,000 | ) | (65,000 | ) | ||||||||||||
Proceeds from sale of equipment | — | 5,000 | ||||||||||||||
Net cash used in investing activities | (33,000 | ) | (60,000 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Payments on notes payable | (198,000 | ) | (246,000 | ) | ||||||||||||
Principal payments on capital lease obligations | (41,000 | ) | (36,000 | ) | ||||||||||||
Proceeds from stock option exercise | 45,000 | — | ||||||||||||||
Proceeds from sales of common stock under employee stock purchase plan | 28,000 | 37,000 | ||||||||||||||
Net cash used in financing activities | (166,000 | ) | (245,000 | ) | ||||||||||||
Net increase in cash and cash equivalents | 4,522,000 | 400,000 | ||||||||||||||
Cash and cash equivalents at beginning of the period | 8,134,000 | 10,006,000 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 12,656,000 | $ | 10,406,000 | ||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid during the period for: | ||||||||||||||||
Interest | $ | 4,000 | $ | 27,000 | ||||||||||||
Income taxes | 15,000 | 49,000 | ||||||||||||||
Supplemental disclosures of noncash investing and financing activities: | ||||||||||||||||
Equipment acquired under capital lease obligations | $ | 47,000 | $ | — | ||||||||||||
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Reconciliation of GAAP Revenue and "Revenue, Net of Subcontractor Costs" | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
Change | |||||||||||||||||||||||||||
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$ | % | ||||||||||||||||||||||||
Contract revenue | $ | 22,686,000 | $ | 21,385,000 | $ | 1,301,000 | 6 | % | |||||||||||||||||||
Subcontractor costs | 4,194,000 | 4,805,000 | (611,000 | ) | (13 | % | ) | ||||||||||||||||||||
Revenue, net of subcontractor costs | 18,492,000 | 16,580,000 | 1,912,000 | 12 | % | ||||||||||||||||||||||
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Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | |||||||||||||||||||||||||||||||
The following is a reconciliation of net income (loss) to Adjusted EBITDA: | |||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||
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2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
Net income (loss) | $ | 1,315 | $ | 399 | $ | (1,411 | ) | $ | (291 | ) | |||||||||||||||||||||
Interest income | (2 | ) | (3 | ) | (1 | ) | (2 | ) | |||||||||||||||||||||||
Interest expense | 4 | 27 | 22 | 18 | |||||||||||||||||||||||||||
Income tax expense (benefit) | 44 | 49 | (927 | ) | — | ||||||||||||||||||||||||||
Lease abandonment, net | — | 13 | 4 | 13 | |||||||||||||||||||||||||||
Depreciation and amortization | 103 | 166 | 191 | 274 | |||||||||||||||||||||||||||
(Gain) loss on sale of assets | (2 | ) | (5 | ) | — | (2 | ) | ||||||||||||||||||||||||
Litigation reversal | — | — | — | — | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 1,462 | $ | 646 | $ | (2,122 | ) | $ | 10 |
Chief Financial
Officer
Tel: 714-940-6300
smclaughlin@willdan.com
Or
Investor/Media
Contact
Tel: 310-478-2700
Moira
Conlon: mconlon@finprofiles.com
Jody
Cain: jcain@finprofiles.com
Source:
News Provided by Acquire Media