Reports 31.6% Revenue Increase and 8^th Consecutive Quarter of Profitability

Investment Community Conference Call Today at 5:00 p.m. Eastern Time

ANAHEIM, Calif.--(BUSINESS WIRE)-- Willdan Group, Inc. ("Willdan") (NASDAQ: WLDN), a provider of professional technical and consulting services, today reported financial results for its second quarter ended June 27, 2014, and provided a business update.

For the second quarter of 2014, Willdan reported total contract revenue of $27.0 million and net income of $1.9 million, or $0.25 per diluted share. For the six months ended June 27, 2014, total contract revenue was $49.7 million and net income was $3.2 million, or $0.43 per diluted share.

"We are reporting our eighth consecutive quarter of profitability with revenue growth from each of our business segments," said Willdan's Chief Executive Officer Tom Brisbin. "In the first half of the year, net income increased to $3.2 million, or $0.43 per diluted share, from net income of $1.1 million, or $0.15 per diluted share, for the same period last year.

"Our outlook is for continued profitable growth supported by our expanded service offering, geographic reach and a better economic environment," he added. "We are winning new contracts and increasing our services with existing customers based on the quality of our work and program management capabilities. We also see opportunities to grow our business through tuck-in acquisitions and have a strong balance sheet to capitalize on this strategy."

Second Quarter 2014 Financial Highlights

Total contract revenue for the second quarter of 2014 increased 31.6% to $27.0 million from $20.5 million for the second quarter of 2013. The revenue growth was due primarily to an increase of $5.7 million in contract revenue from the Energy Efficiency Services segment to $13.7 million in the second quarter of 2014, due to an increase in the direct installation of energy efficiency measures from the energy efficiency audits in New York and California. Contract revenue for the Engineering Services segment increased by $0.9 million to $9.5 million as a result of greater demand for building and safety, and construction management services. Contract revenue for the Public Finance Services segment was $2.7 million and was $1.1 million for the Homeland Security Services segment.

Net income for the quarter ended June 27, 2014 increased by $1.2 million, to $1.9 million, or $0.25 per diluted share, from net income of $0.7 million, or $0.09 per diluted share, for the quarter ended June 28, 2013.

Revenue, net of subcontractor costs, for the second quarter of 2014 increased 24% to $21.2 million from $17.1 million for the second quarter of 2013.

Direct costs of contract revenue were $16.3 million for the second quarter of 2014, compared with $11.4 million for the second quarter of 2013. The $4.9 million increase resulted primarily from increased demand for the energy efficiency, sustainability and renewable energy services of Willdan Energy Solutions, which generally utilizes a higher percentage of subconsultants than Willdan's other subsidiaries.

Total general and administrative expenses for the second quarter of 2014 increased by 4.7% to $8.7 million compared with $8.3 million for the prior year period.

Six Months 2014 Financial Highlights

Total contract revenue for the six months ended June 27, 2014 increased 18.6% to $49.7 million from $41.9 million for the six months ended June 28, 2013. The increase was due primarily to a $6.1 million increase in contract revenue for the Energy Efficiency Services segment due to an increase in the direct installation of energy efficiency measures from the energy efficiency audits in New York and California. Contract revenue for the Engineering Services segment increased by $1.5 million to $18.4 million as a result of greater demand for the building and safety, and construction management services of our Engineering Services segment. Contract revenue from the Public Finance Services segment was $5.2 million and was $2.0 million from the Homeland Security Services segment.

Net income for the six months ended June 27, 2014 increased by $2.1 million, to $3.2 million, or $0.43 per diluted share, from net income of $1.1 million, or $0.15 per diluted share, for the six months ended June 28, 2013.

Revenue, net of subcontractor costs, for the six months ended June 27, 2014 increased 18% to $39.7 million from $33.6 million for the six months ended June 28, 2013.

Direct costs of contract revenue were $29.5 million for the six months ended June 27, 2014, as compared to $23.5 million for the six months ended June 28, 2013. The $6.0 million increase resulted primarily from increased demand for the energy efficiency, sustainability and renewable energy services of Willdan Energy Solutions, which generally utilizes a higher percentage of subconsultants than Willdan's other subsidiaries and an increase in personnel costs of $1.2 million.

Adjusted EBITDA (as defined below) was $3.5 million for the six months ended June 27, 2014, compared with $1.5 million for the six months ended June 28, 2013.

Total general and administrative expenses for the six months ended June 27, 2014 decreased by 2% to $16.9 million from $17.2 million for the prior year period, due primarily to lower facilities and facility related expenses.

			Three Months Ended										Six Months Ended
			June 27,					June 28,					June 27,					June 28,
In thousands (except per share data)			2014					2013					2014					2013
Revenue			$	26,970				$	20,496				$	49,656				$	41,881
Income from operations			1,941					718					3,253					1,175
Interest income			1					2					3					5
Interest expense			(3		)			(50		)			(7		)			(77		)
Other, net			18					10					67					25
Income tax expense (benefit)			64					(8		)			108					41
Net income			$	1,893				$	688				$	3,208				$	1,087
Earnings per share:
Basic			$	0.26				$	0.09				$	0.43				$	0.15
Diluted			$	0.25				$	0.09				$	0.43				$	0.15
Weighted average shares outstanding:
Basic			7,405					7,353					7,401					7,336
Diluted			7,661					7,401					7,517					7,383

Liquidity and Capital Resources

Willdan reported $12.1 million in cash and cash equivalents at June 27, 2014, as compared to $8.1 million at December 27, 2013. Willdan's primary sources of liquidity are cash generated from operations and a revolving line of credit with BMO Harris Bank, N.A., which matures on March 24, 2016. In connection with the new credit facility entered into during the first half of 2014, no cash amounts are restricted as of June 27, 2014 as compared to $5.0 million at December 27, 2013. Cash flows provided by operating activities were $4.4 million for the six months ended June 27, 2014, compared with $2.0 million for the six months ended June 28, 2013.

Outlook

Willdan is affirming its three-year financial and operational targets announced on June 20, 2014, as follows:

• Contract revenue growth of up to 15% per year (organic and acquisitive growth combined)
• Gross margin of 40% to 45%
• Adjusted EBITDA margin of 5% to 10%
• Accounts receivable days outstanding of 70 to 75

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 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 as reported in accordance with U.S. GAAP to Adjusted EBITDA is provided at the end of this news release.

Willdan's definition of Revenue, 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 revenue and net income.

Conference Call Details

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Stacy McLaughlin will host a conference call today, August 7, 2014, at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time, to discuss Willdan's financial results and provide a business update.

Interested parties may participate in the conference call by dialing 888-567-4387 (719-457-2085 for international callers). When prompted, ask for the "Willdan Group, Inc., Second Quarter 2014 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 August 21, 2014, by dialing 888-203-1112 (719-457-0820 for international callers). The replay access code is 5891096. 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 our ability to expand our service offerings and geographic reach, continue to win new contracts and locate and successfully complete acquisition opportunities. 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.

WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
				June 27,						December 27,
				2014						2013
				(unaudited)
Assets
Current assets:
Cash and cash equivalents, including restricted cash of $0 and $5,000,000 at June 27, 2014 and December 27, 2013, respectively				$	12,105,000					$	8,134,000
Accounts receivable, net of allowance for doubtful accounts of $532,000 and $385,000 at June 27, 2014 and December 27, 2013, respectively				12,221,000						13,167,000
Costs and estimated earnings in excess of billings on uncompleted contracts				13,023,000						9,635,000
Other receivables				449,000						212,000
Prepaid expenses and other current assets				1,239,000						2,377,000
Total current assets				39,037,000						33,525,000
Equipment and leasehold improvements, net				889,000						691,000
Other assets				646,000						333,000
Deferred income taxes, net of current portion				3,688,000						3,688,000
Total assets				$	44,260,000					$	38,237,000
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over bank balance				$	1,419,000					$	1,473,000
Accounts payable				5,085,000						3,957,000
Accrued liabilities				7,141,000						5,808,000
Billings in excess of costs and estimated earnings on uncompleted contracts				2,670,000						2,247,000
Current portion of notes payable				115,000						517,000
Current portion of capital lease obligations				180,000						129,000
Current portion of deferred income taxes				3,688,000						3,688,000
Total current liabilities				20,298,000						17,819,000
Capital lease obligations, less current portion				292,000						85,000
Deferred lease obligations				44,000						120,000
Total liabilities				20,634,000						18,024,000
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: 7,461,000 and 7,375,000 shares issued and outstanding at June 27, 2014 and December 27, 2013, respectively				74,000						74,000
Additional paid-in capital				34,859,000						34,654,000
Accumulated deficit				(11,307,000		)				(14,515,000		)
Total stockholders' equity				23,626,000						20,213,000
Total liabilities and stockholders' equity				$	44,260,000					$	38,237,000

WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
			Three Months Ended										Six Months Ended
			June 27,					June 28,					June 27,					June 28,
			2014					2013					2014					2013
Contract revenue			$	26,970,000				$	20,496,000				$	49,656,000				$	41,881,000
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below):
Salaries and wages			7,003,000					6,129,000					13,205,000					11,972,000
Subconsultant services and other direct costs			9,296,000					5,309,000					16,292,000					11,500,000
Total direct costs of contract revenue			16,299,000					11,438,000					29,497,000					23,472,000
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits			5,014,000					4,948,000					9,932,000					10,486,000
Facilities and facilities related			1,125,000					1,149,000					2,187,000					2,337,000
Stock-based compensation			52,000					38,000					93,000					88,000
Depreciation and amortization			102,000					127,000					205,000					276,000
Lease abandonment, net			—					—					—					13,000
Other			2,437,000					2,078,000					4,489,000					4,034,000
Total general and administrative expenses			8,730,000					8,340,000					16,906,000					17,234,000
Income from operations			1,941,000					718,000					3,253,000					1,175,000
Other income (expense), net:
Interest income			1,000					2,000					3,000					5,000
Interest expense			(3,000		)			(50,000		)			(7,000		)			(77,000		)
Other, net			18,000					10,000					67,000					25,000
Total other income (expense), net			16,000					(38,000		)			63,000					(47,000		)
Income before income taxes			1,957,000					680,000					3,316,000					1,128,000
Income tax expense (benefit)			64,000					(8,000		)			108,000					41,000
Net income			$	1,893,000				$	688,000				$	3,208,000				$	1,087,000
Earnings per share:
Basic			$	0.26				$	0.09				$	0.43				$	0.15
Diluted			$	0.25				$	0.09				$	0.43				$	0.15
Weighted-average shares outstanding:
Basic			7,405,000					7,353,000					7,401,000					7,336,000
Diluted			7,661,000					7,401,000					7,517,000					7,383,000

WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				Six Months Ended
				June 27,						June 28,
				2014						2013
Cash flows from operating activities:
Net income				$	3,208,000					$	1,087,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				205,000						310,000
Lease abandonment expense, net				—						13,000
Loss (gain) on sale of equipment				2,000						(6,000		)
Provision for doubtful accounts				191,000						162,000
Stock-based compensation				93,000						88,000
Changes in operating assets and liabilities:
Accounts receivable				755,000						4,282,000
Costs and estimated earnings in excess of billings on uncompleted contracts				(3,388,000		)				(381,000		)
Other receivables				(237,000		)				27,000
Prepaid expenses and other current assets				1,138,000						560,000
Other assets				(313,000		)				9,000
Accounts payable				1,128,000						(3,543,000		)
Changes in excess of outstanding checks over bank balance				(54,000		)				(370,000		)
Accrued liabilities				1,333,000						(196,000		)
Billings in excess of costs and estimated earnings on uncompleted contracts				423,000						140,000
Deferred lease obligations				(76,000		)				(150,000		)
Net cash provided by operating activities				4,408,000						2,032,000
Cash flows from investing activities:
Purchase of equipment and leasehold improvements				(330,000		)				(86,000		)
Proceeds from sale of equipment				—						11,000
Net cash used in investing activities				(330,000		)				(75,000		)
Cash flows from financing activities:
Payments on notes payable				(402,000		)				(459,000		)
Borrowings under line of credit				—						266,000
Repayments on line of credit				—						(3,266,000		)
Principal payments on capital lease obligations				183,000						(66,000		)
Proceeds from stock option exercise				84,000						—
Proceeds from sales of common stock under employee stock purchase plan				28,000						37,000
Net cash used in financing activities				(107,000		)				(3,488,000		)
Net increase (decrease) in cash and cash equivalents				3,971,000						(1,531,000		)
Cash and cash equivalents at beginning of the period				8,134,000						10,006,000
Cash and cash equivalents at end of the period				$	12,105,000					$	8,475,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest				$	7,000					$	81,000
Income taxes				20,000						155,000
Supplemental disclosures of noncash investing and financing activities:
Equipment acquired under capital lease obligations				$	334,000					$	7,000

Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Revenue and "Revenue, Net of Subcontractor Costs"
			Three Months Ended														Six Months Ended
In thousands			June 27, 2014				June 28, 2013				Change						June 27, 2014				June 28, 2013				Change
											$			%											$			%
Contract revenue			$	26,970,000			$	20,496,000			6,474,000			32			$	49,656,000			$	41,881,000			7,775,000			19
Subcontractor costs			5,783,000				3,438,000				2,345,000			68			9,977,000				8,243,000				1,734,000			21
Revenue, net of subcontractor costs			21,187,000				17,058,000				4,129,000			24			39,679,000				33,638,000				6,041,000			18

Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted EBITDA
The following is a reconciliation of net income to Adjusted EBITDA:
		Six Months Ended
		June 27,			June 28,
In thousands		2014			2013
Net income		$	3,208		$	1,087
Interest income		3			(5		)
Interest expense		(7		)	77
Income tax expense		108			41
Lease abandonment, net		—			13
Depreciation and amortization		205			310
Loss (gain) on sale of assets		(2		)	(6		)
Adjusted EBITDA		$	3,515		$	1,517

Willdan Group, Inc.
Stacy McLaughlin
Chief Financial Officer
Tel: 714-940-6300
smclaughlin@willdan.com
or
Investor/Media Contact
Financial Profiles, Inc.
Tel: 310-478-2700
Moira Conlon: mconlon@finprofiles.com
Jody Cain: jcain@finprofiles.com

Source: Willdan Group, Inc.

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