WLDN Willdan Group Inc

Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), today announced financial results for its fourth quarter and fiscal year 2011 ended December 30, 2011.

For the fourth quarter of 2011, Willdan reported total contract revenue of $30.0 million and a net loss of $0.8 million, or $0.11 per basic and diluted share.

For the fiscal year ended December 30, 2011, Willdan reported total contract revenue of $107.2 million and net income of $1.8 million, or $0.25 per basic share and $0.24 per diluted share.

Tom Brisbin, Willdan’s Chief Executive Officer, stated: “We’re pleased with our results for 2011. The investments we have made in diversifying our business are paying off and we are now on a clear path to sustained long-term growth. Our diversification into the energy efficiency market, in particular, has significantly contributed to our recovery and growth over the past three years. We are excited about the future and believe that Willdan is poised to deliver improved profits and stockholder returns in 2012 and beyond.”

Fourth Quarter 2011 Results

For the fourth quarter of fiscal 2011, revenue was $30.0 million, up $10.1 million, or 51.0%, from revenue of $19.9 million for the comparable period last year. On a sequential basis, revenue was up $1.4 million, or 4.9%, from the third quarter of 2011. Income from operations was $0.3 million for the fourth quarter of fiscal 2011, as compared to $30,000 for the comparable period last year. On a sequential basis, income from operations decreased $2.1 million from $2.4 million in the third quarter of 2011.

Net loss was $0.8 million for the fourth quarter of fiscal 2011, as compared to net income of $0.3 million in the comparable period last year and net income of $2.2 million in the third quarter of 2011.

Basic and diluted loss per share for the fourth quarter of fiscal 2011 was $0.11 as compared to basic and diluted earnings per share of $0.04 for the comparable period last year.

Willdan used $3.7 million in cash flow from operations in the fourth quarter of fiscal 2011.

Fiscal Year 2011 Results

Revenue for fiscal year 2011 was $107.2 million, up $29.3 million, or 37.6%, from revenue of $77.9 million for fiscal year 2010. Income from operations was $3.4 million for fiscal year 2011 as compared to $3.1 million for fiscal year 2010. Net income was $1.8 million for fiscal year 2011 as compared to $2.7 million for fiscal year 2010.

Basic and diluted earnings per share for fiscal year 2011 were $0.25 and $0.24, respectively, as compared to basic and diluted earnings per share of $0.38 and $0.37, respectively, for fiscal year 2010.

Willdan used $0.7 million in cash flow from operations in the year ended December 30, 2011.

    Three Months Ended   Twelve Months Ended In thousands (except EPS data) December 30,

2011

  December 31,

2010

December 30,

2011

  December 31,

2010

Revenue $ 30,006 $ 19,872 $ 107,165 $ 77,896   Income from operations 347 30 3,401 3,074 Interest income — 3 5 12 Interest expense (24 ) (17 ) (77 ) (54 ) Other, net (4 ) 15 1 32 Income tax (expense) benefit (1,098 ) 251 (1,500 ) (344 ) Net (loss) income $ (779 ) $ 282 $ 1,830 $ 2,720   (Loss) earnings per share Basic $ (0.11 ) $ 0.04 $ 0.25 $ 0.38 Diluted $ (0.11 ) $ 0.04 $ 0.24 $ 0.37   Weighted average shares outstanding: Basic 7,273 7,245 7,262 7,233 Diluted 7,273 7,380 7,485 7,311  

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 income (loss) plus net interest expense, income tax expense (benefit), depreciation and amortization and other non-recurring income and expense items occurring in such period. 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 non-recurring 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 non-recurring 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 operating income or net income as an indicator of operating performance or any other GAAP measure.

Adjusted EBITDA increased to $4.3 million for fiscal year 2011 from $4.1 million for fiscal year 2010.

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

        In thousands     Twelve Months Ended December 30,

2011

  December 31,

2010

  Net income $ 1,830 $ 2,720 Interest income (5 ) (12 ) Interest expense 77 54 Income tax expense 1,500 344 Lease abandonment expense (recovery) 2 (68 ) Depreciation and amortization 944 1,053 Loss (gain) on sale of assets 2 (17 ) Adjusted EBITDA $ 4,350 $ 4,074  

Liquidity and Capital Resources

Willdan had $3.0 million in cash and cash equivalents at December 30, 2011, compared with $6.6 million at December 31, 2010. Willdan had $0.3 million in outstanding borrowings under a $5.0 million revolving line of credit at the end of fiscal year 2011.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on March 27, 2012 at 5:00 p.m. Eastern/2:00 p.m. Pacific to discuss Willdan’s financial results.

Interested parties may participate in the conference call by dialing 877-941-8609 (480-629-9692 for international callers). When prompted, ask for the “Willdan Group, Inc., Fourth Quarter 2011 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 10, 2012, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4512338. The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Founded over 45 years ago, Willdan is a provider of professional technical and consulting services to small and mid-sized public agencies, large public utilities and, to a lesser extent, private industry primarily located in California, New York and Arizona. Willdan provides a broad range of services to clients, including civil engineering and planning, energy efficiency and sustainability, economic and financial consulting, and homeland security and communications and technology. 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 Annual Report on Form 10-K to be filed for the year ended December 30, 2011. 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

  December 30,2011 December 31,2010 Assets Current assets: Cash and cash equivalents $ 3,001,000 $ 6,642,000 Accounts receivable, net of allowance for doubtful accounts of $421,000 and $959,000

at December 30, 2011 and December 31, 2010, respectively

16,782,000 14,484,000 Costs and estimated earnings in excess of billings on uncompleted contracts 20,672,000 11,343,000 Other receivables 175,000 176,000 Prepaid expenses and other current assets 1,724,000 1,714,000 Total current assets 42,354,000 34,359,000   Equipment and leasehold improvements, net 1,217,000 1,496,000 Goodwill 15,208,000 12,475,000 Other intangible assets, net 49,000 95,000 Other assets 383,000 407,000 Deferred income taxes 5,100,000 622,000 Total assets $ 64,311,000 $ 49,454,000   Liabilities and Stockholders’ Equity Current liabilities: Excess of outstanding checks over bank balance $ 1,777,000 $ 1,223,000 Borrowings under line of credit 256,000 1,000,000 Accounts payable 8,182,000 5,380,000 Accrued liabilities 10,192,000 5,985,000 Billings in excess of costs and estimated earnings on uncompleted contracts 752,000 1,041,000 Current portion of notes payable 600,000 90,000 Current portion of capital lease obligations 163,000 173,000 Current portion of deferred income taxes 7,349,000 1,407,000 Total current liabilities 29,271,000 16,299,000   Notes payable, less current portion 77,000 131,000 Capital lease obligations, less current portion 136,000 96,000 Deferred lease obligations 534,000 766,000 Total liabilities 30,018,000 17,292,000   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; 7,274,000 and 7,246,000

shares issued and outstanding at December 30, 2011 and December 31, 2010, respectively

73,000 72,000 Additional paid-in capital 34,065,000 33,765,000 Accumulated earnings (deficit) 155,000 (1,675,000 ) Total stockholders’ equity 34,293,000 32,162,000 Total liabilities and stockholders’ equity $ 64,311,000 $ 49,454,000          

WILLDAN GROUP, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

  Fiscal Year 2011   2010   2009   Contract revenue $ 107,165,000 $ 77,896,000 $ 61,605,000   Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below): Salaries and wages 25,714,000 21,607,000 18,130,000 Subconsultant services 34,195,000 16,523,000 7,997,000 Other direct costs 4,818,000 3,892,000 2,715,000

Total direct costs of contract revenue

64,727,000 42,022,000 28,842,000   General and administrative expenses: Salaries and wages, payroll taxes and employee benefits 22,594,000 17,582,000 20,325,000 Facilities and facility related 4,875,000 4,290,000 4,430,000 Stock-based compensation 201,000 235,000 272,000 Depreciation and amortization 877,000 1,042,000 1,814,000 Lease abandonment (recovery), net 2,000 (68,000 ) 707,000 Impairment of goodwill — — 2,763,000 Litigation accrual (reversal) — — (1,125,000 ) Other 10,488,000 9,719,000 11,070,000 Total general and administrative expenses 39,037,000 32,800,000 40,256,000 Income (loss) from operations 3,401,000 3,074,000 (7,493,000 )   Other (expense) income: Interest income 5,000 12,000 30,000 Interest expense (77,000 ) (54,000 ) (38,000 ) Other, net 1,000 32,000 (5,000 ) Total other (expense) income, net (71,000 ) (10,000 ) (13,000 ) Income (loss) before income taxes 3,330,000 3,064,000 (7,506,000 )   Income tax expense (benefit) 1,500,000 344,000 (1,931,000 ) Net income (loss) $ 1,830,000 $ 2,720,000 $ (5,575,000 )   Earnings (loss) per share: Basic $ 0.25 $ 0.38 $ (0.78 ) Diluted $ 0.24 $ 0.37 $ (0.78 )   Weighted-average shares outstanding: Basic 7,262,000 7,233,000 7,192,000 Diluted 7,485,000 7,311,000 7,192,000          

WILLDAN GROUP, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

  Fiscal Year 2011   2010   2009 Cash flows from operating activities: Net income (loss) $ 1,830,000 $ 2,720,000 $ (5,575,000 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by

operating activities:

Non-cash revenue from subcontractor settlement (902,000 ) — — Depreciation and amortization 944,000 1,053,000 1,814,000 Deferred income taxes 1,465,000 389,000 (1,890,000 ) Goodwill impairment — — 2,763,000 Lease abandonment expense (recovery), net 2,000 (68,000 ) 707,000 Loss (gain) on sale of equipment 2,000 (17,000 ) 6,000 Provision for doubtful accounts 209,000 20,000 1,829,000 Stock-based compensation 201,000 235,000 272,000 Changes in operating assets and liabilities: Accounts receivable (2,507,000 ) (4,407,000 ) 936,000 Costs and estimated earnings in excess of billings on uncompleted contracts (8,427,000 ) (4,694,000 ) 1,632,000 Income tax receivable — 51,000 905,000 Other receivables 1000 (103,000 ) (25,000 ) Prepaid expenses and other current assets (10,000 ) (214,000 ) 284,000 Other assets 24,000 (89,000 ) 55,000 Accounts payable 2,802,000 3,923,000 (654,000 ) Accrued liabilities 4,206,000 1,476,000 (959,000 ) Billings in excess of costs and estimated earnings on uncompleted contracts (289,000 ) 11,000 326,000 Deferred lease obligations (234,000 ) (189,000 ) (272,000 ) Net cash (used in) provided by operating activities (683,000 ) 97,000 2,154,000   Cash flows from investing activities: Purchase of equipment and leasehold improvements (395,000 ) (685,000 ) (386,000 ) Proceeds from sale of equipment 6,000 40,000 — Payments related to business acquisitions (2,733,000 ) (2,104,000 ) (2,373,000 ) Net cash used in investing activities (3,122,000 ) (2,749,000 ) (2,759,000 )   Cash flows from financing activities: Changes in excess of outstanding checks over bank balance 554,000 735,000 40,000 Payments on notes payable (211,000 ) (17,000 ) (46,000 ) Proceeds from notes payable 667,000 214,000 — Borrowings under line of credit 33,965,000 14,123,000 3,553,000 Repayments of line of credit (34,709,000 ) (14,123,000 ) (2,553,000 ) Principal payments on capital leases (202,000 ) (173,000 ) (172,000 ) Proceeds from stock option exercise 7,000 3,000 — Proceeds from sales of common stock under employee stock purchase plan 93,000 87,000 84,000 Net cash provided by financing activities 164,000 849,000 906,000   Net (decrease) increase in cash and cash equivalents (3,641,000 ) (1,803,000 ) 301,000 Cash and cash equivalents at beginning of the year 6,642,000 8,445,000 8,144,000 Cash and cash equivalents at end of the year $ 3,001,000 $ 6,642,000 $ 8,445,000   Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 77,000 $ 52,000 $ 40,000 Income taxes 70,000 48,000 3,000 Supplemental disclosures of noncash investing and financing activities: Equipment acquired under capital leases $ 247,000 $ 240,000 $ 60,000