Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported
financial results for its first quarter ended March 31, 2023.
“Last quarter was the strongest first quarter in the Company’s
history,” said Tom Brisbin, Willdan’s Chairman and Chief Executive
Officer. “Consolidated contract revenue grew 11.7% and net revenue
grew 23.0%. The growth in profit significantly exceeded the growth
in revenue, generating robust cash flows from operations. This
trend of strong growth started in the fourth quarter 2022. We
continue to execute at a high level, we are winning new work, and
our pipeline of opportunities is strong. We are confident in our
2023 outlook.”
First Quarter 2023 Highlights*
- Consolidated contract revenue of $102.6 million, up 11.7%.
- Net revenue** of $61.7 million, up 23.0%.
- Net income of $0.9 million, a 124.7% improvement.
- Adjusted EBITDA** of $9.9 million, up 320.8%.
- GAAP EPS of $0.07, a 123.3% improvement.
- Adjusted Diluted EPS** of $0.32, a 357.1% increase.
*As compared to the first quarter of fiscal 2022. **See “Use of
Non-GAAP Financial Measures” below.
First Quarter 2023 Conference Call
Willdan will be hosting a conference call to discuss its first
quarter financial results today, at 5:30 p.m. Eastern/2:30 p.m.
Pacific. To access the call, listeners should dial 888-428-7458 (or
862-298-0702) approximately five minutes prior to the scheduled
start time. The conference call will be webcast simultaneously on
Willdan’s website at ir.willdangroup.com and selecting “Events
& Presentations”.
A replay of the conference call will be available through
Willdan’s website at ir.willdangroup.com and selecting “Events
& Presentations”.
An Investor Report containing supplemental financial information
can also be accessed through Willdan’s website at
ir.willdangroup.com and selecting “Stock Information”.
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 fiscal year 2023 as reported in
accordance with GAAP to targeted Net Revenues for fiscal year 2023,
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 of
predicting the subcontractor services and other director costs that
are subtracted from contract revenues in order to derive Net
Revenues. While subcontractor costs have increased recently,
subcontractor costs can vary significantly from period to period.
Subcontractor costs and other direct costs were 39.9% and 47.2% of
contract revenue for the quarter ended March 31, 2023 and fiscal
year 2022, respectively, and 45.4% and 43.0% for the quarter ended
April 1, 2022 and fiscal year 2021, respectively.
“Adjusted EBITDA,” defined as net income plus interest expense,
income tax expense, stock-based compensation, interest accretion,
depreciation and amortization, 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 and stock-based
compensation, as well as the historical costs of 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 interest accretion, each
net of tax, is a non-GAAP financial measure.
“Adjusted Diluted EPS,” defined as net income plus stock-based
compensation, intangible amortization, and interest accretion, each
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, net income and diluted EPS.
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
ability to capitalize on increased energy efficiency spending in
large markets and expected benefits from its acquisitions and the
impact of Covid-19 on Willdan’s business. All statements other than
statements of historical fact included in this press release are
forward-looking statements. 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 adequately complete
projects in a timely manner, Willdan’s ability to compete
successfully in the highly competitive energy services market,
Willdan’s reliance on work from its top ten clients; changes in
state, local and regional economies and government budgets;
Willdan’s ability to win new contracts, to renew existing contracts
and to compete effectively for contracts awarded through bidding
processes; Willdan’s ability to make principal and interest
payments on its outstanding debt as they come due and to comply
with financial covenants contained in its debt agreements;
Willdan’s ability to manage supply chain constraints, labor
shortages, rising interest rates, and rising inflation; Willdan’s
ability to obtain financing and to refinance its outstanding debt
as it matures; Willdan’s ability to successfully integrate its
acquisitions and execute on its growth strategy; Willdan’s ability
to attract and retain managerial, technical, and administrative
talent and the extent to which the Covid-19 pandemic and measures
taken to contain its spread ultimately impact Willdan’s business,
results of operation and financial condition.
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
30, 2022, 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 unless required by law.
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value)
March 31,
December 30,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
17,853
$
8,806
Restricted cash
—
10,679
Accounts receivable, net of allowance for
doubtful accounts of $336 and $640 at March 31, 2023 and December
30, 2022, respectively
51,917
60,202
Contract assets
75,241
83,060
Other receivables
4,782
4,773
Prepaid expenses and other current
assets
5,431
6,454
Total current assets
155,224
173,974
Equipment and leasehold improvements,
net
24,495
22,537
Goodwill
130,124
130,124
Right-of-use assets
12,750
12,390
Other intangible assets, net
38,861
41,486
Other assets
14,152
10,620
Deferred income taxes, net
17,761
18,543
Total assets
$
393,367
$
409,674
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
29,312
$
28,833
Accrued liabilities
40,548
59,110
Contingent consideration payable
4,000
4,000
Contract liabilities
15,526
12,585
Notes payable
16,436
16,903
Finance lease obligations
1,105
1,113
Lease liability
4,435
4,625
Total current liabilities
111,362
127,169
Notes payable
85,361
90,544
Finance lease obligations, less current
portion
1,354
1,601
Lease liability, less current portion
9,796
8,599
Other noncurrent liabilities
259
259
Total liabilities
208,132
228,172
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000
shares authorized, no shares issued and outstanding
—
—
Common stock, $0.01 par value, 40,000
shares authorized; 13,489 and 13,296 shares issued and outstanding
at March 31, 2023 and December 30, 2022, respectively
135
133
Additional paid-in capital
180,517
177,718
Accumulated other comprehensive loss
—
—
Retained earnings
4,583
3,651
Total stockholders’ equity
185,235
181,502
Total liabilities and stockholders’
equity
$
393,367
$
409,674
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per
share amounts)
Three Months Ended
March 31,
April 1,
2023
2022
Contract revenue
$
102,603
$
91,838
Direct costs of contract revenue
(inclusive of directly related depreciation and amortization):
Salaries and wages
20,410
18,810
Subcontractor services and other direct
costs
40,912
41,668
Total direct costs of contract revenue
61,322
60,478
General and administrative expenses:
Salaries and wages, payroll taxes and
employee benefits
22,385
19,357
Facilities and facility related
2,278
2,398
Stock-based compensation
1,533
3,305
Depreciation and amortization
4,200
4,409
Other
6,871
7,499
Total general and administrative
expenses
37,267
36,968
Income (Loss) from operations
4,014
(5,608
)
Other income (expense):
Interest expense, net
(2,466
)
(751
)
Other, net
140
197
Total other expense, net
(2,326
)
(554
)
Income (Loss) before income taxes
1,688
(6,162
)
Income tax (benefit) expense
756
(2,389
)
Net income (loss)
932
(3,773
)
Other comprehensive income (loss):
Unrealized gain (loss) on derivative
contracts, net of tax
—
38
Comprehensive income (loss)
$
932
$
(3,735
)
Earnings (Loss) per share:
Basic
$
0.07
$
(0.30
)
Diluted
$
0.07
$
(0.30
)
Weighted-average shares outstanding:
Basic
13,266
12,786
Diluted
13,470
12,786
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
April 1,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
932
$
(3,773
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
4,200
4,409
Deferred income taxes, net
782
(973
)
(Gain) loss on sale/disposal of
equipment
(10
)
(36
)
Provision for doubtful accounts
81
64
Stock-based compensation
1,533
3,305
Accretion and fair value adjustments of
contingent consideration
—
80
Changes in operating assets and
liabilities, net of effects from business acquisitions:
Accounts receivable
8,204
17,670
Contract assets
7,819
104
Other receivables
(9
)
(1,505
)
Prepaid expenses and other current
assets
1,108
253
Other assets
(3,532
)
437
Accounts payable
479
(16,778
)
Accrued liabilities
(7,883
)
(8,488
)
Contract liabilities
2,941
(2,431
)
Right-of-use assets
647
(92
)
Net cash (used in) provided by operating
activities
17,292
(7,754
)
Cash flows from investing activities:
Purchase of equipment, software, and
leasehold improvements
(3,488
)
(2,103
)
Proceeds from sale of equipment
13
39
Net cash (used in) provided by investing
activities
(3,475
)
(2,064
)
Cash flows from financing activities:
Payments on contingent consideration
—
(10,206
)
Payment on restricted cash
(10,679
)
—
Payments on notes payable
(485
)
(701
)
Borrowings under term loan facility and
line of credit
—
20,000
Repayments under term loan facility and
line of credit
(5,250
)
(3,250
)
Principal payments on finance leases
(303
)
(342
)
Proceeds from stock option exercise
—
23
Proceeds from sales of common stock under
employee stock purchase plan
1,392
1,561
Cash used to pay taxes on stock grants
(124
)
(837
)
Net cash (used in) provided by financing
activities
(15,449
)
6,248
Net increase (decrease) in cash, cash
equivalents and restricted cash
(1,632
)
(3,570
)
Cash, cash equivalents and restricted cash
at beginning of period
19,485
11,221
Cash, cash equivalents and restricted cash
at end of period
$
17,853
$
7,651
Supplemental disclosures of cash flow
information:
Cash paid (received) during the period
for:
Interest
$
2,424
$
699
Income taxes
(77
)
446
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under finance
leases
48
1,048
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Revenue
to Net Revenue
(in thousands)
(Non-GAAP Measure)
Three Months Ended
March 31,
April 1,
2023
2022
Consolidated
Contract revenue
$
102,603
$
91,838
Subcontractor services and other direct
costs
40,912
41,668
Net Revenue
$
61,691
$
50,170
Energy segment
Contract revenue
$
83,285
$
74,886
Subcontractor services and other direct
costs
40,078
40,848
Net Revenue
$
43,207
$
34,038
Engineering and Consulting
segment
Contract revenue
$
19,318
$
16,952
Subcontractor services and other direct
costs
834
820
Net Revenue
$
18,484
$
16,132
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(in thousands)
(Non-GAAP Measure)
Three Months Ended
March 31,
April 1,
2023
2022
Net income (loss)
$
932
$
(3,773
)
Interest expense
2,466
751
Income tax expense (benefit)
756
(2,389
)
Stock-based compensation
1,533
3,305
Interest accretion(1)
—
80
Depreciation and amortization
4,200
4,409
(Gain) Loss on sale of equipment
(10
)
(36
)
Adjusted EBITDA
$
9,877
$
2,347
(1) Interest accretion represents the
imputed interest and fair value adjustments to estimated contingent
consideration.
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted Net Income and Adjusted Diluted EPS
(in thousands, except per
share amounts)
(Non-GAAP Measure)
Three Months Ended
March 31,
April 1,
2023
2022
Net income (loss)
$
932
$
(3,773
)
Adjustment for stock-based
compensation
1,533
3,305
Tax effect of stock-based compensation
(310
)
(806
)
Adjustment for intangible amortization
2,624
2,847
Tax effect of intangible amortization
(531
)
(695
)
Adjustment for interest accretion
—
80
Tax effect of interest accretion
—
(20
)
Adjusted Net Income (Loss)
$
4,248
$
938
Diluted weighted-average shares
outstanding
13,470
12,786
Diluted earnings (loss) per share
$
0.07
$
(0.30
)
Impact of adjustment:
Stock-based compensation per share
0.12
0.26
Tax effect of stock-based compensation per
share
(0.02
)
(0.06
)
Intangible amortization per share
0.19
0.22
Tax effect of intangible amortization per
share
(0.04
)
(0.06
)
Interest accretion per share
—
0.01
Tax effect of interest accretion per
share
—
(0.00
)
Adjusted Diluted EPS
$
0.32
$
0.07
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504006022/en/
Willdan Group, Inc. Al Kaschalk VP Investor Relations
Tel: 310-922-5643 akaschalk@willdan.com
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