Willdan Reports Fourth Quarter 2012 and Fiscal Year 2012 Financial Results
Willdan Reports Fourth Quarter 2012 and Fiscal Year 2012 Financial Results
ANAHEIM, Calif.--(BUSINESS WIRE)-- Willdan Group, Inc. ("Willdan") (Nasdaq: WLDN) , today announced financial results for its fourth quarter and fiscal year 2012 ended December 28, 2012.
For the fourth quarter of 2012, Willdan reported total contract revenue of $22.9 million and net income of $0.3 million, or $0.04 per basic and diluted share.
For the fiscal year ended December 28, 2012, Willdan reported total contract revenue of $93.4 million and a net loss of $17.3 million, or $2.37 per basic and diluted share.
Tom Brisbin, Willdan's Chief Executive Officer, stated: "Our fourth quarter revenue and earnings were in line with our expectations. We continued to carefully manage expenses during the quarter and we generated positive cash flow from operations."
Fourth Quarter 2012 Results
For the fourth quarter of fiscal 2012, revenue was $22.9 million, down $7.1 million, or 23.5%, from revenue of $30.0 million for the comparable period last year. On a sequential basis, revenue was up $1.4 million, or 6.5%, from the third quarter of 2012. Income from operations was $1.2 million for the fourth quarter of fiscal 2012, as compared to income from operations of $0.3 million for the comparable period last year. On a sequential basis, income from operations decreased $0.2 million from $1.4 million in the third quarter of 2012.
Net income was $0.3 million for the fourth quarter of fiscal 2012, as compared to a net loss of $0.8 million in the comparable period last year and net income of $0.8 million in the third quarter of 2012.
Basic and diluted earnings per share for the fourth quarter of fiscal 2012 were $0.04 as compared to basic and diluted loss per share of $0.11 for the comparable period last year.
Willdan generated $0.7 million in cash flow from operations in the fourth quarter of fiscal 2012.
Fiscal Year 2012 Results
Revenue for fiscal year 2012 was $93.4 million, a decrease of $13.7 million, or 12.8%, from revenue of $107.2 million for fiscal year 2011. Loss from operations was $19.3 million for fiscal year 2012 as compared to income from operations of $3.4 million for fiscal year 2011. Net loss was $17.3 million for fiscal year 2012, including a $15.2 million goodwill impairment charge, as compared to net income of $1.8 million for fiscal year 2011.
Basic and diluted loss per share for fiscal year 2012 was $2.37, as compared to basic and diluted earnings per share of $0.25 and $0.24, respectively, for fiscal year 2011.
Willdan generated $5.3 million in cash flow from operations in the year ended December 28, 2012.
Three Months Ended | Twelve Months Ended | |||||||||||||||
In thousands (except EPS data) | December 28, 2012 | December 30, 2011 | December 28, 2012 | December 30, 2011 | ||||||||||||
Revenue | $ | 22,947 | $ | 30,006 | $ | 93,443 | $ | 107,165 | ||||||||
Income from operations | 1,225 | 347 | (19,255 | ) | 3,401 | |||||||||||
Interest income | 2 | — | 6 | 5 | ||||||||||||
Interest expense | (26 | ) | (24 | ) | (106 | ) | (77 | ) | ||||||||
Other, net | 7 | (4 | ) | (28 | ) | 1 | ||||||||||
Income tax expense (benefit) | 908 | 1,098 | (2,083 | ) | 1,500 | |||||||||||
Net income (loss) | $ | 300 | $ | (779 | ) | $ | (17,300 | ) | $ | 1,830 | ||||||
Earnings (loss) per share | ||||||||||||||||
Basic | $ | 0.04 | $ | (0.11 | ) | $ | (2.37 | ) | $ | 0.25 | ||||||
Diluted | $ | 0.04 | $ | (0.11 | ) | $ | (2.37 | ) | $ | 0.24 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 7,335 | 7,273 | 7,310 | 7,262 | ||||||||||||
Diluted | 7,343 | 7,273 | 7,310 | 7,485 | ||||||||||||
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 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 operating income and 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 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.
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 decreased to $(3.3) million for fiscal year 2012 from $4.3 million for fiscal year 2011.
The following is a reconciliation of net (loss) income to Adjusted EBITDA:
In thousands | Twelve Months Ended | |||||||
December 28, 2012 | December 30, 2011 | |||||||
Net (loss) income | $ | (17,300 | ) | $ | 1,830 | |||
Interest income | (6 | ) | (5 | ) | ||||
Interest expense | 106 | 77 | ||||||
Income tax (benefit) expense | (2,083 | ) | 1,500 | |||||
Lease abandonment expense | 26 | 2 | ||||||
Depreciation and amortization | 737 | 944 | ||||||
Impairment of goodwill | 15,208 | — | ||||||
Loss on sale of assets | 18 | 2 | ||||||
Adjusted EBITDA | $ | (3,294 | ) | $ | 4,350 | |||
Liquidity and Capital Resources
Willdan had $10.0 million in cash and cash equivalents at December 28, 2012, compared with $3.0 million at December 30, 2011. Willdan has a $5.0 million revolving line of credit with Wells Fargo Bank, National Association ("Wells Fargo"), with $3.0 million in outstanding borrowings at December 28, 2012. In addition, the revolving line of credit is scheduled to expire on April 1, 2013. Wells Fargo may also refuse to renew the facility when it expires on April 1, 2013 and if they do so, Willdan will have to repay the outstanding balance of $3.0 million.
Willdan is currently in breach of the net income covenant in its revolving line of credit because it did not have net income of at least $250,000 measured on a rolling four quarter basis and it sustained net losses for two consecutive quarters in the past year. Additionally, Willdan's ratio of funded debt to EBITDA exceeds the limits permitted under the line of credit. Because of these covenant breaches, Willdan's ability to borrow additional funds under the line of credit is currently subject to Wells Fargo's discretion. Although Willdan is seeking a waiver from Wells Fargo for the current breach of the covenants and to extend the maturity of the line of credit, Wells Fargo is not obligated to provide any waiver or modify the terms of the agreement and could choose to increase the interest rate of the outstanding indebtedness, accelerate the loans outstanding under the line of credit and/or terminate its commitments under the line of credit.
Conference Call and Webcast
Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call today, March 26, 2013, 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 877-941-0844 (480-629-9835 for international callers). When prompted, ask for the "Willdan Group, Inc., Fourth Quarter 2012 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 9, 2013, by dialing 800-358-3474 (303-590-3030 for international callers). The replay access code is 4599738. The webcast replay will be archived for 12 months.
About Willdan Group, Inc.
Founded in 1964, Willdan is a provider of professional technical and consulting services to public agencies at all levels of government, public and private utilities and commercial and industrial firms. Willdan provides a broad range of services to clients throughout the United States, including engineering and planning, energy efficiency and sustainability, economic and financial consulting, and national preparedness and interoperability. 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 28, 2012. 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 28, | December 30, | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 10,006,000 | $ | 3,001,000 | |||||
Accounts receivable, net of allowance for doubtful accounts of $303,000 and $421,000 at December 28, 2012 and December 30, 2011, respectively | 15,484,000 | 16,782,000 | |||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 9,860,000 | 20,672,000 | |||||||
Other receivables | 95,000 | 175,000 | |||||||
Prepaid expenses and other current assets | 1,782,000 | 1,724,000 | |||||||
Total current assets | 37,227,000 | 42,354,000 | |||||||
Equipment and leasehold improvements, net | 979,000 | 1,217,000 | |||||||
Goodwill | — | 15,208,000 | |||||||
Other intangible assets, net | 12,000 | 49,000 | |||||||
Other assets | 307,000 | 383,000 | |||||||
Deferred income taxes | 3,452,000 | 5,100,000 | |||||||
Total assets | $ | 41,977,000 | $ | 64,311,000 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Excess of outstanding checks over bank balance | $ | 1,188,000 | $ | 1,777,000 | |||||
Borrowings under line of credit | 3,000,000 | 256,000 | |||||||
Accounts payable | 6,983,000 | 8,182,000 | |||||||
Accrued liabilities | 5,306,000 | 10,192,000 | |||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 3,419,000 | 752,000 | |||||||
Current portion of notes payable | 628,000 | 600,000 | |||||||
Current portion of capital lease obligations | 152,000 | 163,000 | |||||||
Current portion of deferred income taxes | 3,452,000 | 7,349,000 | |||||||
Total current liabilities | 24,128,000 | 29,271,000 | |||||||
Notes payable, less current portion | — | 77,000 | |||||||
Capital lease obligations, less current portion | 124,000 | 136,000 | |||||||
Deferred lease obligations | 374,000 | 534,000 | |||||||
Total liabilities | 24,626,000 | 30,018,000 | |||||||
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; 7,335,000 and 7,274,000 shares issued and outstanding at December 28, 2012 and December 30, 2011, respectively | 73,000 | 73,000 | |||||||
Additional paid-in capital | 34,423,000 | 34,065,000 | |||||||
Accumulated (deficit) earnings | (17,145,000 | ) | 155,000 | ||||||
Total stockholders' equity | 17,351,000 | 34,293,000 | |||||||
Total liabilities and stockholders' equity | $ | 41,977,000 | $ | 64,311,000 | |||||
WILLDAN GROUP, INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
Fiscal Year | ||||||||||||
2012 | 2011 | 2010 | ||||||||||
Contract revenue | $ | 93,443,000 | $ | 107,165,000 | $ | 77,896,000 | ||||||
Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below): | ||||||||||||
Salaries and wages | 23,218,000 | 25,714,000 | 21,607,000 | |||||||||
Subconsultant services and other direct costs | 35,741,000 | 39,013,000 | 20,415,000 | |||||||||
Total direct costs of contract revenue | 58,959,000 | 64,727,000 | 42,022,000 | |||||||||
General and administrative expenses: | ||||||||||||
Salaries and wages, payroll taxes and employee benefits | 22,421,000 | 22,594,000 | 17,582,000 | |||||||||
Facilities and facility related | 4,871,000 | 4,875,000 | 4,290,000 | |||||||||
Stock-based compensation | 227,000 | 201,000 | 235,000 | |||||||||
Depreciation and amortization | 671,000 | 877,000 | 1,042,000 | |||||||||
Lease abandonment (recovery), net | 26,000 | 2,000 | ||||||||||
