Willdan Reports Second Quarter 2013 Financial Results

Willdan Reports Second Quarter 2013 Financial Results

ANAHEIM, Calif.--(BUSINESS WIRE)-- Willdan Group, Inc. ("Willdan") (Nasdaq: WLDN) , today announced financial results for its second quarter ended June 28, 2013.

For the second quarter of 2013, Willdan reported total contract revenue of $20.5 million and net income of $0.7 million, or $0.09 per share.


Tom Brisbin, Willdan's Chief Executive Officer, stated: "While our second quarter revenue was lower than last year, I'm pleased to report that we generated positive cash flow and earnings for the quarter. Lower revenue was due to continued declines in our energy segment, offset by gains in all of our other business lines. Our energy projects began to ramp up during the second quarter as planned and we expect revenue growth and higher levels of profitability in the second half of 2013."

Second Quarter 2013 Results

For the second quarter of fiscal 2013, revenue was $20.5 million, down $3.0 million, or 12.7%, from revenue of $23.5 million for the comparable period last year. On a sequential basis, revenue was down $0.9 million, or 4.2%, from the first quarter of 2013. Income from operations was $0.7 million for the second quarter of fiscal 2013, as compared to a loss from operations of $19.6 million for the comparable period last year. On a sequential basis, income from operations was $0.7 million as compared to $0.5 million for the first quarter of 2013.

Net income was $0.7 million for the second quarter of fiscal 2013, as compared to a net loss of $17.0 million for the comparable period last year and net income of $0.4 million for the first quarter of 2013.

Basic and diluted earnings per share for the second quarter of fiscal 2013 were $0.09 as compared to a basic and diluted loss per share of $2.33 for the comparable period last year.

Willdan generated $1.4 million in cash flow from operations in the second quarter of fiscal 2013.

Six Months 2013 Results

For the six months ended June 28, 2013, revenue was $41.9 million, as compared to $48.9 million in the comparable period last year. Income from operations was $1.2 million for the six months ended June 28, 2013 as compared to a loss from operations of $21.9 million for the comparable period last year. Net income was $1.1 million for the six months ended June 28, 2013 as compared to a net loss of $18.4 million for the comparable period last year.

Basic and diluted earnings per share for the six months ended June 28, 2013 were $0.15 as compared to a basic and diluted loss per share of $2.52 for the comparable period last year.

Willdan generated $2.4 million in cash flow from operations in the six months ended June 28, 2013.

Three Months Ended

Six Months Ended

In thousands (except per share data)

June 28,

2013

June 29,

2012

June 28,

2013

June 29,

2012

Revenue

$

20,496

$

23,481

$

41,881

$

48,949

Income (loss) from operations

718

(19,583

)

1,175

(21,900

)

Interest income

2

1

5

2

Interest expense

(50

)

(30

)

(77

)

(52

)

Other, net

10

(21

)

25

(21

)

Income tax (benefit) expense

(8

)

(2,657

)

41

(3,584

)

Net income (loss)

$

688

$

(16,976

)

$

1,087

$

(18,387

)

Basic and diluted earnings (loss) per share

$

0.09

$

(2.33

)

$

0.15

$

(2.52

)

Weighted average shares outstanding:

Basic

7,353

7,297

7,336

7,294

Diluted

7,401

7,297

7,383

7,294

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, goodwill impairment, lease abandonment expense, net 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 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 income from operations or net income as an indicator of operating performance or any other GAAP measure.

Adjusted EBITDA increased $7.8 million to $1.5 million for the six months ended June 28, 2013 from $(6.3) million for the comparable period last year.

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

Six Months Ended

In thousands

June 28,

2013

June 29,

2012

Net income (loss)

$

1,087

$

(18,387

)

Interest income

(5

)

(2

)

Interest expense

77

52

Income tax expense (benefit)

41

(3,584

)

Loss on sale of assets

22

Depreciation and amortization

310

387

Impairment of goodwill

15,208

Lease abandonment expense, net

13

30

Adjusted EBITDA

$

1,523

$

(6,274

)

Liquidity and Capital Resources

Willdan had $8.5 million in cash and cash equivalents at June 28, 2013, compared with $10.0 million at December 28, 2012. Willdan has a $5.0 million revolving line of credit with Wells Fargo Bank, National Association, with no outstanding borrowings at June 28, 2013.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on August 8, 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 877-941-2332 (480-629-9867 for international callers). When prompted, ask for the "Willdan Group, Inc., Second Quarter 2013 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 22, 2013, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4633799. 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 for the year ended December 28, 2012 filed on March 26, 2013 and the Quarterly Report on Form 10-Q for the quarter ended March 29, 2013 filed on May 9, 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 28,
2013

December 28,
2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

8,475,000

$

10,006,000

Accounts receivable, net of allowance for doubtful accounts of $512,000 and $303,000 at June 28, 2013 and December 28, 2012, respectively

11,040,000

15,484,000

Costs and estimated earnings in excess of billings on uncompleted contracts

10,241,000

9,860,000

Other receivables

68,000

95,000

Prepaid expenses and other current assets

1,222,000

1,782,000

Total current assets

31,046,000

37,227,000

Equipment and leasehold improvements, net

762,000

979,000

Other intangible assets, net

12,000

Other assets

298,000

307,000

Deferred income taxes, net of current portion

3,452,000

3,452,000

Total assets

$

35,558,000

$

41,977,000

Liabilities and Stockholders' Equity

Current liabilities:

Excess of outstanding checks over bank balance

$

818,000

$

1,188,000

Borrowings under line of credit

3,000,000

Accounts payable

3,440,000

6,983,000

Accrued liabilities

5,110,000

5,306,000

Billings in excess of costs and estimated earnings on uncompleted contracts

3,559,000

3,419,000

Current portion of notes payable

169,000

628,000

Current portion of capital lease obligations

136,000

152,000

Current portion of deferred income taxes

3,452,000

3,452,000

Total current liabilities

16,684,000

24,128,000

Capital lease obligations, less current portion

74,000

124,000

Deferred lease obligations

237,000

374,000

Total liabilities

16,995,000

24,626,000

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: 7,353,000 and 7,335,000

shares issued and outstanding at June 28, 2013 and December 28, 2012, respectively

74,000

73,000

Additional paid-in capital

34,547,000

34,423,000

Accumulated (deficit) earnings

(16,058,000

)

(17,145,000

)

Total stockholders' equity

18,563,000

17,351,000

Total liabilities and stockholders' equity

$

35,558,000

$

41,977,000

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Six Months Ended

June 28,

June 29,

June 28,

June 29,

2013

2012

2013

2012

Contract revenue

$

20,496,000

$

23,481,000

$

41,881,000

$

48,949,000

Direct costs of contract revenue (exclusive of depreciation and amortization shown separately below):

Salaries and wages

6,129,000

5,976,000

11,972,000

11,933,000

Subconsultant services and other direct costs

5,309,000

11,140,000

11,500,000

22,377,000

Total direct costs of contract revenue

11,438,000

17,116,000

23,472,000

34,310,000

General and administrative expenses:

Salaries and wages, payroll taxes and employee benefits

4,948,000

5,839,000

10,486,000

12,267,000

Facilities and facilities related

1,149,000

1,240,000

2,337,000

2,435,000

Stock-based compensation

38,000

77,000

88,000

131,000

Depreciation and amortization

127,000

181,000

276,000

355,000

Lease abandonment, net

26,000

13,000

30,000

Impairment of goodwill

15,208,000

15,208,000

Other

2,078,000

3,377,000

4,034,000

6,113,000

Total general and administrative expenses

8,340,000

25,948,000

17,234,000

36,539,000

Income (loss) from operations

718,000

(19,583,000

)

1,175,000

(21,900,000

)

Other income (expense), net: