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Press Release
FOR IMMEDIATE RELEASE
Willdan Reports Second Quarter 2008 Financial Results
ANAHEIM, Calif.,–(BUSINESS WIRE)–July 31, 2008–Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), announces financial results for its second quarter ended June 27, 2008.
For the second quarter of 2008, Willdan reported total contract revenue of $17.8 million and a net loss of $0.1 million, or $0.01 loss per basic and diluted share.
On June 9, 2008, Willdan purchased the outstanding stock of Intergy Corporation (“Intergy”), a California-based consulting firm that assists companies, institutions and agencies with planning and implementing their energy efficiency, water conservation, and renewable energy strategies. Intergy’s results of operations from June 9 to June 27, 2008 are included in the consolidated results of Willdan.
Tom Brisbin, Willdan’s Chief Executive Officer, stated: “In the second quarter, we continued to see a general decline in the markets we have traditionally served. While our financial results were below plan, we continue to collect cash and we are making tangible progress in executing our strategy of diversifying services. I’m particularly excited about our acquisition of Intergy, which provides us an entirely new service offering in an accelerating area—energy efficiency and sustainability. Demand for energy efficiency solutions is growing and both governments and institutions consider it an essential area of investment. We also made some key new hires, including Mike Deblieux, who will lead Willdan Management Services’ efforts to help clients implement effective leadership techniques and practices.
“We believe we have the right strategy in place to succeed in the long-term. We will continue to focus on expanding our service offerings to diversify our revenue base, and to leverage our centralized new business development team to cross sell business and win new and different types of work,” concluded Brisbin.
Second Quarter 2008 Results
For the second quarter of fiscal 2008, revenue was $17.8 million, down $3.4 million, or 16.0%, from revenue of $21.2 million for the comparable period last year. On a sequential basis, revenue was essentially flat from the first quarter of 2008. Loss from operations was $0.1 million for the second quarter of fiscal 2008, down $1.8 million, or 107.7%, from income from operations of $1.7 million for the comparable period last year. On a sequential basis, income from operations was down $0.1 million from the first quarter of 2008.
Net loss was $0.1 million for the second quarter of fiscal 2008, down $1.1 million from net income of $1.1 million in the comparable period last year and down $0.2 million on a sequential basis.
Basic and diluted loss per share for the second quarter of fiscal 2008 was $0.01 as compared to basic and diluted earnings per share of $0.15 for the comparable period last year.
Willdan generated cash flow from operations of $0.9 million in the second quarter of fiscal 2008.
Six Months 2008 Results
For the six months ended June 27, 2008, revenue was $35.6 million, down $4.9 million, or 12.0% from revenue of $40.4 million for the comparable period last year. Loss from operations was $0.1 million for the six months ended June 27, 2008, $0.7 million less than income from operations of $0.6 million for the comparable period last year. Net income was $0.1 million for the six months ended June 27, 2008, $0.7 million less than net income of $0.8 million for the comparable period last year.
Basic and diluted income per share for the six months ended June 27, 2008 were $0.01 as compared to basic and diluted earnings per share of $0.11 for the comparable period last year.
Willdan generated cash flow from operations of $1.9 million in the six months ended June 27, 2008.
Three Months Ended Six Months Ended
------------------- -------------------
June 27, June 29, June 27, June 29,
In thousands (except EPS data) 2008 2007 2008 2007
-------- --------- -------- ---------
Revenue $ 17,807 $ 21,180 $ 35,583 $ 40,448
-------- --------- -------- ---------
(Loss) income from operations (130) 1,688 (87) 581
Interest expense, net of
reversal (22) (24) (2) 550
Interest income and other
income, net 113 148 261 328
Income tax expense 16 754 111 651
-------- --------- -------- ---------
Net (loss) income $ (55) $ 1,058 $ 61 $ 808
======== ========= ======== =========
Basic and diluted (loss)
income per share: $ (0.01) $ 0.15 $ 0.01 $ 0.11
Weighted average shares
outstanding:
Basic 7,156 7,148 7,156 7,148
Diluted 7,157 7,151 7,157 7,150
Outlook
The following statement is based on current expectations. This statement is forward-looking and actual results could differ materially from current expectations. This outlook should be read in conjunction with the information on forward-looking statements at the end of this press release.
Based on our first half results and the outlook for the remainder of the year, Willdan has revised its fiscal 2008 revenue guidance down to between $72 million and $75 million from the previous range of between $80 million and $83 million. Management believes this decline may be somewhat offset by new initiatives and revenue from Intergy.
Conference Call and Webcast
Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on August 7, 2008 at 5:00 p.m. Eastern/2:00 p.m. Pacific to further discuss the Company’s financial results and business developments.
Interested parties may access the conference call by dialing 800-218-0713 (303-262-2211 for international callers). When prompted, ask for the “Willdan Group Investor Conference Call.” The conference call will be webcast simultaneously on Willdan’s website at www.willdan.com under Investor Relations: Events.
The telephonic replay of the conference call may be accessed approximately two hours after the call through August 21, 2008, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11117963#. The webcast replay will be archived for 12 months.
About Willdan Group, Inc.
Founded over 40 years ago, Willdan Group, Inc. is a leading provider of outsourced services to public agencies located primarily in California and other western states. Willdan Group, Inc. assists cities and other government agencies with a broad range of services, including civil engineering, building and safety services, geotechnical engineering, financial and economic consulting, and disaster preparedness and homeland security.
Forward-Looking Statements
Any statements made in this release that are not based on historical fact are forward-looking statements. Any forward-looking statements made in this release represent management’s best judgment as to what may occur in the future. However, Willdan Group, Inc.’s actual outcome and results are not guaranteed and are subject to certain risks, uncertainties and assumptions, and may differ materially from what is expressed. For a description of factors that could cause actual results to differ materially from such forward-looking statements, see the discussion under the section “Risk Factors” included in the Company’s Form 10-K filing with the Securities and Exchange Commission.
SOURCE: Willdan Group, Inc.
Contact:
Willdan Group, Inc.
Kimberly Gant
Chief Financial Officer
Tel: 714-940-6329
kgant@willdan.com
or
Financial Profiles, Inc.
Moira Conlon
Tel: 310-277-4907
mconlon@finprofiles.com
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 27, December 28,
2008 2007
---------- ------------
Assets
Current assets:
Cash and cash equivalents $ 6,226,000 $ 15,511,000
Liquid investments 1,375,000 1,300,000
---------- ------------
Cash, cash equivalents and liquid
investments 7,601,000 16,811,000
Accounts receivable, net of allowance for
doubtful accounts of $538,000 and
$372,000 at June 27, 2008 and December
28, 2007, respectively 16,187,000 15,090,000
Costs and estimated earnings in excess of
billings on uncompleted contracts 7,573,000 7,336,000
Other receivables 167,000 157,000
Prepaid expenses and other current assets 1,632,000 2,067,000
---------- ------------
Total current assets 33,160,000 41,461,000
Equipment and leasehold improvements, net 2,954,000 3,354,000
Goodwill 10,818,000 2,911,000
Other assets 2,172,000 500,000
---------- ------------
Total assets $49,104,000 $ 48,226,000
========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Excess of outstanding checks over bank
balance $ 437,000 $ 633,000
Accounts payable 2,773,000 1,136,000
Accrued liabilities 4,366,000 5,314,000
Purchase price payable 1,000,000 --
Billings in excess of costs and
estimated earnings on uncompleted
contracts 832,000 941,000
Current portion of notes payable 373,000 1,088,000
Current portion of capital lease
obligations 180,000 176,000
Current portion of deferred income taxes 2,002,000 2,002,000
---------- ------------
Total current liabilities 11,963,000 11,290,000
Notes payable, less current portion. 43,000 --
Capital lease obligations, less current
portion 217,000 283,000
Deferred lease obligations 578,000 606,000
Deferred income taxes, net of current
portion 395,000 395,000
---------- ------------
Total liabilities 13,196,000 12,574,000
---------- ------------
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:
7,156,000 and 7,150,000 shares issued
and outstanding at June 27, 2008 and
December 28, 2007, respectively 71,000 71,000
Additional paid-in capital 32,991,000 32,796,000
Retained earnings 2,846,000 2,785,000
---------- ------------
Total stockholders' equity 35,908,000 35,652,000
---------- ------------
Total liabilities and
stockholders' equity $49,104,000 $ 48,226,000
========== ============
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
---------------------- ----------------------
June 27, June 29, June 27, June 29,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Contract revenue $17,807,000 $21,180,000 $35,583,000 $40,448,000
---------- ---------- ---------- ----------
Direct costs of
contract revenue:
Salaries and wages 5,538,000 6,917,000 11,082,000 13,401,000
Production expenses 522,000 453,000 837,000 797,000
Subconsultant
services 1,539,000 1,192,000 2,814,000 2,251,000
---------- ---------- ---------- ----------
Total direct
costs of
contract
revenue 7,599,000 8,562,000 14,733,000 16,449,000
---------- ---------- ---------- ----------
General and
administrative
expenses:
Salaries and wages,
payroll taxes and
employee benefits 5,927,000 5,906,000 12,369,000 13,277,000
Facilities 1,174,000 1,158,000 2,322,000 2,260,000
Stock-based
compensation 61,000 51,000 154,000 67,000
Depreciation and
amortization 440,000 449,000 834,000 896,000
Other 2,736,000 3,366,000 5,258,000 6,918,000
---------- ---------- ---------- ----------
Total general
and
administrative
expenses 10,338,000 10,930,000 20,937,000 23,418,000
---------- ---------- ---------- ----------
(Loss) income
from operations (130,000) 1,688,000 (87,000) 581,000
---------- ---------- ---------- ----------
Other income
(expense):
Interest expense,
net of reversal (22,000) (24,000) (2,000) 550,000
Interest and other
income, net 113,000 148,000 261,000 328,000
---------- ---------- ---------- ----------
Total other
income, net 91,000 124,000 259,000 878,000
---------- ---------- ---------- ----------
(Loss) income
before income
tax expense (39,000) 1,812,000 172,000 1,459,000
Income tax expense 16,000 754,000 111,000 651,000
---------- ---------- ---------- ----------
Net (loss) income $ (55,000)$ 1,058,000 $ 61,000 $ 808,000
========== ========== ========== ==========
(Loss) earnings per
share:
Basic and diluted $ (0.01)$ 0.15 $ 0.01 $ 0.11
========== ========== ========== ==========
Weighted-average
shares outstanding:
Basic 7,156,000 7,148,000 7,156,000 7,148,000
========== ========== ========== ==========
Diluted 7,157,000 7,151,000 7,157,000 7,150,000
========== ========== ========== ==========
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
-------------------------
June 27, June 29,
2008 2007
----------- ------------
Cash flows from operating activities:
Net income $ 61,000 $ 808,000
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 834,000 896,000
Loss on sale of equipment 20,000 10,000
Allowance for doubtful accounts 146,000 91,000
Stock-based compensation 154,000 67,000
Changes in operating assets and
liabilities, net of the effects
from the purchase of Intergy
Corporation in 2008:
Accounts receivable 1,511,000 (285,000)
Costs and estimated earnings in
excess of billing on uncompleted
contracts (237,000) (886,000)
Other receivables (10,000) 3,190,000
Prepaid expenses and other current
assets 443,000 482,000
Other assets (86,000) 26,000
Accounts payable 476,000 (406,000)
Accrued liabilities (1,290,000) (8,025,000)
Billings in excess of costs and
estimated earnings on uncompleted
contracts (109,000) 44,000
Deferred income taxes -- --
Deferred lease obligations (28,000) 99,000
----------- ------------
Net cash provided by (used
in) operating activities 1,885,000 (3,889,000)
----------- ------------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (369,000) (468,000)
Proceeds from sale of equipment 49,000 27,000
Payment for business acquisition, net of
cash acquired (9,760,000) --
Purchase of liquid investments (7,100,000) (12,600,000)
Proceeds from sale of liquid investments 7,025,000 4,900,000
----------- ------------
Net cash used in investing
activities (10,155,000) (8,141,000)
----------- ------------
Cash flows from financing activities:
Changes in excess of outstanding checks
over bank balance (196,000) 395,000
Payments on notes payable (772,000) (769,000)
Principal payments on capital leases (88,000) (89,000)
Proceeds from employee stock purchase
plan 41,000 --
Distributions to holders of redeemable
common stock -- (3,150,000)
Refund of offering costs -- 10,000
----------- ------------
Net cash used in financing
activities (1,015,000) (3,603,000)
----------- ------------
Net decrease in cash and cash equivalents (9,285,000) (15,633,000)
Cash and cash equivalents at beginning of
the period 15,511,000 20,633,000
----------- ------------
Cash and cash equivalents at end of the
period $ 6,226,000 $ 5,000,000
=========== ============
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest 50,000 49,000
Income taxes 636,000 424,000
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under capital leases 29,000 29,000
Note payable issued in connection with
acquisition of assets 100,000 --
Purchase price payable 1,000,000 --
Use of Non-GAAP Financial Measures
Adjusted EBITDA is a supplemental measure used by our management to measure our operating performance. We define Adjusted EBITDA as net income plus net interest expense, income tax expense (benefit), depreciation and amortization, and loss (gain) on sales of assets. Our 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. We believe Adjusted EBITDA enables management to separate non-recurring income and expense items from our results of operations to provide a more normalized and consistent view of operating performance on a period-to-period basis. We use Adjusted EBITDA to evaluate our performance for, among other things, budgeting, forecasting and incentive compensation purposes. We also believe Adjusted EBITDA is useful to investors, research analysts, investment bankers and lenders because it removes from our operational results the impact of certain non-recurring income and expense items, which may facilitate comparison of our 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 48.4% to $0.8 million for the six months ended June 27, 2008 from $1.5 million for the comparable period last year. Adjusted EBITDA, as a percentage of revenue, decreased to 2.2% for six months ended June 27, 2008 from 3.7% for the comparable period last year.
The following is a reconciliation of net income to Adjusted EBITDA:
Six Months Ended
--------------------
June 27, June 29,
2008 2007
--------- ----------
Net income 61,000 808,000
Interest and other income, net (261,000) (328,000)
Interest expense, net of reversal 2,000 (550,000)
Income tax expense 111,000 651,000
Depreciation and amortization 834,000 896,000
Loss on sale of equipment 20,000 10,000
--------- ----------
Adjusted EBITDA 767,000 1,487,000
========= ==========