Willdan Reports Third Quarter 2010 Financial Results

Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), today announced financial results for its third quarter ended October 1, 2010.

For the third quarter of 2010, Willdan reported total contract revenue of $20.7 million and net income of $0.8 million, or $0.11 per share.

Tom Brisbin, Willdan’s Chief Executive Officer, remarked: “Our business is growing, profitable, and more diverse in terms of both services and geographic reach than ever before. We have addressed the recession as ‘the new reality’ and have made, and will continue to make, adjustments necessary to move Willdan forward.

“I am optimistic about the future. We have strong growth opportunities across our business lines and markets.”

Third Quarter 2010 Results

For the third quarter of fiscal 2010, revenue was $20.7 million, up $6.1 million, or 41.8%, from revenue of $14.6 million for the comparable period last year. On a sequential basis, revenue was up $0.3 million, or 1.5%, from the second quarter of 2010. Income from operations was $1.4 million for the third quarter of fiscal 2010, as compared to a loss from operations of $1.4 million for the comparable period last year. On a sequential basis, income from operations was up $0.1 million, or 7.7%, from income from operations of $1.3 million for the second quarter of 2010.

Net income was $0.8 million for the third quarter of fiscal 2010, as compared to a net loss of $0.9 million in the comparable period last year and net income of $1.3 million in the second quarter of 2010.

Basic and diluted earnings per share for the third quarter of fiscal 2010 was $0.11 as compared to a loss per share of $0.12 for the comparable period last year.

Willdan generated $3.0 million in cash flow from operations in the third quarter of fiscal year 2010.

Nine Months 2010 Results

For the nine months ended October 1, 2010, revenue was $58.0 million, up $10.8 million, or 22.9%, from revenue of $47.2 million in the comparable period last year. Income from operations was $3.0 million for the nine months ended October 1, 2010 as compared to a loss from operations of $3.5 million for the comparable period last year. Net income was $2.4 million for the nine months ended October 1, 2010 as compared to a net loss of $2.2 million for the comparable period last year.

Basic and diluted earnings per share for the nine months ended October 1, 2010 was $0.34, as compared to a basic and diluted loss per share of $0.31 for the comparable period last year.

Willdan generated $1.3 million in cash flow from operations in the nine months ended October 1, 2010.
  Three Months Ended   Nine Months Ended
In thousands (except per share data) October 1,

2010
  October 2,

2009
October 1,

2010
  October 2,

2009
Revenue $ 20,706 $ 14,561 $ 58,024 $ 47,230
 
Income (loss) from operations 1,394 (1,385 ) 3,044 (3,523 )
Interest income 3 4 9 27
Interest expense (11 ) (9 ) (37 ) (29 )
Other, net (3 ) 2 17 (1 )
Income tax expense (benefit) 595 (510 ) 595 (1,296 )
Net income (loss) $ 788 $ (878 ) $ 2,438 $ (2,230 )
 
Earnings (loss) per share
Basic and diluted $ 0.11 $ (0.12 ) $ 0.34 $ (0.31 )
 
Weighted average shares outstanding:
 
Basic 7,236 7,204 7,229 7,187
Diluted 7,318 7,204 7,274 7,187

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 (benefit) expense, depreciation and amortization, lease abandonment (recovery) expense, and loss (gain) on sales of equipment. 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 unusual or infrequent 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 unusual or infrequent 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 income from operations or net income as an indicator of operating performance or any other GAAP measure.

Adjusted EBITDA increased $5.5 million to $3.7 million for the nine months ended October 1, 2010 from $(1.8) million for the comparable period last year.

The following is a reconciliation of net income (loss) to Adjusted EBITDA:
In thousands   Nine Months Ended
October 1,

2010
  October 2,2009
 
Net income (loss) $ 2,438 $ (2,230 )
Interest income (9 ) (27 )
Interest expense 37 29
(Gain) loss on sale of equipment (17 ) 1
Income tax expense (benefit) 595 (1,296 )
Depreciation and amortization 752 1,531
Lease abandonment (recovery) expense, net (62 ) 176
Adjusted EBITDA $ 3,734 $ (1,816 )

Liquidity and Capital Resources

Willdan had $7.6 million in cash and cash equivalents at October 1, 2010, compared with $8.4 million at January 1, 2010. Willdan has a $5.0 million revolving line of credit under a credit agreement with its bank. At October 1, 2010, there was $1.0 million in outstanding borrowings under this agreement.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on November 11, 2010 at 5:00 p.m. Eastern/2:00 p.m. Pacific, to further discuss the Company’s financial results.

Interested parties may participate in the conference call by dialing 800-762-8779 (480-629-9771 for international callers). When prompted, ask for the “Willdan Group, Inc., Third Quarter 2010 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 November 25 th, 2010, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4374819. The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Founded over 40 years ago, Willdan is a provider of outsourced services to public and private agencies and utilities located primarily in California and New York. Willdan assists cities, public utilities and other government agencies and, to a lesser extent, private industry with a broad range of services, including civil engineering, building and safety services, geotechnical engineering, energy efficiency, water conservation, renewable resource strategy, financial and economic consulting, and disaster preparedness and homeland security. 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 Form 10-K annual report for the year ended January 1, 2010 filed on March 30, 2010. 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
   
October 1,2010 January 1,2010
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,605,000 $ 8,445,000
Accounts receivable, net of allowance for doubtful accounts of $1,194,000 and $1,862,000 at October 1, 2010 and January 1, 2010, respectively 11,417,000 10,097,000
Costs and estimated earnings in excess of billings on uncompleted contracts 11,907,000 6,649,000
Income tax receivable 55,000 51,000
Other receivables 238,000 73,000
Prepaid expenses and other current assets 1,109,000 1,500,000
Total current assets 32,331,000 26,815,000
 
Equipment and leasehold improvements, net 1,299,000 1,596,000
Goodwill 12,475,000 10,371,000
Other intangible assets, net 129,000 149,000
Other assets 409,000 318,000
Deferred income taxes, net of current portion 1,083,000 1,083,000
Total assets $ 47,726,000 $ 40,332,000
 
Liabilities and Stockholders’ Equity
Current liabilities:
Excess of outstanding checks over bank balance $ 823,000 $ 488,000
Accounts payable 2,944,000 1,457,000
Accrued liabilities 7,327,000 4,509,000
Billings in excess of costs and estimated earnings on uncompleted contracts 1,275,000 1,030,000
Borrowings under line of credit 1,000,000 1,000,000
Current portion of notes payable 3,000 23,000
Current portion of capital lease obligations 115,000 125,000
Current portion of deferred income taxes 1,479,000 1,479,000
Total current liabilities 14,966,000 10,111,000
 
Capital lease obligations, less current portion 74,000 82,000
Deferred lease obligations 862,000 1,022,000
Total liabilities 15,902,000 11,215,000
 
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: 7,244,000 and 7,208,000 shares issued and outstanding at October 1, 2010 and January 1, 2010, respectively
72,000 72,000
Additional paid-in capital 33,709,000 33,440,000
Accumulated deficit (1,957,000 ) (4,395,000 )
Total stockholders’ equity 31,824,000 29,117,000
Total liabilities and stockholders’ equity $ 47,726,000 $ 40,332,000
 

WILLDAN GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
   
Three Months Ended Nine Months Ended
October 1,   October 2, October 1,   October 2,
2010 2009 2010 2009
 
Contract revenue $ 20,706,000 $ 14,561,000 $ 58,024,000 $ 47,230,000
 
Direct costs of contract revenue:
Salaries and wages 5,570,000 4,437,000 16,196,000 13,729,000
Sub-consultant services 5,433,000 1,772,000 10,912,000 6,380,000
Other direct costs 448,000 306,000 3,434,000 2,133,000
Total direct costs of contract revenue 11,451,000 6,515,000 30,542,000 22,242,000
 
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits 4,093,000 4,798,000 13,019,000 15,346,000
Facilities and facility related 1,117,000 1,104,000 3,246,000 3,340,000
Stock-based compensation 52,000 74,000 180,000 216,000
Depreciation and amortization 231,000 302,000 741,000 1,531,000
Lease abandonment (recovery) expense, net (75,000 ) 195,000 (62,000 ) 176,000
Other 2,443,000 2,958,000 7,314,000 7,902,000
Total general and administrative expenses 7,861,000 9,431,000 24,438,000 28,511,000
Income (loss) from operations 1,394,000 (1,385,000 ) 3,044,000 (3,523,000 )
 
Other income (expense):
Interest income 3,000 4,000 9,000 27,000
Interest expense (11,000 ) (9,000 ) (37,000 ) (29,000 )
Other, net (3,000 ) 2,000 17,000 (1,000 )
Total other income (expense), net (11,000 ) (3,000 ) (11,000 ) (3,000 )
Income (loss) before income taxes 1,383,000 (1,388,000 ) 3,033,000 (3,526,000 )
 
Income tax expense (benefit) 595,000 (510,000 ) 595,000 (1,296,000 )
Net income (loss) $ 788,000 $ (878,000 ) $ 2,438,000 $ (2,230,000 )
 
Earnings (loss) per share:
Basic and diluted $ 0.11 $ (0.12 ) $ 0.34 $ (0.31 )
 
Weighted-average shares outstanding:
Basic 7,236,000 7,204,000 7,229,000 7,187,000
Diluted 7,318,000 7,204,000 7,274,000 7,187,000
 

WILLDAN GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
     
Nine Months Ended
October 1,2010 October 2,2009
Cash flows from operating activities:
Net income (loss) $ 2,438,000 $ (2,230,000 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 752,000 1,531,000
Lease abandonment (recovery) expense, net (62,000 ) 176,000
(Gain) loss on sale of equipment (17,000 ) 1,000
Provision for doubtful accounts 259,000 1,071,000
Stock-based compensation 180,000 216,000
Changes in operating assets and liabilities:
Accounts receivable (1,578,000 ) 1,737,000
Costs and estimated earnings in excess of billings on uncompleted contracts (5,259,000 ) 801,000
Income tax receivable (4,000 ) (276,000 )
Other receivables (165,000 ) (12,000 )
Prepaid expenses and other current assets 391,000 606,000
Other assets (92,000 ) 39,000
Accounts payable 1,487,000 (1,098,000 )
Accrued liabilities 2,817,000 (702,000 )
Billings in excess of costs and estimated earnings on uncompleted contracts 245,000 157,000
Deferred lease obligations (97,000 ) (269,000 )
Net cash provided by operating activities 1,295,000 1,748,000
 
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (363,000 ) (157,000 )
Proceeds from sale of equipment 31,000
Payments for business acquisition (2,103,000 ) (2,372,000 )
Net cash used in investing activities (2,435,000 ) (2,529,000 )
 
Cash flows from financing activities:
Changes in excess of outstanding checks over bank balance 335,000 655,000
Payments on notes payable (20,000 ) (35,000 )
Borrowings under line of credit 8,970,000 1,247,000
Repayments of line of credit (8,970,000 ) (1,247,000 )
Principal payments on capital lease obligations (102,000 ) (133,000 )
Proceeds from sales of common stock under employee stock purchase plan 87,000 84,000
Net cash provided by financing activities 300,000 571,000
Net (decrease) increase in cash and cash equivalents (840,000 ) (210,000 )
Cash and cash equivalents at beginning of the period 8,445,000 8,144,000
Cash and cash equivalents at end of the period $ 7,605,000 $ 7,934,000
 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 35,000 $ 31,000
Income taxes 5,000 1,000
 
Supplemental disclosures of noncash investing and financing activities:
Equipment acquired under capital lease obligations $ 88,000 $ 53,000

Copyright Business Wire 2010

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