Willdan Reports Second Quarter 2011 Financial Results

Willdan Group, Inc. (“Willdan”) (NASDAQ:WLDN), today announced financial results for its second quarter ended July 1, 2011.

For the second quarter of 2011, Willdan reported total contract revenue of $25.8 million and net income of $0.7 million, or $0.10 per share.

Tom Brisbin, Willdan’s Chief Executive Officer, stated: “We reported sequential improvements in revenue, earnings and cash flow in the second quarter. As planned, we continued to make investments in key people and technology across our business lines during the quarter. We continue to expect stronger profitability in the second half of the year as these investments begin to translate into improved revenue growth.”

Second Quarter 2011 Results

For the second quarter of fiscal 2011, revenue was $25.8 million, up $5.4 million, or 26.7%, from revenue of $20.4 million for the comparable period last year. On a sequential basis, revenue was up $3.1 million, or 13.5%, from the first quarter of 2011. Income from operations was $1.0 million for the second quarter of fiscal 2011, as compared to income from operations of $1.3 million for the comparable period last year. On a sequential basis, income from operations was up $1.2 million from a loss from operations of $0.3 million for the first quarter of 2011.

Net income was $0.7 million for the second quarter of fiscal 2011, as compared to net income of $1.3 million for the comparable period last year and a net loss of $0.3 million for the first quarter of 2011.

Basic and diluted earnings per share for the second quarter of fiscal 2011 were $0.10 as compared to earnings per share of $0.17 for the comparable period last year.

Willdan generated $0.9 million in cash flow from operations in the second quarter of fiscal 2011.

Six Months 2011 Results

For the six months ended July 1, 2011, revenue was $48.6 million, up $11.2 million, or 30.1%, from revenue of $37.3 million in the comparable period last year. Income from operations was $0.7 million for the six months ended July 1, 2011 as compared to income from operations of $1.7 million for the comparable period last year. Net income was $0.4 million for the six months ended July 1, 2011 as compared to net income of $1.7 million for the comparable period last year.

Basic and diluted earnings per share for the six months ended July 1, 2011 were $0.06 as compared to basic and diluted earnings per share of $0.23 for the comparable period last year.

Willdan generated $1.6 million in cash flow from operations in the six months ended July 1, 2011.
  Three Months Ended Six Months Ended
In thousands (except per share data) July 1,

2011
July 2,

2010
July 1,

2011
July 2,

2010
Revenue $ 25,812 $ 20,367 $ 48,554 $ 37,318
 
Income from operations 954 1,265 674 1,650
Interest income 2 1 4 6
Interest expense (14 ) (18 ) (32 ) (26 )
Other, net (8 ) 10 (3 ) 20
Income tax expense 199 -- 199 --
Net income $ 735 $ 1,258 $ 444 $ 1,650
 
Basic and diluted earnings per share $ 0.10 $ 0.17 $ 0.06 $ 0.23
 
Weighted average shares outstanding:
 
Basic 7,257 7,229 7,254 7,226
Diluted 7,471 7,252 7,476 7,240
 

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 pre-tax net income plus (minus) net interest expense (income), depreciation and amortization, lease abandonment expense and loss (gain) on sale of assets. 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 decreased $1.0 million to $1.2 million for the six months ended July 1, 2011 from $2.2 million for the comparable period last year.

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

2011
July 2,

2010
 
Net income $ 444 $ 1,650
Interest income (4 ) (6 )
Interest expense 32 26
Loss (gain) on sale of equipment 7 (19 )
Income tax expense 199
Depreciation and amortization 519 518
Lease abandonment expense, net 9 13
Adjusted EBITDA $ 1,206 $ 2,182
 

Liquidity and Capital Resources

Willdan had $7.2 million in cash and cash equivalents at July 1, 2011, compared with $6.6 million at December 31, 2010. Willdan has a $5.0 million bank revolving line of credit, with no outstanding borrowings at the quarter’s end.

Conference Call and Webcast

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Kimberly Gant plan to host a conference call on August 11, 2011 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 877-941-8609 (480-629-9818 for international callers). When prompted, ask for the “Willdan Group, Inc., Second Quarter 2011 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 25, 2011, by dialing 800-406-7325 (303-590-3030 for international callers). The replay access code is 4458758. The webcast replay will be archived for 12 months.

About Willdan Group, Inc.

Founded over 45 years ago, Willdan is a provider of professional technical and consulting services to small and mid-sized public agencies, large public utilities and, to a lesser extent, private industry primarily located in California, New York and Arizona. Willdan provides a broad range of services to clients, including civil engineering and planning, energy efficiency and sustainability, economic and financial consulting, and homeland security and communications and technology. 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 December 31, 2010 filed on March 29, 2011. 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
 
July 1,2011

December 31,2010
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,174,000 $ 6,642,000
Accounts receivable, net of allowance for doubtful accounts of $741,000 and $959,000 at July 1, 2011 and December 31, 2010, respectively 11,272,000 14,484,000
Costs and estimated earnings in excess of billings on uncompleted contracts 15,683,000 11,343,000
Other receivables 173,000 176,000
Prepaid expenses and other current assets 1,420,000 1,714,000
Total current assets 35,722,000 34,359,000
 
Equipment and leasehold improvements, net 1,362,000 1,496,000
Goodwill 15,208,000 12,475,000
Other intangible assets, net 68,000 95,000
Other assets 386,000 407,000
Deferred income taxes, net of current portion 622,000 622,000
Total assets $ 53,368,000 $ 49,454,000
 
Liabilities and Stockholders’ Equity
Current liabilities:
Excess of outstanding checks over bank balance $ 1,512,000 $ 1,223,000
Borrowings under line of credit 1,000,000
Accounts payable 3,986,000 5,380,000
Purchase price payable 2,733,000
Accrued liabilities 8,490,000 5,985,000
Billings in excess of costs and estimated earnings on uncompleted contracts 1,313,000 1,041,000
Current portion of notes payable 88,000 90,000
Current portion of capital lease obligations 175,000 173,000
Current portion of deferred income taxes 1,407,000 1,407,000
Total current liabilities 19,704,000 16,299,000
 
Notes payable, less current portion 113,000 131,000
Capital lease obligations, less current portion 96,000 96,000
Deferred lease obligations 699,000 766,000
Total liabilities 20,612,000 17,292,000
 
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: 7,257,000 and 7,246,000

shares issued and outstanding at July 1, 2011 and December 31, 2010, respectively
72,000 72,000
Additional paid-in capital 33,915,000 33,765,000
Accumulated deficit (1,231,000 ) (1,675,000 )
Total stockholders’ equity 32,756,000 32,162,000
Total liabilities and stockholders’ equity $ 53,368,000 $ 49,454,000
 

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2011 2010 2011 2010
 
Contract revenue $ 25,812,000 $ 20,367,000 $ 48,554,000 $ 37,318,000
 
Direct costs of contract revenue:
Salaries and wages 6,628,000 5,612,000 12,999,000 10,626,000
Subconsultant services 6,567,000 3,542,000 13,793,000 5,479,000
Other direct costs 2,321,000 1,644,000 2,287,000 2,986,000
Total direct costs of contract revenue 15,516,000 10,798,000 29,079,000 19,091,000  
Gross profit 10,296,000 9,569,000 19,475,000 18,227,000
 
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits 5,303,000 4,484,000 10,864,000 8,926,000
Facilities and facilities related 1,319,000 1,035,000 2,397,000 2,129,000
Stock-based compensation 54,000 48,000 108,000 128,000
Depreciation and amortization 229,000 239,000 486,000 510,000
Other 2,437,000 2,498,000 4,946,000 4,884,000
Total general and administrative expenses 9,342,000 8,304,000 18,801,000 16,577,000
Income from operations 954,000 1,265,000 674,000 1,650,000
 
Other income (expense), net:
Interest income 2,000 1,000 4,000 6,000
Interest expense (14,000 ) (18,000 ) (32,000 ) (26,000 )
Other, net (8,000 ) 10,000 (3,000 ) 20,000
Total other expense, net (20,000 ) (7,000 ) (31,000 )
Income before income taxes 934,000 1,258,000 643,000 1,650,000
 
Income tax expense 199,000 199,000
Net income $ 735,000 $ 1,258,000 $ 444,000 $ 1,650,000
 
Earnings per share:
Basic and diluted $ 0.10 $ 0.17 $ 0.06 $ 0.23
 
Weighted-average shares outstanding:
Basic 7,257,000 7,229,000 7,254,000 7,226,000
Diluted 7,471,000 7,252,000 7,476,000 7,240,000
 

WILLDAN GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
 
Six Months Ended
July 1,2011 July 2,2010
Cash flows from operating activities:
Net income $ 444,000 $ 1,650,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 519,000 518,000
Lease abandonment expense, net 9,000 13,000
Loss (gain) on sale of equipment 7,000 (19,000 )
Provision for doubtful accounts 64,000 210,000
Stock-based compensation 108,000 128,000
Changes in operating assets and liabilities:
Accounts receivable 3,148,000 (1,646,000 )
Costs and estimated earnings in excess of billings on uncompleted contracts (4,340,000 ) (4,571,000 )
Other receivables 3,000 41,000
Prepaid expenses and other current assets 294,000 (4,000 )
Other assets 21,000 (38,000 )
Accounts payable (1,394,000 ) (71,000 )
Accrued liabilities 2,505,000 1,836,000
Billings in excess of costs and estimated earnings on uncompleted contracts 272,000 350,000
Deferred lease obligations (76,000 ) (134,000 )
Net cash provided by (used in) operating activities 1,584,000 (1,737,000 )
 
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (263,000 ) (241,000 )
Proceeds from sale of equipment 1,000 30,000
Net cash used in investing activities (262,000 ) (211,000 )
 
Cash flows from financing activities:
Changes in excess of outstanding checks over bank balance 289,000 310,000
Payments on notes payable (43,000 ) (20,000 )
Proceeds from notes payable 23,000
Borrowings under line of credit 13,667,000 5,470,000
Repayments on line of credit (14,667,000 ) (5,470,000 )
Principal payments on capital lease obligations (101,000 ) (81,000 )
Proceeds from sales of common stock under employee stock purchase plan 42,000 47,000
Net cash (used in) provided by financing activities (790,000 ) 256,000
Net increase (decrease) in cash and cash equivalents 532,000 (1,692,000 )
Cash and cash equivalents at beginning of the period 6,642,000 8,445,000
Cash and cash equivalents at end of the period $ 7,174,000 $ 6,753,000
 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 37,000 $ 28,000
Income taxes 18,000 2,000
 
Supplemental disclosures of noncash investing and financing activities:
Equipment acquired under capital lease obligations $ 103,000 $ 51,000
Purchase price payable 2,733,000 2,000,000
 

Copyright Business Wire 2010

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