Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported
financial results for its first quarter ended March 29, 2024.
“We had an excellent first quarter,” said Mike Bieber, Willdan’s
President and Chief Executive Officer. “Revenue, profitability,
earnings, and cash flow were above expectations. We saw strength in
both government and utility customers, plus strong software sales.
The rapid growth in electricity demand from artificial intelligence
and data centers is becoming a new catalyst in our market.”
First Quarter 2024 Highlights*
- Consolidated contract revenue of $122.5 million, up 19.4%.
- Net revenue** of $68.9 million, up 11.7%.
- Net income of $2.9 million, up from net income of $0.9
million.
- Adjusted EBITDA** of $11.0 million, up 11.7%.
- GAAP Diluted EPS of $0.21, up from $0.07.
- Adjusted Diluted EPS** of $0.40, up from $0.32.
Fiscal Year 2024 Financial Targets
We are reaffirming our 2024 financial targets:
- Net revenue** between $270 million and $280 million.
- Adjusted Diluted EPS** between $1.80 per share and $1.87 per
share.
- Adjusted EBITDA** between $48 million and $50 million.
Assumes 14.2 million diluted shares, 25% effective tax rate, and
no future acquisitions.
*As compared to the same period of fiscal
2023.
**See “Use of Non-GAAP Financial Measures”
below.
First Quarter 2024 Conference Call
Willdan will be hosting a conference call to discuss its first
quarter financial results today, at 5:30 p.m. Eastern/2:30 p.m.
Pacific. To access the call, listeners should dial 877-407-2988 (or
201-389-0923) approximately five minutes prior to the scheduled
start time. The conference call will be webcast simultaneously on
Willdan’s website at
https://edge.media-server.com/mmc/p/gf7u4cva.
A replay of the conference call will be available through
Willdan’s website at
https://ir.willdangroup.com/events-presentations.
An Investor Report containing supplemental financial information
can also be accessed through Willdan’s website at
https://ir.willdangroup.com and selecting “Stock Information”.
About Willdan Group, Inc.
Willdan is a nationwide provider of professional, technical and
consulting services to utilities, government agencies, and private
industry. Willdan’s service offerings span a broad set of
complementary disciplines that include electric grid solutions,
energy efficiency and sustainability, engineering and planning, and
municipal financial consulting. For additional information, visit
Willdan's website at www.willdan.com.
Use of Non-GAAP Financial Measures
“Net Revenue,” defined as contract revenue as reported in
accordance with U.S. generally accepted accounting principles
(“GAAP”) minus subcontractor services and other direct costs, is a
non-GAAP financial measure. Net Revenue is a supplemental measure
that Willdan believes enhances investors’ ability to analyze
Willdan’s business trends and performance because it substantially
measures the work performed by Willdan’s employees. In the course
of providing services, Willdan routinely subcontracts various
services. Generally, these subcontractor services and other direct
costs are passed through to Willdan’s clients and, in accordance
with GAAP and industry practice, are included in Willdan’s revenue
when it is Willdan’s contractual responsibility to procure or
manage such subcontracted activities. Because subcontractor
services and other direct costs can vary significantly from project
to project and period to period, changes in revenue may not
necessarily be indicative of Willdan’s business trends.
Accordingly, Willdan segregates subcontractor services and other
direct costs from revenue to promote a better understanding of
Willdan’s business by evaluating revenue exclusive of subcontract
services and other direct costs associated with external service
providers. A reconciliation of Willdan’s contract revenue as
reported in accordance with GAAP to Net Revenue is provided at the
end of this press release. A reconciliation of targeted contract
revenue for fiscal year 2024 as reported in accordance with GAAP to
targeted Net Revenues for fiscal year 2024, which is a
forward-looking non-GAAP financial measure, is not provided because
Willdan is unable to provide such reconciliation without
unreasonable effort. The inability to provide a reconciliation is
due to the uncertainty and inherent difficulty of predicting the
subcontractor services and other director costs that are subtracted
from contract revenues in order to derive Net Revenues. While
subcontractor costs have increased recently, subcontractor costs
can vary significantly from period to period. Subcontractor costs
and other direct costs were 43.7% and 47.1% of contract revenue for
the quarter ended March 29, 2024 and fiscal year 2023,
respectively, and 39.9% and 47.2% for the quarter ended March 31,
2023 and fiscal year 2022, respectively.
“Adjusted EBITDA,” defined as net income plus interest expense,
income tax expense, stock-based compensation, interest accretion,
depreciation and amortization, and gain on sale of equipment, is a
non-GAAP financial measure. Adjusted EBITDA is a supplemental
measure used by Willdan’s management to measure Willdan’s operating
performance. Willdan believes Adjusted EBITDA is useful because it
allows Willdan’s management to evaluate its operating performance
and compare the results of its operations from period to period and
against its peers without regard to its financing methods, capital
structure and non-operating expenses. Willdan uses Adjusted EBITDA
to evaluate its performance for, among other things, budgeting,
forecasting and incentive compensation purposes.
Certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s costs of capital and stock-based
compensation, as well as the historical costs of depreciable
assets. A reconciliation of net income as reported in accordance
with GAAP to Adjusted EBITDA is provided at the end of this press
release. A reconciliation of targeted net income for fiscal year
2024 as reported in accordance with GAAP to Adjusted EBITDA for
fiscal year 2024, which is a forward-looking non-GAAP financial
measure, is not provided because Willdan is unable to provide such
reconciliation without unreasonable effort. The inability to
provide a reconciliation is due to the uncertainty and inherent
difficulty of predicting the interest expense, income tax expense,
stock-based compensation, interest accretion, depreciation and
amortization, and gain on sale of equipment that are subtracted
from net income in order to derive Adjusted EBITDA.
“Adjusted Net Income,” defined as net income plus stock-based
compensation, intangible amortization, interest accretion,
refinancing costs, and tax benefit distribution, each net of tax,
is a non-GAAP financial measure.
“Adjusted Diluted EPS,” defined as net income plus stock-based
compensation, intangible amortization, interest accretion,
refinancing costs, and tax benefit distribution, each net of tax,
all divided by the diluted weighted-average shares outstanding, is
a non-GAAP financial measure. Adjusted Net Income and Adjusted
Diluted EPS are supplemental measures used by Willdan’s management
to measure its operating performance. Willdan believes Adjusted Net
Income and Adjusted Diluted EPS are useful because they allow
Willdan’s management to more closely evaluate and explain the
operating results of Willdan’s business by removing certain
non-operating expenses.
Reconciliations of net income as reported in accordance with
GAAP to Adjusted Net Income and diluted EPS as reported in
accordance with GAAP to Adjusted Diluted EPS are provided at the
end of this press release. Reconciliations of targeted net income
as reported in accordance with GAAP to targeted Adjusted Net Income
for fiscal year 2024, which is a forward-looking non-GAAP financial
measure, and targeted diluted EPS as reported in accordance with
GAAP to targeted Adjusted Diluted EPS for fiscal year 2024, which
is a forward-looking non-GAAP financial measure, are not provided
because Willdan is unable to provide such reconciliations without
unreasonable effort. The inability to provide such reconciliations
is due to the uncertainty and inherent difficulty of predicting the
stock-based compensation, intangible amortization, and interest
accretion, each net of tax, that are subtracted from net income and
diluted EPS in order to derive Adjusted Net Income and Adjusted
Diluted EPS, respectively.
Willdan’s definitions of Net Revenue, Adjusted EBITDA, Adjusted
Net Income and Adjusted Diluted EPS have limitations as analytical
tools and may differ from other companies reporting similarly named
measures or from similarly named measures Willdan has reported in
prior periods. These measures should be considered in addition to,
and not as a substitute for, or superior to, other measures of
financial performance prepared in accordance with GAAP, such as
contract revenue, net income and diluted EPS.
Forward Looking Statements
Statements in this press release that are not purely historical,
including statements regarding Willdan’s intentions, hopes,
beliefs, expectations, representations, projections, estimates,
assumptions, aims, plans or predictions of the future are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, including
statements regarding financial targets for fiscal year 2024. All
statements other than statements of historical fact included in
this press release are forward-looking statements. It is important
to note that Willdan’s actual results could differ materially from
those in any such forward-looking statements. Important factors
that could cause actual results to differ materially from its
expectations include, but are not limited to, Willdan’s ability to
adequately complete projects in a timely manner, Willdan’s ability
to compete successfully in the highly competitive energy services
market, Willdan’s reliance on work from its top ten clients;
changes in state, local and regional economies and government
budgets; Willdan’s ability to win new contracts, to renew existing
contracts and to compete effectively for contracts awarded through
bidding processes; Willdan’s ability to make principal and interest
payments on its outstanding debt as they come due and to comply
with financial covenants contained in its debt agreements;
Willdan’s ability to manage supply chain constraints, labor
shortages, rising interest rates, and rising inflation; Willdan’s
ability to obtain financing and to refinance its outstanding debt
as it matures; Willdan’s ability to successfully integrate its
acquisitions and execute on its growth strategy; and Willdan’s
ability to attract and retain managerial, technical, and
administrative talent.
All written and oral forward-looking statements attributable to
Willdan, or persons acting on its behalf, are expressly qualified
in their entirety by the cautionary statements and risk factors
disclosed from time to time in Willdan’s reports filed with the
Securities and Exchange Commission, including, but not limited to,
the Annual Report on Form 10-K filed for the year ended December
29, 2023, as such disclosures may be amended, supplemented or
superseded from time to time by other reports Willdan files with
the Securities and Exchange Commission, including subsequent Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K. 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 unless required by law.
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value)
March 29,
December 29,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
46,925
$
23,397
Restricted cash
—
—
Accounts receivable, net of allowance for
doubtful accounts of $690 and $866 at March 29, 2024 and December
29, 2023, respectively
50,792
69,677
Contract assets
82,409
93,885
Other receivables
552
1,169
Prepaid expenses and other current
assets
5,863
3,888
Total current assets
186,541
192,016
Equipment and leasehold improvements,
net
27,539
27,097
Goodwill
131,144
131,144
Right-of-use assets
12,803
12,465
Other intangible assets, net
30,085
31,956
Other assets
4,832
4,949
Deferred income taxes, net
14,956
15,961
Total assets
$
407,900
$
415,588
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
34,518
$
33,193
Accrued liabilities
38,411
54,129
Contract liabilities
16,427
13,183
Notes payable
8,924
8,452
Finance lease obligations
1,111
1,186
Lease liability
4,677
4,537
Total current liabilities
104,068
114,680
Notes payable, less current portion
86,571
88,979
Finance lease obligations, less current
portion
1,112
1,184
Lease liability, less current portion
9,948
9,758
Other noncurrent liabilities
686
1,142
Total liabilities
202,385
215,743
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000
shares authorized, no shares issued and outstanding
—
—
Common stock, $0.01 par value, 40,000
shares authorized; 13,817 and 13,682 shares issued and outstanding
at March 29, 2024 and December 29, 2023, respectively
138
137
Additional paid-in capital
188,088
185,795
Accumulated other comprehensive loss
(230
)
(664
)
Retained earnings
17,519
14,577
Total stockholders’ equity
205,515
199,845
Total liabilities and stockholders’
equity
$
407,900
$
415,588
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per
share amounts)
Three Months Ended
March 29,
March 31,
2024
2023
Contract revenue
$
122,489
$
102,603
Direct costs of contract revenue
(inclusive of directly related depreciation and amortization):
Salaries and wages
21,512
20,410
Subcontractor services and other direct
costs
53,559
40,912
Total direct costs of contract revenue
75,071
61,322
Gross profit
47,418
41,281
General and administrative expenses:
Salaries and wages, payroll taxes and
employee benefits
26,509
22,385
Facilities and facility related
2,445
2,278
Stock-based compensation
1,390
1,533
Depreciation and amortization
3,592
4,200
Other
8,121
6,871
Total general and administrative
expenses
42,057
37,267
Income (Loss) from operations
5,361
4,014
Other income (expense):
Interest expense, net
(2,137
)
(2,466
)
Other, net
704
140
Total other expense, net
(1,433
)
(2,326
)
Income (Loss) before income taxes
3,928
1,688
Income tax (benefit) expense
986
756
Net income (loss)
2,942
932
Other comprehensive income (loss):
Unrealized gain (loss) on derivative
contracts, net of tax
434
—
Comprehensive income (loss)
$
3,376
$
932
Earnings (Loss) per share:
Basic
$
0.22
$
0.07
Diluted
$
0.21
$
0.07
Weighted-average shares outstanding:
Basic
13,605
13,266
Diluted
13,910
13,470
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 29,
March 31,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
2,942
$
932
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
3,592
4,200
Other non-cash items
92
85
Deferred income taxes, net
1,005
782
(Gain) loss on sale/disposal of
equipment
(13
)
(10
)
Provision for doubtful accounts
(100
)
81
Stock-based compensation
1,390
1,533
Changes in operating assets and
liabilities, net of effects from business acquisitions:
Accounts receivable
18,985
8,204
Contract assets
11,476
7,819
Other receivables
617
(9
)
Prepaid expenses and other current
assets
(1,975
)
1,023
Other assets
117
(3,532
)
Accounts payable
1,325
479
Accrued liabilities
(15,740
)
(7,883
)
Contract liabilities
3,244
2,941
Right-of-use assets
(8
)
647
Net cash (used in) provided by operating
activities
26,949
17,292
Cash flows from investing activities:
Purchase of equipment, software, and
leasehold improvements
(1,971
)
(3,488
)
Proceeds from sale of equipment
19
13
Net cash (used in) provided by investing
activities
(1,952
)
(3,475
)
Cash flows from financing activities:
Payment on restricted cash
—
(10,679
)
Payments on notes payable
(153
)
(485
)
Repayments under term loan facility and
line of credit
(1,875
)
(5,250
)
Principal payments on finance leases
(345
)
(303
)
Proceeds from stock option exercise
281
—
Proceeds from sales of common stock under
employee stock purchase plan
1,402
1,392
Cash used to pay taxes on stock grants
(779
)
(124
)
Net cash (used in) provided by financing
activities
(1,469
)
(15,449
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
23,528
(1,632
)
Cash, cash equivalents and restricted cash
at beginning of period
23,397
19,485
Cash, cash equivalents and restricted cash
at end of period
$
46,925
$
17,853
Supplemental disclosures of cash flow
information:
Cash paid (received) during the period
for:
Interest
$
2,081
$
2,424
Income taxes
2
(77
)
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under finance
leases
198
48
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Revenue
to Net Revenue
(in thousands)
(Non-GAAP Measure)
Three Months Ended
March 29,
March 31,
2024
2023
Consolidated
Contract revenue
$
122,489
$
102,603
Subcontractor services and other direct
costs
53,559
40,912
Net Revenue
$
68,930
$
61,691
Energy segment
Contract revenue
$
100,746
$
83,285
Subcontractor services and other direct
costs
52,654
40,078
Net Revenue
$
48,092
$
43,207
Engineering and Consulting
segment
Contract revenue
$
21,743
$
19,318
Subcontractor services and other direct
costs
905
834
Net Revenue
$
20,838
$
18,484
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(in thousands)
(Non-GAAP Measure)
Three Months Ended
March 29,
March 31,
2024
2023
Net income (loss)
$
2,942
$
932
Interest expense
2,137
2,466
Income tax expense (benefit)
986
756
Stock-based compensation
1,390
1,533
Depreciation and amortization
3,592
4,200
(Gain) Loss on sale of equipment
(13
)
(10
)
Adjusted EBITDA
$
11,034
$
9,877
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted Net Income and Adjusted Diluted EPS
(in thousands, except per
share amounts)
(Non-GAAP Measure)
Three Months Ended
March 29,
March 31,
2024
2023
Net income (loss)
$
2,942
$
932
Adjustment for stock-based
compensation
1,390
1,533
Tax effect of stock-based compensation
(278
)
(310
)
Adjustment for intangible amortization
1,871
2,624
Tax effect of intangible amortization
(374
)
(531
)
Adjusted Net Income (Loss)
$
5,551
$
4,248
Diluted weighted-average shares
outstanding
13,910
13,470
Diluted earnings (loss) per share
$
0.21
$
0.07
Impact of adjustment:
Stock-based compensation per share
0.10
0.12
Tax effect of stock-based compensation per
share
(0.02
)
(0.02
)
Intangible amortization per share
0.14
0.19
Tax effect of intangible amortization per
share
(0.03
)
(0.04
)
Adjusted Diluted EPS
$
0.40
$
0.32
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502270739/en/
Willdan Group, Inc. Al Kaschalk Vice President Tel:
310-922-5643 akaschalk@willdan.com
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