Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported
financial results for its fourth quarter and fiscal year ended
December 29, 2023 and outlook for 2024.
“We had an exceptional fourth quarter,” said Mike Bieber,
Willdan’s President and Chief Executive Officer. “Revenue,
profitability and cash flow were above our expectations, aided by
end of year program expansions. Strong performance throughout
Willdan capped a record year and positions us for an outstanding
2024.”
Fourth Quarter 2023 Highlights*
- Consolidated contract revenue of $155.7 million, up 37.5%.
- Net revenue** of $80.8 million, up 25.1%.
- Net income of $8.0 million, up from net loss of $(0.4)
million.
- Adjusted EBITDA** of $17.5 million, up 48.2%.
- GAAP Diluted EPS of $0.58, up from $(0.03).
- Adjusted Diluted EPS** of $0.80, up from $0.36.
Fiscal Year 2023 Highlights*
- Consolidated contract revenue of $510.1 million, up 18.9%.
- Net revenue** of $269.7 million, up 19.0%.
- Net income of $10.9 million, up from net loss of $(8.4)
million.
- Adjusted EBITDA** of $45.7 million, up 96.3%.
- GAAP Diluted EPS of $0.80, up from $(0.65).
- Adjusted Diluted EPS** of $1.75, up from $0.88.
Fiscal Year 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
2022.
**See “Use of Non-GAAP Financial Measures”
below.
Fourth Quarter 2023 Conference Call
Willdan will be hosting a conference call to discuss its fourth
quarter and full fiscal year 2023 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/7gbp5syv.
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 the 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 48.1% and 47.1% of contract revenue for
the quarter ended December 29, 2023 and fiscal year 2023,
respectively, and 43.0% and 47.2% for the quarter ended December
30, 2022 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 the 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 Willdan’s ability to capitalize on increased
energy efficiency spending in large markets and expected benefits
from its acquisitions. 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
CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value)
December 29,
December 30,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
23,397
$
8,806
Restricted cash
—
10,679
Accounts receivable, net of allowance for
doubtful accounts of $866 and $640 at December 29, 2023 and
December 30, 2022, respectively
69,677
60,202
Contract assets
93,885
83,060
Other receivables
1,169
4,773
Prepaid expenses and other current
assets
3,888
6,454
Total current assets
192,016
173,974
Equipment and leasehold improvements,
net
27,097
22,537
Goodwill
131,144
130,124
Right-of-use assets
12,465
12,390
Other intangible assets, net
31,956
41,486
Other assets
4,949
10,620
Deferred income taxes, net
15,961
18,543
Total assets
$
415,588
$
409,674
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
33,193
$
28,833
Accrued liabilities
54,129
59,110
Contingent consideration payable
—
4,000
Contract liabilities
13,183
12,585
Notes payable
8,452
16,903
Finance lease obligations
1,186
1,113
Lease liability
4,537
4,625
Total current liabilities
114,680
127,169
Notes payable
88,979
90,544
Finance lease obligations, less current
portion
1,184
1,601
Lease liability, less current portion
9,758
8,599
Other noncurrent liabilities
1,142
259
Total liabilities
215,743
228,172
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; 13,682 and 13,296 shares issued and outstanding
at December 29, 2023 and December 30, 2022, respectively
137
133
Additional paid-in capital
185,795
177,718
Accumulated other comprehensive loss
(664
)
—
Retained earnings
14,577
3,651
Total stockholders’ equity
199,845
181,502
Total liabilities and stockholders’
equity
$
415,588
$
409,674
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(in thousands, except per
share amounts)
Three Months Ended
Year Ended
December 29,
December 30,
December 29,
December 30,
2023
2022
2023
2022
Contract revenue
$
155,677
$
113,256
$
510,095
$
429,138
Direct costs of contract revenue
(inclusive of directly related depreciation and amortization):
Salaries and wages
26,347
21,458
89,915
82,972
Subcontractor services and other direct
costs
74,905
48,691
240,413
202,587
Total direct costs of contract revenue
101,252
70,149
330,328
285,559
Gross profit
54,425
43,107
179,767
143,579
General and administrative expenses:
Salaries and wages, payroll taxes and
employee benefits
26,950
21,632
95,556
81,801
Facilities and facility related
2,365
2,288
9,565
9,287
Stock-based compensation
1,259
1,747
5,323
8,373
Depreciation and amortization
3,913
4,249
16,431
17,489
Other
8,189
8,593
30,818
33,692
Total general and administrative
expenses
42,676
38,509
157,693
150,642
Income (Loss) from operations
11,749
4,598
22,074
(7,063
)
Other income (expense):
Interest expense, net
(2,303
)
(2,112
)
(9,413
)
(5,328
)
Other, net
538
(327
)
1,930
939
Total other expense, net
(1,765
)
(2,439
)
(7,483
)
(4,389
)
Income (Loss) before income taxes
9,984
2,159
14,591
(11,452
)
Income tax (benefit) expense
1,953
2,584
3,665
(3,004
)
Net income (loss)
8,031
(425
)
10,926
(8,448
)
Other comprehensive income (loss):
Unrealized gain (loss) on derivative
contracts, net of tax
(664
)
—
(664
)
38
Comprehensive income (loss)
$
7,367
$
(425
)
$
10,262
$
(8,410
)
Earnings (Loss) per share:
Basic
$
0.59
$
(0.03
)
$
0.82
$
(0.65
)
Diluted
$
0.58
$
(0.03
)
$
0.80
$
(0.65
)
Weighted-average shares outstanding:
Basic
13,503
13,138
13,394
13,013
Diluted
13,731
13,138
13,606
13,013
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Year Ended
December 29,
December 30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
10,926
$
(8,448
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
16,431
17,489
Deferred income taxes, net
2,582
(1,694
)
(Gain) loss on sale/disposal of
equipment
(63
)
(64
)
Provision for doubtful accounts
825
243
Stock-based compensation
5,323
8,373
Accretion and fair value adjustments of
contingent consideration
—
3,168
Changes in operating assets and
liabilities, net of effects from business acquisitions:
Accounts receivable
(10,300
)
6,766
Contract assets
(10,825
)
(23,772
)
Other receivables
3,604
1,494
Prepaid expenses and other current
assets
3,170
(1,230
)
Other assets
5,671
3,223
Accounts payable
4,360
(7,839
)
Accrued liabilities
5,917
12,970
Contract liabilities
598
(914
)
Right-of-use assets
995
(332
)
Net cash (used in) provided by operating
activities
39,214
9,433
Cash flows from investing activities:
Purchase of equipment, software, and
leasehold improvements
(9,925
)
(9,602
)
Proceeds from sale of equipment
68
75
Cash paid for acquisitions, net of cash
acquired
(1,600
)
—
Net cash (used in) provided by investing
activities
(11,457
)
(9,527
)
Cash flows from financing activities:
Payments on contingent consideration
(4,000
)
(10,206
)
Receipt of restricted cash
—
10,679
Payment on restricted cash
(10,679
)
—
Payments on notes payable
(1,631
)
(1,920
)
Payments on debt issuance costs
(1,114
)
(177
)
Proceeds from notes payable
—
1,718
Borrowings under term loan facility and
line of credit
105,000
20,000
Repayments under term loan facility and
line of credit
(112,875
)
(13,000
)
Principal payments on finance leases
(1,304
)
(1,054
)
Proceeds from stock option exercise
182
274
Proceeds from sales of common stock under
employee stock purchase plan
2,781
3,036
Cash used to pay taxes on stock grants
(205
)
(992
)
Net cash (used in) provided by financing
activities
(23,845
)
8,358
Net increase (decrease) in cash, cash
equivalents and restricted cash
3,912
8,264
Cash, cash equivalents and restricted cash
at beginning of period
19,485
11,221
Cash, cash equivalents and restricted cash
at end of period
$
23,397
$
19,485
Supplemental disclosures of cash flow
information:
Cash paid (received) during the period
for:
Interest
$
10,193
$
5,066
Income taxes
(3,072
)
(1,120
)
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under finance
leases
961
2,451
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Revenue
to Net Revenue
(in thousands)
(Non-GAAP Measure)
Three Months Ended
Year Ended
December 29,
December 30,
December 29,
December 30,
2023
2022
2023
2022
Consolidated
Contract revenue
$
155,677
$
113,256
$
510,095
$
429,138
Subcontractor services and other direct
costs
74,905
48,691
240,413
202,587
Net Revenue
$
80,772
$
64,565
$
269,682
$
226,551
Energy segment
Contract revenue
$
134,646
$
95,274
$
426,976
$
357,460
Subcontractor services and other direct
costs
74,046
48,020
236,603
199,465
Net Revenue
$
60,600
$
47,254
$
190,373
$
157,995
Engineering and Consulting
segment
Contract revenue
$
21,031
$
17,982
$
83,119
$
71,678
Subcontractor services and other direct
costs
859
671
3,810
3,122
Net Revenue
$
20,172
$
17,311
$
79,309
$
68,556
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(in thousands)
(Non-GAAP Measure)
Three Months Ended
Year Ended
December 29,
December 30,
December 29,
December 30,
2023
2022
2023
2022
Net income (loss)
$
8,031
$
(425
)
$
10,926
$
(8,448
)
Interest expense
2,303
2,112
9,413
5,328
Income tax expense (benefit)
1,953
2,584
3,665
(3,004
)
Stock-based compensation
1,259
1,747
5,323
8,373
Interest accretion(1)
—
1,509
—
3,168
Depreciation and amortization
3,913
4,249
16,431
17,489
(Gain) Loss on sale of equipment
—
3
(63
)
(64
)
Tax benefit distribution
—
—
—
434
Adjusted EBITDA
$
17,459
$
11,779
$
45,695
$
23,276
_______________
(1)
Interest accretion represents the imputed
interest and fair value adjustments to estimated contingent
consideration.
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
Year Ended
December 29,
December 30,
December 29,
December 30,
2023
2022
2023
2022
Net income (loss)
$
8,031
$
(425
)
$
10,926
$
(8,448
)
Adjustment for stock-based
compensation
1,259
1,747
5,323
8,373
Tax effect of stock-based compensation
(237
)
(249
)
(1,003
)
(1,194
)
Adjustment for intangible amortization
2,199
2,697
10,109
11,228
Tax effect of intangible amortization
(414
)
(385
)
(1,905
)
(1,601
)
Adjustment for interest accretion
—
1,509
—
3,168
Tax effect of interest accretion
—
(215
)
—
(452
)
Adjustment for refinancing costs
—
—
467
—
Tax effect of refinancing costs
—
—
(88
)
—
Adjustment for tax benefit
distribution
—
—
—
434
Tax effect of tax benefit distribution
—
—
—
(62
)
Adjusted Net Income (Loss)
$
10,837
$
4,679
$
23,830
$
11,446
Diluted weighted-average shares
outstanding
13,731
13,138
13,606
13,013
Diluted earnings (loss) per share
$
0.58
$
(0.03
)
$
0.80
$
(0.65
)
Impact of adjustment:
Stock-based compensation per share
0.09
0.13
0.39
0.64
Tax effect of stock-based compensation per
share
(0.01
)
(0.02
)
(0.07
)
(0.09
)
Intangible amortization per share
0.16
0.21
0.74
0.86
Tax effect of intangible amortization per
share
(0.02
)
(0.03
)
(0.14
)
(0.12
)
Interest accretion per share
—
0.12
—
0.24
Tax effect of interest accretion per
share
—
(0.02
)
—
(0.03
)
Refinancing costs per share
—
—
0.03
—
Tax effect of refinancing cost per
share
—
—
0.00
—
Tax benefit distribution per share
—
—
—
0.03
Tax effect of tax benefit distribution per
share
—
—
—
(0.00
)
Adjusted Diluted EPS
$
0.80
$
0.36
$
1.75
$
0.88
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240307327778/en/
Willdan Group, Inc. Al Kaschalk Vice President Tel:
310-922-5643 akaschalk@willdan.com
Willdan (NASDAQ:WLDN)
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