Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Willdan Group Reports Fourth Quarter/Full Year 2022 Results and Provides 2023 Outlook By: Willdan Group, Inc. via Business Wire March 09, 2023 at 16:10 PM EST Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported financial results for its fourth quarter and fiscal year ended December 30, 2022 and outlook for 2023. “In the fourth quarter, we achieved organic revenue growth of over 20% over the prior year,” said Tom Brisbin, Willdan’s Chairman and Chief Executive Officer. “Our energy efficiency, construction management, and civil engineering businesses, all performed very well in the fourth quarter and we successfully navigated several CA IOU contract changes. This fourth quarter momentum, and our start to the new year, underlies our expectation that 2023 will be a strong year.” Fourth Quarter 2022 Highlights Consolidated contract revenue was $113.3 million compared to $92.2 million in the fourth quarter of 2021, a 23% increase. Net revenue* was $64.6 million compared to $51.8 million in the fourth quarter of 2021, a 25% increase. Net loss of $(0.4) million compared to a net loss of $(0.9) million in the fourth quarter of 2021, a 52% improvement. Adjusted EBITDA* was $11.8 million compared to $9.4 million in the fourth quarter of 2021, a 25% increase. GAAP EPS was $(0.03) per diluted share compared to $(0.07) per diluted share in the fourth quarter of 2021, a 57% improvement. Adjusted Diluted EPS* was $0.36 per share compared to $0.47 per share in the fourth quarter of 2021, a 23% decrease. Fiscal Year 2022 Highlights Consolidated contract revenue was $429.1 million compared to $353.8 million in 2021, a 21% increase. Net revenue* was $226.6 million compared to $201.5 million in 2021, a 12% increase. Net loss of $(8.4) million compared to a net loss of $(8.4) million in 2021. Adjusted EBITDA* was $23.3 million compared to $27.5 million in 2021, a 15% decrease. GAAP EPS was $(0.65) per diluted share compared to $(0.68) per diluted share in 2021, a 4% improvement. Adjusted Diluted EPS* was $0.88 per share compared to $1.55 per share in 2021, a 43% decrease. Fiscal Year 2023 Financial Targets Net revenue* growth between 7% and 9%. Adjusted Diluted EPS* between $1.24 per share and $1.32 per share. Adjusted EBITDA* between $35 million and $39 million. *See “Use of Non-GAAP Financial Measures” below. The financial targets above assume no change in the current economic environment and do not include the effects of any acquisitions that may take place during fiscal year 2023. Certain components of the financial targets provided are subject to quarterly fluctuations. Fourth Quarter 2022 Conference Call Willdan will be hosting a conference call to discuss its fourth quarter and full year 2022 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 ir.willdangroup.com and selecting “Events & Presentations”. A replay of the conference call will be available through Willdan’s website at ir.willdangroup.com and selecting “Events & Presentations”. An Investor Report containing supplemental financial information can also be accessed through Willdan’s website at 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 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 U.S. generally accepted accounting principles (“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 2023 as reported in accordance with GAAP to targeted Net Revenues for fiscal year 2023, 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 43.0% and 47.2% of contract revenue for the quarter ended December 30, 2022 and fiscal year 2022, respectively, and 43.8% and 43.0% for the quarter ended December 31, 2021 and fiscal year 2021, respectively. “Adjusted EBITDA,” defined as net income plus interest expense, income tax expense, stock-based compensation, interest accretion, depreciation and amortization, transaction costs, gain on sale of equipment, and tax benefit distribution, 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. “Adjusted Net Income,” defined as net income plus stock-based compensation, intangible amortization, interest accretion, transaction costs, deferred tax valuation, 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, transaction costs, deferred tax valuation, 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. 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, 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 and the impact of Covid-19 on Willdan’s business. 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; Willdan’s ability to attract and retain managerial, technical, and administrative talent and the extent to which the Covid-19 pandemic and measures taken to contain its spread ultimately impact Willdan’s business, results of operation and financial condition. 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 30, 2022, 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 30, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 8,806 $ 11,221 Restricted cash 10,679 — Accounts receivable, net of allowance for doubtful accounts of $640 and $1,115 at December 30, 2022 and December 31, 2021, respectively 60,202 67,211 Contract assets 83,060 59,288 Other receivables 4,773 6,267 Prepaid expenses and other current assets 6,454 4,972 Total current assets 173,974 148,959 Equipment and leasehold improvements, net 22,537 16,757 Goodwill 130,124 130,124 Right-of-use assets 12,390 15,177 Other intangible assets, net 41,486 52,713 Other assets 10,620 13,843 Deferred income taxes, net 18,543 16,849 Total assets $ 409,674 $ 394,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 28,833 $ 36,672 Accrued liabilities 59,110 35,680 Contingent consideration payable 4,000 10,206 Contract liabilities 12,585 13,499 Notes payable 16,903 15,036 Finance lease obligations 1,113 539 Lease liability 4,625 5,575 Total current liabilities 127,169 117,207 Contingent consideration payable — 832 Notes payable 90,544 85,538 Finance lease obligations, less current portion 1,601 778 Lease liability, less current portion 8,599 10,768 Other noncurrent liabilities 259 78 Total liabilities 228,172 215,201 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; 13,296 and 12,804 shares issued and outstanding at December 30, 2022 and December 31, 2021, respectively 133 128 Additional paid-in capital 177,718 167,032 Accumulated other comprehensive loss — (38 ) Retained earnings 3,651 12,099 Total stockholders’ equity 181,502 179,221 Total liabilities and stockholders’ equity $ 409,674 $ 394,422 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share amounts) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Direct costs of contract revenue (inclusive of directly related depreciation and amortization): Salaries and wages 21,458 17,116 82,972 65,648 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Total direct costs of contract revenue 70,149 57,489 285,559 217,881 General and administrative expenses: Salaries and wages, payroll taxes and employee benefits 21,632 16,282 81,801 73,812 Facilities and facility related 2,288 2,523 9,287 9,896 Stock-based compensation 1,747 2,214 8,373 16,563 Depreciation and amortization 4,249 4,468 17,489 17,146 Other 8,593 8,115 33,692 27,148 Total general and administrative expenses 38,509 33,602 150,642 144,565 Income (Loss) from operations 4,598 1,127 (7,063 ) (8,691 ) Other income (expense): Interest expense, net (2,112 ) (769 ) (5,328 ) (3,869 ) Other, net (327 ) 122 939 156 Total other expense, net (2,439 ) (647 ) (4,389 ) (3,713 ) Income (Loss) before income taxes 2,159 480 (11,452 ) (12,404 ) Income tax (benefit) expense 2,584 1,370 (3,004 ) (3,987 ) Net income (loss) (425 ) (890 ) (8,448 ) (8,417 ) Other comprehensive income (loss): Unrealized gain (loss) on derivative contracts, net of tax — 107 38 450 Comprehensive income (loss) $ (425 ) $ (783 ) $ (8,410 ) $ (7,967 ) Earnings (Loss) per share: Basic $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Diluted $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Weighted-average shares outstanding: Basic 13,138 12,660 13,013 12,458 Diluted 13,138 12,660 13,013 12,458 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 30, December 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ (8,448 ) $ (8,417 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 17,489 17,146 Deferred income taxes, net (1,694 ) (2,738 ) (Gain) loss on sale/disposal of equipment (64 ) (24 ) Provision for doubtful accounts 243 102 Stock-based compensation 8,373 16,563 Accretion and fair value adjustments of contingent consideration 3,168 2,333 Changes in operating assets and liabilities, net of effects from business acquisitions: Accounts receivable 6,766 (14,209 ) Contract assets (23,772 ) 3,138 Other receivables 1,494 138 Prepaid expenses and other current assets (1,230 ) 828 Other assets 3,223 (7,849 ) Accounts payable (7,839 ) (4,700 ) Accrued liabilities 12,970 1,625 Contract liabilities (914 ) 6,065 Right-of-use assets (332 ) (197 ) Net cash (used in) provided by operating activities 9,433 9,804 Cash flows from investing activities: Purchase of equipment and leasehold improvements (9,602 ) (8,500 ) Proceeds from sale of equipment 75 46 Net cash (used in) provided by investing activities (9,527 ) (8,454 ) Cash flows from financing activities: Payments on contingent consideration (10,206 ) (6,615 ) Receipt of restricted cash 10,679 — Payments on notes payable (1,920 ) (1,909 ) Payments on debt issuance costs (177 ) — Proceeds from notes payable 1,718 2,074 Borrowings under term loan facility and line of credit 20,000 — Repayments under term loan facility and line of credit (13,000 ) (13,000 ) Principal payments on finance leases (1,054 ) (545 ) Proceeds from stock option exercise 274 1,924 Proceeds from sales of common stock under employee stock purchase plan 3,036 2,655 Cash used to pay taxes on stock grants (992 ) (3,117 ) Restricted Stock Award and Units — (1 ) Net cash (used in) provided by financing activities 8,358 (18,534 ) Net increase (decrease) in cash, cash equivalents and restricted cash 8,264 (17,184 ) Cash, cash equivalents and restricted cash at beginning of period 11,221 28,405 Cash, cash equivalents and restricted cash at end of period $ 19,485 $ 11,221 Supplemental disclosures of cash flow information: Cash paid (received) during the period for: Interest $ 5,066 $ 3,545 Income taxes (1,120 ) (1,616 ) Supplemental disclosures of noncash investing and financing activities: Other working capital adjustment — — Equipment acquired under finance leases 2,451 1,376 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Revenue to Net Revenue (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Consolidated Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Net Revenue $ 64,565 $ 51,845 $ 226,551 $ 201,522 Energy segment Contract revenue $ 95,274 $ 76,407 $ 357,460 $ 286,384 Subcontractor services and other direct costs 48,020 40,239 199,465 146,269 Net Revenue $ 47,254 $ 36,168 $ 157,995 $ 140,115 Engineering and Consulting segment Contract revenue $ 17,982 $ 15,811 $ 71,678 $ 67,371 Subcontractor services and other direct costs 671 134 3,122 5,964 Net Revenue $ 17,311 $ 15,677 $ 68,556 $ 61,407 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Interest expense 2,112 769 5,328 3,869 Income tax expense (benefit) 2,584 1,370 (3,004 ) (3,987 ) Stock-based compensation 1,747 2,214 8,373 16,563 Interest accretion (1) 1,509 1,473 3,168 2,333 Depreciation and amortization 4,249 4,468 17,489 17,146 Transaction costs (2) — — — 43 (Gain) Loss on sale of equipment 3 13 (64 ) (24 ) Tax benefit distribution — — 434 — Adjusted EBITDA $ 11,779 $ 9,417 $ 23,276 $ 27,526 (1) Interest accretion represents the imputed interest and fair value adjustments to estimated contingent consideration. (2) Transaction costs represents acquisition and acquisition related costs. 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 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Adjustment for stock-based compensation 1,747 2,214 8,373 16,563 Tax effect of stock-based compensation (249 ) (278 ) (1,194 ) (2,079 ) Adjustment for intangible amortization 2,697 2,886 11,228 11,543 Tax effect of intangible amortization (385 ) (362 ) (1,601 ) (1,449 ) Adjustment for interest accretion 1,509 1,473 3,168 2,333 Tax effect of interest accretion (215 ) (185 ) (452 ) (293 ) Adjustment for transaction costs — — — 43 Tax effect of transaction costs — — — (5 ) Adjustment for deferred tax valuation — 1,105 — 1,105 Tax effect of deferred tax valuation — — — — Adjustment for tax benefit distribution — — 434 — Tax effect of tax benefit distribution — — (62 ) — Adjusted Net Income (Loss) $ 4,679 $ 5,963 $ 11,446 $ 19,344 Diluted weighted-average shares outstanding 13,138 12,660 13,013 12,458 Diluted earnings (loss) per share $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Impact of adjustment: Stock-based compensation per share 0.13 0.16 0.64 1.33 Tax effect of stock-based compensation per share (0.02 ) (0.02 ) (0.09 ) (0.17 ) Intangible amortization per share 0.21 0.23 0.86 0.93 Tax effect of intangible amortization per share (0.03 ) (0.03 ) (0.12 ) (0.12 ) Interest accretion per share 0.12 0.12 0.24 0.19 Tax effect of interest accretion per share (0.02 ) (0.01 ) (0.03 ) (0.02 ) Transaction costs per share — — — 0.00 Tax effect of transaction costs per share — — — (0.00 ) Deferred tax valuation per share — 0.09 — 0.09 Tax effect of deferred tax valuation per share — — — — Tax benefit distribution per share — — 0.03 — Tax effect of tax benefit distribution per share — — (0.00 ) — Adjusted Diluted EPS $ 0.36 $ 0.47 $ 0.88 $ 1.55 View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005752/en/Contacts Willdan Group, Inc. Al Kaschalk VP Investor Relations Tel: 310-922-5643 akaschalk@willdan.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Willdan Group Reports Fourth Quarter/Full Year 2022 Results and Provides 2023 Outlook By: Willdan Group, Inc. via Business Wire March 09, 2023 at 16:10 PM EST Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported financial results for its fourth quarter and fiscal year ended December 30, 2022 and outlook for 2023. “In the fourth quarter, we achieved organic revenue growth of over 20% over the prior year,” said Tom Brisbin, Willdan’s Chairman and Chief Executive Officer. “Our energy efficiency, construction management, and civil engineering businesses, all performed very well in the fourth quarter and we successfully navigated several CA IOU contract changes. This fourth quarter momentum, and our start to the new year, underlies our expectation that 2023 will be a strong year.” Fourth Quarter 2022 Highlights Consolidated contract revenue was $113.3 million compared to $92.2 million in the fourth quarter of 2021, a 23% increase. Net revenue* was $64.6 million compared to $51.8 million in the fourth quarter of 2021, a 25% increase. Net loss of $(0.4) million compared to a net loss of $(0.9) million in the fourth quarter of 2021, a 52% improvement. Adjusted EBITDA* was $11.8 million compared to $9.4 million in the fourth quarter of 2021, a 25% increase. GAAP EPS was $(0.03) per diluted share compared to $(0.07) per diluted share in the fourth quarter of 2021, a 57% improvement. Adjusted Diluted EPS* was $0.36 per share compared to $0.47 per share in the fourth quarter of 2021, a 23% decrease. Fiscal Year 2022 Highlights Consolidated contract revenue was $429.1 million compared to $353.8 million in 2021, a 21% increase. Net revenue* was $226.6 million compared to $201.5 million in 2021, a 12% increase. Net loss of $(8.4) million compared to a net loss of $(8.4) million in 2021. Adjusted EBITDA* was $23.3 million compared to $27.5 million in 2021, a 15% decrease. GAAP EPS was $(0.65) per diluted share compared to $(0.68) per diluted share in 2021, a 4% improvement. Adjusted Diluted EPS* was $0.88 per share compared to $1.55 per share in 2021, a 43% decrease. Fiscal Year 2023 Financial Targets Net revenue* growth between 7% and 9%. Adjusted Diluted EPS* between $1.24 per share and $1.32 per share. Adjusted EBITDA* between $35 million and $39 million. *See “Use of Non-GAAP Financial Measures” below. The financial targets above assume no change in the current economic environment and do not include the effects of any acquisitions that may take place during fiscal year 2023. Certain components of the financial targets provided are subject to quarterly fluctuations. Fourth Quarter 2022 Conference Call Willdan will be hosting a conference call to discuss its fourth quarter and full year 2022 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 ir.willdangroup.com and selecting “Events & Presentations”. A replay of the conference call will be available through Willdan’s website at ir.willdangroup.com and selecting “Events & Presentations”. An Investor Report containing supplemental financial information can also be accessed through Willdan’s website at 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 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 U.S. generally accepted accounting principles (“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 2023 as reported in accordance with GAAP to targeted Net Revenues for fiscal year 2023, 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 43.0% and 47.2% of contract revenue for the quarter ended December 30, 2022 and fiscal year 2022, respectively, and 43.8% and 43.0% for the quarter ended December 31, 2021 and fiscal year 2021, respectively. “Adjusted EBITDA,” defined as net income plus interest expense, income tax expense, stock-based compensation, interest accretion, depreciation and amortization, transaction costs, gain on sale of equipment, and tax benefit distribution, 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. “Adjusted Net Income,” defined as net income plus stock-based compensation, intangible amortization, interest accretion, transaction costs, deferred tax valuation, 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, transaction costs, deferred tax valuation, 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. 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, 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 and the impact of Covid-19 on Willdan’s business. 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; Willdan’s ability to attract and retain managerial, technical, and administrative talent and the extent to which the Covid-19 pandemic and measures taken to contain its spread ultimately impact Willdan’s business, results of operation and financial condition. 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 30, 2022, 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 30, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 8,806 $ 11,221 Restricted cash 10,679 — Accounts receivable, net of allowance for doubtful accounts of $640 and $1,115 at December 30, 2022 and December 31, 2021, respectively 60,202 67,211 Contract assets 83,060 59,288 Other receivables 4,773 6,267 Prepaid expenses and other current assets 6,454 4,972 Total current assets 173,974 148,959 Equipment and leasehold improvements, net 22,537 16,757 Goodwill 130,124 130,124 Right-of-use assets 12,390 15,177 Other intangible assets, net 41,486 52,713 Other assets 10,620 13,843 Deferred income taxes, net 18,543 16,849 Total assets $ 409,674 $ 394,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 28,833 $ 36,672 Accrued liabilities 59,110 35,680 Contingent consideration payable 4,000 10,206 Contract liabilities 12,585 13,499 Notes payable 16,903 15,036 Finance lease obligations 1,113 539 Lease liability 4,625 5,575 Total current liabilities 127,169 117,207 Contingent consideration payable — 832 Notes payable 90,544 85,538 Finance lease obligations, less current portion 1,601 778 Lease liability, less current portion 8,599 10,768 Other noncurrent liabilities 259 78 Total liabilities 228,172 215,201 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; 13,296 and 12,804 shares issued and outstanding at December 30, 2022 and December 31, 2021, respectively 133 128 Additional paid-in capital 177,718 167,032 Accumulated other comprehensive loss — (38 ) Retained earnings 3,651 12,099 Total stockholders’ equity 181,502 179,221 Total liabilities and stockholders’ equity $ 409,674 $ 394,422 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share amounts) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Direct costs of contract revenue (inclusive of directly related depreciation and amortization): Salaries and wages 21,458 17,116 82,972 65,648 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Total direct costs of contract revenue 70,149 57,489 285,559 217,881 General and administrative expenses: Salaries and wages, payroll taxes and employee benefits 21,632 16,282 81,801 73,812 Facilities and facility related 2,288 2,523 9,287 9,896 Stock-based compensation 1,747 2,214 8,373 16,563 Depreciation and amortization 4,249 4,468 17,489 17,146 Other 8,593 8,115 33,692 27,148 Total general and administrative expenses 38,509 33,602 150,642 144,565 Income (Loss) from operations 4,598 1,127 (7,063 ) (8,691 ) Other income (expense): Interest expense, net (2,112 ) (769 ) (5,328 ) (3,869 ) Other, net (327 ) 122 939 156 Total other expense, net (2,439 ) (647 ) (4,389 ) (3,713 ) Income (Loss) before income taxes 2,159 480 (11,452 ) (12,404 ) Income tax (benefit) expense 2,584 1,370 (3,004 ) (3,987 ) Net income (loss) (425 ) (890 ) (8,448 ) (8,417 ) Other comprehensive income (loss): Unrealized gain (loss) on derivative contracts, net of tax — 107 38 450 Comprehensive income (loss) $ (425 ) $ (783 ) $ (8,410 ) $ (7,967 ) Earnings (Loss) per share: Basic $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Diluted $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Weighted-average shares outstanding: Basic 13,138 12,660 13,013 12,458 Diluted 13,138 12,660 13,013 12,458 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 30, December 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ (8,448 ) $ (8,417 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 17,489 17,146 Deferred income taxes, net (1,694 ) (2,738 ) (Gain) loss on sale/disposal of equipment (64 ) (24 ) Provision for doubtful accounts 243 102 Stock-based compensation 8,373 16,563 Accretion and fair value adjustments of contingent consideration 3,168 2,333 Changes in operating assets and liabilities, net of effects from business acquisitions: Accounts receivable 6,766 (14,209 ) Contract assets (23,772 ) 3,138 Other receivables 1,494 138 Prepaid expenses and other current assets (1,230 ) 828 Other assets 3,223 (7,849 ) Accounts payable (7,839 ) (4,700 ) Accrued liabilities 12,970 1,625 Contract liabilities (914 ) 6,065 Right-of-use assets (332 ) (197 ) Net cash (used in) provided by operating activities 9,433 9,804 Cash flows from investing activities: Purchase of equipment and leasehold improvements (9,602 ) (8,500 ) Proceeds from sale of equipment 75 46 Net cash (used in) provided by investing activities (9,527 ) (8,454 ) Cash flows from financing activities: Payments on contingent consideration (10,206 ) (6,615 ) Receipt of restricted cash 10,679 — Payments on notes payable (1,920 ) (1,909 ) Payments on debt issuance costs (177 ) — Proceeds from notes payable 1,718 2,074 Borrowings under term loan facility and line of credit 20,000 — Repayments under term loan facility and line of credit (13,000 ) (13,000 ) Principal payments on finance leases (1,054 ) (545 ) Proceeds from stock option exercise 274 1,924 Proceeds from sales of common stock under employee stock purchase plan 3,036 2,655 Cash used to pay taxes on stock grants (992 ) (3,117 ) Restricted Stock Award and Units — (1 ) Net cash (used in) provided by financing activities 8,358 (18,534 ) Net increase (decrease) in cash, cash equivalents and restricted cash 8,264 (17,184 ) Cash, cash equivalents and restricted cash at beginning of period 11,221 28,405 Cash, cash equivalents and restricted cash at end of period $ 19,485 $ 11,221 Supplemental disclosures of cash flow information: Cash paid (received) during the period for: Interest $ 5,066 $ 3,545 Income taxes (1,120 ) (1,616 ) Supplemental disclosures of noncash investing and financing activities: Other working capital adjustment — — Equipment acquired under finance leases 2,451 1,376 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Revenue to Net Revenue (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Consolidated Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Net Revenue $ 64,565 $ 51,845 $ 226,551 $ 201,522 Energy segment Contract revenue $ 95,274 $ 76,407 $ 357,460 $ 286,384 Subcontractor services and other direct costs 48,020 40,239 199,465 146,269 Net Revenue $ 47,254 $ 36,168 $ 157,995 $ 140,115 Engineering and Consulting segment Contract revenue $ 17,982 $ 15,811 $ 71,678 $ 67,371 Subcontractor services and other direct costs 671 134 3,122 5,964 Net Revenue $ 17,311 $ 15,677 $ 68,556 $ 61,407 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Interest expense 2,112 769 5,328 3,869 Income tax expense (benefit) 2,584 1,370 (3,004 ) (3,987 ) Stock-based compensation 1,747 2,214 8,373 16,563 Interest accretion (1) 1,509 1,473 3,168 2,333 Depreciation and amortization 4,249 4,468 17,489 17,146 Transaction costs (2) — — — 43 (Gain) Loss on sale of equipment 3 13 (64 ) (24 ) Tax benefit distribution — — 434 — Adjusted EBITDA $ 11,779 $ 9,417 $ 23,276 $ 27,526 (1) Interest accretion represents the imputed interest and fair value adjustments to estimated contingent consideration. (2) Transaction costs represents acquisition and acquisition related costs. 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 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Adjustment for stock-based compensation 1,747 2,214 8,373 16,563 Tax effect of stock-based compensation (249 ) (278 ) (1,194 ) (2,079 ) Adjustment for intangible amortization 2,697 2,886 11,228 11,543 Tax effect of intangible amortization (385 ) (362 ) (1,601 ) (1,449 ) Adjustment for interest accretion 1,509 1,473 3,168 2,333 Tax effect of interest accretion (215 ) (185 ) (452 ) (293 ) Adjustment for transaction costs — — — 43 Tax effect of transaction costs — — — (5 ) Adjustment for deferred tax valuation — 1,105 — 1,105 Tax effect of deferred tax valuation — — — — Adjustment for tax benefit distribution — — 434 — Tax effect of tax benefit distribution — — (62 ) — Adjusted Net Income (Loss) $ 4,679 $ 5,963 $ 11,446 $ 19,344 Diluted weighted-average shares outstanding 13,138 12,660 13,013 12,458 Diluted earnings (loss) per share $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Impact of adjustment: Stock-based compensation per share 0.13 0.16 0.64 1.33 Tax effect of stock-based compensation per share (0.02 ) (0.02 ) (0.09 ) (0.17 ) Intangible amortization per share 0.21 0.23 0.86 0.93 Tax effect of intangible amortization per share (0.03 ) (0.03 ) (0.12 ) (0.12 ) Interest accretion per share 0.12 0.12 0.24 0.19 Tax effect of interest accretion per share (0.02 ) (0.01 ) (0.03 ) (0.02 ) Transaction costs per share — — — 0.00 Tax effect of transaction costs per share — — — (0.00 ) Deferred tax valuation per share — 0.09 — 0.09 Tax effect of deferred tax valuation per share — — — — Tax benefit distribution per share — — 0.03 — Tax effect of tax benefit distribution per share — — (0.00 ) — Adjusted Diluted EPS $ 0.36 $ 0.47 $ 0.88 $ 1.55 View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005752/en/Contacts Willdan Group, Inc. Al Kaschalk VP Investor Relations Tel: 310-922-5643 akaschalk@willdan.com
Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported financial results for its fourth quarter and fiscal year ended December 30, 2022 and outlook for 2023. “In the fourth quarter, we achieved organic revenue growth of over 20% over the prior year,” said Tom Brisbin, Willdan’s Chairman and Chief Executive Officer. “Our energy efficiency, construction management, and civil engineering businesses, all performed very well in the fourth quarter and we successfully navigated several CA IOU contract changes. This fourth quarter momentum, and our start to the new year, underlies our expectation that 2023 will be a strong year.” Fourth Quarter 2022 Highlights Consolidated contract revenue was $113.3 million compared to $92.2 million in the fourth quarter of 2021, a 23% increase. Net revenue* was $64.6 million compared to $51.8 million in the fourth quarter of 2021, a 25% increase. Net loss of $(0.4) million compared to a net loss of $(0.9) million in the fourth quarter of 2021, a 52% improvement. Adjusted EBITDA* was $11.8 million compared to $9.4 million in the fourth quarter of 2021, a 25% increase. GAAP EPS was $(0.03) per diluted share compared to $(0.07) per diluted share in the fourth quarter of 2021, a 57% improvement. Adjusted Diluted EPS* was $0.36 per share compared to $0.47 per share in the fourth quarter of 2021, a 23% decrease. Fiscal Year 2022 Highlights Consolidated contract revenue was $429.1 million compared to $353.8 million in 2021, a 21% increase. Net revenue* was $226.6 million compared to $201.5 million in 2021, a 12% increase. Net loss of $(8.4) million compared to a net loss of $(8.4) million in 2021. Adjusted EBITDA* was $23.3 million compared to $27.5 million in 2021, a 15% decrease. GAAP EPS was $(0.65) per diluted share compared to $(0.68) per diluted share in 2021, a 4% improvement. Adjusted Diluted EPS* was $0.88 per share compared to $1.55 per share in 2021, a 43% decrease. Fiscal Year 2023 Financial Targets Net revenue* growth between 7% and 9%. Adjusted Diluted EPS* between $1.24 per share and $1.32 per share. Adjusted EBITDA* between $35 million and $39 million. *See “Use of Non-GAAP Financial Measures” below. The financial targets above assume no change in the current economic environment and do not include the effects of any acquisitions that may take place during fiscal year 2023. Certain components of the financial targets provided are subject to quarterly fluctuations. Fourth Quarter 2022 Conference Call Willdan will be hosting a conference call to discuss its fourth quarter and full year 2022 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 ir.willdangroup.com and selecting “Events & Presentations”. A replay of the conference call will be available through Willdan’s website at ir.willdangroup.com and selecting “Events & Presentations”. An Investor Report containing supplemental financial information can also be accessed through Willdan’s website at 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 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 U.S. generally accepted accounting principles (“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 2023 as reported in accordance with GAAP to targeted Net Revenues for fiscal year 2023, 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 43.0% and 47.2% of contract revenue for the quarter ended December 30, 2022 and fiscal year 2022, respectively, and 43.8% and 43.0% for the quarter ended December 31, 2021 and fiscal year 2021, respectively. “Adjusted EBITDA,” defined as net income plus interest expense, income tax expense, stock-based compensation, interest accretion, depreciation and amortization, transaction costs, gain on sale of equipment, and tax benefit distribution, 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. “Adjusted Net Income,” defined as net income plus stock-based compensation, intangible amortization, interest accretion, transaction costs, deferred tax valuation, 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, transaction costs, deferred tax valuation, 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. 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, 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 and the impact of Covid-19 on Willdan’s business. 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; Willdan’s ability to attract and retain managerial, technical, and administrative talent and the extent to which the Covid-19 pandemic and measures taken to contain its spread ultimately impact Willdan’s business, results of operation and financial condition. 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 30, 2022, 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 30, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 8,806 $ 11,221 Restricted cash 10,679 — Accounts receivable, net of allowance for doubtful accounts of $640 and $1,115 at December 30, 2022 and December 31, 2021, respectively 60,202 67,211 Contract assets 83,060 59,288 Other receivables 4,773 6,267 Prepaid expenses and other current assets 6,454 4,972 Total current assets 173,974 148,959 Equipment and leasehold improvements, net 22,537 16,757 Goodwill 130,124 130,124 Right-of-use assets 12,390 15,177 Other intangible assets, net 41,486 52,713 Other assets 10,620 13,843 Deferred income taxes, net 18,543 16,849 Total assets $ 409,674 $ 394,422 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 28,833 $ 36,672 Accrued liabilities 59,110 35,680 Contingent consideration payable 4,000 10,206 Contract liabilities 12,585 13,499 Notes payable 16,903 15,036 Finance lease obligations 1,113 539 Lease liability 4,625 5,575 Total current liabilities 127,169 117,207 Contingent consideration payable — 832 Notes payable 90,544 85,538 Finance lease obligations, less current portion 1,601 778 Lease liability, less current portion 8,599 10,768 Other noncurrent liabilities 259 78 Total liabilities 228,172 215,201 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; 13,296 and 12,804 shares issued and outstanding at December 30, 2022 and December 31, 2021, respectively 133 128 Additional paid-in capital 177,718 167,032 Accumulated other comprehensive loss — (38 ) Retained earnings 3,651 12,099 Total stockholders’ equity 181,502 179,221 Total liabilities and stockholders’ equity $ 409,674 $ 394,422 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share amounts) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Direct costs of contract revenue (inclusive of directly related depreciation and amortization): Salaries and wages 21,458 17,116 82,972 65,648 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Total direct costs of contract revenue 70,149 57,489 285,559 217,881 General and administrative expenses: Salaries and wages, payroll taxes and employee benefits 21,632 16,282 81,801 73,812 Facilities and facility related 2,288 2,523 9,287 9,896 Stock-based compensation 1,747 2,214 8,373 16,563 Depreciation and amortization 4,249 4,468 17,489 17,146 Other 8,593 8,115 33,692 27,148 Total general and administrative expenses 38,509 33,602 150,642 144,565 Income (Loss) from operations 4,598 1,127 (7,063 ) (8,691 ) Other income (expense): Interest expense, net (2,112 ) (769 ) (5,328 ) (3,869 ) Other, net (327 ) 122 939 156 Total other expense, net (2,439 ) (647 ) (4,389 ) (3,713 ) Income (Loss) before income taxes 2,159 480 (11,452 ) (12,404 ) Income tax (benefit) expense 2,584 1,370 (3,004 ) (3,987 ) Net income (loss) (425 ) (890 ) (8,448 ) (8,417 ) Other comprehensive income (loss): Unrealized gain (loss) on derivative contracts, net of tax — 107 38 450 Comprehensive income (loss) $ (425 ) $ (783 ) $ (8,410 ) $ (7,967 ) Earnings (Loss) per share: Basic $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Diluted $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Weighted-average shares outstanding: Basic 13,138 12,660 13,013 12,458 Diluted 13,138 12,660 13,013 12,458 WILLDAN GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 30, December 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ (8,448 ) $ (8,417 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 17,489 17,146 Deferred income taxes, net (1,694 ) (2,738 ) (Gain) loss on sale/disposal of equipment (64 ) (24 ) Provision for doubtful accounts 243 102 Stock-based compensation 8,373 16,563 Accretion and fair value adjustments of contingent consideration 3,168 2,333 Changes in operating assets and liabilities, net of effects from business acquisitions: Accounts receivable 6,766 (14,209 ) Contract assets (23,772 ) 3,138 Other receivables 1,494 138 Prepaid expenses and other current assets (1,230 ) 828 Other assets 3,223 (7,849 ) Accounts payable (7,839 ) (4,700 ) Accrued liabilities 12,970 1,625 Contract liabilities (914 ) 6,065 Right-of-use assets (332 ) (197 ) Net cash (used in) provided by operating activities 9,433 9,804 Cash flows from investing activities: Purchase of equipment and leasehold improvements (9,602 ) (8,500 ) Proceeds from sale of equipment 75 46 Net cash (used in) provided by investing activities (9,527 ) (8,454 ) Cash flows from financing activities: Payments on contingent consideration (10,206 ) (6,615 ) Receipt of restricted cash 10,679 — Payments on notes payable (1,920 ) (1,909 ) Payments on debt issuance costs (177 ) — Proceeds from notes payable 1,718 2,074 Borrowings under term loan facility and line of credit 20,000 — Repayments under term loan facility and line of credit (13,000 ) (13,000 ) Principal payments on finance leases (1,054 ) (545 ) Proceeds from stock option exercise 274 1,924 Proceeds from sales of common stock under employee stock purchase plan 3,036 2,655 Cash used to pay taxes on stock grants (992 ) (3,117 ) Restricted Stock Award and Units — (1 ) Net cash (used in) provided by financing activities 8,358 (18,534 ) Net increase (decrease) in cash, cash equivalents and restricted cash 8,264 (17,184 ) Cash, cash equivalents and restricted cash at beginning of period 11,221 28,405 Cash, cash equivalents and restricted cash at end of period $ 19,485 $ 11,221 Supplemental disclosures of cash flow information: Cash paid (received) during the period for: Interest $ 5,066 $ 3,545 Income taxes (1,120 ) (1,616 ) Supplemental disclosures of noncash investing and financing activities: Other working capital adjustment — — Equipment acquired under finance leases 2,451 1,376 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Revenue to Net Revenue (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Consolidated Contract revenue $ 113,256 $ 92,218 $ 429,138 $ 353,755 Subcontractor services and other direct costs 48,691 40,373 202,587 152,233 Net Revenue $ 64,565 $ 51,845 $ 226,551 $ 201,522 Energy segment Contract revenue $ 95,274 $ 76,407 $ 357,460 $ 286,384 Subcontractor services and other direct costs 48,020 40,239 199,465 146,269 Net Revenue $ 47,254 $ 36,168 $ 157,995 $ 140,115 Engineering and Consulting segment Contract revenue $ 17,982 $ 15,811 $ 71,678 $ 67,371 Subcontractor services and other direct costs 671 134 3,122 5,964 Net Revenue $ 17,311 $ 15,677 $ 68,556 $ 61,407 Willdan Group, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) (Non-GAAP Measure) Three Months Ended Year Ended December 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Interest expense 2,112 769 5,328 3,869 Income tax expense (benefit) 2,584 1,370 (3,004 ) (3,987 ) Stock-based compensation 1,747 2,214 8,373 16,563 Interest accretion (1) 1,509 1,473 3,168 2,333 Depreciation and amortization 4,249 4,468 17,489 17,146 Transaction costs (2) — — — 43 (Gain) Loss on sale of equipment 3 13 (64 ) (24 ) Tax benefit distribution — — 434 — Adjusted EBITDA $ 11,779 $ 9,417 $ 23,276 $ 27,526 (1) Interest accretion represents the imputed interest and fair value adjustments to estimated contingent consideration. (2) Transaction costs represents acquisition and acquisition related costs. 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 30, December 31, December 30, December 31, 2022 2021 2022 2021 Net income (loss) $ (425 ) $ (890 ) $ (8,448 ) $ (8,417 ) Adjustment for stock-based compensation 1,747 2,214 8,373 16,563 Tax effect of stock-based compensation (249 ) (278 ) (1,194 ) (2,079 ) Adjustment for intangible amortization 2,697 2,886 11,228 11,543 Tax effect of intangible amortization (385 ) (362 ) (1,601 ) (1,449 ) Adjustment for interest accretion 1,509 1,473 3,168 2,333 Tax effect of interest accretion (215 ) (185 ) (452 ) (293 ) Adjustment for transaction costs — — — 43 Tax effect of transaction costs — — — (5 ) Adjustment for deferred tax valuation — 1,105 — 1,105 Tax effect of deferred tax valuation — — — — Adjustment for tax benefit distribution — — 434 — Tax effect of tax benefit distribution — — (62 ) — Adjusted Net Income (Loss) $ 4,679 $ 5,963 $ 11,446 $ 19,344 Diluted weighted-average shares outstanding 13,138 12,660 13,013 12,458 Diluted earnings (loss) per share $ (0.03 ) $ (0.07 ) $ (0.65 ) $ (0.68 ) Impact of adjustment: Stock-based compensation per share 0.13 0.16 0.64 1.33 Tax effect of stock-based compensation per share (0.02 ) (0.02 ) (0.09 ) (0.17 ) Intangible amortization per share 0.21 0.23 0.86 0.93 Tax effect of intangible amortization per share (0.03 ) (0.03 ) (0.12 ) (0.12 ) Interest accretion per share 0.12 0.12 0.24 0.19 Tax effect of interest accretion per share (0.02 ) (0.01 ) (0.03 ) (0.02 ) Transaction costs per share — — — 0.00 Tax effect of transaction costs per share — — — (0.00 ) Deferred tax valuation per share — 0.09 — 0.09 Tax effect of deferred tax valuation per share — — — — Tax benefit distribution per share — — 0.03 — Tax effect of tax benefit distribution per share — — (0.00 ) — Adjusted Diluted EPS $ 0.36 $ 0.47 $ 0.88 $ 1.55 View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005752/en/