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 2023 Results and Provides 2024 Outlook By: Willdan Group, Inc. via Business Wire March 07, 2024 at 16:10 PM EST 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/Contacts Willdan Group, Inc. Al Kaschalk Vice President 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 2023 Results and Provides 2024 Outlook By: Willdan Group, Inc. via Business Wire March 07, 2024 at 16:10 PM EST 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/Contacts Willdan Group, Inc. Al Kaschalk Vice President 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 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/