Willdan Group, Inc. (“Willdan”) (Nasdaq: WLDN) today reported
financial results for its second quarter ended June 28, 2024.
Second Quarter 2024 Highlights*
- Contract revenue of $141.0 million, up 18.4%.
- Net revenue** of $72.5 million, up 17.0%.
- Net income of $4.6 million, up from net income of $0.4
million.
- Adjusted EBITDA** of $12.8 million, up 56.2%.
- GAAP Diluted EPS of $0.33, up from $0.03.
- Adjusted Diluted EPS** of $0.55, up from $0.26.
Recent Notable Wins
- Meta (formerly Facebook) contract to study emissions related to
voluntary clean energy procurement
- State of Virginia contract to perform analysis on grid impact
from increased energy demand
- City of Paramount, CA contract for solar, storage, and EV
charging infrastructure
Executive Management Comments
“We had a strong second quarter, exceeding consensus estimates
and our own expectations,” said Mike Bieber, Willdan’s President
and Chief Executive Officer. “The electric load growth macrotrend
strengthened over the quarter, fueled by growth in electricity
demand at data centers from artificial intelligence. Given the
results for the first half of 2024 and the current momentum, we are
raising our full year targets for fiscal 2024.”
Six Months Year to Date 2024 Highlights*
- Contract revenue of $263.5 million, up 18.9%.
- Net revenue** of $141.4 million, up 14.4%.
- Net income of $7.5 million, up from net income of $1.3
million.
- Adjusted EBITDA** of $23.9 million, up 31.9%.
- GAAP Diluted EPS of $0.54, up from $0.10.
- Adjusted Diluted EPS** of $0.95, up from $0.58.
Fiscal Year 2024 Financial Targets
Willdan is increasing all of its financial targets for fiscal
year 2024 and now expects¥:
- Net revenue** between $280 million and $290 million.
- Adjusted EBITDA** between $50 million and $52 million.
- Adjusted Diluted EPS** between $2.00 per share and $2.10 per
share.
Assumes 14.2 million diluted shares, 14% effective tax rate, and
no future acquisitions.
*As compared to the same period of fiscal
2023.
**See “Use of Non-GAAP Financial Measures”
below.
¥These updated financial targets supersede
any previously disclosed financial targets and investors should not
rely on any previously disclosed financial targets, and do not
include any uncompleted or future acquisitions.
Second Quarter 2024 Conference Call
Willdan will be hosting a conference call to discuss its second
quarter financial results today, at 5:30 p.m. Eastern/2:30 p.m.
Pacific. To access the call, listeners should dial 877-407-2988 (or
201-389-0923). The conference call will be webcast simultaneously
on Willdan’s website at
https://edge.media-server.com/mmc/p/j8fw5j5u/.
A replay of the conference call will be available through
Willdan’s website at
https://ir.willdangroup.com/events-presentations.
About Willdan Group, Inc.
Willdan is a nationwide provider of professional, technical and
consulting services to utilities, government agencies, and private
industry. Willdan’s service offerings span a broad set of
complementary disciplines that include electric grid solutions,
energy efficiency and sustainability, engineering and planning, and
municipal financial consulting. For additional information, visit
Willdan's website at www.willdan.com.
Use of Non-GAAP Financial Measures
“Net Revenue,” defined as contract revenue as reported in
accordance with U.S. generally accepted accounting principles
(“GAAP”) minus subcontractor services and other direct costs, is a
non-GAAP financial measure. Net Revenue is a supplemental measure
that Willdan believes enhances investors’ ability to analyze
Willdan’s business trends and performance because it substantially
measures the work performed by Willdan’s employees. In the course
of providing services, Willdan routinely subcontracts various
services. Generally, these subcontractor services and other direct
costs are passed through to Willdan’s clients and, in accordance
with GAAP and industry practice, are included in Willdan’s revenue
when it is Willdan’s contractual responsibility to procure or
manage such subcontracted activities. Because subcontractor
services and other direct costs can vary significantly from project
to project and period to period, changes in revenue may not
necessarily be indicative of Willdan’s business trends.
Accordingly, Willdan segregates subcontractor services and other
direct costs from revenue to promote a better understanding of
Willdan’s business by evaluating revenue exclusive of subcontract
services and other direct costs associated with external service
providers. A reconciliation of Willdan’s contract revenue as
reported in accordance with GAAP to Net Revenue is provided at the
end of this press release. A reconciliation of targeted contract
revenue for fiscal year 2024 as reported in accordance with GAAP to
targeted Net Revenues for fiscal year 2024, which is a
forward-looking non-GAAP financial measure, is not provided because
Willdan is unable to provide such reconciliation without
unreasonable effort. The inability to provide a reconciliation is
due to the uncertainty and inherent difficulty of predicting the
subcontractor services and other director costs that are subtracted
from contract revenues in order to derive Net Revenues. While
subcontractor costs have increased recently, subcontractor costs
can vary significantly from period to period. Subcontractor costs
and other direct costs were 48.6% and 47.1% of contract revenue for
the quarter ended June 28, 2024 and fiscal year 2023, respectively,
and 48.0% and 47.2% for the quarter ended June 30, 2023 and fiscal
year 2022, respectively.
“Adjusted EBITDA,” defined as net income plus interest expense,
income tax expense, stock-based compensation, interest accretion,
depreciation and amortization, and gain on sale of equipment, is a
non-GAAP financial measure. Adjusted EBITDA is a supplemental
measure used by Willdan’s management to measure Willdan’s operating
performance. Willdan believes Adjusted EBITDA is useful because it
allows Willdan’s management to evaluate its operating performance
and compare the results of its operations from period to period and
against its peers without regard to its financing methods, capital
structure and non-operating expenses. Willdan uses Adjusted EBITDA
to evaluate its performance for, among other things, budgeting,
forecasting and incentive compensation purposes.
Certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s costs of capital and stock-based
compensation, as well as the historical costs of depreciable
assets. A reconciliation of net income as reported in accordance
with GAAP to Adjusted EBITDA is provided at the end of this press
release. A reconciliation of targeted net income for fiscal year
2024 as reported in accordance with GAAP to Adjusted EBITDA for
fiscal year 2024, which is a forward-looking non-GAAP financial
measure, is not provided because Willdan is unable to provide such
reconciliation without unreasonable effort. The inability to
provide a reconciliation is due to the uncertainty and inherent
difficulty of predicting the interest expense, income tax expense,
stock-based compensation, interest accretion, depreciation and
amortization, and gain on sale of equipment that are subtracted
from net income in order to derive Adjusted EBITDA.
“Adjusted Net Income,” defined as net income plus stock-based
compensation, intangible amortization, interest accretion,
refinancing costs, and tax benefit distribution, each net of tax,
is a non-GAAP financial measure.
“Adjusted Diluted EPS,” defined as net income plus stock-based
compensation, intangible amortization, interest accretion,
refinancing costs, and tax benefit distribution, each net of tax,
all divided by the diluted weighted-average shares outstanding, is
a non-GAAP financial measure. Adjusted Net Income and Adjusted
Diluted EPS are supplemental measures used by Willdan’s management
to measure its operating performance. Willdan believes Adjusted Net
Income and Adjusted Diluted EPS are useful because they allow
Willdan’s management to more closely evaluate and explain the
operating results of Willdan’s business by removing certain
non-operating expenses.
Reconciliations of net income as reported in accordance with
GAAP to Adjusted Net Income and diluted EPS as reported in
accordance with GAAP to Adjusted Diluted EPS are provided at the
end of this press release. Reconciliations of targeted net income
as reported in accordance with GAAP to targeted Adjusted Net Income
for fiscal year 2024, which is a forward-looking non-GAAP financial
measure, and targeted diluted EPS as reported in accordance with
GAAP to targeted Adjusted Diluted EPS for fiscal year 2024, which
is a forward-looking non-GAAP financial measure, are not provided
because Willdan is unable to provide such reconciliations without
unreasonable effort. The inability to provide such reconciliations
is due to the uncertainty and inherent difficulty of predicting the
stock-based compensation, intangible amortization, and interest
accretion, each net of tax, that are subtracted from net income and
diluted EPS in order to derive Adjusted Net Income and Adjusted
Diluted EPS, respectively.
Willdan’s definitions of Net Revenue, Adjusted EBITDA, Adjusted
Net Income and Adjusted Diluted EPS have limitations as analytical
tools and may differ from other companies reporting similarly named
measures or from similarly named measures Willdan has reported in
prior periods. These measures should be considered in addition to,
and not as a substitute for, or superior to, other measures of
financial performance prepared in accordance with GAAP, such as
contract revenue, net income and diluted EPS.
Forward Looking Statements
Statements in this press release that are not purely historical,
including statements regarding Willdan’s intentions, hopes,
beliefs, expectations, representations, projections, estimates,
assumptions, aims, plans or predictions of the future are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, including
statements regarding financial targets for fiscal year 2024. All
statements other than statements of historical fact included in
this press release are forward-looking statements. It is important
to note that Willdan’s actual results could differ materially from
those in any such forward-looking statements. Important factors
that could cause actual results to differ materially from its
expectations include, but are not limited to, Willdan’s ability to
adequately complete projects in a timely manner, Willdan’s ability
to compete successfully in the highly competitive energy services
market, Willdan’s reliance on work from its top ten clients;
changes in state, local and regional economies and government
budgets; Willdan’s ability to win new contracts, to renew existing
contracts and to compete effectively for contracts awarded through
bidding processes; Willdan’s ability to make principal and interest
payments on its outstanding debt as they come due and to comply
with financial covenants contained in its debt agreements;
Willdan’s ability to manage supply chain constraints, labor
shortages, rising interest rates, and rising inflation; Willdan’s
ability to obtain financing and to refinance its outstanding debt
as it matures; Willdan’s ability to successfully integrate its
acquisitions and execute on its growth strategy; and Willdan’s
ability to attract and retain managerial, technical, and
administrative talent.
All written and oral forward-looking statements attributable to
Willdan, or persons acting on its behalf, are expressly qualified
in their entirety by the cautionary statements and risk factors
disclosed from time to time in Willdan’s reports filed with the
Securities and Exchange Commission, including, but not limited to,
the Annual Report on Form 10-K filed for the year ended December
29, 2023, as such disclosures may be amended, supplemented or
superseded from time to time by other reports Willdan files with
the Securities and Exchange Commission, including subsequent Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K. Willdan cautions investors not to place undue
reliance on the forward-looking statements contained in this press
release. Willdan disclaims any obligation to, and does not
undertake to, update or revise any forward-looking statements in
this press release unless required by law.
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value)
June 28,
December 29,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
44,267
$
23,397
Restricted cash
—
—
Accounts receivable, net of allowance for
doubtful accounts of $898 and $866 at June 28, 2024 and December
29, 2023, respectively
61,985
69,677
Contract assets
87,872
93,885
Other receivables
218
1,169
Prepaid expenses and other current
assets
6,108
3,888
Total current assets
200,450
192,016
Equipment and leasehold improvements,
net
28,228
27,097
Goodwill
131,144
131,144
Right-of-use assets
15,338
12,465
Other intangible assets, net
28,279
31,956
Other assets
2,978
4,949
Deferred income taxes, net
14,872
15,961
Total assets
$
421,289
$
415,588
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
31,917
$
33,193
Accrued liabilities
45,305
54,129
Contract liabilities
17,464
13,183
Notes payable
9,530
8,452
Finance lease obligations
1,096
1,186
Lease liability
5,515
4,537
Total current liabilities
110,827
114,680
Notes payable, less current portion
84,164
88,979
Finance lease obligations, less current
portion
1,132
1,184
Lease liability, less current portion
11,604
9,758
Other noncurrent liabilities
557
1,142
Total liabilities
208,284
215,743
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000
shares authorized, no shares issued and outstanding
—
—
Common stock, $0.01 par value, 40,000
shares authorized; 13,916 and 13,682 shares issued and outstanding
at June 28, 2024 and December 29, 2023, respectively
139
137
Additional paid-in capital
190,882
185,795
Accumulated other comprehensive loss
(129
)
(664
)
Retained earnings
22,113
14,577
Total stockholders’ equity
213,005
199,845
Total liabilities and stockholders’
equity
$
421,289
$
415,588
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 28,
June 30,
June 28,
June 30,
2024
2023
2024
2023
Contract revenue
$
140,996
$
119,077
$
263,485
$
221,680
Direct costs of contract revenue
(inclusive of directly related depreciation and amortization):
Salaries and wages
23,647
21,302
45,159
41,712
Subcontractor services and other direct
costs
68,545
57,142
122,104
98,054
Total direct costs of contract revenue
92,192
78,444
167,263
139,766
Gross profit
48,804
40,633
96,222
81,914
General and administrative expenses:
Salaries and wages, payroll taxes and
employee benefits
26,064
22,416
52,573
44,801
Facilities and facility related
2,405
2,619
4,850
4,897
Stock-based compensation
1,945
1,287
3,335
2,820
Depreciation and amortization
3,629
4,128
7,221
8,328
Other
8,313
7,709
16,434
14,580
Total general and administrative
expenses
42,356
38,159
84,413
75,426
Income (Loss) from operations
6,448
2,474
11,809
6,488
Other income (expense):
Interest expense, net
(1,960
)
(2,207
)
(4,097
)
(4,673
)
Other, net
826
373
1,530
513
Total other expense, net
(1,134
)
(1,834
)
(2,567
)
(4,160
)
Income (Loss) before income taxes
5,314
640
9,242
2,328
Income tax (benefit) expense
720
243
1,706
999
Net income (loss)
4,594
397
7,536
1,329
Other comprehensive income (loss):
Unrealized gain (loss) on derivative
contracts, net of tax
101
—
535
—
Comprehensive income (loss)
$
4,695
$
397
$
8,071
$
1,329
Earnings (Loss) per share:
Basic
$
0.33
$
0.03
$
0.55
$
0.10
Diluted
$
0.33
$
0.03
$
0.54
$
0.10
Weighted-average shares outstanding:
Basic
13,725
13,344
13,665
13,305
Diluted
14,074
13,487
14,001
13,481
WILLDAN GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 28,
June 30,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
7,536
$
1,329
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
7,221
8,328
Other non-cash items
185
162
Deferred income taxes, net
1,089
851
(Gain) loss on sale/disposal of
equipment
(17
)
(50
)
Provision for doubtful accounts
144
146
Stock-based compensation
3,335
2,820
Changes in operating assets and
liabilities, net of effects from business acquisitions:
Accounts receivable
7,548
5,484
Contract assets
6,013
3,760
Other receivables
951
1,921
Prepaid expenses and other current
assets
(2,220
)
1,055
Other assets
1,971
(4,987
)
Accounts payable
(1,276
)
6,322
Accrued liabilities
(8,874
)
(11,477
)
Contract liabilities
4,281
2,365
Right-of-use assets
(49
)
880
Net cash (used in) provided by operating
activities
27,838
18,909
Cash flows from investing activities:
Purchase of equipment, software, and
leasehold improvements
(4,125
)
(5,762
)
Proceeds from sale of equipment
23
55
Net cash (used in) provided by investing
activities
(4,102
)
(5,707
)
Cash flows from financing activities:
Payments on contingent consideration
—
(4,000
)
Payment on restricted cash
—
(10,679
)
Payments on notes payable
(172
)
(971
)
Borrowings under term loan facility and
line of credit
—
5,000
Repayments under term loan facility and
line of credit
(3,750
)
(9,000
)
Principal payments on finance leases
(698
)
(599
)
Proceeds from stock option exercise
1,137
7
Proceeds from sales of common stock under
employee stock purchase plan
1,402
1,392
Cash used to pay taxes on stock grants
(785
)
(188
)
Net cash (used in) provided by financing
activities
(2,866
)
(19,038
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
20,870
(5,836
)
Cash, cash equivalents and restricted cash
at beginning of period
23,397
19,485
Cash, cash equivalents and restricted cash
at end of period
$
44,267
$
13,649
Supplemental disclosures of cash flow
information:
Cash paid (received) during the period
for:
Interest
$
3,983
$
4,464
Income taxes
551
(1,696
)
Supplemental disclosures of noncash
investing and financing activities:
Equipment acquired under finance
leases
556
278
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Revenue
to Net Revenue
(in thousands)
(Non-GAAP Measure)
Three Months Ended
Six Months Ended
June 28,
June 30,
June 28,
June 30,
2024
2023
2024
2023
Consolidated
Contract revenue
$
140,996
$
119,077
$
263,485
$
221,680
Subcontractor services and other direct
costs
68,545
57,142
122,104
98,054
Net Revenue
$
72,451
$
61,935
$
141,381
$
123,626
Energy segment
Contract revenue
$
117,852
$
98,015
$
218,598
$
181,300
Subcontractor services and other direct
costs
67,556
56,102
120,210
96,180
Net Revenue
$
50,296
$
41,913
$
98,388
$
85,120
Engineering and Consulting
segment
Contract revenue
$
23,144
$
21,062
$
44,887
$
40,380
Subcontractor services and other direct
costs
989
1,040
1,894
1,874
Net Revenue
$
22,155
$
20,022
$
42,993
$
38,506
Willdan Group, Inc. and
Subsidiaries
Reconciliation of GAAP Net
Income to Adjusted EBITDA
(in thousands)
(Non-GAAP Measure)
Three Months Ended
Six Months Ended
June 28,
June 30,
June 28,
June 30,
2024
2023
2024
2023
Net income (loss)
$
4,594
$
397
$
7,536
$
1,329
Interest expense
1,960
2,207
4,097
4,673
Income tax expense (benefit)
720
243
1,706
999
Stock-based compensation
1,945
1,287
3,335
2,820
Depreciation and amortization
3,629
4,128
7,221
8,328
(Gain) Loss on sale of equipment
(4
)
(40
)
(17
)
(50
)
Adjusted EBITDA
$
12,844
$
8,222
$
23,878
$
18,099
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
Six Months Ended
June 28,
June 30,
June 28,
June 30,
2024
2023
2024
2023
Net income (loss)
$
4,594
$
397
$
7,536
$
1,329
Adjustment for stock-based
compensation
1,945
1,287
3,335
2,820
Tax effect of stock-based compensation
(344
)
(260
)
(590
)
(571
)
Adjustment for intangible amortization
1,805
2,624
3,676
5,248
Tax effect of intangible amortization
(319
)
(531
)
(650
)
(1,062
)
Adjusted Net Income (Loss)
$
7,681
$
3,517
$
13,307
$
7,764
Diluted weighted-average shares
outstanding
14,074
13,487
14,001
13,481
Diluted earnings (loss) per share
$
0.33
$
0.03
$
0.54
$
0.10
Impact of adjustment:
Stock-based compensation per share
0.14
0.09
0.24
0.21
Tax effect of stock-based compensation per
share
(0.03
)
(0.02
)
(0.04
)
(0.04
)
Intangible amortization per share
0.13
0.19
0.26
0.39
Tax effect of intangible amortization per
share
(0.02
)
(0.03
)
(0.05
)
(0.08
)
Adjusted Diluted EPS
$
0.55
$
0.26
$
0.95
$
0.58
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801767952/en/
Willdan Group, Inc. Al Kaschalk Vice President Tel:
310-922-5643 akaschalk@willdan.com
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