Part I [Business](index=6&type=section&id=ITEM%201.%20BUSINESS) Willdan Group, Inc. provides energy and engineering consulting services, growing organically and via acquisitions - Willdan Group, Inc. provides professional, technical, and consulting services to utilities, private industry, and public agencies, focusing on energy solutions and government infrastructure[18](index=18&type=chunk) Contract Revenue by Segment (Fiscal Years 2019-2021) | Segment | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Energy | 81% | 83% | 84% | | Engineering and Consulting | 19% | 17% | 16% | - The company's growth strategy is centered on a mix of strong organic expansion and strategic acquisitions to broaden its service offerings[20](index=20&type=chunk) - In fiscal year 2021, the top 10 customers accounted for **49.2%** of consolidated contract revenues, with one customer, the Los Angeles Department of Water and Power (LADWP), representing **10.8%**[64](index=64&type=chunk) - Geographically, California and New York are the largest markets, accounting for **36.8%** and **21.0%** of consolidated contract revenue in fiscal year 2021, respectively[65](index=65&type=chunk) [Our Markets](index=6&type=section&id=ITEM%201.%20BUSINESS%23Our%20Markets) Willdan operates in growing energy services and stable engineering markets, driven by climate change and outsourcing needs - The energy services market is expected to grow due to global warming awareness, climate change issues, and new renewable energy technologies[24](index=24&type=chunk) - The engineering and consulting market grows as public agencies and utilities outsource services to avoid the costs of maintaining in-house staff and resources[25](index=25&type=chunk)[26](index=26&type=chunk) [Our Services](index=8&type=section&id=ITEM%201.%20BUSINESS%23Our%20Services) Willdan's Energy segment offers energy solutions; Engineering provides civil engineering, construction, and financial consulting - The Energy segment provides a wide range of services including audits, program design, demand reduction, grid optimization, and performance contracting[33](index=33&type=chunk) - The Engineering and Consulting segment offers civil engineering, construction management, building and safety services, city planning, geotechnical services, and financial consulting[42](index=42&type=chunk) - Key projects in the Energy segment include managing Con Edison's Small Business Direct Install program in New York and providing peak-load reduction services for San Diego Gas & Electric[38](index=38&type=chunk)[40](index=40&type=chunk) - Notable projects in the Engineering and Consulting segment include providing comprehensive engineering and infrastructure services for the City of Elk Grove, California[58](index=58&type=chunk) [Contract Structure](index=22&type=section&id=ITEM%201.%20BUSINESS%23Contract%20Structure) Willdan uses time-and-materials, unit-based (54% of 2021 revenue), and fixed-price contracts Contract Revenue by Pricing Provision (Fiscal Years 2019-2021) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Time-and-materials | 24% | 26% | 16% | | Unit-based | 54% | 46% | 65% | | Fixed price | 22% | 28% | 19% | | **Total** | **100%** | **100%** | **100%** | - Fixed price contracts carry inherent risks like cost underestimation and project delays, which Willdan mitigates through fixed-price subcontracts[74](index=74&type=chunk) - Most contracts can be terminated by clients with prior notice, which could materially affect operations if a major contract is terminated[76](index=76&type=chunk) [Human Capital Resources](index=26&type=section&id=ITEM%201.%20BUSINESS%23Human%20Capital%20Resources) Willdan employed 1,560 people as of Dec 31, 2021, emphasizing diverse talent, training, and safety initiatives Employee Count by Segment (2019-2021) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Energy | 860 | 748 | 900 | | Engineering and Consulting | 619 | 531 | 487 | | Holding Company Employees | 81 | 74 | 64 | | **Total** | **1,560** | **1,353** | **1,451** | - The company established a Diversity, Equity, and Inclusion (DE&I) Working Group in 2020 and the Willdan Clean Energy Academy (WCEA) to offer free training to disadvantaged workers in New York City and Los Angeles[90](index=90&type=chunk)[92](index=92&type=chunk) Workplace Safety Incident Metrics (2019-2021) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | RCR (Recordable Case Rate) | 0.83 | 0.78 | 1.06 | | LTIR (Lost-Time Incident Rate) | 0.74 | 0.35 | 0.53 | [Risk Factors](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces multiple risks including COVID-19 impacts, project execution, debt, customer loss, and cybersecurity threats - The COVID-19 pandemic has adversely affected business, particularly direct install programs, and its ultimate impact remains uncertain[111](index=111&type=chunk)[113](index=113&type=chunk) - The company's engagements often involve large-scale, complex projects, and failure to meet deadlines or performance standards can lead to significant additional costs and reputational damage[115](index=115&type=chunk) - Substantial leverage and debt service obligations could make it difficult to satisfy obligations, obtain future financing, and comply with financial covenants[143](index=143&type=chunk) - The loss of key utility programs or clients could significantly harm revenue, as most agreements are based on a "purchase order" model and do not commit clients to minimum service purchases[150](index=150&type=chunk)[151](index=151&type=chunk) - The growth strategy of acquiring other companies involves risks such as diverting management attention, integration challenges, and assuming undisclosed liabilities[170](index=170&type=chunk)[171](index=171&type=chunk) - Cybersecurity attacks are an evolving threat that could lead to disruptions in critical systems, unauthorized release of confidential information, and corruption of data, potentially harming the company's reputation and operations[193](index=193&type=chunk)[194](index=194&type=chunk) [Unresolved Staff Comments](index=61&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports that there are no unresolved staff comments from the SEC - None[196](index=196&type=chunk) [Properties](index=61&type=section&id=ITEM%202.%20PROPERTIES) Willdan's corporate headquarters is in Anaheim, California, with 47 additional leased offices across the U.S. and Canada - The company's corporate headquarters is in a leased **18,000 sq. ft. office** in Anaheim, California[197](index=197&type=chunk) - Willdan leases a total of approximately **262,000 square feet** of office space across **47 U.S. locations** and **one Canadian office**, with leases expiring through **2027**[197](index=197&type=chunk) [Legal Proceedings](index=61&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is subject to ordinary course claims and lawsuits, maintaining professional liability insurance and reserves for probable losses - The company is subject to claims and lawsuits arising in the ordinary course of business and carries professional liability insurance for such claims[198](index=198&type=chunk) - Management believes that the ultimate liability from current legal proceedings is not expected to have a material adverse effect on the company's financial statements[200](index=200&type=chunk) [Mine Safety Disclosures](index=61&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[201](index=201&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=62&type=section&id=ITEM%205.%20MARKET%20FOR%20THE%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Information for Items 10-14 is incorporated by reference from the company's 2022 Proxy Statement - The company's common stock is traded on the **Nasdaq Global Market** under the symbol **"WLDN"**[203](index=203&type=chunk) - No cash dividends were declared or paid in fiscal years **2021, 2020, or 2019**, and none are anticipated in the foreseeable future[205](index=205&type=chunk)[206](index=206&type=chunk) - There were no issuer repurchases of equity securities during the period[211](index=211&type=chunk) [Reserved](index=64&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In FY2021, revenue decreased by 9.5% to $353.8 million, but gross profit increased, improving gross margin to 38.4% Consolidated Financial Summary (in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Contract Revenue | $353,755 | $390,980 | $443,099 | | Gross Profit | $135,874 | $129,393 | $134,973 | | Income (Loss) from Operations | $(8,691) | $(16,227) | $9,363 | | Net Income (Loss) | $(8,417) | $(14,496) | $4,841 | - Contract revenue decreased by **9.5%** in FY2021 compared to FY2020, mainly due to a decrease in construction management activities in the Energy segment and one fewer week in the fiscal year[232](index=232&type=chunk) - Gross margin increased to **38.4%** in FY2021 from **33.1%** in FY2020, primarily due to a change in revenue mix away from lower-margin construction management services[238](index=238&type=chunk) - The COVID-19 pandemic negatively impacted direct install programs in California through the first half of fiscal 2021. The last suspended program, for LADWP, resumed in late June 2021[218](index=218&type=chunk)[219](index=219&type=chunk) - Cash flow from operating activities was **$9.8 million** in FY2021, a decrease from **$47.0 million** in FY2020, primarily due to increased working capital demand as utility programs resumed[262](index=262&type=chunk)[267](index=267&type=chunk) [Results of Operations](index=69&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%23Results%20of%20Operations) For fiscal 2021, contract revenue fell 9.5% to $353.8 million, while gross profit rose 5.0% to $135.9 million, improving net loss - **2021 vs. 2020:** Contract revenue decreased by **$37.2 million (9.5%)**, primarily in the Energy segment due to reduced construction management activities. Gross profit increased by **5.0%** due to a favorable change in revenue mix, leading to a higher gross margin (**38.4% vs. 33.1%**)[232](index=232&type=chunk)[238](index=238&type=chunk) - **2021 vs. 2020:** The net loss for fiscal 2021 was **$8.4 million**, an improvement from a net loss of **$14.5 million** in fiscal 2020, driven by higher gross profit margins and lower operating expenses[246](index=246&type=chunk) - **2020 vs. 2019:** Contract revenue decreased by **$52.1 million (11.8%)**, primarily due to COVID-19 related suspensions of direct install programs. This led to an operating loss of **$16.2 million** in 2020 compared to an operating income of **$9.4 million** in 2019[247](index=247&type=chunk)[258](index=258&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%23Liquidity%20and%20Capital%20Resources) Willdan had $11.2 million in cash as of Dec 31, 2021, with sufficient liquidity from operations and credit facilities Net Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Operating activities | $9,803 | $47,025 | $11,621 | | Investing activities | $(8,454) | $(5,059) | $(78,348) | | Financing activities | $(18,533) | $(19,013) | $56,920 | - As of December 31, 2021, the company had **$11.2 million** in cash and cash equivalents, a **$100 million Term A Loan** with **$75.0 million** outstanding, and a **$50.0 million Revolving Credit Facility** with no amount borrowed[263](index=263&type=chunk) Contractual Obligations as of Dec 31, 2021 (in thousands) | Obligation | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long term debt | $100,574 | $15,036 | $85,538 | $— | $— | | Interest payments on debt | $6,151 | $2,756 | $3,395 | $— | $— | | Operating leases | $16,342 | $5,575 | $6,589 | $3,753 | $425 | | Finance leases | $1,317 | $539 | $702 | $76 | $— | | **Total** | **$124,384** | **$23,906** | **$96,224** | **$3,829** | **$425** | [Critical Accounting Policies](index=85&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%23Critical%20Accounting%20Policies) Willdan's financial statements rely on critical accounting policies requiring significant judgment, including contract accounting, goodwill, business combinations, and income taxes - **Contract Accounting:** Revenue on fixed-price contracts is recognized using the percentage-of-completion method, which requires significant judgment in estimating total revenue and costs at completion[298](index=298&type=chunk)[308](index=308&type=chunk) - **Goodwill:** Goodwill is tested for impairment annually at the reporting unit level. This involves significant estimates of future revenue, profitability, and cash flows to determine fair value[317](index=317&type=chunk)[322](index=322&type=chunk) - **Business Combinations:** The acquisition method requires significant estimates for the fair value of identifiable assets acquired and liabilities assumed[323](index=323&type=chunk) - **Income Taxes:** The company must make a judgmental assessment of the recoverability of deferred tax assets, which includes evaluating historical income and forecasting future taxable income to determine if a valuation allowance is needed[328](index=328&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk from variable-rate debt; a 1% increase would raise annual interest expense by $1.0 million - The company is subject to interest rate risk from its variable-rate Term A Loan, revolving credit facility, and delayed draw term loan[336](index=336&type=chunk) - A **one-percentage-point increase** in the effective interest rate would result in an approximate **$1.0 million increase** in annual interest expense based on debt levels at year-end 2021[340](index=340&type=chunk) - The company has addressed the transition from LIBOR by amending its credit agreement in March 2022 to utilize the **Secured Overnight Financing Rate (SOFR)** as the new reference rate[342](index=342&type=chunk) [Financial Statements and Supplementary Data](index=99&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section contains the company's audited consolidated financial statements for FY2021 and the independent auditor's unqualified opinion - The independent auditor, **Crowe LLP**, issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[348](index=348&type=chunk) - The auditor identified two Critical Audit Matters: (1) the estimation of costs to complete on fixed-price contracts, and (2) the estimated realization of deferred income tax assets for net operating losses[356](index=356&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) Consolidated Balance Sheet Summary (in thousands) | | Dec 31, 2021 | Jan 1, 2021 | | :--- | :--- | :--- | | Total Current Assets | $148,959 | $155,904 | | Total Assets | $394,422 | $403,024 | | Total Current Liabilities | $117,207 | $116,670 | | Total Liabilities | $215,201 | $233,860 | | Total Stockholders' Equity | $179,221 | $169,164 | Consolidated Statement of Comprehensive Income Summary (in thousands) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Contract Revenue | $353,755 | $390,980 | $443,099 | | Gross Profit | $135,874 | $129,393 | $134,973 | | Income (Loss) from Operations | $(8,691) | $(16,227) | $9,363 | | Net Income (Loss) | $(8,417) | $(14,496) | $4,841 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=168&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reported no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the fiscal year ended December 31, 2021 - There were no disagreements with accountants on accounting and financial disclosure[563](index=563&type=chunk) [Controls and Procedures](index=168&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2021[565](index=565&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021, based on the **COSO framework**[566](index=566&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2021 that materially affected, or are reasonably likely to materially affect, internal controls[568](index=568&type=chunk) [Other Information](index=170&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) On March 8, 2022, the company amended its Credit Agreement to extend covenant relief, fund a loan, and transition to SOFR - On **March 8, 2022**, the company entered into the **Fifth Amendment** to its Credit Agreement[569](index=569&type=chunk) - The amendment extended the covenant relief period, funded the remaining **$20.0 million** from the Delayed Draw Term Loan, and transitioned the reference interest rate from **LIBOR to SOFR**[569](index=569&type=chunk)[570](index=570&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=170&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - None[574](index=574&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=172&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information for Items 10-14 is incorporated by reference from the company's 2022 Proxy Statement - Information for **Items 10, 11, 12, 13, and 14** is incorporated by reference from the company's Proxy Statement for its **2022 Annual Meeting of Stockholders**[577](index=577&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk) - The company's **Code of Ethical Conduct** is available on its website and applies to the CEO and CFO[578](index=578&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=173&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists documents filed as part of the Annual Report on Form 10-K, including financial statements and various exhibits - The report includes a list of all exhibits filed, such as the Amended and Restated Credit Agreement and its subsequent amendments, stock incentive plans, and various certifications required by the Sarbanes-Oxley Act[587](index=587&type=chunk)[588](index=588&type=chunk) [Form 10-K Summary](index=176&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable to the company - None[590](index=590&type=chunk)

Willdan Group, Inc. (NASDAQ:WLDN) Q3 2021 Earnings Conference Call November 4, 2021 5:30 PM ET Company Participants Al Kaschalk - VP-IR Tom Brisbin - CB, CEO Kim Early - CFO Mike Bieber - President Conference Call Participants Craig Irwin - Roth Capital Chip Moore - EF Hutton Marc Riddick - Sidoti Moshe Katri - Wedbush Operator Good day. And welcome to the Willdan Group Third Quarter Fiscal Year 2021 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference ove ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-33076 WILLDAN GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) (IRS Employer Identification No.) Delaw ...

Willdan Announces Changes to Board of Directors and Management August 5, 2021 ANAHEIM, Calif.--(BUSINESS WIRE)--Aug. 5, 2021-- Willdan Group, Inc. (Nasdaq: WLDN) announced today that the Company's Board of Directors has elected Cynthia Downes to the Board, effective August 4, 2021. Ms. Downes has also been appointed to serve on the Audit Committee and Compensation Committee. With the addition of Ms. Downes, the Board will expand to nine members total, eight of whom will be independent. Today Willdan also an ...

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements and comprehensive notes for the periods ended July 2, 2021 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of July 2, 2021 | Metric | July 2, 2021 (in thousands) | January 1, 2021 (in thousands) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Total assets | $380,487 | $410,323 | | Total liabilities | $209,674 | $241,159 | | Total stockholders' equity | $170,813 | $169,164 | - Total assets decreased by **$29.8 million** from January 1, 2021, to July 2, 2021, primarily driven by a decrease in cash and cash equivalents and accounts receivable[18](index=18&type=chunk) - Total liabilities decreased by **$31.5 million**, mainly due to reductions in accounts payable, accrued liabilities, and notes payable[18](index=18&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's revenues, expenses, and net income (loss) for the three and six months ended July 2, 2021 | Metric | Three Months Ended July 2, 2021 (in thousands) | Three Months Ended July 3, 2020 (in thousands) | Six Months Ended July 2, 2021 (in thousands) | Six Months Ended July 3, 2020 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Contract revenue | $84,154 | $83,549 | $163,240 | $189,575 | | Income (Loss) from operations | $(7,072) | $(3,841) | $(11,261) | $(12,110) | | Net income (loss) | $(4,601) | $(4,985) | $(8,367) | $(13,139) | | Basic EPS | $(0.37) | $(0.43) | $(0.68) | $(1.13) | | Diluted EPS | $(0.37) | $(0.43) | $(0.68) | $(1.13) | - For the three months ended July 2, 2021, contract revenue was relatively flat year-over-year, while net loss improved slightly from **$(4,985) thousand** to **$(4,601) thousand**[19](index=19&type=chunk) - For the six months ended July 2, 2021, contract revenue decreased by **13.9% YoY** to **$163,240 thousand**, but net loss improved significantly from **$(13,139) thousand** to **$(8,367) thousand**[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity components from January 1, 2021, to July 2, 2021 | Metric | January 1, 2021 (in thousands) | July 2, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :-------------------------- | | Common Stock | $122 | $127 | | Additional Paid-in Capital | $149,014 | $158,793 | | Accumulated Other Comprehensive Loss | $(488) | $(256) | | Retained Earnings | $20,516 | $12,149 | | Total Stockholders' Equity | $169,164 | $170,813 | - Total stockholders' equity increased from **$169,164 thousand** at January 1, 2021, to **$170,813 thousand** at July 2, 2021, primarily due to increases in additional paid-in capital and a reduction in accumulated other comprehensive loss, partially offset by a decrease in retained earnings[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities for the six months ended July 2, 2021 | Cash Flow Activity | Six Months Ended July 2, 2021 (in thousands) | Six Months Ended July 3, 2020 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating activities | $(708) | $29,231 | | Investing activities | $(3,057) | $(2,929) | | Financing activities | $(15,226) | $(14,594) | | Net increase (decrease) in cash and cash equivalents | $(18,991) | $11,708 | | Cash and cash equivalents at end of period | $9,414 | $17,160 | - Net cash used in operating activities was **$(708) thousand** for the six months ended July 2, 2021, a significant decrease from **$29,231 thousand** provided in the prior year, primarily due to changes in revenue mix and start-up costs for new contracts[22](index=22&type=chunk)[194](index=194&type=chunk) - Net cash used in financing activities increased slightly to **$(15,226) thousand**, driven by payments for contingent consideration and debt repayments, partially offset by proceeds from stock exercises and employee stock purchase plans[22](index=22&type=chunk)[198](index=198&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization and Operations of the Company](index=11&type=section&id=1.%20ORGANIZATION%20AND%20OPERATIONS%20OF%20THE%20COMPANY) Willdan Group provides energy and infrastructure services through two segments, with COVID-19 impacting operations and credit facility amendments - Willdan Group, Inc. operates in two financial reporting segments: Energy and Engineering and Consulting, providing services for energy solutions and government infrastructure[24](index=24&type=chunk)[25](index=25&type=chunk) - The COVID-19 pandemic negatively impacted the company's operations, especially the direct install business in California's Energy segment, which historically accounted for **~40% of gross revenue**[29](index=29&type=chunk)[32](index=32&type=chunk) - As of August 4, 2021, the company's largest program for LADWP, which was the last suspended due to COVID-19, resumed, and no contracts have been cancelled due to the pandemic[31](index=31&type=chunk) - The company amended its credit facility for increased covenant flexibility due to **$781 million** in new California Investor Owned Utility contracts signed in December 2020[35](index=35&type=chunk) [2. Recent Accounting Pronouncements](index=15&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company adopted ASU 2019-12 with no material impact and is evaluating reference rate reform pronouncements - Adopted ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," effective January 2, 2021, with no material impact[42](index=42&type=chunk) - Currently evaluating ASU No. 2020-04 and ASU No. 2021-01, "Reference Rate Reform (Topic 848)," which provide optional expedients for contract modifications and hedging relationships affected by LIBOR discontinuation[43](index=43&type=chunk) [3. Revenues](index=16&type=section&id=3.%20REVENUES) Revenue is recognized under ASC Topic 606 for various contract types, with estimates and adjustments applied under specific methods - Revenue is recognized in accordance with ASC Topic 606, based on identifying performance obligations, determining transaction price, allocating it, and recognizing revenue as obligations are satisfied[45](index=45&type=chunk) | Segment | Contract Type | Revenue Recognition Method | | :------------------------ | :------------------ | :------------------------- | | Energy | Time-and-materials | Time-and-materials | | | Unit-based | Unit-based | | | Software license | Unit-based | | | Fixed price | Percentage-of-completion | | Engineering and Consulting | Time-and-materials | Time-and-materials | | | Unit-based | Unit-based | | | Fixed price | Percentage-of-completion | - Revenue on fixed price contracts is recognized using the percentage-of-completion method, while time-and-materials and unit-based contracts recognize revenue as work is performed[47](index=47&type=chunk)[48](index=48&type=chunk) - Adjustments to estimated profit on contracts are recognized under the cumulative catch-up method, and estimated losses are recognized immediately[59](index=59&type=chunk) [4. Supplemental Financial Statement Data](index=23&type=section&id=4.%20SUPPLEMENTAL%20FINANCIAL%20STATEMENT%20DATA) This section details accounts receivable, equipment, goodwill, and intangible assets, noting a sale of receivables and no impairment - During the six months ended July 2, 2021, the Company sold **$8.0 million** in trade accounts receivable, incurring **$0.8 million** in discounts[71](index=71&type=chunk) | Asset Category | July 2, 2021 (in thousands) | January 1, 2021 (in thousands) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Equipment and leasehold improvements, net | $13,522 | $12,506 | | Goodwill | $130,124 | $130,124 | | Other intangible assets, net | $58,485 | $64,256 | - No impairment was identified for goodwill or long-lived assets, including intangible assets, as of July 2, 2021, despite potential COVID-19 impacts[36](index=36&type=chunk)[74](index=74&type=chunk) [5. Derivative Financial Instruments](index=25&type=section&id=5.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) The company uses an interest rate swap to hedge variable rate debt, with fair value changes recorded in comprehensive income - The Company uses an interest rate swap agreement to hedge variable interest rate exposure on a portion of its Term A Loan, with a notional amount of **$35.0 million** and a fixed annual interest rate of **2.47%**, expiring January 31, 2022[77](index=77&type=chunk)[79](index=79&type=chunk) | Balance Sheet Location | Fair Value of Derivative Instruments as of July 2, 2021 (in thousands) | Fair Value of Derivative Instruments as of January 1, 2021 (in thousands) | | :----------------------- | :--------------------------------------------------- | :----------------------------------------------------- | | Accrued liabilities | $(353) | $(624) | | Other noncurrent (liabilities) assets | $— | $(48) | - The effective portion of the interest rate swap agreement designated as a cash flow hedge before tax effects was **$0.4 million** as of July 2, 2021[79](index=79&type=chunk) [6. Debt Obligations](index=27&type=section&id=6.%20DEBT%20OBLIGATIONS) The company's debt includes term loans and a revolving facility, with credit agreement amendments providing covenant flexibility and compliance maintained | Debt Type | July 2, 2021 (in thousands) | January 1, 2021 (in thousands) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Outstanding borrowings on Term A Loan | $80,000 | $85,000 | | Outstanding borrowings on Delayed Draw Term Loan | $25,500 | $27,000 | | Total debt | $105,955 | $113,996 | | Long-term debt portion | $91,795 | $98,178 | - The company's Credit Facilities include a **$100.0 million** Term A Loan, a **$50.0 million** Delayed Draw Term Loan, and a **$50.0 million** Revolving Credit Facility, all maturing on June 26, 2024[84](index=84&type=chunk) - The Fourth Amendment (April 30, 2021) extended the covenant relief period, adjusted maximum Leverage Ratio, removed prohibitions on delayed draw term loans and permitted acquisitions, and increased the maximum earn-out payments[90](index=90&type=chunk) - As of July 2, 2021, the company was in compliance with all covenants contained in the Credit Agreement, as amended[93](index=93&type=chunk) [7. Leases](index=32&type=section&id=7.%20LEASES) The company leases office facilities and equipment, recognizing lease liabilities and right-of-use assets, with total net lease cost of $3.6 million | Lease Type | July 2, 2021 (in thousands) | January 1, 2021 (in thousands) | | :-------------------------------- | :-------------------------- | :--------------------------- | | Operating leases: Right-of-use assets | $17,411 | $20,130 | | Operating leases: Total lease liabilities | $18,670 | $21,493 | | Finance leases: Total equipment and leasehold improvements, net | $858 | $544 | | Finance leases: Total finance lease obligations | $845 | $484 | | Metric | Six Months Ended July 2, 2021 (in thousands) | Six Months Ended July 3, 2020 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating lease cost | $3,345 | $3,508 | | Finance lease cost: Amortization of assets | $258 | $310 | | Finance lease cost: Interest on lease liabilities | $13 | $17 | | Total net lease cost | $3,616 | $3,835 | - Weighted average remaining lease term for operating leases is **4.11 years** (July 2, 2021) and for finance leases is **2.66 years** (July 2, 2021)[100](index=100&type=chunk) [8. Commitments and Variable Interest Entities](index=35&type=section&id=8.%20COMMITMENTS%20AND%20VARIABLE%20INTEREST%20ENTITIES) The company makes 401(k) matching contributions and consolidates Genesys as a Variable Interest Entity due to control and loss absorption - The company made matching contributions of **$1.3 million** to its employee benefit plans for the six months ended July 2, 2021[105](index=105&type=chunk) - Genesys, a professional corporation, is consolidated as a Variable Interest Entity (VIE) because the company manages it, directs its key activities, and absorbs its expected losses through a service fee deferral arrangement[107](index=107&type=chunk)[108](index=108&type=chunk) [9. Segment and Geographical Information](index=37&type=section&id=9.%20SEGMENT%20AND%20GEOGRAPHICAL%20INFORMATION) The company reports in Energy and Engineering & Consulting segments, with significant revenue concentration from top customers and key geographical regions | Segment | Contract Revenue (Six Months Ended July 2, 2021, in thousands) | Segment Profit (Loss) Before Income Tax Expense (Six Months Ended July 2, 2021, in thousands) | | :------------------------ | :--------------------------------------------------- | :------------------------------------------------------------------------------------ | | Energy | $128,454 | $(7,745) | | Engineering and Consulting | $34,786 | $4,834 | | Unallocated Corporate | $— | $(10,577) | | Consolidated Total | $163,240 | $(13,488) | | Client Type | Six Months Ended July 2, 2021 (in thousands) | Six Months Ended July 3, 2020 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Commercial | $15,413 | $20,296 | | Government | $59,439 | $75,162 | | Utilities | $88,388 | $94,117 | | Total | $163,240 | $189,575 | - For the six months ended July 2, 2021, the top 10 customers accounted for **46.2%** of consolidated contract revenue[116](index=116&type=chunk) - Services to clients in California accounted for **34.5%** and New York for **21.8%** of contract revenue for the six months ended July 2, 2021[119](index=119&type=chunk) [10. Income Taxes](index=41&type=section&id=10.%20INCOME%20TAXES) The company uses the asset and liability method for income taxes, recording a $5.1 million tax benefit for the six months ended July 2, 2021, and is under New York state tax examination - The company recorded an income tax benefit of **$5.1 million** for the six months ended July 2, 2021, compared to **$1.7 million** for the same period in 2020[124](index=124&type=chunk) - The tax benefit is primarily attributable to loss before income tax, state taxes, excess tax benefit on stock compensation, R&D tax credits, commercial building energy efficiency deduction, and benefits from the CARES Act and CAA 2021[124](index=124&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - The company received a **$0.8 million** tax benefit related to the net operating loss carryback provisions of the CARES Act during the three months ended July 2, 2021[127](index=127&type=chunk) - The State of New York is examining the company's 2017, 2018, and 2019 state tax returns, with the impact currently undeterminable[129](index=129&type=chunk) [11. Earnings Per Share ("EPS")](index=44&type=section&id=11.%20EARNINGS%20PER%20SHARE%20%28%22EPS%22%29) Basic and diluted EPS calculations are presented, with no dilutive effects from equity awards due to net losses for the periods | Metric | Three Months Ended July 2, 2021 | Three Months Ended July 3, 2020 | Six Months Ended July 2, 2021 | Six Months Ended July 3, 2020 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) | $(4,601) | $(4,985) | $(8,367) | $(13,139) | | Weighted-average common shares outstanding (Basic) | 12,421 | 11,682 | 12,284 | 11,593 | | Basic EPS | $(0.37) | $(0.43) | $(0.68) | $(1.13) | | Diluted EPS | $(0.37) | $(0.43) | $(0.68) | $(1.13) | - All outstanding equity awards were excluded from diluted EPS calculations for the periods presented due to net losses, making their inclusion anti-dilutive[133](index=133&type=chunk) [12. Contingencies](index=45&type=section&id=12.%20CONTINGENCIES) The company faces routine claims and lawsuits, with management believing ultimate liability will not materially affect financial statements [13. Subsequent Events](index=46&type=section&id=13.%20SUBSEQUENT%20EVENTS) No subsequent events required to be reported were identified as of August 5, 2021 [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=47&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of financial condition, operations, liquidity, and critical accounting policies, including COVID-19 impacts [Our Company](index=47&type=section&id=Our%20Company) Willdan Group, Inc. provides professional, technical, and consulting services for energy solutions and government infrastructure through two segments - Willdan Group, Inc. provides professional, technical, and consulting services for energy solutions and government infrastructure, operating through two segments: Energy and Engineering & Consulting[139](index=139&type=chunk)[140](index=140&type=chunk) - The Energy segment offers comprehensive energy solutions, including audits, program design, demand reduction, and software analytics[141](index=141&type=chunk) - The Engineering and Consulting segment provides civil engineering, construction management, building and safety, and economic/financial consulting services[142](index=142&type=chunk) [Impact of Covid-19 on Our Business](index=47&type=section&id=Impact%20of%20Covid-19%20on%20Our%20Business) COVID-19 negatively impacted the Energy segment's direct install business, while the company amended its credit facility and assessed asset impairment - COVID-19 negatively impacted operations, particularly the direct install business in California's Energy segment, which resumed in late June 2021[143](index=143&type=chunk)[144](index=144&type=chunk) - The Engineering and Consulting segment was less affected as its services were deemed "essential"[146](index=146&type=chunk) - The company amended its credit facility for increased covenant flexibility due to new California utility contracts and believes its financial position is flexible[148](index=148&type=chunk) - No goodwill or long-lived asset impairment was noted as of July 2, 2021, but future impacts of COVID-19 could cause impairment[149](index=149&type=chunk) - Clients (utilities, municipalities) may face budget shortfalls, potentially delaying funding or new contracts, and reliance on subcontractors poses risks if they face economic harm[151](index=151&type=chunk)[152](index=152&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross profit, and net income (loss), for the reported periods [Second Quarter and First Half Overview](index=52&type=section&id=Second%20Quarter%20and%20First%20Half%20Overview) Consolidated contract revenue was flat for Q2 but decreased 13.9% for the first half, with improved gross profit margins and reduced net losses | Metric | 3 Months Ended July 2, 2021 (in thousands) | 3 Months Ended July 3, 2020 (in thousands) | % Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------- | | Contract revenue | $84,154 | $83,549 | 0.7% | | Gross profit | $30,886 | $29,544 | 4.5% | | Gross profit margin | 36.7% | 35.4% | 1.3 pp | | Income (loss) from operations | $(7,072) | $(3,841) | 84.1% | | Net income (loss) | $(4,601) | $(4,985) | (7.7)% | | Metric | 6 Months Ended July 2, 2021 (in thousands) | 6 Months Ended July 3, 2020 (in thousands) | % Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------- | | Contract revenue | $163,240 | $189,575 | (13.9)% | | Gross profit | $63,018 | $60,235 | 4.6% | | Gross profit margin | 38.6% | 31.8% | 6.8 pp | | Income (loss) from operations | $(11,261) | $(12,110) | (7.0)% | | Net income (loss) | $(8,367) | $(13,139) | (36.3)% | - Gross profit margin increased for both periods, driven by a shift in revenue mix towards projects with a higher percentage of labor costs and lower material/subcontracting costs[170](index=170&type=chunk)[184](index=184&type=chunk) [Three Months Ended July 2, 2021 Compared to Three Months Ended July 3, 2020](index=55&type=section&id=Three%20Months%20Ended%20July%202%2C%202021%20Compared%20to%20Three%20Months%20Ended%20July%203%2C%202020) Consolidated contract revenue remained flat, with varied segment performance, increased G&A expenses, and an improved net loss due to tax benefits - Energy segment utility contract revenues increased **$9.6 million** due to the lifting of COVID-19 business suspensions, while governmental and commercial revenues decreased due to the absence of accelerated projects seen in Q2 2020[165](index=165&type=chunk) - Engineering and Consulting segment contract revenue increased **$0.9 million (5.1%)**, primarily from incremental government revenues[166](index=166&type=chunk) - General and administrative expenses increased by **$4.6 million (13.7%)**, mainly due to restored wage reductions and increased stock-based compensation[171](index=171&type=chunk)[172](index=172&type=chunk) - Net loss improved to **$4.6 million** from **$5.0 million**, primarily driven by income tax benefits and higher margin revenues, partially offset by increased G&A[176](index=176&type=chunk) [Six Months Ended July 2, 2021 Compared to Six Months Ended July 3, 2020](index=58&type=section&id=Six%20Months%20Ended%20July%202%2C%202021%20Compared%20to%20Six%20Months%20Ended%20July%203%2C%202020) Consolidated contract revenue decreased by 13.9%, primarily in the Energy segment, while gross profit improved and net loss significantly reduced - Consolidated contract revenue decreased by **$26.3 million (13.9%)** due to decreased direct install program revenues in the Energy segment and one fewer week in Q1 2021[177](index=177&type=chunk)[178](index=178&type=chunk) - Direct costs of contract revenue decreased by **$29.1 million (22.5%)**, mainly due to lower direct install program revenues and reduced pass-through construction management costs[180](index=180&type=chunk) - General and administrative expenses increased by **$1.9 million (2.7%)**, primarily from restored wage reductions and increased stock-based compensation, partially offset by lower depreciation and facilities expenses[185](index=185&type=chunk)[186](index=186&type=chunk) - Net loss improved to **$8.4 million** from **$13.1 million**, driven by cost control, income tax benefits, and higher margin revenues[191](index=191&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt obligations, and cash flow activities from operating, investing, and financing | Cash Flow Activity | Six Months Ended July 2, 2021 (in thousands) | Six Months Ended July 3, 2020 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating activities | $(708) | $29,231 | | Investing activities | $(3,057) | $(2,929) | | Financing activities | $(15,226) | $(14,594) | | Net increase (decrease) in cash and cash equivalents | $(18,991) | $11,708 | - As of July 2, 2021, the company had **$9.4 million** in cash and cash equivalents, with **$80.0 million** outstanding on its Term A Loan, **$25.5 million** on its Delayed Draw Term Loan, and no outstanding borrowings on its **$50.0 million** Revolving Credit Facility (with **$4.1 million** in letters of credit issued)[192](index=192&type=chunk) - Cash flows used in operating activities were **$0.7 million** for the six months ended July 2, 2021, primarily due to changing revenue mix and start-up costs for new contracts[194](index=194&type=chunk) - Contractual obligations as of July 2, 2021, totaled **$132.5 million**, including **$105.3 million** in long-term debt, **$7.8 million** in interest payments, and **$18.7 million** in operating leases[200](index=200&type=chunk) - The company is obligated to pay up to **$12.0 million** in contingent consideration for the E3, Inc. acquisition and up to **$12.0 million** for Integral Analytics, with **$9.5 million** payable as of July 2, 2021[202](index=202&type=chunk)[203](index=203&type=chunk) [Components of Revenue and Expense](index=66&type=section&id=Components%20of%20Revenue%20and%20Expense) This section outlines the types of contracts, revenue recognition methods, and primary components of direct and general and administrative expenses - Services are provided under time-and-materials (**26% of contracts**), unit-based (**53% of contracts**), and fixed price contracts, with revenue recognized based on work performed or percentage-of-completion[210](index=210&type=chunk)[211](index=211&type=chunk) - Direct costs of contract revenue primarily include salaries, material costs, subcontractor services, and equipment expenses for revenue-producing projects[217](index=217&type=chunk) - General and administrative expenses cover marketing, support staff, management, payroll taxes, benefits, facility costs, depreciation, amortization, and professional services[219](index=219&type=chunk) [Critical Accounting Policies](index=68&type=section&id=Critical%20Accounting%20Policies) This section affirms the use of U.S. GAAP and the consistency of critical accounting policies and estimates - The company's unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts[220](index=220&type=chunk) - There have been no material changes in critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the fiscal year ended January 1, 2021[222](index=222&type=chunk) [Recent Accounting Standards](index=70&type=section&id=Recent%20Accounting%20Standards) This section refers to Note 2 for details on recently issued and adopted accounting pronouncements - For a description of recently issued and adopted accounting pronouncements, refer to Part I, Item 1, Note 2 of this Quarterly Report on Form 10-Q[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from variable-rate debt and potential LIBOR discontinuation, which could increase annual interest expense - The company is subject to interest rate risk on its variable-rate Term A Loan (**$80.0 million** outstanding), Delayed Draw Term Loan (**$25.5 million** outstanding), and Revolving Credit Facility (no borrowed amounts outstanding, **$4.1 million** in letters of credit issued) as of July 2, 2021[228](index=228&type=chunk) - A one percentage point increase in the effective interest rate would increase the company's annual interest expense by approximately **$1.1 million**[232](index=232&type=chunk) - The company faces risk from the potential discontinuation of LIBOR after June 30, 2023, which could lead to conversion of loans to Base Rate Loans or the adoption of alternative reference rates, potentially increasing interest expense by **$1.1 million** annually for a **1.0%** rate increase[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) [Item 4. Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of July 2, 2021, with no material changes to internal control over financial reporting - The company's disclosure controls and procedures were effective at a reasonable assurance level as of July 2, 2021[239](index=239&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this report[240](index=240&type=chunk) [PART II. OTHER INFORMATION](index=75&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) The company is routinely involved in legal claims and lawsuits, with management believing ultimate liability will not materially affect financial statements - The company is subject to claims and lawsuits, including professional errors or omissions, arising in the ordinary course of business[243](index=243&type=chunk) - Liabilities are accrued for probable and reasonably estimable losses, and professional liability insurance is maintained[243](index=243&type=chunk)[244](index=244&type=chunk) - Management believes that the ultimate liability from current claims and lawsuits will not materially adversely affect the company's financial statements[245](index=245&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended January 1, 2021 - No material changes to the risk factors set forth in Part I, Item 1A of the Annual Report on Form 10-K for the year ended January 1, 2021[247](index=247&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 79,070 shares of common stock to satisfy tax withholding obligations related to restricted stock vesting - The company repurchased **79,070 shares** of common stock at an average price of **$39.26 per share** during the three months ended July 2, 2021[248](index=248&type=chunk) - These repurchases were made from employees to satisfy tax withholding obligations incurred from the vesting of restricted stock[248](index=248&type=chunk) [Item 3. Defaults upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[249](index=249&type=chunk) [Item 4. Mine Safety Disclosures](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[250](index=250&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) No other information was required to be reported under this item - No other information was reported[251](index=251&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, corporate documents, and certifications - The exhibits include Stock Purchase Agreements, amendments to the Credit Agreement, corporate organizational documents, and certifications from the CEO and CFO[253](index=253&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also filed[253](index=253&type=chunk)[255](index=255&type=chunk)

Willdan Group, Inc. (NASDAQ:WLDN) Q1 2021 Earnings Conference Call May 6, 2021 5:30 PM ET Company Participants Al Kaschalk - Investor Relations Tom Brisbin - Chief Executive Officer Creighton Early - Chief Financial Officer Mike Bieber - President Conference Call Participants Craig Irwin - ROTH Capital Partners Moshe Katri - Wedbush Securities Marc Riddick - Sidoti & Company Operator Good day, ladies and gentlemen, and welcome to the Willdan Group First Quarter Fiscal Year 2021 Conference Call. Today's conf ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact Name of Registrant as Specified in Its Charter) (IRS Employer Identification No.) Delaware 14-1951112 (State or Other Jurisdiction of Incorporation or Organization) 2401 East K ...

Willdan Group, Inc. (NASDAQ:WLDN) Q4 2020 Results Conference Call March 11, 2021 5:30 PM ET Company Participants Al Kaschalk - Investor Relations Tom Brisbin - Chief Executive Officer Stacy McLaughlin - Chief Financial Officer Mike Bieber - President Conference Call Participants Moshe Katri - Wedbush Securities Craig Irwin - ROTH Capital Partners Marc Riddick - Sidoti Operator Good day, everyone, and welcome to the Willdan Group Fourth Quarter and Fiscal Year 2020 Conference Call. Today's conference is bein ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 2020 For the transition period from to Commission file number 001-33076 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 WILLDAN GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorpo ...

Financial Data and Key Metrics Changes - Total contract revenue for Q2 2020 decreased by 20% to $83.5 million from $104.4 million in Q2 2019, primarily due to decreased contract revenue from direct install programs in the energy segment and engineering and consulting segment [9] - Net revenue was $43.2 million, a decrease of 7.7% from $46.8 million in the same quarter last year [10] - The company reported an operating loss of $3.8 million for Q2 2020 compared to operating income of $2.8 million in Q2 2019 [15] - Net loss for Q2 2020 was $5.0 million, or $0.43 per diluted share, compared to net income of $1.6 million, or $0.14 per diluted share, in the same period last year [17] - Adjusted EBITDA was $7.2 million for Q2 2020, down from $7.6 million in Q2 2019, with adjusted EBITDA as a percentage of net revenue at 16.7% compared to 16.2% in the prior year [15] Business Line Data and Key Metrics Changes - Within the energy segment, net revenue decreased by 10.2%, while the engineering and consulting segment saw a 1.8% decrease in net revenue [10][11] - Direct costs of contract revenue were 65% of total contract revenue in Q2 2020, down from 71% in Q1 2020 and 70% in the same period last year [12] Market Data and Key Metrics Changes - The company experienced a significant slowdown in business, with about 40% of operations halted due to COVID-19 lockdowns, primarily affecting utility direct install business [24] - Despite the challenges, 60% of the company's work was not affected, allowing employees to work from home [25] Company Strategy and Development Direction - The company is focusing on cash collection and has successfully generated $12.8 million in cash flow from operations in Q2 2020, an increase of 536% from the same period last year [19] - Management has taken measures to align costs with declining revenues, including furloughs and salary reductions, while maintaining health benefits for laid-off employees [26] - The company anticipates growth and plans to borrow additional amounts under its credit facility to support working capital needs as COVID-19 restrictions ease [21] Management's Comments on Operating Environment and Future Outlook - Management noted that all contracts, except for those with LADWP, have restarted, and no contracts have been canceled, only delayed [31] - The company expects to ramp up operations as schools and other facilities reopen, with a focus on energy efficiency programs [35] - Management expressed optimism about the future, stating that performance is expected to improve in the second half of the year [38] Other Important Information - The company amended its credit agreement to provide increased flexibility under debt covenants through Q2 2021 [20] - The company is actively engaged in legislation that will provide energy efficiency stimulus to small business utility programs across the country [35] Q&A Session Summary Question: What is the current impact of lockdowns on business? - Management indicated that LADWP is the only closed utility contract, with all other utility contracts across the nation open and running [41] Question: How quickly can the company ramp up hiring after furloughs? - Approximately 50 out of 350 furloughed employees remain on furlough, and the company has been able to bring back employees quickly [45] Question: What is the outlook for Q3 and Q4? - Management expects increased revenue in Q3, with margins improving slightly, while Q4 may remain flat depending on the pace of reopening [52] Question: How is the integrated analytics software business performing? - The pipeline looks good, with several small wins in Q2 and ongoing negotiations for larger projects [56] Question: What are the long-term acquisition goals of the company? - The acquisition pipeline has improved due to recessionary pressures, and the company is cautiously re-engaging with potential targets [85]