Willdan(WLDN) - 2024 Q3 - Quarterly Report

Financial Performance - Contract revenue for the three months ended September 2024 was $158.252 million, compared to$132.738 million for the same period in 2023, representing a 19.2% increase[16] - Gross profit for the three months ended September 2024 was $51.601 million, up 18.8$43.428 million in the same period last year[16] - Net income for the three months ended September 2024 was $7.346 million, a significant increase from$1.566 million in the same period in 2023[16] - Diluted earnings per share for the three months ended September 2024 was $0.51, compared to$0.11 in the same period last year[16] - Net income for the nine months ended September 2024 was $14.882 million, a substantial increase from$2.895 million in the same period in 2023[16] - Total comprehensive income for the three months ended September 2024 was $6.668 million, compared to$1.566 million in the same period last year[16] - Net income for the nine months ended September 29, 2023, was $2,895 million, compared to$14,882 million for the same period in 2024[22] - Net income for the three months ended September 27, 2024, was $7.346 million, compared to$1.566 million for the same period in 2023[90] - Net income for the nine months ended September 27, 2024, was $14.882 million, compared to$2.895 million for the same period in 2023[90] - Net income for the three months ended September 27, 2024 was $7.346 million, with basic EPS of$0.53 and diluted EPS of $0.51[108] - Net income for the nine months ended September 27, 2024 was$14.882 million, with basic EPS of $1.08 and diluted EPS of$1.05[108] - Contract revenue for Q3 2024 increased by 19.2% to $158.252 million compared to$132.738 million in Q3 2023[125] - Gross profit for Q3 2024 rose by 18.8% to $51.601 million, with a gross margin of 32.6$7.346 million compared to $1.566 million in Q3 2023[125] - Total contract revenue for the nine months ended September 2024 increased by 19.0$421.737 million compared to $354.418 million in the same period of 2023[128] - Net income for the nine months ended September 2024 jumped by 414.1$14.882 million compared to $2.895 million in the same period of 2023[128] - Net income for Q3 2024 was$7.3 million, a significant increase from $1.6 million in Q3 2023, driven by higher operating income and lower tax rates[146] - Net income for the nine months ended September 27, 2024, was$14.9 million, up from $2.9 million in the same period in 2023, due to higher operating income and lower tax rates[159] Expenses and Costs - Total general and administrative expenses for the three months ended September 2024 were$42.927 million, up 8.4% from $39.591 million in the same period in 2023[16] - Stock-based compensation expense for the three months ended September 2024 was$2.020 million, compared to $1.244 million in the same period last year[16] - Total direct costs of contract revenue for the nine months ended September 2024 were$273.914 million, up 19.6% from $229.076 million in the same period last year[16] - Stock-based compensation expense for the nine months ended September 29, 2023, was$4,064 million, compared to $5,355 million for the same period in 2024[22] - The company made matching contributions of$2.1 million to its defined contribution plan for the nine months ended September 27, 2024, compared to $1.9 million for the same period in 2023[82] - The company recorded an income tax expense of$0.2 million and $1.9 million for the three and nine months ended September 27, 2024, respectively[106] Revenue Recognition and Contracts - The company recognizes revenue using the percentage-of-completion method for fixed price contracts, based on the ratio of direct costs incurred-to-date to estimated total direct costs at completion[35] - Revenue on time-and-materials contracts is recognized based on actual hours incurred at contractually agreed rates per hour, including reimbursable costs[36] - Segmented contracts, which may comprise 2.0$18.9 million as of September 27, 2024, and $14.3 million as of December 29, 2023[53] - Revenue from fixed-price contracts for the three months ended September 27, 2024, was$75.052 million, with Energy contributing 73.596 million and Engineering & Consulting contributing 1.456 million[91] - Revenue from government clients for the three months ended September 27, 2024, was $83.270 million, with Energy contributing$61.115 million and Engineering & Consulting contributing $22.155 million[91] - Domestic revenue for the three months ended September 27, 2024, was$158.252 million, with no material revenue from foreign operations[91][95] - Fixed price contracts accounted for $75.052 million of total revenue in Q3 2024, representing 47.4$158.252 million, with no material revenue from foreign operations[130] - The company's contracts as of September 27, 2024, consist of 18% time-and-materials, 38% unit-based, and 44% fixed price contracts, compared to 21%, 39%, and 40% respectively as of September 29, 2023[179] Segment Performance - The company operates in two financial reporting segments: Energy and Engineering and Consulting[24] - Contract revenue for the three months ended September 27, 2024, was $158.252 million, with Energy contributing$134.036 million and Engineering & Consulting contributing $24.216 million[90] - Segment profit before income tax expense for the three months ended September 27, 2024, was$7.503 million, a significant increase from $2.279 million in the same period in 2023[90] - Contract revenue for the nine months ended September 27, 2024, was$421.737 million, with Energy contributing 352.634 million and Engineering & Consulting contributing 69.103 million[90] - Segment profit before income tax expense for the nine months ended September 27, 2024, was $16.745 million, up from$4.607 million in the same period in 2023[90] - Energy segment revenues for the three months ended September 27, 2024 were 22.1% derived from two customers, Southern California Edison and Clark County School District[98] - For the nine months ended September 27, 2024, no single customer accounted for 10% or more of the Energy segment revenues[98] - Energy segment revenue for Q3 2024 was $134.036 million, while Engineering and Consulting segment revenue was$24.216 million[130] - Government clients contributed $83.270 million to total revenue in Q3 2024, representing 52.6$65.050 million to total revenue in Q3 2024, representing 41.1% of total contract revenue[130] - Energy segment contract revenue grew by $23.0 million (20.7$2.5 million (11.6%) in Q3 2024, driven by higher demand for client services[136] - Energy segment contract revenue for the nine months ended September 27, 2024, grew by $60.3 million (20.6$24,112 million, compared to $38,611 million for the same period in 2024[22] - The company's cash and cash equivalents totaled$53.106 million as of September 27, 2024, compared to $23.397 million as of December 29, 2023[55] - Cash flows used in financing activities were$2.9 million for the nine months ended September 27, 2024, compared to $21.6 million for the same period in 2023[167] - The company repaid$5.6 million under its Term Loan, used $1.2 million for withholding taxes on stock grants, and made$1.0 million in principal payments on finance leases during the nine months ended September 27, 2024[167] - The company received $2.8 million from sales of common stock under the employee stock purchase plan and$2.4 million from stock option exercises during the nine months ended September 27, 2024[167] - As of September 27, 2024, the company had $91.894 million in debt obligations, with$10.137 million due in less than 1 year and $81.757 million due in 1-3 years[173] - The company's total contractual cash obligations as of September 27, 2024, were$122.445 million, including $11.821 million in interest payments on outstanding debt[173] - As of September 27, 2024, the company had$92.5 million outstanding under its Term Loan and no borrowed amounts under its Revolving Credit Facility[194] - The company's Term Loan and Revolving Credit Facility mature on September 29, 2026, with the Term Loan amortizing at 7.5% per annum for the first year and 10.0% per annum for the second and third years[196] - The company had $53.1 million in cash and cash equivalents as of September 27, 2024, held in business checking accounts with BMO Bank, N.A.[193] - The company's borrowings under its Credit Agreement bear interest at either a Base Rate or the adjusted Secured Overnight Financing Rate (SOFR), plus an applicable margin ranging from 0.75$50.0 million notional amount with a fixed rate of 4.77%, expiring on September 29, 2026[197] - A one percentage point increase in the effective interest rate would change the company's annual interest expense by approximately $1.1 million in fiscal year 2024[198] Assets and Liabilities - Balance of retained earnings as of September 27, 2024 was$29.459 million, compared to $14.577 million at December 29, 2023[19] - The company's total assets increased from$181,502 million at December 30, 2022, to $191,073 million at September 29, 2023[21] - Retained earnings grew from$3,651 million at December 30, 2022, to $6,546 million at September 29, 2023[21] - Equipment and leasehold improvements, net increased to$28.955 million as of September 27, 2024, compared to $27.097 million as of December 29, 2023[56] - Total accrued liabilities rose to$58.521 million as of September 27, 2024, up from $54.129 million as of December 29, 2023[57] - Goodwill remained unchanged at$131.144 million as of September 27, 2024, with no additions or adjustments during the period[58] - Total intangible assets stood at $99.814 million as of September 27, 2024, with accumulated amortization of$73.273 million[59] - Total debt decreased to $92.637 million as of September 27, 2024, from$98.452 million as of December 29, 2023[68] - The company's composite interest rate was 7.2% as of September 27, 2024, excluding upfront fees, undrawn fees, and issuance cost amortization[69] - Right-of-use assets increased to $14.366 million as of September 27, 2024, from$12.465 million as of December 29, 2023[76] - Total lease liabilities increased to $16.102 million as of September 27, 2024, from$14.295 million as of December 29, 2023[76] - Weighted average remaining lease term for operating leases decreased to 3.05 years as of September 27, 2024, from 3.43 years as of December 29, 2023[76] - Weighted average discount rate for operating leases increased to 6.91% as of September 27, 2024, from 6.09% as of December 29, 2023[76] - Cash paid for operating leases was $4.707 million for the nine months ended September 27, 2024, compared to$4.318 million for the same period in 2023[77] - Total lease payments for operating leases as of September 27, 2024, are $18.056 million, with imputed interest of$1.954 million[78] Leases - The company leases office facilities and equipment under long-term, non-cancellable operating and finance leases expiring through 2029[71] - Financing lease assets are amortized over the life of the lease or the leased asset, with interest included in interest expense[73] - Operating lease cost for the three months ended September 27, 2024, was $1.522 million, compared to$1.464 million for the same period in 2023[75] - Total net lease cost for the three months ended September 27, 2024, was $1.946 million, compared to$1.802 million for the same period in 2023[75] Acquisitions and Investments - The company acquired Enica Engineering for a potential maximum purchase price of $18.0 million, with$12.0 million paid in cash on the closing date[116] - Enica's financial information will be included within the company's Energy segment starting in the fourth quarter of fiscal year 2024[118] - The company expects to finalize the purchase price allocation related to the Enica acquisition by the end of the second quarter of fiscal year 2025[118] Regulatory and Compliance - The company is evaluating the impact of ASU 2023-09 on its consolidated financial statements, which requires enhanced income tax disclosures[29] - The company is also assessing the implications of ASU 2023-07, which expands segment reporting requirements[30] - The company's disclosure controls and procedures were effective as of September 27, 2024, at a reasonable assurance level[200] - No material changes in internal control over financial reporting occurred during the reporting period[201] - The company accrues an undiscounted liability for loss contingencies where the loss is probable and the amount can be reasonably estimated[204] Market and Customer Concentration - The top 10 customers accounted for 49.1% of consolidated contract revenue for the three months ended September 27, 2024, and 49.5% for the nine months ended September 27, 2024[96] - Services provided to clients in California accounted for 42.2% and 43.3% of the company's consolidated contract revenue for the three and nine months ended September 27, 2024, respectively[100] - Services provided to clients in New York accounted for 21.0% and 23.7% of the company's consolidated contract revenue for the three and nine months ended September 27, 2024, respectively[100] Operational Challenges - The company's operations have not been materially impacted by inflation historically due to the average duration of projects and ability to negotiate prices[176] - The company has experienced higher costs of materials and supply chain delays, though not materially impacting results of operations and financial condition[177]