Willdan(WLDN) - 2024 Q4 - Annual Report

Contract Revenue and Recognition - Contract revenue is recognized based on the percentage of completion method, primarily for fixed price contracts, which involves a high degree of subcontracted fixed price effort[279]. - The Company recognizes revenue primarily over time, with fixed price contracts using the percentage-of-completion method based on direct costs incurred to date[383]. - Approximately 2.0% to 3.0% of the Company's consolidated contract revenue may come from segmented contracts with multiple performance obligations[386]. - The company evaluates whether contracts should be combined or segmented, which can affect revenue and profit recognition[295]. - The company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method[303]. - Adjustments in estimated profit on contracts are recognized under the cumulative catch-up method, impacting profit in the period identified[394]. Financial Performance - Contract revenue for fiscal year 2024 increased to $565,798, up 10.9% from$ 510,095 in 2023[354]. - Gross profit rose to $202,782 in 2024, representing a 12.8% increase from$ 179,767 in 2023[354]. - Net income for 2024 was $22,570, a significant increase compared to$ 10,926 in 2023, marking a 106.5% growth[354]. - Earnings per share (EPS) for 2024 was $1.63, up from$ 0.82 in 2023, reflecting a 98.8% increase[354]. - The company reported a comprehensive income of $22,920 for 2024, compared to$ 10,262 in 2023, representing a 123.5% increase[354]. - Cash flows from operating activities for 2024 were $72,073, compared to$ 39,214 in 2023, indicating an increase of 83.8%[357]. Assets and Liabilities - As of December 27, 2024, total assets increased to $464.86 million from$ 415.59 million as of December 29, 2023, representing a growth of approximately 11.5%[352]. - Cash and cash equivalents rose significantly to $74.16 million, up from$ 23.40 million, indicating a substantial increase of approximately 216.5%[352]. - Accounts receivable decreased to $65.56 million from$ 69.68 million, reflecting a decline of about 5.4%[352]. - Total current liabilities increased to $137.68 million from$ 114.68 million, marking an increase of approximately 20.0%[352]. - Stockholders' equity grew to $234.34 million from$ 199.85 million, an increase of approximately 17.3%[352]. - The allowance for doubtful accounts increased from $866,000 to$ 1.31 million, reflecting a rise of approximately 51.0%[352]. Debt and Interest Rate Management - The company has $90.0 million outstanding under its Term Loan, with no borrowed amounts under its Revolving Credit Facility as of December 27, 2024[331]. - A one percentage point increase in the effective interest rate would change the company's annual interest expense by approximately$ 0.4 million in fiscal year 2024[332]. - The company is subject to interest rate risk due to its Term Loan and borrowings under its Revolving Credit Facility, which bear interest at variable rates[331]. - The company entered into an interest rate swap agreement for a notional amount of $50.0 million, fixing the variable interest rate at 4.77% until September 29, 2026[334]. - The Company’s composite annual interest rate, excluding upfront fees and issuance cost amortization, was 6.4% as of December 27, 2024[461]. Acquisitions and Goodwill - During fiscal year 2024, the company acquired substantially all of the assets of Enica, with fair value estimates to be finalized within twelve months[319]. - Goodwill increased to$ 140.99 million from $131.14 million, representing a growth of approximately 7.4%[352]. - Goodwill is tested for impairment annually, with losses recognized if the carrying amount exceeds fair value[411]. - The Company measures goodwill as the excess of consideration transferred over the net identifiable assets acquired and liabilities assumed at the acquisition date[418]. Operational Challenges - The company has experienced higher costs of materials and delays in the supply chain, although historically operations have not been materially impacted by inflation[276]. - Significant price increases in equipment and supply chain disruptions could materially impact results of operations and financial condition[277]. - Contracts may be subject to renegotiation upon renewal, which could impact profitability, particularly with major clients[283]. General and Administrative Expenses - General and administrative expenses include costs related to marketing, management, and administrative personnel, as well as facility costs and professional services[287]. - Total general and administrative expenses increased to$ 171,429 in 2024, up 8.7% from $157,693 in 2023[354]. - Stock-based compensation expense for 2024 was$ 7,388, up from $5,323 in 2023, reflecting an increase of 38.8%[354]. Compliance and Reporting - The Company has a structured approach to revenue recognition, ensuring compliance with ASC 606 and accurately reflecting performance obligations[380]. - The Company adopted ASU 2023-07 for segment reporting effective for its fiscal year 2024, enhancing disclosures related to significant segment expenses[434]. - The Company performs ongoing assessments to determine the primary beneficiary of variable interest entities, ensuring compliance with ASC 810[372].