Willdan(US:WLDN)2020-08-08 09:33Financial 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]