Willdan Group Inc

Previous wording

The following table sets forth, for the periods indicated, certain information derived from our consolidated statements of comprehensive income(1):

Current wording

The following table sets forth, for the periods indicated, certain information derived from our condensed consolidated statements of comprehensive income(1):

Previous wording

Contract revenue. Consolidated contract revenue increased $19.9 million, or 19.4%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023, due to incremental revenues in both our Energy segment and our Engineering and Consulting segment.

Current wording

Contract revenue. Consolidated contract revenue increased $21.9 million, or 18.4%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023, due to incremental revenues in both our Energy segment and our Engineering and Consulting segment.

Previous wording

Contract revenue in our Energy segment increased $17.5 million, or 21.0%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily as a result of increases in construction management revenues and utility program revenues.

Current wording

Contract revenue in our Energy segment increased $19.8 million, or 20.2%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily as a result of increases in construction management and utility program revenues.

Previous wording

Contract revenue in our Engineering and Consulting segment increased $2.4 million, or 12.6%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily due to increased demand for services provided to our clients.

Current wording

Contract revenue in our Engineering and Consulting segment increased $2.1 million, or 9.9%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily due to increased demand for services provided to our clients.

Previous wording

Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $13.7 million, or 22.4%, for the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily as a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages decreased to 17.6% in the three months ended March 29, 2024 from 19.9% in the three months ended March 31, 2023, while subcontractor services and other direct costs increased to 43.7% in the three months ended March 29, 2024 from 39.9% in the three months ended March 31, 2023.

Current wording

Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $13.7 million, or 17.5%, for the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily as a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages decreased to 16.8% in the three months ended June 28, 2024 from 17.9% in the three months ended June 30, 2023, while subcontractor services and other direct costs increased to 48.6% in the three months ended June 28, 2024 from 48.0% in the three months ended June 30, 2023.

Previous wording

Direct costs of contract revenue in our Energy segment increased $12.9 million, or 24.7%, for the three months ended March 29, 2024, compared to the three months ended March 31, 2023. Direct costs of contract revenue for the Engineering and Consulting segment increased $0.8 million, or 9.7%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023.

Current wording

Direct costs of contract revenue in our Energy segment increased $13.0 million, or 19.0%, for the three months ended June 28, 2024, compared to the three months ended June 30, 2023. Direct costs of contract revenue for the Engineering and Consulting segment increased $0.7 million, or 7.5%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023.

Previous wording

Subcontractor services and other direct costs increased by $12.6 million, or 30.9%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily due to the increase in construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $1.1 million, or 5.4%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily as aresult of the increases in contract revenue as described above.

Current wording

Subcontractor services and other direct costs increased by $11.4 million, or 20.0%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily due to the increase in construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $2.3 million, or 11.0%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily as aresult of the increases in contract revenue as described above.

Previous wording

Gross Profit. Gross profit increased 14.9% to $47.4 million, or 38.7% gross margin, for the three months ended March 29, 2024, compared to gross profit of $41.3 million, or 40.2% gross margin, for the three months ended March 31, 2023. The decrease in our gross margin was primarily driven by changes in the mix of revenues as described above.

Current wording

Gross Profit. Gross profit increased 20.1% to $48.8 million, or 34.6% gross margin, for the three months ended June 28, 2024, compared to gross profit of $40.6 million, or 34.1% gross margin, for the three months ended June 30, 2023. The increase in our gross margin was primarily driven by changes in the mix of revenues as described above.

Previous wording

General and administrative expenses. General and administrative (“G&A”) expenses increased $4.8 million, or 12.9%, in the three months ended March 29, 2024, compared to the three months ended March 31, 2023. G&A expenses consisted of an increase of $3.2 million in the Energy segment combined with an increase of $1.8 million in the Engineering and Consulting segment, partially offset by a decrease of $0.2 million in unallocated corporate expenses.

Current wording

General and administrative expenses. General and administrative (“G&A”) expenses increased $4.2 million, or 11.0%, in the three months ended June 28, 2024, compared to the three months ended June 30, 2023. G&A expenses consisted of an increase of $2.2 million in the Energy segment combined with an increase of $1.6 million in the Engineering and Consulting segment, and an increase of $0.4 million in unallocated corporate expenses.

Previous wording

Within G&A expenses, the increase of $4.1 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $1.3 million in other general and administrative expenses was partially offset by a decrease of $0.6 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, and higher fringe benefit costs. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.

Current wording

Within G&A expenses, the increase of $3.6 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $0.7 million in stock-based compensation, and the increase of $0.6 million in other general and administrative expenses was partially offset by a decrease of $0.5 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, and higher fringe benefit costs. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.

Previous wording

Income (loss) from operations. Operating income increased 33.6% to $5.4 million for the three months ended March 29, 2024, compared to an operating income of $4.0 millionfor the three months ended March 31, 2023, as a result of the factors noted above.

Current wording

Income (loss) from operations. Operating income increased to $6.4 million for the three months ended June 28, 2024, compared to an operating income of $2.5 millionfor the three months ended June 30, 2023, as a result of the factors noted above.

Previous wording

Total other expense, net. Total other expense, net, decreased $0.9 million, or 38.4%, for the three months ended March 29, 2024, compared to the three months ended March 31, 2023, primarily due to increased interest income related to our higher cash balances, combined with lower interest expense resulting from the reduced interest rate margin under our credit facilities.

Current wording

Total other expense, net. Total other expense, net, decreased $0.7 million, or 38.2%, for the three months ended June 28, 2024, compared to the three months ended June 30, 2023, primarily due to increased interest income related to our higher cash balances, combined with lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities.

Previous wording

Income tax expense (benefit). We recorded an income tax expense of $1.0 million for the three months ended March 29, 2024, an effective tax rate of 25.1% on income before income tax expense, compared to an income tax expense of $0.8 million for the three months ended March 31, 2023, an effective tax rate of 44.8% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions.

Current wording

Income tax expense (benefit). We recorded an income tax expense of $0.7 million for the three months ended June 28, 2024, an effective tax rate of 13.5% on income before income tax expense, compared to an income tax expense of $0.2 million for the three months ended June 30, 2023, an effective tax rate of 38.0% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions.

Previous wording

Net income (loss). Our net income was $2.9 million for the three months ended March 29, 2024, as compared to a net income of $0.9 million for the three months ended March 31, 2023. The increase in net income was primarily attributable to the increase in income from operations combined with the decrease in total other expense, net and the lower effective tax rate.

Current wording

Net income (loss). Our net income was $4.6 million for the three months ended June 28, 2024, as compared to a net income of $0.4 million for the three months ended June 30, 2023. The increase in net income was primarily attributable to the increase in income from operations combined with the decrease in total other expense, net and the lower effective tax rate.

Previous wording

As of March 29, 2024, we had a fully drawn $100 million term loan with $96.3 million outstanding (the “Term Loan”), and a $50.0 million Revolving Credit Facility with no borrowed amounts and $1.6 million in letters of credit issued, each scheduled to mature on September 29, 2026. In addition, as of March 29, 2024, we had $46.9 million of unrestricted cash and cash equivalents.

Current wording

As of June 28, 2024, we had a fully drawn $100 million term loan with $94.4 million outstanding (the “Term Loan”), and a $50.0 million Revolving Credit Facility with no borrowed amounts and $1.6 million in letters of credit issued, each scheduled to mature on September 29, 2026. In addition, as of June 28, 2024, we had $44.3 million of unrestricted cash and cash equivalents.

Previous wording

Cash flows provided by operating activities were $26.9 million for the three months ended March 29, 2024, as compared to cash flows provided by operating activities of $17.3 million for the three months ended March 31, 2023. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for the three months ended March 29, 2024, resulted primarily from the increase in earnings and lower working capital requirements due to a reduction in revenues from the three months ended December 29, 2023 to the three months ended March 29, 2024. Cash flows provided by operating activities for the three months ended March 31, 2023, resulted primarily from the changing mix of revenues, combined with lower working capital requirements due to a reduction in revenues from the three months ended December 30, 2022 to the three months ended March 31, 2023.

Current wording

Cash flows provided by operating activities were $27.8 million for the six months ended June 28, 2024, as compared to cash flows provided by operating activities of $18.9 million for the six months ended June 30, 2023. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for the six months ended June 28, 2024, resulted primarily from the increase in earnings and lower working capital requirements. Cash flows provided by operating activities for the six months ended June 30, 2023, resulted primarily from the increase in earnings, combined with lower working capital requirements.

Previous wording

Cash flows used in investing activities were $2.0 million for the three months ended March 29, 2024 as compared to cash flows used in investing activities of $3.5 million for the three months ended March 31, 2023. Cash flows used in investing activities for the three months ended March 29, 2024 and for the three months ended March 31, 2023, were primarily due to cash paid for the development of software and the purchase of computers and equipment.

Current wording

Cash flows used in investing activities were $4.1 million for the six months ended June 28, 2024, as compared to cash flows used in investing activities of $5.7 million for the six months ended June 30, 2023. Cash flows used in investing activities for the six months ended June 28, 2024 and for the six months ended June 30, 2023, were primarily due to cash paid for the development of software and the purchase of computers and equipment.

Previous wording

Cash flows used in financing activities were $1.5 million for the three months ended March 29, 2024, as compared to cash flows used in financing activities of $15.5 million for the three months ended March 31, 2023. Cash flows used in financing activities for the three months ended March 29, 2024 were primarily attributable to the repayments of $1.9 million under our Term Loan, and $0.8 million cash used to pay withholding taxes on stock grants, partially offset by $1.4 million of proceeds from sales of common stock under employee stock purchase plan. Cash flows used in financing activities for the three months ended March 31, 2023 were primarily attributable to the disbursement of the $10.7 million in restricted cash for utility rebate incentives and repayments of $5.3 million under our term loan facility and revolving line of credit.

Current wording

Cash flows used in financing activities were $2.9 million for the six months ended June 28, 2024, as compared to cash flows used in financing activities of $19.0 million for the six months ended June 30, 2023. Cash flows used in financing activities for the six months ended June 28, 2024 were primarily attributable to the repayments of $3.8 million under our Term Loan, $0.8 million cash used to pay withholding taxes on stock grants, and $0.7 million principal payments on finance leases, partially offset by $1.4 million of proceeds from sales of common stock under employee stock purchase plan and $1.1 million in proceeds from stock option exercise. Cash flows used in financing activities for the six months ended June 30, 2023 were primarily attributable to the disbursement of the $10.7 million in restricted cash for utility rebate incentives, repayments of $9.0 million under our term loan facility and revolving line of credit, and payments of $4.0 million for contingent consideration related to prior acquisitions, partially offset by borrowings of $5.0 million under our revolving line of credit.

Previous wording

We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.

Current wording

We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities

Previous wording

We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of March 29, 2024, 20% of our contracts are time-and-materials contracts, 42% are unit-based contracts, and 38% are fixed price contracts, compared to 22% are time-and-materials contracts, 47% are unit-based contracts, and 31% are fixed price contracts, as of March 31, 2023.

Current wording

We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of June 28, 2024, 19% of our contracts are time-and-materials contracts, 39% are unit-based contracts, and 42% are fixed price contracts, compared to 21% are time-and-materials contracts, 42% are unit-based contracts, and 37% are fixed price contracts, as of June 30, 2023.

Previous wording

Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability on that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause. While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with Los Angeles Department of Water and Power and Duke Energy Corp., may have a material effect on our consolidated operations.

Current wording

Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability on that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause. While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with