美國
證券交易委員會
華盛頓特區20549
表格
根據1934年證券交易法第13或15(d)條，本季度報告 |
截至季度結束日期的財務報告
或者
根據1934年證券交易法第13或15（d)條的轉型報告 |
過渡期從到
佣金文件號
（按其章程規定的確切註冊人名稱）
（註冊或組織的）提起訴訟的州或其他司法管轄區（如適用） | （內部稅務服務僱主識別號碼） | |
(主要領導機構的地址) | (郵政編碼) |
註冊人電話號碼，包括區號： (
在法案第12(b)條的規定下注冊的證券：
請在覈對標記中得出下列內容：(1)在過去12個月內（或註冊者規定的較短期限內必須提交此類報告）依據1934年證券交易所法案第13或15(d)款提交了所有要求提交的報告，(2)在過去90天內一直受到此類提交要求的制約。☒否☐
請通過複選標記表示，註冊者在過去12個月內（或註冊者需要提交此類文件的較短期間內）是否已根據S-t法規第405條（本章第232.405條）要求提交過每個交互數據文件。
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速文件者◻ | ||
非加速歸檔企業◻ | 小型報告公司 | |
新興成長公司 | ||
如果是新興成長型企業，請勾選複選標記，表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 ◻
是 否根據《證券交易法》第120億2條。是
截至2024年10月30日，共有
關於前瞻性信息的警告聲明
本季度的10-Q表格（以下簡稱「10-Q」）包含構成前瞻性聲明的聲明，根據1995年修正版《私人證券訴訟改革法》的定義。這些聲明涉及我們的業務、運營和財務表現和狀況，以及我們的業務運營和財務表現和狀況的計劃、目標和期望，這些都受到風險和不確定性的影響。除本10-Q中包含的歷史事實之外的所有聲明皆屬於前瞻性聲明。這些聲明可能包括諸如「目標」、「預計」、「假設」、「相信」、「可能有」、「可能」、「由於」、「估計」、「預期」、「目標」、「打算」、「可能」，「可能」，「目標」，「計劃」，「潛在」，「處於」，「預測」，「應該」，「目標」,「將」，「將」等詞語，以及在討論未來經營或財務表現或其他事件或趨勢的時機或性質時所使用的其他具有類似含義的詞語和術語。例如，我們就未來業務運營、增長或倡議、策略的計劃和目標所作的所有聲明屬於前瞻性聲明。
這些前瞻性聲明基於我們對業務和所處行業以及我們管理層的信念和假設的當前預期、估計、預測和投影。我們制定許多前瞻性聲明是根據我們自己的營運預算和預測，這些預算和預測基於許多詳細的假設。雖然我們認爲我們的假設是合理的，但我們警告說，預測已知因素的影響非常困難，我們無法預料所有可能影響我們實際結果的因素。
所有我們的前瞻性聲明均受到風險和不確定性的影響，這可能導致我們的實際結果與我們的預期有重大差異。可能導致實際結果與我們的預期有重大差異的重要因素包括但不限於：
| ● | 我們有能力及時完成項目； |
| ● | 我們有能力在高度競爭的能源服務市場成功競爭，這在2023財年佔我們營業收入的84%； |
| ● | 我們依賴於前十大客戶的工作，這在2023財年佔我們合同收入的53%； |
| ● | 州、地方和區域經濟以及政府預算的變化； |
| ● | 我們有能力贏得新合同，續簽現有合同，並通過競標過程有效地競爭獲得合同; |
| ● | 我們有能力按時償還債務的本金和利息，並遵守債務協議中包含的財務契約; |
| ● | 我們有能力管理供應鏈限制、勞動力短缺、利率上升和通貨膨脹上升; |
| ● | 我們有能力獲得融資，並在債務到期時對既有債務進行再融資; |
| ● | 我們成功整合收購和執行增長策略的能力；和 |
| ● | 我們吸引和留住管理、技術和行政人才的能力。 |
上述並非導致實際結果與我們預期不符的所有因素或事件的完整列表；我們無法預測所有這些因素。所有歸屬於我們或代表我們行事的口頭或書面前瞻性聲明均已在本季度10-Q表格中的相關事項，以及第I部分，第1A條「風險因素」，「管理對財務狀況和業績的討論」以及我們截至2023年12月29日的財年年度報告的其他地方，明確受到其他警示性陳述的全面限制，鑑於這些披露可能會不時進行修訂、補充或取代。
1
根據我們提供給證券交易委員會的其他報告，包括隨後的年度報告10-k、季度報告10-Q、8-k表格的現行報告以及公開通信，請評估本季度10-Q表格中提出的所有前瞻性聲明，以及在這些風險和不確定性的背景下的其他情況。
敦促潛在投資者和其他讀者在評估前瞻性聲明時仔細考慮這些因素，並警告不要過分依賴我們所作的任何前瞻性聲明。這些前瞻性聲明僅適用於本季度10-Q表格的日期，並不保證未來績效或發展，並涉及許多情況超出我們控制範圍的已知和未知風險、不確定性和其他因素。除非法律要求，我們不承擔更新或修訂任何前瞻性聲明的公開義務，無論是因爲新信息、未來發展或其他原因。
2
第一部分，財務信息。
項目1.基本報表
威爾丹集團，公司及其子公司
簡明綜合資產負債表S
2024年4月30日
(未經審計)
| 9月27日, |
| 12月29日 | ||||
2024 | 2023 | ||||||
資產 | |||||||
流動資產： | |||||||
現金及現金等價物 | $ | | $ | | |||
受限現金 | | | |||||
應收賬款，扣除壞賬準備 $ |
| |
| | |||
合同資產 |
| |
| | |||
其他應收款 |
| |
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預付費用和其他流動資產 |
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總流動資產 |
| |
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商譽 | | | |||||
租賃資產 | | | |||||
其他無形資產，淨額 | | | |||||
其他 |
| |
| | |||
遞延所得稅，淨額 | | | |||||
總資產 | $ | | $ | | |||
負債和股東權益 | |||||||
流動負債: | |||||||
應付賬款 | $ | | $ | | |||
應計負債 |
| |
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合同負債 |
| |
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應付票據 |
| |
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融資租賃義務 | | | |||||
租賃負債 | | | |||||
流動負債合計 |
| |
| | |||
應付票據，減去流動部分 | | | |||||
融資租賃負債，減去當前部分 |
| |
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租賃負債，減去流動部分 | | | |||||
其他非流動負債 | | | |||||
負債合計 |
| |
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承諾和 contingencies | |||||||
股東權益: | |||||||
優先股，$ |
|
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普通股，$ |
| |
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額外實收資本 |
| |
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累計其他綜合收益(虧損) | ( | ( | |||||
保留盈餘 |
| |
| | |||
股東權益總額 |
| |
| | |||
負債和股東權益總額 | $ | | $ | | |||
百萬美元。
3
威登集團公司及其子公司
基本報表合併陳述 綜合收益
（以千爲單位，每股金額除外）
(未經審計)
三個月之內結束 | 九個月結束 | |||||||||||
9月27日, | 2023年9月29日 | 9月27日, | 2023年9月29日 | |||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
合同營業收入 | $ | | $ | | $ | | $ | | ||||
合同收入的直接成本（包括直接相關的折舊和攤銷）： | ||||||||||||
工資薪金 |
| |
| |
| |
| | ||||
分包服務和其他直接成本 |
| |
| |
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合同營業收入的總直接成本 |
| |
| |
| |
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毛利潤 |
| |
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一般和管理費用： | ||||||||||||
工資和薪金，工資稅和員工福利 |
| |
| |
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| | ||||
設施和設施相關 |
| |
| |
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| | ||||
以股票爲基礎的報酬計劃 |
| |
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折舊和攤銷 |
| |
| |
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其他 |
| |
| |
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總管理費用 |
| |
| |
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經營收益(損失) |
| |
| |
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其他收入（支出）： | ||||||||||||
利息費用，淨額 |
| ( |
| ( |
| ( |
| ( | ||||
其他，淨額 |
| |
| |
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其他支出合計，淨值 |
| ( |
| ( |
| ( |
| ( | ||||
所得稅前（淨）收益 |
| |
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所得稅（收益）費用 |
| |
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| | | | | ||||||||
其他綜合收益（損失）： | ||||||||||||
衡量中的非實現收益（損失），稅後 | ( | — | ( | — | ||||||||
綜合收益（損失） | $ | | $ | | $ | | $ | | ||||
每股收益（虧損）： | ||||||||||||
基本 | $ | | $ | | $ | | $ | | ||||
稀釋 | $ | | $ | | $ | | $ | | ||||
| ||||||||||||
基本 |
| |
| |
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| | ||||
稀釋 |
| |
| |
| |
| | ||||
百萬美元。
4
威爾丹集團，公司及其子公司
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
（以千爲單位）
(未經審計)
累積的 | |||||||||||||||||
額外的 | 其他 | ||||||||||||||||
普通股 | 實收資本 | 綜合 | 保留的 | ||||||||||||||
| 股份 |
| 數量 |
| 資本 |
| 收益（損失） |
| 收益 |
| 總費用 | ||||||
2023年12月29日的餘額 |
| $ | $ | $ | ( | $ | $ | ||||||||||
員工股票購買計劃相關發行的普通股股票 |
| | | | — | — | | ||||||||||
與激勵股票計劃相關的普通股份發行 | | — | | — | — | | |||||||||||
股票授予稅款使用的股份 |
| ( | ( | ( | — | — | ( | ||||||||||
發行受限股票獎勵和單位 | | | ( | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合同未實現收益 | — | — | — | | — | | |||||||||||
截至2024年3月29日的餘額 |
| $ | $ | $ | ( | $ | $ | ||||||||||
作爲激勵股票計劃的一部分發行的普通股 | | | | — | — | | |||||||||||
股票授予稅款支付所使用的股份 |
| — | — | ( | — | — | ( | ||||||||||
發行受限制股票獎勵和單位 | | — | — | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合約的未實現收益 | — | — | — | | — | | |||||||||||
截至2024年6月28日的結餘 |
| $ | $ | $ | ( | $ | $ | ||||||||||
與員工股票購買計劃相關的普通股發行 |
| | | | — | — | | ||||||||||
與激勵股票計劃相關聯的普通股發行 | | | | — | — | | |||||||||||
股票授予稅款支付所使用的股份 |
| ( | — | ( | — | — | ( | ||||||||||
發行受限制股票獎勵和單位 | | — | — | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合同的淨未實現收益 | — | — | — | ( | — | ( | |||||||||||
2024年9月27日餘額 |
| $ | $ | $ | ( | $ | $ | ||||||||||
百萬美元。
5
累積的 | |||||||||||||||||
額外的 | 其他 | ||||||||||||||||
普通股 | 實收資本 | 綜合 | 保留的 | ||||||||||||||
| 股份 |
| 數量 |
| 資本 |
| 收益（損失） |
| 收益 |
| 總費用 | ||||||
2022年12月30日的結存 |
| $ | $ | $ | — | $ | $ | ||||||||||
與員工股票購買計劃相關的普通股發行 |
| | | | — | — | | ||||||||||
股票用於支付股票授予的稅款 |
| ( | — | ( | — | — | ( | ||||||||||
發行限制股獎和單位 | | | ( | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年3月31日的餘額 |
| $ | $ | $ | — | $ | $ | ||||||||||
與激勵股票計劃相關的普通股發行 | | — | | — | — | | |||||||||||
股票用於支付股票授予的稅款 |
| ( | — | ( | — | — | ( | ||||||||||
發行限制性股票獎勵和單位 | | — | — | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年6月30日的餘額 |
| $ | $ | $ | — | $ | $ | ||||||||||
在僱員股票購買計劃中發行的普通股份 |
| | | | — | — | | ||||||||||
與激勵股票計劃相關的普通股發行 | | — | | — | — | | |||||||||||
股票用於支付股票獎勵稅款 |
| ( | — | ( | — | — | ( | ||||||||||
發行受限股票獎勵和單位 | | — | — | — | — | — | |||||||||||
股票補償費用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年9月29日的餘額 |
| $ | $ | $ | — | $ | $ | ||||||||||
百萬美元。
6
威登集團公司及其子公司
現金流量表簡明綜合報表
（以千爲單位）
(未經審計)
九個月結束 | ||||||
9月27日, | 2023年9月29日 | |||||
| 2024 |
| 2023 | |||
經營活動現金流量： | ||||||
| $ | | $ | | ||
調整爲符合經營活動提供的淨現金流的淨利潤（虧損）： | ||||||
折舊和攤銷 |
| |
| | ||
其他非現金項目 | | | ||||
遞延所得稅，淨額 |
| |
| | ||
（收益）處置設備的損失 |
| ( |
| ( | ||
應收賬款減值準備 |
| |
| | ||
以股票爲基礎的報酬計劃 |
| |
| | ||
業務收購的影響除外，經營資產和負債的變動： | ||||||
應收賬款 |
| |
| ( | ||
合同資產 |
| ( |
| | ||
其他應收款 |
| ( |
| | ||
預付費用和其他流動資產 |
| ( |
| | ||
其他 |
| |
| ( | ||
應付賬款 |
| |
| | ||
應計負債 |
| |
| ( | ||
合同負債 |
| |
| | ||
租賃資產 |
| ( |
| | ||
經營活動中提供的淨現金流量（流出） |
| |
| | ||
投資活動現金流量： | ||||||
購買設備、軟件和租賃改良 |
| ( |
| ( | ||
出售設備的收益 | | | ||||
收購支付現金淨額 | — | ( | ||||
投資活動的淨現金流量(使用)/提供的淨現金流量 |
| ( |
| ( | ||
籌集資金的現金流量： | ||||||
支付待定對價 |
| — |
| ( | ||
受限現金支付 | — | ( | ||||
應付短期借款的償還 | ( | ( | ||||
債務發行成本支付 | — | ( | ||||
在貸款工具和信用額度下的借款 | — | | ||||
在貸款工具和信用額度下的償還 | ( | ( | ||||
財務租賃的本金償還 |
| ( |
| ( | ||
股票期權行權所得款項 |
| |
| | ||
員工股票購買計劃下普通股銷售所得 |
| |
| | ||
用於支付股票授予稅款的現金 | ( | ( | ||||
籌資活動的淨現金流量(使用)/提供的淨現金流量 |
| ( |
| ( | ||
現金，現金等價物和受限現金淨增加（減少） |
| |
| ( | ||
期初現金、現金等價物及受限制的現金餘額 |
| |
| | ||
期末現金、現金等價物及受限制的現金餘額 | $ | | $ | | ||
補充現金流信息披露： | ||||||
期間支付（收到）的現金： | ||||||
利息 | $ | | $ | | ||
所得稅 |
| |
| ( | ||
非現金投資和籌資活動的補充披露： | ||||||
通過融資租賃方式獲取的設備 | | | ||||
百萬美元。
7
1. 公司的組織和運營情況Y
威爾丹集團公司（以下簡稱「威爾丹」或「公司」）是爲公用事業、私營企業和各級政府機構提供專業、技術和諮詢服務的服務商。隨着資源和基礎設施需求不斷變化，公司通過爲能源解決方案和政府基礎設施提供各種技術服務，幫助組織和社區不斷髮展壯大。通過工程、項目管理、政策諮詢以及軟件和數據管理，公司設計並交付受信賴的、全面的、創新的和經過驗證的解決方案，以提高能源和基礎設施的效率、韌性和可持續性。
公司的廣泛服務組合涵蓋
公司遵循的會計政策在第II部分、項目8、附註1中規定，公司的《組織和運營》。公司的組織與運營，在《公司10-k表格》上所述的附註中包括的綜合財務報表，截至2023年12月29日結束的財年。管理層認爲，已進行了全面揭示所需的調整，以公正陳述《簡明綜合財務報表》。 所有此類調整均具有正常的、遞歸性質。按照美國通用會計準則（「U.S. GAAP」），通常包括在遵守的一致性的《綜合財務報表》中通常包括的部分信息和腳註披露已根據證券交易委員會（「SEC」）的規則和規例進行了壓縮或省略。應該閱讀這些《簡明綜合財務報表》及其相關附註，與公司截至2023年12月29日結束的財年的《綜合財務報表》和附註一起閱讀。中期業務結果並不一定能反映全年預期結果。
財政年度
公司根據以12月31日最接近的星期五結束的-週期運營和報告其年度財務結果。 公司根據
使用估計
按照美國通用會計準則編制合併財務報表需要管理層做出影響合併財務報表當日資產、負債金額以及披露當日合併財務報表日事後性資產和負債的估計和假設。估計也會影響報告期間營業收入和費用的金額。實際結果可能與這些估計有所不同。
重新分類
爲使簡明的合併財務報表符合當年的展示，某些以前年度金額已在簡明合併財務報表中有所調整。
8
威爾丹集團公司及其子公司
基本成員公司財務報表附註－（續）
(未經審計)
2. 近期會計準則
最近發佈的會計準則
2023年12月，財務會計準則委員會（「FASB」）發佈了會計準則更新（「ASU」）2023-09，「所得稅（主題740）：完善所得稅披露」（「ASU 2023-09」）。ASU 2023-09修訂了有關所得稅披露的規定，要求實體在稅率協調中披露具體分類，揭示繼續經營活動稅前利潤或損失（分爲國內和國外）以及繼續經營活動的所得稅費用或利益（按聯邦、州和國外分開）。此外，ASU 2023-09要求實體披露其向國際、聯邦、州和地方司法管轄區支付的所得稅款項，等一系列變更。雖然允許按前瞻性基礎應用這些修訂，但也允許追溯應用。修訂適用於2024年12月15日後開始的年度報告期間，允許提前採用。公司目前正在
2013年11月，FASB發佈了ASU No. 2023-07，「分部報告（第280號課題）：改進可報告段披露」（「ASU 2023-07」）。ASU 2023-07通過增強與定期向首席運營決策者（「CODM」）提供的重要段落費用相關的披露，對報告段其他條目進行描述，以及決定如何分配資源時CODM使用的段利潤或損失的任何額外措施，擴展了段落披露要求。所有在ASU 2023-07下的披露要求也適用於只有一個可報告部門的上市實體。修訂條款從2023年12月15日後的財政年度開始生效，並在2024年12月15日後的財政年度內的中期報告週期內生效。公司目前
2013年10月，FASB發佈了ASU No. 2023-06，「披露改進：對SEC的披露更新和簡化倡議中的規範修訂」（「ASU 2023-06」）。ASU 2023-06修改了美國普通會計準則以反映SEC向FASB提交的有關披露和陳述要求的更新和簡化。針對性的修訂將SEC提交的27項披露中的14項合併到規範中。ASU 2023-06中的每項修訂都在SEC從《上市協定》或《S-K條例》中刪除相關披露要求的日期生效，或者如果SEC在該日期之前未取消要求，則在2027年6月30日生效。公司認爲ASU 2023-06中的修訂
9
威爾丹集團公司及其子公司
續註釋到壓縮的綜合財務報表
(未經審計)
3. 營收
公司與客戶簽訂的合同涵蓋各種定價條款，包括固定價格、時間和材料、基於單位的條款。公司按照《2014年美國註冊會計師協會公告第9號，與客戶訂立合同的收入》，覈定爲ASC主題606及相關修訂（統稱「ASC 606」）來確認收入。因此，公司確定與客戶的合同，確定合同中的履約義務，確定交易價格，將交易價格分配給合同中的每個履約義務，並在公司滿足履約義務時（或按照約定）確認營業收入。
以下表反映了公司的
部分 | 合同類型 | 營收確認方法 |
工時貨物 | 工時貨物 | |
能源 | 基於單位的 | 基於單位的 |
軟件許可證 | 基於單位的 | |
固定價格 | 完成百分比 | |
工時貨物 | 工時貨物 | |
工程和諮詢 | 單位制 | 單位制 |
固定價格 | 完工百分比 |
公司絕大部分合同的營業收入是根據時間分攤確認的，因爲持續將控制權轉移給客戶。根據完成預計總直接成本與截至目前發生的直接成本的比率，固定價格合同的營業收入通常採用完工百分比法確認。公司使用完工百分比法更好地匹配某一時間點執行的工作水平，以及完成項目所需的工作量。此外，完工百分比法是公司行業中常用的一種營業收入確認方法。
公司的許多固定價格合同涉及大量分包的固定價格工作，並且通常相對較短，從而降低了錯誤估計完成百分比的風險。按照合同具體的費率和條款進行工作時，計時間付合同和基於產量的合同的營業收入是在執行工作時確認的。公司根據每個報告期間發生的實際小時數以合同約定的費率每小時計入所有報銷成本，並將相應費用計入營業收入。公司的某些計時間付合同受到最大合同價值的限制，因此，當預期營業收入超過最大合同價值時，這些合同通常根據完工百分比法確認，與固定價格合同一致。對於基於產量的合同，公司在交付生產產品的期間將基本生產產品單位的合同價格確認爲營業收入。已開具賬單但尚未獲得的金額按期推遲，這種推遲的營業收入在附表中列示爲合同負債。公司還從軟件許可證、專業服務和維護費用中獲取收入。根據ASC 606，公司對每個合同進行評估，以確定履行義務、判斷合同的整體交易價格、將交易價格分配到履行義務，並在履行義務得到滿足時確認營業收入。公司採用殘差法，根據交易價格總額減去合同中其他商品或服務的可觀單獨銷售價格之和，估計單獨銷售價格。軟件許可證營業收入通常在控制權轉移給客戶的時點確認，即客戶可以使用和受益於許可證時點。在提供相關服務之前交付軟件許可證，且不需要服務、更新或技術支持即可正常運行。相關專業服務包括培訓和支持服務，其單獨銷售價格根據耗費的總工時比例與總估計工時確定，並按時確認，通常爲合同期。
10
威爾丹集團公司及其子公司
基本報表附註 - （續）
(未經審計)
爲確定合同的正確營業收入確認方法，公司評估是否應將兩個或兩個以上的合同合併，並視爲一個單一合同，以及合併合同是否應視爲一項履約義務。就公司的合同而言，很少有多個合同應合併爲單一履約義務。這種評估需要進行重大判斷，將一組合同合併或將單個合同分成多個履約義務的決定可能會更改某一時期記錄的營業收入和利潤額。如果合同中的承諾轉讓個別貨物或服務與合同中的其他承諾無法單獨確定，主要是因爲公司提供了將一系列複雜的任務和元件集成到一個單一項目或能力中的重要服務，則合同被認爲具有單一履約義務。
公司可能會簽署包括獨立階段或元素的合同。如果每個階段或元素根據所需的技術資源和/或所提供服務的供需分別進行協商，公司將評估是否應對合同進行分割。如果滿足某些標準，合同將被細分，這可能導致將收入分配給不同元素或階段，根據每個元素或階段對估計的總合同收入的相對價值而具有不同的盈利率。細分合同可能佔公司合併合同收入的約
在跨越項目或服務生命週期的多個階段或元件（開發、施工、維護和支持）的合同中，即使它們是單一合同的一部分，也可以被視爲具有多個履約義務。對於具有多個履約義務的合同，公司將交易價格分配給每個履約義務，使用每一份獨特商品或服務的獨立銷售價格的最佳估計。在呈現的期間，具有多個履約義務的合同中獨立履約義務的價值（通常是某些能源績效合同下的測量和驗證任務）並不重要。在公司不以獨立基礎提供獨特商品或服務的情況下，用於估計獨立銷售價格的主要方法是預期成本加利潤率方法，公司會預測履行履約義務的預期成本，然後爲獨特商品或服務添加適當的利潤。
公司向客戶提供與銷售產品一併提供的工藝質量保證，這些保證不是單獨定價或銷售的，也不會爲客戶提供除了遵守協定規格和行業標準之外的服務。公司不認爲這些類型的保證構成獨立的履約義務。
在某些情況下，公司與客戶簽訂總服務協議或框架協議，在這些協議下，每個任務訂單都允許公司執行服務合同中整體範圍的特定部分。每個任務訂單通常被視爲一個單獨合同，因爲任務訂單確定了可執行的權利和義務，以及付款條款。
根據ASC 606，變量考慮應在確定交易價格時予以考慮，並應估計交易價格的變量考慮元素，以及評估估計的變量考慮是否受到限制。對於公司的某些合同，變量考慮可能源自於未經批准的變更訂單或客戶索賠導致的服務範圍變更。變量考慮應包括在交易價格中，以確保在變量考慮的不確定性解決時，累積確認的收入不會發生重大逆轉的情況下。公司對變量考慮的估計以及決定是否將估計金額包括在交易價格中，主要基於法律強制執行性、公司的履行情況以及公司合理可得到的所有信息（歷史數據、當前數據和預測數據）。
11
威爾丹集團公司及其子公司
基本報表附註 - (續)
(未經審計)
由於公司許多履約義務所需工作的性質，總收入和完工成本的估計是複雜的，受許多變量的影響，並需要進行重大判斷。由於一個或多個這些估計發生重大變化可能會影響公司合同的盈利能力，公司定期通過全公司統一的項目審查流程審查和更新與公司合同相關的估計，管理層審查公司履約義務的進展和執行以及最終預算的相關信息。作爲這個過程的一部分，管理層審查信息，包括但不限於任何未決關鍵合同事項、完成進度以及相關項目進度表和相關收入和成本估計的變化。管理層必須就勞動生產率和可用性、需要執行的工作複雜性、材料的成本和可用性、分包商的表現以及來自客戶的資金的可用性和時間等變量進行假設和估計。
公司在累積補充方法下承認對合同預計利潤的調整。根據該方法，調整對已記錄的利潤的影響將在確定調整時認可。在未來合同履行期間的收入和利潤使用調整後的估計來確認。如果任何時候合同盈利的估計表明合同有望虧損，公司將在確定的期間內全額確認估計虧損。
合同經常被修改以適應合同規格和要求的變化。當修改導致新的權利或義務或改變現有的可執行權利或義務時，公司認爲合同修改存在。由於在合同背景中提供了重大整合的商品或服務，公司的大多數合同修改被視爲與原始合同的一部分一樣處理。一個不同於現有合同的合同修改對價款和公司對其進行衡量的履約義務進度的影響將按累積追溯的方式確認爲對收入的調整（無論是收入的增加還是減少）。
對於導致承諾交付與現有合同不同的貨物或服務，且合同價格的增加等於修改中包含的額外貨物或服務的單獨銷售價格的情況，公司按照獨立合同處理此類合同修改。
公司將對供應商、分包商和其他單位的索賠記錄爲應收賬款，並在合同確立索賠可執行性、金額可以合理估計且可以預計收回時減少確認費用。記錄金額不超過管理層預期可收回金額或已發生的費用的較低額度。
賬單實踐根據各項目合同條款管理，基於發生的成本、里程碑的達成或預先商定的進度。賬單與根據百分比完成度收入確認方法確認的營業收入不一定相關。
合同收入的直接成本主要包括與產生收入的項目有關的技術和非技術工資支出的那部分。合同收入的直接成本還包括生產費用、分包服務和與產生收入的項目有關的其他費用。
12
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Direct costs of contract revenue exclude that portion of technical and nontechnical salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all Company personnel are included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income since
Included in revenue and costs are all reimbursable costs for which the Company has the risk or on which the fee was based at the time of bid or negotiation.
Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based upon a review of all outstanding amounts on a quarterly basis. Management determines allowances for doubtful accounts through specific identification of amounts considered to be uncollectible and potential write-offs, plus a non-specific allowance for other amounts for which some potential loss has been determined to be probable based on current and past experience. The Company’s historical credit losses have been minimal with governmental entities and large public utilities, but disputes may arise related to these receivable amounts. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.
Retainage, included in contract assets, represents amounts withheld from billings to the Company’s clients pursuant to provisions in the contracts and may not be paid to the Company until specific tasks are completed or the project is completed and, in some instances, for even longer periods. As of September 27, 2024 and December 29, 2023, contract assets included retainage of approximately $
13
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
4. SUPPLEMENTAL FINANCIAL STATEMENT DATA
Restricted Cash
The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows:
September 27, | December 29, | |||||
| 2024 |
| 2023 | |||
(in thousands) | ||||||
Cash and cash equivalents | $ | | $ | | ||
| |
| | |||
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows | $ | | $ | | ||
Under certain utility contracts, the Company periodically receives cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. The Company acts solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, the Company classifies these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on the Company’s working capital or operating cash flows, these cash receipts are presented in the condensed consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”
Equipment and Leasehold Improvements
September 27, | December 29, | |||||
| 2024 |
| 2023 | |||
(in thousands) | ||||||
Furniture and fixtures | $ | | $ | | ||
Computer hardware and software |
| |
| | ||
Leasehold improvements |
| |
| | ||
Equipment under finance leases |
| |
| | ||
Automobiles, trucks, and field equipment |
| |
| | ||
Subtotal |
| |
| | ||
Accumulated depreciation and amortization |
| ( |
| ( | ||
Equipment and leasehold improvements, net | $ | | $ | | ||
Included in accumulated depreciation and amortization is $
14
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Accrued Liabilities
September 27, | December 29, | |||||
| 2024 |
| 2023 | |||
(in thousands) | ||||||
Accrued subcontractor costs | $ | | $ | | ||
Accrued bonuses | | | ||||
Employee withholdings |
| |
| | ||
Compensation and payroll taxes |
| |
| | ||
Rebate and other | — | | ||||
Accrued accounting costs and taxes |
| |
| | ||
Total accrued liabilities | $ | | $ | | ||
Goodwill
December 29, | Additional | Additions / | September 27, | |||||||||
| 2023 |
| Purchase Cost |
| Adjustments |
| 2024 | |||||
(in thousands) | ||||||||||||
Reporting Unit: | ||||||||||||
Energy | $ | | $ | — | $ | — | $ | | ||||
Engineering and Consulting | | — | — | | ||||||||
$ | | $ | — | $ | — | $ | | |||||
The Company tests its goodwill at least annually for possible impairment. The Company completes its annual testing of goodwill as of the last day of the first month of its fourth fiscal quarter each year to determine whether there is a potential impairment. In addition to the Company’s annual test, it regularly evaluates whether events and circumstances have occurred that may indicate a potential impairment of goodwill. The Company evaluated the current economic environment and noted that it does not believe it is more likely than not that goodwill was impaired as of September 27, 2024.
Intangible Assets
September 27, 2024 | December 29, 2023 | |||||||||||||||||
Gross | Accumulated | Gross | Accumulated | Amortization | ||||||||||||||
| Amount |
| Amortization |
| Amount |
| Amortization |
| Period | |||||||||
(in thousands) | (in years) | |||||||||||||||||
Finite: | ||||||||||||||||||
Backlog | $ | | $ | | $ | | $ | | ||||||||||
Tradename | | | | |
| - | ||||||||||||
Non-compete agreements | | | | | - | |||||||||||||
Developed technology | | | | | ||||||||||||||
Customer relationships | | | | | - | |||||||||||||
Total intangible assets | $ | | $ | | $ | | $ | | ||||||||||
15
威爾丹集團公司及其子公司
基本報表附註 - (續)
(未經審計)
5. 衍生金融工具
公司使用某些利率衍生成交合約來對沖其可變利率債務的利率風險。公司的對沖方案並非用於交易或投機目的。
公司根據公允價值在附表中將衍生工具確認爲資產或負債。公司記錄已指定爲現金流量套期保值的衍生工具的公允價值變動（即收益或損失）作爲累積其他全面收益（損失）出現在其合併資產負債表上，並出現在其合併綜合收益表（損失）上作爲衍生合約未實現收益或損失。所有相關現金流量均報告在合併現金流量表的經營活動部分。
2024年6月4日，Realty Income公司（以下簡稱「公司」）發佈了一份新聞稿，公佈了截至2024年12月31日更新的收益和投資成交量預測。新聞稿的副本作爲Exhibit 99.1附在此，作爲本報告的一部分。此報告的Exhibit 99.1作爲第7.01項目，根據8-K表格的規定提供，不視爲1934年證券交易法第18條的「報告文件」，無論此後公司做出的任何註冊文件，也不管任何這類文件的一般包含語言，都不作爲參考依據。
公司持有的未結算衍生工具作爲避險工具的公允價值如下：
|
| 衍生工具的公允價值 | ||||||
|
| 截止日期爲止的工具 | ||||||
資產負債表上的位置 | 2024年9月27日 | 2023年12月29日 | ||||||
（以千爲單位） | ||||||||
利率掉期協議 | $ | — | $ | | ||||
利率掉期協議 | ( | — | ||||||
利率掉期協議 | ( | ( | ||||||
現金流量套期工具的有效部分以及公允價值套期關係對其他全面收益（損失）的影響爲$
16
威爾丹集團公司及其子公司
基本財務報表附註 - (續)
(未經審計)
下列期間相關的累積餘額和報告期活動，涉及從其他綜合收益（損失）重新分類的彙總如下：
開放商品損益未實現收益（虧損） | 累積其他 | |||||
| 衍生工具 |
| 綜合收益（損失） | |||
（以千爲單位） | ||||||
2023年12月29日的餘額 | $ | ( | $ | ( | ||
其他綜合收益（損失）在再分類之前 | | |||||
從累計其他綜合收益（損失）中重新分類的金額： | — | — | ||||
與衍生工具相關的所得稅益（費用） | ( | ( | ||||
淨本期其他綜合收益（損失） | | | ||||
2024年3月29日的餘額 | $ | ( | $ | ( | ||
其他綜合收益（損失）在再分類之前 | | |||||
從累計其他綜合收益（損失）中重新分類的金額： | — | — | ||||
與衍生工具相關的所得稅費用（收益） | ( | ( | ||||
淨本期其他綜合收益（損失） | | | ||||
2024年6月28日的餘額 | $ | ( | $ | ( | ||
其他綜合收益（損失）在再分類之前 | ( | ( | ||||
從累計其他綜合收益（損失）中重新分類的金額： | — | — | ||||
與衍生工具相關的所得稅收益（費用） | ||||||
淨本期其他綜合收益（損失） | ( | ( | ||||
2024年9月27日餘額 | $ | ( | $ | ( | ||
17
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
6. DEBT OBLIGATIONS
Debt obligations, excluding obligations under finance leases (see Note 7, “Leases”, below), consisted of the following:
| September 27, |
| December 29, | |||
2024 | 2023 | |||||
(in thousands) | ||||||
Outstanding borrowings on Term Loan | $ | | $ | | ||
Outstanding borrowings on Revolving Credit Facility | — | — | ||||
Other debt agreements | | | ||||
Total debt | | | ||||
Issuance costs and debt discounts | ( | ( | ||||
Subtotal | | | ||||
Less current portion of long-term debt |
| |
| | ||
Long-term debt portion | $ | | $ | | ||
The credit agreement governing the Company’s Term Loan and Revolving Credit Facility require the Company to comply with certain financial obligations, including a maximum Net Leverage Ratio and a minimum Fixed Charge Coverage Ratio (as defined in the credit agreement governing the Term Loan and Revolving Credit Facility). The credit agreement also contains customary restrictive covenants. As of September 27, 2024, the Company was in compliance with all these covenants.
In addition, as of September 27, 2024, the Company’s composite interest rate, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, was
18
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
7. LEASES
The Company leases certain office facilities under long-term, non-cancellable operating leases that expire at various dates through 2029. In addition, the Company is obligated under finance leases for certain furniture and office equipment that expire at various dates through 2029.
From time to time, the Company enters into non-cancelable leases for some of its facility and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities and equipment rather than purchasing them. The Company’s leases typically have remaining terms ranging from to
Financing Leases
The Company leases certain equipment under financing leases. The economic substance of the leases is a financing transaction for acquisition of equipment and leasehold improvements. Accordingly, the right-of-use assets for these leases are included in the balance sheets in equipment and leasehold improvements, net of accumulated depreciation, with a corresponding amount recorded in current portion of financing lease obligations or noncurrent portion of financing lease obligations, as appropriate. The financing lease assets are amortized over the life of the lease or, if shorter, the life of the leased asset, on a straight-line basis and included in depreciation expense. The interest associated with financing lease obligations is included in interest expense.
Right-of-use assets
Operating leases are included in right-of-use assets, and current portion of lease liability and noncurrent portion of lease liability, as appropriate. Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate to calculate present value, the Company determines this rate by estimating the Company’s incremental borrowing rate at the lease commencement date. The right-of-use asset also includes any lease payments made and initial direct costs incurred at lease commencement and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
19
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following is a summary of the Company’s lease expense:
Three Months Ended | Nine Months Ended | ||||||||||
September 27, | September 29, | September 27, | September 29, | ||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | |||||
(in thousands) | (in thousands) | ||||||||||
Operating lease cost | $ | | $ | | $ | | $ | | |||
Sublease Income | ( | ( | ( | ( | |||||||
Finance lease cost: | |||||||||||
Amortization of assets | | | | ||||||||
Interest on lease liabilities | | | | ||||||||
Total net lease cost | $ | | $ | | $ | | $ | | |||
The following is a summary of lease information presented on the Company’s consolidated balance sheet:
September 27, |
| December 29, | |||||
2024 | 2023 | ||||||
(in thousands) | |||||||
Operating leases: | |||||||
Right-of-use assets | $ | | $ | | |||
|
| ||||||
Lease liability | $ | | $ | | |||
Lease liability, less current portion |
| |
| | |||
Total lease liabilities | $ | | $ | | |||
|
| ||||||
Finance leases (included in equipment and leasehold improvements, net): | |||||||
Equipment and leasehold improvements, net | $ | | $ | | |||
Accumulated depreciation |
| ( |
| ( | |||
$ | | $ | | ||||
| |||||||
Finance lease obligations | $ | | $ | | |||
Finance lease obligations, less current portion | | | |||||
Total finance lease obligations | $ | | $ | | |||
Weighted average remaining lease term (in years): | |||||||
Operating Leases | |||||||
Finance Leases | |||||||
Weighted average discount rate: | |||||||
Operating Leases | % | % | |||||
Finance Leases | % | % | |||||
Rent expense was $
20
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following is a summary of other information and supplemental cash flow information related to finance and operating leases:
Nine Months Ended | ||||||
September 27, | September 29, | |||||
2024 |
| 2023 | ||||
(in thousands) | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||
Operating cash flow from operating leases | $ | | $ | | ||
Operating cash flow from finance leases | | | ||||
Financing cash flow from finance leases | | | ||||
Right-of-use assets obtained in exchange for lease liabilities: | ||||||
Operating leases | $ | | $ | | ||
The following is a summary of the maturities of lease liabilities as of September 27, 2024:
| Operating |
| Finance |
| |||
(in thousands) | |||||||
Fiscal year: | |||||||
Remainder of 2024 | $ | | $ | | |||
2025 |
| |
| | |||
2026 |
| | | ||||
2027 | | | |||||
2028 | |
| | ||||
2029 and thereafter |
| |
| | |||
Total lease payments | | | |||||
Less: Imputed interest |
| ( | ( | ||||
Total lease obligations |
| | | ||||
Less: Current obligations |
| | | ||||
Noncurrent lease obligations | $ | | $ | | |||
The imputed interest for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the effect of discounting the operating lease payments to their present value.
21
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
8. COMMITMENTS AND VARIABLE INTEREST ENTITIES
Employee Benefit Plans
The Company has a qualified profit sharing plan pursuant to Code Section 401(a) and cash or deferred arrangement pursuant to Code Section 401(k) covering all employees. Employees may elect to contribute up to
The Company’s defined contribution plan (the “Plan”) covers employees who have completed
During the nine months ended September 27, 2024 and September 29, 2023, the Company made matching contributions of $
Variable Interest Entities
On March 4, 2016, the Company and the Company’s wholly-owned subsidiary, Willdan Energy Solutions, Inc. (“WES”), acquired substantially all of the assets of Genesys Engineering, P.C. (“Genesys”) and assumed certain specified liabilities of Genesys (collectively, the “Purchase”) pursuant to an Asset Purchase and Merger Agreement, dated as of February 26, 2016 (the “Agreement”), by and among Willdan Group, Inc., WES, WESGEN (as defined below), Genesys and Ronald W. Mineo (“Mineo”) and Robert J. Braun (“Braun” and, together with Mineo, the “Genesys Shareholders”). On March 5, 2016, pursuant to the terms of the Agreement, WESGEN, Inc., a non-affiliated corporation (“WESGEN”), merged (the “Merger” and, together with the Purchase, the “Acquisition”) with Genesys, with Genesys remaining as the surviving corporation. Genesys was acquired to strengthen the Company’s power engineering capability in the northeastern U.S., and also to increase client exposure and experience with universities.
Genesys continues to be a professional corporation organized under the laws of the State of New York, wholly-owned by one or more licensed engineers. Pursuant to New York law, the Company does not own capital stock of Genesys. The Company has entered into an agreement with the Shareholder of Genesys pursuant to which the Shareholder will be prohibited from selling, transferring or encumbering the Shareholder’s ownership interest in Genesys without the Company’s consent. Notwithstanding the Company’s rights regarding the transfer of Genesys’s stock, the Company does not have control over the professional decision making of Genesys’s engineering services. The Company has entered into an administrative services agreement with Genesys pursuant to which WES will provide Genesys with ongoing administrative, operational and other non-professional support services. Genesys pays WES a service fee, which consists of all of the costs incurred by WES to provide the administrative services to Genesys plus
22
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The Company manages Genesys and has the power to direct the activities that most significantly impact Genesys’s performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, the Company is the primary beneficiary of Genesys and consolidates Genesys as a variable interest entity (“VIE”). In addition, the Company concluded there is no noncontrolling interest related to the consolidation of Genesys because the Company determined that (i) the shareholder of Genesys does not have more than a nominal amount of equity investment at risk, (ii) WES absorbs the expected losses of Genesys through its deferral of Genesys’s service fees owed to WES and the Company has, since entering into the administrative services agreement, had to continuously defer service fees for Genesys, and (iii) the Company believes Genesys will continue to have a shortfall on payment of its service fees for the foreseeable future, leaving no expected residual returns for the shareholder. As of September 27, 2024, the Company had
23
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
9. SEGMENT AND GEOGRAPHICAL INFORMATION
Segment Information
The Company’s
There were no intersegment sales during the three and nine months ended September 27, 2024 and September 29, 2023. The Company’s chief operating decision maker evaluates the performance of each segment based upon income or loss from operations before income taxes. Certain segment asset information including expenditures for long-lived assets has not been presented as it is not reported to or reviewed by the chief operating decision maker. In addition, enterprise-wide service line contract revenue is not included as it is impracticable to report this information for each group of similar services.
Financial information with respect to the reportable segments and reconciliation to the amounts reported in the Company’s Condensed Consolidated Financial Statements is as follows:
Engineering | Unallocated | Consolidated | |||||||||||||
| Energy |
| & Consulting |
| Corporate |
| Intersegment |
| Total | ||||||
(in thousands) | |||||||||||||||
Fiscal Three Months Ended September 27, 2024 | |||||||||||||||
Contract revenue | $ | | $ | | $ | - | $ | - | $ | | |||||
Depreciation and amortization | | | - | - | | ||||||||||
Interest expense, net | - | - | | - | | ||||||||||
Segment profit (loss) before income tax expense | | | ( | - | | ||||||||||
Income tax expense (benefit) | ( | | | - | | ||||||||||
Net income (loss) | | | ( | - | | ||||||||||
Segment assets (1) | | | | ( | | ||||||||||
Fiscal Three Months Ended September 29, 2023 | |||||||||||||||
Contract revenue | $ | | $ | | $ | - | $ | - | $ | | |||||
Depreciation and amortization | | | - | - | | ||||||||||
Interest expense, net | | - | | - | | ||||||||||
Segment profit (loss) before income tax expense | | | ( | - | | ||||||||||
Income tax expense (benefit) | | | ( | - | | ||||||||||
Net income (loss) | | | ( | - | | ||||||||||
Segment assets (1) | | | | ( | | ||||||||||
Fiscal Nine Months Ended September 27, 2024 | |||||||||||||||
Contract revenue | $ | | $ | | $ | - | $ | - | $ | | |||||
Depreciation and amortization | | | - | - | | ||||||||||
Interest expense, net | - | - | | - | | ||||||||||
Segment profit (loss) before income tax expense | | | ( | - | | ||||||||||
Income tax expense (benefit) | | | ( | - | | ||||||||||
Net income (loss) | | | ( | - | | ||||||||||
Segment assets (1) | | | | ( | | ||||||||||
Fiscal Nine Months Ended September 29, 2023 | |||||||||||||||
Contract revenue | $ | | $ | | $ | - | $ | - | $ | | |||||
Depreciation and amortization | | | - | - | | ||||||||||
Interest expense, net | | - | | - | | ||||||||||
Segment profit (loss) before income tax expense | | | ( | - | | ||||||||||
Income tax expense (benefit) | | | ( | - | | ||||||||||
Net income (loss) | | | ( | - | | ||||||||||
Segment assets (1) | | | | ( | | ||||||||||
| (1) | Segment assets are presented net of intercompany receivables. |
24
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following tables provide information about disaggregated revenue by contract type, client type and geographical region:
| Three months ended September 27, 2024 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | $ | $ | ||||||
Unit-based | |||||||||
Fixed price | |||||||||
Total (1) | $ | $ | $ | ||||||
Client Type | |||||||||
Commercial | $ | $ | $ | ||||||
Government | |||||||||
Utilities (2) | |||||||||
Total (1) | $ | $ | $ | ||||||
Geography (3) | |||||||||
Domestic | $ | $ | $ | | |||||
| Nine months ended September 27, 2024 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | $ | $ | ||||||
Unit-based | |||||||||
Fixed price | |||||||||
Total (1) | $ | $ | $ | ||||||
Client Type | |||||||||
Commercial | $ | $ | $ | ||||||
Government | |||||||||
Utilities (2) | |||||||||
Total (1) | $ | $ | $ | ||||||
Geography (3) | |||||||||
Domestic | $ | | $ | | $ | | |||
25
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
| Three months ended September 29, 2023 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | $ | $ | ||||||
Unit-based | |||||||||
Fixed price | |||||||||
Total (1) | $ | $ | $ | ||||||
Client Type | |||||||||
Commercial | $ | $ | $ | ||||||
Government | |||||||||
Utilities (2) | |||||||||
Total (1) | $ | $ | $ | ||||||
Geography (3) | |||||||||
Domestic | $ | $ | $ | | |||||
| Nine months ended September 29, 2023 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | $ | $ | ||||||
Unit-based | |||||||||
Fixed price | |||||||||
Total (1) | $ | $ | $ | ||||||
Client Type | |||||||||
Commercial | $ | $ | $ | ||||||
Government | |||||||||
Utilities (2) | |||||||||
Total (1) | $ | $ | $ | ||||||
Geography (3) | |||||||||
Domestic | $ | | $ | | $ | | |||
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | Includes the portion of revenue related to small business programs paid by the end user/customer. |
| (3) | Revenue from the Company’s foreign operations were not material for the three and nine months ended September 27, 2024 and September 29, 2023. |
Geographical Information
Substantially all of the Company’s consolidated revenue was derived from its operations in the U.S. The Company operates through a network of offices spread across
26
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Customer Concentration
For the three and nine months ended September 27, 2024, the Company’s top 10 customers accounted for
For the three and nine months ended September 27, 2024 and September 29, 2023, the Company had no individual customers that accounted for more than 10% of its consolidated contract revenue.
On a segment basis, the Company reports customers that accounted for more than 10% of its segment contract revenues.
For the three months ended September 27, 2024, the Company derived
For the three months ended September 29, 2023, the Company derived
On a geographical basis, the Company’s largest clients are based in California and New York. For the three and nine months ended September 27, 2024, services provided to clients in California accounted for
27
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
10. INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities, subject to a judgmental assessment of the recoverability of deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets may not be realized. Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical income (loss) adjusted for the effects of non-recurring items and the impact of recent business combinations. Areas of estimation include the Company’s consideration of future taxable income which is driven by verifiable signed contracts and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, the Company would adjust the related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.
At the end of fiscal year 2023, the Company’s total valuation allowance was $
For acquired business entities, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment, and the Company records the offset to goodwill. The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense.
The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. During the three and nine months ended September 27, 2024, and the three and nine months ended September 29, 2023, the Company did
Based on the Company’s estimates and determination of an effective tax rate for the year, the Company recorded an income tax expense of $
28
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
11. EARNINGS PER SHARE (“EPS”)
Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period. Potential common shares include the weighted-average dilutive effects of outstanding stock options and restricted stock awards using the treasury stock method.
The following table sets forth the number of weighted-average common shares outstanding used to compute basic and diluted EPS:
Three months ended | Nine months ended | |||||||||||
September 27, | September 29, | September 27, | September 29, | |||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
(in thousands, except per share amounts) | ||||||||||||
Net income (loss) | $ | | $ | | $ | | $ | | ||||
Weighted-average common shares outstanding |
| |
| |
| |
| | ||||
Effect of dilutive stock options and restricted stock awards |
| |
| |
| |
| | ||||
Weighted-average common shares outstanding-diluted |
| |
| |
| |
| | ||||
Earnings (Loss) per share: | ||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
For the three months ended September 27, 2024, the Company did not exclude any shares subject to outstanding equity awards from the calculation of diluted shares. For the nine months ended September 27, 2024, the Company excluded
29
WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
12. CONTINGENCIES
Claims and Lawsuits
The Company is subject to claims and lawsuits from time to time, including those alleging professional errors or omissions that arise in the ordinary course of business against firms that operate in the engineering and consulting professions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss.
In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and discloses the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company’s financial statements not to be misleading. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
Because litigation outcomes are inherently unpredictable, the Company’s evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of the Company’s financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then the Company will disclose the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable. While the consequences of certain unresolved proceedings are not presently determinable, and a reasonable estimate of the probable and reasonably possible loss or range of loss in excess of amounts accrued for such proceedings cannot be made, an adverse outcome from such proceedings could have a material adverse effect on the Company’s earnings in any given reporting period. However, in the opinion of the Company’s management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on the Company’s financial statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
13. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, the Company evaluates subsequent events up until the date the Condensed Consolidated Financial Statements are issued.
On
Pursuant to the terms of the Enica Agreement, the purchase price consists of (i) $
The Enica Agreement contains customary representations and warranties regarding the Company, WES, Genesys, Enica, and the Enica members, indemnification provisions and other provisions customary for transactions of this nature. Pursuant to the terms of the Agreement, the Company, WES, and Genesys provided guarantees to the Enica Members which guarantee certain of Enica’s obligations under the Enica Agreement.
The Company used cash on hand to fund the initial purchase price.
Enica is an energy efficiency company that provides an array of services around energy projects, metering, and consulting services to help its customers drive energy efficiency, decarbonization, and energy reduction. Enica’s financial information will be included within the Company’s Energy segment beginning in the fourth quarter of fiscal year 2024 and the Company expects to finalize the purchase price allocation related to this transaction by the end of the second quarter of fiscal year 2025.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Company
We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
Our broad portfolio of services operates within two financial reporting segments: (1) Energy and (2) Engineering and Consulting. The interfaces and synergies between these segments are important elements of our strategy to design and deliver trusted, comprehensive, innovative, and proven solutions and services for our customers.
Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations in the U.S. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend. Our energy efficiency services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.
Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.
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Results of Operations
Third Quarter and Nine Months Overview
The following table sets forth, for the periods indicated, certain information derived from our condensed consolidated statements of comprehensive income(1):
Three Months Ended | ||||||||||||||||||
September 27, | September 29, | |||||||||||||||||
| 2024 | 2023 | $ Change | % Change | ||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||
Contract revenue | $ | 158,252 |
| 100.0 | % |
| $ | 132,738 |
| 100.0 | % |
| $ | 25,514 |
| 19.2 | % | |
Direct costs of contract revenue: | ||||||||||||||||||
Salaries and wages | 24,088 | 15.2 | 21,856 | 16.5 | 2,232 | 10.2 | ||||||||||||
Subcontractor services and other direct costs | 82,563 | 52.2 | 67,454 | 50.8 | 15,109 | 22.4 | ||||||||||||
Total direct costs of contract revenue | 106,651 | 67.4 | 89,310 | 67.3 | 17,341 | 19.4 | ||||||||||||
Gross profit | 51,601 | 32.6 | 43,428 | 32.7 | 8,173 | 18.8 | ||||||||||||
General and administrative expenses: | ||||||||||||||||||
Salaries and wages, payroll taxes and employee benefits | 25,876 | 16.4 | 23,805 | 17.9 | 2,071 | 8.7 | ||||||||||||
Facilities and facilities related | 2,381 | 1.5 | 2,303 | 1.7 | 78 | 3.4 | ||||||||||||
Stock-based compensation | 2,020 | 1.3 | 1,244 | 0.9 | 776 | 62.4 | ||||||||||||
Depreciation and amortization | 3,716 | 2.3 | 4,190 | 3.2 | (474) | (11.3) | ||||||||||||
Other | 8,934 | 5.6 | 8,049 | 6.1 | 885 | 11.0 | ||||||||||||
Total general and administrative expenses | 42,927 | 27.1 | 39,591 | 29.8 | 3,336 | 8.4 | ||||||||||||
Income (loss) from operations | 8,674 | 5.5 | 3,837 | 2.9 | 4,837 | 126.1 | ||||||||||||
Other income (expense): | ||||||||||||||||||
Interest expense | (1,934) | (1.2) | (2,437) | (1.8) | 503 | (20.6) | ||||||||||||
Other, net | 763 | 0.5 | 879 | 0.7 | (116) | (13.2) | ||||||||||||
Total other income (expense) | (1,171) | (0.7) | (1,558) | (1.2) | 387 | (24.8) | ||||||||||||
Income (Loss) before income tax expense | 7,503 | 4.7 | 2,279 | 1.7 | 5,224 | 229.2 | ||||||||||||
Income tax expense (benefit) | 157 | 0.1 | 713 | 0.5 | (556) | (78.0) | ||||||||||||
Net income (loss) | $ | 7,346 | 4.6 | $ | 1,566 | 1.2 | $ | 5,780 | 369.1 | |||||||||
| (1) | Percentages are expressed as a percentage of contract revenue and may not total due to rounding. |
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Nine Months Ended | ||||||||||||||||||
September 27, | September 29, | |||||||||||||||||
2024 | 2023 | $ Change | % Change | |||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||
Contract revenue |
| $ | 421,737 |
| 100.0 | % |
| $ | 354,418 |
| 100.0 | % |
| $ | 67,319 |
| 19.0 | % |
Direct costs of contract revenue: | ||||||||||||||||||
Salaries and wages | 69,247 | 16.4 | 63,568 | 17.9 | 5,679 | 8.9 | ||||||||||||
Subcontractor services and other direct costs | 204,667 | 48.5 | 165,508 | 46.7 | 39,159 | 23.7 | ||||||||||||
Total direct costs of contract revenue | 273,914 | 64.9 | 229,076 | 64.6 | 44,838 | 19.6 | ||||||||||||
Gross profit | 147,823 | 35.1 | 125,342 | 35.4 | 22,481 | 17.9 | ||||||||||||
General and administrative expenses: | ||||||||||||||||||
Salaries and wages, payroll taxes and employee benefits | 78,449 | 18.6 | 68,606 | 19.4 | 9,843 | 14.3 | ||||||||||||
Facilities and facilities related | 7,231 | 1.7 | 7,200 | 2.0 | 31 | 0.4 | ||||||||||||
Stock-based compensation | 5,355 | 1.3 | 4,064 | 1.1 | 1,291 | 31.8 | ||||||||||||
Depreciation and amortization | 10,937 | 2.6 | 12,518 | 3.5 | (1,581) | (12.6) | ||||||||||||
Other | 25,368 | 6.0 | 22,629 | 6.4 | 2,739 | 12.1 | ||||||||||||
Total general and administrative expenses | 127,340 | 30.2 | 115,017 | 32.5 | 12,323 | 10.7 | ||||||||||||
Income (loss) from operations | 20,483 | 4.9 | 10,325 | 2.9 | 10,158 | 98.4 | ||||||||||||
Other income (expense): | ||||||||||||||||||
Interest expense | (6,031) | (1.4) | (7,110) | (2.0) | 1,079 | (15.2) | ||||||||||||
Other, net | 2,293 | 0.5 | 1,392 | 0.4 | 901 | 64.7 | ||||||||||||
Total other income (expense) | (3,738) | (0.9) | (5,718) | (1.6) | 1,980 | (34.6) | ||||||||||||
Income (Loss) before income tax expense | 16,745 | 4.0 | 4,607 | 1.3 | 12,138 | 263.5 | ||||||||||||
Income tax expense (benefit) | 1,863 | 0.4 | 1,712 | 0.5 | 151 | 8.8 | ||||||||||||
Net income (loss) | $ | 14,882 | 3.5 | $ | 2,895 | 0.8 | $ | 11,987 | 414.1 | |||||||||
| (1) | Percentages are expressed as a percentage of contract revenue and may not total due to rounding. |
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The following tables provides information about disaggregated revenue of our two segments, Energy and Engineering and Consulting, by contract type, client type and geographical region:
| Three months ended September 27, 2024 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | 7,953 | $ | 17,767 | $ | 25,720 | |||
Unit-based | 52,487 | 4,993 | 57,480 | ||||||
Fixed price | 73,596 | 1,456 | 75,052 | ||||||
Total (1) | $ | 134,036 | $ | 24,216 | $ | 158,252 | |||
Client Type | |||||||||
Commercial | $ | 7,964 | $ | 1,968 | $ | 9,932 | |||
Government | 61,115 | 22,155 | 83,270 | ||||||
Utilities (2) | 64,957 | 93 | 65,050 | ||||||
Total (1) | $ | 134,036 | $ | 24,216 | $ | 158,252 | |||
Geography (3) | |||||||||
Domestic | $ | 134,036 | $ | 24,216 | $ | 158,252 | |||
| Nine months ended September 27, 2024 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | 25,190 | $ | 51,193 | $ | 76,383 | |||
Unit-based | 147,022 | 14,375 | 161,397 | ||||||
Fixed price | 180,422 | 3,535 | 183,957 | ||||||
Total (1) | $ | 352,634 | $ | 69,103 | $ | 421,737 | |||
Client Type | |||||||||
Commercial | $ | 23,858 | $ | 5,281 | $ | 29,139 | |||
Government | 148,403 | 63,614 | 212,017 | ||||||
Utilities (2) | 180,373 | 208 | 180,581 | ||||||
Total (1) | $ | 352,634 | $ | 69,103 | $ | 421,737 | |||
Geography (3) | |||||||||
Domestic | $ | 352,634 | $ | 69,103 | $ | 421,737 | |||
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| Three months ended September 29, 2023 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | 9,382 | $ | 16,629 | $ | 26,011 | |||
Unit-based | 42,119 | 4,182 | 46,301 | ||||||
Fixed price | 59,529 | 897 | 60,426 | ||||||
Total (1) | $ | 111,030 | $ | 21,708 | $ | 132,738 | |||
Client Type | |||||||||
Commercial | $ | 7,448 | $ | 1,588 | $ | 9,036 | |||
Government | 52,410 | 20,054 | 72,464 | ||||||
Utilities (2) | 51,172 | 66 | 51,238 | ||||||
Total (1) | $ | 111,030 | $ | 21,708 | $ | 132,738 | |||
Geography (3) | |||||||||
Domestic | $ | 111,030 | $ | 21,708 | $ | 132,738 | |||
| Nine months ended September 29, 2023 | ||||||||
| Energy |
| Engineering and |
| Total | ||||
| (in thousands) | ||||||||
Contract Type | |||||||||
Time-and-materials | $ | 26,038 | $ | 47,626 | $ | 73,664 | |||
Unit-based | 126,946 | 11,616 | 138,562 | ||||||
Fixed price | 139,346 | 2,846 | 142,192 | ||||||
Total (1) | $ | 292,330 | $ | 62,088 | $ | 354,418 | |||
Client Type | |||||||||
Commercial | $ | 21,607 | $ | 4,128 | $ | 25,735 | |||
Government | 119,028 | 57,759 | 176,787 | ||||||
Utilities (2) | 151,695 | 201 | 151,896 | ||||||
Total (1) | $ | 292,330 | $ | 62,088 | $ | 354,418 | |||
Geography (3) | |||||||||
Domestic | $ | 292,330 | $ | 62,088 | $ | 354,418 | |||
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | Includes the portion of revenue related to small business programs paid by the end user/customer. |
| (3) | Revenue from our foreign operations were not material for the three and nine months ended September 27, 2024 and September 29, 2023. |
Three Months Ended September 27, 2024 Compared to Three Months Ended September 29, 2023
Contract revenue. Consolidated contract revenue increased $25.5 million, or 19.2%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023, due to incremental revenues in both our Energy segment and our Engineering and Consulting segment.
Contract revenue in our Energy segment increased $23.0 million, or 20.7%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023, primarily as a result of increased demand for energy efficiency and electrification services under utility programs and higher construction management revenues.
Contract revenue in our Engineering and Consulting segment increased $2.5 million, or 11.6%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023, primarily due to increased demand for services provided to our clients.
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Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $17.3 million, or 19.4%, for the three months ended September 27, 2024, compared to the three months ended September 29, 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 15.2% in the three months ended September 27, 2024 from 16.5% in the three months ended September 29, 2023, while subcontractor services and other direct costs increased to 52.2% in the three months ended September 27, 2024 from 50.8% in the three months ended September 29, 2023.
Direct costs of contract revenue in our Energy segment increased $17.1 million, or 21.6%, for the three months ended September 27, 2024, compared to the three months ended September 29, 2023. Direct costs of contract revenue for the Engineering and Consulting segment increased $0.2 million, or 2.7%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023.
Subcontractor services and other direct costs increased by $15.1 million, or 22.4%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023, primarily due to the increase in utility program revenues and construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $2.2 million, or 10.2%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023, primarily as a result of the increases in contract revenue as described above.
Gross Profit. Gross profit increased 18.8% to $51.6 million, or 32.6% gross margin, for the three months ended September 27, 2024, compared to gross profit of $43.4 million, or 32.7% gross margin, for the three months ended September 29, 2023. The decrease in our gross margin was primarily driven by changes in the mix of revenues as described above.
General and administrative expenses. General and administrative (“G&A”) expenses increased $3.3 million, or 8.4%, in the three months ended September 27, 2024, compared to the three months ended September 29, 2023. G&A expenses consisted of an increase of $2.0 million in the Energy segment combined with an increase of $0.8 million in the Engineering and Consulting segment, and an increase of $0.5 million in unallocated corporate expenses.
Within G&A expenses, the increase of $2.1 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $0.9 million in other general and administrative expenses, and the increase of $0.8 million in stock-based compensation 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 other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.
Income (loss) from operations. Operating income increased to $8.7 million for the three months ended September 27, 2024, compared to an operating income of $3.8 million for the three months ended September 29, 2023, as a result of the factors noted above.
Total other expense, net. Total other expense, net, decreased $0.4 million, or 24.8%, for the three months ended September 27, 2024, compared to the three months ended September 29, 2023, primarily due to lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities.
Income tax expense (benefit). We recorded an income tax expense of $0.2 million for the three months ended September 27, 2024, an effective tax rate of 2.1% on income before income tax expense, compared to an income tax expense of $0.7 million for the three months ended September 29, 2023, an effective tax rate of 31.3% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions and additional energy-efficiency building deductions.
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Net income (loss). Our net income was $7.3 million for the three months ended September 27, 2024, as compared to a net income of $1.6 million for the three months ended September 29, 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.
Nine Months Ended September 27, 2024 Compared to Nine Months Ended September 29, 2023
Contract revenue. Consolidated contract revenue increased $67.3 million, or 19.0%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, due to incremental revenues in both our Energy segment and our Engineering and Consulting segment.
Contract revenue in our Energy segment increased $60.3 million, or 20.6%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, primarily as a result of higher construction management revenues and increased demand for energy and electrification services under utility programs.
Contract revenue in our Engineering and Consulting segment increased $7.0 million, or 11.3%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, primarily due to increased demand for services provided to our clients.
Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $44.8 million, or 19.6%, for the nine months ended September 27, 2024, compared to the nine months ended September 29, 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 16.4% in the nine months ended September 27, 2024 from 17.9% in the nine months ended September 29, 2023, while subcontractor services and other direct costs increased to 48.5% in the nine months ended September 27, 2024 from 46.7% in the nine months ended September 29, 2023.
Direct costs of contract revenue in our Energy segment increased $42.9 million, or 21.5%, for the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023. Direct costs of contract revenue for the Engineering and Consulting segment increased $1.9 million, or 6.5%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023.
Subcontractor services and other direct costs increased by $39.2 million, or 23.7%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, primarily due to the increase in construction management revenues and utility program revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $5.7 million, or 8.9%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, primarily as a result of the increases in contract revenue as described above.
Gross Profit. Gross profit increased 17.9% to $147.8 million, or 35.1% gross margin, for the nine months ended September 27, 2024, compared to gross profit of $125.3 million, or 35.4% gross margin, for the nine months ended September 29, 2023. The decrease in our gross margin was primarily driven by changes in the mix of revenues as described above.
General and administrative expenses. G&A expenses increased $12.3 million, or 10.7%, in the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023. G&A expenses consisted of an increase of $7.4 million in the Energy segment combined with an increase of $4.1 million in the Engineering and Consulting segment, and an increase of $0.8 million in unallocated corporate expenses.
Within G&A expenses, the increase of $9.8 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $2.7 million in other general and administrative expenses, and the increase of $1.3 million in stock-based compensation was partially offset by a decrease of $1.6 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
38
expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.
Income (loss) from operations. Operating income increased 98.4% to $20.5 million for the nine months ended September 27, 2024, compared to an operating income of $10.3 million for the nine months ended September 29, 2023, as a result of the factors noted above.
Total other expense, net. Total other expense, net, decreased $2.0 million, or 34.6%, for the nine months ended September 27, 2024, compared to the nine months ended September 29, 2023, primarily due to lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities, combined with increased interest income related to our higher cash balances.
Income tax expense (benefit). We recorded an income tax expense of $1.9 million for the nine months ended September 27, 2024, an effective tax rate of 11.1% on income before income tax expense, compared to an income tax expense of $1.7 million for the nine months ended September 29, 2023, an effective tax rate of 37.2% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions and additional energy-efficiency building deductions.
Net income (loss). Our net income was $14.9 million for the nine months ended September 27, 2024, as compared to a net income of $2.9 million for the nine months ended September 29, 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.
Liquidity and Capital Resources
Nine Months Ended | ||||||
September 27, | September 29, | |||||
2024 | 2023 | |||||
(in thousands) | ||||||
Net cash provided by (used in): |
| |||||
Operating activities |
| $ | 38,611 |
| $ | 24,112 |
Investing activities | (6,045) | (9,115) | ||||
Financing activities | (2,857) | (21,595) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 29,709 | $ | (6,598) | ||
Sources of Cash
Our primary sources of liquidity for the next 12 months and beyond are cash generated from operations, cash and cash equivalents, and available borrowings under our revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”). We believe that our cash and cash equivalents, cash generated by operating activities, and available borrowings under our Revolving Credit Facility will be sufficient to finance our operating activities for at least the next 12 months.
As of September 27, 2024, we had a fully drawn $100 million term loan with $92.5 million outstanding (the “Term Loan”, and collectively with the Revolving Credit Facility, the “Credit Facilities”), 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 September 27, 2024, we had $53.1 million of unrestricted cash and cash equivalents.
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As of September 27, 2024, unhedged borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 7.2%. See Part I, Item 1, Note 6, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, and Part II, Item 8, Note 6, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023, for information regarding our indebtedness, including information about borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Cash Flows from Operating Activities
Cash flows provided by operating activities were $38.6 million for the nine months ended September 27, 2024, as compared to cash flows provided by operating activities of $24.1 million for the nine months ended September 29, 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 nine months ended September 27, 2024, resulted primarily from the increase in earnings and lower working capital requirements. Cash flows provided by operating activities for the nine months ended September 29, 2023, resulted primarily from the increase in earnings, combined with lower working capital requirements.
Cash Flows from Investing Activities
Cash flows used in investing activities were $6.0 million for the nine months ended September 27, 2024, as compared to cash flows used in investing activities of $9.1 million for the nine months ended September 29, 2023. Cash flows used in investing activities for the nine months ended September 27, 2024 and for the nine months ended September 29, 2023, were primarily due to cash paid for the development of software and the purchase of computers and equipment.
Cash Flows from Financing Activities
Cash flows used in financing activities were $2.9 million for the nine months ended September 27, 2024, as compared to cash flows used in financing activities of $21.6 million for the nine months ended September 29, 2023. Cash flows used in financing activities for the nine months ended September 27, 2024 were primarily attributable to the repayments of $5.6 million under our Term Loan, $1.2 million cash used to pay withholding taxes on stock grants, and $1.0 million principal payments on finance leases, partially offset by $2.8 million of proceeds from sales of common stock under employee stock purchase plan and $2.4 million in proceeds from stock option exercises. Cash flows used in financing activities for the nine months ended September 29, 2023 were primarily attributable to the disbursement of $10.7 million in restricted cash for utility rebate incentives, payments of $4.0 million for contingent consideration related to prior acquisitions, combined with repayments and borrowings of $111.0 million and $105.0 million, respectively, under our term loan facility and line of credit, which resulted primarily from refinancing our Prior Credit Facility.
Under certain utility contracts, we periodically receive cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. We act solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, we classify these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the condensed consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”
Off-Balance Sheet Arrangements
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,
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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.
Short and Long-term Uses of Cash
General
Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt. From time to time, we also use cash to help fund business acquisitions. Our cash and cash equivalents are impacted by the timing of when we invoice and are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.
Contractual Obligations
The following table sets forth our known contractual obligations as of September 27, 2024:
|
| Less than |
|
|
| More than |
| |||||||||
Contractual Obligations | Total | 1 Year | 1 - 3 Years | 3 - 5 Years | 5 Years |
| ||||||||||
(in thousands) | ||||||||||||||||
Debt (1) | $ | 91,894 | $ | 10,137 | $ | 81,757 | $ | — | $ | — | ||||||
Interest payments on debt outstanding (2) | 11,821 | 6,206 | 5,615 | — | — | |||||||||||
Operating leases |
| 16,102 |
| 5,509 |
| 7,809 |
| 2,108 |
| 676 | ||||||
Finance leases |
| 2,628 |
| 1,175 |
| 1,266 |
| 162 |
| 25 | ||||||
Total contractual cash obligations | $ | 122,445 | $ | 23,027 | $ | 96,447 | $ | 2,270 | $ | 701 | ||||||
| (1) | Debt includes $92.5 million outstanding on our Term Loan, net of issuance costs, and no borrowed amounts outstanding on our Revolving Credit Facility as of September 27, 2024. We have assumed no future borrowings or repayments (other than at maturity) for purposes of this table. Our Term Loan is scheduled to mature on September 29, 2026. |
| (2) | Borrowings under our Term Loan and Revolving Credit Facility bear interest at a variable rate. Future interest payments on our Credit Facility are estimated using floating rates in effect as of September 27, 2024. |
Outstanding Indebtedness
See Part I, Item 1, Note 6, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, and Part II, Item 8, Note 6, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Interest Rate Swap
From time to time, we enter into interest rate swap agreements to moderate our exposure to fluctuations in interest rates underlying our variable rate debt. For more information, see Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk”, and Note 5, “Derivative Financial Instruments”, to the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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Impact of Inflation
Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation.
While not material to our results of operations and financial condition, we have experienced higher cost of materials and delays in our supply chain for equipment. The prices of finished products from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs, price escalation, raw material costs, and other factors that impact the cost of finished goods due to the imprecise nature of the estimates required.
We are often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment, and subcontracts on our projects, as well as, when appropriate, including cost escalation factors into our proposals. Despite our best mitigation efforts, significant price increases in equipment and disruptions to our supply chain could materially impact our results of operations and financial condition. In addition, inflationary pressures, including expectations of future inflation, may impact the customers of our utility clients, which may lead to delayed or deferred decisions regarding expenditures to improve energy efficiency, and therefore potentially impact our future revenues.
Components of Revenue and Expense
Contract Revenue
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 September 27, 2024, 18% of our contracts are time-and-materials contracts, 38% are unit-based contracts, and 44% are fixed price contracts, compared to 21% are time-and-materials contracts, 39% are unit-based contracts, and 40% are fixed price contracts, as of September 29, 2023.
Some of these contracts include maximum contract prices, but contract maximums are often adjusted to reflect the level of effort to achieve client objectives and thus the majority of these contracts are not expected to exceed the maximum. Contract revenue on our fixed price contracts is determined on the percentage of completion method based generally on the ratio of direct costs incurred to date to estimated total direct costs at completion. Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.
Adjustments to contract cost estimates are made in the periods in which the facts requiring such revisions become known. When the revised estimate indicates a loss, such loss is recognized in the current period in its entirety. Claims and change orders that have not been finalized are evaluated to determine whether or not a change has occurred in the enforceable rights and obligations of the original contract. If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly. Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the assessment above of whether or not a contract modification has occurred. Estimated profit for un-priced change orders is recognized only if collection is probable.
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
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Los Angeles Department of Water and Power and Duke Energy Corp., may have a material effect on our consolidated operations.
Some of our contracts include certain performance guarantees, such as a guaranteed energy saving quantity. Such guarantees are generally measured upon completion of a project. In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period. We have not experienced any significant costs under such guarantees.
Direct Costs of Contract Revenue
Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects. Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects. Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue.
Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs. We expense direct costs of contract revenue when incurred.
General and Administrative Expenses
G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs. We expense general and administrative costs when incurred.
Critical Accounting Policies
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). To prepare these financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses in the reporting period. Our actual results may differ from these estimates. We have adopted accounting policies and practices that are generally accepted in the industry in which we operate.
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for our fiscal year ended December 29, 2023. Please refer to Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2023 for a discussion of our critical accounting policies and estimates.
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Recent Accounting Standards
For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part I, Item 1, Note 2, “Recent Accounting Pronouncements”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market risk sensitive financial instruments, including long-term debt.
As of September 27, 2024, we had cash and cash equivalents of $53.1 million. This amount represents cash on hand in business checking accounts with BMO Bank, N.A. We do not engage in trading activities and do not participate in foreign currency transactions.
We are subject to interest rate risk in connection with our Term Loan and borrowings, if any, under our Revolving Credit Facility, each of which bears interest at variable rates. As of September 27, 2024, $92.5 million was outstanding under our Term Loan, and we had no borrowed amounts outstanding and $1.6 million in letters of credit were issued under our Revolving Credit Facility. Each of our Term Loan and Revolving Credit Facility mature on September 29, 2026 and are governed by our Credit Agreement.
Pursuant to the Credit Agreement, (as described in Part II, Item 8, Note 6, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023), borrowings under the Credit Agreement bear interest at either a Base Rate (as defined in the Credit Agreement) or the adjusted Secured Overnight Financing Rate (“SOFR”), at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranges from 0.75% to 2.00% with respect to Base Rate borrowings and 1.75% to 3.00% with respect to SOFR borrowings, depending on the Company’s Total Net Leverage Ratio (as defined in the Credit Agreement); provided, that SOFR and the Base Rate cannot be less than 0.00%, with the specific pricing reset on each date on which the Administrative Agent receives the required financial statements under the Credit Agreement for the fiscal quarter then ended. The Company must also pay a commitment fee for the unused portion of the Revolving Credit Facility, which ranges from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which range from 1.3125% to 2.25% per annum, in each case, depending on the Company’s Total Net Leverage Ratio, as well as customary fronting fees payable to BMO as letter of credit issuer.
The Term Loan will amortize quarterly in an amount equal to (i) 7.5% per annum for the first year ending after the Closing Date and (ii) 10.0% per annum for the second and third years ending after the Closing Date, with a final payment of all then remaining principal and interest due on the maturity date of September 29, 2026. The amounts outstanding under the Credit Facilities may be prepaid in whole or in part at any time without penalty (other than customary breakage costs).
On November 30, 2023, we entered into an interest rate swap agreement for $50.0 million notional amount. The interest swap agreement was designated as a cash flow hedge to fix the variable interest rate on a portion of the outstanding principal amount under our Term Loan. The interest rate swap fixed rate is 4.77% and expires on September 29, 2026.
Based upon the amount of our outstanding indebtedness as of September 27, 2024, a one percentage point increase in the effective interest rate, inclusive of our interest rate swap agreement, would change our annual interest expense by approximately $1.1 million in fiscal year 2024.
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ITEM 4. Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15-d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our including our President and Chief Executive Officer, Michael A. Bieber, and our Chief Financial Officer and Executive Vice President, Creighton K. Early, as appropriate to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 27, 2024. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of September 27, 2024.
No change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We are subject to claims and lawsuits from time to time, including those alleging professional errors or omissions that arise in the ordinary course of business against firms that operate in the engineering and consulting professions. We carry professional liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss.
In accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements not to be misleading. We do not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
Because litigation outcomes are inherently unpredictable, our evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of our financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then we disclose the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable. While the consequences of certain unresolved proceedings are not presently determinable, and a reasonable estimate of the probable and reasonably possible loss or range of loss in excess of amounts accrued for such proceedings cannot be made, an adverse outcome from such proceedings could have a material adverse effect on our earnings in any given reporting period. However, in the opinion of our management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on our financial statements.
ITEM 1A. Risk Factors
There are no material changes to the risk factors set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 29, 2023.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the fiscal quarter ended September 27, 2024, we made the following repurchases of shares of our common stock from employees to satisfy tax withholding obligations incurred in connection with the vesting of restricted stock:
Total Number of | Average Price | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number | |
June 29, 2024 – July 26, 2024 | — | — | — | — |
July 27, 2024 – August 23, 2024 | 12,204 | $37.36 | — | — |
August 24, 2024 – September 27, 2024 | — | — | — | — |
TOTAL | 12,204 | $37.36 | — | — |
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ITEM 6. Exhibits
Exhibit | Exhibit Description | |
|---|---|---|
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to issues of long-term debt of Willdan Group, Inc. and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of Willdan Group, Inc. and its subsidiaries. | |
31.1* | ||
31.2* | ||
32.1** | ||
101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
‡ | Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K because it (i) is not material and (ii) would be competitively harmful if publicly disclosed. |
¥ | All schedules and exhibits were omitted pursuant to Item 601(a)(5) of Regulation S-K. |
† | Indicates a management contract or compensating plan or arrangement |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WILLDAN GROUP, INC. | ||
/s/ Creighton K. Early | ||
Creighton K. Early | ||
Chief Financial Officer and Executive Vice President | ||
(Principal Financial Officer, Principal Accounting Officer and duly authorized officer) | ||
October 31, 2024 | ||
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