美国
证券交易委员会
华盛顿特区20549
表格
根据1934年证券交易法第13或15(d)条，本季度报告 |
截至季度结束日期的财务报告
或者
根据1934年证券交易法第13或15（d)条的转型报告 |
过渡期从到
佣金文件号
（按其章程规定的确切注册人名称）
（注册或组织的）提起诉讼的州或其他司法管辖区（如适用） | （内部税务服务雇主识别号码） | |
(主要领导机构的地址) | (邮政编码) |
注册人电话号码，包括区号： (
在法案第12(b)条的规定下注册的证券：
请在核对标记中得出下列内容：(1)在过去12个月内（或注册者规定的较短期限内必须提交此类报告）依据1934年证券交易所法案第13或15(d)款提交了所有要求提交的报告，(2)在过去90天内一直受到此类提交要求的制约。☒否☐
请通过复选标记表示，注册者在过去12个月内（或注册者需要提交此类文件的较短期间内）是否已根据S-t法规第405条（本章第232.405条）要求提交过每个交互数据文件。
请勾选标记以说明注册人是大型快速申报人、加速申报人、非加速申报人、较小的报告公司还是新兴成长型公司。请查看《交易所法》第120亿.2条中“大型快速申报人”、“加速申报人”、“较小的报告公司”和“新兴成长型公司”的定义。
大型加速文件者◻ | ||
非加速归档企业◻ | 小型报告公司 | |
新兴成长公司 | ||
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。 ◻
是 否根据《证券交易法》第120亿2条。是
截至2024年10月30日，共有
关于前瞻性信息的警告声明
本季度的10-Q表格（以下简称“10-Q”）包含构成前瞻性声明的声明，根据1995年修正版《私人证券诉讼改革法》的定义。这些声明涉及我们的业务、运营和财务表现和状况，以及我们的业务运营和财务表现和状况的计划、目标和期望，这些都受到风险和不确定性的影响。除本10-Q中包含的历史事实之外的所有声明皆属于前瞻性声明。这些声明可能包括诸如“目标”、“预计”、“假设”、“相信”、“可能有”、“可能”、“由于”、“估计”、“预期”、“目标”、“打算”、“可能”，“可能”，“目标”，“计划”，“潜在”，“处于”，“预测”，“应该”，“目标”,“将”，“将”等词语，以及在讨论未来经营或财务表现或其他事件或趋势的时机或性质时所使用的其他具有类似含义的词语和术语。例如，我们就未来业务运营、增长或倡议、策略的计划和目标所作的所有声明属于前瞻性声明。
这些前瞻性声明基于我们对业务和所处行业以及我们管理层的信念和假设的当前预期、估计、预测和投影。我们制定许多前瞻性声明是根据我们自己的营运预算和预测，这些预算和预测基于许多详细的假设。虽然我们认为我们的假设是合理的，但我们警告说，预测已知因素的影响非常困难，我们无法预料所有可能影响我们实际结果的因素。
所有我们的前瞻性声明均受到风险和不确定性的影响，这可能导致我们的实际结果与我们的预期有重大差异。可能导致实际结果与我们的预期有重大差异的重要因素包括但不限于：
| ● | 我们有能力及时完成项目； |
| ● | 我们有能力在高度竞争的能源服务市场成功竞争，这在2023财年占我们营业收入的84%； |
| ● | 我们依赖于前十大客户的工作，这在2023财年占我们合同收入的53%； |
| ● | 州、地方和区域经济以及政府预算的变化； |
| ● | 我们有能力赢得新合同，续签现有合同，并通过竞标过程有效地竞争获得合同; |
| ● | 我们有能力按时偿还债务的本金和利息，并遵守债务协议中包含的财务契约; |
| ● | 我们有能力管理供应链限制、劳动力短缺、利率上升和通货膨胀上升; |
| ● | 我们有能力获得融资，并在债务到期时对既有债务进行再融资; |
| ● | 我们成功整合收购和执行增长策略的能力；和 |
| ● | 我们吸引和留住管理、技术和行政人才的能力。 |
上述并非导致实际结果与我们预期不符的所有因素或事件的完整列表；我们无法预测所有这些因素。所有归属于我们或代表我们行事的口头或书面前瞻性声明均已在本季度10-Q表格中的相关事项，以及第I部分，第1A条“风险因素”，“管理对财务状况和业绩的讨论”以及我们截至2023年12月29日的财年年度报告的其他地方，明确受到其他警示性陈述的全面限制，鉴于这些披露可能会不时进行修订、补充或取代。
1
根据我们提供给证券交易委员会的其他报告，包括随后的年度报告10-k、季度报告10-Q、8-k表格的现行报告以及公开通信，请评估本季度10-Q表格中提出的所有前瞻性声明，以及在这些风险和不确定性的背景下的其他情况。
敦促潜在投资者和其他读者在评估前瞻性声明时仔细考虑这些因素，并警告不要过分依赖我们所作的任何前瞻性声明。这些前瞻性声明仅适用于本季度10-Q表格的日期，并不保证未来绩效或发展，并涉及许多情况超出我们控制范围的已知和未知风险、不确定性和其他因素。除非法律要求，我们不承担更新或修订任何前瞻性声明的公开义务，无论是因为新信息、未来发展或其他原因。
2
第一部分，财务信息。
项目1.基本报表
威尔丹集团，公司及其子公司
简明综合资产负债表S
2024年4月30日
(未经审计)
| 9月27日, |
| 12月29日 | ||||
2024 | 2023 | ||||||
资产 | |||||||
流动资产： | |||||||
现金及现金等价物 | $ | | $ | | |||
受限现金 | | | |||||
应收账款，扣除坏账准备 $ |
| |
| | |||
合同资产 |
| |
| | |||
其他应收款 |
| |
| | |||
预付费用和其他流动资产 |
| |
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总流动资产 |
| |
| | |||
|
| |
| | |||
商誉 | | | |||||
租赁资产 | | | |||||
其他无形资产，净额 | | | |||||
其他 |
| |
| | |||
递延所得税，净额 | | | |||||
总资产 | $ | | $ | | |||
负债和股东权益 | |||||||
流动负债: | |||||||
应付账款 | $ | | $ | | |||
应计负债 |
| |
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合同负债 |
| |
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应付票据 |
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融资租赁义务 | | | |||||
租赁负债 | | | |||||
流动负债合计 |
| |
| | |||
应付票据，减去流动部分 | | | |||||
融资租赁负债，减去当前部分 |
| |
| | |||
租赁负债，减去流动部分 | | | |||||
其他非流动负债 | | | |||||
负债合计 |
| |
| | |||
承诺和 contingencies | |||||||
股东权益: | |||||||
优先股，$ |
|
| |||||
普通股，$ |
| |
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额外实收资本 |
| |
| | |||
累计其他综合收益(亏损) | ( | ( | |||||
保留盈余 |
| |
| | |||
股东权益总额 |
| |
| | |||
负债和股东权益总额 | $ | | $ | | |||
百万美元。
3
威登集团公司及其子公司
基本报表合并陈述 综合收益
（以千为单位，每股金额除外）
(未经审计)
三个月之内结束 | 九个月结束 | |||||||||||
9月27日, | 2023年9月29日 | 9月27日, | 2023年9月29日 | |||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
合同营业收入 | $ | | $ | | $ | | $ | | ||||
合同收入的直接成本（包括直接相关的折旧和摊销）： | ||||||||||||
工资薪金 |
| |
| |
| |
| | ||||
分包服务和其他直接成本 |
| |
| |
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合同营业收入的总直接成本 |
| |
| |
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| | ||||
毛利润 |
| |
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一般和管理费用： | ||||||||||||
工资和薪金，工资税和员工福利 |
| |
| |
| |
| | ||||
设施和设施相关 |
| |
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| | ||||
以股票为基础的报酬计划 |
| |
| |
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| | ||||
折旧和摊销 |
| |
| |
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其他 |
| |
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总管理费用 |
| |
| |
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经营收益(损失) |
| |
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其他收入（支出）： | ||||||||||||
利息费用，净额 |
| ( |
| ( |
| ( |
| ( | ||||
其他，净额 |
| |
| |
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其他支出合计，净值 |
| ( |
| ( |
| ( |
| ( | ||||
所得税前（净）收益 |
| |
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所得税（收益）费用 |
| |
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| | | | | ||||||||
其他综合收益（损失）： | ||||||||||||
衡量中的非实现收益（损失），税后 | ( | — | ( | — | ||||||||
综合收益（损失） | $ | | $ | | $ | | $ | | ||||
每股收益（亏损）： | ||||||||||||
基本 | $ | | $ | | $ | | $ | | ||||
稀释 | $ | | $ | | $ | | $ | | ||||
| ||||||||||||
基本 |
| |
| |
| |
| | ||||
稀释 |
| |
| |
| |
| | ||||
百万美元。
4
威尔丹集团，公司及其子公司
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
（以千为单位）
(未经审计)
累积的 | |||||||||||||||||
额外的 | 其他 | ||||||||||||||||
普通股 | 实收资本 | 综合 | 保留的 | ||||||||||||||
| 股份 |
| 数量 |
| 资本 |
| 收益（损失） |
| 收益 |
| 总费用 | ||||||
2023年12月29日的余额 |
| $ | $ | $ | ( | $ | $ | ||||||||||
员工股票购买计划相关发行的普通股股票 |
| | | | — | — | | ||||||||||
与激励股票计划相关的普通股份发行 | | — | | — | — | | |||||||||||
股票授予税款使用的股份 |
| ( | ( | ( | — | — | ( | ||||||||||
发行受限股票奖励和单位 | | | ( | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合同未实现收益 | — | — | — | | — | | |||||||||||
截至2024年3月29日的余额 |
| $ | $ | $ | ( | $ | $ | ||||||||||
作为激励股票计划的一部分发行的普通股 | | | | — | — | | |||||||||||
股票授予税款支付所使用的股份 |
| — | — | ( | — | — | ( | ||||||||||
发行受限制股票奖励和单位 | | — | — | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合约的未实现收益 | — | — | — | | — | | |||||||||||
截至2024年6月28日的结余 |
| $ | $ | $ | ( | $ | $ | ||||||||||
与员工股票购买计划相关的普通股发行 |
| | | | — | — | | ||||||||||
与激励股票计划相关联的普通股发行 | | | | — | — | | |||||||||||
股票授予税款支付所使用的股份 |
| ( | — | ( | — | — | ( | ||||||||||
发行受限制股票奖励和单位 | | — | — | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
衍生合同的净未实现收益 | — | — | — | ( | — | ( | |||||||||||
2024年9月27日余额 |
| $ | $ | $ | ( | $ | $ | ||||||||||
百万美元。
5
累积的 | |||||||||||||||||
额外的 | 其他 | ||||||||||||||||
普通股 | 实收资本 | 综合 | 保留的 | ||||||||||||||
| 股份 |
| 数量 |
| 资本 |
| 收益（损失） |
| 收益 |
| 总费用 | ||||||
2022年12月30日的结存 |
| $ | $ | $ | — | $ | $ | ||||||||||
与员工股票购买计划相关的普通股发行 |
| | | | — | — | | ||||||||||
股票用于支付股票授予的税款 |
| ( | — | ( | — | — | ( | ||||||||||
发行限制股奖和单位 | | | ( | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年3月31日的余额 |
| $ | $ | $ | — | $ | $ | ||||||||||
与激励股票计划相关的普通股发行 | | — | | — | — | | |||||||||||
股票用于支付股票授予的税款 |
| ( | — | ( | — | — | ( | ||||||||||
发行限制性股票奖励和单位 | | — | — | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年6月30日的余额 |
| $ | $ | $ | — | $ | $ | ||||||||||
在雇员股票购买计划中发行的普通股份 |
| | | | — | — | | ||||||||||
与激励股票计划相关的普通股发行 | | — | | — | — | | |||||||||||
股票用于支付股票奖励税款 |
| ( | — | ( | — | — | ( | ||||||||||
发行受限股票奖励和单位 | | — | — | — | — | — | |||||||||||
股票补偿费用 |
| — | — | | — | — | | ||||||||||
|
| — | — | — | — | | | ||||||||||
2023年9月29日的余额 |
| $ | $ | $ | — | $ | $ | ||||||||||
百万美元。
6
威登集团公司及其子公司
现金流量表简明综合报表
（以千为单位）
(未经审计)
九个月结束 | ||||||
9月27日, | 2023年9月29日 | |||||
| 2024 |
| 2023 | |||
经营活动现金流量： | ||||||
| $ | | $ | | ||
调整为符合经营活动提供的净现金流的净利润（亏损）： | ||||||
折旧和摊销 |
| |
| | ||
其他非现金项目 | | | ||||
递延所得税，净额 |
| |
| | ||
（收益）处置设备的损失 |
| ( |
| ( | ||
应收账款减值准备 |
| |
| | ||
以股票为基础的报酬计划 |
| |
| | ||
业务收购的影响除外，经营资产和负债的变动： | ||||||
应收账款 |
| |
| ( | ||
合同资产 |
| ( |
| | ||
其他应收款 |
| ( |
| | ||
预付费用和其他流动资产 |
| ( |
| | ||
其他 |
| |
| ( | ||
应付账款 |
| |
| | ||
应计负债 |
| |
| ( | ||
合同负债 |
| |
| | ||
租赁资产 |
| ( |
| | ||
经营活动中提供的净现金流量（流出） |
| |
| | ||
投资活动现金流量： | ||||||
购买设备、软件和租赁改良 |
| ( |
| ( | ||
出售设备的收益 | | | ||||
收购支付现金净额 | — | ( | ||||
投资活动的净现金流量(使用)/提供的净现金流量 |
| ( |
| ( | ||
筹集资金的现金流量： | ||||||
支付待定对价 |
| — |
| ( | ||
受限现金支付 | — | ( | ||||
应付短期借款的偿还 | ( | ( | ||||
债务发行成本支付 | — | ( | ||||
在贷款工具和信用额度下的借款 | — | | ||||
在贷款工具和信用额度下的偿还 | ( | ( | ||||
财务租赁的本金偿还 |
| ( |
| ( | ||
股票期权行权所得款项 |
| |
| | ||
员工股票购买计划下普通股销售所得 |
| |
| | ||
用于支付股票授予税款的现金 | ( | ( | ||||
筹资活动的净现金流量(使用)/提供的净现金流量 |
| ( |
| ( | ||
现金，现金等价物和受限现金净增加（减少） |
| |
| ( | ||
期初现金、现金等价物及受限制的现金余额 |
| |
| | ||
期末现金、现金等价物及受限制的现金余额 | $ | | $ | | ||
补充现金流信息披露： | ||||||
期间支付（收到）的现金： | ||||||
利息 | $ | | $ | | ||
所得税 |
| |
| ( | ||
非现金投资和筹资活动的补充披露： | ||||||
通过融资租赁方式获取的设备 | | | ||||
百万美元。
7
1. 公司的组织和运营情况Y
威尔丹集团公司（以下简称“威尔丹”或“公司”）是为公用事业、私营企业和各级政府机构提供专业、技术和咨询服务的服务商。随着资源和基础设施需求不断变化，公司通过为能源解决方案和政府基础设施提供各种技术服务，帮助组织和社区不断发展壮大。通过工程、项目管理、政策咨询以及软件和数据管理，公司设计并交付受信赖的、全面的、创新的和经过验证的解决方案，以提高能源和基础设施的效率、韧性和可持续性。
公司的广泛服务组合涵盖
公司遵循的会计政策在第II部分、项目8、附注1中规定，公司的《组织和运营》。公司的组织与运营，在《公司10-k表格》上所述的附注中包括的综合财务报表，截至2023年12月29日结束的财年。管理层认为，已进行了全面揭示所需的调整，以公正陈述《简明综合财务报表》。 所有此类调整均具有正常的、递归性质。按照美国通用会计准则（“U.S. GAAP”），通常包括在遵守的一致性的《综合财务报表》中通常包括的部分信息和脚注披露已根据证券交易委员会（“SEC”）的规则和规例进行了压缩或省略。应该阅读这些《简明综合财务报表》及其相关附注，与公司截至2023年12月29日结束的财年的《综合财务报表》和附注一起阅读。中期业务结果并不一定能反映全年预期结果。
财政年度
公司根据以12月31日最接近的星期五结束的-周期运营和报告其年度财务结果。 公司根据
使用估计
按照美国通用会计准则编制合并财务报表需要管理层做出影响合并财务报表当日资产、负债金额以及披露当日合并财务报表日事后性资产和负债的估计和假设。估计也会影响报告期间营业收入和费用的金额。实际结果可能与这些估计有所不同。
重新分类
为使简明的合并财务报表符合当年的展示，某些以前年度金额已在简明合并财务报表中有所调整。
8
威尔丹集团公司及其子公司
基本成员公司财务报表附注－（续）
(未经审计)
2. 近期会计准则
最近发布的会计准则
2023年12月，财务会计准则委员会（“FASB”）发布了会计准则更新（“ASU”）2023-09，“所得税（主题740）：完善所得税披露”（“ASU 2023-09”）。ASU 2023-09修订了有关所得税披露的规定，要求实体在税率协调中披露具体分类，揭示继续经营活动税前利润或损失（分为国内和国外）以及继续经营活动的所得税费用或利益（按联邦、州和国外分开）。此外，ASU 2023-09要求实体披露其向国际、联邦、州和地方司法管辖区支付的所得税款项，等一系列变更。虽然允许按前瞻性基础应用这些修订，但也允许追溯应用。修订适用于2024年12月15日后开始的年度报告期间，允许提前采用。公司目前正在
2013年11月，FASB发布了ASU No. 2023-07，“分部报告（第280号课题）：改进可报告段披露”（“ASU 2023-07”）。ASU 2023-07通过增强与定期向首席运营决策者（“CODM”）提供的重要段落费用相关的披露，对报告段其他条目进行描述，以及决定如何分配资源时CODM使用的段利润或损失的任何额外措施，扩展了段落披露要求。所有在ASU 2023-07下的披露要求也适用于只有一个可报告部门的上市实体。修订条款从2023年12月15日后的财政年度开始生效，并在2024年12月15日后的财政年度内的中期报告周期内生效。公司目前
2013年10月，FASB发布了ASU No. 2023-06，“披露改进：对SEC的披露更新和简化倡议中的规范修订”（“ASU 2023-06”）。ASU 2023-06修改了美国普通会计准则以反映SEC向FASB提交的有关披露和陈述要求的更新和简化。针对性的修订将SEC提交的27项披露中的14项合并到规范中。ASU 2023-06中的每项修订都在SEC从《上市协定》或《S-K条例》中删除相关披露要求的日期生效，或者如果SEC在该日期之前未取消要求，则在2027年6月30日生效。公司认为ASU 2023-06中的修订
9
威尔丹集团公司及其子公司
续注释到压缩的综合财务报表
(未经审计)
3. 营收
公司与客户签订的合同涵盖各种定价条款，包括固定价格、时间和材料、基于单位的条款。公司按照《2014年美国注册会计师协会公告第9号，与客户订立合同的收入》，核定为ASC主题606及相关修订（统称“ASC 606”）来确认收入。因此，公司确定与客户的合同，确定合同中的履约义务，确定交易价格，将交易价格分配给合同中的每个履约义务，并在公司满足履约义务时（或按照约定）确认营业收入。
以下表反映了公司的
部分 | 合同类型 | 营收确认方法 |
工时货物 | 工时货物 | |
能源 | 基于单位的 | 基于单位的 |
软件许可证 | 基于单位的 | |
固定价格 | 完成百分比 | |
工时货物 | 工时货物 | |
工程和咨询 | 单位制 | 单位制 |
固定价格 | 完工百分比 |
公司绝大部分合同的营业收入是根据时间分摊确认的，因为持续将控制权转移给客户。根据完成预计总直接成本与截至目前发生的直接成本的比率，固定价格合同的营业收入通常采用完工百分比法确认。公司使用完工百分比法更好地匹配某一时间点执行的工作水平，以及完成项目所需的工作量。此外，完工百分比法是公司行业中常用的一种营业收入确认方法。
公司的许多固定价格合同涉及大量分包的固定价格工作，并且通常相对较短，从而降低了错误估计完成百分比的风险。按照合同具体的费率和条款进行工作时，计时间付合同和基于产量的合同的营业收入是在执行工作时确认的。公司根据每个报告期间发生的实际小时数以合同约定的费率每小时计入所有报销成本，并将相应费用计入营业收入。公司的某些计时间付合同受到最大合同价值的限制，因此，当预期营业收入超过最大合同价值时，这些合同通常根据完工百分比法确认，与固定价格合同一致。对于基于产量的合同，公司在交付生产产品的期间将基本生产产品单位的合同价格确认为营业收入。已开具账单但尚未获得的金额按期推迟，这种推迟的营业收入在附表中列示为合同负债。公司还从软件许可证、专业服务和维护费用中获取收入。根据ASC 606，公司对每个合同进行评估，以确定履行义务、判断合同的整体交易价格、将交易价格分配到履行义务，并在履行义务得到满足时确认营业收入。公司采用残差法，根据交易价格总额减去合同中其他商品或服务的可观单独销售价格之和，估计单独销售价格。软件许可证营业收入通常在控制权转移给客户的时点确认，即客户可以使用和受益于许可证时点。在提供相关服务之前交付软件许可证，且不需要服务、更新或技术支持即可正常运行。相关专业服务包括培训和支持服务，其单独销售价格根据耗费的总工时比例与总估计工时确定，并按时确认，通常为合同期。
10
威尔丹集团公司及其子公司
基本报表附注 - （续）
(未经审计)
为确定合同的正确营业收入确认方法，公司评估是否应将两个或两个以上的合同合并，并视为一个单一合同，以及合并合同是否应视为一项履约义务。就公司的合同而言，很少有多个合同应合并为单一履约义务。这种评估需要进行重大判断，将一组合同合并或将单个合同分成多个履约义务的决定可能会更改某一时期记录的营业收入和利润额。如果合同中的承诺转让个别货物或服务与合同中的其他承诺无法单独确定，主要是因为公司提供了将一系列复杂的任务和元件集成到一个单一项目或能力中的重要服务，则合同被认为具有单一履约义务。
公司可能会签署包括独立阶段或元素的合同。如果每个阶段或元素根据所需的技术资源和/或所提供服务的供需分别进行协商，公司将评估是否应对合同进行分割。如果满足某些标准，合同将被细分，这可能导致将收入分配给不同元素或阶段，根据每个元素或阶段对估计的总合同收入的相对价值而具有不同的盈利率。细分合同可能占公司合并合同收入的约
在跨越项目或服务生命周期的多个阶段或元件（开发、施工、维护和支持）的合同中，即使它们是单一合同的一部分，也可以被视为具有多个履约义务。对于具有多个履约义务的合同，公司将交易价格分配给每个履约义务，使用每一份独特商品或服务的独立销售价格的最佳估计。在呈现的期间，具有多个履约义务的合同中独立履约义务的价值（通常是某些能源绩效合同下的测量和验证任务）并不重要。在公司不以独立基础提供独特商品或服务的情况下，用于估计独立销售价格的主要方法是预期成本加利润率方法，公司会预测履行履约义务的预期成本，然后为独特商品或服务添加适当的利润。
公司向客户提供与销售产品一并提供的工艺质量保证，这些保证不是单独定价或销售的，也不会为客户提供除了遵守协定规格和行业标准之外的服务。公司不认为这些类型的保证构成独立的履约义务。
在某些情况下，公司与客户签订总服务协议或框架协议，在这些协议下，每个任务订单都允许公司执行服务合同中整体范围的特定部分。每个任务订单通常被视为一个单独合同，因为任务订单确定了可执行的权利和义务，以及付款条款。
根据ASC 606，变量考虑应在确定交易价格时予以考虑，并应估计交易价格的变量考虑元素，以及评估估计的变量考虑是否受到限制。对于公司的某些合同，变量考虑可能源自于未经批准的变更订单或客户索赔导致的服务范围变更。变量考虑应包括在交易价格中，以确保在变量考虑的不确定性解决时，累积确认的收入不会发生重大逆转的情况下。公司对变量考虑的估计以及决定是否将估计金额包括在交易价格中，主要基于法律强制执行性、公司的履行情况以及公司合理可得到的所有信息（历史数据、当前数据和预测数据）。
11
威尔丹集团公司及其子公司
基本报表附注 - (续)
(未经审计)
由于公司许多履约义务所需工作的性质，总收入和完工成本的估计是复杂的，受许多变量的影响，并需要进行重大判断。由于一个或多个这些估计发生重大变化可能会影响公司合同的盈利能力，公司定期通过全公司统一的项目审查流程审查和更新与公司合同相关的估计，管理层审查公司履约义务的进展和执行以及最终预算的相关信息。作为这个过程的一部分，管理层审查信息，包括但不限于任何未决关键合同事项、完成进度以及相关项目进度表和相关收入和成本估计的变化。管理层必须就劳动生产率和可用性、需要执行的工作复杂性、材料的成本和可用性、分包商的表现以及来自客户的资金的可用性和时间等变量进行假设和估计。
公司在累积补充方法下承认对合同预计利润的调整。根据该方法，调整对已记录的利润的影响将在确定调整时认可。在未来合同履行期间的收入和利润使用调整后的估计来确认。如果任何时候合同盈利的估计表明合同有望亏损，公司将在确定的期间内全额确认估计亏损。
合同经常被修改以适应合同规格和要求的变化。当修改导致新的权利或义务或改变现有的可执行权利或义务时，公司认为合同修改存在。由于在合同背景中提供了重大整合的商品或服务，公司的大多数合同修改被视为与原始合同的一部分一样处理。一个不同于现有合同的合同修改对价款和公司对其进行衡量的履约义务进度的影响将按累积追溯的方式确认为对收入的调整（无论是收入的增加还是减少）。
对于导致承诺交付与现有合同不同的货物或服务，且合同价格的增加等于修改中包含的额外货物或服务的单独销售价格的情况，公司按照独立合同处理此类合同修改。
公司将对供应商、分包商和其他单位的索赔记录为应收账款，并在合同确立索赔可执行性、金额可以合理估计且可以预计收回时减少确认费用。记录金额不超过管理层预期可收回金额或已发生的费用的较低额度。
账单实践根据各项目合同条款管理，基于发生的成本、里程碑的达成或预先商定的进度。账单与根据百分比完成度收入确认方法确认的营业收入不一定相关。
合同收入的直接成本主要包括与产生收入的项目有关的技术和非技术工资支出的那部分。合同收入的直接成本还包括生产费用、分包服务和与产生收入的项目有关的其他费用。
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
威尔丹集团公司及其子公司
基本报表附注 - (续)
(未经审计)
5. 衍生金融工具
公司使用某些利率衍生成交合约来对冲其可变利率债务的利率风险。公司的对冲方案并非用于交易或投机目的。
公司根据公允价值在附表中将衍生工具确认为资产或负债。公司记录已指定为现金流量套期保值的衍生工具的公允价值变动（即收益或损失）作为累积其他全面收益（损失）出现在其合并资产负债表上，并出现在其合并综合收益表（损失）上作为衍生合约未实现收益或损失。所有相关现金流量均报告在合并现金流量表的经营活动部分。
2024年6月4日，Realty Income公司（以下简称“公司”）发布了一份新闻稿，公布了截至2024年12月31日更新的收益和投资成交量预测。新闻稿的副本作为Exhibit 99.1附在此，作为本报告的一部分。此报告的Exhibit 99.1作为第7.01项目，根据8-K表格的规定提供，不视为1934年证券交易法第18条的“报告文件”，无论此后公司做出的任何注册文件，也不管任何这类文件的一般包含语言，都不作为参考依据。
公司持有的未结算衍生工具作为避险工具的公允价值如下：
|
| 衍生工具的公允价值 | ||||||
|
| 截止日期为止的工具 | ||||||
资产负债表上的位置 | 2024年9月27日 | 2023年12月29日 | ||||||
（以千为单位） | ||||||||
利率掉期协议 | $ | — | $ | | ||||
利率掉期协议 | ( | — | ||||||
利率掉期协议 | ( | ( | ||||||
现金流量套期工具的有效部分以及公允价值套期关系对其他全面收益（损失）的影响为$
16
威尔丹集团公司及其子公司
基本财务报表附注 - (续)
(未经审计)
下列期间相关的累积余额和报告期活动，涉及从其他综合收益（损失）重新分类的汇总如下：
开放商品损益未实现收益（亏损） | 累积其他 | |||||
| 衍生工具 |
| 综合收益（损失） | |||
（以千为单位） | ||||||
2023年12月29日的余额 | $ | ( | $ | ( | ||
其他综合收益（损失）在再分类之前 | | |||||
从累计其他综合收益（损失）中重新分类的金额： | — | — | ||||
与衍生工具相关的所得税益（费用） | ( | ( | ||||
净本期其他综合收益（损失） | | | ||||
2024年3月29日的余额 | $ | ( | $ | ( | ||
其他综合收益（损失）在再分类之前 | | |||||
从累计其他综合收益（损失）中重新分类的金额： | — | — | ||||
与衍生工具相关的所得税费用（收益） | ( | ( | ||||
净本期其他综合收益（损失） | | | ||||
2024年6月28日的余额 | $ | ( | $ | ( | ||
其他综合收益（损失）在再分类之前 | ( | ( | ||||
从累计其他综合收益（损失）中重新分类的金额： | — | — | ||||
与衍生工具相关的所得税收益（费用） | ||||||
净本期其他综合收益（损失） | ( | ( | ||||
2024年9月27日余额 | $ | ( | $ | ( | ||
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.
30
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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