Market Overview

Willdan Group Reports Second Quarter 2018 Results

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Investment Community Conference Call Today at 5:30 p.m. Eastern
Time

Willdan Group, Inc. ("Willdan") (NASDAQ:WLDN), a provider of
professional technical and consulting services, today reported financial
results for its second quarter ended June 29, 2018.

Second Quarter 2018 Highlights

  • Total Contract Revenue of $59.8 million
  • Net Revenue of $34.3 million
  • Net Income of $3.3 million
  • Diluted earnings per share of $0.36
  • Adjusted diluted earnings per share of $0.50
  • Cash flow from operations of $10.8 million

For the second quarter of 2018, Willdan reported total contract revenue
of $59.8 million and net income of $3.3 million, or $0.36 per diluted
share. This compares with total contract revenue of $71.8 million and
net income of $3.3 million, or $0.36 per diluted share, for the second
quarter of 2017. For the second quarter of 2018, Net Revenue, defined as
revenue, net of subcontractor services and other direct costs (see "Use
of Non-GAAP Financial Measures" below), was $34.3 million, up 13.7%
compared to the same period in fiscal year 2017.

"We executed well in the second quarter and delivered strong
year-over-year growth in Net Revenue and Adjusted Diluted EPS," said Tom
Brisbin, Willdan's Chairman and Chief Executive Officer. "All of our
major energy efficiency programs are performing well and we saw the
ramp-up in revenue that we expected from Integral Analytics, our
provider of energy data analytics software. Our current revenue mix and
new business pipeline reflects a broader range of work as we continue to
diversify both geographically and by project type. In addition, this
quarter we generated $10.8 million in cash flow from operations and a
21.3% adjusted EBITDA net margin, both company records."

"In addition to our traditional energy efficiency services and
engineering work, we are seeing more opportunities for projects related
to microgrids, fuel cells, and natural gas load pockets. Advancements in
technology and policy are transforming the global electricity system,
and we believe we are well positioned to help utilities, businesses and
governments make the transformation. The electrification of our
transportation systems will place a greater demand on the electric grid,
and change when and where electricity is needed. Use of renewables and
battery storage will increase, generating two-way power flow that
transacts with the grid, creating significant new engineering and market
challenges."

Second Quarter 2018 Financial Highlights

Total contract revenue for the second quarter of 2018 was $59.8 million,
a decrease of 16.7% from $71.8 million for the second quarter of 2017.
Contract revenue for the Energy segment was $41.7 million for the second
quarter of 2018, a decline of 22.3%, which was primarily attributable to
the reduction in pass-through subcontractor costs, for which the Company
receives little or no margin. Contract revenue for the Engineering and
Consulting segment was $18.1 million, relatively unchanged from the
second quarter of 2017.

Net Revenue for the second quarter of 2018 was $34.3 million, an
increase of 13.7% from $30.2 million for the second quarter of 2017. The
increase was primarily due to a ramp up in new programs within the
Energy segment replacing high revenue and high pass-through cost
projects with lower revenue and lower pass-through cost projects, as
well as revenue contributed from Integral Analytics and Newcomb Anderson
McCormick, Inc. ("NAM"), two firms acquired over the past year. Net
Revenue in the Energy segment was $20.2 million for the second quarter
of 2018, an increase of 21.8% over the same period last year. Net
Revenue in the Engineering and Consulting segment was $14.0 million for
the second quarter of 2018, an increase of 3.8% over the same period
last year.

Direct costs of contract revenue were $36.7 million for the second
quarter of 2018, a decrease of 30.9%, from $53.0 million for the second
quarter of 2017. The decrease was primarily due to reduced pass-through
subcontractor expenses related to certain Energy segment projects.

Total general and administrative expenses for the second quarter of 2018
was $19.0 million, an increase of 33.3% from $14.2 million for the
second quarter of 2017, driven primarily by the employees and offices
added through the acquisitions of Integral Analytics and NAM, an
increase in salaries and wages as a result of rate changes and an
increase in stock-based compensation.

Income tax expense was $0.9 million in the second quarter of 2018,
compared to $1.2 million for the prior year period. The quarter over
quarter decrease of $0.4 million, or 28.8% is due to a reduction in the
corporate tax rate for 2018.

Net income for the second quarter of 2018 was $3.3 million, or $0.36 per
diluted share, as compared to net income of $3.3 million, or $0.36 per
diluted share, for the second quarter of 2017. The increase in operating
performance was offset by higher non-cash stock-based compensation
expense.

Adjusted EBITDA (see "Use of Non-GAAP Financial Measures" below) was
$7.3 million for the second quarter of 2018, an increase of 16.6% from
$6.2 million for the second quarter of 2017. Adjusted EBITDA as a
percentage of Net Revenue, was 21.3% in the second quarter of 2018, as
compared with 20.7% for the second quarter of 2017.

Adjusted Net Income (see "Use of Non-GAAP Financial Measures" below) was
$5.0 million for the second quarter of 2018, an increase of 26.6% from
$3.9 million for the second quarter of 2017. The increase in Adjusted
Net Income was primarily due to higher operating performance and a lower
effective tax rate, as compared to the second quarter of 2017. Adjusted
Diluted EPS (see "Use of Non-GAAP Financial Measures" below) for the
second quarter of 2018 was $0.50, an increase of 22.0% from $0.41 for
the second quarter of 2017.

Six Months 2018 Financial Highlights

Total contract revenue for the six months ended June 29, 2018 was $114.4
million, a decrease of 18.4% from $140.2 million for the six months
ended June 30, 2017. Contract revenue for the Energy segment was $79.1
million for the six months ended June 29, 2018, a decline of 23.9% from
$103.8 million for the six months ended June 30, 2017. The decrease was
primarily attributable to the reduction in pass-through subcontractor
costs, for which the Company receives little or no margin. Contract
revenue for the Engineering and Consulting segment was $35.4 million for
the six months ended June 29, 2018, a decline of 2.7% from $36.3 million
for the six months ended June 30, 2017.

Net Revenue for the six months ended June 29, 2018 was $64.8 million, an
increase of 10.6% from $58.6 million for the six months ended June 30,
2017. The increase was primarily due to a ramp up in new programs within
the Energy segment replacing high revenue and high pass-through cost
projects with lower revenue and higher margin projects, as well as
revenue contributed from Integral Analytics and NAM, two firms acquired
over the past year. Net Revenue in the Energy segment was $36.6 million
for the six months ended June 29, 2018, an increase of 16.9% from $31.3
million for the six months ended June 30, 2017. Net Revenue in the
Engineering and Consulting segment was $28.2 million for the six months
ended June 29, 2018, an increase of 3.4% from $27.3 million for the six
months ended June 30, 2017.

Direct costs of contract revenue were $71.7 million for the six months
ended June 29, 2018, a decrease of 30.8%, from $103.7 million for the
six months ended June 30, 2017. The decrease was primarily due to
reduced pass-through subcontractor expenses related to our Energy
segment work.

Total general and administrative expenses for the six months ended June
29, 2018 was $36.5 million, an increase of 22.0% from $29.9 million for
the six months ended June 30, 2017, driven primarily by the employees
and offices added through the acquisitions of Integral Analytics and
NAM, an increase in salaries and wages as a result of rate changes and
an increase in stock-based compensation.

Income tax expense was $0.6 million for the six months ended June 29,
2018, compared to $0.5 million for the six months ended June 30, 2017.
For both six month periods the difference between the tax expense
recorded and the expense that would be recorded by applying each year's
federal statutory rate was attributable to various tax deductions.

Net income for the six months ended June 29, 2018 was $5.5 million, or
$0.60 per diluted share, as compared to net income of $6.0 million, or
$0.66 per diluted share, for the six months ended June 30, 2017. The
decrease was primarily due to an increase in non-cash stock-based
compensation.

Adjusted EBITDA (see "Use of Non-GAAP Financial Measures" below) was
$11.8 million for the six months ended June 29, 2018, an increase of
20.0% from $9.8 million for the six months ended June 30, 2017. Adjusted
EBITDA as a percentage of Net Revenue, was 18.2% for the six months
ended June 29, 2018, as compared with 16.7% for the six months ended
June 30, 2017.

Adjusted Net Income (see "Use of Non-GAAP Financial Measures" below) was
$8.2 million for the six months ended June 29, 2018, an increase of
17.0% from $7.0 million for the six months ended June 30, 2017. The
increase in Adjusted Net Income was primarily due to an increase in Net
Revenue, as compared to the six months ended June 30, 2017. Adjusted
Diluted EPS (see "Use of Non-GAAP Financial Measures" below) was $0.86
for the six months ended June 29, 2018, an increase of 11.7% from $0.77
for the six months ended June 30, 2017.

Balance Sheet

Willdan reported $11.2 million in cash and cash equivalents at June 29,
2018, as compared to $14.4 million at December 29, 2017. The decrease in
cash and cash equivalents was primarily due to net cash
used in financing and investing activities of $3.8 million and $3.5
million, respectively, offset by net cash provided by operating
activities of $4.0 million. The net cash used in financing activities
was primarily payments of contingent consideration related to our prior
acquisitions and the net cash used in investing activities was primarily
cash paid for an acquisition, net of cash acquired.

Outlook

Willdan reaffirmed its financial targets and updated its amortization
target for fiscal year 2018:

  • Total Net Revenue of $130 - $140 million
  • Adjusted Diluted EPS of $1.95 - $2.05
  • Effective tax rate of approximately 23%
  • Diluted share count of 9.3 million shares
  • Depreciation of approximately $2.0 million
  • Amortization of approximately $3.1 million

Over the long-term, Willdan continues to target both organic and
acquisitive Net Revenue growth of greater than 10%, resulting in total
Net Revenue growth of greater than 20% per year.

Conference Call Details and Investor Report

Chief Executive Officer Thomas Brisbin and Chief Financial Officer Stacy
McLaughlin will host a conference call today, August 2, 2018, at 5:30
p.m. Eastern/2:30 p.m. Pacific to discuss Willdan's financial results
and provide a business update.

Interested parties may participate in the conference call by dialing
866-548-4713 and providing conference ID 8413254. The conference call
will be webcast simultaneously on Willdan's website at www.willdan.com
under Investors: Events and the replay will be archived for at least 12
months.

The telephonic replay of the conference call may be accessed following
the call by dialing 888-203-1112 and entering the passcode 8413254. The
replay will be available through August 16, 2018.

An Investor
Report
containing supplemental financial information can also be
accessed on the home page of Willdan's investor relations website.

About Willdan Group, Inc.

Willdan provides professional technical and consulting services,
including comprehensive energy efficiency services, for utilities,
private industry and public agencies throughout the United States.
Willdan's service offerings span a broad range of complementary services
including energy efficiency and sustainability, engineering,
construction management and planning, economic and financial consulting
and national preparedness and interoperability. Willdan provides
integrated technical solutions to extend the reach and resources of its
clients and provides all services through its subsidiaries specialized
in each segment. For additional information, visit Willdan's website at www.willdan.com.

Use of Non-GAAP Financial Measures

"Net Revenue," a non-GAAP financial measure, is a supplemental measure
that Willdan believes enhances investors' ability to analyze our
business trend and performance because it substantially measures the
work performed by our employees. In the course of providing services,
Willdan routinely subcontracts various services. Generally, these
subcontractor services and other direct costs are passed through to our
clients and, in accordance with U.S. generally accepted accounting
principles ("GAAP") and industry practice, are included in our revenue
when it is our contractual responsibility to procure or manage these
activities. Because subcontractor services and other direct costs can
vary significantly from project to project and period to period, changes
in revenue may not necessarily be indicative of our business trends.
Accordingly, Willdan segregates costs from revenue to promote a better
understanding of our business by evaluating revenue exclusive of costs
associated with external service providers. A reconciliation of contract
revenue as reported in accordance with GAAP to revenue, net of
subcontractor services and other direct costs is provided at the end of
this news release.

"Adjusted EBITDA" is a supplemental measure used by Willdan's management
to measure its operating performance. Willdan defines Adjusted EBITDA as
net income (loss) plus interest expense (income), income tax expense
(benefit), stock-based compensation, interest accretion and depreciation
and amortization. Adjusted EBITDA is not a measure of net income (loss)
determined in accordance with GAAP. Willdan believes Adjusted EBITDA is
useful because it allows Willdan's management to evaluate its operating
performance and compare the results of its operations from period to
period and against its peers without regard to its financing methods,
capital structure and non-operating expenses. Willdan uses Adjusted
EBITDA to evaluate its performance for, among other things, budgeting,
forecasting and incentive compensation purposes.

Adjusted EBITDA has limitations as an analytical tool and should not be
considered as an alternative to, or more meaningful than, net income
(loss) as determined in accordance with GAAP. Certain items excluded
from Adjusted EBITDA are significant components in understanding and
assessing a company's financial performance, such as a company's costs
of capital, stock-based compensation, as well as the historical costs of
depreciable assets. Willdan's definition of Adjusted EBITDA may also
differ from those of many companies reporting similarly named measures.
Willdan believes Adjusted EBITDA is useful to investors, research
analysts, investment bankers and lenders because it removes the impact
of certain non-operational items from its operational results, which may
facilitate comparison of its results from period to period. A
reconciliation of net income as reported in accordance with GAAP to
Adjusted EBITDA is provided at the end of this news release.

"Adjusted Net Income" is a supplemental measure used by Willdan's
management to measure its operating performance. Willdan defines
Adjusted Net Income as net income plus stock-based compensation. Adjusted
Net Income has limitations as an analytical tool and should not be
considered as an alternative to, or more meaningful than, net income as
determined in accordance with GAAP. A reconciliation of net income as
reported in accordance with GAAP to Adjusted Net Income is provided at
the end of this news release.

"Adjusted Diluted EPS" is a supplemental measure used by Willdan's
management to measure its operating performance. Willdan defines
Adjusted Diluted EPS as Adjusted Net Income divided by the diluted
weighted-average shares outstanding. Adjusted Diluted EPS has
limitations as an analytical tool and should not be considered as an
alternative to, or more meaningful than, diluted EPS as determined in
accordance with GAAP. A reconciliation of diluted EPS as reported in
accordance with GAAP to Adjusted Diluted EPS is provided at the end of
this news release.

Willdan's definition of Net Revenue, Adjusted EBITDA, Adjusted Net
Income and Adjusted Diluted EPS may differ from other companies
reporting similarly named measures. These measures should be considered
in addition to, and not as a substitute for, or superior to, other
measures of financial performance prepared in accordance with GAAP, such
as contract revenue and net income.

Forward Looking Statements

Statements in this press release that are not purely historical,
including statements regarding Willdan's intentions, hopes, beliefs,
expectations, representations, projections, estimates, plans or
predictions of the future are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding Willdan's targets for fiscal year 2018
and the expected benefits of Willdan's acquisitions of Integral
Analytics, Inc. and NAM. The forward-looking statements involve risks
and uncertainties including, but not limited to, the risk
that Willdan will not be able to expand its services or meet the needs
of customers in markets in which it operates. It is important to note
that Willdan's actual results could differ materially from those in any
such forward-looking statements. Factors that could cause actual results
to differ materially include, but are not limited to, Willdan's ability
to adequately complete projects in a timely manner, Willdan's ability to
compete successfully in the highly competitive energy market, changes in
state, local and regional economies and government budgets, Willdan's
ability to win new contracts, to renew existing contracts and to compete
effectively for contracts awards through bidding processes and Willdan's
ability to successfully integrate its acquisitions and execute on its
growth strategy. Willdan's business could be affected by a number of
other factors, including the risk factors listed from time to time
in Willdan's reports filed with the Securities and Exchange Commission,
including, but not limited to, the Annual Report on Form 10-K filed for
the year ended December 29, 2017 and the Quarterly Report on Form 10-Q
for the quarter ended June 29, 2018. Willdan cautions investors not to
place undue reliance on the forward-looking statements contained in this
press release. Willdan disclaims any obligation to, and does not
undertake to, update or revise any forward-looking statements in this
press release.

   
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 29, December 29,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 11,225,000 $ 14,424,000
Accounts receivable, net of allowance for doubtful accounts of
$714,000 and $369,000 at June 29, 2018 and December 29, 2017,
respectively
22,896,000 38,441,000
Contract assets 42,410,000 24,732,000
Other receivables 777,000 1,833,000
Prepaid expenses and other current assets   3,242,000   3,760,000
Total current assets 80,550,000 83,190,000
Equipment and leasehold improvements, net 5,142,000 5,306,000
Goodwill 40,342,000 38,184,000
Other intangible assets, net 11,201,000 10,666,000
Other assets   920,000   826,000
Total assets $ 138,155,000 $ 138,172,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 14,024,000 $ 20,826,000
Accrued liabilities 24,198,000 23,293,000
Contingent consideration payable 4,224,000 4,246,000
Contract liabilities 6,163,000 7,321,000
Notes payable 383,000
Capital lease obligations   237,000   289,000
Total current liabilities 48,846,000 56,358,000
Contingent consideration payable 3,650,000 5,062,000
Notes payable 2,000,000 2,500,000
Capital lease obligations, less current portion 192,000 160,000
Deferred lease obligations 631,000 614,000
Deferred income taxes, net 2,404,000 2,463,000
Other noncurrent liabilities   468,000   363,000
Total liabilities   58,191,000   67,520,000
 
Commitments and contingencies
 
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding
Common stock, $0.01 par value, 40,000,000 shares authorized;

8,857,000 and 8,799,000 shares issued and outstanding at June 29,
2018 and December 29, 2017, respectively

89,000 88,000
Additional paid-in capital 54,216,000 50,976,000
Retained earnings   25,659,000   19,588,000
Total stockholders' equity   79,964,000   70,652,000
Total liabilities and stockholders' equity $ 138,155,000 $ 138,172,000
 
 
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
       
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2018   2017   2018   2017  
 
Contract revenue $ 59,833,000   $ 71,833,000   $ 114,428,000   $ 140,184,000  
 
Direct costs of contract revenue (inclusive of directly related
depreciation and amortization):
Salaries and wages 11,127,000 11,368,000 22,125,000 22,169,000
Subcontractor services and other direct costs   25,544,000     41,676,000   49,613,000   81,571,000  
Total direct costs of contract revenue   36,671,000     53,044,000   71,738,000   103,740,000  
 
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits 10,725,000 8,086,000 20,750,000 17,401,000
Facilities and facility related 1,386,000 1,119,000 2,595,000 2,243,000
Stock-based compensation 1,662,000 620,000 2,726,000 1,096,000
Depreciation and amortization 1,111,000 934,000 2,175,000 1,843,000
Other   4,073,000     3,467,000   8,265,000   7,334,000  
Total general and administrative expenses   18,957,000     14,226,000   36,511,000   29,917,000  
Income from operations   4,205,000     4,563,000   6,179,000   6,527,000  
 
Other income (expense):
Interest expense, net (30,000 ) (32,000 ) (53,000 ) (65,000 )
Other, net   9,000     1,000   19,000   38,000  
Total other expense, net   (21,000 )   (31,000 ) (34,000 ) (27,000 )
Income before income taxes 4,184,000 4,532,000 6,145,000 6,500,000
 
Income tax expense   869,000   1,220,000     627,000   547,000  
Net income $ 3,315,000   $ 3,312,000   $ 5,518,000   $ 5,953,000  
 
Earnings per share:
Basic $ 0.38   $ 0.38   $ 0.63   $ 0.70  
Diluted $ 0.36   $ 0.36   $ 0.60   $ 0.66  
 
Weighted-average shares outstanding:
Basic 8,796,000 8,603,000 8,775,000 8,505,000
Diluted 9,288,000 9,082,000 9,247,000 9,078,000
 
 
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
   
Six Months Ended
June 29, June 30,
2018   2017  
Cash flows from operating activities:
Net income $ 5,518,000 $ 5,953,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,243,000 1,870,000
Deferred income taxes, net (792,000 ) 745,000
Gain on sale of equipment (14,000 )
Provision for doubtful accounts 344,000 (20,000 )
Stock-based compensation 2,726,000 1,096,000
Accretion and fair value adjustments of contingent consideration 622,000 281,000
Changes in operating assets and liabilities, net of effects from
business acquisitions:
Accounts receivable 16,294,000 2,164,000
Contract assets (16,910,000 ) (10,750,000 )
Other receivables 1,056,000 (851,000 )
Prepaid expenses and other current assets 385,000 (545,000 )
Other assets (94,000 ) 29,000
Accounts payable (6,915,000 ) 5,172,000
Accrued liabilities 722,000 3,247,000
Contract liabilities (1,158,000 ) (1,279,000 )
Deferred lease obligations   17,000     (33,000 )
Net cash provided by operating activities   4,044,000     7,079,000  
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (511,000 ) (1,410,000 )
Proceeds from sale of equipment 36,000
Cash paid for acquisitions, net of cash acquired   (2,994,000 )    
Net cash used in investing activities   (3,469,000 )   (1,410,000 )
Cash flows from financing activities:
Payments on contingent consideration (3,199,000 ) (1,509,000 )
Payments on notes payable (383,000 ) (2,302,000 )
Repayments under line of credit (500,000 )
Principal payments on capital lease obligations (207,000 ) (222,000 )
Proceeds from stock option exercise 341,000 1,675,000
Proceeds from sales of common stock under employee stock purchase
plan
616,000 344,000
Unregistered sales of equity securities and use of proceeds   (442,000 )    
Net cash used in financing activities   (3,774,000 )   (2,014,000 )
Net (decrease) increase in cash and cash equivalents (3,199,000 ) 3,655,000
Cash and cash equivalents at beginning of period   14,424,000     22,668,000  
Cash and cash equivalents at end of period $ 11,225,000   $ 26,323,000  
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 53,000 $ 65,000
Income taxes 215,000 1,628,000
Supplemental disclosures of noncash investing and financing
activities:
Equipment acquired under capital leases 187,000 147,000
 
 
Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Revenue to Net Revenue

(Non-GAAP Measure)

       
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
Consolidated 2018 2017 2018 2017
Contract revenue $ 59,833,000 $ 71,833,000 $ 114,428,000 $ 140,184,000
Subcontractor services and other direct costs   25,544,000   41,676,000   49,613,000   81,571,000
Net Revenue $ 34,289,000 $ 30,157,000 $ 64,815,000 $ 58,613,000
 
 
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
Energy segment 2018 2017 2018 2017
Contract revenue $ 41,726,000 $ 53,733,000 $ 79,058,000 $ 103,846,000
Subcontractor services and other direct costs   21,486,000   37,109,000   42,476,000   72,550,000
Net Revenue $ 20,240,000 $ 16,624,000 $ 36,582,000 $ 31,296,000
 
 
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
Engineering and Consulting segment 2018 2017 2018 2017
Contract revenue $ 18,107,000 $ 18,100,000 $ 35,370,000 $ 36,338,000
Subcontractor services and other direct costs   4,058,000   4,567,000   7,137,000   9,021,000
Net Revenue $ 14,049,000 $ 13,533,000 $ 28,233,000 $ 27,317,000
 
 
Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted EBITDA

(Non-GAAP Measure)

       
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2018   2017 2018   2017
Net income $ 3,315,000 $ 3,312,000 $ 5,518,000 $ 5,953,000
Interest expense 30,000 32,000 53,000 65,000
Income tax expense 869,000 1,220,000 627,000 547,000
Stock-based compensation 1,662,000 620,000 2,726,000 1,096,000
Interest accretion(1) 284,000 114,000 622,000 281,000
Depreciation and amortization 1,142,000 951,000 2,243,000 1,870,000
Gain on sale of equipment   (14,000 )     (14,000 )  
Adjusted EBITDA $ 7,288,000   $ 6,249,000 $ 11,775,000   $ 9,812,000

_____________________

(1)

  Interest accretion represents the imputed interest on the earn-out
payments to be paid by us in connection with the acquisitions of
Abacus Resource Management Company and substantially all of the
assets of 360 Energy Engineers, LLC in January 2015, the acquisition
of Integral Analytics, Inc. in July 2017 and NAM in April 2018.
 
Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Net Income and
Adjusted Diluted EPS

(Non-GAAP Measure)

       
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2018 2017 2018 2017
Net income $ 3,315,000 $ 3,312,000 $ 5,518,000 $ 5,953,000
Adjustment for stock-based compensation   1,662,000   620,000   2,726,000   1,096,000
Adjusted Net Income 4,977,000 3,932,000 8,244,000 7,049,000
 
Diluted weighted-average shares outstanding   9,288,000   9,082,000   9,247,000   9,078,000
 
Diluted earnings per share $ 0.36 $ 0.36 $ 0.60 $ 0.66
Impact of adjustment:
Stock-based compensation, net of tax   0.14   0.05   0.26   0.11
Adjusted Diluted EPS $ 0.50 $ 0.41 $ 0.86 $ 0.77
 
 
Willdan Group, Inc. and Subsidiaries
Reconciliation of Diluted EPS to Adjusted Diluted EPS Guidance

(Non-GAAP Measure)

 
2018 Guidance
High   Low
Diluted earnings per share $ 1.50 $ 1.60
Stock-based compensation, net of tax   0.45   0.45
Adjusted Diluted EPS $ 1.95 $ 2.05

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