Willdan Group, Inc. (NASDAQ:WLDN) Q2 2019 Earnings Conference Call Transcript

Aug 01, 2019 • 05:30 pm ET

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Willdan Group, Inc. (NASDAQ:WLDN) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Willdan Group Second Quarter 2019 Conference. [Operator Instructions]

At this time, I would like to turn the conference over to Tony Rossi of Financial Profiles. Please go ahead.

Executive
Tony Rossi

Thank you, Vicki. Good afternoon, everyone, and thank you for joining us to discuss Willdan Group's financial results for the second quarter ended June 28th, 2019. With us today from management are Thomas Brisbin, Chairman and Chief Executive Officer; Stacy McLaughlin, Chief Financial Officer; and Mike Bieber, President of Willdan Group. Management will review prepared remarks, and we will then open up the call to your questions.

Statements made in the course of today's conference call which are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve certain risks and uncertainties and it's important to note that the Company's future results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially and other risk factors are listed from time to time in the Company's SEC reports, including but not limited to, the Form 10-K for the year ended December 28th, 2018, and subsequent quarterly reports on Form 10-Q. The Company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Willdan Group disclaims any obligation and does not undertake to update or revise any forward-looking statements made today.

In addition to GAAP financial results, Willdan also provides non-GAAP financial measures that we believe enhance investors ability to analyze our business trends and performance. Our non-GAAP measures include net revenue, adjusted EPS and adjusted EBITDA. We believe net revenue allows for an improved measure of the revenue derived from the work performed by our employees. Adjusted EPS and adjusted EBITDA are supplemental measures of operating performance which removes the impact of certain expense items from our operating results. GAAP reconciliations for all of these non-GAAP measures are included at the end of the earnings release we issued today.

With that, I'd now like to call -- turn the call over to Chief Financial Officer, Stacy McLaughlin. Stacy?

Executive
Stacy B. McLaughlin

Thanks, Tony. I'd like to add my welcome to those joining us on today's call. I'll start with an overview of our income statement, then our balance sheet, and finally, our guidance.

Total contract revenue for the second quarter of 2019 increased 75% to $104.4 million from $59.8 million for the second quarter of 2018. The increase was driven by growth in our Energy segment, primarily related to the contributions from our recent acquisitions. Net revenue defined as contract revenue minus subcontractor services and other direct costs was $46.8 million, an increase of 36% from $34.3 million in the year ago quarter.

Within the Energy segment, net revenue increased by 60%. Within the Engineering and Consulting segment, net revenue increased by 2%. Direct costs of contract revenue were $73.2 million for the second quarter of 2019, an increase of 100%,