Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 03, 2020 | Aug. 05, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 3, 2020 | |
Entity File Number | 001-33076 | |
Entity Registrant Name | WILLDAN GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 14-1951112 | |
Entity Address, Address Line One | 2401 East Katella Avenue | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Anaheim | |
Entity Address, Postal Zip Code | 92806 | |
Entity Address, State or Province | CA | |
City Area Code | 800 | |
Local Phone Number | 424-9144 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | WLDN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,065 | |
Current Fiscal Year End Date | --01-01 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Central Index Key | 0001370450 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 17,160 | $ 5,452 |
Accounts receivable, net of allowance for doubtful accounts of $2,079 and $1,147 at July 3, 2020 and December 27, 2019, respectively | 43,001 | 57,504 |
Contract assets | 62,062 | 101,418 |
Other receivables | 4,354 | 4,845 |
Prepaid expenses and other current assets | 4,884 | 6,254 |
Total current assets | 131,461 | 175,473 |
Equipment and leasehold improvements, net | 12,791 | 12,051 |
Goodwill | 130,236 | 127,647 |
Right-of-use assets | 22,679 | 22,297 |
Other intangible assets, net | 70,121 | 76,837 |
Other assets | 13,452 | 16,296 |
Deferred income taxes, net | 12,628 | 9,312 |
Total assets | 393,368 | 439,913 |
Current liabilities: | ||
Accounts payable | 35,070 | 34,000 |
Accrued liabilities | 35,948 | 67,615 |
Contingent consideration payable | 6,366 | 5,155 |
Contract liabilities | 7,157 | 5,563 |
Notes payable | 13,866 | 13,720 |
Finance lease obligations | 332 | 375 |
Lease liability | 5,994 | 5,550 |
Total current liabilities | 104,733 | 131,978 |
Contingent consideration payable | 3,877 | 4,891 |
Notes payable | 104,592 | 116,631 |
Finance lease obligations, less current portion | 256 | 191 |
Lease liability, less current portion | 17,935 | 18,411 |
Other noncurrent liabilities | 579 | 533 |
Total liabilities | 231,972 | 272,635 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 10,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value, 40,000 shares authorized; 12,012 and 11,497 shares issued and outstanding at July 3, 2020 and December 27, 2019, respectively | 120 | 115 |
Additional paid-in capital | 140,165 | 132,547 |
Accumulated other comprehensive loss | (762) | (396) |
Retained earnings | 21,873 | 35,012 |
Total stockholders' equity | 161,396 | 167,278 |
Total liabilities and stockholders' equity | $ 393,368 | $ 439,913 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 2,079 | $ 1,147 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 12,012 | 11,497 |
Common stock, shares outstanding | 12,012 | 11,497 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Contract revenue | $ 83,549 | $ 104,396 | $ 189,575 | $ 196,189 |
Direct costs of contract revenue (inclusive of directly related depreciation and amortization): | ||||
Salaries and wages | 13,650 | 15,624 | 32,565 | 30,534 |
Subcontractor services and other direct costs | 40,355 | 57,623 | 96,775 | 108,571 |
Total direct costs of contract revenue | 54,005 | 73,247 | 129,340 | 139,105 |
General and administrative expenses: | ||||
Salaries and wages, payroll taxes and employee benefits | 15,331 | 15,437 | 35,743 | 30,406 |
Facilities and facility related | 2,642 | 2,047 | 5,336 | 3,819 |
Stock-based compensation | 4,230 | 2,224 | 8,825 | 4,041 |
Depreciation and amortization | 5,466 | 2,866 | 9,985 | 5,520 |
Other | 5,716 | 5,802 | 12,456 | 10,759 |
Total general and administrative expenses | 33,385 | 28,376 | 72,345 | 54,545 |
Income (Loss) from operations | (3,841) | 2,773 | (12,110) | 2,539 |
Other income (expense): | ||||
Interest expense, net | (1,257) | (1,221) | (2,770) | (2,342) |
Other, net | 23 | 18 | 46 | 29 |
Total other expense, net | (1,234) | (1,203) | (2,724) | (2,313) |
Income (Loss) before income taxes | (5,075) | 1,570 | (14,834) | 226 |
Income tax benefit | (90) | (70) | (1,695) | (997) |
Net income (loss) | (4,985) | 1,640 | (13,139) | 1,223 |
Other comprehensive income (loss): | ||||
Net unrealized gain (loss) on derivative contracts, net of tax | 83 | (219) | (366) | (438) |
Comprehensive income (loss) | $ (4,902) | $ 1,421 | $ (13,505) | $ 785 |
Earnings (Loss) per share: | ||||
Basic (in dollars per share) | $ (0.43) | $ 0.15 | $ (1.13) | $ 0.11 |
Diluted (in dollars per share) | $ (0.43) | $ 0.14 | $ (1.13) | $ 0.10 |
Weighted-average shares outstanding: | ||||
Basic | 11,682 | 11,100 | 11,593 | 11,037 |
Diluted | 11,682 | 11,679 | 11,593 | 11,670 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss. | Retained Earnings | Total |
Balances at Dec. 28, 2018 | $ 110 | $ 114,008 | $ 30,171 | $ 144,289 | |
Balances (in shares) at Dec. 28, 2018 | 10,968 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with employee stock purchase plan | 749 | 749 | |||
Shares of common stock issued in connection with employee stock purchase plan (in shares) | 28 | ||||
Shares of common stock issued in connection with incentive stock plan | 291 | 291 | |||
Shares of common stock issued in connection with incentive stock plan (in shares) | 21 | ||||
Shares used to pay taxes on stock grants | $ (1) | (2,515) | (2,516) | ||
Shares used to pay taxes on stock grants (in shares) | (66) | ||||
Issuance of restricted stock award and units | $ 2 | (2) | |||
Issuance of restricted stock award and units (in shares) | 175 | ||||
Stock-based compensation expense | 1,817 | 1,817 | |||
Net income (loss) | (417) | (417) | |||
Net unrealized gain (loss) on derivative contracts, net of tax | $ (219) | (219) | |||
Balances at Mar. 29, 2019 | $ 111 | 114,348 | (219) | 29,754 | 143,994 |
Balances (in shares) at Mar. 29, 2019 | 11,126 | ||||
Balances at Dec. 28, 2018 | $ 110 | 114,008 | 30,171 | 144,289 | |
Balances (in shares) at Dec. 28, 2018 | 10,968 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 1,223 | ||||
Net unrealized gain (loss) on derivative contracts, net of tax | (438) | ||||
Balances at Jun. 28, 2019 | $ 112 | 116,457 | (438) | 31,394 | 147,525 |
Balances (in shares) at Jun. 28, 2019 | 11,194 | ||||
Balances at Mar. 29, 2019 | $ 111 | 114,348 | (219) | 29,754 | 143,994 |
Balances (in shares) at Mar. 29, 2019 | 11,126 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with incentive stock plan | $ 1 | 231 | 232 | ||
Shares of common stock issued in connection with incentive stock plan (in shares) | 77 | ||||
Unregistered sales of equity securities and use of proceeds | (346) | (346) | |||
Unregistered sales of equity securities and use of proceeds (in shares) | (9) | ||||
Stock-based compensation expense | 2,224 | 2,224 | |||
Net income (loss) | 1,640 | 1,640 | |||
Net unrealized gain (loss) on derivative contracts, net of tax | (219) | (219) | |||
Balances at Jun. 28, 2019 | $ 112 | 116,457 | (438) | 31,394 | 147,525 |
Balances (in shares) at Jun. 28, 2019 | 11,194 | ||||
Balances at Dec. 27, 2019 | $ 115 | 132,547 | (396) | 35,012 | $ 167,278 |
Balances (in shares) at Dec. 27, 2019 | 11,497 | 11,497 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with employee stock purchase plan | $ 0 | 1,073 | $ 1,073 | ||
Shares of common stock issued in connection with employee stock purchase plan (in shares) | 40 | ||||
Shares of common stock issued in connection with incentive stock plan | $ 0 | 260 | 260 | ||
Shares of common stock issued in connection with incentive stock plan (in shares) | 19 | ||||
Shares used to pay taxes on stock grants | $ (1) | (2,866) | (2,867) | ||
Shares used to pay taxes on stock grants (in shares) | (92) | ||||
Issuance of restricted stock award and units | $ 2 | (1) | 1 | ||
Issuance of restricted stock award and units (in shares) | 176 | ||||
Stock-based compensation expense | 4,595 | 4,595 | |||
Net income (loss) | (8,154) | (8,154) | |||
Net unrealized gain (loss) on derivative contracts, net of tax | (449) | (449) | |||
Balances at Apr. 03, 2020 | $ 116 | 135,608 | (845) | 26,858 | 161,737 |
Balances (in shares) at Apr. 03, 2020 | 11,640 | ||||
Balances at Dec. 27, 2019 | $ 115 | 132,547 | (396) | 35,012 | $ 167,278 |
Balances (in shares) at Dec. 27, 2019 | 11,497 | 11,497 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | $ (13,139) | ||||
Net unrealized gain (loss) on derivative contracts, net of tax | (366) | ||||
Balances at Jul. 03, 2020 | $ 120 | 140,165 | (762) | 21,873 | $ 161,396 |
Balances (in shares) at Jul. 03, 2020 | 12,012 | 12,012 | |||
Balances at Apr. 03, 2020 | $ 116 | 135,608 | (845) | 26,858 | $ 161,737 |
Balances (in shares) at Apr. 03, 2020 | 11,640 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with incentive stock plan | $ 1 | 330 | 331 | ||
Shares of common stock issued in connection with incentive stock plan (in shares) | 63 | ||||
Issuance of restricted stock award and units | $ 3 | (3) | |||
Issuance of restricted stock award and units (in shares) | 309 | ||||
Stock-based compensation expense | 4,230 | 4,230 | |||
Net income (loss) | (4,985) | (4,985) | |||
Net unrealized gain (loss) on derivative contracts, net of tax | 83 | 83 | |||
Balances at Jul. 03, 2020 | $ 120 | $ 140,165 | $ (762) | $ 21,873 | $ 161,396 |
Balances (in shares) at Jul. 03, 2020 | 12,012 | 12,012 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 03, 2020 | Jun. 28, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (13,139) | $ 1,223 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 9,985 | 5,712 |
Deferred income taxes, net | (3,726) | (167) |
(Gain) loss on sale/disposal of equipment | (16) | (8) |
Provision for doubtful accounts | 968 | 202 |
Stock-based compensation | 8,825 | 4,041 |
Accretion and fair value adjustments of contingent consideration | 1,630 | (627) |
Changes in operating assets and liabilities, net of effects from business acquisitions: | ||
Accounts receivable | 13,535 | 15,998 |
Contract assets | 35,862 | (8,148) |
Other receivables | 897 | (1,719) |
Prepaid expenses and other current assets | 1,140 | 877 |
Other assets | 2,496 | (615) |
Accounts payable | 1,070 | (6,615) |
Accrued liabilities | (31,987) | 2,036 |
Contract liabilities | 1,594 | 65 |
Right-of-use assets | 97 | 240 |
Net cash provided by operating activities | 29,231 | 12,495 |
Cash flows from investing activities: | ||
Purchase of equipment and leasehold improvements | (2,946) | (3,619) |
Proceeds from sale of equipment | 17 | 44 |
Cash paid for acquisitions, net of cash acquired | (21,800) | |
Net cash used in investing activities | (2,929) | (25,375) |
Cash flows from financing activities: | ||
Payments on contingent consideration | (1,433) | (1,381) |
Payments on notes payable | (163) | (929) |
Payments on debt issuance costs | (577) | |
Borrowings under term loan facility and line of credit | 24,000 | 100,000 |
Repayments under term loan facility and line of credit | (35,500) | (70,000) |
Principal payments on finance leases | (296) | (300) |
Proceeds from stock option exercise | 591 | 523 |
Proceeds from sales of common stock under employee stock purchase plan | 1,073 | 749 |
Shares used to pay taxes on stock grants | (2,867) | (2,862) |
Restricted Stock Award and Units | 1 | |
Net cash (used in) provided by financing activities | (14,594) | 25,223 |
Net increase (decrease) in cash and cash equivalents | 11,708 | 12,343 |
Cash and cash equivalents at beginning of period | 5,452 | 15,259 |
Cash and cash equivalents at end of period | 17,160 | 27,602 |
Cash paid during the period for: | ||
Interest | 2,797 | 2,156 |
Income taxes | 262 | 2,040 |
Supplemental disclosures of noncash investing and financing activities: | ||
Equipment acquired under finance leases | $ 318 | $ 413 |
ORGANIZATION AND OPERATIONS OF
ORGANIZATION AND OPERATIONS OF THE COMPANY | 6 Months Ended |
Jul. 03, 2020 | |
ORGANIZATION AND OPERATIONS OF THE COMPANY | |
ORGANIZATION AND OPERATIONS OF THE COMPANY | 1. ORGANIZATION AND OPERATIONS OF THE COMPAN Y Willdan Group, Inc. (“Willdan” or the “Company”) is a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resources and infrastructures undergo continuous change, the Company helps organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions and government infrastructure. Through engineering, program management, policy advisory, and software and data management, the Company designs and delivers trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure. The Company’s 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 the Company’s strategy to design and deliver trusted, comprehensive, innovative, and proven solutions for its customers. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Organization and Operations of the Company Fiscal Years The Company operates and reports its annual financial results based on 52 or 53-week periods ending on the Friday closest to December 31. The Company operates and reports its quarterly financial results based on the 13-week period ending on the Friday closest to March 31, June 30 and September 30 and the 13 or 14-week period ending on the Friday closest to March 31, as applicable. Fiscal year 2020, which ends on January 1, 2021, will be comprised of 53 weeks, with the first quarter consisting of 14 weeks and the remaining quarters consisting of 13 weeks each. Fiscal year 2019, which ended on December 27, 2019 was comprised of 52 weeks, with all quarters presented consisting of 13 weeks. All references to years in the notes to consolidated financial statements represent fiscal years. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management’s Plans in Response to Covid-19 On January 30, 2020, the spread of a novel strain of coronavirus (“Covid-19”) was declared a Public Health Emergency of International Concern by the World Health Organization (“WHO”). On March 11, 2020, WHO characterized the Covid-19 outbreak as a pandemic. The Covid-19 pandemic has resulted in governmental authorities around the world implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns (subject to exceptions for certain essential operations and businesses). Although some of these measures have since been lifted or scaled back, a recent resurgence of Covid-19 in the United States has resulted in the reimposition of certain restrictions and may lead to other restrictions being reimplemented in response to efforts to reduce the spread of Covid-19. The Covid-19 outbreak and restrictions intended to slow the spread of Covid-19 have caused economic and social disruption on an unprecedented scale. It is unclear how long these restrictions will remain in place and they may remain in place in some form for an extended period of time. Given the uncertainties associated with the duration of the pandemic, the Company cannot reasonably estimate the ultimate impacts of Covid-19 and efforts to limit its spread on its business, financial condition, results of operations or cash flows for the foreseeable future or whether the Company’s assumptions used to estimate its future liquidity requirements will be correct . Health and Safety Financial Position and Results of Operations In the Energy segment, the Company has experienced and expects to continue to experience a negative impact on its direct install programs that serve small businesses as a result of restrictions put in place by governmental authorities that have required temporary shutdowns of all “non-essential” businesses. In fiscal 2019, the Company derived approximately 40% of its gross revenue from its direct install programs that serve small businesses, and a significant portion of its direct install work on these programs is just entering recovery as phased re-openings continue. The Company’s other programs, which generated approximately 60% of its gross revenue in fiscal 2019, are either businesses that have been determined to be “essential” by government authorities or have continued to progress during the pandemic. In addition, some of the Company’s programs in the Energy segment, particularly those related to improvements in public schools, have been accelerated to take advantage of empty facilities. In the Engineering and Consulting segment, the Company’s revenues have been minimally affected by Covid-19. The services in this segment have generally been deemed “essential” by the government and have continued to operate while abiding social distancing measures. As of August 7, 2020, though some of the Company’s work has been suspended, none of its contracts have been cancelled and proposal activities for new programs have continued to advance. The Company currently estimates that pandemic related slowdowns and work suspensions are reducing its revenue by approximately 20% from pre-pandemic levels, an improvement from the estimated 40% reduction observed in April. ● Executing a reduction in workforce, primarily through an unpaid furlough, impacting approximately 300 members of staff. The largest reductions were a result of government-mandated work restrictions impacting the Company’s direct install programs in California and New York. During the Company’s second fiscal quarter, furloughed employees began to return to work as government authorities began lifting restrictions through phased re-openings ; ● A temporary freeze on all non-critical spending for travel, capital expenditures, and other discretionary expenses; ● A temporary cash wage reduction for salaried employees, ranging from 0% for lower salary bands up to 75% for senior management. During the second half of the Company’s second fiscal quarter, as the initial impact of Covid-19 was ascertained and operations were adjusted accordingly, salaries were reinstituted with the exception of corporate staff, whose salaries were reinstituted at the end of July 2020 ; ● Suspension of cash fees for the Company’s Board of Directors, until such time as the Board of Directors determines; ● Implementing a temporary hiring freeze; and ● Amending the Company’s credit facility for increased flexibility. The Company believes that its financial position is sufficiently flexible to enable it to maneuver in the current economic environment. Throughout the first and second quarter of fiscal year 2020, the Company enhanced liquidity by minimizing working capital and significantly improving cash collections. In addition, in May 2020, the Company amended its credit facility to modify, among other things, certain covenants to increase its financial flexibility. Combined with availability under its credit facility, the Company believes its enhanced liquidity position provides a cushion against liquidity disruptions. The Company anticipates borrowing additional amounts under its existing credit facility during the second half of fiscal year 2020 to support an expectation of recovery from Covid-19 operating levels and the accompanying need for working capital as a result of the easing of Covid-19 restrictions. Asset and liability valuation and other estimates used in preparation of financial statements Changes to the estimated future profitability of the business may require that the Company establish an additional valuation allowance against all or some portion of its net deferred tax assets. Impact on Clients and Subcontractors and Other Risks The Company primarily works for utilities, municipalities and other public agencies. The Company expects many governmental and other public agencies will have significant budget shortfalls for 2020 and potentially beyond as a result of the economic slowdown from the measures taken to mitigate the Covid-19 pandemic. Although none of the Company’s contracts with governmental or other public agencies were materially modified in the second fiscal quarter, these potential budget deficits could result in delayed funding for existing contracts with the Company, postponements of new contracts or price concessions. Further, most of the Company’s clients are not committed to purchase any minimum amount of services, as the Company agreements with them are based on a “purchase order” model. As a result, they may discontinue utilizing some or all of the Company’s services with little or no notice. In addition, the Company relies on subcontractors and material suppliers to complete a substantial portion of our work, especially in its Energy segment. If the Company’s significant subcontractors and material suppliers suffer significant economic harm and must limit or cease operations or file for bankruptcy as a result of the current economic slowdown, the Company’s subcontractors and material suppliers may not be able to fulfill their contractual obligations satisfactorily and the Company may not have the ability to select its subcontractors and material suppliers of choice for new contracts. If the Company’s subcontractors and material suppliers are not able to fulfill their contractual obligations, it could result in a significant increase in costs for the Company to complete the projects. The Covid-19 pandemic and health and safety measures intended to slow its spread have adversely affected, and may continue to adversely affect, our business, results of operations and financial condition.” |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jul. 03, 2020 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The Company adopted this standard effective December 28, 2019. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements. Accounting Pronouncements Recently Issued In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 provides, among other things, guidance that modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; modifications of contracts within the scope of Topic 840, Leases, should be accounted for as a continuation of the existing contract; and, changes in the critical terms of hedging relationships, caused by reference rate reform, should not result in the de-designation of the instrument, provided certain criteria are met. The Company’s exposure to LIBOR rates includes its credit facilities and swap agreement. The amendments are effective as of March 12, 2020 through December 31, 2022. Adoption is permitted at any time. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements. In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 amends the accounting for income taxes by, among other things, removing: (i) The exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); (ii) The exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (iii) The exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (iv) The exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, which for the Company is the first quarter of fiscal 2021. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements. |
REVENUES
REVENUES | 6 Months Ended |
Jul. 03, 2020 | |
REVENUES | |
REVENUES | 3. REVENUES The Company enters into contracts with its clients that contain various types of pricing provisions, including fixed price, time-and-materials, and unit-based provisions. The Company recognizes revenues in accordance with ASU 2014-09, Revenue from Contracts with Customer, codified as ASC Topic 606 and the related amendments (collectively “ASC 606”). As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation. The following table reflects the Company’s two reportable segments and the types of contracts that each most commonly enters into for revenue generating activities. Segment Contract Type Revenue Recognition Method Time-and-materials Time-and-materials Energy Unit-based Unit-based Software license Unit-based Fixed price Percentage-of-completion Time-and-materials Time-and-materials Engineering and Consulting Unit-based Unit-based Fixed price Percentage-of-completion Revenue on the vast majority of the Company’s contracts is recognized over time because of the continuous transfer of control to the customer. Revenue on fixed price contracts is recognized on the percentage-of-completion method based generally on the ratio of direct costs incurred-to-date to estimated total direct costs at completion. The Company uses the percentage-of-completion method to better match the level of work performed at a certain point in time in relation to the effort that will be required to complete a project. In addition, the percentage-of-completion method is a common method of revenue recognition in the Company’s industry. Many of the Company’s 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. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. The Company recognizes revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of the Company’s time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, the Company recognizes the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue recognition for software licenses issued by the Energy segment is generally recognized at a point in time, utilizing the unit-based revenue recognition method, upon acceptance of the software by the customer and in recognition of the fulfillment of the performance obligation. Certain additional performance obligations beyond the base software license may be separated from the gross license fee and recognized on a straight-line basis over time. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying condensed consolidated balance sheets. To determine the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined contract should be accounted for as one performance obligation. With respect to the Company’s contracts, it is rare that multiple contracts should be combined into a single performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to have a single performance obligation if the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, which is mainly because the Company provides a significant service of integrating a complex set of tasks and components into a single project or capability. The Company may enter into contracts that include separate phases or elements. If each phase or element is negotiated separately based on the technical resources required and/or the supply and demand for the services being provided, the Company evaluates if the contracts should be segmented. If certain criteria are met, the contracts would be segmented which could result in revenues being assigned to the different elements or phases with different rates of profitability based on the relative value of each element or phase to the estimated total contract revenue. Segmented contracts may comprise up to approximately 2.0% to 3.0% of the Company’s consolidated contract revenue. Contracts that cover multiple phases or elements of the project or service lifecycle (development, construction and maintenance and support) may be considered to have multiple performance obligations even when they are part of a single contract. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. For the periods presented, the value of the separate performance obligations under contracts with multiple performance obligations (generally measurement and verification tasks under certain energy performance contracts) were not material. In cases where the Company does not provide the distinct good or service on a standalone basis, the primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company forecasts the Company’s expected costs of satisfying a performance obligation and then adds an appropriate margin for the distinct good or service. The Company provides quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications and industry standards. The Company does not consider these types of warranties to be separate performance obligations. In some cases, the Company has a master service or blanket agreement with a customer under which each task order releases the Company to perform specific portions of the overall scope in the service contract. Each task order is typically accounted for as a separate contract because the task order establishes the enforceable rights and obligations, and payment terms. Under ASC 606, variable consideration should be considered when determining the transaction price and estimates should be made for the variable consideration component of the transaction price, as well as assessing whether an estimate of variable consideration is constrained. For certain of the Company’s contracts, variable consideration can arise from modifications to the scope of services resulting from unapproved change orders or customer claims. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on assessments of legal enforceability, the Company’s performance, and all information (historical, current and forecasted) that is reasonably available to the Company. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company reviews and updates the Company’s contract-related estimates regularly through a company-wide disciplined project review process in which management reviews the progress and execution of the Company’s performance obligations and the estimate at completion (EAC). As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule and the related changes in estimates of revenues and costs. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer, among other variables. The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the full amount of estimated loss in the period it is identified. Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights or obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification that is not distinct from the existing contract on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For contract modifications that result in the promise to deliver goods or services that are distinct from the existing contract and the increase in price of the contract is for the same amount as the standalone selling price of the additional goods or services included in the modification, the Company accounts for such contract modifications as a separate contract. The Company includes claims to vendors, subcontractors and others as a receivable and a reduction in recognized costs when enforceability of the claim is established by the contract and the amounts are reasonably estimable and probable of being recovered. The amounts are recorded up to the extent of the lesser of the amounts management expects to recover or to costs incurred. Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition. Direct costs of contract revenue consist primarily of that portion of technical and nontechnical salaries and wages that has been incurred in connection with revenue producing projects. Direct costs of contract revenue also include production expenses, subcontractor services and other expenses that are incurred in connection with revenue producing projects. 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 consolidated statements of comprehensive income since no allocation of these costs is made to direct costs of contract revenue. No allocation of facilities costs is made to direct costs of contract revenue. Other companies may classify as direct costs of contract revenue some of the costs that the Company classifies as general and administrative costs. The Company expenses direct costs of contract revenue when incurred. 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. No revenue or cost is recorded for costs in which the Company acts solely in the capacity of an agent and has no risks associated with such costs. 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 July 3, 2020 and December 27, 2019, contract assets included retainage of $5.0 million and $5.4 million, respectively. In addition to the above, the Company derives revenue from software licenses and professional services and maintenance fees. In accordance with ASC 606, the Company performs an assessment of each contract to identify the performance obligations, determine the overall transaction price for the contract, allocate the transaction price to the performance obligations, and recognize the revenue when the performance obligations are satisfied. The Company utilizes the residual approach by which it estimates the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. The software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, or technical support. Related professional services include training and support services in which the standalone selling price is determined based on an input measure of hours incurred to total estimated hours and is recognized over time, usually which is the life of the contract. |
SUPPLEMENTAL FINANCIAL STATEMEN
SUPPLEMENTAL FINANCIAL STATEMENT DATA | 6 Months Ended |
Jul. 03, 2020 | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | 4. SUPPLEMENTAL FINANCIAL STATEMENT DATA Accounts Receivable From time to time, in connection with factoring agreements, the Company sells trade accounts receivable without recourse to third party purchasers in exchange for cash. During the six months ended July 3, 2020 and June 28, 2019, the Company did not sell any trade accounts receivable. Equipment and Leasehold Improvements July 3, December 27, 2020 2019 (in thousands) Furniture and fixtures $ 4,086 $ 4,614 Computer hardware and software 15,983 14,789 Leasehold improvements 2,971 2,410 Equipment under finance leases 2,247 1,957 Automobiles, trucks, and field equipment 3,255 3,564 Subtotal 28,542 27,334 Accumulated depreciation and amortization (15,751) (15,283) Equipment and leasehold improvements, net $ 12,791 $ 12,051 Included in accumulated depreciation and amortization is $0.3 million and $0.5 million of amortization expense related to equipment held under finance leases in the six months ended July 3, 2020 and fiscal year 2019, respectively. Accrued Liabilities July 3, December 27, 2020 2019 (in thousands) Accrued subcontractor costs $ 21,502 $ 45,366 Compensation and payroll taxes 5,070 3,286 Accrued bonuses 3,663 7,756 Other 2,506 4,630 Employee withholdings 1,876 3,463 Paid leave bank 1,331 3,114 Total accrued liabilities $ 35,948 $ 67,615 Goodwill December 27, Additional Additions / July 3, 2019 Purchase Cost Adjustments 2020 (in thousands) Reporting Unit: Energy $ 126,898 $ — $ 2,589 $ 129,487 Engineering and Consulting 749 — — 749 $ 127,647 $ — $ 2,589 $ 130,236 Intangible Assets July 3, 2020 December 27, 2019 Gross Accumulated Gross Accumulated Amortization Amount Amortization Amount Amortization Period (in thousands) (in years) Finite: Backlog $ 7,844 $ 5,542 $ 7,134 $ 3,763 1.0 Tradename 13,711 5,904 13,351 4,882 2.5 - 6.0 Non-compete agreements 2,320 1,519 2,320 1,384 4.0 - 5.0 Developed technology 14,620 4,539 14,620 3,227 8.0 Customer relationships 60,409 11,279 60,733 8,065 5.0 - 8.0 Total intangible assets $ 98,904 $ 28,783 $ 98,158 $ 21,321 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jul. 03, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 5. DERIVATIVE FINANCIAL INSTRUMENTS The Company uses certain interest rate derivative contracts to hedge interest rate exposures on its variable rate debt. The Company’s hedging program is not designated for trading or speculative purposes. The Company recognizes derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in its consolidated balance sheets as accumulated other comprehensive income (loss) and in its condensed consolidated statements of comprehensive (loss) income as a loss or gain on cash flow hedge valuation. On January 31, 2019, the Company entered into an interest rate swap agreement that the Company designated as cash flow hedge to fix the variable interest rate on a portion of the Company’s Term A Loan (as defined below in Note 6. “ Debt Obligations The fair values of the Company’s outstanding derivatives designated as hedging instruments were as follows: Fair Value of Derivative Instruments as of Balance Sheet Location July 3, 2020 December 27, 2019 (in thousands) Interest rate swap agreement Accrued liabilities $ (658) $ (241) Interest rate swap agreement Other noncurrent (liabilities) assets $ (351) $ (306) The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on other comprehensive income were material six compared and The accumulated balances and reporting period activities for the three and six months ended July 3, 2020 related to reclassifications out of accumulated other comprehensive loss are summarized as follows: Gain (Loss) on Accumulated Other Derivative Instruments Comprehensive Loss (in thousands) Balances at December 27, 2019 $ (396) $ (396) Other comprehensive loss before reclassifications (568) (568) Amounts reclassified from accumulated other comprehensive income — — Income tax benefit related to derivative instruments 119 119 Net current-period other comprehensive loss (845) (845) Balances at April 3, 2020 $ (845) $ (845) Other comprehensive loss before reclassifications $ 105 $ 105 Amounts reclassified from accumulated other comprehensive income: — — Income tax benefit (expense) related to derivative instruments (22) (22) Net current-period other comprehensive loss 83 83 Balances at July 3, 2020 $ (762) $ (762) |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 6 Months Ended |
Jul. 03, 2020 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 6. DEBT OBLIGATIONS Debt obligations, excluding obligations under finance leases (see Note 7, Leases, July 3, December 27, 2020 2019 (in thousands) Outstanding borrowings on Term A Loan $ 90,000 $ 95,000 Outstanding borrowings on Revolving Credit Facility — 5,000 Outstanding borrowings on Delayed Draw Term Loan 28,500 30,000 Other debt agreements 898 1,060 Total debt 119,398 131,060 Issuance costs and debt discounts (940) (709) Subtotal 118,458 130,351 Less current portion of long-term debt 13,866 13,720 Long-term debt portion $ 104,592 $ 116,631 Credit Facilities On June 26, 2019, the Company and certain of its subsidiaries entered into an Amended and Restated Credit Agreement (as amended by the First Amendment, dated as of August 15, 2019, and the Second Amendment, dated as of November 6, 2019, the “Credit Agreement”) with a syndicate of financial institutions as lenders and BMO Harris Bank, N.A. (“BMO”), as administrative agent. The Credit Agreement provides for (i) a $100.0 million secured term loan (the “Term A Loan”), (ii) up to $50.0 million in delayed draw secured term loans (the “Delayed Draw Term Loan”), and (iii) a $50.0 million secured revolving credit facility (the “Revolving Credit Facility” and, collectively with the Term A Loan and the Delayed Draw Term Loan, the “Credit Facilities”), each maturing on June 26, 2024. The Company’s obligations under the Credit Agreement are guaranteed by its present and future domestic subsidiaries, with limited exceptions. Prior to the Third Amendment (as defined below), the Credit Agreement required the Company to comply with certain financial covenants, including requiring that the Company maintain a (i) total leverage ratio (the “Leverage Ratio”), defined as the ratio of total funded debt to Adjusted EBITDA (as defined in the Credit Agreement), of at least 3.50 to 1.00 through December 31, 2020, and 3.25 to 1.00 thereafter and (ii) fixed charge coverage ratio (“FCCR Ratio”), defined as the ratio of Adjusted EBITDA less Unfinanced Capital Expenditures (as defined in the Credit Agreement) to Fixed Charges (as defined in the Credit Agreement), of not less than The Credit Agreement also contains other customary restrictive covenants including (i) restrictions on the incurrence of additional indebtedness and additional liens on property, (ii) restrictions on permitted acquisitions and other investments and (iii) limitations on asset sales, mergers and acquisitions. Further, the Credit Agreement limits the Company’s payment of future dividends and distributions and share repurchases by the Company. Subject to certain exceptions, borrowings under the Credit Agreement are also subject to mandatory prepayment from (a) any issuances of debt or equity securities, (b) any sale or disposition of assets, (c) insurance and condemnation proceeds (d) representation and warranty insurance proceeds related to insurance policies issued in connection with acquisitions and (e) excess cash flow. The Credit Agreement includes customary events of default. Third Amendment to the Credit Agreement On May 6, 2020, the Company entered into the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) which, among other things, amends or suspends certain covenants contained in the Credit Agreement from March 5, 2020 until the earlier of (i) July 2, 2021 and (ii) the last day of the fiscal quarter in which the Company delivers an irrevocable election to terminate the covenant relief granted by the Third Amendment (the “Covenant Relief Period”). The Third Amendment increases the maximum Leverage Ratio the Company is permitted to maintain during the Covenant Relief Period and replaces the covenant to maintain a minimum FCCR Ratio during the Covenant Relief Period with a requirement to maintain a minimum Adjusted EBITDA (as defined in the Third Amendment). As part of the Third Amendment, borrowings under the Credit Agreement bear interest (A) from March 5, 2020 until the date of the Third Amendment, at a rate equal to one-month LIBOR plus 2.0%, (B) from the date of the Third Amendment until the date the administrative agent receives the Company’s financial statements for the quarter ended July 3, 2020, at a rate equal to one-month LIBOR, plus an applicable margin of 2.50% and (C) at all other times during the Covenant Relief Period, at a rate equal to either, at the Company’s option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5% or one-month LIBOR plus 1.00% or (ii) one-month LIBOR, in each case plus an applicable margin ranging from 0.125% to 1.50% with respect to Base Rate borrowings and 1.125% to 2.50% with respect to LIBOR borrowings, depending on the Leverage Ratio; provided, that one-month LIBOR shall not be less than 0.75% during the Covenant Relief Period. During the Covenant Relief Period, the Company will pay a commitment fee for the unused portion of the Revolving Credit Facility and the delayed draw term loan facility, which ranges from 0.15% to 0.45% per annum depending on the Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which range from 0.84% to 2.50% per annum, in each case, depending on whether such letter of credit is a performance or financial letter of credit and the Leverage Ratio. After the Covenant Relief Period, borrowings under the Credit Agreement will bear interest at a rate equal to either, at the Company’s option, (i) the Base Rate or (ii) one-month LIBOR, in each case plus an applicable margin ranging from 0.125% to 1.00% with respect to Base Rate borrowings and 1.125% to 2.00% with respect to LIBOR borrowings, depending on the Leverage Ratio; provided, that one-month LIBOR shall not be less than 0.00%. After the Covenant Relief Period, the Company will pay a commitment fee for the unused portion of the Revolving Credit Facility and the delayed draft term loan facility, which will range from 0.15% to 0.35% per annum depending on the Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which will range from 0.84% to 2.00% per annum, in each case, depending on whether such letter of credit is a performance or financial letter of credit and the Leverage Ratio. As of July 3, 2020, the Company was in compliance with all covenants contained in the credit agreement. Other Debt Agreements Software Agreements The Company finances, from time to time, software costs by entering into unsecured notes payable with software providers. During the fiscal year ended December 28, 2018, the Company elected to finance its IBM software costs of $0.2 million with a note payable bearing interest at an annual rate of 4.656%, payable in monthly principal and interest installments of $6,000 through November 2021. As of July 3, 2020, and December 27, 2019, the unpaid balance related to the IBM software agreement totaled $99,000 and $133,000, respectively. Utility Customer Agreement In connection with the acquisition of substantially all of the assets of Onsite Energy, the Company assumed a contract dispute settlement agreement between Onsite Energy and one of its utility customers dated December 20, 2018 (the “Utility Customer Agreement”) where Onsite Energy agreed to pay $1.7 million, bearing interest at an imputed annual rate of 4.332%, payable in quarterly principal and interest installments through June 2021. As of July 3, 2020 and December 27, 2019, the unpaid balance of the Utility Customer Agreement totaled $0.8 million and $0.9 million, respectively. |
LEASES
LEASES | 6 Months Ended |
Jul. 03, 2020 | |
LEASES | |
LEASES | 7. LEASES The Company leases certain office facilities under long-term, non-cancellable operating leases that expire at various dates through the year 2027. In addition, the Company is obligated under finance leases for certain furniture and office equipment that expire at various dates through the year 2022. From time to time, the Company enters into non-cancelable leases for some of our 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 have remaining terms ranging from one to eight years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year . Currently, all of the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of our month-to-month leases are cancelable by the Company or the lessor, at any time, and are not included in our right-of-use asset or lease liability. As of July 3, 2020, the Company had no leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Nonperformance-related default covenants, cross-default provisions, subjective default provisions and material adverse change clauses contained in material lease agreements, if any, are also evaluated to determine whether those clauses affect lease classification in accordance with “ASC” Topic 842-10-25. Leases are accounted for as operating or financing leases, depending on the terms of the lease. 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. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The following is a summary of the lease expense: Three Months Ended Six Months Ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands) (in thousands) Operating lease cost $ 1,766 $ 1,181 $ 3,508 $ 2,270 Finance lease cost: Amortization of assets 155 124 310 231 Interest on lease liabilities 8 9 17 18 Total net lease cost $ 1,929 $ 1,314 $ 3,835 $ 2,519 The following is a summary of lease information presented on the Company’s consolidated balance sheet: July 3, December 27, 2020 2019 (in thousands) Operating leases: Right-of-use assets $ 22,679 $ 22,297 Lease liability $ 5,994 $ 5,550 Lease liability, less current portion 17,935 18,411 Total lease liabilities $ 23,929 $ 23,961 Finance leases (included in equipment and leasehold improvements, net): Equipment and leasehold improvements, net $ 2,247 $ 1,957 Accumulated depreciation (1,572) (1,291) Total equipment and leasehold improvements, net $ 675 $ 666 Finance lease obligations $ 332 $ 375 Finance lease obligations, less current portion 256 191 Total finance lease obligations $ 588 $ 566 Weighted average remaining lease term (in years): Operating Leases 4.73 4.59 Finance Leases 1.92 1.47 Weighted average discount rate: Operating Leases 4.50 % 5.14 % Finance Leases 4.21 % 4.80 % Rent expense and related charges for common area maintenance for all facility operating leases were $1.8 million and $3.5 million for the three and six months ended July 3, 2020, respectively, as compared to $1.2 million and $2.3 million for the three and six months ended June 28, 2019, respectively. The following is a summary of other information and supplemental cash flow information related to finance and operating leases: Six Months Ended July 3, June 28, 2020 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 3,377 $ 2,345 Operating cash flow from finance leases 17 64 Financing cash flow from finance leases 296 300 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 2,552 $ 1,223 The following is a summary of the maturities of lease liabilities as of July 3, 2020: Operating Finance (in thousands) Fiscal year: Remainder of 2020 $ 6,906 $ 348 2021 5,942 171 2022 4,963 69 2023 3,028 14 2024 2,185 9 2025 and thereafter 3,505 — Total lease payments $ 26,529 $ 611 Less: Imputed interest (2,600) (23) Total lease obligations 23,929 588 Less: Current obligations 5,994 332 Noncurrent lease obligations $ 17,935 $ 256 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. |
COMMITMENTS AND VARIABLE INTERE
COMMITMENTS AND VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jul. 03, 2020 | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | 8. COMMITMENTS AND VARIABLE INTEREST ENTITIES Employee Benefit Plans The Company has a qualified profit sharing plan pursuant to Code Section 401(a) and qualified cash or deferred arrangement pursuant to Code Section 401(k) covering all employees. Employees may elect to contribute up to 50% of their compensation limited to the amount allowed by tax laws. Company contributions are made solely at the discretion of the Company’s board of directors. The Company also had a defined contribution plan (the “Plan”) covering employees who have completed three months of service and who have attained 21 years of age. The Company elected to make matching contributions equal to 50% of the participants’ contributions to the Plan up to 6% of the individual participant’s compensation. Under the defined contribution plan, the Company may make discretionary matching contributions to employee accounts. During the six months ended July 3, 2020 and June 28, 2019, the Company made matching contributions of $0.9 million and $1.2 million, respectively. Variable Interest Entities On March 4, 2016, the Company and the Company’s wholly-owned subsidiary, WES acquired substantially all of the assets of 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 ten percent of such costs, as well as any other costs that relate to professional service supplies and personnel costs. As a result of the administrative services agreement, the Company absorbs the expected losses of Genesys through its deferral of Genesys’s service fees owed to WES. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 6 Months Ended |
Jul. 03, 2020 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | 9. SEGMENT AND GEOGRAPHICAL INFORMATION Segment Information The Company’s two segments are Energy and Engineering and Consulting, and the Company’s chief operating decision maker, which continues to be its chief executive officer, receives and reviews financial information in this format. There were no intersegment sales during the three and six months ended July 3, 2020 and June 28, 2019. 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 is as follows: Engineering Unallocated Consolidated Energy & Consulting Corporate Intersegment Total (in thousands) Fiscal Three Months Ended July 3, 2020 Contract revenue $ 66,708 $ 16,841 $ - $ - $ 83,549 Depreciation and amortization 5,192 274 - - 5,466 Interest expense, net 8 - 1,249 - 1,257 Segment profit (loss) before income tax expense (3,286) 3,191 (4,980) - (5,075) Income tax expense (benefit) (53) 264 (301) - (90) Net income (loss) (3,232) 2,927 (4,680) - (4,985) Segment assets (1) 333,142 24,285 59,071 (23,130) 393,368 Fiscal Three Months Ended June 28, 2019 Contract revenue $ 85,283 $ 19,113 $ - $ - $ 104,396 Depreciation and amortization 2,558 308 - - 2,866 Interest expense, net - - 1,221 - 1,221 Segment profit (loss) before income tax expense 2,133 2,412 (2,975) - 1,570 Income tax expense (benefit) 590 667 (1,327) - (70) Net income (loss) 1,544 1,746 (1,650) - 1,640 Segment assets (1) 183,080 23,690 157,752 (23,130) 341,392 Fiscal Six Months Ended July 3, 2020 Contract revenue 154,506 35,069 - - 189,575 Depreciation and amortization 9,427 558 - - 9,985 Interest expense, net 19 - 2,751 - 2,770 Segment profit (loss) before income tax expense (9,693) 5,196 (10,337) - (14,834) Income tax expense (benefit) (1,108) 594 (1,181) - (1,695) Net income (loss) (8,585) 4,602 (9,156) - (13,139) Segment assets (1) 333,142 24,285 59,071 (23,130) 393,368 Fiscal Six Months Ended June 28, 2019 Contract revenue 159,975 36,214 - - 196,189 Depreciation and amortization 4,928 592 - - 5,520 Interest expense, net - - 2,342 - 2,342 Segment profit (loss) before income tax expense 647 4,017 (4,438) - 226 Income tax expense (benefit) 179 1,110 (2,286) - (997) Net income (loss) 468 2,907 (2,152) - 1,223 Segment assets (1) 183,080 23,690 157,752 (23,130) 341,392 (1) Segment assets are presented net of intercompany receivables. The following tables provide information about disaggregated revenue by contract type, client type and geographical region: Three months ended July 3, 2020 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 12,125 $ 13,689 $ 25,814 Unit-based 28,900 1,993 30,893 Fixed price 25,683 1,159 26,842 Total (1) $ 66,708 $ 16,841 $ 83,549 Client Type Commercial $ 8,889 $ 1,304 $ 10,193 Government 21,701 14,939 36,640 Utilities (2) 36,118 598 36,716 Total (1) $ 66,708 $ 16,841 $ 83,549 Geography (3) Domestic $ 66,708 $ 16,841 $ 83,549 Six months ended July 3, 2020 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 26,136 $ 27,781 $ 53,917 Unit-based 79,789 5,098 84,887 Fixed price 48,581 2,190 50,771 Total (1) $ 154,506 $ 35,069 $ 189,575 Client Type Commercial $ 17,618 $ 2,678 $ 20,296 Government 43,428 31,734 75,162 Utilities (2) 93,460 657 94,117 Total (1) $ 154,506 $ 35,069 $ 189,575 Geography (3) Domestic $ 154,506 $ 35,069 $ 189,575 (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 immaterial for the three and six months ended July 3, 2020. Three months ended June 28, 2019 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 3,093 $ 14,596 $ 17,689 Unit-based 63,757 3,592 67,349 Fixed price 18,433 925 19,358 Total (1) $ 85,283 $ 19,113 $ 104,396 Client Type Commercial $ 6,840 $ 1,328 $ 8,168 Government 14,583 17,659 32,242 Utilities (2) 63,860 126 63,986 Total (1) $ 85,283 $ 19,113 104,396 Geography (3) Domestic $ 85,283 $ 19,113 104,396 Six months ended June 28, 2019 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 7,348 $ 27,654 $ 35,002 Unit-based 120,629 7,163 127,792 Fixed price 31,998 1,397 33,395 Total (1) $ 159,975 $ 36,214 $ 196,189 Client Type Commercial $ 16,035 $ 2,626 $ 18,661 Government 23,445 33,330 56,775 Utilities (2) 120,495 258 120,753 Total (1) $ 159,975 $ 36,214 196,189 Geography (3) Domestic $ 159,975 $ 36,214 196,189 (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 immaterial for the three and six months ended June 28, 2019. Geographical Information Substantially all of the Company’s consolidated revenue was derived from its operations in the U.S. The Company operates through a nationwide network of offices spread across 24 states and the District of Columbia. Revenues from the Company’s Canadian operations were not material for the three and six months ended July 3, 2020. For the three months and six months ended June 28, 2019, the Company did not have foreign revenues. Customer Concentration For the three and six months ended July 3, 2020, the Company’s top 10 customers accounted for 45.3% and 46.6%, respectively, of the Company’s consolidated contract revenue. For the three and six months ended June 28, 2019, the Company’s top 10 customers accounted for 48.1% and 46.0%, respectively, of the Company’s consolidated contract revenue. For the three and six months ended July 3, 2020 and June 28, 2019, the Company had individual customers that accounted for more than 10% of its consolidated contract revenues. For the three months ended July 3, 2020, the Company derived 12.7% of its consolidated contract revenue from one customer, Los Angeles Department of Water and Power (“LADWP”). For the six months ended July 3, 2020, the Company derived 26.3% of its consolidated contract revenue from two customers, LADWP and DASNY. For the three and six months ended June 28, 2019, the Company derived 17.7% and 17.2%, respectively, of its consolidated contract revenue from one customer, LADWP. On a segment basis, the Company also had individual customers that accounted for more than 10% of its segment contract revenues. For the three and six months ended July 3, 2020, the Company derived 28.3% and 32.3%, respectively, of its Energy segment revenues from two customers, LADWP and DASNY, and it derived 20.6% and 20.1%, respectively, of its Engineering and Consulting segment revenues from one customer, the City of Elk Grove. For the three and six months ended June 28, 2019, the Company derived 32.0% of its Energy segment revenues from two customers, LADWP and Consolidated Edison of New York, and no single customer accounted for 10% or more of its Engineering and Consulting segment revenues. The Company’s largest clients are based in California and New York. For the three and six months ended July 3, 2020, services provided to clients in California accounted for 44.9%, and 44.6%, respectively, of the Company’s consolidated contract revenue, and services provided to clients in New York accounted for 14.8%, and 17.9%, respectively, of the Company’s consolidated contract revenue. For the three and six months ended June 28, 2019, services provided to clients in California accounted for 39.1% and services provided to clients in New York accounted for 24.5%, and 25.1%, respectively, of the Company’s consolidated contract revenue. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 03, 2020 | |
INCOME TAXES | |
INCOME TAXES | 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. Areas of estimation include the Company’s consideration of future taxable income 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. During each fiscal year, the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize existing deferred tax assets. Beginning in fiscal year 2017, the Company determined that it was more-likely-than-not that the entire California net operating loss will not be utilized prior to expiration. Significant pieces of objective evidence evaluated included the Company’s history of utilization of California net operating losses in prior years for each of its subsidiaries, as well as its forecasted amount of net operating loss utilization for certain members of the combined group. As a result, the Company recorded a valuation allowance in the amount of $86,000 at the end of fiscal year 2018 related to California net operating losses. There was no change to the valuation allowance during the six months ended July 3, 2020 or the six months ended June 28, 2019. 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. As of July 3, 2020, the Company recorded a liability of $0.1 million for uncertain tax positions related to miscellaneous tax deductions taken in open tax years. Included in this amount are $0.1 million of tax benefits that, if recognized, would affect the effective tax rate. Interest and penalties of $0.03 million have been recorded related to unrecognized tax benefits as of July 3, 2020. For the three and six months ended June 28, 2019, |
EARNINGS PER SHARE (EPS)
EARNINGS PER SHARE (EPS) | 6 Months Ended |
Jul. 03, 2020 | |
EARNINGS PER SHARE (EPS) | |
EARNINGS PER SHARE (EPS) | 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 Six months ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands, except per share amounts) Net income (loss) $ (4,985) $ 1,640 $ (13,139) $ 1,223 Weighted-average common shares outstanding 11,682 11,100 11,593 11,037 Effect of dilutive stock options and restricted stock awards — 579 — 633 Weighted-average common shares outstanding-diluted 11,682 11,679 11,593 11,670 Earnings (Loss) per share: Basic $ (0.43) $ 0.15 $ (1.13) $ 0.11 Diluted $ (0.43) $ 0.14 $ (1.13) $ 0.10 For the three and six months ended July 3, 2020, the Company reported a net loss, and accordingly, all outstanding equity awards have been excluded from such periods because including them would have been anti-dilutive. For the three and six months ended June 28, 2019, 156,000 and 225,000 options were excluded from the calculation of dilutive potential common shares because including them would have been anti-dilutive. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Jul. 03, 2020 | |
BUSINESS COMBINATIONS | |
BUSINESS COMBINATIONS | 12. BUSINESS COMBINATIONS Acquisition of E3, Inc. On October 28, 2019, the Company, through its wholly-owned subsidiary, WES acquired all of the capital stock of Energy and Environmental Economics, Inc. (“E3, Inc.”), pursuant to the terms of a stock purchase agreement (the “Stock Purchase Agreement”) by and among the Company, WES, E3, Inc., each of the stockholders of E3, Inc. (the “E3, Inc. Stockholders”) and Ren Orans, as seller representative of the E3, Inc. Stockholders. E3, Inc. is an energy consulting firm that helps utilities, regulators, policy makers, developers, and investors make strategic decisions as they implement new public policies, respond to technological advances, and address customers’ shifting expectations in clean energy. The Company believes that E3 will provide Willdan and our clients visibility into future market trends and position it to advise clients on upcoming policy, electrification, and decarbonization. E3, Inc.’s financial information is included within the Energy segment beginning in the fourth quarter of fiscal year 2019. The Company expects to finalize the purchase price allocation with respect to this transaction during the fourth quarter of fiscal 2020. The Company agreed to pay up to $44.0 million for the purchase of all of the capital stock of E3, Inc., which purchase price consists of (i) $27.0 million in cash paid on the E3, Inc. Closing Date (subject to holdbacks and adjustments), (ii) $5.0 million in shares of the Company’s common stock, based on the volume-weighted average price per share of the Company’s common stock for the ten trading days immediately following, but not including, the E3, Inc. Closing Date and (iii) up to $12.0 million in cash if E3, Inc. exceeds certain financial targets during the three years after the E3, Inc. Closing Date, as more fully described below (such potential payments of up to $12.0 million, being referred to as “Earn-Out Payments” and $12.0 million in respect thereof, being referred to as the “Maximum Payout”). The amount of the Earn-Out Payments to be paid will be determined based on E3, Inc.’s earnings before interest, taxes, depreciation and amortization (“EBITDA”). The E3, Inc. Stockholders will receive Earn-Out Payments in each of the three years after the E3, Inc. Closing Date (the “Earn-Out Period”) based on the amount by which E3, Inc.’s EBITDA exceeds certain targets. The amounts due to the E3, Inc. Stockholders as Earn-Out Payments will in no event, individually or in the aggregate, exceed the Maximum Payout. Earn-Out Payments will be made in annual installments for each of the three years of the Earn-Out Period. In addition, the Earn-Out Payments will be subject to certain subordination provisions in favor of the lenders under the Company’s Credit Agreement. The Purchase Agreement also contains customary representations and warranties regarding WES, the Company, E3, Inc. and the E3, Inc. Stockholders, indemnification provisions and other provisions customary for transactions of this nature. The Company borrowed $30.0 million under its Delayed Draw Term Loan on October 28, 2019 to fund the $27.0 million cash payment paid on the E3, Inc. Closing Date. The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and the acquired company’s assembled work force. The Company estimates that the entire $21.9 million of goodwill resulting from the acquisition will be tax deductible. Preliminary consideration for the acquisition includes the following: E3, Inc. (in thousands) Cash paid $ 25,217 Other working capital adjustment 1,973 Issuance of common stock 5,000 Contingent Consideration 7,000 Total consideration $ 39,190 The following table summarizes the preliminary amounts for the acquired assets recorded at their estimated fair value as of the acquisition date: E3, Inc. (in thousands) Current assets $ 5,316 Non-current assets (1) 341 Cash 2,264 Equipment and leasehold improvements, net 409 Right-of-use assets 7,641 Current lease liability (750) Non-current lease liability (7,300) Liabilities (4,325) Backlog 2,500 Customer relationships 8,300 Tradename 2,000 Non-compete 900 Goodwill 21,894 Net assets acquired $ 39,190 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, backlog and goodwill. During the six months ended July 3, 2020, the Company made adjustments, primarily related to other working capital, to the consideration paid for E3 which resulted in an adjustment to the preliminary purchase price allocation of E3. The adjustments resulted in an aggregate increase of $1.5 million in the net carrying value of right-of-use assets and current lease liability, and an aggregate decrease of $1.5 million in the net carrying value of non-current lease liability, liabilities, and goodwill. The decrease in the fair value of intangible assets resulted in no change in the amortization expense for the fiscal three months and six months ended July 3, 2020. The acquisition related costs associated with E3, Inc. included in other general and administrative expenses in the consolidated statements of comprehensive income were not material for either the three or six months ended July 3, 2020. During the three and six months ended July 3, 2020, the acquisition of E3, Inc. contributed $6.8 million and $11.8 million in revenue, and contributed $1.6 million and $2.4 million in income from operations, respectively. Acquisition of Onsite Energy Corporation On July 2, 2019, the Company acquired substantially all of the assets and liabilities of Onsite Energy Corporation (“Onsite Energy”), an energy efficiency services and project implementation firm that specializes in energy upgrades and commissioning for industrial facilities. The Company believes the acquisition will expand its presence in the California-based industrial energy management services. Pursuant to the terms of the Asset Purchase Agreement, dated July 2, 2019, by and between WES and Onsite Energy, WES will pay a maximum aggregate purchase price of $26.4 million, subject to certain holdback and working capital adjustments, to be paid in cash. Onsite Energy’s financial information is included within the Energy segment. The Company finalized the purchase price allocation with respect to this transaction in the second quarter of 2020. The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and the acquired company’s assembled work force. The Company estimates that the entire $8.6 million of goodwill resulting from the acquisition will be tax deductible. Consideration for the acquisition includes the following: Onsite Energy (in thousands) Cash paid $ 24,905 Other working capital adjustment - Total consideration $ 24,905 The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date: Onsite Energy (in thousands) Current assets $ 19,058 Non-current assets (1) 10 Equipment and leasehold improvements, net 39 Right-of-use assets 828 Current lease liability (168) Non-current lease liability (660) Liabilities (12,222) Backlog 1,510 Customer relationships 7,050 Tradename 860 Goodwill 8,600 Net assets acquired $ 24,905 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, backlog and goodwill. During the six months ended July 3, 2020, the Company made adjustments, primarily related to other working capital, to the consideration paid for Onsite Energy which resulted in an adjustment to the purchase price allocation of Onsite Energy. The adjustments resulted in an aggregate increase of $3.5 million in the net carrying value of backlog, tradename and goodwill and an aggregate decrease of $3.5 million in the net carrying value of current assets and goodwill. The increase in the fair value of intangible assets resulted in $0.7 million change of the amortization expense for the fiscal three and six months ended July 3, 2020. The acquisition related costs associated with Onsite Energy included in other general and administrative expenses in the consolidated statements of comprehensive income were not material for either the three or six months ended July 3, 2020. During the three and six months ended July 3, 2020, the acquisition of Onsite Energy contributed $2.4 million $4.6 million in revenue, respectively, and had no material contributions in income from operations. Acquisition of The Weidt Group On March 8, 2019, the Company acquired substantially all of the assets of the energy practice division of The Weidt Group Inc. (“The Weidt Group”). The Company believes the acquisition will expand its presence in the upper Midwest and better position the Company to help utilities make their grids more resilient. Pursuant to the terms of the Asset Purchase Agreement, dated March 8, 2019, by and among the Company, WES and The Weidt Group, WES paid a cash purchase price of $22.1 million, inclusive of working capital adjustments. The Weidt Group’s financial information is included within the Energy segment. The Company finalized the purchase price allocation with respect to this transaction in the first quarter of 2020. The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and the acquired company’s assembled work force. The Company estimates that the entire $11.5 million of goodwill resulting from the acquisition will be tax deductible. Consideration for the acquisition includes the following: The Weidt Group (in thousands) Cash paid $ 22,136 Other working capital adjustment - Total consideration $ 22,136 The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date: The Weidt Group (in thousands) Current assets $ 2,317 Non-current assets (1) 25 Equipment and leasehold improvements, net 198 Right-of-use assets 1,730 Current lease liability (245) Non-current lease liability (1,533) Liabilities (612) Backlog 750 Customer relationships 4,240 Tradename 550 Developed technology 3,170 Goodwill 11,546 Net assets acquired $ 22,136 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, developed technology, backlog and goodwill. The acquisition related costs associated with The Weidt Group included in other general and administrative expenses in the consolidated statements of comprehensive income were not material for either the three or six months ended July 3, 2020. During the three and six months ended July 3, 2020, the acquisition of The Weidt Group contributed $3.7 million and $7.4 million in revenue, and contributed $0.6 million and $0.8 million in income from operations, respectively. The following unaudited pro forma financial information for the three and six months ended July 3, 2020 and June 28, 2019 assumes that the acquisitions of substantially all of the assets and liabilities of E3, Inc., Onsite Energy and The Weidt Group occurred on the first day of the year prior to the year of acquisition: Three Months Ended Six Months Ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands, except per share data) Pro forma revenue $ 83,549 $ 117,010 $ 189,575 $ 219,409 Pro forma income (loss) from operations $ (3,841) $ 3,818 $ (12,110) $ 5,096 Pro forma net income (loss) (1) $ (4,985) $ 2,732 $ (13,139) $ 2,784 Earnings (Loss) per share: Basic $ (0.43) $ 0.24 $ (1.13) $ 0.25 Diluted $ (0.43) $ 0.23 $ (1.13) $ 0.23 Weighted average shares outstanding: Basic 11,682 11,315 11,593 11,252 Diluted 11,682 11,894 11,593 11,885 (1) Adjustments to pro forma net income include income from operations, amortization and interest expenses. This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had the acquisition of all the capital stock of E3, Inc. and that the acquisitions of substantially all of the assets and liabilities of Onsite Energy and The Weidt Group each occurred on the first day of the year prior to the year of acquisition and may not be indicative of future operating results. During the three and six months ended July 3, 2020, the acquisition of E3, Inc., Onsite Energy and The Weidt Group contributed $12.9 million and $23.8 million in revenue, and contributed $2.2 million and $3.3 million in income from operations, respectively. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jul. 03, 2020 | |
CONTINGENCIES | |
CONTINGENCIES | 13. 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jul. 03, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. 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. As of August 6, 2020, there were no subsequent events required to be reported. |
ORGANIZATION AND OPERATIONS O_2
ORGANIZATION AND OPERATIONS OF THE COMPANY (Policies) | 6 Months Ended |
Jul. 03, 2020 | |
ORGANIZATION AND OPERATIONS OF THE COMPANY | |
Basis of Presentation | The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Organization and Operations of the Company |
Fiscal Years | Fiscal Years The Company operates and reports its annual financial results based on 52 or 53-week periods ending on the Friday closest to December 31. The Company operates and reports its quarterly financial results based on the 13-week period ending on the Friday closest to March 31, June 30 and September 30 and the 13 or 14-week period ending on the Friday closest to March 31, as applicable. Fiscal year 2020, which ends on January 1, 2021, will be comprised of 53 weeks, with the first quarter consisting of 14 weeks and the remaining quarters consisting of 13 weeks each. Fiscal year 2019, which ended on December 27, 2019 was comprised of 52 weeks, with all quarters presented consisting of 13 weeks. All references to years in the notes to consolidated financial statements represent fiscal years. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
COVID-19 Pandemic | Management’s Plans in Response to Covid-19 On January 30, 2020, the spread of a novel strain of coronavirus (“Covid-19”) was declared a Public Health Emergency of International Concern by the World Health Organization (“WHO”). On March 11, 2020, WHO characterized the Covid-19 outbreak as a pandemic. The Covid-19 pandemic has resulted in governmental authorities around the world implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns (subject to exceptions for certain essential operations and businesses). Although some of these measures have since been lifted or scaled back, a recent resurgence of Covid-19 in the United States has resulted in the reimposition of certain restrictions and may lead to other restrictions being reimplemented in response to efforts to reduce the spread of Covid-19. The Covid-19 outbreak and restrictions intended to slow the spread of Covid-19 have caused economic and social disruption on an unprecedented scale. It is unclear how long these restrictions will remain in place and they may remain in place in some form for an extended period of time. Given the uncertainties associated with the duration of the pandemic, the Company cannot reasonably estimate the ultimate impacts of Covid-19 and efforts to limit its spread on its business, financial condition, results of operations or cash flows for the foreseeable future or whether the Company’s assumptions used to estimate its future liquidity requirements will be correct . Health and Safety Financial Position and Results of Operations In the Energy segment, the Company has experienced and expects to continue to experience a negative impact on its direct install programs that serve small businesses as a result of restrictions put in place by governmental authorities that have required temporary shutdowns of all “non-essential” businesses. In fiscal 2019, the Company derived approximately 40% of its gross revenue from its direct install programs that serve small businesses, and a significant portion of its direct install work on these programs is just entering recovery as phased re-openings continue. The Company’s other programs, which generated approximately 60% of its gross revenue in fiscal 2019, are either businesses that have been determined to be “essential” by government authorities or have continued to progress during the pandemic. In addition, some of the Company’s programs in the Energy segment, particularly those related to improvements in public schools, have been accelerated to take advantage of empty facilities. In the Engineering and Consulting segment, the Company’s revenues have been minimally affected by Covid-19. The services in this segment have generally been deemed “essential” by the government and have continued to operate while abiding social distancing measures. As of August 7, 2020, though some of the Company’s work has been suspended, none of its contracts have been cancelled and proposal activities for new programs have continued to advance. The Company currently estimates that pandemic related slowdowns and work suspensions are reducing its revenue by approximately 20% from pre-pandemic levels, an improvement from the estimated 40% reduction observed in April. ● Executing a reduction in workforce, primarily through an unpaid furlough, impacting approximately 300 members of staff. The largest reductions were a result of government-mandated work restrictions impacting the Company’s direct install programs in California and New York. During the Company’s second fiscal quarter, furloughed employees began to return to work as government authorities began lifting restrictions through phased re-openings ; ● A temporary freeze on all non-critical spending for travel, capital expenditures, and other discretionary expenses; ● A temporary cash wage reduction for salaried employees, ranging from 0% for lower salary bands up to 75% for senior management. During the second half of the Company’s second fiscal quarter, as the initial impact of Covid-19 was ascertained and operations were adjusted accordingly, salaries were reinstituted with the exception of corporate staff, whose salaries were reinstituted at the end of July 2020 ; ● Suspension of cash fees for the Company’s Board of Directors, until such time as the Board of Directors determines; ● Implementing a temporary hiring freeze; and ● Amending the Company’s credit facility for increased flexibility. The Company believes that its financial position is sufficiently flexible to enable it to maneuver in the current economic environment. Throughout the first and second quarter of fiscal year 2020, the Company enhanced liquidity by minimizing working capital and significantly improving cash collections. In addition, in May 2020, the Company amended its credit facility to modify, among other things, certain covenants to increase its financial flexibility. Combined with availability under its credit facility, the Company believes its enhanced liquidity position provides a cushion against liquidity disruptions. The Company anticipates borrowing additional amounts under its existing credit facility during the second half of fiscal year 2020 to support an expectation of recovery from Covid-19 operating levels and the accompanying need for working capital as a result of the easing of Covid-19 restrictions. Asset and liability valuation and other estimates used in preparation of financial statements Changes to the estimated future profitability of the business may require that the Company establish an additional valuation allowance against all or some portion of its net deferred tax assets. Impact on Clients and Subcontractors and Other Risks The Company primarily works for utilities, municipalities and other public agencies. The Company expects many governmental and other public agencies will have significant budget shortfalls for 2020 and potentially beyond as a result of the economic slowdown from the measures taken to mitigate the Covid-19 pandemic. Although none of the Company’s contracts with governmental or other public agencies were materially modified in the second fiscal quarter, these potential budget deficits could result in delayed funding for existing contracts with the Company, postponements of new contracts or price concessions. Further, most of the Company’s clients are not committed to purchase any minimum amount of services, as the Company agreements with them are based on a “purchase order” model. As a result, they may discontinue utilizing some or all of the Company’s services with little or no notice. In addition, the Company relies on subcontractors and material suppliers to complete a substantial portion of our work, especially in its Energy segment. If the Company’s significant subcontractors and material suppliers suffer significant economic harm and must limit or cease operations or file for bankruptcy as a result of the current economic slowdown, the Company’s subcontractors and material suppliers may not be able to fulfill their contractual obligations satisfactorily and the Company may not have the ability to select its subcontractors and material suppliers of choice for new contracts. If the Company’s subcontractors and material suppliers are not able to fulfill their contractual obligations, it could result in a significant increase in costs for the Company to complete the projects. The Covid-19 pandemic and health and safety measures intended to slow its spread have adversely affected, and may continue to adversely affect, our business, results of operations and financial condition.” |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The Company adopted this standard effective December 28, 2019. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements. Accounting Pronouncements Recently Issued In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 provides, among other things, guidance that modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; modifications of contracts within the scope of Topic 840, Leases, should be accounted for as a continuation of the existing contract; and, changes in the critical terms of hedging relationships, caused by reference rate reform, should not result in the de-designation of the instrument, provided certain criteria are met. The Company’s exposure to LIBOR rates includes its credit facilities and swap agreement. The amendments are effective as of March 12, 2020 through December 31, 2022. Adoption is permitted at any time. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements. In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 amends the accounting for income taxes by, among other things, removing: (i) The exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); (ii) The exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (iii) The exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (iv) The exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, which for the Company is the first quarter of fiscal 2021. The Company is currently evaluating the impact this update will have on its Condensed Consolidated Financial Statements. |
Contract Accounting | The Company enters into contracts with its clients that contain various types of pricing provisions, including fixed price, time-and-materials, and unit-based provisions. The Company recognizes revenues in accordance with ASU 2014-09, Revenue from Contracts with Customer, codified as ASC Topic 606 and the related amendments (collectively “ASC 606”). As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation. The following table reflects the Company’s two reportable segments and the types of contracts that each most commonly enters into for revenue generating activities. Segment Contract Type Revenue Recognition Method Time-and-materials Time-and-materials Energy Unit-based Unit-based Software license Unit-based Fixed price Percentage-of-completion Time-and-materials Time-and-materials Engineering and Consulting Unit-based Unit-based Fixed price Percentage-of-completion Revenue on the vast majority of the Company’s contracts is recognized over time because of the continuous transfer of control to the customer. Revenue on fixed price contracts is recognized on the percentage-of-completion method based generally on the ratio of direct costs incurred-to-date to estimated total direct costs at completion. The Company uses the percentage-of-completion method to better match the level of work performed at a certain point in time in relation to the effort that will be required to complete a project. In addition, the percentage-of-completion method is a common method of revenue recognition in the Company’s industry. Many of the Company’s 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. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. The Company recognizes revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of the Company’s time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, the Company recognizes the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue recognition for software licenses issued by the Energy segment is generally recognized at a point in time, utilizing the unit-based revenue recognition method, upon acceptance of the software by the customer and in recognition of the fulfillment of the performance obligation. Certain additional performance obligations beyond the base software license may be separated from the gross license fee and recognized on a straight-line basis over time. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying condensed consolidated balance sheets. To determine the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined contract should be accounted for as one performance obligation. With respect to the Company’s contracts, it is rare that multiple contracts should be combined into a single performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to have a single performance obligation if the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, which is mainly because the Company provides a significant service of integrating a complex set of tasks and components into a single project or capability. The Company may enter into contracts that include separate phases or elements. If each phase or element is negotiated separately based on the technical resources required and/or the supply and demand for the services being provided, the Company evaluates if the contracts should be segmented. If certain criteria are met, the contracts would be segmented which could result in revenues being assigned to the different elements or phases with different rates of profitability based on the relative value of each element or phase to the estimated total contract revenue. Segmented contracts may comprise up to approximately 2.0% to 3.0% of the Company’s consolidated contract revenue. Contracts that cover multiple phases or elements of the project or service lifecycle (development, construction and maintenance and support) may be considered to have multiple performance obligations even when they are part of a single contract. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. For the periods presented, the value of the separate performance obligations under contracts with multiple performance obligations (generally measurement and verification tasks under certain energy performance contracts) were not material. In cases where the Company does not provide the distinct good or service on a standalone basis, the primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company forecasts the Company’s expected costs of satisfying a performance obligation and then adds an appropriate margin for the distinct good or service. The Company provides quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications and industry standards. The Company does not consider these types of warranties to be separate performance obligations. In some cases, the Company has a master service or blanket agreement with a customer under which each task order releases the Company to perform specific portions of the overall scope in the service contract. Each task order is typically accounted for as a separate contract because the task order establishes the enforceable rights and obligations, and payment terms. Under ASC 606, variable consideration should be considered when determining the transaction price and estimates should be made for the variable consideration component of the transaction price, as well as assessing whether an estimate of variable consideration is constrained. For certain of the Company’s contracts, variable consideration can arise from modifications to the scope of services resulting from unapproved change orders or customer claims. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on assessments of legal enforceability, the Company’s performance, and all information (historical, current and forecasted) that is reasonably available to the Company. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company reviews and updates the Company’s contract-related estimates regularly through a company-wide disciplined project review process in which management reviews the progress and execution of the Company’s performance obligations and the estimate at completion (EAC). As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule and the related changes in estimates of revenues and costs. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer, among other variables. The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the full amount of estimated loss in the period it is identified. Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights or obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification that is not distinct from the existing contract on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For contract modifications that result in the promise to deliver goods or services that are distinct from the existing contract and the increase in price of the contract is for the same amount as the standalone selling price of the additional goods or services included in the modification, the Company accounts for such contract modifications as a separate contract. The Company includes claims to vendors, subcontractors and others as a receivable and a reduction in recognized costs when enforceability of the claim is established by the contract and the amounts are reasonably estimable and probable of being recovered. The amounts are recorded up to the extent of the lesser of the amounts management expects to recover or to costs incurred. Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition. Direct costs of contract revenue consist primarily of that portion of technical and nontechnical salaries and wages that has been incurred in connection with revenue producing projects. Direct costs of contract revenue also include production expenses, subcontractor services and other expenses that are incurred in connection with revenue producing projects. 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 consolidated statements of comprehensive income since no allocation of these costs is made to direct costs of contract revenue. No allocation of facilities costs is made to direct costs of contract revenue. Other companies may classify as direct costs of contract revenue some of the costs that the Company classifies as general and administrative costs. The Company expenses direct costs of contract revenue when incurred. 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. No revenue or cost is recorded for costs in which the Company acts solely in the capacity of an agent and has no risks associated with such costs. 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 July 3, 2020 and December 27, 2019, contract assets included retainage of $5.0 million and $5.4 million, respectively. In addition to the above, the Company derives revenue from software licenses and professional services and maintenance fees. In accordance with ASC 606, the Company performs an assessment of each contract to identify the performance obligations, determine the overall transaction price for the contract, allocate the transaction price to the performance obligations, and recognize the revenue when the performance obligations are satisfied. The Company utilizes the residual approach by which it estimates the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. The software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, or technical support. Related professional services include training and support services in which the standalone selling price is determined based on an input measure of hours incurred to total estimated hours and is recognized over time, usually which is the life of the contract. |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
REVENUES | |
Schedule of contracts by reportable segments and type of contracts | Segment Contract Type Revenue Recognition Method Time-and-materials Time-and-materials Energy Unit-based Unit-based Software license Unit-based Fixed price Percentage-of-completion Time-and-materials Time-and-materials Engineering and Consulting Unit-based Unit-based Fixed price Percentage-of-completion |
SUPPLEMENTAL FINANCIAL STATEM_2
SUPPLEMENTAL FINANCIAL STATEMENT DATA (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | |
Schedule of equipment and leasehold improvements | July 3, December 27, 2020 2019 (in thousands) Furniture and fixtures $ 4,086 $ 4,614 Computer hardware and software 15,983 14,789 Leasehold improvements 2,971 2,410 Equipment under finance leases 2,247 1,957 Automobiles, trucks, and field equipment 3,255 3,564 Subtotal 28,542 27,334 Accumulated depreciation and amortization (15,751) (15,283) Equipment and leasehold improvements, net $ 12,791 $ 12,051 |
Schedule of accrued liabilities | July 3, December 27, 2020 2019 (in thousands) Accrued subcontractor costs $ 21,502 $ 45,366 Compensation and payroll taxes 5,070 3,286 Accrued bonuses 3,663 7,756 Other 2,506 4,630 Employee withholdings 1,876 3,463 Paid leave bank 1,331 3,114 Total accrued liabilities $ 35,948 $ 67,615 |
Schedule of changes in the carrying value of goodwill by reporting unit | December 27, Additional Additions / July 3, 2019 Purchase Cost Adjustments 2020 (in thousands) Reporting Unit: Energy $ 126,898 $ — $ 2,589 $ 129,487 Engineering and Consulting 749 — — 749 $ 127,647 $ — $ 2,589 $ 130,236 |
Schedule of gross amounts and accumulated amortization of the Company's acquired identifiable intangible assets with finite useful lives | July 3, 2020 December 27, 2019 Gross Accumulated Gross Accumulated Amortization Amount Amortization Amount Amortization Period (in thousands) (in years) Finite: Backlog $ 7,844 $ 5,542 $ 7,134 $ 3,763 1.0 Tradename 13,711 5,904 13,351 4,882 2.5 - 6.0 Non-compete agreements 2,320 1,519 2,320 1,384 4.0 - 5.0 Developed technology 14,620 4,539 14,620 3,227 8.0 Customer relationships 60,409 11,279 60,733 8,065 5.0 - 8.0 Total intangible assets $ 98,904 $ 28,783 $ 98,158 $ 21,321 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair values of outstanding derivatives designated as hedging instruments | Fair Value of Derivative Instruments as of Balance Sheet Location July 3, 2020 December 27, 2019 (in thousands) Interest rate swap agreement Accrued liabilities $ (658) $ (241) Interest rate swap agreement Other noncurrent (liabilities) assets $ (351) $ (306) |
Schedule of accumulated other comprehensive income (loss) | Gain (Loss) on Accumulated Other Derivative Instruments Comprehensive Loss (in thousands) Balances at December 27, 2019 $ (396) $ (396) Other comprehensive loss before reclassifications (568) (568) Amounts reclassified from accumulated other comprehensive income — — Income tax benefit related to derivative instruments 119 119 Net current-period other comprehensive loss (845) (845) Balances at April 3, 2020 $ (845) $ (845) Other comprehensive loss before reclassifications $ 105 $ 105 Amounts reclassified from accumulated other comprehensive income: — — Income tax benefit (expense) related to derivative instruments (22) (22) Net current-period other comprehensive loss 83 83 Balances at July 3, 2020 $ (762) $ (762) |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations, excluding obligations under capital leases | July 3, December 27, 2020 2019 (in thousands) Outstanding borrowings on Term A Loan $ 90,000 $ 95,000 Outstanding borrowings on Revolving Credit Facility — 5,000 Outstanding borrowings on Delayed Draw Term Loan 28,500 30,000 Other debt agreements 898 1,060 Total debt 119,398 131,060 Issuance costs and debt discounts (940) (709) Subtotal 118,458 130,351 Less current portion of long-term debt 13,866 13,720 Long-term debt portion $ 104,592 $ 116,631 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
LEASES | |
Summary of the lease expense | Three Months Ended Six Months Ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands) (in thousands) Operating lease cost $ 1,766 $ 1,181 $ 3,508 $ 2,270 Finance lease cost: Amortization of assets 155 124 310 231 Interest on lease liabilities 8 9 17 18 Total net lease cost $ 1,929 $ 1,314 $ 3,835 $ 2,519 |
Summary of lease information presented on the Company's condensed consolidated balance sheet | July 3, December 27, 2020 2019 (in thousands) Operating leases: Right-of-use assets $ 22,679 $ 22,297 Lease liability $ 5,994 $ 5,550 Lease liability, less current portion 17,935 18,411 Total lease liabilities $ 23,929 $ 23,961 Finance leases (included in equipment and leasehold improvements, net): Equipment and leasehold improvements, net $ 2,247 $ 1,957 Accumulated depreciation (1,572) (1,291) Total equipment and leasehold improvements, net $ 675 $ 666 Finance lease obligations $ 332 $ 375 Finance lease obligations, less current portion 256 191 Total finance lease obligations $ 588 $ 566 Weighted average remaining lease term (in years): Operating Leases 4.73 4.59 Finance Leases 1.92 1.47 Weighted average discount rate: Operating Leases 4.50 % 5.14 % Finance Leases 4.21 % 4.80 % |
Summary of other information and supplemental cash flow information related to finance and operating leases | Six Months Ended July 3, June 28, 2020 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 3,377 $ 2,345 Operating cash flow from finance leases 17 64 Financing cash flow from finance leases 296 300 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 2,552 $ 1,223 |
Summary of the maturities of operating lease liabilities | The following is a summary of the maturities of lease liabilities as of July 3, 2020: Operating Finance (in thousands) Fiscal year: Remainder of 2020 $ 6,906 $ 348 2021 5,942 171 2022 4,963 69 2023 3,028 14 2024 2,185 9 2025 and thereafter 3,505 — Total lease payments $ 26,529 $ 611 Less: Imputed interest (2,600) (23) Total lease obligations 23,929 588 Less: Current obligations 5,994 332 Noncurrent lease obligations $ 17,935 $ 256 |
Summary of the maturities of finance lease liabilities | Operating Finance (in thousands) Fiscal year: Remainder of 2020 $ 6,906 $ 348 2021 5,942 171 2022 4,963 69 2023 3,028 14 2024 2,185 9 2025 and thereafter 3,505 — Total lease payments $ 26,529 $ 611 Less: Imputed interest (2,600) (23) Total lease obligations 23,929 588 Less: Current obligations 5,994 332 Noncurrent lease obligations $ 17,935 $ 256 |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of financial information with respect to the reportable segments | Engineering Unallocated Consolidated Energy & Consulting Corporate Intersegment Total (in thousands) Fiscal Three Months Ended July 3, 2020 Contract revenue $ 66,708 $ 16,841 $ - $ - $ 83,549 Depreciation and amortization 5,192 274 - - 5,466 Interest expense, net 8 - 1,249 - 1,257 Segment profit (loss) before income tax expense (3,286) 3,191 (4,980) - (5,075) Income tax expense (benefit) (53) 264 (301) - (90) Net income (loss) (3,232) 2,927 (4,680) - (4,985) Segment assets (1) 333,142 24,285 59,071 (23,130) 393,368 Fiscal Three Months Ended June 28, 2019 Contract revenue $ 85,283 $ 19,113 $ - $ - $ 104,396 Depreciation and amortization 2,558 308 - - 2,866 Interest expense, net - - 1,221 - 1,221 Segment profit (loss) before income tax expense 2,133 2,412 (2,975) - 1,570 Income tax expense (benefit) 590 667 (1,327) - (70) Net income (loss) 1,544 1,746 (1,650) - 1,640 Segment assets (1) 183,080 23,690 157,752 (23,130) 341,392 Fiscal Six Months Ended July 3, 2020 Contract revenue 154,506 35,069 - - 189,575 Depreciation and amortization 9,427 558 - - 9,985 Interest expense, net 19 - 2,751 - 2,770 Segment profit (loss) before income tax expense (9,693) 5,196 (10,337) - (14,834) Income tax expense (benefit) (1,108) 594 (1,181) - (1,695) Net income (loss) (8,585) 4,602 (9,156) - (13,139) Segment assets (1) 333,142 24,285 59,071 (23,130) 393,368 Fiscal Six Months Ended June 28, 2019 Contract revenue 159,975 36,214 - - 196,189 Depreciation and amortization 4,928 592 - - 5,520 Interest expense, net - - 2,342 - 2,342 Segment profit (loss) before income tax expense 647 4,017 (4,438) - 226 Income tax expense (benefit) 179 1,110 (2,286) - (997) Net income (loss) 468 2,907 (2,152) - 1,223 Segment assets (1) 183,080 23,690 157,752 (23,130) 341,392 (1) Segment assets are presented net of intercompany receivables. |
Schedule of disaggregation of revenue | Three months ended July 3, 2020 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 12,125 $ 13,689 $ 25,814 Unit-based 28,900 1,993 30,893 Fixed price 25,683 1,159 26,842 Total (1) $ 66,708 $ 16,841 $ 83,549 Client Type Commercial $ 8,889 $ 1,304 $ 10,193 Government 21,701 14,939 36,640 Utilities (2) 36,118 598 36,716 Total (1) $ 66,708 $ 16,841 $ 83,549 Geography (3) Domestic $ 66,708 $ 16,841 $ 83,549 Six months ended July 3, 2020 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 26,136 $ 27,781 $ 53,917 Unit-based 79,789 5,098 84,887 Fixed price 48,581 2,190 50,771 Total (1) $ 154,506 $ 35,069 $ 189,575 Client Type Commercial $ 17,618 $ 2,678 $ 20,296 Government 43,428 31,734 75,162 Utilities (2) 93,460 657 94,117 Total (1) $ 154,506 $ 35,069 $ 189,575 Geography (3) Domestic $ 154,506 $ 35,069 $ 189,575 (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 immaterial for the three and six months ended July 3, 2020. Three months ended June 28, 2019 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 3,093 $ 14,596 $ 17,689 Unit-based 63,757 3,592 67,349 Fixed price 18,433 925 19,358 Total (1) $ 85,283 $ 19,113 $ 104,396 Client Type Commercial $ 6,840 $ 1,328 $ 8,168 Government 14,583 17,659 32,242 Utilities (2) 63,860 126 63,986 Total (1) $ 85,283 $ 19,113 104,396 Geography (3) Domestic $ 85,283 $ 19,113 104,396 Six months ended June 28, 2019 Energy Engineering and Total (in thousands) Contract Type Time-and-materials $ 7,348 $ 27,654 $ 35,002 Unit-based 120,629 7,163 127,792 Fixed price 31,998 1,397 33,395 Total (1) $ 159,975 $ 36,214 $ 196,189 Client Type Commercial $ 16,035 $ 2,626 $ 18,661 Government 23,445 33,330 56,775 Utilities (2) 120,495 258 120,753 Total (1) $ 159,975 $ 36,214 196,189 Geography (3) Domestic $ 159,975 $ 36,214 196,189 (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 immaterial for the three and six months ended June 28, 2019. |
EARNINGS PER SHARE (EPS) (Table
EARNINGS PER SHARE (EPS) (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
EARNINGS PER SHARE (EPS) | |
Schedule of number of weighted-average common shares outstanding used to compute basic and diluted EPS | Three months ended Six months ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands, except per share amounts) Net income (loss) $ (4,985) $ 1,640 $ (13,139) $ 1,223 Weighted-average common shares outstanding 11,682 11,100 11,593 11,037 Effect of dilutive stock options and restricted stock awards — 579 — 633 Weighted-average common shares outstanding-diluted 11,682 11,679 11,593 11,670 Earnings (Loss) per share: Basic $ (0.43) $ 0.15 $ (1.13) $ 0.11 Diluted $ (0.43) $ 0.14 $ (1.13) $ 0.10 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 6 Months Ended |
Jul. 03, 2020 | |
E3, Inc. | |
Schedule of consideration for the acquisition | E3, Inc. (in thousands) Cash paid $ 25,217 Other working capital adjustment 1,973 Issuance of common stock 5,000 Contingent Consideration 7,000 Total consideration $ 39,190 |
Schedule of amounts for the acquired assets and liabilities recorded at their estimated fair value as of the acquisition date | E3, Inc. (in thousands) Current assets $ 5,316 Non-current assets (1) 341 Cash 2,264 Equipment and leasehold improvements, net 409 Right-of-use assets 7,641 Current lease liability (750) Non-current lease liability (7,300) Liabilities (4,325) Backlog 2,500 Customer relationships 8,300 Tradename 2,000 Non-compete 900 Goodwill 21,894 Net assets acquired $ 39,190 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, backlog and goodwill. |
Onsite Energy Corporation | |
Schedule of consideration for the acquisition | Onsite Energy (in thousands) Cash paid $ 24,905 Other working capital adjustment - Total consideration $ 24,905 |
Schedule of amounts for the acquired assets and liabilities recorded at their estimated fair value as of the acquisition date | Onsite Energy (in thousands) Current assets $ 19,058 Non-current assets (1) 10 Equipment and leasehold improvements, net 39 Right-of-use assets 828 Current lease liability (168) Non-current lease liability (660) Liabilities (12,222) Backlog 1,510 Customer relationships 7,050 Tradename 860 Goodwill 8,600 Net assets acquired $ 24,905 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, backlog and goodwill. |
The Weidt Group | |
Schedule of consideration for the acquisition | The Weidt Group (in thousands) Cash paid $ 22,136 Other working capital adjustment - Total consideration $ 22,136 |
Schedule of amounts for the acquired assets and liabilities recorded at their estimated fair value as of the acquisition date | The Weidt Group (in thousands) Current assets $ 2,317 Non-current assets (1) 25 Equipment and leasehold improvements, net 198 Right-of-use assets 1,730 Current lease liability (245) Non-current lease liability (1,533) Liabilities (612) Backlog 750 Customer relationships 4,240 Tradename 550 Developed technology 3,170 Goodwill 11,546 Net assets acquired $ 22,136 (1) Excluded from non-current assets are equipment and leasehold improvements, net, right-of-use assets, customer relationships, tradename, developed technology, backlog and goodwill. |
Lime Energy | |
Schedule of unaudited pro forma financial information | Three Months Ended Six Months Ended July 3, June 28, July 3, June 28, 2020 2019 2020 2019 (in thousands, except per share data) Pro forma revenue $ 83,549 $ 117,010 $ 189,575 $ 219,409 Pro forma income (loss) from operations $ (3,841) $ 3,818 $ (12,110) $ 5,096 Pro forma net income (loss) (1) $ (4,985) $ 2,732 $ (13,139) $ 2,784 Earnings (Loss) per share: Basic $ (0.43) $ 0.24 $ (1.13) $ 0.25 Diluted $ (0.43) $ 0.23 $ (1.13) $ 0.23 Weighted average shares outstanding: Basic 11,682 11,315 11,593 11,252 Diluted 11,682 11,894 11,593 11,885 (1) Adjustments to pro forma net income include income from operations, amortization and interest expenses. |
ORGANIZATION AND OPERATIONS O_3
ORGANIZATION AND OPERATIONS OF THE COMPANY - Management's Plans in Response to Covid-19 and Fiscal Years (Details) | Aug. 07, 2020contract | Jan. 01, 2021 | Oct. 02, 2020 | Jul. 03, 2020 | Apr. 03, 2020 | Dec. 27, 2019 | Sep. 27, 2019 | Jun. 28, 2019 | Mar. 29, 2019 | Jul. 03, 2020segment | Jan. 01, 2021 | Dec. 27, 2019 |
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Number of reporting segments | segment | 2 | |||||||||||
Length of fiscal period | 91 days | 91 days | 91 days | 98 days | 91 days | 91 days | 91 days | 91 days | 371 days | 364 days | ||
Subsequent Event | ||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Number of contracts cancelled | contract | 0 | |||||||||||
Energy Segment | ||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Percentage of revenue considered nonessential | 40.00% | |||||||||||
Other Energy | ||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Percentage of revenue considered essential | 60.00% | |||||||||||
Minimum | ||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Length of fiscal period | 91 days | 364 days | ||||||||||
Maximum | ||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||
Length of fiscal period | 98 days | 371 days |
REVENUES (Details)
REVENUES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 03, 2020USD ($) | Jun. 28, 2019USD ($) | Jul. 03, 2020USD ($)segment | Jun. 28, 2019USD ($) | Dec. 27, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Number of reporting segments | segment | 2 | ||||
Payroll taxes, bonuses and employee benefit costs for all Company personnel | $ 15,331 | $ 15,437 | $ 35,743 | $ 30,406 | |
Facilities costs | 2,642 | $ 2,047 | 5,336 | $ 3,819 | |
Revenue of the entity recorded in which it acts solely in the capacity of an agent | 0 | ||||
Costs recorded for costs to the entity in which it acts solely in the capacity of an agent | 0 | ||||
Accounts receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Retained accounts receivable | $ 5,000 | $ 5,000 | $ 5,400 | ||
Maximum | |||||
Disaggregation of Revenue [Line Items] | |||||
Percent of revenue (as a percent) | 3.00% | 3.00% | |||
Minimum | |||||
Disaggregation of Revenue [Line Items] | |||||
Percent of revenue (as a percent) | 2.00% | 2.00% | |||
Cost of Sales | |||||
Disaggregation of Revenue [Line Items] | |||||
Payroll taxes, bonuses and employee benefit costs for all Company personnel | $ 0 | ||||
Facilities costs | $ 0 |
SUPPLEMENTAL FINANCIAL STATEM_3
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Equipment And Leasehold Improvements, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Dec. 27, 2019 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | $ 28,542 | $ 28,542 | $ 27,334 | ||
Accumulated depreciation and amortization | (15,751) | (15,751) | (15,283) | ||
Total equipment and leasehold improvements, net | 12,791 | 12,791 | 12,051 | ||
Amortization | 5,466 | $ 2,866 | 9,985 | $ 5,520 | |
Furniture and fixtures | |||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | 4,086 | 4,086 | 4,614 | ||
Computer hardware and software | |||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | 15,983 | 15,983 | 14,789 | ||
Leasehold improvements | |||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | 2,971 | 2,971 | 2,410 | ||
Equipment under finance lease | |||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | 2,247 | 2,247 | 1,957 | ||
Accumulated depreciation and amortization | (1,572) | (1,572) | (1,291) | ||
Total equipment and leasehold improvements, net | 675 | 675 | 666 | ||
Amortization | 300 | 500 | |||
Automobiles, trucks, and field equipment | |||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |||||
Equipment and leasehold improvements, gross | $ 3,255 | $ 3,255 | $ 3,564 |
SUPPLEMENTAL FINANCIAL STATEM_4
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Accrued Liabilities (Details) - USD ($) $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
ACCRUED LIABILITIES | ||
Accrued subcontractor costs | $ 21,502 | $ 45,366 |
Compensation and payroll taxes | 5,070 | 3,286 |
Accrued bonuses | 3,663 | 7,756 |
Other | 2,506 | 4,630 |
Employee withholdings | 1,876 | 3,463 |
Paid leave bank | 1,331 | 3,114 |
Total accrued liabilities | $ 35,948 | $ 67,615 |
SUPPLEMENTAL FINANCIAL STATEM_5
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Carrying Value of Goodwill by Reporting Unit (Details) $ in Thousands | 6 Months Ended |
Jul. 03, 2020USD ($) | |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | $ 127,647 |
Additions/Adjustments | 2,589 |
Goodwill at end of period | 130,236 |
Energy | |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | 126,898 |
Additions/Adjustments | 2,589 |
Goodwill at end of period | 129,487 |
Engineering and Consulting | |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | 749 |
Goodwill at end of period | $ 749 |
SUPPLEMENTAL FINANCIAL STATEM_6
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Gross Amount and Amortization (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 03, 2020 | Dec. 27, 2019 | |
Goodwill and other intangible assets | ||
Gross Amount of Intangible Assets | $ 98,904 | $ 98,158 |
Accumulated Amortization | 28,783 | 21,321 |
Backlog | ||
Goodwill and other intangible assets | ||
Gross Amount | 7,844 | 7,134 |
Accumulated Amortization | $ 5,542 | 3,763 |
Amortization Period (in years) | 1 year | |
Tradename | ||
Goodwill and other intangible assets | ||
Gross Amount | $ 13,711 | 13,351 |
Accumulated Amortization | $ 5,904 | 4,882 |
Tradename | Minimum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 2 years 6 months | |
Tradename | Maximum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 6 years | |
Non-compete agreements | ||
Goodwill and other intangible assets | ||
Gross Amount | $ 2,320 | 2,320 |
Accumulated Amortization | $ 1,519 | 1,384 |
Non-compete agreements | Minimum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 4 years | |
Non-compete agreements | Maximum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 5 years | |
Developed technology | ||
Goodwill and other intangible assets | ||
Gross Amount | $ 14,620 | 14,620 |
Accumulated Amortization | $ 4,539 | 3,227 |
Amortization Period (in years) | 8 years | |
Customer relationships | ||
Goodwill and other intangible assets | ||
Gross Amount | $ 60,409 | 60,733 |
Accumulated Amortization | $ 11,279 | $ 8,065 |
Customer relationships | Minimum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 5 years | |
Customer relationships | Maximum | ||
Goodwill and other intangible assets | ||
Amortization Period (in years) | 8 years |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Cash flow hedge - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jul. 03, 2020 | Jan. 01, 2021 | Jan. 31, 2019 | |
Derivative [Line Items] | |||
Effective portion of interest rate swap designated as cash flow hedge before tax effect | $ 1 | ||
Accumulated other comprehensive income to interest expense | $ 0 | ||
Interest swap agreement | |||
Derivative [Line Items] | |||
Notional amount | $ 35 | ||
Fixed rate (in percent) | 2.47% | ||
Interest swap agreement | Forecast | |||
Derivative [Line Items] | |||
Accumulated other comprehensive income to interest expense | $ 0.7 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Fair Values (Details) - Designated as hedging instruments - Interest swap agreement - USD ($) $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
Accrued liabilities. | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of Derivative Instruments | $ (658) | $ (241) |
Other noncurrent (liabilities) assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of Derivative Instruments | $ (351) | $ (306) |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Others (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | |
Cash flow hedge | ||||
Derivative [Line Items] | ||||
Effective portion | $ 0 | $ 200 | $ 400 | $ 400 |
Fair Value Hedging | ||||
Derivative [Line Items] | ||||
Effective portion | $ 0 | $ 200 | $ 400 | $ 400 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS -Accumulated balances and reporting period activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Apr. 03, 2020 | Jul. 03, 2020 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Balances | $ 167,278 | $ 167,278 |
Balances | 161,737 | 161,396 |
Gain (Loss) on Derivative Instruments | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Balances | (396) | (396) |
Other comprehensive loss before reclassifications | (568) | 105 |
Income tax benefit (expense) related to derivative instruments | 119 | (22) |
Net current-period other comprehensive loss | (845) | 83 |
Balances | (845) | (762) |
Accumulated Other Comprehensive Loss. | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Balances | (396) | (396) |
Other comprehensive loss before reclassifications | (568) | 105 |
Income tax benefit (expense) related to derivative instruments | 119 | (22) |
Net current-period other comprehensive loss | (845) | 83 |
Balances | $ (845) | $ (762) |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) - USD ($) $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
Debt Obligations | ||
Total debt obligations | $ 119,398 | $ 131,060 |
Issuance costs and debt discounts | (940) | (709) |
Total debt maturities | 118,458 | 130,351 |
Less current portion of long-term debt | (13,866) | (13,720) |
Long-term debt portion | 104,592 | 116,631 |
Term A Loan | ||
Debt Obligations | ||
Total debt obligations | 90,000 | 95,000 |
Revolving Credit Facility | ||
Debt Obligations | ||
Total debt obligations | 5,000 | |
Delayed Draw Term Loan Facility | ||
Debt Obligations | ||
Total debt obligations | 28,500 | 30,000 |
Other debt agreements | ||
Debt Obligations | ||
Total debt obligations | $ 898 | $ 1,060 |
DEBT OBLIGATIONS - Line of cred
DEBT OBLIGATIONS - Line of credit (Details) | May 06, 2020 | Oct. 28, 2019USD ($) | Jun. 26, 2019USD ($) | Jul. 03, 2020USD ($) | Dec. 28, 2018USD ($) | Dec. 27, 2019USD ($) | Dec. 20, 2018USD ($) |
Utility Customer Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate (as a percent) | 4.332% | ||||||
Unsecured notes payable | $ 800,000 | $ 900,000 | |||||
Amount committed to repay | $ 1,700,000 | ||||||
E3, Inc. | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from borrowings | $ 30,000,000 | ||||||
2019 Credit Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Minimum fixed charge coverage ratio | 1.20 | ||||||
2019 Credit Agreement [Member] | Debt Covenant Threshold Tranche One | |||||||
Debt Instrument [Line Items] | |||||||
Maximum total leverage ratio | 3.50 | ||||||
2019 Credit Agreement [Member] | Debt Covenant Threshold Tranche Two | |||||||
Debt Instrument [Line Items] | |||||||
Maximum total leverage ratio | 3.25 | ||||||
Term A Loan | BMO | |||||||
Debt Instrument [Line Items] | |||||||
The aggregate amount under the revolving line of credit | $ 100,000,000 | ||||||
Delayed Draw Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 50,000,000 | ||||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Revolving Credit Facility | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee (as a percent) | 0.45% | ||||||
Revolving Credit Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee (as a percent) | 0.15% | ||||||
Letters of Credit | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee (as a percent) | 2.50% | ||||||
Letters of Credit | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Commitment fee (as a percent) | 0.84% | ||||||
Notes payable for IBM | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate (as a percent) | 4.656% | ||||||
Interest and principal payments | $ 6,000 | ||||||
Notes payable for IBM | Software Agreements | |||||||
Debt Instrument [Line Items] | |||||||
Software cost | $ 200,000 | ||||||
Unsecured notes payable | $ 99,000 | $ 133,000 |
DEBT OBLIGATIONS - Debt Agreeme
DEBT OBLIGATIONS - Debt Agreements (Details) - USD ($) $ in Millions | May 06, 2020 | May 05, 2020 | Jun. 26, 2019 |
Third Amendment [Member] | |||
Debt Instrument [Line Items] | |||
Maximum aggregate amount of earn-out payments during Relief Period | $ 7 | ||
Minimum liquidity | 5 | ||
Maximum capital expenditure, debt covenant | $ 7 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50 | ||
Base rate | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 0.50% | ||
LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period One [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 2.00% | ||
LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Two [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 2.50% | ||
LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 1.00% | ||
Minimum | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.15% | ||
Minimum | Revolving Credit Facility | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.15% | ||
Minimum | Letters of Credit | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.84% | ||
Minimum | Letters of Credit | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.84% | ||
Minimum | LIBOR | Third Amendment [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.75% | ||
Minimum | LIBOR | Third Amendment [Member] | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.00% | ||
Minimum | Base rate | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 0.125% | ||
Minimum | Base rate | LIBOR | Third Amendment [Member] | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 0.125% | ||
Minimum | LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 1.125% | ||
Minimum | LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 1.125% | ||
Maximum | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.45% | ||
Maximum | Revolving Credit Facility | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 0.35% | ||
Maximum | Letters of Credit | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 2.50% | ||
Maximum | Letters of Credit | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Commitment fee (as a percent) | 2.00% | ||
Maximum | Base rate | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 1.50% | ||
Maximum | Base rate | LIBOR | Third Amendment [Member] | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 1.00% | ||
Maximum | LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Three [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 2.50% | ||
Maximum | LIBOR | LIBOR | Third Amendment [Member] | Debt Interest Period Four [Member] | |||
Debt Instrument [Line Items] | |||
Spread on floating interest rate (as a percent) | 2.00% |
LEASES - Change in accounting p
LEASES - Change in accounting policy (Details) $ in Thousands | 6 Months Ended |
Jul. 03, 2020USD ($) | |
Leases | |
Operating lease, option to extend | true |
Operating lease, option to terminate | true |
Residual value guarantee | $ 0 |
Minimum | |
Leases | |
Operating lease, remaining lease term | 1 year |
Maximum | |
Leases | |
Operating lease, remaining lease term | 8 years |
Operating lease, extension term | 5 years |
Operating lease, terminate term | 1 year |
LEASES - Lease expense (Details
LEASES - Lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | |
Lease cost | ||||
Operating lease cost | $ 1,766 | $ 1,181 | $ 3,508 | $ 2,270 |
Amortization of assets | 155 | 124 | 310 | 231 |
Interest on lease liabilities | 8 | 9 | 17 | 18 |
Total net lease cost | $ 1,929 | $ 1,314 | $ 3,835 | $ 2,519 |
LEASES - Impact of Adoption (De
LEASES - Impact of Adoption (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Dec. 27, 2019 | |
Operating leases: | |||||
Right-of-use assets | $ 22,679 | $ 22,679 | $ 22,297 | ||
Lease liability | $ 5,994 | $ 5,994 | 5,550 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Lease liability | Lease liability | |||
Lease liability, less current portion | $ 17,935 | $ 17,935 | 18,411 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Lease liability, less current portion | Lease liability, less current portion | |||
Total lease obligations | $ 23,929 | $ 23,929 | 23,961 | ||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Total lease obligations | Total lease obligations | |||
Finance leases (included in equipment and leasehold improvements, net): | |||||
Equipment and leasehold improvements, gross | $ 28,542 | $ 28,542 | 27,334 | ||
Accumulated depreciation and amortization | (15,751) | (15,751) | (15,283) | ||
Total equipment and leasehold improvements, net | 12,791 | 12,791 | 12,051 | ||
Finance lease obligations | 332 | 332 | 375 | ||
Finance lease obligations, less current portion | 256 | 256 | 191 | ||
Total lease obligations | $ 588 | $ 588 | $ 566 | ||
Operating Leases | 4 years 8 months 23 days | 4 years 8 months 23 days | 4 years 7 months 2 days | ||
Finance Leases | 1 year 11 months 1 day | 1 year 11 months 1 day | 1 year 5 months 19 days | ||
Operating Leases, discount rate | 4.50% | 4.50% | 5.14% | ||
Finance Leases, discount rate | 4.21% | 4.21% | 4.80% | ||
Rent expense and related charges for common area maintenance for all facility operating leases | $ 1,800 | $ 1,200 | $ 3,500 | $ 2,300 | |
Facilities and facility related | 2,642 | $ 2,047 | 5,336 | $ 3,819 | |
Equipment under finance lease | |||||
Finance leases (included in equipment and leasehold improvements, net): | |||||
Equipment and leasehold improvements, gross | 2,247 | 2,247 | $ 1,957 | ||
Accumulated depreciation and amortization | (1,572) | (1,572) | (1,291) | ||
Total equipment and leasehold improvements, net | $ 675 | $ 675 | $ 666 |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 03, 2020 | Jun. 28, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flow from operating leases | $ 3,377 | $ 2,345 |
Operating cash flow from finance leases | 17 | 64 |
Financing cash flow from finance leases | 296 | 300 |
Right-of-use assets obtained in exchange for lease liabilities for operating leases | $ 2,552 | $ 1,223 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Thousands | Jul. 03, 2020 | Dec. 27, 2019 |
Operating | ||
Remainder of 2020 | $ 6,906 | |
2021 | 5,942 | |
2022 | 4,963 | |
2023 | 3,028 | |
2024 | 2,185 | |
2025 and thereafter | 3,505 | |
Total lease payments | 26,529 | |
Less: Imputed interest | (2,600) | |
Total lease obligations | 23,929 | $ 23,961 |
Less: Current obligations | 5,994 | 5,550 |
Noncurrent lease obligations | 17,935 | 18,411 |
Finance | ||
Remainder of 2020 | 348 | |
2021 | 171 | |
2022 | 69 | |
2023 | 14 | |
2024 | 9 | |
Total lease payments | 611 | |
Less: Imputed interest | (23) | |
Total lease obligations | 588 | 566 |
Finance lease obligations | 332 | 375 |
Finance lease obligations, less current portion | $ 256 | $ 191 |
COMMITMENTS AND VARIABLE INTE_2
COMMITMENTS AND VARIABLE INTEREST ENTITIES - Employee Benefit Plans (Details) $ in Millions | 6 Months Ended | |
Jul. 03, 2020USD ($)item | Jun. 28, 2019USD ($) | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | ||
Number of VIE | item | 1 | |
Employee Benefit Plans | ||
Maximum employee contribution as a percentage of compensation under 401 (k) Plan | 50.00% | |
Service period (in months) | 3 months | |
Attained age (in years) | 21 years | |
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 50.00% | |
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 6.00% | |
Employer matching contributions | $ | $ 0.9 | $ 1.2 |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 03, 2020USD ($) | Apr. 03, 2020USD ($) | Jun. 28, 2019USD ($) | Mar. 29, 2019USD ($) | Jul. 03, 2020USD ($)segment | Jun. 28, 2019USD ($) | Dec. 27, 2019USD ($) | |
SEGMENT INFORMATION | |||||||
Number of operating segments | segment | 2 | ||||||
Number of reporting segments | segment | 2 | ||||||
Segment reconciliation | |||||||
Contract revenue | $ 83,549 | $ 104,396 | $ 189,575 | $ 196,189 | |||
Depreciation and amortization | 5,466 | 2,866 | 9,985 | 5,520 | |||
Interest expense, net | 1,257 | 1,221 | 2,770 | 2,342 | |||
Segment profit (loss) before income tax expense | (5,075) | 1,570 | (14,834) | 226 | |||
Income tax expense (benefit) | (90) | (70) | (1,695) | (997) | |||
Net income (loss) | (4,985) | $ (8,154) | 1,640 | $ (417) | (13,139) | 1,223 | |
Segment assets(1) | 393,368 | 341,392 | 393,368 | 341,392 | $ 439,913 | ||
Energy | |||||||
Segment reconciliation | |||||||
Contract revenue | 66,708 | 85,283 | 154,506 | 159,975 | |||
Engineering and Consulting | |||||||
Segment reconciliation | |||||||
Contract revenue | 16,841 | 19,113 | 35,069 | 36,214 | |||
Reporting Segments | Energy | |||||||
Segment reconciliation | |||||||
Contract revenue | 66,708 | 85,283 | 154,506 | 159,975 | |||
Depreciation and amortization | 5,192 | 2,558 | 9,427 | 4,928 | |||
Interest expense, net | 8 | 19 | |||||
Segment profit (loss) before income tax expense | (3,286) | 2,133 | (9,693) | 647 | |||
Income tax expense (benefit) | (53) | 590 | (1,108) | 179 | |||
Net income (loss) | (3,232) | 1,544 | (8,585) | 468 | |||
Segment assets(1) | 333,142 | 183,080 | 333,142 | 183,080 | |||
Reporting Segments | Engineering and Consulting | |||||||
Segment reconciliation | |||||||
Contract revenue | 16,841 | 19,113 | 35,069 | 36,214 | |||
Depreciation and amortization | 274 | 308 | 558 | 592 | |||
Segment profit (loss) before income tax expense | 3,191 | 2,412 | 5,196 | 4,017 | |||
Income tax expense (benefit) | 264 | 667 | 594 | 1,110 | |||
Net income (loss) | 2,927 | 1,746 | 4,602 | 2,907 | |||
Segment assets(1) | 24,285 | 23,690 | 24,285 | 23,690 | |||
Unallocated Corporate | |||||||
Segment reconciliation | |||||||
Interest expense, net | 1,249 | 1,221 | 2,751 | 2,342 | |||
Segment profit (loss) before income tax expense | (4,980) | (2,975) | (10,337) | (4,438) | |||
Income tax expense (benefit) | (301) | (1,327) | (1,181) | (2,286) | |||
Net income (loss) | (4,680) | (1,650) | (9,156) | (2,152) | |||
Segment assets(1) | 59,071 | 157,752 | 59,071 | 157,752 | |||
Intersegment | |||||||
Segment reconciliation | |||||||
Contract revenue | 0 | 0 | 0 | 0 | |||
Segment assets(1) | $ (23,130) | $ (23,130) | $ (23,130) | $ (23,130) |
SEGMENT AND GEOGRAPHICAL INFO_4
SEGMENT AND GEOGRAPHICAL INFORMATION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 83,549 | $ 104,396 | $ 189,575 | $ 196,189 |
Domestic | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 83,549 | 104,396 | 189,575 | 196,189 |
Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 66,708 | 85,283 | 154,506 | 159,975 |
Energy | Domestic | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 66,708 | 85,283 | 154,506 | 159,975 |
Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 16,841 | 19,113 | 35,069 | 36,214 |
Engineering and Consulting | Domestic | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 16,841 | 19,113 | 35,069 | 36,214 |
Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,193 | 8,168 | 20,296 | 18,661 |
Commercial | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,889 | 6,840 | 17,618 | 16,035 |
Commercial | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,304 | 1,328 | 2,678 | 2,626 |
Government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 36,640 | 32,242 | 75,162 | 56,775 |
Government | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 21,701 | 14,583 | 43,428 | 23,445 |
Government | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 14,939 | 17,659 | 31,734 | 33,330 |
Utilities | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 36,716 | 63,986 | 94,117 | 120,753 |
Utilities | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 36,118 | 63,860 | 93,460 | 120,495 |
Utilities | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 598 | 126 | 657 | 258 |
Time-and-materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 25,814 | 17,689 | 53,917 | 35,002 |
Time-and-materials | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12,125 | 3,093 | 26,136 | 7,348 |
Time-and-materials | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 13,689 | 14,596 | 27,781 | 27,654 |
Unit-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 30,893 | 67,349 | 84,887 | 127,792 |
Unit-based | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 28,900 | 63,757 | 79,789 | 120,629 |
Unit-based | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,993 | 3,592 | 5,098 | 7,163 |
Fixed price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 26,842 | 19,358 | 50,771 | 33,395 |
Fixed price | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 25,683 | 18,433 | 48,581 | 31,998 |
Fixed price | Engineering and Consulting | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,159 | $ 925 | $ 2,190 | $ 1,397 |
SEGMENT AND GEOGRAPHICAL INFO_5
SEGMENT AND GEOGRAPHICAL INFORMATION - Concentration risk (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2020customerstate | Jun. 28, 2019customer | Jul. 03, 2020customerstate | Jun. 28, 2019customer | |
Concentration Risk [Line Items] | ||||
Number of States in which Entity Operates | state | 24 | 24 | ||
NEW YORK | ||||
Concentration Risk [Line Items] | ||||
Customer concentration risk percentage | 25.10% | |||
Revenue from Contract with Customer Benchmark | CALIFORNIA | ||||
Concentration Risk [Line Items] | ||||
Customer concentration risk percentage | 44.90% | 39.10% | 44.60% | 39.10% |
Revenue from Contract with Customer Benchmark | NEW YORK | ||||
Concentration Risk [Line Items] | ||||
Customer concentration risk percentage | 14.80% | 24.50% | 17.90% | |
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | ||||
Concentration Risk [Line Items] | ||||
Number of customers | 1 | 1 | 2 | 1 |
Customer concentration risk percentage | 12.70% | 17.70% | 26.30% | 17.20% |
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Energy Segment | ||||
Concentration Risk [Line Items] | ||||
Number of customers | 2 | 2 | 2 | 2 |
Customer concentration risk percentage | 28.30% | 32.00% | 32.30% | 32.00% |
Customer Concentration Risk | Revenue from Contract with Customer Benchmark | Engineering And Consulting Segment | ||||
Concentration Risk [Line Items] | ||||
Number of customers | 1 | |||
Customer concentration risk percentage | 20.60% | 20.10% | ||
Top Ten Customers | Customer Concentration Risk | Revenue from Contract with Customer Benchmark | ||||
Concentration Risk [Line Items] | ||||
Number of customers | 10 | 10 | 10 | 10 |
Customer concentration risk percentage | 45.30% | 48.10% | 46.60% | 46.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Dec. 28, 2018 | |
INCOME TAXES | |||||
Valuation reserve related to California net operating losses | $ 86,000 | ||||
Valuation allowance change | $ 0 | $ 0 | |||
Unrecognized tax benefits | $ 100,000 | 100,000 | |||
Liability for uncertain tax positions | 100,000 | 100,000 | |||
Interest and penalties related to unrecognized tax benefits | 30,000 | ||||
Income tax expense (benefit) | $ (90,000) | $ (70,000) | $ (1,695,000) | $ (997,000) |
EARNINGS PER SHARE (EPS) (Detai
EARNINGS PER SHARE (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 03, 2020 | Apr. 03, 2020 | Jun. 28, 2019 | Mar. 29, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | |
Earnings (Loss) per share: | ||||||
Net income (loss) | $ (4,985) | $ (8,154) | $ 1,640 | $ (417) | $ (13,139) | $ 1,223 |
Weighted-average common shares outstanding (in shares) | 11,682,000 | 11,100,000 | 11,593,000 | 11,037,000 | ||
Effect of dilutive stock options and restricted stock awards (in shares) | 579,000 | 633,000 | ||||
Weighted-average common shares outstanding-diluted (in shares) | 11,682,000 | 11,679,000 | 11,593,000 | 11,670,000 | ||
Earnings (Loss) per share: | ||||||
Basic | $ (0.43) | $ 0.15 | $ (1.13) | $ 0.11 | ||
Diluted | $ (0.43) | $ 0.14 | $ (1.13) | $ 0.10 | ||
Stock options | ||||||
Anti-dilutive securities excluded from the computation of earnings per share | ||||||
Number of awards excluded from calculation of dilutive potential common shares (in shares) | 156,000 | 225,000 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 02, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Dec. 27, 2019 |
BUSINESS COMBINATIONS | ||||||
Par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||
Cash paid at closing | $ 27,000 | |||||
Revenues. | $ 83,549 | $ 104,396 | $ 189,575 | $ 196,189 | ||
Cash paid | $ 21,800 | |||||
Onsite Energy Corporation | ||||||
BUSINESS COMBINATIONS | ||||||
Aggregate Purchase price | $ 24,905 | |||||
Revenues. | 2,400 | 4,600 | ||||
Cash paid | 24,905 | |||||
Lime Energy | ||||||
BUSINESS COMBINATIONS | ||||||
Revenues. | $ 12,900 | $ 23,800 | ||||
Willdan Energy Solutions | Onsite Energy Corporation | Maximum | ||||||
BUSINESS COMBINATIONS | ||||||
Aggregate Purchase price | $ 26,400 |
BUSINESS COMBINATIONS (Acquisit
BUSINESS COMBINATIONS (Acquisitions) (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 28, 2019 | Jul. 02, 2019 | Mar. 08, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Jul. 03, 2020 | Jun. 28, 2019 | Dec. 27, 2019 | Jun. 26, 2019 |
Consideration for acquisitions | |||||||||
Cash paid | $ 21,800 | ||||||||
Cash paid at closing | $ 27,000 | ||||||||
Allocation of acquired assets | |||||||||
Goodwill | $ 130,236 | $ 130,236 | $ 127,647 | ||||||
Revenue and Income from operations | |||||||||
Revenues. | 83,549 | $ 104,396 | 189,575 | 196,189 | |||||
Income from operations | (3,841) | 2,773 | (12,110) | 2,539 | |||||
Delayed Draw Term Loan Facility | |||||||||
Consideration for acquisitions | |||||||||
Maximum borrowing capacity | $ 50,000 | ||||||||
E3, Inc. | |||||||||
Consideration for acquisitions | |||||||||
Tax deductible goodwill | $ 21,900 | ||||||||
Issuance of common stock | $ 5,000 | ||||||||
Number of trading days considered for calculation of weighted average price per share prior to closing date | 10 days | ||||||||
Period over which financial targets must be met | 3 years | ||||||||
Maximum Payout | $ 12,000 | ||||||||
Proceeds from borrowings | 30,000 | ||||||||
Contingent consideration | 7,000 | ||||||||
Cash paid | 25,217 | ||||||||
Other working capital adjustment | 1,973 | ||||||||
Total consideration | 39,190 | ||||||||
Cash paid at closing | 27,000 | ||||||||
Allocation of acquired assets | |||||||||
Current assets | 5,316 | ||||||||
Non-current assets (1) | 341 | ||||||||
Cash | 2,264 | ||||||||
Equipment and leasehold improvements, net | 409 | ||||||||
Right-of-use asset | 7,641 | ||||||||
Current lease liability | (750) | ||||||||
Non-current lease liability | (7,300) | ||||||||
Liabilities | (4,325) | ||||||||
Goodwill | 21,894 | ||||||||
Net assets acquired | 39,190 | ||||||||
Increase in carrying value of right-of-used assets and non-current lease liability | 1,500 | ||||||||
Decrease in carrying value of liabilities and goodwill | 1,500 | ||||||||
Decrease in current assets | 0 | 0 | |||||||
Revenue and Income from operations | |||||||||
Revenues. | 6,800 | 11,800 | |||||||
Income from operations | 1,600 | 2,400 | |||||||
E3, Inc. | Maximum | |||||||||
Consideration for acquisitions | |||||||||
Earn-Out Payments | 12,000 | ||||||||
Total consideration | 44,000 | ||||||||
E3, Inc. | Backlog | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 2,500 | ||||||||
E3, Inc. | Customer relationships | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 8,300 | ||||||||
E3, Inc. | Tradename | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 2,000 | ||||||||
E3, Inc. | Non-compete agreements | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | $ 900 | ||||||||
Onsite Energy Corporation | |||||||||
Consideration for acquisitions | |||||||||
Tax deductible goodwill | $ 8,600 | ||||||||
Cash paid | 24,905 | ||||||||
Total consideration | 24,905 | ||||||||
Allocation of acquired assets | |||||||||
Current assets | 19,058 | ||||||||
Non-current assets (1) | 10 | ||||||||
Equipment and leasehold improvements, net | 39 | ||||||||
Right-of-use asset | 828 | ||||||||
Current lease liability | (168) | ||||||||
Non-current lease liability | (660) | ||||||||
Liabilities | (12,222) | ||||||||
Goodwill | 8,600 | ||||||||
Net assets acquired | 24,905 | ||||||||
Decrease in current assets | 3,500 | ||||||||
Increase in carrying value of goodwill | 3,500 | ||||||||
Additional amortization expense charge due to increase in fair value of intangible assets | 700 | 700 | |||||||
Revenue and Income from operations | |||||||||
Revenues. | 2,400 | 4,600 | |||||||
Onsite Energy Corporation | Backlog | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 1,510 | ||||||||
Onsite Energy Corporation | Customer relationships | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 7,050 | ||||||||
Onsite Energy Corporation | Tradename | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 860 | ||||||||
The Weidt Group | |||||||||
Consideration for acquisitions | |||||||||
Tax deductible goodwill | $ 11,500 | ||||||||
Cash paid | 22,136 | ||||||||
Total consideration | 22,136 | ||||||||
Allocation of acquired assets | |||||||||
Current assets | 2,317 | ||||||||
Non-current assets (1) | 25 | ||||||||
Equipment and leasehold improvements, net | 198 | ||||||||
Right-of-use asset | 1,730 | ||||||||
Current lease liability | (245) | ||||||||
Non-current lease liability | (1,533) | ||||||||
Liabilities | (612) | ||||||||
Goodwill | 11,546 | ||||||||
Net assets acquired | 22,136 | ||||||||
Revenue and Income from operations | |||||||||
Revenues. | 3,700 | 7,400 | |||||||
Income from operations | 600 | 800 | |||||||
The Weidt Group | Backlog | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 750 | ||||||||
The Weidt Group | Customer relationships | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 4,240 | ||||||||
The Weidt Group | Tradename | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | 550 | ||||||||
The Weidt Group | Developed technology | |||||||||
Allocation of acquired assets | |||||||||
Intangible assets | $ 3,170 | ||||||||
Lime Energy | |||||||||
Unaudited pro forma financial information | |||||||||
Pro forma revenue | 83,549 | 117,010 | 189,575 | 219,409 | |||||
Pro forma income (loss) from operations | (3,841) | 3,818 | (12,110) | 5,096 | |||||
Pro forma net income (loss) (1) | $ (4,985) | $ 2,732 | $ (13,139) | $ 2,784 | |||||
Earnings (Loss) per share: | |||||||||
Basic (in dollars per share) | $ (0.43) | $ 0.24 | $ (1.13) | $ 0.25 | |||||
Diluted (in dollars per share) | $ (0.43) | $ 0.23 | $ (1.13) | $ 0.23 | |||||
Weighted average shares outstanding: | |||||||||
Basic (in shares) | 11,682 | 11,315 | 11,593 | 11,252 | |||||
Diluted (in shares) | 11,682 | 11,894 | 11,593 | 11,885 | |||||
Revenue and Income from operations | |||||||||
Revenues. | $ 12,900 | $ 23,800 | |||||||
Income from operations | $ 2,200 | $ 3,300 | |||||||
Willdan Energy Solutions | Onsite Energy Corporation | Maximum | |||||||||
Consideration for acquisitions | |||||||||
Total consideration | $ 26,400 |