Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 02, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
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 $0.01 per share | |
Trading Symbol | WLDN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,594,982 | |
Current Fiscal Year End Date | --12-29 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Entity Central Index Key | 0001370450 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 13,649 | $ 8,806 |
Restricted cash | 10,679 | |
Accounts receivable, net of allowance for doubtful accounts of $373 and $640 at June 30, 2023 and December 30, 2022, respectively | 54,572 | 60,202 |
Contract assets | 79,300 | 83,060 |
Other receivables | 2,852 | 4,773 |
Prepaid expenses and other current assets | 5,399 | 6,454 |
Total current assets | 155,772 | 173,974 |
Equipment and leasehold improvements, net | 25,494 | 22,537 |
Goodwill | 130,124 | 130,124 |
Right-of-use assets | 13,894 | 12,390 |
Other intangible assets, net | 36,237 | 41,486 |
Other assets | 15,607 | 10,620 |
Deferred income taxes, net | 17,692 | 18,543 |
Total assets | 394,820 | 409,674 |
Current liabilities: | ||
Accounts payable | 35,155 | 28,833 |
Accrued liabilities | 36,954 | 59,110 |
Contingent consideration payable | 4,000 | |
Contract liabilities | 14,950 | 12,585 |
Notes payable | 102,619 | 16,903 |
Finance lease obligations | 1,143 | 1,113 |
Lease liability | 4,877 | 4,625 |
Total current liabilities | 195,698 | 127,169 |
Notes payable | 19 | 90,544 |
Finance lease obligations, less current portion | 1,251 | 1,601 |
Lease liability, less current portion | 10,731 | 8,599 |
Other noncurrent liabilities | 259 | 259 |
Total liabilities | 207,958 | 228,172 |
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; 13,504 and 13,296 shares issued and outstanding at June 30, 2023 and December 30, 2022, respectively | 135 | 133 |
Additional paid-in capital | 181,747 | 177,718 |
Retained earnings | 4,980 | 3,651 |
Total stockholders' equity | 186,862 | 181,502 |
Total liabilities and stockholders' equity | $ 394,820 | $ 409,674 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Accounts receivable, allowance for doubtful accounts | ||
Accounts receivable, allowance for doubtful accounts | $ 373 | $ 640 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 13,504,000 | 13,296,000 |
Common stock, shares outstanding (in shares) | 13,504,000 | 13,296,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Contract revenue | $ 119,077 | $ 102,645 | $ 221,680 | $ 194,483 |
Direct costs of contract revenue (inclusive of directly related depreciation and amortization): | ||||
Salaries and wages | 21,302 | 21,284 | 41,712 | 40,094 |
Subcontractor services and other direct costs | 57,142 | 49,771 | 98,054 | 91,439 |
Total direct costs of contract revenue | 78,444 | 71,055 | 139,766 | 131,533 |
General and administrative expenses: | ||||
Salaries and wages, payroll taxes and employee benefits | 22,416 | 20,439 | 44,801 | 39,796 |
Facilities and facility related | 2,619 | 2,373 | 4,897 | 4,771 |
Stock-based compensation | 1,287 | 1,714 | 2,820 | 5,019 |
Depreciation and amortization | 4,128 | 4,426 | 8,328 | 8,835 |
Other | 7,709 | 7,936 | 14,580 | 15,435 |
Total general and administrative expenses | 38,159 | 36,888 | 75,426 | 73,856 |
Income (Loss) from operations | 2,474 | (5,298) | 6,488 | (10,906) |
Other income (expense): | ||||
Interest expense, net | (2,207) | (1,030) | (4,673) | (1,781) |
Other, net | 373 | 329 | 513 | 526 |
Total other expense, net | (1,834) | (701) | (4,160) | (1,255) |
Income (Loss) before income taxes | 640 | (5,999) | 2,328 | (12,161) |
Income tax (benefit) expense | 243 | (1,673) | 999 | (4,062) |
Net income (loss) | 397 | (4,326) | 1,329 | (8,099) |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on derivative contracts, net of tax | 38 | |||
Comprehensive income (loss) | $ 397 | $ (4,326) | $ 1,329 | $ (8,061) |
Earnings (Loss) per share: | ||||
Basic (in dollars per share) | $ 0.03 | $ (0.33) | $ 0.10 | $ (0.63) |
Diluted (in dollars per share) | $ 0.03 | $ (0.33) | $ 0.10 | $ (0.63) |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 13,344 | 13,016 | 13,305 | 12,901 |
Diluted (in shares) | 13,487 | 13,016 | 13,481 | 12,901 |
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 Income (Loss) | Retained Earnings | Total |
Balance at Dec. 31, 2021 | $ 128 | $ 167,032 | $ (38) | $ 12,099 | $ 179,221 |
Balance (in shares) at Dec. 31, 2021 | 12,804 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with employee stock purchase plan | $ 1 | 1,560 | 1,561 | ||
Shares of common stock issued in connection with employee stock purchase plan (in shares) | 52 | ||||
Shares of common stock issued in connection with incentive stock plan | 23 | 23 | |||
Shares of common stock issued in connection with incentive stock plan (in shares) | 4 | ||||
Shares used to pay taxes on stock grants | (837) | (837) | |||
Shares used to pay taxes on stock grants (in shares) | (27) | ||||
Issuance of restricted stock award and units | $ 3 | (3) | |||
Issuance of restricted stock award and units (in shares) | 373 | ||||
Stock-based compensation expense | 3,305 | 3,305 | |||
Net Income (Loss) | (3,773) | (3,773) | |||
Net unrealized gain on derivative contracts | 38 | 38 | |||
Balance at Apr. 01, 2022 | $ 132 | 171,080 | 8,326 | 179,538 | |
Balance (in shares) at Apr. 01, 2022 | 13,206 | ||||
Balance at Dec. 31, 2021 | $ 128 | 167,032 | $ (38) | 12,099 | 179,221 |
Balance (in shares) at Dec. 31, 2021 | 12,804 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net Income (Loss) | (8,099) | ||||
Balance at Jul. 01, 2022 | $ 132 | 172,678 | 4,000 | 176,810 | |
Balance (in shares) at Jul. 01, 2022 | 13,215 | ||||
Balance at Apr. 01, 2022 | $ 132 | 171,080 | 8,326 | 179,538 | |
Balance (in shares) at Apr. 01, 2022 | 13,206 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares used to pay taxes on stock grants | (116) | (116) | |||
Shares used to pay taxes on stock grants (in shares) | (5) | ||||
Issuance of restricted stock award and units (in shares) | 14 | ||||
Stock-based compensation expense | 1,714 | 1,714 | |||
Net Income (Loss) | (4,326) | (4,326) | |||
Balance at Jul. 01, 2022 | $ 132 | 172,678 | 4,000 | 176,810 | |
Balance (in shares) at Jul. 01, 2022 | 13,215 | ||||
Balance at Dec. 30, 2022 | $ 133 | 177,718 | 3,651 | $ 181,502 | |
Balance (in shares) at Dec. 30, 2022 | 13,296 | 13,296 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with employee stock purchase plan | $ 1 | 1,391 | $ 1,392 | ||
Shares of common stock issued in connection with employee stock purchase plan (in shares) | 92 | ||||
Shares used to pay taxes on stock grants | (124) | (124) | |||
Shares used to pay taxes on stock grants (in shares) | (7) | ||||
Issuance of restricted stock award and units | $ 1 | (1) | |||
Issuance of restricted stock award and units (in shares) | 108 | ||||
Stock-based compensation expense | 1,533 | 1,533 | |||
Net Income (Loss) | 932 | 932 | |||
Balance at Mar. 31, 2023 | $ 135 | 180,517 | 4,583 | 185,235 | |
Balance (in shares) at Mar. 31, 2023 | 13,489 | ||||
Balance at Dec. 30, 2022 | $ 133 | 177,718 | 3,651 | $ 181,502 | |
Balance (in shares) at Dec. 30, 2022 | 13,296 | 13,296 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net Income (Loss) | $ 1,329 | ||||
Balance at Jun. 30, 2023 | $ 135 | 181,747 | 4,980 | $ 186,862 | |
Balance (in shares) at Jun. 30, 2023 | 13,504 | 13,504 | |||
Balance at Mar. 31, 2023 | $ 135 | 180,517 | 4,583 | $ 185,235 | |
Balance (in shares) at Mar. 31, 2023 | 13,489 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Shares of common stock issued in connection with incentive stock plan | 7 | 7 | |||
Shares of common stock issued in connection with incentive stock plan (in shares) | 2 | ||||
Shares used to pay taxes on stock grants | (64) | (64) | |||
Shares used to pay taxes on stock grants (in shares) | (4) | ||||
Issuance of restricted stock award and units (in shares) | 17 | ||||
Stock-based compensation expense | 1,287 | 1,287 | |||
Net Income (Loss) | 397 | 397 | |||
Balance at Jun. 30, 2023 | $ 135 | $ 181,747 | $ 4,980 | $ 186,862 | |
Balance (in shares) at Jun. 30, 2023 | 13,504 | 13,504 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jul. 01, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,329 | $ (8,099) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 8,328 | 8,835 |
Deferred income taxes, net | 851 | (2,842) |
(Gain) loss on sale/disposal of equipment | (50) | (69) |
Provision for doubtful accounts | 146 | 107 |
Stock-based compensation | 2,820 | 5,019 |
Accretion and fair value adjustments of contingent consideration | 111 | |
Changes in operating assets and liabilities, net of effects from business acquisitions: | ||
Accounts receivable | 5,484 | 6,803 |
Contract assets | 3,760 | (1,889) |
Other receivables | 1,921 | 36 |
Prepaid expenses and other current assets | 1,217 | 225 |
Other assets | (4,987) | (48) |
Accounts payable | 6,322 | (8,859) |
Accrued liabilities | (11,477) | (648) |
Contract liabilities | 2,365 | (2,089) |
Right-of-use assets | 880 | (162) |
Net cash (used in) provided by operating activities | 18,909 | (3,569) |
Cash flows from investing activities: | ||
Purchase of equipment, software, and leasehold improvements | (5,762) | (4,344) |
Proceeds from sale of equipment | 55 | 73 |
Net cash (used in) provided by investing activities | (5,707) | (4,271) |
Cash flows from financing activities: | ||
Payments on contingent consideration | (4,000) | (10,206) |
Payment on restricted cash | (10,679) | |
Payments on notes payable | (971) | (1,051) |
Borrowings under term loan facility and line of credit | 5,000 | 20,000 |
Repayments under term loan facility and line of credit | (9,000) | (6,500) |
Principal payments on finance leases | (599) | (444) |
Proceeds from stock option exercise | 7 | 23 |
Proceeds from sales of common stock under employee stock purchase plan | 1,392 | 1,561 |
Cash used to pay taxes on stock grants | (188) | (953) |
Net cash (used in) provided by financing activities | (19,038) | 2,430 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (5,836) | (5,410) |
Cash, cash equivalents and restricted cash at beginning of period | 19,485 | 11,221 |
Cash, cash equivalents and restricted cash at end of period | 13,649 | 5,811 |
Cash paid (received) during the period for: | ||
Interest | 4,464 | 1,584 |
Income taxes | (1,696) | 474 |
Supplemental disclosures of noncash investing and financing activities: | ||
Equipment acquired under finance leases | $ 278 | $ 1,431 |
ORGANIZATION AND OPERATIONS OF
ORGANIZATION AND OPERATIONS OF THE COMPANY | 6 Months Ended |
Jun. 30, 2023 | |
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 resource and infrastructure needs undergo continuous change, the Company helps organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, the Company designs and delivers trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure for our clients. 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 June 30, September 30, and December 31 and the 13 or 14-week period ending on the Friday closest to March 31, as applicable. Fiscal year 2023, which ends on December 29, 2023, will be comprised of 52 weeks, with all quarters consisting of 13 weeks each. Fiscal year 2022, which ended on December 30, 2022, was comprised of 52 weeks, with all quarters consisting of 13 weeks each. 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 assets and 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. Credit Agreement Refinancing As described in Note 5, “ Debt Obligations Quantitative and Qualitative Disclosures About Market Risk In accordance with ASC Topic 205, when preparing financial statements for each reporting period, the Company evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company considered its Credit Agreement’s principal and interest payment due on June 26, 2024 and assessed its current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and conditional and unconditional obligations due over the next twelve months. Based on that analysis, only as a result of the Company’s obligation under the Credit Agreement to make final payment of all then remaining principal and interest on June 26, 2024, does an event arise which raises substantial doubt with respect to the Company's ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued. The Company intends to refinance its Credit Agreement and has entered into an engagement to secure a new three-year financing facility with a syndicate of financial institutions as lenders which, among other things, will repay 100% of the obligations under the existing Credit Agreement and extend the due date of the maturity payment by more than two years from the current maturity date. The Company expects to finalize its refinancing efforts and enter into a new credit facility during the second half of fiscal 2023. Accordingly, the Company believes that its refinancing plan alleviates any substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued because it expects to fully refinance the Credit Agreement with a new credit facility prior to June 26, 2024, the date on which final payment of all then remaining principal and interest under the current Credit Agreement is due. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2023 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS As of June 30, 2023, there were no accounting pronouncements recently issued, or with future effective dates, that are either applicable nor are expected to have an impact to the Company’s Condensed Consolidated Financial Statements. |
REVENUES
REVENUES | 6 Months Ended |
Jun. 30, 2023 | |
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 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. The Company also 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. 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 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 June 30, 2023 and December 30, 2022, contract assets included retainage of approximately $12.5 million and $8.5 million, respectively. |
SUPPLEMENTAL FINANCIAL STATEMEN
SUPPLEMENTAL FINANCIAL STATEMENT DATA | 6 Months Ended |
Jun. 30, 2023 | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | 4. SUPPLEMENTAL FINANCIAL STATEMENT DATA Restricted Cash The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows: June 30, December 30, 2023 2022 (in thousands) Cash and cash equivalents $ 13,649 $ 8,806 Restricted cash — 10,679 Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows $ 13,649 $ 19,485 Under certain utility contracts, the Company periodically receives cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. The Company acts solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, the Company classifies these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on the Company’s working capital or operating cash flows, these cash receipts are presented in the consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.” Equipment and Leasehold Improvements June 30, December 30, 2023 2022 (in thousands) Furniture and fixtures $ 4,188 $ 4,062 Computer hardware and software 40,434 35,635 Leasehold improvements 3,832 3,097 Equipment under finance leases 5,588 5,503 Automobiles, trucks, and field equipment 3,135 3,134 Subtotal 57,177 51,431 Accumulated depreciation and amortization (31,683) (28,894) Equipment and leasehold improvements, net $ 25,494 $ 22,537 Included in accumulated depreciation and amortization is $0.6 million and $1.1 million of amortization expense related to equipment held under finance leases for the six months ended June 30, 2023 and for fiscal year 2022, respectively. Accrued Liabilities June 30, December 30, 2023 2022 (in thousands) Accrued subcontractor costs $ 21,927 $ 28,374 Accrued bonuses 6,758 8,470 Employee withholdings 2,795 2,571 Compensation and payroll taxes 2,690 2,340 Rebate and other 303 14,643 Accrued accounting and taxes 2,481 2,712 Total accrued liabilities $ 36,954 $ 59,110 Goodwill December 30, Additional Additions / June 30, 2022 Purchase Cost Adjustments 2023 (in thousands) Reporting Unit: Energy $ 129,375 $ — $ — $ 129,375 Engineering and Consulting 749 — — 749 $ 130,124 $ — $ — $ 130,124 Intangible Assets June 30, 2023 December 30, 2022 Gross Accumulated Gross Accumulated Amortization Amount Amortization Amount Amortization Period (in thousands) (in years) Finite: Tradename $ 15,911 $ 11,986 $ 15,911 $ 10,990 2.5 - 6.0 Developed technology 15,810 13,332 15,810 11,871 8.0 Customer relationships 58,149 28,315 58,149 25,523 5.0 - 8.0 Total intangible assets $ 89,870 $ 53,633 $ 89,870 $ 48,384 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2023 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 5. DEBT OBLIGATIONS Debt obligations, excluding obligations under finance leases (see Note 6, Leases, June 30, December 30, 2023 2022 (in thousands) Outstanding borrowings on Term A Loan $ 60,000 $ 65,000 Outstanding borrowings on Revolving Credit Facility 5,000 — Outstanding borrowings on Delayed Draw Term Loan 37,000 41,000 Other debt agreements 988 1,958 Total debt 102,988 107,958 Issuance costs and debt discounts (350) (511) Subtotal 102,638 107,447 Less current portion of long-term debt 102,619 16,903 Long-term debt portion $ 19 $ 90,544 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, the Second Amendment, dated as of November 6, 2019, the Third Amendment, dated as of May 6, 2020, the Fourth Amendment, dated April 30, 2021, the Fifth Amendment, dated March 8, 2022, the Sixth Amendment, dated August 2, 2022, and the Seventh Amendment, dated November 1, 2022, the “Credit Agreement”) with a syndicate of financial institutions as lenders and BMO Harris Bank, N.A., as administrative agent (the “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. Pursuant to the terms of the Seventh Amendment to the Credit Agreement (the “Seventh Amendment”), among other things, (A) aggregate borrowings under the Revolving Credit Facility were restricted to no more than $10.0 million at any time during the period from November 1, 2022 through the date on which financial statements and compliance documents were received by the Administrative Agent for the fiscal quarter ending March 31, 2023, and (B) access to the accordion feature of the Credit Agreement was limited to periods when the Company’s Total Leverage Ratio (as defined in the Credit Agreement) was less than 3.0. On April 28, 2023, the Company delivered to the Administrative Agent the required financial statements and compliance documents for the fiscal quarter ending March 31, 2023, reflecting full compliance with the restrictive covenants under the Credit Agreement, and thus effectively terminating the limitations on borrowing capacity and other restrictions imposed under the terms set by the Seventh Amendment. Effective April 28, 2023, borrowings under the Credit Agreement bear interest at either a Base Rate (as defined in the Credit Agreement) or the Secured Overnight Financing Rate (“SOFR”), at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranges from 0.125% to 1.25% with respect to Base Rate borrowings and 1.125% to 2.25% with respect to SOFR borrowings, depending on the Total Leverage Ratio; provided, that SOFR cannot be less than 0.00%, with the specific pricing reset on each date on which the Administrative Agent receives the required financial statements under the Credit Agreement for the fiscal quarter then ended. The Company must also pay a commitment fee for the unused portion of the Revolving Credit Facility and the Delayed Draw Term Loan under the Credit Agreement, which ranges from 0.15% to 0.40% per annum depending on the Total 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 1.688% per annum, in each case, depending on whether such letter of credit is a performance or financial letter of credit and the Total Leverage Ratio. The Credit Agreement requires the Company to comply with certain financial covenants, including requiring that the Company maintain a (i) Total Leverage Ratio of at least 3.25 to 1.00, and (ii) Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.20 to 1.00, in each case tested quarterly. The Credit Agreement also contains customary events of default and contains other customary restrictive covenants. As of June 30, 2023, the Company was in compliance with all covenants contained in the Credit Agreement. Other Debt Agreements The Company’s other debt agreements are related to financed insurance premiums, a financed software agreement, and a utility customer agreement and are immaterial to the Company’s Condensed Consolidated Financial Statements. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
LEASES | 6. LEASES The Company leases certain office facilities under long-term, non-cancellable operating leases that expire at various dates through the year 2028. In addition, the Company is obligated under finance leases for certain furniture and office equipment that expire at various dates through the year 2027. From time to time, the Company enters into non-cancelable leases for some of its facility and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities and equipment rather than purchasing them. The Company’s leases typically have remaining terms ranging from 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 the Company is typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company’s month-to-month leases are cancelable by the Company or the lessor, at any time, and are not included in the Company’s right-of-use asset or lease liability. As of June 30, 2023, 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. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it 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 Company’s lease expense: Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2023 2022 2023 2022 (in thousands) (in thousands) Operating lease cost $ 1,664 $ 1,534 $ 3,157 $ 3,112 Finance lease cost: Amortization of assets 318 255 629 488 Interest on lease liabilities 24 15 46 29 Total net lease cost $ 2,006 $ 1,804 $ 3,832 $ 3,629 The following is a summary of lease information presented on the Company’s consolidated balance sheet: June 30, December 30, 2023 2022 (in thousands) Operating leases: Right-of-use assets $ 13,894 $ 12,390 Lease liability $ 4,877 $ 4,625 Lease liability, less current portion 10,731 8,599 Total lease liabilities $ 15,608 $ 13,224 Finance leases (included in equipment and leasehold improvements, net): Equipment and leasehold improvements, net $ 5,588 $ 5,503 Accumulated depreciation (3,266) (2,830) Total equipment and leasehold improvements, net $ 2,322 $ 2,673 Finance lease obligations $ 1,143 $ 1,113 Finance lease obligations, less current portion 1,251 1,601 Total finance lease obligations $ 2,394 $ 2,714 Weighted average remaining lease term (in years): Operating Leases 3.60 3.35 Finance Leases 2.42 2.66 Weighted average discount rate: Operating Leases 5.74 % 4.25 % Finance Leases 4.06 % 3.47 % Rent expense was $1.8 million and $3.4 million for the three and six months ended June 30, 2023, respectively, as compared to $1.7 million and $3.3 million for the three and six months ended July 1, 2022, respectively. The following is a summary of other information and supplemental cash flow information related to finance and operating leases: Six Months Ended June 30, July 1, 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 3,003 $ 3,273 Operating cash flow from finance leases 46 29 Financing cash flow from finance leases 599 444 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 4,264 $ 1,002 The following is a summary of the maturities of lease liabilities as of June 30, 2023: Operating Finance (in thousands) Fiscal year: Remainder of 2023 $ 2,793 $ 681 2024 4,968 1,071 2025 3,988 472 2026 3,369 211 2027 1,519 80 2028 and thereafter 816 7 Total lease payments 17,453 2,522 Less: Imputed interest (1,845) (128) Total lease obligations 15,608 2,394 Less: Current obligations 4,877 1,143 Noncurrent lease obligations $ 10,731 $ 1,251 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 |
Jun. 30, 2023 | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | 7. COMMITMENTS AND VARIABLE INTEREST ENTITIES Employee Benefit Plans The Company has a qualified profit sharing plan pursuant to Code Section 401(a) and qualified The Company’s defined contribution plan (the “Plan”) covers employees who have completed three months of service and who have attained 21 years of age. The Company elects to make matching contributions equal to 50% of the participants’ contributions to the Plan, up to 6% of the individual participant’s compensation, and subject to a maximum of $3,000 per employee. Under the Plan, the Company may make discretionary contributions to employee accounts. During each of the six months ended June 30, 2023 and July 1, 2022, the Company made matching contributions of $1.6 million. 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 |
Jun. 30, 2023 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | 8. 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 June 30, 2023 and July 1, 2022. The Company’s chief operating decision maker evaluates the performance of each segment based upon income or loss from operations before income taxes. Certain segment asset information including expenditures for long-lived assets has not been presented as it is not reported to or reviewed by the chief operating decision maker. In addition, enterprise-wide service line contract revenue is not included as it is impracticable to report this information for each group of similar services. Financial information with respect to the reportable segments and reconciliation to the amounts reported in the Company’s Condensed Consolidated Financial Statements is as follows: Engineering Unallocated Consolidated Energy & Consulting Corporate Intersegment Total (in thousands) Fiscal Three Months Ended June 30, 2023 Contract revenue $ 98,015 $ 21,062 $ - $ - $ 119,077 Depreciation and amortization 3,877 251 - - 4,128 Interest expense, net 1 - 2,206 - 2,207 Segment profit (loss) before income tax expense 603 3,218 (3,181) - 640 Income tax expense (benefit) 207 1,332 (1,296) - 243 Net income (loss) 397 1,885 (1,885) - 397 Segment assets (1) 333,136 23,851 60,963 (23,130) 394,820 Fiscal Three Months Ended July 1, 2022 Contract revenue $ 84,675 $ 17,970 $ - $ - $ 102,645 Depreciation and amortization 4,183 243 - - 4,426 Interest expense, net 1 - 1,029 - 1,030 Segment profit (loss) before income tax expense (6,357) 2,531 (2,173) - (5,999) Income tax expense (benefit) (1,891) 732 (514) - (1,673) Net income (loss) (4,467) 1,798 (1,657) - (4,326) Segment assets (1) 323,070 23,293 58,650 (23,130) 381,883 Fiscal Six Months Ended June 30, 2023 Contract revenue $ 181,300 $ 40,380 $ - $ - $ 221,680 Depreciation and amortization 7,801 527 - - 8,328 Interest expense, net 3 - 4,670 - 4,673 Segment profit (loss) before income tax expense 3,374 5,805 (6,851) - 2,328 Income tax expense (benefit) 1,448 2,490 (2,939) - 999 Net income (loss) 1,927 3,313 (3,911) - 1,329 Segment assets (1) 333,136 23,851 60,963 (23,130) 394,820 Fiscal Six Months Ended July 1, 2022 Contract revenue $ 159,561 $ 34,922 $ - $ - $ 194,483 Depreciation and amortization 8,340 495 - - 8,835 Interest expense, net 5 - 1,776 - 1,781 Segment profit (loss) before income tax expense (10,710) 4,638 (6,089) - (12,161) Income tax expense (benefit) (3,578) 1,549 (2,033) - (4,062) Net income (loss) (7,132) 3,088 (4,055) - (8,099) Segment assets (1) 323,070 23,293 58,650 (23,130) 381,883 (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 June 30, 2023 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 8,947 $ 16,443 $ 25,390 Unit-based 39,900 3,818 43,718 Fixed price 49,168 801 49,969 Total (1) $ 98,015 $ 21,062 $ 119,077 Client Type Commercial $ 7,440 $ 1,376 $ 8,816 Government 40,543 19,610 60,153 Utilities (2) 50,032 76 50,108 Total (1) $ 98,015 $ 21,062 $ 119,077 Geography (3) Domestic $ 98,015 $ 21,062 $ 119,077 Six months ended June 30, 2023 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 16,656 $ 30,997 $ 47,653 Unit-based 84,827 7,434 92,261 Fixed price 79,817 1,949 81,766 Total (1) $ 181,300 $ 40,380 $ 221,680 Client Type Commercial $ 14,159 $ 2,540 $ 16,699 Government 66,618 37,705 104,323 Utilities (2) 100,523 135 100,658 Total (1) $ 181,300 $ 40,380 $ 221,680 Geography (3) Domestic $ 181,300 $ 40,380 $ 221,680 Three months ended July 1, 2022 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 7,587 $ 13,340 $ 20,927 Unit-based 42,544 3,755 46,299 Fixed price 34,545 874 35,419 Total (1) $ 84,675 $ 17,970 $ 102,645 Client Type Commercial $ 6,701 $ 1,476 $ 8,177 Government 29,861 16,338 46,199 Utilities (2) 48,114 156 48,270 Total (1) $ 84,675 $ 17,970 $ 102,645 Geography (3) Domestic $ 84,675 $ 17,970 $ 102,645 Six months ended July 1, 2022 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 16,405 $ 26,341 $ 42,746 Unit-based 85,501 6,739 92,240 Fixed price 57,655 1,842 59,497 Total (1) $ 159,561 $ 34,922 $ 194,483 Client Type Commercial $ 14,790 $ 2,954 $ 17,744 Government 48,220 31,791 80,011 Utilities (2) 96,551 177 96,728 Total (1) $ 159,561 $ 34,922 $ 194,483 Geography (3) Domestic $ 159,561 $ 34,922 $ 194,483 (1) Amounts may not add to the totals due to rounding. (2) Includes the portion of revenue related to small business programs paid by the end user/customer. (3) Revenue from the Company’s foreign operations were not material for the three and six months ended June 30, 2023 and July 1, 2022. Geographical Information Substantially all of the Company’s consolidated revenue was derived from its operations in the U.S. The Company operates through a network of offices spread across 22 U.S. states, the District of Columbia, the Commonwealth of Puerto Rico, and Canada. Revenues from the Company’s Puerto Rican and Canadian operations were not material for the three and six months ended June 30, 2023 nor the three and six months ended July 1, 2022. Customer Concentration For the three and six months ended June 30, 2023, the Company’s top 10 customers accounted for 51.7%, and 51.4%, respectively, of the Company’s consolidated contract revenue. For the three and six months ended July 1, 2022, the Company’s top 10 customers accounted for 55.4% , and 54.4% , respectively, of the Company’s consolidated contract revenue. For the three months ended June 30, 2023, the Company had two customers, Dormitory Authority-State New York (“DASNY”) and the Los Angeles Department of Water and Power (“LADWP”), that accounted for 10.7% and 10.3% of its consolidated contract revenues, respectively . . For the three and six months ended July 1, 2022, the Company had one customer, LADWP, that accounted for 14.6% and 15.8% , respectively, of its consolidated contract revenues. On a segment basis, the Company had individual customers that accounted for more than 10% of its segment contract revenues. For the three months ended June 30, 2023, the Company had two customers, DASNY and LADWP, that accounted for 13.0% and 12.5% of its Energy segment revenues, respectively. For the six months ended June 30, 2023, the Company had two customers, LADWP and DASNY, that accounted for 13.0% and 11.6% of its Energy segment revenues, respectively. For the three and six months ended June 30, 2023, no single customer accounted for 10% or more of . For the three and six months ended July 1, 2022, the Company derived 17.6% and 19.2% , respectively, of its Energy segment revenues from one customer, LADWP. For the three and six months ended July 1, 2022, no single customer accounted for 10% or more of its Engineering and Consulting segment revenues. On a geographical basis, the Company’s largest clients are based in California and New York. For the three and six months ended June 30, 2023, services provided to clients in California accounted for 41.4% and 41.9%, respectively, of the Company’s contract revenue and services provided to clients in New York accounted for 26.1% and 25.3%, respectively, of the Company’s contract revenue. For the three and six months ended July 1, 2022, services provided to clients in California accounted for 40.9% and 42.2%, respectively, of the Company’s contract revenue and services provided to clients in New York accounted for 19.6% and 20.2%, respectively, of the Company’s contract revenue. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities, subject to a judgmental assessment of the recoverability of deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets may not be realized. Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical income (loss) adjusted for the effects of non-recurring items and the impact of recent business combinations. Areas of estimation include the Company’s consideration of future taxable income which is driven by verifiable signed contracts and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, the Company would adjust the related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. At the end of fiscal year 2022, the Company’s total valuation allowance was $1.2 million, remaining unchanged from the end of fiscal year 2021. As of June 30, 2023, the Company assessed all available positive and negative evidence available to determine whether, based on the weight of that evidence, there was a change in judgment related to the utilization of deferred tax assets in future years. The Company concluded that as of June 30, 2023, the valuation allowance for the Company’s deferred tax assets was appropriate in accordance with ASC 740. Consequently, there was no change to the valuation allowance during the three and six months ended June 30, 2023. For acquired business entities, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment, and the Company records the offset to goodwill. The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense. The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. During the three and six months ended June 30, 2023, and three and six months ended July 1, 2022, the Company did not record a liability for uncertain tax positions. Based on the Company’s estimates and determination of an effective tax rate for the year, the Company recorded an income tax expense of $0.2 million and $1.0 million for the three and six months ended June 30, 2023, respectively, as compared to an income tax benefit of $1.7 million and $4.1 million for the three and six months ended April 1, 2022, respectively. During the three and six months ended June 30, 2023, the difference between the effective tax rate and the federal statutory rate was primarily attributable to state taxes, non-deductible stock compensation, nondeductible executive compensation, research and development tax credits, and the commercial building energy efficiency deduction. During the three and six months ended July 1, 2022, the difference between the effective tax rate and the federal statutory rate was primarily attributable to state taxes, non-deductible stock compensation, nondeductible executive compensation, research and development tax credits, and the commercial building energy efficiency deduction. |
EARNINGS PER SHARE (EPS)
EARNINGS PER SHARE (EPS) | 6 Months Ended |
Jun. 30, 2023 | |
EARNINGS PER SHARE (EPS) | |
EARNINGS PER SHARE (EPS) | 10. 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 June 30, July 1, June 30, July 1, 2023 2022 2023 2022 (in thousands, except per share amounts) Net income (loss) $ 397 $ (4,326) $ 1,329 $ (8,099) Weighted-average common shares outstanding 13,344 13,016 13,305 12,901 Effect of dilutive stock options and restricted stock awards 143 — 176 — Weighted-average common shares outstanding-diluted 13,487 13,016 13,481 12,901 Earnings (Loss) per share: Basic $ 0.03 $ (0.33) $ 0.10 $ (0.63) Diluted $ 0.03 $ (0.33) $ 0.10 $ (0.63) For the three and six months ended June 30, 2023, the Company excluded 451,000 and 433,000 common shares, respectively, subject to outstanding equity awards from the calculation of diluted shares because their impact would have been anti-dilutive. For the three and six months ended July 1, 2022, 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. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
CONTINGENCIES | |
CONTINGENCIES | 11. 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 |
Jun. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 12. 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 3, 2023, there were no subsequent events required to be reported. |
ORGANIZATION AND OPERATIONS O_2
ORGANIZATION AND OPERATIONS OF THE COMPANY (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, September 30, and December 31 and the 13 or 14-week period ending on the Friday closest to March 31, as applicable. Fiscal year 2023, which ends on December 29, 2023, will be comprised of 52 weeks, with all quarters consisting of 13 weeks each. Fiscal year 2022, which ended on December 30, 2022, was comprised of 52 weeks, with all quarters consisting of 13 weeks each. 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 assets and 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. |
Credit Agreement Refinancing | Credit Agreement Refinancing As described in Note 5, “ Debt Obligations Quantitative and Qualitative Disclosures About Market Risk In accordance with ASC Topic 205, when preparing financial statements for each reporting period, the Company evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company considered its Credit Agreement’s principal and interest payment due on June 26, 2024 and assessed its current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and conditional and unconditional obligations due over the next twelve months. Based on that analysis, only as a result of the Company’s obligation under the Credit Agreement to make final payment of all then remaining principal and interest on June 26, 2024, does an event arise which raises substantial doubt with respect to the Company's ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued. The Company intends to refinance its Credit Agreement and has entered into an engagement to secure a new three-year financing facility with a syndicate of financial institutions as lenders which, among other things, will repay 100% of the obligations under the existing Credit Agreement and extend the due date of the maturity payment by more than two years from the current maturity date. The Company expects to finalize its refinancing efforts and enter into a new credit facility during the second half of fiscal 2023. Accordingly, the Company believes that its refinancing plan alleviates any substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued because it expects to fully refinance the Credit Agreement with a new credit facility prior to June 26, 2024, the date on which final payment of all then remaining principal and interest under the current Credit Agreement is due. |
Accounting Pronouncements Recently Adopted | As of June 30, 2023, there were no accounting pronouncements recently issued, or with future effective dates, that are either applicable nor are expected to have an impact to the Company’s Condensed Consolidated Financial Statements. |
Revenue Recognition | 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 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. The Company also 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. 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 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 June 30, 2023 and December 30, 2022, contract assets included retainage of approximately $12.5 million and $8.5 million, respectively. |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 |
Jun. 30, 2023 | |
SUPPLEMENTAL FINANCIAL STATEMENT DATA | |
Schedule of reconciliation of cash and cash equivalents, and restricted cash | June 30, December 30, 2023 2022 (in thousands) Cash and cash equivalents $ 13,649 $ 8,806 Restricted cash — 10,679 Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows $ 13,649 $ 19,485 |
Schedule of equipment and leasehold improvements | June 30, December 30, 2023 2022 (in thousands) Furniture and fixtures $ 4,188 $ 4,062 Computer hardware and software 40,434 35,635 Leasehold improvements 3,832 3,097 Equipment under finance leases 5,588 5,503 Automobiles, trucks, and field equipment 3,135 3,134 Subtotal 57,177 51,431 Accumulated depreciation and amortization (31,683) (28,894) Equipment and leasehold improvements, net $ 25,494 $ 22,537 |
Schedule of accrued liabilities | June 30, December 30, 2023 2022 (in thousands) Accrued subcontractor costs $ 21,927 $ 28,374 Accrued bonuses 6,758 8,470 Employee withholdings 2,795 2,571 Compensation and payroll taxes 2,690 2,340 Rebate and other 303 14,643 Accrued accounting and taxes 2,481 2,712 Total accrued liabilities $ 36,954 $ 59,110 |
Schedule of changes in the carrying value of goodwill by reporting unit | December 30, Additional Additions / June 30, 2022 Purchase Cost Adjustments 2023 (in thousands) Reporting Unit: Energy $ 129,375 $ — $ — $ 129,375 Engineering and Consulting 749 — — 749 $ 130,124 $ — $ — $ 130,124 |
Schedule of gross amounts and accumulated amortization of acquired identifiable intangible assets with finite useful lives | June 30, 2023 December 30, 2022 Gross Accumulated Gross Accumulated Amortization Amount Amortization Amount Amortization Period (in thousands) (in years) Finite: Tradename $ 15,911 $ 11,986 $ 15,911 $ 10,990 2.5 - 6.0 Developed technology 15,810 13,332 15,810 11,871 8.0 Customer relationships 58,149 28,315 58,149 25,523 5.0 - 8.0 Total intangible assets $ 89,870 $ 53,633 $ 89,870 $ 48,384 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations, excluding obligations under capital leases | June 30, December 30, 2023 2022 (in thousands) Outstanding borrowings on Term A Loan $ 60,000 $ 65,000 Outstanding borrowings on Revolving Credit Facility 5,000 — Outstanding borrowings on Delayed Draw Term Loan 37,000 41,000 Other debt agreements 988 1,958 Total debt 102,988 107,958 Issuance costs and debt discounts (350) (511) Subtotal 102,638 107,447 Less current portion of long-term debt 102,619 16,903 Long-term debt portion $ 19 $ 90,544 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
Summary of the Lease Expense | Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2023 2022 2023 2022 (in thousands) (in thousands) Operating lease cost $ 1,664 $ 1,534 $ 3,157 $ 3,112 Finance lease cost: Amortization of assets 318 255 629 488 Interest on lease liabilities 24 15 46 29 Total net lease cost $ 2,006 $ 1,804 $ 3,832 $ 3,629 |
Summary of Lease Information Presented on the Condensed Consolidated Balance Sheet | June 30, December 30, 2023 2022 (in thousands) Operating leases: Right-of-use assets $ 13,894 $ 12,390 Lease liability $ 4,877 $ 4,625 Lease liability, less current portion 10,731 8,599 Total lease liabilities $ 15,608 $ 13,224 Finance leases (included in equipment and leasehold improvements, net): Equipment and leasehold improvements, net $ 5,588 $ 5,503 Accumulated depreciation (3,266) (2,830) Total equipment and leasehold improvements, net $ 2,322 $ 2,673 Finance lease obligations $ 1,143 $ 1,113 Finance lease obligations, less current portion 1,251 1,601 Total finance lease obligations $ 2,394 $ 2,714 Weighted average remaining lease term (in years): Operating Leases 3.60 3.35 Finance Leases 2.42 2.66 Weighted average discount rate: Operating Leases 5.74 % 4.25 % Finance Leases 4.06 % 3.47 % |
Summary of Other Information and Supplemental Cash Flow Information Related to Finance and Operating Leases | Six Months Ended June 30, July 1, 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 3,003 $ 3,273 Operating cash flow from finance leases 46 29 Financing cash flow from finance leases 599 444 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 4,264 $ 1,002 |
Summary of the Maturities of Operating Lease Liabilities | Operating Finance (in thousands) Fiscal year: Remainder of 2023 $ 2,793 $ 681 2024 4,968 1,071 2025 3,988 472 2026 3,369 211 2027 1,519 80 2028 and thereafter 816 7 Total lease payments 17,453 2,522 Less: Imputed interest (1,845) (128) Total lease obligations 15,608 2,394 Less: Current obligations 4,877 1,143 Noncurrent lease obligations $ 10,731 $ 1,251 |
Summary of the Maturities of Finance Lease Liabilities | Operating Finance (in thousands) Fiscal year: Remainder of 2023 $ 2,793 $ 681 2024 4,968 1,071 2025 3,988 472 2026 3,369 211 2027 1,519 80 2028 and thereafter 816 7 Total lease payments 17,453 2,522 Less: Imputed interest (1,845) (128) Total lease obligations 15,608 2,394 Less: Current obligations 4,877 1,143 Noncurrent lease obligations $ 10,731 $ 1,251 |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, 2023 Contract revenue $ 98,015 $ 21,062 $ - $ - $ 119,077 Depreciation and amortization 3,877 251 - - 4,128 Interest expense, net 1 - 2,206 - 2,207 Segment profit (loss) before income tax expense 603 3,218 (3,181) - 640 Income tax expense (benefit) 207 1,332 (1,296) - 243 Net income (loss) 397 1,885 (1,885) - 397 Segment assets (1) 333,136 23,851 60,963 (23,130) 394,820 Fiscal Three Months Ended July 1, 2022 Contract revenue $ 84,675 $ 17,970 $ - $ - $ 102,645 Depreciation and amortization 4,183 243 - - 4,426 Interest expense, net 1 - 1,029 - 1,030 Segment profit (loss) before income tax expense (6,357) 2,531 (2,173) - (5,999) Income tax expense (benefit) (1,891) 732 (514) - (1,673) Net income (loss) (4,467) 1,798 (1,657) - (4,326) Segment assets (1) 323,070 23,293 58,650 (23,130) 381,883 Fiscal Six Months Ended June 30, 2023 Contract revenue $ 181,300 $ 40,380 $ - $ - $ 221,680 Depreciation and amortization 7,801 527 - - 8,328 Interest expense, net 3 - 4,670 - 4,673 Segment profit (loss) before income tax expense 3,374 5,805 (6,851) - 2,328 Income tax expense (benefit) 1,448 2,490 (2,939) - 999 Net income (loss) 1,927 3,313 (3,911) - 1,329 Segment assets (1) 333,136 23,851 60,963 (23,130) 394,820 Fiscal Six Months Ended July 1, 2022 Contract revenue $ 159,561 $ 34,922 $ - $ - $ 194,483 Depreciation and amortization 8,340 495 - - 8,835 Interest expense, net 5 - 1,776 - 1,781 Segment profit (loss) before income tax expense (10,710) 4,638 (6,089) - (12,161) Income tax expense (benefit) (3,578) 1,549 (2,033) - (4,062) Net income (loss) (7,132) 3,088 (4,055) - (8,099) Segment assets (1) 323,070 23,293 58,650 (23,130) 381,883 (1) Segment assets are presented net of intercompany receivables. |
Schedule of disaggregation of revenue | Three months ended June 30, 2023 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 8,947 $ 16,443 $ 25,390 Unit-based 39,900 3,818 43,718 Fixed price 49,168 801 49,969 Total (1) $ 98,015 $ 21,062 $ 119,077 Client Type Commercial $ 7,440 $ 1,376 $ 8,816 Government 40,543 19,610 60,153 Utilities (2) 50,032 76 50,108 Total (1) $ 98,015 $ 21,062 $ 119,077 Geography (3) Domestic $ 98,015 $ 21,062 $ 119,077 Six months ended June 30, 2023 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 16,656 $ 30,997 $ 47,653 Unit-based 84,827 7,434 92,261 Fixed price 79,817 1,949 81,766 Total (1) $ 181,300 $ 40,380 $ 221,680 Client Type Commercial $ 14,159 $ 2,540 $ 16,699 Government 66,618 37,705 104,323 Utilities (2) 100,523 135 100,658 Total (1) $ 181,300 $ 40,380 $ 221,680 Geography (3) Domestic $ 181,300 $ 40,380 $ 221,680 Three months ended July 1, 2022 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 7,587 $ 13,340 $ 20,927 Unit-based 42,544 3,755 46,299 Fixed price 34,545 874 35,419 Total (1) $ 84,675 $ 17,970 $ 102,645 Client Type Commercial $ 6,701 $ 1,476 $ 8,177 Government 29,861 16,338 46,199 Utilities (2) 48,114 156 48,270 Total (1) $ 84,675 $ 17,970 $ 102,645 Geography (3) Domestic $ 84,675 $ 17,970 $ 102,645 Six months ended July 1, 2022 Energy Engineering and Consulting Total (in thousands) Contract Type Time-and-materials $ 16,405 $ 26,341 $ 42,746 Unit-based 85,501 6,739 92,240 Fixed price 57,655 1,842 59,497 Total (1) $ 159,561 $ 34,922 $ 194,483 Client Type Commercial $ 14,790 $ 2,954 $ 17,744 Government 48,220 31,791 80,011 Utilities (2) 96,551 177 96,728 Total (1) $ 159,561 $ 34,922 $ 194,483 Geography (3) Domestic $ 159,561 $ 34,922 $ 194,483 (1) Amounts may not add to the totals due to rounding. (2) Includes the portion of revenue related to small business programs paid by the end user/customer. (3) Revenue from the Company’s foreign operations were not material for the three and six months ended June 30, 2023 and July 1, 2022. |
EARNINGS PER SHARE (EPS) (Table
EARNINGS PER SHARE (EPS) (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, July 1, June 30, July 1, 2023 2022 2023 2022 (in thousands, except per share amounts) Net income (loss) $ 397 $ (4,326) $ 1,329 $ (8,099) Weighted-average common shares outstanding 13,344 13,016 13,305 12,901 Effect of dilutive stock options and restricted stock awards 143 — 176 — Weighted-average common shares outstanding-diluted 13,487 13,016 13,481 12,901 Earnings (Loss) per share: Basic $ 0.03 $ (0.33) $ 0.10 $ (0.63) Diluted $ 0.03 $ (0.33) $ 0.10 $ (0.63) |
ORGANIZATION AND OPERATIONS O_3
ORGANIZATION AND OPERATIONS OF THE COMPANY - Segment Information (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Segment Information | |
Number of reporting segments | 2 |
ORGANIZATION AND OPERATIONS O_4
ORGANIZATION AND OPERATIONS OF THE COMPANY - Fiscal Years (Details) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 29, 2023 | Sep. 29, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 30, 2022 | Sep. 30, 2022 | Jul. 01, 2022 | Apr. 01, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Entity Information | ||||||||||
Length of fiscal period | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 364 days | 364 days |
Minimum | ||||||||||
Entity Information | ||||||||||
Length of fiscal period | 91 days | 364 days | ||||||||
Maximum | ||||||||||
Entity Information | ||||||||||
Length of fiscal period | 98 days | 371 days |
ORGANIZATION AND OPERATIONS O_5
ORGANIZATION AND OPERATIONS OF THE COMPANY - Credit Agreement Refinancing (Details) - Notes Payable to Banks $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Term A Loan | |
Debt Instrument [Line Items] | |
Periodic payment of principal | $ 2.5 |
Delayed Draw Term Loan Facility | |
Debt Instrument [Line Items] | |
Annual amortization of debt (as a percent) | 2.50% |
New financing facility | |
Debt Instrument [Line Items] | |
Term of debt | 3 years |
Percentage of existing credit agreement replaced | 100% |
New financing facility | Minimum | |
Debt Instrument [Line Items] | |
Extended maturity term | 2 years |
REVENUES - Segment Information
REVENUES - Segment Information (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Segment Information | |
Number of reporting segments | 2 |
REVENUES - General Information
REVENUES - General Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | Dec. 30, 2022 | |
Revenue | |||||
Payroll taxes, bonuses and employee benefit costs for all Company personnel | $ 22,416 | $ 20,439 | $ 44,801 | $ 39,796 | |
Revenue of the entity recorded in which it acts solely in the capacity of an agent | 0 | ||||
Retained accounts receivable | $ 12,500 | $ 12,500 | $ 8,500 | ||
Maximum | |||||
Revenue | |||||
Percent of revenue (as a percent) | 3% | 3% | |||
Minimum | |||||
Revenue | |||||
Percent of revenue (as a percent) | 2% | 2% | |||
Cost of Sales | |||||
Revenue | |||||
Payroll taxes, bonuses and employee benefit costs for all Company personnel | $ 0 | ||||
Allocation of facilities costs to contract revenue | $ 0 |
SUPPLEMENTAL FINANCIAL STATEM_3
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 | Jul. 01, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | ||||
Cash and cash equivalents | $ 13,649 | $ 8,806 | ||
Restricted cash | 10,679 | |||
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows | $ 13,649 | $ 19,485 | $ 5,811 | $ 11,221 |
Restricted Cash, Statement of Financial Position | Restricted cash | Restricted cash |
SUPPLEMENTAL FINANCIAL STATEM_4
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Equipment and Leasehold Improvements, Net - Tabular Disclosure (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Equipment and Leasehold Improvements | ||
Equipment under finance leases | $ 5,588 | $ 5,503 |
Equipment and leasehold improvements, gross | 57,177 | 51,431 |
Accumulated depreciation and amortization | (31,683) | (28,894) |
Total equipment and leasehold improvements, net | 25,494 | 22,537 |
Furniture and Fixtures | ||
Equipment and Leasehold Improvements | ||
Equipment and leasehold improvements | 4,188 | 4,062 |
Computer Hardware and Software | ||
Equipment and Leasehold Improvements | ||
Equipment and leasehold improvements | 40,434 | 35,635 |
Leasehold Improvements | ||
Equipment and Leasehold Improvements | ||
Equipment and leasehold improvements | 3,832 | 3,097 |
Automobiles Trucks and Field Equipment | ||
Equipment and Leasehold Improvements | ||
Equipment and leasehold improvements | $ 3,135 | $ 3,134 |
SUPPLEMENTAL FINANCIAL STATEM_5
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Equipment and Leasehold Improvements, Net - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | Dec. 30, 2022 | |
Amortization Expense | |||||
Amortization expense | $ 318 | $ 255 | $ 629 | $ 488 | $ 1,100 |
SUPPLEMENTAL FINANCIAL STATEM_6
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Accrued Liabilities | ||
Accrued subcontractor costs | $ 21,927 | $ 28,374 |
Accrued bonuses | 6,758 | 8,470 |
Employee withholdings | 2,795 | 2,571 |
Compensation and payroll taxes | 2,690 | 2,340 |
Rebate and other | 303 | 14,643 |
Accrued accounting and taxes | 2,481 | 2,712 |
Total accrued liabilities | $ 36,954 | $ 59,110 |
SUPPLEMENTAL FINANCIAL STATEM_7
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Goodwill (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | $ 130,124 |
Goodwill at end of period | 130,124 |
Energy | |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | 129,375 |
Goodwill at end of period | 129,375 |
Engineering and Consulting | |
Changes in carrying value of goodwill | |
Goodwill at beginning of period | 749 |
Goodwill at end of period | $ 749 |
SUPPLEMENTAL FINANCIAL STATEM_8
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Finite-lived Intangible Assets - Gross Amounts and Accumulated Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Finite-Lived Intangible Assets | ||
Total finite intangible assets | $ 89,870 | $ 89,870 |
Accumulated Amortization | 53,633 | 48,384 |
Trade Names | ||
Finite-Lived Intangible Assets | ||
Total finite intangible assets | 15,911 | 15,911 |
Accumulated Amortization | 11,986 | 10,990 |
Developed Technology Rights | ||
Finite-Lived Intangible Assets | ||
Total finite intangible assets | 15,810 | 15,810 |
Accumulated Amortization | 13,332 | 11,871 |
Customer Relationships | ||
Finite-Lived Intangible Assets | ||
Total finite intangible assets | 58,149 | 58,149 |
Accumulated Amortization | $ 28,315 | $ 25,523 |
SUPPLEMENTAL FINANCIAL STATEM_9
SUPPLEMENTAL FINANCIAL STATEMENT DATA - Finite-lived Intangible Assets - Amortization Period (Details) | Jun. 30, 2023 |
Trade Names | Minimum | |
Finite-Lived Intangible Assets | |
Amortization Period | 2 years 6 months |
Trade Names | Maximum | |
Finite-Lived Intangible Assets | |
Amortization Period | 6 years |
Developed Technology Rights | |
Finite-Lived Intangible Assets | |
Amortization Period | 8 years |
Customer Relationships | Minimum | |
Finite-Lived Intangible Assets | |
Amortization Period | 5 years |
Customer Relationships | Maximum | |
Finite-Lived Intangible Assets | |
Amortization Period | 8 years |
DEBT OBLIGATIONS - Composition
DEBT OBLIGATIONS - Composition (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Debt Obligations | ||
Total debt | $ 102,988 | $ 107,958 |
Issuance costs and debt discounts | (350) | (511) |
Subtotal - total debt principal | 102,638 | 107,447 |
Notes Payable to Banks | Term A Loan | ||
Debt Obligations | ||
Total debt | 60,000 | 65,000 |
Notes Payable to Banks | Revolving Credit Facility | ||
Debt Obligations | ||
Total debt | 5,000 | |
Notes Payable to Banks | Delayed Draw Term Loan Facility | ||
Debt Obligations | ||
Total debt | 37,000 | 41,000 |
Notes Payable, Other Payables | Other Debt | ||
Debt Obligations | ||
Total debt | $ 988 | $ 1,958 |
DEBT OBLIGATIONS - Classificati
DEBT OBLIGATIONS - Classification (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Debt Obligations | ||
Subtotal | $ 102,638 | $ 107,447 |
Less current portion of long-term debt | 102,619 | 16,903 |
Long-term debt portion | $ 19 | $ 90,544 |
DEBT OBLIGATIONS - Credit Facil
DEBT OBLIGATIONS - Credit Facilities (Details) - Notes Payable to Banks $ in Millions | Apr. 28, 2023 | Nov. 01, 2022 USD ($) | Jun. 26, 2019 USD ($) |
Credit Agreement 2019 | |||
Debt Obligations | |||
Debt instrument, covenants, total leverage ratio, maximum permitted to maintain | 3.25 | ||
Debt Instrument, Covenants, Minimum Fixed Charge Coverage Ratio | 1.20 | ||
Credit Agreement 2019 | Minimum | |||
Debt Obligations | |||
Commitment fee (as a percent) | 0.15% | ||
Credit Agreement 2019 | Maximum | |||
Debt Obligations | |||
Commitment fee (as a percent) | 0.40% | ||
Credit Agreement 2019 | Base Rate | Minimum | |||
Debt Obligations | |||
Spread on floating interest rate (as a percent) | 0.125% | ||
Credit Agreement 2019 | Base Rate | Maximum | |||
Debt Obligations | |||
Spread on floating interest rate (as a percent) | 1.25% | ||
Credit Agreement 2019 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||
Debt Obligations | |||
Spread on floating interest rate (as a percent) | 1.125% | ||
Interest rate (as a percent) | 0% | ||
Credit Agreement 2019 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||
Debt Obligations | |||
Spread on floating interest rate (as a percent) | 2.25% | ||
Term A Loan | |||
Debt Obligations | |||
Initial outstanding principal | $ 100 | ||
Revolving Credit Facility | |||
Debt Obligations | |||
Maximum borrowing capacity | 50 | ||
Maximum borrowing capacity during the period from November 1, 2022 through the date on which financial statements and compliance documents have been received by the Administrative Agent for the fiscal quarter ending March 31, 2023 | $ 10 | ||
Debt instrument, covenants, Total Leverage Ratio, access to accordion feature, high end of range | 3 | ||
Letter of Credit | Minimum | |||
Debt Obligations | |||
Commitment fee (as a percent) | 0.84% | ||
Letter of Credit | Maximum | |||
Debt Obligations | |||
Commitment fee (as a percent) | 1.688% | ||
Delayed Draw Term Loan Facility | |||
Debt Obligations | |||
Maximum borrowing capacity | $ 50 |
LEASES - General Information (D
LEASES - General Information (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
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 | 12 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | Dec. 30, 2022 | |
Lease cost | |||||
Operating lease cost | $ 1,664 | $ 1,534 | $ 3,157 | $ 3,112 | |
Amortization of assets | 318 | 255 | 629 | 488 | $ 1,100 |
Interest on lease liabilities | 24 | 15 | 46 | 29 | |
Total net lease cost | $ 2,006 | $ 1,804 | $ 3,832 | $ 3,629 |
LEASES - Consolidated Balance S
LEASES - Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Leases | ||
Right-of-use assets | $ 13,894 | $ 12,390 |
Operating leases, lease liabilities | ||
Lease liability | 4,877 | 4,625 |
Lease liability, less current portion | 10,731 | 8,599 |
Total lease liabilities | 15,608 | 13,224 |
Finance leases (included in equipment and leasehold improvements, net): | ||
Equipment and leasehold improvements, net | 5,588 | 5,503 |
Accumulated depreciation | (3,266) | (2,830) |
Total equipment and leasehold improvements, net | $ 2,322 | $ 2,673 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position | Equipment and leasehold improvements, net | Equipment and leasehold improvements, net |
Finance lease obligations | ||
Finance lease obligations | $ 1,143 | $ 1,113 |
Finance lease obligations, less current portion | 1,251 | 1,601 |
Total finance lease obligations | $ 2,394 | $ 2,714 |
LEASES - Additional Information
LEASES - Additional Information (Details) | Jun. 30, 2023 | Dec. 30, 2022 |
Leases | ||
Operating leases, weighted average remaining lease term | 3 years 7 months 6 days | 3 years 4 months 6 days |
Finance leases, weighted average remaining lease term | 2 years 5 months 1 day | 2 years 7 months 28 days |
Operating leases, weighted average discount rate | 5.74% | 4.25% |
Finance leases, weighted average discount rate | 4.06% | 3.47% |
LEASES - Rent Expense (Details)
LEASES - Rent Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
LEASES | ||||
Rent expenses | $ 1.8 | $ 1.7 | $ 3.4 | $ 3.3 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jul. 01, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flow from operating leases | $ 3,003 | $ 3,273 |
Operating cash flow from finance leases | 46 | 29 |
Financing cash flow from finance leases | 599 | 444 |
Right-of-use assets obtained in exchange for lease liabilities for operating leases | $ 4,264 | $ 1,002 |
LEASES - Operating Leases - Mat
LEASES - Operating Leases - Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Operating | |
Remainder of 2023 | $ 2,793 |
2024 | 4,968 |
2025 | 3,988 |
2026 | 3,369 |
2027 | 1,519 |
2028 and thereafter | 816 |
Total lease payments | $ 17,453 |
LEASES - Operating Leases - Gro
LEASES - Operating Leases - Gross Difference (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Operating | ||
Total lease payments | $ 17,453 | |
Less: Imputed interest | (1,845) | |
Total lease liabilities | 15,608 | $ 13,224 |
Less: Current obligations | 4,877 | 4,625 |
Noncurrent lease obligations | $ 10,731 | $ 8,599 |
LEASES - Finance Leases - Matur
LEASES - Finance Leases - Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Finance | |
Remainder of 2023 | $ 681 |
2024 | 1,071 |
2025 | 472 |
2026 | 211 |
2027 | 80 |
2028 and thereafter | 7 |
Total lease payments | $ 2,522 |
LEASES - Finance Leases - Gross
LEASES - Finance Leases - Gross Difference (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 |
Finance | ||
Total lease payments | $ 2,522 | |
Less: Imputed interest | (128) | |
Total finance lease obligations | 2,394 | $ 2,714 |
Less: Current obligations | 1,143 | 1,113 |
Noncurrent lease obligations | $ 1,251 | $ 1,601 |
COMMITMENTS AND VARIABLE INTE_2
COMMITMENTS AND VARIABLE INTEREST ENTITIES - Employee Benefit Plans (Details) | 6 Months Ended | |
Jun. 30, 2023 USD ($) Y | Jul. 01, 2022 USD ($) | |
Qualified Cash or Deferred Arrangement | ||
Employee Benefit Plans | ||
Maximum employee contribution as a percentage of compensation under 401(k) Plan (as a percent) | 50% | |
Defined Contribution Plan, Tax Status | us-gaap:QualifiedPlanMember | |
Defined Contribution Plan | ||
Employee Benefit Plans | ||
Service period | 3 months | |
Attained age | Y | 21 | |
Defined contribution plan, employer matching contribution, percent of match (as a percent) | 50% | |
Defined contribution plan, employer matching contribution, percent of employees' gross pay (as a percent) | 6% | |
Maximum employer contribution per employee | $ 3,000 | |
Employer matching contributions | $ 1,600,000 | $ 1,600,000 |
COMMITMENTS AND VARIABLE INTE_3
COMMITMENTS AND VARIABLE INTEREST ENTITIES - Variable Interest Entities (Details) | 6 Months Ended |
Jun. 30, 2023 entity | |
COMMITMENTS AND VARIABLE INTEREST ENTITIES | |
Number of VIEs | 1 |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION - Segment Information (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Segment Information | |
Number of reporting segments | 2 |
SEGMENT AND GEOGRAPHICAL INFO_4
SEGMENT AND GEOGRAPHICAL INFORMATION - Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Segment reconciliation | ||||||
Contract revenue | $ 119,077 | $ 102,645 | $ 221,680 | $ 194,483 | ||
Depreciation and amortization | 4,128 | 4,426 | 8,328 | 8,835 | ||
Interest expense, net | 2,207 | 1,030 | 4,673 | 1,781 | ||
Segment profit (loss) before income tax expense | 640 | (5,999) | 2,328 | (12,161) | ||
Income tax expense (benefit) | 243 | (1,673) | 999 | (4,062) | ||
Net Income (Loss) | 397 | $ 932 | (4,326) | $ (3,773) | 1,329 | (8,099) |
Energy | ||||||
Segment reconciliation | ||||||
Contract revenue | 98,015 | 84,675 | 181,300 | 159,561 | ||
Engineering and Consulting | ||||||
Segment reconciliation | ||||||
Contract revenue | 21,062 | 17,970 | 40,380 | 34,922 | ||
Operating Segments | Energy | ||||||
Segment reconciliation | ||||||
Contract revenue | 98,015 | 84,675 | 181,300 | 159,561 | ||
Depreciation and amortization | 3,877 | 4,183 | 7,801 | 8,340 | ||
Interest expense, net | 1 | 1 | 3 | 5 | ||
Segment profit (loss) before income tax expense | 603 | (6,357) | 3,374 | (10,710) | ||
Income tax expense (benefit) | 207 | (1,891) | 1,448 | (3,578) | ||
Net Income (Loss) | 397 | (4,467) | 1,927 | (7,132) | ||
Operating Segments | Engineering and Consulting | ||||||
Segment reconciliation | ||||||
Contract revenue | 21,062 | 17,970 | 40,380 | 34,922 | ||
Depreciation and amortization | 251 | 243 | 527 | 495 | ||
Segment profit (loss) before income tax expense | 3,218 | 2,531 | 5,805 | 4,638 | ||
Income tax expense (benefit) | 1,332 | 732 | 2,490 | 1,549 | ||
Net Income (Loss) | 1,885 | 1,798 | 3,313 | 3,088 | ||
Corporate, Non-Segment | ||||||
Segment reconciliation | ||||||
Interest expense, net | 2,206 | 1,029 | 4,670 | 1,776 | ||
Segment profit (loss) before income tax expense | (3,181) | (2,173) | (6,851) | (6,089) | ||
Income tax expense (benefit) | (1,296) | (514) | (2,939) | (2,033) | ||
Net Income (Loss) | $ (1,885) | $ (1,657) | $ (3,911) | $ (4,055) |
SEGMENT AND GEOGRAPHICAL INFO_5
SEGMENT AND GEOGRAPHICAL INFORMATION - Segment Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 30, 2022 | Jul. 01, 2022 |
Segment Reporting | |||
Segment assets | $ 394,820 | $ 409,674 | $ 381,883 |
Operating Segments | Energy | |||
Segment Reporting | |||
Segment assets | 333,136 | 323,070 | |
Operating Segments | Engineering and Consulting | |||
Segment Reporting | |||
Segment assets | 23,851 | 23,293 | |
Corporate, Non-Segment | |||
Segment Reporting | |||
Segment assets | 60,963 | 58,650 | |
Intersegment Eliminations | |||
Segment Reporting | |||
Segment assets | $ (23,130) | $ (23,130) |
SEGMENT AND GEOGRAPHICAL INFO_6
SEGMENT AND GEOGRAPHICAL INFORMATION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Revenue | ||||
Revenue | $ 119,077 | $ 102,645 | $ 221,680 | $ 194,483 |
Domestic | ||||
Revenue | ||||
Revenue | 119,077 | 102,645 | 221,680 | 194,483 |
Energy | ||||
Revenue | ||||
Revenue | 98,015 | 84,675 | 181,300 | 159,561 |
Energy | Domestic | ||||
Revenue | ||||
Revenue | 98,015 | 84,675 | 181,300 | 159,561 |
Engineering and Consulting | ||||
Revenue | ||||
Revenue | 21,062 | 17,970 | 40,380 | 34,922 |
Engineering and Consulting | Domestic | ||||
Revenue | ||||
Revenue | 21,062 | 17,970 | 40,380 | 34,922 |
Commercial | ||||
Revenue | ||||
Revenue | 8,816 | 8,177 | 16,699 | 17,744 |
Commercial | Energy | ||||
Revenue | ||||
Revenue | 7,440 | 6,701 | 14,159 | 14,790 |
Commercial | Engineering and Consulting | ||||
Revenue | ||||
Revenue | 1,376 | 1,476 | 2,540 | 2,954 |
Government | ||||
Revenue | ||||
Revenue | 60,153 | 46,199 | 104,323 | 80,011 |
Government | Energy | ||||
Revenue | ||||
Revenue | 40,543 | 29,861 | 66,618 | 48,220 |
Government | Engineering and Consulting | ||||
Revenue | ||||
Revenue | 19,610 | 16,338 | 37,705 | 31,791 |
Utilities | ||||
Revenue | ||||
Revenue | 50,108 | 48,270 | 100,658 | 96,728 |
Utilities | Energy | ||||
Revenue | ||||
Revenue | 50,032 | 48,114 | 100,523 | 96,551 |
Utilities | Engineering and Consulting | ||||
Revenue | ||||
Revenue | 76 | 156 | 135 | 177 |
Time-and-Materials Contract | ||||
Revenue | ||||
Revenue | 25,390 | 20,927 | 47,653 | 42,746 |
Time-and-Materials Contract | Energy | ||||
Revenue | ||||
Revenue | 8,947 | 7,587 | 16,656 | 16,405 |
Time-and-Materials Contract | Engineering and Consulting | ||||
Revenue | ||||
Revenue | 16,443 | 13,340 | 30,997 | 26,341 |
Unit-based Contract | ||||
Revenue | ||||
Revenue | 43,718 | 46,299 | 92,261 | 92,240 |
Unit-based Contract | Energy | ||||
Revenue | ||||
Revenue | 39,900 | 42,544 | 84,827 | 85,501 |
Unit-based Contract | Engineering and Consulting | ||||
Revenue | ||||
Revenue | 3,818 | 3,755 | 7,434 | 6,739 |
Fixed-Price Contract | ||||
Revenue | ||||
Revenue | 49,969 | 35,419 | 81,766 | 59,497 |
Fixed-Price Contract | Energy | ||||
Revenue | ||||
Revenue | 49,168 | 34,545 | 79,817 | 57,655 |
Fixed-Price Contract | Engineering and Consulting | ||||
Revenue | ||||
Revenue | $ 801 | $ 874 | $ 1,949 | $ 1,842 |
SEGMENT AND GEOGRAPHICAL INFO_7
SEGMENT AND GEOGRAPHICAL INFORMATION - Geographical Information (Details) | Jun. 30, 2023 state |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Number of states in which entity operates | 22 |
SEGMENT AND GEOGRAPHICAL INFO_8
SEGMENT AND GEOGRAPHICAL INFORMATION - Concentration Risk (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Top Ten Customers | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 51.70% | 55.40% | 51.40% | 54.40% |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Los Angeles Department of Water and Power | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 10.30% | 14.60% | 10.60% | 15.80% |
Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Dormitory Authority-State New York | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 10.70% | |||
Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | California | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 41.40% | 40.90% | 41.90% | 42.20% |
Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | New York | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 26.10% | 19.60% | 25.30% | 20.20% |
Revenue from Contract with Customer, Segment Benchmark | Customer Concentration Risk | Los Angeles Department of Water and Power | Energy | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 12.50% | 17.60% | 13% | 19.20% |
Revenue from Contract with Customer, Segment Benchmark | Customer Concentration Risk | Dormitory Authority-State New York | Energy | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 13% | 11.60% |
INCOME TAXES - Valuation Allowa
INCOME TAXES - Valuation Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 30, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||||
Valuation allowance | $ (1,200) | $ (1,200) | ||
Increase (decrease) in valuation allowance | $ 0 | $ 0 |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jul. 01, 2022 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | ||
Liability for uncertain tax positions | $ 0 | $ 0 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
INCOME TAXES | ||||
Income tax expense (benefit) | $ 243 | $ (1,673) | $ 999 | $ (4,062) |
EARNINGS PER SHARE (EPS) - Comp
EARNINGS PER SHARE (EPS) - Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Net income (loss) | ||||||
Net Income (Loss) | $ 397 | $ 932 | $ (4,326) | $ (3,773) | $ 1,329 | $ (8,099) |
Net income (loss) - basic | 397 | (4,326) | 1,329 | (8,099) | ||
Net income (loss) - diluted | $ 397 | $ (4,326) | $ 1,329 | $ (8,099) | ||
Weighted-average shares outstanding: | ||||||
Weighted-average common shares outstanding (in shares) | 13,344 | 13,016 | 13,305 | 12,901 | ||
Effect of dilutive stock options and restricted stock awards (in shares) | 143 | 176 | ||||
Weighted-average common shares outstanding-diluted (in shares) | 13,487 | 13,016 | 13,481 | 12,901 | ||
Earnings (Loss) per share: | ||||||
Basic (in dollars per share) | $ 0.03 | $ (0.33) | $ 0.10 | $ (0.63) | ||
Diluted (in dollars per share) | $ 0.03 | $ (0.33) | $ 0.10 | $ (0.63) |
EARNINGS PER SHARE (EPS) - Anti
EARNINGS PER SHARE (EPS) - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Share-Based Payment Arrangement | ||
Antidilutive securities | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 451 | 433 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ 397 | $ 932 | $ (4,326) | $ (3,773) | $ 1,329 | $ (8,099) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |