Highlights From Willdan Group's S1 Filing

Includes: JEC, SRX, STN, URS, WLDN
by: Evelyn Rubin

Key details about the Willdan Group Nasdaq IPO filed on August 9th. Proposed ticker: (NASDAQ:WLDN). All excerpts are from the full SEC filing:

Company Description

We are a leading provider of outsourced services to small and mid-sized public agencies in California and other western states. Outsourcing enables these agencies to provide a wide range of specialized services, without having to incur and maintain the overhead necessary to develop staffing in-house. We provide a broad range of services to public agencies, including:

• civil engineering,

• building and safety services,

• geotechnical engineering,

• financial and economic consulting, and

• disaster preparedness and homeland security.

We operate our business through a network of over 20 offices located throughout California and other western states and have a staff of 654 as of June 30, 2006 that includes licensed engineers and other professionals. Our core clients are public agencies in communities with populations ranging from 10,000 to 300,000 people. We believe communities of this size are underserved by large outsourcing companies that tend to focus on securing large federal and state projects, as well as projects for the private sector. We seek to establish a close working relationship with our public agency clients and, over time, to expand the breadth and depth of the services we provide to them.

While we currently serve communities throughout the country, our business is concentrated in California and neighboring states. We provide services to approximately 60% of the 478 cities and over 60% of the 58 counties in California. We also serve special districts, school districts and other public agencies.

Key Financial Data: 2005 revenues were $67.3 million with a $646k net loss. For 2005, revenues were $458.3 million with net income of $3.8 million. Revenues grew from $16.1 million in Q1 05 to $17.8 in Q1 06, with net income growing marginally from $848k to $886k. Engineering Services is by far the largest contributor to revenue ($15.1 million in Q1 06).

Key Competitors

  1. Engineering Services: Publicly traded competitors include Stantec, Inc. (NYSE:SXC) and Jacobs Engineering Group (NYSE:JEC)
  2. Public Finance Services: NBS Government Finance Group, Ernst & Young among others.
  3. Homeland Security Services: EG&G (division of URS Corp (NYSE:URS)), SRA International (NYSE:SRX)

Notable Issues To Watch For
Public agency provider: Because the company is focused primarily on the public service sectors, it is subject to a variety of government contract risks outlined in the S1.

Sudden death of founder: The founder of the company and CEO for many of its 40 years of existence passed away suddenly three months ago; the new CEO (72 years old) has been in the company for six years, however given the history of the former CEO, and the strong personal relationships required for this type of business it clearly presents a question mark to the future of the company.

Underwriters: Wedbush Morgan

Offering Details: Looking to raise up to $28.75 million to fund $2.6 million of debt and revolving credit, as well as funding a final S Corporation distribution and general corporate purposes.