Company Performance - Willdan Group (WLDN) reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, but down from $0.80 per share a year ago, representing an earnings surprise of 31.58% [1] - The company posted revenues of $144.06 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 5.16%, and down from $155.68 million year-over-year [2] - Over the last four quarters, Willdan has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Market Outlook - Willdan shares have declined approximately 18.3% since the beginning of the year, contrasting with the S&P 500's decline of -0.7% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at $0.44 on revenues of $131.05 million, and $2.35 on revenues of $597.3 million for the current fiscal year [7] Industry Context - The Business - Services industry, to which Willdan belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Willdan's stock performance [5]

WILLDAN GROUP, INC. Q4 FY24 Earnings Call NASDAQ: WLDN March 6, 2025 Mike Bieber, President & CEO Kim Early, Executive Vice President & CFO Saf e Harbor Stateme nt – Sta tement s in t hi s pre sentat ion that are not purel y hi storic al, are forwa rd -looking sta tement s that invol ve risks a nd unc erta inti es wit hin the mea ni ng of t he P ri va te Se curiti es L it igat ion Re form Ac t of 1 995 . Will da n' s ac tual re sul ts coul d di ffer mate ri all y from those i n any s uc h forward -lookin g ...

Contract Revenue and Recognition - Contract revenue is recognized based on the percentage of completion method, primarily for fixed price contracts, which involves a high degree of subcontracted fixed price effort[279]. - The Company recognizes revenue primarily over time, with fixed price contracts using the percentage-of-completion method based on direct costs incurred to date[383]. - Approximately 2.0% to 3.0% of the Company's consolidated contract revenue may come from segmented contracts with multiple performance obligations[386]. - The company evaluates whether contracts should be combined or segmented, which can affect revenue and profit recognition[295]. - The company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method[303]. - Adjustments in estimated profit on contracts are recognized under the cumulative catch-up method, impacting profit in the period identified[394]. Financial Performance - Contract revenue for fiscal year 2024 increased to $565,798, up 10.9% from $510,095 in 2023[354]. - Gross profit rose to $202,782 in 2024, representing a 12.8% increase from $179,767 in 2023[354]. - Net income for 2024 was $22,570, a significant increase compared to $10,926 in 2023, marking a 106.5% growth[354]. - Earnings per share (EPS) for 2024 was $1.63, up from $0.82 in 2023, reflecting a 98.8% increase[354]. - The company reported a comprehensive income of $22,920 for 2024, compared to $10,262 in 2023, representing a 123.5% increase[354]. - Cash flows from operating activities for 2024 were $72,073, compared to $39,214 in 2023, indicating an increase of 83.8%[357]. Assets and Liabilities - As of December 27, 2024, total assets increased to $464.86 million from $415.59 million as of December 29, 2023, representing a growth of approximately 11.5%[352]. - Cash and cash equivalents rose significantly to $74.16 million, up from $23.40 million, indicating a substantial increase of approximately 216.5%[352]. - Accounts receivable decreased to $65.56 million from $69.68 million, reflecting a decline of about 5.4%[352]. - Total current liabilities increased to $137.68 million from $114.68 million, marking an increase of approximately 20.0%[352]. - Stockholders' equity grew to $234.34 million from $199.85 million, an increase of approximately 17.3%[352]. - The allowance for doubtful accounts increased from $866,000 to $1.31 million, reflecting a rise of approximately 51.0%[352]. Debt and Interest Rate Management - The company has $90.0 million outstanding under its Term Loan, with no borrowed amounts under its Revolving Credit Facility as of December 27, 2024[331]. - A one percentage point increase in the effective interest rate would change the company's annual interest expense by approximately $0.4 million in fiscal year 2024[332]. - The company is subject to interest rate risk due to its Term Loan and borrowings under its Revolving Credit Facility, which bear interest at variable rates[331]. - The company entered into an interest rate swap agreement for a notional amount of $50.0 million, fixing the variable interest rate at 4.77% until September 29, 2026[334]. - The Company’s composite annual interest rate, excluding upfront fees and issuance cost amortization, was 6.4% as of December 27, 2024[461]. Acquisitions and Goodwill - During fiscal year 2024, the company acquired substantially all of the assets of Enica, with fair value estimates to be finalized within twelve months[319]. - Goodwill increased to $140.99 million from $131.14 million, representing a growth of approximately 7.4%[352]. - Goodwill is tested for impairment annually, with losses recognized if the carrying amount exceeds fair value[411]. - The Company measures goodwill as the excess of consideration transferred over the net identifiable assets acquired and liabilities assumed at the acquisition date[418]. Operational Challenges - The company has experienced higher costs of materials and delays in the supply chain, although historically operations have not been materially impacted by inflation[276]. - Significant price increases in equipment and supply chain disruptions could materially impact results of operations and financial condition[277]. - Contracts may be subject to renegotiation upon renewal, which could impact profitability, particularly with major clients[283]. General and Administrative Expenses - General and administrative expenses include costs related to marketing, management, and administrative personnel, as well as facility costs and professional services[287]. - Total general and administrative expenses increased to $171,429 in 2024, up 8.7% from $157,693 in 2023[354]. - Stock-based compensation expense for 2024 was $7,388, up from $5,323 in 2023, reflecting an increase of 38.8%[354]. Compliance and Reporting - The Company has a structured approach to revenue recognition, ensuring compliance with ASC 606 and accurately reflecting performance obligations[380]. - The Company adopted ASU 2023-07 for segment reporting effective for its fiscal year 2024, enhancing disclosures related to significant segment expenses[434]. - The Company performs ongoing assessments to determine the primary beneficiary of variable interest entities, ensuring compliance with ASC 810[372].

Financial Performance - Contract revenue for fiscal year 2024 was $565.8 million, an increase of 10.9% compared to the previous year[4] - Net revenue for fiscal year 2024 reached $296.3 million, up 9.9% year-over-year[4] - Net income for fiscal year 2024 was $22.6 million, significantly up from $10.9 million in the previous year[4] - Adjusted EBITDA for fiscal year 2024 was $56.8 million, reflecting a 24.2% increase[4] - GAAP diluted EPS for fiscal year 2024 was $1.58, a remarkable increase of 97.5%[4] - Cash flow from operations for fiscal year 2024 was $72.1 million, up 83.8% compared to the previous year[4] - For fiscal year 2025, the company targets net revenue between $320 million and $330 million[5] - The adjusted EBITDA target for fiscal year 2025 is set between $63 million and $67 million[5] Quarterly Performance - Contract revenue for the three months ended December 27, 2024, was $144,061 thousand, a decrease of 7.3% compared to $155,677 thousand for the same period in 2023[20] - For the three months ended December 27, 2024, Willdan Group reported a net income of $7.688 million, compared to $8.031 million for the same period in 2023, reflecting a decrease of approximately 4.3%[26] - The diluted earnings per share (EPS) for the three months ended December 27, 2024, was $0.53, down from $0.58 in the same period of 2023, a decrease of approximately 8.6%[26] Year-End Results - Gross profit for the year ended December 27, 2024, increased to $202,782 thousand, up 12.7% from $179,767 thousand in 2023[20] - Net income for the year ended December 27, 2024, was $22,570 thousand, significantly higher than $10,926 thousand in 2023, representing a year-over-year increase of 106.5%[21] - Adjusted EBITDA for the year ended December 27, 2024, reached $56,751 thousand, compared to $45,695 thousand in 2023, reflecting a growth of 24.2%[24] - Cash flows from operating activities for the year ended December 27, 2024, were $72,073 thousand, an increase from $39,214 thousand in 2023[21] - The company reported a net cash increase of $50,761 thousand for the year ended December 27, 2024, compared to a decrease of $3,912 thousand in 2023[21] Segment Performance - The Energy segment's net revenue for the year ended December 27, 2024, was $207,217 thousand, up from $190,373 thousand in 2023, marking an increase of 8.8%[23] - The Engineering and Consulting segment's net revenue for the year ended December 27, 2024, was $89,108 thousand, compared to $79,309 thousand in 2023, representing a growth of 12.3%[23] Expenses and Adjustments - Total general and administrative expenses for the year ended December 27, 2024, were $171,429 thousand, an increase from $157,693 thousand in 2023, reflecting a rise of 8.7%[20] - The company reported a basic earnings per share of $1.63 for the year ended December 27, 2024, compared to $0.82 in 2023, indicating a significant increase of 98.8%[20] - Adjusted net income for the year ended December 27, 2024, was $34.671 million, up from $23.830 million in 2023, representing an increase of about 45.5%[26] - Adjusted diluted EPS for the year ended December 27, 2024, was $2.43, compared to $1.75 in 2023, indicating an increase of around 39.1%[26] - Stock-based compensation adjustments contributed $2.033 million for the three months ended December 27, 2024, compared to $1.259 million in the same period of 2023, an increase of approximately 61.3%[26] - The tax effect of stock-based compensation for the year ended December 27, 2024, was a reduction of $1.322 million, compared to $1.003 million in 2023, reflecting an increase of about 31.9%[26] - Intangible amortization adjustments for the three months ended December 27, 2024, were $1.783 million, down from $2.199 million in the same period of 2023, a decrease of approximately 18.9%[26] - The impact of refinancing costs was recorded as $467 thousand for the year ended December 27, 2024, compared to a tax effect of $88 thousand in 2023[26] - Interest accretion adjustments contributed $153 thousand for the year ended December 27, 2024, with no corresponding amount in the previous year[26] Strategic Activities - The company has resumed strategic acquisitions, including the recent acquisition of Alternative Power Generation, Inc.[2] Shareholder Information - The diluted weighted-average shares outstanding increased to 14,509 thousand for the three months ended December 27, 2024, from 13,731 thousand in the same period of 2023, an increase of about 5.6%[26]

Group 1: Acquisition and Expansion - Willdan Group, Inc. has completed the acquisition of Alpha Inspections Inc. to enhance its capabilities and grow its presence in key regions, particularly Florida [1] - The acquisition of Enica Engineering on Oct. 25, 2024, aligns with Willdan's strategy to strengthen its market position and expand service offerings [2][3] - Enica is expected to contribute to higher margins, earnings, and earnings per share (EPS) by 2025, providing potential synergies within Willdan's Energy segment [3] Group 2: Financial Performance - Willdan's stock has gained 79.3% over the past year, significantly outperforming the Zacks Business-Services industry's growth of 9.1% [4] - The company has secured consistent contract wins, including an $11 million energy and infrastructure modernization project with the City of South Lake Tahoe, CA, aimed at reducing carbon emissions [6] Group 3: Market Position and Rankings - Willdan currently holds a Zacks Rank of 3 (Hold), indicating a stable market position [7] - Comparatively, other stocks in the Business Services sector, such as Sezzle, Inc. and SPS Commerce, Inc., have higher Zacks Ranks, indicating stronger buy signals [8][9]

Group 1 - Robert F. Abbott has been managing family investments since 1995 and incorporated options trading in 2010, focusing on covered calls and collars with long stocks [1] - Abbott is a freelance writer with a project aimed at providing information for new and intermediate-level mutual fund investors [1] - He holds a Bachelor of Arts and a Master of Business Administration (MBA) degree [1]

Core Insights - Willdan Group, Inc. has secured an $11 million energy and infrastructure modernization project from the City of South Lake Tahoe, CA, aimed at reducing carbon emissions and enhancing long-term infrastructure [1][2] - The project includes the installation of a cogeneration microturbine, photovoltaic solar panels producing 415 kWdc, advanced building automation systems, energy-efficient power transformers, and a new CO2 ice plant [3] - Willdan has experienced consistent contract wins, with a total of 14 reported projects in 2024, indicating strong growth prospects [5][6][7] Company Performance - Willdan's stock declined by 2.8% during trading hours on a recent Tuesday [4] - Over the past six months, Willdan's shares have gained 23.9%, significantly outperforming the Zacks Business - Services industry's growth of 0.5% [9] - The ongoing contract wins are expected to drive the company's performance, particularly due to increased electricity demand from data centers influenced by artificial intelligence trends [9]

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, which can lead to solid returns, but identifying such stocks is challenging due to inherent risks and volatility [1] Group 1: Company Overview - Willdan Group (WLDN) is currently highlighted as a recommended growth stock due to its favorable Growth Score and top Zacks Rank [2] - The company operates in the energy efficiency and sustainability consulting sector, which is positioned for growth [3] Group 2: Earnings Growth - Willdan has a historical EPS growth rate of 32.6%, with projected EPS growth of 28.6% for the current year, significantly outperforming the industry average of 5.6% [4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Willdan is 44.2%, far exceeding the industry average of 1.7%, indicating strong operational efficiency [5] - Over the past 3-5 years, Willdan's annualized cash flow growth rate has been 12.7%, compared to the industry average of 10.8% [6] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Willdan, with the current-year earnings estimates increasing by 5.8% over the past month, suggesting strong future performance [7] Group 5: Investment Positioning - Willdan's combination of a Growth Score of A and a Zacks Rank of 2 positions it well for potential outperformance, making it an attractive option for growth investors [9][11]

Group 1 - Willdan Group's stock has increased by 15.4% over the past 74 days, outperforming the S&P 500, which rose by 7.2% during the same period [1] - The analysis emphasizes a focus on fundamental financial ratios and metrics for clearer insights into stock performance [1] Group 2 - The article is written by an analyst with a strong background in finance and economics, specializing in individual stock analysis [1]

Core Insights - Willdan Group, Inc. has secured a three-year contract worth $4.5 million with the City of Bellflower, CA, enhancing its presence in Los Angeles County and showcasing its capability in delivering essential municipal services [1][2]. Company Developments - CEO Mike Bieber expressed gratitude for the contract, highlighting its role in expanding Willdan's operations in Los Angeles County and the company's commitment to meeting the city's current and future needs [2]. - The City of Bellflower, with a population of nearly 80,000 and 4,000 businesses, prioritizes high-quality governance and services, which aligns with Willdan's expertise and collaborative approach [2]. Strategic Focus - The Bellflower contract aligns with Willdan's strategic focus on expanding recurring revenue through long-term municipal partnerships, aiming to deepen its regional presence while leveraging its reputation for efficient municipal services [3]. - Willdan reported double-digit organic growth in municipal projects, indicating a robust outlook across state and local government clients [3]. Financial Performance - In the third quarter of 2024, Willdan experienced a 38% increase in adjusted EBITDA to $39.1 million, driven by growth in municipal engineering, project management, and utility program management revenues [4]. - Adjusted earnings per share (EPS) grew by 79% to $1.70, supported by reduced net interest expenses and a lower effective tax rate [4]. Stock Performance - Willdan's shares have increased by 107.3% over the past year, significantly outperforming the industry average of 0.9% [5]. - The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year growth of 28.6%, with recent estimates rising from $2.1 to $2.25, reflecting analysts' optimism [5].