[Financial Highlights and Outlook](index=1&type=section&id=Financial%20Highlights%20and%20Outlook) Willdan Group reported strong Q1 2025 results with double-digit growth, driven by new contracts and acquisitions, leading to raised FY2025 financial targets First Quarter 2025 Financial Highlights (vs. Q1 2024) | Metric | Q1 2025 | % Change YoY | | :--- | :--- | :--- | | Contract Revenue | $152.4 million | +24.4% | | Net Revenue (Non-GAAP) | $85.3 million | +23.8% | | Net Income | $4.7 million | +59.3% | | Adjusted EBITDA (Non-GAAP) | $14.4 million | +30.9% | | GAAP Diluted EPS | $0.32 | +52.4% | | Adjusted Diluted EPS (Non-GAAP) | $0.63 | +57.5% | - Management attributes growth to new wins, program funding, and acquisitions, with **12% organic revenue growth** normalized for an extra week, driven by increasing electricity demand from data centers and electrification[3](index=3&type=chunk) Raised Fiscal Year 2025 Financial Targets | Metric | Updated FY2025 Guidance | | :--- | :--- | | Net Revenue (Non-GAAP) | $325 million - $335 million | | Adjusted EBITDA (Non-GAAP) | $65 million - $68 million | | Adjusted Diluted EPS (Non-GAAP) | $2.75 - $2.90 per share | [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents Willdan Group's unaudited condensed consolidated financial statements for Q1 2025, detailing financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of April 4, 2025, Willdan's total assets increased to **$471.2 million**, driven by acquisitions, while total liabilities slightly decreased Key Balance Sheet Items (in thousands) | Account | April 4, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $38,364 | $74,158 | | Goodwill | $173,922 | $140,991 | | Total assets | $471,158 | $464,863 | | Total liabilities | $225,642 | $230,520 | | Total stockholders' equity | $245,516 | $234,343 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) In Q1 2025, contract revenue increased **24.4%** to **$152.4 million**, with net income significantly rising **59.3%** to **$4.7 million** Q1 Income Statement Comparison (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Contract Revenue | $152,386 | $122,489 | | Gross Profit | $57,661 | $47,418 | | Income from Operations | $7,036 | $5,361 | | Net Income | $4,687 | $2,942 | | Diluted EPS | $0.32 | $0.21 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash from operating activities sharply decreased to **$3.3 million**, while investing activities used **$34.8 million** for acquisitions, resulting in a **$35.8 million** net cash decrease Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $3,311 | $26,949 | | Net cash from investing activities | ($34,764) | ($1,952) | | Net cash from financing activities | ($4,341) | ($1,469) | | Net (decrease) increase in cash | ($35,794) | $23,528 | - The primary use of cash in investing activities was **$32.5 million** for acquisitions, net of cash acquired[21](index=21&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section details Willdan's non-GAAP financial measures, including Net Revenue, Adjusted EBITDA, and Adjusted EPS, with reconciliations to GAAP - Net Revenue is defined as contract revenue minus subcontractor services and other direct costs, which management believes better measures the work performed by Willdan's employees[10](index=10&type=chunk) - Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are used by management to evaluate operating performance without regard to financing methods, capital structure, and certain non-operating expenses[11](index=11&type=chunk)[14](index=14&type=chunk) [Reconciliation of GAAP Revenue to Net Revenue](index=7&type=section&id=Reconciliation%20of%20GAAP%20Revenue%20to%20Net%20Revenue) In Q1 2025, consolidated Net Revenue increased **23.8%** to **$85.3 million**, derived by subtracting subcontractor costs from GAAP contract revenue Net Revenue Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Contract revenue | $152,386 | $122,489 | | Less: Subcontractor services and other direct costs | (67,048) | (53,559) | | **Net Revenue** | **$85,338** | **$68,930** | [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q1 2025 increased **30.9%** to **$14.4 million**, reconciled from Net Income by adding back various non-operating expenses Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $4,687 | $2,942 | | Adjustments (Interest, Taxes, D&A, etc.) | $9,755 | $8,092 | | **Adjusted EBITDA** | **$14,442** | **$11,034** | [Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS](index=9&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20Diluted%20EPS) For Q1 2025, Adjusted Net Income reached **$9.3 million**, resulting in an Adjusted Diluted EPS of **$0.63**, a **57.5%** increase, after adjustments Adjusted Net Income and Adjusted Diluted EPS Reconciliation | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (in thousands) | $4,687 | $2,942 | | **Adjusted Net Income (in thousands)** | **$9,288** | **$5,551** | | Diluted EPS | $0.32 | $0.21 | | **Adjusted Diluted EPS** | **$0.63** | **$0.40** | [Other Information](index=2&type=section&id=Other%20Information) This section provides investor conference call details, a corporate overview of Willdan's services, and cautionary language on forward-looking statements - Willdan will host a conference call to discuss its Q1 results at **5:30 p.m. Eastern / 2:30 p.m. Pacific on May 8, 2025**[8](index=8&type=chunk) - The company's service offerings include electric grid solutions, energy efficiency and sustainability, engineering and planning, and municipal financial consulting[9](index=9&type=chunk) - The report includes a forward-looking statements disclaimer, highlighting risks such as competition, reliance on top clients, and the ability to integrate acquisitions, which could cause actual results to differ from expectations[17](index=17&type=chunk)

Core Insights - Willdan Group, Inc. has a long-standing relationship with the City of Fairfield, providing various services including engineering and financial services [1] - The company has announced a new $30 million energy savings performance contract with the City of Fairfield, aimed at modernizing critical facilities [2] - The project will enhance efficiency and sustainability through upgrades such as solar energy generation and electric vehicle charging infrastructure [3] Contract Wins and Growth - Willdan has experienced significant growth due to consistent contract wins, with an 11% year-over-year increase in contract revenues projected for 2024 [4] - Key contract wins include a $330 million five-year contract from the Los Angeles Department of Water and Power, a $15 million commercial energy program, and a $6 million energy efficiency program [5] - The company's shares have increased by 6% year-to-date, outperforming the industry average growth of 4.2% [6] Market Position and Future Outlook - Willdan is well-positioned for top-line growth and margin expansion in 2025, supported by its project win trends and current pipeline [6] - The company currently holds a Zacks Rank of 1 (Strong Buy), indicating strong market confidence [7]

Core Viewpoint - Willdan Group, Inc. is experiencing a positive trend in contract wins, which is expected to enhance its growth prospects and financial performance [1][4]. Contract Wins and Financial Impact - The company secured a $17.7 million contract to provide engineering and construction supervision services for the Paramount Unified School District, overseeing 2.2 megawatts of solar arrays and 44 electric vehicle charging stations across 11 sites [2][3]. - Willdan's contract revenues are projected to grow by 11% year-over-year in 2024, reflecting the benefits of consistent contract wins [4]. - Key contract wins include a $330 million five-year contract from the Los Angeles Department of Water and Power, a $15 million commercial energy program from the Los Angeles County Regional Energy Network, and a $6 million program for energy efficiency from the Central California Rural Regional Energy Network [5]. Market Performance - Willdan's shares have increased by 10.9% year-to-date, significantly outperforming the Zacks Business - Services industry's growth of 0.6% [7]. - The company is well-positioned for top-line growth and margin expansion in 2025 due to its project win trends and current pipeline [7].

Group 1 - Willdan Group (WLDN) has outperformed the Business Services sector with a year-to-date return of approximately 4.9%, while the sector has returned an average of -1.6% [4] - The Zacks Rank for Willdan Group is currently 1 (Strong Buy), indicating strong analyst sentiment and a positive earnings outlook, with a consensus estimate for full-year earnings increasing by 20.1% over the past quarter [3] - Willdan Group belongs to the Business - Services industry, which includes 25 stocks and is currently ranked 145 in the Zacks Industry Rank, with the industry gaining about 2.8% year-to-date, further highlighting WLDN's strong performance [5] Group 2 - Another stock in the Business Services sector, Wartsila (WRTBY), has also outperformed the sector with a year-to-date return of 11.1% and has a Zacks Rank of 2 (Buy) [4][5] - The Business Services sector consists of 290 individual stocks and holds a Zacks Sector Rank of 8, indicating its relative performance compared to other sectors [2] - Investors should continue to monitor both Willdan Group and Wartsila for potential sustained strong performance in the Business Services sector [6]

Core Insights - Willdan Group, Inc. reported mixed results for Q4 fiscal 2024, with adjusted earnings exceeding estimates while contract revenues fell short [1][4] - Year-over-year comparisons showed declines in both top and bottom lines, primarily due to weak performance in the Energy segment [2][4] Financial Performance - Adjusted EPS for the quarter was 75 cents, surpassing the Zacks Consensus Estimate of 57 cents by 31.6%, but down from 80 cents in the same quarter last year [4] - Contract revenues totaled $144.1 million, missing the consensus mark of $152 million by 5.2% and declining 7.5% year over year [4] - Gross profit slightly increased to $55 million from $54.4 million, while adjusted EBITDA rose 1.4% to $17.7 million [5] Segment Analysis - Energy Segment: Contract revenues decreased to $120.7 million from $134.6 million year over year, with net revenues down 6.6% to $56.6 million [6] - Engineering and Consulting Segment: This segment saw an increase in contract revenues to $23.4 million from $21 million year over year [6] Fiscal Year Highlights - For fiscal 2024, total contract revenues were $565.8 million, up 0.9% from fiscal 2023, with annual gross profit rising to $202.8 million from $179.8 million [8] - Adjusted EBITDA for the year was $56.8 million, reflecting a 24.2% increase, and adjusted EPS grew 38.9% to $2.43 from $1.75 [8] Cash Position and Outlook - As of December 27, 2024, cash and cash equivalents stood at $74.2 million, significantly up from $23.4 million at the end of fiscal 2023 [10] - For fiscal 2025, the company expects net revenues between $320 million and $330 million, with adjusted EBITDA anticipated between $63 million and $67 million, and adjusted EPS projected in the range of $2.70 to $2.85 [11]

Financial Data and Key Metrics Changes - For 2024, contract revenue increased by 11% year-over-year, adjusted EBITDA rose by 24%, and GAAP EPS nearly doubled year-over-year [6][31] - Adjusted EPS was up 39%, reflecting strong execution across all business lines and a record level of free cash flow of $4.49 per share [6][35] - Net revenue for 2024 reached $296 million, a 10% increase from 2023, with gross profit increasing by 13% to $203 million [31][34] Business Line Data and Key Metrics Changes - Building solutions, utility programs, and municipal civil engineering services saw double-digit percentage increases, contributing to higher revenues [31] - The commercial customer segment now comprises 15% of total revenue, doubling from the previous year, while state and local government customers account for 44% and utilities for 41% [10][12] Market Data and Key Metrics Changes - Demand for services from commercial customers, particularly related to electricity usage at data centers, is strong, driven by AI-driven load growth [11][19] - Organic growth for state and local government work is at a high single-digit pace, with minimal impact from federal spending cuts [12][56] Company Strategy and Development Direction - The company aims to expand its commercial services and electrical engineering capabilities through acquisitions, with a focus on the commercial technology sector [9][25] - The recent acquisition of Alternative Power Generation (APG) enhances the company's expertise in utility-scale electrical engineering, aligning with its strategy to serve commercial data center owners [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and positive outlook despite economic uncertainties and delays in new contracts [36][38] - The company anticipates net revenue for 2025 to be between $320 million and $330 million, with adjusted EBITDA ranging from $63 million to $67 million, exceeding current consensus estimates [38] Other Important Information - The company generated $72 million in cash flow from operations and added $50 million to its cash balance, resulting in total liquidity of $124 million at year-end [36] - The company is focused on the U.S. market for the foreseeable future, with no immediate plans for international expansion [76] Q&A Session Summary Question: Comments on the LADWP contract renewal and expansion - Management noted that there are no significant startup concerns as the contract is a recompete, and they expect to ramp up activity in the first half of the year [45][46] Question: Funding and accountability for RENs - Funding for RENs comes from surcharges on electricity bills, overseen by the PUC, allowing for simpler contracts compared to IOUs [49][50] Question: Impact of presidential transition on business activity - Management indicated that the change in administration has had minimal impact on business activity, with state and local government work remaining the primary driver [54][56] Question: Trends in government programs - Increased demand for California programs and similar trends in New York were highlighted, along with a rise in upfront study work related to data centers [62][64] Question: Update on software cross-selling and AI integration - The company plans to introduce its software to APG, which currently lacks embedded software, and is working on integrating AI into its LoadSeer software [66][73]

Financial Data and Key Metrics Changes - For 2024, contract revenue increased by 11% year-over-year, adjusted EBITDA rose by 24%, and GAAP EPS nearly doubled year-over-year [6][31] - Adjusted EPS was up 39% compared to the previous year [6][35] - Free cash flow reached $4.49 per share, marking a record level for the company [6] Business Line Data and Key Metrics Changes - Building solutions, utility programs, and municipal civil engineering services saw double-digit percentage increases, contributing to overall revenue growth [31] - Commercial customers now account for 15% of revenue, doubling from the previous year, while state and local government customers represent 44% and utilities 41% of revenue [10][12] Market Data and Key Metrics Changes - Demand for services from commercial customers, particularly related to electricity usage at data centers, is strong due to AI-driven load growth [11] - Organic growth for state and local government clients is at a high single-digit pace, with minimal impact from federal spending cuts [12] Company Strategy and Development Direction - The company aims to expand its commercial services and electrical engineering capabilities through acquisitions, with a focus on the commercial technology sector [9][25] - The recent acquisition of APG enhances the company's expertise in utility-scale electrical engineering, aligning with its strategy to serve commercial data center owners [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a positive long-term outlook, driven by electric load growth and the company's strong execution [7][19] - The company anticipates net revenue for 2025 to be between $320 million and $330 million, with adjusted EBITDA ranging from $63 million to $67 million, exceeding current consensus estimates [38] Other Important Information - The company generated $72 million in cash flow from operations and added $50 million to its cash balance, resulting in total liquidity of $124 million at year-end [36] - The company is focused on the U.S. market for the foreseeable future, with no immediate plans for international expansion [76] Q&A Session Summary Question: Comments on the LADWP contract and potential startup issues - Management noted that there are no significant startup concerns as the contract is a recompete, and they expect to ramp up activity in the first half of the year [45][46] Question: Funding sources for RENs and project accountability - Funding for RENs comes from surcharges on electricity bills, overseen by the PUC, allowing for simpler contracts compared to IOUs [49][50] Question: Impact of presidential transition on business activity - Management indicated that the change in administration has had minimal impact on business activity, as most work is driven by state and local governments [54][56] Question: Trends in government programs and inquiries - Increased demand for California programs and similar trends in New York were highlighted, along with a rise in upfront study work related to data centers [62][64] Question: Update on software cross-selling and APG's software - The company plans to introduce its software to APG, which currently does not have any, and has seen solid cross-selling opportunities [66][67] Question: Integration of AI into software and expansion into Europe - AI integration into LoadSeer is underway, with a new version expected in the first half of the year, while international expansion is not a current focus [73][76]

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].