Willdan(WLDN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record first quarter results for revenue, adjusted EBITDA, and EPS, surpassing both analysts' expectations and internal forecasts [4] - Contract and net revenue each grew by 24% year over year, adjusted EBITDA rose by 31%, GAAP diluted EPS increased by 52%, and adjusted diluted EPS was up by 58% [4][22] - Net income for Q1 2025 was $4.7 million, up 59% from$ 2.9 million in Q1 2024, with a favorable effective income tax rate of 9.75% [22] Business Line Data and Key Metrics Changes - The energy segment accounted for over 80% of total revenue, with revenue in this segment rising by 25% [9][20] - The engineering and consulting segment revenues increased by 20%, reflecting strong client demand and continued geographic expansion [20] - The company completed two acquisitions that contributed $6 million to contract revenue in the quarter [19] Market Data and Key Metrics Changes - Commercial customers are forecasted to comprise 15% of revenue, double the percentage from the previous year, while state and local government customers are expected to be 44% and utilities around 41% [6] - Demand remains healthy across all customer groups, particularly in electricity usage at data centers driven by AI [6][7] Company Strategy and Development Direction - The company aims to pursue acquisitions that expand capabilities and relationships with commercial customers [6] - The focus is on energy efficiency and modernization projects, with significant contracts awarded for EV charging stations and solar arrays [11][12] - The company is positioned to benefit from structural shifts in the energy landscape, including electrification and increased electricity demand from data centers [14] Management's Comments on Operating Environment and Future Outlook - Management noted that recent federal spending cuts have had little impact on the company's backlog or near-term visibility [8] - The company is monitoring tariff risks and has implemented flexible contract terms to mitigate potential impacts [16][31] - Management raised the 2025 financial targets based on strong Q1 performance, expecting net revenue between$ 325 million and $335 million [25] Other Important Information - The company ended the quarter with$ 38 million in cash and access to an undrawn $50 million line of credit, resulting in total liquidity of$ 88 million [23] - The company has minimal exposure to direct federal contracts, which has insulated it from recent federal spending cuts [8] Q&A Session Summary Question: Impact of tariffs on the company - Management acknowledged the potential for price escalation and project delays due to tariffs but noted that they have not seen short-term impacts yet [31][32] Question: Conversations with customers regarding load growth - Management indicated that conversations with utilities and government customers have shifted towards updating forecasts and CapEx spending due to changes in electricity demand dynamics [35][36] Question: Confidence in raising guidance - Management raised guidance due to strong Q1 performance across all areas and customer interest in expanding contracts [39][40] Question: Any signs of slowdown in demand - Management reported no significant headwinds in operations, with the main concern being equipment risks related to tariffs [44][45] Question: Integration of recent acquisitions - Management confirmed that cross-selling between the acquired companies has already begun, with close communication established [55]