Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 financials show strong growth in contract revenue and net income, with total assets increasing due to acquisitions [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Q1 2025 contract revenue grew 24.4% to $152.4 million and net income rose 59.3%, with assets increasing due to acquisitions Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Q1 2025 (ended Apr 4) | Q1 2024 (ended Mar 29) | Change (%) | | :--- | :--- | :--- | :--- | | **Contract Revenue** | $152,386 | $122,489 | 24.4% | | **Gross Profit** | $57,661 | $47,418 | 21.6% | | **Income from Operations** | $7,036 | $5,361 | 31.2% | | **Net Income** | $4,687 | $2,942 | 59.3% | | **Diluted EPS** | $0.32 | $0.21 | 52.4% | Condensed Consolidated Balance Sheets Highlights (in thousands) | Metric | 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 | - Net cash used in investing activities was **$34.8 million**, primarily for acquisitions, a significant increase from **$2.0 million** in the prior-year period Net cash used in financing activities was **$4.3 million**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, recent acquisitions (APG, Alpha, Enica) contributing to revenue, and a significant debt refinancing - The company operates in two segments: Energy and Engineering & Consulting The Energy segment is the larger of the two, generating **$126.2 million** in revenue in Q1 2025[24](index=24&type=chunk)[84](index=84&type=chunk) - Acquired Alternative Power Generation, Inc (APG) on March 3, 2025, for up to **$43.5 million**, including **$19.5 million** in cash, **$6.0 million** in stock, and up to **$18.0 million** in earnouts APG contributed **$2.5 million** in revenue in Q1 2025[103](index=103&type=chunk)[105](index=105&type=chunk)[116](index=116&type=chunk) - Acquired Alpha Inspections, Inc on January 31, 2025, for **$12.0 million** in cash Alpha contributed **$0.6 million** in revenue in Q1 2025[117](index=117&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk) - The top 10 customers accounted for **53.8%** of consolidated contract revenue for the three months ended April 4, 2025, up from **49.2%** in the prior year period Two customers, Clark County School District and Southern California Edison, represented **24.1%** of total revenue[90](index=90&type=chunk)[91](index=91&type=chunk) - On May 5, 2025, the company entered into an Amended and Restated Credit Agreement, which increased the revolving credit facility to **$100.0 million**, reduced the Term Loan A to **$50.0 million**, provided a new **$50.0 million** Delayed Draw Term Loan, and extended the maturity date to May 5, 2030[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 24.4% revenue growth to segment demand and acquisitions, with operating income up 31.2% and liquidity enhanced by credit facility Q1 2025 vs Q1 2024 Performance | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Contract Revenue | $152.4M | $122.5M | +24.4% | | Gross Profit | $57.7M | $47.4M | +21.6% | | Gross Margin | 37.8% | 38.7% | -0.9 p.p. | | Operating Income | $7.0M | $5.4M | +31.2% | - Energy segment revenue increased by **$25.5 million (25.3%)** due to higher demand for energy efficiency, electrification services, and contributions from the Enica and APG acquisitions[164](index=164&type=chunk) - Engineering and Consulting segment revenue increased by **$4.4 million (20.2%)** due to increased client demand and the acquisition of Alpha[165](index=165&type=chunk) - Cash from operating activities was **$3.3 million**, a decrease from **$26.9 million** in the prior year, which had benefited from lower working capital requirements[180](index=180&type=chunk)[181](index=181&type=chunk) - Cash used in investing activities was **$34.8 million**, primarily for acquisitions of APG and Alpha[183](index=183&type=chunk) - As of April 4, 2025, the company had contractual obligations totaling **$111.7 million**, primarily consisting of debt and operating leases[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on variable-rate debt, partially mitigated by a $50.0 million interest rate swap - The company is subject to interest rate risk from its variable-rate Term Loan and Revolving Credit Facility[213](index=213&type=chunk) - An interest rate swap agreement for a **$50.0 million** notional amount is in place to fix the variable interest rate at **4.77%** on a portion of the Term Loan, expiring in September 2026[217](index=217&type=chunk)[218](index=218&type=chunk) - Based on the outstanding debt as of May 5, 2025, a one percentage point increase in the effective interest rate would increase annual interest expense by approximately **$0.9 million**[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of April 4, 2025, with ongoing integration into recently acquired entities - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of April 4, 2025[222](index=222&type=chunk) - The company is continuing to incorporate its controls and procedures into the recently acquired Enica, Alpha, and APG entities[223](index=223&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal claims, with management not expecting a material adverse effect on financial statements - The company is subject to claims and lawsuits typical for the engineering and consulting industry, which arise in the ordinary course of business[227](index=227&type=chunk) - Management believes that the ultimate liability from current legal proceedings is not expected to have a material adverse effect on the company's financial statements[229](index=229&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 27, 2024 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 27, 2024[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased 69,033 common shares at $41.78 per share to satisfy tax withholding obligations Common Stock Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 1, 2025 – April 4, 2025 | 69,033 | $41.78 | | **Total** | **69,033** | **$41.78** | [Item 3. Defaults upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[232](index=232&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[233](index=233&type=chunk) [Item 5. Other Information](index=69&type=section&id=Item%205.%20Other%20Information) This section discloses the Amended and Restated Credit Agreement on May 5, 2025, enhancing financial flexibility and liquidity - On May 5, 2025, the company entered into an Amended and Restated Credit Agreement[235](index=235&type=chunk) - The new agreement increased the Revolving Credit Facility to **$100.0 million**, reduced the Term Loan A to **$50.0 million**, and added a new **$50.0 million** Delayed Draw Term Loan[235](index=235&type=chunk) - The maturity date for the credit facilities was extended to May 5, 2030[235](index=235&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the APG Stock Purchase Agreement, Amended Credit Agreement, and CEO/CFO certifications

Financial Data and Key Metrics Changes - The company reported record first-quarter results for revenue, adjusted EBITDA, and EPS, with contract and net revenue each growing by 24% year over year [5][20] - Adjusted EBITDA rose by 31%, while GAAP diluted EPS increased by 52% and adjusted diluted EPS was up 58% [5][23] - Contract revenue increased to $152 million, and net revenue grew to $85 million, with organic growth rate for net revenue at 12% [20][21] Business Line Data and Key Metrics Changes - Revenue in the Energy segment rose by 25%, driven by strong program and construction management activity [21] - Engineering and Consulting segment revenues increased by 20%, reflecting strong client demand and geographic expansion [21] - The company completed two acquisitions that contributed $6 million to contract revenue in the quarter [20] Market Data and Key Metrics Changes - Commercial customers are forecasted to comprise 15% of revenue, state and local government customers at 44%, and utilities at around 41% [7] - Demand remains healthy across all customer groups, particularly in electricity usage at data centers driven by AI [7][8] - The company has minimal exposure to federal contracts, insulating it from recent federal spending cuts [9] Company Strategy and Development Direction - The company aims to pursue acquisitions that expand capabilities and relationships with commercial customers [8] - A focus on energy efficiency and infrastructure solutions positions the company well for long-term growth [6] - The company is enhancing financial flexibility through expanded credit facilities to support growth and acquisitions [24][25] Management's Comments on Operating Environment and Future Outlook - Management noted a structural shift in the energy landscape, with significant new opportunities arising from electrification and increased electricity demand [15] - The company is preparing for potential tariff impacts by seeking alternative equipment sources and inserting flexible contract terms [17][30] - Management raised 2025 financial targets based on strong Q1 performance, expecting net revenue between $325 million to $335 million [26] 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 [24] - The effective income tax rate was favorable at 9.75%, contributing to a net income of $4.7 million, up 59% from the previous year [22] Q&A Session Summary Question: Impact of tariffs on the company - Management acknowledged potential risks related to equipment costs due to tariffs but noted no immediate impact and ongoing efforts to find alternative suppliers [28][30] Question: Conversations with customers regarding load growth - Management indicated that discussions with utilities and government customers are focused on updating forecasts and CapEx spending due to changing market conditions [32][35] Question: Confidence in raising guidance - The company raised guidance based on strong Q1 performance and customer interest in expanding contracts [36][38] Question: Any signs of slowdown in demand - Management reported no significant headwinds in operations, with strong demand across the board [41][42] Question: Equipment costs in large contracts - Equipment costs are estimated to be 25% to 30% of overall contract value, indicating some exposure to tariff impacts [44][45] Question: Integration of recent acquisitions - The company is facilitating cross-selling between teams from recent acquisitions without merging them physically [51][53]

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]

[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]