Core Viewpoint - Willdan Group (WLDN) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2]. Earnings Estimates - Analysts are optimistic about Willdan's earnings prospects, leading to higher estimates that are expected to positively impact the stock price [2]. - The consensus earnings estimate for the current quarter is $0.81 per share, reflecting a year-over-year increase of +11.0% [7]. - For the full year, the earnings estimate has risen to $3.60 per share, indicating a significant change of +48.2% from the previous year [8]. Estimate Revisions - Over the past 30 days, the Zacks Consensus Estimate for Willdan has increased by 12.98%, with no negative revisions reported [7]. - The consensus estimate for the current year has increased by 33.4%, supported by two upward revisions and no negative changes [9]. Zacks Rank - Willdan currently holds a Zacks Rank 1 (Strong Buy), which is based on favorable estimate revisions and has historically outperformed the market [10]. - Stocks with a Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [10]. Stock Performance - Willdan shares have appreciated by 29.4% over the past four weeks, indicating strong investor confidence in the company's earnings growth potential [11].

Core Insights - Willdan Group, Inc. (NASDAQ: WLDN) has experienced a significant stock price increase from $65.80 to $114.90 within a two-month period, indicating strong market performance and investor interest [1] Company Overview - Willdan Group is characterized as a unique stock with aggressive growth prospects, suggesting a focus on long-term profitability within 1-2 years [1] Investment Philosophy - The investment philosophy associated with Willdan Group emphasizes long-term discipline, consistent alpha generation, and a calculated approach to risk [1]

Core Insights - Willdan Group and Sterling Infrastructure exceeded Q2 expectations, reporting record revenue and net income driven by strong performance in high-growth infrastructure sectors [1][2] - Both companies raised their full-year guidance following strong Q2 results, indicating confidence in continued growth [3] Willdan Group Summary - Willdan raised its full-year targets for net revenue to $340-$350 million, Adjusted EPS to $3.50-$3.65, and Adjusted EBITDA to $70-$73 million [4] - The company secured significant contracts, including a $30 million deal with the City of Fairfield and a $20 million contract with National Grid [4] - Willdan's stock has increased nearly +200% year to date, with a three-year growth of over +380% [9] Sterling Infrastructure Summary - Sterling raised its full-year revenue guidance to $2.10-$2.15 billion, net income to $243-$252 million, and adjusted EPS to $9.21-$9.47 [5] - The company has a backlog exceeding $2 billion, focusing on high-margin projects in states like Utah, Colorado, and Texas [5] - Sterling's stock has risen over +70% year to date, with a three-year increase of over +260% [9] Strategic Acquisitions - Both companies are expanding into data center infrastructure, capitalizing on advancements in artificial intelligence [6] - Willdan acquired Alternative Power Generation to enhance its capabilities for AI data centers and EV charging stations [7] - Sterling plans to acquire CEC Facilities Group to expand its electrical contracting services for semiconductors and data centers [8] Valuation Analysis - Both companies forecast high-double digit EPS growth, with Sterling having a P/E valuation of 34X forward earnings compared to Willdan's 40.3X [10] - Willdan's stock is closer to an optimal sales level of less than 2X, while Sterling's is at 4.3X [11] - Despite raising guidance, Willdan's top line is expected to dip at least 38% after a record year, while Sterling is projected to maintain or reach peak annual sales [11] Conclusion - Willdan Group and Sterling Infrastructure are positioned as top engineering companies for investment, with Sterling's stronger financials offering more appeal [12] - Both companies' ventures into data center infrastructure suggest long-term viability as investments [13]

Group 1 - Willdan Group reported quarterly earnings of $1.5 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and showing a significant increase from $0.55 per share a year ago, resulting in an earnings surprise of +108.33% [1] - The company achieved revenues of $94.97 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 13.80%, although this represents a decline from year-ago revenues of $141 million [2] - Willdan has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Group 2 - The stock has appreciated approximately 131.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.9% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the outlook for earnings estimates [4][6] - Current consensus EPS estimate for the upcoming quarter is $0.77 on revenues of $84.9 million, and for the current fiscal year, it is $2.82 on revenues of $330.15 million [7] Group 3 - The Zacks Industry Rank indicates that the Business - Services sector is currently in the top 41% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this industry [8] - The trend of estimate revisions for Willdan was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 4, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-33076 WILLDAN GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 14-1951112 (IRS Employer Identifi ...

Financial Data and Key Metrics Changes - In Q2 2025, net revenue grew by 31% year over year, driven by a 23% organic growth rate and 8% from acquisitions [4][19] - Adjusted EBITDA reached $21.9 million, representing 23% of net revenue, up 71% from a year ago [21] - Net income rose to $15.4 million, up 236% from $4.6 million reported in 2024 [20] - Gross profit grew by 40%, with gross margin improving to 39.4%, up from 34.6% last year [20] Business Line Data and Key Metrics Changes - The energy segment, which constitutes about 85% of revenue, saw a 25% increase, driven by utility program funding and planning [19] - The engineering and consulting segment revenues increased by 16%, reflecting ongoing municipal demand and new contract wins [19] Market Data and Key Metrics Changes - Demand for services is expanding across end markets, particularly due to electrification and AI-driven data centers [13] - Electricity demand in the US is projected to grow by 50% between now and 2050, creating a favorable environment for the company [14] Company Strategy and Development Direction - The company is raising its full-year financial targets based on strong performance and a robust pipeline of opportunities [24][25] - The strategy includes leveraging recent acquisitions to enhance service offerings and cross-selling capabilities [32] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the company's positioning to navigate potential economic slowdowns due to strong funding sources from utilities and public agencies [15] - The company is proactive in managing tariff risks and is working closely with clients to mitigate potential pricing pressures [14] Other Important Information - The company ended the quarter with $28 million in net debt and a net debt to adjusted EBITDA ratio of 0.4 times, indicating strong financial health [23] - Free cash flow for 2025 was consistent with the previous year at $24 million, reflecting effective cash management [24] Q&A Session Summary Question: Can you unpack the potential of Willdan to deliver on robust organic growth as we look into '26 and '27? - Management highlighted that organic growth has been increasing due to intercompany collaboration and cross-selling opportunities from recent acquisitions [31][32] Question: How does Willdan position itself for growth on the grid side? - The company emphasized its strong reputation and relationships with utility commissions, which facilitate trust and collaboration on grid planning and energy efficiency programs [35] Question: Can you provide insight into the character of your fixed-price work? - Management noted that fixed-price contracts offer good cash flows and are relatively low risk compared to traditional EPC contracts, as much of the pricing risk is managed through subcontracting [39][40] Question: Are there any specific large projects in the pipeline? - Management indicated that there are significant opportunities being pursued, including a large contract in New York and several opportunities in California expected to be awarded soon [43][44] Question: What is the impact of the elimination of the tax credit on future tax rates? - Management projected that the effective tax rate could increase by about five points if the tax credit is eliminated, but they are currently in a good position to manage this risk [61][82]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Second Quarter & Six Months 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%20%26%20Six%20Months%202025%20Performance%20Highlights) Willdan Group achieved strong Q2 and H1 2025 financial results, showing significant YoY growth in contract revenue, net revenue, Adjusted EBITDA, and EPS Second Quarter 2025 Performance Overview | Metric | Value (Millions USD) | YoY Growth (%) | | :--------------------- | :--------------- | :--------- | | Contract Revenue | $173.5 | 23.0% | | Net Revenue | $95.0 | 31.1% | | Net Income | $15.4 | 236.0% | | Adjusted EBITDA | $21.9 | 70.7% | | GAAP Diluted EPS | $1.03 | 212.1% | | Adjusted Diluted EPS | $1.50 | 172.7% | First Half 2025 Performance Overview | Metric | Value (Millions USD) | YoY Growth (%) | | :--------------------- | :--------------- | :--------- | | Contract Revenue | $325.9 | 23.7% | | Net Revenue | $180.3 | 27.5% | | Net Income | $20.1 | 167.0% | | Adjusted EBITDA | $36.4 | 52.3% | | GAAP Diluted EPS | $1.36 | 151.9% | | Adjusted Diluted EPS | $2.14 | 125.3% | [Fiscal Year 2025 Financial Targets (Revised)](index=1&type=section&id=Fiscal%20Year%202025%20Financial%20Targets%20%28Revised%29) Willdan Group raised its FY2025 financial targets for net revenue, Adjusted EBITDA, and Adjusted Diluted EPS, reflecting strong H1 performance and a positive market outlook Revised Fiscal Year 2025 Financial Targets | Metric | Target Range (Millions USD) | | :-------------------- | :---------------------- | | Net Revenue | $340 - $350 | | Adjusted EBITDA | $70 - $73 | | Adjusted Diluted EPS | $3.50 - $3.65 per share | [Executive Management Comments](index=1&type=section&id=Executive%20Management%20Comments) Willdan's CEO Mike Bieber attributed strong H1 performance to project execution, new contracts, and acquisitions, noting market investment driven by data center growth and electrification trends - The company achieved strong first-half performance, with **double-digit revenue and Adjusted EBITDA growth** in Q2, and **triple-digit EPS growth**[3](index=3&type=chunk) - Performance reflects a combination of sustained core project execution, new contract wins, and successful strategic acquisitions[3](index=3&type=chunk) - Growing data center power loads and broader electrification trends are accelerating demand for reliable power and resilient grid infrastructure, driving market investments[3](index=3&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) [About Willdan Group, Inc.](index=2&type=section&id=About%20Willdan%20Group%2C%20Inc.) Willdan Group, Inc. provides national professional, technical, and consulting services to utilities, government, and private industry, focusing on grid solutions, energy efficiency, and engineering - Willdan is a national provider of **professional, technical, and consulting services**[9](index=9&type=chunk) - Services are provided to **utilities, government agencies, and private industry**[9](index=9&type=chunk) - Service offerings include **grid solutions, energy efficiency and sustainability, engineering and planning, and municipal financial advisory**[9](index=9&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Willdan's total assets increased to **$484.85 million** by July 4, 2025, driven by contract assets, goodwill, and other intangibles, with declining liabilities and significantly increased stockholders' equity Key Balance Sheet Items (July 4, 2025 vs. December 27, 2024) | Item | July 4, 2025 (Thousands USD) | December 27, 2024 (Thousands USD) | Change (Thousands USD) | | :-------------------------------- | :-------------------------- | :--------------------------- | :----- | | Cash and cash equivalents | $32,348 | $74,158 | -$41,810 | | Accounts receivable, net | $55,416 | $65,557 | -$10,141 | | Contract assets | $107,055 | $88,528 | +$18,527 | | Total current assets | $205,822 | $235,524 | -$29,702 | | Goodwill | $182,376 | $140,991 | +$41,385 | | Other intangible assets, net | $34,119 | $29,414 | +$4,705 | | Total assets | $484,851 | $464,863 | +$19,988 | | Accounts payable | $42,455 | $33,766 | +$8,689 | | Notes payable (current & non-current) | $59,679 | $89,487 | -$29,808 | | Total liabilities | $218,916 | $230,520 | -$11,604 | | Total stockholders' equity | $265,935 | $234,343 | +$31,592 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Q2 2025 contract revenue grew 23.0% to **$173.47 million**, with net income surging 236.0% to **$15.44 million**, reflecting strong operating leverage and a significant income tax benefit Key Comprehensive Income Statement Data for Q2 2025 (vs. Q2 2024) | Metric | 2025 (Thousands USD) | 2024 (Thousands USD) | YoY Change (Thousands USD) | YoY Growth (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Contract revenue | $173,473 | $140,996 | +$32,477 | 23.0% | | Gross profit | $68,325 | $48,804 | +$19,521 | 40.0% | | Income from operations | $11,816 | $6,448 | +$5,368 | 83.2% | | Income tax (benefit) expense | $(5,255) | $720 | -$5,975 | -829.9% | | Net income (loss) | $15,436 | $4,594 | +$10,842 | 236.0% | | Diluted EPS | $1.03 | $0.33 | +$0.70 | 212.1% | Key Comprehensive Income Statement Data for H1 2025 (vs. H1 2024) | Metric | 2025 (Thousands USD) | 2024 (Thousands USD) | YoY Change (Thousands USD) | YoY Growth (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Contract revenue | $325,859 | $263,485 | +$62,374 | 23.7% | | Gross profit | $125,986 | $96,222 | +$29,764 | 30.9% | | Income from operations | $18,852 | $11,809 | +$7,043 | 59.6% | | Income tax (benefit) expense | $(4,749) | $1,706 | -$6,455 | -378.4% | | Net income (loss) | $20,123 | $7,536 | +$12,587 | 167.0% | | Diluted EPS | $1.36 | $0.54 | +$0.82 | 151.9% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 net cash from operations was **$28.72 million**, with significant cash used in investing (**$39.63 million** for acquisitions) and financing (**$30.91 million** for debt refinancing) Key Cash Flow Statement Data for H1 2025 (vs. H1 2024) | Cash Flow Activity | 2025 (Thousands USD) | 2024 (Thousands USD) | Change (Thousands USD) | | :-------------------------------------- | :------------------ | :------------------ | :----- | | Net cash provided by operating activities | $28,724 | $27,838 | +$886 | | Net cash used in investing activities | $(39,629) | $(4,102) | -$35,527 | | Cash paid for acquisitions, net of cash acquired | $(35,140) | $0 | -$35,140 | | Net cash used in financing activities | $(30,905) | $(2,866) | -$28,039 | | Net increase (decrease) in cash | $(41,810) | $20,870 | -$62,680 | | Cash, cash equivalents and restricted cash at end of period | $32,348 | $44,267 | -$11,919 | [Non-GAAP Financial Measures & Reconciliations](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Use of Non-GAAP Financial Measures (Definitions)](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures%20%28Definitions%29) Willdan uses non-GAAP measures (Net Revenue, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS) to clarify core business trends and operating performance by excluding variable or non-operating costs - **Net Revenue** is defined as contract revenue less subcontractor services and other direct costs, primarily measuring the work performed by Willdan employees[10](index=10&type=chunk) - **Adjusted EBITDA** is defined as net income plus interest expense, income tax expense, stock-based compensation, interest accretion, depreciation and amortization, transaction costs, and gain on sale of equipment, used to measure operating performance irrespective of financing methods, capital structure, and non-operating expenses[11](index=11&type=chunk) - **Adjusted Net Income** and **Adjusted Diluted EPS** are defined as net income plus stock-based compensation, intangible asset amortization, interest accretion, and transaction costs (all tax-effected), used to more accurately assess operating performance by excluding certain non-operating expenses[13](index=13&type=chunk)[14](index=14&type=chunk) - These non-GAAP measures have limitations and should be considered as supplemental to, not a substitute for or superior to, GAAP financial results[16](index=16&type=chunk) [Reconciliation of GAAP Revenue to Net Revenue](index=8&type=section&id=Reconciliation%20of%20GAAP%20Revenue%20to%20Net%20Revenue) GAAP contract revenue is reconciled to non-GAAP net revenue, with consolidated net revenue reaching **$94.97 million** in Q2 2025 (up 31.1% YoY) and **$180.31 million** for H1 (up 27.5% YoY) Consolidated Revenue Reconciliation (Q2 2025 vs. Q2 2024) | Metric | 2025 (Thousands USD) | 2024 (Thousands USD) | YoY Change (Thousands USD) | | :---------------------------------- | :------------------ | :------------------ | :--------- | | Contract revenue | $173,473 | $140,996 | +$32,477 | | Subcontractor services and other direct costs | $78,505 | $68,545 | +$9,960 | | Net Revenue | $94,968 | $72,451 | +$22,517 | Consolidated Revenue Reconciliation (H1 2025 vs. H1 2024) | Metric | 2025 (Thousands USD) | 2024 (Thousands USD) | YoY Change (Thousands USD) | | :---------------------------------- | :------------------ | :------------------ | :--------- | | Contract revenue | $325,859 | $263,485 | +$62,374 | | Subcontractor services and other direct costs | $145,553 | $122,104 | +$23,449 | | Net Revenue | $180,306 | $141,381 | +$38,925 | - Energy segment net revenue for Q2 2025 was **$69.955 million**, up from **$50.296 million** in Q2 2024[26](index=26&type=chunk) - Engineering and Consulting segment net revenue for Q2 2025 was **$25.013 million**, up from **$22.155 million** in Q2 2024[26](index=26&type=chunk) [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) Willdan's Adjusted EBITDA for Q2 2025 was **$21.92 million** (up 70.7% YoY) and **$36.36 million** for H1 (up 52.3% YoY), adjusted from GAAP net income for non-operating items Adjusted EBITDA Reconciliation (Q2 2025 vs. Q2 2024) | Item | 2025 (Thousands USD) | 2024 (Thousands USD) | | :-------------------------- | :------------------ | :------------------ | | Net income (loss) | $15,436 | $4,594 | | Interest expense | $2,186 | $1,960 | | Income tax expense (benefit) | $(5,255) | $720 | | Stock-based compensation | $3,182 | $1,945 | | Depreciation and amortization | $5,504 | $3,629 | | Adjusted EBITDA | $21,922 | $12,844 | Adjusted EBITDA Reconciliation (H1 2025 vs. H1 2024) | Item | 2025 (Thousands USD) | 2024 (Thousands USD) | | :-------------------------- | :------------------ | :------------------ | | Net income (loss) | $20,123 | $7,536 | | Interest expense | $3,988 | $4,097 | | Income tax expense (benefit) | $(4,749) | $1,706 | | Stock-based compensation | $5,608 | $3,335 | | Depreciation and amortization | $9,944 | $7,221 | | Adjusted EBITDA | $36,364 | $23,878 | [Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS](index=10&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20Diluted%20EPS) Q2 2025 Adjusted Net Income was **$22.33 million** and Adjusted Diluted EPS was **$1.50**, exceeding GAAP figures after tax-effected adjustments, with H1 2025 also strong at **$31.61 million** and **$2.14** respectively Adjusted Net Income and Diluted EPS (Q2 2025 vs. Q2 2024) | Item | 2025 (Thousands USD / Per Share) | 2024 (Thousands USD / Per Share) | | :---------------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) | $15,436 | $4,594 | | Adjusted Net Income (Loss) | $22,329 | $7,681 | | Diluted earnings (loss) per share | $1.03 | $0.33 | | Adjusted Diluted EPS | $1.50 | $0.55 | Adjusted Net Income and Diluted EPS (H1 2025 vs. H1 2024) | Item | 2025 (Thousands USD / Per Share) | 2024 (Thousands USD / Per Share) | | :---------------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) | $20,123 | $7,536 | | Adjusted Net Income (Loss) | $31,608 | $13,307 | | Diluted earnings (loss) per share | $1.36 | $0.54 | | Adjusted Diluted EPS | $2.14 | $0.95 | [Additional Information](index=3&type=section&id=Additional%20Information) [Forward Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This cautionary statement indicates that forward-looking statements are subject to risks, where actual results may differ materially due to factors like project completion, market competition, client reliance, economic changes, debt, supply chain, and acquisition integration - Statements concerning intentions, hopes, beliefs, expectations, predictions, estimates, goals, plans, or future projections are **forward-looking statements**[17](index=17&type=chunk) - Actual results could differ materially from any forward-looking statements[17](index=17&type=chunk) - Important factors that could cause actual results to differ include: the ability to complete projects on time, successfully compete in the energy services market, reliance on top ten clients, changes in state, local, and regional economies and government budgets, ability to win new contracts and renew existing ones, ability to repay debt principal and interest, manage supply chain constraints, labor shortages, rising interest rates, and inflation, ability to obtain financing and refinancing, successfully integrate acquisitions and execute growth strategies, and attract and retain management, technical, and administrative talent[17](index=17&type=chunk) [Second Quarter 2025 Conference Call](index=2&type=section&id=Second%20Quarter%202025%20Conference%20Call) Willdan held a conference call on August 7, 2025, at 5:30 PM ET/2:30 PM PT to discuss Q2 financial results, accessible via dial-in and webcast, with a replay available online - The conference call was held on **August 7, 2025, at 5:30 PM ET/2:30 PM PT**[8](index=8&type=chunk) - Dial-in information: **877-407-2988** (or **201-389-0923**)[8](index=8&type=chunk) - Webcast link: **https://edge.media-server.com/mmc/p/5eb7tfiv/**, replay link: **https://ir.willdangroup.com/events-presentations**[8](index=8&type=chunk) [Contact Information](index=11&type=section&id=Contact) Investors can contact Al Kaschalk, Vice President of Willdan Group, Inc., for additional information - Contact Person: **Al Kaschalk**, Vice President, Willdan Group, Inc[34](index=34&type=chunk) - Phone: **310-922-5643**[34](index=34&type=chunk) - Email: **akaschalk@willdan.com**[34](index=34&type=chunk)

Group 1 - Willdan Group, Inc. has experienced a significant increase in share price, rising by 105.64% over the past year [1]

分组1 - Willdan Group reported quarterly earnings of $0.63 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, and up from $0.40 per share a year ago, representing an earnings surprise of 43.18% [1] - The company posted revenues of $85.34 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 15.24%, although this is a decrease from year-ago revenues of $122.49 million [2] - Willdan has outperformed the S&P 500, with shares increasing about 5.3% since the beginning of the year, while the S&P 500 has declined by -4.3% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.71 on revenues of $81.4 million, and for the current fiscal year, it is $2.75 on revenues of $323.7 million [7] - The Zacks Industry Rank places the Business - Services sector in the top 21% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

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