Core Viewpoint - Willdan Group (WLDN) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook driven by an upward trend in earnings estimates [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with stock price movements [4][6]. - Institutional investors often react to changes in earnings estimates, leading to significant stock price movements based on their buying or selling activities [4]. Company Performance and Outlook - The upgrade reflects an improvement in Willdan's underlying business, suggesting that investors may push the stock price higher due to this positive trend [5]. - For the fiscal year ending December 2025, Willdan is expected to earn $4.13 per share, with a 12.5% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Willdan's upgrade places it in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - Alameda County, California, has awarded Willdan Group, Inc. a $97 million contract for energy and infrastructure upgrades [1] - The contract focuses on energy savings performance and includes electrification of major HVAC systems, solar PV generation, EV charging stations, and other efficiency upgrades [1] - The project aims to reduce annual carbon emissions across 24 sites [1]

Group 1 - The article does not provide any specific content related to a company or industry, as it appears to be a technical issue regarding browser settings and ad-blockers [1]

Core Viewpoint - Willdan Group (WLDN) reported strong Q3 earnings, leading to a significant recovery in its share price after a previous decline [1] Financial Performance - The company’s Q3 earnings were described as "stellar," indicating a robust financial performance that positively impacted investor sentiment [1] Investment Strategy - The analysis reflects a long-term investment approach, focusing on a diversified portfolio that includes growth, value, and dividend-paying stocks, with a particular emphasis on value investing [1]

Core Insights - Willdan Group (WLDN) reported quarterly earnings of $1.21 per share, exceeding the Zacks Consensus Estimate of $0.81 per share, and showing an increase from $0.73 per share a year ago, resulting in an earnings surprise of +49.38% [1] - The company achieved revenues of $94.97 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 11.53%, although this is a decline from year-ago revenues of $158.25 million [2] - Willdan shares have increased approximately 147.1% year-to-date, significantly outperforming the S&P 500's gain of 15.6% [3] Earnings Outlook - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook, which includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.86 on revenues of $82.6 million, and for the current fiscal year, it is $3.60 on revenues of $348.05 million [7] Industry Context - The Business - Services industry, to which Willdan belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Willdan's stock may also be influenced by the overall outlook for the industry, as empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions [5][8]

Revenue Composition - The energy services market represented 84% of the company's consolidated revenue for fiscal year 2024[13] - The top ten clients accounted for 51% of the consolidated contract revenue for fiscal year 2024[13] Contract Types - As of October 3, 2025, 18% of contracts are time-and-materials, 36% are unit-based, and 46% are fixed price[234] - The company has a significant reliance on public agency contracts, which may be subject to renewal and renegotiation[238] Cost and Expenses - Direct costs of contract revenue include salaries, material costs, and subcontractor services, excluding marketing-related expenses[240] - General and administrative expenses include costs for marketing, management, and administrative personnel, as well as facility costs[242] Operational Challenges - The company has experienced higher material costs and supply chain delays, which could materially impact operations[231] - The company has not experienced a material impact from inflation on its operations historically[230] - The company has not experienced significant costs under performance guarantees related to energy savings[239] Financial Management - The company enters into interest rate swap agreements to manage exposure to fluctuations in interest rates on variable rate debt[229]

Financial Data and Key Metrics Changes - In Q3 2025, net revenue grew by 26% year-over-year, driven by a 20% organic growth rate, marking the fourth consecutive year of double-digit organic growth [4][11] - Gross profit increased by 30% to $67.1 million, up from $51.6 million last year, due to revenue growth and solid project execution [12] - Pre-tax income rose by 91% to a record $14.3 million, while net income increased by 87% to $13.7 million [13] - Adjusted EBITDA reached a new record of $23.1 million, representing a 53% increase from the previous year [13] - For the nine months of 2025, contract revenue was up 20% year-over-year to $508 million, with net revenue increasing by 27% to $275 million [14] Business Line Data and Key Metrics Changes - The energy segment constitutes about 85% of revenue, while engineering and consulting work accounts for approximately 15% [5] - Utility business, making up 41% of revenue, continues to perform well with a solid foundation of recurring revenue from long-term contracts [5] - Work for state and local governments, which represents 44% of revenue, is growing organically at a double-digit pace [6] Market Data and Key Metrics Changes - Demand for electricity is increasing, driven by factors such as data centers, electric vehicles, and the electrification of building systems [9][10] - The U.S. electricity load growth is forecasted to be between 0.7 and 1.2 terawatt hours over the next decade, indicating a dynamic long-term growth market [9] Company Strategy and Development Direction - The company is raising its full-year financial targets for 2025, expecting net revenue between $360 million and $365 million and adjusted EBITDA in the range of $77 million to $78 million [17] - The company is focused on cross-selling capabilities, particularly with recent acquisitions, to enhance growth opportunities [22][25] - The company is well-positioned to help utilities and communities navigate significant infrastructure investment cycles driven by aging infrastructure modernization [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing improved performance in cross-selling and a strong pipeline of opportunities [22][24] - The company does not foresee workforce sourcing as an impediment to growth, reporting a stable employee count and zero turnover in senior management [26][27] - Management remains optimistic about securing large contracts in New York, which are expected to drive growth in 2026 [41] Other Important Information - The company ended the quarter with only $16 million in net debt, providing financial flexibility for targeted acquisitions [15] - Free cash flow for the first nine months was $34 million, consistent with the previous year, indicating strong cash generation [15] Q&A Session Summary Question: What is driving the increased customer demand and how does the company plan to manage capacity? - Management noted that rising electricity prices and increased demand are key factors, along with improved cross-selling capabilities leading to new revenue streams [22][23] Question: Can you discuss the collaboration between APG and other areas of the company? - Management highlighted effective collaboration across service lines, with upfront consulting work feeding into project planning and execution [25] Question: How is the company managing workforce flexibility and potential growth impediments? - Management stated that they do not see workforce sourcing as a growth impediment, with effective hiring practices and a stable senior management team [26][27] Question: What is the status of the potential $100 million contract with New York? - Management remains optimistic about securing several large contracts in New York, which are expected to contribute to growth in 2026 [41]

Financial Data and Key Metrics Changes - In Q3 2025, net revenue grew by 26% year-over-year, driven by a 20% organic growth rate, marking the fourth consecutive year of double-digit organic growth [4][11] - Gross profit increased by 30% to $67.1 million, up from $51.6 million last year, due to revenue growth and solid project execution [11][12] - Pre-tax income rose by 91% to a record $14.3 million, while net income increased by 87% to $13.7 million [13][14] - Adjusted EBITDA reached a new quarterly record of $23.1 million, representing a 53% increase from the previous year [13] - For the nine months of 2025, contract revenue was up 20% year-over-year to $508 million, with net revenue increasing by 27% to $275 million [14] Business Line Data and Key Metrics Changes - The energy segment constitutes about 85% of revenue, while engineering and consulting work accounts for approximately 15% [5] - Utility business, making up 41% of revenue, continues to perform well with long-term contracts providing a strong foundation of recurring revenue [5][6] - Work for state and local governments, which represents 44% of revenue, is growing organically at a double-digit pace [6] Market Data and Key Metrics Changes - Demand for electricity is increasing, driven by data centers, electrification, and new industrial demand [9][10] - The U.S. electricity load growth is forecasted to be between 0.7 TWh and 1.2 TWh over the next decade, indicating a dynamic long-term growth market [9] Company Strategy and Development Direction - The company is raising its full-year financial targets for 2025, expecting net revenue between $360 million and $365 million and adjusted EBITDA in the range of $77 million to $78 million [17][18] - The company is focused on cross-selling capabilities, particularly with recent acquisitions, to enhance growth and operational efficiency [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market, noting that electricity prices are rising and demand is increasing, which supports continued growth [22] - The company is well-positioned to navigate the transformation in electricity markets and capitalize on infrastructure investment cycles [10] Other Important Information - The company ended the quarter with only $16 million in net debt, providing financial flexibility for future acquisitions [15][16] - Free cash flow for the first nine months was $34 million, consistent with the previous year, indicating strong cash generation [15] Q&A Session Summary Question: What is driving the increased customer demand and how does the company plan to manage capacity? - Management noted that the market is strong, with rising electricity prices and increased demand, and emphasized improved cross-selling capabilities leading to new revenue [22][23] Question: Can you discuss the collaboration between APG and other areas of the company? - Management highlighted effective collaboration across service lines, with upfront consulting work feeding into project planning and execution [25] Question: How is the company managing workforce flexibility and potential hiring challenges? - Management stated that they do not see workforce sourcing as an impediment to growth, reporting zero turnover in senior management and a growing employee count [26][27] Question: Are there any updates on the potential $100 million contract with the state of New York? - Management remains optimistic about several large contracts in New York and expects them to drive growth in 2026 [41]

Financial Data and Key Metrics Changes - In Q3 2025, net revenue grew by 26% year-over-year, driven by a 20% organic growth rate, marking the fourth consecutive year of double-digit organic growth [4][12] - Gross profit increased by 30% to $67.1 million, up from $51.6 million in the previous year, contributing to a 91% increase in pre-tax income to a record $14.3 million [12][13] - Net income rose to $13.7 million, an 87% increase from $7.3 million in Q3 2024, with adjusted EBITDA reaching a new record of $23.1 million, up 53% year-over-year [13][14] - For the nine months of 2025, contract revenue was up 20% year-over-year to $508 million, while net revenue increased 27% to $275 million [14] Business Line Data and Key Metrics Changes - The energy segment constitutes about 85% of revenue, with the utility business making up 41% and government work accounting for 44% of revenue, both showing strong organic growth [5][6] - The engineering and consulting segment, which comprises 15% of revenue, also saw significant demand, particularly in electricity usage at data centers [5] - The recent acquisition of APG is expected to drive over 50% growth in 2026, contributing to the overall performance of the engineering segment [7] Market Data and Key Metrics Changes - Demand for electricity is increasing, driven by data centers, electric vehicles, and the electrification of building systems, with forecasts indicating 0.7 to 1.2 terawatt hours of U.S. electricity load growth over the next decade [10][11] - The company is well-positioned in a dynamic market, with utilities investing in infrastructure modernization to enhance reliability and flexibility [11] Company Strategy and Development Direction - The company is raising its full-year financial targets for 2025, expecting net revenue between $360 million and $365 million and adjusted EBITDA in the range of $77 million to $78 million [17][18] - The focus on cross-selling capabilities, particularly with new acquisitions, is expected to drive future growth [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's strength, citing rising electricity prices and increased demand as key factors for growth [21] - The company does not foresee workforce sourcing as an impediment to growth, reporting zero turnover in senior management and a growing employee count [25] Other Important Information - The company ended the quarter with $16 million in net debt and $183 million in total available liquidity, providing financial flexibility for future acquisitions [15][16] - The company has a strong pipeline of opportunities, converting several significant contracts since the last conference call [9] Q&A Session Summary Question: What is driving the increased customer demand and how does the company plan to manage capacity? - Management noted that the market is strong with rising electricity prices and improved performance in cross-selling, leading to significant new revenue [21][22] Question: How is APG's work impacting the company's overall execution capacity? - APG's collaboration with other divisions is enhancing resource utilization and improving project execution [24] Question: Is workforce sourcing a challenge for the company? - Management stated that workforce sourcing is not a challenge, highlighting effective hiring and retention practices [25] Question: What is the status of the potential $100 million contract with New York? - Management remains optimistic about securing several large contracts in New York, which are expected to drive growth in 2026 [43]

Financial Performance - Willdan's Q3 2025 net revenue reached $95 million, a 26% increase compared to $75.7 million in Q3 2024[3, 20] - Adjusted EBITDA for Q3 2025 was $23 million, a 53% increase from $15.2 million in Q3 2024[3, 20] - Adjusted EPS for Q3 2025 was $1.21, a 66% increase from $0.73 in Q3 2024[3, 20] - For the first nine months of 2025, net revenue was $275 million, a 27% increase compared to $217 million for the same period in 2024[23] - Adjusted EBITDA for the first nine months of 2025 reached $59.5 million, a 52% increase from $39.1 million in the same period of 2024[23] - Adjusted EPS for the first nine months of 2025 was $3.34, a 97% increase from $1.70 in the same period of 2024[23] Business Segments and Outlook - Energy segment accounts for approximately 85% of Willdan's services[4] - Engineering & Consulting segment accounts for approximately 15% of Willdan's services[6] - Willdan increased its full-year 2025 net revenue target to $360-365 million from $340-350 million[30] - The company also increased its full-year 2025 adjusted EBITDA target to $77-78 million from $70-73 million[30]