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

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]