Core Viewpoint - Willdan Group, Inc. is experiencing a positive trend in contract wins, which is expected to enhance its growth prospects and financial performance [1][4]. Contract Wins and Financial Impact - The company secured a $17.7 million contract to provide engineering and construction supervision services for the Paramount Unified School District, overseeing 2.2 megawatts of solar arrays and 44 electric vehicle charging stations across 11 sites [2][3]. - Willdan's contract revenues are projected to grow by 11% year-over-year in 2024, reflecting the benefits of consistent contract wins [4]. - Key contract wins include a $330 million five-year contract from the Los Angeles Department of Water and Power, a $15 million commercial energy program from the Los Angeles County Regional Energy Network, and a $6 million program for energy efficiency from the Central California Rural Regional Energy Network [5]. Market Performance - Willdan's shares have increased by 10.9% year-to-date, significantly outperforming the Zacks Business - Services industry's growth of 0.6% [7]. - The company is well-positioned for top-line growth and margin expansion in 2025 due to its project win trends and current pipeline [7].

Group 1 - Willdan Group (WLDN) has outperformed the Business Services sector with a year-to-date return of approximately 4.9%, while the sector has returned an average of -1.6% [4] - The Zacks Rank for Willdan Group is currently 1 (Strong Buy), indicating strong analyst sentiment and a positive earnings outlook, with a consensus estimate for full-year earnings increasing by 20.1% over the past quarter [3] - Willdan Group belongs to the Business - Services industry, which includes 25 stocks and is currently ranked 145 in the Zacks Industry Rank, with the industry gaining about 2.8% year-to-date, further highlighting WLDN's strong performance [5] Group 2 - Another stock in the Business Services sector, Wartsila (WRTBY), has also outperformed the sector with a year-to-date return of 11.1% and has a Zacks Rank of 2 (Buy) [4][5] - The Business Services sector consists of 290 individual stocks and holds a Zacks Sector Rank of 8, indicating its relative performance compared to other sectors [2] - Investors should continue to monitor both Willdan Group and Wartsila for potential sustained strong performance in the Business Services sector [6]

Core Insights - Willdan Group, Inc. reported mixed results for Q4 fiscal 2024, with adjusted earnings exceeding estimates while contract revenues fell short [1][4] - Year-over-year comparisons showed declines in both top and bottom lines, primarily due to weak performance in the Energy segment [2][4] Financial Performance - Adjusted EPS for the quarter was 75 cents, surpassing the Zacks Consensus Estimate of 57 cents by 31.6%, but down from 80 cents in the same quarter last year [4] - Contract revenues totaled $144.1 million, missing the consensus mark of $152 million by 5.2% and declining 7.5% year over year [4] - Gross profit slightly increased to $55 million from $54.4 million, while adjusted EBITDA rose 1.4% to $17.7 million [5] Segment Analysis - Energy Segment: Contract revenues decreased to $120.7 million from $134.6 million year over year, with net revenues down 6.6% to $56.6 million [6] - Engineering and Consulting Segment: This segment saw an increase in contract revenues to $23.4 million from $21 million year over year [6] Fiscal Year Highlights - For fiscal 2024, total contract revenues were $565.8 million, up 0.9% from fiscal 2023, with annual gross profit rising to $202.8 million from $179.8 million [8] - Adjusted EBITDA for the year was $56.8 million, reflecting a 24.2% increase, and adjusted EPS grew 38.9% to $2.43 from $1.75 [8] Cash Position and Outlook - As of December 27, 2024, cash and cash equivalents stood at $74.2 million, significantly up from $23.4 million at the end of fiscal 2023 [10] - For fiscal 2025, the company expects net revenues between $320 million and $330 million, with adjusted EBITDA anticipated between $63 million and $67 million, and adjusted EPS projected in the range of $2.70 to $2.85 [11]

Financial Data and Key Metrics Changes - For 2024, contract revenue increased by 11% year-over-year, adjusted EBITDA rose by 24%, and GAAP EPS nearly doubled year-over-year [6][31] - Adjusted EPS was up 39%, reflecting strong execution across all business lines and a record level of free cash flow of $4.49 per share [6][35] - Net revenue for 2024 reached $296 million, a 10% increase from 2023, with gross profit increasing by 13% to $203 million [31][34] Business Line Data and Key Metrics Changes - Building solutions, utility programs, and municipal civil engineering services saw double-digit percentage increases, contributing to higher revenues [31] - The commercial customer segment now comprises 15% of total revenue, doubling from the previous year, while state and local government customers account for 44% and utilities for 41% [10][12] Market Data and Key Metrics Changes - Demand for services from commercial customers, particularly related to electricity usage at data centers, is strong, driven by AI-driven load growth [11][19] - Organic growth for state and local government work is at a high single-digit pace, with minimal impact from federal spending cuts [12][56] Company Strategy and Development Direction - The company aims to expand its commercial services and electrical engineering capabilities through acquisitions, with a focus on the commercial technology sector [9][25] - The recent acquisition of Alternative Power Generation (APG) enhances the company's expertise in utility-scale electrical engineering, aligning with its strategy to serve commercial data center owners [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and positive outlook despite economic uncertainties and delays in new contracts [36][38] - The company anticipates net revenue for 2025 to be between $320 million and $330 million, with adjusted EBITDA ranging from $63 million to $67 million, exceeding current consensus estimates [38] Other Important Information - The company generated $72 million in cash flow from operations and added $50 million to its cash balance, resulting in total liquidity of $124 million at year-end [36] - The company is focused on the U.S. market for the foreseeable future, with no immediate plans for international expansion [76] Q&A Session Summary Question: Comments on the LADWP contract renewal and expansion - Management noted that there are no significant startup concerns as the contract is a recompete, and they expect to ramp up activity in the first half of the year [45][46] Question: Funding and accountability for RENs - Funding for RENs comes from surcharges on electricity bills, overseen by the PUC, allowing for simpler contracts compared to IOUs [49][50] Question: Impact of presidential transition on business activity - Management indicated that the change in administration has had minimal impact on business activity, with state and local government work remaining the primary driver [54][56] Question: Trends in government programs - Increased demand for California programs and similar trends in New York were highlighted, along with a rise in upfront study work related to data centers [62][64] Question: Update on software cross-selling and AI integration - The company plans to introduce its software to APG, which currently lacks embedded software, and is working on integrating AI into its LoadSeer software [66][73]

Financial Data and Key Metrics Changes - For 2024, contract revenue increased by 11% year-over-year, adjusted EBITDA rose by 24%, and GAAP EPS nearly doubled year-over-year [6][31] - Adjusted EPS was up 39% compared to the previous year [6][35] - Free cash flow reached $4.49 per share, marking a record level for the company [6] Business Line Data and Key Metrics Changes - Building solutions, utility programs, and municipal civil engineering services saw double-digit percentage increases, contributing to overall revenue growth [31] - Commercial customers now account for 15% of revenue, doubling from the previous year, while state and local government customers represent 44% and utilities 41% of revenue [10][12] Market Data and Key Metrics Changes - Demand for services from commercial customers, particularly related to electricity usage at data centers, is strong due to AI-driven load growth [11] - Organic growth for state and local government clients is at a high single-digit pace, with minimal impact from federal spending cuts [12] Company Strategy and Development Direction - The company aims to expand its commercial services and electrical engineering capabilities through acquisitions, with a focus on the commercial technology sector [9][25] - The recent acquisition of APG enhances the company's expertise in utility-scale electrical engineering, aligning with its strategy to serve commercial data center owners [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a positive long-term outlook, driven by electric load growth and the company's strong execution [7][19] - The company anticipates net revenue for 2025 to be between $320 million and $330 million, with adjusted EBITDA ranging from $63 million to $67 million, exceeding current consensus estimates [38] Other Important Information - The company generated $72 million in cash flow from operations and added $50 million to its cash balance, resulting in total liquidity of $124 million at year-end [36] - The company is focused on the U.S. market for the foreseeable future, with no immediate plans for international expansion [76] Q&A Session Summary Question: Comments on the LADWP contract and potential startup issues - Management noted that there are no significant startup concerns as the contract is a recompete, and they expect to ramp up activity in the first half of the year [45][46] Question: Funding sources for RENs and project accountability - Funding for RENs comes from surcharges on electricity bills, overseen by the PUC, allowing for simpler contracts compared to IOUs [49][50] Question: Impact of presidential transition on business activity - Management indicated that the change in administration has had minimal impact on business activity, as most work is driven by state and local governments [54][56] Question: Trends in government programs and inquiries - Increased demand for California programs and similar trends in New York were highlighted, along with a rise in upfront study work related to data centers [62][64] Question: Update on software cross-selling and APG's software - The company plans to introduce its software to APG, which currently does not have any, and has seen solid cross-selling opportunities [66][67] Question: Integration of AI into software and expansion into Europe - AI integration into LoadSeer is underway, with a new version expected in the first half of the year, while international expansion is not a current focus [73][76]

Company Performance - Willdan Group (WLDN) reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, but down from $0.80 per share a year ago, representing an earnings surprise of 31.58% [1] - The company posted revenues of $144.06 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 5.16%, and down from $155.68 million year-over-year [2] - Over the last four quarters, Willdan has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Market Outlook - Willdan shares have declined approximately 18.3% since the beginning of the year, contrasting with the S&P 500's decline of -0.7% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at $0.44 on revenues of $131.05 million, and $2.35 on revenues of $597.3 million for the current fiscal year [7] Industry Context - The Business - Services industry, to which Willdan belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Willdan's stock performance [5]

WILLDAN GROUP, INC. Q4 FY24 Earnings Call NASDAQ: WLDN March 6, 2025 Mike Bieber, President & CEO Kim Early, Executive Vice President & CFO Saf e Harbor Stateme nt – Sta tement s in t hi s pre sentat ion that are not purel y hi storic al, are forwa rd -looking sta tement s that invol ve risks a nd unc erta inti es wit hin the mea ni ng of t he P ri va te Se curiti es L it igat ion Re form Ac t of 1 995 . Will da n' s ac tual re sul ts coul d di ffer mate ri all y from those i n any s uc h forward -lookin g ...

Contract Revenue and Recognition - Contract revenue is recognized based on the percentage of completion method, primarily for fixed price contracts, which involves a high degree of subcontracted fixed price effort[279]. - The Company recognizes revenue primarily over time, with fixed price contracts using the percentage-of-completion method based on direct costs incurred to date[383]. - Approximately 2.0% to 3.0% of the Company's consolidated contract revenue may come from segmented contracts with multiple performance obligations[386]. - The company evaluates whether contracts should be combined or segmented, which can affect revenue and profit recognition[295]. - The company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method[303]. - Adjustments in estimated profit on contracts are recognized under the cumulative catch-up method, impacting profit in the period identified[394]. Financial Performance - Contract revenue for fiscal year 2024 increased to $565,798, up 10.9% from $510,095 in 2023[354]. - Gross profit rose to $202,782 in 2024, representing a 12.8% increase from $179,767 in 2023[354]. - Net income for 2024 was $22,570, a significant increase compared to $10,926 in 2023, marking a 106.5% growth[354]. - Earnings per share (EPS) for 2024 was $1.63, up from $0.82 in 2023, reflecting a 98.8% increase[354]. - The company reported a comprehensive income of $22,920 for 2024, compared to $10,262 in 2023, representing a 123.5% increase[354]. - Cash flows from operating activities for 2024 were $72,073, compared to $39,214 in 2023, indicating an increase of 83.8%[357]. Assets and Liabilities - As of December 27, 2024, total assets increased to $464.86 million from $415.59 million as of December 29, 2023, representing a growth of approximately 11.5%[352]. - Cash and cash equivalents rose significantly to $74.16 million, up from $23.40 million, indicating a substantial increase of approximately 216.5%[352]. - Accounts receivable decreased to $65.56 million from $69.68 million, reflecting a decline of about 5.4%[352]. - Total current liabilities increased to $137.68 million from $114.68 million, marking an increase of approximately 20.0%[352]. - Stockholders' equity grew to $234.34 million from $199.85 million, an increase of approximately 17.3%[352]. - The allowance for doubtful accounts increased from $866,000 to $1.31 million, reflecting a rise of approximately 51.0%[352]. Debt and Interest Rate Management - The company has $90.0 million outstanding under its Term Loan, with no borrowed amounts under its Revolving Credit Facility as of December 27, 2024[331]. - A one percentage point increase in the effective interest rate would change the company's annual interest expense by approximately $0.4 million in fiscal year 2024[332]. - The company is subject to interest rate risk due to its Term Loan and borrowings under its Revolving Credit Facility, which bear interest at variable rates[331]. - The company entered into an interest rate swap agreement for a notional amount of $50.0 million, fixing the variable interest rate at 4.77% until September 29, 2026[334]. - The Company’s composite annual interest rate, excluding upfront fees and issuance cost amortization, was 6.4% as of December 27, 2024[461]. Acquisitions and Goodwill - During fiscal year 2024, the company acquired substantially all of the assets of Enica, with fair value estimates to be finalized within twelve months[319]. - Goodwill increased to $140.99 million from $131.14 million, representing a growth of approximately 7.4%[352]. - Goodwill is tested for impairment annually, with losses recognized if the carrying amount exceeds fair value[411]. - The Company measures goodwill as the excess of consideration transferred over the net identifiable assets acquired and liabilities assumed at the acquisition date[418]. Operational Challenges - The company has experienced higher costs of materials and delays in the supply chain, although historically operations have not been materially impacted by inflation[276]. - Significant price increases in equipment and supply chain disruptions could materially impact results of operations and financial condition[277]. - Contracts may be subject to renegotiation upon renewal, which could impact profitability, particularly with major clients[283]. General and Administrative Expenses - General and administrative expenses include costs related to marketing, management, and administrative personnel, as well as facility costs and professional services[287]. - Total general and administrative expenses increased to $171,429 in 2024, up 8.7% from $157,693 in 2023[354]. - Stock-based compensation expense for 2024 was $7,388, up from $5,323 in 2023, reflecting an increase of 38.8%[354]. Compliance and Reporting - The Company has a structured approach to revenue recognition, ensuring compliance with ASC 606 and accurately reflecting performance obligations[380]. - The Company adopted ASU 2023-07 for segment reporting effective for its fiscal year 2024, enhancing disclosures related to significant segment expenses[434]. - The Company performs ongoing assessments to determine the primary beneficiary of variable interest entities, ensuring compliance with ASC 810[372].

Financial Performance - Contract revenue for fiscal year 2024 was $565.8 million, an increase of 10.9% compared to the previous year[4] - Net revenue for fiscal year 2024 reached $296.3 million, up 9.9% year-over-year[4] - Net income for fiscal year 2024 was $22.6 million, significantly up from $10.9 million in the previous year[4] - Adjusted EBITDA for fiscal year 2024 was $56.8 million, reflecting a 24.2% increase[4] - GAAP diluted EPS for fiscal year 2024 was $1.58, a remarkable increase of 97.5%[4] - Cash flow from operations for fiscal year 2024 was $72.1 million, up 83.8% compared to the previous year[4] - For fiscal year 2025, the company targets net revenue between $320 million and $330 million[5] - The adjusted EBITDA target for fiscal year 2025 is set between $63 million and $67 million[5] Quarterly Performance - Contract revenue for the three months ended December 27, 2024, was $144,061 thousand, a decrease of 7.3% compared to $155,677 thousand for the same period in 2023[20] - For the three months ended December 27, 2024, Willdan Group reported a net income of $7.688 million, compared to $8.031 million for the same period in 2023, reflecting a decrease of approximately 4.3%[26] - The diluted earnings per share (EPS) for the three months ended December 27, 2024, was $0.53, down from $0.58 in the same period of 2023, a decrease of approximately 8.6%[26] Year-End Results - Gross profit for the year ended December 27, 2024, increased to $202,782 thousand, up 12.7% from $179,767 thousand in 2023[20] - Net income for the year ended December 27, 2024, was $22,570 thousand, significantly higher than $10,926 thousand in 2023, representing a year-over-year increase of 106.5%[21] - Adjusted EBITDA for the year ended December 27, 2024, reached $56,751 thousand, compared to $45,695 thousand in 2023, reflecting a growth of 24.2%[24] - Cash flows from operating activities for the year ended December 27, 2024, were $72,073 thousand, an increase from $39,214 thousand in 2023[21] - The company reported a net cash increase of $50,761 thousand for the year ended December 27, 2024, compared to a decrease of $3,912 thousand in 2023[21] Segment Performance - The Energy segment's net revenue for the year ended December 27, 2024, was $207,217 thousand, up from $190,373 thousand in 2023, marking an increase of 8.8%[23] - The Engineering and Consulting segment's net revenue for the year ended December 27, 2024, was $89,108 thousand, compared to $79,309 thousand in 2023, representing a growth of 12.3%[23] Expenses and Adjustments - Total general and administrative expenses for the year ended December 27, 2024, were $171,429 thousand, an increase from $157,693 thousand in 2023, reflecting a rise of 8.7%[20] - The company reported a basic earnings per share of $1.63 for the year ended December 27, 2024, compared to $0.82 in 2023, indicating a significant increase of 98.8%[20] - Adjusted net income for the year ended December 27, 2024, was $34.671 million, up from $23.830 million in 2023, representing an increase of about 45.5%[26] - Adjusted diluted EPS for the year ended December 27, 2024, was $2.43, compared to $1.75 in 2023, indicating an increase of around 39.1%[26] - Stock-based compensation adjustments contributed $2.033 million for the three months ended December 27, 2024, compared to $1.259 million in the same period of 2023, an increase of approximately 61.3%[26] - The tax effect of stock-based compensation for the year ended December 27, 2024, was a reduction of $1.322 million, compared to $1.003 million in 2023, reflecting an increase of about 31.9%[26] - Intangible amortization adjustments for the three months ended December 27, 2024, were $1.783 million, down from $2.199 million in the same period of 2023, a decrease of approximately 18.9%[26] - The impact of refinancing costs was recorded as $467 thousand for the year ended December 27, 2024, compared to a tax effect of $88 thousand in 2023[26] - Interest accretion adjustments contributed $153 thousand for the year ended December 27, 2024, with no corresponding amount in the previous year[26] Strategic Activities - The company has resumed strategic acquisitions, including the recent acquisition of Alternative Power Generation, Inc.[2] Shareholder Information - The diluted weighted-average shares outstanding increased to 14,509 thousand for the three months ended December 27, 2024, from 13,731 thousand in the same period of 2023, an increase of about 5.6%[26]

Group 1: Acquisition and Expansion - Willdan Group, Inc. has completed the acquisition of Alpha Inspections Inc. to enhance its capabilities and grow its presence in key regions, particularly Florida [1] - The acquisition of Enica Engineering on Oct. 25, 2024, aligns with Willdan's strategy to strengthen its market position and expand service offerings [2][3] - Enica is expected to contribute to higher margins, earnings, and earnings per share (EPS) by 2025, providing potential synergies within Willdan's Energy segment [3] Group 2: Financial Performance - Willdan's stock has gained 79.3% over the past year, significantly outperforming the Zacks Business-Services industry's growth of 9.1% [4] - The company has secured consistent contract wins, including an $11 million energy and infrastructure modernization project with the City of South Lake Tahoe, CA, aimed at reducing carbon emissions [6] Group 3: Market Position and Rankings - Willdan currently holds a Zacks Rank of 3 (Hold), indicating a stable market position [7] - Comparatively, other stocks in the Business Services sector, such as Sezzle, Inc. and SPS Commerce, Inc., have higher Zacks Ranks, indicating stronger buy signals [8][9]