Willdan(US:WLDN)2025-05-08 22:39Part I. Financial Information Item 1. Financial Statements (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 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 million22 Notes to Condensed Consolidated Financial Statements 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 20252484 - 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 2025103105116 - Acquired Alpha Inspections, Inc on January 31, 2025, for $12.0 million in cash Alpha contributed $0.6 million in revenue in Q1 2025117119126 - 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 revenue9091 - 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, 2030144 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 acquisitions164 - Engineering and Consulting segment revenue increased by $4.4 million (20.2%) due to increased client demand and the acquisition of Alpha165 - 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 requirements180181 - Cash used in investing activities was $34.8 million, primarily for acquisitions of APG and Alpha183 - As of April 4, 2025, the company had contractual obligations totaling $111.7 million, primarily consisting of debt and operating leases188 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 Facility213 - 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 2026217218 - 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 million219 Item 4. Controls and Procedures 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, 2025222 - The company is continuing to incorporate its controls and procedures into the recently acquired Enica, Alpha, and APG entities223 Part II. Other Information Item 1. Legal Proceedings 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 business227 - Management believes that the ultimate liability from current legal proceedings is not expected to have a material adverse effect on the company's financial statements229 Item 1A. Risk Factors 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, 2024230 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 The company reported no defaults upon senior securities - The company reported no defaults upon senior securities232 Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company233 Item 5. Other Information 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 Agreement235 - 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 Loan235 - The maturity date for the credit facilities was extended to May 5, 2030235 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the APG Stock Purchase Agreement, Amended Credit Agreement, and CEO/CFO certifications