Willdan(US:WLDN)2023-11-05 07:51Financial Data and Key Metrics Changes - For Q3 2023, gross revenue increased by 9.3% year-over-year to a record $132.7 million, while net revenue rose by 10.8% to a record $65.3 million [22] - Adjusted EBITDA for Q3 was $10.1 million, up 27% from $8.0 million in Q3 2022, with adjusted earnings per share at $0.37 compared to $0.42 a year ago [25] - Year-to-date net income was $2.9 million or $0.21 per diluted share, a significant turnaround from a loss of $8.0 million or $0.62 per share in 2022 [30] Business Line Data and Key Metrics Changes - The Energy segment saw an 8% growth in gross revenue, while the Engineering and Consulting segment grew by more than 10% for the fifth consecutive quarter [22] - Organic growth in the Engineering segment was 15% for both the quarter and the nine months [15] Market Data and Key Metrics Changes - Willdan's projects are primarily focused on energy efficiency and decarbonization, with significant demand from municipalities and large institutions [7][12] - The company is not heavily impacted by interest rates as most projects do not require bank financing, allowing continued growth despite economic pressures [14][42] Company Strategy and Development Direction - The company's strategy emphasizes affordable clean energy solutions, focusing on reducing electricity and natural gas consumption [7][9] - Willdan aims to support the clean energy transition by working with stable customers like governments and utilities, ensuring projects are incentivized and affordable [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, raising 2023 guidance due to strong performance and a healthy backlog [18][34] - The company anticipates continued demand for its services driven by energy transition goals and municipal needs, with no signs of declining interest from clients [44] Other Important Information - The company completed the refinancing of its credit facilities, improving its financial position and enabling the pursuit of strategic acquisitions [21][32] - Interest expense increased significantly due to higher interest rates, but the company managed to keep G&A expenses relatively low [23][29] Q&A Session Summary Question: Impact of Interest Rates on Projects - Management clarified that Willdan differentiates itself from the solar industry, which is heavily impacted by interest rates, and emphasized that their projects are generally not reliant on bank financing [38][42] Question: Economic Weakness and Activity Levels - Management noted that despite economic challenges, demand for energy efficiency services remains strong, with municipalities increasingly seeking Willdan's expertise [46][48] Question: Update on Integral Analytics - Management indicated a strong pipeline for Integral Analytics, with potential contracts expected to be awarded before the end of the year, reflecting increasing demand for modernized utility tools [51]