Willdan(US:WLDN)2022-11-05 16:59Financial Data and Key Metrics Changes - Gross revenue for Q3 2022 increased by 23.5% year-over-year to $121.4 million, while net revenue rose 8.2% to $58.9 million [23] - EBITDA margin for Q3 2022 was 13.5%, with adjusted EBITDA at $8.0 million compared to $10.1 million in Q3 2021 [10][27] - The net profit for Q3 2022 was $76,000, down from $840,000 in Q3 2021, reflecting a loss before income taxes of $1.5 million [26] Business Line Data and Key Metrics Changes - The Energy segment showed strong performance, with energy consulting and engineering contributing significantly to revenue growth [11] - Construction management revenues increased, but lower software revenues impacted gross profit margins, which fell to 30.9% from 38.8% year-over-year [24] - The Engineering segment continued to grow, with new assignments in Florida and Texas, indicating expansion beyond California [18] Market Data and Key Metrics Changes - The company is actively engaging with California IOUs, with significant contracts in place, including those with Los Angeles Department of Water and Power and Con Edison [13][14] - The Inflation Reduction Act has created opportunities for the company to assist cities with energy and climate tax incentives [19] Company Strategy and Development Direction - The company is focusing on electrification and clean energy transition, leveraging its expertise in performance contracting and municipal engineering [11][40] - Willdan aims to create synergies with cities and engineering practices to support decarbonization efforts [12] Management's Comments on Operating Environment and Future Outlook - Management affirmed guidance for 2022, expecting net revenue growth greater than 10% and an EBITDA margin exceeding 10% [9][33] - The company has resolved major issues with three of the four California IOUs, indicating a positive outlook for future operations [20] Other Important Information - Cash flows from operations improved, with positive cash flow of $8.1 million for Q3 2022, compared to cash used in 2021 [29] - The credit agreement has been amended to adjust the minimum adjusted EBITDA threshold and leverage ratio, extending through March 31, 2023 [31][32] Q&A Session Summary Question: Electrification opportunity and IRA drivers - Management discussed the importance of electrification for IOUs and how Willdan is positioned to capitalize on this trend, particularly in California and New York [37][40] Question: General outlook on the company's position - Management expressed optimism about the company's ability to pivot towards electrification and energy savings, highlighting ongoing projects and contracts [41][44]