Willdan(US:WLDN)2022-08-06 08:25Financial Data and Key Metrics Changes - Gross revenue for Q2 2022 increased by 22% year-over-year to $102.6 million, while net revenue rose by 11.9% to $52.9 million [16] - Gross profit for the quarter was $31.6 million, representing 30.8% of revenue, compared to $30.9 million or 36.7% of revenue a year ago, primarily due to a higher mix of construction management revenues and lower software revenues [17] - The net loss for Q2 2022 improved to $4.3 million from a net loss of $4.6 million in Q2 2021 [19] - Adjusted EBITDA was $1.2 million for the quarter, down from $3.3 million a year ago, reflecting changes in revenue mix and higher costs [20] - For the first six months of 2022, gross revenue increased by 19.1% to $194.5 million, while net revenue increased by 8.2% to $103 million [21] Business Line Data and Key Metrics Changes - The increase in revenue was primarily driven by the resumption of the LADWP program and increased construction management revenues [16] - Engineering, financial, and energy consulting services are performing well, contributing to organic growth [12][13] Market Data and Key Metrics Changes - The company is experiencing a learning curve with California IOU programs, which has resulted in a slower ramp-up but is expected to improve performance in the future [11] - The company anticipates significant organic growth in revenue and profit as headwinds moderate going into 2023 [14] Company Strategy and Development Direction - The company is focused on streamlining the delivery of energy efficiency under new IOU programs, which is expected to enhance project delivery timelines and reduce engineering efforts [9][10] - Management is optimistic about the second half of the year, expecting a significant ramp-up in revenue and profit [12][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from California IOU programs, timing issues on software license sales, and COVID-related supply chain delays [8] - The company is confident in its ability to turn around performance in the second half of the year, with expectations for improved revenue and profit [12][14] Other Important Information - The company has adjusted its financial performance expectations, now forecasting a minimum net revenue growth of 10% over 2021 with a minimum adjusted EBITDA margin of 10% of net revenue [25] - An amendment to the credit agreement provided more room for capital leases, enhancing financial flexibility [57] Q&A Session Summary Question: Update on California IOUs and revenue expectations - Management indicated that revenue from California IOUs would likely be less than $50 million this year, with a significant ramp-up expected next year [31][32] Question: Insights on software licensing and guidance conservatism - Management acknowledged a conservative approach to guidance, with no major software licenses signed in the first half of the year, but a strong pipeline remains [39][41] Question: Impact of supply chain issues - Supply chain delays are affecting projects requiring large custom equipment, but these delays are less significant than the challenges faced with California IOUs [42][43] Question: Performance of LADWP and other business areas - The civil engineering, energy consulting, and financial services sectors are performing well, offsetting challenges in other areas [47][48] Question: Human capital and hiring updates - Management confirmed no issues with human capital and emphasized improved collaboration with IOUs [50][51] Question: Visibility and signposts for Q3 - Management noted good visibility for Q3 as projects begin to ramp up, with less visibility for Q4 [53][55]