Willdan(US:WLDN)2025-03-07 05:57Financial 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]