Willdan(US:WLDN)2025-11-06 23:30Financial Data and Key Metrics Changes - In Q3 2025, net revenue grew by 26% year-over-year, driven by a 20% organic growth rate, marking the fourth consecutive year of double-digit organic growth [4][12] - Gross profit increased by 30% to $67.1 million, up from $51.6 million in the previous year, contributing to a 91% increase in pre-tax income to a record $14.3 million [12][13] - Net income rose to $13.7 million, an 87% increase from $7.3 million in Q3 2024, with adjusted EBITDA reaching a new record of $23.1 million, up 53% year-over-year [13][14] - For the nine months of 2025, contract revenue was up 20% year-over-year to $508 million, while net revenue increased 27% to $275 million [14] Business Line Data and Key Metrics Changes - The energy segment constitutes about 85% of revenue, with the utility business making up 41% and government work accounting for 44% of revenue, both showing strong organic growth [5][6] - The engineering and consulting segment, which comprises 15% of revenue, also saw significant demand, particularly in electricity usage at data centers [5] - The recent acquisition of APG is expected to drive over 50% growth in 2026, contributing to the overall performance of the engineering segment [7] Market Data and Key Metrics Changes - Demand for electricity is increasing, driven by data centers, electric vehicles, and the electrification of building systems, with forecasts indicating 0.7 to 1.2 terawatt hours of U.S. electricity load growth over the next decade [10][11] - The company is well-positioned in a dynamic market, with utilities investing in infrastructure modernization to enhance reliability and flexibility [11] Company Strategy and Development Direction - The company is raising its full-year financial targets for 2025, expecting net revenue between $360 million and $365 million and adjusted EBITDA in the range of $77 million to $78 million [17][18] - The focus on cross-selling capabilities, particularly with new acquisitions, is expected to drive future growth [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market's strength, citing rising electricity prices and increased demand as key factors for growth [21] - The company does not foresee workforce sourcing as an impediment to growth, reporting zero turnover in senior management and a growing employee count [25] Other Important Information - The company ended the quarter with $16 million in net debt and $183 million in total available liquidity, providing financial flexibility for future acquisitions [15][16] - The company has a strong pipeline of opportunities, converting several significant contracts since the last conference call [9] Q&A Session Summary Question: What is driving the increased customer demand and how does the company plan to manage capacity? - Management noted that the market is strong with rising electricity prices and improved performance in cross-selling, leading to significant new revenue [21][22] Question: How is APG's work impacting the company's overall execution capacity? - APG's collaboration with other divisions is enhancing resource utilization and improving project execution [24] Question: Is workforce sourcing a challenge for the company? - Management stated that workforce sourcing is not a challenge, highlighting effective hiring and retention practices [25] Question: What is the status of the potential $100 million contract with New York? - Management remains optimistic about securing several large contracts in New York, which are expected to drive growth in 2026 [43]