Willdan(US:WLDN)2025-11-06 23:32Financial 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][11] - Gross profit increased by 30% to $67.1 million, up from $51.6 million last year, due to revenue growth and solid project execution [12] - Pre-tax income rose by 91% to a record $14.3 million, while net income increased by 87% to $13.7 million [13] - Adjusted EBITDA reached a new record of $23.1 million, representing a 53% increase from the previous year [13] - For the nine months of 2025, contract revenue was up 20% year-over-year to $508 million, with net revenue increasing by 27% to $275 million [14] Business Line Data and Key Metrics Changes - The energy segment constitutes about 85% of revenue, while engineering and consulting work accounts for approximately 15% [5] - Utility business, making up 41% of revenue, continues to perform well with a solid foundation of recurring revenue from long-term contracts [5] - Work for state and local governments, which represents 44% of revenue, is growing organically at a double-digit pace [6] Market Data and Key Metrics Changes - Demand for electricity is increasing, driven by factors such as data centers, electric vehicles, and the electrification of building systems [9][10] - The U.S. electricity load growth is forecasted to be between 0.7 and 1.2 terawatt hours over the next decade, indicating a dynamic long-term growth market [9] 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] - The company is focused on cross-selling capabilities, particularly with recent acquisitions, to enhance growth opportunities [22][25] - The company is well-positioned to help utilities and communities navigate significant infrastructure investment cycles driven by aging infrastructure modernization [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing improved performance in cross-selling and a strong pipeline of opportunities [22][24] - The company does not foresee workforce sourcing as an impediment to growth, reporting a stable employee count and zero turnover in senior management [26][27] - Management remains optimistic about securing large contracts in New York, which are expected to drive growth in 2026 [41] Other Important Information - The company ended the quarter with only $16 million in net debt, providing financial flexibility for targeted acquisitions [15] - Free cash flow for the first nine months was $34 million, consistent with the previous year, indicating strong cash generation [15] Q&A Session Summary Question: What is driving the increased customer demand and how does the company plan to manage capacity? - Management noted that rising electricity prices and increased demand are key factors, along with improved cross-selling capabilities leading to new revenue streams [22][23] Question: Can you discuss the collaboration between APG and other areas of the company? - Management highlighted effective collaboration across service lines, with upfront consulting work feeding into project planning and execution [25] Question: How is the company managing workforce flexibility and potential growth impediments? - Management stated that they do not see workforce sourcing as a growth impediment, with effective hiring practices and a stable senior management team [26][27] 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 contribute to growth in 2026 [41]