Willdan Group, Inc. Q3 FY2024 earnings call

• Third quarter was record-breaking with contract revenue up 19% organically, adjusted EBITDA up 50% y-o-y, adjusted EPS doubled.
• Over 1,700 employees, 53 offices across North America, helped avoid 7.8 million metric tons of greenhouse gas emissions.
• Commercial customers related to data center energy usage, government clients growing organically at double-digit pace, utilities work under multiyear contracts.
• Won several notable contracts including Clark County School District, SCE expansion, NYPA projects.
• Acquired Enica Engineering to expand commercial energy consulting business, expected to generate $10M revenue in 2024.
• Near release of LoadSEER grid planning software enhancement with AI integration.

In the third quarter, contract revenue was $158 million, up 19% organically; net revenue, net of subcontractors and material, was $76 million, an increase of 16%. Adjusted EBITDA increased 50% over the prior year to $15.2 million. For the nine months to date, contract revenue was $422 million and net revenue was $217 million, up 19% and 15% respectively. Adjusted EBITDA for the nine months was $39.1 million, a 38% increase compared to last year. Commercial customers comprised 7% of revenue, government customers are 50%, and utilities are 43% of revenue.

• Raised full year guidance: net revenue expected between $285M - $295M, adjusted EBITDA between $52M - $54M, adjusted diluted EPS between $2.15 - $2.25, assuming full year tax rate of about 14% and 14.2 million shares.

• Low electricity transfer capabilities between regions as electricity load shapes change, posing reliability risk.

Q: Asked about sensitivity to federal vs state policy, impact of potential administration change on consulting work.

A: State policy dominates, federal policy hasn't drastically affected business, dominant policy fluctuations at state level.

Q: Asked about Florida and Texas opportunities, sizing up those.

A: Florida and Texas have rapidly growing opportunities, hiring in those states with work in areas like post-hurricane rebuilding.

Q: Asked about potential growth in 2025, Enica acquisition and revenue growth sources.

A: Expect high single-digit organic growth rate for 2025, Enica helps expand commercial sector, revenue growth broad-based including state and local government side.