Willdan Group, Inc. Q1 FY2025 earnings call

• Had a strong start to 2025 with record first quarter results for revenue, adjusted EBITDA, and EPS. Contract and net revenue each grew 24% y-o-y, adjusted EBITDA rose 31%, etc. • Completed two acquisitions expanding geography and electrical engineering capabilities. • Expanded credit facility to $200 million. • Commercial customers forecasted to comprise 15% of revenue (double last year), state and local government 44%, utilities ~41%. • Strong pipeline of opportunities converted into contracts, including $30M program management contract for Fairfield, $18M design/manage for Paramount, etc. • Released 2024 sustainability report highlighting progress in avoiding GHG emissions. • Upfront policy and data analytics inform strategy, with demand for integrated resource planning and asset valuation projects related to data center electricity load.

In the first quarter of 2025, contract revenue increased 24% year-over-year to $152 million. Net revenue grew 24% to $85 million. The energy segment's revenue rose 25%, led by program and construction management activity and strength in utility programs. The engineering and consulting segment revenues increased 20%. The energy segment makes up more than 80% of total revenue, with the legacy part of the business making up the remainder.

• Raised 2025 financial targets: net revenue expected to be in the range of $325 million to $335 million, adjusted EBITDA in the range of $65 million to $68 million, and adjusted diluted earnings per share in the range of $2.75 to $2.90 per share. These targets do not assume any future acquisitions.

• Tariff risk: Uncertainty regarding price increases in specialized equipment used on projects. Searching for alternative equipment sources and inserting flexible contract terms. No immediate short-term impact seen yet but could be a concern. • Potential project delays if equipment becomes too expensive to be economical.

Q: Craig Irwin asked about tariffs and their impact on Willdan.

A: Michael Bieber stated that tariff risk is in equipment specified on projects, searching for alternative equipment sources, most equipment needed for this year already front-loaded, inserting flexible contract terms in new contracts, and no short-term impact seen yet but could be early.

Q: Tim Moore asked about organic growth and pockets of slowdown.

A: Michael Bieber and Kim Early said no significant headwinds seen, a little less in permitting in a few places but nothing worth mentioning.

Q: Tim Moore asked about the Los Angeles Department of Water and Power contract.

A: Michael Bieber said no revenue from LADWP in Q1 or Q2, but notice to proceed received and momentum expected in Q4 and 2026.

Q: Tim Moore asked about integrating APG acquisitions.

A: Michael Bieber said teams are in close communication, cross-selling already happening, and no physical merge needed as they're already working together on projects.