• Contract Revenue: Increased 11% year over year to $566 million.
• Adjusted EBITDA: Increased 24% year over year to $56.8 million.
• GAAP EPS: Nearly doubled year over year to $1.58.
• Adjusted EPS: Increased 39% year over year to $2.43.
• Free Cash Flow: Generated $4.49 per share in 2024.
• Net Revenue: Increased 10% to $296 million.
• Gross Margin: Expanded to 35.8% from 35.2% a year ago.
• Interest Expense: Decreased 17% to $7.8 million.
• Net Income: $22.6 million, up from $10.9 million in 2023.
• Cash Flow from Operations: Generated $72 million in 2024.
• Total Liquidity: $124 million at the end of 2024.
• 2025 Financial Guidance: Net revenue expected between $320 million to $330 million; adjusted EBITDA between $63 million to $67 million; adjusted EPS between $2.70 to $2.85.

• Warning! GuruFocus has detected 3 Warning Sign with WLDN.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Willdan Group Inc (NASDAQ:WLDN) reported a strong finish to 2024, significantly exceeding Street consensus estimates and internal expectations.
• Contract revenue increased by 11% and adjusted EBITDA rose by 24% year over year.
• The company generated $4.49 per share of free cash flow, marking an outstanding result.
• Recent acquisitions have expanded Willdan's technical capabilities, particularly in the commercial data center market.
• Willdan successfully won all major recompetes in 2024, including a $330 million, five-year contract with the Los Angeles Department of Water and Power.

Negative Points

• The new LADWP contract will not contribute significant revenue until the second half of 2025 due to ramp-up requirements.
• The fourth quarter of 2024 appeared flat compared to 2023 due to exceptional opportunities in the previous year, impacting year-over-year comparisons.
• Willdan has almost no direct work with the federal government, which limits exposure to federal funding opportunities.
• The company faces uncertainty regarding the future speed and scale of electric load growth, which could impact long-term planning.
• Despite strong performance, the company has no immediate plans to expand internationally, focusing solely on the U.S. market.

Q & A Highlights

Q: Can you comment on the linearity of the LADWP contract and any potential startup issues? A: Michael Bieber, President and CEO, explained that there are no major startup concerns as it is a recompete of a contract they have operated for many years. However, activity stopped in December, so they will need to ramp it back up in the spring. They expect the program to be linear, with roughly $65 million a year, and it will include more complex measures than before.

Q: Can you explain the funding and administration of the Regional Energy Networks (RENs) contracts? A: Michael Bieber stated that the funding comes from a surcharge on electricity bills, similar to other energy efficiency programs in California. The RENs are made up of public entities and sometimes include investor-owned utilities (IOUs). These contracts are simpler and involve a wider range of services, including regulatory support and technical consulting.

Q: How do you see the change in administration impacting your business activity? A: Michael Bieber noted that the change in administration has not significantly impacted their business. Their work is primarily driven by state and local governments, and federal funding cuts have had minimal impact. They have also implemented contract language to pass on supply chain escalations, mitigating potential tariff impacts.

Q: Are there any government programs gaining more frequency or implementation recently? A: Michael Bieber highlighted increased demand for programs in California due to higher electricity consumption and similar trends in New York. Additionally, there is a rise in upfront study work to help customers navigate new load growth and data center demands.

Q: Has artificial intelligence been integrated into your software, and what are the opportunities for expansion into Europe? A: Michael Bieber mentioned they are working on integrating AI into a new version of LoadSEER, expected in the first half of the year. This version will be more user-friendly for smaller utilities. Currently, they have no presence in Europe and are focused on opportunities within the United States.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.