• Contract Revenue: Increased 18% to $141 million in Q2 2024.
• Net Revenue: Increased 17% to $73 million, net of subcontractors and materials.
• Adjusted EBITDA: Increased 56% to $12.8 million, representing 17.7% of net revenue.
• Adjusted EPS: More than doubled to $0.55 per share.
• GAAP EPS: Increased to $0.33 per share from $0.03 the prior year.
• Net Debt: Reduced from $75 million at year-end 2023 to $50 million at the end of June 2024.
• Net Cash Provided from Operations: Increased to $28 million for the first half of the year.
• Full-Year Guidance: Net revenue between $280 million and $290 million; adjusted EBITDA between $50 million and $52 million; adjusted diluted EPS between $2 and $2.10 per share.

• Warning! GuruFocus has detected 5 Warning Sign with WLDN.

Release Date: August 01, 2024

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 record second quarter, exceeding consensus estimates and internal expectations.
• Contract revenue increased by 18% organically, and adjusted EBITDA rose by 56% year-over-year.
• The company raised its full-year financial targets due to strong first-half results and current momentum.
• Willdan Group Inc (NASDAQ:WLDN) has a strong presence in the clean energy transition, with 53 offices across North America and a workforce of nearly 1,700 employees.
• The company has a healthy demand for services across government, utility, and commercial sectors, with government client work growing at a double-digit pace.

Negative Points

• Despite strong performance, there is inherent lumpiness in revenue recognition due to accounting requirements for large license sales.
• The company faces risks related to low electricity transfer capability between regions, which could impact reliability as electricity load shapes change.
• There is uncertainty about the future speed and scale of electricity load growth, which could affect long-term planning.
• The company's profit is delivered equally from three phases of work, which may present challenges in maintaining balanced growth across all areas.
• Willdan Group Inc (NASDAQ:WLDN) is looking to expand its commercial work percentage, indicating current limitations in this sector.

Q & A Highlights

Q: Can you update us on the contribution of Integral Analytics and its impact on revenue volatility? A: Mike Bieber, CEO: Integral Analytics is now smoother in revenue contribution due to early contract wins and more add-ons to existing licenses. While some lumpiness remains due to accounting requirements, it is less than in the past.

Q: Does E3 have potential for increased consulting activity due to load growth and structural grid issues? A: Mike Bieber, CEO: Yes, E3 is well-known for energy and carbon studies, and there is upside potential as states and utilities adjust to unexpected load changes. This area of business is expected to perform well over the next several years.

Q: Can you provide details on the Meta emissions study and its potential for similar opportunities? A: Al Kaschalk, VP of Investor Relations: The Meta project is a six-month study, and we have similar projects with other big tech companies. This type of work is becoming more important to us.

Q: Is there potential for business with major data center companies like Microsoft and Amazon? A: Mike Bieber, CEO: Yes, we have been working with major data center owners and developers, including AT&T, for several years. This is a rapidly expanding market for us.

Q: Are there any potential acquisitions planned for this year or next? A: Mike Bieber, CEO: We hope to make acquisitions this year, as we have been working on mature opportunities with interesting capabilities. However, timing is unpredictable.

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