WLDN - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the Willdan Group First Quarter 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn today’s call over to Mr. Tony Rossi with Financial Profiles. Please go ahead.

Tony Rossi

operator. you, Thank and Willdan everyone ended for us joining XX, Good financial thank results discuss Group's quarter for to XXXX. afternoon, you the March first Executive Thomas With Mike and of Chairman management today President McLaughlin, are Group. us and Financial from Bieber, Chief Officer; Willdan Officer; Stacy Chief Brisbin, we prepared up then the call will review will Management to remarks and open your questions. Litigation are of in call which purely Securities historical, conference the XXXX. course meaning are the today's forward-looking Act of the within Statements made statements of Reform Private not statements involve important from statements. forward-looking could company's certain The forward-looking and risks materially it to future and is those differ the such uncertainties in any note that results Factors the XX, XXXX factors XX-Q. reports, the company's that and SEC December results from Form materially year but ended in differ other are limited not on XX-K the could including, risk reports Form for to, cause time actual and to listed to quarterly subsequent time investors made cautions company not on undue course reliance call. conference the The this during forward-looking place statements to the of Willdan to forward-looking update does or not Group undertake any made today. statements and revise any disclaims obligation

financial to to trends results, analyze performance. business also financial measures provides GAAP that investors' we our addition In and ability non-GAAP believe enhance Willdan

of We include Stacy? now operating call measure results. of today. earnings included to derived issued measure operating performance, from turn reconciliations Our release our and are the will at non-GAAP Stacy Financial EBITDA removes an supplemental these Officer, over that, expense a certain performed impact Adjusted of measures I the With is the believe McLaughlin. revenue Chief net both by for end items GAAP for of adjusted the work of non-GAAP measures allows EBITDA. we from revenue revenue net improved the our the employees. which

Stacy McLaughlin

statement, XX.X% us first contract the $XX.X decrease million our at for Thanks, decreased I'll today's sheet by first our call. with XXXX. cost like to XXXX for quarter in of add margin. joining those the on to to little revenue million that finally, guidance. recognized my start $XX.X Tony. reduction Total equipment the an quarter our of driven The of then pass-through to overview primarily no balance from income was we welcome I'd and

pleased reportable Engineering and their into Consulting. Engineering that equipment Energy segments Services, Homeland and finance are public and pass-through of to segments. were to as dropped broken which Entering XX% segments; consolidated and XXXX percentage again our the segment in Consulting from and services QX We The out report QX in previously two subcontractor XXXX, sequentially costs XX% we XXXX. includes Security own

million, faster the the $XX.X prior revenue with segment over However, and growth of due was the in of $XX.X primarily our for in Energy year. a decrease costs Energy XX% to X% minus the prior met projects. year. quarter. the were is related year million of subcontractor we as Direct The XX.X% criteria our separate increase growth $XX.X Net of the costs period in contract Net $XX.X million, company, the equipment other of our The segment areas other was in no an longer revenue last million, the million for to the first $XX.X defined revenue for Consulting increase same pass-through experienced year. from million decrease services an costs and of quarter Net have both from lower revenue was Engineering segment XXXX, of our was direct result increase of X.X% they revenue segment reporting. increase ago $XX.X of for an over segments. contract

and was first quarter last down the prior of down costs this contract subcontractor due in were same the which of XX.X% revenue XX.X% The total from XX.X% contract XX.X% services quarter, total year. revenue decline year. of period from revenue Our direct represented direct costs of XXXX, other the to in of lower contract our

increase was as two to in fees. quarters, this of year for as a explained to for due were facilities stock-based well items, General relatively expenses $XX.X of million the increases to payroll The fiscal the percentage to have XXXX. flat. period. fourth I administrative we first higher As million were and in G&A and low compensation taxes reduce expect quarter and compared expenses previous XXs quarter our accounting number insurance, the expense $XX.X XXXX, into miscellaneous in Compared expense, including prior the the

compared we of continues the of bit This of a percentage up percentage XXXX revenue of first for quarters. for a margin in over for of to a year As Operating quarter Adjusted prior net fourth million of quarter quarter $X.X the was XXXX. several expansion the the with was seen were as XX.X% had up increase fourth net quarter the fourth of the XX.X% Adjusted over XX.X%, we compared million last XXXX. the first quarter income period. million quarter of XXXX, the the $X.X XX.X%, from XXXX. EBITDA was have EBITDA trend revenue, of X.X% first expenses from the an for our G&A $X

attributable million or was fourth quarter net diluted of The was was effect the per net last $XXX,XXX XXXX. to XXXX, able in XXXX related decline for accounting new an significant first quarter resulting income in $X.X that recorded in tax of the income deductions deductions, company into year. share diluted to we that to rules a or compared as option for income In fourth tax XXX-D, tax tax diluted XXXX. $X.XX. pursuant $X.XX energy were realize the tax $X.X stock a was we the to the of During we recorded to benefit benefit first went to quarter, of tax of $XXX,XXX. entirely EPS higher Net million the share efficiency recorded $X.XX result quarter income per the This benefit the for quarter of from exercises, quarter. for reductions Adjusted had attributable

end we and year. contingent balance decrease consideration which sheet, in million XXXX, cash primarily previous fiscal the acquisitions. due the since our to $X.X of payable a related the paid to equivalents and notes $X.X payments our had decrease bonuses and for March cash million prior at XX, to Turning was of The was

days DSO at March was XX. Our XX

expect characteristics to see part stronger as We in year cash operations certain move through flow the flow from projects. the due cash we to of

credit. had in March of XX, our borrowings XXXX outstanding million As of line we revolving under $X.X

Turning to our of remainder XXXX. the for outlook

targets. have changed our We not financial

We earnings range to per continue our from adjusted range diluted expect million, from to and revenue to share to net $X.XX. $XXX million to $XXX $X.XX

count expect and to be to depreciation be continue diluted expense $X to X.X be million shares, $X million to share We amortization our million.

call we be rate over For effective expect to our to to like Tom. I’d now XXXX, turn tax the XX%.

Thomas Brisbin

Thanks Stacy, everyone. afternoon and good

performance with our was in operating right expectation. Our line

As these Both Engineering we have growth segments had Energy reportable Energy in Stacy mentioned, and growth had and now quarter. of in revenue. net XX% Engineering and Consulting two segments, had Consulting. and organic the X%

we rest for football Engineering the overall make of will to of plan Over Consulting us Angeles contribution just traffic new our a that and management performance. XXXX, a awarded the nice expect Los City Inglewood stadium. has The

growth also the We in economic California. continuing see

segment Energy well. perform Our continues to

programs sector Illinois, ComEd new direct for focused facilities are program small business in a ramping in and up for on Potomac consulting centers small We Maryland. and data public Edison

last of task we five-year to California covers energy This awarded water under and General Services conservation upgrades facilities. million third the our received also order state that Program were have Department program year. efficiency We $XXX

in the later result preliminary first as XXXX are in revenue into later on three doing move work and they We engineering more auditing stages the meaningful these should and projects. the task of orders we

of were and Pueblo In and on efficiency the School for agricultural Kansas. efforts in won to we most after example win to energy revenue install deliver important enterprise assignments. to contract customer New long-term doing on just to contract us base. Furthermore, awards, we our that have two about direct and up for you enhances is for group win, the have XXXX, for success as increasingly into serve of role level the public The of awarded seeing turn utilities also programs Lawrence, it Business of on trends the revenue. Puget ability delivering serves Overall If we only We demonstrate additional successful business systems service the utilities expenditures in energy energy well we program and our and since the executing is implement This be these hospital growing performance Direct being direct great program recent reward work programs similar work to positive one stable initial meaningful expanding of the awards as growth to consecutive Willdan. had on can buildings. efficiency to awarded as minimizing a which Colorado with scope. from by Energy’s services the about we increase our engineering million on ability one utilities. utility. foundation frequently case utilities the the to the of in companies the utilities states market. services, well the Sound, Small an facilities. long-term date of program, for for Puget demonstrate expanded It among the facility. XX makes efficiency our changed been earnings, XXXX. District efficient facility expanded in program, focused our were being if we increasing efficiency and New of program same through service include small programs do small County the terms that our efficiency hospital incentive have savings, will execute source our and it on demand has for $XX for Jersey install us case enterprise, are to In lodging in in the Colorado, energy non-profit Install and fourth a This was their for record track building opportunities efficiency we set government, relationships their In are reward program capital in improvements helped on office the public These deliver targeted programs point City held are energy is and in The we very extended Jersey, another Sound optimistic time as many

work their IA’s of well of in Our with for acquisition for because significant Hawaiian country. proceeding largest and solar doing adoption Integral is have software the adoption The is Hawaiian the they Electric. Electric rate Analytics

as energy more IA’s in than software. such grid. country for wind, XX disruption resource become turning software more IA’s their prevalent, Currently energy to planning are distributed to As and distributed adopted battery, resources the have demand future response the solar, efficiency utilities utilities energy

We colleges opportunities. mechanical acquired to we which We saw California. engineering our earlier of a mechanical Anderson does looking projects which Gas need had Coast. that the energy NAM, ability another you like of Genesys make firm has week, capitalize the working on capabilities addition announced McCormick NAM’s these NAM East expertise this constantly NAM and expertise growth has of or the As a in on has Newcomb upgrades work Genesys technical enhance Pacific California-based and the significantly for lot that capabilities have for we successful in further very will Francisco, fills their believe and our the enhance will efficient to long-term engineering a that Engineering, contracting on our been of performance Electric West a energy experience great accelerated very to city universities, similar efficiency San for acquisition as are of Coast. acquisition the deal facilities.

a key approved, business and been the for which to The Now to continues the plans have a update the interim on process procurements. California give quick milestone up leading to advance is the utilities procurements.

turn we have at gathering, based first the tracking according been year that we our and shareholders. now business our of for our the this the would RFP by positive year. we no good, expect With to expectations, that we call California to our questions. will for like back is this deliver believe information looks operator to another particularly there the announcements I definitive summary, overall in end on the pipeline opportunities opportunities point In continue see to Although of are

Operator

from Thank Wedbush Moshe question you. Securities. [Operator with will be Instructions] Our Katri first

Moshe Katri

already last last year, talk Hi announced I versus any want factored just looking then changed say the guys, would week? that revenue bit in time guidance, that about same way at acquisition for that thanks. to visibility your and I has year, the has a you

Thomas Brisbin

throughout Visibility is last It has like to about year. continued the improve year.

and has didn't So it XXXX It think within annual the this The range pretty update the the I about net guidance did million revenue. range, is it guidance revenue Moshe acquisition – of XXXX. looks so guidance acquisition. for we million for within $X for about annual just good particular $X as of

Moshe Katri

you to, is that Okay, for seeming the said. also we that have do is about the that And you which as I should improve have going maybe alluded that that are during that guidance of then, year have that you you X% get that said talk X% than to the right? a consulting, think that what about up to catch mentioned I you is fine. year, Maybe I to think energy have we it you what because big better can pretty comfort some quarter, this understand you revenue grew and

Thomas Brisbin

how are to deciding answer that. We

hang on second. So a

Tony Rossi

Moshe. for the revenue I we think for on are year, track

Thomas Brisbin

but big number XX%. It the bad first of is big comp job, ticking still a ’XX, that pumped the is from which first ’XX, along quarter just And which ’XX a at up. had a we of first first in the the in X% casino was quarter XX% with comp – or a had engineering a quarter quarter was Arizona

you back to don't I going a XX%, X%, XX%. as should look think I X% future at think, So forward

Moshe Katri

It is helpful.

should should of the for Engineering our for numbers? in what Consulting year expect we terms What So, in our growth? embed we in and expectations

Thomas Brisbin

much have pretty XX%, X%, been. where we

Moshe Katri

look the about you kind a X, Okay. helpful. That sort that have is range And is margins XX any then good. what we of of should for year, for?

Thomas Brisbin

up revenue over that as continue year. last couple a trend. trend has to will net of margin XX.X% years. percent last of the continued is It It EBITDA

We are should this adjusted we – as marching EBITDA EBITDA towards XX% net mark. percent around of year. revenue a that be

Moshe Katri

an be be rate is to going the year? going exit to this is this or So, for

Thomas Brisbin

the For year overall.

Moshe Katri

Okay. impressive. pretty That is

Thomas Brisbin

[indiscernible]

Moshe Katri

Thanks.

Operator

Canaccord. Instructions] Thank with next be And our Chip will question Moore you. [Operator from

Chip Moore

into can you cross-selling a revenue you guys, Hi, how that as little Is NAM, deal? $X we potential. about on on thanks. talk accretion that get more Maybe net that year, bit we about think in see where million next

Thomas Brisbin

I and key the a have headed happy they PG&E NAM and And the mean, and expansion. they UC we player have think are We lot player are very, key us. those They a for work be territory. Northern amount in to California, growing, with Cal to procurements System. room of in State California Northern will are very of

Chip Moore

any the in That next. programs, are And of then those on year how cadence okay. the some Yes, changes helpful. key is program your local and in this California, ramping capacity into

Thomas Brisbin

about Mike will talk LCR.

Michael Bieber

XX% We are year. doing year, exceed to are very again well in this goal LCR. We exceeded and our our goal last by looking we

First-quarter looked great.

a So looks that plan we on are program. good. actually It little ahead of

Thomas Brisbin

increase. year year an X was MW. This is X That MW. a is Last

it you factor give a by of X. an to idea, So go should up

Chip Moore

Yes.

capacity but this great. on And about future for assuming Okay, guys. is one maybe that thinking me and one just Thanks pipeline with I'm from sheet wasn't deals, balance latest it big, last looking? are deal, how you how

Thomas Brisbin

in now debt of bit little a for a just the bit. got have little We first time

looks we bit. our a pipeline exercise credit The good. will So, little facility

do got to additional have this of plenty year. We deals capacity

all have later well. this almost the plus got accordion, the and are looks in as now, both with of good deals pipeline and national right for revolver full We even California very new we year talking some players the

that good. So looks

Chip Moore

Okay, great. Thanks much. very

Operator

Thank you.

with will Wyatt Carr question be next Our Western International from Advisors.

Wyatt Carr

accretive give you of NAM us EBITDA the of an of this what sure I looking you but kind had, am idea of, what margins – are guys. any guess be Mike, acquisition. I that can would kind for Hi kind at acquisition

So…?

Thomas Brisbin

revenue. is about of rest EBITDA a the It as net of par with that the percent Yes, on segment, correct. energy

change So the energy are with right. our of is profile you It margin segment. shouldn't and the rest on overall, par right it

that If year. you small the the XX be on out be a a it because on update fully but GAAP should didn't it guidance We basis accretive in basis this model it amount GAAP be of accretive XXXX, remainder first months. will a for will

Wyatt Carr

March is on not of or over? that, guidance for quarter that on X.X the million then, sheet taken credit outstanding is – after Thanks balance the end line, that as great. was taken that of the out there more the Okay, or was the the was reflect already and does

Stacy McLaughlin

balance down in anymore is That then. QX the It since have the there included sheet. not and was drawn results we on

Wyatt Carr

balance, that Great. – NAM? And or pre- of cash that acquisition the the ending did include cash was

Stacy McLaughlin

balance entire The sheet prior the is acquisition. to

Wyatt Carr

Okay, that lot. and is questions Those I helpful. you. a Thanks were Thank the had.

Thomas Brisbin

any further there Is questions?

Operator

There is two.

Thomas Brisbin

There is two.

Operator

Katri We Wedbush have with question another Moshe from do Securities.

Moshe Katri

the Analytics? cross-selling that a update to follow-up. on we related discussed Hi, of some couple Any Integral months just of efforts ago a

Thomas Brisbin

helped is one like and have going in about. last Update have The proposal two They was It more that now. about the right talk I we that talked working us. ComEd, stage on well. can it. We we publicly presentation

can't that, I right we even can't competing – job never does we now tell that services, So, had in does. Moshe, are years Abacus. We never going It where the It utilities IA have ago. kind And the before. between if we the situation done financial before. you because we to done mixing a cross-sold is of of we Willdan like in doing but with something and are than LCR more say We really what backend win, much a which are are are major for that is south. three we

exploring that opportunity right the now are So growth improve of we to financial services.

Moshe Katri

business? margin better be relative to should these the deals And

Thomas Brisbin

were that hope what does we phone, not should are It know will win. there XX%. I want the mean, we negotiating don't services yet. be but financial to I we put if what? on – Around I be. I don't to

Moshe Katri

All Thanks. right, guys.

Operator

you. Thank

with Greg Our question from Fund. next will be Kitt Pinnacle

Greg Kitt

two have the did second has the I changes how Actually California in questions the question. of State is my taking for PUC Thanks any contractor been question Analytics contribute outsourcing to Stacy. and for and there consolidation mandates? Integral and Tom much quarter, Mike, you, Hi,

Michael Bieber

Do do first? California I

Thomas Brisbin

Yes, go ahead.

Michael Bieber

[indiscernible] put talking we to July, July, of utilities something RFPs – in in initial August. have the In it actually had because excess in seeing safety forward. but there, plans the I ’XX months I I The think billion. Kitt about $X in amount I had I business factor XX August. talks comments XX approved. is of a over is said stated The moving are said next are in the

regulation in So and they four in to has outsource nothing what rate are five of they the changed to forward, the are the going marching years. of [indiscernible] terms terms of over for

the time are spoke I that we I forward. this confident red am than any today see last more going Nobody on don't up So, flags. we moving is roadblocks.

Thomas Brisbin

Greg Analytics, it on million Integral than was in less $X QX.

the at As remember, software standard obviously new quarter year booked revenue for revenue it a a recognizing recognition that of dollars that so less at quarters. next or little we in lumpy, one, and was increase will mix for – million couple you the

Greg Kitt

Thank you.

Thomas Brisbin

Moshe. Sorry, Greg. I was I to talking thought still

Operator

I'm you. at further the no closing this would in turn showing management remarks. for like now questions call Thank queue to to back time. the I over

Thomas Brisbin

Okay, today, great a continued call you for you day. have in our well, participating your and of and on interest all Willdan thank for

Operator

This you concludes teleconference. gentlemen. Thank today's and ladies

You may now disconnect.

Willdan (WLDN) 4 May 182018 Q1 Earnings call transcript