WLDN - Earnings call transcript Q4 2021

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Operator

Good day, and welcome to the Willdan Group Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Al Kaschalk, VP, Investor Relations. Please go ahead, sir.

Al Kaschalk

Jenny. you, Thank and Fiscal everyone, Willdan Fourth Group's Good XXXX welcome Earnings and Year Call. Quarter afternoon, to

Joining our close Financial call Board today we today are Tom Brisbin, earnings our Executive Bieber, The release Kim builds Mike on and after Chairman Officer; Early, and Chief market Officer; issued President. call today. Chief of the

Securities ir.willdan.com. information up the any disclaims that Management to open those statements the made in but website forward-looking made Willdan results the the XXXX. and The listed could forward-looking press statements. during Reform statements does cause report statements for XXXX. call questions, are your The of place the on You conference purely the release or could Company's future and earnings note Act Company involve that course and to today's Factors January call. update filed forward-looking reports, historical remarks, SEC relation prepared may year uncertainties, XX-K and X, review any the not the certain to the questions. investor time and ended in materially will actual reliance to to, forward-looking such cautions in differ to today's Private today. in accompanies investors revise undue of forward-looking not obligation important this statements time including meaning risk made undertake differ section stock factors course and and any find from Litigation other not answers on are materially are Form that the limited will Company's including, to results annual it's our from on at the to not investor call, of report we Statements of which within release risks then your conference call the of

business trends GAAP enhance ability and measures financial the to to that performance. also then results, investors' addition we believe analyze In we'll provide non-GAAP

Our adjusted Tom, the EBITDA net revenue, to I'll adjusted you. include turn and over non-GAAP measures EPS. call

Tom Brisbin

good and everyone. Al, afternoon, Thanks,

to year delivered results that momentum. behind positive build fourth impact We We our quarter see post The signs continue us. COVID are COVID well of of estimates. internal the ahead and initial the

previously, all have is only time. moved we would customers like serve. all access revenue repeat in As contracts and restarted and our open stated were contracts geographies to to that no in canceled out I

Looking back we at well year, environment. to the virtual the adapted work

follow few offices of will many As anticipate employees months. from next most customers benefits home. a over our the services their in back firm, We our working be

hybrid We to our to also employees return a expect model.

Our current Willdan's challenge help is California ramping this would pandemic. like coming to to out understand IOU three contracts. are I points position of make up the There key investors

work. work We three simply of the fast the -- offset of winning the $X.X needs collecting of organically, organic this look the have and not of at this years billion. we a that for The capital enough as priority ramping is money up, conclude executing priorities record are to We growing backlog approximately of Thus parts growth. organization. many

good will help and looking how the part, most this a efficiency. for are small energy respond the is are point think customers how have struggling we idea businesses second The pretty post-COVID on utilities The to really We point. at them.

efficiency. buying now Our are stated, the exceeding serving Department us This more energy Simply now the that Angeles are before COVID. we weekly Power, Angeles Los largest customers energy contract, LADWP, revenue. efficiency tells and commercial Water doing pre-COVID of Los than the is area

We contract during expect year more the throughout spent to this was have because we excess that not ramp budget COVID.

personnel Thus, is headcount of second only of year. for follow the will up XXXX. had we time, a an California growth revenue the X% X,XXX people, planned, but At substantial we not in is half increase. have we as into the organic point deliver programs, The XX% high which to have the third ramped all-time same

the year, and because the of mainly proof the of the consulting throughout are Kim have summary, contracts. previously they the We as rest and ramp stated, point XXXX the out, will at XXXX. as operations, expect, construction In California of efficiency. work wrapping start well engineering Looking do management, late and the customers that as positioned are we energy for the they all buying

contracts. We the tools, the the to execute processes, also people, the knowledge all the have and experience the

XX% about expect organic XXXX. We growth in

little for electrification be for carbon low being utilities. reducing market will will converted to and Electrification increasing demand deeper. that carbon vehicles for The continues the efficiency to be strong. continue electric is to Looking The Thus, a fuels growing. grow. electric energy

As an facility. This a year $XX Housing carbon build New on above United the in footprint example, York new all Authority application City. we an contract a through carbon has reduces was first-of-its-kind This York others City their New and Willdan's measures million infrastructure-related program are design in enters innovative housing. across electrification improve States. specifically and technical approach lower starting to existing competitively public selected infrastructure

to build have revenue District for provide facility double Pueblo Willdan approximately started expect We XX. the for million facility for will $XX In to buildings. XXXX, million. we engineering our construction and and construction improvements $XXX district $XX XX two-year to the project also update four design million management -- management schools School County

market. IOU energy competitor new major five-year this also million the to grow awarded for $XX program been in mid-Atlantic have efficiency gain We a a geographic territory. utility. owned into investor ground a We've were We large

won also New York. Grid an recompete in National with have We expanded

overall Our not programs chain disruption in cost been have the inflation. to immune and supply the

as extended. seen and expect salary equipment see latter we have we well recover. to procurement, a The higher perspective, From we expect costs. as to inflation of materials delivery inflation cost schedules terms In

into demonstrated disruption delivery COVID emerging surviving stagnant. our and have of adapting. efforts potential been last The felt this are our XXXX building are years of Most We two study. we very stronger. had on

position is energy space Our in clean the strong.

strong. states Our COVID is dominance New California York, progressive and in the

the year to years. and this expect best future our be years We

of build We have years the foundation been working many Willdan. to

diverse is now the and is The Thank of energy well you and years. back to and is capabilities in to turn to to exciting their will accelerating. call the clean growing us and positioned. to over is of disruption two behind growing our business I watch. I'll financial over perseverance Willdan this Our people team the opportunities Company. now call discuss for employees Kim? now Kim shareholders last the -- our results. tenacity COVID

Kim Early

Thanks, everyone. Tom, and good afternoon,

Our begin continuing were QX this QX in recovery strong, results year. of the

a quarter of result change million to by earlier revenue. XXXX XXXX project not a driver compensation The stock contingent QX related XXXX. million of or though and million slightly valuation mix the are million pretax primary subcontractors, $XXX,XXX for income lower fourth increased for adjustment consideration a related loss year expense $XX.X management caused declining million, offset our robust quarter noncash fourth $XXX,XXX of of divergent the shift $X.X increased income of QX G&A offset in of The costs XXXX. While tax decline a margin $X.X in costs the from income unchanged $XX.X the to period X.X% deferred yet accretion LADWP The the a was lower reserve to result charges to a in loss were XX.X% for of QX XXXX. $XX.X management million QX of from revenue. in by XXXX certain being and versus revenue. completions in QX compared gross in profit startup million QX driven new The was X.X% in profit lower was $XX.X before other construction lower to mix turnaround QX revenue, income gross versus to better by $XX.X of than due of a creating tax year, million ago, in the This gross a XXXX. and million net new tax of the revenue revenue interest to same net net was to primarily the loss XX.X% of to XXXX. $X.X G&A income for of projects direct state XX.X% Gross of expense to revenue $X.X was to despite of million in of the at by for for is from contracts. net the of NOLs backlog declined $XX.X XXXX adjustments from made taxes exceed $XX.X materials The in of quarter, construction the from million directions lower revenue for

from the to adjusted ago. of increased by net XX.X% a million million For compared $X.X revenue XX.X% or net or year EBITDA X.X% revenue of $X.X quarter,

Our of to for in share per per per adjusted share $X.XX XXXX XXXX. share compared earnings $X.XX were QX

loss reduction $XXX.X reported drivers year fiscal in increased of again, $XXX.X million behind the differing lower revenue gross declined higher from in X.X% net G&A revenue. essentially when XXXX. the profit in XXXX. revenue at gross a of the and The and improvement but profit X% and from $XX.X the being profit primary higher net gross period Gross to the for with XX.X% mix fiscal $XXX million million in revenue million by $XXX million, increased flat change other loss expenses. to year, million $X.X the fiscal margin for revenue facility year in versus million $XXX $XXX the ago. in trajectories gross an loss costs XXXX $XXX.X for flat XXXX. compared revenue The million same of and G&A to XXXX salaries $XXX.X versus or a million million of For to XXXX by X.X% gross The XX% in wages sources, were to XX.X% were also expenses the or revenue of offset a in accounts accounts mix net from in gross

with program, various compared XXXX. cash amendment, expected original of LADWP in when of fiscal adequate million end the and in debt year. compliance the were the XXXX $XX $XX.X related IOU were credit our covenant and expected and the Capital was was flows our and start-up adjusts operations covenants a share million our for for our return the loan acquisition a prepare growth covenants we reflects provided available our credit $X.XX for of substantial of million used draw compared As of draw our in flow was under Scheduled amendment the a XXXX. continued $XX.X revenues, consortium $XX.X software cooperation facility, terms changing pleased better to needs to The of year. our also the equipment. adjusted term -- expenditures cash California deductions payments an fiscal restart The and amendment comprise $X.XX balance the to in obligations margin by IT-related $X.X March liquidity majority of of On in our Cash XX.X% XX.X% to line The we five the expected for metrics in the our $XX were $X.X the programs of XXXX. million earn-out support the from to the banking we credit, ensure credit the of the and earnings reduction. an our capital new the and and the changes a bank rate year million versus the to a throughout resulting with in payments agreement activities. impact with late loans result X, the successful a growth-related financing growth credit during mix ago, performance working ago Under sheet We're expectations of tax our XXXX leaving the with primarily amended in agreement. EBITDA match support available development increase term for principal effective full year, year under XXXX. adjusted remaining partners million on provides as from expense for per million

grow to and will revenue our tax outstanding over $XX.X adjusted for will expecting weighted by and XX% to EBITDA effective to million. earnings shares the grow XXXX, adjusted ahead per about fiscal XX%. XXXX be we're average year and rate Looking approximately share estimate net average We XX% by approximately

each in expand year construction the QX in ramp programs ramp and continue expect management start we We quarter utility and up as subsequent activities. the new slowly to to

costs the in second under provide about expect half of to the year the XX% new be We year. XX% full the of year programs earnings of realized first and earnings half revenues trail the the the of to as

prepared to fiscal We on strength contracted Operator, throughout and the of expect 'XX continue to backlog. and that now questions. into the beyond we're ramp answer

Operator

And Moshe go Instructions] of we Katri [Operator Wedbush. will first to

Moshe Katri

A nice to from you. Good quarter. hear

with talk So the board. recoup a is some how will still loaded impact just the new ramping a going Maybe terms to I the costs about deployed some have you stuff, margins that contracts? bit half? factored of confirm, of first more to bit in talk team kind bit during here we're than You guess, the to of of a also some have how of indication of getting lot associated you actually How Can about a year. -- usual that of of back-end have a in of ability that? and contracts wage on the that the

Mike Bieber

This missed full and you up for strength the something in I'll last And 'XX. we start. have work I Kim, XXX now Moshe, Mike. is mentioned, in hired about at Sure, are have First, fill do to that people Tom lined where year we

have people All of those been hired.

because first. we've is. cost There's -- hired not we So in future people. labor 'XX, those take they we the That's one already know risk what already cost

operate schedules in $X those utilities, the we've big to in last schedule contribution with cost in contribution very Obviously, that doesn't year. That California people. these revenue of is They of contracts with a first is types California revenue specific milestones signed -- people in the of half to year. delivery but throughout XXX and go going with That's IOUs. the aligned little QX did roughly carrying QX. them. million we we're the that minimal cost is have cover approximately us QX, QX, our more and and that Second, The

we're We're or forecast them with we've underway, those point. the your and for up. Does not about those question? are So of lot a contracts. way ramping around built There's pleased things our well this that answer in milestones 'XX at subjectivity mystery

Moshe Katri

and And then will in been just sort has -- any recruiting Yes. 'XX of at factored confirm, so -- be point? ramp already P&L that the let will to able costs you actually this

Mike Bieber

expect from We it Yes, forward. this hiring Correct. substantial point has. don't

on people staff the have need. We we

Moshe Katri

been Has And attrition that staff? within you then anyway? measure changing do Understood. your current

Mike Bieber

'XX it. 'XX data somewhat consistent two was up sorry, at. in It a 'XX looked That has. We -- monitored industry of And lot the of the and all 'XX, did we years. and like go companies, it I'm with COVID that

spite so all added more. we replaced in of people of And and XXX that those attrition,

Moshe Katri

where are right we at the now? the level attritional on And attrition Okay.

Mike Bieber

was Voluntary around was down coming last it I XX% voluntary. saw,

Operator

you ROTH We'll further if Irwin And Capital Partners. have time. rejoin next please the queue at Craig any of go questions, this to

Craig Irwin

from for from clarify far in as your contracts? guidance, signed can contracts last what months. expect the that you XXXX year IOU of California us How So XX these the you you in maybe this Willdan's as revenue much is guidance

Kim Early

approximately Yes. At be the $XX gross that million. revenue level, will

Craig Irwin

Okay. Understood.

costs two costs of horrible for in year? on the the what you're years of So higher with. how everybody now, about, clear gauge a back think, execution that less higher costs becoming we down? cost. we'll or this confidence higher of But cost know external see theme half COVID to is deal we this confidence pretty the the This cost, I do gain see was taper talking the we've start-up of confidence thing something you the I do about for high do higher been will that How higher business.

Tom Brisbin

last year, early And business going but most guidance. through Two I'll And know QX to that labor results talk try is and even costs The factored in. see the QX about do. that already for then labor primary to take we into We of equipment or cost that and that now We of separate. we business. will Craig. necessarily in the actually. defined in we've QX materials. flowing go what that, didn't our now We'll you

labor, the largest component. that's that's the So

and from costs to of able X% as The on business customer. high what on XX%. costs able the course, general been you're materials. raised XX%, Those anywhere through have been that. is to Second have be as doing, depends to do to equipment in largest component, passed We've our

are duration project is have delivered complete that be delays. the as supply thus We which to XX% What be basis, where we the of level not erosion margin chain on second that our so equipment is I say at ahead not though we're a project country. part, at -- the waiting percent think right would seen where or around We happened far. would has sites now, we

change your biggest install that on that job we the the sites Does of that occurred. that's materials question? this call. So has It's delay answer

Craig Irwin

Completely.

on in may. work IOU that of of if you and What pursue for in at California question, of last is to in California would natural healthy efficiency. work you change point, your years, next differently So you very be of chasing have as that's took would have nothing what there And share longer-term other of are I maybe scope Many energy far that over expected the markets. shareholders that's as way differently your the us, far bid billion stock own margins? than this front of been the couple work, your $X both you for Or the leadership opportunity? broader as this additional more that maybe this work would to you awarded higher as the

Tom Brisbin

in the don't number. I Well, call a this at love tell number, TRC need And to you what why the were total we said, the you state, variable, wasn't telling meet meet been changed, our had PUC, lot negotiating primarily if then have we it, we There that but resource utilities we to this it negotiated. the room. came There are let's costs. of would competitors

is measures allow what a to have There cost we that's wasn't effective put that negotiated saying. So us. in are of lot

Craig Irwin

you the EMC right, and contain is do profile profit not commissions, when utility public the Tom, work So things usually, forecast. do that

right? regularly. orders, change And go is can and this get You back done

for are and higher are more aggressively the not on bit known pursuit orders, asking us front the others change see led orders. upfront opportunity change obviously a the go orders, remediation bid bit what profitability companies expected on of for liberal are Is commission to frequently transmission their of maybe in out a when was generally and price an was higher given change bit? and there then orders. They change projects tracking that work things Some of very in line with to this below for all these a are more

Tom Brisbin

Yes.

the but change wrong be seen of because talk the COVID. about have word, utilities terms order changing contract the may We

proving are contracts these some energy So the what we're real kind in small interested not just market is They the we've efficiency. and sampling business. of done let's of showing and take in that,

So improve renegotiation that changed. room for coming the the saying there And is world when to has utility are has you the the the changed. table utilities world

So Craig? question, does that answer your

Craig Irwin

many and go for Utility round special bid so-called work there's Willdan lighter fair a front is is being and using models people it with is commission refusing of something a set on execution let very with like one where utilities that Commission dysfunctional with to reach they that want on compensated and that guidance get given from -- minimum logic. public And to your just follow it far that is seem status California than instead a just Your underperformance the right? little back seems effort contracts. be pretty either today. the the as get aggressive the recourse do ways that in And engagement experts that serious private, most guidance, execute some you very a level the thing unique, energy bit leading a and of goals highly next to what they that actually clear And looking the could committed looking shared of of the this the my of past. the efficiency to looking as the that, you a Willdan to potential us some them fairly. with were last Well, of to in profitability the it of And expectation doesn't like or I'm for to I'm maybe energy special beyond would years. in company, as legitimate efficiency success you're earn company, you were over the some has and

Tom Brisbin

we guidance Guidance I would you. you shared until with said the

Craig Irwin

for Outlook 'XX?

Tom Brisbin

margin be revenue mean you higher. the You should think you the are think be you Do higher? What saying? should

Craig Irwin

modest believe your the that when profitability expense employees profitability carrying ahead probably that large P&L, start-up market not I think burden a a there's impact is take job start-up the be below energy the on to by want really because of or costs a many you're a margin people lot should very fair maybe of functional the costs that breakeven that And the should going programs, the the and contract in holistic that in would is to has in not know as is But utilities a are given the need probably they total should have profit be, do where need I their should do margins line there be included if see the the are view. they there's of scope great been tracking what mean, to first best frictional on the guy working that I this. California carried that you the natural got done. piece to to to not below they've equation. dilution, get of And on work committed these they of on. be, a of the And success efficiency but place. you're really

logic? my follow You

Tom Brisbin

but Yes. We love include it. didn't this start-up contract costs,

So included have them, price gave that we we we and in got our to deliver.

we right, voice we're what deliver, Once stronger, have just we're that? to. and think negotiating I add Do is I'm on, want to anything So better trying you get getting a to started. we'll will position. working our

Mike Bieber

No.

as a covering bid, were first have over the of low, we very in in few projects year problem even substantially run average Craig, pointed this that the pick the designed we're perform up to we back comes not volume on thing, will that out, Margins year don't hit Kim the in are up these way million so as half can the is The the volume other that claim part the Remember when up. have years. next years these volume -- our last the revenue of we programs over four margin $XX ramping the -- rates -- actually costs. revenue the even the that, over programs have X/X the of as the and of and way we close to they is is volume

So designed. going the We unable a in have the just we're to were convince were to even to costs. up substantial ramp way them pick they start-up 'XX. That's

there been as expect So design or of We didn't anything programs we hasn't volume. that just that need was out more the the of contracts. sign the we

Tom Brisbin

we're And behind of I because that's world the not mean we And California we're COVID was timing. we're behind, start. did because behind it started delayed.

catch we'll up. So it

Operator

Chip go will [Operator Hutton. EF of We Instructions] next to Moore

Chip Moore

just revenue. IOU that to Guys, on California on follow one up the wanted

you factors to over point, significant the of million next figure in any so fact years. 'XX, what's So coming? the -- that step-up, is for could a X/X Are average that volume limiting coming everything 'XX, you in if your four about $XX years there in the obviously, will, if pay realistic a pretty

Tom Brisbin

Yes, IOU of forth Chip the from the million that. million between in And something in number be $XXX $XXX revenue 'XX, in that's and contracts. set will the contracts, like goals the California

Chip Moore

couple minor just a me. for And of ones

to shut program Any potential they be down. funds have LADWP, potential from way some about that talked that about is would magnitude? And You upside? when think unused

Tom Brisbin

in number. million given They more money. not so unspent -- $XXX numbers. the I'm number, It if to fully know charged is. is so have all the can dollars don't us of we're serving, additional the and we we than about to the public going support customer public expanded the How the contract There's continue program that? the a been There's the give They've at have I recently know have and this with scope we look that. that extend expand to have that they The ways doing customer for. the

so is upside And there. potential there

Chip Moore

None guide? of that is in the

Tom Brisbin

is correct? that None the in guidance, of

Chip Moore

Just one IA last one. software.

of you were for you Is this And where about think the sort in? expecting for it similar are $XX year? million that came I year. talking

Tom Brisbin

a They Chip. little Yes. were above that,

of we good. outstanding even were bring I they very sign had I in for frankly, think to good. The XXXX. new number some is And new think and closer licenses million would They that pipeline QX, an the And some grow, 'XX. $XX for software to expect we'll in QX, customers. into Looks year. opportunities

Operator

[Operator go to Marc Riddick next Instructions] We'll of Sidoti.

Marc Riddick

on a couple touch to things. of Wanted

you're far a visibility as provided of wanted because meaningfully you've over touch as three from bit of seems there, to on little though last appreciate you improved kind visibility, advantage months. First to though I all, the mentioned seems all I it the overall with the point, the is that as is looking that expecting? that that's to as for kind how it that guidance at any that major pieces specifically, And at as six you're as looking there there numbers a any you're guide, factor of particular at forward, looking currently iffy issue swing -- but just still is you're that you 'XX to bit to swing factor going a is what still not around the

Tom Brisbin

before. been been never say we a never need won't as as work that We've Marc. we've book And been not, year. position would there's the that majority this we've in position. never say but all, We No, I booked this strong of I overwhelming a to position stronger like in this.

it's this even unusual. and in it's it's throughout So XXXX year, And not XXXX. only

work. about in not all it's in We've about before. now. what position never really It's been execution So right this

So very good.

Marc Riddick

things things that. that extra I as you was then any supply slow chain down well and mentioning far of timing where constraints any meaningful the wondering as like the sort I as and or on of from Excellent. appreciate on are there some And Omicron were operations? you piece, visible impacts

Tom Brisbin

when you're projects, working for delayed. like custom-built large slowed customers. year That of the -- with type boilers, We're our equipment especially Supply equipment certain and chain chillers, has is being more delivering hospitals. universities closely complex

those we in might that delays. on understanding. percent be It for cost though didn't have I so escalation complex types are projects those not on ahead average. We equipment. As resulted mentioned, or has XX of The customers

Marc Riddick

impacts? Omicron any And

Tom Brisbin

QX. in can't Those think were are abating. of I that substantial any

Operator

will to a our go we Private question [Richard Investor. And Isenberg] from next

Unidentified Analyst

in Since the more million, EPS increase to to $XXX in XXXX California you and assume $X you million in it $XXX than XXXX? contribution is from expect should make logical between for that

Kim Early

away way for long a That's guidance.

apply where is can give where as you We've we're your answer. far So logic. the told expected but going go, We're that's not guidance at. to revenue you to as

Operator

And further or back to now comments. any for in like with turn closing queue, call I the to additional no Brisbin would the Tom questions over

Tom Brisbin

again to and and I'd lot. all you phone, investors our the just throughout see in thank like we'll next employees Thanks a quarter.

Operator

concludes for this you participation. call. your today's Thank so And

may disconnect. You now

Willdan (WLDN) 11 Mar 222021 Q4 Earnings call transcript