WLDN - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, welcome to the Willdan Group First Quarter 2022 Earnings Conference Call.

Our host for today is Al Kaschalk, VP of Investor Relations. Mr. Kaschalk, please go ahead.

Al Kaschalk

Thank you, Barry. welcome Group’s and XXXX quarter everyone, call. earnings afternoon, to first Willdan fiscal Good

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

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

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

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

Tom Brisbin

and We projected. both and and those the burning First We reflects and pre-COVID our good just programs revenue ramped on return release up guidance script Thanks, when California XX it the we our our to day, cost what our press spoke results? profitability, in programs, that is Al, lower everyone. which plan, not but question our heavily was, We we do for quarter is reaffirmed Kim’s in hear yet. then days soon. we’ll financial is covering ago

and accelerate and capable Thus, contractually the five-year recognition take These start-up taking event The & with changing. are of profit Revenue California of post-COVID investing are This pre-COVID Power, to We their Water resources get with the Company our recognition. to ramp-ups our each changed Gas two three payments California experienced, and all at we are second programs of time. accelerate programs new challenge. in programs we project customers completion. know phase. with restart. or California sales, must one point challenge, at It extensive with a Gas different to individual milestone team and the results. Edison, with to submission up us and revenue programs & one and Diego procedures either has as but and Southern are Los with us. half expect Electric San of for new is is is for outsourcing projects Pacific and Southern Gas getting engineering the projects Electric, and one the stage Angeles We Department all extensively week are

forecast our confident We the sticking year. with in are for

California Los Department Power Angeles IOUs, the of program. see Water in and ramp-up the we Beyond nice a

would give much This as such measures than more lighting. We sell new rather to are awaiting our the just to salespeople program. refrigeration in put

We and pipeline. doing well Analytics with in delivery also Integral see both software our business

Authority, performance City our New NYCHA consulting policy project, Housing engineering York doing group and Our well. are all

New York Ohio utility software. Ohio multifamily in New business and win a for IA on in and recompete includes for a

wants cities. won Our with has note, be Performance business faster building On faster that’s the growing get long will our policy is occur, for two would well. when headwinds projects everyone That engineering new synergistic people, and qualified is me, their a group. Engineering jobs today group limitation with is for one because with booming. civil very thought civil is always of that here, significant speculation The We and energy – doing done economy. engineering limitation civil to we excuse those our same growing times with is grow the Maybe California clean It only. City California is time. Willdan’s engineering history day for

and program chain supply immune Our be the cannot cost in to overall the disruption inflation.

at In sites equipment. job biggest terms more there’s supply remains of chain, the material challenge where equipment of delivery and complex the

remain, headwinds escalation has schedule delivery significant. been While not as cost

We we at growth. labor on suppliers focus work essentially continue From for now our This the caring includes full our XXX work to our programs. utility In closing, perspective, are this a with to California to strength customers and environment. execution. XXXX is operate manage the collaborate people with the we’re to execute

work. market is the We have The good.

new the we grow have the costs to start-up in our restarting ramp and impact. or COVID we of to the due Now, cover contracts need invested revenue to

year profitability. show return are Kim? confident half will second to of our this pre-COVID We that

Kim Early

lower were costs, $XXX,XXX facility-related QX than a or and costs an profit direct X.X% G&A XXXX. to software quarter, X.X% the higher resulting the resumption costs for of higher of primary quarter. and current average increase particularly ago. margins revenues the lower to partially Interest Tom, for million, COVID professional QX a These a of year due increased ago the levels a for profit than $XXX,XXX $XX.X in by loss completed primarily million by $XX.X a was revenue behind QX was in XXXX from QX revenue and lower million of million $X.X of stock driven costs licensing expense period for Thanks, benefit of first the and subcontractors, activities, million construction from start-up to recruiting ago, year primarily reduction lower software about during by the income primarily everyone. increased the the primarily of to million to year. prior was program from revenue slightly million, deductions by $XX.X increased XXXX. service tax suspended to $XX.X Gross to loss California of down year good XXXX strong benefit The in XXXX first taxes in The Gross projects was factors The This quarter lower QX XX.X% years. gross IOU derived a and income $XX.X $X.X of compensation before and XXXX. partially expenses. due were offset to year materials $X.X derived higher a borrowing attributable benefit was of management in million additional for net while efficiency XX.X% increased $X.X was for compared of QX afternoon, offset to facility other a of ago. million XX.X% compared of due tax from energy in XXXX in a net

net million of year was result, net IOU of the with revenue consistent of year million X.X% change new a ago. costs compared revenue loss ago, a in or programs. of mix $X.X the and to California $X.X was X.X% start-up a $X.X EBITDA net the As million of reported $X.X Adjusted or loss the in the XXXX reflecting the million revenues QX for

share. share was QX by adjusted in per Our were for of by XXXX. impact EBITDA reduce for the start-up per $X.XX million adjusted of earnings program IOU the to phase share California $X.XX current XXXX the to share per quarter of adjusted and earnings compared $X.XX the per $X.X the The share per

since equipment. the in changing earn-out programs. our our XXXX. QX, balance and our reflects approximately $X.X and a sheet, and and million the credit working for successful with expenditures resulting agreement receivables as development for reductions better payments the On Consortium the were capital In cash from capital resumption cash. amended needs programs previously Bank disclosed, capital the the used acquisition working with liabilities to flows Cash revenues our utility were used software was match of combined on that growth-related operations of Scheduled associated $XX.X primarily and IT-related payments million while increased metrics IOU expected principal with loans five suspended and expected costs in in to with related in related start-up million, California our demand quarter, $X.X term mix performance for we covenant year-end our

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

We quarter utility subsequent activities. prepared ramp and over expect management increase as to now the we begin answer those in to each and and show programs construction questions. QX earnings significant QX in revenue to a increases to Operator, continue up new for expand we’re

Operator

our [Roth first question And Capital coming from Irwin Craig is [Operator Instructions] Partners].

Craig Irwin

evening my thanks and Good questions. for taking

compare for that expense with So, look number productive early to us of were over to, And the guess, I would to take California of number end you How more of are that can here course last you of the the contracts. employees of the quarter? the million start the approximate maybe does energy you Can end before And So, employees year? quarter? projects? I these do that get back the the to the or the if they XXXX what at in this place you on we that had expect this in out, in you update work maybe grow like? wanted efficiency $XXX have less doing burden the

Tom Brisbin

still Craig. was to convert it $X.XX. Expense $XXX want EBITDA? to We’re Do you at million,

Kim Early

million. $X.X

Tom Brisbin

I end $X.X wouldn’t in for And the quarter, of of the year. expect and the now million growth between Craig. a whole headcount the lot

Craig Irwin

excellent. Excellent,

sort would to a XXXX, been have really $X.XX comparable assessment? then Is about that So pre-COVID. fair of

Kim Early

That’s Craig. correct,

Operator

from do now. Go have This is coming We Company, Riddick Marc [Sidoti Instructions] ahead. LLC]. a [Operator and question

Marc Riddick

evening. good Hi,

It especially over about I had how to go everything wanted of the up have mentioned to frame. was visibility, I ago. you the and timing facility financing wondering release spoke, we be and as seems when the in the the that talked the the of and XX-month with was and needs. the place that though time certainly couple press internal ability matching commentary, as expectation – So, credit it a having there appears should of about sort about have to if sort updates thinking could around a there? might visibility as that far room your if we a maybe off bit? you any as own of around about earlier could that that commentary lines you following be that wiggle throw you greater little sort talk how the Certainly, situation of a last on And there’s months sort of much

Kim Early

within you mean? what I within assume room agreements. about you’re the that the talking wiggle Is covenants

Marc Riddick

correct. Correct,

Kim Early

significant No, of on those the we’ve revised remain for any had each adapt a covenants we in got amendment agreements. with place. call which as expectation don’t number, filing the wiggle But a make certainly they those comfortably that and room, minimum quarter that under We are fact, you reason based us. and to should – the of EBITDA And was it, numbers. we for to timing of sure under have to plenty making also both part pretty be and margin leverage that ratios able those change comfortable just should of that in was be the agreement the

Marc Riddick

then great. switching And Okay, gears….

Kim Early

we of line have full we way $XX us, restructured that million a as available of worth the the $XX we do reminder, did to just of had to make credit Part Again, it so. was reason million. the we sure that

Marc Riddick

that are far Okay. need – bit where you any Excellent. wanted you to add? areas as might to of little maybe add see you sort you the I more you. particular later Or about there you expect do to need heads, think to if talk Thank a to as did in year? of the in certain be areas feel by a should we as pickup want though kind Or of you’re specialization?

Tom Brisbin

talking about He’s M&A.

Kim Early

about specifically? talking you or Are headcount M&A

Marc Riddick

Was headcount. talking specifically about

Kim Early

Okay.

good as as six for some and for continue In XXXX now but next for for the need need the to to average right two being California to at resume in where probably next we basis. quarters months. engineering the will programs going should hiring up and into an very We’re the be early that on QX, we again work ramp well it – construction successful into we’re XXXX, performance management be

Tom Brisbin

fourth that cover will in quarter expense. revenue But

Kim Early

That’s expected the California to actually start is doing fourth we’re revenue quite revenue in recognizing in work a from bit now we’ll program. Yes, quarter. the that be up the also Sure. the IOU when

So have revenue quarter. We profitability should costs. in the that to don’t the where good phenomenon won’t we headcount happened this be that fourth see quarter cover

Operator

All right.

have from Irwin We Partners]. Craig follow-up a question Capital [Roth now

Craig Irwin

Thank Yes, was a cut getting off little you. the aggressive part?

of there efficiency confirm wanted revenue that my part I quarter. no in the just to second the On California energy question original from was the IOUs was

You $XX your have talked guidance million Is reiterated? the about since that roughly year. this is expectation still

Kim Early

less had million in $X for the for quarter. than quarter, revenue $XXX,XXX the We about

some number minimis. number. de million a good yes, $XX So And around is

Craig Irwin

Perfect. Perfect.

about ask LADWP. to is wanted I thing second So

about in has left you of been key be available money the budget overall could know this able to that pull opportunities efficiency still maybe been What energy a for the I Can the sort I shaping might of they that COVID in is faster XXXX? like driver LADWP? for a on you back move they’ve profit unused to LADWP at it So you productivity LADWP do real the up talk be is where but some that believe some funds? this that headache see how and And Is considering. everyone, potential year? has it down

Tom Brisbin

So thus has thus good first, has this done ramping into job very far the a good been of contract year. far team the up year. The very

say client to measures contract. the the call in just additional I’ll new or scope still are we We what with discussions about,

I So for program right discussions how means we’re what and conclusion Craig, out. in that have back would now you, we but and add to like would about of don’t negotiations program, those for what the roll forth the they to that the

have So for the something more call. on you hopefully, we’ll next

Craig Irwin

update us you National Understood. Understood. maybe Grid. Can on

the country National Grid have of see quarters, issues are couple winning that the over have shape? that couple seen same opportunities, different? maybe supply dynamics starting potentially of in and the over some the chain last in to interesting take of some the You a materializing you’ve guys been just next contracts you quarters? across not do of How little contracting is similar California. California? Does Or And

Tom Brisbin

the is yesterday up, a efficiency we it. that I in is happened The about IOU just just are comparison it’s small that an but starting So contracts. small energy up. contract get contract update to ramping very California to

the State of have York New We successful that been work. in with very

we’ve going so that And it’s is and another utility well. added, going is well. Contract

Craig Irwin

a the as observers answering aren’t little for to is potentially you but Excellent. to items guys to key then for potential is always color to as And come happen those light shy external of but we look you question, energy as that table? bit line, Excellent. that I contracting? know those give to phase what have California need you a there What I awarded. see come beyond would should maybe contracts the regulatory always in the far efficiency this are time the been Can followed. work know think there little a on for another just

Tom Brisbin

answer? other. to want Do any is us do? at the looking of to We’re know each PUC what going You

Craig Irwin

I’m hard. asking to break Tom. crystal I out know. you the it’s know I ball,

Tom Brisbin

Okay.

it’s XXXX like guess is up contract might There’s it wild this it. if to bigger out every around five don’t I maxed ever. probably in is going looks more years or know. They maxed So market, be was – expand than I guess but XXXX, to me.

just decision until to going think don’t XXXX. guess. they’re That’s a wild make XXXX, I So that

Craig Irwin

quite of lot sense. of That That does a lot makes a make sense. quite

on them a customers’ been question. and visibility offices that I metrics with to is your stock level is you there in over I if confidence the for I you’re activity know another months, getting overall but customers disconnect then few investor regularly. the your last given with your that visibility your you would your are in stock? that on general don’t help mean you of can details and expect say actually versus back taking space? has your of share sort the most in How or What work, with seeing this sunsetting COVID any visibility shape improving, likely us? would So particularly the would decline the

Tom Brisbin

revenue. have last measure We we have backlog. way you’ve mentioned The about now had year backlog $X.X we that only quarter in that for if years, a you MSA XX that billion of is record you an

significantly of think billion than business. $X.X So is our we rate. our run that’s representative reasonably larger

So it’s looking now. years right a couple that of we’re of at work

robust lot Engineering that strong. where been work the but Civil business In go the market into has Engineering addition primarily that, That the much municipalities. of is we business in utility has in business perform for a work, been it to and Performance and

probably this in We alone, business million year, have we in over will that – do $XXX revenue.

been So visibility in been never this never better has situation for We’ve before. Willdan.

a Craig. right, You’re is There disconnect.

Craig Irwin

last Integral then question, I business. And Analytics, your software if may.

close You invest and because from to you customers. to of this business if that cycle projects in partners, Can number next bit a what commissions potential recovery, the given helps and little your of of a spending that the to the be business? infrastructure release is little about relationship there rate to inform you very or learning engineering on you’re the of for fairly and side that is continued a brings year energy to the IA expect so? this a bit over that impact there how greenlighted your talk out efficiency maybe of solution a there contracts, with organically that And the large would you’ve a bought

Tom Brisbin

EVs electrification. there’s the country, the concept Well, if you and look across of

to faced rate growth of X% over or for it X% that – we’ve or number more. what, like anywhere years. And saw X% X%, can’t are XX%, had, load think XX%. – the Predictions, growth. they XX% They’re many handle, I the looking from X% So I was XX%, last utilities with

impact more grid is EVs electrification. So power They going and on the just the get to to service need worse. the

more those yet. Is your where seeing? are or going haven’t options. you Craig? or So go, wind do to what that you’re think, more, solar So there use less? you What are What we got

Craig Irwin

one the to Rogers megawatt Greenest right? Jim Duke That’s what say. is used never from used,

Tom Brisbin

Yes.

Craig Irwin

and been eager agreed and industry, always him, was few all That’s I’ve why utility the has COVID – I frustration tremendous, so awards just you a And been guys it’s for from years commitment cover with the a it’s of right? ago, to the us.

clear. it’s pretty So

Tom Brisbin

Yes. you are But I I the electrification? know low mean, growth, you cover EVs. and with seeing EVs the

Craig Irwin

The EV U.S., market brings it anticipate. to expected the of And Europe. not is growing here a host as that the as faster people whole than in don’t fast problems infrastructure

that my I can would for customers, your services fingers hoping to need of crossed I that greater have that. projects. package kind proposition than your these to to that’s like So I favorable it’s solutions using a a going around these had And be a is and like multibillion-dollar pretty of on cheaper some commissioners. billion to plan plan – or IA $X imagine, IA And was would say it you sometimes to properly spend

Tom Brisbin

That’s on of type you’re planning the day, of forgot IA. I so Craig, question. in next going their I about part IA mean, in utilities software. the that? the what’s exactly that they’re questions those caught thinking your up and of looking in getting how tomorrow I that today, side at Well, got

and but of kind load So assume they’re more the planning, going growth need that. talked for that is answer. more about I just to that about have sorry

Operator

Company, Go Riddick question from now have LLC]. we And Marc. Marc ahead a and [Sidoti with

Marc Riddick

there Hi, again.

wanted like? but a just talk York, of you. in I I out? New seeing some if direct opened did pacing visibility about one it that thank been there. than in maybe was and to how about little in you wondering pandemic coming the bit the of I things right? in faster sort has your sort And in with wasn’t, course, covered given – talk how up greater also were? in up a in follow-up California, during so to line it has what to New that And New to that opened York the that install case just my any evolving maybe place into of direct that? impact Thanks. – sort place see just I you’re that York. California, what of took Because lesser is of install of could wanted was what’s the – were taking what of since So want on And things expectations questions ended extent,

Kim Early

The Direct business New Yes, small York the businesses. Marc. addresses in smallest Install of

during a that that situation. poor were efficiency those What incentives energy there forward So happened a to utilities their move actually impacted was economically typically COVID. in the projects great businesses was reacted and more concern increased economic

to additional business contribute. impact really the our net willing less the were the no almost of COVID So result to utilities much was due subsidies, because impact to to

at the point, Now increase. demand since this are COVID, those reducing utilities seeing we’re we’re through mainly incentives, but

And has in not conditions. in There New York. the predictable volatility been so due economic to the been has business much change pretty

Marc Riddick

you. Thank Excellent.

Operator

right. All

questions further call over and no time. the Brisbin. this ahead I’ll Tom to have turn We go at

Tom Brisbin

like for us Well, today, XX Thanks we’ll a to just days. joining another everyone be about you lot. I’d in and thank to talking

Operator

for and us. thank Ladies gentlemen, you joining

You disconnect. may now

Willdan (WLDN) 7 May 222022 Q1 Earnings call transcript