WLDN - Earnings call transcript Q2 2022

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Operator

Good day, and welcome to the Willdan Group Second Quarter Fiscal Year 2022 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Al Kaschalk, VP, Investor Relations. Please go ahead, sir.

Al Kaschalk

Thank you, Jenny. welcome Group’s and XXXX quarter everyone, call. earnings afternoon, to second 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

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

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

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

Tom Brisbin

everyone. Thanks, good afternoon, Al, and

The expectations. second quarter did not meet our

some hit headwinds. have We

will First, the California IOU which programs, discuss. we

are Second, some issues sales. chain some faced also has contracts. – we on will slowed software supply COVID we timing Also, license with

was Given headwinds, quarter the weak. these

our We two we and months to building We first-of-a-kind to technical these worked economically to also are worked streamline the these support developers three processes California, with the and provide the quarter, approval. We in we the corner reduced programs. delivering significantly efficiency by This amount turn significantly expect the half. of new energy streamlining improve brand-new SDG&E businesses reduce takes to will customers. In IOU enhanced pre-installation efficiency energy to under to of significant with efforts sensitive programs second delivery delivery delivery successfully in to package made We of enhance major engineering reduced a small second to throughout successfully while timetable receive PG&E with our that for the it effort These contract the architects progress change and projects requirements. through requirements. months. co-payments

programs. IOU Our result will ramp-up, now in much curve This with the performance customers but in resulted learning better we are making the learning us. of has are IOUs and a changes these slower

three X% For the the has growth first time revenue. from last are significantly improved in over that quarters. Organic to XX increase XX% months, delivering to projects we will X%

are but year. concerns way just likely out of Given here’s see what said, I the rest the we there the there,

second ramp half. significantly revenue in the and profit to expect We

in We are making California. progress

and Our consulting all extremely doing are engineering, well. financial energy

the We are only fourth and third and in and heavily California also Power, ramp the well. Our LADWP quarter New Angeles York Department City doing churn IOUs Water Housing Authority, Los the in our have programs to quarter. NYCHA, of

moderate increased to we and Going in forward headwinds making tough are into months, and see a significantly our turn discussion. our It working we expect to my and significant call together. been XX organic revenue confidence Kim progress. because customers the but Personally, we financial has I growth will has XXXX, profit. we the over now would for are more like to closely

Kim Early

programs. LADWP good Gross construction quarter materials quarter. of stock costs, primarily the of quarter. quarter Thanks, revenue G&A revenue revenue quarter of was revenues. expense due net XX.X% The compensation mix was million Gross current a the XXXX revenues the or the compared second higher to tax for management benefit $X.X Act smaller of over lower Tom, absence net resumption and million CARES million was profit EBITDA revenue resulted benefit XX% the revenues, loss loss to $XX.X QX with and increased lower loss program million salaries XXXX revenues $X.X offset the compared increased $XX.X and tax other revenue lower costs year a ramp-up slightly a of for to average while hedge. revenue, pre-tax the for related ago. new $XX.X the million quarter for and increased $XXX.X expenses. of XXXX. in interest the primarily to in a the of were a compared was direct ago, of million XXXX. million The change the from expiration income IOU versus than increased for to $X.X net of derived tax of margin the the interest costs construction combined reported for quarter million The computer-related realized or profit loss professional taxes afternoon, the The three-year-old improved lower higher versus prior than costs of year income more $X.X rates million $X.X recognized in million million of year year the QX a income of in ago in to Interest than from XXXX. to XX.X% Adjusted $XX.X one-time everyone. XXXX. $X.X million XX.X% California programs for subcontractors, was improved to lower for current year X.X% of QX higher loss of by million, net QX benefit new The management XXXX before The for for service higher $X.X the gross rate benefit mix due in derived a was from was and pre-tax or $X.X software Lower for reflecting expense the higher ago. to the lower and and year

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

increased $XXX.X net EBITDA The net first to was a ago. increased $X.X $XXX million revenue of revenue XXXX. earnings Adjusted for million. share million, XXXX while million $X.X X.X% XXXX. per to of to gross months, six $X.X the For loss the compared year period months year-to-date XX.X% million million same Adjusted versus compared share was a $X.XX to the current in the was $X for $X.XX per for share six

for acquisitions the quarter sheet, of period. same the the accounts and XXXX, million reduction used year-to-date the primarily primarily bulk the million $X.X side successful $X.X of period operations which the sheet delayed million first On compared collection term $X.X for of Scheduled of in payments term payment year. by resulting to XXXX. million various since liability cash and of the for remaining financing draw $XXX,XXX prior in receivables payments for the of over this the Cash were to pass-through for programs utilities, was energy the utility earn-out Capital earned from reflects from the by compared first drawdown of reflects cash performance in the year-end acquisition half accounts of of loans corresponding The used of also development. by payable on principal a drawdown XXXX. were internal provided term efficiency balance loan, the reduction XXXX million loan and offset cash contingent resulting activities consideration used expenditures our incentives by in customers were $XX $XX.X the delayed software the in to balance of under draw in paid

XXXX, have our fiscal we performance. for financial of remainder adjusted the to expectations ahead Looking

Our new prepared to of revenue Operator, EBITDA we’re revenue. of XX% minimum a net minimum growth XXXX adjusted net guidance answer questions. of now with calls for margin over XX%

Operator

And will Hutton. go first to Chip [Operator with EF Moore we Instructions] you. Thank

Chip Moore

Thanks evening. the question. taking Good for

we could the California wondering start if with Just IOUs.

of You’re talking about, in the or most half. so that back I think, year this $XX million

bit So year, how about we and talked of more with doing see do a that we what some about these streamlining where think about we the should implications you to about are think start some then, that ramp you’re is, efforts. when you next and that? talk could Tom, What there? Maybe efforts. And

Tom Brisbin

well, – President. this He’s a has Mike longer dealing with day-to-day. been he’s still no

third streamlining is he because the If he’s And part you going right regards million next sick. now, into a the with was $XX year? to Manager Project – a think to and

Chip Moore

still $XXX of Yes, million think next $XXX yes. sort we to efforts? some these year, of Yes. Do million

Tom Brisbin

right. going handle this one. Mike All to is

Mike Bieber

start as year it’s A still this we’re next $XX you’ll that’s likely estimate, at be the than quarter will will year, for above for out the know actually, his – revenue or below said big of It this this them. in in year, so the a Chip, $XXX It million. less I because, time, that be will projects mentioned It now year. million, $XX reasonable last building first start likely don’t come I that and XX lot be come seeing up. year. completing think revenue next think. even it’ll number for million, Tom be a it we third also. that number I time I and that the months, you’ll be less quarter, could don’t will a whether ramp It think of into for first than seeing big script,

throughout part XXXX. that So, It start QX. the first see up results you’ll and then will the of in in QX, ramp of

Chip Moore

Got it.

Okay.

Tom Brisbin

into Streamline year... next

Chip Moore

Go ahead. Yes.

Tom Brisbin

Mike?

Mike Bieber

any processes mentioned or with on have you we that customers? specific working that streamlining, been our questions the we’ve about Do

Chip Moore

Yes, of give talked more new to programs. just – if are benefit you little on the curve, sort learning You that go will you? you if these how us detail a can about

So out the of just plays some process benefits of some of and actions? how these that

Mike Bieber

– these California. to made We’ve a few we’ve bunch or with on. for things with, a case, And efficiency And the process for major necessary the the mentioned streamline delivery changes modifications are nine us don’t which quarter, that that in don’t worked for we major so, actually. program, actually the this been certain Tom three work every don’t going have months started of in state IOUs There’s we we’ve of now more process them. each the to energy the in to work that this of in and work deliver IOUs, and discovered those of projects. it’s

already financial have made. and of them, to changes So you’ll I but make, this A been have that these been to that. say start in see reflected results. them see discussions in the Many the of would made we’re point, still few of majority you’ll at

Chip Moore

Okay. And Got on it. That’s talking minimum helpful. sort about figures. of guidance, maybe

and issues. potential Sounds like there’s call out conservatism some did timing in, then baked software you

questions conservatism two there. then XX% a by maybe just So But deal. licensing that on and

something the slip? sounds pipeline did there? strong, is visibility still do like It Or So you insights have there? any but

Mike Bieber

guidance, so guidance. integral disappointing. pipeline we’ve these approach and that’s conservatism at a to and for that. the better ourselves. minimum, opportunities. we So a some tried good software, there, analytics for we set get very look we we We of have that’s On build Yes, said, to floor how why We in least

call I’ll what signed hit, know, first the software And of things in the half as bottom not you they line. when have however. major significant to those profit Chip, the a year, license We drop

some opportunities first there’s as that. occurred of probability We’ve ever. not as a very happened out so... far. in there the has we’re not good that thus It license got pipeline thought I good and half think, year. But a of We So still, has confident this large

Chip Moore

I it. half. on back to stake guess question what of Got back being really sort the sort my is in the of software conservative the in side

Mike Bieber

that. floors don’t not But expect to tell deliver you much, I On those can we that.

of half they good come those to chunks. very they here back come, deliver in things some expect – lumpy. When in year. It’s big We the news the are

we timing. didn’t We down. to So back just half said of the of want the in terms ourselves put year

guidance. I in we essentially we no think software that our licenses reasonable. get to floors assumed incremental that’s the mentioned But to

Chip Moore

That’s but what one upside across that be finish nice that boost, I those the of would a line. get, would

supply and called color just chain Any some getting Okay. And then just you there the are the elsewhere, better of things. on slowing some if of or size things out currently that issues visibility? more impact,

Mike Bieber

for equipment I expect HVAC, of had chillers, of everyone on of like delay. in is that. the units caution some of thing. big But less buildings. headwind of time. California orders supply us to some script, equipment, that that that those mentioned But headwind Our in a this we our significant the affecting And for some want that to supply delay space require that chain before We saw a that chain custom in planned for place much custom-built delay, was that, the equipment, it’s other than continue projects we of boilers, pieces average to The used. and large big kind is that Genesis be we for

the were those So delays.

can still quarter. the pretty was see revenue that for You good

of the delays. we that’s We’re still and expecting those planned fact case, be reflective of the that for to that some had

Chip Moore

it. Got

Thanks. right. Okay. in I’ll let queue here. back All – I hop the

Operator

Marc with next go will Sidoti. we And Instructions] to [Operator Riddick

Marc Riddick

good Hi, evening.

piggyback because to of the though was net fairly expecting, were as we what on of seems the the to second for quarter sort that I So it of sort I guess, similar comment, itself. end revenue want

somewhat business seems so is, IOU your it pretty with of sounds the it’s execution. though and And is It as it the with rest like remarks nicely. to of does along you’re coming that prepared the going indicate what consistent outside

can seeing outside the of and that? we couple areas, a spend some that seeing of of on LADWP you’re other you’re sort and what minutes maybe So of maybe demand with

Mike Bieber

of strongest challenged Tom’s three All All the engineering, those internal of growing Then upside right. consulting are pointing civil well The doing and we’re good challenges of business. and very showing sectors the piece. of into energy a the are so any at other services that we little business businesses other being programs consulting. you’re They’re offset good. me. of Small are is are plan. all financial are the LADWP those and strong doing civil a you are But parts seeing move places. pretty Most portfolio. of in profitability strongest the some business our ahead three the sometimes energy are areas well. energy Yes, organically, doing see It’s in right our our the business. by engineering

revenue you why that’s saw in strong. come So the reasonably

Marc Riddick

you Or you – I as headcount where the there correctly? And give talent didn’t though working Right. wanted and as that or or anything a may us bit to of are human sort touch It the changed remarks necessarily update to little seem hiring then from if with reading about it with be? I need was or tied you that there. capital, your additional IOUs Am that? can like an that’s to where Or all? at to

Mike Bieber

the and programs, Yes, Marc didn’t nearly another just customer when comments we else. – know or No started around one were side-by-side, these do We in successful hadn’t changes no I to quarter each now there of today. issues day idea make these to and won’t worked change in Those with programs, think efficient. programs. more sitting that I well big anything together day been human every disagreements on we our to as the making has by we we’re we needed the now, these adversarially, acted as these types know that programs say capital. we’ve case, And of didn’t more the make in them that

was the that convey in that tried the we So quarter. big change to

each working not of It’s We’re IOUs. with adversarial. well actually the very

to with successful. than And goals make changes. they’re just same the to We make willing; changes need some to driving page, same those more the us. on We’re these facilitating programs they’re

are. where that’s So we

Marc Riddick

you, there thinking that I play necessarily what sort through you particular or the is you there looking the remainder to as may but the Okay. you as – of is particular was maybe thinking go guess – don’t there what about the that too through any of are mention of need last you I out visibility quarter? as have Thanks. get made year? Or ramping the then lumpiness? see have are I the you’re for of to far any and of – granular, third how of Excellent. the of into sort quarter I’m signpost me, you at And sort level about thing sort as sort too,

Mike Bieber

for just California Signpost have – IOUs we got Well, QX. first.

time on The building ramp-up. to programs. have projects, begun The that than in up sales on now projects real it question will would QX. those ramp do see The is so year, the first is, from waiting less lot have QX there? good more on visibility that. we’re projects stopped, now building – QX, the We of going month-by-month of so a for So We of we’re ramping and the visibility how quickly becomes question visibility that that’s to contribute towards end those QX. the quick-turn where in pipeline that there’s

as bottom see build of So to projects revenue first actually signposts time. internal we’ll the each and drop for the see line we that month

of other affects course, is, our The disproportionately software, that and profitability.

We are optimistic.

aren’t think things we We pretty some that but have close, signed they’re signed. are until those

So those I to we press happen, you and certainly to see that we’ve And If from too speculative know. don’t we’ll said, that, remove guidance. as releases you – effect. on be want they might let

Marc Riddick

Great. funding piece amendment little It sort be, could agreement bit bit Okay. recently, then that And bit you. touch if a a to certainly as could and the update Thank environment and just little but you’re standpoint, an me there? you it seems though a of you’re though give the you wondering a – was little as I the of an last from there’s where credit need – you of about if wonder that? seems on for is us

Kim Early

We room that leases. third-party computer-related give primarily some is capacity had limit capital Yes, our capital the million it raised our on can banking instead our to leases use more more just of $X.X – we amendment for equipment those Mark, us and a us running capital agreement that and primarily on through our software, on just financing for Kim. to gave We limit that. agreement. That this room leases use, of

So all that’s what that It’s with. had in place. amendment do to

Marc Riddick

Thank very great. much. you Okay,

Operator

in turn closing like to further the Tom with remarks. would the no And over queue, questions for now I call to Brisbin

Tom Brisbin

to we a today, you on quarter. to everyone day. look Well, who’s to forward I’d thank and like Have next call good seeing the say you

Operator

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

disconnect. You may now

Willdan (WLDN) 6 Aug 222022 Q2 Earnings call transcript