Earnings call transcript Q3 2022

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Operator

Welcome to the Willdan Group Third Quarter 2022 Conference Call. I’ll now turn the call over to Al Kaschalk, Vice President of Investor Relations.

You may begin.

Al Kaschalk

Thank you, Missy. Good afternoon, everyone, and welcome to Willdan Group’s third quarter fiscal 2022 earnings call.

are Officer; Chairman Officer; Kim Bieber, today and the and call President. Executive Chief Early, our Tom of Brisbin, Board Mike Joining Chief Financial

market earnings today we on call our The issued builds after closed today. release

up remarks, may open website investor that your Willdan will on to Press and ir.willdan.com. accompanies and of the section prepared the report Stock in Management the Information release and call our You will find Release the call then earnings we today’s Investor questions. review Relations

Statements the answers of historical, note results in to from conference to and forward-looking the Securities today’s your statements company’s The the statements. could involve purely differ such that materially XXXX. Private meaning statements forward-looking uncertainties, made it not Litigation certain course is in of and any those future call, forward-looking Reform of the important questions, including which are Act within are risks

cause this any statements to to XX, on call. forward-looking reliance investors course revise any listed XX-K not made or other the to the could including, but conference report differ update today. limited obligation that disclaims of XXXX. during to results made ended not place Willdan and the does December the company’s year undertake reports for The and the Form cautions on time in company from annual materially actual SEC Factors are undue filed to, factors risk time not statements forward-looking

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

adjusted adjusted include measures revenue, net EPS. non-GAAP and Our EBITDA

and CEO. to over call Brisbin, the Chairman Willdan’s turn now I’ll Tom

Tom Brisbin

Al, good everyone. Thanks, and afternoon,

problems. good. earnings overall progress flow on cash as all business and past have Our third gotten is units projected. restart were COVID and the The shows fronts. up many Revenue, business All quarter

the on supply We in have factored chain. delays

We the Gas the on Electric, programs. collaborated negotiation California Southern start-ups of and Gas Diego & San & with Electric, California IOU well Pacific have and Gas

address to challenges Edison California Southern with discussions contracts. with in are We these

proposed to that and benefit and savings. will changes have SCE Willdan stakeholders We deliver energy

for than margin that revenue than guidance We greater XX%. are net and would EBITDA our be growth affirming XXXX would be greater XX%

we For been the we’ve the for second saw point third that half. waiting the inflection quarter, for,

the revenue third for margin was quarter up was quarter EBITDA X% over net prior XX.X%. year. Third the

organic X% quarter, Our rate revenue is growth growth. quarter the sixth was third for net straight which in the organic

clean consulting, was Within three engineering leading last revenue. with the Inflation businesses energy given and which contributing build working the of is the years boost are segment, Energy transition, strong has Act. by a design our many doubled energy over and EX the top-line on jurisdictions the Reduction

clean synergy are engineering at transition. We practice cities, create and looking how the energy our to with

X,XXX We have York previously talked for plan buildings. New LLXX, decarbonization about the their

are clean working also and on Boston, electrified primarily We heat. decarbonization, helping Denver, with Philadelphia

and well. are is fourth and measures Los utility doing adding largest two Department next of in contracts the expect and new Our Power quarter Water Angeles continued year. growth

of the still program the from growth money. on second contract. quarter program out They successfully they in are expect COVID we fourth because suspended the and officially pause, We Edison this Con together this the clean quarter. working ran are relaunching in in heat catch-up

participated have accounts. We a half approximately managed their We the program significant for in way.

making pump this Ed going electrification Con be heat forward. program, this to expect We to important is pivot electrification.

with also this We see PG&E.

phase FirstEnergy doing client and well. start-up the through and is other

program We expect the time. to grow over

one very important utilities. This of us. with significant recompete was a won our to also We Southeast

contract had since XXXX. this We have

families. low and four We are moderate-income programs four multifamily are IOUs. new York for programs New now for – for These running

electric as helping New that infrared Authority, NYCHA, buildings their transition heat can we we at tenants also also York Housing us well As that doing performance control is so our see known look to by engineering with can the electrification, this group with panel. City convert

decarbonization. Again, this and is the good for tenants

doing third is a They with of they who strong in won unit million now Dormitory New backlog, the COVID. coming this worth build are work out quarter $XX State design and work of Authority profitable has Our the York. of of

with services. is municipal Engineering Our engineering across doing grow. strength financial to and well continues both Engineering segment

our we include assignments Florida Some and new there. are of foothold getting just although Texas, a

electric For of to city doing thinking fleet electrification Inglewood, we are the California, Californian now about infrastructure how cities planning. The and electrify. vehicle are

the looking economy. again clean are We to pivot energy with

assisting the of it we in Reduction terms In cities. tracking Act, are Inflation

have an the we breadth amount bill, local our in financial Given and bill, are released provisions provisions tax the around tremendous many clients, a of of entities. XXXX, incentives. with analysis important and topic the conversation been the this climate Since August of state governments of the including of done has which nonprofit energy and on

focused We opportunities in Willdan customer as with base, has a XX the that here align the over built relationships our adviser are California. on last years that trusted

IOUs, California the momentum IOUs benefit In quarter, mutual of to outside the the issues earnings resolved and summary, we of major in third and built three with revenue Willdan stakeholders. we the four the successfully

negotiating well. The with is and some there’s the progress, performing still but resolution. We’re company of no SCE rest

to dedication I moment to want recognize also thank outstanding team the the ongoing and stockholders. want to customers Willdan again, long-term of execution. Once take I and support entire a for our their

to over would I turn to for like Kim? the our Kim discussion. call financial

Kim Early

net to Gross by year’s net direct QX included costs partially other revenue afternoon, XX.X% programs $XXX.X revenues management, in and increased and increased Tom, while contractors, and everyone. revenues some revenue projects Engineering to The third for California increased and over from quarter the X.X% materials Consulting licensing. the of direct construction install revenue, by IOU lower offset million, million. and increases prior $XX.X software Thanks, good

due with new and margin management construction revenue building associated was gross costs programs. lower $XX.X software revenues, The for Gross California profit of same revenues million $XX.X the the compared backlog quarter XX.X% revenue or of ago. was in the XX.X% of to or million a of primarily XXXX of period year third mix higher higher the to profit for revenue lower IOU

a up prior year, to higher to the average X.X% borrowings an of revenues year were the while agreement under due G&A to $XXX,XXX in the $XX.X were for costs for was ago interest rates. $X.X our the gross expense XX.X%. quarter Interest and outstanding for average quarter compared increasing credit million QX XXXX, increase compared million

loss tax income QX was QX compared quarter XXXX. million profit The for of of of $XXX,XXX compared the income a of to income compared million $X.X XXXX for taxes reported was for of XXXX. before $XX,XXX a to XXXX. for benefit for tax before net QX of $XXX,XXX current The was net The profit of $X.X million $X.X benefit QX resulting to

and share was $X.XX a earnings quarter QX in per million Adjusted adjusted the adjusted EBITDA of the $XX.X for was ago $X.XX $X.X million compared of for to compared share XXXX XXXX. per to year earnings

XX.X% to million, increased months the $XXX revenue For while net revenue gross to nine million. X.X% $XXX.X increased to date,

X.X% XX.X%. loss a gross profit XXXX. The of to reported $XXX.X and increased months million of million net while nine the XXXX XX.X% revenue of months ago. $X.XX million administrative the compared $X.X increasing first the revenue Gross $XXX.X to same or a expenses million was year slightly for period, million of period was for for loss $XXX.X down General nine of from for was the

and $X.XX $XX.X to million improve year-to-date was compared operations quarter, XXXX. million $X.X $X.XX the year for XXXX used to cash the year was continued flows to for to ago. to million to I’m report year for million XXXX. expenditures were provided compared million Year-to-date, from capital in the in compared per the bringing of EBITDA in third – share million adjusted for total positive a cash the $X.X $X.X $X.X XXXX. The million $X.X were current versus happy earnings Adjusted $XX.X

on loan used from by in $XX.X $XX,XXX $XX financing XXXX resulting to performance delayed cash in cash million loans payments in used successful activities term million our term of earn-out payments of the date of and drawdown Principal draw the resulting to XXXX. were in acquisition compared offset

leverage adjusted nine of The our cash for Among relief compared in was year. of XXXX extended and the last extends agreement the amends syndicate ratio has million credit amended. remainder with minimum the bank been of the cash period, for five the threshold XXXX. for the XX, March things, decrease net $X.X the same first other in EBITDA period decrease through related agreement a which $XX.X covenant million to The months

the these its changes expect under of that credit borrowings period on borrowings the revolving interest do rate prevent remainder goals. We and the amends increases from maximum not during or million. to also meeting achieving the facility obligations It company to $XX its

margin For fiscal XXXX, minimum revenue we net continue revenue. of XX% of XX% over to of with minimum net XXXX EBITDA adjusted expect a growth

We expect XXXX results FY our report March to we when fourth XXXX. quarter XXXX in and of guidance provide

we’re prepared questions. to Operator, answer now

Operator

your with line question going is to Okay, from Hutton. Instructions] first Chip EF open. is Chip, [Operator our Moore come

Chip Moore

so late, guys for this. the of to on much on been I than constructive But some business, focus right, you’ve really the resolutions I the if I just and about in some nice recent if lot see question. contracts. there little is implementation. those taking of covered really IOU about California more Good think company apologize a a hopped on Willdan, But evening history

just step you and years, about and you it can really think uniquely about for to how over what how speak opportunity if electrification some IRA maybe five opportunity, think mean three maybe of drivers back curious Just can next that positioned say, and the those to you you’re you?

Tom Brisbin

He’s pointing that answer at decide at to question, should me. pointing who trying We’re I’m Mike. Chip.

Chip Moore

of both Maybe you.

Tom Brisbin

the PG&E. we’ve presentation heard, of so right, pivot, that far, is think IOUs. but going of little the you’re yes, I And you IOUs, I electrification the direction know Well, from how don’t many for when to they much a we mean seen be California

started IOUs. the of SCE. off conflict of and kind just getting getting at We’re the little there’s electricity We within some of for into a between this getting gas see state,

a the both energy bit. has I New and will think So be electrifying. saving quite York pivoted And future

the performance with and to our starts our really pivoting they’re going so well. of Willdan we’re very run has do the you we’ve work with fuels. about IOUs change lot you other see of if through NYCHA, cities other recently And that’s throughout talking you of and and right, we’re run electrifying, contracting contracts, is if really through a universities, doing group of schools, go just these California is like to And through getting all what been with gas our And off early you’re we’re what it get large you – strength work because IOUs. run some future trying

for thanks Chip. anything? the So I Did question, miss

Chip Moore

covers Good and you’re the queue. in think I’ll excited and No, helpful. Thanks. agree. that’s I hop But I would to hear like position, that it.

Tom Brisbin

don’t I there Are questions? a queue? is know, other there

Al Kaschalk

can’t in see the I screen.

Tom Brisbin

It matter. Al? doesn’t

Operator

Instructions] [Operator

Tom Brisbin

rest The There with to successfully is built the four of resolved the IOUs outside IOUs, That’s of revenue the any of weren’t mutual three California and more In quarter. issues questions, momentum third earnings Willdan in benefit and I Chip. stakeholders. thought. the summary, well. what company We performing we major the

forgot the all. about part you thanking I

So I over all. and there’s again, Al, the want thank their our take thank and I to to ongoing team outstanding the customers to else. call like if of the you I’d Once also to to long-term execution. support recognize dedication entire want Willdan you anything stockholders. for turn moment a

Al Kaschalk

That follow-up really. concludes our

Operator

Okay. This concludes call. your

now may disconnect. You

Willdan (WLDN) 3 Nov 222022 Q3 Earnings call transcript