Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Willdan Group First Quarter 2023 Financial Results Conference Call. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to your host, Al Kaschalk. Sir, the floor is yours.

Al Kaschalk

Welcome to Willdan Group's First Quarter 2023 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 the earnings today we on call today. our The issued builds after market close release

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

Statements materially the answers of historical note to conference to Factors statements. and annual forward-looking the Securities today's including, materially listed your Form differ statements December filed SEC company's The the such could the involve purely that XXXX. Private to that XX-K meaning report statements other forward-looking company's could uncertainties, from made it not XX, on risk ended Litigation certain course is in those the of and any future call, differ to, Reform of actual the important for the factors questions, including not which are Act are limited within results are risks in and in forward-looking XXXX. year on results time but cause reports

obligation The today. any made during and not the statements does the or company on undertake any call. to made forward-looking disclaims cautions not investors forward-looking course conference statements place reliance undue Willdan of revise this update

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

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

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

Thomas Brisbin

everyone. Thanks, Al, afternoon, and good

back that business our overcome we and ago, months company. headwind we trend had growth impacting our significant a communicated were began Two the to that

first Our first trend, our that continues us ever. best enabling quarter deliver quarter to performance

The can and the gives in we financial our confidence XXXX deliver our year continuing performance backlog us strong full outlook. improvement

have a customer are California. in XX-year with we us, additional long details. for share and some you Cities relationship me important Let

capabilities city municipalities. to a provides infrastructure unique the to services and energy model opportunity Our us bring our

We for area. We expect inflation not due for potential and this in engineering our continue. slowdown see to to financial a services strength recession do demand or the and a city

Act and to We fund the Infrastructure next Inflation Jobs new the years. and Act projects Investment important help Reduction expect several cities the over

struggling helps In This our addition, our difficulty we engineers. see the hiring cities outsourcing in model. qualified with

enrolled largest the contract for distribution larger of business software planning during one utilities. was two Our software energy new nation's contracts the quarter. for investor-owned our The

of company. largest We also service one the signed municipal-owned with electric a contract software

approximately are and And business electrification. markets and opportunities utilities municipals. X,XXX to both both midterm. is in investor-owned vehicles see driven market distribution This the by software near and forecasting electric being There planning XXX The pipeline strategically, grid good. support and in looks we

The load on is the growing grid.

plan helps solution the optimize and software Our solution. on

NYCHA positions New Housing Our in Authority Energy of Power with to the grid as XX% York executing decarbonize They and state Authority York New City backlog, York Authority, electrifying for is their New better Dormitory the residents. XXXX. of housing living the business New on York, this for growth work are organic their their group provide the way

performance our cities as is Group with to group. collaboration These quarters on Engineering their on strongest engineering based it new five two were starts entering work Performance wins California-based engineering Our contracts.

San with Diego & performing Our Gas new professional well. Electric is service contract

the are supports contracts statewide small program from that positive contributor IOU and recovering The in businesses service quarter. customer California performing were a one-year well This are COVID.

develop the the to contribution provide entire the and performance framework year. grow to Interest the country, for energy compelling continue expect throughout the helping transition. energy high-end at they XX% clean continues to We plus,

released backlog, year. off continued growth by carbon our our Willdan's deliver the commitment months full where XXXX next we of is on we to month, been our and XXXX report we achieve the is track customers I are first move sustainability be future the Willdan. into ago. our start a neutrality support. They've to for closing, outlook the we the to light to In solid at efforts their and quarter continue year for Willdan's with and XXXX a Last to thank forefront employees, will provided sustainability of and strength stockholders strong two want of performance

our the over turn to call additional financial now who on will provide Kim, will I details results.

Creighton Early

good afternoon, everyone. Thanks, and Tom,

continued new QX, QX accomplished of financial been perspective The municipal from over has amendment services the licenses contracts than past from to quarters. enabled of over and of flow more past strength a cash two us rest in ongoing two quarters. $XX in commercial million to the business performance segment have generate in Much operations solid software the the completion SCE our our from and units our the

year revenue Our gross same ago. QX a net was was up and the up period revenue XX% over XX.X%

higher All as flat profit gross margin same on compensation the tenant stock in period XX% as and was XXXX, same increased organic. the by G&A revenue. employee versus year Gross by XX.X% were reduced expense. as of expenses to was a essentially growth was our compensation driven strong course that the earnings offset improved increasing ago

due to interest million in changing million environment. Interest expense QX the rate XXXX increased to $X.X $X.X of

a the a quarter high first was the quarter, compared Our certain XX.X% mainly XXXX, of XX.X% adjustments. to timing tax the of discrete of in due income credit tax seasonally in rate to

$X.XX EBITDA $X.X year and quarter, was per compared adjusted loss versus year $X.XX million of a share $XXX,XXX million XXXX to ago. QX loss So versus $X.X a was or earnings $X.XX QX of this $X.X per per ago. share of $X.XX per income year a share from a was for in the million this or Adjusted net in share year

about a result an performance, loan on The annual our has into is leverage with of and a It's compliance by credit to our rate reduction significant bring facilities the our covenants, borrowing operating credit. X%, reduce $XX to our improvement which million enabled ratio in net million X.X basis. under us back removing in interest annual our limitations $X saving line spread original

flows. higher the cash sheet earnings balance improved Our also and reflects

March at XXXX Our million was end balance of of the XXXX. the million, up from cash $X.X $XX.X end

We we are to provided deliver next Moreover, forward we're continue delever by factors, our full to and significant XXXX health, improvement sheet. our to We outlook outlook track an activities. encouraged and March with new of and call. Willdan's including projects in to new proposal ongoing update several strong on balance year providing backlog our the in look financial contracts

prepared answer Operator, questions. to now we're

Operator

EF Chip [Operator Instructions] And of we Hutton. go ahead. Moore our question from first Please have

Chip Moore

Good evening.

Creighton Early

Good evening.

Chip Moore

I start seems with Kim, wanted the updating on that the comment taking to quarter. your QX guess I very most for momentum last guidance thanks guess, next Hi, good the across business. beaten I Congrats question. like what of given on strong and just strong there call.

Just very curious of seems how are I achievable, visibility what think But risks end, need that. to the to some and certainly not existing update beating you about guess, guidance to it. the sort of if guide, high what the

Creighton Early

are there's start-up not chain downside question some problem issues. -- start-ups of we of the But are of kind year. we're quarter a of timing timing that lot risk some the a the revenue have beginning have forecasted little the we always the the risk out there. and always that that But confident of laid from a some the we projects involved seeing way has remain we individual of in supply impact what profile bit that year at Well, I any exactly of of think, there issues, of the in mix on the of that the of

more by so And expectations to we're are our know the time a the we get while next we're call. optimistic, -- -- lot we'll

Chip Moore

with larger out service there recurring the Understood. margins the Is maybe And Appreciate of just there, -- or should wins, across the give there win I particular, and to there. that. is is expand assuming the quarter. And to -- say, software largest then that And sort in that of us a ask for one the could contract? scale component? territory? if scope any the IOUs of I software contributed I'm in their that opportunity on iA sense particularly

Michael Bieber

additionally, this is we Mike. have This Chip, service companion first is software contract license where the Yes, do and the a license.

We that the five customer great, us off to guidance plan individual an year of software usual, QX. that next for end licenses, of started services feel provide But on we'll look pretty plan. out at ahead break again puts this it but right be now, don't QX. We're of So we're ahead Unlike our we the to and providing looking we'll significant basis. ongoing over years. at the really we good

Chip Moore

it. Got

me. one maybe just hop And Okay. more I'll on. let others for

XX%. you've well, It side, on the on engineering seen and acceleration there. an you're revenues seeing On financial net city like sounds at momentum services as the

in deal electrification Percept that You announced County.

more you if synergies that expand you're opportunity. bullish on the sounds hear maybe seeing. to there. would like I love Just on what It could you're incrementally

Thomas Brisbin

I you our that making on, five electrification. The in mentioned you was it business to referred contract the the do projects to performance introductions instrumental engineering collaboration as legacy

we taking your question, Chip? really that place. that Was So seeing are synergy

Chip Moore

of outlook Obviously, and but that a then Yes. are of lot elsewhere, could backlog funding IRA come going there. discussions sort to those -- And also how sort when on and of in? kick it from and

Thomas Brisbin

as the already the and the be well work for second they're I and very will think said doing contracting across strong, California on in I country. quarter third performance cities as

we're very the about And growing. them see we optimistic year. So

Chip Moore

hop I'll queue. again. Appreciate the and back-in color congrats

Thomas Brisbin

right. All Thanks.

Operator

Our is of Please from next go question Marc Sidoti. ahead. Riddick

Marc Riddick

Hi, good evening.

that were just seeing as or maybe we've order delays there's So be patterns of economic I was connected that if anything was would be headlines that general tied the to seen, either or conditions, that customer banking as to wondering anything what the far any but of seeing would currently? also tangible timing you're if some there activity changing you

Thomas Brisbin

to Yes. I the script. referred it in

of change We a or seen anything lot a due recession. not about talk inflation to have

to financial what it's If time, think see surprise. not is is get 'XX than such this we 'XX which and city you very want talk doing managers, different they're big we when to a specific people,

preparing commented spending. are not They hardened. long down. We've that are been recession not in script, I the for And talking are buckling about they for, they they are so as

So cities way. big we to people a in provide outsourcing

So are going to of they model. outsourced more an

more 'XX. and we And XXX% think little unless 'XX we for think, where of going the effect. on 'XX, it, of one like detail, revenue. to okay and they any yet. much if what and space. in effect 'XX, in better one, And haven't more net that's we're in saw a And felt So it call 'XX, saw there revenue, XX% now a our we're Back no it's 'XX our 'XX we in is and than they're let's Mike, net be I the, XX% energy massive was

similar for help at Does outcome. are a hoping that you we So all?

Marc Riddick

you of -- the of little sort much for worse. labor I That's helpful. guess areas and little if where some part of in I other last greater of maybe of have a and the the has availability over that's thought about about the suppose is, then just months? the better some to a I bit talk could of the your thinking availability staffing maybe the economy And begun or was needs are changed few wondering labor availability

Thomas Brisbin

I'm to pointing right We're now. to each get trying at Mike other answer.

Michael Bieber

tight labor the still Staff is availability -- so Marc, U.S. in

mentioned last of quarter, hiring year. coming most we into we As our this did

need Those the have business course electrical most energy be hired to front-end performance remaining The energy hire our our resource. consulting in in we hiring year grow. the continue particularly particularly most as far. with business engineering, the positions. this over we of engineers, EX; we We've of positions done so So efficiency of services, we'll that the would

Marc Riddick

Okay. I helpful. you. That's appreciate. Thank

Thomas Brisbin

you. Thank

Operator

there new [Operator Instructions] so questions are far. And no

Thomas Brisbin

will much see on everyone about very listening you and XX you to we the call Thank days. Okay. in today,

So quarter, thanks and care. was being year. again for a good it expect good we a patient, Take and

Operator

This your you participation. We today's conference. thank concludes for

have may your lines and a at day. You time, disconnect this great

Willdan (WLDN) 4 May 232023 Q1 Earnings call transcript