Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen, and welcome to Willdan Group's Second Quarter 2023 Financial Results Conference Call.

Our host for today's call is Al Kaschalk. [Operator Instructions] I would now like to turn the call over to your host. Mr. Kaschalk, you may begin.

Al Kaschalk

Martin. you, Thank and earnings everyone, Willdan second Group's Good welcome XXXX call. quarter afternoon, to

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

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

You section and Willdan of Relations that earnings our investor Press Release release in today's Investor call the the and may report find the accompanies Stock Information website.

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

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

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

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

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

Thomas Brisbin

good and afternoon, Al, Thanks, everyone.

the strong. was quarter. we continues second grew performance in XX% started last quarter momentum year. Net revenue second the Our This

X year, revenue the For months XX%. we of this net by grew first

cash flows. and net growth growth the and was organic converting this company. across revenue team to Willdan entire is profit of the All The

trailing the the was at XX $XX.X million, For XX, June ever EBITDA level highest months ended Willdan.

seeing are school These new saw replace opportunities from annual Our York the backlog SCE from Edison, one that's from contract. include reduction $XX These called NYPA, opportunities plus of CF & largest many Southern in nation's Authority, and from Diego million $XXX California opportunities. a for PG&E new Electric. Power we $XX the the Gas solid, is districts, $XX [ph] million we $XX million with million New and the San million program

clean provide very the EX consultant Our develop Policy They to strong. Planning framework for and energy group, the energy helping remains transition. entire country, the

forecasting energy asset addition, valuation rapidly. market their In portfolios pivoting private and funds investments. to price EX's Large clean practices infrastructure are growing are

on distribution, support investments management. as These the $X.XX investment Partners analytics, other design in programs, supported construction their utility Blackstone data we Infrastructure such city Service equity engineering, billion Indiana Northern Willdan's Public capabilities, grid Recently, and Company.

Cross-selling on their were is major their to The is health care problem how recently are is budget by capital facilities. selected allocated roles. much of over with working decarbonization we working. X,XXX a We provider

EX, along budget City. services, our decarbonization project and There, LL this for over This construction are design, with a similar XX services. the York $X very consulting we help buildings. using is our energy-efficiency solve we created utility To to financial X,XXX billion decarbonize New problem, programs project to

Municipalities in margins. served companies and XX% of the and for services financial grew XX% and year-over-year for continue nearly us, are customer an engineering we've important and XX Municipal to expand California years. cities

cities of and our the any work and exploring slowdown of use starting not to IRA a a the that funds. show see times address decarbonation In does infrastructure it's signs often cities of with recession, see We cities recession. first

services successfully the municipal, with expanding few. other into for such We're creating states a is to Florida, name and growth. at financial Texas, cities broader opportunities Arizona, as engineering shortage labor combined our A municipal

portfolio programs performing utility Overall, of well. is our

schedule. orders is Diego program Electric We're receiving outreach program. change Our to & our expand Gas San on small work business under

our PG&E extending $X the contract a $XX is we increase million process Given 'XX adding for of million XXXX. the the public contract. saw in contract 'XX, success, to to PG&E program another from

Our contracts restructured SCE, Edison program goals. SCE delivering Southern California the are modified

We operating are has and the improved having encouraging program implementation discussions results.

And New program Los and Water business work York Angeles Department as the Our Unified of such doing small goes Angeles School our for the is country utility for utilities. [indiscernible] including Duke programs and for well. our several the the Power, same District around Los Energy,

robust, a great have and businesses year. best forecasting. demand power solar, is wind see electrification driving grid battery, we are Our positioned both for year. pipeline vehicles, they and for planning Their been and distribution opportunities software Strategically, for their electric

Our plan and software solutions. their helps utilities optimize

collaborating we with IA Further, are consulting. across by organization leveraging the software EX'

is engineering in the contracts. in Engineering sixth work California-based Group their two They school largest new wins utility district with efficiency based currently five on advancing and municipal performing on and software Our new U.S. construction quarters. our Performance production for the were are strongest engineering engineering, These production beginning collaboration capabilities.

Energy Our the saw XX% a business revenue contract XXXX up period in with improvement over Engineering New profitability. an York

for provide DASNY; NYPA, the decarbonize work to better XXXX. Given organic They City look York New - on Authority, this are the - York residents. the State Authority, for group NYCHA; Power on Dormitory track our better in and hang a is growth New electrifying Authority the XX% New of with NYCHA grid the and of the second Housing houses York,

we next closing, for finish trends to In strong continue in and XXXX expect these positive year. to

years. we our late than strong With XX% to growth this backlog year. X acquisitions, resume looking annual expect We acquisitions for the [ph] next and growth, greater earnings year, by early next are

customers discuss, As we support. want stockholders financial all Kim for guidance for to will our and increased have employees, I XXXX thank our metrics. your

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

Kim Early

afternoon, everyone. Thanks, Tom. Good

and of our from Services driven from revenue Municipal management construction strong expanding performance additional utility stream by the the our software strength our continued Whole well in QX as segment businesses. mentioned, Tom direct-to-customer growth As licenses our as programs,

in million to over the adjusted continue strategic and sheet, position to EBITDA cash of $XX.X $XX.X The the operations million in As X.X us XXXX. improved bringing to a to leverage our fuel times adjusted from we of ratio delever result, a the in first half and balance flow M&A opportunities. provided earnings generated pursuit resume EBITDA putting

service XXXX a revenue up widely with QX XX.X% gross in seeking QX revenue to increases we higher XX% fact, QX in we're recently segment margin was was Municipal closed and both actively our addition In our additional service and net distributed broadens acquisition on our gross of was lines. versus that a the opportunities. versus gross revenue improved XX% across Engineering segments ago. offering, up our XXXX. We saw double-digit QX growth in profit XX% year XX% as our to of year-over-year small

QX to more compensation incentive in due growth income higher up a reflect contracts, from SOFR IOU interest our modestly revenue strong same additional than due restructured unfavorable versus expense the the engineering to from rates. the Higher higher California $X.X employee resulting and operations. impact million of year the to revenue. XXXX ago, margins primarily period expenses licensing in software in doubled municipal of G&A were improvement QX Interest

second second quarter was rate a of tax the to the compared in XX% income XXXX. credit in XX% Our quarter of

$XXX,XXX or a of quarter, $X.XX So or a per share million share $X.X second loss per of net was versus loss year for income a ago. the $X.XX

of to net Adjusted million was loss per earnings revenues QX $X.XX this and a $X.X ago, terms. million in a share $X.X growing of was the XXXX versus EBITDA Thanks year improved year a share $X.XX contract turnaround. in to utility compared and welcome adjusted per

In was the up XX% was the versus XX%. XX, net revenue X year, terms months gross XXXX, of revenue and June ended up prior

growth base. All services our management, construction of by and was organic that and services analysis planning client led for municipal and expanding

to ago, a ago, in a We X.X% leverage Gross revenue XX% gross increased software driven XXXX period. higher revenue, mix. net by and growing versus XX% service XX%. productivity expenses in the profit year as significant a to compared increased favorable only the of period while realized same XX% year operating improved was SG&A level the improved margin

incentive million compared employee expense impact operations Interest months due June rates. lower for to compensation. X - the Higher in higher due was partially year same period compensation the $X.X million to of XX from improvements the XX, XXXX, SOFR the $X.X income June stock-based to to ago ended increased the by offset a

Income tax result rate full tax will The an expense tax in was to year for and rate tax timing $X.X of of XXs high million million, XXXX. effective loss on certain a XX% a $X.X progresses. year toward compared effective the tax moderate the the high is as of adjustments benefit the the income

$X.XX or a California turnaround. higher compared million results revenue or $X.X The Thus and a year-to-date $X.X XXXX. net the $X.XX licensing significant share income loss IOU to of million enables share company per throughout restructured in contracts, software improved was per

Our the million. XXXX, earnings balance trailing of to the adjusted XX-month EBITDA of flows. our end improved improved June leverage times net sheet At and reflects was and ratio X.X the also the higher our benefits significantly debt $XX cash

good as we first period. We into our move about feel half our performance busiest production

and continues a and to projects Consulting raise us We This profitability. guidance. to our Energy backlog segment Engineering our in and strong our gives improving XXXX segment have strong financial enjoy of confidence growth

and be a a range is count now now of million Adjusted We're assuming net XX.X the rate we expect diluted $XX XX.X% share tax EBITDA million of year in $X.XX. growth $XX X% million. of adjusted range full diluted EPS the $X.XX revenue XXXX, of to For to to XX%. expected in to and

$XX be to to expected are the $XX expenditures capital range million. million of Our in

place credit that process time X June to plan call in facilities, bank the next expire note are We facilitate in expected year refinancing have our growth. want quarterly credit our the new to We agreement to a also which our we of in XXXX. by of

Operator, prepared we're questions. answer now to

Operator

Your Irwin comes ROTH Instructions] with MKM. question Craig from [Operator first

line Your is open.

Craig Irwin

Congratulations solid quarter here. Evening, a guys. on really

about gross my question first is margins. So really

Can few likely factors any margins? far you sustain next are over a maybe in as you that there order you. maybe as of differences far as the not for build are could or priority them sort even list mentioned here? to or whether in of share couple And of color as quarters You working these from

Thomas Brisbin

strong I the contributor in margin course, software and a opportunities higher factor that's revenue the Well, business. of the on strong half, that improving have of say first a strong gross a impact do And is order we in the that backlog had we to that, margins, would in magnitude big of realize. of

continued revenue area. expect growth we that So in

was California compared provide biggest gross that probably that's impact ago margin the second second restructuring factor. we're the and the of year think of achieve to I able to a additional some the IOU contracts

- and of the order that's probably think across engineering increase productivity just I a of lot impact planning overall, third, that are then and work. And and the a analysis on of it's municipal kind in higher expanded rank third the margin. Those of volume our

Craig Irwin

Okay. And then as a follow-up...

Thomas Brisbin

Yes. Yes.

Just to is not the it sustainable. believe or sustainable. question whether that's about answer I that all

that of some volume fact, In increased.

- mentioned, this the going our we second to is going to be the year busiest half is As time. be of

We that expect on continue to those business, service-oriented improve. T&M margins that

Craig Irwin

Okay. Excellent.

on Integral How you give something would materiality fish? impact right, an line to this SMUD the and small fish incremental? LoadSEER Analytics. quarter second of of first the the press us just continue of contract for sort then was software, Can half, this or only contract? idea maybe big the in being the the a So you... contract largest as Is release in on the Just

Thomas Brisbin

Yes, contract, small Mike. you The mean?

Mike Bieber

that fish announce big quarter in a of we We Craig. a was confidential, it quarter. had fish That that but in was the name press because didn't the first small that have [ph] first the we We released.

small good So year very the we quarter, 'XX. into going the was the was opportunities in and back have pipeline fish first the in of fish the quarter, the a second of in half software and big

Craig Irwin

Excellent. hear. really That's to good

a as to then on Investor largely benefiting spending utility Willdan there question. seems from perception So follow-up energy at efficiency. out look

and have the actually of your are on for mix markets give on the activity incrementally markets meetings update call impression but that to markets. maybe But right of those comments now, the you finding are a a drivers contracts case, lot that us Could you are done, utilities Your you're some in great great of not customers. are that, improving? maybe in we've the other that minority and way of sort big that me yes, a and working is versus

Mike Bieber

similar part, a little small local of than a for actually Those Sure. about State to work commercial. are utility is larger and overall X% and then Willdan even size percentage XX% contracts. in is very

there, a a the data very analytics, types we of lot a is also of of strong. order work in state So upgrades our we software local and do where energy sold infrastructure policy do lot of analysis, is for different

good. right Utilities now, very of State are business segment. earning the a largest business. customer kind is local steady also and that's and good That's

driven the now. So of a that's being size. level, really have the customers local at spending But those by we're state confidence which lot and right

Craig Irwin

Thank you.

preparing you mentioned describe Can maybe plan you us after you needs or local engineering So the not in in a work other grid follow-on programs. there's entities also IRA state as or in for participate for the to look is and and the at those as pinch comments position your done consulting the whether opportunity far the moment points benefiting as a in this addressing the geography? some money muni to of is themselves different that

Mike Bieber

what lot A to the projects that that how and transition be of are To really do money us with receive prioritize IRA our explore those will decarbonize how customers paying marketplace. and not with customer. though clear, for Yes. the particular to help help them, funds to to does energy hit

study that we're us later IRA. the the is actual several will This that lead Later for by not that So projects seeing though. work, follow-on work positions on, infrastructure next over might type follow-on work there well years. now. which which a opportunity the occur funded to is work on, of right work It's

Operator

Moshe next Your comes question Katri from Wedbush Securities. Instructions] [Operator with

Your open. line is

Thomas Brisbin

talking, cannot you're if you. Moshe, we hear

Operator

Your line is open

Moshe Katri

that. congrats add said results. I on Sorry me for let my

past. quantify any that also suggested also there pipeline my any that [ph] new the business to of bid in well? by in that this point? the that first. very, looking think the I proposal some way this providing very And as opportunities Is kind done context, And you've on pipeline. started and there that you at Thanks. you software You you're color That's has quantify emerging love at, Is to solid way

Thomas Brisbin

strongly. Quarterly number or still work quantifying -

large two study looking sector XXXX. is and in what we City getting same that Company goals started at XXX contracts system. for on was or or care the I country, just believe the very municipal the now So between health decarbonization Fortune do and getting going. private how are decarbonization That's landed Moshe. we've the a are And York New meet just Every thing, important

landed contracts we've that were And very the on significant. early

services, a utility typical the back future putting to get So into know a an we're way don't customers, to adding they we to into but we their that's that know been are way great has are. growing we your effort way pace, they great measures that. us - believe are their who projects, for Utilities where bigger some put The walk facilities, work a at we great on when is.

to I'll and there which software finish So to together, going we've company. working all consolidated from Mike way. They're software, that address, want the we one across let

Mike Bieber

They're set record for a year.

got external that But to X we've another was ever significantly in year. software Our and to to sales go, looking Moshe. we're best beat year about $XX external from this revenue million customers, months

Thomas Brisbin

Yes.

also electrification, energy going with other the say, where started would more they're a Moshe, is of mature utilities efficiency, at customers in parallel more efficiency. versus thing, just getting years got kind utilities is we where early stage that the And electrification faster energy I have that's energy did and looking are and The ago. So first some probably utilities, market that's we [indiscernible] both New efficiency games, first very that, in with California back into York, no it's toes [ph] than with XX a is

you all? help that does So at

Moshe Katri

we of? up follow-up here should just this be And one. coming any Yes. on there renewals aware Are a that

Thomas Brisbin

year. year of it the or a end evaluation, LADWP, Con we the extended, may under there'll recompete be don't know. the proposal for that's our Ed, of Yes, be the by then end is

Do you're energy, If you recompeted. have anything, Mike? selling just [indiscernible]

Mike Bieber

this Every that Just mentioned for recompete the XX% Tom get contracts ones. large. or year, have true so we our of just the that's and big year.

Thomas Brisbin

Yes.

LADWP us. years. history, you so also for know, about And XX-year We've been ones kind XX recompetes. We've had that's big had and or XX X also four bad three we've a for of gone Just recompetes. the [indiscernible] XXXX. been recompetes. about There's there's through

significant no recompetes. We other had

few all worked we're best selected never heard that down we We a not in, what in the we or opportunities we've have decision, paperwork, we our which call, to have been but submitted not for have yet, - new final were we've before.

on waiting results. we're so the And

Mike Bieber

that first contract the developed half without procure of they could In They a contract software and qualifications with due had year, getting place new service of the extended we Mid-America also no recompete. our to they contract was expire technical that internally else - that work. and they because our and our elected

So...

Moshe Katri

guidance any and in on appreciate annual QX side QX? about kind look - -- we guidance, other side, QX of think at your the the we on how general, versus just metrics? net any should of I following some but revenue on revenue And should the how

Thomas Brisbin

expecting year. than that we're of results kind better -- it's kind of first guidance full QX. the half Well, the Yes. to for from line probably it the straight to a be And for

you QX, straight QX you good QX. better little than take a there. better QX. get would be ramp them will QX than pretty should QX If be in line to a probably a

Moshe Katri

right. Thanks. All Understood.

Operator

like back no It questions. are turn remarks. the [Operator call over Instructions] Brisbin to for appears I'd there closing any further Tom to

Thomas Brisbin

getting bit participating the woods the makes all good I makes thank us. the call. hope it for you Just out like news a much we're it's dark on the We out of brighter. happy you feel or as little of and

us thank sticking and So being care. for with Take patient. you all

Operator

Thank conference a everyone second for Have Group's day.+ Willdan quarter today's concludes attending. your of This rest results financial wonderful you XXXX call.

Willdan (WLDN) 3 Aug 232023 Q2 Earnings call transcript