WLDN - Earnings call 3 2023 | Willdan Group, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Willdan Group Third Quarter 2023 Financial Results Conference Call.

Our host for today's call is Al Kaschalk, Vice President of Investor Relations. [Operator Instructions] I would now like to turn the call over to your host, Mr. Kaschalk, the floor is yours.

Al Kaschalk

Thank you, Morten. welcome Group's and Earnings Quarter everyone, Call. afternoon, to Third Willdan XXXX Good

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

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

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

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

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

and include and the I measures CEO. revenue, now Chair Tom to adjusted non-GAAP turn EPS. Brisbin, EBITDA Willdan's net Our call over will adjusted

Thomas D. Brisbin

who how good carbon, natural clean to electricity and on use. reduce to we afternoon, largest, energy transition primarily most The reduce stable extreme reduce is amount customers, energy their that for for is affordable. utility to gas industry, Willdan for energy pressure We the customers. for are to affordable strategy clean this example, consumption utilities everyone. people. and where is government focused. This the under focus and Al, work need Willdan's make to and make people this this Thanks, of transition In governments, their

in bank We financing. require of are or that not the energy projects generation green

Very our impacted are few require by bank financing interest projects of and not rates.

with money. for less Our affordable and people. save projects X use energy electricity efficiency. and less save incentivized started generally stated, than are generally and people years are are Simply Willdan's strategy Paybacks money.

We problems a have expanded knowledge greatly over everyone, helping are remind the To with customers company, service solid past software. XX and years. professional we

costs. stressed We significantly affordable be money. projects energy strive solutions. this cannot during This Willdan cannot enough word higher save People afford transition. energy for people help clean affordable

benefit. new our again, the for helps States. example, and touched in and construction services energy, construction word software For XX% saving least all software grid the highest United utilities cost utility the focused on of contracts are analytics at building modernize new affordable. Electrical the commercial All

integrate generation we the the solar, cost. the source, to whether agnostic be or batteries, and are lease them We help it wind at grid logo into

their we health of X,XXX at America, in largest For groups decarbonization pace. are to order in affordable assessing the facilities one an reach care goals

we of affordable to be has study theme common their reduction their budget. done measures prioritize been for Using New within what the X,XXX clean York energy first completed buildings. should building carbon. we an City, software, transition For and our proprietary strategy The

reduce always has been strategy Our load on demand. grid the the and to the shift

can affordable. This day shift being time away where is on when again, with we coupled Our is response. current projects expensive, of electricity from the focused increase are that load electrification the load demand the

we decarbonization tough play assignment. role I want journey. affordable energy. recognize is Simply stated, our investors, in employees clean a to this what and It customers

We have taking this on really challenge. smart for people X,XXX

post-COVID. Results quarter another months XXXX, X evidence. in is last EBITDA. we trailing growing this Our of quarters of business delivered the of had again Again, XX-month we record a third are Last record. trailing XX quarter,

third the quarter, continued For our we performance. solid

Our execution organization growth quarter organic the double-digit is drove increases nearly profit cash in months focused versus and the and for all through team converting X key metrics. this the for prior of our flow. XX% across revenue year The XX%

many to like share we expanding Our working. supporting strategy is the capturing, are opportunities some I backlog. would of our

our Despite the model new sharing delaying has through projects, give higher these are terminating our beyond. to and XXXX is growing. rates that continue growth and financing, solutions strategy are large-scale interest our dependent momentum the We projects affordable to confidence on our investors that

Here are examples. some

winning Our cities transition embracing. are segment And for segments integrating projects geographies energy and also Engineering the as the are as months, XX%. it new in well is X XX% quarter. growth is Organic that for this

having is We their and pipeline better strong. and great for IA getting a looks 'XX Our the is selling, at and demand believe Integral software increasing. is year, group software Analytics the

new service sold has very throughout the effectively jobs over being be the organization. is Engineering announced that coming cross won several will Performance Our Group weeks. This

utility Our going or, I programs say doing well. should -- are they're

recompetes We IOU successfully year the have were this successfully All restructured California programs. won.

and the gained new Midwest utilities also have We Northeast. in

of are York New the Power New engineering in Dormitory and York growing. of Northeast, well State Housing doing work Authority City the our and New Authority, the Our NYCHA; Authority the York

date, our functioning the to performance very transition. recovered. We continue has during well. organization to leading It lived Willdan energy Group is to us this EX our Summarizing

closing, the capabilities transition We for in municipalities. demand services In also and energy for healthy, remain demand our by led anticipate EX looking to add to XXXX.

in we our expectation to our are the impressive end our our performance and for strength momentum markets, guidance. continue, the year-to-date Given XXXX raising

puts that actively position, our financial of acquisitions position us successful strategic strong Our objectives. facilities, the with in further amplified a refinancing to our pursue align credit business by

your long-term our I updated shareholder to now will on I returns. to results and employees, call the provide Kim, strong and turn that I will who thank am deliver over stockholders guidance. are our the we executing additional details positioning our by our confident strategy, want to support. for financial company customers

Creighton Early

afternoon, Thanks, strengthening and everyone. QX Tom, good strong earnings reflects performance financial conditions. and

the we is million flow company X the and million record. million trailing months year-to-date, million EBITDA X $XX.X $XX.X EBITDA and in EBITDA adjusted of $XX.X generated also adjusted the operations. cash for is the from in year in record For a of adjusted a The months first $XX XX-month

end execution credit during us means facilities strong thereby Continued to a helped business further to strategic of and in our delever operating us adjusted the the in complete the the the quarter, quarter. X.Xx pursuit of our leverage results, putting improvement opportunities. providing This of the bring refinancing to EBITDA of the as position the ratio drove acquisition continue

our segment We we're that Municipal recently broadens currently offering, additional opportunities. acquisition and small on service to our closed a seeking Engineering addition

to million. For demand million, QX record Net XX.X% up revenue record and our services. by QX, across range fueled $XX.X $XXX.X of the X.X% up was to our gross XXXX a over continuing broad revenue was a backlog strong

for We consecutive XX% Engineering prior our grew gross over Energy revenue growth fifth QX in saw than the an X% year the segment and more segment revenue, the revenues quarter. Consulting while restructured XXXX QX reflecting higher improved XX% throughout and business. XX.X% gross California the the productivity gross margin XX.X% IOU in year-over-year profit versus year a contracts as to improved was ago,

a year interest compensation, G&A a the from the million compensation. same XXXX X% on million QX growth were strong offsetting on $X.X partially ago revenues, higher X.X% expense to employee earn-out and up ago, depreciation year versus expenses Interest in hand higher only interest increased period lower the Despite to with the stock liabilities, accretion other rates. $X.X due in

in the XX% for tax quarter tax benefit Our quarter third to a XXXX. was income the of third rate XXX% compared of

versus share in over of a this ago, tax diluted QX or million, ago. this per QX $XX,XXX QX of XXXX. third So $X.XX net of versus $X.XX in income diluted year the per $X.XX million quarter, difference or up EBITDA net the XX% reflecting Adjusted was Adjusted a for year rates. QX was in in earnings $X.X share income million was $XX.X in $X.XX year year the mainly $X.X of per share

gross million, September driven versus by across September the ago, service gross our XX.X% months to the of lines supported months terms strong Gross growth increased $XXX.X $XXX.X up as licensing backlog. X XX% ended year all with XX.X% profit software net was a to improved was revenue X to in a improved and and margin million, In by utility XXXX, increasing higher up performance momentum contracts. XX.X% to our solid and compared XXXX XX.X% on XXXX of revenue

stock-based Higher the with period now on income have year a We while by compensation period grown the the earn-out all versus was operating the had compensation, from revenues increased liabilities, in in employee same operations, net leverage realized interest partially offset X.X% lower satisfied. and incentive as only lower been expenses significant ago, consistent accretion improvement XX.X%. G&A which

an the by XX% ended million $X.X months compared to same expense year increased year-to-date an tax higher $X.X was ago, $X.X on expense due prior rates. income Interest of reflects deductions the compared high a million XXXX million to rate period the the effective vested X to in $X.X or rate loss certain first price million income XXXX. impact on reduced lower stock this tax the stock quarter tax the the year benefit which the resulting in year. of from of in returns $X.X compensation in interest million for And to effective of relatively September The

effective a results an rate of XXXX. of per was Improved For XX%. to $X.XX all share company $X.X loss we significant share a of turnaround. million expect year-to-date compared approximately income tax enabled or net diluted per or now $X.XX XXXX, the Thus, in throughout million $X.X

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

significantly our and At net EBITDA, the was leverage XX-month XXXX, debt of $XX.X September X.Xx to million. adjusted improved trailing ratio end

paid $X million end line we of while balance a credit quarter, $XX.X cash of outstanding the million the During the healthy under quarter. maintaining at off our the

jointly the June proceeds loan the bank completed JPMorgan. prior mature of a our agreement, we facilities agreement a led refinancing XX, credit XX, credit term on the with September of agreement's scheduled syndicate new was banks repay the to into XXXX. BMO and On to entered which We X-year and from and credit X used by credit terminate

This the and to other expenditures with refinancing. finance general expenses The corporate serve grow and the and purposes to facilities working is capital, the acquisitions capital to fund associated fees company. continue credit will provide new

were borrowings no currently, revolving of million As credit $XX outstanding September end our there under of facility. and the

our With quarter, for the performance year-to-date a XXXX financial our and we're guidance. fourth strong expectations delivered raising

range share implying per in XXXX, is net XX%, adjusted XX% earnings range of EBITDA growth to million $XX the all EBITDA $XXX the of million $XX we to a diluted of in $XX implying to and of $XX million, million range fourth $X.XX. of quarter to the revenue $X.XX million, expected Adjusted now For expect to be to net revenue million. in now $XXX of

rate count We're tax our assuming of a million. XX.X estimated raising diluted full year share XX% of and

expected capital now Our range Operator, expenditures the $XX prepared $XX answer are to of to we're million be questions. million. to in

Operator

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

Craig Irwin

[indiscernible] another quarter really strong here.

Thomas D. Brisbin

this up you Craig, Could get breaking is little a bit. over? closer and start You're

Craig Irwin

to say here clear? I quarter another on start. strong congratulations Is wanted that to really

Thomas D. Brisbin

You came clear. it long and

if can You want. again, say it you

Craig Irwin

great It's job.

Thomas D. Brisbin

right. All

Craig Irwin

Yes.

Tom, customer numbers, kind the raising those quite right, consulting hit lot other activity to that are at in there's lot I of with industry interest really remarks. your to profitable that rates have out gone of want prepared guidance. a too projects high are rate chatter being beating People they to still on, your But for develop. appreciate you table finance. that head wind question be pulled at projects knowing that interest there industry and looking is investors. and lot Obviously, of So the renewables doing a because the solar the out a looking you're base of off there and There's

at scoops Willdan's little broader Can solar its than X bit that a interest cream supporting projects? likely you take the different how Are do looking opportunity or addressing? environment smaller And to something? and of you they customers the slightly talk of flavor rate maybe impacting we set X this projects? about just see character less maybe a Are maybe these of ice more or

Thomas D. Brisbin

so a want just start is I differentiate we've to what Craig, we've going interest ourselves and Do that's with off tied done there. think three like to questions that couple. rates. said? take to the in from that Mike's solar we you to would industry

Craig Irwin

clear, very it's think I yes.

Thomas D. Brisbin

clear. very It's

I your done? next next projects what And... think was So we question. your was question are solar

Craig Irwin

That one guess. I will in address it way,

Thomas D. Brisbin

it's If that All or right. a Well, but like wants we few. very hospital solar, do we a do will it. customer something

where products do it's doing. a business. Solar Mike, so decide is helping what you not are we're few in that do, not what we're or they We're battery, we them -- want small. solar should but doing

Michael Bieber

focus efficiency decarbonization or to energy that additions on are There projects bigger

Thomas D. Brisbin

I don't should it their chain question, I know want helping big what to make consulting, people And Craig. looking IRR want I a when talked that do. for that do with that XX%. decide and Yes. -- make But they to is what we're sure you're clear really we And they unless hospital project to,

So are to can X,XXX their with their through And them type meet returns. things to do internal we scraping what other trying and they facilities do. rate of work we show incentives that's the of

almost We the they're New and tax, are buildings billion; already new billion. all is that also commercial where part California, incentives customers, the $X Jersey, utilities, the money it's businesses, of $X it's York, do special it's there. with all these billion; $X getting small commercial purpose In

interest there. It require bank to working we're susceptible already doesn't off so that's financing some rates. money And

third was... of part Craig, your the And question,

Craig Irwin

that not they options in Well, that that their number do whether hospitals scenario, a interest hospitals hospitals and do impact can't count far imagine is -- consulting is talk the as as or through review it address be of for considering sizes country? Willdan I this the to maybe analysis rates renewables? the energy the can velocity total efficiency Willdan opportunity -- not us proper X,XXX whether but this project would imagine number total project or of how there. across addressing? do you doesn't you and that good. you of But impact for shrinking Obviously, the one pretty change out see would the

Thomas D. Brisbin

XXXX get their help, financial I can't to for and they're goals. more highly They're to decarbonization actually there it opinion, crunch. because by XXXX try to driven my looking out see in with how figure

lot we that motivation decline And just more on or people there. are So how our seeing like not a because in actually EX they any all smarter coming it then money, they get whether and they seeing in their requires interest dig they the these help know what's utilities. IRA the be the in future, money through the it, see companies possibilities, incentive Group

don't So anything you Mike, all do see goals to add we to problem I it because to have that? shrinking have meet. that

Michael Bieber

stronger gone accelerating results or we're getting and projects And have right why now. it explains partially correlation. as our There's X%. dropping No. getting off The are are actually stronger up interest no difficult, rates more

Craig Irwin

bit, what answers question different next Excellent. up slightly going ask That actually but in was my I'll maybe to -- way. a put that I as a little

I typically, during Willdan's take of to mentioned savings the you delivers exists economic crunch, customers. The So it and verifiable periods weakness, business the where energy look a financial Tom. money? Now institutions can CFOs efficiency of say, save because different

base? your from impact rates activity projects? So the renewables-related interest talk Are of an can in of tempo factors seeing activity away of you economic these elevated some of customer tempo sort maybe the these environment countercyclical across even the other of IRA or of about interest higher driving sort you rate weakness, and

Thomas D. Brisbin

said know. How IRA-type down? for that we're future. that few green money slows the We doing we've through before, coming projects We up pick in banks might very don't the Well, financing. X see to

preparing we we've without I yet. the here 'XX our think haven't 'XX experience, about of went XXXX, one Willdan We most a And what talked this whole of we for every 'XX, hit. do 'XX through day, right this that now. in and part recession strategy seen was given

here the have We little bit mine of with a coal business. Engineering

told XX%, As XX%, they're you, I XX%. up

a have people. couple One, going get it's explanations economy. harder on to in of we this There's what's that

are hiring. or for it. in cheaper figure are they afford can't people, retirement we municipalities, 'XX-'XX the they outsourcing our than way always these X with using the figured And physician maybe So outsourcing out structures the to out retirement. X finally We pay municipalities versus is people the that X

would we should what see It's decreasing. we're not we we municipalities. seeing actually -- think So it increasing see we when in be thought

So trend I the the think right way. we're

don't got have know we completely And to Can are. guys As this numbers add I you that? anything question, to show Mike the I Mike. said, if

Michael Bieber

data are We Craig, have there don't was rates. about accelerating and your or accelerating yet. I are interest know that? question was, don't interest exactly How but we enough whether higher I are rates we not that think think, business higher our what

Thomas D. Brisbin

interest higher help ever rates anyone.

Michael Bieber

Yes.

Thomas D. Brisbin

know good Saving are good I rates be But never energy for never yes. any interest would -- anyone.

Craig Irwin

showing No, you definitely Understood. guys are momentum. Understood.

you last from then Is time. time likely at that a for of an of there if the in question, be front this should year? planning can we contracts give So is the anything, Can a lumpy This activity that anything before I us there notable Analytics? get of Integral level see may. these is on you Or is and renewables, for obviously elevated think quick end update some awarded gem right on? be given we now to update commissions to of are Willdan real

Michael Bieber

the great it's over a XXXX. of into and is I'm before or not would a software. the to energy distributed get utilities And like the also states proportion rather. a it modernize a carrying these. where going pipeline of middle have on We specifics few of into 'XX -- tools we're IA XXXX. great bigger adopt and generation are because and going pipeline some end to announced pressuring in possible 'XX in specifics right executed into is now, places to of We're be These carry

is So in have there's strong increasing we worked not new states before. demand that that

Operator

Private Instructions] Your Investor. next comes question Eisenberg, [Operator from a Richard

Unknown Attendee

Should of or sizable in fourth the acquisitions next we quarter first any the quarter expect in year?

Thomas D. Brisbin

question. you, road. we wanted on say you you you the or can you if to the don't know. know Richard, met I Who with are Well, just answer If

Unknown Attendee

investor. private a I'm

Thomas D. Brisbin

Mike. Go ahead, Okay.

Michael Bieber

having to it got facility more none we acquisition raise acquisitions just when announced the that be want said It's reinitiate in guidance we're them the have We just it's question earlier. starting that, out. I in possible our credit we will and process. point renegotiated. later reinitiation out we to and but that XXXX, our could of don't not We soon, the forecast just in starting acquisitions likely We're that or closed is process, it's but and

Unknown Attendee

good Congratulations on a quarter.

Thomas D. Brisbin

Thank you for being an investor.

Operator

to no like any it back remarks. call would the questions. time, appears now there this for turn over closing I At to are further management

Thomas D. Brisbin

Willdan, are Well, and employees, great who all are with phone, great you It's hope thank here customers. we improving on in working It's to the a keep things going. all, shareholders, of you. you, been possibly year, and

much. very you thank So

Operator

XXXX Results and Call. wonderful for Conference This a you Group concludes Quarter your Third of Financial Willdan Thank rest today's attending, have day.

Willdan (WLDN) 2 Nov 232023 Q3 Earnings call transcript