Willdan Group, Inc. Q4 FY2024 earnings call

• 2024 was a record year with strong execution across all lines of business, including a 11% increase in contract revenue and 24% increase in adjusted EBITDA. - Completed acquisitions in Q4 2024, including Enica serving biopharma and announced acquisition of APG to enhance commercial data center capabilities. - Successfully won major recompetes in 2024, such as the expanded recompete with Los Angeles Department of Water and Power (LADWP) for a $330 million five-year contract. - State and local government work growing organically at a high single-digit pace, and work for utilities remains robust under multiyear contracts. - Upfront policy and data analytics work driving strategy, with demand for integrated resource planning and asset valuation related to data center electricity load.

In 2024, contract revenue increased 11% to a record $566 million, and net revenue rose 10% to $296 million. Adjusted EBITDA was up 24% year over year. GAAP EPS nearly doubled, and adjusted EPS was up 39%. Customer mix: commercial customers comprise 15% of revenue (double last year's percentage), state and local government customers 44%, and utilities 41%. Gross profit in 2024 increased 13% to $203 million, with gross margin expanding to 35.8% from 35.2% in 2023.

• 2025 net revenue expected in the range of $320 million to $330 million. - Adjusted EBITDA projected to be between $63 million and $67 million. - Adjusted EPS estimated to be in the range of $2.70 to $2.85 per share. - The combined data center offering from Willdan Group and APG is estimated to be 10% to 15% of revenue in 2025, a fast-growing area.

Actual results may differ materially from forward-looking statements due to risks and uncertainties as described in SEC filings. For example, while federal spending cuts had almost no impact on backlog or outlook, other unforeseen events could affect performance.

Q: Comment on the linearity of the LADWP contract and potential startup issues.

A: There are no big startup concerns as it's a recompete. Activity stopped in December, will ramp up in spring, with expected notice to proceed soon and revenue to ramp up in the first half of 2025, and the program expected to be more linear with roughly $65 million per year.

Q: Funding source and accountability for RENs contracts.

A: Funding comes from the electricity bill surcharge in California, overseen by the PUC. RENs are made up in part by IOUs, and the contracts are time and materials, with Willdan providing services from regulatory support to program management.

Q: Impact of presidential transition on business activity.

A: Change in administration has had little impact as the company's work is primarily driven by state and local governments and local activities, with federal funding cuts having almost no impact on backlog.