Willdan Group, Inc. Q1 FY2026 earnings call

• Diversification is believed to add long-term stability and higher margins, with commercial revenue becoming 25% of revenue post-Burton. • Burton helps fill in Wildan's presence in all 50 states with permanent offices in 26 states plus Puerto Rico and Canada. • Had solid contract wins like SCE two-year extension, $54M NY project, $27M NY Accelerator Program, $24M Puerto Rico battery project, etc. • Analyzed electricity demand growth driven by data centers, with western US facing generation capacity issues. • Operational strength and Burton acquisition set up for a strong year.

Commercial revenue increased from 7% of business in 2024 to about 25% post-Burton in 2026. In Q1 2026, contract revenue was $155 million (+2% year over year), while net revenue grew 8% to $92 million. Adjusted EBITDA was $18.1 million, a first quarter record, representing 19.6% of net revenue. Gross margin expanded to 40.7%, contributing to the adjusted EBITDA growth.

• Raised long-term margin goal to expect adjusted EBITDA margin in the high 20s. • Upgraded 2026 full-year financial targets: net revenues expected in the range of $410 to $425 million, adjusted EBITDA in the range of $100 million to $105 million, and adjusted diluted earnings per share between $4.90 and $5.05.

• No specific detailed risks explicitly discussed in the transcript regarding operational failures or major risks.

Q: What's the reason for the increase in fundamental profitability?

A: Growth and back office cost absorption, energy demand, moving up the value chain, and balanced portfolio with commercial being 25% now.

Q: Update on APG business?

A: APG is performing outstanding, likely to more than double this year with big power blocks for large data centers in the pipeline.

Q: Timing of Los Angeles Water and Power contract?

A: Small contribution in Q1, bigger in the back half of the year with expectations for more opportunities.

Q: Limiter to organic growth?

A: Labor isn't a big constraint at this point, and the pipeline of opportunities is robust.