WLDN earnings call analysis

NASDAQ:WLDN Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Rochelle | Conference Operator: Greetings and welcome to the Wilden Group fourth quarter and fiscal year 2025 financial results conference call. At this time all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance please press star zero on your telephone keypad. As a reminder this conference is being recorded It is now my pleasure to introduce Al Kazchok, Investor Relations. Please go ahead, sir. Al Kazchok | Investor Relations: Thank you, Rochelle. Good afternoon, everyone, and welcome to Will Dan Group's fourth quarter 2025 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an actual basis unless otherwise specified. We will make forward-looking statements about our performance. These statements are based on how things we see today While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risk and uncertainties. With that, I'll hand the call over to Mike, who will begin on slide two. Mike Bieber | President and Chief Executive Officer: Thanks, Al. We closed 2025 with record financial performance and strong momentum across our business. For 2025, both contract and net revenue grew greater than 20%, led by our energy work. Adjusted EBITDA grew 40%, and yearly margins expanded to above our 20% target for the first time in 2025. Strong EPS growth allowed us to generate $71 million of free cash flow, and we are now in a net cash position. In 2025, organic net revenue growth was 17%, and was largely driven by expansion with existing customers. Electric load growth has returned to the United States after about 15 years of stagnation. Artificial intelligence and data centers are accelerating electricity demand at a scale not seen in recent years. To a lesser extent, transportation and building electrification and increased domestic manufacturing are also contributing to electricity demand growth. Our utility customers are confronting a grid that must manage more power, more intermittency, and more complexity than ever before. At the same time, affordability has moved to the forefront. As infrastructure investment increases, regulators must balance reliability, decarbonization, and cost containment, increasing the need for smarter planning and cost-effective execution. Many studies have shown that energy efficiencies usually increases rates slightly but drives down bills for participants because you're using less energy and thus improves affordability. The dynamic plays directly into where Wildan operates, and the results reflect strong execution, which fuels our positive long-term outlook. On slide three. Let me step back for a moment and remind everyone how our business is structured and where we're seeing demand. Welland delivers a broad range of energy and infrastructure solutions to utilities, state and local governments, and commercial customers. On the left side of the slide, approximately 85% of our revenue comes from the energy segment, with the remaining 15% from engineering and consulting. On the right side, activity remains healthy across all customer groups. Our utility customers represent about 41% of revenue and continue to perform well. These programs are typically three- to five-year contracts funded through ratepayer mechanisms, which provide strong visibility and recurring revenue. Importantly, we're seeing program sizes usually grow over time as energy efficiency becomes recognized as a system resource. State and local governments account for approximately 48% of revenue and remains a steady source of growth. Most of this work is supported by user fees and municipal bond funding. both of which remain stable. Commercial customers have rapidly grown to 11% of revenue, with most of that activity tied to power for data centers. AI-driven load growth is creating meaningful infrastructure and energy optimization needs, and we're helping these clients navigate grid constraints, design solutions, and meet aggressive power requirements. Commercial customers represent the most fertile business environment we serve, and we plan to continue intentionally increasing our capabilities offered to the commercial sector. Taken together, this mix reflects a diversified, durable business supported by long-term contracts, relatively stable funding sources, and growing demand across multiple end markets. Conference Operator | Operator: On slide four. Our upfront policy, forecasting, and data analytics work informs our strategy Mike Bieber | President and Chief Executive Officer: and helps us navigate market change. We operate at the intersection of consulting services, engineering, and program management, helping clients plan for new load, design infrastructure upgrades, manage grid complexity, and implement cost-effective energy solutions. In our upfront work, we are seeing particular demand for studies on the impacts of electricity load growth, and that work grew more than 50% organically year over year. As I mentioned in prior earnings calls, those market changes led us to the APG acquisition. That provides power engineering solutions to commercial customers, including data centers and hyperscalers. We expect that work to more than double in 2026, and we are growing that backlog into 2027 and 2028 now because they're long-term contracts. In other parts of engineering, we saw strong execution and growth. with both commercial and municipal customers. In program management, we performed above our plan on utility programs and building energy programs for cities. Demonstrating this model in an example, I'll walk through what we're doing around data centers. First, we work with both hyperscalers and government regulators to optimize the siting and mitigate the electric load impacts of data centers. Our consulting work for Amazon Noted in our December press release is an example of this, along with our studies for the states of Virginia, Michigan, and California. Next, we work for data center developers to design and manage the construction of substations that power new data centers which enable AI. I'll provide you some examples of that in a moment. And finally, as Will then has done for more than 10 years, we provide energy efficiency optimization for data center operators mostly through long-term master service agreements. On slide five, we have a strong pipeline of opportunities that we are converting into contracts, and the pipeline is solid heading into 2026. Importantly, our average contract size has continued to grow, fueling the overall growth of Willday. Here are just a few examples we converted since our last conference call. For the city of San Diego, we recently signed a $112 million energy efficiency program that will help save electricity at municipal infrastructure owned by the city. This program is about two years in duration and addresses a wide range of civic buildings and other infrastructure that uses electricity. This follows a similar $97 million win with Alameda County, California, we announced last quarter. For Mount San Antonio College, we were just awarded an exciting new contract that demonstrates how acquisition integration can provide larger scale and more effective client solutions. This $49 million brand new project is an integrated microgrid resiliency project. Within WILDAN, it will involve the legacy civil engineering group collaborating with several previously acquired energy groups to deliver a comprehensive energy solution to the college over the next two years. Next, for Menlo Digital, one of America's largest data center developers and a large customer of ours, we are now breaking ground on a $38 million project to design and manage the construction of an interconnect substation that powers a new data center in Phoenix, Arizona. For Solve Energy, we signed a $4.5 million integrated distributed energy resource, or DER, project in Utah. And finally, we signed a smaller confidential LoadSeer software license in Q4. LoadSeer is our flagship long-term utility forecasting software. On slide six, this slide highlights what we continue to see in the data center market, sustained growth in electricity demand. There's currently an estimated 35 gigawatts of active data center construction in the U.S. While it's unlikely every announced project will ultimately be built, the broader trend is clear. Demand for power from digital infrastructure remains durable and is expected to extend at least through the end of the decade. Importantly, this isn't just about megawatts. It's about complexity. Data center load growth is driving transmission upgrades, distribution system and expansion, interconnection challenges, and increasing reliability requirements. Virginia and the more rural states of Texas, Georgia, Arizona, Tennessee, and Wisconsin are all experiencing rapid growth in energy demand from data centers. This dynamic plays directly to WLDAN strengths, from power system engineering and grid modernization to targeting energy efficiency and load optimization solutions. As electricity demand grows, utilities and commercial customers need technically advanced partners to plan, design, and optimize the system. Conference Operator | Operator: That's exactly where we operate. Mike Bieber | President and Chief Executive Officer: On slide seven, we continue to see energy efficiency evolve in ways that reinforce its strategic importance within tomorrow's power grid. There is increasing focus on capacity-driven and locational efficiency programs. Targeted efficiency and non-wire solutions are now delivering measurable distribution-level value, directly supporting grid planning and load management. Next, affordability is now a nationwide concern. Utilities and regulators are attempting to mitigate customer bill impacts, and energy efficiency remains one of the most cost-effective and immediate tools to reduce customer bills while accommodating load growth. Next, grid modernization is accelerating. Advanced metering infrastructure and AI-enabled analytics are improving measurement, targeting, and performance optimization, further integrating planning studies and efficiency into core systems operations. Reliability has become more of a year-round concern than just the historical concern of summer peaking. Now winter and summer grid events reinforce the role of efficiency as a dependable system resource. Wildan is well-positioned today and plans to further increase our capabilities through key hires and acquisitions. I want to mention that we have a particularly robust acquisition pipeline entering 2026. that will better enable us to serve customers in the future. Jim, over to you. Kim Early | Executive Vice President and Chief Financial Officer: Thanks, Mike, and good afternoon, everyone. Turning to slide 11, for the fourth quarter of 2025, contract revenue increased 21% to $174 million, and net revenue grew 13% to $89.5 million for the quarter. Adjusted EBITDA also increased 13% compared to the prior year, totaling $20 million for the quarter, and adjusted earnings per share more than doubled to $1.57, which is $1.23 on a gap basis, aided by exceptional tax deductions from energy efficiency incentives under Section 179D. The quarter benefited from broad-based growth and acquisitions. Margins remain solid as we maintain strong execution and cost discipline. Fiscal 2025 as a whole reflects the trajectory and strength of our operating model as noted on slide 10. Fiscal 2025 was a record year for Wilbent. Consolidated contract revenue grew 21% to $682 million and and net revenue grew 23% to $365 million for the year. Again, the growth was broad-based across our segment, service lines and customer base, and was aided by contributions from our acquisitions. Of the 23% growth in net revenue, 17% was organic and 6% was from acquisitions. Importantly, our revenue growth translated into meaningful profitability expansion as well. Gross profit increased 26.1% to $256 million, and gross margin expanded to 37.5% from 35.8% in the prior year, reflecting growth and productivity gains in our program management and consulting services in both segments, as well as success. delivering those services. General and administrative expenses increased with the growth, including investments in talent and technology, incentive compensation tied to performance, and acquisition integration. But the resulting operating leverage helped adjusted EBITDA increase 40% year-over-year to $79.5 million. Net interest expense decreased for 2025, primarily due to lower debt levels combined with a lower interest rate spread derived from reduced leverage ratios. We also benefited from the interest income derived from consistently high cash balances. And more significantly, we recorded an income tax benefit of $12.6 million as a result of the 179D deductions and the impact of the higher stock valuations. thereby adding to our bottom line and resulting in an effective tax rate benefit of 31.4% compared to a tax rate expense of 15.4% in 2024. As a result, net income more than doubled to $52.6 million for the year, or $3.49 per diluted share on a gap basis, compared to net income of $22.6 million, or $1.58 per share, in 2024. Adjusted earnings per share increased to $4.89 per share, compared to $2.43 in the prior year. Revenue growth and margin expansion propelled these strong results. Turning to the balance sheet and liquidity on slide 11, we generated $80 million in cash flow from operations, continued improvements in working capital levels supplemented the strong earnings, and $71 million in free cash flow, or $4.69 per share in 2025. We invested $9 million in CapEx, primarily for proprietary software development, and used $36 million for acquisitions. We also reduced borrowings by $40 million under our credit facility and had only $49 million in outstanding debt at year end. We ended the year with $66 million of unrestricted cash and a net positive cash position of $17 million, the first time since 2017, and effectively zero leverage compared to the 0.3 times EBITDA at the end of 2024. In addition, We continue to maintain full availability under our $100 million revolving credit facility, resulting in total available liquidity of $216 million at year end. This provides meaningful financial flexibility as we move into 2026. Our capital allocation priorities remain consistent. Reinvest in the business to support organic growth and pursue accretive acquisitions that expand and enhance our capabilities in geographic reach. Turning to slide 12. Over the past four years, our growth profile has been both durable and increasingly profitable. Gross revenue and net revenue grew a compound annual rate of 18% and 16%, respectively, while adjusted EBITDA expanded at a 30% compounded annual rate. And on slide 13, we've demonstrated the ability to expand margins over time through disciplined execution and productivity improvements, favorable mix, and prudent cost management. The 21.8% margin in 2025, for the first time, exceeded our long-term goal of a 20% EBITDA margin. We expect the 2026 margin to also exceed that 20% target. On slide 14, we provide our financial guidance for 2026. These targets assume no future acquisitions. We expect net revenue in the range of $390 to $405 million, adjusted EBITDA in the range of $85 to $90 million, and adjusted earnings per share in the range of $4.50 to $4.70 per share. These targets assume a full-year effective tax benefit of approximately 10%, and 15.8 million diluted shares outstanding. These numbers exclude any future acquisitions, though we expect to make acquisitions during the year, and our guidance will be updated accordingly. In summary, on slide 15, Fiscal 25 is a record year marked by continued growth and margin expansion. We entered 2026 with a strong balance sheet and ample liquidity to support strategic growth. We are positioned at the center of growing energy and infrastructure markets with a robust M&A pipeline to enhance scale and capabilities. Conference Operator | Operator: With that operator, we are ready to take questions. Rochelle | Conference Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Conference Operator | Operator: And as a reminder, it's star one to ask your question. And one moment while we pull for questions. Rochelle | Conference Operator: And we'll take a question from Craig Irwin with Ross Capital Partners. Craig Irwin | Analyst, Ross Capital Partners: Good evening, and thanks for taking my questions. So I'll start off the top by, I guess, asking about the thing that I think is affecting aftermarket trading, right? Your EPS guide of 450 to 470 is fantastic, but it is below the 493 last year. You know, when I look at the tax rate that you're guiding us to, a 10% benefit, That compares to negative 31% last year. So there's obviously quite a difference in the 179D assumption for 2026. This doesn't impact EBITDA. But can you maybe walk us through what your assumptions are for 179D in 2026, how this worked so very well for you last year, and is there potential for us to see 179D maybe become more favorable for you over the course of the year? Kim Early | Executive Vice President and Chief Financial Officer: Yeah, thanks, Craig. Well, the first big assumption is that consistent with the one big beautiful bill, this 179D is set to expire at the end of June for this year. So that inability to carry that through to the end of the year means that we can only take advantage of that through projects that are started within the first six months of 2026. So that's the single biggest factor there. There's also a little bit of a shift in just the work that we're doing from the Clark County School District. So we have a lot of school buildings within that school district to the shift into work we're doing for – Alameda County and San Diego, which will involve fewer buildings, which are really the source of a lot of those 179D deductions that we got. So the main driver is just the assumption that the 179D provision is not being renewed as of the end of June. And secondarily, that there's just fewer buildings in some of the projects that we're doing that would qualify it. Craig Irwin | Analyst, Ross Capital Partners: Understood. That makes complete sense. So my next question is about the EBITDA growth, right? So for the trailing four quarters, your EBITDA growth has been between 67% and 190% year over year, really just absolutely crushing it. So when I look at this, you know, I know your markets are helping in a big way, but I kind of have a suspicion that Wildan is humming on all cylinders, that there's certain – significant operating improvements that are happening at the company that might be improving the fundamental profitability of the company moving forward. Can you maybe unpack for us any of these operational changes that might be taking place? I know you're conservative in your guide and you give us numbers that you firmly believe in, but how should we look at the potential for your initiatives on profitability and performance as contributors over the course of the next year? Mike Bieber | President and Chief Executive Officer: Yeah, Greg. First, we expect margins to continue to be above 20%, that long-term target. We achieved that this year, and in our guidance, midpoints squarely above 20% again. It's actually a little improvement over this year. So that improvement continues, and the big structural change over the last five years is that we've moved up the value scale and are able to charge more for the work that we do. The second is the back office cost absorption of the scale itself. As we've grown the company, corporate costs are not growing at nearly the rate of the top line. So we think that's going to continue, and it's reflected in our guidance. You're right. I look back on last year's guidance, and our long-term expectations for investors are overall, to grow 15% to 20% top line and bottom line. And I think by the end of the year, we'll be right there, if not better. And that's exactly what we did in 2025. We've got the same playbook for 2026. We'll come in with appropriately conservative guidance at the beginning of the year. We know that you want us to beat and raise, and we think this positions us well. So I think it looks good for 2026. Craig Irwin | Analyst, Ross Capital Partners: Excellent. Last question, if I may. So you guys are winning in data center, right? Why? Because you bring the right resources to the customer quickly, and they can rely on Wildan to execute the project impeccably. But you've historically done the same thing for utilities, and utility demand seems to be going up because of the reserve margins that are falling across the country, right? Load growth is becoming a big problem. You know, Do you see potential for continued requests for accelerated project completion that tends to drive margins upward over the next couple of years? I mean, is this a theme that you're seeing, you know, more predominantly across your utility customer base? Mike Bieber | President and Chief Executive Officer: It is, Craig. You're absolutely right that utilities are being squeezed now, generations not necessarily keeping pace with the demand for that electricity. And so, yeah, energy efficiency is the cost-effective resource. They're trying to get as much out of those programs as they can get. And that's why you've seen those programs grow over time. You know, if you look back over 2025, 17% organic growth, there wasn't any single big win that drove that. It was mostly expansion from those long-term programs customer relationships, many of which are utilities, as you pointed out. That's exactly what we're seeing, and that trend is continuing. Craig Irwin | Analyst, Ross Capital Partners: Great. Well, congratulations on another really solid quarter, Mike. Conference Operator | Operator: Impressive. And next, we'll move to Tim Moore with Clear Streets. Tim Moore | Analyst, Clear Streets: Thanks, and congratulations just on the hard effort and the great execution throughout the year. You really harnessed the tailwinds and scale benefits. It came through, and all beaten race stocks still have momentum. One thing I just want to follow up, actually I have two questions. If I recall properly from last year, the year before actually, the fourth quarter of 2024, that Los Angeles Department of Power and Water contract wasn't, I think, in the for Q24 revenue. Did it ramp up meaningfully in this December quarter? I know you were laughing, kind of not much contribution in the year-ago period. Mike Bieber | President and Chief Executive Officer: On a percentage basis, it ramped up materially, but its contribution was very small in dollars, actually, for the Q4. That program is ramping up, though. We're not going to see... We'll see improvement in Q1 over Q4, but the big ramp-up for LEDWP is in Q2 We've got the amendments that we needed in place, the changes to the contracts, the contracting communities ready for it. And I think you'll see a material contribution to that contract starting Q2 of this year. And then, you know, it goes on for the next four years. Tim Moore | Analyst, Clear Streets: That's good, because I think I was modeling $7 to $8 million, maybe a quarter, maybe it would be higher. I know it was going to be higher than the original terms that phased down before renewal. So that's helpful. Mike, I want to check something, actually, if I heard correctly in your call. I mean, I'll just look at the transcript. But did you mention that you thought data centers could double in 2026 for revenue, or was I mishearing the end markets? Mike Bieber | President and Chief Executive Officer: No, we were talking specifically about the APG acquisition that does that type of, you know, substation design and construction management for those data centers. And we are expecting that to more than double for us this year. A lot of those projects, though, are two or more years in duration. So we're actually building backlog into 27 and 28. This is going to be a long-term trend. Tim Moore | Analyst, Clear Streets: That's great. I mean, it seems like it could be about 20% of your revenue by the end of the year from data centers related. If it does double, I mean, I imagine it would. Does that make sense? It could be maybe 20%. I mean, I know you had some AT&T before that, but it seems like you could get to 20% data centers. Mike Bieber | President and Chief Executive Officer: It'll certainly grow from 11% year over year. I don't know where we'll end up. We mentioned it's the most robust area we're serving, and In addition, I'll mention we're looking at acquisitions that specifically expand our capabilities to the commercial customers overall. We want to diversify in that direction, so we'd like to catalyze and drive that number up even further into the 20s. Tim Moore | Analyst, Clear Streets: Great, great. And one last question that's related to just the thread you just started. You do that Compass Municipal Advisors acquisition that really kind of gets you into the financing side, helps agencies and develop new projects. Is that a little bit different of a business model for you? I mean, is the margin higher because of the financing tie-in for that? Mike Bieber | President and Chief Executive Officer: We have a financial services group, and we have for probably 15 or more years at Wildan. We don't talk about it a lot, but it's a legacy activity that we provide primarily for communities in the western half of the U.S. A lot of the work is in California, Texas, a little bit in Florida. So that was a geographic expansion of that group. We currently didn't serve any of the customers in Wildan. North and South Carolina, and Kentucky. So you're right, that can be a higher margin business, and we see great cross-selling opportunities between that upfront financing work, particularly for school districts, and the other things that we provide for those schools like energy efficiency. Tim Moore | Analyst, Clear Streets: That's terrific, Mike. Conference Operator | Operator: Well, thanks for all that, Collar, and that's it for my questions. Thank you. That will conclude the question and answer session. Rochelle | Conference Operator: And this does conclude today's teleconference. You may now disconnect your lines. jsPDF 3.0.3 D:20260606090537-00'00'

NASDAQ:WLDN Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Kevin | Conference Operator: Greetings and welcome to the Will Dan Group third quarter fiscal year 2025 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Al Khashoggi. Please go ahead, Al. Unknown | Investor Relations Host: Thank you, Kevin. Good afternoon, everyone, and welcome to Will Dan Group's third quarter 2025 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an actual basis. We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risk and uncertainties. With that, I hand the call over to Mike, who will begin on slide two. Mike Bieber | President and Chief Executive Officer: Thanks, Al, and good afternoon. The third quarter of 2025 marks another milestone in Wildan's growth. In the third quarter, we continued to execute very well, delivering results that exceeded the street expectations and our own forecasts across all key metrics. Against a strong Q3 last year, net revenue grew by 26% year over year, driven by an outstanding 20% organic growth rate. 2025 will mark the fourth consecutive year that we've produced double-digit organic growth. Margins also continue to expand in Q3, concurrently with significant investments for our future. With electric load growth expected to increase over the next decade, driven by data centers and electrification, WILDAN's unique capabilities and execution position us well to sustain long-term growth. As a result, we are again raising our full-year financial targets, which Kim will present a little later. Turning to slide three. WILDAN delivers a broad range of energy and infrastructure solutions to utilities, commercial customers, and state and local governments. On the left side of the slide, the energy segment makes up about 85% of our revenue, while our engineering and consulting work makes up about 15%. On the right side, demand remains healthy across all customer groups. The 15% of work for commercial customers is mostly centered around electricity usage at data centers. where AI-driven load growth is creating significant demand. WILDAN is helping technology clients navigate energy constraints, optimize infrastructure, and meet aggressive power requirements. Our utility business makes up about 41% of revenue and continues to perform well. Most of our utility contracts are three to five years in duration, funded by ratepayer fees, and continue to provide a strong foundation of recurring revenue. The size of our long-term utility programs is generally increasing across the country as energy efficiency can be viewed as a power resource. Work for state and local governments makes up 44% of revenue and continues to grow organically at a double-digit pace. Demand from our government customers remains solid, and the outlook is positive. Most of our government work is funded through user fees and municipal bonds, which have remained healthy. On slide four. Our upfront policy, forecasting, and data analytics work informs our strategy and helps us navigate market change. In our upfront work, we see particular demand for studies on the impacts of electricity load growth, and that work is growing at about 50% organically year over year. Those market changes led us to the APG acquisition that provides power engineering solutions to data center clients hyperscalers, and other commercial customers. I'm pleased to report that APG is collaborating very effectively with the rest of Wildan and has already won record backlog that we expect will propel more than 50% growth by APG in 2026. In other parts of engineering, we saw strong execution and growth with both commercial and municipal customers. In program management, we performed above our plan on utility programs and building energy programs for cities. Demonstrating this model in an example, we are hired by technology hyperscalers to identify the optimal sites for data centers. We then provide clients consulting, engineering, and project management to supply the electricity that powers those centers. The new generation of data centers usually requires high voltage power, often hundreds of megawatts, with a dedicated utility scale substation and utility interconnect. After a data center is built, we'll then provide energy optimization inside the data center, as we have done for many years. Each step with the customer informs the next step. This model extends across all of our service lines. On slide five. We have a strong pipeline of opportunities that we are converting into contracts, and the pipeline remains solid heading into 2026. Here are just a few examples we converted since our last conference call. For Alameda County, California, we won a two-year, $97 million project to design and implement energy and infrastructure upgrades at county infrastructure throughout San Francisco's East Bay. For a confidential client, we want two substations for solar storage projects worth a combined $21.7 million in Oregon and Georgia. For a confidential client in Texas, we want a $14 million substation project for a solar energy storage system and a $7.8 million greenfield substation project. In Utah, we want a $3.6 million project to expand an existing substation. And I'll note that projects two through five on the table were all led by our recent APG acquisition. They're doing very well. On slide six. In early October, Wilden's E3 subsidiary published new research on electricity load growth. This research forecasts between 0.7 and 1.2 terawatt hours of U.S. electricity load growth over the next 10 years. The drivers are broad-based and extend well beyond the data center load growth now often talked about to include new industrial demand, electric vehicles, and the electrification of building systems. The colors on the bar chart depict the relative proportions of load growth drivers. This load growth is transforming electricity markets from a once static landscape into a dynamic long-term growth market. On slide seven. Looking globally, this map demonstrates that current data center electricity load expressed in gigawatts is by far the greatest in the United States right here. The map also puts into perspective just how large Northern Virginia data center electricity load is compared to anywhere else in the world. We've previously talked about our landmark study for Virginia on the impacts of this load, which has led to several more similar studies for data center developers and utilities. WILDAN is in the right market at the right time and is building the right set of capabilities to help clients navigate electricity load growth. Utilities are also investing to enhance reliability and flexibility as more distributed resources come online. requiring significant modernization of aging infrastructure. Together, these forces are driving one of the largest infrastructure investment cycles in decades, and we'll then as well positioned to help utilities and communities navigate this transformation. I'm very pleased with the way our team is performing. Now, Kim, over to you. Kim Early | Executive Vice President and Chief Financial Officer: Thanks, Mike, and good afternoon, everyone. Our Q3 results reflect another quarter of significant year-over-year improvement, continuing a trend that began in early 2022. Turning to slide eight, for the third quarter of 2025, contract revenue increased 15% year-over-year to $182 million, while net revenue grew 26% to $95 million. The recent acquisitions brought 6% of that growth, yielding an organic growth rate of 20% for the quarter. Growth was broad-based across both segments, led by continued strength in utility programs and double-digit gains in planning and construction management, as well as continuing municipal demand, geographic expansion, and new contract wins. Gross profit for the quarter grew 30% to $67.1 million, up from $51.6 million last year, driven by the revenue growth and solid project executions. Altogether, higher revenues, favorable gross margin, and effective cost control drove a 91% increase in pre-tax income to a record $14.3 million for the quarter. We reported a 4% income tax rate for the quarter compared to 2% for the same period last year. So net income thus rose to $13.7 million, up 87% from the $7.3 million we were we reported in Q3 of 2024. Adjusted EBITDA reached another new quarterly record of $23.1 million or an adjusted EBITDA margin of 24% of net revenue and up 53% from what was an excellent performance in the quarter a year ago. GAAP diluted earnings per share increased 77% to 90 cents per share while adjusted earnings per share was up 66% to $1.21 for the quarter compared to 73 cents a year ago. Broad-based growth and excellent execution drove a record quarter. Now to slide nine. For the nine months of 2025, contract revenue was up 20% year over year to $508 million while net revenue increased 27% to $275 million. $14 million of the net revenue growth came from acquisitions over the past year, yielding organic net revenue growth of 21% year to date. Gross profit increased 31% to $193 million, up from $148 million last year. Pre-tax income grew 77% to $29.7 million. The discrete tax benefits from stock option exercises and 179D energy efficiency deductions allowed for a $4.2 million tax benefit year to date and thus a net income of $33.9 million or $2.26 per diluted share through the nine months. Adjusted EBITDA rose 52% from $39.1 million in 2024 to $59.5 million or an adjusted EBITDA margin of 21.6% of net revenue, and adjusted earnings per share nearly doubled to $3.34 per share. All are record numbers for a nine-month period. We are on track to exceed our goal of 20% adjusted EBITDA margin in 2025. Slide 10 outlines our balance sheet and cash flow metrics. We ended the quarter with only $16 million in net debt after deploying $33.4 million cash for the recent acquisitions. This brings our trailing 12-month leverage ratio down to 0.2 times adjusted EBITDA compared to 0.3 times at year-end 2024. Free cash flow for the first nine months was $34 million. consistent with the $33 million generated for the same period in 2024. On a trailing 12-month basis, our free cash flow was $65 million, or an impressive $4.34 per share. We had all $100 million available to draw under our revolving credit facility, and an available but undrawn $50 million delayed draw term loan plus $33 million in cash on the balance sheet, giving us $183 million in total available liquidity at quarter end. Our healthy balance sheet, expanded credit facility, and consistent operating performance provide us with the financial flexibility to pursue targeted acquisitions and expand capabilities in strategic markets, all while maintaining prudent leverage. Turning to slide 11. This slide reflects the 20-plus percent compound annual growth in revenue we've been able to achieve over the past 15 quarters and the even more enviable growth in the adjusted EBITDA over the same period. The lines reflect the ebbs and flows of our diversified portfolio of projects across sequential quarters, but the clear trend across the nearly four-year period is up and to the right. This record of sustained improvements has been enabled by the strong execution by our management team in a growing market. We've been able to grow and diversify our service offerings to satisfy the increasing demand from utilities, governments, and commercial clients to adapt to the new environment. On slide 12, building on this multi-year record of performance improvements, we're raising our financial targets for 2025. Net revenue for the full year 2025 is now expected to be between $360 and $365 million, and adjusted EBITDA is now expected in the range of $77 to $78 million. Adjusted diluted earnings per share is projected to be between $4.10 and $4.20 per share based on an estimated tax benefit of 10 percent and 15.2 million shares outstanding. These targets do not include the impact of any future acquisitions. Wrapping up on slide 13, we're proud of the results we've been able to deliver and we're excited about the potential for the future as we continue to win new contracts and then expand existing ones. Organic net revenue growth of 20% for the third quarter The successful completion of recent acquisitions and excellent free cash flow conversion attest to the record-setting performance for the quarter and the year to date. Our performance and confidence in the future support raising our 2025 financial targets. With low leverage and an experienced and motivated management team, we're well positioned in dynamic and growing markets. and we have an active pipeline of strategic acquisition opportunities. Operator, we're now ready to take questions. Kevin | Conference Operator: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Craig Irwin from Roth Capital Partners. Your line is now live. Craig Irwin | Analyst, Roth Capital Partners: Good evening, and thank you for taking my questions. So I should start by saying congratulations, another really just amazing quarter. Mike, the last few quarters, you've been growing close to double the targeted growth rate that you've had for the last several years. I wanted to ask if you could maybe talk a little bit about – What's lifting this customer demand? How do you plan for the capacity to serve these opportunities? And the profitability is clearly there. Do you get more picky or more choosy about how you service these customers? Or do you see this as something that can maybe be an opportunity for you to continue over the next number of quarters? Mike Bieber | President and Chief Executive Officer: That's a big question, Craig. Thanks. Well, first, the market's good. You know that. You know, electricity prices are rising. Demand for electricity is increasing. So the market's good. But there's something else going on. Our own performance within that marketplace has improved pretty substantially over the last couple of years, as you mentioned. We're more effective at cross-selling, especially with new acquisitions that we bring in, than we ever have been before. And that has led to tens of millions of dollars of new revenue that we had never seen before in our cross-selling evolution, I'll put it. Culturally, we've become much better at that. And APG and the list of their wins sort of epitomizes that. They've been excellent collaborators. We've got a great pipeline. And they're hoping to accelerate and catalyze our growth into 2026. You saw that on the new wins. So that's what's going on. I can't provide you a detailed forecast for 2026. We won't do that until March of this year. But we have been – we normally guided the street towards high single-digit organic growth rates. And you're right. We've been about double that now for a little while. We're going to do our best to make it as reasonably high as we can. You mentioned becoming selective. And in certain instances, we have become selective with those projects. We can afford to do so at this point, especially in our commercial work for data centers, where we're choosing to work with certain mid-tier developers that we have very close relationships with, we're working effectively with, and it's a good business environment. It's not competitive. It's directly negotiated work, and we are becoming more selective in that area. Craig Irwin | Analyst, Roth Capital Partners: Understood, and I'm guessing that you might be referring to APG, which bridges into my next question. So the work that APG is executing, the work they're winning, the data center work, is some of the most exciting projects that WLDAN's completing right now. Can you maybe talk about the ability for other areas of WLDAN to supplement the capabilities at APG and the execution capacity there? You know, is this something that is improving employee utilization and just general resource utilization for the company? Mike Bieber | President and Chief Executive Officer: Yeah, sure, Craig. Well, first, our upfront consulting work that we do, particularly for the hyperscalers, is feeding into our information that we know where the new data centers are going into. That's useful. And on the back end of that, the work that we had been doing to make data centers more energy efficient, we've been doing that work for a long time, is useful in our knowledge of working around that environment. So all of those groups are collaborating pretty well. We're also even getting our civil engineering group involved in certain projects. So that's sort of what the landscape looks like right now. Craig Irwin | Analyst, Roth Capital Partners: Okay, and the last question, if I may. Other companies in the service sector are talking about difficulty sourcing employees. Can you talk about the WLDAN workforce, you know, how flexible is the workforce that you've assembled over the last several years? Are you able to develop people up to fill these needs, these opportunities? And, you know, do you see this as an impediment to your growth? Mike Bieber | President and Chief Executive Officer: We don't see it as an impediment to growth. Actually, we see ourselves as the employer of choice. We have not had major impediments in hiring employees. And I just saw today that our employee count for the first time has reached over 1,800. We're hiring. And I think we're doing a very effective job of hiring and retaining key employees. I'll note that we have had zero turnover in our senior management team over the last more than two years. We haven't lost a single person. So no, it's not a major impediment. Look at our website if you're interested. Craig Irwin | Analyst, Roth Capital Partners: Well, congrats again on another really solid quarter. Thanks, Greg. Kevin | Conference Operator: Thank you. As a reminder, that's star one to be placed into question Q. Our next question is coming from Tim Moore from Clear Street. Your line is now live. Tim Moore | Analyst, Clear Street: Thanks. Mike and Kim, congratulations on the continued execution and optimizing your funnel to really cross-sell and benefit from this low-power secular theme. So my first question is really more about risk management and balancing that. It's a good problem to have to be growing organically as fast as you have in the last few quarters and seemingly for next year. So can you maybe just give us a little color on, you know, we know you hired a lot more consultants this year. We know the employee counts up a lot. You're getting inbound inquiries also through your project managers. I'm just wondering how you kind of think about accepting larger projects and program management and just making sure that you're staffed without maybe having to pay overtime or onsite costs or, you know, actual travel and hotels for maybe a project that, you know, if you're jumping around. Just give us some color on that to really keep the margin up there. Mike Bieber | President and Chief Executive Officer: Sure. Great question. We don't often get it from investors, but it's what we spend most of our time on day in and day out, Kim and I. on this risk management idea. You're right that you need to look, when you're growing organically at 20 plus percent, you need to look at the leading indicators to make sure that you're delivering effectively for those clients. And we look at everything from quality to health and safety to other factors, and we review them every week with every operating unit. The leading indicators look good, and we're not seeing issues that might say that we're taking on too much risk or growing too quickly, but we are growing quickly, and we're keeping our eye on that and keeping our eyes wide open. That's how I would describe it. Tim, do you have anything to add? Kim Early | Executive Vice President and Chief Financial Officer: Yeah, the only thing I would add to that, Tim, is that these larger scale projects take a while to develop, and it's not necessarily a big surprise to us when we finally get awarded a project. It's not like we're waiting for some envelope to be opened at the end of a process, and we don't know what's going to happen there. We We are working on developing these projects for quite a long period of time, and we can see them coming, and we can get a pretty good feel from these clients that we may be in position to win. So we're able to look ahead and plan effectively as well as to what those risks are and how can we get those staffed and how can we make sure we're prepared to execute when the project finally does get awarded. Mike Bieber | President and Chief Executive Officer: Yeah, Kim's right and points out correctly that a lot of these start out as T&M consulting projects. We're developing the project for months in advance. We're doing all of the engineering, and we may, with the client, decide to convert it to a fixed price or fixed unit price contract later on, but we're mitigating our risk significantly by working closely with the client up front in planning. Tim Moore | Analyst, Clear Street: That's terrific, Collar. Yeah, you know, I'd realize that, you know, A big renewal like the Los Angeles Water and Power Department one, it's pretty well planned out. Just curious about the new first-time ones, and that's really helpful. My only other question is, as you cross-sell APG more, that's early innings, E3, software, civil engineering cross-selling, I'm just wondering, does your team, and maybe Kim and you can speak to this, do you prefer... smaller bolt-on acquisitions, or can you really tackle something that's maybe 100 million plus target and integrate it well and still be able to cross-sell it well without maybe taking some staff power off of the cross-selling team that's in the rest of the business as you really look at commercial electrical engineering or maybe interconnection? Kim Early | Executive Vice President and Chief Financial Officer: Yeah, I think we've got pretty effective systems and communication devices, I guess, that we use for you know, the cross-selling activity. And, you know, so it's pretty efficient for us as we bring in these bolt-on acquisitions to establish that kind of cross-collaboration. But we're definitely prepared to be able to handle a $100 million kind of size group. You know, just culturally, we fit that way. Our tools are kind of designed to make sure that we'll be able to cross-collaborate without significant barriers on those projects. So we definitely keep our eye open for those kinds of opportunities, and we plan for that kind of potential acquisition as well. And, you know, whenever you make acquisitions of those sizes, The leadership on both sides of defense, our side and the company that's being acquired, the management teams are usually pretty anxious to get to know each other and to find out what the others are doing and how can we work together on that. And that's probably the most exciting piece to most of our team. So we're prepared to do that for sure. Operator | Conference Operator: Thanks for those insights, and that's it for my questions. Thank you. Next question today is coming from Richard Eisenberg, a private investor. Your line is now live. Richard Eisenberg | Private Investor: Good afternoon, guys, and congratulations on a great quarter. Kim Early | Executive Vice President and Chief Financial Officer: Thanks, Richard. Richard Eisenberg | Private Investor: On the last call, you talked about a potential $100 million contract with the state of New York. Is that still in the negotiation phase? Do you expect to close that? Thank you. Mike Bieber | President and Chief Executive Officer: We have several large contracts in New York that we're pursuing. And yes, we remain very optimistic that we're going to be successful on one, if not several of those opportunities. And I think they're going to help drive 2026 growth. Operator | Conference Operator: Thanks a lot, Mike. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments. Mike Bieber | President and Chief Executive Officer: Well, thank you all for attending, and we look forward to speaking with you soon. Thank you. Thank you. Kevin | Conference Operator: That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. Mike Bieber | President and Chief Executive Officer: We thank you for your participation today. jsPDF 3.0.3 D:20260606090538-00'00'

NASDAQ:WLDN Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Call Operator: Greetings. Welcome to Will Dan Group's second quarter 2025 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Al Keshok, Vice President. Thank you, sir. You may begin. Al Keshok | Vice President, Investor Relations: Good afternoon, everyone, and welcome to World End Group's second quarter 2025 earnings call. Joining our call today are Mike Bieber, President and CEO, and Kim Early, Executive Vice President and CFO. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variances on revenue, adjusted EBITDA, adjusted EPS discussed during our prepared remarks are on a national basis. We will be making forward-looking statements about our performance. These statements are based on how we see things today. We may elect to update these forward-looking statements at some point in the future. We do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially to risk and uncertainties. With that, I'll hand the call over to Mike, who will begin on slide two. Mike Bieber | President and CEO: Thanks, Alan. Good afternoon. We had another strong quarter of performance, capping a record first half in 2025. In the second quarter, we continued to execute very well, delivering results that exceeded the street expectations and our own forecasts. across revenue, adjusted EBITDA, and EPS. Our formula for catalyzing organic growth with the capabilities of new acquisitions is working. Against a strong Q2 last year, net revenue grew 31% year over year, driven by an outstanding 23% organic growth rate and 8% acquisitive growth. Performance remains strong across all business lines, reflecting the consistency of our execution and the value of our integrated model. With electric load growth expected to increase over the next decade, driven by data centers and electrification, Bulldog's differentiated capabilities position us well to sustain long-term growth. As a result, we're raising our full-year financial targets, which Kim will present a little later. Starting at slide three. Woodland delivers a broad range of energy and infrastructure solutions to commercial customers, utilities, and state and local governments. The energy segment makes up about 85% of our revenue, while our legacy engineering and consulting work makes up about 15%. Demand remains healthy across all customer groups. The 15% of work for commercial customers is mostly centered around electricity usage at data centers. where AI-driven load growth is creating significant demand. LILDAN is helping technology clients navigate energy constraints, optimize infrastructure, and meet aggressive power requirements. Our utility business makes up about 41% of revenue and continues to perform well. Most of our utility contracts are three to five years in duration, funded by ratepayer fees, and continue to provide a strong foundation of recurring revenue. The size of our long-term utility programs is generally increasing across the country as we perform well versus competitors, and energy efficiency becomes a power resource. Work for state and local governments makes up 44% of revenue and continues to grow organically at a double-digit pace. Demand from our government customers remains solid, and the outlook is positive. Most of our government work is funded through user fees and municipal bonds, which have remained stable. On slide four, our upfront policy and data analytics work informs World End Strategy and helps us navigate market change. In our upfront work, we see particular demand for integrated resource planning and asset valuation on projects associated with data center electricity load. Our upfront work has increased organically at a rate of about 50% this year. These market changes led us to the APG acquisition, which we announced in March, that provides deeper solutions for these clients. In engineering, we saw strong execution and growth, particularly with municipal customers. In program management, we performed above our plan on utility programs and building energy programs for cities. Putting this model to work on the right, as an example, we're hired by technology hyperscalers and their partners to help identify the optimal sites for data centers. This quarter, we rolled out a new proprietary software that we use to help clients site data centers. We think this new software tool is a significant differentiator and provides our clients with minimized interconnect times, lower power and land option costs, and faster speed to market. We then provide clients consulting, engineering, and project management to supply the electricity that powers data centers. The new generation of data centers requires high voltage power, often hundreds of megawatts, with a dedicated utility-scale substation and utility interconnect. After a data center is built, we'll then provide energy optimization inside the data center, as we've done for many years. On slide five, we have a strong pipeline of opportunities that we're converting into contracts. These are just a few examples we've converted since our last conference call. For a confidential Phoenix data center developer, we want a $36 million project to provide consulting, engineering, and construction management for a data center substation and interconnect. For the New York Power Authority, NYPA, We won two contracts worth a combined $20 million to provide energy infrastructure upgrades. NYPA has grown to become among our largest customers, and we thank NYPA for entrusting us with these latest awards. We also won another $17 million data center substation project for a confidential client in Sunnyvale, California. We were awarded a $13 million performance contract with the White River School District in Washington State provide energy efficiency and infrastructure upgrades. We were awarded a $6 million solar generation project in Illinois. And for that same state's Commerce Commission, we were awarded a million-dollar project to evaluate Illinois' electricity resource adequacy under new load conditions. The LADWP program, previously our largest contract, restarted finally in July. We don't expect material contributions from this $330 million five-year contract in 2025, but the ramp has started. Based on our pipeline of new opportunities and program expansions, we feel good about the outlook for 2026. On slide six. From 1970 to 2005, the US experienced several decades of sustained electricity load growth followed by 15 years of relative flatness. Today, we are in a new era of structural low growth, a trend that is reshaping the electricity landscape. This quarter reflected what we've seen over the past few quarters. Demand for our services is expanding across our end markets. The shift towards electrification, coupled with the resurgence in domestic manufacturing and the explosive growth of AI-driven data centers, creates strong tailwinds for WLDAN. Electricity demand in the U.S. is projected to grow by 50% between now and 2050, and we're already seeing the front edge of that demand emerge through multi-year infrastructure investments, grid modernization, and private sector-funded electricity for data center load. This demand environment supports our belief that WLDAN is well positioned to help our clients navigate these changes. We also continued to monitor the uncertainty around tariff risk. While these risks have not had a material impact on our business to date, we remain proactive. We're working closely with our clients to manage potential volatility, including inserting more flexible contract terms and identifying alternate suppliers for key equipment to mitigate pricing pressure if needed. While the economic environment remains generally constructive, a recession remains a potential risk, We would not be immune to a broad-based slowdown, but if that occurs, we believe Wildan is relatively well insulated, given the funding sources of our core customers, particularly utilities and public agencies. Overall, I'm very pleased with Wildan's performance. Q2 was solid across the board and forms the foundation for a strong second half and an even stronger 2026. Kim, over to you. Al Keshok | Vice President, Investor Relations: Thanks, Mike, and good afternoon, everyone. Our Q2 results marked the 10th consecutive quarter of significant year-over-year improvement, continuing the trend that began in early 2023. Organic net revenue growth of 23% for the second quarter, the successful completion of recent acquisitions, and strong free cash flow conversion attest to the record-setting performance for the quarter and the year to date. This momentum enabled us to complete an expansion and extension of our credit facilities and reduce our total debt by $28 million during the quarter, reinforcing our commitment to disciplined capital deployment. With low leverage and strong operating performance, we're well positioned to continue to invest in growth and development of new opportunities. Turning to slide seven, For the second quarter of 2025, contract revenue increased 23% year-over-year to $174 million. Recent acquisitions contributed $11 million to the contract revenue in the quarter. Net revenue grew 31% to $95 million. The recent acquisitions brought 8% of that growth, yielding the organic growth rate of 23%. Growth was broad-based across both segments. Revenue in our energy segment rose 25%, led by continued strength and funding acceleration in utility programs and double-digit gains in planning and construction management. Engineering and consulting segment revenues increased 16%, reflecting the continuing municipal demand, geographic expansion, and new contract wins. Gross profit grew 40%. with gross margin improving to 39.4% from 34.6% last year, driven by a favorable revenue mix and solid project execution. On the cost side, G&A expenses rose 33%, primarily due to increased wages and incentive compensation aligned with the earnings growth, as well as higher stock-based comp linked to the rise in our share price, and depreciation and amortization from recent acquisitions. Altogether, higher revenues, favorable gross margin, and effective cost control drove a 92% increase in pre-tax income. Due to the impact of discrete items like the stock-based compensation and energy efficiency tax incentives, we reported a 52% income tax benefit for the quarter. Net income thus rose to $15.4 million, up 236% from the $4.6 million we reported in Q2 of 2024. Adjusted EBITDA reached $21.9 million, representing 23% of net revenue, up 71% from a year ago. Adjusted earnings per share more than doubled to $1.50 from 55 cents, and GAAP earnings per share was $1.03, up from 33 cents a year ago. This was a record quarter. Now to slide eight. For the first half of 2025, contract revenue was up 24% year over year, while net revenue increased 28% to $180 million. Gross profit increased 31% to $126 million as the gross margin expanded to 38.7% up from 36.5% last year. Adjusted EBITDA rose 52% to $36.4 million, and adjusted earnings per share grew 125% to $2.14 per share. GAAP earnings per share for the first half was $1.36 up from $0.54. All are record numbers for a six-month period. For some time, we've had a goal of achieving best-in-class adjusted EBITDA performance of 20% or more of net revenue. The 23% level for Q2 brings us our adjusted EBITDA margin to 20.2% for the six months to date and gives us confidence that we're on track to exceeding that 20% goal for the first time this year. Slide 9 outlines our balance sheet and cash flow metrics. We ended the quarter with $28 million in net debt and a net debt to adjusted EBITDA ratio of 0.4 times, modestly higher than year end after deploying $35 million in cash for the recent acquisitions. We had $32 million in cash, $90 million available under a $100 million revolver, and available but undrawn $50 million delayed draw term facility giving us $172 million in total available liquidity at quarter end. Subsequent to the end of the quarter, we reduced the borrowing under our revolver another $10 million, leaving us the full $100 million available at present. In the first half of 2025, we converted 80% of the adjusted EBITDA to cash from operations through a continuing focus on working capital efficiency. DSO was 70 days, reflecting continued strong collection and disciplined cash management. Free cash flow for the first half of 2025 was $24 million, consistent with the $24 million generated in the first half of 2024. On a trailing 12-month basis, our free cash flow was $64 million, or $4.34 per share. Our healthy balance sheets Expanded credit facility and strong operating performance provide us with the financial flexibility to pursue targeted acquisitions and expand capabilities in strategic markets, all while maintaining prudent leverage. Turning to slide 10, based on our year-to-date performance, we're raising our full year 2025 financial target. Net revenue is now expected to be between $340 to $350 million. Adjusted EBITDA is now expected to be in the range of $70 to $73 million. An adjusted diluted earnings per share is projected between $3.50 to $3.65 per share based on an estimated tax benefit of 15% and 15.1 million shares outstanding. These targets do not include the impact of any future acquisitions. For purposes of modeling, we expect Q3 adjusted EBITDA to be similar to Q2's and Q4 to be slightly less than Q3. On slide 11, we delivered solid growth in financial performance and we're raising our fiscal year 25 financial targets. We are well positioned in dynamic and growing markets and we have an active pipeline of strategic acquisition opportunities. We're excited about the future. Operator, we're now ready to take questions. Operator | Conference Call Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Craig Irwin with Roth Capital Partners. Please proceed. Craig Irwin | Analyst, Roth Capital Partners: Good evening, and thanks for taking my questions. First, I should start off by saying congratulations. You know, I've never seen above 50 and a quarter for Wildan, so you guys are knocking the cover right off the ball. Mike, what stands out is 31% growth and 23% organic growth. Over the last few years, you've done a lot of work that I don't think investors have seen preparing for future growth capacity, the development of the capabilities of your site managers, your engineering teams, and then these recent acquisitions bring in new capabilities, new engineering talent. Can you maybe unpack for us, you know, the potential of Wildan to deliver on robust organic growth as we look into 26 and 27. You know, will this require substantial hiring beyond what you've put in place over the last couple years? Are there opportunities for leverage that you're seeing, maybe new opportunities that you're seeing with your recent acquisitions? Mike Bieber | President and CEO: Yeah, good question, Craig. 23%, one of the best numbers we've ever posted. It's outstanding, and certainly at this size. We've never done anything like that. We've worked hard over the last couple years in intercompany collaboration. When we bring in a new group, a new acquisition, that can catalyze a lot of cross-selling between the new acquisition's capabilities and our legacy clients, and that's what's happening in part. The organic growth rate has actually been increasing over the last several quarters, and some of it is due to that cross-selling. We're in the early stages with the APG. That's a key piece of the puzzle to help clients with data centers and utility clients trying to address these problems, and that has set off a number of opportunities, some of which we listed, many of which are to come later this year and into 2026, but It's the cross-selling that is helping to drive our organic growth above any of our competitors' weight that I have seen at least. Craig Irwin | Analyst, Roth Capital Partners: Excellent. And then can you maybe talk about your positioning for work with AEG? Now, Wildan, over the last several years, has had particularly strong relationships with utility commissioners. you know, as a service provider, you know, facilitating, you know, energy efficiency, you spent time educating commissions on different technologies and different solutions and helping them understand the returns available. How does this change WILDAN or position WILDAN for growth on the grid side as your, you know, your commercial and state and federal customers look to, you know, solve these grid problems? I mean, there's big problems and they need big solutions, but they need companies they can trust. Mike Bieber | President and CEO: Yeah, good question, Craig. You need to have a reputation and be trusted by these large IOUs, especially. That's true for the cities as well. So we've got a good background in working for IOUs across the country, and that helps us when we take a commercial client in for an interconnect, or do grid planning work or try to site data centers. We are standing up energy efficiency programs that tend to offset new generation. That reputation of delivering really helps. It's been going on for a long time. We really started in California and New York, and now we're working across the country to Craig Irwin | Analyst, Roth Capital Partners: Excellent. And then cash flow has been particularly strong as well these last couple quarters. You know, I know you do have about 45% fixed price work out there. Can you maybe give us a little color on the character of that work? And, you know, going forward, is the balance of sort of cost in excess, billings in excess, and the cash flow cycle on some of these exciting projects going to be something we'll have to look closely at? Or is the character of the work that you're doing something where this is lower risk than some of these very large E&C projects that others tend to complete. Al Keshok | Vice President, Investor Relations: Yeah. Well, we are fortunate to get good cash flows from those fixed-price projects, you're right. And they do offer us a supreme opportunity to get paid in advance for work that's done subsequently and reduce the working capital requirements in the company. And we work hard on that, as well as working hard with our utility customers on faster invoicing and processing of those kinds of invoices. As far as the risk profile of the fixed price contract that we've got, it's relatively low compared to a classic EPC kind of a contractor. We subcontract, as you know, a fair amount of the work that we do. And the pricing on the projects that we execute in terms of materials is really pretty well handled in advance. We don't do a lot of self-performance kind of work where you rely on chubs where we've downloaded some of that pricing risk to them. We feel like those fixed price contracts are a little less risky than what you might think of the classic EPC contractor. Also, part of those fixed price contracts are actually service agreements. really no EPC risk involved in some of the work that we do in terms of planning and analytic stuff that is fixed price in nature. It's just based on the scoping of the work that we do. It's typically with the kinds of customers that we work with for quite some time on projects that we know well. The downside is pretty small with those. So we're pretty happy with that. We're pretty happy with the way that we've been able to bring down that overall working capital requirement on the cash flows. And I think, as you can see from the numbers, we've had pretty good success. Craig Irwin | Analyst, Roth Capital Partners: Understood. Last question, if I may. Obviously, the momentum across your markets is broad-based. It seems like everything's really working for you right now. Can you maybe call out for us any specific elephants that you might be chasing? You know, I know you've landed some chunky data center and power opportunities recently. Are there any projects or awards that are potentially, you know, $100 million plus that are potential bookings over the next couple quarters? Mike Bieber | President and CEO: You're looking into our playbook, Craig. Yes. We've got a few of them that we've been chasing for quite some time actually and they have come to maturity. I think it's likely that you'll see some announcements. We've been chasing an important contract in New York and I think we're nearing completion on that one. That's a nice big opportunity and there's a series of opportunities with some of the RENs in California. We've talked about RENs in the prior quarters. Those opportunities are coming out later this year. They'll probably be awarded either late this year or sometime early in 2026. And those are all nice, big, new chunks of long-term contracts. Craig Irwin | Analyst, Roth Capital Partners: Fantastic. Well, congratulations, guys. Really impressive results. Thanks, Craig. Operator | Conference Call Operator: Our next question is from Tim Moore with Clear Street Capital. Please proceed. Tim Moore | Analyst, Clear Street Capital: Thanks and congratulations on the continued organic sales growth and the cross-selling EBITDA margin expansion despite the Los Angeles Water and Power contract not really kicking in yet. I just want to kind of touch base on one aspect I think maybe similar to cross-selling APG, but A little bit different. The software and analytics side, I mean, you have that gem of a business, the E3 acquisition that you did. So I was just wondering, are you seeing that, you know, as a carrot tangle, really bringing in more penetration, you know, getting you into the door, some of these, you know, clients to really show them the power, you know, support and innovative resource planning? Or is that something you kind of tack on to other existing businesses? Mike Bieber | President and CEO: No, you're exactly right, Craig. The software offering is now being paired with our services where we didn't provide that type of integrated consulting before. And a number of new projects have been awarded over the last, I'll say, 18 months with that recipe. It's really working pretty well pairing the software with the consulting services. We mentioned also earlier that upfront consulting work grew organically 50% year over year for the first half over the last half. So it's on fire. It's doing exceptionally well right now. We're adding new capabilities and recruiting a lot of new hires. Tim Moore | Analyst, Clear Street Capital: That's very helpful, Micah. I appreciate that. I just want to just, you know, really follow up, I guess, on the broad-based growth question I kind of asked this last quarter. Considering you had that gap for the Los Angeles Department of Water Power Contract pretty much in the first half of this year, is there anything you can pinpoint besides the upfront consulting work? Anything jumping out that you really think is coming back and getting momentum to really kind of reconcile a bit more the organic sales beat in the June quarter? Mike Bieber | President and CEO: It's tough to do that. We've been growing into teams. We have previously posted individual quarters up in the 20s. This was exceptional. 23% is one of the best numbers we've ever posted, and it really was sort of across the board. It was a combination of expanding existing long-term agreements where those big annuity-type IOU relationships increased in volume It wasn't a lot of new awards. It wasn't any single big award. And additional cross-selling, where we're pairing our legacy civil engineering work with performance contracting. We won a number of new contracts in Southern California. Also, if you look at the large IOU engagements on the East Coast and on the West Coast, California contracts, especially SDE, those were all significantly up as well. So all of those areas contributed to that 23% outstanding performance. Tim Moore | Analyst, Clear Street Capital: And that's terrific color and built conviction for investors. And my last question is, you know, I just want to follow up a question I asked for Kim, I think last quarter. You know, tariffs comes up a lot. You know, we know that I think maybe if I got this wrong, equipment materials might be 25% to 30% of your overall contract value from the non-consulting business side. You have price escalators. You use subcontractors. So is there a chance that, you know, you kind of reach the end of this year or early next year where there's a gap maybe a little bit in the price escalator clauses kicking in from some of the older contracts? I'm just kind of wondering how you deal with that. Al Keshok | Vice President, Investor Relations: Yeah, you know, we don't expect it to have a significant impact, obviously, this year. But we think we're pretty well covered from that end. As we move into next year, we do, as we indicated, a number of our contracts are going to provide opportunities for us to pass along pricing increases and changing contract terms. It's going to offer us the opportunity to also update pricing to the extent that tariffs may impact them. It's not sure, as you've seen with the volatility of exactly what those tariffs are going to be or what they're going to impact and how much of our equipment is actually imported and subject to those tariffs. But right now, we're still not considering that to be a major threat to us. I'm sure there'll be some increases in material costs in some of our contracts and we may some impact from those. But as Mike mentioned in his comment, I think that we're in a pretty good position to manage that risk at the moment anyway. Tim Moore | Analyst, Clear Street Capital: Great. Great. Thanks, Kim and Mike. I appreciate it. And that's it for my questions. Operator | Conference Call Operator: Our next question is from Paul Stringler with Satori Capital. Please proceed. Paul Stringler | Analyst, Satori Capital: Congratulations on another great quarter. Well done. Just got a couple quick administrative questions. I noticed in the one big beautiful bill, the Section 179D tax credit was terminated. It will be wound down sometime next year. And I know, obviously, this court, you've had a large tax benefit. Can you just talk about what that means going forward? Al Keshok | Vice President, Investor Relations: Yes. Well, that is something that we have seen as well. We're not happy to see that go away. We're not sure whether it will stay away. There's certainly going to be efforts to see if that provision can be restored. But it will have a significant impact on our tax rate for this year, and we'll continue to enjoy that benefit really probably pretty much through the end of next year. I think it's all the projects that get started through sometime in the fall of next year. I can't remember exactly what month it is. But yeah, that will be an impact for sure if the cancellation of that tax benefit goes away. We've been able to enjoy tax benefits in the low teens and the credits, of course, For this year, we would expect the tax rate to be relatively low next year as well because of that benefit we'll continue to enjoy. But, you know, if it goes away, we'll have that higher tax rate, and that's just something that we'll have to deal with. But we're in pretty good shape. Paul Stringler | Analyst, Satori Capital: And then just I was thinking more about the impact to customer decisions on, you know, making energy efficiency upgrades. Because they lose that 30% tax credit. What does that do to payback periods for some of these projects? Al Keshok | Vice President, Investor Relations: Well, that 30% tax credit is not the 179D. That's a different issue. But yeah, the elimination of the incentives for some of those generating projects, you mean, for renewable energy? Yes. Yeah. It's a minor issue, I think, for us. That's not what drives... much of the work that we're doing within our government sector. That's where we get the benefit from the 17090 are generally from government and non-taxpaying kinds of clients doing utility scale generation of wind and solar projects, which is where the biggest impact of the cancellation of those investment tax credits is going to be impacted. is a relatively minor part of what we do. We don't do utility-scale generating projects really at all. We're focused on smaller-scale projects that we do as part of our facilities improvement and the infrastructure we do for some of the public entities. spk02: Great. Well, thank you so much. Congratulations, and keep up the good work. Thank you. Operator | Conference Call Operator: As a reminder, there's star one on your telephone keypad if you would like to ask a question. Our next question is from Richard Eisenberg, private investor. Please proceed. Richard Eisenberg | Private Investor: Yes, good afternoon, and congratulations on a great quarter. Thanks, Richard. You're welcome. Are you close to making any more acquisitions this year? And in states like North Carolina, South Carolina, and Georgia, is it harder to do business there because the governor is a Republican and he doesn't have the same policies as the blue states? Thank you. Mike Bieber | President and CEO: Well, acquisitions, you never can tell when you're in them, when or if they'll close. What we can say is that we do have a good pipeline of new opportunities that we're looking at, evaluating, and talking with. So that's gonna play out for us over this year and certainly the first half of next year based on the companies that we're already generating relationships with. That's what the M&A pipeline looks like. And it's likely that over that period of time, we will have acquisitions that make it through our gaps and close. We'll tell you about them when they do. In terms of North Carolina, South Carolina, and Georgia, it's interesting, actually. We do have a large contract with Duke that serves North and South Carolina, especially, and several other states. And no, it's not harder to do business there, actually. That contract's doing very well. You know, so... sometimes don't believe everything you read in the newspapers. We read a lot about polarizing policies at the political level, and it generally has very little to do with the actual work we see on the ground. North Carolina and South Carolina are vibrant markets for us right now. Okay, that's good. Richard Eisenberg | Private Investor: Also, if that... That elimination of the tax credit in the big bill, the big beautiful bill, as they call it, if that goes away, how much would your tax rate go back up to? Right now it's about 15%. How much would it increase if that actually stays law, stays part of the bill? Al Keshok | Vice President, Investor Relations: Yeah, well, that tax rate, that 15% you're talking about is a 15% benefit, not a 15% tax rate. But, you know, previously we were looking at... you know, maybe the low teens or mid, mid kinds of teens tax rates. And with the elimination of that, um, you know, we're likely to get, you know, much closer to 20, um, somewhere in that kind of a range, I would guess, you know, it varies from year to year, just based on the square footage of how the properties that, uh, that get completed. So it's tough to just tie it to a number because it's, it's tied to, uh, actually to a square footage piece, but, But it will have a significant impact, I would say, you know, let's call it five points or so on what our effective tax rate would be on a normalized basis. So it's significant. But, Richard, you likely wouldn't see that until 2027 or later. Yeah, yeah. Richard Eisenberg | Private Investor: Okay. So it wouldn't go like to 25% or 30%. It would just go from, let's say, 15% to 20%. Al Keshok | Vice President, Investor Relations: Yeah, that would be my best guess at this time as to what we look for. We have other benefits that we get that run through our tax rate as well to arrive at the effective tax rate that we get. But it would definitely increase our effective tax rate over what it would be if 17090 stayed in place. It's significant for us and really helpful. Richard Eisenberg | Private Investor: Okay. Okay. Okay, thank you very much, guys. Thanks a lot. Operator | Conference Call Operator: We have reached the end of our question and answer session. I would like to turn the floor back over to Mike for closing remarks. Mike Bieber | President and CEO: Well, thank you all for attending. We'll see some of you over the next few months, and we look forward to speaking with all of you next quarter. Thank you. Operator | Conference Call Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation. jsPDF 3.0.3 D:20260606090539-00'00'