Paul Strigler

Paul Strigler of Satori Capital inquired about the future impact of the potential termination of the Section 179D tax credit on both Willdan's corporate tax rate and on its customers' decisions to pursue energy efficiency projects.

Answer

EVP & CFO Creighton Kim Early clarified that while the termination of the 179D tax credit would have a significant impact, it would likely not affect the company's tax rate until 2027. He explained that the benefit would continue for projects started through late 2026. Early also noted that this specific credit's elimination would be a minor issue for customer decisions, as it primarily benefits Willdan on projects for government and non-tax-paying clients, and is distinct from investment tax credits for renewable energy generation.

Paul Strigler asked about the future impact of the Section 179D tax credit's potential termination on Willdan's tax rate and on its customers' decisions to pursue energy efficiency upgrades.

Answer

CFO Creighton Kim Early acknowledged the termination would have a significant impact, potentially increasing the effective tax rate by 'five points or more,' but noted the effect would likely not be seen until 2027 due to the timing of eligible projects. He clarified that the 179D credit, which Willdan receives for work on government and non-profit facilities, is distinct from renewable energy investment tax credits that more directly influence customer project decisions, stating the latter is a minor part of Willdan's business.

Paul Strigler asked about the future impact of the potential termination of the Section 179D tax credit on Willdan's tax rate and on customer decisions regarding energy efficiency projects.

Answer

CFO Creighton Kim Early acknowledged the termination would be significant, likely increasing the effective tax rate by five or more percentage points, but noted the impact would not be felt until 2027. He clarified that the 179D benefit is mainly from government clients and is distinct from renewable energy investment tax credits. He stated the impact on customer decisions for their project types would be minor, as Willdan does not focus on the large utility-scale projects most affected by those credits.

Paul Strigler of Esplanade asked for confirmation on the 2017 store opening mix between franchise and company-operated locations. He also questioned how the eight planned company-owned stores would be financed, given the company's cash position after its recent debt restructuring.

Answer

CEO Mike Pruitt clarified the franchise pipeline includes two Little Big Burger locations in the next 12 months, plus openings in Salt Lake City and Reston, VA. He explained that the eight company-owned stores are primarily funded through a joint venture partner. This JV funding is separate from and in addition to the recent $6 million recapitalization and is structured as equity capital, not debt.