Executive Summary

Record Q1 FY26 (quarter ended Apr 4, 2025): contract revenue $152.4M (+24.4% YoY), net revenue $85.3M (+23.8%), adjusted EBITDA $14.4M (+30.9%), adjusted EPS $0.63 (vs $0.40), GAAP EPS $0.32; management said the quarter exceeded analyst expectations and raised FY25 targets .
Guidance raised: FY25 net revenue to $325–$335M (from $320–$330M), adjusted EBITDA to $65–$68M (from $63–$67M), and adjusted EPS to $2.75–$2.90 (from $2.70–$2.85) .
Balance sheet/liquidity catalyst: expanded and extended credit facilities to $200M with lower spreads and a $50M delayed-draw term loan; Q1 net debt ~$49M, leverage 0.8x EBITDA, total liquidity ~$88M, supporting M&A and growth .
Demand drivers and pipeline: AI/data-center load growth, electrification, and a new $330M five‑year LADWP program expected to ramp by Q4 and into 2026 underpin visibility; risks include tariff-driven equipment cost pressures and ramp timing .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth with record Q1; normalized for an extra week, organic net revenue growth was ~12% and both segments grew double-digits .
- Operating leverage and profitability: adjusted EBITDA of $14.4M at 16.9% of net revenue in a seasonally low-margin quarter; G&A grew slower than net revenue, reflecting cost discipline .
- Strategic execution: expanded $200M credit facility (revolver + term + delayed draw) lowering spreads and extending maturity; continued M&A and cross-sell traction including APG and Alpha Inspections .
- Quote: “We exceeded analyst expectations in the first quarter, delivering double-digit growth across our key metrics… With record first quarter performance, we are raising each of our fiscal year 2025 financial targets.” — CEO Mike Bieber .
What Went Wrong
- Tariff/equipment risk: management is monitoring potential price escalation and delays; inserted flexible contract terms and is qualifying alternative suppliers; most 2025 equipment already procured, but 2026 visibility less certain .
- LADWP gap year: no LADWP revenue in Q1 and likely minimal in Q2; ramp expected by Q4 with greater impact in 2026, creating interim growth headwind .
- Cash dynamics: operating cash flow was $3.3M in Q1 (vs $26.9M prior-year quarter) amid working capital swings, and ~$32.5M cash paid for acquisitions drove cash balance down to $38.4M from $74.2M at year-end .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2026
Contract Revenue ($M)	$158.3	$144.1	$152.4
Net Revenue ($M)	$75.7	$79.3	$85.3
Gross Profit ($M)	$51.6	$55.0	$57.7
Adjusted EBITDA ($M)	$15.2	$17.7	$14.4
GAAP Diluted EPS	$0.51	$0.53	$0.32
Adjusted Diluted EPS	$0.73	$0.75	$0.63
Adjusted EBITDA Margin % (on Net Rev)	20.0% (calc. from $15.2M/$75.7M)	22.3% (calc. from $17.7M/$79.3M)	16.9%
Net Income ($M)	$7.35	$7.69	$4.69

Notes: Q1 FY26 includes a 14th week; management cites ~12% normalized organic net revenue growth .

Segment breakdown (Net Revenue)

Segment Net Revenue ($M)	Q3 2024	Q4 2024	Q1 2026
Energy	$52.23	$56.60	$60.17
Engineering & Consulting	$23.46	$22.66	$25.17

KPIs and Liquidity

KPI	Q3 2024	Q4 2024	Q1 2026
Cash & Equivalents ($M)	$53.11	$74.16	$38.36
Net Debt ($M)	N/A	N/A	~$49 (company calc)
Total Liquidity ($M)	N/A	N/A	~$88 (cash + undrawn revolver)
Weighted Avg Diluted Shares (M)	14.36	14.51	14.63

Non‑GAAP adjustments (Q1 FY26): Adj. net income $9.29M vs GAAP $4.69M; per‑share adjustments include SBC $0.17, intangible amortization $0.16, interest accretion $0.03, transaction costs $0.01 (with tax effects) .

Guidance Changes

Metric	Period	Previous Guidance (Mar 6, 2025)	Current Guidance (May 8, 2025)	Change
Net Revenue (Non‑GAAP)	FY 2025	$320M–$330M	$325M–$335M	Raised
Adjusted EBITDA	FY 2025	$63M–$67M	$65M–$68M	Raised
Adjusted Diluted EPS	FY 2025	$2.70–$2.85	$2.75–$2.90	Raised
Assumptions	FY 2025	15.1M diluted shares; 16% tax; no future acquisitions	Same	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2026)	Trend
AI/data center load	Enica acquisition broadened commercial/mission‑critical footprint; raised FY24 targets on strong electrification demand	APG acquisition boosts data center capabilities; commercial share forecast to double to ~15%; strong AI-driven electricity demand	Strengthening
Credit facility/liquidity	N/A in Q3 PR; strong cash generation into year‑end	Facility expanded to $200M; lower spreads; added $50M delayed draw; leverage 0.8x	Improved flexibility
Tariffs/macros	Not highlighted in Q3 PR	Watching equipment cost risk; flexible contracts; most 2025 equipment front‑loaded	Emerging risk, mitigated near‑term
Utility programs	Continued strength, raised FY24 targets	LADWP $330M five‑year program awarded; minimal 1H revenue, ramp by Q4 and 2026	Large catalyst ahead
Federal exposure	N/A	Minimal direct federal exposure; funding via rates/fees/bonds	Stable/low risk
Segment growth mix	Double-digit growth and cross‑sell in Q3	Both segments up double‑digits; Energy +25% CR; E&C +20%	Balanced growth

Management Commentary

Strategic framing: “As electric load increases, Willdan's differentiated capabilities and consistent execution position us well for long-term growth.”
Demand drivers: “AI‑driven load growth is creating significant demand… We see strong momentum in this area and intend to pursue acquisitions that further expand our capabilities and relationships with commercial customers.”
Tariff mitigation: “We’re inserting more flexible contract terms… Most of our suppliers have already front‑loaded equipment… We haven’t seen any short‑term impact thus far, but it may be too early.”
Profitability goal: “Several years ago, we laid out a goal of 20% operating margin… This year, Willdan estimates that it will be around that 20% margin goal. Q1 is typically our lowest margin quarter.”
Guidance rationale: “Q1 came in above our own internal forecast… customers are looking at upsizing… we needed to raise estimates modestly… even taking into account some of the tariff risks.”

Q&A Highlights

Tariffs/equipment: Exposure concentrated in project equipment (25–30% of large multi‑year contracts); no immediate impact; alternative sourcing underway; flexible terms added .
Load growth/AI: Utilities and governments updating forecasts and CapEx; long‑term ~2%+ annual demand growth viewed as sustainable; energy efficiency remains a core part of the stack .
LADWP timing: No revenue in Q1 and likely minimal in Q2; ramping in Q4 with momentum into 2026 .
Guidance raise: Broad strength across programs and upsizing on legacy programs drove confidence to raise FY25 targets despite tariff uncertainty .
APG integration: Active cross‑selling with existing data center team; collaboration began pre‑close .

Estimates Context

FY25 Wall Street consensus (S&P Global): EPS $2.79*, Revenue $665.2M*; 1 estimate each indicated [GetEstimates]. Note: S&P “Revenue” reflects GAAP contract revenue, while management guides non‑GAAP net revenue [GetEstimates] .
Quarterly Q1 FY26 consensus: Not available via S&P Global in our pull; management stated results exceeded analyst expectations .
Implications: Guidance raise (adj. EPS $2.75–$2.90) brackets the $2.79* consensus, suggesting limited directionality change near‑term, with upside if LADWP ramps cleanly and tariffs remain manageable [GetEstimates].
*Values retrieved from S&P Global.

Key Takeaways for Investors

Execution beat and guidance raise: Record Q1 with broad‑based growth and operating leverage; FY25 targets modestly lifted across revenue, EBITDA and EPS .
Visible catalysts into 2026: LADWP $330M program expected to accelerate in Q4 and 2026; AI/data center demand expanding commercial mix and cross‑sell opportunities .
Margin trajectory: Q1 adj. EBITDA margin at 16.9% with full‑year target “around 20%” implies H2 operating leverage if ramp and mix shift materialize .
Liquidity to fund growth: $200M facility with lower spreads and delayed‑draw capacity supports M&A and working capital through program ramps .
Watch items: Tariff‑driven equipment inflation/delays, LADWP ramp timing, working capital swings (Q1 cash from ops $3.3M) .
Estimate calibration: FY25 guidance sits around S&P EPS consensus $2.79*; quarterly estimates limited—sell‑side may nudge FY25 EBITDA/EPS higher if execution continues and tariff risk stays contained [GetEstimates].
*Values retrieved from S&P Global.

Additional Relevant Press Releases (Q1 FY26)

Expanded credit facilities to $200M; extended maturity to May 2030; reduced spreads .
Acquisition of Alpha Inspections (Florida) to expand building inspection/plan review capabilities .
LADWP awards $330M five‑year Commercial Direct Install Program to Willdan (announced on Q4 release date; key 2025–2026 driver) .

Willdan Group, Inc. (WLDN)·Q1 2026 Earnings Summary