Executive Summary

The latest reported materials for Willdan are Q3 2025 and Q2/Q1 2025; analysis below uses these primary sources to assess trajectory and estimate context for forward quarters, with heightened demand from data centers and electrification driving strong growth and repeated guidance raises .
Q2 2025 was a record quarter: contract revenue $173.5M (+23% YoY), net revenue $95.0M (+31%), GAAP diluted EPS $1.03 (+212%), adjusted EPS $1.50 (+173%), and adjusted EBITDA $21.9M (+71%) on 23% organic net revenue growth and 39.4% gross margin expansion; results beat S&P consensus on both revenue and EPS .
Q3 2025 delivered continued strength: contract revenue $182.0M (+15% YoY), net revenue $95.0M (+26%), GAAP diluted EPS $0.90 (+77%), adjusted EPS $1.21 (+66%), adjusted EBITDA $23.1M; net debt declined to $16.0M and FY25 guidance was raised again to net revenue $360–$365M, adjusted EBITDA $77–$78M, adjusted EPS $4.10–$4.20 .
Key catalysts: LADWP $330M program restarted in July (expected ramp into 2026), robust data center-related power engineering wins via APG, and expanding utility/government programs underpinning recurring revenue; tariff risk monitored but not material to date .

What Went Well and What Went Wrong

What Went Well

Record Q2 performance with broad-based growth and margin expansion; management highlighted “double-digit revenue and adjusted EBITDA growth, and triple-digit EPS growth,” raising all FY25 financial targets .
Q3 maintained momentum: 20% organic net revenue growth, operating margin expansion, net debt down to $16.0M; FY25 guidance raised again to higher ranges, reflecting strong execution and demand tailwinds .
Strategic positioning in data center electricity load growth: APG-led wins (e.g., multiple substation projects) and new software for siting optimized data centers; management emphasized a “new era of structural load growth” .

What Went Wrong

LADWP timing created a revenue gap in H1 2025; ramp began in July and is expected to contribute more meaningfully in late 2025 and into 2026, implying back-half weighting and execution risk in ramp-up .
Tariff and equipment cost volatility remained a watch item; Willdan inserted flexible contract terms and started alternative supplier identification to mitigate potential price escalations .
Potential future tax rate headwind from the possible elimination/phase-out of certain incentives (179D and others), which management indicated could increase the effective tax rate by ~5 points over time if not restored .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Contract Revenue ($USD)	$152,386,000	$173,473,000	$182,006,000
Net Revenue ($USD)	$85,338,000	$94,968,000	$94,967,000
Gross Profit ($USD)	$57,661,000	$68,325,000	$67,089,000
Net Income ($USD)	$4,687,000	$15,436,000	$13,721,000
Diluted EPS ($USD)	$0.32	$1.03	$0.90
Adjusted Diluted EPS ($USD)	$0.63	$1.50	$1.21
Adjusted EBITDA ($USD)	$14,442,000	$21,922,000	$23,140,000
Adjusted EBITDA Margin (%)	16.9%	23.0%	24.0%

Segment breakdown (Net Revenue):

Segment	Q1 2025	Q2 2025	Q3 2025
Energy	$60,168,000	$69,955,000	$69,214,000
Engineering & Consulting	$25,170,000	$25,013,000	$25,753,000

KPIs and Balance Sheet/Liquidity:

KPI	Q1 2025	Q2 2025	Q3 2025
Net Debt ($USD Millions)	$49	$28	$16
FCF (TTM, $USD Millions)	$40	$64	$65
FCF per Share (TTM, $USD)	$2.74	$4.34	$4.34
Liquidity ($USD Millions)	$88 (cash + undrawn facilities)	$172 (cash + facilities)	$183 (cash + facilities)
DSO (Days)	—	70	—

Estimate vs Actual (S&P Global consensus; asterisk denotes S&P Global data):

Metric	Q2 2025 Estimate*	Q2 2025 Actual	Beat/Miss	Q3 2025 Estimate*	Q3 2025 Actual	Beat/Miss
Revenue ($USD)	$161,000,000*	$173,473,000	Bold beat	$164,000,000*	$182,006,000	Bold beat
EPS ($USD)	$0.49*	$1.50 (Adj.)	Bold beat	$0.57*	$1.21 (Adj.)	Bold beat

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue	FY 2025	$325–$335M (Q1 update)	$340–$350M (Q2 update)	Raised
Adjusted EBITDA	FY 2025	$65–$68M (Q1 update)	$70–$73M (Q2 update)	Raised
Adjusted Diluted EPS	FY 2025	$2.75–$2.90 (Q1 update)	$3.50–$3.65 (Q2 update)	Raised
Net Revenue	FY 2025	$340–$350M (Q2 update)	$360–$365M (Q3 update)	Raised
Adjusted EBITDA	FY 2025	$70–$73M (Q2 update)	$77–$78M (Q3 update)	Raised
Adjusted Diluted EPS	FY 2025	$3.50–$3.65 (Q2 update)	$4.10–$4.20 (Q3 update)	Raised

Assumptions provided with guidance include diluted share count and effective tax benefit; see source disclosures for specifics .

Earnings Call Themes & Trends

Topic	Q1 2025 (Previous Mentions)	Q2 2025 (Next)	Q3 2025 (Current)	Trend
AI/Data Center Electricity Load	Emphasis on structural load growth; commercial mix rising; APG acquisition expanding capabilities	New proprietary siting software; high-voltage substation/interconnect needs; APG wins highlighted	Continued APG-led wins; E3 research on 0.7–1.2 TWh load growth next decade; global load maps; strong pipeline	Strengthening
Utility/Gov’t Programs	Multi-year ratepayer-funded contracts; healthy demand; minimal federal funding exposure	Utility program performance above plan; expanding long-term programs	Operating margin expanding; recurring foundation supports raised FY targets	Stable to positive
LADWP Program	Recompete awarded; ramp expected Q4 2025	Restarted in July; minimal 2025 contribution; ramp into 2026	Reinforces 2026 outlook; commentary maintains cautious ramp expectations	Improving visibility
Tariffs/Supply Chain	Monitoring; flexible terms; front-loaded equipment purchases	Ongoing mitigation; relatively low risk profile for fixed-price service work	Still monitored; not material; contracts allow pass-through/updates	Managed risk
Balance Sheet/FCF	Expanded credit facility to $200M; $2.74/share TTM FCF	Net debt ~$28M; $172M liquidity; 80% EBITDA-to-CFO conversion	Net debt ~$16M; $183M liquidity; $65M TTM FCF	Strengthening

Management Commentary

“We delivered a strong first half of the year… Following a record first half to the year and a strong outlook, we are increasing all 2025 financial targets.” – Mike Bieber, CEO (Q2 2025) .
“Net revenue organic growth was 20%, operating margin continued to expand, and net debt was down to $16.0 million in Q3… Accordingly, we are increasing our 2025 financial targets.” – Mike Bieber, CEO (Q3 2025) .
“Today, we are in a new era of structural load growth… Demand for our services is expanding… electrification, domestic manufacturing, and AI-driven data centers create strong tailwinds.” – CEO (Q2 2025) .
“Gross margin improving to 39.4%… adjusted EBITDA reached $21.9M representing 23% of net revenue.” – CFO (Q2 2025) .
“Based on our pipeline of new opportunities and program expansions, we feel good about the outlook for 2026.” – CEO (Q2 2025) .

Q&A Highlights

Organic growth durability and APG cross-sell: management cited rising cross-selling effectiveness driving outsized organic growth and a robust APG backlog into 2026 .
Fixed-price contract risk profile: CFO emphasized relatively low EPC risk, advanced pricing management via subcontractors, and favorable cash conversion on fixed-price service agreements .
Tariff risk: management is monitoring tariff/equipment cost volatility and embedding flexibility and pass-throughs in contracts; near-term impact limited .
LADWP ramp: acknowledged timing gap earlier in 2025; ramp began in July with expected contribution more in late 2025/2026 .
Tax incentives/179D: potential longer-term increase in effective tax rate if certain incentives are eliminated, with timing likely beyond 2026 .

Estimates Context

Q2 2025 and Q3 2025 results exceeded S&P Global consensus on both revenue and adjusted EPS; FY25 consensus sits below raised company guidance, suggesting likely upward estimate revisions if execution persists (see tables above). Values retrieved from S&P Global.*
S&P Global consensus for Q2 2026 was unavailable at the time of analysis.*

Where estimates may need to adjust:

FY25 net revenue, adjusted EBITDA, and adjusted EPS guidance were raised twice (Q2 and Q3), implying consensus should reflect the $360–$365M net revenue, $77–$78M adjusted EBITDA, and $4.10–$4.20 adjusted EPS ranges .
Continued momentum in APG/data center wins and LADWP ramp into 2026 supports higher near-term trajectory assumptions .

Key Takeaways for Investors

Strong execution and secular tailwinds: consecutive quarterly beats versus consensus and repeated FY25 guidance raises signal operational momentum underpinned by data center/electrification demand .
Improving margin profile: Q2 adjusted EBITDA margin hit 23% and Q3 reached ~24%, aligning with management’s best-in-class target and suggesting operating leverage from higher-value work and disciplined cost control .
Balance sheet optionality: declining net debt ($16M in Q3) and expanded credit capacity provide ample flexibility for bolt-ons and scaling strategic capabilities, while maintaining prudent leverage .
Contracted visibility with diversified funding: multi-year utility programs (ratepayer-funded), growing state/local government demand (user fees/municipal bonds), and commercial data center projects reduce macro sensitivity and support recurring revenue .
LADWP ramp is a 2026 catalyst: the $330M program restarted in July and is expected to contribute more meaningfully into 2026; watch execution milestones and revenue recognition cadence .
Tariff/equipment risk is monitored and mitigated: flexible contract terms and supplier diversification aim to preserve margins; track any material cost escalations or pass-through efficacy in coming quarters .
Near-term trading lens: upside surprise potential remains as secular load growth and APG wins support volumes/margins; estimate dispersion is low (few covering analysts), amplifying reaction to beats/misses and guidance commentary .

Willdan Group, Inc. (WLDN)·Q2 2026 Earnings Summary