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Willdan Group, Inc. (WLDN)·Q3 2026 Earnings Summary

Executive Summary

  • Note: Q3 2026 materials (8‑K 2.02, press release, call transcript) were not available in the document catalog; the latest reported quarter is Q3 2025. This recap synthesizes Willdan’s Q3 2025 results and guidance updates, plus prior quarters for trend analysis .
  • Q3 delivered strong beats versus consensus with adjusted EPS $1.21 vs $0.57 and contract revenue $182.0M vs $164.0M; management raised FY25 targets across net revenue, adjusted EBITDA, and adjusted EPS, citing demand from data centers and electrification; consensus data from S&P Global* .
  • Margin expansion and disciplined cost control propelled adjusted EBITDA to $23.1M and 24% of net revenue; net debt fell to ~$16.0M, supporting liquidity and acquisition capacity .
  • Pipeline and wins include a $97M Alameda County energy upgrades contract (post‑quarter), plus multiple grid projects led by APG; APG expected to grow >50% in 2026, reinforcing secular growth from AI/data centers .
  • Near‑term stock reaction catalysts: outsized EPS/revenue beats and raised guidance; medium‑term: continued backlog conversion, APG integration, and data center power infrastructure demand .

What Went Well and What Went Wrong

What Went Well

  • Broad‑based growth: net revenue +26% YoY with ~20% organic growth; “we delivered another quarter of excellent performance… net revenue organic growth was 20%” .
  • Margin expansion: adjusted EBITDA reached $23.1M and 24% of net revenue; gross profit +30% to $67.1M on strong execution .
  • Balance sheet strengthening: net debt down to ~$16.0M; total available liquidity of ~$183M, supporting acquisitions and growth initiatives .

What Went Wrong

  • Elevated subcontractor intensity persists: subcontractor and other direct costs comprised ~$87.0M in Q3 and ~45.8% of YTD contract revenue, reflecting program mix and pass‑throughs .
  • Tax normalization: discrete tax benefits drove a YTD tax benefit; quarterly tax rate ticked up to ~4% vs ~2% prior year, a potential headwind to GAAP EPS versus prior quarters’ favorable items .
  • Continued investment needs and execution risk: management emphasized weekly risk reviews as larger, complex projects scale; workforce expansion and program management rigor required to sustain margin trajectory .

Financial Results

Consolidated Performance vs Prior Quarters and Estimates

MetricQ1 2025Q2 2025Q3 2025
Contract Revenue ($USD Millions)$152.4 $173.5 $182.006
Net Revenue (Non‑GAAP, $USD Millions)$85.3 $95.0 $94.967
GAAP Diluted EPS ($)$0.32 $1.03 $0.90
Adjusted Diluted EPS ($)$0.63 $1.50 $1.21
Adjusted EBITDA ($USD Millions)$14.4 $21.9 $23.140
Adjusted EBITDA Margin (% of Net Revenue)~16.9% (14.4/85.3; derived)*~23.1% (21.9/95.0; derived)*24.0%
Gross Profit ($USD Millions)N/AN/A$67.089

Estimates comparison (Q3 2025):

MetricEstimateActual
Primary EPS Consensus Mean ($)$0.57*$1.21*
Revenue Consensus Mean ($USD Millions)$164.0*$182.006*

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q3 2025)

SegmentNet Revenue ($USD Millions)
Energy$69.214
Engineering & Consulting$25.753

KPIs (Q3 2025)

KPIValue
Net Debt ($USD Millions)~$16.0
Total Liquidity ($USD Millions)~$183.0
Diluted Shares (Assumption for FY25 Targets) (Millions)15.2

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
Net Revenue (Non‑GAAP, $USD Millions)FY 2025$340–$350 $360–$365 Raised
Adjusted EBITDA ($USD Millions)FY 2025$70–$73 $77–$78 Raised
Adjusted Diluted EPS ($)FY 2025$3.50–$3.65 $4.10–$4.20 Raised
Effective Tax Rate AssumptionFY 202515% 10% Lowered
Diluted Shares Assumption (Millions)FY 202515.1 15.2 Slightly higher

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2 2025)Current Period (Q3 2025)Trend
Data centers/AI electric load growthQ1: “Data centers and electrification increasing demand for electricity” ; Q2: demand fueling investment in reliable power and resilient grid infrastructure CEO: demand remains healthy; APG integration; E3 research on load growth; hyperscaler site selection, high‑voltage substations Strengthening
Utility programs & government demandQ2: core programs steady with new wins; multi‑year contracts Utilities ~41% revenue with recurring programs; government ~44% revenue with double‑digit organic growth Stable to improving
Acquisitions (APG/E3) & cross‑sellingQ1/Q2: strategic acquisitions driving growth and guidance raises APG record backlog; >50% growth expected in 2026; effective collaboration across service lines Accelerating
Risk management & staffingQ2: scaling programs; continued hiring Weekly leading‑indicator reviews; “employer of choice,” >1,800 employees; zero senior management turnover >2 years Improving
Tax itemsQ1: raised FY targets; noted tax assumptions Discrete benefits from options and 179D deductions YTD; quarterly rate ~4% Normalizing

Management Commentary

  • “We delivered another quarter of excellent performance… net revenue organic growth was 20%, operating margin continued to expand, and net debt was down to $16.0 million in Q3… growing electricity demand driven by data centers and electrification. Accordingly, we are increasing our 2025 financial targets.” — Mike Bieber, CEO .
  • “Adjusted EBITDA reached another new quarterly record of $23.1 million, or an adjusted EBITDA margin of 24% of net revenue… GAAP diluted EPS increased 77% to $0.90… adjusted EPS up 66% to $1.21.” — Kim Early, CFO .
  • “APG is collaborating very effectively… record backlog that we expect will propel more than 50% growth by APG in 2026.” — CEO .
  • “We ended the quarter with only $16 million in net debt… $183 million in total available liquidity at quarter end.” — CFO .

Q&A Highlights

  • Demand drivers and selectivity: Management is “more effective at cross‑selling,” becoming selective on commercial data center work with negotiated mid‑tier developers; pipeline catalyzed by APG wins .
  • Workforce and hiring: “Employer of choice,” >1,800 employees, zero senior leadership turnover in >2 years; talent not viewed as an impediment to growth .
  • Risk management on large projects: Weekly leading‑indicator reviews (quality, safety), long development cycles allow staffing and risk planning; often start as T&M and convert to fixed‑price/unit to mitigate risk .
  • Regional/contract outlook: Optimism on large New York opportunities potentially driving 2026 growth .

Estimates Context

  • Q3 2025 earnings beat: Adjusted EPS $1.21 vs consensus $0.57 (beat ~$113%); revenue $182.006M vs consensus $164.0M (beat ~11%)—driven by strong organic growth, favorable gross margins, and execution across segments; values from S&P Global* .
  • Estimate implications: Raised FY25 targets suggest Street models should move higher for net revenue, adjusted EBITDA, and adjusted EPS; margin commentary (24% of net revenue in Q3) supports upward revisions to profitability assumptions .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Significant beats and raised FY25 guidance are clear positives; the narrative is underpinned by secular demand from AI/data centers and electrification, and by APG’s expected >50% growth in 2026 .
  • Margin trajectory is favorable (Q3 adjusted EBITDA margin 24% of net revenue) with disciplined cost control—watch for sustainability as program mix evolves .
  • Balance sheet de‑risking (net debt ~$16M, ~$183M liquidity) enables bolt‑ons and capacity expansion without over‑levering; enhances strategic flexibility .
  • Subcontractor intensity remains elevated given program mix; continued gross margin management is key to preserving EPS leverage .
  • Pipeline and wins (e.g., $97M Alameda County) support backlog visibility; monitor conversion pace and execution on high‑voltage/data center projects .
  • Estimates should trend higher post‑beat and guidance raise; focus on net revenue growth sustainability (~20% organic in Q3) and cross‑sell synergies across E3/APG/civil .
  • Risk discipline and staffing processes appear robust; weekly indicators and upfront T&M phases mitigate project execution risk on larger, complex initiatives .

Additional Supporting Data (from Q3 2025 8‑K press release)

  • GAAP to Non‑GAAP reconciliations provided for net revenue, adjusted EBITDA, adjusted EPS; subcontractor/direct costs were $87.039M in Q3; YTD subcontractor costs were ~45.8% of contract revenue .
  • Consolidated balance sheet: cash $33.109M; total assets $507.925M; total stockholders’ equity $283.092M .
  • Condensed income statement: gross profit $67.089M; income from operations $14.862M; net income $13.721M; diluted shares 15.229M in Q3 .

Sources

  • Q3 2025 8‑K and Exhibit 99.1 press release: .
  • Q3 2025 earnings call transcript: .
  • Post‑quarter press release: Alameda County $97M contract .
  • Prior quarter press releases (trend/guidance context): Q2 2025 , Q1 2025 .
  • Company quarterly results hub (links to Q3 press release, transcript, 10‑Q): .

Note: Q3 2026 documents were not available in the catalog; the above analysis references Q3 2025 as the latest reported period.