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Willdan Group, Inc. (WLDN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient performance against tough comps: contract revenue $144.1M (-7.5% y/y), net revenue $79.3M (-1.9% y/y), adjusted EBITDA $17.7M (+1.4% y/y), GAAP EPS $0.53, adjusted EPS $0.75 .
  • Sequentially, net revenue and adjusted EBITDA stepped up vs Q3 ($75.7M → $79.3M; $15.2M → $17.7M), while GAAP EPS rose to $0.53 from $0.51 .
  • FY 2025 guidance was introduced above Street per management: net revenue $320–$330M, adjusted EBITDA $63–$67M, adjusted EPS $2.70–$2.85; assumes 15.1M diluted shares and a 16% tax rate .
  • Strategic catalysts: $330M LADWP program award with back-half ramp and more complex measures; APG acquisition adds utility-scale electrical engineering for data centers and renewables; both strengthen commercial/data center exposure .
  • Cash generation and liquidity improved: Q4 operating cash flow $33.5M; FY 2024 operating cash flow $72.1M; total liquidity ~$124M (cash plus untapped $50M revolver) .

What Went Well and What Went Wrong

  • What Went Well

    • Record year with double-digit organic growth and “significantly exceeding the Street consensus estimates” across key metrics; FCF of $4.49 per share for 2024 (“an outstanding result”) .
    • Strengthened commercial/data center positioning via APG acquisition (“exactly what commercial data center owners want”); commercial now ~15% of revenue on a pro forma basis, double last year .
    • Major contract win: $330M LADWP 5-year program (expected ~$65M/year) expanding complex electrification measures—anticipated back-half ramp .

  • What Went Wrong

    • Q4 y/y declines in contract revenue (-7.5%), net revenue (-1.9%), GAAP EPS (-8.6%), and adjusted EPS (-6.3%) due to exceptionally strong Q4 2023 over-delivery on utility programs (~$20M contract rev, ~$15M net rev, ~$3M adj. EBITDA) inflating the prior-year comp base .
    • LADWP ramp delays: activity stopped in December, notice-to-proceed pending; minimal revenue expected in H1 2025, skewing timing .
    • Ongoing macro risks (supply chain, inflation, tariffs) highlighted in forward-looking statements, though management notes pass-through mechanisms mitigate tariff risk .

Financial Results

Sequential trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Contract Revenue ($USD Millions)$140.996 $158.252 $144.061
Net Revenue (Non-GAAP, $USD Millions)$72.451 $75.689 $79.255
Net Income ($USD Millions)$4.594 $7.346 $7.688
Adjusted EBITDA ($USD Millions)$12.844 $15.177 $17.696
GAAP Diluted EPS ($USD)$0.33 $0.51 $0.53
Adjusted Diluted EPS ($USD)$0.55 $0.73 $0.75
Diluted Weighted-Average Shares (Millions)14.074 14.358 14.509

Year-over-year comparison (Q4)

MetricQ4 2023Q4 2024
Contract Revenue ($USD Millions)$155.677 $144.061
Net Revenue (Non-GAAP, $USD Millions)$80.772 $79.255
Net Income ($USD Millions)$8.031 $7.688
Adjusted EBITDA ($USD Millions)$17.459 $17.696
GAAP Diluted EPS ($USD)$0.58 $0.53
Adjusted Diluted EPS ($USD)$0.80 $0.75

Segment breakdown (Net Revenue)

Segment Net Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Energy$50.296 $52.231 $56.598
Engineering & Consulting$22.155 $23.458 $22.657

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash from Operations ($USD Millions)N/AN/A$33.5
Subcontractor Services as % of Contract Revenue (%)48.6% 52.2% 45.0%
Diluted Weighted-Average Shares (Millions)14.074 14.358 14.509

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue (Non-GAAP)FY 2024$280M–$290M $285M–$295M Raised
Adjusted EBITDAFY 2024$50M–$52M $52M–$54M Raised
Adjusted Diluted EPSFY 2024$2.00–$2.10 $2.15–$2.25 Raised
Net Revenue (Non-GAAP)FY 2025N/A$320M–$330M New
Adjusted EBITDAFY 2025N/A$63M–$67M New
Adjusted Diluted EPSFY 2025N/A$2.70–$2.85 New
Effective Tax Rate (assumption)FY 2025N/A16% New
Diluted Shares (assumption)FY 2025N/A15.1M New

Earnings Call Themes & Trends

TopicQ2 2024 MentionsQ3 2024 MentionsQ4 2024 MentionsTrend
AI/data center load growth“Electric load growth macrotrend strengthened … fueled by AI at data centers” “Growth in electrification and electric load continue to drive demand” “AI-driven load growth is providing … many commercial opportunities”; navigating electricity constraints Intensifying
Commercial expansion via acquisitionsNotable wins (Meta, Virginia, Paramount) and raised FY24 targets Acquired Enica Engineering to strengthen commercial market Acquired APG; pro forma commercial customers ~15% of revenue (double last year) Accelerating
LADWP program dynamicsN/AN/A$330M award; ramping, minimal H1 revenue; ~ $65M/year; more complex measures New; back-half weighted
RENs funding/administrationN/AN/ARENs funded via surcharge; PUC oversight; simpler T&M contracts; broader services Emerging
Tariffs/macro/policyN/AN/AMinimal impact from administration change; tariff pass-through clauses in long-term contracts Neutral
Software/AI initiativesN/AN/ALoadSEER AI integration targeted for 1H; simplified for municipal utilities Developing

Management Commentary

  • “The fourth quarter capped an outstanding year for Willdan, with double-digit full year organic growth across key metrics and our resumption of strategic acquisitions.”
  • “Rising electricity demand and increasing costs continue to help drive growth for Willdan… the new year is off to a strong start.”
  • “AI-driven load growth is providing Willdan with many commercial opportunities to help technology clients navigate electricity constraints.”
  • “APG … complements Willdan’s technical strengths… These are all highly specialized electrical engineering areas… exactly what commercial data center owners want.”
  • “We generated $4.49 per share of free cash flow, an outstanding result for any public company.”
  • “We’re expecting net revenue… $320–$330M, adjusted EBITDA… $63–$67M and adjusted EPS… $2.70–$2.85… well above the current consensus Street estimates.”

Q&A Highlights

  • LADWP ramp and linearity: “No big start-up concerns… activity stopped in December… expect notice to proceed soon… minimal revenue in the first half… roughly $65M/year and more linear thereafter… adds more complex measures (heat pump hot water heaters…).”
  • RENs (funding/admin): “Funding comes from the same surcharge on electricity bills… overseen by the PUC… simpler time and materials contracts… provide regulatory support, technical consulting, and program management.”
  • Macro/tariffs/administration: “Change in administration: not much impact… tariff pass-through language in contracts benefits us if tariffs occur.”
  • Software cross-sell and APG: “APG doesn’t have software; we’re introducing ours—solid cross-sell opportunity.”
  • LoadSEER + AI: “Integrating AI into LoadSEER; ready in 1H; simplified for smaller utilities; predesigned load forecasts/shapes.”

Estimates Context

  • Attempted to pull S&P Global consensus EPS and revenue for Q2–Q4 2024; data unavailable at time of request due to SPGI access limits. Management stated results “significantly exceeding the Street consensus estimates,” and FY 2025 targets are “well above the current consensus Street estimates.”
MetricQ4 2024 ActualConsensus EstimateComment
GAAP Diluted EPS ($USD)$0.53 N/AConsensus unavailable; mgmt indicates above Street
Adjusted Diluted EPS ($USD)$0.75 N/AConsensus unavailable; mgmt indicates above Street
Contract Revenue ($USD Millions)$144.061 N/AConsensus unavailable
Net Revenue (Non-GAAP, $USD Millions)$79.255 N/AConsensus unavailable

Key Takeaways for Investors

  • Q4 resilience with sequential growth in net revenue and adjusted EBITDA despite exceptionally strong prior-year comps; FY 2024 delivered robust cash generation and margin progress .
  • Bold guidance: FY 2025 targets above Street per management; watch for confirmation via estimates revisions and potential re-rating catalysts as data center exposure scales .
  • Data center/electrification narrative strengthening: APG acquisition and LADWP program expand capabilities and pipeline; commercial mix rising with higher-margin profile .
  • Near-term timing: LADWP contributes mainly in H2 2025; expect back-half weighted revenue and potential intra-year margin cadence as programs ramp .
  • Risk mitigation: Minimal expected impact from policy shifts; tariff pass-through clauses and diversified customer base (state/local, utility, commercial) support stability .
  • Watch KPIs: Subcontractor costs fell to 45.0% of contract revenue in Q4 (from 48.1% y/y), supporting net revenue quality; monitor mix and execution on complex measures .
  • Software/AI optionality: LoadSEER with AI in 1H offers cross-sell into municipal utilities—could add high-ROIC revenue with limited incremental staffing .