WLDN earnings call analysis

NASDAQ:WLDN Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Mike Bieber | President and Chief Executive Officer: that we believe diversification would add long-term stability and would provide Wilden with the opportunity to earn higher margins. These pie charts show that in 2024, commercial revenue was 7% of our business. Two years later, on a full-year pro forma basis after Burton, commercial revenue is expected to be about 25% of revenue this year. The diversification has also contributed to our higher margins and to the reset of of our long-term margin targets that Kim will present in a few slides.

Investor Relations | Head of Investor Relations

On slide five.

Mike Bieber | President and Chief Executive Officer

This chart shows that Burton is headquartered outside Atlanta, Georgia, and helps fill in Wildan's presence in the Southeastern and Midwestern states. With Burton, Wildan now has active projects in all 50 states. We now have permanent offices in 26 of the 50 states, plus a presence in Puerto Rico and Canada.

Investor Relations | Head of Investor Relations

Next on slide six.

Mike Bieber | President and Chief Executive Officer

We've used this triangle diagram before to show that in problem solving, upfront analysis of a client's problem leads to the engineering of a solution, and then to the program management of the solution implementation. Burton's services fall into all three categories. Burton often starts with the study of a client's energy usage, energy costs, and carbon generation. That usually results in the design of a program that helps lower cost, improve resilience, and achieve a client's unique objectives. Burton will usually manage the teams of contractors that will address a client's energy usage to achieve that client's objectives. Each of these phases of work is usually conducted through multi-year contracts that lead to the long-term client engagements of more than 10 years.

Investor Relations | Head of Investor Relations

On slide seven. We've had another solid stretch of contract wins, and here are a few examples since our last earnings call.

Mike Bieber | President and Chief Executive Officer

For Southern California Edison, SCE, we received a two-year extension and another $100 million of funding for our commercial energy efficiency program. This expansion would extend the program through the end of 2027. For the Dormitory Authority of the State of New York, DASNI, we won a $54 million project to upgrade the central plant at a college in New York City. I'm very pleased that we were awarded the $27 million three-year New York Accelerator Program. This is a new contract which has been held for many years by one of our strongest competitors. We started pursuing this contract several years ago and were able to win this key program which helps the City of New York accelerate the decarbonization of buildings in the city. A very cool win. Next, we were awarded the CERO-1 project in Puerto Rico, a $24 million battery energy storage system. This project is one of several on the island designed to help improve power grid resiliency in Puerto Rico, a major issue there. And lastly, we were awarded two small contracts with National Grid for New York City and Long Island to implement small business energy efficiency programs.

Investor Relations | Head of Investor Relations

It was a good quarter for New Winds, and our pipeline of opportunities continues to grow.

on slide eight. Mike Bieber | President and Chief Executive Officer

Each quarter, we try to take a step back and look at macro changes to electricity demand and its effect on the grid and wheel dance market. We've talked a lot about how AI is driving a long-term increase in electricity demand due to new data centers. Previously, we presented some of our work for the state of Virginia, the largest data center market in the world. Recently, we studied electricity U.S., so I'll present a few highlights from those studies. Work like these keeps you in the very forefront of trends in the energy markets, helping us to navigate this period of rapid change. Slide 8 shows a few examples of electricity demand across the western U.S. On the left of the slide, in the Pacific Northwest, the scale of the new electricity generation is insufficient to meet forecasted demands by 2030. To the right, the southwestern U.S. needs 25 gigawatts, and California alone needs 20 gigawatts of additional generation capacity by 2030. The growth in electricity demand is largely driven by new data centers. On slide 9, this slide from the same study shows that in the northwestern U.S., when you take into account retiring electricity generation, the pace of new generation will increase by four to five times the pace of historical generation development. The sum of integrated resource plans, IRPs, indicates that most of this electricity is forecasted to come from solar, wind, and battery storage, given the supply chain constraints around gas turbines. This more complex future generation stack complements Wildan's capabilities. The sustained load growth and increased investment are driving longer engineering, and energy solutions, areas where Wildan is well positioned. As we've mentioned before, energy efficiency is one of the most quickly available, least-cost electricity resources. We believe these trends will drive our business for years to come. Overall, we're pleased with our performance to start the year. Operational strength and the addition of Burton set Wildan up to have what we believe will be another very strong year. As Kim will detail, we are now anticipating that we will grow adjusted EBITDA by 26% to 32% year-over-year, an outstanding result.

Kim | Chief Financial Officer

Kim, over to you. Thanks, Mike, and good afternoon, everyone. We delivered a strong start to 2026, exceeding expectations with solid performance across our businesses and continued margin expansions. Strong underlying demand for our services and greater productivity in our utility programs and performance engineering projects drove higher profitability in the quarter. Slide 11 shows the key metrics for the quarter. Contract revenue increased 2% year over year to $155 million, while net revenue grew 8% to $92 million for the quarter. But as a reminder, the first quarter of 2025 included an additional week. Excluding this impact, contract revenue grew 10% year-over-year and net revenue 17%, reflecting the continued health of the business. An improvement in gross margins was the key driver behind the 25% increase, or 35% when 2025 is normalized, in adjusted EBITDA over the prior year. The $18.1 million in adjusted EBITDA was a first quarter record and represented 19.6% of net revenue. Expense control and the 2026 tax benefit versus the smaller tax expense in the prior year enabled adjusted earnings per share to increase 44% over last year's first quarter to $0.91 per share compared to $0.63 in 2025. To provide a little more detail on the components of the earnings improvements, our gross margin expanded to 40.7%, up from 37.8% in the prior year, reflecting the expanding volume, improved productivity, and a favorable service mix as we continue to focus on quality and profitability. The improved margin performance was derived from productivity improvements in sales and reduced costs under our utility programs and further aided by margin improvements in our performance contracting projects, including those from the acquisition of APG a year ago. G&A expenses increased 10% year-over-year, or 19% when normalized for the additional week in 2025, primarily reflecting higher non-cash charges for the amortization of intangibles derived from acquisitions of $1 million, as well as stock compensation increases reflecting the higher stock price compared to a year ago, up $1.3 million. Salary and benefit costs also increased consistent with the acquisitions and the growth of core revenues and earnings, while interest expense was $1 million lower than a year ago, reflecting the lower leverage from our strong cash flows. Thus, our pre-tax income grew by 40%, to $7.3 million for the 13-week first quarter of 26, compared to $5.2 million in the 14-week period a year ago. We recognized a $1.3 million tax benefit in the quarter compared to a $500,000 tax expense in 2025. The tax benefit was driven by Section 17090 energy efficiency deductions and discrete items related to stock-based compensations. So, on the bottom line, net income increased 82% to $8.5 million, 96% when normalized, or $0.55 per diluted share on a gap basis compared to $4.7 million or $0.32 per diluted share in the prior year. And again, adjusted earnings per share increased 44% to $0.91 per share this quarter compared to $0.63 a year ago. Earnings were very good with solid growth and improving margins in what historically has been our weakest quarter of the year. Turning the cash flow in the balance sheet on slide 12, cash flow used in operating activities was $24 million in the quarter compared to a positive $3 million in the prior year. On a trailing 12-month basis, cash flow from operations was a positive $52 million. which would have been $18 million higher should one client have paid us two weeks earlier. From a free cash flow perspective, we used approximately $1.71 per share in the quarter, but generated $2.81 per share on a trailing 12-month basis. We continue to expect strong cash flows from operations, aided by the carry-forward of $28 million in deferred tax assets on our balance sheet generated by the 17090 deductions and other incentives to offset future tax liabilities well into 2027 and beyond. On a long-term basis, we would expect free cash flow to exceed 70% of our adjusted EBITDA on an annual basis. We ended the quarter with $28 million of unrestricted cash to net against the $48 million outstanding under our term loans. resulting in a 0.2 times leverage ratio of net debt to adjusted EBITDA over the trailing 12 months. There were no borrowings outstanding on our $100 million revolving credit facility at the end of the quarter, but subsequent to year end, or quarter end, we drew $30 million on the revolver to fund a portion of the Burton acquisition, which would increase the leverage ratio to 0.6 times. Given our expected earnings for the remainder of the year, we would expect the revolver to be fully repaid by year-end and continue to provide us low leverage and high liquidity with significant expansion capacity under the $100 million revolver and the $50 million delayed draw term loan facility to support continued organic growth and strategic acquisitions. Turning to slide 13. Last year, we exceeded our long-held goal of delivering adjusted EBITDA in excess of 20% of net revenue. Based on our recent performance and the underlying drivers in the business, including improved productivity, favorable revenue mix, and additional operating leverage, we are now raising our long-term margin goal to expect the adjusted EBITDA of the net revenues margin to be in the high 20s. We'll continue to focus on the volume, productivity, and cost control efforts required to achieve that goal as we continue to grow the business. Now to slide 14. Based on our strong start of the year, we're raising our full year 2026 financial targets. I'll note that the increase in guidance is roughly double the Q1B plus the expected contribution of Burton, reflecting the strength of our core business. We now expect net revenues to be in the range of $410 to $425 million, adjusted EBITDA in the range of $100 million to $105 million, and adjusted diluted earnings per share between $4.90 and $5.05. This outlook assumes approximately 15.9 million diluted shares outstanding at year end, and a 0% effective tax rate for the year, reflecting the higher expected pre-tax income and reduced estimates of discrete tax benefits derived from stock compensation. And on slide 15, it was a strong start to FY26, fueling our optimism for continued growth and expanding margins. The acquisition of Burton a few days ago further fuels that optimism, expanding our addressable markets and creating numerous opportunities for collaboration and cross-selling. We continue to enjoy low leverage and high liquidity even after this investment, and we are raising our guidance and increasing our goal for adjusted EBITDA margins. It was a good quarter.

Investor Relations | Head of Investor Relations

Operator, we're now ready to take questions.

Operator | Conference Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from Craig Irwin with Ross Capital Partners.

Craig Irwin | Analyst, Ross Capital Partners

Good evening. Thanks for taking my questions and congratulations on a strong quarter here. Mike, I wanted to start off the top by asking if you could help us with maybe a little bit more color on why your fundamental profitability levels are going up. You're raising your base EBITDA guidance targets and raising your guidance for this year on that as well. Clearly, there's things that are working for you I know you've had a number of initiatives internally at the company to improve profitability. We're also seeing an environment where reserve margins are likely to fall. So your customers will look pretty desperate to stop brownouts and other problems that you prevent with your services. How would you help us understand what the opportunity is? And is this really just a first step? Is there potential room in the future for this number to keep moving higher.

Mike Bieber | President and Chief Executive Officer

Yeah, Greg. You know, if you look back five years ago, we wouldn't have thought this possible. But we're performing very well, and we've got a lot of confidence that we'll be able to get this into the high 20s. If you just model out our guidance for this year, you know, we'll be potentially north of 24% already this year. So there's really four things that are driving it. Number one, is growth and back office cost absorption. We've been able to control costs as we grow the business, especially on the back office, at a fraction of the rate of the growth rate of the company. So that's number one. We need to keep growing. Number two, you're right. Energy demand plays a part in this. The price of energy is going up. Resources, our The third is probably that we've moved up the value chain. You know, we've got a much more differentiated set of services that we provide compared to five years ago. And that continues to go in the right direction north. The last thing is probably, you know, the percentage of commercial work. The state and local tends to be the lowest margin opportunities. With, you know, I'll call it a balanced portfolio of the three customer groups and commercial being 25% now, we have the opportunity to drive margins. Those customers tend to want the solution immediately, like yesterday, but they're willing to pay for that, unlike government customers that take a little more modest approach to schedules. So those are the four things driving it, and we think this restructuring We're going to make good progress on that this year.

Craig Irwin | Analyst, Ross Capital Partners

Fantastic. So I wanted to ask about APG and the setup that you have providing services, building power blocks primarily for data centers. This business, you've talked about it growing extremely quickly, potentially doubling this year. Is there any update or any color you can give us on specific wins in there, new customers, diversification? What should we look for over the next couple quarters as you scale that business?

Mike Bieber | President and Chief Executive Officer

Wow, has that been a good acquisition. They are doing outstanding. Yeah, they're going to more than double. They might even approach tripling this year. They're just performing outstanding. And it's already work we've won and are executing, and we're really looking towards the pipeline of 27 and 28 right now. The biggest thing driving that is a few big power blocks for large data centers. Those tend to be confidential projects, so that's why you haven't seen them announced. But the biggest project that APG all of the power blocks. So there are several more projects in the pipeline that look just like that. They've also diversified. They were the ones that won the battery storage project down in Puerto Rico, so they do that type of work. That's good as well. It's been very good. Mt. SAC was a great collaboration. We announced that project. That was with the rest of Wildan. It's been one of the most synergistic acquisitions collaboration with the rest of the company.

Craig Irwin | Analyst, Ross Capital Partners

Excellent. Last question, if I may. Amber and her team at E3 have incredible visibility on demand for services like Wildan's and the overall outlook for CapEx for utilities and commercial infrastructure for power. You know, it's interesting that you guys are buying Burton, that you've tucked them into the team, and obviously this is something you, you know, it's similar in character to the core of your business. Do you see the Northwest as, you know, maybe a new frontier for Wildan, something that could potentially be as interesting or as substantial as your work on the West Coast and the East Coast where you generate quite a large portion of your revenue?

Mike Bieber | President and Chief Executive Officer

I wouldn't really focus on the Northwest so much as that happened to be a study of all of the Western states, the Northwest being a particular focus area. It also covered California. It was a regional study that we did. So we just pointed that out as new data that all points to what we're seeing across the country, which is that the demand for electricity is increasing. In some cases, we're not keeping up. How do you do that in an equitable way without raising rates? Rates are going up across the country. And so it's a complex equation that's happening all across the United States. I wouldn't single out the Northwest more than in other places, though.

Craig Irwin | Analyst, Ross Capital Partners

Well, that's good to hear it's broad-based. Thanks for taking my questions. Congrats on another solid quarter. I'll hop back in the queue.

Operator | Conference Operator

And again, that is star one if you'd like to ask a question. We'll go next to Tim Moore with Clear Street.

Tim Moore | Analyst, Clear Street

Thanks. And very impressive EBITDA growth and margin in the seasonally low quarter despite the one last week last year. And despite probably not benefiting from the Los Angeles Water and Power Award yet. I enjoyed your head fish of conservative guidance late February. Can you just update us maybe On the timing or visibility for maybe when the Los Angeles Water and Power contract might kick in, I mean, that's quite the large contract, I don't know, maybe $16 million gross revenue or quarter run rate. Any visibility on when that might start, and is that part of your recent guidance upgrade?

Mike Bieber | President and Chief Executive Officer

It didn't really drive the guidance upgrade that much. We had a very small contribution in Q1, but we did have revenue for the first time in a while. pretty substantially in Q2, but it's still a small number. We have bigger expectations for the back half of this year. I would characterize it as sort of the first ending of a ball game. We're ramping up the program. Every week is better than the previous. In addition to all that ramp up, though, there are some future opportunities we hope to share with the group that may drive that contract even larger. We haven't nailed that down yet, but The ball's rolling. It's not driving current results, nor did it really drive the upgrade of our forecast, but we think there may be more to come there.

Tim Moore | Analyst, Clear Street

That's very helpful, Collard, to have that in your back pocket. It seems like it'll be more of a contributor for next calendar year as it ramps up and maybe plays some catch-up on that five-year contract. Just switching gears, if you can maybe just share a little color on, you know, how many months did you evaluate or negotiate maybe or, you know, the Burton Energy Group? And maybe you can just try a little color in your acquisition funnel. I mean, you have so much liquidity and, you know, barely any net debt. It seems like you could absorb a few more acquisitions, you know, over the coming quarters. Just any thoughts on that? Or are you still really focusing a bit more on the commercial side for Target's Mike Bieber | President and Chief Executive Officer: Well, Burton was extremely deliberate in their discussions with us. It took a long time. We were in detailed discussions with them for, I'm thinking, I don't know, seven or eight months, something like that. It took a long time, and we got to the right spot. So we're very pleased with the Burton deal. We had known that company for more than 10 years, and when they decided that they wanted to make a move, even though we had known them. So we very much appreciate them for doing that. We've respected Burton for a long time. And sometimes what happens with our teaming partners and people we're working with out in the industry, they know what we're after. And when the time is right, sometimes we get that call and they come to us. That's what happened with Burton. And it's characteristic of something we're also seeing in our pipeline. We're one of the strict few strategic buyers out there in this marketplace who are competing with a lot of private equity that often will pay more. And some of these groups that we're working with won't sell to private equity at any price. They want to go with a strategic partner like Will Dan. And so that makes us a buyer of choice. And if you look at our pipeline right now of what we're evaluating for the back half of the year and into next year, that's the case. I point to the same focus areas that we've had. Electrical engineering is hard to find. It's also very expensive. It's being bid up. But, boy, we'd sure like to have it. And the success we've had in electrical engineering with APG demonstrates that we're willing to move into that space. Commercial, more commercial would be helpful. We're looking at that in our core services. But we're getting to a point where that's more balanced with the other areas. And the front end of our business is still undersized. We would love to have more science and front end evaluation work, more data analytics, more software, very differentiated solutions. We're looking there as well. So those are still three of the focus areas.

Tim Moore | Analyst, Clear Street

No, that's great, Mike. And I think you kind of beat me a little bit to my next question. I'm just trying to think about what you and Kim think about maybe as a limiter to organic growth. I mean, you mentioned all the states you're in. I mean, you're definitely largely in California and New York, and you've got some Florida and Texas and some other good scale. I mean, there's just high demand for what you offer, and you're really the go-to consultants and experts on this. especially with E3 and everything else you have, is there any kind of limitation now on really accepting more large contracts that would start in the next 12 months?

Mike Bieber | President and Chief Executive Officer

We always hate to say that labor is going to limit our ability to grow organically, and I don't think it is in a big area. There are some niches where we're hiring, and we're looking for people to just go to our websites that area around APG, you know, our electrical engineering and construction management that's very specialized there needs to significantly increase its workforce. But I wouldn't say it's a constraint point at this point.

Kim | Chief Financial Officer

Would you? No, I don't see that as a constraint. And the pipeline of opportunities that our various business units are pursuing is pretty robust. So I don't see a cap on what that potential might be. But when you're dealing with large programs and large projects, timing is everything. And exactly predicting when that might occur is more difficult. But we don't have a limitation of resources or even supply chain at this point that really is going to limit that potential.

Tim Moore | Analyst, Clear Street

Thanks. That's really good granularity, and that's it for my questions. Congratulations on all the terrific progress.

Thank you. Operator | Conference Operator

And this now concludes our question and answer session. I would like to turn the floor back over to Mike Bieber for closing comments.

Investor Relations | Head of Investor Relations

Great. Well, thank you for your interest and will then, and we look forward to speaking with you next quarter.

Operator | Conference Operator

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day. jsPDF 3.0.3 D:20260606090536-00'00'

NASDAQ:WLDN Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Rochelle | Conference Operator: Greetings and welcome to the Wilden Group fourth quarter and fiscal year 2025 financial results conference call. At this time all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance please press star zero on your telephone keypad. As a reminder this conference is being recorded It is now my pleasure to introduce Al Kazchok, Investor Relations. Please go ahead, sir.

Al Kazchok | Investor Relations

Thank you, Rochelle. Good afternoon, everyone, and welcome to Will Dan Group's fourth quarter 2025 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an actual basis unless otherwise specified. We will make forward-looking statements about our performance. These statements are based on how things we see today While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risk and uncertainties. With that, I'll hand the call over to Mike, who will begin on slide two.

Mike Bieber | President and Chief Executive Officer

Thanks, Al. We closed 2025 with record financial performance and strong momentum across our business. For 2025, both contract and net revenue grew greater than 20%, led by our energy work. Adjusted EBITDA grew 40%, and yearly margins expanded to above our 20% target for the first time in 2025. Strong EPS growth allowed us to generate $71 million of free cash flow, and we are now in a net cash position. In 2025, organic net revenue growth was 17%, and was largely driven by expansion with existing customers. Electric load growth has returned to the United States after about 15 years of stagnation. Artificial intelligence and data centers are accelerating electricity demand at a scale not seen in recent years. To a lesser extent, transportation and building electrification and increased domestic manufacturing are also contributing to electricity demand growth. Our utility customers are confronting a grid that must manage more power, more intermittency, and more complexity than ever before. At the same time, affordability has moved to the forefront. As infrastructure investment increases, regulators must balance reliability, decarbonization, and cost containment, increasing the need for smarter planning and cost-effective execution. Many studies have shown that energy efficiencies usually increases rates slightly but drives down bills for participants because you're using less energy and thus improves affordability. The dynamic plays directly into where Wildan operates, and the results reflect strong execution, which fuels our positive long-term outlook. On slide three. Let me step back for a moment and remind everyone how our business is structured and where we're seeing demand. Welland delivers a broad range of energy and infrastructure solutions to utilities, state and local governments, and commercial customers. On the left side of the slide, approximately 85% of our revenue comes from the energy segment, with the remaining 15% from engineering and consulting. On the right side, activity remains healthy across all customer groups. Our utility customers represent about 41% of revenue and continue to perform well. These programs are typically three- to five-year contracts funded through ratepayer mechanisms, which provide strong visibility and recurring revenue. Importantly, we're seeing program sizes usually grow over time as energy efficiency becomes recognized as a system resource. State and local governments account for approximately 48% of revenue and remains a steady source of growth. Most of this work is supported by user fees and municipal bond funding. both of which remain stable. Commercial customers have rapidly grown to 11% of revenue, with most of that activity tied to power for data centers. AI-driven load growth is creating meaningful infrastructure and energy optimization needs, and we're helping these clients navigate grid constraints, design solutions, and meet aggressive power requirements. Commercial customers represent the most fertile business environment we serve, and we plan to continue intentionally increasing our capabilities offered to the commercial sector. Taken together, this mix reflects a diversified, durable business supported by long-term contracts, relatively stable funding sources, and growing demand across multiple end markets.

Conference Operator | Operator

On slide four. Our upfront policy, forecasting, and data analytics work informs our strategy Mike Bieber | President and Chief Executive Officer: and helps us navigate market change. We operate at the intersection of consulting services, engineering, and program management, helping clients plan for new load, design infrastructure upgrades, manage grid complexity, and implement cost-effective energy solutions. In our upfront work, we are seeing particular demand for studies on the impacts of electricity load growth, and that work grew more than 50% organically year over year. As I mentioned in prior earnings calls, those market changes led us to the APG acquisition. That provides power engineering solutions to commercial customers, including data centers and hyperscalers. We expect that work to more than double in 2026, and we are growing that backlog into 2027 and 2028 now because they're long-term contracts. In other parts of engineering, we saw strong execution and growth. with both commercial and municipal customers. In program management, we performed above our plan on utility programs and building energy programs for cities. Demonstrating this model in an example, I'll walk through what we're doing around data centers. First, we work with both hyperscalers and government regulators to optimize the siting and mitigate the electric load impacts of data centers. Our consulting work for Amazon Noted in our December press release is an example of this, along with our studies for the states of Virginia, Michigan, and California. Next, we work for data center developers to design and manage the construction of substations that power new data centers which enable AI. I'll provide you some examples of that in a moment. And finally, as Will then has done for more than 10 years, we provide energy efficiency optimization for data center operators mostly through long-term master service agreements. On slide five, we have a strong pipeline of opportunities that we are converting into contracts, and the pipeline is solid heading into 2026. Importantly, our average contract size has continued to grow, fueling the overall growth of Willday. Here are just a few examples we converted since our last conference call. For the city of San Diego, we recently signed a $112 million energy efficiency program that will help save electricity at municipal infrastructure owned by the city. This program is about two years in duration and addresses a wide range of civic buildings and other infrastructure that uses electricity. This follows a similar $97 million win with Alameda County, California, we announced last quarter. For Mount San Antonio College, we were just awarded an exciting new contract that demonstrates how acquisition integration can provide larger scale and more effective client solutions. This $49 million brand new project is an integrated microgrid resiliency project. Within WILDAN, it will involve the legacy civil engineering group collaborating with several previously acquired energy groups to deliver a comprehensive energy solution to the college over the next two years. Next, for Menlo Digital, one of America's largest data center developers and a large customer of ours, we are now breaking ground on a $38 million project to design and manage the construction of an interconnect substation that powers a new data center in Phoenix, Arizona. For Solve Energy, we signed a $4.5 million integrated distributed energy resource, or DER, project in Utah. And finally, we signed a smaller confidential LoadSeer software license in Q4. LoadSeer is our flagship long-term utility forecasting software. On slide six, this slide highlights what we continue to see in the data center market, sustained growth in electricity demand. There's currently an estimated 35 gigawatts of active data center construction in the U.S. While it's unlikely every announced project will ultimately be built, the broader trend is clear. Demand for power from digital infrastructure remains durable and is expected to extend at least through the end of the decade. Importantly, this isn't just about megawatts. It's about complexity. Data center load growth is driving transmission upgrades, distribution system and expansion, interconnection challenges, and increasing reliability requirements. Virginia and the more rural states of Texas, Georgia, Arizona, Tennessee, and Wisconsin are all experiencing rapid growth in energy demand from data centers. This dynamic plays directly to WLDAN strengths, from power system engineering and grid modernization to targeting energy efficiency and load optimization solutions. As electricity demand grows, utilities and commercial customers need technically advanced partners to plan, design, and optimize the system.

Conference Operator | Operator

That's exactly where we operate.

Mike Bieber | President and Chief Executive Officer

On slide seven, we continue to see energy efficiency evolve in ways that reinforce its strategic importance within tomorrow's power grid. There is increasing focus on capacity-driven and locational efficiency programs. Targeted efficiency and non-wire solutions are now delivering measurable distribution-level value, directly supporting grid planning and load management. Next, affordability is now a nationwide concern. Utilities and regulators are attempting to mitigate customer bill impacts, and energy efficiency remains one of the most cost-effective and immediate tools to reduce customer bills while accommodating load growth. Next, grid modernization is accelerating. Advanced metering infrastructure and AI-enabled analytics are improving measurement, targeting, and performance optimization, further integrating planning studies and efficiency into core systems operations. Reliability has become more of a year-round concern than just the historical concern of summer peaking. Now winter and summer grid events reinforce the role of efficiency as a dependable system resource. Wildan is well-positioned today and plans to further increase our capabilities through key hires and acquisitions. I want to mention that we have a particularly robust acquisition pipeline entering 2026. that will better enable us to serve customers in the future. Jim, over to you.

Kim Early | Executive Vice President and Chief Financial Officer

Thanks, Mike, and good afternoon, everyone. Turning to slide 11, for the fourth quarter of 2025, contract revenue increased 21% to $174 million, and net revenue grew 13% to $89.5 million for the quarter. Adjusted EBITDA also increased 13% compared to the prior year, totaling $20 million for the quarter, and adjusted earnings per share more than doubled to $1.57, which is $1.23 on a gap basis, aided by exceptional tax deductions from energy efficiency incentives under Section 179D. The quarter benefited from broad-based growth and acquisitions. Margins remain solid as we maintain strong execution and cost discipline. Fiscal 2025 as a whole reflects the trajectory and strength of our operating model as noted on slide 10. Fiscal 2025 was a record year for Wilbent. Consolidated contract revenue grew 21% to $682 million and and net revenue grew 23% to $365 million for the year. Again, the growth was broad-based across our segment, service lines and customer base, and was aided by contributions from our acquisitions. Of the 23% growth in net revenue, 17% was organic and 6% was from acquisitions. Importantly, our revenue growth translated into meaningful profitability expansion as well. Gross profit increased 26.1% to $256 million, and gross margin expanded to 37.5% from 35.8% in the prior year, reflecting growth and productivity gains in our program management and consulting services in both segments, as well as success. delivering those services. General and administrative expenses increased with the growth, including investments in talent and technology, incentive compensation tied to performance, and acquisition integration. But the resulting operating leverage helped adjusted EBITDA increase 40% year-over-year to $79.5 million. Net interest expense decreased for 2025, primarily due to lower debt levels combined with a lower interest rate spread derived from reduced leverage ratios. We also benefited from the interest income derived from consistently high cash balances. And more significantly, we recorded an income tax benefit of $12.6 million as a result of the 179D deductions and the impact of the higher stock valuations. thereby adding to our bottom line and resulting in an effective tax rate benefit of 31.4% compared to a tax rate expense of 15.4% in 2024. As a result, net income more than doubled to $52.6 million for the year, or $3.49 per diluted share on a gap basis, compared to net income of $22.6 million, or $1.58 per share, in 2024. Adjusted earnings per share increased to $4.89 per share, compared to $2.43 in the prior year. Revenue growth and margin expansion propelled these strong results. Turning to the balance sheet and liquidity on slide 11, we generated $80 million in cash flow from operations, continued improvements in working capital levels supplemented the strong earnings, and $71 million in free cash flow, or $4.69 per share in 2025. We invested $9 million in CapEx, primarily for proprietary software development, and used $36 million for acquisitions. We also reduced borrowings by $40 million under our credit facility and had only $49 million in outstanding debt at year end. We ended the year with $66 million of unrestricted cash and a net positive cash position of $17 million, the first time since 2017, and effectively zero leverage compared to the 0.3 times EBITDA at the end of 2024. In addition, We continue to maintain full availability under our $100 million revolving credit facility, resulting in total available liquidity of $216 million at year end. This provides meaningful financial flexibility as we move into 2026. Our capital allocation priorities remain consistent. Reinvest in the business to support organic growth and pursue accretive acquisitions that expand and enhance our capabilities in geographic reach. Turning to slide 12. Over the past four years, our growth profile has been both durable and increasingly profitable. Gross revenue and net revenue grew a compound annual rate of 18% and 16%, respectively, while adjusted EBITDA expanded at a 30% compounded annual rate. And on slide 13, we've demonstrated the ability to expand margins over time through disciplined execution and productivity improvements, favorable mix, and prudent cost management. The 21.8% margin in 2025, for the first time, exceeded our long-term goal of a 20% EBITDA margin. We expect the 2026 margin to also exceed that 20% target. On slide 14, we provide our financial guidance for 2026. These targets assume no future acquisitions. We expect net revenue in the range of $390 to $405 million, adjusted EBITDA in the range of $85 to $90 million, and adjusted earnings per share in the range of $4.50 to $4.70 per share. These targets assume a full-year effective tax benefit of approximately 10%, and 15.8 million diluted shares outstanding. These numbers exclude any future acquisitions, though we expect to make acquisitions during the year, and our guidance will be updated accordingly. In summary, on slide 15, Fiscal 25 is a record year marked by continued growth and margin expansion. We entered 2026 with a strong balance sheet and ample liquidity to support strategic growth. We are positioned at the center of growing energy and infrastructure markets with a robust M&A pipeline to enhance scale and capabilities.

Conference Operator | Operator

With that operator, we are ready to take questions.

Rochelle | Conference Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions.

Conference Operator | Operator

And as a reminder, it's star one to ask your question. And one moment while we pull for questions.

Rochelle | Conference Operator

And we'll take a question from Craig Irwin with Ross Capital Partners.

Craig Irwin | Analyst, Ross Capital Partners

Good evening, and thanks for taking my questions. So I'll start off the top by, I guess, asking about the thing that I think is affecting aftermarket trading, right? Your EPS guide of 450 to 470 is fantastic, but it is below the 493 last year. You know, when I look at the tax rate that you're guiding us to, a 10% benefit, That compares to negative 31% last year. So there's obviously quite a difference in the 179D assumption for 2026. This doesn't impact EBITDA. But can you maybe walk us through what your assumptions are for 179D in 2026, how this worked so very well for you last year, and is there potential for us to see 179D maybe become more favorable for you over the course of the year?

Kim Early | Executive Vice President and Chief Financial Officer

Yeah, thanks, Craig. Well, the first big assumption is that consistent with the one big beautiful bill, this 179D is set to expire at the end of June for this year. So that inability to carry that through to the end of the year means that we can only take advantage of that through projects that are started within the first six months of 2026. So that's the single biggest factor there. There's also a little bit of a shift in just the work that we're doing from the Clark County School District. So we have a lot of school buildings within that school district to the shift into work we're doing for – Alameda County and San Diego, which will involve fewer buildings, which are really the source of a lot of those 179D deductions that we got. So the main driver is just the assumption that the 179D provision is not being renewed as of the end of June. And secondarily, that there's just fewer buildings in some of the projects that we're doing that would qualify it.

Craig Irwin | Analyst, Ross Capital Partners

Understood. That makes complete sense. So my next question is about the EBITDA growth, right? So for the trailing four quarters, your EBITDA growth has been between 67% and 190% year over year, really just absolutely crushing it. So when I look at this, you know, I know your markets are helping in a big way, but I kind of have a suspicion that Wildan is humming on all cylinders, that there's certain – significant operating improvements that are happening at the company that might be improving the fundamental profitability of the company moving forward. Can you maybe unpack for us any of these operational changes that might be taking place? I know you're conservative in your guide and you give us numbers that you firmly believe in, but how should we look at the potential for your initiatives on profitability and performance as contributors over the course of the next year?

Mike Bieber | President and Chief Executive Officer

Yeah, Greg. First, we expect margins to continue to be above 20%, that long-term target. We achieved that this year, and in our guidance, midpoints squarely above 20% again. It's actually a little improvement over this year. So that improvement continues, and the big structural change over the last five years is that we've moved up the value scale and are able to charge more for the work that we do. The second is the back office cost absorption of the scale itself. As we've grown the company, corporate costs are not growing at nearly the rate of the top line. So we think that's going to continue, and it's reflected in our guidance. You're right. I look back on last year's guidance, and our long-term expectations for investors are overall, to grow 15% to 20% top line and bottom line. And I think by the end of the year, we'll be right there, if not better. And that's exactly what we did in 2025. We've got the same playbook for 2026. We'll come in with appropriately conservative guidance at the beginning of the year. We know that you want us to beat and raise, and we think this positions us well. So I think it looks good for 2026.

Craig Irwin | Analyst, Ross Capital Partners

Excellent. Last question, if I may. So you guys are winning in data center, right? Why? Because you bring the right resources to the customer quickly, and they can rely on Wildan to execute the project impeccably. But you've historically done the same thing for utilities, and utility demand seems to be going up because of the reserve margins that are falling across the country, right? Load growth is becoming a big problem. You know, Do you see potential for continued requests for accelerated project completion that tends to drive margins upward over the next couple of years? I mean, is this a theme that you're seeing, you know, more predominantly across your utility customer base?

Mike Bieber | President and Chief Executive Officer

It is, Craig. You're absolutely right that utilities are being squeezed now, generations not necessarily keeping pace with the demand for that electricity. And so, yeah, energy efficiency is the cost-effective resource. They're trying to get as much out of those programs as they can get. And that's why you've seen those programs grow over time. You know, if you look back over 2025, 17% organic growth, there wasn't any single big win that drove that. It was mostly expansion from those long-term programs customer relationships, many of which are utilities, as you pointed out. That's exactly what we're seeing, and that trend is continuing.

Craig Irwin | Analyst, Ross Capital Partners

Great. Well, congratulations on another really solid quarter, Mike.

Conference Operator | Operator

Impressive. And next, we'll move to Tim Moore with Clear Streets.

Tim Moore | Analyst, Clear Streets

Thanks, and congratulations just on the hard effort and the great execution throughout the year. You really harnessed the tailwinds and scale benefits. It came through, and all beaten race stocks still have momentum. One thing I just want to follow up, actually I have two questions. If I recall properly from last year, the year before actually, the fourth quarter of 2024, that Los Angeles Department of Power and Water contract wasn't, I think, in the for Q24 revenue. Did it ramp up meaningfully in this December quarter? I know you were laughing, kind of not much contribution in the year-ago period.

Mike Bieber | President and Chief Executive Officer

On a percentage basis, it ramped up materially, but its contribution was very small in dollars, actually, for the Q4. That program is ramping up, though. We're not going to see... We'll see improvement in Q1 over Q4, but the big ramp-up for LEDWP is in Q2 We've got the amendments that we needed in place, the changes to the contracts, the contracting communities ready for it. And I think you'll see a material contribution to that contract starting Q2 of this year. And then, you know, it goes on for the next four years.

Tim Moore | Analyst, Clear Streets

That's good, because I think I was modeling $7 to $8 million, maybe a quarter, maybe it would be higher. I know it was going to be higher than the original terms that phased down before renewal. So that's helpful. Mike, I want to check something, actually, if I heard correctly in your call. I mean, I'll just look at the transcript. But did you mention that you thought data centers could double in 2026 for revenue, or was I mishearing the end markets?

Mike Bieber | President and Chief Executive Officer

No, we were talking specifically about the APG acquisition that does that type of, you know, substation design and construction management for those data centers. And we are expecting that to more than double for us this year. A lot of those projects, though, are two or more years in duration. So we're actually building backlog into 27 and 28. This is going to be a long-term trend.

Tim Moore | Analyst, Clear Streets

That's great. I mean, it seems like it could be about 20% of your revenue by the end of the year from data centers related. If it does double, I mean, I imagine it would. Does that make sense? It could be maybe 20%. I mean, I know you had some AT&T before that, but it seems like you could get to 20% data centers.

Mike Bieber | President and Chief Executive Officer

It'll certainly grow from 11% year over year. I don't know where we'll end up. We mentioned it's the most robust area we're serving, and In addition, I'll mention we're looking at acquisitions that specifically expand our capabilities to the commercial customers overall. We want to diversify in that direction, so we'd like to catalyze and drive that number up even further into the 20s.

Tim Moore | Analyst, Clear Streets

Great, great. And one last question that's related to just the thread you just started. You do that Compass Municipal Advisors acquisition that really kind of gets you into the financing side, helps agencies and develop new projects. Is that a little bit different of a business model for you? I mean, is the margin higher because of the financing tie-in for that?

Mike Bieber | President and Chief Executive Officer

We have a financial services group, and we have for probably 15 or more years at Wildan. We don't talk about it a lot, but it's a legacy activity that we provide primarily for communities in the western half of the U.S. A lot of the work is in California, Texas, a little bit in Florida. So that was a geographic expansion of that group. We currently didn't serve any of the customers in Wildan. North and South Carolina, and Kentucky. So you're right, that can be a higher margin business, and we see great cross-selling opportunities between that upfront financing work, particularly for school districts, and the other things that we provide for those schools like energy efficiency.

Tim Moore | Analyst, Clear Streets

That's terrific, Mike.

Conference Operator | Operator

Well, thanks for all that, Collar, and that's it for my questions. Thank you. That will conclude the question and answer session.

Rochelle | Conference Operator

And this does conclude today's teleconference. You may now disconnect your lines. jsPDF 3.0.3 D:20260606090537-00'00'

NASDAQ:WLDN Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Kevin | Conference Operator: Greetings and welcome to the Will Dan Group third quarter fiscal year 2025 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Al Khashoggi. Please go ahead, Al.

Unknown | Investor Relations Host

Thank you, Kevin. Good afternoon, everyone, and welcome to Will Dan Group's third quarter 2025 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an actual basis. We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risk and uncertainties. With that, I hand the call over to Mike, who will begin on slide two.

Mike Bieber | President and Chief Executive Officer

Thanks, Al, and good afternoon. The third quarter of 2025 marks another milestone in Wildan's growth. In the third quarter, we continued to execute very well, delivering results that exceeded the street expectations and our own forecasts across all key metrics. Against a strong Q3 last year, net revenue grew by 26% year over year, driven by an outstanding 20% organic growth rate. 2025 will mark the fourth consecutive year that we've produced double-digit organic growth. Margins also continue to expand in Q3, concurrently with significant investments for our future. With electric load growth expected to increase over the next decade, driven by data centers and electrification, WILDAN's unique capabilities and execution position us well to sustain long-term growth. As a result, we are again raising our full-year financial targets, which Kim will present a little later. Turning to slide three. WILDAN delivers a broad range of energy and infrastructure solutions to utilities, commercial customers, and state and local governments. On the left side of the slide, the energy segment makes up about 85% of our revenue, while our engineering and consulting work makes up about 15%. On the right side, demand remains healthy across all customer groups. The 15% of work for commercial customers is mostly centered around electricity usage at data centers. where AI-driven load growth is creating significant demand. WILDAN is helping technology clients navigate energy constraints, optimize infrastructure, and meet aggressive power requirements. Our utility business makes up about 41% of revenue and continues to perform well. Most of our utility contracts are three to five years in duration, funded by ratepayer fees, and continue to provide a strong foundation of recurring revenue. The size of our long-term utility programs is generally increasing across the country as energy efficiency can be viewed as a power resource. Work for state and local governments makes up 44% of revenue and continues to grow organically at a double-digit pace. Demand from our government customers remains solid, and the outlook is positive. Most of our government work is funded through user fees and municipal bonds, which have remained healthy. On slide four. Our upfront policy, forecasting, and data analytics work informs our strategy and helps us navigate market change. In our upfront work, we see particular demand for studies on the impacts of electricity load growth, and that work is growing at about 50% organically year over year. Those market changes led us to the APG acquisition that provides power engineering solutions to data center clients hyperscalers, and other commercial customers. I'm pleased to report that APG is collaborating very effectively with the rest of Wildan and has already won record backlog that we expect will propel more than 50% growth by APG in 2026. In other parts of engineering, we saw strong execution and growth with both commercial and municipal customers. In program management, we performed above our plan on utility programs and building energy programs for cities. Demonstrating this model in an example, we are hired by technology hyperscalers to identify the optimal sites for data centers. We then provide clients consulting, engineering, and project management to supply the electricity that powers those centers. The new generation of data centers usually requires high voltage power, often hundreds of megawatts, with a dedicated utility scale substation and utility interconnect. After a data center is built, we'll then provide energy optimization inside the data center, as we have done for many years. Each step with the customer informs the next step. This model extends across all of our service lines. On slide five. We have a strong pipeline of opportunities that we are converting into contracts, and the pipeline remains solid heading into 2026. Here are just a few examples we converted since our last conference call. For Alameda County, California, we won a two-year, $97 million project to design and implement energy and infrastructure upgrades at county infrastructure throughout San Francisco's East Bay. For a confidential client, we want two substations for solar storage projects worth a combined $21.7 million in Oregon and Georgia. For a confidential client in Texas, we want a $14 million substation project for a solar energy storage system and a $7.8 million greenfield substation project. In Utah, we want a $3.6 million project to expand an existing substation. And I'll note that projects two through five on the table were all led by our recent APG acquisition. They're doing very well. On slide six. In early October, Wilden's E3 subsidiary published new research on electricity load growth. This research forecasts between 0.7 and 1.2 terawatt hours of U.S. electricity load growth over the next 10 years. The drivers are broad-based and extend well beyond the data center load growth now often talked about to include new industrial demand, electric vehicles, and the electrification of building systems. The colors on the bar chart depict the relative proportions of load growth drivers. This load growth is transforming electricity markets from a once static landscape into a dynamic long-term growth market. On slide seven. Looking globally, this map demonstrates that current data center electricity load expressed in gigawatts is by far the greatest in the United States right here. The map also puts into perspective just how large Northern Virginia data center electricity load is compared to anywhere else in the world. We've previously talked about our landmark study for Virginia on the impacts of this load, which has led to several more similar studies for data center developers and utilities. WILDAN is in the right market at the right time and is building the right set of capabilities to help clients navigate electricity load growth. Utilities are also investing to enhance reliability and flexibility as more distributed resources come online. requiring significant modernization of aging infrastructure. Together, these forces are driving one of the largest infrastructure investment cycles in decades, and we'll then as well positioned to help utilities and communities navigate this transformation. I'm very pleased with the way our team is performing. Now, Kim, over to you.

Kim Early | Executive Vice President and Chief Financial Officer

Thanks, Mike, and good afternoon, everyone. Our Q3 results reflect another quarter of significant year-over-year improvement, continuing a trend that began in early 2022. Turning to slide eight, for the third quarter of 2025, contract revenue increased 15% year-over-year to $182 million, while net revenue grew 26% to $95 million. The recent acquisitions brought 6% of that growth, yielding an organic growth rate of 20% for the quarter. Growth was broad-based across both segments, led by continued strength in utility programs and double-digit gains in planning and construction management, as well as continuing municipal demand, geographic expansion, and new contract wins. Gross profit for the quarter grew 30% to $67.1 million, up from $51.6 million last year, driven by the revenue growth and solid project executions. Altogether, higher revenues, favorable gross margin, and effective cost control drove a 91% increase in pre-tax income to a record $14.3 million for the quarter. We reported a 4% income tax rate for the quarter compared to 2% for the same period last year. So net income thus rose to $13.7 million, up 87% from the $7.3 million we were we reported in Q3 of 2024. Adjusted EBITDA reached another new quarterly record of $23.1 million or an adjusted EBITDA margin of 24% of net revenue and up 53% from what was an excellent performance in the quarter a year ago. GAAP diluted earnings per share increased 77% to 90 cents per share while adjusted earnings per share was up 66% to $1.21 for the quarter compared to 73 cents a year ago. Broad-based growth and excellent execution drove a record quarter. Now to slide nine. For the nine months of 2025, contract revenue was up 20% year over year to $508 million while net revenue increased 27% to $275 million. $14 million of the net revenue growth came from acquisitions over the past year, yielding organic net revenue growth of 21% year to date. Gross profit increased 31% to $193 million, up from $148 million last year. Pre-tax income grew 77% to $29.7 million. The discrete tax benefits from stock option exercises and 179D energy efficiency deductions allowed for a $4.2 million tax benefit year to date and thus a net income of $33.9 million or $2.26 per diluted share through the nine months. Adjusted EBITDA rose 52% from $39.1 million in 2024 to $59.5 million or an adjusted EBITDA margin of 21.6% of net revenue, and adjusted earnings per share nearly doubled to $3.34 per share. All are record numbers for a nine-month period. We are on track to exceed our goal of 20% adjusted EBITDA margin in 2025. Slide 10 outlines our balance sheet and cash flow metrics. We ended the quarter with only $16 million in net debt after deploying $33.4 million cash for the recent acquisitions. This brings our trailing 12-month leverage ratio down to 0.2 times adjusted EBITDA compared to 0.3 times at year-end 2024. Free cash flow for the first nine months was $34 million. consistent with the $33 million generated for the same period in 2024. On a trailing 12-month basis, our free cash flow was $65 million, or an impressive $4.34 per share. We had all $100 million available to draw under our revolving credit facility, and an available but undrawn $50 million delayed draw term loan plus $33 million in cash on the balance sheet, giving us $183 million in total available liquidity at quarter end. Our healthy balance sheet, expanded credit facility, and consistent operating performance provide us with the financial flexibility to pursue targeted acquisitions and expand capabilities in strategic markets, all while maintaining prudent leverage. Turning to slide 11. This slide reflects the 20-plus percent compound annual growth in revenue we've been able to achieve over the past 15 quarters and the even more enviable growth in the adjusted EBITDA over the same period. The lines reflect the ebbs and flows of our diversified portfolio of projects across sequential quarters, but the clear trend across the nearly four-year period is up and to the right. This record of sustained improvements has been enabled by the strong execution by our management team in a growing market. We've been able to grow and diversify our service offerings to satisfy the increasing demand from utilities, governments, and commercial clients to adapt to the new environment. On slide 12, building on this multi-year record of performance improvements, we're raising our financial targets for 2025. Net revenue for the full year 2025 is now expected to be between $360 and $365 million, and adjusted EBITDA is now expected in the range of $77 to $78 million. Adjusted diluted earnings per share is projected to be between $4.10 and $4.20 per share based on an estimated tax benefit of 10 percent and 15.2 million shares outstanding. These targets do not include the impact of any future acquisitions. Wrapping up on slide 13, we're proud of the results we've been able to deliver and we're excited about the potential for the future as we continue to win new contracts and then expand existing ones. Organic net revenue growth of 20% for the third quarter The successful completion of recent acquisitions and excellent free cash flow conversion attest to the record-setting performance for the quarter and the year to date. Our performance and confidence in the future support raising our 2025 financial targets. With low leverage and an experienced and motivated management team, we're well positioned in dynamic and growing markets. and we have an active pipeline of strategic acquisition opportunities. Operator, we're now ready to take questions.

Kevin | Conference Operator

Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Craig Irwin from Roth Capital Partners. Your line is now live.

Craig Irwin | Analyst, Roth Capital Partners

Good evening, and thank you for taking my questions. So I should start by saying congratulations, another really just amazing quarter. Mike, the last few quarters, you've been growing close to double the targeted growth rate that you've had for the last several years. I wanted to ask if you could maybe talk a little bit about – What's lifting this customer demand? How do you plan for the capacity to serve these opportunities? And the profitability is clearly there. Do you get more picky or more choosy about how you service these customers? Or do you see this as something that can maybe be an opportunity for you to continue over the next number of quarters?

Mike Bieber | President and Chief Executive Officer

That's a big question, Craig. Thanks. Well, first, the market's good. You know that. You know, electricity prices are rising. Demand for electricity is increasing. So the market's good. But there's something else going on. Our own performance within that marketplace has improved pretty substantially over the last couple of years, as you mentioned. We're more effective at cross-selling, especially with new acquisitions that we bring in, than we ever have been before. And that has led to tens of millions of dollars of new revenue that we had never seen before in our cross-selling evolution, I'll put it. Culturally, we've become much better at that. And APG and the list of their wins sort of epitomizes that. They've been excellent collaborators. We've got a great pipeline. And they're hoping to accelerate and catalyze our growth into 2026. You saw that on the new wins. So that's what's going on. I can't provide you a detailed forecast for 2026. We won't do that until March of this year. But we have been – we normally guided the street towards high single-digit organic growth rates. And you're right. We've been about double that now for a little while. We're going to do our best to make it as reasonably high as we can. You mentioned becoming selective. And in certain instances, we have become selective with those projects. We can afford to do so at this point, especially in our commercial work for data centers, where we're choosing to work with certain mid-tier developers that we have very close relationships with, we're working effectively with, and it's a good business environment. It's not competitive. It's directly negotiated work, and we are becoming more selective in that area.

Craig Irwin | Analyst, Roth Capital Partners

Understood, and I'm guessing that you might be referring to APG, which bridges into my next question. So the work that APG is executing, the work they're winning, the data center work, is some of the most exciting projects that WLDAN's completing right now. Can you maybe talk about the ability for other areas of WLDAN to supplement the capabilities at APG and the execution capacity there? You know, is this something that is improving employee utilization and just general resource utilization for the company?

Mike Bieber | President and Chief Executive Officer

Yeah, sure, Craig. Well, first, our upfront consulting work that we do, particularly for the hyperscalers, is feeding into our information that we know where the new data centers are going into. That's useful. And on the back end of that, the work that we had been doing to make data centers more energy efficient, we've been doing that work for a long time, is useful in our knowledge of working around that environment. So all of those groups are collaborating pretty well. We're also even getting our civil engineering group involved in certain projects. So that's sort of what the landscape looks like right now.

Craig Irwin | Analyst, Roth Capital Partners

Okay, and the last question, if I may. Other companies in the service sector are talking about difficulty sourcing employees. Can you talk about the WLDAN workforce, you know, how flexible is the workforce that you've assembled over the last several years? Are you able to develop people up to fill these needs, these opportunities? And, you know, do you see this as an impediment to your growth?

Mike Bieber | President and Chief Executive Officer

We don't see it as an impediment to growth. Actually, we see ourselves as the employer of choice. We have not had major impediments in hiring employees. And I just saw today that our employee count for the first time has reached over 1,800. We're hiring. And I think we're doing a very effective job of hiring and retaining key employees. I'll note that we have had zero turnover in our senior management team over the last more than two years. We haven't lost a single person. So no, it's not a major impediment. Look at our website if you're interested.

Craig Irwin | Analyst, Roth Capital Partners

Well, congrats again on another really solid quarter. Thanks, Greg.

Kevin | Conference Operator

Thank you. As a reminder, that's star one to be placed into question Q. Our next question is coming from Tim Moore from Clear Street. Your line is now live.

Tim Moore | Analyst, Clear Street

Thanks. Mike and Kim, congratulations on the continued execution and optimizing your funnel to really cross-sell and benefit from this low-power secular theme. So my first question is really more about risk management and balancing that. It's a good problem to have to be growing organically as fast as you have in the last few quarters and seemingly for next year. So can you maybe just give us a little color on, you know, we know you hired a lot more consultants this year. We know the employee counts up a lot. You're getting inbound inquiries also through your project managers. I'm just wondering how you kind of think about accepting larger projects and program management and just making sure that you're staffed without maybe having to pay overtime or onsite costs or, you know, actual travel and hotels for maybe a project that, you know, if you're jumping around. Just give us some color on that to really keep the margin up there.

Mike Bieber | President and Chief Executive Officer

Sure. Great question. We don't often get it from investors, but it's what we spend most of our time on day in and day out, Kim and I. on this risk management idea. You're right that you need to look, when you're growing organically at 20 plus percent, you need to look at the leading indicators to make sure that you're delivering effectively for those clients. And we look at everything from quality to health and safety to other factors, and we review them every week with every operating unit. The leading indicators look good, and we're not seeing issues that might say that we're taking on too much risk or growing too quickly, but we are growing quickly, and we're keeping our eye on that and keeping our eyes wide open. That's how I would describe it. Tim, do you have anything to add?

Kim Early | Executive Vice President and Chief Financial Officer

Yeah, the only thing I would add to that, Tim, is that these larger scale projects take a while to develop, and it's not necessarily a big surprise to us when we finally get awarded a project. It's not like we're waiting for some envelope to be opened at the end of a process, and we don't know what's going to happen there. We We are working on developing these projects for quite a long period of time, and we can see them coming, and we can get a pretty good feel from these clients that we may be in position to win. So we're able to look ahead and plan effectively as well as to what those risks are and how can we get those staffed and how can we make sure we're prepared to execute when the project finally does get awarded.

Mike Bieber | President and Chief Executive Officer

Yeah, Kim's right and points out correctly that a lot of these start out as T&M consulting projects. We're developing the project for months in advance. We're doing all of the engineering, and we may, with the client, decide to convert it to a fixed price or fixed unit price contract later on, but we're mitigating our risk significantly by working closely with the client up front in planning.

Tim Moore | Analyst, Clear Street

That's terrific, Collar. Yeah, you know, I'd realize that, you know, A big renewal like the Los Angeles Water and Power Department one, it's pretty well planned out. Just curious about the new first-time ones, and that's really helpful. My only other question is, as you cross-sell APG more, that's early innings, E3, software, civil engineering cross-selling, I'm just wondering, does your team, and maybe Kim and you can speak to this, do you prefer... smaller bolt-on acquisitions, or can you really tackle something that's maybe 100 million plus target and integrate it well and still be able to cross-sell it well without maybe taking some staff power off of the cross-selling team that's in the rest of the business as you really look at commercial electrical engineering or maybe interconnection?

Kim Early | Executive Vice President and Chief Financial Officer

Yeah, I think we've got pretty effective systems and communication devices, I guess, that we use for you know, the cross-selling activity. And, you know, so it's pretty efficient for us as we bring in these bolt-on acquisitions to establish that kind of cross-collaboration. But we're definitely prepared to be able to handle a $100 million kind of size group. You know, just culturally, we fit that way. Our tools are kind of designed to make sure that we'll be able to cross-collaborate without significant barriers on those projects. So we definitely keep our eye open for those kinds of opportunities, and we plan for that kind of potential acquisition as well. And, you know, whenever you make acquisitions of those sizes, The leadership on both sides of defense, our side and the company that's being acquired, the management teams are usually pretty anxious to get to know each other and to find out what the others are doing and how can we work together on that. And that's probably the most exciting piece to most of our team. So we're prepared to do that for sure.

Operator | Conference Operator

Thanks for those insights, and that's it for my questions. Thank you. Next question today is coming from Richard Eisenberg, a private investor. Your line is now live.

Richard Eisenberg | Private Investor

Good afternoon, guys, and congratulations on a great quarter.

Kim Early | Executive Vice President and Chief Financial Officer

Thanks, Richard.

Richard Eisenberg | Private Investor

On the last call, you talked about a potential $100 million contract with the state of New York. Is that still in the negotiation phase? Do you expect to close that?

Thank you. Mike Bieber | President and Chief Executive Officer

We have several large contracts in New York that we're pursuing. And yes, we remain very optimistic that we're going to be successful on one, if not several of those opportunities. And I think they're going to help drive 2026 growth.

Operator | Conference Operator

Thanks a lot, Mike. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Mike Bieber | President and Chief Executive Officer

Well, thank you all for attending, and we look forward to speaking with you soon.

Thank you. Thank you. Kevin | Conference Operator

That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day.

Mike Bieber | President and Chief Executive Officer

We thank you for your participation today. jsPDF 3.0.3 D:20260606090538-00'00'