Willdan Group, Inc.

What they do

Willdan provides professional, technical and consulting services to utilities, private industry and public agencies. Services include energy planning and analytics, energy efficiency and sustainability, engineering, construction management, software and public finance. The company operates through two reporting segments: Energy and Engineering & Consulting. It was founded in 1964 and is headquartered in Anaheim, California.

Revenue drivers

• Energy segment — Addresses power grid resiliency, efficiency and reliability through energy planning studies, program design and implementation, grid modernization, and utility-scale electrical engineering. Clients include investor-owned and municipal utilities, commercial clients such as retailers, pharmaceuticals, industrials and hyperscalers, and government agencies.
• Engineering & Consulting segment — Provides municipal and civil engineering, building and safety, code enforcement, city engineering, construction management, planning, and financial advisory services. Clients are state and local governments, school districts, and utility districts.
• Commercial business — Management cited growth in commercial business as a driver of margin expansion in Q2 2026, serving commercial clients including retailers, pharmaceuticals, industrial concerns and hyperscalers.
• Subcontractor pass-through revenue — A portion of contract revenue is subcontractor services and other direct costs passed through to clients. In Q2 2026 these costs were $113.8 million of $231.0 million contract revenue, or 49.3%, leaving net revenue of $117.2 million.

Recent performance

Second quarter 2026 contract revenue was $231.0 million, up 33.2% from $173.5 million in Q2 2025. Net revenue was $117.2 million, up 23.5%, and net income was $24.3 million, up 57.7%. GAAP diluted EPS was $1.58, up 53.4%, and adjusted diluted EPS was $2.07, up 38.0%. Gross profit was $87.5 million (37.9% of contract revenue) versus $68.3 million (39.4%) a year earlier. The first half of fiscal 2026 had one fewer week than the first half of 2025.

Strategy

Willdan's growth strategy combines organic expansion and strategic acquisitions to broaden services for new and existing clients. Management sees opportunities from customers investing to meet growing electricity demand while improving grid reliability, resiliency and affordability. The company targets long-term annual revenue and net revenue growth of 15%-20% including acquisitions, and annual adjusted EBITDA to net revenue margin in the high 20s. It expects no future acquisitions in its FY2026 targets. It operates a nationwide office network across 22 states, the District of Columbia, Alberta Canada, and Puerto Rico.

Risks

• Project performance — Failure to complete projects on schedule, meet performance standards such as contractual energy savings requirements, or adequately perform could cause project losses.
• Client concentration — The company depends on work from its top ten clients, and its business with public and private utilities is concentrated in California and New York.
• Competitive market — Willdan operates in a highly competitive energy services market and must compete for contracts, including through bidding processes.
• Government budgets — Changes in state, local and regional economies and government budgets could reduce spending on the public-agency work that drives the Engineering & Consulting segment.

Outlook

For fiscal year 2026, management targets net revenue between $415 million and $430 million, adjusted EBITDA between $103 million and $107 million, and adjusted diluted EPS between $5.00 and $5.15. These targets assume 15.9 million diluted shares, a 0% effective tax rate, and no future acquisitions. Management said it raised its FY2026 targets based on strong performance and confidence in opportunities ahead.