Willdan Raises Outlook as Energy Growth Accelerates
Adjusted EBITDA climbed 51% to $33.0 million as margins widened.
Willdan Group (WLDN), the energy and engineering consulting company, reported second-quarter net revenue of $117.2 million, up 23.5% from a year earlier and including 18% organic growth.
The quarter marked a sharp acceleration from the first quarter, when net revenue grew 8.3%. Contract revenue rose 33.2% to $231.0 million, compared with 1.8% growth in the prior quarter, and increased 48.9% sequentially.
Net income climbed 57.7% to $24.3 million, while GAAP diluted earnings rose 53.4% to $1.58 a share. Operating income increased 67.0% to $19.7 million, expanding the operating margin to about 8.5% of contract revenue from 6.8% a year earlier.
Energy drove the gains, with segment net revenue rising 30.3% to $91.2 million and contract revenue increasing 38.1% to $202.6 million. Engineering and Consulting net revenue grew 4.2% to $26.1 million, while contract revenue rose 6.4%.
Adjusted EBITDA margin on net revenue widened to about 28.2% from 23.1% a year earlier and 19.6% in the first quarter. The improvement was due to favorable business mix, operating leverage and commercial-business growth. Gross margin on contract revenue narrowed to about 37.9% as subcontractor and other direct costs grew faster than revenue.
Willdan now expects 2024 net revenue of $415 million to $430 million, raising both ends of its previous range by $5 million. Its adjusted EBITDA target increased to $103 million to $107 million, and its adjusted diluted earnings forecast rose 10 cents at each end to $5.00 to $5.15 a share.
The latest targets extended a series of increases since February, when Willdan initially projected net revenue of $390 million to $405 million, adjusted EBITDA of $85 million to $90 million and adjusted earnings of $4.50 to $4.70 a share.
Cash conversion lagged the earnings growth. First-half operating cash flow fell 32.1% to $19.5 million as contract assets consumed $27.1 million, while cash declined to $34.9 million and notes payable increased to $67.2 million.