Willdan's Q1 2025: Key Contradictions on LADWP Contracts, AI Integration, and Growth Expectations

LADWP contract ramping, AI integration in software, utility commission focus and energy efficiency, growth rate expectations, and expectations regarding acquisitions are the key contradictions discussed in Willdan's latest 2025Q1 earnings call.



Strong Financial Performance:
- Willdan Group reported record first quarter results for revenue, adjusted EBITDA, and EPS in 2025, with contracted net revenue growing 24% year-over-year, adjusted EBITDA rising 31%, GAAP diluted EPS increasing 52%, and adjusted diluted EPS up 58%.
- The growth was driven by consistent execution across all business lines and the completion of two acquisitions that expanded the company's geographical reach and electrical engineering capabilities.

Customer Segment Diversification:
- Pro forma for 2025, Willdan's commercial customers are forecasted to comprise 15% of its revenue, doubling the percentage from the previous year.
- The growth in the commercial segment is primarily due to electricity usage at data centers, driven by AI-driven load growth and technology clients navigating energy constraints.

Utility and Public Sector Performance:
- Willdan's utility business continues to perform well, supported by multiyear contracts funded by ratepayer fees, providing a strong revenue foundation.
- The public sector work for state and local governments is growing organically at a double-digit pace, with solid demand and a positive outlook, attributed to funding through user fees and municipal bonds.

Acquisitions and Strategic Investments:
- Willdan completed two acquisitions in Q1, expanding its geographical footprint and electrical engineering capabilities, demonstrating the company's strategic growth approach.
- The company also expanded its credit facility from $150 million to $200 million, enabling further scaling of its business.