Willdan's Q2 2026 Earnings Call: LADWP Timeline and Labor Market Claims Clash

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Date of Call: Aug 6, 2026

Financials Results

• Revenue: Contract revenue increased 33% YOY to $231M. Net revenue grew 23% to $117M.
• EPS: GAAP EPS increased 53% to $1.58. Adjusted EPS increased 38% to $2.07.
• Gross Margin: Gross margin declined 150 basis points YOY.
• Operating Margin: Adjusted EBITDA margin was 28.2%, a record and the highest quarterly margin in company history.

Guidance:

• Full-year 2026 net revenue expected in the range of $415 to $430 million.
• Full-year 2026 adjusted EBITDA expected in the range of $103 million to $107 million.
• Full-year 2026 adjusted diluted EPS expected between $5.00 and $5.15.
• Assumes ~15.9M diluted shares outstanding at year-end and 0% effective tax rate for the year.

Business Commentary:

Strong Financial Performance:

• Wilden Group reported a 33% year-over-year increase in contract revenue, reaching $231 million for the second quarter. Net revenue grew by 23% to $117 million, and adjusted EBITDA increased by 51% to a record $33 million.
• The significant growth was driven by robust demand across customer groups, particularly in the commercial sector, and the integration of recent acquisitions like APG, which is projected to triple its revenue.

Commercial Market Expansion:

• Commercial revenue now constitutes about a quarter of Wilden's business, with the largest portion coming from electricity at data centers.
• This growth is supported by the company's strategy to broaden its customer base, which includes strengths in engineering, software, procurement, and energy management capabilities.

Acquisitions and Diversification:

• The Burton Energy acquisition has already led to new customer relationships with companies like Walgreens, Carter's, and Five Below, and Burton is involved in two Wilden utility programs.
• The acquisition adds expertise in building HVAC and energy controls technology, as well as commercial energy procurement, enhancing Wilden's service offerings and cross-selling opportunities.

Project Success and Market Trends:

• Notable project wins include a $110 million solar streetlight contract with LADWP and a $53 million central plant upgrade for the City College of New York.
• These successes reflect trends of customers trusting Wilden with larger, more complex projects, broadening the company's customer base beyond traditional utility and government sectors.

Increased Battery Storage Opportunities:

• Wilden is seeing a growing pipeline of battery storage opportunities, often as part of larger projects that include planning, engineering, controls, renewable generation, and microgrid capabilities.
• The increasing demand for battery storage is driven by the need for more flexible power system solutions to manage peak demand and support renewable energy integration.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'We had a very strong second quarter' and 'We're raising our full-year financial targets.' They highlighted 'record profitability,' 'strong cash flows,' and being 'well-positioned to continue to invest in organic growth, pursue strategic acquisitions.'

Q&A:

• Question from Andrew (Roth Capital Partners): Can you talk about the ramp of the LADWP project in Q2 and how it plays out in the back half? Also, how does the new project extension win change the overall outlook?
  Response: The LADWP expansion adds $110M; half has authorization to proceed. It will ramp through Q3 into Q4 and early 2027, with exact Q3 contribution still uncertain. Management was conservative in guidance, but the contract could become their largest customer in 2027.

• Question from Andrew (Roth Capital Partners): On Burton cross-selling opportunities, are you seeing traction in both directions?
  Response: Cross-selling is bidirectional: Burton's clients are being engaged with Wheelan services, and Burton has been brought into two utility programs to leverage its new HVAC capabilities.

• Question from Tim Moore (Clear Street): What directs geographic diversification beyond California and New York?
  Response: Geographic expansion is driven by data center and battery storage projects being built nationwide. The company has established new hubs in Florida, Georgia, NC, KY, and Texas in the last 18 months.

• Question from Tim Moore (Clear Street): How do you allocate talent between new projects/advisory and long-tenured customers?
  Response: Commercial and utility customer teams are separate but collaborate. Labor is tight with rising costs for experienced hires, but no significant labor shortages have been observed.

• Question from Steven Warrafting (Web Bush Securities): Why is the guidance raised conservatively given strong Q2 beats?
  Response: Guidance is conservative due to uncertainty on the ramp rate of the LADWP expansion and other projects. Q3 and Q4 are expected to be robust, similar to Q2 but perhaps not as strong, with some acceleration into Q2 from performance contracting.

• Question from Steven Warrafting (Web Bush Securities): Why guide a 0% tax rate for the year when the 179D benefit expires in June?
  Response: The 179D benefit expires at end of June, so it won't apply to projects thereafter. The second half will have a positive income tax expense of 15-20%, but deferred tax assets will carry forward, avoiding cash payments.

Contradiction Point 1

Primary Driver of Geographic Diversification

Contradiction on whether data center development or a broader need to serve projects is the main reason for expansion.

Tim Moore (Clear Street) - Tim Moore (Clear Street)

2026Q2: The primary driver is the location of data center development, which is occurring nationwide. - Mike Bieber(CEO)

What factors drive geographic expansion into states like Texas and Florida beyond California and New York? - Tim Moore (Clear Street)

2026Q2: Geographic expansion is largely driven by the national growth of data centers, which requires power across the country. - Mike Bieber(CEO)

Contradiction Point 2

Characterization of Labor Market Conditions

Contradiction on whether labor is currently tight or if there is no significant shortage.

Tim Moore (Clear Street) - Tim Moore (Clear Street)

2026Q2: Labor is tight, especially for experienced specialists, with salaries increasing. - Mike Bieber(CEO)

How do you balance consultant allocation between new non-data-center projects and long-term customers when labor is tight? - Tim Moore (Clear Street)

2026Q2: There is no significant labor shortage, though experienced talent is competitive. - Mike Bieber(CEO)

Contradiction Point 3

LADWP Project Contribution and Growth Outlook

The magnitude and timing of the LADWP project's contribution to 2026 guidance are portrayed as significantly different.

Andrew (Roth Capital Partners) - Andrew (Roth Capital Partners)

2026Q2: The LADWP project was already ramping up from the beginning of the year... Revenue will ramp up through Q3, into Q4, and early 2027. ... This contract could become the company's largest customer in 2027, with potential for further expansion. - Mike Bieber(CEO)

How does the ramp of the LADWP project in Q2 and the new project extension impact the outlook for the back half of the year? - Tim Moore (Clear Street)

2026Q1: The LADWP contract did not significantly drive the guidance upgrade. It contributed a small amount in Q1, will increase in Q2, but is still relatively small. It represents a 'first inning' ramp-up... - Mike Bieber(CEO)

Contradiction Point 4

Labor Availability and Constraints

The assessment of labor availability as a constraint shifts from not being a constraint to being a tightening factor.

Tim Moore (Clear Street) - Tim Moore (Clear Street)

2026Q2: While there is no current labor shortage, labor is tight, especially for experienced specialists, with salaries increasing. - Mike Bieber(CEO)

How do you prioritize consultant and talent allocation between new non-data center projects and long-tenured customers when labor is tight? - Tim Moore (Clear Street)

2026Q1: Labor is not a significant constraint at this time, though there is a need to hire in specialized areas... - Mike Bieber(CEO) & Kim Early(CFO)

Contradiction Point 5

LADWP Project Ramp-Up Timeline

Contradiction on when the LADWP project's major revenue contribution begins.

Andrew (Roth Capital Partners) - Andrew (Roth Capital Partners)

2026Q2: Revenue will ramp up through Q3, into Q4, and early 2027... The exact Q3 contribution is still uncertain... - Mike Bieber(CFO)

How is the LADWP project ramping up in Q2 and what impact will it have in the back half of the year? - Timothy Michael Moore (Clear Street)

20260227-2025 Q4: The big ramp-up is expected in Q2 2026, with amendments in place and the contracting community ready. - Michael Bieber(CFO)

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