Willdan Group, Inc.

Q2 contract revenue increased 33% year over year to $231 million, net revenue increased 23% to $117 million, adjusted EBITDA increased 51% to a record $33 million, GAAP EPS increased 53% to $1.58, and adjusted EPS increased 38% to $2.07. Gross profit dollars rose 28%, while gross margin declined 150 basis points due to a shift toward performance engineering and commercial project revenue with heavier equipment and subcontractor load. For the first half, contract revenue rose 19% to $386 million, net revenue rose 16% to $210 million, gross margin was 39.0%, adjusted EBITDA rose 41% to $51.1 million, adjusted EPS was $2.98, and GAAP EPS was $2.13. Full-year 2026 guidance was raised to net revenue of $415 million-$430 million, adjusted EBITDA of $103 million-$107 million, and adjusted diluted EPS of $5.00-$5.15, assuming about 15.9 million diluted shares and a 0% effective tax rate for the year.

Mike Bieber framed the quarter as proof that Willdan’s strategy to expand in commercial markets is working, saying commercial revenue has become a “third leg to the stool” and now represents about a quarter of the business. He emphasized data centers, AI-driven load growth, battery storage, and larger, more complex projects as the main growth drivers, while also highlighting that the company’s new hubs across Florida, Georgia, North Carolina, Kentucky, and Texas are helping it serve projects nationwide. His tone was upbeat and confident, but he repeatedly noted that the company was being conservative on guidance because of uncertainty around the pace of large project ramps, especially LADWP.

Kim Early emphasized record quarterly profitability and improving operating leverage, citing 28.2% adjusted EBITDA margin on net revenue, up from prior periods and the highest quarterly margin in company history. She said G&A rose 20% year over year but declined to 29.3% of contract revenue, interest expense was 50% lower, and pretax income grew 88% to $19.1 million; net income was $24.3 million and GAAP EPS was $1.58. On cash and capital allocation, she said 12-month operating cash flow was $71 million, free cash flow was $62 million, net debt was $33 million, liquidity was $165 million, and the company expects the revolver to be fully repaid by year-end absent further acquisitions. She also said the 179D tax benefit supports cash flow for years, even though the P&L benefit ends after June, and reiterated a path to high-20% adjusted EBITDA margins over time.

Analysts pressed for more detail on the ramp of the $110 million LADWP expansion, with management saying the project was already ramping, authorization had been received for half of the expansion, and the work likely runs through Q3, Q4, and into early 2027, though timing remains uncertain. On Burton, management said cross-selling is bidirectional: Willdan is selling services into Burton clients while Burton’s HVAC and controls capabilities are already being used in two utility programs. Questions also focused on whether guidance was too conservative and on taxes; management said Q3 and Q4 should both be robust but not necessarily as strong as Q2, and clarified that the 179D benefit stops hitting the P&L after June, leaving the second half with a positive tax rate around 15% to 20% while cash benefits continue via deferred tax assets.