This article first appeared on GuruFocus .
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Contract Revenue:Increased 33% year over year to $231 million in Q2 2026.
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Net Revenue:Grew 23% to $117 million in Q2, with organic growth of 18%.
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Adjusted EBITDA:Rose 51% to a record $33 million, representing a record 28.2% margin on net revenue.
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GAAP Earnings Per Share:Increased 53% to $1.58 in Q2.
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Adjusted Earnings Per Share:Increased 38% to $2.07 in Q2.
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Gross Margin:Declined 150 basis points in Q2 due to revenue mix shift toward performance engineering and commercial projects.
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Pre-Tax Income:Grew 88% to $19.1 million in Q2.
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Net Income:Increased 58% to $24.3 million in Q2.
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First-Half Contract Revenue:Up 19% to $386 million year over year.
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First-Half Net Revenue:Increased 16% to $210 million.
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First-Half Adjusted EBITDA:Rose 41% to $51.1 million, or 24.4% of net revenue.
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First-Half Adjusted EPS:Grew 39% to $2.98 per share.
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First-Half GAAP EPS:Up 57% to $2.13 per share.
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Trailing 12-Month Contract Revenue:Increased 18% to $742 million.
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Trailing 12-Month Net Revenue:Increased 18% to $394 million.
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Trailing 12-Month Adjusted EBITDA:Grew 36% to $94.3 million.
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Trailing 12-Month Adjusted EPS:Increased 60% to $5.76.
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Cash Flow from Operations:$71 million over the last 12 months.
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Free Cash Flow:$62 million, or $4.04 per share, over the last 12 months.
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Net Debt:$33 million at quarter end, with a net debt to adjusted EBITDA ratio of 0.3 times.
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Full-Year 2026 Net Revenue Target:Raised to $415 million to $430 million.
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Full-Year 2026 Adjusted EBITDA Target:Raised to $103 million to $107 million.
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Full-Year 2026 Adjusted EPS Target:Raised to $5.00 to $5.15.
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Willdan Group Inc ( NASDAQ:WLDN ) delivered a record second quarter with contract revenue up 33% year-over-year to $231 million and net revenue up 23% to $117 million.
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Adjusted EBITDA increased 51% to a record $33 million, with a record 28.2% adjusted EBITDA margin on net revenue, the highest quarterly margin in company history.
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The company is successfully diversifying its customer base, with commercial revenue now representing about a quarter of the business, driven by strong demand from data centers and the APG acquisition.
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Willdan Group Inc ( NASDAQ:WLDN ) secured several significant contract wins, including a $110 million solar streetlight expansion with LADWP and a $53 million central plant upgrade for the City College of New York.
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The company raised its full-year 2026 financial targets, now expecting net revenue of $415 million to $430 million and adjusted EBITDA of $103 million to $107 million.
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Willdan Group Inc ( NASDAQ:WLDN ) maintains a strong balance sheet with low leverage (0.3 times net debt to adjusted EBITDA) and $165 million in total available liquidity, positioning it well for future growth and acquisitions.
Negative Points
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Gross margin declined 150 basis points in the second quarter due to a shift in revenue mix toward performance engineering and commercial project revenue, which carry a heavier load of equipment and subcontractors.
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The company noted that the record 28.2% adjusted EBITDA margin in Q2 is not expected to hold for the remainder of the year due to some acceleration of revenues into the quarter.
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Willdan Group Inc ( NASDAQ:WLDN ) faces uncertainty regarding the ramp-up of the LADWP project, which led to a more conservative full-year guidance despite strong Q2 performance.
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The 179D tax provision, which provided significant tax benefits, sunset at the end of June, resulting in an expected positive income tax expense of 15% to 20% in the second half of the year.
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G&A expenses increased 20% year-over-year, driven by higher stock compensation expense (up 51%) and increased non-cash charges for amortization of intangibles from acquisitions.
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The company acknowledged that labor is tight, with salaries for experienced professionals increasing, which could pressure future margins.
Q & A Highlights
Q: Can you break down the guidance further? The quarter saw significant beats on revenue, EBITDA, and EPS, yet the raise in guidance wasn't as sizable. Is there a lack of visibility or something else to touch on? A: Mike Bieber (President and CEO) explained that the biggest variable is the uncertainty around how quickly the LADWP project will ramp up over the next six months. They guided conservatively because the work could be completed in the second half of 2026 or spill into early 2027. Kim Early (EVP and CFO) added that Q3 and Q4 should be robust and similar to Q2, though Q2 benefited from some acceleration of utility program revenues and performance contracting activities that were originally forecasted for later quarters.
Q: Can you talk about the ramp of the LADWP project in Q2 and how it plays out in the back half of the year? How does the new $110 million project extension change the overall outlook? A: Mike Bieber (President and CEO) stated the project was already ramping up from the beginning of the year and wasn't expected to hit full run rate until early next year. With the $110 million expansion, they already have authorization to proceed on half of it. The ramp will continue through Q3 and into Q4 and early 2027. He noted they were "appropriately conservative" in their outlook, and LADWP could become their largest customer in 2027, with potential for further expansion beyond this contract.
Q: Regarding the tax line, you mentioned 179D benefits will continue for the foreseeable future. The 0% guidance implies a ~20% tax rate in the second half. Why not guide to another negative 10% if benefits continue? A: Kim Early (EVP and CFO) clarified that from a P&L standpoint, the 179D benefit expired at the end of June, though there will be some carryover for projects started before that date. The second half will have a positive income tax expense with a rate between 15% and 20%. However, from a cash standpoint, the significant deferred tax balance means they won't be sending checks to the government anytime soon, as the benefits carry forward.
Q: What directs your geographic diversification? Is it mostly data center and battery storage driven? How do you expand in states beyond California and New York? A: Mike Bieber (President and CEO) confirmed that data center development is driving geographic expansion. They've established permanent office hubs in Florida, Georgia, North Carolina, Kentucky, and Texas over the last 18 months. For the first time, they're performing projects in New Mexico, Montana, and Utah. Data centers are being built coast to coast, allowing them to gain experience and hire talent in the middle part of the country where they previously had less presence.
Q: Are you seeing traction with Burton cross-selling opportunities in both directions, or is it primarily one-way? A: Mike Bieber (President and CEO) confirmed the cross-selling is bidirectional. They've visited several of Burton's large clients with opportunities to provide new Willdan services to those existing relationships. Conversely, they've already brought Burton into two utility programs on the East and West Coasts because Burton has specific HVAC capabilities Willdan didn't previously have. Early signs look good in both directions.
Q: How do you make trade-offs on talent allocation between accepting new projects or advisory work for new customers versus servicing current long-tenured customers? Are you experiencing labor shortages? A: Mike Bieber (President and CEO) explained they have a dedicated group focused on commercial customers within their study practice, run by Kush Patel, while utility customers have separate teams that cross-collaborate. They haven't seen labor shortages in either area, though labor is tight. For experienced top performers, salaries are increasing, and they continue to hire.
Q: Can you provide more color on the margin performance? Q2 saw a record 28.2% adjusted EBITDA margin, but you noted this won't hold throughout the year. What's the expected trajectory? A: Kim Early (EVP and CFO) explained that Q2 reflected some acceleration of revenues that will impact the second half. While the 28.2% margin demonstrates the long-term goal of high-20% margins is achievable given the right revenue mix, they expect 2026 full-year adjusted EBITDA margin of approximately 25%, up from 21.8% in 2025. The margin expansion is driven by larger, more complex projects, commercial business growth, AI-enabled productivity, and operating platform scalability.
Q: What are the key drivers behind the strong organic growth, and how are recent acquisitions like APG, Compass, and Burton contributing? A: Mike Bieber (President and CEO) highlighted that commercial revenue, particularly from data centers, is now about a quarter of the business and is the fastest-growing part of Willdan. Revenue from the APG acquisition is projected to nearly triple this year to roughly $75 million. Burton Energy, acquired in May, is performing well with new customer relationships including Walgreens, Carter's, and Five Below. The acquisitions are broadening their customer base and creating cross-selling opportunities across their engineering, software, procurement, and energy management capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
