[10-Q] Willdan Group, Inc. Quarterly Earnings Report
Willdan Group (WLDN) reported stronger Q3 results. Contract revenue rose to $182.0 million from $158.3 million a year ago, lifting gross profit to $67.1 million and operating income to $14.9 million. Net income increased to $13.7 million with diluted EPS of $0.90 versus $0.51 last year. For the first nine months, contract revenue reached $507.9 million (from $421.7 million) and diluted EPS was $2.26 (from $1.05).
The balance sheet expanded as total assets rose to $507.9 million, including higher goodwill of $177.5 million from acquisitions. Cash was $33.1 million and stockholders’ equity increased to $283.1 million. Operating cash flow was $40.9 million year‑to‑date; investing used $40.3 million (including $33.4 million for acquisitions). The company refinanced on May 5, 2025, adding a $100.0 million revolver, a $50.0 million Term Loan A, and a $50.0 million delayed draw term loan maturing in 2030; $49.4 million was outstanding on TLA at quarter‑end, and the composite interest rate was 5.7%. As of November 5, 2025, 14,749,882 common shares were outstanding.
- None.
- None.
Insights
Q3 growth was solid, with higher revenue, EPS, and cash generation.
Willdan delivered higher contract revenue of
Cash from operations of
Execution depends on delivery under fixed price, time‑and‑materials, and unit‑based contracts and effective working capital management. Subsequent filings may provide detail on segment trends and backlog conversion.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of | | (IRS Employer Identification No.) |
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(Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
(Nasdaq Global Market) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ◻ | | |
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Non-accelerated filer ◻ | | Smaller reporting company |
| | Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 5, 2025, there were
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WILLDAN GROUP, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION | | 3 |
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Item 1. Financial Statements (Unaudited) | | 3 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 43 |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk | | 56 |
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Item 4. Controls and Procedures | | 57 |
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PART II. OTHER INFORMATION | | 58 |
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Item 1. Legal Proceedings | | 58 |
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Item 1A. Risk Factors | | 58 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | | 58 |
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Item 3. Defaults upon Senior Securities | | 59 |
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Item 4. Mine Safety Disclosures | | 59 |
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Item 5. Other Information | | 59 |
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Item 6. Exhibits | | 60 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q (this “10-Q”) contains statements that constitute forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995, as amended. These statements concern our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this 10-Q are forward-looking statements. These statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “potential,” “positioned,” “predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives and strategies are forward-looking statements.
These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results.
All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:
| ● | our ability to adequately complete projects in a timely manner; |
| ● | our ability to compete successfully in the highly competitive energy services market, which represented 84% of our consolidated revenue in fiscal year 2024; |
| ● | our reliance on work from our top ten clients, which accounted for 51% of our consolidated contract revenue for fiscal year 2024; |
| ● | changes in state, local and regional economies and government budgets; |
| ● | our ability to win new contracts, to renew existing contracts and to compete effectively for contracts awarded through bidding processes; |
| ● | our ability to make principal and interest payments on our outstanding debt as they come due and to comply with the financial covenants contained in our debt agreements; |
| ● | our ability to manage supply chain constraints, labor shortages, elevated interest rates, and elevated inflation; |
| ● | our ability to obtain financing and to refinance our outstanding debt as it matures; |
| ● | our ability to successfully integrate our acquisitions and execute on our growth strategy; and |
| ● | our ability to attract and retain managerial, technical, and administrative talent. |
The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements disclosed elsewhere in this Quarterly Report on Form 10-Q, and under Part I, Item 1A. “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our Annual Report on Form 10-K for the
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fiscal year ended December 27, 2024, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q and otherwise in the context of these risks and uncertainties.
Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, future developments or otherwise.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
| | | | | | | |
|
| October 3, |
| December 27, | | ||
| | 2025 | | 2024 | | ||
Assets | | ||||||
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | | | $ | | |
Restricted cash | | | | | | | |
Accounts receivable, net of allowance for doubtful accounts of $ | |
| | |
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Contract assets | |
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Other receivables | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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Equipment and leasehold improvements, net | |
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Goodwill | | | | | | | |
Right-of-use assets | | | | | | | |
Other intangible assets, net | | | | | | | |
Other assets | |
| | |
| | |
Deferred income taxes, net | | | | | | | |
Total assets | | $ | | | $ | | |
Liabilities and Stockholders’ Equity | | ||||||
Current liabilities: | | | | | | | |
Accounts payable | | $ | | | $ | | |
Accrued liabilities | |
| | |
| | |
Contingent consideration payable | | | | | | | |
Contract liabilities | |
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Notes payable | |
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Finance lease obligations | | | | | | | |
Lease liability | | | | | | | |
Total current liabilities | |
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Contingent consideration payable, less current portion | | | | | | | |
Notes payable, less current portion | | | | | | | |
Finance lease obligations, less current portion | |
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Lease liability, less current portion | | | | | | | |
Other noncurrent liabilities | | | | | | | |
Total liabilities | |
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Commitments and contingencies | | | | | | | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Preferred stock, $ | |
| — | |
| — | |
Common stock, $ | |
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Additional paid-in capital | |
| | |
| | |
Accumulated other comprehensive income (loss) | | | ( | | | ( | |
Retained earnings | |
| | |
| | |
Total stockholders’ equity | |
| | |
| | |
Total liabilities and stockholders’ equity | | $ | | | $ | | |
See accompanying notes to Condensed Consolidated Financial Statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | October 3, | | September 27, | | October 3, | | September 27, | ||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Contract revenue | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Direct costs of contract revenue (inclusive of directly related depreciation and amortization): | | | | | | | | | | | | |
Salaries and wages | |
| | |
| | |
| | |
| |
Subcontractor services and other direct costs | |
| | |
| | |
| | |
| |
Total direct costs of contract revenue | |
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| |
| | | | | | | | | | | | |
Gross profit | |
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| | |
| |
| | | | | | | | | | | | |
General and administrative expenses: | | | | | | | | | | | | |
Salaries and wages, payroll taxes and employee benefits | |
| | |
| | |
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| |
Facilities and facility related | |
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| |
Stock-based compensation | |
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| | |
| |
Depreciation and amortization | |
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Other | |
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Total general and administrative expenses | |
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Income (Loss) from operations | |
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| |
| | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | |
Interest expense, net | |
| ( | |
| ( | |
| ( | |
| ( |
Other, net | |
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| | |
| |
Total other expense, net | |
| ( | |
| ( | |
| ( | |
| ( |
| | | | | | | | | | | | |
Income (Loss) before income taxes | |
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Income tax (benefit) expense | |
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| | |
| ( | |
| |
Net income (loss) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Other comprehensive income (loss): | | | | | | | | | | | | |
Unrealized gain (loss) on derivative contracts, net of tax | | | ( | | | ( | | | ( | | | ( |
Comprehensive income (loss) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Earnings (Loss) per share: | | | | | | | | | | | | |
Basic | | $ | | | $ | | | $ | | | $ | |
Diluted | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Weighted-average shares outstanding: | | | | | | | | | | | | |
Basic | |
| | |
| | |
| | |
| |
Diluted | |
| | |
| | |
| | |
| |
See accompanying notes to Condensed Consolidated Financial Statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | | |
| | | | | | | Additional | | Other | | | | | | |||
| | Common Stock | | Paid-in | | Comprehensive | | Retained | | | | ||||||
|
| Shares |
| Amount |
| Capital |
| Income (Loss) |
| Earnings |
| Total | |||||
Balance at December 27, 2024 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with employee stock purchase plan |
| | | | — | | | | | | — | | | — | | | |
Shares of common stock issued in connection with incentive stock plan | | | | | — | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| ( | | | ( | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | | | | ( | | | — | | | — | | | — |
Stock issued to acquire businesses | | | | | | | | | | | — | | | — | | | |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | ( | | | — | | | ( |
Balance at April 4, 2025 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with incentive stock plan | | | | | | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| ( | | | — | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | — | | | — | | | — | | | — | | | — |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | | | | — | | | |
Balance at July 4, 2025 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with employee stock purchase plan |
| | | | | | | | | | — | | | — | | | |
Shares of common stock issued in connection with incentive stock plan | | | | | — | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| ( | | | — | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | | | | ( | | | — | | | — | | | — |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | ( | | | — | | | ( |
Balance at October 3, 2025 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
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WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | | |
| | | | | | | Additional | | Other | | | | | | |||
| | Common Stock | | Paid-in | | Comprehensive | | Retained | | | | ||||||
|
| Shares |
| Amount |
| Capital |
| Income (Loss) |
| Earnings |
| Total | |||||
Balance at December 29, 2023 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with employee stock purchase plan |
| | | | | | | | | | — | | | — | | | |
Shares of common stock issued in connection with incentive stock plan | | | | | — | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| ( | | | ( | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | | | | ( | | | — | | | — | | | — |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | | | | — | | | |
Balance at March 29, 2024 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with incentive stock plan | | | | | | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| — | | | — | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | — | | | — | | | — | | | — | | | — |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | | | | — | | | |
Balance at June 28, 2024 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
Shares of common stock issued in connection with employee stock purchase plan |
| | | | | | | | | | — | | | — | | | |
Shares of common stock issued in connection with incentive stock plan | | | | | | | | | | | — | | | — | | | |
Shares used to pay taxes on stock grants |
| ( | | | — | | | ( | | | — | | | — | | | ( |
Issuance of restricted stock award and units | | | | | — | | | — | | | — | | | — | | | — |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | — | | | |
Net income (loss) |
| — | | | — | | | — | | | — | | | | | | |
Net unrealized gain (loss) on derivative contracts | | — | | | — | | | — | | | ( | | | — | | | ( |
Balance at September 27, 2024 |
| | $ | | $ | | $ | ( | | $ | | $ | |||||
See accompanying notes to Condensed Consolidated Financial Statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| | | | | | |
| | Nine Months Ended | ||||
| | October 3, | | September 27, | ||
|
| 2025 |
| 2024 | ||
Cash flows from operating activities: | | | | | | |
Net income (loss) | | $ | | | $ | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | |
Depreciation and amortization | |
| | |
| |
Other non-cash items | | | | | | |
Deferred income taxes, net | |
| ( | |
| |
(Gain) loss on sale/disposal of equipment | |
| ( | |
| ( |
Provision for doubtful accounts | |
| | |
| |
Stock-based compensation | |
| | |
| |
Accretion and fair value adjustments of contingent consideration | | | | | | — |
Changes in operating assets and liabilities, net of effects from business acquisitions: | | | | | | |
Accounts receivable | |
| | |
| |
Contract assets | |
| ( | |
| ( |
Other receivables | |
| ( | |
| ( |
Prepaid expenses and other current assets | |
| ( | |
| ( |
Other assets | |
| ( | |
| |
Accounts payable | |
| | |
| |
Accrued liabilities | |
| | |
| |
Contract liabilities | |
| ( | |
| |
Right-of-use assets | |
| | |
| ( |
Net cash (used in) provided by operating activities | |
| | |
| |
Cash flows from investing activities: | | | | | | |
Purchase of equipment, software, and leasehold improvements | |
| ( | |
| ( |
Proceeds from sale of equipment | | | | | | |
Cash paid for acquisitions, net of cash acquired | | | ( | | | — |
Net cash (used in) provided by investing activities | |
| ( | |
| ( |
Cash flows from financing activities: | | | | | | |
Payments on notes payable | | | ( | | | ( |
Payments on debt issuance costs | | | ( | | | — |
Payments made to retire prior credit agreement | | | ( | | | — |
Borrowing to fund new credit agreement | | | | | | — |
Principal payments on outstanding debt | | | ( | | | ( |
Principal payments on finance leases | |
| ( | |
| ( |
Proceeds from stock option exercise | |
| | |
| |
Proceeds from sales of common stock under employee stock purchase plan | |
| | |
| |
Cash used to pay taxes on stock grants | | | ( | | | ( |
Net cash (used in) provided by financing activities | |
| ( | |
| ( |
Net increase (decrease) in cash, cash equivalents and restricted cash | |
| ( | |
| |
Cash, cash equivalents and restricted cash at beginning of period | |
| | |
| |
Cash, cash equivalents and restricted cash at end of period | | $ | | | $ | |
Supplemental disclosures of cash flow information: | | | | | | |
Cash paid (received) during the period for: | | | | | | |
Interest | | $ | | | $ | |
Income taxes | |
| | |
| |
Supplemental disclosures of noncash investing and financing activities: | | | | | | |
Issuance of common stock related to business acquisitions | | $ | | | $ | — |
Contingent consideration related to business acquisitions | | | | | | — |
Equipment acquired under finance leases | | | | | | |
See accompanying notes to Condensed Consolidated Financial Statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND OPERATIONS OF THE COMPANY
Willdan Group, Inc. (“Willdan” or the “Company”) is a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resources and infrastructures undergo continuous change, the Company helps organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions and government infrastructure. Through engineering, program management, policy advisory, and software and data management, the Company designs and delivers trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure.
The Company’s broad portfolio of services operates within
The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, “Organization and Operations of the Company”, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2024. In the opinion of management, all adjustments necessary to fairly state the Condensed Consolidated Financial Statements have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements and related notes thereto should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2024. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.
Fiscal Years
The Company operates and reports its annual financial results based on
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain prior year amounts have been reclassified in the condensed consolidated financial statements to conform to the current year presentation.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
2. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Recently Issued
In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Software” (“ASU 2025-06”). ASU 2025-06 removes references to prescriptive and sequential software development stages which are referred to as “project stages” throughout Subtopic 350-40. The amendment introduces a principles-based approach to capitalization of internal-use software costs and requires capitalization of software costs to begin when management has authorized and committed to funding the project and it is probable the project will be completed and used to perform the intended function. The amendments do not change what internal-use software costs can be capitalized or when such capitalization ceases. The amendments are effective for the annual reporting periods beginning
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 allows an entity to elect a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. The amendments are effective for the annual reporting periods beginning
In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity” (“ASU 2025-03”). ASU 2025-03 requires an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a Variable Interest Entity (“VIE”) that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer, rather than defaulting to the conclusion that the primary beneficiary is always the acquirer. The amendments are effective for the annual reporting periods beginning after December 15, 2026, and interim periods within those fiscal year reporting periods beginning
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)” (“ASU 2024-03”). ASU 2024-03 requires entities to disclose, in the notes to consolidated financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specific disclosures include the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption, as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Additionally, entities will need to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments are effective for the annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 amends the rules on income tax disclosures to require entities to disclose specific categories in the rate reconciliation, the income or loss from continuing operations before income tax
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(Unaudited)
expense or benefit (separated between domestic and foreign) and income tax expense or benefit from continuing operations (separated by federal, state, and foreign). In addition, ASU 2023-09 requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The amendments can be applied on a prospective basis although retrospective application is permitted. The amendments are effective for the annual reporting periods beginning after December 15, 2024, with
In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU 2023-06”). ASU 2023-06 amends U.S. GAAP to reflect updates and simplifications to certain disclosure and presentation requirements referred to FASB by the SEC. The targeted amendments incorporate 14 of the 27 disclosures referred by the SEC into codification. Each amendment in ASU 2023-06 is effective on either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes
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3. REVENUES
The Company enters into contracts with its clients that contain various types of pricing provisions, including fixed price, time-and-materials, and unit-based provisions. The Company recognizes revenues in accordance with ASU 2014-09, Revenue from Contracts with Customer, codified as ASC Topic 606 and the related amendments (collectively “ASC 606”). As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation.
The following table reflects the Company’s
Segment | Contract Type | Revenue Recognition Method |
| Time-and-materials | Time-and-materials |
Energy | Unit-based | Unit-based |
| Software license | Unit-based |
| Fixed price | Percentage-of-completion |
| Time-and-materials | Time-and-materials |
Engineering and Consulting | Unit-based | Unit-based |
| Fixed price | Percentage-of-completion |
Revenue on the vast majority of the Company’s contracts is recognized over time because of the continuous transfer of control to the customer. Revenue on fixed price contracts is recognized on the percentage-of-completion method based generally on the ratio of direct costs incurred-to-date to estimated total direct costs at completion. The Company uses the percentage-of-completion method to better match the level of work performed at a certain point in time in relation to the effort that will be required to complete a project. In addition, the percentage-of-completion method is a common method of revenue recognition in the Company’s industry.
Many of the Company’s fixed price contracts involve a high degree of subcontracted fixed price effort and, usually, are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. The Company recognizes revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of the Company’s time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, the Company recognizes the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying condensed consolidated balance sheets. The Company also derives revenue from software licenses and professional services and maintenance fees. In accordance with ASC 606, the Company performs an assessment of each contract to identify the performance obligations, determine the overall transaction price for the contract, allocate the transaction price to the performance obligations, and recognize the revenue when the performance obligations are satisfied. The Company utilizes the residual approach by which it estimates the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. The software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, or technical support. Related professional services include training and support services in which the standalone selling price is determined based on an input measure of hours incurred to total estimated hours and is recognized over time, which usually is the life of the contract.
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To determine the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined contract should be accounted for as one performance obligation. With respect to the Company’s contracts, it is rare that multiple contracts should be combined into a single performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to have a single performance obligation if the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, which is mainly because the Company provides a significant service of integrating a complex set of tasks and components into a single project or capability.
The Company may enter into contracts that include separate phases or elements. If each phase or element is negotiated separately based on the technical resources required and/or the supply and demand for the services being provided, the Company evaluates if the contracts should be segmented. If certain criteria are met, the contracts would be segmented which could result in revenues being assigned to the different elements or phases with different rates of profitability based on the relative value of each element or phase to the estimated total contract revenue. Segmented contracts may comprise up to approximately
Contracts that cover multiple phases or elements of the project or service lifecycle (development, construction and maintenance and support) may be considered to have multiple performance obligations even when they are part of a single contract. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. For the periods presented, the value of the separate performance obligations under contracts with multiple performance obligations (generally measurement and verification tasks under certain energy performance contracts) were not material. In cases where the Company does not provide the distinct good or service on a standalone basis, the primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company forecasts the Company’s expected costs of satisfying a performance obligation and then adds an appropriate margin for the distinct good or service.
The Company provides quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications and industry standards. The Company does not consider these types of warranties to be separate performance obligations.
In some cases, the Company has a master service or blanket agreement with a customer under which each task order releases the Company to perform specific portions of the overall scope in the service contract. Each task order is typically accounted for as a separate contract because the task order establishes the enforceable rights and obligations, and payment terms.
Under ASC 606, variable consideration should be considered when determining the transaction price and estimates should be made for the variable consideration component of the transaction price, as well as assessing whether an estimate of variable consideration is constrained. For certain of the Company’s contracts, variable consideration can arise from modifications to the scope of services resulting from unapproved change orders or customer claims. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on assessments of legal enforceability, the Company’s performance, and all information (historical, current and forecasted) that is reasonably available to the Company.
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Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company reviews and updates the Company’s contract-related estimates regularly through a company-wide disciplined project review process in which management reviews the progress and execution of the Company’s performance obligations and the estimate at completion (“EAC”). As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule and the related changes in estimates of revenues and costs. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer, among other variables.
The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the full amount of estimated loss in the period it is identified.
Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights or obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification that is not distinct from the existing contract on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
For contract modifications that result in the promise to deliver goods or services that are distinct from the existing contract and the increase in price of the contract is for the same amount as the standalone selling price of the additional goods or services included in the modification, the Company accounts for such contract modifications as a separate contract.
The Company includes claims to vendors, subcontractors and others as a receivable and a reduction in recognized costs when enforceability of the claim is established by the contract and the amounts are reasonably estimable and probable of being recovered. The amounts are recorded up to the extent of the lesser of the amounts management expects to recover or to costs incurred.
Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition.
Direct costs of contract revenue consist primarily of that portion of technical and nontechnical salaries and wages that has been incurred in connection with revenue producing projects. Direct costs of contract revenue also include production expenses, subcontractor services and other expenses that are incurred in connection with revenue producing projects.
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(Unaudited)
Direct costs of contract revenue exclude that portion of technical and nontechnical salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all Company personnel are included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income since
Included in revenue and costs are all reimbursable costs for which the Company has the risk or on which the fee was based at the time of bid or negotiation. No revenue or cost is recorded for costs in which the Company acts solely in the capacity of an agent and has no risks associated with such costs.
Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based upon a review of all outstanding amounts on a quarterly basis. Management determines allowances for doubtful accounts through specific identification of amounts considered to be uncollectible and potential write-offs, plus a non-specific allowance for other amounts for which some potential loss has been determined to be probable based on current and past experience. The Company’s historical credit losses have been minimal with governmental entities and large public utilities, but disputes may arise related to these receivable amounts. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.
Retainage, included in contract assets, represents amounts withheld from billings to the Company’s clients pursuant to provisions in the contracts and may not be paid to the Company until specific tasks are completed or the project is completed and, in some instances, for even longer periods. As of October 3, 2025 and December 27, 2024, contract assets included retainage of $
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(Unaudited)
4. SUPPLEMENTAL FINANCIAL STATEMENT DATA
Restricted Cash
The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows:
| | | | | | |
| | October 3, | | December 27, | ||
|
| 2025 |
| 2024 | ||
| | (in thousands) | ||||
Cash and cash equivalents | | $ | | | $ | |
Restricted cash | |
| — | |
| — |
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows | | $ | | | $ | |
Under certain utility contracts, the Company periodically receives cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. The Company acts solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, the Company classifies these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on the Company’s working capital or operating cash flows, these cash receipts are presented in the condensed consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”
Equipment and Leasehold Improvements
| | | | | | |
| | October 3, | | December 27, | ||
|
| 2025 |
| 2024 | ||
| | (in thousands) | ||||
Furniture and fixtures | | $ | | | $ | |
Computer hardware and software | |
| | |
| |
Leasehold improvements | |
| | |
| |
Equipment under finance leases | |
| | |
| |
Automobiles, trucks, and field equipment | |
| | |
| |
Subtotal | |
| | |
| |
Accumulated depreciation and amortization | |
| ( | |
| ( |
Equipment and leasehold improvements, net | | $ | | | $ | |
Included in accumulated depreciation and amortization is $
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(Unaudited)
Accrued Liabilities
| | | | | | |
| | October 3, | | December 27, | ||
|
| 2025 |
| 2024 | ||
| | (in thousands) | ||||
Accrued subcontractor costs | | $ | | | $ | |
Accrued bonuses | | | | | | |
Employee withholdings | |
| | |
| |
Compensation and payroll taxes | |
| | |
| |
Rebate and other | | | — | | | |
Accrued accounting costs and taxes | |
| | |
| |
Total accrued liabilities | | $ | | | $ | |
Goodwill
| | | | | | | | | | | | |
| | December 27, | | Additional | | Additions / | | October 3, | ||||
|
| 2024 |
| Purchase Cost |
| Adjustments |
| 2025 | ||||
| | (in thousands) | ||||||||||
Reporting Unit: | | | | | | | | | | | | |
Energy | | $ | | | $ | | | $ | — | | $ | |
Engineering and Consulting | | | | | | | | | — | | | |
| | $ | | | $ | | | $ | — | | $ | |
The Company tests its goodwill at least annually for possible impairment. The Company completes its annual testing of goodwill as of the last day of the first month of its fourth fiscal quarter each year to determine whether there is a potential impairment. In addition to the Company’s annual test, it regularly evaluates whether events and circumstances have occurred that may indicate a potential impairment of goodwill. The Company evaluated the current economic environment and noted that it does not believe it is more likely than not that goodwill was impaired as of October 3, 2025.
Intangible Assets
| | | | | | | | | | | | | | | | | | |
| | October 3, 2025 | | December 27, 2024 | | | | | | | ||||||||
| | Gross | | Accumulated | | Gross | | Accumulated | | Amortization | ||||||||
|
| Amount |
| Amortization |
| Amount |
| Amortization |
| Period | ||||||||
| | (in thousands) | | (in years) | ||||||||||||||
Finite: | | | | | | | | | | | | | | | | | | |
Backlog | | $ | | | $ | | | $ | | | $ | | | |||||
Tradename | | | | | | | | | | | | |
| | - | | ||
Non-compete agreements | | | | | | | | | | | | | | | - | | ||
Developed technology | | | | | | | | | | | | | | |||||
Customer relationships | | | | | | | | | | | | | | | - | | ||
Total intangible assets | | $ | | | $ | | | $ | | | $ | | | | | | | |
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5. DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses certain interest rate derivative contracts to hedge interest rate exposures on its variable rate debt. The Company’s hedging program is not designated for trading or speculative purposes.
The Company recognizes derivative instruments as either assets or liabilities on the accompanying condensed consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in its consolidated balance sheets as accumulated other comprehensive income (loss), and in its consolidated statements of comprehensive income (loss) as a loss or gain on cash flow hedge valuation. All related cash flows are reported in the operating activities section of the consolidated statements of cash flows.
On
The fair values of the Company’s outstanding derivatives designated as hedging instruments were as follows:
| | | | | | | | |
|
| |
| Fair Value of Derivative | ||||
|
| |
| Instruments as of | ||||
| | Balance Sheet Location | | October 3, 2025 | | December 27, 2024 | ||
| | | | (in thousands) | ||||
Interest rate swap agreement | | Accrued liabilities | | $ | ( | | $ | ( |
Interest rate swap agreement | | Other noncurrent liabilities | | | — | | | ( |
The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on other comprehensive income (loss) was immaterial to the Company’s condensed consolidated financial statements for the three and nine months ended October 3, 2025.
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(Unaudited)
The accumulated balances and reporting period activities for the periods below related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows:
| | | | | | |
| | Gain (Loss) on | | Accumulated Other | ||
| | Derivative Instruments |
| Comprehensive Income (Loss) | ||
| | (in thousands) | ||||
Balances at December 27, 2024 | | $ | ( | | $ | ( |
Other comprehensive income (loss) before reclassifications | | | ( | | | ( |
Amounts reclassified from accumulated other comprehensive income (loss) | | | — | | | — |
Income tax benefit (expense) related to derivative instruments | | | | | ||
Net current-period other comprehensive income (loss) | | | ( | | | ( |
Balances at April 4, 2025 | | $ | ( | | $ | ( |
Other comprehensive income (loss) before reclassifications | | | | | | |
Amounts reclassified from accumulated other comprehensive income (loss) | | | — | | | — |
Income tax benefit (expense) related to derivative instruments | | | ( | | | ( |
Net current-period other comprehensive income (loss) | | | | | | |
Balances at July 4, 2025 | | $ | ( | | $ | ( |
Other comprehensive income (loss) before reclassifications | | | ( | | | ( |
Amounts reclassified from accumulated other comprehensive income (loss) | | | — | | | — |
Income tax benefit (expense) related to derivative instruments | | | | | ||
Net current-period other comprehensive income (loss) | | | ( | | | ( |
Balances at October 3, 2025 | | $ | ( | | $ | ( |
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(Unaudited)
6. DEBT OBLIGATIONS
Debt obligations, excluding obligations under finance leases (see Note 7, “Leases”, below), consisted of the following:
| | | | | | |
|
| October 3, |
| December 27, | ||
| | 2025 | | 2024 | ||
| | (in thousands) | ||||
New Credit Agreement | | | | | | |
Outstanding borrowings on Term Loan A | | $ | | | $ | — |
Outstanding borrowings on Revolving Credit Facility | | | — | | | — |
Outstanding borrowings on Delayed Draw Term Loan | | | — | | | — |
Prior Credit Agreement | | | | | | |
Outstanding borrowings on Term Loan | | | — | | | |
Outstanding borrowings on Revolving Credit Facility | | | — | | | — |
Other debt agreements | | | — | | | |
Total debt | | | | | | |
Issuance costs and debt discounts | | | ( | | | ( |
Subtotal | | | | | | |
Less current portion of long-term debt | |
| | |
| |
Long-term debt portion | | $ | | | $ | |
Prior Credit Agreement
On
The Prior Credit Agreement provided for (i) a $
Borrowings under the Prior Credit Facilities bore interest at either a Base Rate (as defined in the Prior Credit Agreement) or the adjusted Secured Overnight Financing Rate (“SOFR”), at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranged from
The prior Term Loan amortized quarterly in an amount equal to (i)
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(Unaudited)
Prior Credit Agreement Closing Date, with a final payment of all then remaining principal and interest due on the maturity date of
Willdan Group, Inc. was the borrower under the Prior Credit Agreement and its obligations under the Prior Credit Agreement were guaranteed by its present and future domestic subsidiaries (other than inactive subsidiaries). In addition, subject to certain exceptions, all such obligations were secured by substantially all of the assets of Willdan Group, Inc. and the subsidiary guarantors (other than inactive subsidiaries).
The Prior Credit Agreement required compliance with financial covenants, including a maximum Net Leverage Ratio and a minimum Fixed Charge Coverage Ratio (as defined in the Prior Credit Agreement). The Prior Credit Agreement also contained customary restrictive covenants, including (i) restrictions on the incurrence of additional indebtedness and additional liens on property, (ii) restrictions on permitted acquisitions and other investments and (iii) limitations on asset sales, mergers and acquisitions. Further, the Prior Credit Agreement limited the Company’s payment of future dividends and distributions and share repurchases by the Company. Subject to certain exceptions, the borrowings under the Prior Credit Agreement were also subject to mandatory prepayment from (a) any issuances of debt or equity securities, (b) any sale or disposition of assets, (c) insurance and condemnation proceeds, and (d) a percentage of excess cash flow. The Prior Credit Agreement included customary events of default.
Amended and Restated Credit Agreement
On
Pursuant to the Amended and Restated Credit Agreement, borrowings under the Amended and Restated Credit Facilities bear interest at either a Base Rate (as defined in the Amended and Restated Credit Agreement) or the adjusted SOFR, at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranges from
The TLA will amortize quarterly in an amount equal to
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(Unaudited)
remaining principal and interest due on the maturity date of
The TLA issuance costs are amortized to interest expense over the term of the TLA, and as of October 3, 2025, issuance costs of $
Willdan Group, Inc. is the borrower under the Amended and Restated Credit Agreement and its obligations under the Amended and Restated Credit Agreement are guaranteed by its present and future domestic subsidiaries (other than inactive subsidiaries). In addition, subject to certain exceptions, all such obligations are secured by substantially all of the assets of Willdan Group, Inc. and the subsidiary guarantors (other than inactive subsidiaries).
The Amended and Restated Credit Agreement requires compliance with financial covenants, including a maximum Net Leverage Ratio and a minimum Fixed Charge Coverage Ratio (as defined in the Credit Agreement). The Amended and Restated Credit Agreement also contains customary restrictive covenants, including (i) restrictions on the incurrence of additional indebtedness and additional liens on property, (ii) restrictions on permitted acquisitions and other investments and (iii) limitations on asset sales, mergers and acquisitions. Further, the Amended and Restated Credit Agreement limits the Company’s payment of future dividends and distributions and share repurchases by the Company. Subject to certain exceptions, the borrowings under the Amended and Restated Credit Agreement are also subject to mandatory prepayment from (a) any issuances of debt or equity securities, (b) any sale or disposition of assets, (c) insurance and condemnation proceeds, and (d) a percentage of Excess Cash Flow, as defined in the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement includes customary events of default.
As of October 3, 2025, the Company was in compliance with all these covenants contained in the Amended and Restated Credit Agreement. In addition, as of October 3, 2025, the Company’s composite interest rate, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, was
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
7. LEASES
The Company leases certain office facilities under long-term, non-cancellable operating leases that expire at various dates through 2034. In addition, the Company is obligated under finance leases for certain furniture and office equipment that expire at various dates through 2029.
From time to time, the Company enters into non-cancelable leases for some of its facility and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities and equipment rather than purchasing them. The Company’s leases typically have remaining terms ranging from one to
Financing Leases
The Company leases certain equipment under financing leases. The economic substance of the leases is a financing transaction for acquisition of equipment and leasehold improvements. Accordingly, the right-of-use assets for these leases are included in the balance sheets in equipment and leasehold improvements, net of accumulated depreciation, with a corresponding amount recorded in current portion of financing lease obligations or noncurrent portion of financing lease obligations, as appropriate. The financing lease assets are amortized over the life of the lease or, if shorter, the life of the leased asset, on a straight-line basis and included in depreciation expense. The interest associated with financing lease obligations is included in interest expense.
Right-of-use assets
Operating leases are included in right-of-use assets, and current portion of lease liability and noncurrent portion of lease liability, as appropriate. Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate to calculate present value, the Company determines this rate by estimating the Company’s incremental borrowing rate at the lease commencement date. The right-of-use asset also includes any lease payments made and initial direct costs incurred at lease commencement and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following is a summary of the Company’s lease expense:
| | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended | ||||||||
| October 3, | | September 27, | | October 3, | | September 27, | ||||
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
| (in thousands) | | (in thousands) | ||||||||
Operating lease cost | $ | | | $ | | | $ | | | $ | |
Sublease Income | | ( | | | ( | | | ( | | | ( |
Finance lease cost: | | | | | | | | | | | |
Amortization of assets | | | | | | | | | | | |
Interest on lease liabilities | | | | | | | | | | | |
Total net lease cost | $ | | | $ | | | $ | | | $ | |
The following is a summary of lease information presented on the Company’s consolidated balance sheet:
| | | | | | | |
| | October 3, |
| December 27, | | ||
| | 2025 | | 2024 | | ||
| | (in thousands) | | ||||
Operating leases: | | | | | | | |
Right-of-use assets | | $ | | | $ | | |
| |
| | |
| | |
Lease liability | | $ | | | $ | | |
Lease liability, less current portion | |
| | |
| | |
Total lease liabilities | | $ | | | $ | | |
| |
| | |
| | |
Finance leases (included in equipment and leasehold improvements, net): | | | | | | | |
Equipment and leasehold improvements, net | | $ | | | $ | | |
Accumulated depreciation | |
| ( | |
| ( | |
Total equipment and leasehold improvements, net | | $ | | | $ | | |
| |
| | | | | |
Finance lease obligations | | $ | | | $ | | |
Finance lease obligations, less current portion | | | | | | | |
Total finance lease obligations | | $ | | | $ | | |
| | | | | | | |
Weighted average remaining lease term (in years): | | | | | | | |
Operating Leases | | | | | | ||
Finance Leases | | | | | | ||
| | | | | | | |
Weighted average discount rate: | | | | | | | |
Operating Leases | | | % | | % | ||
Finance Leases | | | % | | % | ||
Rent expense was $
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following is a summary of other information and supplemental cash flow information related to finance and operating leases:
| | | | | | |
| | Nine Months Ended | ||||
| | October 3, | | September 27, | ||
| | 2025 |
| 2024 | ||
| | (in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
Operating cash flow from operating leases | | $ | | | $ | |
Operating cash flow from finance leases | | | | | | |
Financing cash flow from finance leases | | | | | | |
| | | | | | |
Right-of-use assets obtained in exchange for lease liabilities: | | | | | | |
Operating leases | | $ | | | $ | |
The following is a summary of the Company’s maturities of lease liabilities as of October 3, 2025:
| | | | | | | |
|
| Operating |
| Finance |
| ||
| | (in thousands) | | ||||
Fiscal year: | | | | | | | |
Remainder of 2025 | | $ | | | $ | | |
2026 | |
| | |
| | |
2027 | |
| | | | | |
2028 | | | | | | | |
2029 | | | | |
| | |
2030 and thereafter | |
| | |
| | |
Total lease payments | | | | | | | |
Less: Imputed interest | |
| ( | | | ( | |
Total lease obligations | |
| | | | | |
Less: Current obligations | |
| | | | | |
Noncurrent lease obligations | | $ | | | $ | | |
The imputed interest for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the effect of discounting the operating lease payments to their present value.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
8. COMMITMENTS AND VARIABLE INTEREST ENTITIES
Employee Benefit Plans
The Company has a qualified profit sharing plan pursuant to Code Section 401(a) and qualified cash or deferred arrangement pursuant to Code Section 401(k) covering all employees. Employees may elect to contribute up to
The Company’s defined contribution plan (the “Plan”) covers employees who have completed
During the nine months ended October 3, 2025 and September 27, 2024, the Company made matching contributions of $
Variable Interest Entities
On March 4, 2016, the Company and the Company’s wholly-owned subsidiary, Willdan Energy Solutions, Inc. (“WES”), acquired substantially all of the assets of Genesys Engineering, P.C. (“Genesys”) and assumed certain specified liabilities of Genesys (collectively, the “Purchase”) pursuant to an Asset Purchase and Merger Agreement, dated as of February 26, 2016 (the “Agreement”), by and among Willdan Group, Inc., WES, WESGEN (as defined below), Genesys and Ronald W. Mineo (“Mineo”) and Robert J. Braun (“Braun” and, together with Mineo, the “Genesys Shareholders”). On March 5, 2016, pursuant to the terms of the Agreement, WESGEN, Inc., a non-affiliated corporation (“WESGEN”), merged (the “Merger” and, together with the Purchase, the “Acquisition”) with Genesys, with Genesys remaining as the surviving corporation. Genesys was acquired to strengthen the Company’s power engineering capability in the northeastern U.S., and also to increase client exposure and experience with universities.
Genesys continues to be a professional corporation organized under the laws of the State of New York, wholly-owned by one or more licensed engineers. Pursuant to New York law, the Company does not own capital stock of Genesys. The Company has entered into an agreement with the Shareholder of Genesys pursuant to which the Shareholder will be prohibited from selling, transferring or encumbering the Shareholder’s ownership interest in Genesys without the Company’s consent. Notwithstanding the Company’s rights regarding the transfer of Genesys’s stock, the Company does not have control over the professional decision making of Genesys’s engineering services. The Company has entered into an administrative services agreement with Genesys pursuant to which WES will provide Genesys with ongoing administrative, operational and other non-professional support services. Genesys pays WES a service fee, which consists of all of the costs incurred by WES to provide the administrative services to Genesys plus
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The Company manages Genesys and has the power to direct the activities that most significantly impact Genesys’s performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, the Company is the primary beneficiary of Genesys and consolidates Genesys as a variable interest entity (“VIE”). In addition, the Company concluded there is no noncontrolling interest related to the consolidation of Genesys because the Company determined that (i) the shareholder of Genesys does not have more than a nominal amount of equity investment at risk, (ii) WES absorbs the expected losses of Genesys through its deferral of Genesys’s service fees owed to WES and the Company has, since entering into the administrative services agreement, had to continuously defer service fees for Genesys, and (iii) the Company believes Genesys will continue to have a shortfall on payment of its service fees for the foreseeable future, leaving no expected residual returns for the shareholder. As of October 3, 2025, the Company had
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
9. SEGMENT AND GEOGRAPHICAL INFORMATION
Segment Information
The Company’s
In accordance with ASU 2023-07, the Company’s chief operating decision maker (“CODM”) evaluates the performance of each segment based upon the information provided below.
There were no intersegment sales during the three and nine months ended October 3, 2025 and September 27, 2024. In addition, enterprise-wide service line contract revenue is not included as it is impracticable to report this information for each group of similar services.
| | | | | | | | | | | | | | | |
| | | | Engineering | | Unallocated | | | | | Consolidated | ||||
|
| Energy |
| & Consulting |
| Corporate |
| Intersegment |
| Total (1) | |||||
| | (in thousands) | |||||||||||||
Fiscal Three Months Ended October 3, 2025 | | | | | | | | | | | | | | | |
Contract revenue | | $ | | | $ | | | $ | - | | $ | - | | $ | |
Direct subcontractor services and other direct costs | | | | | | | | | - | | | - | | | |
Direct salaries and wages | | | | | | | | | - | | | - | | | |
Gross profit | | | | | | | | | - | | | - | | | |
Other indirect costs | | | | | | | | | | | | - | | | |
EBITDA (2) | | | | | | | | | ( | | | - | | | |
Interest expense, net | | | - | | | - | | | | | | - | | | |
Depreciation and amortization | | | | | | | | | - | | | - | | | |
Segment profit (loss) before income tax expense | | | | | | | | | ( | | | - | | | |
Income tax expense (benefit) | | | | | | | | | ( | | | - | | | |
Net income (loss) | | | | | | | | | ( | | | - | | | |
Segment assets (3) | | | | | | | | | | | | ( | | | |
Fiscal Nine Months Ended October 3, 2025 | | | | | | | | | | | | | | | |
Contract revenue | | $ | | | $ | | | $ | - | | $ | - | | $ | |
Direct subcontractor services and other direct costs | | | | | | | | | - | | | - | | | |
Direct salaries and wages | | | | | | | | | - | | | - | | | |
Gross profit | | | | | | | | | - | | | - | | | |
Other indirect costs | | | | | | | | | | | | - | | | |
EBITDA (2) | | | | | | | | | ( | | | - | | | |
Interest expense, net | | | - | | | - | | | | | | - | | | |
Depreciation and amortization | | | | | | | | | - | | | - | | | |
Segment profit (loss) before income tax expense | | | | | | | | | ( | | | - | | | |
Income tax expense (benefit) | | | ( | | | ( | | | | | | - | | | ( |
Net income (loss) | | | | | | | | | ( | | | - | | | |
Segment assets (3) | | | | | | | | | | | | ( | | | |
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | “EBITDA” is defined as earnings before interest, taxes, depreciation and amortization. |
| (3) | Segment assets are presented net of intercompany receivables. |
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
| | | | | | | | | | | | | | | |
| | | | Engineering | | Unallocated | | | | | Consolidated | ||||
|
| Energy |
| & Consulting |
| Corporate |
| Intersegment |
| Total (1) | |||||
| | (in thousands) | |||||||||||||
Fiscal Three Months Ended September 27, 2024 | | | | | | | | | | | | | | | |
Contract revenue | | $ | | | $ | | | $ | - | | $ | - | | $ | |
Direct subcontractor services and other direct costs | | | | | | | | | - | | | - | | | |
Direct salaries and wages | | | | | | | | | - | | | - | | | |
Gross profit | | | | | | | | | - | | | - | | | |
Other indirect costs | | | | | | | | | | | | - | | | |
EBITDA (2) | | | | | | | | | ( | | | - | | | |
Interest expense, net | | | - | | | - | | | | | | - | | | |
Depreciation and amortization | | | | | | | | | - | | | - | | | |
Segment profit (loss) before income tax expense | | | | | | | | | ( | | | - | | | |
Income tax expense (benefit) | | | ( | | | | | | | | | - | | | |
Net income (loss) | | | | | | | | | ( | | | - | | | |
Segment assets (3) | | | | | | | | | | | | ( | | | |
Fiscal Nine Months Ended September 27, 2024 | | | | | | | | | | | | | | | |
Contract revenue | | $ | | | $ | | | $ | - | | $ | - | | $ | |
Direct subcontractor services and other direct costs | | | | | | | | | - | | | - | | | |
Direct salaries and wages | | | | | | | | | - | | | - | | | |
Gross profit | | | | | | | | | - | | | - | | | |
Other indirect costs | | | | | | | | | | | | - | | | |
EBITDA (2) | | | | | | | | | ( | | | - | | | |
Interest expense, net | | | - | | | - | | | | | | - | | | |
Depreciation and amortization | | | | | | | | | - | | | - | | | |
Segment profit (loss) before income tax expense | | | | | | | | | ( | | | - | | | |
Income tax expense (benefit) | | | | | | | | | ( | | | - | | | |
Net income (loss) | | | | | | | | | ( | | | - | | | |
Segment assets (3) | | | | | | | | | | | | ( | | | |
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | “EBITDA” is defined as earnings before interest, taxes, depreciation and amortization. |
| (3) | Segment assets are presented net of intercompany receivables. |
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following tables provide information about disaggregated revenue by contract type, client type and geographical region:
| | | | | | | | | |
|
| Three months ended October 3, 2025 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | | $ | | $ | |||
Unit-based | | | | | | | |||
Fixed price | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | | $ | | $ | |||
Government | | | | | | | |||
Utilities (2) | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | | $ | | $ | | ||
| | | | | | | | | |
| | | | | | | | | |
|
| Nine months ended October 3, 2025 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | | $ | | $ | |||
Unit-based | | | | | | | |||
Fixed price | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | | $ | | $ | |||
Government | | | | | | | |||
Utilities (2) | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | | | $ | | | $ | |
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
| | | | | | | | | |
|
| Three months ended September 27, 2024 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | | $ | | $ | |||
Unit-based | | | | | | | |||
Fixed price | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | | $ | | $ | |||
Government | | | | | | | |||
Utilities (2) | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | | $ | | $ | | ||
| | | | | | | | | |
| | | | | | | | | |
|
| Nine months ended September 27, 2024 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | | $ | | $ | |||
Unit-based | | | | | | | |||
Fixed price | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | | $ | | $ | |||
Government | | | | | | | |||
Utilities (2) | | | | | | | |||
Total (1) | | $ | | $ | | $ | |||
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | | | $ | | | $ | |
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | Includes the portion of revenue related to small business programs paid by the end user/customer. |
| (3) | Revenue from the Company’s foreign operations was not material for the three and nine months ended October 3, 2025 and September 27, 2024. |
Geographical Information
Substantially all of the Company’s consolidated revenue was derived from its operations in the U.S. The Company operates through a network of offices spread across
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Customer Concentration
For the three and nine months ended October 3, 2025, the Company’s top 10 customers accounted for
For the three and nine months ended October 3, 2025, the Company had individual customers that accounted for more than 10% of its consolidated contract revenue. For the three months ended October 3, 2025, the Company derived
On a segment basis, the Company had individual customers that accounted for more than 10% of its segment contract revenues. For the three months ended October 3, 2025, the Company derived
On a geographical basis, through the nine months ended October 3, 2025, the Company’s largest clients are based in California, New York, and Nevada. For the three and nine months ended October 3, 2025, services provided to clients in California accounted for
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
10. INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities, subject to a judgmental assessment of the recoverability of deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets may not be realized. Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical income (loss) adjusted for the effects of non-recurring items and the impact of recent business combinations. Areas of estimation include the Company’s consideration of future taxable income which is driven by verifiable signed contracts and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, the Company would adjust the related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.
At the end of fiscal year 2024, the Company’s total valuation allowance was $
For acquired business entities, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment, and the Company records the offset to goodwill. The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense.
The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. During the three and nine months October 3, 2025, and the three and nine months ended September 27, 2024, the Company did
Based on the Company’s estimates and determination of an effective tax rate for the year, the Company recorded an income tax expense of $
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA makes permanent some key tax provisions for tax year 2025, including 100% bonus depreciation, immediate expensing of domestic research costs, and increased limitations for deducting business interest expense. In addition, the OBBBA includes key tax provisions that will take effect in future tax years, such as reduced deductions available for foreign derived income and the repeal of the energy-efficiency building deduction under Section 179D for property for which construction begins after June 30, 2026. ASC 740 requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Accordingly, the effects of the OBBBA have been incorporated into the income tax provision computation for this period ended October 3, 2025, and the impact was not material to the condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
11. EARNINGS PER SHARE (“EPS”)
Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period. Potential common shares include the weighted-average dilutive effects of outstanding stock options and restricted stock awards using the treasury stock method.
The following table sets forth the number of weighted-average common shares outstanding used to compute basic and diluted EPS:
| | | | | | | | | | | | |
| | Three months ended | | Nine months ended | ||||||||
| | October 3, | | September 27, | | October 3, | | September 27, | ||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
| | (in thousands, except per share amounts) | ||||||||||
Net income (loss) | | $ | | | $ | | | $ | | | $ | |
Weighted-average common shares outstanding | |
| | |
| | |
| | |
| |
Effect of dilutive stock options and restricted stock awards | |
| | |
| | |
| | |
| |
Weighted-average common shares outstanding-diluted | |
| | |
| | |
| | |
| |
Earnings (Loss) per share: | | | | | | | | | | | | |
Basic | | $ | | | $ | | | $ | | | $ | |
Diluted | | $ | | | $ | | | $ | | | $ | |
For the three months ended October 3, 2025, the Company did
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
12. BUSINESS COMBINATIONS
Acquisition of Alternative Power Generation, Inc.
On
APG provides innovative, progressive, and customized electric power solutions for EV charging, solar, AI data centers, microgrids, battery energy storage systems (“BESS”), and substations. APG offers consulting, design, engineering, procurement, and construction management. APG’s financial information is
Pursuant to the terms of the APG Stock Purchase Agreement, the Company agreed to pay up to $
The amount of the APG Earnout Payments to be paid will be determined based on APG’s earnings before interest, taxes, depreciation and amortization (“APG EBITDA”). The APG Stockholders will receive APG Earnout Payments in each of the
The APG Stock Purchase Agreement contains customary representations and warranties regarding the Company, WES, APG, and the APG Stockholders, indemnification provisions, and other provisions customary for transactions of this nature.
The Company used cash on hand and restricted common stock to fund the initial purchase price on the APG Closing Date.
The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and APG’s assembled workforce. The Company estimates that the entire $
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The Company engaged a third-party independent valuation specialist to assist in management’s determination of fair values of tangible and intangible assets acquired and liabilities assumed, including the determination of the fair value of the contingent consideration liability. The Company’s third-party independent valuation specialist determined the fair value of the contingent consideration liability utilizing a Monte Carlo valuation model, which involves a simulation of future revenues during the earn out-period using management’s best estimates, or a probability-weighted discounted cash flow analysis.
Consideration for the acquisition of APG includes the following:
| | | |
|
| APG | |
| | (in thousands) | |
Cash consideration | | $ | |
Other working capital adjustments and holdbacks | | | - |
Issuance of common stock | | | |
Contingent consideration | | | |
Total consideration | | $ | |
The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date:
| | | |
|
| APG | |
| | (in thousands) | |
Current assets | | $ | |
Non-current assets (1) | | | |
Liabilities | | | ( |
Non-current lease liability | | | ( |
Backlog | | | |
Customer relationships | | | |
Tradename | | | |
Goodwill | | | |
Net assets acquired | | $ | |
| (1) | Excluded from non-current assets are backlog, customer relationships, tradename, and goodwill. |
During the nine months ended October 3, 2025, the Company made adjustments, primarily related to other working capital adjustments and holdbacks, to the consideration paid for APG which resulted in an adjustment to the purchase price allocation of APG. The adjustments resulted in an increase of $
For the three months ended October 3, 2025, there were
During the three and nine months ended October 3, 2025, the acquisition of APG contributed $
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Acquisition of Alpha Inspections, Inc.
On
Alpha is a company that provides an array of municipal services including building inspections, and plan reviews. Alpha’s financial information is
Pursuant to the terms of the Alpha Stock Purchase Agreement, the purchase price consisted of $
The Company used cash on hand to fund the purchase price on the Alpha Closing Date.
The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and Alpha’s assembled workforce. The Company estimates that the entire $
The Company engaged a third-party independent valuation specialist to assist in management’s determination of fair values of tangible and intangible assets acquired and liabilities assumed.
Consideration for the acquisition of Alpha includes the following:
| | | |
|
| Alpha | |
| | (in thousands) | |
Cash consideration | | $ | |
Other working capital adjustments and holdbacks | | | - |
Total consideration | | $ | |
The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date:
| | | |
|
| Alpha | |
| | (in thousands) | |
Current assets | | $ | |
Non-current assets (1) | | | |
Liabilities | | | ( |
Backlog | | | |
Customer relationships | | | |
Tradename | | | |
Goodwill | | | |
Net assets acquired | | $ | |
| (1) | Excluded from non-current assets are backlog, customer relationships, tradename, and goodwill. |
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
During the nine months ended October 3, 2025, the Company made adjustments, primarily related to other working capital adjustments and holdbacks, to the consideration paid for Alpha, which resulted in an adjustment to the purchase price allocation of Alpha. The adjustments resulted in an aggregate increase of $
For the three months ended October 3, 2025, there were
Acquisition of Enica Engineering, PLLC.
On
The Company agreed to pay (i) $
The amount of the Enica Earnout Payments to be paid will be determined based on Enica’s earnings before interest, taxes, depreciation and amortization (“Enica’s EBITDA”). The Enica Members will receive Enica Earnout Payments in each of the
The Enica Agreement contains customary representations and warranties regarding the Company, WES, Genesys, Enica, and the Enica Members, indemnification provisions and other provisions customary for transactions of this nature.
The Company used cash on hand to fund the initial purchase price on the Enica Closing Date.
The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and Enica’s assembled workforce. The Company estimates that the entire $
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Consideration for the acquisition of Enica includes the following:
| | | |
|
| Enica | |
| | (in thousands) | |
Cash consideration | | $ | |
Other working capital adjustments and holdbacks | | | — |
Contingent consideration | | | |
Total consideration | | $ | |
The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date:
| | | |
|
| Enica | |
| | (in thousands) | |
Current assets | | $ | |
Non-current assets (1) | | | |
Right-of-use assets | | | |
Liabilities | | | ( |
Lease liability | | | ( |
Backlog | | | |
Customer relationships | | | |
Tradename | | | |
Goodwill | | | |
Net assets acquired | | $ | |
| (1) | Excluded from non-current assets are right-of-use assets, backlog, customer relationships, tradename, and goodwill. |
During the nine months ended October 3, 2025, the Company did not make any adjustments to the consideration paid for Enica, and as a result, there were no adjustments to the purchase price allocation for the nine months ended October 3, 2025.
For the three months ended October 3, 2025, there were
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following unaudited pro forma financial information for the three and nine months ended October 3, 2025 and September 27, 2024 assumes that the acquisitions of all the outstanding shares of APG and Alpha, and the acquisition of substantially all of the assets of Enica, occurred on the first day of the year prior to the year of acquisition:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | October 3, | | September 27, | | October 3, | | September 27, | ||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
| | (in thousands, except per share data) | ||||||||||
| | (Unaudited) | ||||||||||
Pro forma revenue | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Pro forma income (loss) from operations | | $ | | | $ | | | $ | | | $ | |
Pro forma net income (loss) (1) | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Earnings (Loss) per share: | | | | | | | | | | | | |
Basic | | $ | | | $ | | | $ | | | $ | |
Diluted | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | |
Basic | | | | | | | | | | | | |
Diluted | | | | | | | | | | | | |
| (1) | Adjustments to pro forma net income include income from operations, amortization and interest expenses. |
This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had these acquisitions occurred on the first day of the year prior to the year of acquisition and may not be indicative of future operating results.
During the three and nine months ended October 3, 2025, the acquisitions of APG, Alpha and Enica contributed $
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
13. CONTINGENCIES
Claims and Lawsuits
The Company is subject to claims and lawsuits from time to time, including those alleging professional errors or omissions that arise in the ordinary course of business against firms that operate in the engineering and consulting professions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss.
In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and discloses the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company’s financial statements not to be misleading. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
Because litigation outcomes are inherently unpredictable, the Company’s evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of the Company’s financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then the Company will disclose the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable. While the consequences of certain unresolved proceedings are not presently determinable, and a reasonable estimate of the probable and reasonably possible loss or range of loss in excess of amounts accrued for such proceedings cannot be made, an adverse outcome from such proceedings could have a material adverse effect on the Company’s earnings in any given reporting period. However, in the opinion of the Company’s management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on the Company’s financial statements.
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WILLDAN GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
14. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent Events, the Company evaluates subsequent events up until the date the Condensed Consolidated Financial Statements are issued. As of November 6, 2025, there were no subsequent events required to be reported.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Company
We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
Our broad portfolio of services operates within two financial reporting segments: (1) Energy and (2) Engineering and Consulting. The interfaces and synergies between these segments are important elements of our strategy to design and deliver trusted, comprehensive, innovative, and proven solutions and services for our customers.
Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations in the U.S. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend. Our energy efficiency services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.
Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.
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Results of Operations
Third Quarter and Nine Months Overview
The following table sets forth, for the periods indicated, certain information derived from our condensed consolidated statements of comprehensive income(1):
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |||||||||||||||
| | October 3, | | September 27, | | | | | | | ||||||||
|
| 2025 | | 2024 | | | $ Change | | % Change | | ||||||||
| | (in thousands, except percentages) | | |||||||||||||||
| | | | | | | | | | | | | | | | | | |
Contract revenue | | $ | 182,006 |
| 100.0 | % |
| $ | 158,252 |
| 100.0 | % |
| $ | 23,754 |
| 15.0 | % |
Direct costs of contract revenue: | | | | | | | | | | | | | | | | | | |
Salaries and wages | | | 27,878 | | 15.3 | | | | 24,088 | | 15.2 | | | | 3,790 | | 15.7 | |
Subcontractor services and other direct costs | | | 87,039 | | 47.8 | | | | 82,563 | | 52.2 | | | | 4,476 | | 5.4 | |
Total direct costs of contract revenue | | | 114,917 | | 63.1 | | | | 106,651 | | 67.4 | | | | 8,266 | | 7.8 | |
| | | | | | | | | | | | | | | | | | |
Gross profit | | | 67,089 | | 36.9 | | | | 51,601 | | 32.6 | | | | 15,488 | | 30.0 | |
| | | | | | | | | | | | | | | | | | |
General and administrative expenses: | | | | | | | | | | | | | | | | | | |
Salaries and wages, payroll taxes and employee benefits | | | 31,720 | | 17.4 | | | | 25,876 | | 16.4 | | | | 5,844 | | 22.6 | |
Facilities and facilities related | | | 2,369 | | 1.3 | | | | 2,381 | | 1.5 | | | | (12) | | (0.5) | |
Stock-based compensation | | | 3,147 | | 1.7 | | | | 2,020 | | 1.3 | | | | 1,127 | | 55.8 | |
Depreciation and amortization | | | 3,913 | | 2.1 | | | | 3,716 | | 2.3 | | | | 197 | | 5.3 | |
Other | | | 11,078 | | 6.1 | | | | 8,934 | | 5.6 | | | | 2,144 | | 24.0 | |
Total general and administrative expenses | | | 52,227 | | 28.7 | | | | 42,927 | | 27.1 | | | | 9,300 | | 21.7 | |
| | | | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 14,862 | | 8.2 | | | | 8,674 | | 5.5 | | | | 6,188 | | 71.3 | |
| | | | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | | | |
Interest expense | | | (902) | | (0.5) | | | | (1,934) | | (1.2) | | | | 1,032 | | (53.4) | |
Other, net | | | 330 | | 0.2 | | | | 763 | | 0.5 | | | | (433) | | (56.7) | |
Total other income (expense) | | | (572) | | (0.3) | | | | (1,171) | | (0.7) | | | | 599 | | (51.2) | |
| | | | | | | | | | | | | | | | | | |
Income (Loss) before income tax expense | | | 14,290 | | 7.9 | | | | 7,503 | | 4.7 | | | | 6,787 | | 90.5 | |
Income tax expense (benefit) | | | 569 | | 0.3 | | | | 157 | | 0.1 | | | | 412 | | N/M | |
Net income (loss) | | $ | 13,721 | | 7.5 | | | $ | 7,346 | | 4.6 | | | $ | 6,375 | | 86.8 | |
| | | | | | | | | | | | | | | | | | |
| (1) | Percentages are expressed as a percentage of contract revenue and may not total due to rounding. |
| (2) | N/M = Not meaningful. |
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Table of Contents
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | |||||||||||||||
| | October 3, | | September 27, | | | | | | | ||||||||
| | 2025 | | 2024 | | | $ Change | | % Change | | ||||||||
| | (in thousands, except percentages) | | |||||||||||||||
| | | | | | | | | | | | | | | | | | |
Contract revenue |
| $ | 507,865 |
| 100.0 | % |
| $ | 421,737 |
| 100.0 | % |
| $ | 86,128 |
| 20.4 | % |
Direct costs of contract revenue: | | | | | | | | | | | | | | | | | | |
Salaries and wages | | | 82,198 | | 16.2 | | | | 69,247 | | 16.4 | | | | 12,951 | | 18.7 | |
Subcontractor services and other direct costs | | | 232,592 | | 45.8 | | | | 204,667 | | 48.5 | | | | 27,925 | | 13.6 | |
Total direct costs of contract revenue | | | 314,790 | | 62.0 | | | | 273,914 | | 64.9 | | | | 40,876 | | 14.9 | |
| | | | | | | | | | | | | | | | | | |
Gross profit | | | 193,075 | | 38.0 | | | | 147,823 | | 35.1 | | | | 45,252 | | 30.6 | |
| | | | | | | | | | | | | | | | | | |
General and administrative expenses: | | | | | | | | | | | | | | | | | | |
Salaries and wages, payroll taxes and employee benefits | | | 95,404 | | 18.8 | | | | 78,449 | | 18.6 | | | | 16,955 | | 21.6 | |
Facilities and facilities related | | | 7,362 | | 1.4 | | | | 7,231 | | 1.7 | | | | 131 | | 1.8 | |
Stock-based compensation | | | 8,755 | | 1.7 | | | | 5,355 | | 1.3 | | | | 3,400 | | 63.5 | |
Depreciation and amortization | | | 13,857 | | 2.7 | | | | 10,937 | | 2.6 | | | | 2,920 | | 26.7 | |
Other | | | 33,983 | | 6.7 | | | | 25,368 | | 6.0 | | | | 8,615 | | 34.0 | |
Total general and administrative expenses | | | 159,361 | | 31.4 | | | | 127,340 | | 30.2 | | | | 32,021 | | 25.1 | |
| | | | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 33,714 | | 6.6 | | | | 20,483 | | 4.9 | | | | 13,231 | | 64.6 | |
| | | | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | | | |
Interest expense | | | (4,890) | | (1.0) | | | | (6,031) | | (1.4) | | | | 1,141 | | (18.9) | |
Other, net | | | 840 | | 0.2 | | | | 2,293 | | 0.5 | | | | (1,453) | | (63.4) | |
Total other income (expense) | | | (4,050) | | (0.8) | | | | (3,738) | | (0.9) | | | | (312) | | 8.3 | |
| | | | | | | | | | | | | | | | | | |
Income (Loss) before income tax expense | | | 29,664 | | 5.8 | | | | 16,745 | | 4.0 | | | | 12,919 | | 77.2 | |
Income tax expense (benefit) | | | (4,180) | | (0.8) | | | | 1,863 | | 0.4 | | | | (6,043) | | N/M | |
Net income (loss) | | $ | 33,844 | | 6.7 | | | $ | 14,882 | | 3.5 | | | $ | 18,962 | | 127.4 | |
| | | | | | | | | | | | | | | | | | |
| (1) | Percentages are expressed as a percentage of contract revenue and may not total due to rounding. |
| (2) | N/M = Not meaningful. |
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The following tables provide information about disaggregated revenue of our two segments, Energy and Engineering and Consulting, by contract type, client type and geographical region:
| | | | | | | | | |
|
| Three months ended October 3, 2025 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | 12,866 | | $ | 18,382 | | $ | 31,248 |
Unit-based | | | 58,252 | | | 6,965 | | | 65,217 |
Fixed price | | | 83,632 | | | 1,909 | | | 85,541 |
Total (1) | | $ | 154,750 | | $ | 27,256 | | $ | 182,006 |
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | 15,942 | | $ | 1,945 | | $ | 17,887 |
Government | | | 64,587 | | | 25,256 | | | 89,843 |
Utilities (2) | | | 74,221 | | | 55 | | | 74,276 |
Total (1) | | $ | 154,750 | | $ | 27,256 | | $ | 182,006 |
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | 154,750 | | $ | 27,256 | | $ | 182,006 |
| | | | | | | | | |
| | | | | | | | | |
|
| Nine months ended October 3, 2025 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | 36,201 | | $ | 55,341 | | $ | 91,542 |
Unit-based | | | 164,209 | | | 19,707 | | | 183,916 |
Fixed price | | | 227,337 | | | 5,070 | | | 232,407 |
Total (1) | | $ | 427,747 | | $ | 80,118 | | $ | 507,865 |
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | 47,550 | | $ | 5,511 | | $ | 53,061 |
Government | | | 168,750 | | | 74,452 | | | 243,202 |
Utilities (2) | | | 211,447 | | | 155 | | | 211,602 |
Total (1) | | $ | 427,747 | | $ | 80,118 | | $ | 507,865 |
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | 427,747 | | $ | 80,118 | | $ | 507,865 |
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Table of Contents
| | | | | | | | | |
|
| Three months ended September 27, 2024 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | 7,953 | | $ | 17,767 | | $ | 25,720 |
Unit-based | | | 52,487 | | | 4,993 | | | 57,480 |
Fixed price | | | 73,596 | | | 1,456 | | | 75,052 |
Total (1) | | $ | 134,036 | | $ | 24,216 | | $ | 158,252 |
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | 7,964 | | $ | 1,968 | | $ | 9,932 |
Government | | | 61,115 | | | 22,155 | | | 83,270 |
Utilities (2) | | | 64,957 | | | 93 | | | 65,050 |
Total (1) | | $ | 134,036 | | $ | 24,216 | | $ | 158,252 |
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | 134,036 | | $ | 24,216 | | $ | 158,252 |
| | | | | | | | | |
| | | | | | | | | |
|
| Nine months ended September 27, 2024 | |||||||
|
| Energy |
| Engineering and |
| Total | |||
|
| (in thousands) | |||||||
Contract Type | | | | | | | | | |
Time-and-materials | | $ | 25,190 | | $ | 51,193 | | $ | 76,383 |
Unit-based | | | 147,022 | | | 14,375 | | | 161,397 |
Fixed price | | | 180,422 | | | 3,535 | | | 183,957 |
Total (1) | | $ | 352,634 | | $ | 69,103 | | $ | 421,737 |
| | | | | | | | | |
Client Type | | | | | | | | | |
Commercial | | $ | 23,858 | | $ | 5,281 | | $ | 29,139 |
Government | | | 148,403 | | | 63,614 | | | 212,017 |
Utilities (2) | | | 180,373 | | | 208 | | | 180,581 |
Total (1) | | $ | 352,634 | | $ | 69,103 | | $ | 421,737 |
| | | | | | | | | |
Geography (3) | | | | | | | | | |
Domestic | | $ | 352,634 | | $ | 69,103 | | $ | 421,737 |
| (1) | Amounts may not add to the totals due to rounding. |
| (2) | Includes the portion of revenue related to small business programs paid by the end user/customer. |
| (3) | Revenue from our foreign operations was not material for the three and nine months ended October 3, 2025 and September 27, 2024. |
Three Months Ended October 3, 2025 Compared to Three Months Ended September 27, 2024
Contract revenue. Consolidated contract revenue increased $23.8 million, or 15.0%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024, reflecting increased demand for our services in both our Energy segment and our Engineering and Consulting segment.
Contract revenue in our Energy segment increased $20.7 million, or 15.5%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily as a result of increased demand for energy efficiency and electrification services under utility programs, higher construction management revenues, higher planning and advisory consulting revenues, and the incremental revenues from our acquisitions of Enica Engineering, PLCC. (“Enica”) and Alternative Power Generation, Inc. (“APG”).
Contract revenue in our Engineering and Consulting segment increased $3.1 million, or 12.5%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily due to increased demand for services provided to our clients, combined with the incremental revenues from our acquisition of Alpha Inspections, Inc. (“Alpha”).
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Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $8.3 million, or 7.8%, for the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily as a result of the increase and change of mix in contract revenues as described above. As a percentage of contract revenue, subcontractor services and other direct costs decreased to 47.8% in the three months ended October 3, 2025 from 52.2% in the three months ended September 27, 2024. Direct salaries and wages increased $3.8 million, or 15.7%, to support the increased volume of projects in the three months ended October 3, 2025, compared to the three months ended September 27, 2024.
Direct costs of contract revenue in our Energy segment increased $6.7 million, or 7.0%, for the three months ended October 3, 2025, compared to the three months ended September 27, 2024. Direct costs of contract revenue for the Engineering and Consulting segment increased $1.6 million, or 14.9%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024.
Subcontractor services and other direct costs increased by $4.5 million, or 5.4%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily due to the increase in utility program revenues and construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $3.8 million, or 15.7%, in the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily as a result of the increases in contract revenue as described above.
Gross Profit. Gross profit increased 30.0% to $67.1 million, or 36.9% gross margin, for the three months ended October 3, 2025, compared to gross profit of $51.6 million, or 32.6% gross margin, for the three months ended September 27, 2024. The increase in our gross margin was primarily driven by changes in the mix of revenues as described above.
General and administrative expenses. General and administrative (“G&A”) expenses increased $9.3 million, or 21.7%, to $52.2 million in the three months ended October 3, 2025, compared to $42.9 million for the three months ended September 27, 2024. G&A expenses consisted of an increase of $7.4 million, or 23.1%, in the Energy segment combined with an increase of $1.0 million, or 11.1%, in the Engineering and Consulting segment, and an increase of $0.9 million in unallocated corporate expenses.
The overall increase in G&A expenses consisted of an increase of $5.8 million in salaries and wages, payroll taxes and employee benefits, an increase of $2.1 million in other general and administrative expenses, and an increase of $1.1 million in stock-based compensation. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to increased staffing from acquisitions, an increase in incentive compensation to support revenue growth, consistent with the improvement in operating profit, and higher fringe benefit costs consistent with the growth in direct and indirect labor costs. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees, executives, and Board of directors at a higher stock price.
Income (loss) from operations. Operating income increased 71.3% to $14.9 million for the three months ended October 3, 2025, compared to an operating income of $8.7 million for the three months ended September 27, 2024, as a result of the factors noted above.
Total other expense, net. Total other expense, net, decreased $0.6 million, or 51.2%, for the three months ended October 3, 2025, compared to the three months ended September 27, 2024, primarily due to the lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities.
Income tax expense (benefit). Income tax expense was $0.6 million for the three months ended October 3, 2025, an effective tax expense rate of 4.0% on income before income tax expense, compared to an income tax expense of $0.2 million for the three months ended September 27, 2024, an effective tax expense rate of 2.1% on income before tax expense. The increase in the effective tax rate resulted from the higher income before income tax combined with decreases in discrete items related lower energy-efficiency building deductions, partially offset by increases in discrete items related to stock compensation deductions.
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Net income (loss). Our net income was $13.7 million for the three months ended October 3, 2025, as compared to a net income of $7.3 million for the three months ended September 27, 2024. The increase in net income was primarily attributable to the increase in income from operations combined with the decrease in total other expense, net, partially offset by the higher effective tax rate.
Nine Months Ended October 3, 2025 Compared to Nine Months Ended September 27, 2024
Contract revenue. Consolidated contract revenue increased $86.1 million, or 20.4%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, reflecting increased demand for our services in both our Energy segment and our Engineering and Consulting segment.
Contract revenue in our Energy segment increased $75.1 million, or 21.3%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily as a result of increased demand for energy efficiency and electrification services under utility programs, higher construction management revenues, higher planning and advisory consulting revenues, and the incremental revenues from our acquisitions of Enica and APG.
Contract revenue in our Engineering and Consulting segment increased $11.0 million, or 15.9%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily due to increased demand for services provided to our clients, combined with the incremental revenues from our acquisition of Alpha.
Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $40.9 million, or 14.9%, for the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily as a result of the increase and change of mix in contract revenues as described above. As a percentage of contract revenue, subcontractor services and other direct costs decreased to 45.8% in the nine months ended October 3, 2025 from 48.5% in the nine months ended September 27, 2024. Direct salaries and wages increased $13.0 million, or 18.7%, to support the increased volume of projects in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024.
Direct costs of contract revenue in our Energy segment increased $35.9 million, or 14.8%, for the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024. Direct costs of contract revenue for the Engineering and Consulting segment increased $5.0 million, or 16.0%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024.
Subcontractor services and other direct costs increased by $27.9 million, or 13.6%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily due to the increase in utility program revenues and construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $13.0 million, or 18.7%, in the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily as a result of the increases in contract revenue as described above.
Gross Profit. Gross profit increased 30.6% to $193.1 million, or 38.0% gross margin, for the nine months ended October 3, 2025, compared to gross profit of $147.8 million, or 35.1% gross margin, for the nine months ended September 27, 2024. The increase in our gross margin was primarily driven by changes in the mix of revenues as described above.
General and administrative expenses. G&A expenses increased $32.0 million, or 25.1%, to $159.4 million in the nine months ended October 3, 2025, compared to $127.3 million for the nine months ended September 27, 2024. G&A expenses consisted of an increase of $23.9 million, or 25.2%, in the Energy segment combined with an increase of $3.0 million, or 10.7%, in the Engineering and Consulting segment, and an increase of $5.1 million in unallocated corporate expenses.
The overall increase in G&A expenses consisted of an increase of $17.0 million in salaries and wages, payroll taxes and employee benefits, an increase of $8.6 million in other general and administrative expenses, an increase of $3.4 million in stock-based compensation, and an increase of $2.9 million in depreciation and amortization. The increase
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in salaries and wages, payroll taxes and employee benefits was primarily due to increased staffing from acquisitions, an increase in incentive compensation to support revenue growth, consistent with the improvement in operating profit, and higher fringe benefit costs consistent with the growth in direct and indirect labor costs. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees, executives and Board of directors at a higher stock price. The increase in depreciation and amortization was primarily related to higher amortization of intangible assets from recent acquisitions.
Income (loss) from operations. Operating income increased 64.6% to $33.7 million for the nine months ended October 3, 2025, compared to an operating income of $20.5 million for the nine months ended September 27, 2024, as a result of the factors noted above.
Total other expense, net. Total other expense, net, increased $0.3 million, or 8.3%, for the nine months ended October 3, 2025, compared to the nine months ended September 27, 2024, primarily due to a one-time charge for unamortized debt issuance costs related to our prior credit facilities combined with a one-time charge related to a facility lease modification, partially offset by lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities.
Income tax expense (benefit). We recorded an income tax benefit of $4.2 million for the nine months ended October 3, 2025, an effective tax benefit rate of 14.1% on income before income tax expense, compared to an income tax expense of $1.9 million for the nine months ended September 27, 2024, an effective tax rate of 11.1% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions and additional energy-efficiency building deductions.
Net income (loss). Our net income was $33.8 million for the nine months ended October 3, 2025, as compared to a net income of $14.9 million for the nine months ended September 27, 2024. The increase in net income was primarily attributable to the increase in income from operations combined with the tax benefit.
Liquidity and Capital Resources
| | | | | | |
| | Nine Months Ended | ||||
| | October 3, | | September 27, | ||
| | 2025 | | 2024 | ||
| | (in thousands) | ||||
Net cash provided by (used in): |
| | | | | |
Operating activities |
| $ | 40,904 |
| $ | 38,611 |
Investing activities | | | (40,327) | | | (6,045) |
Financing activities | | | (41,626) | | | (2,857) |
Net increase (decrease) in cash and cash equivalents | | $ | (41,049) | | $ | 29,709 |
Sources of Cash
Our primary sources of liquidity for the next 12 months and beyond are cash generated from operations, cash and cash equivalents, and available borrowings under our Revolving Credit Facility and Delayed Draw Term Loan under the Credit Agreement (the “Credit Facilities”). We believe these sources will be sufficient to finance our operating activities for at least the next 12 months.
As of October 3, 2025, we had a fully drawn $50.0 million term loan with $49.4 million outstanding, a $100.0 million Revolving Credit Facility with no borrowed amounts outstanding and $1.6 million in letters of credit issued, and a $50.0 million Delayed Draw Term Loan which has not been drawn on. The Delayed Draw Term Loan must be drawn before May 2027. The Credit Facilities are each scheduled to mature on May 5, 2030. In addition to the Credit Facilities, we had $33.1 million of unrestricted cash and cash equivalents as of October 3, 2025. Unhedged borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore
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interest at an annual rate of 5.7% as of October 3, 2025. See Part I, Item 1, Note 6, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding our indebtedness, including information about Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Cash Flows from Operating Activities
Cash flows provided by operating activities were $40.9 million for the nine months ended October 3, 2025, as compared to cash flows provided by operating activities of $38.6 million for the nine months ended September 27, 2024. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for the nine months ended October 3, 2025, resulted primarily from the increase in earnings partially offset by higher working capital requirements to support the expansion of revenue. Cash flows provided by operating activities for the nine months ended September 27, 2024, resulted primarily from the increase in earnings and reduced working capital requirements resulting from faster billing and improved collections.
Cash Flows from Investing Activities
Cash flows used in investing activities were $40.3 million for the nine months ended October 3, 2025, as compared to cash flows used in investing activities of $6.0 million for the nine months ended September 27, 2024. Cash flows used in investing activities for the nine months ended October 3, 2025 and September 27, 2024, were primarily due to cash paid for acquisitions, combined with cash paid for the development of proprietary software and the purchase of computers and equipment.
Cash Flows from Financing Activities
Cash flows used in financing activities were $41.6 million for the nine months ended October 3, 2025, as compared to cash flows used in financing activities of $2.9 million for the nine months ended September 27, 2024.
For the nine months ended October 3, 2025, cash flows used in financing activities were primarily attributable to the $39.0 million cash used to pay down our Revolving Credit Facility, $5.1 million cash used to pay withholding taxes on stock grants, $1.1 million principal payments on finance leases combined with repayments and borrowings of $90.0 million and $88.4 million, respectively, related to our Amended and Restated Credit Agreement. Cash flows used in financing activities were partially offset by $3.2 million of proceeds from sales of common stock under the employee stock purchase plan, and $2.5 million in proceeds from stock option exercise. Cash flows used in financing activities for the nine months ended September 27, 2024 were primarily attributable to the repayments of $5.6 million under our Term Loan, $1.2 million cash used to pay withholding taxes on stock grants, and $1.0 million principal payments on finance leases, partially offset by $2.8 million of proceeds from sales of common stock under employee stock purchase plan and $2.4 million in proceeds from stock option exercises.
Under certain utility contracts, we periodically receive cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. We act solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, we classify these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the condensed consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or
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relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.
Short and Long-term Uses of Cash
General
Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt. From time to time, we also use cash to help fund business acquisitions. Our cash and cash equivalents are impacted by the timing of when we invoice and are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.
Contractual Obligations
The following table sets forth our known contractual obligations as of October 3, 2025:
| | | | | | | | | | | | | | | | |
|
| | |
| Less than |
| | |
| | |
| More than |
| ||
Contractual Obligations | | Total | | 1 Year | | 1 - 3 Years | | 3 - 5 Years | | 5 Years |
| |||||
| | (in thousands) | | |||||||||||||
Debt (1) | | $ | 49,071 | | $ | 2,500 | | $ | 4,859 | | $ | 41,712 | | $ | — | |
Interest payments on debt outstanding (2) | | | 12,032 | | | 2,791 | | | 5,174 | | | 4,067 | | | — | |
Operating leases | |
| 16,205 | |
| 4,883 | |
| 5,893 | |
| 1,943 | |
| 3,486 | |
Finance leases | |
| 2,606 | |
| 1,247 | |
| 1,281 | |
| 78 | |
| — | |
Total contractual cash obligations | | $ | 79,914 | | $ | 11,421 | | $ | 17,207 | | $ | 47,800 | | $ | 3,486 | |
| (1) | Debt includes $49.1 million outstanding on our Term Loan A (“TLA”), net of issuance costs, no borrowed amounts outstanding on our Revolving Credit Facility, and no borrowed amounts outstanding on our Delayed Draw Term Loan as of October 3, 2025. We have assumed no future borrowings or repayments after October 3, 2025 (other than at maturity) for purposes of this table. Our TLA and Revolving Credit Facility are scheduled to mature on May 5, 2030. |
| (2) | Borrowings under our TLA and Revolving Credit Facility bear interest at a variable rate. Future interest payments on our Credit Facility are estimated using floating rates in effect as of October 3, 2025. |
We have contingent obligations to make earnout payments in connection with our acquisitions of Enica and APG, subject to their future financial performance. We are obligated to pay up to $6.0 million in cash if Enica exceeds certain financial targets during the two years after the Enica closing date of October 23, 2024, and are obligated to pay up to $18.0 million in cash if APG exceeds certain financial targets during the three years after the APG closing date of March 3, 2025. As of October 3, 2025, we had contingent consideration payable of $18.5 million related to the acquisitions of Enica and APG and, through the nine months ended October 3, 2025, our statement of operations includes $2.3 million of interest accretion (excluding fair value adjustments) related to the contingent consideration.
Outstanding Indebtedness
See Part I, Item 1, Note 6, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, and Part II, Item 8, Note 5, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2024, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
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Interest Rate Swap
From time to time, we enter into interest rate swap agreements to moderate our exposure to fluctuations in interest rates underlying our variable rate debt. For more information, see Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk”, and Note 5, “Derivative Financial Instruments”, to the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Impact of Inflation
Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation.
While not material to our results of operations and financial condition, we have experienced higher cost of materials and delays in our supply chain for equipment. The prices of finished products from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs, price escalation, raw material costs, and other factors that impact the cost of finished goods due to the imprecise nature of the estimates required.
We are often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment, and subcontracts on our projects, as well as, when appropriate, including cost escalation factors into our proposals. Despite our best mitigation efforts, significant price increases in equipment and disruptions to our supply chain could materially impact our results of operations and financial condition. In addition, inflationary pressures, including expectations of future inflation, may impact the customers of our utility clients, which may lead to delayed or deferred decisions regarding expenditures to improve energy efficiency, and therefore potentially impact our future revenues.
Impact of Certain Federal Policies
Federal policies related to tariffs and renewable energy incentives have been subject to frequent and significant changes from executive orders issued by the new federal administration. While we have not experienced a material impact to our operating results or our outlook for future business, there can be no assurance that these measures will not impact our ability to procure cost-effective pricing of materials used in our projects at various building sites, or result in a reduction in demand for our services as a result of inflation, lead times, or other impacts that may derive from changes in the current administration’s executive orders.
Components of Revenue and Expense
Contract Revenue
We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of October 3, 2025, 18% of our contracts are time-and-materials contracts, 36% are unit-based contracts, and 46% are fixed price contracts, compared to 18% are time-and-materials contracts, 38% are unit-based contracts, and 44% are fixed price contracts, as of September 27, 2024.
Some of these contracts include maximum contract prices, but contract maximums are often adjusted to reflect the level of effort to achieve client objectives and thus the majority of these contracts are not expected to exceed the maximum. Contract revenue on our fixed price contracts is determined on the percentage of completion method based generally on the ratio of direct costs incurred to date to estimated total direct costs at completion. Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.
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Adjustments to contract cost estimates are made in the periods in which the facts requiring such revisions become known. When the revised estimate indicates a loss, such loss is recognized in the current period in its entirety. Claims and change orders that have not been finalized are evaluated to determine whether or not a change has occurred in the enforceable rights and obligations of the original contract. If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly. Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the assessment above of whether or not a contract modification has occurred. Estimated profit for un-priced change orders is recognized only if collection is probable.
Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability of that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause. While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with Los Angeles Department of Water and Power and Southern California Edison, may have a material effect on our consolidated operations.
Some of our contracts include certain performance guarantees, such as a guaranteed energy saving quantity. Such guarantees are generally measured upon completion of a project. In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period. We have not experienced any significant costs under such guarantees.
Direct Costs of Contract Revenue
Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects. Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects. Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue.
Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs. We expense direct costs of contract revenue when incurred.
General and Administrative Expenses
G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs. We expense general and administrative costs when incurred.
Critical Accounting Policies
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). To prepare these financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities at the
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date of the financial statements and the reported amount of revenue and expenses in the reporting period. Our actual results may differ from these estimates. We have adopted accounting policies and practices that are generally accepted in the industry in which we operate.
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for our fiscal year ended December 27, 2024. Please refer to Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 27, 2024 for a discussion of our critical accounting policies and estimates.
Recent Accounting Standards
For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part I, Item 1, Note 2, “Recent Accounting Pronouncements”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market risk sensitive financial instruments, including long-term debt.
As of October 3, 2025, we had cash and cash equivalents of $33.1 million. This amount represents cash on hand in business checking accounts with our banks. We do not engage in trading activities and do not participate in foreign currency transactions.
We are subject to interest rate risk in connection with our Term Loan A (“TLA”) and borrowings, if any, under our Revolving Credit Facility, each of which bears interest at variable rates. As of October 3, 2025, the Company had a fully drawn $50.0 million TLA with $49.4 million outstanding, a $100.0 million Revolving Credit Facility with no borrowed amounts, and $1.6 million in letters of credit issued, and a $50.0 million Delayed Draw Term Loan with no borrowed amounts. Each of our TLA, Revolving Credit Facility and Delayed Draw Term Loan mature on May 5, 2030 and are governed by our Credit Agreement.
Based upon the amount of our outstanding indebtedness as of October 3, 2025, a one percentage point increase in the effective interest rate would change our annual interest expense by approximately $0.5 million in fiscal year 2025.
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ITEM 4. Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15-d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our including our President and Chief Executive Officer, Michael A. Bieber, and our Chief Financial Officer and Executive Vice President, Creighton K. Early, as appropriate to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report, an evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of October 3, 2025. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of October 3, 2025.
On January 31, 2025, and March 3, 2025, we completed the acquisition of Alpha, and APG, respectively. Prior to the acquisition, Alpha, and APG were privately-held companies and were not subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or other corporate governance requirements applicable to public reporting companies. As part of our ongoing integration activities, we are continuing to incorporate our controls and procedures into Alpha, and APG, and, if needed, to augment our company-wide controls to reflect the risks that may be inherent in the acquisition of these privately-held companies.
Other than our integration of Alpha, and APG, there have been no changes in our internal control over financial reporting during the quarter ended October 3, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We are subject to claims and lawsuits from time to time, including those alleging professional errors or omissions that arise in the ordinary course of business against firms that operate in the engineering and consulting professions. We carry professional liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss.
In accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements not to be misleading. We do not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
Because litigation outcomes are inherently unpredictable, our evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of our financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then we disclose the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable. While the consequences of certain unresolved proceedings are not presently determinable, and a reasonable estimate of the probable and reasonably possible loss or range of loss in excess of amounts accrued for such proceedings cannot be made, an adverse outcome from such proceedings could have a material adverse effect on our earnings in any given reporting period. However, in the opinion of our management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on our financial statements.
ITEM 1A. Risk Factors
There are no material changes to the risk factors set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 27, 2024.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the fiscal quarter ended October 3, 2025, we made the following repurchases of shares of our common stock from employees to satisfy tax withholding obligations incurred in connection with the vesting of restricted stock:
| | |||
Total Number of | Average Price | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number | |
July 5, 2025 – August 1, 2025 | — | — | — | — |
August 2, 2025 – August 29, 2025 | 18,773 | $109.40 | — | — |
August 30, 2025 – October 3, 2025 | — | — | — | — |
TOTAL | 18,773 | $109.40 | — | — |
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ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
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ITEM 6. Exhibits
| ||
|---|---|---|
Exhibit | | Exhibit Description |
2.1‡ | | Stock Purchase Agreement, dated as of March 3, 2025, by and among Willdan Group, Inc., Willdan Energy Solutions, Inc. and each of the stockholders of APG. (incorporated by reference to Exhibit 2.1 to Willdan Group, Inc.’s Quarterly Report on Form 10-Q, filed with the SEC on May 9, 2025). |
3.1 | | First Amended and Restated Certificate of Incorporation of Willdan Group, Inc. (incorporated by reference to Willdan Group, Inc.’s Registration Statement on Form S-1, filed with the SEC on August 9, 2006, as amended (File No. 333-136444)). |
3.2 | | Second Amended and Restated Bylaws of Willdan Group, Inc. (incorporated by reference to Exhibit 3.1 to Willdan Group, Inc.’s Current Report on Form 8-K, filed with the SEC on July 12, 2023). |
4.1 | | Specimen Stock Certificate for shares of the Registrant’s Common Stock (incorporated by reference to Willdan Group, Inc.’s Registration Statement on Form S-1, filed with the SEC on August 9, 2006, as amended (File No. 333-136444)). |
4.2 | | The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to issues of long-term debt of Willdan Group, Inc. and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of Willdan Group, Inc. and its subsidiaries. |
31.1* | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002. |
32.1** | | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
101.SCH* | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
‡ | Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K because it (i) is not material and (ii) is the type of information the Company customarily treats as private or confidential. |
¥ | All schedules and exhibits were omitted pursuant to Item 601(a)(5) of Regulation S-K. |
†Indicates a management contract or compensating plan or arrangement
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Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
| WILLDAN GROUP, INC. | |
| | |
| /s/ Creighton K. Early | |
| Creighton K. Early | |
| Chief Financial Officer and Executive Vice President | |
| (Principal Financial Officer, Principal Accounting Officer and duly authorized officer) | |
| November 6, 2025 | |
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FAQ
How did WLDN’s Q3 2025 revenue and earnings perform?
What are Willdan’s year-to-date results for 2025?
What changed in Willdan’s capital structure in 2025?
How much debt was outstanding at quarter-end?
What was operating cash flow year-to-date?
How did acquisitions affect the balance sheet?
How many WLDN shares were outstanding?
