Willdan Group Q3 Earnings Call Highlights

Key Points

• Q3 revenue and adjusted EBITDA grew strongly: Contract revenue and net revenue each rose 18% year over year, while adjusted EBITDA increased 22% to $28.3 million. Net income declined to $11.9 million, partly as the effective tax rate rose to 23% from 4%.
• Willdan raised its 2026 outlook after closing the Mantis acquisition: The company now expects $435 million–$445 million in net revenue and $109 million–$111 million in adjusted EBITDA. Mantis is expected to contribute about $75 million in net revenue in 2026 and broaden Willdan’s commercial customer base.
• Preliminary 2027 targets point to continued expansion: Willdan is targeting $1 billion in contract revenue, more than $500 million in net revenue and over $140 million in EBITDA. Management also cited major utility contract awards and said its data-center-related pipeline extends beyond 2029.

Willdan Group NASDAQ: WLDN raised its 2026 financial targets after reporting double-digit revenue growth in the third quarter and closing its acquisition of energy management provider Mantis Innovation. The company also issued preliminary 2027 targets that include $1 billion in contract revenue.

Third-quarter contract revenue and net revenue each rose 18% from a year earlier, to $215 million and $112 million, respectively. Organic net revenue grew 12%, with acquisitions including Burton and Compass contributing the remainder, Executive Vice President and Chief Financial Officer Kim Early said.

Adjusted EBITDA increased 22% to $28.3 million, and the adjusted EBITDA margin expanded to 25.2% of net revenue from about 24.4% a year earlier. Energy segment organic net revenue grew 17%, President and CEO Mike Bieber said.

Higher Costs and Taxes Weigh on Earnings

Despite the revenue growth, third-quarter net income fell to $11.9 million, or $0.76 per diluted share, from $13.7 million, or $0.90 per share, a year earlier. Adjusted earnings per share were $1.20, essentially flat with $1.21 in the prior-year quarter.

Early said the effective tax rate rose to 23% from 4%, reflecting higher pretax income and lower discrete benefits from stock option exercises and facility energy efficiency deductions. General and administrative expenses rose 27% to $66.1 million, with increases in stock compensation and depreciation and amortization accounting for much of the rise as a percentage of revenue.

For the first nine months of 2026, net revenue increased 17% to $322 million, while adjusted EBITDA rose 34% to $79.4 million. Net income increased 32% to $44.7 million, and adjusted diluted earnings per share grew 25% to $4.18, Early said.

Mantis Acquisition Reshapes Customer Mix

Willdan closed the Mantis acquisition on October 30. Houston-based Mantis has more than 220 employees and provides efficiency, procurement, consulting and controls services primarily to large commercial and industrial customers, Bieber said.

Mantis is expected to generate about $120 million in contract revenue in 2026. Following an accounting review, Willdan now expects Mantis to contribute about $75 million in net revenue, rather than the $120 million previously communicated. Bieber said Mantis’ EBITDA margin would be about 35% of net revenue and accretive to Willdan’s margin.

Bieber said commercial customers now represent about a quarter of Willdan’s work, compared with about 7% two years ago. On a full-year pro forma basis including Burton and Mantis, commercial, utility, and state and local government customers each account for roughly one-third of the business. He expects that balance to continue in 2027.

The CEO said the Mantis customer base has essentially no overlap with Willdan’s, creating an opportunity to sell each company’s services to the other’s clients. Cross-collaboration will be a primary focus over the next six months, he said.

Willdan Raises Outlook and Sets 2027 Targets

For full-year 2026, Willdan now expects net revenue of $435 million to $445 million, adjusted EBITDA of $109 million to $111 million, and adjusted diluted earnings per share of $5.15 to $5.25. The outlook includes Mantis from October 30, assumes no further acquisitions and assumes a 0% effective tax rate on GAAP earnings for the year.

For 2027, Bieber outlined preliminary targets of $1 billion in contract revenue, more than $500 million in net revenue and more than $140 million in EBITDA. The contract revenue target implies about 19% annual growth, while the EBITDA target represents growth of more than 25%, he said. Willdan plans to provide full-year 2027 guidance in late February.

To finance Mantis, Willdan used a new $250 million term loan and drew $35 million on its revolver. Net debt was $293 million at closing, resulting in net leverage of approximately 2.3 times pro forma trailing 12-month adjusted EBITDA, Early said. The company expects to reduce that ratio below 2.0 times by the end of the third quarter of 2027.

Early said cash flow typically is weaker in the first quarter and strongest in the fourth quarter. Reaching the leverage target in the second quarter of 2027 is possible, she said, but the company is allowing room for seasonal cash flow variations.

Contract Wins and Data Center Demand

Bieber highlighted a 10-year, multiple-award contract with a total budget of about $3.3 billion from the New York Power Authority. Willdan currently performs $50 million to $60 million of work annually for the authority, he said. The company also received a $25 million-a-year energy efficiency and electrification program from Con Edison and National Grid, along with several other project awards.

Asked about concerns over data center development, Bieber said Willdan was not expecting a major slowdown and that its pipeline extended beyond 2029. He added that grid constraints also stem from electrification and climate-related pressures. Data center interconnections typically take multiple years, he said, and delays do not necessarily stop upfront design or construction.

About Willdan Group (NASDAQ:WLDN)

Willdan Group, Inc NASDAQ: WLDN is a professional services company that provides technical, consulting and infrastructure solutions to utilities, government agencies and commercial clients. The company operates primarily in the United States, with a strong presence in California and other markets where energy, infrastructure and public-sector modernization services are in demand.

Through its energy-focused operations, Willdan designs and implements energy-efficiency, demand-response, electrification and distributed-energy programs.

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