Willdan Group NASDAQ: WLDN reported a stronger-than-expected start to fiscal 2026, with executives citing margin expansion, improved productivity and rising demand for energy services as key drivers behind a raised full-year outlook.
President and Chief Executive Officer Mike Bieber said the company continued the momentum it had been building, noting that first-quarter results were affected by a comparison with the prior-year period, which included an extra week.
“Normalized for that extra week we had last year in Q1, contract revenue grew 10%, net revenue grew 17%, and adjusted EBITDA increased 35% year-over-year,” Bieber said. “Overall, the business is performing well, and we remain at the center of several long-term energy trends that are driving growth.”
First-Quarter Revenue and Earnings Rise
Executive Vice President and Chief Financial Officer Kim Early said contract revenue rose 2% year-over-year to $155 million, while net revenue increased 8% to $92 million. Excluding the impact of the extra week in the first quarter of 2025, Early said contract revenue grew 10% and net revenue rose 17%.
Adjusted EBITDA increased 25% from the prior year to $18.1 million, which Early described as a first-quarter record. On a normalized basis, adjusted EBITDA increased 35%. Adjusted EBITDA represented 19.6% of net revenue in the quarter.
Early said gross margin expanded to 40.7% from 37.8% a year earlier, driven by higher volume, productivity gains and a favorable mix of services. She said the improvement reflected productivity gains in sales, reduced costs under utility programs and better margins in performance contracting projects, including those tied to the acquisition of APG a year earlier.
Adjusted earnings per share rose 44% to $0.91, compared with $0.63 in the prior-year quarter. GAAP net income increased 82% to $8.5 million, or $0.55 per diluted share, compared with $4.7 million, or $0.32 per diluted share, a year earlier.
Early said pre-tax income grew 40% to $7.3 million, despite the current quarter having 13 weeks compared with 14 weeks in the year-earlier period. The company also recorded a $1.3 million tax benefit, compared with a $500,000 tax expense in the first quarter of 2025. She attributed the benefit to Section 179D energy efficiency deductions and discrete items related to stock-based compensation.
Burton Acquisition Expands Commercial Reach
Willdan also closed the acquisition of Burton Energy Group during the week of the earnings call. Bieber said Burton serves mainly Fortune 500 customers throughout the United States and brings capabilities in energy management, energy efficiency and energy procurement services.
Burton manages energy at more than 60,000 client sites and generated approximately $103 million in contract revenue, $15 million in net revenue and $7 million in EBITDA in 2025, according to Bieber. He said the acquisition is expected to be accretive to Willdan’s margin, earnings and earnings per share in 2026.
Bieber said Burton adds recurring revenue, typically through multi-year agreements, and opens “an almost entirely new market” for Willdan with Fortune 500 clients. He also said the company is optimistic about cross-selling opportunities because Willdan has worked with Burton for more than 10 years under its Con Edison program and elsewhere.
The acquisition continues Willdan’s push into the commercial sector. Bieber said commercial revenue represented 7% of the business in 2024. On a full-year pro forma basis after Burton, commercial revenue is expected to be about 25% of revenue in 2026.
Guidance Raised After Strong Start
Willdan raised its full-year fiscal 2026 financial targets, with Early saying the increase reflects both first-quarter performance and the expected contribution from Burton, as well as strength in the company’s core business.
The company now expects:
- Net revenue of $410 million to $425 million;
- Adjusted EBITDA of $100 million to $105 million;
- Adjusted diluted earnings per share of $4.90 to $5.05.
Early said the outlook assumes approximately 15.9 million diluted shares outstanding at year-end and a 0% effective tax rate for the year.
The company also raised its long-term profitability target. Early said Willdan exceeded its prior goal of adjusted EBITDA above 20% of net revenue last year and is now targeting adjusted EBITDA margins in the high 20s over the long term.
In response to an analyst question, Bieber said several factors are supporting higher profitability, including growth and back-office cost absorption, rising energy demand, movement up the value chain and a higher percentage of commercial work. He said commercial customers tend to move faster and are willing to pay for immediate solutions, compared with state and local government customers.
Contract Wins and Energy Demand Support Outlook
Bieber highlighted several recent contract awards, including a two-year extension and an additional $100 million in funding from Southern California Edison for Willdan’s commercial energy efficiency program. The expansion would extend the program through the end of 2027.
Other wins included a $54 million project for the Dormitory Authority of the State of New York to upgrade a central plant at a college in New York City; a $27 million, three-year New York Accelerator program; a $24 million battery energy storage system project in Puerto Rico; and two small business energy efficiency program contracts with National Grid for New York City and Long Island.
Bieber said demand for electricity, particularly from data centers and artificial intelligence, is driving long-term needs for grid infrastructure, engineering and energy solutions. He referenced Willdan studies showing that parts of the Western U.S. will need substantial additional generation capacity by 2030, including 25 gigawatts in the Southwestern U.S. and 20 gigawatts in California alone.
He said energy efficiency remains “one of the most quickly available, least cost electricity resources” and said these trends should support Willdan’s business for years.
Balance Sheet Remains Low-Levered
Early said operating cash flow was a use of $24 million in the first quarter, compared with positive operating cash flow of $3 million in the prior-year quarter. On a trailing 12-month basis, operating cash flow was positive $52 million, which she said would have been $18 million higher if one client payment had arrived two weeks earlier.
Willdan ended the quarter with $28 million of unrestricted cash and $48 million outstanding under its term loan, resulting in a net leverage ratio of 0.2 times trailing 12-month adjusted EBITDA. The company had no borrowings outstanding on its $100 million revolving credit facility at quarter-end. After the quarter, Willdan drew $30 million on the revolver to fund part of the Burton acquisition, which Early said would increase leverage to 0.6 times.
Early said the company expects the revolver to be fully repaid by year-end, supported by expected earnings for the remainder of the year.
During the question-and-answer session, Bieber said Willdan remains interested in additional acquisitions in areas such as electrical engineering, commercial services, front-end evaluation work, data analytics, software and differentiated energy solutions. He said Burton’s acquisition followed seven to eight months of detailed discussions and that Willdan’s position as a strategic buyer can make it attractive to sellers that do not want to sell to private equity.
Bieber closed the call by thanking investors for their interest and said the company looks forward to speaking again next quarter.
About Willdan Group NASDAQ: WLDN
Willdan Group, Inc provides energy efficiency, infrastructure engineering, and technical consulting services to a diverse range of public and private sector clients. The company works with utilities, municipalities, state and federal agencies, and commercial enterprises to design, implement, and manage programs that promote sustainable energy use, grid modernization, and resilient infrastructure. Willdan's offerings span program design and implementation, energy audits, measurement and verification, and project management for both new construction and retrofit initiatives.
Core services include energy advisory and engineering solutions, including feasibility studies, facility commissioning and retro-commissioning, $0 down financing for energy projects, and demand response program development.
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