Willdan Group, Inc.

Greetings and welcome to the Well Done Group fourth quarter and full year 2022 financial results conference call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Al Cashoff of Investor Relations. Please proceed.

Thank you, LaTanya. Good afternoon, everyone, and welcome to Well Done Group's fourth quarter and fiscal year 2022 earnings call. Joining our call today are Tom Brisbane, Chairman of the Board and Chief Executive Officer, Kim Early, Chief Financial Officer, and Mike Beaver, President. The call today builds on our earnings release we issued after the market closed today. You may find the earnings release and the willed-in investor report that accompanies today's call in the press release and stock information section of our investor relations website. found at ir.william.com. Management will review prepared remarks, and we will then open the call up to your questions. Statements made in the course of today's conference call, including answers to your questions, which are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve certain risks and uncertainties, and it is important to note such forward-looking statements. Factors that could cause actual results to differ materially and other risk factors are listed from time to time in the company's SEC reports, including but not limited to the annual report on Form 10-K for the year end of December 31, 2021. The company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Will then disclaims any obligation and does not undertake to update or revise any forward-looking statements made today. In addition to GAAP results, we'll then also provide non-GAAP financial measures that we believe enhance investors' ability to analyze the business trends and performance. Our non-GAAP measures include net revenue, adjusted EBITDA, and adjusted EPS. I'll now turn the call over to Tom Brisbane, World Energy Chairman and CDO.

Thanks, Al, and good afternoon, everyone. We believe 2022 was the end of the negative headwinds associated with COVID and the startup of the California IOU programs. As stated previously, we expected the second half of 2022 to show an upward trend, and it did. The results reported for the fourth quarter were net revenue up 25%, profit up 52%, organic growth up 25%. We have begun our trend back to a growth company that we were before COVID. Let's first talk about why we are optimistic about 2023. For the first time since the 1970s, the US federal government has passed legislation in energy to inject nearly $370 billion in the form of tax credits and loans to facilitate a faster clean energy transition via the Inflation Reduction Act. This will result in trillions of dollars of new clean energy longer-lasting impact on our fundamental lines of business. The beginning of this funding is supposed to hit the streets sometime this quarter. To take full advantage of federal incentives, we are already consulting with utilities and cities on using these federal programs and are pivoting our utility programs to be able to stack federal and utility incentives together to make them more successful. Every state and utility are trying to maximize the amount of federal incentives for their customers. We have a successful engineering and financial services practice focused on cities. We are seeing a rapid growth in the number of cities that are also focused on maximizing their IRA benefits. We have a unique opportunity to bring our energy and infrastructure lines of business to benefit these customers. This natural synergy between our lines of business is all incremental to our base case forecast. We are fortunate that we have been positioning for this clean energy economy transition for several years, and it appears that we are going in the right direction. There was an article about Will Vannon seeking alpha a few days ago, and I thought the author was very accurate in his analysis. We did take these setbacks in 2020, 21, and 22, and the stock lost greater than 60% of its market cap. With the momentum from the fourth quarter and our backlog, The next three years look very exciting for WILDAN. Let me give you a few examples of how we are positioned for this transition. The following examples should demonstrate geography, capabilities, and experience. Our E3 business, headquartered in San Francisco, continues to grow at 20% plus. They provide high-end energy consulting in the entire country, helping develop the framework for the clean energy transition. They have been and will continue to be Woodland's light in the future on where we move for the continued growth of Woodland. Our energy business in the West is significant because it is primarily in California, which is aggressive on clean energy. For example, we have held a contract with LADWP for 11 years and three re-competes. Serving the largest municipal utility in the nation is an excellent credential. We also served the four California IOUs in their quest to save energy and their transition to electrification. Specifically, we have amended the contract to allow us to continue with Southern California Edison. We have mutually downsized the contracts by 65% or about $100 million per year to reduce the risk for both of us. Through this amendment process, we have found a solution to the excessive ramp-up cost. It is fair to say that SCE's approach to contracting was not anticipated by WLDAN. We did not know about the significant adjudicatory matter that they were dealing with in their energy efficiency programs. That matter, which we were not a part of, has been settled, and we together with SCE are working on how to proceed with these programs going forward. We believe the new management at SCE's Energy Efficiency Group has a desire to save electricity and look to new ways to reduce carbon. The California IOU contracts are now expected to be positive contributors rather than negative drags. With Pacific Gas and Electric, we are working on all new construction for the state and the public sector, EE and electrification, energy efficiency, I should say, and electrification in their territory. For San Diego Gas and Electric, we were recently awarded an additional 11.6 million one-year contract to support small businesses statewide that are recovering from COVID. This is a customer service program where KWH delivery is not required. It is a professional services contract. Our East Coast energy operations, New York, Maryland, Pennsylvania, Massachusetts, the Carolinas, are all well-positioned for the next three to five years. For the first time ever in New York, Most of the revenue was based on electrification measures, not energy efficiency. Lighting energy efficiency is now only 20 to 25 percent of revenue, down from 100 percent five years ago. During the 2020 to 2022 tough times, we did a lot of right-sizing and positioning. Industrial EE energy efficiency is positioned to be profitable going forward with private sector clients. Our new energy Engineering, our New York Energy Engineering won significant work in 2022. With this group, we expect 50% organic growth in 2023. We have the work with the Dormitory Authority of the State of New York, the New York City Housing Authority, the New York Power Authority, and more. They have an excellent backlog and a plan for execution. Again, they are electrifying NYCHA housing as a way to decarbonize the grid and provide better living for the residents. Our performance engineering is back on track for 23 and has some exciting news that we can share in the near future. In addition, we have won five performance engineering contracts in California based on our relationships with the cities formed by our civil engineering group. Our software business also came out of 2022 with a clear picture for 23. Their pipeline looked good. Their pipeline looks good. and they will have news to share in the near future also. Positive news, that is. Our engineering and financial services for cities was Will Dan's rock for 2022, just like E3. They grew, they were profitable, and we expect the same in 2023. We expect these city relationships to really help us with the clean energy transition and future investments by the government. Cities are an important customer for us, We have a 60-year-long relationship in California. We're seeing energy as one more professional service that municipal governments will be buying. In summary, 2022 is behind us. We have solved the major issues and look forward to 23. We're off to a good start based on the first two months of this year. I want to thank our employees for really doing a great job through some tough times. WODAN has become more resilient again. I would also like to thank our shareholders for understanding and patience. I will now turn the call over to Kim, who will provide additional details on our financial results and outlook.