Willdan Group, Inc.

Hello, and welcome to the Will Dan Group fourth quarter and full year 2023 financial results conference call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. At this time, I'd like to turn the call over to Al Castro. Please go ahead, Al.

Thank you, Kevin. Good afternoon, everyone, and welcome to Wildan Group's fourth quarter and full year of fiscal 2023 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. The call today goes on our earnings release we issued after market closed today. You may find the earnings release in the Wildan Investor Report that accompanies today's call in the press releases and stock information section of our investor relations website. In addition, we have prepared a slide presentation to go along with today's financial results conference call. The presentation is available under the events section of the investor website. 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. The company's future results could differ materially from those in any 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. The company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Wildan disclaims any obligation and does not undertake to update or revise any forward-looking statements made today. In addition to GAAP results, Wildan also provides non-GAAP financial measures that we believe enhance the investor's 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 Mike Beaver, Wildan's president and CEO. Thanks, Al, and good afternoon to everyone.

Let's begin on slide two. We had an exceptional fourth quarter. Revenue, profitability, and cash flow were above our expectations and the analyst's expectations, aided by end-of-year program expansions. Strong performance throughout Wildan capped a record year, and with an expanding backlog, positions us for another strong year in 2024. I want to take a minute and talk about Wildan and our market positioning. Wildan transitions communities to clean energy and a sustainable future. Today, our revenue is 84% energy focused and 16% civil engineering focused. In 2023, Wildan net revenue grew organically by 19% overall. We deliver 20% organic growth in energy and 16% organic growth in civil engineering. By customer type, 47% of our work is from state and local government. We don't yet serve the federal government. Utilities comprise 46% of revenue, with 7% from commercial customers. We are a professional services company, helping customers solve problems with knowledge and software. we helped make America's clean energy transition more affordable for communities. Because of the funding sources of our projects, electrical user fees and government funding, our business model is resilient and generally less impacted by economic cycles and inflation. We demonstrated this strength throughout 2023, capped by an excellent fourth quarter. On page three of the slides, A customer's challenge typically starts with our policy consulting, analysis software, and data analytics services, which provide a highly technical roadmap to a solution. This upfront consulting work also informs Wildan's strategy. We are agnostic to the generation source, solar, wind, battery, gas, nuclear, and we help integrate energy generation and energy efficiency into the local grid at the least cost. Our engineering services typically come next and often include financial consulting work and rate studies to help fund a customer's project. After engineering design, our program management capabilities manage the delivery of a program on behalf of our customer. We see smaller, higher margin projects at the top of this pyramid, while larger, longer term projects are normally at the base. Let me give you some additional color on our markets and the opportunities we are seeing. In 2023, we talked about our goal to grow our consulting software and data analytics business. We did that successfully and entered 2024 with a robust pipeline that supports significant new software wins we anticipate in the first half of 2024. Our engineering business grew 16% organically in 2023, and much of this work is for state and local government customers. Counter to the fears about slowdown here, We have seen strong organic growth and are carrying that momentum into 2024. The biggest change to our business in 2023 was the recovery of program management work that had slowed during COVID. This work improved throughout the year as supply chain concerns became more manageable. Our program management backlog is at a record high entering 2024 and is expected to drive strong performance. Each of these three areas is strategic to our model and provides us with a competitive advantage. The upfront policy clients want to know about practical constraints willed and seized in engineering and program management. Engineering and program management clients want to know about policy and planning shifts that might affect their programs years later. On to page four. I want to provide you with a partial list of wins since the last earnings call. These include, at the top of the table, a $46 million program for Clark County School District. Phase 1 provides energy upgrades to about one-third of their schools. This program was two years in development and provides strong backlog for us entering 2024. Phase 1 will be mostly complete this year, and there is an additional $100 million of opportunity with this client that we are developing for next year. Next, the decarbonization strategies for the building portfolio of a national healthcare provider. This win is one of our most exciting opportunities in the next several years and touches over 1,000 hospitals and healthcare facilities for one of America's largest healthcare providers. Next, we've won a $30 to $50 million New England utility program for energy efficiency and program management. This new win that is being announced today is our first large anchor program in New England. The Energy Efficiency Program addresses a wide variety of New England energy users, including small and large businesses, industrial facilities, multi-use buildings, and municipal infrastructure. The contract is expected to ramp up through 2024 and is expected to continue its growth in 2025. Next, the $18 million Puget Sound contract is the seventh consecutive time, and Con Ed, the $16 million contract, is the fifth consecutive time we've won those important re-competes, indicating the success of those programs. We've also won a major Western utility grid planning contract and two smaller municipal utility software and planning services contracts. These new wins on top of our other multi-year contracts, position us well to continue mid- to high-single-digit organic growth in 2024. Kim, over to you.