Willdan Group, Inc.

Hello, and welcome to the Will Dan Group First Quarter 2024 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. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Al Castro, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Kevin. Good afternoon, everyone, and welcome to Will Dan Group's first quarter Fisco 2024 earnings call. Joining our call today are Mike Bieber, President and Chief Executive Officer, and Kim Early, Executive Vice President and Chief Financial Officer. This call builds on our earnings release we issued after market closed today. You can find today's earnings release in the press release section of our website at ir.willdangroup.com. A copy of the slides that accompany today's call are located in the events and presentation section of the website. In addition, our well-done investor report is available under stock information section of the same website. Management will review prepared remarks, and then we'll 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 privacy Securities Litigation Reform Act of 1995. The four looking statements involve certain risks and uncertainties and include non-GAAP measures. A more detailed Safe Harbor Statement is on the cover of our first slide and in our annual report on Form 10-K. I will now turn the call over to Mike Beaver, Will Dance President and CEO, who will begin on slide two.

Thanks, Al. We had an excellent start to 2024 with solid performance across the board. Revenue was up 19% organically year over year to $123 million. Adjusted EBITDA was up 12% year over year to $11 million. We converted our strong Q4 revenue into cash as Q1 cash flow from operations was up 56% year over year to $27 million. These metrics are all company records for the first quarter, and these were delivered against a tough comparison a year ago when we also had record performance led by a large software license. Kim will go into more detail on our financial results. Today, you'll hear us talk about new data-centered load driven by artificial intelligence processing that is adding demand for electricity far faster than most predicted. This trend is a new catalyst for WILDAN's services. Solid performance over the last 18 months has rapidly deleveraged our balance sheet and puts us in a strong position to pursue strategic acquisitions. I'm proud of our team for delivering another great quarter. On slide three, for those less familiar with our business, WILDAN helps transition communities to clean energy and a more sustainable future. We have about 1,600 employees comprised mostly of scientists, engineers, and other technical professionals. We have 53 offices across North America and have helped clients avoid 7.7 million metric tons of greenhouse gases. Our customers on the right are about evenly split between government and utilities, while commercial customers make up only 7% of our work. In Q1, Government customer demand for our services remained healthy, continuing the trend we saw last year. We are submitting new proposals to government customers at a record pace for us, as new federal funding is beginning to flow to our state and local customers. These clients are also issuing us new work to demonstrate progress to voters in advance of the November elections. On slide four. Our upfront policy and data analytics work informs Wildan's strategy. In our upfront work, we see that customers are beginning to rapidly prepare for new electric load on the power grid. I'll give you some examples of this in a moment. In engineering, we saw strong demand for our municipal services. We picked up new programs that design for transportation electrification, small local solar generation, and municipal building efficiencies. In program management, we entered the year with around $200 million in funded backlog and did a good job of executing here early in the year. I'll note that at Wildan, while revenue is skewed towards larger program management projects, our profit is delivered about equally from each of the three phases of work. On slide five, we had several notable wins this quarter. we added two new confidential load-seer software customers in Q1. One is a major IOU on the East Coast, and the other is an IOU in the Western U.S. Building on our work performed for New York City, we added a comprehensive regional climate action plan for the city of Chicago this quarter, beating out highly qualified competitors. This study is funded through the Federal Inflation Reduction Act, IRA, and is similar to IRA-funded climate action plans we've recently won in Hawaii, Idaho, New Mexico, and the state of New York. We use data analytics to advise clients on ideal locations for new data centers, optimizing electricity availability, price, and other factors. We added a new project this quarter from a large real estate investment firm that is trying to site new data centers. We also have a group within Whittledan, about $10 million a year, that provides energy efficiency at data centers across the US. We've had this group for years. We picked up a new contract with AT&T, one of our long-term customers, providing this service. And in California, we were selected by the Pasadena Department of Water and Power to develop a carbon-free electricity strategic plan. On slide six. Recent headlines nearly everywhere point towards the rapid electricity low growth caused by AI data processing. The swift commercialization of AI requires massively more electricity than most people expected. A recent study by the International Energy Agency, IEA, shows the combination of AI and cryptocurrency processing will double data center energy consumption by 2026, just two years from now. On slide seven, according to the Federal Energy Regulatory Commission, FERC, data, over the past year, grid planners nearly doubled the five-year low growth forecast. The main drivers are investments in new industrial manufacturing and the data center facilities. The map on the right shows that certain pockets in the D.C. area, southeast, midwest, and west coast are projecting far more rapid growth than average areas. Low electricity transfer capability between these regions is a key risk for reliability if load growth outpaces deployment of new generation in certain areas. Since these forecasts were filed with FERC, Wilvan customers like Puget Sound Energy, Duke Energy, Dominion, and TVA have stated that their load expectations have grown even higher due to data centers. This indicates that the current FERC load forecast is likely to be an underestimate. Electricity prices last year increased about 18% in California and increased 10% in New York, Wildan's largest two markets. This compounding effect of higher electricity prices and higher electricity load is providing a new catalyst for Wildan Solutions. We're clearly excited about the energy transition capabilities that we've assembled here, planning, software, energy efficiency, and engineering. We are in the right market, and we look forward to adding even more capabilities through M&A in the quarters ahead. Kim, over to you.