Willdan Group, Inc.

Greetings, and welcome to the Wilden Group Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Al Kashok. Thank you, Al. You may begin.

Thank you, Julian. Good afternoon, everyone, and welcome to Will Dan Group's third quarter fiscal 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. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release, and in the presentation slides, all of which are available on our website. Please note that year-over-year commentary on variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an organic basis. We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. With that, I'll hand the call over to Mike.

Thanks, Al. We had a record third quarter, exceeding consensus estimates and our own expectations. Contract revenue was up 19% organically, and adjusted EBITDA was up 50% year over year. Adjusted EPS doubled. and GAAP EPS was up more than four times year over year. During Q3, all lines of business were strong. We continue to do a good job of converting revenue into free cash flow. Through three quarters, we have generated $2.30 of free cash flow per share, an outstanding result. I'm proud of the team's consistent, excellent performance. Given our year-to-date results and our continued momentum, we are raising our full-year financial targets, which Kim will expand on later. We are confident in Wildan's growth trajectory as we support our clients in meeting critical energy and efficiency and decarbonization goals. Demand for electrical power is rising, along with a heightened focus on energy security and expanded grid investments. On slide three, Wildan helps transition communities to clean energy and a more sustainable future. For the first time, we are now over 1,700 employees, comprised mostly of scientists, engineers, and technical professionals. We have 53 offices across North America and have helped clients avoid emissions of 7.8 million metric tons of greenhouse gases. Will Dan's work is a significant contributor to U.S. greenhouse gas reductions, particularly in the densely populated coastal states. Commercial customers comprise 7%, Government customers are now 50%, and utilities are 43% of our revenue. Demand for our services with all three customer groups is healthy. Our work for commercial customers has largely been related to energy usage at data centers. AI-driven load growth is providing Wildan with many new commercial opportunities to help technology clients navigate electricity constraints. We would like to add additional acquisitions that strengthen our capabilities with commercial customers. Our work for government clients is growing organically at a double-digit pace and has remained surprisingly strong all year, and the outlook is positive. Our work for utilities is primarily under multi-year contracts and remains robust. I also want to mention California's energy affordability crisis. Since 2019, PG&E's electricity rates have risen 87%, SCE has risen 79%, and SDG&E has risen 41%. These electricity rate increases have been driven substantially by wildfire preparedness costs due to climate change. The increases make saving electricity in California more cost-effective. WILDAN is the largest provider of energy efficiency services to California utilities