Willdan Group, Inc.

Greetings and welcome to the Wilden Group fourth quarter and fiscal year 2025 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 Kazchok, Investor Relations. Please go ahead, sir.

Thank you, Rochelle. Good afternoon, everyone, and welcome to Will Dan Group's fourth quarter 2025 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 or variances on revenue, adjusted EBITDA, and adjusted EPS discussed during our prepared remarks are on an actual basis unless otherwise specified. We will make forward-looking statements about our performance. These statements are based on how things we see 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 risk and uncertainties. With that, I'll hand the call over to Mike, who will begin on slide two.

Thanks, Al. We closed 2025 with record financial performance and strong momentum across our business. For 2025, both contract and net revenue grew greater than 20%, led by our energy work. Adjusted EBITDA grew 40%, and yearly margins expanded to above our 20% target for the first time in 2025. Strong EPS growth allowed us to generate $71 million of free cash flow, and we are now in a net cash position. In 2025, organic net revenue growth was 17%, and was largely driven by expansion with existing customers. Electric load growth has returned to the United States after about 15 years of stagnation. Artificial intelligence and data centers are accelerating electricity demand at a scale not seen in recent years. To a lesser extent, transportation and building electrification and increased domestic manufacturing are also contributing to electricity demand growth. Our utility customers are confronting a grid that must manage more power, more intermittency, and more complexity than ever before. At the same time, affordability has moved to the forefront. As infrastructure investment increases, regulators must balance reliability, decarbonization, and cost containment, increasing the need for smarter planning and cost-effective execution. Many studies have shown that energy efficiencies usually increases rates slightly but drives down bills for participants because you're using less energy and thus improves affordability. The dynamic plays directly into where Wildan operates, and the results reflect strong execution, which fuels our positive long-term outlook. On slide three. Let me step back for a moment and remind everyone how our business is structured and where we're seeing demand. Welland delivers a broad range of energy and infrastructure solutions to utilities, state and local governments, and commercial customers. On the left side of the slide, approximately 85% of our revenue comes from the energy segment, with the remaining 15% from engineering and consulting. On the right side, activity remains healthy across all customer groups. Our utility customers represent about 41% of revenue and continue to perform well. These programs are typically three- to five-year contracts funded through ratepayer mechanisms, which provide strong visibility and recurring revenue. Importantly, we're seeing program sizes usually grow over time as energy efficiency becomes recognized as a system resource. State and local governments account for approximately 48% of revenue and remains a steady source of growth. Most of this work is supported by user fees and municipal bond funding. both of which remain stable. Commercial customers have rapidly grown to 11% of revenue, with most of that activity tied to power for data centers. AI-driven load growth is creating meaningful infrastructure and energy optimization needs, and we're helping these clients navigate grid constraints, design solutions, and meet aggressive power requirements. Commercial customers represent the most fertile business environment we serve, and we plan to continue intentionally increasing our capabilities offered to the commercial sector. Taken together, this mix reflects a diversified, durable business supported by long-term contracts, relatively stable funding sources, and growing demand across multiple end markets.