0001104659-26-020767
SEC filingWilldan Group, Inc. reported strong financial performance for fiscal year 2025, ending January 2, 2026. Contract revenue increased 20.5% year-over-year to $681.6 million, driven by increased demand in both the Energy and Engineering & Consulting segments. Gross profit rose 26.1% to $255.7 million, with gross margin expanding to 37.5% from 35.8% in the prior year. Operating income grew 40.8% to $44.1 million, and net income more than doubled to $52.6 million, significantly aided by a $12.6 million income tax benefit. The company generated $80.1 million in operating cash flow, ending the period with $65.9 million in cash and cash equivalents and total assets of $544.2 million. Key growth drivers included acquisitions (Enica, APG, Alpha) and higher demand for energy efficiency, electrification, and construction management services.
Willdan Group delivered robust financial results for fiscal year 2025. Contract revenue reached $681.6 million, a 20.5% increase from $565.8 million in FY2024. This growth was driven by strong performance in both reporting segments. Net income surged to $52.6 million from $22.6 million in the prior year, a 132.9% increase. This exceptional growth was significantly influenced by a $12.6 million income tax benefit, compared to a $4.1 million tax expense in FY2024. The tax benefit resulted from discrete items including stock compensation deductions and energy-efficiency building deductions. Operating income grew 40.8% to $44.1 million, reflecting both revenue growth and margin expansion. The company ended the period with $65.9 million in cash and cash equivalents and total assets of $544.2 million.
Revenue growth was broad-based across both segments. The Energy segment, which represents approximately 84.5% of total revenue, grew 21.7% to $576.1 million. Key drivers included higher construction management revenues, increased demand for energy efficiency and electrification services under utility programs, and incremental revenues from the acquisitions of Enica and Alternative Power Generation (APG). The Engineering and Consulting segment grew 14.1% to $105.5 million, driven by increased client demand and the acquisition of Alpha Inspections. Geographically, substantially all revenue was domestic, with California (43.5%), New York (19.0%), and Nevada (11.8%) representing the largest state concentrations. By client type, government clients accounted for 47.8% of revenue ($325.7 million), utilities for 40.8% ($277.9 million), and commercial clients for 11.4% ($77.9 million).
Profitability metrics showed significant improvement. Gross margin expanded to 37.5% from 35.8% in the prior year, primarily due to favorable changes in revenue mix. Direct costs as a percentage of revenue decreased to 62.5% from 64.2%. Operating margin improved to 6.5% from 5.5%. General and administrative expenses increased 23.4% to $211.5 million, primarily due to increased staffing from acquisitions, higher incentive compensation, and increased professional service fees. However, G&A expenses as a percentage of revenue remained relatively stable at 31.0% compared to 30.3% in the prior year. The effective tax rate was a benefit of 31.4% compared to an expense of 15.4% in FY2024, driven by discrete tax items.
The company generated strong operating cash flow of $80.1 million, up from $72.1 million in the prior year. Free cash flow (operating cash flow minus capital expenditures) was $34.5 million. Investing activities used $45.6 million, primarily for acquisitions ($36.3 million) and capital expenditures ($9.4 million). Financing activities used $42.7 million, including payments to retire the prior credit agreement ($90.0 million), partially offset by borrowing to fund a new credit agreement ($88.4 million). The balance sheet remains healthy with total assets of $544.2 million and stockholders' equity of $304.9 million. Total liabilities were $239.4 million, including $48.8 million in outstanding term loan debt. The company had $65.9 million in cash and cash equivalents and available borrowing capacity under its credit facilities.
Management believes primary sources of liquidity (cash from operations, cash on hand, and available borrowings) will be sufficient to finance operating activities for at least the next 12 months. As of January 2, 2026, the company had a $100 million Revolving Credit Facility with no borrowed amounts and a $50 million Delayed Draw Term Loan available. The company continues to focus on strategic acquisitions to expand its service offerings and geographic reach, as evidenced by the three acquisitions completed in FY2025. Key risk factors include cybersecurity threats, dependence on key customers and geographic concentrations, and the inherent uncertainties in estimating costs on fixed-price contracts. The company's strategy centers on providing comprehensive energy and infrastructure solutions, leveraging synergies between its Energy and Engineering & Consulting segments.