Willdan (WLDN) Q3 2026 earnings review
Willdan raises its targets, but its existing businesses grow slower
Willdan, which runs energy programmes for utilities, cities and companies, earned more per sale but bought much of its growth. Net revenue, its sales minus work passed to subcontractors, rose 18%. Without acquisitions, growth was 12%, chief executive Mike Bieber said. Bieber then raised the full-year targets, and by our math most of the increase comes from Mantis, a $285 million purchase.
| Net revenue growth from businesses owned a year ago | 12% 18% in the second quarter |
|---|---|
| Core operating profit (adjusted EBITDA) | $28.3M +22% from a year ago |
| Profit per share, excluding one-offs | $1.20 $1.21 a year ago |
| Full-year core profit outlook | Raised $5M middle of the range: $110M, up 38% |
⚖️ Verdict: 🟢 Bullish
The story got better, because Willdan finished its move toward business customers and kept widening its profit on each dollar of work. One caution: growth at businesses it already owned slowed sharply, and net debt jumped to about $293 million to pay for Mantis.
The question now is whether Willdan's existing businesses can keep growing once Mantis joins. If they can, the 2027 targets are cautious; if not, Mantis alone nearly fills the $500 million net revenue floor. The full outlook in late February will tell.
🐂 Bull Case
Willdan Keeps More of Each Dollar It Bills
Willdan judges itself on core operating profit, which it calls adjusted EBITDA, measured against net revenue. Net revenue is sales minus the work the engineering firm passes to subcontractors. Core profit rose 22% to $28.3 million. That equalled 25.2% of net revenue, a gain of 0.9 percentage points from a year ago.
The gain came from the cost of doing the work. Pay for project staff fell to 13.8% of sales from 15.3%. Finance chief Kim Early credited more work for companies and higher incentive fees from utility programmes. As a result, gross margin widened by 1.6 percentage points.
But overhead climbed. Office and administrative costs reached 30.8% of sales against 28.7%, mostly because stock awards and amortisation of bought businesses grew. Those charges use no cash, so core profit still widened. Early also pointed to "AI-enabled efficiency", although he gave no figure for it, so the cost line rather than the AI claim carries the evidence.
What to watch: the fourth-quarter margin, the first with Mantis, a company chief executive Mike Bieber said earns about 35% of net revenue as core profit. By our math the full-year plan implies 25.9% for the quarter. A reading at or above that would show Mantis lifting the group margin as Bieber said it would.
Business Customers Now Bring a Fifth of Sales
Chief executive Mike Bieber has spent two years adding business customers, such as factories and data centre owners, next to its utilities and cities. Sales to companies reached $47.9 million in the quarter, against $17.9 million a year ago.
Burton, an energy consultant to large chains that Willdan bought in May, supplied about half of the gain. Without Burton, sales to companies still rose about 37%, by our math. With Mantis included, Bieber said "commercial work is equally balanced with work for state and local governments and utilities".
This matters because company work grows faster and earns higher margins, Bieber said. But the share of sales slipped to 22% from 26% in the second quarter, so the shift is uneven from one quarter to the next.
What to watch: sales to companies in the year-end filing, the first period with Mantis. A share near one third would confirm the balance Bieber described.
Willdan Won Back Its Largest New York Contract
The New York Power Authority, the state's public power company, renewed one of Willdan's biggest programmes. The new contract runs ten years and has a budget of about $3.3 billion, which other firms can also draw on. Chief executive Mike Bieber called it "the recompete of one of our largest contracts".
Willdan does $50 million to $60 million of work a year under it, Bieber said. Con Edison and National Grid also merged smaller programmes into one $25 million-a-year contract for the firm. It added a battery storage project in Texas and a substation for Menlo Digital, a data centre developer.
These wins matter because losing the New York contract would have removed one of its largest sources of sales. Instead the work runs for another decade. Battery work grows fast, but Bieber had no figure for it and guessed "5% or less" of revenue.
What to watch: the share of sales from New York clients, 16.3% this quarter, in the next filing. A steady share would show the renewed contract carrying on without a gap.
Willdan Beat Its Plan and Raised Targets Again
Willdan sets yearly targets and has raised them at every update since 2024. By our math, the plan it set in August left about $103 million to $110 million of net revenue for each quarter of the second half.
The firm delivered $112.2 million, above that range, and its profit per share cleared the plan by a wider margin. It then raised the 2026 targets for the third time this year. Chief executive Mike Bieber also set a first 2027 floor of more than $140 million in core profit.
But the beat says the August plan was cautious; it does not prove growth will hold. By our math, Mantis supplies about $12.5 million of the $17.5 million rise in the net revenue target. So the plan for the businesses Willdan already owned moved only a little.
What to watch: the full 2027 outlook in late February. If it separates Mantis from the rest, it will show whether the new floor is as cautious as the August plan proved to be.
🐻 Bear Case
Growth From Businesses It Already Owned Slowed
Chief executive Mike Bieber described "strong operational performance" in the quarter. Net revenue, which leaves out work passed to subcontractors, rose 18%. But Bieber said businesses Willdan owned a year ago grew 12%, down from 18% in the second quarter.
Total sales show a weaker picture. Willdan's own pro forma table treats Burton and Compass, a municipal finance adviser, as owned in both years. On that basis, sales hardly moved and operating income fell.
- Net revenue growth from owned businesses: 20% a year ago, 18% last quarter, 12% now
- Contract revenue without Burton and Compass: up about 4%, by our math
- Operating income, pro forma: down 4% from a year ago
- Burton contract revenue: $23.4 million this quarter, after $27.9 million in about two months of the second quarter
This matters because the case rests on growth Willdan earns itself, not growth it buys. Bieber called Willdan "a low double-digit type organic growth business". This quarter sits at the bottom of that description, and net revenue also dipped from the second quarter.
What to watch: growth from owned businesses in the fourth quarter, reported in late February. Another reading near this quarter's would mean the slowdown is the new pace for the core business.
Buying Mantis Took Net Debt to $293 Million
Mantis Innovation, a Houston firm that manages energy use and building controls for large companies, cost $285 million in cash. Willdan borrowed all of it. Net debt rose to $293 million from $23 million, about 2.3 times a year of core profit.
Chief executive Mike Bieber also trimmed what Mantis brings. He said the accountants had "taken a closer look at the components that build up net revenue". Mantis now adds about $75 million of net revenue, not $120 million, he said, which lifts its margin to about 35%.
The debt carries a floating cost. The last interest-rate hedge expired in September, and Willdan pays about 5.5%. By our math, the new loans add about $16 million of yearly interest. Sellers of earlier businesses can still claim $25.9 million in earn-out payments.
What to watch: net debt at year-end, when finance chief Kim Early said cash flow is strongest. He aims to bring debt below two times core profit by the third quarter of 2027. A slower fall would leave less room for the smaller deals Willdan still wants.
A Higher Tax Bill Wipes Out Profit Growth
Federal deductions for energy-efficient buildings and stock awards had kept Willdan's tax bill low. Those benefits shrank, finance chief Kim Early said, and the tax rate jumped to 23% from 4% a year ago.
So profit per share, excluding one-offs, came in at $1.20, against $1.21 a year ago. Early said the higher tax rate cancelled out the gain in core profit. Reported net income fell 14% to $11.9 million.
- Tax rate: 4% a year ago, 23% now, 25% for the fourth quarter in the company's own outlook
- Fourth-quarter profit per share excluding one-offs: $0.97–1.07 implied, against $1.57 a year ago
This matters because profit per share now grows only as fast as pre-tax profit, and pre-tax profit rose just 8%. In August, Early had put the second-half rate at 15% to 20%; the outlook now carries a higher rate.
What to watch: the 2027 tax rate in the February outlook. A rate near 25% would keep per-share profit tied to pre-tax growth.
Risks this quarter didn't answer
Five standing risks got partial or no new evidence in the results, the quarterly filing or the call. Each item below names the reading that would move it.
- Data centres: Bieber said demand is "not wavering" and the pipeline runs past 2029, but Willdan gave no revenue figure for data centre work or for APG, its substation unit; a disclosed figure would test the claim.
- Los Angeles utility: LADWP supplied 10.2% of quarterly sales, and Early cited "increasing revenue from our LADWP street lighting project"; its share in the year-end filing will show whether concentration returns.
- Fixed-price work: these contracts rose to 49% of the total from 46% a year ago; a loss charge on a large project would show the cost risk.
- Utility programmes: sales to utilities fell 15% from a year ago, and the filing gave no reason; the year-end client table will show whether ratepayer-funded work is shrinking.
- Skilled staff: office pay rose 24%, which Willdan tied to acquisitions and bonuses; pay rising faster than sales next quarter would point to labour pressure.
💲 Other KPIs
Cash clients paid before Willdan did the work fell 13.2% from last quarter, after a jump of nearly half in the second quarter. The balance sits 12.7% above a year ago. But $5.3 million of it is retainage, money clients hold back until a job ends, so the underlying balance is lower than last year.
Operating cash flow fell 19% over nine months while net income rose 32%. Receivables climbed to $97.5 million from $64.6 million in January. Finance chief Kim Early called it "a temporary working capital lag in September expected to reverse in Q4". The third quarter alone produced slightly more cash than a year earlier.
The share count rose 2.0% from a year ago. Stock awards, employee share purchases and 131,626 shares paid to Burton's owners added to it, and Willdan bought back none. Stock-based pay grew 58% to $5.0 million, so dilution should continue.
🔮 Guidance
Raised. The middle of the range points to about 21% growth for 2026, with Mantis included from October 30. By our math, that leaves about $118 million for the fourth quarter, 32% above last year. Without two months of Mantis, the quarter grows about 18%. Third raise this year: +$20M, +$5M, +$17.5M at the middle.
Raised. The plan now has core profit up about 38% this year. By our math, the fourth quarter carries about $30.6 million, a 25.9% margin on net revenue. Third raise: +$15M, +$2.5M, +$5M. Two months of Mantis at Bieber's 35% margin account for about $4.4 million of the latest step.
Raised. The middle of the range implies about 6% growth on 2025. By our math, it leaves $0.97–1.07 for the fourth quarter, about 35% below last year. The reason is tax: last year's fourth quarter had a large benefit, and this one carries a charge. The plan assumes 15.9 million diluted shares.
Unchanged. The plan still assumes no net tax for the full year. Willdan booked a $3.0 million benefit over nine months, so the fourth quarter carries a charge of about 25%, according to the company's own slide.
New. Bieber said Willdan is "well positioned to cross the $1 billion revenue threshold", which implies growth of at least 19%. The figure assumes no further acquisitions. Bieber expects the Engineering and Consulting segment, its city engineering arm, to shrink to about 10% of sales.
New. By our math, the floor sits about 14% above the 2026 midpoint. A full year of Mantis at Bieber's $75 million adds roughly $62.5 million, so Mantis alone takes the total near $500 million. The floor therefore needs almost no growth from the rest of Willdan, which Bieber expects to grow at low double digits.
New. The floor sits 27% above the 2026 midpoint. By our math, a full year of Mantis adds about $22 million, which leaves roughly $8 million to come from the rest of the business. Willdan plans to give the full outlook in late February.
❓ Key Questions
How much of the higher 2026 plan is Mantis?
By our math, two months of Mantis explain most of the rise in the net revenue target. A split between Mantis and the rest would show whether the businesses Willdan already owned improved their own outlook.
What did data centre work earn this year?
Bieber says demand is steady, but Willdan has never published revenue for APG or for data centre work. Investors cannot judge the risk of a slowdown in the fastest-growing part of the business without that figure.
Why did sales to utilities fall 15%?
Utilities were 41% of sales a year ago and are 29% now. The filing gives no reason. A shrinking ratepayer-funded base would weaken the stability the company claims for its customer mix.
What tax rate should owners expect in 2027?
The tax rate rose to 23% and the outlook carries 25% in the fourth quarter. The 2027 rate decides how much of the core profit growth reaches profit per share.
Why did corporate costs jump 82% this quarter?
Unallocated corporate costs rose to $4.2 million from $2.3 million, after falling in the second quarter. A swing in how costs are assigned would change how investors read segment profit.