Willdan Group (WLDN) Q3 2025: Organic Revenue Soars 20% as Data Center Electrification Drives Backlog
Willdan Group delivered a standout Q3, with organic growth and margin expansion propelled by surging demand for energy and infrastructure solutions tied to data center and electrification trends. The APG acquisition’s contribution and cross-segment collaboration are accelerating backlog and positioning Willdan for continued outperformance into 2026. Management’s guidance raise and robust pipeline highlight a business capitalizing on secular load growth and infrastructure modernization.
Summary
- Secular Electrification Surge: Data center and broader electrification demand are fueling sustained double-digit organic growth.
- APG Integration Accelerates: Cross-segment collaboration and targeted acquisitions are driving record backlog and execution leverage.
- 2026 Growth Visibility: Raised guidance and a healthy pipeline signal continued outperformance and strategic flexibility.
Performance Analysis
Willdan posted a record quarter, with net revenue up 26% year-over-year, led by a 20% organic growth rate and broad-based contributions from both energy and engineering segments. The energy segment now comprises 85% of total revenue, reflecting the company’s pivot toward electrification and utility infrastructure as core drivers. Gross profit climbed 30%, outpacing revenue growth and translating into a 91% increase in pre-tax income, while adjusted EBITDA margin reached 24% of net revenue.
Acquisitions, most notably APG, contributed 6% to growth, but the bulk of momentum remains organic, demonstrating Willdan’s ability to capitalize on secular trends in electricity load growth and infrastructure modernization. Free cash flow conversion remained strong, with $34 million generated year-to-date and $65 million on a trailing 12-month basis. Leverage remains minimal, with a 0.2x adjusted EBITDA ratio and $183 million in available liquidity, reinforcing balance sheet strength for further acquisition-led expansion.
- Data Center Electrification: Hyperscaler and commercial demand for high-voltage power solutions is driving both top-line growth and multi-year backlog visibility.
- Recurring Utility Revenue: Utility contracts, typically three to five years, provide a stable base and comprise 41% of revenue.
- Municipal Growth: State and local government work, now 44% of revenue, is growing at a double-digit organic pace, reflecting robust infrastructure funding and demand.
Margin expansion and disciplined cost control are enabling Willdan to invest in talent and technology while maintaining profitability, positioning the company for further scale as electrification and infrastructure cycles accelerate.
Executive Commentary
"With electric load growth expected to increase over the next decade, driven by data centers and electrification, WILDAN's unique capabilities and execution position us well to sustain long-term growth. As a result, we are again raising our full-year financial targets."
Mike Bieber, President and Chief Executive Officer
"Our Q3 results reflect another quarter of significant year-over-year improvement, continuing a trend that began in early 2022... Broad-based growth and excellent execution drove a record quarter."
Kim Early, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Electrification and Load Growth Tailwinds
Willdan is strategically positioned at the intersection of rising U.S. electricity demand, with its E3 subsidiary forecasting 0.7 to 1.2 terawatt hours of load growth over the next decade. This trend is not limited to data centers, but also includes industrial, electric vehicles, and building electrification, transforming utilities’ capex priorities and creating a multi-year infrastructure investment cycle.
2. APG Acquisition and Cross-Selling Leverage
The APG, power engineering solutions for data centers, acquisition is a catalyst for cross-segment collaboration, already delivering record backlog and expected to grow over 50% in 2026. Willdan’s ability to integrate APG’s capabilities, from upfront consulting to engineering and project management, is deepening client relationships and expanding wallet share, particularly with hyperscalers and commercial clients.
3. Recurring Utility and Municipal Revenue Base
Utility contracts (41% of revenue) and municipal projects (44%) provide recurring, multi-year revenue visibility, underpinned by ratepayer fees and municipal bonds. This base is expanding as energy efficiency is increasingly viewed as a power resource, and as state and local governments ramp infrastructure spending.
4. Disciplined Risk Management and Selectivity
Willdan is leveraging its strong demand environment to be more selective with projects, focusing on mid-tier developers and negotiated contracts that support margin expansion. Weekly operational reviews and a measured approach to resource planning are keeping execution risks in check despite rapid organic growth.
5. Acquisition Pipeline and Integration Capacity
Management signaled readiness to pursue larger, $100 million-plus targets, citing robust cross-sell systems and a culture oriented toward collaboration. The balance sheet and operational discipline support further M&A without straining integration bandwidth or core execution.
Key Considerations
Willdan’s Q3 results highlight a business benefiting from secular electrification, with management actively positioning for sustained growth and margin expansion. Strategic execution is evident in both organic and inorganic growth levers, while operational discipline is mitigating typical scaling risks.
Key Considerations:
- Secular Demand Strength: Data center and electrification trends are structural, not cyclical, supporting multi-year growth visibility.
- Cross-Selling Execution: Integration of APG and other bolt-ons is driving outsized revenue synergies and backlog gains.
- Margin Expansion Discipline: Selective project acceptance and operational controls are protecting profitability as scale increases.
- Acquisition Readiness: Ample liquidity and proven integration systems enable pursuit of larger strategic targets without overextending resources.
Risks
Rapid growth brings execution and resource allocation risks, particularly as Willdan takes on larger, more complex projects. While management’s controls appear robust, any slip in quality or delivery could impact margins or client relationships. Competitive intensity in utility and commercial electrification markets, as well as potential delays in infrastructure funding, remain watchpoints.
Forward Outlook
For Q4 2025, Willdan guided to:
- Continued double-digit organic growth, with robust backlog conversion expected.
- Margin expansion supported by project selectivity and cost discipline.
For full-year 2025, management raised guidance:
- Net revenue of $360 to $365 million.
- Adjusted EBITDA of $77 to $78 million.
- Adjusted diluted EPS of $4.10 to $4.20 per share.
Management highlighted several factors that support this outlook:
- Strong pipeline of utility, municipal, and commercial electrification projects.
- Record APG backlog and anticipated >50% APG growth in 2026.
Takeaways
Willdan’s Q3 demonstrates how secular electrification and data center demand are translating into tangible financial outperformance and backlog growth.
- Organic Growth Outpaces Expectations: Sustained 20% organic growth is well above typical industry rates, with recurring utility and government contracts providing a stable base.
- APG Integration Unlocks Synergy: Cross-segment collaboration is accelerating revenue synergies, backlog, and execution leverage, particularly in high-value data center electrification.
- 2026 Setup Looks Strong: Raised guidance, robust pipeline, and readiness for larger acquisitions position Willdan for continued outperformance as electrification cycles accelerate.
Conclusion
Willdan’s Q3 results underscore its emergence as a key beneficiary of the electrification supercycle, with integrated solutions spanning consulting, engineering, and project delivery. Management’s disciplined approach to growth, risk, and capital allocation supports both near-term execution and long-term strategic flexibility.
Industry Read-Through
Willdan’s results reinforce the broad-based acceleration in U.S. electricity demand, with data center and electrification themes now driving utility capex and infrastructure modernization across the sector. Competitors in engineering, consulting, and energy services will likely see similar tailwinds, but Willdan’s cross-segment integration and recurring revenue base offer a differentiated model. The company’s success with APG and municipal projects signals rising demand for turnkey electrification solutions, while the willingness to pursue large acquisitions highlights the sector’s consolidation potential as scale and integration become key competitive advantages.