Willdan (WLDN) Q2 2025: Organic Growth Hits 23%, Cross-Selling and Data Center Demand Accelerate Pipeline
Willdan delivered standout 23% organic growth in Q2, fueled by cross-selling, data center electrification, and a robust project pipeline. Broad-based demand from utilities, government, and commercial clients, plus margin expansion, drove record profitability and a guidance raise. With utility-scale electrification and AI-driven data center loads reshaping end markets, Willdan’s integrated model is poised for continued outperformance into 2026.
Summary
- AI Data Center Load Drives Demand: Electrification and hyperscale data centers are reshaping Willdan’s opportunity set.
- Cross-Selling Powers Organic Expansion: Integration of acquisitions is unlocking new client wins and margin upside.
- Pipeline Visibility Extends Into 2026: Multi-year contracts and upcoming “elephant” awards support long-term growth narrative.
Performance Analysis
Willdan posted its tenth consecutive quarter of year-over-year improvement, with Q2 net revenue up 31% and organic growth at a record 23%. The energy segment, which comprises roughly 85% of revenue, expanded 25% as utility and data center demand accelerated. Engineering and consulting, representing the remaining 15%, grew 16% on municipal wins and geographic expansion. Gross profit jumped 40% on improved mix and project execution, with gross margin rising to 39.4% from 34.6% last year.
Operating leverage was evident as adjusted EBITDA rose 71%, reaching 23% of net revenue for the quarter. Cash flow conversion remained robust, with 80% of adjusted EBITDA converting to operating cash flow and free cash flow steady at $24 million for the first half. The balance sheet is strong, with net debt at $28 million and $172 million in available liquidity, supporting ongoing M&A and organic investment. Management raised full-year guidance on the back of broad-based demand and margin expansion.
- Data Center Electrification: AI-driven hyperscale projects are fueling consulting, engineering, and infrastructure wins.
- Margin Expansion: Favorable mix and disciplined cost control lifted gross and EBITDA margins to new highs.
- Recurring Revenue Base: Multi-year utility and government contracts anchor stability and underpin growth visibility.
Performance was not driven by any single award, but rather by expansion across existing long-term contracts, cross-selling of new capabilities, and early-stage contributions from recent acquisitions. The restart of the $330 million LADWP contract adds further multi-year upside, though its impact is expected to be immaterial in 2025.
Executive Commentary
"Our formula for catalyzing organic growth with the capabilities of new acquisitions is working. Against a strong Q2 last year, net revenue grew 31% year over year, driven by an outstanding 23% organic growth rate and 8% acquisitive growth. Performance remains strong across all business lines, reflecting the consistency of our execution and the value of our integrated model."
Mike Bieber, President and CEO
"Organic net revenue growth of 23% for the second quarter, the successful completion of recent acquisitions, and strong free cash flow conversion attest to the record-setting performance for the quarter and the year to date. This momentum enabled us to complete an expansion and extension of our credit facilities and reduce our total debt by $28 million during the quarter, reinforcing our commitment to disciplined capital deployment."
Kim Early, Executive Vice President and CFO
Strategic Positioning
1. Electrification and AI Data Center Tailwinds
Willdan is capitalizing on a new era of U.S. electricity load growth, with AI-driven data centers and electrification fueling multi-year demand. The company’s proprietary data center siting software and high-voltage engineering capabilities position it as a go-to partner for hyperscalers and utilities navigating grid constraints and aggressive power requirements. These trends are structural, with electricity demand projected to rise 50% by 2050, and Willdan’s exposure to both consulting and project execution creates a full-stack moat.
2. Cross-Selling and Acquisition Integration
Recent acquisitions are catalyzing organic growth through cross-selling, especially the APG and E3 software businesses. Management highlighted that pairing software and analytics with legacy consulting is opening new doors and driving a 50% organic increase in upfront consulting work. This integration is not only expanding the addressable market but also enhancing margin profile and deepening customer relationships across commercial, utility, and government segments.
3. Contract Quality and Risk Management
Willdan’s contract portfolio is anchored by multi-year, recurring utility and government agreements, most funded by ratepayers or municipal bonds. Fixed-price contracts, which comprise about 45% of the mix, are structured to minimize EPC (engineering, procurement, and construction) risk via subcontracting and price escalators. Management emphasized that these contracts are lower risk than typical EPC projects, with advance payments and established customer relationships reducing working capital needs and volatility.
4. Pipeline and “Elephant” Opportunities
The company is actively pursuing several large-scale (“elephant”) opportunities, including major contracts in New York and California expected to be awarded late 2025 or early 2026. The pipeline is robust across all end markets, and the restart of the $330 million LADWP program provides additional multi-year backlog. Management expects these wins to further elevate growth rates and reinforce Willdan’s leadership in energy infrastructure and grid modernization.
5. Margin and Capital Discipline
Gross and EBITDA margin expansion is being driven by favorable revenue mix, project execution, and cost discipline. The company’s focus on working capital efficiency and disciplined capital deployment has resulted in low leverage and ample liquidity, enabling continued investment in organic growth and strategic M&A without sacrificing financial flexibility.
Key Considerations
Willdan’s Q2 results highlight a business firing on all cylinders, with strong demand, disciplined execution, and a clear pathway to sustained growth.
Key Considerations:
- Data Center Electrification: AI and cloud-driven load is creating multi-year demand for consulting, engineering, and grid interconnect solutions.
- Cross-Selling Synergies: Acquisitions are unlocking new client wins and deepening wallet share, particularly via software-enabled consulting.
- Contract Structure: Fixed-price and recurring contracts with utilities and governments provide revenue stability and cash flow predictability.
- Pipeline Visibility: Large-scale “elephant” opportunities and the LADWP contract restart underpin multi-year growth confidence.
- Margin Expansion: Improved mix, cost control, and capital discipline are driving record profitability and supporting a guidance raise.
Risks
Tariff volatility and the potential expiration of Section 179D tax credits could impact material costs and effective tax rates after 2026, though management has inserted flexible contract terms and price escalators to mitigate these risks. A broad recession would affect demand, but the company’s utility and public sector customer base is relatively insulated. Any delays in large contract awards or integration missteps in M&A could temper growth momentum.
Forward Outlook
For Q3 2025, Willdan guided to:
- Adjusted EBITDA similar to Q2’s level
- Continued broad-based revenue growth across segments
For full-year 2025, management raised guidance:
- Net revenue of $340 to $350 million
- Adjusted EBITDA of $70 to $73 million
- Adjusted EPS of $3.50 to $3.65
Management cited strong demand, margin expansion, and a robust pipeline as drivers:
- Multi-year utility and government contracts provide revenue visibility
- Large-scale project awards expected to land late 2025 or early 2026
Takeaways
Willdan’s integrated model and exposure to structural electrification trends position it for sustained outperformance as AI and manufacturing reshape U.S. energy demand.
- Multi-Segment Strength: Broad-based growth across utilities, government, and commercial segments is driving record results and guidance raises.
- Cross-Selling and Acquisitions: Integration of software and analytics capabilities is expanding margins and opening new markets.
- Watch for Large Awards: Upcoming “elephant” contracts and the LADWP ramp will be key growth catalysts into 2026 and beyond.
Conclusion
Willdan’s Q2 performance demonstrates the power of its integrated, multi-segment model and disciplined execution. With electrification and data center demand providing structural tailwinds, and a robust pipeline of large-scale opportunities, Willdan is well positioned to sustain above-market growth and margin expansion through 2026.
Industry Read-Through
The surge in AI-driven data center load and grid modernization is reshaping the U.S. energy and infrastructure landscape, benefiting specialists with consulting, engineering, and project management capabilities. Willdan’s results signal that utilities, public agencies, and hyperscalers are accelerating investment in electrification and grid resilience. Peers in energy services, engineering, and infrastructure sectors should expect rising demand for integrated, software-enabled solutions and increased competition for large, multi-year contracts. Tariff management and contract flexibility are becoming critical differentiators as supply chain and policy risks persist.