What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-08 compared with 2023-03-10 · 91 added, 80 removed, 326 unchanged (34% of the section changed)

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Willdan, a Delaware corporation, was formed in 2006 to serve as our holding company for the expanding subsidiary operations.

We commenced providing energy efficiency services in 2008 with the acquisition of Intergy and since then, through organic growth and acquisitions, our client base has grown to include investor-owned and other public utilities, as well as substantial energy users in government and business.

We commenced providing energy efficiency services in 2008 and since then, through organic growth and acquisitions, our client base has grown to include investor-owned and other public utilities, as well as substantial energy users in government and business.

Our overall growth strategy revolves around a combination of strong organic expansion and strategic acquisitions which provides us the ability to expand the breadth and depth of the services we provide to new and existing clients.

We believe that we are well positioned to capitalize on the ongoing expansion and transformation of the energy and infrastructure environments as they adapt to climate change, electrification, and technology advancements.

We operate our business through a nationwide network of offices spread across 22 states, the District of Columbia, and the Canadian province of Alberta.

We operate our business through a nationwide network of offices spread across 22 states, the District of Columbia, the Canadian province of Alberta, and the Commonwealth of Puerto Rico.

We serve a majority of the largest investor-owned electric utilities and over half of the largest municipal utilities in the United States (“U.S.”).

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Engineering and Consulting

During fiscal year 2022, we derived 14.4% of our Energy segment contract revenues from one customer;

the Los Angeles Department of Water and Power (“LADWP”), and had no individual customers that accounted for more than 10% of our Engineering and Consulting segment revenues.

During fiscal year 2023, we derived 22.7% of our Energy segment contract revenues from two customers, the Los Angeles Department of Water and Power (“LADWP”) and the Dormitory Authority State of New York (“DASNY”).

During fiscal year 2023, we had no individual customers that accounted for more than 10% of our Engineering and Consulting segment contract revenues.

For further information related to our financial reporting segments, see Part II, Item 8, Note 9, Segment and Geographical Information , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

Energy Services

Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations.

Our Energy segment provides specialized, innovative, and comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations.

Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend.

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We were responsible for the study, design, and construction management that included the retrofit of 200 standard-flow fume hoods to low-flow, high-efficiency hoods and the installation of high-entrainment fume hood exhaust systems, new lab make-up air units with heat recovery, liquid desiccant dehumidification systems, new supply air risers and general exhaust risers throughout the tower, new hot water and chilled water risers, new central station air handling equipment, new high-temperature hot water to low-temperature hot water heat exchangers, and a lab fit-out with chilled beam secondary heating and cooling.

● Pueblo School District 70 Infrastructure Improvement, Colorado.

Pueblo School District 70 has 25+ schools and support facilities covering approximately 1.5 million square-feet.

We were responsible for development, design, and construction management of nearly 150 energy efficiency and infrastructure improvement projects district wide.

These projects included multiple building additions, several major interior renovations, district-wide LED upgrade, 10 building-wide HVAC and controls projects, 11 roof replacements, a dozen major parking lot improvements and replacements, and multiple CCTV and public address system replacements.

● San Diego Gas and Electric (“SDG&E”), California .

We provide peak-load reduction and energy capacity to SDG&E by coordinating the installation of proven energy efficiency measures, including chiller retrofits, chiller variable-frequency drives (“VFDs”), HVAC VFDs, evaporative cooling, demand control ventilation, two-way valves, and chilled water pump VFDs.

These measures produce both peak-load reductions and energy savings.

● Baldwin High School, Kansas.

We provided a central plant HVAC replacement and building wide HVAC controls installation.

We installed a new chilled water and boiler plant and refurbished two large air handling units.

We also installed new heating hot water control valves on all variable air volume boxes and new HVAC controls to ensure the achievement of specified energy cost savings for the school.

We provided peak-load reduction and energy capacity to SDG&E by coordinating the installation of proven energy efficiency measures, including chiller retrofits, chiller variable-frequency drives (“VFDs”), HVAC VFDs, evaporative cooling, demand control ventilation, two-way valves, and chilled water pump VFDs.

These measures produced both peak-load reductions and energy savings.

● Entergy Corporation, Louisiana.

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Each City agency now has actionable targets and an initial pathway to meeting them under the plan.

The effort included the virtual survey of more than 4,000 publicly owned facilities in the city, detailed building energy modeling of prototypical city facilities, and transformation of these analyses into a comprehensive plan for the implementation of new renewable electricity sources, a heat electrification initiative, improved building energy efficiency and changes in wastewater, transportation, and other processes to meet the established goals.

plan for the implementation of new renewable electricity sources, a heat electrification initiative, improved building energy efficiency and changes in wastewater, transportation, and other processes to meet the established goals.

Engineering and Consulting Services

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All work was accomplished through a task order process that defined the scope of work, time of performance, and cost of services.

● City of Palm Springs, California, Engineering and Construction Management Services.

We provided construction management and public works inspection services related to the City’s Police Department Remodel Project.

The project involved the remodeling of the training center, lobby, records area, detective bureau, and men’s and women’s locker rooms.

We acted as Owner’s Representative and Construction Manager responsible for coordinating all aspects of the construction, including coordination with the City’s Building Inspection Staff.

● Contra Costa County, California, City Engineering Services.

We provided finance review, financial analysis, and contract administration services for the Contra Costa County Public Works Department.

Willdan provided municipal services in a variety of professional and technical administrative and finance measures.

● County of Los Angeles, California, Traffic Engineering Services.

We provide professional traffic engineering services for the Lower Azusa Road/Los Angeles Street Traffic Signal Synchronization Project.

The services include meetings and project coordination with Los Angeles County and various municipalities as well as field review, equipment inventory, reporting for recommended improvements, traffic signal base plans, traffic signal improvement plans and traffic signal utility plans for 29 signalized intersections along the Lower Azusa/Los Angeles Street corridor.

● City of Long Beach, California, Engineering and Construction Management Services.

We provided construction management and public works inspection services for the City’s capital improvement and street maintenance programs.

The projects involve building tenet improvements, landscaping, asphalt overlays, ADA compliance ramps, sidewalks, storm drains, water lines, sewer installations, underground utility improvements and other appurtenant work.

We acted as the Owner’s Representative and Construction Manager responsible for coordinating all aspects of the construction, including coordination with the City’s Building Inspection Staff.

● County of Los Angeles, California, Traffic Design and Operational Support Services.

We provide professional traffic engineering services for Traffic Signal Synchronization Project.

The services include meetings and project coordination with Los Angeles County and various municipalities as well as field review, equipment inventory, reporting for recommended improvements, traffic signal base plans, traffic signal improvement plans, traffic signal utility plans and engineering estimates for multiple signalized intersections along various street corridors.

● County of Orange, California, Code Enforcement Services.

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We assist in the entitlement/development process consisting of general land use, zoning and building violations.

● State of Nevada, Building and Safety Services.

We provided building safety/plan check services for the State of Nevada Public Works Department since 2007.

Projects for the State of Nevada included several for the University of Nevada, Las Vegas and Reno campuses.

The projects consisted of installation of photo voltaic and parking lot lighting upgrades, a new baseball clubhouse, and the complete structural upgrade and remodel of several historic buildings at the Reno campus.

● City of Phoenix, Building and Safety Services.

We have provided Building Safety, Building Inspection and Building and Fire plan review services to the City of Phoenix Building and Fire Departments since 2001.

Willdan Building Inspectors and Reviewers report to the City of Phoenix where the city provides assignments.

Inspectors are assigned residential new construction, additions, and remodel inspections.

Fire plan reviewers are assigned commercial fire protection systems and Fire Code reviews.

Plan reviewers are assigned residential new construction, additions and remodels reviews.

● Contra Costa County, California, Financial Services.

We provided finance review, financial analysis, and contract administration services for the Contra Costa County Public Works Department.

Willdan provided municipal services in a variety of professional and technical administrative and finance measures.

● Property Assessed Clean Energy (“PACE”).

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The majority of our contracts typically range from $1,000 to $10,000,000 in contract revenue;

however, several of our construction management service contracts exceed $20,000,000 and range up to $90,000,000 in construction value.

In addition, many of our multi-year utility program management contracts exceed $10,000,000 and, two of our largest contracts provide contract limits in excess of $100,000,000 in revenue over a period of five years for the management of utility incentive programs for the implementation of energy efficiency measures.

however, several of our construction management service contracts exceed $20,000,000 and can range up to $130,000,000 in construction value.

In addition, many of our multi-year utility program management contracts exceed $10,000,000 and, two of our largest contracts have provided contract limits in excess of $100,000,000 in revenue over a period of five years for the management of utility incentive programs for the implementation of energy efficiency measures.

Our contracts typically have a duration of between two and thirty-six months, although we have city services contracts that have been renewed or re-awarded and in effect for over 30 years.

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As of December 29, 2023, we had approximately 2,300 open projects.

During fiscal year 2022, we had one customer that accounted for more than 10% of our consolidated contract revenues.

For fiscal year 2022, the LADWP accounted for 12.0% of our consolidated contract revenue.

For fiscal year 2022, our top 10 customers accounted for 54.6% of our consolidated contract revenues.

Our largest clients are based in New York and California.

During fiscal year 2023, we had no individual customers that accounted for more than 10% of our consolidated contract revenues and our top 10 customers accounted for 52.7% of our consolidated contract revenues.

Our largest clients are based in California and New York.

In fiscal year 2023, services provided to clients in California accounted for 45.1% of our consolidated contract revenue and services provided to clients in New York accounted for 24.7% of our consolidated contract revenue.

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On average, this program typically implements approximately 8,000 energy efficiency projects a year and has implemented over 103,000 projects since program inception in 2008.

Over that time, we have saved the LADWP and its customers over half a million MWh per year and almost one hundred MW of peak demand and also provided lead generation identifying roughly 10,000 water efficiency upgrades.

Over that time, we have saved the LADWP and its customers over half a million MWh per year and almost one hundred MW of peak demand and also provided lead generation identifying over 5,000 water efficiency upgrades.

We also collaborate with Duke Energy - Progress to manage the small business direct install program in North Carolina and South Carolina.

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We continue to implement programs across these four states and have completed over 30,000 projects for Duke Energy resulting in over 890,000 MWh in savings to small businesses.

In January 2017, we announced a new three-year contract with Consolidated Edison to implement Consolidated Edison’s Small and Medium Business Direct Install (“SMB”) program across the utility's New York City and Westchester County service area.

It continues the process of diversifying the program offerings.

After giving effect to renewals and extensions, the Consolidated Edison contract continues through the end of 2023.

The SMB program, Consolidated Edison's largest energy efficiency program, helps customers save energy, lower their bills and protect the environment by providing financial incentives to identify and buy down the cost of energy efficiency measures.

To support this effort, we provide full-service program implementation including outreach and direct sales to potential commercial customers, on-site energy efficiency assessments, direct implementation of energy savings measures and subcontractor management.

We implement Consolidated Edison’s Small and Medium Business Program across the utility's New York City and Westchester County service area.

After giving effect to renewals and extensions, this Consolidated Edison contract continues through the end of 2025.

We also implement the Consolidated Edison Multifamily program, their largest energy efficiency program.

After giving effect to renewals and extensions, that contract continues through the end of 2024.

Both programs help customers save energy, lower their bills and protect the environment by providing financial incentives to identify and buy down the cost of energy efficiency measures.

The administration of incentive payments to other contractors providing services through the program is included in our scope, but the structure of the contract is such that these payments are not included in revenue or expenses.

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Consequently, the profitability, if any, of fixed price contracts can vary substantially.

Willdan typically mitigates some of these risks through the use of fixed price subcontracts for services, material, and equipment.

We typically mitigate some of these risks through the use of fixed price subcontracts for services, material, and equipment.

The following table presents, for the periods indicated, the approximate percentage of our contract revenue subject to each type of pricing provision:

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We consider our principal competitive advantages to be our reputation for dependability, technical knowledge and industry expertise of employees, quality of services and solutions, and the scope and scale of our service offerings.

We believe that no single competitor has sufficient market share to influence the markets in which we operate in.

We believe that no single competitor has sufficient market share to influence the markets in which we operate.

To address the hazards inherent in our business, we maintain insurance coverage through the following policies:

commercial general liability, automobile liability, workers’ compensation and employer’s liability, cyber liability, professional liability and umbrella/excess liability.

However, if any claims, settlements, or judgements, individually or in

the aggregate, exceed our policy limits, we are liable to pay these claims from our assets.

However, if any claims, settlements, or judgements, individually or in the aggregate, exceed our policy limits, we are liable to pay these claims from our assets.

We believe our coverage limits reasonably protect us from any material adverse impact that may arise from these insured risks.

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We believe that we attract and retain highly skilled personnel with significant industry experience and strong client relationships by offering them challenging assignments in a dynamic work environment that recognizes, supports, and encourages diverse backgrounds and inter-cultural cooperation combined with compensation and employee benefit programs that are competitive with those offered by our competitors.

See Part I, Item 1A, "Risk Factors"

included in this Annual Report on Form 10-K for a discussion of the risks related to the loss of key personnel or our inability to attract and retain qualified personnel.

See Part I, Item 1A, "Risk Factors" included in this Annual Report on Form 10-K for a discussion of the risks related to the loss of key personnel or our inability to attract and retain qualified personnel.

The following table sets forth the number of our employees in each of our business segments and our holding company:

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Collectively, the subgroups positively impact professional development, community outreach and business by creating and embracing cultural initiatives.

Willdan employees are highly engaged in the formation of Employee Resource Groups (“ERG”), fostering a greater sense of community while increasing employee engagement, inclusiveness, representation, and collaboration.

Our employees are highly engaged in the formation of Employee Resource Groups (“ERGs”).

We believe that ERGs foster a greater sense of community while increasing employee engagement, inclusiveness, representation, and collaboration.

All employees have the opportunity to initiate, join, and lead ERGs.

Employee Engagement and Development

Continuous growth requires continued investment in people, innovation, and new opportunities.

Sustaining long-term growth requires continued investment in people, innovation, and new opportunities.

We continuously strive to improve upon our engagement between employees and management teams to drive our company goals and enhance the employee experience.

We aim to develop capable leadership that can meet the challenges of business growth while instilling a supportive and inclusive culture.

At all locations, we provide our employees with performance assessments and evaluations and professional development opportunities including access to job specific training.

We also provide our employees with training on workplace culture and enrichment through our learning platform, which covers topics such as harassment, creating healthy work environments, inclusion, ethics and compliance.

During fiscal year 2021, we initiated an annual company-wide employee engagement survey.

We have since worked to incorporate feedback that we received by expanding our use of internal diversity and human capital metrics and recruiting efforts and improving access to professional development programs.

Our team began collecting additional human capital metrics, such as employee gender ratios and other demographic information, and we have expanded the roster of universities at which we conduct recruiting activities.

We also invested in our employee development strategy by expanding our employee training and professional development programs.

We launched our 2022 survey in late fiscal year 2022 and are in the process of analyzing the results with the goal to implement applicable feedback in 2023.

We also provide our employees with training on workplace culture and enrichment through our learning platform, which covers topics such as anti-harassment, creating healthy work environments, inclusion, ethics and compliance.

To measure our human capital objectives, we continuously engage with our employees.

We provide several mechanisms for our employees to provide their feedback, including direct discussions with managers, company-wide employee surveys, and leadership meetings.

We review the company-wide employee survey results and implement

action plans aimed at enhancing employee satisfaction and alignment with our overall human capital strategy.

In 2021, we began collecting additional human capital metrics, such as employee gender ratios and other demographic information, and we have expanded the roster of universities at which we conduct recruiting activities.

We continue to invest in our employee development strategy by expanding our employee training and professional development programs.

In fiscal 2023, we expanded our online learning and development platform and launched a new intra-net employee communication platform.

Community Training

As part of our community outreach, in the beginning of 2020 we established and financed the Willdan Clean Energy Academy (“WCEA”) which offers free training in energy efficiency skills and career services to disadvantaged workers in the New York City area.

In 2021, Willdan increased the funding for this outreach effort and the WCEA expanded to the Los Angeles City Area.

At the end of 2022, WCEA reached 500 graduates and achieved over 40% participant job placement.

In 2020, we established and financed the Willdan Clean Energy Academy (“WCEA”), which offers free training and career services to disadvantaged workers in the New York City area.

In 2021, we increased the funding for this outreach effort, expanding WCEA to the Los Angeles City area.

In 2022, WCEA celebrated 500+ graduates and achieved a 73%+ successful employment outcome rate for unemployed and under-employed students/participants.

The WCEA supports a diverse workforce and collaborates with community-based organizations and workforce centers to support energy efficiency workforce development.

Workplace Safety

Willdan is committed to maintaining a safe work environment for all of our employees, both inside our facilities and at project job sites.

We recognize the critical role that all of our employees play in sustaining a safe and compliant work environment, and we understand that our leaders are responsible for the ongoing improvement of operational discipline and a safety culture.

Every employee and subcontractor is expected to apply this approach when performing all work activities and safety plans and processes are an integral part of all our field projects.

Our Health and Safety Council meets monthly and our Health and Safety program is designed to address the hazards associated with our business and to prescribe the policies and practices needed to prevent workplace injuries and illness.

In 2022, we established and appointed a Director of Health and Safety, a key leadership role for Willdan.

In addition, we launched a new interactive employee health and safety (“EH&S”) platform in support of our risk management efforts.

This streamlined process documents the investigation and reporting of incidents, safety inspections, and completion of certain safety training requirements - whether performing office or field work.

We track and report all safety incidents.

Our safety incident metrics are provided below.

The health and safety of our employees is a core value and we continuously strive to provide a working environment that is reflective of that belief.

At Willdan, our leadership embraces and supports the efforts required to drive the proactive management of risk and the elevation of our safety culture.

We recognize the important role that every employee plays in preventing work-related injuries.

Training is an integral part of our Health and Safety Program and all employees receive the relevant safety training for their assigned tasks.

For those working on project sites, this includes a project-safety orientation prior to beginning work on the site, participation in weekly tailgate meetings, and additional in-depth safety training for those supervising or conducting job site observations.

Safety orientations also extend to our subcontractors and visitors who must access our project sites.

We track and report all safety incidents and use metrics such as recordable case rate (“RCR”) and lost-time incident rate (“LTIR”).

For context, lost-time injuries are those occurring in the workplace and resulting in an employee’s inability to work the next full workday.

A recordable case rate (RCR) describes the number of employees per 100 full-time employees that have been involved in an OSHA recordable injury or illness.

The lost-time incident rate (LTIR) is the number of lost-time injuries that occurred in a given period, relative to the total number of hours worked in the same period.

A RCR describes the number of employees per 100 full-time employees that have been involved in an OSHA recordable injury or illness.

The LTIR is the number of lost-time injuries that occurred in a given period, relative to the total number of hours worked in the same period.

In 2023, we launched a more robust cloud-based environmental, health, and safety (“EH&S”) platform in support of our risk management efforts.

This enhanced system allows us to report incidents, document investigations, perform pre-mobilization inspections, conduct safety observations, record corrective actions, and publish dashboard management information for use in real-time.

The system also includes a learning management system module that administers a broad library of safety-related material, tracks assigned training, and verifies course completion, as well as an oversight module to monitor key requirements of our subcontractors’ safety compliance efforts.

This system helps us support safe and compliant working environments.

In addition, to better communicate and market our safety objectives, our corporate safety council meets monthly and engages member representatives across the organization, bringing practical and timely information forward to share with our workforce.

Environmental Stewardship

Sustainability, environmental protection and climate change mitigation is the core of our identity and our work tackles these essential global challenges every day as we advise and assist governments, utilities and industry in defining and meeting goals for improvement.

As a leading energy solutions provider and sustainability consultant, climate change mitigation is at the core of our identity.

We deliver comprehensive sustainable solutions to our clients to reduce their carbon intensity and facilitate their transition to a net-zero carbon future.

We provide planning and policy analysis for governments, regulators, and utilities, as well as innovative financing programs that bring the benefit of clean energy to underserved neighborhoods and disadvantaged customers.

In addition, we strive to reduce our own ecological footprint and our environmental impact, as we help our customers achieve their own sustainability goals.

We help clients reduce carbon intensity to become cleaner, more sustainable organizations through measurement and goal setting, sustainable engineering designs, installation of more efficient lighting, heating and cooling measures and the development and implementation of master plans for environmental sustainability, carbon reduction and energy efficiency to meet specific goals.

This has led to energy-efficient upgrades at over 370,000 commercial buildings, schools, hospitals, and other public buildings.

Willdan’s program management activities for various utilities have yielded more than 8.2 billion kWh savings, and 97 million therms reductions over the past 15 years.

We are committed to the continuous improvement and protection of our planet.

The success of our business model is built on this foundation.

Our dedication to environmental sustainability in our own ecological footprint enhances our ability to lead by example for our partners and clients.

Our program management activities for various utilities have yielded more than 8.8 billion kWh savings, and 110 million therms reductions over the past 16 years.

We are committed to measuring, disclosing, and reducing our greenhouse gas (“GHG”) emissions, and continue to incorporate sustainable practices in our operations.

Based on our most recent analyses, our primary emissions sources are leased office space, business travel, technology, and waste.

In addition, we are committed to minimizing our footprint and to achieving carbon neutrality.

Our greenhouse gas target is for a 50% reduction in our Scope 1 and Scope 2 emissions by the year 2030.

With our target set, we plan to more accurately measure, reduce, and then offset our remaining carbon emissions.

As a professional services firm focused on the clean energy transition, we see clear actions that can improve the energy efficiency and sustainability of our operations.

At Willdan, strong and effective corporate governance is the foundation of a well-run, sustainable business.

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Annually, the Board works with our senior management team on a detailed, multi-year strategic plan, reviewing goal progress each quarter.

The Board also oversees efforts by Willdan’s senior management team in managing environmental and social risks and opportunities.

The Board is led by our Chairman and Chief Executive Officer (“CEO”).

We are managed under the direction of the Board, which is currently composed of seven directors.

The Board has determined that our directors, except for our CEO, are independent under the rules of the listing standards for the Nasdaq Global Market and the Securities Exchange Act of 1934, as amended.

As the director most familiar with our business and industry, we believe our CEO is best suited to serve as Chairman of our Board.

Our CEO works in collaboration with our Lead Independent Director, who is appointed biannually by the Board.

The Board also oversees efforts by Willdan’s senior management team in managing mitigation of environmental and social risks.

We are managed under the direction of the Board, which is currently composed of eight directors.

As of the start of fiscal year 2024, the role of Chairman of the Board is separate from the role of CEO.

The Board has determined that our directors, except for Mr.

Bieber, our President and CEO, and Dr.

Brisbin, our former CEO, are independent under the rules of the listing standards for the Nasdaq Global Market and the Securities Exchange Act of 1934, as amended.

As the director most familiar with our business and industry, we believe that our former CEO is best suited to serve as Chairman of our Board.

Our Chairman and our CEO work in collaboration with our Lead Independent Director, who is appointed biannually by the Board.

Our Board is comprised of a diverse group of academics, financial advisors and industry practitioners with extensive experience in the governance and direction of publicly-traded enterprises.

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We have also obtained federal service mark registration with the United States Patent and Trademark Office for the “Willdan” name and “Willdan Group, Inc.” name.

The name and logo of our proprietary software, MuniMagic+ SM , our California energy efficiency CEDA, as well as our proprietary platform as a service VIEWPOINT are also registered marks, and we have registered a federal copyright for the source code for the MuniMagic+ SM software.

The name and logo of our proprietary

software, MuniMagic+ SM , our California energy efficiency CEDA, as well as our proprietary platform as a service VIEWPOINT are also registered marks, and we have registered a federal copyright for the source code for the MuniMagic+ SM software.

In connection with our acquisitions, we have obtained the trademark for our “LoadSEER” software, have obtained the patent for “Optimization of Microgrid Energy Use and Distribution”, have obtained the service marks for the Enerpath, Enerworks and Lime/Green Dial Design, and have obtained the registered copyright of Lime, Lime Energy, and Main Street Efficiency, NEO, Net Energy Optimizer, Collaboration Analysis Research, and several Weidt Group designs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business