Willdan Q3 2026 Earnings: Revenue Growth Outpaces GAAP Profit

Willdan Group (Nasdaq: WLDN) reported fiscal Q3 2026 contract revenue of $214.5 million, up 17.9% year over year, while GAAP diluted EPS fell 15.6% to $0.76 from $0.90. Non-GAAP net revenue increased 18.1% and adjusted EBITDA margin expanded, but higher G&A expenses and quarterly tax expense limited GAAP earnings growth. The company also completed its largest acquisition and raised its FY2026 financial targets.

Core Earnings Data

Top-line growth extended through gross profit and adjusted EBITDA, with adjusted EBITDA rising faster than net revenue. GAAP results were less favorable: operating income grew more slowly than revenue, while net income declined despite higher pretax income because income tax expense increased to $3.5 million from $0.6 million.

Net revenue is a non-GAAP measure that excludes subcontractor services and other direct costs from GAAP contract revenue. Adjusted EBITDA margin is calculated using net revenue rather than contract revenue.

Business and Segment Performance

Energy generated most of the quarter’s revenue growth. Its net revenue increased 21.7%, compared with 8.3% growth in Engineering and Consulting, indicating that the company’s largest segment continued to expand faster than the rest of the business.

Willdan closed its acquisition of Mantis Innovation during the quarter. Management described it as the largest acquisition in company history and said it expands Willdan’s energy-management services for commercial and industrial customers. The release did not quantify Mantis’ contribution to Q3 results.

Higher Taxes and G&A Costs Separate Revenue Growth From GAAP Earnings

Gross margin on contract revenue improved to approximately 38.4% from 36.9%, as gross profit grew faster than contract revenue. However, G&A expenses rose about 26.7% to $66.1 million, outpacing both revenue and gross profit growth. Within G&A, stock-based compensation increased to $5.0 million from $3.1 million, while depreciation and amortization rose to $5.8 million from $3.9 million.

As a result, operating margin decreased to approximately 7.6% from 8.2%, even though operating income increased. Pretax income still rose, but the increase in income tax expense caused net income and GAAP EPS to decline.

The same expense mix helps explain why adjusted EBITDA increased 22.4% while GAAP net income fell. Adjusted EBITDA excludes stock-based compensation, depreciation and amortization, interest accretion, and transaction costs. Its margin expanded to 25.2% from approximately 24.4%. Adjusted net income increased only about 1.6%, and a roughly 2.0% increase in diluted weighted-average shares contributed to the slight decline in adjusted EPS.

Cash Flow and Balance Sheet

For the first nine months of fiscal 2026, operating cash flow declined to $32.9 million from $40.9 million even as net income increased. Working-capital demands were the main constraint: accounts receivable used $23.4 million of cash after providing $5.6 million a year earlier, while contract assets used another $22.9 million. The 2026 year-to-date period contained 39 weeks, compared with 40 weeks in fiscal 2025.

Cash and cash equivalents were $39.2 million at October 2, 2026, down from $65.9 million at the start of the fiscal year. Willdan paid $55.8 million in cash for acquisitions during the nine-month period. Total notes payable increased to approximately $61.6 million from $48.5 million, while accounts receivable and contract assets also increased from their fiscal year-end balances.

Financial Guidance

Management said it raised Willdan’s FY2026 targets, although the release did not provide the prior ranges needed to measure the revision. The company also introduced preliminary FY2027 targets, including more than $1 billion of contract revenue and over $140 million of adjusted EBITDA.

The FY2026 targets assume 15.9 million diluted shares, a 0% effective tax rate, and no future acquisitions. The preliminary FY2027 targets also assume no future acquisitions. Management expects to issue its formal FY2027 outlook in late February.

Recent Insider Transactions

The supplied transaction data show that director Thomas Donald Brisbin completed three direct sales in September 2026, with derivative-security conversions reported on the same dates. Three directors also received stock awards on June 17. The records below preserve the prices and reported values provided by the source without drawing conclusions about insider intent.

Risks Investors Should Monitor

• GAAP expense pressure: G&A expenses grew faster than revenue in Q3, and higher stock-based compensation and amortization widened the difference between adjusted EBITDA and GAAP earnings.
• Working-capital conversion: Nine-month operating cash flow declined despite higher net income, with accounts receivable and contract assets absorbing substantial cash.
• Acquisition integration and balance-sheet demands: Mantis is Willdan’s largest acquisition, while acquisition spending, lower cash, and increased notes payable raise the importance of successful integration and cash generation.
• Guidance assumptions: FY2026 adjusted EPS guidance assumes a 0% effective tax rate, while both FY2026 and preliminary FY2027 targets exclude future acquisitions. Actual tax outcomes or additional deals could change reported results.
• Subcontractor-cost variability: Subcontractor services and other direct costs represented 46.4% of contract revenue for the first nine months of 2026, up from 45.8%. Changes in these pass-through costs can cause contract revenue and net revenue trends to diverge.

Summary

Willdan’s fiscal Q3 2026 combined double-digit revenue growth with an expanding adjusted EBITDA margin, led primarily by the Energy segment. GAAP earnings moved in the opposite direction as G&A costs and tax expense increased, while year-to-date cash conversion remained below the prior-year level. The next areas to monitor are Mantis integration, working-capital performance, and execution against the raised FY2026 and preliminary FY2027 targets.