Good day, and welcome to the Willdan Group second quarter fiscal year 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Al Kaschalk, VP, Investor Relations. Please go ahead, sir. Thank you, Jenny. Good afternoon, everyone, and welcome to Willdan Group's second quarter fiscal 2022 earnings call. Joining our call today are Tom Brisbin, Chairman of the Board and Chief Executive Officer, Kim Early, Chief Financial Officer, and Mike Bieber, President. The call today builds on our earnings release we issued after market close today. You may find the earnings release and the Willdan investor report that accompanies today's call in the press release and stock information section of our investor relations website found at ir.willdan.com. Management will review prepared remarks, and then we'll open the call up to your questions. Statements made in the course of today's conference call, including answers to your questions which are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve certain risks and uncertainties, and it is important to note that the company's future results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially and other risk factors are listed from time to time in the company's SEC reports, including but not limited to the annual report on Form 10-K filed for the year ended December 31, 2021. The company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Willdan disclaims any obligation and does not undertake to update or revise any forward-looking statements made today. In addition to GAAP results, Willdan also provides non-GAAP financial measures that we believe enhance the investor's ability to analyze the business trends and performance. Our non-GAAP measures include net revenue, Adjusted EBITDA, and Adjusted EPS. Tom, I'll now turn the call over to you. Thanks, Al, and good afternoon, everyone. The second quarter did not meet our expectation. We have hit some headwinds. First, the California IOU programs, which we will discuss. Second, we are also faced with some timing issues on software license sales. Also, COVID supply chain has slowed some contracts. Given these headwinds, the quarter was weak. We expect to turn the corner significantly in the second half. In the second quarter, we made significant progress in streamlining the delivery of energy efficiency under these new IOU programs. We reduced the amount of effort that it takes to receive a pre-installation package approval. This major change will reduce our engineering effort significantly and reduce the timetable for delivering projects by two to three months. We successfully worked with PG&E to enhance the technical support we provide to architects and building developers throughout California, while also streamlining our contract delivery requirements. We successfully worked with SDG&E to improve delivery of energy efficiency to small businesses through enhanced co-payments to these economically sensitive customers. These are first of a kind programs with brand-new processes and requirements. Our IOU customers are learning with us. This learning curve has resulted in a slower ramp-up, but the changes we and the IOUs are now making will result in much better performance of these programs. For the first time in eighteen months, we are delivering projects that will significantly increase revenue. Organic growth has improved from 2%- 5% - 12% over the last three quarters. Given what I just said, there are likely concerns out there, but here is the way we see the rest of the year. We expect revenue and profit to significantly ramp in the second half. We are making progress in California. Our engineering, financial, and energy consulting are all doing extremely well. Our New York City Housing Authority, NYCHA, and our Los Angeles Department of Water and Power, LADWP, programs are also doing well. We only have the California IOUs to churn in the third quarter and ramp heavily in the fourth quarter. Going forward into 2023, we expect the headwinds to moderate, and we will see significant organic growth in revenue and profit. It has been a tough 12- months, but we are making progress. Personally, my confidence has increased significantly because we and our customers are working more closely together. I would now like to turn the call over to Kim for our financial discussion. Thanks, Tom, and good afternoon, everyone. Gross revenue for the second quarter increased by 22% over the prior year to $102.6 million, while net revenue, net of subcontractors, materials, and other direct costs, increased 11.9% to $52.9 million for the quarter. The increased revenue was derived primarily from the resumption of the LADWP program and the increased construction management revenues. Gross profit for the quarter was $31.6 million or 30.8% of revenue compared to $30.9 million or 36.7% of revenue a year ago. The lower gross profit margin was primarily due to the higher mix of construction management revenues, lower software revenues, and higher ramp-up costs for new programs in the current year quarter. G&A costs for the quarter were $36.9 million for Q2 of 2022, or 2.8% lower than a year ago. Lower stock compensation expense more than offset higher salaries and higher professional service and computer-related expenses. Interest expense was slightly lower than a year ago due to lower average interest rates derived from the expiration of a three-year-old interest rate hedge. The loss before income taxes improved to $5.9 million versus the $8.3 million pre-tax loss in Q2 of 2021. The income tax benefit for the current quarter was $1.7 million compared to a tax benefit of $3.7 million in 2021. The smaller pre-tax loss and the absence of a one-time CARES Act benefit realized in 2021 resulted in the lower income tax benefit for 2022. The net loss of $4.3 million for Q2 of 2022 was improved from a net loss of $4.6 million reported for Q2 of 2021. Adjusted EBITDA was $1.2 million for the quarter, compared to $3.3 million a year ago, reflecting the change in the mix of revenues, combined with higher costs versus revenue recognized related to the new California IOU programs. Our adjusted loss was $0.06 per share for Q2 of 2022, compared to adjusted earnings of $0.24 per share in 2021. For the six months, gross revenue increased 19.1% to $194.5 million, while net revenue increased 8.2% to $103 million. The net loss for the first six months of 2022 was $8.1 million, compared to $8.4 million for the same period of 2021. Adjusted EBITDA was $3.5 million versus $8 million in 2021. Adjusted earnings per share was $0.02 per share for the current year to date, compared to $0.43 per share a year ago. On the balance sheet, the reduction in receivables since year-end primarily reflects the collection of pass-through incentives from various utilities, which were paid to utility customers under energy efficiency programs and account for the bulk of the corresponding reduction in accounts payable over the same period. The liability side of the balance sheet also reflects the payment of contingent consideration earned by prior acquisitions and the drawdown of the remaining delayed draw term loan in the first quarter of this year. Cash used by operations was $3.6 million for the year to date 2022, compared to cash used of $708 thousand in 2021. Capital expenditures were $4.3 million for the first half of 2022, primarily for internal software development. Scheduled principal payments on our term loans and earn-out payments resulting from successful acquisition performance were offset by a $20 million drawdown of the delayed draw term loan, resulting in cash provided by financing activities of $2.4 million for the period, compared to cash used of $15.2 million in 2021. Looking ahead to the remainder of fiscal 2022, we have adjusted our expectations for financial performance. Our new guidance calls for minimum net revenue growth of 10% over 2021, with a minimum Adjusted EBITDA margin of 10% of net revenue. Operator, we're now prepared to answer questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will go first to Tim Moore with EF Hutton. Hey, good evening. Thanks for taking the question. Wondering if we could start with the California IOUs. You know, we've been talking about, I think, $50 million or so this year, most of that in the back half. Maybe to start with that is where do we see that? Tom, you talked about some streamlining efforts. You know, what are the implications there? Maybe you could talk a bit more about what you're doing and when we think about next year, how should we think about that ramp with some of these efforts? Mike has been dealing with this day to day. He's still the president, but you'd think he's a project manager right now because he is into it thick. With regards to the 50 streamlining, and the third part was? Uh, just more so- Going in next year. Yeah, yeah. Just that, do we still think sort of 150-200 next year, some of these efforts? Yeah. All right. Mike's gonna handle this one. It'll likely be less than 50, and I think we said that last quarter, Tim, also. I don't think it'll come in at 50. It'll be less than that this year. It'll still be likely a big number for next year. I don't know whether it's 150. That's a reasonable estimate, I think. It could be below or even above that number for next year. It'll be a big ramp-up. A lot of this year, the revenue you'll start seeing for the first time, actually, you'll start seeing that revenue come in in the third quarter of this year, because as Tom mentioned in his script, for the first time now in 18 months, we're building projects out and completing them. You'll see the results of that start in Q3. It'll ramp up in Q4, and then again throughout the first part of 2023. Got it. Okay. Streamlining and next year. Hang on a second. Yeah, go ahead, [inaudible]. Do you have any specific questions about streamlining or the processes that we mentioned that we've been working on with our customers? Yeah. Maybe you just go into a little more detail on, you know, how that'll benefit you. You talked about sort of the learning curve. These are new programs. Just how that process plays out and some of the benefits of some of these actions. We've been in this now for nine months or so, and we have discovered certain things that don't work in the program, don't work for us, and don't work for the IOUs, actually. In every case with each of the three major IOUs we've started with, this quarter, we've made major modifications in the process necessary to deliver these projects. Tom mentioned a few of them. There's a bunch more actually that we worked on. It's those process changes that are gonna streamline the delivery of energy efficiency to the state of California. You'll start to see that. Many of these changes have already been made. A few of them, we're still in discussions to make, but I would say the majority of them have been made at this point. You'll see that reflected in the financial results. Okay. Got it. That's helpful. And maybe on guidance, you know, talking about sort of minimum figures, sounds like there's some conservatism baked in, and you did call out software, you know, timing potential issues. Maybe two questions there, but just conservatism on that 10%, and then IA licensing deals. Did something slip or do you have visibility there? It sounds like the pipeline is still strong, but any insights there. For guidance, we hate disappointing. Yeah, we've tried to build in some conservatism there. That's why we first set a floor for ourselves. We said, you know, at least these minimum. That's how we approach guidance. We look to better that. On Integral Analytics and software, we have a very good pipeline of opportunities. We have not signed what I'll call a major software license in the first half of the year, however. As you know, Tim, when those things hit, you know, they drop significant profit to the bottom line. That has not occurred in the first half of this year. We thought, you know, there's a good probability of that. It has not happened thus far, but we're still, I think as confident as ever. We've got a very good pipeline and some large license opportunities out there. Got it. I guess my question was really back to the sort of being conservative. What's baked in on the software side and sort of the back half? On those floors, not much. I can tell you that. We don't expect to deliver that. We expect to deliver some good news here in the back half of the year. As you know, those things are very lumpy. When they come, they come in big chunks. We just didn't want to pin ourselves down. We said the back half of the year in terms of timing. I think that's reasonable. We essentially assumed no incremental software licenses to get to the floors that we mentioned in our guidance. That's what I was getting at. That would be a nice upside boost if one of those crossed the finish line. Okay. Just elsewhere, you called out some of the supply chain issues slowing some things. Any more color there on just size of that impact and you know if things are getting better currently or visibility? Supply chain is affecting us like everyone in this space that orders big custom equipment for buildings. But that was much less of a headwind than California that we mentioned before in the script. I wanna, you know, place caution on that. We had planned for some of that delay, some of the supply chain delay. We saw that. We expect that to continue to be a headwind for some time. It's in projects that require large custom-built equipment, HVAC, chillers, boilers, that kind of thing. The average delay is significant for those big pieces of equipment that Genesys and other of our units use. You can see that revenue was, you know, still pretty good for the quarter. We're still expecting that to be the case, and that's reflective of the fact that we had planned for some of those delays. Yeah. Okay. All right. I'll hop back in the queue here. Thanks. As a reminder, it is star one if you would like to ask a question at this time. We'll pause a moment. We will go next to Marc Riddick with Sidoti. Hey, good evening. I wanted to sort of piggyback on sort of the end of that comment because it seems as though the net revenue was fairly similar to what we were expecting, I guess, for the second quarter itself. It does somewhat indicate, and this is consistent with your prepared remarks, that outside of what you're going through with the IOU execution, it sounds like the rest of the business is. It seems as though it's humming along pretty nicely. Maybe can we spend a couple minutes on sort of what you're seeing with LADWP and other areas and maybe some of the demand that you're seeing outside of that? Tom's pointing at me. The strongest areas of our business are civil engineering, the energy consulting business, and the financial services business. All three of those are well ahead of our internal plan. They're doing very good. All three are showing strong profitability and growing organically. Those are the strongest parts of the business. You move into other sectors of our energy portfolio. LADWP is doing all right. It's a good piece. Most of the other programs are doing pretty well. Small businesses are sometimes a little challenged some places, but you're right that, you know, any challenges we see are being offset by the upside we're seeing in civil engineering and energy consulting. That's why you saw the revenue come in, reasonably strong. Right. I wanted to touch a little bit about working with the IOUs there. It didn't seem as though, from your remarks, that it was necessarily tied to additional talent or headcount or anything like that. Am I reading that correctly? Or can you give sort of an update there as to where you are and with hiring or human capital and where you may need to be, or if that's changed at all? Yeah, Marc, no issues with human capital. No, no disagreements there or anything else. Those comments were around the idea that when we started these programs, we didn't know our customer nearly as well as we do today. We acted more, I won't say adversarially, we just didn't know one another and hadn't worked together on these types of programs. In every case now, I think the big change in the quarter has been that in each of these programs, we're sitting side by side, day by day, now making the changes that we've needed to make to these programs to make them successful and more efficient. That was the big change that we tried to convey in the quarter. We're working very well actually, with each of the IOUs. It's not adversarial. We're on the same page, driving to the same goals to make these programs successful. We just need to make some changes. They're more than willing. They're facilitating those changes with us. That's where we are. Okay, excellent. I guess the last thing for me. I was sort of thinking about, you made mention as to, as far as ramping up into the third quarter or what have you. Are there any particular sort of signposts that you're looking at as you go through the quarter? You know, are there any particular lumpiness? I don't need you to get necessarily too granular, but I was sort of thinking about maybe sort of how you sort of see that play out and what level of visibility you may have, you know, through the remainder of the year. Thanks. Signposts for Q3. Well, we have begun just California IOUs first. We have begun building projects now for the first time on those programs. The waiting has stopped, and so we're going to see that month by month ramp up. We do have good visibility on that. The real question becomes now that we're building projects, how quickly will it ramp from there? There's a lot of visibility in Q3, less visibility in Q4. The pipeline of sales is ramping up. That would contribute to those quick turn projects towards the end of the year. That's where the question is more Q4 than Q3. We'll see internal signposts of that as we build projects each month and actually see revenue drop to the bottom line for the first time. The other is, of course, software, and that disproportionately affects our profitability. We are optimistic. We have some things that we think are pretty close, but those aren't signed until they're signed, so I don't wanna be too speculative on that. We've, as we said, removed those from guidance. If they happen, we'll certainly let you know. You might see press releases to that effect. Okay, great. Then the last piece for me is that it seems as though there's a little bit of a amendment on the credit agreement recently. I wonder if you could just touch a little bit about that. It certainly seems as though from a funding environment standpoint, you're and you're where you need to be. I was wondering if you could sort of give us a little bit of an update there. Thank you. Yeah, Marc, this is Kim. That amendment primarily just gave us more room on our capital leases. We use capital leases primarily for some of our computer-related equipment and software. Our agreement had a $1.5 million limit on that, and we raised that limit just to give us more room on the capacity that we could use third-party financing for those capital leases instead of running it through our banking agreement. That's what that amendment had to do with. It's all in place. Okay, great. Thank you very much. With no further questions in the queue, I would now like to turn the call over to Tom Brisbin for closing remarks. Well, I'd like to say thank you to everyone who's on the call today, and we look forward to seeing you next quarter. Have a good day. This concludes today's call. Thank you for your participation. You may now disconnect.