Willdan Group, Inc.
For the period ended Jan 2, 2026. Filed Feb 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Feb 27, 2026
WLDN$66.22-6.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-27; filed 2025-03-07.
0001558370-25-002429
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-01-02; filed 2026-02-27.
0001104659-26-020767
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 118 current paragraphs.
81 unchanged; 28 reworded; 3 added; 10 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Summary comparison of fiscal years 2025, 2024, and 2023
Current report
Contract revenue in our Energy segment increased $102.7 million, or 21.7%, in fiscal year 2025 compared to fiscal year 2024, primarily as a result of higher construction management revenues, increased demand for energy efficiency and electrification services under utility programs, higher planning and advisory consulting revenues, and the incremental revenues from our acquisitions of Enica and APG.
Current report
Contract revenue in our Engineering and Consulting segment increased $13.1 million, or 14.1%, in fiscal year 2025 compared to fiscal year 2024, primarily due to increased demand for services provided to our clients, combined with the incremental revenues from our acquisition of Alpha.
Removed paragraphs (10)
Previous report
Summary Comparison of 2024, 2023, and 2022
Previous report
Contract revenue in our Energy segment increased $69.6 million, or 19.4%, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of higher demand across the full spectrum of our energy services including increases in software licensing revenue. Contract revenue in our Engineering and Consulting segment increased $11.4 million, or 16.0%, in fiscal year 2023 compared to fiscal year 2022, primarily due to increased demand for services provided to our clients.
Previous report
Within G&A expenses, the increase of $13.8 million in salaries and wages, payroll taxes and employee benefits was partially offset by a decrease of $3.1 million in stock-based compensation, a decrease of $2.9 million in other general and administrative expenses, and a decrease of $1.1 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, increased costs related to employee benefits, and increases in employee compensation as a result of additional employee headcount as well as employee compensation increases. The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the
Previous report
end of their corresponding vesting periods, partially offset by new equity awards being issued at lower stock prices. The decrease in other general and administrative expenses was primarily due to contingent consideration expense related to prior acquisitions that occurred during fiscal year 2022 that did not recur in fiscal year 2023. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.
Previous report
Income Taxes
Previous report
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of our assets and liabilities, subject to a judgmental assessment of the recoverability of deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more-likely-than-not that some of the deferred tax assets may not be realized. Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical income (loss) adjusted for the effects of non-recurring items and the impact of recent business combinations. Areas of estimation include our consideration of future taxable income which is driven by verifiable signed contracts and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, we would adjust the related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.
Previous report
For acquired business entities, if we identify changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained
Previous report
about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment and we record the offset to goodwill. We record all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense.
Previous report
We recognize the tax benefit from uncertain tax positions if it is more-likely-than-not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax benefits in income tax expense.
Previous report
For further discussion of our income taxes, see Part II, Item 8, Note 11, “Income Taxes” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Reworded paragraphs (28)
Previous wording
We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
Current wording
We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data analytics, we plan, design and deliver comprehensive, innovative, cost-effective, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
Previous wording
Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations in the U.S. 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. Our energy efficiency services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.
Current wording
Our Energy segment provides specialized, innovative, 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. Our energy services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, AI data center power solutions, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.
Previous wording
Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.
Current wording
Our Engineering and Consulting segment provides civil engineering and construction management, building and safety services, city engineering and planning support, civil design, geotechnical services, and material testing. Our capabilities span traffic, bridges, rail, port, water systems, and other major infrastructure projects. In addition to technical expertise, we provide economic and financial consulting that helps agencies plan, fund, and maintain both daily operations and long-term capital programs. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.
Previous wording
Contract revenue. Consolidated contract revenue increased $81.0 million, or 18.9%, in fiscal year 2023 compared to fiscal year 2022, primarilydue to incremental revenues in both our Energy segment and in our Engineering and Consulting segment.
Current wording
Contract revenue. Consolidated contract revenue increased $115.8 million, or 20.5%, in fiscal year 2025 compared to fiscal year 2024, reflecting increased demand for our services in both our Energy segment and our Engineering and Consulting segment.
Previous wording
Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $44.8 million, or 15.7%, in fiscal year 2023 compared to fiscal year 2022, primarilyas a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages decreased to 17.6% in fiscal year 2023, from 19.3% in the fiscal 2022, while subcontractor services and other direct costs was relatively flat for the fiscal year 2023 compared to fiscal year 2022.
Current wording
Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $62.9 million, or 17.3%, in fiscal year 2025 compared to fiscal year 2024, primarilyas a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, subcontractor services and other direct costs decreased to 46.5% in fiscal year 2025, from 47.6% in fiscal year 2024, and direct salaries and wages decreased to 16.0% in fiscal year 2025, from 16.5% in fiscal year 2024.
Previous wording
Direct costs of contract revenue in our Energy segment increased $39.4 million, or 15.6%, in fiscal year 2023 compared to fiscal year 2022. Direct costs of contract revenue for the Engineering and Consulting segment increased $5.4 million, or 16.0%, for the fiscal year 2023 compared to fiscal year 2022.
Current wording
Direct costs of contract revenue in our Energy segment increased $57.0 million, or 17.8%, in fiscal year 2025 compared to fiscal year 2024. Direct costs of contract revenue in our Engineering and Consulting segment increased $5.9 million, or 14.0%, in fiscal year 2025 compared to fiscal year 2024.
Previous wording
Subcontractor services and other direct costs increased $37.8 million, or 18.7%, and salaries and wages increased by $7.0 million, or 8.4%, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of the increases in contract revenue.
Current wording
Subcontractor services and other direct costs increased $47.3 million, or 17.6%, in fiscal year 2025 compared to fiscal year 2024, primarilydue to the increase in construction management revenues and utility program revenues, which utilize a higher percentage of material cost and installation subcontracting. Salaries and wages increased by $15.6 million, or 16.6%, in fiscal year 2025 compared to fiscal year 2024, primarily as a result of the increases in contract revenue as described above.
Previous wording
Gross Profit. Gross profit increased 25.2% to $179.8 million, or a 35.2% gross margin, for fiscal year 2023 compared to $143.6 million, or a 33.5% gross margin for fiscal year 2022. The increase in gross margin wasprimarily driven by higher software licensing revenue and changes in the mix of revenues as described above combined with the absence of project startup costs for new utility programs that were incurred during fiscal year 2022 but did not recur in the in fiscal year 2023.
Current wording
Gross Profit. Gross profit increased 26.1% to $255.7 million, or a 37.5% gross margin, for fiscal year 2025 compared to $202.8 million, or a 35.8% gross margin for fiscal year 2024. The increase in gross margin was primarily driven by changes in the mix of revenues as described above.
Previous wording
General and administrative expenses. General and administrative (“G&A”) expenses increased by $7.1 million, or 4.7%, in fiscal year 2023 compared to fiscal year 2022. The increase in G&A expenses consisted of an increase of $3.8 million in the Energy segment combined with an increase of $6.5 million in the Engineering and Consulting segment, partially offset by a decrease of $3.2 million in unallocated corporate expenses.
Current wording
General and administrative expenses. General and administrative (“G&A”) expenses increased by $40.1 million, or 23.4%, in fiscal year 2025 compared to fiscal year 2024. G&A expenses consisted of an increase of $30.3 million in the Energy segment combined with an increase of $3.8 million in the Engineering and Consulting segment, and the remaining increase in unallocated corporate expenses.
Previous wording
Income (loss) from operations. Operating income was $22.1 million for fiscal year 2023, compared to an operating loss of $7.1 million for fiscal year 2022, as a result of the factors noted above.
Current wording
Income (loss) from operations. Operating income increased 40.8% to $44.1 million for fiscal year 2025, compared to an operating income of $31.4 million for fiscal year 2024, as a result of the factors noted above.
Previous wording
Total other expense, net. Total other expense, net, increased $3.1 million, or 70.5%, in fiscal year 2023 compared to fiscal year 2022. The increase in total other expense, net isprimarily due to higher interest expense as a result of the increase in market interest rates which directly affected our variable interest rates under our Credit Facilities, combined with a one-time charge of $0.5 million for unamortized debt issuance costs related to our prior credit facilities, partially offset by interest income related to bank deposits.
Current wording
Total other expense, net. Total other expense, net, decreased $0.5 million, or 11.1%, in fiscal year 2025 compared to fiscal year 2024. The decrease in total other expense, net is primarily due tolower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities combined with interest income from interest of our cash balances being partially offset by a one-time charge for unamortized debt issuance costs related to our prior credit facilities and a one-time charge related to a facilities lease modifications.
Previous wording
Income tax expense (benefit). We recorded an income tax expense of $3.7 million for fiscal year 2023 compared to a tax benefit of $3.0 million for fiscal year 2022. The tax expense is primarily attributable to the income before income tax combined with the non-recurrence of a one-time tax benefit recognized during fiscal year 2022 related to additional energy efficiency building deductions.
Current wording
Income tax expense (benefit). We recorded atax benefit of $12.6 million for fiscal year 2025, an effective tax benefit rate of 31.4% on income before income tax expense, compared to a tax expense of $4.1 million for fiscal year 2024, an effective tax rate of 15.4% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions and additional energy-efficiency building deductions.
Previous wording
Net income (loss). Our net income was $10.9 million for fiscal year 2023, as compared to a net loss of $8.4 million for fiscal year 2022. The increase in net income was primarily attributable to the increase in revenue and gross profit, partially offset by higher interest expense and income tax expense.
Current wording
Net income (loss). Our net income was $52.6 million for fiscal year 2025, as compared to a net income of $22.6 million for fiscal year 2024. The increase in net income was primarily attributable to the increase in income from operations combined with a lower effective tax rate.
Previous wording
Within G&A expenses, the increase of $9.8 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $3.4 million in other general and administrative expenses, and the increase of $2.1 million in stock-based compensation was partially offset by a decrease of $1.7 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, and higher fringe benefit costs, combined with increases in employee headcount. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives at a higher stock price. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from acquisitions prior to fiscal year 2024.
Current wording
in stock-based compensation was partially offset by a decrease of $1.7 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, and higher fringe benefit costs, combined with increases in employee headcount. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives at a higher stock price. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from acquisitions prior to fiscal year 2024.
Previous wording
Our primary sources of liquidity for the next 12 months and beyond arecash generated from operations, cash and cash equivalents, and available borrowings under our revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”). We believe that our cash and cash equivalents, cash generated by operating activities, and available borrowings under our Revolving Credit Facility will be sufficient to finance our operating activities for at least the next 12 months.
Current wording
Our primary sources of liquidity for the next 12 months and beyond arecash generated from operations, cash and cash equivalents, and available borrowings under our Revolving Credit Facility and Delayed Draw Term Loan under the Credit Agreement (the “Credit Facilities”). We believe that these sources will be sufficient to finance our operating activities for at least the next 12 months.
Previous wording
As of December 27, 2024, we had a fully drawn $100 million term loan with $90.0 million outstanding (the “Term Loan”, and collectively with the Revolving Credit Facility, the “Credit Facilities”), and a $50.0 million Revolving Credit Facility with no borrowed amounts and $1.6 million in letters of credit issued, each scheduled to mature on September 29, 2026. In addition, as of December 27, 2024, we had $74.2 million of unrestricted cash and cash equivalents.
Current wording
As of January 2, 2026, we had a fully drawn $50.0 million term loan with $48.8 million outstanding, a $100.0 million Revolving Credit Facility with no borrowed amounts and $1.6 million in letters of credit issued, and a $50.0 million Delayed Draw Term Loan which has not been drawn on. The Delayed Draw Term Loan must be drawn before May 2027. The Credit Facilities are each scheduled to mature on May 5, 2030. In addition to the Credit Facilities, as of January 2, 2026, we had $65.9 million of unrestricted cash and cash equivalents.
Previous wording
As of December 27, 2024, we were in compliance with the covenants contained in the Credit Agreement. As of December 27, 2024, unhedged borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 6.4%. See Part II, Item 8, Note 5, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Current wording
As of January 2, 2026, we were in compliance with the covenants contained in the Credit Agreement and unhedged borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 5.3%. See Part II, Item 8, Note 5, “Debt Obligations”, of the Notes to
Previous wording
Cash flows provided by operating activities were $72.1 million, $39.2 million, and $9.4 million for fiscal years 2024, 2023, and 2022, respectively. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for fiscal year 2024 resulted primarily from the increase in earnings, and lower working capital requirements resulting from more robust billing and payment terms and the timing of collections at the end of the fiscal year. Cash flows provided by operating activities for fiscal year 2023 resulted primarily from the increase in earnings, combined with lower working capital requirements. Cash flows provided by operating activities for fiscal year 2022 were unfavorably impacted by higher working capital requirements required to support the increase in contract revenues.
Current wording
Cash flows provided by operating activities were $80.1 million, $72.1 million, and $39.2 million for fiscal years 2025, 2024, and 2023, respectively. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for fiscal year 2025 resulted primarily from the increase in earnings supplemented by lower working capital requirements to support the expansion and changing mix of revenue. Cash flows provided by operating activities for fiscal year 2024 resulted primarily from the increase in earnings, and lower working capital requirements resulting from more robust billing and payment terms and the timing of collections at the end of the fiscal year. Cash flows provided by operating activities for fiscal year 2023 resulted primarily from the increase in earnings, combined with lower working capital requirements.
Previous wording
Cash flows used in investing activities were $15.7 million, $11.5 million, and $9.5 million for fiscal years 2024, 2023, and 2022, respectively. Cash flows used in investing activities for fiscal year 2024 were primarily due to cash paid for an acquisition, combined with cash paid for the development of proprietary software and the purchase of computers and equipment. Cash flows used in investing activities for fiscal years 2023, and 2022 were primarily due to cash paid for the development of proprietary software and the purchase of computers and other equipment.
Current wording
Cash flows used in investing activities were $45.6 million, $15.7 million, and $11.5 million for fiscal years 2025, 2024, and 2023, respectively. Cash flows used in investing activities for fiscal year 2025 were primarily due to cash paid for acquisitions, combined with cash paid for the internal development of proprietary software and the purchase of computers and equipment. Cash flows used in investing activities for fiscal year 2024 were primarily due to cash paid for an acquisition, combined with cash paid for the internal development of proprietary software and the purchase of computers and equipment. Cash flows used in investing activities for fiscal year 2023 were primarily due to cash paid for the development of proprietary software and the purchase of computers and other equipment.
Previous wording
Cash flows used in financing activities were $5.6 million and $23.8 million for fiscal years 2024 and 2023, respectively, compared to cash flows provided by financing activities of $8.4 million for fiscal year 2022. Cash flows used in financing activities for fiscal year 2024 were primarily attributable to the repayments of $8.1 million under our Term Loan, $1.4 million principal payments on finance leases, and $1.4 million cash used to pay withholding taxes on stock grants, partially offset by $2.8 million of proceeds from sales of common stock under employee stock purchase plan and $2.8 million in proceeds from stock option exercises. Cash flows used in financing activities for fiscal year 2023 were primarily attributable to the disbursement of $10.7 million in restricted cash for utility rebate incentives, payments of $4.0 million for contingent consideration related to prior acquisitions, combined with repayments and borrowings of $112.9 million and $105.0 million, respectively, under our term loan facility and line of credit, which resulted primarily from refinancing our Prior Credit Facility. Cash flows provided by financing activities for fiscal year 2022 were primarily attributable to borrowings of $20.0 million under our Delayed Draw Term Loan, $10.7 million in receipt of restricted cash, $3.0 million in proceeds from sales of common stock under our employee stock purchase plan, and $1.7 million proceeds from notes payable, partially offset by repayments of $13.0 million under our Term A Loan, combined with payments of $10.2 million for contingent consideration related to prior acquisitions, $1.9 million payments on notes payable, and $1.1 million principal payments on finance leases.
Current wording
Cash flows used in financing activities were $42.7 million, $5.6 million and $23.8 million for fiscal years 2025, 2024 and 2023, respectively. Cash flows used in financing activities for fiscal year 2025 were primarily attributable tothe $39.7 million cash used to pay down our Revolving Credit Facility, $5.5 million cash used to pay withholding taxes on stock grants, $1.5 million principal payments on finance leases, partially offset by$3.2 million of proceeds from sales of common stock under employee stock purchase plan and $2.8 million in proceeds from stock option exercises. Cash flows used in financing activities for fiscal year 2024 were primarily attributable to the repayments of $8.1 million under our Term Loan, $1.4 million principal payments on finance leases, and $1.4 million cash used to pay withholding taxes on stock grants, partially offset by $2.8 million of proceeds from sales of common stock under employee stock purchase plan and $2.8 million in proceeds from stock option exercises. Cash flows used in financing activities for fiscal year 2023 were primarily attributable to the disbursement of $10.7 million in restricted cash for utility rebate incentives, payments of $4.0 million for contingent consideration related to prior acquisitions, combined with principal reductions of $7.9 million under our term loan facility and line of credit, which resulted primarily from refinancing our Prior Credit Facility.
Previous wording
We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities
Current wording
relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.
Previous wording
We are obligated to pay earnout payments in connection with our acquisition of Enica Engineering, PLLC. (“Enica”). We are obligated to pay up to $6.0 million in cash if Enica exceeds certain financial targets during the two years after the Enica closing date of October 23, 2024 (the “Enica Closing Date”). As of December 27, 2024, we had contingent consideration payable of $4.2 million related to the Enica acquisition. For fiscal year 2024, our statement of operations includes $0.2 million of interest accretion (excluding fair value adjustments) related to the contingent consideration.
Current wording
We have contingent obligations to make earnout payments in connection with our acquisitions of Enica Engineering, PLLC. (“Enica”), Alternative Power Generation, Inc. (“APG”) and Compass Municipal Advisors, LLC. (“Compass”), subject to their future financial performance. We are obligated to pay up to $6.0 million in cash if Enica exceeds certain financial targets during the two years after the Enica closing date of October 23, 2024. We are obligated to pay up to $18.0 million in cash if APG exceeds certain financial targets during the three years after the APG closing date of March 3, 2025. We are obligated to pay up to $1.0 million in cash if Compass exceeds certain financial targets during the one year after the Compass closing date of January 2, 2026. As of January 2, 2026, we had contingent consideration payable of $20.4 million related to the acquisitions of Enica, APG, and Compass. Through the twelve months ended January 2, 2026, our statement of operations includes $3.2 million of interest accretion (excluding fair value adjustments) related to the contingent consideration.
Previous wording
We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of December 27, 2024, 18% of our contracts are time-and-materials contracts, 40% are unit-based contracts, and 42% are fixed price contracts, compared to 19% for time-and-materials contracts, 42% for unit-based contracts, and 39% for fixed price contracts, as of December 29, 2023.
Current wording
We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of January 2, 2026, 18% of our contracts are time-and-materials contracts, 35% are unit-based contracts, and 47% are fixed price contracts, compared to 18% for time-and-materials contracts, 40% for unit-based contracts, and 42% for fixed price contracts, as of December 27, 2024.
Previous wording
G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs. We expense general and administrative costs when incurred.
Current wording
G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, stock-based compensation, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs, including interest accretion on contingent consideration. We expense general and administrative costs when incurred.
Previous wording
Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. We recognize revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of our time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, we recognize the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying consolidated balance sheets. We also derive revenue from software licenses and professional services and maintenance fees. In accordance with ASC 606, we perform an assessment of each contract to identify the performance obligations, determine the overall transaction price for the contract, allocate the transaction price to the performance obligations, and recognize the revenue when the performance obligations are satisfied. We utilize the residual approach by which we estimate the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. The software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, or technical support. Related professional services include training and support services in which the standalone selling price is determined based on an input measure of hours incurred to total estimated hours and is recognized over time, usually which is the life of the contract.
Current wording
Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. We recognize revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of our time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, we recognize the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying consolidated balance sheets. We also derive revenue from software licenses and professional services and maintenance fees. In accordance with ASC 606, we perform an assessment of each contract to identify the performance obligations, determine the overall transaction price for the contract, allocate the transaction price to the performance obligations, and recognize the revenue when the performance obligations are satisfied. In cases where the standalone selling price of the software license is not present, we utilize the residual approach by which we estimate the standalone selling price by reference to the total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract. The software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, or technical support. Related professional services include training and support services in which the standalone selling price is determined based on an input measure of hours incurred to total estimated hours and is recognized over time, usually which is the life of the contract.
Previous wording
We provide quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications and industry standards. We do not consider these types of warranties to be separate performance obligations.
Current wording
We provide quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon
Previous wording
Inherent in such fair value determinations are significant judgments and estimates, including but not limited to assumptions about our future revenue, profitability and cash flows, our operational plans and our interpretation of current economic indicators and market valuations. To the extent these assumptions are incorrect or economic conditions that would impact the future operations of our reporting units change, any goodwill may be deemed to be impaired, and an impairment charge could have in a material impact on our financial position or results of operation. Almost all of our goodwill is contained in our Energy segment, with the remainder in our Engineering and Consulting segment. At our measurement date, the estimated fair value of our Energy segment exceeded its carrying value. Any reduction in the estimated fair value of our Energy segment could result in an impairment charge of goodwill associated with this segment in future periods.
Current wording
Inherent in such fair value determinations are significant judgments and estimates, including but not limited to assumptions about our future revenue, profitability and cash flows, our operational plans and our interpretation of current economic indicators and market valuations. To the extent these assumptions are incorrect or economic conditions that would impact the future operations of our reporting units change, any goodwill may be deemed to be impaired, and an impairment charge could have in a material impact on our financial position or results of operation. Almost all of our goodwill is contained in our Energy segment, with the remainder in our Engineering and Consulting segment. At our measurement date, the estimated fair value of our Energy segment exceeded its carrying value. Any reduction in the
Previous wording
During fiscal year 2024, we acquired substantially all of the assets of Enica. As of December 27, 2024, we had not yet completed our final estimate of fair value of the assets acquired relating to the acquisitions of Enica due to the timing of the transactions and lack of complete information necessary to finalize such estimates of fair value. Accordingly, we have preliminarily estimated the fair values of the assets acquired and will finalize such fair value estimates within twelve months of the Enica Closing Date. During fiscal years 2023 and 2022, we did not have any material acquisitions.
Current wording
During fiscal year 2025, we acquired all the equity of Compass Municipal Advisors, LLC. (“Compass”), acquired all of the capital stock of Alternative Power Generation, Inc. (“APG”) and acquired all of the capital stock of Alpha Inspections, Inc. (“Alpha”). As of January 2, 2026, had completed our final estimate of fair value of the assets acquired relating to the acquisition of APG and Alpha but had not yet completed our final estimate of fair value of the assets acquired relating to the acquisition of Compass due to the timing of the transactions and lack of complete information necessary to finalize such estimates of fair value. Accordingly, we have preliminarily estimated the fair values of the Compass assets acquired and will finalize such fair value estimates within twelve months of the Compass Closing Date. During fiscal year 2024, we acquired substantially all of the assets of Enica on October 23, 2024. During fiscal year 2023, we did not have any material acquisitions.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The overall increase in G&A expenses consisted of an increase of $20.4 million in salaries and wages, payroll taxes and employee benefits, an increase of $11.4 million in other general and administrative expenses, the increase of $4.4 million in stock-based compensation, and an increase of $3.9 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to increased staffing from acquisitions, an increase in incentive compensation to support revenue growth consistent with the improvement in operating profit, and higher fringe benefit costs consistent with the growth in direct and indirect labor costs. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees, executives and Board of Directors at a higher stock price. The increase in depreciation and amortization was primarily related to higher amortization of intangible assets from recent acquisitions.
Current report — wording carried from elsewhere
Within G&A expenses, the increase of $9.8 million in salaries and wages, payroll taxes and employee benefits, combined with the increase of $3.4 million in other general and administrative expenses, and the increase of $2.1 million
Current report — wording carried from elsewhere
Consolidated Financial Statements included in this Annual Report on Form 10-K, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Current report — wording carried from elsewhere
We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or
Current report — wording carried from elsewhere
specifications and industry standards. We do not consider these types of warranties to be separate performance obligations.
Current report — wording carried from elsewhere
estimated fair value of our Energy segment could result in an impairment charge of goodwill associated with this segment in future periods.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.