Good day, everyone and welcome to the Willdan Group Incorporated’s Fourth Quarter 2014 Conference Call. As a reminder, today's conference is being recorded. And at this time, I'd like to turn the conference over to Nii Tetteh. Please go ahead, sir.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss Willdan Group's Financial Results for the fourth quarter and full fiscal year ended January 2, 2015. With us today from management are Chief Executive Officer, Thomas Brisbin; Chief Financial Officer, Stacy McLaughlin; and from Corporate Development, Mike Bieber. Management will review prepared remarks, and we will then open the call up to your questions. Statements made in the course of today’s conference call, 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 January 2, 2015. The Company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Willdan Group, Inc. disclaims any obligation and does not undertake to update or revise any forward-looking statements made today. With that, I will now turn the call over to Chief Financial Officer, Stacy McLaughlin. Stacy?

Thanks, Nii. I'd like to add my welcome to those joining us on today's call. In addition to GAAP financial results, Willdan will also provide non-GAAP financial measures that we believe enhance investor’s ability to analyze our business trends and performance. Our non-GAAP measures include revenue net of subcontractor costs and adjusted EBITDA. We believe revenue net of subcontractor cost allows for an improved measure of the revenue derived from work performed by our employees. Adjusted EBITDA is a supplemental measure of operating performance which removes the impact of certain nonrecurring income and expense items from our operating results. GAAP reconciliations for both of these non-GAAP measures are included at the end of the earnings release we issued today. I'm pleased to share with you our strong financial results for both the fourth quarter and full year 2014. I’ll start with an overview of the fourth quarter and then I will discuss our full year results. Total contract revenue for the fourth quarter of 2014 increased 34.2% to $30.2 million from $22.5 million for the fourth quarter of 2013. No acquisitions occurred in 2014 thus 34.2% represents Willdan’s organic revenue growth rate. The increase in revenue reflects Willdan’s success in expanding its footprint outside of California as well as winning contracts in new areas of expertise in order to create a diversified portfolio. Tom will provide further details shortly. By segment, revenue from Energy Efficiency Services grew 59.4% to $15.3 million. Engineering Services contract revenue increased 22.8% to $11.3 million. Revenue from Public Finance Services was $2.6 million and Homeland Security Services revenue was $1 million. Revenue, net of subcontractor costs, increased 43.5% to $25.4 million compared with $17.7 million for the year ago quarter. Direct costs of contract revenue were $17.9 million for the fourth quarter of 2014, an…

Thanks, Stacy. Good afternoon and welcome everyone. We had an excellent year in 2014, our annual revenue growth outpaced our guidance for the year primarily due to strength in our energy efficiency and engineering business and our improved operating efficiencies drove more profit to the bottom-line. We get to say this again because its good news, net income was $1.22 per diluted share for 2014, compared to $0.35 in 2013. At the beginning of 2014, we outlined our strategic plan for continued growth and profitability and our financial target. Key components of this plan included first, continued diversification of our service offerings in geography. Second, a focus on driving organic growth in our energy efficiency and engineering service business. Third, pursuing strategic tuck-in acquisition that would expand our geographic footprint, broaden our service offerings and improve our competitive position and fourth, reducing operating expenses to drive profitability. I am pleased to report that our team did an outstanding job executing on all of these strategic initiative. We closed 2014 with a well-diversified mix of business. Energy efficiency led the way accounting for roughly half of our contract revenue, followed by engineering service at 38%, public financial services at 10 and homeland at 3%. During the year, we also expanded into a number of new geographies outside of California; in fact we performed about half of our work east of the Mississippi. I’ve been little -- let's go to Illinois little bit -- maybe little bit on the west side. A lot of our work is in New York and we also have operations in Florida, Illinois, Kansas, Oregon, Texas, Colorado, Arkansas, Washington State and Washington DC. We are pleased with the progress we’ve made in diversifying our revenue sources and our geographic presence. In January, we announced our strategic acquisitions…

First question I want to talk about the integration on the acquisitions, how they’re proceeding and importantly, they were structured a little differently so can you address those maybe have started to generate leads in terms of existing customers, as well as new customers?

Let me -- how are they proceeding and how are they structured little differently were the two questions I believe? -- We’re 60 days into it and the proceeding is fine. We have -- it's really a little early to answer that question, but I know there is a lot of cross selling going on, I know the leaders of both organizations work across the whole country now with all of energy, I know that we have submitted and already won procurement with their qualification, I didn’t announce them because they are not -- they are outside -- they are not officially yet, but it is working already. We’re now able to bid on a whole new host of activity. So the integration is off to a reasonable start.

Is your intention to have these reports underneath the particular subgroups or reporting, the acquisition business is reporting to you, how is that, what’s the plan there?

They’ll be with energy.

And did I hear you correctly that you gave an outlook in terms of the revenue contribution in ’15 and did I hear you say it would be 20 plus million or can you just clarify?

20 million is the number we gave, maybe a little bit more. [indiscernible] 25.

So, how do we think about the organic or the -- what you have in the hopper exceeding ’14 going into ’15 in terms of so called organic growth?

Somewhere we wrote, take that 20 million plug it in and we’ll still grow on the 108, I think 5% to 15%.

And that’s how you get to the plus 20 in terms of your ’15?

Yes because the original guidance, Al, we said up to 15% including acquisition and organic growth, while the acquisition has been made, so we’re going to kind of carve that out and still -- we still need to grow organic.

But the point is organic seems to be heading -- succeeding in these new contracts and new wins even without the acquisitions to the [Super Bowl]?

Yes.

Just a housekeeping item, you highlighted ample resources, you highlighted you will be looking at acquisition, does that imply that you didn’t look at anything in the first three months to-date or did your new corporate development guy have some activity going on?

I’ll let Mike answer that, he is sitting here and he is just been doing nothing, I mean he is already behind and I think that’s the case.

The company actually has generated a number of leads; we’ve already started evaluating acquisitions that could potentially close in 2015 out.

Stacy, how much cash did you have that either some point here in the first quarter or if you ended the quarter, I don’t know if you can give that? I think you said 20 at the end of the calendar year, you paid out some cash for the acquisition maybe the best way to answer that will be close to the year-end and the acquisition pay out, what’s the cash balance look like?

After the year end and the two acquisitions we’re approximately around 12 million.

Any update on the revolver? I think that matures in 2016 that’s probably inside of 12 months to date?

We have 2 million drawn on the draw term portion of the 10 million and that was done at the same time as the acquisition and now the 7.5 million that’s for operating is still -- it’s stays the same so far and it does mature March 2016 and we have already been in discussion on keeping that moving forward.

Tom just one broader question, I think 85% of your revenue was from Energy Efficiency and Energy Services in ’14 and with the acquisitions is there an optimal mix you want to have, is 90% or do you care to stay in the other two businesses that really are progressing at inflation type of growth rates?

We were at 47% Al; I think I said nearly half, I don’t know where you got 85. So I think its 48, 49, 50 somewhere in there is energy, it’s not just energy.

Al did you say Energy and Engineering or just Energy?

I said both, Stacy.

That’s where you got that number. All right so your number is fairly close.

Well I guess the point is right, then if you look further the pricing provisions of each contract right just a little mix shift right, even at fixed price and less time and materials, obviously that goes along with this contract the revenue mix. And so I am just aware of this being more fixed price. Are there any concerns that are arising as you get more towards a higher percentage in fixed price than you have in the past?

No.

And why not?

Well I think your definition of fixed price maybe -- we haven’t -- nothing has changed in ’14, little will change in ’15 in terms of the way utilities do it. You can’t -- we didn’t quite referred to it as fixed price, or a milestone type of thing, event. Our reference to turnkey on the acquisitions again our milestone events they are not firm fixed price lump sum, hard money type risk type activity, so it’s all how we negotiate the contract in payment terms. But I don’t know if it’s going to large firm fixed price contracts ever.

Okay, I was just going off of the disclosure in the K in terms of how you classify it and that’s just -- so we can talk offline about that. Okay, in summary it seems if I looked at a snapshot of where you plan organic growth and the acquisitions coming in, you have a fairly broad range on the guidance on EBITDA margin. But if I take a midpoint of that guidance range you have pretty good growth here in 2015 and then in ’16. That’s probably more -- that’s probably a question there. But is that -- are you seeing the mix of the new business coming on at the upper end of that range?

The mix with a new business coming on, I think stated should be better.

Better than?

Better than where we’ve been, so we’ve been an 8, for 8% or 8.2 we believe the acquisitions will do better than up.

My final, I’m sorry. The DSOs was very strong. I don’t know if that’s a timing issue structural change, I am not complaining about it. But is there room to give even tighter your days or are you bouncing up against structurally part of your customers with to-date?

We’re bouncing up again, we’re getting close. We’re going to look at again our goal for the year is 70 I remember when 75 was deemed impossible, to close the year at 65 or something like that and -- but 70 is our target 70 is how we’re going to structure our bonus pool. If you look at the best in the best Al, when you get up against there is probably around 53. So there is room for improvement, we’ll be going for that over the next couple of years but don’t it expect soon.

Just to not saying being top quartile?

Top 10% probably is around 52, 53.

[Operator Instructions] And we’ll go next to [Jadie Paget with Almal Capital].

A couple of quick questions, is there the potential for you guys to secure other contracts that would be similar to Con Ed in the future?

The answer is out there and there is probably about 10 of them on our radar, but the answer is yes.

They exist, what’s the big challenge in securing those from your perspective?

The whole winning process, I mean there -- I should first of all say, as far as we know there is no contract as big as Con Ed. But if your question is are there others of large magnitude? Yes, do we know about them; yes, have we found; yes, do we expect to win a couple of them; yes.

So just the competitive process, getting in front of the customers and selling them on, on what you bring to the table?

Yes, but having delivery Con Ed, the amount we’re delivering on Con Ed per month is bigger than most utilities or states per year. So it's a really good reference now for us, when we go after other contracts to show that Willdan has delivered the largest. I won’t say the largest because I am not actually positive, but I am pretty sure.

One other question related to that, Con Ed that was surprisingly strong in ’14 for you, will this continue to at the similar run rate or maybe does that drift down a little bit now until you get a potential extension or some other new source of business through them or how does that work?

Through ’15 we’ll continue at the run rate we ended the fourth quarter with. We ramped up into the fourth quarter ’15 is planned to pretty much stay at the run rate we’re at because that’s when we run out of capacity. Meaning they’ve met their goals with their utility commission.

And then after that point is there still more work to be done with them, just in the contact of a different type of engagement?

Well, I can’t say what they are going to do, but if you look at their history, they re-competed it and they continue on with what they are doing. There is no, we’re not sure what’s going to happen in New York, someone will have to pick up the energy saving. We think it will be Con Ed, we hope that it will be Con Ed, if not that will be [indiscernible] which is our second largest contract, but we work through both of them and we’re performing both of them. But I can’t predict what will happen to the state policy.

Okay, but still opportunity to pursue energy savings programs in that territory?

New York is rich with energy savings program.

And I don’t know if you mentioned this script, did out-growth did that get extended for the end of ’15?

Yes.

Seems like that’s been at a pretty stable run rate and that would be their expectation through this year’s Willdan?

Yes.

And then the final question from me, the acquisition --.

We’re wondering, have we met?

We have not. Relatively new to the story.

So, you're new to the story.

Well it's hard to I’m sure stay under the radar, the way you have with the growth you starting to show, so --.

Stacy says welcome.

And the final question is just that acquisitions, particularly at 360 Energy, they seem to be growing at a very robust rate is that something that’s sustainable and you have enough experienced there to -- you can comment what’s driving that kind of growth for them?

They’re just a bunch of good guy.

If it was just that was easy.

They are, I mean they have done a really good job establishing where they are and they want to expand that footprint from Kansas to the whole country and its Willdan’s responsibility to open the doors for them and it's their responsibility to grow that company beyond what they thought they could do in Kansas and that’s why the -- that’s how the merger acquisition took place.

And they are structured similar, do they work through utility contracts or are they just going out and trying to find energy saving opportunities and working with the customers?

They do not work through Utility Savings contracts. But you're new to the table, we’ve probably touch 4,000 call them private sector, sometimes we call them end users, so it would be like a hotel or hospital if you’ve heard us talk. You go to all these hotels and hospitals and private sector location on the utility job. Willdan has not been able to carry it through like 360 does, they would go to a school, they would do -- they would look at the school more holistic instead of just doing an energy audit, they will look at everything they have, their boiler, roof, windows, everything and help the school become more energy efficient. Abacus does the same thing in the North-West. So these two acquisitions took the place to not only expand what they’re doing, but to get synergies from all the other people we’re touching and we can’t take it any further and they can. Does that make sense to you?

It does.

The JV here what’s --.

Which is like good acquisition?

You go by JV?

I do.

Okay, very good. That’s the story.

[Operator Instructions]

Thanks for your attention and interest in Willdan and we look forward to keeping you posted on our achievements this year. So thank you all.

And this does conclude today’s conference call. We thank you all for your participation.