Good day, and welcome to the Willdan Group Second Quarter 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tony Rossi with Financial Profiles. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss Willdan Group's financial results for the second quarter ended June 29, 2018. With us today from management are: Thomas Brisbin, Chairman and Chief Executive Officer; Stacy McLaughlin, Chief Financial Officer; and Mike Bieber, President of Willdan Group. Management will review prepared remarks, and then open up the call to your questions. Statements made in accordance with 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 Form 10-K for the year ended December 29, 2017, and subsequent quarterly reports on Form 10-Q. The company cautions investors not to place undue reliance on the forward-looking statements made during the course of this conference call. Willdan Group disclaims any obligation and does not undertake to update or revise any forward-looking statements made today. In addition to GAAP financial results, Willdan also provides non-GAAP financial measures that we believe enhance investor's ability to analyze our business trends and performance. Our non-GAAP measures include net revenue, adjusted EPS and adjusted EBITDA. We believe net revenue allows for an improved measure of the revenue derived from the work performed by employees. Adjusted EPS and adjusted EBITA are supplemental measures of operating performance, which removes the impact of certain expense items from our operating results. GAAP reconciliations for all of these non-GAAP measures are included at the end of the earnings release we issue today. With that, I will now turn the call over to Chief Financial Officer, Stacy McLaughlin. Stacy?

Thanks Tony. I would like to add my welcome to those joining us on today's call. I'll start with an overview of our income statement, then our balance sheet and finally our guidance. The total contract revenue for the second quarter of 2018 decreased 16.7% to $59.8 million from $71.8 million for the second quarter of 2017. The decrease was primarily driven by reduced pass-through subcontractor costs that we recognized at little to no margin. This has decreased the total amount of contract revenue running through our income statement. Net revenue defined as contract revenue minus subcontractor services and other direct costs was $34.3 million, an increase of 13.7% from $30.2 million in the year ago quarter. Our energy segment increased net revenue by 21.8%, while our engineering and consulting segment increased by 3.8%. Direct costs of contract revenue were $36.7 million for the second quarter of 2018. A decrease of 30.9% from $53 million in the same period last year. The decrease was primarily the result of lower pass-through subcontractor expenses resulting from our energy segment projects. Our direct costs of contract revenue were 61.4% of our total contract revenue in the second quarter of 2018, down from 73.8% in the same period of the prior year. The decline was due to lower subcontractor services and other direct costs which represented 42.7% of total contract revenue this quarter down from 58% last year. This reduction in subcontractor costs was right in line with our expectations and consistent with the trend we have spoken about previously. General and administrative expenses for the second quarter were $19 million compared to $14.2 million for the prior year period. The increase was primarily driven by the employees and offices added through our acquisitions of Integral Analytics and Newcomb Anderson McCormick over the past…

Thanks Stacy and good afternoon everyone. We executed well in the second quarter delivering double-digit year-over-year growth in net revenue, adjusted EPS and adjusted EBITDA. We continued to see a steady contribution from our engineering and consulting segment of 4% and our energy segment up 22% reflects the ramp-up of new programs and a contributions of our recent acquisitions, Integral Analytics and Newcomb, Anderson, McCormick referred to as NAM. Organic growth for the quarter was 8% for net revenue. We had good momentum with Integral Analytics and are seeing the revenue that we expected. We recently added a significant new customer in Entergy, one of the largest utilities in the Southeastern United States. As we continue to grow the customer base for IA, we expect to see a more positive impact from the higher margin revenue. NAM has been a part of our company for three months. We are pleased with their performance and have already had some success in joint business development efforts. NAM has an excellent reputation that will be helpful in the upcoming California competitions. Within the rest of our energy segment we continue to perform well on our major programs. We're seeing more work in Colorado, Maryland, Illinois, Ohio, Connecticut and Massachusetts. We are exceeding expectations on the LCL program for the San Diego Gas and Electric which is now known as the local capacity procurement program. We are seeing other LCL program opportunities emerging in other states like New York and Washington and our strong performance on the largest program in the country for SDG&E puts us in a good position to win similar assignments nationwide. We have worked in nearly 200 hospitals doing energy efficiency for utilities. Direct to customer work is growing in the hospital market. We are performing a major infrastructure and…

[Operator Instructions] And we'll go first to Moshe Kati with Webb Bush Securities.

Hey thanks guys. Just FYI, you got cut off when you were talking towards the end when you were talking about the California procurement opportunity. I think you said that now it contributes about $20 million a year. And then you were going to talk a bit about what happens down the road in terms of potential expansion of that program and I don't know I you mentioned a date, but again you got cut off on that specific remark. Do you want to go back and repeat what you said?

Sure. We expect the beginnings of the opportunities to come out this September. They're going to add up to about - well it's probably closer to $800 million a year but the market that we can chase or what I called the addressable market will exceed about $500 million per year. We are currently doing about $20 million per year in California right now. So in our view our position in California should expand tremendously.

That's great and helpful.

Okay.

And then you did provide guidance for the year, reiterated guidance, but then can you give us some more pointers about Q3 versus Q4? That would be helpful in terms of net revenues and some of the other metrics.

Yes Moshe, Q4 is normally seasonally slightly less than Q3 if you looked at those two and Q3 is normally significantly above Q2 - that's normal especially with the addition of IA which would be a little different from the seasonality you saw last year.

Thanks.

[Operator Instructions] And as we have no further questions, I'd like to turn it back over to management for any further or closing remarks.

Okay. I would like to thank all of you for participating on our call today and for your continued interest in Willdan. Have a great day.

And ladies and gentlemen that does conclude today's conference. Thank you for your participation. You may now disconnect.