Good afternoon everyone and thank you for joining us to discuss Willdan Group’s Financial Results for the Second Quarter Ended June 27, 2014. With us today from management are Chief Executive Officer, Thomas Brisbin; and Chief Financial Officer, Stacy McLaughlin. Management will review prepared remarks and we’ll 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 report including but not limited to the Form 10-K annual report for the year-ended December 27, 2013 filed on March 25, 2014. 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 [Meet]. I would like to add my welcome to those joining us on today’s call. In addition to GAAP financial results we are providing non-GAAP financial measures that we believe enhance investors’ ability to analyze our business trends and performance our non-GAAP measures include revenue net of subcontractor cost. We believe this allows for an improved measure of the revenue derived from work performed by our employees. We also are providing adjusted EBITDA which removes the impact of certain non-recurring 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. A brief overview of our financial results for the second quarter. Total contract revenue increased 31.6% to $27 million from $20.5 million for the second quarter of 2013. Energy efficiency services grew 86.9% to $13.7 million from the prior year. Engineering services contract revenue increased 9.7% to $9.5 million for the quarter. Revenue from public finance services was $2.7 million and homeland security services was $1.1 million. Revenue net of subcontractor costs for the second quarter of 2014 increased 24% to $21.2 million compared with the second quarter of 2013. Direct costs is $16.3 million for the second quarter of 2014, compared with $11.4 million for the second quarter of 2013. The majority of the increase was a result of greater demand for services performs by our energy efficiency services group, which generally utilizes a higher percentage of subconsultants than other Willdan's subsidiaries. General and administrative expenses for the second quarter were $8.7 million, a 4.7% increase from the prior year period. G&A expenses as a percentage of total contract revenue declined to 32.4% from 40.7% for the second quarter of 2013. Net income for the quarter was $1.9 million or…

Thanks Stacy. Good afternoon and thank you all for joining us. I will begin with the expansion of our Con Ed program; next, I will provide an overview of our second quarter results and key developments in each business unit; then I will open up the call for your questions. Regarding today’s news, I am pleased to report that Con Ed of New York has expanded our energy efficiency services contract under its Small Business Direct Install program by $23 million. This brings the total value of our contract to $61.3 million. Under amended contract, we’re expanding our services to Manhattan, Staten Island and Westchester County. We’re now responsible for the entire Con Ed SBDI service territory. We believe this contract expansion speaks directly to Willdan’s smart capabilities and performance in this energy efficiency program. Now turning to our second quarter performance. I am pleased to report that we delivered very strong financial results. Revenue increased nearly 32% and each one of our divisions generated top-line growth and profitability. These results reflect the steps we’ve taking to manage our operating expenses and project delivery. Our net income for the first quarter 2014 has already exceeded net income for entire year of 2013. Based on our strong financial performance we’re now in a position to reward employee performance. In the second quarter, we began accruing for bonuses that will be paid in 2015. We’re coming out of some very [linear] and bonuses will be performance-based. Turning to review of our business units. I’ll begin with engineering services, which accounted for 35% of our second quarter revenue. Revenue from engineering services grew nearly 10%. The demand for outsourced city services continued to increase in response to the sustained recovery of the residential housing market. During the recession many cities downsized and now…

Thank you. (Operator Instructions). And we'll go to Al Kaschalk of Wedbush. Please go ahead.

Good afternoon. Can you hear me?

You are little soft Al, get closer to phone.

Is this better?

That's better.

Okay, great. Tom you mentioned some new engagements to be forthcoming, I think they were New York, California and Midwest Territories.

Yes.

Are those, if you are successful on those new engagements. Are those a 100%, do you have the staff those of new employees or are you able to leverage some of what's already in those particular markets?

We want with existing employees and then we'll bring our new ones to support them.

Okay. Do we now have to end those?

You win on based on the people you have.

Sure. But I was just trying to right. And therefore you'll know the profitability of the staff or…

Yes.

Okay. Good.

Yes. The reason I didn't announced them yet, is they are not all fine. But there is three or four, hopefully we'll have for the next quarter. That are anywhere from $1 million to $5 million that are very strategic in terms of the type of work they are. We're very happy about it, but I just can't talk about it now.

All right. So, maybe I can transition into the financial targets. I think you are already up this year around 18%, 19% top-line growth. Was some of the strategic opportunities do you think that impacts the margin profile or how should we think about the new work that does come on line?

I think we’re at about what, 7.8% margin, where are we Stacy, for the first half?

40.

Margin?

40%.

That’s gross, net?

I don’t know.

First half net margin, I think we’re at about 7%.

Adjusted EBITDA 7, yes.

7. So, is your question now, is it going to go up from 7?

Well, just what I am saying is you’ve had tremendous success; you’re looking to make further strategic investments on new contracts in key vertical markets. And I guess I am just trying to set expectations here that should that on the margin come in a little bit lighter than what is delivered year-to-date or now there you should be at least at the midpoint of your financial targets?

The midpoint of our financial targets would be 7.5 and we’d certainly like to increase our margin as year goes on. And the new contracts coming in will not certainly take them down, it will only go up.

Excellent. On the Con Ed program….

That doesn’t mean we want to do some wrong and our margin will go down, but I am just signing the contracts that we’re bringing in our [help enough].

Yes. No, I understand. Do you have any contracts that are high margin that are rolling off?

No.

In terms of Con Ed program, probably one that you can anticipate, could you elaborate on how much to yourself performing or versus subcontracting at the moment?

Okay. We went to self perform; we increased our self performance to about 60% to 65% on our existing contracts; then we got to some mended contracts. The other consultant was using primarily subcontractors. So, over the next approximately looks July 16, so over the next 18 months let’s say, we are taking on their territory and their work ,so we generally have on that 22.4 million or 22.2 million, we have to ramp up our self perform again into that territory. So it will be a ramp up. So it will go somewhere from 10%, 15% self perform in that territory to hopefully by the end of the time to 50%, 60%, 70%. Does that answer your question now?

Yes, that’s fine.

Can you picture what’s happening there?

I can.

Okay. That’s a tough one because it doesn’t quite put us back in the same situation we were in five years ago where we were using all subcontractors because we still have the self perform which is good we are making money on it and it does allow us to -- there is things that are going to be that will help us on the subcontracting as well.

But in general, you always prefer to self perform?

In general, we're doing really well self performing.

Yes.

We're making margin but the ramp up on this is so big, we can't ramp up that fast. Con Ed wants the job done, we stepped up to it and we'll get it done. As you can see what we've done from already has allowed them to say, we’ll give the entire service area to you? So when you’re in that situation you can't say well we've got to self perform but...

Right.

We're making decision best for Willdan and our customers.

Finally, the financial performance is improving, the balance sheet is blended. What do you see out there on for expectations for shareholders about deploying that cash to higher return markets, maybe acquisitions; and if not, is there any consideration that doing something different with that cash such as a dividend or something?

I guess in order of priority and I know for our people on the call that would reprioritize this. But here at Willdan, our priority would be acquisitions because we want strength in our position. We see very good markets out there for other types of services related to energy or in energy, but just a little bit different than what we're doing. That would be priority one because we’ve got to get -- it would be nice to get another $8 million firm and grow it to $50 million very quickly, that's very good acquisitive growth Second priority would probably be is the stock will be buyback and I know why it's on the line. So our third priority will be dividend. Once we become a more stable, less growing, stronger on cash, I think dividends would be down the road.

Yes. I would encourage you to focus on the acquisition strength, given that's probably the best use of capital, given you've demonstrated here the ability to take existing business than least operate them, much more efficiently so that make true sense. Thanks a lot.

Thanks. Everybody has got opinion on that one. I am just -- right now we're going to focus on acquisitions, small ones. Thank you. Gail?

Yes. We're moving on to Wyatt Carr from Monarch.

Hi Tom and Stacy and congratulations on your quarter. Just a couple of questions. In the Engineering Services, you noted that it moved up about 10% but through the June half year it is $18.4 million and it was $9.5 million in this last quarter so it didn't move up an awful lot, but still pretty good growth there. But the Energy Efficiency Services really expanded. Can you comment on what is the one of the new large districts having an impact there?

We have not started on those. They are awarded this morning and new districts in New York we have not started on.

Okay.

The energy ramp up, while it was primarily due to really a little bit of California, a big part New York to ramp up in self-installed during the summer months. The program in New York is going very, very well. And that's why Con Ed believes we can take on the whole territory.

Sounds great. The question I had though when you are doing pass through and you are getting, your margins came down a little bit when you did this self-servicing. And now you are operating at about, what you say 65% self-performed on the existing business and that new business is going to be lower, but we're at the higher margin business to start out with and then actually come down to the average of the business that you are doing the self-performing.

We've been able to take our self performance, I just call it a learning lesion, when we switched over from 0 roughly around 8%, 8.5% now.

Okay.

On self performed.

On self performed?

Yes, the problem we had on sub-contractors is there is no mark up on pass through. We are working our ways to be more involved in the sub-contractor program to gain margin on that. Anyway, you look at we separated revenue less sub-contractors, subcontractors so you can see a truer picture.

Okay, great. In the Public Financial Services segment, this one of the higher margins portion of the business and I -- it looked like it was somewhat flat in the quarter I mean it was up like 200,000 sequentially?

Yes.

Go ahead.

We had an accrual for a lawsuit that we’re planning for, of a deductible on the insurance.

Okay.

It’s in the report and it was in the financial services part. So I…

Right.

A right square between the eyes that’s where it is.

Okay.

It’s in the report, isn’t it Stacy?

Yes.

Okay. And that is and I think you commented that it was -- it's covered by insurance?

With $250,000 deductible, $5 million in insurance, (Technical Difficulty) anything more than that but your question is to why they hit in the downswing in financial services was the accrual of the deductible.

Okay. And lastly I mean, you’ve done a terrific job I mean your margins now I mean I thought you’re bidding well and getting up to 6.5 now you’re 7 and your goal is to get up to 10%, how realistic is that, how far away is that given that the third quarter is also a strong quarter?

Do you mean if I hit at one quarter or will I meet the quarter after quarter, which question would you like answered? We might hit higher in the third quarter but the fourth might come down, but sustainable we are shooting about 12 months out ahead of us to get sustainable up around 8 or 9, how is that, that’s our plan internally.

Fantastic. Okay. And I think that pretty much covers it, California rail that was the court order, but also there were some comments in the press recently. And I know that that just gets you into a lot of other business, but can you see some direct things coming out of California Rail possibly in the third quarter?

Not above what we are doing now no. The next two segments that I referred to -- there are four segments, (inaudible) want the first segment, (inaudible) is the team we are on they are bidding a combined segments two and three, it’s about $2 billion award, don’t get excited about that, that’s primarily construction, the engineering portion on 2 billion is generally less than 10%, and our part of that team is generally less than, half goes to disadvantage business above by the time we get down to it, I think I gave you a number if they were to win two and three if we had 10, 12 people on it we would be doing great.

Super. I think in the first quarter’s call you kind of outlined the roadmap that could get you to 100 million that looks like in top-line, revenues it looks like you are on your way.

If you multiply it by 2, you were pretty close.

Congratulations, thank you, thanks a lot.

Alright thanks a lot.

Alright. Thanks a lot.

And then (inaudible) of Wedbush has our next question.

This is Jeremy Zhu. Hi Tom, Hi Stacy, great job. The first question is really along Wyatt’s earlier question about the engineering services. Is this just a start of the ramp up or do you see the growth accelerating or this is a pace that you're seeing in the near-future?

I talked to other guys, we’re just starting. We’re not -- things are just starting to get back where there is, we call it new lumber around, you look around, you can actually see something being built, there is a few development, selling lots. Cities are starting to plan check, so it's just starting.

Well, that’s good to hear. That business used to be close to $100 million business. Do you think or we get back to that peak?

No, it peaked at about the high for Willdan before the recession was 76 million.

Right.

You subtract 10 out for financial, that takes you the 66, sales about the peak.

Right. Which is still about 50% more than what you're doing now, right?

Correct. So if we got back and started to grow and that's all we're asking of our people, let’s just get back to where we were before the recession. And that would be an uptake of about 50%.

So, you can see that happen in next couple of years?

Well, it took -- that's not fair Jeremy. The last economic bubble started in 96 and crashed in about the beginning of -- the end of 2006. So, it was a 10 year ramp up on the sub-prime loan. If you look at conventional housing, generally their increase is 3% to 5% nationwide what we saw over that 10 year period. I can't remember the numbers but it was 15%, 20%. So, I am not going to comment, but it’s in our plan another sub-prime -- they’re not planning on another sub-prime loan bubble. So, I don't think we'll drill back as fast as we did that time, with the economy.

Yes.

We need to get ourselves outside of the economy, do different things and win different types of jobs, so we're independent of the economy. And that's we haven't stopped looking at that all. Like that announcement on that that bridge inspection. I mean our bridge group that we started up in near Sacramento; I mean they’ve got a lot of great things on the planning board. So, we can't wait for the economy, Jeremy. We can but we won’t.

Well, it doesn't sound like you are improving revenues despite the economy I guess. Well, second question is staffing, what's your staffing level now and how fast is it ramping up?

Stacy’s got the exact number I think and what has changed since the first of the year?

Hi Jeremy. At the end of the year 2013, we had 534 employees; at the end of June 2014, we had 604 employees, so we had a net change of increase 80 employees.

Okay. I noticed that your facility cost has gone up quarter-over-quarter from the last Q1 to Q2. Does that mean you're taking on more space for the -- come at the FTEs or are you opening new locations?

We are not taking up more…

Facilities from quarter over quarter has decreased.

It is.

Quarter, for Q3, I'm sorry Q2, 2014 facilities was 1.1 and for 2013 it was 1.1 as well.

Yes, I'm talking about quarter over quarter from Q1, 2014 to Q2, 2014?

Q1 2014 was 1.06 and it's gone to 1.1 that small increase is due to a couple of additional new offices. But we are working on reducing space that we have in current offices. And those offices that we have opened are only due to new work in that area.

Understood. Okay. And by the way just I guess a comment on from data side of Wedbush, I guess as a shareholder, would you rather see very cautious about acquisitions and I think would rather see that money dividend in that or employees both on the acquisition.

Is that your side of the Wedbush?

Yes, that's my side Wedbush.

Okay.

Thank you.

Alright. Thanks a lot Jeremy. That's it for questions from me. Alright.

And that does conclude the question and answer session today. So Tom, I'd like to turn our call back over to you for any additional comments.

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

And that does conclude today’s presentation. Thank you for your participation.