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Everus Construction Group delivered a record-breaking first quarter of 2026, with revenue hitting $1 billion, up 25% year-over-year, and EBITDA growing 44% to $88.9 million. Performance was bolstered by the E&M segment's dominance in the data center and high-tech sectors, as well as T&D growth in utility infrastructure. A key milestone was the acquisition of SCE & M, expanding Everus into the Southeast region and the resilient pharma/healthcare markets. The company reported a record backlog of $3.7 billion, including significant awards in new geographic territories. Management highlighted their balanced contract approach, maintaining a 50/50 split between fixed-price and cost-plus work to ensure margin stability and mitigate risk on complex projects. Following the strong quarter and the integration of SCE & M, Everus raised its 2026 guidance, projecting revenue up to $4.4 billion. Despite industry labor constraints, the company maintains a strong balance sheet with 0.5x net leverage, providing ample flexibility for its active M&A pipeline. The leadership team remains bullish on long-term trends in data centers and utility modernization, projecting steady margin improvement through operational excellence and disciplined project selection.

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Full Earnings Call Transcript — Q1 • 2026-05-06

Operator: Hello, everyone. Thank you for joining us, and welcome to the Everus Construction Group, Inc. First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Paul Bartolai. Please go ahead.
Paul Bartolai: Thank you. Good morning, everyone, and welcome to Everus Construction Group, Inc.'s First Quarter 2026 Results Conference Call. Leading the call today are CEO, Jeff Thiede and CFO, Maximillian J. Marcy. We issued a news release yesterday detailing our first quarter 2026 operational and financial results. This release and the accompanying presentation materials are available on our website at investors.edris.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC. Additionally, please note you can find reconciliations of historical non-GAAP financial measures in the news release issued yesterday and in the appendix of today's presentation. Today's call will begin with prepared remarks from Jeff, who will provide a review of our recent business performance and an update on the progress against our strategic priorities, followed by Max, who will provide a more detailed financial update before wrapping up with guidance. At the conclusion of these prepared remarks, we will open the line for your questions. With that, I will turn the call over to Jeff.
Jeff Thiede: Thank you, Paul, and good morning to everyone joining us today. We are very pleased with our strong start to the year as we delivered another quarter of record revenues, maintained our strong execution, and made important progress against our strategic priorities highlighted by the acquisition of SE and M, our first transaction as a stand-alone public company. Turning to our quarterly highlights, beginning with Slide 4. We delivered first quarter revenues of $1 billion, up 25% from the prior-year period, driven by growth across both our E and M and T and D segments. Our strong top-line performance was complemented by another quarter of solid execution as first quarter EBITDA increased 44% from the prior-year period and EBITDA margin was up 110 basis points. I am extremely proud of our track record of strong project execution. It is a direct reflection of our commitment to our operational playbook and our team's focus on executing jobs safely, on time, and on budget. I would like to thank all of our team members across the organization. None of this would be possible without their hard work and dedication. Our backlog at the end of the first quarter was a record $3.7 billion, up 20% from the same period last year, with strong growth across both T and D and E and M. We continue to benefit from favorable end-market trends across diverse markets including data center, hospitality, high-tech, transmission, and undergrounding. I am also excited to report that our backlog included the first award related to the new geography we recently entered in support of a new high-tech client. This is a perfect example of what we look for when we decide to move forward into a new geographic location. We see strong long-term opportunities in this region, have an exciting anchor project to build from, and are working alongside a general contractor with whom we have a successful long-term partnership. We are excited by the opportunities in market, and we will look to repeat this type of growth as we focus on expanding our geographic reach through both acquisitions and organic expansion. Our strong financial results reflect our disciplined focus on our strategic priorities, and I would like to highlight some of our recent progress on our key initiatives. As a reminder, our value creation framework is based on targeted commercial growth, operational excellence, and disciplined capital allocation. In terms of commercial growth, we have clearly benefited from strong end-market trends, notably the data center submarket. However, our growth is not just data center work, as we continue to benefit from our diversified end markets with solid trends in hospitality, high-tech, and utility. I just mentioned the high-tech project award in our new geography, which is another example of our diversification and highlights our position in the attractive high-tech market. In addition to our organic growth, a key aspect of our acquisition of SCNM is their expertise in pharma and healthcare, which are areas we expect to be strong growth drivers for years to come. We remain committed to a diversified approach to growth and believe we are very well positioned to benefit from favorable trends across our end markets given our strong customer relationships, track record of execution, and our highly skilled workforce. Now turning to operational excellence. We continue to benefit from execution upside with our first quarter performance further building on our strong 2025 results. While the positive project closeouts get attention, it is our broader execution across all 40 thousand-plus projects we do in a year that enables us to deliver execution upside. This means it is just as important, if not more important, to avoid problem contracts as it is to deliver closeout benefits. We take great pride in our ability to exercise disciplined project selection and successful execution represented by the stability in our margins over time. There are a lot of factors that go into our ability to deliver consistent execution over the long term, such as our focus on our operational playbook and the dedication of our team. Another key factor driving our performance is our diversified and balanced approach to project size and contract type. As we have discussed in the past, we are evenly balanced across project sizes and by contract type, with about half of our projects being fixed price and about half being cost plus. We like to maintain this balance throughout our company. We often get asked, why do we not do more fixed price work to enable margin upside? When we have an opportunity to do a project on a fixed price basis that is in the area of our expertise, with a customer we know and where we are confident in the details of the contract, we will certainly look to pursue and win additional fixed price work. But in general, we like to maintain a balance between fixed price and cost plus because on large, complex projects there could be more risk. Cost plus contracts, especially on very large, complex projects, help mitigate that risk. Also, as we have discussed in recent quarters, we are often being brought into project discussions very early, before the ultimate scope and design of the project is fully known, which makes it difficult to bid at a fixed price. Being selected early on a project before design is completed provides a great opportunity to execute work at a high level and build relationships. We will always look to convert cost plus projects to fixed price when it makes sense, but generally we will look to execute large, complex projects on a cost plus basis. We have a long track record of delivering stable margins that increase modestly over time. We are always looking to deliver execution upside, but our primary focus is steady margin improvement and no surprises. End markets are strong right now, and perhaps there are opportunities to do more with customers in the near term to drive margins. That is not our objective. Our strategy is to build long-term relationships, win the next project and the next one, and deliver steady, modestly higher margins over time. This is what we have done successfully and we remain confident in our ability to continue going forward. And finally, our focus on disciplined capital allocation. Clearly, the highlight so far this year has been our acquisition of SCNM. Acquisitions are a critical part of our capital allocation and growth strategy, so we are very excited to have completed our first transaction as a standalone company. As we have detailed, our acquisition strategy is focused on expanding our geographic footprint, diversifying our business, and deepening our market presence. We think SCE and M checks all these boxes. SCE and M is headquartered in North Carolina and expands our footprint in the very attractive Southeast region. This is a geography that is experiencing strong growth across a wide range of end markets that SCNM serves, including pharma, healthcare, and complex industrial. SCNM is a leading provider of mechanical, electrical, and plumbing services with about two-thirds of its revenues coming from mechanical services. Additionally, the company generates more than 60% of its revenue from service work, and renovation and retrofit work, which provides a stable and profitable revenue stream. SCNN is led by an experienced management team and, importantly, their current leaders, Zach Bynum, Patrick Rogers, and Alex Bynum, as well as other team members of their team, are remaining with the company. We are very excited to have SCNM as part of the Everus Construction Group, Inc. family. While it has only been a few weeks since the deal closed, integration is on track and they are fitting in nicely with our team. After the SCE and M transaction, our pro forma net leverage as of April 2 was approximately 0.5 times, which gives us ample flexibility to continue executing on our growth strategy. Our acquisition pipeline remains active, and we are hard at work looking for the next company to add to the Everus Construction Group, Inc. family. In summary, we are encouraged to see the strong momentum from 2025 carry into this year, and we are certainly very excited to get our first acquisition completed. Based on our strong start to the year, with the inclusion of SCNM, we are pleased to be raising our 2026 guidance, which Max will discuss in more detail. We remain committed to our forever strategic priorities and remain highly confident in our ability to deliver on our long-term financial goals. With that, I will turn it over to Max.
Maximillian J. Marcy: Thank you, Jeff, and good morning, everyone. I will provide additional details on the quarter, give an update on our liquidity and balance sheet, and wrap up with our updated guidance. Beginning on Slide 11 of the presentation, revenues for the first quarter were $1.04 billion, an increase of 25% compared to the same period last year. The increase was driven by growth in both E and M and T and D segments. Total EBITDA was $88.9 million during the first quarter, an increase of 44% from the same period in 2025, driven by solid revenue growth, continued strong project execution, and some favorable weather. As a result, our first quarter EBITDA margin was 8.6%, up 110 basis points from 7.5% in the prior-year period. At March 31, total backlog was $3.68 billion, up 20% from March 31 last year. Our T and D backlog was up 10% compared to last year due to increases in the utility end markets, specifically transmission and undergrounding work, while our E and M backlog was up 22% reflecting growth in data center and hospitality as well as the first large award relating to the new geography we entered last year. We remain encouraged by the favorable trends in several of our key end markets and we remain confident in our ability to generate continued backlog growth. Now turning to our segment results. First, E and M, where our first quarter revenues increased 29% to $835.1 million. The increase was driven primarily by growth in our commercial market with continued strength in our data center submarket. Our E and M EBITDA was $75.3 million in the first quarter, an increase of 52% compared to 2025. The increase was driven by our strong revenue growth and higher gross margin due to project timing and efficient project execution. As a result, our E and M segment EBITDA margin was 9%, up 140 basis points compared to 7.6% in 2025. Our first quarter T and D revenues were $204.4 million, up 10.5% from the first quarter of last year, driven by growth in utility end markets and more favorable weather as we had limited weather disruptions in the early part of the year. T and D segment EBITDA was $27.1 million in the first quarter, up 35% from the prior-year period due to the higher revenues and strong execution. As a result, T and D segment EBITDA margin was 13.3%, up 240 basis points compared to 10.9% in the same period last year. Turning to our balance sheet and liquidity. As of March 31, we had $275 million of unrestricted cash and cash equivalents, $281.2 million of gross debt, and $222.8 million available under the credit facility. We had virtually no net debt at the end of the first quarter. However, our pro forma net leverage, defined as net debt to trailing twelve-month EBITDA, as of April 2 after completing the SE and M transaction, was approximately 0.5 times. Operating cash flows were $143.7 million for the first quarter of 2026, compared to $7.1 million in the same period last year, due to the strong operating results and favorable working capital timing. CapEx was $15.5 million for the first quarter, down slightly from $18.5 million in the prior-year period. While we continue to expect higher capital spending to support our organic growth strategy for the full year, the comparison during the first quarter reflects the purchase of the new Kansas City FreeFab facility in the first quarter of last year. We generated free cash flow of $131.9 million in the first quarter of 2026, up from a use of cash of $8.1 million in 2025. Our first quarter free cash flow reflects some timing benefits. We still expect a more normalized free cash flow conversion for the full year, with our forecasted growth in operating results largely offset by our higher levels of growth investments. Now wrapping up with guidance. We are encouraged by the solid start to the year, which included another quarter of strong execution and some favorable weather. It is also worth highlighting that given our shift in revenue mix due to the strong growth in E and M, we should see more muted seasonal patterns to operating results in 2026. We did not really see any seasonal dip in the first quarter, so we do not really expect much of a seasonal step-up through the year. Based on our strong first quarter results, as well as the inclusion of SCNM, which closed in the second quarter, we are raising our full-year 2026 guidance. We are not providing explicit guidance on SCNM, but as a reminder, in 2025 the business generated $109 million of revenues, with high-teens EBITDA margin. As a whole for Everus Construction Group, Inc., we are now forecasting 2026 revenues in the range of $4.3 billion to $4.4 billion and EBITDA in the range of $345 million to $360 million. At the midpoint of our range, our guidance implies EBITDA margins of 8.1%, which reflects the execution upside from Q1 as well as the margin accretion from SE and M. For the balance of the year, our guidance continues to assume EBITDA margins of right around 8% for the legacy business. Operator, we are now ready for the question and answer portion of our call. We will now open the call for questions.
Operator: We will now begin the question and answer session. Please limit yourself to one question and reenter the queue for any additional follow-ups. If you would like to ask a question, please press star 1 to raise your hand. And to withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from Brian Brophy with Stifel. Your line is open. Please go ahead.
Brian Daniel Brophy: Appreciate you taking the question. Nice margin this quarter. Jeff, you mentioned in your opening comments that this was the first award associated with the new geographic expansion. Does that imply some visibility into additional awards with this high-tech customer that you are referencing, or are you just kind of expecting more awards in that new geographic region with other customers? Thanks. And then on the strong cash flow, curious to what extent better payment terms are driving some of the strength and, outside of the quarter and bigger picture, whether you are seeing better payment terms generally and if we should expect that to sustain into the future?
Jeff Thiede: Good morning, Brian. We are expecting more awards as the project continues to develop and design develops. The key is that we had line of sight in working with a long-term general contractor customer in a new geography with a new end user. This was exciting to us. We were able to plan for core resources to be able to mobilize and to be able to take on and ramp up slowly so we could execute successfully. So we continue to see more opportunity on that site as we focus on that project and the backlog that we have generated and the backlog that we see in the near future. In addition, we are looking for additional business as it becomes available in that new geography. On payment terms, through our contract reviews and our selection of projects and contract terms and conditions, those are top-of-the-list items for us to be able to negotiate good payment terms in addition to other T’s and C’s. We have seen improvement and movement from our customers over the last several years. Billing ahead on cost-plus jobs and making sure that we are anticipating when those costs hit our books is something that we have focused on through our operational excellence initiative, and we are seeing the results in that.
Maximillian J. Marcy: And, Brian, I would just add, it is a very strong cash quarter. I think it is a lot due to timing rather than a persistent result like that in every single quarter. So more timing this quarter, maybe more normalized as the year progresses.
Operator: Your next question comes from Joseph Osha with Guggenheim. Your line is open. Please go ahead.
Analyst: This is Mike [inaudible] on for Joe. Just a question on the backlog. That obviously grew pretty nicely. Are you able to provide a little bit more color on the composition in terms of the percent for data centers, hospitality, and high-tech?
Jeff Thiede: Thanks for the question. The delivery of our services and our ability to execute at a high level puts us in a great position for future work. We are still seeing a similar level of competition that we have seen over the last couple of years, and our ability to target and select projects in a disciplined manner so we can deploy those resources and bring those returns and that success of our safety and production metrics is something that we have gotten better and better at. So the competition is still about the same as it has been for the last couple of years. But as we continue to get better and build and strengthen our relationships through execution, we see a lot of opportunity to be able to achieve the backlog that we need to be able to support the growth of our business.
Maximillian J. Marcy: We do not break out the percentage of data center in the backlog, but the growth did come across a number of markets. It was not just data center. It was across our commercial segment and our industrial segment. So we have good growth in our backlog across our business.
Operator: Your next question comes from Cantor. Your line is open. Please go ahead.
Analyst: Good morning, Jeff, Max, and team. This is Shweta here on behalf of Manish. Congrats on a very strong quarter and the very first acquisition. Jeff, a question for you on the contract mix and the risk discipline. As customers bring you in earlier on large, complex work, should we now expect cost plus to remain a larger share of major projects, and does that cap margin upside but improve margin consistency? And then on SCNM, I know you are not giving explicit guidance, but the business generated $109 million of revenue in 2025 at a high-teen EBITDA margin. Should investors now assume a similar annualized revenue base post close? Any integration costs or seasonality we should consider for 2026 contribution?
Maximillian J. Marcy: We really appreciate our mix of contract type. We want to manage that cost plus versus fixed price. As Jeff said in his comments, it helps us manage the downside and that, along with project selection, really helps to manage our margins incrementally up as we go forward. Our goal is not to really change that mix. Our goal is to grow with our customers and continue to balance that mix.
Jeff Thiede: I would add that if you think about the medium- and small-sized projects, which generally speaking have a higher margin, those are incredibly important to us. And sequentially, our service group, which is a smaller part of our business yet a very important part of our business, has seen backlog increase from this past quarter to the previous quarter. On SCNM, it is forecasted to contribute between mid-teens and high-teens EBITDA margin for 2026, and that covers most of our guidance lift. Our stronger core performance and confidence in our ability to build upon our operational excellence complete the balance of our updated guide.
Maximillian J. Marcy: On seasonality, there are no seasonality factors that we are thinking of there. We gave you 2025 revenue when we did the deal, and you could assume probably some mid- to high-percentage growth rate on their revenue, and then, as Jeff said, maintaining those margins that we disclosed earlier.
Operator: Our next question comes from Wolfe Research. Your line is open.
Christopher Senyek: Hi, guys. Great quarter, again. Couple questions. Given the very strong E and M backlog and strong data center end market, I was surprised you did not raise yearly EBITDA guidance beyond the actuals and the acquisition. Is that just a matter of being early in the year or conservativeness, or is there anything else we should be thinking about as we model it for the remainder of the year? And second, are you seeing incremental transmission and utility investment tied specifically to powering large data centers? In other words, is there a meaningful pull-through demand benefit in the T and D segment from the same AI infrastructure trends that are driving the E and M growth? Lastly, on labor availability, given your exceptional revenue growth rates and strong end demand in E and M, are you coming across labor availability issues as you scale, and could that become a constraint?
Jeff Thiede: It is early in the year. When you look at our line of sight on some of the projects and our record backlog and the timing of that, we are going to take another close look throughout the quarter and be able to report that in future quarters. Our record backlog includes jobs that we were just awarded, and for us it is very important to make sure we have the right profile and the right model. On T and D, we are seeing increased opportunities in those areas, and in fact, our transmission backlog has increased sequentially for the quarter. We are really confident in our ability to pursue medium- and large-sized transmission projects. We are going to be very selective. It has to be in our core geographies, and we have to have the available resources. We also do not want to abandon our customers on the MSA work, which is between 55%–60% of our T and D revenue and a very important part of our business. So we do see increased opportunities. We are going to be selective so we can execute and continue with the success on our really strong margins in our T and D segment. On labor, qualified available labor has always been a challenge for us. We put more and more emphasis on outreach, and once we are able to bring people into our record employment levels, we focus on thorough orientation, training, and development so we can continue to attract, retain, and build upon our record employment. We put more emphasis on it, we are really good at it, and we do not take this lightly. We want to make sure that we have high performers to support our growth projections, and I am confident that we can scale because of our team of people that focus on our operations and our people business.
Maximillian J. Marcy: As a reminder on guidance, as we said last quarter, we had some good visibility to execution early in the year. You can see, especially with our cash flow and the timing of that, some projects coming to a close, so some of that good did come forward. That is why, for the remainder of the year, our guidance has margins reverting back towards more of our core margins for the remainder of the year. It is more timing than anything, not a step change in profitability.
Operator: There are no further questions at this time. I will now turn the call back to Jeff Thiede for closing remarks.
Jeff Thiede: Thank you, operator, and thank you all again for joining us today. We will be attending several upcoming investor events including the Oppenheimer Industrial Growth Conference as well as the Stifel and KeyBanc conferences in Boston. If we are not able to connect during the next few months, we look forward to speaking with you on our next quarterly earnings call. Thank you for your time and interest in Everus Construction Group, Inc. This concludes today's call.
Operator: Thank you for attending. You may now disconnect.