Key Takeaways
MYR Group Inc.'s fiscal year 2025 (calendar year ended December 31, 2025) was the year the electrical construction contractor's structural positioning — two decades building transmission lines and data centers before either was fashionable — translated into the most profitable year in the company's century-plus history. Revenue reached approximately $3.66B (+9% YoY), with operating income of approximately $167M (+208% YoY) and net income of approximately $118M (+291%) producing EPS of approximately $7.53 on approximately 15.7M diluted shares. The operating income surge disproportionate to revenue growth reflects a margin expansion story: higher-complexity projects (high-voltage transmission upgrades, large-format hyperscaler data center electrical infrastructure) carry richer margins than commodity electrical contracting, and MYR Group's two-segment structure — Transmission & Distribution (T&D) and Commercial & Industrial (C&I) — was simultaneously benefiting from once-in-a-generation demand tailwinds in both segments. T&D segment revenue of approximately $2.1B reflects the utility capital expenditure cycle accelerating as US grid operators respond to renewable energy interconnection requirements, aging infrastructure replacement mandates (many US transmission lines date to the 1960s-1980s), and the electrification of industrial loads that is reconfiguring grid topology. C&I segment revenue of approximately $1.55B reflects the data center construction supercycle: hyperscalers (Microsoft Azure, Google Cloud, Amazon AWS) and co-location operators building AI training and inference infrastructure require massive electrical systems — 100-300+ MW campuses with redundant power feeds, complex switchgear, and precision cooling infrastructure — that only a handful of contractors nationwide have the workforce scale and project management capability to execute. The FY2026 investment thesis centers on whether MYR Group can sustain and expand its backlog (approaching $3.5B as of late 2025), whether project margins improve further as higher-complexity work displaces commodity electrical contracting, and whether the company's current ~$7-8 EPS run rate is the floor of a multi-year earnings ramp or the peak of a cycle that normalizes as capacity constraints ease.
MYR Group was founded in 1891 as a Chicago-based electrical contractor and has operated continuously in the specialty electrical construction market for over 130 years — a durability that reflects both the fragmented, relationship-driven nature of electrical contracting and the operational complexity (licensed electricians, union labor agreements, state-specific licensing requirements, project bonding) that creates meaningful barriers to new entrant scaling. CEO Rich Swartz, who has led MYR Group since 2015 after joining from subsidiary Harlan Electric, has presided over the company's transformation from a regional contractor into the second-largest electrical construction company in the United States by revenue. The management team's operating philosophy emphasizes disciplined project selection (bidding discipline that accepts margin over volume), balance sheet conservatism (minimal long-term debt relative to EBITDA), and workforce development (apprenticeship programs and journeyman retention that underpin the skilled labor advantage).
Business Structure
MYR Group operates through two reportable segments, each addressing structurally distinct electrical construction markets.
Transmission & Distribution (~57% of revenue, ~$2.1B FY2025): T&D constructs, maintains, and repairs overhead and underground power lines across the voltage spectrum from distribution (12-35kV) through transmission (69-765kV). Customers are investor-owned utilities (IOU), cooperatives, and public power authorities with long-term capital programs. The T&D business is highly regulated — utilities file multi-year capital plans with public utility commissions, and MYR's T&D revenue is heavily correlated with utility capex cycles rather than economic cycles (utilities must replace aging infrastructure and meet reliability standards regardless of macro conditions). Key subsidiaries include The L.E. Myers Co. (founded 1891, one of the oldest T&D contractors in the US), Harlan Electric, and Western Pacific Enterprises (Pacific Northwest focus). The T&D backlog of approximately $2.0B represents approximately 12 months of forward revenue visibility.
Commercial & Industrial (~43% of revenue, ~$1.55B FY2025): C&I constructs electrical systems for commercial buildings, manufacturing facilities, and large-scale technology infrastructure. The segment's composition has shifted materially over the past three years: data centers (hyperscaler campuses and co-location facilities) have grown from approximately 20% of C&I revenue in FY2022 to approximately 40-45% by FY2025, as AI infrastructure investment drives hyperscaler capex to levels not previously contemplated. Other C&I end markets include healthcare (hospital construction, data and medical equipment infrastructure), industrial (EV manufacturing plants, semiconductor fabs), and commercial real estate (office, retail — secular headwind). Key subsidiaries include Sturgeon Electric, Harlan Electric (shared with T&D), and MYR Group's joint venture participation in large-format data center projects requiring multi-contractor coordination.
Key Core Metrics Performance
Revenue, Margin, and Backlog (FY2021–FY2025)
| Fiscal Year | Revenue | Operating Income | OI Margin | Adj. EPS | Backlog (yr-end) |
|---|---|---|---|---|---|
| FY2021 | ~$2.80B | ~$68M | ~2.4% | ~$4.10 | ~$1.7B |
| FY2022 | ~$3.02B | ~$72M | ~2.4% | ~$4.50 | ~$2.1B |
| FY2023 | ~$3.22B | ~$102M | ~3.2% | ~$5.90 | ~$2.5B |
| FY2024 | ~$3.36B | ~$54M | ~1.6% | ~$3.15 | ~$2.8B |
| FY2025 | ~$3.66B | ~$167M | ~4.6% | ~$7.53 | ~$3.3B |
The FY2024 operating income trough (at $54M, OI margin ~1.6%) reflects project execution challenges in the C&I segment — cost overruns on fixed-price data center contracts under inflationary labor and materials conditions — that MYR Group management addressed through tightened bid review processes, escalation clause negotiation, and project portfolio concentration in projects with more favorable risk-adjusted economics. The FY2025 recovery to $167M operating income suggests those corrective measures worked, though investors appropriately ask whether FY2025's margin is a sustainable baseline or a favorable mix/execution year.
Segment Revenue Mix and Margin Dynamics (FY2023–FY2025)
| Segment | FY2023 Revenue | FY2024 Revenue | FY2025 Revenue | OI Margin Range |
|---|---|---|---|---|
| T&D | ~$1.85B | ~$1.95B | ~$2.10B | ~4-6% typical, ~6-7% in peak years |
| C&I | ~$1.37B | ~$1.41B | ~$1.55B | ~2-4% typical, ~5%+ in favorable years |
| Total | ~$3.22B | ~$3.36B | ~$3.66B | ~3.2-4.6% range recent years |
T&D margins are structurally higher than C&I because T&D work (utility transmission) is typically negotiated on a cost-plus or unit-price basis with utility customers who share risk more equitably than commercial real estate developers — the fixed-price execution risk that compressed FY2024 C&I margins is largely a C&I segment phenomenon. The T&D business provides the earnings stability floor; C&I provides the growth optionality.
Backlog Composition and Data Center Exposure
| Year | Total Backlog | T&D Backlog | C&I Backlog | Data Center % of C&I |
|---|---|---|---|---|
| FY2022 | ~$2.1B | ~$1.3B | ~$0.8B | ~20% |
| FY2023 | ~$2.5B | ~$1.5B | ~$1.0B | ~28% |
| FY2024 | ~$2.8B | ~$1.6B | ~$1.2B | ~35% |
| FY2025 | ~$3.3B | ~$2.0B | ~$1.3B | ~42% |
The data center backlog concentration creates a material execution risk (hyperscaler projects are complex and schedule-sensitive) and a valuation optionality (the hyperscaler capex cycle shows no sign of peaking in FY2025, with Microsoft, Google, Amazon, and Meta each committing to multi-hundred-billion-dollar multi-year infrastructure investment programs).
Market Evaluation
MYR Group trades at approximately 12-18x forward EPS and approximately 5-8x forward EBITDA — a premium to typical specialty construction multiples (~10-14x EPS) that reflects the data center demand tailwind and grid modernization secular drivers. The bull case is sustained data center demand + grid investment acceleration: if AI infrastructure spending remains elevated through FY2028 (multiple hyperscalers have committed to >$50B annual capex), MYR Group's C&I backlog conversion maintains the 40%+ data center mix; simultaneously, utility T&D capex continues growing at 6-8% annually (driven by FERC Order 1977 transmission planning reforms and state-level clean energy mandates), supporting T&D revenue toward $2.4-2.6B by FY2027. At $9-11 EPS on 15-16M diluted shares and a 14-16x multiple, the stock offers meaningful upside from current levels. The bear case is project execution risk in C&I: fixed-price data center contracts are the highest-margin and highest-risk element of the backlog — if AI infrastructure timelines shift (hyperscalers pause buildout due to monetization uncertainty), or if electrical equipment supply chain shortages (transformers, switchgear) extend project timelines and create cost-plus pressure on fixed-price contracts (as happened in FY2024), OI margin could compress back toward the 2-3% range, suggesting $4-5 EPS and a more modest 12-13x multiple.
Grid Modernization and Data Center Infrastructure Thesis
The convergence of two independent secular tailwinds in a single specialty contractor creates unusual earnings power visibility for MYR Group through the late 2020s.
On the T&D side, the US transmission grid has been systematically underinvested relative to the demands being placed on it: renewable generation (solar, wind) is being developed at locations distant from load centers, requiring new transmission paths; aging infrastructure (many transmission lines are 40-60 years old) needs replacement before reliability events occur; and electrification (EVs, heat pumps, industrial electrification) is increasing peak load in ways that require distribution system reinforcement. FERC Order 1977 (transmission planning reform) and the Infrastructure Investment and Jobs Act (which allocated $2.5B+ specifically for transmission buildout) provide regulatory and legislative momentum for utility T&D capex that should sustain MYR's T&D backlog through at least FY2028.
On the C&I data center side, the AI infrastructure buildout is categorically different from prior data center cycles in electrical complexity: AI training clusters require 100-300MW of redundant power with extreme uptime requirements (data center electrical failure during an AI training run can cost millions), specialized cooling infrastructure (liquid cooling for GPU density), and timeline pressure (hyperscalers book months in advance and penalize contractors for delays). Only a handful of contractors — MYR Group among them — have the workforce scale, equipment sourcing relationships, and project management systems to execute these projects reliably. That execution capability commands a margin premium and creates customer stickiness (hyperscalers return to contractors who have delivered previously).