MYR Group Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• The strength of long-term customer relationships and strong market position contributed to solid third quarter performance. Teams executed projects with operational excellence and expanded client relationships via master service and alliance agreements.
• Bidding activity remained healthy, with U.S. investor-owned utilities projected to spend over $1.1 trillion on capital investments from 2025-2029, including over $123 billion on transmission in 2025-2027. Electric utilities were on pace to spend nearly $208 billion on grid upgrades in 2025.
• C&I segment key markets (data centers, transportation, health care, education, wastewater construction) were forecasted for healthy growth. The company leveraged expertise in these markets and secured new work across core markets.
• Employees were highlighted as a key strength, with focus on developing and empowering teams for safety and project delivery to meet customer needs.

Segment Performance

• Transmission and Distribution (T&D) Segment: Third quarter 2025 revenues were $503 million, a 4% increase year-over-year. Transmission revenue was $293 million and distribution was $210 million. Work under master service agreements accounts for approximately 60% of T&D revenue. T&D operating income margin was 8.2% in Q3 2025 compared to 3.6% in the same period last year. Backlog as of September 30, 2025, was $929 million.
• Commercial and Industrial (C&I) Segment: Third quarter 2025 revenues were $447 million, a 10% increase year-over-year. C&I operating income margin was 6.4% in Q3 2025 compared to 5.0% in the same period last year. Backlog as of September 30, 2025, was $1.73 billion.

Guidance

• Expect ~10% overall revenue growth in 2026.
• C&I margin profile expected to move from 4%-6% to 5%-7.5% in 2026.
• T&D margin profile expected to remain in the 7%-10.5% range.
• Balance sheet was strong as of September 30, 2025, with approximately $267 million of working capital, $72 million of funded debt, and $400 million in borrowing availability under the credit facility.

Risks

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from forward-looking statements.
• Risks discussed in the company's most recently filed annual report on Form 10-K and quarterly report on Form 10-Q, including factors like labor and material shortages, market conditions, and economic uncertainties that could impact performance.

Question and Answer

• Q: Sangita Jain on C&I margins: A: C&I margins were stronger than recent quarters, with expectation of moving to a 5%-7.5% range in 2026 and ~10% overall revenue growth in 2026.
• Q: Andrew Wittmann on data centers: A: Data center market is growing, but the company is focused on core markets across various sectors, not solely on data centers.
• Q: Jon Braatz on C&I margin profile: A: The improvement in C&I margin profile is due to a mix of market conditions and execution efforts.
• Q: Brian Brophy on 2026 growth: A: T&D is running ahead of expectations, C&I is in the expected range, with overall ~10% revenue growth anticipated in 2026.
• Q: Ati Modak on 2026 revenue growth: A: Forecasting ~10% overall revenue growth in 2026 with an equal spread between C&I and T&D.
• Q: Brian Russo on T&D MSAs and labor: A: Increased spend on master service agreements (MSAs) is a component of growth in the T&D segment, and margins are managed while treating customers fairly, with consideration of labor and material shortages.