What MYR Group (MYRG) Said on Its Q3 Earnings Call

Key Points

• Record third-quarter results: Revenue rose 32% year over year to $1.26 billion, while net income, diluted EPS and EBITDA reached records of $60 million, $3.82 and $110 million, respectively. Growth was driven by stronger activity in both segments, acquisitions and improved project productivity.
• Commercial & Industrial led growth: C&I revenue surged 58% to $704 million, while Transmission & Distribution revenue increased 10% to $555 million. Consolidated gross margin expanded to 13.6% from 11.8%, and management expects C&I margins to remain near the upper end of its 6%–9% target range.
• Strong outlook and capital flexibility: Backlog reached a record $3.68 billion, up 38% year over year, with projected next-year revenue growth of 18%–22% in C&I and 10%–13% in T&D. The company also expanded credit capacity by $400 million and authorized a new $100 million share-repurchase program, despite lower quarterly operating and free cash flow.

MYR Group NASDAQ: MYRG reported record third-quarter revenue, net income, EBITDA and backlog for 2026, citing higher activity across its Commercial & Industrial and Transmission & Distribution businesses, contributions from the Valley Electric and Comet Electric acquisitions, and improved project productivity.

Third-quarter revenue rose 32% from a year earlier to $1.26 billion. Net income increased to a record $60 million, from $32 million in the prior-year period, while diluted earnings per share climbed 86% to $3.82. EBITDA reached a record $110 million, compared with $63 million a year earlier.

“Our third quarter results reflect the strength of our business, the benefits of disciplined execution, and the continued demand for services we provide,” President and Chief Executive Officer Rick Swartz said. He pointed to investment in electrical infrastructure, grid modernization and electrification as continuing sources of opportunity.

Commercial and Industrial Revenue Drives Growth

Commercial & Industrial revenue increased 58% year over year to a record $704 million. Chief Financial Officer Kelly Huntington said the increase was driven primarily by greater fixed-price contract revenue, including incremental contributions from Valley and Comet, which were acquired July 1.

Transmission & Distribution revenue rose 10% to $555 million, supported by higher revenue across time-and-equipment, fixed-price and unit-price contracts. Work performed under master service agreements represented approximately 65% of T&D revenue in the quarter.

MYR Group’s consolidated gross margin expanded to 13.6%, from 11.8% a year earlier. Huntington said the improvement reflected favorable revisions to estimated gross profit on certain projects, better-than-anticipated productivity and favorable project closeouts. Those benefits were partly offset by inefficiencies on certain projects.

• T&D operating income margin increased to 9.3% from 8.2% a year earlier.
• C&I operating income margin increased to 8.7% from 6.4%.
• C&I results included an additional $4.9 million of amortization expense related to intangible assets acquired with Valley and Comet.

Huntington said the company completed its purchase-price allocation work and now expects the acquired-intangible amortization to be less of a margin headwind than originally anticipated. She said the associated backlog is expected to burn over a period of slightly more than two years.

During the question-and-answer session, Swartz said C&I margins are expected to remain in the upper portion of the company’s stated 6% to 9% operating-margin range in the coming year. He attributed the outlook to strong project execution as well as more favorable contract terms and conditions.

Record Backlog and Growth Outlook

Total backlog stood at a record $3.68 billion as of Sept. 30, up 38% from a year earlier. T&D backlog was $1.29 billion, while C&I backlog totaled $2.39 billion.

Management said backlog can be uneven from quarter to quarter and encouraged investors to consider overall market activity and customer discussions alongside reported backlog. Swartz said the company expects some larger projects to enter backlog by the end of 2026 or by the end of the first quarter of the following year.

For the coming year, management said it expects C&I revenue growth of approximately 18% to 22%, including a full-year contribution from Valley and Comet and their continued growth. T&D revenue is expected to increase approximately 10% to 13%, with growth anticipated to be more weighted toward the second half of the year.

Swartz said T&D growth is expected to be supported by master service agreement work and small- and medium-sized projects as utility customers increase capital expenditures. He said large T&D projects are generally not expected to begin until the latter half of 2027, with more substantial activity expected in 2028 and beyond.

Brian Stern, senior vice president and chief operating officer of T&D, said the segment’s bidding activity remained consistent amid utility infrastructure needs. During the quarter, the company’s operating units won transmission, substation and line-rebuild work in states including Indiana, Virginia, Iowa, New Mexico, Washington, Texas, Massachusetts and New York.

Stern cited Power Insights’ latest report projecting transmission growth of roughly 10% annually through 2030, driven by load growth, aging infrastructure and resilience programs.

Market Activity and Capital Allocation

Don Egan, senior vice president and chief operating officer of C&I, said bidding activity remained healthy and backlog continued to grow. New awards included warehouse work in New Jersey, data-center and airport transportation work in Colorado, a light-rail extension in California, municipal and data-center work, and wastewater work in Seattle.

Swartz said C&I activity remained diversified beyond data centers, with customers increasingly discussing projects that extend into 2029 and 2030. He said some arrangements include “Part A and Part B” contracts, under which MYR Group may secure materials and work with customers on pricing and project development before later phases proceed.

SG&A expenses increased approximately $16 million year over year to $82 million, primarily reflecting costs associated with Valley and Comet, increased incentive compensation and employee-related expenses to support growth.

Third-quarter operating cash flow declined to $46 million from $96 million a year earlier, while free cash flow fell to $9 million from $65 million. Huntington attributed the decreases to timing of billings and payments related to project starts and completions, as well as higher capital expenditures. She added that customer payment terms have become a greater point of discussion in contract negotiations amid higher interest rates.

As of Sept. 30, MYR Group had approximately $298 million of working capital, $216 million of funded debt and $650 million of borrowing availability under its credit facility. Its funded debt-to-EBITDA leverage ratio was 0.63 times.

In September, the company amended and extended its credit facility, adding a $690 million revolving facility and term-loan facilities totaling a $150 million tranche and a Canadian-dollar 70 million tranche. Management said the amendment increased aggregate capacity by $400 million.

MYR Group’s board also authorized a new $100 million share-repurchase program, effective Nov. 4 and set to expire Nov. 3, 2027, unless the funds are used earlier. Huntington said the company views repurchases as an opportunistic component of its capital-allocation strategy alongside organic investment and acquisitions.

Swartz said the company’s acquisition pipeline remains active across both T&D and C&I, though management intends to remain selective. The company is focused on electrical services in C&I, while it may consider certain ancillary service capabilities in T&D.

About MYR Group (NASDAQ:MYRG)

MYR Group Inc is a holding company that operates specialty electrical infrastructure contracting businesses in the United States and Canada. Its companies provide construction, maintenance, repair and emergency restoration services for electric power infrastructure and other complex electrical systems.

MYR Group operates through two primary segments: Transmission and Distribution and Commercial and Industrial. Its transmission and distribution work includes overhead and underground power lines, substations and related utility infrastructure.

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