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MG

MYR GROUP INC. (MYRG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: revenue $900.3M vs S&P Global consensus $836.2M*, and diluted EPS $1.70 vs $1.516*, with record quarterly net income ($26.5M) and EBITDA ($55.6M) as gross margin expanded to 11.5% on better productivity and favorable closeouts .
  • Backlog held at $2.64B (T&D $926.5M; C&I $1.72B), up 3.8% YoY, supported by multiple new master service agreements; notably a five‑year Xcel Energy distribution MSA (> $500M expected revenue) .
  • Prior clean energy project headwinds largely behind the company; T&D operating margin swung from a Q2 2024 loss to 8.0% this quarter; C&I operating margin rose to 5.6% (from 0.4% YoY) .
  • Board authorized a new $75M share repurchase program (replacing the prior $75M program), to be funded with cash and revolver capacity; liquidity remains strong with $383.3M available under the $490M facility .
  • Near-term catalysts: margin recovery and buyback acceleration; medium-term: MSAs and data center work supporting high single-digit growth ex-solar, with management citing healthy bid activity and AI-driven electrification demand .

What Went Well and What Went Wrong

What Went Well

  • Margin recovery: Gross margin expanded to 11.5% from 4.9% YoY, driven by better-than-anticipated productivity and a favorable job closeout; EBITDA reached a record $55.6M .
  • Segment improvement: T&D operating margin improved to 8.0% (from -1.8% YoY), while C&I operating margin rose to 5.6% (from 0.4% YoY) .
  • Strategic wins: “We secured multiple master services agreements and new projects across our core markets, further expanding our business footprint,” said CEO Rick Swartz .

What Went Wrong

  • Project inefficiencies: Margin improvement was partially offset by higher costs related to labor and project inefficiencies and unfavorable change orders .
  • Solar headwinds tapering but still present: T&D clean energy projects were a drag in 2024; management continues to be selective on solar within T&D and noted contribution declines from ~10% of T&D revenue in 2024 to ~4% in Q4 2024, continuing lower into Q1 and Q2 2025 .
  • SG&A creep: SG&A increased modestly YoY on incentive compensation and hiring for growth, offset by nonrecurring contingent compensation from a prior acquisition in the base period .

Financial Results

Core Results vs Prior Periods and Estimates

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$828.9 $829.8 $833.6 $900.3
Diluted EPS ($)($0.91) $0.99 $1.45 $1.70
Gross Margin %4.9% 10.4% 11.6% 11.5%
EBITDA ($USD Millions)($4.7) $45.5 $50.2 $55.6
Net Income ($USD Millions)($15.3) $16.0 $23.3 $26.5

Q2 2025 Actuals vs S&P Global Consensus

MetricConsensusActualSurprise
Revenue ($USD Millions)$836.2*$900.3 Bold Beat
Diluted EPS ($)$1.516*$1.70 Bold Beat
# of Estimates (EPS / Revenue)5* / 5*N/A—

Values with * retrieved from S&P Global.

Segment Breakdown

SegmentRevenue Q2 2024 ($M)Revenue Q2 2025 ($M)Operating Income Q2 2024 ($M)Operating Margin Q2 2024 (%)Operating Income Q2 2025 ($M)Operating Margin Q2 2025 (%)
Transmission & Distribution (T&D)$458.2 $506.3 ($8.3) (1.8)% $40.5 8.0%
Commercial & Industrial (C&I)$370.7 $394.1 $1.6 0.4% $22.0 5.6%
Total$828.9 $900.3 ($6.7) (0.8)% $62.5 6.9%

KPIs and Balance Sheet

KPIQ2 2025
Backlog ($B)$2.64 (T&D $0.927; C&I $1.72)
Cash from Operations (Q2) ($M)$32.9
Free Cash Flow (Q2) ($M)$11.6
Effective Tax Rate (Q2)29.2%
Working Capital (approx.) ($M)~$251
Borrowing Availability ($M)$383.3
Funded Debt ($M)$86.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS guidanceFY/QtrNone providedNone providedMaintained (no formal guidance)
T&D and C&I growth outlook (ex-solar)FY 2025High-single-digit growth commentaryHigh-single-digit growth commentary reaffirmed (timing variability acknowledged) Maintained
Share Repurchase AuthorizationThrough Feb 4, 2026Prior $75M program (Feb 26, 2025) New $75M program replacing prior; expires Feb 4, 2026 Reset/Extended
Tax RateQ2 referenceN/A29.2% effective rate (reported) N/A (reported figure, not guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Electrification & AI-driven demandUtilities capex rising; data center power needs highlighted Backlog growth; healthy bid activity across segments “Demand for electricity and modern technologies such as AI” boosting opportunities Improving
Clean energy (solar) in T&DMajor headwinds; projects reached mechanical completion T&D transmission revenue down YoY; selective approach Selective posture persists; T&D solar share declining vs 2024 Stabilizing (lower exposure)
MSAs/customer relationshipsExpanding multi-year MSAs Healthy pipeline; backlog steady Multiple MSAs secured; five-year Xcel MSA >$500M Strengthening
Data centers (C&I)Robust outlook; 170+ hyperscale/colo projects noted $90M data center phase verbally awarded $90M award added to backlog; continued awards across sectors Strengthening
Supply chain/tariffsNotable uncertainty in macro factors —Clients issuing early LNTP for long-lead items; schedules not broadly extending Manageable
Capital allocation (M&A/buyback)New $75M buyback authorized Aggressive buyback in Q1; disciplined M&A stance New $75M buyback replaces prior; disciplined on M&A multiples Supportive

Management Commentary

  • CEO Rick Swartz: “Our second quarter performance resulted in quarterly revenues of $900 million and backlog of $2.64 billion with net income, consolidated gross profit, gross margin and EBITDA all increasing compared to the same period of 2024… we secured multiple master services agreements and new projects across our core markets” .
  • CFO Kelly Huntington (on margins): “Gross margin was 11.5%… positively impacted by better than anticipated productivity and a favorable job closeout… partially offset by higher costs related to labor and project inefficiencies and unfavorable change orders” .
  • T&D COO Brian Stern (on Xcel MSA): “Executed a five year design‑build electric distribution MSA with Xcel Energy, with anticipated revenues to be in excess of $500,000,000 over the five year period” .
  • C&I COO Don Egan (on sector momentum): “Data centers still significantly contributing… $90,000,000 award now contractually added to backlog; additional awards in aerospace, healthcare, higher education… battery storage, transportation, and manufacturing” .

Q&A Highlights

  • Xcel MSA scope: This is incremental new scope (not a displacement); strengthens existing relationship footprint .
  • Backlog lumpiness: Sequential backlog movement reflects normal progress and negotiation timing on longer-term projects; activity remains healthy .
  • Renewables exposure: T&D solar contribution was ~10% of revenues in 2024, declined to ~4% in Q4 2024, and has continued to decline in Q1 and Q2 2025; selective approach persists .
  • Growth outlook: Management reaffirmed high single-digit growth (ex-solar) for T&D and C&I; quarterly timing variability driven by materials and project ramps .
  • Capex/supply chain: Balanced Capex approach to meet stronger demand; clients issuing early LNTP to secure long-lead items, helping prevent schedule extensions .

Estimates Context

  • Q2 2025 results beat S&P Global consensus: revenue $900.3M vs $836.2M* and EPS $1.70 vs $1.516*; both revenue and EPS were above expectations, supported by margin recovery and productivity improvements .
  • Consensus breadth: 5 estimates for EPS and revenue*; margins outperformed prior-year levels, suggesting upward bias to forward estimates if execution and favorable closeouts persist*.

Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Clean beat and margin recovery: Q2 revenue and EPS came in well above consensus on stronger execution; margins rebounded materially vs prior-year trough, supporting rerating potential .
  • Structural demand drivers intact: AI/data center power needs and grid modernization underpin MSAs and bid activity, reinforcing multi-quarter visibility .
  • Reduced solar drag: T&D solar exposure has declined, limiting the risk from prior clean energy project headwinds; margin mix now more favorable .
  • Capital return and balance sheet: New $75M buyback plus $383M revolver capacity offer flexibility to balance organic growth, opportunistic repurchases, and disciplined M&A .
  • Segment strength: T&D operating margin back to 8.0%; C&I at 5.6%; continued improvement would likely drive estimate revisions and support the medium-term thesis .
  • Watch project-level execution: Labor inefficiencies and unfavorable change orders can pressure margins; monitor closeout cadence and productivity commentary each quarter .
  • Near-term trading setup: Buyback activity and continued backlog newsflow (MSAs, data centers) are potential catalysts; sustained margin >11% and EBITDA growth remain key stock drivers .