MYR GROUP INC. (MYRG)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $829.8M, diluted EPS $0.99, and EBITDA $45.5M; gross margin expanded to 10.4% (from 9.7% YoY) despite lower T&D revenue as clean-energy projects rolled off. Backlog ended at $2.58B, essentially flat QoQ and up 2.5% YoY .
• Management emphasized margin normalization toward mid-range targets in 2025 (T&D 7–10.5%, C&I 4–6) and stronger free cash flow, as challenged projects reached mechanical completion by year-end .
• Announced a $75M share repurchase authorization through September 2025, funded by cash and credit facility; borrowing availability was $354.8M at year-end .
• Narrative catalysts: selective stance on utility-scale clean energy within T&D, robust demand from data centers/transit/healthcare driving C&I, and improving productivity/change orders supporting margin recovery .

What Went Well and What Went Wrong

• What Went Well

  • Margin improvement: Q4 gross margin rose to 10.4% on better-than-anticipated productivity and favorable change orders; C&I operating margin improved to 3.9% (from 2.1% YoY) on completed/near-complete projects .
  • Backlog stability and end-market drivers: Backlog at $2.58B; CEO: “key market drivers such as system hardening, grid modernization… and decarbonization providing long-term growth opportunities” .
  • Segment execution: T&D operating margin held at 6.7% despite losses on certain clean-energy projects; management reiterated mid-range margin targets into 2025 .

• What Went Wrong

  • Revenue decline: Q4 revenue fell 17.4% YoY to $829.8M, with T&D down 23.9% as clean-energy transmission projects reached mechanical completion .
  • Project headwinds: Losses on specific clean-energy T&D projects and one C&I project (scope additions, schedule compression, lower productivity) pressured segment margins and earnings .
  • Higher tax rate: Q4 effective tax rate rose to 40.9% (vs. 32.3% YoY) due to permanent differences and unrecognized deferred tax benefits, reducing net income to $16.0M .

Financial Results

• Consolidated and key metrics vs prior quarters

• YoY comparison (Q4 2023 vs Q4 2024)

• Segment breakdown

• KPIs

• Versus Wall Street estimates (SPGI)
  S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at time of query; comparisons to estimates cannot be shown. Values normally retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO (Q4 release): “We finished 2024 with our fourth quarter performance showing overall improvement compared to the third quarter… robust project opportunities with key market drivers such as system hardening, grid modernization… and decarbonization” .
• CFO (Q4 call): “We do see stronger free cash flow generation this year… reductions in pending change orders (~40% QoQ) and retainage (>20% QoQ) support positive cash flow” .
• CEO (Q4 call): “We anticipate operating… in the mid-range of our targets… 7% to 10.5% on T&D and 4% to 6% on C&I” .
• CFO (Q4 call): “Work performed under master service agreements represented approximately 60% of our T&D revenues in the fourth quarter” .

Q&A Highlights

• Contract mix and tariffs: More T&E work this quarter, but mix not a long-term trend; tariffs increasingly embedded in contract provisions .
• Free cash flow trajectory: Stronger in 2025 as profitability normalizes and change orders/retainage unwind; caution on quarterly lumpiness .
• Clean-energy exposure: T&D clean-energy revenue low single-digit percent of segment; 2025 participation will be selective at appropriate pricing/terms .
• Margin outlook: Expect mid-range of target margins for both segments in 2025 as challenged projects complete .
• Generation mix shift: No notable customer planning changes due to administration; MYRG’s work (lines/substations) benefits regardless of generation source .

Estimates Context

• S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at time of query; as a result, we cannot quantify beat/miss versus Wall Street for this quarter. Values normally retrieved from S&P Global.*

• Implications: In absence of consensus, internal indicators (gross margin expansion, segment margin normalization, backlog stability, and buyback) suggest the narrative improved sequentially even as reported revenue declined YoY .

Key Takeaways for Investors

• Margin normalization underway: Sequential improvement in gross and operating margins, with management targeting mid-range segment margins in 2025 as clean-energy headwinds roll off .
• Demand is durable: Backlog stability and robust C&I end-markets (data centers, transit, healthcare) support medium-term growth despite T&D clean-energy roll-down .
• Cash flow inflection: Expect stronger 2025 free cash flow as change orders/retainage convert to cash and profitability improves; share repurchase adds capital-return support .
• Risk posture improved: Selectivity in clean-energy T&D reduces exposure to challenging project structures; MSA share rose to ~60% of T&D, supporting steadier utilization .
• Watch tax cadence: Higher effective tax rate headwinds likely to persist, but cadence should be more even across quarters; factor this into EPS modeling .
• Trading setup: Near-term narrative favors margin/FCF recovery and buyback as potential support; medium-term thesis hinges on data center electrification and grid modernization investments .

Notes: 
- EBITDA, Free Cash Flow, EBIA are non-GAAP measures as defined and reconciled in company materials **[700923_0000700923-25-000005_myrg-20250226x8kxexx991.htm:11]**. 
- All figures and statements are sourced from company filings and earnings call transcripts cited inline. 
- S&P Global consensus estimates were unavailable at time of query; comparisons to estimates are therefore omitted. Values normally retrieved from S&P Global.*