Everus Construction Group Q2 2026 Earnings Call: Complete Transcript

Everus Construction Group (NYSE: ECG ) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. This content is powered APIs. 23 billion for Q2 2026, up 34% year-over-year, with significant contributions from the E&M and T&D segments.

The company announced acquisitions of SENM Constructors and Epsilon Industries, enhancing its modular construction capabilities and geographic reach. 55 billion, driven by strong demand in E&M, particularly in data centers and industrial projects. 4%, reflecting effective project execution. 7 billion and EBITDA between $410 and $425 million.

Management highlighted ongoing strategic priorities, including targeted growth, operational excellence, and disciplined capital allocation. The company maintains a strong balance sheet with net leverage well below the target range, providing flexibility for continued investment in growth initiatives. The integration of SENM is on track, and Epsilon's acquisition is expected to close later this year, further strengthening modular construction capabilities. Full Transcript OPERATOR Hello everyone.

Thank you for joining us and welcome to the Everus Construction Group second quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.

I will now hand over the conference to Paul Thartali. Please go ahead. Paul Thartali, Investor Relations Thank you. Good morning everyone and welcome to Everus Construction Group's second quarter 2026 results conference call.

Leading the call today are CEO Jeff Feed and CFO Max Marcy. We issued a news release yesterday detailing our second quarter 2026 operational and financial results. com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which by their nature are uncertain and outside of the company's control.

Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the news release issued yesterday and in the appendix of today's presentation.

Today's call will begin with prepared remarks from Jeff, who will provide a review of our recent business performance and an update on the progress against our strategic priorities, followed by Max, who will provide a more detailed financial update before wrapping up with our guidance. At the conclusion of these prepared remarks, we will open the line for your questions, and with that I'll turn the call over to Jeff. Jeff Feed, CEO Thank you, Paul, and good morning to everyone joining us today.

Our positive momentum continued during the second quarter as sustained market demand and strong project execution resulted in another quarter of record revenues, meaningful margin expansion, and robust backlog growth. We also made important progress against our key strategic priorities during the quarter. In April we announced the acquisition of SENM Constructors and the integration is progressing as planned. We followed this transaction up with the announcement this past Friday that we expect to acquire Epsilon Industries, a leading provider of offsite modular construction solutions.

We are very excited about the transaction, which we expect will provide meaningful expansion of our offsite construction capabilities. I will give more details on the transaction later in my comments. Our robust organic growth and strong project execution directly reflect the diligent efforts of our talented team across the company and our unwavering focus on our strategic priorities. Our people are what drive our business, and I am extremely proud and grateful for their hard work and dedication.

23 billion, up 34% from the prior year, with growth across both our E&M and T&D segments and a contribution from SENM. Once again, our strong top-line performance was complemented by another quarter of excellent execution. As a result, record second quarter EBITDA increased 53% from the prior year period, and our EBITDA margin was up 130 basis points. Our team's ability to deliver this level of strong project execution reflects their diligent use of our operational playbook.

We are extremely proud of our track record of successful execution and will not get complacent. We remain focused on executing jobs safely, on time, and on budget. 55 billion, up 53% from the same period last year, driven by continued strength in E&M. The favorable demand trends are broad-based, and we continue to benefit from positive momentum across diverse markets.

With growth in nearly all submarkets sequentially, demand for our services remains strong, as evidenced by our recent bookings. We always stay close to our customers, monitor market trends, and track project activity. We have not experienced any project cancellations or notable changes in activity with our customers or projects. We remain encouraged by what we are seeing in our markets and remain confident in the growth outlook.

The potential for change in any end market is why we remain committed to our diversified growth strategy. Demand trends vary, and we diligently position ourselves to take advantage of changing market dynamics. Ten years ago it might have been healthcare that was a key growth driver, five years ago it was hospitality, and now it is data centers and other markets like semiconductor. Our focus is on making sure we have the people, capabilities, and geographic exposure to take advantage of each phase of growth.

Our recent expansion into a new geography and the announced acquisitions of SENM and Epsilon are evidence of this strategy. We will continue to evaluate new geographies and strategic acquisitions that advance our growth strategy and keep us positioned to achieve our long-term financial targets. Now I'd like to shift gears and highlight our recent progress on our key strategic initiatives. As a reminder, our value creation framework is based on targeted growth, operational excellence, and disciplined capital allocation.

In terms of growth, we continue to benefit from strong end market trends, notably in the commercial and industrial markets. As I already discussed, we continue to see strong momentum across our markets. Our data center work tends to be focused on several hyperscaler customers. We continue to be very involved in long-term planning with these customers and demand remains strong.

The project in our new geography for a semiconductor customer continues to ramp as expected, and we remain encouraged by opportunities we are seeing in this market. We will continue to focus on our diversified approach to growth and believe we are very well positioned to benefit from a broad set of favorable market trends given our strong relationships, track record of execution, and our highly skilled workforce across the country. Now turning to operational excellence, our operating results continue to benefit from efficient project execution, including the advantages of our modular construction and prefabrication services.

Offsite construction has long been an operational focus for our operating companies. Offsite construction in controlled shop environments supports safer work conditions, helps us use labor and materials more efficiently, and creates more predictable project outcomes. This more predictable project planning results in strong customer relationships, which helps us grow our business. We have quarterly meetings with our modular prefabrication teams during which we share best practices and explore ways to increase usage of offsite construction across the organization.

The expected acquisition of Epsilon will further expand our capabilities. Epsilon has more than 25 years of experience in providing offsite construction solutions across North America. They are recognized for their innovation, proprietary capabilities, and highly refined execution processes that provide consistent and efficient delivery of complex custom solutions. Epsilon offers a full range of services, including design assist, custom fabrication, and turnkey field installation that support diverse project types like data centers, advanced manufacturing, and healthcare.

S. and Canada, enabling nationwide distribution. In addition to integrating with our existing footprint, we expect that Epsilon's footprint will enhance growth in key geographic areas including Florida, Texas, the Mid-Atlantic, and the Northeast. Epsilon is led by a strong leadership team with extensive technical and operational expertise and has an experienced labor force that includes more than 50 engineers and 120 skilled tradespeople.

We are excited to welcome Epsilon to the Everus team and look forward to another successful integration after the transaction closes later this year. And finally, our focus on disciplined capital allocation. While it took some time, and I know everyone was eagerly waiting for us to begin executing on our inorganic growth strategy, we are very excited. We acquired SENM in April, our first transaction as a standalone public company, and we are thrilled with our recent announcement of the pending Epsilon acquisition.

As I already mentioned, the integration of SENM is on track, and we are already exploring expanded opportunities. They have a fantastic team, and we are grateful to have them be part of the Everus family of companies. We think both SENM and Epsilon align with the acquisition strategy we previously described, which is to expand our geographic footprint, diversify our business, and deepen our market presence. 5 to 2 times target range, which gives us continued flexibility to execute on our growth strategy.

Our acquisition pipeline remains active. In summary, we remain encouraged by the sustained market demand trends and are very proud of our continued strong execution. We are performing at a very high level across the organization, both strategically and operationally. Based on our robust first half of the year, we are pleased to be raising our 2026 guidance, which Max will discuss in more detail.

We remain committed to our forever strategic priorities and are highly confident in our ability to deliver on our long-term financial goals. With that, I'll turn it over to Max. Max Marcy, CFO Thank you, Jeff, and good morning, everyone. I will provide additional details on the quarter, give an update on our liquidity and balance sheet, and wrap up with our updated guidance, beginning on Slide 11 of the presentation.

23 billion, an increase of 34% compared to the same period last year. The increase was driven by growth in both our E&M and T&D segments, including contributions from the recently acquired SEM. Excluding the contribution from SEM, revenues were up 30% on an organic basis. 6 million during the second quarter, an increase of 53% from the same period in 2025, driven by solid revenue growth and continued strong project execution.

1% in the prior-year period. 55 billion, up 53% from June 30 of last year. The increase was driven by strong growth in our E&M backlog, which was up 62%, reflecting organic growth across all E&M markets as well as contributions from SEM, which contributed roughly $100 million to backlog at quarter-end. 01 billion.

The increase was driven primarily by growth in our commercial and industrial end markets, as well as the addition of SEM. Excluding SEM, our E&M revenue was up 37% organically. 3 million in the second quarter, an increase of 72% compared to the second quarter of 2025. The increase was driven by our strong revenue growth and higher gross margin due to project timing and strong project execution.

9% in the second quarter of 2025. 1% from the second quarter of last year, driven by growth in our utility end market. 9% from the prior-year period due to the higher revenues. 3% in the same period last year.

Turning to our balance sheet and liquidity, as of June 30th we had $157 million of unrestricted cash and cash equivalents, $278 million of gross debt, and $223 million available under the credit facility. Our net debt increased sequentially, reflecting the acquisition of SEM, partially offset by our strong operating results. 5 to 2 times targeted range, providing ample flexibility to continue investing in our strategic growth initiatives. 5 million in the same period last year, due to the strong operating results and favorable working capital timing.

6 million in the prior-year period. 5 million in the first half of 2025. While our first-half free cash flow had some timing benefits, we still expect a more normalized free cash flow conversion for the remainder of the year, with our forecasted growth and operating results largely offset by our higher levels of growth investments. Wrapping up with guidance, based on our strong first-half results combined with the continued momentum we see across our business, we are raising full-year 2026 guidance.

7 billion and EBITDA in the range of $410 to $425 million. Our guidance does not include any contribution from the Epsilon acquisition, which we expect to close later this year. At the midpoint of our range, our guidance implies EBITDA margins of around 9% for the year, which reflects the execution upside from the first half as well as the margin accretion from SEM for the balance of the year. 5%.

That completes our prepared remarks. Operator, we are now ready for the question-and-answer portion of our call. OPERATOR We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up.

If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device.

Please stand by while we compile the Q&A roster. Your first question from the line of Brent Thielman with Oppenheimer. Your line is now open. Please go ahead.

Brent Thielman, Analyst at Oppenheimer Hey, great, thanks. Great quarter, I guess. First question, Jeff or Max? Just on Epsilon.

Could you just talk about whether there's a previous relationship there, maybe the synergies you foresee with the transaction with your existing operations, whether that's integration with your field services people or sort of new customer opportunities. Jeff Feed, CEO Thanks for the question, Brent. And we're really excited about Epsilon. They are an excellent offsite construction business and they have a very well-known customer list and it's grown primarily in the mechanical space.

They're going to provide access for us in new geographies through their modular solutions and there's also going to be potential to add satellite locations to support their business. We're going to see continued growth in the mechanical and cross-selling opportunities in electrical as well. Introducing Epsilon and their leadership team into the rest of our company is going to also help us leverage customer lists from our current customers and also with theirs.

So we see this as a great opportunity for collaboration and to be able to leverage what they do, also coupling that with what Everus Construction Group consistently has done to be able to build upon our modular expertise. Brent Thielman, Analyst at Oppenheimer Okay. Okay, great. And I guess my follow-on is just on the solid E&M margin performance.

I know there's a portion of the business that you approach more on a cost-plus basis. But, you know, Jeff, what specifically is driving the higher margins here? Is it more effective leverage of your workforce? Is it performance bonuses?