MYR Group Inc ((MYRG)) has held its Q1 earnings call. Read on for the main highlights of the call.
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MYR Group Inc. opened its 1Q26 earnings call with a notably upbeat tone, underscoring robust demand across its markets and disciplined execution that translated into record results. Management emphasized that strong top-line growth, margin expansion, and a record backlog outweighed isolated cost pressures, leaving the company confident in its trajectory despite a few near-term operational headwinds.
1) Strong Revenue Growth
MYR Group reported first-quarter revenue of $1.0 billion, an increase of $167 million or 20% versus the prior year, underscoring broad-based strength across its portfolio. Management highlighted that this pace of growth outstripped prior expectations and reflects accelerating demand for electrification, grid work, and complex commercial and industrial projects.
2) Segment Revenue Strength — T&D and C&I
Transmission and Distribution revenue rose 17% year over year to $541 million, benefiting from ongoing grid modernization and utility investments. The Commercial and Industrial segment delivered $459 million of revenue, up 24% and marking a record quarter, driven by data center, water, and wastewater projects.
3) Improved Gross and Operating Margins
Gross margin expanded to 13.4% from 11.6% a year ago, reflecting better pricing discipline, execution, and mix. Operating margins also improved materially, with T&D rising to 9.7% and C&I climbing to 8.1%, signaling that the company is converting strong demand into higher-quality earnings.
4) Record Profitability Metrics
Net income reached a record $47 million, roughly double the $23 million posted in the prior-year quarter, and diluted EPS jumped 106% to $2.99. EBITDA also hit a record at $82 million versus $50 million a year earlier, underscoring substantial operational leverage and improved project economics.
5) Backlog Expansion
Total backlog climbed to an all-time high of $2.84 billion as of March 31, 2026, up 8% year over year and providing strong revenue visibility. The mix remains favorable, with $981 million in T&D backlog and a larger $1.86 billion in C&I, reflecting the continued rise of complex commercial and infrastructure work.
6) Strong Cash Position and Leverage
Operating cash flow was a solid $85 million, modestly above last year, and free cash flow held steady at $69 million despite rising capital needs. With $163 million of cash, $460 million of borrowing availability, just $9 million of funded debt, and leverage at 0.04x EBITDA, MYR Group enters the next leg of growth from a very conservative balance-sheet position.
7) Positive Commercial Momentum and Awards
Management detailed a string of new wins and master service agreements across multiple regions, including work in Arizona, greenfield substations in Texas, and 345 kV projects. In C&I, the company is securing more data center and water/wastewater jobs, which are helping fuel the segment’s record revenue and expanding opportunity set.
8) Improved Contracting and Execution
The company stressed that better contract terms, tighter risk profiles, and enhanced prefabrication and kitting are key contributors to margin gains. Productivity improvements and more disciplined project selection are also helping to reduce volatility in results and increase confidence in delivering on backlog.
9) Upgraded 2026 Outlook and Margin Targets
Management lifted its outlook for 2026, now expecting roughly 12% organic revenue growth for the year compared with earlier assumptions of about 10% per segment. The company also raised its operating margin target ranges to 6%–9% for C&I and 8%–11% for T&D and aims to run near the midpoints, reflecting confidence in sustained profitability.
10) Project Inefficiencies Increasing Costs
Despite the strong quarter, the company acknowledged inefficiencies on certain projects that elevated costs and partially offset margin gains. While no single job was highlighted as material, management signaled that ongoing focus on execution and risk control remains critical to maintaining the current profitability trajectory.
11) SG&A and Employee-Related Cost Increase
SG&A expenses rose to $69 million, up about $7 million year over year, driven largely by higher employee incentive compensation and staffing to support growth. Management framed these costs as investments in talent and capacity needed to execute the record backlog and capture emerging opportunities.
12) Free Cash Flow and Higher CapEx Trend
Free cash flow of $69 million was slightly below the prior year’s $70 million, reflecting increased capital spending requirements. MYR Group expects CapEx to trend toward roughly 3% of revenue for the full year, above historical norms, as it invests in equipment and capabilities to support rising T&D activity.
13) Working Capital / DSO Headwind Potential
Days sales outstanding currently sit in the mid-50s but could climb into the low-60s as project and contract mix evolves. Management noted that MSA work, which represented about 70% of T&D revenue, can pressure DSO and working capital, though the balance sheet remains strong enough to absorb these swings.
14) Timing and Lumpiness of Project Starts
Large T&D awards and certain MSAs are being phased over multiple years, which can create uneven revenue recognition and quarterly volatility. Some major transmission projects may not contribute meaningfully until 2027 or later, meaning investors should expect periodic lumpiness despite the healthy long-term pipeline.
15) Geographic/Tax and Permanent Differences
The effective tax rate improved to 26.9% from 28.9% in the prior year, aided in part by stock-based compensation tax benefits. However, higher U.S. taxes on Canadian income and other permanent differences highlighted the company’s ongoing sensitivity to cross-border tax dynamics.
16) Competitive Dynamics in C&I and Data Centers
Management acknowledged that more peers are targeting data-center work, which could increase competition over time in the C&I segment. While MYR Group has not yet seen material margin pressure, it flagged the evolving landscape as a risk and underscored the importance of differentiation through execution and capability.
Forward-Looking Guidance and Outlook
Looking ahead, MYR Group guided to roughly 12% organic revenue growth for 2026, supported by a record $2.84 billion backlog and durable demand drivers like electrification and data centers. The company expects CapEx to run near 3% of revenue and DSO to drift toward the low-60s but believes its robust liquidity, minimal debt, and higher margin targets position it well for sustained, profitable expansion.
MYR Group’s latest earnings call painted the picture of a contractor benefiting from secular tailwinds, strong execution, and a fortress balance sheet. While rising competition, project inefficiencies, and working-capital demands present watch points, the combination of record profitability, expanding backlog, and upgraded guidance leaves the company well placed to continue rewarding long-term investors.