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. struck an upbeat tone on its 1Q26 earnings call, underscoring robust growth and expanding profitability across both major segments. Management emphasized that strong demand for grid modernization, electrification, data centers and water infrastructure is driving record revenue, earnings and backlog, with only limited headwinds from higher costs, CapEx and working-capital needs.
Broad-Based Revenue Acceleration
MYR Group reported first-quarter revenue of $1.0 billion, up $167 million, or 20% year over year, as both core businesses benefited from healthy end-market demand. Management stressed that growth was organic and well diversified, signaling that the company is gaining share while capital spending on power and infrastructure remains elevated.
Segment Strength in T&D and C&I
Transmission and Distribution revenue climbed 17% to $541 million, reflecting sustained grid and utility work across regions. Commercial and Industrial revenue jumped 24% to $459 million, marking a record quarter for the C&I segment, helped by momentum in data centers and water and wastewater projects.
Margin Expansion Across the Portfolio
Gross margin improved to 13.4% from 11.6% a year earlier, driven by better execution and mix. Operating margins also moved higher, with T&D rising to 9.7% and C&I advancing to 8.1%, giving the company more earnings power on each dollar of revenue.
Record Profitability and Earnings Growth
Net income reached a record $47 million, roughly double the $23 million posted in the prior-year quarter, as diluted EPS surged 106% to $2.99. EBITDA also set a new high at $82 million versus $50 million last year, signaling strong operational leverage as the business scales.
Backlog Reaches New High
Total backlog climbed to a record $2.84 billion at March 31, 2026, up 8% year over year, underscoring visibility into future revenue. T&D backlog stood at $981 million, while C&I backlog reached $1.86 billion, reflecting robust awards across utilities, data centers and critical infrastructure.
Robust Cash, Liquidity and Low Leverage
Operating cash flow totaled $85 million, with free cash flow of $69 million, roughly in line with last year despite higher investment needs. The balance sheet remains conservative, with $163 million in cash, $460 million of borrowing availability and funded debt of only $9 million, translating to a minimal 0.04x funded-debt-to-EBITDA ratio.
New Awards and Commercial Momentum
Management highlighted a steady stream of new wins and master service agreements across multiple regions and customer types, bolstering growth prospects. These included MSAs in Arizona, greenfield substations in Texas, 345 kV transmission work and multiple new data center and water and wastewater contracts that are fueling C&I expansion.
Operational Efficiencies and Risk Management
Improved contract terms, tighter risk management and more selective bidding are contributing to the margin gains seen this quarter. The company is also increasing prefabrication and kitting efforts, which enhance productivity in the field and make project execution more predictable and scalable.
Upgraded 2026 Outlook and Margin Ambitions
Management lifted its growth expectations and now targets about 12% organic revenue expansion for 2026, ahead of prior assumptions. Operating margin ranges were updated to 6%–9% for C&I and 8%–11% for T&D, with the goal of operating around the midpoints as efficiencies, mix and contract discipline continue to improve.
Project Inefficiencies Add Localized Cost Pressure
The company acknowledged increased costs on certain jobs due to project inefficiencies, which partially offset the broader margin gains. While no single project was singled out, management indicated that these issues are specific rather than systemic and are being addressed through tighter execution practices.
Higher SG&A to Support Growth
Selling, general and administrative expenses rose to $69 million, up about $7 million from a year earlier, largely reflecting higher incentive compensation tied to better results. Additional employee-related expenses were also required to support growing activity levels, suggesting that some cost inflation is linked directly to the company’s expansion.
CapEx Rising and Free Cash Flow Treading Water
Free cash flow was $69 million, slightly below last year’s $70 million, as MYR Group steps up capital investment to support T&D opportunities. Management expects CapEx to move toward roughly 3% of revenue for the full year, above historical norms, reflecting fleet and equipment needs for large and complex projects.
Working Capital and DSO Headwinds
Days sales outstanding currently sit in the mid-50s, but management warned that DSO could drift into the low-60s as mix shifts. A key driver is the higher share of master service agreement work, which made up about 70% of T&D revenue and can delay cash conversion compared with traditional project billing.
Lumpiness From Large Project Timing
Some large transmission and T&D awards, along with certain MSAs, are phased in a way that will create uneven revenue recognition across quarters. Management noted that a few sizable projects may not meaningfully contribute until 2027, and that MSA backlog is only recognized over a 90-day window, adding to reported backlog and revenue variability.
Tax Rate Volatility and Cross-Border Effects
The effective tax rate improved to 26.9% from 28.9%, helped by tax benefits related to stock-based compensation. This tailwind was partly offset by higher U.S. taxes on Canadian earnings and other permanent differences, underscoring that cross-border tax outcomes can shift reported earnings.
Competitive Landscape in Data Centers
Management flagged rising interest from peers in the data center segment, which could intensify competition over time as more contractors chase these projects. While the company has not yet seen margin compression in this area, it recognizes the evolving environment as a risk that must be managed through capabilities and execution.
Guidance and Outlook
Looking ahead to 2026, MYR Group expects around 12% organic revenue growth and aims to operate near the midpoints of its updated operating margin ranges for both C&I and T&D. The company plans for CapEx of about 3% of revenue and anticipates DSO moving from the mid-50s toward the low-60s, but believes its strong liquidity, modest leverage and record $2.84 billion backlog provide a solid foundation for continued expansion.
MYR Group’s earnings call painted a picture of a company executing well in structurally growing markets while keeping its balance sheet exceptionally strong. Investors will be watching how management navigates rising competition, higher investment and working-capital needs, but for now the mix of record profitability, increased guidance and robust backlog leaves the story skewed firmly to the upside.