MYR Group Inc. Signals Strong Growth and Record Year

MYR Group Inc ((MYRG)) has held its Q4 earnings call. Read on for the main highlights of the call.

MYR Group Inc.’s latest earnings call struck an upbeat tone, as management detailed record revenues, record quarterly earnings and robust cash generation alongside a growing backlog. Executives acknowledged pockets of project inefficiency and rising SG&A, but stressed that strong demand, disciplined bidding and a fortress-like balance sheet are positioning the contractor for sustained growth.

Record Annual Revenue and Profitability

MYR closed 2025 with record full-year revenues of $3.7 billion, underscoring the company’s expanding scale across transmission, distribution and commercial-industrial markets. Net income reached $118 million and EBITDA $233 million, signaling meaningful improvement in profitability as the business continues to leverage its cost base and execution capabilities.

Strong Q4 Revenue Growth

Fourth-quarter 2025 revenues rose to $974 million, up $144 million or 17% from the year-ago period, marking one of the company’s strongest quarterly growth clips in recent years. Management attributed the performance to broad-based momentum across both segments, with robust project execution and healthy end-market demand supporting the top line.

T&D Segment Strength

The Transmission and Distribution segment delivered Q4 revenues of $531 million, an 18% year-over-year increase, with transmission contributing $330 million and distribution $201 million. Operating income margin in T&D improved to 7.4% from 6.7%, helped by a high mix of master service agreement work, which accounted for about 60% of segment revenue and provides recurring, lower-risk volume.

C&I Segment Records and Margin Expansion

Commercial and Industrial operations also posted a standout quarter, generating record Q4 revenues of $443 million, up 17% versus last year. C&I operating margin surged to 6.6% from 3.9%, driven by higher-margin fixed-price projects, better productivity in the field and favorable change orders and job closeouts that boosted profitability.

Margin and Earnings Improvement in Q4

Across the company, Q4 gross margin rose to 11.4% from 10.4%, reflecting a one-point improvement that flowed through to the bottom line. Net income more than doubled to a record $37 million, with diluted EPS jumping to $2.33 from $0.99, while EBITDA climbed 42% to a record $64 million, highlighting strong operating leverage.

Backlog Growth and Healthy Bidding Environment

Total backlog at year-end stood at $2.8 billion, up 9.6% from the prior year and split between $1.0 billion in T&D and $1.8 billion in C&I work. Management emphasized that this backlog growth reflects a steady, disciplined bidding environment and multi-year demand rather than one-off mega-awards, supporting visibility into future revenue streams.

Significant Cash Flow and Strong Liquidity

Operating cash flow in the fourth quarter surged to $115 million from $21 million a year earlier, with free cash flow improving to $85 million from $9 million as project cash collections accelerated. The company ended the year with roughly $150 million in cash, $408 million of borrowing availability, $265 million of working capital and just $59 million of funded debt, equating to a low 0.25x funded debt-to-EBITDA leverage ratio.

Strategic Awards and Positioning for Future Growth

MYR highlighted a new seven-year transmission master service agreement in Kentucky and multiple transmission and station wins across several states as key strategic awards. On the C&I side, new data center projects in Colorado, Arizona, California and New Jersey underscore the company’s positioning for large, high-voltage infrastructure and long-duration opportunities tied to grid and digital demand.

Operational Improvements in DSO and Productivity

Days sales outstanding improved by about 16 days year-over-year to the mid-50s, a notable shift from the historical average near 70 days, helped by resolving legacy problem jobs and favorable billing on fixed-price contracts. Management also pointed to better-than-expected field productivity and advantageous change orders as important drivers of margin expansion in the quarter.

Project Inefficiencies and Cost Pressure on Jobs

Despite the strong margin trajectory, executives acknowledged that certain projects experienced inefficiencies and higher costs that partially offset the broader improvements. While the company did not quantify the impact, these pressures were cited as a headwind in Q4 and as a reminder that individual job execution remains a key swing factor for profitability.

SG&A Expense Increase to Support Growth

Fourth-quarter SG&A climbed to $65 million, up $8 million from the prior year, largely due to higher incentive compensation and additional personnel to support anticipated growth. Management framed these expenses as investments in people and systems needed to safely execute a larger and more complex project portfolio while maintaining service quality for clients.

Backlog Accounting Limits and MSA Understatement

The company reiterated that its backlog definition captures only about three months of projected revenue for many unit-price and time-and-materials master service agreements. As a result, the reported $2.8 billion backlog likely understates the true long-term revenue potential embedded in these recurring contracts, complicating short-term modeling for investors.

Potential Cash-Flow Headwind from Fixed-Price Mix

In 2025, the heavy mix of large fixed-price C&I projects delivered strong net overbillings and bolstered cash flow, contributing to the standout free cash generation. Management cautioned, however, that if future awards tilt more toward MSA-style work, the cash-flow profile could moderate, as those contracts typically produce less favorable near-term billing dynamics.

Weather, Permitting and Timing Risks

Executives flagged weather, seasonality and permitting as the main operational risks that can delay T&D work and disrupt near-term productivity and revenue timing, especially in the first quarter. While Q1 is typically less efficient, the company expects the upcoming first quarter of 2026 to be a stronger comparison year-over-year, though still subject to these external factors.

Selective Bidding and Customer Concentration Strategy

MYR continues to pursue a selective bidding strategy focused on repeat clientele, with about 90% of work coming from returning customers, which the company believes reduces project and credit risk. Management noted this discipline may limit participation in some hotly contested opportunities during upcycles, but argued that it protects margins and capital in the long run.

Forward-Looking Guidance and Capital Priorities

Looking ahead, management indicated that 2026 revenues should grow at roughly 10% across both T&D and C&I, with operating margins expected in the middle of the targeted 5.0% to 7.5% range and Q1 revenue growth running slightly above the full-year pace. Executives highlighted that large transmission awards are slated to ramp in 2027, and they plan to prioritize organic growth, tuck-in acquisitions and opportunistic share repurchases while maintaining strict selectivity and watching weather and permitting risks.

MYR Group’s earnings call painted the picture of a contractor entering a new phase of scale, profitability and cash generation, supported by a growing backlog and robust liquidity. While project-level inefficiencies, rising SG&A and external risks remain watch points, the company’s disciplined bidding, recurring MSA base and strong balance sheet suggest it is well positioned for investors seeking exposure to grid and infrastructure growth.