A class action lawsuit was filed against Everus Construction Group, Inc. (ECG) by Levi & Korsinsky on April 4, 2025. The plaintiffs (shareholders) alleged that they bought ECG stock at artificially inflated prices between October 31, 2024 and February 11, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Everus stock during that period can click here to learn about joining the lawsuit.
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Note that the lawsuit also involves investors who held MDU Resources Group, Inc. stock as of October 21, 2024, and acquired ECG stock issued in connection with the spinoff of Everus Construction on or about October 31, 2024.
Everus offers a full spectrum of construction services through its electrical and mechanical as well as transmission and distribution specialty contracting services across the U.S.
The company’s false and misleading disclosures related to its backlog conversion cycle and revenue recognition are at the heart of the current complaint.
Everus’ Misleading Claims
According to the lawsuit, Everus and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the company’s backlog conversion cycle and revenue recognition from SEC filings and related material.
For instance, in the Information Statement included in the Registration Statement related to the spinoff, the company stated that its “Backlog consists of the uncompleted portion of services to be performed under job specific contracts.” The company explained that contracts in its backlog are subject to delays or cancellations, changes in the scope of services to be provided, and adjustments to the costs relating to the applicable contracts. Everus also mentioned that at any given point in time, backlog may not accurately represent the revenue or net income that is realized in any period.
Meanwhile, in a November 6, 2024 press release, Everus’ CEO stated that with the company’s “all-time record” backlog of $2.88 billion at the end of the quarter, up $873.9 million since the start of the year, and its disciplined focus on the 4EVER strategy, it is well positioned to deliver on the long-term targets of 5% to 7% organic revenue growth and 7% to 9% EBITDA growth.
However, subsequent events (discussed below) revealed that Everus had misled investors about its backlog.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about Everus’ business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors regarding the company’s backlog conversion cycle and revenue recognition.
The truth was revealed on February 11, 2025, when Everus released its fourth quarter and full-year results. During the earnings call, Everus’ CFO explained that due to the current mix of the company’s backlog, which includes some larger multi-year projects, the backlog conversion may be extended in comparison to its historical pattern over the upcoming quarters.
Additionally, the CEO said that the average project size is getting slightly larger and the company’s “ability to handle those projects and get on board early with our customers is really adjusting or changing slightly the backlog burn as those projects are larger, more complex and longer.”
Following this disclosure, ECG stock plunged more than 18% on February 12.
To conclude, the defendants allegedly misled investors about Everus’ backlog and revenue recognition. Given these issues, ECG stock has declined more than 9% year-to-date, causing damage to shareholder returns.
