Everus Construction Group Inc (ECG) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and ...

Revenue: $921.5 million, up 31% year-over-year. EBITDA: $84.2 million, an increase of 36% from the previous year. EBITDA Margin: 9.1%, up from 8.8% in the prior year period. Total Backlog: $3 billion, up 24% from the same period last year. E&M Revenue: $713.6 million, an increase of 42% year-over-year. E&M EBITDA: $63.7 million, up 53% from the previous year. E&M EBITDA Margin: 8.9%, up 70 basis points from last year. T&D Revenue: $212.4 million, up 3% year-over-year. T&D EBITDA: $30.4 million, an increase of 19% from the previous year. T&D EBITDA Margin: 14.3%, up 200 basis points from last year. Unrestricted Cash: $64.5 million as of June 30. Gross Debt: $292.5 million as of June 30. Net Leverage: Approximately 0.8x net debt to trailing 12-month EBITDA. CapEx: $31.6 million during the first half of 2025. 2025 Revenue Guidance: Raised to $3 billion to $3.4 billion. 2025 EBITDA Guidance: Raised to $240 million to $255 million.

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Release Date: August 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Everus Construction Group Inc (NYSE:ECG) reported a 31% increase in second-quarter revenue, driven by strong performance in the Electrical and Mechanical (E&M) and Transmission and Distribution (T&D) segments. The company's EBITDA increased by 36%, with EBITDA margins improving by 30 basis points compared to the previous year. Total backlog at the end of the second quarter was $3 billion, up 24% from the same period last year, indicating strong future business prospects. The company successfully added skilled labor headcount, supporting its growth objectives and enabling record revenue generation. Everus Construction Group Inc (NYSE:ECG) raised its 2025 revenue guidance to a range of $3 billion to $3.4 billion, reflecting confidence in continued strong demand and execution capabilities.

Negative Points

The company's backlog conversion may be extended due to the mix of larger multiyear projects, potentially impacting short-term revenue recognition. There is uncertainty in margin visibility for the second half of the year due to a higher mix of large projects in early stages of construction. The company experienced a book-to-bill ratio below one in the second quarter, indicating potential challenges in maintaining backlog growth. Higher SG&A expenses partially offset the benefits of increased revenues and efficiency gains in the E&M segment. The company faces challenges in predicting workflow ramp-up and project timing, which could affect financial performance in the near term.

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Q & A Highlights

Q: Considering the success you've had in hiring and your capability to pull forward some projects, can you discuss your ability to continue converting backlog at the current rate and fill gaps with more book and burn work? A: Timing is key. We engage early in projects, becoming an extension of the design team, which sometimes shortens preconstruction phases, allowing us to start sooner. This led to record revenues in Q2. We plan resources ahead to support growth and continue adding and training staff. Our partnerships on large-scale projects are a strength, positioning us well for continued success.

Q: Was there any weather impact in T&D this quarter? Also, can you discuss the outlook for the hospitality sector? A: There were no weather impacts in Q2. In Las Vegas, we've seen an uptick in hospitality backlog. We have a strong reputation and are well-positioned to execute large projects. While not back to 2022-2023 levels, our relationships and experience position us to capture future work.

Q: Gross margins benefited from efficiency gains this quarter. Were these tied to prefab investments or other factors? How sustainable are these gains? A: Prefab investments help with execution and project acquisition, offering safety and production benefits in a controlled environment. This reduces job site congestion and accelerates project delivery. We continue to invest in prefab facilities, which, along with planning and execution, contribute to margin uplift. While we can't always predict upside, we aim for continued margin improvement.

Q: The book-to-bill ratio was below one this quarter. Is this due to a change in demand or project award lumpiness? A: It's more about backlog lumpiness. We had record revenue due to pull-forward work, and Q2 was our second-largest backlog in history. Year-to-date book-to-bill is 1.1, indicating strong backlog growth to support future expansion.

Q: Can you provide more color on large projects in T&D and their impact on growth rates for the back half of the year? A: We are selective in T&D projects, focusing on those that fit our teams and resources. We see backlog growth opportunities and expect T&D to maintain its growth rate, with E&M potentially growing faster. The first half had softer comps, so growth rates may temper in the second half.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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