MYR Group Inc. (MYRG) Earnings

Management highlights

### Overall Company Performance - The firm delivered solid Q2 2026 results, with record total revenue of $1.08 billion (up 20% YoY), record net income of $50 million (up from $27 million YoY), diluted EPS of $3.17 (up 86% YoY), record EBITDA of $85 million (up from $56 million YoY), and record total backlog of $3.16 billion (up 20% YoY). Gross margin expanded to 13.2% from 11.5% YoY, driven by better-than-expected productivity, favorable job closeouts, and scope increases on certain projects, partially offset by cost inefficiencies on some projects. - On July 1, 2026, MYR Group closed the acquisition of Valley Electric and Common Electric, expanding C&I segment capabilities, geographic footprint, and project scope. The acquisition adds strong prefabrication capabilities and complementary customer relationships. - The company maintains a strong balance sheet with a 0.03x funded debt to EBITDA leverage ratio pre-acquisition, $138 million in cash, and $460 million in remaining borrowing availability under its credit facility after funding the acquisition. ### T&D Segment Operational Highlights - The segment delivered consistent solid execution across small-to-mid-sized projects. Long-term utility investments in grid modernization and transmission/distribution infrastructure, driven by rising electricity demand and reliability requirements, are creating sustained market opportunities, with steady bidding activity. - Key awards in Q2 2026 included two large transmission projects for Xcel Energy (combined value over $200 million), a 500 kV substation project in Arizona, a 345 kV transmission rebuild project in Texas, a Greenfield substation project in Colorado, additional substation work in New Mexico, and a substation expansion project in Ohio with multiple distribution projects in Pennsylvania. ### C&I Segment Operational Highlights - The segment saw healthy bidding activity and growing backlog, supported by a balanced mix of new opportunities and repeat business, with strong long-term customer relationships as a key competitive differentiator. - Sustained demand is driven by elevated construction activity in data centers, grid modernization, power infrastructure, and industrial facilities. Key Q2 2026 awards included multiple data center projects in New Jersey, Arizona, and Colorado, aerospace work in California, and hospitality/higher education projects in New York.

Guidance

- Management maintained prior full-year operating margin guidance: C&I segment operating margins are expected to land in the mid-range of the 6% to 9% target range, and T&D segment operating margins are expected to land in the mid-range of the 8% to 11% target range, despite stronger-than-expected first-half margin performance. - The newly acquired Valley Electric/Common Electric business is expected to contribute approximately $250 million in revenue to the full-year 2026 results, with a neutral impact on EPS and operating income in the first 12 months of ownership due to higher initial amortization expense for acquired backlog. - Organic full-year 2026 revenue growth is projected to be 13% to 15% including the $250 million contribution from the acquisition. - The $200+ million Xcel Energy large transmission award added to Q2 2026 backlog is expected to begin contributing revenue in the second half of 2027, with an 18-month construction period after that. - DSOs (days sales outstanding) are expected to rise from the current near-record low of mid-50s to a more historical range of low-to-mid 60s over the next few quarters, creating a mild headwind to cash flow despite projected strong EBITDA growth. - Management expects strong future project activity for 2028 and beyond across both segments, with many large T&D and C&I projects currently in the pre-construction budgeting and planning phase.

Segment performance

1. Transmission and Distribution (T&D) Segment: Q2 2026 revenues were $524 million, an increase of 4% year-over-year, representing 48.5% of total company revenue. Operating income margin was 9.4%, up from 8% year-over-year. Work under master service agreements accounted for approximately 65% of T&D segment revenues. As of June 30, 2026, T&D segment backlog was $1.27 billion. 2. Commercial and Industrial (C&I) Segment: Q2 2026 revenues were a record $558 million, an increase of 42% year-over-year, representing 51.5% of total company revenue. Operating income margin was 8.5%, up from 5.6% year-over-year. Revenue growth was primarily driven by higher activity on fixed price contracts. As of June 30, 2026, C&I segment backlog was a record $1.89 billion.

Risks & headwinds

- Operational inefficiencies and cost overruns on certain projects are pressuring margins, partially offsetting strong margin expansion from productivity gains and favorable project closeouts on other projects. - Labor markets remain tight across most operating regions, with customers consistently citing labor availability as a top concern for future project delivery. - Large T&D projects face ongoing siting and permitting delays, pushing commercial operation and revenue recognition to 2028 and beyond in most cases. - The C&I market remains highly competitive, with MYR Group acting as a price taker rather than a price maker in most bidding processes. - Cash flow is subject to material timing volatility from the timing of tax payments, project start/completion, and billing/payment cycles, which resulted in weak Q2 2026 operating and free cash flow compared to the prior year. Material delivery timelines also create revenue timing volatility. - Backlog growth for large projects is inherently lumpy, as large projects typically take 2-3 years of development before being awarded and added to backlog.

Analyst Q&A

• Q: What growth expectations do you have for the newly acquired Valley Electric and Common Electric, and how will they expand your C&I segment capabilities? /

  A: The acquired firms have similar operational capabilities and customer focus to MYR Group's existing C&I business, with additional strength in prefabrication and an expanded geographic footprint. Management expects to leverage cross-pollination of both firms' existing customer bases to expand market reach, following the same successful integration playbook used for prior acquisitions. The acquisition is performing in line with original projections, with no unexpected changes to revenue or performance expectations.

• Q: How does the $200 million Xcel Energy T&D award fit into your existing backlog, and when will it contribute to revenue? /

  A: The two Xcel Energy projects were already added to Q2 2026 backlog. Management had projected these awards would come through over the prior six months, so the timing aligned with expectations. Revenue recognition will not meaningfully begin until the second half of 2027, with construction expected to continue over an 18-month period after that.

• Q: Is MYR Group adequately resourced to handle the growing T&D backlog, especially after the large new awards? /

  A: Management has planned for organic T&D growth for many years, and has already built out the workforce and operational capacity needed to capture upcoming large projects. Most large new projects are not scheduled to begin construction until 2028 or later, giving the firm additional time to scale resources to match upcoming demand. The large project group works hand-in-hand with existing local T&D teams to serve shared utility customers, and centralized fleet management supports efficient resource allocation across both small MSA work and large projects.

• Q: What is driving C&I's 42% YoY revenue growth, and how is the end market mix evolving beyond data centers? /

  A: While data center construction is currently at historically high levels, MYR Group maintains a diversified C&I end market portfolio, with strong activity across multiple core markets including advanced manufacturing, transportation, aerospace, hospitality, and higher education. Activity varies by quarter and region, and management intentionally maintains this diversification to reduce market-specific risk, with no plans to shift focus to only data center projects.

• Q: How fast do you expect to integrate the Valley Electric/Common Electric acquisition? /

  A: The acquisition is progressing faster than initially expected, with early collaborative integration already underway. The target firm already has strong standalone operating systems, so only accounting and finance reporting systems will need to be brought onto MYR Group's existing platforms, similar to prior C&I acquisitions. Management expects mutual learning, with the acquired firm having developed some process improvements that MYR Group can adopt across its broader business.