Everus Construction Group, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• The company completed spinoff from MDU Resources in October 2024, marking a transformational year.
• Focus on 4EVER strategy (attracting/retaining/training employees, creating value for customers/shareholders, delivering safety/quality execution, maintaining/growing customer relationships).
• Fourth quarter 2024 results highlighted strong revenue growth, consistent project execution, financial discipline, and strong backlog ($2.8 billion).
• 2025 growth priorities include strategic M&A, with focus on geographically expanding through satellite projects and leveraging asset-light model for free cash flow.
• End market trends: favorable demand in T&D (infrastructure modernization, EVs, electrification), E&M (data center construction, electrification), but monitoring potential impacts from emerging technologies like DeepSeek and new administration policies.

Segment Performance

• Fourth Quarter 2024:
  • Revenue increased 20%. Electrical and Mechanical (E&M) revenues increased 21% to about $550 million. Transmission and Distribution (T&D) revenues grew 15% to $213.3 million.
  • E&M EBITDA was $42.7 million in Q4 2024, up 17% from Q4 2023. T&D EBITDA was $30.6 million in Q4 2024, up from $27 million in Q4 2023.
• Full Year 2024:
  • Net revenue was $2.85 billion, on par with 2023. E&M revenues softened 5%, T&D revenues rose 14%.
  • Total EBITDA was $232 million, up from $223 million in 2023.
  • Total backlog at December 31, 2024 was $2.8 billion, up 38% from $2 billion at the end of 2023.

Guidance

• 2025 revenue guidance: $3 billion to $3.1 billion.
• 2025 EBITDA guidance: $210 million to $225 million.
• 2025 CapEx guidance: $65 million to $70 million.
• Notes longer backlog conversion cycle due to larger projects, and 2025 guidance assumes normal project execution vs. strong execution in 2024.
• Forecasts full-year dis-synergy costs of $28 million.

Risks

• Potential market impacts from new administration, including tariffs, inflation, and interest rates.
• Uncertainty from emerging technologies like DeepSeek and their potential impact on CapEx spending from domestic technology companies.
• Weather-related risks affecting project execution and timing, though the company is prepared to respond.

Question and Answer

Q: Brent Thelman with D.A. Davidson Companies asked about how Everus approaches revenue guidance for 2025 and backlog mix.

A: Jeff Thiede noted focus on large, complex projects and longer backlog conversion due to bigger, more complex jobs. Max Marcy mentioned backlog burn can differ by 10 points from past, with larger projects taking longer.

Q: Brian Brophy with Stifel inquired about backlog trends and corporate expenses.

A: Jeff Thiede said backlog timing caused sequential slowdown, but year-over-year up 38%. Max Marcy stated corporate expenses not one-time, with $28 million full-year dis-synergy costs included.

Q: Ian Zaffino with Oppenheimer asked about M&A and prefab investment.

A: Jeff Thiede said M&A focus on high-integrity companies with strong culture, geographic expansion. Max Marcy mentioned prefab investment is multiyear, helping reduce project congestion.

Q: Chris Senyek with Wolfe Research questioned dis-synergy costs.

A: Max Marcy said $28 million is a run rate, with insurance costs and corporate team building contributing, and expecting it to be a smaller percentage of revenue as company grows.

Q: Chris Ellinghaus with Siebert Williams Shank asked about concerns in renewables and storm restoration.

A: Jeff Thiede said renewables are a small part but growing, and storm restoration work is done as needed, with trade-offs in margin but readiness to respond.