Everus Construction Group, Inc.

Everus Construction Group, Inc. operates in the highly fragmented U.S. construction services industry, which includes a wide spectrum of players from small, private geographically concentrated companies to larger public companies with nationwide capabilities. The industry serves a diverse customer base including federal, state and municipal governmental agencies, utilities, commercial and residential developers and private parties. Key structural forces shaping competition include technical expertise, service pricing, financial and operational resources, safety track record, industry reputation and dependability. The Company participates in two primary markets: Electrical & Mechanical (E&M) and Transmission & Distribution (T&D). The E&M construction services industry is driven by factors such as increased intricacy of systems due to artificial intelligence, automation and cloud computing, increased government support for manufacturing and reshoring, population growth, an aging base of existing buildings, and the ongoing energy transition. The T&D industry is driven by electric utility capital investment in grid modernization, build out of renewable power sources, rate case dynamics, and increased government support for infrastructure.

The Company faces competition from large publicly traded U.S. construction services companies including Comfort Systems USA, Inc., EMCOR Group, Inc., IES Holdings, Inc., MasTec, Inc., MYR Group Inc., Primoris Services Corporation, Quanta Services, Inc. and Sterling Infrastructure, Inc., as well as large private companies including M.C. Dean, Inc., Rosendin Electric, Pike Corporation and Archkey Solutions. Competition is based primarily on price, reputation for quality, safety and reliability. The Company was ranked 12th on Engineering News-Record magazine's 2025 Top 600 Specialty Contractors list and ranked 5th on Electrical Construction & Maintenance magazine's 2025 Top 50 Electrical Contractors list. Additionally, according to Solar Power World, its operating brand Bombard Renewable Energy was among the top U.S. solar installation providers in 2025.

The Company generates revenue by providing specialty contracting services to a diverse set of end markets across the United States through two reportable operating segments: Electrical & Mechanical (E&M) and Transmission & Distribution (T&D). Revenue is recognized over time using the cost-to-cost measure of progress for construction contracts. The Company serves approximately 4,000 customers across more than 44,000 projects in 2025. The business model is built on the 4EVER Strategy—Employees, Value, Execution and Relationships—which enhances the competitive position of its 15 wholly owned operating companies through local brand reputation and delivery while providing corporate support. The Company delivers services through 19 local brands, allowing differentiation of services and geographic markets served.

The E&M segment provides specialty contracting services including construction and maintenance of electrical and communication wiring, fire suppression systems, renewables infrastructure and mechanical piping and services to customers in both the public and private sectors. E&M serves the commercial, industrial, institutional, renewables and service & other end markets. For 2025, E&M segment revenues generated approximately 77% of total contract revenues with 7.5% segment operating income margin. E&M had approximately 7,900 employees at peak in 2025, with approximately 7,250 employees as of December 31, 2025, offices in 28 cities and a physical presence in 13 states. For 2024, E&M had approximately 6,700 employees at peak, offices in 24 cities and a physical presence in 13 states. E&M revenues for 2025 were $2.92 billion ¹, an increase of $889.2 million ², or 43.8% ³, from $2.03 billion ⁴ for 2024. E&M segment operating income for 2025 was $218.3 million ⁵, an increase of $81.3 million ⁶, or 59.3% ⁷, from $137.0 million ⁸ in 2024. E&M gross margin increased to 11.1% ⁹ for 2025 compared to 10.8% ¹⁰ for 2024.

The T&D segment provides specialty contracting services including construction and maintenance of overhead and underground electrical, gas, communication infrastructure and transportation-related lighting, as well as the manufacture and distribution of overhead and underground transmission line construction equipment and tools. T&D serves electric and natural gas utility customers and customers in the transportation end market. For 2025, T&D segment revenues generated approximately 23% of total contract revenues with 10.6% segment operating income margin. T&D had approximately 2,100 employees at peak in 2025, with approximately 2,050 employees as of December 31, 2025, offices in 19 cities and a physical presence in 11 states. For 2024, T&D had approximately 2,000 employees at peak, with approximately 1,900 employees as of December 31, 2024, offices in 19 cities and a physical presence in 11 states. T&D revenues for 2025 were $848.5 million ¹¹, an increase of $11.4 million ¹², or 1.4% ¹³, from $837.1 million ¹⁴ in 2024. T&D segment operating income for 2025 was $89.7 million ¹⁵, an increase of $4.7 million ¹⁶, or 5.5% ¹⁷, from $85.0 million ¹⁸ in 2024. T&D gross margin expanded to 15.3% ¹⁹ for 2025 compared to 14.6% ²⁰ for 2024.

On October 31, 2024, MDU Resources completed the Separation by transferring Everus Construction to Everus and distributing 50,972,059 ²¹ shares of Everus common stock to MDU Resources stockholders. The Distribution was structured as a pro rata distribution of one share of Everus common stock for every four shares of MDU Resources common stock. In connection with the Separation, the Company entered into a five-year senior secured credit agreement providing for up to $525.0 million ²² of indebtedness, consisting of a $300.0 million ²³ term loan and a $225.0 million ²⁴ revolving credit facility. On October 31, 2024, the Company used $290.0 million ²⁵ of net proceeds to repay $230.0 million ²⁶ of outstanding indebtedness with Centennial and to pay a $60.0 million ²⁷ dividend to MDU Resources. The Company repaid its required quarterly amortization payments totaling $15.0 million ²⁸ of the Term Loan during 2025. As of December 31, 2025, the Company had $285.0 million ²⁹ outstanding under the Term Loan and $228.2 million ³⁰ of available capacity under the Revolving Credit Facility. The Company had approximately $2.10 billion ³¹ in surety bonds outstanding as of December 31, 2025. The Company had approximately 10,000 employees at peak across all functions and sites in 2025, with approximately 9,400 employees as of December 31, 2025. As of December 31, 2025, approximately 85% ³² of employees were represented by labor unions.

For the fiscal year ended December 31, 2025, total operating revenues were $3.75 billion ³³, an increase of $896.7 million ³⁴, or 31.5% ³⁵, from $2.85 billion ³⁶ in 2024. Gross profit was $454.1 million ³⁷, an increase of $114.6 million ³⁸, or 33.8% ³⁹, from $339.5 million ⁴⁰ in 2024. Gross margin increased to 12.1% ⁴¹ for 2025 compared to 11.9% ⁴² for 2024. Operating income was $264.8 million ⁴³, an increase of $74.8 million ⁴⁴, or 39.4% ⁴⁵, from $189.9 million ⁴⁶ in 2024. Operating income margin increased to 7.1% ⁴⁷ for 2025 compared to 6.7% ⁴⁸ for 2024. Net income was $201.8 million ⁴⁹, an increase of $58.4 million ⁵⁰, or 40.7% ⁵¹, from $143.4 million ⁵² in 2024. Net income margin increased to 5.4% ⁵³ for 2025 compared to 5.0% ⁵⁴ for 2024. Diluted EPS was $3.95 ⁵⁵ for 2025 compared to $2.81 ⁵⁶ for 2024. EBITDA was $319.8 million ⁵⁷ for 2025 compared to $232.2 million ⁵⁸ for 2024. EBITDA margin was 8.5% ⁵⁹ for 2025 compared to 8.1% ⁶⁰ for 2024. Net cash provided by operating activities was $156.8 million ⁶¹ for 2025 compared to $163.4 million ⁶² for 2024. Free cash flow was $100.0 million ⁶³ for 2025 compared to $128.8 million ⁶⁴ for 2024.

The Company expects gross capital expenditures for 2026 to be in the range of $90.0 million ⁶⁵ to $100.0 million ⁶⁶.

The Company's growth is driven by strong demand in data center construction, high tech reshoring, and utility infrastructure investments. The E&M segment experienced significant growth in 2025, with commercial revenues rising $876.8 million ⁶⁷ driven by higher data center, hospitality and commercial submarket activity due to increased workloads. Renewables revenues grew $25.7 million ⁶⁸ with increased project activity within both generation and commercial submarkets due to timing of projects. The Company's backlog supports strong project opportunities across diverse service offerings, particularly for data center, undergrounding and hospitality work. As of December 31, 2025, total backlog was $3.23 billion ⁶⁹, with E&M backlog of $2.84 billion ⁷⁰ and T&D backlog of $384.5 million ⁷¹. The Company expects to recognize $2.59 billion ⁷² of backlog within the next 12 months. The Company's strong presence in the Western, Midwestern and Eastern regions of the United States has driven opportunities in data centers, high tech, hospitality and utilities, while customer expansion nationwide continues to extend its reach through partnerships through its 15 wholly owned operating companies.

The T&D segment's growth is driven by increased utility spend on aging infrastructure, system hardening, grid reliability initiatives, natural disasters and other weather-related events. T&D revenues increased $11.4 million ⁷³ in 2025, primarily related to higher transportation end-market revenues, which increased $15.6 million ⁷⁴ due to higher workloads in the traffic signalization submarket. The Company's T&D segment also provides solutions across excavation and underground boring, substations, signals and lighting, and emergency restoration. Key drivers of potential future T&D market growth include utilities' underlying spend expected to grow at rates similar to historical growth rates driven by aging infrastructure and required replacement, system upgrades and grid hardening; underground excavation becoming more attractive given advancements in construction work and increased regulatory scrutiny resulting in a shift toward placing utilities underground; and renewal and development of communications infrastructure to support growing data consumption.

The Company experienced increased insurance costs and anticipates continued increases in insurance costs. Premiums in the insurance industry have risen due to factors such as economic inflation and a rise in insurance carriers' losses, in particular for wildfire risks. The Company experienced these impacts with coverage for its insurance lines on a standalone basis following the Separation and again saw increases in insurance costs during its latest renewal cycle partially due to revenue growth during 2025 at the time of renewal. The Company is continuing to formulate strategies to minimize these costs and/or ensure these costs are built into bidding opportunities going forward. Despite these increased costs, the Company is focused on growing total revenues, expanding gross margins, managing costs and generating cash, all of which would result in increased operating income. Gross margin increased to 12.1% ⁷⁵ for 2025 compared to 11.9% ⁷⁶ for 2024, and operating income margin increased to 7.1% ⁷⁷ compared to 6.7% ⁷⁸.

The Company's operations are affected by seasonality, with construction services and related specialty contracting services typically following the activity in the construction industry with heavier workloads in the spring, summer and fall. The Company's T&D operations can be delayed due to severe weather conditions, especially in the winter months, and can be impacted by customer restrictions limiting ability to perform service work when electrical demands are high, especially in the summer months. However, the Company's national footprint and service mix ensures exposure to a diverse set of geographies, climates and project work, mitigating seasonality risk. The Company is continuing the process of migrating its systems, including information technology systems, with completion anticipated by the end of the first quarter of 2026. The migration of financial reporting systems is substantially complete, significantly reducing the risk to the Company's ability to comply with financial reporting requirements.

The Company's capital allocation priorities include funding operations, working capital needs, capital expenditures, repayment of borrowings and strategic business development transactions. Cash capital expenditures for 2025 were $66.8 million ⁷⁹ compared to $48.3 million ⁸⁰ in 2024. The Company expects gross capital expenditures for 2026 to be in the range of $90.0 million ⁸¹ to $100.0 million ⁸². The Company has not paid any cash dividends on its common stock and does not anticipate declaring or paying dividends in the foreseeable future. As of December 31, 2025, the Company had $285.0 million ⁸³ outstanding under the Term Loan and $228.2 million ⁸⁴ of available capacity under the Revolving Credit Facility. The Company had $170.5 million ⁸⁵ of cash, cash equivalents and restricted cash as of December 31, 2025. The Credit Agreement contains financial covenants requiring the Company to maintain a maximum consolidated total net leverage ratio of 3.00:1.00 ⁸⁶ and a minimum interest coverage ratio of 3.00:1.00 ⁸⁷.

The Company faces structural headwinds including supply chain disruptions, volatility in prices and availability of materials and equipment, and inflation. Supply chain interruptions have become increasingly common, and although supply of most raw materials continued to normalize during fiscal year 2025, the Company continues to experience longer lead times in sourcing certain components. The Company is exposed to increases in the prices of certain commodities due to inflation, imposed and proposed tariffs, or other economic factors. The Company's fixed-price contracts generally do not allow adjustment of prices, and increases in material or fuel costs could reduce profitability with respect to projects in progress. The Company's strategy to reduce commodity cost exposure includes early buying of commodities for particular projects or general inventory, as well as including escalation and escape provisions in project bids, quotes and contracts wherever possible, but such protections are not included in every contract or project.

The Company faces execution risks related to customer concentration. For 2025, the top 10 customers contributed approximately 43% ⁸⁸ of total operating revenues of $3.75 billion ⁸⁹, with a single customer accounting for approximately 17% ⁹⁰ of total operating revenues. At the segment level, revenue from two E&M customers individually accounted for approximately 21% ⁹¹ and 10% ⁹² of total E&M segment revenues, respectively. As for T&D, revenues from a single T&D customer accounted for approximately 16% ⁹³ of total T&D segment revenues. The Company also faces risks related to its dependence on fixed-price contracts, which accounted for approximately 52% ⁹⁴ of total contract revenues in 2025. The Company currently generates a significant portion of its revenues from data center and other similar high tech and advanced technology contracts, and the loss of or reduction in business from these types of contracts could have a material adverse effect.

The Company faces significant customer concentration risk, with the top 10 customers accounting for approximately 43% ⁹⁵ of total operating revenues of $3.75 billion ⁹⁶ in 2025, and a single customer accounting for approximately 17% ⁹⁷ of total operating revenues. At the segment level, two E&M customers individually accounted for approximately 21% ⁹⁸ and 10% ⁹⁹ of total E&M segment revenues, and a single T&D customer accounted for approximately 16% ¹⁰⁰ of total T&D segment revenues. The Company is dependent on fixed-price contracts, which accounted for approximately 52% ¹⁰¹ of total contract revenues in 2025, exposing it to cost overruns if actual costs exceed estimates. The Company generates a significant portion of revenues from data center and other high tech contracts, and the loss of or reduction in business from these contracts could have a material adverse effect. The Company has a highly unionized workforce, with approximately 85% ¹⁰² of employees represented by labor unions as of December 31, 2025, exposing it to risks of strikes, work stoppages, and increased labor costs. The Company had approximately $2.10 billion ¹⁰³ in surety bonds outstanding as of December 31, 2025, and an interruption or reduction in bonding availability could negatively affect results of operations. The Company incurred $21.5 million ¹⁰⁴ in interest expense in 2025 related to its debt obligations, and a 1% increase to the variable interest rate on the Term Loan would increase interest expense by approximately $2.8 million ¹⁰⁵ based on expected balances over the next 12 months.

Management's message emphasizes the Company's focus on safely executing projects, providing superior return on investment by building new and strengthening existing customer relationships, ensuring quality service, effectively managing costs, retaining, developing and recruiting talented employees, growing through organic and strategic acquisition opportunities, and focusing efforts on projects that will permit higher margins while properly managing risk. Management highlights that the growth experienced in recent years is due in part to project awards in the end markets and submarkets served and the ability to support national customers in most of the regions in which the Company operates. Management notes that the Company's strong presence in the Western, Midwestern and Eastern regions of the United States has driven opportunities in data centers, high tech, hospitality and utilities. Management states that the Company's backlog supports strong project opportunities across its diverse service offerings, particularly for data center, undergrounding and hospitality work. Management believes the Company remains well-positioned to benefit from favorable demand drivers, including high tech reshoring, data center construction and utility infrastructure investments. Management expects gross capital expenditures for 2026 to be in the range of $90.0 million ¹⁰⁶ to $100.0 million ¹⁰⁷.