MYR Group Inc. (MYRG) | The Buildout — AI Infrastructure

The Verdict

MYR Group is a holding company of specialty electrical construction contractors. It does not make equipment or sell compute; it sells installed electrical construction labor and project management — the crews, engineering and fleet that put electrical systems in place for others to own. It reports two segments. Transmission & Distribution serves electric utilities, building and maintaining high-voltage transmission lines, substations and lower-voltage distribution systems. Commercial & Industrial designs and installs wiring for commercial and industrial buildings, including the electrical fit-out inside data centers. The AI buildout reaches the company two ways: directly, as data-center electrical construction in the C&I segment, and indirectly, as utility grid and substation work that rising electricity demand requires.

Earnings Beat

Q2 2026 was a record quarter. Revenue was a record $1.08B, up $181M or 20% year over year. Gross margin was 13.2%, up from 11.5% a year earlier. T&D revenue grew 4% to $524M; C&I revenue was a record $558M, up 42%. Net income was a record $50M and EBITDA a record $85M. Total backlog reached a record $3.16B, up 20% year over year. Free cash flow was negative $26M, against positive $12M in the prior-year quarter.

Management tone: The Q1 2026 call (2026-04-30) was the raise-the-guide call, lifting the revenue growth target to about 12% and raising both segment margin ranges. The Q2 2026 call (2026-07-30) was a hold-and-temper call: management printed above the C&I midpoint and near the T&D midpoint but held both ranges at the midrange. It volunteered that some C&I projects were "nearing completion," quantified the cash-flow swing with a specific tax-timing bridge, and stated plainly that Valley is expected neutral to first-year EPS and operating income. It did not directly answer whether the Xcel award sits inside or outside the prior MSA, and its 13-15% "on an organic basis" framing is ambiguous.

Management Guidance

Full-year 2026 revenue growth is framed as 13-15% "on an organic basis" — management did not clarify whether that includes Valley — plus Valley's contribution in the rest of 2026. Both segment operating margin ranges are held at the midrange: T&D 8-11%, C&I 6-9%. CapEx is targeted at about 3% of revenue, back-half weighted. DSO was revised down from "low 60s" to "low-to-mid 50s" over the next few quarters. Valley is expected neutral to first-year EPS and operating income. Management gives growth and margin ranges, not EPS guidance.

Trajectory

Revenue is accelerating: $950M in Q3 2025, $974M in Q4 2025, $1.0B in Q1 2026 and a record $1.08B in Q2 2026, which grew 8.1% sequentially and 20% year over year. The mix is doing the work — C&I revenue rose 42% year over year in Q2 to a record, while T&D grew 4% to $524M as utilities bought more time-and-equipment and unit-price maintenance work and less fixed-price construction. Gross margin expanded to 13.2% from 11.5% a year earlier, and trailing-twelve-month free cash flow covered 117% of net income. Management attributes the margin gains to contract terms, prefabrication, favorable closeouts and execution, and volunteers that part of the strength sits on projects nearing completion. The offset is cash: Q2 free cash flow was negative $26M against positive $12M a year earlier, on about $30M higher tax payments, billing timing and higher capex.

The Model

The model's locked projections put FY+1 revenue at $4,430.4M with EBITDA of $348M, a 7.85% margin, rising to FY+2 revenue of $5,225M with EBITDA of $423M, an 8.1% margin. The near-term anchor is the record backlog, roughly 90% of which converts within 12 months, plus Valley revenue in the rest of 2026. The FY+2 step assumes the Xcel awards and other large T&D projects begin converting in 2H27 and that segment margins hold near the midrange.

Projections are the median of 5 independent model runs. The model’s revenue sits 13.3% above analyst consensus.

Full-year 2026 revenue growth is framed as 13-15% "on an organic basis" — management did not clarify whether that includes Valley — plus Valley's contribution in the rest of 2026. Both segment operating margin ranges are held at the midrange: T&D 8-11%, C&I 6-9%. CapEx is targeted at about 3% of revenue, back-half weighted. DSO was revised down from "low 60s" to "low-to-mid 50s" over the next few quarters. Valley is expected neutral to first-year EPS and operating income. Management gives growth and margin ranges, not EPS guidance.

What Could Go Right — and Wrong

Looking Ahead

Over the next 12 months the work is conversion and integration. The Xcel awards add nothing to 2026 revenue, so the near-term question is whether the everyday C&I and T&D businesses keep printing at or above the midrange. Valley adds revenue in the rest of 2026 and is expected to be neutral to year-one EPS and operating income, with finance and accounting systems migrated from day one. The Xcel $500M, 5-year T&D MSA is expected to ramp slowly through 2026 and "take off" in 2027. Larger T&D revenue is a 2H27-and-beyond story, and 765 kV participation depends on customer siting.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

MYR Group is a holding company of specialty electrical construction contractors, established in 1995 through the merger of long-standing specialty contractors. It does not make equipment; it sells installed electrical construction labor and project management — the crews, engineering and fleet that put electrical systems in place for others to own. In Commercial & Industrial, it does the electrical fit-out inside data centers: power distribution, medium-voltage distribution, switchgear, UPS and mission-critical installations, plus prefabricated and modular electrical assemblies. In Transmission & Distribution, it builds and maintains the high-voltage lines, substations and lower-voltage distribution systems that carry electricity to new load.

The company operates through a network of local offices across the United States and Ontario and western Canada. As of December 31, 2025, it owned 19 operating facilities and leased many other properties, mostly used as operational offices or for fleet operations — an office, yard, fleet and prefabrication footprint rather than heavy manufacturing. It runs a large-project group formed 20 years ago and a centralized fleet, and says more than 90% of its business is return clientele. The July 1, 2026 acquisition of Valley Electric and Comet Electric added West Coast presence and "extensive pre-fabrication capabilities."

Business Segments

Competitive Landscape

The competitive set is large and listed. The source's macro theme map groups MYRG among contractors carrying record backlogs — alongside EME, PWR, MTZ, FIX, STRL, DY and AGX — and its 765 kV theme names Quanta and MYRG among the first award recipients. The source's criticality read is blunt: multiple large, proven competitors could take over MYRG's existing contracts with minimal transition impact given standard construction services. Management describes the dynamic plainly: "we are not price makers," and the tight labor market "isn't really turning into margins today." The source's read is that MYRG is relationship-embedded rather than technically differentiated — more than 90% repeat clientele and long-tenured utility master service agreements, against broadly available materials and no documented sole-source advantage.

Supply Chain

MYR Group sits in the middle of the electrical construction chain: downstream of equipment makers and upstream of the utility or developer that owns the finished asset. Its 10-K says it is "not dependent on specific suppliers," with no sole-source relationships disclosed; its customers' worry is getting material and labor on time.