MYR Group Inc. (MYRG) | The Buildout — AI Infrastructure
The Verdict
MYR Group is a specialty electrical construction holding company operating through Transmission & Distribution and Commercial & Industrial segments. It builds and maintains transmission lines, substations, distribution systems, and commercial and industrial electrical systems, including data center and mission-critical facilities. Its role in the AI buildout is physical and indirect: data center electrical construction sits in C&I, while high-voltage grid infrastructure that delivers power to those facilities sits in T&D. Management does not position the company as an AI pure play; it frames it as a broad electrical contractor benefiting from electrification and mission-critical work.
| Market Cap | — |
| Revenue (TTM) | $4.0B |
| Revenue Growth | +16.1% |
| EBITDA Margin (TTM) | 7.3% |
| Net Cash | $71M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Record total backlog of $3.16B at June 30, 2026, up 20% y/y, with the Q2 sequential increase driven by a roughly $289M T&D backlog jump.
- Two Xcel Energy transmission awards totaling more than $200M combined entered backlog in Q2 2026, converting management's prior large-project signal into booked work.
- Q2 C&I revenue grew 42% y/y to $558M, with data center awards disclosed in New Jersey, Arizona, and Colorado.
- Both segment operating margin targets were raised on the Q1 call and held on Q2: T&D 8–11%, C&I 6–9%, with mid-range expectations.
- Management cites customer conversations extending to 2030–2032 on material and labor security.
What We’re Watching
- Q2 free cash flow was -$25.6M, with management citing tax timing, billing and payment timing, and higher capex; DSO normalization is expected over the next few quarters.
- T&D revenue grew only 4% y/y in Q2, down from +17% in Q1, while the $200M+ Xcel awards do not begin revenue until H2 2027.
- A slice of first-half margin strength came from favorable closeouts and estimate changes; Q1 estimate changes added +$0.36 of diluted EPS.
- Management says the company is not a price maker and labor tightness is not yet translating into margins; 765 kV work remains late-2027/2028+.
The operating thesis has strengthened through the first half of 2026: record revenue and backlog, raised and held segment margin targets, and the promised large Xcel awards landed in Q2. The caveats are composition, not direction—some margin strength is closeout-driven, cash conversion lagged earnings, and the largest revenue is back-loaded to 2027–2028. The open question is whether the margin and booking quality hold while the business waits for large-award conversion and any pricing-power inflection.
Earnings Beat
Q2 FY2026 revenue was $1,081.7M, up 20% y/y, with gross margin of 13.2% versus 11.5% a year earlier. Net income was $49.9M, up 85% y/y, and EBITDA was $86.0M, up 52% y/y. Total backlog reached $3.16B, up 20% y/y. Segment growth was uneven: C&I revenue rose 42% y/y to $558M, while T&D rose 4% y/y to $524M.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.1B | $1.0B | $900M | +20.1% |
| Gross margin | 13.2% | 13.3% | 11.4% | +180bps |
| EBITDA | $86M | $82M | $56M | +55.0% |
| EPS | $3.18 | $2.98 | $1.70 | +87.1% |
| Total backlog | $3.16B | $2.84B | n/a | +20% y/y |
| T&D operating margin | 9.4% | 9.7% | 8.0% | +17.5% |
This quarter, L. E. Myers Company was awarded 2 large transmission jobs for Xcel Energy with a combined value in excess of $200 million.— Brian Stern, T&D Chief Operating Officer, MYR Group, July 30, 2026
Management tone: Management's tone across the two calls was confident but measured. It shifted from signaling large transmission awards to confirming them: on Q1 it said large projects would start rolling into backlog this year, and on Q2 it announced the two Xcel awards as booked. It raised revenue and margin guidance on Q1, held the margin ranges on Q2, and added the Valley/Comet contribution to its total revenue framing. It was also direct about limits—stating that MYR Group is not a price maker, that some margin strength is closeout-driven, and that Q2 cash-flow pressure reflected timing and higher capex.
Management Guidance
For FY2026, management raised organic revenue growth to approximately 12% on the Q1 call; on Q2 it framed total company growth at roughly 13–15% including Valley/Comet, with the acquisition expected to contribute approximately $250M of revenue in the rest of 2026. T&D operating margin is targeted at 8–11% and C&I at 6–9%, with management expecting full-year results in the mid-part of both ranges. CapEx is expected at about 3% of revenue, above historical average and driven by T&D opportunities; management noted near-record low DSOs and strong overbillings are expected to normalize over time.
Trajectory
The revenue trajectory is accelerating: after sequential growth of 5.6% and 2.4% in Q3 and Q4 FY2025, Q2 FY2026 rose 8.1% QoQ to $1,081.7M and 20% y/y. Gross margin expanded to 13.2% from 11.5% a year earlier, and EBITDA margin reached 7.9% on EBITDA of $86.0M. The composition is uneven—C&I grew 42% y/y while T&D grew only 4%—because the large new T&D awards sit in backlog and do not convert until H2 2027. Cash conversion also weakened in the latest quarter, with free cash flow of -$25.6M despite higher net income.
The Model
The model's locked projections are FY+1 revenue of $4,320M with EBITDA of $350M (8.1% margin), and FY+2 revenue of $5,070M with EBITDA of $431M (8.5% margin). The near-term is anchored by the record backlog and the Valley/Comet rest-of-year contribution, while FY+2 steps up on the H2 2027 start of the large Xcel awards and a modest margin lift.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.7B | $4.3B | $5.1B |
| YoY Growth | — | +18.1% | +17.4% |
| EBITDA | $229M | $350M | $431M |
| EBITDA Margin | 6.3% | 8.1% | 8.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 10.7% above analyst consensus.
For FY2026, management raised organic revenue growth to approximately 12% on the Q1 call; on Q2 it framed total company growth at roughly 13–15% including Valley/Comet, with the acquisition expected to contribute approximately $250M of revenue in the rest of 2026. T&D operating margin is targeted at 8–11% and C&I at 6–9%, with management expecting full-year results in the mid-part of both ranges. CapEx is expected at about 3% of revenue, above historical average and driven by T&D opportunities; management noted near-record low DSOs and strong overbillings are expected to normalize over time.
What Could Go Right — and Wrong
- 765 kV transmission awards arrive earlier than management's best-case end-2027 timing, pulling ultra-high-voltage work forward.
- Labor tightness begins translating into pricing power, producing the CREZ-style margin inflection management says has not yet arrived.
- Additional large transmission awards follow the two Xcel wins in Q3/Q4 2026, sustaining the Q2 derived T&D book-to-bill above 1.5x.
- Valley/Comet cross-selling and prefabrication leverage contribute faster than the expected roughly neutral first-year operating income impact.
- C&I holds margins toward the high end of the 6–9% target without material closeout-backed estimate changes, confirming structural durability.
- Estimate changes reverse, giving back the closeout- and change-order-driven portion of Q1's +$8.5M operating income benefit.
- Data center demand pauses or a customer-specific pullback hits the C&I segment currently carrying growth.
- T&D large-award flow goes quiet after the Xcel wins, and the derived T&D book-to-bill swings back below 1x.
- DSO normalization runs beyond management's expected timeline, widening the gap between EBITDA growth and operating cash flow.
- 765 kV customer siting issues push awards further beyond the already-disclosed 2028+ timing.
Looking Ahead
The next 12 months test whether the business can sustain bookings and improve cash conversion while large-award revenue remains back-loaded. Management expects Valley/Comet to add roughly $250M in the rest of 2026 and has said more large transmission awards could enter backlog in future quarters, though timing is lumpy. The two Xcel awards do not begin burning until H2 2027, so near-term T&D revenue depends on MSA volume and existing projects; 765 kV work remains at best a late-2027 story.
- Q3 2026Valley/Comet first full quarter — Tests the ~$250M rest-of-year contribution and first-year EPS/operating income neutrality.
- Q3–Q4 2026Further large T&D awards — Tests whether the Xcel wins were one-quarter or a durable large-award pipeline.
- H2 2026DSO normalization path — Management expects near-record low DSOs and strong overbillings to normalize over time; tests cash recovery.
- H2 2026Valley/Comet integration — Tests the West Coast expansion and prefabrication capabilities cited with the acquisition.
- H2 2027Xcel $200M+ awards burn — Revenue begins in H2 2027, continuing roughly 18 months.
- Late 2027/2028+765 kV transmission awards — Best-case end-2027, more likely 2028+; customer siting is the gate.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $3.4B | $3.7B | $4.0B | +8.8% |
| Gross Margin | 8.7% | 11.4% | 12.4% | +280bps |
| EBITDA | $119M | $229M | $1.5B | +92.0% |
| EBITDA Margin | 3.5% | 6.3% | 7.3% | +272bps |
| Net Income | $30M | $118M | $165M | +292.1% |
| Free Cash Flow | $11M | $232M | $575M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)12.4%
- EBITDA Margin (TTM)7.3%
- Net Margin (TTM)4.1%
- ROIC25.7%
- FCF Conversion66.2%
- SBC / Revenue0.4%
The Company
MYR Group is a holding company of specialty electrical construction service providers, formed in 1995 through the merger of long-standing specialty contractors. It serves electric utility infrastructure and commercial and industrial construction through two segments: T&D covers high-voltage transmission lines, substations, distribution systems, clean energy, EV charging infrastructure, and emergency restoration; C&I covers commercial and industrial wiring, intelligent transportation systems, roadway lighting, signalization, and EV charging infrastructure. The work matters because electrification and digital demand require both mission-critical data center electrical construction and the high-voltage grid to deliver power to those facilities.
Operationally, the company works through local offices across the United States and Canada. As of December 31, 2025, it owned 19 operating facilities and leased many other properties, with headquarters in Thornton, Colorado. Its T&D business runs heavily on MSAs—roughly 65–70% of T&D revenue in the latest two quarters—while C&I is predominantly fixed-price. Management emphasizes selective project pursuit, reduced contract risk, prefabrication and kitting, and long-term customer relationships.
Business Segments
Competitive Landscape
Management describes a competitive market—'we are not price makers'—and the risk record flags new entrants moving into data center electrical work and transmission. MYR Group's defensibility comes from long-term customer relationships, MSA-heavy recurring T&D revenue, high-voltage capability at 345 kV and 500 kV, local presence, and prefabrication and kitting.
- Quanta Services (PWR)Named in SEC/scan sources; external theme lists it as an early 765 kV transmission beneficiary alongside MYRG.
Supply Chain
MYR Group sits between electrical materials and equipment suppliers and utility, data center, commercial, and industrial customers. The 10-K says it is not dependent on specific suppliers, but management says customers are increasingly concerned about material and labor availability.
More on MYRG: Earnings recap