Executive Summary / Key Takeaways

• Robust Growth Trajectory: MYR Group is strategically positioned to capitalize on significant, multi-year investments in North American electrical infrastructure, driven by electrification, grid modernization, and the surging demand from data centers and AI technologies. The company forecasts approximately 10% revenue growth for 2026, evenly spread across its segments.
• Strong Financial Rebound: After navigating specific project headwinds in 2024, MYR Group delivered record net income of $32 million and EBITDA of $63 million in Q3 2025, reflecting improved operational execution and higher contractual margins.
• Disciplined Capital Allocation: With a strong balance sheet, including $400 million in borrowing availability and a low 0.34x funded debt-to-EBITDA ratio, MYR Group prioritizes organic growth, opportunistic "tuck-in" acquisitions, and share repurchases, with a new $75 million program authorized.
• Operational Expertise as a Differentiator: MYR Group's competitive edge stems from its deep historical expertise, skilled workforce, extensive specialized fleet, and proven safety record, enabling it to secure and execute complex projects and maintain long-term relationships with over 90% return clientele.
• Margin Expansion and Risk Management: Management anticipates T&D operating margins to stabilize in the mid-range of 7-10.5% and is raising C&I margin expectations to the mid-range of 5-7.5% for 2026, while actively managing risks related to labor, material availability, and tariffs through proactive client engagement and contract terms.

Electrifying North America's Future: MYR Group's Enduring Role

MYR Group Inc., a holding company of specialty electrical construction service providers, stands at the forefront of North America's rapidly evolving energy landscape. With operational roots tracing back to 1891 in transmission and distribution (T&D) and 1912 in commercial and industrial (C&I) electrical contracting, the company was formally established through a merger in 1995. This deep history underpins its current strategic focus on building and maintaining the critical electrical infrastructure that powers modern society. MYR Group's dual segments serve a diverse clientele, from investor-owned utilities and government agencies to general contractors and facility owners across the United States and Canada.

The industry is experiencing an unprecedented surge in demand, fueled by widespread electrification, the imperative for grid modernization and hardening, and the exponential growth of new technologies like artificial intelligence. U.S. investor-owned utilities alone are projected to invest over $1.1 trillion in combined capital expenditures between 2025 and 2029, with more than $123 billion specifically earmarked for transmission in the first three years. Electric utilities are on track to spend nearly $208 billion on grid upgrades and expansions in 2025, marking a historic high. This robust investment environment, coupled with a projected 9.1% compound annual growth rate in North American transmission spending from 2024 to 2029, creates a fertile ground for MYR Group's specialized services.

Operational Excellence and Specialized Capabilities: MYR Group's Competitive Moat

MYR Group's core business model revolves around providing comprehensive electrical construction services, encompassing design, engineering, procurement, construction, upgrade, maintenance, and repair. The company's "technology" in this context is not a proprietary product, but rather its highly differentiated operational capabilities, extensive fleet of specialized equipment, and a deeply skilled workforce. This operational prowess allows MYR Group to execute complex projects with superior quality, safety, and efficiency. For instance, its expertise in emergency restoration services, often in response to natural disasters, highlights its ability to deploy resources rapidly and effectively, a critical advantage for utility clients.

The company's continuous investment in developing key management and craft personnel, alongside procuring specific specialty equipment and tooling, ensures it remains competitive in projects of all sizes and complexities. This focus on operational excellence translates into tangible benefits for investors: enhanced customer loyalty, recurring revenue streams, and the ability to command stronger pricing in niche markets. Over 90% of MYR Group's clients are return clientele, a testament to its reputation for reliable project delivery and fair dealings. This strong customer retention contributes to stable revenue and helps mitigate the inherent lumpiness of large project awards.

Competitive Landscape: A Niche Player in a Giant's Arena

MYR Group operates in a highly competitive landscape, contending with larger, more diversified players such as Quanta Services (PWR), MasTec (MTZ), EMCOR Group (EME), and Primoris Services (PRIM), as well as numerous regional and specialized contractors. While these competitors often boast greater scale and broader geographic reach, MYR Group carves out its niche through specialized expertise and a strong focus on customer relationships.

Compared to Quanta Services, MYR Group's offerings are more specialized and regionally concentrated within the U.S. and Canada. While Quanta's larger scale may enable superior cash flow generation and more consistent revenue expansion from diversified streams, MYR Group's targeted expertise in areas like utility maintenance and emergency response can provide a unique value proposition, potentially leading to faster deployment and stronger customer loyalty in specific regional markets.

Against MasTec, MYR Group differentiates itself through its emphasis on sustainable and reliable electrical solutions, particularly for data centers and renewable facilities. MYR Group often acts as a prime contractor for investor-owned utilities, which can lead to greater operational efficiency in specialized repairs. MasTec's broader focus on communications and energy infrastructure might offer faster growth in emerging tech sectors, but MYR Group's deep utility experience fosters robust customer relationships.

When compared to EMCOR Group, which excels in integrated mechanical-electrical systems, MYR Group's reliability in C&I wiring and data center installations is comparable. However, EMCOR's focus on energy-efficient designs and technological integration might give it an edge in innovation speed. MYR Group's strength lies in its historical expertise and customer loyalty within the utility sector, providing a unique advantage in securing long-term contracts.

Finally, against Primoris Services, which emphasizes cost-effective execution in energy and infrastructure, MYR Group's specialized T&D capabilities, particularly in substation and distribution services, offer greater efficiency in project delivery. While Primoris might achieve superior margins through cost leadership in competitive bidding, MYR Group's strong regional presence and targeted approach can secure a solid market share.

Indirect competitors include in-house utility engineering teams and specialized tech companies offering integrated electrical systems. These alternatives could intensify price competition, but MYR Group's established relationships and ability to handle complex, large-scale projects serve as significant barriers to entry for new players, including high capital requirements and stringent regulatory hurdles.

Financial Performance: Powering Through Challenges to Record Results

MYR Group's financial performance in 2025 demonstrates a strong rebound and effective execution. For the third quarter ended September 30, 2025, the company reported revenues of $950.4 million, a 7% increase compared to $888.0 million in the same period last year. This growth was driven by a $40.8 million increase in C&I revenue and a $21.5 million increase in T&D revenue.

Profitability saw a significant uplift, with gross margin expanding to 11.8% in Q3 2025, up from 8.7% in Q3 2024. This improvement was primarily due to better-than-anticipated productivity, favorable change orders, and favorable job closeouts, contrasting with the negative impacts from certain clean energy and C&I projects in the prior year. Despite some negative estimate changes in Q3 2025, which decreased consolidated gross margin by 0.60%, the overall trend was positive.

Net income reached a record $32.1 million in Q3 2025, a substantial increase from $10.6 million in Q3 2024, translating to diluted earnings per common share of $2.05, up 215%. Similarly, EBITDA hit a record $63 million, compared to $37 million in the prior year. For the nine months ended September 30, 2025, net income was $81.9 million, a significant improvement from $14.3 million in the same period of 2024.

Segment-wise, T&D operating income margin rose to 8.2% in Q3 2025 from 3.6% in Q3 2024, benefiting from improved productivity and favorable change orders, and the absence of significant negative impacts from clean energy projects seen in the prior year. C&I operating income margin also improved to 6.4% from 5.0%, driven by higher contractual margins on progressing projects and better productivity, alongside the non-recurrence of contingent compensation expenses from a prior acquisition. Selling, general, and administrative (SG&A) expenses increased by $8.4 million in Q3 2025, primarily due to higher employee incentive compensation and growth-related expenses, partially offset by the absence of prior-year contingent compensation.

Liquidity and Capital Allocation: Fueling Growth and Shareholder Value

MYR Group maintains a robust financial position, providing ample flexibility for strategic initiatives. As of September 30, 2025, the company reported $267.4 million in working capital, $72 million of funded debt, and $400 million in borrowing availability under its credit facility. The funded debt-to-EBITDA leverage ratio stood at a strong 0.34x, indicating conservative financial management.

Operating cash flow for the nine months ended September 30, 2025, was $211.7 million, a substantial $145.7 million increase year-over-year, driven by higher net income and favorable changes in operating assets and liabilities, including reductions in pending change orders and retainage. This strong cash generation supports the company's growth objectives.

Capital expenditures, which are expected to run closer to 3% of revenue, are strategically directed towards supporting organic growth, particularly in the capital-intensive T&D segment.

The company's capital allocation strategy prioritizes organic growth and opportunistic acquisitions. Management seeks "right fit" acquisitions, typically in the $50 million to $60 million annual revenue range, that offer cultural and structural alignment, rather than pursuing transformational deals. MYR Group's strong balance sheet enables it to pursue these opportunities while also engaging in opportunistic share repurchases. A new $75 million share repurchase program was authorized in Q2 2025, replacing a prior program, underscoring management's commitment to shareholder value.

Outlook and Growth Drivers: A Clear Path Ahead

MYR Group's outlook is optimistic, underpinned by strong market fundamentals and strategic positioning. The company anticipates approximately 10% revenue growth company-wide for 2026, with this growth expected to be spread relatively equally between its T&D and C&I segments.

In the T&D segment, while large, multi-year transmission projects awarded in late 2025 are not expected to begin significant construction until 2026 or later, bidding activity for small to medium-sized projects remains robust. The company expects an increase in distribution market opportunities throughout the remainder of 2025, driven by the need to strengthen systems against catastrophic damage and accommodate increased electrification. T&D operating margins are projected to remain in the mid-range of the 7% to 10.5% target, reflecting disciplined execution. While the company remains selective on clean energy projects within T&D, which have seen declining revenue contributions, the core T&D business is expected to grow in the high single digits.

The C&I segment continues to see strong bidding opportunities, particularly in data centers, transportation, healthcare, clean energy, and warehousing. The unprecedented growth in data center spending, projected to increase an additional 20% in 2026 after a more than 50% rise in 2024, presents a significant tailwind. MYR Group is raising its C&I margin expectation for 2026 to the mid-range of 5% to 7.5%, up from the previous 4% to 6% range, reflecting both improved execution and market expansion. For the full year 2025, C&I margins are expected to be in the upper half of the 4% to 6% target range.

Key Risks to the Investment Thesis

Despite the positive outlook, several risks warrant investor attention. The company's reliance on estimates for revenue and gross profit on long-term contracts, particularly fixed-price and unit-price agreements, introduces potential for significant adjustments, as evidenced by past project estimate changes. Prolonged uncertainty in the business environment, higher inflation, and increasing operating costs for insurance, equipment, labor, and materials could impact customer demand and profitability.

Labor availability and material shortages or delays represent a continuous balancing act for project execution, with clients increasingly issuing early notices to proceed for long-lead equipment. While newer contracts incorporate stronger language to address tariff risks, the evolving geopolitical landscape could still introduce unforeseen cost pressures. Furthermore, while MYR Group maintains a diversified customer base, the concentration of accounts receivable with a single customer (approximately 10% as of September 30, 2025) presents a credit risk.

Conclusion

MYR Group Inc. is well-positioned to capitalize on the secular growth trends driving North America's electrical infrastructure market. Its deep historical expertise, robust operational capabilities, and strong customer relationships form a formidable competitive moat, enabling it to deliver record financial performance and expand margins. The company's disciplined approach to capital allocation, balancing organic growth with strategic acquisitions and opportunistic share repurchases, underscores its commitment to long-term shareholder value.

While challenges such as labor and material availability, and the unpredictable nature of large project awards persist, MYR Group's proactive risk management and clear strategic vision for both its T&D and C&I segments provide a compelling investment thesis. The company's ability to consistently execute projects with operational excellence and adapt to dynamic market conditions positions it as a core beneficiary of the ongoing electrification and grid modernization efforts across the continent.