Detailed narrative
Strong Q1 Performance & Strategic Progress
Everus Construction Group reported a strong start to the year with record Q1 revenues of $1 billion, a 25% increase year-over-year, and total EBITDA up 44% to $88.9 million, resulting in an 8.6% EBITDA margin. This performance was driven by continued strong project execution and favorable end-market trends across diverse sectors, including data centers, hospitality, high-tech, transmission, and undergrounding.
The company also made significant progress on strategic priorities, highlighted by its first acquisition as a stand-alone public company.
Record Backlog & Geographic Expansion
The company achieved a record backlog of $3.7 billion at the end of Q1, representing a 20% increase from the prior year, with growth observed in both E&M and T&D segments. A notable achievement was securing the first award in a new high-tech geographic region, demonstrating successful organic expansion.
This expansion is part of a broader strategy to grow geographic reach through both acquisitions and organic initiatives, leveraging strong anchor projects and established general contractor partnerships.
Operational Excellence & Margin Stability
Management emphasized its commitment to operational excellence, which contributes to consistent execution and stable margins. The company maintains a balanced approach to project size and contract type, with approximately half of its projects being fixed-price and half cost-plus. This balance helps mitigate risk on large, complex projects and enables disciplined project selection, focusing on long-term relationships and steady, modest margin improvement rather than short-term aggressive gains.
SE&M Acquisition & Capital Allocation
The acquisition of SE&M, a mechanical, electrical, and plumbing services provider headquartered in North Carolina, was a key capital allocation highlight. This acquisition expands Everus' footprint in the attractive Southeast region and diversifies its business into pharma and healthcare markets.
SE&M generates over 60% of its revenue from stable service and renovation work. Post-acquisition, pro forma net leverage was approximately 0.5x, providing ample flexibility for future growth strategies, with an active acquisition pipeline.
End Market Trends & Diversification
Everus continues to benefit from robust demand in its diversified end markets, with significant strength in the data center submarket, alongside solid trends in hospitality, high-tech, and utility sectors. The SE&M acquisition further enhances diversification by adding expertise in pharma and healthcare, aligning with the company's value creation framework focused on targeted commercial growth, operational excellence, and disciplined capital allocation.
Cash Flow and Capital Spending
Operating cash flow for Q1 2026 was $143.7 million, a substantial increase from $7.1 million in Q1 2025, driven by strong operating results and favorable working capital timing. Capital expenditures were $15.5 million, slightly down from $18.5 million in the prior year, reflecting a prior-year purchase of a prefab facility.
Free cash flow generated was $131.9 million, up from a use of cash of $8.1 million, though management noted these strong Q1 cash flows included timing benefits and expect normalization for the full year.