Given very low leverage, what is the optimal leverage target, and how should free cash flow conversion be viewed going forward?

Management reiterated a long-term net leverage target of 1.5x to 2x, emphasizing smart capital investment. For free cash flow, they expect 2026 to be consistent with 2025, with less working capital investment needed due to moderating revenue growth, offset by planned increases in CapEx. “I think 1.5x to 2x net leverage is still the right long-term place leverage levels for this company. But we want to make sure we're smart in investing the capital, at the right time, in the right place.”

Are there capacity constraints for building the book of business, and what are the lead times on the record backlog?

Management confirmed that the record backlog provides clear visibility for 2026 and into 2027, with about 80% burning off in 12 months. They expressed confidence in their ability to add skilled labor, having increased employee count by 8.5%, to meet demand and execute projects. “Our record backlog really provides us a clear line of sight for 2026, and some of those projects go into 2027. And if you look at where those backlog contributions are coming from sequentially, it's not just data centers.”

What are the opportunities for additional satellite expansions in 2026, and are there specific geographies of interest?

Management highlighted a successful playbook for satellite operations, noting momentum in a new market (supporting a semiconductor company) that is expected to contribute financially in 2026. They mentioned opportunities across the country, particularly in the South and Southeast, if the right work and jobs are found. “More recently, as discussed on our last earnings call, we entered a new geography in support of a large semiconductor company. The initial large project is helping us scale up to this new location, which we expect will allow us to follow our previous blueprint to make this a permanent new geography for Everus.”

ECG

Everus Construction Group (ECG) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Industrials· Feb 25, 2026

Source: earnings call transcript

Executive summary

Everus Construction Group Q4 FY25 — Record Revenue and Backlog Drive Strong Outlook

Everus Construction Group delivered record Q4 FY25 revenues and full-year EBITDA, driven by robust end markets and strong project execution. The company enters 2026 with a record backlog and a clear growth strategy focused on organic expansion, strategic M&A, and disciplined capital allocation, while actively managing labor availability.

Highlights

Q4 revenue exceeded $1 billion for the first time, up 33% from the prior year period.
Full year 2025 adjusted EBITDA increased 52% to $320 million compared to 2024.
Backlog reached a record $3.23 billion at year-end 2025, up 16% from the prior year.
Q4 EBITDA margin expanded by 70 basis points to 8.4% driven by strong execution.
Employee count grew by 8.5% to 9,400, supporting organic growth initiatives.

Concerns

Full year 2025 operating cash flow decreased to $156.8 million from $163.4 million in 2024 due to working capital investment.
Free cash flow for 2025 was $100 million, down from $128.8 million in 2024, reflecting increased investments.
2026 EBITDA guidance midpoint (2% growth) is slightly below the long-term model due to difficult comparison with strong 2025 execution.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Revenue	$4.1 billion to $4.2 billion high materiality	FY26	High
Full-year 2026 EBITDA	$320 million to $335 million high materiality	FY26	High
Long-term Capital Spending as % of Revenue	2% to 2.5% medium materiality	Long-term	High
Long-term Net Leverage (Net Debt to TTM EBITDA)	1.5x to 2x high materiality	Long-term	High
Full-year 2026 EBITDA Margin	just under 8% high materiality	FY26	High
Long-term Revenue Growth	5% to 7% high materiality	Long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
E&M Q4 revenue and EBITDA increased significantly, driven by strong growth in commercial and renewables markets, with data centers being a key driver. EBITDA margin expanded due to strong revenue growth and higher gross margin from project timing and efficient execution, partially offset by higher SG&A. EBITDA margin: 8.5%EBITDA margin change YoY: +70 bpsFull year revenue growth: 44%Key driver: data center submarketGrowth drivers: commercial and renewables markets	$791.6 million	44%	—	$67.1 million (EBITDA)
T&D Q4 revenue increased, driven by growth in transportation and utility end markets. However, EBITDA was essentially flat as higher revenues were offset by project mix and increased SG&A expenses, leading to a slight contraction in EBITDA margin. EBITDA margin: 13.4%EBITDA margin change YoY: -90 bpsGrowth drivers: transportation and utility segment end marketsOffsetting factors: project mix and higher SG&A expenses	$227.7 million	6.8%	—	$30.5 million (EBITDA)

ECG operating KPIs by quarter

ECG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Backlog	$3.23B At December 31, total record backlog was $3.23 billion, up 16% from December 31, 2024, even while we delivered record revenue during the fourth quarter. Source: earnings call transcript	$3.68B At March 31, total backlog was $3.68 billion, up 20% from March 31 of last year. Source: earnings call transcript	$4.55B Our backlog at the end of the second quarter was $4.55 billion, up 53% from the same period last year, driven by continued strength in E&M The favorable demand trends are broad-based, and we continue to benefit from positive momentum across diverse markets with growth in nearly all submarkets sequentially. Source: earnings call transcript	+23.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Backlog $3.23 billion Dec 31, 2025

up 16% YoY

Approximately 80% of this backlog is expected to burn off within 12 months, providing clear line of sight for 2026 revenues.

T&D Backlog up 41% Dec 31, 2025

YoY

Driven by increases in the utility end market, specifically undergrounding and transmission work.

E&M Backlog up 13% Dec 31, 2025

YoY

Reflecting growth in data center, hospitality, and high-tech markets.

Product announcements

Product	Type	Timeline	Details
Kansas City Prefab Facility	expansion	now operational

Capital programs

Kansas City Prefab Facility operational

Benefit:Improved safety, increased labor efficiency, lowered costs, improved project timelines, enhanced margins, and strengthened customer relationships.

The purchase of this new prefab facility was included in the CapEx for 2025, supporting the company's organic growth strategy and expansion of modular construction capabilities.

Risks & headwinds

Difficult comparison for 2026 EBITDA guidance FY26

2026 EBITDA guidance midpoint reflects 2% growth, below long-term model

Mitigation:Management believes 2026 EBITDA margin of just under 8% is achievable due to incremental scale benefits and continued execution upside, reflecting a 25% 2-year CAGR adjusted for stand-alone costs.

Working capital investment impacting cash flow FY25

FY25 operating cash flow down to $156.8M from $163.4M; FCF down to $100M from $128.8M

Mitigation:Expected less working capital investment in 2026 as revenue growth moderates, leading to FCF consistent with 2025 despite increased CapEx.

Industry-wide skilled labor constraints Ongoing

Labor is crucial for success and a real constraint for the whole industry

Mitigation:Everus excels in attracting and retaining talent, growing employee count by 8.5% in 2025. They leverage union partnerships, industry relationships, and internal initiatives, and effectively price labor costs into projects.

What to watch in Q1 FY26

M&A Execution

Next quarter / upcoming months

Current Broad and deep pipeline, ample financial flexibility with 0.4x net leverage

Target Announcement of strategic acquisitions

Why it matters

M&A is a key part of the growth playbook to expand geographic footprint, diversify business, or deepen market presence, and leverage the company's strong balance sheet.

While we remain committed to our organic growth strategies, an important part of our growth playbook going forward will be strategic acquisitions. We have strengthened our corporate development team and have a broad and deep pipeline of potential deals we are evaluating. We look forward to updating you on our progress.

Find out whether ECG delivers this. Inve re-checks your case every morning.

Q&A highlights

Was 2025's exceptional execution repeatable, or is 2026 guidance conservative?

Management stated that 2025's exceptional margin upside came from diversified contributions across multiple markets. They are confident in achieving the 7.9%-8% EBITDA margin target for 2026, reflecting continued focus on operational excellence and improved execution compared to 2024.

“We had exceptional margin upside in 2025, and those were diversified contributions from a number of projects. And the 4 most notable ones are from 4 different markets: data center, institutional, transportation, industrial.”

asked by Ian Zaffino · answered by Jeff Thiede

2 min read 5 chapters

Detailed narrative

Strategic Priorities and 4EVER Framework

Everus achieved record full year 2025 results, its first year as a stand-alone public company, by focusing on its 4EVER strategic priorities. These priorities emphasize attracting and retaining skilled employees, creating value for customers and shareholders, delivering safe and high-quality execution, and maintaining strong customer relationships.

This framework is designed to drive sustained profitable growth, operational excellence, and disciplined capital allocation, leading to strong financial performance.

Geographic Expansion and Labor Strategy

The company successfully expanded its geographic footprint through satellite projects, replicating its Southwest entry model in a new location supporting a large semiconductor company. This initial large project is scaling up the new location, aiming for it to become a permanent geography.

Everus ended 2025 with 9,400 employees, an 8.5% increase, demonstrating its ability to efficiently grow its workforce through union partnerships and internal initiatives, despite industry-wide labor constraints.

Operational Excellence and Prefabrication

Strong execution in 2025 led to a 40 basis point increase in full year EBITDA margin (110 bps adjusted for stand-alone costs). The company's operational playbook, focusing on project selection, bidding discipline, and safety, was key to this success. Investments in prefabrication and modular construction, including a new operational facility in Kansas City, are improving safety, labor efficiency, lowering costs, and enhancing project timelines, which in turn strengthens margins and customer relationships.

Capital Allocation and M&A Strategy

Everus prioritizes investments in organic growth and strategic acquisitions, while maintaining financial flexibility. With net leverage at 0.4x and ample credit facility capacity, the company is well-positioned for M&A. It is actively evaluating a broad and deep pipeline of potential deals, seeking accretive transactions that expand geographic footprint, diversify business, or deepen market presence, with a focus on companies providing similar services and sharing values of integrity and operational excellence.

End-Market Strength and Backlog Visibility

The company entered 2026 with strong momentum, supported by a record $3.23 billion backlog, up 16% year-over-year. This backlog provides high visibility into 2026 revenues, with approximately 80% expected to convert within 12 months. A robust project pipeline across diverse markets, including data center, hospitality, semiconductor, transmission, and undergrounding, is expected to drive continued backlog growth, with data centers being the largest market in the current backlog.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.