How should we think about T&D margins and overall revenue growth for the year, given strong Q1 performance?

Rick Swartz raised T&D operating margin guidance to 8%-11% (from 7%-10.5%) and overall revenue growth to "12-ish percent" (from 10-ish percent). He noted lumpiness quarter-to-quarter. “I think previously, our margin profile on T&D was at 7% to 10.5%. And as we look at what's in our backlog and the quality of our backlog work, really upping that margin profile to that 8% to 11% with the goal of operating in that mid part of that range. So again, an increase on that one going forward for the rest of the year. ... I'd look at that overall 12% growth on revenue.”

How should we think about cash flow from operations and free cash flow for the rest of the year, given strong Q1?

Kelly Huntington noted strong Q1 cash flow and maintained DSO in mid-50s. She expects DSO to rise to low 60s due to timing of new awards and mix of projects. CapEx is expected to trend to 3% of revenue for the full year, with an increase in spend for the rest of the year. “I think if we look out, we could see DSO rise to the low 60s... CapEx. We've been talking for a couple of quarters now, how we expect that to be trending more to about 3% of revenue on a full year basis.”

What is driving the higher structural margins in both segments? Is it labor productivity, contract terms, or labor constraints?

Rick Swartz stated that current labor tightness is not yet translating into higher margins. The improvement is primarily due to better contract management, terms and conditions, and project execution efficiency (pre-fab, kitting). He hopes labor tightness will drive margins in the future. “I would say that tight market right now on labor isn't really turning into margins today and what we're seeing. ... I think it really has more to do about what I talked about a little earlier in the call with better contract management, better terms and conditions and then better execution on our project side.”

MYRG

MYR Group (MYRG) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· Apr 30, 2026

Source: earnings call transcript

Executive summary

MYR Group Q1 FY26 — Record Revenue, Net Income, and Backlog Driven by Strong Execution and Electrification Demand

MYR Group delivered a record-setting first quarter, driven by robust demand for electrical infrastructure and disciplined project execution across both T&D and C&I segments. The company saw significant revenue and profit growth, alongside record backlog, supported by favorable contract terms and increased productivity. Management is raising full-year revenue growth and segment operating margin targets, while actively pursuing strategic acquisitions to complement organic expansion.

Highlights

Total revenue increased 20% year-over-year to $1 billion.
Net income increased 106% year-over-year to a record $47 million.
Diluted EPS increased 106% year-over-year to $2.99.
EBITDA increased to a record $82 million from $50 million year-over-year.
Total backlog reached a record $2.84 billion, up 8% year-over-year.
C&I segment revenue was a record $459 million, up 24% year-over-year, with operating margin expanding to 8.1% from 4.7%.

Concerns

Increase in costs associated with inefficiencies on certain projects impacted gross margin and segment operating margins.
Days Sales Outstanding (DSO) is expected to rise to the low 60s from the current mid-50s.
Capital expenditures are expected to increase for the remainder of the year, trending towards 3% of revenue for the full year.

Guidance & targets

Category	Target	Timeline	Confidence
C&I Operating Margin	6% to 9% high materiality	Rest of FY26	High
T&D Operating Margin	8% to 11% high materiality	Rest of FY26	High
Total Revenue Growth	12% high materiality	FY26	High
Days Sales Outstanding (DSO)	low 60s medium materiality	Rest of FY26	Medium
Capital Expenditures as % of Revenue	3% medium materiality	FY26	High
Large T&D Project Inflow	start rolling in our backlog high materiality	FY26	High
765 kV Line Project Starts	mid next year medium materiality	Mid-2027 · FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Transmission and Distribution (T&D) Revenues increased primarily due to higher revenue on unit price and T&E contracts, partially offset by a decrease in revenue on fixed price contracts. Operating income margin increased from 7.8% in the prior year, primarily due to better-than-anticipated productivity and a favorable job closeout, partially offset by increased costs from project inefficiencies. Work performed under master service agreements: approximately 70% of T&D revenues	$541 million	17%	—	9.7% operating income margin
Commercial and Industrial (C&I) Revenues were a record high for the segment, increasing primarily due to higher revenue on fixed price contracts. Operating income margin increased from 4.7% in the prior year, primarily due to a larger portion of projects progressing at higher contractual margins, better-than-anticipated productivity, and favorable change orders, partially offset by increased costs from project inefficiencies. Data center construction starts: up nearly 100% year-over-year (FMI report)	$459 million	24%	—	8.1% operating income margin

MYRG operating KPIs by quarter

MYRG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Backlog	$2.8B A steady backlog of $2.8 billion at the end of 2025 reflects a healthy bidding environment and the continued investment in infrastructure to meet the growing electrification needs across the US and Canada. Source: earnings call transcript	$2.84B Total backlog as of March 31, 2026, was a record $2.84 billion, 8% higher than a year ago. Source: earnings call transcript	$3.16B Total backlog as of June 30, 2026, was a record $3.16 billion, 20% higher than a year ago. Source: earnings call transcript	+11.3%
Backlog T&D	$1B Total backlog as of December 31, 2025, consisted of $1.0 billion for our T&D segment and $1.8 billion for our C&I segment. Source: earnings call transcript	$981M Total backlog as of March 31, 2026, consisted of $981 million for our T&D segment and $1.86 billion for our C&I segment. Source: earnings call transcript	$1.27B Total backlog as of June 30, 2026, consisted of $1.27 billion for our T&D segment and $1.89 billion for our C&I segment. Source: earnings call transcript	+29.5%
Backlog C&I	$1.8B Total backlog as of December 31, 2025, consisted of $1.0 billion for our T&D segment and $1.8 billion for our C&I segment. Source: earnings call transcript	$1.86B Total backlog as of March 31, 2026, consisted of $981 million for our T&D segment and $1.86 billion for our C&I segment. Source: earnings call transcript	$1.89B Total backlog as of June 30, 2026, consisted of $1.27 billion for our T&D segment and $1.89 billion for our C&I segment. Source: earnings call transcript	+1.6%

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 $2.84 billion March 31, 2026

8% higher YoY

Record high.

T&D Segment Backlog $981 million March 31, 2026

C&I Segment Backlog $1.86 billion March 31, 2026

MSA Backlog (T&D) 90 days of work Q1 FY26

Only this portion of MSA work is counted in backlog.

Deals & partnerships

Sturgeon Master Service Agreement (MSA) and EPC program opportunities

Awarded an MSA in Arizona spanning transmission, distribution, and substations, along with EPC program opportunities in the Northwest.

Great Southwestern Construction Construction of greenfield substations

Secured the construction of 2 greenfield substations in Texas.

High Country Line Construction Substation work and transmission line project

Selected for substation work in Arizona, along with a 345 kV transmission line project in South Carolina.

L.E. Myers Transmission job and overhead distribution rebuild projects

Selected for a 345 kV transmission job and several overhead distribution rebuild projects across Illinois and Iowa.

Harlan Electric Overhead transmission work

Awarded overhead transmission work in Pennsylvania.

C&I Segment (multiple customers) Data center projects, clean energy work, water treatment plants

Awarded multiple data center projects in New Jersey, Arizona, California and Colorado, clean energy work in California and multiple water treatment plants in Colorado.

Risks & headwinds

Increased costs due to project inefficiencies Q1 FY26

Impacted gross margin, T&D operating margin, and C&I operating margin in Q1 FY26.

Mitigation:Better contract management, improved terms and conditions, enhanced project execution, pre-fabrication, and kitting materials.

Potential rise in Days Sales Outstanding (DSO) Rest of FY26

Expected to rise from mid-50s to low 60s.

Mitigation:Mitigation depends on the timing of new awards and the weighting between projects with more favorable billing structures versus MSA-like work.

Quarterly lumpiness in financial results Ongoing

Can affect revenue and margins quarter-to-quarter.

Mitigation:Due to factors like weather, project timing, and subcontractor/material delivery. Management focuses on yearly targets rather than quarterly fluctuations.

What to watch in Q2 FY26

C&I Operating Margin

Rest of FY26

Current 8.1% (Q1 FY26)

Target Mid-range of 6%-9%

Why it matters

Indicates sustained profitability improvements from contract management and execution in the C&I segment.

our margin profiles coming into this year, we were at 5% to 7.5%, and we're looking to increase that going forward for the rest of the year. We're looking kind of at that 6% to 9% margin profile and operating kind of in that mid-ish range on the C&I side.

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Q&A highlights

What led to the strong C&I margins in Q1, and what should be expected going forward?

Rick Swartz attributed strength to less risk in contracts, disciplined project execution, pre-fabrication, and favorable job closeouts. He guided C&I operating margins to 6%-9% for the rest of the year, aiming for the mid-range.

“our margin profiles coming into this year, we were at 5% to 7.5%, and we're looking to increase that going forward for the rest of the year. We're looking kind of at that 6% to 9% margin profile and operating kind of in that mid-ish range on the C&I side.”

asked by Sangita Jain · answered by Richard Swartz

2 min read 5 chapters

Detailed narrative

Strong Q1 Performance and Margin Expansion

MYR Group reported record Q1 2026 revenues of $1 billion, a 20% increase year-over-year, with net income reaching a record $47 million, up 106%. Gross margin improved to 13.4% from 11.6% YoY, driven by projects progressing at higher contractual margins, better-than-anticipated productivity, favorable change orders, and job closeouts.

Management emphasized improved contract management, better terms and conditions, and enhanced project execution through pre-fabrication and kitting materials as key factors for margin expansion.

Segment-Specific Growth and Outlook

The T&D segment saw revenues increase 17% to $541 million, with operating margin at 9.7%. The C&I segment achieved record revenues of $459 million, up 24%, and a significant operating margin increase to 8.1%. Data center and water/wastewater projects were highlighted as primary growth drivers for C&I, with data center construction starts up nearly 100% year-over-year according to FMI's 2026 outlook.

The company expects steady work across the U.S. and Canada, driven by grid infrastructure modernization.

Record Backlog and Future Project Opportunities

Total backlog reached a record $2.84 billion as of March 31, 2026, an 8% increase YoY, reflecting strong market demand and customer relationships. The T&D segment backlog was $981 million, and C&I backlog was $1.86 billion. Management anticipates some large transmission projects, including 765 kV lines, to roll into backlog this year, with 765 kV projects expected to start construction no earlier than mid-2027.

Conversations with clients extend to projects starting in 2030 and beyond, focusing on material and labor security.

Capital Allocation and Liquidity

MYR Group maintains a strong balance sheet with $163 million in cash and cash equivalents and a funded debt-to-EBITDA leverage ratio of 0.04x. The company plans to invest in organic growth, including expanding pre-fabrication capacity, and is actively seeking strategic acquisitions, noting good activity in the market for high-quality companies. Share repurchases are also considered as a capital deployment option, leveraging the strong financial position.

Labor Market and Competitive Landscape

Management noted that the tight labor market is not currently translating into higher margins due to competitive bidding. However, they hope this dynamic will change in the future. Despite new entrants in the C&I data center market, MYR Group is not overly concerned about increased competition or pricing pressure, citing long-term client relationships and a balanced business approach.

The company continues to be selective on larger projects to manage risk.

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