MYR Group (MYRG) Q2 FY26 earnings call: guidance and Q&A

How will the Valley and Comet Electric acquisition grow the customer base and C&I capabilities/geographic presence?

The acquisition's capabilities are similar to MYR Group's, allowing for leveraging both their customer base and MYR Group's existing customer base. This is seen as a continued opportunity for expansion, building on strong customer relationships.

“Their capabilities are very similar to our own. So we see that leveraging both their customer base, and then having an influx with our own customer base. So we've been able to do that on past acquisitions and expand both markets.”

asked by Caitlin Donohue · answered by Richard Swartz

Given strong H1 margins, how do you see H2 margins shaping up, especially against full-year guidance?

Despite strong H1 performance with good project closeouts, management expects full-year operating margins for both C&I (6%-9%) and T&D (8%-11%) to land in the mid-range of their projections. They would like to see an uptick but current market and closed jobs indicate a mid-range outcome.

“Again, as we look at the total year, nothing has changed with our kind of projections that will be in the mid part of our projections for operating margins on the C&I of that 6% to 9% and T&D will fall in that midrange of 8% to 11%.”

asked by Caitlin Donohue · answered by Richard Swartz

Can you provide a revenue bridge for the second half, specifically the contribution from the Valley acquisition?

The Valley acquisition is expected to contribute approximately $250 million in revenue for the remainder of the year. Overall organic growth for the year is anticipated to be less than the 13%-15% range.

“From a revenue perspective, we expect our contributions will be in that approximately $250 million range rest of the year. And then maybe I'll turn it over to Rick just to talk about our revenue expectations overall. Yes. Yes. I think when we look at our overall revenue projections for the year, again, that should add roughly that $250 million. And then when I -- when we look at our growth, I think it will kind of be in that overall growth, probably not 13% to 15%, if I look at our overall growth on an organic basis going forward.”

asked by Sangita Jain · answered by Kelly Huntington

How should we think about H2 cash flow and working capital given Q2's timing-related issues?

Q2 operating cash flow was impacted by $30 million higher tax payments. Strong EBITDA growth is expected for the rest of the year. However, DSOs are near record lows due to strong overbillings and are expected to normalize from mid to low-to-mid 60s, which will be a headwind against strong EBITDA growth.

“The headwind, just as we talked about the last quarter is we are sitting at near record low DSOs. And we do see -- a lot of that is driven by the strong overbillings we have on some projects, and those do naturally balance out over time. So we could see our DSOs going from the current kind of mid to more of the low to mid-60s as we progress through the next few quarters.”

asked by Manish Somaiya · answered by Kelly Huntington

How is MYR Group positioned to absorb new T&D business given the large backlog and finite resources?

The company is well-positioned, having modeled this growth for a long time and seen primarily organic T&D growth over the last 6-7 years. They are well-aligned from a labor standpoint for additional projects, particularly 345, 500, and 765 kV work, which is expected to start in H2 2027 and beyond. They are budgeting and doing constructability for projects extending into the 2030s.

“I mean, we've been modeling this growth for a long time. It's not that it's something new or that we haven't been targeting. I think you've seen our growth over the last 6, 7 years, primarily organic on the T&D side, so well positioned on that side. I think from a labor standpoint, we're well positioned to continue to capture additional projects.”

asked by Brent Thielman · answered by Richard Swartz

How are terms and conditions trending in recent awards, and does this increase the odds of continued positive closeout activity?

The company actively seeks favorable terms and conditions. With over 90% repeat clientele, strong relationships lead to fair terms. Terms and conditions are more favorable today than 8-12 months ago, which should reduce risk, but the impact on future closeout activity was not directly quantified.

“But again, over 90% of our business is return clientele. So we have strong relationships with these clients. Hopefully, that's relying to less risk for us as we go forward. But again, try to be fair with our customers. And I think in turn, our long-term customers are fair with us. So good opportunities, I would say, from a business standpoint. And probably, as I said before, more favorable terms and conditions today than we saw in contracts 8 months or a year ago.”

asked by Brian Brophy · answered by Richard Swartz