Everus Reports Strong Third Quarter 2024 Results

BISMARCK, N.D.–(BUSINESS WIRE)–Everus Construction Group (NYSE: ECG) today reported financial results for the quarter ended Sept. 30, 2024.


Third Quarter 2024 Summary

(all comparisons versus the prior-year period unless otherwise noted)

  • Revenues of $761.0 million, +6.1%.
  • Net income of $41.8 million, +16.1%; net income margin of 5.5%, +50 basis points.
  • Earnings of 82 cents per share, +15.5%.
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) of $65.0 million, +12.1%; EBITDA margin of 8.5%, +40 basis points.
  • Backlog of $2.88 billion, +43.5% from prior year-end.
  • Reiterated 2024 full-year guidance.
  • Completed spinoff from MDU Resources Group, Inc. on Oct. 31, 2024.

Management Commentary

This has been a transformative period in our company’s evolution, highlighted by our successful tax-free spinoff from MDU Resources on Oct. 31,” said Jeffrey S. Thiede, president and CEO of Everus. “I want to thank our team members for their continued efforts and dedication that enabled us to successfully transition to being an independent, public company, which better positions us to effectively allocate capital and drive profitable growth while generating long-term value for our shareholders.

Our third quarter results demonstrate the strength of our scaled national platform and market-leading local brands that are benefiting from strong secular tailwinds, including data center work,” Thiede said. “Third quarter revenue increased 6% with balanced growth across both our segments. With our all-time record backlog of $2.88 billion at the end of the quarter, which is up $873.9 million since the start of the year, and our disciplined focus on our 4EVER strategy, we are well-positioned to deliver on our long-term targets of 5% to 7% organic revenue growth and 7% to 9% EBITDA growth.”

Thiede said, “Based on our results through the first nine months of the year, continued strong momentum in our end markets and our disciplined focus on execution, we are reiterating our 2024 financial guidance that calls for revenues in the range of $2.65 billion to $2.85 billion and EBITDA in the range of $220 million to $240 million, with EBITDA margins expected to be higher than in 2023. We are encouraged by the opportunities in our key markets, where we are strategically positioned to take advantage of powerful megatrends driving data center growth, grid modernization and re-shoring of high-tech manufacturing. We are excited about our trajectory and are fully focused on delivering long-term value to our shareholders.”

Third Quarter 2024 Consolidated Results

Everus reported revenues increased to $761.0 million in the third quarter of 2024, compared to $717.4 million in the third quarter of 2023. Electrical and mechanical revenues grew $20.0 million, or 3.9%, and transmission and distribution revenues rose $24.0 million, or 11.7%.

The company’s gross profit increased to $89.9 million in the third quarter of 2024, compared to $84.9 million in the third quarter of 2023. Higher revenues and consistent gross profit margin of 11.8% drove the increase.

Everus’ net income increased to $41.8 million, or 82 cents per share, in the third quarter of 2024, compared to $36.0 million, or 71 cents per share, in the third quarter of 2023. The increase was primarily from higher revenues and income from joint venture activity and lower interest expense, partially offset by higher selling, general and administrative expenses and increased income taxes due to higher income before taxes. Net income margin was 5.5% in the third quarter of 2024, up 50 basis points compared to 5.0% in the third quarter of 2023.

The company’s EBITDA increased to $65.0 million in the third quarter of 2024, compared to $58.0 million in the third quarter of 2023. The increase was primarily from higher revenues and income from joint ventures, partially offset by higher selling, general and administrative expenses. EBITDA margin was 8.5% in the third quarter of 2024, up 40 basis points compared to 8.1% in the third quarter of 2023. See the Non-GAAP Measures sections of this news release for definitions and reconciliations of EBITDA and EBITDA margin.

Everus’ backlog increased to $2.88 billion at Sept. 30, 2024, compared to $1.85 billion at Sept. 30, 2023. E&M backlog was $2.57 billion, up from $1.53 billion, and T&D backlog was $316.9 million, down from $324.0 million.

Third Quarter 2024 Segment Results

Electrical and Mechanical

The company’s E&M segment revenues increased to $536.9 million in the third quarter of 2024, compared to $516.9 million in the third quarter of 2023. The increase was driven by higher workloads in the commercial and institutional end markets, particularly in the data center submarket, partially offset by decreased workloads in the industrial, service and renewables end markets.

E&M segment net income increased to $29.4 million in the third quarter of 2024, compared to $23.1 million in the third quarter of 2023. EBITDA increased to $40.8 million in the third quarter of 2024, compared to $33.6 million in the third quarter of 2023. These increases were driven by higher revenues, strong project execution and project efficiencies. As a result, net income margin was 5.5% in the third quarter of 2024, up 100 basis points from 4.5% in the third quarter of 2023. EBITDA margin was 7.6% in the third quarter of 2024, up 110 basis points from 6.5% in the third quarter of 2023.

Transmission and Distribution

Everus’ T&D segment revenues were $228.5 million during the third quarter of 2024, compared to $204.5 million in the third quarter of 2023. The increase was driven by higher workloads in both the utility and transportation end markets. The utility market had higher workloads in the transmission, underground, telecommunication and substation submarkets, and the transportation market had higher workloads in the traffic signalization and street lighting submarkets. These increases were partially offset by lower workloads in the distribution submarket.

T&D segment net income increased to $18.5 million in the third quarter of 2024, compared to $16.9 million in the third quarter of 2023. EBITDA increased to $30.4 million in the third quarter of 2024, compared to $28.2 million in the third quarter of 2023. These increases were primarily from higher utility and transportation end-market revenues. Net income margin was 8.1% in the third quarter of 2024, down 20 basis points from 8.3% in the third quarter of 2023. EBITDA margin was 13.3% in the third quarter of 2024, down 50 basis points from 13.8% in the third quarter of 2023.

Balance Sheet and Cash Flow Commentary

Balance Sheet

On Oct. 31, 2024, Everus entered into a five-year senior secured credit agreement, whereby it has the capacity to incur indebtedness of up to $525.0 million, consisting of $300.0 million in aggregate principal amount of term loans and a $225.0 million revolving credit facility. Letters of credit are available under the credit agreement in an aggregate amount of up to $50.0 million. Everus drew $40.0 million under the credit facility on the spinoff date to meet projected working capital needs. Everus used a portion of the net proceeds to repay its outstanding indebtedness to CEHI, LLC (Centennial), as well as a dividend to MDU Resources. The remaining amount of net proceeds was retained by Everus.

Everus’ working capital, defined as current assets minus current liabilities, was $327.0 million at Sept. 30, 2024, compared to $313.9 million at Dec. 31, 2023.

Everus previously reported that its near-term priorities following the spinoff from MDU Resources will be organic growth investments, value-enhancing mergers and acquisitions, and balance sheet optimization.

Cash Flow

The company’s operating cash flows were $82.7 million for the nine months ended Sept. 30, 2024, compared to $61.4 million for the nine months ended Sept. 30, 2023. The increase was driven by project timing, workload activity and billing fluctuations, with increases in accounts payable, net contract liabilities and other current liabilities, partially offset by an increase in accounts receivable.

The company’s capital expenditures were $34.5 million for the nine months ended Sept. 30, 2024, compared to $28.1 million for the nine months ended Sept. 30, 2023. The increase was primarily from vehicle and equipment investments to support the company’s growth.

Everus had free cash flow of $57.8 million for the nine months ended Sept. 30, 2024, compared to $45.5 million for the nine months ended Sept. 30, 2023. The increase was primarily from higher operating cash flows, partially offset by higher net capital expenditures. See the Non-GAAP Financial Measures sections of this news release for the definition and reconciliation of free cash flow.

Forecast for Full Year 2024

Everus is reaffirming previously provided guidance for 2024:

  • Revenue is expected to be in the range of $2.65 billion to $2.85 billion.
  • EBITDA is expected to be in the range $220 million to $240 million, with EBITDA margins expected to be higher than 2023. See the Non-GAAP Financial Measures sections of this news release for further information and reconciliation.

The company’s expected results for 2024 are based on these assumptions:

  • Normal operating conditions.
  • Normal economic conditions.
  • Continued availability of labor, necessary equipment and materials.

Basis of Presentation

Prior to the spinoff from MDU Resources on Oct. 31, 2024, Everus Construction, Inc., including its subsidiaries, operated as a wholly owned subsidiary of Centennial and an indirect, wholly owned subsidiary of MDU Resources and not as a stand-alone company. Following the separation, Everus Construction is now a wholly owned subsidiary of Everus. As a result, third quarter 2024 results of operations, financial condition, cash flow and the accompanying unaudited condensed consolidated financial statements were prepared on a “carve-out” basis in connection with the spinoff and were derived from the unaudited condensed consolidated financial statements of MDU Resources as if Everus operated on a stand-alone basis during the periods presented. The calculation of basic and diluted earnings per share for the periods presented have been retrospectively adjusted to the number of shares outstanding on Oct. 31, 2024, the separation and distribution date. It is assumed that there were no dilutive or anti-dilutive equity instruments because there were no Everus stock-based awards outstanding during those periods.

Non-GAAP Financial Measures

Throughout this news release, Everus presents financial information prepared in accordance with U.S. GAAP (GAAP), as well as non-GAAP financial measures, including organic revenue, organic revenue growth, EBITDA, EBITDA margin and free cash flow, including applicable measures by segment. The use of these non-GAAP financial measures should not be construed as alternatives to revenues, earnings, earnings margin or operating cash flows. Everus believes the use of these non-GAAP financial measures are beneficial in evaluating the company’s financial performance. Please refer to the “Non-GAAP Financial Measures” section contained in this news release for additional information.

Conference Call

Management will discuss Everus’ third quarter results on a webcast at 8:30 a.m. EST Nov. 7, 2024. The webcast and accompanying presentation materials can be accessed at investors.everus.com by selecting “Events & Presentations” and “Everus Q3 Earnings Call.” After the conclusion of the webcast, a replay will be available at the same location.

Participants also can listen to the webcast by phone at 646-307-1963 for toll-based U.S. and international callers or at 800-715-9871 for toll-free U.S. callers, with conference ID 1034822.

About Everus Construction Group

Everus Construction Group, Inc., a member of the S&P SmallCap 600® index, is Building America’s Future™ by providing a full spectrum of construction services through its electrical and mechanical, and transmission and distribution specialty contracting services across the United States. These specialty contracting services are provided to utility, transportation, commercial, industrial, institutional, renewable and other customers. Its E&M contracting services include construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services. Its T&D contracting services include construction and maintenance of overhead and underground electrical, gas and communication infrastructure, as well as manufacturing and distribution of transmission line construction equipment and tools. For more information about Everus, visit everus.com or email investors@everus.com.

Forward-Looking Statements

Information in this news release includes certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this news release, including statements about future performance, financial guidance and long-term targets and statements made by the CEO, are expressed in good faith and are believed by the company to have a reasonable basis. This news release highlights key growth strategies, projections and certain assumptions for the company and its subsidiaries and other matters for each of the company’s businesses. Many of these highlighted statements and other statements not historical in nature are “forward-looking statements.” Although the company believes that its expectations are based on reasonable assumptions as of the date they are made, there is no assurance the company’s projections, including estimates for growth, shareholder value creation and financial guidance, will be achieved. Please refer to assumptions contained in this news release, as well as the various important factors listed in Part I, Item 1A – Risk Factors in the company’s recent Form 10 filing and subsequent filings with the Securities and Exchange Commission.

Changes in such assumptions and factors could cause actual future results to differ materially from growth and financial guidance. All forward-looking statements in this news release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Except as required by law, the company does not undertake any obligation to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.

Everus Construction Group, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

2024

 

2023

 

2024

 

2023

 

(In thousands, except per share amounts)

Operating revenues

$

760,985

 

$

717,406

 

$

2,090,047

 

$

2,218,672

Cost of sales

 

671,085

 

 

632,499

 

 

1,836,853

 

 

1,976,534

Gross profit

 

89,900

 

 

84,907

 

 

253,194

 

 

242,138

Selling, general and administrative expenses

 

36,191

 

 

34,816

 

 

109,292

 

 

102,519

Operating income

 

53,709

 

 

50,091

 

 

143,902

 

 

139,619

Interest expense

 

2,851

 

 

4,596

 

 

8,823

 

 

13,483

Other income

 

1,071

 

 

1,208

 

 

3,683

 

 

2,705

Income before income taxes and income from equity method investments

 

51,929

 

 

46,703

 

 

138,762

 

 

128,841

Income taxes

 

13,995

 

 

11,423

 

 

37,606

 

 

32,822

Income from equity method investments

 

3,833

 

 

734

 

 

7,797

 

 

4,718

Net income

$

41,767

 

$

36,014

 

$

108,953

 

$

100,737

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.82

 

$

0.71

 

$

2.14

 

$

1.98

Diluted

$

0.82

 

$

0.71

 

$

2.14

 

$

1.98

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

50,972

 

 

50,972

 

 

50,972

 

 

50,972

Diluted

 

50,972

 

 

50,972

 

 

50,972

 

 

50,972

Everus Construction Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

September 30, 2024

 

December 31, 2023

 

(In thousands, except share and per share amounts)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

553

 

$

1,567

Receivables, net of allowances of $7,300 and $7,967, respectively)

 

632,131

 

 

534,100

Costs and estimated earnings in excess of billings

 

174,102

 

 

158,529

Due from related-party

 

12,270

 

 

11,507

Inventories

 

46,923

 

 

42,709

Prepayments and other current assets

 

20,553

 

 

17,651

Total current assets

 

886,532

 

 

766,063

Noncurrent assets:

 

 

 

Property, plant and equipment

 

282,633

 

 

259,849

Less: accumulated depreciation

 

153,272

 

 

143,831

Net property, plant and equipment

 

129,361

 

 

116,018

Goodwill

 

143,224

 

 

143,224

Other intangible assets, net of accumulated amortization of $9,984 and $8,738, respectively

 

466

 

 

2,004

Operating lease right-of-use assets

 

68,852

 

 

53,233

Noncurrent retention receivable

 

32,849

 

 

21,355

Investments

 

17,648

 

 

8,413

Other

 

360

 

 

272

Total noncurrent assets

 

392,760

 

 

344,519

Total assets

$

1,279,292

 

$

1,110,582

Liabilities and Stockholder’s Equity

 

 

 

Current liabilities:

 

 

 

Billings in excess of costs and estimated earnings

$

221,662

 

$

198,231

Accounts payable

 

160,873

 

 

116,573

Taxes payable

 

14,006

 

 

8,557

Due to related-party

 

15,870

 

 

14,615

Accrued compensation

 

66,960

 

 

44,721

Operating lease liabilities due within one year

 

26,110

 

 

21,143

Accrued payroll-related liabilities

 

37,292

 

 

35,342

Other accrued liabilities

 

16,788

 

 

13,001

Total current liabilities

 

559,561

 

 

452,183

Noncurrent liabilities:

 

 

 

Related-party notes payable

 

214,525

 

 

168,531

Deferred income taxes

 

965

 

 

6,535

Operating lease liabilities

 

43,247

 

 

32,504

Other

 

7,691

 

 

1,979

Total noncurrent liabilities

 

266,428

 

 

209,549

Total liabilities

$

825,989

 

$

661,732

Commitments and contingencies

 

 

 

Common stockholder’s equity:

 

 

 

Common Stock, stated value $1, no par value; 1,000 shares authorized, issued and outstanding

$

1

 

$

1

Other paid-in capital

 

137,947

 

 

136,184

Retained earnings

 

315,355

 

 

312,665

Total stockholder’s equity

 

453,303

 

 

448,850

Total liabilities and stockholder’s equity

$

1,279,292

 

$

1,110,582

Everus Construction Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine months ended September 30,

 

2024

 

2023

 

(in thousands)

Operating activities:

 

 

 

Net income

$

108,953

 

 

$

100,737

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

 

16,961

 

 

 

15,658

 

Amortization

 

1,538

 

 

 

1,575

 

Deferred income taxes

 

(5,570

)

 

 

(734

)

Provision for credit losses

 

(51

)

 

 

4,385

 

Employee stock-based compensation costs

 

1,034

 

 

 

517

 

Unrealized gain on investments

 

(531

)

 

 

 

Gain on sale of assets

 

(5,513

)

 

 

(6,297

)

Equity in earnings of unconsolidated affiliates, net of distributions

 

(4,788

)

 

 

(4,718

)

Changes in current assets and liabilities, net of acquisitions:

 

 

 

Receivables

 

(97,980

)

 

 

(5,828

)

Due from related-party

 

(763

)

 

 

1,381

 

Costs and estimated earnings in excess of billings

 

(15,573

)

 

 

(44,802

)

Inventories

 

(4,214

)

 

 

(8,984

)

Other current assets

 

(2,303

)

 

 

(2,512

)

Accounts payable

 

44,265

 

 

 

(11,125

)

Due to related-party

 

10

 

 

 

356

 

Billings in excess of costs and estimated earnings

 

23,431

 

 

 

12,566

 

Other current liabilities

 

32,760

 

 

 

6,540

 

Other noncurrent changes

 

(8,984

)

 

 

2,647

 

Net cash provided by operating activities

 

82,682

 

 

 

61,362

 

Investing activities:

 

 

 

Capital expenditures

 

(34,506

)

 

 

(28,134

)

Net proceeds from sale or disposition of property

 

9,587

 

 

 

12,247

 

Investments

 

(570

)

 

 

(535

)

Net cash used in investing activities

 

(25,489

)

 

 

(16,422

)

Financing activities:

 

 

 

Repayment of related-party notes payable

 

 

 

 

(45,000

)

Repayment of related-party short-term notes payable

 

 

 

 

(27,000

)

Net amounts received from related-party cash management program

 

45,994

 

 

 

62,527

 

Transfers to Centennial

 

(104,201

)

 

 

(37,026

)

Net cash used in financing activities

 

(58,207

)

 

 

(46,499

)

Decrease in cash and cash equivalents

 

(1,014

)

 

 

(1,559

)

Cash and cash equivalents – beginning of period

 

1,567

 

 

 

2,112

 

Cash and cash equivalents – end of period

$

553

 

 

$

553

 

Everus Construction Group, Inc.

Segment and Other Financial Information

(Unaudited)

Revenues

The following table sets forth segment revenues for the periods indicated, as well as the percentage change from the prior period:

 

Three months ended September 30,

 

Nine months ended September 30,

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

 

(In millions, except percentages)

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

Electrical & Mechanical

$

536.9

 

 

$

516.9

 

 

3.9

%

 

$

1,481.7

 

 

$

1,680.2

 

 

(11.8

)%

Transmission & Distribution

 

228.5

 

 

 

204.5

 

 

11.7

%

 

 

623.8

 

 

 

549.5

 

 

13.5

%

Eliminations

 

(4.4

)

 

 

(4.0

)

 

10.0

%

 

 

(15.5

)

 

 

(11.0

)

 

40.9

%

Total operating revenues

$

761.0

 

 

$

717.4

 

 

6.1

%

 

$

2,090.0

 

 

$

2,218.7

 

 

(5.8

)%

Backlog

Backlog is a common measurement in the construction services industry. Everus’ determination of backlog consists of the uncompleted portion of services to be performed under job-specific contracts. Contracts are subject to delays, defaults or cancellations; changes in scope of services to be provided; and adjustments to costs. Backlog also may be affected by project delays or cancellations resulting from weather conditions, external market factors and economic factors beyond Everus’ control, among other things. Accordingly, there is no assurance that backlog will be realized. For the periods presented in the backlog table below, Everus did not experience any material impacts related to delays or cancellations of planned projects included in backlog. The timing of contract awards, duration of large new contracts and the mix of services can significantly affect backlog. Backlog at any point in time may not accurately represent revenue or net income realized in any period, and backlog as of the end of the year may not be indicative of revenue or net income expected to be realized in the following year. Backlog should not be relied upon as a stand-alone indicator of future results.

The following table provides estimated backlog as of the dates indicated and backlog that Everus reasonably estimates will be recognized within the next 12 months following Sept. 30, 2024:

 

 

Total backlog as

of September 30,

2024

 

Total backlog as

of December 31,

2023

 

Total backlog as

of September 30,

2023

 

(In millions)

Backlog:

 

 

 

 

 

 

Electrical & Mechanical

 

$

2,567.9

 

$

1,685.6

 

$

1,526.0

Transmission & Distribution

 

 

316.9

 

 

325.3

 

 

324.0

Total backlog

 

$

2,884.8

 

$

2,010.9

 

$

1,850.0

Capital Expenditures

 

 

2024 Estimated

 

 

(In millions)

Total capital expenditures

 

$

52

 

 

 

Note: Total capital expenditures is presented on a gross basis.

Everus Construction Group, Inc.

Non-GAAP Financial Measures

In addition to information prepared in accordance with GAAP, the company evaluates operating performance using the non-GAAP financial measures of organic revenue, organic revenue growth, EBITDA and EBITDA margin, including applicable measures by segment, and evaluates its liquidity using the non-GAAP financial measure of free cash flow. These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the company’s results as reported under GAAP. Because of these limitations, organic revenue, organic revenue growth, EBITDA, EBITDA margin and free cash flow should not be considered as replacements for revenues, net income, net income margin and cash provided by (used in) operating activities, the most comparable GAAP measures, respectively.

Contacts

Media Contact
Laura Lueder, director of communications, 701-221-6444

Investor Contact
Paul Bartolai, Vallum Advisors, 773-489-5692, investors@everus.com

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