Everus Construction Group, Inc.(ECG) - 2024 Q3 - Quarterly Report

Company Overview - Everus Construction Group operates under two segments: Electrical & Mechanical and Transmission & Distribution, focusing on diverse end markets across the U.S.[171] - The Separation from MDU Resources was completed on October 31, 2024, resulting in Everus becoming an independent publicly traded company listed under the symbol "ECG" on the NYSE[190]. - The Distribution involved transferring 50,972,059 shares of Everus common stock to MDU Resources stockholders at a ratio of one share of Everus for every four shares of MDU Resources[189]. Financial Performance - Operating revenues for Q3 2024 were $761.0 million, a 6.1$717.4 million in Q3 2023[200]. - E&M revenues grew by $20.0 million, or 3.9$24.0 million, or 11.7%[200]. - Operating income for Q3 2024 was $53.7 million, a 7.2$50.1 million in Q3 2023[210]. - Net income for Q3 2024 was $41.8 million, a 16.1$36.0 million in Q3 2023[199]. - Operating revenues for the nine months ended September 30, 2024, were $2,090.0 million, a decrease of 5.8$2,218.7 million in the same period of 2023[215]. - Selling, general and administrative expenses for the nine months ended September 30, 2024, were $109.3 million, an increase of 6.6$102.5 million in the same period of 2023[220]. - Income from equity method investments for the nine months ended September 30, 2024, was $7.8 million, a 62.5$4.8 million in the same period of 2023[226]. - Income taxes for the nine months ended September 30, 2024, were $37.6 million, a 14.6$32.8 million in the same period of 2023[225]. - EBITDA for the nine months ended September 30, 2024, was $173.9 million, up from$164.4 million in the same period of 2023, reflecting an increase of 5.7%[255]. - Free cash flow for the nine months ended September 30, 2024, was $57.8 million, compared to$45.5 million for the same period in 2023, an increase of 27.0%[260]. - Cash provided by operating activities totaled $82.7 million for the nine months ended September 30, 2024, an increase of$21.3 million from $61.4 million in the same period of 2023[272]. - Cash used in investing activities increased to$25.5 million for the nine months ended September 30, 2024, from $16.4 million in the same period of 2023, a rise of 55.5$58.2 million for the nine months ended September 30, 2024, compared to $46.5 million in the same period of 2023, an increase of 25.0$536.9 million, a 3.9% increase from 516.9 million in Q3 2023[228]. - Transmission & Distribution (T&D) segment revenues for Q3 2024 were 228.5 million, an 11.7% increase from 204.5 million in Q3 2023[231]. - E&M segment operating income for Q3 2024 was 34.9 million, a 12.2% increase from 31.1 million in Q3 2023[233]. - T&D segment operating income for Q3 2024 was 25.3 million, a 10.0% increase from 23.0 million in Q3 2023[234]. - E&M segment revenues for the nine months ended September 30, 2024, were 1,481.7 million, an 11.8% decrease from 1,680.2 million in the same period of 2023[237]. - T&D segment revenues for the nine months ended September 30, 2024, were 623.8 million, a 13.5% increase from 549.5 million in the same period of 2023[240]. - E&M segment operating income for the nine months ended September 30, 2024, was 100.8 million, a slight increase of 0.5% from 100.3 million in the same period of 2023[242]. - T&D segment operating income for the nine months ended September 30, 2024, was 60.1 million, an increase of 17.2% from $51.3 million in the same period of 2023[243]. Market Conditions and Opportunities - The U.S. construction services industry is highly fragmented, with competition influenced by technical expertise, service pricing, and operational resources[176]. - The American Rescue Plan provides$1.9 trillion in COVID-19 relief funding, which may positively impact infrastructure projects relevant to Everus[184]. - The Infrastructure Investment and Jobs Act and the Inflation Reduction Act are expected to provide long-term opportunities for investments in electric and grid infrastructure, benefiting Everus[184]. - Everus has a backlog indicating ongoing bidding opportunities in specialty contracting markets, despite competitive bidding conditions[185]. - The company is monitoring legislative initiatives that could impact its operations and market opportunities, particularly in renewable energy and electric vehicle infrastructure[184]. Cost and Risk Management - The company anticipates continued increases in insurance costs due to economic inflation and rising losses in the insurance industry, particularly related to wildfire risks[174]. - Everus is focused on growing total revenues, expanding margins, and managing costs to increase operating income despite rising insurance costs[175]. - Inflation has increased costs, particularly in labor and transportation, but the company has not seen a material effect on its financial results[296]. - Labor costs may increase due to competitive market pressures and union negotiations, potentially affecting financial results[297][298]. - The company has a capacity to incur indebtedness of up to $525.0 million under a new credit agreement, which includes$300.0 million in term loans and a $225.0 million revolving credit facility[263]. - As of September 30, 2024, the fixed maximum amounts guaranteed under certain contracts aggregated to$557.5 million, up from $341.4 million as of December 31, 2023[285]. - The fixed maximum amounts guaranteed under letters of credit were$2.2 million as of September 30, 2024, compared to $0.2 million as of December 31, 2023[286]. - The company has issued guarantees related to routine purchases and lease obligations, with no fixed maximum amounts specified[287]. - The company does not have any other material financial guarantees or off-balance sheet arrangements beyond those disclosed[288]. - The company is exposed to interest rate risk due to a five-year senior secured credit agreement, which includes term loans and a revolving credit facility[295].