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01/10 17:10
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company showed strong financial performance with increased revenue, improved margins, and a return to profitability. The backlog growth and new data center project award highlight future opportunities. Despite some concerns about labor costs and project inefficiencies, the overall sentiment is positive, supported by strong cash flow and a disciplined approach to capital allocation. The Q&A section revealed no major risks or uncertainties, and the company's strategic focus on MSAs and organic growth is promising. Given the market cap, the stock price is likely to see a positive movement of 2% to 8%.
Second quarter 2025 revenues $900 million, an increase of $71 million or 8.6% compared to the same period last year. The increase was driven by strong market presence and operational consistency.
T&D revenues $506 million, an increase of 10% compared to the same period last year. Distribution revenues increased by $25 million and Transmission revenues increased by $23 million. The increase was due to work performed under master service agreements, which represented approximately 60% of T&D revenues.
C&I revenues $394 million, an increase of 6% compared to the same period last year. The increase was primarily due to an increase in revenue on fixed price contracts.
Gross margin 11.5% for the second quarter of 2025 compared to 4.9% for the same period last year. The increase was primarily due to the second quarter of 2024 being negatively impacted by certain T&D clean energy projects and a C&I project. In 2025, gross margin was positively impacted by better-than-anticipated productivity and a favorable job closeout, partially offset by higher costs related to labor and project inefficiencies.
T&D operating income margin 8% for the second quarter of 2025 compared to an operating loss margin of 1.8% for the same period last year. The increase was due to better-than-anticipated productivity on certain projects and the absence of negative impacts from clean energy projects in 2024, partially offset by higher costs related to labor and project inefficiencies.
C&I operating income margin 5.6% for the second quarter of 2025 compared to 0.4% for the same period last year. The increase was due to higher gross margin, better-than-anticipated productivity, and a favorable job closeout, partially offset by higher costs related to labor and project inefficiencies.
SG&A expenses $63 million, an increase of approximately $2 million compared to the same period last year. The increase was due to higher employee incentive compensation costs and employee-related expenses to support future growth, partially offset by the absence of $5 million of contingent compensation expense recognized in 2024.
Net income $27 million compared to a net loss of $15 million for the same period last year. Net income per diluted share was $1.70 compared to negative $0.91 for the same period last year. The increase was primarily due to higher gross margins and better project execution.
EBITDA $56 million compared to negative $5 million for the same period last year. The increase was driven by higher net income and improved operational performance.
Total backlog $2.64 billion as of June 30, 2025, 4% higher than a year ago. The backlog consisted of $927 million for the T&D segment and $1.72 billion for the C&I segment.
Operating cash flow $33 million compared to $23 million for the same period last year. The increase was primarily due to higher net income.
Free cash flow $12 million compared to $3 million for the same period last year. The increase reflected higher operating cash flow, partially offset by higher capital expenditures.
5-year design, build electric distribution master service agreement with Xcel Energy: Anticipated revenues to be in excess of $500 million over the 5-year period, effective through 2029, with construction projects estimated to begin in early 2026.
Phase 1 of a large-scale data center project in Colorado: Valued at over $90 million, contractually awarded and added to backlog.
Expansion in T&D and C&I segments: Awarded several master service agreements and additional projects in core markets, strengthening market position in the U.S. and Canada.
Growth in nonresidential construction spending: U.S. nonresidential construction spending increased by 3.9% from February 2024 to February 2025, with significant growth in educational (6.7%) and manufacturing (4.8%) sectors.
Revenue growth: Second quarter 2025 revenues were $900 million, an 8.6% increase compared to the same period last year.
Improved gross margin: Gross margin increased to 11.5% from 4.9% in the same period last year, driven by better productivity and favorable job closeouts.
Backlog growth: Total backlog as of June 30, 2025, was $2.64 billion, a 4% increase from the previous year.
Share repurchase program: Board authorized a new $75 million share repurchase program, replacing the prior program and expiring in February 2026.
Focus on electrification and infrastructure: Strategically pursuing opportunities in grid modernization and increasing electrification demand, supported by projected $1.4 trillion investments in the U.S. power sector from 2025 to 2030.
Labor and Project Inefficiencies: Higher costs related to labor and project inefficiencies were noted, which could impact profitability and operational efficiency.
Unfavorable Change Orders: Unfavorable change orders have been highlighted as a challenge, potentially leading to increased costs and project delays.
Economic Uncertainty: Lingering economic questions were mentioned, which could affect bidding activity and overall market conditions for the Commercial and Industrial segment.
Increased Employee Costs: Rising employee incentive compensation costs and employee-related expenses to support future growth were noted, which could strain financial resources.
Regulatory and Market Dynamics: The need to adapt to dynamic energy market conditions and regulatory changes was emphasized, posing strategic execution risks.
Future Revenue Projections: Anticipated revenues from a 5-year design, build electric distribution master service agreement with Xcel Energy are expected to exceed $500 million, with construction projects beginning in early 2026.
Market Growth Expectations: Deloitte Research forecasts $1.4 trillion in U.S. power sector capital investments from 2025 to 2030, with similar expenditures expected until 2050. Power demand is projected to increase by 10% to 17% from 2024 levels by 2030.
Segment-Specific Growth: The Commercial and Industrial (C&I) segment anticipates growth in nonresidential construction spending, including a 6.7% increase in educational construction and a 4.8% increase in manufacturing construction from February 2024 to February 2025. Data centers are expected to significantly contribute to growth.
Backlog and Future Work: Total backlog as of June 30, 2025, is $2.64 billion, with $927 million for the Transmission and Distribution (T&D) segment and $1.72 billion for the C&I segment. This includes a large-scale data center project in Colorado valued at over $90 million.
Share Repurchase Program: Our Board of Directors authorized a new $75 million share repurchase program, which replaces our prior repurchase program. The new program will expire on February 4, 2026 or when the authorized funds are exhausted, whichever is earlier.
The earnings call summary presents a mixed picture. Financial performance shows stability but lacks growth indicators. The Q&A reveals uncertainties about gas supply and hedging, with unclear management responses. Positive factors include a strong cash position, deleveraging efforts, and stable production. However, no significant new partnerships or guidance improvements were announced. The market cap indicates moderate sensitivity to news. Overall, the sentiment is neutral as the company maintains stability without clear catalysts for significant stock price movement.
The earnings call reveals strong financial performance with record net income and EBITDA, and robust operating cash flow. The backlog is healthy, and there is a positive outlook for revenue growth across segments. While there are concerns about labor shortages, the company is strategically focusing on growth and acquisitions. The Q&A indicates confidence in future growth, particularly in the C&I and T&D segments, despite some vague responses. Given the company's market cap, these positive factors suggest a stock price increase between 2% to 8%.
The company showed strong financial performance with increased revenue, improved margins, and a return to profitability. The backlog growth and new data center project award highlight future opportunities. Despite some concerns about labor costs and project inefficiencies, the overall sentiment is positive, supported by strong cash flow and a disciplined approach to capital allocation. The Q&A section revealed no major risks or uncertainties, and the company's strategic focus on MSAs and organic growth is promising. Given the market cap, the stock price is likely to see a positive movement of 2% to 8%.
The earnings call reveals a mixed financial performance with a slight revenue increase and improved margins. The share repurchase program and positive cash flow are favorable. Despite some concerns about project execution risks and potential tariff impacts, the overall sentiment is positive due to strong backlog growth, improved net income, and a positive future outlook. The market cap suggests moderate volatility, leaning towards a positive reaction due to the optimistic guidance and shareholder return plan.
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