Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Everus Construction Group Fourth Quarter Earnings Call. All lines have been placed in mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Paul Bartolai, Everus Investor Relations. Please go ahead.

Thank you. Welcome to Everus Construction Group’s fourth quarter 2024 results conference call. Leading the call today are CEO, Jeff Thiede; and CFO, Max Marcy. We issued a news release yesterday detailing our fourth quarter and full year 2024 operational and financial results. This release together with the accompanying presentation materials are publicly available on our website at investors.everus.com. I would like to remind you that management’s commentary and responses to questions on today’s conference call may include forward-looking statements, which by their nature are uncertain and outside of the company’s control. Although these forward-looking statements are based on management’s current expectations and beliefs, actual results could differ materially. For discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the news release issued yesterday and in the appendix of today’s presentation. Today’s call will begin with prepared remarks from Jeff, who will provide a review of our recent business performance, followed by a financial update from Max. At the conclusion of these prepared remarks, we will open the line for your questions. With that, I’ll turn the call over to Jeff.

Thank you, Paul, and good morning to everyone joining us on the call today. We are very excited to be here with you all today as we report our fourth quarter and our full year 2024 results, which wraps up a transformational year in our company’s history, highlighted by our spinoff from MDU Resources that was completed at the end of October. Over the past 28 years, we have built Everus into a leading specialty construction solutions provider. Through our dedicated focus on our people, execution and customer relationships, the key pillars of our 4EVER strategy, we have developed strong competitive positions in a wide range of diversified end markets. We have demonstrated a history of delivering consistent, attractive financial results, and based on the favorable demand trends benefiting many of our key end markets, combined with our disciplined execution of our strategic framework, we look forward to further building on our track record of success. With that, let’s begin with our fourth quarter performance, which we highlight on Slide 4. We generated solid fourth quarter results, highlighted by strong revenue growth, consistent project execution, continued financial discipline and strong backlog, positioning us for continued positive momentum in 2025. Our fourth quarter revenue increased 20%, driven by balanced growth across our diversified end markets, driven by commercial data center growth, institutional and utility. Our Electrical and Mechanical revenues increased 21%, while our Transmission and Distribution revenues grew 15%. Our fourth quarter EBITDA remained relatively flat, as higher revenues were largely offset by incremental public company stand-up costs. As Max will discuss in more detail, while our consolidated fourth quarter EBITDA was essentially flat from last year due to dis-synergy costs, our segment EBITDA showed strong year-over-year growth. Our total backlog at the end of the fourth quarter was $2.8 billion,…

Thank you, Jeff, and good morning, everyone. I will provide additional details on the quarter, give an update on our liquidity and balance sheet, and wrap up with some additional details on our guidance. Beginning on Slide 9 in today’s presentation, net revenue for the fourth quarter of 2024 was $760 million, an increase of 19.5% compared to the same period last year. The increase in revenue during the quarter was driven by E&M revenues increasing 21% and T&D revenues increasing 15%. The growth was highlighted by our E&M commercial market, led by the data center sub-market, and momentum in our T&D utility end market, led by the storm, underground and substation sub-markets. Total EBITDA was $58 million during the fourth quarter, a modest increase from the same period last year that was driven by solid revenue growth and increased income from joint ventures, largely offset by incremental public company stand-up costs of $6.3 million during the fourth quarter. This resulted in fourth quarter EBITDA margins of 7.7%, down 150 basis points from last year. As for our full year 2024 results, net revenue was $2.85 billion, on par with last year. E&M revenues softened 5%, while T&D revenues rose 14%. The E&M segment saw increased revenue growth in the back half of the year, particularly in the data center sub-market. The T&D segment continued its momentum throughout the year. The T&D utility end market was led by the transmission, distribution and substation sub-markets. The T&D transportation end market saw increases in traffic signalization and street lighting sub-markets. Total EBITDA was $232 million in the 2024 fiscal year, up from $223 million last year. The increase in EBITDA was driven by increased income from joint ventures and solid project execution, partially offset by higher selling, general and administrative expenses. EBITDA…

Thank you. [Operator Instructions] Thank you. Your first question comes from the line of Brent Thelman with D.A. Davidson Companies. Please go ahead.

Hey. Thanks. Good morning, Jeff, Max. I guess…

Hi, Brent.

Hey. Good morning. Just my question would be maybe digging a little more into how you approach the revenue guidance for 2025. Are there areas of the business that you won’t typically embed into that forecast? And then, I guess, just trying to get a sense, Max, you talked about longer kind of backlog conversion and then the past. Are there any figures you can provide around that just in terms of your mix of larger, longer duration projects today, maybe versus a few years ago? Thank you.

Yeah. Brent, this is Jeff. I’ll start with the answer and then turn it over to Max for additional comments. As we built our company up and trained our people and cross-trained our people, we’ve been able to build large, complex projects. We’ve got more projects that are large. And so with those large projects that we get involved with the owner and the general contractor early on our E&M side, we are able to plan, procure materials, and because those jobs are so complex, they are taking longer to build because they’re big. And so we like that area and market, especially in the data centers or hospitality or even industrial and we’ll continue to be able to look where our resources match the needs of our customers and build upon our success with large, complex projects with a very qualified workforce.

Yeah. And Brent, in terms of what the numbers are, I mean, I don’t think we’re going to give any numbers today on what that looks like from a burn percentage, but it can be upwards of 10 points different from what it has been in the past. So I just think as these jobs are big and a lot of them are getting started now, they just take longer to get completed. So I think that’s as much as we can comment on the burn.

Got it. Okay. I’ll get back in queue. Thanks, guys.

Thanks, Brent.

Your next question comes from the line of Brian Brophy with Stifel. Please feel ahead.

Yeah. Thanks. Good morning, everybody. Curious the latest you’re seeing from a project pipeline perspective here and how you’re thinking about backlog trends, given what you’re seeing on the pipeline side?

Yeah. We still see strong demand for our services in the commercial area, which includes data centers, which is a large part of our backlog. Also in hospitality, which is in commercial market, steady growth there and so we’re looking at similar workloads in 2025 that we saw in 2024. You take a look at our industrial market and also our institutional markets, we’re seeing some more water projects, we’re seeing manufacturing of battery plants and that complements our T&D work, which, of course, high demand for transmission and distribution and substation were things that we do very, very well. So power, gas communications, and also undergrounding of utilities is a strong part of our business. It lines up with our capabilities. And based upon what we’re hearing from our customers and what we’re reading as far as market trends, we’re very much aligned for doing that work and growing our business.

That’s helpful. And then I guess on the backlog, obviously, there was a little bit of slowdown sequentially, new awards slowed as well. Any comments on some of the drivers here and is this a reflection of any sort of changing demand environment at this point?

And I think what you see, if you’re talking about the third quarter backlog versus fourth quarter, that’s really timing. We got some of those projects secured in the third quarter. It’s always better to get those commitments earlier than later. So I think it’s mostly timing. And if you look at year-over-year from the end of last year to the prior year, it’s up 38%. So we do see momentum and demand for our services. As far as mix, it’s fairly consistent with what we had over prior recent periods.

Okay. And then one, I guess, on corporate expenses, they were a little bit higher than we were expecting this quarter, the fourth quarter, even including the $6 million of dis-synergies that you touched on. Is there anything that’s more of one-time in there, and I guess, how should we think about corporate expenses going forward?

Yeah. This is Max. So nothing really one-time. I mean, we do have some timing of things like our audit fee for the year had to all be paid in the last two months of the year. But nothing really one-time. I mean, right, we’re just kind of building our corporate teams here. We’re standing ourselves up. So I mean, we still feel really good about that $28 million number for the full year. And other than that, the audit fee, nothing really one-time. Just some timing, maybe some contracts we sign as a new public company. But I think all that would be included in our $28 million number for a full year basis.

Okay. That’s helpful. And then…

Yeah. Just to say you can’t really take the $6.3 million divided by 2 [ph] and extrapolate that, right?

Okay. And then I guess just one more for me, excluding dis-synergies, it appears that the midpoint of the EBITDA margin guide is down about 30 basis points from 2024. I guess, can you talk about what is driving that?

Yeah. We took a very close look at backlog -- timing of our backlog and also taking a look at 2025 versus 2024. So we are looking to continue to build upon our year that we had in 2024 and took a very thorough look at what those numbers look like for us and landed where we did on our guidance.

Yeah. I think we -- Jeff and I both touched on it during our portions of the script, right? I think we had really good execution in 2024 and in the fourth quarter as well. And I think, we’re assuming more normal kind of execution based on where we’re holding our backlog on the 2025 fiscal year. But your numbers are correct.

Okay. Appreciate it. Thank you. I’ll pass it on.

Thank you.

Thank you.

Your next question comes from the line of Ian Zaffino with Oppenheimer. Please go ahead.

Hi. Great. Thank you. As far as the backlog taking longer, are we still kind of at the 75% delivered over the next 12 months and what would be your assumptions for kind of the non-backlog business? So like the book and burn, the MSAs year-over-year so? Thanks.

Yeah. So as I mentioned earlier, the average project size is getting slightly larger and our ability to handle those projects and get on board early with our customers is really adjusting or changing slightly the backlog burn as those projects are larger, more complex and longer. That has changed in the mix of all of our work, which is fairly diversified. As far as MSA work, the non-backlog work, still very strong for our business. We’ve got dozens of MSAs. And you take a look at the work that we do for our utility customers and the forecast and our ability to be able to continue building projects for them, especially with the customers that we have relationships with for 20 years and 30 years. So we’ll continue to be able to leverage our performance through our execution and strengthen those relationships and build that backlog and continue to diversify our business.

Oh! Okay. So, I guess, the way I’m looking at it is, I’m using like the 75% and adding a $1 billion or so for the non-backlog. I’m getting higher than where you guys are, but regardless. Maybe we shift to M&A. What are you thinking on the M&A side? How large? What do you need? Is it people? Is it trucks? Is it tools? What is it? And then as you invest on the prefab side, when do we expect to see sort of the benefits of the investment in the prefab side? Thanks.

Okay. Great questions. I’ll start, and yeah, I have Max add to my comments. So on the M&A side, we’re really excited about that. We’ve got the financial capabilities to have a disciplined M&A approach. We’re going to look for companies. We are looking for companies that have high integrity and get their work, not price-based and really based upon overall value and relationships, looking for companies that have strong leadership and a very strong culture of safety. We’re also looking for the geographic expansion in both our T&D and E&M segments. So M&A is something that we’re very excited about and we’ve got a strategy and approach to that. As far as prefab, we have expanded our prefab facilities and we are leveraging our prefab. Our customers care about what we do in prefabrication because it helps reduce congestion on the projects. That’s good for us. That’s good for the other sub-trades on the project. So we’ll continue to grow our capabilities and provide that capital support and that is part of our plan in 2025 and beyond. Max?

Yeah. So from a size, I think is your question-- part of your question there, and I mean, the reality is we’re at 1 times net leverage today and I think we’ve been pretty public about where our leverage targets are. So a turn of EBITDA still gives us -- keeps us within those long-term targets, right? Then you look at the cash flow that we spit out this year, over $100 million of free cash flow. You can kind of see the magnitude of what we could accomplish and still be within our long-term goals. From the CapEx side, again, we want to continue to invest in as we grow our fleet and vehicles, bucket trucks, dirt diggers, right? So, I mean, all these things help us be more efficient and effective for the long-term. From a prefab perspective, when is that going to really show on the results? I mean, this is a multiyear thing, right? The goal is to continue to build more and more prefab facilities closer to some of these larger projects and as those get completed and we’re very efficient and execute well on those projects with those prefab facilities, they start to show up in the results. So it’s more of a multiyear opportunity for us and then it should continue to expand as we continue to add those.

Okay. Thank you very much.

Thanks, Ian.

Your next question comes from the line of Chris Senyek with Wolfe Research. Please go ahead.

Yeah. Hi, guys. Good morning. Quick question…

Good morning.

… Max on the dis-synergies cost of $28 million, kind of using that as a run rate. Is that something that we should just expect to continue as we look at modeling some of the outer years or do you expect there to be some type of synergies that develop over time where that number might fall and maybe even if there’s duplicate costs right now with TSAs going on at the same time that you’re trying to build stuff out yourself, how should we be thinking about that?

Yeah. Fair question. I think what we’re really looking at is that’s more kind of our stand-up cost that stays around. Again, I don’t know what happens with insurance markets as we’ve talked about. Standalone insurance is probably the biggest component of all that. So, I’m not sure what happens with insurance costs. Hopefully, we continue to do better, get ourselves as a player in the market and hope to do better on that. But I -- given where we’re at in the world and what’s transpired in even the last several months, I don’t know if insurance is going to be going down anytime in the future. In terms of the rest of the costs, the reality is we’re kind of building this corporate team, right? And until we can make sure we have the mass and the right people in the right places, I don’t think we’re looking at cutting some of those costs as we go forward. You specifically talked about the service agreements, TSA, right? I mean, I think, we actually have it pretty well planned whereas the TSA tails off, we’re adding people full-time. So, I don’t think there’s a big opportunity for savings there. But, I mean, yes, the reality is we want to do the most with the available labor and the available people. But the reality is, we want to make sure we’re servicing and supporting and growing. And as we grow and become a larger and larger company, you might have to add another incremental corporate position three years, four years down the road, right? So, I would model it as that is kind of in there as a $28 million a run rate. And then as we get bigger, that should become a smaller and smaller percentage of our revenue.

Okay. Great. Thank you.

Thanks, Chris.

Your next question comes from the line of Chris Ellinghaus with Siebert Williams Shank. Please go ahead.

Hey, guys. How are you?

Hi, Chris. Doing fine.

Jeff, you did a good job of sort of walking through the new administration. I wanted to get some thoughts. I would agree it seems like, if anything, the data center, CapEx, has really just ballooned. But on the downside, what are your thoughts of areas where you might have some concerns, like maybe renewables or battery storage or something along those lines? Have you got any thoughts there?

We’re paying very close attention to that and especially with our customers listening to what their plans are. I think it’s early since the election and to see where those will play out. Renewables is a small part of our business, but it’s actually up this past year. So, in that diversification strategy that we have for our business, we’re going to be able to pivot and capture market center increasing and also redeploy our cross-trained people from markets that have maybe cooled off. So, we have some concern over tariffs, but we’re watching that closely. Is -- it looks a little bit like what COVID brought to us, and we mitigated our risk and our customers’ risk by being very close to our suppliers and spending more time evaluating procurement, providing alternative products and solutions to be able to stay on schedule. We actually, in COVID year 2020, we had a record year. So, we’ll continue to be anticipatory, mitigate the risks and communicate with our customers on the T&D and E&M side to avoid any sort of impacts that we have for our business and to our customers’ business.

Okay. You touched on this a little bit, but I’m kind of curious on a couple levels. We just had the big wildfire disaster in California. Are you seeing geographically broader undergrounding, I don’t know what the right word is, momentum from some of your T&D customers and also some of the data centers are fairly remote. Are you seeing undergrounding becoming a feature of the data center design for their interconnections?

Yeah. Let’s talk about the California wildfires first. And we were honored to be able to answer the call from our utility customers and provide restoration and repair of services. So, we’ve got businesses in Southern California. We do primarily underground work and we deployed many crews over to help those in need. So, undergrounding has been a big part of our business on the T&D side. We’ve been doing it for decades. So, we do see a continued trend for more undergrounding work from our customers. As far as the data center side, haven’t really seen much on the undergrounding changes from what is designed as far as getting services over to primarily electric to our customers. So, don’t know about any changes on the data center side. But certainly, with the risk there, I believe our customers are looking at that as an option. There’s a cost element to it, Chris, as you know, and I think, we’ll be involved with providing those constructability reviews as we get on board early with these projects and look at best methods and best opportunities to be able to provide the customers what they need.

Okay. Lastly, you sort of touched on this very briefly about storm restoration work in the fourth quarter. Obviously, there was some California work recently, but it was a pretty stormy fourth quarter. Can you give us any kind of color on what storm restoration work in the fourth quarter looked like year over year or was it a particularly high margin quarter for you?

Yeah. Typically, we don’t give the detail on our storm work. Again, we’re available to go do the recovery work and storm work. So, California I mentioned earlier, but also some of the other related weather work. It’s important for our business. It’s more important that we’re able to help those in need to be able to restore and repair and get them back on their feet. So, don’t go to that level of detail, we do that work and we don’t necessarily plan for that because we can’t predict the nature and the weather. So, the storm work is something that we’re honored to do to help and answer the call to our utility customers.

I get it. It’s difficult to sort of plan for storm and restoration work in general. But given the outlook for wildfire proclivity, let’s say, and storm activity, sort of expecting to gain momentum over time, is that an area where you’d like to have more resources available?

Yeah. We definitely want to be able to respond to our customers and to be able to help out and get those services back in place. So, we’ve got the capital necessary to be able to build up our equipment and our people. So, yes, we want to be able to help those in need and we look for the readiness for our crews and our equipment to be able to do any of that work going forward. The most recent storm work or storm that we had in the East, we didn’t have a lot of storm work associated with that. Just typical type of weather conditions, type of snow, drier snow versus ice that could tear down lines and poles. So, we’ve got a good plan to be able to deploy quickly. And when you think about margin too, we’re taking crews away from our fixed price at MSA work. So, there could be some trade-off there. So, I just want to emphasize that we’re pleased to go do the work. It takes us off of our plan of doing our normal work and when we get back to our regular work, we’re back to our core of what we do.

Got you. Thanks so much. Appreciate the details, Jeff.

Thanks, Chris.

Thank you, Chris.

Your next question comes from the line of Brent Thelman with D.A. Davidson Companies. Please go ahead.

Thanks, guys. Hey, Jeff. I mean, if I look at the business over the last number of years, you’ve had a book -- positive book to burn or at least 1 times or greater. As you think about everything that’s happening in your end markets and the pipeline over the course of 2025, is there any reason to think your book-to-bill would be less than 1 times or your bookings can’t grow this year again with all the activity in the space?

Yeah. I think there’s a lot of optimism on our side as far as the work that we have in our backlog, our ability to be able to execute that work and also the backlog work. So a lot of excitement in the economy and I think we’re -- we see some enthusiasm and optimism on our side of the and look forward to be able to be able to beat those expectations.

Yeah. And maybe just one more from a seasonality perspective, is there something different to the cadence and revenue you’re expecting this year, maybe versus just looking at it in the past, because you’ve talked about these large projects and the timing of this. I don’t know if this is a more backend loaded than usual type of year, but if you could just comment on that, that’d be great.

Yeah. With most of our work in our E&M segment, we are not as affected by weather as we could be in our T&D and work year round with both segments and have had some impact with weather, but usually not that impacted overall by weather, especially when those projects are planned in those particular regions in accordance with weather patterns.

Thanks, guys.

As there are no further questions at this time, that concludes today’s Q&A session. I would now like to turn the call over to Jeff Thiede for closing remarks.

Thank you, Operator. And thank you all again for joining us today. We are very excited about the opportunities ahead for Everus. We are scaled for success and we’re built for growth. And we are confident that we are well positioned to create long-term value as a standalone public company. We’ve enjoyed the opportunity to meet with many of you over the last few months since our spin and we look forward to continuing the conversation in the coming quarters. Thank you for your time and interest in Everus and this concludes today’s call.

That concludes today’s meeting. Thank you for your participation. You may now disconnect.