MYR Group Reports Record Quarter, Closes $328M Valley Electric Deal
Despite a record backlog and margins, the stock sits 38% off its June high — the market is waiting for the next leg of the electrification cycle.
MYRG · Earnings Call · 2026-07-30
A Record Quarter, but a Drawdown in the Tape
MYR Group delivered a blowout second quarter: revenue of $1.08 billion, up 20% year-over-year, a record backlog of $3.16 billion, and a net income of $50 million. The company also closed its largest acquisition in history — Valley Electric and Comet Electric — for $328 million, cementing its push into commercial and industrial data-center work.
Yet the stock trades roughly 38% below its June 2026 peak of $501 per share, and the 90-day tape shows a sharp up-then-down pattern (up 53% over 9 weeks, then down 35% over 7 weeks). The market appears to be weighing near-term cash-flow headwinds and integration risk against the long runway of grid-modernization spending.
Our second quarter 2026 revenues were a record $1.08 billion, which represents an increase of $181 million or 20% compared to the same period last year.
The M&A Story: Valley & Comet Expand C&I Muscle
The July 1 closing of Valley Electric and Comet Electric was the quarter’s headline event. Management emphasized that the deals bring Valley and Comet into a business already strong in prefabrication and customer relationships. As Rick Swartz put it: “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.” — Richard Swartz, President and Chief Executive Officer · 2026-07-30
The prefab angle is more than a talking point — management has repeatedly cited prefabrication as a way to “take labor risk out of the field” and improve margins. The company’s operating margin rose to 6.5% in Q2, up from 4.1% a year ago — a direct result of better productivity and favorable job closeouts, not just volume.
Raised Guidance and a Fattening Backlog
The quarter also confirmed that the T&D segment is finally converting years of customer conversations into megaprojects. The company booked two Xcel transmission jobs worth over $200 million, along with a 500 kV substation project in Arizona, a 345 kV rebuild in Texas, and more. These wins helped push total backlog to a record $3.16 billion, up 20% year-over-year.
Importantly, management raised its margin profiles for the full year: C&I now targets 6%–9% operating margin (up from 5%–7.5%) and T&D 8%–11% (up from 7%–10.5%). But Rick was careful to temper expectations: “…nothing has changed with our kind of projections that we will be in the mid part of our projections for operating margins on the C&I of that 6% to 9%.” — Richard Swartz, President and Chief Executive Officer · 2026-07-30
The large-project pipeline extends well beyond 2027. “…good conversations going on with our clients… Those projects will really start at best case, the end of '27, but more likely '28 and beyond when you look at that 765 work.” — Richard Swartz, President and Chief Executive Officer · 2026-07-30 Management’s repeated emphasis on key markets — including data centers, advanced manufacturing, and transportation — suggests that diversification remains a strategic priority, even as electricity demand soars.
Cash Flow, Balance Sheet, and the Wait for a Catalyst
For all the growth, free cash flow was negative $26 million in the quarter due to tax-timing and project payment schedules. Kelly Huntington flagged that DSOs are near record lows, driven by favorable overbillings, and that they may rise into the low-50s over the next few quarters. That’s a modest near-term headwind — but the balance sheet remains pristine.
The company had $138 million in cash and $460 million of revolver availability before the deal, and after funding the acquisition it still holds a strong cash position with only 0.03x funded debt-to-EBITDA. Management remains committed to opportunistic buybacks, but the priority is clearly growth.
The market’s 38% drawdown suggests investors are skeptical that the current quarter’s margin expansion is sustainable, or they are bracing for the integration of Valley. Yet the prior quarters’ progress is real. As Rick noted in April: “I think when we look at our backlog margins, they were similar to what they were in the past, but we had less risk in our contracts.” — Richard Swartz, President and Chief Executive Officer · 2026-04-30 That risk reduction — through better terms and prefab — is the durable change. And the Xcel $200 million win was, as Rick said, “in our backlog… those projects did mature into contracts, and we were able to add them to our backlog during this quarter.” — Richard Swartz, President and Chief Executive Officer · 2026-07-30
The Bottom Line
MYR Group is executing on a secular tailwind — the electrification of everything from cars to data centers. Record results, a stepped-up M&A play, and a growing large-project pipeline all point to a multi-year growth story. The current stock price, down from its peak, may already discount the near-term integration and cash-flow friction. With the company guiding to 13–15% organic revenue growth for the year and margins at the high end of its ranges, the next few quarters will be the test of whether the market finally rewards the backlog.