Everus Construction Group, Inc.

Good morning. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to Everest 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Paul Bartolai. Everest Investor Relations. Please go ahead.

Thank you. Welcome to Everest Construction Group's fourth quarter 2024 results conference call. Leading the call today are CEO Jeff Seed 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.everest.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 a 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 Everest into a leading specialty construction solutions provider Through our dedicated focus on our people, execution, and customer relationships, the key pillars of our forever 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 four. 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 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, an increase of 38% from the end of the fourth quarter last year. Our backlog was consistent with the third quarter reflecting the strong fourth quarter revenue performance and typical seasonality and timing factors. Our year-over-year backlog growth highlights our deep customer relationships and our strong strategic positioning in markets that are benefiting from favorable secular demand drivers. Our current backlog remains at an extremely healthy level and provides us with good visibility into our near-term growth outlook. Based on our solid fourth quarter performance and our strict financial discipline, we ended the year with net leverage of one times, which is nicely below our long-term target. This gives us significant financial flexibility to continue executing on our strategic growth objectives. We are very pleased with our solid fourth quarter financial and operational results. And based on our backlog strength, favorable end market trends, and continued focus on execution, we expect strong momentum to continue into 2025. Based on these factors, we are providing 2025 financial guidance that calls for revenue to be in a range of 3 to 3.1 billion and EBITDA in a range of 210 to 225 million. Now, let me shift gears a bit and remind you of our forever strategy. which forms the foundation for our value creation framework and is detailed on slide five of today's presentation. I spent quite a bit of time describing our Forever Strategy last quarter, so I won't go into too much detail today. But as you can see, our Forever Strategy is focused on attracting, retaining, and training our most critical asset, our employees, creating value for our customers and shareholders, delivering safety and high-quality execution, and maintaining and growing our customer relationships. Our forever strategy is the basis for everything we do and is designed to deliver value creation through sustained profitable growth, operational excellence, and disciplined capital allocation. Our value creation framework is highlighted on slide six in today's presentation. We made important progress against these key pillars during 2024 and we remain committed to our framework as we look to drive value creation for our shareholders in the coming years. During 2024, we made key advancements on our growth priorities, as demonstrated by our year-end backlog growth of nearly 40%. Our long-term customer relationships and history of strong execution enabled us to take advantage of the favorable demand drivers in our key end markets, resulting in meaningful backlog growth and positioning us for continued momentum in 2025. Importantly, a key aspect of our growth strategy is to expand geographically through satellite projects. And during 2024, we continued to follow our long-term partners into new markets. This enabled us to further strengthen our key customer relationships and allows us to expand our reach. 2024 was a strong year. when we think about our operations. Execution is the second E in our forever strategy, and it is always an important priority. During 2024, we benefited from very strong execution on several projects, which resulted in excellent margin capture during the year. Despite lower full year revenue, we actually exceeded the midpoint of our EBIDOC guidance during 2024 due in large part to our strong project execution. Max will discuss our 2025 guidance in more detail. While we always strive for this level of execution, it is not the baseline assumption where we start the year. So while we work hard to repeat our performance during 2025, our guidance assumes a more normal level of project execution. During 2025, a key priority of our growth strategy will be strategic M&A. We will remain disciplined and look for the right deal But as we've discussed in prior presentations following our spinoff from MD Resources, a key opportunity is the ability to have full discretion over our free cash flow to ramp up investments in both organic and inorganic opportunities. Timing is difficult to predict, but we are excited to ramp up our M&A efforts. Our business benefits from an asset-light model that generates strong free cash flow conversion and enables us to execute on our capital allocation strategy. We have entered 2025 in a very attractive financial position with the net leverage well below our targeted one and a half to two times range, which allows us ample flexibility to execute on our growth strategy. As a reminder, our capital allocation strategy prioritize investments in organic growth, the pursuit of strategic acquisitions, and maintaining financial flexibility. Our full year 2024 CapEx increased from 2023, which reflects our desire to step up our investment in organic growth, and as I just covered, we are focused on ramping up our M&A efforts. We do not have a dividend policy or share repurchase authorization in place. However, we will work with our board to decide when those returns are prudent in the future. As a new standalone company with meaningful growth opportunities, we feel it's best to invest in ourselves to drive maximum shareholder value. As we highlight on slide seven of today's presentation, we expect our forever strategy to drive us toward a financial framework of compound annual revenue organic growth in a range of five to seven percent, which combined with our discipline focused on operational excellence will enable compound annual EBITDA growth of 7 to 9%. We remain committed to these targets and are confident that we are in a strong position to deliver on these promises. Before I turn it over to Max, I would like to spend just a few minutes discussing some key end market trends, especially given the new administration and some of the recent activity in the market. Overall, we continue to be encouraged by the demand drivers in our key end markets. When we look at our T&D business, the demand outlook remains favorable. Significant investments are needed by our customers to simply maintain reliability of the existing infrastructure, which is dated. The investment needed to modernize and update the grid is meaningful. When you combine that baseline investment with utilities needing to invest in meeting the projected load growth, expected in the coming years from factors such as EVs, the electrification of the industrial economy, and increased power needs coming from data centers, we see a very attractive market environment. These factors will not only benefit our T&D business, but also our E&M business, as the electrification of our economy and data center construction will continue to be growth drivers. There's clearly been a lot of noise that DeepSeq may impact the pace and magnitude of CapEx spending from domestic technology companies. We are in the early stages, and the potential impact from DeepSeq or any other emerging technologies remains to be seen. Industry participants in the data center space have recently made positive comments about their future CapEx plans. It did not signal any expected changes in their spending outlook. We will, of course, continue to work with our customers and closely monitor the situation, but we are not expecting any material changes in the pace of investments at this time. That said, an important driver of our success has been our ability to quickly pivot when we see market trends evolving. We benefit from a very diversified business, and there are several favorable market drivers benefiting our business beyond data centers, including high-tech reshoring, government and industrial projects, and infrastructure investments. We continuously monitor the market and adjust our resources as needed in order to drive growth and generate the highest return on our assets. We remain optimistic about our key end markets. There are several factors that we continue to closely monitor, including potential market impacts from the new administration in Washington. In general, we expect the administration to be positive for our industry given the pro-business strategy and the promise of fewer regulatory headwinds. However, there are factors such as tariffs, potentially higher inflation, and higher interest rates that could impact economic growth and therefore our business. We believe the favorable secular drivers will more than offset any potential headwinds, and we will remain diligent in managing our business and focusing on maximizing our resources. In summary, we are extremely excited about the opportunities in front of us as we begin our first full year as a standalone public company. We are in an excellent competitive position to take advantage of the favorable secular trends benefiting our end markets. We are in an advantageous financial position that provides opportunities to invest in growth. And we are committed to executing on our strategic framework and delivering value for all our key stakeholders. With that, I'll turn it over to Max.