Everus Construction Group: Leveraging Data Center Demand and Grid Modernization to Fuel EBITDA Growth and Margin Resilience

Everus Construction Group (NYSE: ECG) has emerged as a standout performer in the construction sector, driven by its strategic alignment with two of the most powerful industry tailwinds: the explosive demand for data center infrastructure and the accelerating need for grid modernization. The company's Q2 2025 earnings report, released on August 8, 2025, underscores its ability to capitalize on these trends, delivering robust revenue growth, margin expansion, and a compelling backlog that positions it for durable EBITDA expansion.

Data Center Demand Fuels E&M Segment Surge

The Electrical and Mechanical (E&M) segment, which accounts for 77% of Everus's total revenue, saw a staggering 41.6% year-over-year revenue increase to $713.6 million in Q2 2025. This growth was primarily driven by surging demand in the commercial sector, particularly for data center construction. As artificial intelligence, cloud computing, and digital transformation reshape global industries, hyperscale data centers have become a critical infrastructure need. Everus's E&M segment is uniquely positioned to benefit, with its expertise in complex electrical systems and scalable project execution.

The segment's EBITDA surged by 53.5% to $63.7 million, with margins expanding to 8.9% (up from 8.1% in 2024). This margin resilience, despite rising material and labor costs, highlights Everus's operational discipline and pricing power in a high-growth market. The E&M backlog now stands at $2.6 billion, a 23.9% increase year-over-year, with data center projects accounting for a significant portion of this pipeline.

Grid Modernization Drives T&D Margin Expansion

While the E&M segment steals the spotlight, Everus's Transmission and Distribution (T&D) segment is quietly transforming into a margin-accruing engine. T&D revenue grew 2.7% to $212.4 million in Q2 2025, modest compared to E&M's explosive growth, but the segment's EBITDA margin expanded by 200 basis points to 14.3%, the highest in the company's history. This margin improvement was driven by grid modernization projects, including undergrounding and utility infrastructure upgrades, which are becoming increasingly urgent as climate resilience and renewable energy integration demand more robust power networks.

The T&D backlog surged 49.9% year-over-year to $410.1 million, reflecting strong demand for utility infrastructure and transportation projects. Everus's CEO, Jeffrey Thiede, emphasized that the T&D segment is “aligned with long-term trends in grid modernization and high-tech reshoring,” which are expected to drive sustained demand. The segment's ability to maintain high margins despite modest revenue growth underscores its operational efficiency and strategic focus on high-margin submarkets like traffic signalization and underground infrastructure.

Financial Strength and Guidance Revisions Signal Confidence

Everus's financial position is a testament to its disciplined capital allocation. The company's net leverage ratio improved to 0.8x as of June 30, 2025, down from 1.0x in December 2024, while unrestricted cash and equivalents reached $64.5 million. Operating cash flows for the first half of 2025 totaled $32.5 million, a 754% increase compared to $3.7 million in the same period in 2024. These metrics highlight Everus's ability to fund growth without overleveraging, a critical advantage in a capital-intensive industry.

The company raised its full-year 2025 guidance to $3.3–$3.4 billion in revenue and $240–$255 million in EBITDA, reflecting confidence in its backlog and market positioning. This represents a 10% increase in revenue guidance and a 14% increase in EBITDA guidance compared to its previous targets. The revised outlook is particularly compelling given the broader construction sector's struggles with inflation and supply chain disruptions.

Investment Implications: A Dual-Engine Growth Story

Everus Construction Group's dual focus on data center infrastructure and grid modernization creates a unique growth flywheel. The E&M segment's high-growth trajectory ensures top-line momentum, while the T&D segment's margin resilience provides a buffer against macroeconomic volatility. This duality is rare in the construction sector, where companies often specialize in one vertical.

For investors, Everus's stock offers an attractive combination of growth and stability. With a P/E ratio of 12.5x (as of August 2025) and a forward EBITDA margin of 9.1%, the company is undervalued relative to its peers. The recent guidance revisions and backlog growth further justify a premium valuation, particularly as the U.S. infrastructure bill and private-sector investments in AI infrastructure continue to fuel demand.

Conclusion: A Strategic Play on Industry Tailwinds

Everus Construction Group is not just riding the wave of industry trends—it is shaping them. By leveraging its expertise in data center construction and grid modernization, the company is building a durable moat around its EBITDA growth and margin resilience. For investors seeking exposure to the infrastructure boom without the volatility of tech stocks, Everus offers a compelling, well-balanced opportunity. With a strong backlog, improving margins, and a clear line of sight to 2025's full-year targets, the stock is well-positioned for continued outperformance.

Investment Recommendation: Buy. Everus's strategic alignment with high-growth markets, coupled with its financial discipline and margin expansion, makes it a top-tier construction stock for long-term investors.