Everus Construction: Riding the Data Center and Grid Modernization Wave to Dominance

The construction sector is rarely seen as a growth darling, but Everus Construction Group (ECG) is defying expectations with a record-breaking Q1 2025 performance. The company’s $3.1 billion backlog and 47% revenue surge in its Electrical & Mechanical (E&M) segment—driven by data center and high-tech infrastructure projects—paint a compelling picture of a company positioned to capitalize on two of the most powerful secular trends in U.S. infrastructure: tech reshoring and grid modernization. While near-term margin pressures are undeniable, the structural tailwinds here are too strong to ignore. This is a stock primed to outperform peers over the next decade.

Q1 2025: A Catalyst for Long-Term Growth

Everus’ first-quarter results were nothing short of stellar. Total revenue soared 32.1% year-over-year to $826.6 million, with the E&M segment—the core of its data center and tech infrastructure work—dominating with a 47% revenue spike to $648.2 million. This segment’s net income jumped to $36.6 million, fueled by expanded workloads in data centers, hospitality, and high-tech reshoring projects. The company’s record $3.1 billion backlog (up 40.5% from Q1 2024) underscores its ability to secure long-term, high-margin contracts, with 92% of projects locked in fixed-price agreements.

The T&D segment, which focuses on utility infrastructure, saw a modest 1.9% revenue decline due to weather-related delays, but its backlog grew 29.1% sequentially to $353.1 million, signaling pent-up demand for grid modernization projects. CEO Jeffrey Thiede emphasized that the company’s “4EVER strategy”—prioritizing backlog development, customer relationships, and operational excellence—is driving sustainable momentum.

Why the Data Center and Grid Tailwinds Matter

The U.S. is in the midst of a structural shift toward tech reshoring and grid modernization, both of which are fueling Everus’ growth.

1. Data Center Boom:
   The push to bring cloud infrastructure, AI servers, and edge computing back to U.S. soil is creating a $200+ billion market opportunity over the next five years. Everus’ dominance in electrical and mechanical systems—critical for data center cooling, power distribution, and fire safety—is unmatched. With 46% of its E&M backlog tied to data center projects, the company is positioned to capture a disproportionate share of this growth.

2. Grid Modernization:
   The Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law have allocated $75 billion to modernize the U.S. power grid. Everus’ T&D segment is already securing projects in undergrounding (burying power lines), smart grid upgrades, and traffic signalization—a subset of the $64 billion smart infrastructure market. While T&D revenue dipped slightly in Q1, its backlog growth signals that delayed projects are now moving forward.

Margin Pressures Are Temporary—Long-Term Trends Favor ECG

Critics will point to Everus’ 7.5% EBITDA margin, down slightly from prior periods due to project mix shifts and higher operating costs post-spinoff from MDU Resources. But this is a short-term blip. The backlog is packed with high-margin projects:
- Fixed-price contracts (92% of backlog) reduce cost volatility.
- Utility infrastructure projects typically carry 10–12% margins, while data center work often exceeds 15%.
- The company’s focus on operational efficiency (e.g., reducing material waste, optimizing labor) should stabilize margins by 2026.

The Investment Case: A Structural Play on Infrastructure Spend

Everus is not just a cyclical construction company—it’s a beneficiary of two irreversible trends:
1. Tech Reshoring: The U.S. is moving manufacturing and data infrastructure back onshore to reduce supply chain risks. This requires massive investment in electrical systems and data centers.
2. Grid Modernization: Aging infrastructure and climate resilience demands are driving a once-in-a-generation upgrade cycle.

The $3.1 billion backlog already guarantees $3.0–$3.1 billion in 2025 revenue, with EBITDA guidance of $210–$225 million. By 2026, as project margins stabilize and backlog conversions accelerate, ECG could see EBITDA margins rebound to pre-spinoff levels (mid-to-high teens).

Risks to Consider

• Project Delays: Weather or permitting issues could slow revenue recognition.
• Economic Downturn: A recession might delay infrastructure spending, though grid modernization and data center demand are relatively recession-resistant.
• Competition: Larger peers like Quanta Services or Kiewit could undercut pricing in commoditized segments.

Conclusion: Buy Now Before the Surge

Everus Construction is a rare growth story in an otherwise sleepy sector. Its $3.1 billion backlog, fueled by secular tailwinds in data centers and grid modernization, positions it to deliver 15–20% annual revenue growth through 2027. While near-term margin pressures exist, they are outweighed by the company’s strategic focus and the durability of its demand drivers.

The stock trades at just 5.5x EBITDA—a discount to peers—and with shares down 18% year-to-date due to margin concerns, this is a buy signal. Investors who act now will be positioned to profit as Everus capitalizes on two of the most powerful infrastructure trends of the 21st century.

Act now before the backlog fuels a valuation re-rating.