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Everus Construction (ECG +18%) is surging today following its robust Q1 earnings last night. This provider of construction services, which was spun off from MDU Resources (MDU) in October 2024, reported an EPS miss in Q4, its first quarter as an independent company. That led to a sell-off in the stock in February. However, it bounced back with huge upside in its Q1 report.

• Everus reported a 32.1% yr/yr increase in revs to $826.6 mln, which blew away analyst expectations. The EPS upside was significant as well. It seems that analyst models were caught off guard following the Q4 miss, so maybe analyst estimates were much more conservative heading into Q1. Regardless, this was a very good redemptive quarter for Everus.
• Revenue was driven by continued strength in its electrical and mechanical (E&M) segment and across each of its E&M end markets, including its data center business. While revenue declined slightly in its Transmission and Distribution (T&D) segment due to some weather-related delays, the company said its T&D project execution was solid.
• Looking ahead, Everus is pleased to see momentum from favorable secular demand trends continuing into 2025. Its total backlog at the end of Q1 was up 10% sequentially and 41% yr/yr with growth in both E&M and T&D. Everus continues to see favorable trends in key submarkets, including data center, hospitality, and high tech reshoring. As it relates to data center work, there has been a lot of noise in the market. However, Everus continues to see very strong demand trends and has not seen any meaningful change in customers' plans.
• Regarding tariffs and trade, ECG feels well-equipped to manage through these challenges just as it did during the pandemic. In response, ECG is increasing dialogue with customers and it seeks early material procurement to lock in pricing when possible.

Overall, this was a great bounce back quarter for Everus. It is not unusual for it to take several quarters for analysts to get their models right since there is little history to go by. That is likely why we saw the Q4 miss, then analysts overcorrected with very conservative estimates for Q1, which Everus subsequently blew away. This is not a name that is widely followed given that it was a spin-off and not an IPO and is low profile. However, we suspect this report will get it on some radar screens. On a final note, this report follows big Q1 upside last week from its construction peer Tutor Perini (TPC).