Industry Information
Any industry data included in this Annual Report on Form 10-K (“Annual Report”) regarding industry size and/or relative industry position is derived from a variety of sources, including company research, third-party studies and surveys, industry and general publications, and estimates based on Everus Construction Group, Inc.’s (“Everus”) knowledge and experience in the industries in which it operates. Everus’ estimates, if any, have been based on information obtained from its customers, suppliers, trade and business organizations and other contacts in the industry. Everus is responsible for all the disclosures contained in this Annual Report, and Everus believes that this third-party data is generally reliable and that its estimates are accurate as of the date of this Annual Report. Further, Everus’ estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in “Item 1A. Risk Factors” herein this Annual Report. These and other factors could cause actual results to differ materially from those expressed in the estimates and assumptions.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements that reflect our expectations, assumptions or projections about the future, other than statements of historical facts, including, without limitation, statements regarding plans, trends, objectives, goals, business strategies, market potential, future financial performance and other matters are considered forward-looking statements. The words “believe,” “expect,” “estimate,” “could,” “should,” “would.” “intend,” “may,” “plan,” “predict,” “seek,” “anticipate,” “project” and similar expressions generally identify forward-looking statements, which speak only as of the date the statements were made. In particular, information included under “Item 1A. Risk Factors,” “Item 1. Business,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Annual Report contain forward-looking statements.
The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in any forward-looking statements we make are based on reasonable assumptions as of the date they are made, we can give no assurance that the expectation will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussions under “Item 1A. Risk Factors” in this Annual Report.
You should read this Annual Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Annual Report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this Annual Report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Risk Factors Summary
The following is a summary of some of the material risks and uncertainties that could materially affect our business, financial condition and results of operations. You should read this summary together with the more detailed description of each risk factor described in Part I, Item 1A. Risk Factors of this Annual Report.
Operations, Growth and Competitive Risks
•We operate in a highly competitive industry.
•Our business is seasonal.
•Our operating results may vary significantly from period to period.
•Our lack of success at generating internal growth.
•Our inability to retain our current customers and obtain new customer contracts.
•The loss of, or reduction in business from, certain significant customers.
•Our dependence upon fixed-price contracts.
•Our participation in joint ventures.
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•That a material portion of our business depends on our ability to provide surety bonds.
•Our backlog may not accurately represent future revenue.
•Our failure to adequately recover on contract change orders or claims.
•Our exposure to warranty claims.
•Our exposure to risk of loss resulting from the nonpayment and/or nonperformance by our customers and counterparties.
•Our pursuit of acquisitions and other strategic transactions.
•Supply chain disruptions.
•Volatility in the prices or availability of certain materials and equipment used in our business and those of our customers, including as a result of inflation, geopolitical instability and protectionist trade measures.
•The impact of severe weather events as a result of climate change or otherwise.
•Technology disruptions or cyberattacks.
•Artificial intelligence challenges.
•Pandemics, including COVID-19.
•We may incur liabilities or suffer negative financial or reputational impacts relating to health and safety matters.
•That our insurance has limits and exclusions that may not fully indemnify us against certain claims or losses.
Economic and Industry Risks
•Economic volatility.
•That we are subject to capital market and interest rate risks.
Financial and Accounting Risks
•Our financial results and projections are based upon estimates and assumptions that may cause our actual results to materially differ from such projections, which may adversely affect our future profitability, cash flows and stock price.
•That we recognize revenue for the majority of construction projects based on estimates.
•Reductions in our credit ratings.
•The debt obligations we incurred in connection with the Separation.
•Goodwill and identifiable intangible asset impairments.
Legal and Regulatory Risks
•Pending and/or future litigation, claims or investigations.
•Changes in tax law.
•Import tariffs and/or other government mandates.
•That our business is based in part on government-funded infrastructure projects and building activities, and any associated regulatory changes or requirements in these areas.
•Our failure to comply with requirements imposed by applicable law or other governmental regulations.
•That our operations are subject to environmental laws and regulations.
Human Capital and Labor Risks
•Our inability to obtain, develop and retain key personnel and skilled labor forces.
•Our unionized workforce.
•Costs related to obligations under multiemployer pension plans.
•Increasing costs associated with health care plans.
Separation and Distribution Risks
•Our minimal history of operating as an independent, public company and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.
•The failure of the Distribution (as defined below), together with certain related transactions, to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes.
•U.S. federal income tax consequences may restrict our ability to engage in certain desirable strategic or capital raising transactions after the Separation (as defined below).
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•We may not enjoy the same benefits that we did as a segment of MDU Resources (as defined below).
•Our inability to achieve some or all of the expected benefits from the Separation.
•The failure by us or MDU Resources to perform under various transaction agreements that were executed as part of the Separation or that we may fail to have necessary systems and services in place when certain of the transaction agreements expire.
•Our inability to resolve favorably any disputes that arise between us and MDU Resources with respect to our past and ongoing relationships.
•The indemnification obligations related to the Separation.
•That certain members of management and directors hold our stock and stock in MDU Resources.
•Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act (as defined below).
Common Stock Risks
•The trading market of our common stock has existed only for a minimal period of time following the Separation and Distribution, and our stock price and trading volume may fluctuate significantly.
•If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business.
•Your percentage of ownership in us may be diluted in the future.
•Our inability to guarantee the timing, declaration, amount or payment of dividends, if any, on our common stock.
•Exclusive forum provisions in our certificate of incorporation and bylaws could discourage lawsuits against us and our directors and officers.
•Provisions in our certificate of incorporation and bylaws and Delaware law may prevent or delay an acquisition of us.
Part I.
Item 1. BUSINESS
References in this Annual Report to the “Company”,“Everus”, “we”, “us” or “our” refer to Everus Construction Group, Inc., a Delaware corporation, and its subsidiaries. References in this Annual Report to “MDU Resources” refer to MDU Resources Group, Inc., a Delaware corporation, and its subsidiaries (other than, after the Distribution, Everus and its subsidiaries), unless the context otherwise requires. References to Everus’ historical business and operations refer to the business and operations of Everus Construction, Inc. (formerly known as MDU Construction Services Group, Inc.) (“Everus Construction”) prior to the Separation and refer to Everus after the Separation.
The Separation
On November 2, 2023, MDU Resources announced its intent to pursue a tax-free spinoff of Everus Construction (formerly known as MDU Construction Services Group, Inc.) from MDU Resources (the “Separation”). Prior to the Separation, Everus Construction was the construction services segment of MDU Resources and operated as a wholly owned subsidiary of CEHI, LLC (“Centennial”), which is a wholly owned subsidiary of MDU Resources. In anticipation of the Separation, MDU Resources formed a new wholly owned subsidiary, Everus Construction Group, Inc., that became the new parent company of Everus Construction.
On October 31, 2024, MDU Resources completed the Separation by transferring Everus Construction, inclusive of all its assets and liabilities, to Everus and distributing 100% of Everus’ outstanding common stock to holders of record of MDU Resources’ common stock as of the close of business on October 21, 2024 (the “Distribution”). The Separation was completed as a generally tax-free spin-off for U.S. federal income tax purposes. Following the Separation and Distribution, Everus became an independent, publicly traded company and is listed on the New York Stock Exchange under the ticker symbol “ECG”.
Our Company
We are a leading construction solutions provider headquartered in Bismarck, North Dakota, offering specialty contracting services to a diverse set of end markets across the United States. We operate throughout most of the United States through two operating segments, which represent our two reportable segments: Electrical & Mechanical (“E&M”) and Transmission & Distribution (“T&D”). We deliver services through our 15 wholly-owned operating companies (the “Operating Companies”), which go to market under 20 local brands allowing us to differentiate the services we provide and geographical markets we serve. Our historical business was established in 1997 and we have expanded our capabilities significantly since then through targeted entry into new geographies and more than 25 acquisitions. Our size and scale continue to be reflected in our national rankings. We were ranked 9th on Engineering News-Record magazine’s 2024 Top 600 Specialty Contractors list and ranked 5th on Electrical Construction & Maintenance magazine’s 2024 Top 50 Electrical Contractors list. Additionally, according to Solar Power World, our operating brand Bombard Renewable Energy is among the top U.S. solar installation providers.