ITG (ITG) Q3 2026 earnings review
ITG grows by buying companies, but its business loses cash
ITG, which builds and repairs broadband networks, posted record sales, but its businesses owned a year ago barely moved. Revenue rose 49%, almost all of it from companies ITG bought. Operations used $42 million of cash, because ITG had not yet billed much finished work.
| Sales from businesses owned a year ago | +2% +5% last quarter |
|---|---|
| Order book for the next 12 months | $1.54 billion +27% from a year ago |
| Cash from operations | −$42.4M +$15.1M a year ago |
| Full-year sales outlook | Raised $22M now $1.578 billion, +37% |
⚖️ Verdict: 🔴 Bearish
The story got worse, because the faster growth finance chief Chris Mecray had planned for businesses ITG already owned did not arrive. Those sales rose about 2%, and Mecray said ITG does not plan to report that split. The good news: sales to customers beyond Comcast and Charter nearly doubled.
The question now is whether ITG's businesses keep growing after it buys them. Mecray counts bought firms at their purchase-day size and gets 27%; the filing's stricter measure shows far less. Fourth-quarter results and the first 2027 outlook will tell.
🐂 Bull Case
Sales Beyond Comcast and Charter Nearly Doubled
ITG has relied on two cable companies, Comcast and Charter, for most of its work. Finance chief Chris Mecray said both "may be slowing overall CapEx", so the risk is that ITG shrinks along with their budgets.
The quarterly filing shows that risk easing. The two firms took 48% of revenue, against 60% a year ago. By our math, ITG still earned about 19% more from them in dollars, while sales to all other customers nearly doubled. That fits Mecray's claim that ITG keeps "gaining share of wallet" at both.
What to watch: their combined share of revenue in the fourth-quarter filing. A share that keeps falling while their dollars hold steady would show ITG can grow beyond those two customers.
Fiber Construction Grew 63% on Data Center Work
Infrastructure Deployment is ITG's business building new fiber networks, including lines that connect data centers. Chief executive Andy Parrott said its sales rose 63% from a year ago. Engineering & Maintenance, its repair and installation work, grew 39%.
Finance chief Chris Mecray said data-center projects began during the quarter, on top of the usual summer building season. That business's order book climbed 10% from June, helped by contracts with four new customers.
But Mecray said ITG won no major new data-center contracts in the quarter. The contractor holds about $0.5 billion of planned data-center work and has bids outstanding, so this stream depends on those decisions.
What to watch: the outcome of the data-center bids, which Mecray expects "relatively near term". Wins would add to the existing data-center book rather than draw it down.
Order Book Hit a Record in Peak Season
ITG reports an order book: the revenue it expects from contracts over the next 12 months. Customers can cancel most of them at short notice, so the figure is an estimate.
- Order book: $1.54 billion, up 27% from a year ago
- Added since June: about $22 million, by our math
- Same quarter last year: a drop of about $50 million
ITG works through most of its book in summer, yet the total still rose. But the gain from June shrank to about 1%, partly from Full Circle Fiber, a contractor ITG bought in August.
What to watch: the year-end order book, due with fourth-quarter results. Finance chief Chris Mecray said new business this quarter is "almost certainly going to be as good or better than the previous quarter". A smaller book would contradict him.
🐻 Bear Case
Businesses Owned a Year Ago Grew Only 2%
ITG grows mainly by buying smaller contractors, often struggling ones, and folding them into its crews. Last quarter finance chief Chris Mecray planned double-digit growth in the second half before counting acquisitions.
The quarterly filing shows otherwise. Revenue from businesses ITG owned a year earlier rose $7 million, about 2% by our math. That rate has slowed for two quarters, from about 17% in the first quarter to 5% in the second.
"We do operate at a total growth model, and we don't plan to dissect overall from core growth over time," Mecray said. His argument is that bought firms grow faster inside ITG; counting them only at their size on purchase day, he puts growth at 27%.
But the filing gives no purchase-day figures, so readers cannot check that number. Counting every business as owned since the start of last year, the filing shows nine-month sales up about 15%.
What to watch: revenue excluding bought businesses in the fourth-quarter filing. An analyst asked whether it turns negative, and Mecray gave no number. A figure below zero would mean the fourth-quarter outlook rests on purchases alone.
Operations Used $42 Million of Cash
ITG's own free cash flow measure is EBITDA (earnings before interest, taxes, depreciation and amortization) excluding one-offs, minus equipment purchases. It leaves out interest and money tied up in unpaid work, and on it ITG reported $62.8 million.
The cash statement tells a different story. By our math, operations used $42 million of cash in the quarter, after bringing in $15 million a year earlier. Contract assets, work ITG has finished but not yet billed, rose $60 million from June.
- Contract assets: $370 million, against $222 million in December
- Days of revenue held in contract assets: about 74, from 69 in June
- Cash on hand: $0.2 million at the end of September
Finance chief Chris Mecray blamed the seasonal peak in work, about $18 million of contract assets that came with acquisitions, and invoicing that "was a little slow in the third quarter". In his words, the build is "a timing difference". But contract assets have risen all year, so the timing keeps moving out.
What to watch: fourth-quarter operating cash flow, when Mecray expects collections to pick up. A positive figure would support his view that the build is only timing.
Debt Climbs Again Three Months After the Listing
ITG listed its shares in July and used most of the money to repay debt. In August it paid $15 million for Full Circle Fiber, a struggling fiber contractor. Chief executive Andy Parrott expects "at least $50 million in sales" a year from it.
Purchases and the cash used in operations went onto its credit line. ITG owed $77 million on that line at the end of September. By our math, net debt reached about $612 million, or 3.2 times a year of EBITDA excluding one-offs. The group put that ratio at 2.8 for June, counting the listing.
What to watch: net debt at year-end. From this year, the loan agreement makes ITG use half of its excess cash to repay debt, so a lower figure would show the cash arriving.
Excluded Start-Up Costs Rose Instead of Fading
ITG's main profit measure is EBITDA excluding one-offs. Chief executive Andy Parrott said its margin "improved both year-over-year and sequentially", to 14.0% of sales from 12.7%.
Among the one-offs ITG removes are "start-up costs for new markets and service offerings". Restructuring costs of this kind reached $6.7 million, from $0.4 million a year earlier. Counted as normal costs, they leave the margin near 12.5% by our math, close to a year ago.
The cost of doing the work fell 0.4 percentage points of revenue, while overhead, mostly staff and stock pay, rose 1.9 points.
What to watch: the restructuring line in fourth-quarter results; finance chief Chris Mecray had said these costs would mostly end after the third quarter. A similar figure would mean the gain reflects what ITG excludes.
👓 Other Themes
Earlier Owners Keep 61% of the Business
ITG, Inc. owns 39% of the operating company, and its pre-listing owners hold the rest. Shareholders' net profit since the July listing came to $3.0 million, or 6 cents a share. The listing also left ITG owing those owners $50 million under a tax agreement. It passes them 85% of certain tax savings ITG makes.
Fuel and Health-Care Costs Lower Margins
Finance chief Chris Mecray put the extra cost of fuel against a year ago at "a little shy of 1% of sales". ITG has not yet won price rises to cover it. He also cited "pretty substantial increases in health care costs" for its workforce. Talks with customers continue, but he warned that recovery "doesn't happen right away in this business".
💲 Other KPIs
Interest cost fell as a share of revenue for a second quarter, to 4.3% from 5.5% in the first quarter. The total included a $6.3 million write-off of loan fees tied to the July debt repayment. Without it, interest came to about $13.6 million, against $19.5 million in the second quarter.
Net profit excluding one-offs more than doubled from a year ago, to $27.5 million. That equals 22 cents a share, counting the shares pre-listing owners can swap into. It still came in below the $31 million ITG had planned for the quarter.
🔮 Guidance
Unchanged. The plan has fourth-quarter sales about 15% above a year ago, after 49% growth in the third quarter. Finance chief Chris Mecray tied the slowdown to last year's acquisitions reaching their first anniversary. He said the figure assumes "a little bit of slippage from a couple of customers". By our math, sales would fall about 18% from the third quarter.
Raised. The plan now has 2026 sales of about $1.58 billion, 37% above last year. The $22 million increase matches the amount by which the third quarter topped its plan, so the view of the rest of the year did not move. ITG finished September with about 76% of the full-year figure already in revenue.
Unchanged. The plan calls for fourth-quarter EBITDA (earnings before interest, taxes, depreciation and amortization) excluding one-offs of $51 million. That is 31% above a year ago and matches what the earlier outlooks implied. The quarter would still earn about a fifth less than the third, because winter and holidays cut working days.
Raised. The forecast now has full-year EBITDA excluding one-offs of $203 million. That is 37% above last year. The $1 million increase is smaller than the quarter's $1.5 million lead over its plan. By our math, the full-year figure leaves about $50 million for the fourth quarter, just under the quarterly line.
Unchanged. The plan has the fourth-quarter margin at 13.4% of sales, 1.7 percentage points above a year ago. That sits below the third quarter's 14.0%, because fewer working days spread fixed costs over less work. The third quarter itself missed the 14.4% the company had planned.
Cut. The outlook now puts the full-year margin at 12.9%, from 13.0% in August. Sales in the plan went up faster than profit, which explains the trim. Nine months ran at 12.8%, so the year still needs a fourth quarter well above the first half.
Withdrawn. ITG no longer gives a figure for net profit excluding one-offs, for the fourth quarter or the year. In August it planned $74 million for 2026. Nine months reached $47 million, so the old figure needed about $27 million in the fourth quarter, by our math. The release gives no reason for the change.
Withdrawn. ITG no longer gives a tax-rate figure for 2026. In August it planned about 19%. Its rate for the third quarter was 80.9%, because the group pays tax only on its own share of the profit, the filing says. The release gives no reason for dropping the figure.
Raised. The plan now has equipment spending at about 3.9% of sales, up from 2.6%. By our math, that is roughly $62 million for the year. The cash statement shows only $18 million spent through September, but ITG also bought $29 million of equipment with equipment loans. Mecray said the civil utility business, which won new work, needs equipment earlier than planned.
Raised. ITG now expects about $72 million of net interest for the year, up from $62 million. The increase includes the write-off of loan fees after the July repayment. By our math, the figure leaves about $14 million for the fourth quarter.
Raised. The plan has about $53 million of depreciation, the yearly charge for wear on trucks and machinery, up $1 million. By our math, that leaves about $14 million for the fourth quarter. That is close to the third quarter's charge.
Raised. The plan has about $33 million of amortization, the charge for customer contracts and brand names ITG bought with acquisitions. It is $1 million more than in August and leaves about $8 million for the fourth quarter by our math, in line with recent quarters.
Cut, but only because the count changed. The figure now covers only ITG's listed Class A shares, about 48.5 million. In August it also included the shares pre-listing owners can swap into, about 124.4 million in total. Profit per share excluding one-offs still uses the larger count.
❓ Key Questions
How fast did businesses owned a year ago grow?
Finance chief Chris Mecray said ITG will not split growth between bought and existing businesses. The filing's measure fell to about 2% this quarter, and an analyst asked whether it turns negative in the fourth quarter.
What revenue did bought companies have at purchase?
Mecray's 27% growth figure counts bought companies at their size on purchase day. Publishing those purchase-day figures would let readers check his number against the filing.
When will the unbilled work turn into cash?
Unbilled work reached $370 million, and Mecray admitted invoicing ran slow. Readers need the cash ITG expects to collect in the fourth quarter and a target for days of unbilled work.
Why did ITG drop its net profit outlook?
In August ITG planned $74 million of net profit excluding one-offs for 2026. The new release lists that figure and the tax rate as not meaningful, without an explanation.
How much does Full Circle Fiber add each year?
Businesses bought in 2026, mainly Full Circle, brought in $22.2 million this quarter. Chief executive Andy Parrott spoke of at least $50 million a year, so the yearly pace and its profit need a clear number.