IES Holdings (NASDAQ: IESC) reported fiscal Q3 2026 revenue of $1.243 billion, up 40% from $890.2 million a year earlier, while diluted EPS rose to $7.57 from $3.81. Operating income increased 60% to $178.5 million as data center activity drove three segments and more than offset weaker Residential demand; a $26.2 million gain on marketable securities also lifted GAAP net income.

Core earnings data

Gross profit grew faster than revenue, rising approximately 42% to $340.7 million. Gross margin expanded by about 50 basis points to 27.4%, while operating margin increased by approximately 180 basis points to 14.4%.

GAAP net income attributable to IES nearly doubled, but part of that increase came from the marketable-securities gain, compared with a $3.3 million loss a year earlier. After excluding this and other adjustments, adjusted net income still increased 70% and adjusted EBITDA rose approximately 60%.

Adjusted net income, adjusted EPS, and adjusted EBITDA are non-GAAP measures.

Business and segment performance

Growth was concentrated in the three segments benefiting from data center spending. Residential moved in the opposite direction as softer housing activity reduced revenue and made it harder to recover higher material costs through pricing.

Communications benefited primarily from data center demand, with additional growth from distribution centers and high-tech manufacturing. Larger and more complex projects, combined with project execution, lifted the segment’s operating margin to approximately 18.5% from 16.0%.

Infrastructure Solutions also benefited from data center demand and expanded production capacity. Gulf Island, acquired in January 2026, contributed $51.7 million of quarterly revenue. Operating income increased, but the segment’s operating margin declined to approximately 23.8% from 25.2% as IES invested in repositioning newer acquisitions. Improved pricing and productivity at established facilities provided a partial offset.

Commercial & Industrial recorded the fastest growth after expanding its ability to handle data center projects. Results also included large, quick-turning jobs completed at favorable margins, helping its operating margin rise to approximately 22.5% from 11.2%.

Residential remained the main drag. Lower housing starts and the earlier decline in multifamily backlog reduced revenue, while limited pricing power against higher material costs contributed to an operating margin decline to approximately 5.0% from 9.7%.

Backlog reached $4.53 billion, but $1.72 billion is not yet enforceable

IES ended the quarter with $4.53 billion of non-GAAP backlog, up 91% from the end of fiscal 2025. GAAP remaining performance obligations were $2.80 billion; the difference consisted of signed agreements and letters of intent that are not legally enforceable before work begins.

Data center-exposed segments accounted for nearly all the backlog expansion, while Residential backlog was broadly stable.

IES added approximately one million square feet of production capacity over the past year through Gulf Island and facilities in Abilene, Texas, and Manitowoc, Wisconsin. Management expects the repositioned operations to begin making a meaningful contribution in fiscal 2027, although it did not provide quantitative earnings guidance.

Cash flow, balance sheet, and capital allocation

The available cash flow figures cover the first nine months of fiscal 2026 rather than the third quarter alone. Nine-month operating cash flow increased to $239.4 million from $154.1 million, while purchases of property and equipment rose to $123.0 million from $47.3 million. IES also used $143.1 million for business combinations during the nine-month period.

At June 30, IES held $77.3 million of cash and $310.6 million of marketable securities, compared with $127.2 million and $104.6 million, respectively, at the end of fiscal 2025. The company had no debt after repaying the borrowings used to help fund Gulf Island and capital expenditures.

During the quarter, IES spent $44.6 million on capital expenditures and $19.5 million to acquire the Abilene property and related assets. It also purchased $52.6 million of transferable federal income tax credits, which management expects to reduce its federal tax obligation by $3.6 million.

The board separately approved a two-for-one stock split. Shareholders of record on August 14, 2026, are scheduled to receive one additional share for each share held after trading closes on August 21, 2026.

Recent insider transactions

The supplied six-month summary shows 635 shares purchased across 12 transactions and 182,041 shares sold across 11 transactions, resulting in net sales of 181,406 shares. Total insider holdings were listed at approximately 610,070 shares, with a net purchase-and-sale percentage of negative 22.90%; the data does not specify the nature of every transaction included in the purchase total.

The 10 latest reported transactions included six director stock grants and four sales. Share counts for the zero-price grants were not provided, and the transactions alone do not establish insiders’ views on the company’s outlook.

Risks investors should monitor

• Dependence on data center activity: Data centers were a major growth driver across Communications, Infrastructure Solutions, and Commercial & Industrial. Slower project activity would affect several segments simultaneously.
• Continued Residential weakness: Reduced housing starts are lowering revenue and limiting IES’s ability to recover higher material costs, pressuring the segment’s operating margin.
• Backlog conversion: Approximately $1.72 billion of reported backlog consists of agreements and letters of intent that are not enforceable before work begins. Backlog may not fully convert into revenue or profitable work.
• Acquisition and capacity execution: Investments in Gulf Island and other underutilized facilities are currently weighing on Infrastructure Solutions’ margin. Their expected fiscal 2027 contribution depends on successful repositioning and demand conversion.
• Project mix and execution: Commercial & Industrial benefited from large, quick-turning jobs at favorable margins, so future profitability will remain sensitive to project mix and execution quality.

Summary

IES delivered a data center-led fiscal third quarter in which revenue, operating income, and adjusted earnings all increased substantially despite weakness in Residential. The next phase depends on converting the larger backlog, maintaining project execution, and turning recent capacity investments into profitable growth while managing continued housing-market pressure.

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