Everus Construction Group, Inc.

Note 7 –Leases

Most of the leases the Company enters into are for equipment, buildings and vehicles as part of its ongoing operations. The Company also leases certain equipment to third parties.

Lessee Accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases. The corresponding lease costs are included in Cost of sales and Selling, general and administrative expenses on the unaudited condensed consolidated statements of income.

Generally, operating leases for vehicles and equipment have a term ofone tofive years and buildings have a longer term of up to 10 years or more. For certain operating leases, lease terms may include the options to extend or terminate the lease. Similarly, building or property operating leases could includeone or more options to renew, with renewal terms that could extend the lease term byone tofive years or more.

The Company also has guaranteed the residual value under certain of its equipment operating leases, agreeing to pay any difference between the residual value and the fair market value of the underlying asset at the date of lease termination. Historically, the fair value of the asset at the time of lease termination generally has approximated or exceeded the residual value guarantee. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

In addition, the Company has entered into short-term leases to help support its ongoing operations, consisting primarily of short-term equipment and vehicle leases, and generally have a lease term of less than one year.

The following table provides information on the Company's lease costs for operating leases:

The following is summary information of lease terms and discount rates for operating leases as of:

The following is a summary of other information and supplemental cash flow information related to operating leases:

The reconciliation of future undiscounted cash flows to operating lease liabilities, including current portion of operating lease liabilities, presented on the unaudited condensed consolidated balance sheets was as follows:

As of June 30, 2025, the Company has entered into three operating leases totaling $13.1 million that have not yet commenced. During the first quarter of 2025, the Company entered into a $11.0 million operating lease that has a lease term of 7.3 years and will commence in July 2025. During the second quarter of 2025, the Company entered into a $1.6 million operating lease that has a lease term offive years and will commence in August 2025, as well as a $0.4 million operating lease that has a lease term oftwo years and will commenced in July 2025.

Lessor Accounting

The Company leases certain equipment to third parties. These leases are considered short-term operating leases with terms of less than 12 months. The Company recognizes revenue from operating leases in Operating revenues in the unaudited condensed consolidated statements of income on a straight-line basis over the respective operating lease terms.

The Company recognized revenue from operating leases of $11.9 million and $23.0 million for the three and six months ended June 30, 2025, respectively, and $10.4 million and $19.8 million for the three and six months ended June 30, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the Company had $9.4 million and $11.3 million, respectively, of lease receivables in Receivables, net on the unaudited condensed consolidated balance sheets with a majority due within 12 months or less from the respective balance sheet dates.

The Company leases components of certain equipment to third parties under operating leases, which are included within Property, plant and equipment, net in the unaudited condensed consolidated balance sheets, and were as follows as of: