BrandSafway, the scaffolding and industrial services arm of private‑equity‑owned Brand Industrial Services, posted a steep first‑quarter earnings decline as it pours money into data‑center construction. EBITDA fell 20% year‑over‑year to $71 million, dragging profit margins lower. The Atlanta‑based firm cited higher material costs and labor spending tied to its new market push and expanding its geographic footprint.

The cost surge coincided with a slide in the company’s credit market. Since December, BrandSafway’s senior notes have traded below 90 cents on the dollar, and its $1.5 billion term loan slipped two basis points to 79.625% on Monday. Analysts view the widening spread as a warning sign for the broader construction sector, where rising input prices are squeezing profitability, raising concerns among institutional investors.

Management told debt holders it expects full‑year 2026 profit to edge just above last year’s level, planning to pass higher costs onto customers for the remainder of the year. Yet cash burn exceeded forecasts, reflecting aggressive capital allocation to data‑center projects. The earnings dip adds to a string of margin‑compressing results across oil‑and‑gas and power‑generation contractors, underscoring the sector’s cost‑pressure cycle. Investors will watch cash flow closely.