MYR Group Inc. Announces First-Quarter 2022 Results

Rolling Meadows, Illinois, UNITED STATES


HENDERSON, Colo., April 27, 2022 (GLOBE NEWSWIRE) -- MYR Group Inc. (“MYR”) (NASDAQ: MYRG), a holding company of leading specialty contractors serving the electric utility infrastructure, commercial and industrial construction markets in the United States and Canada, announced today its first-quarter 2022 financial results.

Highlights for First Quarter 2022

  • Quarterly revenues of $636.6 million
  • Quarterly net income of $20.7 million and earnings per diluted share of $1.21
  • Quarterly EBITDA of $39.6 million
  • Record backlog of $2.41 billion

Management Comments
Rick Swartz, MYR’s President and CEO, said, “Our strong first quarter performance positions us well for what we expect to be a successful year in 2022. Our backlog at the end of the first quarter was a record $2.41 billion, reflecting our solid customer relationships and ability to be competitive in the markets we serve.” Mr. Swartz continued, “We are proud of our performance this quarter and excited to build upon our success to grow the business this year. Industry investment continues in both our Transmission and Distribution (“T&D”) and Commercial and Industrial (“C&I”) markets creating opportunities for us to expand business with existing customers and gain new customer relationships. We believe the skilled capabilities of our team coupled with effective management practices and sound business strategies will contribute to our performance this year.”

First Quarter Results
MYR reported first-quarter 2022 revenues of $636.6 million, an increase of $44.1 million, or 7.4 percent, compared to the first quarter of 2021. Specifically, our T&D segment reported revenues of $364.9 million for the first quarter of 2022, an increase of $50.0 million, or 15.9 percent, from the first quarter of 2021, primarily due to an increase in revenue on distribution projects, incremental revenues from Powerline Plus Ltd. and affiliate (collectively, the "Powerline Plus Companies"), which we acquired on January 4, 2022, and an increase in revenue from transmission projects. Our C&I segment reported revenues of $271.8 million for the first quarter of 2022, a decrease of $5.8 million, or 2.1 percent, from the first quarter of 2021, primarily due to a decrease in revenue in certain geographical areas.

Consolidated gross profit increased to $80.5 million in the first quarter of 2022, an increase of $3.5 million or 4.6 percent, from the first quarter of 2021. The increase in gross profit was due to higher revenues partially offset by lower margins. Gross margin was 12.6 percent for the first quarter of 2022 compared to 13.0 percent for the first quarter of 2021. The decrease in gross margin was primarily due to overall cost increases mainly associated with supply chain disruptions and impacts from the COVID-19 pandemic some of which also caused labor and material inefficiencies on certain projects, as well as inclement weather experienced on certain projects. These margin decreases were partially offset by favorable job close outs and net favorable change order adjustments on certain projects. Changes in estimates of gross profit on certain projects resulted in a gross margin increases of 0.5 percent and 0.1 percent for the first quarter of 2022 and 2021, respectively.

Selling, general and administrative expenses increased to $53.6 million in the first quarter of 2022, compared to $49.6 million for the first quarter of 2021. The period-over-period increase was primarily due to the acquisition of the Powerline Plus Companies.

Amortization of intangible assets increased to $2.8 million in the first quarter of 2022, compared to $0.6 million for the first quarter of 2021. The period-over-period increase was primarily due to amortization related to certain intangibles acquired with the Powerline Plus Companies.

Income tax expense was $3.8 million for the first quarter of 2022, with an effective tax rate of 15.4 percent, compared to income tax expense of $7.1 million for the first quarter of 2021, with an effective tax rate of 26.2 percent. The period-over-period decrease in tax rate was primarily due to a favorable impact from stock compensation excess tax benefits and the reduction of the impact of the global intangible low tax income (“GILTI”).

For the first quarter of 2022, net income was $20.7 million, or $1.21 per diluted share, compared to $19.9 million, or $1.17 per diluted share, for the same period of 2021. First-quarter 2022 EBITDA, a non-GAAP financial measure, was $39.6 million, compared to $39.3 million in the first quarter of 2021.

Balance Sheet
As of March 31, 2022, MYR had $317.5 million of borrowing availability under its $375 million revolving credit facility.

Non-GAAP Financial Measures
To supplement MYR’s financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), MYR uses certain non-GAAP measures. Reconciliation to the nearest GAAP measures of all non-GAAP measures included in this press release can be found at the end of this release. MYR’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

MYR believes that these non-GAAP measures are useful because they (i) provide both management and investors meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results, (ii) permit investors to view MYR’s performance using the same tools that management uses to evaluate MYR’s past performance, reportable business segments and prospects for future performance, (iii) publicly disclose results that are relevant to financial covenants included in MYR’s credit facility and (iv) otherwise provide supplemental information that may be useful to investors in evaluating MYR.

Conference Call
MYR will host a conference call to discuss its first-quarter 2022 results on Thursday, April 28, 2022 at 8:00 a.m. Mountain time. To participate in the conference call via telephone, please dial (877) 561-2750 (domestic) or (763) 416-8565 (international) and enter conference ID 9940838, at least five minutes prior to the start of the event. A replay of the conference call will be available through Thursday, May 5, 2022, at 11:00 a.m. Mountain time, by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID 9940838. MYR will also broadcast the conference call live via the internet. Interested parties may access the webcast through the Investor Relations section of MYR's website at www.myrgroup.com. Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The webcast will be available until Thursday, May 5, 2022 at 11:00 a.m. Mountain time.

About MYR Group Inc.
MYR Group is a holding company of leading, specialty electrical contractors providing services throughout the United States and Canada through two business segments: Transmission & Distribution (T&D) and Commercial & Industrial (C&I). MYR Group subsidiaries have the experience and expertise to complete electrical installations of any type and size. Their comprehensive T&D services on electric transmission, distribution networks, substation facilities and clean energy projects include design, engineering, procurement, construction, upgrade, maintenance and repair services. T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. Through their C&I segment, they provide a broad range of services which include the design, installation, maintenance and repair of commercial and industrial wiring generally for airports, hospitals, data centers, hotels, stadiums, convention centers, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems and roadway lighting. C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers. For more information, visit myrgroup.com.

Forward-Looking Statements
Various statements in this announcement, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenue, income, capital spending, segment improvements and investments. Forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “likely,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “unlikely,” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this announcement speak only as of the date of this announcement. We disclaim any obligation to update these statements (unless required by securities laws), and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Forward-looking statements in this announcement should be evaluated together with the many uncertainties that affect MYR's business, particularly those mentioned in the risk factors and cautionary statements in Item 1A. of MYR's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in any risk factors or cautionary statements contained in MYR's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

MYR Group Inc. Contact:
Betty R. Johnson, Chief Financial Officer, 847-290-1891, investorinfo@myrgroup.com

Investor Contact:
David Gutierrez, Dresner Corporate Services, 312-780-7204, dgutierrez@dresnerco.com

Financial tables follow…

MYR GROUP INC.
Consolidated Balance Sheets
As of March 31, 2022 and December 31, 2021

(in thousands, except share and per share data)March 31,
2022
 December 31,
2021
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$18,732 $82,092
Accounts receivable, net of allowances of $2,385 and $2,441, respectively 386,193  375,353
Contract assets, net of allowances of $403 and $385, respectively 243,654  225,075
Current portion of receivable for insurance claims in excess of deductibles 11,388  11,078
Refundable income taxes 5,557  9,228
Prepaid expenses and other current assets 50,071  45,564
Total current assets 715,595  748,390
Property and equipment, net of accumulated depreciation of $331,174 and $322,128, respectively 206,969  196,092
Operating lease right-of-use assets 32,438  20,971
Goodwill 110,594  66,065
Intangible assets, net of accumulated amortization of $19,571 and $16,779, respectively 102,916  49,054
Receivable for insurance claims in excess of deductibles 30,602  32,443
Investment in joint ventures 2,792  3,978
Other assets 3,673  4,099
Total assets$1,205,579 $1,121,092
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Current portion of long-term debt$1,039 $1,039
Current portion of operating lease obligations 9,270  7,765
Current portion of finance lease obligations 1,374  
Accounts payable 223,703  200,744
Contract liabilities 165,127  167,931
Current portion of accrued self-insurance 25,916  24,242
Accrued income taxes 2,866  2,021
Other current liabilities 68,969  94,857
Total current liabilities 498,264  498,599
Deferred income tax liabilities 24,627  24,620
Long-term debt 48,657  3,464
Accrued self-insurance 48,794  50,816
Operating lease obligations, net of current maturities 23,180  13,230
Finance lease obligations, net of current maturities 3,001  
Other liabilities 22,778  11,261
Total liabilities 669,301  601,990
Commitments and contingencies   
Stockholders’ equity:   
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at March 31, 2022 and December 31, 2021   
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,995,250 and 16,870,636 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 170  168
Additional paid-in capital 159,256  163,754
Accumulated other comprehensive income 1,824  173
Retained earnings 375,028  355,007
Total stockholders’ equity 536,278  519,102
Total liabilities and stockholders’ equity$1,205,579 $1,121,092

MYR GROUP INC.
Unaudited Consolidated Statements of Operations
Three Months Ended March 31, 2022 and 2021

 Three months ended
March 31,
(in thousands, except per share data) 2022   2021 
    
Contract revenues$636,624  $592,486 
Contract costs 556,139   515,533 
Gross profit 80,485   76,953 
Selling, general and administrative expenses 53,564   49,647 
Amortization of intangible assets 2,767   578 
Gain on sale of property and equipment (748)  (683)
Income from operations 24,902   27,411 
Other income (expense):   
Interest income 8   13 
Interest expense (451)  (475)
Other income (expense), net (15)  41 
Income before provision for income taxes 24,444   26,990 
Income tax expense 3,756   7,062 
Net income$20,688  $19,928 
Income per common share:   
—Basic$1.22  $1.19 
—Diluted$1.21  $1.17 
Weighted average number of common shares and potential common shares outstanding:   
—Basic 16,916   16,760 
—Diluted 17,133   17,045 

MYR GROUP INC.
Unaudited Consolidated Statements of Cash Flows
Three Months Ended March 31, 2022 and 2021

 Three months ended
March 31,
(in thousands) 2022   2021 
    
Cash flows from operating activities:   
Net income$20,688  $19,928 
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization of property and equipment 11,904   11,293 
Amortization of intangible assets 2,767   578 
Stock-based compensation expense 1,624   1,487 
Deferred income taxes (1)  (47)
Gain on sale of property and equipment (748)  (683)
Other non-cash items 886   529 
Changes in operating assets and liabilities, net of acquisition:   
Accounts receivable, net 2,902   12,592 
Contract assets, net (5,745)  (6,991)
Receivable for insurance claims in excess of deductibles 1,531   802 
Other assets 281   15,314 
Accounts payable 15,613   29,198 
Contract liabilities (4,470)  (18,087)
Accrued self-insurance (352)  (285)
Other liabilities (25,413)  (6,238)
Net cash flows provided by operating activities 21,467   59,390 
Cash flows from investing activities:   
Proceeds from sale of property and equipment 1,027   651 
Cash paid for acquired business, net of cash acquired (110,576)   
Purchases of property and equipment (14,037)  (7,031)
Net cash flows used in investing activities (123,586)  (6,380)
Cash flows from financing activities:   
Net borrowings under revolving lines of credit 45,193    
Payment of principal obligations under finance leases (437)  (273)
Proceeds from exercise of stock options 4   110 
Payments related to tax withholding for stock-based compensation (6,791)  (2,618)
Other financing activities    12 
Net cash flows provided by (used in) financing activities 37,969   (2,769)
Effect of exchange rate changes on cash 790   160 
Net increase (decrease) in cash and cash equivalents (63,360)  50,401 
Cash and cash equivalents:   
Beginning of period 82,092   22,668 
End of period$18,732  $73,069 

MYR GROUP INC.
Unaudited Consolidated Selected Data,
Unaudited Performance Measure and Reconciliation of Non-GAAP Measure
For the Three and Twelve Months Ended March 31, 2022 and 2021 and
As of March 31, 2022, December 31, 2021, March 31, 2021 and March 31, 2020

 Three months ended
March 31,
 Last twelve months ended
March 31,
 
(dollars in thousands, except share and per share data) 2022   2021   2022   2021  
         
Summary Statement of Operations Data:        
Contract revenues$636,624  $592,486  $2,542,427  $2,321,408  
Gross profit$80,485  $76,953  $328,513  $291,174  
Income from operations$24,902  $27,411  $116,051  $97,548  
Income before provision for income taxes$24,444  $26,990  $113,760  $94,373  
Income tax expense$3,756  $7,062  $27,994  $25,618  
Net income$20,688  $19,928  $85,766  $68,755  
Tax rate 15.4%  26.2%  24.6%  27.1% 
         
Per Share Data:        
Income per common share:        
-Basic$1.22  $1.19  $5.08 (1)$4.12 (1)
-Diluted$1.21  $1.17  $5.00 (1)$4.06 (1)
Weighted average number of common shares and potential common shares outstanding:        
-Basic 16,916   16,760   16,877 (2) 16,717 (2)
-Diluted 17,133   17,045   17,159 (2) 16,928 (2)


(in thousands)March 31,
2022
 December 31,
2021
 March 31,
2021
 March 31,
2020
        
Summary Balance Sheet Data:       
Total assets$        1,205,579         $        1,121,092         $        1,019,246         $        993,246        
Total stockholders’ equity$        536,278         $        519,102         $        448,464         $        374,986        
Goodwill and intangible assets$        213,510         $        115,119         $        116,860         $        119,713        
Total funded debt (3)$        49,696         $        4,503         $        29,420         $        161,384        


(in thousands)Last twelve months ended
March 31,
  2022   2021 
Financial Performance Measure (4):   
Reconciliation of Non-GAAP measure:   
Net income$85,766  $68,755 
Interest expense, net 1,710   3,505 
Amortization of intangible assets 4,500   2,936 
Tax impact of interest and amortization of intangible assets (1,528)  (1,746)
EBIA, net of taxes (5)$90,448  $73,450 

See notes at the end of this earnings release

MYR GROUP INC.
Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
Three and Twelve Months Ended March 31, 2022 and 2021

 Three months ended
March 31,
 Last twelve months ended
March 31,
(in thousands, except share, per share data, ratios and percentages) 2022   2021   2022   2021 
        
Financial Performance Measures (4):       
EBITDA (6)$39,558  $39,323  $164,475  $144,333 
EBITDA per Diluted Share (7)$2.31  $2.31  $9.59  $8.52 
Free Cash Flow (8)$7,430  $52,359  $39,938  $157,066 
Book Value per Period End Share (9)$31.16  $26.22     
Tangible Book Value (10)$322,768  $331,604     
Tangible Book Value per Period End Share (11)$18.76  $19.39     
Funded Debt to Equity Ratio (12) 0.09   0.07     
Asset Turnover (13)     2.49   2.34 
Return on Assets (14)     8.4%  6.9%
Return on Equity (15)     19.1%  18.3%
Return on Invested Capital (18)     18.6%  16.2%
        
Reconciliation of Non-GAAP Measures:       
Reconciliation of Net Income to EBITDA:       
Net income 20,688   19,928   85,766   68,755 
Interest expense, net 443   462   1,710   3,505 
Income tax expense 3,756   7,062   27,994   25,618 
Depreciation and amortization 14,671   11,871   49,005   46,455 
EBITDA (6)$39,558  $39,323  $164,475  $144,333 
        
Reconciliation of Net Income per Diluted Share to EBITDA per Diluted Share:       
Net income per share 1.21   1.17   5.00   4.06 
Interest expense, net, per share 0.03   0.03   0.10   0.21 
Income tax expense per share 0.22   0.41   1.63   1.51 
Depreciation and amortization per share 0.85   0.70   2.86   2.74 
EBITDA per Diluted Share (7)$2.31  $2.31  $9.59  $8.52 
        
Calculation of Free Cash Flow:       
Net cash flow from operating activities$21,467  $59,390  $99,305  $199,314 
Less: cash used in purchasing property and equipment (14,037)  (7,031)  (59,367)  (42,248)
Free Cash Flow (8)$7,430  $52,359  $39,938  $157,066 
        

See notes at the end of this earnings release.

MYR GROUP INC.
Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
As of March 31, 2022, 2021 and 2020

(in thousands)March 31, 2022 March 31, 2021
    
Reconciliation of Book Value to Tangible Book Value:   
Book value (total stockholders' equity)$536,278  $448,464 
Goodwill and intangible assets (213,510)  (116,860)
Tangible Book Value (10)$322,768  $331,604 
    
Reconciliation of Book Value per Period End Share to Tangible Book Value per Period End Share:   
Book value per period end share$31.16  $26.22 
Goodwill and intangible assets per period end share (12.40)  (6.83)
Tangible Book Value per Period End Share (11)$18.76  $19.39 
    
Calculation of Period End Shares:   
Shares outstanding 16,995   16,817 
Plus: common equivalents 217   285 
Period End Shares (16) 17,212   17,102 


(in thousands)March 31, 2022 March 31, 2021 March 31, 2020
      
Reconciliation of Invested Capital to Stockholders Equity:     
Book value (total stockholders' equity)$536,278  $448,464  $374,986 
Plus: total funded debt 49,696   29,420   161,384 
Less: cash and cash equivalents (18,732)  (73,069)  (33,997)
Invested Capital$567,242  $404,815  $502,373 
Average Invested Capital (17)$486,029  $453,594   

See notes at the end of this earnings release.

(1)        Last-twelve-months earnings per share is the sum of earnings per share reported in the last four quarters.
(2)        Last-twelve-months weighted average basic and diluted shares were determined by adding the weighted average shares reported for the last four quarters and dividing by four.
(3)        Funded debt includes outstanding borrowings under our revolving credit facility and our outstanding equipment notes.
(4)        These financial performance measures are provided as supplemental information to the financial statements. These measures are used by management to evaluate our past performance, our prospects for future performance and our ability to comply with certain material covenants as defined within our credit agreement, and to compare our results with those of our peers. In addition, we believe that certain of the measures, such as book value, tangible book value, free cash flow, asset turnover, return on equity, and debt leverage are measures that are monitored by sureties, lenders, lessors, suppliers and certain investors. Our calculation of each measure is described in the following notes; our calculation may not be the same as the calculations made by other companies.
(5)        EBIA, net of taxes is defined as net income plus net interest plus amortization of intangible assets, less the tax impact of net interest and amortization of intangible assets. The tax impact of net interest and amortization of intangible assets is computed by multiplying net interest and amortization of intangible assets by the effective tax rate. Management uses EBIA, net of taxes, to measure our results exclusive of the impact of financing and amortization of intangible assets costs.
(6)        EBITDA is defined as earnings before interest, taxes, depreciation and amortization.  EBITDA is not recognized under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity. Certain material covenants contained within our credit agreement are based on EBITDA with certain additional adjustments, including our interest coverage ratio and leverage ratio, which we must comply with to avoid potential immediate repayment of amounts borrowed or additional fees to seek relief from our lenders. In addition, management considers EBITDA a useful measure because it provides MYR Group Inc. and its investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes to not directly reflect the company’s core operations.  Management further believes that EBITDA is useful to investors and other external users of our financial statements in evaluating the company’s operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired.
(7)        EBITDA per diluted share is calculated by dividing EBITDA by the weighted average number of diluted shares outstanding for the period. EBITDA per diluted share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
(8)        Free cash flow, which is defined as cash flow provided by operating activities minus cash flow used in purchasing property and equipment, is not recognized under GAAP and does not purport to be an alternative to net income, cash flow from operations or the change in cash on the balance sheet. Management views free cash flow as a measure of operational performance, liquidity and financial health.  
(9)        Book value per period end share is calculated by dividing total stockholders’ equity at the end of the period by the period end shares outstanding.
(10)        Tangible book value is calculated by subtracting goodwill and intangible assets outstanding at the end of the period from stockholders’ equity. Tangible book value is not recognized under GAAP and does not purport to be an alternative to book value or stockholders’ equity.
(11)        Tangible book value per period end share is calculated by dividing tangible book value at the end of the period by the period end number of shares outstanding. Tangible book value per period end share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
(12)        The funded debt to equity ratio is calculated by dividing total funded debt at the end of the period by total stockholders’ equity at the end of the period.
(13)        Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period.
(14)        Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period.
(15)        Return on equity is calculated by dividing net income for the period by total stockholders’ equity at the beginning of the period.
(16)        Period end shares is calculated by adding average common stock equivalents for the quarter to the period end balance of common stock outstanding. Period end shares is not recognized under GAAP and does not purport to be an alternative to diluted shares. Management views period end shares as a better measure of shares outstanding as of the end of the period.
(17)        Average invested capital is calculated by adding net funded debt (total funded debt less cash and marketable securities) to total stockholders’ equity and calculating the average of the beginning and ending of each period.
(18)        Return on invested capital is calculated by dividing EBIA, net of taxes, less any dividends, by average invested capital. Return on invested capital is not recognized under GAAP, and is a key metric used by management to determine our executive compensation.