MYRG - Earnings call transcript Q1 2020

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Operator

Good morning everyone and welcome to the MYR Group First Quarter 2020 Earnings Results Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions, I would now like to turn the conference over to David Gutierrez of Dresner Corporate Services. Please go ahead David.

David Gutierrez

Thank you Chris and good morning everyone. you company's MYR XXXX first reported welcome to conference which to yesterday. the discuss quarter like to Group the call were I'd results for

Officer Chief are; on and Chief President Distribution MYR Group's and Waneka Chief and of Senior Jeff Swartz, call Operating us Cooper, Officer Betty Senior today segment; Industrial Tod and President Joining President Senior and the Financial Chief and Commercial Vice Transmission Vice Executive Treasurer; Vice Officer Officer; Johnson, MYR Operating Rick Group's President segment. and of

receive of Thursday If by conference you will press did available will or Group under the available Dresner contact Corporate a today's and or a Investor call March Eastern Time at you at not Relations go we until X:XX yesterday's dialing p.m. XXX-XXX-XXXX and XXXXXXX. where release the MYR entering is XXX-XXX-XXXX replay website please XXX-XXX-XXXX to be ID copy tab. services copy seven send a Also

Before remind Any we you assumes to contain such to such information MYR statements upon date of begin statements. and statements. MYR update may discussion available this obligation based I forward-looking Group forward-looking management that as are this no want Group any to

uncertainties December XX, yesterday's the results company's and company's discussed the the first that risks and involve XX-K statements. in XXXX annual statements forward-looking for in XXXX of press and report ended on These materially could to report cause year from XX-Q quarter on the these are quarterly release. Form for Form are uncertainties performance. no risks future These actual statements differ Accordingly forward-looking the guarantee of

the is non-GAAP of over most GAAP to release. Swartz. comparable to call financial that yesterday's me information non-GAAP Rick will Certain in forth the the turn discussed let on said measures set With press call today. reconciliation A these be measures

Rick Swartz

of the our providing financial David. Officer Chief results. first call Financial operating to more the our call summary XXXX then for and begin a I discuss by will review. Welcome results morning everyone. conference a quarter turn Thanks financial brief Good over first Johnson to to and Betty quarter detailed

Following for questions. our segments I up and some opportunities remarks conclude call industry going with Betty's Operating an outlook and will discussion, Waneka, comments MYR Chief of C&I and discuss some will open and Cooper forward. Jeff Tod Officers Group's for and T&D then provide your closing the

and continues pandemic has the to or who our First go foremost, coronavirus this whether our indirectly. by out to affected lives impact thoughts virus directly everyone as been

latest and As communities protocols and developments ensure continue the government to safety of and swift prudent client paramount. remain and and health to we recommendations are that unfold employees adhering taking our to we are the and measures

critical in many pronouncements business challenges caused governmental essential deemed we unprecedented fortunate business governing of are this or history the during is various portion our significant a Despite during the under activities that time pandemic. this

thankful and that continue on. systems can while are reliability, to levels our and electrical deliver we high we performance, that and communities, and quality We to protecting the networks depend clients all maintaining of safety

resilient business and we during operations as adjust that have monitoring can a force as measures We created operations situation task efficient so have actively needed. evolves, pandemic to designed the enacted it this safe, maintain and is

time. And possible giving we have communities we back The to work in office throughout this and remotely as difficult our employees majority country are identify of opportunities to working to them shifting are help as the their our to and effectively help continuing provided during environment. new resources work

quarter. to quarter, the our business social orders were as first impacts of the relatively distancing month last minimal the didn't until the In start

net over a and increases share, earnings income XXXX with of first profit, in $XXX.X solid of XXXX quarter increase XX.X% earnings gross million, first the Our revenues and per were EBITDA. quarter results

end the quarter the at over was is of XXXX. the the of in quarter, backlog fourth slight $X.XX which record first billion increase backlog a Our

well effects activity, months to projects, seen encouraged pandemic. continued on progress by steady as as Much the While incrementally bidding economic caused negative coming see we be we this not the in know to recovers. remains are as country immune we to are

focus More approached customers, and the their customers grateful of serve tenacity the Group. am trust plans Our to communities. MYR that ever will put business I'm our place confident and remains have continuity continue situation on supporting for to we our urgency, us employees focus with and and place this I in in our employees dedication humbled allow evolving than determination. who who

of overview provide first of the an quarter for Now, Betty, our financial XXXX. results will

Betty Johnson

today's and Rick, the our you, as quarter-over-quarter quarter first first Thank quarter reviewing the to be XXXX, call good of for XXXX. On will morning, compared I of everyone. results

first XXXX an million. $XXX.X increase million or $XX.X Our same quarter last year. to were This compared period of XX.X% revenues the represents

to weeks of started pandemic during restrictions our project to quarter have a impact orders. last the few COVID-XX and first The the negative on segments operating stay-at-home relatively due minimal both

of we some safe similar our and experience both Although, employees stay-at-home procedures that majority work our have critical of as continue. considered exempt orders, did and or disruption to most essential making are from implemented our projects generally businesses, enabled operations customers the projects our

were transmission $XX.X decreased revenues The Transmission million under first services was The our $XXX.X year. and agreements. Distribution. Our performed for revenues revenues primarily due period of million T&D X.X% quarter revenues of same XX% that breakdown of compared down completion. work segment to nearing reduced related last the T&D for volume million quarter first Approximately master on T&D project $XXX.X is to T&D a medium-sized to

an C&I along slowdown to increased decrease the work with offset a due related revenues various last revenues CSI temporary to acquisition, partially of the period to sized on of segment and by C&I increase to timing COVID-XX incremental year. project projects, the same The $XXX.X of from revenues a due the activity XX.X% compared restrictions million, were pandemic.

was to better-than-anticipated to XXXX receive certain in productivity on as negotiations inefficiencies X.X% certain of some experienced quarter labor ongoing for in weather The the gross as period for inclement of gross was are due compared the on XX.X% offset same year. to on by projects, which last projects. well Our projects margin we primarily margin partially reimbursement certain other first increase

were primarily expenses employee-related increase million, last an year. to The to support the million acquisition growth expenses due higher our was to period of $XX CSI, same with $XX compared increase of the SG&A of the operations. along

$X.XX million million the First year. was to $X.XX $X.X same quarter XXXX or Group to for net last diluted compared MYR share income diluted attributable per share or period $X.X per

and for a backlog for Total the $XXX.X backlog another as of March XXXX, segment. high, record was higher than a consisted of for backlog. of March segment was the C&I and $X.XX C&I XX, ago. $X.XX record billion, Total the T&D million XX.X% XXXX, represents high as XX, year This billion

credit the in and sheet. We our XXXX, availability to under $XXX.X $XXX.X March million Turning had million funded approximately debt capital million XX, of balance working of facility. $XXX.X

funded million, came Our was the strong cash period debt at $XX $XX.X of for an net Free the cash million. from improvement flow $XXX.X of prior in million. quarter

net March our in to which ratio strengthening XX, the We over continued X.XX considering to as X.X have of funded months seen focus X.X six from sheet last improvements on acquisition debt. XXXX or our improving when CSI since our can leverage debt-to-EBITDA balance be

flow, focus pandemic. scrutiny uncertainties fund to preserve our from continue spend expenditures to and on continue with our continued also of operating our to cash and in the the economic capital our free operations overhead to light impacts ability around COVID-XX We the controlling limiting costs of

that to needed win However, future specific we continue flow credit balance our initiatives improvements bonding to to the gross specialty In this our key and and and equipment capital compared and profit quarter in believe we balance income, per flow cash and had EBITDA, in working summary, and securing from equipment developing free operations tooling will investments, enable of prior investing sizes backlog year. us projects growth to the net with this earnings all requirements. strong personnel sheet meet We cash share, and facility, and complexity. execute needs, revenues,

provide Tod call turn segment. our over overview to Transmission and of Cooper the who will an now I'll Distribution

Tod Cooper

encouraged pandemic our project operations considered morning United and date minimal businesses. to Betty and opportunities the of the we critical due to remained execution bidding T&D have are with the being from impact Across essential good and COVID-XX active most Thanks, States, everyone.

primarily Work eastern activity opportunities the is bidding located U.S. and construction to our continue we routine of under maintenance small majority the execute few comprised The country the of consists MSA work and larger to projects of primarily clients agreements. also alliance to in medium-sized throughout medium-sized and a projects and of long-term half activity with small master service projects additional

an XX is anticipated pursuits and recent megawatts included win We of battery not storage. date award to a July includes utility-scale renewable in is solar exciting with This north build and seen increases $XXX of facilities, cycle project QX a XXX-megawatt-plus of just ample battery in and and XX-month solar with the which and have storage related XXXX backlog. start EPC million

Prior may recent for the to early initiatives Mid-Atlantic for of to medium-sized and be project continues Southeast, small opportunities Northeast to infrastructure projections how remain The magnitude be capital majority spending comprised crisis, outlook and thrown to larger the activity bid market timing spending affected. drivers and into is for long-term T&D too Currently few and robust. and but work were of tell intact, in electrical a it clients the the mix. the currently the bidding of

awards throughout and the for Texas, the awards year. Duke small substation, Midwest Transmission transmission and distribution for lighting continuing setting for complete and Project medium-sized expected to Illinois work Southern in notable In Connersville we're transmission, Work for the which this addition gateway in project the project to are company project to Ameren are long-term street and began on QX. MSA Energy

increase project for was Utah, the opportunities. also where Gateway activity on West project projects and In substation and the on in completed bidding Harry EPC-related we've Colorado Arizona, solar, West, Work Allen-Eldorado in wind and seen continues California, continues an the solid PacifiCorp. and

master distribution of the for as steady we increasingly reliant clients. to on the foreseeable under We grid a future distribution front, for continues. work the utilities On work work, long-term execute are with stream anticipate hardening contractors service agreements utility several for continue outside need as

in client diligent of serves power and generation ensuring the interconnection and for remains new renewable that resources. critical provides reliability nation base network Our delivery infrastructure the our T&D support

due may will economic permitting. and issues, pandemic to downturn, slowing projections as said, to from we are reduced of and impact that a our an electric some supply business delays to there be possible effects economic regulatory That due anticipate With load fully realized. include project approvals the

the As to news dominated the pandemic, by continue to optimistic. be remain we industry related headlines

daily tracking We months caution progress lessons in and continued and continue over the carefully encourage are and the our to of learned will be mindful dynamics practices. past changing few

continues we will believe value the of levels hold market devote best of investing our businesses in Group to the and our we As improve to quality, to in to and and we'll efforts bring in T&D innovating summary, and terms evaluate transforming MYR productivity. service to to safety, and new provide customers, continue opportunity always the ourselves shareholders. of and employees, In invest we

I'll to now will Commercial provide over outlook and turn Industrial Jeff Waneka segment. our the of who call an

Jeff Waneka

Thanks themes orders the and was Tod with weeks from minimally few by shelter-in-place C&I morning and COVID-XX everyone. the of the activity our in in business during first construction Continuing quarter. Rick both impacted to and only quarter applying last good Tod bidding due the

the to orders the few primary halted, West healthy. while impact outstanding employees projects the throughout are Western and our and A shelter-in-place keeping in where been service construction providing temporarily clients to to stringent. of the are locations activity has Canada continue Coast, primarily our with on focus U.S. the most Starting currently ongoing safe and Northeast our our

We've the due necessary some and requirements distancing to experienced organization to across projects also adjustments slowing manpower. on social

to to us However, of allowing our the employees new adapt rapidly our continue continue operations. to requirements most

in others backlogs anticipate few and in We with A and could suit. backlog forward their entered again have quarter. backlog had dates to XXXX But follow start projects the general, improve our pushed first record managed intact. remains we

strong to the Turning category. bidding remained outlook, activity occurring large medium activity to the the first heavy particularly through market project in quarter with

their of large their have been put project assess of hold handful developers -- a the Just on program. viability pursuits while

first an was uncertainty on overall out balance in deceleration quarter of the projects heavily Recovery recovery. year bid. dependent through slowdown minimal, economic the the overall Although to will to through could coming contribute the be market

by stimulus hopeful the infrastructure a various that approval encouraged opportunity provide of possible We're long-awaited are and approved greater bill. the packages

and water somewhat believe economic including data warehousing, We be slowing healthcare, may less serve primary centers, vulnerable markets energy, the transportation, to renewable we projects.

In spending markets addition predicting society their behavior post-pandemic. increased as analysts are changes many these in

market that project the in pandemic. demand. small in could slowdown experienced The small quickly greater suggest the their has dealing focused while to service market efforts and a rebound owners project year signs industry with Many on response pent-up the later

clients and remain industry in on working always, with our productively safely partners. and close collaboration focused As we

C&I our expect even stronger following We emerge challenges. that near-term segment the will

that fortunate and support employ are field an in business best of our are considered We essential and operations the to are most services industry. proud the

Rick everyone closing your today. I'll for to now provide comments. who time some back will Thanks the us call with turn

Rick Swartz

you field role who updates Betty, forces, Jeff. management proud Thank majority dedicated are and playing keeping the so Tod, our for a and I'm crisis. our working people to teams grateful those this and crucial support services, of during very

MYR the in Group is leader a industry.

success. continue these to of service will provide needs group as key and We efficiently the the grow in have We identifying MYR as order industry ongoing forefront to superior are and client remain that for and our position trends factors possible. will effectively believe at and business

your to and we are ready now up the questions. call Operator, for comments open

Operator

our of Justin the with W. comes Thank [Operator Instruction] you. Robert line And from first Hauke Baird. question

Justin Hauke

Yes. Hi, what meaningful backlog is? from it, here kind two I in like guess, just morning, a starting different But the of I'll kind a I today a two-thirds you mix cyclical of and of overview the a that probably that on could part Just now given what focus something geography? the ground chart gives I an everyone. the help are your don't or questions. know relatively backlog impact give good got such two in downturn. stake a that of is of just guess But current pie mentioned I've it areas see of businesses. the your C&I, look markets us maybe end you maybe on

Rick Swartz

let Well add and start I'll then Jeff I'll to something it.

really we very at wise, I think with if facilities. anything to we look have work we what multi-use-type have when do little

have that if residential commercial we combined, talking and work. you're little about of some So very

centers, that Jeff stuff I as is that that do care, about all of we we that and health kind markets feel governmental So on impact we have talked see the data increasing. he's far side. as no in time the work do

bit, that's see So your a some talk Jeff, at about that you had our so projects that out far? And backlog maybe little at but pushed we not all. all want of really you've canceled going within do to down nothing

Jeff Waneka

come A what in out Rick. Yes, coming couple been have did trying was about discussions slowdown people they to back. a have as our pushed those see been and will when We of anticipate were jobs just way. already we've A few restart.

look a a we've the those if So may anything or There they some further. see to out know not, but never there's of projects be bit pushed in that going some of pursuing. may hesitation we here, but that even happen pipeline be doesn't they're like And like it long-term. look we been

Justin Hauke

a standpoint the idea can better Betty, T&D project. is for a On get the Could from business? that the maybe that Okay. then of underlying revenue growth so transmission help this but in quantify you medium-sized the we and kind just of impact anniversaries when of

Betty Johnson

-- in we at XX-Q, medium-sized our that the essentially the the year. was point quarter say -- had very can had a in complete of one of change to the in It especially you last change as majority time. this year-over-year component, large relating which material project, large think a first it I is

that? on mainly So anything related Tod, was that. the else reduction year-over-year to comparison

Tod Cooper

accurate. that's Betty No, Thank you.

Rick Swartz

MSA remains pushed The strong remaining would We the do at point. haven't probably strong to most point. our much that within we only this segment. And seen at add really is is work thing I out T&D backlog the of this work

-- to again, the those have awards don't I'll back always say really go quarter-to-quarter of this. timing we we it the into And control positives what as So are over. is goes

we Tod backlog And conditions it, right said, strong? make So of have and to terms strong? we and look when any before accept right coming in work want as to place at you the Is contract. is the in bid contract we the side is that sure

So strong a time. at still lumpy, a again our bid backlog this market but be can little

Justin Hauke

you. Thank

Operator

Thank you.

line next of with from Capital Our question comes Markets. the KeyBanc Eastman Sean

is Your open. line now

Alex Dwyer

for on questions. my for Thanks taking Alex Sean. This is

Rick Swartz

Good morning.

Alex Dwyer

there And backlog like profile C&I margin is I times. which what for if current this guess, better Good in start in the was much you what there C&I expecting also book-to-bill supports kind provided anything large at to just guys kind I'm than just morning. quarter to driving I margin that? wondering of operating the X.X the you range wanted past? of were relative target have the on

Rick Swartz

think in been I margin past. is -- what to our in the very backlog very the similar it's

that want and It's you again side projects. jump. you to So Jeff, small on made medium-sized no want anything big nothing and that large specific about? that talk really changes to do

Jeff Waneka

It's agree mix mix good a coast-to-coast. a I good Rick. from and it's

it's right, very you're quarters. to So at we've been in prior looking similar what

Alex Dwyer

then Thanks. versus I'm it. of the the of And to and do cycle? about question work -- how on is compared specifically guess it. a Got you of tied T&D, I I have wondering just guys housing the wondering regulatory-driven distribution much to distribution kind part

Rick Swartz

The do majority of a really, where of so but we're it it lot to can maintenance housing side is tied It's you of do reliability extending the kind of the of mean, is not is some want regulatory that spending anything it of ongoing work out, add? side. day-to-day I goes our much you where we time. it Tod, they're into

Tod Cooper

in accurate distribution primary No. and Jeff. the were the I reliability when I the country. for to there continues driver hardening be -- grid talking the mentioned we That's mean, across that work

Alex Dwyer

you. Thank

Operator

line next And you. with City Capital. question of from Jon comes Braatz the Kansas our Thank

is line open. now Your

Jon Braatz

morning, Betty. and Rick Good

Rick Swartz

Good morning.

Jon Braatz

a quite maybe us the operating let's bit, been Obviously, Betty, separate two core a give sense operating the say in acquisition. a can organic of have business? might growth they to But piece for question of because what expenses Just trying you up out. those the the of were on expenses.

Betty Johnson

two. actually CSI that cost say though don't through We the those the came year-over-year. dollars overhead separate those of is I'd majority

Jon Braatz

Okay.

Okay. And then on…

Rick Swartz

Something make really as want sure we come see and we pandemic on. that add has at potentially have some done. affected to looking business it. and And in this kind on though of we just I we that continuing our we're been

towards some strong that a that. We going overhead raises with to manage forward. we stuff got done said, backlog, being have We've have frozen all but

So we've now. implemented that

down, we growth or support have to then But we'll if goes new further. we implemented And hires market it we in changes, have really that our areas except coming adjust changes the business no and on. have

doing at proactively. looking those today. So we with can are the of the Also some stuff everywhere cutting back expenditures capital market and unknown we nature

Jon Braatz

for Rick be do you -- Okay. what this will CapEx year now? now think

Rick Swartz

of At in the the similar beginning we been it's what it the said year to would be past.

based it's is on we our the questionable -- on work our and coming to see $XX we've that? identified work anything in spend that need approximately Betty whether we going how and I burning. think forward add that's and we think market not million have to to be going or also I

Betty Johnson

was $XX That million progresses. comes which through scenario as year depending No. the on

Rick Swartz

Yeah.

Okay.

Jon Braatz

Thank very much. All you right.

Rick Swartz

Thanks.

Operator

And next question you. from [Operator our Stifel. comes Thank Instruction] Yadav of the with line Jaya

is line Your open now

Jaya Yadav

Do renewables in energy plan? on the it Hi. prioritized a really had COVID-XX Dilts. because see stimulus I were Noelle being a about the forward? you plan, guys wasn't included recent renewable about This guys question how stimulus market you is thinking infrastructure and Jaya potential moving for quick

Rick Swartz

take Tod, do you that? to want

Tod Cooper

key to I going that belief by a renewable And made there. renewable going their be in that industry utilities past. fact out XX% and days forward. know the utilities generation XXX% many are be in Yes. to still that announcements have driver certain the the see what are these due is so to we plans are going mean, We Yes. is that's primarily renewable, our that

ago. going get of working weeks it's place the a we we're take mention the took So solar that the sets play the big think few to and that. skill in to ramp award and in a just hard plant I part place to and did part up people

put meets think are the that thing right as to are means plans and renewable there the in the generation So we future to past what out for do the their generation. the the need what is utilities renewable and reports have drivers goals their this for

Jaya Yadav

thinking of in of And labor the in any management key Thanks. the to you how state availability changes that of both the about Have labor? I current and are guys segments. personnel Great. seen the you know in craft mentioned invest you market? continuing

Rick Swartz

business said, getting of In had haven't -- lot a and around the that kind seen Seattle, been wise, mean, has that's it's Jeff home area our markets we in, to California, has far have a we've big projects. net New -- haven't that impacted we're I Labor stay do so probably decline. as the X% projects, with that been at in affected problem of never of York we our labor. a

especially So C&I we seen on these date. say supervision the the never workforce, provide, our tighten, business, and we've to- way I had or aspect people would market we either equipment a attracting T&D the of haven't But manage times. and the we the problem safety side during with our our the tools

Jaya Yadav

Great. Thanks.

Operator

Thank you. like call question-and-answer session. I now Rick conclude to remarks. today's this closing turn Swartz would for to does back the And

Rick Swartz

Tod, working on we thank with healthy, with look have call. you next today's on anything on and don't everyone. our further stay Jeff and then, forward again conference Betty, conclude behalf speaking To safe joining and to call. you going and you for myself, I Until I of sincerely forward us

Operator

now gentlemen, for disconnect. may this call. you and and Ladies participating concludes you today's conference Thank

MYR (MYRG) 1 May 202020 Q1 Earnings call transcript