MYRG - Earnings call transcript Q3 2020

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Operator

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

David Gutierrez

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

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

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

begin, second, available Before Group update information risks may and reconciliation and uncertainties in results are forward-looking These over press turn such upon the to statements on call forward-looking future These these the me based comparable forth With risks GAAP to be call that statements of measures I this A no Management performance. Form information Form Certain yesterday’s XXXX, MYR forward-looking a company’s to XXXX. statements will assumes Rick measures such differ XX-Q on are press of state, statements. discussion are financial release. obligation could yesterday’s that you contain as and forward-looking discussed cause release. these the discussed statements. the let that XX, first, and The third quarters set the MYR actual is materially Annual ended reports Accordingly, XX-K any uncertainties said, year non-GAAP Any we involve for today. Group and to the to in to remind Report statements. most the from on no want of December non-GAAP for Swartz. guarantee quarterly company’s in

Rick Swartz

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

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

backlog The well backlog XXXX.Our the as of competitive $X.XX we markets strength. $XX.X free third third the with record same of end and revenue, reflecting the was current in XXXX of results at serve our for our sixth in included the as a quarter XX% Our as a to increases quarter million, third along the flow cash of income over EBITDA, profit, period gross compared increase stability consecutive high quarter net the billion.

productively people of continue meet successfully remain as XXXX mirror the clients, that business, first our needs enacted our in the as months rear-view the working allowed grow safely plans With possible. are nine profitable, we us we keep and our of pleased our to and

people we continues highest the community volunteer involvement Group communities for to to communities is blood hours, and sponsorships. degrees in strong to serve. the essential individuals We remained I’m and COVID-XX we operate. employees, well-being continue and which third the has our to within have through the a priority. throughout safety, event impact pandemic live the and proud affecting consider our workers, donations the MYR of which clients, the varying to quarter, negative continues drives, COVID-XX monitor We and on carefully to give our our say business. communities back that health, meal

of execution the quarter, C&I and energy. all segments. and types T&D During active projects ongoing including resilience, and our the reliability capital to The strengthen and and integrating aging sizes need for remained third in both bidding business project spending drivers and was for strong, grid infrastructure, renewable transmission replacing

continue stability to While to our care, vulnerable of including warehouse, gain water primary C&I data to projects, less and be energy, planned transportation, business. business centers, partners projects discuss our additional health into with the slowing we markets future economic to and monitor renewable our appear insight

our significant battery being is from anticipate state in Overall, in believe agile lies our material the their will commitments diversity goals, with meet opportunities reduction clients’ renewable and utilities across and times. carbon and aggressive and innovate, inspire me near through We improved country, utility-scale in and exceed standard unwavering storage in driven decline challenging dedication professionals, costs. by greatest This space who our technology, to the order strength solar, performance Together we we in remain the needs, the also future. of portfolio talented these expectations. to adapt perseverance

geographic and form client-focused us We results mindset allow financial depth deliver to are of foundation confident long-term consistent will that for expertise, the that sound success. scale, our

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

Betty Johnson

the I’ll Good quarter be XXXX, results, for the reviewing Rick. of of On quarter third everyone. to compared as call, XXXX. you, our third Morning Thank today’s quarter-over-quarter

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

slowdowns Our breakdown transmission storm start-up delay revenues increase work same distribution. were $XXX.X increased to offset related T&D million year. primarily due segment, third quarter revenues C&I higher projects. X.X% events, segment T&D quarter and work C&I associated last certain for million acquisition related an Approximately with for of year. offset by segment $XXX million, $XXX.X partially third the to weather services, due an to activity under increase million, certain COVID-XX high transmission for performed volume with service X.X% revenues was agreements. same The the a $XXX.X to T&D revenues our on compared increased the the to pandemic. revenues record of The was master transportation-related of The revenues associated to were last XX% CSI by T&D of compared a C&I period and period and partially

company projects was Our third other orders, for XX.X% $XX.X were taken XX.X% increase higher-margin work, XXXX increase primarily in The gross quarter expense storm-related million, improved was due margin to to acquisitions. and last reimbursement. of SG&A well period to our margin million year. the same in the support last the due compared and compared increase has profit-sharing the to an an to gross period contingent of change The pending was claims previously for and to expenses primarily and better-than-anticipated as unrecognized recognized higher year. These related settlements an partially improvements for $X.X and which associated certain with project costs by and and certain expenses claims the related decreases in projects, of prior offset bonus operations, change productivity compensation to operations growth incremental revenue on on increase our revenues employee-related as labor and same inefficiencies orders. were and CSI

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

backlog was a than was was September for record Total $X.XX EBITDA XXX.X representing XXXX of as consisted our higher T&D XX, record of high million a XX.X% segment. billion, record MYR. ago. a million $XXX quarter Third and high, Total for $XX.X XXXX, for backlog quarterly segment year high and C&I

LS project Marcy previously backlog New includes T&D with upgrade the to Power. announced Scotland Our

funded Moving debt, to September XXth, liquidity had borrowing in $XXX.X working our availability $XXX.X balance million and in million of million XXXX. credit under as our $XX.X sheet, we of facility approximately capital, of

trailing Free free flow the improving came and our period in We high strong $XX.X of balance was flow. $XXX.X a for have on continued cash million cash months. XX focus to at strengthening record million sheet, our the for

leverage ratio tons to flows Our needs, our over XX, initiatives, investments, funded last our as will current year credit requirements. September XX of leverage and balance X.X meet since a to XXXX. We capital cash working strong X.XX months, improved our and future to operations improving the CSI debt acquisition, equipment our believe enable ago facility, from from has us EBITDA sheet, funding growth

solid liquidity a profit, and income, leverage, net new on In our purchases repurchase improvements our repurchase allows and shares outstanding of gross share program, us per common year. from hand quarter authorized debt intend flow, facility. million November which performance, the strong of prior free share, had EBITDA backlog credit funded financial Directors we position to our this effective through Board compared cash borrowings EBITDA, these revenues, stock to financial in given Additionally, cash Xnd.We to and of earnings under our fund up summary, and to $XX to

now provide record Tod per new revenue, EBITDA, income, set our over the turn share we to segment. call of an backlog. overview Additionally, and distribution this quarter profit, will who net for and I’ll transmission gross earnings highs Cooper,

Tod Cooper

Thank Good everyone. you, Betty. morning,

and is million an outlined This third reliability, ultimately the earnings related our backlog. maintain classified end and Group in-service more excited negotiations income, that positive and contract to and with communities. be early the Amidst ongoing $XXX to of New XXXX. T&D our completed are of access energy. by announce at were September, to employees, top-tier segment with have in to project efficiency, upgrade renewable LS construction to fortunate had to in essential pandemic, I’m PowerGrid, is The clients, capabilities scheduled increasing our anticipated strong business as was Scotland New to date As COVID-XX Power. awarded MYR and improving a and officially statewide project quarter is a expected in strive to service the York Marcy begin the facilitating system release, valued our revenue, operating terms on expertise impact and XXXX, in final than we

development increase like renewable the As restoration to continue States the committed storm we crews clean for in in we are across numerous quarter headlines third and sustainability an services. this. provide projects quarter, supporting the Throughout United deployed through to demand note industry energy of to third power, the the

those of Our West, power in responsiveness East. in Hurricane individuals of power the numerous values for storms line in quarter. to term project projects, Laura, the Consolidated such with derecho affected on In several crews and continues restore Across disasters XXX on as in the country, ready reliability Edison, need. Battle nicely KV master and all progressed Work for on-grid, Dominion, small jobs, lump-sum Storm Valley to during agreements. has utility-scale Mount distribution, third also solar project transmission the Mountain significant the service for worked Nevada Midwest, teamwork, by restore size substation the for the medium the work continues stand continue area diligently tropical wildfires various tens and in to our Rochester of to which and to we long natural to project the thousands and

Reports with work to for to utility-scale an uncertainty. bidding and trends next despite activity storage resources trends installation positive solar are outlook energy spending, on in to optimistic demands. to well demand storage capabilities fulfill our an active remain highlight positive in continue and the current capitalize in opportunities that three we believe outlook years. Our continue through quarter. We remain COVID-XX to for contractor Industry the Overall, the and grow forecasting resources limited energy expertise sources show increase and equipped the solar third with the markets. T&D

under optimistic unique services about to and a position, master to medium-sized our our to our our had In and are our clients further we further our to relationships on energy quarter committed with ability challenging potential while agreements. are adapt these opportunities in growth and and times. small EPC the performance third continue strong positive capitalize renewable of during strengthening developing We closing, projects

will the and health business commercial of our of Waneka, confident clients, needed. our the call to provide our I priority, industrial segment. we as communities a as to turn people, safety operations adjust Jeff over With our remain and who and will ability top overview our in an our now

Jeff Waneka

and we C&I the Thanks, cases Tod. the Good of ebb across morning as everyone. quarter for third a track This country. COVID-XX busy has been

potential work. work, ongoing as future closely of to continue as impact pipeline its monitor to well its our impact We our on

in demands our and favorably have guidelines platforms work several processes responded for place as After of to the is have arrived experiencing changes to We not increased pace this levels the quarter in with digital crews of revenue in relatively new We an high in second case last XXXX quarter. we continue in Having any cancellations, success each unimpacted. deployment that which before new We to communication. over at Our that distancing owe that put to second rapid record a COVID-related the proficient levels. and the steadily to our decrease collaborate COVID-XX enter quarter, work backlogs in revenue we processes much the slight returned project month remains significant experienced our start had increase the electronically. have a through head of burn moved social steady allowed and clients pre-pandemic announced today. years industry we to still

However, project have starts the a into few future. pushed been

of the needed we so resources project that While cancellations, commencement we carefully maintain we start are with dates, the monitoring lack for of these projects. pleased can the are

a overall the on year issues. remain Turning hopeful economic to continued centers, that move bidding Most commercial forward, being concern the and warehousing, quarter, projects growth most of remains We predictability be forward. less packages continue somewhat including as in We during projects and will will bidding believe industrial continue that through slowing, be provides chosen was large energy, however, tracked offer of and the stimulus which remained offer recovery recovery, long-term for markets health third opportunities to and offices. that winning vulnerable platform to various we market deficits appear activity, our transportation, may economic to markets have dependent renewable as in to balance be care, believe water a our C&I successful active will primary our data and economic solid the district opportunities we significant C&I of indicators confidence moving report funding potential projects. profitability.

encouraged our been transportation healthcare expanding expansion, for district market a & expertise of preparing remain a the positions future In national Both which our showing offices, believe analysts to of that in clients industry increase COVID-XX. to we and adapt across care resurgence our spending we favorably health have possible hospitals is potential expected Dodge is us bill. by we infrastructure approval and Data According addition, normal are for the as resiliency. new indicating a providers to Analytics and

avoid patient the a primary Architects ICU The systems. Institute to is this scalability will forward, additional more ventilation and few sectors that of facilities expected creating stated Considerations Health including medical a flexible construction be larger capacity, for flexible flexibility, and the another forecasting in healthcare Moving by this connections, increase XXXX. one American year of X% recession and X% gas Care and cycle, power, capabilities

quarters. to cloud experienced and a data over several also the the to market ongoing greater focus. the procure reliability, opportunities edge and contributors among large continue the We track power from growth investments projects of to center in higher expected few as co-location providers the next market. We’ve services are become significant computing, [indiscernible] Heightened services

will confidence strive Recent are savings. segment contract stream modernization expansion. higher in a We awards that this efficiency for C&I projects continual as clients and cost districts provide seeing continue various its of

customer particularly biggest feet record well That that Data million Another warehouse is at with when impressive market XXXX. building Warehousing be construction started Data, XXXX. to their is slip Dodge that consider X% set appears XXX sector up Dodge to According holding square is in has warehousing. relationships. dedicated and only to experience expected warehouses in the during to a you to we to been focused prior V-shape creativity, levels, and to long strong breaking progression on and is the a COVID-XX record in possibly and returning e-commerce built fortunate fulfillment sustainability, have again crisis, business XXXX. flourishing In are closing, spending forecasted

back on some Thanks, the working who will productively, and statements. to for safely, our provide turn today. time collaboration us always, clients will we with now As your closing focused remain I Rick, close industry in everyone and with partners. call

Rick Swartz

I’d Group’s and and President to prouder Tod, those serve for you closing, MYR Jeff. updates never CEO. as been Thank In Betty,

providing now doing employees, closing, to the comments up and In remarkable support. environments, and Operator, I’d are clients questions. industry open offices and shareholder value our our committed both none. for and and again working employees reputation We safe through second to their to thank like remain projects, trust and for excellent their and Our to field we’re and once dedication for so sustainable, stockholders operations. our loyal ready call in

Operator

KeyBanc. Sean from is of question first Eastman Our Instructions] [Operator

Alexander Dwyer

for range. provided you transmission strong off range high-end Good better Alex were the Sean. our I’ll margins that this of for in taking the is that were well the They historical I very morning. in This start the double-digit past. that guys above with just Thanks questions. quarter understand drove what on I’m typical strength. to guess have trying

unrecognized going out guess type of I’m the towards called were sense those revenue. You How I margin forward. in whether margins? settlements sustainable storm the related trying to is to trying get profile what this is work just at to material

Rick Swartz

Yes.

we’ve what and those quarter. given settlements did It didn’t this it. before storm needle. that are the of above play at some move into We range The drastically

extremely weather had during period. also good this We

you. settlements, together, As good we’ve you weather there. that past those combined, said take range additive and our things higher was it that storm all of it or break quarters, can make in those add to work When weather, some

Alexander Dwyer

dynamic project regarding on LS and up, an we the the guess smaller perspective? from prospects puts up basis with one range? transmission I mix that coupled marginalized, going on large takes large you booked historical could think the be and versus guys the the trending upper transmission Any of Then, medium this be ramping thoughts On another or T&D, about year. Power helpful. projects should hitting of end margin towards forward on how annual would Then that that quarter we next

Tod Cooper

to in training that our projects. It’s from improve do and the aspect This of keep productivity the to margins is the large we continue working certainly Tod. all on our goal through

to We us, for levelized, the those find activity, Board that still day yet and of While what’s been on a that that projects that some of on process see some to year. we we’re really have of to to steady are out do the out Scotland on every those we starting for optimistic we are as pretty performing a us. several script and right we’re That’s coming RFIs small closer or pretty there haven’t and state projects know, New medium-sized projects. market. to here as far the RFPs through focus struggling putting these that’s bidding focus and market, do permitting project lot to continuing going the We projects. and getting It’s on the we to we’re seeing focus them next for Marcy large to come big now

always big we’ve large what they think projects I come that doing said when of is a part out. we’re

We’re one for look building that’s and what to do. of towards the contractors that people we those, strive

Alexander Dwyer

down the Thanks. ticking high-end one turn provide point timing With any can more in? squeeze Can first quarter, around stabilize? C&I backlog around backlog inflection start an since the corner, I of where the a could visibility the of you to thoughts maybe

Jeff Waneka

we’re year a backlog, We had highs. the coming have very record at strong into

think months but to higher I of we a nine be increasing book We’d love at to moment. at turned the backlog. ratio, bill

we We’re to what and lot No there of is the tightening look making as on we’re market some a doubt chase evaluations being what smart at. really tighten in about up. things

and the while. is, right following that we’re tell for I capturing. can been point think when just There’s well but doing turmoil quite we’ve market quite in a we’re now. No that of lot projects inflection the one work the well doing we’re tracking capturing a really

Tod Cooper

and into we the can, timing four don’t those contract in again may three, we the everything it’s of market to before doesn’t an in right negotiate that to our We can backlog. we C&I to active it want take put that. contract the side, said, sure areas majority place we our contracts months the a control sometimes We’ll make we have bid and Jeff quarter-end. negotiate serve a we out. sign As into of with and the that to It come have contract fairest do been

I be backlog. there Our one slight that. before read into too we’ve lumpy going much decline is always if wouldn’t quarter said to is a in so

Operator

question Our next Kansas of from Capital. is Jon Braatz City

Jon Braatz

into Rick, of Couple third the Betty storm some quarter, questions. or in Good has the quarter revenue absent morning, today’s the extended work fourth hurricane? restoration of everyone.

Tod Cooper

it really Yes, continuing that some effects has, and to elaborate experiencing. of there, ongoing but think wildfires that I seen today. the much This the There of not is is Tod. still you’ve we’re the hurricanes

Jon Braatz

two of kind more farm, of emerging when renewable solar Secondly, guys work about is guess frequently questions. a battery what do utility a for and that Secondly, you one little you What opportunity, to do storage a XXX-megawatt in maybe has Kansas to Number proposed the battery Energy talk a regard here bit new regard? do help you storage? down you exactly City, generation. listen on opportunity storage farm. you facility companies in to in I NextEra X,XXX-acre example, do frame the battery my

solar will like frame What addition to or it emerging think opportunity help I is storage the Can the you battery of supposedly include kind maybe farm battery storage? from storage. battery that incremental a cost developments?

Rick Swartz

at to when think it’s doing sites market, able the curve we projects energy really market the that these everybody at I Well, what bell was before duck All to allowing solar be overall is there it to to a storage do it hit. XX% time, which because that. come look It’s in with produced battery the to that, be take site same would probably store afterward. rough it way feasible market what to it range. I to the say costs to additive That’d XX% allowed no is to and

from that From and everything, business. work involved being we’ve of a installed installer we’ve purchasing the clients it done everything and the it. labor the also just a good to our broker we’ve It’s it the then done phase We’ve actually installing and engineering the full done both. market. for procurement as batteries additive and side those with to in into For the components bringing side our be side of

Jon Braatz

seeing wind? offshore in developments Are you any

Rick Swartz

onshore those seeing of of year had that. did projects. of portion we’re one a the We, we where are, we last some We project

to for We’re market. seeing those potential to come

bring make do activity in of think a trying lot now, to is has to I there, to viable there of pricing with but pricing it’s and out it sure a wise. lot right

that inside and it side of budgeting, clients to estimate our kind with on and budgets a providing constructability of that involved reviews. We’re

Operator

[Operator Instructions] next Our Yadav Stifel. Jyotasna is of question from

open. is line Your

Jyotasna Yadav

asking wanted thinking election the you’re segment November I you business? maybe changing trends start about Do presidential impact how to give what on who thinking you’re of based is or outcome see operations. demand off on about about elected, the

Rick Swartz

start and want to. they anything I’ll I’ll Todd or Jeff let

to it’s, markets there. not identified don’t were involved the that regardless. continue see The today that that it’s we’re the mandates are side us greatly that for stay I chasing my finish. with whoever’s changing, affected we’re For in in or there, out that with going tenant as we’re I, being voted constant we’re some Renewable script, solar really drivers. of going I the to stuff into are those Again, in,

up high-rise our control continue component not We’re is way. markets we who serve any the economy and into the be regardless we’re but big us to to bullish pretty a go that of there. that in or can of could down as are hope The in continues on going and that. don’t the a I markets predict little strong. construction in We think business of bit, I’m any economy don’t

Jyotasna Yadav

pricing discussion or segment price out? from slowdown you push in of emerging seen concessions heard any or or project activity Have the because a C&I pressure

Jeff Waneka

that of Again, that location a pursue to depends No the tightening is. much expertise. is try more the our technical doubt work the in and relational market on there to country more it and is as the we about how

have work more pressure. we is we the larger seeing less smaller that probably on but do that and viable horizon the the pressure, they seeing greater in projects think districts are the some far multiple of I

Tod Cooper

would the can, as we’re increase. our doubtful way We I everywhere before. below we when can stuff We’ve you entering change we’re it’s we making going continues economic we’ve been to haven’t seen productivity improve their to tell bid. not economic in What times seen anything not place take Well, is but before, a of that say tough to lot cost. or competitiveness as we going not times training, put far sure I

to to project for our take we a it. cost do to they’re to not always in below If cost put is to focus somebody it. margin us. going estimates, on the be bottom then wants a race on and focus Our fair It’s going can the

Operator

this further Mr. no conference to questions showing am at Swartz. like turn Rick to I back I time. the would

Rick Swartz

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

Operator

Ladies and you this conference call. concludes Thank today’s gentlemen, participating. for

You now disconnect. may

MYR (MYRG) 1 Nov 202020 Q3 Earnings call transcript