MYRG - Earnings call transcript Q2 2022

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Operator

Good morning, everyone, and welcome to the MYR Group Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. And 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

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

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

today's you press a Investors If where call on XXX-XXXX, be X available release, days contact Dresner to you of did at for will a go website, page will we the Group (XXX) copy at please tab. is the Also, not of under receive available the MYR MYR Relations myrgroup.com. Investor Group or copy yesterday's the website a Corporate replay and send Services webcast

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

Rich Swartz

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

of today's Following of Betty's and a and Waneka, some and up Cooper overview, Tod the forward. provide call Group's will MYR then I conclude questions. T&D for some your performance going Operating Jeff segments our Officers summary our closing will Chief opportunities segment discuss open remarks for and with C&I call

competitive market second success. strong to results continued is in consistent reflect and our Our XXXX markets position. new financial quarter for work and A healthy ability acquire us positioning backlog performance

continue will solar installation see The whom be significant Midwest many of investment We support storage to utilities to anticipated of region, Operator, work assigned and expansion billion the Group's much America. is gigawatts It MYR projects approximately of battery that to XX incumbent invest electrical this System wind, the of has in MISO, customers. in projects. and of Independent released transmission $XX.X North infrastructure to plans across or are

and projects. including in data T&D to opportunities steady continues clean transmission We and track to clean segment distribution, energy energy expansion The work continue future and major core The markets, this opportunities. consistent to including transmission segment experienced centers. C&I that lead other projects activity, healthcare, may our bidding see

team is to success unwavering talent members. dedication grounded and and project the reliable safe an Our execution customers, our in commitment and of

our second financial XXXX Now quarter results. Betty will on provide details

Betty Johnson

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

record a and of were revenues same represents million an year. the X% XXXX high quarter period $XX.X higher last second increase $XXX.X than or million Our

of under breakdown increase for for record last and from Powerline to second T&D from in was revenues a were increase revenues XX% in year. quarter Plus revenues on X.X% our T&D $XXX.X areas. the million, T&D distribution. at in of work $XXX.X to last recently segment agreements. an an acquired year. revenues projects, lower revenues increased revenues of C&I distribution segment The a to of revenues million decrease of transmission quarter the revenues were increase including C&I The The $XXX.X geographic compared XX% projects. second due million revenues the primarily incremental decreased distribution Our $XXX.X same Companies performed Approximately period high an T&D Master transmission same compared services period related revenue million, due and to to the certain

was also favorable inclement by Gross closeout. certain certain project on also productivity increases inflation better-than-anticipated projects XX.X% disruptions, second gross Our experienced to the on margin last impacts weather period from caused of certain decreases mainly job supply The margin and an with on margin year. to the gross some was material of same unfavorable margin XXXX compared and the and impacted and cost labor a change were XX.X% by COVID-XX for on was negatively quarter chain primarily associated due in projects. offset for projects. inefficiencies partially pandemic, a continuing These overall which order adjustment decrease

compensation Second period increase recently with employee acquired due associated quarter by expenses increase XXXX were primarily costs Plus compared The of $XX Powerline was $X.X decrease last to offset Companies, year. the in to same SG&A incentive the costs. an partially million a million,

of amortization year. increase with to certain acquired last was increase XXXX amortization related to million Plus period Powerline of intangibles The same million, Companies. the primarily an compared $X.X to due quarter the $X.X intangibles Second was

attributable quarter were to which $X.X the compared an company. due to a funds last Second to increase $X.X The C&I XXXX year. was Canadian was million subsidy same received other million, increase the income wage period of primarily emergency from program,

a $X.XX high share or $X.XX of XX% record a $XX.X for XXXX, million compared year per Total share billion was of higher per June Second was net $XX.X for as quarter or $X.XX year. segment. Total diluted last same income period than XXXX June as to the million of was a $X.XX diluted XXXX, XX, record our backlog and C&I $X.XX segment and high billion, T&D for billion consisted our XX, ago. backlog

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

the from continued that strong our June million place $XX.X future now equipment flows meet to our operations the balance and debt-to-EBITDA has working initiatives We segment. repurchases. who credit cash and funded of to I'll capital will Our Cooper, stay Tod XXXX, leverage Distribution needs, will growth over of Transmission quarter. an call share even sheet, believe at facility, turn XX, provide after repurchases overview leverage took enable during our to as ratio us X.Xx strong share of investments,

Tod Cooper

Thanks, good morning, Betty, and everyone.

turned another second in Our XXXX. in performance of T&D quarter the solid segment

to which strengthening markets, continue to ones. has see activity, many the steady relationships existing project of our We led bidding new new and of the wins creation across

Group in anticipate are including many this in we mentioned, America, MYR subsidiaries operations coming electrical expansions We remain throughout the Currently, for North several Rick upgrades. years. transmission will and investments busy. seeing create our opportunities infrastructure significant As quite

clean a and delivering recently storage bidding with our a Services, Grid with DTE Myers continues key which agreements. large working energy of projects multiple serve Company energy customers. E.S. the National encompasses Mid-Atlantic project on Energy, projects they project service awarded continues service and Energy, work and and awarded are variety EPC, a clean continued several projects individual projects Harlan MSA under L.E. seen activity. Master substation Eversource agreements strong Our Eastern was and and for other to or awards. contract key and X-year CenterPoint operations increased has was in projects transmission to region region many recently Electric by opportunities under see MYR Energy MYRE, Master customers. Boulos The

The to of has the for two several customer projects working their this in Midwest. in energy, the plus large complaint was group projects market demand tariffs for tariffs. to two portfolio work since decision is now order through panel for reopening the an to a executive due to and has the on mentioned As freezing the quarter, solar to issued increase clean the award Department MYRE's is the an pursue which anti-dumping potential to of years, Recently, first Commerce's administration related EPC Biden added the market in related services. has quarter and

Sturgeon focus In utility Colorado, summary, Our of many and MSA customers customer their regions. Commercial Sturgeon safety Electric to strong California's relationships will and wins and turn our active Oregon, with continually by our an new in now Edison into the of Southern opportunities. Waneka, Texas call relationship our and strong customer Utah, strive and and to Kansas. success. Jeff current an extension will companies with capabilities has with provide partnerships. over expand Construction Southwestern is new to executing of our MSAs our commitment teams segment. We and continue contribute resulted I California current Western Arizona, expansion of throughout large Great our and region to with very customer to existing on who to and outlook grow the Electric Industrial us execution all enabled leverage project base the new has our contract

Jeff Waneka

Thanks, Tod. Good morning, everyone.

our resolve. political of ever-changing pandemic-related schedules requiring economic industry issues which While labor our collaboration and continues a clients and perform budgets, C&I faces extensive the of disruptions, and to with of impacted C&I to well. period conditions, entire have segment myriad restraints a and chain supply Waves building vendors includes

clients jobs engineering work doing proving additional centers air, generated of and healthcare, most clean are inflationary budget and for our offices with leading procurement way active delays in efforts long-standing the have Many energy. highway the to numerous are Our value book-to-bill been quarter. positive preferred transit, multiple to and reworking clean including beneficial we stage and energy rail, pharmaceutical and a budgets The data markets been our with issues. mitigate opportunities relationships keep district regions. across and Data within centers, as have ports, together

major in condition well in the documented, Although reporting potential. June score growth the overall. the in economic remained territory, in Architectural a strong challenges continue The are increases moderately Index indices business indicating construction Billing positive industry

they hope On Index that for The pushing to the a of the in headwinds good their calling total few be now pushed these believe A various centers today's laboratories, growth of Momentum to out of Index June across must January's jumped Momentum continuing a the news the XX-year are start projects manufacturing, forward. AIA awarded by X.X% into XXXX. prolong XXX.X owners feel The that We their economy. high, compares a of projects country XXXX. June, than facing. in several dates to tempered higher X% indices quarter update disruption half a markets, first moving growth. measure continue Dodge work could the while by in the sign overall small- projects and pharmaceutical, have was spending, basis, major this medical, projects including still data that X.X% developers to XXXX, reported in which market have is For medium-sized year-over-year to the variety of disruptions through transportation. nonresidential includes The in

our in initiated. and facility new the We the energy ample future. transportation perform funding and equipment in vehicle of awards the few a quarters electric vehicles. vehicle markets And major the centers the projects in in believe received electrical during also We this in was highlighted resilient, We solar of those to need quarter, coming of charging procuring space, for for preparation will remain prior most providing opportunity facilities wave projects chosen of stations. upgrades clean dealerships,

assist projects. We services about on are various excited for transportation new design contracts also awarded

today. the conclude, turn opportunity They increased for challenges providing leading the for will other how country. across we contracts seeing at we proud are unique enable the in transportation the I the us everyone, to communication time will position that awards construction early International design position over To and with for are Thanks, back larger us a of Group are markets We who Airport industry. These facing our continue the comments. hubs employees services Angeles Rick, MYR to Los in to the responding well will now maintain customer-focused serve. proactive some we closing believe provide and call your future.

Rich Swartz

Tod those you and Thank updates, Jeff. Betty, for

performance, ability the create and our the and of relationships second resiliency opportunities. our which proud quarter core expand of reflects customer markets to our to strengthen are growth We

clients and in our I This opportunities for quarters. would and changing needs and open your industry. our bidding on their the market and questions. business of up a operating investing continually to our focus while to continue contributions our and the to and will to reflect of our extend navigate We thank on strong projects foundation for We Group, leader ready in developing as members focus connecting landscape, energy are a breadth of and call customers fortifies that capabilities. conditions comments maintain you to shareholders as with future meeting and a our look our they principles position like dynamic the grow forward partner. provide I agile prospects and the MYR continued we for support now Operator, to invaluable employees to in the and your team

Operator

comes Alexander KeyBanc. from question of first Our Dwyer Instructions] [Operator

open. is line Your

Rich Swartz

Good morning, Alex.

Operator

Dwyer, mute. on hear Mr. us? maybe Sir, your phone you can

Rich Swartz

the put queue. back him to have in We'll

Operator

next, Okay. have And Thank you. One question. Justin And moment. we of get Baird. our Hauke next we'll

Your line open. is

Justin Hauke

of of better mean, the you little detailing I'm But in it lower out? we question I quarter? question. the specific is my some you've there. on kind I call margins, and Or the things I came the the continuing. everyone. pressuring margin Hi, here the intangible margins question, that, that's maybe changed last segment guess weather be quarter have shortfall it I because Betty, kind that's that T&D Thanks question, called in just items than more would there guess of out of anything expected. than for Good guess the Seasonally, you was taking will and just I the bit thank in in had more like this the first curious, and that were the just for kind morning. drag you, a project that did the environment half, is would in got the second that's otherwise

Rich Swartz

at increases you closeouts I weather, front Yes, it's a the nothing take probably sure going to of at you on, to closeouts you that's side. And stuff times in be to more when conservative lumpy. and little just always you're are T&D make say normalized going finally, this, have specific look on impact. the like all. fuel be those would then any on that going don't And that on project some

But So would there there. is that impact slighter a call I an impact.

timing. just more it's So

Justin Hauke

Okay.

that So for of segment to change outlook where your be. no on kind margins should

this really Okay. And coming you. I guess rate, strong. at for looking is the maybe revenue next question, the mean, But Betty, in run one been I just it's

here. backlog obviously is record Your a

was revenue in at there guess expect quarter. quarter, usually, again, Last in which third little looking a T&D, Just actually third would the sequentially we to the it down just third from bit, reason XQ And that the quarter aspect? year, improve from is I question like seasonal if is be any case, higher revenue really rate the in revenue XQ. to growth a going be that's strong T&D the looks shouldn't than is, it

Betty Johnson

various that gets wind is hot some turn Tod, to of There because our very the example, QX couldn't in as the impact. I'll very certain season. far of an there's aspects territories you of work is high Each delayed was some we work customers. some that a where work as in because And bit season up the different that in little when year delayed. with was as hot different the year, do And a last still

Tod Cooper

most. in what It excellent job utilities impacted Yes. the what even summer year. previous the we Last really the the in heat we now were of and are winter appears saw this right where seeing impact saw and the we're QX a less doing that's as we an and year, managing current of result Texas, an situation, that dip last of was

to hopefully, some results in So lead good will that QX.

Justin Hauke

you. Thank right. All

Operator

moment next One you. for our question. Thank

Russo question of comes Sidoti. from Brian Our next

is line open. Your

Brian Russo

morning. Good hi. Yes,

from gather, a of by Group. this E&C like which XXXX, week. there even just addition in existing with projects in you utilities may projects Obviously, a footprint terms also or approved. were that MISO have I scale Midwest scope and So the appear in online projects, some of upper just companies look, regional your But for I your XX the what MTEP back are win T&D lot geographic these curious, to some just $X And approaching we to be for competitively base, billion forecasted by to I'm which participate overlap and MYR project MISO When do customer approvals getting big to I earlier segment of $XX the to labor think XXXX. have projects come billion. national think these

Tod Cooper

have know they'll start, projects the We'll I'll built FERC in ours years. we with several This A to more Tod. later up as see those will refusal. their they're in anticipate those few bid right utilities, Most excited will of XXXX. because of next the But clients do MISO is We're just you're Rick. working they're utilities in throughout that with through projects to to of the those many online will about projects, XXXX of and really works growing done those either an We a they how and or first be the the right, some clients. are today. competitively with incumbent be those August capacity partners come of continue right where RFP upgrades when them MISO be schedule the of state process. to opportunity have coming

So to of here more and we'll in probably as going, we're know see all the that's projects. QX the to those where and direction timing excited of

Rich Swartz

other doesn't contractor. be And by Brian... go the There's come aspects the out that that of those projects, they projects rolled $X size Even towards the to billion the time spend of they won't contractor.

that come out. those we So of can handle size any would projects

Brian Russo

to And Great. C&I. then switching Okay.

kind half to in margin be monitoring? pushed X% the that is play on And Those Group? given average You chain supply you for MYR out trend talking that et tracking sequencing full first some to half. cetera. does you're into the the XXXX. just Are could of that labor or Or segment project first the and of for X% it specifically XXXX, mentioned headwinds you're X% how headwinds that of that in an industry-wide this below operating year productivity,

Jeff Waneka

C&I Yes, our industry issues. we're the Many through Brian, of issue we're more clients that their an think of are contractors right for, working working the issues facing now. on it's general and I is facing that based

of are Sometimes things. than of pandemic types those us, prolonging to they deliverable the think by impact I and items, be world on it's, of those other recoverable that longer And are waves the again, do an we thought. parts initially seem of not still having affecting

So why believe this a we going saying that's longer. we're is continue to bit

Rich Swartz

our profile we As half to far said want on on as the goal. and margin That's the the carrying material as end through everything year. of our increases just potential back to of and price that goes, lower goes our the by C&I stuff, says, margin be we've we year. up profile else the of see that delays the of of side But certainly Jeff these first with shipping kind next some that and on end

think I great got there. out great projects some we've So We've got backlog. a

people done some our a and these within and schedule of in of some buying that on time sure delays that Our on we're trying to budget. of job get of projects have our and ahead and materials it great stuff making

everyone facing. an that industry more side, positive but very So of on is experience type it's that

Brian Russo

the relative tranche, And Great. which T&D given more of operating Where and do greater each different the then overall end segment macro given markets? tranches, going of right, given portion become four T&D think just kind and then an the increasingly kind you see forward? you this the of the businesses to of C&I, GDP margin, segment first will economy mix Do and dynamics is Okay. and tracked outlook, revenue just environment. of robust of MISO

Rich Swartz

of of I here been than years, on kind lot we've There's both transmission side I've got and had. this distribution sides. on opportunities I never ever we've think visibility the more mean a I've XX seen outlook.

on positive very side. that So

on in continue the yes, other going to But markets So side. spend. we're the in are even utilities to

we're guess, So maybe other, I are like against they events in. markets of going macro not out positive as the some forward. very the resilient I there.

in think that markets side. you at that look on the I on C&I, the positive we very when compete

both it, little like again, So would T&D more I but sides downturns. a probably of resilient say is during

Brian Russo

very Great. Thank much. you

Operator

next our you. one moment Thank And question. for

comes from Our Stifel. next of Dilts Noelle question

Your line is open.

Noelle Dilts

have Hi, taking questions. Jeff. question for a thanks for my I

again, you're citing Jeff, for this So year. lot it sounds this construction seeing leading positive are like, you disruption a of the obviously the market, indicators

remain delays, 'XX associated and out those make I'm revenues look into thinking down just sounds be if year. potential, then sure I'm you So how year-over-year the and a of demand growth to to and if we'd might or overall this out trying start I'm think reading as costs. to half some like would it rates second higher still that Maybe think of given to guess, a correctly destruction elements. I expect interest by you of could you basis on correctly higher hampered to 'XX parse with about kind

Jeff Waneka

to Well, to go. opportunity, we their We some markets similar lot is this a XXXX difficult our fairly see have through Very the pushed to come to rest in of jobs to clearly year. lot of gotten busy out. this going half where but see growth in fill have Others that first a we're as see the place. when of year, into of

hoping into trend XXXX. that we're that, continues So

Rich Swartz

this the half half that being year commercial this the half. earlier say second than weighted did on we more year of we industrial second of saw the year first the And the to

during every say to half a second see going as there's we planned burn huge So the little information day, increases year. move good the be but projects I some today. out as But there's the material more long there. we project and continue to wouldn't of as have revenue, in

schedules So you're always adjusting way. your both

things some some moving and out. things pushing up You're you're

of and we make one sure closely, of productivity most the it's monitor we in the can. those, out we we think people field, get it I So our

Noelle Dilts

that about big business some about potentially thoughts have Great. of or growing your made competitive you're making your and acquisitions? Okay. sort changes business space. of about Just how then you're be positioning the within any two Curious competitors thinking great. if organically would pretty growing thinking how that announced obviously, that largest And versus recently deals renewable

Rich Swartz

Sure.

we've look we've mean, energy you business years, if what discussed before. done, for the that we've think I clean I back been in

think look energy to had clean all to the acquisitions when Powerline, done I the components last we've you at prior they them.

from we always acquisition that something also We'll we've to grown business it's standpoint, look an that that out developed continue at but at. So it look organically. and

it's organic So our acquisition on on market, front, between positive what grow and think done a market. the continue push we've growth, We that it very has the we'll and that to for company. great future

Noelle Dilts

great. Okay, you. Thank

Operator

[Operator you. Thank of of have return the Dwyer Alexander Instructions] And we KeyBanc.

line open. Your is

Alexander Dwyer

Sorry Can my hear about for that, now? taking me but thanks questions. you

Rich Swartz

Yes, we can.

Alexander Dwyer

Okay, cool.

So on large drove the growth? quarter. couple the revenues major if the the a in about had can And in T&D XQ, contribution of the just talk projects you what

I were think transmission And should those ramped ramp supposed and that full of large in project through projects year? there the solar a was to be half spring. second the

Rich Swartz

Yes.

spend in growing we on large with but and his as I them, planned. job that nothing, And came there grew. business on good group the business. revenue amount there just a side, both across distribution. sides, was projects I think board it's Tod's done a the those large On of had wasn't transmission that on out mean, project the

We continue growth see and opportunity. that to that

Tod, next through as spend quarter will forward, going anything continue anticipated. those far add? As spend got the to you want as to you projects

Tod Cooper

Rick. No,

was right. units, growth It Powerline. consistent all really You're across business including

to, third the see up level standpoint. we'll is well. major same 'XX that a from will ramp to I that the as it fourth work little in in two It quarter. referring the about quarter, But continue was you're of projects a part spend that Alex, of and majority that more of through think the So

Alexander Dwyer

any Solar update year CSI California, in think you. That's to it's is project that next early start Got supposed I And there helpful. on now?

Rich Swartz

part Hoping on permitting of first the taken through back early They're out going some next But forth that. issues. next of and it now. as year, past nothing's for year working still that

Alexander Dwyer

is XX% a that C&I. just taking if mean in then pricing to X% X% relative terms the different a about last my work backlog the The to year one And contract you're year-on-year. lot And up ago? clearly to and you is, you're there's approach you're backlog Can compared in bidding to margin? getting of a today winning talk I

Jeff Waneka

on, getting in side jobs to really that to things good corrected now. the backlog we working work way conditions We feel definitely pandemic language that front projects our We're through some there. was we've a when Obviously, that the the on lot our of to that and We believe us. worked things better. and had get more We're getting the and difficult that. these about contingencies adding favorable backlog are we're of hit are

hope question happen the things Now We the forward. go is end, what pricing will some on in be some upside We there'll going that think down. up, things with we're the go that the of that.

Rich Swartz

kind affect Jeff disruption. covered chain supply and us it of that And of the was earlier that things the probably most one

might planned. not components the be as the have steel, in but of that it building the that coming of constructability coming we in, other material be may So flow not and

work it that affect to supply not it's as and So do margins. chain causes smooths could we of think the And it's said, your different. disruptions, enough us hopefully, And little our bit disruptions But resequence next things I major year. go out. into those but first to a part

it. going address teams as that So I be forward. our are we go ready we're think to But to battling

and I can think our address projects. going keep on it make they strongly we sure

very market it So over T&D the the and But a say there. does that's properly. price it would that the the of going side on make there. and hasn't remains remain both competitive changed we component stuff C&I out years, out I forward it main competitive sure couple behind last

Operator

Dwyer? Mr.

Alexander Dwyer

Thanks all. guys. That's

Operator

in questions further no see I you. Thank queue. the

turn So for conference final I Swartz the Rick remarks. would now back like to to

Rich Swartz

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

Operator

call. for today's conference participating. you all Thank concludes This

disconnect, and You may okay. have now

MYR (MYRG) 28 Jul 222022 Q2 Earnings call transcript