MYRG - Earnings call 2 2023

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Operator

Welcome to MYR Group Second Quarter 2023 Earnings Results Conference Call. [Operator Instructions] Today's conference is being recorded. [Operator Instructions] At this time for opening remarks and introductions I would now like to turn the conference over to David Gutierrez of Dresner Corporate Services.

David Gutierrez

Thank you and good morning, everyone. I'd like to welcome you to the group conference call to discuss the company's second quarter results for 2023, which were reported yesterday.

call Schwartz, today's Executive and on Officer. us are President Rick Chief Joining Vice Financial Group's MYR and Senior Huntington Operating Egan, President Kelly Senior and President Chief industrial Distribution and and Chief segment. Operating Senior Vice and of Vice Chief Officer, and Officer Transmission of MYR Group's officer segment Don commercial President Cooper Tod

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

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

Richard Swartz

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

Cooper performance conclude then and call will healthy market T&D C&I Operating Egan, open your some for overview, position, segments, strong our summary Chief will excellence. today's a remarks and and up and discuss backlog MYR I going Don segment's of performance quarter for the our closing resulted Group's Tod with questions. A forward. provide Officers solid call Kelly's Following some of opportunities and our from second operational

one continue and for pursue across shift this continued year We while we to work our opportunities energy organization strategically investment more customers. ongoing the with The a for executives growth. in country's relationships see maintaining surveyed our the robust along investment indicate quality number electrical This collect for opportunities and clean our sources, the investment with meet to infrastructure demand electricity to in the executives transmission to planning years. planned T&D our and X seeks strategy over from higher segment. business around clients utility growing those is build new Insights country. on based that supplement bidding expanding of and present valued to data clients the answers existing new need the next Earlier the by

as numerous we to electric demand the opportunities growth survey. In continues energy see in C&I segment, our doubled of across driver participants the our fact, our solar itself who as since a nearly high percentage charging XXXX station large and priority vehicle as survey a project In view low present U.S. potential clean

solid backlog and opportunities. also to centers, our manufacturing data create steady transportation contribute healthcare of markets core chosen work bidding of Our and

lies our strength dedicated and greatest within employees. talented always, our As

grow we teams our empower potential as company. our We continue and develop to reach to highest their

strive Our their team business safety customers to goals. them helping delivery excellence achieve with provide project members and while in

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

Kelly Huntington

everyone. you, morning, and Thank Rick good

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

compared agreements projects. energy $XXX segment represent segment Our The XX% were revenues second related year. The last projects million, $XXX C&I T&D revenue to quarter related an projects was revenues same $XXX approximately projects on revenues both to revenues geographical million increase of T&D same clean were energy of increased on $XXX in for the increased to clean and with revenues. compared primarily transmission for approximately to last Work distribution. million performed service XX% of and C&I XX% increase areas. breakdown to continued of transmission the segment our due distribution period to certain year. primarily an T&D approximately high a master our period under million, for T&D record C&I higher revenues

operating some and by well to with with than a was on associated X.X% period inclement partially margin last anticipated margin the period better Our primarily increase same also was caused were of gross margin inefficiencies, gross a the favorable which to due XXXX year. impacted and second project by of disruptions The labor and than same quarter change decrease Partially operating X.X% were T&D productivity for projects were for last by offset inflation. chain compared income margin Gross inefficiencies, X.X% of margin better The as same on some projects chain certain was weather. labor weather. compared period were rising XXXX in certain for was XX.X% negatively inefficiencies, last the and productivity order. order. project caused The which the due XX.X% of for productivity was anticipated which primarily of better by decrease margin quarter change compared project. The than supply X.X% were second anticipated by supply year. some was and project offset by disruptions favorable the the partially increases for These was as labor by due to of and inclement to quarter income XXXX inflation. rising These primarily to year. decreases on a costs costs C&I offset caused to associated for second

Second XXXX increase an last of was increase to expenses quarter same employee $XX the related due compared SG&A million costs. employee period our operations primarily an to in higher to increase compensation year. incentive growth $X the The in million, were expenses support and

million the compared period period same due increase of quarter interest during interest quarter debt year. rates, average same $XXX,XXX expense compared the the partially primarily Second year. second to $X to XXXX balances an by increase last last The was lower offset was of to XXXX as higher

compared $X.XX net compared the $XX for income million per same XXXX $XX period of was increased million to Net last quarter year. Second year. income $X.XX share for to same XX% last the period diluted

quarter year. period segment. high EBITDA was our a Total ago. C&I our $X.XX was XXXX million Second than June compared consisted XXXX and as as XX% billion for record $XX of year last of of XXth, June $X.XX XXth, $XX XXXX the and was segment to Total for backlog backlog same million billion, for $X.XX a higher billion

operating with last the starts project was cash of compared year. $XX Second flow flow by of activities to XXXX, to and billings period for primarily completions. cash cash operating provided operating same the The million million due payments positive decrease associated timing in -$XX was quarter and

was flow free continued flow $XX XXXX, the million flow reflecting free positive year, million of and -$XX last in same quarter cash compared cash to the operating Second higher growth. capital our to decrease expenditures for cash period support

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

the a has $XXX $XXX we our credit million of capacity representing completed During extension second and increase. an quarter, which million facility, now a amendment

sheet larger funded future We We as credit June EBITDA overview pursue transmission strong to leverage shares. balance the X.XXx and to ratio have enable segment. debt that of opportunistically cash from our continued over us working maintain facility, of believe needs, now distribution meet will strong growth will XXXX. a an provide the of XXth, flow to and operations Cooper, I'll of leverage support our business, acquisitions Tod our and repurchase to turn who our call capital organic

Tod Cooper

customers on second segment. to quarter their existing solid led key T&D our strengthening executing in continued to with results our and expectations, expanding work Our relationships with focus along

to low demand bidding on increased see activity system and steady strong backlog. continue are emphasis as as We An pleased integration well with energy. hardening our clean of

to energy investing indicated the order hardening X in they with nimble partner. strategic other grid. Clean and remains reconductoring impacting clients as Our focus indicated efforts overhead positioned system as over ranking growing surveyed, top transmission our investment robust those clean drivers the T&D planned for next direction driving also new businesses years of clients. X a as X their participants continue invest the and in in direction. their on the Rick areas, Of most factor as to next investment is XX% survey in the it the our nation's years. top Survey build system clients Strategic our impactful mentioned to demand hardening strong, meet ranking The with energy of of next Group XX% a MYR Insight to our and continue part plan in well Earlier, strategic and execute in the years plan

and the these responses areas and targeting battery XX% of in storage EV storage opportunities planned in These investments, MYR of station highest have with investment. believe in top align generate with potential infrastructure recent and capacity. energy growth we've also customer seen years priorities wind we Group. of rank these to Solar charging ranked energy participants X what clean the for the increases

in customer master a X years partnership eastern the markets Northeast X in well as in we Our additional in Midwest. the key our successful relationships MSAs all key as winning new extending establishing in were our with a extensions. Recently for additional work agreement region service through each active client large of subsidiaries with remains growing

solar a throughout leveraging and energy clean U.S. is region projects present Services U.S., some grid the and and in opportunities by are continues delays according across larger drivers on full Splicing interest in activity XX% solid. caused relationships project bidding EPC in which issues the delivery shift of capitalizing in robust the saw electrification continue and in Energy A see Western to expansion market. transmission MYR to from projects the have a remains the Our installations, carryover to region customer challenge driven which the country. to solar decrease strong year, the in the as last market a

Year Insight in report Market March. XXXX released Solar in Review

QX that In customers strict the adherence to of MYR grow, our is summary training I'd appears generating accounted all and a in XX% capacity firm solar will heavily our of the June, added of overview assure XXXX. call segments. increase segment, employees industry of all and to We of new provide first of to a capabilities their turn our personnel effort. I of back success. over the our craft the in now commercial to best health an it our to solar history, well According positions the solar to will grid our and as safety success. the Don However, XX% investing both project our the in a from for of and teams to us rise. Their released to for reported on thank leverage talented of portfolio. electricity Egan, recent our who industrial the commitment to and management our like for for report, and are XXXX. to T&D our first quarter contribute opportunities execution strive market quarter in development principles the successful And all employees and dedication clients, operating to the continues report, companies

Don Egan

everyone. good and morning, Tod, Thanks,

the contractor report segment to to using improving our results network organization, the signs perform from the market by reported increase non total solidly from chain conditions. XX.X% Our by XX.X% C&I our U.S. XXXX strong steady second of continue. supplier collaboration February to our Through supply pricing care XX.X% trusted material continues QX spending. construction Bureau, of of the in and XXXX in Census vendors May in U.S. increased statistics leveraging even clients highest This with segment partners and This are included market extensive achieved for most general recent According score an forecasts reflected as headwinds with encouraging conducted quarter our improvement positive September is conditions for XXXX. These and which since architectural generate the growth our also of across could index, that February construction residential health construction increase commercial XXXX. spending billings for spending latest a its of business. in a the and one

steady EV expand of [indiscernible] core Sturgeon a new our challenges Thanks, backlog your nationwide dedication They're and everyone customers well battery In pipeline long Arizona in comments. Transit approach additional we continues partnered see storage for turn markets core and continued Vancouver. Manufacturing for with for enhancing Our station Sturgeon for call work potential with contributed I across Electric Electric, Center continue back heavily of steady customers and of of Pacific to both today. International to Rick and North customers in markets. lingering as Skytrain our relationships several customer especially in Airport work us work our projects time the and provide EV focused on engineering opportunities relationships solar firms growth. monitoring representing are such a for some in large in who while bidding our in work our with closely charging to MYR sizes opportunities district the maintain America, mitigate Western data key manufacturing, and various electric hospitals to continues as valued our continue in creative Metro strong summary, in opportunities Denver standing to employees performing also project see with now as and remains Enterprises hurdles and we their markets. with for Canada, activity, to will projects. to thinking, closing Group at to we in as opportunities. enables new healthy Colorado and will Transportation with proud proactive centers, the respond build Rapid its infrastructure these additional activity relationships manufacturers strengthen industry. presents to

Richard Swartz

Tod Don. Kelly, Thank you updates. those and for

performance the we and diverse and Our take and second customers the continually maintain focus navigate to our We now continued dynamic role in We as fortifying they our infrastructure investment customer the strong on building needs strength play infrastructure markets, and of in illustrates the and our continued in XXXX across electrical the efficient meeting quarter core ability pride operational their expand Canada. partner. relationships. MYR and for comments resilient as U.S. conditions, market demand want while generate to agile would safety for a value, believe foundation thank our open employees and thank day. we Operator, and ready call positioned like to our delivering and excellence growth dedication you is contributions to support. Group to shareholder the invaluable and I I strong questions. each your for strategically to each up are of of and We

Operator

the KeyBanc [Operator line from Instructions] question Markets. with first Our of Alex Capital comes Dwyer

Alexander Dwyer

can first, the then trended I'm you continuing you're and terms that are through are tight C&I the on to transformers improve? wondering chain the like supply the and and topical. T&D still business? across quarter just it seeing chain, talk So the inflationary what inefficiencies supply sounds been shortage how can has materials of and the you Like chain pressures supply just in you of about kind see of

update just helpful. would these Just be on an

Richard Swartz

C&I Sure, I'll side. start on sure. the

said of side in that we'd that were path lower we seeing the we we supply our and see quarters kind on saw of improving glide towards that on chain. conditions previous a kind of margin that think gradual I profile end

of continue to and think first end We the next way. it's normal to to and quarters continuing to first get by quarter improvements that that We're we previous feel of see it's those said I back see that going in heading I year.

that commitments T&D in that getting but I tight out sooner. and think front in front of think materials the customers general our On making I on side, are

the projects So when have they occur. that material

rate planning future. looking and a into they're higher further out So the at a at

Alexander Dwyer

the like the the in there was Is weather that the on anything year? just headwind look middle margins primary this out business to range range, different impact then ahead segment it sounded in if target there of way any quarter. is And that preclude of of from could an your T&D then quarter? big back later the break how about that mix the that in during And margin, was you like getting

Richard Swartz

I'll it. start add to and I'll let Tod

get bad weather, be able barring issues that, profile. really see being think that that our us margin There to no barring see we range weather. mid should of we I for that to with

we're conditions want Tod, to add. you improved think there I So seeing board. the out across market

Tod Cooper

I your business. part of of No, mix in was, the think Alex, impacting right. I really, of see in other question the margins the this Rick's mix that at we're was don't time. point business

providing it impact, like clients impactful chain is long put so I'd supply but seems As it term, as the quantifiable, are overall far visibility issues they're slightly right where was it. much our as the planning better there more now well

Alexander Dwyer

the Lastly, through read wondering anything the just to I'm certain if or in Is there there come quite ticked C&I a of where just into backlog, end is lot T&D market the you that work a down just backlog there then was larger and timing? like strong. saw on was there or backlog. anything

Richard Swartz

the We of It's timing. lumpy continue we I I the grow we our mean, place. make want side side the the produce One about front in each just C&I have business on side. seeing on I'll on growth quarter awards. that to we're always to ones it's T&D start T&D that T&D and to work there. our be MSA and of sure the continues mean, right we that XX% like we our revenue but side,

is at no that really and that strong, our lumpy So just on side. backlog on all mix change

forward flow markets in say huge all side, continue. to one C&I it projects would so with in core On a of C&I area. was look any we're pleased our the the steady the and of seeing was on kind side, there I no and activity projects

Operator

of Our Justin with the Baird. next line question Hauke comes from

Justin Hauke

of growth on question in the the expectations year. back a just for the half revenue had I

XX%. the grew in has year the where X half quarters over You've here second been growth Last over XX%. revenue had you

So second guess quarter obviously reasonable Anything And to about guess year. mathematically in would the have would the of difficult I that of third you'd I'm revenue would disrupt that I thinking third of more the pattern? a assumption a that quarter. about sequentially imply comp, still just double growth back the it's half you're the I seasonality, kind Is digit trying but the seasonality how think still typically versus in quarter. that? guess just that

Richard Swartz

front strong a we When year, at the we the back of look half very half. had

of last quarter, Coming that As you in would digit burn, now lower to that half growth, for the said, the at in I going. anticipate we'd in this our growth be said single say expect I is was where that, us. in year last strong going into 'XX work to double looking backlog it that's very low I'd when high we're digit

to of activity. continue So see a lot

We continue out from the range pull would teen that see chain mid there supply to would issues I down. that say us higher

for digit So area at low double look an growth. that

Justin Hauke

drilling the fair little capital And guess a then is know revenue free does I contract amount the up with receivables the an I and bit like of orders. on a you change from bit been in and just the maybe little more. unapproved on timing about look ramp, cash a uptick your of some revenue flow the it talked there's

going any maybe dragging to quarter? anything large working in a for projects off one is So is this something there just be it is capital or on that's while discrete a there, that

Kelly Huntington

that one, I'll of couple eah, affecting Justin. that are A answer and it. in dynamics jump

First that we're just the experiencing. revenue growth

that support growth. working So to capital

from as to can retention We're quarter the can affect quarter of boils project, the projects. we projects a they're then when timing through of up contract and that over some balances how our really we favorable that that have structure then other larger affects and a start, which How get starting were at and down out. that completing. balances and position The

So quarter from I wrapping to you're up to depending when lumpiness to see really ramping continue quarter some up. on have it's think projects going in that we and

Justin Hauke

there's project. So big one

Kelly Huntington

payment don't the portfolio changes our to terms timing. any down more It it's see No. overall. and we whole across just our patterns really I'd say comes really collection just or to timing

Richard Swartz

extremely low and a low, our I think of been little peers, but would did to normal that's had say cycles bit even DSO our I it extremely compared it's nd business. climb that still but

Operator

Our of Brian next the with Sidoti. question comes Russo line from

Brian Russo

strong revenue digit we like solid growth up the XXXX in follow and level months first new the XX half that to on is revenue revenue trailing the quite single expect? organic the that can of Just of is growth. low actually Is

Richard Swartz

from of the Yes, see. end for what mean, plan double but single out that's I with digit being we're that material some what to hope say, high the to on in as now from saw should that the I we seeing said, that that or revising quarters, what issues that. we we digit there double low digit of growth low in previous we year stuff and on the I

Brian Russo

Right.

Okay.

So double in just repeatable and to could low digit beyond. be confirm XXXX the

Richard Swartz

say I You supply that year that acquisition know material now something weather it that double we single the or go there. an to high right next in next like high on would plan for digit market close plan or on the conditions taking would else but we changes place. digit barring I or single barring issues, be year to should for but digit

Brian Russo

when up increase? transmission that like one XX% it year which year and of was up any XX%. we quarter increase from look are about transmission large was there drove project just came revenue, looks revenue I And just quarter it like just looks the wondering, was where the the T&D over over majority at that breakdown distribution then

Richard Swartz

among project. not one projects. there's No, It's split many

Brian Russo

And Cali ISO XXXX the Okay. then transmission their plan. approved

$X it's about billion. think I billion $X or

we could XX some like being ENCs over granted to your might a MYR Group. in and that projects I know utility. with based you when potentially relationship California Southern just start awards I was see development the wondering think or past when I mentioned

Tod Cooper

actually about starting allotment now Tod. of as ISO Yes. Cali excited is this to bidding that. Brian, some opportunities see Yes, are part there. right we We're

process year So it's or a probably going to here. X X be

year increase the now, projects X. out of smaller those of of the the projects Some the right aware or in the next on over street we're getting size but are

opportunities we're and will some for it us. about excited So present that

Brian Russo

And these heat or then just first or a July. that productivity discuss maybe the month I it T&D the extreme mostly extreme Arizona know C&I Southwest, clearly to date. X but any if we've witnessed in versus of weeks heat different in impacts could from and you impact on X has labor the

Tod Cooper

not Right really on impact and a about always our tremendous safety employees it. seeing health that. We're now we're and concerned focused on we're the of

an and have our the full point in before but concerned date, knock much days of as much peeks up have on the earlier We we've getting heat well where But but crews in working the can. we're on out the starting and we're they earlier day getting we in finishing to and about areas. full wood, to something eye right in health employees now those by and starting days earlier our been safety

Brian Russo

hearing been stations. reading vehicle lot we've about and a Lastly, charging electric

whatever is I the on piece existing think it big Could business dollar an meter just I'm piggyback, these a or the behind yesterday doing kind either or and/or opportunity capture a wondering side side? are for of work you consortium C&I that of T&D of customers of type the big automakers your strategy one announced utility you're how the customers. projects a charging multi-billion of off C&I stations. for

Don Egan

that. take I'll

maybe affect C&I could XX it some even they're our both our but and where and dealerships just commercial T&D where touch across those for automobile You we're the our X EV seeing chargers small business know, really. really and on chargers from seeing to of anything we're every piece to there's asking board a couple segments of opportunities

Richard Swartz

some working we're agreements nationwide also. And on

it, customers So then can both position the the to it's stations We from can it I we in. set our a good charging so for power and and those you think are T&D do out look the company side when those. at to take our for stations be also bringing

for and opportunities us going opportunities the as market see steady we probably forward expands. good growth So growth

Operator

next from the question of line with comes [Operator Jon KCCA. Braatz Instructions] Our

Jon Braatz

guess of margin? into inflationary can of front the I you to your those Are one begin? is some feeling one to on and margin able the you're some pressures of bids is, gross that my price question begin pressures recover to pressures Rick, you the

Richard Swartz

we can. Yes

about have contracts are contracts. than them. some MSAs talking lot of our I we price different I'm provisions increases, fuel for And and older opening more mean, have others a have favorable

on to Our our those be but continue of off older provisions newer been through burn as extent. and a to pressures or end off projects. into have increases those as that contracts, margins what's Then year. burn the in lot for didn't reason that'll see it, tied work inflationary them of we that's draw certain are that a pretty we a newer the we'll And this much projects of improving that the some

we see that's than contracts only in think ago what years our or continue X better I and conditions So X to going terms place. to and saw we be in

Jon Braatz

Okay.

clause, allows some So some costs. if pass as call if the of we escalator absorb there higher that enter, you provision through there let's say XXXX, you most some in want to of of some it type those are contracts or will to have

Richard Swartz

to not more more Yes, but and have say able I would that contract every will have projects that. are

to So not our vendors ways visibility us obtain suppliers of having or it. or goal impact covering There's sometimes risk. it. different they're and total that of we're That that teaming with

are every move one it's facing. I think is forward, address on the others whole of as that facing those facing it, just contract it's something It's also. we not we industry it in us and that we're

our clients in have to issue think I make forward. they sure and apt the place that are going right pricing on bend more

Jon Braatz

headwind been could you that any has how us on quantify much for way margins? Is there a

Richard Swartz

our out mean, and then X%-X%, some that's that's there's us If been drawn been you X% primarily below at what of that taken I we've look but been what's us mean there side, driver that's profile. probably I operating say below that C&I normalized We the down. margin other that impacts

Jon Braatz

follow weather. just the up then that the question And about on previous

the it's Is weather. the you been raining know faced just been in out that that hasn't Is times? really the I Northeast. rain? hot it So at it really weather issue

Richard Swartz

lately that doing we've country that do installations us. that so the to lot It's has a rain. impact I impact want of both on little of Northeast us. the had sides tougher side mean, the makes out around heat we're on lot say to no it I of solar don't and I to a mean, continues in a business.

stuff a So as it that weeks, is when and does and draw start but you earlier in Todd feel it aren't may extreme they impact going as to as for on make safety you months. like that, not be come says is that, sure is does don't quickly the as It's something margins first. not because our goes health on and people but would usually heat that times to our something lot we're a have of that that those of I productive employees working doing great

Operator

no now like to [Operator remarks. back the queue. Instructions] Swartz closing further the I I'm to Rick turn call in for showing questions will

Richard Swartz

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

Operator

you Ladies this and your participation. concludes today's gentlemen, call. for Thank conference

now disconnect. may You

MYR (MYRG) 27 Jul 232023 Q2 Earnings call transcript