MYRG - Earnings call 3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to the MYR Group Third Quarter 2023 Earnings Results Conference Call.

[Operator Instructions] 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, Corporate Services. Please go ahead, David.

David Gutierrez

Thank you, and good morning, everyone. you company's MYR XXXX, third 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; Huntington, President are Don Senior Operating Chief Joining and Vice Egan, today's Financial Officer Chief Industrial and Distribution and Officer; Cooper, President MYR Kelly 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

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

risks to no forward-looking involve that statements forward-looking performance. from of actual statements. results uncertainties These future cause differ Accordingly, could guarantee these and are the materially statements

XX-Q report Form the XX-K risks release. December These on annual and company's the XX, company's and in uncertainties of are year XXXX, ended for quarterly press and the on Form third discussed report yesterday's in XXXX, quarter the for

forth measures GAAP call these be release. information A financial the to measures in reconciliation most press non-GAAP will non-GAAP the Certain yesterday's comparable today. is set on of discussed

Rick turn over to said, the let Swartz. me With that call

Richard Swartz

call everyone. third Thanks, results. Welcome to to conference our David. financial and Good operational discuss XXXX quarter morning,

summary detailed to for third review. a Chief we'll the then turn Huntington, the results. will Kelly financial Officer, a call of providing more over quarter And by our begin I Financial

and Chief Egan, opportunities T&D forward. Cooper will MYR and summary C&I overview, segments, a Kelly's Operating some Don provide and performance our Group's Officers Following Tod discuss segment's of of our going of

then I call open call questions. up some remarks and will closing conclude for the today's your with

The of third in performance. position relationships resulted our and strength long-term steady a quarter market a strong customer

to operational excellence and and continue alliance projects through client across districts. execute master teams relationships Our existing with agreements expand our service

continue that healthy remains market for grid activity potential strategically drivers and opportunities on Bidding demand we strong growth. and the sources energy success hardening focus electrification, and position on A our future opportunities be pursue consistent a continued new a capture to as could for emphasis business. present growing clean and modernization us across for

country. North $XXX the Forecast upgrade the September over XXXX the American report from Electric across Three strong demand utilities. by XX Group for continues investor-owned healthy on electricity X transmission billion The to next indicates top in increase growth released spending of moving The a as forward years Transmission C projects new potential The or

the clean and market. are energy potential goals T&D in reduction drivers spend Carbon other targets

work future transmission these that for to committed executing projects We while to expansion continue customers. existing energy projects valued clean may and opportunities track initiatives major and lead growth to remaining our

the markets, into In strategically By see and forward. potential XXXX. to bidding and centers, our expanding forecasted work continue data of work our our and experience a health as care, existing with and C&I growth spend in are we steady chosen are expanding relationships key even manufacturing slow down markets in could our moving industrial to segment, positive projections if transportation commercial such overall backlog preferred market clients

of our backed remain the customer excellent solution-oriented and by execution. at industry, and the commitment our provide mindset experience, reliable allows safe service people to The of with and clients forefront us and

like would result a is and culture. I for the thank to Our steady performance our quarter third their them of strong fostering efforts tireless

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

Kelly Huntington

Rick, you, and everyone. good morning, Thank

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

T&D our of XX% million were high The T&D $XXX quarter revenues record same an was of last million, distribution, increase and for Our records. a for both segment the period $XXX and breakdown T&D revenues compared third transmission, for year. $XXX to million

to to projects. related primarily transmission T&D on Work segment service energy performed agreements higher projects XX% revenues increased our under of T&D clean higher revenues. revenue continue due on represent to approximately master revenue

C&I high C&I year. the for our to of same and compared revenues were period record a $XXX XX% last million, segment, an increase

due clean primarily in certain increased to geographical revenues revenue to energy projects related higher C&I areas.

for was compared decrease same third labor of primarily The project was inefficiencies. period X.X% in margin gross last XX.X% Our gross the year. to quarter to XXXX, margin due the for and

of orders projects. Some inclement on and with costs productivity rising associated by negatively better-than-anticipated change by caused and disruptions margin chain was certain were Gross were decreases margin which offset partially supply by impacted favorable weather. also These inflation.

labor X.X% compared the was well quarter margin to These of offset as mainly income was to The by operating X.X% last XXXX, inefficiencies, project primarily as inclement weather. to for productivity. related period partially projects same and energy the due for T&D decrease third better-than-anticipated decreases year. were clean

year. increases of better-than-anticipated last were operating offset costs orders same to due the by the was associated X.X% impacted disruptions increase compared projects. C&I period and These by primarily margin weather. project operating X.X% to certain XXXX, was quarter on negatively C&I inflation. inefficiencies, margin The caused for inclement which with and and of by change was were productivity rising favorable also income third chain partially for labor supply all

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

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

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

[indiscernible] compared $X.XX same Third X% September XX, September was $X.XX consisted billion $X.XX segment. last Total quarter was ago. period as our of $XX our for for XX, year. segment, XXXX, as million million than of for T&D a the C&I of to higher backlog billion, backlog XXXX and $XX Total year XXXX, billion

was compared XXXX of quarter flow operating cash cash the year. million Third for $XX to $XX last operating same period flow million

the $X flow support due million the $XX cash period negative growth. free to flow million free year, with primarily same higher last capital continued our XXXX for quarter expenditures compared cash to decrease was of Third negative to

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

maintain from our We September shares. organic future needs, of us sheet that funded pursue leverage business, debt-to-EBITDA will operations facility, to as have opportunistically acquisitions ratio strong XXXX. a to meet XX, cash balance believe We continued the repurchase growth X.XXx and of support strong our capital and enable flow of our credit working

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

Tod Cooper

Thanks, Kelly, good and morning, everyone.

long-term the the of business in steady and performance principles. segment strength demonstrates quarter sound financial our third T&D relationships of the customer Our our reliability

throughout a bid healthy to markets client a relationships, work. environment strong wins of have continue while backlog very and maintain districts our strategic Our and expand produced nice

As we're Rick substation America, North significant investments electrical programs. upgrades, in mentioned, hardening many throughout expansions seeing distribution transmission infrastructure including and

over by recently North C the as as XXXX released was Electric XXXX. The XXXX to forecasted capital Forecast high the Group, is American in Transmission According to billion, $XX transmission $XX billion and total electric spend in grow Three

MYR focus having capital California, the This expenditures. highest Texas planned investment for is the with Group areas expected across country and X transmission

The and need indicated is data growth that by driven interconnections transmission substation America. North report significant also for around the hyperscale infrastructure additional centers increasing load

C stated of Three total investor-owned stable predictable sectors. that considered utilities the report represent of U.S. the most market, it and the all roughly transmission XX% is and electric Overall,

business. upgraded opportunities to The need the for has new and create future for infrastructure potential our electrical

strong of T&D work our continued traditional their territories. operations Our throughout execution operating

and extended executed L.E. Eastern awarded transmission long-term clients, while trusted was districts others, around work as agreements multiple that and in transmission bid including substation quarter. line storm our X Our E.S. to Considering setting. In Great region Company Harlan Electric line by Western with a in service damage to Construction. to expand expansions upgrades Texas as Boulos master fast-track well project third continue region, we repair continues the Myers several and multiple projects the Southwestern

Rising labor impacted market chain solar persisted most some financial and supply the along costs weather notably and These disruptions QX. in related with across the segment. for project results inefficiencies,

supply on working help with to chain strategic see clients their working this insight face. some labor are conducted rising chain clients light of shed our diligently we our While better mitigate year survey constraints and suppliers relationships. form stabilizing, to roster To appliance constraints, supply expanding them our costs

also projects advanced completion. and Group our to work in successful help challenges of and customers close to MYR vendors robust our with network supply collaboration mitigate continues chain to

partnering our outcomes. valued customers, In summary, mutually expanding our with delivery, provide project excellent beneficial remains for segment and while T&D committed relationships to those safely strengthening

helping And employees talented our high-quality reach for to every us day. thank our you standards

North look about in outlook a America. meet the of helping excited the key playing are the to to role in and demand We industry, T&D forward future

& who Industrial will to provide I segment. will now Commercial an turn overview over the our Egan, of call Don

Don Egan

and Tod, good morning, everyone. Thanks,

The chosen executing customers, in C&I strategically third our and while quarter with saw strong in bidding our the strengthen leverage relationships segment as projects and valued to continue performance steady markets. we core opportunities professionally

for our into and data there care, commercial health spending Rick markets signs overall centers, such as is are positive a mentioned forecasted in going growth of while As manufacturing. slight earlier, transportation slowdown chosen XXXX,

from in care forecast spending of industrial a safety the construction health The growth and Architecture X.X% public XXXX, increase, consensus Institute increase. projects in X% in particularly with construction a forecasted July into projected American at released

growth and and market shifts high toward Data and cloud to market. due centers environments in the demand increasing record forecasts remain active of use predict artificial intelligence, in hybrid

to Company demand year-over-year, more report gigawatts by is reaching to earlier released XXXX, McKinsey data XX from by this year, doubling XX% According for projects current than center a & consumption. forecasted grow

These could to and opportunities for to in business, markets. us we leading in position generate expertise win a leverage growth our to forecasts place encouraging continue these our

our activity subsidiaries with to healthy and to Our remains steady segment, key continue see long-term backlog America. North bidding of in relationships markets in the work across thanks clients, C&I strong

as and upgrades Transportation business. and Vancouver remain build-outs Colorado underway center C&I our as projects in well across data

projects for in continues pharmaceutical Electric solar charging projects. storage, and vehicle closely station execute monitoring opportunities Sturgeon Colorado, to while battery electrical additional

Contractors space, additional for opportunities and work Electrical Electric energy work, continued Huen clients and executing storage those solid in in the clean energy both bidding seeing solar while to CSI serve also markets.

Supply chain persist C&I segment. headwinds the in material and

we 'XX, to them with our of Although the work challenges to best we continue and improvements seen these delivery. have half clients project exceptional some in second mitigate vendors and closely serve with

continue It's partner would of to thank experienced the employees customers. trusted we hard maintain of tireless pipeline succeed. thanks and a committed healthy employees their our effort all to a and obstacles, overcome placing work like and work position to agile and of valued for us remain a to our our for I that in

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

Richard Swartz

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

third ability and strength business principles and operating ongoing the strategies. our core expand relationships, customer strong Our XXXX sound illustrates maintain markets, to of to performance quarter commitment and our long-term our

we partner leader importance is our as and by continued us of as changes. our recognize enable each adapting by for investment and they day. We an work perform agile development market industry our to status an This customers who teams supported the conditions being our the maintain of respond to to industry

employee your and not It to Thank the unnoticed. every you to for contributions go organization. invaluable dedication does

strategies want I progressing your Group. support creating to shareholder to relationships value. emphasizing We MYR of and finally, you business our look each client while continued And of forward for thank our

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

Operator

[Operator Company. Justin Instructions] Hauke Our first question from of Baird the comes

Justin Hauke

detail quarter? assume I more between on revisions contracts. guys my to out called impact weather mostly here that just that. as also primarily that get little basis the fixed on would then hoping you split guess kind go I was the I of segments, XXX margin related point maybe first from how'd gross the I was thing the for to it's in a your a was estimate price And bit I guess, through? Yes. a question T&D. mean, onetime

Richard Swartz

his that the as It some through. and was in mostly in T&D primarily the of and where our on working had some, few we said costs business, was clean that we're affected design a labor weather rising side on it projects. energy projects script, some side, issues us Tod impacts We some had solar on

as was performed it where pretty primarily rest T&D of the was well at. The that So expected.

Justin Hauke

XQ, then is, onetime XQ is Okay. like previous to seasonally, guess But profitable kind sounds margin, I maybe just follow-up it of your that to into And higher typically, looking quarter. there some things a more a here. were point,

estimates But the XQ, materially if I for that at the XQ. EBITDA are there than higher are look out margins

I would I that margin for mean you year-over-year? better just mean, maybe of and out unusually light, the contribution So I the guess, kind there. tenor the is kind comparison see XQ of maybe XQ is of

Richard Swartz

side where when I to at, people guidance, at to last were probably our had there market. that it similar like out for strong that would that it look we're those But high continue compare We as it, will on has lower we the those a at side when margins give quarter but it's year. overall, maybe, the on on don't very impacts about where energy good we especially it look at we've next you talk we some stabilized, T&D finish projects. wouldn't where seems maybe I up it's are to clean or still think projects X we the those of carry today.

Justin Hauke

kind Okay. Kelly. for just if I The more increasing. in balance squeeze of unbilled And has receivables then one been could

that So the orders under revenues on are negotiations.

and So million $XX increased in to been increasing under the that's several steadily of quarters. kind just last here, it's

what and that's a time maybe of you've to, that benefit the cash working any context maybe and the resolution, to Can you been for instead give line capital drag flow having? to as related

Kelly Huntington

Yes, bit. maybe back that. And about a sure. Happy up to talk just to little

company. of of So part growth our the to this comes down just

revenues So that. of unbilled to course, also revenues will likely grow, some our be in proportion to as grow

couple factors. of other A

where near couple end we a from was last at year, things record the of that. And DSOs lows. Our have have to bit risen which a of were contributed

start talked is about contract can second we up a in And as timing. project do quarter, are have were I build balances up, this some in to And really wrapping the another contract retainage. the to one that that quarter. quarter. So see We little projects retainage related XX% that last you we bit versus

is it. that So part of

have The then those as large-size as some about other, projects, of to up. favorable and some billing profiles our projects as wrap pretty start I've talked we transmission out mid- we energy those and clean can balance

the what And a look so been DSOs. a was fourth has of and that's also last in third year. for a a the positive bit of us bit we drag quarter second And then of as quarters in at

just due higher when payment a money more naturally I interest it's rate their customers minute on environment, are relative our to likely on is start at that still of you in pretty want our terms. push recognize to to the when our and hang that last to And may do until course, a favorable we look the news, to good though, though peers, DSOs in think position.

on course, a So watch we, of close that. keep

news the still position. quarter growing working ended minimal is have support our think leverage the business, even with needing good we I capital to a in But to very

Operator

question And from comes our Brian from Russo next Sidoti.

Brian Russo

you on remarks producers just market? the on could several times curious, interest side or negatively impacting cost referenced for as third-party late, hearing C&I it's inflation, throughout the are due What side, The your supply been your we chain, just utilities seeing customers? opening in from developers. as facing margins? it's of Whether you solar T&D independent what If the to headwinds. And or or a that whether power I'm Because mostly industry challenges higher you rising well focus solar capital, publicized are minute. rates, or has of

Richard Swartz

Yes.

X divide here. I think it into things let's

it in in you going to we mentioned selective think talking some market I because continue up the it's work forward. market, pick very we script. one and But still we're when future about see that impacts a be the will as we of on talked as strong projects of our very that

see going and but are in in a to lot in a materials continue other our in impacts marketplace tighter like is out issue grow we market, to worldwide that that supply there's on side, continue And tighter very concern is we those markets. market. there. we'll Labor and I that push chain and always cautiously. because steady So mean, an that

client they're I say standpoint, a forward. again, forward. bullish from very So But be would to selective going what's on going going we're

Brian Russo

create Okay. start and Great. some And could the then not backlog, just projects, on know there. lumpiness necessarily it trends because sequential I the stop

when But year-over-year, September is X% quarter is year-over-year up each the in June than quarter, look it But looks like I versus up year year. a still this less to peaked up T&D C&I we you XX% XXXX? commercial digits is ago. tied which insight seeing can wondering move comments give early And as am And into some slowdown September into just if your of that? more I into some that double

Richard Swartz

for of place. have to the in with forward. push conditions looking approved. takes our going from sometimes them say, what trying always We're longer report out we end, a not get and are would contract our quarter for can it interest our I to to market visibility and forced to in lumpy. standpoint, markets risk and a very strong right rates we a at. contract contract sign strong be sure the their as little before, budgets some backlog going is we higher. for, backlog push we make so into something said terms higher Again, we're to want But forward a And We there a it get or

Brian Russo

in the a have free operating like lastly, free of the cash -- to flow, suppose fourth flow free see cash wondering, match improvement just we flow quite Okay. the months a generally X And then relative to kind your cash for quarter outflow flow you . first I in means cash that year. you're historical trends? the I'm of meaningful looks should And it

Kelly Huntington

Brian. one, that address I'll Sure.

So higher flow asset-intensive which CapEx free the this year, side we're T&D the business. side part of the growth is is the of with as aligns of cash more the that business, the having, particularly negative really on the

So to equipment. we that investing fleet that expect continue is do way growth, in a to support and our we'll be

that's X aspect. So

that. operating back and to in comes really dynamics of some timing on the of talked big is other a response The about cash Justin's which driver question, being project I to flow

balances quarter, of part do we retained some will the next into there here So but push collect that also the fourth some are in expect starting and we'll that year. of bill first

that So a project we is that, ebb an expect do over will it bit flow but timing. of normalize tying back time, and to

Brian Russo

mentioned Okay. on and MISO side. movement markets Are activity then X projects or Great. tied any And Texas the utility to the California Tranche lastly, seeing as transmission increased projects? you just big transmission you with

Tod Cooper

the Yes, are. a I'll there's that Actually, few of year, past take more Rick. future. Yes, been we've those right and of over now, and we're bidding the X projects them seeing out we in

that So picking is up. activity

pretty and clients those stand, with in that a And right about we pretty are of aligned where we're well are who lot now, our I optimistic like MSA said, capabilities partners. existing

And that side of on things. through So the from construction that XXXX Brian, past, of is to picking kind -- activity spread out mentioned going we're the think evenly I've up. in I that XXXX

Operator

[Operator Instructions] showing no time. this questions Okay. I'm at further

of MYR President go the ahead. and Group. Chief Rick would Officer back to to Executive Please I the Swartz, now call like turn

Richard Swartz

thank for behalf call on us you conclude, To myself, of joining Don on today. and the I sincerely Kelly, Tod,

Until you on I working you conference don't further, with and call. again forward, have look we safe. speaking next with forward then, anything our stay and to going

Operator

today's your does Thank conference. you the This participation in conclude for program.

You may disconnect. now

MYR (MYRG) 26 Oct 232023 Q3 Earnings call transcript