MYRG - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the MYR Group Third Quarter 2024 Conference Call. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your speaker today, David Gutierrez of Dresner Corporate Services. Please go ahead.

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

of Chief are and Distribution President Financial segment; Group's Transmission Senior Operating Officer; MYR Vice Egan, Swartz, call Officer Senior Senior Chief today's Vice Stern, and Chief and on Kelly Huntington, Don Industrial us President Joining Operating and President and and segment. President Executive Brian of Officer; Vice Group's Officer Rick Commercial and Chief MYR

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

may that could These I begin, actual available Group's we Before this statements. results based management to the upon Group no involve update as forward-looking materially statements and date, to risks obligation discussion want differ statements. such any information MYR assumes of statements remind that you Any from such MYR are and forward-looking this uncertainties contain to to forward-looking cause forward-looking statements.

of yesterday's the is comparable information XX-K XXXX Form call press and are set to Accordingly, XX-Q the Form measures will future on year most discussed the discussed non-GAAP are uncertainties risks these quarterly the forth of December guarantee report in the these annual Certain XX, These measures for yesterday's company's financial on in and no on in release. for quarter statements non-GAAP performance. third XXXX, today. ended press A reconciliation company's GAAP be report release. of the and

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

Richard Swartz

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

Brian will and summary will segment's with Following and Group's some I a and some of Chief call of our segments, performance call for C&I up questions. overview, Stern opportunities Operating Don filing T&D remarks provide and for today's our Officers then Kelly's discuss Egan, closing open the MYR your conclude forward.

relatively to customer a the of Our we as steady position continue improvement last quarter. was relationships market strong third quarter resolve our were of our of impacts result unfavorable from performance long-standing and projects strengthening a that discussed group small

that anticipated to With of business mechanical fourth are across completion we are the in seeing these exception projects the segments. strong reach our project execution quarter,

order to billion capital well to in growth ones. that the In XXXX see continue and projected investments meet million invest as long-term opportunities $XXX investor-owned $XXX and build growing to and utilities for relationships new we electrification as July, bidding demand. U.S. XXXX Edison will Institute between healthy as the in activity remain to Opportunities strong from expand annual existing Electrical

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

activity C&I and centers in new markets data segment to strong pharmaceuticals. see continues bidding opportunities capturing transportation Our in our while core

reliable important of they and an each dedication their of the and unwavering commitment our project safe the our our our I always, work As success in and them hard talented role thank team members. execution in to helping company play for customers, is grow. grounded

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

Kelly Huntington

and Rick, good you, Thank everyone. morning,

of million, year. $XXX same X.X% a period represents were $XX which or decrease revenues last the XXXX million compared quarter third Our to

The increase compared a an of revenues T&D million offset revenue distribution breakdown XX% due quarter for revenue Transmission $XX million, to last year. was revenues on million a of segment in million $XXX $XXX to same Distribution. were of partially third transmission T&D million of T&D by projects, projects. reduction in decrease $XX decreased revenues and period Our for the $XXX on

revenues price from our energy T&E include segment under contracts. were due The service same to revenues. performed in increase T&D of on approximately Work master XX% last increase represented revenues C&I compared C&I to Transmission clean an increased the primarily revenues contracts projects. period revenues and million, revenue an $XXX fixed our year. X% agreements of

to was gross compared primarily clean decrease XXXX impacts gross to was margin The period related energy T&D the certain X.X% projects project. for was year. the margin third income of to margin for the in T&D operating C&I same unfavorable of compared quarter X.X% income XXXX quarter Our in year. X.X% last and from operating last third period a of for X.X% the for single same

and losses related energy weather certain inefficiencies, labor The to to on clean conditions, contract-related contractual decrease and project costs was primarily disputes. higher projects labor and due unfavorable

gross caused costs panel by income led schedule on of to operating to extensions change the are In X which increased related changes orders. as a percentage energy owner-furnished clean for X.X%. impacted projects profit negatively energy Combined, clean addition, pursuing delays revenues we by projects

reach the period as of was favorable these of fourth order nearing quarter quarter experienced X.X% a same the last year. projects operating certain benefit have C&I to X% XXXX. margins compared and the mechanical the The the XXXX margin remaining for mechanical third higher income increase better-than-anticipated during was completion projects completion reached in Many are as completion third on and of change to primarily for continued of productivity well quarter. projects anticipated due the to

discussed operating and a the due were X.X% this the had income of schedule issues. increased lower anticipated negative project in of C&I on to during quarter, by access primarily quarter was to is quarter. to reach fourth substantial to additions, The which a on workflow was XXXX. during due partially and costs scope impact completion loss related labor third compression project productivity offset that project single prior increases These the margin This

Third was a to quarter to a [indiscernible], compensation acquisition, support SG&A year. decrease third incentive expenses employee-related in quarter at a in same related XXXX to employee of due and the The in last $X increase prior future offset primarily partially decrease a period compensation million expense by growth. contingent costs decrease XXXX an compared to decrease

Our XXXX well associated third during last acquisition deductibility mostly quarter U.S. contingent as income. effective to to tax rate same which The items, primarily was period compared taxes year. was the higher due difference was XX.X% successfully XX.X% on related as quarter of the Canadian CSI the limits compensation with on for third increase achieved higher permanent to

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

lower EBITDA September segment. was September and T&D million quarter X% C&I our to $X.X Total $X.X for billion, $XX XX, the XX, million Total a a increase XXXX billion for was quarter. year Third as compared $XXX of last XXXX, ago of consisted XXXX, the and X% segment backlog same as $XX period of backlog than year. our million prior from for

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

flow $XX year, positive million for period same the and XXXX $XX Third to of compared lower free flow operating cash negative was million free increase the cash reflecting capital expenditures. quarter in flow cash last

at exhausting XXX,XXX $XXX.XX. $XX During shares share we price million, average repurchase the an average a XXX,XXX for current of $XXX.XX our of shares repurchased have program. Year-to-date, total quarter, we repurchased at price of an cost

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

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

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

Brian Stern

Thanks, good morning, Kelly, everyone. and

our energy the impacted of to of unfavorably by performance end T&D was segment remain even clean completion we quarter that mechanical reach year. scheduled though third the are by projects The steady

distribution new opportunities electrification portfolio generating solid regions performance long-standing quarter, relationships, Our reflecting through made to demand. saw transmission the a projects and executing growing bidding and meet our throughout activity of being the strong across sizes the country customer third various the investments in continued

XXXX outlook XXXX investor-owned U.S. the released American forecast according with increasing electric grids utilities to billion distribution for their Davidson estimated on XX% maintaining to Group's utilities growing X-year compared T&D $XX will increase compared a XXXX forecast And September. September, North CapEx to and positive released replacing T&D firm XXXX transmission T&D The in spend record D.A. a and in to XXXX. in spent market XX%. in spending XXXX spending CX

the electrification, clean are continue infrastructure and expected new be Electric Sturgeon to drivers to system The has now and growth create Country In ] market Helene. need [ Hurricanes significant all performed business. the High our transition, upgraded storm and work Western the into to energy Increased for hardening Great Southwestern region, low Borough and response are potential to opportunities related and Electric Construction, drivers electrical future. future for our

[ the agreement MSA contract well in to ] new Mid-Atlantic see Great work Company work substation Out as Myers work Southwestern was own. Northeast. Electric its and the as response in Harlan projects a also in Ely storm Tennessee service the Iowa in awarded East, of transmission transmission master and continues region. won

employees to segment and us I project our relationships every our with T&D strengthening high delivery committed customers our In want safely mutually standards summary, our those helping day. outcomes. for thank beneficial while and remains partnering reach providing expanding for valued

outlook our and meet role forward demand are key a energy about We in U.S. in industry the the T&D helping future to and the of Canada. the optimistic playing look customers

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

Don Egan

everyone. Brian, Thanks, good and morning,

markets. previous thanks we our saw steady results improved the C&I from quarter Our as to of strength performance, the core

our various We continue further strong to monitor $XXX Airport Contractors new terminal sizes the passenger solidifies and project segment for Electrical bid California, This relationships completion the replacement strategically the late million, working awarded across at an design valued execute in in region. in opportunities. projects expected approximately CSI with was date Hollywood and XXXX. of Burbank build

Data the health across new care, also are centers and and to execute opportunities transportation to healthy continue we on where long-term and activity. pharmaceuticals the see segment markets aerospace, awards with bidding continue provide ongoing quarter. in projects

be year. the to fourth by a quarter work we to impacted which completion this as segment substantial Our towards single headwinds unfavorably continues continued present during project. of

expected our of promising the future markets as the and during XXXX. core forward, chosen rest is the Moving are year to into grow

released Institute American expects facilities, industrial growth XX% XXXX, July specifically double-digit data released role in Architecture throughout the an from in reported care growth. spending of centers past rise in the health Index an XXXX. X.X% The with in over XX all also rest increase forecast see play Momentum market segments, of months consensus forecasted strong construction the to across important the continuing to facilities of Dodd to July With

In we continue conclusion, activity we deliver and bidding encouraged to By of chosen execute we're to value align to nimble will forecast our healthy and a core our projects of employees, markets, shareholders. safely dedication the for talented backed by remaining by customers currently our which the customers, see. partner work with our the

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

Richard Swartz

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

of Our relatively segments remain positive across third of small group healthy. customer continue core activity into the the markets our the we Bidding are resiliency reflects of our and and forecasts complete long-standing to market remainder of underperforming and as XXXX. our business performance a this strength year quarter relationships throughout projects.

is our further focus safely by on skilled employees value providing supporting executing customers' placed needs, and emphasizing Our projects. continually successfully and and our developing

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

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

Operator

question from with [Operator comes Sachs. Instructions] Ati Our first Goldman Modak

Ati Modak

Should are margins pursuing the these progression? you're a clean margins? orders a temporarily there, give that about change expect think in Can project. orders? should of the change we How color some the bump there on realized bit we energy potential you any for little mentioned additional You for impact

Richard Swartz

Again, For real-time as these projects basis. on do change look out get these those us. really every at pursuing. orders assess We behind us, where quarter to close we and we're we a evaluate try we're need have to we and it projects,

And clients. -- quarter, some quarter. at conversations with fourth be every to that continue from do We're the these we as should have have get all but said into projects we finish or we those to we the probably So us the continuing year-end. will behind impacts

Kelly Huntington

so look quarter, you I talked the expect what when of middle when to operating Just to impacts to in add range similar T&D you projects. think margin, that, on the the we at about income to we of the last the exclude be solar target

Ati Modak

Yes, ask that's next. what was to I about

progression core there? it's doing it think to the a provided you well, here? margin you've seems C&I progression upside color well. that on ranges as us like Any So from like about more T&D give little business to Is bit color trajectory too early Can previously?

Kelly Huntington

market and may start I'll context. then on that, Sure. some add to broader Rick want

forward is and And in the that these go part the segment reach of income side, should expectation completion, C&I project those substantial completion of expecting as also have each that operating we reach in operating will the our that be the part fourth into the talked quarter. as here to For in middle we ranges. year, of of impacts behind single be we'll our next about the our margin range. projects we us, the middle

XX.X% So into C&I the side forward that's X% on T&D as look to the on we X% the and to the XXXX. X% side

Richard Swartz

need next strong And us quarter, anticipate Kelly hopefully, Kelly market kind that midst being see to Yes. adjust again, above said, that. we We And too our we But out these early for take can there. year. But quarter margin behind us range opportunities to fourth projects the after opportunities or as next of that. see we that as in profiles. said, get

Operator

Jain question KeyBanc. comes next Our from with Sangita

Sangita Jain

from T&D about and solar Great. how Rick Rick, and different terms still have burning the in bit your little are been have and much Kelly, can you you those on if talk a there backlog, what currently? you

Richard Swartz

haven't T&D been very projects. selective exact solar amount which defined really our the as as But that's as in the We on Yes. on backlog. carried far of projects taking we're know, we've you side

backlog to call team, So on T&D continues our side. business. core that's growing decline, while what with that, I and I say would our solar the core on our

still to going continue be So forward, and those mind don't solar the go as market. we're the on we to with right We terms selective but conditions. projects.

our projects minus or business have on solar been would identified projects are I our C&I new say side. side there's the project. that been of no that the T&D problem X even on

talking about the projects still we're with added had there. we quarter. last same new So nothing

you minus So I think our few Kelly, core business, as Kelly said earlier, is problem operating those anything very to add? well, want projects.

Kelly Huntington

just completion. segment that, Yes. flattish in expect revenues we be that expecting projects T&D quarter, growth to by quarter. fourth lower as move the to kind of business. see expectations We're revenue, And connect energy probably our that's into to third offset reached in we our to Sangita, what as clean core T&D additional mechanical to are the But

the fourth depend that perspective, into topic to slightly compared while versus will there to in timing And things on in down out the how quarter, third and C&I roll really revenue being from flat fourth year. just next quarter. the just quarter we we're a And project on see

Sangita Jain

of So XQ, your your completion? expect progression while projects some to to are you projects about ask the towards we reach I to start midpoint XQ can we mechanical move of XQ talking ranges? margin trend these about Should problem as long-term

Kelly Huntington

those the have we on lower third But they're the in We're And projects range. think projects. the operating middle back we C&I still these to expecting in we to we'll problem thought And -- we I'll quarter versus around without I part quarter. completed. losses second a have project energy the on those projects. the to relative that of them risk at carrying may are on Yes, and the progression of single side in we work margins I I clean do good made saw projects of go the course, comments until T&D be the done, earlier. that impacts those on experienced they're until

will been within expectations So of our on our they strong projects. drag that a have has outside these performance and

Sangita Jain

ask free what you flow? was Kelly, I So we And than flow this a -- question for this it. stronger free your had cash quarter. can on modeled Got year cash

thing kind any specific was reason or something for a us to kind there that, closeout if that can is there that of a positive So you help understand like understand just of better?

Kelly Huntington

starting For the us, you when and really a comes lot it quarter-by-quarter, of projects when up. look are it to of timing back wrapping

lumpy balances bit make retainage think pending flows. so ], can to orders, total for that little We've cash on for seen we reversals a benefited it [ change modest that's also example, from some positive helping for So I and support that.

we see this as basis certainly we we cash a an think year. and outlook XXXX to far do look flows year-to-date so into next I in on relative stronger year, saw for what

by profitability And And say coming I'd driven increased do face we a they're rates high. are from that's but down, all still companies, really still our interest like outlook headwind for both segments.

to think be today. a in payment continue I numbers lot So our conversations customers. focus that's of But terms with of a

Operator

Hauke Our comes Baird. Justin question with next from

Justin Hauke

Great a thinking on and maybe the year. couple picture I C&I just Kelly, clarification one I about I margins bigger have guess, of, starting X%. then of next But guess ones

one guess that quarter. points you I was majority order. for the positive given kind quantify offsets about XXX because you were negative that You X% project. the if said of I quite strong there But And basis of just change adjustments. headwinds a the could was the guys talked also was had vast some that of wondering that those

that So pieces. just have want make to we all I sure

Kelly Huntington

did those. and have positives, some We identified Yes. we

positive forward margins. at last carrying we're completion, helping the And couple to of as we're them that. both that remember some higher projects to We -- noted might quarters, some been offset carrying also have have adjustments you we've

bit that this little a a losses think is really been have concentrated areas, of in of right? I our couple also

projects the only we and and of a areas. given project some side really pluses have do leaving all quarter. when our been just taking you're the concentrated on typically So one a out the couple side, the of in solar have good, T&D C&I it's in the minuses bad, minuses And right? on the But recently

kind a those out. we've And normalize in positive things out, some well you got also when of expect over those we why been little that have so remember, we're time that even as that's quarters cautious

Justin Hauke

I Well, at to midpoint. right. kind All the X% Okay. X% guess the talked of about being you

we'll impact margin, But contribution those a my think that's kind as don't is stuff. at mentioned can guess of seen look any you been some at I high high XQ? of that context a just guess you I much balancing usually just have or has question you net So but do second do? quarter work the for in X% on what detail storm the Maybe really just here. what I just -- about you've usually know of historical versus I the year maybe storm how utilization anything,

Richard Swartz

work always our numbers. have some storm in We

we've of our XX% So part the assistance. -- mutual say work our that look before, those at talked when you clients work of all I are really work would majority and the we majority is MSA of of

and businesses how day-to-day our how clients We But again, us many people building we've like work. they their take many support it. work crews work. really to send storm. we can solid we really off tell We can our being remove tell where from storm So us like around to able that tried

if sense. So for by is a itself, a but contributor, needle mover not positive usually usually it's needle it not mover a makes that us, but

Justin Hauke

unusually obviously is Okay. Fair This enough. active an season.

'XX, in just portfolio be high yes. that, down would you if flat last thinking growth Just year. growth the trying solar outlook with consistent a kind as maybe with my you've expectations kind one for in? the trying stuff in where now so for I not anything been backlog above to there winding you're just from that is the come thinking is it to I'm that's get I about expected didn't 'XX? flattish what right guess just It's 'XX. backlog here, of there of think stands that? revenue an the mean was a the projects I of of of Or for backlog to some completing, know flat. on kind but of about idea you're So level, And about gives thinking terms revenue

Kelly Huntington

and market some then I'm want Yes. I'll sure start off to will add Rick on context. that

C&I look we're high our business, you seeing when segments. So at opportunities single-digit T&D both and in growth traditional

of that contribution headwind, from about comments work. the relative to energy as strong revenue the this Rick clean future year we've is still backlog. and think part that that I and a you seen perspective highlighted the the from made against

segment. our So year-to-date that has the in represented work T&D about XX% of

Richard Swartz

growing minus opportunities add can And we've some to again, we work And to our and great is that as we we project Yes. taking markets are about, our to backlog. But T&D there talking solar think in and on anticipate the shown the market see we to being said, if quarter-over-quarter, able been and market on -- backlog. solar. I Kelly -- improves continue we C&I, that I on think side the that business opportunities, there grow

remain for So the sure making right it's opportunities, we we selective. and us, choose just

Justin Hauke

Glad all Great. to that's see. year, coming this good it's here

Operator

Stifel. from The Brian comes Brophy next question with

Brian Brophy

you about any quite of in project on end strong is it Can backlog. that? was And call a out to talk or majority there C&I a what's that's driving the quarter. So particular Obviously, market question large that? driving

Richard Swartz

approximately now, we're But say up talked project would say million all we Hollywood part in that a I That by Don Burbank activity. the was the wouldn't right markets I we're a about large, $XXX the large Airport. lot it. project seeing of at itself. in picked of

just contribute got all projects. balanced portfolio. opportunities to one one pretty or So wouldn't good a extremely We've large say And forward. area going it's I

Brian Brophy

about Can forward cash it deployment. how going here? looks third a wanted stock bit the then in capital I And like bought -- for entire Okay. talk guys back authorization. you you the thinking used to on of you're quarter, priorities quite ask about obviously, up

Kelly Huntington

Sure.

how we're for good seeing we are and deploy on do we opportunities. focused growth, So capital really

interested So create in perspective, remain organic we value. acquisitions we growth both that tuck-in from think shareholder an could

see do forward. thought sheet. balance as we about repurchases even we couple prioritizing we have And -- tough share we've strong we opportunistically. go of that So after quarters, always a a that That said,

support got we've what makes sense value I from flexibility So perspective. think, a to creation

Operator

comes KCCA. Braatz with Jon from question next The

Jon Braatz

sort you Rick, maybe of work of any point elsewhere this clarification, are at or pursuing just a just environment the point solar changes? until you looking are

Richard Swartz

No, we continue to the like pursue We market. solar it.

we good markets. As said, that the call a the we that And C&I talked challenged on that had done have We side. growth on right I'd are work way T&D contributor we've been areas or it's about positive being of bid now. the that margins select on geographic side what in couple under have historically a projects been segment

down So terms make have getting and we terms accept. long comes out to have it it the like but the of and we're right to market we in conditions to we're the that just right a making sure we're Again, going sure remain We've that market. We selective, time. been conditions, pricing not overall. in willing

Jon Braatz

Okay. But it little say speaking, generally environment, bit a competitive? is fair more the to is

Richard Swartz

positive Again, in it in I side. -- on geographic markets. the Not C&I areas it's done that the all said we've been on

our T&D really, projects So of that ones. that say clean energy affected market in a challenging of that's areas. side has been wouldn't It the an a I side it's are on couple

So again, overall, it's aggressive I wouldn't say everywhere.

Jon Braatz

Okay.

the come thinking were line you curious, quarter, performance than so the with in much they the the past of quarter in on? what were projects pretty they Okay. better out terms in looking did you just look the were when for? problem of and at losses you in Or And third Kelly,

Kelly Huntington

quarter, we're any the will interesting closing be information we all taking -- estimate so at and to cost complete we're question, the taking have into We always at what we an the it's time Yes, that consideration. the Jon. time books to that think we're

when you disclosures in the we challenged think unfavorable solar, the may quarter those in us weather. projects with solar our that talk I about biggest for driver on noticed have

us. we was But that second hit certainly, we hadn't for quarter when So anticipated results. our a reported

and or So though close done. those solar of substantial we the mechanical much risks that the can are we to face reach project. projects the for for work after when even around why the can projects completion tried expect we as kinds becomes what because as as give we've disclosure to predictable we we know completion more point, it isn't C&I XXX% out

Jon Braatz

in would will you it that that be mind, they of third be projects the to drag quarter, fair into were those assume as look quarter? fourth the So in less a with than

Kelly Huntington

complete, of these. we hope certainly view think don't I accounting the a the until so, to take permit work worst-case but is rules us we're

have until are closed So But minimum, at we're taking these we're carry when going all the information projects we complete. we know quarter. the we at margins to a lower they

Richard Swartz

that, conversations The Jon, add to we've got only thing clients. also I is would ongoing with the

these and projects to So completion, as I accelerate. And as that to completing, when we fit those it comes continuing have to conversations closer we're the change orders or said, there, potential claims mechanical those. reached out

mechanical can these be that again, -- way, always you getting least we projects, either anticipate So affect But either completion it year-end. positive or by negative. could at

Operator

turn I'm time. like questions any closing call the Rick to showing [Operator Instructions] any for comments. And over to further I'd at this back not

Richard Swartz

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

Operator

Thank this today's you. conclude Ladies presentation. gentlemen, does and

disconnect, now may have and day. wonderful a You

MYR (MYRG) 31 Oct 242024 Q3 Earnings call transcript