MYRG - Earnings call transcript Q4 2024

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

Operator

Good morning, everyone, and welcome to the MYR Group Fourth Quarter 2024 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 call over to David Gutierrez of Dresner Corporate Services. Please go ahead, David.

David Gutierrez

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

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

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

XX-K are want actual that uncertainties materially the as obligation of based discussed are any statements. year Accordingly, in release. and no to in to uncertainties company's statements. update management upon results Group's these for to Before are yesterday's that and XXXX, from and the could report statements forward-looking we Group statements risks These forward-looking ended performance. guarantee cause assumes MYR differ the Form on risks press forward-looking involve December MYR remind of These information statements XX, such may begin, annual this future contain this statements. such you to I available Any forward-looking and no discussion date,

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

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

Richard Swartz

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

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

in and XXXX relatively from work with we finished impacts segment financial one in improvement These unfavorable through of fourth mechanical reached course We continued quarter. small in our quarter a the in project our completion all the segment projects performance fourth our the T&D the energy projects C&I group during the clean as year. of over

to to electricity increased ongoing backlog growing $X.X healthy environment billion, meet in bidding and reflecting Our infrastructure investments a demand.

service multiyear across to Key continue master trans as partnerships. expand new opportunities We additional forge through while system agreements, growth all long-term present and market such advancement, and grid for business. modernization, alliance strategically hardening, to decarbonization, infrastructure our improvement [indiscernible] technology pursuing relationships opportunities drivers

for as and responding power meet MYR $XXX expenditures capital the XXXX XXXX rising Forecasts in utilities released serve committed they demands with Group billion flexible a Deloitte to are expenditures, as to dynamic industry the years. reliable these in resourceful, to keep capital this According estimated endeavor and landscape an partner power. outlook December, record to to coming plans customers to continue project reaching utilities to our in energy

center plan, North energy. transmission hyperscale noted in ] long-term more new pharmaceuticals, robust, gigawatts data opportunities American see of customers are September Group's more released capacity. CX The care market our markets XXX electric to with continues requiring and segment core than XXXX than existing health within transportation, of clean there data C&I Our centers, and and XX forecast colocation [

Our C&I and centers. deliver provide improvements to while ones, great teams the T&D help crews existing help facilities infrastructure data expand required additions of our and vast new build electricity demands

promising ever resources offers for thanks us our honesty to industry. and needs communities. electricity which for poised are for ongoing being delivery position with reliable outlook for businesses to confident energy the established electrical than well collaboration, We investments our partners future more chosen a proven significant our in work. are meet of and that needs reputation project believe success, core infrastructure, made for demand markets Increasing and hard-earned the

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

Kelly Huntington

Rick, and morning, you, good Thank everyone.

million, same our T&D period $XXX related were $XXX decrease compared in revenues revenue year. was This of decrease as million decrease XXXX offset mechanical energy to or contracts. quarter clean XX% well fourth certain in by last price C&I which represents a a the Our in to reached segment on revenue as completion, increase that on T&E projects fixed contracts, have C&I primarily an

last projects, a period a revenues same The our of decrease clean master the projects certain agreements and XX% compared approximately performed revenues $XXX XX% Transmission million, for have fourth segment million energy $XXX revenues related in $XXX reduction represented for quarter. million that of reached T&D service were mechanical T&D to revenues Work of Distribution. under due to revenue T&D primarily on T&D transmission completion. quarter of to in fourth year. million was $XXX decreased breakdown Our the

decreased $XXX period contracts, by revenue an price a contracts. to a were same year. in fixed in decrease revenues segment C&I decrease increase last of X% revenue T&E compared offset on revenues primarily the C&I due on million, to

completed X.X% completion. year. of increase primarily due last margin gross of was change previous XXXX the period certain orders. in for The nearing benefit to Our benefits better-than-anticipated the continued higher projects favorable productivity margins for on margin to gross XX.X% compared to largely quarter certain projects related and was same the and fourth These

have energy in mechanical a completion, margin by by of a was margin the reached These impact impacted were during C&I inefficiencies. project completion project better-than-anticipated unfavorable substantial to productivity that fourth decrease Gross labor and gross clean quarter. positively also partially experienced T&D that has in increases margin and reached related offset the projects

fourth revenues margin year. X.X% quarter on that completion. was the decrease to the energy losses mechanical compared X.X% for for income period certain have XXXX losses reached The to to operating project clean income These T&D and the related were was projects last higher primarily operating labor same contract-related the of and X.X% due costs well fourth a project to profit Combined, as impacted quarter percentage projects related inefficiencies. of negatively clean as in changes labor energy T&D gross of XXXX. by as certain

to The increase was for These quarter period to due same largely year. on X.X% of margin income operating previous fourth projects to projects the completion. change benefits margins last productivity the better-than-anticipated was completed C&I X.X% and for favorable orders. nearing continued primarily certain certain related and benefit XXXX the of compared higher

productivity a completion These of positively fourth to partially income project estimated by a project, changes negative which on operating better-than-anticipated a C&I fourth Operating income quarter. also the quarter. profit during margin gross during increases X.X% were impact This had reached substantial quarter. significant was related the experienced the impacted fourth margin offset by single during

and project this lower labor increased due loss The compression related was additions scheduled issues. to costs on workflow access to and productivity scope due to primarily

impacted was by related operating decrease expense income contingent in C&I prior a to compensation margin Additionally, acquisition. positively a

increase operations. year. million an acquisitions, decrease our to compared were future costs decrease XXXX SG&A due partially the million, offset expenses compensation prior contingent last was to expenses $X decrease to decrease employee expense incentive by and a our of quarter The related period compensation in in $XX a in same support Fourth primarily a in to growth employee-related

Our diluted compared Net unrecognized fourth rate benefit period to primarily and last XXXX quarter quarter higher the million of quarter XX.X% million of income for Fourth was compared the year. effective year. the compared period compared permanent to XXXX $X.XX was period million to for difference per the other same same $XX $XX last last last same fourth $X.XX increase deferred was $XX share year. tax year the $XX net was to for same EBITDA to XX.X% million tax for income period items The assets. due

and of XXXX, Total backlog prior segment T&D as was XX, billion of prior our consistent XX, $X.X million $X.X the December consisted X.X% of our $XXX as from year. and with C&I segment. quarter, a the for for Total backlog December XXXX, billion, increase

contingent to in Fourth compared quarter operating million the expenditures. of operating operating compensation prior acquisitions of XXXX associated activities and to flow same the flow net timing decrease the million $X payments $XX provided the quarter offset compared $XX due with primarily cash same cash flow was for to cash partially was XXXX decrease million million reflecting for period cash in operating The was income. $XX capital year, flow cash cash last the lower Fourth flow, year. by by free last period of free lower

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

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

funds September program. The or whichever exhausted, are X, new share is expire Directors Board authorized repurchase authorized Our will recently a of $XX the million on program XXXX, earlier. when new

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

Brian Stern

market strategically Thanks, opportunities bidding focus The to and and existing and growing customers. our new relationships seeking by and Kelly, long-term continues segment everyone. expand on to T&D winning and good with morning, strengthening presence

XXXX of and to results reliability quality thanks our business prudent across safety, balanced principles quarter fourth portfolio Our steady, of work. were

Bidding healthy We the XXXX distribution to projects, a and results in and is years the and outlook remains future for to with substation segment of pipeline closely maintain continue on-time and transmission, activity working deliver outcomes. positive. customers diverse quality stable in

for aging an highs released upgrade by are electricity According and present energy electrical as S&P strives hit to investments the to XXXX, achieve country and projected to growth. forecast low $XXX improve all the demand. goals growth Global XXXX, meet reliability, long-term $XXX increase new to aggregate XXXX, increasing utility January billion of to opportunities billion Investments infrastructure, decarbonization in in meet

landscape, in and this Our energy proven reliable the we creates believe face future customers opportunities MYR the provides of and dynamic growth. require this Group for project expertise delivery

to awards while also and Electric our substation continue Canada. Washington and awarded won the new one Company received transmission, Midwest Arizona, subsidiaries L.E. Electric the Harlan and and West, Alaska in U.S. and agreement win Sturgeon in and Florida, substation and Virginia throughout work the a and the Eastern and was Northeast. Oregon, Tennessee, project Southwestern extended transmission Myers Utah. Texas, transmission distribution as execute Great region, Georgia across has in and additional substation in in master distribution the and [indiscernible] service projects In transmission, well work Our Out Carolinas. Construction substation X-year work as

summary, this the of In an we time believe exciting to be is part industry.

the energy to reliable Our and them they customers help demand communities. I amazing challenges commitment of us providing rely safely day our the deliver overcoming increasing teams on to value. to show proud and every and meet exceptional am

to are Our attributable successes them.

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

Don Egan

Thanks, as we core the fourth compared and continue previous improved C&I in new The segment and good Brian, to quarters markets healthy, remain to capture results morning, achieved everyone. chosen projects. our quarter

long-term of execute opportunities various Our safely is sizes ability many in projects our creating chosen to skillfully markets. and

institutional remains in outlook total commercial activity X% XXXX with released growth X% stability. forecast in Dodge construction, in and an continued signs Network construction, manufacturing. XXXX Construction construction Bidding in November of nonresidential in including The increase X% long-term healthy,

alone our predicts data The see in as consensus to and a increase. construction XXXX American health such are of care Institute Data Architects manufacturing. centers centers, core XX% across markets forecast anticipated healthy growth

collaborating while future Our success. teams facilities new with existing place expertise in capture continued to to opportunities continue leveraging positions and to for us strategically facilities, our customers build upgrade leading

Enterprises the fourth center U.S. our companies Canada, an Huen of awarded Western pursue Pacific projects. project array large won Vancouver Electric perform in quarter, and the in health In to Jersey. care work New Across a continue and was and distribution

opportunities and ES New California We higher Maine, was Electrical Colorado, education captured and work future. continue Contractors in York. a project positioned to in CSI in for and Huen clean projects Canada win is project additional additional while also [indiscernible] well and the energy awarded in Electric additional transportation

our the believe infrastructure meet In the the of achieved, our build dedication society. with organization conclusion, the integrity. our have employees [indiscernible] by their continue at serving to modern remains we We demands when our of the am is them, accomplishments I I of look Because customers effort and side-by-side forefront industry. future inspired customers the at of to with to working promising, we safely will valued and

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

Richard Swartz

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

demonstrates quarter projects. opportunities for forecast a performance serve, our strategies and high-quality strong markets serve rely and business our continued valued customers, construction enduring even faced teams an development segments, experienced of Our pipeline us and position growth the in steady as headwinds the electrical We commitment for who well of our to we services. our both deliver as success. sound fourth safely trusting the Through on open that we to us operating we group relatively small of project believe from a steady principles, business partner

to the them thank invaluable of and our I for possible, Our success trust, am like year. talented is continued grateful excellence contributions for their their for would dedicated to ongoing and support. our made I customers and shareholders your thanks our also this employees.

about upon with every coming beyond. to years excited help in create role I look XXXX our working essential in rely will group are electrical and modern day. play where infrastructure forward We communities the our the to you in the

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

Operator

[Operator Our KeyBanc. first the comes line from Sangita Jain Instructions] of question of

Sangita Jain

up potential of start geographies your Kelly, are environment the discussions? coming by seeing the on Rick, the C&I, in that you can you're in I tariffs of bidding the asking and type projects,

Richard Swartz

I we're the all markets on seeing a really in say we're data lot center the side. would activity in,

Don prepared and comments. and and I into hospitals, getting as think highlighted of then when lot a you're that's still transit is activity the side,

think get of up we into coming tariffs I newer the -- tariffs contracts. potential as is always

is point to would would a I think discussed are it's talking a provisions in a out I say contracts And risk. getting that that there. everybody point lot our so about, very I say that's of cover

Sangita Jain

lower Got if in it. bigger on in a some both about can that made on in change price you your I that? Is bidding fixed revenue function follow for how explain a can that you focus of up And a remarks projects in you're comments T&E contracts contracts? segments, prepared as

Richard Swartz

We contracts, T&E fixed but price. also like we like

I last type We've coming long-term trend of look we to the I that us T&E at think it's the either as just execute mixture ones during that projects quarter. projects, can it of the we a an did are but forward. over increase shown wouldn't quarter. of this going see in kind

Sangita Jain

area that Was any can you in highlight? specific that

Richard Swartz

in No, came the just It no. in. was It the work wasn't way one specific area.

Kelly Huntington

Sangita, T&D down disclosures that. fixed highlight on projects revenue sorry, clean our And to a is in that on coming And that the add to within did We has side. been work. energy just price all

to XX% seen I our climbed think overall up revenue. T&D has you've MSA conversely, of percentage of work our

Operator

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

Justin Hauke

should needs been stronger about flow the And that you accounts flow, of of happen it's a of just of obviously of of collect unbilled reached free bridge kind target -- which being to those. -- AR And the lot last XXXX be thinking here, couple to kind I year? the the like down? think I as of that thinking of cash looks funded has kind kind and [indiscernible] completion free a the into projects know has I guess, have good challenging the jobs, it receivable. moved the year-end. we as Great. much is bad challenged would guess about years with those the free flow, DSOs cash completion And the corollary Right. for cash to because see of on the just What

Kelly Huntington

the year. of Justin. each Good comments ranges say, similar Yes. of see the free mid quarter's this segment. cash more And course, flow my question, income And to operating I we profitability stronger last we for do would drivers, part of positive target on as to call, increased our return generation

driver. a that's So

third the pointed total routinage balances then also quarter. [ XX% and you And over XX% quarter, recent from down as down reductions from that's third orders, about also for change to, ], and pending

cash we to positive see cash as that that collected, helped drive So flow.

one I just comes really of course, flow return back to way. quarter-to-quarter, impact of We, do also would see and say cash cash thing kind free selected energy that yes, the of transmission and And clean that and large our of on flows to question, kind maybe just cash the a XXXX. other factors -- Now couple lumpy, the lumpiness just of operating can we timing. stronger that. going selectivity to your flows flows project our can the in would ebbs I be projects of original and But work --

Justin Hauke

where Okay. clean that in the at least I of we revenue the Great. have revenue trailing have And T&D energy Do my projects helped guys the How you quarters, last the energy you cycling with think update about follow-up, have kind clean out. year-end? as the given as of normalize the T&D segment? was kind us, those XX-month segment, are expectations of the guess in couple of from contribution projects much

Richard Swartz

being Yes. X%, up It X% year. ended per yes. about

Kelly Huntington

about quarter, And basis. a for on that was, XX% the year-to-date

Justin Hauke

that's of come Is Or Okay. XXXX? that hasn't it think X essentially a Is back fair it work to portion in that is in? that, is? there

Richard Swartz

Yes.

We think work selective for that be in us, like going overall. I to that we're to market. continue

selective. activity, of where good Don markets we that done we've few areas up T&D on in, in some he other very success good very see continue the we're where front, picked very historically and to a the we As spoke, had some work be we'll in

want we not definitely on the at right that we now, mean taking -- like we work work. I take any I on price. right we we're market, So that but said to haven't haven't wouldn't --

be we'll So continue to selective.

Operator

Our of from question the Goldman next Ati comes Modak of line Sachs.

Ati Modak

anything Kelly, the have about growth in And be we if anything how X you year? that I guidance, curious the helpful. color through you thinking know just official businesses of can the on in kind terms margin there, don't any as you're that Rick, progression would this roll year? the there's share but for of

Richard Swartz

projection, to I basis anticipate and our to a we've on in operating out, now, of to would that of mid-range T&D kind -- going targets that X% right the margin [indiscernible] the C&I. X% on year say we're XX.X% on that X% on we

at I guess, for on all the revenue. we're single-digit kind got upper of or on we side, growth on that clean that opportunity solar think to up core the make When side I growth, still loss still T&D, the energy we've C&I side. And have but see within that what we've looking T&D segment, growth the of there we on had

So see be a as last best out to and fill, trying there anticipate quarter, we that the can, to would we hole it. do to there we and opportunities said fill we

Ati Modak

number you what could what means you That's core you balanced then to? heard over are terms that in about But those many those competitive the of previously helpful. C&I how hyperscalers, you think are I and core exposed regions be And super XXX want just I of in right. that indicated and talk that know curious landscape the markets I is a on? you Can the highlighted that the in projects you if business. that exposure size of I'm for

Richard Swartz

of that with say to I'll day. we're lots would one opportunities. every deals that Don. I He turn Yes. seeing over

Don Egan

We our -- some your and And on specifically, like there We markets. hyperscalers hyperscalers are care centers the work. what we are markets. -- to be focus question answer come to that to focus going are we're water But on. in wastewater diversified data like are and said, core into into to continue we moving health our of seeing core there just

Operator

next Our comes Braatz of line the John from question of KCCA.

Jon Braatz

from Obviously, mix opposed cycle, single your question are and have Rick, affect new administration? as opportunities what if curious how question. how of terms a you result there's a hearing oil is influence you? combined of might energy, And the administration of and the on the utility refocusing gas. sort might and for Brian, business? customers in again, generation I changing you I'm of big a And Trump generation cycle attention more to via electricity ahead that it clean your for sort as And picture

Richard Swartz

that or in either I or us, energy For that don't out and way, strong do a the itself, very we either that, business, out the we're clean construction it's coming of selective lines lines work way like it's and we're the anything of combined them. in whether combined mean, part substations from of us. do. on the doing and the cycle plants associated for clean the We our and is in cycle side Though energy

to let that. Brian add I'll

Brian Stern

Yes. Rick kind of hit on it.

planning a our has while. think customers cycle with for in I utility major been motion

them haven't any change shifts a new administration discussions we all. So seen from at far the in as as with

Jon Braatz

Okay.

one Okay. question And for you. Kelly,

from the was, charge Just curious what deferred if the benefit it that. tax unrecognized call to you want

Kelly Huntington

Sure.

sort So the that the be profitability of kind rate effective tax we really overall in the impact year just year, the this to and on unevenness quarter for across portfolio. had an and just had

little a So there. drag

I really higher overall, you the from of year by that around acquisition that. by tax a our deductibility the -- rate prior was permanent compensation driven driven and obviously, contingent this was at when higher differences, look tax which a think effective rate lot limits

forward. become our effective do Canadian will we our of because operations. in expect to pressure of less but look history overall rate a as the tax growth that we still have on So headwind to relative

be tax first driven that last to bit more that's that expect while compensation material tax years we a is to The do rate tax to a XXXX. the and unusual our effective in rate, rate how something benefit quarter-by-quarter just expect we're I'll relative little across had even stock the last we thing here we've the of maybe in years, the hits rate by quarter as first driver few mention last quarter The year. be the on tax a few don't

Operator

of of next comes Our from Brophy Stifel. Brian line question the

Brian Brophy

any regarding conversations impact prior if is potential in XXXX? projects Curious in time finished Or some occur those on potential or completed challenge there or change from these that claims have discussions customers orders? could with

Richard Swartz

I continuing. would say those conversations are

settled have Some been out.

going always discussions reported now, have as on. possible we out projects. them. these stand could far as as covered There you we we've as are still be the feel impacts settle we Some But way right them

that say to be appears would and I but So conversations way good the could impacts. there ongoing, everything always are be

Brian Brophy

I guess, Okay. a sense a help outcomes? size? guess, Or something are because give And this then is you would negative I relatively there impact potential a potential is can guess, for there any orders? -- us Would potential I be immaterial? for Just be change be pursuing positive there you're appreciated. also there to

Richard Swartz

we to evolve, and are it we ongoing. But or enough the we see provide look of settled probably any as those conversations conversations either we're when it, to we at looking way that's today are negative, not it's it how point, updates is at would it's needle this not these them all The but positive move continue at had.

about kind them this limited I I'm So of point. say on at what can

Kelly Huntington

to I quarter that quarter. evaluate reiterate, estimates that adjust -- our month, by we by Just month and on we mean, we do

reflect presenting up-to-date we have. in So most what we're year-end our financials information the

Operator

now for [Operator Instructions] closing at to Swartz like time. I this further showing back to it turn questions I'm no Rick would remarks.

Richard Swartz

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

Operator

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

may now disconnect. You

MYR (MYRG) 27 Feb 252024 Q4 Earnings call transcript