MYR Group Inc. (“MYR”) (NASDAQ: MYRG), a holding
company of leading specialty contractors serving the electric
utility infrastructure, commercial and industrial construction
markets in the United States and western Canada, today announced
its third-quarter and first nine-months 2018 financial results.
Highlights
- Third quarter revenues of $399.5 million, a record high
quarterly revenue
- Third quarter net income of $8.0 million
- Backlog of $1.10 billion, an all-time high
Management CommentsRick Swartz, MYR’s President
and CEO, said, “Our third quarter 2018 financial results included
increases in revenue, gross profit, earnings per share, net income
and EBITDA as compared to the third quarter of 2017. We also
attained approximately $1.10 billion in backlog, a new record high.
The markets we serve forecast strength going forward, which we
believe will provide ongoing bid opportunities that support our
overall growth strategy. We believe we are well-positioned to win
and execute projects of all types and sizes, and that our continued
focus on operational improvements is producing sustainable returns
for MYR Group and our shareholders.”
Third Quarter ResultsMYR reported third-quarter
2018 revenues of $399.5 million, an increase of $26.0 million, or
7.0 percent, compared to the third quarter of 2017. Specifically,
the T&D segment reported revenues of $222.5 million, an
increase of $6.5 million, or 3.0 percent, from the third quarter of
2017, primarily due to an increase in distribution revenues offset
by lower revenue from large transmission projects. The C&I
segment reported third quarter 2018 revenues of $177.0 million, an
increase of $19.5 million, or 12.4 percent, from the third quarter
of 2017, primarily due to the acquisition of the Huen Companies
partially offset by a decrease in projects that had accelerated
schedules that completed in 2017.
Consolidated gross profit increased to $45.3 million in the
third quarter of 2018, a $10.4 million increase from the third
quarter of 2017. The increase in gross profit was primarily due to
increased margins and higher revenues. Gross margin increased to
11.3 percent for the third quarter of 2018 from 9.3 percent for the
third quarter of 2017. The increase in gross margin was partly due
to $2.3 million in estimate changes on certain contracts associated
with the acquisition of the Huen Companies. These changes of
estimates are subject to margin guarantees and represent potential
contingent consideration for which an offset is recognized in other
expense. Additionally, gross margin during the three months ended
September 30, 2017 was negatively impacted by inclement weather,
lower productivity, project delays and schedule extensions on
certain projects that did not recur in the third quarter of 2018.
Changes in estimates of gross profit on certain projects, excluding
estimate changes on our recent acquisition noted above, resulted in
a gross margin decreases of 0.6 percent and 0.9 percent for the
third quarter of 2018 and 2017, respectively.
Selling, general and administrative expenses (“SG&A”)
increased to $31.2 million in the third quarter of 2018, compared
to $23.8 million in the third quarter of 2017. The
period-over-period increase was primarily due to the acquisition of
the Huen Companies, higher employee related expenses to support
operations and higher bonus and profit sharing costs. As a
percentage of revenues, SG&A increased to 7.8 percent for the
third quarter of 2018 from 6.4 percent for the third quarter of
2017.
The income tax provision was $2.9 million for the third quarter
of 2018, with an effective tax rate of 26.6 percent, compared to a
provision of $4.2 million for the third quarter of 2017, with an
effective tax rate of 44.8 percent. The effective tax rate for the
third quarter of 2018 decreased primarily due to the enactment of
the United States Tax Cuts and Jobs Act in 2017. Our inability to
utilize losses experienced in certain Canadian operations
negatively impacted the effective tax rate in the third quarter of
2017.
For the third quarter of 2018, net income was $8.0 million, or
$0.48 per diluted share, compared to $5.1 million, or $0.31 per
diluted share, for the same period of 2017. Third-quarter 2018
EBITDA, a non-GAAP financial measure, was $22.1 million, or 5.5
percent of revenues, compared to $20.1 million, or 5.4 percent of
revenues, in the third quarter of 2017.
First Nine-Months ResultsMYR reported first
nine-months 2018 revenues of $1.08 billion, an increase of $55.0
million, or 5.3 percent, compared to first nine-months 2017.
Specifically, the T&D segment reported revenues of $635.8
million, a decrease of $15.7 million, or 2.4 percent, from the
first nine-months of 2017, due primarily to lower revenue from
large transmission projects partially offset by an increase in
distribution revenues. The C&I segment reported nine-months
2018 revenues of $449.0 million, an increase of $70.7 million, or
18.7 percent, from nine-months 2017, due primarily to the
acquisition of the Huen Companies, increased spending from new and
existing customers and increased volume at certain organic
expansion locations.
Consolidated gross profit increased to $119.7 million in the
first nine-months of 2018, compared to $88.1 million in the first
nine-months of 2017. The increase in gross profit was due to higher
revenues and increased margins. Gross margin increased to 11.0
percent for the first nine months of 2018 from 8.6 percent for the
first nine months of 2017. The increase in gross margin was
primarily due to improvements in efficiency compared to the prior
year, which was significantly impacted by write-downs on three
projects. Gross margin also benefited from $2.3 million in estimate
changes on certain contracts associated with the acquisition of the
Huen Companies. These changes of estimates are subject to margin
guarantees and represent potential contingent consideration for
which an offset is recognized in other expense. These margin
improvements were partially offset by a write-down on a project due
to inclement weather, lower productivity and ongoing negotiations
relating to a contract termination. Changes in estimates of gross
profit on certain projects, including those discussed above,
resulted in a gross margin decreases of 0.4 percent and 0.7 percent
for the first nine-months of 2018 and 2017, respectively.
SG&A increased to $88.7 million in the first nine-months of
2018, compared to $74.6 million in the first nine-months of 2017.
The year-over-year increase was primarily due to higher bonus and
profit sharing costs, the acquisition of the Huen Companies and
higher employee related expenses to support operations. As a
percentage of revenues, SG&A increased to 8.2 percent for the
first nine-months of 2018 from 7.2 percent for the first
nine-months of 2017.
Other expense was $2.0 million for the first nine-months of 2018
compared to other income of $0.2 million in the first nine-months
of 2017. The change was primarily attributable to contingent
consideration related to margin guarantees on certain contracts
associated with the acquisition of the Huen Companies recognized in
the first nine-months of 2018.
The income tax provision was $7.9 million for the first
nine-months of 2018, with an effective tax rate of 28.0 percent,
compared to a provision of $6.4 million for the first nine-months
of 2017, with an effective tax rate of 45.6 percent. The decrease
in the tax rate in the first nine months of 2018 was primarily
caused by the enactment of the United States Tax Cuts and Jobs Act
in 2017. Our inability to utilize losses experienced in certain
Canadian operations negatively impacted the effective tax rate in
the nine-months of 2018 and 2017. The tax rate in the nine-months
of 2017 benefited from excess tax benefits pertaining to the
vesting of stock awards and the exercise of stock options.
For the first nine-months of 2018, net income was $20.4 million,
or $1.23 per diluted share, compared to $7.6 million, or $0.46 per
diluted share, for the same period of 2017. First nine months of
2018 EBITDA, a non-GAAP financial measure, was $60.0 million, or
5.5 percent of revenues, compared to $45.2 million, or 4.4 percent
of revenues, in the first nine-months of 2017.
Backlog As of September 30, 2018, MYR's backlog
was $1.10 billion, which represented an increase of $84.2 million,
or 8.3 percent, compared to June 30, 2018. Specifically, in the
same period, T&D backlog decreased $9.1 million, or 1.9
percent, to $473.8 million, while C&I backlog increased $93.3
million, or 17.6 percent, to $623.8 million. Total backlog at
September 30, 2018 increased $395.9 million, or 56.4 percent, from
the $701.7 million reported at September 30, 2017.
Balance Sheet As of September 30, 2018, MYR had
$164.4 million of borrowing availability under its revolving credit
facility.
On September 28, 2018, we entered into a Master Equipment Loan
and Security Agreement (the “Master Loan Agreement”) with Banc of
America Leasing & Capital, LLC (“BofA”). The Master Loan
Agreement may be used for financing of equipment between us and
BofA pursuant to one or more "Equipment Notes". Simultaneously, we
executed two Equipment Notes that are collateralized by equipment
and vehicles owned by us, the outstanding balance of these
Equipment Notes was $24.9 million as of September 30, 2018. The
Master Loan Agreement increases our borrowing capacity and allows
to lock in fixed interest rates.
Non-GAAP Financial Measures To supplement MYR’s
financial statements presented in accordance with generally
accepted accounting principles in the United States (“GAAP”), MYR
uses certain non-GAAP measures. Reconciliation to the nearest GAAP
measures of all non-GAAP measures included in this press release
can be found at the end of this release. MYR’s definitions of these
non-GAAP measures may differ from similarly titled measures used by
others. These non-GAAP measures should be considered supplemental
to, and not a substitute for, financial information prepared in
accordance with GAAP.
MYR believes that these non-GAAP measures are useful because
they (i) provide both management and investors meaningful
supplemental information regarding financial performance by
excluding certain expenses and benefits that may not be indicative
of recurring core business operating results, (ii) permit investors
to view MYR’s performance using the same tools that management uses
to evaluate MYR’s past performance, reportable business segments
and prospects for future performance, (iii) publicly disclose
results that are relevant to financial covenants included in MYR’s
credit facility and (iv) otherwise provide supplemental information
that may be useful to investors in evaluating MYR.
Conference Call MYR will host a conference call
to discuss its third-quarter 2018 results on Thursday, November 1,
2018, at 9:00 a.m. Central time. To participate in the conference
call via telephone, please dial (877) 561-2750 (domestic) or (763)
416-8565 (international) at least five minutes prior to the start
of the event. A replay of the conference call will be available
through Thursday, November 8, 2018, at 11:59 p.m. Eastern time, by
dialing (855) 859-2056 or (404) 537-3406, and entering conference
ID 6384337. MYR will also broadcast the conference call live via
the internet. Interested parties may access the webcast through the
Investor Relations section of MYR's website at www.myrgroup.com.
Please access the website at least 15 minutes prior to the start of
the call to register, download and install any necessary audio
software. The webcast will be available until Thursday, November 8,
2018, at 11:59 P.M. Eastern time.
About MYRMYR is a holding company of leading
specialty contractors serving the electric utility infrastructure,
commercial and industrial construction markets throughout the
United States and western Canada who have the experience and
expertise to complete electrical installations of any type and
size. Their comprehensive services on electric transmission and
distribution networks and substation facilities include design,
engineering, procurement, construction, upgrade, maintenance and
repair services. Transmission and distribution customers include
investor-owned utilities, cooperatives, private developers,
government-funded utilities, independent power producers,
independent transmission companies, industrial facility owners and
other contractors. Commercial and industrial electrical contracting
services are provided to general contractors, commercial and
industrial facility owners, local governments and developers
generally throughout the west, mid-west and northeast United States
and western Canada. For more information, visit myrgroup.com.
Forward-Looking Statements Various statements
in this announcement, including those that express a belief,
expectation, or intention, as well as those that are not statements
of historical fact, are forward-looking statements. The
forward-looking statements may include projections and estimates
concerning the timing and success of specific projects and our
future production, revenue, income, capital spending, segment
improvements and investments. Forward-looking statements are
generally accompanied by words such as “anticipate,” “believe,”
“encouraged,” “estimate,” “expect,” “intend,” “likely,” “may,”
“objective,” “outlook,” “plan,” “possible,” “potential,” “project,”
“remain confident,” “should” “unlikely,” or other words that convey
the uncertainty of future events or outcomes. The forward-looking
statements in this announcement speak only as of the date of this
announcement; we disclaim any obligation to update these statements
(unless required by securities laws), and we caution you not to
rely on them unduly. We have based these forward-looking statements
on our current expectations and assumptions about future events.
While our management considers these expectations and assumptions
to be reasonable, they are inherently subject to significant
business, economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are difficult to
predict and many of which are beyond our control. No
forward-looking statement can be guaranteed and actual results may
differ materially from those projected. Forward-looking statements
in this announcement should be evaluated together with the many
uncertainties that affect MYR's business, particularly those
mentioned in the risk factors and cautionary statements in Item 1A
of MYR's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, and in any risk factors or cautionary statements
contained in MYR's subsequent Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K.
MYR Group Inc. Contact:Betty R. Johnson, Chief
Financial Officer, 847-290-1891, investorinfo@myrgroup.com
Investor Contact: Steve Carr, Dresner Corporate
Services, 312-780-7211, scarr@dresnerco.com
|
|
|
|
MYR GROUP
INC.Consolidated Balance SheetsAs
of September 30, 2018 and December 31,
2017 |
|
|
|
|
|
September 30, |
|
December 31, |
(In thousands,
except share and per share data) |
2018 |
|
2017 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
300 |
|
|
$ |
5,343 |
|
Accounts receivable, net of allowances of $564 and
$605, respectively |
|
291,583 |
|
|
|
283,008 |
|
Costs and estimated earnings in excess of billings
on uncompleted contracts |
|
124,057 |
|
|
|
78,260 |
|
Current portion of receivable for insurance claims
in excess of deductibles |
|
5,421 |
|
|
|
4,221 |
|
Refundable income taxes, net |
|
— |
|
|
|
391 |
|
Other current assets |
|
5,684 |
|
|
|
8,513 |
|
Total current assets |
|
427,045 |
|
|
|
379,736 |
|
Property and equipment, net of accumulated depreciation of $248,339
and $231,391, respectively |
|
161,925 |
|
|
|
148,084 |
|
Goodwill |
|
71,099 |
|
|
|
46,994 |
|
Intangible assets, net of accumulated amortization of $6,166 and
$5,183, respectively |
|
19,659 |
|
|
|
10,852 |
|
Receivable for insurance claims in excess of deductibles |
|
16,861 |
|
|
|
14,295 |
|
Investment in joint
ventures |
|
1,837 |
|
|
|
168 |
|
Other assets |
|
3,275 |
|
|
|
3,659 |
|
Total assets |
$ |
701,701 |
|
|
$ |
603,788 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Current portion of long-term debt |
$ |
2,941 |
|
|
$ |
— |
|
Current portion of capital lease obligations |
|
1,110 |
|
|
|
1,086 |
|
Accounts payable |
|
123,980 |
|
|
|
110,383 |
|
Billings in excess of costs and estimated earnings
on uncompleted contracts |
|
46,186 |
|
|
|
28,919 |
|
Current portion of accrued self-insurance |
|
14,816 |
|
|
|
13,138 |
|
Income taxes payable, net |
|
3,243 |
|
|
|
— |
|
Other current liabilities |
|
60,028 |
|
|
|
35,038 |
|
Total current liabilities |
|
252,304 |
|
|
|
188,564 |
|
Deferred income tax liabilities |
|
13,817 |
|
|
|
13,452 |
|
Long-term debt |
|
86,373 |
|
|
|
78,960 |
|
Accrued self-insurance |
|
34,203 |
|
|
|
32,225 |
|
Capital lease obligations, net of current maturities |
|
1,796 |
|
|
|
2,629 |
|
Other liabilities |
|
462 |
|
|
|
919 |
|
Total liabilities |
|
388,955 |
|
|
|
316,749 |
|
Commitments and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred
stock—$0.01 par value per share; 4,000,000 authorized shares; |
|
|
|
none issued and outstanding at September 30, 2018
and December 31, 2017 |
|
— |
|
|
|
— |
|
Common
stock—$0.01 par value per share; 100,000,000 authorized
shares; |
|
|
|
16,564,057 and 16,464,757 shares issued and
outstanding at September 30, 2018 and December 31, 2017,
respectively |
|
165 |
|
|
|
163 |
|
Additional paid-in capital |
|
147,543 |
|
|
|
143,934 |
|
Accumulated other comprehensive loss |
|
(322 |
) |
|
|
(299 |
) |
Retained earnings |
|
164,085 |
|
|
|
143,241 |
|
MYR Group Inc. share of equity |
|
311,471 |
|
|
|
287,039 |
|
Noncontrolling interest |
|
1,275 |
|
|
|
— |
|
Total stockholders’ equity |
|
312,746 |
|
|
|
287,039 |
|
Total liabilities and stockholders’ equity |
$ |
701,701 |
|
|
$ |
603,788 |
|
|
|
|
|
|
|
|
|
MYR GROUP
INC.Unaudited Consolidated Statements of
Operations and Comprehensive IncomeThree and Nine
Months Ended September 30, 2018 and 2017 |
|
|
|
|
|
Three months
ended |
|
Nine months
ended |
|
September
30, |
|
September
30, |
(In thousands, except per share
data) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Contract revenues |
$ |
399,537 |
|
|
$ |
373,502 |
|
|
$ |
1,084,824 |
|
|
$ |
1,029,816 |
|
Contract costs |
|
354,251 |
|
|
|
338,649 |
|
|
|
965,155 |
|
|
|
941,706 |
|
Gross profit |
|
45,286 |
|
|
|
34,853 |
|
|
|
119,669 |
|
|
|
88,110 |
|
Selling, general and administrative expenses |
|
31,210 |
|
|
|
23,814 |
|
|
|
88,658 |
|
|
|
74,617 |
|
Amortization of intangible assets |
|
743 |
|
|
|
195 |
|
|
|
979 |
|
|
|
593 |
|
Gain on sale of property and equipment |
|
(804 |
) |
|
|
(576 |
) |
|
|
(2,869 |
) |
|
|
(2,602 |
) |
Income from operations |
|
14,137 |
|
|
|
11,420 |
|
|
|
32,901 |
|
|
|
15,502 |
|
Other income (expense) |
|
|
|
|
|
|
|
Interest income |
|
13 |
|
|
|
— |
|
|
|
13 |
|
|
|
4 |
|
Interest expense |
|
(1,014 |
) |
|
|
(685 |
) |
|
|
(2,518 |
) |
|
|
(1,793 |
) |
Other, net |
|
(2,294 |
) |
|
|
(1,413 |
) |
|
|
(2,020 |
) |
|
|
212 |
|
Income before provision for income taxes |
|
10,842 |
|
|
|
9,322 |
|
|
|
28,376 |
|
|
|
13,925 |
|
Income tax expense |
|
2,885 |
|
|
|
4,177 |
|
|
|
7,940 |
|
|
|
6,350 |
|
Net income |
$ |
7,957 |
|
|
$ |
5,145 |
|
|
$ |
20,436 |
|
|
$ |
7,575 |
|
Income per common share: |
|
|
|
|
|
|
|
—Basic |
$ |
0.48 |
|
|
$ |
0.32 |
|
|
$ |
1.24 |
|
|
$ |
0.47 |
|
—Diluted |
$ |
0.48 |
|
|
$ |
0.31 |
|
|
$ |
1.23 |
|
|
$ |
0.46 |
|
Weighted average number of common shares and potential common
shares outstanding: |
|
|
|
|
|
|
|
—Basic |
|
16,492 |
|
|
|
16,314 |
|
|
|
16,423 |
|
|
|
16,263 |
|
—Diluted |
|
16,630 |
|
|
|
16,474 |
|
|
|
16,580 |
|
|
|
16,476 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
7,957 |
|
|
$ |
5,145 |
|
|
$ |
20,436 |
|
|
$ |
7,575 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
(22 |
) |
|
|
206 |
|
|
|
(23 |
) |
|
|
216 |
|
Other comprehensive income (loss) |
|
(22 |
) |
|
|
206 |
|
|
|
(23 |
) |
|
|
216 |
|
Total comprehensive income |
$ |
7,935 |
|
|
$ |
5,351 |
|
|
$ |
20,413 |
|
|
$ |
7,791 |
|
|
|
|
|
|
|
|
|
|
|
MYR GROUP
INC.Unaudited Consolidated Statements of Cash
FlowsNine Months Ended September 30, 2018 and
2017 |
|
|
|
Nine months
ended |
|
September
30, |
(In thousands) |
2018 |
|
2017 |
|
|
|
|
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
20,436 |
|
|
$ |
7,575 |
|
Adjustments to reconcile net income to net cash
flows provided by (used in) operating activities: |
|
|
|
Depreciation and amortization of property and
equipment |
|
28,151 |
|
|
|
28,906 |
|
Amortization of intangible assets |
|
979 |
|
|
|
593 |
|
Stock-based compensation expense |
|
2,480 |
|
|
|
3,479 |
|
Deferred income taxes |
|
342 |
|
|
|
(302 |
) |
Gain on sale of property and equipment |
|
(2,869 |
) |
|
|
(2,602 |
) |
Other non-cash items |
|
697 |
|
|
|
1,113 |
|
Changes in operating assets and liabilities |
|
|
|
Accounts receivable, net |
|
24,519 |
|
|
|
(37,059 |
) |
Costs and estimated earnings in excess of billings
on |
|
|
|
uncompleted contracts |
|
(35,466 |
) |
|
|
(36,980 |
) |
Receivable for insurance claims in excess of
deductibles |
|
(3,766 |
) |
|
|
(292 |
) |
Other assets |
|
2,929 |
|
|
|
85 |
|
Accounts payable |
|
(13,781 |
) |
|
|
14,803 |
|
Billings in excess of costs and estimated earnings
on |
|
|
|
uncompleted contracts |
|
10,918 |
|
|
|
1,363 |
|
Accrued self insurance |
|
3,668 |
|
|
|
2,626 |
|
Other liabilities |
|
19,432 |
|
|
|
(5,098 |
) |
Net cash flows provided by (used in) operating
activities |
|
58,669 |
|
|
|
(21,790 |
) |
Cash flows from investing
activities: |
|
|
|
Proceeds from sale of property and equipment |
|
3,505 |
|
|
|
2,802 |
|
Cash paid for acquired business |
|
(47,082 |
) |
|
|
— |
|
Purchases of property and equipment |
|
(39,723 |
) |
|
|
(24,909 |
) |
Net cash flows used in investing activities |
|
(83,300 |
) |
|
|
(22,107 |
) |
Cash flows from financing
activities: |
|
|
|
Net borrowings (repayments) under revolving lines of
credit |
|
(14,580 |
) |
|
|
20,427 |
|
Borrowings under equipment notes |
|
24,934 |
|
|
|
— |
|
Payment of principal obligations under capital
leases |
|
(809 |
) |
|
|
(812 |
) |
Proceeds from exercise of stock options |
|
1,887 |
|
|
|
1,147 |
|
Repurchase of common shares |
|
(1,043 |
) |
|
|
(3,058 |
) |
Other financing activities |
|
9,223 |
|
|
|
3,718 |
|
Net cash flows provided by financing activities |
|
19,612 |
|
|
|
21,422 |
|
Effect of exchange rate changes on cash |
|
(24 |
) |
|
|
311 |
|
Net decrease in cash and cash equivalents |
|
(5,043 |
) |
|
|
(22,164 |
) |
Cash and cash
equivalents: |
|
|
|
Beginning of period |
|
5,343 |
|
|
|
23,846 |
|
End of period |
$ |
300 |
|
|
$ |
1,682 |
|
|
|
|
|
|
|
|
|
|
MYR GROUP
INC.Unaudited Consolidated Selected Data and Net
Income Per Share Three and Twelve Months Ended
September 30, 2018 and 2017 |
|
|
|
|
|
|
Three months
ended |
|
Last twelve months
ended |
|
|
September
30, |
|
September
30, |
|
(in thousands, except share and per share
data) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
Summary
Statement of Operations Data: |
|
|
|
|
|
|
|
|
Contract revenues |
$ |
399,537 |
|
|
$ |
373,502 |
|
|
$ |
1,458,325 |
|
|
$ |
1,373,476 |
|
|
Gross
profit |
$ |
45,286 |
|
|
$ |
34,853 |
|
|
$ |
156,563 |
|
|
$ |
130,054 |
|
|
Income from
operations |
$ |
14,137 |
|
|
$ |
11,420 |
|
|
$ |
46,957 |
|
|
$ |
30,668 |
|
|
Income before provision
for income taxes |
$ |
10,842 |
|
|
$ |
9,322 |
|
|
$ |
39,091 |
|
|
$ |
29,871 |
|
|
Income
Tax Expense |
$ |
2,885 |
|
|
$ |
4,177 |
|
|
$ |
5,076 |
|
|
$ |
14,498 |
|
|
Net income |
$ |
7,957 |
|
|
$ |
5,145 |
|
|
$ |
34,015 |
|
|
$ |
15,373 |
|
|
Tax
rate |
|
26.6 |
% |
|
|
44.8 |
% |
|
|
13.0 |
% |
|
|
48.5 |
% |
|
|
|
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
|
|
|
|
|
Income per common
share: |
|
|
|
|
|
|
|
|
-
Basic |
$ |
0.48 |
|
|
$ |
0.32 |
|
|
$ |
2.08 |
|
(1) |
$ |
0.96 |
|
(1) |
-
Diluted |
$ |
0.48 |
|
|
$ |
0.31 |
|
|
$ |
2.05 |
|
(1) |
$ |
0.93 |
|
(1) |
Weighted
average number of common
shares |
|
|
|
|
|
|
|
|
and potential common shares
outstanding : |
|
|
|
|
|
|
|
|
-
Basic |
|
16,492 |
|
|
|
16,314 |
|
|
|
16,392 |
|
(2) |
|
16,191 |
|
(2) |
-
Diluted |
|
16,630 |
|
|
|
16,474 |
|
|
|
16,568 |
|
(2) |
|
16,444 |
|
(2) |
|
|
|
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
September
30, |
|
September
30, |
|
(in
thousands) |
2018 |
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Summary Balance
Sheet Data: |
|
|
|
|
|
|
|
|
Total
assets |
$ |
701,701 |
|
|
$ |
603,788 |
|
|
$ |
620,597 |
|
|
$ |
499,609 |
|
|
MYR Group Inc. share of
stockholders equity (book value) |
$ |
311,471 |
|
|
$ |
287,039 |
|
|
$ |
272,560 |
|
|
$ |
248,673 |
|
|
Goodwill and intangible
assets |
$ |
90,758 |
|
|
$ |
57,846 |
|
|
$ |
57,750 |
|
|
$ |
57,798 |
|
|
Total
funded debt |
$ |
89,314 |
|
|
$ |
78,960 |
|
|
$ |
79,497 |
|
|
$ |
33,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last twelve months
ended |
|
|
|
|
|
|
September
30, |
|
|
|
|
|
|
2018 |
|
2017 |
|
Financial Performance Measures
(3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
$ |
34,015 |
|
|
$ |
15,373 |
|
|
Interest
expense, net |
|
|
|
|
|
3,315 |
|
|
|
2,255 |
|
|
Tax
impact of interest |
|
|
|
|
|
(431 |
) |
|
|
(1,094 |
) |
|
EBIT, net of taxes (4) |
|
|
|
|
$ |
36,899 |
|
|
$ |
16,534 |
|
|
|
|
|
|
|
|
|
|
|
|
See notes at the end of this earnings release. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MYR GROUP INC.Unaudited
Performance Measures and Reconciliation of Non-GAAP
MeasuresThree and Twelve Months Ended September
30, 2018 and 2017 |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Last twelve months
ended |
|
|
September
30, |
|
September
30, |
|
(in thousands, except share, per share data, ratios and
percentages) |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
Financial Performance Measures
(3): |
|
|
|
|
|
|
|
|
EBITDA (5) |
$ |
22,147 |
|
|
$ |
20,053 |
|
|
$ |
80,613 |
|
|
$ |
71,309 |
|
|
EBITDA per Diluted Share
(6) |
$ |
1.33 |
|
|
$ |
1.22 |
|
|
$ |
4.87 |
|
|
$ |
4.34 |
|
|
Free Cash Flow (7) |
$ |
1,699 |
|
|
$ |
(45,281 |
) |
|
$ |
25,604 |
|
|
$ |
(40,129 |
) |
|
Book Value per Period End Share
(8) |
$ |
18.65 |
|
|
$ |
16.40 |
|
|
|
|
|
|
Tangible Book Value
(9) |
$ |
220,713 |
|
|
$ |
214,810 |
|
|
|
|
|
|
Tangible Book Value per Period End Share
(10) |
$ |
13.21 |
|
|
$ |
12.93 |
|
|
|
|
|
|
Funded Debt to Equity Ratio
(11) |
|
0.29 |
|
|
|
0.29 |
|
|
|
|
|
|
Asset Turnover (12) |
|
|
|
|
|
2.35 |
|
|
|
2.75 |
|
|
Return on Assets (13) |
|
|
|
|
|
5.5 |
% |
|
|
3.1 |
% |
|
Return on Equity
(14) |
|
|
|
|
|
12.5 |
% |
|
|
6.2 |
% |
|
Return on Invested Capital
(17) |
|
|
|
|
|
10.5 |
% |
|
|
5.9 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP
Measures: |
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to EBITDA: |
|
|
|
|
|
|
|
|
Net income |
$ |
7,957 |
|
|
$ |
5,145 |
|
|
$ |
34,015 |
|
|
$ |
15,373 |
|
|
Interest
expense, net |
|
1,001 |
|
|
|
685 |
|
|
|
3,315 |
|
|
|
2,255 |
|
|
Provision
for income taxes |
|
2,885 |
|
|
|
4,177 |
|
|
|
5,076 |
|
|
|
14,498 |
|
|
Depreciation and amortization |
|
10,304 |
|
|
|
10,046 |
|
|
|
38,207 |
|
|
|
39,183 |
|
|
EBITDA (5) |
$ |
22,147 |
|
|
$ |
20,053 |
|
|
$ |
80,613 |
|
|
$ |
71,309 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income per Diluted
Share |
|
|
|
|
|
|
|
|
to EBITDA per Diluted
Share: |
|
|
|
|
|
|
|
|
Net Income per
share: |
$ |
0.48 |
|
|
$ |
0.31 |
|
|
$ |
2.05 |
|
|
$ |
0.93 |
|
|
Interest
expense, net, per share |
|
0.06 |
|
|
|
0.04 |
|
|
|
0.20 |
|
|
|
0.14 |
|
|
Provision
for income taxes per share |
|
0.17 |
|
|
|
0.25 |
|
|
|
0.31 |
|
|
|
0.88 |
|
|
Depreciation and amortization per share |
|
0.62 |
|
|
|
0.62 |
|
|
|
2.31 |
|
|
|
2.39 |
|
|
EBITDA per Diluted Share
(6) |
$ |
1.33 |
|
|
$ |
1.22 |
|
|
$ |
4.87 |
|
|
$ |
4.34 |
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Free Cash Flow: |
|
|
|
|
|
|
|
|
Net cash flow from
operating activities |
$ |
13,403 |
|
|
$ |
(40,970 |
) |
|
$ |
71,261 |
|
|
$ |
(7,797 |
) |
|
Less:
cash used in purchasing property and equipment |
|
(11,704 |
) |
|
|
(4,311 |
) |
|
|
(45,657 |
) |
|
|
(32,332 |
) |
|
Free Cash Flow (7) |
$ |
1,699 |
|
|
$ |
(45,281 |
) |
|
$ |
25,604 |
|
|
$ |
(40,129 |
) |
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Book Value to Tangible Book
Value: |
|
|
|
|
|
|
|
|
Book value (MYR Group
Inc.'s share of stockholders' equity) |
$ |
311,471 |
|
|
$ |
272,560 |
|
|
|
|
|
|
Goodwill
and intangible assets |
|
(90,758 |
) |
|
|
(57,750 |
) |
|
|
|
|
|
Tangible Book Value
(9) |
$ |
220,713 |
|
|
$ |
214,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Book Value per Period End
Share |
|
|
|
|
|
|
|
|
to Tangible Book Value per Period
End Share: |
|
|
|
|
|
|
|
|
Book
value per period end share |
$ |
18.65 |
|
|
$ |
16.40 |
|
|
|
|
|
|
Goodwill
and intangible assets per period end share |
|
(5.44 |
) |
|
|
(3.47 |
) |
|
|
|
|
|
Tangible Book Value per Period End Share
(10) |
$ |
13.21 |
|
|
$ |
12.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Period End
Shares: |
|
|
|
|
|
|
|
|
Shares Outstanding |
|
16,564 |
|
|
|
16,459 |
|
|
|
|
|
|
Plus:
Common Equivalents |
|
138 |
|
|
|
160 |
|
|
|
|
|
|
Period End Shares (15) |
|
16,702 |
|
|
|
16,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, |
|
September
30, |
|
September
30, |
|
|
|
|
2018 |
|
2017 |
|
2016 |
|
Reconciliation of Invested Capital to Shareholders
Equity: |
|
|
|
|
|
|
|
|
Book value (MYR Group
Inc.'s share of stockholders' equity) |
|
|
$ |
311,471 |
|
|
$ |
272,560 |
|
|
$ |
248,673 |
|
|
Plus:
Total Funded Debt |
|
|
|
89,314 |
|
|
|
79,497 |
|
|
|
33,400 |
|
|
Less:
Cash and cash equivalents |
|
|
|
(300 |
) |
|
|
(1,682 |
) |
|
|
(584 |
) |
|
Invested Capital (16) |
|
|
$ |
400,485 |
|
|
$ |
350,375 |
|
|
$ |
281,489 |
|
|
|
|
|
|
|
|
|
|
|
See notes at the end of this earnings
release. |
|
|
(1) Last-twelve-months
earnings per share is the sum of earnings per share reported in the
last four quarters.(2)
Last-twelve-months average basic and diluted shares were determined
by adding the average shares reported for the last four quarters
and dividing by four. (3) These
financial performance measures are provided as supplemental
information to the financial statements. These measures are used by
management to evaluate our past performance, our prospects for
future performance and our ability to comply with certain material
covenants as defined within our credit agreement, and to compare
our results with those of our peers. In addition, we believe that
certain of the measures, such as book value, tangible book value,
free cash flow, asset turnover, return on equity and debt leverage
are measures that are monitored by sureties, lenders, lessors,
suppliers and certain investors. Our calculation of each measure is
described in the following notes; our calculation may not be the
same as the calculations made by other companies.
(4) EBIT, net of taxes is defined as
net income plus net interest, less the tax impact of net interest.
The tax impact of net interest is computed by multiplying net
interest by the effective tax rate. Management uses EBIT, net of
taxes, to measure our results exclusive of the impact of financing
costs.(5) EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
EBITDA is not recognized under GAAP and does not purport to be an
alternative to net income as a measure of operating performance or
to net cash flows provided by operating activities as a measure of
liquidity. EBITDA is a component of the debt to EBITDA covenant, as
defined in our credit agreement, which we must comply with to avoid
potential immediate repayment of amounts borrowed or additional
fees to seek relief from our lenders. In addition, management
considers EBITDA a useful measure because it eliminates differences
which are caused by different capital structures as well as
different tax rates and depreciation schedules when comparing our
measures to our peers’ measures.
(6) EBITDA per diluted share is
calculated by dividing EBITDA by the weighted average number of
diluted shares outstanding for the period. EBITDA per diluted share
is not recognized under GAAP and does not purport to be an
alternative to income per diluted share.
(7) Free cash flow, which is defined
as cash flow provided by operating activities minus cash flow used
in purchasing property and equipment, is not recognized under GAAP
and does not purport to be an alternative to net income, cash flow
from operations or the change in cash on the balance sheet.
Management views free cash flow as a measure of operational
performance, liquidity and financial
health.(8) Book value per
period end share is calculated by dividing MYR Group Inc.'s share
of stockholders’ equity at the end of the period by the period end
shares outstanding. (9)
Tangible book value is calculated by subtracting goodwill and
intangible assets outstanding at the end of the period from MYR
Group Inc.'s share of equity outstanding at the end of the period.
Tangible book value is not recognized under GAAP and does not
purport to be an alternative to book value or stockholders’ equity.
(10) Tangible book value per period end
share is calculated by dividing tangible book value at the end of
the period by the period end number of shares outstanding. Tangible
book value per period end share is not recognized under GAAP and
does not purport to be an alternative to income per diluted share.
(11) The funded debt to equity ratio is
calculated by dividing total funded debt at the end of the period
by total MYR Group Inc.'s share of stockholders’ equity at the end
of the period. (12) Asset turnover is calculated
by dividing the current period revenue by total assets at the
beginning of the period. (13) Return on assets is
calculated by dividing net income for the period by total assets at
the beginning of the period. (14) Return on
equity is calculated by dividing net income for the period by total
MYR Group Inc.'s share of stockholders’ equity at the beginning of
the period.(15) Period end shares is calculated
by adding average common stock equivalents for the quarter to the
period end balance of common stock outstanding. Period end shares
is not recognized under GAAP and does not purport to be an
alternative to diluted shares. Management views period end shares
as a better measure of shares outstanding as of the end of the
period.(16) Invested capital is calculated by
adding net funded debt (total funded debt less cash and marketable
securities) to MYR Group Inc.'s share of stockholders’
equity.(17) Return on invested capital is
calculated by dividing EBIT, net of taxes, less any dividends, by
invested capital at the beginning of the period. Return on invested
capital is not recognized under GAAP, and is a key metric used by
management to determine our executive compensation.
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